ITEM 7. — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the notes thereto, and other financial information included in this Form 10-K. Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. See "Special Note Regarding Forward-Looking Statements."
Overview
We view each of our Integrated Resorts as an operating segment. Our operating segments in Macao consist of The Venetian Macao; The Londoner Macao; The Parisian Macao; The Plaza Macao and Four Seasons Macao; and the Sands Macao. Our operating segment in Singapore is Marina Bay Sands.
On February 23, 2022, we closed on the sale of our Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center (the “Las Vegas Operations”), for $6.25 billion (the “Las Vegas Sale”). At closing, we received approximately $5.05 billion in cash proceeds, before transaction costs and working capital adjustments of $77 million, a $1.20 billion seller financing loan and recognized a gain on disposal of $3.60 billion, before income tax expense of $750 million, during the year ended December 31, 2022.
During 2022, we achieved milestones in advancing several of our strategic objectives. We were awarded a new 10-year gaming concession for the operation of casino games of chance in Macao under the Concession entered into with the Macao government. We completed our key development project in Macao with the conversion of Sands Cotai Central into The Londoner Macao, in which the Londoner Arena and the expansion of the Shoppes at Londoner were completed during the first half of 2022. We began renovations at Marina Bay Sands, to provide world-class suites in Tower 1 and Tower 2, and welcomed the return of Marina Bay Sands to normal operating conditions in the second half of 2022 with the removal of various COVID-19 restrictions. We also continued to strengthen our balance sheet with the completion of the sale of the Las Vegas Operations.
COVID-19 Pandemic Update
While visitation to Macao remains substantially below pre-COVID-19 pandemic levels, the Macao government's policy regarding the management of COVID-19 and general travel restrictions has adjusted in line with changes in policy in mainland China in late December 2022 and early January 2023. Currently, visitors from mainland China, Hong Kong and Taiwan may enter Macao, subject to them holding the appropriate travel documents, without having to present any proof of COVID-19 testing. Arrivals from foreign countries must provide proof of a negative COVID-19 nucleic acid test ("NAT") or antigen test completed within 48 hours prior to arrival. Our operations in Macao will continue to be impacted and subject to changes in the government policies of Macao, mainland China, Hong Kong and other jurisdictions in Asia addressing travel and public health measures associated with COVID-19.
Throughout the year ended December 31, 2022, various outbreaks occurred in the region, particularly in Hong Kong in late January and early February, the Guangdong province in March, Macao in mid-June and Zhuhai in early October, all of which resulted in various travel, border and/or operational restrictions. Specifically, on July 9, 2022, the Macao government ordered casinos and all non-essential businesses to close from July 11 to July 18 in an attempt to control the outbreak in Macao, which was extended through July 22, 2022. On July 20, 2022, the Macao government announced a consolidation period, which started on July 23, 2022 and ended on July 30, 2022, whereby certain business activities were allowed to resume limited operations; however, casino operations resumed, but with a maximum capacity of 50% of casino staff working at any point. Throughout August, these preventative measures were gradually reduced, as well as various restrictions on movement between Macao and Zhuhai were progressively lifted by both the Macao and mainland China governments.
Various travel restrictions, such as border closures, mandatory quarantines and proof of negative COVID-19 testing on arrival in Macao, among others, were in effect at various times during the year ended December 31, 2022, resulting in fluctuations in guest travel and visitation.
The Hong Kong / Macao Express bus service and the ferry services between the Taipa Ferry Terminal and Hong Kong International Airport recommenced on December 24, 2022 and December 30, 2022, respectively. Our ferry operations between Macao and Hong Kong were suspended throughout 2022 and resumed operation on a limited basis on January 8, 2023.
Our Macao gaming operations remained open during most of the year ended December 31, 2022. While guest visitation has begun to recover with the gradual relaxation of travel and quarantine restrictions, the timing and manner in which our casinos, restaurants and shopping malls will operate at full capacity will progressively be assessed against business volumes.
At our Macao properties, all social distancing requirements, including those requiring reduced seating at table games and a decreased number of active slot machines on the casino floor compared to pre-COVID-19 levels, have ceased in early January 2023.
As with prior periods, in support of the Macao government’s initiatives to fight the COVID-19 Pandemic, at various times throughout the year ended December 31, 2022, we provided both towers of the Sheraton Grand Macao hotel and also The Parisian Macao hotel to the Macao government to house individuals for quarantine and medical observation purposes.
Our operations in Macao have been significantly impacted by the reduced visitation to Macao. The Macao government announced total visitation from mainland China to Macao decreased approximately 27.5% and 81.7%, during the year ended December 31, 2022, as compared to the same period in 2021 and 2019 (pre-pandemic), respectively. The Macao government also announced gross gaming revenue decreased approximately 51.4% and 85.6%, during the year ended December 31, 2022, as compared to the same period in 2021 and 2019, respectively.
In Singapore, the Vaccinated Travel Framework (“VTF”) was launched on April 1, 2022, to facilitate the resumption of travel for all travelers, including short-term visitors. Under the VTF, all fully vaccinated travelers are permitted to enter Singapore, without entry approvals, and starting April 26, 2022, these travelers are no longer required to take a COVID-19 test before departing for Singapore. Non-fully vaccinated travelers need only take a pre-departure test within two days before departure for Singapore and test negative before departing for Singapore. Operations at Marina Bay Sands will continue to be impacted and subject to changes in the government policies of Singapore and other jurisdictions in Asia, if any, addressing travel and public health measures associated with COVID-19.
Visitation to Marina Bay Sands continues to be impacted by the effects of the COVID-19 Pandemic; however, visitation has increased since restrictions have been lifted. The STB announced total visitation to Singapore increased from approximately 330,000 in 2021 to 6.3 million in 2022, while visitation decreased 67.0% when compared to the same period in 2019.
While our properties were open and some operating at reduced levels due to lower visitation and required safety measures in place as described above during the year ended December 31, 2022, the current economic and regulatory environment on a global basis and in each of our jurisdictions continue to evolve. We cannot predict the manner in which governments will react as the global and regional impact of the COVID-19 Pandemic changes over time, which could significantly alter our current operations.
We have a strong balance sheet and sufficient liquidity in place, including total unrestricted cash and cash equivalents of $6.31 billion and access to $1.50 billion, $541 million and $439 million of available borrowing capacity from our LVSC Revolving Facility, 2018 SCL Revolving Facility and the 2012 Singapore Revolving Facility, respectively, as of December 31, 2022. We believe we are able to support continuing operations, complete the major construction projects that are underway and respond to the current COVID-19 Pandemic challenges. We have taken various mitigating measures to manage through the current environment, including a cost and capital expenditure reduction program to minimize cash outflow for nonessential items.
Macao Concession
Until December 31, 2022, gaming in Macao was administered by the government through concession agreements awarded to three different concessionaires and three subconcessionaires, of which VML was one. On June 23, 2022, an extension was approved and authorized by the Macao government and executed between VML and Galaxy Casino, S.A., pursuant to which the subconcession was extended from June 26, 2022 to December 31,
2022 (the “Subconcession Amendment”). VML paid the Macao government 47 million patacas (approximately $6 million at exchange rates in effect at the time of the transaction) and provided a bank guarantee on September 20, 2022, of 2.31 billion patacas (approximately $289 million at exchange rates as defined in the bank guarantee contract) to secure the fulfillment of VML's payment obligations towards its employees if VML were unsuccessful in tendering for a new concession contract after its subconcession expired.
On November 26, 2022, the Macao government awarded six concessions to six of the bidders on a temporary basis, of which VML was one, subject to fulfillment of certain conditions, namely providing a bank guarantee of 1.0 billion patacas (approximately $125 million at exchange rates in effect on December 31, 2022) to secure the fulfillment of VML’s legal, contractual and other obligations, including labor obligations. VML complied with all of these conditions by December 9, 2022. On December 16, 2022, the Macao government awarded six concessions on a definitive basis, of which VML was one, and VML entered into the Concession with the Macao government, effective as of January 1, 2023, and for the duration of ten years. On December 19, 2022, VML requested the release of all the bank guarantees it provided to the Macao government under its subconcession, and in January 2023 such bank guarantees were released, including the 2.31 billion patacas bank guarantee.
On December 30, 2022, in accordance with the requirements of the Gaming Law and their obligations under letters of undertakings (the "Undertakings"), each of VML, Venetian Cotai Limited ("VCL"), Venetian Orient Limited ("VOL") and Cotai Strip Lot 2 Apart Hotel (Macau) Limited (“CSL2,” a subsidiary of SCL) entered into deeds of reversion, pursuant to which each of VML, VCL, VOL and CSL2 confirmed and agreed to revert to the Macao government relevant gaming equipment and gaming areas (as identified in the Undertakings) without compensation and free of any liens or charges upon the expiry of the term of the subconcession extension period. On the same day, VML entered into a handover record (the "Handover Record"), pursuant to which the right to operate the same gaming equipment and gaming areas was granted to VML for the duration of the Concession, in return for annual payments of 750 patacas per square meter for the first three years and 2,500 patacas per square meter for the following seven years (approximately $93 and $311, respectively, at exchange rates in effect on December 31, 2022). The annual payment of 750 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years two and three and the annual payment of 2,500 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years five through ten.
Inflation Reduction Act
The Inflation Reduction Act of 2022 (“IRA”) was signed into law on August 16, 2022. The IRA contains numerous provisions including a 15% corporate alternative minimum tax (“CAMT”) for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-year period effective in tax years beginning after December 31, 2022. Applicable corporations would be allowed to claim a credit for the corporate minimum tax paid against regular tax in future years. The IRA also includes a 1% excise tax on corporate stock repurchases beginning January 1, 2023. The CAMT could impact our future cash flows and results of operations. The Internal Revenue Service has been granted broad authority to issue regulations or other guidance that could clarify how these taxes will be applied. We will continue to evaluate the impact of the IRA as additional information becomes available.
Intercompany Loan Agreement with SCL
On July 11, 2022, we entered into an intercompany term loan agreement with SCL, a related party, in the amount of $1.0 billion, which is repayable on July 11, 2028. In the first two years from July 11, 2022, SCL will have the option to elect to pay cash interest at 5% per annum or payment-in-kind interest at 6% per annum by adding the amount of such interest to the then-outstanding principal amount of the loan, following which only cash interest at 5% per annum will be payable. This loan is unsecured, subordinated to all third party unsecured indebtedness and other obligations of SCL and its subsidiaries and is eliminated in consolidation.
Key Operating Revenue Measurements
Operating revenues at The Venetian Macao, The Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Macao, Marina Bay Sands and our Las Vegas Operating Properties, prior to its sale on February 23, 2022, are dependent upon the volume of customers who stay at the hotel, which affects the price charged for hotel
rooms and our gaming volume. Operating revenues at Sands Macao are principally driven by casino customers who visit the property on a daily basis.
Management utilizes the following volume and pricing measures in order to evaluate past performance and assist in forecasting future revenues. The various volume measurements indicate our ability to attract customers to our Integrated Resorts. In casino operations, win and hold percentages indicate the amount of revenue to be expected based on volume. In hotel operations, average daily rate and revenue per available room indicate the demand for rooms and our ability to capture that demand. In mall operations, base rent per square foot indicates our ability to attract and maintain profitable tenants for our leasable space.
The following are the key measurements we use to evaluate operating revenues:
Casino revenue measurements for Macao and Singapore: Macao and Singapore table games are segregated into two groups: Rolling Chip play (composed of VIP players) and Non-Rolling Chip play (mostly non-VIP players). The volume measurement for Rolling Chip play is non-negotiable gaming chips wagered and lost. The volume measurement for Non-Rolling Chip play is table games drop ("drop"), which is net markers issued (credit instruments), cash deposited in the table drop boxes and gaming chips purchased and exchanged at the cage. Rolling Chip and Non-Rolling Chip volume measurements are not comparable as they are two distinct measures of volume. The amounts wagered and lost for Rolling Chip play are substantially higher than the amounts dropped for Non-Rolling Chip play. Slot handle, also a volume measurement, is the gross amount wagered for the period cited.
We view Rolling Chip win as a percentage of Rolling Chip volume, Non-Rolling Chip win as a percentage of drop and slot hold (amount won by the casino) as a percentage of slot handle. Win or hold percentage represents the percentage of Rolling Chip volume, Non-Rolling Chip drop or slot handle that is won by the casino and recorded as casino revenue. Our win and hold percentages are calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis. Our Rolling Chip win percentage is expected to be 3.15% to 3.45% in Macao and Singapore. Actual win percentage may vary from our expected win percentage and historical win and hold percentages. Generally, slot machine play is conducted on a cash basis. In Macao and Singapore, 9.8% and 15.8%, respectively, of our table games play was conducted on a credit basis for the year ended December 31, 2022.
Casino revenue measurements for the U.S.: The volume measurements in the U.S. were slot handle, as previously described, and table games drop, which was the total amount of cash and net markers issued (credit instruments) deposited in the table drop box. We viewed table games win as a percentage of drop and slot hold as a percentage of slot handle. Our win and hold percentages were calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis. Similar to Macao and Singapore, slot machine play was generally conducted on a cash basis.
Hotel revenue measurements: Performance indicators used are occupancy rate (a volume indicator), which is the average percentage of available hotel rooms occupied during a period, and average daily room rate ("ADR," a price indicator), which is the average price of occupied rooms per day. Available rooms exclude those rooms unavailable for occupancy during the period due to renovation, development or other requirements (such as government mandated closure, lodging for team members and usage by the Macao and Singapore governments for quarantine measures). The calculations of the occupancy rate and ADR include the impact of rooms provided on a complimentary basis. Revenue per available room ("RevPAR") represents a summary of hotel ADR and occupancy. Because not all available rooms are occupied, ADR is normally higher than RevPAR. Reserved rooms where the guests do not show up for their stay and lose their deposit, or where guests check out early, may be re-sold to walk-in guests.
Mall revenue measurements: Occupancy, base rent per square foot and tenant sales per square foot are used as performance indicators. Occupancy represents gross leasable occupied area ("GLOA") divided by gross leasable area ("GLA") at the end of the reporting period. GLOA is the sum of: (1) tenant occupied space under lease and (2) tenants no longer occupying space, but paying rent. GLA does not include space currently under development or not on the market for lease. Base rent per square foot is the weighted average base or minimum rent charge, excluding rent concessions, in effect at the end of the reporting period for all tenants that would qualify to be included in occupancy. Tenant sales per square foot is the sum of reported comparable sales for the trailing
12 months divided by the comparable square footage for the same period. Only tenants that have been open for a minimum of 12 months are included in the tenant sales per square foot calculation.
Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021
Summary Financial Results
The reopening of borders and elimination of most pandemic-related restrictions in Singapore positively impacted the financial results of Marina Bay Sands. In contrast, tighter border and travel restrictions had an adverse impact at our Macao operations. See "COVID-19 Pandemic Update" for further information.
Net revenues for the year ended December 31, 2022 were $4.11 billion, compared to $4.23 billion for the year ended December 31, 2021. Operating loss was $792 million for the year ended December 31, 2022, compared to $689 million for the year ended December 31, 2021. Net loss from continuing operations was $1.54 billion for the year ended December 31, 2022, compared to $1.47 billion for the year ended December 31, 2021.
Operating Revenues
Our net revenues consisted of the following:
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2022 | | 2021 | | Percent
Change |
| | | | | |
| | (Dollars in millions) |
| Casino | $ | 2,627 | | | $ | 2,892 | | | (9.2) | % |
| Rooms | 469 | | | 415 | | | 13.0 | % |
| Food and beverage | 301 | | | 199 | | | 51.3 | % |
| Mall | 580 | | | 649 | | | (10.6) | % |
| Convention, retail and other | 133 | | | 79 | | | 68.4 | % |
| Total net revenues | $ | 4,110 | | | $ | 4,234 | | | (2.9) | % |
Consolidated net revenues were $4.11 billion for the year ended December 31, 2022, a decrease of $124 million compared to $4.23 billion for the year ended December 31, 2021, driven by a decrease of $1.27 billion at our Macao operations due to decreased visitation as tighter border restrictions were introduced throughout 2022 as a result of increased COVID-19 cases in Macao and the surrounding region. The decrease was partially offset by an increase of $1.15 billion at Marina Bay Sands, primarily due to increased visitation from the reopening of borders and elimination of most pandemic-related restrictions in April 2022.
Net casino revenues decreased $265 million compared to the year ended December 31, 2021. The decrease was driven by a $1.04 billion decrease at our Macao operations due to lower visitation across our properties resulting in decreased table games and slot volumes. Casino revenues at Marina Bay Sands increased by $775 million due to increased table games and slot volumes, driven by the reopening of borders and elimination of most pandemic-related restrictions, partially offset by a lower Rolling Chip win percentage. The following table summarizes the results of our casino activity:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | Change |
| | | | | |
| (Dollars in millions) |
| Macao Operations: | | | | | |
| The Venetian Macao | | | | | |
| Total casino revenues | $ | 438 | | | $ | 944 | | | (53.6) | % |
| Non-Rolling Chip drop | $ | 1,751 | | | $ | 3,234 | | | (45.9) | % |
| Non-Rolling Chip win percentage | 25.7 | % | | 27.4 | % | | (1.7) | pts |
| Rolling Chip volume | $ | 1,295 | | | $ | 4,412 | | | (70.6) | % |
| Rolling Chip win percentage | 3.77 | % | | 3.99 | % | | (0.22) | pts |
| Slot handle | $ | 1,132 | | | $ | 1,841 | | | (38.5) | % |
| Slot hold percentage | 3.9 | % | | 3.9 | % | | — | pts |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | Change |
| | | | | |
| (Dollars in millions) |
| The Londoner Macao | | | | | |
| Total casino revenues | $ | 194 | | | $ | 396 | | | (51.0) | % |
| Non-Rolling Chip drop | $ | 896 | | | $ | 1,755 | | | (48.9) | % |
| Non-Rolling Chip win percentage | 21.7 | % | | 21.6 | % | | 0.1 | pts |
| Rolling Chip volume | $ | 936 | | | $ | 3,674 | | | (74.5) | % |
| Rolling Chip win percentage | 5.03 | % | | 3.23 | % | | 1.80 | pts |
| Slot handle | $ | 671 | | | $ | 962 | | | (30.2) | % |
| Slot hold percentage | 3.4 | % | | 3.8 | % | | (0.4) | pts |
| The Parisian Macao | | | | | |
| Total casino revenues | $ | 116 | | | $ | 244 | | | (52.5) | % |
| Non-Rolling Chip drop | $ | 454 | | | $ | 1,146 | | | (60.4) | % |
| Non-Rolling Chip win percentage | 24.9 | % | | 22.3 | % | | 2.6 | pts |
| Rolling Chip volume | $ | 283 | | | $ | 502 | | | (43.6) | % |
| Rolling Chip win percentage | 7.66 | % | | 3.73 | % | | 3.93 | pts |
| Slot handle | $ | 305 | | | $ | 787 | | | (61.2) | % |
| Slot hold percentage | 3.8 | % | | 3.3 | % | | 0.5 | pts |
| The Plaza Macao and Four Seasons Macao | | | | | |
| Total casino revenues | $ | 146 | | | $ | 298 | | | (51.0) | % |
| Non-Rolling Chip drop | $ | 551 | | | $ | 1,140 | | | (51.7) | % |
| Non-Rolling Chip win percentage | 23.8 | % | | 23.5 | % | | 0.3 | pts |
| Rolling Chip volume | $ | 1,452 | | | $ | 2,659 | | | (45.4) | % |
| Rolling Chip win percentage | 4.48 | % | | 4.64 | % | | (0.16) | pts |
| Slot handle | $ | 21 | | | $ | 42 | | | (50.0) | % |
| Slot hold percentage | 9.4 | % | | 5.7 | % | | 3.7 | pts |
| Sands Macao | | | | | |
| Total casino revenues | $ | 53 | | | $ | 105 | | | (49.5) | % |
| Non-Rolling Chip drop | $ | 237 | | | $ | 433 | | | (45.3) | % |
| Non-Rolling Chip win percentage | 17.9 | % | | 17.1 | % | | 0.8 | pts |
| Rolling Chip volume | $ | 192 | | | $ | 1,073 | | | (82.1) | % |
| Rolling Chip win percentage | 4.16 | % | | 4.39 | % | | (0.23) | pts |
| Slot handle | $ | 409 | | | $ | 606 | | | (32.5) | % |
| Slot hold percentage | 3.2 | % | | 3.1 | % | | 0.1 | pts |
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | Change |
| | | | | |
| (Dollars in millions) |
| Singapore Operations: | | | | | |
| Marina Bay Sands | | | | | |
| Total casino revenues | $ | 1,680 | | | $ | 905 | | | 85.6 | % |
| Non-Rolling Chip drop | $ | 4,640 | | | $ | 2,679 | | | 73.2 | % |
| Non-Rolling Chip win percentage | 18.6 | % | | 15.0 | % | | 3.6 | pts |
| Rolling Chip volume | $ | 21,223 | | | $ | 3,901 | | | 444.0 | % |
| Rolling Chip win percentage | 2.92 | % | | 5.79 | % | | (2.87) | pts |
| Slot handle | $ | 16,547 | | | $ | 12,084 | | | 36.9 | % |
| Slot hold percentage | 4.3 | % | | 4.2 | % | | 0.1 | pts |
| U.S. Operations: | | | | | |
Las Vegas Operating Properties(1) | | | | | |
| Total net casino revenues | $ | 61 | | | $ | 443 | | | (86.2) | % |
| Table games drop | $ | 257 | | | $ | 1,630 | | | (84.2) | % |
| Table games win percentage | 13.6 | % | | 16.4 | % | | (2.8) | pts |
| Slot handle | $ | 599 | | | $ | 3,830 | | | (84.4) | % |
| Slot hold percentage | 8.2 | % | | 8.5 | % | | (0.3) | pts |
__________________________
(1) The Las Vegas Operating Properties are classified as a discontinued operation. We completed the sale on February 23, 2022. Financial results are for the period through February 22, 2022.
In our experience, average win percentages remain fairly consistent when measured over extended periods of time with a significant volume of wagers, but can vary considerably within shorter time periods as a result of the statistical variances associated with games of chance in which large amounts are wagered.
Room revenues increased $54 million compared to the year ended December 31, 2021. The increase was primarily due to increased occupancy rates and ADR at Marina Bay Sands driven by increased visitation, partially offset by decreased occupancy rates and ADR driven by reduced visitation at our Macao properties. The following table summarizes the results of our room activity:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | Change |
| | | | | |
| (Room revenues in millions) |
| Macao Operations: | | | | | |
| The Venetian Macao | | | | | |
| Total room revenues | $ | 55 | | | $ | 77 | | | (28.6) | % |
| Occupancy rate | 41.7 | % | | 49.7 | % | | (8.0) | pts |
| Average daily room rate (ADR) | $ | 143 | | | $ | 155 | | | (7.7) | % |
| Revenue per available room (RevPAR) | $ | 60 | | | $ | 77 | | | (22.1) | % |
| The Londoner Macao | | | | | |
| Total room revenues | $ | 61 | | | $ | 90 | | | (32.2) | % |
| Occupancy rate | 26.9 | % | | 40.3 | % | | (13.4) | pts |
| Average daily room rate (ADR) | $ | 155 | | | $ | 160 | | | (3.1) | % |
| Revenue per available room (RevPAR) | $ | 42 | | | $ | 64 | | | (34.4) | % |
| The Parisian Macao | | | | | |
| Total room revenues | $ | 33 | | | $ | 54 | | | (38.9) | % |
| Occupancy rate | 37.9 | % | | 52.1 | % | | (14.2) | pts |
| Average daily room rate (ADR) | $ | 110 | | | $ | 118 | | | (6.8) | % |
| Revenue per available room (RevPAR) | $ | 42 | | | $ | 61 | | | (31.1) | % |
| The Plaza Macao and Four Seasons Macao | | | | | |
| Total room revenues | $ | 29 | | | $ | 45 | | | (35.6) | % |
| Occupancy rate | 27.5 | % | | 44.3 | % | | (16.8) | pts |
| Average daily room rate (ADR) | $ | 440 | | | $ | 438 | | | 0.5 | % |
| Revenue per available room (RevPAR) | $ | 121 | | | $ | 194 | | | (37.6) | % |
| Sands Macao | | | | | |
| Total room revenues | $ | 6 | | | $ | 10 | | | (40.0) | % |
| Occupancy rate | 51.1 | % | | 68.2 | % | | (17.1) | pts |
| Average daily room rate (ADR) | $ | 141 | | | $ | 138 | | | 2.2 | % |
| Revenue per available room (RevPAR) | $ | 72 | | | $ | 94 | | | (23.4) | % |
| Singapore Operations: | | | | | |
Marina Bay Sands(1) | | | | | |
| Total room revenues | $ | 285 | | | $ | 139 | | | 105.0 | % |
| Occupancy rate | 93.1 | % | | 70.1 | % | | 23.0 | pts |
| Average daily room rate (ADR) | $ | 422 | | | $ | 236 | | | 78.8 | % |
| Revenue per available room (RevPAR) | $ | 393 | | | $ | 165 | | | 138.2 | % |
| U.S. Operations: | | | | | |
Las Vegas Operating Properties(2) | | | | | |
| Total room revenues | $ | 78 | | | $ | 454 | | | (82.8) | % |
| Occupancy rate | 84.6 | % | | 82.4 | % | | 2.2 | pts |
| Average daily room rate (ADR) | $ | 247 | | | $ | 221 | | | 11.8 | % |
| Revenue per available room (RevPAR) | $ | 209 | | | $ | 182 | | | 14.8 | % |
_________________________
(1)During the year ended December 31, 2022, approximately 500 rooms were under construction for renovation purposes.
(2)The Las Vegas Operating Properties are classified as a discontinued operation. We completed the sale on February 23, 2022. Financial results are for the period through February 22, 2022.
Food and beverage revenues increased $102 million compared to the year ended December 31, 2021. The increase was due to a $128 million increase driven by increased business volume at food and beverage outlets and banquets at Marina Bay Sands, partially offset by a decrease of $26 million at our Macao operations.
Mall revenues decreased $69 million compared to the year ended December 31, 2021. A $119 million decrease in mall revenues in Macao, driven by decreases in base rent and turnover rent, and an increase in rent concessions granted to our mall tenants, was partially offset by a $50 million increase in mall revenues at Marina Bay Sands, driven by a decrease in rent concessions granted to our mall tenants and an increase in turnover rent.
For further information related to the financial performance of our malls, see "Additional Information Regarding our Retail Mall Operations." The following table summarizes the results of our malls on the Cotai Strip in Macao and in Singapore:
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2022 | | 2021 | | Change |
| | | | | |
| | (Mall revenues in millions) |
| Macao Operations: | | | | | |
| Shoppes at Venetian | | | | | |
| Total mall revenues | $ | 154 | | | $ | 194 | | | (20.6) | % |
| Mall gross leasable area (in square feet) | 813,832 | | | 814,784 | | | (0.1) | % |
| Occupancy | 81.0 | % | | 79.7 | % | | 1.3 | pts |
| Base rent per square foot | $ | 274 | | | $ | 292 | | | (6.2) | % |
Tenant sales per square foot(1) | $ | 932 | | | $ | 1,348 | | | (30.9) | % |
| Shoppes at Londoner | | | | | |
| Total mall revenues | $ | 47 | | | $ | 55 | | | (14.5) | % |
| Mall gross leasable area (in square feet) | 610,238 | | | 532,175 | | | 14.7 | % |
| Occupancy | 54.7 | % | | 54.4 | % | | 0.3 | pts |
| Base rent per square foot | $ | 134 | | | $ | 152 | | | (11.8) | % |
Tenant sales per square foot(1) | $ | 1,139 | | | $ | 1,462 | | | (22.1) | % |
| Shoppes at Parisian | | | | | |
| Total mall revenues | $ | 25 | | | $ | 39 | | | (35.9) | % |
| Mall gross leasable area (in square feet) | 296,322 | | | 296,322 | | | — | % |
| Occupancy | 67.6 | % | | 74.5 | % | | (6.9) | pts |
| Base rent per square foot | $ | 107 | | | $ | 133 | | | (19.5) | % |
Tenant sales per square foot(1) | $ | 338 | | | $ | 648 | | | (47.8) | % |
| Shoppes at Four Seasons | | | | | |
| Total mall revenues | $ | 127 | | | $ | 184 | | | (31.0) | % |
| Mall gross leasable area (in square feet) | 248,674 | | | 244,208 | | | 1.8 | % |
| Occupancy | 93.6 | % | | 94.3 | % | | (0.7) | pts |
| Base rent per square foot | $ | 538 | | | $ | 549 | | | (2.0) | % |
Tenant sales per square foot(1) | $ | 3,806 | | | $ | 6,300 | | | (39.6) | % |
| Singapore Operations: | | | | | |
| The Shoppes at Marina Bay Sands | | | | | |
| Total mall revenues | $ | 226 | | | $ | 176 | | | 28.4 | % |
| Mall gross leasable area (in square feet) | 622,007 | | | 622,362 | | | (0.1) | % |
| Occupancy | 99.5 | % | | 98.2 | % | | 1.3 | pts |
| Base rent per square foot | $ | 284 | | | $ | 277 | | | 2.5 | % |
Tenant sales per square foot(1) | $ | 2,596 | | | $ | 1,614 | | | 60.8 | % |
_________________________
Note: This table excludes the results of retail outlets at Sands Macao. As a result of the COVID-19 Pandemic, tenants were provided rent concessions during the year ended December 31, 2022 and 2021. Base rent per square foot presented above excludes the impact of these rent concessions.
(1)Tenant sales per square foot is the sum of reported comparable sales for the trailing 12 months divided by the comparable square footage for the same period.
Convention, retail, and other revenues increased $54 million compared to the year ended December 31, 2021. The increase was due to increases of $47 million and $7 million at Marina Bay Sands and our Macao operations, respectively, driven primarily by increases in convention revenue at Marina Bay Sands, and quarantine room revenue at the Sheraton Grand Macao hotel and The Parisian Macao.
Operating Expenses
Our operating expenses consisted of the following:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | Percent
Change |
| | | | | |
| (Dollars in millions) |
| Casino | $ | 1,792 | | | $ | 2,068 | | | (13.3) | % |
| Rooms | 173 | | | 164 | | | 5.5 | % |
| Food and beverage | 319 | | | 244 | | | 30.7 | % |
| Mall | 73 | | | 65 | | | 12.3 | % |
| Convention, retail and other | 103 | | | 85 | | | 21.2 | % |
| Provision for credit losses | 15 | | | 3 | | | 400.0 | % |
| General and administrative | 936 | | | 831 | | | 12.6 | % |
| Corporate | 235 | | | 211 | | | 11.4 | % |
| Pre-opening | 13 | | | 19 | | | (31.6) | % |
| Development | 143 | | | 109 | | | 31.2 | % |
| Depreciation and amortization | 1,036 | | | 1,041 | | | (0.5) | % |
| Amortization of leasehold interests in land | 55 | | | 56 | | | (1.8) | % |
| Loss on disposal or impairment of assets | 9 | | | 27 | | | (66.7) | % |
| Total operating expenses | $ | 4,902 | | | $ | 4,923 | | | (0.4) | % |
Operating expenses were $4.90 billion for the year ended December 31, 2022, a decrease of $21 million compared to $4.92 billion for the year ended December 31, 2021. The decrease was primarily driven by a $276 million decrease in casino expenses, partially offset by increases of $105 million in general and administrative expenses, $75 million in food and beverage expenses, $34 million in in development expenses and $24 million in corporate expenses.
Casino expenses decreased $276 million compared to the year ended December 31, 2021. The decrease was primarily attributable to a decrease of $290 million in gaming taxes. The $1.04 billion decrease in casino revenue at our Macao operating properties is subject to a 39% tax rate, whereas the $775 million increase in casino revenue at Marina Bay Sands is subject to a lower tax rate.
Food and beverage expenses increased $75 million compared to the year ended December 31, 2021. The increase was due to an $86 million increase at Marina Bay Sands, driven by increased business volume at food outlets and banquets and consistent with increased revenues, partially offset by an $11 million decrease at our Macao operations.
Convention, retail and other expenses increased $18 million compared to the year ended December 31, 2021, primarily driven by an increase of $16 million, consistent with increased revenues at Marina Bay Sands.
The provision for credit losses was $15 million for the year ended December 31, 2022, compared to $3 million for the year ended December 31, 2021. The $12 million increase was primarily driven by an $11 million increase at Marina Bay Sands due to an increase in new credit issued and patrons who were unable to return to the property. The amount of this provision can vary over short periods of time because of factors specific to the patrons who owe us money from gaming activities. We believe the amount of our provision for credit losses in the future will depend upon the state of the economy, our credit standards, our risk assessments and the judgment of our employees responsible for granting credit.
General and administrative expenses increased $105 million compared to the year ended December 31, 2021, primarily driven by increases at Marina Bay Sands. The increases were primarily driven by increases in property operation costs, marketing and payroll to support the increased visitation and property tax and insurance costs.
Corporate expenses increased $24 million compared to the year ended December 31, 2021. The increase was primarily driven by increases in bonuses and stock-based compensation.
Pre-opening expenses represent personnel and other costs incurred prior to the opening of new ventures, which are expensed as incurred. The majority of pre-opening expenses for the year ended December 31, 2022, related to Marina Bay Sands. Pre-opening expenses for the year ended December 31, 2021, related to The Londoner Macao.
Development expenses were $143 million for the year ended December 31, 2022, compared to $109 million for the year ended December 31, 2021. During the year ended December 31, 2022, the costs were associated with our evaluation and pursuit of new business opportunities, primarily in Florida and Texas, and our digital gaming related efforts. Development costs are expensed as incurred.
Loss on disposal or impairment of assets was $9 million for the year ended December 31, 2022, compared to $27 million for the year ended December 31, 2021. The losses incurred for the year ended December 31, 2022, were primarily due to $4 million in asset disposals related to aircraft parts and $3 million in asset disposal and demolition costs, primarily at The Londoner Macao, The Venetian Macao, Sands Macao and our corporate offices. The losses for the year ended December 31, 2021, were primarily due to asset disposals and demolition costs related to The Londoner Macao.
Segment Adjusted Property EBITDA
The following table summarizes information related to our segments (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 20 — Segment Information" for discussion of our operating segments):
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | Percent
Change |
| | | | | |
| (Dollars in millions) |
| Macao: | | | | | |
| The Venetian Macao | $ | (25) | | | $ | 297 | | | (108.4) | % |
| The Londoner Macao | (189) | | | (84) | | | 125.0 | % |
| The Parisian Macao | (103) | | | (17) | | | 505.9 | % |
| The Plaza Macao and Four Seasons Macao | 81 | | | 219 | | | (63.0) | % |
| Sands Macao | (81) | | | (69) | | | 17.4 | % |
| Ferry Operations and Other | (7) | | | (8) | | | (12.5) | % |
| (324) | | | 338 | | | (195.9) | % |
| Marina Bay Sands | 1,056 | | | 448 | | | 135.7 | % |
Consolidated adjusted property EBITDA(1) | $ | 732 | | | $ | 786 | | | (6.9) | % |
| | | | | |
Las Vegas Operating Properties(2) | $ | 63 | | | $ | 290 | | | (78.3) | % |
_________________________
(1)Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is used by management as the primary measure of the operating performance of our segments. Consolidated adjusted property EBITDA is net income/loss before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal or impairment of assets, interest, other income or expense, gain or loss on modification or early retirement of debt and income taxes. Consolidated adjusted property EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. In particular, management utilizes consolidated adjusted property EBITDA to compare the operating profitability of our operations with those of our competitors, as well as a basis for determining certain
incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. We have significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal repayments and income taxes, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, our presentation of consolidated adjusted property EBITDA may not be directly comparable to similarly titled measures presented by other companies.
| | | | | | | | | | | |
| | Year Ended December 31, |
| | 2022 | | 2021 |
| | | |
| | (In millions) |
| Consolidated adjusted property EBITDA | $ | 732 | | | $ | 786 | |
| | | |
| Other Operating Costs and Expenses | | | |
Stock-based compensation(a) | (33) | | | (12) | |
| Corporate | (235) | | | (211) | |
| Pre-opening | (13) | | | (19) | |
| Development | (143) | | | (109) | |
| Depreciation and amortization | (1,036) | | | (1,041) | |
| Amortization of leasehold interests in land | (55) | | | (56) | |
| Loss on disposal or impairment of assets | (9) | | | (27) | |
| Operating loss | (792) | | | (689) | |
| Other Non-Operating Costs and Expenses | | | |
| Interest income | 116 | | | 4 | |
| Interest expense, net of amounts capitalized | (702) | | | (621) | |
| Other expense | (9) | | | (31) | |
| | | |
| Loss on modification or early retirement of debt | — | | | (137) | |
| Income tax (expense) benefit | (154) | | | 5 | |
| Net loss from continuing operations | $ | (1,541) | | | $ | (1,469) | |
(a)During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense of $70 million and $27 million, respectively, of which $37 million and $15 million, respectively, was included in corporate expense in the accompanying consolidated statements of operations.
(2)The Las Vegas Operating Properties are classified as a discontinued operation. We completed the sale on February 23, 2022. Financial results are for the period through February 22, 2022.
Adjusted property EBITDA at our Macao operations decreased $662 million compared to the year ended December 31, 2021. The decrease was primarily due to decreased casino, mall and room revenues, driven by decreased visitation at our properties as tighter border and travel restrictions were in place in 2022 as a result of increased COVID-19 cases in Macao and the surrounding areas.
Adjusted property EBITDA at Marina Bay Sands increased $608 million compared to the year ended December 31, 2021. The increase was primarily due to increased casino, room, food and beverage and mall operations driven by increased visitation and loosened pandemic-related restrictions implemented in April 2022.
Discontinued Operation
Adjusted property EBITDA at our Las Vegas Operating Properties decreased $227 million compared to the year ended December 31, 2021. The decrease was primarily due to the current year activity representing only 53 days of operations as we completed the sale of the Las Vegas Operating properties on February 23, 2022, partially
offset by increased casino and room operations as Las Vegas Operating Properties operated under pre-pandemic guidelines.
Interest Expense
The following table summarizes information related to interest expense:
| | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 |
| | | |
| (Dollars in millions) |
Interest cost | $ | 706 | | | $ | 636 | |
| Less — capitalized interest | (4) | | | (15) | |
Interest expense, net | $ | 702 | | | $ | 621 | |
Cash paid for interest | $ | 618 | | | $ | 606 | |
Weighted average total debt balance | $ | 15,298 | | | $ | 14,592 | |
Weighted average interest rate | 4.6 | % | | 4.4 | % |
Interest cost increased $70 million compared to the year ended December 31, 2021, resulting primarily from increases in our weighted average interest rate and weighted average total debt balance. The weighted average debt balance increased due to draws of $1.20 billion on the SCL revolver during the year ended December 31, 2022. Additionally, the weighted average interest rate increased primarily due to increased interest rates on the SCL revolver and the MBS credit facility in line with increases in market rates and increased interest rates on the SCL senior notes in connection with the credit rating downgrades in February and June 2022 (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 12 — Long-Term Debt").
Other Factors Affecting Earnings
Interest income was $116 million for the year ended December 31, 2022, compared to $4 million for the year ended December 31, 2021. This increase was primarily from the $90 million in interest income on money market funds and bank deposits driven by an increase in cash due to the sale of the Las Vegas Operating Properties and higher interest rates. We also had $21 million in interest income from the seller financing loan in connection with the sale of the Las Vegas Operating Properties in 2022.
Other expense was $9 million for the year ended December 31, 2022, compared to $31 million during the year ended December 31, 2021. The change was due to the fluctuation in the exchange rate between the U.S. dollar and pataca in connection with our U.S. dollar denominated debt held by SCL.
Our income tax expense was $154 million on a loss from continuing operations before income taxes of $1.39 billion for the year ended December 31, 2022, resulting in an 11.1% effective income tax rate. This compares to a (0.3)% effective income tax rate for the year ended December 31, 2021. The income tax expense for the year ended December 31, 2022, reflects a 17% statutory tax rate on our Singapore operations, a 21% corporate income tax rate on our U.S. operations, and a zero percent tax rate on our Macao gaming operations due to our income tax exemption in Macao. Our U.S. operations recorded a valuation allowance on certain U.S. foreign tax credits, which we no longer expect to utilize. Our U.S. tax expense was partially offset by a tax benefit associated with the pre-tax book losses incurred for the year ended December 31, 2022.
We have had the benefit of a corporate tax exemption in Macao, which exempts us from paying the 12% corporate income tax on profits generated by the operation of casino games, but does not apply to our non-gaming activities. We continued to benefit from this tax exemption through December 31, 2022. Additionally, we entered into a shareholder dividend tax agreement with the Macao government in April 2019, effective through June 26, 2022, providing an annual payment as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits. In December 2022, we requested a corporate tax exemption on profits generated by the operation of casino games in Macao for the new gaming concession period effective from January 1, 2023 through December 31, 2032, or for a period of corporate tax exemption that the Chief Executive of Macao may deem more appropriate. We are evaluating the timing of an application for a new shareholder dividend tax agreement.
The net loss attributable to our noncontrolling interests from continuing operations was $475 million for the year ended December 31, 2022, compared to $315 million for the year ended December 31, 2021. These amounts were related to the noncontrolling interest of SCL.
Additional Information Regarding our Retail Mall Operations
The following tables summarize the results of our mall operations on the Cotai Strip and at Marina Bay Sands for the years ended December 31, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shoppes at Venetian | | Shoppes at Four Seasons | | Shoppes at Londoner | | Shoppes at Parisian | | The Shoppes at Marina Bay Sands | | |
| | | | | | | | | | | |
| (In millions) |
| For the year ended December 31, 2022 | | | | | | | | | | | |
| Mall revenues: | | | | | | | | | | | |
Minimum rents(1) | $ | 168 | | | $ | 119 | | | $ | 30 | | | $ | 22 | | | $ | 145 | | | |
| Overage rents | 6 | | | 8 | | | 11 | | | 2 | | | 51 | | | |
Rent concessions(2) | (47) | | | (10) | | | (6) | | | (7) | | | — | | | |
| | | | | | | | | | | |
Total overage rents and rent concessions | (41) | | | (2) | | | 5 | | | (5) | | | 51 | | | |
| CAM, levies and direct recoveries | 27 | | | 10 | | | 12 | | | 8 | | | 30 | | | |
| Total mall revenues | 154 | | | 127 | | | 47 | | | 25 | | | 226 | | | |
| Mall operating expenses: | | | | | | | | | | | |
| Common area maintenance | 11 | | | 5 | | | 7 | | | 4 | | | 20 | | | |
Marketing and other direct operating expenses | 7 | | | 6 | | | 4 | | | 3 | | | 5 | | | |
| Mall operating expenses | 18 | | | 11 | | | 11 | | | 7 | | | 25 | | | |
Property taxes(3) | 1 | | | — | | | — | | | — | | | 4 | | | |
| | | | | | | | | | | |
Mall-related expenses(4) | $ | 19 | | | $ | 11 | | | $ | 11 | | | $ | 7 | | | $ | 29 | | | |
| For the year ended December 31, 2021 | | | | | | | | | | | |
| Mall revenues: | | | | | | | | | | | |
Minimum rents(1) | $ | 181 | | | $ | 121 | | | $ | 29 | | | $ | 29 | | | $ | 144 | | | |
| Overage rents | 15 | | | 54 | | | 15 | | | 6 | | | 25 | | | |
Rent concessions(2) | (31) | | | (1) | | | (3) | | | (6) | | | (24) | | | |
Other(5) | — | | | — | | | — | | | — | | | 6 | | | |
Total overage rents and rent concessions | (16) | | | 53 | | | 12 | | | — | | | 7 | | | |
| CAM, levies and direct recoveries | 29 | | | 10 | | | 14 | | | 10 | | | 25 | | | |
| Total mall revenues | 194 | | | 184 | | | 55 | | | 39 | | | 176 | | | |
| Mall operating expenses: | | | | | | | | | | | |
| Common area maintenance | 12 | | | 5 | | | 7 | | | 4 | | | 16 | | | |
Marketing and other direct operating expenses | 6 | | | 4 | | | 3 | | | 2 | | | 6 | | | |
| Mall operating expenses | 18 | | | 9 | | | 10 | | | 6 | | | 22 | | | |
Property taxes(3) | 1 | | | — | | | — | | | — | | | 2 | | | |
| Provision for (recovery of) credit losses | (1) | | | — | | | — | | | 3 | | | — | | | |
Mall-related expenses(4) | $ | 18 | | | $ | 9 | | | $ | 10 | | | $ | 9 | | | $ | 24 | | | |
____________________
Note: This table excludes the results of our mall operations at Sands Macao.
(1) Minimum rents include base rents and straight-line adjustments of base rents.
(2) Rent concessions were provided to tenants as a result of the COVID-19 Pandemic and the related impact on mall operations.
(3) Commercial property that generates rental income is exempt from property tax for the first six years for newly constructed buildings in Cotai. If the property also qualifies for Tourism Utility Status, the property tax exemption can be extended to twelve years with effect from the opening of the property. To date, The Venetian Macao, The Plaza Macao and Four Seasons Macao, The Londoner Macao and The Parisian Macao have obtained an extended exemption. The exemption for The Venetian Macao and The Plaza Macao and Four Seasons Macao expired in August 2019 and August 2020, respectively, and the exemption for The Londoner Macao and The Parisian Macao will be expiring in December 2027 and September 2028, respectively.
(4) Mall-related expenses consist of CAM, marketing fees and other direct operating expenses, property taxes and provision for credit losses, but excludes depreciation and amortization and general and administrative costs.
(5) The amount for Marina Bay Sands of $6 million related to a grant provided by the Singapore government to lessors to support small and medium enterprises impacted by the COVID-19 Pandemic in connection with their rent obligations.
It is common in the mall operating industry for companies to disclose mall net operating income ("NOI") as a useful supplemental measure of a mall's operating performance. Because NOI excludes general and administrative expenses, interest expense, impairment losses, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests and provision for income taxes, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.
In the table above, we believe taking total mall revenues less mall-related expenses provides an operating performance measure for our malls. Other mall operating companies may use different methodologies for deriving mall-related expenses. As such, this calculation may not be comparable to the NOI of other mall operating companies.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
A discussion of changes in our results of operations between 2021 and 2020 has been omitted from this Form 10-K and can be found in "Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Liquidity and Capital Resources
Cash Flows — Summary
Our cash flows consisted of the following:
| | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Net cash used in operating activities from continuing operations | $ | (944) | | | $ | (243) | |
| Cash flows from investing activities from continuing operations: | | | |
| | | |
Capital expenditures | (651) | | | (828) | |
Proceeds from disposal of property and equipment | 9 | | | 7 | |
| Acquisition of intangible assets and other | (129) | | | (11) | |
| Proceeds from seller loan | 50 | | | — | |
| Net cash used in investing activities from continuing operations | (721) | | | (832) | |
| Cash flows from financing activities from continuing operations: | | | |
Proceeds from exercise of stock options | — | | | 19 | |
| Tax withholding on vesting of equity awards | (1) | | | — | |
| | | |
| | | |
Proceeds from long-term debt | 1,200 | | | 2,702 | |
Repayments of long-term debt | (66) | | | (1,867) | |
Payments of financing costs | (11) | | | (38) | |
| Make-whole premium on early extinguishment of debt | — | | | (131) | |
| Transaction with discontinued operations | 5,032 | | | 178 | |
| Net cash generated from financing activities from continuing operations | 6,154 | | | 863 | |
| | | |
| Net cash generated from (used in) discontinued operations | $ | — | | | $ | 16 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
A discussion of changes in cash flows between 2021 and 2020 has been omitted from this Form 10-K and can be found in "Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Cash Flows — Operating Activities
Table games play at our properties is conducted on a cash and credit basis, while slot machine play is primarily conducted on a cash basis. Our rooms, food and beverage and other non-gaming revenues are conducted primarily on a cash basis and to a lesser extent as a trade receivable. Operating cash flows are generally affected by changes in operating income, accounts receivable, gaming related liabilities and interest payments. For the year ended December 31, 2022, cash used in operations was $944 million, an increase of $701 million compared to $243 million for the year ended December 31, 2021. The increase in cash used for operations was primarily due to cash tax payments inclusive of, and primarily due to, the gain on sale of the Las Vegas Operations totaling $612 million, and our Macao operations generating increased operating losses and working capital requirements due to the decrease in visitation resulting from COVID-19 travel restrictions across key China markets in 2022 and Macao experiencing COVID-19 cases at various times throughout 2022. This cash usage was partially offset by operating cash flows provided by Marina Bay Sands due to the acceleration of visitation and elimination of restrictions in Singapore over the course of 2022.
Cash Flows — Investing Activities
Capital expenditures for the year ended December 31, 2022, totaled $651 million. Included in this amount was $348 million at Marina Bay Sands in Singapore and $243 million for construction and development activities in Macao, which consisted of $175 million for The Londoner Macao, $52 million for The Venetian Macao, $9 million for The Plaza Macao and Four Seasons Macao, $4 million for Sands Macao and $3 million for The Parisian Macao. Additionally, this amount included $60 million for corporate and other.
Capital expenditures for the year ended December 31, 2021, totaled $828 million, including $653 million in Macao, which consisted of $551 million for The Londoner Macao, $71 million for The Venetian Macao and $19 million for The Plaza Macao and Four Seasons Macao primarily for The Grand Suites at Four Seasons, $7 million from Sands Macao, $4 million for The Parisian Macao and $1 million for Ferry and Other; $148 million at Marina Bay Sands in Singapore; and $27 million for corporate and other.
Cash Flows — Financing Activities
Net cash flows generated from financing activities were $6.15 billion for the year ended December 31, 2022, which was primarily attributable to the net proceeds from the sale of the Las Vegas Operating Properties of $4.89 billion and $1.20 billion from the drawdown of our SCL revolving facility. These items were partially offset by $66 million in repayments on long-term debt and $11 million in deferred offering costs relating to obtaining LVSC Revolving Facility lender consents to consummate the Las Vegas Sale and the covenant waiver obtained on the 2018 SCL Credit Facility.
Net cash flows generated from financing activities were $863 million for the year ended December 31, 2021, which was primarily attributable to net proceeds of $756 million, received from the drawdown of our SCL revolving facility, and transactions with discontinued operations. These items were partially offset by a $131 million make-whole premium for the early redemption of the SCL senior note due 2023 and $38 million in financing costs related to the issuance of the new unsecured notes at SCL and the covenant waivers obtained on the LVSC Revolving Facility, 2018 SCL Credit Facility and 2012 Singapore Credit Facility.
As of December 31, 2022, we had $2.48 billion available for borrowing under our U.S., Macao and Singapore revolving facilities, net of letters of credit. Additionally, we had $2.74 billion available for borrowing under the 2012 Singapore Delayed Draw Term Facility to finance construction costs incurred in connection with the MBS Expansion Project.
Cash Flows — Discontinued Operations
Cash flows from discontinued operations for the twelve months ended December 31, 2022, were primarily attributable to $4.89 billion in net proceeds from the Las Vegas Sale, which were transferred to continuing operations.
Capital Financing Overview
We fund our development projects primarily through borrowings from our debt instruments (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 12 — Long-Term Debt") and operating cash flows.
On February 23, 2022, we closed the sale of our Las Vegas Operations. At closing, we received approximately $5.05 billion in cash proceeds, before transaction costs and income taxes. The net proceeds of approximately $4.36 billion, after working capital adjustments, transaction costs and the payment of income taxes throughout 2022, will be used for incremental liquidity and general corporate purposes, which may include capital expenditures and development activities. In connection with the closing of the sale, we may be required to make certain payments (“Support Payments”) to OpCo. The Support Payments are payable on a monthly basis following the closing through the year ending December 31, 2023, based upon the performance of the Las Vegas Operations relative to certain agreed upon target metrics and subject to quarterly and annual adjustments. Our remaining payment obligations are subject to a cap equal to $250 million for the period beginning January 1, 2023 and ending December 31, 2023. No Support Payments were made for the period post-close through December 31, 2022. On January 31, 2023, the Company received notice from OpCo that the Contingent Lease Support Agreement had terminated pursuant to its terms and that neither party would have any further liability or obligation thereunder.
Our U.S., SCL and Singapore credit facilities, as amended, contain various financial covenants, which include maintaining a maximum leverage ratio or net debt, as defined, to trailing twelve-month adjusted earnings before interest, income taxes, depreciation and amortization, as defined. In September 2021, LVSC extended the amendment, pursuant to which lenders, among other things, removed LVSC’s requirement to maintain a maximum leverage ratio as of the last day of the fiscal quarter, through and including December 31, 2022. In November 2022, SCL extended the waiver and amendment request letter, pursuant to which lenders, among other things, waived SCL’s requirement to ensure the leverage ratio does not exceed 4.0x and the interest coverage ratio is greater than
2.50x, through July 31, 2023. In September 2021, MBS extended the amendment letter, pursuant to which MBS will not have to comply with the leverage or interest coverage covenants as of the last day of the fiscal quarter, through and including December 31, 2022. Our compliance with our financial covenants for periods beyond December 31, 2022 could be affected by certain factors beyond our control, such as the impact of the COVID-19 Pandemic, including travel, quarantine and border restrictions occurring in the future. We will pursue additional waivers to meet the required financial covenant ratios, which include a maximum leverage ratio of 4.0x, 4.0x and 4.5x under our U.S., Macao and Singapore credit facilities, respectively, for periods beyond December 31, 2022 for LVSC and MBS and July 31, 2023 for SCL, if deemed necessary. We believe we will be successful in obtaining the additional waivers, although no assurance can be provided that such waivers will be granted, which could negatively impact our ability to be in compliance with our debt covenants for periods beyond December 31, 2022 for LVSC and MBS and July 31, 2023 for SCL. The 2018 SCL Credit Facility expires on July 31, 2023; however, we believe we will be successful in extending the maturity date of the facility prior to its expiration. If we are unable to extend the maturity date or refinance the 2018 SCL Credit Facility, we would be required to seek alternative forms of capital to repay the outstanding balance and our available liquidity may be reduced.
On January 30, 2023, LVSC entered into the Fourth Amendment with lenders to the LVSC Revolving Credit Agreement. Pursuant to the Fourth Amendment, the existing LVSC Revolving Credit Agreement was amended to (a) determine consolidated adjusted EBITDA on a year-to-date annualized basis during the period commencing on the effective date and ending on and including December 31, 2023, as follows: (i) for the fiscal quarter ending March 31, 2023, consolidated adjusted EBITDA for such fiscal quarter multiplied by four, (ii) for the fiscal quarter ending June 30, 2023, consolidated adjusted EBITDA for such fiscal quarter and the immediately preceding fiscal quarter multiplied by two, and (iii) for the fiscal quarter ending September 30, 2023, consolidated adjusted EBITDA for such fiscal quarter and the two immediately preceding fiscal quarters, multiplied by four-thirds; (b) extend the period during which LVSC is required to maintain a specified amount of minimum liquidity as of the last day of each month to December 31, 2023; and (c) extend the period during which LVSC is unable to declare or pay any dividend or other distribution, unless liquidity is greater than $1.0 billion on a pro forma basis after giving effect to such dividend or distribution, to December 31, 2023.
Any defaults under our debt agreements would allow the lenders, in each case, to exercise their rights and remedies as defined under their respective agreements. If the lenders were to exercise their rights to accelerate the due dates of the indebtedness outstanding, there can be no assurance we would be able to repay or refinance any amounts that may become due and payable under such agreements, which could force us to restructure or alter our operations or debt obligations.
We held unrestricted cash and cash equivalents of $6.31 billion and restricted cash of $125 million as of December 31, 2022, of which approximately $2.57 billion of the unrestricted amount is held by non-U.S. subsidiaries. Of the $2.57 billion, approximately $2.06 billion is available to be repatriated, either in the form of dividends or via intercompany loans or advances, to the U.S., subject to levels of earnings, cash flow generated from gaming operations and various other factors, including dividend requirements to third-party public stockholders in the case of funds being repatriated from SCL, compliance with certain local statutes, laws and regulations currently applicable to our subsidiaries and restrictions in connection with their contractual arrangements. We do not expect withholding taxes or other foreign income taxes to apply should these earnings be distributed in the form of dividends or otherwise.
We believe the cash on hand and cash flow generated from operations, as well as the $2.48 billion available for borrowing under our U.S., Macao and Singapore credit facilities, net of outstanding letters of credit, and SGD 3.69 billion (approximately $2.74 billion at exchange rates in effect on December 31, 2022) under the 2012 Singapore Delayed Draw Term Facility, as of December 31, 2022 (only available for draws after the construction cost estimate and construction schedule for the MBS Expansion Project have been delivered to the lenders), will be sufficient to maintain compliance with the financial covenants of our credit facilities and fund our working capital needs, committed and planned capital expenditures, development opportunities and debt obligations. In the normal course of our activities, we will continue to evaluate global capital markets to consider future opportunities for enhancements of our capital structure. During the year ended December 31, 2022, SCL drew down $114 million and HKD 8.50 billion (approximately $1.09 billion at exchange rates in effect on December 31, 2022) under the SCL revolving facility for general corporate purposes.
We have suspended our quarterly dividend program beginning in April 2020, and SCL suspended its dividend payments after paying its interim dividend for 2019 on February 21, 2020.
We believe we have a strong balance sheet and sufficient liquidity in place, including access to available borrowing capacity under our credit facilities. We also believe we are well positioned to support our continuing operations, complete the major construction projects underway, meet our commitments under the Macao Concession and respond to the current COVID-19 Pandemic challenges. We have taken various mitigating measures to manage through the current environment, including a cost and capital expenditure reduction program to minimize cash outflow for non-essential items.
Share Repurchase Program
In June 2018, our Board of Directors authorized the repurchase of $2.50 billion of our outstanding common stock, which was to expire in November 2020. In October 2020, our Board of Directors authorized the extension of the expiration date of the remaining repurchase amount of $916 million to November 2022 and in October 2022, our Board of Directors authorized the further extension of the expiration date of the remaining repurchase amount of $916 million to November 2024. During the year ended December 31, 2022, no shares of our common stock were repurchased under this program. All share repurchases of our common stock have been recorded as treasury stock. Repurchases of our common stock are made at our discretion in accordance with applicable federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including our financial position, earnings, cash flows, legal requirements, other investment opportunities and market conditions.
Aggregate Indebtedness and Other Contractual Obligations
Our total long-term indebtedness and other contractual obligations are summarized below as of December 31, 2022:
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| Payments Due by Period(1) |
| 2023 | | 2024 - 2025 | | 2026 - 2027 | | Thereafter | | Total |
| | | | | | | | | |
| (In millions) |
Long-Term Debt Obligations(2) | | | | | | | | | |
| LVSC Senior Notes | $ | — | | | $ | 2,250 | | | $ | 1,000 | | | $ | 750 | | | $ | 4,000 | |
| SCL Senior Notes | — | | | 1,800 | | | 1,500 | | | 3,850 | | | 7,150 | |
| 2018 SCL Credit Facility — Revolving | 1,958 | | | — | | | — | | | — | | | 1,958 | |
| 2012 Singapore Credit Facility | 62 | | | 1,165 | | | 1,676 | | | — | | | 2,903 | |
| Singapore Delayed Draw Term Facility | — | | | 15 | | | 31 | | | — | | | 46 | |
Other Debt(3) | 11 | | | 14 | | | 1 | | | — | | | 26 | |
| Fixed Interest Payments | 480 | | | 898 | | | 521 | | | 379 | | | 2,278 | |
Variable Interest Payments(4) | 206 | | | 235 | | | 35 | | | — | | | 476 | |
Macao Concession Related(5) | | | | | | | | | |
Macao Annual Premium(6) | 41 | | | 82 | | | 82 | | | 203 | | | 408 | |
Handover Record(7) | 13 | | | 25 | | | 85 | | | 212 | | | 335 | |
| Contractual Obligations | | | | | | | | | |
Operating Leases, Including Imputed Interest(8) | 14 | | | 19 | | | 14 | | | 304 | | | 351 | |
Mall Deposits(9) | 65 | | | 58 | | | 13 | | | 13 | | | 149 | |
Other(10) | 95 | | | 96 | | | 39 | | | 134 | | | 364 | |
| Total | $ | 2,945 | | | $ | 6,657 | | | $ | 4,997 | | | $ | 5,845 | | | $ | 20,444 | |
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(1)As of December 31, 2022, we had a $100 million liability related to uncertain tax positions. We do not expect this liability to result in a payment of cash within the next 12 months. We are unable to reasonably
estimate the timing of the liability in individual years beyond 12 months due to uncertainties in the timing of the effective settlement of tax positions; therefore, such amounts are not included in the table.
(2)See "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 12 — Long-Term Debt" for further details on these financing transactions and "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 16 — Leases" for further details on finance leases.
(3)Other debt consists of finance leases, including imputed interest, and other financed purchased obligations, including the related interest.
(4)Based on the 1-month rate as of December 31, 2022, Secured Overnight Financing Rate ("SOFR") of 4.30%, Hong Kong Inter-Bank Offer Rate (“HIBOR”) of 4.35% and Singapore Swap Offer Rate ("SOR") of 2.53%, plus the applicable interest rate spread in accordance with the respective debt agreements.
(5)In addition to the amounts listed in the table above, under the Macao Concession, we have committed to spend 30.24 billion patacas (approximately $3.77 billion at exchange rates in effect on December 31, 2022) through 2032 on both capital and operating projects, including 27.80 billion patacas (approximately $3.46 billion at exchange rates in effect on December 31, 2022) in non-gaming projects. We will be required to increase our investment in non-gaming projects by up to 20% in the following year subject to a trigger, namely if Macao’s annual market gross gaming revenue achieves or exceeds 180 billion patacas (approximately $22.42 billion at exchange rates in effect on December 31, 2022). The 20% increase is subject to a deduction of 4% per year if the revenue trigger occurs on or after 2028 (the sixth year of the term of the Concession). This potential additional investment is estimated to be approximately $700 million. As the exact timing of this spend has not been finalized, these amounts have not been included in the table above.
We are also required to pay a 35% gross gaming revenue special gaming tax and a 5% gross gaming revenue contribution in Macao, which amounts we pay are variable in nature. Under the Concession, however, we are obligated to pay a special annual gaming premium if the average of the gross gaming revenues of our gaming tables and our electrical or mechanical gaming machines, including slot machines, is lower than a certain minimum amount determined by the Macao government; such special premium being the difference between the gaming tax based on the actual gross gaming revenues and that of the specified minimum amount. Based on the maximum number of gaming tables and gaming machines we are currently authorized to operate, if the monthly special gaming taxes paid during the year aggregates to less than 4.50 billion patacas (approximately $561 million at exchange rates in effect on December 31, 2022), we would be required to pay the difference as the special annual gaming premium.
(6)We are required to pay an annual premium with a fixed portion and a variable portion, which is based on the number and type of gaming tables and gaming machines we operate. Based on the gaming tables and gaming machines (which is at the maximum number of tables and machines currently allowed by the Macao government) in operation as of January 1, 2023, the annual premium payable to the Macao government is approximately $41 million for the years ending December 31, 2023 through December 31, 2027, respectively, and $203 million in aggregate thereafter through the termination of the Concession in December 2032.
(7)Under the Handover Record, we are required to make annual payments of 750 patacas per square meter for the first three years and 2,500 patacas per square meter for the following seven years (approximately $93 and $311, respectively, at exchange rates in effect on December 31, 2022). The annual payment of 750 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years two and three and the annual payment of 2,500 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years five through ten.
(8)We are party to certain operating leases for real estate, which primarily include $319 million related to long-term land leases in Macao with an anticipated lease term of 50 years and $16 million related to a long-term land lease in Las Vegas with a 40-year lease term. See "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 16 — Leases" for further details on operating leases.
(9)Mall deposits consist of refundable security deposits received from mall tenants.
(10)Primarily consists of all other non-cancellable contractual obligations and primarily relates to certain hotel management and service agreements, as described below. The amounts exclude open purchase orders with our suppliers that have not yet been received as these agreements generally allow us the option to cancel, reschedule and adjust terms based on our business needs prior to the delivery of goods or performance of services. Some of our hotel properties operate pursuant to management agreements with various experienced third-party hotel operators (management companies), whereby the management company controls the day-to-day operations of each of these hotels, and we are granted limited approval rights with respect to certain of the management company’s actions. The non-cancelable period of our management agreements ranges from 14 to 40 years with various extension provisions and some with early termination options. Each management company receives a base management fee, generally a percentage of revenue as defined. There are also monthly fees for certain support services and some also include incentive fees based on attaining certain financial thresholds.
Off-Balance Sheet Arrangements
We have not entered into any transactions with special purpose entities, nor have we engaged in any derivative transactions other than foreign currency swaps. Refer to "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 11 — Derivative Instruments" for outstanding foreign currency swaps as of December 31, 2022.
Restrictions on Distributions
We are a parent company with limited business operations. Our main asset is the stock and ownership interests of our subsidiaries. Certain of our debt instruments contain restrictions that, among other things, limit the ability of certain subsidiaries to incur additional indebtedness, issue disqualified stock or equity interests, pay dividends or make other distributions, repurchase equity interests or certain indebtedness, create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell certain of our assets without prior approval of the lenders or noteholders.
Under the Concession, although not a restriction, we have to provide a five-day prior notification to the Macao government for any major financial decisions exceeding 10% of the share capital of VML.
Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the discussions of our business strategies and expectations concerning future operations, margins, profitability, liquidity and capital resources. In addition, in certain portions included in this report, the words: “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends” and similar expressions, as they relate to our Company or management, are intended to identify forward-looking statements. Although we believe these forward-looking statements are reasonable, we cannot assure you any forward-looking statements will prove to be correct. These forward-looking statements involve known and unknown risks, uncertainties and other factors beyond our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the risks associated with:
•the uncertainty of the extent, duration and effects of the COVID-19 Pandemic and the response of governments and other third parties, including government-mandated property closures, increased operational regulatory requirements or travel restrictions, on our business, results of operations, cash flows, liquidity and development prospects;
•our ability to maintain our Concession in Macao and gaming license in Singapore;
•our ability to invest in future growth opportunities;
•the ability to execute our previously announced capital expenditure programs in Singapore, and produce future returns;
•general economic and business conditions internationally, which may impact levels of disposable income, consumer spending, group meeting business, pricing of hotel rooms and retail and mall tenant sales;
•disruptions or reductions in travel and our operations due to natural or man-made disasters, pandemics, epidemics or outbreaks of infectious or contagious diseases, political instability, civil unrest, terrorist activity or war;
•the uncertainty of consumer behavior related to discretionary spending and vacationing at our Integrated Resorts in Macao and Singapore;
•the extensive regulations to which we are subject and the costs of compliance or failure to comply with such regulations;
•new developments and construction projects and ventures, including development at our existing properties (for example, development at our Cotai Strip properties and the MBS Expansion Project);
•regulatory policies in China or other countries in which our patrons reside, or where we have operations, including visa restrictions limiting the number of visits or the length of stay for visitors from China to Macao, restrictions on foreign currency exchange or importation of currency, and the judicial enforcement of gaming debts;
•the possibility that the laws and regulations of mainland China become applicable to our operations in Macao and Hong Kong;
•the possibility that economic, political and legal developments in Macao adversely affect our Macao operations, or that there is a change in the manner in which regulatory oversight is conducted in Macao;
•our leverage, debt service and debt covenant compliance, including the pledge of certain of our assets (other than our equity interests in our subsidiaries) as security for our indebtedness and ability to refinance our debt obligations as they come due or to obtain sufficient funding for our planned, or any future, development projects;
•fluctuations in currency exchange rates and interest rates, and the possibility of increased expense as a result;
•increased competition for labor and materials due to planned construction projects in Macao and Singapore and quota limits on the hiring of foreign workers;
•our ability to compete for limited management and labor resources in Macao and Singapore, and policies of those governments may also affect our ability to employ imported managers or labor from other countries;
•our dependence upon properties primarily in Macao and Singapore for all of our cash flow and the ability of our subsidiaries to make distribution payments to us;
•the passage of new legislation and receipt of governmental approvals for our operations in Macao and Singapore and other jurisdictions where we are planning to operate;
•the ability of our insurance coverage to cover all possible losses that our properties could suffer and the potential for our insurance costs to increase in the future;
•our ability to collect gaming receivables from our credit players;
•the collectability of our outstanding loan receivable;
•our dependence on chance and theoretical win rates;
•fraud and cheating;
•our ability to establish and protect our intellectual property rights;
•reputational risk related to the license of certain of our trademarks;
•the possibility that our securities may be prohibited from being traded in the U.S. securities market under the Holding Foreign Companies Accountable Act;
•conflicts of interest that arise because certain of our directors and officers are also directors and officers of SCL;
•government regulation of the casino industry (as well as new laws and regulations and changes to existing laws and regulations), including gaming license regulation, the requirement for certain beneficial owners of our securities to be found suitable by gaming authorities, the legalization of gaming in other jurisdictions and regulation of gaming on the internet;
•increased competition in Macao, including recent and upcoming increases in hotel rooms, meeting and convention space, retail space, potential additional gaming licenses and online gaming;
•the popularity of Macao and Singapore as convention and trade show destinations;
•new taxes, changes to existing tax rates or proposed changes in tax legislation;
•the continued services of our key officers;
•any potential conflict between the interests of our Principal Stockholders and us;
•labor actions and other labor problems;
•our failure to maintain the integrity of our information and information systems or comply with applicable privacy and data security requirements and regulations could harm our reputation and adversely affect our business;
•the completion of infrastructure projects in Macao;
•limitations on the transfers of cash to and from our subsidiaries, limitations of the pataca exchange markets and restrictions on the export of the renminbi;
•the outcome of any ongoing and future litigation; and
•potential negative impacts from environmental, social and governance and sustainability matters.
All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Readers are cautioned not to place undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by federal securities laws.
Investors and others should note we announce material financial information using our investor relations website (https://investor.sands.com), our company website, SEC filings, investor events, news and earnings releases, public conference calls and webcasts. We use these channels to communicate with our investors and the public about our company, our products and services, and other issues.
In addition, we post certain information regarding SCL, a subsidiary of Las Vegas Sands Corp. with ordinary shares listed on The Stock Exchange of Hong Kong Limited, from time to time on our company website and our investor relations website. It is possible the information we post regarding SCL could be deemed to be material information.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information currently available to us and on various other assumptions management believes to be reasonable under the circumstances. Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations. Changes in these estimates and assumptions may have a material effect on our results of operations and financial condition. We believe the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Provision for Expected Credit Losses
We maintain a provision for expected credit losses on casino, hotel and mall receivables and regularly evaluate the balances. We apply standard reserve percentages to aged account balances, which are grouped based on shared credit risk characteristics and days past due. The reserve percentages are based on estimated loss rates supported by historical observed default rates over the expected life of the receivable and are adjusted for forward-looking information. We also specifically analyze the collectability of each account with a balance over a specified dollar amount, based upon the age of the account, the customer's financial condition, collection history and any other known information and adjust the aforementioned reserve with the results from the individual reserve analysis. We also monitor regional and global economic conditions and forecasts, which include the impact of the COVID-19 Pandemic, in our evaluation of the adequacy of the recorded reserves.
During the year ended December 31, 2022, there continued to be a delay in payments on casino receivables due to the inability of patrons to travel to our properties or to accomplish financial transactions due to the travel restrictions caused by the COVID-19 Pandemic. The collection of casino receivables has also been impacted by liquidity issues faced by certain patrons also stemming from the COVID-19 Pandemic. We have increased the provision for credit losses where appropriate to account for the expected credit losses due to the COVID-19 Pandemic. We continue to closely monitor any delays in payments due to the COVID-19 Pandemic and will increase the provision accordingly depending on the facts and circumstances. Although we believe the provision on our casino receivables is adequate as of December 31, 2022, it is possible our provisions could increase if we experience further delays on payments from patrons.
Account balances are written off against the provision when we believe it is probable the receivable will not be recovered. Credit or marker play was 9.8% and 15.8% of table games play at our Macao properties and Marina Bay Sands, respectively, during the year ended December 31, 2022. Our provision for casino credit losses was 61.6% and 72.5% of gross casino receivables as of December 31, 2022 and 2021, respectively. The credit extended to gaming promoters can be offset by the commissions payable to said gaming promoters, which is considered in the establishment of the provision for credit losses. Our provision for credit losses from our hotel and other receivables is not material.
Litigation Accrual
We are subject to various claims and legal actions. We estimate the accruals for these claims and legal actions based on all relevant facts and circumstances currently available and include such accruals in other accrued liabilities in the consolidated balance sheets when it is determined such contingencies are both probable and reasonably estimable.
Property and Equipment
As of December 31, 2022, we had net property and equipment of $11.45 billion, representing 52.0% of our total assets. We depreciate property and equipment on a straight-line basis over their estimated useful lives. The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations, such as contractual life. Future events, such as property expansions, property developments, new competition or new regulations, could result in a change in the manner in which we use certain assets requiring a change in the estimated useful lives of such assets. The estimated useful lives of assets are periodically reviewed and adjusted as necessary on a prospective basis.
For assets to be held and used (including projects under development), fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we first group our assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the "asset group"). Secondly, we estimate the undiscounted future cash flows directly associated with and expected to arise from the completion, use and eventual disposition of such asset group. We estimate the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. 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 measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.
To estimate the undiscounted cash flows of our asset groups, we consider all potential cash flows scenarios, which are probability weighted based on management's estimates given current conditions. Determining the recoverability of our asset groups is judgmental in nature and requires the use of significant estimates and assumptions, including estimated cash flows, probability weighting of potential scenarios, costs to complete construction for assets under development, growth rates and future market conditions, among others. Future changes to our estimates and assumptions based upon changes in macro-economic factors, regulatory environments, operating results or management's intentions may result in future changes to the recoverability of our asset groups.
For assets to be held for sale, the fixed assets (the "disposal group") are measured at the lower of their carrying amount or fair value less costs to sell. Losses are recognized for any initial or subsequent write-down to fair value less costs to sell, while gains are recognized for any subsequent increase in fair value less costs to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Fixed assets are not depreciated while classified as held for sale.
Income Taxes
We are subject to income taxes in the U.S. (including federal and state) and numerous foreign jurisdictions in which we operate. We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards.
Our foreign and U.S. tax rate differential reflects the fact that U.S. tax rates are higher than the statutory tax rates in Singapore and Macao of 17% and 12%, respectively. In August 2018, we received an exemption from Macao's corporate income tax on profits generated by the operation of casino games of chance for the period of January 1, 2019 through June 26, 2022. In September 2022, we received an additional extension of this exemption for the period June 27, 2022 through December 31, 2022. Additionally, we entered into an agreement with the Macao government in April 2019, effective through June 26, 2022, providing for payments as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits, namely a payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2022) for each of the years 2021 and 2020, each payment to be made on or before January 31 of the following year, and a payment of 18 million patacas (approximately $2 million at exchange rates in effect on December 31, 2022) for the period between January 1, 2022 through June 26, 2022, to be paid on or before July 26, 2022. In December 2022, we requested a corporate tax exemption on profits generated by the operation of casino games in Macao for the new Concession period effective from January 1, 2023 through December 31, 2032, or for a period of corporate tax exemption that the Chief Executive of Macao may deem more appropriate. We are evaluating the timing of an application for a new shareholder dividend tax agreement. There is no certainty either of these tax arrangements will be granted.
Accounting standards regarding income taxes require a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, 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 a "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 duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring and tax planning strategies.
We recorded a valuation allowance on the net deferred tax assets of certain foreign jurisdictions of $475 million and $416 million as of December 31, 2022 and 2021, respectively, and a valuation allowance on certain net deferred tax assets of our U.S. operations of $3.61 billion and $4.62 billion as of December 31, 2022 and 2021, respectively. Management will reassess the realization of deferred tax assets each reporting period and consider the scheduled reversal of deferred tax liabilities, sources of taxable income and tax planning strategies. To the extent the financial results of these operations improve and it becomes "more-likely-than-not" the deferred tax assets are realizable, we will be able to reduce the valuation allowance in the period such determination is made, as appropriate.
Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is "more-likely-than-not" the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely, based solely on the technical merits, of being sustained on examinations. We recorded unrecognized tax benefits of $136 million as of December 31, 2022 and 2021. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may be different.
Our major tax jurisdictions are the U.S., Macao, and Singapore. We could be subject to examination for tax years beginning in 2018 in Macao and Singapore and tax years 2010 through 2015 and 2019 through 2021 in the U.S.
Recent Accounting Pronouncements
See related disclosure at "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Accounting Pronouncements."
ITEM 8. — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
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| Financial Statement Schedule: | |
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The financial information included in the financial statement schedule should be read in conjunction with the consolidated financial statements. All other financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements or the notes thereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Las Vegas Sands Corp.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Las Vegas Sands Corp. and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 3, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Casino Receivables — Refer to Notes 2 and 6 to the financial statements
Critical Audit Matter Description
Accounts receivable as of December 31, 2022 include credit extended to casino patrons and gaming promoters. The Company records a provision for credit losses based on the amount of expected credit losses. The Company applies standard reserve percentages to aged account balances, which are grouped based on shared credit risk characteristics and days past due. The reserve percentages are based on estimated loss rates supported by historical observed default rates over the expected life of the receivable and are adjusted for forward-looking information. The Company also specifically analyzes the collectability of each account with a balance over a specified dollar amount,
based upon the age of the account, the customer's financial condition, collection history, and any other known information and adjusts the aforementioned reserve with the results from the individual reserve analysis.
Auditing the valuation of accounts receivable involved a high degree of subjectivity in evaluating management’s judgments related to the collectability of patron and gaming promoter accounts receivable, especially as it relates to the evaluation of patron and junket operator assets available to repay amounts owed.
How the Critical Audit Matter Was Addressed in the Audit
We planned and performed the following procedures in connection with forming our overall opinion on the financial statements:
•We tested the operating effectiveness of controls over the granting of casino credit, controls over the collection processes, and management’s review controls over the assessment of the collectability of casino receivables, including the information used by management in those controls.
•For a selection of casino receivables, we (1) obtained evidence related to payment history and correspondence with patron or gaming promoter, (2) evaluated management’s use of this information in establishing a provision for credit losses, and (3) examined subsequent settlement, if any.
•Performed a retrospective analysis of historical reserves evaluating subsequent collections and write-offs.
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/s/ Deloitte & Touche LLP |
|
| Las Vegas, Nevada |
| February 3, 2023 |
We have served as the Company's auditor since 2013.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Las Vegas Sands Corp.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Las Vegas Sands Corp. and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2022 of the Company and our report dated February 3, 2023, expressed an unqualified opinion on those financial statements and financial schedule.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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| /s/ Deloitte & Touche LLP |
|
| Las Vegas, Nevada |
| February 3, 2023 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions,
except par value) |
| ASSETS |
| Current assets: | | | |
| Cash and cash equivalents | $ | 6,311 | | | $ | 1,854 | |
| Restricted cash and cash equivalents | — | | | 16 | |
Accounts receivable, net of provision for credit losses of $217 and $232 | 267 | | | 202 | |
| Inventories | 28 | | | 22 | |
| Prepaid expenses and other | 138 | | | 113 | |
| Current assets of discontinued operations held for sale | — | | | 3,303 | |
| Total current assets | 6,744 | | | 5,510 | |
| Loan receivable | 1,165 | | | — | |
| Property and equipment, net | 11,451 | | | 11,850 | |
| Restricted cash | 125 | | | — | |
| Deferred income taxes, net | 131 | | | 297 | |
| Leasehold interests in land, net | 2,128 | | | 2,166 | |
| Intangible assets, net | 64 | | | 19 | |
| Other assets, net | 231 | | | 217 | |
| Total assets | $ | 22,039 | | | $ | 20,059 | |
| LIABILITIES AND EQUITY |
| Current liabilities: | | | |
| Accounts payable | $ | 89 | | | $ | 77 | |
| Construction payables | 189 | | | 227 | |
| Other accrued liabilities | 1,458 | | | 1,334 | |
| Income taxes payable | 135 | | | 32 | |
| Current maturities of long-term debt | 2,031 | | | 74 | |
| Current liabilities of discontinued operations held for sale | — | | | 821 | |
| Total current liabilities | 3,902 | | | 2,565 | |
| Other long-term liabilities | 382 | | | 352 | |
| Deferred income taxes | 152 | | | 173 | |
| | | |
| Long-term debt | 13,947 | | | 14,721 | |
| Total liabilities | 18,383 | | | 17,811 | |
| Commitments and contingencies (Note 17) | | | |
| Equity: | | | |
Preferred stock, $0.001 par value, 50 shares authorized, zero shares issued and outstanding | — | | | — | |
Common stock, $0.001 par value, 1,000 shares authorized, 833 shares issued, 764 shares outstanding | 1 | | | 1 | |
Treasury stock, at cost, 69 shares | (4,481) | | | (4,481) | |
| Capital in excess of par value | 6,684 | | | 6,646 | |
| Accumulated other comprehensive loss | (7) | | | (22) | |
| Retained earnings (loss) | 1,684 | | | (148) | |
| Total Las Vegas Sands Corp. stockholders' equity | 3,881 | | | 1,996 | |
| Noncontrolling interests | (225) | | | 252 | |
| Total equity | 3,656 | | | 2,248 | |
| Total liabilities and equity | $ | 22,039 | | | $ | 20,059 | |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions, except per share data) |
| Revenues: | | | | | |
| Casino | $ | 2,627 | | | $ | 2,892 | | | $ | 2,041 | |
| Rooms | 469 | | | 415 | | | 280 | |
| Food and beverage | 301 | | | 199 | | | 156 | |
| Mall | 580 | | | 649 | | | 381 | |
| Convention, retail and other | 133 | | | 79 | | | 82 | |
| Net revenues | 4,110 | | | 4,234 | | | 2,940 | |
| Operating expenses: | | | | | |
| Casino | 1,792 | | | 2,068 | | | 1,585 | |
| Rooms | 173 | | | 164 | | | 136 | |
| Food and beverage | 319 | | | 244 | | | 236 | |
| Mall | 73 | | | 65 | | | 59 | |
| Convention, retail and other | 103 | | | 85 | | | 103 | |
| Provision for credit losses | 15 | | | 3 | | | 86 | |
| General and administrative | 936 | | | 831 | | | 798 | |
| Corporate | 235 | | | 211 | | | 168 | |
| Pre-opening | 13 | | | 19 | | | 19 | |
| Development | 143 | | | 109 | | | 18 | |
| Depreciation and amortization | 1,036 | | | 1,041 | | | 997 | |
| Amortization of leasehold interests in land | 55 | | | 56 | | | 55 | |
| Loss on disposal or impairment of assets | 9 | | | 27 | | | 73 | |
| 4,902 | | | 4,923 | | | 4,333 | |
| Operating loss | (792) | | | (689) | | | (1,393) | |
| Other income (expense): | | | | | |
| Interest income | 116 | | | 4 | | | 21 | |
| Interest expense, net of amounts capitalized | (702) | | | (621) | | | (523) | |
| Other income (expense) | (9) | | | (31) | | | 19 | |
| | | | | |
| Loss on modification or early retirement of debt | — | | | (137) | | | — | |
| Loss from continuing operations before income taxes | (1,387) | | | (1,474) | | | (1,876) | |
| Income tax (expense) benefit | (154) | | | 5 | | | (24) | |
| Net loss from continuing operations | (1,541) | | | (1,469) | | | (1,900) | |
| Discontinued operations: | | | | | |
| Income (loss) from operations of discontinued operations, net of tax | 46 | | | 193 | | | (243) | |
| Gain on disposal of discontinued operations, net of tax | 2,861 | | | — | | | — | |
| Adjustment to gain on disposal of discontinued operations, net of tax | (9) | | | — | | | — | |
| Income (loss) from discontinued operations, net of tax | 2,898 | | | 193 | | | (243) | |
| Net income (loss) | 1,357 | | | (1,276) | | | (2,143) | |
| Net loss attributable to noncontrolling interests from continuing operations | 475 | | | 315 | | | 458 | |
| Net income (loss) attributable to Las Vegas Sands Corp. | $ | 1,832 | | | $ | (961) | | | $ | (1,685) | |
| Earnings (loss) per share - basic and diluted: | | | | | |
| Loss from continuing operations | $ | (1.40) | | | $ | (1.51) | | | $ | (1.89) | |
| Income (loss) from discontinued operations, net of tax | 3.80 | | | 0.25 | | | (0.32) | |
| Net income (loss) attributable to Las Vegas Sands Corp. | $ | 2.40 | | | $ | (1.26) | | | $ | (2.21) | |
| | | | | |
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| Weighted average shares outstanding: | | | | | |
| Basic and diluted | 764 | | | 764 | | | 764 | |
| | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2022 | | 2021 | | 2020 |
| | | | | |
| | (In millions) |
| Net income (loss) | $ | 1,357 | | | $ | (1,276) | | | $ | (2,143) | |
| Currency translation adjustment | 14 | | | (51) | | | 37 | |
| Cash flow hedge fair value adjustment | (3) | | | (4) | | | — | |
| Total comprehensive income (loss) | 1,368 | | | (1,331) | | | (2,106) | |
| Comprehensive loss attributable to noncontrolling interests | 479 | | | 319 | | | 453 | |
| Comprehensive income (loss) attributable to Las Vegas Sands Corp. | $ | 1,847 | | | $ | (1,012) | | | $ | (1,653) | |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Las Vegas Sands Corp. Stockholders' Equity | | | | |
| Common
Stock | | Treasury Stock | | Capital in
Excess of
Par
Value | | Accumulated
Other
Comprehensive
Income (Loss) | | Retained
Earnings (Loss) | | Noncontrolling
Interests | | Total |
| | | | | | | | | | | | | |
| (In millions) |
| Balance at January 1, 2020 | $ | 1 | | | $ | (4,481) | | | $ | 6,569 | | | $ | (3) | | | $ | 3,101 | | | $ | 1,320 | | | $ | 6,507 | |
| Net loss | — | | | — | | | — | | | — | | | (1,685) | | | (458) | | | (2,143) | |
| Currency translation adjustment | — | | | — | | | — | | | 32 | | | — | | | 5 | | | 37 | |
| Exercise of stock options | — | | | — | | | 22 | | | — | | | — | | | 2 | | | 24 | |
| | | | | | | | | | | | | |
| Stock-based compensation | — | | | — | | | 19 | | | — | | | — | | | 4 | | | 23 | |
| Other | — | | | — | | | 1 | | | — | | | — | | | — | | | 1 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Dividends declared ($0.79 per share) (Note 13) | — | | | — | | | — | | | — | | | (603) | | | (308) | | | (911) | |
| Balance at December 31, 2020 | 1 | | | (4,481) | | | 6,611 | | | 29 | | | 813 | | | 565 | | | 3,538 | |
| Net loss | — | | | — | | | — | | | — | | | (961) | | | (315) | | | (1,276) | |
| Currency translation adjustment | — | | | — | | | — | | | (48) | | | — | | | (3) | | | (51) | |
| Cash flow hedge fair value adjustment | — | | | — | | | — | | | (3) | | | — | | | (1) | | | (4) | |
| Exercise of stock options | — | | | — | | | 15 | | | — | | | — | | | 4 | | | 19 | |
| | | | | | | | | | | | | |
| Stock-based compensation | — | | | — | | | 20 | | | — | | | — | | | 2 | | | 22 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Balance at December 31, 2021 | 1 | | | (4,481) | | | 6,646 | | | (22) | | | (148) | | | 252 | | | 2,248 | |
| Net income (loss) | — | | | — | | | — | | | — | | | 1,832 | | | (475) | | | 1,357 | |
| Currency translation adjustment | — | | | — | | | — | | | 17 | | | — | | | (3) | | | 14 | |
| Cash flow hedge fair value adjustment | — | | | — | | | — | | | (2) | | | — | | | (1) | | | (3) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Stock-based compensation | — | | | — | | | 39 | | | — | | | — | | | 2 | | | 41 | |
| Tax withholding on vesting of equity awards | — | | | — | | | (1) | | | — | | | — | | | — | | | (1) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Balance at December 31, 2022 | $ | 1 | | | $ | (4,481) | | | $ | 6,684 | | | $ | (7) | | | $ | 1,684 | | | $ | (225) | | | $ | 3,656 | |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| | 2022 | | 2021 | | 2020 |
| | | | | |
| | (In millions) |
| Cash flows from operating activities from continuing operations: | | | | | |
| Net loss from continuing operations | $ | (1,541) | | | $ | (1,469) | | | $ | (1,900) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | | | |
| Depreciation and amortization | 1,036 | | | 1,041 | | | 997 | |
| Amortization of leasehold interests in land | 55 | | | 56 | | | 55 | |
| Amortization of deferred financing costs and original issue discount | 57 | | | 52 | | | 43 | |
| Change in fair value of derivative asset/liability | 1 | | | (1) | | | — | |
| Paid-in-kind interest income | (15) | | | — | | | — | |
| | | | | |
| Loss on modification or early retirement of debt | — | | | 137 | | | — | |
| Loss on disposal or impairment of assets | 7 | | | 16 | | | 39 | |
| | | | | |
| Stock-based compensation expense | 39 | | | 22 | | | 22 | |
| Provision for credit losses | 15 | | | 3 | | | 86 | |
| Foreign exchange (gain) loss | (10) | | | 34 | | | (20) | |
| Deferred income taxes | (2) | | | (45) | | | 24 | |
| Income tax impact related to gain on sale of Las Vegas Operations | (750) | | | — | | | — | |
| Changes in operating assets and liabilities: | | | | | |
| Accounts receivable | (78) | | | 43 | | | 339 | |
| Other assets | 2 | | | (5) | | | 14 | |
| | | | | |
| Accounts payable | 11 | | | (11) | | | (42) | |
| Other liabilities | 229 | | | (116) | | | (848) | |
| Net cash used in operating activities from continuing operations | (944) | | | (243) | | | (1,191) | |
| Cash flows from investing activities from continuing operations: | | | | | |
| | | | | |
| Capital expenditures | (651) | | | (828) | | | (1,227) | |
| Proceeds from disposal of property and equipment | 9 | | | 7 | | | 1 | |
| Acquisition of intangible assets and other | (129) | | | (11) | | | — | |
| Proceeds from loan receivable | 50 | | | — | | | — | |
| Net cash used in investing activities from continuing operations | (721) | | | (832) | | | (1,226) | |
| Cash flows from financing activities from continuing operations: | | | | | |
| Proceeds from exercise of stock options | — | | | 19 | | | 24 | |
| Tax withholding on vesting of equity awards | (1) | | | — | | | — | |
| | | | | |
| Dividends paid and noncontrolling interest payments | — | | | — | | | (911) | |
| Proceeds from long-term debt | 1,200 | | | 2,702 | | | 1,945 | |
| Repayments of long-term debt | (66) | | | (1,867) | | | (467) | |
| Payments of financing costs | (11) | | | (38) | | | (31) | |
| Make-whole premium on early extinguishment of debt | — | | | (131) | | | — | |
| Transactions with discontinued operations | 5,032 | | | 178 | | | (205) | |
| Net cash generated from financing activities from continuing operations | 6,154 | | | 863 | | | 355 | |
| Cash flows from discontinued operations: | | | | | |
| Net cash generated from (used in) operating activities | 149 | | | 258 | | | (121) | |
| Net cash generated from (used in) investing activities | 4,883 | | | (63) | | | (103) | |
| Net cash provided (to) by continuing operations and (used in) financing activities | (5,032) | | | (179) | | | 205 | |
| Net cash generated from (used in) discontinued operations | — | | | 16 | | | (19) | |
| Effect of exchange rate on cash, cash equivalents and restricted cash and cash equivalents | 22 | | | (16) | | | (24) | |
| Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents | 4,511 | | | (212) | | | (2,105) | |
| Cash, cash equivalents and restricted cash and cash equivalents at beginning of year | 1,925 | | | 2,137 | | | 4,242 | |
| Cash, cash equivalents and restricted cash and cash equivalents at end of year | 6,436 | | | 1,925 | | | 2,137 | |
| Less: cash and cash equivalents at end of period for discontinued operations | — | | | (55) | | | (39) | |
| Cash, cash equivalents and restricted cash and cash equivalents at end of period for continuing operations | $ | 6,436 | | | $ | 1,870 | | | $ | 2,098 | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Supplemental disclosure of cash flow information: | | | | | |
| Cash payments for interest, net of amounts capitalized | $ | 614 | | | $ | 591 | | | $ | 419 | |
| Cash payments for taxes, net of refunds | $ | 649 | | | $ | 86 | | | $ | 196 | |
| Changes in construction payables | $ | (38) | | | $ | (109) | | | $ | 17 | |
| | | | | |
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| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and Business of Company
Las Vegas Sands Corp. ("LVSC" or together with its subsidiaries, the "Company") is incorporated in Nevada and its common stock is traded on the New York Stock Exchange under the symbol "LVS."
The ordinary shares of the Company's subsidiary, Sands China Ltd. ("SCL," the indirect owner and operator of the majority of the Company's operations in the Macao Special Administrative Region ("Macao") of the People's Republic of China) are listed on The Main Board of The Stock Exchange of Hong Kong Limited. The shares were not, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent a registration under the Securities Act of 1933, as amended, or an applicable exception from such registration requirements.
COVID-19 Pandemic Update
Macao
While visitation to Macao remains substantially below pre-COVID-19 pandemic levels, the Macao government's policy regarding the management of COVID-19 and general travel restrictions has adjusted in line with changes in policy in mainland China in late December 2022 and early January 2023. Currently, visitors from mainland China, Hong Kong and Taiwan may enter Macao, subject to them holding the appropriate travel documents, without having to present any proof of COVID-19 testing. Arrivals from foreign countries must provide proof of a negative COVID-19 nucleic acid test ("NAT") or antigen test completed within 48 hours prior to arrival. The Company’s operations in Macao will continue to be impacted and subject to changes in the government policies of Macao, mainland China, Hong Kong and other jurisdictions in Asia addressing travel and public health measures associated with COVID-19.
Throughout the year ended December 31, 2022, various outbreaks occurred in the region, particularly in Hong Kong in late January and early February, the Guangdong province in March, Macao in mid-June and Zhuhai in early October, all of which resulted in various travel, border and/or operational restrictions. Specifically, on July 9, 2022, the Macao government ordered casinos and all non-essential businesses to close from July 11 to July 18 in an attempt to control the outbreak in Macao, which was extended through July 22, 2022. On July 20, 2022, the Macao government announced a consolidation period, which started on July 23, 2022 and ended on July 30, 2022, whereby certain business activities were allowed to resume limited operations; however, casino operations resumed, but with a maximum capacity of 50% of casino staff working at any point. Throughout August, these preventative measures were gradually reduced, as well as various restrictions on movement between Macao and Zhuhai were progressively lifted by both the Macao and mainland China governments.
Various travel restrictions, such as border closures, mandatory quarantines and proof of negative COVID-19 testing on arrival in Macao, among others, were in effect at various times during the year ended December 31, 2022, resulting in fluctuations in guest travel and visitation.
The Hong Kong / Macao Express bus service and the ferry services between the Taipa Ferry Terminal and Hong Kong International Airport recommenced on December 24, 2022 and December 30, 2022, respectively. The Company’s ferry operations between Macao and Hong Kong were suspended throughout 2022 and resumed operation on a limited basis on January 8, 2023.
The Company’s Macao gaming operations remained open during most of the year ended December 31, 2022. While guest visitation has begun to recover with the gradual relaxation of travel and quarantine restrictions, the timing and manner in which the Company's casinos, restaurants and shopping malls will operate at full capacity will progressively be assessed against business volumes.
As with prior periods, in support of the Macao government’s initiatives to fight the COVID-19 Pandemic, at various times throughout the year ended December 31, 2022, the Company provided both towers of the Sheraton Grand Macao hotel and also The Parisian Macao hotel to the Macao government to house individuals for quarantine and medical observation purposes.
The Company’s operations in Macao have been significantly impacted by the reduced visitation to Macao. The Macao government announced total visitation from mainland China to Macao decreased approximately 27.5%
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and 81.7%, during the year ended December 31, 2022, as compared to the same period in 2021 and 2019 (pre-pandemic), respectively. The Macao government also announced gross gaming revenue decreased approximately 51.4% and 85.6%, during the year ended December 31, 2022, as compared to the same period in 2021 and 2019, respectively.
At the Macao properties, all social distancing requirements, including those requiring reduced seating at table games and a decreased number of active slot machines on the casino floor compared to pre-COVID-19 levels, have ceased in early January 2023.
Singapore
In Singapore, the Vaccinated Travel Framework (“VTF”) was launched on April 1, 2022, to facilitate the resumption of travel for all travelers, including short-term visitors. Under the VTF, all fully vaccinated travelers are permitted to enter Singapore, without entry approvals, and starting April 26, 2022, these travelers are no longer required to take a COVID-19 test before departing for Singapore. Non-fully vaccinated travelers need only take a pre-departure test within two days before departure for Singapore and test negative before departing for Singapore. Operations at Marina Bay Sands will continue to be impacted and subject to changes in the government policies of Singapore and other jurisdictions in Asia, if any, addressing travel and public health measures associated with COVID-19.
Visitation to Marina Bay Sands continues to be impacted by the effects of the COVID-19 Pandemic; however, visitation has increased since restrictions have been lifted. The Singapore Tourism Board (“STB”) announced total visitation to Singapore increased from approximately 330,000 in 2021 to 6.3 million in 2022, while visitation decreased 67.0% when compared to the same period in 2019.
Summary
The disruptions arising from the COVID-19 Pandemic continued to have a significant adverse impact on the Company’s financial condition and operations during the year ended December 31, 2022. The duration and intensity of this global health situation and related disruptions are uncertain and given the dynamic nature of these circumstances, the potential future impact on the Company’s consolidated results of operations, cash flows and financial condition is uncertain.
While each of the Company’s properties were open with some operating at reduced levels due to lower visitation and required safety measures in place during the year ended December 31, 2022, the current economic and regulatory environment on a global basis and in each of the Company’s jurisdictions continues to evolve. The Company cannot predict the manner in which governments will react as the global and regional impact of the COVID-19 Pandemic changes over time, which could significantly alter the Company’s current operations.
The Company has a strong balance sheet and sufficient liquidity in place, including total unrestricted cash and cash equivalents of $6.31 billion and access to $1.50 billion, $541 million and $439 million of available borrowing capacity from the LVSC Revolving Facility, 2018 SCL Revolving Facility and the 2012 Singapore Revolving Facility, respectively, as of December 31, 2022. The Company believes it is able to support continuing operations, complete the major construction projects that are underway and respond to the current COVID-19 Pandemic challenges. The Company has taken various mitigating measures to manage through the current environment, including a cost reduction program to minimize cash outflow for non-essential items.
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Macao Concession
Until December 31, 2022, gaming in Macao was administered by the government through concession agreements awarded to three different concessionaires and three subconcessionaires, of which Venetian Macau Limited (“VML,” a subsidiary of Sands China Ltd.) was one. On June 23, 2022, an extension was approved and authorized by the Macao government and executed between VML and Galaxy Casino, S.A., pursuant to which the subconcession was extended from June 26, 2022 to December 31, 2022 (the “Subconcession Amendment”). VML paid the Macao government 47 million patacas (approximately $6 million at exchange rates in effect at the time of the transaction) and provided a bank guarantee on September 20, 2022, of 2.31 billion patacas (approximately $289 million at exchange rates as defined in the bank guarantee contract) to secure the fulfillment of VML's payment obligations towards its employees if VML were unsuccessful in tendering for a new concession contract after its subconcession expired.
On November 26, 2022, the Macao government awarded six concessions to six of the bidders on a temporary basis, of which VML was one, subject to fulfillment of certain conditions, namely providing a bank guarantee of 1.0 billion patacas (approximately $125 million at exchange rates in effect on December 31, 2022) to secure the fulfillment of VML’s legal, contractual and other obligations, including labor obligations. VML complied with all of these conditions by December 9, 2022. On December 16, 2022, the Macao government awarded six concessions on a definitive basis, of which VML was one, and VML entered into a concession contract with the Macao government, effective as of January 1, 2023, and for the duration of ten years (the "Concession"). On December 19, 2022, VML requested the release of all the bank guarantees it provided to the Macao government under its subconcession, and in January 2023 such bank guarantees were released, including the 2.31 billion patacas bank guarantee. Refer to “Note 5 — Restricted Cash and Cash Equivalents” for further information on cash restricted for the bank guarantee.
On December 30, 2022, in accordance with the requirements of the Gaming Law and their obligations under letters of undertakings (the "Undertakings"), each of VML, Venetian Cotai Limited ("VCL"), Venetian Orient Limited ("VOL") and Cotai Strip Lot 2 Apart Hotel (Macau) Limited (“CSL2,” a subsidiary of SCL) entered into deeds of reversion, pursuant to which each of VML, VCL, VOL and CSL2 confirmed and agreed to revert to the Macao government relevant gaming equipment and gaming areas (as identified in the Undertakings) without compensation and free of any liens or charges upon the expiry of the term of the subconcession extension period. On the same day, VML entered into a handover record (the "Handover Record"), pursuant to which the right to operate the same gaming equipment and gaming areas was granted to VML for the duration of the Concession, in return for annual payments of 750 patacas per square meter for the first three years and 2,500 patacas per square meter for the following seven years (approximately $93 and $311, respectively, at exchange rates in effect on December 31, 2022). The annual payment of 750 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years two and three and the annual payment of 2,500 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years five through ten.
Operations
The Company is a developer of destination properties ("Integrated Resorts") that feature premium accommodations, world-class gaming, entertainment and retail malls, convention and exhibition facilities, celebrity chef restaurants and other amenities.
Macao
The Company currently owns 69.9% of SCL, which includes the operations of The Venetian Macao Resort Hotel ("The Venetian Macao"), The Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Hotel Macao, Cotai Strip (the "Four Seasons Macao"), Sands Macao and other ancillary operations that support these properties, as further discussed below. The Company operates the gaming areas within these properties pursuant to the 10-year Concession agreement, which expires in December 2032.
The Venetian Macao anchors the Cotai Strip, the Company's master-planned development of Integrated Resorts on an area of approximately 140 acres in Macao. The Venetian Macao includes a 39-floor luxury hotel with 2,905 suites; approximately 503,000 square feet of gaming space and gaming support area; a 15,000-seat arena; an
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1,800-seat theater; a mall with retail and dining space of approximately 944,000 square feet; and a convention center and meeting room complex of approximately 1.2 million square feet.
The Londoner Macao (previously Sands Cotai Central), our largest Integrated Resort on the Cotai Strip, is located across the street from The Venetian Macao, The Parisian Macao and The Plaza Macao and Four Seasons Macao. The Londoner Macao is the result of our renovation, expansion and rebranding of Sands Cotai Central, which included the addition of extensive thematic elements both externally and internally and was completed during 2022. The Londoner Macao presents a range of new attractions and features, including some of London’s most recognizable landmarks, such as the Houses of Parliament and the Elizabeth Tower (commonly known as "Big Ben"), and interactive guest experiences. The Integrated Resort features four hotel towers. The first hotel tower consists of Londoner Court with 368 luxury suites and 400 rooms and suites under the St. Regis brand. The second hotel tower consists of 659 five-star rooms and suites under the Conrad brand and The Londoner Macao Hotel with 594 London-themed suites, including 14 exclusive Suites by David Beckham. The third hotel tower consists of 1,842 rooms and suites under the Sheraton brand. The fourth hotel tower consists of 2,126 rooms and suites under the Sheraton brand. Within The Londoner Macao, the Company also owns and currently operates approximately 400,000 square feet of gaming space and gaming support area, approximately 369,000 square feet of meeting space and approximately 610,000 square feet of retail space, a 6,000-seat arena, as well as entertainment and dining facilities.
The Parisian Macao is an Integrated Resort connected to The Venetian Macao and The Plaza Macao and Four Seasons Macao, which includes approximately 270,000 square feet of gaming space and gaming support area. The Parisian Macao also features 2,541 rooms and suites; approximately 296,000 square feet of retail and dining space; a meeting room complex of approximately 63,000 square feet; and a 1,200-seat theater.
The Plaza Macao and Four Seasons Macao features 360 rooms and suites managed and operated by FS Macau Lda. and is located adjacent and connected to The Venetian Macao. Within the Integrated Resort, the Plaza Casino features approximately 108,000 square feet of gaming space and gaming support area; 19 Paiza mansions; retail space of approximately 249,000 square feet, which is connected to the mall at The Venetian Macao; several food and beverage offerings; and conference, banquet and other facilities. The Grand Suites at Four Seasons opened in October 2020 and features 289 luxury suites.
The Sands Macao, the first Las Vegas-style casino in Macao, offers approximately 176,000 square feet of gaming space and gaming support area and a 289-suite hotel tower, as well as several restaurants, VIP facilities, a theater and other high-end services and amenities.
Singapore
The Company owns and operates the Marina Bay Sands in Singapore, which opened with approximately 2,600 rooms and suites located in three 55-story hotel towers. The Company is currently undertaking extensive renovation work with approximately 2,300 rooms and suites resulting upon completion, which is expected to greatly enhance the positioning of the Company's suite product (see "Development Projects" for further information). Marina Bay Sands also features the Sands SkyPark (which sits atop the hotel towers and features an infinity swimming pool and several dining options), approximately 160,000 square feet of gaming space, an enclosed retail, dining and entertainment complex of approximately 800,000 net leasable square feet, a convention center and meeting room complex of approximately 1.2 million square feet, a theater and a landmark iconic structure at the bay-front promenade that contains an art/science museum. The Company announced an expansion project at Marina Bay Sands, as further described below.
United States
Las Vegas
The Company previously owned and operated The Venetian Resort Las Vegas and the Sands Expo and Convention Center (collectively referred to as the “Las Vegas Operations”). On February 23, 2022, the Company closed on the sale of the Las Vegas Operations. Refer to “Note 3 — Discontinued Operations” for further information.
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Development Projects
The Company regularly evaluates opportunities to improve its product offerings, such as refreshing its meeting and convention facilities, suites and rooms, retail malls, restaurant and nightlife mix and its gaming areas, as well as other anticipated revenue generating additions to the Company's Integrated Resorts.
Macao
As part of the Concession entered into by VML and the Macao government, VML has a financial commitment to spend 30.24 billion patacas (approximately $3.77 billion at exchange rates in effect on December 31, 2022) through 2032 on both capital and operating projects, including 27.80 billion patacas (approximately $3.46 billion at exchange rates in effect on December 31, 2022) in non-gaming projects that will also appeal to international visitors. As part of the investment, VML will dedicate resources to several key areas, including:
•A commitment to expand, improve and optimize the scale and quality of its convention centers and related amenities. This includes the proposed development of a new approximately 18,000-square-meter MICE facility in a new podium adjacent to the existing Cotai Expo, expanding the Company’s footprint of inter-connected meeting space and enabling the hosting of additional large-scale international MICE events. In connection with these efforts, the Company will strengthen the planning, organization and international marketing of convention tourism in order to attract global multinational companies to host annual meetings and corporate summits in Macao.
•The redevelopment of the existing Le Jardin (the “Tropical Garden” on the south side of The Londoner Macao) to create a new and unique approximately 50,000-square-meter garden-themed destination. The proposed garden-themed attraction will include an iconic conservatory together with related themed green spaces and amenities. The conservatory is intended to become a Macao landmark of international renown, providing a year-round themed attraction for tourists and residents.
•An expansion of entertainment and sporting events and offerings to grow international tourism, supported in part by a meaningful reinvestment and upgrade of the Cotai Arena. The Company will also develop several new restaurants and introduce innovative international culinary concepts to support Macao’s position as a city of gastronomy. The Company will also launch a luxury yacht experience featuring on-board dining and entertainment including celebrity appearances, as well as water sports.
Singapore
In April 2019, the Company's wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”) and the STB entered into a development agreement (the “Development Agreement”) pursuant to which MBS will construct a development, the MBS Expansion Project, which will include a hotel tower with a rooftop attraction, convention and meeting facilities and a state-of-the-art live entertainment arena with approximately 15,000 seats. The Development Agreement provides for a total project cost of approximately 4.5 billion Singapore dollars ("SGD," approximately $3.3 billion at exchange rates in effect on December 31, 2022). The amount of the total project cost will be finalized as the Company completes design and development and begins construction. In connection with the Development Agreement, MBS entered into a lease with the STB for the parcels of land underlying the project. In April 2019 and in connection with the lease, MBS provided various governmental agencies in Singapore the required premiums, deposits, stamp duty, goods and services tax and other fees in an aggregate amount of approximately SGD 1.54 billion (approximately $1.14 billion at exchange rates in effect at the time of the transaction). The Company amended its 2012 Singapore Credit Facility to provide for the financing of the development and construction costs, fees and other expenses related to the MBS Expansion Project pursuant to the Development Agreement. On September 7, 2021, the Company amended the 2012 Singapore Credit Facility, which, among other things, extended the deadline for delivering the construction cost estimate and the construction schedule for the MBS Expansion Project to March 31, 2022. On March 29, 2022, the Company entered into a letter agreement with the STB to extend the construction commencement date for the MBS Expansion Project from April 8, 2022 to April 8, 2023. The Company is in the process of reviewing the budget and timing of the MBS expansion based on the impact of the COVID-19 Pandemic and other factors. As a result, the construction cost estimate and construction schedule were not delivered to the lenders by the extended deadline, and the Company will not be permitted to make further draws on the Singapore Delayed Draw Term Facility until these items are delivered. The Company does not anticipate material spend related to the MBS Expansion Project prior to the delivery of these items to lenders.
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The Company also began the approximately $1.0 billion renovation of Marina Bay Sands, which is expected to introduce world-class suites in Tower 1 and Tower 2, and substantially upgrade the overall guest experience for premium customers. This project is in addition to the MBS Expansion Project.
Other
The Company continues to evaluate current development projects in each of its markets and pursue new development opportunities globally.
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information currently available to the Company and on various other assumptions the Company believes to be reasonable under the circumstances. Actual results could vary from those estimates.
Cash and Cash Equivalents and Restricted Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Such investments are carried at cost, which is a reasonable estimate of their fair value. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. Cash is considered restricted when withdrawal or general use is legally restricted. The Company determines current or noncurrent classification based on the expected duration of the restriction. The Company’s restricted cash and cash equivalents includes amounts held in a separate cash deposit account as collateral for a bank guarantee and other amounts contractually reserved for various items. The estimated fair value of the Company's cash equivalents is based on level 1 inputs (quoted market prices in active markets).
Accounts Receivable and Credit Risk
Accounts receivable is comprised of casino, hotel, mall and other receivables, which do not bear interest and are recorded at amortized cost. The Company extends credit to approved casino patrons following background checks and investigations of creditworthiness. The Company also extends credit to gaming promoters in Macao. These receivables can be offset against commissions payable to the respective gaming promoters. Business or economic conditions, the legal enforceability of gaming debts, foreign currency control measures or other significant events in foreign countries could affect the collectability of receivables from patrons and gaming promoters residing in these countries.
Accounts receivable primarily consists of casino receivables. Other than casino receivables, there is no other concentration of credit risk with respect to accounts receivable. The Company believes the concentration of its credit risk in casino receivables is mitigated substantially by its credit evaluation process, credit policies, credit control and collection procedures, and also believes there are no concentrations of credit risk for which a provision has not been established. Although management believes the provision is adequate, it is possible the estimated amount of cash collections with respect to accounts receivable could change.
Loan Receivable
Loan receivables are carried at the outstanding principal amount. A provision for credit loss on loan receivables is established when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company determines this by considering several factors, including the credit risk and current financial condition of the borrower, the borrower’s ability to pay current obligations, historical trends, and economic and market conditions. The Company performs a credit quality assessment on the loan receivable on a quarterly basis and reviews the need for an
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allowance under Financial Accounting Standards Board (“FASB”) Accounting Standards Update No. 2016-13. The Company evaluates the extent and impact of any credit deterioration that could affect the performance and the value of the secured property, as well as the financial and operating capability of the borrower. The Company also evaluates and considers the overall economic environment, casino and hospitality industry and geographic sub-market in which the secured property is located.
Interest income is recorded on an accrual basis at the stated interest rate and is recorded in interest income in the accompanying consolidated statements of operations.
Inventories
Inventories consist primarily of food, beverage, retail products and operating supplies, which are stated at the lower of cost or net realizable value. Cost is determined by the weighted average and specific identification methods.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization, and accumulated impairment losses, if any. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets, which do not exceed the lease term for leasehold improvements, as follows:
| | | | | | | | | | | | | | |
| Land improvements, building and building improvements | 10 | to | 50 | years |
| Furniture, fixtures and equipment | 3 | to | 20 | years |
| Leasehold improvements | 3 | to | 15 | years |
| Transportation | 5 | to | 20 | years |
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations, such as contractual life, and are periodically reviewed. Future events, such as property expansions, property developments, new competition or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets.
Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the consolidated statements of operations.
The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with related accounting standards. For assets to be disposed of, the Company recognizes the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is estimated based on comparable asset sales, solicited offers or a discounted cash flow model.
Fixed assets are reviewed for impairment whenever indicators of impairment exist. Determining the recoverability of the Company's asset groups is judgmental in nature and requires the use of significant estimates and assumptions, including estimated cash flows, probability weighting of potential scenarios, costs to complete construction for assets under development, growth rates and future market conditions, among others. Future changes to the Company's estimates and assumptions based upon changes in macro-economic factors, regulatory environments, operating results or management's intentions may result in future changes to the recoverability of these asset groups.
Leases
Management determines if a contract is, or contains, a lease at inception or modification of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset.
Finance and operating lease right-of-use ("ROU") assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The expected lease terms include options to extend or terminate the lease when it is reasonably certain the Company will
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exercise such option. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term.
The Company’s lease arrangements have lease and non-lease components. For leases in which the Company is the lessee, the Company accounts for the lease components and non-lease components as a single lease component for all classes of underlying assets (primarily real estate). Leases in which the Company is the lessor are substantially all accounted for as operating leases and the lease components and non-lease components are accounted for separately. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term.
Capitalized Interest and Internal Costs
Interest costs associated with major construction projects are capitalized and included in the cost of the projects. When no debt is incurred specifically for construction projects, interest is capitalized on amounts expended using the weighted average cost of the Company's outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or construction activity is suspended for more than a brief period. During the years ended December 31, 2022, 2021 and 2020, the Company capitalized $4 million, $15 million and $21 million, respectively, of interest expense.
During the years ended December 31, 2022, 2021 and 2020, the Company capitalized approximately $42 million, $49 million and $37 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.
Deferred Financing Costs and Original Issue Discounts
Certain direct and incremental costs and discounts incurred in obtaining loans are capitalized and amortized to interest expense based on the terms of the related debt instruments using the effective interest method.
Leasehold Interests in Land
Leasehold interests in land represent payments for the use of land over an extended period of time. The leasehold interests in land are amortized on a straight-line basis over the expected term of the related lease agreements.
Revenue Recognition
Revenue from contracts with customers primarily consists of casino wagers, room sales, food and beverage transactions, rental income from the Company’s mall tenants, convention sales and entertainment and ferry ticket sales. These contracts can be written, oral or implied by customary business practices.
Gross casino revenue is the aggregate of gaming wins and losses. The commissions rebated to gaming promoters and premium players for rolling play, cash discounts and other cash incentives to patrons related to gaming play are recorded as a reduction to gross casino revenue. Gaming contracts include a performance obligation to honor the patron’s wager and typically include a performance obligation to provide a product or service to the patron on a complimentary basis to incentivize gaming or in exchange for points earned under the Company’s loyalty programs.
For wagering contracts that include complimentary products and services provided by the Company to incentivize gaming, the Company allocates the relative stand-alone selling price of each product and service to the respective revenue type. Complimentary products or services provided under the Company's control and discretion, which are supplied by third parties, are recorded as an operating expense.
For wagering contracts that include products and services provided to a patron in exchange for points earned under the Company’s loyalty programs, the Company allocates the estimated fair value of the points earned to the loyalty program liability. The loyalty program liability is a deferral of revenue until redemption occurs. Upon redemption of loyalty program points for Company-owned products and services, the stand-alone selling price of each product or service is allocated to the respective revenue type. For redemptions of points with third parties, the redemption amount is deducted from the loyalty program liability and paid directly to the third party. Any discounts received by the Company from the third party in connection with this transaction are recorded to other revenue.
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After allocation to the other revenue types for products and services provided to patrons as part of a wagering contract, the residual amount is recorded to casino revenue as soon as the wager is settled. As all wagers have similar characteristics, the Company accounts for its gaming contracts collectively on a portfolio basis versus an individual basis.
Hotel revenue recognition criteria are met at the time of occupancy. Food and beverage revenue recognition criteria are met at the time of service. Convention revenues are recognized when the related service is rendered or the event is held. Deposits for future hotel occupancy, convention space or food and beverage services contracts are recorded as deferred revenue until the revenue recognition criteria are met. Cancellation fees for convention contracts are recognized upon cancellation by the customer and are included in other revenues. Ferry and entertainment revenue recognition criteria are met at the completion of the ferry trip or event, respectively. Revenue from contracts with a combination of these services is allocated pro rata based on each service’s relative stand-alone selling price.
Revenue from leases is primarily recorded to mall revenue and is generated from base rents and overage rents received through long-term leases with retail tenants. Base rent, adjusted for contractual escalations, is recognized on a straight-line basis over the term of the related lease. Overage rent is paid by a tenant when its sales exceed an agreed upon minimum amount and is not recognized by the Company until the threshold is met.
Contract and Contract Related Liabilities
The Company provides numerous products and services to its customers. There is often a timing difference between the cash payment by the customers and recognition of revenue for each of the associated performance obligations. The Company has the following main types of liabilities associated with contracts with customers: (1) outstanding chip liability, (2) loyalty program liability and (3) customer deposits and other deferred revenue for gaming and non-gaming products and services yet to be provided.
The outstanding chip liability represents the collective amounts owed to gaming promoters and patrons in exchange for gaming chips in their possession. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. The loyalty program liability represents a deferral of revenue until patron redemption of points earned. The loyalty program points are expected to be redeemed and recognized as revenue within one year of being earned. Due to travel restrictions resulting from the COVID-19 Pandemic, the Company temporarily extended the redemption period of these points for patrons not able or willing to travel to Singapore and for all patrons with points at its properties located in Macao. In December 2022, this redemption period has been reinstated for certain groups of patrons that are able to travel to the properties. The required redemption period is expected to be reinstated for all patrons during 2023. Customer deposits and other deferred revenue represent cash deposits made by customers for future services provided by the Company. With the exception of mall deposits, which typically extend beyond a year based on the terms of the lease, the majority of these customer deposits and other deferred revenue are expected to be recognized as revenue or refunded to the customer within one year of the date the deposit was recorded.
The following table summarizes the liability activity related to contracts with customers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Outstanding Chip Liability | | Loyalty Program Liability | | Customer Deposits and Other Deferred Revenue(1) |
| 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | | | | | |
| (In millions) |
| Balance at January 1 | $ | 74 | | | $ | 197 | | | $ | 61 | | | $ | 62 | | | $ | 618 | | | $ | 633 | |
| Balance at December 31 | 81 | | | 74 | | | 72 | | | 61 | | | 614 | | | 618 | |
| Increase (decrease) | $ | 7 | | | $ | (123) | | | $ | 11 | | | $ | (1) | | | $ | (4) | | | $ | (15) | |
____________________
(1)Of this amount, $149 million, $145 million and $152 million as of December 31, 2022 and 2021 and January 1, 2021, respectively, relates to mall deposits that are accounted for based on lease terms usually greater than one year.
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Gaming Taxes
The Company is subject to taxes based on gross gaming revenue in the jurisdictions in which it operates, subject to applicable jurisdictional adjustments. These gaming taxes, including the goods and services tax in Singapore, are an assessment on the Company's gaming revenue and are recorded as a casino expense in the accompanying consolidated statements of operations. These taxes were $935 million, $1.22 billion and $812 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Pre-Opening and Development Expenses
The Company accounts for costs incurred in the development and pre-opening phases of new ventures in accordance with accounting standards regarding start-up activities. Pre-opening expenses represent personnel and other costs incurred prior to the opening of new ventures and are expensed as incurred. Development expenses include the costs associated with the Company's evaluation and pursuit of new business opportunities, which are also expensed as incurred.
Advertising Costs
Costs for advertising are expensed the first time the advertising takes place or as incurred. Advertising costs included in the accompanying consolidated statements of operations were $29 million, $31 million and $26 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Corporate Expenses
Corporate expense represents payroll, travel, legal fees, professional fees and various other expenses not allocated or directly related to the Company's Integrated Resort operations and related ancillary operations.
Foreign Currency
The functional currency of most of our foreign subsidiaries is the local currency in which the subsidiary operates. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date and income statement accounts are translated at the average exchange rates during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (loss).
Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income (expense).
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and all other non-stockholder changes in equity, or other comprehensive income (loss). The balance of accumulated other comprehensive income (loss) consisted of foreign currency translation adjustment and cash flow hedge fair value adjustments.
Earnings (Loss) Per Share
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings (loss) per share consisted of the following:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Weighted average common shares outstanding (used in the calculation of basic earnings (loss) per share) | 764 | | | 764 | | | 764 | |
Potential dilution from stock options and restricted stock and stock units | — | | | — | | | — | |
| Weighted average common and common equivalent shares (used in the calculation of diluted earnings (loss) per share) | 764 | | | 764 | | | 764 | |
| Antidilutive stock options excluded from the calculation of diluted earnings (loss) per share | 15 | | | 9 | | | 9 | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Stock-Based Employee Compensation
Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized over the employee's requisite service period (generally the vesting period of the equity grant). The Company's stock-based employee compensation plans are more fully discussed in "Note 18 — Stock-Based Employee Compensation."
Income Taxes
The Company is subject to income taxes in the U.S. (including federal and state) and numerous foreign jurisdictions in which it operates. The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards.
Accounting standards regarding income taxes require a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, 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 a "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 duration of statutory carryforward periods, the Company's experience with operating loss and tax credit carryforwards not expiring and tax planning strategies.
Management will reassess the realization of deferred tax assets each reporting period and consider the scheduled reversal of deferred tax liabilities, sources of taxable income and tax planning strategies. To the extent the financial results of these operations improve and it becomes "more-likely-than-not" the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance in the period such determination is made as appropriate.
Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may be different.
Fair Value Measurements
Under applicable accounting guidance, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance also establishes a valuation hierarchy for inputs in measuring fair value that maximizes the use of observable inputs (inputs market participants would use based on market data obtained from sources independent of the Company) and minimizes the use of unobservable inputs (inputs that reflect the Company's assumptions based upon the best information available in the circumstances) by requiring the most observable inputs be used when available. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets or liabilities. Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Accounting for Derivative Instruments and Hedging Activities
Accounting standards require an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If specific conditions are met, a derivative may be designated as a hedge of specific financial exposures. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and, if used in hedging activities, on its effectiveness as a hedge. In order to qualify for hedge accounting, the underlying hedged item must expose the Company to risks associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce the Company's exposure to market fluctuation throughout the hedge period.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices, can impact the Company’s results of operations. The Company’s primary exposures to market risk are interest rate risk associated with long-term debt and foreign currency exchange rate risk associated with the Company’s operations outside the United States. The Company has a policy aimed at managing interest rate risk associated with its current and anticipated future borrowings and foreign currency exchange rate risk associated with operations of its foreign subsidiaries. This policy enables the Company to use any combination of swaps, futures, options, caps, forward contracts and similar instruments. The Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions.
Recent Accounting Pronouncements
The Company’s management has evaluated all of the recently issued, but not yet effective, accounting standards that have been issued or proposed by the FASB or other standards-setting bodies through the filing date of these financial statements and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s financial position, results of operations and cash flows.
Note 3 — Discontinued Operations
On February 23, 2022, the Company completed the previously announced sale of the Las Vegas Operations (the "Closing"), to VICI Properties L.P. (“PropCo”) and Pioneer OpCo, LLC (“OpCo”) for an aggregate purchase price of approximately $6.25 billion (the “Las Vegas Sale”). Under the terms of the agreements related to the Las Vegas Sale, OpCo acquired subsidiaries that hold the operating assets and liabilities of the Las Vegas Operations for approximately $1.05 billion in cash, subject to certain post-closing adjustments, and $1.20 billion in seller financing in the form of a six-year term loan credit and security agreement (the “Seller Financing Loan Agreement”) and PropCo acquired subsidiaries that hold the real estate and real estate-related assets of the Las Vegas Operations for approximately $4.0 billion in cash.
Upon the Closing, the Company received approximately $5.05 billion in cash proceeds, before transaction costs and working capital adjustments of $77 million, and recognized a gain on disposal of $3.60 billion, before income tax expense of $750 million, during the year ended December 31, 2022.
As there is no continuing involvement between the Company and the Las Vegas Operations, the Company accounted for the transaction as a sale of a business. The Company concluded the Las Vegas Operations met the criteria for held for sale and discontinued operations beginning in the first quarter of 2021. As a result, the Las Vegas Operations is presented in the accompanying consolidated statements of operations and cash flows as a discontinued operation for all periods presented. The Company reported the operating results and cash flows related to the Las Vegas Operations through February 22, 2022. Current and non-current assets and liabilities of the Las Vegas Operations as of December 31, 2021, are presented in the accompanying consolidated balance sheets as current assets and liabilities held for sale.
Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to the Company's continuing operations.
Contingent Lease Support Agreement
On February 23, 2022, in connection with the Closing, the Company and OpCo entered into a post-closing contingent lease support agreement (the “Contingent Lease Support Agreement”) pursuant to which, among other things, the Company may be required to make certain payments (“Support Payments”) to OpCo.
The Support Payments are payable on a monthly basis following the Closing through the year ending December 31, 2023, based upon the performance of the Las Vegas Operations relative to certain agreed upon target metrics and subject to quarterly and annual adjustments. The target metrics are measured against a benchmark annual EBITDAR (as defined in the Contingent Lease Support Agreement) of the Las Vegas Operations equal to $426 million for the period beginning on the date of the Closing and ending December 31, 2022 and $500 million for the period beginning January 1, 2023 and ending December 31, 2023. The Company’s payment obligations are subject to a cap equal to $213 million for the period beginning on the date of the Closing and ending December 31, 2022 and $250 million for the period beginning January 1, 2023 and ending December 31, 2023. Each monthly Support Payment is subject to a prorated cap based on the annual cap. No Support Payments were made for the period post-Closing through December 31, 2022. On January 31, 2023, the Company received notice from OpCo
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
that the Contingent Lease Support Agreement had terminated pursuant to its terms and that neither party would have any further liability or obligation thereunder.
Seller Financing Loan Agreement
At the Closing, the Company, as lender, OpCo, as borrower, the parent company of OpCo (“Holdings”) and certain subsidiaries of OpCo, as guarantors party thereto (collectively, and with Holdings, the “Guarantors” and, together with OpCo in its capacity as borrower, the “Loan Parties”), entered into the Seller Financing Loan Agreement. Refer to "Note 4 — Loan Receivable" for further information.
Las Vegas Operations
The following table represents summarized balance sheet information of assets and liabilities of the discontinued operation:
| | | | | | | |
| | | December 31, 2021 |
| | | |
| | | (In millions) |
| | | |
| Cash and cash equivalents | | | $ | 55 | |
Accounts receivable, net of provision for credit losses of $58 | | | 126 | |
| Inventories | | | 9 | |
| Prepaid expenses and other | | | 23 | |
| Property and equipment, net | | | 2,864 | |
| | | |
| Other assets, net | | | 226 | |
| Total held for sale assets in the balance sheet | | | $ | 3,303 | |
| | | |
| | | |
| Accounts payable | | | $ | 24 | |
| Construction payables | | | 8 | |
| Other accrued liabilities | | | 318 | |
| Long-term debt | | | 2 | |
| Deferred amounts related to mall sale transactions | | | 338 | |
| Other long-term liabilities | | | 131 | |
| Total held for sale liabilities in the balance sheet | | | $ | 821 | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table represents summarized income statement information of discontinued operations:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022(1) | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Revenues: | | | | | |
| Casino | $ | 61 | | | $ | 443 | | | $ | 228 | |
| Rooms | 78 | | | 454 | | | 218 | |
| Food and beverage | 43 | | | 236 | | | 126 | |
| Convention, retail and other | 46 | | | 138 | | | 100 | |
| Net revenues | 228 | | | 1,271 | | | 672 | |
| Resort operations expenses | 107 | | | 626 | | | 490 | |
| Provision for credit losses | 3 | | | 13 | | | 12 | |
| General and administrative | 55 | | | 342 | | | 294 | |
| Corporate | — | | | — | | | 1 | |
| | | | | |
| Depreciation and amortization | — | | | 25 | | | 163 | |
| Loss on disposal or impairment of assets | — | | | 6 | | | 7 | |
| Operating income (loss) | 63 | | | 259 | | | (295) | |
| | | | | |
| Interest expense | (2) | | | (13) | | | (13) | |
| Other income (expense) | (3) | | | 1 | | | 3 | |
| | | | | |
| Income (loss) from operations of discontinued operations | 58 | | | 247 | | | (305) | |
| Gain on disposal of discontinued operations | 3,611 | | | — | | | — | |
Adjustment to gain on disposal of discontinued operations(2) | (9) | | | — | | | — | |
| Income (loss) from discontinued operations, before income tax | 3,660 | | | 247 | | | (305) | |
| Income tax (expense) benefit | (762) | | | (54) | | | 62 | |
| Net income (loss) from discontinued operations presented in the statement of operations | $ | 2,898 | | | $ | 193 | | | $ | (243) | |
| | | | | |
| Adjusted Property EBITDA | $ | 63 | | | $ | 290 | | | $ | (124) | |
__________________________
(1) Includes the Las Vegas Operations financial results for the period from January 1, 2022 through February 22, 2022.
(2) Primarily relates to the finalization of the working capital adjustment pursuant to the terms of the related agreements.
For the 53-day period ended February 22, 2022 and for the year ended December 31, 2021, the Company’s Las Vegas Operations were classified as a discontinued operation held for sale. The Company applied the intraperiod tax allocation rules to allocate the provision for income taxes between continuing operations and discontinued operations using the “with and without” approach. The Company calculated income tax expense from all financial statement components (continuing and discontinued operations), the “with” computation, and compared that to the income tax expense attributable to continuing operations, the “without” computation. The difference between the “with” and “without” computations was allocated to discontinued operations.
The Company’s effective income tax rate from discontinued operations was 20.8% for the year ended December 31, 2022. This compares to a 21.9% effective income tax rate from discontinued operations for the year ended December 31, 2021, which reflects the application of the “with and without” approach consistent with intraperiod tax allocation rules. During the year ended December 31, 2020, the Company’s effective income tax rate from discontinued operations was (20.3)%. The income tax on discontinued operations reflects a 21% corporate income tax rate on the Company’s Las Vegas Operations. The cash income tax expense as if the discontinued operations was a standalone enterprise and a separate taxpayer is $804 million. The Company files a U.S. consolidated income tax return inclusive of the discontinued operations, which allows the income from discontinued operations to utilize net operating loss carryforwards and operating losses from continuing operations, U.S. foreign
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
tax credits and charitable contribution carryforwards. During 2022, the Company made U.S. cash tax payments inclusive of the gain on sale of the Las Vegas Operations totaling $612 million.
Note 4 — Loan Receivable
Seller Financing Loan Agreement
At the Closing, the Company and the Loan Parties entered into the Seller Financing Loan Agreement. The Seller Financing Loan Agreement provides for a six-year senior secured term loan facility in an aggregate principal amount of $1.20 billion (the “Seller Loan”) at the date of the Closing. The Seller Loan is guaranteed by the Guarantors and secured by a first-priority lien on substantially all of the Loan Parties’ assets (subject to customary exceptions and limitations), including a leasehold mortgage from OpCo over certain real estate that was sold to PropCo at the Closing and leased by OpCo.
The Seller Loan will bear interest at a rate equal to 1.50% per annum for the calendar years ending December 31, 2022 and 2023, and 4.25% per annum for each calendar year thereafter, subject to an increase of 1.00% per annum for any interest OpCo elects to pay by increasing the principal amount of the Seller Loan prior to January 1, 2024, and an increase of 1.50% per annum for any such election during the calendar year ending December 31, 2024. Any interest to be paid after December 31, 2024, will be paid in cash.
The Seller Financing Loan Agreement contains certain customary representations and warranties and covenants, subject to customary exceptions and thresholds. The Seller Financing Loan Agreement’s negative covenants restrict the ability of the Loan Parties and their subsidiaries to, among other things, (i) incur debt, (ii) create certain liens on their assets, (iii) dispose of their assets, (iv) make investments or restricted payments, including dividends, (v) merge, liquidate, dissolve, change their business or consolidate with other entities and (vi) enter into affiliate transactions.
The Seller Financing Loan Agreement also contains customary events of default, including payment defaults, cross defaults to material debt, bankruptcy and insolvency, breaches of covenants and inaccuracy of representations and warranties, subject to customary grace periods. Upon an event of default, the Company may declare any then-outstanding amounts due and payable and exercise other customary remedies available to a secured lender.
Based on the Company’s assessment of the credit quality of the loan receivable, the Company believes it will collect all contractual amounts due under the loan. Accordingly, no provision for credit losses on the loan receivable was established as of December 31, 2022.
Interest income is recorded on an accrual basis at the stated interest rate and is recorded in interest income in the accompanying consolidated statements of operations. Interest income recognized on the loan was $21 million during the year ended December 31, 2022, and OpCo elected payment-in-kind for a portion of this interest, thereby increasing the principal amount by $15 million.
During November 2022, PropCo paid a principal amount of $50 million towards the Seller Financing Loan Agreement.
Note 5 — Restricted Cash and Cash Equivalents
The Company’s restricted cash and cash equivalents includes amounts held in a separate cash deposit account as collateral for a bank guarantee, as further described below.
On December 7, 2022, as required by the Concession, VML provided a bank guarantee in favor of the Macao government of 1.0 billion patacas (approximately $125 million at exchange rates as defined in the bank guarantee contract) to secure the fulfillment of VML's performance of the statutory and contractual obligations under the Concession Contract. As stipulated in the bank guarantee contract, a minimum amount of 1.0 billion patacas, or $125 million, is required to be held within a cash deposit account as collateral in order to secure the bank guarantee. Any amount in excess of the minimum amount can be withdrawn from the cash deposits. The bank guarantee will remain in effect until 180 days after the end of the term of the Concession or the rescission of the Concession and was classified as noncurrent restricted cash in the accompanying consolidated balance sheets.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 6 — Accounts Receivable, Net
Accounts receivable consists of the following:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Casino | $ | 341 | | | $ | 313 | |
| Rooms | 34 | | | 13 | |
| Mall | 64 | | | 91 | |
| Other | 45 | | | 17 | |
| 484 | | | 434 | |
| Less — provision for credit losses | (217) | | | (232) | |
| $ | 267 | | | $ | 202 | |
The following table shows the movement in the provision for credit losses recognized for accounts receivable that occurred during the period:
| | | | | | | | | | | |
| |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Balance at January 1 | $ | 232 | | | $ | 255 | |
Current period provision for credit losses | 15 | | | 3 | |
Write-offs | (31) | | | (26) | |
Recoveries of receivables previously written-off | — | | | 4 | |
Exchange rate impact | 1 | | | (4) | |
| Balance at December 31 | $ | 217 | | | $ | 232 | |
Note 7 — Property and Equipment, Net
Property and equipment consists of the following:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Land and improvements | $ | 450 | | | $ | 449 | |
| Building and improvements | 15,494 | | | 14,840 | |
| Furniture, fixtures, equipment and leasehold improvements | 4,155 | | | 3,992 | |
| Transportation | 482 | | | 494 | |
| Construction in progress | 1,123 | | | 1,513 | |
| 21,704 | | | 21,288 | |
| Less — accumulated depreciation and amortization | (10,253) | | | (9,438) | |
| $ | 11,451 | | | $ | 11,850 | |
With the expiry of VML’s subconcession on December 31, 2022, as described in "Note 1 — Organization and Business of Company," all of the casinos, gaming areas and respective supporting areas located in Sands Macao, The Venetian Macao, The Plaza Macao and Four Seasons Macao, The Londoner Macao and The Parisian Macao, with a total area of approximately 136,000 square meters (representing approximately 4.7% of the total property area of these entities) and gaming equipment (collectively referred to as the "Gaming Assets"), reverted to, and are now owned by the Macao government. Effective as of January 1, 2023, the Gaming Assets were temporarily transferred to VML for the duration of the Concession, in return for annual payments for the right to operate the Gaming Assets pursuant to the Handover Record.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Gaming Assets that reverted to the Macao government on December 31, 2022, and included in the above table, consisted of the following:
| | | | | |
| December 31, |
| 2022 |
| |
| (In millions) |
| Building and improvements | $ | 1,264 | |
| Furniture, fixtures, equipment and leasehold improvements | 419 | |
| 1,683 | |
| Less — accumulated depreciation and amortization | (930) | |
| $ | 753 | |
As the Company will continue to operate the Gaming Assets in the same manner as under the previous subconcession, obtain substantially all of the economic benefits and bear all of the risks arising from the use of these assets, as well as assuming it will be successful in the awarding of a new concession upon expiry of the Concession, the Company will continue to recognize these Gaming Assets as property and equipment over their remaining estimated useful lives.
During the year ended December 31, 2022, the Company recognized a loss on disposal or impairment of assets of $9 million, primarily relating to $4 million in asset disposals related to aircraft parts and $3 million in asset disposals and demolition costs, primarily at The Londoner Macao, The Venetian Macao, Sands Macao, and our Corporate offices. The $27 million and $73 million of losses for the years ended December 31, 2021 and December 31, 2020, respectively, were primarily related to asset disposals and demolition costs related to The Londoner Macao.
Depreciation expense was $1.01 billion, $1.02 billion and $980 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Note 8 — Leasehold Interests in Land, Net
Leasehold interests in land consist of the following:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Marina Bay Sands | $ | 1,993 | | | $ | 1,980 | |
| The Londoner Macao | 293 | | | 293 | |
| The Venetian Macao | 241 | | | 241 | |
| The Plaza Macao and Four Seasons Macao | 106 | | | 106 | |
| The Parisian Macao | 89 | | | 89 | |
| Sands Macao | 36 | | | 36 | |
| 2,758 | | | 2,745 | |
| Less — accumulated amortization | (630) | | | (579) | |
| $ | 2,128 | | | $ | 2,166 | |
The Company amortizes the leasehold interests in land on a straight-line basis over the expected term of the lease, which includes automatic extensions in Macao as discussed further below. Amortization expense of $55 million, $56 million and $55 million was included in amortization of leasehold interests in land expense for the years ended December 31, 2022, 2021 and 2020, respectively. The estimated future amortization expense over the expected term of the lease is approximately $56 million for each of the five years in the period ending December 31, 2027 and $2.02 billion thereafter at exchange rates in effect on December 31, 2022.
Land concessions in Macao generally have an initial term of 25 years with automatic extensions of 10 years thereafter in accordance with Macao law. The Company anticipates a useful life of 50 years related to the land concessions in Macao. The Company has received land concessions from the Macao government to build on the sites on which Sands Macao, The Venetian Macao, The Plaza Macao and Four Seasons Macao, The Londoner Macao and The Parisian Macao are located. The Company does not own these land sites in Macao; however, the
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
land concessions grant the Company exclusive use of the land. As specified in the land concessions, the Company is required to pay premiums for each parcel, as well as make annual rent payments in the amounts and at the times specified in the land concessions. The rent amounts may be revised every five years by the Macao government.
Land concessions in Singapore have an initial term of 60 years. The Company has received land concessions from the STB to build on the sites on which Marina Bay Sands and the future MBS Expansion Project are located. The Company does not own these land sites in Singapore; however, the land concessions grant the Company exclusive use of the land. As specified in the land concessions, the Company was required to prepay the premiums for each parcel.
Note 9 — Intangible Assets, Net
Intangible assets consist of the following:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Marina Bay Sands gaming license | $ | 54 | | | $ | 53 | |
| Trademarks and other | 22 | | | 13 | |
| 76 | | | 66 | |
| Less — accumulated amortization | (12) | | | (47) | |
| Total intangible assets, net | $ | 64 | | | $ | 19 | |
In April 2022, the Company paid SGD 72 million (approximately $53 million at exchange rates in effect at the time of the transaction) to the Singapore Gambling Regulatory Authority (the "GRA") as part of the process to renew its gaming license at Marina Bay Sands. This license is being amortized over its three-year term, which expires in April 2025, and is renewable upon submitting an application, paying the applicable license fee and meeting the requirements as determined by the GRA.
Amortization expense was $17 million, $18 million and $17 million for the years ended December 31, 2022, 2021 and 2020, respectively. The estimated future amortization expense is approximately $18 million for the years ending December 31, 2023 and 2024, and $6 million for the year ending December 31, 2025.
Note 10 — Other Accrued Liabilities
Other accrued liabilities consist of the following:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Customer deposits | $ | 471 | | | $ | 470 | |
| Payroll and related | 316 | | | 253 | |
| Accrued interest payable | 189 | | | 157 | |
| Taxes and licenses | 134 | | | 143 | |
| Outstanding chip liability | 81 | | | 74 | |
| Other accruals | 267 | | | 237 | |
| $ | 1,458 | | | $ | 1,334 | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 11 — Derivative Instruments
During the year ended December 31, 2021, the Company entered into two foreign currency swap agreements. The objective of both agreements is to manage the risk of changes in cash flows resulting from foreign currency gains/losses realized upon remeasurement of U.S. dollar denominated SCL senior notes by swapping a specified amount of Hong Kong dollars for U.S. dollars at the contractual spot rate. The terms in one of the contracts did not effectively match the terms of the related SCL senior notes; thus, it was not designated as hedging (the “Non-Hedging Swap”). The remaining contract was designated as a hedge of the cash flows related to a portion of the SCL senior notes (the “Hedging Swap,” and together with the Non-Hedging Swap, the “FX Swaps”). The Non-Hedging Swap and the Hedging Swap have a total notional value of $500 million and $1.0 billion, respectively, and expire in August 2023 and August 2025, respectively.
The fair value of the FX Swaps is recorded as an asset in prepaid expenses and other and a liability in other long-term liabilities. The fair value of the FX Swaps was estimated using Level 2 inputs from recently reported market transactions of foreign currency exchange rates. For the Hedging Swap, the changes in fair value of the derivative were recognized as other comprehensive income in the accompanying consolidated balance sheets. Additionally, the foreign currency gains/losses incurred from the remeasurement of the portion of the SCL senior notes being hedged were also recognized in other comprehensive income. For the Non-Hedging Swap the changes in fair value of the derivative were recorded in other income in the accompanying consolidated statements of operations.
In August 2018, the Company entered into interest rate swap agreements (the "IR Swaps"), which qualified and were designated as fair value hedges, swapping fixed-rate for variable-rate interest to hedge changes in the fair value of the 2023, 2025 and 2028 SCL Senior Notes. These IR Swaps had a total notional value of $5.50 billion and expired in August 2020. During the year ended December 31, 2020, the Company recorded $53 million as a reduction to interest expense related to the realized amount associated with the IR Swaps.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 12 — Long-Term Debt
Long-term debt consists of the following:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
Corporate and U.S. Related(1): | | | |
3.200% Senior Notes due 2024 (net of unamortized original issue discount and deferred financing costs of $5 and $8, respectively) | $ | 1,745 | | | $ | 1,742 | |
2.900% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $2 and $3, respectively) | 498 | | | 497 | |
3.500% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $7 and $8, respectively) | 993 | | | 992 | |
3.900% Senior Notes due 2029 (net of unamortized original issue discount and deferred financing costs of $6 and $7, respectively) | 744 | | | 743 | |
| | | |
| | | |
| | | |
Macao Related(1): | | | |
| | | |
5.125% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $7 and $9, respectively) | 1,793 | | | 1,791 | |
3.800% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $5 and $6, respectively) | 795 | | | 794 | |
2.300% Senior Notes due 2027 (net of unamortized original issue discount and deferred financing cost of $6 and $7, respectively) | 694 | | | 693 | |
5.400% Senior Notes due 2028 (net of unamortized original issue discount and deferred financing costs of $13 and $15, respectively) | 1,887 | | | 1,885 | |
2.850% Senior Notes due 2029 (net of unamortized original issue discount and deferred financing cost of $6 and $7, respectively) | 644 | | | 643 | |
4.375% Senior Notes due 2030 (net of unamortized original issue discount and deferred financing costs of $8 and $9, respectively) | 692 | | | 691 | |
3.250% Senior Notes due 2031 (net of unamortized original issue discount and deferred financing cost of $5 and $6, respectively) | 595 | | | 594 | |
| 2018 SCL Credit Facility — Revolving | 1,958 | | | 753 | |
Other(2) | 22 | | | 27 | |
Singapore Related(1): | | | |
2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $33 and $43, respectively) | 2,870 | | | 2,902 | |
2012 Singapore Delayed Draw Term Facility (net of unamortized deferred financing costs of nil and $1, respectively) | 46 | | | 45 | |
| | | |
Other(2) | 2 | | | 3 | |
| 15,978 | | | 14,795 | |
| Less — current maturities | (2,031) | | | (74) | |
| Total long-term debt | $ | 13,947 | | | $ | 14,721 | |
____________________
(1)Unamortized deferred financing costs of $60 million and $81 million as of December 31, 2022 and 2021, respectively, related to the Company's revolving credit facilities and the undrawn portion of the Singapore Delayed Draw Term Facility are included in other assets, net, and prepaid and other in the accompanying consolidated balance sheets.
(2)Includes finance leases related to Macao of $21 million and $24 million as of December 31, 2022 and 2021, respectively, and related to Singapore of $1 million as of December 31, 2021.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Corporate and U.S. Related Debt
LVSC Senior Notes
On July 31, 2019, LVSC issued, in a public offering, three series of senior unsecured notes in an aggregate principal amount of $3.50 billion, consisting of $1.75 billion of 3.200% Senior Notes due August 8, 2024 (the “2024 LVSC Senior Notes”), $1.0 billion of 3.500% Senior Notes due August 18, 2026 (the “2026 LVSC Senior Notes”) and $750 million of 3.900% Senior Notes due August 8, 2029 (the “2029 LVSC Senior Notes”). A portion of the net proceeds from the offering was used to repay in full the outstanding borrowings under the 2013 U.S. Credit Facility.
On November 25, 2019, LVSC issued, in a public offering, a senior unsecured note in an aggregate principal amount of $500 million of 2.900% Senior Notes due June 25, 2025 (the “2025 LVSC Senior Notes” and, together with the 2024 LVSC Senior Notes, 2026 LVSC Senior Notes and the 2029 LVSC Senior Notes, the “LVSC Senior Notes”). A portion of the net proceeds from the offering was used for general corporate purposes, including repurchases of shares of the Company's common stock.
There are no interim principal payments on the LVSC Senior Notes and interest is payable semi-annually in arrears on each February 8 and August 8 with respect to the 2024 LVSC Notes and 2029 LVSC Notes, on each February 18 and August 18 with respect to the 2026 Notes, and on each June 25 and December 25 with respect to the 2025 Notes.
The LVSC Senior Notes are senior unsecured obligations of LVSC. Each series of LVSC Senior Notes rank equally in right of payment with all of LVSC’s other unsecured and unsubordinated obligations, if any. None of LVSC’s subsidiaries guarantee the LVSC Senior Notes.
The LVSC Senior Notes were issued pursuant to an indenture, dated July 31, 2019, as amended with respect to each of the series of the LVSC Senior Notes (the “Indenture”), between LVSC and U.S. Bank National Association, as trustee. The Indenture contains covenants, subject to customary exceptions and qualifications, that limit the ability of LVSC and its subsidiaries to, among other things, incur liens, enter into sale and leaseback transactions and consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets on a consolidated basis. The Indenture also provides for customary events of default.
LVSC Revolving Facility
On August 9, 2019, LVSC entered into a revolving credit agreement with the arrangers and lenders named therein and The Bank of Nova Scotia, as administrative agent for the lenders (the “LVSC Revolving Credit Agreement”), pursuant to which the lenders provided unsecured, revolving credit commitments to LVSC in an aggregate principal amount of $1.50 billion (the “LVSC Revolving Facility”), which are available until August 9, 2024, and include a $150 million sub-facility for letters of credit. LVSC may utilize the proceeds of the loans for general corporate purposes and working capital requirements of LVSC and its subsidiaries and any other purpose not prohibited by the LVSC Revolving Credit Agreement. As of December 31, 2022, the Company had $1.50 billion of available borrowing capacity under the LVSC Revolving Facility, net of outstanding letters of credit.
The revolving loans bear interest at the Company’s option, at either, an adjusted Eurodollar rate, plus an applicable margin ranging from 1.125% to 1.550% per annum, or at an alternative base rate, plus an applicable margin ranging from 0.125% to 0.550% per annum, in each case, based on LVSC’s corporate family credit rating. As of December 31, 2022, the applicable margin for revolving loans with reference to an adjusted Eurodollar rate is 1.4% per annum and the applicable margin for revolving loans with reference to an alternative base rate is 0.4% per annum. LVSC is also required to pay a quarterly commitment fee on the undrawn portion of the LVSC Revolving Facility, which commitment fee ranges from 0.125% to 0.250% per annum, based on the LVSC’s corporate family credit rating. As of December 31, 2022, the commitment fee is 0.200% per annum.
The LVSC Revolving Credit Agreement contains customary affirmative and negative covenants for facilities of this type, subject to customary exceptions and thresholds that limit the ability of (a) LVSC and its restricted subsidiaries to, among other things, (i) incur liens, (ii) enter into sale and leaseback transactions and (iii) sell, lease, sub-lease or otherwise dispose of any core facility (as defined in the LVSC Revolving Credit Agreement), (b) certain restricted subsidiaries of LVSC to incur indebtedness and (c) LVSC to merge, consolidate, liquidate or sell all or substantially all of its assets. The LVSC Revolving Credit Agreement also requires LVSC to maintain a maximum
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
consolidated leverage ratio of 4.0x as of the last day of each fiscal quarter. The LVSC Revolving Credit Agreement also contains customary events of default, including payment defaults, cross defaults to material debt, bankruptcy and insolvency, breaches of covenants and inaccuracy of representations and warranties, subject to customary grace periods.
On September 23, 2020, LVSC entered into an amendment agreement with lenders to the LVSC Revolving Credit Agreement. Pursuant to the amendment, the LVSC Revolving Credit Agreement was amended to (a) remove the requirement to maintain a maximum consolidated leverage ratio of 4.0x as of the last day of any fiscal quarter of LVSC during the period commencing on October 31, 2020, through and including December 31, 2021 (the “Relevant Period”); (b) include a requirement for LVSC to maintain a minimum liquidity of $350 million as of the last day of each month during the Relevant Period; and (c) include a limitation on LVSC’s ability to declare or pay any dividend or other distribution during the period commencing on the closing date of the amendment, through and including December 31, 2021, unless liquidity is greater than $1.0 billion on a pro forma basis after giving effect to such dividend or distribution. Pursuant to the amendment, LVSC agreed to pay a customary fee to the lenders that consented.
On September 3, 2021, LVSC entered into amendment No. 2 (the "Second Amendment") with lenders to the LVSC Revolving Credit Agreement. Pursuant to the Second Amendment, the existing LVSC Revolving Credit Agreement was amended to (a) extend the period during which LVSC is not required to maintain a maximum consolidated leverage ratio of 4.0x as of the last day of any fiscal quarter to December 31, 2022; (b) extend the period during which LVSC is required to maintain a specified amount of minimum liquidity as of the last day of each month to December 31, 2022; (c) increase the minimum liquidity amount that LVSC is required to maintain until December 31, 2022 to $700 million; and (d) extend the period during which LVSC is unable to declare or pay any dividend or other distribution, unless liquidity is greater than $1.0 billion on a pro forma basis after giving effect to such dividend or distribution, to December 31, 2022. In addition, pursuant to the Second Amendment and subject to the satisfaction of certain conditions specified therein, the requisite lenders under the existing LVSC Revolving Credit Agreement consented to, and waived any applicable restrictions prohibiting, the consummation of the announced sale of the Las Vegas Operations. Pursuant to the Second Amendment, LVSC paid a customary fee to the lenders that consented.
On December 7, 2021, LVSC entered into amendment No. 3 (the “Third Amendment”) with lenders to the LVSC Revolving Credit Agreement. Pursuant to the Third Amendment, the existing LVSC Revolving Credit Agreement was amended to update the terms therein that provide for a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by a replacement benchmark interest rate or mechanism.
On January 30, 2023, LVSC entered into Amendment No. 4 (the “Fourth Amendment”) with lenders to the LVSC Revolving Credit Agreement. Pursuant to the Fourth Amendment, the existing LVSC Revolving Credit Agreement was amended to (a) determine consolidated adjusted EBITDA on a year-to-date annualized basis during the period commencing on the effective date and ending on and including December 31, 2023, as follows: (i) for the fiscal quarter ending March 31, 2023, consolidated adjusted EBITDA for such fiscal quarter multiplied by four, (ii) for the fiscal quarter ending June 30, 2023, consolidated adjusted EBITDA for such fiscal quarter and the immediately preceding fiscal quarter multiplied by two, and (iii) for the fiscal quarter ending September 30, 2023, consolidated adjusted EBITDA for such fiscal quarter and the two immediately preceding fiscal quarters, multiplied by four-thirds; (b) extend the period during which LVSC is required to maintain a specified amount of minimum liquidity as of the last day of each month to December 31, 2023; and (c) extend the period during which LVSC is unable to declare or pay any dividend or other distribution, unless liquidity is greater than $1.0 billion on a pro forma basis after giving effect to such dividend or distribution, to December 31, 2023.
Macao Related Debt
SCL Senior Notes
On August 9, 2018, SCL issued, in a private offering, three series of senior unsecured notes in an aggregate principal amount of $5.50 billion, consisting of $1.80 billion of 4.600% Senior Notes due August 8, 2023 (the "2023 SCL Senior Notes"), $1.80 billion of 5.125% Senior Notes due August 8, 2025 (the "2025 SCL Senior Notes") and $1.90 billion of 5.400% Senior Notes due August 8, 2028 (the "2028 SCL Senior Notes"). A portion of the net proceeds from the offering was used to repay in full the outstanding borrowings under the 2016 VML Credit
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Facility. There are no interim principal payments on the 2023, 2025 or 2028 SCL Senior Notes and interest is payable semi-annually in arrears on each February 8 and August 8, commencing on February 8, 2019.
On June 4, 2020, SCL issued, in a private offering, two series of senior unsecured notes in an aggregate principal amount of $1.50 billion, consisting of $800 million of 3.800% Senior Notes due January 8, 2026 (the “2026 SCL Senior Notes”) and $700 million of 4.375% Senior Notes due June 18, 2030 (the "2030 SCL Senior Notes"). The net proceeds from the offering were used for incremental liquidity and general corporate purposes. There are no interim principal payments on the 2026 or 2030 SCL Senior Notes and interest is payable semi-annually in arrears on January 8 and July 8, commencing on January 8, 2021, with respect to the 2026 SCL Senior Notes, and on June 18 and December 18, commencing on December 18, 2020, with respect to the 2030 SCL Senior Notes.
On September 23, 2021, SCL issued in a private offering three series of senior unsecured notes in an aggregate principal amount of $1.95 billion, consisting of $700 million of 2.300% Senior Notes due March 8, 2027 (the “2027 SCL Senior Notes”), $650 million of 2.850% Senior Notes due March 8, 2029 (the “2029 SCL Senior Notes”) and $600 million of 3.250% Senior Notes due August 8, 2031 (the “2031 SCL Senior Notes” and, together with the 2023 SCL Senior Notes, 2025 SCL Senior Notes, 2026 SCL Senior Notes, 2027 SCL Senior Notes, 2028 SCL Senior Notes, 2029 SCL Senior Notes, 2030 SCL Senior Notes, the “SCL Senior Notes”). SCL used the net proceeds from the offering and cash on hand to redeem in full the outstanding principal amount of its $1.80 billion 4.600% Senior Notes due 2023, any accrued interest and the associated make-whole premium as determined under the related senior notes indenture dated as of August 9, 2018.
The SCL Senior Notes are senior unsecured obligations of SCL. Each series of notes rank equally in right of payment with all of SCL’s existing and future senior unsecured debt and will rank senior in right of payment to all of SCL’s future subordinated debt, if any. The notes will be effectively subordinated in right of payment to all of SCL’s future secured debt (to the extent of the value of the collateral securing such debt) and will be structurally subordinated to all of the liabilities of SCL’s subsidiaries. None of SCL’s subsidiaries guarantee the notes.
The 2023, 2025 and 2028 SCL Senior Notes were issued pursuant to an indenture, dated August 9, 2018 (the "2018 SCL Indenture"), the 2026 and 2030 SCL Senior Notes were issued pursuant to an indenture, dated June 4, 2020 (the “2020 SCL Indenture”) and the 2027, 2029 and 2031 SCL Senior Notes were issued pursuant to an indenture, dated September 23, 2021 (the “2021 SCL Indenture”), between SCL and U.S. Bank National Association, as trustee. Upon the occurrence of certain events described in these indentures, the interest rate on the SCL senior notes may be adjusted. The indentures contain covenants, subject to customary exceptions and qualifications, that limit the ability of SCL and its subsidiaries to, among other things, incur liens, enter into sale and leaseback transactions and consolidate, merge, sell or otherwise dispose of all or substantially all of SCL’s assets on a consolidated basis. The indentures also provide for customary events of default.
The cost associated with the early termination of the 4.600% Senior Notes due 2023, including the make-whole premium of $131 million and $6 million in unamortized original issue discount and deferred financing costs, was recorded as a loss on early retirement of debt in the consolidated statement of operations during the year ended December 31, 2021.
On February 16 and June 16, 2022, Standard & Poor’s (“S&P”) and Fitch, respectively, downgraded the credit rating for the Company and SCL to BB+. As a result of the downgrades, the coupon on each series of the outstanding SCL Senior Notes increased by 0.50% per annum, with a 0.25% per annum increase becoming effective on the first interest payment date after February 16, 2022 as it relates to S&P and an additional 0.25% increase per annum after June 16, 2022 as it relates to Fitch. This resulted in an increase of $16 million in interest expense for the year ended December 31, 2022 and $36 million for each year thereafter through 2024, at which time this will decrease as the SCL Senior Notes are repaid based on each of their set maturity dates. The weighted average interest rate for the SCL Senior Notes was 4.6%, 4.7% and 4.8% for the years ended December 31, 2022, 2021 and 2020, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2018 SCL Credit Facility
On November 20, 2018, SCL entered into a facility agreement with the arrangers and lenders named therein and Bank of China Limited, Macau Branch, as agent for the lenders (the "2018 SCL Credit Facility"), pursuant to which the lenders made available a $2.0 billion revolving unsecured credit facility to SCL (the "2018 SCL Revolving Facility"). The facility is available until July 31, 2023, and SCL may draw loans under the facility, which may consist of general revolving loans (consisting of a United States dollar component and a Hong Kong dollar component) or loans drawn under a swing-line loan sub-facility (denominated in either United States dollars or Hong Kong dollars). SCL may utilize the loans for general corporate purposes and working capital requirements of SCL and its subsidiaries.
Loans under the 2018 SCL Revolving Facility bear interest calculated by reference to (1) in the case of general revolving loans denominated in United States dollars, Secured Overnight Financing Rate ("SOFR"), (2) in the case of loans denominated in United States dollars drawn under the swing-line loan sub-facility, a United States dollar alternate base rate (determined by reference to, among other things, the United States dollar prime lending rate and the Federal Funds Effective Rate), (3) in the case of general revolving loans denominated in Hong Kong dollars, the Hong Kong Interbank Offered Rate ("HIBOR") or (4) in the case of loans denominated in Hong Kong dollars drawn under the swing-line loan sub-facility, a Hong Kong dollar alternate base rate (determined by reference to, among other things, the Hong Kong dollar prime lending rate), in each case, plus a margin that is determined by reference to the consolidated leverage ratio as defined in the 2018 SCL Credit Facility. The initial margin for general revolving loans is 2.0% per annum and the initial margin for loans drawn under the swing-line loan sub-facility is 1.0% per annum. SCL is also required to pay a commitment fee of 0.60% per annum on the undrawn amounts under the 2018 SCL Revolving Facility.
The 2018 SCL Credit Facility contains affirmative and negative covenants customary for similar unsecured financings, including, but not limited to, limitations on indebtedness secured by liens on principal properties and sale and leaseback transactions. The 2018 SCL Credit Facility also requires SCL to maintain a maximum ratio of total indebtedness to adjusted EBITDA of 4.0x throughout the life of the facility and a minimum ratio of adjusted EBITDA to net interest expense (including capitalized interest) of 2.5x throughout the life of the facility.
On March 27, 2020, SCL entered into a waiver and amendment request letter (the “Waiver Letter”) with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders (a) waived the requirements for SCL to comply with the requirements that SCL ensure the maximum consolidated leverage ratio does not exceed 4.0x and minimum consolidated interest coverage ratio of 2.5x for any quarterly period ending during the period beginning on, and including, January 1, 2020 and ending on, and including, July 1, 2021 (the “SCL Relevant Period”) (other than with respect to the financial year ended on December 31, 2019); (b) waived any default that may arise as a result of any breach of said requirements during the SCL Relevant Period (other than with respect to the financial year ended on December 31, 2019); and (c) extended the period of time during which SCL may supply the agent with (i) its audited consolidated financial statements for the financial year ended on December 31, 2019, to April 30, 2020; and (ii) its audited consolidated financial statements for the financial year ending on December 31, 2020, to April 30, 2021. Pursuant to the Waiver Letter, SCL agreed to pay a customary fee to the lenders that consented.
On September 11, 2020, SCL entered into a waiver extension and amendment request letter (the “Waiver Extension Letter”) with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders agreed to (a) extend the SCL Relevant Period such that it ends on, and includes, January 1, 2022 instead of July 1, 2021; and (b) amend and restate the 2018 SCL Credit Facility in the form attached to the Waiver Extension Letter, which contains the following amendments: (1) it provides SCL with the option to increase the total borrowing capacity by an aggregate amount of up to $1.0 billion; and (2) it imposes a restriction on the ability of SCL to declare or make any dividend payment or similar distribution at any time during the period from (and including) July 1, 2020 to (and including) January 1, 2022, if at such time (x) the total borrowing capacity exceeds $2.0 billion by operation of the increase referred to above; and (y) the maximum consolidated leverage ratio is greater than 4.0x, unless, after giving effect to such payment, the sum of (i) the aggregate amount of cash and cash equivalents of SCL on such date; and (ii) the aggregate amount of the undrawn facility under the 2018 SCL Credit Facility and unused commitments under other credit facilities of SCL is greater than $2.0 billion. Pursuant to the Waiver Extension Letter, SCL agreed to pay a customary fee to the lenders that consented.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On July 7, 2021, SCL entered into a waiver extension and amendment request letter (the "Third Waiver Extension Letter") with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders agreed to (a) extend by one year to (and including) January 1, 2023, the waiver period for the requirement for SCL to comply with the requirements that SCL ensure the consolidated leverage ratio does not exceed 4.0x and the consolidated interest coverage ratio is not less than 2.5x as at the last day of the financial quarter; (b) extend the period of time during which SCL may supply the agent with its audited consolidated financial statements for the financial year ending on December 31, 2021 to April 30, 2022; and (c) extend by one year to (and including) January 1, 2023, the period during which SCL's ability to declare or make any dividend payment or similar distribution is restricted if at such time (x) the Total Commitments (as defined in the 2018 SCL Credit Facility) exceed $2.0 billion by SCL's exercise of the option to increase the Total Commitments by an aggregate amount of up to $1.0 billion; and (y) the consolidated leverage ratio is greater than 4.0x, unless, after giving effect to such payment, the sum of (i) the aggregate amount of cash and cash equivalents of SCL on such date; and (ii) the aggregate amount of the undrawn facility under the 2018 SCL Credit Facility and unused commitments under other credit facilities of SCL is greater than $2.0 billion. Pursuant to the Third Waiver Extension Letter, SCL paid a customary fee to the lenders that consented.
On November 30, 2022, SCL entered into a waiver extension and amendment request letter (the "Fourth Waiver Extension Letter") with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders have (a) extended to (and including) July 31, 2023, the waiver period for the requirement for SCL to comply with the requirements that SCL ensure (a) the consolidated leverage ratio does not exceed 4.0x and the consolidated interest coverage ratio is not less than 2.5x as at the last day of the financial quarter; (b) extend to (and including) July 31, 2023, the period during which SCL's ability to declare or make any dividend payment or similar distribution is restricted if at such time (x) the Total Commitments (as defined in the 2018 SCL Credit Facility) exceed $2.0 billion by SCL's exercise of the option to increase the Total Commitments by an aggregate amount of up to $1.0 billion; and (y) the consolidated leverage ratio is greater than 4.0x, unless, after giving effect to such payment, the sum of (i) the aggregate amount of cash and cash equivalents of SCL on such date; and (ii) the aggregate amount of the undrawn facility under the 2018 SCL Credit Facility and unused commitments under other credit facilities of SCL is greater than $2.0 billion; and (c) incorporated provisions to address the transition of LIBOR to a term SOFR reference rate. Pursuant to the Fourth Waiver Extension Letter, SCL paid a customary fee to the lenders that consented.
The 2018 SCL Credit Facility also contains certain events of default (some of which are subject to grace and remedy periods and materiality qualifiers), including, but not limited to, events relating to SCL's gaming operations and the loss or termination of certain land concession contracts.
On January 25, 2021, SCL entered into an agreement with lenders to increase commitments under the 2018 SCL Credit Facility by HKD 3.83 billion (approximately $491 million at exchange rates in effect on December 31, 2021).
During the years ended December 31, 2022 and 2021, SCL drew down $114 million and $71 million, respectively, and HKD 8.50 billion and HKD 5.31 billion, respectively, (approximately $1.09 billion and $681 million at exchange rates in effect on December 31, 2022) under the facility for general corporate purposes. The weighted average interest rate for the 2018 SCL Credit Facility was 4.3% and 2.6% for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, SCL had $541 million of available borrowing capacity under the 2018 SCL Revolving Facility comprised of HKD commitments of HKD 3.82 billion (approximately $490 million at exchange rates in effect on December 31, 2022) and U.S. dollar commitments of $51 million.
Singapore Related Debt
2012 Singapore Credit Facility
In June 2012, MBS entered into a SGD 5.10 billion (approximately $3.80 billion at exchange rates in effect on December 31, 2022) credit agreement (the "2012 Singapore Credit Facility"), providing for a fully funded SGD 4.60 billion (approximately $3.42 billion at exchange rates in effect on December 31, 2022) term loan (the "2012 Singapore Term Facility") and a SGD 500 million (approximately $372 million at exchange rates in effect on December 31, 2022) revolving facility (the "2012 Singapore Revolving Facility") that was available until
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
November 25, 2017, which included a SGD 100 million (approximately $74 million at exchange rates in effect on December 31, 2022) ancillary facility (the "2012 Singapore Ancillary Facility"). Borrowings under the 2012 Singapore Credit Facility were used to repay the outstanding balance under the previous Singapore credit facility.
During August 2014, MBS amended its 2012 Singapore Credit Facility, pursuant to which consenting lenders of borrowings under the 2012 Singapore Term Facility extended the maturity to August 28, 2020, and consenting lenders of borrowings under the 2012 Singapore Revolving Facility extended the maturity to February 28, 2020.
During March 2018, MBS amended its 2012 Singapore Credit Facility, which refinanced the facility in an aggregate amount of SGD 4.80 billion (approximately $3.57 billion at exchange rates in effect on December 31, 2022), pursuant to which consenting lenders of borrowings under the 2012 Singapore Term Facility extended the maturity to March 29, 2024, and consenting lenders of borrowings under the 2012 Singapore Revolving Facility extended the maturity to September 29, 2023.
On August 30, 2019, MBS amended and restated its 2012 Singapore Credit Facility (the “Third Amendment and Restatement Agreement”). The Third Amendment and Restatement Agreement extended (a) the maturity date of the term loans under the 2012 Singapore Term Facility to August 31, 2026, and (b) the termination date of the revolving credit commitments under the 2012 Singapore Revolving Facility to February 27, 2026, and also increased the principal amount of revolving credit commitments by an additional SGD 250 million (approximately $186 million at exchange rates in effect on December 31, 2022) for a total aggregate principal amount of SGD 750 million (approximately $558 million at exchange rates in effect on December 31, 2022). As of December 31, 2022, MBS had SGD 590 million (approximately $439 million at exchange rates in effect on December 31, 2022) of available borrowing capacity under the 2012 Singapore Revolving Facility, net of outstanding letters of credit, primarily consisting of a banker’s guarantee in connection with the MBS Expansion Project for SGD 153 million (approximately $114 million at exchange rates in effect on December 31, 2022).
Under the Third Amendment and Restatement Agreement, certain lenders committed to provide a new delayed draw term loan facility (the “Singapore Delayed Draw Term Facility”) in an aggregate principal amount of SGD 3.75 billion (approximately $2.79 billion at exchange rates in effect on December 31, 2022), which will be available to MBS until December 30, 2024, to finance costs associated with the MBS Expansion Project. The loans borrowed under the Singapore Delayed Draw Term Facility will mature on August 31, 2026. During the year ended December 31, 2020, MBS borrowed SGD 62 million (approximately $46 million at exchange rates in effect at the time of the transaction) under the Singapore Delayed Draw Term Facility. As of December 31, 2022, SGD 3.69 billion (approximately $2.74 billion at exchange rates in effect on December 31, 2022) remains available to be drawn under the Singapore Delayed Draw Term Facility once the construction cost estimate and construction schedule for the MBS Expansion Project are delivered to lenders.
The indebtedness under the 2012 Singapore Credit Facility is collateralized by a first-priority security interest in substantially all of MBS's assets, other than capital stock and similar ownership interests, certain furniture, fixtures and equipment and certain other excluded assets.
The term loans under the 2012 Singapore Term Facility are subject to interim quarterly amortization payments, beginning with the fiscal quarter ended December 31, 2019, in an amount equal to (i) until and including the fiscal quarter ending September 30, 2024, 0.5% of the principal amount outstanding on June 30, 2019 (the “Term Facility Restatement Date”), (ii) for the fiscal quarter ending December 31, 2024, 3.0% of the principal amount outstanding on the Term Facility Restatement Date, (iii) for the fiscal quarters ending March 31, 2025 through September 30, 2025, 5.0% of the principal amount outstanding on the Term Facility Restatement Date, and (iv) for the fiscal quarters ending December 31, 2025 through June 30, 2026, 18.0% of the principal amount outstanding on the Term Facility Restatement Date. On the maturity date of August 31, 2026, MBS is required to repay all remaining amounts outstanding on the Singapore Term Facility.
Loans under the Singapore Delayed Draw Term Facility are subject to interim quarterly amortization payments, beginning with the fiscal quarter ending March 31, 2025, in an amount equal to (i) until and including the fiscal quarter ending September 30, 2025, 5.0% of the principal amount outstanding on December 30, 2024 (the “Delayed Draw Term Facility Restatement Date”), and (ii) for each fiscal quarter from December 31, 2025, until and including June 30, 2026, 18.0% of the principal amount outstanding on the Delayed Draw Term Facility
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Restatement Date. On the maturity date of August 31, 2026, MBS is required to repay all remaining amounts outstanding on the Singapore Delayed Draw Term Facility.
Under the Third Amendment and Restatement Agreement, MBS must comply with a maximum consolidated leverage ratio of 4.5x on the last day of each fiscal quarter from August 30, 2019, until twelve months following the date on which a temporary occupation permit is issued with respect to the MBS Expansion Project. Thereafter, MBS must comply with a maximum consolidated leverage ratio of 4.0x as of the last day of each fiscal quarter through maturity.
On February 9, 2022, MBS entered into the Fourth Amendment and Restatement Agreement (the “Fourth Amendment Agreement”) with DBS Bank Ltd., as agent and security trustee. The Fourth Amendment Agreement amended and restated the 2012 Singapore Credit Facility, to update the terms therein that provide for a transition away from the Swap Offer Rate (“SOR”) as a benchmark interest rate and the replacement of SOR by a replacement benchmark interest rate or mechanism.
Under the Fourth Amendment Agreement, outstanding loans bear interest at the Singapore Overnight Rate Average (“SORA”) with a credit spread adjustment of 0.19% per annum, plus an applicable margin ranging from 1.15% to 1.85% per annum, based on MBS’s consolidated leverage ratio (estimated interest rate set at approximately 4.89% as of December 31, 2022). MBS pays a standby commitment fee of 35% to 40% of the spread per annum on all undrawn amounts under the 2012 Singapore Revolving Facility. The weighted average interest rate for the 2012 Singapore Credit Facility was 3.5%, 2.1% and 2.2% for the years ended December 31, 2022, 2021 and 2020, respectively.
On June 18, 2020, MBS amended the existing 2012 Singapore Credit Facility (the “Amendment Letter”). The Amendment Letter (a) modifies the financial covenant provisions under the 2012 Singapore Credit Facility such that MBS will not have to comply with the leverage or interest coverage covenants for the financial quarters ending, and including, September 30, 2020 through, and including, December 31, 2021 (the “Waiver Period”); (b) extends to June 30, 2021, the deadline for delivering the construction costs estimate and the construction schedule for the MBS Expansion Project; and (c) permits MBS to make dividend payments during the Waiver Period of (i) an unlimited amount if the ratio of its debt to consolidated adjusted EBITDA is lower than or equal to 4.25x and (ii) up to SGD 500 million per fiscal year if the ratio of its debt to consolidated adjusted EBITDA is higher than 4.25x, subject to the additional requirements that (a) the aggregate amount of MBS’s cash plus Facility B availability is greater than or equal to SGD 800 million immediately following such dividend payment and (b) MBS’s interest coverage ratio is higher than 3.0x. Pursuant to the Amendment Letter, MBS agreed to pay a customary fee to the lenders that consented thereto.
On September 7, 2021, MBS further amended the existing 2012 Singapore Credit Facility (the “Second Amendment Letter”). The Second Amendment Letter (a) extends by one year to (and including) December 31, 2022, the waiver period for the requirement for MBS to comply with the financial covenant provisions under the 2012 Singapore Credit Facility such that MBS will not have to comply with the leverage or interest coverage covenants for the financial quarters ending, and including, September 30, 2021 through, and including, December 31, 2022 (the “Extended Waiver Period”); (b) extends to March 31, 2022, the deadline for delivering the construction cost estimate and the construction schedule for the MBS Expansion Project; and (c) permits MBS to make dividend payments during the Extended Waiver Period of (i) an unlimited amount if the ratio of its debt to consolidated adjusted EBITDA is lower than or equal to 4.25x and (ii) up to SGD 500 million per fiscal year if the ratio of its debt to consolidated adjusted EBITDA is higher than 4.25x, subject to the additional requirements that (a) the aggregate amount of MBS’s cash plus Facility B availability is greater than or equal to SGD 800 million immediately following such dividend payment and (b) MBS’s interest coverage ratio is higher than 3.0x. Pursuant to the Second Amendment Letter, MBS paid a customary fee to the lenders that consented. The Company is in the process of reviewing the budget and timing of the MBS expansion based on the impact of the COVID-19 Pandemic and other factors. As a result, the construction cost estimate and construction schedule were not delivered to the lenders by the March 31, 2022 deadline. The Company does not anticipate material spend related to the MBS Expansion Project prior to the delivery of these items to the lenders.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Debt Covenant Compliance
As of December 31, 2022, management believes the Company was in compliance with all debt covenants. The Company amended its credit facilities to, among other things, waive the Company’s requirement to comply with certain financial covenant ratios through December 31, 2022 for LVSC and MBS and July 31, 2023 for SCL, which include a maximum leverage ratio or net debt to trailing twelve-months adjusted earnings before interest, income taxes, depreciation and amortization, calculated in accordance with the respective credit agreement, of 4.0x, 4.0x and 4.5x under the LVSC Revolving Facility, 2018 SCL Credit Facility and 2012 Singapore Credit Facility, respectively. The Company’s compliance with its financial covenants for periods beyond December 31, 2022 for MBS and LVSC and July 31, 2023 for SCL, could be affected by certain factors beyond the Company’s control, such as the impact of the COVID-19 Pandemic, including current travel, quarantine and border restrictions continuing in the future. The Company will pursue additional waivers to meet the required financial covenant ratios for periods beyond the current covenant waiver periods, if deemed necessary.
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt and finance lease obligations are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Proceeds from 2027, 2029 and 2031 SCL Senior Notes | $ | — | | | $ | 1,946 | | | $ | — | |
| Proceeds from 2026 and 2030 SCL Senior Notes | — | | | — | | | 1,496 | |
| Proceeds from 2018 SCL Credit Facility | 1,200 | | | 756 | | | 403 | |
| Proceeds from 2012 Singapore Credit Facility - Delayed Draw Term | — | | | — | | | 46 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| $ | 1,200 | | | $ | 2,702 | | | $ | 1,945 | |
| | | | | |
| | | | | |
| Repayments on 2023 SCL Senior Notes | $ | — | | | $ | (1,800) | | | $ | — | |
| Repayments on 2018 SCL Credit Facility | — | | | — | | | (404) | |
| Repayments on 2012 Singapore Credit Facility | (60) | | | (62) | | | (60) | |
| | | | | |
| | | | | |
| | | | | |
| Repayments on Other Long-Term Debt | (6) | | | (5) | | | (3) | |
| $ | (66) | | | $ | (1,867) | | | $ | (467) | |
Scheduled Maturities of Long-Term Debt
Maturities of long-term debt outstanding (excluding finance leases) as of December 31, 2022, are summarized as follows:
| | | | | |
| Long-term
Debt |
| (In millions) |
| 2023 | $ | 2,022 | |
| 2024 | 1,891 | |
| 2025 | 3,340 | |
| 2026 | 3,507 | |
| 2027 | 700 | |
| Thereafter | 4,600 | |
| Total | $ | 16,060 | |
Note 13 — Equity
Preferred Stock
The Company is authorized to issue up to 50,000,000 shares of preferred stock. The Company's Board of Directors is authorized, subject to limitations prescribed by Nevada law and the Company's articles of incorporation, to determine the terms and conditions of the preferred stock, including whether the shares of preferred stock will be
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
issued in one or more series, the number of shares to be included in each series and the powers, designations, preferences and rights of the shares. The Company's Board of Directors also is authorized to designate any qualifications, limitations or restrictions on the shares without any further vote or action by the stockholders.
Common Stock
Dividends
In April 2020, the Company suspended the quarterly dividend program due to the impact of the COVID-19 Pandemic. The Company will assess the resumption of the dividend program at a time deemed appropriate after taking into account all facts and circumstances.
On March 26, 2020, the Company paid a dividend of $0.79 per common share as part of a regular cash dividend program. During the year ended December 31, 2020, the Company recorded $603 million as a distribution against retained earnings (of which $342 million related to Mr. Adelson, (a Principal Stockholder at that time), and the other Principal Stockholders, and the remaining $261 million related to all other stockholders).
Share Repurchases
In June 2018, the Company's Board of Directors authorized the repurchase of $2.50 billion of its outstanding common stock, which was to expire in November 2020. In October 2020, the Company's Board of Directors authorized the extension of the expiration date of the remaining repurchase amount of $916 million to November 2022, and in October 2022, the Company’s Board of Directors authorized the further extension of the expiration date of the remaining repurchase amount of $916 million to November 2024. Repurchases of the Company's common stock are made at the Company's discretion in accordance with applicable federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, legal requirements, other investment opportunities and market conditions. During the years ended December 31, 2022, 2021 and 2020, no shares of its common stock were repurchased. All share repurchases of the Company's common stock have been recorded as treasury stock.
Rollforward of Shares of Common Stock
A summary of the outstanding shares of common stock is as follows:
| | | | | |
| Balance as of January 1, 2020 | 763,484,915 | |
| Exercise of stock options | 342,700 | |
| Issuance of restricted stock | 17,512 | |
| |
| Forfeiture of unvested restricted stock | (2,189) | |
| |
| Balance as of December 31, 2020 | 763,842,938 | |
| Exercise of stock options | 121,710 | |
| Issuance of restricted stock | 25,104 | |
| |
| |
| |
| Balance as of December 31, 2021 | 763,989,752 | |
| |
| Issuance of restricted stock | 46,448 | |
| Vesting of restricted stock units | 211,083 | |
| |
| |
| Balance as of December 31, 2022 | 764,247,283 | |
Noncontrolling Interests
SCL
Subsequent to the February 21, 2020 dividend payment, as mentioned below, SCL suspended its dividend payments as a result of the COVID-19 Pandemic. SCL will assess the resumption of the dividend program at a time deemed appropriate after taking into account all facts and circumstances.
On February 21, 2020, SCL paid a dividend of HKD 0.99 to SCL stockholders (a total of $1.03 billion, of which the Company retained $717 million during the year ended December 31, 2020).
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 14 — Income Taxes
Consolidated loss before taxes and noncontrolling interests for domestic and foreign operations is as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Foreign | $ | (1,090) | | | $ | (1,091) | | | $ | (1,614) | |
| Domestic | (297) | | | (383) | | | (262) | |
| Total loss before income taxes from continuing operations | $ | (1,387) | | | $ | (1,474) | | | $ | (1,876) | |
The components of the income tax expense (benefit) from continuing operations are as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Foreign: | | | | | |
| Current | $ | 136 | | | $ | 32 | | | $ | 7 | |
| Deferred | (21) | | | (12) | | | 3 | |
| Federal: | | | | | |
| Current | 20 | | | 8 | | | (5) | |
| Deferred | 19 | | | (33) | | | 21 | |
| State: | | | | | |
| Current | — | | | — | | | (2) | |
| | | | | |
| Total income tax expense (benefit) | $ | 154 | | | $ | (5) | | | $ | 24 | |
The reconciliation of the statutory federal income tax rate and the Company's effective tax rate for continuing operations is as follows:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| Statutory federal income tax rate | (21.0) | % | | (21.0) | % | | (21.0) | % |
| Increase (decrease) in tax rate resulting from: | | | | | |
| Change in valuation allowance | 15.8 | % | | 13.1 | % | | 11.4 | % |
| Foreign and U.S. tax rate differential | 9.0 | % | | 6.7 | % | | 7.8 | % |
| Tax exempt loss of foreign subsidiary | 4.5 | % | | 0.6 | % | | 2.4 | % |
| | | | | |
| | | | | |
| | | | | |
| Other, net | 2.8 | % | | 0.3 | % | | 0.7 | % |
| Effective tax rate | 11.1 | % | | (0.3) | % | | 1.3 | % |
The Company enjoys an income tax exemption in Macao that exempts the Company from paying corporate income tax on profits generated by gaming operations. The Company benefited from this tax exemption through December 31, 2022. The VML gaming losses incurred during 2022, 2021 and 2020 did not generate a tax benefit because they are not subject to tax. In April 2019, the Company entered into a renewed agreement with the Macao government, effective through June 26, 2022, providing for payments as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits; namely an annual payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2022) for each of the years 2021 and 2020, each payment to be made on or before January 31 of the following year, and a payment of 18 million patacas (approximately $2 million at exchange rates in effect on December 31, 2022) for the period between January 1, 2022 through June 26, 2022, to be paid on or before July 26, 2022. In September 2013, the Company and the Internal Revenue Service entered into a Pre-Filing Agreement providing the Macao special gaming tax (35% of gross gaming revenue) qualifies as a tax paid in lieu of an income tax and could be claimed as a U.S. foreign tax credit.
The Company's foreign and U.S. tax rate differential reflects the fact that the U.S. tax rate of 21% is higher than the statutory tax rates in Singapore and Macao of 17% and 12%, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The primary tax affected components of the Company's net deferred tax assets (liabilities) are as follows:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Deferred tax assets: | | | |
| U.S. foreign tax credit carryforwards | $ | 3,720 | | | $ | 4,815 | |
| Net operating loss carryforwards | 481 | | | 539 | |
| Stock-based compensation | 17 | | | 16 | |
| Accrued expenses | 9 | | | 21 | |
| Provision for credit losses | 1 | | | 14 | |
| Interest expense carryforward | — | | | 18 | |
Deferred gain on mall sale transactions | — | | | 11 | |
| Pre-opening expenses | — | | | 6 | |
| | | |
| | | |
| Other | 14 | | | 2 | |
| 4,242 | | | 5,442 | |
| Less — valuation allowances | (4,083) | | | (5,034) | |
| Total deferred tax assets | 159 | | | 408 | |
| Deferred tax liabilities: | | | |
| Property and equipment | (174) | | | (273) | |
| Prepaid expenses | (2) | | | (5) | |
| Other | (4) | | | (6) | |
| Total deferred tax liabilities | (180) | | | (284) | |
| Deferred tax assets (liabilities), net | $ | (21) | | | $ | 124 | |
The Company's U.S. foreign tax credit carryforwards were $3.76 billion and $4.87 billion as of December 31, 2022 and 2021, respectively, which expire beginning in 2023 and 2022, respectively. There was a valuation allowance of $3.61 billion and $4.62 billion as of December 31, 2022 and 2021, respectively, provided on certain net U.S. deferred tax assets, as the Company believes these assets do not meet the "more-likely-than-not" criteria for recognition. The Company’s U.S. net operating loss carryforward was $563 million as of December 31, 2021. The Company's U.S. interest expense carryforward was $87 million as of December 31, 2021. The U.S. net operating loss carryforward and the interest expense carryforward were fully utilized during 2022 due to the sale of the Company's Las Vegas Operations. Net operating loss carryforwards for the Company's foreign subsidiaries were $3.96 billion and $3.46 billion as of December 31, 2022 and 2021, respectively, which expire beginning in 2023 and 2022, respectively. There are valuation allowances of $475 million and $416 million as of December 31, 2022 and 2021, respectively, provided on the net deferred tax assets of certain foreign jurisdictions, as the Company believes these assets do not meet the "more-likely-than-not" criteria for recognition.
Undistributed earnings of subsidiaries are accounted for as a temporary difference, except deferred tax liabilities are not recorded for undistributed earnings of foreign subsidiaries deemed to be indefinitely reinvested in foreign jurisdictions. The Company does not consider current year's tax earnings and profits of its foreign subsidiaries to be indefinitely reinvested. Beginning with the year ended December 31, 2015, the Company's major foreign subsidiaries distributed, and may continue to distribute, earnings in excess of their current year's tax earnings and profits in order to meet the Company's liquidity needs. As of December 31, 2022, the amount of earnings and profits of foreign subsidiaries the Company does not intend to repatriate was $910 million. The Company does not expect withholding taxes or other foreign income taxes to apply should these earnings be distributed in the form of dividends or otherwise.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, is as follows:
| | | | | | | | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Balance at the beginning of the year | $ | 136 | | | $ | 131 | | | $ | 134 | |
| Additions to tax positions related to prior years | — | | | — | | | — | |
| Reductions to tax positions related to prior years | (15) | | | (4) | | | (14) | |
| Additions to tax positions related to current year | 15 | | | 9 | | | 11 | |
| | | | | |
| | | | | |
| | | | | |
| Balance at the end of the year | $ | 136 | | | $ | 136 | | | $ | 131 | |
As of December 31, 2022, 2021 and 2020, unrecognized tax benefits of $36 million, $57 million and $60 million, respectively, were recorded as reductions to the U.S. foreign tax credit deferred tax asset. As of December 31, 2022, 2021 and 2020, unrecognized tax benefits of $100 million, $79 million and $71 million, respectively, were recorded in other long-term liabilities.
Included in the unrecognized tax benefit balance as of December 31, 2022, 2021 and 2020, are $122 million, $126 million and $123 million, respectively, of uncertain tax benefits that would affect the effective income tax rate if recognized.
The Company's major tax jurisdictions are the U.S., Macao and Singapore. The Company could be subject to examination for tax years beginning in 2018 in Macao and Singapore and tax years 2010 through 2015 and 2019 through 2021 in the U.S. The Company believes it has adequately reserved and provided for its uncertain tax positions; however, there is no assurance the taxing authorities will not propose adjustments that are different from the Company's expected outcome and it could impact the provision for income taxes.
The Company recognizes interest and penalties, if any, related to unrecognized tax positions in the provision for income taxes in the accompanying consolidated statement of operations. Interest and penalties of $13 million, $10 million and $7 million were accrued as of December 31, 2022, 2021 and 2020, respectively. The Company does not expect a significant increase or decrease in unrecognized tax benefits over the next twelve months.
The Inflation Reduction Act of 2022 (“IRA”) was signed into law on August 16, 2022. The IRA contains numerous provisions including a 15% corporate alternative minimum tax (“CAMT”) for certain large corporations that have at least an average of $1 billion adjusted financial statement income over a consecutive three-year period effective in tax years beginning after December 31, 2022. Applicable corporations would be allowed to claim a credit for the corporate minimum tax paid against regular tax in future years. The IRA also includes a 1% excise tax on corporate stock repurchases beginning January 1, 2023. The CAMT could impact our future cash flows and results of operations. The Internal Revenue Service has been granted broad authority to issue regulations or other guidance that could clarify how these taxes will be applied. The Company will continue to evaluate the impact of the IRA as additional information becomes available.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 15 — Fair Value Disclosures
As of December 31, 2022 and 2021, the amounts of the Company's assets and liabilities that were accounted for at fair value were immaterial.
The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company as of December 31, 2022 and 2021, using available market information. Determining fair value is judgmental in nature and requires market assumptions and/or estimation methodologies. The table excludes cash and cash equivalents, restricted cash and cash equivalents, accounts receivables, net, and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.
| | | | | | | | | | | | | |
| December 31, 2022 |
| | | | | Hierarchy Level |
| Carrying Amount | | | | Level 2 |
| (in millions) | | | | |
| Assets: | | | | | |
| | | | | |
Loan Receivable(1) | $ | 1,165 | | | | | $ | 1,078 | |
| Liabilities: | | | | | |
Long-term debt(2) | $ | 16,060 | | | | | $ | 15,140 | |
| | | | | | | | | | | | | |
| December 31, 2021 |
| | | | | Hierarchy Level |
| Carrying Amount | | | | Level 2 |
| (in millions) | | | | |
| | | | | |
| | | | | |
| | | | | |
| Liabilities: | | | | | |
Long-term debt(2) | $ | 14,900 | | | | | $ | 15,060 | |
| | | | | |
| | | | | |
| | | | | |
____________________
(1)The fair value is estimated based on level 2 inputs and reflects the increase in market interest rates since finalizing the terms of the loan receivable at a fixed interest rate on March 2, 2021.
(2)The estimated fair value of our long-term debt is based on recent trades, if available, and indicative pricing from market information (level 2 inputs).
Note 16 — Leases
Lessee
The Company has operating and finance leases for various real estate (including the Macao and Singapore leasehold interests in land) and equipment. Certain of these lease agreements include rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term by one month to 10 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Leases recorded on the balance sheet consist of the following (excluding the Macao and Singapore leasehold interests in land assets; see "Note 8 — Leasehold Interests in Land, Net"):
| | | | | | | | | | | | | | | | | | | | | | |
| | | | December 31, | | |
Leases | | Classification on the Balance Sheet | | 2022 | | 2021 | | |
| | | | | | | | |
| | | | (In millions) | | |
Assets | | | | | | | | |
| Operating lease ROU assets | | Other assets, net | | $ | 23 | | | $ | 24 | | | |
| Finance lease ROU assets | | Property and equipment, net(1) | | $ | 10 | | | $ | 16 | | | |
Liabilities | | | | | | | | |
| Current | | | | | | | | |
| Operating | | Other accrued liabilities | | $ | 13 | | | $ | 14 | | | |
| Finance | | Current maturities of long-term debt | | $ | 8 | | | $ | 10 | | | |
| Noncurrent | | | | | | | | |
| Operating | | Other long-term liabilities | | $ | 157 | | | $ | 154 | | | |
| Finance | | Long-term debt | | $ | 13 | | | $ | 15 | | | |
____________________
(1)Finance lease ROU assets are recorded net of accumulated depreciation of $26 million and $21 million as of December 31, 2022 and 2021, respectively.
Other information related to lease term and discount rate is as follows:
| | | | | | | | | | | | | |
| December 31, | | |
| 2022 | | 2021 | | |
| | | | | |
| Weighted Average Remaining Lease Term | | | | | |
| Operating leases | 32.0 years | | 32.8 years | | |
| Finance leases | 2.5 years | | 2.9 years | | |
| Weighted Average Discount Rate | | | | | |
| Operating leases | 4.9 | % | | 4.9 | % | | |
| Finance leases | 4.9 | % | | 2.6 | % | | |
The components of lease expense are as follows:
| | | | | | | | | | | | | | | | | | | | | |
| December 31, | | | | |
| 2022 | | 2021 | | 2020 | | | | |
| | | | | | | | | |
| (In millions) | | | | |
| Operating lease cost: | | | | | | | | | |
| Amortization of leasehold interests in land | $ | 55 | | | $ | 56 | | | $ | 55 | | | | | |
| Operating lease cost | 21 | | | 14 | | | 12 | | | | | |
| Short-term lease cost | 4 | | | 1 | | | 1 | | | | | |
| Variable lease cost | 2 | | | 2 | | | 2 | | | | | |
| Finance lease cost: | | | | | | | | | |
| Amortization of ROU assets | 5 | | | 8 | | | 9 | | | | | |
| Interest on lease liabilities | 1 | | | 1 | | | 1 | | | | | |
| Total lease cost | $ | 88 | | | $ | 82 | | | $ | 80 | | | | | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
As of December 31, 2022, the Company has short-term lease commitments of $38 million.
Supplemental cash flow information related to leases is as follows:
| | | | | | | | | | | | | | | | | | | |
| December 31, | | |
| 2022 | | 2021 | | 2020 | | |
| | | | | | | |
| (In millions) |
Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | |
| Operating cash flows for operating leases | $ | 14 | | | $ | 16 | | | $ | 19 | | | |
| | | | | | | |
| Financing cash flows for finance leases | $ | 4 | | | $ | 5 | | | $ | 3 | | | |
Right-of-use assets obtained in exchange for lease liabilities: | | | | | | | |
| Operating leases | $ | 8 | | | $ | 10 | | | $ | 10 | | | |
| Finance leases | $ | 1 | | | $ | 9 | | | $ | 22 | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Maturities of lease liabilities are summarized as follows:
| | | | | | | | | | | |
| Operating Leases | | Finance Leases |
| | | |
| (In millions) |
Year ending December 31, | | | |
| 2023 | $ | 14 | | | $ | 9 | |
| 2024 | 11 | | | 9 | |
| 2025 | 8 | | | 3 | |
| 2026 | 7 | | | 1 | |
| 2027 | 7 | | | — | |
| Thereafter | 304 | | | — | |
| Total future minimum lease payments | 351 | | | 22 | |
Less — amount representing interest | (181) | | | (1) | |
| Present value of future minimum lease payments | 170 | | | 21 | |
Less — current lease obligations | (13) | | | (8) | |
| Long-term lease obligations | $ | 157 | | | $ | 13 | |
Lessor
The Company leases space at several of its Integrated Resorts to various third parties as part of its mall operations that are recorded within mall revenues, as well as restaurant and retail space that are recorded within convention, retail and other revenues. These leases are non-cancelable operating leases with remaining lease periods that vary from one month to 20 years. The leases include minimum base rents with escalated contingent rent clauses.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Lease revenue consists of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31, | | | | | | | | |
| | | | | | | | | | | | | |
| 2022 | | 2021 | | 2020 | | | | | | | | |
| Mall | | Other | | Mall | | Other | | Mall | | Other | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| (In millions) | | | | | | | | |
| Minimum rents | $ | 484 | | | $ | 1 | | | $ | 505 | | | $ | 1 | | | $ | 523 | | | $ | 1 | | | | | | | | | |
| Overage rents | 78 | | | — | | | 115 | | | — | | | 39 | | | — | | | | | | | | | |
Rent concessions(1) | (70) | | | — | | | (65) | | | — | | | (272) | | | — | | | | | | | | | |
Other(2) | — | | | — | | | 6 | | | — | | | — | | | — | | | | | | | | | |
| Total overage rents and rent concessions | 8 | | | — | | | 56 | | | — | | | (233) | | | — | | | | | | | | | |
| $ | 492 | | | $ | 1 | | | $ | 561 | | | $ | 1 | | | $ | 290 | | | $ | 1 | | | | | | | | | |
___________________
(1)Rent concessions were provided to tenants during the years ended December 31, 2022, 2021 and 2020 as a result of the COVID-19 Pandemic and the impact on mall and other operations.
(2)Amount related to a grant provided by the Singapore government to lessors to support small and medium enterprises impacted by the COVID-19 Pandemic in connection with their rent obligations.
Future minimum rentals (excluding the escalated contingent rent clauses) on non-cancelable leases are as follows:
| | | | | | | | | | | |
| Mall | | Other |
| | | |
| (In millions) |
Year ending December 31, | | | |
| 2023 | $ | 442 | | | $ | 1 | |
| 2024 | 386 | | | 1 | |
| 2025 | 289 | | | — | |
| 2026 | 225 | | | — | |
| 2027 | 188 | | | — | |
| Thereafter | 340 | | | — | |
| Total minimum future rentals | $ | 1,870 | | | $ | 2 | |
The cost and accumulated depreciation of property and equipment the Company is leasing to third parties is as follows:
| | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 |
| | | |
| (In millions) |
| Property and equipment, at cost | $ | 1,554 | | | $ | 1,536 | |
| Accumulated depreciation | (711) | | | (639) | |
| Property and equipment, net | $ | 843 | | | $ | 897 | |
Note 17 — Commitments and Contingencies
Litigation
The Company is involved in other litigation in addition to those noted below, arising in the normal course of business. Management has made certain estimates for potential litigation costs based upon consultation with legal counsel. Actual results could differ from these estimates; however, in the opinion of management, such litigation and claims will not have a material effect on the Company’s financial condition, results of operations and cash flows.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Asian American Entertainment Corporation, Limited v. Venetian Macau Limited, et al.
On February 5, 2007, Asian American Entertainment Corporation, Limited (“AAEC” or “Plaintiff”) brought a claim (the “Prior Action”) in the U.S. District Court for the District of Nevada (the “U.S. District Court”) against Las Vegas Sands, Inc. (now known as Las Vegas Sands, LLC (“LVSLLC”)), Venetian Casino Resort, LLC (“VCR”) and Venetian Venture Development, LLC, which are subsidiaries of the Company, and William P. Weidner and David Friedman, who are former executives of the Company. The Prior Action sought damages based on an alleged breach of agreements entered into between AAEC and the aforementioned defendants for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. The U.S. District Court entered an order dismissing the Prior Action on April 16, 2010.
On January 19, 2012, AAEC filed another claim (the “Macao Action”) with the Macao Judicial Court against VML, LVS (Nevada) International Holdings, Inc. (“LVS (Nevada)”), LVSLLC and VCR (collectively, the “Defendants”). The claim was for 3.0 billion patacas (approximately $374 million at exchange rates in effect on December 31, 2022). The Macao Action alleges a breach of agreements entered into between AAEC and LVS (Nevada), LVSLLC and VCR (collectively, the “U.S. Defendants”) for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. On July 4, 2012, the Defendants filed their defense to the Macao Action with the Macao Judicial Court and amended the defense on January 4, 2013.
On March 24, 2014, the Macao Judicial Court issued a decision holding that AAEC’s claim against VML is unfounded and that VML be removed as a party to the proceedings. On May 8, 2014, AAEC lodged an appeal against that decision and the appeal is currently pending.
On June 5, 2015, the U.S. Defendants applied to the Macao Judicial Court to dismiss the claims against them as res judicata based on the dismissal of the Prior Action. On March 16, 2016, the Macao Judicial Court dismissed the defense of res judicata. An appeal against that decision was lodged by U.S. Defendants on April 7, 2016, and is currently pending. Evidence gathering by the Macao Judicial Court commenced by letters rogatory, which was completed on March 14, 2019, and the trial of this matter was originally scheduled for September 2019.
On July 15, 2019, AAEC submitted a request to the Macao Judicial Court to increase the amount of its claim to 96.45 billion patacas (approximately $12.01 billion at exchange rates in effect on December 31, 2022), allegedly representing lost profits from 2004 to 2018, and reserving its right to claim for lost profits up to 2022. On September 4, 2019, the Macao Judicial Court allowed AAEC’s request to increase the amount of its claim. On September 17, 2019, the U.S. Defendants appealed the decision granting AAEC’s request and that appeal is currently pending.
On June 18, 2020, the U.S. Defendants moved to reschedule the trial, which had been scheduled to begin on September 16, 2020, due to travel disruptions and other extraordinary circumstances resulting from the ongoing COVID-19 Pandemic. The Macao Judicial Court granted that motion and rescheduled the trial to begin on June 16, 2021. On April 16, 2021, the U.S. Defendants again moved to reschedule the trial because of the ongoing COVID-19 Pandemic. The Macao Judicial Court denied the U.S. Defendants’ motion on May 28, 2021. The U.S. Defendants appealed that ruling on June 16, 2021, and that appeal is currently pending.
The trial began as scheduled on June 16, 2021. By order dated June 17, 2021, the Macao Judicial Court scheduled additional trial dates in late 2021 to hear witnesses who were subject to COVID-19 travel restrictions that prevented or severely limited their ability to enter Macao. That order also provided a procedure for the parties to request written testimony from witnesses who were not able to travel to Macao. The U.S. Defendants appealed certain aspects of the Macao Judicial Court’s June 17, 2021 order, and that appeal is currently pending.
On July 10, 2021, the U.S. Defendants were notified of an invoice for supplemental court fees totaling 93 million patacas (approximately $12 million at exchange rates in effect on December 31, 2022) based on Plaintiff’s July 15, 2019 amendment. By motion dated July 20, 2021, the U.S. Defendants moved for an order withdrawing that invoice. The Macao Judicial Court denied that motion by order dated September 11, 2021. The U.S. Defendants appealed that order on September 23, 2021, and that appeal is currently pending. By order dated September 29, 2021, the Macao Judicial Court ordered that the invoice for supplemental court fees be stayed pending resolution of that appeal.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Macao Judicial Court heard additional testimony in late 2021. Certain witnesses who were not able to enter Macao due to ongoing COVID-19 travel restrictions presented testimony in writing.
From December 17, 2021 to January 19, 2022, Plaintiff submitted additional documents to the court file and disclosed written reports from two purported experts, who calculated Plaintiff’s damages at 57.88 billion patacas and 62.29 billion patacas (approximately $7.21 billion and $7.76 billion, respectively, at exchange rates in effect on December 31, 2022).
The parties presented factual and rebuttal summations in January 2022. The Macao Judicial Court announced its proposed findings on disputed facts at a February 15, 2022 hearing. The parties filed post-trial briefs on points of law in March 2022. On April 28, 2022, the Macao Judicial Court entered a judgment for the U.S. Defendants. The Macao Judicial Court also held that Plaintiff litigated certain aspects of its case in bad faith.
Plaintiff filed a notice of appeal from the Macao Judicial Court’s judgment on May 13, 2022. That appeal is fully briefed and remains pending with the Macao Second Instance Court.
On September 19, 2022, the U.S. Defendants were notified of an invoice for appeal court fees totaling 48 million patacas (approximately $6 million at exchange rates in effect on December 31, 2022). By motion dated September 29, 2022, the U.S. Defendants moved the Macao Judicial Court for an order withdrawing that invoice. The Macao Judicial Court denied that motion by order dated October 24, 2022. The U.S. Defendants appealed that order on November 10, 2022, and that appeal remains pending. By order dated November 15, 2022, the Macao Judicial Court ordered that the invoice for appeal court fees be stayed pending resolution of that appeal.
Management has determined that, based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
The Daniels Family 2001 Revocable Trust v. LVSC, et al.
On October 22, 2020, The Daniels Family 2001 Revocable Trust, a putative purchaser of the Company’s shares, filed a purported class action complaint in the U.S. District Court against LVSC, Sheldon G. Adelson and Patrick Dumont. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and alleges that LVSC made materially false or misleading statements, or failed to disclose material facts, from February 27, 2016 through September 15, 2020, with respect to its operations at Marina Bay Sands, its compliance with Singapore laws and regulations, and its disclosure controls and procedures. On January 5, 2021, the U.S. District Court entered an order appointing Carl S. Ciaccio and Donald M. DeSalvo as lead plaintiffs (“Lead Plaintiffs”). On March 8, 2021, Lead Plaintiffs filed a purported class action amended complaint against LVSC, Sheldon G. Adelson, Patrick Dumont, and Robert G. Goldstein, alleging similar violations of Sections 10(b) and 20(a) of the Exchange Act over the same time period of February 27, 2016 through September 15, 2020. On March 22, 2021, the U.S. District Court granted Lead Plaintiffs’ motion to substitute Dr. Miriam Adelson, in her capacity as the Special Administrator for the estate of Sheldon G. Adelson, for Sheldon G. Adelson as a defendant in this action. On May 7, 2021, the defendants filed a motion to dismiss the amended complaint. Lead Plaintiffs filed an opposition to the motion to dismiss on July 6, 2021, and the defendants filed their reply on August 5, 2021. On March 28, 2022, the U.S. District Court entered an order dismissing the amended complaint in its entirety. The U.S. District Court dismissed certain claims with prejudice but granted Lead Plaintiffs leave to amend the complaint with respect to the other claims by April 18, 2022. On April 8, 2022, Lead Plaintiffs filed a Motion for Reconsideration and to Extend Time to File the Amended Complaint, requesting the U.S. District Court to reconsider certain aspects of its March 28, 2022 order and to extend the deadline for Lead Plaintiffs to file an amended complaint. The defendants filed an opposition to the motion on April 22, 2022. On April 18, 2022, Lead Plaintiffs filed a second amended complaint. On May 18, 2022, the defendants filed a motion to dismiss the second amended complaint. Lead Plaintiffs filed an opposition to the motion to dismiss on June 17, 2022, and the defendants filed their reply on July 8, 2022. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Turesky v. Sheldon G. Adelson, et al.
On December 28, 2020, Andrew Turesky filed a putative shareholder derivative action on behalf of the Company in the U.S. District Court, against Sheldon G. Adelson, Patrick Dumont, Robert G. Goldstein, Irwin Chafetz, Micheline Chau, Charles D. Forman, Steven L. Gerard, George Jamieson, Charles A. Koppelman, Lewis Kramer and David F. Levi, all of whom are current or former directors and/or officers of LVSC. The complaint asserts claims for breach of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control, gross mismanagement, violations of Sections 10(b), 14(a) and 20(a) of the Exchange Act and for contribution under Sections 10(b) and 21D of the Exchange Act. On February 24, 2021, the U.S. District Court entered an order granting the parties’ stipulation to stay this action in light of the Daniels Family 2001 Revocable Trust putative securities class action (the “Securities Action”). Subject to the terms of the parties’ stipulation, this action is stayed until 30 days after the final resolution of the motion to dismiss in the Securities Action. On March 11, 2021, the U.S. District Court granted the plaintiff’s motion to substitute Dr. Miriam Adelson, in her capacity as the Special Administrator for the estate of Sheldon G. Adelson, for Sheldon G. Adelson as a defendant in this action. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
Commitments
Macao Concession
Annual Premium
Under the Macao Concession, the Company is obligated to pay to the Macao government an annual gaming premium with a fixed portion and a variable portion based on the number and type of gaming tables it employs and gaming machines it operates. The fixed portion of the premium is equal to 30 million patacas (approximately $4 million at exchange rates in effect on December 31, 2022). The variable portion is equal to 300,000 patacas per gaming table reserved exclusively for certain kinds of games or players, 150,000 patacas per gaming table not so reserved and 1,000 patacas per electrical or mechanical gaming machine, including slot machines (approximately $37,360, $18,680 and $125, respectively, at exchange rates in effect on December 31, 2022), subject to a minimum of 76 million patacas (approximately $9 million at exchange rates in effect on December 31, 2022). Based on the gaming tables and gaming machines (which is at the maximum number of tables and machines currently allowed by the Macao government) in operation as of January 1, 2023, the annual premium payable to the Macao government is approximately $41 million during each of the next five years ending December 31, 2027, and approximately $203 million in aggregate thereafter through the termination of the Concession in December 2032.
The Company is also obligated to pay a special gaming tax of 35% of gross gaming revenues and applicable withholding taxes. Under the Concession, the Company must also contribute 5% of its gross gaming revenue to utilities designated by the Macao government, a portion of which must be used for promotion of tourism in Macao. Additionally, under the Concession, the Company is also obligated to pay a special annual gaming premium if the average of the gross gaming revenues of the Company's gaming tables and electrical or mechanical gaming machines, including slot machines, is lower than a certain minimum amount determined by the Macao government; such special premium being the difference between the gaming tax based on the actual gross gaming revenues and that of the specified minimum amount; this minimum amount has been set by the Macao government at 7 million patacas per gaming table and 300,000 patacas per gaming machine (approximately $1 million and $37,360, respectively, at exchange rates in effect on December 31, 2022), for an annual total of 4.50 billion patacas (approximately $561 million at exchange rates in effect on December 31, 2022) based on the maximum number of gaming tables and gaming machines the Company is currently authorized to operate.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Handover Record
Pursuant to the Handover Record, the Company is required to make annual payments of 750 patacas per square meter for the first three years and 2,500 patacas per square meter for the following seven years (approximately $93 and $311, respectively, at exchange rates in effect on December 31, 2022). The annual payment of 750 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years two and three and the annual payment of 2,500 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years five through ten. The annual fee for the first three years is approximately $13 million and $42 million for the next seven years, subject to the Macao average price index adjustment mentioned above.
Committed Investment
Under the Concession, the Company is obligated to develop certain gaming and non-gaming investment projects by December 2032 in connection with, among others, attraction of international visitors, conventions and exhibitions, entertainment shows, sporting events, culture and art, health and wellness and themed attractions, as well as support Macao's position as a city of gastronomy and increase community and maritime tourism, and we are required to invest, or cause to be invested, at least 30.24 billion patacas (approximately $3.77 billion at exchange rates in effect on December 31, 2022), including 27.80 billion patacas (approximately $3.46 billion at exchange rates in effect on December 31, 2022) on non-gaming projects. The Company will be required to increase its investment in non-gaming projects by up to 20% in the following year if Macao’s annual market gross gaming revenue achieves or exceeds 180 billion patacas (approximately $22.42 billion at exchange rates in effect on December 31, 2022). The 20% increase is subject to a deduction of 4% per year if the revenue trigger occurs on or after the sixth year of the term of the Concession (2028). The additional investment is estimated to be approximately $700 million.
Non-Cancelable Contractual Obligations
The Company's non-cancelable contractual obligations (excluding operating leases and the Macao annual gaming premium mentioned above) is $364 million as of December 31, 2022. The amount excludes open purchase orders with the Company's suppliers that have not yet been received as these agreements generally allow the Company the option to cancel, reschedule and adjust terms based on the Company's business needs prior to the delivery of goods or performance of services. These obligations consist primarily of certain hotel management and service agreements. Some of the Company's hotel properties operate pursuant to management agreements with various experienced third-party hotel operators (management companies), whereby the management company controls the day-to-day operations of each of these hotels, and the Company is granted limited approval rights with respect to certain of the management company’s actions. The non-cancelable period of the Company's management agreements ranges from 14 to 40 years with various extension provisions and some with early termination options. Each management company receives a base management fee, generally a percentage of revenue as defined. There are also monthly fees for certain support services and some also include incentive fees based on attaining certain financial thresholds.
Note 18 — Stock-Based Employee Compensation
The Company has two equity award plans for grants of options to purchase the Company's common stock and ordinary shares of SCL (the "2004 Plan" and the "SCL Equity Plan," respectively), which are described below. The 2004 Plan provides for the granting of equity awards pursuant to the applicable provisions of the Internal Revenue Code and regulations in the United States.
Las Vegas Sands Corp. 2004 Equity Award Plan
The 2004 Plan gives the Company a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide the Company with a stock plan providing incentives directly related to increases in its stockholder value. Any of the Company's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the 2004 Plan. The 2004 Plan provided for an aggregate of 26,344,000 shares of the Company's common stock to be available for awards. The 2004 Plan originally had a term of ten years, but in June 2014, the Company's Board of Directors approved an amendment to the 2004 Plan, extending the term to December 2019. In May 2019, the Board of Directors and stockholders approved the adoption of the Las Vegas Sands Corp. Amended and Restated 2004 Equity Award Plan (the “Amended 2004 Plan”), which
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
extended the term of the Amended 2004 Plan through December 2024 and increased the number of shares of common stock available for grants by 10,000,000 shares. The compensation committee may grant awards of nonqualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. As of December 31, 2022, there were 2,385,512 shares available for grant under the Amended 2004 Plan.
Stock option awards are granted with an exercise price equal to the fair market value (as defined in the Amended 2004 Plan) of the Company's stock on the date of grant. The outstanding stock options generally vest over three to four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting, is recognized on a straight-line basis over the awards' respective requisite service periods. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on the Company's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.
Sands China Ltd. Equity Award Plan
The SCL Equity Plan gives SCL a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide SCL with a stock plan providing incentives directly related to increases in its stockholder value. Subject to certain criteria as defined in the SCL Equity Plan, SCL's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the SCL Equity Plan.
The SCL 2009 Equity Plan provided for an aggregate of 804,786,508 shares of SCL's common stock to be available for awards. The SCL 2009 Equity Plan had a term of ten years, which expired on November 30, 2019, and no further awards may be granted after the expiration of the term. All existing awards previously granted under the SCL 2009 Equity Plan, but which are unexercised or unvested, will remain valid and (where applicable) exercisable in accordance with their terms of grant despite the expiration of the SCL 2009 Equity Plan. SCL's remuneration committee may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. Effective December 1, 2019, the SCL 2019 Equity Plan was approved by shareholders, with materially the same terms of the SCL 2009 Equity Plan. As of December 31, 2022, there were 805,319,139 shares available for grant under the SCL 2019 Equity Plan.
Stock option awards are granted with an exercise price not less than (i) the closing price of SCL's stock on the date of grant or (ii) the average closing price of SCL's stock for the five business days immediately preceding the date of grant. The outstanding stock options generally vest over four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting is recognized on a straight-line basis over the awards' respective requisite service periods. SCL estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on SCL's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the Hong Kong Government Bond rate in effect at the time of the grant. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.
Under the SCL 2009 Equity Plan and the SCL 2019 Equity Plan, SCL granted restricted share units to eligible employees. Such restricted share units vest over three to four years. Employees are entitled to a future cash payment that is equivalent to the fair value of the restricted share unit and any accumulated dividends in cash upon vesting.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Stock-Based Employee Compensation Activity
The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| LVSC Amended 2004 Plan: | | | | | |
| Weighted average volatility | 26.0 | % | | 25.1 | % | | 23.8 | % |
| Expected term (in years) | 6.3 | | 5.5 | | 5.5 |
| Risk-free rate | 2.1 | % | | 0.9 | % | | 1.3 | % |
| Expected dividend yield | — | % | | — | % | | 4.6 | % |
| SCL Equity Award Plan: | | | | | |
| Weighted average volatility | 43.7 | % | | — | % | | — | % |
| Expected term (in years) | 7.2 | | — | | — |
| Risk-free rate | 2.7 | % | | — | % | | — | % |
| Expected dividend yield | — | % | | — | % | | — | % |
A summary of the stock option activity for the Company's equity award plans for the year ended December 31, 2022, is presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| Shares | | Weighted
Average
Exercise
Price | | Weighted
Average
Remaining
Contractual
Life (Years) | | Aggregate
Intrinsic
Value
(in millions) |
| | | | | | | |
| LVSC Amended 2004 Plan: | | | | | | | |
| Outstanding as of January 1, 2022 | 13,264,517 | | | $ | 49.35 | | | | | |
| Granted | 1,730,000 | | | 41.61 | | | | | |
| | | | | | | |
| Forfeited or expired | (455,743) | | | 60.19 | | | | | |
| Outstanding as of December 31, 2022 | 14,538,774 | | | $ | 48.09 | | | 6.45 | | $ | 74 | |
| Exercisable as of December 31, 2022 | 8,058,372 | | | $ | 53.65 | | | 5.03 | | $ | 21 | |
| SCL Equity Award Plan: | | | | | | | |
| Outstanding as of January 1, 2022 | 48,180,300 | | | $ | 5.01 | | | | | |
| Granted | 3,300,000 | | | 2.28 | | | | | |
| Forfeited or expired | (3,079,400) | | | 4.69 | | | | | |
| | | | | | | |
| Outstanding as of December 31, 2022 | 48,400,900 | | | $ | 4.84 | | | 4.95 | | $ | 3 | |
| Exercisable as of December 31, 2022 | 41,687,600 | | | $ | 5.02 | | | 4.47 | | $ | — | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A summary of the unvested restricted stock and restricted stock units under the Company's equity award plans for the year ended December 31, 2022, is presented below:
| | | | | | | | | | | |
| Shares | | Weighted
Average
Grant Date
Fair Value |
| | | |
| LVSC Amended 2004 Plan: | | | |
| Unvested Restricted Stock | | | |
| Balance as of January 1, 2022 | 25,104 | | | $ | 55.76 | |
| Granted | 46,448 | | | 30.14 | |
| Vested | (30,910) | | | 50.59 | |
| | | |
| Balance as of December 31, 2022 | 40,642 | | | $ | 30.14 | |
| Unvested Restricted Stock Units | | | |
| Balance as of January 1, 2022 | 771,150 | | | $ | 48.75 | |
| Granted | 123,497 | | | 42.55 | |
| Vested | (242,942) | | 41.42 | 48.75 | |
| Forfeited | (76,443) | | | 44.48 | |
| Balance as of December 31, 2022 | 575,262 | | | $ | 47.99 | |
| SCL Equity Plan: | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Unvested Restricted Stock Units | | | |
| Balance as of January 1, 2022 | 15,321,544 | | | $ | 3.40 | |
| Granted | 9,393,200 | | | 2.32 | |
| Vested | (2,587,860) | | | 4.67 | |
| Forfeited | (969,320) | | | 3.00 | |
| Balance as of December 31, 2022 | 21,157,564 | | | $ | 2.79 | |
The grant date fair value of SCL's restricted stock unit awards is the share price of SCL's ordinary shares at the respective grant date. The fair value of these awards is remeasured each reporting period until the vesting dates. Upon settlement, SCL will pay the grantees an amount in cash calculated based on the closing price of SCL's shares on the vesting date or higher of (i) the closing price of SCL's shares on the vesting date, and (ii) the average closing price of SCL's shares for the five trading days immediately preceding the vesting date. The accrued liability associated with these cash-settled restricted stock units was $34 million and $8 million as of December 31, 2022 and 2021, respectively.
As of December 31, 2022, under the Amended 2004 Plan there was $48 million and $21 million of unrecognized compensation cost related to unvested stock options and unvested restricted stock and stock units, respectively. The stock option and restricted stock and stock unit costs are expected to be recognized over a weighted average period of 2.7 years, and 1.5 years, respectively.
As of December 31, 2022, under the SCL Equity Plan there was $4 million and $37 million of unrecognized compensation cost related to unvested stock options and unvested restricted stock units, respectively. The stock option and restricted stock unit costs are expected to be recognized over a weighted average period of 3.3 years and 2.1 years, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The stock-based compensation activity for the Amended 2004 Plan and SCL Equity Plan is as follows for the three years ended December 31, 2022:
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (Dollars in millions, except weighted average grant date fair values) |
| Compensation expense: | | | | | |
| Stock options | $ | 24 | | | $ | 14 | | | $ | 20 | |
| Restricted stock and stock units | 46 | | | 13 | | | 7 | |
| $ | 70 | | | $ | 27 | | | $ | 27 | |
Income tax benefit recognized in the consolidated statements of operations | $ | 2 | | | $ | 1 | | | $ | 2 | |
Compensation cost capitalized as part of property and equipment | $ | 2 | | | $ | 1 | | | $ | 1 | |
| | | | | |
| LVSC Amended 2004 Plan: | | | | | |
| Stock options granted | 1,730,000 | | | 4,513,468 | | | 875,474 | |
| Weighted average grant date fair value | $ | 12.74 | | | $ | 8.63 | | | $ | 7.79 | |
| | | | | |
| Restricted stock granted | 46,448 | | | 25,104 | | | 17,512 | |
| Weighted average grant date fair value | $ | 30.14 | | | $ | 55.76 | | | $ | 45.68 | |
| | | | | |
| Restricted stock units granted | 123,497 | | | 786,310 | | | — | |
| Weighted average grant date fair value | $ | 42.55 | | | $ | 48.96 | | | $ | — | |
| | | | | |
| Stock options exercised: | | | | | |
| Intrinsic value | $ | — | | | $ | 1 | | | $ | 5 | |
| Cash received | $ | — | | | $ | 7 | | | $ | 18 | |
| | | | | |
| SCL 2019 Equity Plan: | | | | | |
| Stock options granted | 3,300,000 | | | — | | | — | |
| Weighted average grant date fair value | $ | 1.13 | | | $ | — | | | $ | — | |
| | | | | |
| Restricted stock units granted | 9,393,200 | | | 13,039,600 | | | 2,337,200 | |
| Weighted average grant date fair value | $ | 2.32 | | | $ | 3.22 | | | $ | 4.11 | |
| | | | | |
| Stock options exercised: | | | | | |
| Intrinsic value | $ | — | | | $ | 3 | | | $ | 2 | |
| Cash received | $ | — | | | $ | 12 | | | $ | 6 | |
| | | | | |
Note 19 — Related Party Transactions
During the years ended December 31, 2022, 2021 and 2020, the Principal Stockholders purchased certain services from the Company including security and medical support, design services and other goods and services for $3 million, $2 million and $1 million, respectively. For the years ended December 31, 2022, 2021 and 2020, the Company incurred $1 million, $3 million and $2 million, respectively, for food and beverage services, newspaper subscriptions and security support from entities in which the Principal Stockholders have an ownership interest.
During the years ended December 31, 2022, 2021 and 2020, the Company incurred certain expenses of $6 million, $3 million and $5 million, respectively, related to the Company's use of its Principal Stockholders' personal aircraft, yacht and aircraft refurbishment and maintenance services for business purposes. During the years ended December 31, 2022, 2021 and 2020, the Company charged the Principal Stockholders $19 million, $21 million and
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
$18 million, respectively, related to aviation costs incurred by the Company for the Principal Stockholders' use of Company aviation personnel and assets for personal purposes.
Related party receivables were $2 million and $2 million as of December 31, 2022 and 2021, respectively. Related party payables were approximately $1 million and $1 million as of December 31, 2022 and 2021, respectively.
On July 11, 2022, the Company entered into an intercompany term loan agreement with SCL, a related party, in the amount of $1.0 billion, which is repayable on July 11, 2028. In the first two years from July 11, 2022, SCL will have the option to elect to pay cash interest at 5% per annum or payment-in-kind interest at 6% per annum by adding the amount of such interest to the then-outstanding principal amount of the loan, following which only cash interest at 5% per annum will be payable. This loan is unsecured, subordinated to all third party unsecured indebtedness and other obligations of SCL and its subsidiaries and is eliminated in consolidation.
Note 20 — Segment Information
The Company’s principal operating and developmental activities occur in two geographic areas: Macao and Singapore. The Company reviews the results of operations and construction and development activities for each of its operating segments: The Venetian Macao; The Londoner Macao; The Parisian Macao; The Plaza Macao and Four Seasons Macao; Sands Macao; and Marina Bay Sands. The Company also reviews construction and development activities for its primary projects under development, in addition to its reportable segments noted above, which include the renovation and expansion of the Company's MICE, entertainment and retail product in Macao and the MBS Expansion Project. The Company has included Ferry Operations and Other (comprised primarily of the Company’s ferry operations and various other operations that are ancillary to its properties in Macao) and Corporate and Other to reconcile to the consolidated results of operations and financial condition. The operations that comprised the Company’s former Las Vegas Operating Properties reportable business segment were classified as a discontinued operation and the information below as of and for the years ended December 31, 2022, 2021 and 2020, excludes these results.
The Company's segment information as of and for the years ended December 31, 2022, 2021 and 2020, is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Casino | | Rooms | | Food and Beverage | | Mall | | Convention, Retail and Other | | Net Revenues |
| | | | | | | | | | | |
| (In millions) |
| Year Ended December 31, 2022 | | | | | | | | | | | |
| Macao: | | | | | | | | | | | |
| The Venetian Macao | $ | 438 | | | $ | 55 | | | $ | 17 | | | $ | 155 | | | $ | 17 | | | $ | 682 | |
| The Londoner Macao | 194 | | | 61 | | | 26 | | | 47 | | | 22 | | | 350 | |
| The Parisian Macao | 116 | | | 33 | | | 10 | | | 25 | | | 4 | | | 188 | |
| The Plaza Macao and Four Seasons Macao | 146 | | | 29 | | | 10 | | | 127 | | | 1 | | | 313 | |
| Sands Macao | 53 | | | 6 | | | 4 | | | 1 | | | 1 | | | 65 | |
| Ferry Operations and Other | — | | | — | | | — | | | — | | | 29 | | | 29 | |
| 947 | | | 184 | | | 67 | | | 355 | | | 74 | | | 1,627 | |
| Marina Bay Sands | 1,680 | | | 285 | | | 234 | | | 226 | | | 91 | | | 2,516 | |
| Intercompany royalties | — | | | — | | | — | | | — | | | 107 | | | 107 | |
Intercompany eliminations(1) | — | | | — | | | — | | | (1) | | | (139) | | | (140) | |
| Total net revenues | $ | 2,627 | | | $ | 469 | | | $ | 301 | | | $ | 580 | | | $ | 133 | | | $ | 4,110 | |
| | | | | | | | | | | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Casino | | Rooms | | Food and Beverage | | Mall | | Convention, Retail and Other | | Net Revenues |
| | | | | | | | | | | |
| (In millions) |
| | | | | | | | | | | |
| Year Ended December 31, 2021 | |
| Macao: | | | | | | | | | | | |
| The Venetian Macao | $ | 944 | | | $ | 77 | | | $ | 24 | | | $ | 195 | | | $ | 16 | | | $ | 1,256 | |
| The Londoner Macao | 396 | | | 90 | | | 30 | | | 56 | | | 16 | | | 588 | |
| The Parisian Macao | 244 | | | 54 | | | 17 | | | 39 | | | 3 | | | 357 | |
| The Plaza Macao and Four Seasons Macao | 298 | | | 45 | | | 17 | | | 184 | | | 2 | | | 546 | |
| Sands Macao | 105 | | | 10 | | | 5 | | | 1 | | | 1 | | | 122 | |
| Ferry Operations and Other | — | | | — | | | — | | | — | | | 28 | | | 28 | |
| 1,987 | | | 276 | | | 93 | | | 475 | | | 66 | | | 2,897 | |
| Marina Bay Sands | 905 | | | 139 | | | 106 | | | 176 | | | 44 | | | 1,370 | |
| Intercompany royalties | — | | | — | | | — | | | — | | | 83 | | | 83 | |
Intercompany eliminations(1) | — | | | — | | | — | | | (2) | | | (114) | | | (116) | |
| Total net revenues | $ | 2,892 | | | $ | 415 | | | $ | 199 | | | $ | 649 | | | $ | 79 | | | $ | 4,234 | |
| | | | | | | | | | | |
| Year Ended December 31, 2020 | |
| Macao: | | | | | | | | | | | |
| The Venetian Macao | $ | 531 | | | $ | 46 | | | $ | 14 | | | $ | 126 | | | $ | 21 | | | $ | 738 | |
| The Londoner Macao | 192 | | | 42 | | | 17 | | | 38 | | | 8 | | | 297 | |
| The Parisian Macao | 180 | | | 33 | | | 14 | | | 27 | | | 5 | | | 259 | |
| The Plaza Macao and Four Seasons Macao | 159 | | | 17 | | | 9 | | | 79 | | | 1 | | | 265 | |
| Sands Macao | 107 | | | 6 | | | 5 | | | 1 | | | 1 | | | 120 | |
| Ferry Operations and Other | — | | | — | | | — | | | — | | | 28 | | | 28 | |
| 1,169 | | | 144 | | | 59 | | | 271 | | | 64 | | | 1,707 | |
| Marina Bay Sands | 872 | | | 136 | | | 97 | | | 112 | | | 44 | | | 1,261 | |
| | | | | | | | | | | |
| Intercompany royalties | — | | | — | | | — | | | — | | | 66 | | | 66 | |
Intercompany eliminations(1) | — | | | — | | | — | | | (2) | | | (92) | | | (94) | |
| Total net revenues | $ | 2,041 | | | $ | 280 | | | $ | 156 | | | $ | 381 | | | $ | 82 | | | $ | 2,940 | |
| | | | | | | | | | | |
_________________________
(1)Intercompany eliminations include royalties and other intercompany services.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Intersegment Revenues | | | | | |
| Macao: | | | | | |
| The Venetian Macao | $ | 7 | | | $ | 4 | | | $ | 4 | |
| The Londoner Macao | — | | | 1 | | | 1 | |
| | | | | |
| Ferry Operations and Other | 23 | | | 22 | | | 19 | |
| 30 | | | 27 | | | 24 | |
| Marina Bay Sands | 3 | | | 6 | | | 4 | |
| Intercompany royalties | 107 | | | 83 | | | 66 | |
| Total intersegment revenues | $ | 140 | | | $ | 116 | | | $ | 94 | |
| | | | | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Adjusted Property EBITDA | | | | | |
| Macao: | | | | | |
| The Venetian Macao | $ | (25) | | | $ | 297 | | | $ | (53) | |
| The Londoner Macao | (189) | | | (84) | | | (184) | |
| The Parisian Macao | (103) | | | (17) | | | (131) | |
| The Plaza Macao and Four Seasons Macao | 81 | | | 219 | | | 33 | |
| Sands Macao | (81) | | | (69) | | | (76) | |
| Ferry Operations and Other | (7) | | | (8) | | | (20) | |
| (324) | | | 338 | | | (431) | |
| Marina Bay Sands | 1,056 | | | 448 | | | 383 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Consolidated adjusted property EBITDA(1) | 732 | | | 786 | | | (48) | |
| Other Operating Costs and Expenses | | | | | |
Stock-based compensation(2) | (33) | | | (12) | | | (15) | |
| Corporate | (235) | | | (211) | | | (168) | |
| Pre-opening | (13) | | | (19) | | | (19) | |
| Development | (143) | | | (109) | | | (18) | |
| Depreciation and amortization | (1,036) | | | (1,041) | | | (997) | |
| Amortization of leasehold interests in land | (55) | | | (56) | | | (55) | |
| Loss on disposal or impairment of assets | (9) | | | (27) | | | (73) | |
| Operating loss | (792) | | | (689) | | | (1,393) | |
| Other Non-Operating Costs and Expenses | | | | | |
| Interest income | 116 | | | 4 | | | 21 | |
| Interest expense, net of amounts capitalized | (702) | | | (621) | | | (523) | |
| Other income (expense) | (9) | | | (31) | | | 19 | |
| | | | | |
| Loss on modification or early retirement of debt | — | | | (137) | | | — | |
| Income tax (expense) benefit | (154) | | | 5 | | | (24) | |
| Net loss from continuing operations | $ | (1,541) | | | $ | (1,469) | | | $ | (1,900) | |
_________________________
(1)Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is net income (loss) from continuing operations before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal or impairment of assets, interest, other income or expense, gain or loss on modification or early retirement of debt and income taxes. Consolidated adjusted property EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. In particular, management utilizes consolidated adjusted property EBITDA to compare the operating profitability of its operations with those of its competitors, as well as a basis for determining certain incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. The Company has significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal repayments and income taxes, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, consolidated
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
adjusted property EBITDA as presented by the Company may not be directly comparable to similarly titled measures presented by other companies.
(2)During the years ended December 31, 2022, 2021 and 2020, the Company recorded stock-based compensation expense of $70 million, $27 million and $27 million, respectively, of which $37 million, $15 million and $12 million, respectively, was included in corporate expense in the accompanying consolidated statements of operations.
| | | | | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Capital Expenditures | | | | | |
| Corporate and Other | $ | 60 | | | $ | 27 | | | $ | 5 | |
| Macao: | | | | | |
| The Venetian Macao | 52 | | | 71 | | | 140 | |
| The Londoner Macao | 175 | | | 551 | | | 739 | |
| The Parisian Macao | 3 | | | 4 | | | 11 | |
| The Plaza Macao and Four Seasons Macao | 9 | | | 19 | | | 157 | |
| Sands Macao | 4 | | | 7 | | | 9 | |
| Ferry Operations and Other | — | | | 1 | | | 2 | |
| 243 | | | 653 | | | 1,058 | |
| Marina Bay Sands | 348 | | | 148 | | | 164 | |
| | | | | |
| Total capital expenditures | $ | 651 | | | $ | 828 | | | $ | 1,227 | |
| | | | | | | | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
| Total Assets | | | | | |
| Corporate and Other | $ | 5,422 | | | $ | 1,357 | | | $ | 1,465 | |
| Macao: | | | | | |
| The Venetian Macao | 2,135 | | | 2,087 | | | 2,446 | |
| The Londoner Macao | 4,489 | | | 4,494 | | | 4,299 | |
| The Parisian Macao | 1,828 | | | 1,962 | | | 2,119 | |
| The Plaza Macao and Four Seasons Macao | 1,020 | | | 1,145 | | | 1,203 | |
| Sands Macao | 208 | | | 253 | | | 320 | |
| Ferry Operations and Other | 870 | | | 132 | | | 141 | |
| | | | | |
| 10,550 | | | 10,073 | | | 10,528 | |
| Marina Bay Sands | 6,067 | | | 5,326 | | | 5,592 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total assets | $ | 22,039 | | | $ | 16,756 | | | $ | 17,585 | |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
| | | | | | | | | | | | | | | | | |
| December 31, |
| 2022 | | 2021 | | 2020 |
| | | | | |
| (In millions) |
Total Long-Lived Assets(1) | | | | | |
| Corporate and Other | $ | 203 | | | $ | 176 | | | $ | 186 | |
| Macao: | | | | | |
| The Venetian Macao | 1,415 | | | 1,555 | | | 1,705 | |
| The Londoner Macao | 4,085 | | | 4,317 | | | 4,163 | |
| The Parisian Macao | 1,789 | | | 1,915 | | | 2,067 | |
| The Plaza Macao and Four Seasons Macao | 975 | | | 1,055 | | | 1,135 | |
| Sands Macao | 180 | | | 197 | | | 218 | |
| Ferry Operations and Other | 41 | | | 60 | | | 73 | |
| | | | | |
| 8,485 | | | 9,099 | | | 9,361 | |
| Marina Bay Sands | 4,891 | | | 4,741 | | | 4,989 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total long-lived assets | $ | 13,579 | | | $ | 14,016 | | | $ | 14,536 | |
_________________________
(1)Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and leasehold interests in land, net of accumulated amortization.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 21 — Selected Quarterly Financial Results (Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Quarter |
| First(1) | | Second | | Third | | Fourth | | Total |
| | | | | | | | | |
| (In millions, except per share data) |
| 2022 | | | | | | | | | |
| Net revenues | $ | 943 | | | $ | 1,045 | | | $ | 1,005 | | | $ | 1,117 | | | $ | 4,110 | |
| Operating loss | (302) | | | (147) | | | (177) | | | (166) | | | (792) | |
| Net loss from continuing operations | (478) | | | (414) | | | (380) | | | (269) | | | (1,541) | |
| Income (loss) from discontinued operations, net of tax | 2,907 | | | (3) | | | (1) | | | (5) | | | 2,898 | |
| Net income (loss) | 2,429 | | | (417) | | | (381) | | | (274) | | | 1,357 | |
| Net income (loss) attributable to Las Vegas Sands Corp. | 2,530 | | | (290) | | | (239) | | | (169) | | | 1,832 | |
| Earnings (loss) per share - basic and diluted: | | | | | | | | | |
| Loss from continuing operations | $ | (0.49) | | | $ | (0.38) | | | $ | (0.31) | | | $ | (0.21) | | | $ | (1.40) | |
| Income (loss) from discontinued operations, net of tax | 3.80 | | | — | | | — | | | (0.01) | | | 3.80 | |
| Net income (loss) attributable to Las Vegas Sands Corp. | $ | 3.31 | | | $ | (0.38) | | | $ | (0.31) | | | $ | (0.22) | | | $ | 2.40 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| 2021 | | | | | | | | | |
| Net revenues | $ | 1,196 | | | $ | 1,173 | | | $ | 857 | | | $ | 1,008 | | | $ | 4,234 | |
| Operating loss | (96) | | | (139) | | | (316) | | | (138) | | | (689) | |
| Net loss from continuing operations | (280) | | | (280) | | | (594) | | | (315) | | | (1,469) | |
| Income (loss) from discontinued operations, net of tax | (62) | | | 38 | | | 99 | | | 118 | | | 193 | |
| Net loss | (342) | | | (242) | | | (495) | | | (197) | | | (1,276) | |
| Net loss attributable to Las Vegas Sands Corp. | (278) | | | (192) | | | (368) | | | (123) | | | (961) | |
| Earnings (loss) per share - basic and diluted: | | | | | | | | | |
| Loss from continuing operations | $ | (0.28) | | | $ | (0.30) | | | $ | (0.61) | | | $ | (0.32) | | | $ | (1.51) | |
| Income (loss) from discontinued operations, net of tax | (0.08) | | | 0.05 | | | 0.13 | | | 0.15 | | | 0.25 | |
| Net loss attributable to Las Vegas Sands Corp. | $ | (0.36) | | | $ | (0.25) | | | $ | (0.48) | | | $ | (0.17) | | | $ | (1.26) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
_________________________
(1) During the first quarter of 2022, the Company closed the sale of the Las Vegas Operations and recorded a gain on the sale of $2.86 billion, net of tax. The Las Vegas Operations has been disclosed as a discontinued operation for all periods presented.
Because earnings per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters may not equal the total earnings per share amounts for the respective year.