MGM Resorts International (MGM) FY 2023 MD&A

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

This management’s discussion and analysis of financial condition and results of operations includes discussion as of and for the year ended December 31, 2023 compared to December 31, 2022. Discussion of our financial condition and results of operations as of and for the year ended December 31, 2022 compared to December 31, 2021 can be found in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on February 24, 2023.

Overview

Our primary business is the operation of casino properties, which offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities. We lease the real estate assets of our domestic properties pursuant to triple-net lease agreements.

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. Our results will also depend upon our ability to expand our ownership, management and operation of gaming facilities and accessing new markets for iGaming and online sports betting.

Our results are also affected by significant recent developments in our business, which principally consist of transactions we have executed in furtherance of our businesses strategy and the recovery from the COVID-19 pandemic, including the removal of COVID-19 travel restrictions in Macau and mainland China, as described in further detail below.

Overview of strategic business developments

•In July 2018, we and Entain formed BetMGM. 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.

•On September 28, 2021, we announced that we and ORIX were selected by Osaka as the region’s integrated resort partner. In December 2021, we and ORIX formed a venture, Osaka IR KK, through which we plan to develop the integrated resort. On April 27, 2022, we, together with Osaka prefecture/city, Osaka IR KK, and ORIX, submitted an ADP to Japan’s central government. On April 14, 2023, we announced that the Japanese government officially certified the ADP, and, in September 2023, Osaka IR KK signed an agreement with Osaka to implement the ADP.

•On April 29, 2022, VICI acquired MGM Growth Properties LLC (“MGP”) in a stock-for-stock transaction (such transaction, the “VICI Transaction”). MGP Class A shareholders received 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and we received 1.366 units of VICI Properties OP LLC (“VICI OP”) in exchange for each MGM Growth Properties Operating Partnership LP (“MGP OP”) unit held by us. In connection with the exchange, VICI OP redeemed the majority of our VICI OP units, with us retaining an approximate 1% ownership interest in VICI OP. MGP’s Class B share that was held by us was cancelled. Accordingly, we no longer hold a controlling interest in MGP and deconsolidated MGP upon the closing of the transaction. In connection with the VICI Transaction, we entered into an amended and restated master lease with VICI. See Note 4 and Note 11 in the accompanying consolidated financial statements for discussion of the transaction and lease, respectively.

•On May 17, 2022, we acquired the operations of The Cosmopolitan for cash consideration of $1.625 billion, plus working capital adjustments, for a total purchase price of approximately $1.7 billion. Additionally, we entered into a lease agreement for the real estate assets of The Cosmopolitan. See Note 4 and Note 11 for discussion of the transaction and lease, respectively.

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•In June 2022, the Macau government enacted a new gaming law that provides for material changes to the legal form of gaming concessions in Macau, including discontinuing and prohibiting gaming subconcessions subsequent to their expiration, and also includes material changes to the rights and obligations provided for under the new gaming concessions that were awarded in the public tender that concluded in December 2022, such as limiting the term of concessions to a maximum of 10 years. As a result, we reassessed the useful life of the MGM Grand Paradise gaming subconcession intangible asset and reduced the useful life to align with the contractual term of the subconcession, which expired on December 31, 2022, thereby accelerating the recognition of amortization within our statements of operations. See Note 7 in the accompanying consolidated financial statements for further discussion. In December 2022, we were awarded a new gaming concession, which permits the operation of games of chance or other games in casinos in Macau, commencing on January 1, 2023.

•On September 7, 2022, we acquired LeoVegas through a tender offer at a cash price of SEK 61 per share, for a total fair value of equity interests acquired of approximately $556 million, inclusive of cash settlement of equity awards. See Note 4 for discussion of this transaction.

•On December 19, 2022, we completed the sale of the operations of The Mirage to an affiliate of Seminole Hard Rock Entertainment, Inc. for cash consideration of $1.075 billion, or $1.1 billion, net of purchase price adjustments and transaction costs. At closing, the master lease with VICI was amended to remove The Mirage and reflect a $90 million reduction in annual cash rent. Refer to Note 4 for further discussion of this transaction.

