Item 1.
|
Financial Statements
|
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2013
|
|
|
December 31,
2012
|
|
ASSETS
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,375,403
|
|
|
$
|
1,543,509
|
|
Accounts receivable, net
|
|
|
411,077
|
|
|
|
443,677
|
|
Inventories
|
|
|
98,330
|
|
|
|
107,577
|
|
Deferred income taxes, net
|
|
|
126,396
|
|
|
|
179,431
|
|
Prepaid expenses and other
|
|
|
272,809
|
|
|
|
232,898
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
2,284,015
|
|
|
|
2,507,092
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
13,969,293
|
|
|
|
14,194,652
|
|
|
|
|
Other assets
|
|
|
|
|
|
|
|
|
Investments in and advances to unconsolidated affiliates
|
|
|
1,416,462
|
|
|
|
1,444,547
|
|
Goodwill
|
|
|
2,900,758
|
|
|
|
2,902,847
|
|
Other intangible assets, net
|
|
|
4,548,415
|
|
|
|
4,737,833
|
|
Other long-term assets, net
|
|
|
539,892
|
|
|
|
497,767
|
|
|
|
|
|
|
|
|
|
|
Total other assets
|
|
|
9,405,527
|
|
|
|
9,582,994
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,658,835
|
|
|
$
|
26,284,738
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
202,792
|
|
|
$
|
199,620
|
|
Income taxes payable
|
|
|
2,500
|
|
|
|
1,350
|
|
Accrued interest on long-term debt
|
|
|
183,958
|
|
|
|
206,736
|
|
Other accrued liabilities
|
|
|
1,772,220
|
|
|
|
1,517,965
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
2,161,470
|
|
|
|
1,925,671
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
2,478,063
|
|
|
|
2,473,889
|
|
Long-term debt
|
|
|
13,034,518
|
|
|
|
13,589,283
|
|
Other long-term obligations
|
|
|
157,613
|
|
|
|
179,879
|
|
|
|
|
Commitments and contingencies (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value: authorized 1,000,000,000 shares; issued and outstanding 489,814,210 and 489,234,401
shares
|
|
|
4,898
|
|
|
|
4,892
|
|
Capital in excess of par value
|
|
|
4,150,413
|
|
|
|
4,132,655
|
|
Retained earnings
|
|
|
95,427
|
|
|
|
213,698
|
|
Accumulated other comprehensive income
|
|
|
11,619
|
|
|
|
14,303
|
|
|
|
|
|
|
|
|
|
|
Total MGM Resorts International stockholders equity
|
|
|
4,262,357
|
|
|
|
4,365,548
|
|
Noncontrolling interests
|
|
|
3,564,814
|
|
|
|
3,750,468
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
7,827,171
|
|
|
|
8,116,016
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,658,835
|
|
|
$
|
26,284,738
|
|
|
|
|
|
|
|
|
|
|
The accompanying condensed notes are an integral part of these consolidated financial statements.
1
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
1,460,300
|
|
|
$
|
1,294,318
|
|
|
$
|
4,304,877
|
|
|
$
|
3,928,548
|
|
Rooms
|
|
|
413,060
|
|
|
|
393,055
|
|
|
|
1,252,020
|
|
|
|
1,205,441
|
|
Food and beverage
|
|
|
366,988
|
|
|
|
361,252
|
|
|
|
1,121,117
|
|
|
|
1,126,096
|
|
Entertainment
|
|
|
145,799
|
|
|
|
123,168
|
|
|
|
380,654
|
|
|
|
364,477
|
|
Retail
|
|
|
52,151
|
|
|
|
51,211
|
|
|
|
149,606
|
|
|
|
149,921
|
|
Other
|
|
|
123,180
|
|
|
|
127,567
|
|
|
|
374,920
|
|
|
|
373,590
|
|
Reimbursed costs
|
|
|
92,038
|
|
|
|
87,682
|
|
|
|
275,015
|
|
|
|
269,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,653,516
|
|
|
|
2,438,253
|
|
|
|
7,858,209
|
|
|
|
7,417,232
|
|
Less: Promotional allowances
|
|
|
(190,479
|
)
|
|
|
(183,275
|
)
|
|
|
(561,759
|
)
|
|
|
(550,899
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,463,037
|
|
|
|
2,254,978
|
|
|
|
7,296,450
|
|
|
|
6,866,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
913,137
|
|
|
|
826,072
|
|
|
|
2,705,190
|
|
|
|
2,519,757
|
|
Rooms
|
|
|
132,386
|
|
|
|
128,546
|
|
|
|
394,096
|
|
|
|
384,598
|
|
Food and beverage
|
|
|
214,683
|
|
|
|
209,686
|
|
|
|
645,119
|
|
|
|
643,892
|
|
Entertainment
|
|
|
107,939
|
|
|
|
92,888
|
|
|
|
281,604
|
|
|
|
270,235
|
|
Retail
|
|
|
28,053
|
|
|
|
29,064
|
|
|
|
81,884
|
|
|
|
85,888
|
|
Other
|
|
|
91,841
|
|
|
|
88,616
|
|
|
|
270,633
|
|
|
|
263,673
|
|
Reimbursed costs
|
|
|
92,038
|
|
|
|
87,682
|
|
|
|
275,015
|
|
|
|
269,159
|
|
General and administrative
|
|
|
342,847
|
|
|
|
319,106
|
|
|
|
961,072
|
|
|
|
931,873
|
|
Corporate expense
|
|
|
54,190
|
|
|
|
62,992
|
|
|
|
153,178
|
|
|
|
147,792
|
|
Preopening and start-up expenses
|
|
|
4,279
|
|
|
|
765
|
|
|
|
9,931
|
|
|
|
765
|
|
Property transactions, net
|
|
|
26,127
|
|
|
|
5,803
|
|
|
|
122,749
|
|
|
|
97,187
|
|
Depreciation and amortization
|
|
|
211,682
|
|
|
|
228,414
|
|
|
|
641,751
|
|
|
|
700,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,219,202
|
|
|
|
2,079,634
|
|
|
|
6,542,222
|
|
|
|
6,315,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from unconsolidated affiliates
|
|
|
3,928
|
|
|
|
(37,943
|
)
|
|
|
26,954
|
|
|
|
(45,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
247,763
|
|
|
|
137,401
|
|
|
|
781,182
|
|
|
|
505,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of amounts capitalized
|
|
|
(208,939
|
)
|
|
|
(275,771
|
)
|
|
|
(648,886
|
)
|
|
|
(836,436
|
)
|
Non-operating items from unconsolidated affiliates
|
|
|
(22,673
|
)
|
|
|
(20,901
|
)
|
|
|
(83,616
|
)
|
|
|
(68,603
|
)
|
Other, net
|
|
|
(676
|
)
|
|
|
2,012
|
|
|
|
(6,909
|
)
|
|
|
(55,518
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(232,288
|
)
|
|
|
(294,660
|
)
|
|
|
(739,411
|
)
|
|
|
(960,557
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
15,475
|
|
|
|
(157,259
|
)
|
|
|
41,771
|
|
|
|
(455,175
|
)
|
Benefit (provision) for income taxes
|
|
|
8,150
|
|
|
|
2,585
|
|
|
|
(26,146
|
)
|
|
|
26,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
23,625
|
|
|
|
(154,674
|
)
|
|
|
15,625
|
|
|
|
(428,415
|
)
|
Less: Net income attributable to noncontrolling interests
|
|
|
(55,484
|
)
|
|
|
(26,485
|
)
|
|
|
(133,896
|
)
|
|
|
(115,449
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to MGM Resorts International
|
|
$
|
(31,859
|
)
|
|
$
|
(181,159
|
)
|
|
$
|
(118,271
|
)
|
|
$
|
(543,864
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share of common stock attributable to MGM Resorts International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.07
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(1.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.07
|
)
|
|
$
|
(0.37
|
)
|
|
$
|
(0.24
|
)
|
|
$
|
(1.11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying condensed notes are an integral part of these consolidated financial statements.
2
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Net income (loss)
|
|
$
|
23,625
|
|
|
$
|
(154,674
|
)
|
|
$
|
15,625
|
|
|
$
|
(428,415
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
587
|
|
|
|
2,840
|
|
|
|
(5,638
|
)
|
|
|
12,841
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
587
|
|
|
|
2,840
|
|
|
|
(5,523
|
)
|
|
|
12,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
24,212
|
|
|
|
(151,834
|
)
|
|
|
10,102
|
|
|
|
(415,574
|
)
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
|
(55,760
|
)
|
|
|
(27,838
|
)
|
|
|
(131,057
|
)
|
|
|
(121,735
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to MGM Resorts International
|
|
$
|
(31,548
|
)
|
|
$
|
(179,672
|
)
|
|
$
|
(120,955
|
)
|
|
$
|
(537,309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying condensed notes are an integral part of these consolidated financial statements.
3
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
15,625
|
|
|
$
|
(428,415
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
641,751
|
|
|
|
700,866
|
|
Amortization of debt discounts, premiums and issuance costs
|
|
|
26,027
|
|
|
|
56,086
|
|
Loss on retirement of long-term debt
|
|
|
3,799
|
|
|
|
58,740
|
|
Provision for doubtful accounts
|
|
|
16,929
|
|
|
|
46,993
|
|
Stock-based compensation
|
|
|
23,934
|
|
|
|
30,132
|
|
Property transactions, net
|
|
|
122,749
|
|
|
|
97,187
|
|
Loss from unconsolidated affiliates
|
|
|
57,038
|
|
|
|
113,993
|
|
Distributions from unconsolidated affiliates
|
|
|
12,788
|
|
|
|
15,203
|
|
Change in deferred income taxes
|
|
|
57,302
|
|
|
|
(50,918
|
)
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
15,330
|
|
|
|
32,527
|
|
Inventories
|
|
|
9,238
|
|
|
|
4,981
|
|
Income taxes receivable and payable, net
|
|
|
(647
|
)
|
|
|
(7,121
|
)
|
Prepaid expenses and other
|
|
|
(69,848
|
)
|
|
|
(22,357
|
)
|
Prepaid Cotai land concession premium
|
|
|
(9,657
|
)
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
190,147
|
|
|
|
256,397
|
|
Other
|
|
|
(16,748
|
)
|
|
|
(17,032
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
1,095,757
|
|
|
|
887,262
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable
|
|
|
(379,573
|
)
|
|
|
(316,757
|
)
|
Dispositions of property and equipment
|
|
|
546
|
|
|
|
236
|
|
Investments in and advances to unconsolidated affiliates
|
|
|
(23,853
|
)
|
|
|
(37,000
|
)
|
Distributions from unconsolidated affiliates in excess of earnings
|
|
|
|
|
|
|
1,347
|
|
Investments in treasury securities - maturities longer than 90 days
|
|
|
(174,446
|
)
|
|
|
(195,313
|
)
|
Proceeds from treasury securities - maturities longer than 90 days
|
|
|
204,394
|
|
|
|
225,301
|
|
Other
|
|
|
1,580
|
|
|
|
(1,221
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(371,352
|
)
|
|
|
(323,407
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
Net borrowings (repayments) under bank credit facilities - maturities of 90 days or less
|
|
|
59,000
|
|
|
|
(205,926
|
)
|
Borrowings under bank credit facilities - maturities longer than 90 days
|
|
|
2,793,000
|
|
|
|
900,000
|
|
Repayments under bank credit facilities - maturities longer than 90 days
|
|
|
(2,793,000
|
)
|
|
|
(2,734,128
|
)
|
Issuance of senior notes
|
|
|
|
|
|
|
2,850,000
|
|
Retirement of senior notes
|
|
|
(612,262
|
)
|
|
|
(534,650
|
)
|
Debt issuance costs
|
|
|
(17,061
|
)
|
|
|
(54,459
|
)
|
Distributions to noncontrolling interest owners
|
|
|
(318,348
|
)
|
|
|
(206,806
|
)
|
Other
|
|
|
(3,211
|
)
|
|
|
(1,733
|
)
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(891,882
|
)
|
|
|
12,298
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
(629
|
)
|
|
|
1,093
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period
|
|
|
(168,106
|
)
|
|
|
577,246
|
|
Balance, beginning of period
|
|
|
1,543,509
|
|
|
|
1,865,913
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
1,375,403
|
|
|
$
|
2,443,159
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures
|
|
|
|
|
|
|
|
|
Interest paid, net of amounts capitalized
|
|
$
|
645,637
|
|
|
$
|
734,096
|
|
Federal, state and foreign income taxes paid, net of refunds
|
|
|
806
|
|
|
|
6,539
|
|
Non-cash investing and financing activities
|
|
|
|
|
|
|
|
|
Increase in investment in and advances to CityCenter related to change in completion guarantee liability
|
|
$
|
72,676
|
|
|
$
|
79,580
|
|
The accompanying condensed notes are an integral part of these consolidated financial statements.
4
MGM RESORTS INTERNATIONAL AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 ORGANIZATION
Organization.
MGM Resorts International (the Company) is a Delaware corporation that acts largely as
a holding company and, through wholly owned subsidiaries, primarily owns and/or operates casino resorts. The Company owns and operates the following casino resorts in Las Vegas, Nevada: Bellagio, MGM Grand Las Vegas (including The Signature), The
Mirage, Mandalay Bay, Luxor, New York-New York, Monte Carlo, Excalibur and Circus Circus Las Vegas. Other Nevada operations include Circus Circus Reno, Gold Strike in Jean and Railroad Pass in Henderson. The Company and its local partners own and
operate MGM Grand Detroit in Detroit, Michigan. The Company also owns and operates Beau Rivage in Biloxi and Gold Strike Tunica in Mississippi. In addition, the Company owns Shadow Creek, an exclusive world-class golf course located approximately
ten miles north of its Las Vegas Strip resorts, Primm Valley Golf Club at the California/Nevada state line and Fallen Oak golf course in Saucier, Mississippi. The Company has two reportable segments: wholly owned domestic resorts and MGM China.
The Company owns 51% and has a controlling interest in MGM China Holdings Limited (MGM China), which owns MGM
Grand Paradise, S.A. (MGM Grand Paradise), the Macau company that owns and operates the MGM Macau resort and casino and the related gaming subconcession and land concession. On October 18, 2012, MGM Grand Paradise formally accepted
a land concession contract with the government of Macau to develop a second resort and casino on an approximately 17.8 acre site in Cotai, Macau. The land concession contract became effective on January 9, 2013 when the Macau government
published the agreement in the Official Gazette of Macau.
The Company owns 50% of CityCenter, located between Bellagio and
Monte Carlo. The other 50% of CityCenter is owned by Infinity World Development Corp, a wholly owned subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter consists of Aria, a casino resort; Mandarin Oriental
Las Vegas, a non-gaming boutique hotel; Crystals, a retail, dining and entertainment district; and Vdara, a luxury condominium-hotel. In addition, CityCenter features residential units in the Residences at Mandarin Oriental and Veer. The Company
receives a management fee of 2% of revenues for the management of Aria and Vdara, and 5% of EBITDA (as defined in the agreements governing the Companys management of Aria and Vdara). In addition, the Company receives an annual fee of $3
million for the management of Crystals.
The Company has 50% interests in Grand Victoria and Silver Legacy. Grand Victoria is
a riverboat casino in Elgin, Illinois; an affiliate of Hyatt Gaming owns the other 50% of Grand Victoria and also operates the resort. Silver Legacy is located in Reno, Nevada, adjacent to Circus Circus Reno, and the other 50% is owned by Eldorado
LLC.
MGM Hospitality.
MGM Hospitality seeks to leverage the Companys management expertise and well-recognized
brands through strategic partnerships and international expansion opportunities. MGM Hospitality has entered into management agreements for hotels in the Middle East, North Africa, India and through its joint venture with Diaoyutai State
Guesthouse the Peoples Republic of China. MGM Hospitality opened its first resort, MGM Grand Sanya, on Hainan Island in the Peoples Republic of China in early 2012.
Borgata.
The Company has a 50% economic interest in Borgata Hotel Casino & Spa (Borgata) located on
Renaissance Pointe in the Marina area of Atlantic City, New Jersey. Boyd Gaming Corporation owns the other 50% of Borgata and also operates the resort. The Companys interest is held in trust and was offered for sale pursuant to its amended
settlement agreement with the New Jersey Division of Gaming Enforcement and approved by the New Jersey Casino Control Commission (CCC). The terms of the amended settlement agreement previously mandated the sale by March 2014. The Company
had the right to direct the sale through March 2013 (the divesture period), subject to approval of the CCC, and the trustee was responsible for selling the trust property during the following 12-month period (the terminal sale
period). On February 13, 2013, the settlement agreement was further amended to allow the Company to re-apply to the CCC for licensure in New Jersey and to defer expiration of these periods pending the outcome of the licensure process. The
Company has submitted its licensure request to the CCC and there can be no assurances that such request will be approved or with respect to the timing of the licensure process. If the CCC denies the Companys licensure request, then the
divesture period will immediately end, and the terminal sale period will immediately begin, which will result in the Companys Borgata interest being disposed of by the trustee pursuant to the terms of the settlement agreement.
The Company consolidates the trust because it is the sole economic beneficiary and accounts for its interest in Borgata under the cost
method. The Company reviews its investment carrying value whenever indicators of impairment exist. As of September 30, 2013, the trust had $110 million of cash and investments, of which $90 million is held in U.S. treasury securities with
maturities greater than three months but less than one year, and is recorded within Prepaid expenses and other.
5
NOTE 2 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation.
As permitted by the rules and regulations of the Securities and Exchange Commission,
certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted. These consolidated financial
statements should be read in conjunction with the Companys 2012 annual consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December 31, 2012.
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments which include
only normal recurring adjustments necessary to present fairly the Companys interim financial statements. The results for such periods are not necessarily indicative of the results to be expected for the full year.
Fair value measurements.
Fair value measurements affect the Companys accounting and impairment assessments of its long-lived
assets, investments in unconsolidated affiliates, cost method investments, assets acquired and liabilities assumed in an acquisition, goodwill and other intangible assets. Fair value measurements also affect the Companys accounting for certain
of its financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured
according to a hierarchy that includes: Level 1 inputs, such as quoted prices in an active market; Level 2 inputs, which are observable inputs for similar assets; or Level 3 inputs, which are unobservable inputs.
|
|
|
At September 30, 2013, the fair value of the Companys treasury securities held by the Borgata trust was $90 million, measured using Level 1
inputs. See Note 1;
|
|
|
|
The Company uses Level 1 inputs for its long-term debt fair value disclosures. See Note 4;
|
|
|
|
The Company used Level 3 inputs when assessing the fair value of its investment in Grand Victoria at June 30, 2013. See Note 3; and
|
|
|
|
The Company used Level 3 inputs when assessing the fair value of its land in Jean and Sloan, Nevada at September 30, 2013. See Note 9.
|
Income tax provision.
