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EX-32.2 - EX-32.2 - MGM Resorts Internationalmgm-ex322_7.htm
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EX-31.1 - EX-31.1 - MGM Resorts Internationalmgm-ex311_9.htm

 

 

 

UNITED STATES

SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2018

OR

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

For the transition period from            to            

Commission File No. 001-10362

 

MGM Resorts International

(Exact name of registrant as specified in its charter)

 

 

Delaware

88-0215232

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3600 Las Vegas Boulevard South, Las Vegas, Nevada 89109

(Address of principal executive offices)

(702) 693-7120

(Registrant’s telephone number, including area code)

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

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:   Yes       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

Accelerated filer

 

Non-accelerated filer

  

Smaller reporting company

 

Emerging growth 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: Yes    No   

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

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

 

 Class 

 

 Outstanding at November 2, 2018 

Common Stock, $.01 par value

 

527,197,958 shares

 

 

 

 

 

 


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

 

FORM 10-Q

 

I N D E X

 

 

 

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements (Unaudited)

1

 

 

Consolidated Balance Sheets at September 30, 2018 and December 31, 2017

1

 

 

Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2018 and September 30, 2017

2

 

 

Consolidated Statements of Comprehensive Income for the Three Months and Nine Months Ended September 30, 2018 and September 30, 2017

3

 

 

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and September 30, 2017

4

 

 

Consolidated Statements of Stockholders’ Equity for the Nine Months Ended September 30, 2018 and September 30, 2017

5

 

 

Condensed Notes to Consolidated Financial Statements

7

Item 2.

 

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

28

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

45

Item 4.

 

Controls and Procedures

45

 

PART II.

OTHER INFORMATION

46

Item 1.

 

Legal Proceedings

46

Item 1A.

 

Risk Factors

46

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

47

Item 6.

 

Exhibits

47

 

SIGNATURES

48

 

 

 

 


 

Part I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

 

 

September 30,

 

 

December 31,

 

 

2018

 

 

2017

 

ASSETS

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

1,302,677

 

 

$

1,499,995

 

Accounts receivable, net

 

546,646

 

 

 

542,273

 

Inventories

 

104,438

 

 

 

102,292

 

Income tax receivable

 

19,552

 

 

 

42,551

 

Prepaid expenses and other

 

234,711

 

 

 

189,244

 

Total current assets

 

2,208,024

 

 

 

2,376,355

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

20,733,381

 

 

 

19,635,459

 

 

 

 

 

 

 

 

 

Other assets

 

 

 

 

 

 

 

Investments in and advances to unconsolidated affiliates

 

666,210

 

 

 

1,033,297

 

Goodwill

 

1,822,009

 

 

 

1,806,531

 

Other intangible assets, net

 

3,991,963

 

 

 

3,877,960

 

Other long-term assets, net

 

551,928

 

 

 

430,440

 

Total other assets

 

7,032,110

 

 

 

7,148,228

 

 

$

29,973,515

 

 

$

29,160,042

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

301,008

 

 

$

255,028

 

Construction payable

 

372,744

 

 

 

474,807

 

Current portion of long-term debt, net

 

 

 

 

158,042

 

Accrued interest on long-term debt

 

142,774

 

 

 

135,785

 

Other accrued liabilities

 

2,161,064

 

 

 

2,114,635

 

Total current liabilities

 

2,977,590

 

 

 

3,138,297

 

 

 

 

 

 

 

 

 

Deferred income taxes, net

 

1,241,036

 

 

 

1,295,375

 

Long-term debt, net

 

14,663,972

 

 

 

12,751,052

 

Other long-term obligations

 

251,399

 

 

 

284,416

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

93,339

 

 

 

79,778

 

Stockholders' equity

 

 

 

 

 

 

 

Common stock, $.01 par value: authorized 1,000,000,000 shares, issued and outstanding 531,937,096 and 566,275,789 shares

 

5,319

 

 

 

5,663

 

Capital in excess of par value

 

4,251,702

 

 

 

5,357,709

 

Retained earnings

 

2,510,103

 

 

 

2,217,299

 

Accumulated other comprehensive income (loss)

 

6,234

 

 

 

(3,610

)

Total MGM Resorts International stockholders' equity

 

6,773,358

 

 

 

7,577,061

 

Noncontrolling interests

 

3,972,821

 

 

 

4,034,063

 

