What changed in this filing

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Item 1. Financial Statements

2022-11-02 compared with 2022-08-03 · 246 added, 175 removed, 767 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30,

2022 December 31,

46 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Gain on REIT transactions, net — — ( 2,277,747 ) —

Gain on consolidation of CityCenter, net — ( 1,562,329 ) — ( 1,562,329 )

Depreciation and amortization 1,405,520 279,403 2,060,413 853,579

1 unchanged sentence

Income (loss) from unconsolidated affiliates ( 17,467 ) 35,111 ( 119,888 ) 92,870

Operating income 2,381,451 263,760 2,487,239 17,070

Operating income (loss) ( 1,045,971 ) 1,892,782 1,441,268 1,909,852

Non-operating income (expense)

19 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

Net income (loss) $ 1,587,832 $ ( 245,634 )

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

Net income $ 526,745 $ 1,092,302

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

Depreciation and amortization 2,060,413 853,579

5 unchanged sentences

Gain on REIT transactions, net ( 2,277,747 ) —

Gain on consolidation of CityCenter, net — ( 1,562,329 )

Noncash lease expense 303,044 131,586

19 unchanged sentences

Investments and other ( 238,361 ) 32,742

Net cash provided by (used in) investing activities 2,226,681 ( 273,722 )

Net cash provided by investing activities 1,582,636 1,677,021

Cash flows from financing activities

6 unchanged sentences

Distributions to noncontrolling interest owners ( 207,792 ) ( 239,514 )

Purchases of common stock ( 2,116,055 ) ( 339,661 )

Repurchases of common stock ( 2,423,009 ) ( 1,026,194 )

Other ( 82,355 ) ( 112,862 )

Net cash provided by (used in) financing activities ( 2,539,431 ) 429,986

Net cash used in financing activities ( 2,780,564 ) ( 2,093,427 )

Effect of exchange rate on cash, cash equivalents, and restricted cash ( 3,315 ) ( 1,103 )

6 unchanged sentences

Interest paid, net of amounts capitalized $ 411,701 $ 508,056

Federal, state and foreign income taxes paid (refunds received), net ( 32,736 ) 1,898

Federal, state and foreign income taxes paid 12,888 34,836

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

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Shares Par Value Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Loss Total MGM Resorts International Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity

Balances, April 1, 2022 430,562 $ 4,306 $ 761,559 $ 4,321,482 $ ( 22,007 ) $ 5,065,340 $ 4,814,284 $ 9,879,624

Net income (loss) — — — 1,783,937 — 1,783,937 ( 163,596 ) 1,620,341

Balances, July 1, 2022 398,418 $ 3,984 $ — $ 5,746,532 $ ( 16,942 ) $ 5,733,574 $ 1,464,109 $ 7,197,683

Net loss — — — ( 576,830 ) — ( 576,830 ) ( 486,445 ) ( 1,063,275 )

Currency translation adjustment — — — — ( 16,888 ) ( 16,888 ) ( 675 ) ( 17,563 )

Cash flow hedges — — — — 690 690 971 1,661

Stock-based compensation — — 6,751 — — 6,751 664 7,415

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Adjustment of redeemable noncontrolling interest to redemption value — — 8,043 — — 8,043 — 8,043

Deconsolidation of MGP — — — — 11,084 11,084 ( 3,184,710 ) ( 3,173,626 )

Other — — ( 25 ) — — ( 25 ) 7,325 7,300

Balances, June 30, 2022 398,418 $ 3,984 $ — $ 5,746,532 $ ( 16,942 ) $ 5,733,574 $ 1,464,109 $ 7,197,683

Balances, September 30, 2022 388,761 $ 3,888 $ — $ 4,871,632 $ ( 33,830 ) $ 4,841,690 $ 982,993 $ 5,824,683

Balances, January 1, 2022 453,804 $ 4,538 $ 1,750,135 $ 4,340,588 $ ( 24,616 ) $ 6,070,645 $ 4,906,121 $ 10,976,766

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Other — — 191 — — 191 6,193 6,384

Balances, June 30, 2022 398,418 $ 3,984 $ — $ 5,746,532 $ ( 16,942 ) $ 5,733,574 $ 1,464,109 $ 7,197,683

Balances, September 30, 2022 388,761 $ 3,888 $ — $ 4,871,632 $ ( 33,830 ) $ 4,841,690 $ 982,993 $ 5,824,683

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

3 unchanged sentences

Balances, April 1, 2021 491,874 $ 4,919 $ 3,569,186 $ 2,757,941 $ ( 25,218 ) $ 6,306,828 $ 4,925,691 $ 11,232,519

Balances, July 1, 2021 486,530 $ 4,865 $ 3,335,015 $ 2,861,474 $ ( 21,173 ) $ 6,180,181 $ 4,923,941 $ 11,104,122

Net income (loss) — — — 1,350,433 — 1,350,433 ( 15,157 ) 1,335,276

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Other — — ( 5,166 ) — — ( 5,166 ) 6,151 985

Balances, June 30, 2021 486,530 $ 4,865 $ 3,335,015 $ 2,861,474 $ ( 21,173 ) $ 6,180,181 $ 4,923,941 $ 11,104,122

Balances, September 30, 2021 469,728 $ 4,697 $ 2,639,804 $ 4,210,726 $ ( 25,273 ) $ 6,829,954 $ 4,831,023 $ 11,660,977

Balances, January 1, 2021 494,318 $ 4,943 $ 3,439,453 $ 3,091,007 $ ( 30,677 ) $ 6,504,726 $ 4,675,182 $ 11,179,908

Net loss — — — ( 227,076 ) — ( 227,076 ) ( 23,207 ) ( 250,283 )

Net income (loss) — — — 1,123,357 — 1,123,357 ( 38,364 ) 1,084,993

Currency translation adjustment — — — — ( 10,806 ) ( 10,806 ) ( 8,361 ) ( 19,167 )

9 unchanged sentences

MGP Class A share issuances — — 99,934 — 3,240 103,174 656,361 759,535

Redemption of Operating Partnership units — — 171,332 — 5,327 176,659 ( 227,487 ) ( 50,828 )

Redemption of MGP OP units — — 171,332 — 5,327 176,659 ( 227,487 ) ( 50,828 )

Other — — ( 8,337 ) — ( 2,473 ) ( 10,810 ) 3,457 ( 7,353 )

Balances, June 30, 2021 486,530 $ 4,865 $ 3,335,015 $ 2,861,474 $ ( 21,173 ) $ 6,180,181 $ 4,923,941 $ 11,104,122

Balances, September 30, 2021 469,728 $ 4,697 $ 2,639,804 $ 4,210,726 $ ( 25,273 ) $ 6,829,954 $ 4,831,023 $ 11,660,977

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

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Organization.

MGM Resorts International (together with its consolidated subsidiaries, unless otherwise indicated or unless the context requires otherwise, the “Company”) is a Delaware corporation that acts largely as a holding company and, through subsidiaries, operates casino resorts .

As of June 30, 2022, the Company operates the following integrated casino, hotel and entertainment resorts in Las Vegas, Nevada:

As of September 30, 2022, the Company operates domestic casino resorts, which include the following integrated casino, hotel and entertainment resorts in Las Vegas, Nevada:

Aria (including Vdara), Bellagio, The Cosmopolitan of Las Vegas ( “ The Cosmopolitan”), MGM Grand Las Vegas (including The Signature), The Mirage, Mandalay Bay, Luxor, New York-New York, Park MGM, and Excalibur.

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MGM Grand Paradise owns and operates MGM Macau and MGM Cotai, two integrated casino, hotel and entertainment resorts in Macau, as well as the related gaming subconcession and land concessions.

The Company also has an approximate 98 % controlling interest in LeoVegas AB (“LeoVegas”), a consolidated subsidiary that has global online gaming operations headquartered in Sweden and Malta.

Additionally, the Company and its venture partner, Entain plc, each have a 50 % ownership interest in BetMGM, LLC (“BetMGM”), an unconsolidated affiliate, which provides online sports betting and gaming in certain jurisdictions in North America.

MGP and the VICI Transaction.