The Company recognizes deferred tax assets, net of applicable reserves,
related to net operating loss carryforwards and certain temporary differences with a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied. Given the negative
impact of the U.S. economy on the results of operations in the past several years, the Company no longer relies on projected future domestic operating income in assessing the realization of its domestic deferred tax assets and now relies only on the
future reversal of existing domestic taxable temporary differences. As of September 30, 2013, the scheduled future reversal of existing U.S. federal deductible temporary differences exceeds the scheduled future reversal of existing U.S.
federal taxable temporary differences. The Company recorded a valuation allowance for U.S. federal deferred tax assets in order to account for this excess, which resulted in an increase in provision for income taxes of $38 million and $64 million
for the three and nine months ended September 30, 2013, respectively.
Income generated from gaming operations of
MGM Grand Paradise is exempted from Macaus 12% complementary tax for the five-year period ending December 31, 2016 pursuant to approval from the Macau government granted on September 22, 2011. The approval granted in 2011 represented
the second five-year exemption period granted to MGM Grand Paradise. The Company measures the net deferred tax liability of MGM Grand Paradise under the assumption that it will receive an additional five-year exemption beyond 2016. Such assumption
is based upon the granting of a third five-year exemption to a competitor of MGM Grand Paradise. The Company believes MGM Grand Paradise should also be entitled to a third five-year exemption in order to ensure non-discriminatory treatment among
gaming concessionaires and subconcessionaires, a requirement under Macanese law. The net deferred tax liability of MGM Grand Paradise was remeasured during the first quarter of 2013 due to the extension of the amortization period of the Macau gaming
concession in connection with the effectiveness of the Cotai land concession. This resulted in an increase in the net deferred tax liability and a corresponding increase in provision for income taxes of $65 million. While non-gaming operations
remain subject to the complementary tax, MGM Grand Paradise has tax net operating losses from non-gaming operations that are fully offset by a valuation allowance.
During the first quarter of 2013, the Company settled all issues under appeal in connection with the IRS audits of the Companys consolidated federal income tax returns and the Companys cost
method investee returns for the 2003 and 2004 tax years. Unrecognized tax benefits were reduced by $28 million and provision for income taxes was reduced by $38 million, including the impact of the settlement on the valuation allowance, as a result
of this settlement.
NOTE 3 INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED AFFILIATES
Investments in and advances to unconsolidated affiliates consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
CityCenter Holdings, LLC CityCenter (50%)
|
|
$
|
1,224,622
|
|
|
$
|
1,220,741
|
|
Elgin Riverboat ResortRiverboat Casino Grand Victoria (50%)
|
|
|
169,822
|
|
|
|
206,296
|
|
Other
|
|
|
22,018
|
|
|
|
17,510
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,416,462
|
|
|
$
|
1,444,547
|
|
|
|
|
|
|
|
|
|
|
6
The Company recorded its share of the results of operations of unconsolidated affiliates as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Income (loss) from unconsolidated affiliates
|
|
$
|
3,928
|
|
|
$
|
(37,943
|
)
|
|
$
|
26,954
|
|
|
$
|
(45,266
|
)
|
Preopening and start-up expenses
|
|
|
|
|
|
|
(124
|
)
|
|
|
(376
|
)
|
|
|
(124
|
)
|
Non-operating items from unconsolidated affiliates
|
|
|
(22,673
|
)
|
|
|
(20,901
|
)
|
|
|
(83,616
|
)
|
|
|
(68,603
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(18,745
|
)
|
|
$
|
(58,968
|
)
|
|
$
|
(57,038
|
)
|
|
$
|
(113,993
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating expense from unconsolidated affiliates for the three and nine months ended
September 30, 2013 includes $1 million and $17 million, respectively, for the Companys share of statutory interest recorded by CityCenter related to estimated amounts owed in connection with the CityCenter construction litigation. The
nine months ended September 30, 2012 included $4 million related to the Companys share of CityCenters loss on retirement of long-term debt.
In the third quarter of 2012, CityCenter recorded a $36 million impairment charge using revised management forecasts related to its Mandarin Oriental residential inventory. A discount rate of 17% was
utilized in the discounted cash flow analysis to represent what management believed a market participant would determine to be commensurate with the inherent risks associated with the assets and related estimated cash flows. The Company recognized
50% of such impairment charge, resulting in a pre-tax charge of approximately $18 million. In addition, CityCenter accrued $32 million in the third quarter of 2012 related to the estimated demolition cost of the Harmon. The Company recognized 50% of
such charge, resulting in a pre-tax charge of approximately $16 million. See Note 5 for additional information regarding the Harmon.
Grand Victoria
At June 30, 2013, the Company reviewed the carrying
value of its Grand Victoria investment for impairment due to a higher than anticipated decline in operating results and loss of market share as a result of the opening of a new river boat casino in the Illinois market, as well as a decrease in
forecasted cash flows for 2013 through 2017 compared to the prior forecast. The Company used a blended discounted cash flow analysis and guideline public company method to determine the estimated fair value from a market participants
viewpoint. Key assumptions included in the discounted cash flow analysis were estimates of future cash flows including outflows for capital expenditures, a long-term growth rate of 2% and a discount rate of 11%. Key assumptions in the guideline
public company method included business enterprise value multiples selected based on the range of multiples in the Companys peer group. As a result of the analysis, the Company determined that it was necessary to record an other-than-temporary
impairment charge of $37 million at June 30, 2013, based on an estimated fair value of $170 million for the Companys 50% interest. The Company intends to, and believes it will be able to, retain the investment in Grand Victoria; however,
due to the extent of the shortfall and the Companys assessment of the uncertainty of fully recovering its investment, the Company has determined that the impairment was other-than-temporary. At June 30, 2012, the Company recorded an
impairment charge of $85 million on its investment in Grand Victoria based on the then estimated fair value of $205 million for its 50% interest.
CityCenter
CityCenter summary financial information.
Summarized
balance sheet information of the CityCenter joint venture is as follows:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Current assets
|
|
$
|
633,926
|
|
|
$
|
546,851
|
|
Property and other assets, net
|
|
|
8,364,102
|
|
|
|
8,606,163
|
|
Current liabilities
|
|
|
421,672
|
|
|
|
451,332
|
|
Long-term debt and other long-term obligations
|
|
|
2,609,758
|
|
|
|
2,533,918
|
|
Equity
|
|
|
5,966,598
|
|
|
|
6,167,764
|
|
7
Summarized income statement information of the CityCenter joint venture is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Net revenues
|
|
$
|
294,330
|
|
|
$
|
266,430
|
|
|
$
|
942,646
|
|
|
$
|
795,492
|
|
Operating expenses
|
|
|
(324,120
|
)
|
|
|
(376,283
|
)
|
|
|
(996,378
|
)
|
|
|
(989,786
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(29,790
|
)
|
|
|
(109,853
|
)
|
|
|
(53,732
|
)
|
|
|
(194,294
|
)
|
Non-operating expense
|
|
|
(71,238
|
)
|
|
|
(65,219
|
)
|
|
|
(240,905
|
)
|
|
|
(204,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(101,028
|
)
|
|
$
|
(175,072
|
)
|
|
$
|
(294,637
|
)
|
|
$
|
(398,972
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2013 debt restructuring transactions.
In October 2013, CityCenter entered into a $1.775
billion senior secured credit facility. The senior secured credit facility consists of a $75 million revolving facility maturing in October 2018, and a $1.7 billion term loan B facility maturing in October 2020. The term loan B facility was issued
at 99% of the principal amount and will bear interest at LIBOR plus 4.00% with a LIBOR floor of 1.00%. Concurrent with the closing of the new senior secured credit facility, CityCenter issued a notice of full redemption with respect to its existing
7.625% senior secured first lien notes and 10.75% senior secured second lien PIK toggle notes and discharged each of the indentures for its first and second lien notes at a premium in accordance with the terms of such indentures. As a result of the
transaction, the Company expects to record a fourth quarter charge of approximately $70 million for its share of CityCenters non-operating loss on retirement of long-term debt, primarily consisting of premiums associated with the redemption of
the existing first and second lien notes as well as the write-off of previously unamortized debt issuance costs. In connection with the October 2013 debt restructuring, sponsor notes with a carrying value of approximately $738 million were converted
to members equity. After these transactions, the senior credit facility is CityCenters only remaining long-term debt.
The senior secured credit facility is secured by substantially all the assets of CityCenter, and contain certain financial covenants including minimum interest coverage ratios and maximum leverage ratio
requirements (as defined in the agreements).
NOTE 4 LONG-TERM DEBT
Long-term debt consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Senior credit facility:
|
|
|
|
|
|
|
|
|
$2,779 million ($2,800 million at December 31, 2012) term loans, net
|
|
$
|
2,771,777
|
|
|
$
|
2,791,284
|
|
Revolving loans
|
|
|
80,000
|
|
|
|
|
|
MGM Grand Paradise credit facility
|
|
|
553,123
|
|
|
|
553,531
|
|
$462.2 million 6.75% senior notes, due 2013
|
|
|
|
|
|
|
462,226
|
|
$150 million 7.625% senior subordinated debentures, due 2013, net
|
|
|
|
|
|
|
150,539
|
|
$508.9 million 5.875% senior notes, due 2014, net
|
|
|
508,771
|
|
|
|
508,540
|
|
$875 million 6.625% senior notes, due 2015, net
|
|
|
876,178
|
|
|
|
876,634
|
|
$1,450 million 4.25% convertible senior notes, due 2015, net
|
|
|
1,457,323
|
|
|
|
1,460,780
|
|
$242.9 million 6.875% senior notes, due 2016
|
|
|
242,900
|
|
|
|
242,900
|
|
$732.7 million 7.5% senior notes, due 2016
|
|
|
732,749
|
|
|
|
732,749
|
|
$500 million 10% senior notes, due 2016, net
|
|
|
496,758
|
|
|
|
496,110
|
|
$743 million 7.625% senior notes, due 2017
|
|
|
743,000
|
|
|
|
743,000
|
|
$475 million 11.375% senior notes, due 2018, net
|
|
|
467,102
|
|
|
|
466,117
|
|
$850 million 8.625% senior notes, due 2019
|
|
|
850,000
|
|
|
|
850,000
|
|
$1,000 million 6.75% senior notes, due 2020
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
$1,250 million 6.625% senior notes, due 2021
|
|
|
1,250,000
|
|
|
|
1,250,000
|
|
$1,000 million 7.75% senior notes, due 2022
|
|
|
1,000,000
|
|
|
|
1,000,000
|
|
$0.6 million 7% debentures, due 2036, net
|
|
|
572
|
|
|
|
572
|
|
$4.3 million 6.7% debentures, due 2096
|
|
|
4,265
|
|
|
|
4,265
|
|
Other notes
|
|
|
|
|
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13,034,518
|
|
|
$
|
13,589,283
|
|
|
|
|
|
|
|
|
|
|
Debt due within one year of the September 30, 2013 balance sheet date is classified as long-term as
the Company has both the intent and ability to refinance such amounts on a long-term basis under its senior credit facility.
8
Senior credit facility.
At September 30, 2013, the Companys senior credit
facility consisted of a $1.2 billion revolving credit facility, a $1.04 billion term loan A facility and a $1.74 billion term loan B facility. The revolving and term loan A facilities bear interest at LIBOR plus an applicable rate determined by the
Companys credit rating (2.75% as of September 30, 2013). The term loan B facility was re-priced in May 2013 and bears interest at LIBOR plus 2.50%, with a LIBOR floor of 1.00%, a 75 basis-point reduction compared to the prior rate. The
revolving and term loan A facilities mature in December 2017 and the term loan B facility matures in December 2019. The term loan A and term loan B facilities are subject to scheduled amortization payments on the last day of each calendar quarter
from and after March 31, 2013 in an amount equal to 0.25% of the original principal balance. The Company permanently repaid $7 million and $21 million in the three and nine months ended September 30, 2013, respectively, in accordance with
the scheduled amortization. The Company had $1.09 billion of available borrowing capacity under its senior credit facility at September 30, 2013. At September 30, 2013, the interest rate on the term loan A was 2.93%, the interest rate on
the term loan B was 3.50% and the interest rate on the revolving loans was 2.89%.
The land and substantially all of the
assets of MGM Grand Las Vegas, Bellagio and The Mirage secure up to $3.35 billion of obligations outstanding under the senior credit facility. In addition, the land and substantially all of the assets of New York-New York and Gold Strike Tunica
secure the entire amount of the senior credit facility and the land and substantially all of the assets of MGM Grand Detroit secure its $450 million of obligations as a co-borrower under the senior credit facility. In addition, the senior credit
facility is secured by a pledge of the equity or limited liability company interests of the subsidiaries that own the pledged properties.
The senior credit facility contains customary representations and warranties and customary affirmative and negative covenants. In addition, the senior credit facility requires the Company and its
restricted subsidiaries to maintain a minimum trailing four-quarter EBITDA and limits the ability of the Company and its restricted subsidiaries to make capital expenditures. As of September 30, 2013, the Company and its restricted subsidiaries
are required to maintain a minimum EBITDA (as defined) of $1.05 billion. The minimum EBITDA increases to $1.10 billion for March 31, 2014 and June 30, 2014 and to $1.20 billion for September 30, 2014 and December 31, 2014, with
periodic increases thereafter. EBITDA for the trailing twelve months ended September 30, 2013 calculated in accordance with the terms of the senior credit facility was $1.26 billion. The Company and its restricted subsidiaries are within the
limit of $500 million of capital expenditures for the calendar year 2013.
The senior credit facility provides for customary
events of default, including, without limitation, (i) payment defaults, (ii) covenant defaults, (iii) cross-defaults to certain other indebtedness in excess of specified amounts, (iv) certain events of bankruptcy and insolvency,
(v) judgment defaults in excess of specified amounts, (vi) the failure of any loan document by a significant party to be in full force and effect and such circumstance, in the reasonable judgment of the required lenders, is materially
adverse to the lenders, or (vii) the security documents cease to create a valid and perfected first priority lien on any material portion of the collateral. In addition, the senior credit facility provides that a cessation of business due to
revocation, suspension or loss of any gaming license affecting a specified amount of its revenues or assets, will constitute an event of default.
MGM China credit facility.
At September 30, 2013, the MGM China credit facility consisted of approximately $550 million of term loans and an approximately $1.45 billion revolving credit
facility due October 2017. The credit facility is subject to scheduled amortization payments beginning in 2016. The outstanding balance at September 30, 2013 was comprised solely of term loans. The interest rate on the facility fluctuates
annually based on HIBOR plus a margin, which was set at 2.50% until April 2013 and ranges between 1.75% and 2.50% thereafter based on MGM Chinas leverage ratio. The margin was 1.75% at September 30, 2013. MGM China is a joint and several
co-borrower with MGM Grand Paradise. MGM Grand Paradises interest in the Cotai land use right agreement will become collateral under the MGM China credit facility upon finalization of the appropriate government approvals. The material
subsidiaries of MGM China continue to guarantee the facilities, and MGM China, MGM Grand Paradise and their guarantor subsidiaries have granted a security interest in substantially all of their assets to secure the amended facilities. The credit
facility will be used for general corporate purposes and for the development of the Cotai project.
The MGM China
credit facility agreement contains customary representations and warranties, events of default, affirmative covenants and negative covenants, which impose restrictions on, among other things, the ability of MGM China and its subsidiaries to make
investments, pay dividends and sell assets, and to incur additional debt and additional liens. MGM China is also required to maintain compliance with a maximum consolidated total leverage ratio of 4.50 to 1.00 prior to the first anniversary of the
MGM Cotai opening date and 4.00 to 1.00 thereafter, in addition to a minimum interest coverage ratio of 2.50 to 1.00. MGM China was in compliance with its credit facility covenants at September 30, 2013.
Senior notes.
The Company repaid its $462 million 6.75% senior notes in April 2013 and $150 million 7.625% senior subordinated
debentures in July 2013 at maturity.
Fair value of long-term debt.
The estimated fair value of the
Companys long-term debt at September 30, 2013 was $14.2 billion. At December 31, 2012, the estimated fair value of the Companys long-term debt was $14.3 billion. Fair value was estimated using quoted market prices for the
Companys senior notes, senior subordinated notes and senior credit facility. Carrying value of the MGM China credit facility approximates fair value.
9
NOTE 5 COMMITMENTS AND CONTINGENCIES
CityCenter construction litigation.
In March 2010, Perini Building Company, Inc. (Perini), general
contractor for CityCenter, filed a lawsuit in the Eighth Judicial District Court for Clark County, State of Nevada, against MGM MIRAGE Design Group (a wholly owned subsidiary of the Company which was the original party to the Perini construction
agreement) and certain direct or indirect subsidiaries of CityCenter Holdings, LLC (the CityCenter Owners). Perini asserted that CityCenter was substantially completed, but the defendants failed to pay Perini approximately $490
million allegedly due and owing under the construction agreement for labor, equipment and materials expended on CityCenter. The complaint further charged the defendants with failure to provide timely and complete design documents, late delivery
to Perini of design changes, mismanagement of the change order process, obstruction of Perinis ability to complete the Harmon component, and fraudulent inducement of Perini to compromise significant amounts due for its general conditions. The
complaint advanced claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious breach of the implied covenant of good faith and fair dealing, unjust enrichment and promissory estoppel, and fraud and
intentional misrepresentation. Perini seeks compensatory damages, punitive damages, attorneys fees and costs.
In
April 2010, Perini served an amended complaint in this case which joins as defendants many owners of CityCenter residential condominium units (the Condo Owner Defendants), added a count for foreclosure of Perinis recorded master
mechanics lien against the CityCenter property in the amount of approximately $491 million, and asserted the priority of this mechanics lien over the interests of the CityCenter Owners, the Condo Owner Defendants and CityCenter lenders
in the CityCenter property.
CityCenter Owners and the other defendants dispute Perinis allegations, and
contend that the defendants are entitled to substantial amounts from Perini, including offsets against amounts claimed to be owed to Perini and its subcontractors and damages based on breach of their contractual and other duties to CityCenter,
duplicative payment requests, non-conforming work, lack of proof of alleged work performance, defective work related to the Harmon, property damage and Perinis failure to perform its obligations to pay certain subcontractors and to prevent
filing of liens against CityCenter. Parallel to the court litigation, CityCenter management conducted an extra-judicial program for settlement of CityCenter subcontractor claims. Prior to June 30, 2013, CityCenter resolved the claims of 215
first-tier Perini subcontractors (including the claims of any lower-tier subcontractors that might have claims through those first-tier subcontractors), with only seven remaining for further proceedings along with trial of Perinis claims and
CityCenters Harmon-related counterclaim and other claims by CityCenter against Perini and its parent guarantor, Tutor Perini. Subsequent to June 30, 2013, CityCenter reached settlement with four additional subcontractors; of the three
remaining, two are implicated in the defective work at the Harmon. In August 2012, Perini recorded an amended notice of lien reducing its lien to approximately $191 million. In May 2013, Perini served an expert witness disclosure which asserted an
increase in Perinis claim for its work and materials on the CityCenter project. In August 2013, Perini recorded an amended notice of lien reducing its lien to approximately $167 million.
In November 2012, Perini filed a second amended complaint which, among other things, added claims against the CityCenter defendants of
breach of contract (alleging that CityCenters Owner Controlled Insurance Program (OCIP) failed to provide adequate project insurance for Perini with broad coverages and high limits) and tortious breach of the implied covenant of
good faith and fair dealing (alleging improper administration by CityCenter of the OCIP and Builders Risk insurance programs).
CityCenter reached a settlement agreement with certain professional service providers against whom it had asserted claims in this
litigation for errors or omissions with respect to the CityCenter project, which settlement has been approved by the court. Trial of all remaining claims, including the Perini and remaining subcontractor lien claims against CityCenter, and
CityCenters counterclaims against Perini and certain subcontractors for defective work at the Harmon has been set to commence on April 28, 2014.
CityCenter Owners and the other defendants will continue to vigorously assert and protect their interests in the Perini lawsuit. The Company believes it is probable that the CityCenter Owners and the
other defendants will be liable for $143 million in connection with this lawsuit. Amounts determined to be owed would be funded in part under the Companys completion guarantee which is discussed below. The Company does not believe it is
reasonably possible it will be liable for any material amount in excess of its estimate of its probable liability. The Companys estimate of its probable liability does not include any offset for amounts that may be recovered on its
counterclaims against Perini and certain subcontractors for defective work at the Harmon.
CityCenter completion
guarantee.
In October 2013, the Company entered into a third amended and restated completion guarantee, which is collateralized by substantially all of the assets of Circus Circus Las Vegas, as well as certain undeveloped land adjacent to that
property. The terms of the amended and restated completion guarantee provide CityCenter the ability to utilize up to $72 million of net residential proceeds to fund construction costs, or to reimburse the Company for construction costs previously
expended. As of September 30, 2013, CityCenter is holding approximately $72 million in a separate bank account representing the remaining condo proceeds available to fund completion guarantee obligations or be reimbursed to the Company. In
accordance with the amended and restated completion guarantee such amounts can only be used to fund construction lien obligations or reimbursed to the Company once the Perini litigation is settled.
As of September 30, 2013, the Company has funded $711 million under the completion guarantee and has accrued a liability of $82
million which includes estimated litigation costs related to the resolution of disputes with contractors concerning the final construction costs and estimated amounts to be paid to contractors through the legal process related to the Perini
litigation. The Company does not believe it is reasonably possible it could be liable for amounts in excess of what it has accrued. The Companys estimated obligation has been offset by $72 million of condominium proceeds
10
received by CityCenter, which are available to fund construction lien claims upon the resolution of the Perini litigation. Also, the Companys accrual reflects certain estimated offsets to
the amounts claimed by the contractors. Moreover, the Company has not accrued for any contingent payments to CityCenter related to the Harmon component.
Harmon demolition.
In response to a request by the Clark County Building Division (the Building Division), CityCenter engaged an engineer to conduct an analysis, based on all available
information, as to the structural stability of the Harmon under building-code-specified load combinations. On July 11, 2011, that engineer submitted the results of his analysis of the Harmon tower and podium in its current as-built condition.
The engineer opined, among other things, that [i]n a code-level earthquake, using either the permitted or current code specified loads, it is likely that critical structural members in the tower will fail and become incapable of supporting
gravity loads, leading to a partial or complete collapse of the tower. There is missing or misplaced reinforcing steel in columns, beams, shear walls, and transfer walls throughout the structure of the tower below the twenty-first floor. Based
on this engineering opinion, the Building Division requested a plan of action from CityCenter. CityCenter informed the Building Division that it decided to abate the potential for structural collapse of the Harmon in the event of a code-level
earthquake by demolishing the building, and enclosed a plan of action for demolition by implosion prepared by LVI Environmental Services of Nevada, Inc (LVI). CityCenter also advised that prior to undertaking the demolition plan of
action, it would seek relief from a standing order of the district court judge presiding over the Perini litigation that prohibits alteration or destruction of the building without court approval. In addition, CityCenter supplied the foundational
data for the engineering conclusions stated in the July 11, 2011 letter declaring the Harmons structural instability in the event of a code-level earthquake. On November 22, 2011, the Building Division required that CityCenter submit
a plan to abate the code deficiencies discovered in the Harmon tower.
In December 2011, CityCenter resubmitted to the
Building Division the plan of abatement action prepared by LVI which was first submitted on August 15, 2011, and met with the Building Division about the requirements necessary to obtain demolition permits and approvals. As discussed above, the
timing of the demolition of the Harmon is subject to rulings in the Perini litigation.
The district court presiding over the
Perini litigation had previously granted CityCenters motion to demolish the Harmon, but stayed the demolition to allow CityCenter an opportunity to conduct additional Phase 4 destructive testing at the Harmon following the courts order
prohibiting CityCenters structural engineering expert from extrapolating the results of pre-Phase 4 testing to untested portions of the building.
In May 2013, CityCenter completed additional Phase 4 destructive testing of 468 structural elements at the Harmon, analysis of which data confirmed the existence of a wide variety of construction defects
throughout the Harmon tower. In his June 2013 expert report CityCenters structural engineer opined that the additional test results and extrapolation thereof to untested portions of the building show that after a service-level earthquake
(typically defined as an earthquake with a 50% chance of occurring in 30 years), the Harmon can be expected to sustain extensive damage and failure of many structural elements, and in a large earthquake, such as a building code-level earthquake,
critical elements of the Harmon are likely to fail and lead to a partial or complete collapse of the tower. In April 2013 Perinis structural engineering expert John A. Martin & Associates (JAMA) had sent a letter to the
Building Division which declared in part that JAMA no longer believes that the Harmon Tower can be repaired to a code compliant structure, which condition JAMA attributed to CityCenters building testing. On July 18, 2013 CityCenter filed
a renewed motion with the district court for permission to demolish the Harmon. On August 23, 2013, the court granted CityCenters motion, and CityCenter has commenced planning for demolition of the building.
The Company does not believe it would be responsible for funding any additional remediation efforts under the completion guarantee that
might be required with respect to the Harmon; however, the Companys view is based on a number of developing factors, including with respect to on-going litigation with CityCenters contractors, actions by local officials and other
developments related to the CityCenter venture, all of which are subject to change.
Sales and use tax on complimentary
meals.
In March 2008, the Nevada Supreme Court ruled, in a case involving another gaming company, that food and non-alcoholic beverages purchased for use in providing complimentary meals to customers and to employees were exempt from use
tax. The Company had previously paid use tax on these items and had generally filed for refunds for the periods from January 2001 to February 2008 related to this matter, which refunds had not been paid. The Company claimed the exemption on
sales and use tax returns for periods after February 2008 in light of this Nevada Supreme Court decision and had not accrued or paid any sales or use tax for those periods. In February 2012, the Nevada Department of Taxation asserted that
customer complimentary meals and employee meals were subject to sales tax on a prospective basis commencing February 15, 2012. In July 2012, the Nevada Department of Taxation announced that sales taxes applicable to such meals would be due
and payable without penalty or interest at the earlier of certain regulatory, judicial or legislative events or June 30, 2013. The Nevada Department of Taxations position stemmed from a Nevada Tax Commission decision concerning
another gaming company which stated that complimentary meals provided to customers are subject to sales tax at the retail value of the meal and employee meals are subject to sales tax at the cost of the meal. The Clark County District Court
subsequently issued a ruling in such case that held that complementary meals provided to customers were subject to sales tax, while meals provided to employees were not subject to sales tax. This decision was appealed to the Nevada Supreme Court.
In June 2013, the Company and other similarly situated companies entered into a global
settlement agreement with the Nevada Department of Taxation that, when combined with the contemporaneous passage of legislation governing the prospective treatment of complimentary meals (AB 506), resolved all matters concerning the
prior and future taxability of such meals. AB 506 provides that complimentary meals provided to customers and employees after the effective date of the bill are not subject to either sales or use tax. Under the terms of the global settlement, the
Company agreed to withdraw its refund requests and the Nevada Department of Tax agreed to drop its assertion that sales tax was due on
11
such meals up to the effective date of AB 506. Since the Company did not previously accrue either the claims for refund of use taxes or any liability for sales taxes that the Nevada Department of
Tax may have asserted prior to entering the global settlement agreement, there is no financial statement impact of entering into the settlement agreement.
Cotai land concession contract.
MGM Grand Paradises land concession contract for an approximately 17.8 acre site in Cotai, Macau became effective on January 9, 2013 and has an
initial term of 25 years. The land premium payable to the Macau government for the land concession contract is $161 million and is composed of a down payment and eight additional semi-annual payments. As of September 30, 2013, MGM China
had paid $71 million of the contract premium recorded within other long-term assets, net. Including interest on the seven remaining semi-annual payments, MGM China has approximately $103 million remaining payable for the land concession
contract. The Company accounts for the Cotai land concession contract as an operating lease. As such, the required upfront payments are amortized over the initial 25-year contract term. For the three and nine months ended
September 30, 2013, the Company had amortized $2 million and $5 million, respectively, which is classified as preopening expense during the construction of the project. In addition, in connection with the effectiveness of the Cotai land
concession, the Company extended the useful life of its Macau gaming concession and is amortizing it on a straight-line basis through the initial term of the Cotai land concession.
Other guarantees.
The Company is party to various guarantee contracts in the normal course of business, which are generally
supported by letters of credit issued by financial institutions. The Companys senior credit facility limits the amount of letters of credit that can be issued to $500 million, and the amount of available borrowings under the revolving facility
is reduced by any outstanding letters of credit. At September 30, 2013, the Company had provided $35 million of total letters of credit. At September 30, 2013, MGM China had provided $39 million of guarantees under its credit facility.
Other litigation.
The Company is party to various legal proceedings, most of which relate to routine matters
incidental to its business. Management does not believe that the outcome of such proceedings will have a material adverse effect on the Companys financial position, results of operations or cash flows.
NOTE 6 INCOME (LOSS) PER SHARE OF COMMON STOCK
The weighted-average number of common and common equivalent shares used in the calculation of basic and diluted income
(loss) per share consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to MGM Resorts Internationalbasic
|
|
$
|
(31,859
|
)
|
|
$
|
(181,159
|
)
|
|
$
|
(118,271
|
)
|
|
$
|
(543,864
|
)
|
Potentially dilutive effect due to MGM China Share Option Plan
|
|
|
(31
|
)
|
|
|
|
|
|
|
(25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to MGM Resorts Internationaldiluted
|
|
$
|
(31,890
|
)
|
|
$
|
(181,159
|
)
|
|
$
|
(118,296
|
)
|
|
$
|
(543,864
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstandingbasic and diluted
|
|
|
489,672
|
|
|
|
488,945
|
|
|
|
489,484
|
|
|
|
488,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anti-dilutive share-based awards excluded from the calculation of diluted earnings per share
|
|
|
17,454
|
|
|
|
22,993
|
|
|
|
17,454
|
|
|
|
22,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 7 STOCKHOLDERS EQUITY AND NONCONTROLLING INTERESTS
Noncontrolling interests.
The noncontrolling interests in MGM China and other minor subsidiaries are presented
as a separate component of stockholders equity in the Companys consolidated balance sheets and the net income attributable to noncontrolling interests is presented in the Companys consolidated statements of operations. For the nine
months ended September 30, 2013 and 2012, distributions to noncontrolling interests were $318 million and $207 million, respectively, related primarily to MGM China dividends discussed below.
MGM China dividends.
MGM China paid a $113 million special dividend in September 2013, of which $58 million remained within the
consolidated entity and $55 million was distributed to noncontrolling interests, and a $500 million special dividend in March 2013, of which $255 million remained within the consolidated entity and $245 million was distributed to noncontrolling
interests.
MGM China paid a $400 million special dividend in March 2012, of which $204 million remained within the
consolidated entity and $196 million was distributed to noncontrolling interests.
12
Supplemental equity information.
The following table presents the Companys
changes in stockholders equity for the nine months ended September 30, 2013:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM
Resorts
International
Stockholders
Equity
|
|
|
Noncontrolling
Interests
|
|
|
Total
Stockholders
Equity
|
|
|
|
(In thousands)
|
|
Balances, January 1, 2013
|
|
$
|
4,365,548
|
|
|
$
|
3,750,468
|
|
|
$
|
8,116,016
|
|
Net income (loss)
|
|
|
(118,271
|
)
|
|
|
133,896
|
|
|
|
15,625
|
|
Foreign currency translation adjustment
|
|
|
(2,799
|
)
|
|
|
(2,839
|
)
|
|
|
(5,638
|
)
|
Other comprehensive income from unconsolidated affiliate, net
|
|
|
115
|
|
|
|
|
|
|
|
115
|
|
Stock-based compensation
|
|
|
22,413
|
|
|
|
2,341
|
|
|
|
24,754
|
|
Issuance of MGM Resorts common stock pursuant to stock-based compensation awards
|
|
|
(3,911
|
)
|
|
|
|
|
|
|
(3,911
|
)
|
Cash distributions to noncontrolling interest owners
|
|
|
|
|
|
|
(318,344
|
)
|
|
|
(318,344
|
)
|
Other
|
|
|
(738
|
)
|
|
|
(708
|
)
|
|
|
(1,446
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2013
|
|
$
|
4,262,357
|
|
|
$
|
3,564,814
|
|
|
$
|
7,827,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss).
Changes in accumulated other comprehensive income
(loss) by component are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
Translation
Adjustment
|
|
|
Other
Adjustments
|
|
|
Total
|
|
|
|
(In thousands)
|
|
Balances, January 1, 2013
|
|
$
|
14,997
|
|
|
$
|
(694
|
)
|
|
$
|
14,303
|
|
Current period other comprehensive income (loss)
|
|
|
(2,799
|
)
|
|
|
115
|
|
|
|
(2,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, September 30, 2013
|
|
$
|
12,198
|
|
|
$
|
(579
|
)
|
|
$
|
11,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 8 STOCK-BASED COMPENSATION
2005 Omnibus Incentive Plan.
As of September 30, 2013, the Company had an aggregate of 16 million
shares of common stock available for grant as share-based awards under the Companys omnibus incentive plan (Omnibus Plan). A summary of activity under the Omnibus Plan for the nine months ended September 30, 2013 is presented
below:
Stock options and stock appreciation rights (SARs)
|
|
|
|
|
|
|
|
|
|
|
Units
(000s)
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding at January 1, 2013
|
|
|
22,929
|
|
|
$
|
14.44
|
|
Granted
|
|
|
120
|
|
|
|
14.67
|
|
Exercised
|
|
|
(2,154
|
)
|
|
|
9.94
|
|
Forfeited or expired
|
|
|
(5,449
|
)
|
|
|
15.85
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2013
|
|
|
15,446
|
|
|
|
14.62
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2013
|
|
|
9,042
|
|
|
|
17.64
|
|
|
|
|
|
|
|
|
|
|
13
Restricted stock units (RSUs) and performance share units
(PSUs)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
|
|
|
PSUs
|
|
|
|
Units
(000s)
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
|
Units
(000s)
|
|
|
Weighted
Average
Grant-Date
Fair Value
|
|
Nonvested at January 1, 2013
|
|
|
1,424
|
|
|
$
|
10.17
|
|
|
|
688
|
|
|
$
|
10.03
|
|
Granted
|
|
|
103
|
|
|
|
14.93
|
|
|
|
|
|
|
|
|
|
Vested
|
|
|
(135
|
)
|
|
|
12.49
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(66
|
)
|
|
|
9.95
|
|
|
|
(6
|
)
|
|
|
10.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonvested at September 30, 2013
|
|
|
1,326
|
|
|
|
10.31
|
|
|
|
682
|
|
|
|
10.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM China Share Option Plan.
As of September 30, 2013, MGM China had an aggregate of 1.0
billion shares of options available for grant as share-based awards under the MGM China share option plan (MGM China Plan). A summary of activity under the MGM China Plan for the nine months ended September 30, 2013 is presented
below:
Stock options
|
|
|
|
|
|
|
|
|
|
|
Units
(000s)
|
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding at January 1, 2013
|
|
|
19,235
|
|
|
$
|
1.98
|
|
Granted
|
|
|
360
|
|
|
|
2.56
|
|
Exercised
|
|
|
(1,492
|
)
|
|
|
1.99
|
|
Forfeited or expired
|
|
|
(675
|
)
|
|
|
2.06
|
|
|
|
|
|
|
|
|
|
|
Outstanding at September 30, 2013
|
|
|
17,428
|
|
|
|
1.99
|
|
|
|
|
|
|
|
|
|
|
Exercisable at September 30, 2013
|
|
|
7,656
|
|
|
|
1.97
|
|
|
|
|
|
|
|
|
|
|
Recognition of compensation cost.
Compensation cost for both the Omnibus Plan and MGM China Plan
was recognized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Compensation cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Omnibus Plan
|
|
$
|
6,208
|
|
|
$
|
8,912
|
|
|
$
|
19,976
|
|
|
$
|
29,068
|
|
MGM China Plan
|
|
|
1,412
|
|
|
|
1,437
|
|
|
|
4,778
|
|
|
|
4,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total compensation cost
|
|
|
7,620
|
|
|
|
10,349
|
|
|
|
24,754
|
|
|
|
33,200
|
|
Less: Reimbursed costs and other
|
|
|
(241
|
)
|
|
|
(1,013
|
)
|
|
|
(820
|
)
|
|
|
(3,068
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation cost recognized as expense
|
|
|
7,379
|
|
|
|
9,336
|
|
|
|
23,934
|
|
|
|
30,132
|
|
Less: Related tax expense
|
|
|
|
|
|
|
(108
|
)
|
|
|
|
|
|
|
(525
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expense, net of tax expense
|
|
$
|
7,379
|
|
|
$
|
9,228
|
|
|
$
|
23,934
|
|
|
$
|
29,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 9 PROPERTY TRANSACTIONS, NET
Property transactions, net includes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Land impairment charge
|
|
$
|
20,354
|
|
|
$
|
|
|
|
$
|
20,354
|
|
|
$
|
|
|
Corporate buildings impairment charge
|
|
|
|
|
|
|
|
|
|
|
44,510
|
|
|
|
|
|
Grand Victoria investment impairment charge
|
|
|
|
|
|
|
|
|
|
|
36,607
|
|
|
|
85,009
|
|
Other property transactions, net
|
|
|
5,773
|
|
|
|
5,803
|
|
|
|
21,278
|
|
|
|
12,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,127
|
|
|
$
|
5,803
|
|
|
$
|
122,749
|
|
|
$
|
97,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
The Company owns land in Jean and Sloan, Nevada. Due to an increased probability of sale,
management does not believe it is likely that the carrying value of the land will be recovered. Therefore, an impairment charge of $20 million was recorded as of September 30, 2013, based on an estimated fair value of $24 million. Fair value
was determined based on recent indications from market participants.
See Note 3 for discussion of the Grand Victoria
investment impairment charge in 2013 and 2012. During the second quarter of 2013, the Company recorded an impairment charge of $45 million related to corporate buildings which are expected to be removed from service. In June 2013, the Company
executed agreements formalizing the details of a joint venture to build a new Las Vegas arena project, of which the Company will own 50%, that will be located on the land underlying these buildings. Other property transactions, net for the three and
nine months ended September 30, 2013 and 2012 includes miscellaneous asset disposals and demolition costs.
NOTE 10 SEGMENT INFORMATION
The Companys 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 Companys principal
operating activities occur in two geographic regions: the United States and Macau S.A.R. The Company has aggregated its operations into two reportable segments based on the similar characteristics of the operating segments within the regions in
which they operate: wholly owned domestic resorts and MGM China. The Companys operations related to investments in unconsolidated affiliates, MGM Hospitality, and certain other corporate and management operations have not been identified as
separate reportable segments; therefore, these operations are included in corporate and other in the following segment disclosures to reconcile to consolidated results.
The Companys management utilizes Adjusted Property EBITDA as the primary profit measure for its reportable segments. Adjusted Property EBITDA is a non-GAAP measure defined as Adjusted EBITDA before
corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which are not allocated to the reportable segments. MGM China recognizes stock compensation expense related to its stock compensation plan which is
included in the calculation of Adjusted EBITDA for MGM China. Adjusted EBITDA is a non-GAAP measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses
and property transactions, net.
The following tables present the Companys segment information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Net Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
$
|
1,548,113
|
|
|
$
|
1,486,155
|
|
|
$
|
4,573,297
|
|
|
$
|
4,470,981
|
|
MGM China
|
|
|
808,471
|
|
|
|
665,074
|
|
|
|
2,391,177
|
|
|
|
2,076,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment net revenues
|
|
|
2,356,584
|
|
|
|
2,151,229
|
|
|
|
6,964,474
|
|
|
|
6,547,441
|
|
Corporate and other
|
|
|
106,453
|
|
|
|
103,749
|
|
|
|
331,976
|
|
|
|
318,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,463,037
|
|
|
$
|
2,254,978
|
|
|
$
|
7,296,450
|
|
|
$
|
6,866,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
$
|
350,060
|
|
|
$
|
324,764
|
|
|
$
|
1,086,700
|
|
|
$
|
990,894
|
|
MGM China
|
|
|
190,772
|
|
|
|
152,491
|
|
|
|
576,042
|
|
|
|
503,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment Adjusted Property EBITDA
|
|
|
540,832
|
|
|
|
477,255
|
|
|
|
1,662,742
|
|
|
|
1,494,466
|
|
Corporate and other
|
|
|
(50,981
|
)
|
|
|
(104,872
|
)
|
|
|
(107,129
|
)
|
|
|
(190,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
489,851
|
|
|
|
372,383
|
|
|
|
1,555,613
|
|
|
|
1,304,200
|
|
Other operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preopening and start-up expenses
|
|
|
(4,279
|
)
|
|
|
(765
|
)
|
|
|
(9,931
|
)
|
|
|
(765
|
)
|
Property transactions, net
|
|
|
(26,127
|
)
|
|
|
(5,803
|
)
|
|
|
(122,749
|
)
|
|
|
(97,187
|
)
|
Depreciation and amortization
|
|
|
(211,682
|
)
|
|
|
(228,414
|
)
|
|
|
(641,751
|
)
|
|
|
(700,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
247,763
|
|
|
|
137,401
|
|
|
|
781,182
|
|
|
|
505,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of amounts capitalized
|
|
|
(208,939
|
)
|
|
|
(275,771
|
)
|
|
|
(648,886
|
)
|
|
|
(836,436
|
)
|
Non-operating items from unconsolidated affiliates
|
|
|
(22,673
|
)
|
|
|
(20,901
|
)
|
|
|
(83,616
|
)
|
|
|
(68,603
|
)
|
Other, net
|
|
|
(676
|
)
|
|
|
2,012
|
|
|
|
(6,909
|
)
|
|
|
(55,518
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(232,288
|
)
|
|
|
(294,660
|
)
|
|
|
(739,411
|
)
|
|
|
(960,557
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
15,475
|
|
|
|
(157,259
|
)
|
|
|
41,771
|
|
|
|
(455,175
|
)
|
Benefit (provision) for income taxes
|
|
|
8,150
|
|
|
|
2,585
|
|
|
|
(26,146
|
)
|
|
|
26,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
23,625
|
|
|
|
(154,674
|
)
|
|
|
15,625
|
|
|
|
(428,415
|
)
|
Less: Net income attributable to noncontrolling interests
|
|
|
(55,484
|
)
|
|
|
(26,485
|
)
|
|
|
(133,896
|
)
|
|
|
(115,449
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to MGM Resorts International
|
|
$
|
(31,859
|
)
|
|
$
|
(181,159
|
)
|
|
$
|
(118,271
|
)
|
|
$
|
(543,864
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
NOTE 11 RELATED PARTY TRANSACTIONS
MGM China.
MGM Branding and Development Holdings, Ltd., (together with its subsidiary MGM Development Services,
Ltd, MGM Branding and Development), an entity included in the Companys consolidated financial statements in which Ms. Pansy Ho indirectly holds a noncontrolling interest, has a brand license agreement with MGM China. MGM China
pays a license fee to MGM Branding and Development equal to 1.75% of MGM Chinas consolidated net revenue, subject to an annual cap of $36 million in 2013 with a 20% increase per annum during the agreement term. During the three and nine months
ended September 30, 2013, MGM China incurred total license fees of $8 million and $36 million, respectively. During the three and nine months ended September 30, 2012, MGM China incurred total license fees of $5 million and $30 million,
respectively. Such amounts have been eliminated in consolidation.
MGM China also has a development services
agreement with MGM Branding and Development to provide certain development services to MGM China in connection with future expansion of existing projects and development of future resort gaming projects. Such services are subject to a development
fee which is calculated separately for each resort casino property upon commencement of development. For each such property, the fee is 2.625% of project costs, to be paid in installments as certain benchmarks are achieved. Project costs are the
total costs incurred for the design, development and construction of the casino, casino hotel, integrated resort and other related sites associated with each project, including costs of construction, fixtures and fittings, signage, gaming and other
supplies and equipment and all costs associated with the opening of the business to be conducted at each project but excluding the cost of land and gaming concessions and financing costs. The development fee for MGM Cotai is subject to a cap of $22
million in 2013, which will increase by 10% per annum for each year during the term of the agreement. During the nine months ended September 30, 2013, MGM China incurred $15 million of fees to MGM Branding and Development related to
development services. During the nine months ended September 30, 2012, MGM China incurred $6 million of fees to MGM Branding and Development related to development services. Such amounts have been eliminated in consolidation.
An entity owned by Ms. Pansy Ho received distributions of $4 million and $18 million during the three and nine months ended
September 30, 2013, respectively, in connection with the ownership of a noncontrolling interest in MGM Branding and Development. The entity received distributions of $3 million and $11 million in the three and nine months ended
September 30, 2012, respectively.
16
NOTE 12 CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The Companys domestic subsidiaries, excluding certain minor subsidiaries, its domestic insurance
subsidiaries and MGM Grand Detroit, LLC, have fully and unconditionally guaranteed, on a joint and several basis, payment of the senior credit facility and the outstanding debt securities. The Companys international subsidiaries,
including MGM China, are not guarantors of such indebtedness. Separate condensed financial statement information for the subsidiary guarantors and non-guarantors as of September 30, 2013 and December 31, 2012 and for the three and nine
months ended September 30, 2013 and 2012 is as follows:
CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2013
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Current assets
|
|
$
|
238,990
|
|
|
$
|
822,432
|
|
|
$
|
1,222,945
|
|
|
$
|
(352
|
)
|
|
$
|
2,284,015
|
|
Property and equipment, net
|
|
|
|
|
|
|
12,579,173
|
|
|
|
1,402,092
|
|
|
|
(11,972
|
)
|
|
|
13,969,293
|
|
Investments in subsidiaries
|
|
|
19,844,973
|
|
|
|
3,944,597
|
|
|
|
|
|
|
|
(23,789,570
|
)
|
|
|
|
|
Investments in and advances to unconsolidated affiliates
|
|
|
|
|
|
|
1,407,815
|
|
|
|
8,647
|
|
|
|
|
|
|
|
1,416,462
|
|
Other non-current assets
|
|
|
156,045
|
|
|
|
538,599
|
|
|
|
7,294,421
|
|
|
|
|
|
|
|
7,989,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,240,008
|
|
|
$
|
19,292,616
|
|
|
$
|
9,928,105
|
|
|
$
|
(23,801,894
|
)
|
|
$
|
25,658,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
287,998
|
|
|
$
|
969,278
|
|
|
$
|
929,546
|
|
|
$
|
(25,352
|
)
|
|
$
|
2,161,470
|
|
Intercompany accounts
|
|
|
1,383,052
|
|
|
|
(1,411,879
|
)
|
|
|
28,827
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
2,161,744
|
|
|
|
|
|
|
|
316,319
|
|
|
|
|
|
|
|
2,478,063
|
|
Long-term debt
|
|
|
12,028,590
|
|
|
|
4,836
|
|
|
|
1,001,092
|
|
|
|
|
|
|
|
13,034,518
|
|
Other long-term obligations
|
|
|
116,267
|
|
|
|
40,453
|
|
|
|
893
|
|
|
|
|
|
|
|
157,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
15,977,651
|
|
|
|
(397,312
|
)
|
|
|
2,276,677
|
|
|
|
(25,352
|
)
|
|
|
17,831,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM Resorts stockholders equity
|
|
|
4,262,357
|
|
|
|
19,689,928
|
|
|
|
4,086,614
|
|
|
|
(23,776,542
|
)
|
|
|
4,262,357
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
3,564,814
|
|
|
|
|
|
|
|
3,564,814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
4,262,357
|
|
|
|
19,689,928
|
|
|
|
7,651,428
|
|
|
|
(23,776,542
|
)
|
|
|
7,827,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,240,008
|
|
|
$
|
19,292,616
|
|
|
$
|
9,928,105
|
|
|
$
|
(23,801,894
|
)
|
|
$
|
25,658,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Current assets
|
|
$
|
438,878
|
|
|
$
|
891,826
|
|
|
$
|
1,176,844
|
|
|
$
|
(456
|
)
|
|
$
|
2,507,092
|
|
Property and equipment, net
|
|
|
|
|
|
|
12,881,152
|
|
|
|
1,325,472
|
|
|
|
(11,972
|
)
|
|
|
14,194,652
|
|
Investments in subsidiaries
|
|
|
19,785,312
|
|
|
|
4,077,228
|
|
|
|
|
|
|
|
(23,862,540
|
)
|
|
|
|
|
Investments in and advances to unconsolidated affiliates
|
|
|
|
|
|
|
1,437,151
|
|
|
|
7,396
|
|
|
|
|
|
|
|
1,444,547
|
|
Other non-current assets
|
|
|
163,372
|
|
|
|
541,634
|
|
|
|
7,433,441
|
|
|
|
|
|
|
|
8,138,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,387,562
|
|
|
$
|
19,828,991
|
|
|
$
|
9,943,153
|
|
|
$
|
(23,874,968
|
)
|
|
$
|
26,284,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
$
|
272,138
|
|
|
$
|
989,864
|
|
|
$
|
672,125
|
|
|
$
|
(8,456
|
)
|
|
$
|
1,925,671
|
|
Intercompany accounts
|
|
|
960,610
|
|
|
|
(983,288
|
)
|
|
|
22,678
|
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
2,222,823
|
|
|
|
|
|
|
|
251,066
|
|
|
|
|
|
|
|
2,473,889
|
|
Long-term debt
|
|
|
12,432,581
|
|
|
|
155,413
|
|
|
|
1,001,289
|
|
|
|
|
|
|
|
13,589,283
|
|
Other long-term obligations
|
|
|
133,862
|
|
|
|
45,303
|
|
|
|
714
|
|
|
|
|
|
|
|
179,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
16,022,014
|
|
|
|
207,292
|
|
|
|
1,947,872
|
|
|
|
(8,456
|
)
|
|
|
18,168,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM Resorts stockholders equity
|
|
|
4,365,548
|
|
|
|
19,621,699
|
|
|
|
4,244,813
|
|
|
|
(23,866,512
|
)
|
|
|
4,365,548
|
|
Noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
3,750,468
|
|
|
|
|
|
|
|
3,750,468
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
4,365,548
|
|
|
|
19,621,699
|
|
|
|
7,995,281
|
|
|
|
(23,866,512
|
)
|
|
|
8,116,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
20,387,562
|
|
|
$
|
19,828,991
|
|
|
$
|
9,943,153
|
|
|
$
|
(23,874,968
|
)
|
|
$
|
26,284,738
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2013
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Net revenues
|
|
$
|
|
|
|
$
|
1,521,159
|
|
|
$
|
942,315
|
|
|
$
|
(437
|
)
|
|
$
|
2,463,037
|
|
Equity in subsidiaries earnings
|
|
|
166,187
|
|
|
|
72,986
|
|
|
|
|
|
|
|
(239,173
|
)
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations
|
|
|
1,337
|
|
|
|
934,853
|
|
|
|
644,324
|
|
|
|
(437
|
)
|
|
|
1,580,077
|
|
General and administrative
|
|
|
1,028
|
|
|
|
278,538
|
|
|
|
63,281
|
|
|
|
|
|
|
|
342,847
|
|
Corporate expense
|
|
|
16,881
|
|
|
|
31,811
|
|
|
|
22,498
|
|
|
|
(17,000
|
)
|
|
|
54,190
|
|
Preopening and start-up expenses
|
|
|
|
|
|
|
1,993
|
|
|
|
2,286
|
|
|
|
|
|
|
|
4,279
|
|
Property transactions, net
|
|
|
|
|
|
|
26,109
|
|
|
|
18
|
|
|
|
|
|
|
|
26,127
|
|
Depreciation and amortization
|
|
|
|
|
|
|
131,660
|
|
|
|
80,022
|
|
|
|
|
|
|
|
211,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,246
|
|
|
|
1,404,964
|
|
|
|
812,429
|
|
|
|
(17,437
|
)
|
|
|
2,219,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from unconsolidated affiliates
|
|
|
|
|
|
|
3,979
|
|
|
|
(51
|
)
|
|
|
|
|
|
|
3,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
146,941
|
|
|
|
193,160
|
|
|
|
129,835
|
|
|
|
(222,173
|
)
|
|
|
247,763
|
|
Interest expense, net of amounts capitalized
|
|
|
(198,362
|
)
|
|
|
(510
|
)
|
|
|
(10,067
|
)
|
|
|
|
|
|
|
(208,939
|
)
|
Other, net
|
|
|
10,310
|
|
|
|
(23,241
|
)
|
|
|
(10,418
|
)
|
|
|
|
|
|
|
(23,349
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(41,111
|
)
|
|
|
169,409
|
|
|
|
109,350
|
|
|
|
(222,173
|
)
|
|
|
15,475
|
|
Benefit (provision) for income taxes
|
|
|
9,252
|
|
|
|
(508
|
)
|
|
|
(594
|
)
|
|
|
|
|
|
|
8,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(31,859
|
)
|
|
|
168,901
|
|
|
|
108,756
|
|
|
|
(222,173
|
)
|
|
|
23,625
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(55,484
|
)
|
|
|
|
|
|
|
(55,484
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to MGM Resorts International
|
|
$
|
(31,859
|
)
|
|
$
|
168,901
|
|
|
$
|
53,272
|
|
|
$
|
(222,173
|
)
|
|
$
|
(31,859
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(31,859
|
)
|
|
$
|
168,901
|
|
|
$
|
108,756
|
|
|
$
|
(222,173
|
)
|
|
$
|
23,625
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
311
|
|
|
|
311
|
|
|
|
587
|
|
|
|
(622
|
)
|
|
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
311
|
|
|
|
311
|
|
|
|
587
|
|
|
|
(622
|
)
|
|
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
(31,548
|
)
|
|
|
169,212
|
|
|
|
109,343
|
|
|
|
(222,795
|
)
|
|
|
24,212
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(55,760
|
)
|
|
|
|
|
|
|
(55,760
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to MGM Resorts International
|
|
$
|
(31,548
|
)
|
|
$
|
169,212
|
|
|
$
|
53,583
|
|
|
$
|
(222,795
|
)
|
|
$
|
(31,548
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2013
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Net revenues
|
|
$
|
|
|
|
$
|
4,498,816
|
|
|
$
|
2,799,016
|
|
|
$
|
(1,382
|
)
|
|
$
|
7,296,450
|
|
Equity in subsidiaries earnings
|
|
|
470,383
|
|
|
|
181,568
|
|
|
|
|
|
|
|
(651,951
|
)
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations
|
|
|
4,213
|
|
|
|
2,741,255
|
|
|
|
1,909,455
|
|
|
|
(1,382
|
)
|
|
|
4,653,541
|
|
General and administrative
|
|
|
3,155
|
|
|
|
791,015
|
|
|
|
166,902
|
|
|
|
|
|
|
|
961,072
|
|
Corporate expense
|
|
|
46,335
|
|
|
|
89,925
|
|
|
|
33,918
|
|
|
|
(17,000
|
)
|
|
|
153,178
|
|
Preopening and start-up expenses
|
|
|
|
|
|
|
3,013
|
|
|
|
6,918
|
|
|
|
|
|
|
|
9,931
|
|
Property transactions, net
|
|
|
|
|
|
|
122,384
|
|
|
|
365
|
|
|
|
|
|
|
|
122,749
|
|
Depreciation and amortization
|
|
|
|
|
|
|
395,378
|
|
|
|
246,373
|
|
|
|
|
|
|
|
641,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,703
|
|
|
|
4,142,970
|
|
|
|
2,363,931
|
|
|
|
(18,382
|
)
|
|
|
6,542,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated affiliates
|
|
|
|
|
|
|
25,937
|
|
|
|
1,017
|
|
|
|
|
|
|
|
26,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
416,680
|
|
|
|
563,351
|
|
|
|
436,102
|
|
|
|
(634,951
|
)
|
|
|
781,182
|
|
Interest expense, net of amounts capitalized
|
|
|
(607,027
|
)
|
|
|
(6,209
|
)
|
|
|
(35,650
|
)
|
|
|
|
|
|
|
(648,886
|
)
|
Other, net
|
|
|
38,071
|
|
|
|
(85,093
|
)
|
|
|
(43,503
|
)
|
|
|
|
|
|
|
(90,525
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(152,276
|
)
|
|
|
472,049
|
|
|
|
356,949
|
|
|
|
(634,951
|
)
|
|
|
41,771
|
|
Benefit (provision) for income taxes
|
|
|
34,005
|
|
|
|
6,904
|
|
|
|
(67,055
|
)
|
|
|
|
|
|
|
(26,146
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(118,271
|
)
|
|
|
478,953
|
|
|
|
289,894
|
|
|
|
(634,951
|
)
|
|
|
15,625
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(133,896
|
)
|
|
|
|
|
|
|
(133,896
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to MGM Resorts International
|
|
$
|
(118,271
|
)
|
|
$
|
478,953
|
|
|
$
|
155,998
|
|
|
$
|
(634,951
|
)
|
|
$
|
(118,271
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(118,271
|
)
|
|
$
|
478,953
|
|
|
$
|
289,894
|
|
|
$
|
(634,951
|
)
|
|
$
|
15,625
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
(2,799
|
)
|
|
|
(2,799
|
)
|
|
|
(5,638
|
)
|
|
|
5,598
|
|
|
|
(5,638
|
)
|
Other
|
|
|
115
|
|
|
|
115
|
|
|
|
|
|
|
|
(115
|
)
|
|
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
(2,684
|
)
|
|
|
(2,684
|
)
|
|
|
(5,638
|
)
|
|
|
5,483
|
|
|
|
(5,523
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
(120,955
|
)
|
|
|
476,269
|
|
|
|
284,256
|
|
|
|
(629,468
|
)
|
|
|
10,102
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(131,057
|
)
|
|
|
|
|
|
|
(131,057
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to MGM Resorts International
|
|
$
|
(120,955
|
)
|
|
$
|
476,269
|
|
|
$
|
153,199
|
|
|
$
|
(629,468
|
)
|
|
$
|
(120,955
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2013
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(618,561
|
)
|
|
$
|
868,219
|
|
|
$
|
846,099
|
|
|
$
|
|
|
|
$
|
1,095,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable
|
|
|
|
|
|
|
(187,116
|
)
|
|
|
(192,457
|
)
|
|
|
|
|
|
|
(379,573
|
)
|
Dispositions of property and equipment
|
|
|
|
|
|
|
347
|
|
|
|
199
|
|
|
|
|
|
|
|
546
|
|
Investments in and advances to unconsolidated affiliates
|
|
|
(18,500
|
)
|
|
|
(5,353
|
)
|
|
|
|
|
|
|
|
|
|
|
(23,853
|
)
|
Investments in treasury securities - maturities longer than 90 days
|
|
|
|
|
|
|
(174,446
|
)
|
|
|
|
|
|
|
|
|
|
|
(174,446
|
)
|
Proceeds from treasury securities - maturities longer than 90 days
|
|
|
|
|
|
|
204,394
|
|
|
|
|
|
|
|
|
|
|
|
204,394
|
|
Other
|
|
|
|
|
|
|
1,580
|
|
|
|
|
|
|
|
|
|
|
|
1,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(18,500
|
)
|
|
|
(160,594
|
)
|
|
|
(192,258
|
)
|
|
|
|
|
|
|
(371,352
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net borrowings under bank credit facilities - maturities of 90 days or less
|
|
|
59,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59,000
|
|
Borrowings under bank credit facilities - maturities longer than 90 days
|
|
|
2,343,000
|
|
|
|
|
|
|
|
450,000
|
|
|
|
|
|
|
|
2,793,000
|
|
Repayments under bank credit facilities - maturities longer than 90 days
|
|
|
(2,343,000
|
)
|
|
|
|
|
|
|
(450,000
|
)
|
|
|
|
|
|
|
(2,793,000
|
)
|
Retirement of senior notes
|
|
|
(462,226
|
)
|
|
|
(150,036
|
)
|
|
|
|
|
|
|
|
|
|
|
(612,262
|
)
|
Debt issuance costs
|
|
|
(17,061
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,061
|
)
|
Intercompany accounts
|
|
|
886,519
|
|
|
|
(579,560
|
)
|
|
|
(306,959
|
)
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling interest owners
|
|
|
|
|
|
|
|
|
|
|
(318,348
|
)
|
|
|
|
|
|
|
(318,348
|
)
|
Other
|
|
|
(2,111
|
)
|
|
|
|
|
|
|
(1,100
|
)
|
|
|
|
|
|
|
(3,211
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
464,121
|
|
|
|
(729,596
|
)
|
|
|
(626,407
|
)
|
|
|
|
|
|
|
(891,882
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
(629
|
)
|
|
|
|
|
|
|
(629
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period
|
|
|
(172,940
|
)
|
|
|
(21,971
|
)
|
|
|
26,805
|
|
|
|
|
|
|
|
(168,106
|
)
|
Balance, beginning of period
|
|
|
254,385
|
|
|
|
226,242
|
|
|
|
1,062,882
|
|
|
|
|
|
|
|
1,543,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
81,445
|
|
|
$
|
204,271
|
|
|
$
|
1,089,687
|
|
|
$
|
|
|
|
$
|
1,375,403
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Net revenues
|
|
$
|
|
|
|
$
|
1,450,101
|
|
|
$
|
805,535
|
|
|
$
|
(658
|
)
|
|
$
|
2,254,978
|
|
Equity in subsidiaries earnings
|
|
|
89,705
|
|
|
|
47,759
|
|
|
|
|
|
|
|
(137,464
|
)
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations
|
|
|
1,676
|
|
|
|
904,578
|
|
|
|
556,958
|
|
|
|
(658
|
)
|
|
|
1,462,554
|
|
General and administrative
|
|
|
1,853
|
|
|
|
265,040
|
|
|
|
52,213
|
|
|
|
|
|
|
|
319,106
|
|
Corporate expense
|
|
|
14,390
|
|
|
|
48,524
|
|
|
|
8,078
|
|
|
|
(8,000
|
)
|
|
|
62,992
|
|
Preopening and start-up expenses
|
|
|
|
|
|
|
124
|
|
|
|
641
|
|
|
|
|
|
|
|
765
|
|
Property transactions, net
|
|
|
|
|
|
|
5,319
|
|
|
|
484
|
|
|
|
|
|
|
|
5,803
|
|
Depreciation and amortization
|
|
|
|
|
|
|
128,466
|
|
|
|
99,948
|
|
|
|
|
|
|
|
228,414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,919
|
|
|
|
1,352,051
|
|
|
|
718,322
|
|
|
|
(8,658
|
)
|
|
|
2,079,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from unconsolidated affiliates
|
|
|
|
|
|
|
(37,919
|
)
|
|
|
(24
|
)
|
|
|
|
|
|
|
(37,943
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
71,786
|
|
|
|
107,890
|
|
|
|
87,189
|
|
|
|
(129,464
|
)
|
|
|
137,401
|
|
Interest expense, net of amounts capitalized
|
|
|
(261,094
|
)
|
|
|
(2,730
|
)
|
|
|
(11,947
|
)
|
|
|
|
|
|
|
(275,771
|
)
|
Other, net
|
|
|
6,904
|
|
|
|
(20,170
|
)
|
|
|
(5,623
|
)
|
|
|
|
|
|
|
(18,889
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(182,404
|
)
|
|
|
84,990
|
|
|
|
69,619
|
|
|
|
(129,464
|
)
|
|
|
(157,259
|
)
|
Benefit (provision) for income taxes
|
|
|
1,245
|
|
|
|
1,436
|
|
|
|
(96
|
)
|
|
|
|
|
|
|
2,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(181,159
|
)
|
|
|
86,426
|
|
|
|
69,523
|
|
|
|
(129,464
|
)
|
|
|
(154,674
|
)
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(26,485
|
)
|
|
|
|
|
|
|
(26,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to MGM Resorts International
|
|
$
|
(181,159
|
)
|
|
$
|
86,426
|
|
|
$
|
43,038
|
|
|
$
|
(129,464
|
)
|
|
$
|
(181,159
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(181,159
|
)
|
|
$
|
86,426
|
|
|
$
|
69,523
|
|
|
$
|
(129,464
|
)
|
|
$
|
(154,674
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
1,487
|
|
|
|
1,487
|
|
|
|
2,840
|
|
|
|
(2,974
|
)
|
|
|
2,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
1,487
|
|
|
|
1,487
|
|
|
|
2,840
|
|
|
|
(2,974
|
)
|
|
|
2,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
(179,672
|
)
|
|
|
87,913
|
|
|
|
72,363
|
|
|
|
(132,438
|
)
|
|
|
(151,834
|
)
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(27,838
|
)
|
|
|
|
|
|
|
(27,838
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to MGM Resorts International
|
|
$
|
(179,672
|
)
|
|
$
|
87,913
|
|
|
$
|
44,525
|
|
|
$
|
(132,438
|
)
|
|
$
|
(179,672
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Net revenues
|
|
$
|
|
|
|
$
|
4,356,937
|
|
|
$
|
2,510,591
|
|
|
$
|
(1,195
|
)
|
|
$
|
6,866,333
|
|
Equity in subsidiaries earnings
|
|
|
317,428
|
|
|
|
160,260
|
|
|
|
|
|
|
|
(477,688
|
)
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino and hotel operations
|
|
|
5,919
|
|
|
|
2,733,100
|
|
|
|
1,699,378
|
|
|
|
(1,195
|
)
|
|
|
4,437,202
|
|
General and administrative
|
|
|
5,683
|
|
|
|
771,581
|
|
|
|
154,609
|
|
|
|
|
|
|
|
931,873
|
|
Corporate expense
|
|
|
46,719
|
|
|
|
101,216
|
|
|
|
7,857
|
|
|
|
(8,000
|
)
|
|
|
147,792
|
|
Preopening and start-up expenses
|
|
|
|
|
|
|
124
|
|
|
|
641
|
|
|
|
|
|
|
|
765
|
|
Property transactions, net
|
|
|
|
|
|
|
94,356
|
|
|
|
2,831
|
|
|
|
|
|
|
|
97,187
|
|
Depreciation and amortization
|
|
|
|
|
|
|
389,651
|
|
|
|
311,215
|
|
|
|
|
|
|
|
700,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58,321
|
|
|
|
4,090,028
|
|
|
|
2,176,531
|
|
|
|
(9,195
|
)
|
|
|
6,315,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from unconsolidated affiliates
|
|
|
|
|
|
|
(45,131
|
)
|
|
|
(135
|
)
|
|
|
|
|
|
|
(45,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
259,107
|
|
|
|
382,038
|
|
|
|
333,925
|
|
|
|
(469,688
|
)
|
|
|
505,382
|
|
Interest expense, net of amounts capitalized
|
|
|
(791,003
|
)
|
|
|
(8,238
|
)
|
|
|
(37,195
|
)
|
|
|
|
|
|
|
(836,436
|
)
|
Other, net
|
|
|
(23,811
|
)
|
|
|
(66,909
|
)
|
|
|
(33,401
|
)
|
|
|
|
|
|
|
(124,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(555,707
|
)
|
|
|
306,891
|
|
|
|
263,329
|
|
|
|
(469,688
|
)
|
|
|
(455,175
|
)
|
Benefit for income taxes
|
|
|
11,843
|
|
|
|
463
|
|
|
|
14,454
|
|
|
|
|
|
|
|
26,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(543,864
|
)
|
|
|
307,354
|
|
|
|
277,783
|
|
|
|
(469,688
|
)
|
|
|
(428,415
|
)
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(115,449
|
)
|
|
|
|
|
|
|
(115,449
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to MGM Resorts International
|
|
$
|
(543,864
|
)
|
|
$
|
307,354
|
|
|
$
|
162,334
|
|
|
$
|
(469,688
|
)
|
|
$
|
(543,864
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(543,864
|
)
|
|
$
|
307,354
|
|
|
$
|
277,783
|
|
|
$
|
(469,688
|
)
|
|
$
|
(428,415
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
6,555
|
|
|
|
6,555
|
|
|
|
12,841
|
|
|
|
(13,110
|
)
|
|
|
12,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
6,555
|
|
|
|
6,555
|
|
|
|
12,841
|
|
|
|
(13,110
|
)
|
|
|
12,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
|
(537,309
|
)
|
|
|
313,909
|
|
|
|
290,624
|
|
|
|
(482,798
|
)
|
|
|
(415,574
|
)
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
(121,735
|
)
|
|
|
|
|
|
|
(121,735
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to MGM Resorts International
|
|
$
|
(537,309
|
)
|
|
$
|
313,909
|
|
|
$
|
168,889
|
|
|
$
|
(482,798
|
)
|
|
$
|
(537,309
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
Parent
|
|
|
Guarantor
Subsidiaries
|
|
|
Non-Guarantor
Subsidiaries
|
|
|
Elimination
|
|
|
Consolidated
|
|
|
|
(In thousands)
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(655,726
|
)
|
|
$
|
771,165
|
|
|
$
|
771,823
|
|
|
$
|
|
|
|
$
|
887,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net of construction payable
|
|
|
|
|
|
|
(254,852
|
)
|
|
|
(61,905
|
)
|
|
|
|
|
|
|
(316,757
|
)
|
Dispositions of property and equipment
|
|
|
|
|
|
|
135
|
|
|
|
101
|
|
|
|
|
|
|
|
236
|
|
Investments in and advances to unconsolidated affiliates
|
|
|
(37,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37,000
|
)
|
Distributions from unconsolidated affiliates in excess of earnings
|
|
|
|
|
|
|
1,347
|
|
|
|
|
|
|
|
|
|
|
|
1,347
|
|
Investments in treasury securities- maturities longer than 90 days
|
|
|
|
|
|
|
(195,313
|
)
|
|
|
|
|
|
|
|
|
|
|
(195,313
|
)
|
Proceeds from treasury securities- maturities longer than 90 days
|
|
|
|
|
|
|
225,301
|
|
|
|
|
|
|
|
|
|
|
|
225,301
|
|
Other
|
|
|
|
|
|
|
(1,221
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,221
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(37,000
|
)
|
|
|
(224,603
|
)
|
|
|
(61,804
|
)
|
|
|
|
|
|
|
(323,407
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net repayments under bank credit facilities - maturities of 90 days or less
|
|
|
(192,100
|
)
|
|
|
|
|
|
|
(13,826
|
)
|
|
|
|
|
|
|
(205,926
|
)
|
Borrowings under bank credit facilities maturities - longer than 90 days
|
|
|
|
|
|
|
|
|
|
|
900,000
|
|
|
|
|
|
|
|
900,000
|
|
Repayments under bank credit facilities maturities - longer than 90 days
|
|
|
(1,834,128
|
)
|
|
|
|
|
|
|
(900,000
|
)
|
|
|
|
|
|
|
(2,734,128
|
)
|
Issuance of senior notes
|
|
|
2,850,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,850,000
|
|
Retirement of senior notes
|
|
|
(534,650
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(534,650
|
)
|
Debt issuance costs
|
|
|
(54,459
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(54,459
|
)
|
Intercompany accounts
|
|
|
591,602
|
|
|
|
(548,791
|
)
|
|
|
(42,811
|
)
|
|
|
|
|
|
|
|
|
Distributions to noncontrolling interest owners
|
|
|
|
|
|
|
|
|
|
|
(206,806
|
)
|
|
|
|
|
|
|
(206,806
|
)
|
Other
|
|
|
(843
|
)
|
|
|
(833
|
)
|
|
|
(57
|
)
|
|
|
|
|
|
|
(1,733
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
825,422
|
|
|
|
(549,624
|
)
|
|
|
(263,500
|
)
|
|
|
|
|
|
|
12,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
1,093
|
|
|
|
|
|
|
|
1,093
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) for the period
|
|
|
132,696
|
|
|
|
(3,062
|
)
|
|
|
447,612
|
|
|
|
|
|
|
|
577,246
|
|
Balance, beginning of period
|
|
|
795,326
|
|
|
|
230,888
|
|
|
|
839,699
|
|
|
|
|
|
|
|
1,865,913
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, end of period
|
|
$
|
928,022
|
|
|
$
|
227,826
|
|
|
$
|
1,287,311
|
|
|
$
|
|
|
|
$
|
2,443,159
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
Item 2.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations
|
This managements discussion and analysis of financial condition and results of operations (MD&A) contains
forward-looking statements that involve risks and uncertainties. Please see Cautionary Statement Concerning Forward-Looking Statements for a discussion of the uncertainties, risks and assumptions that may cause our actual results to
differ materially from those discussed in the forward-looking statements. This discussion should be read in conjunction with our historical financial statements and related notes thereto and the other disclosures contained elsewhere in this
Quarterly Report on Form 10-Q, and the audited consolidated financial statements and notes for the fiscal year ended December 31, 2012, which were included in our Form 10-K, filed with the SEC on March 1, 2013. The results of operations
for the periods reflected herein are not necessarily indicative of results that may be expected for future periods. MGM Resorts International together with its subsidiaries may be referred to as we, us or our. MGM
China Holdings Limited together with its subsidiaries is referred to as MGM China.
Executive Overview
Our primary business is the ownership and operation of casino resorts, which includes offering gaming, hotel, convention, dining,
entertainment, retail and other resort amenities. We believe that we own and invest in several of the premier casino resorts in the world and have continually reinvested 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 repay debt financings, fund capital expenditures and
provide excess cash flow for future development. 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.
Results of operations from our wholly owned domestic resorts in the third quarter of 2013 improved compared to the third quarter of 2012
as a result of increased casino and hotel revenues as general economic conditions continue to improve. In the Las Vegas Strip market, as reported by the Las Vegas Convention and Visitors Authority, casino revenues increased 3% through September of
2013, and although visitation to Las Vegas was flat for the same period, the average room rate increased 3% compared to the same period in the prior year.
In Macau, results of operations also improved in the third quarter of 2013 compared to the prior year period primarily as a result of strong gaming volumes. Despite continued concerns about economic
uncertainty in China we expect the Macau market to continue to grow. Gross casino revenues for the Macau market increased 17% year-to-date through September of 2013, with increases in both high-end (VIP) and main floor volumes.
Our results of operations are affected by decisions we make related to our capital allocation, our access to capital and our
cost of capital. In December 2012, we completed a comprehensive refinancing transaction that allows us to maximize free cash flow and further enhance our deleveraging efforts. While we are focused on continuing to improve our financial position and
lower our interest costs, we are also dedicated to capitalizing on development opportunities. In Macau, we plan to spend approximately $2.6 billion, excluding land and capitalized interest, to develop a resort and casino featuring approximately
1,600 hotel rooms, 500 gaming tables, and 2,500 slots built on an approximately 17.8 acre site in Cotai, Macau. In addition, we have been actively pursuing development opportunities in markets such as Maryland and Massachusetts.
Wholly Owned Domestic Resorts
Over half of the net revenue from our wholly owned domestic resorts is derived from non-gaming operations including hotel, food and beverage, entertainment and other non-gaming amenities. We market to
different customer groups and utilize our significant convention and meeting facilities to maximize hotel occupancy and customer volumes during off-peak times such as mid-week or during traditionally slower leisure travel periods, 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. As a result of our leveraged business model,
our operating results are significantly affected by our ability to generate operating revenues. Also, we generate a significant portion of our revenue from our wholly owned domestic resorts in Las Vegas, Nevada, which exposes us to certain risks,
such as increased competition from new or expanded Las Vegas resorts, and from the expansion of gaming in the United States generally.
Key performance indicators related to gaming and hotel revenue at our wholly owned domestic resorts 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 is in the range of 19% to 22% of table games drop and our normal slots hold percentage is in the range of 7.5% to 8.5% of slots handle; 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 an analysis of retail or cash rates for each customer segment and each type of room product to estimate complimentary rates which
|
24
|
are consistent with retail rates. Complimentary rates are reviewed at least annually and on an interim basis if there are significant changes in market conditions. 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.
|
MGM China
We own 51% and have a controlling interest in MGM China Holdings Limited (MGM China), which owns MGM Grand Paradise, S.A. (MGM Grand Paradise), the Macau company that owns and
operates the MGM Macau resort and casino and the related gaming subconcession and land concession, and is in the process of developing a gaming resort in Cotai. We believe our investment in MGM China plays an important role in extending our reach
internationally and will foster future growth and profitability. Asia is the fastest growing gaming market in the world and Macau is the worlds largest gaming destination in terms of revenue, and has continued to grow over the past few years
despite the global economic downturn.
Revenues at MGM Macau are generated primarily from gaming operations made up of two
distinct market segments: main floor and high-end, or VIP. MGM Macau main floor operations consist of both table games and slot machines offered to the public, which usually consists of walk-in and day trip visitors. VIP players play mostly in
dedicated VIP rooms or designated gaming areas. VIP customers can be further divided into customers sourced by in-house VIP programs and those sourced through gaming promoters. A significant portion of our VIP volume is generated through the use of
gaming promoters, also known as junket operators. These operators introduce VIP gaming players to MGM Macau, assist these customers with travel arrangements and extend gaming credit to these players.
VIP gaming at MGM Macau is conducted by the use of special purpose nonnegotiable gaming chips called rolling chips. Gaming
promoters purchase these rolling chips from MGM Macau and in turn they sell these chips to their players. The rolling chips allow MGM Macau to track the amount of wagering conducted by each gaming promoters clients in order to determine VIP
gaming play. In exchange for the gaming promoters services, MGM Macau pays them either through rolling chip turnover-based commissions or through revenue-sharing arrangements. The estimated portion of the gaming promoter payments that
represent amounts passed through to VIP customers is recorded net against casino revenue, and the estimated portion retained by the gaming promoter for its compensation is recorded to casino expense.
In addition to the key performance indicators used by our wholly owned domestic resorts, MGM Macau utilizes turnover, which
is the sum of rolling chip wagers won by MGM Macau (rolling chips purchased, plus rolling chips exchanged, less rolling chips returned). Turnover provides a basis for measuring VIP casino win percentage. Normal win for VIP gaming operations at MGM
Macau is in the range of 2.7% to 3.0% of turnover. MGM Macaus main floor normal table games hold percentage is in the range of 25% to 35% of table games drop. Comparability of table games drop and resulting hold percentage indicators between
periods can be affected by the volume of casino chips purchased at the cage versus the gaming tables. Normal slots hold percentage at MGM Macau is in the range of 5% to 6% of slots handle.
Corporate and Other
Corporate and other includes our investments in unconsolidated affiliates, MGM Hospitality and certain management and other operations.
CityCenter.
We own 50% of CityCenter. The other 50% of CityCenter is owned by Infinity World Development Corp, a wholly owned
subsidiary of Dubai World, a Dubai, United Arab Emirates government decree entity. CityCenter consists of Aria, a casino resort; Mandarin Oriental Las Vegas, a non-gaming boutique hotel; Crystals, a retail and entertainment district; and Vdara, a
luxury condominium-hotel. In addition, CityCenter includes residential units in the Residences at Mandarin Oriental and Veer. We receive a management fee of 2% of revenues for the management of Aria and Vdara, and 5% of EBITDA (as defined in the
agreements governing our management of Aria and Vdara). In addition, we receive an annual fee of $3 million for the management of Crystals.
Other unconsolidated affiliates.
We also own 50% interests in Grand Victoria and Silver Legacy. Grand Victoria is a riverboat casino in Elgin, Illinois; an affiliate of Hyatt Gaming owns the other
50% of Grand Victoria and also operates the resort. Silver Legacy is located in Reno, Nevada, adjacent to Circus Circus Reno, and the other 50% is owned by Eldorado LLC.
MGM Hospitality.
MGM Hospitality seeks to leverage our management expertise and well-recognized brands through strategic partnerships and international expansion opportunities. MGM Hospitality has
entered into management agreements for hotels in the Middle East, North Africa, India and through its joint venture with Diaoyutai State Guesthouse the Peoples Republic of China. MGM Hospitality opened its first resort, MGM Grand
Sanya, on Hainan Island in the Peoples Republic of China in early 2012.
Borgata.
We have a 50% economic interest
in Borgata Hotel Casino & Spa (Borgata) located on Renaissance Pointe in the Marina area of Atlantic City, New Jersey. Boyd Gaming Corporation owns the other 50% of Borgata and also operates the resort. Our interest is held in
trust and was offered for sale pursuant to our amended settlement agreement with the New Jersey Division of Gaming Enforcement and approved by the New Jersey Casino Control Commission (CCC). The terms of the amended settlement agreement
previously mandated the sale by March 2014. We had the right to direct the sale through March 2013 (the divesture period), subject to approval of the CCC, and the
25
trustee was responsible for selling the trust property during the following 12-month period (the terminal sale period). On February 13, 2013, the settlement agreement was further
amended to allow us to re-apply to the CCC for licensure in New Jersey and to defer expiration of these periods pending the outcome of the licensure process. We have submitted our licensure request to the CCC and there can be no assurances that such
request will be approved or with respect to the timing of the licensure process. If the CCC denies our licensure request, then the divesture period will immediately end, and the terminal sale period will immediately begin, which will result in our
Borgata interest being disposed of by the trustee pursuant to the terms of the settlement agreement.
We consolidate the trust
because we are the sole economic beneficiary and we account for our interest in Borgata under the cost method. As of September 30, 2013, the trust had $110 million of cash and investments, of which $90 million is held in U.S. treasury
securities with maturities greater than three months but less than one year, and is recorded within Prepaid expenses and other.
Results of Operations
The following discussion is based on our consolidated financial statements for the three and nine months ended September 30, 2013 and
2012.
Summary Financial Results
The following table summarizes our financial results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Net revenues
|
|
$
|
2,463,037
|
|
|
$
|
2,254,978
|
|
|
$
|
7,296,450
|
|
|
$
|
6,866,333
|
|
Operating income
|
|
|
247,763
|
|
|
|
137,401
|
|
|
|
781,182
|
|
|
|
505,382
|
|
Net income (loss)
|
|
|
23,625
|
|
|
|
(154,674
|
)
|
|
|
15,625
|
|
|
|
(428,415
|
)
|
Net loss attributable to MGM Resorts International
|
|
|
(31,859
|
)
|
|
|
(181,159
|
)
|
|
|
(118,271
|
)
|
|
|
(543,864
|
)
|
Consolidated net revenue for the three months ended September 30, 2013 increased 9% over the prior
year quarter due primarily to a 13% increase in casino revenue. Consolidated net revenue for the nine months ended September 30, 2013 increased 6% over the prior year period due primarily to an increase of 10% in casino revenues. See below for
additional information related to segment revenues.
Consolidated operating income of $248 million for the three months ended
September 30, 2013 benefited from increased revenues at our wholly owned domestic resorts and MGM China, a decrease in corporate expense, and a decrease in depreciation and amortization expense compared to the prior year period as discussed
further below. Operating income for the third quarter of 2013 was negatively affected by an impairment charge of $20 million related to land in Jean and Sloan, Nevada. In the prior year quarter, operating income was negatively affected by $18
million related to our share of a CityCenter residential inventory impairment charge and $16 million related to costs CityCenter accrued for the Harmon demolition.
Consolidated operating income of $781 million for the nine months ended September 30, 2013 benefited from increases in revenues at our wholly owned domestic resorts and MGM China and a decrease in
depreciation and amortization expense. Corporate expense increased over the prior year period as discussed below. In addition to the impairment charges noted above for the third quarter of 2013, we recognized impairment charges of $37 million
related to our investment in Grand Victoria and $45 million related to certain corporate buildings in the second quarter of 2013. In the second quarter of the prior year, we recognized an impairment charge of $85 million related to our investment in
Grand Victoria.
Corporate expense decreased 14% to $54 million for the quarter ended September 30, 2013 and increased 4%
to $153 million for the nine months ended September 30, 2013, as costs associated with development efforts in Massachusetts and Maryland were mainly incurred during 2012 and the first half of 2013.
Depreciation and amortization decreased $17 million and $59 million in the three and nine months ended September 30, 2013,
respectively, compared to the prior year periods, due primarily to lower amortization expense at MGM China as a result of extending the useful life of the gaming subconcession upon effectiveness of our Cotai land concession agreement.
26
Operating Results Detailed Segment Information
The following table presents detailed information regarding consolidated net revenues and Adjusted EBITDA by segment. Management uses
Adjusted Property EBITDA as the primary profit measure for our reportable segments. See Non-GAAP Measures for additional information:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
$
|
1,548,113
|
|
|
$
|
1,486,155
|
|
|
$
|
4,573,297
|
|
|
$
|
4,470,981
|
|
MGM China
|
|
|
808,471
|
|
|
|
665,074
|
|
|
|
2,391,177
|
|
|
|
2,076,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment net revenues
|
|
|
2,356,584
|
|
|
|
2,151,229
|
|
|
|
6,964,474
|
|
|
|
6,547,441
|
|
Corporate and other
|
|
|
106,453
|
|
|
|
103,749
|
|
|
|
331,976
|
|
|
|
318,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,463,037
|
|
|
$
|
2,254,978
|
|
|
$
|
7,296,450
|
|
|
$
|
6,866,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
$
|
350,060
|
|
|
$
|
324,764
|
|
|
$
|
1,086,700
|
|
|
$
|
990,894
|
|
MGM China
|
|
|
190,772
|
|
|
|
152,491
|
|
|
|
576,042
|
|
|
|
503,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportable segment Adjusted Property EBITDA
|
|
|
540,832
|
|
|
|
477,255
|
|
|
|
1,662,742
|
|
|
|
1,494,466
|
|
Corporate and other
|
|
|
(50,981
|
)
|
|
|
(104,872
|
)
|
|
|
(107,129
|
)
|
|
|
(190,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
489,851
|
|
|
$
|
372,383
|
|
|
$
|
1,555,613
|
|
|
$
|
1,304,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts.
The following table presents detailed net revenue at our wholly
owned domestic resorts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
Percentage
Change
|
|
|
2012
|
|
|
2013
|
|
|
Percentage
Change
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Casino revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Table games
|
|
$
|
223,981
|
|
|
|
10
|
%
|
|
$
|
204,286
|
|
|
$
|
648,120
|
|
|
|
10
|
%
|
|
$
|
588,531
|
|
Slots
|
|
|
421,408
|
|
|
|
1
|
%
|
|
|
417,107
|
|
|
|
1,247,971
|
|
|
|
1
|
%
|
|
|
1,241,349
|
|
Other
|
|
|
16,053
|
|
|
|
(10
|
%)
|
|
|
17,860
|
|
|
|
47,027
|
|
|
|
(11
|
%)
|
|
|
52,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino revenue
|
|
|
661,442
|
|
|
|
3
|
%
|
|
|
639,253
|
|
|
|
1,943,118
|
|
|
|
3
|
%
|
|
|
1,882,702
|
|
Non-casino revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
399,127
|
|
|
|
5
|
%
|
|
|
378,994
|
|
|
|
1,210,254
|
|
|
|
4
|
%
|
|
|
1,163,038
|
|
Food and beverage
|
|
|
345,237
|
|
|
|
1
|
%
|
|
|
342,242
|
|
|
|
1,057,685
|
|
|
|
(1
|
%)
|
|
|
1,068,537
|
|
Entertainment, retail and other
|
|
|
306,818
|
|
|
|
8
|
%
|
|
|
285,043
|
|
|
|
846,808
|
|
|
|
1
|
%
|
|
|
835,866
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-casino revenue
|
|
|
1,051,182
|
|
|
|
4
|
%
|
|
|
1,006,279
|
|
|
|
3,114,747
|
|
|
|
2
|
%
|
|
|
3,067,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,712,624
|
|
|
|
4
|
%
|
|
|
1,645,532
|
|
|
|
5,057,865
|
|
|
|
2
|
%
|
|
|
4,950,143
|
|
Less: Promotional allowances
|
|
|
(164,511
|
)
|
|
|
3
|
%
|
|
|
(159,377
|
)
|
|
|
(484,568
|
)
|
|
|
1
|
%
|
|
|
(479,162
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,548,113
|
|
|
|
4
|
%
|
|
$
|
1,486,155
|
|
|
$
|
4,573,297
|
|
|
|
2
|
%
|
|
$
|
4,470,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue related to wholly owned domestic resorts increased 4% for the quarter ended
September 30, 2013 as a result of increased casino revenue and non-casino revenue. Overall table games volumes increased 5% for the third quarter, due primarily to higher baccarat drop, and table games hold percentage was 21.5% for the current
quarter compared to 20.4% in the prior year period. Slots revenue increased 1% compared to the prior year quarter.
Net
revenue related to wholly owned domestic resorts increased 2% for the nine months ended September 30, 2013, primarily as a result of increased casino revenue and rooms revenue. Table games hold percentage was 20.6% for the nine months ended
September 30, 2013, compared to 18.9% for the prior year period, and total table games volume decreased 1% compared to the prior year period. Slots revenue increased 1% for the nine months ended September 30, 2013 compared to the nine
months ended September 30, 2012.
Rooms revenue for the quarter ended September 30, 2013 increased 5%, with a 3%
increase in Las Vegas Strip REVPAR. Rooms revenue for the nine months ended September 30, 2013 increased 4% with a 2% increase in Las Vegas Strip REVPAR. Occupancy at our Las Vegas Strip resorts increased for the three months ended
September 30, 2013 and was flat for the nine months ended September 30, 2013.
27
The following table shows key hotel statistics for our Las Vegas Strip resorts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Occupancy
|
|
|
93
|
%
|
|
|
92
|
%
|
|
|
92
|
%
|
|
|
92
|
%
|
Average Daily Rate (ADR)
|
|
$
|
127
|
|
|
$
|
124
|
|
|
$
|
131
|
|
|
$
|
129
|
|
Revenue per Available Room (REVPAR)
|
|
|
117
|
|
|
|
114
|
|
|
|
121
|
|
|
|
119
|
|
Food and beverage revenue for the three months ended September 30, 2013 increased 1% compared to the
same period in the prior year, due primarily to increased revenue from leased outlets. Food and beverage revenue for the nine months ended September 30, 2013 decreased 1% compared to the prior year, due primarily to the closure of certain
outlets. Entertainment, retail and other revenue increased for the three and nine months ended September 30, 2013 compared to the prior year, due primarily to higher revenue related to our Michael Jackson ONE Cirque du Soleil production show.
Adjusted Property EBITDA at our wholly owned domestic resorts increased 8% and 10% for the three and nine months ended
September 30, 2013, respectively, primarily as a result of an increase in casino margin driven by higher table games revenue, as well as an increase in rooms revenue, as discussed above.
MGM China.
For the quarter ended September 30, 2013, net revenue for MGM China increased 22% driven by increases in VIP table
games turnover and main floor table games drop of 28% and 10%, respectively. VIP table games hold percentage decreased from 3.0% in the quarter ended September 30, 2012 to 2.8% in the quarter ended September 30, 2013, and main floor table
games hold percentage increased from 29.6% to 35.3% in the current year quarter. Slots revenue increased 3% due to a 10% increase in volume. MGM Chinas Adjusted EBITDA for the quarter ended September 30, 2013 was $191 million. Excluding
branding fees of $8 million and $5 million for the quarter ended September 30, 2013 and 2012, respectively, Adjusted EBITDA increased 26%.
Net revenue for the nine months ended September 30, 2013 increased 15% compared to the same period in the prior year, due primarily to increases in both VIP table games turnover and main floor table
games drop of 26% and 9%, respectively. VIP table games hold percentage was 2.8% in the current nine month period compared to 3.1% in the prior year, while main floor table games hold increased from 29.2% in the prior year period to 34.3% in the
current year. Slots volume for the nine months ended September 30, 2013 increased 16% compared to the same period in the prior year. MGM Chinas Adjusted EBITDA for the nine months ended September 30, 2013 was $576 million. MGM
Chinas Adjusted EBITDA included branding fees of $36 million and $30 million for the nine months ended September 30, 2013 and 2012, respectively. Excluding branding fees, Adjusted EBITDA increased 15% compared to the same period in the prior
year.
Corporate and other.
Corporate and other revenue includes revenues from MGM Hospitality and management
operations and reimbursed revenue related primarily to our CityCenter management agreement. Corporate and other Adjusted EBITDA loss for the third quarter of 2013 decreased $54 million from the comparable prior year period due primarily to a
decrease in our loss from unconsolidated affiliates related to CityCenter. Adjusted EBITDA loss for the nine months ended September 30, 2013 decreased $83 million due mainly to operating income of $10 million from unconsolidated affiliates
related to CityCenter, compared to a $61 million loss in the prior year period. Additionally, a reduction in stock compensation expense was offset by an increase in corporate expense as discussed above.
Operating Results Details of Certain Charges
Property transactions, net consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Land impairment charge
|
|
$
|
20,354
|
|
|
$
|
|
|
|
$
|
20,354
|
|
|
$
|
|
|
Corporate buildings impairment charge
|
|
|
|
|
|
|
|
|
|
|
44,510
|
|
|
|
|
|
Grand Victoria investment impairment charge
|
|
|
|
|
|
|
|
|
|
|
36,607
|
|
|
|
85,009
|
|
Other property transactions, net
|
|
|
5,773
|
|
|
|
5,803
|
|
|
|
21,278
|
|
|
|
12,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
26,127
|
|
|
$
|
5,803
|
|
|
$
|
122,749
|
|
|
$
|
97,187
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We own land in Jean and Sloan, Nevada. Due to an increased probability of sale, we do not believe it is
likely that the carrying value of the land will be recovered. Therefore, an impairment charge of $20 million was recorded as of September 30, 2013, based on an estimated fair value of $24 million. Fair value was determined based on recent
indications from market participants.
28
During the second quarter of 2013, we recorded an impairment charge of $45 million related
to corporate buildings which are expected to be removed from service. In June 2013, we executed agreements formalizing the details of a joint venture to build a new Las Vegas arena project, of which we will own 50%, that will be located on the land
underlying these buildings.
At June 30, 2013, we reviewed the carrying value of our Grand Victoria investment for
impairment due to a higher than anticipated decline in operating results and loss of market share as a result of the opening of a new river boat casino in the Illinois market, as well as a decrease in forecasted cash flows for 2013 through 2017
compared to the prior forecast. We used a blended discounted cash flow analysis and guideline public company method to determine the estimated fair value from a market participants viewpoint. Key assumptions included in the discounted cash
flow analysis were estimates of future cash flows including outflows for capital expenditures, a long-term growth rate of 2% and a discount rate of 11%. Key assumptions in the guideline public company method included business enterprise value
multiples selected based on the range of multiples in the Companys peer group. As a result of the analysis, we determined that it was necessary to record an other-than-temporary impairment charge of $37 million at June 30, 2013, based on
an estimated fair value of $170 million for our 50% interest. We intend to, and believe we will be able to, retain our investment in Grand Victoria; however, due to the extent of the shortfall and our assessment of the uncertainty of fully
recovering our investment, we have determined that the impairment was other-than-temporary. At June 30, 2012, we recorded an impairment charge of $85 million on our investment in Grand Victoria based on the then estimated fair value of $205
million for our 50% interest.
Other property transactions, net for the nine months ended September 30, 2013 and 2012
includes miscellaneous asset disposals and demolition costs.
Operating Results Income (loss) from Unconsolidated
Affiliates
The following table summarizes information related to our income (loss) from unconsolidated affiliates,
adjusted for the effect of certain basis differences:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
CityCenter
|
|
$
|
(2,881
|
)
|
|
$
|
(42,814
|
)
|
|
$
|
9,675
|
|
|
$
|
(60,745
|
)
|
Other
|
|
|
6,809
|
|
|
|
4,871
|
|
|
|
17,279
|
|
|
|
15,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,928
|
|
|
$
|
(37,943
|
)
|
|
$
|
26,954
|
|
|
$
|
(45,266
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Our share of CityCenters operating loss, including certain basis difference adjustments, decreased
$40 million for the quarter ended September 30, 2013 compared to the prior year period. CityCenters net revenues increased 10% in the same period due primarily to increased residential revenues. Casino revenue decreased 12% due to lower
table games hold percentage, which was 22.5% in the current year quarter and 29.3% in the prior year period. In the prior year, CityCenters third quarter results were negatively affected by an impairment charge of $36 million related to the
Mandarin Oriental residential inventory and $32 million for an accrual of costs related to the Harmon demolition. We recorded our 50% share of these charges.
For the nine months ended September 30, 2013, our share of operating income was $10 million compared to an operating loss of $61 million in the prior year period. CityCenters net revenue for
the nine months ended September 30, 2013 increased 18% compared to the prior year period, related to an increase in casino revenue as well as increased residential revenues. Arias casino revenue benefited from an increase in table games
volume and a table games hold percentage of 24.3% in 2013 compared to 23.0% in the prior year. In addition, entertainment revenue increased $19 million due to the opening of the Zarkana Cirque du Soleil production show.
Non-operating Results
Interest expense.
Interest expense decreased $67 million and $188 million for the three and nine months ended September 30, 2013, respectively, compared to 2012, primarily as a result of the
December 2012 refinancing transactions. At MGM China, interest expense was $6 million and $22 million for the three and nine months ended September 30, 2013, respectively, compared to $6 million and $17 million in the prior year periods. We had
minimal capitalized interest in the three and nine months ended September 30, 2013 and 2012.
Other, net.
The nine
months ended September 30, 2012 included a loss on early retirement of debt of $59 million related to previously recorded discounts and certain debt issuance costs in connection with a prior year amendment of our senior credit facility and
subsequent repayment of non-extending loans.
Non-operating items from unconsolidated affiliates.
Non-operating expense
from unconsolidated affiliates increased by $2 million and $15 million for the three and nine months ended September 30, 2013 primarily related to our share of statutory interest recorded by CityCenter for estimated amounts owed in connection
with the CityCenter construction litigation as well as an increase in interest expense at CityCenter related to an increase in pay-in-kind interest on member notes.
29
Income taxes.
We remeasured the net deferred tax liability of MGM Grand Paradise
due to the extension of the amortization period of the Macau gaming concession in connection with the effectiveness of the Cotai land concession, resulting in an increase in the net deferred tax liability and a corresponding increase in provision
for income taxes of $65 million in the first quarter of 2013. In addition, we settled all issues under appeal in connection with the IRS audits of our consolidated federal income tax returns and our cost method investee returns for the 2003 and 2004
tax years, resulting in a reduction in provision for income taxes of $38 million, including the impact of the settlement on the valuation allowance, in the first quarter of 2013. Finally, we recorded a valuation allowance for U.S. federal deferred
tax assets, resulting in an increase in provision for income taxes of $38 million and $64 million for the three and nine months ended September 30, 2013, respectively. See Note 2 in the accompanying financial statements for further discussion
of the valuation allowance and complementary tax.
Non-GAAP Measures
Adjusted EBITDA is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization,
preopening and start-up expenses and property transactions, net. Adjusted Property EBITDA is Adjusted EBITDA before corporate expense and stock compensation expense related to the MGM Resorts stock option plan, which is not
allocated to each property. MGM China recognizes stock compensation expense related to its stock compensation plan which is included in the calculation of Adjusted EBITDA for MGM China. Adjusted EBITDA information is presented solely as a
supplemental disclosure to reported GAAP measures because management believes these measures are 1) widely used measures of operating performance in the gaming and hospitality industry, and 2) a principal basis for valuation of gaming and
hospitality companies.
We believe that while items excluded from Adjusted EBITDA and Adjusted Property EBITDA 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 operating 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, capital allocation, tax planning, financing and stock compensation
awards are all managed at the corporate level. Therefore, we use Adjusted Property EBITDA as the primary measure of wholly owned domestic resorts operating performance.
Adjusted EBITDA or Adjusted Property EBITDA should not be construed as an alternative to operating income or net income, as an indicator of our performance; or as an alternative to cash flows from
operating activities, as a measure 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
and debt principal repayments, which are not reflected in Adjusted EBITDA. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner.
The following table presents a reconciliation of Adjusted EBITDA to net loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
(In thousands)
|
|
Adjusted EBITDA
|
|
$
|
489,851
|
|
|
$
|
372,383
|
|
|
$
|
1,555,613
|
|
|
$
|
1,304,200
|
|
Preopening and start-up expenses
|
|
|
(4,279
|
)
|
|
|
(765
|
)
|
|
|
(9,931
|
)
|
|
|
(765
|
)
|
Property transactions, net
|
|
|
(26,127
|
)
|
|
|
(5,803
|
)
|
|
|
(122,749
|
)
|
|
|
(97,187
|
)
|
Depreciation and amortization
|
|
|
(211,682
|
)
|
|
|
(228,414
|
)
|
|
|
(641,751
|
)
|
|
|
(700,866
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
247,763
|
|
|
|
137,401
|
|
|
|
781,182
|
|
|
|
505,382
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net of amounts capitalized
|
|
|
(208,939
|
)
|
|
|
(275,771
|
)
|
|
|
(648,886
|
)
|
|
|
(836,436
|
)
|
Other, net
|
|
|
(23,349
|
)
|
|
|
(18,889
|
)
|
|
|
(90,525
|
)
|
|
|
(124,121
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(232,288
|
)
|
|
|
(294,660
|
)
|
|
|
(739,411
|
)
|
|
|
(960,557
|
)
|
Income (loss) before income taxes
|
|
|
15,475
|
|
|
|
(157,259
|
)
|
|
|
41,771
|
|
|
|
(455,175
|
)
|
Benefit (provision) for income taxes
|
|
|
8,150
|
|
|
|
2,585
|
|
|
|
(26,146
|
)
|
|
|
26,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
23,625
|
|
|
|
(154,674
|
)
|
|
|
15,625
|
|
|
|
(428,415
|
)
|
Less: Net income attributable to noncontrolling interests
|
|
|
(55,484
|
)
|
|
|
(26,485
|
)
|
|
|
(133,896
|
)
|
|
|
(115,449
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to MGM Resorts International
|
|
$
|
(31,859
|
)
|
|
$
|
(181,159
|
)
|
|
$
|
(118,271
|
)
|
|
$
|
(543,864
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
The following tables present reconciliations of operating income (loss) to Adjusted Property
EBITDA and Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2013
|
|
|
|
Operating
Income (Loss)
|
|
|
Preopening
and Start-up
Expenses
|
|
|
Property
Transactions,
Net
|
|
|
Depreciation
and
Amortization
|
|
|
Adjusted
EBITDA
|
|
|
|
(In thousands)
|
|
Bellagio
|
|
$
|
47,576
|
|
|
$
|
|
|
|
$
|
(69
|
)
|
|
$
|
22,604
|
|
|
$
|
70,111
|
|
MGM Grand Las Vegas
|
|
|
43,059
|
|
|
|
|
|
|
|
422
|
|
|
|
22,617
|
|
|
|
66,098
|
|
Mandalay Bay
|
|
|
19,209
|
|
|
|
1,076
|
|
|
|
17
|
|
|
|
21,734
|
|
|
|
42,036
|
|
The Mirage
|
|
|
17,198
|
|
|
|
|
|
|
|
30
|
|
|
|
12,547
|
|
|
|
29,775
|
|
Luxor
|
|
|
5,708
|
|
|
|
646
|
|
|
|
(373
|
)
|
|
|
9,304
|
|
|
|
15,285
|
|
New York-New York
|
|
|
13,631
|
|
|
|
|
|
|
|
1,886
|
|
|
|
5,192
|
|
|
|
20,709
|
|
Excalibur
|
|
|
11,732
|
|
|
|
|
|
|
|
22
|
|
|
|
3,582
|
|
|
|
15,336
|
|
Monte Carlo
|
|
|
10,025
|
|
|
|
82
|
|
|
|
554
|
|
|
|
4,584
|
|
|
|
15,245
|
|
Circus Circus Las Vegas
|
|
|
863
|
|
|
|
|
|
|
|
1,037
|
|
|
|
3,948
|
|
|
|
5,848
|
|
MGM Grand Detroit
|
|
|
31,265
|
|
|
|
|
|
|
|
|
|
|
|
5,590
|
|
|
|
36,855
|
|
Beau Rivage
|
|
|
14,004
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
7,268
|
|
|
|
21,258
|
|
Gold Strike Tunica
|
|
|
6,038
|
|
|
|
|
|
|
|
|
|
|
|
3,464
|
|
|
|
9,502
|
|
Other resort operations
|
|
|
(21,107
|
)
|
|
|
|
|
|
|
22,553
|
|
|
|
556
|
|
|
|
2,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
|
199,201
|
|
|
|
1,804
|
|
|
|
26,065
|
|
|
|
122,990
|
|
|
|
350,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM China
|
|
|
114,071
|
|
|
|
2,286
|
|
|
|
20
|
|
|
|
74,395
|
|
|
|
190,772
|
|
CityCenter (50%)
|
|
|
(2,881
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,881
|
)
|
Other unconsolidated resorts
|
|
|
6,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,809
|
|
Management and other operations
|
|
|
(1,511
|
)
|
|
|
189
|
|
|
|
4
|
|
|
|
2,962
|
|
|
|
1,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
315,689
|
|
|
|
4,279
|
|
|
|
26,089
|
|
|
|
200,347
|
|
|
|
546,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
(5,968
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,968
|
)
|
Corporate
|
|
|
(61,958
|
)
|
|
|
|
|
|
|
38
|
|
|
|
11,335
|
|
|
|
(50,585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
247,763
|
|
|
$
|
4,279
|
|
|
$
|
26,127
|
|
|
$
|
211,682
|
|
|
$
|
489,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2012
|
|
|
|
Operating
Income (Loss)
|
|
|
Preopening
and Start-up
Expenses
|
|
|
Property
Transactions,
Net
|
|
|
Depreciation
and
Amortization
|
|
|
Adjusted
EBITDA
|
|
|
|
(In thousands)
|
|
Bellagio
|
|
$
|
30,454
|
|
|
$
|
|
|
|
$
|
52
|
|
|
$
|
23,627
|
|
|
$
|
54,133
|
|
MGM Grand Las Vegas
|
|
|
24,375
|
|
|
|
|
|
|
|
3,497
|
|
|
|
20,506
|
|
|
|
48,378
|
|
Mandalay Bay
|
|
|
15,251
|
|
|
|
|
|
|
|
392
|
|
|
|
18,749
|
|
|
|
34,392
|
|
The Mirage
|
|
|
25,949
|
|
|
|
|
|
|
|
541
|
|
|
|
13,017
|
|
|
|
39,507
|
|
Luxor
|
|
|
6,076
|
|
|
|
|
|
|
|
765
|
|
|
|
8,876
|
|
|
|
15,717
|
|
New York-New York
|
|
|
15,619
|
|
|
|
|
|
|
|
148
|
|
|
|
5,187
|
|
|
|
20,954
|
|
Excalibur
|
|
|
11,016
|
|
|
|
|
|
|
|
|
|
|
|
4,378
|
|
|
|
15,394
|
|
Monte Carlo
|
|
|
8,332
|
|
|
|
|
|
|
|
9
|
|
|
|
4,809
|
|
|
|
13,150
|
|
Circus Circus Las Vegas
|
|
|
3,541
|
|
|
|
|
|
|
|
|
|
|
|
4,781
|
|
|
|
8,322
|
|
MGM Grand Detroit
|
|
|
30,206
|
|
|
|
641
|
|
|
|
37
|
|
|
|
8,380
|
|
|
|
39,264
|
|
Beau Rivage
|
|
|
15,129
|
|
|
|
|
|
|
|
(78
|
)
|
|
|
7,671
|
|
|
|
22,722
|
|
Gold Strike Tunica
|
|
|
7,825
|
|
|
|
|
|
|
|
1
|
|
|
|
3,215
|
|
|
|
11,041
|
|
Other resort operations
|
|
|
1,176
|
|
|
|
|
|
|
|
(8
|
)
|
|
|
622
|
|
|
|
1,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
|
194,949
|
|
|
|
641
|
|
|
|
5,356
|
|
|
|
123,818
|
|
|
|
324,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM China
|
|
|
60,527
|
|
|
|
|
|
|
|
426
|
|
|
|
91,538
|
|
|
|
152,491
|
|
CityCenter (50%)
|
|
|
(42,938
|
)
|
|
|
124
|
|
|
|
|
|
|
|
|
|
|
|
(42,814
|
)
|
Other unconsolidated resorts
|
|
|
4,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,871
|
|
Management and other operations
|
|
|
(3,574
|
)
|
|
|
|
|
|
|
|
|
|
|
3,165
|
|
|
|
(409
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
213,835
|
|
|
|
765
|
|
|
|
5,782
|
|
|
|
218,521
|
|
|
|
438,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
(7,897
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,897
|
)
|
Corporate
|
|
|
(68,537
|
)
|
|
|
|
|
|
|
21
|
|
|
|
9,893
|
|
|
|
(58,623
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
137,401
|
|
|
$
|
765
|
|
|
$
|
5,803
|
|
|
$
|
228,414
|
|
|
$
|
372,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2013
|
|
|
|
Operating
Income (Loss)
|
|
|
Preopening
and Start-up
Expenses
|
|
|
Property
Transactions,
Net
|
|
|
Depreciation
and
Amortization
|
|
|
Adjusted
EBITDA
|
|
|
|
(In thousands)
|
|
Bellagio
|
|
$
|
185,354
|
|
|
$
|
|
|
|
$
|
272
|
|
|
$
|
73,586
|
|
|
$
|
259,212
|
|
MGM Grand Las Vegas
|
|
|
113,431
|
|
|
|
|
|
|
|
1,192
|
|
|
|
63,115
|
|
|
|
177,738
|
|
Mandalay Bay
|
|
|
63,445
|
|
|
|
1,550
|
|
|
|
2,453
|
|
|
|
63,360
|
|
|
|
130,808
|
|
The Mirage
|
|
|
42,462
|
|
|
|
|
|
|
|
4,325
|
|
|
|
37,677
|
|
|
|
84,464
|
|
Luxor
|
|
|
18,580
|
|
|
|
758
|
|
|
|
2,554
|
|
|
|
27,255
|
|
|
|
49,147
|
|
New York-New York
|
|
|
49,326
|
|
|
|
|
|
|
|
2,416
|
|
|
|
16,039
|
|
|
|
67,781
|
|
Excalibur
|
|
|
39,276
|
|
|
|
|
|
|
|
35
|
|
|
|
10,905
|
|
|
|
50,216
|
|
Monte Carlo
|
|
|
35,066
|
|
|
|
140
|
|
|
|
3,506
|
|
|
|
13,902
|
|
|
|
52,614
|
|
Circus Circus Las Vegas
|
|
|
1,275
|
|
|
|
|
|
|
|
1,047
|
|
|
|
13,379
|
|
|
|
15,701
|
|
MGM Grand Detroit
|
|
|
98,345
|
|
|
|
|
|
|
|
|
|
|
|
16,825
|
|
|
|
115,170
|
|
Beau Rivage
|
|
|
29,163
|
|
|
|
|
|
|
|
(305
|
)
|
|
|
22,739
|
|
|
|
51,597
|
|
Gold Strike Tunica
|
|
|
16,824
|
|
|
|
|
|
|
|
1,174
|
|
|
|
10,009
|
|
|
|
28,007
|
|
Other resort operations
|
|
|
(19,994
|
)
|
|
|
|
|
|
|
22,552
|
|
|
|
1,687
|
|
|
|
4,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
|
672,553
|
|
|
|
2,448
|
|
|
|
41,221
|
|
|
|
370,478
|
|
|
|
1,086,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM China
|
|
|
339,322
|
|
|
|
6,918
|
|
|
|
365
|
|
|
|
229,437
|
|
|
|
576,042
|
|
CityCenter (50%)
|
|
|
9,299
|
|
|
|
376
|
|
|
|
|
|
|
|
|
|
|
|
9,675
|
|
Other unconsolidated resorts
|
|
|
17,279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,279
|
|
Management and other operations
|
|
|
17,383
|
|
|
|
189
|
|
|
|
4
|
|
|
|
8,889
|
|
|
|
26,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,055,836
|
|
|
|
9,931
|
|
|
|
41,590
|
|
|
|
608,804
|
|
|
|
1,716,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
(19,157
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19,157
|
)
|
Corporate
|
|
|
(255,497
|
)
|
|
|
|
|
|
|
81,159
|
|
|
|
32,947
|
|
|
|
(141,391
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
781,182
|
|
|
$
|
9,931
|
|
|
$
|
122,749
|
|
|
$
|
641,751
|
|
|
$
|
1,555,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2012
|
|
|
|
Operating
Income (Loss)
|
|
|
Preopening
and Start-up
Expenses
|
|
|
Property
Transactions,
Net
|
|
|
Depreciation
and
Amortization
|
|
|
Adjusted
EBITDA
|
|
|
|
(In thousands)
|
|
Bellagio
|
|
$
|
135,874
|
|
|
$
|
|
|
|
$
|
406
|
|
|
$
|
71,649
|
|
|
$
|
207,929
|
|
MGM Grand Las Vegas
|
|
|
50,796
|
|
|
|
|
|
|
|
4,627
|
|
|
|
59,312
|
|
|
|
114,735
|
|
Mandalay Bay
|
|
|
60,817
|
|
|
|
|
|
|
|
937
|
|
|
|
58,851
|
|
|
|
120,605
|
|
The Mirage
|
|
|
52,691
|
|
|
|
|
|
|
|
611
|
|
|
|
38,691
|
|
|
|
91,993
|
|
Luxor
|
|
|
23,691
|
|
|
|
|
|
|
|
950
|
|
|
|
26,785
|
|
|
|
51,426
|
|
New York-New York
|
|
|
52,318
|
|
|
|
|
|
|
|
391
|
|
|
|
16,220
|
|
|
|
68,929
|
|
Excalibur
|
|
|
35,407
|
|
|
|
|
|
|
|
3
|
|
|
|
13,288
|
|
|
|
48,698
|
|
Monte Carlo
|
|
|
29,235
|
|
|
|
|
|
|
|
567
|
|
|
|
14,752
|
|
|
|
44,554
|
|
Circus Circus Las Vegas
|
|
|
7,079
|
|
|
|
|
|
|
|
77
|
|
|
|
14,455
|
|
|
|
21,611
|
|
MGM Grand Detroit
|
|
|
94,975
|
|
|
|
641
|
|
|
|
921
|
|
|
|
28,303
|
|
|
|
124,840
|
|
Beau Rivage
|
|
|
36,252
|
|
|
|
|
|
|
|
(70
|
)
|
|
|
22,991
|
|
|
|
59,173
|
|
Gold Strike Tunica
|
|
|
23,758
|
|
|
|
|
|
|
|
3
|
|
|
|
9,901
|
|
|
|
33,662
|
|
Other resort operations
|
|
|
958
|
|
|
|
|
|
|
|
(22
|
)
|
|
|
1,803
|
|
|
|
2,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholly owned domestic resorts
|
|
|
603,851
|
|
|
|
641
|
|
|
|
9,401
|
|
|
|
377,001
|
|
|
|
990,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MGM China
|
|
|
218,869
|
|
|
|
|
|
|
|
1,890
|
|
|
|
282,813
|
|
|
|
503,572
|
|
CityCenter (50%)
|
|
|
(60,869
|
)
|
|
|
124
|
|
|
|
|
|
|
|
|
|
|
|
(60,745
|
)
|
Other unconsolidated resorts
|
|
|
15,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,479
|
|
Management and other operations
|
|
|
3,692
|
|
|
|
|
|
|
|
|
|
|
|
10,702
|
|
|
|
14,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
781,022
|
|
|
|
765
|
|
|
|
11,291
|
|
|
|
670,516
|
|
|
|
1,463,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock compensation
|
|
|
(25,998
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25,998
|
)
|
Corporate
|
|
|
(249,642
|
)
|
|
|
|
|
|
|
85,896
|
|
|
|
30,350
|
|
|
|
(133,396
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
505,382
|
|
|
$
|
765
|
|
|
$
|
97,187
|
|
|
$
|
700,866
|
|
|
$
|
1,304,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Liquidity and Capital Resources
Cash Flows
Our cash and cash equivalents balance at September 30, 2013 was $1.4 billion, which included $925 million at MGM China.
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 tax payments or refunds, and by distributions from unconsolidated affiliates. Cash provided by operating activities was $1.10 billion for the nine months ended
September 30, 2013, compared to cash provided by operating activities of $887 million in the prior year period. Operating cash flows related to MGM China were $785 million for the nine months ended September 30, 2013, compared to $685
million in the prior year period and were positively affected by changes in working capital primarily related to short-term gaming liabilities.
Investing activities.
We had capital expenditures of $380 million for the nine months ended September 30, 2013, of which $183 million related to MGM China, excluding development fees
eliminated in consolidation. Capital expenditures at MGM China primarily related to the construction of MGM Cotai, including a $47 million construction deposit. Capital expenditures at our wholly owned domestic resorts included various room
remodels, restaurant remodels, and entertainment venue remodels. Most of the costs capitalized related to furniture and fixtures, materials and external labor costs.
We had capital expenditures of $317 million in the nine months ended September 30, 2012, including $51 million at MGM China. Our capital expenditures related mainly to $77 million of expenditures
related to the room remodel at MGM Grand, $43 million of aircraft acquisition costs and capital expenditures at various resorts including restaurant remodels, entertainment venue remodels and theater renovations. Most of the costs capitalized
related to furniture and fixtures, materials and external labor costs.
In the nine months ended September 30, 2013, we
made investments and advances of $19 million to CityCenter pursuant to the completion guarantee, compared to $37 million in the prior year period.
During the nine months ended September 30, 2013, our New Jersey trust received proceeds of $204 million from treasury securities with maturities greater than 90 days and reinvested $174 million in
treasury securities with maturities greater than 90 days. During the nine months ended September 30, 2012, our New Jersey trust received proceeds of $225 million from treasury securities with maturities greater than 90 days and reinvested $195
million in treasury securities with maturities greater than 90 days.
Financing activities
. During the nine months
ended September 30, 2013, we repaid net debt of $553 million, which included the repayment of our $462 million 6.75% senior notes and $150 million 7.625% senior subordinated debentures at maturity. We incurred $17 million of debt issuance costs
related to the re-pricing of the term loan B facility in May 2013. During the first nine months of 2012, we issued $850 million of 8.625% senior notes due 2019 for net proceeds of $836 million, issued $1.0 billion of 7.75% senior notes due 2022 for
net proceeds of $986 million, issued $1.0 billion of 6.75% senior notes due 2020 for net proceeds of $986 million, and repaid $2.0 billion under our senior credit facility. Additionally, in the nine months ended September 30, 2012, we repaid
the approximately $535 million outstanding principal amount of our 6.75% senior notes due 2012 at maturity.
MGM China paid a
$113 million special dividend in September 2013, of which $58 million remained within the consolidated entity and $55 million was distributed to noncontrolling interests. Additionally, MGM China paid a $500 million special dividend in March 2013, of
which $255 million remained within the consolidated entity and $245 million was distributed to noncontrolling interests. MGM China paid a $400 million special dividend in March 2012, of which $204 million remained within the consolidated entity and
$196 million was distributed to noncontrolling interests.
Other Factors Affecting Liquidity
Anticipated uses of cash.
We have significant outstanding debt and contractual obligations in addition to planned capital
expenditures. We expect to meet our debt obligations and planned capital expenditure requirements with future anticipated operating cash flows, cash and cash equivalents, and available borrowings under our senior credit facility. Excluding MGM
China, at September 30, 2013 we had $537 million of principal amount of long-term debt maturing, and an estimated $784 million of cash interest payments based on current outstanding debt and applicable interest rates, within the next twelve
months. At September 30, 2013, we had $13.0 billion of indebtedness, including $2.9 billion of borrowings outstanding under our $4.0 billion senior credit facility and $553 million outstanding under the $2.0 billion MGM China credit facility.
We expect to spend approximately $325 million in the twelve months ending December 31, 2013 related to capital
expenditures at corporate and our wholly owned domestic resorts, which includes expenditures for a remodel of the front façades of New York-New York and Monte Carlo, room remodels, theater renovations, information technology and slot machine
purchases. Our capital expenditures fluctuate depending on our decisions with respect to strategic capital investments in new or existing resorts and the timing of capital investments to maintain the quality of our resorts, the amounts of which can
vary depending on timing of larger remodel projects related to our public spaces and hotel rooms. Such costs could
33
increase significantly in future periods depending on the progress of our development efforts and the structure of our ownership interests in such developments. In accordance with our senior
credit facility covenants, we and our restricted subsidiaries are limited to annual capital expenditures (as defined in the agreement governing our senior credit facility) of $500 million in each year beginning with 2013 with unused amounts in any
fiscal year rolling over to the next fiscal year, but not any fiscal year thereafter.
In Macau, MGM China expects to spend
approximately $320 million during 2013 on capital improvements, of which approximately $270 million relates to the Cotai project, including a construction deposit made in the second quarter of 2013. The budgeted capital improvement amounts exclude
land and capitalized interest.
Cotai land concession.
On October 18, 2012, MGM Grand Paradise formally accepted
the terms and conditions of a land concession contract from the government for its planned development on Cotai. The land concession contract became effective on January 9, 2013 when the Macau government published it in the Official Gazette of
Macau, and has an initial term of 25 years. The land premium payable to the Macau government for the land concession contract is $161 million and is composed of a down payment and eight additional semi-annual payments. As of September 30, 2013,
MGM China had paid $71 million of the contract premium recorded within other long-term assets, net. In July 2013, MGM China paid the first semi-annual payment of $15 million under the land concession contract. Including interest on the seven
remaining semi-annual payments, MGM China has $103 million remaining payable for the land concession contract. In addition, MGM Grand Paradise is required to pay the Macau government $269,000 per year in rent during the course of development of the
land and $681,000 per year in rent once the development is completed. The annual rent is subject to review by the Macau government every five years. MGM China has made significant progress in getting its construction team in place as well as
finalizing its designs. Under the terms of the land concession contract, MGM Grand Paradise is required to complete the development of the land within 60 months from the date of publication.
MGM China dividend policy.
In February 2013, MGM China adopted a distribution policy pursuant to which it may make semi-annual
distributions in an aggregate amount per year not to exceed 35% of its anticipated consolidated annual profits. In accordance with the policy, MGM China may also declare special distributions from time to time. The determination to make
distributions will be made at the discretion of the MGM China board of directors and will be based upon MGM Chinas operations and earnings, development pipeline, cash flows, financial condition, capital and other reserve requirements and
surplus, general financial conditions, contractual restrictions and any other conditions or factors which the board of directors deems relevant. As a result, there can be no assurance that any distributions will be declared in the future or the
amount or timing of such distributions, if any.
CityCenter completion guarantee.
In October 2013, we entered into a
third amended and restated completion and cost overrun guarantee, which is collateralized by substantially all of the assets of Circus Circus Las Vegas, as well as certain undeveloped land adjacent to that property. The terms of the amended and
restated completion guarantee provide CityCenter the ability to utilize up to $72 million of net residential proceeds to fund construction costs, or to reimburse us for construction costs previously expended. As of September 30, 2013,
CityCenter is holding approximately $72 million in a separate bank account representing the remaining condo proceeds available to fund completion guarantee obligations or be reimbursed to us. In accordance with the amended and restated completion
guarantee, such amounts can only be used to fund construction lien obligations or reimbursed to us once the Perini litigation is settled.
As of September 30, 2013, we had funded $711 million under the completion guarantee and have accrued a liability of $82 million which includes estimated litigation costs related to the resolution of
disputes with contractors concerning the final construction costs and estimated amounts to be paid to contractors through the legal process related to the Perini litigation. We do not believe it is reasonably possible we could be liable for amounts
in excess of what we have accrued. Our estimated obligation has been offset by $72 million of condominium proceeds received by CityCenter, which are available to fund construction lien claims upon the resolution of the Perini litigation. Also, our
accrual reflects certain estimated offsets to the amounts claimed by the contractors. Moreover, we have not accrued for any contingent payments to CityCenter related to the Harmon component, which will not be completed using the building as it now
stands. See Note 5 in the accompanying financial statements for discussion of the status of the Harmon.
We do not believe we
would be responsible for funding under the completion guarantee any additional remediation efforts that might be required with respect to the Harmon; however, our view is based on a number of developing factors, including with respect to on-going
litigation with CityCenters contractors, actions by local officials and other developments related to the CityCenter venture, all of which are subject to change.
Critical Accounting Policies and Estimates
A complete discussion of our
critical accounting policies and estimates is included in our Form 10-K for the fiscal year ended December 31, 2012. There have been no significant changes in our critical accounting policies and estimates since year end.
Impairments.
The undiscounted cash flows of our significant operating asset groups have historically exceeded their carrying
values by a substantial margin. However, during the third quarter we recorded an impairment charge related to land in Jean and Sloan, Nevada as discussed in Note 9. In addition, during the second quarter of 2013, we recorded an impairment charge
related to our corporate building assets and our investment in the Grand Victoria joint venture as discussed in Note 3.
34
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. 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 September 30, 2013, variable rate borrowings represented 26% of our total borrowings. Assuming a 100 basis-point increase in LIBOR (in the case of the term loan B facility, over the 1.00%
floor specified in our senior credit facility), our annual interest cost would change by $29 million based on gross amounts outstanding at September 30, 2013. Assuming a 100 basis-point increase in HIBOR for the MGM Grand Paradise credit
facility, our annual interest cost would change by $6 million based on amounts outstanding at September 30, 2013. The following table provides additional information about our gross long-term debt subject to changes in interest rates:
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Debt maturing in
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Fair Value
September 30,
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2013
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2014
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2015
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2016
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2017
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Thereafter
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Total
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2013
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(In millions)
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Fixed-rate
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$
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$
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509
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|
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$
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2,325
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|
|
$
|
1,476
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|
|
$
|
743
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|
|
$
|
4,579
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|
|
$
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9,632
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|
|
$
|
10,817
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Average interest rate
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|
N/A
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|
|
5.9
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%
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|
|
5.1
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%
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|
|
8.2
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%
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|
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7.6
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%
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7.8
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%
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7.1
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%
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|
|
|
|
Variable rate
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|
$
|
7
|
|
|
$
|
28
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|
|
$
|
28
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|
|
$
|
166
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|
|
$
|
1,520
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|
|
$
|
1,663
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|
|
$
|
3,412
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|
|
$
|
3,400
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Average interest rate
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|
|
3.3
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%
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|
|
3.3
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%
|
|
|
3.3
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%
|
|
|
2.2
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%
|
|
|
2.7
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%
|
|
|
3.5
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%
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|
|
3.1
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%
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|
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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. While recent fluctuations in exchange rates have been minimal, potential changes in policy by governments or fluctuations in the
economies of the United States, Macau or Hong Kong could cause variability in these exchange rates.
Cautionary Statement Concerning
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains 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 our ability to generate
significant cash flow, amounts we will invest in capital expenditures, amounts we will pay under the CityCenter completion guarantee and the development of strategic resorts and other projects. 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 could adversely affect our development options and financial results and impact our
ability to satisfy our obligations;
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current and future economic and credit market conditions could adversely affect our ability to service or refinance our indebtedness and to make
planned expenditures and investments;
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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;
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significant competition we face with respect to destination travel locations generally and with respect to our peers in the industries in which we
compete;
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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;
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the impact on our business of economic and market conditions in the markets in which we operate and in the locations in which our customers reside;
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35
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restrictions on our ability to have any interest or involvement in gaming business in China, Macau, Hong Kong and Taiwan, other than through MGM China;
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the ability of the Macau government to terminate MGM Grand Paradises gaming subconcession under certain circumstances without compensating MGM
Grand Paradise or refuse to grant MGM Grand Paradise an extension of the subconcession, which is scheduled to expire on March 31, 2020;
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our ability to build and open our development in Cotai by January 2018;
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the dependence of MGM Macau upon gaming junket operators for a significant portion of gaming revenues in Macau;
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extreme weather conditions or climate change may cause property damage or interrupt business;
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the concentration of our major gaming resorts on the Las Vegas Strip;
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the fact that we extend credit to a large portion of our customers and we may not be able to collect gaming receivables;
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the potential occurrence of impairments to goodwill, indefinite-lived intangible assets or long-lived assets which could negatively affect future
profits;
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the susceptibility of leisure and business travel, especially travel by air, to global geopolitical events, such as terrorist attacks or acts of war or
hostility;
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the fact that investing through partnerships or joint ventures including CityCenter decreases our ability to manage risk;
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the fact that future construction or development projects will be susceptible to substantial development and construction risks;
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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;
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the fact that CityCenter has decided to abate the potential for structural collapse of the Harmon in the event of a code-level earthquake by
demolishing the building, which exposes us to risks prior to or in connection with the demolition process;
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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;
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the fact that Tracinda Corporation owns a significant amount of our common stock and may have interests that differ from the interests of other holders
of our stock;
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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;
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risks related to pending claims that have been, or future claims that may be brought against us;
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the fact that a significant portion of our labor force is covered by collective bargaining agreements;
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the sensitivity of our business to energy prices and a rise in energy prices could harm our operating results;
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the potential that failure to maintain the integrity of internal customer information could result in damage of reputation and/or subject us to fines,
payment of damages, lawsuits or other restrictions on our use or transfer of data;
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increases in gaming taxes and fees in the jurisdictions in which we operate;
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the potential for conflicts of interest to arise because certain of our directors and officers are also directors of MGM China, which is now a publicly
traded company listed on the Hong Kong Stock Exchange; and
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the risks associated with doing business outside of the United States.
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Any forward-looking statement made by us in this Form 10-Q 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.