Total stockholders' equity

 

10,746,179

 

 

 

11,611,124

 

 

$

29,973,515

 

 

$

29,160,042

 

 

 

 

 

 

 

 

 

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

 

 

 

1


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casino

 

$

1,465,380

 

 

$

1,283,049

 

 

$

4,191,910

 

 

$

3,727,281

 

Rooms

 

 

566,319

 

 

 

572,994

 

 

 

1,669,670

 

 

 

1,673,561

 

Food and beverage

 

 

520,773

 

 

 

503,623

 

 

 

1,470,992

 

 

 

1,458,057

 

Entertainment, retail and other

 

 

370,150

 

 

 

368,128

 

 

 

1,063,142

 

 

 

1,039,087

 

Reimbursed costs

 

 

106,680

 

 

 

102,381

 

 

 

314,520

 

 

 

301,888

 

 

 

 

3,029,302

 

 

 

2,830,175

 

 

 

8,710,234

 

 

 

8,199,874

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Casino

 

 

819,334

 

 

 

674,959

 

 

 

2,323,514

 

 

 

1,969,255

 

Rooms

 

 

206,406

 

 

 

192,663

 

 

 

598,432

 

 

 

568,448

 

Food and beverage

 

 

391,091

 

 

 

373,956

 

 

 

1,121,465

 

 

 

1,090,129

 

Entertainment, retail and other

 

 

263,915

 

 

 

254,113

 

 

 

734,119

 

 

 

721,338

 

Reimbursed costs

 

 

106,680

 

 

 

102,381

 

 

 

314,520

 

 

 

301,888

 

General and administrative

 

 

463,417

 

 

 

402,023

 

 

 

1,319,760

 

 

 

1,145,160

 

Corporate expense

 

 

98,089

 

 

 

88,506

 

 

 

301,036

 

 

 

241,086

 

Preopening and start-up expenses

 

 

46,890

 

 

 

29,349

 

 

 

132,884

 

 

 

65,508

 

Property transactions, net

 

 

(42,400

)

 

 

7,711

 

 

 

(19,532

)

 

 

22,650

 

NV Energy exit expense

 

 

 

 

 

 

 

 

 

 

 

(40,629

)

Depreciation and amortization

 

 

300,472

 

 

 

249,600

 

 

 

865,502

 

 

 

744,123

 

 

 

 

2,653,894

 

 

 

2,375,261

 

 

 

7,691,700

 

 

 

6,828,956

 

Income from unconsolidated affiliates

 

 

35,495

 

 

 

37,790

 

 

 

115,201

 

 

 

118,195

 

Operating income

 

 

410,903

 

 

 

492,704

 

 

 

1,133,735

 

 

 

1,489,113

 

Non-operating income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of amounts capitalized

 

 

(205,573

)

 

 

(163,287

)

 

 

(554,975

)

 

 

(511,404

)

Non-operating items from unconsolidated affiliates

 

 

(11,583

)

 

 

(8,825

)

 

 

(31,661

)

 

 

(26,302

)

Other, net

 

 

(3,291

)

 

 

(30,138

)

 

 

(11,588

)

 

 

(31,706

)

 

 

 

(220,447

)

 

 

(202,250

)

 

 

(598,224

)

 

 

(569,412

)

Income before income taxes

 

 

190,456

 

 

 

290,454

 

 

 

535,511

 

 

 

919,701

 

Benefit (provision) for income taxes

 

 

(19,046

)

 

 

(114,710

)

 

 

42,623

 

 

 

(250,510

)

Net income

 

 

171,410

 

 

 

175,744

 

 

 

578,134

 

 

 

669,191

 

Less: Net income attributable to noncontrolling interests

 

 

(28,532

)

 

 

(27,381

)

 

 

(88,035

)

 

 

(104,552

)

Net income attributable to MGM Resorts International

 

$

142,878

 

 

$

148,363

 

 

$

490,099

 

 

$

564,639

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.26

 

 

$

0.26

 

 

$

0.87

 

 

$

0.98

 

Diluted

 

$

0.26

 

 

$

0.26

 

 

$

0.86

 

 

$

0.97

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

535,130

 

 

 

573,527

 

 

 

549,418

 

 

 

574,262

 

Diluted

 

 

540,396

 

 

 

580,676

 

 

 

555,521

 

 

 

580,941

 