Prior to the closing of the VICI Transaction (defined below), MGM Growth Properties LLC (“MGP”) was a consolidated subsidiary of the Company.

Substantially all of its assets were owned by and substantially all of its operations were conducted through MGM Growth Properties Operating Partnership LP (the “Operating Partnership”).

Substantially all of its assets were owned by and substantially all of its operations were conducted through MGM Growth Properties Operating Partnership LP ("MGP OP”).

MGP had two classes of common shares:

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The Company owned MGP’s Class B share, through which it held a controlling interest in MGP as it was entitled to an amount of votes representing a majority of the total voting power of MGP’s shares.

The Company and MGP each held Operating Partnership units representing limited partner interests in the Operating Partnership.

Immediately prior to the VICI Transaction, the Company owned 41.5 % of the Operating Partnership units, and MGP held the remaining 58.5 % ownership interest in the Operating Partnership.

Additionally, the Company had leased the real estate assets of certain of its domestic properties from the Operating Partnership, as further discussed in Note 14, and the real estate assets of Mandalay Bay and MGM Grand Las Vegas from a venture that was 50.1 % owned by a subsidiary of the Operating Partnership and 49.9 % by a subsidiary of Blackstone Real Estate Investment Trust, Inc.

The Company and MGP each held MGP OP units representing limited partner interests in MGP OP.

Immediately prior to the VICI Transaction, the Company owned 41.5 % of MGP OP units, and MGP held the remaining 58.5 % ownership interest in MGP OP.

Additionally, the Company had leased the real estate assets of certain of its domestic properties from MGP OP, as further discussed in Note 14, and the real estate assets of Mandalay Bay and MGM Grand Las Vegas from a venture that was 50.1 % owned by a subsidiary of MGP OP and 49.9 % by a subsidiary of Blackstone Real Estate Investment Trust, Inc.

(“BREIT”, such venture, the “VICI BREIT Venture”).

VICI Transaction.

On April 29, 2022, the Company completed a series of transactions with VICI Properties, Inc.

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Refer to Note 3 for additional information on this acquisition and Note 9 for further discussion of the lease.

LeoVegas acquisition.

On September 7, 2022, the Company acquired LeoVegas.

Refer to Note 3 for additional information on this acquisition.

The Mirage transaction.

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( “ Hard Rock”).

Upon closing, the master lease between the Company and VICI will be amended and restated.

Refer to Note 3 for additional information on this disposition.

LeoVegas transaction.

On May 2, 2022, the Company commenced a public offer to the shareholders of LeoVegas AB (publ) (“LeoVegas”) to tender 100 % of the shares of LeoVegas at a price of SEK 61 in cash per share, equivalent to a total tender offer value of approximately SEK 6.0 billion (approximately $ 583 million, based on exchange rates at June 30, 2022).

The transaction is expected to close in the third quarter of 2022, subject to certain regulatory approvals, the receipt of valid tenders of more than 90 % of LeoVegas’ shares, and customary closing conditions.

During the three months ended June 30, 2022, the Company purchased shares of LeoVegas in the open market and, as of June 30, 2022, has a 23 % ownership interest.

Gold Strike Tunica transaction.

On June 9, 2022, the Company entered into an agreement to sell the operations of Gold Strike Tunica to Cherokee Nation Entertainment Gaming Holdings, LLC (“CNE”), a subsidiary of Cherokee Nation Business.

Upon closing, the master lease between the Company and VICI will be amended and restated.

Refer to Note 3 for additional information on this disposition.

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On June 23, 2022, MGM Grand Paradise entered into an addendum to its subconcession pursuant to which its gaming subconcession was extended to December 31, 2022 (refer to Note 6 for additional considerations relating to the gaming subconcession).

In connection with the extension, MGM Grand Paradise paid the Macau government MOP 47 million (approximately $ 6 million) and will provide, within three months of the execution of the extension, a bank guarantee to secure the fulfillment of MGM Grand Paradise’s existing commitment of labor liabilities upon expiration of its subconcession (refer to Note 10 for discussion on the guarantee).

In connection with the extension, MGM Grand Paradise paid the Macau government MOP 47 million (approximately $ 6 million) and provided a bank guarantee to secure the fulfillment of MGM Grand Paradise’s existing commitment of labor liabilities upon expiration of its subconcession (refer to Note 10 for discussion on the guarantee).

Additionally, MGM Grand Paradise executed an agreement with the Macau government pursuant to which the casino areas of MGM Cotai and MGM Macau will be reverted, free of charge and without any encumbrances, to the Macau government at the end of the extended subconcession period on December 31, 2022.

Management anticipates the gaming assets subject to reversion will be assets used in gaming operations or located in a gaming area, as well as an allocation of square footage for building assets.

Management anticipates the gaming assets subject to reversion will be assets used in gaming operations, as well as the gaming areas determined in the agreement.

Upon reversion, MGM Grand Paradise will cease to have the legal ownership of the gaming assets, and, while management is currently evaluating the effect of the reversion, it expects that it will retain use of such assets if it is able to obtain a gaming concession in the forthcoming public tender.

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The enactment of the new gaming law precedes the public tender for the awarding of new gaming concessions for which the rules of the public tender were published on July 1, 2022, which outlined the details for the bidding, the qualifications of bidding companies, and the criteria for granting the new gaming concessions.

On July 28, 2022, the opening of the public tender was announced with a deadline for the submission of bids of September 14, 2022.

MGM China intends to respond proactively and believes it will be in a position to satisfy the relevant requirements relating to the tender process.

On September 14, 2022, MGM Grand Paradise submitted its bid.

The awarding of a new concession contract would permit the operation of games of chance or other games in casinos in Macau, commencing on January 1, 2023.

Certain events relating to the loss, termination, rescission, revocation or modification of MGM Grand Paradise’s ability to game in Macau, where such events have a material adverse effect on the financial condition, business, properties, or results of operations of MGM China, taken as a whole, may result in a special put option triggering event under MGM China’s senior notes and in an event of default under MGM China’s revolving credit facilities.

Management cannot provide any assurance that it will be able to obtain a gaming concession in the public tender;

however, management believes that MGM Grand Paradise will be successful in obtaining a gaming concession when the public tender is held.

The Company owns 50 % of BetMGM, LLC (“BetMGM”), which provides online sports betting and iGaming in certain jurisdictions in North America.

The other 50 % of BetMGM is owned by Entain plc.

however, management believes that MGM Grand Paradise will be successful in obtaining a gaming concession.

Reportable segments.

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Impact of COVID-19 - Update.

As of June 30, 2022, all of the Company’s domestic properties were open and not subject to operating restrictions;

As of September 30, 2022, all of the Company’s domestic properties were open and not subject to operating restrictions;

however, travel and business volume were negatively affected in the early part of the first quarter of 2022 due to the spread of the omicron variant.

Macau is currently operating under a “dynamic zero” COVID-19 policy, as is Hong Kong and mainland China.

The Company’s properties in Macau were open during the first half of 2022, however, gaming operations were temporarily suspended on July 11, 2022 due to an increase in the number of COVID-19 cases in Macau and resumed on July 23, 2022, subject to certain continuing health safeguards, with most restaurants and bars and certain retail outlets remaining closed.

Several travel and entry restrictions in Macau, Hong Kong and mainland China remain in place, including entry bans, visa limitations, COVID-19 testing, and certain quarantine requirements, which have significantly impacted visitation to the Company’s Macau properties.

Although gaming operations have resumed, protective and operational measures have had a negative effect on MGM China’s operations.

The extent and timing of a closure of the MGM China’s properties, limitations of operations, or whether further travel restrictions to or from Macau will be implemented is uncertain if there is an increase or continued spread of COVID-19.

Macau is currently operating under a “dynamic zero” COVID-19 policy, as is mainland China.

On October 30, 2022, a COVID-19 case was identified as connected to MGM Cotai.

All guests and staff were isolated until November 1, 2022 and all gaming, hotel, restaurant, and retail operations were suspended with limited operations expected to resume beginning November 3, 2022.

More broadly, electronic applications for individual and group travel visas to Macau resumed on November 1, 2022, however, several travel and entry restrictions in Macau and mainland China remain in place, including COVID-19 testing and certain quarantine requirements, which have significantly impacted visitation to the Company’s Macau properties.

Although gaming operations in Macau have resumed and certain restrictions on visa applications have been lifted, protective and operational measures have had a negative effect on MGM China’s operations.

The extent and timing of further closures of MGM China’s properties, limitations of operations, or whether further travel restrictions to or from Macau will be implemented is uncertain if there is an increase or continued spread of COVID-19.

NOTE 2 — BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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The Company performs this analysis on an ongoing basis.

Management has determined that the venture that is 5 % owned by a subsidiary of the Company and 95 % owned by a subsidiary of BREIT, (such venture, the “Bellagio BREIT Venture”), is a VIE because the equity holders as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance.

Management has determined that the venture (the “Bellagio BREIT Venture”) that is 5 % owned by a subsidiary of the Company and 95 % owned by a subsidiary of BREIT is a VIE because the equity holders as a group lack the power through voting or similar rights to direct the activities of such entity that most significantly impact such entity’s economic performance.

The Company has determined that it is not the primary beneficiary of Bellagio BREIT Venture because the Company does not have power to direct the activities that could potentially be significant to the venture as BREIT, as the managing member, has such power;

accordingly, the Company does not consolidate the venture.

The Company’s maximum exposure to loss in Bellagio BREIT Venture is equal to the carrying value of its investment of $ 57 million as of June 30, 2022, assuming no future capital funding requirements, plus the exposure to loss resulting from the Company’s guarantee of the debt of Bellagio BREIT Venture, which guarantee is immaterial as of June 30, 2022, as further discussed in Note 10.

The Company’s maximum exposure to loss in Bellagio BREIT Venture is equal to the carrying value of its investment of $ 57 million as of September 30, 2022, assuming no future capital funding requirements, plus the exposure to loss resulting from the Company’s guarantee of the debt of Bellagio BREIT Venture, which guarantee is immaterial as of September 30, 2022, as further discussed in Note 10.

For entities determined not to be a VIE, the Company consolidates such entities in which the Company owns 100 % of the equity.

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For entities over which the Company does not have significant influence, such as VICI OP, the Company accounts for its equity investment under ASC 321.

Property and equipment.

As of September 30, 2022 and December 31, 2021, the Company had accrued $ 83 million and $ 36 million, respectively, for purchases of property and equipment within accounts payable.

Fair value measurements .

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• Level 1, Level 2, and Level 3 inputs when assessing the fair value of assets acquired and liabilities assumed in acquisitions.

Fair value is measured based upon trading prices on the applicable securities exchange for equity investments for which the Company has elected the fair value option of ASC 825, such as LeoVegas, and equity investments accounted for under ASC 321, such as VICI OP.

The fair value of these investments was $ 571 million and $ 66 million as of June 30, 2022 and December 31, 2021, respectively, and is reflected within “Other long-term assets, net” on the consolidated balance sheets.

Fair value is measured based upon trading prices on the applicable securities exchange for equity investments for which the Company has elected the fair value option of ASC 825, such as LeoVegas (prior to consolidation), and equity investments accounted for under ASC 321 that have a readily determinable fair value, such as VICI OP.

The fair value of these investments was $ 423 million and $ 66 million as of September 30, 2022 and December 31, 2021, respectively, and is reflected within “Other long-term assets, net” on the consolidated balance sheets.

Unrealized gains and losses are recorded in “Other, net” in the statements of operations.

For the three and six months ended June 30, 2022, the Company recorded a net unrealized loss of $ 23 million and $ 8 million, respectively.

For each of the three and six months ended June 30, 2021, the Company recorded a net unrealized gain of $ 86 million.

For the three and nine months ended September 30, 2022, the Company recorded a net unrealized loss on its equity investments of $ 20 million and $ 28 million, respectively.

For the three and nine months ended September 30, 2021, the Company recorded a net unrealized loss on its equity investments of $ 48 million and a net unrealized gain on its equity investments of $ 39 million, respectively.

Restricted cash.

Restricted cash reflects cash held in an escrow account related to the reverse termination fee that was contractually required to be prefunded for The Cosmopolitan acquisition and is reflected as “Restricted Cash” on the consolidated balance sheets as of December 31, 2021.

Restricted cash reflects cash held in an escrow account related to the reverse termination fee that was contractually required to be prefunded for The Cosmopolitan acquisition and was reflected as “Restricted Cash” on the consolidated balance sheets as of December 31, 2021.

“Restricted Cash” and “Cash and cash equivalents” on the consolidated balance sheets equal “Cash, cash equivalents, and restricted cash” on the consolidated statements of cash flows as of December 31, 2021.

Accounts receivable.

As of June 30, 2022 and December 31, 2021, the loss reserve on accounts receivable was $ 113 million and $ 128 million, respectively.

As of September 30, 2022 and December 31, 2021, the loss reserve on accounts receivable was $ 113 million and $ 128 million, respectively.

Reclassifications.

Certain reclassifications have been made to conform the prior period presentation.

Revenue recognition.

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Balance at January 1 $ 176,219 $ 212,671 $ 144,465 $ 139,756 $ 640,001 $ 382,287

Balance at June 30 165,564 144,975 160,752 136,659 704,404 513,971

Balance at September 30 156,560 177,066 175,716 142,969 747,505 662,096

Increase / (decrease) $ ( 19,659 ) $ ( 35,605 ) $ 31,251 $ 3,213 $ 107,504 $ 279,809

The June 30, 2022 balances exclude liabilities related to assets held for sale.

The September 30, 2022 balances exclude liabilities related to assets held for sale.

Revenue by source.

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The Company classifies a lease with terms greater than twelve months as either operating or finance.

At commencement date, the right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term.

The initial measurement of the operating lease ROU assets also includes any prepaid lease payments and are reduced by any previously accrued deferred rent.

At commencement, the right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term.

The initial measurement of ROU assets also includes any prepaid lease payments and are reduced by any previously accrued deferred rent.

When available, such as for the Company’s triple-net operating leases for which the lessor has provided its implicit rate or provided the assumptions required for the Company to readily determine the rate implicit in the lease, the Company uses the rate implicit in the lease to discount lease payments to present value.

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Lease revenues earned by the Company from third parties are classified within the line item corresponding to the type or nature of the tenant’s good or service .

During the three and six months ended June 30, 2022, lease revenues from third-party tenants include $ 19 million and $ 33 million recorded within food and beverage revenue, respectively, and $ 29 million and $ 55 million recorded within entertainment, retail, and other revenue for the same such periods, respectively.

During the three and six months ended June 30, 2021, lease revenues from third-party tenants include $ 11 million and $ 16 million recorded within food and beverage revenue, respectively, and $ 20 million and $ 36 million recorded within entertainment, retail, and other revenue for the same such periods, respectively.

For the three and nine months ended September 30, 2022, lease revenues from third-party tenants include $ 19 million and $ 52 million recorded within food and beverage revenue, respectively, and $ 30 million and $ 85 million recorded within entertainment, retail, and other revenue for the same such periods, respectively.

For the three and nine months ended September 30, 2021, lease revenues from third-party tenants include $ 13 million and $ 29 million recorded within food and beverage revenue, respectively, and $ 22 million and $ 58 million recorded within entertainment, retail, and other revenue for the same such periods, respectively.

Lease revenues from the rental of hotel rooms are recorded as rooms revenues within the consolidated statements of operations.

Share repurchases.

Shares repurchased pursuant to the Company’s share repurchase programs are retired upon purchase.

Shares repurchased pursuant to the Company’s share repurchase plans are retired upon purchase.

The cost of the repurchases in excess of the aggregate par value of the shares reduces capital in excess of par value, to the extent available, with any residual cost applied against retained earnings .

NOTE 3 — ACQUISITIONS AND DIVESTITURES

LeoVegas acquisition.

On May 2, 2022, the Company commenced a public offer to the shareholders of LeoVegas to tender 100 % of the shares at a price of SEK 61 in cash per share.

On September 7, 2022, the Company completed its tender offer and acquired 65 % of the outstanding shares of LeoVegas and, at the completion of an extended acceptance period on September 22, 2022, acquired an additional 2 % of outstanding shares, for an aggregate cash tender price of $ 370 million.

During the tender offer period, the Company had acquired 31 % of outstanding shares in open market purchases that had an acquisition-date fair value of approximately $ 172 million.

As the Company’s previous 31 % ownership interest was accounted for at fair value, no gain or loss was recorded upon consolidation.

The remaining outstanding shares, with a fair value of approximately $ 11 million based upon the tender price, will be settled by the Company in cash in connection with squeeze-out proceedings.

The acquisition provides the Company an opportunity to create a scaled global online gaming business.

The Company recognized 100 % of the assets, liabilities, and noncontrolling interests of LeoVegas at fair value at the date of the acquisition.

The fair value of the acquired equity interests of LeoVegas was determined by the tender price and equaled $ 556 million, inclusive of cash settlement of equity awards.

Under the acquisition method, the fair value was

allocated to the assets acquired, liabilities assumed, and noncontrolling interests.

T he Company estimated fair value using level 1 inputs, level 2 inputs, and level 3 inputs.

The estimated fair values of the identified intangible assets were determined using methodologies under the income approach based on significant inputs that were not observable.

The intangible assets include trademarks, which is an indefinite-lived intangible asset, and customer lists and technology, which are finite-lived intangibles that are amortized over each of their estimated useful lives of five years .

Goodwill is primarily attributable to the profitability of LeoVegas in excess of identifiable assets as well as expected synergies and is not deductible for tax purposes.

All of the goodwill was assigned to Corporate and other.

The allocation of fair value is preliminary as of September 30, 2022 and is primarily open for the valuation of the acquired intangible assets and for income tax impacts, and may be adjusted up to one year after the acquisition.

The following table sets forth the preliminary purchase price allocation (in thousands):

Cash and cash equivalents $ 93,407

Receivables and other current assets 36,872

Technology 126,162

Trademarks 166,356

Customer lists 140,843

Goodwill 238,040

Other long-term assets 19,181

Accounts payable, accrued liabilities, and other current liabilities ( 118,302 )

Debt ( 104,439 )

Other long-term liabilities ( 39,564 )

Noncontrolling interests ( 2,861 )

The operating results for LeoVegas are included in the consolidated statements of operations from the date of acquisition.

LeoVegas’s net revenue for the period from September 7, 2022 through September 30, 2022 was $ 31 million and operating loss and net loss were $ 3 million and $ 4 million, respectively.

The Cosmopolitan acquisition.

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The Company estimated fair value using level 1 inputs, level 2 inputs, and level 3 inputs.

As the transaction was recently consummated on May 17, 2022, the allocation of fair value for substantially all of the assets and liabilities is preliminary as of June 30, 2022, and may be adjusted up to one year after the acquisition.

The estimated fair values of the identified intangible assets were determined using methodologies under the income approach based on significant inputs that were not observable.

The intangible assets include trademarks, which is an indefinite-lived intangible asset, and customer lists, which is amortized over its estimated useful life of seven years .

Goodwill, which is deductible for tax purposes, is primarily attributable to the profitability of The Cosmopolitan in excess of identifiable assets as well as expected synergies.

All of the goodwill was assigned to the Company’s Las Vegas Strip Resorts segment.

As of September 30, 2022, the purchase price allocation is preliminary, however, the Company does not expect material changes to the value of the assets acquired or liabilities assumed.

The following table sets forth the preliminary purchase price allocation (in thousands):

Fair value of assets acquired and liabilities assumed:

Cash and cash equivalents $ 80,670

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Other long-term liabilities ( 1,570 )

The estimated fair values of the intangible assets were determined using methodologies under the income approach based on significant inputs that were not observable.

The identified intangible assets include trademarks, which is an indefinite-lived intangible asset, and customer lists, which is amortized over its estimated useful life of seven years .

Goodwill, which is deductible for tax purposes, is primarily attributable to the profitability of The Cosmopolitan in excess of identifiable assets as well as expected synergies.

All of the goodwill was assigned to the Company’s Las Vegas Strip Resorts segment.

The operating results for The Cosmopolitan are included in the accompanying consolidated statements of operations from the date of acquisition.

The Cosmopolitan’s net revenue for the period from May 17, 2022 through June 30, 2022 was $ 151 million and operating income and net income were $ 18 million and $ 18 million, respectively.

The operating results for The Cosmopolitan are included in the consolidated statements of operations from the date of acquisition.

The Cosmopolitan’s net revenue for the period from May 17, 2022 through September 30, 2022 was $ 465 million and operating income and net income were each $ 57 million.

CityCenter acquisition.

2 unchanged sentences

Through the acquisition, the Company obtained 100 % of the equity interests and therefore consolidated CityCenter as of September 27, 2021.

The fair value of the equity interests of CityCenter was determined by the transaction price and equaled $ 4.25 billion.

The fair value of the equity interests was determined by the transaction price and equaled $ 4.25 billion.

The carrying value of the Company's equity method investment was less than its share of the fair value of CityCenter at the acquisition date, resulting in a net gain of $ 1.6 billion upon consolidation, which was recognized as "Gain on consolidation of CityCenter, net" on the consolidated statements of operations.

On September 28, 2021, the Company sold the real estate assets of Aria (including Vdara) for cash consideration of $ 3.89 billion and entered into a lease agreement pursuant to which the Company leases back the real property.

4 unchanged sentences

The Company estimated fair value using level 1 inputs, level 2 inputs, and level 3 inputs.

The fair value of the acquired indefinite-lived trademarks was determined using methodologies under the relief from royalty method based on significant inputs that were not observable.

The goodwill is primarily attributable to the profitability of CityCenter in excess of identifiable assets, of which approximately 50 % of the goodwill is deductible for income tax purposes.

All of the goodwill was assigned to the Company’s Las Vegas Strip Resorts segment.

The following table sets forth the purchase price allocation (in thousands):

Fair value of assets acquired and liabilities assumed:

Cash and cash equivalents $ 335,396

8 unchanged sentences

Other long-term liabilities ( 64,054 )

The fair value of the acquired indefinite-lived trademarks was determined using methodologies under the relief from royalty method based on significant inputs that were not observable.

The goodwill is primarily attributable to the profitability of CityCenter in excess of identifiable assets, of which approximately 50 % of the goodwill is deductible for income tax purposes.

All of the goodwill was assigned to the Company’s Las Vegas Strip Resorts segment.

Unaudited pro forma information - CityCenter and The Cosmopolitan acquisitions .

2 unchanged sentences

The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of the indicated date.

Pro forma results of operations for the LeoVegas acquisition have not been included because it is not material to the consolidated results of operations.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

On April 29, 2022, VICI acquired MGP in a stock-for-stock transaction.

MGP Class A shareholders received 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and the Company received 1.366 units of VICI OP in exchange for each Operating Partnership unit held by the Company.

The fixed exchange ratio represents an agreed upon price of $ 43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021.

5 unchanged sentences

In connection with the transactions, the Company recognized a $ 2.3 billion gain recorded within “Gain on REIT transactions, net.” The gain reflects the fair value of consideration received of $ 4.8 billion plus the carrying amount of noncontrolling interest immediately prior to the transactions of $ 3.2 billion less the carrying value of the assets and liabilities and accumulated comprehensive income derecognized of $ 5.7 billion.

The major classes of assets and liabilities derecognized are as follows:

(In thousands)

The major classes of assets and liabilities derecognized are as follows (in thousands):

Cash and cash equivalents $ 25,387

14 unchanged sentences

On December 13, 2021, the Company entered into an agreement to sell the operations of The Mirage to an affiliate of Hard Rock for cash consideration of $ 1.075 billion, subject to certain purchase price adjustments.

Upon closing, the master lease between the Company and VICI will be amended and restated to reflect a $ 90 million reduction in annual cash rent.

Upon closing, the master lease between the Company and VICI will be amended to remove The Mirage and to reflect a $ 90 million reduction in annual cash rent.

The transaction is expected to close during the fourth quarter of 2022, subject to certain closing conditions, including, but not limited to, the receipt of regulatory approvals.

