Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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This management’s discussion and analysis of financial condition and results of operations includes discussion as of and for the year ended December 31, 2020 compared to December 31, 2019. Discussion of our financial condition and results of operations as of and for the year ended December 31, 2019 compared to December 31, 2018 can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (“SEC”) on February 27, 2020.

Description of our business and key performance indicators

Our primary business is the ownership and operation of casino resorts, which offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities. We own or invest in several of the finest casino resorts in the world and we continually reinvest in our resorts to maintain our competitive advantage. Most of our revenue is cash-based, through customers wagering with cash or paying for non-gaming services with cash or credit cards. We rely heavily on the ability of our resorts to generate operating cash flow to fund capital expenditures, provide excess cash flow for future development and repay debt financings. We make significant investments in our resorts through newly remodeled hotel rooms, restaurants, entertainment and nightlife offerings, as well as other new features and amenities.

Our results of operations are affected by decisions we make related to our capital allocation, our access to capital and our cost of capital. While we continue to be focused on improving our financial position and returning capital to shareholders, we are also dedicated to capitalizing on strategic development or initiatives.

Our results of operations do not tend to be seasonal in nature, though a variety of factors may affect the results of any interim period, including the timing of major conventions, Far East baccarat volumes, the amount and timing of marketing and special events for our high-end gaming customers, and the level of play during major holidays, including New Year and Lunar New Year. While our results do not depend on key individual customers, a significant portion of our operating income is generated from high-end gaming customers, which can cause variability in our results. In addition, our success in marketing to customer groups such as convention customers and the financial health of customer segments such as business travelers or high-end gaming customers from a specific country or region can affect our results.

Financial Impact of COVID-19

The spread of COVID-19 and developments surrounding the global pandemic have had, and we expect will continue to have, a significant impact on our business, financial condition, results of operations and cash flows in 2021. In March 2020, all of our domestic properties were temporarily closed pursuant to state and local government restrictions imposed as a result of COVID-19. Throughout the second and third quarters of 2020 all of our properties that were temporarily closed re-opened to the public but continue to operate without certain amenities and subject to certain occupancy limitations, with restrictions varying by jurisdiction and with further temporary re-closures and re-openings occurring for our properties or portions of our properties into the first quarter of 2021. In response to reduced demand, we temporarily closed the hotel tower operations at Mandalay Bay and Park MGM midweek and temporarily closed The Mirage midweek, which are expected to resume full week operations on March 3, 2021. Accordingly, our properties continued to generate revenues that are significantly lower than historical results. In addition, as a result of the continued impact of the COVID-19 pandemic and the emergence of variant strains, our properties may be subject to temporary, complete, or partial shutdowns in the future. At this time, we cannot predict whether the jurisdictions in which our properties are located, states or the federal government will continue to impose operating restrictions on us or adopt similar or more restrictive measures in the future, including stay-at-home orders or ordering the temporary closures of all or a portion of our properties. We have implemented certain measures to mitigate the spread of COVID-19, including limitations on the number of gaming tables allowed to operate and on the number of seats at each table game, as well as slot machine spacing, temperature checks, mask protection, limitations on restaurant capacity, entertainment events and conventions as well as other measures to enforce social distancing. In addition, following a temporary closure of our properties in Macau on February 5, 2020, operations resumed on February 20, 2020, subject to certain health safeguards, such as limiting the number of gaming tables allowed to operate and the number of seats available at each table game, slot machine spacing, reduced operating hours at a number of restaurants and bars, temperature checks, mask protection and the need to present negative COVID-19 test results and health declarations submitted through the Macau Health Code system which remain in effect. Effective July 15, 2020, all guests entering our casinos were required to provide a negative nucleic acid test result with a valid ‘green’ Macau Health Code. Although the issuance of tourist visas (including the IVS) for residents of Zhuhai, Guangdong Province and all other provinces in mainland China to travel to Macau resumed on August 12, 2020, August 26, 2020 and September 23, 2020, respectively, several travel and entry restrictions in Macau, Hong Kong and mainland China remain in place (including the temporary suspension of ferry services from Hong Kong to Macau, the nucleic acid test result certificate and mandatory quarantine requirements

for visitors from Hong Kong and Taiwan, and bans on entry or enhanced quarantine requirements on other visitors into Macau), which have significantly impacted visitation to our Macau properties.

During 2020, we engaged in aggressive cost reduction efforts to minimize cash outflows while our properties were initially closed and have continued to engage in such efforts as the properties have re-opened, we still face significant fixed and variable expenses. Our efforts included:

•reducing or deferring at least 50% of planned domestic capital expenditures in 2020;
•reducing employee costs, including through hiring freezes, headcount reductions and substantial furloughs of employees (which have resulted in a number of employees being separated from us) and cancellation of merit pay increases;
•midweek closures of certain hotel towers and properties in response to reduced demand;
•initiating a program where certain senior executives and directors voluntarily elected to receive all or a portion of their remaining base salary during 2020 in the form of restricted stock units in lieu of cash; and
•starting with our dividend for the second quarter of 2020, our Board approved a nominal annual dividend of $0.01 per share.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides opportunities for additional liquidity, loan guarantees, and other government programs to support companies affected by the COVID-19 pandemic and their employees. Based on a preliminary analysis of the CARES Act, the benefits we expect to recognize include:

•refund of federal income taxes due to a five-year carryback of net operating loss incurred in 2020 that we estimate will result in a $205 million to $215 million refund;
•relaxation of interest expense deduction limitation for income tax purposes, which is included in the estimate above;
•reduction of employer Federal Insurance Contributions Act (“FICA”) taxes equal to 50% of wages paid and health care coverage provided to furloughed employees during 2020, which resulted in permanent savings of approximately $121 million that was recorded in the year ended December 31, 2020, including our share of the savings recorded by CityCenter; and
•deferral of all employer FICA taxes from the date of enactment through December 31, 2020, 50% payable by December 2021 and the remainder payable by December 2022, which resulted in a deferral of approximately $51 million.

In addition, we have seen and continue to expect to see weakened demand at our properties as a result of continued domestic and international travel restrictions or warnings, restrictions on amenity use, such as gaming, restaurant and pool capacity limitations, consumer fears and reduced consumer discretionary spending, general economic uncertainty, and increased rates of unemployment. In light of the foregoing, we are unable to determine when our properties will return to pre-pandemic demand or pricing, or if our properties will remain re-opened. The COVID-19 pandemic has had a material impact on our consolidated results of operations during 2020 and we expect that it will continue to have a material impact on our consolidated results of operations during 2021 and potentially thereafter.

The Las Vegas Strip segment results of operations are heavily impacted by visitor volume and trends. During the year ended December 31, 2020, Las Vegas visitor volume decreased 55% compared to the prior year period according to information published by the Las Vegas Convention and Visitors Authority. Although the Las Vegas market has had the addition of new sporting events and venues, the expansion of convention centers, as well as music and entertainment events, the COVID-19 pandemic has drastically impacted visitation.

The MGM China segment results of operations also are heavily impacted by visitor volume and trends. During the year ended December 31, 2020 Macau visitor arrivals decreased 85% compared to the prior year period according to statistics published by the Statistics and Census Service of the Macau Government, as a result of the disruption caused by the COVID-19 pandemic.

Other Developments

As of December 31, 2020, pursuant to a master lease agreement with MGP, we lease the real estate assets of The Mirage, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, and MGM Northfield Park. See Note 1 in the accompanying consolidated financial statements for information regarding MGP and the Operating Partnership, which we consolidate in our financial statements. All intercompany transactions, including transactions under the master lease with MGP, have been eliminated in consolidation. As further discussed below, pursuant to a lease agreement with the Bellagio BREIT Venture, we lease the real estate assets of Bellagio, and pursuant to a lease agreement with the MGP BREIT Venture, we lease the real estate assets of Mandalay Bay and MGM Grand Las Vegas.

In July 2018, MGP completed its Northfield Acquisition for approximately $1.1 billion. In April 2019, we acquired the membership interests of Northfield from MGP and MGP retained the real estate assets. We then rebranded the property to MGM Northfield Park, and added it to the master lease between us and MGP. See Note 4 and Note 18 in the accompanying financial statements for information regarding this acquisition.

In July 2018, we and Entain formed BetMGM, a venture that is owned 50% by each party. In connection with its formation, we provided BetMGM with exclusive access to all of our domestic land-based and online sports betting, major tournament poker, and online gaming operations and Entain provided BetMGM with exclusive access to its technology in the United States.