Dividends declared per common share

 

$

0.12

 

 

$

0.11

 

 

$

0.36

 

 

$

0.33

 

 

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

 

 

2


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Net income

 

$

171,410

 

 

$

175,744

 

 

$

578,134

 

 

$

669,191

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

12,210

 

 

 

(3,004

)

 

 

(10,542

)

 

 

(41,313

)

Unrealized gain (loss) on cash flow hedges

 

 

4,028

 

 

 

1,316

 

 

 

23,219

 

 

 

(2,641

)

Other comprehensive income (loss)

 

 

16,238

 

 

 

(1,688

)

 

 

12,677

 

 

 

(43,954

)

Comprehensive income

 

 

187,648

 

 

 

174,056

 

 

 

590,811

 

 

 

625,237

 

Less: Comprehensive income attributable to noncontrolling interests

 

 

(35,299

)

 

 

(26,495

)

 

 

(90,868

)

 

 

(85,600

)

Comprehensive income attributable to MGM Resorts International

 

$

152,349

 

 

$

147,561

 

 

$

499,943

 

 

$

539,637

 

 

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

 

 

3


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended

 

 

September 30,

 

 

2018

 

 

2017

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net income

$

578,134

 

 

$

669,191

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

865,502

 

 

 

744,123

 

Amortization of debt discounts, premiums and issuance costs

 

30,713

 

 

 

25,931

 

Loss on retirement of long-term debt

 

2,193

 

 

 

31,345

 

Provision for doubtful accounts

 

32,651

 

 

 

13,764

 

Stock-based compensation

 

51,010

 

 

 

46,306

 

Property transactions, net

 

(19,532

)

 

 

22,650

 

Income from unconsolidated affiliates

 

(80,219

)

 

 

(91,893

)

Distributions from unconsolidated affiliates

 

11,563

 

 

 

10,450

 

Deferred income taxes

 

(58,762

)

 

 

94,630

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(31,791

)

 

 

13,951

 

Inventories

 

(1,457

)

 

 

(3,598

)

Income taxes receivable and payable, net

 

22,997

 

 

 

(4,639

)

Prepaid expenses and other

 

(46,690

)

 

 

(50,253

)

Prepaid Cotai land concession premium

 

5,158

 

 

 

(9,492

)

Accounts payable and accrued liabilities

 

50,550

 

 

 

5,887

 

Other

 

(16,554

)

 

 

(6,444

)

Net cash provided by operating activities

 

1,395,466

 

 

 

1,511,909

 

Cash flows from investing activities

 

 

 

 

 

 

 

Capital expenditures, net of construction payable

 

(1,223,924

)

 

 

(1,399,278

)

Dispositions of property and equipment

 

575

 

 

 

371

 

Proceeds from sale of investment in unconsolidated affiliate

 

163,616

 

 

 

 

Acquisition of Northfield Park, net of cash acquired

 

(1,034,534

)

 

 

 

Investments in unconsolidated affiliates

 

(2,503

)

 

 

(5,921

)

Distributions from unconsolidated affiliates in excess of cumulative earnings

 

320,287

 

 

 

300,000

 

Other

 

(22,209

)

 

 

(21,786

)

Net cash used in investing activities

 

(1,798,692

)

 

 

(1,126,614

)

Cash flows from financing activities

 

 

 

 

 

 

 

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

 

778,101

 

 

 

618,734

 

Issuance of long-term debt

 

1,000,000

 

 

 

350,000

 

Debt issuance costs

 

(64,808

)

 

 

(9,760

)

Issuance of MGM Growth Properties Class A shares in public offering

 

 

 

 

404,685

 

MGM Growth Properties Class A share issurance costs

 

 

 

 

(17,137

)

Dividends paid to common shareholders

 

(197,295

)

 

 

(189,726

)

Distributions to noncontrolling interest owners

 

(149,526

)

 

 

(139,670

)

Purchases of common stock

 

(1,133,334

)

 

 

(327,500

)

Retirement of debentures

 

(2,265

)

 

 

(502,669

)

Other

 

(23,476

)

 

 

(28,937

)

Net cash provided by financing activities

 

207,397

 

 

 

158,020

 

Effect of exchange rate on cash

 

(1,489

)

 

 

(3,208

)

Cash and cash equivalents

 

 

 

 

 

 

 

Net increase (decrease) for the period

 

