Form 10-Q
UNITED STATES SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| |
|
|
| þ |
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2010
| |
|
|
| o |
|
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
(State or other jurisdiction of
incorporation or organization)
|
|
27-0099920
(I.R.S. Employer
Identification No.) |
| |
|
|
3355 Las Vegas Boulevard South
Las Vegas, Nevada
(Address of principal executive offices)
|
|
89109
(Zip Code) |
(702) 414-1000
(Registrant’s telephone number, including area code)
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 þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
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 and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
| |
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|
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| Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
(Do not check if a smaller reporting company)
|
|
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ
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 30, 2010 |
| Common Stock ($0.001 par value)
|
|
660,337,124 shares |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Table of Contents
2
|
|
|
| ITEM 1 |
|
— FINANCIAL STATEMENTS |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2010 |
|
|
2009 |
|
| |
|
(In thousands, except share |
|
| |
|
and per share data) |
|
| |
|
(Unaudited) |
|
ASSETS
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,751,845 |
|
|
$ |
4,955,416 |
|
Restricted cash |
|
|
297,329 |
|
|
|
118,641 |
|
Investments |
|
|
173,868 |
|
|
|
— |
|
Accounts receivable, net |
|
|
436,074 |
|
|
|
460,766 |
|
Inventories |
|
|
24,922 |
|
|
|
27,073 |
|
Deferred income taxes, net |
|
|
28,776 |
|
|
|
26,442 |
|
Prepaid expenses and other |
|
|
43,744 |
|
|
|
35,336 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
4,756,558 |
|
|
|
5,623,674 |
|
Property and equipment, net |
|
|
13,736,138 |
|
|
|
13,351,271 |
|
Deferred financing costs, net |
|
|
128,855 |
|
|
|
138,454 |
|
Restricted cash |
|
|
4,245 |
|
|
|
— |
|
Deferred income taxes, net |
|
|
22,989 |
|
|
|
22,219 |
|
Leasehold interests in land, net |
|
|
1,217,995 |
|
|
|
1,209,820 |
|
Other assets, net |
|
|
226,678 |
|
|
|
226,668 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
20,093,458 |
|
|
$ |
20,572,106 |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
86,829 |
|
|
$ |
82,695 |
|
Construction payables |
|
|
773,252 |
|
|
|
778,771 |
|
Accrued interest payable |
|
|
16,592 |
|
|
|
18,332 |
|
Other accrued liabilities |
|
|
825,651 |
|
|
|
786,192 |
|
Income taxes payable |
|
|
7,033 |
|
|
|
— |
|
Current maturities of long-term debt |
|
|
286,819 |
|
|
|
173,315 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
1,996,176 |
|
|
|
1,839,305 |
|
Other long-term liabilities |
|
|
87,404 |
|
|
|
81,959 |
|
Deferred proceeds from sale of The Shoppes at The Palazzo |
|
|
243,928 |
|
|
|
243,928 |
|
Deferred gain on sale of The Grand Canal Shoppes |
|
|
53,406 |
|
|
|
54,272 |
|
Deferred rent from mall transactions |
|
|
148,650 |
|
|
|
149,074 |
|
Long-term debt |
|
|
10,174,574 |
|
|
|
10,852,147 |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
12,704,138 |
|
|
|
13,220,685 |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, issued to Principal
Stockholder’s family, 5,250,000 shares issued and
outstanding, after allocation of fair value of attached
warrants, aggregate redemption/liquidation value of
$577,500 |
|
|
433,970 |
|
|
|
410,834 |
|
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value, 50,000,000 shares
authorized, 4,089,999 shares issued and outstanding
with warrants to purchase up to 68,166,786 shares of
common stock |
|
|
234,607 |
|
|
|
234,607 |
|
Common stock, $0.001 par value, 1,000,000,000 shares
authorized, 660,337,124 and 660,322,749 shares issued
and outstanding |
|
|
660 |
|
|
|
660 |
|
Capital in excess of par value |
|
|
5,129,757 |
|
|
|
5,114,851 |
|
Accumulated other comprehensive income |
|
|
25,871 |
|
|
|
26,748 |
|
Retained earnings |
|
|
444,928 |
|
|
|
473,833 |
|
|
|
|
|
|
|
|
Total Las Vegas Sands Corp. stockholders’ equity |
|
|
5,835,823 |
|
|
|
5,850,699 |
|
Noncontrolling interests |
|
|
1,119,527 |
|
|
|
1,089,888 |
|
|
|
|
|
|
|
|
Total equity |
|
|
6,955,350 |
|
|
|
6,940,587 |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
20,093,458 |
|
|
$ |
20,572,106 |
|
|
|
|
|
|
|
|
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
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|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
| |
|
(In thousands, except share |
|
| |
|
and per share data) |
|
| |
|
(Unaudited) |
|
Revenues: |
|
|
|
|
|
|
|
|
Casino |
|
$ |
1,061,770 |
|
|
$ |
797,925 |
|
Rooms |
|
|
180,782 |
|
|
|
174,388 |
|
Food and beverage |
|
|
92,079 |
|
|
|
87,308 |
|
Convention, retail and other |
|
|
108,215 |
|
|
|
113,487 |
|
|
|
|
|
|
|
|
|
|
|
1,442,846 |
|
|
|
1,173,108 |
|
Less-promotional allowances |
|
|
(107,958 |
) |
|
|
(94,046 |
) |
|
|
|
|
|
|
|
Net revenues |
|
|
1,334,888 |
|
|
|
1,079,062 |
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Casino |
|
|
694,635 |
|
|
|
548,897 |
|
Rooms |
|
|
29,654 |
|
|
|
33,767 |
|
Food and beverage |
|
|
44,303 |
|
|
|
42,642 |
|
Convention, retail and other |
|
|
58,404 |
|
|
|
59,243 |
|
Provision for doubtful accounts |
|
|
16,442 |
|
|
|
21,010 |
|
General and administrative |
|
|
126,259 |
|
|
|
121,303 |
|
Corporate expense |
|
|
23,476 |
|
|
|
23,424 |
|
Rental expense |
|
|
8,698 |
|
|
|
7,929 |
|
Pre-opening expense |
|
|
37,459 |
|
|
|
44,934 |
|
Development expense |
|
|
157 |
|
|
|
254 |
|
Depreciation and amortization |
|
|
153,089 |
|
|
|
139,249 |
|
Loss on disposal of assets |
|
|
492 |
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
1,193,068 |
|
|
|
1,042,783 |
|
|
|
|
|
|
|
|
Operating income |
|
|
141,820 |
|
|
|
36,279 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
Interest income |
|
|
1,633 |
|
|
|
5,549 |
|
Interest expense, net of amounts capitalized |
|
|
(78,165 |
) |
|
|
(71,118 |
) |
Other expense |
|
|
(6,448 |
) |
|
|
(5,743 |
) |
Gain on early retirement of debt |
|
|
2,176 |
|
|
|
— |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
61,016 |
|
|
|
(35,033 |
) |
Income tax expense |
|
|
(13,202 |
) |
|
|
(813 |
) |
|
|
|
|
|
|
|
Net income (loss) |
|
|
47,814 |
|
|
|
(35,846 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
(30,233 |
) |
|
|
1,240 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Las Vegas Sands Corp. |
|
|
17,581 |
|
|
|
(34,606 |
) |
Preferred stock dividends |
|
|
(23,350 |
) |
|
|
(23,154 |
) |
Accretion to redemption value of preferred stock issued to Principal Stockholder’s family |
|
|
(23,136 |
) |
|
|
(23,136 |
) |
|
|
|
|
|
|
|
Net loss attributable to common stockholders |
|
$ |
(28,905 |
) |
|
$ |
(80,896 |
) |
|
|
|
|
|
|
|
Basic and diluted loss per share |
|
$ |
(0.04 |
) |
|
$ |
(0.12 |
) |
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding |
|
|
660,280,641 |
|
|
|
647,802,932 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity and Comprehensive Income (Loss)
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Las Vegas Sands Corp. Stockholders’ Equity |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital in |
|
|
Comprehensive |
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
| |
|
Preferred |
|
|
Common |
|
|
Treasury |
|
|
Excess of |
|
|
Income |
|
|
Retained |
|
|
Comprehensive |
|
|
Noncontrolling |
|
|
|
|
| |
|
Stock |
|
|
Stock |
|
|
Stock |
|
|
Par Value |
|
|
(Loss) |
|
|
Earnings |
|
|
Income (Loss) |
|
|
Interests |
|
|
Total |
|
| |
|
(In thousands) |
|
| |
|
(Unaudited) |
|
Balance at January 1, 2009 |
|
$ |
298,066 |
|
|
$ |
642 |
|
|
$ |
— |
|
|
$ |
3,090,292 |
|
|
$ |
17,554 |
|
|
$ |
1,015,554 |
|
|
|
|
|
|
$ |
3,073 |
|
|
$ |
4,425,181 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(34,606 |
) |
|
|
(34,606 |
) |
|
|
(1,240 |
) |
|
|
(35,846 |
) |
Currency translation
adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(21,026 |
) |
|
|
— |
|
|
|
(21,026 |
) |
|
|
— |
|
|
|
(21,026 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(55,632 |
) |
|
|
(1,240 |
) |
|
|
(56,872 |
) |
Tax shortfall from
stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,216 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(1,216 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,223 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
12,223 |
|
Purchase of treasury stock |
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(13 |
) |
Warrants exercised and
settled with preferred
stock |
|
|
(47,271 |
) |
|
|
14 |
|
|
|
— |
|
|
|
47,257 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
Contribution from
noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
41 |
|
|
|
41 |
|
Dividends declared, net
of amounts previously
accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(17,619 |
) |
|
|
|
|
|
|
— |
|
|
|
(17,619 |
) |
Accumulated but
undeclared dividend
requirement on preferred
stock issued to Principal
Stockholder’s family |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,854 |
) |
|
|
|
|
|
|
— |
|
|
|
(6,854 |
) |
Accretion to redemption
value of preferred stock
issued to Principal
Stockholder’s family |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,136 |
) |
|
|
|
|
|
|
— |
|
|
|
(23,136 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2009 |
|
$ |
250,795 |
|
|
$ |
656 |
|
|
$ |
(13 |
) |
|
$ |
3,148,556 |
|
|
$ |
(3,472 |
) |
|
$ |
933,339 |
|
|
|
|
|
|
$ |
1,874 |
|
|
$ |
4,331,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2010 |
|
$ |
234,607 |
|
|
$ |
660 |
|
|
$ |
— |
|
|
$ |
5,114,851 |
|
|
$ |
26,748 |
|
|
$ |
473,833 |
|
|
|
|
|
|
$ |
1,089,888 |
|
|
$ |
6,940,587 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,581 |
|
|
|
17,581 |
|
|
|
30,233 |
|
|
|
47,814 |
|
Currency translation
adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(877 |
) |
|
|
— |
|
|
|
(877 |
) |
|
|
(1,447 |
) |
|
|
(2,324 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,704 |
|
|
|
28,786 |
|
|
|
45,490 |
|
Exercise of stock options |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
73 |
|
Tax shortfall from
stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(195 |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
(195 |
) |
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
14,970 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
853 |
|
|
|
15,823 |
|
Deemed contribution from
Principal Stockholder |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
58 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
58 |
|
Dividends declared, net
of amounts previously
accrued |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(16,496 |
) |
|
|
|
|
|
|
— |
|
|
|
(16,496 |
) |
Accumulated but
undeclared dividend
requirement on preferred
stock issued to Principal
Stockholder’s family |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,854 |
) |
|
|
|
|
|
|
— |
|
|
|
(6,854 |
) |
Accretion to redemption
value of preferred stock
issued to Principal
Stockholder’s family |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,136 |
) |
|
|
|
|
|
|
— |
|
|
|
(23,136 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2010 |
|
$ |
234,607 |
|
|
$ |
660 |
|
|
$ |
— |
|
|
$ |
5,129,757 |
|
|
$ |
25,871 |
|
|
$ |
444,928 |
|
|
|
|
|
|
$ |
1,119,527 |
|
|
$ |
6,955,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
| |
|
(In thousands) |
|
| |
|
(Unaudited) |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
47,814 |
|
|
$ |
(35,846 |
) |
Adjustments to reconcile net income (loss) to net cash generated from operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
153,089 |
|
|
|
139,249 |
|
Amortization of leasehold interests in land included in rental expense |
|
|
8,698 |
|
|
|
6,490 |
|
Amortization of deferred financing costs and original issue discount |
|
|
7,809 |
|
|
|
8,940 |
|
Amortization of deferred gain and rent |
|
|
(1,290 |
) |
|
|
(1,291 |
) |
Gain on early retirement of debt |
|
|
(2,176 |
) |
|
|
— |
|
Loss on disposal of assets |
|
|
492 |
|
|
|
131 |
|
Stock-based compensation expense |
|
|
15,093 |
|
|
|
11,596 |
|
Provision for doubtful accounts |
|
|
16,442 |
|
|
|
21,010 |
|
Foreign exchange (gain) loss |
|
|
(3,198 |
) |
|
|
363 |
|
Deferred income taxes |
|
|
4,965 |
|
|
|
12,405 |
|
Non-cash contribution from Principal Stockholder included in corporate expense |
|
|
58 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
8,070 |
|
|
|
17,237 |
|
Inventories |
|
|
2,139 |
|
|
|
1,650 |
|
Prepaid expenses and other |
|
|
(8,050 |
) |
|
|
(39,690 |
) |
Leasehold interests in land |
|
|
(13,891 |
) |
|
|
(309 |
) |
Accounts payable |
|
|
4,164 |
|
|
|
(2,719 |
) |
Accrued interest payable |
|
|
(1,784 |
) |
|
|
(6,943 |
) |
Income taxes payable |
|
|
7,033 |
|
|
|
— |
|
Other accrued liabilities |
|
|
37,317 |
|
|
|
13,442 |
|
|
|
|
|
|
|
|
Net cash generated from operating activities |
|
|
282,794 |
|
|
|
145,715 |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Changes in restricted cash |
|
|
(182,575 |
) |
|
|
90,140 |
|
Capital expenditures |
|
|
(538,201 |
) |
|
|
(523,841 |
) |
Proceeds from disposal of property and equipment |
|
|
2,311 |
|
|
|
— |
|
Purchases of investments |
|
|
(173,978 |
) |
|
|
— |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(892,443 |
) |
|
|
(433,701 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
73 |
|
|
|
— |
|
Dividends paid to preferred stockholders |
|
|
(23,350 |
) |
|
|
(24,473 |
) |
Purchase of treasury stock |
|
|
— |
|
|
|
(13 |
) |
Proceeds from long-term debt (Note 4) |
|
|
272,056 |
|
|
|
177,429 |
|
Repayments on long-term debt (Note 4) |
|
|
(847,326 |
) |
|
|
(144,575 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
41 |
|
Payments of deferred financing costs |
|
|
(821 |
) |
|
|
— |
|
|
|
|
|
|
|
|
Net cash generated from (used in) financing activities |
|
|
(599,368 |
) |
|
|
8,409 |
|
|
|
|
|
|
|
|
Effect of exchange rate on cash |
|
|
5,446 |
|
|
|
(114 |
) |
|
|
|
|
|
|
|
Decrease in cash and cash equivalents |
|
|
(1,203,571 |
) |
|
|
(279,691 |
) |
Cash and cash equivalents at beginning of period |
|
|
4,955,416 |
|
|
|
3,038,163 |
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
3,751,845 |
|
|
$ |
2,758,472 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Cash payments for interest, net of amounts capitalized |
|
$ |
72,149 |
|
|
$ |
70,776 |
|
|
|
|
|
|
|
|
Cash payments for taxes, net of refunds |
|
$ |
120 |
|
|
$ |
600 |
|
|
|
|
|
|
|
|
Changes in construction payables |
|
$ |
(5,519 |
) |
|
$ |
(51,950 |
) |
|
|
|
|
|
|
|
Non-cash investing and financing activities: |
|
|
|
|
|
|
|
|
Capitalized stock-based compensation costs |
|
$ |
730 |
|
|
$ |
627 |
|
|
|
|
|
|
|
|
Property and equipment acquired under capital lease |
|
$ |
773 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Accumulated but undeclared dividend requirement on preferred stock issued to Principal
Stockholder’s family |
|
$ |
6,854 |
|
|
$ |
6,854 |
|
|
|
|
|
|
|
|
Accretion to redemption value of preferred stock issued to Principal Stockholder’s family |
|
$ |
23,136 |
|
|
$ |
23,136 |
|
|
|
|
|
|
|
|
Warrants exercised and settled through tendering of preferred stock |
|
$ |
— |
|
|
$ |
47,271 |
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
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, 2009. The year-end balance sheet data
was derived from audited financial statements, except as discussed below, but does not include all disclosures required by
generally accepted accounting principles in the United States of America. 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. The Company’s common stock is traded on the New York Stock Exchange
under the symbol “LVS.”
In November 2009, the Company’s newly formed subsidiary, Sands China Ltd. (“SCL,” the indirect owner and operator of the majority of the Company’s operations in the Macau Special
Administrative Region (“Macau”) of the People’s Republic of China), completed an initial public
offering by listing its ordinary shares (the “SCL Offering”) on The Main Board of The Stock
Exchange of Hong Kong Limited. Immediately following the SCL Offering and several transactions
consummated in connection with such offering, the Company owned 70.3% of issued and outstanding
ordinary shares of SCL. The shares of SCL were not, and will not, be registered under the
Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent a
registration under the Securities Act of 1933, as amended, or an applicable exception from such
registration requirements.
Operations
United States
Las Vegas
The Company owns and operates The Venetian Resort Hotel Casino (“The Venetian Las Vegas”), a
Renaissance Venice-themed resort; The Palazzo Resort Hotel Casino (“The Palazzo”), a resort
featuring modern European ambience and design; and an expo and convention center of approximately
1.2 million square feet (the “Sands Expo Center”). These Las Vegas properties, situated on or near
the Las Vegas Strip, form an integrated resort with approximately 7,100 suites; approximately
225,000 square feet of gaming space; a meeting and conference facility of approximately 1.1 million
square feet; an enclosed retail, dining and entertainment complex located within The Venetian Las
Vegas of approximately 440,000 net leasable square feet (“The Grand Canal Shoppes”), which was sold
to GGP Limited Partnership (“GGP”) in 2004; and an enclosed retail and dining complex located
within The Palazzo of approximately 400,000 net leasable square feet (“The Shoppes at The
Palazzo”), which was sold to GGP in February 2008. See “— Note 3 — Property and Equipment, Net”
regarding the sale of The Shoppes at The Palazzo.
Pennsylvania
The Company is in the process of developing Sands Casino Resort Bethlehem (the “Sands
Bethlehem”), a gaming, hotel, retail and dining complex located on the site of the historic
Bethlehem Steel Works in Bethlehem, Pennsylvania. Sands Bethlehem is also expected to be home to
the National Museum of Industrial History, an arts and cultural center, and the broadcast home of
the local PBS affiliate. The Company owns 86% of the economic interest of the gaming, hotel and
entertainment portion of the property through its ownership interest in Sands Bethworks Gaming LLC
and more than 35% of the economic interest of the retail portion of the property through its
ownership interest in Sands Bethworks Retail, LLC.
On May 22, 2009, the Company opened the casino component of Sands Bethlehem, which features
slot machines and several food and beverage offerings, as well as the parking garage and surface
parking. In April 2010, the Company received approval of its table games application from the
Pennsylvania Gaming Control Board that will allow Sands Bethlehem to operate table games, which it
is targeting to commence in the third quarter of 2010, and has recommenced construction of a
300-room hotel tower, which is expected to open in the second quarter of 2011. Construction
activities on the remaining components, which include an approximate 200,000-square-foot retail
facility, a 50,000-square-foot multipurpose event center and a variety of additional dining
options, have been suspended temporarily and are intended to recommence when capital markets and
general economic conditions improve and when the suspended components are able to be financed. As
of March 31, 2010, the Company has capitalized construction costs of $631.1
million for this project (including $22.7 million in outstanding construction payables). The
Company expects to spend approximately $80 million to complete construction of the hotel tower, on
furniture, fixtures and equipment (“FF&E”) and other costs, and to pay outstanding construction
payables, as noted above, and the $16.5 million license fee. The impact of the suspension on the
estimated overall cost of the project’s remaining components is currently not determinable with
certainty.
7
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Macau
SCL, of which the Company owns 70.3% subsequent to the SCL Offering and related transactions,
includes the operations of the Sands Macao, The Venetian Macao, Four Seasons Macao and other
ancillary operations that support these properties, as further discussed below. The Company
operates the gaming areas within these properties pursuant to a 20-year gaming subconcession.
The Company owns and operates the Sands Macao, the first Las Vegas-style casino in Macau. The
Sands Macao offers approximately 229,000 square feet of gaming space and a 289-suite hotel tower,
as well as several restaurants, VIP facilities, a theater and other high-end services and
amenities.
The Company also owns and operates The Venetian Macao Resort Hotel (“The Venetian Macao”),
which anchors the Cotai StripTM, the Company’s master-planned development of
integrated resort properties in Macau. With a theme similar to that of The Venetian Las Vegas, The
Venetian Macao includes a 39-floor luxury hotel with over 2,900 suites; approximately 550,000
square feet of gaming space; a 15,000-seat arena; an 1,800-seat theater; retail and dining space of
approximately 1.0 million square feet; and a convention center and meeting room complex of
approximately 1.2 million square feet.
The Company opened the Four Seasons Hotel Macao, Cotai StripTM (the “Four
Seasons Hotel Macao”), which features 360 rooms and suites managed and operated by Four Seasons
Hotels Inc. and is located adjacent and connected to The Venetian Macao. Connected to the Four
Seasons Hotel Macao, the Company owns and operates the Plaza Casino (together with the Four Seasons
Hotel Macao, the “Four Seasons Macao”), which features approximately 70,000 square feet of gaming
space; 19 Paiza mansions; retail space of approximately 211,000 square feet, which is connected to
the mall at The Venetian Macao; several food and beverage offerings; and conference, banquet and
other facilities. This integrated resort will also feature the Four Seasons Apartment Hotel Macao,
Cotai Strip (the “Four Seasons Apartments”), an apart-hotel tower that consists of approximately
1.0 million square feet of Four Seasons-serviced and -branded luxury apart-hotel units and common
areas. The Company has completed the structural work of the tower and expects to subsequently
monetize units within the Four Seasons Apartments subject to market conditions and obtaining the
necessary government approvals. As of March 31, 2010, the Company has capitalized construction
costs of $1.06 billion for the entire project (including $24.1 million in outstanding construction
payables). The Company expects to spend approximately $155 million primarily on additional costs to
complete the Four Seasons Apartments, including FF&E, pre-opening costs and additional land
premiums, and to pay outstanding construction payables, as noted above.
Development Projects
Given the challenging conditions in the capital markets and the global economy and their
impact on the Company’s ongoing operations, the Company revised its development plan to suspend
portions of its development projects and focus its development efforts on those projects with the
highest expected rates of return on invested capital. Should general economic conditions fail to
improve, if the Company is unable to obtain sufficient funding such that completion of its
suspended projects is not probable, or should management decide to abandon certain projects, all or
a portion of the Company’s investment to date on its suspended projects could be lost and would
result in an impairment charge. In addition, the Company may be subject to penalties under the
termination clauses in its construction contracts or termination rights under its management
contracts with certain hotel management companies.
United States
The Company was constructing a St. Regis-branded high-rise residential condominium tower, the
St. Regis Residences at The Venetian Palazzo (the “St. Regis Residences”), located on the Las Vegas
Strip between The Palazzo and The Venetian Las Vegas. As part of its revised development plan, the
Company suspended construction activities for the project due to reduced demand for Las Vegas Strip
condominiums and the overall decline in general economic conditions. The Company intends to
recommence construction when demand and conditions improve and expects that it will take
approximately 18 months thereafter to complete construction of the project. As of March 31, 2010,
the Company has capitalized construction costs of $184.9 million for this project. The impact of
the suspension on the estimated overall cost of the project is currently not determinable with
certainty.
8
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Macau
The Company submitted plans to the Macau government for its other Cotai Strip developments,
which represent three integrated resort developments, in addition to The Venetian Macao and Four
Seasons Macao, on an area of approximately 200 acres (which are referred to as parcels 3, 5 and 6,
and 7 and 8). Subject to the approval from the Macau government, the developments are expected to
include hotels, exhibition and conference facilities, gaming areas, showrooms, shopping malls,
spas, restaurants, entertainment facilities and other amenities. The Company had commenced
construction or pre-construction on these developments and plans to operate the related gaming
areas under the Company’s Macau gaming subconcession.
As part of its revised development plan, the Company is sequencing the construction of its
integrated resort development on parcels 5 and 6 due to difficulties in the capital markets and the
overall decline in general economic conditions. Upon completion of phases I and II of the project,
the integrated resort is expected to feature approximately 6,000 hotel rooms, approximately 300,000
square feet of gaming space, approximately 1.2 million square feet of retail, entertainment and
dining facilities, exhibition and conference facilities and a multipurpose theater. Phase I of the
project is expected to include two hotel towers with approximately 3,700 hotel rooms to be managed
by Shangri-La International Hotel Management Limited (“Shangri-La”) under its Shangri-La and
Traders brands and Sheraton International Inc. and Sheraton Overseas Management Co. (collectively
“Starwood”) under its Sheraton brand, as well as completion of the structural work of an adjacent
hotel tower with approximately 2,300 rooms to be managed by Starwood under its Sheraton brand.
Phase I will also include the gaming space, theater and a partial opening of the retail and
exhibition and conference facilities. The total cost to complete phase I is expected to be
approximately $2.0 billion. Phase II of the project includes completion of the additional Sheraton hotel tower
as well as the remaining retail facilities and the total cost is expected to be approximately $235
million. Phase III of the project is expected to include a fourth hotel and mixed-use tower to be
managed by Starwood under its St. Regis brand and the total cost is expected to be approximately
$450 million. In connection with receiving commitments for a proposed $1.75 billion project
financing credit facility (which the Company expects to close in the second quarter of 2010) to be
used together with $500.0 million of proceeds from the SCL Offering, the Company is mobilizing to
recommence construction of phases I and II and expects that phase I will be completed in the third
quarter of 2011, and that it will take an additional six months thereafter to complete the adjacent
Sheraton tower in phase II and an additional 24 months thereafter to complete the remaining retail
facilities in phase II. The Company intends to commence construction of phase III of the project as
demand and market conditions warrant it. As of March 31, 2010, the Company has capitalized
construction costs of $1.75 billion for the entire project (including $132.7 million in outstanding
construction payables). The Company’s management agreements with Starwood and Shangri-La impose
certain construction deadlines and opening obligations on the Company and certain past and/or
anticipated delays, as described above, may represent a default under the respective agreements,
which would allow Starwood and Shangri-La to terminate their respective agreements. See “— Note 10
— Commitments and Contingencies — Other Agreements.”
The Company had commenced pre-construction on parcels 7 and 8 and 3, and has capitalized
construction costs of $114.1 million for parcels 7 and 8 and $35.6 million for parcel 3 as of March
31, 2010. The Company intends to commence construction after the integrated resort on parcels 5 and
6 is complete, necessary government approvals are obtained, regional and global economic conditions
improve, future demand warrants it and additional financing is obtained.
The impact of the delayed construction on the Company’s previously estimated cost to complete
its Cotai Strip developments is currently not determinable with certainty. As of March 31, 2010,
the Company has capitalized an aggregate of $5.86 billion in costs for its Cotai Strip
developments, including The Venetian Macao and Four Seasons Macao, as well as the Company’s
investments in transportation infrastructure, including its passenger ferry service operations. In
addition to receiving commitments for project financing for phases I and II of parcels 5 and 6,
the Company will need to arrange
additional financing to fund the balance of its Cotai Strip developments and there is no assurance
that the Company will be able to obtain any of the additional financing required.
Land concessions in Macau generally have an initial term of 25 years with automatic extensions
of 10 years thereafter in accordance with Macau law. The Company has received a land concession
from the Macau government to build on parcels 1, 2 and 3, including the sites on which The Venetian
Macao (parcel 1) and Four Seasons Macao (parcel 2) are located. The Company does not own these land
sites in Macau; however, the land concession grants the Company exclusive use of the land. As
specified in the land concession, the Company is required to pay premiums for each parcel, which
are either payable in a single lump sum upon acceptance of the land concession by the Macau
government or in seven semi-annual installments (provided that the outstanding balance is due upon
the completion of the corresponding integrated resort), as well as annual rent for the term of the
land concession.
9
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Under the Company’s land concession for parcel 3, the Company was initially required to
complete the corresponding development by August 2011. The Macau government has granted the Company
a two-year extension to complete the development of parcel 3, which now must be completed by April
2013. The Company believes that if it is not able to complete the development by the
revised deadline, it will likely be able to obtain another extension from the Macau government;
however, no assurances can be given that an additional extension will be granted. If the Company is
unable to meet the April 2013 deadline and that deadline is not extended, it could lose its land
concession for parcel 3, which would prohibit the Company from operating any facilities developed
under the land concession. As a result, the Company could forfeit all or a substantial portion of
its $35.6 million in capitalized costs, as of March 31, 2010, related to its development on parcel
3.
In November 2009, the Company formally accepted the terms and conditions of the final draft of
the land concession agreement received from the Macau government for parcels 5 and 6 and made an
initial premium payment of 700.0 million patacas (approximately $87.5 million at exchange rates in
effect on March 31, 2010). The land concession will not become effective until the date it is
published in Macau’s Official Gazette. Once the land concession becomes effective, the Company will
be required to make additional land premium and annual rent payments in the amounts and at the
times specified in the land concession. The land concession requires the Company to complete the
development of the integrated resort on parcels 5 and 6 within 48 months of the date it is
published in Macau’s Official Gazette. If the Company is not able to meet this deadline, it will
need to obtain an extension to complete the development on parcels 5 and 6; however, no assurances
can be given that such extension will be granted. If the Company is unable to the meet the deadline
and that deadline is not extended, the Company could lose its land concession for parcels 5 and 6,
which would prohibit the Company from operating any facilities developed under the land concession.
As a result, the Company could forfeit all or a substantial portion of its $1.75 billion in
capitalized costs, as of March 31, 2010, related to its development on parcels 5 and 6.
The Company does not yet have all of the necessary Macau government approvals to develop its
planned Cotai Strip developments on parcels 3, 5 and 6, and 7 and 8. The Company has received a
land concession for parcel 3 and will negotiate the land concession for parcels 7 and 8 once the
land concession for parcels 5 and 6, as previously noted, is finalized. Based on historical
experience with the Macau government with respect to the Company’s land concessions for the Sands
Macao and parcels 1, 2, 3 and 5 and 6, management believes that the land concessions for parcels 7
and 8 will be granted; however, if the Company does not obtain these land concessions, the Company
could forfeit all or a substantial portion of its $114.1 million in capitalized costs, as of March
31, 2010, related to its development on parcels 7 and 8.
Singapore
The Company’s wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”), entered into a
development agreement (the “Development Agreement”) with the Singapore Tourism Board (the “STB”) to
build and operate an integrated resort called Marina Bay Sands in Singapore. Marina Bay Sands,
portions of which opened on April 27, 2010, is expected to include three 55-story hotel towers
(totaling approximately 2,600 rooms and suites), a casino, an enclosed retail, dining and
entertainment complex of approximately 800,000 net leasable square feet, a convention center and
meeting room complex of approximately 1.3 million square feet, theaters and a landmark iconic
structure at the bay-front promenade that will contain an art/science museum. As of March 31, 2010,
the Company has capitalized 6.31 billion Singapore dollars (“SGD,” approximately $4.51 billion at
exchange rates in effect on March 31, 2010) in costs for this project, including the land premium
and SGD 762.3 million (approximately $544.9 million at exchange rates in effect on March 31, 2010)
in outstanding construction payables. The Company expects to spend approximately SGD 2.5 billion
(approximately $1.8 billion at exchange rates in effect on March 31, 2010) through 2011 on
additional costs to complete the construction of the integrated resort, FF&E, pre-opening and other
costs, and to pay outstanding construction payables, as noted above, of which approximately SGD 1.9
billion (approximately $1.4 billion at exchange rates in effect on March 31, 2010) is expected to
be spent during 2010. As the Company has obtained Singapore-denominated financing and primarily
pays its costs in Singapore dollars, its exposure to foreign exchange gains and losses is expected
to be minimal. Based on its current development plan, the Company expects to progressively open the remaining
portions of Marina Bay Sands throughout 2010.
Other
When the current economic environment and access to capital improve, the Company may continue
exploring the possibility of developing and operating additional properties, including integrated
resorts, in additional Asian and U.S. jurisdictions, and in Europe.
Development Financing Strategy
Through March 31, 2010, the Company has funded its development projects primarily through
borrowings under its U.S., Macau and Singapore credit facilities, operating cash flows, proceeds
from its recent equity offerings and proceeds from the disposition of non-core assets.
10
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
The U.S. credit facility and FF&E facility require the Company’s Las Vegas operations to
comply with certain financial covenants at the end of each quarter, including maintaining a maximum
leverage ratio of net debt, as defined, to trailing twelve-month adjusted earnings before interest,
income taxes, depreciation and amortization, as defined (“Adjusted EBITDA”). The maximum leverage
ratio is 6.0x for the quarterly periods ended March 31 and June 30, 2010, decreases to 5.5x for
quarterly periods ended September 30 and December 31, 2010, and then decreases to 5.0x for all
quarterly periods thereafter through maturity. The Macau credit facility, as amended in August
2009, requires the Company’s Macau operations to comply with similar financial covenants, including
maintaining a maximum leverage ratio of debt to Adjusted EBITDA. The maximum leverage ratio is 4.0x
for the quarterly periods ended March 31 and June 30, 2010, decreases to 3.5x for the quarterly
periods ended September 30 and December 31, 2010, and then decreases to 3.0x for all quarterly
periods thereafter through maturity. The Company can elect to contribute up to $50 million and $20
million of cash on hand to its Las Vegas and Macau operations, respectively, on a bi-quarterly
basis; such contributions having the effect of increasing Adjusted EBITDA by the corresponding
amount during the applicable quarter for purposes of calculating compliance with the maximum
leverage ratio (the “EBITDA true-up”). If the Company is unable to maintain compliance with the
financial covenants under these credit facilities, it would be in default under the respective
credit facilities. A default under the U.S. credit facilities would trigger a cross-default under
the Company’s airplane financings, which, if the respective lenders chose to accelerate the
indebtedness outstanding under these agreements, would result in a default under the Company’s
senior notes. A default under the Macau credit facility would trigger a cross-default under the
Company’s ferry financing. Any defaults or cross-defaults under these agreements would allow the
lenders, in each case, to exercise their rights and remedies as defined under their respective
agreements. If the lenders were to exercise their rights to accelerate the due dates of the
indebtedness outstanding, there can be no assurance that the Company would be able to repay or
refinance any amounts that may become due and payable under such agreements, which could force the
Company to restructure or alter its operations or debt obligations.
In 2008, the Company completed a $475.0 million convertible senior notes offering and a $2.1
billion common and preferred stock and warrants offering. In 2009, the Company completed a $600.0
million exchangeable bond offering and its $2.5 billion SCL Offering. A portion of the proceeds
from these offerings was used in the U.S. to pay down $775.9 million under the revolving portion of
the U.S. credit facility in March 2010, to exercise the EBITDA true-up provision during the quarterly
periods ended September 30, 2009 and March 31, 2010, and was contributed to Las Vegas Sands, LLC
(“LVSLLC”) to reduce its net debt in order to maintain compliance with the maximum leverage ratio
for the quarterly period ended March 31, 2010. Proceeds were also used in Macau to exercise the
EBITDA true-up provision during the quarterly period ended June 30, 2009, and cash on hand was used
to pay down $125.0 million of indebtedness under the Macau credit facility in 2009 in order to
maintain compliance with the maximum leverage ratio for the quarterly period ended March 31, 2010.
In November 2009, in connection with the SCL Offering, the Company was required to repay $500.0 million of borrowings under its Macau credit facility,
permanently reducing a pro rata portion of the revolving facility.
The Company held unrestricted and restricted cash, cash equivalents and investments of
approximately $3.93 billion and $301.6 million, respectively, as of March 31, 2010. The Company
believes that the cash and investments on hand, cash flow generated from operations and available
borrowings under its credit facilities will be sufficient to fund its revised development plan and
maintain compliance with the financial covenants of its U.S. and Macau credit facilities. In the
normal course of its activities, the Company will continue to evaluate its capital structure and
opportunities for enhancements thereof. Additionally, in connection with receiving commitments for
the proposed $1.75 billion project financing credit facility (which the Company expects to close in
the second quarter of 2010) to be used together with $500.0 million of proceeds from the SCL
Offering, the Company is mobilizing to recommence construction of phases I and II of the Company’s
Cotai Strip development on parcels 5 and 6.
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance
for variable interest entities (“VIEs”), which changes the approach to determining the primary
beneficiary of a VIE and requires companies to more frequently assess whether they must consolidate
VIEs. In December 2009, the FASB supplemented its authoritative guidance for VIE’s, which
establishes new criteria for consolidation based on power to direct the activities of a VIE that
would significantly impact the VIE’s economic performance and the obligation to absorb losses of
the VIE or the right to receive benefits from the VIE that could potentially be significant to the
VIE. The new guidance does not allow grandfathering of existing structures and is effective January
1, 2010. The application of this guidance did not have a material effect on the Company’s financial
condition, results of operations or cash flows. See “— Note 6 — Variable Interest Entities.”
In January 2010, the FASB issued authoritative guidance for fair value measurements, which
requires new disclosures regarding significant transfers in and out of Level 1 and 2 fair value
measurements and gross presentation of activity within the reconciliation for Level 3 fair value
measurements. The guidance also clarifies existing requirements on the level of disaggregation and
required disclosures regarding inputs and valuation techniques for both recurring and nonrecurring
Level 2 and 3 fair value measurements. The guidance is effective for interim and annual reporting
periods beginning after December 15, 2009, with the exception of gross
presentation of Level 3 activity, which is effective for interim and annual reporting periods
beginning after December 15, 2010. The adoption of this guidance did not have a material effect on
the Company’s financial condition, results of operations or cash flows. See “— Note 9 — Fair Value
Measurements” for the required disclosure.
11
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
In April 2010, the FASB issued authoritative guidance for companies that generate revenue from
gaming activities that involve base jackpots, which requires companies to accrue for a liability
and charge a jackpot (or portion thereof) to revenue at the time the company has the obligation to
pay the jackpot. The guidance is effective for interim and annual reporting periods beginning on or
after December 15, 2010. Base jackpots are currently not accrued for by the Company until it has
the obligation to pay such jackpots. As such, the application of this guidance will not have a
material effect on the Company’s financial condition, results of operations or cash flows.
Revision
The Company
revised its December 31, 2009, condensed consolidated balance sheet and condensed consolidated statements of equity
and comprehensive income (loss) to appropriately reflect the impact of the issuance of
SCL shares upon its initial public offering. This revision resulted in a $655.7 million
increase in the noncontrolling interests balance with a corresponding reduction to capital
in excess of par value. The revision, which the Company determined is
not material, had no
impact on total equity, results of operations or cash flows.
NOTE 2 — INVESTMENTS
In accordance with applicable accounting standards, investments in securities are classified
as either held to maturity, trading or available for sale. Management determines the classification
of its investments at the time of purchase. The Company’s securities are classified as held to
maturity, as the Company has positive intent and ability to hold the securities to maturity, and
are recorded at cost, which is equivalent to their fair value. As of March 31, 2010, the Company
has $173.9 million in non-U.S. government fixed maturity investments, of which $109.5 million and
$64.4 million will mature in July and August 2010, respectively.
NOTE 3 — PROPERTY AND EQUIPMENT, NET
Property and equipment consists of the following (in thousands):
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2010 |
|
|
2009 |
|
Land and improvements |
|
$ |
369,406 |
|
|
$ |
353,791 |
|
Building and improvements |
|
|
6,904,088 |
|
|
|
6,898,071 |
|
Furniture, fixtures, equipment and leasehold improvements |
|
|
1,711,730 |
|
|
|
1,703,792 |
|
Transportation |
|
|
403,736 |
|
|
|
403,256 |
|
Construction in progress |
|
|
6,151,186 |
|
|
|
5,647,986 |
|
|
|
|
|
|
|
|
|
|
|
15,540,146 |
|
|
|
15,006,896 |
|
Less — accumulated depreciation and amortization |
|
|
(1,804,008 |
) |
|
|
(1,655,625 |
) |
|
|
|
|
|
|
|
|
|
$ |
13,736,138 |
|
|
$ |
13,351,271 |
|
|
|
|
|
|
|
|
Construction in progress consists of the following (in thousands):
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2010 |
|
|
2009 |
|
Marina Bay Sands |
|
$ |
3,610,227 |
|
|
$ |
3,119,935 |
|
Other Macau Development Projects (principally Cotai Strip parcels 5 and 6) |
|
|
1,930,405 |
|
|
|
1,915,587 |
|
Four Seasons Macao (principally the Four Seasons Apartments) |
|
|
326,896 |
|
|
|
328,300 |
|
Sands Bethlehem |
|
|
86,507 |
|
|
|
85,159 |
|
Other |
|
|
197,151 |
|
|
|
199,005 |
|
|
|
|
|
|
|
|
|
|
$ |
6,151,186 |
|
|
$ |
5,647,986 |
|
|
|
|
|
|
|
|
The $197.2 million in other construction in progress consists primarily of construction of the
St. Regis Residences, other projects in Las Vegas and at The Venetian Macao and Sands Macao.
As of March 31, 2010, the Company has received proceeds of $295.4 million from the sale of The
Shoppes at The Palazzo; however, the final purchase price will be determined in accordance with the
agreement between Venetian Casino Resort, LLC (“VCR”) and GGP based on net operating income (“NOI”)
of The Shoppes at The Palazzo calculated 30 months after the closing date of the sale, as defined
under the agreement and subject to certain later audit adjustments. In April 2009, GGP and its
subsidiary that owns The Shoppes at The Palazzo filed voluntary petitions under Chapter 11 of the
U.S. Bankruptcy Code (the “Chapter 11 Cases”). Additionally, given the economic and market
conditions facing retailers on a national and local level, tenants are facing economic challenges
that have had an effect, and may have a future effect, on the calculation of NOI. Approximately
$287.7 million of property and equipment (net of $23.6 million of accumulated depreciation), which
was sold to GGP, is included in the condensed consolidated balance sheet as of March 31, 2010. The
Company will continue to review the Chapter 11 Cases and the projected financial performance of the
tenants to be included in the NOI calculation, and will adjust the estimates of NOI and
capitalization rates as
additional information is received. The Company may be required to record further impairment
charges in the future depending on changes in the projections. Based on GGP’s current financial
condition, there can be no assurance that GGP will make its final payment.
12
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
The cost and accumulated depreciation of property and equipment that the Company is leasing to
tenants as part of its Macau mall operations was $386.1 million and $54.0 million, respectively, as
of March 31, 2010. The cost and accumulated depreciation of property and equipment that the Company
is leasing under capital lease arrangements is $25.2 million and $1.6 million, respectively, as of
March 31, 2010.
During the three months ended March 31, 2010 and 2009, the Company capitalized interest
expense of $19.7 million and $14.1 million, respectively.
As described in “— Note 1 — Organization and Business of Company — Development Projects,” the
Company revised its development plan to suspend portions of its development projects given the
conditions in the capital markets and the global economy and their impact on the Company’s ongoing
operations. If circumstances change, the Company may be required to record an impairment charge
related to these developments in the future.
NOTE 4 — LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2010 |
|
|
2009 |
|
Corporate and U.S. Related: |
|
|
|
|
|
|
|
|
Senior Secured Credit Facility — Term B |
|
$ |
2,917,500 |
|
|
$ |
2,925,000 |
|
Senior Secured Credit Facility — Delayed Draws I and II |
|
|
984,500 |
|
|
|
987,000 |
|
Senior Secured Credit Facility — Revolving |
|
|
— |
|
|
|
775,860 |
|
6.375% Senior Notes (net of original issue discount of $977 and $1,164, respectively) |
|
|
216,338 |
|
|
|
248,836 |
|
FF&E Facility |
|
|
100,200 |
|
|
|
108,550 |
|
Airplane Financings |
|
|
81,188 |
|
|
|
82,110 |
|
HVAC Equipment Lease |
|
|
24,280 |
|
|
|
24,717 |
|
Other |
|
|
4,550 |
|
|
|
4,778 |
|
Macau Related: |
|
|
|
|
|
|
|
|
Macau Credit Facility — Term B |
|
|
1,497,289 |
|
|
|
1,501,789 |
|
Macau Credit Facility — Term B Delayed |
|
|
582,279 |
|
|
|
584,029 |
|
Macau Credit Facility — Revolving |
|
|
479,640 |
|
|
|
479,640 |
|
Macau Credit Facility — Local Term |
|
|
61,336 |
|
|
|
67,697 |
|
Ferry Financing |
|
|
201,725 |
|
|
|
210,762 |
|
Other |
|
|
11,424 |
|
|
|
11,016 |
|
Singapore Related: |
|
|
|
|
|
|
|
|
Singapore Credit Facility |
|
|
3,298,866 |
|
|
|
3,013,678 |
|
Other |
|
|
278 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
10,461,393 |
|
|
|
11,025,462 |
|
Less — current maturities |
|
|
(286,819 |
) |
|
|
(173,315 |
) |
|
|
|
|
|
|
|
Total long-term debt |
|
$ |
10,174,574 |
|
|
$ |
10,852,147 |
|
|
|
|
|
|
|
|
Senior Secured Credit Facility
During the three months ended March 31, 2010, the Company paid down $775.9 million under the
revolving portion of the Senior Secured Credit Facility. As of March 31, 2010, the Company had
$888.0 million of available borrowing capacity under the Senior Secured Credit Facility, net of
outstanding letters of credit and undrawn amounts committed to be funded by Lehman Brothers
Commercial Paper Inc.
Senior Notes
During the three months ended March 31, 2010, the Company repurchased $32.7 million of the
outstanding principal of its Senior Notes and recorded a gain of $2.4 million in connection with
the repurchase. Subsequent to March 31, 2010, the Company repurchased an additional $2.0 million of the outstanding
principal of its Senior Notes.
13
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Macau Credit Facility
As of March 31, 2010, the Company had $120.4 million of available borrowing capacity under the
Macau Credit Facility, net of undrawn amounts committed to be funded by Lehman Brothers Commercial
Paper Inc.
Singapore Credit Facility
As of March 31, 2010, the Company had SGD 485.5 million (approximately $347.1 million at
exchange rates in effect on March 31, 2010) of available borrowing capacity under the Singapore
Credit Facility, net of outstanding banker’s guarantees and undrawn amounts to be funded by Lehman
Brothers Finance Asia Pte. Ltd.
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt are as follows (in thousands):
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Proceeds from Singapore Credit Facility |
|
$ |
272,056 |
|
|
$ |
171,026 |
|
Proceeds from Ferry Financing |
|
|
— |
|
|
|
6,403 |
|
|
|
|
|
|
|
|
|
|
$ |
272,056 |
|
|
$ |
177,429 |
|
|
|
|
|
|
|
|
Repayments on Senior Secured Credit Facility |
|
$ |
(785,860 |
) |
|
$ |
(10,000 |
) |
Repayments on Macau Credit Facility |
|
|
(12,525 |
) |
|
|
(125,000 |
) |
Repayments on Senior Notes |
|
|
(30,156 |
) |
|
|
— |
|
Repayments on Ferry Financing |
|
|
(8,762 |
) |
|
|
— |
|
Repayments on Airplane Financings |
|
|
(922 |
) |
|
|
(922 |
) |
Repayments on HVAC Equipment Lease |
|
|
(437 |
) |
|
|
— |
|
Repayments on FF&E Facility and Other Long-Term Debt |
|
|
(8,664 |
) |
|
|
(8,653 |
) |
|
|
|
|
|
|
|
|
|
$ |
(847,326 |
) |
|
$ |
(144,575 |
) |
|
|
|
|
|
|
|
Fair Value of Long-Term Debt
The estimated fair value of the Company’s long-term debt as of March 31, 2010, was
approximately $9.46 billion, compared to its carrying value of $10.44 billion. As of December 31,
2009, the estimated fair value of the Company’s long-term debt was approximately $9.66 billion,
compared to its carrying value of $11.0 billion. The estimated fair value of the Company’s
long-term debt is based on quoted market prices, if available, or by pricing models based on the
value of related cash flows discounted at current market interest rates.
NOTE 5 — EQUITY AND LOSS PER SHARE
Preferred Stock and Warrants
Preferred stock dividend activity is as follows (in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Preferred Stock |
|
|
|
|
|
|
|
| |
|
|
|
|
|
Dividends Paid to |
|
|
Preferred Stock |
|
|
Total |
|
| Board of Directors’ |
|
|
|
|
|
Principal |
|
|
Dividends Paid to |
|
|
Preferred Stock |
|
| Declaration Date |
|
Payment Date |
|
|
Stockholder’s Family |
|
|
Public Holders |
|
|
Dividends Paid |
|
February 5, 2009 |
|
February 17, 2009 |
|
$ |
13,125 |
|
|
$ |
11,348 |
|
|
$ |
24,473 |
|
February 5, 2010 |
|
February 16, 2010 |
|
|
13,125 |
|
|
|
10,225 |
|
|
|
23,350 |
|
May 4, 2010 |
|
May 17, 2010 |
|
|
13,125 |
|
|
|
10,225 |
|
|
|
23,350 |
|
During the three months ended March 31, 2010, no warrants were exercised. During the three
months ended March 31, 2009, holders of the preferred stock exercised 824,101 warrants to purchase
an aggregate of 13,735,042 shares of the Company’s common stock at $6.00 per share and tendered
824,101 shares of preferred stock as settlement of the warrant exercise price.
14
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Loss Per Share
The weighted average number of common and common equivalent shares used in the calculation of
basic and diluted loss per share consisted of the following:
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Weighted-average common shares outstanding (used in the calculation of basic loss per share) |
|
|
660,280,641 |
|
|
|
647,802,932 |
|
Potential dilution from stock options, restricted stock and warrants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
Weighted-average common and common equivalent shares (used in the calculation of diluted loss
per share) |
|
|
660,280,641 |
|
|
|
647,802,932 |
|
|
|
|
|
|
|
|
Antidilutive stock options, restricted stock and warrants excluded from the calculation of
diluted loss per share |
|
|
172,467,803 |
|
|
|
176,057,087 |
|
|
|
|
|
|
|
|
NOTE 6 — VARIABLE INTEREST ENTITIES
The Company consolidates any VIEs in which it is the primary beneficiary and discloses
significant variable interests in VIEs of which it is not the primary beneficiary, if any, which
management determines such designation based on accounting standards for VIEs.
The Company has entered into various joint venture agreements with independent third parties.
The operations of these joint ventures have been consolidated by the Company due to the
Company’s significant investment in these joint ventures, its power to direct the activities of the
joint ventures that would significantly impact their economic performance and the obligation to
absorb potentially significant losses or the rights to receive potentially significant benefits
from these joint ventures. In accordance with revised accounting standards, the Company evaluates
its primary beneficiary designation on an ongoing basis and will assess the appropriateness of the
VIE’s status when events have occurred that would trigger such an analysis.
As of March 31, 2010 and December 31, 2009, the Company’s joint ventures had total
assets of $98.5 million and $105.6 million, respectively, and total liabilities of $71.9 million and
$75.3 million, respectively.
NOTE 7 — INCOME TAXES
The Company’s major tax jurisdictions are the U.S., Macau and Singapore. In the U.S., the
Company is currently under examination for years after 2004. In Macau and Singapore, the Company is subject
to examination for years after 2005. It is reasonably possible that unrecognized tax benefits could
significantly change within the next 12 months, due to the progression of open audits. An estimate
of the amount of possible changes cannot be made at this time. The Company believes it has
adequately reserved for its uncertain tax positions; however, there is no assurance that taxing
authorities will not propose adjustments that are different than the Company’s expected outcome and
impact the provision for income taxes.
The Company recorded a valuation allowance on the net deferred tax assets of the Company’s
U.S. operations during the year ended December 31, 2009, and does not anticipate recording an
income tax benefit related to deferred tax assets generated by its U.S. operations. The Company
will reassess the realization of deferred tax assets based on accounting standards for income taxes
each reporting period and will be able to reduce the valuation allowance to the extent that the
financial results of U.S. operations improve and it becomes more likely than not that the deferred
tax assets are realizable.
The Company received a 5-year income tax exemption in Macau that exempts the Company from
paying corporate income tax on profits generated by gaming operations. The Company will continue to
benefit from this tax exemption through the end of 2013.
15
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
NOTE 8 — STOCK-BASED EMPLOYEE COMPENSATION
Sands China Ltd. Equity Award Plan
The Company’s subsidiary, SCL, adopted an equity award plan (the “SCL Equity Plan”) for grants
of options to purchase ordinary shares of SCL. The purpose of the SCL Equity Plan is to give SCL a
competitive edge in attracting, retaining and motivating employees, directors and consultants and
to provide SCL with a stock plan providing incentives directly related to increases in its
stockholder value. Subject to certain criteria as defined in the SCL Equity Plan, SCL’s
subsidiaries’ or affiliates’ employees, directors or officers and many of its consultants are
eligible for awards under the SCL Equity Plan. The SCL Equity Plan provides for an aggregate of
804,786,508 shares of SCL’s common stock to be available for awards, representing 10% of the
outstanding shares upon completion of the SCL Offering. The SCL Equity Plan has a term of ten years
and no further awards may be granted after the expiration of the term. SCL’s compensation committee
may grant awards of stock options, stock appreciation rights, restricted stock awards, restricted
stock units, stock bonus awards, performance compensation awards or any combination of the
foregoing. As of March 31, 2010, there were 786,910,408 shares available for grant under the SCL
Equity Plan.
Stock option awards are granted with an exercise price not less than (i) the closing price of
SCL’s stock on the date of grant or (ii) the average closing price of SCL’s stock for the five
business days immediately preceding the date of grant. The outstanding stock options vest over
four years and have ten-year contractual terms. Compensation cost for all stock option grants,
which all have graded vesting, is net of estimated forfeitures and is recognized on a straight-line
basis over the awards’ respective requisite service periods. The Company estimates the fair value
of stock options using the Black-Scholes option-pricing model. Expected volatilities are based on
the historical volatilities from a selection of companies from SCL’s peer group due to SCL’s lack
of historical information. The Company used the simplified method for estimating expected option
life, as the options qualify as “plain-vanilla” options. The risk-free interest rate for periods
equal to the expected term of the stock option is based on the Hong Kong Exchange Fund Note rate in effect
at the time of grant.
Stock-Based Compensation Activity
Stock-based compensation activity under the LVSC 2004 and SCL Equity Plans is as follows
(in thousands, except weighted average grant date fair values):
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Compensation expense: |
|
|
|
|
|
|
|
|
Stock options |
|
$ |
14,968 |
|
|
$ |
11,097 |
|
Restricted shares |
|
|
125 |
|
|
|
499 |
|
|
|
|
|
|
|
|
|
|
$ |
15,093 |
|
|
$ |
11,596 |
|
|
|
|
|
|
|
|
Compensation cost capitalized as part of property and equipment |
|
$ |
730 |
|
|
$ |
627 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LVSC 2004 Plan: |
|
|
|
|
|
|
|
|
Stock options granted |
|
|
2,046 |
|
|
|
5,599 |
|
|
|
|
|
|
|
|
Weighted average grant date fair value |
|
$ |
10.66 |
|
|
$ |
1.74 |
|
|
|
|
|
|
|
|
Restricted shares granted |
|
|
— |
|
|
|
29 |
|
|
|
|
|
|
|
|
Weighted average grant date fair value |
|
$ |
— |
|
|
$ |
4.67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCL Equity Plan: |
|
|
|
|
|
|
|
|
Stock options granted |
|
|
17,876 |
|
|
|
— |
|
|
|
|
|
|
|
|
Weighted average grant date fair value |
|
$ |
1.06 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
The fair value of each option grant was estimated on the grant date using the Black-Scholes
option-pricing model with the following weighted average assumptions:
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
LVSC 2004 Plan: |
|
|
|
|
|
|
|
|
Weighted average volatility |
|
|
97.8 |
% |
|
|
74.1 |
% |
Expected term (in years) |
|
|
4.4 |
|
|
|
4.7 |
|
Risk-free rate |
|
|
2.9 |
% |
|
|
2.7 |
% |
Expected dividends |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
SCL Equity Plan: |
|
|
|
|
|
|
|
|
Weighted average volatility |
|
|
73.6 |
% |
|
|
— |
|
Expected term (in years) |
|
|
6.3 |
|
|
|
— |
|
Risk-free rate |
|
|
2.0 |
% |
|
|
— |
|
Expected dividends |
|
|
— |
|
|
|
— |
|
16
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
NOTE 9 — FAIR VALUE MEASUREMENTS
Under applicable accounting guidance, fair value is defined as the exit price, or the amount
that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants as of the measurement date. Applicable accounting guidance also
establishes a valuation hierarchy for inputs in measuring fair value that maximizes the use of
observable inputs (inputs market participants would use based on market data obtained from sources
independent of the Company) and minimizes the use of unobservable inputs (inputs that reflect the
Company’s assumptions based upon the best information available in the circumstances) by requiring
that the most observable inputs be used when available. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted
prices for similar assets or liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active, and inputs (other than quoted prices) that
are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are
unobservable inputs for the assets or liabilities. Categorization within the hierarchy is based
upon the lowest level of input that is significant to the fair value measurement.
The following table provides the assets carried at fair value (in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Fair Value Measurements as of March 31, 2010 Using: |
|
| |
|
Total Carrying |
|
|
Quoted Market |
|
|
Significant Other |
|
|
Significant |
|
| |
|
Value as of |
|
|
Prices in Active |
|
|
Observable Inputs |
|
|
Unobservable Inputs |
|
| |
|
March 31, 2010 |
|
|
Markets (Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
Cash equivalents(1) |
|
$ |
2,510,568 |
|
|
$ |
2,510,568 |
|
|
$ |
— |
|
|
$ |
— |
|
Interest rate caps(2) |
|
$ |
813 |
|
|
$ |
— |
|
|
$ |
813 |
|
|
$ |
— |
|
| |
|
|
| (1) |
|
The Company has short-term investments classified as cash equivalents as the original maturities are less than 90 days. |
| |
| (2) |
|
The Company has 29 interest rate cap agreements with an aggregate fair value of approximately $0.8 million, based on
quoted market values from the institutions holding the agreements as of March 31, 2010. |
NOTE 10 — 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 or cash flows.
Macau Operations
On October 15, 2004, Richard Suen and Round Square Company Limited filed an action against
LVSC, Las Vegas Sands, Inc. (“LVSI”), Sheldon G. Adelson and William P. Weidner in the District
Court of Clark County, Nevada, asserting a breach of an alleged agreement to pay a success fee of
$5.0 million and 2.0% of the net profit from the Company’s Macau resort operations to the
plaintiffs as well as other related claims. In March 2005, LVSC was dismissed as a party without
prejudice based on a stipulation to do so between the parties. Pursuant to an order filed March 16,
2006, plaintiffs’ fraud claims set forth in the first amended complaint were dismissed with
prejudice as against all defendants. The order also dismissed with prejudice the first amended
complaint against defendants Sheldon G. Adelson and William P. Weidner. On May 24, 2008, the jury
returned a verdict for the plaintiffs in the amount of $43.8 million. On June 30, 2008, a judgment
was entered in this matter in the amount of $58.6 million (including pre-judgment interest). The
Company has appealed the verdict to the Nevada Supreme Court and the appeal has been fully briefed
by all parties. The Company believes that it has valid bases in law and fact to overturn or appeal
the verdict. As a result, the Company believes that the likelihood that the amount of the judgment
will be affirmed is not probable, and, accordingly, that the amount of any loss cannot be
reasonably estimated at this time. Because the Company believes that this potential loss is not
probable or estimable, it has not recorded any reserves or contingencies related to this legal
matter. In the event that the Company’s assumptions used to evaluate this matter as neither
probable nor estimable change in future periods, it will be required to record a liability for an
adverse outcome, which may include post judgment interest.
17
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
On February 5, 2007, Asian American Entertainment Corporation, Limited (“AAEC”) filed an
action against LVSI, VCR, Venetian Venture Development, William P. Weidner and David Friedman in
the United States District Court for the District of
Nevada (the “District Court”). The plaintiffs assert (i) breach of contract by LVSI, VCR and
Venetian Venture Development of an agreement under which AAEC would work to obtain a gaming license
in Macau and, if successful, AAEC would jointly operate a casino, hotel and related facilities in
Macau with Venetian Venture Development and Venetian Venture Development would receive fees and a
minority equity interest in the venture and (ii) breach of fiduciary duties by all of the
defendants. The plaintiffs have requested an unspecified amount of actual, compensatory and
punitive damages, and disgorgement of profits related to the Company’s Macau gaming license. The
Company filed a motion to dismiss on July 11, 2007. On August 1, 2007, the District Court granted
the defendants’ motion to dismiss the complaint against all defendants without prejudice. The
plaintiffs appealed this decision and subsequently, the Ninth Circuit Court of Appeals (the
“Circuit Court”) decided that AAEC was not barred from asserting claims that the written agreement
was breached prior to its expiration on January 15, 2002. The Circuit Court remanded the case back
to the District Court for further proceedings on this issue and discovery has recently begun. The
plaintiffs’ counsel filed a motion to withdraw from representing the plaintiffs on December 15,
2009, and it was granted by the Magistrate on January 12, 2010. On February 11, 2010, the
Magistrate filed a recommendation that the case be dismissed in the court docket. The plaintiffs
had until February 28, 2010, to file any objections thereto. None were filed and the District Court
entered an order on April 16, 2010, dismissing the case. Management believes that AAEC’s case
against the Company is without merit and will continue to defend this matter if an appeal from the
dismissal is taken.
On October 16, 2009, the Company received a letter from counsel to Far East Consortium
International Ltd. (“FEC”) notifying the Company that it may pursue various claims seeking, among
other things, monetary damages and an entitlement to an ownership interest in any development
projects on parcel 3 in Macau, which the Company will own and operate. The Company believes such
claims, which are based on a non-legally binding memorandum of agreement that expired by its terms
over three years ago, are frivolous, baseless and without merit. The Company intends to vigorously
contest any claims or lawsuits that may be brought by FEC.
China Matters
The State Administration
of Foreign Exchange in China (“SAFE”) regulates foreign currency exchange transactions and
other business dealings in China. SAFE has made inquiries and requested and obtained documents relating
to certain payments made by the Company’s wholly foreign-owned enterprises (“WFOEs”) to
counterparties and other vendors in China. These WFOEs were established to conduct non-gaming
marketing activities in China and to create goodwill in China and Macau for the Company’s
operations in Macau. SAFE recently preliminarily indicated that its investigation of these matters
was nearly complete and that it may impose a fine or penalty against the Company’s WFOEs,
although it has not done so to date. The Company believes that the WFOEs complied with then-applicable
SAFE regulations in connection with these matters. The Company and the WFOEs will continue to
address this matter with SAFE and would likely contest any fine or penalty that may be imposed.
The Company does not believe that any fine or penalty that may be imposed on the WFOEs as a result
of these matters would have a material adverse effect on the Company’s financial condition,
results of operations or cash flows.
Singapore Development Project
In August 2006, the Company entered into the Development Agreement with the STB, which
requires the Company to construct and operate the Marina Bay Sands in accordance with the Company’s
proposal for the integrated resort and in accordance with the agreement. The Company entered into
the SGD 5.44 billion (approximately $3.89 billion at exchange rates in effect on March 31, 2010)
Singapore Credit Facility to fund a significant portion of the construction, operating and other
development costs of the Marina Bay Sands.
In December 2009, MBS signed a supplement to the Development Agreement with the STB, which
permits the Marina Bay Sands to open in stages throughout 2010 in accordance with an agreed upon
schedule. There are no financial consequences to MBS if it fails to meet the agreed upon schedule,
provided that the entire integrated resort is opened by December 31, 2011. If MBS fails to meet
this deadline, the STB will be entitled to draw on the SGD 192.6 million (approximately $137.7
million at exchange rates in effect on March 31, 2010) security deposit under the Singapore Credit
Facility.
Other Agreements
The Company has entered into agreements with Starwood and Shangri-La to manage hotels and
serviced luxury apart-hotel units on the Company’s Cotai Strip parcels 5 and 6, and for Starwood to
brand the St. Regis Residences in connection with the sales and marketing of these condominium
units. The management agreements with Starwood and Shangri-La impose certain construction and
opening obligations and deadlines on the Company, and certain past and/or anticipated delays may
represent a default under the agreements, which would allow Starwood and Shangri-La to terminate
their respective agreements. The Company is mobilizing to recommence construction on parcels 5 and
6 and is negotiating amendments to the management agreements with Starwood and Shangri-La to
provide for new opening timelines, which the Company expects to finalize in the second quarter of
2010. If negotiations are unsuccessful, Starwood and Shangri-La would have the right to terminate
their agreements with the Company, which would result in the Company having to find new managers
and brands for these projects. Such measures could have a material adverse effect on the Company’s
financial condition, results of operations and cash flows, including requiring the Company to
write-off its $20.0 million investment related to the St. Regis Residences.
18
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
NOTE 11 — SEGMENT INFORMATION
The Company’s principal operating and developmental activities occur in three geographic
areas: United States, Macau and Singapore. The Company reviews the results of operations for each
of its key operating segments: The Venetian Las Vegas, which includes the Sands Expo Center; The
Palazzo; Sands Bethlehem; Sands Macao; The Venetian Macao; Four Seasons Macao; and Other Asia
(comprised primarily of the Company’s ferry operations and various other operations that are
ancillary to the Company’s properties in Macau). The Company also reviews construction and
development activities for each of its primary projects: The Venetian Las Vegas; The Palazzo; Sands
Bethlehem; Sands Macao; The Venetian Macao; Four Seasons Macao; Other Asia; Marina Bay Sands in
Singapore; Other Development Projects (on Cotai Strip parcels 3, 5, 6, 7 and 8); and Corporate and
Other (comprised primarily of airplanes and the St. Regis Residences). The Venetian Las Vegas and
The Palazzo operating segments are managed as a single integrated resort and have been aggregated
as one reportable segment (the “Las Vegas Operating Properties”), considering their similar
economic characteristics, types of customers, types of service and products, the regulatory
business environment of the operations within each segment and the Company’s organizational and
management reporting structure. The information for the three months ended March 31, 2009, has been
reclassified to conform to the current presentation. The Company’s segment information as of March
31, 2010 and December 31, 2009, and for the three months ended March 31, 2010 and 2009, is as
follows (in thousands):
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Revenues: |
|
|
|
|
|
|
|
|
Macau: |
|
|
|
|
|
|
|
|
The Venetian Macao |
|
$ |
549,695 |
|
|
$ |
484,100 |
|
Sands Macao |
|
|
283,806 |
|
|
|
224,412 |
|
Four Seasons Macao |
|
|
102,344 |
|
|
|
46,991 |
|
Other Asia |
|
|
24,172 |
|
|
|
23,929 |
|
|
|
|
|
|
|
|
|
|
|
960,017 |
|
|
|
779,432 |
|
United States: |
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
325,510 |
|
|
|
318,638 |
|
Sands Bethlehem |
|
|
67,241 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
392,751 |
|
|
|
318,638 |
|
Intersegment eliminations |
|
|
(17,880 |
) |
|
|
(19,008 |
) |
|
|
|
|
|
|
|
Net revenues |
|
$ |
1,334,888 |
|
|
$ |
1,079,062 |
|
|
|
|
|
|
|
|
Adjusted Property EBITDA (1) |
|
|
|
|
|
|
|
|
Macau: |
|
|
|
|
|
|
|
|
The Venetian Macao |
|
$ |
169,915 |
|
|
$ |
121,486 |
|
Sands Macao |
|
|
69,761 |
|
|
|
50,358 |
|
Four Seasons Macao |
|
|
19,495 |
|
|
|
4,368 |
|
Other Asia |
|
|
(4,432 |
) |
|
|
(6,010 |
) |
|
|
|
|
|
|
|
|
|
|
254,739 |
|
|
|
170,202 |
|
United States: |
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
105,292 |
|
|
|
89,774 |
|
Sands Bethlehem |
|
|
10,968 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
116,260 |
|
|
|
89,774 |
|
|
|
|
|
|
|
|
Total adjusted property EBITDA |
|
|
370,999 |
|
|
|
259,976 |
|
Other Operating Costs and Expenses |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
(5,808 |
) |
|
|
(7,776 |
) |
Corporate expense |
|
|
(23,476 |
) |
|
|
(23,424 |
) |
Rental expense |
|
|
(8,698 |
) |
|
|
(7,929 |
) |
Pre-opening expense |
|
|
(37,459 |
) |
|
|
(44,934 |
) |
Development expense |
|
|
(157 |
) |
|
|
(254 |
) |
Depreciation and amortization |
|
|
(153,089 |
) |
|
|
(139,249 |
) |
Loss on disposal of assets |
|
|
(492 |
) |
|
|
(131 |
) |
|
|
|
|
|
|
|
Operating income |
|
|
141,820 |
|
|
|
36,279 |
|
Other Non-Operating Costs and Expenses |
|
|
|
|
|
|
|
|
Interest income |
|
|
1,633 |
|
|
|
5,549 |
|
Interest expense, net of amounts capitalized |
|
|
(78,165 |
) |
|
|
(71,118 |
) |
Other expense |
|
|
(6,448 |
) |
|
|
(5,743 |
) |
Gain on early retirement of debt |
|
|
2,176 |
|
|
|
— |
|
Income tax expense |
|
|
(13,202 |
) |
|
|
(813 |
) |
Net (income) loss attributable to noncontrolling interests |
|
|
(30,233 |
) |
|
|
1,240 |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Las Vegas Sands Corp. |
|
$ |
17,581 |
|
|
$ |
(34,606 |
) |
|
|
|
|
|
|
|
| |
|
|
| (1) |
|
Adjusted property EBITDA is net income (loss) attributable to Las Vegas Sands Corp. before
stock-based compensation expense, corporate expense, rental expense, pre-opening expense,
development expense, depreciation and amortization, loss on disposal of assets, interest,
other expense, gain on early retirement of debt, income taxes and net (income) loss
attributable to noncontrolling
interests. Adjusted property EBITDA is used by management as the primary measure of operating
performance of the Company’s properties and to compare the operating performance of the Company’s
properties with that of its competitors. |
19
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Intersegment Revenues: |
|
|
|
|
|
|
|
|
Macau: |
|
|
|
|
|
|
|
|
The Venetian Macao |
|
$ |
2,413 |
|
|
$ |
447 |
|
Other Asia |
|
|
13,826 |
|
|
|
17,427 |
|
|
|
|
|
|
|
|
|
|
|
16,239 |
|
|
|
17,874 |
|
United States: |
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
1,641 |
|
|
|
1,134 |
|
|
|
|
|
|
|
|
Total intersegment revenues |
|
$ |
17,880 |
|
|
$ |
19,008 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
| |
|
March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Capital Expenditures |
|
|
|
|
|
|
|
|
Corporate and Other |
|
$ |
8,009 |
|
|
$ |
23,772 |
|
Macau: |
|
|
|
|
|
|
|
|
The Venetian Macao |
|
|
5,867 |
|
|
|
2,662 |
|
Sands Macao |
|
|
654 |
|
|
|
3,503 |
|
Four Seasons Macao |
|
|
11,636 |
|
|
|
61,801 |
|
Other Asia |
|
|
1,784 |
|
|
|
9,216 |
|
Other Development Projects |
|
|
27,798 |
|
|
|
39,640 |
|
|
|
|
|
|
|
|
|
|
|
47,739 |
|
|
|
116,822 |
|
United States: |
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
4,631 |
|
|
|
33,732 |
|
Sands Bethlehem |
|
|
11,259 |
|
|
|
86,810 |
|
|
|
|
|
|
|
|
|
|
|
15,890 |
|
|
|
120,542 |
|
Singapore |
|
|
466,563 |
|
|
|
262,705 |
|
|
|
|
|
|
|
|
Total capital expenditures |
|
$ |
538,201 |
|
|
$ |
523,841 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2010 |
|
|
2009 |
|
Total Assets |
|
|
|
|
|
|
|
|
Corporate and Other |
|
$ |
1,398,851 |
|
|
$ |
1,849,596 |
|
Macau: |
|
|
|
|
|
|
|
|
The Venetian Macao |
|
|
2,829,052 |
|
|
|
2,836,643 |
|
Sands Macao |
|
|
508,045 |
|
|
|
527,737 |
|
Four Seasons Macao |
|
|
1,153,956 |
|
|
|
1,151,028 |
|
Other Asia |
|
|
328,589 |
|
|
|
328,584 |
|
Other Development Projects |
|
|
2,647,494 |
|
|
|
2,085,984 |
|
|
|
|
|
|
|
|
|
|
|
7,467,136 |
|
|
|
6,929,976 |
|
United States: |
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
5,830,109 |
|
|
|
6,893,106 |
|
Sands Bethlehem |
|
|
733,972 |
|
|
|
737,062 |
|
|
|
|
|
|
|
|
|
|
|
6,564,081 |
|
|
|
7,630,168 |
|
Singapore |
|
|
4,663,390 |
|
|
|
4,162,366 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
20,093,458 |
|
|
$ |
20,572,106 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
March 31, |
|
|
December 31, |
|
| |
|
2010 |
|
|
2009 |
|
Total Long-Lived Assets |
|
|
|
|
|
|
|
|
Corporate and Other |
|
$ |
325,546 |
|
|
$ |
324,268 |
|
Macau: |
|
|
|
|
|
|
|
|
The Venetian Macao |
|
|
2,286,328 |
|
|
|
2,324,882 |
|
Sands Macao |
|
|
341,353 |
|
|
|
355,170 |
|
Four Seasons Macao |
|
|
1,044,052 |
|
|
|
1,047,201 |
|
Other Asia |
|
|
274,608 |
|
|
|
276,559 |
|
Other Development Projects |
|
|
2,042,176 |
|
|
|
2,022,861 |
|
|
|
|
|
|
|
|
|
|
|
5,988,517 |
|
|
|
6,026,673 |
|
United States: |
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
3,583,316 |
|
|
|
3,642,405 |
|
Sands Bethlehem |
|
|
606,411 |
|
|
|
610,846 |
|
|
|
|
|
|
|
|
|
|
|
4,189,727 |
|
|
|
4,253,251 |
|
Singapore |
|
|
4,450,343 |
|
|
|
3,956,899 |
|
|
|
|
|
|
|
|
Total long-lived assets |
|
$ |
14,954,133 |
|
|
$ |
14,561,091 |
|
|
|
|
|
|
|
|
20
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
NOTE 12 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION
LVSC is the obligor of the Senior Notes due 2015. LVSLLC, VCR, Mall Intermediate Holding
Company, LLC, Venetian Venture Development, Venetian Transport, LLC, Venetian Marketing, Inc., Lido
Intermediate Holding Company, LLC and Lido Casino Resort Holding Company, LLC (collectively, the
“Original Guarantors”), have jointly and severally guaranteed the Senior Notes on a full and
unconditional basis. Effective May 2007, in conjunction with entering into the Senior Secured
Credit Facility, LVSC, the Original Guarantors and the trustee entered into a supplemental
indenture related to the Senior Notes, whereby the following subsidiaries were added as full and
unconditional guarantors on a joint and several basis: Interface Group-Nevada, Inc., Palazzo Condo
Tower, LLC, Sands Pennsylvania, Inc., Phase II Mall Holding, LLC and Phase II Mall Subsidiary, LLC
(collectively with the Original Guarantors, the “Guarantor Subsidiaries”). LVS (Nevada)
International Holdings, Inc. (“LVS Nevada”) and LVS Management Services, LLC, newly formed
subsidiaries, were added in September 2009 as full and unconditional guarantors to the Senior Notes
on a joint and several basis, and have been included in the group of subsidiaries that is the
Guarantor Subsidiaries. In November 2009, Venetian Venture Development was merged with and into LVS
Nevada, with LVS Nevada as the surviving entity. The voting stock of all entities included as
Guarantor Subsidiaries is 100% owned directly or indirectly by Las Vegas Sands Corp. The
noncontrolling interest amount included in the Guarantor Subsidiaries’ condensed consolidating
balance sheets is related to non-voting preferred stock of one of the subsidiaries held by third
parties.
In February 2008, all of the capital stock of Phase II Mall Subsidiary, LLC was sold to GGP
and in connection therewith, it was released as a guarantor under the Senior Notes. The sale is not
complete from an accounting perspective due to the Company’s continuing involvement in the
transaction related to the completion of construction on the remainder of The Shoppes at The
Palazzo, certain activities to be performed on behalf of GGP and the uncertainty of the final sales
price. Certain of the assets, liabilities, operating results and cash flows related to the
ownership and operation of the mall by Phase II Mall Subsidiary, LLC subsequent to the sale will
continue to be accounted for by the Guarantor Subsidiaries until the final sales price has been
determined, and therefore are included in the “Guarantor Subsidiaries” columns in the following
condensed consolidating financial information. As a result, net assets of $43.6 million (consisting
of $287.7 million of property and equipment, offset by $244.1 million of liabilities consisting
primarily of deferred proceeds from the sale) and $47.0 million (consisting of $291.1 million of
property and equipment, offset by $244.1 million of liabilities consisting primarily of deferred
proceeds from the sale) as of March 31, 2010 and December 31, 2009, respectively, and a net loss
(consisting primarily of depreciation expense) of $3.7 million and $2.5 million for the three
months ended March 31, 2010 and 2009, respectively, related to the mall and are being accounted for
by the Guarantor Subsidiaries. These balances and amounts are not collateral for the Senior Notes
and should not be considered as credit support for the guarantees of the Senior Notes.
The condensed consolidating financial information of LVSC, the Guarantor Subsidiaries and the
non-guarantor subsidiaries on a combined basis as of March 31, 2010 and December 31, 2009, and for
the three months ended March 31, 2010 and 2009, is as follows (in thousands):
21
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Condensed Consolidating Balance Sheets
March 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/ |
|
|
|
|
| |
|
Las Vegas |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
|
|
| |
|
Sands Corp. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Total |
|
Cash and cash equivalents |
|
$ |
426,721 |
|
|
$ |
2,028,645 |
|
|
$ |
1,296,479 |
|
|
$ |
— |
|
|
$ |
3,751,845 |
|
Restricted cash |
|
|
— |
|
|
|
2,709 |
|
|
|
294,620 |
|
|
|
— |
|
|
|
297,329 |
|
Investments |
|
|
— |
|
|
|
— |
|
|
|
173,868 |
|
|
|
— |
|
|
|
173,868 |
|
Intercompany receivables |
|
|
— |
|
|
|
70,754 |
|
|
|
19,034 |
|
|
|
(89,788 |
) |
|
|
— |
|
Accounts receivable, net |
|
|
— |
|
|
|
169,589 |
|
|
|
267,544 |
|
|
|
(1,059 |
) |
|
|
436,074 |
|
Inventories |
|
|
1,824 |
|
|
|
11,209 |
|
|
|
11,889 |
|
|
|
— |
|
|
|
24,922 |
|
Deferred income taxes, net |
|
|
— |
|
|
|
28,364 |
|
|
|
5,324 |
|
|
|
(4,912 |
) |
|
|
28,776 |
|
Prepaid expenses and other |
|
|
3,821 |
|
|
|
9,120 |
|
|
|
30,803 |
|
|
|
— |
|
|
|
43,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
432,366 |
|
|
|
2,320,390 |
|
|
|
2,099,561 |
|
|
|
(95,759 |
) |
|
|
4,756,558 |
|
Property and equipment, net |
|
|
142,043 |
|
|
|
3,728,609 |
|
|
|
9,865,486 |
|
|
|
— |
|
|
|
13,736,138 |
|
Investments in subsidiaries |
|
|
6,023,856 |
|
|
|
3,973,255 |
|
|
|
— |
|
|
|
(9,997,111 |
) |
|
|
— |
|
Deferred financing costs, net |
|
|
962 |
|
|
|
34,612 |
|
|
|
93,281 |
|
|
|
— |
|
|
|
128,855 |
|
Restricted cash |
|
|
— |
|
|
|
4,245 |
|
|
|
— |
|
|
|
— |
|
|
|
4,245 |
|
Intercompany receivables |
|
|
34,040 |
|
|
|
76,182 |
|
|
|
— |
|
|
|
(110,222 |
) |
|
|
— |
|
Intercompany notes receivable |
|
|
— |
|
|
|
543,163 |
|
|
|
— |
|
|
|
(543,163 |
) |
|
|
— |
|
Deferred income taxes, net |
|
|
52,784 |
|
|
|
— |
|
|
|
213 |
|
|
|
(30,008 |
) |
|
|
22,989 |
|
Leasehold interests in land, net |
|
|
— |
|
|
|
— |
|
|
|
1,217,995 |
|
|
|
— |
|
|
|
1,217,995 |
|
Other assets, net |
|
|
2,160 |
|
|
|
33,703 |
|
|
|
190,815 |
|
|
|
— |
|
|
|
226,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
6,688,211 |
|
|
$ |
10,714,159 |
|
|
$ |
13,467,351 |
|
|
$ |
(10,776,263 |
) |
|
$ |
20,093,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,494 |
|
|
$ |
24,395 |
|
|
$ |
59,999 |
|
|
$ |
(1,059 |
) |
|
$ |
86,829 |
|
Construction payables |
|
|
— |
|
|
|
2,709 |
|
|
|
770,543 |
|
|
|
— |
|
|
|
773,252 |
|
Intercompany payables |
|
|
26,745 |
|
|
|
— |
|
|
|
63,043 |
|
|
|
(89,788 |
) |
|
|
— |
|
Accrued interest payable |
|
|
1,779 |
|
|
|
388 |
|
|
|
14,425 |
|
|
|
— |
|
|
|
16,592 |
|
Other accrued liabilities |
|
|
5,190 |
|
|
|
157,925 |
|
|
|
662,536 |
|
|
|
— |
|
|
|
825,651 |
|
Income taxes payable |
|
|
6,889 |
|
|
|
— |
|
|
|
144 |
|
|
|
— |
|
|
|
7,033 |
|
Deferred income taxes |
|
|
4,912 |
|
|
|
— |
|
|
|
— |
|
|
|
(4,912 |
) |
|
|
— |
|
Current maturities of long-term debt |
|
|
3,688 |
|
|
|
95,975 |
|
|
|
187,156 |
|
|
|
— |
|
|
|
286,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
52,697 |
|
|
|
281,392 |
|
|
|
1,757,846 |
|
|
|
(95,759 |
) |
|
|
1,996,176 |
|
Other long-term liabilities |
|
|
48,907 |
|
|
|
11,122 |
|
|
|
27,375 |
|
|
|
— |
|
|
|
87,404 |
|
Intercompany payables |
|
|
22,976 |
|
|
|
— |
|
|
|
87,246 |
|
|
|
(110,222 |
) |
|
|
— |
|
Intercompany notes payable |
|
|
— |
|
|
|
— |
|
|
|
543,163 |
|
|
|
(543,163 |
) |
|
|
— |
|
Deferred amounts related to mall transactions |
|
|
— |
|
|
|
445,984 |
|
|
|
— |
|
|
|
— |
|
|
|
445,984 |
|
Deferred income taxes |
|
|
— |
|
|
|
30,008 |
|
|
|
— |
|
|
|
(30,008 |
) |
|
|
— |
|
Long-term debt |
|
|
293,838 |
|
|
|
3,930,505 |
|
|
|
5,950,231 |
|
|
|
— |
|
|
|
10,174,574 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
418,418 |
|
|
|
4,699,011 |
|
|
|
8,365,861 |
|
|
|
(779,152 |
) |
|
|
12,704,138 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock issued to Principal Stockholder’s family |
|
|
433,970 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
433,970 |
|
Total Las Vegas Sands Corp. stockholders’ equity |
|
|
5,835,823 |
|
|
|
6,014,743 |
|
|
|
3,982,368 |
|
|
|
(9,997,111 |
) |
|
|
5,835,823 |
|
Noncontrolling interests |
|
|
— |
|
|
|
405 |
|
|
|
1,119,122 |
|
|
|
— |
|
|
|
1,119,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
5,835,823 |
|
|
|
6,015,148 |
|
|
|
5,101,490 |
|
|
|
(9,997,111 |
) |
|
|
6,955,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
6,688,211 |
|
|
$ |
10,714,159 |
|
|
$ |
13,467,351 |
|
|
$ |
(10,776,263 |
) |
|
$ |
20,093,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Condensed Consolidating Balance Sheets
December 31, 2009
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/ |
|
|
|
|
| |
|
Las Vegas |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
|
|
| |
|
Sands Corp. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Total |
|
Cash and cash equivalents |
|
$ |
254,256 |
|
|
$ |
3,033,625 |
|
|
$ |
1,667,535 |
|
|
$ |
— |
|
|
$ |
4,955,416 |
|
Restricted cash |
|
|
— |
|
|
|
6,954 |
|
|
|
111,687 |
|
|
|
— |
|
|
|
118,641 |
|
Intercompany receivables |
|
|
— |
|
|
|
101,485 |
|
|
|
27,646 |
|
|
|
(129,131 |
) |
|
|
— |
|
Accounts receivable, net |
|
|
727 |
|
|
|
152,151 |
|
|
|
309,547 |
|
|
|
(1,659 |
) |
|
|
460,766 |
|
Inventories |
|
|
1,906 |
|
|
|
12,332 |
|
|
|
12,835 |
|
|
|
— |
|
|
|
27,073 |
|
Deferred income taxes, net |
|
|
— |
|
|
|
29,117 |
|
|
|
1,992 |
|
|
|
(4,667 |
) |
|
|
26,442 |
|
Prepaid expenses and other |
|
|
11,410 |
|
|
|
5,251 |
|
|
|
18,675 |
|
|
|
— |
|
|
|
35,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
268,299 |
|
|
|
3,340,915 |
|
|
|
2,149,917 |
|
|
|
(135,457 |
) |
|
|
5,623,674 |
|
Property and equipment, net |
|
|
140,684 |
|
|
|
3,786,061 |
|
|
|
9,424,526 |
|
|
|
— |
|
|
|
13,351,271 |
|
Investment in subsidiaries |
|
|
6,242,214 |
|
|
|
4,117,915 |
|
|
|
— |
|
|
|
(10,360,129 |
) |
|
|
— |
|
Deferred financing costs, net |
|
|
1,095 |
|
|
|
37,850 |
|
|
|
99,509 |
|
|
|
— |
|
|
|
138,454 |
|
Intercompany receivables |
|
|
34,029 |
|
|
|
85,725 |
|
|
|
— |
|
|
|
(119,754 |
) |
|
|
— |
|
Intercompany notes receivable |
|
|
— |
|
|
|
500,518 |
|
|
|
— |
|
|
|
(500,518 |
) |
|
|
— |
|
Deferred income taxes, net |
|
|
48,362 |
|
|
|
— |
|
|
|
243 |
|
|
|
(26,386 |
) |
|
|
22,219 |
|
Leasehold interests in land, net |
|
|
— |
|
|
|
— |
|
|
|
1,209,820 |
|
|
|
— |
|
|
|
1,209,820 |
|
Other assets, net |
|
|
2,338 |
|
|
|
27,555 |
|
|
|
196,775 |
|
|
|
— |
|
|
|
226,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
6,737,021 |
|
|
$ |
11,896,539 |
|
|
$ |
13,080,790 |
|
|
$ |
(11,142,244 |
) |
|
$ |
20,572,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,229 |
|
|
$ |
21,353 |
|
|
$ |
58,772 |
|
|
$ |
(1,659 |
) |
|
$ |
82,695 |
|
Construction payables |
|
|
— |
|
|
|
9,172 |
|
|
|
769,599 |
|
|
|
— |
|
|
|
778,771 |
|
Intercompany payables |
|
|
59,029 |
|
|
|
— |
|
|
|
70,102 |
|
|
|
(129,131 |
) |
|
|
— |
|
Accrued interest payable |
|
|
6,074 |
|
|
|
351 |
|
|
|
11,907 |
|
|
|
— |
|
|
|
18,332 |
|
Other accrued liabilities |
|
|
6,470 |
|
|
|
170,706 |
|
|
|
609,016 |
|
|
|
— |
|
|
|
786,192 |
|
Deferred income taxes |
|
|
4,667 |
|
|
|
— |
|
|
|
— |
|
|
|
(4,667 |
) |
|
|
— |
|
Current maturities of long-term debt |
|
|
3,688 |
|
|
|
81,374 |
|
|
|
88,253 |
|
|
|
— |
|
|
|
173,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
84,157 |
|
|
|
282,956 |
|
|
|
1,607,649 |
|
|
|
(135,457 |
) |
|
|
1,839,305 |
|
Other long-term liabilities |
|
|
48,907 |
|
|
|
10,621 |
|
|
|
22,431 |
|
|
|
— |
|
|
|
81,959 |
|
Intercompany payables |
|
|
15,166 |
|
|
|
— |
|
|
|
104,588 |
|
|
|
(119,754 |
) |
|
|
— |
|
Intercompany notes payable |
|
|
— |
|
|
|
— |
|
|
|
500,518 |
|
|
|
(500,518 |
) |
|
|
— |
|
Deferred amounts related to mall transactions |
|
|
— |
|
|
|
447,274 |
|
|
|
— |
|
|
|
— |
|
|
|
447,274 |
|
Deferred income taxes |
|
|
— |
|
|
|
26,386 |
|
|
|
— |
|
|
|
(26,386 |
) |
|
|
— |
|
Long-term debt |
|
|
327,258 |
|
|
|
4,739,753 |
|
|
|
5,785,136 |
|
|
|
— |
|
|
|
10,852,147 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
475,488 |
|
|
|
5,506,990 |
|
|
|
8,020,322 |
|
|
|
(782,115 |
) |
|
|
13,220,685 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock issued to Principal Stockholder’s family |
|
|
410,834 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
410,834 |
|
Total Las Vegas Sands Corp. stockholders’ equity |
|
|
5,850,699 |
|
|
|
6,389,144 |
|
|
|
3,970,985 |
|
|
|
(10,360,129 |
) |
|
|
5,850,699 |
|
Noncontrolling interests |
|
|
— |
|
|
|
405 |
|
|
|
1,089,483 |
|
|
|
— |
|
|
|
1,089,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
5,850,699 |
|
|
|
6,389,549 |
|
|
|
5,060,468 |
|
|
|
(10,360,129 |
) |
|
|
6,940,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
6,737,021 |
|
|
$ |
11,896,539 |
|
|
$ |
13,080,790 |
|
|
$ |
(11,142,244 |
) |
|
$ |
20,572,106 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Condensed Consolidating Statements of Operations
For the Three Months Ended March 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/ |
|
|
|
|
| |
|
Las Vegas |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
|
|
| |
|
Sands Corp. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Total |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino |
|
$ |
— |
|
|
$ |
155,345 |
|
|
$ |
906,425 |
|
|
$ |
— |
|
|
$ |
1,061,770 |
|
Rooms |
|
|
— |
|
|
|
120,067 |
|
|
|
60,715 |
|
|
|
— |
|
|
|
180,782 |
|
Food and beverage |
|
|
— |
|
|
|
43,522 |
|
|
|
48,557 |
|
|
|
— |
|
|
|
92,079 |
|
Convention, retail and other |
|
|
— |
|
|
|
51,022 |
|
|
|
66,241 |
|
|
|
(9,048 |
) |
|
|
108,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
369,956 |
|
|
|
1,081,938 |
|
|
|
(9,048 |
) |
|
|
1,442,846 |
|
Less — promotional allowances |
|
|
(132 |
) |
|
|
(50,650 |
) |
|
|
(56,485 |
) |
|
|
(691 |
) |
|
|
(107,958 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
|
(132 |
) |
|
|
319,306 |
|
|
|
1,025,453 |
|
|
|
(9,739 |
) |
|
|
1,334,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino |
|
|
— |
|
|
|
86,652 |
|
|
|
608,590 |
|
|
|
(607 |
) |
|
|
694,635 |
|
Rooms |
|
|
— |
|
|
|
23,211 |
|
|
|
6,443 |
|
|
|
— |
|
|
|
29,654 |
|
Food and beverage |
|
|
— |
|
|
|
18,332 |
|
|
|
27,599 |
|
|
|
(1,628 |
) |
|
|
44,303 |
|
Convention, retail and other |
|
|
— |
|
|
|
19,700 |
|
|
|
40,938 |
|
|
|
(2,234 |
) |
|
|
58,404 |
|
Provision for doubtful accounts |
|
|
— |
|
|
|
8,340 |
|
|
|
8,102 |
|
|
|
— |
|
|
|
16,442 |
|
General and administrative |
|
|
— |
|
|
|
56,575 |
|
|
|
69,948 |
|
|
|
(264 |
) |
|
|
126,259 |
|
Corporate expense |
|
|
20,271 |
|
|
|
81 |
|
|
|
8,124 |
|
|
|
(5,000 |
) |
|
|
23,476 |
|
Rental expense |
|
|
— |
|
|
|
— |
|
|
|
8,698 |
|
|
|
— |
|
|
|
8,698 |
|
Pre-opening expense |
|
|
178 |
|
|
|
2 |
|
|
|
37,285 |
|
|
|
(6 |
) |
|
|
37,459 |
|
Development expense |
|
|
157 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
157 |
|
Depreciation and amortization |
|
|
3,019 |
|
|
|
58,459 |
|
|
|
91,611 |
|
|
|
— |
|
|
|
153,089 |
|
Loss on disposal of assets |
|
|
— |
|
|
|
— |
|
|
|
492 |
|
|
|
— |
|
|
|
492 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,625 |
|
|
|
271,352 |
|
|
|
907,830 |
|
|
|
(9,739 |
) |
|
|
1,193,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(23,757 |
) |
|
|
47,954 |
|
|
|
117,623 |
|
|
|
— |
|
|
|
141,820 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
504 |
|
|
|
20,278 |
|
|
|
510 |
|
|
|
(19,659 |
) |
|
|
1,633 |
|
Interest expense, net of amounts capitalized |
|
|
(4,278 |
) |
|
|
(29,564 |
) |
|
|
(63,982 |
) |
|
|
19,659 |
|
|
|
(78,165 |
) |
Other expense |
|
|
— |
|
|
|
(16 |
) |
|
|
(6,432 |
) |
|
|
— |
|
|
|
(6,448 |
) |
Gain (loss) on early retirement of debt |
|
|
2,397 |
|
|
|
— |
|
|
|
(221 |
) |
|
|
— |
|
|
|
2,176 |
|
Income from equity investments in subsidiaries |
|
|
50,590 |
|
|
|
25,556 |
|
|
|
— |
|
|
|
(76,146 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
25,456 |
|
|
|
64,208 |
|
|
|
47,498 |
|
|
|
(76,146 |
) |
|
|
61,016 |
|
Income tax benefit (expense) |
|
|
(7,875 |
) |
|
|
(8,440 |
) |
|
|
3,113 |
|
|
|
— |
|
|
|
(13,202 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
17,581 |
|
|
|
55,768 |
|
|
|
50,611 |
|
|
|
(76,146 |
) |
|
|
47,814 |
|
Net income attributable to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
(30,233 |
) |
|
|
— |
|
|
|
(30,233 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Las Vegas Sands Corp. |
|
$ |
17,581 |
|
|
$ |
55,768 |
|
|
$ |
20,378 |
|
|
$ |
(76,146 |
) |
|
$ |
17,581 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Condensed Consolidating Statements of Operations
For the Three Months Ended March 31, 2009
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/ |
|
|
|
|
| |
|
Las Vegas |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
|
|
| |
|
Sands Corp. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Total |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino |
|
$ |
— |
|
|
$ |
129,819 |
|
|
$ |
668,106 |
|
|
$ |
— |
|
|
$ |
797,925 |
|
Rooms |
|
|
— |
|
|
|
122,949 |
|
|
|
51,439 |
|
|
|
— |
|
|
|
174,388 |
|
Food and beverage |
|
|
— |
|
|
|
47,095 |
|
|
|
40,213 |
|
|
|
— |
|
|
|
87,308 |
|
Convention, retail and other |
|
|
— |
|
|
|
44,867 |
|
|
|
73,410 |
|
|
|
(4,790 |
) |
|
|
113,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
344,730 |
|
|
|
833,168 |
|
|
|
(4,790 |
) |
|
|
1,173,108 |
|
Less-promotional allowances |
|
|
(158 |
) |
|
|
(42,817 |
) |
|
|
(50,159 |
) |
|
|
(912 |
) |
|
|
(94,046 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
|
(158 |
) |
|
|
301,913 |
|
|
|
783,009 |
|
|
|
(5,702 |
) |
|
|
1,079,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino |
|
|
— |
|
|
|
76,845 |
|
|
|
472,838 |
|
|
|
(786 |
) |
|
|
548,897 |
|
Rooms |
|
|
— |
|
|
|
26,585 |
|
|
|
7,182 |
|
|
|
— |
|
|
|
33,767 |
|
Food and beverage |
|
|
— |
|
|
|
19,160 |
|
|
|
25,124 |
|
|
|
(1,642 |
) |
|
|
42,642 |
|
Convention, retail and other |
|
|
— |
|
|
|
19,524 |
|
|
|
42,643 |
|
|
|
(2,924 |
) |
|
|
59,243 |
|
Provision for doubtful accounts |
|
|
— |
|
|
|
13,053 |
|
|
|
7,957 |
|
|
|
— |
|
|
|
21,010 |
|
General and administrative |
|
|
— |
|
|
|
62,437 |
|
|
|
59,216 |
|
|
|
(350 |
) |
|
|
121,303 |
|
Corporate expense |
|
|
19,621 |
|
|
|
67 |
|
|
|
3,736 |
|
|
|
— |
|
|
|
23,424 |
|
Rental expense |
|
|
— |
|
|
|
1,417 |
|
|
|
6,512 |
|
|
|
— |
|
|
|
7,929 |
|
Pre-opening expense |
|
|
290 |
|
|
|
92 |
|
|
|
44,552 |
|
|
|
— |
|
|
|
44,934 |
|
Development expense |
|
|
146 |
|
|
|
— |
|
|
|
108 |
|
|
|
— |
|
|
|
254 |
|
Depreciation and amortization |
|
|
2,621 |
|
|
|
56,920 |
|
|
|
79,708 |
|
|
|
— |
|
|
|
139,249 |
|
(Gain) loss on disposal of assets |
|
|
— |
|
|
|
(60 |
) |
|
|
191 |
|
|
|
— |
|
|
|
131 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,678 |
|
|
|
276,040 |
|
|
|
749,767 |
|
|
|
(5,702 |
) |
|
|
1,042,783 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
(22,836 |
) |
|
|
25,873 |
|
|
|
33,242 |
|
|
|
— |
|
|
|
36,279 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
4,539 |
|
|
|
2,620 |
|
|
|
174 |
|
|
|
(1,784 |
) |
|
|
5,549 |
|
Interest expense, net of amounts capitalized |
|
|
(4,787 |
) |
|
|
(29,501 |
) |
|
|
(38,614 |
) |
|
|
1,784 |
|
|
|
(71,118 |
) |
Other expense |
|
|
— |
|
|
|
(91 |
) |
|
|
(5,652 |
) |
|
|
— |
|
|
|
(5,743 |
) |
Loss from equity investments in subsidiaries |
|
|
(8,728 |
) |
|
|
(10,145 |
) |
|
|
— |
|
|
|
18,873 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(31,812 |
) |
|
|
(11,244 |
) |
|
|
(10,850 |
) |
|
|
18,873 |
|
|
|
(35,033 |
) |
Income tax benefit (expense) |
|
|
(2,794 |
) |
|
|
2,516 |
|
|
|
(535 |
) |
|
|
— |
|
|
|
(813 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
(34,606 |
) |
|
|
(8,728 |
) |
|
|
(11,385 |
) |
|
|
18,873 |
|
|
|
(35,846 |
) |
Net loss attributable to noncontrolling interests |
|
|
— |
|
|
|
— |
|
|
|
1,240 |
|
|
|
— |
|
|
|
1,240 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Las Vegas Sands Corp. |
|
$ |
(34,606 |
) |
|
$ |
(8,728 |
) |
|
$ |
(10,145 |
) |
|
$ |
18,873 |
|
|
$ |
(34,606 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 2010
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/ |
|
|
|
|
| |
|
Las Vegas |
|
|
Guarantor |
|
|
Non-Guarantor |
|
|
Eliminating |
|
|
|
|
| |
|
Sands Corp. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Total |
|
Net cash generated from (used in) operating activities |
|
$ |
(44,115 |
) |
|
$ |
103,595 |
|
|
$ |
223,314 |
|
|
$ |
— |
|
|
$ |
282,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in restricted cash |
|
|
— |
|
|
|
— |
|
|
|
(182,575 |
) |
|
|
— |
|
|
|
(182,575 |
) |
Capital expenditures |
|
|
(4,378 |
) |
|
|
(8,170 |
) |
|
|
(525,653 |
) |
|
|
— |
|
|
|
(538,201 |
) |
Proceeds from disposal of property and equipment |
|
|
— |
|
|
|
700 |
|
|
|
1,611 |
|
|
|
— |
|
|
|
2,311 |
|
Purchases of investments |
|
|
— |
|
|
|
— |
|
|
|
(173,978 |
) |
|
|
— |
|
|
|
(173,978 |
) |
Notes receivable to non-guarantor subsidiaries |
|
|
— |
|
|
|
(42,695 |
) |
|
|
— |
|
|
|
42,695 |
|
|
|
— |
|
Repayment of receivable from non-guarantor subsidiaries |
|
|
— |
|
|
|
50 |
|
|
|
— |
|
|
|
(50 |
) |
|
|
— |
|
Dividends from Guarantor Subsidiaries |
|
|
1,675,313 |
|
|
|
— |
|
|
|
— |
|
|
|
(1,675,313 |
) |
|
|
— |
|
Dividends from non-guarantor subsidiaries |
|
|
— |
|
|
|
11,500 |
|
|
|
— |
|
|
|
(11,500 |
) |
|
|
— |
|
Capital contributions to subsidiaries |
|
|
(1,400,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
1,400,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from (used in) investing activities |
|
|
270,935 |
|
|
|
(38,615 |
) |
|
|
(880,595 |
) |
|
|
(244,168 |
) |
|
|
(892,443 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options |
|
|
73 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
73 |
|
Dividends paid to preferred stockholders |
|
|
(23,350 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(23,350 |
) |
Dividends paid to Las Vegas Sands Corp. |
|
|
— |
|
|
|
(1,675,313 |
) |
|
|
— |
|
|
|
1,675,313 |
|
|
|
— |
|
Dividends paid to Guarantor Subsidiaries |
|
|
— |
|
|
|
— |
|
|
|
(11,500 |
) |
|
|
11,500 |
|
|
|
— |
|
Capital contributions received |
|
|
— |
|
|
|
1,400,000 |
|
|
|
— |
|
|
|
(1,400,000 |
) |
|
|
— |
|
Borrowings from Guarantor Subsidiaries |
|
|
— |
|
|
|
— |
|
|
|
42,695 |
|
|
|
(42,695 |
) |
|
|
— |
|
Repayment on borrowings from Guarantor Subsidiaries |
|
|
— |
|
|
|
— |
|
|
|
(50 |
) |
|
|
50 |
|
|
|
— |
|
Proceeds from Singapore credit facility |
|
|
— |
|
|
|
— |
|
|
|
272,056 |
|
|
|
— |
|
|
|
272,056 |
|
Repayments on senior secured credit facility |
|
|
— |
|
|
|
(785,860 |
) |
|
|
— |
|
|
|
— |
|
|
|
(785,860 |
) |
Repayments on Macau credit facility |
|
|
— |
|
|
|
— |
|
|
|
(12,525 |
) |
|
|
— |
|
|
|
(12,525 |
) |
Repayments on senior notes |
|
|
(30,156 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(30,156 |
) |
Repayments on ferry financing |
|
|
— |
|
|
|
— |
|
|
|
(8,762 |
) |
|
|
— |
|
|
|
(8,762 |
) |
Repayments on airplane financings |
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
Repayments on HVAC equipment lease |
|
|
— |
|
|
|
(437 |
) |
|
|
— |
|
|
|
— |
|
|
|
(437 |
) |
Repayments on FF&E facility and other long-term debt |
|
|
— |
|
|
|
(8,350 |
) |
|
|
(314 |
) |
|
|
— |
|
|
|
(8,664 |
) |
Payments of deferred financing costs |
|
|
— |
|
|
|
— |
|
|
|
(821 |
) |
|
|
— |
|
|
|
(821 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from (used in) financing activities |
|
|
(54,355 |
) |
|
|
(1,069,960 |
) |
|
|
280,779 |
|
|
|
244,168 |
|
|
|
(599,368 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash |
|
|
— |
|
|
|
— |
|
|
|
5,446 |
|
|
|
— |
|
|
|
5,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
172,465 |
|
|
|
(1,004,980 |
) |
|
|
(371,056 |
) |
|
|
— |
|
|
|
(1,203,571 |
) |
Cash and cash equivalents at beginning of period |
|
|
254,256 |
|
|
|
3,033,625 |
|
|
|
1,667,535 |
|
|
|
— |
|
|
|
4,955,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
426,721 |
|
|
$ |
2,028,645 |
|
|
$ |
1,296,479 |
|
|
$ |
— |
|
|
$ |
3,751,845 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS — CONTINUED
(UNAUDITED)
Condensed Consolidating Statements of Cash Flows
For the Three Months Ended March 31, 2009
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Non- |
|
|
Consolidating/ |
|
|
|
|
| |
|
Las Vegas |
|
|
Guarantor |
|
|
Guarantor |
|
|
Eliminating |
|
|
|
|
| |
|
Sands Corp. |
|
|
Subsidiaries |
|
|
Subsidiaries |
|
|
Entries |
|
|
Total |
|
Net cash generated from (used in) operating activities |
|
$ |
(15,814 |
) |
|
$ |
32,993 |
|
|
$ |
128,536 |
|
|
$ |
— |
|
|
$ |
145,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in restricted cash |
|
|
— |
|
|
|
6 |
|
|
|
90,134 |
|
|
|
— |
|
|
|
90,140 |
|
Capital expenditures |
|
|
(861 |
) |
|
|
(56,697 |
) |
|
|
(466,283 |
) |
|
|
— |
|
|
|
(523,841 |
) |
Dividend received from Guarantor Subsidiaries |
|
|
13,416 |
|
|
|
— |
|
|
|
— |
|
|
|
(13,416 |
) |
|
|
— |
|
Intercompany receivables to non-guarantor subsidiaries |
|
|
(55,000 |
) |
|
|
(86,760 |
) |
|
|
— |
|
|
|
141,760 |
|
|
|
— |
|
Repayments of receivable from Guarantor Subsidiaries |
|
|
9,642 |
|
|
|
— |
|
|
|
— |
|
|
|
(9,642 |
) |
|
|
— |
|
Capital contributions to subsidiaries |
|
|
(116,115 |
) |
|
|
(66,032 |
) |
|
|
— |
|
|
|
182,147 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(148,918 |
) |
|
|
(209,483 |
) |
|
|
(376,149 |
) |
|
|
300,849 |
|
|
|
(433,701 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to preferred stockholders |
|
|
(24,473 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(24,473 |
) |
Purchase of treasury stock |
|
|
(13 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
Dividends paid to Las Vegas Sands Corp. |
|
|
— |
|
|
|
(13,416 |
) |
|
|
— |
|
|
|
13,416 |
|
|
|
— |
|
Capital contributions received |
|
|
— |
|
|
|
116,115 |
|
|
|
66,032 |
|
|
|
(182,147 |
) |
|
|
— |
|
Borrowings from Las Vegas Sands Corp. |
|
|
— |
|
|
|
— |
|
|
|
55,000 |
|
|
|
(55,000 |
) |
|
|
— |
|
Borrowings from Guarantor Subsidiaries |
|
|
— |
|
|
|
— |
|
|
|
86,760 |
|
|
|
(86,760 |
) |
|
|
— |
|
Repayments on borrowings from Las Vegas Sands Corp. |
|
|
— |
|
|
|
(9,642 |
) |
|
|
— |
|
|
|
9,642 |
|
|
|
— |
|
Proceeds from Singapore credit facility |
|
|
— |
|
|
|
— |
|
|
|
171,026 |
|
|
|
— |
|
|
|
171,026 |
|
Proceeds from ferry financing |
|
|
— |
|
|
|
— |
|
|
|
6,403 |
|
|
|
— |
|
|
|
6,403 |
|
Repayments on Macau credit facility |
|
|
— |
|
|
|
— |
|
|
|
(125,000 |
) |
|
|
— |
|
|
|
(125,000 |
) |
Repayments on senior secured credit facility |
|
|
— |
|
|
|
(10,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
(10,000 |
) |
Repayments on airplane financings |
|
|
(922 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(922 |
) |
Repayments on FF&E facility and other long-term debt |
|
|
— |
|
|
|
(8,350 |
) |
|
|
(303 |
) |
|
|
— |
|
|
|
(8,653 |
) |
Contribution from noncontrolling interest |
|
|
— |
|
|
|
— |
|
|
|
41 |
|
|
|
— |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash generated from (used in) financing activities |
|
|
(25,408 |
) |
|
|
74,707 |
|
|
|
259,959 |
|
|
|
(300,849 |
) |
|
|
8,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash |
|
|
— |
|
|
|
— |
|
|
|
(114 |
) |
|
|
— |
|
|
|
(114 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents |
|
|
(190,140 |
) |
|
|
(101,783 |
) |
|
|
12,232 |
|
|
|
— |
|
|
|
(279,691 |
) |
Cash and cash equivalents at beginning of period |
|
|
294,563 |
|
|
|
2,286,825 |
|
|
|
456,775 |
|
|
|
— |
|
|
|
3,038,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
104,423 |
|
|
$ |
2,185,042 |
|
|
$ |
469,007 |
|
|
$ |
— |
|
|
$ |
2,758,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
|
|
|
| ITEM 2 |
|
— 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 condensed consolidated financial statements and the notes thereto, and other financial
information included in this Form 10-Q. 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.”
Operations
We view each of our casino properties as an operating segment. Our operating segments in the
United States consist of The Venetian Resort Hotel Casino (“The Venetian Las Vegas”), The Palazzo
Resort Hotel Casino (“The Palazzo”) and the Sands Casino Resort Bethlehem (the “Sands Bethlehem”).
The Venetian Las Vegas and The Palazzo operating segments are managed as a single integrated resort
and have been aggregated into one reportable segment (the “Las Vegas Operating Properties”),
considering their similar economic characteristics, types of customers, types of service and
products, the regulatory business environment of the operations within each segment and our
organizational and management reporting structure. Our operating segments in the Macau Special
Administrative Region of the People’s Republic of China (“Macau”) consist of the Sands Macao; The
Venetian Macao Resort Hotel (“The Venetian Macao”); the Four Seasons Hotel Macao, Cotai
StripTM and the Plaza Casino (collectively, the “Four Seasons Macao”); and
other ancillary operations in that region (“Other Asia”).
United States
Las Vegas
Our Las Vegas Operating Properties, situated on or near the Las Vegas Strip, consist of The
Venetian Las Vegas, a Renaissance Venice-themed resort; The Palazzo, a resort featuring modern
European ambience and design; and an expo and convention center of approximately 1.2 million square
feet (the “Sands Expo Center”). Our Las Vegas Operating Properties represent an integrated resort
with approximately 7,100 suites and approximately 225,000 square feet of gaming space. Our Las
Vegas Operating Properties also feature a meeting and conference facility of approximately
1.1 million square feet; Canyon Ranch SpaClub facilities; a Paiza ClubTM
offering services and amenities to premium customers, including luxurious VIP suites, spa
facilities and private VIP gaming room facilities; entertainment facilities; an enclosed retail,
dining and entertainment complex located within The Venetian Las Vegas of approximately 440,000 net
leasable square feet (“The Grand Canal Shoppes”), which was sold to GGP Limited Partnership (“GGP”)
in 2004; and an enclosed retail and dining complex located within The Palazzo of approximately
400,000 net leasable square feet (“The Shoppes at The Palazzo”), which was sold to GGP in February
2008. See “Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements —
Note 3 — Property and Equipment, Net” regarding the sale of The Shoppes at The Palazzo.
Approximately 58.8% and 64.1% of gross revenue at our Las Vegas Operating Properties for the
three months ended March 31, 2010 and 2009, respectively, was derived from room revenues, food and
beverage services, and other non-gaming sources, and 41.2% and 35.9%, respectively, was derived
from gaming activities. The percentage of non-gaming revenue reflects the integrated resort’s
emphasis on the group convention and trade show business.
Pennsylvania
We are in the process of developing Sands Bethlehem, a gaming, hotel, retail and dining
complex located on the site of the historic Bethlehem Steel Works in Bethlehem, Pennsylvania. Sands
Bethlehem is also expected to be home to the National Museum of Industrial History, an arts and
cultural center, and the broadcast home of the local PBS affiliate. We own 86% of the economic
interest of the gaming, hotel and entertainment portion of the property through our ownership
interest in Sands Bethworks Gaming LLC and more than 35% of the economic interest of the retail
portion of the property through our ownership interest in Sands Bethworks Retail, LLC.
28
On May 22, 2009, we opened the casino component of Sands Bethlehem, which features slot
machines and several food and beverage offerings, as well as the parking garage and surface
parking. In April 2010, we received approval of our table games
application from the Pennsylvania Gaming Control Board that will allow Sands Bethlehem to
operate table games, which we are targeting to commence in the third quarter of 2010, and have recommenced
construction of a 300-room hotel tower, which is expected to open in the second quarter
of 2011. Construction activities on the remaining components, which include an approximate
200,000-square-foot retail facility, a 50,000-square-foot multipurpose event center and a variety
of additional dining options, have been suspended temporarily and are intended to recommence when
capital markets and general economic conditions improve, and when the suspended components are able
to be financed.
Macau
Sands China Ltd. (“SCL,” the indirect owner and operator of the majority of the
Company’s Macau operations), completed an initial public offering by listing its ordinary shares
(the “SCL Offering”) on The Main Board of The Stock Exchange of Hong Kong Limited. SCL, of which we
own 70.3%, includes the operations of the Sands Macao, The Venetian Macao, Four Seasons Macao and
other ancillary operations that support these properties. We operate the gaming areas within these
properties pursuant to a 20-year gaming subconcession.
We own and operate the Sands Macao, the first Las Vegas-style casino in Macau, pursuant to a
20-year gaming subconcession. The Sands Macao includes approximately 229,000 square feet of gaming
space; a 289-suite hotel tower; several restaurants; a spacious Paiza Club; a theater and other
high-end services and amenities. Approximately 94.3% and 92.5% of the gross revenue at the Sands
Macao for the three months ended March 31, 2010 and 2009, respectively, was derived from gaming
activities, with the remainder primarily derived from room revenues and food and beverage services.
We also own and operate The Venetian Macao, the anchor property of our master-planned
development of integrated resort properties that we refer to as the Cotai
StripTM in Macau. The Venetian Macao, with a theme similar to that of The
Venetian Las Vegas, features a 39-floor luxury hotel with over 2,900 suites; approximately
550,000 square feet of gaming space; approximately 1.0 million square feet of retail and dining
offerings; a convention center and meeting room complex of approximately 1.2 million square feet; a
15,000-seat arena that has hosted a wide range of entertainment and sporting events; and an
1,800-seat theater that features an original production from Cirque du Soleil. Approximately 82.3%
and 81.5% of the gross revenue at The Venetian Macao for the three months ended March 31, 2010 and
2009, respectively, was derived from gaming activities, with the remainder derived from room
revenues, food and beverage services, and other non-gaming sources.
In August 2008, we opened the Four Seasons Macao, which is located adjacent and connected to
The Venetian Macao. The Four Seasons Macao is an integrated resort that features 360 rooms and
suites managed and operated by Four Seasons Hotels Inc.; 19 Paiza mansions; approximately
70,000 square feet of gaming space; retail space of approximately 211,000 square feet, which is
connected to the mall at The Venetian Macao; several food and beverage offerings; and conference,
banquet and other facilities operated by us. The property will also feature the Four Seasons
Apartment Hotel Macao, Cotai Strip (the “Four Seasons Apartments”), an apart-hotel tower that
consists of approximately 1.0 million square feet of Four Seasons-serviced and -branded luxury
apart-hotel units and common areas. We have completed the structural work of the tower and expect
to monetize the units within the Four Seasons Apartments subject to market conditions and obtaining
the necessary government approvals. Approximately 83.1% and 70.0% of the gross revenue at the Four
Seasons Macao for the three months ended March 31, 2010 and 2009, respectively, was derived from
gaming activities, with the remainder primarily derived from mall revenues, room revenues and other
non-gaming sources.
Development Projects
Given the challenging conditions in the capital markets and the global economy and their
impact on our ongoing operations, we revised our development plan to suspend portions of our
development projects and focus our development efforts on those projects with the highest expected
rates of return on invested capital. Should general economic conditions fail to improve, if we are
unable to obtain sufficient funding such that completion of our suspended projects is not probable,
or should management decide to abandon certain projects, all or a portion of our investment to date
on our suspended projects could be lost and would result in an impairment charge. In addition, we
may be subject to penalties under the termination clauses in our construction contracts or
termination rights under our management contracts with certain hotel management companies.
United States
We were constructing a St. Regis-branded high-rise residential condominium tower, the St.
Regis Residences at The Venetian Palazzo (the “St. Regis Residences”), located on the Las Vegas
Strip between The Palazzo and The Venetian. As part of our revised development plan, we suspended
our construction activities for the project due to reduced demand for Las Vegas Strip condominiums
and the overall decline in general economic conditions. We intend to recommence construction
when demand and conditions improve and expect that it will take approximately 18 months thereafter
to complete construction of the project. As of March 31, 2010, we have capitalized construction
costs of $184.9 million for this project. The impact of the suspension on the estimated overall
cost of the project is currently not determinable with certainty.
29
Macau
We submitted plans to the Macau government for our other Cotai Strip developments, which
represent three integrated resort developments, in addition to The Venetian Macao and Four Seasons
Macao, on an area of approximately 200 acres (which we refer to as parcels 3, 5 and 6, and 7 and
8). Subject to the approval from the Macau government, the developments are expected to include
hotels, exhibition and conference facilities, gaming areas, showrooms, spas, dining, retail and
entertainment facilities and other amenities. We commenced construction or pre-construction on
these developments and plan to operate the related gaming areas under our Macau gaming
subconcession. In addition, we are completing the development of some public areas surrounding our
Cotai Strip properties on behalf of the Macau government. We currently intend to develop our other
Cotai Strip properties as follows:
| |
• |
|
Parcels 5 and 6 — Under our revised development plan, we are sequencing the construction
of the integrated resort on parcels 5 and 6 due to difficulties in the capital markets and
overall decline in general economic conditions. Upon completion of phases I and II of the
project, the integrated resort will feature approximately 6,000 luxury and mid-scale hotel
rooms, approximately 300,000 square feet of gaming space, approximately 1.2 million square
feet of retail, entertainment and dining facilities, exhibition and conference facilities
and a multipurpose theater. Phase I of the project is expected to include two hotel towers
with approximately 3,700 hotel rooms to be managed by Shangri-La International Hotel
Management Limited (“Shangri-La”) under its Shangri-La and Traders brands and Sheraton
International Inc. and Sheraton Overseas Management Co. (collectively “Starwood”) under its
Sheraton brand, as well as completion of the structural work of an adjacent hotel tower with
approximately 2,300 rooms to be managed by Starwood under its Sheraton brand. Phase I will
also include the gaming space, theater and a partial opening of the retail and exhibition
and conference facilities. The total cost to complete phase I is expected to be
approximately $2.0 billion. Phase II of the project includes completion of the additional Sheraton
hotel tower as well as the remaining retail facilities. The total cost to complete phase II
is expected to be approximately $235 million. Phase III of the project is expected to
include a fourth hotel and mixed-use tower to be managed by Starwood under its St. Regis
brand. The total cost to complete phase III is expected to be approximately $450 million. In
connection with receiving commitments for a proposed $1.75 billion project financing credit
facility (which we expect to close in the second quarter of 2010) to be used together with
$500.0 million of proceeds from the SCL Offering, we are mobilizing to recommence
construction of phases I and II and expect that phase I will be completed in the third
quarter of 2011, and that it will take an additional six months thereafter to complete the
adjacent Sheraton tower in phase II and an additional 24 months thereafter to complete the
remaining retail facilities in phase II. We intend to commence construction of phase III of
the project as demand and market conditions warrant it. As of March 31, 2010, we have
capitalized construction costs of $1.75 billion for the entire project (including $132.7
million in outstanding construction payables). Our management agreements with Starwood and
Shangri-La impose certain construction deadlines and opening obligations on us and certain
past and/or anticipated delays, as described above, may represent a default under the
respective agreements, which would allow Starwood and Shangri-La to terminate their
respective agreements. We are currently negotiating amendments to the management agreements
with Starwood and Shangri-La to provide for new opening timelines, which we expect to
finalize in the second quarter of 2010. |
| |
• |
|
Parcels 7 and 8 — The integrated resort on parcels 7 and 8 is expected to be similar in
size and scope to the integrated resort on parcels 5 and 6. We had commenced
pre-construction and have capitalized construction costs of $114.1 million as of March 31,
2010. We intend to commence construction after the integrated resorts on parcels 5 and 6 and
3 are complete, necessary government approvals are obtained, regional and global economic
conditions improve, future demand warrants it and additional financing is obtained. |
| |
• |
|
Parcel 3 — The integrated resort on parcel 3 will be connected to The Venetian Macao and
Four Seasons Macao. The multi-hotel complex is intended to include a gaming area, a shopping
mall and serviced luxury apart-hotel units. We had commenced pre-construction and have
capitalized construction costs of $35.6 million as of March 31, 2010. We intend to commence
construction after the integrated resort on parcels 5 and 6 is complete, necessary
government approvals are obtained, regional and global economic conditions improve, future
demand warrants it and additional financing is obtained. |
The impact of the delayed construction on our previously estimated cost to complete our Cotai
Strip developments is currently not determinable with certainty. As of March 31, 2010, we have
capitalized an aggregate of $5.86 billion in construction costs for our Cotai Strip developments,
including The Venetian Macao and Four Seasons Macao, as well as our investments in transportation
infrastructure, including our passenger ferry service operations. In addition to receiving
commitments for project financing for phases I and II of parcels 5 and 6, we will need to arrange additional financing to
fund the balance of our Cotai Strip developments and there is no assurance that we will be
able to obtain any of the additional financing required.
30
We have received a land concession from the Macau government to build on parcels 1, 2 and 3,
including the sites on which The Venetian Macao (parcel 1) and Four Seasons Macao (parcel 2) are
located. We do not own these land sites in Macau; however, the land concession, which has an
initial term of 25 years and is renewable at our option in accordance with Macau law, grants us
exclusive use of the land. As specified in the land concession, we are required to pay premiums for
each parcel, which are either payable in a single lump sum upon acceptance of our land concession
by the Macau government or in seven semi-annual installments (provided that the outstanding balance
is due upon the completion of the corresponding integrated resort), as well as annual rent for the
term of the land concession.
Under our land concession for parcel 3, we were initially required to complete the
corresponding development by August 2011. The Macau government has granted us a two-year extension
to complete the development of parcel 3, which now must be completed by April 2013. We believe that
if we are not able to complete the development by the revised deadline, we likely will be able to obtain
another extension from the Macau government; however, no assurances can be given that an additional
extension will be granted. If we are unable to meet the April 2013 deadline and that deadline is
not extended, we could lose our land concession for parcel 3, which would prohibit us from
operating any facilities developed under the land concession. As a result, we could forfeit all or
a substantial portion of our $35.6 million in capitalized costs, as of March 31, 2010, related to
our development on parcel 3.
In November 2009, we formally accepted the terms and conditions of the final draft of the land
concession agreement received from the Macau government for parcels 5 and 6 and made an initial
premium payment of 700.0 million patacas (approximately $87.5 million at exchange rates in effect
on March 31, 2010). The land concession will not become effective until the date it is published in
Macau’s Official Gazette. Once the land concession becomes effective, we will be required to make
additional land premium and annual rent payments in the amounts and at the times specified in the
land concession. The land concession requires us to complete the development of the integrated
resort on parcels 5 and 6 within 48 months of the date it is published in Macau’s Official Gazette.
If we are not able to meet this deadline, we will need to obtain an extension to complete the
development on parcels 5 and 6; however, no assurances can be given that such extension will be
granted. If we are unable to the meet the deadline and that deadline is not extended, we could lose
our land concession for parcels 5 and 6, which would prohibit us from operating any facilities
developed under the land concession. As a result, we could forfeit all or a substantial portion of
our $1.75 billion in capitalized costs, as of March 31, 2010, related to our development on parcels
5 and 6.
We do not yet have all of the necessary Macau government approvals to develop our planned
Cotai Strip developments on parcels 3, 5 and 6, and 7 and 8. We have received a land concession for
parcel 3 and will negotiate the land concession for parcels 7 and 8 once the land concession for
parcels 5 and 6, as previously noted, is finalized. Based on historical experience with the Macau
government with respect to our land concessions for the Sands Macao and parcels 1, 2, 3 and 5 and
6, management believes that the land concessions for parcels 7 and 8 will be granted; however, if
we do not obtain these land concessions, we could forfeit all or a substantial portion of our
$114.1 million in capitalized costs, as of March 31, 2010, related to our developments on parcels 7
and 8.
Singapore
Our wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”), entered into a development
agreement (the “Development Agreement”) with the Singapore Tourism Board (the “STB”) to build and
operate an integrated resort called Marina Bay Sands in Singapore. Marina Bay Sands, portions of
which opened on April 27, 2010, is expected to include three 55-story hotel towers (totaling
approximately 2,600 rooms and suites), a casino, an enclosed retail, dining and entertainment
complex of approximately 800,000 net leasable square feet, a convention center and meeting room
complex of approximately 1.3 million square feet, theaters and a landmark iconic structure at the
bay-front promenade that will contain an art/science museum. As of March 31, 2010, we have
capitalized 6.31 billion Singapore dollars (“SGD,” approximately $4.51 billion at exchange rates in
effect on March 31, 2010) in costs for this project, including the land premium and SGD 762.3
million (approximately $544.9 million at exchange rates in effect on March 31, 2010) in outstanding
construction payables. We expect to spend approximately SGD 2.5 billion (approximately $1.8 billion
at exchange rates in effect on March 31, 2010) through 2011 on additional costs to complete the
construction of the integrated resort, FF&E, pre-opening and other costs, and to pay outstanding
construction payables, as noted above, of which approximately SGD 1.9 billion (approximately $1.4
billion at exchange rates in effect on March 31, 2010) is expected to be spent during 2010. As we
have obtained Singapore-denominated financing and primarily pay our costs in Singapore dollars, our
exposure to foreign exchange gains and losses is expected to be minimal. Based on our current
development plan, we expect to progressively open the remaining portions of Marina Bay Sands throughout 2010.
31
Other
When the current economic environment and access to capital improve, we may continue exploring
the possibility of developing and operating additional properties, including integrated resorts, in
additional Asian and U.S. jurisdictions, and in Europe.
Critical Accounting Policies and Estimates
The preparation of our condensed 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 are
based on historical information, information that is currently available to us and on various other
assumptions that 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 financial condition
and results of operations. We believe that these critical accounting policies affect our more
significant judgments and estimates used in the preparation of our condensed consolidated financial
statements. For a discussion of our significant accounting policies and estimates, please refer to
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented
in our 2009 Annual Report on Form 10-K filed on March 1, 2010.
There were no newly identified significant accounting estimates in the three months ended
March 31, 2010, nor were there any material changes to the critical accounting policies and
estimates discussed in our 2009 Annual Report.
Recent Accounting Pronouncements
See related disclosure at “Item 1 — Financial Statements — Notes to Condensed Consolidated
Financial Statements — Note 1 — Organization and Business of Company — Recent Accounting
Pronouncements.”
Summary Financial Results
The following table summarizes our results of operations:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
|
|
|
|
|
|
|
|
Percent |
|
| |
|
2010 |
|
|
2009 |
|
|
Change |
|
| |
|
(Dollars in thousands) |
|
Net revenues |
|
$ |
1,334,888 |
|
|
$ |
1,079,062 |
|
|
|
23.7 |
% |
Operating expenses |
|
|
1,193,068 |
|
|
|
1,042,783 |
|
|
|
14.4 |
% |
Operating income |
|
|
141,820 |
|
|
|
36,279 |
|
|
|
290.9 |
% |
Income (loss) before income taxes |
|
|
61,016 |
|
|
|
(35,033 |
) |
|
|
(274.2 |
)% |
Net income (loss) |
|
|
47,814 |
|
|
|
(35,846 |
) |
|
|
(233.4 |
)% |
Net income (loss) attributable to Las Vegas Sands Corp. |
|
|
17,581 |
|
|
|
(34,606 |
) |
|
|
(150.8 |
)% |
| |
|
|
|
|
|
|
|
|
| |
|
Percent of Net Revenues |
|
| |
|
Three Months |
|
| |
|
Ended March 31, |
|
| |
|
2010 |
|
|
2009 |
|
Operating expenses |
|
|
89.4 |
% |
|
|
96.6 |
% |
Operating income |
|
|
10.6 |
% |
|
|
3.4 |
% |
Income (loss) before income taxes |
|
|
4.6 |
% |
|
|
(3.2 |
)% |
Net income (loss) |
|
|
3.6 |
% |
|
|
(3.3 |
)% |
Net income (loss) attributable to Las Vegas Sands Corp. |
|
|
1.3 |
% |
|
|
(3.2 |
)% |
Operating Results
Key Operating Revenue Measurements
Operating revenues at our Las Vegas Operating Properties, The Venetian Macao and Four Seasons
Macao are dependent upon the volume of customers who stay at the hotel, which affects the price
that can be charged for hotel rooms and the volume of table games and slot machine play. Operating
revenues at Sands Macao and Sands Bethlehem are principally driven by casino customers who visit
the properties on a daily basis.
32
The following are the key measurements we use to evaluate operating revenues:
Casino revenue measurements for the U.S.: Table games drop (“drop”) and slot handle (“handle”)
are volume measurements. Win or hold percentage represents the percentage of drop or handle that is
won by the casino and recorded as casino revenue. Table games drop represents the sum of markers
issued (credit instruments) less markers paid at the table, plus cash deposited in the table drop
box. Slot handle is the gross amount wagered for the period cited. We view table games win as a
percentage of drop and slot hold as a percentage of slot handle. Based upon our mix of table games,
our table games have produced a trailing 12-month win percentage (calculated before discounts) of 17.3% and slot
machines produce a statistical average
hold percentage (calculated before slot club cash incentives) generally between 6.0% and 7.0%. Actual win may vary from the statistical average. Generally, slot
machine play is conducted on a cash basis, while approximately 65.9% of our table games play, for
the three months ended March 31, 2010, was conducted on a credit basis.
Casino revenue measurements for Macau: Macau table games are segregated into two groups,
consistent with the Macau market’s convention: Rolling Chip play (all 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
as previously described. Rolling Chip and Non-Rolling Chip volume measurements are not comparable
as the amounts wagered and lost are substantially higher than the amounts dropped. Slot handle 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 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. Based upon our mix of table games, our Rolling Chip win percentage (calculated before discounts and commissions) is expected to be 2.7% to 3.0% and our
Non-Rolling Chip table games have produced a trailing 12-month win percentage of 23.6%, 19.5% and 23.7% at The Venetian
Macao, Sands Macao and Four Seasons Macao, respectively. Similar to Las Vegas, our Macau slot machines
produce a statistical average win percentage generally
between 6.0% and 7.0%. Actual win may vary from the statistical average. Generally, gaming is
conducted on a cash basis, with only 34.9% of our table games play, for the three months ended
March 31, 2010, being conducted on a credit basis. This percentage is expected to increase as we
increase the credit extended to our premium players and gaming promoters for table games play.
Hotel revenue measurements: Hotel occupancy rate, which is the average percentage of available
hotel rooms occupied during a period, and average daily room rate, which is the average price of
occupied rooms per day, are used as performance indicators. Revenue per available room represents a
summary of hotel average daily room rates and occupancy. Because not all available rooms are
occupied, average daily room rates are normally higher than revenue per available room. Reserved
rooms where the guests do not show up for their stay and lose their deposit may be re-sold to
walk-in guests. These rooms are considered to be occupied twice for statistical purposes due to
obtaining the original deposit and the walk-in guest revenue. In cases where a significant number
of rooms are resold, occupancy rates may be in excess of 100% and revenue per available room may be
higher than the average daily room rate.
Three Months Ended March 31, 2010 Compared to the Three Months Ended March 31, 2009
Operating Revenues
Our net revenues consisted of the following:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
|
|
|
|
|
|
|
|
Percent |
|
| |
|
2010 |
|
|
2009 |
|
|
Change |
|
| |
|
(Dollars in thousands) |
|
Casino |
|
$ |
1,061,770 |
|
|
$ |
797,925 |
|
|
|
33.1 |
% |
Rooms |
|
|
180,782 |
|
|
|
174,388 |
|
|
|
3.7 |
% |
Food and beverage |
|
|
92,079 |
|
|
|
87,308 |
|
|
|
5.5 |
% |
Convention, retail and other |
|
|
108,215 |
|
|
|
113,487 |
|
|
|
(4.6 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,442,846 |
|
|
|
1,173,108 |
|
|
|
23.0 |
% |
Less — promotional allowances |
|
|
(107,958 |
) |
|
|
(94,046 |
) |
|
|
14.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total net revenues |
|
$ |
1,334,888 |
|
|
$ |
1,079,062 |
|
|
|
23.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues were $1.33 billion for the three months ended March 31, 2010, an
increase of $255.8 million as compared to the $1.08 billion for the three months ended March 31,
2009. The increase in net revenues was driven by $67.2 million of net revenues at Sands Bethlehem,
which opened in May 2009, as well as increases across all of our properties, lead by our Macau
operations.
33
Casino revenues increased $263.8 million as compared to the three months ended March 31, 2009.
Of the increase, $175.0 million was attributable to our Macau operations primarily due to an
increase in Non-Rolling Chip win percentage, as well as $63.3 million attributable to Sands
Bethlehem. The following table summarizes the results of our casino activity:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2010 |
|
|
2009 |
|
|
Change |
|
| |
|
(Dollars in thousands) |
|
Macau Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao |
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues |
|
$ |
474,755 |
|
|
$ |
413,229 |
|
|
|
14.9 |
% |
Non-Rolling Chip drop |
|
$ |
921,931 |
|
|
$ |
854,346 |
|
|
|
7.9 |
% |
Non-Rolling Chip win percentage |
|
|
25.1 |
% |
|
|
21.9 |
% |
|
|
3.2 |
pts |
Rolling Chip volume |
|
$ |
10,049,678 |
|
|
$ |
8,693,889 |
|
|
|
15.6 |
% |
Rolling Chip win percentage |
|
|
2.92 |
% |
|
|
3.16 |
% |
|
|
(0.24 |
) pts |
Slot handle |
|
$ |
670,749 |
|
|
$ |
558,504 |
|
|
|
20.1 |
% |
Slot hold percentage |
|
|
7.4 |
% |
|
|
7.6 |
% |
|
|
(0.2 |
) pts |
Sands Macao |
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues |
|
$ |
277,945 |
|
|
$ |
219,473 |
|
|
|
26.6 |
% |
Non-Rolling Chip drop |
|
$ |
589,496 |
|
|
$ |
612,864 |
|
|
|
(3.8 |
)% |
Non-Rolling Chip win percentage |
|
|
20.3 |
% |
|
|
18.8 |
% |
|
|
1.5 |
pts |
Rolling Chip volume |
|
$ |
6,406,933 |
|
|
$ |
5,133,848 |
|
|
|
24.8 |
% |
Rolling Chip win percentage |
|
|
3.18 |
% |
|
|
2.59 |
% |
|
|
0.59 |
pts |
Slot handle |
|
$ |
362,505 |
|
|
$ |
277,436 |
|
|
|
30.7 |
% |
Slot hold percentage |
|
|
6.1 |
% |
|
|
7.0 |
% |
|
|
(0.9 |
) pts |
Four Seasons Macao |
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues |
|
$ |
90,454 |
|
|
$ |
35,404 |
|
|
|
155.5 |
% |
Non-Rolling Chip drop |
|
$ |
99,012 |
|
|
$ |
86,712 |
|
|
|
14.2 |
% |
Non-Rolling Chip win percentage |
|
|
25.3 |
% |
|
|
23.2 |
% |
|
|
2.1 |
pts |
Rolling Chip volume |
|
$ |
3,717,941 |
|
|
$ |
559,117 |
|
|
|
565.0 |
% |
Rolling Chip win percentage |
|
|
2.48 |
% |
|
|
3.09 |
% |
|
|
(0.61 |
) pts |
Slot handle |
|
$ |
148,761 |
|
|
$ |
43,922 |
|
|
|
238.7 |
% |
Slot hold percentage |
|
|
5.6 |
% |
|
|
5.4 |
% |
|
|
0.2 |
pts |
U.S. Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues |
|
$ |
155,345 |
|
|
$ |
129,819 |
|
|
|
19.7 |
% |
Table games drop |
|
$ |
547,043 |
|
|
$ |
444,447 |
|
|
|
23.1 |
% |
Table games win percentage |
|
|
23.4 |
% |
|
|
20.6 |
% |
|
|
2.8 |
pts |
Slot handle |
|
$ |
637,795 |
|
|
$ |
705,901 |
|
|
|
(9.6 |
)% |
Slot hold percentage |
|
|
7.8 |
% |
|
|
7.0 |
% |
|
|
0.8 |
pts |
Sands Bethlehem |
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues |
|
$ |
63,271 |
|
|
$ |
— |
|
|
|
— |
% |
Slot handle |
|
$ |
921,631 |
|
|
$ |
— |
|
|
|
— |
% |
Slot hold percentage |
|
|
6.9 |
% |
|
|
— |
% |
|
|
— |
pts |
In our experience, average win percentages remain steady when measured over extended periods
of time, but can vary considerably within shorter time periods as a result of the statistical
variances that are associated with games of chance in which large amounts are wagered.
Room revenues increased $6.4 million as compared to the three months ended March 31, 2009.
Room revenues increased at The Venetian Macao and Four Seasons Macao as room rates were reduced to
increase visitation, partially offset by a decrease at our Las Vegas Operating Properties as room
rates were reduced to maintain occupancy. The suites at Sands Macao are primarily provided to
casino patrons on a complimentary basis. The following table summarizes the results of our room
activity:
34
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2010 |
|
|
2009 |
|
|
Change |
|
| |
|
(Room revenues in thousands) |
|
Macau Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao |
|
|
|
|
|
|
|
|
|
|
|
|
Total room revenues |
|
$ |
47,557 |
|
|
$ |
41,073 |
|
|
|
15.8 |
% |
Average daily room rate |
|
$ |
202 |
|
|
$ |
216 |
|
|
|
(6.5 |
)% |
Occupancy rate |
|
|
92.8 |
% |
|
|
77.2 |
% |
|
|
15.6 |
pts |
Revenue per available room |
|
$ |
187 |
|
|
$ |
167 |
|
|
|
12.0 |
% |
Sands Macao |
|
|
|
|
|
|
|
|
|
|
|
|
Total room revenues |
|
$ |
6,594 |
|
|
$ |
6,675 |
|
|
|
(1.2 |
)% |
Average daily room rate |
|
$ |
262 |
|
|
$ |
268 |
|
|
|
(2.2 |
)% |
Occupancy rate |
|
|
97.3 |
% |
|
|
96.8 |
% |
|
|
0.5 |
pts |
Revenue per available room |
|
$ |
254 |
|
|
$ |
260 |
|
|
|
(2.3 |
)% |
Four Seasons Macao |
|
|
|
|
|
|
|
|
|
|
|
|
Total room revenues |
|
$ |
6,564 |
|
|
$ |
3,691 |
|
|
|
77.8 |
% |
Average daily room rate |
|
$ |
278 |
|
|
$ |
295 |
|
|
|
(5.8 |
)% |
Occupancy rate |
|
|
72.9 |
% |
|
|
38.6 |
% |
|
|
34.3 |
pts |
Revenue per available room |
|
$ |
203 |
|
|
$ |
114 |
|
|
|
78.1 |
% |
U.S. Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
|
|
|
|
|
|
|
|
|
|
Total room revenues |
|
$ |
120,067 |
|
|
$ |
122,949 |
|
|
|
(2.3 |
)% |
Average daily room rate |
|
$ |
207 |
|
|
$ |
214 |
|
|
|
(3.3 |
)% |
Occupancy rate |
|
|
91.3 |
% |
|
|
90.7 |
% |
|
|
0.6 |
pts |
Revenue per available room |
|
$ |
189 |
|
|
$ |
194 |
|
|
|
(2.6 |
)% |
Food and beverage revenues increased $4.8 million as compared to the three months ended
March 31, 2009. The increase was primarily due to $4.6 million in revenues at Sands Bethlehem,
which opened in May 2009.
Convention, retail and other revenues decreased $5.3 million as compared to the three months
ended March 31, 2009. The decrease is primarily due to a decrease in mall revenues as rental
reductions were given to retailers in order to maintain leased occupancy percentages.
Operating Expenses
The breakdown of operating expenses is as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
|
|
|
|
|
|
|
|
Percent |
|
| |
|
2010 |
|
|
2009 |
|
|
Change |
|
| |
|
(Dollars in thousands) |
|
Casino |
|
$ |
694,635 |
|
|
$ |
548,897 |
|
|
|
26.6 |
% |
Rooms |
|
|
29,654 |
|
|
|
33,767 |
|
|
|
(12.2 |
)% |
Food and beverage |
|
|
44,303 |
|
|
|
42,642 |
|
|
|
3.9 |
% |
Convention, retail and other |
|
|
58,404 |
|
|
|
59,243 |
|
|
|
(1.4 |
)% |
Provision for doubtful accounts |
|
|
16,442 |
|
|
|
21,010 |
|
|
|
(21.7 |
)% |
General and administrative |
|
|
126,259 |
|
|
|
121,303 |
|
|
|
4.1 |
% |
Corporate expense |
|
|
23,476 |
|
|
|
23,424 |
|
|
|
0.2 |
% |
Rental expense |
|
|
8,698 |
|
|
|
7,929 |
|
|
|
9.7 |
% |
Pre-opening expense |
|
|
37,459 |
|
|
|
44,934 |
|
|
|
(16.6 |
)% |
Development expense |
|
|
157 |
|
|
|
254 |
|
|
|
(38.2 |
)% |
Depreciation and amortization |
|
|
153,089 |
|
|
|
139,249 |
|
|
|
9.9 |
% |
Loss on disposal of assets |
|
|
492 |
|
|
|
131 |
|
|
|
275.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
$ |
1,193,068 |
|
|
$ |
1,042,783 |
|
|
|
14.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses were $1.19 billion for the three months ended March 31, 2010, an increase
of $150.3 million as compared to $1.04 billion for the three months ended March 31, 2009. The
increase in operating expenses was primarily attributable to higher casino revenues and an increase
in our depreciation and amortization expense, partially offset by a decrease in our pre-opening
expense, as more fully described below.
Casino expenses increased $145.7 million as compared to the three months ended March 31, 2009.
Of the increase, $91.1 million was due to the 39.0% gross win tax on increased casino revenues
across all of our Macau operations and $45.1 million was due to Sands Bethlehem, which opened in
May 2009.
Room expenses decreased $4.1 million as compared to the three months ended March 31, 2009,
primarily due a decrease of $3.4 million at our Las Vegas Operating Properties driven primarily by
cost saving initiatives that were implemented during 2009.
35
The provision for doubtful accounts was $16.4 million for the three months ended March 31,
2010, compared to $21.0 million for the three months ended March 31, 2009. The decrease was due
primarily to a $9.0 million provision for one customer during the three months ended March 31,
2009. The amount of this provision can vary over short periods of time because of factors specific
to the customers who owe us money from gaming activities at any given time. We believe that the
amount of our provision for doubtful accounts 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.
Pre-opening expenses were $37.5 million for the three months ended March 31, 2010, compared to
$44.9 million for the three months ended March 31, 2009. Pre-opening expense represents personnel
and other costs incurred prior to the opening of new ventures, which are expensed as incurred.
Pre-opening expenses for the three months ended March 31, 2010, were primarily related to
activities at Marina Bay Sands and costs associated with recommencing work on our Cotai Strip
development on parcels 5 and 6.
Depreciation and amortization expense increased $13.8 million as compared to the three months
ended March 31, 2009. The increase was primarily the result of the opening of Sands Bethlehem,
which contributed $6.8 million.
Adjusted Property EBITDA
Adjusted property EBITDA is used by management as the primary measure of the operating
performance of our segments. Adjusted property EBITDA is net income (loss) attributable to Las
Vegas Sands Corp. before stock-based compensation expense, corporate expense, rental expense,
pre-opening expense, development expense, depreciation and amortization, loss on disposal of
assets, interest, other expense, gain on early retirement of debt, income taxes and net (income)
loss attributable to noncontrolling interests. The following table summarizes information related
to our segments (see “Item 1 — Financial Statements — Notes to Condensed Consolidated Financial
Statements — Note 11 — Segment Information” for discussion of our operating segments and a
reconciliation of adjusted property EBITDA to net income (loss) attributable to Las Vegas Sands
Corp.):
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
|
|
|
|
|
|
|
|
Percent |
|
| |
|
2010 |
|
|
2009 |
|
|
Change |
|
| |
|
(Dollars in thousands) |
|
Macau: |
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao |
|
$ |
169,915 |
|
|
$ |
121,486 |
|
|
|
39.9 |
% |
Sands Macao |
|
|
69,761 |
|
|
|
50,358 |
|
|
|
38.5 |
% |
Four Seasons Macao |
|
|
19,495 |
|
|
|
4,368 |
|
|
|
346.3 |
% |
Other Asia |
|
|
(4,432 |
) |
|
|
(6,010 |
) |
|
|
(26.3 |
)% |
United States: |
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties |
|
|
105,292 |
|
|
|
89,774 |
|
|
|
17.3 |
% |
Sands Bethlehem |
|
|
10,968 |
|
|
|
— |
|
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
Total adjusted property EBITDA |
|
$ |
370,999 |
|
|
$ |
259,976 |
|
|
|
42.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Adjusted property EBITDA at our Macau properties increased $83.0 million as compared to the
three months ended March 31, 2009, led by an increase of $48.4 million at The Venetian Macao. As
previously described, the increase across the properties was primarily attributable to an increase
in net revenues of $180.3 million, partially offset by an increase of $91.1 million in gross win
tax on increased casino revenues.
Adjusted property EBITDA at our Las Vegas Operating Properties increased $15.5 million as
compared to the three months ended March 31, 2009. As previously described, the increase was
primarily attributable to an increase in net revenues of $6.9 million, as well as decreases in
expenses driven by our cost-cutting measures, which were implemented during 2009 and of which $10.7
million were payroll-related expenses.
Adjusted property EBITDA at Sands Bethlehem does not have a comparable prior-year period.
Results of the operations of Sands Bethlehem are as previously described.
36
Interest Expense
The following table summarizes information related to interest expense on long-term debt:
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2010 |
|
|
2009 |
|
| |
|
(Dollars in thousands) |
|
Interest cost (which includes
the amortization of deferred
financing costs and original issue
discount) |
|
$ |
97,818 |
|
|
$ |
85,171 |
|
Less — capitalized interest |
|
|
(19,653 |
) |
|
|
(14,053 |
) |
|
|
|
|
|
|
|
Interest expense, net |
|
$ |
78,165 |
|
|
$ |
71,118 |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
91,802 |
|
|
$ |
84,829 |
|
Weighted average total debt balance |
|
$ |
11,138,465 |
|
|
$ |
10,469,500 |
|
Weighted average interest rate |
|
|
3.5 |
% |
|
|
3.3 |
% |
Interest cost increased $12.6 million as compared to the three months ended March 31, 2009,
resulting from an increase in our weighted average long-term debt balance and weighted average
interest rate. The increase in interest cost was offset by an increase in capitalized interest
primarily due to Marina Bay Sands and the increase in the weighted average interest rate.
Other Factors Effecting Earnings
Other expense was $6.4 million for the three months ended March 31, 2010, as compared to
$5.7 million for the three months ended March 31, 2009. The expense during the three months ended
March 31, 2010, was primarily attributable to foreign exchange losses in Macau and a decrease in
the fair value of our interest rate cap agreements held in Macau and Singapore.
The gain on early retirement of debt was $2.2 million for the three months ended March 31,
2010, which was primarily related to the repurchase of
$32.7 million of the
outstanding principal of our senior notes.
Our effective income tax rate was 21.6% for the three months ended March 31, 2010, compared to
a rate of 2.3% for the three months ended March 31, 2009. The effective income tax rate for the
three months ended March 31, 2010, reflects the commencement of our Singapore operations in April
2010 that are subject to a statutory tax rate of 17% and a zero percent tax rate from our Macau
gaming operations due to our income tax exemption in Macau, which is set to expire in 2013. The
non-realizable net operating losses in foreign jurisdictions unfavorably impacted our effective
income tax rate. A valuation allowance was recorded during the year ended December 31, 2009, on the
net deferred tax assets of our U.S. operations. Management does not anticipate recording an income
tax benefit related to deferred tax assets generated by our U.S. operations; however, to the extent
that the financial results of our U.S. operations improve and it becomes more likely than not that
the deferred tax assets are realizable, we will be able to reduce the valuation allowance.
The
net income attributable to our noncontrolling interests was $30.2 million for the three months
ended March 31, 2010, as compared to a net loss of $1.2 million for the three months ended March 31,
2009. The net income during the three months ended March 31, 2010, was primarily attributable to the
noncontrolling interest of SCL.
Liquidity and Capital Resources
Cash Flows — Summary
Our cash flows consisted of the following:
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended March 31, |
|
| |
|
2010 |
|
|
2009 |
|
| |
|
(Dollars in thousands) |
|
Net cash generated from operations |
|
$ |
282,794 |
|
|
$ |
145,715 |
|
|
|
|
|
|
|
|
Investing cash flows: |
|
|
|
|
|
|
|
|
Change in restricted cash |
|
|
(182,575 |
) |
|
|
90,140 |
|
Capital expenditures |
|
|
(538,201 |
) |
|
|
(523,841 |
) |
Proceeds from disposal of property and equipment |
|
|
2,311 |
|
|
|
— |
|
Purchases of investments |
|
|
(173,978 |
) |
|
|
— |
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(892,443 |
) |
|
|
(433,701 |
) |
|
|
|
|
|
|
|
Financing cash flows: |
|
|
|
|
|
|
|
|
Dividends paid to preferred stockholders |
|
|
(23,350 |
) |
|
|
(24,473 |
) |
Proceeds from long term-debt |
|
|
272,056 |
|
|
|
177,429 |
|
Repayments of long-term debt |
|
|
(847,326 |
) |
|
|
(144,575 |
) |
Other |
|
|
(748 |
) |
|
|
28 |
|
|
|
|
|
|
|
|
Net cash generated from (used in) financing activities |
|
|
(599,368 |
) |
|
|
8,409 |
|
|
|
|
|
|
|
|
Effect of exchange rate on cash |
|
|
5,446 |
|
|
|
(114 |
) |
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
$ |
(1,203,571 |
) |
|
$ |
(279,691 |
) |
|
|
|
|
|
|
|
37
Cash Flows — Operating Activities
Table games play at our Las Vegas Operating Properties is conducted on a cash and credit basis
while table games play at our Macau properties is generally conducted on a cash basis. Slot machine
play is primarily conducted on a cash basis. The retail hotel rooms business is generally conducted
on a cash basis, the group hotel rooms business is conducted on a cash and credit basis, and
banquet business is conducted primarily on a credit basis resulting in operating cash flows being
generally affected by changes in operating income and accounts receivable. Net cash generated from
operating activities for the three months ended March 31, 2010, increased $137.1 million as
compared to the three months ended March 31, 2009. The increase was attributable primarily to the
increase in our operating income and favorable changes in our working capital, driven by accrued
liabilities, during the three months ended March 31, 2010.
Cash Flows — Investing Activities
Restricted cash increased $182.6 million due primarily to increases in restricted cash in
Macau of $179.3 million to be used for debt service under our Macau credit facility and for construction related
to our Cotai Strip developments, including the Four Seasons Apartments.
Capital expenditures for the three months ended March 31, 2010, totaled $538.2 million,
including $466.6 million for construction and development activities in Singapore; $47.7 million
for construction and development activities in Macau (primarily for the Four Seasons Apartments and
our other Cotai Strip developments); $11.3 million for construction activities at Sands Bethlehem;
and $12.6 million at our Las Vegas Operating Properties and for corporate and other activities.
During the three months ended March 31, 2010, the Company purchased $173.9 million of
short-term investments, which are classified as held-to-maturity and recorded at cost.
Cash Flows — Financing Activities
For the three months ended March 31, 2010, net cash flows used in financing activities were
$599.4 million. The net decrease was primarily attributable to the repayments of $785.9 million of
borrowings under the U.S. senior secured credit facility, payments of $30.2 million to purchase our
senior notes and dividends paid to preferred stockholders of $23.4 million, offset by proceeds of
$272.1 million under the Singapore credit facility.
Development Financing Strategy
Through March 31, 2010, we have funded our development projects primarily through borrowings
under our U.S., Macau and Singapore credit facilities, operating cash flows, proceeds from our
recent equity offerings and proceeds from the disposition of non-core assets.
The U.S. credit facility and FF&E facility require our Las Vegas operations to comply with
certain financial covenants at the end of each quarter, including maintaining a maximum leverage
ratio of net debt, as defined, to trailing twelve-month adjusted earnings before interest, income
taxes, depreciation and amortization, as defined (“Adjusted EBITDA”). The maximum leverage ratio is
6.0x for the quarterly periods ended March 31 and June 30, 2010, decreases to 5.5x for the
quarterly periods ended September 30, and December 31, 2010, and then decreases to 5.0x for all
quarterly periods thereafter through maturity. The Macau credit facility, as amended in August
2009, requires our Macau operations to comply with similar financial covenants, including
maintaining a maximum leverage ratio of debt to Adjusted EBITDA. The maximum leverage ratio is 4.0x
for the quarterly periods ended March 31 and June 30, 2010, decreases to 3.5x for the quarterly
periods ended September 30 and December 31, 2010, and then decreases to 3.0x for all quarterly
periods thereafter through maturity. We can elect to contribute up to $50 million and $20 million
of cash on hand to our Las Vegas and Macau operations, respectively, on a bi-quarterly basis; such
contributions having the effect of increasing Adjusted EBITDA by the corresponding amount during
the applicable quarter for purposes of calculating compliance with the maximum leverage ratio (the
“EBITDA true-up”). 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. A default under
the U.S. credit facilities would trigger a cross-default under our airplane financings, which, if
the respective lenders chose to accelerate the indebtedness outstanding under these agreements,
would result in a default under our senior notes. A default under the Macau credit facility would
trigger a cross-default
under the our ferry financing. Any defaults or cross-defaults under these agreements would
allow the lenders, in each case, to exercise their rights and remedies as defined under their
respective agreements. If the lenders were to exercise their rights to accelerate the due dates of
the indebtedness outstanding, there can be no assurance that we would be able to repay or refinance
any amounts that may become due and payable under such agreements, which could force us to
restructure or alter our operations or debt obligations.
38
In 2008, we completed a $475.0 million convertible senior notes offering and a $2.1 billion
common and preferred stock and warrants offering. In 2009, we completed a $600.0 million
exchangeable bond offering and our $2.5 billion SCL Offering. A portion of the proceeds from these
offerings was used in the U.S. to pay down of $775.9 million under the revolving portion of the
U.S. credit facility in March 2010, to exercise the EBITDA true-up provision during the quarterly
periods ended September 30, 2009 and March 31, 2010, and was contributed to Las Vegas Sands, LLC to
reduce its net debt in order to maintain compliance with the maximum leverage ratio for the
quarterly period ended March 31, 2010. As of March 31, 2010, our U.S. leverage ratio was 5.4x,
compared to the maximum leverage ratio allowed of 6.0x. Proceeds were also used in Macau to
exercise the EBITDA true-up provision during the quarterly period ended June 30, 2009, and cash on
hand was used to pay down $125.0 million of indebtedness under the Macau credit facility in 2009 in
order to maintain compliance with the maximum leverage ratio for the quarterly period ended March
31, 2010. In November 2009, in connection with the SCL Offering, we were required to repay $500.0 million of borrowings under our Macau credit facility,
permanently reducing a pro rata portion of the revolving facility. As of March 31,
2010, our Macau leverage ratio was 2.6x, compared to the maximum leverage ratio allowed of 4.0x.
We held unrestricted and restricted cash, cash equivalents and investments of approximately
$3.93 billion and $301.6 million, respectively, as of March 31, 2010. We believe that the cash and
investments on hand, cash flow generated from operations and available borrowings under our credit
facilities will be sufficient to fund our revised development plan and maintain compliance with the
financial covenants of our U.S. and Macau credit facilities. In the normal course of our
activities, we will continue to evaluate our capital structure and opportunities for enhancements
thereof. In connection with receiving commitments for a proposed $1.75 billion project financing
credit facility (which we expect to close in the second quarter of 2010) to be used together with
$500.0 million of proceeds from the SCL Offering, we are mobilizing to recommence construction of
phases I and II of our Cotai Strip development on parcels 5 and 6.
Aggregate Indebtedness and Other Known Contractual Obligations
As of March 31, 2010, there had been no material changes to our aggregated indebtedness and
other known contractual obligations, which are set forth in the table included in our Annual Report
on Form 10-K for the year ended December 31, 2009, with the exception of borrowings of $285.2
million under our Singapore credit facility (which mature in March 2015 and include quarterly
payments commencing with the quarter ending March 31, 2011, with the remaining principal due in
full upon maturity), a repayment of $775.9 million under the revolving portion of our senior
secured credit facility (which would have matured in May 2012 with no interim amortization) and the
repurchase of $32.7 million of the outstanding principal of our senior notes (which would have
matured in February 2015).
Restrictions on Distributions
We are a parent company with limited business operations. Our main asset is the stock and
membership interests of our subsidiaries. The debt instruments of our U.S., Macau and Singapore
subsidiaries contain certain 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 our assets of our company without prior approval of the lenders or
noteholders.
Inflation
We believe that inflation and changing prices have not had a material impact on our sales,
revenues or income from continuing operations during the past year.
39
Special Note Regarding Forward-Looking Statements
This report contains forward-looking statements that are made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include the discussions of our business strategies and expectations concerning future
operations, margins, profitability, liquidity and capital resources. In addition, in certain
portions included in this report, the words: “anticipates,” “believes,” “estimates,” “seeks,”
“expects,” “plans,” “intends” and similar expressions, as they relate
to our company or management, are intended to identify forward-looking statements. Although we
believe that these forward-looking statements are reasonable, we cannot assure you that any
forward-looking statements will prove to be correct. These forward- looking statements involve
known and unknown risks, uncertainties and other factors, 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 substantial leverage, debt service and debt covenant compliance (including
sensitivity to fluctuations in interest rates, as a significant portion of our debt is variable-rate debt, and other capital markets trends); |
| |
| |
• |
|
disruptions in the global financing markets and our ability to obtain sufficient funding
for our current and future developments, including our Cotai Strip, Singapore, Pennsylvania
and Las Vegas developments; |
| |
| |
• |
|
general economic and business conditions which may impact levels of disposable income,
consumer spending, group meeting business, pricing of hotel rooms and retail and mall sales; |
| |
| |
• |
|
the impact of the suspensions of certain of our development projects, including those in Macau and Singapore, and our ability to
meet certain development deadlines; |
| |
| |
• |
|
the uncertainty of tourist behavior related to spending and vacationing at casino-resorts
in Las Vegas, Macau and Singapore; |
| |
| |
• |
|
regulatory policies in mainland China or other countries in which our customers reside,
including visa restrictions limiting the number of visits or the length of stay for visitors
from mainland China to Macau and restrictions on foreign currency exchange or importation of
currency; |
| |
| |
• |
|
our dependence upon properties primarily in Las Vegas, Macau and Singapore for all of our
cash flow; |
| |
| |
• |
|
the expected annualized savings and enhanced operating leverage to be generated from our
cost-cutting measures, which were fully implemented during 2009, may not be fully realized; |
| |
| |
• |
|
our relationship with GGP or any successor owner of The Shoppes at The Palazzo and The
Grand Canal Shoppes, and the ability of GGP to perform under the purchase and sale agreement
for The Shoppes at The Palazzo, as amended; |
| |
| |
• |
|
new developments, construction and ventures, including our Cotai Strip developments,
Marina Bay Sands, Sands Bethlehem and the St. Regis Residences; |
| |
| |
• |
|
the passage of new legislation and receipt of governmental approvals for our proposed
developments in Macau, Singapore and other jurisdictions where we are planning to operate; |
| |
| |
• |
|
our insurance coverage, including the risk that we have not obtained sufficient coverage
or will only be able to obtain additional coverage at significantly increased rates; |
| |
| |
• |
|
disruptions or reductions in travel due to acts of terrorism; |
| |
| |
• |
|
disruptions or reductions in travel, as well as disruptions in our operations, due to
outbreaks of infectious diseases, such as severe acute respiratory syndrome, avian flu or
swine flu; |
| |
| |
• |
|
government regulation of the casino industry, including gaming license regulation, the
legalization of gaming in other jurisdictions and regulation of gaming on the Internet; |
| |
| |
• |
|
increased competition and additional construction in Las Vegas and Macau, including recent and
upcoming increases in hotel rooms, meeting and convention space, and retail space; |
| |
| |
• |
|
fluctuations in the demand for all-suites rooms, occupancy rates and average daily room
rates in Las Vegas and Macau; |
| |
| |
• |
|
the popularity of Las Vegas, Macau and Singapore as convention and trade show
destinations; |
| |
| |
• |
|
new taxes, changes to existing tax rates or proposed changes in tax legislation; |
40
| |
• |
|
our ability to maintain our gaming licenses and gaming subconcession; |
| |
| |
• |
|
the completion of infrastructure projects in Macau and Singapore; |
| |
| |
• |
|
increased competition and other planned construction projects in Macau and Singapore; and |
| |
| |
• |
|
the outcome of any ongoing and future litigation. |
All future written and verbal forward-looking statements attributable to us or any person
acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. New risks and uncertainties arise from time to time, and
it is impossible for us to predict these events or how they may affect us. Readers are cautioned
not to place undue reliance on these forward-looking statements. We assume no obligation to update
any forward-looking statements after the date of this report as a result of new information, future
events or developments, except as required by federal securities laws.
|
|
|
| ITEM 3 |
|
— QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Market risk is the risk of loss arising from adverse changes in market rates and prices, such
as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to
market risk is interest rate risk associated with our variable rate long-term debt, which we
attempt to manage through the use of interest rate cap agreements. We do not hold or issue
financial instruments for trading purposes and do not enter into derivative transactions that would
be considered speculative positions. Our derivative financial instruments consist exclusively of
interest rate cap agreements, which do not qualify for hedge accounting. Interest differentials
resulting from these agreements are recorded on an accrual basis as an adjustment to interest
expense.
To manage exposure to counterparty credit risk in interest rate cap agreements, we enter into
agreements with highly rated institutions that can be expected to fully perform under the terms of
such agreements. Frequently, these institutions are also members of the bank group providing our
credit facilities, which management believes further minimizes the risk of nonperformance.
The table below provides information about our financial instruments that are sensitive to
changes in interest rates. For debt obligations, the table presents notional amounts and weighted
average interest rates by contractual maturity dates. Notional amounts are used to calculate the
contractual payments to be exchanged under the contract. Weighted average variable rates are based
on March 31, 2010, LIBOR, HIBOR and SOR plus the applicable interest rate spread in accordance with
the respective debt agreements. The information is presented in U.S. dollar equivalents, which is
the Company’s reporting currency, for the years ending March 31:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair |
|
| |
|
2011 |
|
|
2012 |
|
|
2013 |
|
|
2014 |
|
|
2015 |
|
|
Thereafter |
|
|
Total |
|
|
Value(1) |
|
| |
|
(Dollars in millions) |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
217.3 |
|
|
$ |
— |
|
|
$ |
217.3 |
|
|
$ |
205.4 |
|
Average interest rate(2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.4 |
% |
|
|
— |
|
|
|
6.4 |
% |
|
|
|
|
Variable rate |
|
$ |
284.9 |
|
|
$ |
1,448.3 |
|
|
$ |
1,677.6 |
|
|
$ |
1,180.3 |
|
|
$ |
5,539.9 |
|
|
$ |
89.1 |
|
|
$ |
10,220.1 |
|
|
$ |
9,256.9 |
|
Average interest rate(2) |
|
|
2.9 |
% |
|
|
4.0 |
% |
|
|
4.2 |
% |
|
|
3.1 |
% |
|
|
2.3 |
% |
|
|
2.0 |
% |
|
|
3.0 |
% |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cap agreements(3) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.8 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
0.8 |
|
|
$ |
0.8 |
|
| |
|
|
| (1) |
|
The estimated fair values are based on quoted market prices, if
available, or by pricing models based on the value of related cash
flows discounted at current market interest rates. |
| |
| (2) |
|
Based upon contractual interest rates for fixed rate indebtedness or
current LIBOR, HIBOR and SOR for variable-rate indebtedness. Based on
variable-rate debt levels as of March 31, 2010, an assumed 100 basis
point change in LIBOR, HIBOR and SOR would cause our annual interest
cost to change approximately $102.4 million. |
| |
| (3) |
|
As of March 31, 2010, we have 29 interest rate cap agreements with an
aggregate fair value of approximately $0.8 million based on quoted
market values from the institutions holding the agreements. |
41
Borrowings under the $5.0 billion senior secured credit facility bear interest at our
election, at either an adjusted Eurodollar rate or at an alternative base rate plus a credit
spread. The revolving facility and term loans bear interest at the alternative base rate plus 0.5%
per annum or 0.75% per annum, respectively, or at the adjusted Eurodollar rate plus 1.5% per annum
or 1.75% per annum,
respectively, subject to downward adjustments based upon our credit rating. Borrowings under
the Macau credit facility, as amended, bear interest at our election, at either an adjusted
Eurodollar rate (or in the case of the local term loan, adjusted HIBOR) plus 4.5% per annum or at
an alternative base rate plus 3.5% per annum. Applicable spreads under the Macau revolving facility
and the local term loan are subject to a downward adjustment if certain consolidated leverage
ratios are satisfied. Borrowings under the Singapore credit facility bear interest at SOR plus a
spread of 2.25% per annum. Borrowings under the airplane financings bear interest at LIBOR plus
approximately 1.5% per annum. Borrowings under the ferry financing, as amended, bear interest at
HIBOR plus 2.5% per annum.
Foreign currency transaction losses for the three months ended March 31, 2010, were $4.1
million primarily due to U.S. denominated debt held in Macau. We may be vulnerable to changes in
the U.S. dollar/Macau pataca exchange rate. Based on balances as of March 31, 2010, an assumed 1%
change in the U.S. dollar/Macau pataca exchange rate would cause a foreign currency transaction
gain/loss of approximately $25.4 million. We do not hedge our exposure to foreign currencies;
however, we maintain a significant amount of our operating funds in the same currencies in which we
have obligations; thereby, reducing our exposure to currency fluctuations.
See also “Liquidity and Capital Resources.”
|
|
|
| ITEM 4 |
|
— CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be
disclosed in the reports that the Company files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms and that such information is accumulated and
communicated to our management, including our principal executive officer and principal financial
officer, as appropriate, to allow for timely decisions regarding required disclosure. The Company’s
Chief Executive Officer and its Chief Financial Officer have evaluated the disclosure controls and
procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) of the
Company as of March 31, 2010, and have concluded that they are effective to provide reasonable
assurance that the desired control objectives were achieved.
It should be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the system are met. In
addition, the design of any control system is based in part upon certain assumptions about the
likelihood of future events. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred
during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially
affected, or are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Part II
OTHER INFORMATION
|
|
|
| ITEM 1 |
|
— LEGAL PROCEEDINGS |
The Company is party to litigation matters and claims related to its operations. For more
information, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, and
“Part I — Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements
— Note 10 — Commitments and Contingencies” of this Quarterly Report on Form 10-Q.
There have been no material changes from the risk factors previously disclosed in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2009.
42
LAS VEGAS SANDS CORP.
List of Exhibits
| |
|
|
|
|
| Exhibit No. |
|
Description of Document |
| |
|
|
|
|
| |
10.1 |
|
|
Employment Offer
Terms and Conditions, agreed on August 3, 2009, by Steve Jacobs and the Company. |
| |
|
|
|
|
| |
31.1 |
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
31.2 |
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
32.1 |
|
|
Certification of Chief Executive Officer of Las Vegas Sands Corp. pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| |
|
|
|
|
| |
32.2 |
|
|
Certification of Chief Financial Officer of Las Vegas Sands Corp. pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
43
LAS VEGAS SANDS CORP.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly
caused this quarterly report on Form 10-Q to be signed on its behalf by the undersigned thereunto
duly authorized.
| |
|
|
|
|
| |
LAS VEGAS SANDS CORP.
|
|
| |
By: |
/s/ Sheldon G. Adelson
|
|
| |
|
Sheldon G. Adelson |
|
| |
|
Chairman of the Board and
Chief Executive Officer |
|
| |
May 7, 2010
| |
|
|
|
|
| |
|
|
| |
By: |
/s/ Kenneth J. Kay
|
|
| |
|
Kenneth J. Kay |
|
| |
|
Chief Financial Officer |
|
| |
May 7, 2010