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

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

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."

Operations

We view each of our Integrated Resorts as an operating segment. Our operating segments in Macao consist of The Venetian Macao; Sands Cotai Central; The Parisian Macao; The Plaza Macao and Four Seasons Hotel Macao; and the Sands Macao. Our operating segment in Singapore is Marina Bay Sands. Our operating segments in the U.S. consist of the Las Vegas Operating Properties, which includes The Venetian Resort Las Vegas and the Sands Expo Center, and Sands Bethlehem.

On March 8, 2018, we entered into a purchase and sale agreement under which PCI Gaming Authority, an unincorporated, chartered instrumentality of the Poarch Band of Creek Indians, will acquire Sands Bethlehem for a total enterprise value of $1.30 billion. The closing of the transaction is subject to regulatory review and other closing conditions.

Revenue Recognition

We adopted the new revenue recognition standard on January 1, 2018, on a full retrospective basis. Revenue from contracts with customers primarily consists of casino wagers, room sales, food and beverage transactions, rental income from our 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 our loyalty programs.

When a patron earns points under our loyalty programs, the estimated fair value of the points earned is deferred until redemption. Once redeemed, revenue is recognized in its respective revenue type. Similarly, revenue is also allocated to its respective revenue type for complimentaries provided at management's discretion. After the aforementioned allocations, the residual amount is recorded to casino revenue.

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 hotel, convention space and food and beverage services 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 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 until the threshold is met.

Key Operating Revenue Measurements

Operating revenues at The Venetian Macao, Sands Cotai Central, The Parisian Macao, The Plaza Macao and Four Seasons Hotel Macao, Marina Bay Sands and our Las Vegas Operating Properties are dependent upon the volume of customers who stay at the hotel, which affects the price that can be charged for hotel rooms and our gaming volume. Operating revenues at Sands Macao and Sands Bethlehem are principally driven by casino customers who visit the properties on a daily basis.

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 ("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 3.0% to 3.3% in Macao and 2.7% to 3.0% in Singapore. As of January 1, 2018, Non-Rolling Chip drop at Marina Bay Sands includes chips purchased and exchanged at the cage, consistent with our Macao properties. Prior period amounts have been updated to conform to

the current presentation. 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, 15.3% and 16.0%, respectively, of our table games play was conducted on a credit basis for the year ended December 31, 2018.

Casino revenue measurements for the U.S.: The volume measurements in the U.S. are slot handle, as previously described, and table games drop, which is the total amount of cash and net markers issued deposited in the table drop box. We view table games win as a percentage of drop and slot hold as a percentage of handle. 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. Based upon our mix of table games, our table games are expected to produce a win percentage of 18% to 26% for Baccarat and 16% to 24% for non-Baccarat. Actual win percentage may vary from our expected win percentage and historical win and hold percentages. Similar to Macao and Singapore, slot machine play is generally conducted on a cash basis. Approximately 65.8% of our table games play at our Las Vegas Operating Properties, for the year ended December 31, 2018, was conducted on a credit basis, while our table games play in Pennsylvania is primarily 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. 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 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, 2018 Compared to the Year Ended December 31, 2017

Summary Financial Results

Net revenues and operating income for the year ended December 31, 2018, increased 7.9% to $13.73 billion and 8.3% to $3.75 billion compared to $12.73 billion and $3.46 billion, respectively, for the year ended December 31, 2017. The increases were primarily driven by stronger operating performance in Macao due to a 14% increase in revenues. Net income decreased 9.6% to $2.95 billion for the year ended December 31, 2018, compared to $3.26 billion for the year ended December 31, 2017. The decrease was primarily driven by an increase in tax expense due to a nonrecurring non-cash income tax benefit of $526 million related to U.S. tax reform (as discussed below), partially offset by the increase in operating income. Adjusted property EBITDA for the year ended December 31, 2018, increased 7.7% to $5.28 billion, compared to $4.90 billion for the year ended December 31, 2017.

Operating Revenues

Our net revenues consisted of the following:

Year Ended December 31,
20182017Percent Change
(Dollars in millions)
Casino$9,819$9,0868.1%
Rooms1,7331,5869.3%
Food and beverage8658284.5%
Mall6906516.0%
Convention, retail and other6225777.8%
Total net revenues$13,729$12,7287.9%

Consolidated net revenues were $13.73 billion for the year ended December 31, 2018, an increase of $1.0 billion compared to $12.73 billion for the year ended December 31, 2017. The increase was primarily driven by a $1.08 billion increase from our Macao operations, primarily due to increased casino revenues. The increase was partially offset by a $65 million decrease at Marina Bay Sands, primarily due to decreased casino revenues.

Casino revenues increased $733 million compared to the year ended December 31, 2017. The increase was primarily attributable to a $936 million increase at our Macao operating properties, driven by increases in Non-Rolling Chip drop and Rolling Chip volume. The increase was partially offset by a $155 million decrease at Marina Bay Sands, driven by a decrease in Rolling Chip volume. The following table summarizes the results of our casino activity:

Year Ended December 31,
20182017Change
(Dollars in millions)
Macao Operations:
The Venetian Macao
Total casino revenues$2,829$2,36219.8%
Non-Rolling Chip drop$9,068$7,39922.6%
Non-Rolling Chip win percentage24.7%25.2%(0.5)pts
Rolling Chip volume$32,148$26,23922.5%
Rolling Chip win percentage3.55%3.34%0.21pts
Slot handle$3,303$2,92912.8%
Slot hold percentage4.6%5.3%(0.7)pts
Sands Cotai Central
Total casino revenues$1,622$1,43313.2%
Non-Rolling Chip drop$6,722$5,99612.1%
Non-Rolling Chip win percentage21.4%20.7%0.7pts
Rolling Chip volume$10,439$10,621(1.7)%
Rolling Chip win percentage3.59%3.09%0.50pts
Slot handle$4,811$4,8020.2%
Slot hold percentage3.9%4.1%(0.2)pts
The Parisian Macao
Total casino revenues$1,265$1,12012.9%
Non-Rolling Chip drop$4,323$3,9738.8%
Non-Rolling Chip win percentage21.1%19.6%1.5pts
Rolling Chip volume$19,049$18,2754.2%
Rolling Chip win percentage3.19%3.14%0.05pts
Slot handle$4,837$3,72929.7%
Slot hold percentage2.9%3.3%(0.4)pts
Year Ended December 31,
20182017Change
(Dollars in millions)
The Plaza Macao and Four Seasons Hotel Macao
Total casino revenues$502$39128.4%
Non-Rolling Chip drop$1,365$1,2846.3%
Non-Rolling Chip win percentage24.9%22.7%2.2pts
Rolling Chip volume$13,100$10,04030.5%
Rolling Chip win percentage2.95%2.59%0.36pts
Slot handle$565$43629.6%
Slot hold percentage6.1%7.4%(1.3)pts
Sands Macao
Total casino revenues$598$5744.2%
Non-Rolling Chip drop$2,565$2,4574.4%
Non-Rolling Chip win percentage18.4%19.0%(0.6)pts
Rolling Chip volume$5,705$4,30932.4%
Rolling Chip win percentage3.12%2.79%0.33pts
Slot handle$2,569$2,4206.2%
Slot hold percentage3.1%3.3%(0.2)pts
Singapore Operations:
Marina Bay Sands
Total casino revenues$2,178$2,333(6.6)%
Non-Rolling Chip drop(1)$5,352$5,2701.6%
Non-Rolling Chip win percentage(1)20.0%20.2%(0.2)pts
Rolling Chip volume$27,164$34,994(22.4)%
Rolling Chip win percentage3.50%3.52%(0.02)pts
Slot handle$14,578$14,1533.0%
Slot hold percentage4.5%4.4%0.1pts
U.S. Operations:
Las Vegas Operating Properties
Total casino revenues$357$380(6.1)%
Table games drop$1,866$1,56719.1%
Table games win percentage15.0%19.0%(4.0)pts
Slot handle$2,787$2,6037.1%
Slot hold percentage8.3%8.5%(0.2)pts
Sands Bethlehem
Total casino revenues$468$493(5.1)%
Table games drop$1,134$1,1231.0%
Table games win percentage17.9%20.1%(2.2)pts
Slot handle$4,795$4,7151.7%
Slot hold percentage6.4%6.5%(0.1)pts
(1)As of January 1, 2018, Non-Rolling Chip drop includes chips purchased and exchanged at the cage. Prior period amounts have been updated to conform to the current period presentation.

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 $147 million compared to the year ended December 31, 2017. The increase was primarily due to increases of $83 million, $35 million and $29 million at our Macao operating properties, Marina Bay Sands and

our Las Vegas Operating Properties, respectively, driven by increased occupancy and average daily room rates. During the year ended December 31, 2018, there were approximately 18% fewer average rooms available at The Parisian Macao compared to the year ended December 31, 2017, due to room renovations. The following table summarizes the results of our room activity:

Year Ended December 31,
20182017Change
(Room revenues in millions)
Macao Operations:
The Venetian Macao
Total room revenues$223$17924.6%
Occupancy rate95.9%91.4%4.5pts
Average daily room rate (ADR)$225$2145.1%
Revenue per available room (RevPAR)$216$19610.2%
Sands Cotai Central
Total room revenues$331$29113.7%
Occupancy rate94.8%86.6%8.2pts
Average daily room rate (ADR)$157$1495.4%
Revenue per available room (RevPAR)$149$12915.5%
The Parisian Macao
Total room revenues$124$128(3.1)%
Occupancy rate96.3%90.4%5.9pts
Average daily room rate (ADR)$155$1419.9%
Revenue per available room (RevPAR)$149$12816.4%
The Plaza Macao and Four Seasons Hotel Macao
Total room revenues$39$3414.7%
Occupancy rate88.7%82.1%6.6pts
Average daily room rate (ADR)$323$343(5.8)%
Revenue per available room (RevPAR)$286$2811.8%
Sands Macao
Total room revenues$17$19(10.5)%
Occupancy rate98.6%97.7%0.9pts
Average daily room rate (ADR)$164$188(12.8)%
Revenue per available room (RevPAR)$162$184(12.0)%
Singapore Operations:
Marina Bay Sands
Total room revenues$393$3589.8%
Occupancy rate96.7%95.5%1.2pts
Average daily room rate (ADR)$441$4253.8%
Revenue per available room (RevPAR)$426$4064.9%
U.S. Operations:
Las Vegas Operating Properties
Total room revenues$590$5615.2%
Occupancy rate94.6%93.9%0.7pts
Average daily room rate (ADR)$243$2382.1%
Revenue per available room (RevPAR)$230$2233.1%
Sands Bethlehem
Total room revenues$16$16—
Occupancy rate92.8%93.2%(0.4)pts
Average daily room rate (ADR)$163$1611.2%
Revenue per available room (RevPAR)$151$1500.7%

Food and beverage revenues increased $37 million compared to the year ended December 31, 2017. The increase was primarily due to increases of $28 million at Marina Bay Sands, driven by the opening of new restaurants, and $7 million at The Venetian Macao, driven by an increase in banquet operations.

Mall revenues increased $39 million compared to the year ended December 31, 2017. The increase was primarily due to increases of $14 million, $13 million and $12 million at the Shoppes at Four Seasons, the Shoppes at Venetian and The Shoppes at Marina Bay Sands, respectively, driven by overage rents as well as additional retail space available at Sands Cotai Central. 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,
20182017Change
(Mall revenues in millions)
Macao Operations:
Shoppes at Venetian
Total mall revenues$233$2205.9%
Mall gross leasable area (in square feet)813,376786,4293.4%
Occupancy90.3%97.2%(6.9)pts
Base rent per square foot$263$2476.5%
Tenant sales per square foot$1,746$1,38925.7%
Shoppes at Cotai Central(1)
Total mall revenues$69$639.5%
Mall gross leasable area (in square feet)519,681424,30922.5%
Occupancy91.5%93.5%(2.0)pts
Base rent per square foot$108$113(4.4)%
Tenant sales per square foot$892$74419.9%
Shoppes at Parisian
Total mall revenues$57$66(13.6)%
Mall gross leasable area (in square feet)295,915300,218(1.4)%
Occupancy89.8%93.4%(3.6)pts
Base rent per square foot$156$218(28.4)%
Tenant sales per square foot$649$57413.1%
Shoppes at Four Seasons
Total mall revenues$145$13110.7%
Mall gross leasable area (in square feet)241,548257,859(6.3)%
Occupancy99.0%99.6%(0.6)pts
Base rent per square foot$460$4560.9%
Tenant sales per square foot$4,373$3,50024.9%
Singapore Operations:
The Shoppes at Marina Bay Sands
Total mall revenues$179$1677.2%
Mall gross leasable area (in square feet)606,362604,4490.3%
Occupancy95.4%96.4%(1.0)pts
Base rent per square foot$258$2445.7%
Tenant sales per square foot$1,898$1,59019.4%
Note:This table excludes the results of our mall operations at Sands Macao and Sands Bethlehem.
(1)The Shoppes at Cotai Central will feature up to approximately 600,000 square feet of gross leasable area upon completion of all phases of Sands Cotai Central's renovation, rebranding and expansion to The Londoner Macao.

Convention, retail and other revenues increased $45 million compared to the year ended December 31, 2017. The increase was primarily due to increases of $20 million and $15 million at our Las Vegas Operating Properties and at Marina Bay Sands, respectively, driven by an increase in convention business. The increase was also attributable to the recovery of business interruption insurance proceeds in Macao related to Typhoon Hato and Typhoon Mangkhut.

Operating Expenses

Our operating expenses consisted of the following:

Year Ended December 31,
20182017Percent Change
(Dollars in millions)
Casino$5,448$4,87611.7%
Rooms4384116.6%
Food and beverage6736405.2%
Mall79772.6%
Convention, retail and other3363253.4%
Provision for doubtful accounts596(94.8)%
General and administrative1,4831,4174.7%
Corporate20217316.8%
Pre-opening68(25.0)%
Development1213(7.7)%
Depreciation and amortization1,1111,171(5.1)%
Amortization of leasehold interests in land3537(5.4)%
Loss on disposal or impairment of assets15020650.0%
Total operating expenses$9,978$9,2647.7%

Operating expenses were $9.98 billion for the year ended December 31, 2018, an increase of $714 million compared to $9.26 billion for the year ended December 31, 2017. The increase in operating expenses was driven by an increase in casino expense at our Macao operating properties due to increased casino revenues and visitation.

Casino expenses increased $572 million compared to the year ended December 31, 2017. The increase was primarily attributable to a $566 million increase at our Macao operating properties, driven by an increase in gaming taxes due to increased casino revenues.

The provision for doubtful accounts was $5 million for the year ended December 31, 2018, compared to $96 million for the year ended December 31, 2017. The decrease resulted from increased collections of previously reserved customer balances during year ended December 31, 2018, as compared to the prior year period, and continued improvement in the quality of casino credit currently being extended. The amount of this provision can vary over short

periods of time because of factors specific to the customers who owe us money from gaming activities at any given time. We believe the amount of our provision for doubtful accounts 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 $66 million compared to the year ended December 31, 2017. The increase was primarily due to a $35 million increase in team member costs across all our properties, a $22 million increase at Marina Bay Sands driven by an increase in property taxes and a $15 million increase at our Las Vegas Operating Properties due to increased marketing and advertising efforts and property operations costs.

Corporate expenses increased $29 million compared to the year ended December 31, 2017. The increase was primarily due to political contributions made during the year ended December 31, 2018.

Depreciation and amortization decreased $60 million compared to the year ended December 31, 2017. The decrease was primarily attributable to a $127 million decrease resulting from a change in the estimated useful lives of certain property and equipment, partially offset by a $73 million increase due to the acceleration of depreciation on certain assets to be disposed in conjunction with The Londoner Macao project.

Loss on disposal or impairment of assets was $150 million for the year ended December 31, 2018, compared to $20 million for the year ended December 31, 2017. The loss for the year ended December 31, 2018, consisted primarily of a $128 million write-off of costs related to the Four Seasons Tower Suites Macao project.

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 19 — Segment Information" for discussion of our operating segments and a reconciliation of consolidated adjusted property EBITDA to net income):

Year Ended December 31,
20182017Percent Change
(Dollars in millions)
Macao:
The Venetian Macao$1,378$1,13321.6%
Sands Cotai Central75963319.9%
The Parisian Macao48441317.2%
The Plaza Macao and Four Seasons Hotel Macao26223312.4%
Sands Macao1781742.3%
Ferry Operations and Other1821(14.3)%
3,0792,60718.1%
Marina Bay Sands1,6901,755(3.7)%
United States:
Las Vegas Operating Properties3943910.8%
Sands Bethlehem116147(21.1)%
510538(5.2)%
Consolidated adjusted property EBITDA(1)$5,279$4,9007.7%
(1)Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is net income 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.

Adjusted property EBITDA at our Integrated Resorts is primarily driven by our casino, room and mall operations, as previously discussed.

Adjusted property EBITDA at our Macao operations increased $472 million compared to the year ended December 31, 2017. As previously described, the increase was primarily due to increased casino revenues, driven by increases in Non-Rolling Chip drop and Rolling Chip volume, increased room revenues, driven by increases in occupancy and ADR, as well as increased mall revenues, driven by overage rents.

Adjusted property EBITDA at Marina Bay Sands decreased $65 million compared to the year ended December 31, 2017. As previously described, the decrease was primarily due to decreased casino revenues, driven by a decrease in Rolling Chip volume, partially offset by an increase in non-gaming operations and a decrease in the provision for doubtful accounts, driven by collections on previously reserved customer balances.

Adjusted property EBITDA at Sands Bethlehem decreased $31 million compared to the year ended December 31, 2017. The decrease was primarily due to decreased casino revenues, driven by a decrease in table games win percentage.

Interest Expense

The following table summarizes information related to interest expense:

Year Ended December 31,
20182017
(Dollars in millions)
Interest cost (which includes the amortization of deferred financing costs and original issue discounts)$434$314
Add — imputed interest on deferred proceeds from sale of The Shoppes at The Palazzo1515
Less — capitalized interest(3)(2)
Interest expense, net$446$327
Cash paid for interest$329$271
Weighted average total debt balance$10,992$9,909
Weighted average interest rate4.0%3.2%

Interest cost increased $120 million compared to the year ended December 31, 2017, resulting primarily from increases in our weighted average interest rate and weighted average total debt balance. The increase in our weighted average interest rate was due to the issuance of the SCL Senior Notes and increases in interest rates globally. Our weighted average total debt balance increased in connection with the issuance of the SCL Senior Notes and additional borrowings on our U.S. Credit Facility (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Long-term Debt).

Other Factors Affecting Earnings

Other income was $26 million for the year ended December 31, 2018, compared to other expense of $94 million during the year ended December 31, 2017. Other income during the year ended December 31, 2018, was primarily attributable to $25 million of foreign currency transaction gains, driven by Singapore dollar denominated intercompany

debt reported in U.S. dollars, resulting from the appreciation of the U.S. dollar versus the Singapore dollar during the period, and the U.S. dollar denominated debt held by SCL.

The loss on modification or early retirement of debt was $64 million for the year ended December 31, 2018, primarily due to the write-off of unamortized deferred financing fees resulting from the early retirement of our 2016 VML Credit Facility in connection with the issuance of the SCL Senior Notes (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Long-term Debt — 2016 VML Credit Facility").

Our effective income tax rate was 11.3% for the year ended December 31, 2018, compared to (6.8)% for the year ended December 31, 2017. U.S. tax reform made significant changes to U.S. income tax laws including lowering the U.S. corporate tax rate to 21% effective beginning in 2018 and transitioning from a worldwide tax system to a territorial tax system resulting in dividends from our foreign subsidiaries not being subject to U.S. income tax and creating a one-time tax on previously unremitted earnings of foreign subsidiaries. The effective tax rate for 2018 included a one-time discrete expense of $57 million resulting from recently issued guidance by the Internal Revenue Service related to certain international provisions of the Act. Our effective tax rate for 2018 would have been 9.6% without the one-time discrete expense. The discrete tax expense recorded during 2018 relates to an increase in the valuation allowance recorded on certain U.S. foreign tax credit assets as we determined these assets were no longer "more-likely-than-not" realizable due to concluding how the foreign tax credits allowed against the U.S. tax liability, would be utilized. The effective tax rate for 2017 included a one-time discrete benefit of $526 million recorded as a result of U.S. tax reform. Our effective tax rate for 2017 would have been 10.4% without the one-time discrete benefit.

The effective income tax rates reflect a 17% statutory tax rate on our Singapore operations and a zero percent tax rate on our Macao gaming operations due to our income tax exemption in Macao. In August 2018, our income tax exemption in Macao was extended through June 26, 2022, the date our subconcession agreement expires. We have recorded a valuation allowance related to certain deferred tax assets previously generated by operations in the U.S. and certain foreign jurisdictions; however, to the extent the financial results of these operations improve or we determine related administrative guidance, notices, implementation regulations, potential legislative amendments or interpretations of the Act require changes to positions we have taken and it becomes "more-likely-than-not" these deferred tax assets or a portion thereof are realizable, we will reduce the valuation allowances in the period such determination is made, as appropriate.

The net income attributable to our noncontrolling interests was $538 million for the year ended December 31, 2018, compared to $455 million for the year ended December 31, 2017. These amounts are primarily related to the noncontrolling interest of SCL and reflect the increased net income generated by SCL in 2018.

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Operating Revenues

Our net revenues consisted of the following:

Year Ended December 31,
20172016Percent Change
(Dollars in millions)
Casino$9,086$7,88615.2%
Rooms1,5861,4995.8%
Food and beverage82874710.8%
Mall65159110.2%
Convention, retail and other5775485.3%
Total net revenues$12,728$11,27112.9%

Consolidated net revenues were $12.73 billion for the year ended December 31, 2017, an increase of $1.46 billion compared to $11.27 billion for the year ended December 31, 2016. The increase was primarily due to increases of $994 million at The Parisian Macao, which opened in September 2016, and $343 million at Marina Bay Sands, primarily due to increased casino revenues.

Casino revenues increased $1.20 billion compared to the year ended December 31, 2016. The increase was due to increases of $805 million at The Parisian Macao, which opened in September 2016, and $368 million at Marina Bay Sands, driven by increases in Rolling Chip win percentage and volume. The following table summarizes the results of our casino activity:

Year Ended December 31,
20172016Change
(Dollars in millions)
Macao Operations:
The Venetian Macao
Total casino revenues$2,362$2,2863.3%
Non-Rolling Chip drop$7,399$6,8567.9%
Non-Rolling Chip win percentage25.2%25.2%—
Rolling Chip volume$26,239$28,851(9.1)%
Rolling Chip win percentage3.34%3.23%0.11pts
Slot handle$2,929$3,790(22.7)%
Slot hold percentage5.3%4.5%0.8pts
Sands Cotai Central
Total casino revenues$1,433$1,471(2.6)%
Non-Rolling Chip drop$5,996$5,9920.1%
Non-Rolling Chip win percentage20.7%20.2%0.5pts
Rolling Chip volume$10,621$12,329(13.9)%
Rolling Chip win percentage3.09%3.41%(0.32)pts
Slot handle$4,802$5,794(17.1)%
Slot hold percentage4.1%3.6%0.5pts
The Parisian Macao
Total casino revenues$1,120$315255.6%
Non-Rolling Chip drop$3,973$1,085266.2%
Non-Rolling Chip win percentage19.6%18.5%1.1pts
Rolling Chip volume$18,275$4,061350.0%
Rolling Chip win percentage3.14%4.24%(1.10)pts
Slot handle$3,729$974282.9%
Slot hold percentage3.3%4.5%(1.2)pts
The Plaza Macao and Four Seasons Hotel Macao
Total casino revenues$391$392(0.3)%
Non-Rolling Chip drop$1,284$1,11415.3%
Non-Rolling Chip win percentage22.7%21.9%0.8pts
Rolling Chip volume$10,040$9,00411.5%
Rolling Chip win percentage2.59%3.09%(0.50)pts
Slot handle$436$4145.3%
Slot hold percentage7.4%6.2%1.2pts
Sands Macao
Total casino revenues$574$614(6.5)%
Non-Rolling Chip drop$2,457$2,628(6.5)%
Non-Rolling Chip win percentage19.0%18.6%0.4pts
Rolling Chip volume$4,309$7,014(38.6)%
Rolling Chip win percentage2.79%2.48%0.31pts
Slot handle$2,420$2,583(6.3)%
Slot hold percentage3.3%3.4%(0.1)pts
Year Ended December 31,
20172016Change
(Dollars in millions)
Singapore Operations:
Marina Bay Sands
Total casino revenues$2,333$1,96518.7%
Non-Rolling Chip drop(1)$5,270$5,2310.7%
Non-Rolling Chip win percentage(1)20.2%21.1%(0.9)pts
Rolling Chip volume$34,994$31,8879.7%
Rolling Chip win percentage3.52%2.65%0.87pts
Slot handle$14,153$13,4415.3%
Slot hold percentage4.4%4.5%(0.1)pts
U.S. Operations:
Las Vegas Operating Properties
Total casino revenues$380$3595.8%
Table games drop$1,567$1,692(7.4)%
Table games win percentage19.0%17.3%1.7pts
Slot handle$2,603$2,5890.5%
Slot hold percentage8.5%8.5%—
Sands Bethlehem
Total casino revenues$493$4841.9%
Table games drop$1,123$1,124(0.1)%
Table games win percentage20.1%19.3%0.8pts
Slot handle$4,715$4,5164.4%
Slot hold percentage6.5%6.8%(0.3)pts
(1)As of January 1, 2018, Non-Rolling Chip drop includes chips purchased and exchanged at the cage. Prior period amounts have been updated to conform to the current period presentation.

Room revenues increased $87 million compared to the year ended December 31, 2016. The increase was primarily due to increases of $92 million at The Parisian Macao, which opened in September 2016, and $24 million at Sands Cotai Central, driven by increased occupancy and average daily room rates, partially offset by an $18 million decrease at Marina Bay Sands, driven by decreased occupancy and fewer rooms available due to renovations. During the year ended December 31, 2017, there were approximately 9%, 8% and 4% fewer rooms available at The Plaza Macao and Four Seasons Hotel Macao, The Venetian Macao and Marina Bay Sands, respectively, compared to the year ended December 31, 2016. The following table summarizes the results of our room activity:

Year Ended December 31,
20172016Change
(Room revenues in millions)
Macao Operations:
The Venetian Macao
Total room revenues$179$1771.1%
Occupancy rate91.4%86.0%5.4pts
Average daily room rate (ADR)$214$2082.9%
Revenue per available room (RevPAR)$196$1799.5%
Sands Cotai Central
Total room revenues$291$2679.0%
Occupancy rate86.6%82.2%4.4pts
Average daily room rate (ADR)$149$1452.8%
Revenue per available room (RevPAR)$129$1198.4%
The Parisian Macao
Total room revenues$128$36255.6%
Occupancy rate90.4%90.5%(0.1)pts
Average daily room rate (ADR)$141$1363.7%
Revenue per available room (RevPAR)$128$1234.1%
The Plaza Macao and Four Seasons Hotel Macao
Total room revenues$34$36(5.6)%
Occupancy rate82.1%75.3%6.8pts
Average daily room rate (ADR)$343$355(3.4)%
Revenue per available room (RevPAR)$281$2684.9%
Sands Macao
Total room revenues$19$20(5.0)%
Occupancy rate97.7%97.1%0.6pts
Average daily room rate (ADR)$188$199(5.5)%
Revenue per available room (RevPAR)$184$193(4.7)%
Singapore Operations:
Marina Bay Sands
Total room revenues$358$376(4.8)%
Occupancy rate95.5%97.3%(1.8)pts
Average daily room rate (ADR)$425$4181.7%
Revenue per available room (RevPAR)$406$406—
U.S. Operations:
Las Vegas Operating Properties
Total room revenues$561$572(1.9)%
Occupancy rate93.9%93.5%0.4pts
Average daily room rate (ADR)$238$240(0.8)%
Revenue per available room (RevPAR)$223$224(0.4)%
Sands Bethlehem
Total room revenues$16$156.7%
Occupancy rate93.2%94.5%(1.3)pts
Average daily room rate (ADR)$161$1600.6%
Revenue per available room (RevPAR)$150$151(0.7)%

Food and beverage revenues increased $81 million compared to the year ended December 31, 2016. The increase was primarily due to increases of $43 million at our Las Vegas Operating Properties, driven by an increase in banquet operations associated with our convention customers and $41 million at The Parisian Macao, which opened in September 2016.

Mall revenues increased $60 million compared to the year ended December 31, 2016. The increase was primarily due to a $43 million increase in revenues from the Shoppes at Parisian. 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,
20172016Change
(Mall revenues in millions)
Macao Operations:
Shoppes at Venetian
Total mall revenues$220$2095.3%
Mall gross leasable area (in square feet)786,429777,4131.2%
Occupancy97.2%97.6%(0.4)pts
Base rent per square foot$247$2412.5%
Tenant sales per square foot$1,389$1,3264.8%
Shoppes at Cotai Central(1)
Total mall revenues$63$621.6%
Mall gross leasable area (in square feet)424,309407,0654.2%
Occupancy93.5%96.7%(3.2)pts
Base rent per square foot$113$128(11.7)%
Tenant sales per square foot$744$882(15.6)%
Shoppes at Parisian(2)
Total mall revenues$66$23187.0%
Mall gross leasable area (in square feet)300,218299,7780.1%
Occupancy93.4%92.6%0.8pts
Base rent per square foot$218$222(1.8)%
Tenant sales per square foot$574$—N/M
Shoppes at Four Seasons
Total mall revenues$131$1273.1%
Mall gross leasable area (in square feet)257,859259,410(0.6)%
Occupancy99.6%99.3%0.3pts
Base rent per square foot$456$4520.9%
Tenant sales per square foot$3,500$3,00416.5%
Singapore Operations:
The Shoppes at Marina Bay Sands
Total mall revenues$167$1660.6%
Mall gross leasable area (in square feet)604,449612,567(1.3)%
Occupancy96.4%98.3%(1.9)pts
Base rent per square foot$244$2239.4%
Tenant sales per square foot$1,590$1,38315.0%
Note:This table excludes the results of our mall operations at Sands Macao and Sands Bethlehem.
(1)The Shoppes at Cotai Central will feature up to approximately 600,000 square feet of gross leasable area upon completion of all phases of Sands Cotai Central's renovation, rebranding and expansion to The Londoner Macao.
(2)The Shoppes at Parisian opened in September 2016. Tenant sales per square foot reflect sales from tenants only after the tenant has been open for a period of 12 months.

Operating Expenses

Our operating expenses consisted of the following:

Year Ended December 31,
20172016Percent Change
(Dollars in millions)
Casino$4,876$4,36511.7%
Rooms41137011.1%
Food and beverage6405849.6%
Mall776420.3%
Convention, retail and other3253037.3%
Provision for doubtful accounts96173(44.5)%
General and administrative1,4171,28710.1%
Corporate173256(32.4)%
Pre-opening8130(93.8)%
Development13944.4%
Depreciation and amortization1,1711,1115.4%
Amortization of leasehold interests in land3738(2.6)%
Loss on disposal or impairment of assets2079(74.7)%
Total operating expenses$9,264$8,7695.6%

Operating expenses were $9.26 billion for the year ended December 31, 2017, an increase of $495 million compared to $8.77 billion for the year ended December 31, 2016. The increase in operating expenses was driven by the opening of The Parisian Macao in September 2016.

Casino expenses increased $511 million compared to the year ended December 31, 2016. The increase was primarily attributable to increases of $524 million at The Parisian Macao and $36 million at Marina Bay Sands, driven by an increase in gaming tax, partially offset by a $39 million decrease at our Macao Operations (excluding The Parisian Macao), driven by a $22 million decrease in gaming taxes due to decreased casino revenues.

The provision for doubtful accounts was $96 million for the year ended December 31, 2017, compared to $173 million for the year ended December 31, 2016. The decrease resulted from increased collections of previously reserved customer balances during year ended December 31, 2017, as compared to the prior year period, and continued improvement in the quality of casino credit currently being extended. The amount of this provision can vary over short periods of time because of factors specific to the customers who owe us money from gaming activities at any given time. We believe the amount of our provision for doubtful accounts 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 $130 million compared to the year ended December 31, 2016. The increase was primarily due to an $89 million increase at The Parisian Macao and increases of $18 million at our Las Vegas Operating Properties, driven by an increase in marketing and advertising efforts, and $12 million at The Venetian Macao, driven by an increase in team member related expenses.

Corporate expenses decreased $83 million compared to the year ended December 31, 2016. The decrease was primarily due to nonrecurring legal costs incurred during the year ended December 31, 2016.

Pre-opening expense represents personnel and other costs incurred prior to the opening of new ventures, which are expensed as incurred. Pre-opening expenses decreased $122 million compared to the year ended December 31, 2016, primarily due to The Parisian Macao. Development expenses include the costs associated with the Company's evaluation and pursuit of new business opportunities, which are also expensed as incurred.

Depreciation and amortization expense increased $60 million compared to the year ended December 31, 2016. The increase is primarily attributable to a $144 million increase at The Parisian Macao, partially offset by a $112 million decrease resulting from a change in the estimated useful lives of certain property and equipment (see "Item 8 — Financial

Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2 — Summary of Significant Accounting Policies — Property and Equipment").

Loss on disposal or impairment of assets was $20 million for the year ended December 31, 2017, compared to $79 million for the year ended December 31, 2016. The loss for the year ended December 31, 2017, primarily related to dispositions at our Macao and U.S. operations.

Adjusted Property EBITDA

The following table summarizes information related to our segments:

Year Ended December 31,
20172016Percent Change
(Dollars in millions)
Macao:
The Venetian Macao$1,133$1,0894.0%
Sands Cotai Central6336162.8%
The Parisian Macao413115259.1%
The Plaza Macao and Four Seasons Hotel Macao2332215.4%
Sands Macao1741721.2%
Ferry Operations and Other2132(34.4)%
2,6072,24516.1%
Marina Bay Sands1,7551,39525.8%
United States:
Las Vegas Operating Properties3913569.8%
Sands Bethlehem1471432.8%
5384997.8%
Consolidated adjusted property EBITDA$4,900$4,13918.4%

Adjusted property EBITDA at our Integrated Resorts is primarily driven by our casino, room and mall operations, as previously discussed.

Adjusted property EBITDA at our Macao operations increased $362 million compared to the year ended December 31, 2016. The increase was primarily due to a $298 million increase at The Parisian Macao, which opened in September 2016, and $44 million at The Venetian Macao, mainly due to increased casino operations, driven by an increase in Non-Rolling Chip drop.

Adjusted property EBITDA at Marina Bay Sands increased $360 million compared to the year ended December 31, 2016. The increase was primarily due to increased casino revenues, driven by increases in Rolling Chip win percentage and volume. The increase was partially offset by a decrease in room revenues, driven by fewer rooms available due to renovations.

Adjusted property EBITDA at our Las Vegas Operating Properties increased $35 million compared to the year ended December 31, 2016. The increase was primarily due to a $54 million increase in net revenues (excluding intersegment royalty revenue), driven by increased convention and group meeting events benefiting food and beverage results and higher win percentage driving casino revenues, partially offset by an increase in marketing and advertising costs.

Interest Expense

The following table summarizes information related to interest expense:

Year Ended December 31,
20172016
(Dollars in millions)
Interest cost (which includes the amortization of deferred financing costs and original issue discounts)$314$293
Add — imputed interest on deferred proceeds from sale of The Shoppes at The Palazzo1515
Less — capitalized interest(2)(34)
Interest expense, net$327$274
Cash paid for interest$271$248
Weighted average total debt balance$9,909$9,746
Weighted average interest rate3.2%3.0%

Interest cost increased $21 million compared to the year ended December 31, 2016, resulting primarily from an increase in our weighted average total debt balance and a slight increase in our weighted average interest rate. Capitalized interest decreased $32 million compared to the year ended December 31, 2016, primarily due to the opening of The Parisian Macao in September 2016.

Other Factors Affecting Earnings

Other expense was $94 million for the year ended December 31, 2017, compared to other income of $31 million during the year ended December 31, 2016. Other expense during the year ended December 31, 2017, was primarily attributable to a depreciation of the U.S. dollar versus the Singapore dollar during the period. This resulted in $83 million of foreign currency transaction losses, driven by Singapore dollar denominated intercompany debt reported in U.S. dollars, and a $12 million fair value adjustment on our Singapore forward contracts.

The loss on modification or early retirement of debt was $5 million for the year ended December 31, 2017, and primarily related the amendment to the 2013 U.S. Credit Facility (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Long-term Debt — 2013 U.S. Credit Facility").

Our effective income tax rate was (6.8)% for the year ended December 31, 2017, compared to 10.6% for the year ended December 31, 2016. The decrease in the effective income tax rate relates primarily to the release of certain valuation allowances as a result of U.S. tax reform. The Act made significant changes to U.S. income tax laws including lowering the U.S. corporate tax rate to 21% effective beginning in 2018 and transitioning from a worldwide tax system to a territorial tax system resulting in dividends from our foreign subsidiaries not being subject to U.S. income tax and creating a one-time tax on previously unremitted earnings of foreign subsidiaries.

The effective income tax rates reflect a 17% statutory tax rate on our Singapore operations and a zero percent tax rate on our Macao gaming operations due to our income tax exemption in Macao. We have recorded a valuation allowance related to certain deferred tax assets generated by operations in the U.S. and certain foreign jurisdictions; however, to the extent the financial results of these operations improve and it becomes "more-likely-than-not" these deferred tax assets or a portion thereof are realizable, we will reduce the valuation allowances in the period such determination is made as appropriate. Our effective tax rate for 2017 would have been 10.4% without a one-time discrete benefit of $526 million recorded as a result of the impact of U.S. tax reform.

The net income attributable to our noncontrolling interests was $455 million for the year ended December 31, 2017, compared to $346 million for the year ended December 31, 2016. These amounts are primarily related to the noncontrolling interest of SCL and reflect the increased net income generated by SCL in 2017.

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, 2018, 2017 and 2016:

Shoppes at VenetianShoppes at Four SeasonsShoppes at Cotai CentralShoppes at ParisianThe Shoppes at Marina Bay SandsTotal
(In millions)
For the year ended December 31, 2018
Mall revenues:
Minimum rents(1)$180$110$38$42$129$499
Overage rents21251432285
CAM, levies and direct recoveries321017122899
Total mall revenues2331456957179683
Mall operating expenses:
Common area maintenance156761751
Marketing and other direct operating expenses9334726
Mall operating expenses24910102477
Property taxes(2)————66
Provision for doubtful accounts——11—2
Mall-related expenses(3)$24$9$11$11$30$85
For the year ended December 31, 2017
Mall revenues:
Minimum rents(1)$176$113$39$53$123$504
Overage rents129511845
CAM, levies and direct recoveries32919122698
Total mall revenues2201316366167647
Mall operating expenses:
Common area maintenance155661547
Marketing and other direct operating expenses8435626
Mall operating expenses2399112173
Property taxes(2)————55
Provision for doubtful accounts——12—3
Mall-related expenses(3)$23$9$10$13$26$81
For the year ended December 31, 2016
Mall revenues:
Minimum rents(1)$167$114$44$17$123$465
Overage rents1034—1633
CAM, levies and direct recoveries32101462789
Total mall revenues2091276223166587
Mall operating expenses:
Common area maintenance155621644
Marketing and other direct operating expenses5322618
Mall operating expenses208842262
Property taxes(2)————55
Provision for doubtful accounts3———25
Mall-related expenses(3)$23$8$8$4$29$72
Note:This table excludes the results of our mall operations at Sands Macao and Sands Bethlehem.
(1)Minimum rents include base rents and straight-line adjustments of base rents.
(2)Commercial property that generates rental income is exempt from property tax for the first six years for newly constructed buildings in Cotai. Each property is also eligible to obtain an additional six-year exemption, provided certain qualifications are met. To date, The Venetian Macao, The Plaza Macao and Four Seasons Hotel Macao and The Parisian Macao have obtained a second exemption, extending the property tax exemption to July 2019, July 2020 and August 2028, respectively. Under the initial exemption, Sands Cotai Central has a distinct exemption for each hotel tower with expiration dates that range from March 2018 to November 2021. The Company is currently working on obtaining the second exemption for Sands Cotai Central.
(3)Mall-related expenses consist of CAM, marketing fees and other direct operating expenses, property taxes and provision for doubtful accounts, but excludes depreciation and amortization and general and administrative costs.

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 tables 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.

Development Projects

We are constantly evaluating opportunities to improve our product offerings, such as refreshing our meeting and convention facilities, suites and rooms, retail malls, restaurant and nightlife mix and our gaming areas, as well as other revenue generating additions to our Integrated Resorts.

Macao

As of December 31, 2018, we have capitalized an aggregate of $12.93 billion in construction costs and land premiums for our Cotai Strip developments, which include The Venetian Macao, Sands Cotai Central, The Parisian Macao and The Plaza Macao and Four Seasons Hotel Macao, as well as our investments in transportation infrastructure, including our passenger ferry service operations.

We previously announced the renovation, expansion and rebranding of the Sands Cotai Central into a new destination Integrated Resort, The Londoner Macao, by adding extensive thematic elements both externally and internally. The Londoner Macao will feature new attractions and features from London, including some of London’s most recognizable landmarks, and expanded retail and food and beverage venues. We will add approximately 370 luxury suites in the St. Regis Tower Suites Macao. Design work is nearing completion and construction is being initiated and will be phased to minimize disruption during the property’s peak periods. We expect the additional St. Regis Tower Suites Macao to be completed in 2020 and The Londoner Macao project to be completed in phases throughout 2020 and 2021.

We also previously announced the Four Seasons Tower Suites Macao, which will feature approximately 290 additional premium quality suites. We have completed the structural work of the tower and have commenced preliminary build out of the suites. We expect the project to be completed in the first quarter of 2020.

We anticipate the total costs associated with these development projects to be approximately $2.2 billion. The ultimate costs and completion dates for these projects are subject to change as we finalize our planning and design work and complete the projects. See "Item 1A — Risk Factors — Risks Related to Our Business — There are significant risks associated with our construction projects, which could have a material adverse effect on our financial condition, results of operations and cash flows."

United States

We were constructing the Las Vegas Condo Tower, located on the Las Vegas Strip within The Venetian Resort Las Vegas. In 2008, we suspended our construction activities for the project due to reduced demand for Las Vegas Strip condominiums and the overall decline in general economic conditions. We continue to evaluate the highest return opportunity for the project. The impact of the suspension on the estimated overall cost of the project is currently not determinable with certainty. Should management decide to abandon the project, we could record a charge for some portion of the $129 million in capitalized construction costs as of December 31, 2018.

Other

We continue to evaluate additional development projects in each of our markets and pursue new development opportunities globally.

Liquidity and Capital Resources

Cash Flows — Summary

Our cash flows consisted of the following:

Year Ended December 31,
201820172016
(In millions)
Net cash generated from operating activities$4,701$4,543$4,044
Cash flows from investing activities:
Capital expenditures(949)(837)(1,398)
Proceeds from disposal of property and equipment19155
Acquisition of intangible assets——(47)
Net cash used in investing activities(930)(822)(1,440)
Cash flows from financing activities:
Proceeds from exercise of stock options794017
Repurchase of common stock(905)(375)—
Dividends paid(2,979)(2,943)(2,924)
Proceeds from long-term debt7,5936542,296
Repayments of long-term debt(5,178)(858)(1,987)
Payments of financing costs(132)(5)(33)
Net cash used in financing activities(1,522)(3,487)(2,631)
Effect of exchange rate on cash, cash equivalents and restricted cash(18)58(22)
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents2,231292(49)
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year2,4302,1382,187
Cash, cash equivalents and restricted cash and cash equivalents at end of year$4,661$2,430$2,138

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 or as a trade receivable, resulting in operating cash flows being generally affected by changes in operating income and accounts receivable. For the year ended December 31, 2018, net cash generated from operating activities increased $158 million compared to the year ended December 31, 2017. The increase was primarily attributable to an increase in operating income, driven by our Macao operations. For the year ended December 31, 2017, net cash generated from operating activities increased $499 million compared to the year ended December 31, 2016. The increase was primarily attributable to the increase in operating cash flows generated from our Macao and Singapore operations.

Cash Flows — Investing Activities

Capital expenditures for the year ended December 31, 2018, totaled $949 million, including $535 million in Macao, which consisted primarily of $180 million for the Venetian Macao, $131 million for each of Sands Cotai Central and The Parisian Macao; $182 million in Singapore; $127 million at our Las Vegas Operating Properties; and $105 million for corporate and other activities.

Capital expenditures for the year ended December 31, 2017, totaled $837 million, including $479 million in Macao, which consisted primarily of $204 million for The Parisian Macao, $153 million for the Venetian Macao and $86 million for Sands Cotai Central; $196 million in Singapore; $123 million at our Las Vegas Operating Properties; and $39 million for corporate and other activities.

Capital expenditures for the year ended December 31, 2016, totaled $1.40 billion, including $1.19 billion in Macao, which consisted primarily of $925 million for The Parisian Macao and $128 million for Sands Cotai Central; $92 million at our Las Vegas Operating Properties; $83 million in Singapore; and $38 million for corporate and other activities. Additionally, during the year ended December 31, 2016, we paid SGD 66 million (approximately $47 million at exchange rates in effect at the time of the transaction) to renew our Singapore gaming license for a three-year term.

Cash Flows — Financing Activities

Net cash flows used in financing activities were $1.52 billion for the year ended December 31, 2018, which was primarily attributable to $2.98 billion in dividend payments and $905 million in common stock repurchases, partially offset by net proceeds of $2.42 billion from the issuance of the SCL Senior Notes and borrowings under the 2013 U.S. Credit Facility.

Net cash flows used in financing activities were $3.49 billion for the year ended December 31, 2017, which was primarily attributable to $2.94 billion in dividend payments, $375 million in common stock repurchases, net repayments of $204 million on our various credit facilities, partially offset by proceeds of $40 million from the exercise of stock options.

Net cash flows used in financing activities were $2.63 billion for the year ended December 31, 2016, which was primarily attributable to $2.92 billion in dividend payments, partially offset by $309 million of net proceeds from our various credit facilities.

As of December 31, 2018, we had $3.51 billion available for borrowing under our U.S., Macao and Singapore credit facilities, net of letters of credit.

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 9 — Long-term Debt") and operating cash flows.

In March 2018, we amended our SGD 4.80 billion (approximately $3.51 billion at exchange rates in effect on December 31, 2018) Singapore credit facility, which extended the maturities of the term loans and revolving loans to March 29, 2024, and September 29, 2023, respectively, and amended the amortization schedule and the leverage covenant to provide that the leverage ratio not exceed 4.0x for all quarterly periods through maturity (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Long-term Debt — 2012 Singapore Credit Facility").

In March 2018, we amended our U.S. Credit Facility, which refinanced the term loans in an aggregate amount of $2.16 billion, extended the maturity of the term loans to March 27, 2025, and reduced the applicable margin credit spread for borrowings under the term loans. In June 2018, we further amended our U.S. Credit Facility to, among other things, increase the amount of the term loans by $1.35 billion, to an aggregate amount of $3.51 billion (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Long-Term Debt — 2013 U.S. Credit Facility").

In August 2018, SCL issued, in a private offering, three series of unsecured notes in an aggregate principal amount of $5.50 billion (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Long-Term Debt — SCL Senior Notes"). A portion of the net proceeds from the offering was

used to repay in full the outstanding borrowings under the prior Macao credit facility. We will use the remaining net proceeds from the offering of the SCL Senior Notes for general corporate purposes, including capital expenditures. In connection with the SCL Senior Notes, we entered into interest rate swap agreements in August 2018, which were designated as fair value hedges (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 10 — Derivative Instruments").

We entered into a $2.0 billion revolving credit facility available pursuant to the facility agreement, dated November 20, 2018, (the "SCL Credit Facility") and on November 20, 2018, effective as of November 21, 2018, we canceled the remaining commitments under the prior Macao credit facility. As of December 31, 2018, no amounts were drawn on the SCL Credit Facility.

Our U.S., Macao and Singapore credit facilities, as amended, contain various financial covenants, which include maintaining a maximum leverage ratio of debt or net debt, as defined, to trailing twelve-month adjusted earnings before interest, income taxes, depreciation and amortization, as defined ("Adjusted EBITDA"). The U.S. credit facility requires our Las Vegas operations to maintain a maximum leverage ratio of net debt to Adjusted EBITDA at the end of each quarter to the extent any revolving loans or certain letters of credit are outstanding. The maximum leverage ratio is 5.5x for all quarterly periods through maturity. We can elect to contribute cash on hand to our Las Vegas operations on a bi-quarterly basis; such contributions having the effect of increasing Adjusted EBITDA during the applicable quarter for purposes of calculating compliance with the maximum leverage ratio. Our SCL credit facility requires our Macao operations to comply with similar financial covenants, including maintaining a maximum leverage ratio of debt to Adjusted EBITDA of 4.0x for all quarterly periods through maturity. Our Singapore credit facility requires our Marina Bay Sands operations to comply with similar financial covenants, including maintaining a maximum leverage ratio of debt to Adjusted EBITDA of 4.0x for all quarterly periods through maturity. As of December 31, 2018, our U.S., Macao and Singapore leverage ratios, as defined per the respective credit facility agreements, were 0.6x, 1.9x and 1.9x, respectively, compared to the maximum leverage ratios allowed of 5.5x, 4.0x and 4.0x, respectively. If we are unable to maintain compliance with the financial covenants under these credit facilities, we would be in default under the respective credit facilities.

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 approximately $4.65 billion and restricted cash and cash equivalents of approximately $13 million as of December 31, 2018, of which approximately $3.0 billion of the unrestricted amount is held by non-U.S. subsidiaries. Of the $3.0 billion, approximately $2.20 billion is available to be repatriated to the U.S., and 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. U.S. tax reform created a one-time mandatory tax on the previously unremitted earnings of foreign subsidiaries upon transitioning from a worldwide tax system to a territorial tax system. The foreign taxes paid on these earnings created a U.S. foreign tax credit that offsets this one-time tax. Foreign earnings repatriated to the U.S. in the future will be exempt from U.S. income tax and we do not expect significant withholding or other foreign taxes to apply to the repatriation of these earnings. The remaining unrestricted amounts held by non-U.S. subsidiaries are not available for repatriation primarily due to dividend requirements to third-party public shareholders in the case of funds being repatriated from SCL. We believe the cash on hand and cash flow generated from operations, as well as the $3.51 billion available for borrowing under our U.S., Macao and Singapore credit facilities, net of outstanding letters of credit, as of December 31, 2018, 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, debt obligations and dividend commitments. 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, 2018, we paid a quarterly dividend of $0.75 per common share as part of a regular cash dividend program and recorded $2.35 billion as a distribution against retained earnings. In January 2019, our Board of Directors declared a quarterly dividend of $0.77 per common share (a total estimated to be approximately $597 million) to be paid on March 28, 2019, to shareholders of record on March 20, 2019. We expect this level of

dividend to continue quarterly through the remainder of 2019. Our Board of Directors will continually assess the level and appropriateness of any cash dividends.

On February 23 and June 22, 2018, SCL paid a dividend of 0.99 Hong Kong dollars ("HKD") and HKD 1.00 per share, respectively, to SCL shareholders (a total of $2.05 billion, of which the Company retained $1.44 billion during the year ended December 31, 2018). In January 2019, the Board of Directors of SCL declared a dividend of HKD 0.99 per share (a total of $1.02 billion, of which we will retain approximately $715 million) to SCL shareholders of record on February 4, 2019, which was paid on February 22, 2019.

In November 2016, our Board of Directors authorized the repurchase of $1.56 billion of our outstanding common stock, which was to expire in November 2018. In June 2018, our Board of Directors authorized increasing the remaining repurchase amount of $1.11 billion to $2.50 billion and extending the expiration date to November 2020. During the year ended December 31, 2018, we repurchased 14,998,127 shares of our common stock for $905 million (including commissions) 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, legal requirements, other investment opportunities and market conditions.

Aggregate Indebtedness and Other Known Contractual Obligations

Our total long-term indebtedness and other known contractual obligations are summarized below as of December 31, 2018:

Payments Due by Period(1)
20192020 - 20212022 - 2023ThereafterTotal
(In millions)
Long-Term Debt Obligations(2)
2013 U.S. Credit Facility$35$70$70$3,310$3,485
SCL Senior Notes——1,8003,7005,500
2012 Singapore Credit Facility631262,3325633,084
Capital Leases133——16
Fixed Interest Payments2775555556982,085
Variable Interest Payments(3)2404704261791,315
Contractual Obligations
Operating Leases(4)355145294425
Mall Deposits(5)52681811149
Macao Annual Premium(6)428521—148
Other(7)15917765218619
Total$916$1,605$5,332$8,973$16,826
(1)As of December 31, 2018, we had a $51 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 9 — Long-Term Debt" for further details on these financing transactions.
(3)Based on the 1-month rates as of December 31, 2018, London Inter-Bank Offered Rate ("LIBOR") of 2.50%, and Singapore Swap Offer Rate ("SOR") of 1.75% plus the applicable interest rate spread in accordance with the respective debt agreements.
(4)We are party to certain operating leases for real estate and various equipment, which primarily include $135 million related to a 99-year lease agreement (85 years remaining) for a parking structure located adjacent to The Venetian Resort Las Vegas, $90 million related to certain leaseback agreements related to the sale of the Grand Canal Shoppes and $77 million related to long-term land leases with an initial term of 25 years.
(5)Mall deposits consist of refundable security deposits received from mall tenants.
(6)In addition to the 39% gross gaming win tax in Macao (which is not included in this table as the amount we pay is variable in nature), 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 in operation as of December 31, 2018, the annual premium payable to the Macao government is approximately $42 million through the termination of the gaming subconcession in June 2022.
(7)Consists of all other non-cancellable contractual obligations and primarily relates to certain hotel and restaurant management and service agreements. 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.

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 interest rate swaps.

Restrictions on Distributions

We are a parent company with limited business operations. Our main asset is the stock and membership interests of our subsidiaries. The debt instruments of our U.S., Macao and Singapore subsidiaries contain certain 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 our assets of our company without prior approval of the lenders or noteholders.

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, 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:

•general economic and business conditions in the U.S. and internationally, which may impact levels of disposable income, consumer spending, group meeting business, pricing of hotel rooms and retail and mall sales;
•the uncertainty of consumer behavior related to discretionary spending and vacationing at our Integrated Resorts in Macao, Singapore, Las Vegas and Bethlehem, Pennsylvania;
•the extensive regulations to which we are subject and the costs of compliance or failure to comply with such regulations;
•our ability to maintain our gaming licenses, certificate and subconcession in Macao, Singapore, Las Vegas and Bethlehem, Pennsylvania;
•new developments, construction projects and ventures, including our Cotai Strip developments;
•fluctuations in currency exchange rates and interest rates;
•regulatory policies in mainland China or other countries in which our customers reside, or where we have operations, including visa restrictions limiting the number of visits or the length of stay for visitors from mainland China to Macao, restrictions on foreign currency exchange or importation of currency, and the judicial enforcement of gaming debts;
•our leverage, debt service and debt covenant compliance, including the pledge 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;
•increased competition for labor and materials due to planned construction projects in Macao and quota limits on the hiring of foreign workers;
•our ability to obtain required visas and work permits for management and employees from outside countries to work in Macao, and our ability to compete for the managers and employees with the skills required to perform the services we offer at our properties;
•our dependence upon properties primarily in Macao, Singapore and Las Vegas for all of our cash flow;
•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;
•our insurance coverage, including the risk we have not obtained sufficient coverage, may not be able to obtain sufficient coverage in the future, or will only be able to obtain additional coverage at significantly increased rates;
•disruptions or reductions in travel, as well as disruptions in our operations, due to natural or man-made disasters, outbreaks of infectious diseases, terrorist activity or war;
•our ability to collect gaming receivables from our credit players;
•our relationship with gaming promoters in Macao;
•our dependence on chance and theoretical win rates;
•fraud and cheating;
•our ability to establish and protect our IP rights;
•conflicts of interest that arise because certain of our directors and officers are also directors 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 and Las Vegas, 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, Singapore and Las Vegas as convention and trade show destinations;
•new taxes, changes to existing tax rates or proposed changes in tax legislation and the impact of U.S. tax reform;
•the continued services of our key management and personnel;
•any potential conflict between the interests of our principal stockholder and us;
•the ability of our subsidiaries to make distribution payments to us;
•labor actions and other labor problems;
•our failure to maintain the integrity of information systems that contain legally protected information about people and company data, including against past or future cybersecurity attacks, and any litigation or disruption to our operations resulting from such loss of data integrity;
•the completion of infrastructure projects in Macao;
•our relationship with GGP or any successor owner of the Grand Canal Shoppes; and
•the outcome of any ongoing and future litigation.

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.

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.

Allowance for Doubtful Casino Accounts

We maintain an allowance, or reserve, for doubtful casino accounts at our operating casino resorts in Macao, Singapore and the U.S., which we regularly evaluate. We 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 we apply standard reserve percentages to aged account balances under the specified dollar amount. We also monitor regional and global economic conditions and forecasts in our evaluation of the adequacy of the recorded reserves. Credit or marker play was 15.3%, 16.0% and 65.8% of table games play at our Macao properties, Marina Bay Sands and Las Vegas Operating Properties, respectively, during the year ended December 31, 2018. Our table games play in Pennsylvania is primarily conducted on a cash basis. Our allowance for doubtful casino accounts was 41.1% and 51.5% of gross casino receivables as of December 31, 2018 and 2017, 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 allowance for doubtful accounts. Our allowance for doubtful accounts 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

At December 31, 2018, we had net property and equipment of $15.15 billion, representing 67.2% 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. During the year ended December 31, 2017, we completed an evaluation of the estimated useful lives of our property and equipment (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2 — Summary of Significant Accounting Policies — Property and Equipment").

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 cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost 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 income earned in Singapore and Macao is taxed at local rates, which are lower than U.S. tax rates. In August 2018, we received an additional exemption from Macao's corporate income tax on profits generated by the operation of casino games of chance for the period January 1, 2019 through June 26, 2022, the date our subconcession agreement expires. We entered into an agreement with the Macao government effective through the end of 2018 that provided for an annual payment of 42 million patacas (approximately $5 million at exchange rates in effect on December 31, 2018) that is a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions. In September 2018, we requested an additional agreement with the Macao government through June 26, 2022, to correspond to the expiration of the income tax exemption for gaming operations; however, there is no assurance we will receive the additional agreement.

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 implementation of tax planning strategies.

We recorded a valuation allowance on the net deferred tax assets of certain foreign jurisdictions of $268 million and $261 million, as of December 31, 2018 and 2017, respectively, and a valuation allowance on certain net deferred tax assets of our U.S. operations of $4.50 billion and $4.43 billion as of December 31, 2018 and 2017, respectively. Management will reassess the realization of deferred tax assets based on the applicable accounting standards for income taxes 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 tax treatment 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 $118 million and $92 million as of December 31, 2018 and 2017, respectively. 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 years beginning 2010 in the U.S. and for years beginning 2014 in Macao and Singapore.

U.S. tax reform made significant changes to U.S. income tax laws including lowering the U.S. corporate tax rate to 21% effective beginning in 2018 and transitioning from a worldwide tax system to a territorial tax system resulting in dividends from our foreign subsidiaries not being subject to U.S. income tax and creating a one-time tax on previously unremitted earnings of foreign subsidiaries. As a result, during the year ended December 31, 2017, we recorded a tax benefit of $526 million relating to the reduction of the valuation allowance on certain deferred tax assets that were previously determined not likely to be utilized and also the revaluation of our U.S. deferred tax liabilities at the reduced corporate income tax rate of 21%.

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."

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