filings.toolsItem 8. — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
257K characters. Original on sec.gov · Markdown
Item 8. — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
The financial information included in the financial statement schedule should be read in conjunction with the consolidated financial statements. All other financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements or the notes thereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Las Vegas Sands Corp.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Las Vegas Sands Corp. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 4, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Casino Receivables — Refer to Notes 2 and 4 to the financial statements
Critical Audit Matter Description
Accounts receivable as of December 31, 2021 include credit extended to casino patrons and gaming promoters. The Company records a provision for credit losses based on the amount of expected credit losses. The Company applies standard reserve percentages to aged account balances, which are grouped based on shared credit risk characteristics and days past due. The reserve percentages are based on estimated loss rates supported by historical observed default rates over the expected life of the receivable and are adjusted for forward-looking information. The Company also specifically analyzes the collectability of each account with a balance over a specified dollar amount, based upon the
age of the account, the customer's financial condition, collection history, and any other known information and adjusts the aforementioned reserve with the results from the individual reserve analysis.
Auditing the valuation of accounts receivable involved a high degree of subjectivity in evaluating management’s judgments related to the collectability of patron accounts receivable, especially as it relates to the evaluation of patron assets available to repay amounts owed.
How the Critical Audit Matter Was Addressed in the Audit
We planned and performed the following procedures in connection with forming our overall opinion on the financial statements:
-
We tested the operating effectiveness of controls over the granting of casino credit, controls over the collection processes and management’s review controls over the assessment of the collectability of casino receivables, including the information used by management in those controls.
-
For a selection of casino receivables, we (1) obtained evidence related to payment history and correspondence with patron or gaming promoter, (2) evaluated management’s use of this information in establishing a provision for credit losses, and (3) examined subsequent settlement, if any.
-
Performed a retrospective analysis of historical reserves evaluating subsequent collections and write-offs.
Long-Term Debt – Macao Related – Refer to Notes 1 and 10 to the financial statements
Critical Audit Matter Description
The Company classified (i) senior notes issued by the Company’s 69.9% owned subsidiary, Sands China, Ltd. (“SCL”), with an aggregate carrying value of $7,091 million (the “SCL Senior Notes”), and (ii) $753 million in loans outstanding under the SCL’s revolving credit facility (the “SCL Loans”) as long-term debt as of December 31, 2021. The SCL Senior Notes mature, and the SCL revolving credit facility (of which the SCL Loans are part) terminates, beyond one year after December 31, 2021.
Venetian Macau Limited (“VML”), a subsidiary of SCL and indirect subsidiary of the Company, conducts gaming operations in Macao pursuant to concession agreements awarded by the Macao government to three different concessionaires and three subconcessionaires, of which VML is one. These concession agreements are set to expire on June 26, 2022. SCL intends to follow the process for a concession renewal once the process and requirements are announced by the Macao government. The indentures of the SCL Senior Notes include an “Investor Put Option” that could potentially be triggered if none of SCL or any of its subsidiaries own or manage casino or gaming areas in Macao or operates casino games in substantially the same manner as of the SCL Senior Notes issue date for a period of 30 consecutive days or more and such event has a material adverse effect on the financial condition, business properties, or results of operations of SCL and its subsidiaries taken as a whole. If both of these conditions occur, it would result in each holder of the SCL Senior Notes having the right to require SCL to repurchase all or any part of such holder’s SCL Senior Notes, potentially within one year of December 31, 2021. Additionally, under the terms of SCL’s credit facility, the events that trigger an Investor Put Option under the SCL Senior Notes (as described above) would be an event of default, which may result in commitments being immediately cancelled, in whole or in part, and the related outstanding balances and accrued interest, if any, becoming immediately due and payable.
Auditing the classification of the SCL Senior Notes and SCL Loans as current or noncurrent liabilities involved a high degree of auditor judgment and an increased extent of effort, as this classification is, in part, dependent on management’s assessment of the probability of the Investor Put Option becoming exercisable within one year of December 31, 2021, which is a subjective assessment that required management to consider many factors, specifically as it relates to the likelihood of the gaming subconcession being extended or renewed beyond June 26, 2022.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s assessment of the likelihood of the gaming subconcession being extended or renewed included the following, among others:
-
We tested the effectiveness of controls over management’s process to determine the classification of debt, including such controls over (i) assessing the likelihood of the gaming subconcession being extended or renewed and (ii) identifying and assessing applicable authoritative accounting standards and related interpretive literature, as well as the information used by management in those controls.
-
We consulted with subject matter experts within our firm regarding the application of accounting principles generally accepted in the United States of America pertaining to the classification of indebtedness.
-
We evaluated the Company’s disclosures related to the renewal or extension of the gaming subconcession.
-
We evaluated relevant information known to us, including information provided to us by the Company’s management and information that was publicly available, particularly regarding recent developments pertaining to the formulation by the Macao government of the process and requirements for renewal or the potential extension of VML’s ability to conduct gaming operations in Macao.
| /s/ Deloitte & Touche LLP | ||
| Las Vegas, Nevada | ||
| February 4, 2022 |
We have served as the Company's auditor since 2013.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Las Vegas Sands Corp.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Las Vegas Sands Corp. and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2021 of the Company and our report dated February 4, 2022, expressed an unqualified opinion on those financial statements and financial schedule.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Controls over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| /s/ Deloitte & Touche LLP | ||
| Las Vegas, Nevada | ||
| February 4, 2022 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions, except par value) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 1,854 | $ | 2,082 | |||||||
| Restricted cash and cash equivalents | 16 | 16 | |||||||||
| Accounts receivable, net of provision for credit losses of $232 and $255 | 202 | 252 | |||||||||
| Inventories | 22 | 22 | |||||||||
| Prepaid expenses and other | 113 | 113 | |||||||||
| Current assets of discontinued operations held for sale | 3,303 | 3,222 | |||||||||
| Total current assets | 5,510 | 5,707 | |||||||||
| Property and equipment, net | 11,850 | 12,280 | |||||||||
| Deferred income taxes, net | 297 | 318 | |||||||||
| Leasehold interests in land, net | 2,166 | 2,256 | |||||||||
| Intangible assets, net | 19 | 25 | |||||||||
| Other assets, net | 217 | 221 | |||||||||
| Total assets | $ | 20,059 | $ | 20,807 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 77 | $ | 89 | |||||||
| Construction payables | 227 | 336 | |||||||||
| Other accrued liabilities | 1,334 | 1,474 | |||||||||
| Income taxes payable | 32 | 87 | |||||||||
| Current maturities of long-term debt and finance leases | 74 | 75 | |||||||||
| Current liabilities of discontinued operations held for sale | 821 | 755 | |||||||||
| Total current liabilities | 2,565 | 2,816 | |||||||||
| Other long-term liabilities | 352 | 336 | |||||||||
| Deferred income taxes | 173 | 188 | |||||||||
| Long-term debt and finance leases | 14,721 | 13,929 | |||||||||
| Total liabilities | 17,811 | 17,269 | |||||||||
| Commitments and contingencies (Note 15) | |||||||||||
| Equity: | |||||||||||
| Preferred stock, $0.001 par value, 50 shares authorized, zero shares issued and outstanding | — | — | |||||||||
| Common stock, $0.001 par value, 1,000 shares authorized, 833 shares issued, 764 shares outstanding | 1 | 1 | |||||||||
| Treasury stock, at cost, 69 shares | (4,481) | (4,481) | |||||||||
| Capital in excess of par value | 6,646 | 6,611 | |||||||||
| Accumulated other comprehensive income (loss) | (22) | 29 | |||||||||
| Retained earnings (loss) | (148) | 813 | |||||||||
| Total Las Vegas Sands Corp. stockholders' equity | 1,996 | 2,973 | |||||||||
| Noncontrolling interests | 252 | 565 | |||||||||
| Total equity | 2,248 | 3,538 | |||||||||
| Total liabilities and equity | $ | 20,059 | $ | 20,807 |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions, except per share data) | |||||||||||||||||
| Revenues: | |||||||||||||||||
| Casino | $ | 2,892 | $ | 2,041 | $ | 9,384 | |||||||||||
| Rooms | 415 | 280 | 1,142 | ||||||||||||||
| Food and beverage | 199 | 156 | 550 | ||||||||||||||
| Mall | 649 | 381 | 716 | ||||||||||||||
| Convention, retail and other | 79 | 82 | 335 | ||||||||||||||
| Net revenues | 4,234 | 2,940 | 12,127 | ||||||||||||||
| Operating expenses: | |||||||||||||||||
| Casino | 2,068 | 1,585 | 5,073 | ||||||||||||||
| Rooms | 164 | 136 | 255 | ||||||||||||||
| Food and beverage | 244 | 236 | 467 | ||||||||||||||
| Mall | 65 | 59 | 78 | ||||||||||||||
| Convention, retail and other | 85 | 103 | 226 | ||||||||||||||
| Provision for credit losses | 3 | 86 | 22 | ||||||||||||||
| General and administrative | 831 | 798 | 1,118 | ||||||||||||||
| Corporate | 211 | 168 | 313 | ||||||||||||||
| Pre-opening | 19 | 19 | 34 | ||||||||||||||
| Development | 109 | 18 | 24 | ||||||||||||||
| Depreciation and amortization | 1,041 | 997 | 1,020 | ||||||||||||||
| Amortization of leasehold interests in land | 56 | 55 | 51 | ||||||||||||||
| Loss on disposal or impairment of assets | 27 | 73 | 81 | ||||||||||||||
| 4,923 | 4,333 | 8,762 | |||||||||||||||
| Operating income (loss) | (689) | (1,393) | 3,365 | ||||||||||||||
| Other income (expense): | |||||||||||||||||
| Interest income | 4 | 21 | 74 | ||||||||||||||
| Interest expense, net of amounts capitalized | (621) | (523) | (449) | ||||||||||||||
| Other income (expense) | (31) | 19 | 56 | ||||||||||||||
| Gain on sale of Sands Bethlehem | — | — | 556 | ||||||||||||||
| Loss on modification or early retirement of debt | (137) | — | (2) | ||||||||||||||
| Income (loss) from continuing operations before income taxes | (1,474) | (1,876) | 3,600 | ||||||||||||||
| Income tax (expense) benefit | 5 | (24) | (432) | ||||||||||||||
| Net income (loss) from continuing operations | (1,469) | (1,900) | 3,168 | ||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | 193 | (243) | 136 | ||||||||||||||
| Net income (loss) | (1,276) | (2,143) | 3,304 | ||||||||||||||
| Net (income) loss attributable to noncontrolling interests from continuing operations | 315 | 458 | (606) | ||||||||||||||
| Net income (loss) attributable to Las Vegas Sands Corp. | $ | (961) | $ | (1,685) | $ | 2,698 | |||||||||||
| Earnings (loss) per share - Basic: | |||||||||||||||||
| Income (loss) from continuing operations | $ | (1.51) | $ | (1.89) | $ | 3.32 | |||||||||||
| Income (loss) from discontinued operations, net of income taxes | 0.25 | (0.32) | 0.18 | ||||||||||||||
| Net income (loss) attributable to Las Vegas Sands Corp. | $ | (1.26) | $ | (2.21) | $ | 3.50 | |||||||||||
| Earnings (loss) per share - Diluted: | |||||||||||||||||
| Income (loss) from continuing operations | $ | (1.51) | $ | (1.89) | $ | 3.32 | |||||||||||
| Income (loss) from discontinued operations, net of income taxes | 0.25 | (0.32) | 0.18 | ||||||||||||||
| Net income (loss) attributable to Las Vegas Sands Corp. | $ | (1.26) | $ | (2.21) | $ | 3.50 | |||||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 764 | 764 | 771 | ||||||||||||||
| Diluted | 764 | 764 | 771 |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Net income (loss) | $ | (1,276) | $ | (2,143) | $ | 3,304 | |||||||||||
| Currency translation adjustment | (51) | 37 | 42 | ||||||||||||||
| Cash flow hedge fair value adjustment | (4) | — | — | ||||||||||||||
| Total comprehensive income (loss) | (1,331) | (2,106) | 3,346 | ||||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interests | 319 | 453 | (611) | ||||||||||||||
| Comprehensive income (loss) attributable to Las Vegas Sands Corp. | $ | (1,012) | $ | (1,653) | $ | 2,735 |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EQUITY
| Las Vegas Sands Corp. Stockholders' Equity | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | Treasury Stock | Capital in Excess of Par Value | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Noncontrolling Interests | Total | |||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||
| Balance at January 1, 2019 | $ | 1 | $ | (3,727) | $ | 6,680 | $ | (40) | $ | 2,770 | $ | 1,061 | $ | 6,745 | |||||||||||||||||||||||||||
| Net income | — | — | — | — | 2,698 | 606 | 3,304 | ||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | 37 | — | 5 | 42 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | 43 | — | — | 11 | 54 | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 31 | — | — | 4 | 35 | ||||||||||||||||||||||||||||||||||
| Disposition of interest in majority-owned subsidiary, net of taxes | — | — | (185) | — | — | 266 | 81 | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | (754) | — | — | — | — | (754) | ||||||||||||||||||||||||||||||||||
| Dividends declared ($3.08 per share) (Note 11) | — | — | — | — | (2,367) | (633) | (3,000) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2019 | 1 | (4,481) | 6,569 | (3) | 3,101 | 1,320 | 6,507 | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (1,685) | (458) | (2,143) | ||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | 32 | — | 5 | 37 | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | 22 | — | — | 2 | 24 | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 19 | — | — | 4 | 23 | ||||||||||||||||||||||||||||||||||
| Other | — | — | 1 | — | — | — | 1 | ||||||||||||||||||||||||||||||||||
| Dividends declared ($0.79 per share) (Note 11) | — | — | — | — | (603) | (308) | (911) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2020 | 1 | (4,481) | 6,611 | 29 | 813 | 565 | 3,538 | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | (961) | (315) | (1,276) | ||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | (48) | — | (3) | (51) | ||||||||||||||||||||||||||||||||||
| Cash flow hedge fair value adjustment | — | — | — | (3) | — | (1) | (4) | ||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | 15 | — | — | 4 | 19 | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | 20 | — | — | 2 | 22 | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | 1 | $ | (4,481) | $ | 6,646 | $ | (22) | $ | (148) | $ | 252 | $ | 2,248 |
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Cash flows from operating activities from continuing operations: | |||||||||||||||||
| Net income (loss) from continuing operations | $ | (1,469) | $ | (1,900) | $ | 3,168 | |||||||||||
| Adjustments to reconcile net income (loss) to net cash generated from (used in) operating activities: | |||||||||||||||||
| Depreciation and amortization | 1,041 | 997 | 1,020 | ||||||||||||||
| Amortization of leasehold interests in land | 56 | 55 | 51 | ||||||||||||||
| Amortization of deferred financing costs and original issue discount | 52 | 43 | 30 | ||||||||||||||
| Change in fair value of derivative asset/liability | (1) | — | — | ||||||||||||||
| Loss on modification or early retirement of debt | 137 | — | 2 | ||||||||||||||
| Loss on disposal or impairment of assets | 16 | 39 | 72 | ||||||||||||||
| Gain on sale of Sands Bethlehem | — | — | (556) | ||||||||||||||
| Stock-based compensation expense | 22 | 22 | 35 | ||||||||||||||
| Provision for credit losses | 3 | 86 | 22 | ||||||||||||||
| Foreign exchange (gain) loss | 34 | (20) | (21) | ||||||||||||||
| Deferred income taxes | (45) | 24 | 146 | ||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||
| Accounts receivable | 43 | 339 | (118) | ||||||||||||||
| Other assets | (5) | 14 | (15) | ||||||||||||||
| Leasehold interests in land | — | — | (969) | ||||||||||||||
| Accounts payable | (11) | (42) | (13) | ||||||||||||||
| Other liabilities | (116) | (848) | (51) | ||||||||||||||
| Net cash generated from (used in) operating activities from continuing operations | (243) | (1,191) | 2,803 | ||||||||||||||
| Cash flows from investing activities from continuing operations: | |||||||||||||||||
| Net proceeds from sale of Sands Bethlehem | — | — | 1,161 | ||||||||||||||
| Capital expenditures | (828) | (1,227) | (1,018) | ||||||||||||||
| Proceeds from disposal of property and equipment | 7 | 1 | 5 | ||||||||||||||
| Acquisition of intangible assets and other | (11) | — | (53) | ||||||||||||||
| Net cash generated from (used in) investing activities from continuing operations | (832) | (1,226) | 95 | ||||||||||||||
| Cash flows from financing activities continuing operations: | |||||||||||||||||
| Proceeds from exercise of stock options | 19 | 24 | 54 | ||||||||||||||
| Repurchase of common stock | — | — | (754) | ||||||||||||||
| Dividends paid and noncontrolling interest payments | — | (911) | (3,000) | ||||||||||||||
| Proceeds from long-term debt (Note 10) | 2,702 | 1,945 | 4,000 | ||||||||||||||
| Repayments of long-term debt (Note 10) | (1,867) | (467) | (51) | ||||||||||||||
| Payments of financing costs | (38) | (31) | (132) | ||||||||||||||
| Make-whole premium on early extinguishment of debt (Note 10) | (131) | — | — | ||||||||||||||
| Transactions with discontinued operations | 178 | (205) | (3,445) | ||||||||||||||
| Net cash generated from (used in) financing activities from continuing operations | 863 | 355 | (3,328) | ||||||||||||||
| Cash flows from discontinued operations: | |||||||||||||||||
| Net cash generated from (used in) operating activities | 258 | (121) | 235 | ||||||||||||||
| Net cash used in investing activities | (63) | (103) | (198) | ||||||||||||||
| Net cash provided (to) by continuing operations and (used in) financing activities | (179) | 205 | (40) | ||||||||||||||
| Net cash generated from (used in) discontinued operations | 16 | (19) | (3) | ||||||||||||||
| Effect of exchange rate on cash, cash equivalents and restricted cash and cash equivalents | (16) | (24) | 14 | ||||||||||||||
| Decrease in cash, cash equivalents and restricted cash and cash equivalents | (212) | (2,105) | (419) | ||||||||||||||
| Cash, cash equivalents and restricted cash and cash equivalents at beginning of year | 2,137 | 4,242 | 4,661 | ||||||||||||||
| Cash, cash equivalents and restricted cash and cash equivalents at end of year | 1,925 | 2,137 | 4,242 | ||||||||||||||
| Less: cash, cash equivalents and restricted cash and cash equivalents at end of period for discontinued operations | (55) | (39) | (58) | ||||||||||||||
| Cash, cash equivalents and restricted cash at end of period for continuing operations | $ | 1,870 | $ | 2,098 | $ | 4,184 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Supplemental disclosure of cash flow information from continuing operations: | |||||||||||||||||
| Cash payments for interest, net of amounts capitalized | $ | 591 | $ | 419 | $ | 373 | |||||||||||
| Cash payments for taxes, net of refunds | $ | 86 | $ | 196 | $ | 253 | |||||||||||
| Changes in construction payables | $ | (109) | $ | 17 | $ | 145 | |||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and Business of Company
Las Vegas Sands Corp. ("LVSC" or together with its subsidiaries, the "Company") is incorporated in Nevada and its common stock is traded on the New York Stock Exchange under the symbol "LVS."
The ordinary shares of the Company's subsidiary, Sands China Ltd. ("SCL," the indirect owner and operator of the majority of the Company's operations in the Macao Special Administrative Region ("Macao") of the People's Republic of China) are listed on The Main Board of The Stock Exchange of Hong Kong Limited. The shares were not, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent a registration under the Securities Act of 1933, as amended, or an applicable exception from such registration requirements.
COVID-19 Pandemic Update
In early January 2020, an outbreak of a respiratory illness caused by a novel coronavirus (“COVID-19”) was identified and the disease spread rapidly across the world causing the World Health Organization to declare the outbreak of a pandemic on March 12, 2020 (the “COVID-19 Pandemic”). Governments around the world mandated actions to contain the spread of the virus that included stay-at-home orders, quarantines, capacity limits, closures of non-essential businesses, including entertainment activities, and significant restrictions on travel. The government actions varied based upon a number of factors, including the extent and severity of the COVID-19 Pandemic within their respective countries and jurisdictions.