The closing condition that the VICI Transaction is consummated or terminated was resolved upon the closing of such transaction and, accordingly, the asset group is classified as held for sale as of June 30, 2022.

Gold Strike Tunica.

On June 9, 2022, the Company entered into an agreement to sell the operations of Gold Strike Tunica to CNE for cash consideration of $ 450 million, subject to certain purchase price adjustments.

Upon closing, the master lease between the Company and VICI will be amended and restated to reflect a $ 40 million reduction in annual cash rent.

Upon closing, the master lease between the Company and VICI will be amended to remove Gold Strike Tunica and to reflect a $ 40 million reduction in annual cash rent.

The transaction is expected to close during the first quarter of 2023, subject to certain closing conditions, including, but not limited to, the receipt of regulatory approvals.

The asset group is classified as held for sale as of June 30, 2022.

The asset group is classified as held for sale as of September 30, 2022.

The Mirage and Gold Strike Tunica are not classified as discontinued operations because the Company concluded that the sales are not a strategic shift that have a major effect on the Company’s operations or its financial results and they do not represent a major geographic segment or product line.

The major classes of assets and liabilities classified as held for sale as of June 30, 2022 are as follows:

The major classes of assets and liabilities classified as held for sale as of September 30, 2022 are as follows:

The Mirage Gold Strike Tunica

17 unchanged sentences

Property and equipment, net consisted of the following:

September 30,

2022 December 31,

10 unchanged sentences

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

September 30,

2022 December 31,

(In thousands)

VICI BREIT Venture ( 50.1 % owned by the Operating Partnership through April 28, 2022)

VICI BREIT Venture ( 50.1 % owned by MGP OP through April 28, 2022)

$ — $ 816,756

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

5 unchanged sentences

$ ( 17,467 ) $ 35,111 $ ( 119,888 ) $ 92,870

Refer to Note 3 for discussion of the acquisition and consolidation of CityCenter in September 2021 and for discussion of the derecognition of the assets and liabilities of MGP, which included the Operating Partnership’s investment in VICI BREIT Venture, in April 2022.

Refer to Note 3 for discussion of the acquisition and consolidation of CityCenter in September 2021 and for discussion of the derecognition of the assets and liabilities of MGP, which included MGP OP’s investment in VICI BREIT Venture, in April 2022.

VICI BREIT Venture distributions.

For the three and six months ended June 30, 2022, the Operating Partnership received $ 8 million and $ 32 million in distributions, respectively.

For the three and six months ended June 30, 2021, the Operating Partnership received $ 32 million and $ 47 million in distributions, respectively.

For the nine months ended September 30, 2022, MGP OP received $ 32 million in distributions.

For the three and nine months ended September 30, 2021, MGP OP received $ 24 million and $ 70 million in distributions, respectively.

BetMGM contributions.

For the three and six months ended June 30, 2022, the Company contributed $ 25 million and $ 150 million to BetMGM, respectively.

For the three and six months ended June 30, 2021, the Company contributed $ 25 million and $ 100 million to BetMGM, respectively.

For the three and nine months ended September 30, 2022, the Company contributed $ 50 million and $ 200 million to BetMGM, respectively.

For the three and nine months ended September 30, 2021, the Company contributed $ 50 million and $ 150 million to BetMGM, respectively.

CityCenter sale of Harmon land.

In June 2021, CityCenter closed the sale of its Harmon land for $ 80 million on which it recorded a $ 30 million gain.

The Company recorded a $ 50 million gain, which included $ 15 million of its 50 % share of the gain recorded by CityCenter and $ 35 million representing the reversal of certain basis differences.

NOTE 6 — GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets consisted of the following:

September 30,

2022 December 31,

2 unchanged sentences

Indefinite-lived intangible assets:

Detroit development rights $ 98,098 $ 98,098

MGM Northfield Park and Empire City racing and gaming licenses 280,000 280,000

Trademarks and other 600,443 479,238

Trademarks $ 762,969 $ 479,238

Gaming rights and other 384,593 378,098

Total indefinite-lived intangible assets 1,147,562 857,336

3 unchanged sentences

1,216,554 2,651,313

MGM National Harbor and MGM Springfield gaming licenses 106,600 106,600

Customer lists 285,841 52,000

Accumulated amortization ( 47,314 ) ( 32,188 )

238,527 19,812

Other finite-lived intangible assets 159,839 65,207

Other gaming rights 106,600 106,600

Accumulated amortization ( 31,539 ) ( 26,209 )

75,061 80,391

Technology and other 136,051 13,207

Accumulated amortization ( 7,592 ) ( 5,674 )

128,459 7,533

Total finite-lived intangible assets, net 1,658,601 2,759,049

Total other intangible assets, net $ 2,806,163 $ 3,616,385

A summary of changes in the Company’s goodwill by reportable segment is as follows for the six months ended June 30, 2022 and twelve months ended December 31, 2021:

Balance at January 1 Acquisitions Reclassifications Currency exchange Balance at June 30

A summary of changes in the Company’s goodwill is as follows:

Balance at January 1 Acquisitions Reclassifications Currency exchange Balance at September 30

(In thousands)

Goodwill, net by segment:

Las Vegas Strip Resorts $ 1,427,790 $ 1,289,468 $ ( 10,249 ) $ — $ 2,707,009

1 unchanged sentence

MGM China 1,351,744 — — ( 9,163 ) 1,342,581

Corporate and other — 238,040 — ( 3,382 ) 234,658

$ 3,480,997 $ 1,527,508 $ ( 50,772 ) $ ( 12,545 ) $ 4,945,188

1 unchanged sentence

(In thousands)

Goodwill, net by segment:

Las Vegas Strip Resorts $ 30,452 $ 1,397,338 $ — $ — $ 1,427,790

2 unchanged sentences

$ 2,091,278 $ 1,397,338 $ — $ ( 7,619 ) $ 3,480,997

Goodwill was recognized in 2022 related to the acquisition of the operations of The Cosmopolitan, which is included in Las Vegas Strip Resorts.

Goodwill was recognized in 2022 related to the acquisition of the operations of The Cosmopolitan and LeoVegas, which is included in Las Vegas Strip Resorts and Corporate and other, respectively.

Goodwill related to The Mirage and Gold Strike Tunica, which are included in Las Vegas Strip Resorts and Regional Operations, respectively, were reclassified into assets held for sale in 2022 as further discussed in Note 3.

5 unchanged sentences

The Company compared the estimated undiscounted cash flows of the asset group to its carrying value and determined that the undiscounted cash flows significantly exceeded the carrying value and therefore, no impairment was indicated.

Additionally, the Company reassessed the useful life of the existing gaming subconcession intangible asset and determined that, given the new gaming law and the resulting changes described above, the useful life would no longer be based on the initial term of the MGM Cotai land concession, which ends in January 2038, and that the useful life should be revised to align with the cessation of the subconcession rights that will occur at the end of the contractual term of the existing gaming subconcession, which ends on December 31, 2022.

Additionally, in June 2022, the Company reassessed the useful life of the existing gaming subconcession intangible asset and determined that, given the new gaming law and the resulting changes described above, the useful life would no longer be based on the initial term of the MGM Cotai land concession, which ends in January 2038, and that the useful life should be revised to align with the cessation of the subconcession rights that will occur at the end of the contractual term of the existing gaming subconcession, which ends on December 31, 2022.

Accordingly, amortization of the MGM Grand Paradise gaming subconcession will be recognized on a straight-line basis over its reduced useful life.

1 unchanged sentence

Long-term debt consisted of the following:

September 30,

2022 December 31,

(In thousands)

Operating Partnership senior secured credit facility $ — $ 50,000

MGP OP senior secured credit facility $ — $ 50,000

MGM China first revolving credit facility 1,242,070 360,414

MGM China second revolving credit facility 12,739 —

LeoVegas revolving credit facility 39,206 —

LeoVegas senior notes, due 2023

7.75 % senior notes, due 2022

1 unchanged sentence

1,250,000 1,250,000

5.625 % Operating Partnership senior notes, due 2024

5.625 % MGP OP senior notes, due 2024

5.375 % MGM China senior notes, due 2024

4 unchanged sentences

675,000 675,000

4.625 % Operating Partnership senior notes, due 2025

4.625 % MGP OP senior notes, due 2025

5.25 % MGM China senior notes, due 2025

2 unchanged sentences

750,000 750,000

4.5 % Operating Partnership senior notes, due 2026

4.5 % MGP OP senior notes, due 2026

4.625 % senior notes, due 2026

400,000 400,000

5.75 % Operating Partnership senior notes, due 2027

5.75 % MGP OP senior notes, due 2027

5.5 % senior notes, due 2027

2 unchanged sentences

750,000 750,000

4.5 % Operating Partnership senior notes, due 2028

4.5 % MGP OP senior notes, due 2028

4.75 % senior notes, due 2028

750,000 750,000

3.875 % Operating Partnership senior notes, due 2029

3.875 % MGP OP senior notes, due 2029

7 % debentures, due 2036

5 unchanged sentences

Senior secured credit facility.

At June 30, 2022, the Company’s senior secured credit facility consisted of a $ 1.675 billion revolving credit facility, of which no amounts were drawn.

At September 30, 2022, the Company’s senior secured credit facility consisted of a $ 1.675 billion revolving credit facility, of which no amounts were drawn.

The Company’s senior secured credit facility contains customary representations and warranties, events of default and positive and negative covenants.

The Company was in compliance with its credit facility covenants at June 30, 2022.

The Company was in compliance with its credit facility covenants at September 30, 2022.

MGM China first revolving credit facility.

At June 30, 2022, the MGM China first revolving credit facility consisted of a $ 1.25 billion unsecured revolving credit facility.

At June 30, 2022, $ 1.2 billion was drawn on the MGM China first revolving credit facility and the weighted average interest rate was 3.48 %.

At September 30, 2022, the MGM China first revolving credit facility consisted of a HK$ 9.75 billion unsecured revolving credit facility, which was fully drawn.

At September 30, 2022, the weighted average interest rate was 5.23 %.

The MGM China first revolving credit facility contains customary representations and warranties, events of default, and positive, negative and financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest coverage ratio.

In February 2022, MGM China further amended its first revolving credit facility to extend the financial covenant waivers through maturity in May 2024.

MGM China was in compliance with its applicable MGM China first revolving credit facility covenants at June 30, 2022.

In February 2022, MGM China further amended its first revolving credit

facility to extend the financial covenant waivers through maturity in May 2024.

MGM China was in compliance with its applicable first revolving credit facility covenants at September 30, 2022.

MGM China second revolving credit facility.

At June 30, 2022, the MGM China second revolving credit facility consisted of a $ 400 million unsecured revolving credit facility with an option to increase the amount of the facility up to $ 500 million, subject to certain conditions.

Draws will be subject to satisfaction of certain conditions precedent, including

evidence that the MGM China first revolving credit facility has been fully drawn.

At June 30, 2022, no amounts were drawn on the MGM China second revolving credit facility.

At September 30, 2022, the MGM China second revolving credit facility consisted of a HK$ 3.12 billion unsecured revolving credit facility with an option to increase the amount of the facility up to HK$ 3.9 billion, subject to certain conditions.

Draws will be subject to satisfaction of certain conditions precedent, including evidence that the MGM China first revolving credit facility has been fully drawn.

At September 30, 2022, $ 13 million was drawn on the MGM China second revolving credit facility and the weighted average interest rate was 4.81 %.

The MGM China second revolving credit facility contains customary representations and warranties, events of default, and positive, negative and financial covenants, including that MGM China maintains compliance with a maximum leverage ratio and a minimum interest coverage ratio.

In February 2022, MGM China further amended its second revolving credit facility to extend the financial covenant waivers through maturity in May 2024.

MGM China was in compliance with its applicable MGM China second revolving credit facility covenants at June 30, 2022.

MGM China was in compliance with its applicable second revolving credit facility covenants at September 30, 2022.

LeoVegas revolving credit facility.

As of September 30, 2022, the LeoVegas revolving credit facility consisted of a € 40 million revolving facility, which was fully drawn.

The revolving credit facility matures on November 27, 2023 and has an interest rate based on Euro Interbank Offered Rate plus 250 basis points.

As of September 30, 2022, the interest rate was 3.67 %.

The LeoVegas revolving credit facility contains customary representations and warranties, events of default, and positive, negative, and financial covenants, including compliance with a maximum leverage ratio and minimum interest coverage ratio.

LeoVegas was in compliance with its applicable revolving credit facility covenants at September 30, 2022.

The revolving credit facility contains a change-of-control provision which requires repayment of the facility, together with accrued interest, within 60 days following a change-of-control event.

As the Company’s acquisition of LeoVegas triggers the change-of-control provision, the revolving credit facility is classified as current.

Senior notes.

2 unchanged sentences

In March 2021, MGM China issued $ 750 million in aggregate principal amount of 4.75 % senior notes due 2027 at an issue price of 99.97 %.

Operating Partnership senior secured credit facility and Operating Partnership senior notes.

In April 2022, the Operating Partnership senior secured credit facility and the senior notes of the Operating Partnership were derecognized in connection with the deconsolidation of MGP as a result of the VICI Transaction.

In March 2022, the Operating Partnership terminated its interest rate swap agreements.

MGP OP senior secured credit facility and MGP OP senior notes.

In April 2022, the MGP OP senior secured credit facility and the senior notes of MGP OP were derecognized in connection with the deconsolidation of MGP as a result of the VICI Transaction.

In March 2022, MGP OP terminated its interest rate swap agreements.

LeoVegas senior unsecured notes.

As of September 30, 2022, LeoVegas had senior unsecured notes of SEK 700 million in aggregate principal outstanding and have an option to increase the issuance to SEK 800 million.

The notes mature on December 10, 2023 with interest payable quarterly in arrears at an interest rate based on Stockholm Interbank Offered Rate plus 550 basis points.

As of September 30, 2022, the interest rate was 6.98 %.

The LeoVegas senior unsecured notes contains customary representations and warranties, events of default, and positive, negative, and financial covenants, including compliance with a maximum leverage ratio.

LeoVegas was in compliance with its applicable senior unsecured notes covenants at September 30, 2022.

The senior unsecured notes contain a change-of-control provision which provides for the holders to request that all or a portion of the principal amount held be repurchased at a price of 101 %, together with accrued interest, during a period of 60 days following notice.

As the Company’s acquisition of LeoVegas triggers the change-of-control provision, the senior unsecured notes are classified as current.

Fair value of long-term debt.

The estimated fair value of the Company’s long-term debt was $ 7.5 billion and $ 13.4 billion at June 30, 2022 and December 31, 2021, respectively.

The estimated fair value of the Company’s long-term debt was $ 7.8 billion and $ 13.4 billion at September 30, 2022 and December 31, 2021, respectively.

Fair value was estimated using quoted market prices for the Company’s senior notes and credit facilities.

2 unchanged sentences

The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

The Company’s effective income tax rate was a provision of 26.1 % and 25.3 % on income before income taxes for the three and six months ended June 30, 2022, respectively, compared to a provision of 27.8 % on income before income taxes and a benefit of 19.6 % on loss before income taxes for the three and six months ended June 30, 2021.

The Company’s effective income tax rate was a benefit of 10.6 % on loss before income taxes and a provision of 43.8 % on income before income taxes for the three and nine months ended September 30, 2022, respectively, compared to a provision of 17.4 % and 16.9 % on income before income taxes for the three and nine months ended September 30, 2021, respectively.

The Company recognizes deferred income tax assets, net of applicable reserves, related to net operating losses, tax credit carryforwards and certain temporary differences.

1 unchanged sentence

Otherwise, a valuation allowance is applied.

During the three and six months ended June 30, 2022, the Company increased its valuation allowance for Macau deferred tax assets by $ 90 million primarily as a result of the reassessment of the useful life of the MGM Grand Paradise gaming subconcession, with a corresponding increase to provision for income taxes, and decreased its state deferred tax liabilities by $ 37 million as a result of the VICI Transaction, with a corresponding decrease to provision for income taxes.

During the six months ended June 30, 2022, the Company reversed $ 13 million of unrecognized tax benefit upon the resolution of a tax accounting method issue related to its customer loyalty program.