Also, in January 2019, we acquired the real property and operations associated with Empire City in Yonkers, New York for consideration of approximately $865 million. Subsequently, MGP acquired the developed real property associated with Empire City from us and Empire City was added to the master lease between us and MGP. In addition, pursuant to the master lease amendment, we agreed to provide MGP a right of first offer with respect to certain undeveloped land adjacent to the property to the extent that we develop additional gaming facilities and choose to sell or transfer such property in the future. See Note 4 and Note 18 in the accompanying consolidated financial statements for information regarding this acquisition.

In March 2019, we entered into an amendment to the master lease between us and MGP with respect to improvements made by us related to rebranding of the Park MGM and NoMad Las Vegas. See Note 18 in the accompanying financial statements for information regarding this transaction with MGP, which is eliminated in consolidation.

In November 2019, we completed the Bellagio transaction, pursuant to which the Bellagio BREIT Venture was formed, which acquired the Bellagio real estate assets from us and entered into a lease agreement to lease the real estate assets back to us. The Bellagio lease provides for a term of 30 years with two ten-year renewal options and has initial annual base rent of $245 million with a fixed 2% escalator for the first ten years and, thereafter, an escalator equal to the greater of 2% and the CPI increase during the prior year, subject to a cap of 3% during the 11th through 20th years and 4% thereafter. In exchange for the contribution of the real estate assets, we received total consideration of $4.25 billion, which consisted of a 5% equity interest in the venture and approximately $4.2 billion in cash. We also provide a shortfall guarantee of the principal amount of indebtedness of the Bellagio BREIT Venture (and any interest accrued and unpaid thereon). As a result of the sale, we recorded a gain of approximately $2.7 billion. See Note 1, Note 11, and Note 12 in the accompanying consolidated financial statements for information regarding this transaction, lease agreement, and shortfall guarantee.

In December 2019, we sold Circus Circus Las Vegas and adjacent land for $825 million, which consisted of $662.5 million paid in cash and a secured note due 2024 with a face value of $162.5 million and fair value of $133.7 million. In connection with our review of the carrying value of assets to be sold due to the offer for sale received during the third quarter of 2019, we recorded a non-cash impairment charge of $219 million. Upon completion of the sale in the fourth quarter, we recorded a loss of $2 million. See Note 1 and Note 16 in the accompanying consolidated financial statements for information regarding this transaction.

On February 14, 2020, we completed the MGP BREIT Venture Transaction pursuant to which the real estate assets of MGM Grand Las Vegas and Mandalay Bay (including Mandalay Place) were contributed to MGP BREIT Venture, owned 50.1% by the Operating Partnership and 49.9% by a subsidiary of BREIT. In exchange for the contribution of the real estate assets, MGM and MGP received total consideration of $4.6 billion, which was comprised of $2.5 billion of cash, $1.3 billion of the Operating Partnership’s secured indebtedness assumed by the MGP BREIT Venture, and the Operating Partnership’s 50.1% equity interest in the MGP BREIT Venture. In addition, the Operating Partnership issued approximately 3 million Operating Partnership units to us representing 5% of the equity value of the MGP BREIT Venture. We also provide a shortfall guarantee of the principal amount of indebtedness of the MGP BREIT Venture (and any interest accrued and unpaid thereon). On the closing date, BREIT also purchased approximately 5 million MGP Class A shares for $150 million. See Note 1, Note 11, and Note 12 in the accompanying consolidated financial statements for information regarding this transaction, lease agreement, and shortfall guarantee.

In connection with the MGP BREIT Venture Transaction, MGP BREIT Venture entered into a lease with us for the real estate assets of Mandalay Bay and MGM Grand Las Vegas. The lease provides for a term of thirty years with two ten-year renewal options and has an initial annual base rent of $292 million, escalating annually at a rate of 2% per annum for the first fifteen years and thereafter equal to the greater of 2% and the CPI increase during the prior year subject to a cap of 3%. In addition, the lease obligates us to spend a specified percentage of net revenues at the properties on capital expenditures and that we comply with certain financial covenants, which, if not met, would require us to maintain cash security or provide one or more letters of credit in favor of the landlord in an amount equal to the rent for the succeeding one-year period. See Note 11 in the accompanying financial statements for information regarding this lease agreement.

In connection with the MGP BREIT Venture Transaction, the master lease with MGP was modified to remove the Mandalay Bay property and the annual cash rent under the MGP master lease was reduced by $133 million.

Also, on January 14, 2020, we, the Operating Partnership, and MGP entered into an agreement for the Operating Partnership to waive its right to issue MGP Class A shares, in lieu of cash, to us in connection with us exercising our right to require the Operating Partnership to redeem the Operating Partnership units we hold, at a price per unit equal to a 3% discount to the applicable cash amount as calculated in accordance with the operating agreement. The waiver was scheduled to terminate on the earlier of 24 months following the closing of the MGP BREIT Venture Transaction or upon our receipt of cash proceeds of $1.4 billion as consideration for the redemption of our Operating Partnership units. On May 18, 2020 the Operating Partnership redeemed approximately 30 million Operating Partnership units that we held for $700 million, or $23.10 per unit, and on December 2, 2020, the Operating Partnership redeemed approximately 24 million Operating Partnership units that we held for the remaining $700 million, or $29.78 per unit. As a result, the waiver terminated in accordance with its terms.

In January 2019, we announced the implementation of a company-wide business optimization initiative (the “MGM 2020 Plan”) to further reduce costs, improve efficiencies and position us for growth. With the impact of COVID-19, we further addressed our strategy and cost approach with the aggressive reduction in operating costs, as further discussed earlier.

Key Performance Indicators

Key performance indicators related to gaming and hotel revenue are:

•Gaming revenue indicators: table games drop and slots handle (volume indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games hold percentage at our Las Vegas Strip Resorts is in the range of 25.0% to 35.0% of table games drop for Baccarat and 19.0% to 23.0% for non-Baccarat; however, reduced gaming volumes as a result of the COVID-19 pandemic could cause volatility in our hold percentages; and
•Hotel revenue indicators: hotel occupancy (a volume indicator); average daily rate (“ADR,” a price indicator); and revenue per available room (“REVPAR,” a summary measure of hotel results, combining ADR and occupancy rate). Our calculation of ADR, which is the average price of occupied rooms per day, includes the impact of complimentary rooms. Complimentary room rates are determined based on standalone selling price. Because the mix of rooms provided on a complimentary basis, particularly to casino customers, includes a disproportionate suite component, the composite ADR including complimentary rooms is slightly higher than the ADR for cash rooms, reflecting the higher retail value of suites. Rooms that were out of service during the year ended December 31, 2020 as a result of property closures due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.

Additional key performance indicators at MGM China are:

•Gaming revenue indicators: MGM China utilizes “turnover,” which is the sum of nonnegotiable chip wagers won by MGM China calculated as nonnegotiable chips purchased plus nonnegotiable chips exchanged less nonnegotiable chips returned. Turnover provides a basis for measuring VIP casino win percentage. Win for VIP gaming operations at MGM China is typically in the range of 2.6% to 3.3% of turnover; however, reduced gaming volumes as a result of the COVID-19 pandemic could cause volatility in MGM China’s hold percentages.

Results of Operations

The following discussion is based on our consolidated financial statements for the years ended December 31, 2020, 2019 and 2018.

Summary Financial Results

The following table summarizes our operating results:

Year Ended December 31,
202020192018
(In thousands)
Net revenues$5,162,082$12,899,672$11,763,096
Operating income (loss)(642,434)3,940,2151,469,486
Net income (loss)(1,319,907)2,214,380583,894
Net income (loss) attributable to MGM Resorts International(1,032,724)2,049,146466,772

Summary Operating Results

Our domestic properties were temporarily closed due to COVID-19 on the dates shown below:

Las Vegas Strip ResortsClosure DateInitial Re-opening Date
BellagioMarch 17, 2020June 4, 2020
MGM Grand Las VegasMarch 17, 2020June 4, 2020
New York-New YorkMarch 17, 2020June 4, 2020
ExcaliburMarch 17, 2020June 11, 2020
LuxorMarch 17, 2020June 25, 2020
Mandalay Bay(1)March 17, 2020July 1, 2020
The Mirage(2)March 17, 2020August 27, 2020
Park MGM(1)March 17, 2020September 30, 2020
Regional Operations
Gold StrikeMarch 17, 2020May 25, 2020
Beau RivageMarch 17, 2020June 1, 2020
MGM Northfield ParkMarch 14, 2020June 20, 2020
MGM National HarborMarch 15, 2020June 29, 2020
MGM Springfield(3)March 15, 2020July 13, 2020
BorgataMarch 16, 2020July 26, 2020
MGM Grand Detroit(4)March 16, 2020August 7, 2020
Empire CityMarch 14, 2020September 21, 2020
(1)Park MGM and Mandalay Bay’s hotel tower operations were closed midweek starting November 9, 2020 and November 30, 2020, respectively, with full week hotel tower operations expected to resume on March 3, 2021.
(2)The Mirage’s hotel tower operations were closed midweek beginning November 30, 2020. The entire property was closed midweek starting January 4, 2021, with re-opening expected to occur on March 3, 2021.
(3)MGM Springfield’s hotel was closed beginning November 2, 2020, with re-opening expected to occur on March 5, 2021.
(4)MGM Grand Detroit re-closed on November 17, 2020 and re-opened on December 23, 2020, with the hotel tower operations remaining closed through February 8, 2021.

