UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________ 

Form 10-Q

_________________________________________________________ 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-32373

_________________________________________________________ 

LAS VEGAS SANDS CORP.

(Exact name of registration as specified in its charter)

_________________________________________________________ 

Nevada	27-0099920
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

3355 Las Vegas Boulevard South
Las Vegas,	Nevada	89109
(Address of principal executive offices)		(Zip Code)

(702) 414-1000

(Registrant’s telephone number, including area code)

 _________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.001 par value)	LVS	New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Class	Outstanding at April 22, 2020
Common Stock ($0.001 par value)	763,729,715 shares

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

Table of Contents

	PART I FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019	3
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2020 and 2019	5
	Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2020 and 2019	6
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 4.	Controls and Procedures	36
	PART II OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 6.	Exhibits	39
Signatures		40

2

PART I FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31, 2020			December 31, 2019
	(In millions, except par value) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,602		$	4,226
Restricted cash and cash equivalents	16			16
Accounts receivable, net of provision for credit losses of $271 and $282	653			844
Inventories	36			37
Prepaid expenses and other	186			182
Total current assets	3,493			5,305
Property and equipment, net	14,706			14,844
Deferred income taxes, net	279			282
Leasehold interests in land, net	2,169			2,272
Intangible assets, net	36			42
Other assets, net	484			454
Total assets	$	21,167		$	23,199
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	82		$	149
Construction payables	303			334
Other accrued liabilities	1,693			2,396
Income taxes payable	272			275
Current maturities of long-term debt	69			70
Total current liabilities	2,419			3,224
Other long-term liabilities	521			513
Deferred income taxes	169			183
Deferred amounts related to mall sale transactions	348			350
Long-term debt	12,253			12,422
Total liabilities	15,710			16,692
Commitments and contingencies (Note 7)
Equity:
Preferred stock, $0.001 par value, 50 shares authorized, zero shares issued and outstanding	—			—
Common stock, $0.001 par value, 1,000 shares authorized, 833 shares issued, 764 shares outstanding	1			1
Treasury stock, at cost, 69 shares	(4,481		)	(4,481		)
Capital in excess of par value	6,591			6,569
Accumulated other comprehensive loss	(119		)	(3		)
Retained earnings	2,497			3,101
Total Las Vegas Sands Corp. stockholders’ equity	4,489			5,187
Noncontrolling interests	968			1,320
Total equity	5,457			6,507
Total liabilities and equity	$	21,167		$	23,199

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended March 31,
	2020			2019
	(In millions, except per share data) (Unaudited)
Revenues:
Casino	$	1,177		$	2,661
Rooms	268			450
Food and beverage	139			232
Mall	103			160
Convention, retail and other	95			143
Net revenues	1,782			3,646
Operating expenses:
Casino	707			1,439
Rooms	92			110
Food and beverage	139			178
Mall	17			17
Convention, retail and other	56			80
Provision for credit losses	18			4
General and administrative	319			369
Corporate	59			152
Pre-opening	5			4
Development	6			5
Depreciation and amortization	290			301
Amortization of leasehold interests in land	14			9
Loss on disposal or impairment of assets	5			7
	1,727			2,675
Operating income	55			971
Other income (expense):
Interest income	13			20
Interest expense, net of amounts capitalized	(131		)	(141		)
Other income (expense)	37			(21		)
Income (loss) before income taxes	(26		)	829
Income tax expense	(25		)	(85		)
Net income (loss)	(51		)	744
Net (income) loss attributable to noncontrolling interests	50			(162		)
Net income (loss) attributable to Las Vegas Sands Corp.	$	(1	)	$	582
Earnings per share:
Basic	$	—		$	0.75
Diluted	$	—		$	0.75
Weighted average shares outstanding:
Basic	764			774
Diluted	764			775

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Three Months Ended March 31,
	2020			2019
	(In millions) (Unaudited)
Net income (loss)	$	(51	)	$	744
Currency translation adjustment	(111		)	5
Total comprehensive income (loss)	(162		)	749
Comprehensive (income) loss attributable to noncontrolling interests	45			(159		)
Comprehensive income (loss) attributable to Las Vegas Sands Corp.	$	(117	)	$	590

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

	Las Vegas Sands Corp. Stockholders’ Equity
	Common Stock		Treasury Stock			Capital in Excess of Par Value		Accumulated Other Comprehensive Loss			Retained Earnings			Noncontrolling Interests			Total
	(In millions) (Unaudited)
Balance at January 1, 2019	$	1	$	(3,727	)	$	6,680	$	(40	)	$	2,770		$	1,061		$	6,745
Net income	—		—			—		—			582			162			744
Currency translation adjustment	—		—			—		8			—			(3		)	5
Exercise of stock options	—		—			12		—			—			2			14
Stock-based compensation	—		—			8		—			—			1			9
Repurchase of common stock	—		(174		)	—		—			—			—			(174		)
Dividends declared ($0.77 per share) (Note 5)	—		—			—		—			(595		)	(308		)	(903		)
Balance at March 31, 2019	$	1	$	(3,901	)	$	6,700	$	(32	)	$	2,757		$	915		$	6,440
Balance at January 1, 2020	$	1	$	(4,481	)	$	6,569	$	(3	)	$	3,101		$	1,320		$	6,507
Net loss	—		—			—		—			(1		)	(50		)	(51		)
Currency translation adjustment	—		—			—		(116		)	—			5			(111		)
Exercise of stock options	—		—			16		—			—			—			16
Stock-based compensation	—		—			6		—			—			1			7
Dividends declared ($0.79 per share) and noncontrolling interest payments (Note 5)	—		—			—		—			(603		)	(308		)	(911		)
Balance at March 31, 2020	$	1	$	(4,481	)	$	6,591	$	(119	)	$	2,497		$	968		$	5,457

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
	2020			2019
	(In millions) (Unaudited)
Cash flows from operating activities:
Net income (loss)	$	(51	)	$	744
Adjustments to reconcile net income (loss) to net cash generated from (used in) operating activities:
Depreciation and amortization	290			301
Amortization of leasehold interests in land	14			9
Amortization of deferred financing costs and original issue discount	10			8
Amortization of deferred gain on mall sale transactions	(1		)	(1		)
Loss on disposal or impairment of assets	4			5
Stock-based compensation expense	7			9
Provision for credit losses	18			4
Foreign exchange (gain) loss	(39		)	22
Deferred income taxes	(4		)	1
Changes in operating assets and liabilities:
Accounts receivable	166			(15		)
Other assets	(48		)	(4		)
Accounts payable	(66		)	(26		)
Other liabilities	(670		)	(237		)
Net cash generated from (used in) operating activities	(370		)	820
Cash flows from investing activities:
Capital expenditures	(320		)	(240		)
Proceeds from disposal of property and equipment	1			—
Net cash used in investing activities	(319		)	(240		)
Cash flows from financing activities:
Proceeds from exercise of stock options	16			14
Repurchase of common stock	—			(174		)
Dividends paid and noncontrolling interest payments	(911		)	(903		)
Repayments of long-term debt	(16		)	(26		)
Payments of financing costs	(3		)	—
Net cash used in financing activities	(914		)	(1,089		)
Effect of exchange rate on cash, cash equivalents and restricted cash	(21		)	(4		)
Decrease in cash, cash equivalents and restricted cash	(1,624		)	(513		)
Cash, cash equivalents and restricted cash at beginning of period	4,242			4,661
Cash, cash equivalents and restricted cash at end of period	$	2,618		$	4,148
Supplemental disclosure of cash flow information:
Cash payments for interest, net of amounts capitalized	$	180		$	159
Cash payments for taxes, net of refunds	$	27		$	40
Change in construction payables	$	(31	)	$	1

The accompanying notes are an integral part of these condensed consolidated financial statements.

7

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 — Organization and Business of Company

The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Las Vegas Sands Corp. (“LVSC”), a Nevada corporation, and its subsidiaries (collectively the “Company”) for the year ended December 31, 2019, and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations; however, the Company believes the disclosures herein are adequate to make the information presented not misleading. In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair statement of the results for the interim period have been included. The interim results reflected in the unaudited condensed consolidated financial statements are not necessarily indicative of expected results for the full year.

COVID-19 Coronavirus Pandemic

In January 2020, an outbreak of a respiratory illness caused by a new strain of coronavirus was identified. The disease has since spread rapidly across the world, causing the World Health Organization to declare the outbreak a pandemic (the “COVID-19 Pandemic”) on March 12, 2020. Since that time, people across the globe have been advised to avoid non-essential travel. Steps have also been taken by various countries around the world, 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 has decreased substantially, driven by the outbreak’s strong deterrent effect on travel and social activities. The China Individual Visit Scheme to Macao ("China IVS") and group tour schemes to Macao have been suspended and a ban on entry or enhanced quarantine requirements, depending on the person’s residency and their recent travel history, for any Macao residents, citizens of the People’s Republic of China (“PRC”), Hong Kong residents and Taiwan residents attempting to enter Macao is currently in place. Additionally, restrictions required the Company’s ferry operations between Macao and Hong Kong to be suspended until further notice. On February 4, 2020, in response to the outbreak, the Macao government announced the suspension of all Macao casino operations beginning on February 5, 2020. The Company’s Macao casino operations resumed on February 20, 2020, except for casino operations at Sands Cotai Central, which resumed on February 27, 2020. Certain health safeguards, however, such as limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection and health declarations remain in effect at the present time. Management 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 one of the hotel towers at Sands Cotai Central (which features rooms and suites under the Conrad brand), these hotels were gradually reopened beginning February 20, 2020. The remaining hotel tower at Sands Cotai Central is expected to reopen in line with operational needs and demand, but the timing of this currently cannot be determined. On March 28, 2020, in support of the Macao government’s initiatives to fight the COVID-19 Pandemic, up to 2,000 hotel rooms at the Sheraton Grand Macao Hotel, Cotai Strip at Sands Cotai Central were provided to the Macao government for quarantine purposes. A number of restaurants and food outlets across the Company’s properties in Macao are currently closed, as are a number of retail outlets in the retail malls and a number of entertainment amenities. The timing or manner in which these operations will return is currently not able to be determined.

The Hong Kong government temporarily closed the Hong Kong China Ferry Terminal in Kowloon beginning on January 30, 2020 and the Hong Kong Macao Ferry Terminal in Hong Kong beginning on February 4, 2020. In response, the Company was forced to immediately suspend its Macao ferry operations between Macao and Hong Kong. The timing and manner in which the Company’s ferry operations will be able to resume is currently unknown.

8

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Total visitation from China to Macao in February 2020 declined 97% compared to the same period in 2019, according to the Statistics and Census Services of the Macao government.

Singapore

For the three months ended March 31, 2020, the operations at Marina Bay Sands remained open; however, visitation to the property declined throughout the quarter due to the COVID-19 Pandemic. Subsequent to quarter-end, the Singapore government suspended all casino and non-essential operations, including all operations at Marina Bay Sands, beginning on April 7, 2020 through at least June 1, 2020, which could be extended in the future.

Total visitation to Marina Bay Sands, per Company data, for the three months ended March 31, 2020, has decreased over 36% as compared to visitation for the same period in the prior year.

Las Vegas

Since the COVID-19 Pandemic began in January, visitation to the Las Vegas Operating Properties declined steadily. On March 17, 2020, the Nevada government suspended all casino and non-essential operations, including all operations at the Las Vegas Operating Properties, beginning on March 18, 2020 through at least April 30, 2020, which could be extended in the future.

Summary

The disruptions arising from the COVID-19 Pandemic had a significant adverse impact on the Company's financial condition and operations during the three months ended March 31, 2020. The duration and intensity of this global health emergency and related disruptions is uncertain. Given the dynamic nature of these circumstances, the impact on the Company’s consolidated results of operations, cash flows and financial condition in 2020 will be material, 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 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 meetings, incentives, conventions and exhibitions (“MICE”).

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 $2.60 billion and access to $1.50 billion, $2.02 billion and $416 million of available borrowing capacity from the LVSC Revolving Facility, 2018 SCL Revolving Facility and the 2012 Singapore Credit Facility, respectively, and 3.75 billion Singapore dollars (“SGD,” approximately $2.63 billion at exchange rates in effect on March 31, 2020) under the Singapore Delayed Draw Term Facility, exclusively for capital expenditures for the MBS Expansion Project, as of March 31, 2020. 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.

9

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Note 2 — Long-Term Debt

Long-term debt consists of the following:

	March 31, 2020			December 31, 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 $14)	$	1,736		$	1,736
2.900% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $5)	495			495
3.500% Senior Notes due 2026 (net of unamortized original issue discount and deferred financing costs of $11 and $12, respectively)	989			988
3.900% Senior Notes due 2029 (net of unamortized original issue discount and deferred financing costs of $8)	742			742
Macao Related(1):
4.600% Senior Notes due 2023 (net of unamortized original issue discount and deferred financing costs of $10 and $11, respectively, and a positive cumulative fair value adjustment of $11)	1,801			1,800
5.125% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $13 and a positive cumulative fair value adjustment of $11)	1,798			1,798
5.400% Senior Notes due 2028 (net of unamortized original issue discount and deferred financing costs of $18 and $19, respectively, and a positive cumulative fair value adjustment of $11 and $12, respectively)	1,893			1,893
Other	19			17
Singapore Related(1):
2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $49 and $54, respectively)	2,849			3,023
	12,322			12,492
Less — current maturities	(69		)	(70		)
Total long-term debt	$	12,253		$	12,422

____________________

(1) Unamortized deferred financing costs of $94 million and $100 million as of March 31, 2020 and December 31, 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 condensed consolidated balance sheets.

LVSC Revolving Facility

As of March 31, 2020, the Company had $1.50 billion of available borrowing capacity under the LVSC Revolving Facility, net of outstanding letters of credit.

2018 SCL Credit Facility

During March 2020, Sands China Ltd. (“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 “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 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)

10

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

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.

As of March 31, 2020, SCL had $2.02 billion of available borrowing capacity under the 2018 SCL Revolving Facility comprised of Hong Kong dollar commitments (13.81 billion Hong Kong dollars or “HKD,” approximately $1.78 billion at exchange rates in effect on March 31, 2020) and U.S. dollar commitments ($237 million).

2012 Singapore Credit Facility

As of March 31, 2020, the Company’s wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”), had SGD 592 million (approximately $416 million at exchange rates in effect on March 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 pursuant to a development agreement for SGD 153 million (approximately $107 million at exchange rates in effect on March 31, 2020).

There were no loans borrowed under the Delayed Draw Term Facility as of March 31, 2020.

Debt Covenant Compliance

As of March 31, 2020, management believes the Company was in compliance with all debt covenants.

Fair Value of Long-Term Debt

The estimated fair value of the Company’s long-term debt as of March 31, 2020 and December 31, 2019, was approximately $11.65 billion and $13.21 billion, respectively, compared to its contractual value of $12.40 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 3 — Accounts Receivable, Net

Accounts Receivable and Provision for Credit Losses

Accounts receivable are 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 consist of casino receivables. Other than casino receivables, there is no other concentration of credit risk with respect to accounts receivable as the Company has a large number of customers. 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.

The Company maintains a provision for expected credit losses on casino, hotel and mall receivables and regularly evaluates the balances. 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. The Company also monitors regional and global economic conditions and forecasts in its evaluation of the

11

LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

adequacy of the recorded reserves. Account balances are written off against the provision when the Company believes it is probable the receivable will not be recovered.

Credit or marker play was 22.1%, 14.9% and 70.0% of table games play at the Company’s Macao properties, Marina Bay Sands and Las Vegas Operating Properties, respectively, during the period ended March 31, 2020. The Company’s provision for casino credit losses was 34.7% and 32.3% of gross casino receivables as of March 31, 2020 and December 31, 2019, respectively. The Company’s provision for credit losses from its hotel and other receivables is not material.

Accounts receivable, net consists of the following:

	March 31, 2020			December 31, 2019
	(In millions)
Casino	$	752		$	858
Rooms	48			88
Mall	78			93
Other	46			87
	924			1,126
Less - provision for credit losses	(271		)	(282		)
	$	653		$	844

The following table shows the movement in the provision for credit losses recognized for accounts receivable that occurred during the period:

	March 31, 2020			March 31, 2019
	(In millions)
Balance at beginning of year	$	282		$	324
Current period provision for credit losses	18			4
Write-offs	(23		)	(17		)
Recoveries of receivables previously written-off	—			1
Exchange rate impact	(6		)	1
Balance at end of period	$	271		$	313

Impacts of Adoption

On January 1, 2020, the Company adopted the guidance under the accounting standard update (“ASU”) issued in June 2016 by the Financial Accounting Standards Board (“FASB”). The ASU revised the methodology for measuring credit losses on financial 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 4 — Derivative Instruments

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 SCL Senior Notes. These IR Swaps have a total notional value of $5.50 billion and expire in August 2020.

The total fair value of the IR Swaps as of March 31, 2020, was $43 million. In the accompanying condensed consolidated balance sheet, $33 million was recorded as an asset in prepaid expenses and other with an equal corresponding adjustment recorded against the carrying value of the SCL Senior Notes. The fair value of the IR Swaps was estimated using level 2 inputs from recently reported market forecasts of interest rates. Gains and losses due to changes in fair value of the IR Swaps completely offset changes in the fair value of the hedged portion of the underlying

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LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

debt. Additionally, for the three months ended March 31, 2020 and 2019, the Company recorded a $14 million and $2 million reduction to interest expense, respectively, related to the realized amount associated with the IR Swaps.

Note 5 — Equity and Earnings Per Share

Common Stock

Dividends

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 three months ended March 31, 2020, the Company recorded $603 million as a distribution against retained earnings (of which $342 million related to the principal stockholder and his family and the remaining $261 million related to all other stockholders).

On March 28, 2019, the Company paid a dividend of $0.77 per common share as part of a regular cash dividend program. During the three months ended March 31, 2019, the Company recorded $595 million as a distribution against retained earnings (of which $333 million related to the principal stockholder and his family and the remaining $262 million related to all other shareholders).

In April 2020, the Company suspended the quarterly dividend program due to the impact of the COVID-19 Pandemic.

Noncontrolling Interests

On February 21, 2020, SCL paid a dividend of HKD 0.99 to SCL stockholders (a total of $1.03 billion, of which the Company retained $717 million during the three months ended March 31, 2020).

On February 22, 2019, SCL paid a dividend of HKD 0.99 to SCL stockholders (a total of $1.02 billion, of which the Company retained $716 million during the three months ended March 31, 2019).

On April 17, 2020, SCL announced it will not pay a final dividend for 2019 due to the impact of the COVID-19 Pandemic.

Earnings Per Share

The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings per share consisted of the following:

	Three Months Ended March 31,
	2020	2019
	(In millions)
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)	764	774
Potential dilution from stock options and restricted stock and stock units	—	1
Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)	764	775
Antidilutive stock options excluded from the calculation of diluted earnings per share	3	5

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Note 6 — Leases

Lessor

Lease revenue consists of the following:

	Three Months Ended March 31,
	2020						2019
	Mall			Other			Mall		Other
	(In millions)
Minimum rents	$	134		$	3		$	128	$	4
Overage rents	5			1			7		1
Rent concessions(1)	(59		)	(1		)	—		—
Total overage rents and rent concessions	(54		)	—			7		1
	$	80		$	3		$	135	$	5

____________________

(1) Rent concessions were provided to tenants as a result of the COVID-19 Pandemic and the impact on mall and other operations.

Note 7 — 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 March 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

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LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

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 March 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 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 September 10, 2019, AAEC moved to reschedule the trial of the Macao Action, which had been scheduled to begin on September 12, 2019. The Macao Judicial Court granted that motion and rescheduled the trial to begin on September 16, 2020.

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.

Note 8 — 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 and construction and development activities for each of its operating segments: The Venetian Macao; Sands Cotai Central; 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 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 the condensed 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 condensed consolidated financial condition.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

The Company’s segment information as of March 31, 2020 and December 31, 2019, and for the three months ended March 31, 2020 and 2019 is as follows:

	Casino		Rooms		Food and Beverage		Mall		Convention, Retail and Other			Net Revenues
Three Months Ended March 31, 2020	(In millions)
Macao:
The Venetian Macao	$	251	$	21	$	5	$	29	$	9		$	315
Sands Cotai Central	123		27		8		9		3			170
The Parisian Macao	115		13		5		6		2			141
The Plaza Macao and Four Seasons Hotel Macao	83		4		3		17		—			107
Sands Macao	64		2		2		—		1			69
Ferry Operations and Other	—		—		—		—		12			12
	636		67		23		61		27			814
Marina Bay Sands	439		74		41		42		16			612
Las Vegas Operating Properties	102		127		75		—		96			400
Intercompany eliminations(1)	—		—		—		—		(44		)	(44		)
Total net revenues	$	1,177	$	268	$	139	$	103	$	95		$	1,782
Three Months Ended March 31, 2019
Macao:
The Venetian Macao	$	740	$	57	$	22	$	56	$	22		$	897
Sands Cotai Central	445		84		26		16		6			577
The Parisian Macao	387		32		18		12		5			454
The Plaza Macao and Four Seasons Hotel Macao	173		10		9		31		1			224
Sands Macao	139		4		7		1		1			152
Ferry Operations and Other	—		—		—		—		30			30
	1,884		187		82		116		65			2,334
Marina Bay Sands	544		102		53		43		25			767
United States:
Las Vegas Operating Properties	113		157		90		—		111			471
Sands Bethlehem(2)	120		4		7		1		5			137
	233		161		97		1		116			608
Intercompany eliminations(1)	—		—		—		—		(63		)	(63		)
Total net revenues	$	2,661	$	450	$	232	$	160	$	143		$	3,646

____________________

(1) Intercompany eliminations include royalties and other intercompany services.

(2) The Company completed the sale of Sands Bethlehem on May 31, 2019.

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LAS VEGAS SANDS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Three Months Ended March 31,
	2020		2019
	(In millions)
Intersegment Revenues
Macao:
The Venetian Macao	$	1	$	1
Ferry Operations and Other	7		6
	8		7
Marina Bay Sands	1		1
Las Vegas Operating Properties(1)	35		55
Total intersegment revenues	$	44	$	63

____________________

(1) Primarily consists of royalties from the Company’s international operations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

	Three Months Ended March 31,
	2020			2019
	(In millions)
Adjusted Property EBITDA
Macao:
The Venetian Macao	$	49		$	361
Sands Cotai Central	—			212
The Parisian Macao	(3		)	163
The Plaza Macao and Four Seasons Hotel Macao	28			85
Sands Macao	(1		)	40
Ferry Operations and Other	(6		)	(3		)
	67			858
Marina Bay Sands	282			423
United States:
Las Vegas Operating Properties	88			138
Sands Bethlehem(1)	—			33
	88			171
Consolidated adjusted property EBITDA(2)	437			1,452
Other Operating Costs and Expenses
Stock-based compensation(3)	(3		)	(3		)
Corporate	(59		)	(152		)