Macao
Visitation to the Macao Special Administrative Region (“Macao”) of the People’s Republic of China (“China”) has remained substantially below pre-COVID-19 levels as a result of various government policies limiting or discouraging travel. As of the date of this report, other than people from mainland China who in general may enter Macao without quarantine subject to them holding the appropriate travel documents, a negative COVID-19 test result issued within a specified time period and a green health-code, there remains in place a complete ban on entry or a need to undergo various quarantine requirements depending on the person’s residency and recent travel history. The Company’s operations in Macao will continue to be impacted and subject to changes in the government policies of Macao, China, Hong Kong and other jurisdictions in Asia addressing travel and public health measures associated with COVID-19.
On March 3, 2021, the negative COVID-19 test requirement to enter casinos was removed; however, various other health safeguards implemented by the Macao government remain in place, including mandatory mask protection, limitation on the number of seats per table game, slot machine spacing and temperature checks. Management is currently unable to determine when the remaining measures will be eased or cease to be necessary.
As of the date of this report, most businesses are allowed to remain open, subject to social distancing and health code checking requirements as designated by the Macao government. In January 2022, the Macao government commenced the roll out and trial of a non-mandatory contact tracing QR code function at a range of businesses including government buildings, restaurants, hotels and other public venues.
In support of the Macao government’s initiatives to fight the COVID-19 Pandemic, the Company provided one tower (approximately 2,100 hotel rooms) at the Sheraton Grand Macao to the Macao government to house individuals who returned to Macao for quarantine purposes. This tower has been utilized for quarantine purposes on several occasions during 2020 and 2021. From October 4, 2021 to October 30, 2021, an additional tower (approximately 1,800 hotel rooms) at the Sheraton Grand Macao was provided.
The Company’s Macao gaming operations remained open during the year ended December 31, 2021, compared to the same period in 2020 when the Company’s Macao gaming operations were suspended from February 5, 2020 to February 19, 2020 due to a government mandate, except for gaming operations at The Londoner Macao, which resumed on February 27, 2020. Some of the Company’s Macao hotel facilities were also closed during the casino suspension in response to the decrease in visitation and were gradually reopened from February 20, 2020, with the exception of the Conrad Macao at The Londoner Macao (the “Conrad hotel”), which reopened on June 13, 2020.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Operating hours at restaurants and other venues across the Company’s Macao properties are continuously being adjusted in line with fluctuations in guest visitation. The majority of retail outlets in the Company’s various shopping malls are open with reduced operating hours. The timing and manner in which these areas will return to full operation are currently unknown.
The Company’s ferry operations between Macao and Hong Kong remain suspended. The timing and manner in which the Company’s ferry operations will be able to resume are currently unknown.
The Company’s operations in Macao have been significantly impacted by the reduced visitation to Macao. The Macao government announced total visitation from mainland China to Macao increased 48.2% and decreased 74.8% for 2021, as compared to 2020 and 2019, respectively. The Macao government also announced gross gaming revenue increased by 43.7% and decreased by 70.3% for 2021, as compared to 2020 and 2019, respectively.
Singapore
As of the date of this report, entry into Singapore is largely limited to Singapore citizens and permanent residents, with certain visitors allowed from specified countries on a quarantine-free basis, subject to certain requirements and health control measures. Additionally, there are no stay-at-home orders or curfews except for certain individuals arriving into Singapore who are subject to quarantine and individuals who may be assessed to have been exposed to COVID-19 as a result of the government’s contact tracing efforts. All operations are currently subject to limited capacities and other social distancing measures. As of the date of this report, Marina Bays Sands has implemented vaccination-differentiated safe management measures ("VDS"), allowing only fully vaccinated individuals; individuals who have recovered from COVID-19 within the past 180 days; or individuals medically ineligible for COVID-19 vaccination to enter the casino and other attractions.
Vaccinated Travel Lanes (VTLs) (travel corridors for vaccinated visitors in receipt of a negative COVID-19 test) were introduced for a number of key source markets in November and December of 2021, however, due to the emergence of the Omicron variant, new ticket sales for the VTLs were suspended on December 23, 2021 through January 20, 2022.
The Company’s operations at Marina Bay Sands will continue to be impacted and subject to changes in the government policies of Singapore and other jurisdictions in Asia addressing travel and public health measures associated with COVID-19. These government policies will continue to impact (i) the number of people allowed at business-to-business events, sporting events and live performances; (ii) closure or limited seating at food and beverage or entertainment establishments; and (iii) casino capacity limits, among other restrictions. During the year ended December 31, 2021, gaming operations at Marina Bay Sands were closed from May 17 until May 18, and from July 22 until August 4 due to pandemic-related measures in consultation with the Singapore government authorities.
As a result of the border closures, visitation to Marina Bay Sands continues to be impacted by the effects of the COVID-19 Pandemic. The Singapore Tourism Board (“STB”) announced for the 12 months ended December 31, 2021, total visitation to Singapore decreased approximately 88.0% and 98.3%, as compared to the same period in 2020 and 2019, respectively.
Las Vegas
Effective June 1, 2021, pursuant to State of Nevada and Nevada Gaming Control Board decisions, all capacity limits, restrictions on large gatherings and other restrictions, which had been implemented in response to the impact of the COVID-19 Pandemic, were lifted and the Company’s Las Vegas Operating Properties are operating under pre-pandemic guidelines.
During the year ended December 31, 2021, the Company’s Las Vegas Operating Properties were open subject to various capacity limits in place at various times throughout the year. This compares to the same period in 2020 when the Company’s Las Vegas Operating Properties operations were suspended on March 18, 2020, due to a government mandate, and on June 4, 2020, The Venetian Tower, The Palazzo Tower and select food and beverage outlets reopened, with certain operations subject to reduced capacity. Convention, meeting and certain entertainment related operations remained closed for a portion of the year ended December 31, 2020.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Visitation to the Company’s Las Vegas Operating Properties continues to be impacted by the effects of the COVID-19 Pandemic; however, visitation has increased since restrictions have been lifted. The Las Vegas Convention and Visitors Authority ("LVCVA") announced for the twelve months ended December 31, 2021, total visitation to Las Vegas increased 69.4% and decreased 24.2%, respectively, as compared to the same period in 2020 and 2019. The LVCVA also announced for the twelve months ended December 31, 2021, gross gaming revenue for the Las Vegas Strip increased 89.9%, and 7.6%, as compared to the same period in 2020 and 2019, respectively.
Summary
The disruptions arising from the COVID-19 Pandemic continued to have a significant adverse impact on the Company’s financial condition and operations during the year ended December 31, 2021. The duration and intensity of this global health emergency and related disruptions are uncertain. Given the dynamic nature of these circumstances, the impact on the Company’s consolidated results of operations, cash flows and financial condition may continue to be material in the future, but cannot be reasonably estimated at this time as it is unknown when the impact of the COVID-19 Pandemic will end, when or how quickly the current travel and operational restrictions will be modified or cease to be necessary and the resulting impact on the Company’s business and the willingness of tourism patrons to spend on travel and entertainment and business patrons to spend on MICE.
While each of the Company’s properties were open and operating at reduced levels due to lower visitation and the implementation of required safety measures during the year ended December 31, 2021, the current economic and regulatory environment on a global basis and in each of the Company’s jurisdictions continues to evolve. The Company cannot predict the manner in which governments will react as the global and regional impact of the COVID-19 Pandemic changes over time, which could significantly alter the Company’s current operations.
The Company has a strong balance sheet and sufficient liquidity in place, including total cash and cash equivalents balance, excluding restricted cash and cash equivalents, of $1.85 billion and access to $1.50 billion, $1.75 billion and $438 million of available borrowing capacity from the LVSC Revolving Facility, 2018 SCL Revolving Facility and the 2012 Singapore Revolving Facility, respectively, and 3.69 billion Singapore dollars (“SGD,” approximately $2.73 billion at exchange rates in effect on December 31, 2021) under the Singapore Delayed Draw Term Facility, exclusively for capital expenditures for the MBS Expansion Project, as later defined, (subject to restrictions as described in Note 10 — Long-Term Debt), as of December 31, 2021. The Company believes it is able to support continuing operations, complete the major construction projects that are underway and respond to the current COVID-19 Pandemic challenges. The Company has taken various mitigating measures to manage through the current environment, including a cost and capital expenditure reduction program to minimize cash outflow for non-essential items.
Macao Subconcession
Gaming in Macao is administered by the government through concession agreements awarded to three different concessionaires and three subconcessionaires, of which Venetian Macau Limited (“VML,” a subsidiary of Sands China Ltd.) is one. These concession agreements expire on June 26, 2022. If VML’s subconcession is not extended or renewed, VML may be prohibited from conducting gaming operations in Macao, and VML could cease to generate revenues from the gaming operations when the subconcession agreement expires on June 26, 2022. In addition, all of VML’s casino premises and gaming-related equipment could be automatically transferred to the Macao government without any compensation to VML.
On January 18, 2022, the Macao Legislative Assembly published a draft bill entitled Amendment to Law No. 16/2001 to amend Macao’s gaming Law 16/2002 (the “Gaming Law”).
Certain changes to the Gaming Law set out in the draft bill include a reduction in the term of future gaming concessions to ten (10) years; authorization of up to six (6) gaming concession contracts; an increase in the minimum capital contribution of concessionaires to 5 billion patacas (approximately $622 million at exchange rates in effect on December 31, 2021); and a prohibition of revenue sharing arrangements between gaming promoters and concessionaires.
The Company is actively monitoring developments with respect to the Macao government’s Gaming Law amendment and concession renewal process and continues to believe it will be successful in extending the term of its subconcession and/or obtaining a new gaming concession when its current subconcession expires; however, it is
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
possible the Macao government could further change or interpret the associated gaming laws in a manner that could negatively impact the Company.
Under the Company’s SCL senior notes indentures, upon the occurrence of any event resulting from any change in Gaming Law (as defined in the indentures) after which none of Sands China Ltd. (“SCL”) or any of its subsidiaries own or manage casino or gaming areas or operate casino games of fortune and chance in Macao in substantially the same manner as they are owning or managing casino or gaming areas or operating casino games as of the issue date of the SCL senior notes, for a period of 30 consecutive days or more, and such event has a material adverse effect on the financial condition, business, properties or results of operations of SCL and its subsidiaries, taken as a whole, each holder of the SCL senior notes would have the right to require the Company to repurchase all or any part of such holder's SCL senior notes at par, plus any accrued and unpaid interest (the “Investor Put Option”).
Additionally, under the 2018 SCL Credit Facility, the events that trigger an Investor Put Option under the SCL senior notes (as described above) would be an event of default, which may result in commitments being immediately cancelled, in whole or in part, and the related outstanding balances and accrued interest, if any, becoming immediately due and payable.
The subconcession not being extended or renewed and the potential impact if holders of the notes and the agent have the ability to, and make the election to, accelerate the repayment of the Company’s debt would have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. The Company intends to follow the process for a concession renewal once the process and requirements are announced by the Macao government.
Operations
The Company is a developer of destination properties ("Integrated Resorts") that feature premium accommodations, world-class gaming, entertainment and retail malls, convention and exhibition facilities, celebrity chef restaurants and other amenities.
Macao
The Company currently owns 69.9% of SCL, which includes the operations of The Venetian Macao Resort Hotel ("The Venetian Macao"), The Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Hotel Macao, Cotai Strip (the "Four Seasons Macao"), Sands Macao and other ancillary operations that support these properties, as further discussed below. The Company operates the gaming areas within these properties pursuant to a 20-year gaming subconcession agreement, which expires in June 2022.
The Venetian Macao anchors the Cotai Strip, the Company's master-planned development of Integrated Resorts on an area of approximately 140 acres in Macao. The Venetian Macao includes a 39-floor luxury hotel with over 2,900 suites; approximately 374,000 square feet of gaming space; a 15,000-seat arena; an 1,800-seat theater; a mall with retail and dining space of approximately 945,000 square feet; and a convention center and meeting room complex of approximately 1.2 million square feet.
The Londoner Macao (previously Sands Cotai Central) is the Company's largest Integrated Resort on the Cotai Strip and is located across the street from The Venetian Macao, The Parisian Macao and The Plaza Macao and Four Seasons Macao. The Londoner Macao is the result of the renovation, expansion and rebranding of Sands Cotai Central, which included the addition of extensive thematic elements both externally and internally. Construction work on The Londoner Macao Hotel and Londoner Court was completed in 2021. The Company anticipates the Londoner Arena, expansion of the Shoppes at Londoner and other amenities to be completed before the end of 2022. The Londoner Macao presents a range of new attractions and features, including some of London’s most recognizable landmarks, such as the Houses of Parliament and the Elizabeth Tower (commonly known as "Big Ben"), and interactive guest experiences. The Londoner Macao Hotel opened in January 2021 with 594 London-themed suites, including 14 exclusive Suites by David Beckham. The Integrated Resort also features Londoner Court, which opened on September 16, 2021, and includes approximately 370 luxury suites. The expansion of our retail offerings was rebranded as Shoppes at Londoner in 2021. The Integrated Resort features four hotel towers. The first hotel tower includes approximately 650 five-star rooms and suites under the Conrad brand and The Londoner Macao Hotel. The second hotel tower consists of approximately 1,800 rooms and suites under the
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Sheraton brand. The third hotel tower consists of approximately 2,100 rooms and suites under the Sheraton brand. The fourth hotel tower consists of Londoner Court and approximately 400 rooms and suites under the St. Regis brand. Within The Londoner Macao, the Company also owns and currently operates approximately 351,000 square feet of gaming space, approximately 369,000 square feet of meeting space and approximately 532,000 square feet of retail space, as well as entertainment and dining facilities.
The Parisian Macao is an Integrated Resort connected to The Venetian Macao and The Plaza Macao and Four Seasons Macao, which includes approximately 248,000 square feet of gaming space. The Parisian Macao also features approximately 2,500 rooms and suites; approximately 296,000 square feet of retail and dining space; a meeting room complex of approximately 63,000 square feet; and a 1,200-seat theater.
The Plaza Macao and Four Seasons Macao features 360 rooms and suites managed and operated by FS Macau Lda. and is located adjacent and connected to The Venetian Macao. Within the Integrated Resort, the Plaza Casino features approximately 127,000 square feet of gaming space; 19 Paiza mansions; retail space of approximately 244,000 square feet, which is connected to the mall at The Venetian Macao; several food and beverage offerings; and conference, banquet and other facilities. The Grand Suites at Four Seasons opened in October 2020 and features 289 luxury suites.
The Sands Macao, the first Las Vegas-style casino in Macao, offers approximately 212,000 square feet of gaming space and a 289-suite hotel tower, as well as several restaurants, VIP facilities, a theater and other high-end services and amenities.
Singapore
The Company owns and operates the Marina Bay Sands in Singapore, which features three 55-story hotel towers (totaling approximately 2,600 rooms and suites), the Sands SkyPark (which sits atop the hotel towers and features an infinity swimming pool and several dining options), approximately 160,000 square feet of gaming space, an enclosed retail, dining and entertainment complex of approximately 800,000 net leasable square feet, a convention center and meeting room complex of approximately 1.2 million square feet, a theater and a landmark iconic structure at the bay-front promenade that contains an art/science museum. The Company recently announced an expansion project at Marina Bay Sands, as further described below.
United States
Las Vegas
The Company owns and operates The Venetian Resort Hotel Casino ("The Venetian Resort Las Vegas"), with three hotel towers, which include The Venetian Tower, a Renaissance Venice-themed resort; the adjoining Venezia Tower; The Palazzo Tower, a resort featuring modern European ambience and design; and an expo and convention center of approximately 1.2 million square feet (the "Sands Expo Center," together with The Venetian Resort Las Vegas, the "Las Vegas Operating Properties"). The Las Vegas Operating Properties, situated on the Las Vegas Strip, is an Integrated Resort with approximately 7,100 suites; approximately 225,000 square feet of gaming space; 2.3 million gross square feet of state-of-the-art exhibition and meeting facilities that can be configured to provide small, mid-size or large meeting rooms and/or accommodate large-scale multi-media events or trade shows.
The Company is working with Madison Square Garden Company ("MSG") to bring a 875,000-square-foot venue built specifically for music and entertainment to Las Vegas. MSG is currently building the MSG Sphere at The Venetian, an 18,000-seat venue, which will be located near, with connectivity to, the Las Vegas Operating Properties and is currently expected to open in 2023.
Development Projects
The Company regularly evaluates opportunities to improve its product offerings, such as refreshing its meeting and convention facilities, suites and rooms, retail malls, restaurant and nightlife mix and its gaming areas, as well as other anticipated revenue generating additions to the Company's Integrated Resorts.
Macao
The Londoner Macao is the result of our renovation, expansion and rebranding of Sands Cotai Central, which included the addition of extensive thematic elements both externally and internally. Construction work on The
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Londoner Macao Hotel and Londoner Court was completed in 2021. The Company anticipates the Londoner Arena, expansion of the Shoppes at Londoner and other amenities to be completed before the end of 2022. The Londoner Macao features new attractions and features internally and externally from London, including some of London’s most recognizable landmarks, such as the Houses of Parliament and the Elizabeth Tower (commonly known as "Big Ben"), and interactive guest experiences. The Londoner Macao Hotel opened in January 2021 with 594 London-themed suites, including 14 exclusive Suites by David Beckham. The Integrated Resort also features Londoner Court, which opened on September 16, 2021, and includes approximately 370 luxury suites. The expansion of the retail offerings has been rebranded as Shoppes at Londoner in 2021.
The Company anticipates the total costs associated with The Londoner Macao development project described above and the completed The Grand Suites at Four Seasons to be approximately $2.2 billion, of which $2.0 billion was spent as of December 31, 2021. The Company expects to fund its developments through a combination of cash on hand, borrowings from the 2018 SCL Credit Facility and surplus from operating cash flows.
Singapore
In April 2019, the Company's wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”) and the Singapore Tourism Board (the “STB”) entered into a development agreement (the “Development Agreement”) pursuant to which MBS will construct a development, the MBS Expansion Project, which will include a hotel tower with a rooftop attraction, convention and meeting facilities and a state-of-the-art live entertainment arena with approximately 15,000 seats. The Development Agreement provides for a total project cost of approximately SGD 4.5 billion (approximately $3.3 billion at exchange rates in effect on December 31, 2021). The amount of the total project cost will be finalized as the Company completes design and development and begins construction. In connection with the Development Agreement, MBS entered into a lease with the STB for the parcels of land underlying the project. In April 2019 and in connection with the lease, MBS provided various governmental agencies in Singapore the required premiums, deposits, stamp duty, goods and services tax and other fees in an aggregate amount of approximately SGD 1.54 billion (approximately $1.14 billion at exchange rates in effect at the time of the transaction). The Company amended its 2012 Singapore Credit Facility to provide for the financing of the development and construction costs, fees and other expenses related to the MBS Expansion Project pursuant to the Development Agreement. On September 7, 2021, the Company further amended the 2012 Singapore Credit Facility, which, among other things, extended the deadline for delivering the construction cost estimate and the construction schedule for the MBS Expansion Project to March 31, 2022. The Company is in the process of reviewing the budget and timing of the MBS expansion based on the impact of the COVID-19 Pandemic and other factors. If the Company does not meet the March 31, 2022 deadline, the Company will not be permitted to make further draws on the Singapore Delayed Draw Term Facility until these items are delivered to lenders.
Other
The Company continues to evaluate current development projects in each of its markets and pursue new development opportunities globally.
Discontinued Operations Held for Sale
On March 2, 2021, the Company entered into definitive agreements to sell its Las Vegas real property and operations, including The Venetian Resort Las Vegas and the Sands Expo and Convention Center (collectively referred to as the “Las Vegas Operations”) for a total enterprise value of $6.25 billion to Pioneer OpCo, LLC, an affiliate of certain funds managed by affiliates of Apollo Global Management, Inc., and VICI Properties L.P. The Company currently anticipates the closing of the transaction in the first quarter of 2022, subject to regulatory review and other closing conditions. Additionally, as discussed in “Note 3 — Held for Sale — Discontinued Operations,” the Company concluded the Las Vegas Operations met the criteria for held for sale and discontinued operations beginning in the first quarter of 2021. As a result, the Las Vegas Operations is presented in the accompanying consolidated statements of operations and cash flows as a discontinued operation for all periods presented. Current and non-current assets and liabilities of the Las Vegas Operations are presented in the accompanying consolidated balance sheets as current assets and liabilities held for sale for all periods presented.
Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to the Company's continuing operations.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and variable interest entities in which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could vary from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Such investments are carried at cost, which is a reasonable estimate of their fair value. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. Restricted cash represents those amounts contractually reserved for substantial mall-related repairs and maintenance expenditures. The estimated fair value of the Company's cash equivalents is based on level 1 inputs (quoted market prices in active markets).
Accounts Receivable and Credit Risk
Accounts receivable is comprised of casino, hotel, mall and other receivables, which do not bear interest and are recorded at amortized cost. The Company extends credit to approved casino patrons following background checks and investigations of creditworthiness. The Company also extends credit to gaming promoters in Macao. These receivables can be offset against commissions payable to the respective gaming promoters. Business or economic conditions, the legal enforceability of gaming debts, foreign currency control measures or other significant events in foreign countries could affect the collectability of receivables from patrons and gaming promoters residing in these countries.
Accounts receivable primarily consists of casino receivables. Other than casino receivables, there is no other concentration of credit risk with respect to accounts receivable. The Company believes the concentration of its credit risk in casino receivables is mitigated substantially by its credit evaluation process, credit policies, credit control and collection procedures, and also believes there are no concentrations of credit risk for which a provision has not been established. Although management believes the provision is adequate, it is possible the estimated amount of cash collections with respect to accounts receivable could change.
Inventories
Inventories consist primarily of food, beverage, retail products and operating supplies, which are stated at the lower of cost or net realizable value. Cost is determined by the weighted average and specific identification methods.
Property and Equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization, and accumulated impairment losses, if any. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives of the assets, which do not exceed the lease term for leasehold improvements, as follows:
| Land improvements, building and building improvements | 10 | to | 50 | years | ||||||||||
| Furniture, fixtures and equipment | 3 | to | 20 | years | ||||||||||
| Leasehold improvements | 3 | to | 15 | years | ||||||||||
| Transportation | 5 | to | 20 | years |
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations, such as contractual life, and are periodically reviewed. Future events, such as property expansions,
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
property developments, new competition or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets.
Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the consolidated statements of operations.
The Company evaluates its property and equipment and other long-lived assets for impairment in accordance with related accounting standards. For assets to be disposed of, the Company recognizes the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is estimated based on comparable asset sales, solicited offers or a discounted cash flow model.
Fixed assets are reviewed for impairment whenever indicators of impairment exist. Determining the recoverability of the Company's asset groups is judgmental in nature and requires the use of significant estimates and assumptions, including estimated cash flows, probability weighting of potential scenarios, costs to complete construction for assets under development, growth rates and future market conditions, among others. Future changes to the Company's estimates and assumptions based upon changes in macro-economic factors, regulatory environments, operating results or management's intentions may result in future changes to the recoverability of these asset groups.
Leases
Management determines if a contract is, or contains, a lease at inception or modification of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset.
Finance and operating lease right-of-use ("ROU") assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. As the implicit rate is not determinable in most of the Company’s leases, management uses the Company’s incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The expected lease terms include options to extend or terminate the lease when it is reasonably certain the Company will exercise such option. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease term.
The Company’s lease arrangements have lease and non-lease components. For leases in which the Company is the lessee, the Company accounts for the lease components and non-lease components as a single lease component for all classes of underlying assets (primarily real estate). Leases in which the Company is the lessor are substantially all accounted for as operating leases and the lease components and non-lease components are accounted for separately. Leases with an expected term of 12 months or less are not accounted for on the balance sheet and the related lease expense is recognized on a straight-line basis over the expected lease term.
Capitalized Interest and Internal Costs
Interest costs associated with major construction projects are capitalized and included in the cost of the projects. When no debt is incurred specifically for construction projects, interest is capitalized on amounts expended using the weighted average cost of the Company's outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or construction activity is suspended for more than a brief period. During the years ended December 31, 2021, 2020 and 2019, the Company capitalized $15 million, $21 million and $9 million, respectively, of interest expense.
During the years ended December 31, 2021, 2020 and 2019, the Company capitalized approximately $49 million, $37 million and $27 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.
Deferred Financing Costs and Original Issue Discounts
Certain direct and incremental costs and discounts incurred in obtaining loans are capitalized and amortized to interest expense based on the terms of the related debt instruments using the effective interest method.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Leasehold Interests in Land
Leasehold interests in land represent payments for the use of land over an extended period of time. The leasehold interests in land are amortized on a straight-line basis over the expected term of the related lease agreements.
Revenue Recognition
Revenue from contracts with customers primarily consists of casino wagers, room sales, food and beverage transactions, rental income from the Company’s mall tenants, convention sales and entertainment and ferry ticket sales. These contracts can be written, oral or implied by customary business practices.
Gross casino revenue is the aggregate of gaming wins and losses. The commissions rebated to gaming promoters and premium players for rolling play, cash discounts and other cash incentives to patrons related to gaming play are recorded as a reduction to gross casino revenue. Gaming contracts include a performance obligation to honor the patron’s wager and typically include a performance obligation to provide a product or service to the patron on a complimentary basis to incentivize gaming or in exchange for points earned under the Company’s loyalty programs.
For wagering contracts that include complimentary products and services provided by the Company to incentivize gaming, the Company allocates the relative stand-alone selling price of each product and service to the respective revenue type. Complimentary products or services provided under the Company's control and discretion, which are supplied by third parties, are recorded as an operating expense.
For wagering contracts that include products and services provided to a patron in exchange for points earned under the Company’s loyalty programs, the Company allocates the estimated fair value of the points earned to the loyalty program liability. The loyalty program liability is a deferral of revenue until redemption occurs. Upon redemption of loyalty program points for Company-owned products and services, the stand-alone selling price of each product or service is allocated to the respective revenue type. For redemptions of points with third parties, the redemption amount is deducted from the loyalty program liability and paid directly to the third party. Any discounts received by the Company from the third party in connection with this transaction are recorded to other revenue.
After allocation to the other revenue types for products and services provided to patrons as part of a wagering contract, the residual amount is recorded to casino revenue as soon as the wager is settled. As all wagers have similar characteristics, the Company accounts for its gaming contracts collectively on a portfolio basis versus an individual basis.
Hotel revenue recognition criteria are met at the time of occupancy. Food and beverage revenue recognition criteria are met at the time of service. Convention revenues are recognized when the related service is rendered or the event is held. Deposits for future hotel occupancy, convention space or food and beverage services contracts are recorded as deferred revenue until the revenue recognition criteria are met. Cancellation fees for convention contracts are recognized upon cancellation by the customer and are included in other revenues. Ferry and entertainment revenue recognition criteria are met at the completion of the ferry trip or event, respectively. Revenue from contracts with a combination of these services is allocated pro rata based on each service’s relative stand-alone selling price.
Revenue from leases is primarily recorded to mall revenue and is generated from base rents and overage rents received through long-term leases with retail tenants. Base rent, adjusted for contractual escalations, is recognized on a straight-line basis over the term of the related lease. Overage rent is paid by a tenant when its sales exceed an agreed upon minimum amount and is not recognized by the Company until the threshold is met.
Contract and Contract Related Liabilities
The Company provides numerous products and services to its customers. There is often a timing difference between the cash payment by the customers and recognition of revenue for each of the associated performance obligations. The Company has the following main types of liabilities associated with contracts with customers: (1) outstanding chip liability, (2) loyalty program liability and (3) customer deposits and other deferred revenue for gaming and non-gaming products and services yet to be provided.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The outstanding chip liability represents the collective amounts owed to gaming promoters and patrons in exchange for gaming chips in their possession. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. The loyalty program liability represents a deferral of revenue until patron redemption of points earned. The loyalty program points are expected to be redeemed and recognized as revenue within one year of being earned. Due to travel restrictions resulting from the COVID-19 Pandemic, the Company temporarily extended the redemption period of these points for patrons not able or willing to travel to Singapore and for all patrons with points at its properties located in Macao. The required redemption period is expected to be reinstated during 2022. Customer deposits and other deferred revenue represent cash deposits made by customers for future services provided by the Company. With the exception of mall deposits, which typically extend beyond a year based on the terms of the lease, the majority of these customer deposits and other deferred revenue are expected to be recognized as revenue or refunded to the customer within one year of the date the deposit was recorded.
The following table summarizes the liability activity related to contracts with customers:
| Outstanding Chip Liability | Loyalty Program Liability | Customer Deposits and Other Deferred Revenue**(1)** | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Balance at January 1 | $ | 197 | $ | 510 | $ | 62 | $ | 63 | $ | 633 | $ | 591 | |||||||||||||||||||||||
| Balance at December 31 | 74 | 197 | 61 | 62 | 618 | 633 | |||||||||||||||||||||||||||||
| Increase (decrease)(2) | $ | (123) | $ | (313) | $ | (1) | $ | (1) | $ | (15) | $ | 42 |
(1)Of this amount, $145 million, $152 million and $154 million as of December 31, 2021 and 2020 and January 1, 2020, respectively, relates to mall deposits that are accounted for based on lease terms usually greater than one year.
(2)The decrease noted in outstanding chip liability in 2021 primarily resulted from the closure of fixed room junket operations in December 2021.
Gaming Taxes
The Company is subject to taxes based on gross gaming revenue in the jurisdictions in which it operates, subject to applicable jurisdictional adjustments. These gaming taxes, including the goods and services tax in Singapore, are an assessment on the Company's gaming revenue and are recorded as a casino expense in the accompanying consolidated statements of operations. These taxes were $1.22 billion, $812 million and $3.93 billion for the years ended December 31, 2021, 2020 and 2019, respectively.
Pre-Opening and Development Expenses
The Company accounts for costs incurred in the development and pre-opening phases of new ventures in accordance with accounting standards regarding start-up activities. Pre-opening expenses represent personnel and other costs incurred prior to the opening of new ventures and are expensed as incurred. Development expenses include the costs associated with the Company's evaluation and pursuit of new business opportunities, which are also expensed as incurred.
Advertising Costs
Costs for advertising are expensed the first time the advertising takes place or as incurred. Advertising costs included in the accompanying consolidated statements of operations were $31 million, $26 million and $112 million for the years ended December 31, 2021, 2020 and 2019, respectively.
Corporate Expenses
Corporate expense represents payroll, travel, legal fees, professional fees and various other expenses not allocated or directly related to the Company's Integrated Resort operations and related ancillary operations.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Foreign Currency
The functional currency of most of our foreign subsidiaries is the local currency in which the subsidiary operates. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date and income statement accounts are translated at the average exchange rates during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (loss).
Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income (expense).
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and all other non-stockholder changes in equity, or other comprehensive income (loss). The balance of accumulated other comprehensive income (loss) consisted of foreign currency translation adjustment and cash flow hedge fair value adjustments.
Earnings (Loss) Per Share
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings (loss) per share consisted of the following:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Weighted average common shares outstanding (used in the calculation of basic earnings (loss) per share) | 764 | 764 | 771 | ||||||||||||||
| Potential dilution from stock options and restricted stock and stock units | — | — | — | ||||||||||||||
| Weighted average common and common equivalent shares (used in the calculation of diluted earnings (loss) per share) | 764 | 764 | 771 | ||||||||||||||
| Antidilutive stock options excluded from the calculation of diluted earnings (loss) per share | 9 | 9 | 3 |
Stock-Based Employee Compensation
Stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized over the employee's requisite service period (generally the vesting period of the equity grant). The Company's stock-based employee compensation plans are more fully discussed in "Note 16 — Stock-Based Employee Compensation."
Income Taxes
The Company is subject to income taxes in the U.S. (including federal and state) and numerous foreign jurisdictions in which it operates. The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards.
Accounting standards regarding income taxes require a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is "more-likely-than-not" such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a "more-likely-than-not" realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company's experience with operating loss and tax credit carryforwards not expiring and tax planning strategies.
Management will reassess the realization of deferred tax assets each reporting period and consider the scheduled reversal of deferred tax liabilities, sources of taxable income and tax planning strategies. To the extent the financial results of these operations improve and it becomes "more-likely-than-not" the deferred tax assets are
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
realizable, the Company will be able to reduce the valuation allowance in the period such determination is made as appropriate.
Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may be different.
Accounting for Derivative Instruments and Hedging Activities
Accounting standards require an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If specific conditions are met, a derivative may be designated as a hedge of specific financial exposures. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and, if used in hedging activities, on its effectiveness as a hedge. In order to qualify for hedge accounting, the underlying hedged item must expose the Company to risks associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce the Company's exposure to market fluctuation throughout the hedge period.
Changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices, can impact the Company’s results of operations. The Company’s primary exposures to market risk are interest rate risk associated with long-term debt and foreign currency exchange rate risk associated with the Company’s operations outside the United States. The Company has a policy aimed at managing interest rate risk associated with its current and anticipated future borrowings and foreign currency exchange rate risk associated with operations of its foreign subsidiaries. This policy enables the Company to use any combination of swaps, futures, options, caps, forward contracts and similar instruments. The Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions.
Recent Accounting Pronouncements
The Company’s management has evaluated all of the recently issued, but not yet effective, accounting standards that have been issued or proposed by the Financial Accounting Standards Board (“FASB”) or other standards-setting bodies through the filing date of these financial statements and does not believe the future adoption of any such pronouncements will have a material effect on the Company’s financial position, results of operations and cash flows.
Reclassification
Certain amounts in the accompanying consolidated financial statements and accompanying notes have been reclassified to be consistent with the current period presentation. These reclassifications had no effect on net income for the prior periods.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 3 — Held for Sale — Discontinued Operations
On March 2, 2021, the Company entered into definitive agreements to sell the Las Vegas Operations for an aggregate purchase price of approximately $6.25 billion (the “Las Vegas Sale”) to Pioneer OpCo, LLC (“OpCo”), an affiliate of certain funds managed by affiliates of Apollo Global Management, Inc., and VICI Properties L.P. (“VICI” and together with OpCo, the “Purchasers”). Under the terms of the agreements, OpCo will acquire subsidiaries that hold the operating assets and liabilities of the Las Vegas Operations for approximately $1.05 billion in cash, subject to certain post-closing adjustments, and $1.20 billion in seller financing in the form of a six-year term loan credit and security agreement and VICI will acquire subsidiaries that hold the real estate and real estate-related assets of the Las Vegas Operations for approximately $4.0 billion in cash. The closing of the Las Vegas Sale is subject to customary closing conditions, including regulatory approvals, and is anticipated to close in the first quarter of 2022.
In connection with the closing, the Company and OpCo will enter into a post-closing contingent lease support agreement (the “Contingent Lease Support Agreement”) pursuant to which, among other things, the Company may be required to make certain payments (“Support Payments”) to OpCo. The Support Payments are payable on a monthly basis following closing through the year ending December 31, 2023, based upon the performance of the Las Vegas Operations relative to certain agreed upon target metrics and subject to quarterly and annual adjustments. The target metrics are measured against a benchmark annual EBITDAR (as defined in the Contingent Lease Support Agreement) of the Las Vegas Operations equal to $500 million for 2022 and 2023 (as it may be adjusted as a result of when the closing occurs). The Company’s payment obligations are subject to an annual cap equal to $250 million, subject to prorated reduction depending on when the closing occurs. Each monthly Support Payment is subject to a prorated cap based on the annual cap (as it may be adjusted as a result of when the closing occurs).
After consideration of the relevant facts, the Company concluded the assets and liabilities of the Las Vegas Operations met the criteria for classification as held for sale. The Company further concluded the proposed disposal activities represented a strategic shift that will have a major effect on the Company’s operations and financial results and qualified for presentation as discontinued operations in accordance with FASB Accounting Standards Codification (“ASC”) 205-20. Accordingly, the financial results of the Las Vegas Operations are presented in the accompanying consolidated statements of operations and cash flows as discontinued operations for all periods presented.
The Las Vegas Operations are recorded at the carrying value of the assets held for sale. The fair value of these assets was determined to be the stated sales price per the agreements, which is greater than the carrying amount of the net assets and consequently no impairment charge was recognized. Depreciation and amortization on the assets held for sale ceased upon entering into the Las Vegas Sale agreements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table represents summarized balance sheet information of assets and liabilities held for sale:
| December 31, 2021 | December 31, 2020 | ||||||||||
| (In millions) | |||||||||||
| Cash and cash equivalents | $ | 55 | $ | 39 | |||||||
| Accounts receivable, net of provision for credit losses of $58 and $59 | 126 | 86 | |||||||||
| Inventories | 9 | 10 | |||||||||
| Prepaid expenses and other | 23 | 23 | |||||||||
| Property and equipment, net | 2,864 | 2,830 | |||||||||
| Other assets, net | 226 | 234 | |||||||||
| Total held for sale assets in the balance sheet(1) | $ | 3,303 | $ | 3,222 | |||||||
| Accounts payable | $ | 24 | $ | 9 | |||||||
| Construction payables | 8 | 6 | |||||||||
| Other accrued liabilities | 318 | 232 | |||||||||
| Long-term debt | 2 | 3 | |||||||||
| Deferred amounts related to mall sale transactions | 338 | 344 | |||||||||
| Other long-term liabilities | 131 | 161 | |||||||||
| Total held for sale liabilities in the balance sheet(1) | $ | 821 | $ | 755 |
(1)All assets and liabilities held for sale were classified as current as it is probable the sale of the Las Vegas Operations will be completed within one year.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table represents summarized income statement information of discontinued operations:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Revenues: | |||||||||||||||||
| Casino | $ | 443 | $ | 228 | $ | 444 | |||||||||||
| Rooms | 454 | 218 | 610 | ||||||||||||||
| Food and beverage | 236 | 126 | 347 | ||||||||||||||
| Convention, retail and other | 138 | 100 | 211 | ||||||||||||||
| Net revenues | 1,271 | 672 | 1,612 | ||||||||||||||
| Resort operations expenses | 626 | 490 | 733 | ||||||||||||||
| Provision for credit losses | 13 | 12 | 8 | ||||||||||||||
| General and administrative | 342 | 294 | 384 | ||||||||||||||
| Corporate | — | 1 | — | ||||||||||||||
| Depreciation and amortization | 25 | 163 | 145 | ||||||||||||||
| Loss on disposal or impairment of assets | 6 | 7 | 9 | ||||||||||||||
| Operating income (loss) | 259 | (295) | 333 | ||||||||||||||
| Interest expense | (13) | (13) | (106) | ||||||||||||||
| Other income (expense) | 1 | 3 | (34) | ||||||||||||||
| Loss on modification or early retirement of debt | — | — | (21) | ||||||||||||||
| Income (loss) from discontinued operations before income tax | 247 | (305) | 172 | ||||||||||||||
| Income tax (expense) benefit | (54) | 62 | (36) | ||||||||||||||
| Net income (loss) from discontinued operations presented in the statement of operations | $ | 193 | $ | (243) | $ | 136 | |||||||||||
| Adjusted Property EBITDA | $ | 290 | $ | (124) | $ | 487 |
For the year ended December 31, 2021, the Company’s Las Vegas Operations were classified as a discontinued operation held for sale. The Company applied the intra-period tax allocation rules to allocate the provision for income taxes between continuing operations and discontinued operations using the “with and without” approach. The Company calculated income tax expense from all financial statement components (continuing and discontinued operations), the “with” computation, and compared that to the income tax expense attributable to continuing operations, the “without” computation. The difference between the “with” and “without” computations was allocated to discontinued operations.
The Company’s effective income tax rate from discontinued operations was 21.9% for the year ended December 31, 2021. This compares to a (20.3)% effective income tax rate from discontinued operations for the year ended December 31, 2020, which reflects the application of the “with and without” approach consistent with intra-period tax allocation rules. During the year ended December 31, 2019, the Company’s effective income tax rate from discontinued operations was 20.9%. The income tax on discontinued operations reflects a 21% corporate income tax rate on the Company’s Las Vegas Operations.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 4 — Accounts Receivable, Net
Accounts receivable consists of the following:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Casino | $ | 313 | $ | 415 | |||||||
| Rooms | 13 | 9 | |||||||||
| Mall | 91 | 49 | |||||||||
| Other | 17 | 34 | |||||||||
| 434 | 507 | ||||||||||
| Less — provision for credit losses | (232) | (255) | |||||||||
| $ | 202 | $ | 252 |
The following table shows the movement in the provision for credit losses recognized for accounts receivable that occurred during the period:
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Balance at January 1 | $ | 255 | $ | 220 | |||||||
| Current period provision for credit losses | 3 | 86 | |||||||||
| Write-offs | (26) | (54) | |||||||||
| Recoveries of receivables previously written-off | 4 | — | |||||||||
| Exchange rate impact | (4) | 3 | |||||||||
| Balance at December 31 | $ | 232 | $ | 255 |
Note 5 — Property and Equipment, Net
Property and equipment consists of the following:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Land and improvements | $ | 449 | $ | 452 | |||||||
| Building and improvements | 14,840 | 14,235 | |||||||||
| Furniture, fixtures, equipment and leasehold improvements | 3,992 | 3,798 | |||||||||
| Transportation | 494 | 524 | |||||||||
| Construction in progress | 1,513 | 1,901 | |||||||||
| 21,288 | 20,910 | ||||||||||
| Less — accumulated depreciation and amortization | (9,438) | (8,630) | |||||||||
| $ | 11,850 | $ | 12,280 |
During the year ended December 31, 2021, the Company recognized a loss on disposal or impairment of assets of $27 million, compared to $73 million for the year ended December 31, 2020, consisting primarily of the asset disposals and demolition costs related to The Londoner Macao. During the year ended December 31, 2019, the Company recognized a loss on disposal or impairment of assets of $81 million, primarily relating to an impairment charge of $65 million of our ferries in Macao.
Depreciation expense was $1.02 billion, $980 million and $1.0 billion for the years ended December 31, 2021, 2020 and 2019, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 6 — Leasehold Interests in Land, Net
Leasehold interests in land consist of the following:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Marina Bay Sands | $ | 1,980 | $ | 2,024 | |||||||
| The Londoner Macao | 293 | 295 | |||||||||
| The Venetian Macao | 241 | 242 | |||||||||
| The Plaza Macao and Four Seasons Macao | 106 | 106 | |||||||||
| The Parisian Macao | 89 | 89 | |||||||||
| Sands Macao | 36 | 37 | |||||||||
| 2,745 | 2,793 | ||||||||||
| Less — accumulated amortization | (579) | (537) | |||||||||
| $ | 2,166 | $ | 2,256 |
The Company amortizes the leasehold interests in land on a straight-line basis over the expected term of the lease, which includes automatic extensions in Macao as discussed further below. Amortization expense of $56 million, $55 million and $51 million was included in amortization of leasehold interests in land expense for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated future amortization expense over the expected term of the lease is approximately $56 million for each of the five years in the period ending December 31, 2026 and $2.07 billion thereafter at exchange rates in effect on December 31, 2021.
Land concessions in Macao generally have an initial term of 25 years with automatic extensions of 10 years thereafter in accordance with Macao law. The Company anticipates a useful life of 50 years related to the land concessions in Macao. The Company has received land concessions from the Macao government to build on the sites on which Sands Macao, The Venetian Macao, The Plaza Macao and Four Seasons Macao, The Londoner Macao and The Parisian Macao are located. The Company does not own these land sites in Macao; however, the land concessions grant the Company exclusive use of the land. As specified in the land concessions, the Company is required to pay premiums for each parcel, as well as make annual rent payments in the amounts and at the times specified in the land concessions. The rent amounts may be revised every five years by the Macao government.
Land concessions in Singapore have an initial term of 60 years. The Company has received land concessions from the Singapore Tourism Board to build on the sites on which Marina Bay Sands and the future MBS Expansion Project are located. The Company does not own these land sites in Singapore; however, the land concessions grant the Company exclusive use of the land. As specified in the land concessions, the Company was required to prepay the premiums for each parcel.
In April 2019, and in connection with the Second Development Agreement, MBS paid $963 million for the additional land concession in connection with the MBS Expansion Project.
Note 7 — Intangible Assets, Net
Intangible assets consist of the following:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Marina Bay Sands gaming license | $ | 53 | $ | 55 | |||||||
| Trademarks and other | 13 | 1 | |||||||||
| 66 | 56 | ||||||||||
| Less — accumulated amortization | (47) | (31) | |||||||||
| Total intangible assets, net | $ | 19 | $ | 25 |
In April 2019, the Company paid SGD 72 million (approximately $53 million at exchange rates in effect at the time of the transaction) to the Singapore Casino Regulatory Authority (the "CRA") as part of the process to renew its
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
gaming license at Marina Bay Sands. This license is being amortized over its three-year term, which expires in April 2022, and is renewable upon submitting an application, paying the applicable license fee and meeting the requirements as determined by the CRA. The Company has filed a renewal application and believes it meets the renewal requirements as determined by the CRA; however, no assurance can be given the license renewal will be granted or for what period of time it will be granted.
Amortization expense was $18 million, $17 million and $17 million for the years ended December 31, 2021, 2020 and 2019, respectively. The estimated future amortization expense is approximately $6 million for the year ending December 31, 2022.
Note 8 — Other Accrued Liabilities
Other accrued liabilities consist of the following:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Customer deposits | $ | 470 | $ | 501 | |||||||
| Payroll and related | 253 | 161 | |||||||||
| Accrued interest payable | 157 | 179 | |||||||||
| Taxes and licenses | 143 | 148 | |||||||||
| Outstanding chip liability | 74 | 197 | |||||||||
| Other accruals | 237 | 288 | |||||||||
| $ | 1,334 | $ | 1,474 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 9 — Derivative Instruments
During the year ended December 31, 2021, the Company entered into two foreign currency swap agreements. The objective of both agreements is to manage the risk of changes in cash flows resulting from foreign currency gains/losses realized upon remeasurement of U.S. dollar denominated SCL senior notes by swapping a specified amount of Hong Kong dollars for U.S. dollars at the contractual spot rate. The terms in one of the contracts did not effectively match the terms of the related SCL senior notes; thus, it was not designated as hedging (the “Non-Hedging Swap”). The remaining contract was designated as a hedge of the cash flows related to a portion of the SCL senior notes (the “Hedging Swap,” and together with the Non-Hedging Swap, the “FX Swaps”). The Non-Hedging Swap and the Hedging Swap have a total notional value of $500 million and $1.0 billion, respectively, and expire in August 2023 and August 2025, respectively.
The total fair value of the FX Swaps is recorded as an asset in other assets, net. The fair value of the FX Swaps was estimated using Level 2 inputs from recently reported market transactions of foreign currency exchange rates. For the Hedging Swap, the changes in fair value of the derivative were recognized as other comprehensive income in the accompanying consolidated balance sheets. Additionally, the foreign currency gains/losses incurred from the remeasurement of the portion of the SCL senior notes being hedged were also recognized in other comprehensive income. For the Non-Hedging Swap the changes in fair value of the derivative were recorded in other income in the accompanying consolidated statements of operations.
In August 2018, the Company entered into interest rate swap agreements (the "IR Swaps"), which qualified and were designated as fair value hedges, swapping fixed-rate for variable-rate interest to hedge changes in the fair value of the 2023, 2025 and 2028 SCL Senior Notes. These IR Swaps had a total notional value of $5.50 billion and expired in August 2020. During the years ended December 31, 2020 and 2019, the Company recorded $53 million and $23 million, respectively, as a reduction to interest expense related to the realized amount associated with the IR Swaps.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 10 — Long-Term Debt
Long-term debt consists of the following:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Corporate and U.S. Related**(1)****:** | |||||||||||
| 3.200% Senior Notes due 2024 (net of unamortized original issue discount and deferred financing costs of $8 and $11, respectively) | $ | 1,742 | $ | 1,739 | |||||||
| 2.900% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $3 and $4, respectively) | 497 | 496 | |||||||||
| 3.500% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $8 and $10, respectively) | 992 | 990 | |||||||||
| 3.900% Senior Notes due 2029 (net of unamortized original issue discount and deferred financing costs of $7 and $8, respectively) | 743 | 742 | |||||||||
| Macao Related**(1)****:** | |||||||||||
| 4.600% Senior Notes due 2023 (net of unamortized original issue discount and deferred financing costs $9) | — | 1,791 | |||||||||
| 5.125% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $9 and $11, respectively) | 1,791 | 1,789 | |||||||||
| 3.800% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $6 and $8, respectively) | 794 | 792 | |||||||||
| 2.300% Senior Notes due 2027 (net of unamortized original issue discount and deferred financing cost of $7) | 693 | — | |||||||||
| 5.400% Senior Notes due 2028 (net of unamortized original issue discount and deferred financing costs of $15 and $16, respectively) | 1,885 | 1,884 | |||||||||
| 2.850% Senior Notes due 2029 (net of unamortized original issue discount and deferred financing cost of $7) | 643 | — | |||||||||
| 4.375% Senior Notes due 2030 (net of unamortized original issue discount and deferred financing costs of $9 and $10, respectively) | 691 | 690 | |||||||||
| 3.250% Senior Notes due 2031 (net of unamortized original issue discount and deferred financing cost of $6) | 594 | — | |||||||||
| 2018 SCL Credit Facility — Revolving | 753 | — | |||||||||
| Other(2) | 27 | 21 | |||||||||
| Singapore Related**(1)****:** | |||||||||||
| 2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $43 and $50, respectively) | 2,902 | 3,023 | |||||||||
| 2012 Singapore Delayed Draw Term Facility (net of unamortized deferred financing costs of $1) | 45 | 46 | |||||||||
| Other(2) | 3 | 1 | |||||||||
| 14,795 | 14,004 | ||||||||||
| Less — current maturities | (74) | (75) | |||||||||
| Total long-term debt | $ | 14,721 | $ | 13,929 |
(1)Unamortized deferred financing costs of $81 million and $91 million as of December 31, 2021 and 2020, respectively, related to the Company's revolving credit facilities and the undrawn portion of the Singapore Delayed Draw Term Facility are included in other assets, net in the accompanying consolidated balance sheets.
(2)Includes finance leases related to Macao and Singapore of $24 million and $1 million as of December 31, 2021, respectively and $21 million and $1 million as of December 31, 2020, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Corporate and U.S. Related Debt
LVSC Senior Notes
On July 31, 2019, LVSC issued, in a public offering, three series of senior unsecured notes in an aggregate principal amount of $3.50 billion, consisting of $1.75 billion of 3.200% Senior Notes due August 8, 2024 (the “2024 LVSC Senior Notes”), $1.0 billion of 3.500% Senior Notes due August 18, 2026 (the “2026 LVSC Senior Notes”) and $750 million of 3.900% Senior Notes due August 8, 2029 (the “2029 LVSC Senior Notes”). A portion of the net proceeds from the offering was used to repay in full the outstanding borrowings under the 2013 U.S. Credit Facility.
On November 25, 2019, LVSC issued, in a public offering, a senior unsecured note in an aggregate principal amount of $500 million of 2.900% Senior Notes due June 25, 2025 (the “2025 LVSC Senior Notes” and, together with the 2024 LVSC Senior Notes, 2026 LVSC Senior Notes and the 2029 LVSC Senior Notes, the “LVSC Senior Notes”). A portion of the net proceeds from the offering was used for general corporate purposes, including repurchases of shares of the Company's common stock.
There are no interim principal payments on the LVSC Senior Notes and interest is payable semi-annually in arrears on each February 8 and August 8 with respect to the 2024 LVSC Notes and 2029 LVSC Notes, on each February 18 and August 18 with respect to the 2026 Notes, and on each June 25 and December 25 with respect to the 2025 Notes.
The LVSC Senior Notes are senior unsecured obligations of LVSC. Each series of LVSC Senior Notes rank equally in right of payment with all of LVSC’s other unsecured and unsubordinated obligations, if any. None of LVSC’s subsidiaries guarantee the LVSC Senior Notes.
The LVSC Senior Notes were issued pursuant to an indenture, dated July 31, 2019, as amended with respect to each of the series of the LVSC Senior Notes (the “Indenture”), between LVSC and U.S. Bank National Association, as trustee. The Indenture contains covenants, subject to customary exceptions and qualifications, that limit the ability of LVSC and its subsidiaries to, among other things, incur liens, enter into sale and leaseback transactions and consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets on a consolidated basis. The Indenture also provides for customary events of default.
LVSC Revolving Facility
On August 9, 2019, LVSC entered into a revolving credit agreement with the arrangers and lenders named therein and The Bank of Nova Scotia, as administrative agent for the lenders (the “LVSC Revolving Credit Agreement”), pursuant to which the lenders provided unsecured, revolving credit commitments to LVSC in an aggregate principal amount of $1.50 billion (the “LVSC Revolving Facility”), which are available until August 9, 2024, and include a $150 million sub-facility for letters of credit. LVSC may utilize the proceeds of the loans for general corporate purposes and working capital requirements of LVSC and its subsidiaries and any other purpose not prohibited by the LVSC Revolving Credit Agreement. As of December 31, 2021, the Company had $1.50 billion of available borrowing capacity under the LVSC Revolving Facility, net of outstanding letters of credit.
The revolving loans bear interest at the Company’s option, at either, an adjusted Eurodollar rate, plus an applicable margin ranging from 1.125% to 1.550% per annum, or at an alternative base rate, plus an applicable margin ranging from 0.125% to 0.550% per annum, in each case, based on LVSC’s corporate family credit rating. As of December 31, 2021, the applicable margin for revolving loans with reference to an adjusted Eurodollar rate is 1.4% per annum and the applicable margin for revolving loans with reference to an alternative base rate is 0.4% per annum. LVSC is also required to pay a quarterly commitment fee on the undrawn portion of the LVSC Revolving Facility, which commitment fee ranges from 0.125% to 0.250% per annum, based on the LVSC’s corporate family credit rating. As of December 31, 2021, the commitment fee is 0.200% per annum.
The LVSC Revolving Credit Agreement contains customary affirmative and negative covenants for facilities of this type, subject to customary exceptions and thresholds that limit the ability of (a) LVSC and its restricted subsidiaries to, among other things, (i) incur liens, (ii) enter into sale and leaseback transactions and (iii) sell, lease, sub-lease or otherwise dispose of any core facility (as defined in the LVSC Revolving Credit Agreement), (b) certain restricted subsidiaries of LVSC to incur indebtedness and (c) LVSC to merge, consolidate, liquidate or sell all or substantially all of its assets. The LVSC Revolving Credit Agreement also requires LVSC to maintain a maximum consolidated leverage ratio of 4.0x as of the last day of each fiscal quarter. The LVSC Revolving Credit Agreement
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
also contains customary events of default, including payment defaults, cross defaults to material debt, bankruptcy and insolvency, breaches of covenants and inaccuracy of representations and warranties, subject to customary grace periods.
On September 23, 2020, LVSC entered into an amendment agreement with lenders to the LVSC Revolving Credit Agreement. Pursuant to the amendment, the LVSC Revolving Credit Agreement was amended to (a) remove the requirement to maintain a maximum consolidated leverage ratio of 4.0x as of the last day of any fiscal quarter of LVSC during the period commencing on October 31, 2020, through and including December 31, 2021 (the “Relevant Period”); (b) include a requirement for LVSC to maintain a minimum liquidity of $350 million as of the last day of each month during the Relevant Period; and (c) include a limitation on LVSC’s ability to declare or pay any dividend or other distribution during the period commencing on the closing date of the amendment, through and including December 31, 2021, unless liquidity is greater than $1.0 billion on a pro forma basis after giving effect to such dividend or distribution. Pursuant to the amendment, LVSC agreed to pay a customary fee to the lenders that consented.
On September 3, 2021, LVSC entered into amendment No. 2 (the "Second Amendment") with lenders to the LVSC Revolving Credit Agreement. Pursuant to the Second Amendment, the existing LVSC Revolving Credit Agreement was amended to (a) extend the period during which LVSC is not required to maintain a maximum consolidated leverage ratio of 4.0x as of the last day of any fiscal quarter to December 31, 2022; (b) extend the period during which LVSC is required to maintain a specified amount of minimum liquidity as of the last day of each month to December 31, 2022; (c) increase the minimum liquidity amount that LVSC is required to maintain until December 31, 2022 to $700 million; and (d) extend the period during which LVSC is unable to declare or pay any dividend or other distribution, unless liquidity is greater than $1.0 billion on a pro forma basis after giving effect to such dividend or distribution, to December 31, 2022. In addition, pursuant to the Second Amendment and subject to the satisfaction of certain conditions specified therein, the requisite lenders under the existing LVSC Revolving Credit Agreement consented to, and waived any applicable restrictions prohibiting, the consummation of the announced sale of the Las Vegas Operations. Pursuant to the Second Amendment, LVSC paid a customary fee to the lenders that consented.
On December 7, 2021, LVSC entered into amendment No. 3 (the “Third Amendment”) with lenders to the LVSC Revolving Credit Agreements. Pursuant to the Third Amendment, the existing LVSC Revolving Credit Agreement was amended to update the terms therein that provide for a transition away from LIBOR as a benchmark interest rate and the replacement of LIBOR by a replacement benchmark interest rate or mechanism.
2013 U.S. Credit Facility
The Company entered into a credit agreement (the "2013 U.S. Credit Facility"), which pursuant to various amendments, provided for a $3.51 billion term loan (the "2013 Extended U.S. Term B Facility") and a $1.15 billion revolving facility (the "2013 Extended U.S. Revolving Facility," and together with the 2013 Extended U.S. Term B Facility, the "2013 U.S. Credit Facility"). Borrowings under the 2013 Extended U.S. Term B Facility were used for working capital requirements and general corporate purposes, including to make any investment or payment not specifically prohibited by the terms of the loan documents.
The Company paid standby fees of 0.2% per annum on the undrawn amounts under the 2013 Extended U.S. Revolving Facility. The weighted average interest rate on the 2013 U.S. Credit Facility was 4.2% for the year ended December 31, 2019.
As previously described, the proceeds from the LVSC Senior Notes were used to repay the outstanding borrowings under the 2013 U.S. Credit Facility and the facility was terminated. As a result, the Company recorded a $22 million loss on early retirement of debt during the year ended December 31, 2019.
Macao Related Debt
SCL Senior Notes
On August 9, 2018, SCL issued, in a private offering, three series of senior unsecured notes in an aggregate principal amount of $5.50 billion, consisting of $1.80 billion of 4.600% Senior Notes due August 8, 2023 (the "2023 SCL Senior Notes"), $1.80 billion of 5.125% Senior Notes due August 8, 2025 (the "2025 SCL Senior Notes") and $1.90 billion of 5.400% Senior Notes due August 8, 2028 (the "2028 SCL Senior Notes"). A portion of the net
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
proceeds from the offering was used to repay in full the outstanding borrowings under the 2016 VML Credit Facility. There are no interim principal payments on the 2023, 2025 or 2028 SCL Senior Notes and interest is payable semi-annually in arrears on each February 8 and August 8, commencing on February 8, 2019.
On June 4, 2020, SCL issued, in a private offering, two series of senior unsecured notes in an aggregate principal amount of $1.50 billion, consisting of $800 million of 3.800% Senior Notes due January 8, 2026 (the “2026 SCL Senior Notes”) and $700 million of 4.375% Senior Notes due June 18, 2030 (the "2030 SCL Senior Notes"). The net proceeds from the offering were used for incremental liquidity and general corporate purposes. There are no interim principal payments on the 2026 or 2030 SCL Senior Notes and interest is payable semi-annually in arrears on January 8 and July 8, commencing on January 8, 2021, with respect to the 2026 SCL Senior Notes, and on June 18 and December 18, commencing on December 18, 2020, with respect to the 2030 SCL Senior Notes.
On September 23, 2021, SCL issued in a private offering three series of senior unsecured notes in an aggregate principal amount of $1.95 billion, consisting of $700 million of 2.300% Senior Notes due March 8, 2027 (the “2027 SCL Senior Notes”), $650 million of 2.850% Senior Notes due March 8, 2029 (the “2029 SCL Senior Notes”) and $600 million of 3.250% Senior Notes due August 8, 2031 (the “2031 SCL Senior Notes” and, together with the 2023 SCL Senior Notes, 2025 SCL Senior Notes, 2026 SCL Senior Notes, 2027 SCL Senior Notes, 2028 SCL Senior Notes, 2029 SCL Senior Notes, 2030 SCL Senior Notes, the “SCL Senior Notes”). SCL used the net proceeds from the offering and cash on hand to redeem in full the outstanding principal amount of its $1.80 billion 4.600% Senior Notes due 2023, any accrued interest and the associated make-whole premium as determined under the related senior notes indenture dated as of August 9, 2018.
The SCL Senior Notes are senior unsecured obligations of SCL. Each series of notes rank equally in right of payment with all of SCL’s existing and future senior unsecured debt and will rank senior in right of payment to all of SCL’s future subordinated debt, if any. The notes will be effectively subordinated in right of payment to all of SCL’s future secured debt (to the extent of the value of the collateral securing such debt) and will be structurally subordinated to all of the liabilities of SCL’s subsidiaries. None of SCL’s subsidiaries guarantee the notes.
The 2023, 2025 and 2028 SCL Senior Notes were issued pursuant to an indenture, dated August 9, 2018 (the "2018 SCL Indenture"), the 2026 and 2030 SCL Senior Notes were issued pursuant to an indenture, dated June 4, 2020 (the “2020 SCL Indenture”) and the 2027, 2029 and 2031 SCL Senior Notes were issued pursuant to an indenture, dated September 23, 2021 (the “2021 SCL Indenture”), between SCL and U.S. Bank National Association, as trustee. Upon the occurrence of certain events described in these indentures, the interest rate on the SCL senior notes may be adjusted. The indentures contain covenants, subject to customary exceptions and qualifications, that limit the ability of SCL and its subsidiaries to, among other things, incur liens, enter into sale and leaseback transactions and consolidate, merge, sell or otherwise dispose of all or substantially all of SCL’s assets on a consolidated basis. The indentures also provide for customary events of default.
Under the SCL senior notes indentures, upon the occurrence of any event resulting from any change in Gaming Law (as defined in the indentures) after which none of SCL or any of its subsidiaries own or manage casino or gaming areas or operate casino games of fortune and chance in Macao in substantially the same manner as they are owning or managing casino or gaming areas or operating casino games as of the issue date of the SCL senior notes, for a period of 30 consecutive days or more, and such event has a material adverse effect on the financial condition, business, properties or results of operations of SCL and its subsidiaries, taken as a whole, each holder of the SCL senior notes would have the right to require SCL to repurchase all or any part of such holder’s SCL senior notes at par plus accrued and unpaid interest (the “Investor Put Option”). Refer to “Note 1 — Organization and Business of Company” for further information related to the Macao subconcession.
The cost associated with the early termination of the 4.600% Senior Notes due 2023, including the make-whole premium of $131 million and $6 million in unamortized original issue discount and deferred financing costs, was recorded as a loss on early retirement of debt in the consolidated statement of operations during the year ended December 31, 2021.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
2018 SCL Credit Facility
On November 20, 2018, SCL entered into a facility agreement with the arrangers and lenders named therein and Bank of China Limited, Macau Branch, as agent for the lenders (the "2018 SCL Credit Facility"), pursuant to which the lenders made available a $2.0 billion revolving unsecured credit facility to SCL (the "2018 SCL Revolving Facility"). The facility is available until July 31, 2023, and SCL may draw loans under the facility, which may consist of general revolving loans (consisting of a United States dollar component and a Hong Kong dollar component) or loans drawn under a swing-line loan sub-facility (denominated in either United States dollars or Hong Kong dollars). SCL may utilize the loans for general corporate purposes and working capital requirements of SCL and its subsidiaries.
Loans under the 2018 SCL Revolving Facility bear interest calculated by reference to (1) in the case of general revolving loans denominated in United States dollars, the London Interbank Offered Rate ("LIBOR"), (2) in the case of loans denominated in United States dollars drawn under the swing-line loan sub-facility, a United States dollar alternate base rate (determined by reference to, among other things, the United States dollar prime lending rate and the Federal Funds Effective Rate), (3) in the case of general revolving loans denominated in Hong Kong dollars, the Hong Kong Interbank Offered Rate ("HIBOR") or (4) in the case of loans denominated in Hong Kong dollars drawn under the swing-line loan sub-facility, a Hong Kong dollar alternate base rate (determined by reference to, among other things, the Hong Kong dollar prime lending rate), in each case, plus a margin that is determined by reference to the consolidated leverage ratio as defined in the 2018 SCL Credit Facility. The initial margin for general revolving loans is 2.0% per annum and the initial margin for loans drawn under the swing-line loan sub-facility is 1.0% per annum. SCL is also required to pay a commitment fee of 0.60% per annum on the undrawn amounts under the 2018 SCL Revolving Facility.
The 2018 SCL Credit Facility contains affirmative and negative covenants customary for similar unsecured financings, including, but not limited to, limitations on indebtedness secured by liens on principal properties and sale and leaseback transactions. The 2018 SCL Credit Facility also requires SCL to maintain a maximum ratio of total indebtedness to adjusted EBITDA of 4.0x throughout the life of the facility and a minimum ratio of adjusted EBITDA to net interest expense (including capitalized interest) of 2.5x throughout the life of the facility.
On March 27, 2020, SCL entered into a waiver and amendment request letter (the “Waiver Letter”) with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders (a) waived the requirements for SCL to comply with the requirements that SCL ensure the maximum consolidated leverage ratio does not exceed 4.0x and minimum consolidated interest coverage ratio of 2.5x for any quarterly period ending during the period beginning on, and including, January 1, 2020 and ending on, and including, July 1, 2021 (the “SCL Relevant Period”) (other than with respect to the financial year ended on December 31, 2019); (b) waived any default that may arise as a result of any breach of said requirements during the SCL Relevant Period (other than with respect to the financial year ended on December 31, 2019); and (c) extended the period of time during which SCL may supply the agent with (i) its audited consolidated financial statements for the financial year ended on December 31, 2019, to April 30, 2020; and (ii) its audited consolidated financial statements for the financial year ending on December 31, 2020, to April 30, 2021. Pursuant to the Waiver Letter, SCL agreed to pay a customary fee to the lenders that consented.
On September 11, 2020, SCL entered into a waiver extension and amendment request letter (the “Waiver Extension Letter”) with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders agreed to (a) extend the SCL Relevant Period such that it ends on, and includes, January 1, 2022 instead of July 1, 2021; and (b) amend and restate the 2018 SCL Credit Facility in the form attached to the Waiver Extension Letter, which contains the following amendments: (1) it provides SCL with the option to increase the total borrowing capacity by an aggregate amount of up to $1.0 billion; and (2) it imposes a restriction on the ability of SCL to declare or make any dividend payment or similar distribution at any time during the period from (and including) July 1, 2020 to (and including) January 1, 2022, if at such time (x) the total borrowing capacity exceeds $2.0 billion by operation of the increase referred to above; and (y) the maximum consolidated leverage ratio is greater than 4.0x, unless, after giving effect to such payment, the sum of (i) the aggregate amount of cash and cash equivalents of SCL on such date; and (ii) the aggregate amount of the undrawn facility under the 2018 SCL Credit Facility and unused commitments under other credit facilities of SCL is greater than $2.0 billion. Pursuant to the Waiver Extension Letter, SCL agreed to pay a customary fee to the lenders that consented.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On July 7, 2021, SCL entered into a waiver extension and amendment request letter (the "Third Waiver Extension Letter") with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders agreed to (a) extend by one year to (and including) January 1, 2023, the waiver period for the requirement for SCL to comply with the requirements that SCL ensure the consolidated leverage ratio does not exceed 4.0x and the consolidated interest coverage ratio is not less than 2.5x as at the last day of the financial quarter; (b) extend the period of time during which SCL may supply the agent with its audited consolidated financial statements for the financial year ending on December 31, 2021 to April 30, 2022; and (c) extend by one year to (and including) January 1, 2023, the period during which SCL's ability to declare or make any dividend payment or similar distribution is restricted if at such time (x) the Total Commitments (as defined in the 2018 SCL Credit Facility) exceed $2.0 billion by SCL's exercise of the option to increase the Total Commitments by an aggregate amount of up to $1.0 billion; and (y) the consolidated leverage ratio is greater than 4.0x, unless, after giving effect to such payment, the sum of (i) the aggregate amount of cash and cash equivalents of SCL on such date; and (ii) the aggregate amount of the undrawn facility under the 2018 SCL Credit Facility and unused commitments under other credit facilities of SCL is greater than $2.0 billion. Pursuant to the Third Waiver Extension Letter, SCL paid a customary fee to the lenders that consented.
Under the 2018 SCL Credit Facility, the events that trigger an Investor Put Option under the SCL senior notes (as described above) would be an Event of Default (as defined in the credit agreement), which could result in commitments being immediately cancelled, in whole or in part, and the related outstanding balances and accrued interest, if any, becoming immediately due and payable. Refer to “Note 1 — Organization and Business of Company” for further information related to the Macao subconcession.
The 2018 SCL Credit Facility also contains certain events of default (some of which are subject to grace and remedy periods and materiality qualifiers), including, but not limited to, events relating to SCL's gaming operations and the loss or termination of certain land concession contracts.
On January 25, 2021, SCL entered into an agreement with lenders to increase commitments under the 2018 SCL Credit Facility by HKD 3.83 billion (approximately $491 million at exchange rates in effect on December 31, 2021). During the year ended December 31, 2021, SCL drew down $71 million and HKD 5.31 billion (approximately $681 million at exchange rates in effect on December 31, 2021) under the facility for general corporate purposes. The weighted average interest rate for the 2018 SCL Credit Facility was 2.6% for the year ended December 31, 2021.
As of December 31, 2021, SCL had $1.75 billion of available borrowing capacity under the 2018 SCL Revolving Facility comprised of HKD commitments of HKD 12.32 billion (approximately $1.58 billion at exchange rates in effect on December 31, 2021) and U.S. dollar commitments of $166 million.
Singapore Related Debt
2012 Singapore Credit Facility
In June 2012, MBS entered into a SGD 5.10 billion (approximately $3.77 billion at exchange rates in effect on December 31, 2021) credit agreement (the "2012 Singapore Credit Facility"), providing for a fully funded SGD 4.60 billion (approximately $3.40 billion at exchange rates in effect on December 31, 2021) term loan (the "2012 Singapore Term Facility") and a SGD 500 million (approximately $370 million at exchange rates in effect on December 31, 2021) revolving facility (the "2012 Singapore Revolving Facility") that was available until November 25, 2017, which included a SGD 100 million (approximately $74 million at exchange rates in effect on December 31, 2021) ancillary facility (the "2012 Singapore Ancillary Facility"). Borrowings under the 2012 Singapore Credit Facility were used to repay the outstanding balance under the previous Singapore credit facility.
During August 2014, MBS amended its 2012 Singapore Credit Facility, pursuant to which consenting lenders of borrowings under the 2012 Singapore Term Facility extended the maturity to August 28, 2020, and consenting lenders of borrowings under the 2012 Singapore Revolving Facility extended the maturity to February 28, 2020.
During March 2018, MBS amended its 2012 Singapore Credit Facility, which refinanced the facility in an aggregate amount of SGD 4.80 billion (approximately $3.55 billion at exchange rates in effect on December 31, 2021), pursuant to which consenting lenders of borrowings under the 2012 Singapore Term Facility extended the
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
maturity to March 29, 2024, and consenting lenders of borrowings under the 2012 Singapore Revolving Facility extended the maturity to September 29, 2023.
On August 30, 2019, MBS amended and restated its 2012 Singapore Credit Facility (the “Third Amendment and Restatement Agreement”). The Third Amendment and Restatement Agreement extended (a) the maturity date of the term loans under the 2012 Singapore Term Facility to August 31, 2026, and (b) the termination date of the revolving credit commitments under the 2012 Singapore Revolving Facility to February 27, 2026, and also increased the principal amount of revolving credit commitments by an additional SGD 250 million (approximately $185 million at exchange rates in effect on December 31, 2021) for a total aggregate principal amount of SGD 750 million (approximately $555 million at exchange rates in effect on December 31, 2021). As of December 31, 2021, MBS had SGD 593 million (approximately $438 million at exchange rates in effect on December 31, 2021) of available borrowing capacity under the 2012 Singapore Revolving Facility, net of outstanding letters of credit, primarily consisting of a banker’s guarantee in connection with the MBS Expansion Project for SGD 153 million (approximately $113 million at exchange rates in effect on December 31, 2021).
Under the Third Amendment and Restatement Agreement, certain lenders committed to provide a new delayed draw term loan facility (the “Singapore Delayed Draw Term Facility”) in an aggregate principal amount of SGD 3.75 billion (approximately $2.77 billion at exchange rates in effect on December 31, 2021), which will be available to MBS until December 30, 2024, to finance costs associated with the MBS Expansion Project. The loans borrowed under the Singapore Delayed Draw Term Facility will mature on August 31, 2026. During the year ended December 31, 2020, MBS borrowed SGD 62 million (approximately $46 million at exchange rates in effect at the time of the transaction) under the Singapore Delayed Draw Term Facility. As of December 31, 2021, SGD 3.69 billion (approximately $2.73 billion at exchange rates in effect on December 31, 2021) remains available to be drawn under the Singapore Delayed Draw Term Facility. If the construction cost estimate and construction schedule to the MBS Expansion Project are not delivered by the extended deadline, the Company will not be permitted to make further draws on the Singapore Delayed Draw Term Facility after March 31, 2022 until these items are delivered to lenders.
As a result of the Third Amendment and Restatement Agreement, the Company recorded a $2 million loss on modification of debt during the year ended December 31, 2019.
The indebtedness under the 2012 Singapore Credit Facility is collateralized by a first-priority security interest in substantially all of MBS's assets, other than capital stock and similar ownership interests, certain furniture, fixtures and equipment and certain other excluded assets.
The term loans under the 2012 Singapore Term Facility are subject to interim quarterly amortization payments, beginning with the fiscal quarter ending December 31, 2019, in an amount equal to (i) until and including the fiscal quarter ending September 30, 2024, 0.5% of the principal amount outstanding on June 30, 2019 (the “Term Facility Restatement Date”), (ii) for the fiscal quarter ending December 31, 2024, 3.0% of the principal amount outstanding on the Term Facility Restatement Date, (iii) for the fiscal quarters ending March 31, 2025 through September 30, 2025, 5.0% of the principal amount outstanding on the Term Facility Restatement Date, and (iv) for the fiscal quarters ending December 31, 2025 through June 30, 2026, 18.0% of the principal amount outstanding on the Term Facility Restatement Date. On the maturity date of August 31, 2026, MBS is required to repay all remaining amounts outstanding on the Singapore Term Facility.
Loans under the Singapore Delayed Draw Term Facility are subject to interim quarterly amortization payments, beginning with the fiscal quarter ending March 31, 2025, in an amount equal to (i) until and including the fiscal quarter ending September 30, 2025, 5.0% of the principal amount outstanding on December 30, 2024 (the “Delayed Draw Term Facility Restatement Date”), and (ii) for each fiscal quarter from December 31, 2025, until and including June 30, 2026, 18.0% of the principal amount outstanding on the Delayed Draw Term Facility Restatement Date. On the maturity date of August 31, 2026, MBS is required to repay all remaining amounts outstanding on the Singapore Delayed Draw Term Facility.
Under the Third Amendment and Restatement Agreement, outstanding loans bear interest at the Singapore Swap Offered Rate (“SOR”) plus an applicable margin that is fixed at 1.65% per annum until September 30, 2020, and will range from 1.15% to 1.85% per annum thereafter, based on MBS’s consolidated leverage ratio (interest rate set at approximately 2.31% as of December 31, 2021). MBS pays a standby commitment fee of 35% to 40% of the spread per annum on all undrawn amounts under the 2012 Singapore Revolving Facility. The weighted average
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
interest rate for the 2012 Singapore Credit Facility was 2.1%, 2.2% and 3.2% for the years ended December 31, 2021, 2020 and 2019.
Under the Third Amendment and Restatement Agreement, MBS must comply with a maximum consolidated leverage ratio of 4.5x on the last day of each fiscal quarter from August 30, 2019, until twelve months following the date on which a temporary occupation permit is issued with respect to the MBS Expansion Project. Thereafter, MBS must comply with a maximum consolidated leverage ratio of 4.0x as of the last day of each fiscal quarter through maturity.
On June 18, 2020, MBS amended the existing 2012 Singapore Credit Facility (the “Amendment Letter”). The Amendment Letter (a) modifies the financial covenant provisions under the 2012 Singapore Credit Facility such that MBS will not have to comply with the leverage or interest coverage covenants for the financial quarters ending, and including, September 30, 2020 through, and including, December 31, 2021 (the “Waiver Period”); (b) extends to June 30, 2021, the deadline for delivering the construction costs estimate and the construction schedule for the MBS Expansion Project; and (c) permits MBS to make dividend payments during the Waiver Period of (i) an unlimited amount if the ratio of its debt to consolidated adjusted EBITDA is lower than or equal to 4.25x and (ii) up to SGD 500 million per fiscal year if the ratio of its debt to consolidated adjusted EBITDA is higher than 4.25x, subject to the additional requirements that (a) the aggregate amount of MBS’s cash plus Facility B availability is greater than or equal to SGD 800 million immediately following such dividend payment and (b) MBS’s interest coverage ratio is higher than 3.0x. Pursuant to the Amendment Letter, MBS agreed to pay a customary fee to the lenders that consented thereto.
On September 7, 2021, MBS further amended the existing 2012 Singapore Credit Facility (the “Second Amendment Letter”). The Second Amendment Letter (a) extends by one year to (and including) December 31, 2022, the waiver period for the requirement for MBS to comply with the financial covenant provisions under the 2012 Singapore Credit Facility such that MBS will not have to comply with the leverage or interest coverage covenants for the financial quarters ending, and including, September 30, 2021 through, and including, December 31, 2022 (the “Extended Waiver Period”); (b) extends to March 31, 2022, the deadline for delivering the construction cost estimate and the construction schedule for the MBS Expansion Project; and (c) permits MBS to make dividend payments during the Extended Waiver Period of (i) an unlimited amount if the ratio of its debt to consolidated adjusted EBITDA is lower than or equal to 4.25x and (ii) up to SGD 500 million per fiscal year if the ratio of its debt to consolidated adjusted EBITDA is higher than 4.25x, subject to the additional requirements that (a) the aggregate amount of MBS’s cash plus Facility B availability is greater than or equal to SGD 800 million immediately following such dividend payment and (b) MBS’s interest coverage ratio is higher than 3.0x. Pursuant to the Second Amendment Letter, MBS paid a customary fee to the lenders that consented.
Debt Covenant Compliance
As of December 31, 2021, management believes the Company was in compliance with all debt covenants. The Company amended its credit facilities to, among other things, waive the Company’s requirement to comply with certain financial covenant ratios through December 31, 2022 for LVSC and MBS and January 1, 2023 for SCL, which include a maximum leverage ratio or net debt to trailing twelve-months adjusted earnings before interest, income taxes, depreciation and amortization, calculated in accordance with the respective credit agreement, of 4.0x, 4.0x and 4.5x under the LVSC Revolving Facility, 2018 SCL Credit Facility and 2012 Singapore Credit Facility, respectively. The Company’s compliance with its financial covenants for periods beyond December 31, 2022 for MBS and LVSC and January 1, 2023 for SCL, could be affected by certain factors beyond the Company’s control, such as the impact of the COVID-19 Pandemic, including current travel and border restrictions continuing in the future. The Company will pursue additional waivers to meet the required financial covenant ratios for periods beyond their current deadlines, if deemed necessary.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt and finance lease obligations are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Proceeds from 2027, 2029 and 2031 SCL Senior Notes | $ | 1,946 | $ | — | $ | — | |||||||||||
| Proceeds from 2026 and 2030 SCL Senior Notes | — | 1,496 | — | ||||||||||||||
| Proceeds from 2018 SCL Credit Facility | 756 | 403 | — | ||||||||||||||
| Proceeds from 2012 Singapore Credit Facility - Delayed Draw Term | — | 46 | — | ||||||||||||||
| Proceeds from LVSC Senior Notes | — | — | 4,000 | ||||||||||||||
| $ | 2,702 | $ | 1,945 | $ | 4,000 | ||||||||||||
| Repayments on 2023 SCL Senior Notes | $ | (1,800) | $ | — | $ | — | |||||||||||
| Repayments on 2018 SCL Credit Facility | — | (404) | — | ||||||||||||||
| Repayments on 2012 Singapore Credit Facility | (62) | (60) | (47) | ||||||||||||||
| Repayments on Other Long-Term Debt | (5) | (3) | (4) | ||||||||||||||
| $ | (1,867) | $ | (467) | $ | (51) |
Scheduled Maturities of Long-Term Debt
Maturities of long-term debt outstanding as of December 31, 2021, are summarized as follows:
| Long-term Debt | |||||
| (In millions) | |||||
| 2022 | $ | 74 | |||
| 2023 | 826 | ||||
| 2024 | 1,893 | ||||
| 2025 | 3,335 | ||||
| 2026 | 3,496 | ||||
| Thereafter | 5,300 | ||||
| Total | $ | 14,924 |
Fair Value of Long-Term Debt
The estimated fair value of the Company's long-term debt as of December 31, 2021 and 2020, was approximately $15.06 billion and $15.15 billion, respectively, compared to its contractual value of $14.90 billion and $14.12 billion, respectively. The estimated fair value of our long-term debt is based on recent trades, if available, and indicative pricing from market information (level 2 inputs).
Note 11 — Equity
Preferred Stock
The Company is authorized to issue up to 50,000,000 shares of preferred stock. The Company's Board of Directors is authorized, subject to limitations prescribed by Nevada law and the Company's articles of incorporation, to determine the terms and conditions of the preferred stock, including whether the shares of preferred stock will be issued in one or more series, the number of shares to be included in each series and the powers, designations,
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
preferences and rights of the shares. The Company's Board of Directors also is authorized to designate any qualifications, limitations or restrictions on the shares without any further vote or action by the stockholders.
Common Stock
Dividends
In April 2020, the Company suspended the quarterly dividend program due to the impact of the COVID-19 Pandemic.
On March 26, 2020, the Company paid a dividend of $0.79 per common share as part of a regular cash dividend program. During the year ended December 31, 2020, the Company recorded $603 million as a distribution against retained earnings (of which $342 million related to Mr. Adelson, (a Principal Stockholder at that time), and the other Principal Stockholders, and the remaining $261 million related to all other stockholders).
On March 28, June 27, September 26 and December 26, 2019, the Company paid a dividend of $0.77 per common share as part of a regular cash dividend program. During the year ended December 31, 2019, the Company recorded $2.37 billion as a distribution against retained earnings (of which $1.33 billion related to Mr. Adelson and the other Principal Stockholders and the remaining $1.04 billion related to all other stockholders).
Share Repurchases
In June 2018, the Company's Board of Directors authorized the repurchase of $2.50 billion of its outstanding common stock, which was to expire in November 2020. In October 2020, the Company's Board of Directors authorized the extension of the expiration date of the remaining repurchase amount of $916 million to November 2022. Repurchases of the Company's common stock are made at the Company's discretion in accordance with applicable federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, legal requirements, other investment opportunities and market conditions. During the years ended December 31, 2021 and 2020, no shares of its common stock were repurchased. During the year ended December 31, 2019, the Company repurchased 12,556,635 shares of its common stock for $754 million (including commissions) under the Company's current program. All share repurchases of the Company's common stock have been recorded as treasury stock.
In addition to the shares repurchased under the share repurchase program, the Company repurchased 1,927 shares during the year ended December 31, 2019, in satisfaction of tax withholding and exercise price obligations on stock option exercises.
Rollforward of Shares of Common Stock
A summary of the outstanding shares of common stock is as follows:
| Balance as of January 1, 2019 | 775,463,214 | ||||
| Exercise of stock options | 569,224 | ||||
| Issuance of restricted stock | 11,039 | ||||
| Repurchase of common stock | (12,558,562) | ||||
| Balance as of December 31, 2019 | 763,484,915 | ||||
| Exercise of stock options | 342,700 | ||||
| Issuance of restricted stock | 17,512 | ||||
| Forfeiture of unvested restricted stock | (2,189) | ||||
| Balance as of December 31, 2020 | 763,842,938 | ||||
| Exercise of stock options | 121,710 | ||||
| Issuance of restricted stock | 25,104 | ||||
| Balance as of December 31, 2021 | 763,989,752 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Noncontrolling Interests
SCL
Subsequent to the February 21, 2020 dividend payment, as mentioned below, SCL suspended its dividend payments as a result of the COVID-19 Pandemic.
On February 21, 2020, SCL paid a dividend of HKD 0.99 to SCL stockholders (a total of $1.03 billion, of which the Company retained $717 million during the year ended December 31, 2020).
On February 22 and June 21, 2019, SCL paid a dividend of HKD 0.99 and HKD 1.00 per share, respectively, to SCL stockholders (a total of $2.05 billion, of which the Company retained $1.44 billion during the year ended December 31, 2019).
Other
During the year ended December 31, 2019 the Company distributed $17 million to certain of its noncontrolling interests. Of the amount distributed, $11 million related to payments to the Company's minority interest partners to purchase their interests in connection with the sale of Sands Casino Resort Bethlehem ("Sands Bethlehem").
Note 12 — Income Taxes
Consolidated income (loss) before taxes and noncontrolling interests for domestic and foreign operations is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Foreign | $ | (1,091) | $ | (1,614) | $ | 3,145 | |||||||||||
| Domestic | (383) | (262) | 455 | ||||||||||||||
| Total income (loss) before income taxes from continuing operations | $ | (1,474) | $ | (1,876) | $ | 3,600 |
The components of the income tax expense (benefit) from continuing operations are as follows:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Foreign: | |||||||||||||||||
| Current | $ | 32 | $ | 7 | $ | 245 | |||||||||||
| Deferred | (12) | 3 | (10) | ||||||||||||||
| Federal: | |||||||||||||||||
| Current | 8 | (5) | 8 | ||||||||||||||
| Deferred | (33) | 21 | 134 | ||||||||||||||
| State: | |||||||||||||||||
| Current | — | (2) | 33 | ||||||||||||||
| Deferred | — | — | 22 | ||||||||||||||
| Total income tax expense (benefit) | $ | (5) | $ | 24 | $ | 432 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The reconciliation of the statutory federal income tax rate and the Company's effective tax rate for continuing operations is as follows:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| Statutory federal income tax rate | (21.0) | % | (21.0) | % | 21.0 | % | |||||||||||
| Increase (decrease) in tax rate resulting from: | |||||||||||||||||
| Change in valuation allowance | 13.1 | % | 11.4 | % | 2.9 | % | |||||||||||
| Foreign and U.S. tax rate differential | 6.7 | % | 7.8 | % | (5.9) | % | |||||||||||
| Tax exempt (income) loss of foreign subsidiary | 0.6 | % | 2.4 | % | (8.4) | % | |||||||||||
| Other, net | 0.3 | % | 0.7 | % | 2.4 | % | |||||||||||
| Effective tax rate | (0.3) | % | 1.3 | % | 12.0 | % |
The Company enjoys an income tax exemption in Macao that exempts the Company from paying corporate income tax on profits generated by gaming operations. The Company will continue to benefit from this tax exemption through June 26, 2022, the date VML's subconcession agreement expires. Had the Company not received the income tax exemption in Macao, consolidated net income attributable to LVSC would have been reduced by $200 million and diluted earnings per share would have been reduced by $0.26 per share for the year ended December 31, 2019. The VML gaming losses incurred during 2021 and 2020 did not generate a tax benefit because they are not subject to tax. In April 2019, the Company entered into a renewed agreement with the Macao government, effective through June 26, 2022, providing for payments as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits; namely an annual payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2021) for each of the years 2021, 2020 and 2019, each payment to be made on or before January 31 of the following year, and a payment of 18 million patacas (approximately $2 million at exchange rates in effect on December 31, 2021) for the period between January 1, 2022 through June 26, 2022, to be paid on or before July 26, 2022. In September 2013, the Company and the Internal Revenue Service entered into a Pre-Filing Agreement providing the Macao special gaming tax (35% of gross gaming revenue) qualifies as a tax paid in lieu of an income tax and could be claimed as a U.S. foreign tax credit.
The Company's foreign and U.S. tax rate differential reflects the fact that the U.S. tax rate of 21% is higher than the statutory tax rates in Singapore and Macao of 17% and 12%, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The primary tax affected components of the Company's net deferred tax assets are as follows:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Deferred tax assets: | |||||||||||
| U.S. foreign tax credit carryforwards | $ | 4,815 | $ | 4,812 | |||||||
| Net operating loss carryforwards | 539 | 466 | |||||||||
| Interest expense carryforward | 18 | — | |||||||||
| Stock-based compensation | 16 | 16 | |||||||||
| Provision for credit losses | 14 | 14 | |||||||||
| Deferred gain on mall sale transactions | 11 | 12 | |||||||||
| Accrued expenses | 21 | 10 | |||||||||
| Pre-opening expenses | 6 | 7 | |||||||||
| Other | 2 | — | |||||||||
| 5,442 | 5,337 | ||||||||||
| Less — valuation allowances | (5,034) | (4,922) | |||||||||
| Total deferred tax assets | 408 | 415 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Property and equipment | (273) | (274) | |||||||||
| Prepaid expenses | (5) | (4) | |||||||||
| Other | (6) | (7) | |||||||||
| Total deferred tax liabilities | (284) | (285) | |||||||||
| Deferred tax assets, net | $ | 124 | $ | 130 |
The Company's U.S. foreign tax credit carryforwards were $4.87 billion as of December 31, 2021 and 2020, which will begin to expire in 2022. There was a valuation allowance of $4.62 billion and $4.58 billion as of December 31, 2021 and 2020, respectively, provided on certain net U.S. deferred tax assets, as the Company believes these assets do not meet the "more-likely-than-not" criteria for recognition. The Company’s U.S. net operating loss carryforward was $563 million and $568 million as of December 31, 2021 and 2020, respectively, which does not have an expiration date. The Company's U.S. interest expense carryforward was $87 million as of December 31, 2021, which does not have an expiration date. Net operating loss carryforwards for the Company's foreign subsidiaries were $3.46 billion and $2.84 billion as of December 31, 2021 and 2020, respectively, which began to expire in 2022. There are valuation allowances of $416 million and $342 million as of December 31, 2021 and 2020, respectively, provided on the net deferred tax assets of certain foreign jurisdictions, as the Company believes these assets do not meet the "more-likely-than-not" criteria for recognition.
Undistributed earnings of subsidiaries are accounted for as a temporary difference, except deferred tax liabilities are not recorded for undistributed earnings of foreign subsidiaries deemed to be indefinitely reinvested in foreign jurisdictions. U.S. tax reform required the Company to compute a tax on previously unremitted earnings of its foreign subsidiaries upon transition from a worldwide tax system to a territorial tax system during the year ended December 31, 2017. The Company expects these earnings to be exempt from U.S. income tax if distributed as these earnings were taxed during the year ended December 31, 2017, under U.S. tax reform. The Company does not consider current year's tax earnings and profits of its foreign subsidiaries to be indefinitely reinvested. Beginning with the year ended December 31, 2015, the Company's major foreign subsidiaries distributed, and may continue to distribute, earnings in excess of their current year's tax earnings and profits in order to meet the Company's liquidity needs. As of December 31, 2021, the amount of earnings and profits of foreign subsidiaries the Company does not intend to repatriate was $2.85 billion. The Company does not expect withholding taxes or other foreign income taxes to apply should these earnings be distributed in the form of dividends or otherwise.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, is as follows:
| December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Balance at the beginning of the year | $ | 131 | $ | 134 | $ | 118 | |||||||||||
| Additions to tax positions related to prior years | — | — | 1 | ||||||||||||||
| Reductions to tax positions related to prior years | (4) | (14) | — | ||||||||||||||
| Additions to tax positions related to current year | 9 | 11 | 15 | ||||||||||||||
| Balance at the end of the year | $ | 136 | $ | 131 | $ | 134 |
As of December 31, 2021, 2020 and 2019, unrecognized tax benefits of $57 million, $60 million and $53 million, respectively, were recorded as reductions to the U.S. foreign tax credit deferred tax asset. As of December 31, 2021, 2020 and 2019, unrecognized tax benefits of $79 million, $71 million and $81 million, respectively, were recorded in other long-term liabilities.
Included in the unrecognized tax benefit balance as of December 31, 2021, 2020 and 2019, are $126 million, $123 million and $115 million, respectively, of uncertain tax benefits that would affect the effective income tax rate if recognized.
The Company's major tax jurisdictions are the U.S., Macao and Singapore. The Company could be subject to examination for tax years beginning in 2017 in Macao and Singapore and tax years 2010 through 2015 and 2018 through 2020 in the U.S. The Company believes it has adequately reserved and provided for its uncertain tax positions; however, there is no assurance the taxing authorities will not propose adjustments that are different from the Company's expected outcome and it could impact the provision for income taxes.
The Company recognizes interest and penalties, if any, related to unrecognized tax positions in the provision for income taxes in the accompanying consolidated statement of operations. Interest and penalties of $10 million, $7 million and $5 million were accrued as of December 31, 2021, 2020 and 2019, respectively. The Company does not expect a significant increase or decrease in unrecognized tax benefits over the next twelve months.
Note 13 — Fair Value Measurements
Under applicable accounting guidance, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance also establishes a valuation hierarchy for inputs in measuring fair value that maximizes the use of observable inputs (inputs market participants would use based on market data obtained from sources independent of the Company) and minimizes the use of unobservable inputs (inputs that reflect the Company's assumptions based upon the best information available in the circumstances) by requiring the most observable inputs be used when available. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets or liabilities. Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Cash equivalents, which are short-term investments with original maturities of less than 90 days, had an estimated fair value of $791 million and $726 million as of December 31, 2021 and 2020, respectively. The estimated fair value of the Company's cash equivalents is based on level 1 inputs (quoted market prices in active markets).
Note 14 — Leases
Lessee
The Company has operating and finance leases for various real estate (including the Macao and Singapore leasehold interests in land) and equipment. Certain of these lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
payments based on usage. The Company’s leases include options to extend the lease term by one month to 10 years. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Leases recorded on the balance sheet consist of the following (excluding the Macao and Singapore leasehold interests in land assets; see "Note 6 — Leasehold Interests in Land, Net"):
| December 31, | ||||||||||||||||||||||||||
| Leases | Classification on the Balance Sheet | 2021 | 2020 | |||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Operating lease ROU assets | Other assets, net | $ | 24 | $ | 25 | |||||||||||||||||||||
| Finance lease ROU assets | Property and equipment, net(1) | $ | 16 | $ | 16 | |||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Current | ||||||||||||||||||||||||||
| Operating | Other accrued liabilities | $ | 14 | $ | 16 | |||||||||||||||||||||
| Finance | Current maturities of long-term debt | $ | 10 | $ | 12 | |||||||||||||||||||||
| Noncurrent | ||||||||||||||||||||||||||
| Operating | Other long-term liabilities | $ | 154 | $ | 153 | |||||||||||||||||||||
| Finance | Long-term debt | $ | 15 | $ | 10 |
(1)Finance lease ROU assets are recorded net of accumulated depreciation of $21 million and $13 million as of December 31, 2021 and 2020, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Other information related to lease term and discount rate is as follows:
| December 31, | |||||||||||||||||
| 2021 | 2020 | ||||||||||||||||
| Weighted Average Remaining Lease Term | |||||||||||||||||
| Operating leases | 32.8 years | 33.5 years | |||||||||||||||
| Finance leases | 2.9 years | 2.1 years | |||||||||||||||
| Weighted Average Discount Rate | |||||||||||||||||
| Operating leases | 4.9 | % | 4.9 | % | |||||||||||||
| Finance leases | 2.6 | % | 2.9 | % |
The components of lease expense are as follows:
| December 31, | |||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||
| Operating lease cost: | |||||||||||||||||||||||||||||
| Amortization of leasehold interests in land | $ | 56 | $ | 55 | $ | 51 | |||||||||||||||||||||||
| Operating lease cost | 14 | 12 | 16 | ||||||||||||||||||||||||||
| Short-term lease cost | 1 | 1 | 5 | ||||||||||||||||||||||||||
| Variable lease cost | 2 | 2 | 5 | ||||||||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||||||||
| Amortization of ROU assets | 8 | 9 | 5 | ||||||||||||||||||||||||||
| Interest on lease liabilities | 1 | 1 | — | ||||||||||||||||||||||||||
| Total lease cost | $ | 82 | $ | 80 | $ | 82 |
As of December 31, 2021, the Company has short-term lease commitments of $41 million.
Supplemental cash flow information related to leases is as follows:
| December 31, | |||||||||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
| Operating cash flows for operating leases | $ | 16 | $ | 19 | $ | 15 | |||||||||||||||||
| Financing cash flows for finance leases | $ | 5 | $ | 3 | $ | 4 | |||||||||||||||||
| Right-of-use assets obtained in exchange for lease liabilities: | |||||||||||||||||||||||
| Operating leases | $ | 10 | $ | 10 | $ | 13 | |||||||||||||||||
| Finance leases | $ | 9 | $ | 22 | $ | 17 | |||||||||||||||||
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Maturities of lease liabilities are summarized as follows:
| Operating Leases | Finance Leases | ||||||||||
| (In millions) | |||||||||||
| Year ending December 31, | |||||||||||
| 2022 | $ | 16 | $ | 10 | |||||||
| 2023 | 10 | 10 | |||||||||
| 2024 | 9 | 4 | |||||||||
| 2025 | 6 | 2 | |||||||||
| 2026 | 5 | — | |||||||||
| Thereafter | 310 | — | |||||||||
| Total future minimum lease payments | 356 | 26 | |||||||||
| Less — amount representing interest | (188) | (1) | |||||||||
| Present value of future minimum lease payments | 168 | 25 | |||||||||
| Less — current lease obligations | (14) | (10) | |||||||||
| Long-term lease obligations | $ | 154 | $ | 15 |
Lessor
The Company leases space at several of its Integrated Resorts to various third parties as part of its mall operations that are recorded within mall revenues, as well as restaurant and retail space and land that are recorded within convention, retail and other revenues. These leases are non-cancelable operating leases with remaining lease periods that vary from one month to 15 years. The leases include minimum base rents with escalated contingent rent clauses.
Lease revenue consists of the following:
| Year Ended December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mall | Other | Mall | Other | Mall | Other | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Minimum rents | $ | 505 | $ | 1 | $ | 523 | $ | 1 | $ | 518 | $ | 2 | |||||||||||||||||||||||||||||||||||||||||||||||
| Overage rents | 115 | — | 39 | — | 98 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rent concessions(1) | (65) | — | (272) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other(2) | 6 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total overage rents and rent concessions | 56 | — | (233) | — | 98 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 561 | $ | 1 | $ | 290 | $ | 1 | $ | 616 | $ | 2 |
(1)Rent concessions were provided to tenants during the years ended December 31, 2021 and 2020 as a result of the COVID-19 Pandemic and the impact on mall and other operations.
(2)Amount related to a grant provided by the Singapore government to lessors to support small and medium enterprises impacted by the COVID-19 Pandemic in connection with their rent obligations.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Future minimum rentals (excluding the escalated contingent rent clauses) on non-cancelable leases are as follows:
| Mall | Other | ||||||||||
| (In millions) | |||||||||||
| Year ending December 31, | |||||||||||
| 2022 | $ | 442 | $ | 1 | |||||||
| 2023 | 359 | 1 | |||||||||
| 2024 | 279 | — | |||||||||
| 2025 | 192 | — | |||||||||
| 2026 | 155 | — | |||||||||
| Thereafter | 363 | — | |||||||||
| Total minimum future rentals | $ | 1,790 | $ | 2 |
The cost and accumulated depreciation of property and equipment the Company is leasing to third parties is as follows:
| December 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In millions) | |||||||||||
| Property and equipment, at cost | $ | 1,536 | $ | 1,405 | |||||||
| Accumulated depreciation | (639) | (578) | |||||||||
| Property and equipment, net | $ | 897 | $ | 827 |
Note 15 — Commitments and Contingencies
Litigation
The Company is involved in other litigation in addition to those noted below, arising in the normal course of business. Management has made certain estimates for potential litigation costs based upon consultation with legal counsel. Actual results could differ from these estimates; however, in the opinion of management, such litigation and claims will not have a material effect on the Company’s financial condition, results of operations and cash flows.
Asian American Entertainment Corporation, Limited v. Venetian Macau Limited, et al.
On February 5, 2007, Asian American Entertainment Corporation, Limited (“AAEC” or “Plaintiff”) brought a claim (the “Prior Action”) in the U.S. District Court for the District of Nevada (the “U.S. District Court”) against Las Vegas Sands, Inc. (now known as Las Vegas Sands, LLC (“LVSLLC”)), Venetian Casino Resort, LLC (“VCR”) and Venetian Venture Development, LLC, which are subsidiaries of the Company, and William P. Weidner and David Friedman, who are former executives of the Company. The Prior Action sought damages based on an alleged breach of agreements entered into between AAEC and the aforementioned defendants for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. The U.S. District Court entered an order dismissing the Prior Action on April 16, 2010.
On January 19, 2012, AAEC filed another claim (the “Macao Action”) with the Macao Judicial Court against VML, LVS (Nevada) International Holdings, Inc. (“LVS (Nevada)”), LVSLLC and VCR (collectively, the “Defendants”). The claim was for 3.0 billion patacas (approximately $373 million at exchange rates in effect on December 31, 2021). The Macao Action alleges a breach of agreements entered into between AAEC and LVS (Nevada), LVSLLC and VCR (collectively, the “U.S. Defendants”) for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. On July 4, 2012, the Defendants filed their defense to the Macao Action with the Macao Judicial Court and amended the defense on January 4, 2013.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
On March 24, 2014, the Macao Judicial Court issued a decision holding that AAEC’s claim against VML is unfounded and that VML be removed as a party to the proceedings, and the claim should proceed exclusively against the U.S. Defendants. On May 8, 2014, AAEC lodged an appeal against that decision and the appeal is currently pending.
On June 5, 2015, the U.S. Defendants applied to the Macao Judicial Court to dismiss the claims against them as res judicata based on the dismissal of the Prior Action. On March 16, 2016, the Macao Judicial Court dismissed the defense of res judicata. An appeal against that decision was lodged by U.S. Defendants on April 7, 2016. As of the end of December 2016, all appeals (including VML’s dismissal and the res judicata appeals) were being transferred to the Macao Second Instance Court. On May 11, 2017, the Macao Second Instance Court notified the parties of its decision of refusal to deal with the appeals at the present time. The Macao Second Instance Court ordered the court file be transferred back to the Macao Judicial Court. Evidence gathering by the Macao Judicial Court commenced by letters rogatory, which was completed on March 14, 2019, and the trial of this matter was scheduled for September 2019.
On July 15, 2019, AAEC submitted a request to the Macao Judicial Court to increase the amount of its claim to 96.45 billion patacas (approximately $12.01 billion at exchange rates in effect on December 31, 2021), allegedly representing lost profits from 2004 to 2018, and reserving its right to claim for lost profits up to 2022 in due course at the enforcement stage. On September 4, 2019, the Macao Judicial Court allowed AAEC’s request to increase the amount of its claim. On September 17, 2019, the U.S. Defendants appealed the decision granting AAEC’s request and that appeal is currently pending.
On September 2, 2019, the U.S. Defendants moved to revoke the legal aid granted to AAEC, which excuses AAEC from paying its share of court costs. On September 4, 2019, the Macao Judicial Court deferred ruling on the U.S. Defendants’ motion regarding legal aid until the entry of final judgment. The U.S. Defendants appealed that deferral on September 17, 2019. On September 26, 2019, the Macao Judicial Court rejected that appeal on procedural grounds. The U.S. Defendants requested clarification of that order on October 29, 2019. By order dated December 4, 2019, the Macao Judicial Court stated it would reconsider the U.S. Defendants’ motion to revoke legal aid and, as part of that reconsideration, it would reanalyze portions of the record, seek an opinion from the Macao Public Prosecutor regarding the propriety of legal aid and consult with the trial court overseeing AAEC’s separate litigation against Galaxy Entertainment Group Ltd., Galaxy Entertainment Group S.A. and two of the U.S. Defendants’ former executives, individually. The Macao Judicial Court denied the motion to revoke legal aid on January 14, 2020.
On June 18, 2020, the U.S. Defendants moved to reschedule the trial, which had been scheduled to begin on September 16, 2020, due to travel disruptions and other extraordinary circumstances resulting from the ongoing COVID-19 Pandemic. The Macao Judicial Court granted that motion and rescheduled the trial to begin on June 16, 2021. On April 16, 2021, the U.S. Defendants again moved to reschedule the trial because continued travel disruptions resulting from the pandemic prevented the representatives of the U.S. Defendants and certain witnesses from attending the trial as scheduled. Plaintiff opposed that motion on April 29, 2021. The Macao Judicial Court denied the U.S. Defendants’ motion on May 28, 2021, concluding that, under Macao law, it lacked the power to reschedule the trial absent agreement of the parties. The U.S. Defendants appealed that ruling on June 16, 2021, and that appeal is currently pending.
The trial began as scheduled on June 16, 2021. The Macao Judicial Court heard testimony on June 16, 17, 23, and July 1. By order dated June 17, 2021, the Macao Judicial Court scheduled additional trial dates during September, October and December 2021 to hear witnesses who are currently subject to COVID-19 travel restrictions that prevent or severely limit their ability to enter Macao. That order also provided a procedure for the parties to request written testimony from witnesses who are not able to travel to Macao on those dates. On June 28, 2021, the U.S. Defendants sought clarification of certain aspects of that ruling concerning procedures for written testimony and appealed aspects of that ruling setting limits on written testimony, imposing a deadline for in-person testimony, and rejecting the U.S. Defendants’ request to have witnesses testify via video conference. On July 9, 2021, the Macao Judicial Court issued an order clarifying the procedure for written testimony. The U.S. Defendants’ appeal on the remainder of the Macao Judicial Court’s June 17, 2021 order is currently pending.
On July 10, 2021, the U.S. Defendants were notified of an invoice for supplemental court fees totaling 93 million patacas (approximately $12 million at exchange rates in effect on December 31, 2021) based on
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Plaintiff’s July 15, 2019 amendment of its claim amount. By motion dated July 20, 2021, the U.S. Defendants moved the Macao Judicial Court for an order withdrawing that invoice on the grounds that it was procedurally improper and conflicted with rights guaranteed in Macao’s Basic Law. The Macao Judicial Court denied that motion by order dated September 11, 2021. The U.S. Defendants appealed that order on September 23, 2021, and that appeal is currently pending. By order dated September 29, 2021, the Macao Judicial Court ordered that the invoice for supplemental court fees be stayed pending resolution of that appeal.
On September 6, 2021, Plaintiff notified the Macao Judicial Court that it would not be bringing any additional witnesses to testify in-person on the scheduled hearing dates. In submissions dated September 6 and September 20, 2021, the U.S. Defendants notified the Macao Judicial Court that certain witnesses were unable to attend the September hearing dates due to ongoing travel restrictions related to the COVID-19 Pandemic. By orders dated September 11 and September 23, 2021, the Macao Judicial Court cancelled the various hearing dates scheduled in September.
The Macao Judicial Court heard additional testimony on October 8, 11, and 15, and December 14 and 15, 2021. Certain witnesses who were not able to enter Macao due to ongoing COVID-19 travel restrictions presented testimony in writing. On December 15, 2021, the U.S. Defendants sought to initiate a proceeding to impeach the testimony of certain witnesses offered by Plaintiff, and the Macao Judicial Court admitted that incident and ordered Plaintiff to produce its shareholder registry. By notice dated December 16, 2021, Plaintiff appealed the order to produce its shareholder registry, and that appeal is currently pending.
From December 17, 2021 to January 19, 2022, Plaintiff submitted additional documents to the court file and disclosed written reports from two purported experts, who calculated Plaintiff’s damages at 57.88 billion patacas and 62.29 billion patacas (approximately $7.20 billion and $7.75 billion, respectively, at exchange rates in effect on December 31, 2021). In response, the U.S. Defendants moved to exclude those materials or, in the alternative, to require additional testimony from relevant witnesses. By order dated January 19, 2022, the Macao Judicial Court denied the U.S. Defendants’ motion and ruled that the materials could be included in the court file with the probative value of their contents to be determined by the Court.
Plaintiff presented its factual summation on January 21, 2022. On January 26, 2022, the U.S. Defendants presented their factual summation, and Plaintiff and the U.S. Defendants presented rebuttal summations. The Macao Judicial Court scheduled a hearing on February 15, 2022 to announce its proposed findings on disputed facts. Management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
The Daniels Family 2001 Revocable Trust v. LVSC, et al.
On October 22, 2020, The Daniels Family 2001 Revocable Trust, a putative purchaser of the Company’s shares, filed a purported class action complaint in the U.S. District Court against LVSC, Sheldon G. Adelson and Patrick Dumont. The complaint asserts violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and alleges that LVSC made materially false or misleading statements, or failed to disclose material facts, from February 27, 2016 through September 15, 2020, with respect to its operations at the Marina Bay Sands, its compliance with Singapore laws and regulations, and its disclosure controls and procedures. On January 5, 2021, the U.S. District Court entered an order appointing Carl S. Ciaccio and Donald M. DeSalvo as lead plaintiffs (“Lead Plaintiffs”). On March 8, 2021, Lead Plaintiffs filed a purported class action amended complaint against LVSC, Sheldon G. Adelson, Patrick Dumont, and Robert G. Goldstein, alleging similar violations of Sections 10(b) and 20(a) of the Exchange Act over the same time period of February 27, 2016 through September 15, 2020. On March 22, 2021, the U.S. District Court granted Lead Plaintiffs’ motion to substitute Dr. Miriam Adelson, in her capacity as the Special Administrator for the estate of Sheldon G. Adelson, for Sheldon G. Adelson as a defendant in this action. On May 7, 2021, the defendants filed a motion to dismiss the amended complaint. Lead Plaintiffs filed an opposition to the motion to dismiss on July 6, 2021, and the defendants filed their reply on August 5, 2021. All briefing on the motion to dismiss is complete and the motion is pending before the U.S. District Court. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Turesky v. Sheldon G. Adelson, et al.
On December 28, 2020, Andrew Turesky filed a putative shareholder derivative action on behalf of the Company in the U.S. District Court, against Sheldon G. Adelson, Patrick Dumont, Robert G. Goldstein, Irwin Chafetz, Micheline Chau, Charles D. Forman, Steven L. Gerard, George Jamieson, Charles A. Koppelman, Lewis Kramer and David F. Levi, all of whom are current or former directors and/or officers of LVSC. The complaint asserts claims for breach of fiduciary duty, unjust enrichment, waste of corporate assets, abuse of control, gross mismanagement, violations of Sections 10(b), 14(a) and 20(a) of the Exchange Act and for contribution under Sections 10(b) and 21D of the Exchange Act. On February 24, 2021, the U.S. District Court entered an order granting the parties’ stipulation to stay this action in light of the Daniels Family 2001 Revocable Trust putative securities class action (the “Securities Action”). Subject to the terms of the parties’ stipulation, this action is stayed until 30 days after the final resolution of the motion to dismiss in the Securities Action. On March 11, 2021, the U.S. District Court granted the plaintiff’s motion to substitute Dr. Miriam Adelson, in her capacity as the Special Administrator for the estate of Sheldon G. Adelson, for Sheldon G. Adelson as a defendant in this action. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
Macao Subconcession
Under the Macao subconcession, the Company is obligated to pay to the Macao government an annual premium with a fixed portion and a variable portion based on the number and type of gaming tables it employs and gaming machines it operates. The fixed portion of the premium is equal to 30 million patacas (approximately $4 million at exchange rates in effect on December 31, 2021). The variable portion is equal to 300,000 patacas per gaming table reserved exclusively for certain kinds of games or players, 150,000 patacas per gaming table not so reserved and 1,000 patacas per electrical or mechanical gaming machine, including slot machines (approximately $37,344, $18,672 and $124, respectively, at exchange rates in effect on December 31, 2021), subject to a minimum of 45 million patacas (approximately $6 million at exchange rates in effect on December 31, 2021). The Company is also obligated to pay a special gaming tax of 35% of gross gaming revenues and applicable withholding taxes. The Company must also contribute 4% of its gross gaming revenue to utilities designated by the Macao government, a portion of which must be used for promotion of tourism in Macao. Based on the number and types of gaming tables employed and gaming machines in operation as of December 31, 2021 and the expiration of the VML subconcession on June 26, 2022, the Company is obligated under its subconcession to make minimum future payments of approximately $22 million through the termination of the gaming subconcession in June 2022.
Note 16 — Stock-Based Employee Compensation
The Company has two equity award plans for grants of options to purchase the Company's common stock and ordinary shares of SCL (the "2004 Plan" and the "SCL Equity Plan," respectively), which are described below. The 2004 Plan provides for the granting of equity awards pursuant to the applicable provisions of the Internal Revenue Code and regulations in the United States.
Las Vegas Sands Corp. 2004 Equity Award Plan
The 2004 Plan gives the Company a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide the Company with a stock plan providing incentives directly related to increases in its stockholder value. Any of the Company's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the 2004 Plan. The 2004 Plan provided for an aggregate of 26,344,000 shares of the Company's common stock to be available for awards. The 2004 Plan originally had a term of ten years, but in June 2014, the Company's Board of Directors approved an amendment to the 2004 Plan, extending the term to December 2019. In May 2019, the Board of Directors and stockholders approved the adoption of the Las Vegas Sands Corp. Amended and Restated 2004 Equity Award Plan (the “Amended 2004 Plan”), which extended the term of the Amended 2004 Plan through December 2024 and increased the number of shares of common stock available for grants by 10,000,000 shares. The compensation committee may grant awards of nonqualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. As of December 31, 2021, there were 3,753,271 shares available for grant under the Amended 2004 Plan.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Stock option awards are granted with an exercise price equal to the fair market value (as defined in the Amended 2004 Plan) of the Company's stock on the date of grant. The outstanding stock options generally vest over three to four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting, is recognized on a straight-line basis over the awards' respective requisite service periods. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on the Company's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.
Sands China Ltd. Equity Award Plan
The SCL Equity Plan gives SCL a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide SCL with a stock plan providing incentives directly related to increases in its stockholder value. Subject to certain criteria as defined in the SCL Equity Plan, SCL's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the SCL Equity Plan.
The SCL 2009 Equity Plan provided for an aggregate of 804,786,508 shares of SCL's common stock to be available for awards. The SCL 2009 Equity Plan had a term of ten years, which expired on November 30, 2019, and no further awards may be granted after the expiration of the term. All existing awards previously granted under the SCL 2009 Equity Plan, but which are unexercised or unvested, will remain valid and (where applicable) exercisable in accordance with their terms of grant despite the expiration of the SCL 2009 Equity Plan. SCL's remuneration committee may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. Effective December 1, 2019, the SCL 2019 Equity Plan was approved by shareholders, with materially the same terms of the SCL 2009 Equity Plan. As of December 31, 2021, there were 808,619,139 shares available for grant under the SCL 2019 Equity Plan.
Stock option awards are granted with an exercise price not less than (i) the closing price of SCL's stock on the date of grant or (ii) the average closing price of SCL's stock for the five business days immediately preceding the date of grant. The outstanding stock options generally vest over four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting is recognized on a straight-line basis over the awards' respective requisite service periods. SCL estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on SCL's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the Hong Kong Government Bond rate in effect at the time of the grant. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.
Under the SCL 2009 Equity Plan and the SCL 2019 Equity Plan, SCL granted restricted share units to eligible employees. Such restricted share units vest over three to four years. Employees are entitled to a future cash payment that is equivalent to the fair value of the restricted share unit and any accumulated dividends in cash upon vesting.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Stock-Based Employee Compensation Activity
The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| LVSC Amended 2004 Plan: | |||||||||||||||||
| Weighted average volatility | 25.1 | % | 23.8 | % | 24.1 | % | |||||||||||
| Expected term (in years) | 5.5 | 5.5 | 5.5 | ||||||||||||||
| Risk-free rate | 0.9 | % | 1.3 | % | 2.1 | % | |||||||||||
| Expected dividend yield | — | % | 4.6 | % | 5.2 | % | |||||||||||
| SCL Equity Plan: | |||||||||||||||||
| Weighted average volatility | — | % | — | % | 36.9 | % | |||||||||||
| Expected term (in years) | — | — | 4.8 | ||||||||||||||
| Risk-free rate | — | % | — | % | 1.7 | % | |||||||||||
| Expected dividend yield | — | % | — | % | 5.0 | % |
A summary of the stock option activity for the Company's equity award plans for the year ended December 31, 2021, is presented below:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value (in millions) | ||||||||||||||||||||
| LVSC Amended 2004 Plan: | |||||||||||||||||||||||
| Outstanding as of January 1, 2021 | 8,937,266 | $ | 57.16 | ||||||||||||||||||||
| Granted | 4,513,468 | 34.34 | |||||||||||||||||||||
| Exercised | (121,710) | 58.73 | |||||||||||||||||||||
| Forfeited or expired | (64,507) | 63.48 | |||||||||||||||||||||
| Outstanding as of December 31, 2021 | 13,264,517 | $ | 49.35 | 7.05 | $ | 15 | |||||||||||||||||
| Exercisable as of December 31, 2021 | 5,946,626 | $ | 58.64 | 4.82 | $ | — | |||||||||||||||||
| SCL Equity Plan: | |||||||||||||||||||||||
| Outstanding as of January 1, 2021 | 54,417,800 | $ | 4.96 | ||||||||||||||||||||
| Exercised | (3,070,100) | 3.91 | |||||||||||||||||||||
| Forfeited or expired | (3,167,400) | 5.32 | |||||||||||||||||||||
| Outstanding as of December 31, 2021 | 48,180,300 | $ | 5.01 | 5.56 | $ | — | |||||||||||||||||
| Exercisable as of December 31, 2021 | 37,620,100 | $ | 4.94 | 5.17 | $ | — |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
A summary of the unvested restricted stock and restricted stock units under the Company's equity award plans for the year ended December 31, 2021, is presented below:
| Shares | Weighted Average Grant Date Fair Value | ||||||||||
| LVSC Amended 2004 Plan: | |||||||||||
| Unvested Restricted Stock | |||||||||||
| Balance as of January 1, 2021 | 15,323 | $ | 45.68 | ||||||||
| Granted | 25,104 | 55.76 | |||||||||
| Vested | (15,323) | 45.68 | |||||||||
| Balance as of December 31, 2021 | 25,104 | $ | 55.76 | ||||||||
| Unvested Restricted Stock Units | |||||||||||
| Balance as of January 1, 2021 | — | $ | — | ||||||||
| Granted | 786,310 | 48.96 | |||||||||
| Forfeited | (15,160) | 59.76 | |||||||||
| Balance as of December 31, 2021 | 771,150 | $ | 48.75 | ||||||||
| SCL Equity Plan: | |||||||||||
| Unvested Restricted Stock Units | |||||||||||
| Balance as of January 1, 2021 | 3,362,700 | $ | 4.44 | ||||||||
| Granted | 13,039,600 | 3.22 | |||||||||
| Vested | (960,544) | 4.46 | |||||||||
| Forfeited | (120,212) | 4.53 | |||||||||
| Balance as of December 31, 2021 | 15,321,544 | $ | 3.40 |
The grant date fair value of SCL's restricted stock unit awards is the share price of SCL's ordinary shares at the respective grant date. The fair value of these awards is remeasured each reporting period until the vesting dates. Upon settlement, SCL will pay the grantees an amount in cash calculated based on the closing price of SCL's shares on the vesting date or higher of (i) the closing price of SCL's shares on the vesting date, and (ii) the average closing price of SCL's shares for the five trading days immediately preceding the vesting date. The accrued liability associated with these cash-settled restricted stock units was $8 million as of December 31, 2021.
As of December 31, 2021, under the Amended 2004 Plan there was $49 million and $32 million of unrecognized compensation cost related to unvested stock options and unvested restricted stock and stock units, respectively. The stock option and restricted stock and stock unit costs are expected to be recognized over a weighted average period of 2.4 years, and 2.7 years, respectively.
As of December 31, 2021, under the SCL Equity Plan there was $5 million and $28 million of unrecognized compensation cost related to unvested stock options and unvested restricted stock units, respectively. The stock option and restricted stock unit costs are expected to be recognized over a weighted average period of 1.1 years and 2.8 years, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The stock-based compensation activity for the Amended 2004 Plan and SCL Equity Plan is as follows for the three years ended December 31, 2021:
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (Dollars in millions, except weighted average grant date fair values) | |||||||||||||||||
| Compensation expense: | |||||||||||||||||
| Stock options | $ | 14 | $ | 20 | $ | 34 | |||||||||||
| Restricted stock and stock units | 13 | 7 | 2 | ||||||||||||||
| $ | 27 | $ | 27 | $ | 36 | ||||||||||||
| Income tax benefit recognized in the consolidated statements of operations | $ | 1 | $ | 2 | $ | 4 | |||||||||||
| Compensation cost capitalized as part of property and equipment | $ | 1 | $ | 1 | $ | 1 | |||||||||||
| LVSC Amended 2004 Plan: | |||||||||||||||||
| Stock options granted | 4,513,468 | 875,474 | 1,204,145 | ||||||||||||||
| Weighted average grant date fair value | $ | 8.63 | $ | 7.79 | $ | 7.23 | |||||||||||
| Restricted stock granted | 25,104 | 17,512 | 11,039 | ||||||||||||||
| Weighted average grant date fair value | $ | 55.76 | $ | 45.68 | $ | 63.40 | |||||||||||
| Restricted stock units granted | 786,310 | — | — | ||||||||||||||
| Weighted average grant date fair value | $ | 48.96 | $ | — | $ | — | |||||||||||
| Stock options exercised: | |||||||||||||||||
| Intrinsic value | $ | 1 | $ | 5 | $ | 11 | |||||||||||
| Cash received | $ | 7 | $ | 18 | $ | 26 | |||||||||||
| SCL 2019 Equity Plan: | |||||||||||||||||
| Stock options granted | — | — | 19,409,600 | ||||||||||||||
| Weighted average grant date fair value | $ | — | $ | — | $ | 1.03 | |||||||||||
| Restricted stock units granted | 13,039,600 | 2,337,200 | 1,412,400 | ||||||||||||||
| Weighted average grant date fair value | $ | 3.22 | $ | 4.11 | $ | 4.99 | |||||||||||
| Stock options exercised: | |||||||||||||||||
| Intrinsic value | $ | 3 | $ | 2 | $ | 12 | |||||||||||
| Cash received | $ | 12 | $ | 6 | $ | 28 | |||||||||||
Note 17 — Related Party Transactions
During the years ended December 31, 2021, 2020 and 2019, the Principal Stockholders purchased certain services from the Company including security and medical support, lodging, banquet services and other goods and services for $2 million, $1 million and $2 million, respectively. For the years ended December 31, 2021, 2020 and 2019, the Company incurred $3 million, $2 million and $3 million, respectively, for food and beverage services, newspaper subscriptions and security support from entities in which the Principal Stockholders have an ownership interest.
During the years ended December 31, 2021, 2020 and 2019, the Company incurred certain expenses of $3 million, $5 million and $9 million, respectively, related to the Company's use of its Principal Stockholders' personal aircraft and yacht and aircraft refurbishment and maintenance services for business purposes. During the years ended December 31, 2021, 2020 and 2019, the Company charged the Principal Stockholders $21 million, $18 million and $25 million, respectively, related to aviation costs incurred by the Company for the Principal Stockholders' use of Company aviation personnel and assets for personal purposes. In addition, the Principal Stockholders agreed to reimburse the Company for the installation of avionics and aircraft systems on their personal aircraft. During the year ended December 31, 2019, the Company paid $9 million for such costs and was reimbursed in full by the Principal Stockholders.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Related party receivables were $2 million and $6 million as of December 31, 2021 and 2020, respectively. Related party payables were approximately $1 million and $1 million as of December 31, 2021 and 2020, respectively.
Note 18 — Segment Information
The Company's principal operating and developmental activities occur in three geographic areas: Macao, Singapore and the U.S. The Company reviews the results of operations for each of its operating segments: The Venetian Macao; The Londoner Macao; The Parisian Macao; The Plaza Macao and Four Seasons Macao; Sands Macao; Marina Bay Sands; Las Vegas Operating Properties; and, through May 30, 2019, Sands Bethlehem. The Company also reviews construction and development activities for each of its primary projects currently under development, in addition to its reportable segments noted above, which include the renovation, expansion and rebranding of Sands Cotai Central to The Londoner Macao and the MBS Expansion Project. The Company has included Ferry Operations and Other (comprised primarily of the Company's ferry operations and various other operations that are ancillary to its properties in Macao) and Corporate and Other to reconcile to the condensed consolidated results of operations and financial condition. The operations that comprised the Company’s former Las Vegas Operating Properties reportable business segment were classified as a discontinued operation and the information below as of and for the years ended December 31, 2021, 2020 and 2019, excludes these results.
The Company's segment information as of and for the years ended December 31, 2021, 2020 and 2019, is as follows:
| Casino | Rooms | Food and Beverage | Mall | Convention, Retail and Other | Net Revenues | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Year Ended December 31, 2021 | |||||||||||||||||||||||||||||||||||
| Macao: | |||||||||||||||||||||||||||||||||||
| The Venetian Macao | $ | 944 | $ | 77 | $ | 24 | $ | 195 | $ | 16 | $ | 1,256 | |||||||||||||||||||||||
| The Londoner Macao | 396 | 90 | 30 | 56 | 16 | 588 | |||||||||||||||||||||||||||||
| The Parisian Macao | 244 | 54 | 17 | 39 | 3 | 357 | |||||||||||||||||||||||||||||
| The Plaza Macao and Four Seasons Macao | 298 | 45 | 17 | 184 | 2 | 546 | |||||||||||||||||||||||||||||
| Sands Macao | 105 | 10 | 5 | 1 | 1 | 122 | |||||||||||||||||||||||||||||
| Ferry Operations and Other | — | — | — | — | 28 | 28 | |||||||||||||||||||||||||||||
| 1,987 | 276 | 93 | 475 | 66 | 2,897 | ||||||||||||||||||||||||||||||
| Marina Bay Sands | 905 | 139 | 106 | 176 | 44 | 1,370 | |||||||||||||||||||||||||||||
| Intercompany royalties(1) | — | — | — | — | 83 | 83 | |||||||||||||||||||||||||||||
| Intercompany eliminations(2) | — | — | — | (2) | (114) | (116) | |||||||||||||||||||||||||||||
| Total net revenues | $ | 2,892 | $ | 415 | $ | 199 | $ | 649 | $ | 79 | $ | 4,234 |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
| Casino | Rooms | Food and Beverage | Mall | Convention, Retail and Other | Net Revenues | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Year Ended December 31, 2020 | |||||||||||||||||||||||||||||||||||
| Macao: | |||||||||||||||||||||||||||||||||||
| The Venetian Macao | $ | 531 | $ | 46 | $ | 14 | $ | 126 | $ | 21 | $ | 738 | |||||||||||||||||||||||
| The Londoner Macao | 192 | 42 | 17 | 38 | 8 | 297 | |||||||||||||||||||||||||||||
| The Parisian Macao | 180 | 33 | 14 | 27 | 5 | 259 | |||||||||||||||||||||||||||||
| The Plaza Macao and Four Seasons Macao | 159 | 17 | 9 | 79 | 1 | 265 | |||||||||||||||||||||||||||||
| Sands Macao | 107 | 6 | 5 | 1 | 1 | 120 | |||||||||||||||||||||||||||||
| Ferry Operations and Other | — | — | — | — | 28 | 28 | |||||||||||||||||||||||||||||
| 1,169 | 144 | 59 | 271 | 64 | 1,707 | ||||||||||||||||||||||||||||||
| Marina Bay Sands | 872 | 136 | 97 | 112 | 44 | 1,261 | |||||||||||||||||||||||||||||
| Intercompany royalties(1) | — | — | — | — | 66 | 66 | |||||||||||||||||||||||||||||
| Intercompany eliminations(2) | — | — | — | (2) | (92) | (94) | |||||||||||||||||||||||||||||
| Total net revenues | $ | 2,041 | $ | 280 | $ | 156 | $ | 381 | $ | 82 | $ | 2,940 | |||||||||||||||||||||||
| Year Ended December 31, 2019 | |||||||||||||||||||||||||||||||||||
| Macao: | |||||||||||||||||||||||||||||||||||
| The Venetian Macao | $ | 2,875 | $ | 222 | $ | 73 | $ | 254 | $ | 86 | $ | 3,510 | |||||||||||||||||||||||
| The Londoner Macao | 1,541 | 320 | 97 | 71 | 23 | 2,052 | |||||||||||||||||||||||||||||
| The Parisian Macao | 1,376 | 130 | 70 | 53 | 21 | 1,650 | |||||||||||||||||||||||||||||
| The Plaza Macao and Four Seasons Macao | 650 | 41 | 31 | 151 | 4 | 877 | |||||||||||||||||||||||||||||
| Sands Macao | 576 | 18 | 27 | 3 | 4 | 628 | |||||||||||||||||||||||||||||
| Ferry Operations and Other | — | — | — | — | 117 | 117 | |||||||||||||||||||||||||||||
| 7,018 | 731 | 298 | 532 | 255 | 8,834 | ||||||||||||||||||||||||||||||
| Marina Bay Sands | 2,167 | 404 | 241 | 185 | 104 | 3,101 | |||||||||||||||||||||||||||||
| Sands Bethlehem (3) | 199 | 7 | 11 | 1 | 9 | 227 | |||||||||||||||||||||||||||||
| Intercompany royalties(1) | — | — | — | — | 206 | 206 | |||||||||||||||||||||||||||||
| Intercompany eliminations(2) | — | — | — | (2) | (239) | (241) | |||||||||||||||||||||||||||||
| Total net revenues | $ | 9,384 | $ | 1,142 | $ | 550 | $ | 716 | $ | 335 | $ | 12,127 | |||||||||||||||||||||||
(1)Royalties were earned from foreign operations, which were previously included in the Las Vegas Operating Properties and will continue post-closing of the sale.
(2)Intercompany eliminations include royalties and other intercompany services.
(3)The Company completed the sale of Sands Bethlehem on May 31, 2019. Results of operations include Sands Bethlehem through May 30, 2019.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Intersegment Revenues | |||||||||||||||||
| Macao: | |||||||||||||||||
| The Venetian Macao | $ | 4 | $ | 4 | $ | 4 | |||||||||||
| The Londoner Macao | 1 | 1 | — | ||||||||||||||
| Ferry Operations and Other | 22 | 19 | 27 | ||||||||||||||
| 27 | 24 | 31 | |||||||||||||||
| Marina Bay Sands | 6 | 4 | 4 | ||||||||||||||
| Intercompany royalties | 83 | 66 | 206 | ||||||||||||||
| Total intersegment revenues | $ | 116 | $ | 94 | $ | 241 | |||||||||||
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Adjusted Property EBITDA | |||||||||||||||||
| Macao: | |||||||||||||||||
| The Venetian Macao | $ | 297 | $ | (53) | $ | 1,407 | |||||||||||
| The Londoner Macao | (84) | (184) | 726 | ||||||||||||||
| The Parisian Macao | (17) | (131) | 544 | ||||||||||||||
| The Plaza Macao and Four Seasons Macao | 219 | 33 | 345 | ||||||||||||||
| Sands Macao | (69) | (76) | 175 | ||||||||||||||
| Ferry Operations and Other | (8) | (20) | (8) | ||||||||||||||
| 338 | (431) | 3,189 | |||||||||||||||
| Marina Bay Sands | 448 | 383 | 1,661 | ||||||||||||||
| Sands Bethlehem(1) | — | — | 52 | ||||||||||||||
| Consolidated adjusted property EBITDA(2) | 786 | (48) | 4,902 | ||||||||||||||
| Other Operating Costs and Expenses | |||||||||||||||||
| Stock-based compensation(3) | (12) | (15) | (14) | ||||||||||||||
| Corporate | (211) | (168) | (313) | ||||||||||||||
| Pre-opening | (19) | (19) | (34) | ||||||||||||||
| Development | (109) | (18) | (24) | ||||||||||||||
| Depreciation and amortization | (1,041) | (997) | (1,020) | ||||||||||||||
| Amortization of leasehold interests in land | (56) | (55) | (51) | ||||||||||||||
| Loss on disposal or impairment of assets | (27) | (73) | (81) | ||||||||||||||
| Operating income (loss) | (689) | (1,393) | 3,365 | ||||||||||||||
| Other Non-Operating Costs and Expenses | |||||||||||||||||
| Interest income | 4 | 21 | 74 | ||||||||||||||
| Interest expense, net of amounts capitalized | (621) | (523) | (449) | ||||||||||||||
| Other income (expense) | (31) | 19 | 56 | ||||||||||||||
| Gain on sale of Sands Bethlehem | — | — | 556 | ||||||||||||||
| Loss on modification or early retirement of debt | (137) | — | (2) | ||||||||||||||
| Income tax (expense) benefit | 5 | (24) | (432) | ||||||||||||||
| Net income (loss) from continuing operations | $ | (1,469) | $ | (1,900) | $ | 3,168 |
(1)The Company completed the sale of Sands Bethlehem on May 31, 2019. Results of operations include Sands Bethlehem through May 30, 2019.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(2)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 on sale of Sands Bethlehem, gain or loss on modification or early retirement of debt and income taxes. Consolidated adjusted property EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. In particular, management utilizes consolidated adjusted property EBITDA to compare the operating profitability of its operations with those of its competitors, as well as a basis for determining certain incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. The Company has significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal repayments and income taxes, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, consolidated adjusted property EBITDA as presented by the Company may not be directly comparable to similarly titled measures presented by other companies.
(3)During the years ended December 31, 2021, 2020 and 2019, the Company recorded stock-based compensation expense of $27 million, $27 million and $36 million, respectively, of which $15 million, $12 million and $22 million, respectively, was included in corporate expense in the accompanying consolidated statements of operations.
| Year Ended December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Capital Expenditures | |||||||||||||||||
| Corporate and Other | $ | 27 | $ | 5 | $ | 59 | |||||||||||
| Macao: | |||||||||||||||||
| The Venetian Macao | 71 | 140 | 131 | ||||||||||||||
| The Londoner Macao | 551 | 739 | 282 | ||||||||||||||
| The Parisian Macao | 4 | 11 | 32 | ||||||||||||||
| The Plaza Macao and Four Seasons Macao | 19 | 157 | 298 | ||||||||||||||
| Sands Macao | 7 | 9 | 16 | ||||||||||||||
| Ferry Operations and Other | 1 | 2 | 3 | ||||||||||||||
| 653 | 1,058 | 762 | |||||||||||||||
| Marina Bay Sands | 148 | 164 | 195 | ||||||||||||||
| Sands Bethlehem(1) | — | — | 2 | ||||||||||||||
| Total capital expenditures | $ | 828 | $ | 1,227 | $ | 1,018 |
(1)The Company completed the sale of Sands Bethlehem on May 31, 2019. Results of operations include Sands Bethlehem through May 30, 2019.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
| December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Total Assets | |||||||||||||||||
| Corporate and Other | $ | 1,357 | $ | 1,465 | $ | 1,860 | |||||||||||
| Macao: | |||||||||||||||||
| The Venetian Macao | 2,087 | 2,446 | 3,243 | ||||||||||||||
| The Londoner Macao | 4,494 | 4,299 | 4,504 | ||||||||||||||
| The Parisian Macao | 1,962 | 2,119 | 2,351 | ||||||||||||||
| The Plaza Macao and Four Seasons Macao | 1,145 | 1,203 | 1,239 | ||||||||||||||
| Sands Macao | 253 | 320 | 324 | ||||||||||||||
| Ferry Operations and Other | 132 | 141 | 418 | ||||||||||||||
| 10,073 | 10,528 | 12,079 | |||||||||||||||
| Marina Bay Sands | 5,326 | 5,592 | 5,880 | ||||||||||||||
| Total assets | $ | 16,756 | $ | 17,585 | $ | 19,819 |
| December 31, | |||||||||||||||||
| 2021 | 2020 | 2019 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Total Long-Lived Assets**(1)** | |||||||||||||||||
| Corporate and Other | $ | 176 | $ | 186 | $ | 212 | |||||||||||
| Macao: | |||||||||||||||||
| The Venetian Macao | 1,555 | 1,705 | 1,740 | ||||||||||||||
| The Londoner Macao | 4,317 | 4,163 | 3,591 | ||||||||||||||
| The Parisian Macao | 1,915 | 2,067 | 2,203 | ||||||||||||||
| The Plaza Macao and Four Seasons Macao | 1,055 | 1,135 | 1,112 | ||||||||||||||
| Sands Macao | 197 | 218 | 237 | ||||||||||||||
| Ferry Operations and Other | 60 | 73 | 54 | ||||||||||||||
| 9,099 | 9,361 | 8,937 | |||||||||||||||
| Marina Bay Sands | 4,741 | 4,989 | 5,063 | ||||||||||||||
| Total long-lived assets | $ | 14,016 | $ | 14,536 | $ | 14,212 |
(1)Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and leasehold interests in land, net of accumulated amortization.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 19 — Selected Quarterly Financial Results (Unaudited)
| Quarter | |||||||||||||||||||||||||||||
| First | Second | Third | Fourth | Total | |||||||||||||||||||||||||
| (In millions, except per share data) | |||||||||||||||||||||||||||||
| 2021 | |||||||||||||||||||||||||||||
| Net revenues | $ | 1,196 | $ | 1,173 | $ | 857 | $ | 1,008 | $ | 4,234 | |||||||||||||||||||
| Operating loss | (96) | (139) | (316) | (138) | (689) | ||||||||||||||||||||||||
| Net loss from continuing operations | (280) | (280) | (594) | (315) | (1,469) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | (62) | 38 | 99 | 118 | 193 | ||||||||||||||||||||||||
| Net loss | (342) | (242) | (495) | (197) | (1,276) | ||||||||||||||||||||||||
| Net loss attributable to Las Vegas Sands Corp. | (278) | (192) | (368) | (123) | (961) | ||||||||||||||||||||||||
| Earnings (loss) per share - Basic: | |||||||||||||||||||||||||||||
| Loss from continuing operations | (0.28) | (0.30) | (0.61) | (0.32) | (1.51) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | (0.08) | 0.05 | 0.13 | 0.15 | 0.25 | ||||||||||||||||||||||||
| Net loss attributable to Las Vegas Sands Corp. | (0.36) | (0.25) | (0.48) | (0.17) | (1.26) | ||||||||||||||||||||||||
| Earnings (loss) per share - Diluted: | |||||||||||||||||||||||||||||
| Income (loss) from continuing operations | (0.28) | (0.30) | (0.61) | (0.32) | (1.51) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | (0.08) | 0.05 | 0.13 | 0.15 | 0.25 | ||||||||||||||||||||||||
| Net income (loss) attributable to Las Vegas Sands Corp. | (0.36) | (0.25) | (0.48) | (0.17) | (1.26) | ||||||||||||||||||||||||
| 2020 | |||||||||||||||||||||||||||||
| Net revenues | $ | 1,417 | $ | 62 | $ | 446 | $ | 1,015 | $ | 2,940 | |||||||||||||||||||
| Operating income (loss) | 6 | (757) | (523) | (119) | (1,393) | ||||||||||||||||||||||||
| Net loss from continuing operations | (92) | (841) | (664) | (303) | (1,900) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | 41 | (144) | (67) | (73) | (243) | ||||||||||||||||||||||||
| Net loss | (51) | (985) | (731) | (376) | (2,143) | ||||||||||||||||||||||||
| Net loss attributable to Las Vegas Sands Corp. | (1) | (820) | (565) | (299) | (1,685) | ||||||||||||||||||||||||
| Earnings (loss) per share - Basic: | |||||||||||||||||||||||||||||
| Loss from continuing operations | (0.05) | (0.88) | (0.65) | (0.30) | (1.89) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | 0.05 | (0.19) | (0.09) | (0.10) | (0.32) | ||||||||||||||||||||||||
| Net loss attributable to Las Vegas Sands Corp. | — | (1.07) | (0.74) | (0.40) | (2.21) | ||||||||||||||||||||||||
| Earnings (loss) per share - Diluted: | |||||||||||||||||||||||||||||
| Loss from continuing operations | (0.05) | (0.88) | (0.65) | (0.30) | (1.89) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of income taxes | 0.05 | (0.19) | (0.09) | (0.10) | (0.32) | ||||||||||||||||||||||||
| Net income (loss) attributable to Las Vegas Sands Corp. | — | (1.07) | (0.74) | (0.40) | (2.21) |
Because earnings per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters may not equal the total earnings per share amounts for the respective year.
SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
For the Years Ended December 31, 2021, 2020 and 2019
| Description | Balance at Beginning of Year | Provision for Credit Losses | Write-offs, Net of Recoveries | Balance at End of Year | ||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Provision for credit losses: | ||||||||||||||||||||||||||
| 2019 | $ | 247 | 22 | (49) | $ | 220 | ||||||||||||||||||||
| 2020 | $ | 220 | 86 | (51) | $ | 255 | ||||||||||||||||||||
| 2021 | $ | 255 | 3 | (26) | $ | 232 |
| Description | Balance at Beginning of Year | Additions | Deductions | Balance at End of Year | ||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||
| Deferred income tax asset valuation allowance: | ||||||||||||||||||||||||||
| 2019 | $ | 4,769 | 29 | (12) | $ | 4,786 | ||||||||||||||||||||
| 2020 | $ | 4,786 | 138 | (2) | $ | 4,922 | ||||||||||||||||||||
| 2021 | $ | 4,922 | 115 | (3) | $ | 5,034 |
Previous: Item 7A. — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK · Next: Item 9. — CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE