2019 ANNUAL REPORT
2019 IN REVIEW
Financial Results
Consolidated Net Revenue of $12.9bn
Consolidated Net Income
Attributable to MGM of $2.0bn
Consolidated Adjusted
EBITDAR of $3.0bn
Record Net Revenues and
Adjusted Property EBITDAR at
MGM National Harbor
Beau Rivage
Gold Strike Tunica
MGM 2020
In 2019, Phase I of MGM 2020
resulted in $130mm of
Adjusted EBITDAR uplift
Operating model to improve effectiveness
and efficiency, setting the foundation
for future growth
Focus on cost reduction
Capital Allocation
Returned $1.3bn to shareholders
through buyback and dividends
Fortifying our balance sheet: Reduced
consolidated debt by nearly $4bn
Real Estate Monetization
Transactions expected to result in total net
cash proceeds of $8.2bn
• Monetized real estate assets of Bellagio and
MGM Grand Las Vegas at attractive multiples
• Sold Circus Circus Las Vegas for $825mm
• Agreement to redeem $1.4bn in MGM Growth
Properties (“MGP”) Operating Partnership units
for cash, at MGM’s election
Focused on two key growth opportunities
Japan integrated resort opportunity with
Osaka-first strategy
Continued progress in Sports Betting with
GVC venture, Roar Digital
Commitment to ESG
Launched Focused on What Matters: Embracing
Humanity and Protecting the Planet, a bold vision
for MGM’s commitment to social impact and
sustainability, together with 14 specific long-term
goals to be achieved by 2025
RECOGNITIONS:
• #18 out of 500 on Forbes list of America’s
Best Large Employers
• 8th year with perfect score by Human Rights
Campaign equality index
• #1 on Top 8 Regionals Company List for
Diversity by DiversityInc
• Only Nevada recipient of Environmental Protection
Agency Food Recovery Challenge Award
Schedules that reconcile the non-GAAP financial measure to the most directly comparable GAAP financial measures are included in the
MGM Resorts International Form 10-K and are available on the MGM Resorts International website at www.mgmresorts.com.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2019
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
(State or other jurisdiction of
incorporation or organization)
88-0215232
(I.R.S. Employer
Identification Number)
3600 Las Vegas Boulevard South - Las Vegas, Nevada 89109
(Address of principal executive office) (Zip Code)
(702) 693-7120
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 Par Value
Trading Symbol(s)
MGM
Name of each exchange on which registered
New York Stock Exchange (NYSE)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted 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 such
files). Yes ☒ No ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting company
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No ☒
The aggregate market value of the Registrant’s Common Stock held by non-affiliates of the Registrant as of June 28, 2019 (based on the closing price
on the New York Stock Exchange Composite Tape on June 28, 2019) was $14.4 billion. As of February 24, 2020, 492,434,341 shares of Registrant’s
Common Stock, $0.01 par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s definitive Proxy Statement for its 2019 Annual Meeting of Stockholders are incorporated by reference into Part III of this
Form 10-K.
TABLE OF CONTENTS
PART I
Page
Item 1.
Business................................................................................................................................................................................. 1
Item 1A. Risk Factors ........................................................................................................................................................................... 12
Item 1B. Unresolved Staff Comments.................................................................................................................................................. 25
Properties............................................................................................................................................................................... 26
Item 2.
Item 3.
Legal Proceedings ................................................................................................................................................................. 27
Item 4. Mine Safety Disclosures........................................................................................................................................................ 27
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities............ 28
Item 6.
Selected Financial Data ......................................................................................................................................................... 30
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ................................................ 31
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .............................................................................................. 50
Financial Statements and Supplementary Data ..................................................................................................................... 51
Item 8.
Consolidated Financial Statements........................................................................................................................................ 55
Notes to Consolidated Financial Statements ......................................................................................................................... 60
Schedule II – Valuation and Qualifying Accounts................................................................................................................ 104
Item 9.
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure ............................................... 105
Item 9A. Controls and Procedures........................................................................................................................................................ 106
Item 9B. Other Information.................................................................................................................................................................. 107
PART III
Item 10. Directors, Executive Officers and Corporate Governance .................................................................................................... 108
Item 11. Executive Compensation ....................................................................................................................................................... 108
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ............................. 108
Item 13. Certain Relationships and Related Transactions, and Director Independence...................................................................... 108
Item 14. Principal Accounting Fees and Services ............................................................................................................................... 108
PART IV
Item 15. Exhibits, Financial Statements Schedules ............................................................................................................................. 109
Item 16. Form 10-K Summary............................................................................................................................................................. 116
Signatures .............................................................................................................................................................................. 117
ITEM 1.
BUSINESS
PART I
MGM Resorts International is referred to as the “Company,” “MGM Resorts,” or the “Registrant,” and together with its
subsidiaries may also be referred to as “we,” “us” or “our.” MGM China Holdings Limited together with its subsidiaries is referred
to as “MGM China.” Except where the context indicates otherwise, “MGP” refers to MGM Growth Properties LLC together with its
consolidated subsidiaries.
Overview
MGM Resorts International is a Delaware corporation incorporated in 1986 that acts largely as a holding company and, through
subsidiaries, owns and operates integrated casino, hotel, and entertainment resorts across the United States and in Macau.
We believe we own or invest in several of the finest casino resorts in the world and we continually reinvest in our resorts to
maintain our competitive advantage. We make significant investments in our resorts through newly remodeled hotel rooms,
restaurants, entertainment and nightlife offerings, as well as other new features and amenities. We believe we operate the highest
quality resorts in each of the markets in which we operate. Ensuring our resorts are the premier resorts in their respective markets
requires capital investments to maintain the best possible experiences for our guests.
MGM Growth Properties LLC (“MGP”), is a consolidated subsidiary of the Company. Substantially all of its assets are owned
by and substantially all of its businesses are conducted through its subsidiary MGM Growth Properties Operating Partnership LP (the
“Operating Partnership”). As of December 31, 2019, pursuant to a master lease agreement between a subsidiary of the Company and a
subsidiary of the Operating Partnership, we lease the real estate assets of The Mirage, Mandalay Bay, Luxor, New York-New York,
Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National
Harbor, and MGM Northfield. See Note 1 in the accompanying consolidated financial statements for information regarding MGP and
the Operating Partnership, which we consolidate in our financial statements, and Note 18 in the accompanying consolidated financial
statements for information regarding the master lease with MGP. As further discussed below, pursuant to a lease agreement, we lease
the real estate assets of Bellagio from a venture that we formed with Blackstone Real Estate Trust, Inc. (“BREIT”). See Note 11 in the
accompanying consolidated financial statements for information regarding the lease with BREIT.
Business Developments
In August 2016, we acquired the remaining 50% ownership interest in Borgata, at which time Borgata became a wholly-owned
consolidated subsidiary of ours. Subsequently, MGP acquired Borgata’s real property from us and Borgata was added to the existing
master lease between us and MGP. In December 2016, we opened MGM National Harbor and, in October 2017, MGP also acquired
the long-term leasehold interest and real property associated with MGM National Harbor from us and MGM National Harbor was
added to the existing master lease between us and MGP.
In February 2018, we opened MGM Cotai, an integrated casino, hotel and entertainment resort on the Cotai Strip in Macau, and
in August 2018, we opened MGM Springfield in Springfield, Massachusetts.
In July 2018, MGP acquired the membership interests of Northfield Park Associates, LLC (“Northfield”), an Ohio limited
liability company that owned the real estate assets and operations of the Hard Rock Rocksino Northfield Park (“Northfield
Acquisition”). In April 2019, we acquired the membership interests of Northfield from MGP and MGP retained the associated real
estate assets. We then rebranded the property to MGM Northfield Park, which was then added to the existing master lease between us
and MGP.
In January 2019, we acquired the real property and operations associated with Empire City Casino's racetrack and casino
("Empire City"). Subsequently, MGP acquired Empire City’s developed real property from us and Empire City was then added to the
existing master lease between us and MGP.
In March 2019, we entered into an amendment to the existing master lease between us and MGP with respect to investments
made by us related to the Park MGM and NoMad Las Vegas property (the “Park MGM Lease Transaction”).
Additionally, in November 2019, we formed a venture (the “Bellagio BREIT Venture”) with BREIT, which acquired the
Bellagio real estate assets from us and leased such assets back to us pursuant to a long-term lease agreement (the “Bellagio Sale-
Leaseback Transaction”). The lease has an initial term of thirty years with the potential to extend for two ten year terms thereafter and
provides for an initial rent of $245 million, escalating annually at a rate of 2% per annum for the first ten years and thereafter equal to
1
the greater of 2% and the CPI increase during the prior year subject to a cap of 3% during the 11th through 20th years and 4%
thereafter. In addition, the lease obligates us to spend a specified percentage of net revenues at the property on capital expenditures
and that we comply with certain financial covenants, which, if not met, would require us to maintain cash security or a letter of credit
in favor of the landlord in an amount equal to rent for the succeeding two year period. We received $4.25 billion consideration for the
sale, which consisted of a 5% equity interest in the venture with the remaining consideration of approximately $4.2 billion in cash. We
also provide a shortfall guarantee of the principal amount of indebtedness of Bellagio BREIT Venture’s $3.01 billion of debt (and any
interest accrued and unpaid thereon).
In December 2019, we completed the sale of Circus Circus Las Vegas and adjacent land for $825 million, which consisted of
$662.5 million paid in cash and a secured note due 2024 with a face value of $162.5 million and fair value of $133.7 million.
On February 14, 2020, we completed a series of transactions (collectively the “MGP BREIT Venture Transaction”) pursuant to
which the real estate assets of MGM Grand Las Vegas and Mandalay Bay (including Mandalay Place) were contributed to a newly
formed entity (“MGP BREIT Venture”), owned 50.1% by the Operating Partnership and 49.9% by a subsidiary of BREIT. In
exchange for the contribution of the real estate assets, MGM and MGP received total consideration of $4.6 billion, which was
comprised of $2.5 billion of cash, $1.3 billion of the Operating Partnership’s secured indebtedness assumed by MGP BREIT Venture,
and the Operating Partnership’s 50.1% equity interest in the MGP BREIT Venture. In addition, the Operating Partnership issued
approximately 3 million Operating Partnership units to us representing 5% of the equity value of MGP BREIT Venture. In connection
with the transactions, we provided a shortfall guaranty of the principal amount of indebtedness of the MGP BREIT Venture (and any
interest accrued and unpaid thereon). On the closing date, BREIT also purchased approximately 5 million MGP Class A shares for
$150 million.
In connection with the transactions, MGP BREIT Venture entered into a lease with us for the real estate assets of Mandalay Bay
and MGM Grand Las Vegas. The lease provides for a term of thirty years with two ten-year renewal options and has an initial annual
base rent of $292 million, escalating annually at a rate of 2% per annum for the first fifteen years and thereafter equal to the greater of
2% and the CPI increase during the prior year subject to a cap of 3%. In addition, the lease will require us to spend 3.5% of net
revenues over a rolling five-year period at the properties on capital expenditures and for us to comply with certain financial covenants,
which, if not met, will require us to maintain cash security or provide one or more letters of credit in favor of the landlord in an
amount equal to the rent for the succeeding one-year period.
In connection with the MGP BREIT Venture Transaction, the existing master lease with MGP was modified to remove the
Mandalay Bay property and the annual rent under the MGP master lease was reduced by $133 million.
Also, on January 14, 2020, we, the Operating Partnership, and MGP entered into an agreement for the Operating Partnership to
waive its right to issue MGP Class A shares, in lieu of cash, to us in connection with us exercising our right to require the Operating
Partnership to redeem the Operating Partnership units we hold, at a price per unit equal to a 3% discount to the applicable cash amount
as calculated in accordance with the operating agreement. The waiver terminates on the earlier of 24 months following the closing of
the MGP BREIT Venture Transaction and us receiving cash proceeds of $1.4 billion as consideration for the redemption of our
Operating Partnership units.
Resort Operations
General
Most of our revenue is cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit
cards. We rely heavily on the ability of our resorts to generate operating cash flow to fund capital expenditures, provide excess cash
flow for future development, acquisitions or investments, and repay debt financings.
Our results of operations do not tend to be seasonal in nature as all of our casino resorts operate 24 hours a day, every day of the
year, with the exception of Empire City Casino which operates 20 hours a day, every day of the year. Our primary casino and hotel
operations are owned and managed by us. Other resort amenities may be owned and operated by us, owned by us but managed by
third parties for a fee, or leased to third parties. We utilize third-party management for specific expertise in operations of restaurants
and nightclubs. We lease space to retail and food and beverage operators, particularly for branding opportunities.
As of December 31, 2019, we have three reportable segments: Las Vegas Strip Resorts, Regional Operations, and MGM China.
2
Las Vegas Strip Resorts and Regional Operations
Las Vegas Strip Resorts. Las Vegas Strip Resorts consists of the following casino resorts: Bellagio, MGM Grand Las Vegas
(including The Signature), Mandalay Bay (including Delano and Four Seasons), The Mirage, Luxor, New York-New York (including
the Park), Excalibur, Park MGM (including NoMad Las Vegas) and Circus Circus Las Vegas (until the sale of such property in
December 2019).
Regional Operations. Regional Operations consists of the following casino resorts: MGM Grand Detroit in Detroit, Michigan;
Beau Rivage in Biloxi, Mississippi; Gold Strike Tunica in Tunica, Mississippi; Borgata in Atlantic City, New Jersey; MGM National
Harbor in Prince George’s County, Maryland; MGM Springfield in Springfield, Massachusetts; Empire City in Yonkers, New York
(upon its acquisition in January 2019); and MGM Northfield Park in Northfield Park, Ohio (upon MGM’s acquisition of the
operations from MGP in April 2019).
Over half of the net revenue from our domestic resorts is derived from non-gaming operations, including hotel, food and
beverage, entertainment and other non-gaming amenities. We market to different customers and utilize our significant convention and
meeting facilities to allow us to maximize hotel occupancy and customer volumes which also leads to better labor utilization. Our
operating results are highly dependent on the volume of customers at our resorts, which in turn affects the price we can charge for our
hotel rooms and other amenities.
Our casino operations feature a variety of slots, table games, and race and sports book wagering. In addition, we offer our
premium players access to high-limit rooms and lounge experiences where players may enjoy an upscale atmosphere.
MGM China
We own approximately 56% of MGM China, which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”), the Macau
company that owns and operates the MGM Macau and MGM Cotai casino resorts and the related gaming subconcession and land
concessions. We believe our ownership interest in MGM China plays an important role in extending our reach internationally and will
foster future growth and profitability. Macau is the world’s largest gaming destination in terms of revenue and we expect future
growth in the Asian gaming market to drive additional visitation at MGM Macau and MGM Cotai.
Our current MGM China operations relate to MGM Macau and MGM Cotai, discussed further below. MGM China’s revenues
are generated primarily from gaming operations which are conducted under a gaming subconcession held by MGM Grand Paradise.
The Macau government has granted three gaming concessions and each of these concessionaires has granted a subconcession. The
MGM Grand Paradise gaming subconcession was granted by Sociedade de Jogos de Macau, S.A., which expires in 2022. The Macau
government currently prohibits additional concessions and subconcessions, but does not place a limit on the number of casinos or
gaming areas operated by the concessionaires and subconcessionaires, though additional casinos require government approval prior to
commencing operations.
Corporate and Other
We have additional business activities including our investments in unconsolidated affiliates, and certain other corporate and
management operations. CityCenter Holdings, LLC (“CityCenter”) is our most significant unconsolidated affiliate, which we also
manage for a fee.
See Note 17 in the accompanying consolidated financial statements for detailed financial information about our segments.
3
Our Operating Resorts
We have provided certain information below about our resorts as of December 31, 2019.
Name and Location
Las Vegas Strip Resorts:
Number of
Approximate
Guestrooms Casino Square
and Suites
Footage (1)
Slots (2)
Gaming
Tables (3)
Bellagio ................................................................................
MGM Grand Las Vegas (4) ...................................................
Mandalay Bay (5)...................................................................
The Mirage ...........................................................................
Luxor ....................................................................................
Excalibur ..............................................................................
New York-New York ...........................................................
Park MGM (6)........................................................................
Subtotal ...........................................................................
Regional Operations:
MGM Grand Detroit (Detroit, Michigan) (7) ........................
Beau Rivage (Biloxi, Mississippi)........................................
Gold Strike (Tunica, Mississippi) ........................................
Borgata (Atlantic City, New Jersey) ....................................
MGM National Harbor (Prince George's County,
Maryland) (8) .........................................................................
MGM Springfield (Springfield, Massachusetts) (9)...............
MGM Northfield Park (Northfield, Ohio)............................
Empire City (Yonkers, New York) ......................................
Subtotal ...........................................................................
MGM China:
MGM Macau – 55.95% owned (Macau S.A.R.)..................
MGM Cotai – 55.95% owned (Macau S.A.R.) ....................
Subtotal ...........................................................................
Other Operations:
3,933
6,071
4,750
3,044
4,397
3,981
2,024
2,898
31,098
400
1,740
1,133
2,767
308
240
—
—
6,588
582
1,390
1,972
155,000
169,000
152,000
94,000
101,000
94,000
81,000
66,000
912,000
127,000
87,000
48,000
160,000
146,000
109,000
73,000
137,000
887,000
307,000
298,000
605,000
CityCenter – 50% owned (Las Vegas, Nevada) (10) .............
Subtotal ...........................................................................
Grand total ......................................................................
5,499
5,499
45,157
139,000
139,000
2,543,000
1,692
1,553
1,232
1,195
1,049
1,161
1,139
914
9,935
3,205
1,811
1,183
2,859
3,137
1,814
2,200
4,671
20,880
1,085
1,154
2,239
1,492
1,492
34,546
147
128
71
75
53
50
62
66
652
134
81
68
188
161
79
—
—
711
290
262
552
126
126
2,041
(1) Casino square footage is approximate and includes the gaming floor, race and sports, high limit areas and casino specific walkways, and excludes casino cage and
other non-gaming space within the casino area.
Includes slot machines, video poker machines and other electronic gaming devices.
Includes blackjack (“21”), baccarat, craps, roulette and other table games; does not include poker.
Includes 1,078 rooms at The Signature at MGM Grand Las Vegas.
Includes 1,117 rooms at the Delano and 424 rooms at the Four Seasons Hotel.
Includes 293 rooms at NoMad Las Vegas.
(2)
(3)
(4)
(5)
(6)
(7) Our local investors have an ownership interest of approximately 3% of MGM Grand Detroit.
(8) Our local investors have a non-voting economic interest in MGM National Harbor. Refer to Note 2 in the accompanying consolidated financial statements for
further description of such interest.
(9) Our local investor has a 1% ownership interest in MGM Springfield.
(10) Includes Aria with 4,004 rooms. Vdara includes 1,495 condo-hotel units, which are predominantly utilized as company-owned hotel rooms. The other 50% of
CityCenter is owned by Infinity World Development Corp.
4
Customers and Competition
Our casino resorts operate in highly competitive environments. We compete against gaming companies, as well as other
hospitality companies in the markets in which we operate, neighboring markets, and in other parts of the world, including non-gaming
resort destinations such as Hawaii. Our gaming operations compete to a lesser extent with state-sponsored lotteries, off-track wagering,
card parlors, online gambling and other forms of legalized gaming in the United States and internationally. For further discussion of
the potential impact of competitive conditions on our business, see “Risk Factors — Risks Related to our Business.” We face
significant competition with respect to destination travel locations generally and with respect to our peers in the industries in which we
compete, and failure to compete effectively could materially adversely affect our business, financial condition, results of operations
and cash flow.”
Our primary methods of successful competition include:
•
•
Locating our resorts in desirable leisure and business travel markets and operating at superior sites within those markets;
Constructing and maintaining high-quality resorts and facilities, including luxurious guestrooms, state-of-the-art convention
facilities and premier dining, entertainment, retail and other amenities;
Recruiting, training and retaining well-qualified and motivated employees who provide superior customer service;
Providing unique, “must-see” entertainment attractions; and
•
•
• Developing distinctive and memorable marketing, promotional and customer loyalty programs.
Las Vegas Strip Resorts and Regional Operations
Our customers include premium gaming customers; leisure and wholesale travel customers; business travelers, and group
customers, including conventions, trade associations, and small meetings. We have a complete portfolio of resorts which appeal to the
upper end of each market segment and also cater to leisure and value-oriented tour and travel customers. Many of our resorts have
significant convention and meeting space which we utilize to drive business to our resorts during mid-week and off-peak periods.
Our Las Vegas casino resorts compete for customers with a large number of other hotel casinos in the Las Vegas area, including
major hotel casinos on or near the Las Vegas Strip, major hotel casinos in the downtown area, which is about five miles from the
center of the Las Vegas Strip, and several major hotel casinos elsewhere in the Las Vegas area. Our Las Vegas Strip Resorts also
compete, in part, with each other. Major competitors, including new entrants, have either recently expanded their hotel room capacity
or have plans to expand their capacity or construct new resorts in Las Vegas. Also, the growth of gaming in areas outside Las Vegas
has increased the competition faced by our operations in Las Vegas.
Outside Nevada, our resorts primarily compete with other hotel casinos in their markets and for customers in surrounding
regional gaming markets, where location is a critical factor to success. In addition, we compete with gaming operations in surrounding
jurisdictions and other leisure destinations in each region.
MGM China
The three primary customer bases in the Macau gaming market are VIP gaming operations, main floor gaming operations and
slot machine operations. VIP gaming play is sourced both internally and externally. Externally sourced VIP gaming play is obtained
through external gaming promoters who assist VIP players with their travel and entertainment arrangements. Gaming promoters are
compensated through payment of revenue-sharing arrangements and rolling chip turnover-based commissions. In-house VIP players
also typically receive a commission based on the program in which they participate. Unlike gaming promoters and in-house VIP
players, main floor players do not receive commissions. The profit contribution from the main floor gaming operations exceeds the
VIP gaming operations due to commission costs paid to gaming promoters. We offer amenities to attract players such as premium
gaming lounges and stadium-style electronic table games terminals, which include both table games and slots to create a dedicated
exclusive gaming space for premium main floor players’ use, as well as non-gaming amenities, such as The Mansion and Mansion
One to attract ultra-high end customers.
VIP gaming at MGM China is conducted by the use of special purpose nonnegotiable gaming chips. Gaming promoters
purchase these nonnegotiable chips and in turn they sell these chips to their players. The nonnegotiable chips allow us to track the
amount of wagering conducted by each gaming promoters’ clients in order to determine VIP gaming play. Gaming promoter
commissions are based on a percentage of the gross table games win or a percentage of the table games turnover they generate. They
also receive a complimentary allowance based on a percentage of the table games turnover they generate, which can be applied to
hotel rooms, food and beverage and other discretionary customers-related expenses. Gaming promoter commissions are recorded as a
reduction of casino revenue. In-house VIP commissions are based on a percentage of rolling chip turnover and are recorded as a
reduction of casino revenue.
5
Our key competitors in Macau include five other gaming concessionaires and subconcessionaires. If the Macau government
were to grant additional concessions or subconcessions, we would face additional competition which could have a material adverse
effect on our financial condition, results of operations or cash flows. Additionally, we face competition at our Macau and Cotai
properties from concessionaires who have expanded their operations, primarily on the Cotai Strip.
We encounter competition from major gaming centers located in other areas of Asia and around the world including, but not
limited to, Singapore, South Korea, Vietnam, Cambodia, the Philippines, Australia, and Las Vegas.
Marketing
Our marketing efforts are conducted through various means, including our loyalty programs. We advertise on radio, television,
internet and billboards and in newspapers and magazines in selected cities throughout the United States and overseas, as well as by
direct mail, email and through the use of social media. We also advertise through our regional marketing offices located in major U.S.
and foreign cities. Our direct marketing efforts utilize advanced analytic techniques that identify customer preferences and help predict
future customer behavior, allowing us to make more relevant offers to customers, influence incremental visits, and help build lasting
customer relationships.
M life Rewards, our customer loyalty program, is a tiered program and allows customers to qualify for benefits across our
participating resorts and in both gaming and non-gaming areas, encouraging customers to keep their total spend within our casino
resorts. We also offer the Golden Lion Club for gaming focused customers, in addition to M life Rewards, at MGM China. The
structured rewards systems based on member value and tier level ensure that customers can progressively access the full range of
services that the resorts provide. Our loyalty programs focus on building a rewarding relationship with our customers, encouraging
members to increase both visitation and spend.
Strategy
We strive to be the recognized global leader in entertainment and hospitality, embracing innovation and diversity to inspire
excellence. The quality of our resorts and amenities can be measured by our success in winning numerous awards, both domestic and
globally, including several Four and Five Diamond designations from the American Automobile Association as well as multiple Four
and Five Star designations from Forbes Travel Guide, as well as numerous certifications of our Corporate Social Responsibility efforts.
Our strategic objectives include:
• Operational enhancements. Drive continuous improvements in operational performance to support enterprise-wide
•
•
increases in revenue, market share, cash flow, and margins;
Financial strength. Accelerate financial performance through optimal capital structure and disciplined investment of cash
flows;
Corporate social responsibility. Continue to solidify the Company’s reputation as a global leader in the principles of
Corporate Social Responsibility;
• Geographic expansion. Execute a targeted approach to domestic and international expansion to increase global brand
•
presence; and
Business model innovation. Explore the evolution of the existing business model into new lines of business and key
adjacencies.
In allocating resources, our financial strategy is focused on managing a proper mix of investing in existing resorts, spending on
strategic developments or initiatives and repaying long-term debt or returning capital to shareholders. We believe there are reasonable
investments for us to make in new initiatives and at our current resorts that will provide profitable returns.
We regularly evaluate possible expansion and acquisition opportunities in domestic and international markets. Opportunities we
evaluate may include the ownership, management and operation of gaming and other entertainment facilities in Nevada, or in states
other than Nevada, or outside of the United States, accessing new markets for sports and interactive, as well as online gaming. We
leverage our management expertise and well-recognized brands through strategic partnerships and international expansion
opportunities. We feel that several of our brands are well-suited to new projects in both gaming and non-gaming developments. We
may undertake these opportunities either alone or in cooperation with one or more third parties.
During 2019, we launched the (“MGM 2020 Plan”), a portfolio of Adjusted EBITDAR (as defined herein) improvement
initiatives that yielded over $130 million of Adjusted EBITDAR uplift in 2019. We expect to exceed $200 million by the end of 2020
compared to 2018 results. The initiatives are primarily comprised of labor, sourcing and revenue initiatives. We have continued to
invest in our operating model by expanding the footprint of our Centers of Excellence and enabling best in class operations through
adjustments within corporate and property business units. As part of the second phase of our MGM 2020 Plan, we expect to invest in
our digital transformation to drive customer-centric strategy for revenue growth. In addition, we have continued to focus on key
growth opportunities to develop an integrated resort in Japan and also continued investments in sports betting through our venture,
Roar Digital LLC.
6
Technology
We utilize technology to maximize revenue and to drive efficiency in our operations. Additionally, technology is core to our
ability to provide an enhanced customer and employee experience. We believe that digital platforms and customer experiences are
critical to differentiation in our marketplace and are critical components to drive growth in our business. While we continue to
automate various aspects of operations in an effort to control costs, we are also investing in infrastructure and platforms unique to
MGM such as self-service technology, advanced pricing systems and a host of other platform-based customer and employee services.
Our team of world class product leaders and technologists leverage the newest advancements in technology including cloud, advanced
analytics, and other methods to ensure speed to market and security of our platforms. For example, our commerce and digital
platforms provide our customers the ability to create an itinerary of experiences including self-service booking of accommodations,
dining and entertainment, with pricing options unique and specific to them based on their relationship or loyalty status with us. We
expect continued and incremental investment in this area as part of the second phase of our MGM 2020 Plan.
Commitment to Employees
We believe that knowledgeable, friendly and dedicated employees are a primary success factor in the hospitality industry.
Therefore, we invest heavily in recruiting, training, motivating and retaining exceptional employees, and we seek to hire and promote
the strongest management team possible. We have numerous programs, both at the corporate and business unit level, designed to
achieve these objectives. We believe in the importance of developing our employees through training and advanced education. Our
Pathways Educational Program provides tuition reimbursement and our College Opportunity Program, in partnership with the Nevada
System of Higher Education, provides online education at no cost to eligible MGM Resorts employees in the United States. We also
offer a student Loan Debt Assistance Program that will match a portion of monthly student loan debt payments for qualifying
employees. The MGM Resorts Scholarship Program for Children of Employees awards scholarships to selected children of our full-
time domestic employees (excluding executives) based on financial need and academic performance.
Corporate Social Responsibility
We believe that profitability and social responsibility can be linked for long-term sustainability and profitability in furtherance
of value to all our stakeholders – our shareholders, our employees, our customers and our communities.
We have a bold vision for how our company will lead the way in social impact and environmental sustainability in the years to
come. Focused on What Matters: Embracing Humanity and Protecting the Planet articulates our purpose and our commitment to a set
of priorities and goals that we hope can have an enduring impact on the world. We have aligned our efforts with a growing interest
from investors to define a set of Environmental, Social and Governance criteria that assists in identifying companies with values that
match their own. Focused on What Matters: Embracing Humanity and Protecting the Planet defines our environmental sustainability
and social impact strategy in four critical areas: Fostering Diversity and Inclusion, Investing in Community, Caring for One Another
and Protecting the Planet. In each of these areas we have adopted goals against which we will chart our progress. We have aligned our
goals and our social impact and environmental sustainability priorities to the United Nations Sustainable Development Goals. Focused
on What Matters reaffirms our commitment to our guests, employees and partners; to the communities we call home and to the planet
we must protect.
Through investment of many years of dedicated effort and resources, our evolving social impact strategy – grounded in prudent
fiscal management and long-term focused strategies – have advanced us beyond leadership in the gaming and hospitality industry to
national recognition for our accomplishments.
Our core values of integrity, inclusion, teamwork and excellence shape our character and culture, the way we do business, and
our CSR practices. Four strategic pillars guide our work.
Fostering diversity and inclusion. Our commitment to inclusion translates diversity as a fundamental paradigm of the 21st
century global economy into long-term human capital leadership, customer market expansion and competitive business advantage.
Inclusion is an important, multi-dimensional business imperative that attracts top talent; drives our culture of respect for humanity;
leverages the broad diversity of our employees’ talents to drive excellence in collaboration, innovation and financial performance;
fuels expansion of our customer markets and supply chain; and forges stronger ties with our communities around the world.
Investing in community. The communities in which we operate, and our employees live, work and care for their families, are
cornerstones of our business. We create economic opportunity for local residents, collaborate to promote educational and develop
skills of local workforces, engage local businesses, and stimulate economic development in our communities. We promote responsible
gaming practices and tools, such as GameSense, that keep gaming safe and entertaining. Beyond our tax support of public education,
infrastructure and services, we make philanthropic and development-related investments in long-term institutions that benefit our
employees and customers and elevate the quality of life and culture in our communities.
7
Caring for one another. We believe caring for less fortunate community neighbors is a deep-rooted part of our culture, and our
actions help uplift the communities in which we operate, while simultaneously instilling employee pride and engagement in our
business. Through three primary channels – our employee-driven MGM Resorts Foundation, our Employee Volunteer Program and
our Corporate Giving Program, we contribute leadership, funding and manpower to an extensive array of nonprofit organizations that
provide services, goods and resources indispensable to our communities’ well-being, development and stability.
Protecting the Planet. We continue to gain recognition for our comprehensive environmental responsibility initiatives in energy
and water conservation, recycling and waste management, sustainable supply chain and green construction. Many of our resorts have
earned certification from Green Key, one of the largest international programs evaluating environmental sustainability in hotel
operations. Aria, Vdara, Bellagio, Delano, Mandalay Bay, and MGM Grand Detroit have all received “Five Green Key,” the highest
possible rating. Many major travel service providers recognize the Green Key designation and identify our resorts for their continued
commitment to sustainable hotel operations.
In addition, we believe that incorporating the tenets of environmental sustainability in our business decisions advances a
platform for innovation and operational efficiency. CityCenter (Aria, Vdara and Veer) is one of the world’s largest private sustainable
developments. With six LEED® Gold certifications from the U.S. Green Building Council (the “Council”), CityCenter serves as the
standard for combining luxury and environmental responsibility within the large-scale hospitality industry. Also, MGM National
Harbor, The Park, and T-Mobile Arena have all been awarded LEED® Gold certification by the Council.
At MGM China, we incorporate the same commitment to environmental preservation. MGM Cotai has achieved the China
Green Building (Macau) Design label from the China Green Building and Energy Saving (Macau) Association.
Intellectual Property
Our principal intellectual property consists of trademarks for, among others, Bellagio, The Mirage, Borgata, Mandalay Bay,
MGM, MGM Grand, MGM Resorts International, Luxor, Excalibur, New York-New York, Beau Rivage and Empire City, all of
which have been registered or allowed in various classes in the United States. In addition, we have also registered or applied to
register numerous other trademarks in connection with our properties, facilities and development projects in the United States and in
various other foreign jurisdictions. These trademarks are brand names under which we market our properties and services. We
consider these brand names to be important to our business since they have the effect of developing brand identification. We believe
that the name recognition, reputation and image that we have developed attract customers to our facilities. Once granted, our
trademark registrations are of perpetual duration so long as they are used and periodically renewed. It is our intent to pursue and
maintain our trademark registrations consistent with our goals for brand development and identification, and enforcement of our
trademark rights.
Employees and Labor Relations
As of December 31, 2019, we had approximately 52,000 full-time and 18,000 part-time employees domestically, of which
approximately 6,000 and 3,000, respectively, support the Company’s management agreements with CityCenter. In addition, we had
approximately 11,000 employees at MGM China. We had collective bargaining agreements with unions covering approximately
38,000 of our employees as of December 31, 2019. Collective bargaining agreements covering a number of employee job
classifications in our Las Vegas properties are scheduled to expire in the first half of 2020. We anticipate negotiations for successor
contracts covering those employees will begin in the first quarter of 2020. In addition, in our regional properties, successor collective
bargaining agreements will be negotiated in 2020 for MGM Grand Detroit, Borgata and Empire City. Negotiations for first time
collective bargaining agreements are underway for employee bargaining units at MGM National Harbor, MGM Grand Las Vegas,
MGM Northfield Park, and the MGM Resorts Operations Contact Center in Las Vegas. As of December 31, 2019, none of the
employees of MGM China are part of a labor union and the resorts are not party to any collective bargaining agreements.
Regulation and Licensing
The gaming industry is highly regulated, and we must maintain our licenses and pay gaming taxes to continue our operations.
Each of our casinos is subject to extensive regulation under the laws, rules and regulations of the jurisdiction in which it is located.
These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and
persons with financial interest in the gaming operations. Violations of laws in one jurisdiction could result in disciplinary action in
other jurisdictions.
8
A more detailed description of the gaming regulations to which we are subject is contained in Exhibit 99.1 to this Annual Report
on Form 10-K, which Exhibit is incorporated herein by reference.
Our businesses are subject to various federal, state, local and foreign laws and regulations affecting businesses in general. These
laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, smoking, employees,
currency transactions, taxation, zoning and building codes (including regulations under the Americans with Disabilities Act, which
requires all public accommodations to meet certain federal requirements related to access and use by persons with disabilities),
construction, land use and marketing and advertising. We also deal with significant amounts of cash in our operations and are subject
to various reporting and anti-money laundering regulations. Such laws and regulations could change or could be interpreted differently
in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in
interpretations by courts or governmental authorities could adversely affect our operating results.
In addition, we are subject to certain federal, state and local environmental laws, regulations and ordinances, including the Clean
Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response, Compensation
and Liability Act and the Oil Pollution Act of 1990. Under various federal, state and local laws and regulations, an owner or operator
of real property may be held liable for the costs of removal or remediation of certain hazardous or toxic substances or wastes located
on its property, regardless of whether or not the present owner or operator knows of, or is responsible for, the presence of such
substances or wastes. We have not identified any issues associated with our properties that could reasonably be expected to have an
adverse effect on us or the results of our operations.
Cautionary Statement Concerning Forward-Looking Statements
This Form 10-K and our 2019 Annual Report to Stockholders contain “forward-looking statements” within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,”
“intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “will,” “may” and similar references to future periods. Examples of
forward-looking statements include, but are not limited to, statements we make regarding the execution of the MGM 2020 Plan and
our asset light strategy, our ability to generate significant cash flow, execute on ongoing and future projects, including the
development of an integrated resort in Japan, amounts we will spend in capital expenditures and investments, our expectations with
respect to future share repurchases and cash dividends on our common stock, dividends and distributions we will receive from MGM
China, the Operating Partnership or CityCenter and amounts projected to be realized as deferred tax assets. The foregoing is not a
complete list of all forward-looking statements we make.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and
other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and
changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-
looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we
caution you against relying on any of these forward-looking statements. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are not limited to, regional, national or global political, economic,
business, competitive, market, and regulatory conditions and the following:
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•
•
•
•
•
•
•
our substantial indebtedness and significant financial commitments, including the fixed component of our rent payments to
MGP, rent payments to the Bellagio BREIT Venture, and rent we will be required to make in connection with the MGP
BREIT Venture lease, and guarantee we provide of the indebtedness of the Bellagio BREIT Venture and will provide for
MGP BREIT Venture could adversely affect our development options and financial results and impact our ability to satisfy
our obligations;
current and future economic, capital and credit market conditions could adversely affect our ability to service or refinance
our indebtedness and to make planned expenditures;
restrictions and limitations in the agreements governing our senior credit facility and other senior indebtedness could
significantly affect our ability to operate our business, as well as significantly affect our liquidity;
the fact that we are required to pay a significant portion of our cash flows as rent, which could adversely affect our ability to
fund our operations and growth, service our indebtedness and limit our ability to react to competitive and economic
changes;
significant competition we face with respect to destination travel locations generally and with respect to our peers in the
industries in which we compete;
the fact that our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such
regulations could adversely affect our business;
the impact on our business of economic and market conditions in the jurisdictions in which we operate and in the locations
in which our customers reside;
the possibility that we may not realize all of the anticipated benefits of our MGM 2020 Plan or our asset light strategy;
9
•
our ability to pay ongoing regular dividends is subject to the discretion of our board of directors and certain other
limitations;
•
•
•
•
•
•
•
•
•
•
•
•
• Nearly all of our domestic gaming facilities are leased and could experience risks associated with leased property, including
risks relating to lease termination, lease extensions, charges and our relationship with the lessor, which could have a
material adverse effect on our business, financial position or results of operations;
financial, operational, regulatory or other potential challenges that may arise with respect to MGP, as the lessor for a
significant portion of our properties, may adversely impair our operations;
the fact that MGP has adopted a policy under which certain transactions with us, including transactions involving
consideration in excess of $25 million, must be approved in accordance with certain specified procedures;
restrictions on our ability to have any interest or involvement in gaming businesses in China, Macau, Hong Kong and
Taiwan, other than through MGM China;
the ability of the Macau government to terminate MGM Grand Paradise’s subconcession under certain circumstances
without compensating MGM Grand Paradise, exercise its redemption right with respect to the subconcession, or refuse to
grant MGM Grand Paradise an extension of the subconcession in 2022;
the dependence of MGM Grand Paradise upon gaming promoters for a significant portion of gaming revenues in Macau;
changes to fiscal and tax policies;
our ability to recognize our foreign tax credit deferred tax asset and the variability of the valuation allowance we may apply
against such deferred tax asset;
extreme weather conditions or climate change may cause property damage or interrupt business;
the concentration of a significant number of our major gaming resorts on the Las Vegas Strip;
the fact that we extend credit to a large portion of our customers and we may not be able to collect such gaming receivables;
the potential occurrence of impairments to goodwill, indefinite-lived intangible assets or long-lived assets which could
negatively affect future profits;
the susceptibility of leisure and business travel, especially travel by air, to global geopolitical events, such as terrorist
attacks, other acts of violence, acts of war or hostility or outbreaks of infectious disease (including the recent coronavirus
outbreak);
the fact that co-investing in properties, including our investment in CityCenter, decreases our ability to manage risk;
the fact that future construction, development, or expansion projects will be subject to significant development and
construction risks;
the fact that our insurance coverage may not be adequate to cover all possible losses that our properties could suffer, our
insurance costs may increase and we may not be able to obtain similar insurance coverage in the future;
the fact that a failure to protect our trademarks could have a negative impact on the value of our brand names and adversely
affect our business;
the risks associated with doing business outside of the United States and the impact of any potential violations of the
Foreign Corrupt Practices Act or other similar anti-corruption laws;
risks related to pending claims that have been, or future claims that may be brought against us;
the fact that a significant portion of our labor force is covered by collective bargaining agreements;
the sensitivity of our business to energy prices and a rise in energy prices could harm our operating results;
the potential that failure to maintain the integrity of our computer systems and internal customer information could result in
damage to our reputation and/or subject us to fines, payment of damages, lawsuits or other restrictions on our use or transfer
of data;
the potential reputational harm as a result of increased scrutiny related to our corporate social responsibility efforts;
the potential failure of future efforts to expand through investments in other businesses and properties or through alliances
or acquisitions, or to divest some of our properties and other assets;
increases in gaming taxes and fees in the jurisdictions in which we operate; and
the potential for conflicts of interest to arise because certain of our directors and officers are also directors of MGM China.
•
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Any forward-looking statement made by us in this Form 10-K or our 2019 Annual Report to Stockholders speaks only as of the
date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not
possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a
result of new information, future developments or otherwise, except as may be required by law. If we update one or more forward-
looking statements, no inference should be made that we will make additional updates with respect to those or other forward-looking
statements.
You should also be aware that while we from time to time communicate with securities analysts, we do not disclose to them any
material non-public information, internal forecasts or other confidential business information. Therefore, you should not assume that
we agree with any statement or report issued by any analyst, irrespective of the content of the statement or report. To the extent that
reports issued by securities analysts contain projections, forecasts or opinions, those reports are not our responsibility and are not
endorsed by us.
10
Information about our Executive Officers
The following table sets forth, as of February 27, 2020, the name, age and position of each of our executive officers. Executive
officers are elected by and serve at the pleasure of the Board of Directors.
Name
James J. Murren(1).......................
William J. Hornbuckle ...............
Corey I. Sanders .........................
John M. McManus......................
Robert C. Selwood .....................
Atif Rafiq....................................
Age
58
62
56
52
64
46
Position
Chairman and Chief Executive Officer
President and Chief Operating Officer
Chief Financial Officer and Treasurer
Executive Vice President, General Counsel and Secretary
Executive Vice President and Chief Accounting Officer
President of Commercial & Growth
(1) On February 12, 2020, the Company announced that Mr. Murren has informed the Board of Directors that he will step down from his position as Chairman and
Chief Executive Officer of the Company prior to the expiration of his contract. He will continue to serve in his current leadership roles until a successor is
appointed.
Mr. Murren has served as Chairman and Chief Executive Officer of the Company since December 2008 and as President from
December 1999 to December 2012. He served as Chief Operating Officer from August 2007 through December 2008. He was Chief
Financial Officer from January 1998 to August 2007 and Treasurer from November 2001 to August 2007.
Mr. Hornbuckle has served as President since December 2012 and as Chief Operating Officer since March 2019. He served as
President and Chief Customer Development Officer from December 2018 to February 2019, as Chief Marketing Officer from August
2009 to August 2014 and President and Chief Operating Officer of Mandalay Bay Resort & Casino from April 2005 to August 2009.
Mr. Sanders has served as the Chief Financial Officer and Treasurer since March 2019. He served as Chief Operating Officer
from September 2010 through February 2019, as Chief Operating Officer for the Company’s Core Brand and Regional Properties
from August 2009 to September 2010, as Executive Vice President—Operations from August 2007 to August 2009, as Executive Vice
President and Chief Financial Officer for MGM Grand Resorts from April 2005 to August 2007.
Mr. McManus has served as Executive Vice President, General Counsel and Secretary since July 2010. He served as Acting
General Counsel from December 2009 to July 2010, as a senior member of the Company’s Corporate Legal Department from July
2008 to December 2009, and he served as counsel to various MGM operating subsidiaries from May 2001 to July 2008.
Mr. Selwood has served as Executive Vice President and Chief Accounting Officer since August 2007. He served as Senior
Vice President—Accounting of the Company from February 2005 to August 2007 and as Vice President—Accounting of the
Company from December 2000 to February 2005.
Mr. Rafiq has served as President of Commercial & Growth of the Company since May 2019. Prior to joining the Company,
Mr. Rafiq served as the Chief Digital Officer and Global Chief Information Officer at Volvo Car AB since January 2017 and, prior to
that, as Chief Digital Officer and Corporate Senior Vice President at McDonald’s from 2013 through 2016.
Available Information
We maintain a website at www.mgmresorts.com that includes financial and other information for investors. We provide access
to our SEC filings, including our annual report on Form 10-K and quarterly reports on Form 10-Q (including related filings in XBRL
format), filed and furnished current reports on Form 8-K, and amendments to those reports on our website, free of charge, through a
link to the SEC’s EDGAR database. Through that link, our filings are available as soon as reasonably practicable after we file or
furnish the documents with the SEC. These filings are also available on the SEC’s website at www.sec.gov.
Because of the time differences between Macau and the United States, we also use our corporate website as a means of posting
important information about MGM China.
References in this document to our website address do not incorporate by reference the information contained on the websites
into this Annual Report on Form 10-K.
11
ITEM 1A. RISK FACTORS
You should be aware that the occurrence of any of the events described in this section and elsewhere in this report or in any
other of our filings with the SEC could have a material adverse effect on our business, financial position, results of operations and
cash flows. In evaluating us, you should consider carefully, among other things, the risks described below.
Risks Relating to Our Substantial Indebtedness
Our substantial indebtedness and significant financial commitments, including the fixed component of our rent payments,
and our debt guarantees could adversely affect our operations and financial results and impact our ability to satisfy our
obligations. As of December 31, 2019, we had approximately $11.3 billion of principal amount of indebtedness outstanding on a
consolidated basis. The Operating Partnership and MGM China, our consolidated subsidiaries, had $4.4 billion and $2.2 billion,
respectively, of indebtedness outstanding. Any increase in the interest rates applicable to our existing or future borrowings would
increase the cost of our indebtedness and reduce the cash flow available to fund our other liquidity needs. We do not guarantee MGM
China’s or the Operating Partnership’s obligations under their respective debt agreements and, to the extent MGM China or the
Operating Partnership were to cease to produce cash flow sufficient to service their indebtedness, our ability to make additional
investments into such entities is limited by the covenants in our existing senior credit facility.
In addition, our substantial indebtedness and significant financial commitments could have important negative consequences on
us, including:
•
•
•
increasing our exposure to general adverse economic and industry conditions;
limiting our flexibility to plan for, or react to, changes in our business and industry;
limiting our ability to borrow additional funds for working capital requirements, capital expenditures, debt service
requirements, execution of our business strategy (including returning value to our shareholders) or other general operating
requirements;
• making it more difficult for us to make payments on our indebtedness; or
•
placing us at a competitive disadvantage compared to less-leveraged competitors.
Moreover, our businesses are capital intensive. For our owned, leased and managed resorts to remain attractive and competitive,
we must periodically invest significant capital to keep the properties well-maintained, modernized and refurbished. Moreover, our
leases with MGP, the Bellagio BREIT Venture, and the MGP BREIT Venture have fixed rental payments (with annual escalators) and
also require us to apply a percentage of net revenues generated at the leased properties to capital expenditures at those properties. Such
investments require an ongoing supply of cash and, to the extent that we cannot fund expenditures from cash generated by operations,
funds must be borrowed or otherwise obtained. Similarly, development projects, including any potential future development of an
integrated resort in Japan, and acquisitions could require significant capital commitments, the incurrence of additional debt, guarantees
of third-party debt or the incurrence of contingent liabilities, any or all of which could have an adverse effect on our business,
financial condition and results of operations.
In addition, our senior credit facility calculates interest on outstanding balances using the London Inter-Bank Offered Rate
(“LIBOR”). On July 27, 2017, the United Kingdom Financial Conduct Authority (the "FCA") announced it would phase out LIBOR
as a benchmark by the end of 2021. Although our senior credit facility includes LIBOR replacement provisions that contemplate an
alternate benchmark rate to be mutually agreed upon by us and the administrative agent, if necessary, any such changes may result in
interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made if
LIBOR was available in its current form. As a result, there can be no assurance that discontinuation of LIBOR will not result in
significant increases in benchmark interest rates, substantially higher financing costs or a shortage of available debt financing, any of
which could have an adverse effect on us.
Current and future economic, capital and credit market conditions could adversely affect our ability to service or refinance
our indebtedness and to make planned expenditures. Our ability to make payments on, and to refinance, our indebtedness, make our
rent payments under our leases and to fund planned or committed capital expenditures and other investments depends on our ability to
generate cash flow, receive distributions from our unconsolidated affiliates (including CityCenter) and subsidiaries (including MGM
China and the Operating Partnership), borrow under our senior credit facility or incur new indebtedness. If regional and national
economic conditions deteriorate, revenues from our operations could decline as consumer spending levels decrease and we could fail
to generate cash sufficient to fund our liquidity needs or satisfy the financial and other restrictive covenants in our debt and lease
instruments. We cannot assure you that our business will generate sufficient cash flow from operations, or continue to receive
distributions from our unconsolidated affiliates and subsidiaries, nor can we assure you that future borrowings will be available to us
under our senior secured credit facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs
or that we will be able to access the capital markets in the future to borrow additional indebtedness on terms that are favorable to us.
12
We have a significant amount of indebtedness maturing in 2022, and thereafter. Our ability to timely refinance and replace our
indebtedness in the future will depend upon the economic and credit market conditions discussed above. If we are unable to refinance
our indebtedness on a timely basis, we might be forced to seek alternate forms of financing, dispose of certain assets or minimize
capital expenditures and other investments. There is no assurance that any of these alternatives would be available to us, if at all, on
satisfactory terms, on terms that would not be disadvantageous to us, or on terms that would not require us to breach the terms and
conditions of our existing or future debt agreements or leases.
The agreements governing our senior credit facility and other senior indebtedness contain restrictions and limitations that
could significantly affect our ability to operate our business, as well as significantly affect our liquidity, and therefore could
adversely affect our results of operations. Covenants governing our senior credit facility and certain of our debt securities restrict,
among other things, our ability to:
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pay dividends or distributions, repurchase equity, prepay certain debt or make certain investments;
incur additional debt;
incur liens on assets;
sell assets or consolidate with another company or sell all or substantially all of our assets;
enter into transactions with affiliates;
allow certain subsidiaries to transfer assets or enter into certain agreements; and
enter into sale and lease-back transactions.
Our ability to comply with these provisions may be affected by events beyond our control. The breach of any such covenants or
obligations not otherwise waived or cured could result in a default under the applicable debt obligations and could trigger acceleration
of those obligations, which in turn could trigger cross-defaults under other agreements governing our long-term indebtedness. In
addition, our senior secured credit facility requires us to satisfy certain financial covenants, including a maximum total net leverage
ratio, a maximum first lien net leverage ratio and a minimum interest coverage ratio. Any default under our senior credit facility or the
indentures governing our other debt could adversely affect our growth, our financial condition, our results of operations and our ability
to make payments on our debt.
In addition, each of MGM China and the Operating Partnership has issued debt securities and is a borrower under credit
facilities, all of which contain covenants that restrict the respective borrower’s ability to engage in certain transactions, require them to
satisfy certain financial covenants and impose certain operating and financial restrictions on them and their respective subsidiaries.
These restrictions include, among other things, limitations on their ability to pay dividends or distributions to us, incur additional debt,
make investments or engage in other businesses, merge or consolidate with other companies, or transfer or sell assets.
We are required to pay a significant portion of our cash flows as rent, which could adversely affect our ability to fund our
operations and growth, service our indebtedness and limit our ability to react to competitive and economic changes. As of
December 31, 2019 we are required to make annual rent payments of $946 million under the master lease with MGP and annual rent
payments of $245 million under the lease with Bellagio BREIT Venture, and will be required to make annual rent payments of $292
million under the lease with MGP BREIT Venture, which leases are also subject to annual escalators as described elsewhere in this
Annual Report on Form 10-K. The leases also require us to spend a certain amount on capital expenditures at the leased properties. As
a result of the foregoing rent and capital expenditure obligations, our ability to fund our operations, raise capital, make acquisitions,
make investments, service our debt and otherwise respond to competitive and economic changes may be adversely affected. For
example, our obligations under the leases may:
• make it more difficult for us to satisfy our obligations with respect to our indebtedness and to obtain additional indebtedness;
•
•
increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;
require us to dedicate a substantial portion of our cash flow from operations to making rent payments, thereby reducing the
availability of our cash flow to fund working capital, capital expenditures, development projects, pay dividends, repurchase
shares and other general corporate purposes;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
restrict our ability to make acquisitions, divestitures and engage in other significant transactions; and
cause us to lose our rights with respect to the applicable leased properties if we fail to pay rent or other amounts or otherwise
default on the leases.
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•
Any of the above factors could have a material adverse effect on our business, financial condition and results of operations.
13
The Company provides a guarantee of the indebtedness of the Bellagio BREIT Venture and MGP BREIT Venture. We
currently provide a shortfall guarantee of the $3.01 billion and $3.0 billion principal amount of indebtedness (and any interest accrued
and unpaid thereon) of the Bellagio BREIT Venture and MGP BREIT Venture, respectively. The terms of each guarantee provide that,
after the lenders have exhausted certain remedies to collect on the obligations under the underlying indebtedness, we would then be
responsible for any shortfall between the value of the collateral and the debt obligation, which amount may be material, and we may
not have sufficient cash on hand to fund any such obligation to the extent it is triggered in the future. If we do not have sufficient cash
on hand, we may need to raise capital, including incurring additional indebtedness, in order to satisfy our obligation. There can be no
assurance that any financing will be available to us, or, if available, will be on terms that are satisfactory to us.
Risks Related to our Business
We face significant competition with respect to destination travel locations generally and with respect to our peers in the
industries in which we compete, and failure to compete effectively could materially adversely affect our business, financial
condition, results of operations and cash flow. The hotel, resort, entertainment, and casino industries are highly competitive. We do
not believe that our competition is limited to a particular geographic area, and hotel, resort, entertainment, and gaming operations in
other states or countries could attract our customers. To the extent that new casinos enter our markets or hotel room capacity is
expanded by others in major destination locations, competition will increase. Major competitors, including potential new entrants, may
also expand their hotel room capacity, expand their range of amenities, improve their level of service, or construct new resorts in Las
Vegas, Macau or in the domestic regional markets in which we operate, all of which could attract our customers. Also, the growth of
gaming in areas outside Las Vegas, including California, has increased the competition faced by our operations in Las Vegas and
elsewhere. While we believe our principal competitors are major gaming and hospitality resorts with well-established and recognized
brands, we also compete against smaller hotel offerings and peer-to-peer inventory sources, which allow travelers to book short-term
rentals of homes and apartments from owners. We expect that we will continue to face increased competition from new channels of
distribution, innovations in consumer-facing technology platforms and other transformations in the travel industry that could impact
our ability to attract and retain customers and related business.
In addition, competition could increase if changes in gaming restrictions in the United States and elsewhere result in the addition
of new gaming establishments located closer to our customers than our casinos. For example, while our Macau operations compete to
some extent with casinos located elsewhere in or near Asia, certain countries in the region have legalized casino gaming (including
Japan) and others (such as Taiwan and Thailand) may legalize casino gaming (or online gaming) in the future. Furthermore, currently
MGM Grand Paradise holds one of only six gaming concessions authorized by the Macau government to operate casinos in Macau. If
the Macau government were to allow additional competitors to operate in Macau through the grant of additional concessions or if
current concessionaires and subconcessionaires open additional facilities, we would face increased competition.
Most jurisdictions where casino gaming is currently permitted place numerical and/or geographical limitations on the issuance
of new gaming licenses. Although a number of jurisdictions in the United States and foreign countries are considering legalizing or
expanding casino gaming, in some cases new gaming operations may be restricted to specific locations and we expect that there will
be intense competition for any attractive new opportunities (which may include acquisitions of existing properties) that do arise.
Furthermore, certain jurisdictions, including Nevada and New Jersey, have also legalized forms of online gaming and other
jurisdictions, including Illinois, have legalized video gaming terminals. Additionally, in May 2018, the United States Supreme Court
overturned a federal ban on sports betting that had prohibited single-game gambling in most states, raising the potential for increased
competition in sports betting should additional states pass legislation to legalize it. The expansion of online gaming, sports betting,
and other types of gaming in these and other jurisdictions may further compete with our operations by reducing customer visitation
and spend in our casino resorts.
In addition to competition with other hotels, resorts and casinos, we compete with destination travel locations outside of the
markets in which we operate. Our failure to compete successfully in our various markets and to continue to attract customers could
adversely affect our business, financial condition, results of operations and cash flow.
14
Our businesses are subject to extensive regulation and the cost of compliance or failure to comply with such regulations may
adversely affect our business and results of operations. Our ownership and operation of gaming facilities is subject to extensive
regulation by the countries, states and provinces in which we operate. These laws, regulations and ordinances vary from jurisdiction to
jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming
operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to
disassociate ourselves from suppliers or business partners found unsuitable by the regulators or, alternatively, cease operations in that
jurisdiction. In addition, unsuitable activity on our part or on the part of our domestic or foreign unconsolidated affiliates or
subsidiaries in any jurisdiction could have a negative effect on our ability to continue operating in other jurisdictions. The regulatory
environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our
results of operations. For example, in 2018, the U.S. Department of Justice (“DOJ”) reversed its previously-issued opinion published
in 2011, which stated that interstate transmissions of wire communications that do not relate to a “sporting event or contest” fall
outside the purview of the Wire Act of 1961 (“Wire Act”). The DOJ’s updated opinion concluded instead that the Wire Act was not
uniformly limited to gaming relating to sporting events or contests and that certain of its provisions apply to non-sports-related
wagering activity. In June 2019, a federal district court in New Hampshire ruled that the DOJ’s new interpretation of the Wire Act was
erroneous and vacated DOJ’s new opinion. DOJ has appealed the decision of the district court to the U.S. Court of Appeals for the
First Circuit. An adverse ruling in the Court of Appeals or other disposition of the case may impact our ability to engage in online
internet gaming in the future. For a summary of gaming and other regulations that affect our business, see “Regulation and Licensing”
and Exhibit 99.1 to this Annual Report on Form 10-K.
Further, our directors, officers, key employees and investors in our properties must meet approval standards of certain state and
foreign regulatory authorities. If state regulatory authorities were to find such a person or investor unsuitable, we would be required to
sever our relationship with that person or the investor may be required to dispose of his, her or its interest in the property. State
regulatory agencies may conduct investigations into the conduct or associations of our directors, officers, key employees or investors
to ensure compliance with applicable standards. Certain public and private issuances of securities, borrowings under credit
agreements, guarantees of indebtedness and other transactions also require the approval of certain regulatory authorities.
Macau laws and regulations concerning gaming and gaming concessions are complex, and a court or administrative or
regulatory body may in the future render an interpretation of these laws and regulations, or issue new or modified regulations, that
differ from MGM China’s interpretation, which could have a material adverse effect on its business, financial condition and results of
operations. In addition, MGM China’s activities in Macau are subject to administrative review and approval by various government
agencies. We cannot assure you that MGM China will be able to obtain all necessary approvals, and any such failure to do so may
materially affect its long-term business strategy and operations. Macau laws permit redress to the courts with respect to administrative
actions; however, to date such redress is largely untested in relation to gaming issues.
In addition to gaming regulations, we are also subject to various federal, state, local and foreign laws and regulations affecting
businesses in general. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic
beverages, environmental matters, smoking, employees, currency transactions, taxation, zoning and building codes, and marketing and
advertising. For instance, we are subject to certain federal, state and local environmental laws, regulations and ordinances, including
the Clean Air Act, the Clean Water Act, the Resource Conservation Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act and the Oil Pollution Act of 1990. Under various federal, state and local environmental laws and
regulations, an owner or operator of real property may be held liable for the costs of removal or remediation of certain hazardous or
toxic substances or wastes located on its property, regardless of whether or not the present owner or operator knows of, or is
responsible for, the presence of such substances or wastes. Such laws and regulations could change or could be interpreted differently
in the future, or new laws and regulations could be enacted. For example, Illinois has enacted a ban on smoking in nearly all public
places, including bars, restaurants, work places, schools and casinos. In addition, effective January 1, 2019, smoking in casinos in
Macau, including MGM Macau and MGM Cotai, will only be permitted inside specially ventilated smoking rooms, rather than outside
smoking areas or VIP areas. The likelihood or outcome of similar legislation in other jurisdictions and referendums in the future
cannot be predicted, though any smoking ban would be expected to negatively impact our financial performance.
We also deal with significant amounts of cash in our operations and are subject to recordkeeping and reporting obligations as
required by various anti-money laundering laws and regulations. For instance, we are subject to regulation under the Currency and
Foreign Transactions Reporting Act of 1970, commonly known as the “Bank Secrecy Act,” which, among other things, requires us to
report to the Internal Revenue Service (“IRS”) any currency transactions in excess of $10,000 that occur within a 24-hour gaming day,
including identification of the individual(s) involved in the currency transaction. We are also required to report certain suspicious
activity where we know, suspect or have reason to suspect transactions, among other things, involve funds from illegal activity or are
intended to evade federal regulations or avoid reporting requirements or have no business or lawful purpose. In addition, under the
Bank Secrecy Act we are subject to various other rules and regulations involving reporting, recordkeeping and retention. Our
compliance with the Bank Secrecy Act is subject to periodic examinations by the IRS. Any such laws and regulations could change or
could be interpreted differently in the future, or new laws and regulations could be enacted. Any violations of the anti-money
laundering laws, including the Bank Secrecy Act, or regulations by any of our properties could have an adverse effect on our financial
condition, results of operations or cash flows.
15
Our business is affected by economic and market conditions in the jurisdictions in which we operate and in the locations in
which our customers reside. Our business is particularly sensitive to reductions in discretionary consumer spending and corporate
spending on conventions, trade shows and business development. Economic contraction, economic uncertainty or the perception by
our customers of weak or weakening economic conditions may cause a decline in demand for hotels, casino resorts, trade shows and
conventions, and for the type of luxury amenities we offer. In addition, changes in discretionary consumer spending or consumer
preferences could be driven by factors such as the increased cost of travel, an unstable job market, perceived or actual disposable
consumer income and wealth, outbreaks of contagious diseases or fears of war and acts of terrorism or other acts of violence.
Consumer preferences also evolve over time due to a variety of factors, including demographic changes, which, for instance, have
resulted in recent growth in consumer demand for non-gaming offerings. Our success depends in part on our ability to anticipate the
preferences of consumers and timely react to these trends, and any failure to do so may negatively impact our results of operations. In
particular, Aria, Bellagio and MGM Grand Las Vegas may be affected by economic conditions in the Far East, and all of our Nevada
resorts are affected by economic conditions in the United States, and California in particular. A recession, economic slowdown or any
other significant economic condition affecting consumers or corporations generally is likely to cause a reduction in visitation to our
resorts, which would adversely affect our operating results.
For example, in December 2019 a new strain of coronavirus (Covid-19) was reported in Wuhan, China. In order to mitigate the
spread of the virus, China has placed certain cities under quarantine and advised its citizens to avoid all non-essential travel and other
countries, including the U.S., have also restricted inbound travel from China. In addition, China implemented a temporary suspension
of its visa scheme that permits mainland Chinese to travel to Macau, and on February 4, 2020 the Hong Kong SAR government
temporarily suspended all ferry service from Hong Kong to Macau until further notice. The government of Macau also asked that all
gaming operators in Macau suspend casino operations for a 15-day period that commenced on February 5, 2020. As a result, MGM
Macau and MGM Cotai suspended all operations at their properties other than operations that were necessary to provide sufficient
non-gaming facilities to serve any remaining hotel guests. Operations at MGM Macau and MGM Cotai resumed on February 20,
2020; however, there are currently limits on the number of gaming tables allowed to operate and restrictions on the number of seats
available at each table, and the temporary suspension of the visa scheme and ferry service to Macau remains in place. The Company is
currently unable to predict the duration of the business disruption in Macau or the impact of the reduced customer traffic at the
Company’s properties as a result, but we expect the impact could have a material effect on MGM China’s results of operations for the
first quarter of 2020 and potentially thereafter. Although the outbreak has been largely concentrated in China, to the extent that the
virus impacts the willingness or ability of customers to travel to the Company’s properties in the United States (due to travel
restrictions, or otherwise), the Company’s domestic results of operations could also be negatively impacted. The extent to which the
coronavirus impacts the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of the coronavirus and any additional actions taken to contain it
from spreading.
In addition, since we expect a significant number of customers to come to MGM Macau and MGM Cotai (and, to a lesser
extent, our domestic properties) from mainland China, general economic and market conditions in China could impact our financial
prospects. Any slowdown in economic growth or changes to China’s current restrictions on travel and currency conversion or
movements, including market impacts resulting from China’s recent anti-corruption campaign and related tightening of liquidity
provided by non-bank lending entities and cross-border currency monitoring (including increased restrictions on Union Pay
withdrawals and other ATM limits on the withdrawal of patacas imposed by the government), could disrupt the number of visitors
from mainland China and/or the amounts they are willing to spend at our properties. Most recently, in July 2017, the Chinese
government, along with Macau authorities, implemented new facial recognition technology on ATM machines in Macau to strictly
enforce the “know your customer” regulations for mainland Chinese bank cardholders and in November 2017 new rules were adopted
to control the cross-border transportation of cash and bearer negotiable instruments. It is unclear whether these and other measures
will continue to be in effect, become more restrictive, or be readopted in the future. These developments have had, and any future
policy developments that may be implemented may have, the effect of reducing the number of visitors to Macau from mainland China,
which could adversely impact tourism and the gaming industry in Macau.
Furthermore, our operations in Macau may be impacted by competition for limited labor resources and our ability to retain and
hire employees. We compete with a large number of casino resorts for a limited number of employees and we anticipate that such
competition will grow in light of the opening of new developments in Macau. While we seek employees from outside of Macau to
adequately staff our resorts, certain Macau government policies limit our ability to import labor in certain job classifications (for
instance, the Macau government requires that we only hire Macau residents as dealers in our casinos) and any future government
policies that freeze or cancel our ability to import labor could cause labor costs to increase. Finally, because additional casino projects
have commenced operations and other projects are under construction, the existing transportation infrastructure may need to be
expanded to accommodate increased visitation to Macau. If transportation facilities to and from Macau are inadequate to meet the
demands of an increased volume of gaming customers visiting Macau, the desirability of Macau as a gaming destination, as well as
the results of operations at our developments in Macau, could be negatively impacted.
16
We may not realize all of the anticipated benefits of our MGM 2020 Plan. We have undertaken, and plan to undertake, several
initiatives to implement the first phase of our MGM 2020 Plan to reduce costs and further position us for growth. While we believe
these initiatives will exceed $200 million of annual Adjusted EBITDAR uplift by the end of 2020, compared to 2018 results, our
efforts may fail to achieve expected results. As part of the second phase of our MGM 2020 Plan, we also expect to invest in our digital
transformation to drive customer-centric strategy for revenue growth to drive additional EBITDAR uplift, which efforts may also fail
to achieve expected results. Execution of our MGM 2020 Plan is subject to numerous risks and uncertainties that may change at any
time, and, therefore, our actual Adjusted EBITDAR uplift may differ materially from what we anticipate.
The anticipated benefits of our asset light strategy, including the Bellagio Sale-Leaseback Transaction and MGP BREIT
Venture Transaction, may take longer to realize than expected or may not be realized at all. Our current growth strategy is to
pursue and execute on an asset-light business model, which involves a comprehensive review of our owned real estate assets to
determine whether those assets can be monetized efficiently to allow unlocked capital to be redeployed towards balance sheet
improvements, new growth opportunities and to return value to our shareholders. Our ability to execute on this strategy will depend on
our ability to identify accretive transactions that optimize the value of our remaining assets. There can be no assurances, however, that
we will be able to monetize our remaining real property assets on commercially reasonable terms, or at all, or that any anticipated
benefits from any such potential transactions will be realized.
Our ability to pay ongoing regular dividends to our stockholders is subject to the discretion of our board of directors and may be
limited by our holding company structure, existing and future debt agreements entered into by us or our subsidiaries and state law
requirements. We intend to pay ongoing regular quarterly cash dividends on our common stock; however, our board of directors may, in
its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. In addition, our ability
to pay dividends is restricted by certain covenants in our credit agreement, and because we are a holding company with no material direct
operations, we are dependent on receiving cash from our operating subsidiaries to generate the funds from operations necessary to pay
dividends on our common stock. We expect our subsidiaries will continue to generate significant cash flow necessary to maintain
quarterly dividend payments on our common stock; however, their ability to generate funds will be subject to their operating results, cash
requirements and financial condition, any applicable provisions of state law that may limit the amount of funds available to
us, and compliance with covenants and financial ratios related to existing or future agreements governing any indebtedness at such
subsidiaries and any limitations in other agreements such subsidiaries may have with third parties. In addition, each of the companies in
our corporate chain must manage its assets, liabilities and working capital in order to meet all of their respective cash obligations. As a
consequence of these various limitations and restrictions, future dividend payments may be reduced or eliminated. Any change in the
level of our dividends or the suspension of the payment thereof could adversely affect the market price of our common stock.
Nearly all of our domestic gaming facilities are leased and could experience risks associated with leased property, including
risks relating to lease termination, lease extensions, charges and our relationship with the lessor, which could have a material
adverse effect on our business, financial position or results of operations. Nearly all of our properties are subject to triple-net leases
that, in addition to rent, require us to pay: (1) all facility maintenance, (2) all insurance required in connection with the leased
properties and the business conducted on the leased properties, (3) taxes levied on or with respect to the leased properties (other than
taxes on the income of the lessor), (4) all capital expenditures, and (5) all utilities and other services necessary or appropriate for the
leased properties and the business conducted on the leased properties. We are responsible for paying these expenses notwithstanding
the fact that many of the benefits received in exchange for such costs shall accrue in part to the landlords as the owners of the
associated facilities. Furthermore, our obligation to pay rent as well as the other costs described above is absolute in virtually all
circumstances, regardless of the performance of the properties and other circumstances that might abate rent in leases that now place
these risks on the tenant, such as certain events of casualty and condemnation.
In addition, under the master lease with MGP, if some of our facilities should prove to be unprofitable or experience other issues
that would warrant ceasing operations, or if we should otherwise decide to exit a particular property, we would remain obligated for
lease payments and other obligations even if we decided to cease operations at those locations unless we are able to transfer the rights
with respect to a particular property in accordance with the requirements of the MGP master lease. Furthermore, our ability to transfer
our obligations under the MGP master lease to a third-party with respect to individual properties, should we decide to withdraw from a
particular location, is limited to non-Las Vegas properties and no more than two Las Vegas gaming properties, and is subject to
identifying a willing third-party who meets the requirements for a transferee set forth in the MGP master lease, which we may be
unable to find. In addition, we could incur special charges relating to the closing of such facilities including sublease termination
costs, impairment charges and other special charges that would reduce our net income and could have a material adverse effect on our
business, financial condition and results of operations.
James J. Murren, our Chairman, Daniel J. Taylor, one of our directors, and William J. Hornbuckle, and John M.
McManus, members of our senior management, may have actual or potential conflicts of interest because of their positions at
MGP. James J. Murren serves as our Chairman and as the Chairman of MGP. In addition, Daniel J. Taylor, one of our directors, is
17
also a director of MGP and William J. Hornbuckle, and John M. McManus, members of our senior management, are also directors of
MGP. While we have procedures in place to address such situations and the organizational documents with respect to MGP contain
provisions that reduce or eliminate duties (including fiduciary duties) to any MGP shareholder to the fullest extent permitted by law,
these overlapping positions could nonetheless create, or appear to create, potential conflicts of interest when our or MGP's
management and directors pursue the same corporate opportunities, such as potential acquisition targets, or face decisions that could
have different implications for us and MGP. Further, potential conflicts of interest could arise in connection with the resolution of any
dispute between us and MGP (or its subsidiaries) regarding the terms of the agreements governing the separation and the relationship,
between us and MGP, such as under the MGP master lease. Potential conflicts of interest could also arise if we and MGP enter into
any commercial or other adverse arrangements with each other in the future.
Despite our ability to exercise control over the affairs of MGP as a result of our ownership of the single outstanding Class B
share of MGP, MGP has adopted a policy under which certain transactions with us, including transactions involving consideration
in excess of $25 million, must be approved in accordance with certain specified procedures, which could affect our ability to
execute our operational and strategic objectives. We own the single outstanding Class B share of MGP. The Class B Share is a non-
economic interest in MGP which does not provide its holder any rights to profits or losses or any rights to receive distributions from
operations of MGP or upon liquidation or winding up of MGP, and which represents a majority of the voting power of MGP’s shares
so long as the holder of the Class B share and its controlled affiliates’ (excluding MGP) aggregate beneficial ownership of the
combined economic interests in MGP and the Operating Partnership does not fall below 30%. We, therefore, have the ability to
exercise significant control over MGP’s affairs, including control over the outcome of all matters submitted to MGP’s shareholders for
approval.
MGP’s operating agreement, however, provides that whenever a potential conflict of interest exists or arises between us or any
of our affiliates (other than MGP and its subsidiaries), on the one hand, and MGP or any of its subsidiaries, on the other hand, any
resolution or course of action by MGP’s board of directors in respect of such conflict of interest shall be conclusively deemed to be
fair and reasonable to MGP if it is (i) approved by a majority of a conflicts committee which consists solely of “independent” directors
(which MGP refers to as “Special Approval”) (such independence determined in accordance with the NYSE’s listing standards, the
standards established by the Exchange Act to serve on an audit committee of a board of directors and certain additional independence
requirements in our operating agreement), (ii) determined by MGP’s board of directors to be fair and reasonable to MGP or (iii)
approved by the affirmative vote of the holders of at least a majority of the voting power of MGP’s outstanding voting shares
(excluding voting shares owned by us and our affiliates). Furthermore, MGP’s operating agreement provides that any transaction with
a value, individually or in the aggregate, over $25 million between us or any of our affiliates (other than MGP and its subsidiaries), on
the one hand, and MGP or any of its subsidiaries, on the other hand (any such transaction (other than the exercise of rights by us or
any of our affiliates (other than MGP and its subsidiaries) under any of the material agreements entered into on the closing day of
MGP’s formation transactions), a “Threshold Transaction”), shall be permitted only if (i) Special Approval is obtained or (ii) such
transaction is approved by the affirmative vote of the holders of at least a majority of the voting power of MGP’s outstanding voting
shares (excluding voting shares owned by us and our affiliates).
As a result, certain transactions, including any Threshold Transactions that we may want to pursue with MGP and that could
have significant benefit to us may require Special Approval. There can be no assurance that the required approval will be obtained
with respect to these transactions either from a conflicts committee comprised of independent MGP directors or the affirmative vote of
a majority of the shares not held by us and our affiliates. The failure to obtain such requisite consent could materially affect our ability
and the cost to execute our operational and strategic objectives.
We have agreed not to have any interest or involvement in gaming businesses in China, Macau, Hong Kong and Taiwan,
other than through MGM China. As a result of the extension of the Macau gaming subconcession, we entered into a First Renewed
Deed of Non-Compete Undertakings with MGM China and Ms. Ho, Pansy Catilina Chiu King (“Ms. Ho”), pursuant to which we are
restricted from having any interest or involvement in gaming businesses in the People’s Republic of China, Macau, Hong Kong and
Taiwan, other than through MGM China. While gaming is currently prohibited in China, Hong Kong and Taiwan, if it is legalized in
the future our ability to compete in these locations could be limited until the earliest of (i) the date MGM China’s ordinary shares
cease to be listed on The Stock Exchange of Hong Kong Limited or (ii) the date when our ownership of MGM China shares is less
than 20% of the then-issued share capital of MGM China.
The Macau government can terminate MGM Grand Paradise’s subconcession under certain circumstances without
compensating MGM Grand Paradise, exercise its redemption right with respect to the subconcession, or refuse to grant MGM
Grand Paradise an extension of the subconcession in 2022, any of which would have a material adverse effect on our business,
financial condition, results of operations and cash flows. The Macau government has the right to unilaterally terminate the
subconcession in the event of fundamental non-compliance by MGM Grand Paradise with applicable Macau laws or MGM Grand
Paradise’s basic obligations under the subconcession contract. MGM Grand Paradise has the opportunity to remedy any such non-
compliance with its fundamental obligations under the subconcession contract within a period to be stipulated by the Macau
government. Upon such termination, all of MGM Grand Paradise’s casino area premises and gaming-related equipment would be
transferred automatically to the Macau government without compensation to MGM Grand Paradise, and we would cease to generate
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any revenues from these operations. We cannot assure you that MGM Grand Paradise will perform all of its obligations under the
subconcession contract in a way that satisfies the requirements of the Macau government.
Furthermore, under the subconcession contract, MGM Grand Paradise is obligated to comply with any laws and regulations that
the Macau government might promulgate in the future. We cannot assure you that MGM Grand Paradise will be able to comply with
these laws and regulations or that these laws and regulations would not adversely affect our ability to construct or operate our Macau
businesses. If any disagreement arises between MGM Grand Paradise and the Macau government regarding the interpretation of, or
MGM Grand Paradise’s compliance with, a provision of the subconcession contract, MGM Grand Paradise will be relying on a
consultation and negotiation process with the Macau government. During any consultation or negotiation, MGM Grand Paradise will
be obligated to comply with the terms of the subconcession contract as interpreted by the Macau government. Currently, there is no
precedent concerning how the Macau government will treat the termination of a concession or subconcession upon the occurrence of
any of the circumstances mentioned above. The loss of the subconcession would require us to cease conducting gaming operations in
Macau, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, the subconcession contract expires on June 26, 2022. Unless the subconcession is extended, or legislation with
regard to reversion of casino premises is amended, all of MGM Grand Paradise’s casino premises and gaming-related equipment will
automatically be transferred to the Macau government on that date without compensation to us, and we will cease to generate any
revenues from such gaming operations. Beginning on April 20, 2017, the Macau government may redeem the subconcession contract
by providing us at least one year’s prior notice. In the event the Macau government exercises this redemption right, MGM Grand
Paradise is entitled to fair compensation or indemnity. The amount of such compensation or indemnity will be determined based on
the amount of gaming and non-gaming revenue generated by MGM Grand Paradise, excluding the convention and exhibition
facilities, during the taxable year prior to the redemption, before deducting interest, depreciation and amortization, multiplied by the
number of remaining years before expiration of the subconcession. We cannot assure you that MGM Grand Paradise will be able to
renew or extend the subconcession contract on terms favorable to MGM Grand Paradise or at all. We also cannot assure you that if the
subconcession is redeemed, the compensation paid to MGM Grand Paradise will be adequate to compensate for the loss of future
revenues.
MGM Grand Paradise is dependent upon gaming promoters for a significant portion of gaming revenues in Macau. Gaming
promoters, who promote gaming and draw high-end customers to casinos, are responsible for a significant portion of MGM Grand
Paradise’s gaming revenues in Macau. With the rise in gaming in Macau and the recent reduction in the number of licensed gaming
promoters in Macau and in the number of VIP rooms operated by licensed gaming promoters, the competition for relationships with
gaming promoters has increased. While MGM Grand Paradise is undertaking initiatives to strengthen relationships with gaming
promoters, there can be no assurance that it will be able to maintain, or grow, relationships with gaming promoters. In addition,
continued reductions in, and new regulations governing, the gaming promoter segment may result in the closure of additional VIP
rooms in Macau, including VIP rooms at MGM Macau and MGM Cotai. If MGM Grand Paradise is unable to maintain or grow
relationships with gaming promoters, or if gaming promoters are unable to develop or maintain relationships with our high-end
customers (or if, as a result of recent market conditions in Macau, gaming promoters encounter difficulties attracting patrons to come
to Macau or experience decreased liquidity limiting their ability to grant credit to patrons), MGM Grand Paradise’s ability to grow
gaming revenues will be hampered. Furthermore, if existing VIP rooms at MGM Macau and MGM Cotai are closed there can be no
assurance that MGM Grand Paradise will be able to locate acceptable gaming promoters to run such VIP rooms in the future in a
timely manner, or at all.
In addition, the quality of gaming promoters is important to MGM Grand Paradise’s and our reputation and ability to continue to
operate in compliance with gaming licenses. While MGM Grand Paradise strives for excellence in associations with gaming
promoters, we cannot assure you that the gaming promoters with whom MGM Grand Paradise is or becomes associated will meet the
high standards insisted upon. If a gaming promoter falls below MGM Grand Paradise’s standards, MGM Grand Paradise or we may
suffer reputational harm or possibly sanctions from gaming regulators with authority over our operations.
We also grant credit lines to certain gaming promoters and any adverse change in the financial performance of those gaming
promoters may impact the recoverability of these loans.
The future recognition of our foreign tax credit deferred tax asset is uncertain, and the amount of valuation allowance we
may apply against such deferred tax asset may change materially in future periods. We currently have significant deferred tax assets
resulting from foreign tax credit carryforwards that are available to reduce potential taxable foreign-sourced income in future periods,
including the recapture of overall domestic losses to the extent of U.S. taxable income. We evaluate our foreign tax credit deferred tax
asset for recoverability and record a valuation allowance to the extent that we determine it is not more likely than not such asset will
be recovered. This evaluation is based on all available evidence, including assumptions concerning future U.S. operating profits and
foreign source income. As a result, significant judgment is required in assessing the possible need for a valuation allowance and
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changes to our assumptions could result in a material change in the valuation allowance with a corresponding impact on the provision
for income taxes in the period including such change.
Extreme weather conditions or climate change may cause property damage or interrupt business, which could harm our
business and results of operations. Certain of our properties are located in areas that may be subject to extreme weather conditions,
including, but not limited to, hurricanes and winter storms in the United States and severe typhoons in Macau. Such extreme weather
conditions may interrupt our operations, damage our properties, and reduce the number of customers who visit our facilities in such
areas. In addition, our operations could be adversely impacted by a drought or other cause of water shortage. A severe drought of
extensive duration experienced in Las Vegas or in the other regions in which we operate could adversely affect our business and
results of operations. Although we maintain both property and business interruption insurance coverage for certain extreme weather
conditions, such coverage is subject to deductibles and limits on maximum benefits, including limitation on the coverage period for
business interruption, and we cannot assure you that we will be able to fully insure such losses or fully collect, if at all, on claims
resulting from such extreme weather conditions. Furthermore, such extreme weather conditions may interrupt or impede access to our
affected properties and may cause visits to our affected properties to decrease for an indefinite period, which would have a material
adverse effect on our business, financial condition, results of operations and cash flows.
Because a significant number of our major gaming resorts are concentrated on the Las Vegas Strip, we are subject to greater
risks than a gaming company that is more geographically diversified. Given that a significant number of our major resorts are
concentrated on the Las Vegas Strip, our business may be significantly affected by risks common to the Las Vegas tourism industry.
For example, the cost and availability of air services and the impact of any events that disrupt air travel to and from Las Vegas can
adversely affect our business. We cannot control the number or frequency of flights to or from Las Vegas, but we rely on air traffic for
a significant portion of our visitors. Reductions in flights by major airlines as a result of higher fuel prices or lower demand can impact
the number of visitors to our resorts. Additionally, there is one principal interstate highway between Las Vegas and Southern
California, where a large number of our customers reside. Capacity constraints of that highway or any other traffic disruptions may
also affect the number of customers who visit our facilities.
We extend credit to a large portion of our customers and we may not be able to collect gaming receivables. We conduct a
portion of our gaming activities on a credit basis through the issuance of markers which are unsecured instruments. Table games
players typically are issued more markers than slot players, and high-end players typically are issued more markers than patrons who
tend to wager lower amounts. High-end gaming is more volatile than other forms of gaming, and variances in win-loss results
attributable to high-end gaming may have a significant positive or negative impact on cash flow and earnings in a particular quarter.
Furthermore, the loss or a reduction in the play of the most significant of these high-end customers could have an adverse effect on our
business, financial condition, results of operations and cash flows. We issue markers to those customers whose level of play and
financial resources warrant, in the opinion of management, an extension of credit. In addition, MGM Grand Paradise extends credit to
certain gaming promoters and those promoters can extend credit to their customers. Uncollectible receivables from high-end
customers and gaming promoters could have a significant impact on our results of operations.
While gaming debts evidenced by markers and judgments on gaming debts are enforceable under the current laws of Nevada,
and Nevada judgments on gaming debts are enforceable in all states under the Full Faith and Credit Clause of the U.S. Constitution,
other jurisdictions may determine that enforcement of gaming debts is against public policy. Although courts of some foreign nations
will enforce gaming debts directly and the assets in the U.S. of foreign debtors may be reached to satisfy a judgment, judgments on
gaming debts from United States courts are not binding on the courts of many foreign nations.
Furthermore, we expect that MGM China will be able to enforce its gaming debts only in a limited number of jurisdictions,
including Macau. To the extent MGM China gaming customers and gaming promoters are from other jurisdictions, MGM China may
not have access to a forum in which it will be able to collect all of its gaming receivables because, among other reasons, courts of
many jurisdictions do not enforce gaming debts and MGM China may encounter forums that will refuse to enforce such debts.
Moreover, under applicable law, MGM China remains obligated to pay taxes on uncollectible winnings from customers.
Even where gaming debts are enforceable, they may not be collectible. Our inability to collect gaming debts could have a
significant negative impact on our operating results.
We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets which could negatively affect
our future profits. We review our goodwill, intangible assets and long-lived assets on an annual basis and during interim reporting
periods in accordance with the authoritative guidance. Significant negative trends, reduced estimates of future cash flows, disruptions
to our business, slower growth rates or lack of growth have resulted in write-downs and impairment charges in the past and, if one or
more of such events occurs in the future, additional impairment charges or write-downs may be required in future periods. If we are
required to record additional impairment charges or write-downs, this could have a material adverse impact on our consolidated results
of operations.
20
Leisure and business travel, especially travel by air, are particularly susceptible to global geopolitical events, such as terrorist
attacks, other acts of violence or acts of war or hostility or the outbreak of infectious diseases. We are dependent on the willingness
of our customers to travel by air. Since most of our customers travel by air to our Las Vegas and Macau properties, any terrorist act or
other acts of violence, outbreak of hostilities, escalation of war, or any actual or perceived threat to the security of travel by air could
adversely affect our financial condition, results of operations and cash flows. In addition, the outbreak of infectious diseases, such as
the recent coronavirus, may severely disrupt domestic and international travel. For instance, the coronavirus outbreak has resulted in
several countries, including United States, issuing travel warnings and suspending flights to and from China. In addition, on February
4, 2020, the Hong Kong SAR government temporarily suspended all ferry service from Hong Kong to Macau, until further notice. We
are unable to predict the extent to which disruptions to travel as a result of the coronavirus will impact our results of operations but we
expect that the current disruption will have an adverse effect on MGM China’s results of operations for the first quarter of 2020 and
potentially thereafter. Furthermore, although we have been able to purchase some insurance coverage for certain types of terrorist acts,
insurance coverage against loss or business interruption resulting from war and some forms of terrorism continues to be unavailable.
Co-investing in our properties, including our investment in CityCenter, decreases our ability to manage risk. In addition to
acquiring or developing hotels and resorts or acquiring companies that complement our business directly, we have from time to time
invested, and expect to continue to invest, in properties or businesses as a co-investor. Co-investors often have shared control over the
operation of the property or business. Therefore, the operation of such properties or businesses is subject to inherent risk due to the
shared nature of the enterprise and the need to reach agreements on material matters. In addition, investments with other investors may
involve risks such as the possibility that the co-investor might become bankrupt or not have the financial resources to meet its
obligations, or have economic or business interests or goals that are inconsistent with our business interests or goals, or be in a
position to take action contrary to our instructions or requests or contrary to our policies or objectives. Consequently, actions by a co-
investor might subject the properties or businesses owned by such entities to additional risk. Further, we may be unable to take action
without the approval of our co-investors, or our co-investors could take actions binding on the property without our consent.
Additionally, should a co-investor become bankrupt, we could become liable for its share of liabilities.
For instance, CityCenter, which is 50% owned and managed by us, has a significant amount of indebtedness, which could
adversely affect its business and its ability to meet its obligations. If CityCenter is unable to meet its financial commitments and we
and our co-investor are unable to support future funding requirements, as necessary, such event could have adverse financial
consequences to us. In addition, the agreements governing CityCenter’s indebtedness subject CityCenter and its subsidiaries to
significant financial and other restrictive covenants, including restrictions on its ability to incur additional indebtedness, place liens
upon assets, make distributions to us, make certain investments, consummate certain asset sales, enter into transactions with affiliates
(including us) and merge or consolidate with any other person or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets. The CityCenter credit facility also includes certain financial covenants that require CityCenter to
maintain a maximum total net leverage ratio (as defined in CityCenter’s credit facility) for each quarter. We cannot be sure that
CityCenter will be able to meet this test in the future or that the lenders will waive any failure to meet the test.
Any of our future construction, development or expansion projects will be subject to significant development and construction
risks, which could have a material adverse impact on related project timetables, costs and our ability to complete the projects.
Any of our future construction, development or expansion projects will be subject to a number of risks, including:
•
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•
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•
•
lack of sufficient, or delays in the availability of, financing;
changes to plans and specifications;
engineering problems, including defective plans and specifications;
shortages of, and price increases in, energy, materials and skilled and unskilled labor, and inflation in key supply markets;
delays in obtaining or inability to obtain necessary permits, licenses and approvals;
changes in laws and regulations, or in the interpretation and enforcement of laws and regulations, applicable to gaming,
leisure, residential, real estate development or construction projects;
labor disputes or work stoppages;
availability of qualified contractors and subcontractors;
disputes with and defaults by contractors and subcontractors;
personal injuries to workers and other persons;
environmental, health and safety issues, including site accidents and the spread of viruses;
•
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• weather interferences or delays;
•
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fires, typhoons and other natural disasters;
geological, construction, excavation, regulatory and equipment problems; and
other unanticipated circumstances or cost increases.
21
The occurrence of any of these development and construction risks could increase the total costs, delay or prevent the
construction, development, expansion or opening or otherwise affect the design and features of any future projects which we might
undertake. In addition, the regulatory approvals associated with our development projects may require us to open future casino resorts
by a certain specified time and to the extent we are unable to meet those deadlines, and any such deadlines are not extended, we may
lose our regulatory approval to open a casino resort in a proposed jurisdiction, or incur payment penalties in connection with any
delays which could have an adverse effect on our results of operations and financial condition.
We also make significant capital expenditures to maintain and upgrade our resorts, which may disrupt operations and displace
revenue at the properties, including revenue lost while rooms, restaurants and meeting spaces are under renovation and out of service.
Our insurance coverage may not be adequate to cover all possible losses that our properties could suffer. In addition, our
insurance costs may increase and we may not be able to obtain similar insurance coverage in the future. Although we have “all
risk” property insurance coverage for our operating properties, which covers damage caused by a casualty loss (such as fire, natural
disasters, acts of war, or terrorism or other acts of violence), each policy has certain exclusions. In addition, our property insurance
coverage is in an amount that may be significantly less than the expected replacement cost of rebuilding the facilities if there was a
total loss. Our level of insurance coverage also may not be adequate to cover all losses in the event of a major casualty. In addition,
certain casualty events, such as labor strikes, nuclear events, acts of war, loss of income due to cancellation of room reservations or
conventions due to fear of terrorism or other acts of violence, loss of electrical power due to catastrophic events, rolling blackouts or
otherwise, deterioration or corrosion, insect or animal damage, and pollution, may not be covered at all under our policies. Therefore,
certain acts could expose us to substantial uninsured losses.
In addition to the damage caused to our properties by a casualty loss, we may suffer business disruption as a result of these
events or be subject to claims by third parties that may be injured or harmed. While we carry business interruption insurance and
general liability insurance, this insurance may not be adequate to cover all losses in any such event. Furthermore, the leases we entered
into in connection with the MGP BREIT Venture Transaction and the Bellagio BREIT Venture require us to maintain specified
insurance coverage. We cannot assure you that we will continue to be able to obtain the types and limits of insurance coverage
required by these leases and, to the extent such required insurance coverage cannot be obtained at commercially reasonable cost or at
all, then we would need to obtain amendments to the leases or face a default by the applicable tenant under the lease, which could
have material adverse effect on our business.
We renew our insurance policies (other than our builder’s risk insurance) on an annual basis. The cost of coverage may become
so high that we may need to further reduce our policy limits, further increase our deductibles, or agree to certain exclusions from our
coverage.
Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our
business. The development of intellectual property is part of our overall business strategy, and we regard our intellectual property to
be an important element of our success. While our business as a whole is not substantially dependent on any one trademark or
combination of several of our trademarks or other intellectual property, we seek to establish and maintain our proprietary rights in our
business operations through the use of trademarks. We file applications for, and obtain trademarks in, the United States and in foreign
countries where we believe filing for such protection is appropriate. Despite our efforts to protect our proprietary rights, parties may
infringe our trademarks and our rights may be invalidated or unenforceable. The laws of some foreign countries do not protect
proprietary rights to as great an extent as the laws of the United States. Monitoring the unauthorized use of our intellectual property is
difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the
proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resource. We cannot assure you
that all of the steps we have taken to protect our trademarks in the United States and foreign countries will be adequate to prevent
imitation of our trademarks by others. The unauthorized use or reproduction of our trademarks could diminish the value of our brand
and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.
22
We are subject to risks associated with doing business outside of the United States. Our operations outside of the United States
are subject to risks that are inherent in conducting business under non-United States laws, regulations and customs. In particular, the
risks associated with the operation of MGM China or any future operations in which we may engage in any other foreign territories,
include:
•
•
•
•
•
•
•
•
•
•
•
•
changes in laws and policies that govern operations of companies in Macau or other foreign jurisdictions;
changes in non-United States government programs;
possible failure by our employees or agents to comply with anti-bribery laws such as the United States Foreign Corrupt
Practices Act and similar anti-bribery laws in other jurisdictions;
general economic conditions and policies in China, including restrictions on travel and currency movements;
difficulty in establishing, staffing and managing non-United States operations;
different labor regulations;
changes in environmental, health and safety laws;
outbreaks of diseases or epidemics, including the recent coronavirus outbreak;
potentially negative consequences from changes in or interpretations of tax laws;
political instability and actual or anticipated military and political conflicts;
economic instability and inflation, recession or interest rate fluctuations; and
uncertainties regarding judicial systems and procedures.
These risks, individually or in the aggregate, could have an adverse effect on our results of operations and financial condition.
We are also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. If the
United States dollar strengthens in relation to the currencies of other countries, our United States dollar reported income from sources
where revenue is denominated in the currencies of other such countries will decrease.
Any violation of the Foreign Corrupt Practices Act or any other similar anti-corruption laws could have a negative impact on
us. A significant portion of our revenue is derived from operations outside the United States, which exposes us to complex foreign and
U.S. regulations inherent in doing cross-border business and in each of the countries in which we transact business. We are subject to
compliance with the United States Foreign Corrupt Practices Act (“FCPA”) and other similar anti-corruption laws, which generally
prohibit companies and their intermediaries from making improper payments to foreign government officials for the purpose of
obtaining or retaining business. While our employees and agents are required to comply with these laws, we cannot be sure that our
internal policies and procedures will always protect us from violations of these laws, despite our commitment to legal compliance and
corporate ethics. Violations of these laws by us or our non-controlled ventures may result in severe criminal and civil sanctions as well
as other penalties against us, and the SEC and U.S. Department of Justice continue to vigorously pursue enforcement of the FCPA.
The occurrence or allegation of these types of risks may adversely affect our business, performance, prospects, value, financial
condition, and results of operations.
We face risks related to pending claims that have been, or future claims that may be, brought against us. Claims have been
brought against us and our subsidiaries in various legal proceedings, and additional legal and tax claims arise from time to time. We
may not be successful in the defense or prosecution of our current or future legal proceedings, which could result in settlements or
damages that could significantly impact our business, financial condition, results of operations and reputation. Please see the further
discussion in “Legal Proceedings” and Note 12 in the accompanying consolidated financial statements.
A significant portion of our labor force is covered by collective bargaining agreements. Work stoppages and other labor
problems could negatively affect our business and results of operations. As of December 31, 2019, approximately 38,000 of our
employees are covered by collective bargaining agreements. A prolonged dispute with the covered employees or any labor unrest,
strikes or other business interruptions in connection with labor negotiations or others could have an adverse impact on our operations,
and adverse publicity in the marketplace related to union messaging could further harm our reputation and reduce customer demand
for our services. Also, wage and/or benefit increases resulting from new labor agreements may be significant and could also have an
adverse impact on our results of operations. To the extent that our non-union employees join unions, we would have greater exposure
to risks associated with labor problems. Furthermore, we may have, or acquire in the future, multi-employer plans that are classified as
“endangered,” “seriously endangered,” or “critical” status. For instance, Borgata’s most significant plan is the Legacy Plan of the
UNITE HERE Retirement Fund, which has been listed in “critical status” and is subject to a rehabilitation plan. Plans in these
classifications must adopt measures to improve their funded status through a funding improvement or rehabilitation plan, which may
require additional contributions from employers (which may take the form of a surcharge on benefit contributions) and/or
modifications to retiree benefits. In addition, while Borgata has no current intention to withdraw from these plans, a withdrawal in the
future could result in the incurrence of a contingent liability that would be payable in an amount and at such time (or over a period of
time) that would vary based on a number of factors at the time of (and after) withdrawal. Any such additional costs may be significant.
23
Our business is particularly sensitive to energy prices and a rise in energy prices could harm our operating results. We are a
large consumer of electricity and other energy and, therefore, higher energy prices may have an adverse effect on our results of
operations. Accordingly, increases in energy costs may have a negative impact on our operating results. Additionally, higher
electricity and gasoline prices that affect our customers may result in reduced visitation to our resorts and a reduction in our revenues.
The failure to maintain the integrity of our computer systems and customer information could result in damage to our
reputation and/or subject us to fines, payment of damages, lawsuits and restrictions on our use of data. We collect and process
information relating to our employees, guests, and others for various business purposes, including marketing and promotional
purposes. The collection and use of personal data are governed by privacy laws and regulations enacted by the various states, the
United States and other jurisdictions around the world. Privacy laws and regulations continue to evolve and on occasion may be
inconsistent (or conflict) between jurisdictions. Various federal, state and foreign legislative or regulatory bodies may enact or adopt
new or additional laws and regulations concerning privacy, data retention, data transfer, and data protection. For example, the
European Union has adopted a data protection regulation known as the General Data Protection Regulation, which became fully
enforceable in May 2018, that includes operational and compliance requirements with significant penalties for non-compliance. In
addition, California has enacted a new privacy law, known as the California Consumer Privacy Act of 2018, which went into effect on
January 1, 2020 and provides some of the strongest privacy requirements in the United States.
Compliance with applicable privacy laws and regulations may increase our operating costs and/or adversely impact our ability
to market our products, properties and services to our guests. In addition, non-compliance with applicable privacy laws and
regulations by us (or in some circumstances non-compliance by third parties engaged by us), including accidental loss, inadvertent
disclosure, unapproved dissemination or a breach of security on systems storing our data may result in damage to our reputation
and/or subject us to fines, payment of damages, lawsuits or restrictions on our use or transfer of data. We rely on proprietary and
commercially available systems, software, and tools to provide security for processing of customer and employee information, such as
payment card and other confidential or proprietary information. Our data security measures are reviewed and evaluated regularly;
however, they might not protect us against increasingly sophisticated and aggressive threats including, but not limited to, computer
malware, viruses, hacking and phishing attacks by third parties. In addition, while we maintain cyber risk insurance to assist in the
cost of recovery from a significant cyber event, such coverage may not be sufficient.
We also rely extensively on computer systems to process transactions, maintain information and manage our businesses.
Disruptions in the availability of our computer systems, through cyber-attacks or otherwise, could impact our ability to service our
customers and adversely affect our sales and the results of operations. For instance, there has been an increase in criminal cyber
security attacks against companies where customer and company information has been compromised and company data has been
destroyed. Our information systems and data, including those we maintain with our third-party service providers, may be subject to
cyber security breaches in the future. In addition, our third-party information system service providers face risks relating to cyber
security similar to ours, and we do not directly control any of such parties’ information security operations. A significant theft, loss or
fraudulent use of customer or company data maintained by us or by a third-party service provider could have an adverse effect on our
reputation, cause a material disruption to our operations, and result in remediation expenses, regulatory penalties and litigation by
customers and other parties whose information was subject to such attacks, all of which could have a material adverse effect on our
business, results of operations and cash flows.
We are subject to risks related to corporate social responsibility and reputation. Many factors influence our reputation and the
value of our brands including the perception held by our customers, business partners, other key stakeholders and the communities in
which we do business. Our business faces increasing scrutiny related to environmental, social and governance activities and risk
of damage to our reputation and the value of our brands if we fail to act responsibly in a number of areas, such as diversity and
inclusion, environmental stewardship, supply chain management, climate change, workplace conduct, human rights, philanthropy and
support for local communities. Any harm to our reputation could impact employee engagement and retention and the willingness of
customers and our partners to do business with us, which could have a material adverse effect on our business, results of operations
and cash flows.
We may seek to expand through investments in other businesses and properties or through alliances or acquisitions, and we
may also seek to divest some of our properties and other assets, any of which may be unsuccessful. We intend to consider strategic
and complementary acquisitions and investments in other businesses, properties or other assets. Furthermore, we may pursue any of
these opportunities in alliance with third parties, including MGP. Acquisitions and investments in businesses, properties or assets, as
well as these alliances, are subject to risks that could affect our business, including risks related to:
•
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•
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spending cash and incurring debt;
assuming contingent liabilities;
unanticipated issues in integrating information, communications and other systems;
unanticipated incompatibility of purchasing, logistics, marketing and administration methods;
retaining key employees; and
consolidating corporate and administrative infrastructures.
24
We cannot assure you that we will be able to identify opportunities or complete transactions on commercially reasonable terms
or at all, or that we will actually realize any anticipated benefits from such acquisitions, investments or alliances. In addition, even if
we are able to successfully integrate new assets and businesses, the integration of such assets and businesses may result in
unanticipated costs, competitive responses, loss or customer or other business relationships and the diversion of management
attention.
In addition, we periodically review our business to identify properties or other assets that we believe either are non-core, no
longer complement our business, are in markets which may not benefit us as much as other markets or could be sold at significant
premiums. From time to time, we may attempt to sell these identified properties and assets. There can be no assurance, however, that
we will be able to complete dispositions on commercially reasonable terms or at all.
If the jurisdictions in which we operate increase gaming taxes and fees, as well as other taxes and fees, our results could be
adversely affected. State and local authorities raise a significant amount of revenue through taxes and fees, including taxes and fees on
gaming activities. From time to time, legislators and government officials have proposed changes in tax laws, or in the administration
of such laws, affecting the gaming industry. Periods of economic downturn or uncertainty and budget deficits may intensify such
efforts to raise revenues through increases in gaming taxes. If the jurisdictions in which we operate were to increase taxes, including
gaming taxes or fees, depending on the magnitude of the increase and any offsetting factors, our financial condition and results of
operations could be materially adversely affected. For instance, income generated from gaming operations of MGM Grand Paradise
currently has the benefit of a corporate tax exemption in Macau through March 31, 2020, which exempts us from paying the 12%
complementary tax on profits generated by the operation of casino games. We have applied for an extension of such exemption to
June 26, 2022 to run concurrent with its extended sub-concession. While our competitors have received additional extensions of their
complementary tax exemptions through June 26, 2022, which runs concurrent with the end of the term of their gaming concessions,
and we believe MGM Grand Paradise should also be entitled to such extension in order to ensure non-discriminatory treatment among
gaming concessionaires and sub-concessionaires, a requirement under Macanese law, due to the uncertainty concerning taxation after
the subconcession renewal process, we cannot assure you that any extensions of the tax exemption will be granted beyond March 31,
2020.
Conflicts of interest may arise because certain of our directors and officers are also directors of MGM China, the holding
company for MGM Grand Paradise which owns and operates MGM Macau and MGM Cotai. As a result of the initial public offering
of shares of MGM China common stock in 2011, MGM China has stockholders who are not affiliated with us, and we and certain of our
officers and directors who also serve as officers and/or directors of MGM China may have conflicting fiduciary obligations to our
stockholders and to the minority stockholders of MGM China. Decisions that could have different implications for us and MGM China,
including contractual arrangements that we have entered into or may in the future enter into with MGM China, may give rise to the
appearance of a potential conflict of interest or an actual conflict of interest.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 2.
PROPERTIES
The location and general characteristics of our properties are provided in Part I, Item 1. Business. As detailed in the
aforementioned section, the majority of our facilities are subject to leases of the underlying real estate assets, which among other
things, includes the land underlying the facility and the buildings used in the operations.
The following table lists certain of our land holdings as of December 31, 2019.
Las Vegas Strip Resorts
Name and Location
Bellagio(1)....................................................................
MGM Grand Las Vegas(5)...........................................
Mandalay Bay(2)(5) .......................................................
The Mirage(2)...............................................................
Luxor(2)........................................................................
Excalibur(2)..................................................................
New York-New York(2)...............................................
Park MGM(2) ...............................................................
Regional Operations
MGM Grand Detroit (Detroit, Michigan)(2)................
Beau Rivage (Biloxi, Mississippi)(2) ...........................
Gold Strike (Tunica, Mississippi)(2)............................
MGM National Harbor (Prince George's County,
Maryland)(2).................................................................
Borgata (Atlantic City, New Jersey)(2)........................
MGM Springfield (Springfield, Massachusetts).........
MGM Northfield Park (Northfield, Ohio)(2) ...............
Empire City (Yonkers, New York)(2)..........................
MGM China
MGM Macau(3)............................................................
MGM Cotai(3)..............................................................
Approximate
Acres
Notes
Approximately two acres of the site are subject to two
ground leases.(4)
Includes 15 acres of land located across the Las Vegas Strip
from Luxor.
Includes three acres of land related to The Park entertainment
district development located between Park MGM and New
York-New York.
10 acres are subject to a tidelands lease.
All 23 acres are subject to a ground lease.
11 acres are subject to ground leases.
Includes 57 acres of land adjacent to the property.
77
102
124
77
73
51
23
21
27
42
24
23
46
14
113
97
10
18
(1) Subject to a lease agreement between a subsidiary of ours and the Bellagio BREIT Venture, in which the land and the real estate assets are owned and leased from
the Bellagio BREIT Venture.
(2) Subject to a master lease agreement between a subsidiary of ours and a subsidiary of the Operating Partnership, in which the land and the real estate assets are
leased from a subsidiary of the Operating Partnership.
(3) Subject to separate land concession agreements with the Macau government.
(4) Beginning January 1, 2020, approximately two acres subject to a ground lease with a third party expired, reducing the total acres to approximately 75 acres.
(5) Beginning February 14, 2020, subject to a master lease agreement between a subsidiary of ours and MGP BREIT Venture, in which the land and the real estate
assets are leased from MGP BREIT Venture.
As of December 31, 2019, the land and substantially all of the assets of MGM Grand Las Vegas secured the obligations under
our senior credit facility. In addition, the senior credit facility was secured by a pledge of the equity or limited liability company
interests of the subsidiaries that own MGM Grand Las Vegas and Bellagio. In connection with the MGP BREIT Venture Transaction,
on February 14, 2020, we entered into a new unsecured credit agreement which provides that we will grant a security interest in our
Operating Partnership units in the future to the extent our leverage ratio exceeds certain thresholds.
The land and substantially all of the assets of MGP’s properties, indicated within the table above, other than MGM National
Harbor and Empire City, secure the obligations under the Operating Partnership’s credit agreement. These borrowings are non-
recourse to us.
The land and substantially all of the assets of Bellagio secure the obligations under the Bellagio BREIT Venture indebtedness.
We provide a shortfall guarantee on the principal amount of such indebtedness (and any interest accrued and unpaid thereon) as
further described within “Risk Factors – Risks Related to Our Business.”
The land and substantially all of the assets of MGM Grand Las Vegas and Mandalay Bay secure the obligations under MGP
BREIT Venture’s indebtedness. We provide a shortfall guarantee on the principal amount of such indebtedness (and any interest
accrued and unpaid thereon) as further described within “Risk Factors – Risks Related to Our Business.”
Other than as described above, none of our properties are subject to any major encumbrance.
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ITEM 3.
LEGAL PROCEEDINGS
October 1 litigation. We and/or certain of our subsidiaries were named as defendants in a number of lawsuits related to the
October 1, 2017 shooting in Las Vegas. The matters involve in large degree the same legal and factual issues, each case being filed on
behalf of individuals who are seeking damages for emotional distress, physical injury, medical expenses, economic damages and/or
wrongful death. Lawsuits were first filed in October 2017 and include actions originally filed in the District Court of Clark County,
Nevada and in the Superior Court of Los Angeles County, California. In June 2018, we removed to federal court all actions that
remained pending in California and Nevada state courts. We also initiated declaratory relief actions in federal courts in various
districts against individuals who had sued or stated an intent to sue.
In connection with the mediation of these matters, we and law firms representing plaintiffs in the majority of pending matters
and purporting to represent substantially all claimants known to us (collectively, the “Claimants”) have entered into a settlement
agreement (the “Settlement Agreement”) whereby, subject to the satisfaction of certain monetary and non-monetary conditions, our
insurance carriers will deposit funds into a settlement fund covering the plaintiffs and certain other cases that emerged or were filed
prior to October 1, 2019. Pursuant to the terms of the Settlement Agreement, we expect that the total amount placed in the fund to be
between $735 million and $800 million, subject to and depending on obtaining a minimum level of participation with escalators based
on greater participation increasing the amount payable up to $800 million in the event of 100% participation by certain categories of
claimants, as defined in the Settlement Agreement. We have $751 million of insurance coverage available to fund. Following the
mediation a few additional lawsuits were filed against us and/or certain of our subsidiaries. While it is possible that these lawsuits may
be resolved as part of the Settlement Agreement, no assurances can be made that they will be included. Although we continue to
believe we are not legally responsible for the perpetrator’s criminal acts, in the interest of avoiding protracted litigation and the related
impact on the community, we believed it was in the best interests of all parties involved to negotiate and enter into the Settlement
Agreement. As a result of the foregoing, we believe that it is probable a loss will be incurred and, as of December 31, 2019, we
accrued a liability of $735 million, which represents the low end of the range of probable loss. In addition, we recorded an insurance
receivable of $735 million, which represents the entire amount of the liability recorded for the settlement of these cases. While we
intend for substantially all claimants to be covered by the Settlement Agreement, it remains possible that certain claimants may not
join the settlement. In addition, no assurances can be given that the significant conditions to the Settlement Agreement will be satisfied
by the Claimants.
If the conditions in the Settlement Agreement are not satisfied and the mediation stay is lifted, we are currently unable to
reliably predict the future developments in, outcome of, and economic costs and other consequences of any such litigation related to
this matter. We will continue to investigate the factual and legal defenses, and evaluate these matters based on subsequent events, new
information and future circumstances. We intend to defend against any such lawsuits and believe we ultimately should prevail, but
litigation of this type is inherently unpredictable. Although there are significant procedural, factual and legal issues to be resolved that
could significantly affect our belief as to the possibility of liability, we currently believe that it is reasonably possible that we could
incur liability in connection with certain of these lawsuits. The foregoing determination was made in accordance with generally
accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability on our part or any of our affiliates.
Given that these cases would be in the early stages, and in light of the uncertainties surrounding them, we do not currently possess
sufficient information to determine a range of reasonably possible liability. The insurance carriers have not expressed a reservation of
rights or coverage defense that affects our evaluation of potential losses in connection with these claims. Our general liability
insurance coverage provides, as part of the contractual “duty to defend”, payment of legal fees and associated costs incurred to defend
covered lawsuits that are filed arising from the October 1, 2017 shooting in Las Vegas. Payment of such fees and costs is in addition to
(and not limited by) the limits of the insurance policies and does not erode the total liability coverage available.
Other. We are a party to various legal proceedings, most of which relate to routine matters incidental to our business.
Management does not believe that the outcome of such proceedings will have a material adverse effect on our financial position,
results of operations or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
27
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Common Stock Information
Our common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “MGM.”
There were approximately 3,483 record holders of our common stock as of February 24, 2020.
Dividend Policy
The Company implemented a dividend program in February 2017 pursuant to which it has paid regular quarterly dividends. The
amount, declaration and payment of any future dividends will be subject to the discretion of our Board of Directors who will evaluate
our dividend policy from time to time based on factors it deems relevant, and the contractual limitations described below. In addition,
as a holding company with no independent operations, our ability to pay dividends will depend upon the receipt of cash from our
operating subsidiaries to generate the funds from operations necessary to pay dividends on our common stock. Furthermore, our senior
credit facility contains financial covenants and restrictive covenants that could restrict our ability to pay dividends, subject to certain
exceptions. In addition, the Operating Partnership and MGM China credit facilities each contain limitations on the ability of the
applicable subsidiary under each credit agreement to pay dividends to us. There can be no assurance that we will continue to pay
dividends in the future.
Purchases of Equity Securities by the Issuer
The following table provides information about share repurchases made by the Company of its common stock during the quarter
ended December 31, 2019:
Period
October 1, 2019 — October 31, 2019 ...............
November 1, 2019 — November 30, 2019 .......
December 1, 2019 — December 31, 2019 ........
Total
Number of
Shares
Purchased
Average
Price Paid
per Share
— $
4,964,502 $
7,284,817 $
—
31.23
32.62
Total Number
of Shares
Purchased as
Part of a Publicly
Announced Program
Dollar Value of
Shares that May
Yet be Purchased
Under the Program
(In thousands)
—
4,964,502
7,284,817
$
$
$
750,216
595,162
357,496
On May 10, 2018, the Company announced that its Board of Directors had adopted a $2.0 billion stock repurchase program.
Additionally, in February 2020, upon substantial completion of the prior program, the Company announced that its Board of Directors
had adopted a $3.0 billion stock repurchase program. Under the stock repurchase program the Company may repurchase shares from
time to time in the open market or in privately negotiated agreements. Repurchases of common stock may also be made under a Rule
10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so
under insider trading laws. The timing, volume and nature of stock repurchases will be at the sole discretion of management,
dependent on market conditions, applicable securities laws, and other factors, and may be suspended or discontinued at any time. All
shares repurchased by the Company during the quarter ended December 31, 2019 were purchased pursuant to the Company’s publicly
announced stock repurchase programs and have been retired.
28
PERFORMANCE GRAPH
The graph below matches our cumulative Five-Year total shareholder return on common stock with the cumulative total returns
of the Dow Jones US Total Return index, the S&P 500 index and the Dow Jones US Gambling index. The graph tracks the
performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends as required by the
SEC) from December 31, 2014 to December 31, 2019. The return shown on the graph is not necessarily indicative of future
performance.
The following performance graph shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act, nor shall
this information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent
that we specifically incorporate it by reference into a filing.
29
ITEM 6.
SELECTED FINANCIAL DATA
The following reflects selected historical financial data that should be read in conjunction with “Item 7 – Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto
included elsewhere in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results of
operations to be expected in the future.
2019
2018
2017
(In thousands, except per share data)
2016
2015
Net revenues........................................................................... $12,899,672 $11,763,096 $10,797,479 $ 9,478,269 $ 9,179,590
Operating income (loss)......................................................... 3,940,215 1,469,486 1,712,527 2,078,199
(152,838)
583,894 2,088,184 1,235,846 (1,037,444)
Net income (loss) ................................................................... 2,214,380
Net income (loss) attributable to MGM Resorts
(445,515)
International ........................................................................ 2,049,146
(0.82)
3.90 $
Earnings (loss) per share - Basic............................................ $
(0.82)
3.88 $
Earnings (loss) per share - Diluted......................................... $
Dividends declared per common share .................................. $
—
0.52 $
Total assets............................................................................. $33,876,356 $30,210,706 $29,160,042 $28,174,400 $25,215,178
Long-term obligations(1)......................................................... 15,915,508 15,449,495 13,115,246 13,359,339 12,532,224
MGM Resorts International stockholders' equity .................. 7,727,265 6,512,283 7,577,061 6,192,825 5,119,927
466,772 1,952,052 1,100,408
1.94 $
1.92 $
— $
3.38 $
3.34 $
0.44 $
0.82 $
0.81 $
0.48 $
(1)
Includes long-term debt, operating lease liabilities, other long-term obligations (which includes finance lease liabilities), and redeemable noncontrolling interests.
The following events/transactions affect the year-to-year comparability of the selected financial data presented above:
Acquisitions, Dispositions, and Significant Transactions
•
•
•
•
•
•
In 2016, we recorded a $401 million gain for our share of CityCenter’s gain on the sale of the Shops at Crystals (“Crystals”)
and also recorded a $430 million gain on our acquisition of the remaining 50% ownership interest in Borgata on August 1,
2016, and began to consolidate Borgata beginning on that date.
In 2016, we received net proceeds of $1.1 billion in connection with MGP’s IPO.
In 2016, we opened MGM National Harbor.
In 2018, we opened MGM Cotai and MGM Springfield; MGP acquired Northfield.
In 2019, we acquired Empire City.
In 2019, we recorded a loss of $220 million related to the sale of Circus Circus Las Vegas and adjacent land and a gain of
$2.7 billion related to the Bellagio transaction.
Other
•
•
•
•
•
•
•
In 2015, we recorded a goodwill impairment charge of $1.5 billion at MGM China. We also recorded an $80 million gain
for our share of CityCenter’s gain resulting from the final resolution of its construction litigation and related settlements.
In 2016, we recorded a $152 million expense related to our strategic decision to exit the fully bundled sales system of NV
Energy. In 2017, we then recorded a gain of $45 million related to the NV Energy exit fee modification.
In 2017, we began declaring dividends.
In 2017, we recorded a $1.4 billion tax benefit related to the enactment of the U.S. Tax Cuts and Jobs Act (“Tax Act”). In
2018, we then recorded a $20 million tax expense related to the Tax Act.
In 2018, we adopted the new accounting standard relating to revenue recognition on a full retrospective basis. Accordingly,
financial data as of and for the years ended December 31, 2018, 2017, and 2016, and for the year ended December 31,
2015, reflect such retrospective adoption within the chart above. Financial data as of December 31, 2015 does not reflect
such adoption.
In 2019, we adopted the new accounting standard related to leases utilizing the simplified transition method and
accordingly did not recast comparative period financial information.
In 2019, we recorded a $198 million loss on early retirement of debt.
30
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This management’s discussion and analysis of financial condition and results of operations includes discussion as of and for the
year ended December 31, 2019 compared to December 31, 2018. Discussion of our financial condition and results of operations as of
and for the year ended December 31, 2018 compared to December 31, 2017 can be found in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2019.
Executive Overview
Our primary business is the ownership and operation of casino resorts, which offer gaming, hotel, convention, dining,
entertainment, retail and other resort amenities. We own or invest in several of the finest casino resorts in the world and we
continually reinvest in our resorts to maintain our competitive advantage. Most of our revenue is cash-based, through customers
wagering with cash or paying for non-gaming services with cash or credit cards. We rely heavily on the ability of our resorts to
generate operating cash flow to fund capital expenditures, provide excess cash flow for future development and repay debt financings.
We make significant investments in our resorts through newly remodeled hotel rooms, restaurants, entertainment and nightlife
offerings, as well as other new features and amenities.
Our results of operations are affected by decisions we make related to our capital allocation, our access to capital and our cost of
capital. While we continue to be focused on improving our financial position and returning capital to shareholders, we are also
dedicated to capitalizing on strategic development or initiatives.
The Las Vegas Strip segment results of operations are heavily impacted by visitor volume and trends. During the year ended
December 31, 2019, Las Vegas visitor volume increased 1% compared to the prior year period according to information published by
the Las Vegas Convention and Visitors Authority. The Las Vegas market is growing and diversifying with the addition of new
sporting events and venues, the expansion of convention centers, as well as music and entertainment events.
The MGM China segment results of operations also are heavily impacted by visitor volume and trends. During the year ended
December 31, 2019 Macau visitor arrivals increased 10% compared to the prior year period according to statistics published by the
Statistics and Census Service of the Macau Government. In early 2020, the rapid spread of a respiratory illness caused by a novel
coronavirus (Covid-19) identified as originating in Wuhan, Hubei Province, China led to certain cities in China being placed under
quarantine and citizens across China were advised to avoid non-essential travel. Certain countries, including the U.S., have restricted
inbound travel from mainland China to mitigate the spread of the virus. In addition, China implemented a temporary suspension of its
visa scheme that permits mainland Chinese to travel to Macau, and on February 4, 2020 the Hong Kong SAR government temporarily
suspended all ferry service from Hong Kong to Macau, until further notice. The Macau Government Tourism Office disclosed total
visitation from mainland China to Macau decreased 83% and total visitor arrivals decreased 78% during Chinese New Year as
compared to the same period in 2019. On February 4, 2020, the government of Macau asked that all gaming operators in Macau
suspend casino operations for a 15-day period that commenced on February 5, 2020. As a result, MGM Macau and MGM Cotai
suspended all operations at their properties other than operations that were necessary to provide sufficient non-gaming facilities
to serve any remaining hotel guests. Operations at MGM Macau and MGM Cotai resumed on February 20, 2020; however, there are
currently limits on the number of gaming tables allowed to operate and restrictions on the number of seats available at each table, and
the temporary suspension of the visa scheme and ferry service to Macau remains in place. As a result of these measures, we expect
material declines in MGM China’s operating results during the first quarter of 2020 and potentially thereafter. Additionally, to the
extent that the virus impacts the willingness or ability of customers to travel to our properties in the United States (due to travel
restrictions, or otherwise), our domestic results of operations could also be negatively impacted. We are continuing to evaluate the
nature and extent of the impacts to our business, which could have a material effect on our consolidated operating results for the first
quarter of 2020 and potentially thereafter. Given the uncertain nature of these circumstances, the related impact on our results of
operations, cash flows and financial condition cannot be reasonably estimated at this time.
Our results of operations do not tend to be seasonal in nature, though a variety of factors may affect the results of any interim
period, including the timing of major conventions, Far East Baccarat volumes, the amount and timing of marketing and special events
for our high-end gaming customers, and the level of play during major holidays, including New Year and Lunar New Year. While our
results do not depend on key individual customers, a significant portion of our operating income is generated from high-end gaming
customers, which can cause variability in our results as evidenced by the recent weakness in Far East baccarat, which we expect to
continue in 2020. In addition, our success in marketing to customer groups such as convention customers and the financial health of
customer segments such as business travelers or high-end gaming customers from a specific country or region can affect our results.
31
As of December 31, 2019, pursuant to a master lease agreement with MGP, we lease the real estate assets of The Mirage,
Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau
Rivage, Borgata, Empire City, MGM National Harbor, and MGM Northfield Park. See Note 1 in the accompanying consolidated
financial statements for information regarding MGP and the Operating Partnership, which we consolidate in our financial statements.
All intercompany transactions, including transactions under the master lease with MGP, have been eliminated in consolidation. As
further discussed below, pursuant to a lease agreement with the Bellagio BREIT Venture, we lease the real estate assets of Bellagio.
In July 2018, MGP completed its Northfield Acquisition for approximately $1.1 billion. In April 2019, we acquired the
membership interests of Northfield from MGP and MGP retained the real estate assets. We then rebranded the property to MGM
Northfield Park, which was then added to the existing master lease between us and MGP. See Note 4 and Note 18 in the
accompanying financial statements for information regarding this acquisition.
Also, in January 2019, we acquired the real property and operations associated with Empire City in Yonkers, New York for
consideration of approximately $865 million. Subsequently, MGP acquired the developed real property associated with Empire City
from us and Empire City was added to the existing master lease between us and MGP. In addition, pursuant to the master lease
amendment, we agreed to provide MGP a right of first offer with respect to certain undeveloped land adjacent to the property to the
extent that we develop additional gaming facilities and choose to sell or transfer such property in the future. See Note 4 and Note 18
in the accompanying consolidated financial statements for information regarding this acquisition.
In March 2019, we entered into an amendment to the existing master lease between us and MGP with respect to investments
made by us related to improvements at Park MGM and NoMad Las Vegas. See Note 18 in the accompanying financial statements for
information regarding this transaction with MGP, which is eliminated in consolidation.
In November 2019, we completed the Bellagio Sale-Leaseback Transaction, pursuant to which we formed the Bellagio BREIT
Venture, which acquired the Bellagio real estate assets from us and entered into a lease agreement to lease the real estate assets back to
us. The Bellagio lease has an initial term of 30 years with two subsequent ten-year renewal periods, exercisable at our option. The
lease provides for initial annual rent of $245 million with a fixed 2% escalator for the first ten years and, thereafter, an escalator equal
to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4%
thereafter. We received $4.25 billion consideration for the sale, which consisted of a 5% equity interest in the venture with the
remaining consideration of approximately $4.2 billion in cash. We also provide a shortfall guarantee of the principal amount of
indebtedness of the Bellagio BREIT Venture’s $3.01 billion of debt (and any interest accrued and unpaid thereon). As a result of the
sale, we recorded a gain of approximately $2.7 billion. See Note 1 and Note 12 in the accompanying financial statements for
information regarding this transaction and lease agreement.
In December 2019, we sold Circus Circus Las Vegas and adjacent land for $825 million, which consisted of $662.5 million paid
in cash and a secured note due 2024 with a face value of $162.5 million and fair value of $133.7 million. In connection with our
review of the carrying value of assets to be sold due to the offer for sale received during the third quarter of 2019, we recorded a non-
cash impairment charge of $219 million. Upon completion of the sale in the fourth quarter, we recorded a loss of $2 million. See Note
1 and Note 16 in the accompanying financial statements for information regarding this transaction.
On February 14, 2020, we completed the MGP BREIT Venture Transaction pursuant to which the real estate assets of MGM
Grand Las Vegas and Mandalay Bay (including Mandalay Place) were contributed to MGP BREIT Venture, owned 50.1% by the
Operating Partnership and 49.9% by a subsidiary of BREIT. In exchange for the contribution of the real estate assets, MGM and MGP
received total consideration of $4.6 billion, which was comprised of $2.5 billion of cash, $1.3 billion of the Operating Partnership’s
secured indebtedness assumed by MGP BREIT Venture, and the Operating Partnership’s 50.1% equity interest in the MGP BREIT
Venture. In addition, the Operating Partnership issued approximately 3 million Operating Partnership units to us representing 5% of
the equity value of MGP BREIT Venture. In connection with the transactions, we provided a shortfall guaranty of the principal
amount of indebtedness of the MGP BREIT Venture (and any interest accrued and unpaid thereon). On the closing date, BREIT also
purchased approximately 5 million MGP Class A shares for $150 million.
In connection with the transactions, MGP BREIT Venture entered into a lease with us for the real estate assets of Mandalay Bay
and MGM Grand Las Vegas. The lease provides for a term of thirty years with two ten-year renewal options and has an initial annual
base rent of $292 million, escalating annually at a rate of 2% per annum for the first fifteen years and thereafter equal to the greater of
2% and the CPI increase during the prior year subject to a cap of 3%. In addition, the lease will require us to spend 3.5% of net
revenues over a rolling five-year period at the properties on capital expenditures and for us to comply with certain financial covenants,
which, if not met, will require us to maintain cash security or provide one or more letters of credit in favor of the landlord in an
amount equal to the rent for the succeeding one-year period.
32
In connection with the MGP BREIT Venture Transaction, the existing master lease with MGP was modified to remove the
Mandalay Bay property and the annual rent under the MGP master lease was reduced by $133 million.
Also, on January 14, 2020, we, the Operating Partnership, and MGP entered into an agreement for the Operating Partnership to
waive its right to issue MGP Class A shares, in lieu of cash, to us in connection with us exercising our right to require the Operating
Partnership to redeem the Operating Partnership units we hold, at a price per unit equal to a 3% discount to the applicable cash amount
as calculated in accordance with the operating agreement. The waiver terminates on the earlier of 24 months following the closing of
the MGP BREIT Venture Transaction and us receiving cash proceeds of $1.4 billion as consideration for the redemption of our
Operating Partnership units.
In January 2019, we announced the implementation of a company-wide business optimization initiative (the “MGM 2020 Plan”)
to further reduce costs, improve efficiencies and position us for growth, which yielded over $130 million of Adjusted EBITDAR uplift
in 2019 compared to 2018 results. We expect the initiatives associated with the MGM 2020 Plan to exceed Adjusted EBITDAR uplift
of $200 million by the end of 2020 compared to 2018 results, which includes operating model changes to improve efficiency. We
currently anticipate achieving this target. As part of the second phase, we plan to invest in our digital transformation to drive revenue
growth through a customer-centric strategy aimed at increasing customer spend, increasing our wallet share, and attracting our most
valuable customers.
Key Performance Indicators
Key performance indicators related to gaming and hotel revenue are:
• Gaming revenue indicators: table games drop and slots handle (volume indicators); “win” or “hold” percentage, which is
not fully controllable by us. Our normal table games hold percentage at our Las Vegas Strip Resorts is in the range of
25.0% to 35.0% of table games drop for Baccarat and 19.0% to 23.0% for non-Baccarat; and
• Hotel revenue indicators: hotel occupancy (a volume indicator); average daily rate (“ADR,” a price indicator); and revenue
per available room (“REVPAR,” a summary measure of hotel results, combining ADR and occupancy rate). Our calculation
of ADR, which is the average price of occupied rooms per day, includes the impact of complimentary rooms.
Complimentary room rates are determined based on standalone selling price. Because the mix of rooms provided on a
complimentary basis, particularly to casino customers, includes a disproportionate suite component, the composite ADR
including complimentary rooms is slightly higher than the ADR for cash rooms, reflecting the higher retail value of suites.
Additional key performance indicators at MGM China are:
• Gaming revenue indicators: MGM China utilizes “turnover,” which is the sum of nonnegotiable chip wagers won by MGM
China calculated as nonnegotiable chips purchased plus nonnegotiable chips exchanged less nonnegotiable chips returned.
Turnover provides a basis for measuring VIP casino win percentage. Win for VIP gaming operations at MGM China is
typically in the range of 2.6% to 3.3% of turnover.
Results of Operations
The following discussion is based on our consolidated financial statements for the years ended December 31, 2019, 2018 and
2017.
Summary Financial Results
The following table summarizes our operating results:
Net revenues....................................................................................................... $
Operating income...............................................................................................
Net income .........................................................................................................
Net income attributable to MGM Resorts International ....................................
12,899,672 $
3,940,215
2,214,380
2,049,146
11,763,096 $
1,469,486
583,894
466,772
10,797,479
1,712,527
2,088,184
1,952,052
2019
Year Ended December 31,
2018
(In thousands)
2017
33
Summary Operating Results
Consolidated net revenues in 2019 increased 10% compared to 2018 due primarily to continued ramp-up of operations at MGM
Cotai following its opening in February 2018, a full year of operating results at MGM Springfield, which opened in August 2018, the
acquisition of Empire City in January 2019, a full year of operating results at MGM Northfield Park, which MGP acquired in July
2018, and an increase in revenues as a result of the ramp-up of operations at Park MGM, partially offset by a decrease in casino
revenues at certain of our other Las Vegas Strip Resorts.
Consolidated operating income increased $2.5 billion to $3.9 billion in 2019, compared to $1.5 billion in 2018. The current year
included a $2.7 billion gain related to the Bellagio Sale-Leaseback Transaction, a $220 million loss related to the sale of Circus Circus
Las Vegas and adjacent land, included in property transactions, net, as well as $92 million in restructuring costs related to severance,
accelerated stock compensation expense and consulting fees directly related to the operating model component of the MGM 2020
Plan. In comparison, consolidated operating income in 2018 included a $45 million gain related to the sale of Grand Victoria and $24
million in business interruption insurance proceeds primarily at Mandalay Bay. During 2019, consolidated operating income was
positively impacted by the increase in net revenues described above and a decrease in preopening and start-up expenses, partially
offset by increases in general and administrative, depreciation and amortization, and corporate expenses, further discussed below.
Preopening and start-up expenses decreased by $144 million in 2019 compared to 2018 due primarily to the openings of MGM
Springfield and MGM Cotai and the completion of the Park MGM rebranding project. Corporate expense, including share-based
compensation for corporate employees, increased $45 million compared to the prior year period. The current year period included $20
million of Empire City acquisition costs, primarily related to transfer taxes and advisory fees, $29 million in costs incurred to
implement the MGM 2020 Plan, of which $12 million is included in the restructuring costs discussed above, and $11 million in
finance modernization initiative costs. The prior year period included $27 million of corporate brand campaign expenses, $19 million
in transaction costs, and $8 million in costs incurred to implement the MGM 2020 Plan and finance modernization initiatives.
Depreciation and amortization expense, and general and administrative expense increased compared to the prior year due primarily to
the operations of MGM Cotai, MGM Springfield and Empire City.
34
Net Revenues by Segment
The following table presents a detail by segment of net revenues:
Las Vegas Strip Resorts
Table games win........................................................................................... $
Slots win .......................................................................................................
Other .............................................................................................................
Less: Incentives ............................................................................................
Casino revenue................................................................................................
Rooms...........................................................................................................
Food and beverage........................................................................................
Entertainment, retail and other .....................................................................
Non-casino revenue ........................................................................................
Regional Operations
Table games win...........................................................................................
Slots win .......................................................................................................
Other .............................................................................................................
Less: Incentives ............................................................................................
Casino revenue................................................................................................
Rooms...........................................................................................................
Food and beverage........................................................................................
Entertainment, retail and other .....................................................................
Non-casino revenue ........................................................................................
MGM China
VIP table games win.....................................................................................
Main floor table games win..........................................................................
Slots win .......................................................................................................
Less: Commissions and incentives...............................................................
Casino revenue................................................................................................
Rooms...........................................................................................................
Food and beverage........................................................................................
Entertainment, retail and other .....................................................................
Non-casino revenue ........................................................................................
Reportable segment net revenues.......................................................................
Corporate and other ......................................................................................
$
Las Vegas Strip Resorts
2019
Year Ended December 31,
2018
(In thousands)
2017
789,330 $
1,193,607
64,834
(751,601)
1,296,170
1,863,521
1,517,745
1,153,615
4,534,881
5,831,051
827,155
2,362,638
313,710
(965,723)
2,537,780
316,753
494,243
201,008
1,012,004
3,549,784
949,055 $
1,140,269
62,249
(743,840)
1,407,733
1,776,029
1,402,378
1,130,532
4,308,939
5,716,672
793,754
1,947,325
108,690
(822,844)
2,026,925
318,017
428,934
160,645
907,596
2,934,521
1,237,297
1,906,600
286,939
(821,030)
2,609,806
142,306
127,152
26,158
295,616
2,905,422
12,286,257
613,415
12,899,672 $
1,235,387
1,391,454
284,919
(716,616)
2,195,144
118,527
114,862
21,424
254,813
2,449,957
11,101,150
661,946
11,763,096 $
931,508
1,106,192
67,150
(668,020)
1,436,830
1,778,869
1,410,496
1,119,928
4,309,293
5,746,123
722,966
1,784,452
92,377
(764,992)
1,834,803
319,049
410,143
145,725
874,917
2,709,720
1,099,303
1,044,415
180,500
(582,583)
1,741,635
54,824
51,330
10,371
116,525
1,858,160
10,314,003
483,476
10,797,479
Las Vegas Strip Resorts casino revenue decreased 8% in 2019 compared to 2018, primarily due to a 17% decrease in table
games win resulting from a 9% decrease in table games drop, driven by Far East baccarat, and an increase in incentives, partially
offset by a 5% increase in slots win.
35
The following table shows key gaming statistics for our Las Vegas Strip Resorts:
2019
Table Games Drop .................................................................................................
Table Games Win % ..............................................................................................
Slots Handle ...........................................................................................................
Slots Hold % ..........................................................................................................
Year Ended December 31,
2018
(Dollars in millions)
$3,857
24.6%
$12,569
9.1%
$3,526
22.4%
$12,874
9.3%
2017
$3,777
24.7%
$12,396
8.9%
Las Vegas Strip Resorts rooms revenue increased 5% in 2019 compared to 2018, primarily due to a 4% increase in REVPAR.
The following table shows key hotel statistics for our Las Vegas Strip Resorts:
Year Ended December 31,
2018
2017
2019
Occupancy..............................................................................................................
Average Daily Rate (ADR)....................................................................................
Revenue per Available Room (REVPAR).............................................................
91%
$167
$153
91%
$161
$147
91%
$160
$146
Las Vegas Strip Resorts food and beverage revenue increased 8% in 2019 compared to 2018 due primarily to the ramp-up of
newly opened outlets at Park MGM and NoMad Las Vegas and an increase in catering and banquets revenue driven by the completion
of the expansion of MGM Grand’s Conference Center in 2019.
Las Vegas Strip Resorts entertainment, retail and other revenue increased 2% in 2019 compared to 2018 due primarily to an
increase in entertainment revenue related to events at Park Theater, partially offset by a decrease in revenue from Cirque du Soleil
production shows.
Regional Operations
Regional Operations casino revenue increased 25% in 2019 compared to 2018 primarily due to the acquisition of Empire City in
2019, for which its video lottery terminal revenue is included in other casino revenue, the acquisition of MGM Northfield Park’s
operations from MGP, and a full year of operations at MGM Springfield.
The following table shows key gaming statistics for our Regional Operations:
Table Games Drop .................................................................................................
Table Games Win % ..............................................................................................
Slots Handle ...........................................................................................................
Slots Hold % ..........................................................................................................
2019
Year Ended December 31,
2018
(Dollars in millions)
$4,038
19.7%
$21,468
9.1%
$4,226
19.6%
$25,031
9.4%
2017
$3,872
18.7%
$19,634
9.1%
Regional Operations food and beverage revenue increased 15% in 2019 compared to 2018 due primarily to full year of
operations at MGM Springfield, the acquisition of Empire City, and the acquisition of MGM Northfield Park’s operations from MGP.
Regional Operations entertainment, retail and other revenue increased 25% in 2019 compared to 2018 due primarily to
entertainment revenue at MGM Springfield and MGM Northfield Park, ATM fees from the operations of MGM Springfield, Empire
City and MGM Northfield Park, and parking fees from the operations of Empire City.
36
MGM China
The following table shows key gaming statistics for MGM China:
2019
VIP Table Games Turnover ...................................................................................
VIP Table Games Win %.......................................................................................
Main Floor Table Games Drop ..............................................................................
Main Floor Table Games Win % ...........................................................................
Year Ended December 31,
2018
(Dollars in millions)
$40,599
3.0%
$7,566
18.4%
$38,071
3.2%
$8,252
23.1%
2017
$34,533
3.2%
$5,159
20.2%
MGM China net revenue increased 19% in 2019 compared to 2018 primarily as a result of the continued ramp-up of operations
at MGM Cotai and an increase in main floor table games win percentage. Main floor table games win increased 37% compared to the
prior year due to the addition of 25 new-to-market tables at MGM Cotai in 2019 and a 472 basis point increase in win percentage. VIP
table games win increased slightly in 2019 compared to 2018 due to the opening of VIP junket rooms at the end of the third quarter of
2018 at MGM Cotai and an increase in the VIP table games win percentage, offset by a 34% decrease in turnover at MGM Macau.
Corporate and other
Corporate and other revenue includes revenues from other corporate operations, management services and reimbursed costs
revenue primarily related to our CityCenter management agreement and $68 million in net revenues from MGP’s Northfield casino,
which represents revenues prior to our acquisition of MGM Northfield Park’s operations from MGP on April 1, 2019. Corporate and
other revenue for 2018 included $133 million in net revenues from MGP Northfield’s casino. Reimbursed costs revenue represents
reimbursement of costs, primarily payroll-related, incurred by us in connection with the provision of management services and was
$437 million, $425 million and $402 million for 2019, 2018 and 2017, respectively. See below for additional discussion of our share
of operating results from unconsolidated affiliates.
Adjusted EBITDAR
The following table presents a detail of Adjusted EBITDAR. We use Adjusted Property EBITDAR as the primary profit
measure for our reportable segments. See “Non-GAAP Measures” for additional information.
2019
Year Ended December 31,
2018
(In thousands)
2017
Adjusted EBITDAR
Las Vegas Strip Resorts ............................................................................... $
Regional Operations .....................................................................................
MGM China .................................................................................................
Reportable segment Adjusted Property EBITDAR ................................
Corporate and other ......................................................................................
$
1,643,122 $
969,866
734,729
3,347,717
(331,621)
3,016,096 $
1,706,315 $
781,854
574,333
3,062,502
(224,800)
2,837,702 $
1,781,390
754,597
535,524
3,071,511
(213,908)
2,857,603
Las Vegas Strip Resorts
Adjusted Property EBITDAR at our Las Vegas Strip Resorts decreased 4% in 2019 compared to 2018 due primarily to a
decrease in casino revenue, as discussed above, and the inclusion of $24 million in business interruption insurance proceeds at
Mandalay Bay in the prior year. Adjusted Property EBITDAR margin was 28.2% in 2019, a 167 basis point decrease compared to
2018.
Regional Operations
Adjusted Property EBITDAR at our Regional Operations increased 24% in 2019 compared to 2018 and benefitted from a full
year of operations at MGM Springfield, the acquisition of Empire City, and the acquisition of MGM Northfield Park’s operations
from MGP. Adjusted Property EBITDAR margin was 27.3% in 2019, a 68 basis point increase compared to 2018, primarily as a result
of the inclusion of Empire City and MGM Northfield Park.
37
MGM China
MGM China’s Adjusted Property EBITDAR increased 28% in 2019 compared to 2018 due primarily to the ramp-up of
operations at MGM Cotai, and an increase in main floor table games win percentage, as discussed above. Excluding intercompany
license fees of $51 million and $43 million for the years ended December 31, 2019 and 2018, respectively, Adjusted Property
EBITDAR increased 27% compared to 2018. Adjusted Property EBITDAR margin was 25.3% in 2019, a 185 basis point increase
compared to 2018.
Corporate and other
Adjusted EBITDAR related to corporate and other in 2019 decreased compared to the prior year due primarily to $14 million of
non-recurring charges including certain management termination fees and other fees, an increase in corporate expense as described in
“Summary Operating Results,” a decrease in income from unconsolidated affiliates, as discussed below, and a decrease in Adjusted
EBITDAR related to MGM Northfield Park’s operating results from $45 million in 2018 compared to $23 million in 2019.
Operating Results – Details of Certain Charges
Preopening and start-up expenses consisted of the following:
2019
Year Ended December 31,
2018
(In thousands)
2017
MGM China ....................................................................................................... $
MGM Springfield...............................................................................................
Park MGM rebranding.......................................................................................
Other ..................................................................................................................
$
2,619 $
—
2,245
2,311
7,175 $
64,341 $
60,787
22,569
3,695
151,392 $
86,970
22,881
6,498
2,126
118,475
Preopening and start-up expenses decreased in 2019 due primarily to the opening of MGM Springfield and the final phase of
MGM Cotai, as well as the completion of the Park MGM rebranding project.
Property transactions, net consisted of the following:
2019
Year Ended December 31,
2018
(In thousands)
2017
Loss related to sale of Circus Circus Las Vegas and adjacent land................... $
Gain on sale of Grand Victoria ..........................................................................
Other property transactions, net.........................................................................
$
220,294 $
—
55,508
275,802 $
— $
(44,703)
53,850
9,147 $
—
—
50,279
50,279
See Note 16 to the accompanying consolidated financial statements for further discussion of property transactions, net.
Operating Results – Income from Unconsolidated Affiliates
The following table summarizes information related to our income from unconsolidated affiliates:
CityCenter .......................................................................................................... $
Other ..................................................................................................................
$
128,421 $
(8,900)
119,521 $
138,383 $
9,307
147,690 $
133,400
12,822
146,222
2019
Year Ended December 31,
2018
(In thousands)
2017
38
In 2019, our share of CityCenter’s operating results, including certain basis difference adjustments, was $128 million compared
to $138 million in 2018. The prior year period included a $12 million gain on the sale of Mandarin Oriental related to the reversal of
basis differences in excess of our share of the loss recorded by CityCenter. The current year period included $12 million in charges
related to restructuring costs and certain one-time management agreement termination fees. At Aria, casino revenues decreased 5% in
2019 compared to 2018 primarily due to a decrease in table games win, driven by baccarat. CityCenter’s non-casino revenues
increased 4% in 2019 compared to 2018 primarily related to an increase in food and beverage revenue due to the opening of a new
outlet, and a 3% increase in rooms revenue due primarily to a 4% increase in REVPAR at Aria.
Non-operating Results
Interest expense. The following table summarizes information related to interest expense, net:
2019
Year Ended December 31,
2018
(In thousands)
2017
Total interest incurred ........................................................................................ $
Interest capitalized .............................................................................................
$
853,007 $
(5,075)
847,932 $
821,229 $
(51,716)
769,513 $
779,855
(111,110)
668,745
Gross interest expense in 2019 increased $32 million compared to 2018 due to an increase in the average debt outstanding under
our senior notes, and an increase in the weighted average interest rate related to our senior credit facilities, which was partially offset
by a decrease in the average debt outstanding under our senior credit facilities and a decrease in the weighted average interest rate of
our senior notes. Capitalized interest was $5 million and $52 million during the years ended December 31, 2019 and 2018,
respectively. The decrease in capitalized interest was due primarily to the completion of MGM Springfield, which opened in August
2018, and the completion of MGM Cotai, which opened in February 2018. See Note 9 to the accompanying consolidated financial
statements for additional discussion on long-term debt and see “Liquidity and Capital Resources” for additional discussion on
issuances and repayments of long-term debt and other sources and uses of cash.
Other, net. Other expense, net in 2019 increased $165 million compared to 2018 due primarily to a $198 million loss incurred
on the early retirement of debt related to our senior notes and senior credit facility, the Operating Partnership’s prepayments on its
senior credit facility, and the early retirement of debt related to MGM China’s senior secured credit facility, partially offset by a $11
million remeasurement gain on MGM China’s U.S. dollar-denominated senior notes and a $9 million increase in interest income.
Refer to Note 9 for further discussion on long-term debt.
Income taxes. The following table summarizes information related to our income taxes:
2019
Year Ended December 31,
2018
(In thousands)
2017
Income before income taxes ............................................................................. $
Benefit (provision) for income taxes ................................................................
Effective income tax rate ..................................................................................
Federal, state and foreign income taxes paid, net of refunds ............................ $
2,846,725
$
(632,345)
22.2%
$
28,493
634,006
$
(50,112)
7.9%
(10,100) $
960,790
1,127,394
(117.3)%
181,651
Our effective tax rate for 2019 is driven primarily by the $2.7 billion gain recorded on the Bellagio Sale-Leaseback Transaction.
Income tax expense recorded on this gain results in our effective tax rate approximating our federal and state combined statutory rate
and minimizes the impact of other items. Our effective tax rate for 2018 was favorably impacted by the reversal of Macau shareholder
dividend tax that was accrued in 2017 upon receipt of the extension of the annual fee arrangement and income tax benefit recorded on
our Macau operations, partially offset by measurement period tax expense related to the U.S. Tax Cuts and Jobs Act (the “Tax Act”).
Cash taxes paid increased in 2019 compared to 2018 due to federal taxes paid on the liquidation of MGP OH, Inc., a
consolidated subsidiary directly owned by MGM Growth Properties Operating Partnership LP, and an increase in state taxes paid in
2019 compared to 2018. In addition, we received a refund in 2018 of taxes paid with respect to our 2017 federal income tax return.
39
Non-GAAP Measures
“Adjusted EBITDAR” is earnings before interest and other non-operating income (expense), taxes, depreciation and
amortization, preopening and start-up expenses, gain on Bellagio transaction, restructuring costs (which represents costs related to
severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the
MGM 2020 Plan), NV Energy exit expense, rent expense associated with triple net operating and ground leases, income from
unconsolidated affiliates related to investments in REITs, and property transactions, net. We utilize “Adjusted Property EBITDAR” as
the primary profit measures for our reportable segments and underlying operating segments. Adjusted Property EBITDAR is a
measure defined as Adjusted EBITDAR before corporate expense and stock compensation expense, which are not allocated to each
operating segment, and before rent expense related to the master lease with MGP that eliminates in consolidation. We manage capital
allocation, tax planning, stock compensation, and financing decisions at the corporate level. “Adjusted Property EBITDAR margin” is
Adjusted Property EBITDAR divided by related segment net revenues.
Adjusted EBITDAR information is a valuation metric, should not be used as an operating metric, and is presented solely as a
supplemental disclosure to reported GAAP measures because we believe these measures are widely used by analysts, lenders,
financial institutions, and investors as a principal basis for the valuation of gaming companies. We believe that while items excluded
from Adjusted EBITDAR, Adjusted Property EBITDAR, and Adjusted Property EBITDAR margin may be recurring in nature and
should not be disregarded in evaluation of our earnings performance, it is useful to exclude such items when analyzing current results
and trends compared to other periods because these items can vary significantly depending on specific underlying transactions or
events that may not be comparable between the periods being presented. Also, we believe excluded items may not relate specifically
to current trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in
periods when we are developing and constructing a major expansion project and will depend on where the current period lies within
the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals,
gains and losses on sales of assets related to specific assets within our resorts, but also includes gains or losses on sales of an entire
operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which
may not be comparable period over period. In addition, we changed our non-GAAP measures in the fourth quarter of 2019, including
recasting prior periods, as a result of the Bellagio real estate transaction, to exclude rent expense associated with triple net operating
leases and ground leases. We believe excluding rent expense associated with triple net operating leases and ground leases provides
useful information to analysts, lenders, financial institutions, and investors when valuing us, as well as comparing our results to other
gaming companies, without regard to differences in capital structure and leasing arrangements since the operations of other gaming
companies may or may not include triple net operating leases or ground leases. However, as discussed herein, Adjusted EBITDAR
and Adjusted Property EBITDAR should not be viewed as measures of overall operating performance, considered in isolation, or as
an alternative to net income, because these measures are not presented on a GAAP basis and exclude certain expenses, including the
rent expense associated with our triple net operating and ground leases, and are provided for the limited purposes discussed herein.
Adjusted EBITDAR, Adjusted Property EBITDAR or Adjusted Property EBITDAR margin should not be construed as
alternatives to operating income or net income, as indicators of our performance; or as alternatives to cash flows from operating
activities, as measures of liquidity; or as any other measure determined in accordance with generally accepted accounting
principles. We have significant uses of cash flows, including capital expenditures, interest payments, taxes, real estate triple net lease
and ground lease payments, and debt principal repayments, which are not reflected in Adjusted EBITDAR, Adjusted Property
EBITDAR or Adjusted Property EBITDAR margin. Also, other companies in the gaming and hospitality industries that report
Adjusted EBITDAR, Adjusted Property EBITDAR or Adjusted Property EBITDAR margin information may calculate Adjusted
EBITDAR, Adjusted Property EBITDAR or Adjusted Property EBITDAR margin in a different manner and such differences may be
material.
40
The following table presents a reconciliation of net income attributable to MGM Resorts International to Adjusted EBITDAR:
Net income attributable to MGM Resorts International .................................... $
Plus: Net income attributable to noncontrolling interests..................................
Net income .........................................................................................................
Provision (benefit) for income taxes ............................................................
Income before income taxes ..............................................................................
Non-operating expense
Interest expense, net of amounts capitalized ................................................
Non-operating items from unconsolidated affiliates ....................................
Other, net ......................................................................................................
Operating income...............................................................................................
NV Energy exit expense...............................................................................
Preopening and start-up expenses ................................................................
Property transactions, net .............................................................................
Gain on Bellagio transaction ........................................................................
Depreciation and amortization .....................................................................
Restructuring ................................................................................................
Triple net operating lease and ground lease rent expense ............................
Income from unconsolidated affiliates related to investments in REITs .....
Adjusted EBITDAR........................................................................................... $
2019
Year Ended December 31,
2018
(In thousands)
2017
2,049,146 $
165,234
2,214,380
632,345
2,846,725
847,932
62,296
183,262
1,093,490
3,940,215
—
7,175
275,802
(2,677,996)
1,304,649
92,139
74,656
(544)
3,016,096 $
466,772 $
117,122
583,894
50,112
634,006
1,952,052
136,132
2,088,184
(1,127,394)
960,790
769,513
47,827
18,140
835,480
1,469,486
—
151,392
9,147
—
1,178,044
—
29,633
—
2,837,702 $
668,745
34,751
48,241
751,737
1,712,527
(40,629)
118,475
50,279
—
993,480
—
23,471
—
2,857,603
41
The following table presents Adjusted Property EBITDAR and Adjusted EBITDAR:
2019
Year Ended December 31,
2018
(In thousands)
2017
Bellagio .............................................................................................................. $
MGM Grand Las Vegas .....................................................................................
Mandalay Bay ....................................................................................................
The Mirage .........................................................................................................
Luxor ..................................................................................................................
New York-New York .........................................................................................
Excalibur ............................................................................................................
Park MGM..........................................................................................................
Circus Circus Las Vegas ....................................................................................
Las Vegas Strip Resorts................................................................................
MGM Grand Detroit...........................................................................................
Beau Rivage .......................................................................................................
Gold Strike Tunica .............................................................................................
Borgata ...............................................................................................................
MGM National Harbor.......................................................................................
MGM Springfield...............................................................................................
Empire City Casino ............................................................................................
MGM Northfield Park ........................................................................................
Regional Operations .....................................................................................
MGM Macau ......................................................................................................
MGM Cotai ........................................................................................................
MGM China..................................................................................................
Unconsolidated resorts .......................................................................................
Management and other operations .....................................................................
Stock compensation............................................................................................
Corporate ............................................................................................................
$
465,194 $
282,609
237,472
153,838
125,758
147,179
117,774
65,983
47,315
1,643,122
193,971
111,101
66,712
206,812
215,962
34,349
71,013
69,946
969,866
458,099
276,630
734,729
122,598
24,773
(68,289)
(410,703)
3,016,096 $
490,702 $
371,566
265,741
131,864
120,749
137,622
111,255
14,290
62,526
1,706,315
195,817
105,493
52,081
203,945
210,729
13,789
—
—
781,854
478,121
96,212
574,333
147,690
74,790
(68,211)
(379,069)
2,837,702 $
506,526
344,685
258,471
176,996
126,650
135,036
113,561
49,191
70,274
1,781,390
176,280
89,319
52,882
286,690
149,426
—
—
—
754,597
535,524
—
535,524
146,222
26,838
(60,936)
(326,032)
2,857,603
Liquidity and Capital Resources
Cash Flows – Summary
Our cash flows consisted of the following:
2019
Year Ended December 31,
2018
(In thousands)
2017
Net cash provided by operating activities ........................................................ $
Net cash provided by (used in) investing activities..........................................
Net cash provided by (used in) financing activities .........................................
1,810,401 $
3,519,434
(4,529,594)
1,722,539 $
(2,083,021)
389,234
2,206,411
(1,580,592)
(568,778)
Cash Flows
Operating activities. Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges,
but can be affected by changes in working capital, the timing of significant interest payments, tax payments or refunds, and
distributions from unconsolidated affiliates. Cash provided by operating activities increased to $1.8 billion in 2019 from $1.7 billion in
2018. Operating cash flows increased in the current year period compared to the prior year period due to increases in our operating
income primarily from our Regional Operations and MGM China, as discussed above, partially offset by an increase in cash paid for
interest, as discussed in “Non-operating Results” and an increase in cash paid for taxes. In addition, operating cash flows in the current
year period were negatively affected by a decrease in working capital primarily related to a decrease in gaming deposits. Operating
cash flows in the prior year period were negatively affected by a decrease in working capital primarily related to the timing of
significant chip purchases by gaming promoters at MGM China.
42
Investing activities. Our investing cash flows can fluctuate significantly from year to year depending on our decisions with
respect to strategic capital investments in new or existing resorts, business acquisitions or dispositions, and the timing of maintenance
capital expenditures to maintain the quality of our resorts. Capital expenditures related to regular investments in our existing resorts
can also vary depending on timing of larger remodel projects related to our public spaces and hotel rooms.
Cash provided by investing activities was $3.5 billion in 2019 compared to cash used in investing activities of $2.1 billion in
2018. The change was due primarily to $4.2 billion of proceeds received related to the sale of Bellagio, $652 million of proceeds
received related to the sale of Circus Circus Las Vegas and adjacent land, the inclusion of the $1.0 billion outflow for MGP’s
acquisition of Northfield Park in 2018, and a decrease of $748 million in capital expenditures, partially offset by a $536 million
outflow for the acquisition of Empire City and a $222 million decrease in distributions from unconsolidated affiliates. Distributions
from unconsolidated affiliates in 2019 included our $90 million share of a $180 million dividend paid by CityCenter in
2019. Distributions from unconsolidated affiliates in 2018 included our $313 million share of a $625 million dividend paid by
CityCenter. The decrease in capital expenditures primarily reflects substantial completion of our development projects at MGM Cotai,
MGM Springfield, and the rebranding at Park MGM, as discussed in further detail below.
Capital Expenditures
In 2019, we made capital expenditures of $739 million, of which $146 million related to MGM China. Capital expenditures at
MGM China included $118 million related to projects at MGM Cotai and $28 million related to projects at MGM Macau. Capital
expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $593 million included $49 million related
to the construction of MGM Springfield, $52 million related to the Park MGM rebranding project, as well as expenditures relating to
information technology, the expansion of the convention center at MGM Grand Las Vegas and various room, restaurant, and
entertainment venue remodels.
In 2018, we made capital expenditures of $1.5 billion, of which $376 million related to MGM China, excluding development
fees and capitalized interest on development fees eliminated in consolidation. Capital expenditures at MGM China included $340
million related to the construction of MGM Cotai and $36 million related to projects at MGM Macau. Capital expenditures at our Las
Vegas Strip Resorts, Regional Operations and corporate entities of $1.1 billion included $368 million related to the construction of
MGM Springfield, $228 million related to the Park MGM rebranding project, as well as expenditures relating to the expansion of the
convention center at MGM Grand Las Vegas and various room, restaurant, and entertainment venue remodels.
Financing activities. Cash used in financing activities was $4.5 billion in 2019 compared to cash provided by financing
activities of $389 million in 2018. The change was due primarily to net debt repayments of $4.1 billion in 2019 compared to net debt
borrowings of $2.2 billion in 2018, partially offset by proceeds from MGP’s issuances of Class A shares in 2019 of $1.3 billion and a
decrease of $252 million in share repurchases.
Borrowings and Repayments of Long-term Debt
In 2019, we repaid net debt of $4.1 billion which consisted of the repayment of our $850 million 8.625% notes due 2019, the
repayment of an aggregate $2.8 billion of our senior notes, as described below, $750 million of net repayments on our senior credit
facility, $1.1 billion of net repayments on the Operating Partnership’s senior credit facility, and $1.8 billion of net repayments on the
current and previous MGM China senior secured credit facilities, partially offset by our issuance of $1.0 billion of our senior notes,
the Operating Partnership’s issuance of $750 million of senior notes, and MGM China’s issuance of $1.5 billion of senior notes.
In April 2019, we issued $1.0 billion in aggregate principal amount of 5.5% senior notes due 2027. We used the net proceeds
from the offering to fund the purchase of $639 million in aggregate principal amount of our outstanding 6.75% senior notes due 2020
and $233 million in aggregate principal amount of our outstanding 5.25% senior notes due 2020 through our cash tender offers. In
December 2019, we used a portion of the net proceeds from the Bellagio Sale-Leaseback Transaction to redeem for cash the
remaining $267 million principal amount of its outstanding 5.25% senior notes due 2020, the remaining $361 million principal amount
of its outstanding 6.75% senior notes due 2020, all $1.25 billion principal amount of its outstanding 6.625% senior notes due 2021,
permanently repay the $750 million outstanding on our term loan A facility, and fully repay amounts outstanding under our revolving
credit facility.
In May 2019, MGM China issued $750 million in aggregate principal amount of 5.375% senior notes due 2024 and $750
million in aggregate principal amount of 5.875% senior notes due 2026 and used the proceeds to permanently repay approximately
$1.0 billion on its term loan facility with the remainder used to pay down its revolving credit facility under its prior senior secured
credit facility. In August 2019, MGM China entered into a new $1.25 billion senior unsecured revolving credit facility, on which it
drew $776 million and used the proceeds to fully repay the borrowings outstanding under its previous senior secured credit facility.
43
In November 2019, the Operating Partnership used the proceeds from its November 2019 Class A share issuance to prepay $65
million on the term loan A facility and $476 million on the term loan B facility, which reflects all scheduled amortization plus
additional principal, and fully repaid the outstanding balance on its revolving credit facility. The proceeds from the Operating
Partnership’s issuance of $750 million 5.75% senior notes due 2027 in January 2019 along with the proceeds from MGP’s January
2019 Class A share issuance were primarily used to finance MGP’s acquisition of the real property associated with Empire City and
finance the Park MGM Lease Transaction.
In 2018, we borrowed net debt of $2.2 billion which primarily consisted of the issuance of $1.0 billion 5.75% senior notes due
2025, $368 million of net borrowings on our senior credit facility, $137 million of net borrowings on the MGM China credit facility,
and $728 million of net borrowings on the Operating Partnership senior credit facility. Additionally, we paid $77 million of debt
issuance costs related to the amendments of the Operating Partnership’s senior credit facility in March and June 2018, the amendment
of MGM China’s credit facility in June 2018, the amendment of our senior credit facility in December 2018, and the issuance of the
$1.0 billion 5.75% senior notes.
Dividends, Distributions to Noncontrolling Interest Owners and Share Repurchases
In May 2018, our Board of Directors authorized a $2.0 billion stock repurchase program and completed the previously
announced $1.0 billion stock repurchase program. In 2019, we repurchased and retired $1.0 billion of our common stock pursuant to
our current $2.0 billion stock repurchase plan. In 2018, we repurchased and retired $1.3 billion of our common stock pursuant to our
current and prior stock repurchase plan. The remaining availability under our $2.0 billion stock repurchase program was
approximately $357 million as of December 31, 2019.
In 2019, MGM China paid dividends of $62 million, of which we received $35 million and noncontrolling interests received
$27 million. In 2018, MGM China paid dividends of $78 million, of which we received $44 million and noncontrolling interests
received $34 million.
During 2019, we paid dividends each quarter of $0.13 per share, totaling $271 million for the year. During 2018, we paid
dividends each quarter of $0.12 per share, totaling $261 million for the year.
The Operating Partnership paid the following distributions to its partnership unit holders during 2019 and 2018:
•
•
$534 million of distributions paid in 2019, of which we received $372 million and MGP received $162 million, which MGP
concurrently paid as a dividend to its Class A shareholders;
$454 million of distributions paid in 2018, of which we received $333 million and MGP received $121 million, which MGP
concurrently paid as a dividend to its Class A shareholders.
Other Factors Affecting Liquidity
Anticipated sources and uses of cash. We require a certain amount of cash on hand to operate our resorts. In addition to
required cash on hand for operations, we utilize corporate cash management procedures to minimize the amount of cash held on hand
or in banks. Funds are swept from the accounts at most of our domestic resorts daily into central bank accounts, and excess funds are
invested overnight or are used to repay borrowings under our credit facility. We have significant outstanding debt, rent payments,
interest payments, and contractual obligations in addition to planned capital expenditures (and required capital expenditures pursuant
to the terms of our long-term leases). In addition, we plan to repurchase our outstanding debt and equity securities subject to
limitations in our credit facility and Delaware law, as applicable.
We held cash and cash equivalents of $2.3 billion at December 31, 2019, of which MGM China held $420 million and the
Operating Partnership held $202 million. At December 31, 2019, we had $11.3 billion in principal amount of indebtedness, including
$1.7 billion outstanding under the $3.1 billion Operating Partnership credit facility, and $667 million outstanding under the $1.25
billion MGM China revolving credit facility. We expect to meet our debt maturities and planned equity repurchases and capital
expenditure requirements with future anticipated operating cash flows, cash and cash equivalents, proceeds from the MGP BREIT
Venture Transaction, MGP’s cash redemption of our Operating Partnership units, and available borrowings under our credit facilities.
We expect to make domestic capital investments at our resorts and corporate entities of $410 million to $420 million. Additionally, we
expect to make capital investments at MGM China of $195 million to $205 million.
44
As part of the MGP BREIT Venture Transaction, the consideration to us for the real estate assets of MGM Grand Las Vegas
included, among other things, $2.4 billion of cash. Further, in connection with the waiver agreement signed in February 2019, we have
the ability to exercise our right to receive cash for up to $1.4 billion of our Operating Partnership units. With the proceeds from the
MGP BREIT Venture Transaction and the cash we expect to receive for redemption of the Operating Partnership units, we plan to
repurchase debt and equity securities, as discussed further below. Additionally, in connection with the MGP BREIT Venture
Transaction, we entered into an unsecured credit agreement, comprised of a $1.5 billion unsecured revolving facility that matures in
February 2025.
Subsequent to the year ended December 31, 2019, we repurchased 11 million shares of our common stock pursuant to our $2.0
billion share repurchase program at an average price of $32.57 per share for an aggregate amount of $354 million. Repurchased shares
will be retired.
On February 12, 2020, we announced that our Board of Directors adopted a $3.0 billion stock repurchase program. On February
13, 2020, we announced cash tender offers to acquire up to $1.25 billion in aggregate purchase price of our issued and outstanding
common stock through a modified “Dutch auction” tender offer at a price not greater than $34 nor less than $29 per share, in cash, less
any applicable withholding taxes and without interest, upon the terms and subject to the conditions described in the offer to purchase
dated February 13, 2020, and in the related letter of transmittal and other related materials. The tender offer is scheduled to expire on
March 12, 2020, unless extended or terminated.
On February 18, 2020, we commenced cash tender offers to purchase up to $750 million in aggregate principal amount of our
outstanding 5.75% senior notes due 2025, 4.625% senior notes due 2026, and 5.5% senior notes due 2027. Holders of notes that are
tendered by March 2, 2020 will receive the tender offer consideration plus an early tender premium. The tender offers will expire on
March 16, 2020, unless extended or earlier terminated by us. We intend to fund the tender offers with the net cash proceeds from the
MGP BREIT Venture Transaction, and, if necessary, cash on hand or borrowings under our revolving credit facility.
On February 12, 2020, the Board of Directors approved a quarterly dividend to holders of record on March 10, 2020 of $0.15
per share, which will be paid on March 16, 2020. In January 2020, the Operating Partnership paid $147 million of distributions to its
partnership unit holders, of which we received $94 million and MGP received $53 million, which MGP concurrently paid as a
dividend to its Class A shareholders.
As discussed in Executive Overview, due to of the outbreak of a novel coronavirus (Covid-19) primarily concentrated in China
and the resulting impacts on visitation to Macau, we expect material declines in MGM China’s operating results during the first
quarter of 2020 and potentially thereafter. Additionally, to the extent that the virus impacts the willingness or ability of customers to
travel to our properties in the United States (due to travel restrictions, or otherwise), our domestic results of operations could also be
negatively impacted. We are continuing to evaluate the nature and extent of the impacts to our business, which could have a material
effect on our consolidated operating results for the first quarter of 2020 and potentially thereafter. Given the uncertain nature of these
circumstances, the related impact on our results of operations, cash flows and financial condition cannot be reasonably estimated at
this time.
Principal Debt Arrangements
See Note 9 to the accompanying consolidated financial statements for information regarding our debt agreements as of
December 31, 2019.
Off Balance Sheet Arrangements
As of December 31, 2019, our off-balance sheet arrangements consist primarily of purchase obligations, disclosed below, and
our variable interest in unconsolidated affiliates, which is our investment in Bellagio BREIT Venture. See Note 2 to the accompanying
consolidated financial statements for additional information relating to our exposure to risks associated with our variable interest.
45
Commitments and Contractual Obligations
The following table summarizes our scheduled contractual obligations as of December 31, 2019:
Long-term debt(1) ........................................ $
Estimated interest payments on long-term
debt(2) ..........................................................
Construction commitments.........................
Operating lease liabilities(3) ........................
Finance lease liabilities(3)............................
Other long-term liabilities(4)........................
Other purchase obligations(5) ......................
$
2020
2021
2022
2023
(In millions)
2024
Thereafter Total
—
$
— $
1,000 $
1,649 $
2,467 $
6,155 $ 11,271
638
31
346
30
—
109
1,154 $
638
—
324
27
43
35
1,067 $
600
—
314
25
7
24
1,970 $
511
—
316
17
—
1
2,494 $
378
—
321
—
—
—
3,166 $
498
—
10,067
—
32
—
3,263
31
11,688
99
82
169
16,752 $ 26,603
(1) Reflects scheduled amortization payments and debt maturities. Refer to Note 9 for further information on long-term debt.
(2)
Estimated interest payments, including the impact of interest rate swap agreements, are based on principal amounts and expected maturities of debt outstanding at
December 31, 2019.
(3) Refer to Note 11 for further information on our leases.
(4) Reflects future expected cash outlays of our other long-term liabilities recorded on our balance sheet as of December 31, 2019, and, accordingly, we have not
included such liabilities above that do not have future cash payments, such as deferred rent. We have also excluded contingent consideration related to the Empire
City acquisition, general liability and workers compensation insurance claims, deferred income tax liabilities and unrecognized tax benefits from the amounts
presented in the table as the amounts that will be settled in cash are not known or contingent upon certain future events occurring, and the timing of any payments
is uncertain.
(5) Our purchase obligations represent minimum obligations we have under agreements with certain of our vendors, primarily advertising and entertainment contracts.
Also, although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our
requirements based on our business needs prior to the delivery of goods or performance of services, and hence, have not been included in the table above.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our
consolidated financial statements. To prepare our consolidated financial statements in accordance with accounting principles generally
accepted in the United States of America, we must make estimates and assumptions that affect the amounts reported in the
consolidated financial statements. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be
critical accounting estimates, where changes in the estimates and assumptions could have a material effect on our results of operations,
financial position or cash flows. However, by their nature, judgments are subject to an inherent degree of uncertainty and therefore
actual results can differ from our estimates.
Allowance for Doubtful Casino Accounts Receivable
Marker play represents a significant portion of the table games volume at certain of our Las Vegas resorts. Our other casinos do
not emphasize marker play to the same extent, although we offer markers to customers at those casinos as well. MGM China extends
credit to certain in-house VIP gaming customers and gaming promoters. We maintain strict controls over the issuance of markers and
aggressively pursue collection from our customers who fail to pay their marker balances timely. These collection efforts are similar to
those used by most large corporations when dealing with overdue customer accounts, including the mailing of statements and
delinquency notices, personal contacts, the use of outside collection agencies and civil litigation. Markers are generally legally
enforceable instruments in the United States and Macau. Markers are not legally enforceable instruments in some foreign countries,
but the United States assets of foreign customers may be reached to satisfy judgments entered in the United States. We consider the
likelihood and difficulty of enforceability, among other factors, when we issue credit to customers at our domestic resorts who are not
residents of the United States. MGM China performs background checks and investigates the credit worthiness of gaming promoters
and casino customers prior to issuing credit. Refer to Note 2 for further discussion of the Company’s casino receivables and those due
from customers residing in foreign countries.
We maintain an allowance, or reserve, for doubtful casino accounts at all of our operating casino resorts. The provision for
doubtful accounts, an operating expense, increases the allowance for doubtful accounts. We regularly evaluate the allowance for
doubtful casino accounts. At domestic resorts where marker play is not significant, the allowance is generally established by applying
standard reserve percentages to aged account balances. At domestic resorts where marker play is significant, we apply standard
reserve percentages to aged account balances under a specified dollar amount and specifically analyze the collectability of each
account with a balance over the specified dollar amount, based on the age of the account, the customer’s financial condition, collection
history and any other known information. MGM China specifically analyzes the collectability of casino receivables on an individual
basis taking into account the age of the account, the financial condition and the collection history of the gaming promoter or casino
customer.
46
In addition to enforceability issues, the collectability of unpaid markers given by foreign customers at our domestic resorts is
affected by a number of factors, including changes in currency exchange rates and economic conditions in the customers’ home
countries. Because individual customer account balances can be significant, the allowance and the provision can change significantly
between periods, as information about a certain customer becomes known or as changes in a region’s economy occur.
The following table shows key statistics related to our casino receivables, net of discounts:
Casino receivables .................................................................................................................
Allowance for doubtful casino accounts receivable ..............................................................
Allowance as a percentage of casino accounts receivable.....................................................
$
December 31,
2019
2018
(In thousands)
394,163
88,338
$
22%
419,127
85,544
20%
Approximately $77 million and $48 million of casino receivables and $16 million and $12 million of the allowance for doubtful
casino accounts receivable relate to MGM China at December 31, 2019 and 2018, respectively. The allowance for doubtful accounts
as a percentage of casino accounts receivable increased in the current year due to an increase in the age of outstanding account
balances at our domestic resorts. At December 31, 2019, a 100 basis-point change in the allowance for doubtful accounts as a
percentage of casino accounts receivable would change income before income taxes by $4 million.
Fixed Asset Capitalization and Depreciation Policies
Property and equipment are stated at cost. A significant amount of our property and equipment was acquired through business
combinations and was therefore recognized at fair value at the acquisition date. Maintenance and repairs that neither materially add to
the value of the property nor appreciably prolong its life are charged to expense as incurred. Depreciation and amortization are
provided on a straight-line basis over the estimated useful lives of the assets. When we construct assets, we capitalize direct costs of
the project, including fees paid to architects and contractors, property taxes, and certain costs of our design and construction
subsidiaries. In addition, interest cost associated with major development and construction projects is capitalized as part of the cost of
the project. Interest is typically capitalized on amounts expended on the project using the weighted-average cost of our outstanding
borrowings. Capitalization of interest starts when construction activities begin and ceases when construction is substantially complete
or development activity is suspended for more than a brief period.
We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a
maintenance expense or a capital asset is a matter of judgment. When constructing or purchasing assets, we must determine whether
existing assets are being replaced or otherwise impaired, which also may be a matter of judgment. In addition, our depreciation
expense is highly dependent on the assumptions we make about our assets’ estimated useful lives. We determine the estimated useful
lives based on our experience with similar assets, engineering studies, and our estimate of the usage of the asset. Whenever events or
circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.
Impairment of Long-lived Assets, Goodwill and Indefinite-lived Intangible Assets
We evaluate our property and equipment and other long-lived assets for impairment based on our classification as held for sale
or to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the
appropriate authority commits to a plan to sell the asset at a reasonable price in relation to its fair value and is actively seeking a buyer.
For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as
estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and used, we review
for impairment whenever indicators of impairment exist. We then compare the estimated future cash flows of the asset, on an
undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is
indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is recorded based on the fair value of
the asset. For operating assets, fair value is typically measured using a discounted cash flow model whereby future cash flows are
discounted using a weighted-average cost of capital, developed using a standard capital asset pricing model, based on guideline
companies in our industry. If an asset is still under development, future cash flows include remaining construction costs. All
recognized impairment losses, whether for assets to be held for sale or assets to be held and used, are recorded as operating expenses.
47
There are several estimates, assumptions and decisions in measuring impairments of long-lived assets. First, management must
determine the usage of the asset. To the extent management decides that an asset will be sold, it is more likely that an impairment may
be recognized. Assets must be tested at the lowest level for which identifiable cash flows exist. This means that some assets must be
grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and
actual results may differ materially from our estimates.
On a quarterly basis, we review our major long-lived assets to determine if events have occurred or circumstances exist that
indicate a potential impairment. Potential factors which could trigger an impairment include underperformance compared to historical
or projected operating results, negative industry or economic factors, significant changes to our operating environment, or changes in
intended use of the asset group. We estimate future cash flows using our internal budgets and probability weight cash flows in certain
circumstances to consider alternative outcomes associated with recoverability of the asset group, including potential sale. Historically,
undiscounted cash flows of our significant operating asset groups have exceeded their carrying values by a substantial margin. During
2019, we recorded a non-cash impairment charge relating to the carrying value of Circus Circus Las Vegas and adjacent land. Refer to
Note 16 for further discussion.
We review indefinite-lived intangible assets at least annually and between annual test dates in certain circumstances. We
perform our annual impairment test for indefinite-lived intangible assets in the fourth quarter of each fiscal year. Indefinite-lived
intangible assets consist primarily of license rights and trademarks. For our 2019 annual impairment tests, we utilized the option to
perform a qualitative (“step zero”) analysis for certain of our indefinite-lived intangibles and concluded it was more likely than not
that the fair values of such intangibles exceeded their carrying values by a substantial margin. We elected to perform a quantitative
analysis for the Borgata trade name using the relief-from-royalty method, for which the fair value exceeded its carrying value by
approximately 11% in 2019. We also elected to perform a quantitative analysis for the Northfield gaming license in 2019 primarily
using the discounted cash flow approach, for which the fair value exceeded its carrying value by a substantial margin. As discussed
below, management makes significant judgments and estimates as part of these analyses. If certain future operating results do not meet
current expectations it could cause carrying values of the intangibles to exceed their fair values in future periods, potentially resulting
in an impairment charge.
We review goodwill at least annually and between annual test dates in certain circumstances. None of our reporting units
incurred any goodwill impairment charges in 2019. For our 2019 annual impairment tests, we utilized the option to perform a step
zero analysis for certain of our reporting units and concluded it was more likely than not that the fair values of such reporting units
exceeded their carrying values by a substantial margin. For reporting units for which we elected to perform a quantitative analysis, the
fair value of such reporting units exceeded their carrying value by a substantial margin. As discussed below, management makes
significant judgments and estimates as part of these analyses. If future operating results of our reporting units do not meet current
expectations it could cause carrying values of our reporting units to exceed their fair values in future periods, potentially resulting in a
goodwill impairment charge.
There are several estimates inherent in evaluating these assets for impairment. In particular, future cash flow estimates are, by
their nature, subjective and actual results may differ materially from our estimates. In addition, the determination of multiples,
capitalization rates and the discount rates used in the impairment tests are highly judgmental and dependent in large part on
expectations of future market conditions.
See Note 2 and Note 7 to the accompanying consolidated financial statements for further discussion of goodwill and other
intangible assets.
Impairment of Investments in Unconsolidated Affiliates
See Note 2 to the accompanying consolidated financial statements for discussion of our evaluation of other-than-temporary
impairment of investments in unconsolidated affiliates. Our investments in unconsolidated affiliates had no material impairments in
2019, 2018, or 2017.
Income Taxes
We recognize deferred tax assets, net of applicable reserves, related to net operating loss and tax credit 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.
48
We file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions,
although the income taxes paid in foreign jurisdictions are not material. Our income tax returns are subject to examination by the
Internal Revenue Service (“IRS”) and other tax authorities. Positions taken in tax returns are sometimes subject to uncertainty in the
tax laws and may not ultimately be accepted by the IRS or other tax authorities. See Note 10 in the accompanying consolidated
financial statements for a discussion of the status and impact of examinations by tax authorities.
We assess our tax positions using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold
and is measured at the largest amount of benefit that is greater than fifty percent likely of being realized. Uncertain tax positions must
be reviewed at each balance sheet date. Liabilities we record as a result of this analysis are recorded separately from any current or
deferred income tax accounts and are classified as current in “Other accrued liabilities” or long-term in “Other long-term liabilities”
based on the time until expected payment. Additionally, we recognize accrued interest and penalties, if any, related to unrecognized
tax benefits in income tax expense.
Refer to Note 10 in the accompanying consolidated financial statements for further discussion relating to income taxes.
49
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
In addition to the inherent risks associated with our normal operations, we are also exposed to additional market risks. Market
risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange
rates. Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt. We attempt to limit our
exposure to interest rate risk by managing the mix of our long-term fixed rate borrowings and short-term borrowings under our bank
credit facilities and by utilizing interest rate swap agreements that provide for a fixed interest payment on the Operating Partnership’s
credit facility. A change in interest rates generally does not have an impact upon our future earnings and cash flow for fixed-rate debt
instruments. As fixed-rate debt matures, however, and if additional debt is acquired to fund the debt repayment, future earnings and
cash flow may be affected by changes in interest rates. This effect would be realized in the periods subsequent to the periods when the
debt matures. We do not hold or issue financial instruments for trading purposes and do not enter into derivative transactions that
would be considered speculative positions.
As of December 31, 2019, variable rate borrowings represented approximately 10% of our total borrowings after giving effect to
the currently effective interest rate swap agreements on which the Operating Partnership pays a weighted average of 1.821% on a total
notional amount of $1.9 billion. Additionally, the Operating Partnership has $900 million of notional amount of forward starting
swaps that are not currently effective. The following table provides additional information about our gross long-term debt subject to
changes in interest rates excluding the effect of the Operating Partnership interest rate swaps discussed above:
2020 2021 2022
2023
2024
Thereafter
Total
Debt maturing in,
Fair Value
December 31,
2019
Fixed-rate ................................................ $ — $ — $ 1,000
Average interest rate ............................... N/A N/A
Variable rate ............................................ $ — $ — $ —
Average interest rate ............................... N/A N/A N/A
7.8%
$
$ 1,250
$ 1,800
(In millions)
$
5.5%
667
$
4.9%
6.0%
399
$
3.5%
4,851
$ 8,901
1,305
$ 2,371
5.4%
3.8%
$
5.8%
$
4.1%
9,759
2,377
In addition to the risk associated with our variable interest rate debt, we are also exposed to risks related to changes in foreign
currency exchange rates, mainly related to MGM China and to our operations at MGM Macau and MGM Cotai. While recent
fluctuations in exchange rates have not been significant, potential changes in policy by governments or fluctuations in the economies
of the United States, China, Macau or Hong Kong could cause variability in these exchange rates. We cannot assure you that the Hong
Kong dollar will continue to be pegged to the U.S. dollar or the current peg rate for the Hong Kong dollar will remain at the same
level. The possible changes to the peg of the Hong Kong dollar may result in severe fluctuations in the exchange rate thereof. For U.S.
dollar denominated debt incurred by MGM China, fluctuations in the exchange rates of the Hong Kong dollar in relation to the U.S.
dollar could have adverse effects on our financial position and results of operations. As of December 31, 2019, a 1% weakening of the
Hong Kong dollar (the functional currency of MGM China) to the U.S. dollar would result in a foreign currency transaction loss of
$15 million.
50
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements:
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting ..............................
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements .........................................
Consolidated Balance Sheets — December 31, 2019 and 2018..................................................................................................
Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Operations ..............................................................................................................................
Consolidated Statements of Comprehensive Income (Loss)................................................................................................
Consolidated Statements of Cash Flows .............................................................................................................................
Consolidated Statements of Stockholders’ Equity ..............................................................................................................
Notes to Consolidated Financial Statements ..............................................................................................................................
52
53
55
56
57
58
59
60
Financial Statement Schedule:
Schedule II — Valuation and Qualifying Accounts....................................................................................................................
104
The financial information included in the financial statement schedule should be read in conjunction with the consolidated
financial statements. All other financial statement schedules have been omitted because they are not applicable, or the required
information is included in the consolidated financial statements or the notes thereto.
51
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of MGM Resorts International
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of MGM Resorts International and subsidiaries (the “Company”)
as of December 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control —
Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2019, of
the Company and our report dated February 27, 2020, expressed an unqualified opinion on those financial statements and included an
explanatory paragraph regarding the Company’s change in accounting principle.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 27, 2020
52
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of MGM Resorts International
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of MGM Resorts International and subsidiaries (the "Company")
as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income (loss), cash flows
and stockholders’ equity for each of the three years in the period ended December 31, 2019, and the related notes and the financial
statement schedule of Valuation and Qualifying Accounts included in Item 15(a)(2), (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as
of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended
December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2019, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February 27, 2020, expressed an unqualified opinion on the Company's internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the financial statements, effective January 1, 2019, the Company adopted FASB ASC Topic 842,
Leases, using the modified retrospective approach.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or
fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are
not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or
disclosures to which it relates.
Acquisition and Goodwill and Other Intangible Assets Valuation of Empire City – Refer to Notes 4 and 7 to the financial
statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment at the Empire City reporting unit (“Empire City”) involves the
comparison of the fair value of the reporting unit to its carrying value. The Company determines the fair value of its reporting units
using a combination of income-based and market-based approaches and incorporates assumptions it believes market participants
would utilize. Under the income-based approach, the Company uses a discounted cash flow model to estimate the fair value of the
reporting unit, which requires management to make subjective estimates and assumptions, particularly related to the forecast of future
revenues and EBITDA, as well as in the selection of the company specific risk premium utilized in the calculation of the discount rate.
The fair value of Empire City reporting unit exceeded its carrying value as of the measurement date and, therefore, no impairment was
recognized.
53
The Company’s goodwill balance was $2.1 billion as of December 31, 2019, of which $256 million relates to the Empire City
acquisition completed in January 2019. The sensitivity of operating results for Empire City to changes in the regulatory environment
and competition required the application of a high degree of auditor judgment and an increased extent of effort, including the need to
involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and
assumptions related to the forecast of future revenues and EBITDA, as well as in determining the reasonableness of the selection of
the company specific risk premium utilized in the calculation of the discount rate.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimate of the forecast of future revenues and EBITDA, as well as the company
specific risk premium utilized in the discount rate included the following, among others:
• We tested the operating effectiveness of controls over management’s goodwill impairment evaluation, including the controls
related to management’s forecast of future revenues and EBITDA, as well as the controls related to management’s selection
of the company specific risk premium utilized in the calculation of the discount rate.
• We evaluated management’s ability to accurately forecast future revenues and EBITDA and assessed the reasonableness of
the forecasted future revenues and EBITDA by comparing the forecast to:
o Historical revenues and EBITDA
o
o
o
Forecast information included in analyst and industry reports
Internal communications to management and the Board of Directors
Subsequent forecasts, to evaluate for changes made by management since the annual measurement date through issuance
of the financial statements.
• With the assistance of our fair value specialists, we evaluated the reasonableness of the company specific risk premium
utilized in the discount rate by gaining an understanding of the estimated company specific risk premium, gathering and
analyzing relevant facts and objective evidence provided by the Company, and gathering and analyzing additional facts and
objective evidence obtained through independent research.
/s/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 27, 2020
We have served as the Company's auditor since 2002.
54
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
2019
2018
Current assets
ASSETS
Cash and cash equivalents ................................................................................................
Accounts receivable, net ...................................................................................................
Inventories ........................................................................................................................
Income tax receivable .......................................................................................................
October 1 litigation insurance receivable .........................................................................
Prepaid expenses and other...............................................................................................
Total current assets......................................................................................................
$
$
2,329,604
612,717
102,888
27,167
735,000
200,317
4,007,693
1,526,762
657,206
110,831
28,431
—
203,548
2,526,778
Property and equipment, net...............................................................................................
18,285,955
20,729,888
Other assets
Investments in and advances to unconsolidated affiliates ................................................
Goodwill ...........................................................................................................................
Other intangible assets, net ...............................................................................................
Operating lease right-of-use assets, net ............................................................................
Other long-term assets, net ...............................................................................................
Total other assets .........................................................................................................
$
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable..............................................................................................................
Construction payable ........................................................................................................
Current portion of long-term debt.....................................................................................
Accrued interest on long-term debt ..................................................................................
October 1 litigation liability..............................................................................................
Other accrued liabilities ....................................................................................................
Total current liabilities ................................................................................................
$
Deferred income taxes, net ..................................................................................................
Long-term debt, net..............................................................................................................
Operating lease liabilities.....................................................................................................
Other long-term obligations ................................................................................................
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests .................................................................................
Stockholders' equity
Common stock, $.01 par value: authorized 1,000,000,000 shares, issued and
outstanding 503,147,632 and 527,479,528 shares .........................................................
Capital in excess of par value ...........................................................................................
Retained earnings..............................................................................................................
Accumulated other comprehensive loss ...........................................................................
Total MGM Resorts International stockholders' equity ..............................................
Noncontrolling interests....................................................................................................
Total stockholders' equity............................................................................................
$
$
822,366
2,084,564
3,826,504
4,392,481
456,793
11,582,708
33,876,356
235,437
74,734
—
122,250
735,000
2,024,002
3,191,423
2,106,506
11,168,904
4,277,970
363,588
732,867
1,821,392
3,944,463
—
455,318
6,954,040
30,210,706
302,578
311,793
43,411
140,046
—
2,151,054
2,948,882
1,342,538
15,088,005
—
259,240
105,046
102,250
5,031
3,531,099
4,201,337
(10,202)
7,727,265
4,935,654
12,662,919
33,876,356
$
5,275
4,092,085
2,423,479
(8,556)
6,512,283
3,957,508
10,469,791
30,210,706
$
The accompanying notes are an integral part of these consolidated financial statements.
55
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Year Ended December 31,
2018
2017
2019
Revenues
Casino .................................................................................................................
Rooms .................................................................................................................
Food and beverage..............................................................................................
Entertainment, retail and other ...........................................................................
Reimbursed costs ................................................................................................
$
Expenses
Casino .................................................................................................................
Rooms .................................................................................................................
Food and beverage..............................................................................................
Entertainment, retail and other ...........................................................................
Reimbursed costs ................................................................................................
General and administrative .................................................................................
Corporate expense ..............................................................................................
NV Energy exit expense .....................................................................................
Preopening and start-up expenses.......................................................................
Property transactions, net ...................................................................................
Gain on Bellagio transaction ..............................................................................
Depreciation and amortization............................................................................
Income from unconsolidated affiliates .................................................................
Operating income ...................................................................................................
Non-operating income (expense)
Interest expense, net of amounts capitalized ......................................................
Non-operating items from unconsolidated affiliates ..........................................
Other, net ............................................................................................................
Income before income taxes...................................................................................
Benefit (provision) for income taxes ..................................................................
Net income...............................................................................................................
Less: Net income attributable to noncontrolling interests ..................................
Net income attributable to MGM Resorts International....................................
Earnings per share
Basic ...................................................................................................................
Diluted ................................................................................................................
Weighted average common shares outstanding
Basic ...................................................................................................................
Diluted ................................................................................................................
$
$
$
$
6,517,759
2,322,579
2,145,247
1,477,200
436,887
12,899,672
3,623,899
829,677
1,661,626
1,051,400
436,887
2,101,217
464,642
—
7,175
275,802
(2,677,996)
1,304,649
9,078,978
119,521
3,940,215
(847,932)
(62,296)
(183,262)
(1,093,490)
2,846,725
(632,345)
2,214,380
(165,234)
2,049,146
3.90
3.88
524,173
527,645
$
$
$
5,753,150
2,212,573
1,959,021
1,412,860
425,492
11,763,096
3,199,775
791,761
1,501,868
999,979
425,492
1,764,638
419,204
—
151,392
9,147
—
1,178,044
10,441,300
147,690
1,469,486
(769,513)
(47,827)
(18,140)
(835,480)
634,006
(50,112)
583,894
(117,122)
466,772
0.82
0.81
544,253
549,536
$
$
$
$
5,016,426
2,152,741
1,871,969
1,354,301
402,042
10,797,479
2,673,397
748,947
1,414,611
954,125
402,042
1,559,575
356,872
(40,629)
118,475
50,279
—
993,480
9,231,174
146,222
1,712,527
(668,745)
(34,751)
(48,241)
(751,737)
960,790
1,127,394
2,088,184
(136,132)
1,952,052
3.38
3.34
572,253
578,795
The accompanying notes are an integral part of these consolidated financial statements.
56
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
Net income ........................................................................................................
Other comprehensive income (loss), net of tax:
$
Foreign currency translation adjustment ......................................................
Other comprehensive income (loss) related to cash flow hedges ................
Other comprehensive loss .......................................................................
Comprehensive income....................................................................................
Less: Comprehensive income attributable to noncontrolling interests ........
Comprehensive income attributable to MGM Resorts International.........
$
Year Ended December 31,
2018
$
583,894
$
2019
2,214,380
28,870
(29,505)
(635)
2,213,745
(168,447)
2,045,298
$
(13,022)
3,576
(9,446)
574,448
(112,622)
461,826
$
2017
2,088,184
(43,188)
7,995
(35,193)
2,052,991
(119,700)
1,933,291
The accompanying notes are an integral part of these consolidated financial statements.
57
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities
Net income.............................................................................................................................................................. $
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization........................................................................................................................
Amortization of debt discounts, premiums and issuance costs ......................................................................
Loss on early retirement of debt .....................................................................................................................
Provision for doubtful accounts......................................................................................................................
Stock-based compensation..............................................................................................................................
Property transactions, net................................................................................................................................
Gain on Bellagio transaction...........................................................................................................................
Noncash lease expense....................................................................................................................................
Income from unconsolidated affiliates ...........................................................................................................
Distributions from unconsolidated affiliates...................................................................................................
Deferred income taxes ....................................................................................................................................
Change in operating assets and liabilities:
Accounts receivable ................................................................................................................................
Inventories...............................................................................................................................................
Income taxes receivable and payable, net...............................................................................................
Prepaid expenses and other .....................................................................................................................
Accounts payable and accrued liabilities ................................................................................................
Other ...............................................................................................................................................................
Net cash provided by operating activities .......................................................................................
Cash flows from investing activities
Capital expenditures, net of construction payable..................................................................................................
Dispositions of property and equipment.................................................................................................................
Proceeds from Bellagio transaction ........................................................................................................................
Proceeds from sale of Circus Circus Las Vegas and adjacent land........................................................................
Proceeds from sale of business units and investment in unconsolidated affiliate ..................................................
Acquisition of Northfield, net of cash acquired .....................................................................................................
Acquisition of Empire City Casino, net of cash acquired ......................................................................................
Investments in and advances to unconsolidated affiliates ......................................................................................
Distributions from unconsolidated affiliates ..........................................................................................................
Other .......................................................................................................................................................................
Net cash provided by (used in) investing activities ........................................................................
Cash flows from financing activities
Net borrowings (repayments) under bank credit facilities – maturities of
90 days or less......................................................................................................................................................
Issuance of long-term debt .....................................................................................................................................
Retirement of senior notes and senior debentures ..................................................................................................
Debt issuance costs .................................................................................................................................................
Issuance of MGM Growth Properties Class A shares, net .....................................................................................
Dividends paid to common shareholders................................................................................................................
Distributions to noncontrolling interest owners .....................................................................................................
Purchases of common stock ...................................................................................................................................
Other .......................................................................................................................................................................
Net cash provided by (used in) financing activities ........................................................................
Effect of exchange rate on cash ...................................................................................................................................
Cash and cash equivalents
Net increase for the period......................................................................................................................................
Balance, beginning of period..................................................................................................................................
Balance, end of period ............................................................................................................................................ $
Supplemental cash flow disclosures
Interest paid, net of amounts capitalized ................................................................................................................ $
Federal, state and foreign income taxes paid (refunds received), net.....................................................................
Non-cash investing and financing activities
Note receivable related to sale of Circus Circus Las Vegas and adjacent land...................................................... $
Investment in Bellagio BREIT Venture .................................................................................................................
Increase in construction accounts payable..............................................................................................................
2019
Year Ended December 31,
2018
2017
2,214,380
$
583,894
$
2,088,184
1,304,649
38,972
198,151
39,270
88,838
275,802
(2,677,996 )
71,784
(57,225 )
299
595,046
(726,610 )
6,522
1,259
7,567
465,602
(35,909 )
1,810,401
(739,006 )
2,578
4,151,499
652,333
—
—
(535,681 )
(81,877 )
100,700
(31,112 )
3,519,434
(3,634,049 )
3,250,000
(3,764,167 )
(63,391 )
1,250,006
(271,288 )
(223,303 )
(1,031,534 )
(41,868 )
(4,529,594 )
2,601
802,842
1,526,762
2,329,604
826,970
28,493
133,689
62,133
—
$
$
$
1,178,044
41,102
3,619
39,762
70,177
9,147
—
—
(96,542 )
11,563
46,720
(149,554 )
(7,860 )
14,120
(8,656 )
21,508
(34,505 )
1,722,539
(1,486,843 )
25,612
—
—
163,616
(1,034,534 )
—
(56,295 )
322,631
(17,208 )
(2,083,021 )
1,242,259
1,000,000
(2,265 )
(76,519 )
—
(260,592 )
(184,932 )
(1,283,333 )
(45,384 )
389,234
(1,985 )
26,767
1,499,995
1,526,762
723,609
(10,100 )
—
—
—
$
$
$
993,480
32,996
45,696
20,603
62,494
50,279
—
—
(111,471 )
13,050
(1,259,406 )
(17,972 )
(4,656 )
(53,204 )
(54,739 )
422,258
(21,181 )
2,206,411
(1,864,082 )
718
—
—
—
—
—
(16,727 )
301,211
(1,712 )
(1,580,592 )
15,001
350,000
(502,669 )
(9,977 )
387,548
(252,014 )
(170,402 )
(327,500 )
(58,765 )
(568,778 )
(3,627 )
53,414
1,446,581
1,499,995
658,637
181,651
—
—
204,466
The accompanying notes are an integral part of these consolidated financial statements.
58
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Years ended December 31, 2019, 2018 and 2017
(In thousands)
Common Stock
Shares
$
574,124
—
—
Par
Value
5,741
—
—
Capital in
Excess of
Par Value
$
5,653,575
—
—
Retained
Earnings
(Accumulated
Deficit)
$
518,456
1,952,052
—
Accumulated
Other
Comprehensive
Income (Loss)
15,053
$
—
Total
MGM Resorts
International
Stockholders'
Equity
Non-
Controlling
Interests
$
6,192,825
1,952,052
$
(23,995 )
(23,995 )
3,749,132
128,320
(19,193 )
Total
Stockholders'
Equity
9,941,957
2,080,372
(43,188 )
$
5,234
—
5,234
57,531
2,761
4,991
7,995
62,522
Balances, January 1, 2017 ...................................
Net income.....................................................
Currency translation adjustment....................
Other comprehensive income - cash
flow hedges.................................................
Stock-based compensation ............................
Issuance of common stock pursuant to
stock-based compensation awards..............
Cash distributions to noncontrolling
interest owners............................................
Dividends declared to common shareholders
($0.44 per share).........................................
MGP dividend payable to Class A
shareholders................................................
Issuance of performance share units..............
Repurchase of common stock........................
MGP Class A share issuance.........................
Adjustment of redeemable non-
controlling interest to redemption value.....
MGM National Harbor transaction ...............
Other ..............................................................
Balances, December 31, 2017 ..............................
Net income.....................................................
Currency translation adjustment....................
Other comprehensive income - cash
flow hedges.................................................
Stock-based compensation ............................
Issuance of common stock pursuant to
stock-based compensation awards..............
Cash distributions to noncontrolling
interest owners............................................
Dividends declared to common shareholders
($0.48 per share).........................................
MGP dividend payable to Class A
shareholders................................................
Issuance of performance share units..............
Repurchase of common stock........................
Adjustment of redeemable non-
controlling interest to redemption value.....
Other ..............................................................
Balances, December 31, 2018 ..............................
Net income.....................................................
Currency translation adjustment....................
Other comprehensive loss - cash
flow hedges.................................................
Stock-based compensation ............................
Issuance of common stock pursuant to
stock-based compensation awards..............
Cash distributions to noncontrolling
interest owners............................................
Dividends declared to common shareholders
($0.52 per share).........................................
MGP dividend payable to Class A
shareholders................................................
Issuance of performance share units..............
Repurchase of common stock........................
Adjustment of redeemable non-
controlling interest to redemption value.....
Empire City acquisition.................................
Empire City MGP transaction .......................
MGP Class A share issuance.........................
Park MGM Transaction.................................
Northfield OpCo transaction .........................
Other ..............................................................
Balances, December 31, 2019 ..............................
—
—
2,152
—
—
—
—
(10,000 )
—
—
—
—
566,276
—
—
—
—
2,280
—
—
—
—
(41,076 )
—
—
527,480
—
—
—
—
2,150
—
—
—
—
(35,854 )
—
9,372
—
—
—
—
—
503,148
$
—
—
22
—
—
—
—
(100 )
—
—
—
—
5,663
—
—
—
—
23
—
—
—
57,531
(33,802 )
—
—
—
9,648
(327,400 )
35,029
(18,280 )
(12,486 )
(6,106 )
5,357,709
—
—
—
65,072
(32,225 )
—
—
—
—
(411 )
—
3,609
(1,282,922 )
—
—
5,275
—
—
—
—
20
—
—
(21,326 )
2,168
4,092,085
—
—
—
83,897
(25,985 )
—
—
—
—
—
—
(252,014 )
—
—
—
—
—
—
(1,195 )
2,217,299
466,772
—
—
—
—
—
(260,592 )
—
—
—
—
—
2,423,479
2,049,146
—
—
—
—
—
(271,288 )
—
—
(358 )
—
1,546
(1,031,176 )
—
94
—
—
—
—
—
5,031
(2,714 )
265,671
(18,913 )
150,464
(1,984 )
21,681
(3,473 )
$
3,531,099
$
—
—
—
—
—
—
—
—
—
—
4,201,337
—
—
—
—
—
—
109
—
(11 )
—
(3,610 )
—
(7,422 )
2,476
—
—
—
—
—
—
—
—
—
(8,556 )
—
16,125
(19,973 )
—
—
—
—
—
—
—
—
—
195
1,512
16
(2 )
(33,780 )
—
(33,780 )
—
(147,685 )
(147,685 )
(252,014 )
—
(252,014 )
—
9,648
(327,500 )
35,138
(18,280 )
(12,497 )
(7,301 )
7,577,061
466,772
(29,777 )
95
—
326,484
—
19,383
(448 )
4,034,063
108,114
(7,422 )
(5,600 )
(29,777 )
9,743
(327,500 )
361,622
(18,280 )
6,886
(7,749 )
11,611,124
574,886
(13,022 )
2,476
65,072
1,100
5,124
3,576
70,196
(32,202 )
—
(32,202 )
—
(147,321 )
(147,321 )
(260,592 )
—
(260,592 )
—
3,609
(1,283,333 )
(21,326 )
2,168
6,512,283
2,049,146
16,125
(31,732 )
107
—
—
(6,347 )
3,957,508
156,141
12,745
(31,732 )
3,716
(1,283,333 )
(21,326 )
(4,179 )
10,469,791
2,205,287
28,870
(19,973 )
83,897
(9,532 )
4,941
(29,505 )
88,838
(25,965 )
—
(25,965 )
—
(181,816 )
(181,816 )
(271,288 )
—
(271,288 )
—
1,546
(1,031,534 )
(53,489 )
—
—
(53,489 )
1,546
(1,031,534 )
(2,714 )
265,765
(18,718 )
151,976
(1,968 )
21,679
(2,992 )
7,727,265
$
—
—
23,745
1,049,582
2,496
(27,439 )
772
4,935,654
(2,714 )
265,765
5,027
1,201,558
528
(5,760 )
(2,220 )
$ 12,662,919
$
481
(10,202 ) $
The accompanying notes are an integral part of these consolidated financial statements.
59
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — ORGANIZATION
Organization. MGM Resorts International (together with its consolidated subsidiaries, unless otherwise indicated or unless the
context requires otherwise, the “Company”) is a Delaware corporation that acts largely as a holding company and, through
subsidiaries, owns and operates casino resorts.
As of December 31, 2019, the Company owns and operates the following integrated casino, hotel and entertainment resorts in
Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas, The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, and
Excalibur. Operations at MGM Grand Las Vegas include management of The Signature at MGM Grand Las Vegas. The Company
owns and operates along with local investors, MGM Grand Detroit in Detroit, Michigan, MGM National Harbor in Prince George’s
County, Maryland and MGM Springfield in Springfield, Massachusetts. The Company also owns and operates Borgata located on
Renaissance Pointe in the Marina area of Atlantic City, New Jersey, Empire City in Yonkers, New York, MGM Northfield Park in
Northfield Park, Ohio, and the following resorts in Mississippi: Beau Rivage in Biloxi and Gold Strike in Tunica. Additionally, the
Company owns and operates the Park, a dining and entertainment district located between New York-New York and Park MGM,
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.
MGM Growth Properties LLC (“MGP”), a consolidated subsidiary of the Company, is organized as an umbrella partnership
REIT (commonly referred to as an UPREIT) structure in which substantially all of its assets are owned by and substantially all of its
businesses are conducted through MGM Growth Properties Operating Partnership LP (the “Operating Partnership”). MGP has two
classes of authorized and outstanding voting common shares (collectively, the “shares”): Class A shares and a single Class B share.
The Company owns MGP’s Class B share, which does not provide its holder any rights to profits or losses or any rights to receive
distributions from operations of MGP or upon liquidation or winding up of MGP. MGP’s Class A shareholders are entitled to one vote
per share, while the Company, as the owner of the Class B share, is entitled to an amount of votes representing a majority of the total
voting power of MGP’s shares so long as the Company and its controlled affiliates’ (excluding MGP) aggregate beneficial ownership
of the combined economic interests in MGP and the Operating Partnership does not fall below 30%. The Company and MGP each
hold Operating Partnership units representing limited partner interests in the Operating Partnership. The general partner of the
Operating Partnership is a wholly-owned subsidiary of MGP. The Operating Partnership units held by the Company are exchangeable
into Class A shares of MGP on a one-to-one basis, or cash at the fair value of a Class A share. The determination of settlement method
is at the option of MGP’s independent conflicts committee; refer to discussion below as to the agreement entered into in February
2020 which allows the Company to receive cash of up to $1.4 billion in exchange for its Operating Partnership units, should the
Company elect to have its units redeemed for a 24 month period following the closing of the MGP BREIT Venture Transaction (as
defined below). The Company and MGP’s ownership interest percentage in the Operating Partnership have varied based upon the
transactions that MGP has completed, as discussed in Note 18. As of December 31, 2019, the Company owned 63.7% of the
Operating Partnership units, and MGP held the remaining 36.3% ownership interest in the Operating Partnership.
Pursuant to a master lease agreement between a subsidiary of the Company and a subsidiary of the Operating Partnership, the
Company leases the real estate assets of The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur, The Park,
Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, and MGM Northfield Park. As
discussed further below, pursuant to a lease agreement between a subsidiary of the Company and the venture with Blackstone Real
Estate Income Trust, Inc. (“BREIT), the Company leases the real estate assets of Bellagio from the Bellagio BREIT Venture.
In July 2018, MGP acquired the membership interests of Northfield Park Associates, LLC (“Northfield”), a company that
owned the real estate assets and operations of the Hard Rock Rocksino Northfield Park (“Northfield Acquisition”). In April 2019, the
Company acquired the membership interests of Northfield from MGP and MGP retained the associated real estate assets. The
Company then rebranded the property to MGM Northfield Park, which was then added to the existing master lease between the
Company and MGP. Refer to Note 4 and Note 18 for additional information.
In January 2019, the Company acquired the real property and operations associated with the Empire City Casino's race track and
casino ("Empire City"). Subsequently, MGP acquired the developed real property associated with Empire City from the Company and
Empire City was added to the existing master lease between the Company and MGP. Refer to Note 4 and Note 18 for additional
information.
In March 2019, the Company entered into an amendment to the existing master lease with respect to investments made by the
Company related to improvements at Park MGM and NoMad Las Vegas. Refer to Note 18 for additional information on this
transaction.
60
On November 15, 2019, the Company formed a venture (the “Bellagio BREIT Venture”) with a subsidiary of BREIT, which
acquired the Bellagio real estate assets from the Company and entered into a lease agreement to lease the real estate assets back to the
Company. As consideration for the real estate assets, the Company received total consideration of $4.25 billion, which consisted of a
5% equity interest in the venture and cash of approximately $4.2 billion. The Company recorded a gain of $2.7 billion related to sale
of the Bellagio real estate assets, recorded as “Gain on Bellagio transaction,” which primarily reflects the difference between the
carrying value of the real estate assets sold and the consideration received. The Company also provides a shortfall guarantee of the
principal amount of indebtedness of the debt of the Bellagio BREIT Venture’s $3.01 billion of debt (and any interest accrued and
unpaid thereon). Refer to Note 11 and Note 12 for additional information relating to the lease and guarantee, respectively.
In December 2019, the Company completed the sale of Circus Circus Las Vegas and adjacent land. See Note 16 for additional
information related to this transaction.
On February 14, 2020, the Company completed a series of transactions (collectively the “MGP BREIT Venture Transaction”)
pursuant to which the real estate assets of MGM Grand Las Vegas and Mandalay Bay (including Mandalay Place) were contributed to
a newly formed entity (“MGP BREIT Venture”), owned 50.1% by the Operating Partnership and 49.9% by a subsidiary of BREIT. In
exchange for the contribution of the real estate assets, the Company received total consideration of $4.6 billion, which was comprised
of $2.5 billion of cash, $1.3 billion of the Operating Partnership’s secured indebtedness assumed by MGP BREIT Venture, and the
Operating Partnership’s 50.1% equity interest in the MGP BREIT Venture. In addition, the Operating Partnership issued
approximately 3 million Operating Partnership units to the Company representing 5% of the equity value of MGP BREIT Venture. In
connection with the transactions, the Company provided a shortfall guaranty of the principal amount of indebtedness of the MGP
BREIT Venture (and any interest accrued and unpaid thereon). On the closing date, BREIT also purchased approximately 5 million
MGP Class A shares for $150 million.
In connection with the transactions, MGP BREIT Venture entered into a lease with the Company for the real estate assets of
Mandalay Bay and MGM Grand Las Vegas. The lease provides for a term of thirty years with two ten-year renewal options and has an
initial annual base rent of $292 million, escalating annually at a rate of 2% per annum for the first fifteen years and thereafter equal to
the greater of 2% and the CPI increase during the prior year subject to a cap of 3%. In addition, the lease will require the Company to
spend 3.5% of net revenues over a rolling five-year period at the properties on capital expenditures and for the Company to comply
with certain financial covenants, which, if not met, will require the Company to maintain cash security or provide one or more letters
of credit in favor of the landlord in an amount equal to the rent for the succeeding one-year period.
In connection with the MGP BREIT Venture Transaction, the existing master lease with MGP was modified to remove the
Mandalay Bay property and the annual rent under the MGP master lease was reduced by $133 million.
The real estate assets of Mandalay Bay and MGM Grand Las Vegas were classified as held and used in the consolidated balance
sheets at December 31, 2019 as the held for sale criteria were not met as of the balance sheet date.
Also, on January 14, 2020, the Company, the Operating Partnership, and MGP entered into an agreement for the Operating
Partnership to waive its right to issue MGP Class A shares, in lieu of cash, to the Company in connection with the Company
exercising its right to require the Operating Partnership to redeem Operating Partnership units that the Company holds, at a price per
unit equal to a 3% discount to the applicable cash amount as calculated in accordance with the operating agreement. The waiver
terminates on the earlier of 24 months following the closing of the MGP BREIT Venture Transaction and the Company receiving cash
proceeds of $1.4 billion as consideration for the redemption of the Company’s Operating Partnership units.
The Company has an approximate 56% controlling interest in MGM China Holdings Limited (together with its subsidiaries,
“MGM China”), which owns MGM Grand Paradise, S.A. (“MGM Grand Paradise”). MGM Grand Paradise owns and operates the
MGM Macau resort and casino and MGM Cotai, an integrated casino, hotel and entertainment resort located on the Cotai Strip in
Macau, as well as the related gaming subconcession and land concessions.
In early 2020, the rapid spread of a respiratory illness caused by a novel coronavirus (Covid-19) identified as originating in
Wuhan, Hubei Province, China led to certain actions taken by the Chinese government and other countries to attempt to mitigate the
spread of the virus. Among the actions taken were the implementation of travel restrictions, such as the temporary suspension of
China’s visa scheme that permits mainland Chinese to travel to Macau, the temporary suspension of all ferry service from Hong Kong
to Macau, the suspension of casino operations in Macau for a 15-day period that commenced on February 5, 2020, and restrictions
placed on inbound travel from mainland China to the U.S. Although operations at MGM Macau and MGM Cotai resumed on February
20, 2020, there are currently limits on the number of gaming tables allowed to operate and restrictions on the number of seats available
at each table, and the temporary suspension of the visa scheme and ferry service to Macau remains in place. Due to the reduced travel
to the Company's Macau properties as a result of these measures, the Company expects a decline in the operating results of its MGM
61
China operating segments. Additionally, to the extent that the virus impacts the willingness or ability of customers to travel to the
Company’s properties in the United States (due to travel restrictions, or otherwise), the Company’s domestic results of operations
could also be negatively impacted. The Company is continuing to evaluate the nature and extent of the impacts to its business, which
could have a material effect on its consolidated operating results for the first quarter of 2020 and potentially thereafter. Given the
uncertain nature of these circumstances, the related impact on results of operations, cash flows and financial condition cannot be
reasonably estimated at this time.
The Company owns 50% of and manages CityCenter Holdings, LLC (“CityCenter”), located between Bellagio and Park MGM.
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, an integrated casino, hotel and entertainment resort; and
Vdara, a luxury condominium-hotel. See Note 6 and Note 18 for additional information related to CityCenter.
The Company has three reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China. See Note 17 for
additional information about the Company’s segments.
NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. For entities not determined to be a variable interest entity (“VIE”), the Company consolidates such
entities in which the Company owns 100% of the equity. For entities in which the Company owns less than 100% of the equity
interest, the Company consolidates the entity if it has the direct or indirect ability to control the entities’ activities based upon the
terms of the respective entities’ ownership agreements, such as MGM China. For these entities, the Company records a noncontrolling
interest in the consolidated balance sheets. The Company’s investments in unconsolidated affiliates which are 50% or less owned are
accounted for under the equity method when the Company can exercise significant influence over or has joint control of the
unconsolidated affiliate, such as CityCenter. All intercompany balances and transactions are eliminated in consolidation.
The Company evaluates entities for which control is achieved through means other than voting rights to determine if it is the
primary beneficiary of a VIE. A VIE is an entity in which either (i) the equity investors as a group, if any, lack the power through
voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance or (ii)
the equity investment at risk is insufficient to finance that entity’s activities without additional subordinated financial support. The
Company identifies the primary beneficiary of a VIE as the enterprise that has both of the following characteristics: (i) the power to
direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) the obligation to absorb
losses or receive benefits of the VIE that could potentially be significant to the entity. The Company consolidates its investment in a
VIE when it determines that it is its primary beneficiary. For these VIEs, the Company records a noncontrolling interest in the
consolidated balance sheets. The Company may change its original assessment of a VIE upon subsequent events such as the
modification of contractual arrangements that affect the characteristics or adequacy of the entity’s equity investments at risk and the
disposition of all or a portion of an interest held by the primary beneficiary. The Company performs this analysis on an ongoing basis.
Management has determined that MGP is a VIE because the Class A equity investors as a group lack the power through voting
or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance. The
Company has determined that it is the primary beneficiary of MGP and consolidates MGP because (i) its ownership of MGP’s single
Class B share entitles it to a majority of the total voting power of MGP’s shares, and (ii) the exchangeable nature of the Operating
Partnership units owned provide the Company the right to receive benefits from MGP that could potentially be significant to MGP.
The Company has recorded MGP’s ownership interest in the Operating Partnership as noncontrolling interest in the Company’s
consolidated financial statements. As of December 31, 2019, on a consolidated basis MGP had total assets of $11.9 billion, primarily
related to its real estate investments, and total liabilities of $5.0 billion, primarily related to its indebtedness.
Management has determined that Bellagio BREIT Venture is a VIE because the equity holders as a group lack the power
through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic
performance. The Company has determined that it is not the primary beneficiary of Bellagio BREIT Venture and, accordingly, does
not consolidate Bellagio BREIT Venture, because the Company does not have power to direct the activities that could potentially be
significant to Bellagio BREIT Venture; BREIT, as the managing member, has such power. The Company has recorded its 5%
ownership interest in Bellagio BREIT Venture as an investment in unconsolidated affiliates in the Company’s consolidated financial
statements, for which such amount was $61 million as of December 31, 2019. The Company’s maximum exposure to loss as a result
of its involvement with Bellagio BREIT Venture is equal to the carrying value of its investment, assuming no future capital funding
requirements, plus the exposure to loss resulting from the Company’s guarantee of the debt of Bellagio BREIT Venture, as further
discussed in Note 12.
62
Reclassifications. Certain reclassifications have been made to conform the prior period presentation.
Management’s use of estimates. The consolidated financial statements have been prepared in conformity with accounting
principles generally accepted in the United States of America. These principles require the Company’s management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
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, and 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. The Company used the following inputs in its fair value measurements:
•
•
•
Level 1 and Level 2 inputs for its long-term debt fair value disclosures. See Note 9;
Level 2 and Level 3 inputs when assessing the fair value of assets acquired and liabilities assumed during the Northfield
and Empire City acquisition. See Note 4;
Level 2 and Level 3 inputs when assessing the fair value of the note receivable relating to the Circus Circus Las Vegas and
adjacent land sale. See Note 16.
Cash and cash equivalents. Cash and cash equivalents include investments and interest-bearing instruments with maturities of
90 days or less at the date of acquisition. Such investments are carried at cost, which approximates market value. Book overdraft
balances resulting from the Company’s cash management program are recorded as “Accounts payable” or “Construction payable” as
applicable.
Accounts receivable and credit risk. Financial instruments that potentially subject the Company to concentrations of credit
risk consist primarily of casino accounts receivable. The Company issues credit to approved casino customers and gaming promoters
following background checks and investigations of creditworthiness. At December 31, 2019 and 2018, approximately 57% and 62%,
respectively, of the Company’s gross casino accounts receivable were owed by customers from foreign countries, primarily within
Asia. Business or economic conditions or other significant events in these countries could affect the collectability of such receivables.
Accounts receivable are typically non-interest bearing and are initially recorded at cost. Accounts are written off when
management deems the account to be uncollectible. Recoveries of accounts previously written off are recorded when received. An
estimated allowance for doubtful accounts is maintained to reduce the Company’s receivables to their net carrying amount, which
approximates fair value. The allowance is estimated based on both a specific review of customer accounts as well as historical
collection experience and current economic and business conditions. Management believes that as of December 31, 2019, no
significant concentrations of credit risk existed for which an allowance had not already been recorded.
Inventories. Inventories consist primarily of food and beverage, retail merchandise and operating supplies, and are stated at the
lower of cost or net realizable value. Cost is determined primarily using the average cost method for food and beverage and operating
supplies. Cost for retail merchandise is determined using the cost method.
Property and equipment. Property and equipment are stated at cost. A significant amount of the Company’s property and
equipment was acquired through business combinations and therefore recognized at fair value at the acquisition date. Gains or losses
on dispositions of property and equipment are included in the determination of income or loss. Maintenance costs are expensed as
incurred. As of December 31, 2019, and 2018, the Company had accrued $14 million and $47 million, respectively for property and
equipment within “Accounts payable”.
Property and equipment are generally depreciated over the following estimated useful lives on a straight-line basis:
Buildings and improvements.......................................................................................................................................
Land improvements .....................................................................................................................................................
Furniture and fixtures ..................................................................................................................................................
Equipment....................................................................................................................................................................
15 to 40 years
10 to 20 years
3 to 20 years
3 to 15 years
63
The Company evaluates its property and equipment and other long-lived assets for impairment based on its classification as held
for sale or to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management
with the appropriate authority commits to a plan to sell the asset at a reasonable price in relation to its fair value and is actively
seeking a buyer. For assets held for sale, the Company recognizes the asset at the lower of carrying value or fair market value less
costs to sell, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and
used, the Company reviews for impairment whenever indicators of impairment exist. The Company then compares the estimated
future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the
carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment
charge is recorded based on the fair value of the asset, typically measured using a discounted cash flow model. If an asset is still under
development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets held for
sale or assets to be held and used, are recorded as operating expenses. Refer to Note 16 for discussion on the impairment loss recorded
on Circus Circus Las Vegas and adjacent land in 2019.
Capitalized interest. The interest cost associated with major development and construction projects is capitalized and included
in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project
using the weighted-average cost of the Company’s outstanding borrowings. Capitalization of interest ceases when the project is
substantially complete, or development activity is suspended for more than a brief period.
Investments in and advances to unconsolidated affiliates. The Company has investments in unconsolidated affiliates
accounted for under the equity method. Under the equity method, carrying value is adjusted for the Company’s share of the investees’
earnings and losses, amortization of certain basis differences, as well as capital contributions to and distributions from these
companies. Distributions in excess of equity method earnings are recognized as a return of investment and recorded as investing cash
inflows in the accompanying consolidated statements of cash flows. The Company classifies operating income and losses as well as
gains and impairments related to its investments in unconsolidated affiliates as a component of operating income or loss and classifies
non-operating income or losses related to its investments in unconsolidated affiliates as a component of non-operating income or loss,
as the Company’s investments in such unconsolidated affiliates are an extension of the Company’s core business operations.
The Company evaluates its investments in unconsolidated affiliates for impairment whenever events or changes in
circumstances indicate that the carrying value of its investment may have experienced an “other-than-temporary” decline in value. If
such conditions exist, the Company compares the estimated fair value of the investment to its carrying value to determine if an
impairment is indicated and determines whether the impairment is “other-than-temporary” based on its assessment of all relevant
factors, including consideration of the Company’s intent and ability to retain its investment. The Company estimates fair value using a
discounted cash flow analysis based on estimated future results of the investee and market indicators of terminal year capitalization
rates, and a market approach that utilizes business enterprise value multiples based on a range of multiples from the Company’s peer
group.
Goodwill and other intangible assets. Goodwill represents the excess of purchase price over fair market value of net assets
acquired in business combinations. Goodwill and indefinite-lived intangible assets must be reviewed for impairment at least annually
and between annual test dates in certain circumstances. The Company performs its annual impairment tests in the fourth quarter of
each fiscal year. No impairments were indicated or recorded as a result of the annual impairment review for goodwill and indefinite-
lived intangible assets in 2019, 2018 and 2017.
Accounting guidance provides entities the option to perform a qualitative assessment of goodwill and indefinite-lived intangible
assets (commonly referred to as “step zero”) in order to determine whether further impairment testing is necessary. In performing the
step zero analysis the Company considers macroeconomic conditions, industry and market considerations, current and forecasted
financial performance, entity-specific events, and changes in the composition or carrying amount of net assets of reporting units for
goodwill. In addition, the Company takes into consideration the amount of excess of fair value over carrying value determined in the
last quantitative analysis that was performed, as well as the period of time that has passed since the last quantitative analysis. If the
step zero analysis indicates that it is more likely than not that the fair value is less than its carrying amount, the entity would proceed
to a quantitative analysis.
Under the quantitative analysis, goodwill for relevant reporting units is tested for impairment using a discounted cash flow
analysis based on the estimated future results of the Company’s reporting units discounted using market discount rates and market
indicators of terminal year capitalization rates, and a market approach that utilizes business enterprise value multiples based on a range
of multiples from the Company’s peer group. If the fair value of the reporting unit is less than its carrying value, an impairment charge
is recognized equal to the difference. Under the quantitative analysis, license rights are tested for impairment using a discounted cash
flow approach, and trademarks are tested for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived
intangible asset is less than its carrying amount, an impairment loss is recognized equal to the difference.
64
Revenue recognition. The Company’s revenue from contracts with customers consists of casino wagers transactions, hotel
room sales, food and beverage transactions, entertainment shows, and retail transactions.
The transaction price for a casino wager is the difference between gaming wins and losses (“net win”). In certain circumstances,
the Company offers discounts on markers, which is estimated based upon historical business practice, and recorded as a reduction of
casino revenue. Commissions rebated to gaming promoters and VIP players at MGM China are also recorded as a reduction of casino
revenue. The Company accounts for casino revenue on a portfolio basis given the similar characteristics of wagers by recognizing net
win per gaming day versus on an individual wager basis.
For casino wager transactions that include other goods and services provided by the Company to gaming patrons on a
discretionary basis to incentivize gaming, the Company allocates revenue from the casino wager transaction to the good or service
delivered based upon stand-alone selling price (“SSP”). Discretionary goods and services provided by the Company and supplied by
third parties are recognized as an operating expense.
For casino wager transactions that include incentives earned by customers under the Company’s loyalty programs, the Company
allocates a portion of net win based upon the SSP of such incentive (less estimated breakage). This allocation is deferred and
recognized as revenue when the customer redeems the incentive. When redeemed, revenue is recognized in the department that
provides the goods or service. Redemption of loyalty incentives at third party outlets are deducted from the loyalty liability and
amounts owed are paid to the third party, with any discount received recorded as other revenue. Commissions and incentives provided
to gaming customers were $2.5 billion, $2.3 billion and $2.1 billion for the years ended December 31, 2019, 2018 and 2017,
respectively. After allocating revenue to other goods and services provided as part of casino wager transactions, the Company records
the residual amount to casino revenue.
The transaction price of rooms, food and beverage, and retail contracts is the net amount collected from the customer for such
goods and services. The transaction price for such contracts is recorded as revenue when the good or service is transferred to the
customer over their stay at the hotel or when the delivery is made for the food & beverage and retail & other contracts. Sales and
usage-based taxes are excluded from revenues. For some arrangements, the Company acts as an agent in that it arranges for another
party to transfer goods and services, which primarily include certain of the Company’s entertainment shows as well as customer rooms
arranged by online travel agents.
The Company also has other contracts that include multiple goods and services, such as packages that bundle food, beverage, or
entertainment offerings with hotel stays and convention services. For such arrangements, the Company allocates revenue to each good
or service based on its relative SSP. The Company primarily determines the SSP of rooms, food and beverage, entertainment, and
retail goods and services based on the amount that the Company charges when sold separately in similar circumstances to similar
customers.
Contract and Contract-Related Liabilities. There may be a difference between the timing of cash receipts from the customer and
the recognition of revenue, resulting in a contract or contract-related liability. The Company generally has three types of liabilities
related to contracts with customers: (1) outstanding chip liability, which represents the amounts owed in exchange for gaming chips
held by a customer, (2) loyalty program obligations, which represents the deferred allocation of revenue relating to loyalty program
incentives earned, as discussed above, and (3) customer advances and other, which is primarily funds deposited by customers before
gaming play occurs (“casino front money”) and advance payments on goods and services yet to be provided such as advance ticket
sales and deposits on rooms and convention space or for unpaid wagers. These liabilities are generally expected to be recognized as
revenue within one year of being purchased, earned, or deposited and are recorded within “Other accrued liabilities” on the
Company’s consolidated balance sheets.
The following table summarizes the activity related to contract and contract-related liabilities:
Outstanding Chip Liability
Loyalty Program
Customer Advances and Other
2019
2018
2019
2018
2019
2018
Balance at January 1......$
Balance at December 31.
Increase / (decrease) .......$
323,811 $
314,570
(9,241) $
597,753 $
323,811
(273,942) $
(in thousands)
113,293 $
126,966
13,673 $
91,119 $
113,293
22,174 $
667,285 $
481,095
(186,190) $
539,626
667,285
127,659
Reimbursed cost. Costs reimbursed pursuant to management services are recognized as revenue in the period it incurs the costs
as this reflects when the Company performs its related performance obligation and is entitled to reimbursement. Reimbursed costs
relate primarily to the Company’s management of CityCenter.
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Revenue by source. The Company presents the revenue earned disaggregated by the type or nature of the good or service
(casino, room, food and beverage, and entertainment, retail and other) and by relevant geographic region within Note 17.
Leases. The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An
arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a
period of time in exchange for consideration. Control over the use of the identified asset means the lessee has both the right to obtain
substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset.
For leases with terms greater than twelve months, the right-of-use (“ROU”) assets and lease liabilities are recognized based on
the present value of the future minimum lease payments over the lease term at commencement date. The initial measurement of the
operating lease ROU assets also includes any prepaid lease payments and are reduced by any previously accrued deferred rent. When
available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the
Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company typically uses its incremental
borrowing rate to discount the lease payments based on the information available at commencement date. Many of the Company’s
leases include fixed rental escalation clauses that are factored into the determination of lease payments. Lease terms include options to
extend or terminate the lease when it is reasonably certain that such option will be exercised. For operating leases, lease expense for
minimum lease payments is recognized on a straight-line basis over the expected lease term. For finance leases, the ROU asset
depreciates on a straight-line basis over the shorter of the lease term or useful life of the ROU asset and the lease liability accretes
interest based on the interest method using the discount rate determined at lease commencement.
The Company is a lessor under certain of its lease arrangements. Lease revenues earned by the Company from third parties are
classified within the line item corresponding to the type or nature of the tenant’s good or service. Lease revenues include $53 million,
$51 million and $51 million recorded within food and beverage revenue for 2019, 2018 and 2017, respectively, and $89 million, $87
million and $79 million recorded within entertainment, retail, and other revenue for the same such periods, respectively. Lease
revenues from the rental of hotel rooms are recorded as rooms revenues within the consolidated statements of operations.
Advertising. The Company expenses advertising costs as they are incurred. Advertising expense, which is generally included in
general and administrative expenses, was $257 million, $305 million and $223 million for 2019, 2018 and 2017, respectively.
Corporate expense. Corporate expense represents unallocated payroll, aircraft costs, professional fees and various other
expenses not directly related to the Company’s casino resort operations. In addition, corporate expense includes the costs associated
with the Company’s evaluation and pursuit of new business opportunities, which are expensed as incurred.
Preopening and start-up expenses. Preopening and start-up costs, including organizational costs, are expensed as incurred.
Costs classified as preopening and start-up expenses include payroll, outside services, advertising, and other expenses related to new
or start-up operations.
Property transactions, net. The Company classifies transactions such as write-downs and impairments, demolition costs, and
normal gains and losses on the sale of assets as “Property transactions, net.” See Note 16 for a detailed discussion of these amounts.
Redeemable noncontrolling interest. Certain noncontrolling interest parties have non-voting economic interests in MGM
National Harbor which provide for annual preferred distributions by MGM National Harbor to the noncontrolling interest parties
based on a percentage of its annual net gaming revenue (as defined in the MGM National Harbor operating agreement). Such
distributions are accrued each quarter and are paid 90-days after the end of each fiscal year. Beginning on December 31, 2019, the
noncontrolling interest parties each have the ability to require MGM National Harbor to purchase all or a portion of their interests for a
purchase price based on a contractually agreed upon formula.
The Company has recorded the interests as “Redeemable noncontrolling interests” in the mezzanine section of the
accompanying consolidated balance sheets and not stockholders’ equity because their redemption is not exclusively in the Company’s
control. The interests were initially accounted for at fair value. Subsequently, the Company recognizes changes in the redemption
value as they occur and adjusts the carrying amount of the redeemable noncontrolling interests to equal the maximum redemption
value, provided such amount does not fall below the initial carrying value, at the end of each reporting period. The Company records
any changes caused by such an adjustment in capital in excess of par value. Additionally, the carrying amount of the redeemable
noncontrolling interests is adjusted for accrued annual preferred distributions, with changes caused by such adjustments recorded
within net income (loss) attributable to noncontrolling interests.
66
Income per share of common stock. The table below reconciles basic and diluted income per share of common stock. Diluted
net income attributable to common stockholders includes adjustments for redeemable noncontrolling interests and the potentially
dilutive effect on the Company’s equity interests in MGP and MGM China due to shares outstanding under their respective stock
compensation plans. Diluted weighted-average common and common equivalent shares include adjustments for potential dilution of
share-based awards outstanding under the Company’s stock compensation plan.
Numerator:
Net income attributable to MGM Resorts International .....................................
Adjustment related to redeemable noncontrolling interests..........................
Net income available to common stockholders - basic ......................................
$
2019
Year Ended December 31,
2018
(In thousands)
2017
$
2,049,146
(2,713)
2,046,433
$
466,772
(21,326)
445,446
1,952,052
(18,363)
1,933,689
Potentially dilutive effect due to MGP and MGM China stock
compensation plans .......................................................................................
Net income attributable to common stockholders - diluted................................
Denominator:
Weighted-average common shares outstanding basic ........................................
Potential dilution from share-based awards ..................................................
Weighted-average common and common equivalent shares - diluted ...............
Antidilutive share-based awards excluded from the calculation of diluted
earnings per share ...............................................................................................
(194)
2,046,239
$
$
(206)
445,240
$
(268)
1,933,421
524,173
3,472
527,645
544,253
5,283
549,536
572,253
6,542
578,795
1,617
2,668
2,601
Currency translation. The Company translates the financial statements of foreign subsidiaries that are not denominated in U.S.
dollars. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date. Income statement accounts are
translated at the average rate of exchange prevailing during the period. Translation adjustments resulting from this process are
recorded to other comprehensive income (loss). Gains or losses from foreign currency remeasurements are recorded to other non-
operating income (expense).
Accumulated other comprehensive income (loss). Comprehensive income (loss) includes net income (loss) and all other non-
stockholder changes in equity, or other comprehensive income (loss). Elements of the Company’s accumulated other comprehensive
income (loss) are reported in the accompanying consolidated statements of stockholders’ equity. Amounts reported in accumulated
other comprehensive income (loss) related to cash flow hedges will be reclassified to interest expense as interest payments are made
on the corresponding variable-rate debt.
Recently issued accounting standards. In February 2016, the FASB issued ASC 842 “Leases (Topic 842)”, which replaces the
existing guidance in Topic 840, “Leases”, (“ASC 842”). ASC 842 is effective for fiscal years, and interim periods within those years,
beginning after December 15, 2018. ASC 842 requires a dual approach for lessee accounting under which a lessee would classify and
account for its lease agreements as either finance or operating. Both finance and operating leases will result in the lessee recognizing a
ROU asset and a corresponding lease liability. For finance leases, the lessee will recognize interest expense associated with the lease
liability and depreciation expense associated with the ROU asset; and for operating leases, the lessee will recognize straight-line lease
expense. The Company adopted ASC 842 on January 1, 2019 utilizing the simplified transition method and accordingly did not recast
comparative period financial information. The Company elected the basket of transition practical expedients which includes not
needing to reassess: (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or
existing leases, and (3) direct costs for any existing leases. As a result of adoption, the Company recognized $656 million of operating
ROU assets and $580 million of operating lease liabilities as of January 1, 2019.
Prior to the adoption of ASC 842 on January 1, 2019, the MGP master lease between subsidiaries of MGM and MGP was
accounted for as a failed sale of the real estate assets due to the subsidiaries’ investments in the Operating Partnership, which
constituted continuing involvement. As such, the real estate assets were reflected in the balance sheets of the applicable MGM
subsidiaries as well as the associated finance lease liability. 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. Accordingly, the real
estate assets are now only reflected on the balance sheet of MGP and the MGM subsidiaries have recorded operating lease liabilities
and operating ROU assets. The MGP master lease and its related accounting eliminates in consolidation.
67
In June 2016, the FASB issued ASC 326 “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on
Financial Instruments” (“ASC 326”), which replaces the existing incurred loss model with a current expected credit loss (CECL)
model that requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The
Company would be required to use a forward-looking CECL model for accounts receivables, guarantees, and other financial
instruments. The Company will adopt ASC 326 on January 1, 2020 and does not expect ASC 326 to have a material impact on its
financial statements.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,”
(“ASU 2019-12”), which simplifies the accounting for income taxes and includes removal of certain exceptions to the general
principles of ASC 740, Income Taxes, and simplification in several other areas such as accounting for a franchise tax (or similar tax)
that is partially based on income. ASU 2019-12 is effective for the Company beginning on January 1, 2021. Early adoption is
permitted. The Company is currently assessing the impact ASU 2019-12 will have on its consolidated financial statements and
footnote disclosures.
NOTE 3 — ACCOUNTS RECEIVABLE, NET
Accounts receivable, net consisted of the following:
Casino.....................................................................................................................................
Hotel .......................................................................................................................................
Other.......................................................................................................................................
Less: Allowance for doubtful accounts ..................................................................................
NOTE 4 — ACQUISITION
Empire City
December 31,
2019
2018
(In thousands)
$
$
394,163
164,079
149,036
707,278
(94,561)
612,717
$
$
419,127
154,707
174,147
747,981
(90,775)
657,206
On January 29, 2019, the Company acquired the real property and operations associated with Empire City for total consideration
of approximately $865 million, plus customary working capital and other adjustments. The fair value of consideration paid included
the issuance of approximately $266 million of the Company’s common stock, the incurrence of a new bridge facility, and the
remaining balance in cash. If Empire City is awarded a license for live table games on or prior to December 31, 2022 and the
Company accepts such license by December 31, 2024, the Company will pay additional consideration of $50 million. The acquisition
expands the Company’s presence in the northeast region and greater New York City market. Subsequent to the Company’s
acquisition, MGP acquired the developed real property associated with Empire City from the Company and Empire City was added to
the existing master lease between the Company and MGP. See Note 18 for additional information.
The Company recognized 100% of the assets and liabilities of Empire City at fair value on the date of acquisition. Under the
acquisition method, the fair value was allocated to the assets acquired and liabilities assumed in the transaction. The Company
estimated fair value using both level 2 inputs, which are observable inputs for similar assets, and level 3 inputs, which are
unobservable inputs. During the second quarter of 2019, the Company received updated information regarding facts and circumstances
in existence as of the acquisition date that impacted the forecasted revenues and expenses utilized in the preliminary purchase price
valuation. As a result, the Company recorded a measurement period adjustment that included a $76 million decrease to the racing and
gaming license, a $17 million decrease to other intangible assets and a $20 million decrease to deferred income taxes, with the offset
to goodwill.
68
The following table sets forth the purchase price allocation (in thousands):
Fair value of assets acquired and liabilities assumed:
Property and equipment ...........................................................................................................................$
Cash and cash equivalents........................................................................................................................
Racing and gaming license.......................................................................................................................
Other intangible assets .............................................................................................................................
Goodwill...................................................................................................................................................
Other assets ..............................................................................................................................................
Deferred income taxes..............................................................................................................................
Other liabilities .........................................................................................................................................
$
645,733
63,197
52,000
34,000
256,133
24,420
(125,149)
(85,690)
864,644
The Company recognized the identifiable intangible assets at fair value. The estimated fair values of the intangible assets were
determined using methodologies under the income approach based on significant inputs that were not observable. The gaming license
is an indefinite-lived intangible asset and the customer lists and trade name acquired, both of which comprise other intangible assets
above, are amortized over their estimated useful lives of approximately four and five years, respectively. The goodwill is primarily
attributable to the potential for a conversion to a full-scale gaming facility.
For the period from January 29, 2019 through December 31, 2019, Empire City’s net revenue was $193 million, operating
income was $12 million and net income was $36 million. Pro forma results of operations for the acquisition have not been presented
because it is not material to the consolidated results of operations.
Northfield
On July 6, 2018, MGP completed its acquisition of 100% of the membership interests of Northfield for a purchase price of
approximately $1.1 billion (“Northfield Acquisition”). MGP funded the acquisition through a $200 million draw on the Operating
Partnership’s term loan A and a $655 million draw under the Operating Partnership’s revolving credit facility, with the remainder of
the purchase price paid with cash on hand. The acquisition expanded MGP’s real estate assets and diversified MGP’s geographic
reach.
MGP recognized 100% of the assets and liabilities of Northfield at fair value at the date of the acquisition. Under the acquisition
method, the fair value was allocated to the assets acquired and liabilities assumed in the transaction. The Company estimated fair
value using both level 2 inputs, which are observable inputs for similar assets, and level 3 inputs, which are unobservable inputs.
The following table sets forth the purchase price allocation (in thousands):
Fair value of assets acquired and liabilities assumed:
Property and equipment ...........................................................................................................................$
Cash and cash equivalents........................................................................................................................
Racing and gaming license.......................................................................................................................
Customer list ............................................................................................................................................
Goodwill...................................................................................................................................................
Other assets ..............................................................................................................................................
Other liabilities .........................................................................................................................................
$
792,807
35,831
228,000
25,000
17,915
9,598
(38,786)
1,070,365
MGP recognized the identifiable intangible assets at fair value. The estimated fair values of the intangible assets were
determined using methodologies under the income approach based on significant inputs that were not observable. The goodwill was
primarily attributed to the synergies expected to arise after the acquisition.
In April 2019, the Company subsequently acquired the membership interests of Northfield from MGP, and MGP retained the
associated real estate assets. MGM Northfield Park was then added to the existing master lease between the Company and MGP. Refer
to Note 18 for additional information.
For the period from July 6, 2018 through December 31, 2018, Northfield’s net revenue was $133 million, operating income and
net income were both $33 million. Pro forma results of operations for the acquisition have not been presented because it is not
material to the consolidated results of operations.
69
NOTE 5 — PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
Land........................................................................................................................................
Buildings, building improvements and land improvements...................................................
Furniture, fixtures and equipment ..........................................................................................
Construction in progress.........................................................................................................
Less: Accumulated depreciation ............................................................................................
Finance lease ROU assets, net................................................................................................
December 31,
2019
2018
(In thousands)
$
$
5,348,223
15,291,801
5,924,439
209,890
26,774,353
(8,581,835)
93,437
18,285,955
$
$
6,923,769
16,437,695
6,064,330
321,944
29,747,738
(9,017,850)
—
20,729,888
NOTE 6 — INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consisted of the following:
CityCenter Holdings, LLC – CityCenter (50%).....................................................................
Other.......................................................................................................................................
December 31,
2019
2018
$
$
(In thousands)
568,879
253,487
822,366
$
$
589,965
142,902
732,867
The Company recorded its share of income from unconsolidated affiliates, including adjustments for basis differences, as
follows:
Income from unconsolidated affiliates...............................................................
Preopening and start-up expenses......................................................................
Non-operating items from unconsolidated affiliates..........................................
2019
Year Ended December 31,
2018
(In thousands)
2017
$
$
119,521
—
(62,296)
57,225
$
$
147,690
(3,321)
(47,827)
96,542
$
$
146,222
—
(34,751)
111,471
The following table summarizes information related to the Company’s share of income from unconsolidated affiliates:
CityCenter ..........................................................................................................
Other ..................................................................................................................
CityCenter
2019
Year Ended December 31,
2018
(In thousands)
2017
$
$
128,421
(8,900)
119,521
$
$
138,383
9,307
147,690
$
$
133,401
12,821
146,222
Mandarin Oriental sale. On August 30, 2018, CityCenter closed the sale of the Mandarin Oriental and adjacent retail parcels
for approximately $214 million. During the year ended December 31, 2018, CityCenter recognized a loss on the sale of the Mandarin
Oriental of $133 million and the Company recognized a $12 million gain on the sale related to the reversal of basis differences in
excess of its share of the loss recorded by CityCenter, which is recorded within “Income from unconsolidated affiliates”.
70
CityCenter distributions. During the year ended December 31, 2019, CityCenter paid $180 million in dividends and
distributions, of which the Company received its 50% share, or approximately $90 million. During the year ended December 31, 2018,
CityCenter paid $625 million in dividends and distributions, of which the Company received its 50% share, or approximately $313
million. During the year ended December 31, 2017, CityCenter paid $600 million in dividends and distributions, of which the
Company received its 50% share, or approximately $300 million.
Grand Victoria
Grand Victoria sale. On August 7, 2018, the Company, along with its joint venture partner, completed the sale of Grand
Victoria, of which a subsidiary of the Company owned a 50% interest, for $328 million in cash. The Company recorded a gain of $45
million related to the sale, which is recorded within “Property transactions, net”.
Unconsolidated Affiliate Financial Information - CityCenter
Summarized balance sheet information is as follows:
December 31,
2019
2018
(In thousands)
Current assets .........................................................................................................................
Property and other assets, net and other long-term assets......................................................
Current liabilities....................................................................................................................
Long-term debt and other long-term obligations ...................................................................
$
$
405,918
5,982,059
295,815
1,782,411
363,755
6,167,853
347,710
1,763,290
Summarized results of operations are as follows:
2019
Year Ended December 31,
2018
(In thousands)
2017
Net revenues.......................................................................................................
Operating income...............................................................................................
Income from continuing operations ...................................................................
Net income (loss) ...............................................................................................
$
$
1,294,861
188,156
69,143
69,143
$
1,277,745
185,368
97,091
(37,911)
1,227,733
200,109
137,226
131,683
Basis Differences
The Company’s investments in unconsolidated affiliates do not equal the Company’s share of venture-level equity due to
various basis differences. Basis differences related to depreciable assets are being amortized based on the useful lives of the related
assets and liabilities, and basis differences related to non–depreciable assets, such as land and indefinite-lived intangible assets, are not
being amortized. Differences between the Company’s share of venture-level equity and investment balances are as follows:
Venture-level equity attributable to the Company .................................................................
Adjustment to CityCenter equity upon contribution of net assets by MGM Resorts
International (1)...................................................................................................................
CityCenter capitalized interest (2)..........................................................................................
CityCenter completion guarantee (3) .....................................................................................
CityCenter deferred gain (4) ..................................................................................................
CityCenter capitalized interest on sponsor notes (5)..............................................................
Other-than-temporary impairments of CityCenter investment (6).........................................
Other adjustments...................................................................................................................
December 31,
2019
2018
(In thousands)
$
2,399,993
$
2,347,103
(509,382)
177,898
261,708
(210,240)
(34,755)
(1,304,317)
41,461
822,366
$
(514,592)
186,830
274,685
(212,276)
(36,500)
(1,352,118)
39,735
732,867
$
(1) Primarily relates to land and fixed assets.
(2) Relates to interest capitalized on the Company’s investment balance during development and construction stages.
(3) Created by contributions to CityCenter under the completion guarantee recognized as equity contributions by CityCenter
split between the members.
71
(4) Relates to a deferred gain on assets contributed to CityCenter upon formation of CityCenter.
(5) Relates to interest on the sponsor notes capitalized by CityCenter during development. Such sponsor notes were converted
to equity in 2013.
(6) The impairment of the Company’s CityCenter investment includes $352 million of impairments allocated to land as of
December 31, 2019 and 2018.
NOTE 7 — GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets consisted of the following:
December 31,
2019
2018
(In thousands)
Goodwill ................................................................................................................................
$
2,084,564 $
1,821,392
Indefinite-lived intangible assets:
Detroit development rights ...............................................................................................
MGM Northfield Park racing and gaming licenses..........................................................
Trademarks, license rights and other................................................................................
Total indefinite-lived intangible assets .......................................................................
$
Finite-lived intangible assets:
MGM Grand Paradise gaming sub-concession ................................................................
Less: Accumulated amortization ......................................................................................
MGM Macau land concession..........................................................................................
Less: Accumulated amortization ......................................................................................
Customer lists ...................................................................................................................
Less: Accumulated amortization ......................................................................................
Finite-lived gaming licenses and other intangible assets .................................................
Less: Accumulated amortization ......................................................................................
Total finite-lived intangible assets, net .......................................................................
Total other intangible assets, net.................................................................................
$
98,098 $
228,000
352,212
678,310
4,519,558
(1,514,772)
3,004,786
—
—
—
202,347
(161,892)
40,455
141,327
(38,374)
102,953
3,148,194
3,826,504 $
98,098
228,000
312,022
638,120
4,468,766
(1,342,561)
3,126,205
83,885
(32,035)
51,850
174,679
(151,465)
23,214
136,127
(31,053)
105,074
3,306,343
3,944,463
Goodwill. A summary of changes in the Company’s goodwill by reportable segment is as follows for 2019 and 2018:
Balance at
January 1
Acquisitions
2019
Reclassifications
(In thousands)
Currency
exchange
Balance at
December 31
Goodwill, net by segment:
Las Vegas Strip Resorts .......................................... $
Regional Operations................................................
MGM China ............................................................
Corporate and other.................................................
70,975
386,892
1,345,610
17,915
$ 1,821,392
$
$
— $
256,133
—
—
256,133 $
(40,523)
58,438
—
(17,915)
—
$
$
—
—
7,039
—
7,039
$
30,452
701,463
1,352,649
—
$ 2,084,564
72
2018
Balance at
January 1
Acquisitions
Currency
exchange
Balance at
December 31
(In thousands)
Goodwill, net by segment:
Las Vegas Strip Resorts ..................................................................... $
Regional Operations...........................................................................
MGM China .......................................................................................
Corporate and other............................................................................
70,975 $
386,892
1,348,664
—
$ 1,806,531
$
— $
—
—
17,915
17,915
$
—
—
(3,054)
—
(3,054)
$
70,975
386,892
1,345,610
17,915
$ 1,821,392
Goodwill was recognized related to the acquisition of Empire City in January 2019, which is included in Regional Operations.
See Note 4 for discussion of the Empire City acquisition.
Goodwill was recognized by MGP, which was included within Corporate and other in 2018 and reclassed to Regional
Operations in 2019, in connection with MGP’s acquisition of Northfield in 2018, and the Company’s acquisition of the membership
interests of Northfield in 2019. See Note 4 for discussion of the Northfield Acquisition.
The presentation of the goodwill balance attributable to Gold Strike Tunica has been reclassified in 2019 from Las Vegas Strip
Resorts to Regional Operations.
Indefinite-lived intangible assets. The Company’s indefinite-lived intangible assets consist primarily of development rights in
Detroit, gaming and racing licenses for MGM Northfield Park, and trademarks and trade names, which is primarily related to
Mandalay Bay, Luxor, Borgata, and Empire City.
MGM Grand Paradise gaming subconcession. Pursuant to the agreement dated June 19, 2004 between MGM Grand Paradise
and Sociedade de Jogos de Macau, S.A. (“SJMSA”), a gaming sub-concession was acquired by MGM Grand Paradise for the right to
operate casino games of chance and other casino games for a period of 15 years commencing on April 20, 2005. In March 2019,
MGM Grand Paradise and SJMSA entered into a Sub-Concession Extension Contract (the “Extension Agreement”), pursuant to which
the gaming sub-concession was extended to June 26, 2022, which coincides with the current expiration of all the other concessionaires
and sub-concessionaires. MGM Grand Paradise paid the government of Macau approximately $25 million and paid SJMSA
approximately $2 million as a contract premium for such extension. The Company cannot provide any assurance that the gaming sub-
concession will be extended beyond the current terms; however, management believes that the gaming sub-concession will be
extended, given that the Cotai land concession agreement with the government extends significantly beyond the gaming sub-
concession. As such, as of December 31, 2019, the Company amortizes the gaming sub-concession intangible asset on a straight-line
basis over the initial term of the Cotai land concession, ending in January 2038.
MGM Macau land concession. MGM Grand Paradise entered into a contract with the Macau government to use the land under
MGM Macau commencing from April 6, 2006. The land use right has an initial term through April 6, 2031, subject to renewal for
additional periods. Upon the adoption of ASC 842 on January 1, 2019, the below market component of the MGM Macau land
concession, recognized prior to ASC 842 adoption as an intangible asset, is now reflected within the ROU operating asset recorded for
the MGM Macau land concession.
Customer lists. The Company recognized intangible assets related to the Empire City customer list and the MGM Northfield
Park customer list, which are amortized on a straight-line basis over the estimated useful life over four years, and seven years,
respectively. The Company also recognized intangible assets related to MGM China’s and Borgata’s customer lists, which became
fully amortized in 2016 and 2018, respectively.
Finite-lived gaming licenses. The license fee paid to the State of Maryland of $22 million is considered a finite-lived intangible
asset that is amortized on a straight-line basis over a period of its initial term of 15 years, beginning in December 2016, when MGM
National Harbor started operations. The license fee paid to the State of Massachusetts of $85 million is considered a finite-lived
intangible asset that is amortized over a period of 15 years, beginning in August 2018, when MGM Springfield started operations.
Other. The Company’s other finite–lived intangible assets consist primarily of lease acquisition costs amortized over the life of
the related leases, and certain license rights amortized over their contractual life.
73
Total amortization expense related to intangible assets was $192 million, $176 million and $173 million for 2019, 2018, and
2017, respectively. As of December 31, 2019, estimated future amortization is as follows:
Years ending December 31,
(In thousands)
2020......................................................................................................................................................
2021......................................................................................................................................................
2022......................................................................................................................................................
2023......................................................................................................................................................
2024......................................................................................................................................................
Thereafter .............................................................................................................................................
$
$
193,886
196,932
190,840
178,378
175,866
2,212,292
3,148,194
NOTE 8 — OTHER ACCRUED LIABILITIES
Other accrued liabilities consisted of the following:
Contract and contract-related liabilities:
Outstanding chip liability................................................................................................... $
Loyalty program obligations..............................................................................................
Casino front money............................................................................................................
Advance deposits and ticket sales......................................................................................
Unpaid wagers and other ...................................................................................................
Other accrued liabilities:
Payroll and related .............................................................................................................
Taxes, other than income taxes..........................................................................................
MGP Dividend ...................................................................................................................
Lease obligations - short-term (Refer to Note 11) .............................................................
Other ..................................................................................................................................
$
2019
2018
(In thousands)
314,570 $
126,966
176,827
190,325
113,943
507,041
218,027
53,489
95,448
227,366
2,024,002 $
323,811
113,293
342,941
221,003
103,341
518,892
235,160
31,732
—
260,881
2,151,054
74
NOTE 9 — LONG-TERM DEBT
Long-term debt consisted of the following:
December 31,
2019
2018
(In thousands)
Senior credit facility ...............................................................................................................
Operating Partnership senior credit facility ...........................................................................
MGM China credit facility .....................................................................................................
$850 million 8.625% senior notes, due 2019 .........................................................................
$500 million 5.25% senior notes, due 2020 ...........................................................................
$1,000 million 6.75% senior notes, due 2020 ........................................................................
$1,250 million 6.625% senior notes, due 2021 ......................................................................
$1,000 million 7.75% senior notes, due 2022 ........................................................................
$1,250 million 6% senior notes, due 2023 .............................................................................
$1,050 million 5.625% Operating Partnership senior notes, due 2024..................................
$750 million 5.375% MGM China senior notes, due 2024 ...................................................
$1,000 million 5.75% senior notes, due 2025 ........................................................................
$750 million 5.875% MGM China senior notes, due 2026 ...................................................
$500 million 4.50% Operating Partnership senior notes, due 2026.......................................
$500 million 4.625% senior notes, due 2026 .........................................................................
$750 million 5.75% Operating Partnership senior notes, due 2027.......................................
$1,000 million 5.5% senior notes, due 2027 ..........................................................................
$350 million 4.50% Operating Partnership senior notes, due 2028.......................................
$0.6 million 7% debentures, due 2036 ...................................................................................
Less: Premiums, discounts, and unamortized debt issuance costs, net ..................................
Less: Current portion..............................................................................................................
$
$
—
1,703,750
667,404
—
—
—
—
1,000,000
1,250,000
1,050,000
750,000
1,000,000
750,000
500,000
500,000
750,000
1,000,000
350,000
552
11,271,706
(102,802)
11,168,904
—
11,168,904
$
$
750,000
2,819,125
2,433,562
850,000
500,000
1,000,000
1,250,000
1,000,000
1,250,000
1,050,000
—
1,000,000
—
500,000
500,000
—
—
350,000
552
15,253,239
(121,823)
15,131,416
(43,411)
15,088,005
Debt due within one year of the December 31, 2019 and 2018 balance sheet was classified as long-term as the Company had
both the intent and ability to refinance current maturities on a long-term basis under its revolving senior credit facilities, with the
exception that $43 million related to MGM China’s term loan amortization payments in excess of available borrowings under the
previous MGM China revolving credit facility were classified as current as of December 31, 2018.
Interest expense, net consisted of the following:
2019
Year Ended December 31,
2018
(In thousands)
2017
Total interest incurred.........................................................................$
Interest capitalized ..............................................................................
$
853,007 $
(5,075)
847,932 $
821,229 $
(51,716)
769,513 $
779,855
(111,110)
668,745
Senior credit facility. At December 31, 2019, the Company’s senior credit facility consisted of a $1.5 billion revolving facility.
The revolving facility bears interest of LIBOR plus 1.50% to 2.25% determined by reference to a total net leverage ratio pricing grid
and will mature in December 2023. At December 31, 2019, no amounts were drawn on the revolving credit facility. In November
2019, the Company used a portion of the net proceeds of the Bellagio transaction to pay off all $750 million outstanding on the term
loan A facility, which was subsequently extinguished, and fully paid down its revolving facility.
The senior credit facility contains representations and warranties, customary events of default, and positive, negative and
financial covenants, including that the Company maintain compliance with a maximum total net leverage ratio, a maximum first lien
net leverage ratio and a minimum interest coverage ratio.
75
As of December 31, 2019, the senior credit facility is secured by (i) a mortgage on the real properties comprising the MGM
Grand Las Vegas, (ii) a pledge of substantially all existing and future personal property of the subsidiaries of the Company that own
the MGM Grand Las Vegas; and (iii) a pledge of the equity or limited liability company interests of the entities that own the MGM
Grand Las Vegas and the Bellagio. In connection with the MGP BREIT Venture Transaction, on February 14, 2020, we entered into a
new unsecured credit agreement which provides that we will grant a security interest in our Operating Partnership units in the future to
the extent our leverage ratio exceeds certain thresholds.
In connection with the MGP BREIT Venture Transaction, the Company entered into an unsecured credit agreement, comprised
of a $1.5 billion unsecured revolving facility that matures in February 2025, and the revolving commitments under the prior credit
agreement were terminated.
Operating Partnership senior credit facility. At December 31, 2019, the Operating Partnership’s senior secured credit facility
consisted of a $399 million term loan A facility, a $1.3 billion term loan B facility, and a $1.35 billion revolving credit facility. The
revolving and term loan A facilities bear interest of LIBOR plus 1.75% to 2.25% determined by reference to a total net leverage ratio
pricing grid. The revolving and term loan A facilities will mature in June 2023. The term loan B facility bears interest of LIBOR plus
2.00% and will mature in March 2025.
The term loan facilities are subject to amortization of principal in equal quarterly installments of approximately $3 million and
$5 million for the term loan A facility and term loan B facility, respectively, with the balances due at maturity. In November 2019, the
Operating Partnership used the proceeds from its equity offering, discussed in Note 13, to prepay $65 million on the term loan A
facility and $476 million on the term loan B facility, which reflects all scheduled amortization plus additional principal. At December
31, 2019, the interest rate on the term loan A facility was 3.55% and the interest rate on the term loan B facility was 3.80%. At
December 31, 2019, no amounts were drawn on the revolving credit facility.
In connection with the MGP BREIT Venture Transaction, the Operating Partnership amended its senior secured credit facility
to, among other things, allow for the transaction to occur, permit the incurrence by the Operating Partnership of a nonrecourse
guarantee for debt of the MGP BREIT Venture, and permit incurrence of a bridge loan facility. As a result of the transaction and the
amendment, the Operating Partnership repaid its $1.3 billion outstanding term loan B facility in full with the proceeds of a bridge
facility, which was then assumed by the MGP BREIT Venture as partial consideration for the Operating Partnership’s contribution.
Additionally, the Operating Partnership used the proceeds from the settlement of the forward equity issuances to pay off the balance of
its term loan A facility in full.
The Operating Partnership credit facility contains customary representations and warranties, events of default and positive and
negative covenants. The revolving credit facility and term loan A facility also require the Operating Partnership maintain compliance
with a maximum senior secured net debt to adjusted total assets ratio, a maximum total net debt to adjusted assets ratio and a
minimum interest coverage ratio. The Operating Partnership was in compliance with its credit facility covenants at December 31,
2019.
The Operating Partnership senior credit facility is guaranteed by each of the Operating Partnership’s existing and subsequently
acquired direct and indirect wholly owned material domestic restricted subsidiaries, and secured by a first priority lien security interest
on substantially all of the Operating Partnership’s and such restricted subsidiaries’ material assets, including mortgages on its real
estate, excluding the real estate assets of MGM National Harbor and Empire City, and subject to other customary exclusions.
The Operating Partnership is party to interest rate swaps to mitigate the interest rate risk inherent in its senior credit facility. As
of December 31, 2019, the Operating Partnership has effective interest rate swap agreements on which it pays a weighted average
fixed rate of 1.821% on total notional amount of $1.9 billion. The Operating Partnership has an additional $900 million total notional
amount of forward starting interest rate swaps that are not currently effective.
MGM China credit facility. At December 31, 2019, the MGM China credit facility consisted of a $1.25 billion unsecured
revolving credit facility. In August 2019, MGM China entered into a new $1.25 billion senior unsecured revolving credit facility, on
which it drew $776 million and used the proceeds to fully repay the borrowings outstanding under its previous secured credit facility.
The new revolving credit facility matures in May 2024 and bears interest at a fluctuating rate per annum based on HIBOR plus
1.625% to 2.75%, as determined by MGM China’s leverage ratio. During 2019, MGM China also used the proceeds from its senior
notes issuance, discussed below, to permanently repay $1.0 billion of the previous term loan facilities, with the remaining proceeds
used to pay down outstanding borrowings under its previous revolving credit facility. At December 31, 2019, $667 million was
outstanding on the revolving credit facility. At December 31, 2019, the interest rate on the revolving credit facility was 4.95%.
76
The MGM China credit facility contains customary representations and warranties, events of default, and positive, negative and
financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest
coverage ratio. Due to the impact of the outbreak of the novel coronavirus, discussed in Note 1, MGM China entered into an
amendment to its credit agreement on February 21, 2020 that provided for an increase of its maximum leverage ratio for the first
quarter of 2020, a waiver of its maximum leverage ratio beginning in the second quarter of 2020 and extending through the first
quarter of 2021, and a decrease of its minimum interest coverage ratio beginning in the second quarter of 2020 and extending through
the first quarter of 2021. MGM China was in compliance with its credit facility covenants at December 31, 2019.
Bridge Facility. In connection with the Empire City transaction in January 2019, the Company borrowed $246 million under a
bridge facility, which was subsequently assumed by the Operating Partnership. The Operating Partnership repaid the bridge facility
with a combination of cash on hand and a draw on its revolving credit facility, which was subsequently repaid with proceeds from its
offering of its 5.75% senior notes due 2027, discussed below.
Senior Notes. In December 2019, the Company used a portion of the net proceeds from the Bellagio transaction to redeem for
cash all $267 million principal amount of its outstanding 5.250% senior notes due 2020, all $361 million principal amount of its
outstanding 6.750% senior notes due 2020, and all $1.25 billion principal amount of its outstanding 6.625% senior notes due 2021.
The Company incurred a $171 million loss on the early retirement of such notes recorded in “Other, net” in the consolidated
statements of operations.
In April 2019, the Company issued $1.0 billion in aggregate principal amount of 5.50% senior notes due 2027. The Company
primarily used the net proceeds from the offering to fund the purchase of $639 million in aggregate principal amount of its outstanding
6.75% senior notes due 2020 and $233 million in aggregate principal amount of its outstanding 5.25% senior notes due 2020 through
cash tender offers.
In February 2019, the Company repaid its $850 million 8.625% senior notes due 2019.
In June 2018, the Company issued $1.0 billion in aggregate principal amount of 5.750% senior notes due 2025.
On February 18, 2020 the Company commenced cash tender offers to purchase up to $750 million in aggregate principal
amount of its outstanding 5.750% senior notes due 2025, 4.625% senior notes due 2026, and 5.500% senior notes due 2027. Holders
of notes that are tendered by March 2, 2020 will receive the tender offer consideration plus an early tender premium. The tender offers
will expire on March 16, 2020, unless extended or earlier terminated by the Company.
Operating Partnership senior notes. In January 2019, the Operating Partnership issued $750 million in aggregate principal
amount of 5.75% senior notes due 2027.
Each series of the Operating Partnership's senior notes are fully and unconditionally guaranteed, jointly and severally, on a
senior basis by all of the Operating Partnership’s subsidiaries that guarantee the Operating Partnership’s credit facilities, other than
MGP Finance Co-Issuer, Inc., which is a co-issuer of the senior notes. The Operating Partnership may redeem all or part of the senior
notes at a redemption price equal to 100% of the principal amount of the senior notes plus, to the extent the Operating Partnership is
redeeming senior notes prior to the date that is three months prior to their maturity date, an applicable make whole premium, plus, in
each case, accrued and unpaid interest. The indentures governing the senior notes contain customary covenants and events of default.
These covenants are subject to a number of important exceptions and qualifications set forth in the applicable indentures governing the
senior notes, including, with respect to the restricted payments covenants, the ability to make unlimited restricted payments to
maintain the REIT status of MGP.
MGM China senior notes. In May 2019, MGM China issued $750 million in aggregate principal amount of 5.375% senior
notes due 2024 and $750 million in aggregate principal amount of 5.875% senior notes due 2026. The Company primarily used the net
proceeds from the offering to pay down outstanding borrowings under the MGM China credit facility, as discussed above. MGM
China incurred a $16 million loss on the debt retirement recorded in “Other, net” in the consolidated statements of operations.
77
Maturities of long-term debt. The maturities of the principal amount of the Company’s long-term debt as of December 31,
2019 are as follows:
Years ending December 31,
2020 ....................................................................................................................................................................
2021 ....................................................................................................................................................................
2022 ....................................................................................................................................................................
2023 ....................................................................................................................................................................
2024 ....................................................................................................................................................................
Thereafter............................................................................................................................................................
(In thousands)
—
—
1,000,000
1,649,125
2,467,404
6,155,177
11,271,706
$
$
Fair value of long-term debt. The estimated fair value of the Company’s long-term debt was $12.1 billion and $15.1 billion at
December 31, 2019 and 2018, respectively. Fair value was estimated using quoted market prices for the Company’s senior notes and
senior credit facilities.
NOTE 10 — INCOME TAXES
The Company recognizes deferred income tax assets, net of applicable reserves, related to net operating losses, tax credit
carryforwards and certain temporary differences. The Company recognizes future tax benefits to the extent that realization of such
benefit is more likely than not. Otherwise, a valuation allowance is applied.
Income (loss) before income taxes for domestic and foreign operations consisted of the following:
Domestic operations........................................................................................... $
Foreign operations .............................................................................................
$
2,717,756 $
128,969
2,846,725 $
660,832 $
(26,826)
634,006 $
747,090
213,700
960,790
2019
Year Ended December 31,
2018
(In thousands)
2017
78
The benefit (provision) for income taxes attributable to income (loss) before income taxes is as follows:
Federal:
Current.......................................................................................................... $
Deferred (excluding separate components) ..................................................
Deferred – change in enacted rates...............................................................
Deferred – valuation allowance....................................................................
Other noncurrent...........................................................................................
Benefit (provision) for federal income taxes ..........................................
State:
Current..........................................................................................................
Deferred (excluding separate components) ..................................................
Deferred – operating loss carryforward........................................................
Deferred – valuation allowance....................................................................
Other noncurrent...........................................................................................
Provision for state income taxes .............................................................
Foreign:
Current..........................................................................................................
Deferred (excluding separate components) ..................................................
Deferred – operating loss carryforward........................................................
Deferred – valuation allowance....................................................................
Benefit (provision) for foreign income taxes..........................................
$
2019
Year Ended December 31,
2018
(In thousands)
2017
(4,928) $
(537,993)
—
(20,175)
(5,745)
(568,841)
(22,685)
(32,793)
(5,241)
(191)
(1,401)
(62,311)
(2,454)
44,374
32,915
(76,028)
(1,193)
(632,345) $
11,991 $
(143,468)
—
(19,753)
576
(150,654)
(12,564)
(12,731)
(29,490)
41,068
(1,334)
(15,051)
(2,037)
63,827
30,574
23,229
115,593
(50,112) $
(120,980)
204,713
987,942
101,443
1,356
1,174,474
(6,798)
(25,233)
44,242
(40,078)
(3,876)
(31,743)
(470)
(40,653)
4,688
21,098
(15,337)
1,127,394
A reconciliation of the federal income tax statutory rate and the Company’s effective tax rate is as follows:
Federal income tax statutory rate ........................................................................
Change in enacted rates.......................................................................................
Non-controlling interest ......................................................................................
Foreign jurisdiction income/losses taxed at other than U.S. statutory rate.........
Repatriation of foreign earnings .........................................................................
Foreign tax credit ................................................................................................
Federal valuation allowance................................................................................
Macau dividend tax .............................................................................................
State taxes, net.....................................................................................................
General business credits......................................................................................
Stock-based compensation ..................................................................................
Non-deductible employee dining facility costs...................................................
Permanent and other items ..................................................................................
Year Ended December 31,
2018
2017
2019
21.0%
—
(0.8)
(0.5)
—
—
0.7
—
1.7
(0.5)
(0.1)
0.2
0.5
22.2%
21.0%
—
(2.4)
(9.5)
—
—
3.1
(6.4)
1.9
(2.9)
(1.2)
1.4
2.9
7.9%
35.0%
(102.7)
(1.5)
(9.2)
35.4
(70.3)
(10.6)
4.2
2.4
(1.0)
(2.1)
—
3.1
(117.3)%
79
The tax-effected components of the Company’s net deferred tax liability are as follows:
Deferred tax assets – federal and state:
Bad debt reserve................................................................................................................ $
Deferred compensation .....................................................................................................
Net operating loss carryforward .......................................................................................
Accruals, reserves and other .............................................................................................
Investments in unconsolidated affiliates...........................................................................
Stock-based compensation................................................................................................
Lease liabilities .................................................................................................................
Long-term debt .................................................................................................................
Tax credits.........................................................................................................................
Less: Valuation allowance .....................................................................................................
Deferred tax assets – foreign:
Bad debt reserve................................................................................................................
Net operating loss carryforward .......................................................................................
Accruals, reserves and other .............................................................................................
Property and equipment ....................................................................................................
Stock-based compensation................................................................................................
Lease liabilities .................................................................................................................
Less: Valuation allowance .....................................................................................................
Total deferred tax assets ................................................................................................... $
Deferred tax liabilities – federal and state:
Property and equipment .................................................................................................... $
Investments in unconsolidated affiliates...........................................................................
ROU assets........................................................................................................................
Long-term debt .................................................................................................................
Intangibles.........................................................................................................................
Deferred tax liabilities – foreign:
Intangibles.........................................................................................................................
ROU Assets.......................................................................................................................
Total deferred tax liability ................................................................................................ $
Net deferred tax liability ................................................................................................... $
December 31,
2019
2018
(In thousands)
25,085 $
7,918
19,265
97,590
—
18,882
1,020,171
2,022
2,600,142
3,791,075
(2,469,907)
1,321,168
1,682
140,223
13,112
10,125
6,487
1,213
172,842
(104,149)
68,693
1,389,861 $
(1,599,948) $
(496,501)
(977,870)
—
(112,380)
(3,186,699)
(307,728)
(1,940)
(309,668)
(3,496,367) $
(2,106,506) $
23,497
5,950
23,406
88,139
83,130
20,581
—
—
2,926,996
3,171,699
(2,449,582)
722,117
1,372
107,308
18,603
998
5,409
—
133,690
(28,121)
105,569
827,686
(1,729,786)
—
—
(3,141)
(90,758)
(1,823,685)
(346,539)
—
(346,539)
(2,170,224)
(1,342,538)
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the U.S. Tax Cuts
and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code that are generally applicable to tax
years beginning after December 31, 2017. The Company’s accounting for certain elements of the Tax Act was incomplete as of
December 31, 2017. Consequently, the Company recorded non-cash income tax expense totaling $20 million during the measurement
period in 2018, as it adjusted its valuation allowance on its foreign tax credit (FTC) carryovers to account for guidance clarifying the
treatment of FTCs resulting from Global Intangible Low-Taxed Income (GILTI) and other provisions impacting FTC utilization.
These measurement period adjustments increased the Company’s effective tax rate by 3% during the year ended December 31, 2018.
In addition, the Company finalized its accounting for the tax treatment of indirect costs of providing certain employee fringe benefits
subject to limitation under the Tax Act. This measurement period adjustment had an immaterial impact on the effective tax rate for the
year ended December 31, 2018. The Company’s accounting for the impact of the Tax Act is complete.
The Company has made an accounting policy decision to treat taxes due, if any, on future inclusions in U.S. taxable income
under the GILTI provisions as a current period expense when incurred. Accordingly, the Company has not provided a deferred tax
liability for any GILTI taxes that may result in future periods.
80
The Company has recorded a valuation allowance of $2.47 billion on its FTC carryover of $2.6 billion as of December 31, 2019,
resulting in an FTC net deferred tax asset of $133 million. The FTCs are attributable to the Macau Special Gaming Tax, which is 35%
of gross gaming revenue in Macau. Because MGM Grand Paradise is presently exempt from the Macau 12% complementary tax on
gaming profits, the Company believes that payment of the Macau Special Gaming Tax qualifies as a tax paid in lieu of an income tax
that is creditable against U.S. taxes. While the Company generally does not expect to generate new FTC carryovers under the Tax Act,
it will be able to utilize its existing FTC carryovers to the extent that it has active foreign source income during the 10-year FTC
carryforward period. Such foreign source income includes the recapture, to the extent of U.S. taxable income, of overall domestic
losses that totaled $87 million at December 31, 2019. The Company relies on future U.S. source operating income in assessing
utilization of the overall domestic losses and, by extension, future FTC realization during the 10-year FTC carryover period. The FTC
carryovers will expire if not utilized as follows: $319 million in 2022; $976 million in 2023; $773 million in 2024; $333 million in
2025; and $199 million in 2027.
The Company’s assessment of the realization of its FTC deferred tax asset is based on available evidence, including
assumptions concerning future U.S. operating profits and foreign source income. As a result, significant judgment is required in
assessing the possible need for a valuation allowance and changes to such assumptions could result in a material change in the
valuation allowance with a corresponding impact on the provision for income taxes in the period including such change.
MGM Grand Paradise has been granted an exemption from the Macau 12% complementary tax on gaming profits through
March 31, 2020. Absent this exemption, “Net income attributable to MGM Resorts International” would have decreased by $54
million and $43 million in 2019 and 2018, respectively, and diluted earnings per share would have decreased by $0.10 and $0.08 in
2019 and 2018, respectively.
Given the Extension Agreement entered into during the first quarter, MGM Grand Paradise has applied for an extension of the
gaming profits complementary tax exemption to June 26, 2022 to run concurrent with its extended sub-concession. Competitors of
MGM Grand Paradise have received additional extensions of their complementary tax exemptions through June 26, 2022, which runs
concurrent with the end of the term of their gaming concessions. The Company believes MGM Grand Paradise should also be entitled
to such extension in order to ensure non-discriminatory treatment among gaming concessionaires and sub-concessionaires, a
requirement under Macanese law. Based upon these developments, the Company during the first quarter re-measured the net deferred
tax liability of MGM Grand Paradise assuming that it will receive an additional extension of its complementary tax exemption through
June 26, 2022. This change in assumption resulted in a net increase in deferred tax liabilities in the amount of $35 million, due to an
increase in the valuation allowance on certain net operating loss deferred tax assets partially offset by a reduction in certain intangible
deferred tax liabilities, and a corresponding increase in the provision for income taxes for the year ended December 31, 2019. The
Company has assumed that MGM Grand Paradise will pay the Macau 12% complementary tax on gaming profits for all periods
beyond June 26, 2022 and has factored that assumption into the measurement of Macau deferred tax assets and liabilities.
Non-gaming operations remain subject to the Macau complementary tax. MGM Grand Paradise had at December 31, 2019 a
complementary tax net operating loss carryforward of $1.15 billion resulting from non-gaming operations that will expire if not
utilized against non-gaming income in years 2020 through 2022.
MGM Grand Paradise’s exemption from the 12% complementary tax on gaming profits does not apply to dividend distributions
of such profits to MGM China. However, MGM Grand Paradise has had an agreement with the Macau government to settle the 12%
complementary tax that would otherwise be due by its shareholder, MGM China, on distributions of its gaming profits by paying a flat
annual payment (“annual fee arrangement”) regardless of the amount of distributable dividends. On March 15, 2018, MGM Grand
Paradise executed an extension of the annual fee arrangement, which covers the distributions of gaming profits earned for the period
of January 1, 2017 through March 31, 2020. It requires annual payments of approximately $1 million for 2017 through 2019 and a
payment of approximately $300,000 for the first quarter 2020. The Company reversed, during 2018, $41 million of deferred taxes
previously recorded on 2017 earnings that were not covered by an annual fee arrangement prior to the extension, resulting in a
reduction in provision for income taxes for the year ended December 31, 2018, partially offset by the 2017 annual payment amount.
MGM Grand Paradise has applied for an extension of the annual fee arrangement to cover distributions of gaming profits to be earned
through June 26, 2022.
The Company has net operating losses in certain of the states in which it operates that total $291 million as of December 31,
2019, which equates to deferred tax assets of $19 million after federal tax effect and before valuation allowance. These net operating
loss carryforwards will expire if not utilized by 2030 through 2037. The Company has provided a valuation allowance of $3 million on
certain of its state deferred tax assets, including the net operating losses described above.
In addition, there is a valuation allowance of $102 million on certain Macau deferred tax assets, and a valuation allowance of $3
million on Hong Kong net operating losses because the Company believes these assets do not meet the “more likely than not” criteria
for recognition.
81
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits is as follows:
Gross unrecognized tax benefits at January 1 ..................................................... $
Gross increases - prior period tax positions ...................................................
Gross decreases - prior period tax positions ..................................................
Gross increases - current period tax positions ...............................................
Gross unrecognized tax benefits at December 31 ............................................... $
Year Ended December 31,
(In thousands)
24,464 $
8,960
(1,006)
880
33,298 $
18,588 $
5,345
(957)
1,488
24,464 $
14,026
—
(2,280)
6,842
18,588
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $9 million and $13
million at December 31, 2019 and 2018, respectively.
The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense, which were not
material as of December 31, 2019, 2018 or 2017. The Company does not anticipate that the total amounts of unrecognized tax benefits
at December 31, 2019 will change materially within the next twelve months.
The Company files income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign
jurisdictions, although the income taxes paid in foreign jurisdictions are not material. As of December 31, 2019, the IRS can no longer
assess tax with respect to years ended prior to 2014; however, the IRS may adjust NOLs generated in such years that were utilized in
2014. The Company’s 2014 U.S. consolidated federal income tax return is currently under examination by the IRS.
As of December 31, 2019, other than adjustments resulting from the federal income tax audits discussed above, the various state
and local tax jurisdictions in which the Company files tax returns can no longer assess tax with respect to years ended prior to 2014.
However, such jurisdictions may adjust NOLs generated in such years that are utilized in subsequent years. The Company’s state
income tax returns filed in Michigan for the tax years 2014 through 2017 are currently under examination and the Company was
recently notified that the 2018 tax year will be included in the examination as well. In addition, the State of New Jersey recently
opened an audit of one of the Company’s subsidiaries, Marina District Development Company, LLC, for the tax years 2015 through
2018. The examinations of the Company’s state income tax returns filed in Mississippi and New Jersey for the tax years 2014 through
2016 were completed during 2019 resulting in no material audit adjustments. No other state or local income tax returns are currently
under examination.
NOTE 11 – LEASES
The Company leases the land underlying certain of its properties, real estate, and various equipment under operating and, to a
lesser extent, finance lease arrangements. The master lease agreement with MGP is eliminated in consolidation and, accordingly is not
included within the disclosures below; refer to Note 18 for further discussion of the master lease with MGP.
Land. The Company is a lessee of land underlying Borgata, MGM National Harbor, and Beau Rivage. The Company is
obligated to make lease payments through the non-cancelable term of the ground leases, which is through 2066 for Beau Rivage,
through 2070 for Borgata, and through 2082 for MGM National Harbor. Additionally, the Company has MGM Macau and MGM
Cotai land concession contracts, each with an initial 25-year contract term ending in April 2031 and January 2038, respectively. The
Company’s land leases are classified as operating leases.
Bellagio real estate assets. Pursuant to a lease agreement between a subsidiary of the Company and the Bellagio BREIT
Venture, the Company leases the real estate assets of Bellagio from the Bellagio BREIT venture. The Bellagio lease has an initial term
of 30 years with two subsequent ten-year renewal periods, exercisable at the Company’s option. The lease provides for initial annual
rent of $245 million with a fixed 2% escalator for the first ten years and, thereafter, an escalator equal to the greater of 2% and the CPI
increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4% thereafter. The Company does not
consider the renewal options reasonably certain of being exercised and, accordingly, has determined the lease term to be 30 years. In
consideration of such, Company determined that the expected lease term of 30 years to be less than 75% of the economic useful live of
the real estate assets of Bellagio. Further, the Bellagio BREIT Venture provided its implicit rate to the Company, with which the
Company determined that the present value of the future lease payments is less than 90% of the fair market value of the Bellagio real
estate assets. Accordingly, in consideration of these lease classification tests as well as that the lease does not transfer ownership of
the assets back to the Company at the end of the lease term or grant the Company a purchase option and the real estate assets have
alternative uses at the end of the lease term, the Company classified Bellagio lease as an operating lease.
82
Mandalay Bay and MGM Grand Las Vegas real estate assets. In February 2020, the Company entered into a lease with
MGP BREIT Venture for the real estate assets of Mandalay Bay and MGM Grand Las Vegas. Refer to Note 1 for further discussion.
The Company is still assessing the accounting treatment for this subsequent event, including that of the lease agreement.
Other information. Components of lease costs and other information related to the Company’s leases was as follows for the
year ended December 31, 2019:
Operating lease expense cost, primarily classified within "General and administrative" ................................. $
143,954
(In thousands)
Finance Lease Costs
Interest expense .............................................................................................................................................. $
Amortization expense .....................................................................................................................................
Total finance lease costs .............................................................................................................................. $
1,164
13,341
14,505
Supplemental balance sheet information
Operating leases
Operating lease right-of-use assets ................................................................................................................. $
Operating lease liabilities - short-term, classified within "Other accrued liabilities".................................... $
Operating lease liabilities - long-term ............................................................................................................
Total operating lease liabilities .................................................................................................................... $
Finance leases
Finance lease right-of-use assets, classified within "Property and equipment, net" ...................................... $
Finance lease liabilities - short-term, classified within "Other accrued liabilities" ....................................... $
Finance lease liabilities - long-term, classified within "Other long-term obligations" ..................................
Total finance lease liabilities........................................................................................................................ $
Weighted-average remaining lease term (years)
Operating leases..............................................................................................................................................
Finance leases .................................................................................................................................................
Weighted-average discount rate (%)
Operating leases..............................................................................................................................................
Finance leases .................................................................................................................................................
December 31, 2019
(In thousands)
4,392,481
67,473
4,277,970
4,345,443
93,437
27,975
67,182
95,157
31
4
7
3
Cash paid for amounts included in the measurement of lease liabilities
Year Ended
December 31, 2019
(In thousands)
Operating cash outflows from operating leases.............................................................................................. $
Operating cash outflows from finance leases .................................................................................................
Financing cash outflows from finance leases .................................................................................................
117,072
1,164
10,311
ROU assets obtained in exchange for new lease liabilities
Operating leases.............................................................................................................................................. $
Finance leases .................................................................................................................................................
3,814,115
84,934
83
Maturities of lease liabilities were as follows:
Operating Leases
Finance Leases
Year ending December 31,
2020 ........................................................................................................................................$
2021 ........................................................................................................................................
2022 ........................................................................................................................................
2023 ........................................................................................................................................
2024 ........................................................................................................................................
Thereafter................................................................................................................................
Total future minimum lease payments.................................................................................
Less: Amount of lease payments representing interest...........................................................
Present value of future minimum lease payments ...............................................................
Less: Current portion ..............................................................................................................
Long-term lease obligations.................................................................................................$
(In thousands)
345,678
324,281
313,779
316,336
320,642
10,066,850
11,687,566
(7,342,123)
4,345,443
(67,473)
4,277,970
$
$
30,361
27,273
25,427
17,019
—
—
100,080
(4,923)
95,157
(27,975)
67,182
NOTE 12 – COMMITMENTS AND CONTINGENCIES
October 1 litigation. The Company and/or certain of its subsidiaries were named as defendants in a number of lawsuits related
to the October 1, 2017 shooting in Las Vegas. The matters involve in large degree the same legal and factual issues, each case being
filed on behalf of individuals who are seeking damages for emotional distress, physical injury, medical expenses, economic damages
and/or wrongful death. Lawsuits were first filed in October 2017 and include actions originally filed in the District Court of Clark
County, Nevada and in the Superior Court of Los Angeles County, California. In June 2018, the Company removed to federal court all
actions that remained pending in California and Nevada state courts. The Company also initiated declaratory relief actions in federal
courts in various districts against individuals who had sued or stated an intent to sue.
In connection with the mediation of these matters, the Company and law firms representing plaintiffs in the majority of pending
matters and purporting to represent substantially all claimants known to the Company (collectively, the “Claimants”) have entered into
a settlement agreement (the “Settlement Agreement”) whereby, subject to the satisfaction of certain monetary and non-monetary
conditions, the Company’s insurance carriers will deposit funds into a settlement fund covering the plaintiffs and certain other cases
that emerged or were filed prior to October 1, 2019. Pursuant to the terms of the Settlement Agreement, the Company expects that the
total amount placed in the fund to be between $735 million and $800 million, subject to and depending on obtaining a minimum level
of participation with escalators based on greater participation increasing the amount payable up to $800 million in the event of 100%
participation by certain categories of claimants, as defined in the Settlement Agreement. The Company has $751 million of insurance
coverage available to fund. Following the mediation a few additional lawsuits were filed against the Company and/or certain of its
subsidiaries. While it is possible that these lawsuits may be resolved as part of the Settlement Agreement, no assurances can be made
that they will be included. Although the Company continues to believe it is not legally responsible for the perpetrator’s criminal acts,
in the interest of avoiding protracted litigation and the related impact on the community, the Company believed it was in the best
interests of all parties involved to negotiate and enter into the Settlement Agreement. As a result of the foregoing, the Company
believes that it is probable a loss will be incurred and, as of December 31, 2019, the Company accrued a liability of $735 million,
which represents the low end of the range of probable loss. In addition, the Company recorded an insurance receivable of $735
million, which represents the entire amount of the liability recorded for the settlement of these cases. While the Company intends for
substantially all claimants to be covered by the Settlement Agreement, it remains possible that certain claimants may not join the
settlement. In addition, no assurances can be given that the significant conditions to the Settlement Agreement will be satisfied by the
Claimants.
84
If the conditions in the Settlement Agreement are not satisfied and the mediation stay is lifted, the Company is currently unable
to reliably predict the future developments in, outcome of, and economic costs and other consequences of any such litigation related to
this matter. The Company will continue to investigate the factual and legal defenses, and evaluate these matters based on subsequent
events, new information and future circumstances. The Company intends to defend against any such lawsuits and believes it ultimately
should prevail, but litigation of this type is inherently unpredictable. Although there are significant procedural, factual and legal issues
to be resolved that could significantly affect the Company’s belief as to the possibility of liability, the Company currently believes that
it is reasonably possible that it could incur liability in connection with certain of these lawsuits. The foregoing determination was
made in accordance with generally accepted accounting principles, as codified in ASC 450-20, and is not an admission of any liability
on the part of the Company or any of its affiliates. Given that these cases would be in the early stages, and in light of the uncertainties
surrounding them, the Company does not currently possess sufficient information to determine a range of reasonably possible liability.
The insurance carriers have not expressed a reservation of rights or coverage defense that affects the Company’s evaluation of
potential losses in connection with these claims. The Company’s general liability insurance coverage provides, as part of the
contractual “duty to defend”, payment of legal fees and associated costs incurred to defend covered lawsuits that are filed arising from
the October 1, 2017 shooting in Las Vegas. Payment of such fees and costs is in addition to (and not limited by) the limits of the
insurance policies and does not erode the total liability coverage available.
Other litigation. The Company is a 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.
Borgata property tax reimbursement agreement. In 2017, Borgata was reimbursed $72 million as settlement for property tax
refunds in satisfaction of New Jersey Tax Court and Superior Court judgments of pending tax appeals. The Company recorded the
amounts received as an offset to general and administrative expenses in the consolidated statements of operations. As required by the
agreement to acquire Borgata from Boyd Gaming in August 2016, the Company paid Boyd Gaming half of the settlement amount
received by the Company, net of fees and expenses, which was recorded in general and administrative expenses in the consolidated
statements of operations.
Other guarantees. The Company and its subsidiaries are 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 Operating Partnership’s senior credit facility limits the amount to
$75 million. At December 31, 2019, $11 million in letters of credit were outstanding under the Company’s senior credit facility. No
letters of credit were outstanding under the Operating Partnership’s senior credit facility at December 31, 2019. The amount of
available borrowings under each of the credit facilities is reduced by any outstanding letters of credit.
In connection with the Extension Agreement, MGM Grand Paradise provided a bank guarantee in an amount of approximately
$102 million (when giving effect to foreign currency exchange rate fluctuations) to the government of Macau in May 2019 to warrant
the fulfillment of labor debts upon the expiration of the Extension Agreement in June 2022.
Additionally, the Company provides a guarantee of the $3.01 billion principal amount of indebtedness (and any interest accrued
and unpaid thereon) of Bellagio BREIT Venture, which matures in 2029. The terms of the guarantee provide that after the lenders
have exhausted certain remedies to collect on the obligations under the indebtedness, the Company would then be responsible for any
shortfall between the value of the collateral, which is the real estate assets of Bellagio owned by Bellagio BREIT Venture, and the
debt obligation. This guarantee is accounted for under ASC 460 at fair value; such value is immaterial.
In connection with the MGP BREIT Venture Transaction, the Company provides a guarantee of the $3.0 billion principal
amount of indebtedness (and any interest accrued and unpaid thereon) of MGP BREIT Venture, which has an initial term of twelve
years, maturing in 2032, with an anticipated repayment date of March 2030. The terms of the guarantee provide that after the lenders
have exhausted certain remedies to collect on the obligations under the indebtedness, the Company would then be responsible for any
shortfall between the value of the collateral, which is the real estate assets of Mandalay Bay and MGM Grand Las Vegas, owned by
MGP BREIT Venture, and the debt obligation. Refer to Note 1 for further discussion on this subsequent event.
85
NOTE 13 — STOCKHOLDERS’ EQUITY
Accumulated Other Comprehensive Income (Loss)
The following is a summary of the changes in the accumulated balance of other comprehensive income (loss) attributable to
MGM Resorts International:
Balances, January 1, 2017 ....................................................................
Other comprehensive income (loss) before reclassifications ............
Amounts reclassified from accumulated other comprehensive
income to "Interest expense, net" ......................................................
Other comprehensive income (loss), net of tax.......................................
Other comprehensive (income) loss attributable to noncontrolling
interest ...............................................................................................
Balances, December 31, 2017 ...............................................................
Other comprehensive income (loss) before reclassifications ............
Amounts reclassified from accumulated other comprehensive loss
to "Interest expense, net" ...................................................................
Other comprehensive income (loss), net of tax.......................................
Other comprehensive (income) loss attributable to noncontrolling
interest ...............................................................................................
Balances, December 31, 2018 ...............................................................
Other comprehensive income (loss) before reclassifications ............
Amounts reclassified from accumulated other comprehensive loss
to "Interest expense, net" ...................................................................
Amounts reclassified from accumulated other comprehensive loss
related to de-designation of interest rate swaps to "Other, net" ........
Other comprehensive income (loss), net of tax.......................................
Other changes in accumulated other comprehensive income (loss):
Empire City MGP transaction ...........................................................
MGP Class A share issuances ...........................................................
Park MGM Transaction .....................................................................
Northfield OpCo transaction .............................................................
Other ..................................................................................................
Changes in accumulated other comprehensive income (loss).................
Other comprehensive (income) loss attributable to noncontrolling
interest ...............................................................................................
Balances, December 31, 2019 ...............................................................
Currency
Translation
Adjustments
Cash Flow
Hedges
Other
Total
$
12,545
(43,188)
$
(In thousands)
1,434
(1,221)
$
$
1,074
98
15,053
(44,311)
—
(43,188)
19,193
(11,450)
(13,022)
—
(13,022)
5,600
(18,872)
28,870
9,216
7,995
(2,761)
6,668
4,706
(1,130)
3,576
(1,100)
9,144
(28,783)
—
(5,599)
—
28,870
—
—
—
—
—
28,870
4,877
(29,505)
—
—
—
—
—
(29,505)
—
98
—
1,172
—
—
—
—
1,172
—
—
—
—
195
1,512
16
(2)
481
2,202
9,216
(35,095)
16,432
(3,610)
(8,316)
(1,130)
(9,446)
4,500
(8,556)
87
(5,599)
4,877
(635)
195
1,512
16
(2)
481
1,567
(12,745)
(2,747)
$
9,532
(10,829)
$
$
—
3,374
$
(3,213)
(10,202)
86
Noncontrolling interest
The following is a summary of net income attributable to MGM Resorts International and transfers to noncontrolling interest,
which shows the effects of changes in the Company’s ownership interest in a subsidiary on the equity attributable to the Company:
Net income attributable to MGM Resorts International .......................................
$
2019
For the Years Ended December 31,
2018
(In thousands)
$
466,772
2,049,146
2017
$ 1,952,052
Transfers from/(to) noncontrolling interest:
MGP Class A share issuances ....................................................................
MGM National Harbor transaction ............................................................
Empire City MGP transaction....................................................................
Park MGM Transaction..............................................................................
Northfield OpCo transaction ......................................................................
Other...........................................................................................................
Net transfers from/(to) noncontrolling interest................................................
Change from net income attributable to MGM Resorts International and
transfers to noncontrolling interest .......................................................................
151,976
—
(18,718)
(1,968)
21,679
(935)
152,034
—
—
—
—
—
(5,667)
(5,667)
35,138
(12,497)
—
—
—
(2,889)
19,752
$
2,201,180
$
461,105
$ 1,971,804
Noncontrolling interest ownership transactions
MGP Class A share issuance – September 2017. On September 11, 2017, MGP completed a public offering of 13.2 million of
its Class A shares. In connection with the offering, the Operating Partnership issued 13.2 million Operating Partnership units to MGP.
The Company has adjusted the carrying value of the noncontrolling interests as a result of MGP’s Class A share issuance to adjust for
the change in noncontrolling interests ownership percentage of the Operating Partnership's net assets, with offsetting adjustments to
capital in excess of par value and accumulated other comprehensive income. Subsequent to MGP’s issuance of the incremental shares,
the Company indirectly owned 72.3% of partnership units in the Operating Partnership.
MGM National Harbor transaction. On October 15, 2017, MGP acquired the long-term leasehold interest and real property
associated with MGM National Harbor from a subsidiary of the Company in exchange for cash of $463 million, the assumption of
$425 million of indebtedness, which was immediately repaid by MGP on the closing date, and the issuance of 9.8 million Operating
Partnership units to a subsidiary of the Company. The Company adjusted the carrying value of noncontrolling interests to adjust for
the change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, including assets and liabilities
transferred, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to
the MGM National Harbor transaction, the Company indirectly owned 73.4% of the partnership units in the Operating Partnership.
Empire City transaction. As further discussed in Note 18, in January 2019, MGP acquired the developed real property
associated with Empire City from the Company for consideration that included the issuance of approximately 13 million Operating
Partnership units to a subsidiary of the Company. The Company adjusted the carrying value of the noncontrolling interests for the
change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to
capital in excess of par value and accumulated other comprehensive income. Subsequent to the Empire City transaction, the Company
indirectly owned 74.6% of the partnership units in the Operating Partnership.
MGP Class A share issuance – January 2019. On January 31, 2019, MGP completed an offering of approximately 20 million
of its Class A shares. In connection with the offering, the Operating Partnership issued approximately 20 million Operating
Partnership units to MGP. The Company has adjusted the carrying value of the noncontrolling interests as a result of MGP’s Class A
share issuance to adjust for the change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with
offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to the issuance, the
Company indirectly owned 69.7% of the partnership units in the Operating Partnership.
Park MGM Lease Transaction. As further discussed in Note 18, in March 2019, the Company and MGP completed the Park
MGM Lease Transaction (as defined in Note 18) for which consideration included the issuance of approximately 1 million Operating
Partnership units to a subsidiary of the Company. The Company has adjusted the carrying value of the noncontrolling interests for the
change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with offsetting adjustments to
capital in excess of par value and accumulated other comprehensive income. Subsequent to the issuance, the Company indirectly
owned 69.8% of the partnership units in the Operating Partnership.
87
Northfield OpCo transaction. As further discussed in Note 18, in April 2019, the Company acquired the membership interests
of Northfield from MGP for consideration of approximately 9 million Operating Partnership units that were ultimately redeemed by
the Operating Partnership and MGP retained the real estate assets. The Company has adjusted the carrying value of the noncontrolling
interests for the change in noncontrolling interests ownership percentage of the Operating Partnership’s net assets, with offsetting
adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to the Northfield OpCo
transaction, the Company indirectly owned 68.8% of the partnership units in the Operating Partnership.
MGP Class A share issuance – November 2019. On November 22, 2019, MGP completed an offering of 30 million of its
Class A shares. The Offering consisted of 18 million shares sold directly to the underwriters at closing and 12 million shares sold to
forward purchasers under forward sale agreements. In connection with the offering, the Operating Partnership issued 18 million
Operating Partnership units to MGP. The Company has adjusted the carrying value of the noncontrolling interests as a result of
MGP’s Class A share issuance to adjust for the change in noncontrolling interests ownership percentage of the Operating Partnership’s
net assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to
the issuance, the Company indirectly owned 63.7% of the partnership units in the Operating Partnership. In connection with any
issuance of Class A shares by MGP under the forward sales agreements, additional Operating Partnership units will be issued to the
Company by the Operating Partnership on a one-to-one basis with the number of Class A shares issued by MGP in such sales.
MGP Class A share issuances – At-the-Market (“ATM”) program. During the year ended December 31, 2019, MGP issued
approximately 5 million Class A shares under its ATM program. In connection with the issuances, the Operating Partnership issued 5
million Operating Partnership units to MGP during the year ended December 31, 2019. The Company has adjusted the carrying value
of the noncontrolling interests for the change in noncontrolling interests ownership percentage of the Operating Partnership’s net
assets, with offsetting adjustments to capital in excess of par value and accumulated other comprehensive income. Subsequent to the
collective issuances, and as of December 31, 2019, the Company indirectly owned 63.7% of the partnership units in the Operating
Partnership.
Stock repurchase program
MGM Resorts International stock repurchase program. In May 2018, the Company’s Board of Directors authorized a $2.0
billion stock repurchase program and completed the previously announced $1.0 billion stock repurchase program. Additionally, on
February 12, 2020, the Company announced that the Board of Directors adopted a $3.0 billion stock repurchase program. Under each
stock repurchase program, the Company may repurchase shares from time to time in the open market or in privately negotiated
agreements. Repurchases of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be
repurchased when the Company might otherwise be precluded from doing so under insider trading laws. The timing, volume and
nature of stock repurchases will be at the sole discretion of management, dependent on market conditions, applicable securities laws,
and other factors, and may be suspended or discontinued at any time.
During the year ended December 31, 2019, the Company repurchased approximately 36 million shares of its common stock at
an average purchase price of $28.77 per share for an aggregate amount of $1.0 billion. Repurchased shares were retired. The
remaining availability under the $2.0 billion stock repurchase program was approximately $357 million as of December 31, 2019.
Subsequent to the year ended December 31, 2019, the Company repurchased 11 million shares of its common stock at an
average price of $32.57 per share for an aggregate amount of $354 million. Repurchased shares will be retired.
Additionally, subsequent to the year ended December 31, 2019, on February 13, 2020, the Company announced the
commencement of a tender offer to acquire up to $1.25 million in aggregate purchase price of the Company’s issued and outstanding
common stock through a modified “Dutch auction” tender offer at a price not greater than $34 nor less than $29 per share, in cash, less
any applicable withholding taxes and without interest, upon the terms and subject to the conditions described in the offer to purchase
dated February 13, 2020, and in the related letter of transmittal and other related materials. The tender offer is scheduled to expire on
March 12, 2020, unless extended or terminated.
During the year ended December 31, 2018, the Company repurchased approximately 41 million shares of its common stock at
an average purchase price of $31.25 per share for an aggregate amount of $1.3 billion. Repurchased shares were retired.
MGM Resorts International dividends. On February 12, 2020 the Company’s Board of Directors approved a quarterly
dividend of $0.15 per share that will be payable on March 16, 2020 to holders of record on March 10, 2020.
88
NOTE 14 — STOCK-BASED COMPENSATION
MGM Resorts 2005 Omnibus Incentive Plan. The Company’s omnibus incentive plan, as amended (the “Omnibus Plan”),
allows it to grant up to 45 million shares or share-based awards, such as stock options, stock appreciation rights (“SARs”), restricted
stock units (“RSUs”), performance share units (“PSUs”) and other stock-based awards to eligible directors, officers and employees of
the Company and its subsidiaries.
As of December 31, 2019, the Company had an aggregate of approximately 20 million shares of common stock available for
grant as share-based awards under the Omnibus Plan. Additionally, as of December 31, 2019, the Company had approximately 4
million aggregate SARs outstanding and approximately 7 million aggregate RSUs and PSUs outstanding, including deferred share
units and dividend equivalent units related to RSUs and PSUs.
Intrinsic value. The following table includes information related to the intrinsic value:
2019
Year Ended December 31,
2018
(In thousands)
2017
SARs exercised and RSUs and PSUs vested.....................................................
SARs outstanding ..............................................................................................
SARs vested and expected to vest .....................................................................
SARs exercisable...............................................................................................
$
$
86,843
45,197
45,162
41,432
$
97,302
21,563
21,547
19,745
100,264
112,604
111,284
78,865
As of December 31, 2019, there was a total of $116 million of unamortized compensation related to SARs, RSUs, and PSUs,
which is expected to be recognized over a weighted-average period of 2.0 years.
MGM Growth Properties 2016 Omnibus Incentive Plan and MGM China Share Option Plan. The Company’s
subsidiaries, MGP and MGM China, each adopted their own equity award plans for the issuance of share-based awards to each
subsidiary’s eligible recipients.
Recognition of compensation cost. Compensation cost was recognized as follows:
Compensation cost:
2019
Year Ended December 31,
2018
(In thousands)
2017
Omnibus Plan ..............................................................................................
MGM Growth Properties Omnibus Incentive Plan .....................................
MGM China Share Option Plan ..................................................................
Total compensation cost.........................................................................
Less: Reimbursed costs and capitalized cost ...................................................
Compensation cost after reimbursed costs and capitalized cost ............
Less: Related tax benefit.............................................................................
Compensation cost, net of tax benefit ....................................................
$
$
$
76,995
2,277
9,566
88,838
(3,487)
85,351
(16,752)
$
68,599
$
57,735
2,092
10,369
70,196
(1,710)
68,486
(13,218)
$
55,268
49,383
2,568
10,571
62,522
(1,398)
61,124
(18,650)
42,474
NOTE 15 — EMPLOYEE BENEFIT PLANS
Multiemployer benefit plans. The Company currently participates in multiemployer pension plans in which the risks of
participating differs from single-employer plans in the following aspects:
a) Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other
b)
c)
d)
participating employers;
If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the
remaining participating employers;
If an entity chooses to stop participating in some of its multiemployer plans, the entity may be required to pay those plans
an amount based on the underfunded status of the plan, referred to as a withdrawal liability; and
If the plan is terminated by withdrawal of all employers and if the value of the nonforfeitable benefits exceeds plan assets
and withdrawal liability payments, employers are required by law to make up the insufficient difference.
89
The Company’s participation in these plans is presented below.
Pension Fund(1)
EIN/Pension
Plan Number
Pension
Protection
Act Zone
Status (2)
Expiration
Dates of
Collective
Bargaining
2018 2017 Status (3) 2019 2018 2017 Imposed Agreements
3/31/2021(5);
5/31/2023(5);
5/31/2024(5)
Contributions by the
Company
(in thousands)(4)
$52,218 $47,825 $45,297 No
Surcharge
FIP/RP
88-6016617/001 Green Green No
82-0994119/001 Red Red Yes
$10,151 $ 9,794 $ 9,416 Yes
2/29/2020(7)
Southern Nevada Culinary and
Bartenders Pension Plan ..........
The Legacy Plan of the
UNITE HERE Retirement
Fund (UHF)(6) ..........................
(1)
The Company was listed in the plan's Form 5500 as providing more than 5% of the total contributions for the plan years 2018 and 2017 for the Southern Nevada
Culinary and Bartenders Pension Plan and for the plan year 2018 for the UHF. At the date the financial statements were issued, Form 5500 was not available for
the plan year 2019.
(2) The zone status is based on information that the Company received from the plan and is certified by the plan's actuary. Plans in the red zone are generally less than
65% funded (critical status) and plans in the green zone are at least 80% funded.
Indicates plans for which a Financial Improvement Plan (FIP) or a Rehabilitation Plan (RP) is either pending or has been implemented.
(3)
(4) There have been no significant changes that affect the comparability of contributions.
(5) The Company is party to twelve collective bargaining agreements (CBA) that require contributions with the Local Joint Executive Board of Las Vegas, which is
made up of the Culinary Workers Union and Bartenders Union. The agreements between Aria, Bellagio, Mandalay Bay, and MGM Grand Las Vegas are the most
significant because more than half of the Company’s employee participants in this plan are covered by those four agreements.
(6) Effective January 1, 2018, the Pension Benefit Guaranty Corporation approved the spin-off of the UNITE HERE portion of the Legacy Plan of the National
Retirement Fund (NRF) to the newly formed UHF. As a result of the spin-off, the pension liabilities as well as certain assets of the plan were transferred to the
new plan. The terms of the UHF plan are identical to the NRF plan.
(7) The Company intends to extend the agreement past the expiration date until a new agreement is executed.
Multiemployer benefit plans other than pensions. Pursuant to its collective bargaining agreements referenced above, the
Company also contributes to UNITE HERE Health (the “Health Fund”), which provides healthcare benefits to its active and retired
members. The Company contributed $206 million, $191 million, and $183 million to the Health Fund in the years ended December
31, 2019, 2018, and 2017, respectively.
Self-insurance. The Company is self-insured for most health care benefits and workers compensation for its non-union
employees. The liability for self-insurance was $95 million and $93 million at December 31, 2019 and 2018, respectively, which is
included in “Other accrued liabilities” and “Other long-term obligations.”
NOTE 16 — PROPERTY TRANSACTIONS, NET
Property transactions, net consisted of the following:
2019
Year Ended December 31,
2018
(In thousands)
2017
Loss related to sale of Circus Circus Las Vegas and adjacent land................... $
Gain on sale of Grand Victoria ..........................................................................
Other property transactions, net.........................................................................
$
220,294 $
—
55,508
275,802 $
— $
(44,703)
53,850
9,147 $
—
—
50,279
50,279
Circus Circus Las Vegas and adjacent land. In December 2019, the Company completed the previously announced sale of
Circus Circus Las Vegas and the adjacent land for $825 million, which consisted of $662.5 million paid in cash and a secured note due
2024 with a face value of $162.5 million and fair value of $133.7 million. The note has a stated interest rate of 3% for the first two
years, 4% for following two years, and 4.5% for the fifth year and is secured by the borrower with the land adjacent to Circus Circus
Las Vegas as collateral with an effective interest rate of 7.31%. The interest on the note, which is comprised of the stated interest and
the discount on the note, will amortize into interest income using the effective interest method over the length of the agreement.
90
During the third quarter of 2019, the Company recorded a non-cash impairment charge of $219 million, which reflects the
amount by which the assets’ carrying value exceeds the assets’ fair value (expected selling price). We further recognized a loss of $2
million during the fourth quarter of 2019 primarily relating to selling costs. The assets and liabilities of Circus Circus Las Vegas and
the adjacent land sold of $810 million and $14 million, respectively, primarily consisted of property and equipment, net of $785
million. Circus Circus Las Vegas is not classified as discontinued operations because the Company concluded that the sale is not a
strategic shift that has a major effect on the Company’s operations or its financial results and it does not represent a major geographic
segment or product line.
Grand Victoria investment sale. See Note 6 for additional information related to the sale of Grand Victoria investment in
2018.
Other. Other property transactions, net includes miscellaneous asset disposals and demolition costs in the periods presented in
the above table, including a loss of $24 million related to MGM Cotai production show costs in 2018, and a loss of $20 million and
$34 million related to the rebranding of the Monte Carlo Resort and Casino to Park MGM and NoMad Las Vegas in 2018 and 2017,
respectively.
NOTE 17 — 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 has aggregated its operating segments into the
following reportable segments: Las Vegas Strip Resorts, Regional Operations and MGM China.
Las Vegas Strip Resorts. Las Vegas Strip Resorts consists of the following casino resorts: Bellagio, MGM Grand Las Vegas
(including The Signature), Mandalay Bay (including Delano and Four Seasons), The Mirage, Luxor, New York-New York (including
the Park), Excalibur, Park MGM (including NoMad Las Vegas) and Circus Circus Las Vegas (until the sale of such property in
December 2019).
Regional Operations. Regional Operations consists of the following casino resorts: MGM Grand Detroit in Detroit, Michigan;
Beau Rivage in Biloxi, Mississippi; Gold Strike Tunica in Tunica, Mississippi; Borgata in Atlantic City, New Jersey; MGM National
Harbor in Prince George’s County, Maryland; MGM Springfield in Springfield, Massachusetts; Empire City in Yonkers, New York
(upon acquisition in January 2019); and MGM Northfield Park in Northfield Park, Ohio (upon MGM’s acquisition of the operations
from MGP in April 2019).
MGM China. MGM China consists of MGM Macau and MGM Cotai.
The Company’s operations related to investments in unconsolidated affiliates, MGM Northfield Park (prior to April 1, 2019 as
the operations were owned by MGP until that date), and certain other corporate operations and management services 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.
In 2019, the Company changed its segment measure of profit and loss from Adjusted Property EBITDA to Adjusted Property
EBITDAR. As discussed in Note 2, prior to the adoption of ASC 842 on January 1, 2019, the master lease between subsidiaries of the
Company and MGP was accounted for as a failed sale of the real estate assets due to the subsidiaries’ investments in the Operating
Partnership, which constituted continuing involvement. As such, the real estate assets were reflected in the balance sheets of the
applicable MGM subsidiaries as well as the associated finance lease liability. 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.
Accordingly, the real estate assets are now only reflected on the balance sheet of MGP and the MGM subsidiaries have recorded
operating lease liabilities and operating ROU assets and also now record rent expense instead of depreciation and interest expense.
The master lease and its related accounting eliminates in consolidation. Further, as a result of the Bellagio transaction in the fourth
quarter of 2019, the Company records rent expense associated with the triple-net operating lease with Bellagio BREIT Venture. In
order to present profit and loss of each reportable segment on a similar economic basis, the rent expense associated with the triple net
operating leases and ground leases is added back within the financial information reviewed by the chief operating decision maker and
as presented below, including recasting of prior year periods.
Adjusted Property EBITDAR is a measure defined as Adjusted EBITDAR before corporate expense and stock compensation
expense, which are not allocated to each operating segment, and before rent expense related to the master lease with MGP that
eliminates in consolidation. Adjusted EBITDAR is a measure defined as earnings before interest and other non-operating income
(expense), taxes, depreciation and amortization, preopening and start-up expenses, gain on Bellagio transaction, restructuring costs
(which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the
operating model component of the MGM 2020 Plan), rent expense associated with triple net operating and ground leases, income from
unconsolidated affiliates related to investments in REITs, NV Energy exit expense, and property transactions, net.
91
The following tables present the Company’s segment information:
2019
Year Ended December 31,
2018
(In thousands)
2017
Net Revenues
Las Vegas Strip Resorts
Casino........................................................................................................... $
Rooms ..........................................................................................................
Food and beverage .......................................................................................
Entertainment, retail and other.....................................................................
Regional Operations
Casino...........................................................................................................
Rooms ..........................................................................................................
Food and beverage .......................................................................................
Entertainment, retail and other.....................................................................
MGM China
Casino...........................................................................................................
Rooms ..........................................................................................................
Food and beverage .......................................................................................
Entertainment, retail and other.....................................................................
Reportable segment net revenues.................................................................
Corporate and other ...........................................................................................
$
Adjusted Property EBITDAR
1,296,170
1,863,521
1,517,745
1,153,615
5,831,051
2,537,780
316,753
494,243
201,008
3,549,784
2,609,806
142,306
127,152
26,158
2,905,422
12,286,257
613,415
12,899,672
Las Vegas Strip Resorts..................................................................................... $
Regional Operations ..........................................................................................
MGM China.......................................................................................................
Reportable segment Adjusted Property EBITDAR .....................................
1,643,122
969,866
734,729
3,347,717
Other operating income (expense)
Corporate and other ...........................................................................................
NV Energy exit expense ....................................................................................
Preopening and start-up expenses......................................................................
Property transactions, net...................................................................................
Gain on Bellagio transaction..............................................................................
Depreciation and amortization...........................................................................
Restructuring......................................................................................................
Triple net operating lease and ground lease rent expense .................................
Income from unconsolidated affiliates related to investments in REITs...........
Operating income.........................................................................................
Non-operating income (expense)
Interest expense, net of amounts capitalized .....................................................
Non-operating items from unconsolidated affiliates .........................................
Other, net ...........................................................................................................
Income before income taxes..................................................................................
Benefit (provision) for income taxes .................................................................
Net income ..............................................................................................................
Less: Net income attributable to noncontrolling interests .................................
Net income attributable to MGM Resorts International ................................... $
(331,621)
—
(7,175)
(275,802)
2,677,996
(1,304,649)
(92,139)
(74,656)
544
3,940,215
(847,932)
(62,296)
(183,262)
(1,093,490)
2,846,725
(632,345)
2,214,380
(165,234)
2,049,146
$
$
$
$
1,407,733
1,776,029
1,402,378
1,130,532
5,716,672
2,026,925
318,017
428,934
160,645
2,934,521
2,195,144
118,527
114,862
21,424
2,449,957
11,101,150
661,946
11,763,096
1,706,315
781,854
574,333
3,062,502
(224,800)
—
(151,392)
(9,147)
—
(1,178,044)
—
(29,633)
—
1,469,486
(769,513)
(47,827)
(18,140)
(835,480)
634,006
(50,112)
583,894
(117,122)
466,772
$
$
$
$
1,436,830
1,778,869
1,410,496
1,119,928
5,746,123
1,834,803
319,049
410,143
145,725
2,709,720
1,741,635
54,824
51,330
10,371
1,858,160
10,314,003
483,476
10,797,479
1,781,390
754,597
535,524
3,071,511
(213,908)
40,629
(118,475)
(50,279)
—
(993,480)
—
(23,471)
—
1,712,527
(668,745)
(34,751)
(48,241)
(751,737)
960,790
1,127,394
2,088,184
(136,132)
1,952,052
92
Capital expenditures:
Las Vegas Strip Resorts ..............................................................................
Regional Operations....................................................................................
MGM China ................................................................................................
Reportable segment capital expenditures ..............................................
Corporate and other.....................................................................................
Eliminated in consolidation.........................................................................
2019
Year Ended December 31,
2018
(In thousands)
2017
$
$
285,863
187,489
145,634
618,986
120,020
—
739,006
$
$
501,044
72,865
390,212
964,121
537,347
(14,625)
1,486,843
$
$
419,983
66,628
923,346
1,409,957
469,053
(14,928)
1,864,082
Total assets are not allocated to segments for internal reporting presentations or when determining the allocation of resources
and, accordingly, are not presented.
Long-lived assets, which includes property and equipment, net, operating and finance lease right-of-use assets, net, goodwill,
and other intangibles, net, presented by geographic region in which the Company holds assets are presented below:
Long-lived assets:
2019
December 31,
2018
(In thousands)
2017
United States................................................................................................. $
China and all other foreign countries ...........................................................
$
20,582,055 $
8,007,449
28,589,504 $
18,228,939 $
8,266,804
26,495,743 $
16,863,222
8,456,728
25,319,950
NOTE 18 — RELATED PARTY TRANSACTIONS
CityCenter
Management agreements. The Company and CityCenter have entered into agreements whereby the Company is responsible
for management of the operations of CityCenter for a fee of 2% of revenue and 5% of EBITDA (as defined) for Aria and Vdara. The
Company earned fees of $48 million, $47 million and $49 million for the years ended December 31, 2019, 2018 and 2017,
respectively. The Company is being reimbursed for certain costs in performing its development and management services. During the
years ended December 31, 2019, 2018 and 2017, the Company incurred $420 million, $409 million and $390 million, respectively, of
costs reimbursable by CityCenter, primarily for employee compensation and certain allocated costs. As of December 31, 2019 and
2018, CityCenter owed the Company $66 million and $83 million, respectively, for management services and reimbursable costs
recorded in “Accounts receivable, net” in the accompanying consolidated balance sheets.
MGM China
Ms. Ho, Pansy Catilina Chiu King (“Ms. Ho”) is a member of the Board of Directors of, and holds a minority ownership interest
in, MGM China. Ms. Ho is also the managing director of Shun Tak Holdings Limited (together with its subsidiaries “Shun Tak”), a
leading conglomerate in Hong Kong with core businesses in transportation, property, hospitality and investments. Shun Tak provides
various services and products, including ferry tickets, travel products, rental of hotel rooms, laundry services and property cleaning
services to MGM China. In addition, MGM China leases transportation equipment and office space from Shun Tak. MGM China
incurred expenses relating to Shun Tak of $16 million, $17 million and $13 million for the years ended December 31, 2019, 2018 and
2017, respectively. In addition, Ms. Ho holds managing director positions with several other companies that provide travel and
advertising services to MGM China, which totaled $6 million for the year ended December 31, 2019.
Grand Paradise Macau deferred cash payment. On September 1, 2016, the Company purchased 188.1 million common
shares of its MGM China subsidiary from Grand Paradise Macau (“GPM”), an entity controlled by Ms. Ho. As part of the
consideration for the purchase, the Company agreed to pay GPM or its nominee a deferred cash payment of $50 million, which will be
paid in amounts equal to the ordinary dividends received on such shares, with a final lump sum payment due on the fifth anniversary
of the closing date of the transaction if any portion of the deferred cash payment remains unpaid at that time. Such amount was paid to
Expert Angles Limited, an entity controlled by Ms. Ho through November 2018 and subsequently controlled by an immediate family
member of Ms. Ho. As of December 31, 2019 and 2018, the Company recorded a remaining liability on a discounted basis of $34
million and $36 million in “Other long-term obligations”, respectively.
93
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. Ho indirectly holds
a noncontrolling interest, is party to a brand license agreement and a development services agreement with MGM China, for which the
related amounts are eliminated in consolidation. An entity owned by Ms. Ho received distributions of $20 million, $22 million and
$15 million for the years ended December 31, 2019, 2018 and 2017, respectively, in connection with the ownership of a
noncontrolling interest in MGM Branding and Development Holdings, Ltd.
MGP
As further described in Note 1, pursuant to the master lease with MGP, the Company leases the real estate assets of The Mirage,
Mandalay Bay, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau
Rivage, Borgata, Empire City, MGM National Harbor and MGM Northfield Park from MGP.
MGP master lease. The MGP master lease has an initial lease term of ten years that began on April 25, 2016 (other than with
respect to MGM National Harbor, as described below) with the potential to extend the term for four additional five-year terms
thereafter at the option of the Company. The MGP master lease provides that any extension of its term must apply to all of the real
estate under the master lease at the time of the extension. The MGP master lease provides that the initial term with respect to MGM
National Harbor ends on April 31, 2024. Thereafter, the initial term of the MGP master lease with respect to MGM National Harbor
may be renewed at the option of the Company for an initial renewal period lasting until the earlier of the end of the then-current term
of the master lease or the next renewal term (depending on whether the Company elects to renew the other properties under the master
lease in connection with the expiration of the initial ten-year term). If, however, the Company chooses not to renew the lease with
respect to MGM National Harbor after the initial MGM National Harbor term under the master lease, the Company would also lose
the right to renew the MGP master lease with respect to the rest of the properties when the initial ten-year lease term ends related to
the rest of the properties in 2026. The MGP master lease has a triple-net structure, which requires the Company to pay substantially all
costs associated with the lease, including real estate taxes, insurance, utilities and routine maintenance, in addition to the base rent.
Additionally, the master lease provides MGP with a right of first offer with respect to MGM Springfield and with respect to any
further gaming development by the Company on the undeveloped land adjacent to Empire City, which MGP may exercise should the
Company elect to sell either property in the future.
Rent under the MGP master lease consists of a “base rent” component and a “percentage rent” component. As of December 31,
2019, the base rent represents approximately 90% of the rent payments due and the percentage rent represents approximately 10% of
the rent payments due under the MGP master lease. The MGP master lease also provides for fixed annual escalators of 2% on the base
rent through the sixth lease year and the possibility for additional 2% increases thereafter subject to the Company meeting an adjusted
net revenue to rent ratio, as well as potential increases in percentage rent in year six and every five years thereafter based on a
percentage of average actual annual net revenue during the preceding five year period calculated in accordance with the terms under
the master lease. The MGP master lease also contains customary events of default and financial covenants. The Company was in
compliance with all applicable covenants as of December 31, 2019.
Subsequent to the Company completing its acquisition of Empire City in January 2019, MGP acquired the developed real
property associated with Empire City from the Company for consideration of approximately $634 million, which included the
assumption of debt of approximately $246 million, which was immediately repaid, and the remaining paid through the issuance of
Operating Partnership units. The real estate assets of Empire City were then leased to the Company pursuant to an amendment to the
MGP master lease, increasing the annual rent payment to MGP by $50 million, prorated for the remainder of the lease year. Consistent
with the MGP master lease terms, 90% of this rent will be fixed and contractually grow at 2% per year until 2022. As disclosed above,
the master lease provides MGP with a right of first offer with respect to certain undeveloped land adjacent to the property to the
extent the Company develops additional gaming facilities, which MGP may exercise should the Company elect to sell this property in
the future.
On March 7, 2019, the Company entered into an amendment to the existing MGP master lease with respect to investments made
by the Company related to the Park MGM and NoMad Las Vegas property (the “Park MGM Lease Transaction”). In connection with
the transaction, the Company received consideration of $638 million, of which approximately $606 million was paid in cash and the
remaining paid through the issuance of Operating Partnership units. Additionally, the annual rent payment to MGP was increased by
$50 million, prorated for the remainder of the lease year. Consistent with the master lease terms, 90% of this rent will be fixed and
contractually grow at 2% per year until 2022.
Additionally, on April 1, 2019, the Company acquired the membership interests of Northfield from MGP, which held the
operations of Northfield, for fair value of consideration of approximately $305 million consisting primarily of approximately 9 million
Operating Partnership units that were ultimately redeemed by the Operating Partnership, and MGP retained the associated real estate
assets. The Company then rebranded the property to MGM Northfield Park, which was then added to the existing MGP master lease
with MGP, increasing the annual rent payment to MGP by $60 million. Consistent with the master lease terms, 90% of this rent will
be fixed and contractually grow at 2% per year until 2022.
94
The annual rent payments under the MGP master lease for the fourth lease year, which commenced on April 1, 2019, increased
to $946 million from $770 million at the start of the third lease year. The increase was a result of the $50 million in additional rent for
each of the Park MGM Transaction and the addition of Empire City in the beginning of 2019, the $60 million of additional rent for
MGM Northfield Park, which entered the Master Lease on April 1, 2019, as well as the third 2.0% fixed annual rent escalator that
went into effect on April 1, 2019.
On February 14, 2020, the Company amended the MGP master lease to remove Mandalay Bay from such master lease and the
rent under the MGP master lease was reduced by $133 million. Refer to Note 1 for further discussion.
All intercompany transactions, including transactions under the MGP master lease, have been eliminated in the Company’s
consolidation of MGP. The public ownership of MGP’s Class A shares is recognized as non-controlling interests in the Company’s
consolidated financial statements.
Bellagio BREIT Venture
The Company has a 5% ownership interest in the Bellagio BREIT Venture which owns the Bellagio real estate assets and leased
back such assets to a subsidiary of the Company pursuant to a lease agreement. Refer to Note 11 for further information related to the
Bellagio lease.
MGP BREIT Venture
On February 14, 2020, the Company entered into a lease with the MGP BREIT Venture, in which MGP has a 50.1% ownership
interest. Refer to Note 1 for further discussion of this subsequent event.
NOTE 19 —CONDENSED CONSOLIDATING FINANCIAL INFORMATION
As of December 31, 2019, all of the Company’s principal debt arrangements are guaranteed by each of its material domestic
subsidiaries, other than MGP and the Operating Partnership, MGM Grand Detroit, MGM National Harbor, MGM Springfield, and
each of their respective subsidiaries. The Company’s international subsidiaries, including MGM China and its subsidiaries, are not
guarantors of such indebtedness. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors
as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017, 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 MGP 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 MGP 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 MGP 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 rent expense reflected within “general and administrative” expense within the condensed
consolidating financial information.
95
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
December 31, 2019
Non-Guarantor
Subsidiaries
Parent
Guarantor
Subsidiaries
MGP
Other
Elimination Consolidated
Current assets ................................................................................ $
Property and equipment, net .........................................................
Investments in subsidiaries ...........................................................
Investments in the MGP Operating Partnership ...........................
Investments in and advances to unconsolidated affiliates ............
Intercompany accounts .................................................................
Other non-current assets ...............................................................
1,847,328 $
—
26,283,270
—
—
—
59,968
1,166,667 $
2,972,291
3,500,241
3,713,065
782,820
12,994,459
14,142,246
(In thousands)
216,232 $
790,285 $
10,827,972 4,497,664
—
783,049
14,546
—
866,068 7,057,191
—
—
—
—
$ 28,190,566 $ 39,271,789 $ 11,910,272 $13,142,735 $
842,161 $
1,601,959 $
Current liabilities .......................................................................... $
Intercompany accounts .................................................................
Deferred income taxes, net ...........................................................
Long-term debt, net.......................................................................
Other non-current liabilities..........................................................
Total liabilities .......................................................................
Redeemable noncontrolling interests............................................
MGM Resorts International stockholders' equity .........................
Noncontrolling interests................................................................
Total stockholders' equity ......................................................
12,956,091
1,865,535
4,713,521
85,993
20,463,301
—
7,727,265
—
7,727,265
$ 28,190,566
197,581 $
774
29,909
845,471 $
37,594
240,971
4,307,354 2,147,460
476,642 2,339,166
5,012,260 5,610,662
105,046
4,383,113 5,011,075
2,514,899 2,415,952
6,898,012 7,427,027
$ 11,910,272 $13,142,735
—
$
(12,819) $
(11,972)
(29,783,511)
(4,496,114)
25,000
(12,994,459)
(11,365,131)
(58,639,006) $
(295,749) $
(12,994,459)
(29,909)
—
(11,411,315)
(24,731,432)
—
(33,907,574)
—
(33,907,574)
(58,639,006)
$
4,007,693
18,285,955
—
—
822,366
—
10,760,342
33,876,356
3,191,423
—
2,106,506
11,168,904
4,641,558
21,108,391
105,046
7,727,265
4,935,654
12,662,919
33,876,356
Parent
304,741
Current assets ................................................................................ $
Property and equipment, net..........................................................
—
Investments in subsidiaries............................................................ 22,419,282
—
Investments in the MGP Operating Partnership............................
—
Investments in and advances to unconsolidated affiliates.............
—
Intercompany accounts..................................................................
67,214
Other non-current assets ................................................................
—
Assets held for sale........................................................................
$22,791,237
Current liabilities........................................................................... $
154,484
Intercompany accounts.................................................................. 6,932,325
Deferred income taxes, net ............................................................ 1,097,654
Long-term debt, net ....................................................................... 8,055,472
39,019
Other non-current liabilities ..........................................................
—
Liabilities related to assets held for sale........................................
Total liabilities........................................................................ 16,278,954
Redeemable noncontrolling interests ............................................
—
MGM Resorts International stockholders' equity.......................... 6,512,283
—
Noncontrolling interests ................................................................
Total stockholders' equity....................................................... 6,512,283
$22,791,237
December 31, 2018
Non-Guarantor
Subsidiaries
MGP
Other
(In thousands)
12,054 $
$
972,820
10,506,129 6,392,014
—
831,494
29,119
—
77,436 4,932,872
—
355,688
$10,951,307 $13,158,319
—
—
—
—
$
227
33,634
160,441 $ 1,224,752
202,631
240,970
4,666,949 2,365,014
215,613 2,247,584
—
28,937
5,105,801 6,280,951
102,250
4,279,535 4,383,581
1,565,971 2,391,537
5,845,506 6,775,118
$10,951,307 $13,158,319
—
Elimination
Consolidated
$
(7,701)
(9,753,625)
(25,820,313)
(4,266,096)
25,000
(7,135,183)
(43,015)
(355,688)
$(47,356,621)
$
(237,276)
(7,135,183)
(29,720)
—
(9,453,924)
(28,937)
(16,885,040)
—
(30,471,581)
—
(30,471,581)
$(47,356,621)
$
$
$
$
2,526,778
20,729,888
—
—
732,867
—
6,221,173
—
30,210,706
2,948,882
—
1,342,538
15,088,005
259,240
—
19,638,665
102,250
6,512,283
3,957,508
10,469,791
30,210,706
—
—
569
13,151,072
14,753,600
—
24,513,386
4,803
24,518,189
$ 39,271,789
Guarantor
Subsidiaries
$ 1,244,864
13,585,370
3,401,031
3,434,602
678,748
7,135,183
1,186,666
—
$ 30,666,464
$ 1,646,481
—
—
570
7,210,948
—
8,857,999
—
21,808,465
—
21,808,465
$ 30,666,464
96
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
Net revenues................................................................................................ $
Equity in subsidiaries' earnings................................................................... 3,468,056
Expenses
— $ 8,250,745 $
143,416
(In thousands)
881,078
—
$ 4,648,935 $ (881,086) $ 12,899,672
—
— (3,611,472)
Parent
Guarantor
Subsidiaries MGP
Other
Elimination Consolidated
Year Ended December 31, 2019
Non-Guarantor
Subsidiaries
Casino and hotel operations .................................................................
General and administrative ..................................................................
Corporate expense................................................................................
Preopening and start-up expenses ........................................................
Property transactions, net.....................................................................
Gain on Bellagio transaction................................................................
Depreciation and amortization .............................................................
9,834 4,715,365
27,752 2,235,321
236,175
180,288
5,168
—
255,081
7,530
— (2,677,996)
431,222
—
225,404 5,200,336
Income (loss) from unconsolidated affiliates..............................................
134,584
Operating income........................................................................................ 3,242,652 3,328,409
(1,103)
254,509
Income from continuing operations before income taxes........................... 2,672,683 3,581,815
(8)
Income from continuing operations, net of tax........................................... 2,049,146 3,581,807
Income from discontinued operations, net of tax........................................
—
Net income .................................................................................................. 2,049,146 3,581,807
(8,995)
Net income attributable to MGM Resorts International ............................. $ 2,049,146 $ 3,572,812 $
Interest expense, net of amounts capitalized ...........................................
Other non-operating, net..........................................................................
Less: Net income attributable to noncontrolling interests ...................
Provision for income taxes...................................................................
(472,066)
(97,903)
(623,537)
—
—
—
—
23,321
27,041
—
10,844
—
294,705
355,911
—
525,167
(249,944)
(8,276)
266,947
(7,598)
259,349
16,216
275,565
(90,260)
185,305
(11,031)
2,889,321
(940,555)
755,378
—
21,138
—
2,007
—
2,347
—
—
—
578,722
(951,586)
4,248,913
(15,063)
—
384,959 (3,540,972)
(124,819)
—
(11,304)
(382,584)
248,836 (3,923,556)
—
247,634 (3,923,556)
(16,216)
247,634 (3,939,772)
—
(65,979)
181,655 $ (3,939,772) $
(1,202)
—
$
7,603,489
2,101,217
464,642
7,175
275,802
(2,677,996)
1,304,649
9,078,978
119,521
3,940,215
(847,932)
(245,558)
2,846,725
(632,345)
2,214,380
—
2,214,380
(165,234)
2,049,146
Net income .................................................................................................. $ 2,049,146 $ 3,581,807 $
Other comprehensive income (loss), net of tax:
275,565
$
247,634 $ (3,939,772) $
2,214,380
Foreign currency translation adjustment..............................................
Other comprehensive loss related to cash flow hedges........................
Other comprehensive income (loss)..............................................
16,125
—
16,125
Comprehensive income............................................................................... 2,045,298 3,597,932
—
Comprehensive income attributable to MGM Resorts International.......... $ 2,045,298 $ 3,597,932 $
Less: Comprehensive income attributable to noncontrolling interests
16,125
(19,973)
(3,848)
—
—
(35,198)
(35,198)
240,367
(80,728)
159,639
$
(32,250)
28,870
25,666
—
28,870
(6,584)
276,504 (3,946,356)
(87,719)
—
188,785 $ (3,946,356) $
28,870
(29,505)
(635)
2,213,745
(168,447)
2,045,298
97
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
Cash flows from operating activities
Net cash provided by (used in) operating activities ................................. $ (308,995) $ 1,404,869 $
100,706 $
629,412 $
(15,591) $
1,810,401
Year Ended December 31, 2019
Non-Guarantor
Subsidiaries
Parent
Guarantor
Subsidiaries MGP
Other
Elimination Consolidated
(In thousands)
Cash flows from investing activities
Capital expenditures, net of construction payable ..........................................
Dispositions of property and equipment .........................................................
Proceeds from Bellagio transaction ................................................................
Proceeds from sale of Circus Circus Las Vegas and adjacent land ................
Acquisition of Empire City Casino, net of cash acquired...............................
Investments in and advances to unconsolidated affiliates ..............................
Distributions from unconsolidated affiliates...................................................
Intercompany accounts ...................................................................................
Northfield OpCo transaction...........................................................................
Other................................................................................................................
Net cash provided by (used in) investing activities..................................
(504,105)
—
—
2,425
— 4,151,499
652,333
—
(535,681)
—
(81,877)
—
—
100,700
— (5,859,196)
(3,779)
—
—
(4,500)
— (2,082,181)
—
—
—
—
—
—
—
—
3,779
—
3,779
12
(234,913)
—
153
—
—
—
—
—
—
—
—
—
—
— 5,859,196
—
—
—
(26,612)
(261,372) 5,859,208
Cash flows from financing activities
Net borrowings (repayments) under bank credit facilities - maturities of 90
days or less ......................................................................................................
(752,220)
Issuance of long-term debt.............................................................................. 1,000,000
Retirement of senior notes and senior debentures .......................................... (3,764,167)
(14,080)
Debt issuance costs .........................................................................................
—
Issuance of MGM Growth Properties Class A shares, net..............................
(271,288)
Dividends paid to common shareholders ........................................................
—
MGP dividends paid to consolidated subsidiaries ..........................................
Distributions to noncontrolling interest owners..............................................
—
Purchases of common stock............................................................................ (1,031,534)
Intercompany accounts ................................................................................... 5,987,076
(27,217)
Other................................................................................................................
Net cash provided by (used in) financing activities ................................. 1,126,570
—
Effect of exchange rate on cash...........................................................................
245,950 (1,361,325) (1,766,454)
750,000 1,500,000
—
(39,328)
—
—
—
(56,420)
—
—
—
—
—
(9,983)
— 1,250,006
—
—
(371,759)
—
(161,976)
(4,907)
—
—
—
456,571
(1,342)
(47,686)
93,621
649,928
—
—
—
—
—
—
—
—
371,759
—
—
(212,692) (6,230,955)
37,900
(578,417) (5,821,296)
—
(3,523)
2,601
(739,006)
2,578
4,151,499
652,333
(535,681)
(81,877)
100,700
—
—
(31,112)
3,519,434
(3,634,049)
3,250,000
(3,764,167)
(63,391)
1,250,006
(271,288)
—
(223,303)
(1,031,534)
—
(41,868)
(4,529,594)
2,601
Cash flows from discontinued operations, net
Cash flows from operating activities ..............................................................
Cash flows used in investing activities ...........................................................
Cash flows used in financing activities...........................................................
Net cash flows used in discontinued operations ......................................
Change in cash and cash equivalents classified as assets held for sale ...........
Cash and cash equivalents
—
—
—
—
—
—
—
—
—
15,591
(12)
(37,900)
(22,321)
—
—
—
—
(15,591)
12
37,900
22,321
—
(22,321)
—
22,321
—
—
—
—
—
Net increase (decrease) for the period.............................................................
817,575
259,738
Balance, beginning of period ..........................................................................
Balance, end of period .................................................................................... $ 1,077,313 $
(27,384)
445,423
418,039 $
198,106
3,995
202,101 $
(207,776)
817,606
609,830 $
22,321
—
22,321 $
802,842
1,526,762
2,329,604
98
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
Year Ended December 31, 2018
Non-Guarantor
Subsidiaries
Parent
Guarantor
Subsidiaries MGP
Other
Elimination Consolidated
Net revenues.................................................................................................. $
Equity in subsidiaries' earnings..................................................................... 1,221,538
Expenses
— $ 7,780,253 $
116,676
(In thousands)
869,495
—
$ 3,983,575 $ (870,227) $
— (1,338,214)
11,763,096
—
156,503
—
—
—
Casino and hotel operations ...................................................................
General and administrative ....................................................................
Corporate expense..................................................................................
Preopening and start-up expenses ..........................................................
Property transactions, net.......................................................................
Depreciation and amortization ...............................................................
11,130 4,438,687
9,945 1,241,329
216,318
26,100
(15,955)
628,961
177,578 6,535,440
148,866
Income (loss) from unconsolidated affiliates................................................
Operating income.......................................................................................... 1,043,960 1,510,355
(510)
(480,985)
63,722
(444,897)
626,697 1,064,948
—
(159,925)
466,772 1,064,948
—
466,772 1,064,948
—
466,772 $ 1,064,948 $
Interest expense, net of amounts capitalized .............................................
Other non-operating, net............................................................................
Income before income taxes .........................................................................
Benefit (provision) for income taxes .....................................................
Income from continuing operations, net of tax.............................................
Income from discontinued operations, net of tax..........................................
Net income ....................................................................................................
Less: Net income attributable to noncontrolling interests .....................
Net income attributable to MGM Resorts International ............................... $
—
—
—
—
93,739
48,675
—
20,319
266,622
429,355
—
440,140
(215,532)
(4,690)
219,918
(5,779)
214,139
30,563
244,702
(67,065)
$
177,637
2,491,007
495,015
21,317
125,292
25,033
543,606
3,701,270
(1,176)
(21,949)
(75,390)
(23,609)
—
(20,250)
(261,145)
(402,343)
—
281,129 (1,806,098)
(72,486)
—
507,684
(187,786)
20,857 (1,298,414)
—
115,592
136,449 (1,298,414)
(30,563)
136,449 (1,328,977)
(50,057)
—
86,392 $ (1,328,977) $
—
6,918,875
1,764,638
419,204
151,392
9,147
1,178,044
10,441,300
147,690
1,469,486
(769,513)
(65,967)
634,006
(50,112)
583,894
—
583,894
(117,122)
466,772
Net income .................................................................................................... $
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment................................................
Other comprehensive income related to cash flow hedges ....................
Other comprehensive income (loss)................................................
Comprehensive income.................................................................................
Less: Comprehensive income attributable to noncontrolling interests ..
Comprehensive income attributable to MGM Resorts International............ $
466,772 $ 1,064,948 $
244,702
$
136,449 $ (1,328,977) $
583,894
(7,422)
2,476
(4,946)
(7,422)
—
(7,422)
461,826 1,057,526
—
461,826 $ 1,057,526 $
—
—
4,128
4,128
248,830
(68,165)
$
180,665
14,844
(13,022)
(3,028)
—
(13,022)
11,816
123,427 (1,317,161)
(44,457)
—
78,970 $ (1,317,161) $
(13,022)
3,576
(9,446)
574,448
(112,622)
461,826
99
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
Year Ended December 31, 2018
Non-Guarantor
Subsidiaries
Parent
Guarantor
Subsidiaries
MGP
Other
Elimination Consolidated
(In thousands)
Cash flows from operating activities
Net cash provided by (used in) operating activities............................... $
(460,117 ) $
1,294,989 $
556,801
$
330,866 $
— $
1,722,539
Cash flows from investing activities
Capital expenditures, net of construction payable ........................................
Dispositions of property and equipment .......................................................
Proceeds from sale of business units and investment in unconsolidated
affiliate ..........................................................................................................
Acquisition of Northfield, net of cash acquired............................................
Investments in and advances to unconsolidated affiliates ............................
Distributions from unconsolidated affiliates.................................................
Intercompany accounts .................................................................................
Other .............................................................................................................
Net cash used in investing activities......................................................
—
—
—
—
—
—
—
—
—
(697,462 )
25,507
(192 )
—
(789,189 )
105
—
—
(1,486,843 )
25,612
163,616
33,802
(56,295 )
322,631
(1,136,764 )
(13,416 )
(1,358,381 )
—
(1,068,336 )
—
—
—
—
(1,068,528 )
—
—
—
—
—
(3,792 )
(792,876 )
—
—
—
—
1,136,764
—
1,136,764
163,616
(1,034,534 )
(56,295 )
322,631
—
(17,208 )
(2,083,021 )
Cash flows from financing activities
Net borrowings under bank credit facilities - maturities of 90 days or
less.................................................................................................................
Issuance of long-term debt............................................................................
Retirement of senior notes and senior debentures ........................................
Debt issuance costs .......................................................................................
Dividends paid to common shareholders ......................................................
MGP dividends paid to consolidated subsidiaries ........................................
Distributions to noncontrolling interest owners............................................
Purchases of common stock..........................................................................
Intercompany accounts .................................................................................
Other .............................................................................................................
Net cash provided by financing activities..............................................
Effect of exchange rate on cash .........................................................................
377,500
1,000,000
—
(26,125 )
(260,592 )
—
—
(1,283,333 )
917,760
(32,225 )
692,985
—
—
—
(2,265 )
—
—
—
—
—
207,015
(6,979 )
197,771
—
727,750
—
—
(17,490 )
—
(333,192 )
(121,068 )
—
—
—
256,000
—
137,009
—
—
(32,904 )
—
—
(63,864 )
—
345,181
(6,180 )
379,242
(1,985 )
—
—
—
—
—
333,192
—
—
(1,469,956 )
—
(1,136,764 )
—
1,242,259
1,000,000
(2,265 )
(76,519 )
(260,592 )
—
(184,932 )
(1,283,333 )
—
(45,384 )
389,234
(1,985 )
Cash flows from discontinued operations, net
Cash flows from operating activities ............................................................
Cash flows from investing activities.............................................................
Cash flows from financing activities ............................................................
Net cash flows from discontinued operations .......................................
Change in cash and cash equivalents classified as assets held for sale..........
Cash and cash equivalents
—
—
—
—
—
—
—
—
—
23,406
32,416
—
55,822
—
—
—
—
(23,406 )
(32,416 )
—
(55,822 )
—
55,822
—
(55,822 )
—
—
—
—
—
Net increase (decrease) for the period...........................................................
Balance, beginning of period ........................................................................
Balance, end of period .................................................................................. $
232,868
26,870
259,738 $
134,379
311,044
445,423 $
(255,727 )
259,722
3,995
$
(84,753 )
902,359
817,606 $
—
—
— $
26,767
1,499,995
1,526,762
100
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
Year Ended December 31, 2017
Non-Guarantor
Subsidiaries
Parent
Guarantor
Subsidiaries MGP
Other
Elimination Consolidated
(In thousands)
— $ 7,649,990 $
156,081
Net revenues ........................................................................................................... $
Equity in subsidiaries' earnings .............................................................................. 1,391,725
Expenses.................................................................................................................
Casino and hotel operations.............................................................................
General and administrative..............................................................................
Corporate expense ...........................................................................................
NV Energy exit expense ..................................................................................
Preopening and start-up expenses ...................................................................
Property transactions, net ................................................................................
Depreciation and amortization.........................................................................
10,784 4,262,212
8,742 1,180,989
200,801
(40,629)
8,258
43,985
649,676
146,618 6,305,292
Income (loss) from unconsolidated affiliates .........................................................
147,234
Operating income ................................................................................................... 1,245,107 1,648,013
(982)
(402,602)
804,415 1,244,429
—
Net income ............................................................................................................. 1,952,052 1,244,429
—
Net income attributable to MGM Resorts International......................................... $ 1,952,052 $ 1,244,429 $
Interest expense, net of amounts capitalized.......................................................
Other non-operating, net .....................................................................................
Income before income taxes...................................................................................
Benefit (provision) for income taxes ............................................................... 1,147,637
Less: Net income attributable to noncontrolling interests ...............................
127,092
—
—
—
—
(466,907)
26,215
—
—
765,695 $ 3,151,304 $ (769,510) $ 10,797,479
—
— (1,547,806)
—
— 1,923,942
369,844
84,348
(515)
34,085
—
—
110,217
—
6,294
34,022
260,455
343,804
412,910 2,753,586
(1,012)
(3,816)
(84,348)
(4,591)
—
—
(34,022)
(260,455)
(387,232)
—
396,706 (1,930,084)
(16,681)
—
(142,997)
434,106
237,028 (1,495,978)
(15,337)
—
221,691 (1,495,978)
(94,357)
—
127,334 $ (1,495,978) $
—
352,785
(184,175)
2,286
170,896
(4,906)
165,990
(41,775)
124,215 $
6,193,122
1,559,575
356,872
(40,629)
118,475
50,279
993,480
9,231,174
146,222
1,712,527
(668,745)
(82,992)
960,790
1,127,394
2,088,184
(136,132)
1,952,052
Net income ............................................................................................................. $ 1,952,052 $ 1,244,429 $
Other comprehensive income (loss), net of tax:
165,990 $
221,691 $ (1,495,978) $
2,088,184
Foreign currency translation adjustment .........................................................
Other comprehensive income related to cash flow hedges..............................
Other comprehensive income (loss) .........................................................
(23,995)
—
(23,995)
Comprehensive income .......................................................................................... 1,933,291 1,220,434
—
Comprehensive income attributable to MGM Resorts International ..................... $ 1,933,291 $ 1,220,434 $
Less: Comprehensive income attributable to noncontrolling interests............
(23,995)
5,234
(18,761)
—
—
9,782
9,782
175,772
(44,536)
131,236 $
47,990
(43,188)
(7,021)
—
40,969
(43,188)
178,503 (1,455,009)
(75,164)
—
103,339 $ (1,455,009) $
(43,188)
7,995
(35,193)
2,052,991
(119,700)
1,933,291
101
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
Cash flows from operating activities
Net cash provided by (used in) operating activities ........................ $ (584,252) $ 1,152,083 $
482,578
$ 1,156,002 $
— $
2,206,411
Year Ended December 31, 2017
Non-Guarantor
Subsidiaries
Parent
Guarantor
Subsidiaries MGP
Other
Elimination Consolidated
(In thousands)
Cash flows from investing activities
Capital expenditures, net of construction payable .................................
Dispositions of property and equipment ................................................
Acquisition of National Harbor, net of cash acquired ...........................
Investments in and advances to unconsolidated affiliates .....................
Distributions from unconsolidated affiliates..........................................
Intercompany accounts ..........................................................................
Other.......................................................................................................
Net cash provided by (used in) investing activities.........................
—
—
—
—
—
(482,024)
502
—
(16,727)
301,211
462,500 (1,186,942)
(1,754)
462,500 (1,385,734)
—
—
(462,500)
(488) (1,381,570)
216
—
—
—
—
42
(462,988) (1,381,312)
—
—
—
—
—
—
462,500
—
—
724,442
—
1,186,942
(1,864,082)
718
—
(16,727)
301,211
—
(1,712)
(1,580,592)
Cash flows from financing activities
Net borrowings (repayments) under bank credit facilities - maturities
122,500
of 90 days or less....................................................................................
—
Issuance of long-term debt.....................................................................
(502,669)
Retirement of senior notes and senior debentures .................................
—
Debt issuance costs ................................................................................
—
Issuance of MGM Growth Properties Class A shares, net.....................
(252,014)
Dividends paid to common shareholders ...............................................
—
MGP dividends paid to consolidated subsidiaries .................................
—
Distributions to noncontrolling interest owners.....................................
Purchases of common stock...................................................................
(327,500)
Intercompany accounts .......................................................................... 1,042,111
(33,801)
Other.......................................................................................................
48,627
Net cash provided by (used in) financing activities ........................
—
Effect of exchange rate on cash..................................................................
Cash and cash equivalents
—
—
—
—
—
—
—
—
—
248,626
(11,644)
236,982
—
(466,875)
350,000
—
(5,598)
387,548
—
(290,091)
(95,344)
—
—
—
(120,360)
—
359,376
—
—
(4,379)
—
—
—
(75,058)
—
186,296
(13,320)
452,915
(3,627)
—
—
—
—
—
—
290,091
—
—
(1,477,033)
—
(1,186,942)
—
15,001
350,000
(502,669)
(9,977)
387,548
(252,014)
—
(170,402)
(327,500)
—
(58,765)
(568,778)
(3,627)
Net increase (decrease) for the period....................................................
Balance, beginning of period .................................................................
Balance, end of period ........................................................................... $
(73,125)
99,995
26,870 $
3,331
307,713
311,044 $
(100,770)
360,492
259,722
$
223,978
678,381
902,359 $
—
—
— $
53,414
1,446,581
1,499,995
102
NOTE 20 — SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED)
2019
First
Second
Quarter
Third
(In thousands, except per share data)
Fourth
Total
Net revenues ..................................................................... $ 3,176,911 $ 3,223,243 $ 3,314,382 $ 3,185,136 $12,899,672
238,381 2,960,089 3,940,215
Operating income..............................................................
Net income........................................................................
6,104 2,065,950 2,214,380
Net income (loss) attributable to MGM Resorts
International ...................................................................
Earnings (loss) per share - Basic....................................... $
Earnings (loss) per share - Diluted ................................... $
(37,133) 2,011,577 2,049,146
3.90
3.88
43,405
0.08 $
0.08 $
31,297
0.05 $
0.05 $
371,485
76,169
370,260
66,157
(0.08) $
(0.08) $
3.94 $
3.91 $
2018
Net revenues ..................................................................... $ 2,822,237 $ 2,858,695 $ 3,029,302 $ 3,052,862 $11,763,096
335,751 1,469,486
Operating income..............................................................
583,894
Net income........................................................................
Net income (loss) attributable to MGM Resorts
International ...................................................................
Earnings (loss) per share - Basic....................................... $
Earnings (loss) per share - Diluted ................................... $
123,777
0.21 $
0.21 $
142,878
0.26 $
0.26 $
223,444
0.39 $
0.38 $
(23,327)
(0.06) $
(0.06) $
466,772
0.82
0.81
363,075
140,423
410,903
171,410
359,757
266,301
5,760
Because earnings per share amounts are calculated using the weighted average number of common and dilutive common
equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters does not equal the total
earnings per share amounts for the year. The following sections list certain items affecting comparability of quarterly and year-to-date
results and related impact on earnings (loss) per share - diluted. Additional information related to these items is included elsewhere in
the notes to the accompanying financial statements.
Certain items affecting comparability for the year ended December 31, 2019 are as follows:
•
•
•
•
First Quarter. None
Second Quarter. None
Third Quarter. The Company recorded a $219 million non-cash impairment charge ($0.33 per share in the quarter and
$0.32 per share in the full year of 2019) related to the Circus Circus Las Vegas and adjacent land; and
Fourth Quarter. The Company recorded a $2.7 billion gain ($4.04 per share in the quarter and $3.95 per share in the full
year of 2019) related to the sale and lease back of Bellagio. Additionally, the Company recorded loss on early retirement of
debt of $142 million ($0.21 per share) in the quarter and $198 million ($0.28 per share) in the full year of 2019.
Certain items affecting comparability for the year ended December 31, 2018 are as follows:
•
•
•
•
First Quarter. The Company recorded a $72 million tax benefit ($0.13 per share in the quarter) related to a measurement
period adjustment of the Tax Act;
Second Quarter. None;
Third Quarter. The Company recorded a $45 million gain ($0.07 per share in the quarter and $0.06 per share in the full
year of 2018) related to the sale of Grand Victoria. Additionally, the Company recorded a $12 million gain ($0.02 per share
in the quarter and full year of 2018) related to the sale of Mandarin Oriental; and
Fourth Quarter. The Company recorded business interruption insurance proceeds of $24 million ($0.04 per share in the
quarter and $0.03 per share in the full year of 2018) primarily at Mandalay Bay. Additionally, the Company recorded a $92
million tax expense ($0.17 per share in the quarter) related to the Tax Act.
103
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Balance at
Beginning of Doubtful
Provision
for
Write-offs,
Net of
Balance at
Period
Accounts Recoveries End of Period
Allowance for doubtful accounts:
Year Ended December 31, 2019 ............................................. $
Year Ended December 31, 2018 .............................................
Year Ended December 31, 2017 .............................................
90,775 $
92,571
97,920
39,270 $
39,762
20,603
(35,484) $
(41,558)
(25,952)
94,561
90,775
92,571
Balance at
Beginning of
Period
Increase Decrease End of Period
Balance at
Deferred income tax valuation allowance:
Year Ended December 31, 2019 ............................................. $
Year Ended December 31, 2018 .............................................
Year Ended December 31, 2017 .............................................
2,477,703 $
2,513,738
2,583,274
96,353 $
—
—
— $
(36,035)
(69,536)
2,574,056
2,477,703
2,513,738
104
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
105
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have
concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended (“the Exchange Act”)) were effective as of December 31, 2019 to provide reasonable assurance that information
required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the SEC rules and regulations and to provide that such information is accumulated and communicated to
management to allow timely decisions regarding required disclosures. This conclusion is based on an evaluation as required by Rules
13a-15(b) and 15d-15(b) under the Exchange Act conducted under the supervision and participation of the principal executive officer
and principal financial officer along with company management.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2019, there were no changes in our internal control over financial reporting that
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have commenced
finance modernization initiatives to implement new accounting systems, which are expected to improve the efficiency of certain
business processes. We will continue to monitor and evaluate our internal control over financial reporting throughout the
transformation.
Management’s Annual Report on Internal Control over Financial Reporting
Management’s Responsibilities
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in
Sections 13a-15(f) and 15d-15(f) of the Exchange Act) for MGM Resorts International and subsidiaries (the “Company”).
Objective of Internal Control over Financial Reporting
In establishing adequate internal control over financial reporting, management has developed and maintained a system of
internal control, policies and procedures designed to provide reasonable assurance that information contained in the accompanying
consolidated financial statements and other information presented in this annual report is reliable, does not contain any untrue
statement of a material fact or omit to state a material fact, and fairly presents in all material respects the financial condition, results of
operations and cash flows of the Company as of and for the periods presented in this annual report. These include controls and
procedures designed to ensure that this information is accumulated and communicated to the Company’s management, including its
principal executive officer and principal financial officer, as appropriate for all timely decisions regarding required disclosure.
Significant elements of the Company’s internal control over financial reporting include, for example:
• Hiring skilled accounting personnel and training them appropriately;
• Written accounting policies;
• Written documentation of accounting systems and procedures;
•
•
• Oversight by an independent Audit Committee of the Board of Directors.
Segregation of incompatible duties;
Internal audit function to monitor the effectiveness of the system of internal control; and
Management’s Evaluation
Management, with the participation of the Company’s principal executive officer and principal financial officer, has evaluated
the Company’s internal control over financial reporting using the criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on its evaluation as of December 31, 2019, management believes that the Company’s internal control over financial
reporting is effective in achieving the objectives described above.
The Company’s independent registered public accounting firm’s report on the effectiveness of our internal control over financial
reporting appears herein.
106
ITEM 9B. OTHER INFORMATION
None.
107
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
We incorporate by reference the information appearing under “Information about our Executive Officers” in Item 1 of this Form
10-K and under “Election of Directors” and “Corporate Governance” in our definitive Proxy Statement for our 2020 Annual Meeting
of Stockholders, which we expect to file with the SEC on or before March 27, 2020 (the “Proxy Statement”).
ITEM 11.
EXECUTIVE COMPENSATION
We incorporate by reference the information appearing under “Director Compensation” and “Executive Compensation” and
“Corporate Governance — Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in
the Proxy Statement.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
We incorporate by reference the information appearing under “Principal Stockholders” and “Election of Directors” in the Proxy
Statement.
Equity Compensation Plan Information
The following table includes information about our equity compensation plans at December 31, 2019:
Securities to be issued Weighted average
exercise price of
outstanding options,
warrants and rights
(In thousands, except per share data)
upon exercise of
outstanding options,
warrants and rights
Securities available for
future issuance under
equity compensation
plans
Equity compensation plans approved by
security holders (1) ............................................
Equity compensation plans not approved by
security holders..................................................
10,991 $
—
23.16
—
20,310
—
(1) As of December 31, 2019, we had 4.3 million restricted stock units and 2.5 million performance share units outstanding that do
not have an exercise price; therefore, the weighted average per share exercise price only relates to outstanding stock appreciation
rights. The amount included in the securities outstanding above for performance share units assumes that each target price is
achieved.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
We incorporate by reference the information appearing under “Transactions with Related Persons” and “Corporate Governance”
in the Proxy Statement.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
We incorporate by reference the information appearing under “Selection of Independent Registered Public Accounting Firm” in
the Proxy Statement.
108
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
PART IV
(a)(1).
Financial Statements. The following consolidated financial statements of the Company are filed as part of this
report under Item 8 – “Financial Statements and Supplementary Data.”
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting ..............................
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements ..........................................
Consolidated Balance Sheets — December 31, 2019 and 2018..................................................................................................
Years Ended December 31, 2019, 2018 and 2017
Consolidated Statements of Operations ...............................................................................................................................
Consolidated Statements of Comprehensive Income (Loss)................................................................................................
Consolidated Statements of Cash Flows ..............................................................................................................................
Consolidated Statements of Stockholders’ Equity ...............................................................................................................
Notes to Consolidated Financial Statements................................................................................................................................
52
53
55
56
57
58
59
60
(a)(2).
Financial Statement Schedule. The following financial statement schedule of the Company is filed as part of this
report under Item 8 – “Financial Statements and Supplementary Data.”
Years Ended December 31, 2019, 2018 and 2017
Schedule II — Valuation and Qualifying Accounts...............................................................................................................
104
The financial information included in the financial statement schedule should be read in conjunction with the consolidated
financial statements. All other financial statement schedules have been omitted because they are not applicable, or the required
information is included in the consolidated financial statements or the notes thereto.
(a)(3).
Exhibits.
Exhibit
Number
2.1
3.1
3.2
4.1(1)
4.1(2)
4.1(3)
4.1(4)
4.1(5)
Description
Master Transaction Agreement by and among MGM Resorts International, Bellagio, LLC and BCORE Paradise
Parent LLC, dated as of October 15, 2019 (incorporated by reference to Exhibit 2.1 of MGM Resort International’s
Current Report on Form 8-K filed with the SEC on October 16, 2019).
Amended and Restated Certificate of Incorporation of the Company, dated June 14, 2011 (incorporated by reference
to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2011).
Amended and Restated Bylaws of the Company, effective January 13, 2016 (incorporated by reference to Exhibit 3.1
to the Company’s Current Report on Form 8-K filed on January 15, 2016).
Indenture, dated November 15, 1996, by and between Mandalay and Wells Fargo Bank (Colorado), N.A., as Trustee
(the “Mandalay November 1996 Indenture”) (incorporated by reference to Exhibit 4(e) to the Mandalay October 1996
10-Q).
Supplemental Indenture, dated as of November 15, 1996, to the Mandalay November 1996 Indenture, with respect to
$150 million aggregate principal amount of 7.0% Senior Notes due 2036 (incorporated by reference to Exhibit 4(f) to
the Mandalay October 1996 10-Q).
7.0% Senior Notes due February 15, 2036, in the principal amount of $150,000,000 (incorporated by reference to
Exhibit 4(g) to the Mandalay October 1996 10-Q).
Indenture, dated March 22, 2012, between the Company and U.S. Bank National Association, as trustee (incorporated
by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 22, 2012).
First Supplemental Indenture, dated March 22, 2012, among the Company, the guarantors named therein and U.S.
Bank National Association, as trustee with respect to $1.0 billion aggregate principal amount of 7.75% senior notes
due 2022 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on March 22,
2012).
109
4.1(6)
4.1(7)
4.1(8)
4.1(9)
4.1(10)
4.1(11)
4.1(12)
4.1(13)
4.1(14)
4.1(15)
4.1(16)
4.1(17)
Fourth Supplemental Indenture, dated November 25, 2014, among the Company, the guarantors named therein and
U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among the Company and
U.S. Bank National Association, as trustee, relating to the 6.000% senior notes due 2023 (incorporated by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 25, 2014).
Fifth Supplemental Indenture, dated August 19, 2016, among MGM Resorts International, the guarantors named
therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM
Resorts International and U.S. Bank National Association, as trustee, relating to the 4.625% senior notes
due 2026 (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on August 19,
2016).
Sixth Supplemental Indenture, dated June 18, 2018, among MGM Resorts International, the guarantors named therein
and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM Resorts
International and U.S. Bank National Association, as trustee, relating to the 5.750% senior notes due 2025
(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 18, 2018).
Seventh Supplemental Indenture, dated April 10, 2019, among MGM Resorts International, the guarantors named
therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of March 22, 2012, among MGM
Resorts International and U.S. Bank National Association, as trustee, relating to the 5.500% senior notes due 2027
(incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on April 10, 2019).
Indenture, dated as of August 12, 2016, among MGM Growth Properties Operating Partnership LP, MGP Finance Co-
Issuer, Inc., the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 of the Current Report on Form 8-K of MGM Growth Properties LLC filed on August 12,
2016).
Indenture, dated as of April 20, 2016, among MGP Escrow Issuer, LLC and MGP Escrow Co-Issuer, Inc. and U.S.
Bank National Association, as Trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K filed April 21, 2016).
Indenture, dated as of September 21, 2017, among MGM Growth Properties Operating Partnership LP, MGP Finance
Co-Issuer, Inc., the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (incorporated
by reference to Exhibit 4.1 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth
Properties Operating Partnership LP filed on September 21, 2017).
Indenture, dated as of January 25, 2019, among MGM Growth Properties Operating Partnership LP, MGP Finance
Co-Issuer, Inc., the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (incorporated
by reference to Exhibit 4.1 of the Current Report on Form 8-K of MGM Growth Properties LLC and MGM Growth
Properties Operating Partnership LP filed on January 25, 2019).
Supplemental Indenture to the Indentures, dated as of June 15, 2018, among MGP OH, Inc., MGP Finance Co-Issuer,
Inc. and MGM Growth Properties Operating Partnership LP (incorporated by reference to Exhibit 4.1 to the Quarterly
Report on Form 10-Q of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed
on August 7, 2018).
Second Supplemental Indenture to the Indentures, dated as of July 10, 2018, among Northfield Park Associates LLC,
Cedar Downs OTB, LLC, MGP Finance Co-Issuer, Inc. and MGM Growth Properties Operating Partnership LP
(incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q of MGM Growth Properties LLC and
MGM Growth Properties Operating Partnership LP filed on November 6, 2018).
Third Supplemental Indenture to the Indentures, dated as of January 29, 2019, among MGP Yonkers Realty Sub, LLC,
YRL Associates, L.P., MGP Finance Co-Issuer, Inc., MGM Growth Properties Operating Partnership LP, the
Subsidiary Guarantors named therein, and U.S. Bank National Association, as Trustee (incorporated by reference to
Exhibit 4.2 to the Company’s Quarterly Report on Form 10-Q filed on May 7, 2019).
Fourth Supplemental Indenture to the Indentures, dated as of March 29, 2019, among MGP, MGP OH Propco, LLC,
MGP Finance Co-Issuer, Inc., MGM Growth Properties Operating Partnership LP, the Subsidiary Guarantors named
therein, and U.S. Bank National Association, as Trustee (incorporated by reference to Exhibit 4.3 to the Company’s
Quarterly Report on Form 10-Q filed on May 7, 2019).
110
4.1(18)
4.1(19)
4.2
4.3
Indenture governing the 5.375% senior notes due 2024, dated as of May 16, 2019, between MGM China Holdings
Limited and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 of the Company’s
Current Report on Form 8-K filed on May 16, 2019).
Indenture governing the 5.875% senior notes due 2026, dated as of May 16, 2019, between MGM China Holdings
Limited and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 of the Company’s
Current Report on Form 8-K filed on May 16, 2019).
Guarantee (Mandalay Resort Group 7.0% Senior Notes due 2036), dated as of April 25, 2005, by the Company and
certain subsidiaries of the Company, in favor of The Bank of New York, as trustee for the benefit of the holders of the
Notes pursuant to the Indenture referred to therein (incorporated by reference to Exhibit 10.22 to the September 2005
10-Q).
Amended and Restated Registration Rights Agreement, between MGM Growth Properties LLC and MGM Resorts
International, dated as of October 5, 2017 (incorporated by reference to Exhibit 10.8 of the Annual Report on Form
10-K of MGM Growth Properties LLC and MGM Growth Properties Operating Partnership LP filed on March 1,
2018).
4.4
Description of MGM Common Stock
10.1(1)
10.1(2)
10.1(3)
10.1(4)
10.1(5)
10.1(6)
10.1(7)
10.1(8)
Amended and Restated Credit Agreement, dated as of April 25, 2016, among MGM Resorts International, the Lenders
from time to time party thereto and Bank of America, N.A., as Administrative Agent (incorporated by reference to
Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 25, 2016).
First Amendment, dated as of December 21, 2018, to the Amended and Restated Credit Agreement, dated as of April
25, 2016 among the Company, the Administrative Agent and the other parties lenders thereto (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 28, 2018).
Second Amendment, dated as of November 14, 2019, to the Amended and Restated Credit Agreement, dated as of
April 25, 2016 among MGM, the lenders from time to time party thereto and the Administrative Agent (incorporated
by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 18, 2019).
Credit Agreement, dated as of April 25, 2016, among MGM Growth Properties Operating Partnership LP, the
financial institutions referred to as Lenders therein and Bank of America, N.A., as Administrative Agent (incorporated
by reference to Exhibit 10.17 of the Current Report on Form 8-K of MGM Growth Properties LLC filed on April 25,
2016).
First Amendment to Credit Agreement, dated October 26, 2016, among MGM Growth Properties Operating
Partnership LP, the other loan parties and lenders named therein and Bank of America, N.A., as administrative agent
(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth Properties LLC filed
on October 26, 2016).
Second Amendment to Credit Agreement, dated May 1, 2017, among MGM Growth Properties Operating Partnership
LP, the other loan parties and lenders named therein and Bank of America, N.A., as administrative agent (incorporated
by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth Properties LLC filed on May 1,
2017).
Third Amendment to Credit Agreement, dated March 23, 2018, among MGM Growth Properties Operating
Partnership LP, the other loan parties and lenders named therein and Bank of America, N.A., as administrative agent
(incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth Properties LLC filed
on March 26, 2018).
Fourth Amendment to Credit Agreement, dated June 14, 2018, among MGM Growth Properties Operating Partnership
LP, the other loan parties and lenders named therein and Bank of America, N.A., as administrative agent (incorporated
by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth Properties LLC filed on June 18,
2018).
111
10.1(9)
10.1(10)
10.1(11)
10.2(1)
10.2(2)
10.2(3)
10.2(4)
10.2(5)
10.3(1)
10.3(2)
10.3(3)
10.4(1)
10.4(2)
10.4(3)
10.4(4)
Sixth Supplemental Agreement, dated April 15, 2019, between MGM China Holdings Limited, MGM Grand Paradise
(HK) Limited, Superemprego Limitada, MGM – Security Services, LTD. and Bank of America, N.A., as Facility
Agent (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed on August 8,
2019).
Revolving Credit Facility Agreement, dated August 12, 2019, by and among MGM China Holdings Limited and
certain Arrangers and Lenders party thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8-K filed on August 13, 2019).
Guaranty Agreement, dated as of November 15, 2019 (incorporated by reference to Exhibit 10.3 to the Company’s
Current Report on Form 8-K filed on November 18, 2019).
Subconcession Contract for the Exploitation of Games Fortune and Chance or Other Games in Casino in the Special
Administrative Region of Macau, dated April 19, 2005, between Sociedade de Jogos de Macau, S.A., as
concessionaire, and MGM Grand Paradise S.A., as subconcessionaire (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q filed on November 7, 2011).
Sub-Concession Extension Contract, dated as of March 15, 2019, between MGM Grand Paradise Limited and
Sociedade de Jogos de Macau, S.A. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on
Form 8-K filed on March 18, 2019).
MGM SJM Agreement, dated as of March 15, 2019, between MGM Grand Paradise Limited and Sociedade de Jogos
de Macau, S.A. (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed on
March 18, 2019).
Land Concession Agreement, dated as of April 18, 2005, relating to the MGM Macau resort and casino between the
Special Administrative Region of Macau and MGM Grand Paradise, S.A. (incorporated by reference to Exhibit 10.2
to the Company’s Quarterly Report on Form 10-Q filed on August 9, 2011).
Land Concession Agreement, effective as of January 9, 2013, relating to the MGM Macau resort and casino between
the Special Administrative Region of Macau and MGM Grand Paradise S.A. (incorporated by reference to Exhibit
10.2(4) to the Company’s Annual Report on Form 10-K filed on March 1, 2013).
Third Amended and Restated Limited Liability Company Agreement of CityCenter Holdings, LLC, dated December 22,
2015 (incorporated by reference to Exhibit 10.3(1) to the Company’s Annual Report on Form 10-K filed on February
29, 2016).
Company Stock Purchase and Support Agreement, dated August 21, 2007, by and between the Company and Infinity
World Investments, LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed August 27, 2007).
Amendment No. 1, dated October 17, 2007, to the Company Stock Purchase and Support Agreement by and between
the Company and Infinity World Investments, LLC (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on October 23, 2007).
Master Lease between MGP Lessor, LLC and MGM Lessee, LLC, dated April 25, 2016 (incorporated by reference to
Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth Properties LLC filed on April 25, 2016).
First Amendment to Master Lease, dated as of August 1, 2016, between MGP Lessor, LLC and MGM Lessee, LLC
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 1, 2016).
Second Amendment to Master Lease, dated as of October 5, 2017, between MGP Lessor, LLC and MGM Lessee,
LLC (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth Properties LLC
and MGM Growth Properties Operating Partnership LP filed on October 6, 2017).
Third Amendment to Master Lease Agreement, dated as of January 29, 2019, between MGP Lessor, LLC and MGM
Lessee, LLC (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth
Properties LLC and MGM Growth Properties Operating Partnership LP filed on January 29, 2019).
112
10.4(5)
10.4(6)
10.4(7)
10.4(8)
*10.5(1)
*10.5(2)
*10.5(3)
*10.5(4)
*10.5(5)
*10.5(6)
*10.5(7)
*10.5(8)
*10.5(9)
*10.5(10)
*10.5(11)
*10.5(12)
Fourth Amendment to Master Lease Agreement, dated as of March 7, 2019, between MGP Lessor, LLC and MGM
Lessee, LLC (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth
Properties LLC and MGM Growth Properties Operating Partnership LP filed on March 8, 2019).
Fifth Amendment to Master Lease Agreement, dated as of April 1, 2019, between MGP Lessor, LLC and MGM
Lessee, LLC (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K of MGM Growth
Properties LLC and MGM Growth Properties Operating Partnership LP on Form 8-K filed on April 4, 2019).
Lease, by and between BCORE Paradise LLC and Bellagio, LLC, dated as of November 15, 2019 (incorporated by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 18, 2019).
Tax Protection Agreement, by and among Bellagio, LLC, BCORE Paradise Parent LLC and BCORE Paradise JV
LLC, dated as of November 15, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K filed on November 18, 2019).
Amended and Restated 2005 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on June 10, 2014).
Second Amended and Restated Annual Performance-Based Incentive Plan for Executive Officers (incorporated by
reference to Appendix A to the Company’s Proxy Statement filed on April 20, 2016).
Deferred Compensation Plan II, as Amended and Restated, effective December 17, 2014 (incorporated by reference to
Exhibit 10.4(6) to the Company’s Annual Report on Form 10-K filed on March 2, 2015).
Supplemental Executive Retirement Plan II, dated as of December 30, 2004 (incorporated by reference to Exhibit 10.1
on Form 8-K filed on January 10, 2005).
Amendment No. 1 to the Supplemental Executive Retirement Plan II, dated as of July 10, 2007 (incorporated by
reference to Exhibit 10.3(12) to the 2007 10-K).
Amendment No. 2 to the Supplemental Executive Retirement Plan II, dated as of October 15, 2007 (incorporated by
reference to Exhibit 10.3(14) to the 2007 10-K).
Amendment No. 1 to the Supplemental Executive Retirement Plan II, dated as of November 4, 2008 (incorporated by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 7, 2008).
Employment Agreement, effective as of December 13, 2014, between the Company and Robert H. Baldwin
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 13, 2015).
Separation Agreement and Complete Release of Claims, between MGM Resorts International and Daniel J. D’Arrigo,
dated February 21, 2019 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
filed on February 22, 2019).
Employment Agreement, dated as of October 3, 2016, by and between the Company and James J. Murren
(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 5, 2016).
Employment Agreement, effective as of November 15, 2016, between the Company and Corey Sanders (incorporated
by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 7, 2016).
Employment Agreement, effective as of November 15, 2016, between the Company and William Hornbuckle
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on December 7,
2016).
*10.5(13)
Employment Agreement, effective as of November 15, 2016, between the Company and John McManus (incorporated
by references to Exhibit 10.5(14) of the Company’s Annual Report on Form 10-K filed on February 27, 2019).
*10.5(14)
Employment Agreement, effective as of March 25, 2019, between the Company and Atif Rafiq.
113
*10.5(15)
*10.5(16)
*10.5(17)
*10.5(18)
*10.5(19)
*10.5(20)
*10.5(21)
*10.5(22)
*10.5(23)
*10.5(24)
*10.5(25)
*10.5(26)
*10.5(27)
*10.5(28)
*10.5(29)
Amended and Restated Deferred Compensation Plan for Non-employee Directors, effective as of June 5, 2014
(incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on August 11,
2014).
Form of Restricted Stock Units Agreement of the Company effective for awards granted in October 2015 and
thereafter (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed on
November 6, 2015).
Form of Restricted Stock Units Agreement of the Company (Performance) effective for awards granted in October
2015 and thereafter (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed
on November 6, 2015).
Form of Sign-On RSU Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report
on Form 8-K filed on October 5, 2016).
Form of Performance Share Units Agreement of the Company, effective for bonus awards granted in March 2014
through March 2015 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q
filed on May 8, 2014).
Form of Performance Share Units Agreement of the Company effective for awards granted in October 2015 and
thereafter (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed on
November 6, 2015).
Form of Bonus Performance Share Units Agreement of the Company, effective for bonus awards granted in March
2016 and thereafter (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed
on May 6, 2016).
Change of Control Policy for Executive Officers, dated as of November 5, 2012 (incorporated by reference to Exhibit
10.6 to the Company’s Current Report on Form 8-K filed on November 8, 2012).
Form of Memorandum Agreement re: Changes to Severance and Change of Control Policies (incorporated by
reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on November 8, 2012).
Form of Freestanding Stock Appreciation Right Agreement of the Company effective for awards granted in October
2013 and thereafter (incorporated by reference to Exhibit 10.4(43) of the Company’s Annual Report on Form 10-K for
the year ended December 31, 2013).
Amendment to all Stock Appreciation Right Agreements adopted by the Compensation Committee of the Board of
Directors on October 7, 2013 (incorporated by reference to Exhibit 10.4(44) of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2013).
Form of Freestanding Stock Appreciation Right Agreement of the Company effective for awards granted in October
2015 and thereafter (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed
on November 6, 2015).
MGM Growth Properties LLC 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.1 of the
Registration Statement on Form S-8 of MGM Growth Properties LLC (File No. 333-210832) filed on April 19, 2016).
MGM Growth Properties LLC Form of 2016 Restricted Share Units Agreement (MGM Non-Employee Directors)
(incorporated by reference to Exhibit 10.15 of the Current Report on Form 8-K of MGM Growth Properties LLC filed
on April 25, 2016).
MGM Growth Properties LLC Form of 2016 Restricted Share Units Agreement (MGM Employees) (incorporated by
reference to Exhibit 10.16 of the Current Report on Form 8-K of MGM Growth Properties LLC filed on April 25,
2016).
*10.5(30)
Retirement Policy for Senior Officers, adopted January 10, 2017 (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed January 12, 2017).
*10.5(31)
Amended and Restated Retirement Policy for Senior Officers, dated October 7, 2019.
114
*10.5(32)
*10.5(33)
*10.5(34)
*10.5(35)
*10.5(36)
*10.5(37)
*10.5(38)
*10.5(39)
*10.5(40)
Form of Letter to Employees re: Existing Equity Awards (incorporated by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed March 10, 2017).
Form of Performance Share Unit Agreement (Bonus Payout) (incorporated by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K filed March 10, 2017).
Form of Performance Share Unit Agreement (Annual Grant) (incorporated by reference to Exhibit 10.3 to the
Company’s Current Report on Form 8-K filed March 10, 2017).
Form of Restricted Stock Unit Agreement (Non-Employee Director) (incorporated by reference to Exhibit 10.4 to the
Company’s Current Report on Form 8-K filed March 10, 2017).
Form of Restricted Stock Unit Agreement (with Performance Hurdle) (incorporated by reference to Exhibit 10.5 to the
Company’s Current Report on Form 8-K filed March 10, 2017).
Form of Restricted Stock Unit Agreement (no Performance Hurdle) (incorporated by reference to Exhibit 10.6 to the
Company’s Current Report on Form 8-K filed March 10, 2017).
Form of Restricted Stock Unit Agreement (Bonus RSUs) (incorporated by reference to Exhibit 10.5(40) to the
Company’s Annual Report on Form 10 K filed on March 1, 2018).
Form of Restricted Stock Unit (Deferred Payment Bonus) (incorporated by reference to Exhibit 10.1 to the
Company’s Quarterly Report on Form 10-Q filed on May 7, 2018).
Form of Relative Performance Share Unit Agreement (Annual Grant) (incorporated by reference to Exhibit 10.5(41)
to the Company’s Annual Report on Form 10-K filed on March 1, 2018).
*10.5(41)
Form of Performance Share Unit Agreement (Annual Grant).
*10.5(42)
Form of Performance Share Unit Agreement (Annual Grant, Messrs. Hornbuckle, Sanders & McManus).
*10.5(43)
Form of Restricted Stock Unit Agreement (with Performance Hurdle).
*10.5(44)
Form of Restricted Stock Unit Agreement (no Performance Hurdle).
*10.5(45)
Form of Relative Performance Share Unit Agreement (Annual Grant).
*10.5(46)
Form of Relative Performance Share Unit Agreement (Annual Grant, Messrs. Hornbuckle, Sanders & McManus).
21
23.1
31.1
31.2
**32.1
**32.2
99.1
101.INS
List of subsidiaries of the Company.
Consent of Deloitte & Touche LLP, independent auditors to the Company.
Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) and Rule 15d-14(a).
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
Description of Regulation and Licensing.
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
115
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
The cover page from this Annual Report on Form 10-K for the year ended December 31, 2019, has been formatted in
Inline XBRL.
* Management contract or compensatory plan or arrangement.
** Exhibits 32.1 and 32.2 shall not be deemed filed with the SEC, nor shall they be deemed incorporated by reference in any filing
with the SEC under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and
irrespective of any general incorporation language in any filings.
In accordance with Rule 402 of Regulation S-T, the XBRL information included in Exhibit 101 and Exhibit 104 to this Form 10-
K shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration
statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly
set forth by specific reference in such filing.
ITEM 16.
FORM 10K SUMMARY
None.
116
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
MGM Resorts International
By: /s/ JAMES J. MURREN
James J. Murren
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
Dated: February 27, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE
/S/ JAMES J. MURREN
James J. Murren
/S/ COREY I. SANDERS
Corey I. Sanders
/S/ ROBERT C. SELWOOD
Robert C. Selwood
TITLE
DATE
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
Executive Vice President
and Chief Accounting Officer
(Principal Accounting Officer)
February 27, 2020
February 27, 2020
February 27, 2020
/S/ MARY CHRIS JAMMET
Director
February 27, 2020
Mary Chris Jammet
/S/ WILLIAM W. GROUNDS
Director
February 27, 2020
William W. Grounds
/S/ ALEXIS M. HERMAN
Director
February 27, 2020
Alexis M. Herman
/S/ ROLAND HERNANDEZ
Director
February 27, 2020
Roland Hernandez
/S/ JOHN B. KILROY, JR.
Director
February 27, 2020
John B. Kilroy, Jr.
117
/S/ ROSE MCKINNEY-JAMES
Director
February 27, 2020
Rose McKinney-James
/s/ KEITH A. MEISTER
Director
February 27, 2020
Keith A. Meister
/S/ PAUL SALEM
Paul Salem
Director
February 27, 2020
/S/ GREGORY M. SPIERKEL
Director
February 27, 2020
Gregory M. Spierkel
/S/ JAN SWARTZ
Jan Swartz
Director
February 27, 2020
/S/ DANIEL J. TAYLOR
Director
February 27, 2020
Daniel J. Taylor
118
CORPORATE INFORMATION
William W. Grounds
Director
President and Chief Operating
Officer of InfinityWorld Development Corp,
a private investment entity
Keith A. Meister
Director
Founder, Managing Partner and Chief
Investment Officer of Corvex Management LP
Alexis M. Herman
Director
Chair and Chief Executive
Office of New Ventures LLC,
a corporate consulting company
Mary Chris Jammet
Director
Daniel J. Taylor
Director
Gregory M. Spierkel
Director
DIRECTORS
Paul Salem
Director/Chairman of the Board
Senior Managing Director Emeritus,
Providence Equity Partners
Roland Hernandez
Director
Founding Principal and Chief Executive
Officer of Hernandez Media Ventures, a
privately held media assets company
John Kilroy
Director
Chairman, President and CEO,
Kilroy Realty Corp.
Rose McKinney-James
Director
Managing Principal of Energy Works
Consulting LLC and McKinney-James and Associates,
a government affairs firm
Jan G. Swartz
Director
Group President, Princess Cruises and
Carnival Australia, Carnival Corporation
DIRECTOR EMERITUS
Willie D. Davis
Director Emeritus
OFFICERS
William J. Hornbuckle
Acting Chief Executive Officer and President
Robert C. Selwood
Executive Vice President and Chief Accounting Officer
Corey I. Sanders
Chief Financial Officer and Treasurer
Atif Rafiq
President of Commercial & Growth
John M. McManus
Executive Vice President,
General Counsel and Secretary