Discontinued Operations

12 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

On February 23, 2022, the Company completed the previously announced sale of the Las Vegas Operations (the "Closing"), to VICI Properties L.P. (“PropCo”) and Pioneer OpCo, LLC (“OpCo”) for an aggregate purchase price of approximately $6.25 billion (the “Las Vegas Sale”). Under the terms of the agreements related to the Las Vegas Sale, OpCo acquired subsidiaries that hold the operating assets and liabilities of the Las Vegas Operations for approximately $1.05 billion in cash, subject to certain post-closing adjustments, and $1.20 billion in seller financing in the form of a six-year term loan credit and security agreement (the “Seller Financing Loan Agreement”) and PropCo acquired subsidiaries that hold the real estate and real estate-related assets of the Las Vegas Operations for approximately $4.0 billion in cash.

Upon the Closing, the Company received approximately $5.05 billion in cash proceeds, before transaction costs and working capital adjustments of $77 million, and recognized a gain on disposal of $3.60 billion, before income tax expense of $750 million, during the year ended December 31, 2022.

As there is no continuing involvement between the Company and the Las Vegas Operations, the Company accounted for the transaction as a sale of a business. The Company concluded the Las Vegas Operations met the criteria for held for sale and discontinued operations beginning in the first quarter of 2021. As a result, the Las Vegas Operations is presented in the accompanying consolidated statements of operations and cash flows as a discontinued operation for all periods presented. The Company reported the operating results and cash flows related to the Las Vegas Operations through February 22, 2022. Current and non-current assets and liabilities of the Las Vegas Operations as of December 31, 2021, are presented in the accompanying consolidated balance sheets as current assets and liabilities held for sale.

Unless otherwise noted, amounts and disclosures throughout these Notes to Consolidated Financial Statements relate to the Company's continuing operations.

Contingent Lease Support Agreement

On February 23, 2022, in connection with the Closing, the Company and OpCo entered into a post-closing contingent lease support agreement (the “Contingent Lease Support Agreement”) pursuant to which, among other things, the Company may be required to make certain payments (“Support Payments”) to OpCo.

The Support Payments are payable on a monthly basis following the Closing through the year ending December 31, 2023, based upon the performance of the Las Vegas Operations relative to certain agreed upon target metrics and subject to quarterly and annual adjustments. The target metrics are measured against a benchmark annual EBITDAR (as defined in the Contingent Lease Support Agreement) of the Las Vegas Operations equal to $426 million for the period beginning on the date of the Closing and ending December 31, 2022 and $500 million for the period beginning January 1, 2023 and ending December 31, 2023. The Company’s payment obligations are subject to a cap equal to $213 million for the period beginning on the date of the Closing and ending December 31, 2022 and $250 million for the period beginning January 1, 2023 and ending December 31, 2023. Each monthly Support Payment is subject to a prorated cap based on the annual cap. No Support Payments were made for the period post-Closing through December 31, 2022. On January 31, 2023, the Company received notice from OpCo

that the Contingent Lease Support Agreement had terminated pursuant to its terms and that neither party would have any further liability or obligation thereunder.

Seller Financing Loan Agreement

At the Closing, the Company, as lender, OpCo, as borrower, the parent company of OpCo (“Holdings”) and certain subsidiaries of OpCo, as guarantors party thereto (collectively, and with Holdings, the “Guarantors” and, together with OpCo in its capacity as borrower, the “Loan Parties”), entered into the Seller Financing Loan Agreement. Refer to "Note 4 — Loan Receivable" for further information.

Las Vegas Operations

The following table represents summarized balance sheet information of assets and liabilities of the discontinued operation:


	December 31, 2021

	(In millions)

Cash and cash equivalents	$	55
Accounts receivable, net of provision for credit losses of $58	126
Inventories	9
Prepaid expenses and other	23
Property and equipment, net	2,864

Other assets, net	226
Total held for sale assets in the balance sheet	$	3,303


Accounts payable	$	24
Construction payables	8
Other accrued liabilities	318
Long-term debt	2
Deferred amounts related to mall sale transactions	338
Other long-term liabilities	131
Total held for sale liabilities in the balance sheet	$	821

The following table represents summarized income statement information of discontinued operations:


	Year Ended December 31,
	2022(1)		2021		2020

	(In millions)
Revenues:
Casino	$	61	$	443	$	228
Rooms	78		454		218
Food and beverage	43		236		126
Convention, retail and other	46		138		100
Net revenues	228		1,271		672
Resort operations expenses	107		626		490
Provision for credit losses	3		13		12
General and administrative	55		342		294
Corporate	—		—		1

Depreciation and amortization	—		25		163
Loss on disposal or impairment of assets	—		6		7
Operating income (loss)	63		259		(295)

Interest expense	(2)		(13)		(13)
Other income (expense)	(3)		1		3

Income (loss) from operations of discontinued operations	58		247		(305)
Gain on disposal of discontinued operations	3,611		—		—
Adjustment to gain on disposal of discontinued operations(2)	(9)		—		—
Income (loss) from discontinued operations, before income tax	3,660		247		(305)
Income tax (expense) benefit	(762)		(54)		62
Net income (loss) from discontinued operations presented in the statement of operations	$	2,898	$	193	$	(243)

Adjusted Property EBITDA	$	63	$	290	$	(124)

__________________________

(1) Includes the Las Vegas Operations financial results for the period from January 1, 2022 through February 22, 2022.

(2) Primarily relates to the finalization of the working capital adjustment pursuant to the terms of the related agreements.

For the 53-day period ended February 22, 2022 and for the year ended December 31, 2021, the Company’s Las Vegas Operations were classified as a discontinued operation held for sale. The Company applied the intraperiod tax allocation rules to allocate the provision for income taxes between continuing operations and discontinued operations using the “with and without” approach. The Company calculated income tax expense from all financial statement components (continuing and discontinued operations), the “with” computation, and compared that to the income tax expense attributable to continuing operations, the “without” computation. The difference between the “with” and “without” computations was allocated to discontinued operations.

The Company’s effective income tax rate from discontinued operations was 20.8% for the year ended December 31, 2022. This compares to a 21.9% effective income tax rate from discontinued operations for the year ended December 31, 2021, which reflects the application of the “with and without” approach consistent with intraperiod tax allocation rules. During the year ended December 31, 2020, the Company’s effective income tax rate from discontinued operations was (20.3)%. The income tax on discontinued operations reflects a 21% corporate income tax rate on the Company’s Las Vegas Operations. The cash income tax expense as if the discontinued operations was a standalone enterprise and a separate taxpayer is $804 million. The Company files a U.S. consolidated income tax return inclusive of the discontinued operations, which allows the income from discontinued operations to utilize net operating loss carryforwards and operating losses from continuing operations, U.S. foreign

tax credits and charitable contribution carryforwards. During 2022, the Company made U.S. cash tax payments inclusive of the gain on sale of the Las Vegas Operations totaling $612 million.