Consolidated net revenues in 2020 decreased 60% compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to temporary closures at our properties, midweek hotel closures at certain domestic properties subsequent to re-opening, travel restrictions to Macau, including the suspension of the IVS for part of the year, restrictions on the number of table games allowed to operate in certain jurisdictions, and restrictions on the number of seats available at each table at both our domestic resorts and Macau properties, and other social distancing restrictions in place at our properties, including the number of slot machines available for use, property capacity restrictions, and venue/amenity limitations, as discussed above, as well as a decrease in travel and business volume. These factors resulted in a 77% decrease in net revenues at MGM China, a 61% decrease in net revenues at our Las Vegas Strip Resorts, and a 45% decrease in net revenues at our Regional Operations.

Consolidated operating loss was $642 million for the year ended December 31, 2020 compared to operating income of $3.9 billion in 2019, due primarily to the impact of COVID-19 which included a decrease in net revenues discussed above, a $1.2 billion decrease in the gain related to our REIT transactions, and a $21 million increase in general and administrative expense, as discussed

below, partially offset by a decrease in operating expenses as a result of cost reduction efforts during property closures, a $66 million decrease in restructuring costs of which a portion was recorded to corporate expense, discussed below, a $182 million decrease in property transactions, net, and a $94 million decrease in depreciation and amortization. General and administrative expense increased in the current year period compared to the prior year period due primarily to $678 million of rent expense in the current year period associated with the Bellagio lease and the Mandalay Bay and MGM Grand Las Vegas lease compared to $42 million associated with the Bellagio lease in the prior year period, largely offset by aggressive efforts to reduce expenses at our domestic properties during the temporary closures, which primarily related to decreases in payroll expense, utilities, and advertising expense. In addition, general and administrative expense in the current year included $10 million of restructuring costs related to severance and accelerated stock compensation expense compared to $76 million in the prior year period. Corporate expense in the current year period included $49 million of October 1 litigation settlement expense, $44 million of CEO transition expense, and $11 million of restructuring costs. Included in the CEO transition expense is $20 million of stock compensation expense, of which approximately $13 million related to the modification and accelerated vesting of outstanding stock compensation awards. Corporate expense in the prior year period included $20 million of Empire City acquisition costs, primarily related to transfer taxes and advisory fees, $29 million in costs incurred to implement the MGM 2020 Plan, and $11 million in finance modernization initiative costs. Property transactions, net in the current year period included a $64 million other-than-temporary non-cash impairment charge on an equity method investment and $17 million related to a loss on production show costs, and the prior year period included a $220 million loss related to the sale of Circus Circus Las Vegas and the adjacent land. Depreciation and amortization and the gain related to our REIT transactions decreased compared to the prior year period due primarily to the sale of the MGM Grand Las Vegas and Mandalay Bay real estate assets in February 2020 and the sale of the Bellagio real estate assets in November 2019.

Net Revenues by Segment

The following table presents a detail by segment of net revenues:

Year Ended December 31,
202020192018
(In thousands)
Las Vegas Strip Resorts
Table games win$470,432$789,330$949,055
Slots win649,2291,193,6071,140,269
Other31,01464,83462,249
Less: Incentives(422,421)(751,601)(743,840)
Casino revenue728,2541,296,1701,407,733
Rooms662,8131,863,5211,776,029
Food and beverage471,5291,517,7451,402,378
Entertainment, retail and other383,1891,153,6151,130,532
Non-casino revenue1,517,5314,534,8814,308,939
2,245,7855,831,0515,716,672
Regional Operations
Table games win487,942827,155793,754
Slots win1,404,5672,362,6381,947,325
Other177,086313,710108,690
Less: Incentives(500,402)(965,723)(822,844)
Casino revenue1,569,1932,537,7802,026,925
Rooms130,945316,753318,017
Food and beverage184,153494,243428,934
Entertainment, retail and other82,880201,008160,645
Non-casino revenue397,9781,012,004907,596
1,967,1713,549,7842,934,521
MGM China
VIP table games win212,5601,237,2971,235,387
Main floor table games win467,2091,906,6001,391,454
Slots win72,298286,939284,919
Less: Commissions and incentives(186,396)(821,030)(716,616)
Casino revenue565,6712,609,8062,195,144
Rooms36,624142,306118,527
Food and beverage40,284127,152114,862
Entertainment, retail and other14,12426,15821,424
Non-casino revenue91,032295,616254,813
656,7032,905,4222,449,957
Reportable segment net revenues4,869,65912,286,25711,101,150
Corporate and other292,423613,415661,946
$5,162,082$12,899,672$11,763,096

Las Vegas Strip Resorts

Las Vegas Strip Resorts casino revenue decreased 44% in 2020 compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to the temporary closure of properties, operational restrictions related to the pandemic, as discussed above, as well as a decrease in travel and business volume, which resulted in decreases in table games win and slots win of 40% and 46%, respectively.

The following table shows key gaming statistics for our Las Vegas Strip Resorts:

Year Ended December 31,
202020192018
(Dollars in millions)
Table Games Drop$2,001$3,526$3,857
Table Games Win %23.5%22.4%24.6%
Slots Handle$6,904$12,874$12,569
Slots Hold %9.4%9.3%9.1%

Las Vegas Strip Resorts rooms revenue decreased 64% in 2020 compared to 2019 due primarily to the impacts of COVID-19, which included a partial year of operations due to the temporary closure of the properties, midweek hotel closures at certain properties, and a decrease in REVPAR due primarily to a decrease in occupancy as a result of operational restrictions and a decrease in travel and business volume related to the pandemic, as discussed above.

The following table shows key hotel statistics for our Las Vegas Strip Resorts:

Year Ended December 31,
202020192018
Occupancy55%91%91%
Average Daily Rate (ADR)(1)$161$167$161
Revenue per Available Room (REVPAR)(1)88153147
(1)Rooms that were out of service during the year ended December 31, 2020 as a result of property and hotel tower closures due to the COVID-19 pandemic were excluded from the available room count when calculating hotel occupancy and REVPAR.

Las Vegas Strip Resorts food and beverage revenue decreased 69% in 2020 compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to the temporary closure of properties, operational restrictions related to the pandemic, as well as a decrease in travel and business volume, as discussed above.

Las Vegas Strip Resorts entertainment, retail and other revenue decreased 67% in 2020 compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to the temporary closure of properties, operational restrictions related to the pandemic, as well as a decrease in travel and business volume, as discussed above, including the temporary closure of entertainment venues, such as theaters and nightclubs.

Regional Operations

Regional Operations casino revenue decreased 38% in 2020 compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to the temporary closure of properties, operational restrictions related to the pandemic, as well as a decrease in business volume, as discussed above, which resulted in decreases in each of table games win and slots win of 41%.

The following table shows key gaming statistics for our Regional Operations:

Year Ended December 31,
202020192018
(Dollars in millions)
Table Games Drop$2,422$4,226$4,038
Table Games Win %20.1%19.6%19.7%
Slots Handle$14,527$25,031$21,468
Slots Hold %9.7%9.4%9.1%

Regional Operations rooms revenue decreased 59% in 2020 compared to 2019 due primarily to the impacts of COVID-19, which included a partial year of operations due to the temporary closure of the properties, the temporary closure of the hotel at MGM Grand Detroit, and a decrease in REVPAR due primarily to a decrease in occupancy as a result of operational restrictions and a decrease in business volume related to the pandemic, as discussed above.

Regional Operations food and beverage revenue decreased 63% in 2020 compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to the temporary closure of properties, operational restrictions related to the pandemic, as well as a decrease in business volume, as discussed above.

Regional Operations entertainment, retail and other revenue decreased 59% in 2020 compared to 2019 due primarily to the impact of COVID-19, which included a partial year of operations due to the temporary closure of properties, operational restrictions related to the pandemic, as well as a decrease in business volume, as discussed above, including the temporary closure of certain entertainment venues such as theaters.

MGM China

The following table shows key gaming statistics for MGM China:

Year Ended December 31,
202020192018
(Dollars in millions)
VIP Table Games Turnover$7,015$38,071$40,599
VIP Table Games Win %3.0%3.2%3.0%
Main Floor Table Games Drop$2,037$8,252$7,566
Main Floor Table Games Win %22.9%23.1%18.4%

MGM China net revenue decreased 77% in 2020 compared to 2019 due primarily to the suspension of operations for a 15-day period in February, travel restrictions to Macau, including the suspension of the IVS for the majority of the current year period, as well as other operational restrictions and a decrease in travel and business volume related to the pandemic, as discussed above. VIP table games win decreased 83% and main floor table games win decreased 75% compared to the prior year period.

Corporate and other

Corporate and other revenue includes revenues from other corporate operations, management services and reimbursed costs revenue primarily related to our CityCenter management agreement. Corporate and other revenue in 2019 included $68 million in net revenues from MGP’s Northfield casino, which represents revenues prior to our acquisition of MGM Northfield Park’s operations from MGP on April 1, 2019. Reimbursed costs revenue represents reimbursement of costs, primarily payroll-related, incurred by us in connection with the provision of management services and was $245 million, $437 million and $425 million for 2020, 2019 and 2018, respectively. Reimbursed costs revenue for the year ended December 31, 2020 decreased compared to the prior year due primarily to property closures and other operational restrictions caused by the COVID-19 pandemic. See below for additional discussion of our share of operating results from unconsolidated affiliates.

Adjusted Property EBITDAR and Adjusted EBITDAR

The following table presents Adjusted Property EBITDAR and Adjusted EBITDAR. Adjusted Property EBITDAR is our reportable segment generally accepted accounting principles (“GAAP”) measure, which we utilize as the primary profit measure for our reportable segments. See Note 17 – Segment Information in the accompanying consolidated financial statements and “Reportable Segment GAAP measure” below for additional information.

Year Ended December 31,
202020192018
(In thousands)
Las Vegas Strip Resorts$232,188$1,643,122$1,706,315
Regional Operations343,990969,866781,854
MGM China(193,832)734,729574,333
Corporate and other(530,843)(331,621)(224,800)
Adjusted EBITDAR$(148,497)

Las Vegas Strip Resorts

Adjusted Property EBITDAR at our Las Vegas Strip Resorts decreased 86% and Adjusted Property EBITDAR margin decreased to 10.3% in 2020 from 28.2% in 2019. Adjusted Property EBITDAR decreased compared to the prior year period due primarily to a decrease in casino and non-casino revenues resulting from the temporary closure of our properties, operational restrictions related to the pandemic, and a decrease in travel and business volume, partially offset by a decrease in operating expenses as a result of cost reduction efforts.

Regional Operations

Adjusted Property EBITDAR at our Regional Operations decreased 65% in 2020 and Adjusted Property EBITDAR margin decreased to 17.5% in 2020 from 27.3% in 2019. Adjusted Property EBITDAR decreased compared to the prior year period due primarily to a decrease in casino and non-casino revenues resulting from the temporary closure of our properties, operational restrictions related to the pandemic, and a decrease in business volume, partially offset by a decrease in operating expenses as a result of cost reduction efforts.

MGM China

MGM China’s Adjusted Property EBITDAR loss was $194 million in 2020 compared to Adjusted Property EBITDAR of $735 million in 2019 due primarily to a decrease in casino revenues resulting from the temporary suspension of casino operations, travel restrictions to Macau, including the suspension of the IVS for majority of the current year period, operational restrictions related to the pandemic, and a decrease in travel and business volumes. The current period included $11 million of license fee expense compared to $51 million in the prior year period.

Operating Results – Details of Certain Charges

Property transactions, net consisted of the following:

Year Ended December 31,
202020192018
(In thousands)
Loss related to sale of Circus Circus Las Vegas and adjacent land$—$220,294$—
Gain on sale of Grand Victoria——(44,703)
Other property transactions, net93,56755,50853,850
$93,567$275,802$9,147

See Note 16 to the accompanying consolidated financial statements for further discussion of property transactions, net.

Operating Results – Income from Unconsolidated Affiliates

The following table summarizes information related to our share of operating income from unconsolidated affiliates:

Year Ended December 31,
202020192018
(In thousands)
CityCenter$(29,753)$128,421$138,383
MGP BREIT Venture136,755——
Other(64,064)(8,900)9,307
$42,938$119,521$147,690

On March 17, 2020, CityCenter temporarily closed to the public as a result of the unprecedented public health crisis from the COVID-19 pandemic described above. Aria re-opened on July 1, 2020 and Vdara re-opened on July 16, 2020.

In 2020, our share of CityCenter’s operating loss, including certain basis difference adjustments, was $30 million compared to operating income of $128 million in 2019, primarily driven by the decrease in CityCenter’s casino and non-casino revenue as a result of the operational restrictions related to the COVID-19 pandemic, including the temporary closure, as well as a decrease in travel and business volume.

Non-operating Results

Interest expense. The following table summarizes information related to interest expense, net:

Year Ended December 31,
202020192018
(In thousands)
Total interest incurred$679,251$853,007$821,229
Interest capitalized(2,871)(5,075)(51,716)
$676,380$847,932$769,513

Gross interest expense was $679 million in 2020 compared to $853 million in 2019. The decrease in gross interest expense was due primarily to a decrease in the average debt outstanding under the credit facilities and senior notes due to the early retirement of debt discussed below, partially offset by the May 2020 issuance of the $750 million 6.75% senior notes due 2025, the June 2020 issuance of the Operating Partnership’s $800 million 4.625% senior notes due 2025, the June 2020 issuance of MGM China’s $500 million 5.25% senior notes due 2025, the October 2020 issuance of the $750 million 4.75% senior notes due 2028, and the November 2020 issuance of the Operating Partnership’s $750 million 3.875% senior notes due 2029. See Note 9 to the accompanying consolidated financial statements for additional discussion on long-term debt and see “Liquidity and Capital Resources” for additional discussion on issuances and repayments of long-term debt and other sources and uses of cash.

Other, net. Other expenses, net in 2020 decreased $94 million compared to 2019. The current year period included a $109 million loss incurred on the early retirement of debt related to our senior notes and the termination of our revolving facility, as well as an $18 million loss incurred on the early retirement of debt related to the Operating Partnership’s repayment of its term loan A facility and its term loan B facility, partially offset by a $7 million remeasurement gain on MGM China’s U.S. dollar-denominated senior notes, and a $18 million increase in interest income resulting from an increase in cash and cash equivalents. The prior year period included a $198 million loss incurred on the early retirement of debt related to our senior notes and senior credit facility, the Operating Partnership’s prepayments on its senior credit facility, and the early retirement of debt related to MGM China’s senior secured credit facility, partially offset by a $11 million remeasurement gain on MGM China’s U.S. dollar-denominated senior notes. Refer to Note 9 for further discussion on long-term debt.

Income taxes. The following table summarizes information related to our income taxes:

Year Ended December 31,
202020192018
(In thousands)
Income (loss) before income taxes$(1,511,479)$2,846,725$634,006
Benefit (provision) for income taxes191,572(632,345)(50,112)
Effective income tax rate12.7%22.2%7.9%
Federal, state and foreign income taxes paid, net of refunds$8,543$28,493$(10,100)

Our effective rate for 2020 was unfavorably impacted by losses incurred on our Macau operations for which we could not provide tax benefit and increases to valuation allowances for Macau deferred tax assets and foreign tax credits, partially offset by tax benefit resulting from carrying back net operating losses to tax years with a higher tax rate than is currently in effect. Our effective tax rate for 2019 was driven primarily by the $2.7 billion gain recorded on the Bellagio transaction. Income tax expense recorded on this gain results in our effective tax rate approximating our federal and state combined statutory rate and minimizes the impact of other items.

Cash taxes paid decreased in 2020 compared to 2019 due to the impact of COVID-19 on business operations. In addition, 2019 cash taxes paid included federal taxes paid on the liquidation of MGP OH, Inc., a consolidated subsidiary directly owned by MGM Growth Properties Operating Partnership LP.

Reportable Segment GAAP measure

“Adjusted Property EBITDAR” is our reportable segment GAAP measure, which we utilize as the primary profit measure for our 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, gain on REIT transactions, net, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 Plan), rent expense associated with triple-net

operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, property transactions, net, and also 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 eliminates in consolidation. We manage capital allocation, tax planning, stock compensation, and financing decisions at the corporate level. “Adjusted Property EBITDAR margin” is Adjusted Property EBITDAR divided by related segment net revenues.

Non-GAAP Measure

“Adjusted EBITDAR” is earnings before interest and other non-operating income (expense), taxes, depreciation and amortization, preopening and start-up expenses, gain on REIT transactions, net, CEO transition expense, October 1 litigation settlement, restructuring costs (which represents costs related to severance, accelerated stock compensation expense, and consulting fees directly related to the operating model component of the MGM 2020 Plan), rent expense associated with triple-net operating and ground leases, income from unconsolidated affiliates related to investments in real estate ventures, and property transactions, net.

Adjusted EBITDAR information is a valuation metric, should not be used as an operating metric, and is presented solely as a supplemental disclosure to reported GAAP measures because we believe this measure is widely used by analysts, lenders, financial institutions, and investors as a principal basis for the valuation of gaming companies. We believe that while items excluded from Adjusted EBITDAR 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. Also, we believe excluded items may not relate specifically to current trends or be indicative of future results. For example, preopening and start-up expenses will be significantly different in periods when we are developing and constructing a major expansion project and will depend on where the current period lies within the development cycle, as well as the size and scope of the project(s). Property transactions, net includes normal recurring disposals, gains and losses on sales of assets related to specific assets within our resorts, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. However, as discussed herein, Adjusted EBITDAR should not be viewed as a measure of overall operating performance, considered in isolation, or as an alternative to net income, because this measure is not presented on a GAAP basis and exclude certain expenses, including the rent expense associated with our triple-net operating and ground leases, and are provided for the limited purposes discussed herein.

Adjusted EBITDAR 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 GAAP. We have significant uses of cash flows, including capital expenditures, interest payments, taxes, real estate triple-net lease and ground lease payments, and debt principal repayments, which are not reflected in Adjusted EBITDAR. Also, other companies in the gaming and hospitality industries that report Adjusted EBITDAR information may calculate Adjusted EBITDAR in a different manner and such differences may be material.

The following table presents a reconciliation of net income attributable to MGM Resorts International to Adjusted EBITDAR:

Year Ended December 31,
202020192018
(In thousands)
Net income (loss) attributable to MGM Resorts International$(1,032,724)$2,049,146$466,772
Plus: Net income (loss) attributable to noncontrolling interests(287,183)165,234117,122
Net income (loss)(1,319,907)2,214,380583,894
Provision (benefit) for income taxes(191,572)632,34550,112
Income (loss) before income taxes(1,511,479)2,846,725634,006
Non-operating expense
Interest expense, net of amounts capitalized676,380847,932769,513
Non-operating items from unconsolidated affiliates103,30462,29647,827
Other, net89,361183,26218,140
869,0451,093,490835,480
Operating income (loss)(642,434)3,940,2151,469,486
Preopening and start-up expenses847,175151,392
Property transactions, net93,567275,8029,147
Gain on REIT transactions, net(1,491,945)(2,677,996)—
Depreciation and amortization1,210,5561,304,6491,178,044
CEO transition expense44,401——
October 1 litigation settlement49,000——
Restructuring26,02592,139—
Triple-net operating lease and ground lease rent expense710,68374,65629,633
Income from unconsolidated affiliates related to real estate ventures(148,434)(544)—
Adjusted EBITDAR$(148,497)

Guarantor Financial Information

As of December 31, 2020, all of our principal debt arrangements are guaranteed by each of our wholly owned material domestic subsidiaries that guarantee our senior credit facility. Our principal debt arrangements are not guaranteed by MGP, the Operating Partnership, MGM Grand Detroit, MGM National Harbor, Blue Tarp reDevelopment, LLC (the entity that owns and operates MGM Springfield), and each of their respective subsidiaries. Our foreign subsidiaries, including MGM China and its subsidiaries, are also not guarantors of our principal debt arrangements. In the event that any subsidiary is no longer a guarantor of our credit facility or any of our future capital markets indebtedness, that subsidiary will be released and relieved of its obligations to guarantee our existing senior notes. The indentures governing the senior notes further provide that in the event of a sale of all or substantially all of the assets of, or capital stock in a subsidiary guarantor then such subsidiary guarantor will be released and relieved of any obligations under its subsidiary guarantee.

The guarantees provided by the subsidiary guarantors rank senior in right of payment to any future subordinated debt of ours or such subsidiary guarantors, junior to any secured indebtedness to the extent of the value of the assets securing such debt and effectively subordinated to any indebtedness and other obligations of our subsidiaries that do not guarantee the senior notes. In addition, the obligations of each subsidiary guarantor under its guarantee is limited so as not to constitute a fraudulent conveyance under applicable law, which may eliminate the subsidiary guarantor’s obligations or reduce such obligations to an amount that effectively makes the subsidiary guarantee lack value.

The summarized financial information of us and our guarantor subsidiaries, on a combined basis, is presented below. Certain of our guarantor subsidiaries collectively own Operating Partnership units and each subsidiary accounts for its respective investment under the equity method within the summarized financial information presented below. These subsidiaries have also accounted for the MGP master lease as an operating lease, recording operating lease liabilities and operating ROU assets with the related rent expense of guarantor subsidiaries reflected within the summarized financial information.

December 31,
2020
Balance Sheet(In thousand)
Current assets$4,749,542
Investment in the MGP Operating Partnership1,617,055
Intercompany accounts due from non-guarantor subsidiaries16,622
MGP master lease right-of-use asset, net6,714,101
Other long-term assets12,318,912
MGP master lease operating lease liabilities – current153,415
Other current liabilities1,123,814
MGP master lease operating lease liabilities – noncurrent7,191,450
Other long-term liabilities15,827,794
Year Ended
December 31,
2020
Income Statement(In thousand)
Net revenues$3,586,846
MGP master lease rent expense(641,841)
Operating loss(222,009)
Loss from continuing operations(520,152)
Net loss(310,705)
Net loss attributable to MGM Resorts International(310,705)

Liquidity and Capital Resources

Cash Flows – Summary

Our cash flows consisted of the following:

Year Ended December 31,
202020192018
(In thousands)
Net cash provided by (used in) operating activities$(1,493,043)$1,810,401$1,722,539
Net cash provided by (used in) investing activities2,159,3043,519,434(2,083,021)
Net cash provided by (used in) financing activities2,103,427(4,529,594)389,234

Cash Flows

Operating activities. Trends in our operating cash flows tend to follow trends in operating income, excluding non-cash charges, but can be affected by changes in working capital, the timing of significant interest payments, tax payments or refunds, and distributions from unconsolidated affiliates. Cash used in operating activities was $1.5 billion in 2020 compared to cash provided by operating activities of $1.8 billion in 2019. Operating cash flows were significantly negatively impacted by the temporary closures at our properties and hotels, travel restrictions to Macau, and other operational restrictions resulting from the COVID-19 pandemic, as discussed above, and triple-net operating lease rent payments, partially offset by an increase in distributions from unconsolidated affiliates primarily received from the MGP BREIT Venture and a decrease in cash paid for interest, as discussed in “Non-operating Results.” In addition to the decrease in our operating results across all properties, the current year period was negatively affected by a change in working capital primarily related to a decrease in accrued expenses, partially offset by a decrease in accounts receivable, each of which were impacted by the COVID-19 pandemic, discussed above, and the settlement of the October 1 litigation. The prior year period was negatively affected by a change in working capital, primarily related to gaming deposits.

Investing activities. Our investing cash flows can fluctuate significantly from year to year depending on our decisions with respect to strategic capital investments in new or existing resorts, business acquisitions or dispositions, and the timing of maintenance capital expenditures to maintain the quality of our resorts. Capital expenditures related to regular investments in our existing resorts can also vary depending on timing of larger remodel projects related to our public spaces and hotel rooms.