(197,318

)

 

 

540,107

 

Balance, beginning of period

 

1,499,995

 

 

 

1,446,581

 

Balance, end of period

$

1,302,677

 

 

$

1,986,688

 

Supplemental cash flow disclosures

 

 

 

 

 

 

 

Interest paid, net of amounts capitalized

$

516,868

 

 

$

522,851

 

Federal, state and foreign income taxes paid (received), net of refunds

 

(8,220

)

 

 

158,537

 

 

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

 

 

4


 

MGM RESORTS INTERNATIONAL AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

Accumulated

 

 

MGM Resorts

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Capital in

 

 

Earnings

 

 

Other

 

 

International

 

 

Non-

 

 

Total

 

 

 

 

 

 

 

Par

 

 

Excess of

 

 

(Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Controlling

 

 

Stockholders'

 

 

 

Shares

 

 

Value

 

 

Par Value

 

 

Deficit)

 

 

Income (Loss)

 

 

Equity

 

 

Interests

 

 

Equity

 

Balances, January 1, 2018

 

 

566,276

 

 

$

5,663

 

 

$

5,357,709

 

 

$

2,217,299

 

 

$

(3,610

)

 

$

7,577,061

 

 

$

4,034,063

 

 

$

11,611,124

 

Net income

 

 

 

 

 

 

 

 

 

 

 

223,444

 

 

 

 

 

 

223,444

 

 

 

40,740

 

 

 

264,184

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,368

)

 

 

(13,368

)

 

 

(10,784

)

 

 

(24,152

)

Other comprehensive income - cash flow

   hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,498

 

 

 

9,498

 

 

 

4,358

 

 

 

13,856

 

Stock-based compensation

 

 

 

 

 

 

 

 

14,742

 

 

 

 

 

 

 

 

 

14,742

 

 

 

1,375

 

 

 

16,117

 

Issuance of common stock pursuant to

   stock-based compensation awards

 

 

493

 

 

 

5

 

 

 

(8,300

)

 

 

 

 

 

 

 

 

(8,295

)

 

 

 

 

 

(8,295

)

Cash distributions to noncontrolling

   interest owners

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,791

)

 

 

(9,791

)

Dividends paid to common shareholders

 

 

 

 

 

 

 

 

 

 

 

(67,999

)

 

 

 

 

 

(67,999

)

 

 

 

 

 

(67,999

)

MGP dividend payable to Class A

   shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,777

)

 

 

(29,777

)

Issuance of performance share units

 

 

 

 

 

 

 

 

3,609

 

 

 

 

 

 

 

 

 

3,609

 

 

 

107

 

 

 

3,716

 

Repurchase of common stock

 

 

(10,000

)

 

 

(100

)

 

 

(362,300

)

 

 

 

 

 

 

 

 

(362,400

)

 

 

 

 

 

(362,400

)

Adjustment of redeemable non-controlling

   interest to redemption value

 

 

 

 

 

 

 

 

(4,598

)

 

 

 

 

 

 

 

 

(4,598

)

 

 

 

 

 

(4,598

)

Other

 

 

 

 

 

 

 

 

(904

)

 

 

 

 

 

 

 

 

(904

)

 

 

(710

)

 

 

(1,614

)

Balances, March 31, 2018

 

 

556,769

 

 

 

5,568

 

 

 

4,999,958

 

 

 

2,372,744

 

 

 

(7,480

)

 

 

7,370,790

 

 

 

4,029,581

 

 

 

11,400,371

 

Net income

 

 

 

 

 

 

 

 

 

 

 

123,777

 

 

 

 

 

 

123,777

 

 

 

14,344

 

 

 

138,121

 

Currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

583

 

 

 

583

 

 

 

817

 

 

 

1,400

 

Other comprehensive income - cash flow

   hedges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,660

 

 

 

3,660

 

 

 

1,675

 

 

 

5,335

 

Stock-based compensation

 

 

 

 

 

 

 

 

16,430

 

 

 

 

 

 

 

 

 

16,430

 

 

 

1,377

 

 

 

17,807

 

Issuance of common stock pursuant to

   stock-based compensation awards

 

 

102

 

 

 

1

 

 

 

(1,096

)

 

 

 

 

 

 

 

 

(1,095

)

 

 

 

 

 

(1,095

)

Cash distributions to noncontrolling

   interest owners