ITEM 7. — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements and the notes thereto, and other financial information included in this Form 10-K. Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. See "Special Note Regarding Forward-Looking Statements."
Overview
We view each of our Integrated Resorts as an operating segment. Our operating segments in Macao consist of The Venetian Macao; The Londoner Macao; The Parisian Macao; The Plaza Macao and Four Seasons Hotel Macao; and the Sands Macao. Our operating segment in Singapore is Marina Bay Sands. Our operating segments in the U.S. consist of the Las Vegas Operating Properties, which includes The Venetian Resort Las Vegas and the Sands Expo Center, and, through May 30, 2019, Sands Bethlehem.
During 2020, we had achieved milestones in advancing several of our strategic objectives. We continued progress on our key development projects in Macao for the conversion of Sands Cotai Central into The Londoner Macao and we opened The Grand Suites at Four Seasons in October 2020, featuring gaming spaces and 289 luxury suites. In Singapore, we initiated development activities associated with the MBS Expansion Project. Finally, we continued to strengthen our balance sheet with the issuance of SCL 2026 and 2030 Senior Notes to provide funds for incremental liquidity and general corporate purposes.
COVID-19 Pandemic
In early January 2020, an outbreak of a respiratory illness caused by a novel coronavirus was identified and the disease has since spread rapidly across the world causing the World Health Organization to declare on March 12, 2020, the outbreak of a pandemic (the “COVID-19 Pandemic”). As a result, people across the globe were advised to avoid non-essential travel. Steps were also taken by various countries, including those in which we operate, to restrict inbound international travel and implement closures of non-essential operations, including our Integrated Resorts for certain periods in 2020 in each of the jurisdictions in which we operate, to contain the spread of the virus.
Visitation to Macao decreased substantially throughout 2020 as a result of various government policies limiting travel. Travel restrictions and quarantine requirements have been varying in response to changes in circumstances in other countries. A complete ban on entry, or a need to undergo enhanced quarantine requirements depending on the person’s residency and their recent travel history, remains in place for Macao residents, foreign workers residing in Macao and international travelers from countries other than mainland China.
Beginning December 21, 2020, all travelers who have been to any overseas territory, including Hong Kong, but not including mainland China or Taiwan, in the past 14 days will be subject to a 21-day compulsory quarantine at a designated location when arriving in Macao. Those travelers arriving from mainland China or Taiwan will be subject to a 14-day quarantine. People from low risk cities in China may enter Macao quarantine free, subject to them holding the appropriate travel documents, a negative COVID-19 test result and a green health-code. All other foreign nationals, including those holding a temporary work permit, are still not permitted to enter Macao. The China Individual Visit Scheme ("China IVS") recommenced for certain regions from August 12, 2020, and was extended to more jurisdictions within mainland China effective September 23, 2020. General travel restrictions within mainland China continue to exist and are updated and revised based on evolving public health consideraions within China.
Following suspension of all gaming operations on February 5, 2020 by the Macao government, our Macao casino operations resumed on February 20, 2020, except for operations at The Londoner Macao, which resumed on February 27, 2020. Additional health safeguards, such as the requirement to present a negative COVID-19 test certificate prior to entering the casino, have been implemented, as well as the ongoing limitation on the number of seats per table game, slot machine spacing, temperature checks and mandatory mask protection. Management is currently unable to determine when these measures will be modified or cease to be necessary.
Some of our Macao hotel facilities were also closed during the casino suspension in response to the drop in visitation and, with the exception of the Conrad Macao, Cotai Strip which reopened on June 13, 2020, these hotels were gradually reopened from February 20, 2020. In support of the Macao government’s initiatives to fight the COVID-19 Pandemic, we provided one tower (approximately 2,000 hotel rooms) for quarantine purposes at the Sheraton Grand Macao Hotel, Cotai Strip to the Macao government to house individuals who returned to Macao. This tower has been utilized for quarantine purposes on several occasions including from March 28 to April 30, 2020; from June 7 to August 14, 2020; from December 20, 2020 until February 6, 2021; and will resume on February 20, 2021 until further notice.
Operating hours at restaurants across our Macao properties are continuously being adjusted in line with movements in guest visitation. The majority of retail outlets in the 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 Hong Kong government temporarily closed the Hong Kong China Ferry Terminal in Kowloon on January 30, 2020, and the Hong Kong Macao Ferry Terminal in Hong Kong on February 4, 2020. In response, we have suspended our Macao ferry operations between Macao and Hong Kong. The timing and manner in which our normal ferry operations will be able to resume are currently unknown.
Our operations in Macao have been significantly impacted by the lack of visitation to Macao. The Macao government announced total visitation from mainland China to Macao decreased 83.0% for 2020, as compared to 2019. The Macao government also announced gross gaming revenue decreased by 79.3% for 2020, as compared to 2019.
Beginning on April 7, 2020, the Singapore government suspended all casino and non-essential operations, including all operations at Marina Bay Sands, due to the COVID-19 Pandemic. Our Singapore operations were permitted to reopen beginning on June 19, 2020; however, this only included certain restaurants and retail mall operations. The casino operations reopened on July 1, 2020; however, entry was initially limited to annual levy holders and certain Sands Rewards Club (“SRC”) members. The casino opened to all SRC members as of July 9, 2020, and to the public as of October 23, 2020. All operations are currently subject to capacity limitations.
On May 28, 2020, in support of the Singapore government’s initiatives to fight the COVID-19 Pandemic, Marina Bay Sands entered into an agreement with the Singapore government to utilize all three hotel towers to house Singapore residents for quarantine upon their initial return from other jurisdictions. The government’s use of the first tower ceased on June 26, 2020, while usage of the second and third towers continued through July 26, 2020. Beginning on July 17, 2020, the first tower reopened for normal operations, while the second and third towers reopened on August 1, 2020. On September 7, 2020, the STB announced that event organizers would be allowed to apply for pilot events with limited capacities of up to 250 attendees from October 1, 2020. The date on which nightlife venues may reopen is unknown at this time. In December 2020, Singapore entered phase 3 of reopening, which, among other things, increased our casino operating capacity for Marina Bay Sands from 3,000 players to 3,750 players.
Visitation to Marina Bay Sands declined significantly due to the COVID-19 Pandemic. The STB announced for the 12 months ended November 30, 2020 (the latest information publicly available at the time of filing), total visitation to Singapore decreased approximately 76.6%, as compared to the same period in 2019.
The Nevada government suspended all casino and non-essential operations, including all operations at the Las Vegas Operating Properties, beginning on March 18, 2020, due to the COVID-19 Pandemic. The Nevada government allowed casinos to reopen on June 4, 2020, under strict guidelines issued by the Gaming Control Board and the State of Nevada. We reopened the casino, suites within The Venetian Tower and The Palazzo Tower, and select food and beverage outlets on June 4, 2020, with certain operations subject to reduced capacity. Beginning October 1, 2020, the limit for both public and private events increased from 50 people to the lesser of 250 people or 50% of the room’s capacity (excluding employees, organizers and performers) provided social distancing measures and various safety and related protocols were followed. MICE events for more than 250 people, but no more than 1,000 people, were allowed subject to certain requirements. Larger venues, defined as having more than a 2,500 fixed-seating capacity, were allowed to host a gathering of 10% of their total capacity provided they met additional requirements. As a result of these requirements and lack of customer demand in connection with the impact of the
COVID-19 Pandemic, we have not held any MICE events at our Las Vegas Operating Properties since reopening on June 4, 2020.
In November 2020, the Nevada government tightened capacity and other restrictions, which included, among other things, a 25% capacity limit for gaming establishments and the lesser of 25% or 50 people for MICE events. These increased restrictions will be in place until at least February 14, 2021.
Visitation to our Las Vegas Operating Properties declined due to the COVID-19 Pandemic. The LVCVA announced for the 12 months ended November 30, 2020 (the latest information publicly available at the time of filing), total visitation to Las Vegas decreased 49.8%, as compared to the same period in 2019. The LVCVA also announced for the 12 months ended November 30, 2020 (the latest information publicly available at the time of filing), gross gaming revenue for the Las Vegas Strip decreased 38.5%, as compared to the same period in 2019.
In connection with reopening the Singapore and Las Vegas properties, we are adhering to social distancing requirements, which include reduced seating at table games and a decreased number of active slot machines on the casino floor. Additionally, there is uncertainty around the impact the COVID-19 Pandemic will continue to have on operations in future periods. For example, there have been a number of MICE event cancellations or rescheduling through the end of 2021 and there may be additional restrictions placed on our other services, such as nightclubs and entertainment venues for our Las Vegas properties.
If our Integrated Resorts are not permitted to resume normal operations, travel restrictions such as those related to inbound travel from other countries are not modified or eliminated, the China IVS and other visa programs are suspended or the global response to contain the COVID-19 Pandemic escalates or is unsuccessful, our operations, cash flows and financial condition will be additionally and materially impacted.
While each of our properties is currently open and operating at reduced levels due to lower visitation and the implementation of required safety measures as described above, the current economic and regulatory environment on a global basis and in each of our jurisdictions continues to evolve. We cannot predict the manner in which governments will react as the global and regional impact of COVID-19 changes over time, which could significantly alter our current operations.
We have a strong balance sheet and sufficient liquidity in place, including total cash and cash equivalents balance, excluding restricted cash and cash equivalents, of $2.12 billion and access to $1.50 billion, $2.02 billion and $448 million of available borrowing capacity from our LVSC Revolving Facility, 2018 SCL Revolving Facility and the 2012 Singapore Revolving Facility, respectively, and SGD 3.69 billion (approximately $2.79 billion at exchange rates in effect on December 31, 2020) under our Singapore Delayed Draw Term Facility, exclusively for capital expenditures for the MBS Expansion Project, as of December 31, 2020. 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 $494 million at exchange rates in effect on the date of this transaction). Subsequently, on January 29, 2021, SCL drew down $29 million and HKD 2.13 billion (approximately $274 million at exchange rates in effect on January 29, 2021) under this facility for general corporate purposes, resulting in remaining available borrowing capacity of $2.21 billion. We believe we are able to support continuing operations, complete the major construction projects that are underway and respond to the current COVID-19 Pandemic challenges. We have taken various mitigating measures to manage through the current environment, including a cost and capital expenditure reduction program to minimize cash outflow of non-essential items.
Key Operating Revenue Measurements
Operating revenues at The Venetian Macao, The Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Hotel Macao, Marina Bay Sands and our Las Vegas Operating Properties are dependent upon the volume of customers who stay at the hotel, which affects the price charged for hotel rooms and our gaming volume. Operating revenues at Sands Macao are principally driven by casino customers who visit the property on a daily basis.
Management utilizes the following volume and pricing measures in order to evaluate past performance and assist in forecasting future revenues. The various volume measurements indicate our ability to attract customers to our Integrated Resorts. In casino operations, win and hold percentages indicate the amount of revenue to be expected based on volume. In hotel operations, average daily rate and revenue per available room indicate the demand for
rooms and our ability to capture that demand. In mall operations, base rent per square foot indicates our ability to attract and maintain profitable tenants for our leasable space.
The following are the key measurements we use to evaluate operating revenues:
Casino revenue measurements for Macao and Singapore: Macao and Singapore table games are segregated into two groups: Rolling Chip play (composed of VIP players) and Non-Rolling Chip play (mostly non-VIP players). The volume measurement for Rolling Chip play is non-negotiable gaming chips wagered and lost. The volume measurement for Non-Rolling Chip play is table games drop ("drop"), which is net markers issued (credit instruments), cash deposited in the table drop boxes and gaming chips purchased and exchanged at the cage. Rolling Chip and Non-Rolling Chip volume measurements are not comparable as they are two distinct measures of volume. The amounts wagered and lost for Rolling Chip play are substantially higher than the amounts dropped for Non-Rolling Chip play. Slot handle, also a volume measurement, is the gross amount wagered for the period cited.
We view Rolling Chip win as a percentage of Rolling Chip volume, Non-Rolling Chip win as a percentage of drop and slot hold (amount won by the casino) as a percentage of slot handle. Win or hold percentage represents the percentage of Rolling Chip volume, Non-Rolling Chip drop or slot handle that is won by the casino and recorded as casino revenue. Our win and hold percentages are calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis. Our Rolling Chip win percentage is expected to be 3.15% to 3.45% in Macao and Singapore. Actual win percentage may vary from our expected win percentage and historical win and hold percentages. Generally, slot machine play is conducted on a cash basis. In Macao and Singapore, 24.0% and 14.6%, respectively, of our table games play was conducted on a credit basis for the year ended December 31, 2020.
Casino revenue measurements for the U.S.: The volume measurements in the U.S. are slot handle, as previously described, and table games drop, which is the total amount of cash and net markers issued deposited in the table drop box. We view table games win as a percentage of drop and slot hold as a percentage of slot handle. Our win and hold percentages are calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis. Based upon our mix of table games, our table games are expected to produce a win percentage of 18% to 26% for Baccarat and 16% to 24% for non-Baccarat. Actual win percentage may vary from our expected win percentage and historical win and hold percentages. Similar to Macao and Singapore, slot machine play is generally conducted on a cash basis. Approximately 68.8% of our table games play at our Las Vegas Operating Properties was conducted on a credit basis for the year ended December 31, 2020.
Hotel revenue measurements: Performance indicators used are occupancy rate (a volume indicator), which is the average percentage of available hotel rooms occupied during a period and average daily room rate ("ADR", a price indicator), which is the average price of occupied rooms per day. Available rooms exclude those rooms unavailable for occupancy during the period due to renovation, development or other requirements (such as government mandated closure, lodging for team members and usage by the Macao and Singapore governments for quarantine measures). The calculations of the occupancy rate and ADR include the impact of rooms provided on a complimentary basis. Revenue per available room ("RevPAR") represents a summary of hotel ADR and occupancy. Because not all available rooms are occupied, ADR is normally higher than RevPAR. Reserved rooms where the guests do not show up for their stay and lose their deposit, or where guests check out early, may be re-sold to walk-in guests.
Mall revenue measurements: Occupancy, base rent per square foot and tenant sales per square foot are used as performance indicators. Occupancy represents gross leasable occupied area ("GLOA") divided by gross leasable area ("GLA") at the end of the reporting period. GLOA is the sum of: (1) tenant occupied space under lease and (2) tenants no longer occupying space, but paying rent. GLA does not include space currently under development or not on the market for lease. Base rent per square foot is the weighted average base or minimum rent charge, excluding rent concessions, in effect at the end of the reporting period for all tenants that would qualify to be included in occupancy. Tenant sales per square foot is the sum of reported comparable sales for the trailing 12 months divided by the comparable square footage for the same period. Only tenants that have been open for a minimum of 12 months are included in the tenant sales per square foot calculation.
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
Summary Financial Results
Our financial results were adversely impacted by decreased visitation at each of our operating properties due to the COVID-19 Pandemic. See “COVID-19 Pandemic” for further information. Net revenues for the year ended December 31, 2020 were $3.61 billion, compared to $13.74 billion for the year ended December 31, 2019. Operating loss was $1.69 billion, compared to operating income of $3.70 billion for the year ended December 31, 2019. Net loss was $2.14 billion for the year ended December 31, 2020, compared to net income of $3.30 billion for the year ended December 31, 2019.
Operating Revenues
Our net revenues consisted of the following:
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|
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Year Ended December 31,
|
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2020
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|
2019
|
|
Percent
Change
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|
|
|
|
|
|
(Dollars in millions)
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Casino
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$
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2,268
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|
$
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9,828
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|
(76.9)
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%
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Rooms
|
498
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|
|
1,752
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(71.6)
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%
|
Food and beverage
|
283
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|
|
897
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(68.5)
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%
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Mall
|
381
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|
|
716
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|
|
(46.8)
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%
|
Convention, retail and other
|
182
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|
|
546
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|
|
(66.7)
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%
|
Total net revenues
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$
|
3,612
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|
|
$
|
13,739
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(73.7)
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%
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Consolidated net revenues were $3.61 billion for the year ended December 31, 2020, a decrease of $10.13 billion compared to $13.74 billion for the year ended December 31, 2019, due to decreases of $7.12 billion, $1.84 billion and $940 million at our Macao operations, Marina Bay Sands and our Las Vegas Operating Properties, respectively. The decreases were driven by decreased visitation and temporary property closures as a result of the COVID-19 Pandemic, as described above. Additionally, there was a $227 million decrease due to the sale of Sands Bethlehem on May 31, 2019.
Net casino revenues decreased $7.56 billion compared to the year ended December 31, 2019, driven by temporary property closures and decreased visitation once our properties reopened as a result of the COVID-19 Pandemic described above. Additionally, casinos at each of our properties continue to operate at a reduced capacity due to social distancing measures. Revenues at our Macao operations and Marina Bay Sands decreased $5.85 billion and $1.30 billion, respectively, driven by decreases in Non-Rolling Chip drop and Rolling Chip volume, while revenues at our Las Vegas Operating Properties decreased $217 million due to decreases in table games drop and win percentage and slot handle. Additionally, there was a decrease of $199 million attributable to the sale of Sands Bethlehem on May 31, 2019. The following table summarizes the results of our casino activity:
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Year Ended December 31,
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2020
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2019
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Change
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(Dollars in millions)
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Macao Operations:
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The Venetian Macao
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Total casino revenues
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$
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531
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$
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2,875
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(81.5)
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%
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Non-Rolling Chip drop
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$
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1,925
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$
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9,275
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(79.2)
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%
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Non-Rolling Chip win percentage
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25.4
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%
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26.2
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%
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(0.8)
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pts
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Rolling Chip volume
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$
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3,775
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$
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25,715
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(85.3)
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%
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Rolling Chip win percentage
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3.12
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%
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3.29
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%
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(0.17)
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pts
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Slot handle
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$
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1,041
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$
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3,952
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(73.7)
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%
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Slot hold percentage
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4.2
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%
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4.8
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%
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(0.6)
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pts
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The Londoner Macao
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Total casino revenues
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$
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192
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$
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1,541
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(87.5)
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%
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Non-Rolling Chip drop
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$
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881
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$
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6,586
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(86.6)
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%
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Non-Rolling Chip win percentage
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22.6
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%
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|
22.7
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%
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(0.1)
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pts
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Rolling Chip volume
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$
|
167
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|
|
$
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5,364
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(96.9)
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%
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Rolling Chip win percentage
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5.85
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%
|
|
3.36
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%
|
|
2.49
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pts
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Slot handle
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$
|
531
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|
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$
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4,107
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(87.1)
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%
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Slot hold percentage
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4.3
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%
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|
4.2
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%
|
|
0.1
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pts
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The Parisian Macao
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|
|
|
|
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Total casino revenues
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$
|
180
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$
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1,376
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(86.9)
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%
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Non-Rolling Chip drop
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$
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844
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$
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4,522
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(81.3)
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%
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Non-Rolling Chip win percentage
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23.1
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%
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|
23.1
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%
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|
—
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pts
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Rolling Chip volume
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$
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3,141
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$
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16,121
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(80.5)
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%
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Rolling Chip win percentage
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1.13
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%
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3.43
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%
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(2.30)
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pts
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Slot handle
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$
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763
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$
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4,217
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(81.9)
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%
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Slot hold percentage
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3.7
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%
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|
3.7
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%
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|
—
|
pts
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The Plaza Macao and Four Seasons Hotel Macao
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Total casino revenues
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$
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159
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$
|
650
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(75.5)
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%
|
Non-Rolling Chip drop
|
$
|
544
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|
|
$
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1,473
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|
(63.1)
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%
|
Non-Rolling Chip win percentage
|
24.6
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%
|
|
24.4
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%
|
|
0.2
|
pts
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Rolling Chip volume
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$
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3,656
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$
|
13,368
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|
(72.7)
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%
|
Rolling Chip win percentage
|
2.46
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%
|
|
3.88
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%
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(1.42)
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pts
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Slot handle
|
$
|
37
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|
$
|
518
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(92.9)
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%
|
Slot hold percentage
|
4.6
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%
|
|
6.0
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%
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(1.4)
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pts
|
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Year Ended December 31,
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2020
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2019
|
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Change
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Sands Macao
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Total casino revenues
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$
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107
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$
|
576
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(81.4)
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%
|
Non-Rolling Chip drop
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$
|
451
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$
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2,634
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(82.9)
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%
|
Non-Rolling Chip win percentage
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18.7
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%
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18.3
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%
|
|
0.4
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pts
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Rolling Chip volume
|
$
|
1,361
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$
|
4,605
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(70.4)
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%
|
Rolling Chip win percentage
|
2.44
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%
|
|
2.52
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%
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|
(0.08)
|
pts
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Slot handle
|
$
|
549
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|
$
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2,596
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(78.9)
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%
|
Slot hold percentage
|
3.1
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%
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|
3.3
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%
|
|
(0.2)
|
pts
|
Singapore Operations:
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|
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|
Marina Bay Sands
|
|
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|
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Total casino revenues
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$
|
872
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|
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$
|
2,167
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(59.8)
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%
|
Non-Rolling Chip drop
|
$
|
2,111
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|
|
$
|
5,194
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|
(59.4)
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%
|
Non-Rolling Chip win percentage
|
18.6
|
%
|
|
20.7
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%
|
|
(2.1)
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pts
|
Rolling Chip volume
|
$
|
9,495
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|
$
|
29,504
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|
(67.8)
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%
|
Rolling Chip win percentage
|
3.56
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%
|
|
3.40
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%
|
|
0.16
|
pts
|
Slot handle
|
$
|
8,915
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|
|
$
|
14,183
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|
(37.1)
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%
|
Slot hold percentage
|
4.4
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%
|
|
4.6
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%
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|
(0.2)
|
pts
|
U.S. Operations:
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|
Las Vegas Operating Properties
|
|
|
|
|
|
Total casino revenues
|
$
|
227
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|
$
|
444
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|
(48.9)
|
%
|
Table games drop
|
$
|
1,258
|
|
|
$
|
1,945
|
|
|
(35.3)
|
%
|
Table games win percentage
|
13.2
|
%
|
|
19.2
|
%
|
|
(6.0)
|
pts
|
Slot handle
|
$
|
1,951
|
|
|
$
|
2,960
|
|
|
(34.1)
|
%
|
Slot hold percentage
|
8.0
|
%
|
|
8.2
|
%
|
|
(0.2)
|
pts
|
In our experience, average win percentages remain fairly consistent when measured over extended periods of time with a significant volume of wagers, but can vary considerably within shorter time periods as a result of the statistical variances associated with games of chance in which large amounts are wagered.
Room revenues decreased $1.25 billion compared to the year ended December 31, 2019. The decrease was primarily a result of temporary property closures and decreased visitation at each of our properties due to the COVID-19 Pandemic. Additionally, certain rooms within The Londoner Macao and Marina Bay Sands were utilized for quarantine purposes and certain rooms across our Macao properties were used by team members due to travel restrictions. The following table summarizes the results of our room activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
Change
|
|
|
|
|
|
|
|
(Room revenues in millions)
|
Macao Operations:
|
|
|
|
|
|
The Venetian Macao
|
|
|
|
|
|
Total room revenues
|
$
|
46
|
|
|
$
|
222
|
|
|
(79.3)
|
%
|
Occupancy rate
|
27.2
|
%
|
|
95.9
|
%
|
|
(68.7)
|
pts
|
Average daily room rate (ADR)
|
$
|
197
|
|
|
$
|
227
|
|
|
(13.2)
|
%
|
Revenue per available room (RevPAR)
|
$
|
53
|
|
|
$
|
217
|
|
|
(75.6)
|
%
|
The Londoner Macao
|
|
|
|
|
|
Total room revenues
|
$
|
42
|
|
|
$
|
320
|
|
|
(86.9)
|
%
|
Occupancy rate
|
18.3
|
%
|
|
96.8
|
%
|
|
(78.5)
|
pts
|
Average daily room rate (ADR)
|
$
|
164
|
|
|
$
|
160
|
|
|
2.5
|
%
|
Revenue per available room (RevPAR)
|
$
|
30
|
|
|
$
|
155
|
|
|
(80.6)
|
%
|
The Parisian Macao
|
|
|
|
|
|
Total room revenues
|
$
|
33
|
|
|
$
|
130
|
|
|
(74.6)
|
%
|
Occupancy rate
|
27.3
|
%
|
|
97.2
|
%
|
|
(69.9)
|
pts
|
Average daily room rate (ADR)
|
$
|
145
|
|
|
$
|
159
|
|
|
(8.8)
|
%
|
Revenue per available room (RevPAR)
|
$
|
39
|
|
|
$
|
155
|
|
|
(74.8)
|
%
|
The Plaza Macao and Four Seasons Hotel Macao(1)
|
|
|
|
|
|
Total room revenues
|
$
|
17
|
|
|
$
|
41
|
|
|
(58.5)
|
%
|
Occupancy rate
|
28.5
|
%
|
|
91.3
|
%
|
|
(62.8)
|
pts
|
Average daily room rate (ADR)
|
$
|
394
|
|
|
$
|
332
|
|
|
18.7
|
%
|
Revenue per available room (RevPAR)
|
$
|
113
|
|
|
$
|
303
|
|
|
(62.7)
|
%
|
Sands Macao
|
|
|
|
|
|
Total room revenues
|
$
|
6
|
|
|
$
|
18
|
|
|
(66.7)
|
%
|
Occupancy rate
|
39.4
|
%
|
|
99.8
|
%
|
|
(60.4)
|
pts
|
Average daily room rate (ADR)
|
$
|
157
|
|
|
$
|
175
|
|
|
(10.3)
|
%
|
Revenue per available room (RevPAR)
|
$
|
62
|
|
|
$
|
175
|
|
|
(64.6)
|
%
|
Singapore Operations:
|
|
|
|
|
|
Marina Bay Sands
|
|
|
|
|
|
Total room revenues
|
$
|
136
|
|
|
$
|
404
|
|
|
(66.3)
|
%
|
Occupancy rate
|
69.1
|
%
|
|
97.6
|
%
|
|
(28.5)
|
pts
|
Average daily room rate (ADR)
|
$
|
313
|
|
|
$
|
450
|
|
|
(30.4)
|
%
|
Revenue per available room (RevPAR)
|
$
|
216
|
|
|
$
|
439
|
|
|
(50.8)
|
%
|
U.S. Operations:
|
|
|
|
|
|
Las Vegas Operating Properties
|
|
|
|
|
|
Total room revenues
|
$
|
218
|
|
|
$
|
610
|
|
|
(64.3)
|
%
|
Occupancy rate
|
56.3
|
%
|
|
95.3
|
%
|
|
(39.0)
|
pts
|
Average daily room rate (ADR)
|
$
|
220
|
|
|
$
|
251
|
|
|
(12.4)
|
%
|
Revenue per available room (RevPAR)
|
$
|
124
|
|
|
$
|
239
|
|
|
(48.1)
|
%
|
_________________________
(1) Includes The Grand Suites at Four Seasons, which opened in October 2020.
Food and beverage revenues decreased $614 million compared to the year ended December 31, 2019. The decrease was primarily due to decreases of $239 million, $220 million and $144 million at our Macao properties, our Las Vegas Operating Properties and Marina Bay Sands, respectively, as a result of the COVID-19 Pandemic described above.
Mall revenues decreased $335 million compared to the year ended December 31, 2019. The decrease was primarily due to $272 million in rent concessions granted to our mall tenants in Macao and Singapore, as well as a $59 million decrease in overage rents resulting from lower traffic in our malls as a result of the COVID-19 Pandemic. Our Macao Operations were also impacted by lower occupancy due to the impact of the COVID-19 Pandemic.
For further information related to the financial performance of our malls, see "Additional Information Regarding our Retail Mall Operations." The following table summarizes the results of our malls on the Cotai Strip in Macao and in Singapore:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
Change
|
|
|
|
|
|
|
|
(Mall revenues in millions)
|
Macao Operations:
|
|
|
|
|
|
Shoppes at Venetian
|
|
|
|
|
|
Total mall revenues
|
$
|
125
|
|
|
$
|
253
|
|
|
(50.6)
|
%
|
Mall gross leasable area (in square feet)
|
812,936
|
|
|
812,938
|
|
|
—
|
%
|
Occupancy
|
83.8
|
%
|
|
91.4
|
%
|
|
(7.6)
|
pts
|
Base rent per square foot
|
$
|
302
|
|
|
$
|
277
|
|
|
9.0
|
%
|
Tenant sales per square foot(1)
|
$
|
794
|
|
|
$
|
1,709
|
|
|
(53.5)
|
%
|
Shoppes at Londoner(2)
|
|
|
|
|
|
Total mall revenues
|
$
|
37
|
|
|
$
|
70
|
|
|
(47.1)
|
%
|
Mall gross leasable area (in square feet)
|
525,206
|
|
|
525,222
|
|
|
—
|
%
|
Occupancy
|
83.9
|
%
|
|
90.1
|
%
|
|
(6.2)
|
pts
|
Base rent per square foot
|
$
|
96
|
|
|
$
|
107
|
|
|
(10.3)
|
%
|
Tenant sales per square foot(1)
|
$
|
409
|
|
|
$
|
934
|
|
|
(56.2)
|
%
|
Shoppes at Parisian
|
|
|
|
|
|
Total mall revenues
|
$
|
27
|
|
|
$
|
53
|
|
|
(49.1)
|
%
|
Mall gross leasable area (in square feet)
|
295,963
|
|
|
295,920
|
|
|
—
|
%
|
Occupancy
|
78.5
|
%
|
|
86.2
|
%
|
|
(7.7)
|
pts
|
Base rent per square foot
|
$
|
156
|
|
|
$
|
149
|
|
|
4.7
|
%
|
Tenant sales per square foot(1)
|
$
|
349
|
|
|
$
|
785
|
|
|
(55.5)
|
%
|
Shoppes at Four Seasons
|
|
|
|
|
|
Total mall revenues
|
$
|
79
|
|
|
$
|
151
|
|
|
(47.7)
|
%
|
Mall gross leasable area (in square feet)
|
244,104
|
|
|
242,425
|
|
|
0.7
|
%
|
Occupancy
|
94.9
|
%
|
|
95.0
|
%
|
|
(0.1)
|
pts
|
Base rent per square foot
|
$
|
540
|
|
|
$
|
544
|
|
|
(0.7)
|
%
|
Tenant sales per square foot(1)
|
$
|
2,744
|
|
|
$
|
5,478
|
|
|
(49.9)
|
%
|
Singapore Operations:
|
|
|
|
|
|
The Shoppes at Marina Bay Sands
|
|
|
|
|
|
Total mall revenues
|
$
|
112
|
|
|
$
|
185
|
|
|
(39.5)
|
%
|
Mall gross leasable area (in square feet)
|
620,330
|
|
|
593,714
|
|
|
4.5
|
%
|
Occupancy
|
98.2
|
%
|
|
96.4
|
%
|
|
1.8
|
pts
|
Base rent per square foot
|
$
|
258
|
|
|
$
|
270
|
|
|
(4.4)
|
%
|
Tenant sales per square foot(1)
|
$
|
1,053
|
|
|
$
|
2,062
|
|
|
(48.9)
|
%
|
_________________________
Note: This table excludes the results of mall operations at Sands Macao.
(1)Tenant sales per square foot is the sum of reported comparable sales for the trailing 12 months divided by the comparable square footage for the same period.
(2)The Shoppes at Londoner will feature up to approximately 600,000 square feet of gross leasable area upon completion of all phases of the renovation, rebranding and expansion to The Londoner Macao.
Convention, retail and other revenues decreased $364 million compared to the year ended December 31, 2019, driven by decreases of $111 million, $102 million and $61 million at our Las Vegas Operating Properties, Macao properties and Marina Bay Sands, respectively, as a result of the cancellation of MICE events and decreased visitation across our properties due to the COVID-19 Pandemic described above. Additionally, there was a $76 million decrease related to our ferry operations, due to the temporary closure of the Hong Kong China Ferry Terminal since late January 2020 and the Hong Kong Macao Ferry Terminal since early February 2020 in response to the COVID-19 Pandemic.
Operating Expenses
Our operating expenses consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
Percent
Change
|
|
|
|
|
|
|
|
(Dollars in millions)
|
Casino
|
$
|
1,758
|
|
|
$
|
5,304
|
|
|
(66.9)
|
%
|
Rooms
|
271
|
|
|
444
|
|
|
(39.0)
|
%
|
Food and beverage
|
371
|
|
|
702
|
|
|
(47.2)
|
%
|
Mall
|
59
|
|
|
78
|
|
|
(24.4)
|
%
|
Convention, retail and other
|
149
|
|
|
304
|
|
|
(51.0)
|
%
|
Provision for credit losses
|
99
|
|
|
30
|
|
|
230.0
|
%
|
General and administrative
|
1,093
|
|
|
1,502
|
|
|
(27.2)
|
%
|
Corporate
|
168
|
|
|
313
|
|
|
(46.3)
|
%
|
Pre-opening
|
19
|
|
|
34
|
|
|
(44.1)
|
%
|
Development
|
18
|
|
|
24
|
|
|
(25.0)
|
%
|
Depreciation and amortization
|
1,160
|
|
|
1,165
|
|
|
(0.4)
|
%
|
Amortization of leasehold interests in land
|
55
|
|
|
51
|
|
|
7.8
|
%
|
Loss on disposal or impairment of assets
|
80
|
|
|
90
|
|
|
(11.1)
|
%
|
Total operating expenses
|
$
|
5,300
|
|
|
$
|
10,041
|
|
|
(47.2)
|
%
|
Operating expenses were $5.30 billion for the year ended December 31, 2020, a decrease of $4.74 billion compared to $10.04 billion for the year ended December 31, 2019. The decrease was primarily driven by a $3.55 billion decrease in casino expenses. Additionally, general and administrative expenses decreased $409 million and food and beverage expenses decreased $331 million. The decreases were mainly driven by the COVID-19 Pandemic described above. Although management has implemented certain cost reduction programs, operating margins in each business segment were negatively impacted due to employee and other costs incurred during this period of decreased visitation and property closures. We have maintained our staffing levels across our jurisdictions through significantly reduced visitation. The level of payroll costs during 2020 were reduced by $109 million in connection with the Job Support Scheme in Singapore and the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act in the U.S. We have also implemented payroll cost saving initiatives across each of our properties, including utilization of paid time off and voluntary unpaid leave. Finally, our bonus and incentive expense in 2020 decreased $262 million from 2019 due to not meeting certain performance criteria due to impact of the COVID-19 Pandemic.
Casino expenses decreased $3.55 billion compared to the year ended December 31, 2019. The decrease was primarily attributable to a decrease of $3.06 billion in gaming taxes due to decreased casino revenues, as previously described. Additionally, the sale of Sands Bethlehem in May 2019 resulted in a $127 million decrease.
Room expenses decreased $173 million compared to the year ended December 31, 2019. The decrease was driven by decreases of $90 million, $54 million and $27 million at our Macao properties, our Las Vegas Operating Properties and Marina Bay Sands, respectively. These decreases are consistent with the reduction in room revenue.
Food and beverage expenses decreased $331 million compared to the year ended December 31, 2019, due to decreases of $135 million, $99 million and $87 million at our Macao properties, our Las Vegas Operating Properties and Marina Bay Sands, respectively. These decreases are consistent with the reduction in food and beverage revenues.
Convention, retail and other expenses decreased $155 million compared to the year ended December 31, 2019, driven by a $69 million decrease related to the temporary closure of the ferry terminals as previously described. Additionally, our Macao properties, Las Vegas Operating Properties and Marina Bay Sands decreased $35 million, $31 million and $17 million, respectively, as a result of the COVID-19 Pandemic described above.
The provision for credit losses was $99 million for the year ended December 31, 2020, compared to $30 million for the year ended December 31, 2019. The increase was driven by the aging of receivables for premium players at our Macao properties and Marina Bay Sands during 2020, as travel restrictions have limited the ability for patrons to redeem markers. The amount of this provision can vary over short periods of time because of factors specific to the customers who owe us money from gaming activities at any given time. We believe the amount of our provision for credit losses in the future will depend upon the state of the economy, our credit standards, our risk assessments and the judgment of our employees responsible for granting credit.
General and administrative expenses decreased $409 million compared to the year ended December 31, 2019, due to decreases of $169 million, $116 million and $92 million at our Macao properties, Marina Bay Sands and our Las Vegas Operating Properties, respectively. The decreases were primarily driven by decreases in marketing, payroll and property operation costs. Additionally, the sale of Sands Bethlehem in May 2019 resulted in a $32 million decrease.
Corporate expenses decreased $145 million compared to the year ended December 31, 2019. The decrease was primarily driven by a nonrecurring legal settlement recorded in 2019 and a decrease in payroll costs as described above.
Pre-opening expenses represent personnel and other costs incurred prior to the opening of new ventures, which are expensed as incurred. Development expenses include the costs associated with our evaluation and pursuit of new business opportunities, which are also expensed as incurred.
Loss on disposal or impairment of assets was $80 million for the year ended December 31, 2020, compared to $90 million for the year ended December 31, 2019. The loss for the year ended December 31, 2020, consisted primarily of asset disposals and demolition costs related to The Londoner Macao. The loss for the year ended December 31, 2019, consisted primarily of a $65 million impairment of our ferries in Macao.
Segment Adjusted Property EBITDA
The following table summarizes information related to our segments (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 17 — Segment Information" for discussion of our operating segments and a reconciliation of consolidated adjusted property EBITDA to net income/loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
Percent
Change
|
|
|
|
|
|
|
|
(Dollars in millions)
|
Macao:
|
|
|
|
|
|
The Venetian Macao
|
$
|
(53)
|
|
|
$
|
1,407
|
|
|
(103.8)
|
%
|
The Londoner Macao
|
(184)
|
|
|
726
|
|
|
(125.3)
|
%
|
The Parisian Macao
|
(131)
|
|
|
544
|
|
|
(124.1)
|
%
|
The Plaza Macao and Four Seasons Hotel Macao
|
33
|
|
|
345
|
|
|
(90.4)
|
%
|
Sands Macao
|
(76)
|
|
|
175
|
|
|
(143.4)
|
%
|
Ferry Operations and Other
|
(20)
|
|
|
(8)
|
|
|
150.0
|
%
|
|
(431)
|
|
|
3,189
|
|
|
(113.5)
|
%
|
Marina Bay Sands
|
383
|
|
|
1,661
|
|
|
(76.9)
|
%
|
United States:
|
|
|
|
|
|
Las Vegas Operating Properties
|
(124)
|
|
|
487
|
|
|
(125.5)
|
%
|
Sands Bethlehem(1)
|
—
|
|
|
52
|
|
|
(100.0)
|
%
|
|
(124)
|
|
|
539
|
|
|
(123.0)
|
%
|
Consolidated adjusted property EBITDA(2)
|
$
|
(172)
|
|
|
$
|
5,389
|
|
|
(103.2)
|
%
|
_________________________
(1)We completed the sale of Sands Bethlehem on May 31, 2019. Results of operations include Sands Bethlehem through May 30, 2019.
(2)Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is used by management as the primary measure of the operating performance of our segments. Consolidated adjusted property EBITDA is net income/loss before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal or impairment of assets, interest, other income or expense, gain 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 our operations with those of our competitors, as well as a basis for determining certain incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. We have significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal repayments and income taxes, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, our presentation of consolidated adjusted property EBITDA may not be directly comparable to similarly titled measures presented by other companies.
Adjusted property EBITDA at our Macao operations decreased $3.62 billion compared to the year ended December 31, 2019, due to a decrease in operations driven by government-mandated travel restrictions, property closures and overall reduced visitation since late January 2020 resulting from the COVID-19 Pandemic.
Adjusted property EBITDA at Marina Bay Sands decreased $1.28 billion compared to the year ended December 31, 2019, due to a decrease in operations, driven by the temporary closure of the property and reduced visitation resulting from the COVID-19 Pandemic.
Adjusted property EBITDA at our Las Vegas Operating Properties decreased $611 million compared to the year ended December 31, 2019, primarily due to no MICE events after the first quarter of 2020 and decreased room and casino revenues driven by the temporary closure of the properties and overall reduced visitation resulting from the COVID-19 Pandemic.
Interest Expense
The following table summarizes information related to interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(Dollars in millions)
|
Interest cost
|
$
|
544
|
|
|
$
|
549
|
|
Add — imputed interest on deferred proceeds from sale of The Shoppes at The Palazzo
|
13
|
|
|
15
|
|
Less — capitalized interest
|
(21)
|
|
|
(9)
|
|
Interest expense, net
|
$
|
536
|
|
|
$
|
555
|
|
Cash paid for interest
|
$
|
440
|
|
|
$
|
471
|
|
Weighted average total debt balance
|
$
|
13,412
|
|
|
$
|
12,154
|
|
Weighted average interest rate
|
4.1
|
%
|
|
4.5
|
%
|
Interest cost decreased $5 million compared to the year ended December 31, 2019, resulting primarily from decreases in our weighted average interest rate, offset by the increase in weighted average total debt balance. The decrease in weighted average interest rate was due to a decrease in the Singapore Offer Rate ("SOR"). The weighted average debt balance increased in connection with the issuance of the SCL 2026 and 2030 Senior Notes in June 2020 and borrowings on the Singapore Delayed Draw Term Loan in September 2020 (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt").
Other Factors Affecting Earnings
Other income was $22 million for the year ended December 31, 2020, compared to $23 million during the year ended December 31, 2019. Other income during the year ended December 31, 2020, was primarily attributable to $20 million of foreign currency transaction gains, driven by the U.S. dollar-denominated debt held by SCL.
Our income tax benefit was $38 million on a loss before income taxes of $2.18 billion for the year ended December 31, 2020, resulting in a (1.7%) effective income tax rate. This compares to a 12.4% effective income tax rate for the year ended December 31, 2019. The effective income tax rate for the year ended December 31, 2019, would have been 9.5% without the discrete income tax expense of $161 million resulting from the sale of Sands Bethlehem. The income tax benefit for the year ended December 31, 2020, reflects a 17% statutory tax rate on our Singapore operations, a 21% corporate income tax rate on our U.S. operations, and a zero percent tax rate on our Macao gaming operations due to our income tax exemption in Macao. Our U.S. operations recorded a tax benefit associated with the pre-tax book losses incurred for the year ended December 31, 2020. Our U.S. tax benefit was partially offset by a valuation allowance recorded on certain U.S. foreign tax credits, which we no longer expect to utilize due to lower royalty income resulting from a decrease in revenues from our Macao and Singapore operations compared to prior estimates. Our Macao non-gaming operations had a non-cash income tax expense of $14 million due to the reversal of certain deferred tax assets related to fixed assets, which were primarily disposed of as part of The Londoner Macao project.
The net loss attributable to our noncontrolling interests was $458 million for the year ended December 31, 2020, compared to net income attributable to our noncontrolling interest of $606 million for the year ended December 31, 2019. These amounts were primarily related to the noncontrolling interest of SCL.
Additional Information Regarding our Retail Mall Operations
The following tables summarize the results of our mall operations on the Cotai Strip and at Marina Bay Sands for the years ended December 31, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shoppes at Venetian
|
|
Shoppes at Four Seasons
|
|
Shoppes
at Cotai Central
|
|
Shoppes at Parisian
|
|
The Shoppes at Marina Bay Sands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
For the year ended December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
Mall revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Minimum rents(1)
|
$
|
192
|
|
|
$
|
121
|
|
|
$
|
37
|
|
|
$
|
34
|
|
|
$
|
137
|
|
|
|
Overage rents
|
13
|
|
|
10
|
|
|
4
|
|
|
2
|
|
|
11
|
|
|
|
Rent concessions(2)
|
(111)
|
|
|
(61)
|
|
|
(22)
|
|
|
(20)
|
|
|
(56)
|
|
|
|
Total overage rents and rent concessions
|
(98)
|
|
|
(51)
|
|
|
(18)
|
|
|
(18)
|
|
|
(45)
|
|
|
|
CAM, levies and direct recoveries
|
31
|
|
|
9
|
|
|
18
|
|
|
11
|
|
|
20
|
|
|
|
Total mall revenues
|
125
|
|
|
79
|
|
|
37
|
|
|
27
|
|
|
112
|
|
|
|
Mall operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Common area maintenance
|
11
|
|
|
4
|
|
|
6
|
|
|
4
|
|
|
13
|
|
|
|
Marketing and other direct operating expenses
|
5
|
|
|
5
|
|
|
2
|
|
|
3
|
|
|
5
|
|
|
|
Mall operating expenses
|
16
|
|
|
9
|
|
|
8
|
|
|
7
|
|
|
18
|
|
|
|
Property taxes(3)
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
|
Provision for credit losses
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
|
Mall-related expenses(4)
|
$
|
19
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
7
|
|
|
$
|
20
|
|
|
|
For the year ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Mall revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Minimum rents(1)
|
$
|
194
|
|
|
$
|
110
|
|
|
$
|
39
|
|
|
$
|
37
|
|
|
$
|
135
|
|
|
|
Overage rents
|
26
|
|
|
31
|
|
|
13
|
|
|
3
|
|
|
24
|
|
|
|
CAM, levies and direct recoveries
|
33
|
|
|
10
|
|
|
18
|
|
|
13
|
|
|
26
|
|
|
|
Total mall revenues
|
253
|
|
|
151
|
|
|
70
|
|
|
53
|
|
|
185
|
|
|
|
Mall operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Common area maintenance
|
16
|
|
|
6
|
|
|
8
|
|
|
6
|
|
|
17
|
|
|
|
Marketing and other direct operating expenses
|
8
|
|
|
3
|
|
|
3
|
|
|
5
|
|
|
6
|
|
|
|
Mall operating expenses
|
24
|
|
|
9
|
|
|
11
|
|
|
11
|
|
|
23
|
|
|
|
Property taxes(3)
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
|
Provision for credit losses
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Mall-related expenses(4)
|
$
|
25
|
|
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
29
|
|
|
|
____________________
Note: This table excludes the results of our mall operations at Sands Macao and Sands Bethlehem, which was sold in May 2019.
(1) Minimum rents include base rents and straight-line adjustments of base rents.
(2) Rent concessions were provided to tenants as a result of the COVID-19 Pandemic and the related impact on mall operations.
(3) Commercial property that generates rental income is exempt from property tax for the first six years for newly constructed buildings in Cotai. Each property is also eligible to obtain an additional six-year exemption,
provided certain qualifications are met. To date, The Venetian Macao, The Plaza Macao and Four Seasons Hotel Macao, The Londoner Macao and The Parisian Macao have obtained a second exemption. The exemption for The Venetian Macao and The Plaza Macao and Four Seasons Hotel Macao expired in August 2019 and August 2020, respectively, and the exemption for The Londoner Macao and The Parisian Macao will be expiring in December 2027 and September 2028, respectively.
(4) Mall-related expenses consist of CAM, marketing fees and other direct operating expenses, property taxes and provision for credit losses, but excludes depreciation and amortization and general and administrative costs.
It is common in the mall operating industry for companies to disclose mall net operating income ("NOI") as a useful supplemental measure of a mall's operating performance. Because NOI excludes general and administrative expenses, interest expense, impairment losses, depreciation and amortization, gains and losses from property dispositions, allocations to noncontrolling interests and provision for income taxes, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and operating commercial real estate properties and the impact on operations from trends in occupancy rates, rental rates and operating costs.
In the table above, we believe taking total mall revenues less mall-related expenses provides an operating performance measure for our malls. Other mall operating companies may use different methodologies for deriving mall-related expenses. As such, this calculation may not be comparable to the NOI of other mall operating companies.
Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018
A discussion of changes in our results of operations between 2019 and 2018 has been omitted from this Form 10-K and can be found in "Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Liquidity and Capital Resources
Cash Flows — Summary
Our cash flows consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Net cash generated from (used in) operating activities
|
$
|
(1,312)
|
|
|
$
|
3,038
|
|
|
$
|
4,701
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Net proceeds from sale of Sands Bethlehem
|
—
|
|
|
1,161
|
|
|
—
|
|
Capital expenditures
|
(1,330)
|
|
|
(1,216)
|
|
|
(949)
|
|
Proceeds from disposal of property and equipment
|
1
|
|
|
5
|
|
|
19
|
|
Acquisition of intangible assets
|
—
|
|
|
(53)
|
|
|
—
|
|
Net cash used in investing activities
|
(1,329)
|
|
|
(103)
|
|
|
(930)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from exercise of stock options
|
24
|
|
|
54
|
|
|
79
|
|
Repurchase of common stock
|
—
|
|
|
(754)
|
|
|
(905)
|
|
Dividends paid and noncontrolling interest payments
|
(911)
|
|
|
(3,000)
|
|
|
(2,979)
|
|
Proceeds from long-term debt
|
1,945
|
|
|
4,000
|
|
|
7,593
|
|
Repayments of long-term debt
|
(467)
|
|
|
(3,536)
|
|
|
(5,178)
|
|
Payments of financing costs
|
(31)
|
|
|
(132)
|
|
|
(132)
|
|
Net cash generated from (used in) financing activities
|
560
|
|
|
(3,368)
|
|
|
(1,522)
|
|
Effect of exchange rate on cash, cash equivalents and restricted cash
|
(24)
|
|
|
14
|
|
|
(18)
|
|
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
|
(2,105)
|
|
|
(419)
|
|
|
2,231
|
|
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year
|
4,242
|
|
|
4,661
|
|
|
2,430
|
|
Cash, cash equivalents and restricted cash and cash equivalents at end of year
|
$
|
2,137
|
|
|
$
|
4,242
|
|
|
$
|
4,661
|
|
A discussion of changes in cash flows between 2019 and 2018 has been omitted from this Form 10-K and can be found in "Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
Cash Flows — Operating Activities
Table games play at our properties is conducted on a cash and credit basis, while slot machine play is primarily conducted on a cash basis. Our rooms, food and beverage and other non-gaming revenues are conducted primarily on a cash basis or as a trade receivable, resulting in operating cash flows being generally affected by changes in operating income and accounts receivable. For the year ended December 31, 2020, cash used in operations was $1.31 billion, a decrease of $4.35 billion compared to $3.04 billion of cash flow from operations for the year ended December 31, 2019. The main factor driving this decrease was the impact of the COVID-19 Pandemic on our operations, which significantly reduced visitation to our properties and caused the temporary shutdown of all of our properties at various times during 2020 as described above. The COVID-19 Pandemic impacted our working capital, which was a cash outflow during the year ended December 31, 2020 as the amount of receivables collected was less than the settlement of operating accrued liabilities and the outstanding chip liability was significantly reduced in 2020. In addition, cash flow from operations in the prior year were impacted by the land lease payment made in 2019 in connection with the MBS Expansion Project.
Cash Flows — Investing Activities
Capital expenditures for the year ended December 31, 2020, totaled $1.33 billion, including $1.06 billion in Macao, which consisted of $739 million for The Londoner Macao, $157 million for The Plaza Macao and Four Seasons Hotel Macao primarily for The Grand Suites at Four Seasons and $140 million for The Venetian Macao; $164 million in Singapore; $103 million at our Las Vegas Operating Properties; and $5 million for corporate and other activities.
Capital expenditures for the year ended December 31, 2019, totaled $1.22 billion, including $762 million in Macao, which consisted of $298 million for The Plaza Macao and Four Seasons Hotel Macao primarily for The Grand Suites at Four Seasons, $282 million for The Londoner Macao and $131 million for The Venetian Macao; $198 million at our Las Vegas Operating Properties; $195 million in Singapore; and $61 million for corporate and other activities.
Cash Flows — Financing Activities
Net cash flows generated from financing activities were $560 million for the year ended December 31, 2020, which was primarily attributable to the issuance of $1.50 billion of unsecured notes at SCL, partially offset by $911 million in dividend payments.
Net cash flows used in financing activities were $3.37 billion for the year ended December 31, 2019, which was primarily attributable to $3.0 billion in dividend payments, $754 million in common stock repurchases and $132 million in payments of financing costs, partially offset by proceeds of $495 million from the issuance of the 2025 LVSC Senior Notes.
As of December 31, 2020, we had $3.96 billion available for borrowing under our U.S., Macao and Singapore revolving facilities, net of letters of credit. Additionally, we had $2.79 billion available for borrowing under the 2012 Singapore Delayed Draw Term Facility to finance construction costs incurred in connection with the MBS Expansion Project.
Capital Financing Overview
We fund our development projects primarily through borrowings from our debt instruments (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt") and operating cash flows.
In June 2020, SCL issued, in a private offering, two series of senior unsecured notes in an aggregate principal amount of $1.50 billion. The net proceeds from the offering were used for incremental liquidity and general corporate purposes. (see "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt — Corporate and U.S. Related Debt — SCL Senior Notes").
Our U.S., SCL and Singapore credit facilities, as amended, contain various financial covenants, which include maintaining a maximum leverage ratio or net debt, as defined, to trailing twelve-month adjusted earnings before interest, income taxes, depreciation and amortization, as defined. In September 2020, LVSC entered into an amendment, pursuant to which lenders, among other things, removed LVSC’s requirement to maintain a maximum leverage ratio as of the last day of the fiscal quarter during the period beginning on October 31, 2020, through and including December 31, 2021. In March 2020, SCL entered into a waiver and amendment request letter, pursuant to which lenders, among other things, waived SCL’s requirement to ensure the leverage ratio does not exceed 4.0x and the interest coverage ratio is greater than 2.50x for any period beginning on, and including, January 1, 2020 and ending on, and including, July 1, 2021 (other than with respect to the financial year ended December 31, 2019). In September 2020, SCL entered into a waiver extension and amendment request letter, pursuant to which the aforementioned waiver period was extended to January 1, 2022. In June 2020, MBS entered into an amendment letter, 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.
Any defaults under our debt agreements would allow the lenders, in each case, to exercise their rights and remedies as defined under their respective agreements. If the lenders were to exercise their rights to accelerate the due dates of the indebtedness outstanding, there can be no assurance we would be able to repay or refinance any
amounts that may become due and payable under such agreements, which could force us to restructure or alter our operations or debt obligations.
We held unrestricted cash and cash equivalents of $2.12 billion and restricted cash and cash equivalents of $16 million as of December 31, 2020, of which approximately $1.21 billion of the unrestricted amount is held by non-U.S. subsidiaries. Of the $1.21 billion, approximately $946 million is available to be repatriated to the U.S., and we do not expect withholding taxes or other foreign income taxes to apply should these earnings be distributed in the form of dividends or otherwise. The remaining unrestricted amounts held by non-U.S. subsidiaries are not available for repatriation primarily due to dividend requirements to third-party public stockholders in the case of funds being repatriated from SCL. We believe the cash on hand and cash flow generated from operations, as well as the $3.96 billion available for borrowing under our U.S., Macao and Singapore credit facilities, net of outstanding letters of credit, and SGD 3.69 billion (approximately $2.79 billion at exchange rates in effect on December 31, 2020) under the 2012 Singapore Delayed Draw Term Facility, as of December 31, 2020, will be sufficient to maintain compliance with the financial covenants of our credit facilities and fund our working capital needs, committed and planned capital expenditures, development opportunities and debt obligations. In the normal course of our activities, we will continue to evaluate global capital markets to consider future opportunities for enhancements of our capital structure. On January 25, 2021, we increased the amount available under the SCL revolving credit facility by HKD 3.83 billion (approximately $494 million in exchange rates in effect at the time of transaction) to further enhance our liquidity. Subsequently, on January 29, 2021 SCL drew down $29 million and HKD 2.13 billion (approximately $274 million at exchange rates in effect on January 29, 2021) under this facility for general corporate purposes, resulting in remaining available borrowing capacity of $2.21 billion.
During the quarter ended March 31, 2020, we paid a quarterly dividend of $0.79 per common share as part of a regular cash dividend program and recorded $603 million as a distribution against retained earnings.
On February 21, 2020, SCL paid a dividend of 0.99 HKD to SCL stockholders (a total of $1.03 billion, of which we retained $717 million during the year ended December 31, 2020).
We have suspended our quarterly dividend program and SCL did not pay a final dividend for 2019 due to the impact of the COVID-19 Pandemic.
In June 2018, our Board of Directors authorized the repurchase of $2.50 billion of our outstanding common stock, which was to expire in November 2020. In October 2020, our Board of Directors authorized the extension of the expiration date of the remaining repurchase amount of $916 million to November 2022. During the year ended December 31, 2020, no shares of our common stock were repurchased under this program. All share repurchases of our common stock have been recorded as treasury stock. Repurchases of our common stock are made at our discretion in accordance with applicable federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including our financial position, earnings, cash flows, legal requirements, other investment opportunities and market conditions.
Aggregate Indebtedness and Other Contractual Obligations
Our total long-term indebtedness and other contractual obligations are summarized below as of December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period(1)
|
|
2021
|
|
2022 - 2023
|
|
2024 - 2025
|
|
Thereafter
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Long-Term Debt Obligations(2)
|
|
|
|
|
|
|
|
|
|
LVSC Senior Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,250
|
|
|
$
|
1,750
|
|
|
$
|
4,000
|
|
SCL Senior Notes
|
—
|
|
|
1,800
|
|
|
1,800
|
|
|
3,400
|
|
|
7,000
|
|
2012 Singapore Credit Facility
|
63
|
|
|
126
|
|
|
1,182
|
|
|
1,702
|
|
|
3,073
|
|
Singapore Delayed Draw Term Facility
|
—
|
|
|
—
|
|
|
16
|
|
|
31
|
|
|
47
|
|
Finance Leases, Including Imputed Interest
|
14
|
|
|
11
|
|
|
1
|
|
|
—
|
|
|
26
|
|
Fixed Interest Payments
|
476
|
|
|
946
|
|
|
718
|
|
|
614
|
|
|
2,754
|
|
Variable Interest Payments(3)
|
55
|
|
|
107
|
|
|
97
|
|
|
15
|
|
|
274
|
|
Contractual Obligations
|
|
|
|
|
|
|
|
|
|
Operating Leases, Including Imputed Interest(4)
|
36
|
|
|
54
|
|
|
46
|
|
|
514
|
|
|
650
|
|
Mall Deposits(5)
|
70
|
|
|
48
|
|
|
21
|
|
|
10
|
|
|
149
|
|
Macao Annual Premium(6)
|
41
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
62
|
|
Other(7)
|
108
|
|
|
136
|
|
|
99
|
|
|
204
|
|
|
547
|
|
Total
|
$
|
863
|
|
|
$
|
3,249
|
|
|
$
|
6,230
|
|
|
$
|
8,240
|
|
|
$
|
18,582
|
|
_______________________
(1)As of December 31, 2020, we had a $71 million liability related to uncertain tax positions; we do not expect this liability to result in a payment of cash within the next 12 months. We are unable to reasonably estimate the timing of the liability in individual years beyond 12 months due to uncertainties in the timing of the effective settlement of tax positions; therefore, such amounts are not included in the table.
(2)See "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt" for further details on these financing transactions and "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 13 — Leases" for further details on finance leases.
(3)Based on the 1-month rate as of December 31, 2020, Singapore Swap Offer Rate ("SOR") of 0.13% plus the applicable interest rate spread in accordance with the respective debt agreements.
(4)We are party to certain operating leases for real estate and various equipment, which primarily include $331 million related to long-term land leases in Macao with an anticipated lease term of 50-years, $132 million related to a 99-year lease agreement (83 years remaining) for a parking structure located adjacent to The Venetian Resort Las Vegas and $70 million related to certain leaseback agreements related to the sale of the Grand Canal Shoppes. See "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 13 — Leases" for further details on operating leases.
(5)Mall deposits consist of refundable security deposits received from mall tenants.
(6)In addition to the 39% gross gaming win tax in Macao (which is not included in this table as the amount we pay is variable in nature), we are required to pay an annual premium with a fixed portion and a variable portion, which is based on the number and type of gaming tables and gaming machines we operate. Based on the gaming tables and gaming machines in operation as of December 31, 2020, the annual premium payable to the Macao government is approximately $41 million for the year ended December 31, 2021 and approximately $21 million through the termination of the gaming subconcession in June 2022.
(7)Primarily consists of all other non-cancellable contractual obligations and primarily relates to certain hotel and restaurant management and service agreements. The amounts exclude open purchase orders with our suppliers that have not yet been received as these agreements generally allow us the option to cancel, reschedule and adjust terms based on our business needs prior to the delivery of goods or performance of services.
Off-Balance Sheet Arrangements
We have not entered into any transactions with special purpose entities, nor have we engaged in any derivative transactions.
Restrictions on Distributions
We are a parent company with limited business operations. Our main asset is the stock and membership interests of our subsidiaries. Certain of our debt instruments contain restrictions that, among other things, limit the ability of certain subsidiaries to incur additional indebtedness, issue disqualified stock or equity interests, pay dividends or make other distributions, repurchase equity interests or certain indebtedness, create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell certain assets of our Company without prior approval of the lenders or noteholders.
Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the discussions of our business strategies and expectations concerning future operations, margins, profitability, liquidity and capital resources. In addition, in certain portions included in this report, the words: “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends” and similar expressions, as they relate to our Company or management, are intended to identify forward-looking statements. Although we believe these forward-looking statements are reasonable, we cannot assure you any forward-looking statements will prove to be correct. These forward-looking statements involve known and unknown risks, uncertainties and other factors beyond our control, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the risks associated with:
•the uncertainty of the extent, duration and effects of the COVID-19 Pandemic and the response of governments and other third parties, including government-mandated property closures, increased operational regulatory requirements or travel restrictions, on our business, results of operations, cash flows, liquidity and development prospects;
•general economic and business conditions in the U.S. and internationally, which may impact levels of disposable income, consumer spending, group meeting business, pricing of hotel rooms and retail and mall tenant sales;
•disruptions or reductions in travel and our operations due to natural or man-made disasters, pandemics, epidemics or outbreaks of infectious or contagious diseases, political instability, civil unrest, terrorist activity or war;
•the uncertainty of consumer behavior related to discretionary spending and vacationing at our Integrated Resorts in Macao, Singapore and Las Vegas;
•the extensive regulations to which we are subject and the costs of compliance or failure to comply with such regulations;
•our ability to maintain our gaming licenses and subconcession in Macao, Singapore and Las Vegas;
•new developments, construction projects and ventures, including our Cotai Strip developments and MBS Expansion Project;
•regulatory policies in China or other countries in which our customers reside, or where we have operations, including visa restrictions limiting the number of visits or the length of stay for visitors from China to
Macao, restrictions on foreign currency exchange or importation of currency, and the judicial enforcement of gaming debts;
•the ability of our subsidiaries to make distribution payments to us;
•our leverage, debt service and debt covenant compliance, including the pledge of certain of our assets (other than our equity interests in our subsidiaries) as security for our indebtedness and ability to refinance our debt obligations as they come due or to obtain sufficient funding for our planned, or any future, development projects;
•fluctuations in currency exchange rates and interest rates;
•increased competition for labor and materials due to planned construction projects in Macao and Singapore and quota limits on the hiring of foreign workers;
•our ability to compete for limited management and labor resources in Macao and Singapore, and policies of those governments may also affect our ability to employ imported managers or labor from other countries;
•our dependence upon properties primarily in Macao, Singapore and Las Vegas for all of our cash flow;
•the passage of new legislation and receipt of governmental approvals for our operations in Macao and Singapore and other jurisdictions where we are planning to operate;
•our insurance coverage may not be adequate to cover all possible losses that our properties could suffer and our insurance costs may increase in the future;
•our ability to collect gaming receivables from our credit players;
•our relationship with gaming promoters in Macao;
•our dependence on chance and theoretical win rates;
•fraud and cheating;
•our ability to establish and protect our intellectual property rights;
•conflicts of interest that arise because certain of our directors and officers are also directors of SCL;
•government regulation of the casino industry (as well as new laws and regulations and changes to existing laws and regulations), including gaming license regulation, the requirement for certain beneficial owners of our securities to be found suitable by gaming authorities, the legalization of gaming in other jurisdictions and regulation of gaming on the internet;
•increased competition in Macao and Las Vegas, including recent and upcoming increases in hotel rooms, meeting and convention space, retail space, potential additional gaming licenses and online gaming;
•the popularity of Macao, Singapore and Las Vegas as convention and trade show destinations;
•new taxes, changes to existing tax rates or proposed changes in tax legislation and the impact of U.S. tax reform;
•the continued services of our key officers;
•any potential conflict between the interests of our Principal Stockholders and us;
•labor actions and other labor problems;
•our failure to maintain the integrity of our information and information systems or comply with applicable privacy and data security requirements and regulations could harm our reputation and adversely affect our business;
•the completion of infrastructure projects in Macao;
•our relationship with Brookfield or any successor owner of the Grand Canal Shoppes; and
•the outcome of any ongoing and future litigation.
All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Readers are cautioned not to place undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by federal securities laws.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information currently available to us and on various other assumptions management believes to be reasonable under the circumstances. Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations. Changes in these estimates and assumptions may have a material effect on our results of operations and financial condition. We believe the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Provision for Expected Credit Losses
We maintain a provision for expected credit losses on casino, hotel and mall receivables and regularly evaluate the balances. We apply standard reserve percentages to aged account balances, which are grouped based on shared credit risk characteristics and days past due. The reserve percentages are based on estimated loss rates supported by historical observed default rates over the expected life of the receivable and are adjusted for forward-looking information. We also specifically analyze the collectability of each account with a balance over a specified dollar amount, based upon the age of the account, the customer's financial condition, collection history and any other known information and adjust the aforementioned reserve with the results from the individual reserve analysis. We also monitor regional and global economic conditions and forecasts, which include the impact of the COVID-19 Pandemic, in our evaluation of the adequacy of the recorded reserves.
During the year ended December 31, 2020, there has been a delay in payments on casino receivables due to the inability of patrons to travel to our properties or to accomplish financial transactions due to the travel restrictions caused by the COVID-19 Pandemic. The collection of casino receivables has also been impacted by liquidity issues faced by certain patrons also stemming from the COVID-19 Pandemic. We have increased the provision for credit losses in each jurisdiction accordingly to account for the expected credit losses due to the COVID-19 Pandemic. Although we believe the provision on our casino receivables is adequate as of December 31, 2020, it is possible our provisions could increase if we experience further delays on payments from patrons.
Account balances are written off against the provision when we believe it is probable the receivable will not be recovered. Credit or marker play was 24.0%, 14.6% and 68.8% of table games play at our Macao properties, Marina Bay Sands and Las Vegas Operating Properties, respectively, during the year ended December 31, 2020. Our provision for casino credit losses was 58.3% and 32.3% of gross casino receivables as of December 31, 2020 and 2019, respectively. The credit extended to gaming promoters can be offset by the commissions payable to said gaming promoters, which is considered in the establishment of the provision for credit losses. Our provision for credit losses from our hotel and other receivables is not material.
Litigation Accrual
We are subject to various claims and legal actions. We estimate the accruals for these claims and legal actions based on all relevant facts and circumstances currently available and include such accruals in other accrued liabilities in the consolidated balance sheets when it is determined such contingencies are both probable and reasonably estimable.
Property and Equipment
As of December 31, 2020, we had net property and equipment of $15.11 billion, representing 72.6% of our total assets. We depreciate property and equipment on a straight-line basis over their estimated useful lives. The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal
considerations, such as contractual life. Future events, such as property expansions, property developments, new competition or new regulations, could result in a change in the manner in which we use certain assets requiring a change in the estimated useful lives of such assets. The estimated useful lives of assets are periodically reviewed and adjusted as necessary on a prospective basis.
For assets to be held and used (including projects under development), fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we first group our assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the "asset group"). Secondly, we estimate the undiscounted future cash flows directly associated with and expected to arise from the completion, use and eventual disposition of such asset group. We estimate the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.
To estimate the undiscounted cash flows of our asset groups, we consider all potential cash flows scenarios, which are probability weighted based on management's estimates given current conditions. Determining the recoverability of our asset groups is judgmental in nature and requires the use of significant estimates and assumptions, including estimated cash flows, probability weighting of potential scenarios, costs to complete construction for assets under development, growth rates and future market conditions, among others. Future changes to our estimates and assumptions based upon changes in macro-economic factors, regulatory environments, operating results or management's intentions may result in future changes to the recoverability of our asset groups.
Due to the substantial reduction in cash flows generated from our operating properties and the ongoing travel restrictions due to the COVID-19 Pandemic, we determined a triggering event occurred in 2020 and an impairment assessment was warranted for our asset groups in Macao, Singapore and Las Vegas. We tested our long-lived assets held for use at our operating properties in Macao, Singapore and Las Vegas for recoverability as of December 31, 2020, resulting in no impairment as the estimated undiscounted future cash flows exceeded their carrying values. We believe we made reasonable estimates and judgments in performing the analysis in light of the uncertainties surrounding the COVID-19 Pandemic; however, should the effects of the COVID-19 Pandemic persist for a prolonged duration and projected operating results further decline in future periods, we could be required to recognize an impairment loss.
For assets to be held for sale, the fixed assets (the "disposal group") are measured at the lower of their carrying amount or fair value less cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Fixed assets are not depreciated while classified as held for sale.
Income Taxes
We are subject to income taxes in the U.S. (including federal and state) and numerous foreign jurisdictions in which we operate. We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards.
Our foreign and U.S. tax rate differential reflects the fact that U.S. tax rates are higher than the statutory tax rates in Singapore and Macao of 17% and 12%, respectively. In August 2018, we received an additional exemption from Macao's corporate income tax on profits generated by the operation of casino games of chance for the period January 1, 2019 through June 26, 2022, the date our subconcession agreement expires. Additionally, we entered into an agreement with the Macao government in April 2019, effective through June 26, 2022, providing for an annual payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2020) that is a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming
profits. We intend to request extensions of these tax arrangements; however, there is no assurance we will receive these extensions.
Accounting standards regarding income taxes require a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is "more-likely-than-not" such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a "more-likely-than-not" realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring and tax planning strategies.
We recorded a valuation allowance on the net deferred tax assets of certain foreign jurisdictions of $342 million and $279 million as of December 31, 2020 and 2019, respectively, and a valuation allowance on certain net deferred tax assets of our U.S. operations of $4.58 billion and $4.51 billion as of December 31, 2020 and 2019, respectively. Due to the impact of the COVID-19 Pandemic and the resulting reduction in estimated royalty income from an expected decrease in our Macao and Singapore operations, we recorded a valuation allowance on certain U.S. foreign tax credits, which we no longer expect to utilize during the period 2021 through 2027 before their expiration. We believe we made reasonable estimates and judgments in performing the analysis in light of the uncertainties surrounding the COVID-19 Pandemic; however, should the effects of the COVID-19 Pandemic persist for a prolonged duration, we could be required to record additional valuation allowances. Management will reassess the realization of deferred tax assets each reporting period and consider the scheduled reversal of deferred tax liabilities, sources of taxable income and tax planning strategies. To the extent the financial results of these operations improve and it becomes "more-likely-than-not" the deferred tax assets are realizable, we will be able to reduce the valuation allowance in the period such determination is made, as appropriate.
Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is "more-likely-than-not" the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely, based solely on the technical merits, of being sustained on examinations. We recorded unrecognized tax benefits of $131 million and $134 million as of December 31, 2020 and 2019, respectively. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may be different.
Our major tax jurisdictions are the U.S., Macao, and Singapore. We could be subject to examination for tax years beginning in 2016 in Macao and Singapore and tax years 2010 through 2015 and 2017 through 2019 in the U.S.
U.S. tax reform made significant changes to U.S. income tax laws including lowering the U.S. corporate tax rate to 21% effective beginning in 2018 and transitioning from a worldwide tax system to a territorial tax system resulting in dividends from our foreign subsidiaries not being subject to U.S. income tax and therefore, no longer generating U.S. foreign tax credits.
Recent Accounting Pronouncements
See related disclosure at "Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2 — Summary of Significant Accounting Policies — Recent Accounting Pronouncements."
ITEM 7A. — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposures to market risk are interest rate risk associated with our long-term debt and foreign currency exchange rate risk associated with our operations outside the United States, which we may manage through the use of futures, options, caps, forward contracts and similar
instruments. We do not hold or issue financial instruments for trading purposes and do not enter into derivative transactions that would be considered speculative positions.
As of December 31, 2020, the estimated fair value of our long-term debt was approximately $15.15 billion, compared to its contractual value of $14.12 billion. 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). A hypothetical 100 basis point change in market rates would cause the fair value of our long-term debt to change by $557 million. A hypothetical 100 basis point change in SOR would cause our annual interest cost on our long-term debt to change by approximately $31 million.
Foreign currency transaction gains for the year ended December 31, 2020, were $22 million primarily due to U.S. dollar denominated debt issued by SCL and by Singapore dollar denominated intercompany debt reported in U.S. dollars. We may be vulnerable to changes in the U.S. dollar/SGD and U.S. dollar/pataca exchange rates. Based on balances as of December 31, 2020, a hypothetical 10% weakening of the U.S. dollar/SGD exchange rate would cause a foreign currency transaction loss of approximately $23 million and a hypothetical 1% weakening of the U.S. dollar/pataca exchange rate would cause a foreign currency transaction loss of approximately $67 million. The pataca is pegged to the Hong Kong dollar and the Hong Kong dollar is pegged to the U.S. dollar (within a narrow range). We maintain a significant amount of our operating funds in the same currencies in which we have obligations thereby reducing our exposure to currency fluctuations.
ITEM 8. — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
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Financial Statements:
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Financial Statement Schedule:
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The financial information included in the financial statement schedule should be read in conjunction with the consolidated financial statements. All other financial statement schedules have been omitted because they are not applicable or the required information is included in the consolidated financial statements or the notes thereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the stockholders and the Board of Directors of Las Vegas Sands Corp.:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Las Vegas Sands Corp. and subsidiaries (the "Company") as of December 31, 2020 and 2019, 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, 2020, 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, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, 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, 2020, 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 5, 2021, 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 Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Casino Receivables — Refer to Notes 2 and 3 to the financial statements
Critical Audit Matter Description
As discussed in Note 2 to the financial statements, accounts receivable at December 31, 2020 include credit extended to casino patrons and gaming promoters. The Company records a provision for credit losses based on the amount of expected credit losses. The Company applies standard reserve percentages to aged account balances, which are grouped based on shared credit risk characteristics and days past due. The reserve percentages are based on estimated loss rates supported by historical observed default rates over the expected life of the receivable and are adjusted for forward-looking information. The Company also specifically analyzes the collectability of each account
with a balance over a specified dollar amount, based upon the age of the account, the customer's financial condition, collection history, and any other known information and adjusts the aforementioned reserve with the results from the individual reserve analysis.
Auditing the valuation of accounts receivable involved a high degree of subjectivity in evaluating management’s judgments related to the collectability of patron and gaming promoter accounts receivable, especially as it relates to the evaluation of patron and gaming promoter assets available to repay amounts owed.
How the Critical Audit Matter Was Addressed in the Audit
We planned and performed the following procedures in connection with forming our overall opinion on the financial statements:
•We tested the operating effectiveness of controls over the granting of casino credit, controls over the collection processes and management’s review controls over the assessment of the collectability of casino receivables, including the information used by management in those controls.
•For a selection of casino receivables, we (1) obtained evidence related to payment history and correspondence with patron or gaming promoter, (2) evaluated management’s use of this information in establishing a provision for credit losses, and (3) examined subsequent settlement, if any.
•Performed a retrospective analysis of historical reserves evaluating subsequent collections and write-offs.
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/s/ Deloitte & Touche LLP
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Las Vegas, Nevada
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February 5, 2021
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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, 2020, 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, 2020, 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, 2020 of the Company and our report dated February 5, 2021, expressed an unqualified opinion on those financial statements and financial statement 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 Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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/s/ Deloitte & Touche LLP
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Las Vegas, Nevada
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February 5, 2021
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LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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December 31,
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2020
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2019
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(In millions,
except par value)
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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2,121
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$
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4,226
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Restricted cash and cash equivalents
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16
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16
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Accounts receivable, net of provision for credit losses of $314 and $282
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338
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844
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Inventories
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32
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37
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Prepaid expenses and other
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137
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182
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Total current assets
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2,644
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5,305
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Property and equipment, net
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15,109
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14,844
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Deferred income taxes, net
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318
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282
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Leasehold interests in land, net
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2,256
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2,272
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Intangible assets, net
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25
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42
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Other assets, net
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455
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454
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Total assets
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$
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20,807
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$
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23,199
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$
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98
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$
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149
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Construction payables
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342
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334
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Other accrued liabilities
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1,706
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2,396
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Income taxes payable
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87
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275
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Current maturities of long-term debt
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76
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70
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Total current liabilities
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2,309
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3,224
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Other long-term liabilities
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497
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513
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Deferred income taxes
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188
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183
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Deferred amounts related to mall sale transactions
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344
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350
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Long-term debt
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13,931
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12,422
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Total liabilities
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17,269
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16,692
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Commitments and contingencies (Note 14)
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Equity:
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Preferred stock, $0.001 par value, 50 shares authorized, zero shares issued and outstanding
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—
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—
|
|
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
|
6,611
|
|
|
6,569
|
|
Accumulated other comprehensive income (loss)
|
29
|
|
|
(3)
|
|
Retained earnings
|
813
|
|
|
3,101
|
|
Total Las Vegas Sands Corp. stockholders' equity
|
2,973
|
|
|
5,187
|
|
Noncontrolling interests
|
565
|
|
|
1,320
|
|
Total equity
|
3,538
|
|
|
6,507
|
|
Total liabilities and equity
|
$
|
20,807
|
|
|
$
|
23,199
|
|
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,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions, except per share data)
|
Revenues:
|
|
|
|
|
|
Casino
|
$
|
2,268
|
|
|
$
|
9,828
|
|
|
$
|
9,819
|
|
Rooms
|
498
|
|
|
1,752
|
|
|
1,733
|
|
Food and beverage
|
283
|
|
|
897
|
|
|
865
|
|
Mall
|
381
|
|
|
716
|
|
|
690
|
|
Convention, retail and other
|
182
|
|
|
546
|
|
|
622
|
|
Net revenues
|
3,612
|
|
|
13,739
|
|
|
13,729
|
|
Operating expenses:
|
|
|
|
|
|
Casino
|
1,758
|
|
|
5,304
|
|
|
5,448
|
|
Rooms
|
271
|
|
|
444
|
|
|
438
|
|
Food and beverage
|
371
|
|
|
702
|
|
|
673
|
|
Mall
|
59
|
|
|
78
|
|
|
79
|
|
Convention, retail and other
|
149
|
|
|
304
|
|
|
336
|
|
Provision for credit losses
|
99
|
|
|
30
|
|
|
5
|
|
General and administrative
|
1,093
|
|
|
1,502
|
|
|
1,483
|
|
Corporate
|
168
|
|
|
313
|
|
|
202
|
|
Pre-opening
|
19
|
|
|
34
|
|
|
6
|
|
Development
|
18
|
|
|
24
|
|
|
12
|
|
Depreciation and amortization
|
1,160
|
|
|
1,165
|
|
|
1,111
|
|
Amortization of leasehold interests in land
|
55
|
|
|
51
|
|
|
35
|
|
Loss on disposal or impairment of assets
|
80
|
|
|
90
|
|
|
150
|
|
|
5,300
|
|
|
10,041
|
|
|
9,978
|
|
Operating income (loss)
|
(1,688)
|
|
|
3,698
|
|
|
3,751
|
|
Other income (expense):
|
|
|
|
|
|
Interest income
|
21
|
|
|
74
|
|
|
59
|
|
Interest expense, net of amounts capitalized
|
(536)
|
|
|
(555)
|
|
|
(446)
|
|
Other income
|
22
|
|
|
23
|
|
|
26
|
|
Gain on sale of Sands Bethlehem
|
—
|
|
|
556
|
|
|
—
|
|
Loss on modification or early retirement of debt
|
—
|
|
|
(24)
|
|
|
(64)
|
|
Income (loss) before income taxes
|
(2,181)
|
|
|
3,772
|
|
|
3,326
|
|
Income tax (expense) benefit
|
38
|
|
|
(468)
|
|
|
(375)
|
|
Net income (loss)
|
(2,143)
|
|
|
3,304
|
|
|
2,951
|
|
Net (income) loss attributable to noncontrolling interests
|
458
|
|
|
(606)
|
|
|
(538)
|
|
Net income (loss) attributable to Las Vegas Sands Corp.
|
$
|
(1,685)
|
|
|
$
|
2,698
|
|
|
$
|
2,413
|
|
Earnings (loss) per share:
|
|
|
|
|
|
Basic
|
$
|
(2.21)
|
|
|
$
|
3.50
|
|
|
$
|
3.07
|
|
Diluted
|
$
|
(2.21)
|
|
|
$
|
3.50
|
|
|
$
|
3.07
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
Basic
|
764
|
|
|
771
|
|
|
786
|
|
Diluted
|
764
|
|
|
771
|
|
|
786
|
|
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,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Net income (loss)
|
$
|
(2,143)
|
|
|
$
|
3,304
|
|
|
$
|
2,951
|
|
Currency translation adjustment
|
37
|
|
|
42
|
|
|
(58)
|
|
Total comprehensive income (loss)
|
(2,106)
|
|
|
3,346
|
|
|
2,893
|
|
Comprehensive (income) loss attributable to noncontrolling interests
|
453
|
|
|
(611)
|
|
|
(534)
|
|
Comprehensive income (loss) attributable to Las Vegas Sands Corp.
|
$
|
(1,653)
|
|
|
$
|
2,735
|
|
|
$
|
2,359
|
|
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, 2018
|
$
|
1
|
|
|
$
|
(2,818)
|
|
|
$
|
6,580
|
|
|
$
|
14
|
|
|
$
|
2,709
|
|
|
$
|
1,141
|
|
|
$
|
7,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,413
|
|
|
538
|
|
|
2,951
|
|
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
(54)
|
|
|
—
|
|
|
(4)
|
|
|
(58)
|
|
Exercise of stock options
|
—
|
|
|
(4)
|
|
|
74
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
30
|
|
Repurchase of common stock
|
—
|
|
|
(905)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(905)
|
|
Dividends declared ($3.00 per share) (Note 9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,352)
|
|
|
(627)
|
|
|
(2,979)
|
|
Balance at December 31, 2018
|
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) and noncontrolling interest payments (Note 9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(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 9)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(603)
|
|
|
(308)
|
|
|
(911)
|
|
Balance at December 31, 2020
|
$
|
1
|
|
|
$
|
(4,481)
|
|
|
$
|
6,611
|
|
|
$
|
29
|
|
|
$
|
813
|
|
|
$
|
565
|
|
|
$
|
3,538
|
|
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,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income (loss)
|
$
|
(2,143)
|
|
|
$
|
3,304
|
|
|
$
|
2,951
|
|
Adjustments to reconcile net income (loss) to net cash generated from (used in) operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
1,160
|
|
|
1,165
|
|
|
1,111
|
|
Amortization of leasehold interests in land
|
55
|
|
|
51
|
|
|
35
|
|
Amortization of deferred financing costs and original issue discount
|
43
|
|
|
33
|
|
|
35
|
|
Amortization of deferred gain on mall sale transactions
|
(5)
|
|
|
(5)
|
|
|
(5)
|
|
Loss on modification or early retirement of debt
|
—
|
|
|
24
|
|
|
64
|
|
Loss on disposal or impairment of assets
|
46
|
|
|
82
|
|
|
149
|
|
Gain on sale of Sands Bethlehem
|
—
|
|
|
(556)
|
|
|
—
|
|
Stock-based compensation expense
|
22
|
|
|
35
|
|
|
30
|
|
Provision for credit losses
|
99
|
|
|
30
|
|
|
5
|
|
Foreign exchange gain
|
(20)
|
|
|
(21)
|
|
|
(26)
|
|
Deferred income taxes
|
(33)
|
|
|
157
|
|
|
113
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
Accounts receivable
|
402
|
|
|
(150)
|
|
|
(119)
|
|
Other assets
|
(6)
|
|
|
(63)
|
|
|
(25)
|
|
Leasehold interests in land
|
—
|
|
|
(969)
|
|
|
(15)
|
|
Accounts payable
|
(51)
|
|
|
(26)
|
|
|
8
|
|
Other liabilities
|
(881)
|
|
|
(53)
|
|
|
390
|
|
Net cash generated from (used in) operating activities
|
(1,312)
|
|
|
3,038
|
|
|
4,701
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Net proceeds from sale of Sands Bethlehem
|
—
|
|
|
1,161
|
|
|
—
|
|
Capital expenditures
|
(1,330)
|
|
|
(1,216)
|
|
|
(949)
|
|
Proceeds from disposal of property and equipment
|
1
|
|
|
5
|
|
|
19
|
|
Acquisition of intangible assets
|
—
|
|
|
(53)
|
|
|
—
|
|
Net cash used in investing activities
|
(1,329)
|
|
|
(103)
|
|
|
(930)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from exercise of stock options
|
24
|
|
|
54
|
|
|
79
|
|
Repurchase of common stock
|
—
|
|
|
(754)
|
|
|
(905)
|
|
Dividends paid and noncontrolling interest payments
|
(911)
|
|
|
(3,000)
|
|
|
(2,979)
|
|
Proceeds from long-term debt (Note 8)
|
1,945
|
|
|
4,000
|
|
|
7,593
|
|
Repayments of long-term debt (Note 8)
|
(467)
|
|
|
(3,536)
|
|
|
(5,178)
|
|
Payments of financing costs
|
(31)
|
|
|
(132)
|
|
|
(132)
|
|
Net cash generated from (used in) financing activities
|
560
|
|
|
(3,368)
|
|
|
(1,522)
|
|
Effect of exchange rate on cash, cash equivalents and restricted cash
|
(24)
|
|
|
14
|
|
|
(18)
|
|
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents
|
(2,105)
|
|
|
(419)
|
|
|
2,231
|
|
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year
|
4,242
|
|
|
4,661
|
|
|
2,430
|
|
Cash, cash equivalents and restricted cash and cash equivalents at end of year
|
$
|
2,137
|
|
|
$
|
4,242
|
|
|
$
|
4,661
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
Cash payments for interest, net of amounts capitalized
|
$
|
419
|
|
|
$
|
462
|
|
|
$
|
326
|
|
Cash payments for taxes, net of refunds
|
$
|
196
|
|
|
$
|
253
|
|
|
$
|
264
|
|
Changes in construction payables
|
$
|
8
|
|
|
$
|
145
|
|
|
$
|
37
|
|
|
|
|
|
|
|
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The accompanying notes are an integral part of these consolidated financial statements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and Business of Company
Las Vegas Sands Corp. ("LVSC" or together with its subsidiaries, the "Company") is incorporated in Nevada and its common stock is traded on the New York Stock Exchange under the symbol "LVS."
The ordinary shares of the Company's subsidiary, Sands China Ltd. ("SCL," the indirect owner and operator of the majority of the Company's operations in the Macao Special Administrative Region ("Macao") of the People's Republic of China) are listed on The Main Board of The Stock Exchange of Hong Kong Limited. The shares were not, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent a registration under the Securities Act of 1933, as amended, or an applicable exception from such registration requirements.
COVID-19 Pandemic
In early January 2020, an outbreak of a respiratory illness caused by a novel coronavirus was identified and the disease has since 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”). As a result, people across the globe were advised to avoid non-essential travel. Steps were also taken by various countries, including those in which we operate, to restrict inbound international travel and implement closures of non-essential operations to contain the spread of the virus.
Macao
Visitation to Macao decreased substantially throughout 2020 as a result of various government policies limiting travel. Travel restrictions and quarantine requirements have been varying in response to changes in circumstances in other countries. A complete ban on entry, or a need to undergo enhanced quarantine requirements depending on the person’s residency and their recent travel history, remains in place for Macao residents, foreign workers residing in Macao and international travelers from countries other than mainland China.
Beginning December 21, 2020, all travelers who have been to any overseas territory, including Hong Kong, but not including mainland China or Taiwan, in the past 14 days will be subject to a 21-day compulsory quarantine at a designated location when arriving in Macao. Those travelers arriving from mainland China or Taiwan will be subject to a 14-day quarantine. People from low risk cities in China may enter Macao quarantine free, subject to them holding the appropriate travel documents, a negative COVID-19 test result and a green health-code. All other foreign nationals, including those holding a temporary work permit, are still not permitted to enter Macao. The China Individual Visit Scheme ("China IVS") recommenced for certain regions from August 12, 2020, and was extended to more jurisdictions within mainland China effective September 23, 2020. General travel restrictions within mainland China continue to exist and are updated and revised based on evolving public health consideraions within China.
Following suspension of all gaming operations on February 5, 2020 by the Macao government, the Company’s Macao casino operations resumed on February 20, 2020, except for operations at The Londoner Macao, which resumed on February 27, 2020. Additional health safeguards, such as the requirement to present a negative COVID-19 test certificate prior to entering the casino, have been implemented, as well as the ongoing limitation on the number of seats per table game, slot machine spacing, temperature checks and mandatory mask protection. The Company is currently unable to determine when these measures will be modified or cease to be necessary.
Some of the Company’s Macao hotel facilities were also closed during the casino suspension in response to the drop in visitation and, with the exception of the Conrad Macao, Cotai Strip, which reopened on June 13, 2020, these hotels were gradually reopened from February 20, 2020. In support of the Macao government’s initiatives to fight the COVID-19 Pandemic, the Company provided one tower (approximately 2,000 hotel rooms) at the Sheraton Grand Macao Hotel, Cotai Strip 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 including from March 28 to April 30, 2020; from June 7 to August 14, 2020; from December 20, 2020 until February 6, 2021; and will resume on February 20, 2021 until further notice.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Operating hours at restaurants across the Company’s Macao properties are continuously being adjusted in line with movements 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 Hong Kong government temporarily closed the Hong Kong China Ferry Terminal in Kowloon on January 30, 2020, and the Hong Kong Macao Ferry Terminal in Hong Kong on February 4, 2020. In response, the Company suspended its Macao ferry operations between Macao and Hong Kong. The timing and manner in which the Company’s normal ferry operations will be able to resume are currently unknown.
Our operations in Macao have been significantly impacted by the lack of visitation to Macao. The Macao government announced total visitation from mainland China to Macao decreased 83.0% for 2020, as compared to 2019. The Macao government also announced gross gaming revenue decreased by 79.3% for 2020, as compared to 2019.
Singapore
Beginning on April 7, 2020, the Singapore government suspended all casino and non-essential operations, including all operations at Marina Bay Sands, due to the COVID-19 Pandemic. The Company’s Singapore operations were permitted to reopen beginning on June 19, 2020; however, this only included certain restaurants and retail mall operations. The casino operations reopened on July 1, 2020; however, entry was initially limited to annual levy holders and certain Sands Rewards Club (“SRC”) members. The casino opened to all SRC members as of July 9, 2020, and to the public as of October 23, 2020. All operations are currently subject to limited capacities.
On May 28, 2020, in support of the Singapore government’s initiatives to fight the COVID-19 Pandemic, Marina Bay Sands entered into an agreement with the Singapore government to utilize all three hotel towers to house Singapore residents upon their initial return from other jurisdictions for quarantine. The government’s use of the first tower ceased on June 26, 2020, while usage of the second and third towers continued through July 26, 2020. Beginning on July 17, 2020, the first tower reopened for normal operations, while the second and third towers reopened on August 1, 2020. On September 7, 2020, the Singapore Tourism Board ("STB") announced that event organizers are allowed to apply for pilot events with limited capacities of up to 250 attendees from October 1, 2020. The date on which nightlife venues may reopen is unknown at this time. In December 2020, Singapore entered phase 3 of reopening, which, among other things, increased our casino operating capacity from 3,000 players to 3,750 players.
Visitation to Marina Bay Sands declined significantly due to the COVID-19 Pandemic. The STB announced for the 12 months ended November 30, 2020 (the latest information publicly available at the time of filing), total visitation to Singapore decreased approximately 76.6%, as compared to the same period in 2019.
Las Vegas
The Nevada government suspended all casino and non-essential operations, including all operations at the Las Vegas Operating Properties, as later defined, beginning on March 18, 2020, due to the COVID-19 Pandemic. The Nevada government allowed casinos to reopen on June 4, 2020, under strict guidelines issued by the Gaming Control Board and the State of Nevada. The Company reopened the casino suites, within The Venetian Tower and The Palazzo Tower, and select food and beverage outlets on June 4, 2020, with certain operations subject to reduced capacity. Beginning October 1, 2020, the limit for both public and private events increased from 50 people to the lesser of 250 people or 50% of the room’s capacity (excluding employees, organizers and performers) provided social distancing measures and various safety and related protocols were followed. Meetings, incentives, conventions and exhibitions (“MICE”) for more than 250 people, but no more than 1,000 people, were allowed subject to certain requirements. Larger venues, defined as having more than a 2,500 fixed-seating capacity, were allowed to host a gathering of 10% of their total capacity provided they met additional requirements. Despite these allowances, there have been no MICE events at the Company's Las Vegas Operating Properties since reopening on June 4, 2020.
In November 2020, the Nevada government tightened capacity and other restrictions, which included, among other things, a 25% capacity limit for gaming establishments and the lesser of 25% or 50 people for MICE events. These increased restrictions will be in place until at least February 14, 2021.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Visitation to the Company’s Las Vegas Operating Properties declined due to the COVID-19 Pandemic. The Las Vegas Convention and Visitors Authority ("LVCVA") announced for the 12 months ended November 30, 2020 (the latest information publicly available at the time of filing), total visitation to Las Vegas decreased 49.8%, as compared to the same period in 2019. The LVCVA also announced for the 12 months ended November 30, 2020 (the latest information publicly available at the time of filing), gross gaming revenue for the Las Vegas Strip decreased 38.5%, as compared to the same period in 2019.
Summary
The disruptions arising from the COVID-19 Pandemic had a significant adverse impact on the Company’s financial condition, operations and cash flows during the year ended December 31, 2020. 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 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 customers to spend on travel and entertainment and business customers to spend on MICE.
While each of the Company’s properties are currently open and operating at reduced levels due to lower visitation and the implementation of required safety measures, 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 $2.12 billion and access to $1.50 billion, $2.02 billion and $448 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 $2.79 billion at exchange rates in effect on December 31, 2020) under the Singapore Delayed Draw Term Facility, exclusively for capital expenditures for the MBS Expansion Project, as later defined, as of December 31, 2020. On January 25, 2021, SCL entered into an agreement with lenders to increase commitments under the 2018 SCL Credit Facility by Hong Kong Dollars ("HKD") 3.83 billion (approximately $494 million at exchange rates in effect on the date of this transaction). Subsequently, on January 29, 2021, SCL drew down $29 million and HKD 2.13 billion (approximately $274 million at exchange rates in effect on January 29, 2021) under this facility for general corporate purposes, resulting in remaining available borrowing capacity of $2.21 billion. 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 of non-essential items.
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 Hotel 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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Paiza Club, a mall with retail and dining space of approximately 943,000 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 Hotel Macao. The Integrated Resort opened in phases beginning April 2012 and features four hotel towers. The first hotel tower includes (i) approximately 650 five-star rooms and suites under the Conrad brand and (ii) The Londoner Macao Hotel, which opened in January 2021, with 600 London-themed suites, including 14 exclusive Suites by David Beckham. The second hotel tower consists of approximately 1,800 rooms and suites under the Sheraton brand. The third hotel tower consists of approximately 2,100 rooms and suites under the Sheraton brand. The fourth hotel tower consists of 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 525,000 square feet of retail space, as well as entertainment and dining facilities. The Londoner Macao is the result of our previously announced renovation, expansion and rebranding of Sands Cotai Central as described below.
The Parisian Macao is an Integrated Resort connected to The Venetian Macao and The Plaza Macao and Four Seasons Hotel 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 Hotel 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 Company initiated VIP gaming operations in this space in the first quarter of 2020.
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 400,000-square-foot venue built specifically for music and entertainment to Las Vegas. MSG is currently building the MSG Sphere at
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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
Construction work on the conversion of Sands Cotai Central into the new destination Integrated Resort, The Londoner Macao, is progressing. This project is being delivered in phases, which started in 2020 and will continue throughout 2021. Upon completion, The Londoner Macao will feature 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"). The Londoner Macao Hotel opened in January 2021 with approximately 600 London-themed suites, including 14 exclusive Suites by David Beckham. The resort will also feature the Londoner Court with approximately 370 luxury suites; construction of the Londoner Court is now complete and is expected to open in 2021. The Company's retail offerings will be expanded and rebranded as the Shoppes at Londoner.
The Company anticipates the total costs associated with The Londoner Macao development projects described above and the recently completed The Grand Suites at Four Seasons to be approximately $2.2 billion. The ultimate costs and completion dates for The Londoner Macao development is subject to change as the Company completes the project.
Singapore
In April 2019, the Company's wholly owned subsidiary, Marina Bay Sands Pte. Ltd. ("MBS"), entered into the Second Development Agreement with the Singapore Tourism Board pursuant to which MBS has agreed to construct a development, which will include a hotel tower with approximately 1,000 rooms and suites, a rooftop attraction, convention and meeting facilities and a state-of-the-art live entertainment arena with approximately 15,000 seats (the “MBS Expansion Project”). The Second Development Agreement provides for a total project cost of approximately SGD 4.5 billion (approximately $3.4 billion at exchange rates in effect on December 31, 2020), which investment must be completed within eight years from the effective date of the agreement. The amount of the total project cost will be finalized as the Company completes design and development and begins construction.
United States
The Company was constructing a high-rise residential condominium tower (the "Las Vegas Condo Tower"), located on the Las Vegas Strip within The Venetian Resort Las Vegas. In 2008, the Company suspended construction activities for the project due to reduced demand for Las Vegas Strip condominiums and the overall decline in general economic conditions. The Company continues to evaluate the highest return opportunity for the project. The impact of the suspension on the estimated overall cost of the project is currently not determinable with certainty. Should demand and conditions fail to improve or management decides to abandon the project, the Company could record a charge for some portion of the $130 million in capitalized construction costs (net of depreciation) as of December 31, 2020.
Other
The Company continues to evaluate current development projects in each of its markets and pursue new development opportunities globally.
Note 2 — Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company, 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.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 customers 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 customers 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:
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Land improvements, building and building improvements
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10
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to
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50
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years
|
Furniture, fixtures and equipment
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3
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to
|
20
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years
|
Leasehold improvements
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3
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to
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15
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years
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Transportation
|
5
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to
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20
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years
|
The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations, such as contractual life, and are periodically reviewed. Future events, such as property expansions, property developments, new competition or new regulations, could result in a change in the manner in which the Company uses certain assets requiring a change in the estimated useful lives of such assets.
Maintenance and repairs that neither materially add to the value of the asset nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the consolidated statements of operations.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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, 2020, 2019 and 2018, the Company capitalized $21 million, $9 million and $3 million, respectively, of interest expense.
During the years ended December 31, 2020, 2019 and 2018, the Company capitalized approximately $44 million, $34 million and $31 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.
Deferred Financing Costs and Original Issue Discounts
Certain direct and incremental costs and discounts incurred in obtaining loans are capitalized and amortized to interest expense based on the terms of the related debt instruments using the effective interest method.
Leasehold Interests in Land
Leasehold interests in land represent payments for the use of land over an extended period of time. The leasehold interests in land are amortized on a straight-line basis over the expected term of the related lease agreements.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
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 visit its
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
properties located in Macao and Singapore. The required redemption period is expected to be reinstated during 2021. 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:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Chip Liability
|
|
Loyalty Program Liability
|
|
Customer Deposits and Other Deferred Revenue(1)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Balance at January 1
|
$
|
540
|
|
|
$
|
551
|
|
|
$
|
68
|
|
|
$
|
66
|
|
|
$
|
724
|
|
|
$
|
827
|
|
Balance at December 31
|
211
|
|
|
540
|
|
|
68
|
|
|
68
|
|
|
751
|
|
|
724
|
|
Increase (decrease)
|
$
|
(329)
|
|
|
$
|
(11)
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
27
|
|
|
$
|
(103)
|
|
____________________
(1)Of this amount, $152 million, $154 million and $152 million as of December 31, 2020 and 2019 and January 1, 2019, respectively, relates to mall deposits that are accounted for based on lease terms usually greater than one year.
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 $834 million, $3.98 billion and $4.09 billion for the years ended December 31, 2020, 2019 and 2018, 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 $42 million, $123 million and $132 million for the years ended December 31, 2020, 2019 and 2018, respectively.
Corporate Expenses
Corporate expense represents payroll, travel, legal fees, professional fees and various other expenses not allocated or directly related to the Company's Integrated Resort operations and related ancillary operations.
Foreign Currency
The functional currency of most of our foreign subsidiaries is the local currency in which the subsidiary operates. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date and income statement accounts are translated at the average exchange rates during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (loss).
Gains or losses from foreign currency remeasurements that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other income (expense).
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 solely of foreign currency translation 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,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Weighted average common shares outstanding (used in the calculation of basic earnings (loss) per share)
|
764
|
|
|
771
|
|
|
786
|
|
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
|
|
|
771
|
|
|
786
|
|
Antidilutive stock options excluded from the calculation of diluted earnings (loss) per share
|
9
|
|
|
3
|
|
|
2
|
|
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 15 — Stock-Based Employee Compensation."
Income Taxes
The Company is subject to income taxes in the U.S. (including federal and state) and numerous foreign jurisdictions in which it operates. The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards.
Accounting standards regarding income taxes require a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is "more-likely-than-not" such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a "more-likely-than-not" realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company's experience with operating loss and tax credit carryforwards not expiring and tax planning strategies.
Management will reassess the realization of deferred tax assets each reporting period and consider the scheduled reversal of deferred tax liabilities, sources of taxable income and tax planning strategies. To the extent the financial results of these operations improve and it becomes "more-likely-than-not" the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance in the period such determination is made as appropriate.
Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions for which the ultimate tax determination is uncertain. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and for which actual outcomes may be different.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 interest rate 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.
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, 2019 and 2018, the Company recorded $53 million, $23 million and $9 million, respectively, as a reduction to interest expense related to the realized amount associated with the IR Swaps.
Recent Accounting Pronouncements
On January 1, 2020, the Company adopted the guidance under the accounting standard update (“ASU”) 2016-13 issued in June 2016 by the Financial Accounting Standards Board (“FASB”). The ASU revised the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The adoption, which was applied on a modified retrospective basis, did not have a material impact on the Company’s financial condition and results of operations and therefore did not result in an adjustment to retained earnings as of January 1, 2020.
Note 3 — Accounts Receivable, Net
Accounts receivable consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Casino
|
$
|
527
|
|
|
$
|
858
|
|
Rooms
|
15
|
|
|
88
|
|
Mall
|
49
|
|
|
93
|
|
Other
|
61
|
|
|
87
|
|
|
652
|
|
|
1,126
|
|
Less — provision for credit losses
|
(314)
|
|
|
(282)
|
|
|
$
|
338
|
|
|
$
|
844
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The following table shows the movement in the provision for credit losses recognized for accounts receivable that occurred during the period:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Balance at beginning of year
|
$
|
282
|
|
|
$
|
324
|
|
Current period provision for credit losses
|
99
|
|
|
30
|
|
Write-offs
|
(70)
|
|
|
(74)
|
|
Recoveries of receivables previously written-off
|
—
|
|
|
1
|
|
Exchange rate impact
|
3
|
|
|
1
|
|
Balance at end of period
|
$
|
314
|
|
|
$
|
282
|
|
Note 4 — Property and Equipment, Net
Property and equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Land and improvements
|
$
|
637
|
|
|
$
|
650
|
|
Building and improvements
|
18,014
|
|
|
17,662
|
|
Furniture, fixtures, equipment and leasehold improvements
|
4,843
|
|
|
4,520
|
|
Transportation
|
525
|
|
|
520
|
|
Construction in progress
|
2,074
|
|
|
1,507
|
|
|
26,093
|
|
|
24,859
|
|
Less — accumulated depreciation and amortization
|
(10,984)
|
|
|
(10,015)
|
|
|
$
|
15,109
|
|
|
$
|
14,844
|
|
The property and equipment sold to GGP totaling $179 million (net of $119 million of accumulated depreciation) as of December 31, 2020, will continue to be recorded on the Company's consolidated balance sheet and will continue to be depreciated in the Company's consolidated statement of operations. See "Note 12 — Mall Activities — The Shoppes at The Palazzo."
During the year ended December 31, 2020, the Company recognized a loss on disposal or impairment of assets of $80 million, consisting primarily of $56 million for asset write-offs and demolition costs related to the Londoner Macao. During the years ended December 31, 2019 and 2018, the Company recognized a loss on disposal or impairment of assets of $90 million and $150 million, respectively, primarily consisting of a $65 million due to the ferry impairment charge as a result of the decline in passenger volume and $128 million in write-off of costs related to The Grand Suites at Four Seasons, as well as other dispositions at the Company's operating properties, respectively.
Depreciation expense was $1.14 billion, $1.15 billion and $1.10 billion for the years ended December 31, 2020, 2019 and 2018, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 5 — Leasehold Interests in Land, Net
Leasehold interests in land consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Marina Bay Sands
|
$
|
2,024
|
|
|
$
|
1,986
|
|
The Londoner Macao
|
295
|
|
|
293
|
|
The Venetian Macao
|
242
|
|
|
242
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
106
|
|
|
106
|
|
The Parisian Macao
|
89
|
|
|
89
|
|
Sands Macao
|
37
|
|
|
38
|
|
|
2,793
|
|
|
2,754
|
|
Less — accumulated amortization
|
(537)
|
|
|
(482)
|
|
|
$
|
2,256
|
|
|
$
|
2,272
|
|
The Company amortizes the leasehold interests in land on a straight-line basis over the expected term of the lease, which includes automatic extensions in Macao as discussed further below. Amortization expense of $55 million, $51 million and $35 million was included in amortization of leasehold interests in land expense for the years ended December 31, 2020, 2019 and 2018, respectively. The estimated future amortization expense over the expected term of the lease is approximately $53 million for each of the five years in the period ending December 31, 2025 and $2.18 billion thereafter at exchange rates in effect on December 31, 2020.
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 Hotel 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. For the Company's future rental payment obligations, see "Note 13 — Leases."
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 6 — Intangible Assets, Net
Intangible assets consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Marina Bay Sands gaming license
|
$
|
55
|
|
|
$
|
53
|
|
Trademarks and other
|
1
|
|
|
1
|
|
|
56
|
|
|
54
|
|
Less — accumulated amortization
|
(31)
|
|
|
(12)
|
|
Total intangible assets, net
|
$
|
25
|
|
|
$
|
42
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 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.
Amortization expense was $17 million, $17 million and $16 million for the years ended December 31, 2020, 2019 and 2018, respectively. The estimated future amortization expense is approximately $18 million and $6 million for the years ending December 31, 2021 and 2022, respectively.
Note 7 — Other Accrued Liabilities
Other accrued liabilities consist of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Customer deposits
|
$
|
614
|
|
|
$
|
582
|
|
Outstanding chip liability
|
211
|
|
|
540
|
|
Payroll and related
|
205
|
|
|
378
|
|
Accrued interest payable
|
179
|
|
|
165
|
|
Taxes and licenses
|
155
|
|
|
389
|
|
Other accruals
|
342
|
|
|
342
|
|
|
$
|
1,706
|
|
|
$
|
2,396
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 8 — Long-Term Debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(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 $11 and $14, respectively)
|
$
|
1,739
|
|
|
$
|
1,736
|
|
2.900% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $4 and $5, respectively)
|
496
|
|
|
495
|
|
3.500% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $10 and $12, respectively)
|
990
|
|
|
988
|
|
3.900% Senior Notes due 2029 (net of unamortized original issue discount and deferred financing costs of $8)
|
742
|
|
|
742
|
|
|
|
|
|
|
|
|
|
Other
|
3
|
|
|
—
|
|
Macao Related(1):
|
|
|
|
4.600% Senior Notes due 2023 (net of unamortized original issue discount and deferred financing costs of $9 and $11, respectively, and a positive cumulative fair value adjustment of $11 for 2019)
|
1,791
|
|
|
1,800
|
|
5.125% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $11 and $13, and a positive cumulative fair value adjustment of $11 for 2019)
|
1,789
|
|
|
1,798
|
|
3.800% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $8)
|
792
|
|
|
—
|
|
5.400% Senior Notes due 2028 (net of unamortized original issue discount and deferred financing costs of $16 and $19, respectively, and a positive cumulative fair value adjustment of $12 for 2019)
|
1,884
|
|
|
1,893
|
|
4.375% Senior Notes due 2030 (net of unamortized original issue discount and deferred financing costs of $10)
|
690
|
|
|
—
|
|
Other
|
21
|
|
|
17
|
|
Singapore Related(1):
|
|
|
|
2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $50 and $54, respectively)
|
3,023
|
|
|
3,023
|
|
2012 Singapore Delayed Draw Term Facility (net of unamortized deferred financing costs of $1)
|
46
|
|
|
—
|
|
|
|
|
|
Other
|
1
|
|
|
—
|
|
|
14,007
|
|
|
12,492
|
|
Less — current maturities
|
(76)
|
|
|
(70)
|
|
Total long-term debt
|
$
|
13,931
|
|
|
$
|
12,422
|
|
____________________
(1)Unamortized deferred financing costs of $91 million and $100 million as of December 31, 2020 and 2019, 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.
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”)
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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, commencing on February 8, 2020, with respect to the 2024 LVSC Notes and 2029 LVSC Notes, on each February 18 and August 18, commencing on February 18, 2020, with respect to the 2026 Notes, and on each June 25 and December 25, commencing on June 25, 2020, 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, 2020, 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, 2020, 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, 2020, 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 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 (the "Amendment") with lenders to the LVSC Revolving Credit Agreement. Pursuant to the Amendment, the LVSC Revolving Credit Agreement was
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 (such period, 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.
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% and 3.9% for the years ended December 31, 2019 and 2018, respectively.
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 proceeds from the offering was used to repay in full the outstanding borrowings under the 2016 VML Credit Facility (defined below). 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” and together with the 2023 SCL Senior Notes, 2025 SCL Senior Notes, 2026 SCL Senior Notes and 2028 SCL Senior Notes, the "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.
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 "SCL Indenture") and the 2026 and 2030 SCL Senior Notes were issued pursuant to an indenture, dated June 4, 2020 (the “2020 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. Both indentures contain covenants, subject to customary exceptions and qualifications, that limit the ability of SCL
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
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. As of December 31, 2020, the Company had $2.02 billion of available borrowing capacity under the 2018 SCL Revolving Facility.
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,
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
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 $494 million at exchange rates in effect on the date of this transaction). Subsequently, on January 29, 2021, SCL drew down $29 million and HKD 2.13 billion (approximately $274 million at exchange rates in effect on January 29, 2021) under this facility for general corporate purposes, resulting in remaining available borrowing capacity of $2.21 billion.
2016 VML Credit Facility
Two subsidiaries of the Company, VML US Finance LLC, the Borrower, and Venetian Macau Limited ("VML"), as guarantor, entered into a credit agreement (the "2016 VML Credit Facility"), which pursuant to various amendments, provided for a $4.12 billion term loan (the "2016 VML Term Loans"), a $269 million non-extended term loan (the "2016 Non-Extended VML Term Loans") and a $2.0 billion revolving facility (the "2016 VML Revolving Facility," and together with the 2016 VML Term Loans and the 2016 Non-Extended VML Term Loans, the "2016 VML Credit Facility"). Borrowings under the 2016 VML Term Loans 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 0.5% per annum on the undrawn amounts under the 2016 VML Revolving Facility. The weighted average interest rate on the 2016 VML Credit Facility was 3.1% for the year ended December 31, 2018.
As previously described, a portion of the proceeds from the SCL Senior Notes was used to repay the outstanding borrowings under the 2016 VML Credit Facility. As a result, the Company recorded a $52 million loss on early retirement of debt during the three months ended September 30, 2018.
On November 20, 2018, effective as of November 21, 2018, the 2016 VML Credit Facility was terminated. As a result, the Company recorded a $9 million loss on early retirement of debt during the three months ended December 31, 2018.
Singapore Related Debt
2012 Singapore Credit Facility
In June 2012, MBS entered into a SGD 5.10 billion (approximately $3.85 billion at exchange rates in effect on December 31, 2020) credit agreement (the "2012 Singapore Credit Facility"), providing for a fully funded SGD 4.60 billion (approximately $3.48 billion at exchange rates in effect on December 31, 2020) term loan (the "2012 Singapore Term Facility") and a SGD 500 million (approximately $378 million at exchange rates in effect on December 31, 2020) revolving facility (the "2012 Singapore Revolving Facility") that was available until November 25, 2017, which included a SGD 100 million (approximately $76 million at exchange rates in effect on December 31, 2020) 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 $3.63 billion at exchange rates in effect on December 31, 2020), pursuant to which consenting lenders of borrowings under the 2012 Singapore Term Facility extended the maturity to March 29, 2024, and consenting lenders of borrowings under the 2012 Singapore Revolving Facility extended the maturity to September 29, 2023.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 $189 million at exchange rates in effect on December 31, 2020) for a total aggregate principal amount of SGD 750 million (approximately $567 million at exchange rates in effect on December 31, 2020). As of December 31, 2020, MBS had SGD 592 million (approximately $448 million at exchange rates in effect on December 31, 2020) 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 $116 million at exchange rates in effect on December 31, 2020).
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 $2.83 billion at exchange rates in effect on December 31, 2020), 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, 2020, SGD 3.69 billion (approximately $2.79 billion at exchange rates in effect on December 31, 2020) remains available to be drawn under the Singapore Delayed Draw Term Facility.
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 2.0% as of December 31, 2020). MBS pays a standby commitment fee of 35% to 40% of the spread per annum on all undrawn amounts under the 2012 Singapore Revolving Facility. The weighted average interest rate for the 2012 Singapore Credit Facility was 2.2%, 3.2% and 2.6% for the years ended December 31, 2020, 2019 and 2018.
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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 or the “Borrower,” entered into an amendment letter (the “Amendment Letter”) with DBS Bank Ltd. (“DBS”), as agent. The Amendment Letter amends the facility agreement originally dated as of June 25, 2012 (as amended, restated, amended and restated, supplemented and otherwise modified, the “Facility Agreement”), among the Borrower, the lenders party thereto, DBS, as the agent, and the other parties thereto.
The Amendment Letter (a) modifies the financial covenant provisions under the Facility Agreement such that the Borrower 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 the Borrower 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 the Borrower’s cash plus Facility B availability is greater than or equal to SGD 800 million immediately following such dividend payment and (b) the Borrower’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.
Debt Covenant Compliance
As of December 31, 2020, management believes the Company was in compliance with all debt covenants.
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,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Proceeds from 2026 and 2030 SCL Senior Notes
|
$
|
1,496
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Proceeds from 2018 SCL Credit Facility
|
403
|
|
|
—
|
|
|
—
|
|
Proceeds from 2012 Singapore Credit Facility - Delayed Draw Term
|
46
|
|
|
—
|
|
|
—
|
|
Proceeds from LVSC Senior Notes
|
—
|
|
|
4,000
|
|
|
—
|
|
Proceeds from 2023, 2025 and 2028 SCL Senior Notes
|
—
|
|
|
—
|
|
|
5,500
|
|
Proceeds from 2013 U.S. Credit Facility
|
—
|
|
|
—
|
|
|
1,347
|
|
Proceeds from 2016 VML Credit Facility
|
—
|
|
|
—
|
|
|
746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,945
|
|
|
$
|
4,000
|
|
|
$
|
7,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments on 2018 SCL Credit Facility
|
$
|
(404)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Repayments on 2012 Singapore Credit Facility
|
(60)
|
|
|
(47)
|
|
|
(65)
|
|
Repayments on 2013 U.S. Credit Facility
|
—
|
|
|
(3,484)
|
|
|
(26)
|
|
Repayments on 2016 VML Credit Facility
|
—
|
|
|
—
|
|
|
(5,083)
|
|
|
|
|
|
|
|
Repayments on HVAC Equipment Lease and Other Long-Term Debt
|
(3)
|
|
|
(5)
|
|
|
(4)
|
|
|
$
|
(467)
|
|
|
$
|
(3,536)
|
|
|
$
|
(5,178)
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Scheduled Maturities of Long-Term Debt
Maturities of long-term debt outstanding as of December 31, 2020, are summarized as follows:
|
|
|
|
|
|
|
Long-term
Debt
|
|
(In millions)
|
2021
|
$
|
63
|
|
2022
|
63
|
|
2023
|
1,863
|
|
2024
|
1,892
|
|
2025
|
3,356
|
|
Thereafter
|
6,883
|
|
Total
|
$
|
14,120
|
|
Fair Value of Long-Term Debt
The estimated fair value of the Company's long-term debt as of December 31, 2020 and 2019, was approximately $15.15 billion and $13.21 billion, respectively, compared to its contractual value of $14.12 billion and $12.58 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 9 — 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, 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 (the "Principal Stockholder") and his family 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 the Principal Stockholder and his family and the remaining $1.04 billion related to all other stockholders).
On March 30, June 28, September 27 and December 27, 2018, the Company paid a dividend of $0.75 per common share as part of a regular cash dividend program. During the year ended December 31, 2018, the Company recorded $2.35 billion as a distribution against retained earnings (of which $1.30 billion related to the Principal Stockholder and his family and the remaining $1.05 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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 year ended December 31, 2020, no shares of its common stock were repurchased. During the years ended December 31, 2019 and 2018, the Company repurchased 12,556,635 and 14,998,127 shares, respectively, of its common stock for $754 million and $905 million, respectively, (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, during the year ended December 31, 2019, the Company repurchased 1,927 shares, 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, 2018
|
789,484,987
|
|
Exercise of stock options
|
1,007,551
|
|
Issuance of restricted stock
|
10,296
|
|
Vesting of restricted stock units
|
5,000
|
|
|
|
Repurchase of common stock
|
(15,044,620)
|
|
Balance as of December 31, 2018
|
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
|
|
Noncontrolling Interests
SCL
On April 17, 2020, SCL announced it will not pay a final dividend for 2019 due to the impact of the COVID-19 Pandemic.
On February 21, 2020, SCL paid a dividend of 0.99 HKD 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).
On February 23 and June 22, 2018, 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, 2018).
Other
During the years ended December 31, 2019 and 2018, the Company distributed $17 million and $12 million, respectively, to certain of its noncontrolling interests. Of the amount distributed during the year ended December 31, 2019, $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").
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 10 — Income Taxes
Consolidated income (loss) before taxes and noncontrolling interests for domestic and foreign operations is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Foreign
|
$
|
(1,614)
|
|
|
$
|
3,145
|
|
|
$
|
3,164
|
|
Domestic
|
(567)
|
|
|
627
|
|
|
162
|
|
Total income (loss) before income taxes
|
$
|
(2,181)
|
|
|
$
|
3,772
|
|
|
$
|
3,326
|
|
The components of the income tax expense (benefit) are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Foreign:
|
|
|
|
|
|
Current
|
$
|
7
|
|
|
$
|
245
|
|
|
$
|
245
|
|
Deferred
|
3
|
|
|
(10)
|
|
|
(12)
|
|
Federal:
|
|
|
|
|
|
Current
|
(11)
|
|
|
33
|
|
|
15
|
|
Deferred
|
(35)
|
|
|
145
|
|
|
135
|
|
State:
|
|
|
|
|
|
Current
|
(2)
|
|
|
33
|
|
|
2
|
|
Deferred
|
—
|
|
|
22
|
|
|
(10)
|
|
Total income tax expense (benefit)
|
$
|
(38)
|
|
|
$
|
468
|
|
|
$
|
375
|
|
The reconciliation of the statutory federal income tax rate and the Company's effective tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Statutory federal income tax rate
|
(21.0)
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
Increase (decrease) in tax rate resulting from:
|
|
|
|
|
|
Change in valuation allowance
|
9.8
|
%
|
|
2.7
|
%
|
|
4.5
|
%
|
Foreign and U.S. tax rate differential
|
6.7
|
%
|
|
(5.6)
|
%
|
|
(6.5)
|
%
|
Tax exempt (income) loss of foreign subsidiary
|
2.1
|
%
|
|
(8.0)
|
%
|
|
(8.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other, net
|
0.7
|
%
|
|
2.3
|
%
|
|
0.6
|
%
|
Effective tax rate
|
(1.7)
|
%
|
|
12.4
|
%
|
|
11.3
|
%
|
The Company enjoys an income tax exemption in Macao that exempts the Company from paying corporate income tax on profits generated by gaming operations. The Company 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 $184 million, and diluted earnings per share would have been reduced by $0.26 and $0.23 per share for the years ended December 31, 2019 and 2018, respectively. The VML gaming losses incurred during 2020 did not generate a tax benefit because they are not subject to tax. This results in an increase in the Company’s overall effective tax rate. In April 2019, the Company entered into a renewed agreement with the Macao government, which is effective through June 26, 2022, and provides for an annual payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2020) as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits. 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.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
The Tax Cuts and Jobs Act (the "Act" or "U.S. tax reform") made significant changes to U.S. income tax laws including lowering the U.S. corporate tax rate to 21% effective beginning in 2018 and transitioning from a worldwide tax system to a territorial tax system resulting in dividends from the Company's foreign subsidiaries not being subject to U.S. income tax and therefore, no longer generating U.S. foreign tax credits. During the year ended December 31, 2018, the Company recorded a tax expense of $57 million resulting from guidance by the Internal Revenue Service ("IRS") related to certain international provisions of U.S. tax reform.
The primary tax affected components of the Company's net deferred tax assets are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Deferred tax assets:
|
|
|
|
U.S. foreign tax credit carryforwards
|
$
|
4,812
|
|
|
$
|
4,791
|
|
Net operating loss carryforwards
|
466
|
|
|
283
|
|
Stock-based compensation
|
16
|
|
|
15
|
|
Provision for credit losses
|
14
|
|
|
14
|
|
Deferred gain on mall sale transactions
|
12
|
|
|
13
|
|
Accrued expenses
|
10
|
|
|
23
|
|
Pre-opening expenses
|
7
|
|
|
9
|
|
|
|
|
|
|
|
|
|
Other
|
—
|
|
|
1
|
|
|
5,337
|
|
|
5,149
|
|
Less — valuation allowances
|
(4,922)
|
|
|
(4,786)
|
|
Total deferred tax assets
|
415
|
|
|
363
|
|
Deferred tax liabilities:
|
|
|
|
Property and equipment
|
(274)
|
|
|
(251)
|
|
Prepaid expenses
|
(4)
|
|
|
(5)
|
|
Other
|
(7)
|
|
|
(8)
|
|
Total deferred tax liabilities
|
(285)
|
|
|
(264)
|
|
Deferred tax assets, net
|
$
|
130
|
|
|
$
|
99
|
|
U.S. tax reform required the Company to compute a one-time mandatory tax on the previously unremitted earnings of its foreign subsidiaries during the year ended December 31, 2017. This one-time deemed repatriation of these earnings did not result in a cash tax liability for the Company as the incremental U.S. taxable income was fully offset by the utilization of the U.S. foreign tax credits generated as a result of the deemed repatriation. In addition, the deemed repatriation generated excess U.S. foreign tax credits, which were carried forward to tax years 2018 and beyond. The Company's U.S. foreign tax credit carryforwards were $4.87 billion and $4.84 billion as of December 31, 2020 and 2019, respectively, which will begin to expire in 2022. There was a valuation allowance of $4.58 billion and $4.51 billion as of December 31, 2020 and 2019, 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 $568 million as of December 31, 2020, which does not have an expiration date. Net operating loss carryforwards for the Company's foreign subsidiaries were $2.84 billion and $2.31 billion as of December 31, 2020 and 2019, respectively, which began to expire in 2021. There are valuation allowances of $342 million and $279 million as of December 31, 2020 and 2019, 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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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, 2020, the amount of earnings and profits of foreign subsidiaries the Company does not intend to repatriate was $2.58 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.
A reconciliation of the beginning and ending amounts of unrecognized tax benefits, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Balance at the beginning of the year
|
$
|
134
|
|
|
$
|
118
|
|
|
$
|
92
|
|
Additions to tax positions related to prior years
|
—
|
|
|
1
|
|
|
2
|
|
Reductions to tax positions related to prior years
|
(14)
|
|
|
—
|
|
|
—
|
|
Additions to tax positions related to current year
|
11
|
|
|
15
|
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year
|
$
|
131
|
|
|
$
|
134
|
|
|
$
|
118
|
|
As of December 31, 2020, 2019 and 2018, unrecognized tax benefits of $60 million, $53 million and $67 million, respectively, were recorded as reductions to the U.S. foreign tax credit deferred tax asset. As of December 31, 2020, 2019 and 2018, unrecognized tax benefits of $71 million, $81 million and $51 million, respectively, were recorded in other long-term liabilities.
Included in the unrecognized tax benefit balance as of December 31, 2020, 2019 and 2018, are $123 million, $115 million and $103 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 2016 in Macao and Singapore and tax years 2010 through 2015 and 2017 through 2019 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 $7 million, $5 million and $3 million were accrued as of December 31, 2020, 2019 and 2018, respectively. The Company does not expect a significant increase or decrease in unrecognized tax benefits over the next twelve months.
Note 11 — 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 $726 million and $2.26 billion as of December 31, 2020 and 2019, respectively. The estimated fair value of the Company's cash equivalents is based on level 1 inputs (quoted market prices in active markets).
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 12 — Mall Activities
The Grand Canal Shoppes at The Venetian Resort Las Vegas
In April 2004, the Company entered into an agreement to sell the portion of the Grand Canal Shoppes located within The Venetian Tower (formerly referred to as "The Grand Canal Shoppes") and lease certain restaurant and other retail space at the casino level of The Venetian Tower (the "Master Lease") to GGP for approximately $766 million (the "Mall Sale"). The Mall Sale closed in May 2004, and the Company realized a gain of $418 million in connection with the Mall Sale. Under the Master Lease agreement, the Company leased nineteen retail and restaurant spaces on the casino level within The Venetian Tower to GGP for 89 years with annual rent of one dollar and GGP assumed the various tenant operating leases for those spaces. In accordance with related accounting standards, the Master Lease agreement does not qualify as a sale of the real property assets, which real property was not separately legally demised. Accordingly, $109 million of the transaction has been deferred as prepaid operating lease payments to the Company, which will amortize into income on a straight-line basis over the 89-year lease term. During each of the years ended December 31, 2020, 2019 and 2018, $1 million of this deferred item was amortized and included in convention, retail and other revenue. In addition, the Company agreed with GGP to: (i) continue to be obligated to fulfill certain lease termination and asset purchase agreements; (ii) lease theater space located within The Grand Canal Shoppes from GGP for a period of 25 years with fixed minimum rent of $3 million per year with cost of living adjustments; (iii) operate the Gondola ride under an operating agreement for a period of 25 years for an annual fee of $4 million; and (iv) lease certain office space from GGP for a period of 10 years, subject to extension options, with annual rent of approximately $1 million. The lease payments under clauses (ii) through (iv) above are subject to automatic increases beginning on the sixth lease year. In accordance with related accounting standards, a portion of the transaction must be deferred in an amount equal to the present value of the minimum lease payments set forth in the lease back agreements. This deferred gain will be amortized to reduce lease expense on a straight-line basis over the lives of the leases. During each of the years ended December 31, 2020, 2019 and 2018, $3 million of this deferred item was amortized as an offset to convention, retail and other expense.
The Shoppes at The Palazzo
The Company contracted to sell a portion of the Grand Canal Shoppes located within The Palazzo Tower (formerly referred to as The Shoppes at The Palazzo) to GGP pursuant to a purchase and sale agreement dated as of April 12, 2004, as amended (the "Amended Agreement") and under the terms of the settlement with GGP on June 24, 2011, the Company retained $295 million of proceeds received and participates in certain potential future revenues earned by GGP. Pursuant to the Amended Agreement, the Company agreed with GGP to lease certain spaces located within The Shoppes at The Palazzo. As the transaction has not been accounted for as a sale in accordance with related accounting standards, $224 million of the mall sale transaction has been recorded as deferred proceeds from the sale as of December 31, 2020, which accrues interest at an imputed interest rate, offset by (i) imputed rental income and (ii) rent payments made to GGP related to those spaces leased back from GGP.
In the Amended Agreement, the Company agreed to lease certain restaurant and retail space on the casino level of The Palazzo Tower to GGP pursuant to a master lease agreement ("The Palazzo Master Lease"). Under The Palazzo Master Lease, which was executed concurrently with, and as a part of, the closing on the sale of The Shoppes at The Palazzo to GGP on February 29, 2008, the Company leased nine restaurant and retail spaces on the casino level within The Palazzo Tower to GGP for 89 years with annual rent of one dollar and GGP assumed the various tenant operating leases for those spaces. In accordance with related accounting standards, The Palazzo Master Lease does not qualify as a sale of the real property assets, which real property was not separately legally demised. Accordingly, $23 million of the mall sale transaction has been deferred as prepaid operating lease payments to the Company, which will amortize into income on a straight-line basis over the 89-year lease term.
Note 13 — 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 payments based on usage. The Company’s leases include options to extend the lease term by one month to 40 years.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 5 — Leasehold Interests in Land, Net"):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Leases
|
|
Classification on the Balance Sheet
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Operating lease ROU assets
|
|
Other assets, net
|
|
$
|
178
|
|
|
$
|
190
|
|
|
|
Finance lease ROU assets
|
|
Property and equipment, net(1)
|
|
$
|
18
|
|
|
$
|
17
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Operating
|
|
Other accrued liabilities
|
|
$
|
29
|
|
|
$
|
28
|
|
|
|
Finance
|
|
Current maturities of long-term debt
|
|
$
|
13
|
|
|
$
|
8
|
|
|
|
Noncurrent
|
|
|
|
|
|
|
|
|
Operating
|
|
Other long-term liabilities
|
|
$
|
294
|
|
|
$
|
305
|
|
|
|
Finance
|
|
Long-term debt
|
|
$
|
12
|
|
|
$
|
9
|
|
|
|
____________________
(1)Finance lease ROU assets are recorded net of accumulated depreciation of $13 million and $6 million as of December 31, 2020 and 2019, respectively.
Other information related to lease term and discount rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
|
Operating leases
|
31.4 years
|
|
31.6 years
|
|
|
Finance leases
|
2.3 years
|
|
2.3 years
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
|
Operating leases(1)
|
4.6
|
%
|
|
4.6
|
%
|
|
|
Finance leases
|
3.0
|
%
|
|
3.8
|
%
|
|
|
____________________
(1)Upon adoption of the new lease standard, discount rates used for existing operating leases were established on January 1, 2019.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The components of lease expense are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
Operating lease cost:
|
|
|
|
|
|
|
|
Amortization of leasehold interests in land
|
$
|
55
|
|
|
$
|
51
|
|
|
|
|
|
Operating lease cost
|
30
|
|
|
34
|
|
|
|
|
|
Short-term lease cost
|
10
|
|
|
19
|
|
|
|
|
|
Variable lease cost(1)
|
(1)
|
|
|
5
|
|
|
|
|
|
Finance lease cost:
|
|
|
|
|
|
|
|
Amortization of ROU assets
|
9
|
|
|
5
|
|
|
|
|
|
Interest on lease liabilities
|
1
|
|
|
1
|
|
|
|
|
|
Total lease cost
|
$
|
104
|
|
|
$
|
115
|
|
|
|
|
|
____________________
(1)Lease concessions were received for the year ended December 31, 2020, as a result of the COVID-19 Pandemic.
As of December 31, 2020, the Company has short-term lease commitments of $44 million. Expenses incurred under operating lease agreements, including amortization of leasehold interest in land and those that are short-term and variable in nature, totaled $94 million for the year ended December 31, 2018.
Supplemental cash flow information related to leases is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
(In millions)
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
Operating cash flows for operating leases
|
$
|
35
|
|
|
$
|
40
|
|
|
|
Operating cash flows for finance leases
|
$
|
—
|
|
|
$
|
1
|
|
|
|
Financing cash flows for finance leases
|
$
|
3
|
|
|
$
|
5
|
|
|
|
Right-of-use assets obtained in exchange for lease liabilities:
|
|
|
|
|
|
Operating leases
|
$
|
10
|
|
|
$
|
14
|
|
|
|
Finance leases
|
$
|
24
|
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities of lease liabilities are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
Finance Leases
|
|
|
|
|
|
(In millions)
|
Year ending December 31,
|
|
|
|
2021
|
$
|
36
|
|
|
$
|
14
|
|
2022
|
30
|
|
|
8
|
|
2023
|
24
|
|
|
3
|
|
2024
|
24
|
|
|
1
|
|
2025
|
22
|
|
|
—
|
|
Thereafter
|
514
|
|
|
—
|
|
Total future minimum lease payments
|
650
|
|
|
26
|
|
Less — amount representing interest
|
(327)
|
|
|
(1)
|
|
Present value of future minimum lease payments
|
323
|
|
|
25
|
|
Less — current lease obligations
|
(29)
|
|
|
(13)
|
|
Long-term lease obligations
|
$
|
294
|
|
|
$
|
12
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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 50 years. The leases include minimum base rents with escalated contingent rent clauses.
Lease revenue consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Mall
|
|
Other
|
|
Mall
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
|
|
|
Minimum rents
|
$
|
523
|
|
|
$
|
8
|
|
|
$
|
518
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
|
Overage rents
|
39
|
|
|
1
|
|
|
98
|
|
|
2
|
|
|
|
|
|
|
|
|
|
Rent concessions(1)
|
(272)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Total overage rents and rent concessions
|
(233)
|
|
|
(1)
|
|
|
98
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
$
|
290
|
|
|
$
|
7
|
|
|
$
|
616
|
|
|
$
|
17
|
|
|
|
|
|
|
|
|
|
___________________
(1)Rent concessions were provided for the periods presented to tenants as a result of the COVID-19 Pandemic and the impact on mall and other operations.
Overage rents amounted to $88 million for the year ended December 31, 2018.
Future minimum rentals (excluding the escalated contingent rent clauses) on non-cancelable leases are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mall
|
|
Other
|
|
|
|
|
|
(In millions)
|
Year ending December 31,
|
|
|
|
2021
|
$
|
466
|
|
|
$
|
9
|
|
2022
|
361
|
|
|
6
|
|
2023
|
277
|
|
|
5
|
|
2024
|
213
|
|
|
3
|
|
2025
|
160
|
|
|
2
|
|
Thereafter
|
463
|
|
|
3
|
|
Total minimum future rentals
|
$
|
1,940
|
|
|
$
|
28
|
|
The cost and accumulated depreciation of property and equipment the Company is leasing to third parties is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
|
|
|
|
(In millions)
|
Property and equipment, at cost
|
$
|
1,405
|
|
|
$
|
1,320
|
|
Accumulated depreciation
|
(578)
|
|
|
(532)
|
|
Property and equipment, net
|
$
|
827
|
|
|
$
|
788
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 14 — 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 (Tribunal Judicial de Base) against VML, LVS (Nevada) International Holdings, Inc. (“LVS (Nevada)”), LVSLLC and VCR (collectively, the “Defendants”). The claim was for 3.0 billion patacas (approximately $376 million at exchange rates in effect on December 31, 2020). The Macao Action alleges a breach of agreements entered into between AAEC and LVS (Nevada), LVSLLC and VCR (collectively, the “U.S. Defendants”) for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. On July 4, 2012, the Defendants filed their defense to the Macao Action with the Macao Judicial Court and amended the defense on January 4, 2013.
On March 24, 2014, the Macao Judicial Court issued a Decision (Despacho Seneador) 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.
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 $12.08 billion at exchange rates in effect on December 31, 2020), 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 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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
litigation against Galaxy Entertainment Group Ltd., Galaxy Entertainment Group S.A. and Messrs. Weidner and Friedman, individually. The Macao Judicial Court denied the motion to revoke legal aid on January 14, 2020.
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. On September 26, 2019, the Macao Judicial Court accepted that appeal and it is currently pending before the Macao Second Instance Court.
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.
The Macao 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.
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 co-lead plaintiffs. Pursuant to a scheduling order entered by the U.S. District Court, the plaintiffs anticipate filing an amended complaint on or before March 8, 2021. The Company anticipates bringing a motion to dismiss the amended complaint on or before May 7, 2021. All briefing on the motion to dismiss is scheduled to be completed by August 5, 2021. 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.
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. The Company’s response to the complaint is currently due on or before February 24, 2021. 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.
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, 2020). 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 $37,570, $18,785 and $125, respectively, at exchange rates in effect on December 31, 2020), subject to a minimum of 45 million patacas (approximately $6 million at exchange rates in effect on December 31, 2020). 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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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, 2020, the Company was obligated under its subconcession to make minimum future payments of approximately $41 million during the year ending December 31, 2021, and approximately $21 million during the year ending December 31, 2022.
Note 15 — 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 plans provide for the granting of equity awards pursuant to the applicable provisions of the Internal Revenue Code and regulations.
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, 2020, there were 8,998,486 shares available for grant under the Amended 2004 Plan.
Stock option awards are granted with an exercise price equal to the fair market value (as defined in the Amended 2004 Plan) of the Company's stock on the date of grant. The outstanding stock options generally vest over three to four years and have ten-year contractual terms. Compensation cost for all stock option grants, which all have graded vesting, is recognized on a straight-line basis over the awards' respective requisite service periods. The Company estimates the fair value of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on the Company's historical volatility for a period equal to the expected life of the stock options. The expected option life is based on the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate for periods equal to the expected term of the stock option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant.
Sands China Ltd. Equity Award Plan
The SCL Equity Plan gives SCL a competitive edge in attracting, retaining and motivating employees, directors and consultants and to provide SCL with a stock plan providing incentives directly related to increases in its stockholder value. Subject to certain criteria as defined in the SCL Equity Plan, SCL's subsidiaries' or affiliates' employees, directors or officers and many of its consultants are eligible for awards under the SCL Equity Plan.
The SCL 2009 Equity Plan provided for an aggregate of 804,786,508 shares of SCL's common stock to be available for awards. The SCL 2009 Equity Plan had a term of ten years, which expired on November 30, 2019, and no further awards may be granted after the expiration of the term. All existing awards previously granted under the SCL 2009 Equity Plan, but which are unexercised or unvested, will remain valid and (where applicable) exercisable in accordance with their terms of grant despite the expiration of the SCL 2009 Equity Plan. SCL's remuneration committee may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards or any combination of the foregoing. Effective December 1, 2019, the SCL 2019 Equity Plan was approved by shareholders, with materially the same terms of the SCL 2009 Equity Plan. As of December 31, 2020, there were 808,619,139 shares available for grant under the SCL 2019 Equity Plan.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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.
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,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
LVSC Amended 2004 Plan:
|
|
|
|
|
|
Weighted average volatility
|
23.8
|
%
|
|
24.1
|
%
|
|
25.8
|
%
|
Expected term (in years)
|
5.5
|
|
5.5
|
|
6.7
|
Risk-free rate
|
1.3
|
%
|
|
2.1
|
%
|
|
2.9
|
%
|
Expected dividend yield
|
4.6
|
%
|
|
5.2
|
%
|
|
5.7
|
%
|
SCL Equity Plan:
|
|
|
|
|
|
Weighted average volatility
|
—
|
%
|
|
36.9
|
%
|
|
36.0
|
%
|
Expected term (in years)
|
—
|
|
4.8
|
|
4.7
|
Risk-free rate
|
—
|
%
|
|
1.7
|
%
|
|
1.7
|
%
|
Expected dividend yield
|
—
|
%
|
|
5.0
|
%
|
|
5.8
|
%
|
A summary of the stock option activity for the Company's equity award plans for the year ended December 31, 2020, 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, 2020
|
8,515,855
|
|
|
$
|
56.33
|
|
|
|
|
|
Granted
|
875,474
|
|
|
64.82
|
|
|
|
|
|
Exercised
|
(342,700)
|
|
|
51.25
|
|
|
|
|
|
Forfeited or expired
|
(111,363)
|
|
|
72.44
|
|
|
|
|
|
Outstanding as of December 31, 2020
|
8,937,266
|
|
|
$
|
57.16
|
|
|
6.61
|
|
$
|
38
|
|
Exercisable as of December 31, 2020
|
4,597,701
|
|
|
$
|
58.52
|
|
|
5.14
|
|
$
|
14
|
|
SCL Equity Plan:
|
|
|
|
|
|
|
|
Outstanding as of January 1, 2020
|
64,874,150
|
|
|
$
|
4.99
|
|
|
|
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
Exercised
|
(1,766,550)
|
|
|
3.41
|
|
|
|
|
|
Forfeited or expired
|
(8,689,800)
|
|
|
5.51
|
|
|
|
|
|
Outstanding as of December 31, 2020
|
54,417,800
|
|
|
$
|
4.96
|
|
|
6.53
|
|
$
|
9
|
|
Exercisable as of December 31, 2020
|
32,903,000
|
|
|
$
|
4.85
|
|
|
5.77
|
|
$
|
9
|
|
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, 2020, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
|
|
|
LVSC Amended 2004 Plan:
|
|
|
|
Unvested Restricted Stock
|
|
|
|
Balance as of January 1, 2020
|
19,337
|
|
|
$
|
60.00
|
|
Granted
|
17,512
|
|
|
45.68
|
|
Vested
|
(19,337)
|
|
|
60.00
|
|
Forfeited
|
(2,189)
|
|
|
45.68
|
|
Balance as of December 31, 2020
|
15,323
|
|
|
$
|
45.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCL Equity Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unvested Restricted Stock Units
|
|
|
|
Balance as of January 1, 2020
|
1,407,200
|
|
|
$
|
4.99
|
|
Granted
|
2,337,200
|
|
|
4.11
|
|
Vested
|
(244,500)
|
|
|
4.09
|
|
Forfeited
|
(137,200)
|
|
|
4.97
|
|
Balance as of December 31, 2020
|
3,362,700
|
|
|
$
|
4.44
|
|
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 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 $3 million as of December 31, 2020.
As of December 31, 2020, under the Amended 2004 Plan there was $18 million of unrecognized compensation cost related to unvested stock options. The stock option costs are expected to be recognized over a weighted average period of 2.4 years.
As of December 31, 2020, under the SCL Equity Plan there was $14 million and $9 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 1.9 years.
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, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(Dollars in millions, except weighted average grant date fair values)
|
Compensation expense:
|
|
|
|
|
|
Stock options
|
$
|
21
|
|
|
$
|
34
|
|
|
$
|
29
|
|
Restricted stock and stock units
|
7
|
|
|
2
|
|
|
1
|
|
|
$
|
28
|
|
|
$
|
36
|
|
|
$
|
30
|
|
Income tax benefit recognized in the consolidated statements of operations
|
$
|
2
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Compensation cost capitalized as part of property and equipment
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
1
|
|
LVSC Amended 2004 Plan:
|
|
|
|
|
|
Stock options granted
|
875,474
|
|
|
1,204,145
|
|
|
3,124,168
|
|
Weighted average grant date fair value
|
$
|
7.79
|
|
|
$
|
7.23
|
|
|
$
|
7.52
|
|
Restricted stock granted
|
17,512
|
|
|
11,039
|
|
|
10,296
|
|
Weighted average grant date fair value
|
$
|
45.68
|
|
|
$
|
63.40
|
|
|
$
|
77.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised:
|
|
|
|
|
|
Intrinsic value
|
$
|
5
|
|
|
$
|
11
|
|
|
$
|
16
|
|
Cash received
|
$
|
18
|
|
|
$
|
26
|
|
|
$
|
56
|
|
SCL 2019 Equity Plan:
|
|
|
|
|
|
Stock options granted
|
—
|
|
|
19,409,600
|
|
|
18,872,800
|
|
Weighted average grant date fair value
|
$
|
—
|
|
|
$
|
1.03
|
|
|
$
|
1.01
|
|
Restricted stock units granted
|
2,337,200
|
|
|
1,412,400
|
|
|
—
|
|
Weighted average grant date fair value
|
$
|
4.11
|
|
|
$
|
4.99
|
|
|
$
|
—
|
|
Stock options exercised:
|
|
|
|
|
|
Intrinsic value
|
$
|
2
|
|
|
$
|
12
|
|
|
$
|
12
|
|
Cash received
|
$
|
6
|
|
|
$
|
28
|
|
|
$
|
23
|
|
|
|
|
|
|
|
Note 16 — Related Party Transactions
During the years ended December 31, 2020, 2019 and 2018, the Principal Stockholder and his family purchased certain services from the Company including lodging, banquet services and other goods and services for $1 million, $2 million and $3 million, respectively. For the years ended December 31, 2020, 2019 and 2018, the Company incurred $2 million, $3 million and $3 million, respectively, for food and beverage services, newspaper subscriptions and security support from entities in which the Principal Stockholder has an ownership interest.
During the years ended December 31, 2020, 2019 and 2018, the Company incurred certain expenses of $5 million, $9 million and $6 million, respectively, related to the Company's use of its Principal Stockholder's personal aircraft and yacht and aircraft refurbishment and maintenance services for business purposes. During the years ended December 31, 2020, 2019 and 2018, the Company charged the Principal Stockholder $18 million, $25 million and $20 million, respectively, related to aviation costs incurred by the Company for the Principal Stockholder's use of Company aviation personnel and assets for personal purposes. In addition, the Principal Stockholder agreed to reimburse the Company for the installation of avionics and aircraft systems on his personal aircraft. During the years ended December 31, 2019 and 2018, the Company paid $9 million and $13 million, respectively, for such costs and was reimbursed in full by the Principal Stockholder.
Related party receivables were $6 million and $3 million as of December 31, 2020 and 2019, respectively. Related party payables were approximately $1 million and $2 million as of December 31, 2020 and 2019, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 17 — 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 Hotel 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, the MBS Expansion Project and the Las Vegas Condo Tower (for which construction currently is suspended) in the United States. 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) to reconcile to consolidated results of operations and financial condition. The Company has included Corporate and Other (which includes the Las Vegas Condo Tower and corporate activities of the Company) to reconcile to the consolidated financial condition.
The Company's segment information as of and for the years ended December 31, 2020, 2019 and 2018, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Hotel 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
|
|
Las Vegas Operating Properties
|
227
|
|
|
218
|
|
|
127
|
|
|
—
|
|
|
166
|
|
|
738
|
|
Intercompany eliminations(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(92)
|
|
|
(94)
|
|
Total net revenues
|
$
|
2,268
|
|
|
$
|
498
|
|
|
$
|
283
|
|
|
$
|
381
|
|
|
$
|
182
|
|
|
$
|
3,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Hotel 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
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
444
|
|
|
610
|
|
|
347
|
|
|
—
|
|
|
417
|
|
|
1,818
|
|
Sands Bethlehem(2)
|
199
|
|
|
7
|
|
|
11
|
|
|
1
|
|
|
9
|
|
|
227
|
|
|
643
|
|
|
617
|
|
|
358
|
|
|
1
|
|
|
426
|
|
|
2,045
|
|
Intercompany eliminations(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
(239)
|
|
|
(241)
|
|
Total net revenues
|
$
|
9,828
|
|
|
$
|
1,752
|
|
|
$
|
897
|
|
|
$
|
716
|
|
|
$
|
546
|
|
|
$
|
13,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2018
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
2,829
|
|
|
$
|
223
|
|
|
$
|
81
|
|
|
$
|
234
|
|
|
$
|
107
|
|
|
$
|
3,474
|
|
The Londoner Macao
|
1,622
|
|
|
331
|
|
|
102
|
|
|
69
|
|
|
29
|
|
|
2,153
|
|
The Parisian Macao
|
1,265
|
|
|
124
|
|
|
65
|
|
|
57
|
|
|
22
|
|
|
1,533
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
502
|
|
|
39
|
|
|
29
|
|
|
145
|
|
|
4
|
|
|
719
|
|
Sands Macao
|
598
|
|
|
17
|
|
|
27
|
|
|
3
|
|
|
5
|
|
|
650
|
|
Ferry Operations and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
160
|
|
|
6,816
|
|
|
734
|
|
|
304
|
|
|
508
|
|
|
327
|
|
|
8,689
|
|
Marina Bay Sands
|
2,178
|
|
|
393
|
|
|
211
|
|
|
179
|
|
|
108
|
|
|
3,069
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
357
|
|
|
590
|
|
|
324
|
|
|
—
|
|
|
411
|
|
|
1,682
|
|
Sands Bethlehem
|
468
|
|
|
16
|
|
|
26
|
|
|
4
|
|
|
22
|
|
|
536
|
|
|
825
|
|
|
606
|
|
|
350
|
|
|
4
|
|
|
433
|
|
|
2,218
|
|
Intercompany eliminations(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(246)
|
|
|
(247)
|
|
Total net revenues
|
$
|
9,819
|
|
|
$
|
1,733
|
|
|
$
|
865
|
|
|
$
|
690
|
|
|
$
|
622
|
|
|
$
|
13,729
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_________________________
(1)Intercompany eliminations include royalties and other intercompany services.
(2)The Company completed the sale of Sands Bethlehem on May 31, 2019. Results of operations include Sands Bethlehem through May 30, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Intersegment Revenues
|
|
|
|
|
|
Macao:
|
|
|
|
|
|
The Venetian Macao
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
4
|
|
The Londoner Macao
|
1
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Ferry Operations and Other
|
19
|
|
|
27
|
|
|
25
|
|
|
24
|
|
|
31
|
|
|
29
|
|
Marina Bay Sands
|
4
|
|
|
4
|
|
|
9
|
|
Las Vegas Operating Properties
|
66
|
|
|
206
|
|
|
209
|
|
Total intersegment revenues
|
$
|
94
|
|
|
$
|
241
|
|
|
$
|
247
|
|
|
|
|
|
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Adjusted Property EBITDA
|
|
|
|
|
|
Macao:
|
|
|
|
|
|
The Venetian Macao
|
$
|
(53)
|
|
|
$
|
1,407
|
|
|
$
|
1,378
|
|
The Londoner Macao
|
(184)
|
|
|
726
|
|
|
759
|
|
The Parisian Macao
|
(131)
|
|
|
544
|
|
|
484
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
33
|
|
|
345
|
|
|
262
|
|
Sands Macao
|
(76)
|
|
|
175
|
|
|
178
|
|
Ferry Operations and Other
|
(20)
|
|
|
(8)
|
|
|
18
|
|
|
(431)
|
|
|
3,189
|
|
|
3,079
|
|
Marina Bay Sands
|
383
|
|
|
1,661
|
|
|
1,690
|
|
United States:
|
|
|
|
|
|
Las Vegas Operating Properties
|
(124)
|
|
|
487
|
|
|
394
|
|
Sands Bethlehem(1)
|
—
|
|
|
52
|
|
|
116
|
|
|
(124)
|
|
|
539
|
|
|
510
|
|
Consolidated adjusted property EBITDA(2)
|
(172)
|
|
|
5,389
|
|
|
5,279
|
|
Other Operating Costs and Expenses
|
|
|
|
|
|
Stock-based compensation(3)
|
(16)
|
|
|
(14)
|
|
|
(12)
|
|
Corporate
|
(168)
|
|
|
(313)
|
|
|
(202)
|
|
Pre-opening
|
(19)
|
|
|
(34)
|
|
|
(6)
|
|
Development
|
(18)
|
|
|
(24)
|
|
|
(12)
|
|
Depreciation and amortization
|
(1,160)
|
|
|
(1,165)
|
|
|
(1,111)
|
|
Amortization of leasehold interests in land
|
(55)
|
|
|
(51)
|
|
|
(35)
|
|
Loss on disposal or impairment of assets
|
(80)
|
|
|
(90)
|
|
|
(150)
|
|
Operating income (loss)
|
(1,688)
|
|
|
3,698
|
|
|
3,751
|
|
Other Non-Operating Costs and Expenses
|
|
|
|
|
|
Interest income
|
21
|
|
|
74
|
|
|
59
|
|
Interest expense, net of amounts capitalized
|
(536)
|
|
|
(555)
|
|
|
(446)
|
|
Other income
|
22
|
|
|
23
|
|
|
26
|
|
Gain on sale of Sands Bethlehem
|
—
|
|
|
556
|
|
|
—
|
|
Loss on modification or early retirement of debt
|
—
|
|
|
(24)
|
|
|
(64)
|
|
Income tax (expense) benefit
|
38
|
|
|
(468)
|
|
|
(375)
|
|
Net income (loss)
|
$
|
(2,143)
|
|
|
$
|
3,304
|
|
|
$
|
2,951
|
|
_________________________
(1)The Company completed the sale of Sands Bethlehem on May 31, 2019. Results of operations include Sands Bethlehem through May 30, 2019.
(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
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
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, 2020, 2019 and 2018, the Company recorded stock-based compensation expense of $28 million, $36 million and $30 million, respectively, of which $12 million, $22 million and $18 million, respectively, was included in corporate expense in the accompanying consolidated statements of operations.
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|
|
|
|
|
|
|
|
|
|
|
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|
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|
Year Ended December 31,
|
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2020
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
(In millions)
|
Capital Expenditures
|
|
|
|
|
|
Corporate and Other
|
$
|
5
|
|
|
$
|
59
|
|
|
$
|
81
|
|
Macao:
|
|
|
|
|
|
The Venetian Macao
|
140
|
|
|
131
|
|
|
180
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|
The Londoner Macao
|
739
|
|
|
282
|
|
|
131
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|
The Parisian Macao
|
11
|
|
|
32
|
|
|
131
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|
The Plaza Macao and Four Seasons Hotel Macao
|
157
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|
|
298
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|
|
63
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|
Sands Macao
|
9
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|
|
16
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|
|
29
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|
Ferry Operations and Other
|
2
|
|
|
3
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|
|
1
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|
|
1,058
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|
|
762
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|
|
535
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|
Marina Bay Sands
|
164
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|
|
195
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|
|
182
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|
United States:
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|
|
|
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Las Vegas Operating Properties
|
103
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|
|
198
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|
|
127
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Sands Bethlehem(1)
|
—
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|
|
2
|
|
|
24
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|
|
103
|
|
|
200
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|
|
151
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|
Total capital expenditures
|
$
|
1,330
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|
|
$
|
1,216
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|
|
$
|
949
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|
_________________________
(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)
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|
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|
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December 31,
|
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2020
|
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2019
|
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2018
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|
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|
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(In millions)
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Total Assets
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|
|
|
|
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Corporate and Other
|
$
|
839
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|
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$
|
1,390
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|
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$
|
1,296
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Macao:
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|
|
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The Venetian Macao
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2,446
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|
|
3,243
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|
|
3,403
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The Londoner Macao
|
4,298
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|
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4,504
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|
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4,295
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The Parisian Macao
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2,119
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|
|
2,351
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|
|
2,455
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The Plaza Macao and Four Seasons Hotel Macao
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1,203
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|
|
1,239
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|
|
883
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Sands Macao
|
320
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|
|
324
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|
|
322
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|
Ferry Operations and Other
|
141
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|
|
156
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|
|
259
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|
|
|
|
|
|
|
|
10,527
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|
|
11,817
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|
|
11,617
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Marina Bay Sands
|
5,592
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|
|
5,880
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|
|
4,674
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|
United States:
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|
|
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|
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Las Vegas Operating Properties
|
3,849
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|
|
4,112
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|
|
4,321
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Sands Bethlehem(1)
|
—
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|
|
—
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|
|
639
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3,849
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|
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4,112
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|
|
4,960
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Total assets
|
$
|
20,807
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|
|
$
|
23,199
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|
|
$
|
22,547
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|
_________________________
(1)The Company completed the sale of Sands Bethlehem on May 31, 2019.
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|
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|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
|
|
|
|
|
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(In millions)
|
Total Long-Lived Assets(1)
|
|
|
|
|
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Corporate and Other
|
$
|
308
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|
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$
|
311
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|
|
$
|
281
|
|
Macao:
|
|
|
|
|
|
The Venetian Macao
|
1,705
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|
|
1,740
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|
|
1,750
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The Londoner Macao
|
4,162
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|
|
3,591
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|
|
3,414
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The Parisian Macao
|
2,067
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|
|
2,203
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|
|
2,317
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The Plaza Macao and Four Seasons Hotel Macao
|
1,135
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|
|
1,112
|
|
|
772
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Sands Macao
|
218
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|
|
237
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|
|
229
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|
Ferry Operations and Other
|
73
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|
|
54
|
|
|
130
|
|
|
|
|
|
|
|
|
9,360
|
|
|
8,937
|
|
|
8,612
|
|
Marina Bay Sands
|
4,989
|
|
|
5,063
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|
|
4,148
|
|
United States:
|
|
|
|
|
|
Las Vegas Operating Properties
|
2,708
|
|
|
2,805
|
|
|
2,762
|
|
Sands Bethlehem(2)
|
—
|
|
|
—
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|
|
549
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|
|
2,708
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|
|
2,805
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|
|
3,311
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|
Total long-lived assets
|
$
|
17,365
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|
|
$
|
17,116
|
|
|
$
|
16,352
|
|
_________________________
(1)Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and leasehold interests in land, net of accumulated amortization.
(2)The Company completed the sale of Sands Bethlehem on May 31, 2019.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Note 18 — Selected Quarterly Financial Results (Unaudited)
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|
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|
|
|
|
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|
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|
|
|
|
|
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|
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Quarter
|
|
First
|
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Second
|
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Third
|
|
Fourth
|
|
Total
|
|
|
|
|
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|
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|
(In millions, except per share data)
|
2020
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
|
1,782
|
|
|
$
|
98
|
|
|
$
|
586
|
|
|
$
|
1,146
|
|
|
$
|
3,612
|
|
Operating income (loss)
|
55
|
|
|
(922)
|
|
|
(610)
|
|
|
(211)
|
|
|
(1,688)
|
|
Net loss
|
(51)
|
|
|
(985)
|
|
|
(731)
|
|
|
(376)
|
|
|
(2,143)
|
|
Net loss attributable to Las Vegas Sands Corp.
|
(1)
|
|
|
(820)
|
|
|
(565)
|
|
|
(299)
|
|
|
(1,685)
|
|
Basic loss per share
|
—
|
|
|
(1.07)
|
|
|
(0.74)
|
|
|
(0.39)
|
|
|
(2.21)
|
|
Diluted loss per share
|
—
|
|
|
(1.07)
|
|
|
(0.74)
|
|
|
(0.39)
|
|
|
(2.21)
|
|
2019
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
|
3,646
|
|
|
$
|
3,334
|
|
|
$
|
3,250
|
|
|
$
|
3,509
|
|
|
$
|
13,739
|
|
Operating income
|
971
|
|
|
894
|
|
|
899
|
|
|
934
|
|
|
3,698
|
|
Net income(1)
|
744
|
|
|
1,108
|
|
|
669
|
|
|
783
|
|
|
3,304
|
|
Net income attributable to Las Vegas Sands Corp.(1)
|
582
|
|
|
954
|
|
|
533
|
|
|
629
|
|
|
2,698
|
|
Basic earnings per share(1)
|
0.75
|
|
|
1.24
|
|
|
0.69
|
|
|
0.82
|
|
|
3.50
|
|
Diluted earnings per share(1)
|
0.75
|
|
|
1.24
|
|
|
0.69
|
|
|
0.82
|
|
|
3.50
|
|
________________________
(1)During Q2 2019, the Company closed the sale of Sands Bethlehem and recorded a gain on the sale of $556 million.
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.