•On February 15, 2023, we completed the sale of the operations of Gold Strike Tunica to CNE Gaming Holdings, LLC, a subsidiary of Cherokee Nation Business, for cash consideration of $450 million, or $474 million, net of purchase price adjustments and transaction costs. At closing, the master lease with VICI was amended to remove Gold Strike Tunica and reflect a $40 million reduction in annual cash rent. Refer to Note 4 for further discussion of this transaction.

•In August 2023, LeoVegas completed the acquisition of the majority ownership of Push Gaming, a digital gaming developer.

Cybersecurity Issue

In September 2023, we identified a cybersecurity issue involving unauthorized access to certain of our U.S. systems by criminal actors. Upon discovery of the Cybersecurity Issue, we shut down certain systems to mitigate risk to customer information, which resulted in operational disruptions at our domestic properties during the third quarter of 2023. Based on our investigation, we believe that the unauthorized activity has been contained. We determined that the criminal actors obtained, for some of our customers, personal information (including name, contact information (such as phone number, email address and postal address), gender, date of birth and driver’s license numbers). For a limited number of customers, Social Security numbers and passport numbers were also obtained by the criminal actors. The types of impacted information varied by individual. At this time, we do not believe that customer passwords, bank account numbers or payment card information were obtained by the criminal actors.

In connection with the Cybersecurity Issue, we became subject to consumer class actions and state and federal regulatory inquiries to which we intend to respond to in due course. However, we cannot predict the timing or outcome of any of these potential matters, or whether we may be subject to additional legal proceedings, claims, regulatory inquiries, investigations, or enforcement actions as a result.

The Cybersecurity Issue, together with the incident response efforts discussed above, resulted in some disruptions to our business operations primarily during the third quarter of 2023 and we also incurred expenses for technology consulting services, legal fees and other third-party advisors in connection with this issue during the second half of 2023, which were not material to our 2023 results.

We have incurred, and may continue to incur, certain expenses related to the Cybersecurity Issue, including expenses to respond to, remediate, and investigate this matter. Although we have cybersecurity insurance that we expect will cover these expenses, the full scope of the costs and related impacts of this issue have not been determined. The Cybersecurity Issue is not expected to have a material effect on our financial condition and results of operations.

COVID-19

The spread of COVID-19 and developments surrounding the global pandemic had a significant impact on our business from 2020 through early 2023. Domestically, we had temporary closures, re-closures, and re-openings of our

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properties or portions thereof, as well as operations without certain amenities and subject to certain occupancy limitations, with restrictions varying by jurisdiction. In 2022, all of our 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.

In Macau, travel and entry restrictions, testing and quarantine requirements, as well as temporary closures and suspensions of gaming, hotel, restaurant, and retail operations, significantly impacted visitation to our Macau properties from 2020 through early 2023. Beginning in December 2022, Macau and mainland China started to unwind testing and quarantine requirements as well as travel and entry restrictions associated with the “dynamic zero” COVID-19 policy. On January 8, 2023, Macau lifted the majority of its COVID-19 pandemic travel and quarantine restrictions with the exception of overseas visitors travelling from outside of mainland China, Hong Kong and Taiwan being required to present a negative nucleic acid test or rapid antigen test result, and, on February 6, 2023, all remaining COVID-19 travel restrictions were removed.

Visitation Statistics

The Las Vegas Strip segment results of operations are heavily impacted by visitor volume and trends. During the year ended December 31, 2023, Las Vegas visitor volume increased 5% compared to 2022 according to information published by the Las Vegas Convention and Visitors Authority. The Las Vegas market has experienced the expansion of convention center, sporting, music, and entertainment events in the current year, which have positively impacted business and leisure travel.

The MGM China segment results of operations also are heavily impacted by visitor volume and trends. During the year ended December 31, 2023, Macau visitor arrivals increased 395% compared to 2022 according to statistics published by the Statistics and Census Service of the Macau Government, as 2022 was more negatively affected by travel and entry restrictions in Macau than in 2023.

Key Performance Indicators

Key performance indicators related to gaming and hotel revenue are:

•Gaming revenue indicators: table games drop and slots handle (volume indicators); “win” or “hold” percentage, which is not fully controllable by us. Our normal table games hold percentage at our Las Vegas Strip Resorts is in the range of 25.0% to 35.0% of table games drop for baccarat and 19.0% to 23.0% for non-baccarat; and

•Hotel revenue indicators (for Las Vegas Strip Resorts): 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, 2021 as a result of property closures due to the pandemic were excluded from the available room count when calculating hotel occupancy and RevPAR.

Results of Operations

Summary Operating Results

The following table summarizes our operating results:

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Consolidated net revenues increased 23% in 2023 compared to 2022 due primarily to MGM China increasing 368% and our Las Vegas Strip Resorts increasing 5%, partially offset by Regional Operations decreasing 4%, compared to 2022, as discussed below.

Consolidated operating income increased 31% in 2023 compared to 2022. The increase was due primarily to the increase in net revenues, discussed above, a $2.7 billion decrease in depreciation and amortization expense, and a $399 million gain in the current year period related to the sale of the operations of Gold Strike Tunica recorded in property transactions, net, partially offset by a $2.3 billion gain related to the VICI Transaction and a $1.1 billion gain on the sale of the operations of The Mirage recorded in property transactions, net in 2022, as well as a current year increase in rent expense recorded within general and administrative expense primarily related to the VICI and The Cosmopolitan leases, which commenced in April 2022 and May 2022, respectively. Depreciation and amortization expense decreased compared to 2022 primarily due to $2.5 billion of amortization in 2022 related to the MGM Grand Paradise gaming subconcession, which became fully amortized in 2022.

Net Revenues by Segment

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

Las Vegas Strip Resorts

Las Vegas Strip Resorts net revenues for 2023 increased 5% compared to 2022 due primarily to a full year of net revenues related to The Cosmopolitan and an increase in non-gaming revenues as discussed below, partially offset by the disposition of The Mirage.

Las Vegas Strip Resorts casino revenue increased 1% in 2023 compared to 2022 primarily due to a full year of operating results from The Cosmopolitan, increases in volume partially due to the inaugural F1 race, and an increase in table games win percentage, partially offset by an increase in incentives and the disposition of The Mirage.

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

Las Vegas Strip Resorts rooms revenue increased 11% in 2023 compared to 2022 due primarily to a full year of operating results from The Cosmopolitan and an increase in RevPAR, partially due to the inaugural F1 race, partially offset by the disposition of The Mirage.

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

(1)Rooms that were out of service, including full and midweek closures, during the year ended December 31, 2021 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 increased 8% in 2023 compared to 2022 due primarily to a full period of operating results from The Cosmopolitan and an increase in catering and banquet revenue and in restaurant covers, partially offset by the disposition of The Mirage.

Las Vegas Strip Resorts entertainment, retail and other revenue decreased 6% in 2023 compared to 2022 due primarily to the disposition of The Mirage, partially offset by a full period of operating results from The Cosmopolitan and an increase in theater show revenues.

Regional Operations

Regional Operations net revenues decreased 4% in 2023 compared to 2022 due primarily to the disposition of Gold Strike Tunica in February 2023.

Regional Operations casino revenue decreased 7% in 2023 compared to 2022 due primarily to the disposition of Gold Strike Tunica.

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

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Regional Operations rooms revenue increased 4% in 2023 compared to 2022 due to an increase in RevPAR, partially offset by the disposition of Gold Strike Tunica.

Regional Operations food and beverage revenue increased 3% in 2023 compared to 2022 due primarily to an increase in restaurant covers, partially offset by the disposition of Gold Strike Tunica.

Regional Operations entertainment, retail and other, and reimbursed costs revenue increased 10% in 2023 compared to 2022. The changes were primarily driven by an improved event calendar compared to prior year periods, partially offset by the disposition of Gold Strike Tunica.

MGM China

MGM China net revenues increased 368% in 2023 compared to 2022 due primarily to an increase in casino revenues discussed below.

The following table shows key gaming statistics for MGM China:

MGM China casino revenues increased 391% in 2023 compared to 2022 due to the current year being positively affected by the removal of COVID-19 related travel and entry restrictions in Macau and an increase in authorized tables in 2023.

Corporate and other

Corporate and other revenue in 2023 and 2022 includes revenues from LeoVegas, other corporate operations, and management services. The increase from 2023 compared to 2022 is due primarily to the acquisition of LeoVegas in September 2022.

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 to the accompanying consolidated financial statements and “Reportable Segment GAAP measure” below for additional information. Adjusted EBITDAR is a non-GAAP measure, discussed within “Non-GAAP measures” below.

Las Vegas Strip Resorts

Las Vegas Strip Resorts Adjusted Property EBITDAR increased 2% compared to 2022. Las Vegas Strip Resorts Adjusted Property EBITDAR margin decreased to 36.3% in 2023 compared to 37.4% in 2022 due primarily to payroll-related expenses.

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Regional Operations

Regional Operations Adjusted Property EBITDAR decreased 12% compared to 2022. Regional Operations Adjusted Property EBITDAR margin decreased to 30.9% in 2023 compared to 33.9% in 2022. The margin decrease was due primarily to the decrease in casino revenue discussed above and increases in payroll-related expense and insurance costs.

MGM China

MGM China’s Adjusted Property EBITDAR was $867 million in 2023 compared to Adjusted Property EBITDAR loss of $203 million in 2022. The increase was due primarily to the increase in revenues in 2023, discussed above, and an $18 million charge related to litigation reserves in 2022.

Supplemental Information - Same-store Results of Operations

The following table presents the financial results of Las Vegas Strip Resorts and Regional Operations on a same-store basis for the periods presented below. Same-Store Adjusted Property EBITDAR is a non-GAAP measure, discussed within “Non-GAAP measures” below.

(1)Excludes the net revenues and Adjusted Property EBITDAR of The Cosmopolitan and Aria.

(2)Excludes the net revenues and Adjusted Property EBITDAR of The Mirage.

(1)Excludes the net revenues and Adjusted Property EBITDAR of Gold Strike Tunica.

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Operating Results – Details of Certain Charges

Property transactions, net consisted of the following:

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

Income (loss) from Unconsolidated Affiliates

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

In April 2022, we completed the VICI Transaction pursuant to which the assets and liabilities of MGP were derecognized, which included MGP OP’s investment in the venture that was 50.1% owned by a subsidiary of MGP OP at the time of the transaction (such venture, the “MGP BREIT Venture”).

Non-operating Results

Interest expense

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

Gross interest expense was $463 million in 2023 compared to $596 million in 2022. The decrease from 2022 is due primarily to a decrease in debt outstanding as a result of the repayment of the $1.0 billion 7.75% senior notes in March 2022, the derecognition of MGP OP’s senior notes in connection with the deconsolidation of MGP in April 2022, the repayment of the $1.25 billion 6% senior notes in March 2023, the decrease in the debt outstanding under MGM China’s revolving credit facilities, and repayment of the LeoVegas senior notes in August 2023. See Note 9 to the accompanying consolidated financial statements for discussion on long-term debt and see “Liquidity and Capital Resources” for discussion on issuances and repayments of long-term debt and other sources and uses of cash.

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Other, net

Other income, net was $43 million in 2023 compared to $83 million in 2022. Other, net in 2023 was primarily comprised of interest and dividend income of $164 million and foreign currency transaction loss of $106 million. Other, net in 2022 was primarily comprised of interest and dividend income of $96 million and foreign currency transaction loss of $19 million.

Income taxes

The following table summarizes information related to our income taxes:

Our effective rate for 2023 was favorably impacted primarily by a decrease in the valuation allowance on foreign tax credit carryforwards resulting from a projected increase in foreign source income and favorably impacted by an increase in Macau income offset by expiring net operating losses from prior years subject to valuation allowances. These changes were partially offset by an increase in incremental U.S. tax on foreign earnings. Our effective rate for 2022 was unfavorably impacted by losses in Macau from which we could not benefit and an increase in state deferred tax liabilities as a result of the New Jersey income tax regulation issuance, partially offset by a decrease in Macau deferred tax liabilities resulting from the acceleration of amortization of the MGM Grand Paradise gaming subconcession and the extension of the exemption from the Macau 12% complementary tax to the end of the year as well as the impact of a decrease in state deferred tax liabilities as a result of the VICI Transaction.

Cash taxes paid increased in 2023 compared to 2022 due to utilization of our remaining overall domestic loss in 2023 prior to fully sheltering 50% of domestic taxable income as well as the payment of taxes in 2023 related to the disposition of The Mirage. In addition, cash taxes paid in 2022 were lower due to approximately $80 million in refunds received mainly from claims related to losses incurred in 2020.

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, 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. “Adjusted Property EBITDAR margin” is Adjusted Property EBITDAR divided by related segment net revenues.

Non-GAAP Measures

“Same-Store Adjusted Property EBITDAR” is Adjusted Property EBITDAR further adjusted to exclude the Adjusted Property EBITDAR of acquired operating segments from the date of acquisition through the end of the reporting period and to exclude the Adjusted Property EBITDAR of disposed operating segments from the beginning of the reporting period through the date of disposition. Accordingly, for Las Vegas Strip Resorts, we have excluded the Adjusted Property EBITDAR of The Cosmopolitan for periods subsequent to its acquisition on May 17, 2022, Aria for periods subsequent to its acquisition on September 27, 2021, and The Mirage for the periods prior to its disposition on December 19, 2022, as applicable. For Regional Operations, we have excluded the Adjusted Property EBITDAR of Gold Strike Tunica for the periods prior to its disposition on February 15, 2023, as applicable.

Same-Store Adjusted Property EBITDAR is a non-GAAP measure and is presented solely as a supplemental disclosure to reported GAAP measures because management believes this measure is useful in providing meaningful

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period-to-period comparisons of the results of our operations for operating segments that were consolidated for the full period presented to assist users of the financial statements in reviewing operating performance over time. Same-Store Adjusted Property EBITDAR should not be viewed as a measure of overall operating performance, considered in isolation, or as an alternative to our reportable segment GAAP measure or net income, or as an alternative to any other measure determined in accordance with generally accepted accounting principles, because this measure is not presented on a GAAP basis, and is provided for the limited purposes discussed herein. In addition, Same-Store Adjusted Property EBITDAR may not be defined in the same manner by all companies and, as a result, may not be comparable to similarly titled non-GAAP financial measures of other companies, and such differences may be material. A reconciliation of our reportable segment Adjusted Property EBITDAR GAAP measure to Same-Store Adjusted Property EBITDAR is included herein.

“Adjusted EBITDAR” is 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, gain on consolidation of CityCenter, net, rent expense related to triple-net operating leases and ground leases, gain related to CityCenter’s sale of Harmon land recorded within income from unconsolidated affiliates, and income from unconsolidated affiliates related to investments in real estate ventures.

Adjusted EBITDAR information is a non-GAAP measure that 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 properties, but also includes gains or losses on sales of an entire operating resort or a group of resorts and impairment charges on entire asset groups or investments in unconsolidated affiliates, which may not be comparable period over period. In addition, management excludes rent expense related to triple-net operating leases and ground leases. Management believes excluding rent expense related to triple-net operating leases and ground leases provides useful information to analysts, lenders, financial institutions, and investors when valuing us, as well as comparing our results to other gaming companies, without regard to differences in capital structure and leasing arrangements since the operations of other gaming companies may or may not include triple-net operating leases or ground leases. However, as discussed herein, Adjusted EBITDAR should not be viewed as a measure of overall operating performance, an indicator of our performance, considered in isolation, or construed as an alternative to operating income or net income, or as an alternative to cash flows from operating activities, as a measure of liquidity, or as an alternative to any other measure determined in accordance with generally accepted accounting principles because this measure is not presented on a GAAP basis and excludes certain expenses, including the rent expense related to our triple-net operating leases and ground leases, and is provided for the limited purposes discussed herein. In addition, other companies in the gaming and hospitality industries that report Adjusted EBITDAR may calculate Adjusted EBITDAR in a different manner and such differences may be material. 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. A reconciliation of GAAP net income to Adjusted EBITDAR is included herein.

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

Guarantor Financial Information

As of December 31, 2023, 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 MGM Grand Detroit, MGM National Harbor, Blue Tarp reDevelopment, LLC (the entity that operates MGM Springfield), and each of their respective subsidiaries. Our foreign subsidiaries, including LeoVegas, MGM China, and each of their respective 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.

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The summarized financial information of us and our guarantor subsidiaries, on a combined basis, is presented below.

Liquidity and Capital Resources

Cash Flows – Summary

Our cash flows consisted of the following:

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, and tax payments or refunds. Cash provided by operating activities was $2.7 billion in 2023 compared to $1.8 billion in 2022. The increase from the prior year was due primarily to the increase in Adjusted Property EBITDAR at our Las Vegas Strip Resorts and MGM China discussed within the Results of Operations section above and a decrease in cash paid for interest, partially offset by an increase in triple-net lease rent payments and cash paid for taxes, net.

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 properties, business acquisitions or dispositions, and the timing of maintenance capital expenditures to maintain the quality of our properties. Capital expenditures related to regular investments in our existing properties can also vary depending on timing of larger remodel projects related to our public spaces and hotel rooms.

Cash used in investing activities was $714 million in 2023 compared to cash provided by investing activities of $2.1 billion in 2022. In 2023, we made payments of $932 million in capital expenditures, as further discussed below, contributed $161 million to unconsolidated affiliates, which primarily consisted of contributions of $109 million to Osaka IR KK and $50 million to BetMGM, paid $122 million to acquire Push Gaming, net of cash acquired, and made $125

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million in net short-term investments in debt securities, which were partially offset by proceeds of $447 million related to the sale of the operations of Gold Strike Tunica and proceeds of $153 million related to the principal portion of the Circus Circus Las Vegas note receivable that was repaid. In comparison, in 2022, we received $4.4 billion in net cash proceeds related to the VICI Transaction and $1.1 billion in net cash proceeds related to the sale of the operations of The Mirage, which were partially offset by cash paid of $1.6 billion to acquire The Cosmopolitan, net of cash acquired, cash paid of $279 million in connection with the LeoVegas tender offer, net of cash acquired, cash paid of $183 million to acquire shares of LeoVegas in the open market during the tender offer period, payments of $765 million in capital expenditures, as further discussed below, contributions of $225 million to BetMGM, and $282 million in net short-term investments in debt securities.

Capital Expenditures

In 2023, we made capital expenditures of $932 million, of which $45 million related to MGM China and is inclusive of capital expenditures relating to the gaming concession investment. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations, and corporate and other entities of $887 million primarily related to land, information technology, room and restaurant remodels, convention center remodels, and gaming equipment.

In 2022, we made capital expenditures of $765 million, of which $31 million related to MGM China. Capital expenditures at our Las Vegas Strip Resorts, Regional Operations, and corporate and other entities of $734 million were primarily related to expenditures in information technology, room remodels and convention center remodels.

Financing activities. Cash used in financing activities was $5.0 billion in 2023 compared to $3.0 billion in 2022. In 2023, we had net repayments of debt of $2.4 billion, as further discussed below, paid $2.3 billion for repurchases of our common stock, and distributed $177 million to noncontrolling interest owners. In comparison, in the prior year period, we had net borrowings of debt of $78 million, as further discussed below, distributed $211 million to noncontrolling interest owners, and repurchased $2.8 billion of our common stock.

Borrowings and Repayments of Long-term Debt

In 2023, we had net repayments of debt of $2.4 billion, which consisted of the repayment of $1.25 billion of aggregate principal amount of our 6% senior notes due 2023 upon maturity, aggregate net repayments of $1.1 billion on MGM China’s revolving credit facilities, and the early repayment of LeoVegas’s senior notes due 2023 of $36 million. The net repayments of debt were funded with cash on hand.

In 2022, we had net borrowings of debt of $78 million, which consisted of net draws of $40 million on MGP OP’s revolving credit facility, aggregate net borrowings of $1.1 billion on MGM China’s revolving credit facilities to fund an increase in share capital of MGM Grand Paradise pursuant to the capital requirements under the new Macau gaming law and for general corporate purposes, partially offset by the repayment of $1.0 billion of aggregate principal amount of our 7.75% senior notes due 2022 at maturity, and the repayments of $30 million of LeoVegas senior unsecured notes and $40 million of LeoVegas’ revolving credit facility due to change-in-control provisions.

Dividends, Distributions to Noncontrolling Interest Owners and Share Repurchases

In 2023, we paid $2.3 billion relating to repurchases of our common stock pursuant to our stock repurchase plans. See Note 13 for further information on the stock repurchases. In connection with those repurchases, the March 2022 $2.0 billion stock repurchase plan was completed. In February 2023, we announced that the Board of Directors authorized a $2.0 billion stock repurchase plan. Additionally, in November 2023, we announced that the Board of Directors authorized a $2.0 billion stock repurchase plan. The remaining availability under the February 2023 $2.0 billion stock repurchase plan was $183 million and the remaining availability under the November 2023 $2.0 billion stock repurchase plan was $2.0 billion as of December 31, 2023.

In 2022, we repurchased and retired $2.8 billion of our common stock pursuant to our stock repurchase plans. In connection with those repurchases, the February 2020 $3.0 billion stock repurchase plan was completed.

In March 2022, June 2022, September 2022, and December 2022, we paid dividends of $0.0025 per share, totaling $4 million for 2022. During 2022, MGP OP paid $283 million of distributions to its partnership unit holders, of which we received $117 million and MGP received $166 million, which MGP concurrently paid as a dividend to its Class A shareholders.

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Other Factors Affecting Liquidity and Anticipated Uses of Cash

We require a certain amount of cash on hand to operate our businesses. 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 properties daily into central bank accounts, and excess funds are invested overnight or are used to repay amounts drawn under our revolving credit facilities. 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 commitments.

On February 8, 2023, we announced that the Board of Directors has determined to suspend the ongoing dividends in light of our current preferred method of returning value to shareholders through our share repurchase plan. To the extent we determine to reinstate the dividend in the 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 of December 31, 2023, we had cash and cash equivalents of $2.9 billion, of which MGM China held $542 million, and we had $6.4 billion in principal amount of indebtedness, including $3.1 billion related to MGM China. No amounts were drawn on our revolving credit facility or MGM China’s second revolving credit facility, and as of December 31, 2023, there was $371 million outstanding under MGM China’s first revolving credit facility. In June 2023, MGM China amended each of its first revolving credit facility and its second revolving credit facility, which extended the maturity date of each facility to May 2026, increased the amount to which MGM China may upsize its second revolving credit facility, removed the requirement for the MGM China first revolving credit facility to be fully drawn prior to utilizing the MGM China second revolving credit facility, and extended the financial covenant waivers through December 31, 2024. The option to increase the amount of the second revolving facility was partially exercised in 2023, as further discussed in Note 9 to the accompanying consolidated financial statements. In February 2024, the Company amended its senior secured credit facility to increase the facility to $2.3 billion and extend the maturity date to February 2029.

Our expected cash interest payments, based on principal amounts of debt outstanding, contractual maturity dates, and interest rates as of December 31, 2023, for 2024, 2025, and 2026 are approximately $185 million, $140 million, and $95 million, respectively, excluding MGM China, and approximately $360 million, $280 million, and $170 million, respectively, on a consolidated basis, which includes MGM China.

We are also required as of December 31, 2023 to make annual contractual cash rent payments of $1.8 billion over the next twelve months under triple-net lease agreements, which triple-net leases are also subject to annual escalators and also require us to pay substantially all costs associated with the lease, including real estate taxes, ground lease payments, insurance, utilities and routine maintenance, in addition to the annual cash rent. See Note 11 for discussion of our leases and lease obligations.

We have planned capital expenditures in 2024 of approximately $830 million to $860 million domestically, which is inclusive of the capital expenditures required under the triple-net lease agreements, each of which requires us to spend a specified percentage of net revenues at the respective domestic properties, and an estimate of approximately $200 million to $250 million at MGM China, which is inclusive of the estimated amount of the gaming concession investment for 2024 that relates to capital projects. Refer to Note 12 for discussion of MGM Grand Paradise’s commitment to investment in gaming and non-gaming projects and the development of international tourist markets as well as other contractual obligations pursuant to its gaming concession.

We continue to explore potential development or investment opportunities, such as expanding our global online gaming presence and pursuing a commercial gaming facility in New York, which may require cash commitments in the future. If our pursuit of a commercial gaming facility in New York is successful, we expect the project cost to be approximately $2 billion, reflecting an estimated $1.5 billion of improvements and a $500 million license fee, with the timing of costs dependent upon progress of the project and selection process. Additionally, we have cash commitments to fund Osaka IR KK relating to the development of an integrated resort in Osaka, Japan for our proportionate share of the unfinanced portion of Osaka IR KK’s development project. We currently expect our share to be 306 billion yen (approximately $2.2 billion as of December 31, 2023), which we anticipate funding over the next five years, subject to changes in the progress and scope of the development, the availability and amount of financing to be obtained by Osaka IR KK, and the timing and amount of noncontrolling interest participation. Refer to Note 12 to the accompanying consolidated financial statements for further discussion regarding our commitments and guarantees.

We also expect to continue to repurchase shares pursuant to our share repurchase plans. Subsequent to December 31, 2023, we repurchased approximately 7 million shares of our common stock for an aggregate amount of $320 million,

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excluding excise tax. Repurchased shares were retired. In connection with those repurchases, the Company completed its February 2023 $2.0 billion stock repurchase plan.

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, 2023.

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 both a significant level of estimation uncertainty due to the levels of subjectivity and judgment necessary to account for the matters or the susceptibility of such matters to change is high and also 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 Receivables

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. We maintain strict controls over the issuance of markers by assessing patrons’ credit worthiness prior to issuing credit and we 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 properties who are not residents of the United States.

We maintain a loss reserve for casino accounts at all of our operating casino properties. Expected credit losses, an operating expense, increases the loss reserve. We regularly evaluate the loss reserve for casino accounts, which involves judgments and assumptions about realizability, current and expected future economic conditions in various geographies, and business conditions. At domestic properties 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 ongoing evaluation of relevant historical analysis and any other known information such as the current economic conditions that could drive losses. At domestic properties 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 customer. Approximately $99 million and $54 million of casino receivables and $29 million and $25 million of the loss reserve for casino receivables relate to MGM China at December 31, 2023 and 2022, respectively.

The following table shows key statistics related to our casino receivables:

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The loss reserve as a percentage of casino accounts receivable in the current year is consistent with prior year. Because individual customer account balances can be significant, the loss reserve and credit losses can change significantly between periods, as information about a certain customer becomes known or as changes in economic conditions occur. At December 31, 2023, a 100 basis-point change in the loss reserve as a percentage of casino receivables would change income before income taxes by $6 million.

Fixed Asset Capitalization

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. 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.

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.

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 2023 annual impairment tests, we either 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 or we elected to perform a quantitative analysis and the fair value of such intangibles exceeded their carrying value by a substantial margin. As discussed below, management makes significant judgments and estimates as part of these

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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 2023. For our 2023 annual impairment tests, we either 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 or we elected to perform a quantitative analysis and the fair value of the reporting units exceeded their carrying value by a substantial margin. 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. 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. 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 or events outside of our control. The value of our Empire City reporting unit is dependent upon us obtaining a commercial gaming license and the timing thereof, as well as other assumptions that may change throughout the bidding process as additional information becomes known, which includes the size, scope, and timing of constructing an expanded commercial gaming facility, the potential for and timing of a transaction for the monetization of the improvements and the proceeds and any rent associated with such transaction, and the incremental cash flows generated by the expanded facility, such as license payments and other payments to government entities, gaming tax rates, and forecasted revenue and expenses from operations. While the quantitative impairment analysis performed in 2023 resulted in the fair value of Empire City exceeding its carrying value by a substantial margin based upon the assumptions as of the date of the analysis, any of these assumptions could change materially as a result of new or additional information and, if they do, could result in an impairment of up to the full amount of the reporting unit’s goodwill of $256 million.

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

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 $1.6 billion and $2.6 billion as of December 31, 2023 and 2022, respectively, and a valuation allowance on certain net deferred tax assets of foreign jurisdictions of $180 million and $245 million as of December 31, 2023 and 2022, 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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