During the three months ended September 30, 2022, the Company decreased its Macau deferred tax liabilities by $ 296 million as a result of an extension of the exemption from the Macau 12% complementary tax to the end of the year, with a corresponding decrease to provision for income taxes and increased its state deferred tax liabilities by $ 59 million with a corresponding increase to provision for income taxes as a result of income tax regulations published by the state of New Jersey during the quarter.

During the nine months ended September 30, 2022, the Company decreased its Macau deferred tax liabilities by $ 227 million as a result of the extension of the exemption from the Macau 12% complementary tax to the end of the year and the impact of the reassessment of the useful life of the MGM Grand Paradise gaming subconcession and increased its state deferred tax liabilities by $ 14 million due to the increase resulting from the issuance of the New Jersey income tax regulations, partially offset by a decrease resulting from the VICI Transaction, with a corresponding increase to provision for income taxes.

During the nine months ended September 30, 2022, the Company reversed $ 13 million of unrecognized tax benefit upon the resolution of a tax accounting method issue related to its customer loyalty program.

NOTE 9 — LEASES

3 unchanged sentences

The triple-net structure of the leases requires the Company to pay substantially all costs associated with each property, including real estate taxes, insurance, utilities and routine maintenance (with each lease obligating the Company to spend a specified percentage of net revenues at the properties on capital expenditures), in addition to the annual cash rent.

Each of the leases also obligates the Company to comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to 6 months or 1 year of rent, as applicable to the circumstances, under the VICI lease, 1 year of rent under the Mandalay Bay and MGM Grand Las Vegas lease, the Aria lease, and The

Cosmopolitan lease, and 2 years of rent under the Bellagio lease.

The Company was in compliance with its applicable covenants under its leases as of June 30, 2022.

Each of the leases also requires the Company to comply with certain financial covenants, which, if not met, would require the Company to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to 6 months or 1 year of rent, as applicable to the circumstances, under the VICI lease, 1 year of rent under the Mandalay Bay and MGM Grand Las Vegas lease, the Aria lease, and The Cosmopolitan lease, and 2 years of rent under the Bellagio lease.

The Company was in compliance with its applicable covenants under its leases as of September 30, 2022.

Bellagio lease .

4 unchanged sentences

The Company leases the real estate assets of Mandalay Bay and MGM Grand Las Vegas from VICI BREIT Venture.

The Mandalay Bay and MGM Grand Las Vegas lease commenced February 14, 2020 and has an initial term of 30 years with two 10 -year renewal periods, exercisable at the Company’s option, with a fixed 2 % rent escalator for the first 15 years and, thereafter, an escalator equal to the greater of 2 % and the CPI increase during the prior year, subject to a cap of 3 %.

CPI increase during the prior year, subject to a cap of 3 %.

Annual cash rent payments for the third lease year that commenced on March 1, 2022 increased to $ 304 million as a result of the 2 % fixed annual escalator.

1 unchanged sentence

The Aria lease commenced September 28, 2021 and has an initial term of 30 years with three 10 -year renewal periods, exercisable at the Company’s option, with a fixed 2 % rent escalator for the first 15 years, and thereafter, an escalator equal to the greater of 2 % and the CPI increase during the prior year, subject to a cap of 3 %.

Annual cash rent payments for the first lease year that commenced on September 28, 2021 was $ 215 million.

Annual cash rent payments for the second lease year that commenced on October 1, 2022 increased to $ 219 million as a result of the 2 % fixed annual escalator.

The VICI lease and ground subleases.

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

(1) The Bellagio lease is held with a related party, as further discussed in Note 14.

Operating lease cost includes $ 83 million for each of the three months ended June 30, 2022 and 2021 and $ 166 million for each of the six months ended June 30, 2022 and 2021 related to the Bellagio lease.

(2) For the three and six months ended June 30, 2021, interest expense includes the effect of COVID-19 related rent concessions which was recognized as negative variable rent expense.

Operating lease cost includes $ 83 million for each of the three months ended September 30, 2022 and 2021 and $ 248 million for each of the nine months ended September 30, 2022 and 2021 related to the Bellagio lease.

(2) For the three and nine months ended September 30, 2021, interest expense includes the effect of COVID-19 related rent concessions which was recognized as negative variable rent expense.

September 30,

2022 December 31,

Supplemental balance sheet information (In thousands)

(In thousands)

Operating leases

2 unchanged sentences

Operating lease liabilities - current, classified within “Other accrued liabilities”

$ 50,108 $ 31,706

Operating lease liabilities - long-term (2)

3 unchanged sentences

Finance lease right-of-use assets, net classified within “Property and equipment, net”

$ 168,523 $ 151,909

Finance lease liabilities - current, classified within “Other accrued liabilities”

$ 69,862 $ 87,665

Finance lease liabilities - long-term, classified within “Other long-term obligations”

101,420 75,560

Total finance lease liabilities $ 171,282 $ 163,225

5 unchanged sentences

Finance leases 5 3

(1) As of June 30, 2022 and December 31, 2021, operating lease right-of-use assets, net included $ 3.6 billion related to the Bellagio lease.

(2) As of June 30, 2022 and December 31, 2021, operating lease liabilities – long-term included $ 3.8 billion related to the Bellagio lease.

Six Months Ended

(1) As of September 30, 2022 and December 31, 2021, operating lease right-of-use assets, net included $ 3.6 billion related to the Bellagio lease.

(2) As of September 30, 2022 and December 31, 2021, operating lease liabilities – long-term included $ 3.8 billion related to the Bellagio lease.

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities (In thousands)

10 unchanged sentences

Year ending December 31, (In thousands)

2022 (excluding the six months ended June 30, 2022) $ 882,530 $ 44,610

2022 (excluding the nine months ended September 30, 2022) $ 440,304 $ 19,062

2023 1,795,191 72,205

14 unchanged sentences

The Company’s senior credit facility limits the amount of letters of credit that can be issued to $ 1.35 billion.

At June 30, 2022, $ 33 million in letters of credit were outstanding under the Company’s senior credit facility.

At September 30, 2022, $ 33 million in letters of credit were outstanding under the Company’s senior credit facility.

The amount of available borrowings under the credit facility is reduced by any outstanding letters of credit.

MGM China bank guarantee.

In May 2019, in connection with the extension of the term of its gaming subconcession to June 2022, MGM Grand Paradise provided a bank guarantee to the government of Macau in the amount of MOP 820 million (approximately $ 101 million as of June 30, 2022) to warrant the fulfillment of an existing commitment of labor liabilities upon expiration of the gaming subconcession.

In connection with the June 2022 extension of the term of its gaming subconcession to December 31, 2022, MGM Grand Paradise is required to provide, within three months of the execution of such extension, a bank guarantee to the government of Macau in the amount of not less than MOP 880 million (approximately $ 109 million as of June 30, 2022), which would replace or increase the bank guarantee provided under the previous extension.

As of June 30, 2022, the MOP 820 million guarantee was in place and the MOP 880 million guarantee was not yet provided.

In May 2019, in connection with the extension of the term of its gaming subconcession to June 2022, MGM Grand Paradise provided a bank guarantee to the government of Macau in the amount of MOP 820 million (approximately $ 101 million as of September 30, 2022) to warrant the fulfillment of an existing commitment of labor liabilities upon expiration of the gaming subconcession.

In September 2022, in connection with the June 2022 extension of the term of its gaming subconcession to December 31, 2022, MGM Grand Paradise increased its bank guarantee to the government of Macau to the amount of MOP 880 million (approximately $ 109 million as of September 30, 2022).

Bellagio BREIT Venture shortfall guarantee.

The Company provides a shortfall guarantee of the $ 3.01 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of Bellagio BREIT Venture, which matures

The Company provides a shortfall guarantee of the $ 3.01 billion principal amount of indebtedness (and any interest accrued and unpaid thereon) of Bellagio BREIT Venture, which matures in 2029.

The terms of the shortfall guarantee provide that after the lenders have exhausted certain remedies to collect on the obligations under the indebtedness, the Company would then be responsible for any shortfall between the value of the collateral, which is the real estate assets of Bellagio owned by Bellagio BREIT Venture, and the debt obligation.

6 unchanged sentences

such value is immaterial.

NOTE 11 — INCOME PER SHARE OF COMMON STOCK

The table below reconciles basic and diluted income per share of common stock.

NOTE 11 — EARNINGS PER SHARE

The table below reconciles basic and diluted earnings per share of common stock.

Diluted weighted-average common and common equivalent shares include adjustments for potential dilution of share-based awards outstanding under the Company’s stock compensation plan.

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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MGM Resorts International dividends.

On August 3, 2022 the Company’s Board of Directors approved a quarterly dividend of $ 0.0025 per share that will be payable on September 15, 2022 to holders of record on September 9, 2022.

MGM Resorts International stock repurchase program.

The Company’s Board of Directors authorized a $ 2.0 billion stock repurchase program in March 2022 and a $ 3.0 billion stock repurchase program in February 2020.

Under the stock repurchase programs, the Company may repurchase shares from time to time in the open market or in privately negotiated agreements.

On November 2, 2022 the Company’s Board of Directors approved a quarterly dividend of $ 0.0025 per share that will be payable on December 15, 2022 to holders of record on December 9, 2022.

MGM Resorts International stock repurchase plan.

The Company’s Board of Directors authorized a $ 2.0 billion stock repurchase plan in March 2022 and a $ 3.0 billion stock repurchase plan in February 2020.

Under the stock repurchase plans, the Company may repurchase shares from time to time in the open market or in privately negotiated agreements.

Repurchases of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws.

The timing, volume and nature of stock repurchases will be at the sole discretion of management, dependent on market conditions, applicable securities laws, and other factors, and may be suspended or discontinued at any time.

During the three months ended June 30, 2021, the Company repurchased approximately 6 million shares of its common stock at an average price of $ 39.48 per share for an aggregate amount of $ 220 million.

During the six months ended June 30, 2021, the Company repurchased approximately 9 million shares of its common stock at an average price of $ 38.90 per share for an aggregate amount of $ 340 million.

During the three months ended September 30, 2021, the Company repurchased approximately 17 million shares of its common stock at an average price of $ 39.89 per share for an aggregate amount of $ 687 million.

During the nine months ended September 30, 2021, the Company repurchased approximately 26 million shares of its common stock at an average price of $ 39.56 per share for an aggregate amount of $ 1.0 billion.

Repurchased shares were retired.

During the three months ended June 30, 2022, the Company repurchased approximately 32 million shares of its common stock at an average price of $ 34.42 per share for an aggregate amount of $ 1.1 billion.

During the six months ended June 30, 2022, the Company repurchased approximately 56 million shares of its common stock at an average price of $ 37.98 per share for an aggregate amount of $ 2.1 billion, which included the February 2022 repurchase of 4.5 million shares at a price of $ 45.00 per share for an aggregate amount of $ 202.5 million from funds managed by Corvex Management LP, a related party.

In connection with these repurchases, the February 2020 $ 3.0 billion stock repurchase program was completed.

During the three months ended September 30, 2022, the Company repurchased approximately 10 million shares of its common stock at an average price of $ 30.69 per share for an aggregate amount of $ 307 million.

During the nine months ended September 30, 2022, the Company repurchased approximately 66 million shares of its common stock at an average price of $ 36.87 per share for an aggregate amount of $ 2.4 billion, which included the February 2022 repurchase of 4.5 million shares at a price of $ 45.00 per share for an aggregate amount of $ 202.5 million from funds managed by Corvex Management LP, a related party.

In connection with these repurchases, the February 2020 $ 3.0 billion stock repurchase plan was completed.

Repurchased shares were retired.

The remaining availability under the March 2022 $ 2.0 billion stock repurchase program was $ 1.1 billion as of June 30, 2022.

Subsequent to the quarter ended June 30, 2022, the Company repurchased 5 million shares of its common stock at an average price of $ 29.32 per share for an aggregate amount of $ 156 million.

The remaining availability under the March 2022 $ 2.0 billion stock repurchase plan was $ 827 million as of September 30, 2022.

Subsequent to the quarter ended September 30, 2022, the Company repurchased 6 million shares of its common stock at an average price of $ 31.76 per share for an aggregate amount of $ 183 million.

Repurchased shares were retired.

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(In thousands)

Balances, April 1, 2022 $ ( 11,091 ) $ ( 28,841 ) $ 17,925 $ ( 22,007 )

Other comprehensive loss before reclassifications ( 9,828 ) — — ( 9,828 )

Amounts reclassified from accumulated other comprehensive loss to interest expense — 1,661 — 1,661

Other comprehensive income (loss), net of tax ( 9,828 ) 1,661 — ( 8,167 )

Other changes in accumulated other comprehensive loss:

Deconsolidation of MGP — 28,151 ( 17,067 ) 11,084

Changes in accumulated other comprehensive loss ( 9,828 ) 29,812 ( 17,067 ) 2,917

Other comprehensive loss (income) attributable to noncontrolling interest 3,119 ( 971 ) — 2,148

Balances, June 30, 2022 $ ( 17,800 ) $ — $ 858 $ ( 16,942 )

Balances, July 1, 2022 $ ( 17,800 ) $ — $ 858 $ ( 16,942 )

Other comprehensive loss, net of tax ( 17,563 ) — — ( 17,563 )

Other comprehensive loss attributable to noncontrolling interest 675 — — 675

Balances, September 30, 2022 $ ( 34,688 ) $ — $ 858 $ ( 33,830 )

Balances, January 1, 2022 $ ( 907 ) $ ( 41,634 ) $ 17,925 $ ( 24,616 )

6 unchanged sentences

Other comprehensive loss (income) attributable to noncontrolling interest 11,576 ( 24,209 ) — ( 12,633 )

Balances, June 30, 2022 $ ( 17,800 ) $ — $ 858 $ ( 16,942 )

Balances, September 30, 2022 $ ( 34,688 ) $ — $ 858 $ ( 33,830 )

NOTE 13 — SEGMENT INFORMATION

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MGM China consists of MGM Macau and MGM Cotai.

The Company’s operations related to investments in unconsolidated affiliates and certain other corporate operations and management services have not been identified as separate reportable segments;

The Company’s operations related to LeoVegas (upon acquisition in September 2022), investments in unconsolidated affiliates, and certain other corporate operations and management services have not been identified as separate reportable segments;

therefore, these operations are included in “Corporate and other” in the following segment disclosures to reconcile to consolidated results.

Adjusted Property EBITDAR is the Company’s reportable segment GAAP measure, which management utilizes as the primary profit measure for its reportable segments and underlying operating segments.

Adjusted Property EBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, property transactions, net, gain on REIT transactions, net, rent expense associated with triple-net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, and excludes corporate expense and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGP that eliminated in consolidation.

Adjusted Property EBITDAR is a measure defined as earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, property transactions, net, gain on REIT transactions, net, rent expense related to triple-net operating leases and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, and also excludes gain on consolidation of CityCenter, net, gain related to CityCenter’s sale of Harmon land recorded within income from unconsolidated affiliates, corporate expense and stock compensation expense, which are not allocated to each operating segment, and rent expense related to the master lease with MGP that eliminated in consolidation.

The following tables present the Company’s segment information:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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Food and beverage 115,432 92,148 312,621 211,661

Entertainment, retail and other 48,567 30,345 88,465 54,098

Entertainment, retail and other, and reimbursed costs 52,557 42,579 141,022 96,677

973,935 925,123 2,824,433 2,492,756

18 unchanged sentences

Gain on REIT transactions, net — — 2,277,747 —

Gain on consolidation of CityCenter, net — 1,562,329 — 1,562,329

Triple-net operating lease and ground lease rent expense ( 604,193 ) ( 191,622 ) ( 1,350,099 ) ( 570,851 )

1 unchanged sentence

Income from unconsolidated affiliates related to real estate ventures 2,690 41,669 59,162 125,007

Operating income 2,381,451 263,760 2,487,239 17,070

Operating income (loss) ( 1,045,971 ) 1,892,782 1,441,268 1,909,852

Non-operating income (expense)

21 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements