LAS VEGAS SANDS CORP (LVS) FY 2023 MD&A

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 Macao; and the Sands Macao. Our operating segment in Singapore is Marina Bay Sands.

During 2023, we achieved milestones in advancing several of our strategic objectives. We acquired the Nassau Coliseum, which included the right to lease the underlying land, with the intent to obtain a casino license from the State of New York to develop and operate an Integrated Resort. There is no assurance we will be able to obtain such casino license. We commenced work on Phase II of The Londoner Macao, which includes the renovation of the rooms in the Sheraton and Conrad hotel towers, an upgrade of the gaming areas and the addition of new attractions, dining, retail and entertainment offerings. We are nearing completion of renovations in Tower 1 and Tower 2 to provide world-class suites and other luxury amenities at Marina Bay Sands and announced the next phase with the renovation of the Tower 3 hotel rooms into world class suites and other property changes. We welcomed the return to normal operating conditions at our Macao operations with the relaxation of various COVID-19 restrictions beginning in late December 2022.

Macao

From 2020 through the beginning of 2023, our operations in Macao were negatively impacted by the reduction in travel and tourism related to the COVID-19 pandemic. The Macao government's policy regarding the management of COVID-19 and general travel restrictions was relaxed in late December 2022 and early January 2023. Since then, visitation to our Macao Integrated Resorts and operations has improved.

The Macao government announced total visitation from mainland China to Macao increased approximately 273.1% and decreased approximately 31.8%, during the year ended December 31, 2023, as compared to the same period in 2022 and 2019 (pre-pandemic), respectively. The Macao government also announced gross gaming revenue increased approximately 333.8% and decreased approximately 37.4%, during the year ended December 31, 2023, as compared to 2022 and 2019, respectively.

Singapore

From 2020 through early 2022, our operations in Singapore were negatively impacted by the reduction in travel and tourism related to the COVID-19 pandemic. However, the Vaccinated Travel Framework (“VTF”), launched in April 2022, facilitated the resumption of travel and had a positive impact on operations at Marina Bay Sands. During February 2023, all remaining COVID-19 border measures were lifted. Airlift passenger movement has increased with a total of 59 million passengers having passed through Singapore's Changi Airport from January through December 2023, an increase of 83% and a decrease of 14% compared to 2022 and 2019, respectively.

Visitation to Marina Bay Sands continues to improve since the travel restrictions have been lifted. The STB announced total visitation to Singapore increased from approximately 6.3 million in 2022 to 13.6 million for the year ended December 31, 2023, while visitation decreased 28.8% when compared to the same period in 2019.

Summary

We have a strong balance sheet and sufficient liquidity in place, including total unrestricted cash and cash equivalents of $5.11 billion and access to $1.50 billion, $2.49 billion and $446 million of available borrowing capacity from our LVSC Revolving Facility, 2018 SCL Revolving Facility and the 2012 Singapore Revolving Facility, respectively, as of December 31, 2023. We believe we are able to support continuing operations and complete the major construction projects that are underway.

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Key Operating Revenue Measurements

Operating revenues at The Venetian Macao, The Londoner Macao, The Parisian Macao, The Plaza Macao and Four Seasons Macao and Marina Bay Sands 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 3.30% 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, 10.6% and 11.9%, respectively, of our table games play was conducted on a credit basis for the year ended December 31, 2023.

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 government 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.

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Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022

Summary Financial Results

We continued to see positive financial results for the year ended December 31, 2023, due to the lift of COVID-19 restrictions in Macao beginning in late December 2022 and the elimination of most pandemic-related restrictions in Singapore in April 2022. Macao visitation from mainland China increased 273.1% compared to the year ended December 31, 2022 due to relaxed general travel restrictions. Singapore visitation increased 115.8% as compared to the year ended December 31, 2022 due to the elimination of all remaining pandemic restrictions in February 2023 and an 83% increase in airlift passenger movement compared to the year ended December 31, 2022.

Net revenues for the year ended December 31, 2023 were $10.37 billion, compared to $4.11 billion for the year ended December 31, 2022. Operating income was $2.31 billion for the year ended December 31, 2023, compared to an operating loss of $792 million for the year ended December 31, 2022. Net income from continuing operations was $1.43 billion for the year ended December 31, 2023, compared to a net loss of $1.54 billion for the year ended December 31, 2022.

Operating Revenues

Our net revenues consisted of the following:

Consolidated net revenues were $10.37 billion for the year ended December 31, 2023, an increase of $6.26 billion compared to $4.11 billion for the year ended December 31, 2022, primarily driven by an increase of $4.93 billion at our Macao operations. The increase at our Macao operations was due to increased visitation as COVID-19 restrictions were lifted in Macao and the surrounding region in late December 2022 and early January 2023. In addition, an increase of $1.33 billion at Marina Bay Sands was primarily due to increased visitation from the reopening of borders and elimination of all remaining pandemic-related restrictions in February 2023 and an increase in airlift passenger movement in 2023.

Net casino revenues increased $4.90 billion compared to the year ended December 31, 2022. The increase was driven by a $3.89 billion increase at our Macao operations due to increased visitation across our properties resulting in increased table games and slot volumes, partially offset by a decrease in table games win percentages. Casino revenues at Marina Bay Sands increased by $1.0 billion due to increased table games and slot volumes, partially offset by a decrease in slot hold percentage. The lift of COVID-19 restrictions in Macao beginning in late December 2022 and elimination of restrictions in Singapore in February 2023 and an increase in airlift passenger movement in 2023 led to increased visitation and table games and slot volumes.

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The following table summarizes the results of our casino activity:

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In our experience, average win percentages remain fairly consistent when measured over extended periods of time with a significant volume of wagers, but can vary considerably within shorter time periods as a result of the statistical variances associated with games of chance in which large amounts are wagered.

Room revenues increased $735 million compared to the year ended December 31, 2022. The increase was due to increases of $577 million and $158 million at our Macao operations and Marina Bay Sands, respectively. Macao room revenue increased as a result of increased occupancy rates and ADR, driven by increased visitation as pandemic-related restrictions were lifted beginning in December 2022, and the grand opening of The Londoner Macao in May 2023. Marina Bay Sands room revenues increased as a result of increased occupancy rates and ADR due to the elimination of all remaining pandemic-related restrictions in February 2023 and increased airlift passenger movement in Singapore in 2023. Our room revenues were also impacted by the disruption of the renovation associated with the introduction of new and elevated suites and rooms and other amenities throughout 2023.

The following table summarizes the results of our room activity:

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(1)During the years ended December 31, 2023 and 2022, approximately 2,100 rooms were available for occupancy. Of the 2,100 available rooms for the year ended December 31, 2023, approximately 1,250 rooms have been renovated. The completion of the remaining rooms is projected for early 2025 and will ultimately result in 1,850 available rooms.

Food and beverage revenues increased $283 million compared to the year ended December 31, 2022. The increase was due to a $173 million and $110 million at our Macao operations and Marina Bay Sands, respectively, driven by new outlets and increased business volume at existing food and beverage outlets and banquet operations.

Mall revenues increased $187 million compared to the year ended December 31, 2022. The increase was due to a $159 million increase at our Macao operations, primarily driven by an increase in overage rent and a decrease in rent concessions granted to our mall tenants, and a $28 million increase at Marina Bay Sands, driven by increases in minimum rent and overage rent.

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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:

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Note:    This table excludes the results of retail outlets at Sands Macao. As a result of the COVID-19 pandemic, tenants were provided rent concessions during the year ended December 31, 2022. Base rent per square foot presented above excludes the impact of these rent concessions.

(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.

Convention, retail, and other revenues increased $162 million compared to the year ended December 31, 2022. The increase was due to increases of $127 million and $35 million at our Macao operations and Marina Bay Sands, respectively. Increases at our Macao operations were primarily driven by increases of $57 million in ferry operations due to the resumption of ferry services in January 2023, $31 million in entertainment revenue, $16 million in limo revenue, $5 million in retail revenue, $4 million in convention revenue and $14 million in other

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operating revenues (e.g., Eiffel Tower, spa, and gondola rides). Increases at Marina Bay Sands were primarily driven by increases of $18 million in convention revenue, $2 million in entertainment revenue and $15 million in other operating revenues (e.g. SkyPark, art/science museum).

Operating Expenses

Our operating expenses consisted of the following:

Operating expenses were $8.06 billion for the year ended December 31, 2023, an increase of $3.16 billion compared to $4.90 billion for the year ended December 31, 2022. The increase was primarily driven by a $2.36 billion increase in casino expenses.

Casino expenses increased $2.36 billion compared to the year ended December 31, 2022. The increase was primarily attributable to increases of $1.90 billion and $232 million in gaming taxes at our Macao operations and Marina Bay Sands, respectively, consistent with increased casino revenues. In addition, we had increases in gaming tax rates of 1% in Macao and 3% in Singapore, and a 1% increase in value added tax in Singapore.

Room expenses increased $110 million compared to the year ended December 31, 2022. The increase was due to increases of $83 million and $27 million at our Macao operations and Marina Bay Sands, respectively, consistent with increased occupancy at both our Macao operations and Marina Bay Sands. Additionally, the increase was also due to higher costs associated with the renovated and expanded suites and rooms at The Londoner Macao and the new and elevated suites and rooms introduced at Marina Bay Sands during the year.

Food and beverage expenses increased $162 million compared to the year ended December 31, 2022. The increase was due to increases of $85 million and $77 million at Marina Bay Sands and our Macao operations, respectively, driven by increased business volume at food outlets and banquets and consistent with increased property visitation.

Convention, retail and other expenses increased $98 million compared to the year ended December 31, 2022, primarily driven by increases of $82 million and $16 million at our Macao operations and Marina Bay Sands, respectively. The increases were primarily due to increases of $36 million in ferry operation expenses due to the resumption of ferry services in January 2023, $29 million in entertainment expenses due to increased number of events held in 2023, $15 million in limo expenses, $7 million in convention expenses, $3 million in retail expenses and $8 million in other operating expenses (e.g., spa and valet).

The provision for credit losses was $4 million for the year ended December 31, 2023, compared to $15 million for the year ended December 31, 2022. The $11 million decrease was primarily driven by decreases of $8 million and $3 million at our Macao operations and Marina Bay Sands, respectively. The decreases were primarily driven

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by collections of receivables that were fully reserved. The amount of this provision can vary over short periods of time because of factors specific to the patrons who owe us money from gaming activities. 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 increased $171 million compared to the year ended December 31, 2022. The increase was primarily driven by increases of $95 million and $76 million at Marina Bay Sands and our Macao operations, respectively, driven by increases in payroll and marketing costs, utilities and property taxes.

Pre-opening expenses represent personnel and other costs incurred prior to the opening of new ventures, which are expensed as incurred. The majority of pre-opening expenses for the year ended December 31, 2023 related to the grand opening of The Londoner Macao and new guest rooms at Marina Bay Sands. Pre-opening expenses for the year ended December 31, 2022 related to Marina Bay Sands.

Development expenses were $205 million for the year ended December 31, 2023, compared to $143 million for the year ended December 31, 2022. During the year ended December 31, 2023, the costs were associated with our evaluation and pursuit of new business opportunities, primarily $93 million in New York and Texas, and $109 million for our digital gaming related efforts. Development costs are expensed as incurred.

Depreciation and amortization increased $172 million compared to the year ended December 31, 2022. The increase was primarily due to $109 million increase at Marina Bay Sands, as a result of the completion of renovations that were placed into service and a $60 million increase at our Macao operations, primarily as a result of accelerated depreciation related to the second phase of the renovations at The Londoner Macao and amortization of the intangible asset related to the Macao gaming concession.

Loss on disposal or impairment of assets was $27 million for the year ended December 31, 2023, compared to $9 million for the year ended December 31, 2022. The losses incurred for the year ended December 31, 2023, were primarily due to $13 million in demolition costs related to renovations at Marina Bay Sands and $12 million in disposals and demolition costs at our Macao operations. The losses incurred for the year ended December 31, 2022 were primarily due to $4 million in asset disposals related to aircraft parts and $3 million in asset disposal and demolition costs, primarily at The Londoner Macao, The Venetian Macao, Sands Macao and our corporate offices.

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 20 — Segment Information” for discussion of our operating segments):

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N/M - Not meaningful

(1)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 from

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continuing operations before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal or impairment of assets, interest, other income or expense, gain or loss on modification or early retirement of debt and income taxes. Consolidated adjusted property EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. In particular, management utilizes consolidated adjusted property EBITDA to compare the operating profitability of our operations with those of our competitors, as well as a basis for determining certain incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. We have significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal repayments and income taxes, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same manner. As a result, our presentation of consolidated adjusted property EBITDA may not be directly comparable to similarly titled measures presented by other companies.

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a)During the years ended December 31, 2023 and 2022, the Company recorded stock-based compensation expense of $72 million and $70 million, respectively, of which $43 million and $37 million, respectively, was included in corporate expense in “Part II — Item 8 — Financial Statements and Supplementary Data — Consolidated Statements of Operations”.

Adjusted property EBITDA at our Macao operations increased $2.55 billion compared to the year ended December 31, 2022. The increase was primarily due to increased casino and room revenues, driven by increased visitation at our properties due to the lift of COVID-19 restrictions in late December 2022 and early January 2023.

Adjusted property EBITDA at Marina Bay Sands increased $805 million compared to the year ended December 31, 2022. The increase was primarily due to increased revenues across our operations driven by the opening of borders and elimination of all remaining pandemic-related restrictions in February 2023 and increased airlift passenger movement in Singapore in 2023, as well as introducing new and elevated suites and rooms and other amenities at Marina Bay Sands during 2023.

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Interest Expense

The following table summarizes information related to interest expense:

Interest cost increased $119 million compared to the year ended December 31, 2022, resulting primarily from increases in our weighted average interest rate, partially offset by decreases in our weighted average total debt balance. The weighted average interest rate increased primarily due to the increase in the underlying benchmark rates on our SCL Revolving Facility and our Singapore Credit Facility, and increased interest rates on the SCL senior notes in connection with the credit rating downgrades in February and June 2022, partially offset by the credit rating upgrade in July 2023 (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 12 — Long-Term Debt”). The weighted average debt balance decreased primarily due to payments made on the SCL revolver totaling $1.95 billion throughout the year ended December 31, 2023. We also had $31 million in imputed interest expense on the VML Concession financial liability in 2023 (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Goodwill and Intangible Assets, Net”).

Other Factors Affecting Earnings

Interest income was $288 million for the year ended December 31, 2023, compared to $116 million for the year ended December 31, 2022. Interest income for the year ended December 31, 2023, was primarily attributable to $258 million in interest income on money market funds, bank deposits and treasury bills driven by higher interest rates. Our average interest rates on cash and cash equivalents for the year ended December 31, 2023 was 4.8% compared to 1.7% for the year ended December 31, 2022. We also had $29 million in interest income on the seller financing loan in connection with the sale of the Las Vegas Operating Properties, which increased $8 million compared to the year ended December 31, 2022 due to an increase in the interest rate as the buyer elected payment-in-kind for the interest payments effective July 1, 2022 and an increase in the period in which the loan balance was outstanding in 2023.

Other expense was $8 million for the year ended December 31, 2023, compared to $9 million during the year ended December 31, 2022. Other expense for the year ended December 31, 2023, was primarily attributable to foreign currency transaction losses driven by the U.S. dollar-denominated debt held by SCL, partially offset by foreign currency transaction gains driven by U.S dollar-denominated intercompany debt held by MBS.

Our income tax expense was $344 million on income before income taxes of $1.78 billion for the year ended December 31, 2023, resulting in a 19.4% effective income tax rate. This compares to an 11.1% effective income tax rate for the year ended December 31, 2022. The income tax expense for the year ended December 31, 2023, reflects a 17% statutory tax rate on our Singapore operations and a 21% corporate income tax rate on our U.S. operations.

Our operations in Macao are subject to a 12% statutory income tax rate, but in connection with the 35% gaming tax, VML and its peers received an income tax exemption on gaming operations through December 31, 2022. On February 5, 2024, the Macao government provided notice that VML and its peers would continue to receive this exemption for the period January 1, 2023 through December 31, 2027. Additionally, we entered into a shareholder dividend tax agreement with the Macao government in April 2019, effective through June 26, 2022, providing an annual payment as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits. We are in discussions for a new shareholder dividend tax agreement with the Macao government, which would commence effective as of January 1, 2023.

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The net income attributable to our noncontrolling interests from continuing operations was $210 million for the year ended December 31, 2023, compared to a net loss of $475 million for the year ended December 31, 2022. These amounts were 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, 2023 and 2022:

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Note:    This table excludes the results of our mall operations at Sands Macao.

(1)    Minimum rents include base rents and straight-line adjustments of base rents.

(2)    Commercial property that generates rental income is exempt from property tax for the first six years for newly constructed buildings in Cotai. If the property also qualifies for Tourism Utility Status, the property tax exemption can be extended to twelve years with effect from the opening of the property. To date, The Venetian Macao, The Plaza Macao and Four Seasons Macao, The Londoner Macao and The Parisian Macao have obtained an extended exemption. The exemption for The Venetian Macao and The Plaza Macao and Four Seasons 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.

(3)     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.

(4)    Rent concessions were provided to tenants as a result of the COVID-19 pandemic and the related impact on mall operations.

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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, 2022 Compared to the Year Ended December 31, 2021

A discussion of changes in our results of operations between 2022 and 2021 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, 2022 Compared to the Year Ended December 31, 2021” of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Liquidity and Capital Resources

Cash Flows — Summary

Our cash flows consisted of the following:

A discussion of changes in cash flows between 2022 and 2021 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, 2022.

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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 and to a lesser extent as a trade receivable. Operating cash flows are generally affected by changes in operating income, accounts receivable, gaming related liabilities and interest payments. For the year ended December 31, 2023, cash generated from operations was $3.23 billion, an increase of $4.17 billion compared to cash used in operating activities of $944 million for the year ended December 31, 2022. The increase in cash generated from operations was primarily due to our Macao and Singapore operations generating increased operating income driven by the acceleration of visitation and the elimination of all remaining pandemic-related restrictions in Singapore in February 2023, and in Macao in late December 2022 and early January 2023. We also had increases in cash related to changes in working capital due to our gaming operations.

Cash Flows — Investing Activities

Capital expenditures for the year ended December 31, 2023, totaled $1.02 billion. Included in this amount was $584 million at Marina Bay Sands in Singapore, primarily due to Towers 1 and 2 room renovations. Capital expenditures were $233 million for construction and development activities in Macao, which consisted of $132 million for The Londoner Macao, $71 million for The Venetian Macao, $15 million for The Plaza Macao and Four Seasons Macao, $9 million for The Parisian Macao and $6 million for Sands Macao. Additionally, we funded $200 million for corporate and other.

Included in net cash flows from investing activities was a payment of $221 million related to the purchase of the Nassau Coliseum.

Capital expenditures for the year ended December 31, 2022, totaled $651 million. Included in this amount was $348 million at Marina Bay Sands in Singapore, primarily due to Towers 1 and 2 room renovations. Capital expenditures were $243 million for construction and development activities in Macao, which consisted of $175 million for The Londoner Macao, $52 million for The Venetian Macao, $9 million for The Plaza Macao and Four Seasons Macao, $4 million for Sands Macao and $3 million for The Parisian Macao. Additionally, we funded $60 million for corporate and other.

Cash Flows — Financing Activities

Net cash flows utilized for financing activities were $3.19 billion for the year ended December 31, 2023. There were $2.07 billion in repayments on long-term debt, primarily related to the repayment on the SCL revolving facility of $1.95 billion. We also utilized $505 million for common stock repurchases and $305 million for dividend payments related to our stockholder return of capital program, and funded $250 million for a forward contract to purchase common stock of SCL to increase our equity ownership in SCL. Lastly, we paid $32 million in deferred offering costs, primarily related to the amendment and restatement of the 2018 SCL Credit Facility, and $29 million in other financial liability payments.

Net cash flows generated from financing activities were $6.15 billion for the year ended December 31, 2022, which was primarily attributable to net proceeds from the sale of the Las Vegas Operating Properties of $4.89 billion and $1.20 billion from the drawdown of our SCL revolving facility. These items were partially offset by $66 million in repayments on long-term debt and $11 million in deferred offering costs relating to obtaining LVSC Revolving Facility lender consents to consummate the Las Vegas Sale and the covenant waiver obtained on the 2018 SCL Credit Facility.

As of December 31, 2023, we had $4.44 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 12 — Long-Term Debt”) and operating cash flows.

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Our U.S., SCL and Singapore credit facilities, as amended, contain various financial covenants, which include maintaining a maximum leverage ratio, as defined per the respective facility agreements. As of December 31, 2023, our U.S. and Singapore leverage ratios, as defined per the respective credit facility agreements, were 3.3x and 1.7x, respectively, compared to the maximum leverage ratios allowed of 4.0x and 4.5x, respectively, while our SCL credit facility had a covenant waiver through January 1, 2024, as mentioned below. If we are unable to maintain compliance with the financial covenants under these credit facilities, we would be in default under the respective credit facilities.

On May 11, 2023, SCL entered into an amended and restated facility agreement (the “A&R Facility Agreement”) with respect to certain provisions of the 2018 SCL Credit Facility, pursuant to which lenders have (a) extended the termination date for the Hong Kong Dollar (“HKD”) commitments and U.S. dollar commitments of the lenders that consented to the waivers and amendments in the A&R Facility Agreement (the “Extending Lenders”) from July 31, 2023 to July 31, 2025; (b) extended to (and including) January 1, 2024, the waiver period for the requirement for SCL to comply with the requirements that SCL ensure (i) the consolidated leverage ratio does not exceed 4.0x and (ii) the consolidated interest coverage ratio is not less than 2.5x; (c) amended the definition of consolidated total debt such that it excludes any financial indebtedness that is subordinated and subject in right of payment to the prior payment in full of the A&R Facility Agreement (including the $1.0 billion subordinated unsecured term loan facility made available by the Company to SCL); (d) amended the maximum permitted consolidated leverage ratio as of the last day of each of the financial quarters ending March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024, and subsequent financial quarters to be 6.25x, 5.5x, 5.0x, 4.5x, and 4.0x respectively; and (e) extended to (and including) January 1, 2025 the period during which SCL’s ability to declare or make any dividend payment or similar distribution is restricted if at such time (x) the Total Commitments (as defined in the A&R Facility Agreement) exceed $2.0 billion by SCL’s exercise of the option to increase the Total Commitments by an aggregate amount of up to $1.0 billion and (y) the consolidated leverage ratio is greater than 4.0x, unless, after giving effect to such payment, the sum of (i) the aggregate amount of cash and cash equivalents of SCL on such date and (ii) the aggregate amount of the undrawn facility under the A&R Facility Agreement and unused commitments under other credit facilities of SCL is greater than $2.0 billion. Pursuant to the A&R Facility Agreement, SCL paid a customary fee to the Extending Lenders that consented. The amendments with respect to the extended commitments took effect on July 31, 2023.

We held unrestricted cash and cash equivalents of $5.11 billion and restricted cash of $124 million as of December 31, 2023, of which approximately $2.20 billion of the unrestricted amount is held by non-U.S. subsidiaries. Of the $2.20 billion, approximately $1.80 billion is available to be repatriated, either in the form of dividends or via intercompany loans or advances, to the U.S., subject to levels of earnings, cash flow generated from gaming operations and various other factors, including dividend requirements to third-party public stockholders in the case of funds being repatriated from SCL, compliance with certain local statutes, laws and regulations currently applicable to our subsidiaries and restrictions in connection with their contractual arrangements. 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.

We believe the cash on hand and cash flow generated from operations, as well as the $4.44 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, 2023) under the 2012 Singapore Delayed Draw Term Facility, as of December 31, 2023 (only available for draws after the construction cost estimate and construction schedule for the MBS Expansion Project have been delivered to the lenders), will be sufficient to maintain compliance with the financial covenants of our credit facilities and fund our working capital needs, committed and planned capital expenditures, development opportunities, debt obligations and dividend commitments, as well as meet our commitments under the Macao Concession. 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.

In July 2023, we announced the resumption of our return of capital program. On August 16, 2023 and November 15, 2023, we paid a quarterly dividend of $0.20 per common share as part of a regular cash dividend program and, for the year ended December 31, 2023, we recorded $305 million as a distribution against retained earnings. In January 2024, our Board of Directors declared a quarterly dividend of $0.20 per common share (a total estimated to be approximately $151 million) to be paid on February 14, 2024, to stockholders of record on

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February 6, 2024. We expect this level of dividend to continue quarterly through the remainder of 2024. Our Board of Directors will continue to assess the level of appropriateness of any cash dividends.

Share Repurchase Program

On October 16, 2023, our Board of Directors authorized increasing the remaining share repurchase amount under our existing share repurchase program of $916 million to $2.0 billion and extending the expiration date from November 2024 to November 3, 2025. During the year ended December 31, 2023, we repurchased 11,121,497 shares of our common stock for $510 million (including commissions and $5 million in excise tax) under our current program. All share repurchases of our common stock have been recorded as treasury stock.

We have approximately $1.50 billion remaining under our authorized share repurchase program. 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, 2023:

_______________________

(1)As of December 31, 2023, we had a $105 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 12 — Long-Term Debt” for further details on these financing transactions and “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 16 — Leases” for further details on finance leases.

(3)Other consists of finance leases, including imputed interest, and other financed purchased obligations, including the related interest.

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(4)Based on the 1-month rate as of December 31, 2023, Secured Overnight Financing Rate (“SOFR”) of 5.40%, Hong Kong Inter-Bank Offer Rate (“HIBOR”) of 5.27% and Singapore Swap Offer Rate (“SOR”) of 3.62%, plus the applicable interest rate spread in accordance with the respective debt agreements.

(5)In addition to the amounts listed in the table above, under the Macao Concession, we have committed to spend 30.24 billion patacas (approximately $3.76 billion at exchange rates in effect on December 31, 2023) through 2032 on both capital and operating projects, including 27.80 billion patacas (approximately $3.45 billion at exchange rates in effect on December 31, 2023) in non-gaming projects. As Macao's annual gross gaming revenue amounted to 183.06 billion patacas (approximately $22.74 billion at exchange rates in effect on December 31, 2023) in 2023, we are required to invest, or cause to be invested, an additional 5.56 billion patacas (approximately $691 million at exchange rates in effect on December 31, 2023) in non-gaming investment projects by December 2032. As the exact timing of this spend has not been finalized, these amounts have not been included in the table above.

We are also required to pay a 35% gross gaming revenue special gaming tax and a 5% gross gaming revenue contribution in Macao, which amounts we pay are variable in nature. Under the Concession, however, we are obligated to pay a special annual gaming premium if the average of the gross gaming revenues of our gaming tables and our electrical or mechanical gaming machines, including slot machines, is lower than a certain minimum amount determined by the Macao government; such special premium being the difference between the gaming tax based on the actual gross gaming revenues and that of the specified minimum amount. Based on the maximum number of gaming tables and gaming machines we are currently authorized to operate, if the monthly special gaming taxes paid during the year aggregates to less than 4.50 billion patacas (approximately $560 million at exchange rates in effect on December 31, 2023), we would be required to pay the difference as the special annual gaming premium.

(6)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 (which is at the maximum number of tables and machines currently allowed by the Macao government) in operation as of January 1, 2023, the annual premium payable to the Macao government is approximately $40 million for the years ending December 31, 2024 through December 31, 2028, respectively, and $158 million in aggregate thereafter through the termination of the Concession in December 2032.

(7)Under the Handover Record, we are required to make annual payments of 750 patacas per square meter for the first three years and 2,500 patacas per square meter for the following seven years (approximately $93 and $311, respectively, at exchange rates in effect on December 31, 2023). The annual payment of 750 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years two and three and the annual payment of 2,500 patacas per square meter will be adjusted with the Macao average price index of the corresponding preceding year for years five through ten.

(8)We are party to certain operating leases for real estate, which primarily include $290 million related to long-term land leases in Macao with an anticipated lease term of 50 years, $148 million related to a long-term land lease in New York with a 26-year lease term, $16 million related to a long-term land lease in Las Vegas with a 40-year lease term, and $20 million related to office space in Singapore with a 5-year lease term. See “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 16 — Leases” for further details on operating leases.

(9)Mall deposits consist of refundable security deposits received from mall tenants.

(10)Primarily consists of all other non-cancellable contractual obligations and primarily relates to certain hotel management and service agreements, as described below. 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. Some of our hotel properties operate pursuant to management agreements with various experienced third-party hotel operators (management companies), whereby the management company controls the day-to-day operations of each of these hotels, and we are granted limited approval rights with respect to certain of the management company’s actions. The non-cancelable period of our management agreements ranges from 14 to 40 years with various extension provisions and some with early termination options. Each management company receives a base management fee, generally a percentage of revenue as defined. There are also monthly fees for certain support services and some also include incentive fees based on attaining certain financial thresholds. Additionally, the Company's non-cancelable contractual obligations also include agreements with certain celebrities and professional sports leagues and teams for the hosting of events, advertising, marketing, promotional and sponsorship opportunities in order to promote the Company’s brand and services.

Off-Balance Sheet Arrangements

We have not entered into any transactions with special purpose entities, nor have we engaged in any derivative transactions other than foreign currency swaps. Refer to “Item 8 — Financial Statements and Supplementary Data

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— Notes to Consolidated Financial Statements — Note 11 — Derivative Instruments” for outstanding foreign currency swaps as of December 31, 2023.

Restrictions on Distributions

We are a parent company with limited business operations. Our main asset is the stock and ownership 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 of our assets without prior approval of the lenders or noteholders.

Under the Concession, although not a restriction, we have to provide a five-day prior notification to the Macao government for any major financial decisions exceeding 10% of the share capital of VML.

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,” “remains,” “positions” 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:

•our ability to maintain our concession in Macao and gaming license in Singapore;

•our ability to invest in future growth opportunities, or attempt to expand our business in new markets and new ventures;

•the ability to execute our previously announced capital expenditure programs, and produce future returns;

•general economic and business conditions 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 and Singapore;

•the extensive regulations to which we are subject and the costs of compliance or failure to comply with such regulations;

•new developments and construction projects at our existing properties (for example, development at our Cotai Strip properties and the MBS Expansion Project);

•regulatory policies in China or other countries in which our patrons 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 possibility that the laws and regulations of mainland China become applicable to our operations in Macao and Hong Kong;

•the possibility that economic, political and legal developments in Macao adversely affect our Macao operations, or that there is a change in the manner in which regulatory oversight is conducted in Macao;

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•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, and the possibility of increased expense as a result;

•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 that may also affect our ability to employ imported managers or labor from other countries;

•our dependence upon properties primarily in Macao and Singapore for all of our cash flow and the ability of our subsidiaries to make distribution payments to us;

•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;

•the ability of our insurance coverage to cover all possible losses that our properties could suffer and the potential for our insurance costs to increase in the future;

•our ability to collect gaming receivables from our credit players;

•the collectability of our outstanding loan receivable;

•our dependence on chance and theoretical win rates;

•fraud and cheating that could result in losses in our gaming operations and reputational harm;

•our ability to establish and protect our intellectual property rights;

•reputational risk related to the license of certain of our trademarks;

•the possibility that our securities may be prohibited from being traded in the U.S. securities market under the Holding Foreign Companies Accountable Act;

•conflicts of interest that arise because certain of our directors and officers are also directors and officers 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, 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 and Singapore as convention and trade show destinations;

•new taxes, changes to existing tax rates or proposed changes in tax legislation;

•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;

•the completion of infrastructure projects in Macao;

•limitations on the transfers of cash to and from our subsidiaries, limitations of the pataca exchange markets and restrictions on the export of the renminbi;

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•the outcome of any ongoing and future litigation; and

•potential negative impacts from environmental, social and governance and sustainability matters.

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.

Investors and others should note we announce material financial information using our investor relations website (https://investor.sands.com), our company website, SEC filings, investor events, news and earnings releases, public conference calls and webcasts. We use these channels to communicate with our investors and the public about our company, our products and services, and other issues.

In addition, we post certain information regarding SCL, a subsidiary of Las Vegas Sands Corp. with ordinary shares listed on The Stock Exchange of Hong Kong Limited, from time to time on our company website and our investor relations website. It is possible the information we post regarding SCL could be deemed to be material information.

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 and estimates 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 in our evaluation of the adequacy of the recorded reserves.

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 10.6% and 11.9% of table games play at our Macao properties and Marina Bay Sands, respectively, during the year ended December 31, 2023. Our provision for casino credit losses was 40.2% and 61.6% of gross casino receivables as of December 31, 2023 and 2022, respectively. 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.

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Property and Equipment

As of December 31, 2023, we had net property and equipment of $11.44 billion, representing 52.5% 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.

Gaming Assets under the Macao Concession

As we will continue to operate the Gaming Assets, as defined in “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 7 — Property and Equipment, Net,” in the same manner as under the previous subconcession, obtain substantially all of the economic benefits and bear all of the risks arising from the use of these assets, as well as assuming VML will be successful in being awarded a new concession upon expiry of the current concession, we will continue to recognize these Gaming Assets as property and equipment over their remaining estimated useful lives.

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 exemption from Macao's corporate income tax on profits generated by the operation of casino games of chance for the period of January 1, 2019 through June 26, 2022. In September 2022, we received an additional extension of this exemption for the period June 27, 2022 through December 31, 2022. On February 5, 2024, the Macao government provided notice that VML and its peers would continue to receive this exemption for the period January 1, 2023 through December 31, 2027. We entered into an agreement with the Macao government in April 2019, effective through June 26, 2022, providing for payments as a substitution for a 12% tax otherwise due from VML shareholders on dividend distributions paid from VML gaming profits, namely a payment of 38 million patacas (approximately $5 million at exchange rates in effect on December 31, 2023) for 2021 and a payment of 18 million patacas (approximately $2 million at exchange rates in effect on December 31, 2023) for the period between January 1, 2022 through June 26, 2022. We are in discussions for a new shareholder dividend tax agreement with the Macao

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government, which would commence effective as of January 1, 2023. The effective income tax rate for the year ended December 31, 2023, reflects a continuation of the exemption from Macao's corporate income tax on profits generated by the operation of casino games of chance and a new shareholder dividend tax agreement.

Accounting standards regarding income taxes require a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is “more-likely-than-not” such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a “more-likely-than-not” realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring and tax planning strategies.

We recorded a valuation allowance on the net deferred tax assets of certain foreign jurisdictions of $394 million and $475 million as of December 31, 2023 and 2022, respectively, and a valuation allowance on certain U.S. foreign tax credit carryforwards of $3.49 billion and $3.61 billion as of December 31, 2023 and 2022, respectively. 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 examination. We recorded unrecognized tax benefits of $141 million and $136 million as of December 31, 2023 and 2022. 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 2019 in Macao and Singapore and tax years 2010 through 2015 and 2020 through 2022 in the U.S.

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.”