Cash provided by investing activities decreased to $2.2 billion in 2020 from $3.5 billion in 2019. The change was due primarily to $2.5 billion in net cash proceeds from the sale of the real estate of Mandalay Bay and MGM Grand Las Vegas in the current year compared to $4.2 billion of proceeds received related to the sale of Bellagio and $652 million of proceeds received related to the sale of Circus Circus Las Vegas and adjacent land that was partially offset by a $536 million outflow for the acquisition of Empire City in the prior year, and a decrease of $468 million in capital expenditures, partially offset by a $37 million decrease in distributions from unconsolidated affiliates. In the current year period, distributions from unconsolidated affiliates included $51 million related to our share of a distribution received from CityCenter. In the prior year period, distributions from unconsolidated affiliates included $90 million related to our share of a distribution received from CityCenter. The decrease in capital expenditures primarily reflects our efforts to reduce or defer planned domestic capital expenditures as we mitigate the impact of the COVID-19 pandemic on our liquidity, and the substantial completion of our MGM Springfield development project, the rebranding at Park MGM, and the expansion of the convention center at MGM Grand Las Vegas in the prior year, as discussed in further detail below.

Capital Expenditures

In 2020, we made capital expenditures of $271 million, of which $108 million related to MGM China. Capital expenditures at MGM China included $95 million primarily related to construction close-out and projects at MGM Cotai and $13 million related to projects at MGM Macau. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $162 million included expenditures relating to information technology, health and safety initiatives, and various room, restaurant, and entertainment venue remodels.

In 2019, we made capital expenditures of $739 million, of which $146 million related to MGM China. Capital expenditures at MGM China included $118 million related to projects at MGM Cotai and $28 million related to projects at MGM Macau. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations and corporate entities of $593 million included $49 million related to the construction of MGM Springfield, $52 million related to the Park MGM rebranding project, as well as expenditures relating to information technology, the expansion of the convention center at MGM Grand Las Vegas and various room, restaurant, and entertainment venue remodels.

Financing activities. Cash provided by financing activities was $2.1 billion in 2020 compared to cash used in financing activities of $4.5 billion in 2019. In 2020, we received net proceeds from the incurrence of the bridge loan facility in connection with the MGP BREIT Venture Transaction of $1.3 billion, net proceeds of $525 million from MGP’s Class A share issuances, net debt borrowings of $1.1 billion, as further discussed below, repurchased $354 million of our common stock, distributed $286 million to noncontrolling interest owners, and paid $78 million in dividends to our shareholders. In comparison, in the prior year period, we repaid net debt of $4.1 billion, had net proceeds from MGP’s issuance of Class A shares of $1.3 billion, repurchased $1.0 billion of our common stock, distributed $223 million to noncontrolling interest owners, and paid $271 million in dividends to our shareholders.

Borrowings and Repayments of Long-term Debt

In 2020, we had net proceeds from the incurrence of the bridge loan facility in connection with the MGP BREIT Venture Transaction of $1.3 billion and net debt borrowings of $1.1 billion, which consisted of net borrowings on MGM China’s credit facility of $103 million, our issuance of $750 million of 4.75% senior notes and $750 million of 6.75% senior notes, the Operating Partnership’s issuance of $750 million of 3.875% senior notes and $800 million of 4.625% senior notes, and MGM China’s issuance of $500 million of 5.25% senior notes, partially offset by the tender of $750 million of our senior notes and the corresponding $97 million of tender offer costs, and the net repayment of $1.7 billion on the Operating Partnership's senior credit facility consisting of the repayment of $1.3 billion of its term loan B facility in full using the proceeds of the $1.3 billion bridge loan facility, which was then assumed by the MGP BREIT Venture, the repayment of its $399 million term loan A facility in full using the net proceeds from MGP’s settlement of forward equity agreements, partially offset by a net draw of $10 million on its revolving credit facility.

In March 2020, with certain of the proceeds from the MGP BREIT Venture Transaction, we completed cash tender offers for an aggregate amount of $750 million of our senior notes, comprised of $325 million principal amount of our outstanding 5.75% senior notes due 2025, $100 million principal amount of our outstanding 4.625% senior notes due 2026, and $325 million principal amount of our outstanding 5.5% senior notes due 2027.

In May 2020, we issued $750 million in aggregate principal amount of 6.750% senior notes due 2025. The proceeds were used to further increase our liquidity position.

In June 2020, the Operating Partnership issued $800 million in aggregate principal amount of 4.625% senior notes due 2025. The proceeds were used to repay borrowings on the Operating Partnership’s senior credit facility, which were used to fund the May 2020 redemption of $700 million of Operating Partnership units held by us.

In June 2020, MGM China issued $500 million in aggregate principal amount of 5.25% senior notes due 2025. The proceeds were used to partially repay amounts outstanding under the MGM China credit facility and for general corporate purposes.

In October 2020, we issued $750 million in aggregate principal amount of 4.75% senior notes due 2028. The proceeds were used for general corporate purposes.

In November 2020, the Operating Partnership issued $750 million in aggregate principal amount of 3.875% senior notes due 2029. The proceeds were used for general corporate purposes, which included the December 2020 redemption of $700 million of the Operating Partnership units held by us.

In 2019, we repaid net debt of $4.1 billion which consisted of the repayment of our $850 million 8.625% notes due 2019, the repayment of an aggregate $2.8 billion of our senior notes, as described below, $750 million of net repayments on our senior credit facility, $1.1 billion of net repayments on the Operating Partnership’s senior credit facility, and $1.8 billion of net repayments on the current and previous MGM China senior secured credit facilities, partially offset by our issuance of $1.0 billion of our senior notes, the Operating Partnership’s issuance of $750 million of senior notes, and MGM China’s issuance of $1.5 billion of senior notes.

In April 2019, we issued $1.0 billion in aggregate principal amount of 5.5% senior notes due 2027. We used the net proceeds from the offering to fund the purchase of $639 million in aggregate principal amount of our outstanding 6.75% senior notes due 2020 and $233 million in aggregate principal amount of our outstanding 5.25% senior notes due 2020 through our cash tender offers. In December 2019, we used a portion of the net proceeds from the Bellagio transaction to redeem for cash the remaining $267 million principal amount of its outstanding 5.25% senior notes due 2020, the remaining $361 million principal amount of its outstanding 6.75% senior notes due 2020, all $1.25 billion principal amount of its outstanding 6.625% senior notes due 2021, permanently repay the $750 million outstanding on our term loan A facility, and fully repay amounts outstanding under our revolving credit facility.

In May 2019, MGM China issued $750 million in aggregate principal amount of 5.375% senior notes due 2024 and $750 million in aggregate principal amount of 5.875% senior notes due 2026 and used the proceeds to permanently repay approximately $1.0 billion on its term loan facility with the remainder used to pay down its revolving credit facility. In August 2019, MGM China entered into a new $1.25 billion senior unsecured revolving credit facility, on which it drew $776 million and used the proceeds to fully repay the borrowings outstanding under its previous senior secured credit facility.

In November 2019, the Operating Partnership used the proceeds from its November 2019 Class A share issuance to prepay $65 million on the term loan A facility and $476 million on the term loan B facility, which reflects all scheduled amortization plus additional principal, and fully repaid the outstanding balance on its revolving credit facility. The proceeds from the Operating Partnership’s issuance of $750 million 5.75% senior notes due 2027 in January 2019 along with the proceeds from MGP’s January 2019 Class A share issuance were primarily used to finance MGP’s acquisition of the real property associated with Empire City and finance the Park MGM Transaction.

Dividends, Distributions to Noncontrolling Interest Owners and Share Repurchases

In May 2018, our Board of Directors authorized a $2.0 billion stock repurchase program and completed the previously announced $1.0 billion stock repurchase program. In 2020, we repurchased and retired $354 million of our common stock pursuant to our current $2.0 billion stock repurchase plan. In 2019, we repurchased and retired $1.0 billion of our common stock pursuant to our current $2.0 billion stock repurchase plan. The remaining availability under our $2.0 billion stock repurchase program was approximately $4 million as of December 31, 2020, and the remaining availability under the $3.0 billion stock repurchase program was $3.0 billion as of December 31, 2020.

In March 2020, we paid a dividend of $0.15 per share, and in June 2020, September 2020 and December 2020, we paid dividends of $0.0025 per share, totaling $78 million for 2020. In March 2019, June 2019, September 2019 and December 2019, we paid dividends of $0.13 per share, totaling $271 million for 2019.

In 2020, MGM China paid the final dividend for 2019 of $41 million, of which we received $23 million and noncontrolling interests received $18 million. In 2019, MGM China paid dividends of $62 million, of which we received $35 million and noncontrolling interests received $27 million.

The Operating Partnership paid the following distributions to its partnership unit holders during 2020 and 2019:

•$602 million of distributions paid in 2020, of which we received $358 million and MGP received $244 million, which MGP concurrently paid as a dividend to its Class A shareholders; and
•$534 million of distributions paid in 2019, of which we received $372 million and MGP received $162 million, which MGP concurrently paid as a dividend to its Class A shareholders.

Other Factors Affecting Liquidity and Anticipated Uses of Cash

We require a certain amount of cash on hand to operate our resorts. In addition to required cash on hand for operations, we utilize corporate cash management procedures to minimize the amount of cash held on hand or in banks. Funds are swept from the accounts at most of our domestic resorts daily into central bank accounts, and excess funds are invested overnight or are used to repay amounts drawn under our revolving credit facility. In addition, from time to time we may use excess funds to repurchase our outstanding debt and equity securities subject to limitations in our revolving credit facility and Delaware law, as applicable. We have significant outstanding debt, interest payments, rent payments, and contractual obligations in addition to planned capital expenditures and investments.

As previously discussed, the spread of COVID-19 and developments surrounding the global pandemic have had, and we expect will continue to have, a significant impact on our business, financial condition, results of operations, and cash flows. During this time, we have remained committed to managing our expenses to strengthen our liquidity position. As of December 31, 2020, we had cash and cash equivalents of $5.1 billion, of which MGM China held $344 million and the Operating Partnership held $626 million. In addition to our cash and cash equivalent balance, we have significant real estate assets and other holdings: we own MGM Springfield, a 50% interest in CityCenter in Las Vegas, an approximate 56% interest in MGM China, and a 53% economic interest in MGP.

At December 31, 2020, we had $12.5 billion in principal amount of indebtedness, including $10 million outstanding under the $1.35 billion Operating Partnership revolving credit facility, and $770 million outstanding under the $1.25 billion MGM China revolving credit facility. No amounts were drawn on our $1.5 billion revolving credit facility or the $400 million MGM China second revolving credit facility. We have no debt maturing prior to 2022.

We have planned capital expenditures in 2021 of approximately $425 million to $450 million domestically and approximately $100 million to $125 million at MGM China. We also plan to invest approximately $220 million in BetMGM during 2021. As of December 31, 2020, our expected cash interest payments excluding MGP and MGM China for each of 2021, 2022, and 2023 was approximately $340 million, and our expected cash interest payments on a consolidated basis for 2021, 2022, and 2023 were approximately $720 million, $715 million, and $705 million, respectively. We are also required as of December 31, 2020 to make annual rent payments of $828 million under the master lease with MGP, annual rent payments of $250 million under the lease with Bellagio BREIT Venture, and annual rent payments of $292 million under the lease with MGP BREIT Venture, which leases are also subject to annual escalators.

In April 2020, we amended our credit facility to provide us with certain relief from the effects of the COVID-19 pandemic. The amendment provides us a waiver of the financial maintenance covenants for the period beginning with the quarter ending June 30, 2020 through the earlier of (x) the date we deliver to the administrative agent a compliance certificate with respect to the quarter ending June 30, 2021 and (y) the date we deliver to the administrative agent an irrevocable notice terminating the covenant relief period (such period, the “covenant relief period”). In connection with the amendment, we pledged the Operating Partnership units held by loan parties to the lenders as collateral. We also agreed to certain limitations including, among other things, further restricting our ability to incur debt and liens, make restricted payments, make investments and prepay subordinated debt. In addition, in connection with the amendment, we agreed to a liquidity test that requires our borrower group (as defined in the credit agreement) to maintain a minimum liquidity level of not less than $600 million (including unrestricted cash, cash equivalents and availability under the revolving credit facility), tested at the end of each month during the covenant relief period. In February 2021, we further amended our credit facility to extend the covenant relief period through (but excluding) the second quarter of 2022 and adjust the required leverage and interest coverage levels for the covenant when it is reimposed at the end of the waiver period. Pursuant to that amendment, we agreed to increase our total required minimum liquidity level to $1.0 billion.

Additionally, due to the continued impact of the COVID-19 pandemic, in April 2020, MGM China entered into an amendment to its credit agreement, which provided for a waiver of its maximum leverage ratio through the second quarter of 2021, and a waiver of its minimum interest coverage ratio beginning in the second quarter of 2020 through the second quarter of 2021. In October 2020, MGM China further amended its credit agreement to provide for a waiver of its maximum leverage ratio and its minimum interest coverage ratio through the fourth quarter of 2021. In October 2020, MGM China entered into an amendment of its second credit facility which provided for a waiver of its maximum leverage ratio and its minimum interest coverage ratio through the fourth quarter

of 2021. In February 2021, MGM China further amended each of its revolving credit facility and its second revolving credit facility to provide for waivers of the maximum leverage ratio and minimum interest coverage ratio through the fourth quarter of 2022.

In January 2021, the Operating Partnership paid $136 million of distributions to its partnership unit holders, of which we received $72 million and MGP received $64 million, which MGP concurrently paid as a dividend to its Class A shareholders.

On February 10, 2021, our Board of Directors approved a quarterly dividend of $0.0025 per share. The dividend will be payable on March 15, 2021 to holders of record on March 10, 2021. Future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including our results of operations, financial condition, and other factors that our Board of Directors may deem relevant.

As previously discussed, the COVID-19 pandemic has caused, and is continuing to cause, significant economic disruption both globally and in the United States, and will continue to impact our business, financial condition, results of operations and cash flows. We cannot predict the degree, or duration, to which our operations will be affected by the COVID-19 outbreak, and the effects could be material. While we believe our strong liquidity position, valuable real estate assets and aggressive cost reduction initiatives will enable us to fund our current obligations for the foreseeable future, COVID-19 has resulted in significant disruption of global financial markets, which could have a negative impact on our ability to access capital in the future. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to further adjust our operating plan, including the implementation or extension of new or existing restrictions, which may include the reinstatement of stay-at-home orders in the jurisdictions in which we operate or additional restrictions on travel and/or our business operations. Because the situation is ongoing, and because the duration and severity remain unclear, it is difficult to forecast any impacts on our future results.

For additional information related to our long-term obligations, refer to the maturities of long-term debt table in Note 9 and the lease liability maturity table in Note 11.

Principal Debt Arrangements

See Note 9 to the accompanying consolidated financial statements for information regarding our debt agreements as of December 31, 2020.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements. To prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, we must make estimates and assumptions that affect the amounts reported in the consolidated financial statements. We regularly evaluate these estimates and assumptions, particularly in areas we consider to be critical accounting estimates, where the estimates and assumptions involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material effect on our financial condition or results of operations. However, by their nature, judgments are subject to an inherent degree of uncertainty and therefore actual results can differ from our estimates.

Loss Reserve for Casino Accounts Receivable

Marker play represents a significant portion of the table games volume at certain of our Las Vegas resorts. Our other casinos do not emphasize marker play to the same extent, although we offer markers to customers at those casinos as well. MGM China extends credit to certain in-house VIP gaming customers and gaming promoters. We maintain strict controls over the issuance of markers and aggressively pursue collection from our customers who fail to pay their marker balances timely. These collection efforts are similar to those used by most large corporations when dealing with overdue customer accounts, including the mailing of statements and delinquency notices, personal contacts, the use of outside collection agencies and civil litigation. Markers are generally legally enforceable instruments in the United States and Macau. Markers are not legally enforceable instruments in some foreign countries, but the United States assets of foreign customers may be reached to satisfy judgments entered in the United States. We consider the likelihood and difficulty of enforceability, among other factors, when we issue credit to customers at our domestic resorts who are not residents of the United States. MGM China performs background checks and investigates the credit worthiness of gaming promoters and casino customers prior to issuing credit. Refer to Note 2 for further discussion of our casino receivables and those due from customers residing in foreign countries.

We maintain a loss reserve for casino accounts at all of our operating casino resorts. The provision for doubtful accounts, an operating expense, increases the loss reserve. We regularly evaluate the loss reserve for casino accounts. At domestic resorts where marker play is not significant, the loss reserve is generally established by applying standard reserve percentages to aged account

balances, which is supported by relevant historical analysis and any other known information such as the current economic conditions that could drive losses. At domestic resorts where marker play is significant, we apply standard reserve percentages to aged account balances under a specified dollar amount and specifically analyze the collectability of each account with a balance over the specified dollar amount, based on the age of the account, the customer’s current and expected future financial condition, collection history and current and expected future economic conditions. MGM China specifically analyzes the collectability of casino receivables on an individual basis taking into account the age of the account, the financial condition and the collection history of the gaming promoter or casino customer.

In addition to enforceability issues, the collectability of unpaid markers given by foreign customers at our domestic resorts is affected by a number of factors, including changes in currency exchange rates and economic conditions in the customers’ home countries. Because individual customer account balances can be significant, the loss reserve and the provision can change significantly between periods, as information about a certain customer becomes known or as changes in a region’s economy occur.

The following table shows key statistics related to our casino receivables, net of discounts:

December 31,
20202019
(In thousands)
Casino receivables$260,998$394,163
Loss reserve for casino accounts receivable107,72388,338
Loss reserve as a percentage of casino accounts receivable41%22%

Approximately $54 million and $77 million of casino receivables and $18 million and $16 million of the loss reserve for casino accounts receivable relate to MGM China at December 31, 2020 and 2019, respectively. The loss reserve as a percentage of casino accounts receivable increased in the current year due to an increase in the age of outstanding account balances at our domestic resorts and MGM China primarily due to the COVID-19 pandemic. At December 31, 2020, a 100 basis-point change in the loss reserve as a percentage of casino accounts receivable would change income before income taxes by $3 million.

Fixed Asset Capitalization and Depreciation Policies

Property and equipment are stated at cost. A significant amount of our property and equipment was acquired through business combinations and was therefore recognized at fair value at the acquisition date. Maintenance and repairs that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets. When we construct assets, we capitalize direct costs of the project, including fees paid to architects and contractors, property taxes, and certain costs of our design and construction subsidiaries. In addition, interest cost associated with major development and construction projects is capitalized as part of the cost of the project. Interest is typically capitalized on amounts expended on the project using the weighted average cost of our outstanding borrowings. Capitalization of interest starts when construction activities begin and ceases when construction is substantially complete, or development activity is suspended for more than a brief period.

We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense, or a capital asset is a matter of judgment. When constructing or purchasing assets, we must determine whether existing assets are being replaced or otherwise impaired, which also may be a matter of judgment. In addition, our depreciation expense is highly dependent on the assumptions we make about our assets’ estimated useful lives. We determine the estimated useful lives based on our experience with similar assets, engineering studies, and our estimate of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.

Impairment of Long-lived Assets, Goodwill and Indefinite-lived Intangible Assets

We evaluate our property and equipment and other long-lived assets for impairment based on our classification as held for sale or to be held and used. Several criteria must be met before an asset is classified as held for sale, including that management with the appropriate authority commits to a plan to sell the asset at a reasonable price in relation to its fair value and is actively seeking a buyer. For assets classified as held for sale, we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, offers received, or a discounted cash flow model. For assets to be held and used, we review for impairment whenever indicators of impairment exist. We then compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is recorded based on the fair value of the asset. For operating assets, fair value is typically measured using a discounted cash flow model whereby future cash flows are discounted using a weighted average cost of capital, developed using a standard capital asset pricing model, based on guideline

companies in our industry. If an asset is still under development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets to be held for sale or assets to be held and used, are recorded as operating expenses.

There are several estimates, assumptions and decisions in measuring impairments of long-lived assets. First, management must determine the usage of the asset. To the extent management decides that an asset will be sold, it is more likely that an impairment may be recognized. Assets must be tested at the lowest level for which identifiable cash flows exist. This means that some assets must be grouped, and management has some discretion in the grouping of assets. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates.

On a quarterly basis, we review our major long-lived assets to determine if events have occurred or circumstances exist that indicate a potential impairment. Potential factors which could trigger an impairment include underperformance compared to historical or projected operating results, negative industry or economic factors, significant changes to our operating environment, or changes in intended use of the asset group. We estimate future cash flows using our internal budgets and probability weight cash flows in certain circumstances to consider alternative outcomes associated with recoverability of the asset group, including potential sale. Historically, undiscounted cash flows of our significant operating asset groups have exceeded their carrying values by a substantial margin. During 2019, we recorded a non-cash impairment charge relating to the carrying value of Circus Circus Las Vegas and adjacent land. Refer to Note 16 for further discussion.

We review indefinite-lived intangible assets at least annually and between annual test dates in certain circumstances. We perform our annual impairment test for indefinite-lived intangible assets in the fourth quarter of each fiscal year. Indefinite-lived intangible assets consist primarily of license rights and trademarks. For our 2020 annual impairment tests, we utilized the option to perform a qualitative (“step zero”) analysis for certain of our indefinite-lived intangibles and concluded it was more likely than not that the fair values of such intangibles exceeded their carrying values by a substantial margin. We elected to perform a quantitative analysis for the Northfield gaming license in 2020 primarily using the discounted cash flow approach, for which the fair value exceeded its carrying value by 14%. As discussed below, management makes significant judgments and estimates as part of these analyses. If certain future operating results do not meet current expectations it could cause carrying values of the intangibles to exceed their fair values in future periods, potentially resulting in an impairment charge.

We review goodwill at least annually and between annual test dates in certain circumstances. None of our reporting units incurred any goodwill impairment charges in 2020. For our 2020 annual impairment tests, we utilized the option to perform a step zero analysis for certain of our reporting units and concluded it was more likely than not that the fair values of such reporting units exceeded their carrying values by a substantial margin. For reporting units for which we elected to perform a quantitative analysis, the fair value of such reporting units exceeded their carrying value by a substantial margin. As discussed below, management makes significant judgments and estimates as part of these analyses. If future operating results of our reporting units do not meet current expectations it could cause carrying values of our reporting units to exceed their fair values in future periods, potentially resulting in a goodwill impairment charge.

There are several estimates inherent in evaluating these assets for impairment. In particular, future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. In addition, the determination of multiples, capitalization rates and the discount rates used in the impairment tests are highly judgmental and dependent in large part on expectations of future market conditions.

See Note 2 and Note 7 to the accompanying consolidated financial statements for further discussion of goodwill and other intangible assets.

Impairment of Investments in Unconsolidated Affiliates

See Note 2 to the accompanying consolidated financial statements for discussion of our evaluation of other-than-temporary impairment of investments in unconsolidated affiliates. During 2020, we recorded $64 million in other-than-temporary impairment charges on an equity method investment. Refer to Note 6 for further discussion. Our investments in unconsolidated affiliates had no material impairments in 2019 or 2018.

Income Taxes

We are subject to income taxes in the U.S. federal jurisdiction, various state and local jurisdictions, and foreign jurisdictions, although the income taxes paid in foreign jurisdictions are not material.

We recognize deferred tax assets and liabilities related to net operating losses, tax credit carryforwards and temporary differences with future tax consequences. We reduce the carrying amount of deferred tax assets by a valuation allowance if it is more likely than not such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on such "more-likely-than-not" realization threshold. This assessment considers, among other

matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the scheduled reversal of deferred tax liabilities, the duration of statutory carryforward periods, and tax planning strategies.

We recorded a valuation allowance on the net deferred tax assets of our domestic jurisdictions of $2.7 billion and $2.5 billion as of December 31, 2020 and 2019, respectively, and a valuation allowance on certain net deferred tax assets of foreign jurisdictions of $156 million and $104 million as of December 31, 2020 and 2019, respectively. We reassess the realization of deferred tax assets each reporting period. In the event we were to determine that it is more likely than not that we will be unable to realize all or part of our deferred tax assets in the future, we would increase the valuation allowance and recognize a corresponding charge to earnings or other comprehensive income in the period in which we make such a determination. Likewise, if we later determine that we are more likely than not to realize the deferred tax assets, we would reverse the applicable portion of the previously recognized valuation allowance. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income in the jurisdictions in which the deferred tax assets are located.

Furthermore, we are subject to routine corporate income tax audits in many of these jurisdictions. We believe that positions taken on our tax returns are fully supported, but tax authorities may challenge these positions, which may not be fully sustained on examination by the relevant tax authorities. Accordingly, our income tax provision includes amounts intended to satisfy assessments that may result from these challenges. Determining the income tax provision for these potential assessments and recording the related effects requires management judgments and estimates. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously included in our income tax provision and, therefore, could have a material impact on our income tax provision, net income and cash flows.

Refer to Note 10 in the accompanying consolidated financial statements for further discussion relating to income taxes.

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