UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| x | ||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2011
| ¨ | ||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission file number 001-32373
LAS VEGAS SANDS CORP.
(Exact name of registration as specified in its charter)
| Nevada | 27-0099920 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 3355 Las Vegas Boulevard South | 89109 | |
| Las Vegas, Nevada | (Zip Code) | |
| (Address of principal executive offices) |
(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. Yesþx Noo¨
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). Yesþx Noo¨
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):
Large accelerated filerx Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ (Do not check if a smaller reporting company)
|
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, 2012 | ||
| Common Stock ($0.001 par value) |
Table of Contents
PART I
FINANCIAL INFORMATION
2
Item 4. | 45 | |||||
Condensed Consolidated Balance Sheets
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| (In thousands, except share and | ||||||||
| per share data) | ||||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 3,951,575 | $ | 3,037,081 | ||||
| Restricted cash and cash equivalents | 184,366 | 164,315 | ||||||
| Accounts receivable, net | 1,112,896 | 716,919 | ||||||
| Inventories | 33,462 | 32,260 | ||||||
| Deferred income taxes, net | 9,664 | 61,606 | ||||||
| Prepaid expenses and other | 50,693 | 46,726 | ||||||
| Total current assets | 5,342,656 | 4,058,907 | ||||||
| Property and equipment, net | 14,804,973 | 14,502,197 | ||||||
| Deferred financing costs, net | 126,419 | 155,378 | ||||||
| Restricted cash and cash equivalents | 35,510 | 645,605 | ||||||
| Deferred income taxes, net | 14,361 | 10,423 | ||||||
| Leasehold interests in land, net | 1,382,539 | 1,398,840 | ||||||
| Intangible assets, net | 82,546 | 89,805 | ||||||
| Other assets, net | 176,247 | 183,153 | ||||||
| Total assets | $ | 21,965,251 | $ | 21,044,308 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 103,319 | $ | 113,505 | ||||
| Construction payables | 355,686 | 516,981 | ||||||
| Accrued interest payable | 19,318 | 42,625 | ||||||
| Other accrued liabilities | 1,318,857 | 1,160,234 | ||||||
| Income taxes payable | 78,447 | — | ||||||
| Current maturities of long-term debt | 457,344 | 767,068 | ||||||
| Total current liabilities | 2,332,971 | 2,600,413 | ||||||
| Other long-term liabilities | 81,950 | 78,240 | ||||||
| Deferred income taxes | 134,928 | 115,219 | ||||||
| Deferred proceeds from sale of The Shoppes at The Palazzo | 266,585 | 243,928 | ||||||
| Deferred gain on sale of The Grand Canal Shoppes | 48,210 | 50,808 | ||||||
| Deferred rent from mall transactions | 120,285 | 147,378 | ||||||
| Long-term debt | 9,282,084 | 9,373,755 | ||||||
| Total liabilities | 12,267,013 | 12,609,741 | ||||||
| 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 | 572,787 | 503,379 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Equity: | ||||||||
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, 1,871,794 and 3,614,923 shares issued and outstanding with warrants to purchase up to 1,694,503 and 22,663,212 shares of common stock | 107,368 | 207,356 | ||||||
| Common stock, $0.001 par value, 1,000,000,000 shares authorized, 731,668,681 and 707,507,982 shares issued and outstanding | 732 | 708 | ||||||
| Capital in excess of par value | 5,587,892 | 5,444,705 | ||||||
| Accumulated other comprehensive income | 103,067 | 129,519 | ||||||
| Retained earnings | 1,830,097 | 880,703 | ||||||
| Total Las Vegas Sands Corp. stockholders’ equity | 7,629,156 | 6,662,991 | ||||||
| Noncontrolling interests | 1,496,295 | 1,268,197 | ||||||
| Total equity | 9,125,451 | 7,931,188 | ||||||
| Total liabilities and equity | $ | 21,965,251 | $ | 21,044,308 | ||||
| March 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
| (In thousands, except share and | ||||||||
| per share data) | ||||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,056,360 | $ | 3,902,718 | ||||
Restricted cash and cash equivalents | 4,874 | 4,828 | ||||||
Accounts receivable, net | 1,530,340 | 1,336,817 | ||||||
Inventories | 40,014 | 34,990 | ||||||
Deferred income taxes, net | 15,066 | 72,192 | ||||||
Prepaid expenses and other | 76,085 | 45,607 | ||||||
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|
|
| |||||
Total current assets | 5,722,739 | 5,397,152 | ||||||
Property and equipment, net | 15,329,602 | 15,030,979 | ||||||
Deferred financing costs, net | 163,219 | 173,636 | ||||||
Restricted cash and cash equivalents | 2,466 | 2,315 | ||||||
Deferred income taxes, net | 18,889 | 153 | ||||||
Leasehold interests in land, net | 1,414,349 | 1,390,468 | ||||||
Intangible assets, net | 78,017 | 80,068 | ||||||
Other assets, net | 141,751 | 169,352 | ||||||
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| |||||
Total assets | $ | 22,871,032 | $ | 22,244,123 | ||||
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| LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 105,205 | $ | 104,113 | ||||
Construction payables | 311,568 | 359,909 | ||||||
Accrued interest payable | 6,937 | 31,668 | ||||||
Other accrued liabilities | 1,422,931 | 1,439,110 | ||||||
Income taxes payable | 176,853 | 108,060 | ||||||
Current maturities of long-term debt | 469,324 | 455,846 | ||||||
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| |||||
Total current liabilities | 2,492,818 | 2,498,706 | ||||||
Other long-term liabilities | 105,039 | 89,445 | ||||||
Deferred income taxes | 159,427 | 205,438 | ||||||
Deferred proceeds from sale of The Shoppes at The Palazzo | 267,228 | 266,992 | ||||||
Deferred gain on sale of The Grand Canal Shoppes | 46,478 | 47,344 | ||||||
Deferred rent from mall transactions | 119,545 | 119,915 | ||||||
Long-term debt | 9,382,649 | 9,577,131 | ||||||
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|
| |||||
Total liabilities | 12,573,184 | 12,804,971 | ||||||
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|
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Commitments and contingencies (Note 9) | ||||||||
Equity: | ||||||||
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 822,724,993 and 733,249,698 shares issued and outstanding | 823 | 733 | ||||||
Capital in excess of par value | 6,174,773 | 5,610,160 | ||||||
Accumulated other comprehensive income | 191,935 | 94,104 | ||||||
Retained earnings | 2,438,945 | 2,145,692 | ||||||
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| |||||
Total Las Vegas Sands Corp. stockholders’ equity | 8,806,476 | 7,850,689 | ||||||
Noncontrolling interests | 1,491,372 | 1,588,463 | ||||||
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| |||||
Total equity | 10,297,848 | 9,439,152 | ||||||
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| |||||
Total liabilities and equity | $ | 22,871,032 | $ | 22,244,123 | ||||
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Condensed Consolidated Statements of Operations
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Revenues: | ||||||||||||||||
| Casino | $ | 1,903,142 | $ | 1,573,851 | $ | 5,429,903 | $ | 3,929,922 | ||||||||
| Rooms | 262,352 | 208,160 | 734,022 | 579,709 | ||||||||||||
| Food and beverage | 147,223 | 117,186 | 438,632 | 314,344 | ||||||||||||
| Convention, retail and other | 223,841 | 147,179 | 589,138 | 370,660 | ||||||||||||
| 2,536,558 | 2,046,376 | 7,191,695 | 5,194,635 | |||||||||||||
| Less-promotional allowances | (127,183 | ) | (137,604 | ) | (325,305 | ) | (356,499 | ) | ||||||||
| Net revenues | 2,409,375 | 1,908,772 | 6,866,390 | 4,838,136 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Casino | 993,378 | 882,178 | 2,889,327 | 2,367,760 | ||||||||||||
| Rooms | 53,493 | 36,866 | 152,679 | 100,593 | ||||||||||||
| Food and beverage | 71,781 | 50,906 | 216,619 | 143,007 | ||||||||||||
| Convention, retail and other | 99,229 | 70,603 | 291,498 | 194,333 | ||||||||||||
| Provision for doubtful accounts | 33,953 | 37,833 | 92,507 | 72,986 | ||||||||||||
| General and administrative | 240,672 | 193,476 | 674,718 | 492,654 | ||||||||||||
| Corporate expense | 54,031 | 28,686 | 133,983 | 78,116 | ||||||||||||
| Rental expense | 10,143 | 9,186 | 33,333 | 30,690 | ||||||||||||
| Pre-opening expense | 15,823 | 10,107 | 43,472 | 97,684 | ||||||||||||
| Development expense | 3,308 | 425 | 6,301 | 1,258 | ||||||||||||
| Depreciation and amortization | 200,071 | 186,738 | 596,469 | 510,521 | ||||||||||||
| Impairment loss | — | 16,057 | — | 16,057 | ||||||||||||
| Loss on disposal of assets | 937 | 2,406 | 8,879 | 40,577 | ||||||||||||
| 1,776,819 | 1,525,467 | 5,139,785 | 4,146,236 | |||||||||||||
| Operating income | 632,556 | 383,305 | 1,726,605 | 691,900 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 2,369 | 2,661 | 8,444 | 6,367 | ||||||||||||
| Interest expense, net of amounts capitalized | (70,761 | ) | (76,723 | ) | (214,938 | ) | (231,875 | ) | ||||||||
| Other income (expense) | (6,617 | ) | 6,444 | (9,384 | ) | (6,205 | ) | |||||||||
| Loss on modification or early retirement of debt | — | (21,692 | ) | — | (18,555 | ) | ||||||||||
| Income before income taxes | 557,547 | 293,995 | 1,510,727 | 441,632 | ||||||||||||
| Income tax expense | (52,375 | ) | (25,161 | ) | (151,960 | ) | (46,436 | ) | ||||||||
| Net income | 505,172 | 268,834 | 1,358,767 | 395,196 | ||||||||||||
| Net income attributable to noncontrolling interests | (80,293 | ) | (54,337 | ) | (233,928 | ) | (121,311 | ) | ||||||||
| Net income attributable to Las Vegas Sands Corp. | 424,879 | 214,497 | 1,124,839 | 273,885 | ||||||||||||
| Preferred stock dividends | (19,140 | ) | (23,350 | ) | (57,957 | ) | (70,050 | ) | ||||||||
| Accretion to redemption value of preferred stock issued to Principal Stockholder’s family | (23,136 | ) | (23,136 | ) | (69,408 | ) | (69,408 | ) | ||||||||
| Preferred stock inducement and repurchase premiums | (28,972 | ) | — | (48,080 | ) | — | ||||||||||
| Net income attributable to common stockholders | $ | 353,631 | $ | 168,011 | $ | 949,394 | $ | 134,427 | ||||||||
| Basic earnings per share | $ | 0.48 | $ | 0.25 | $ | 1.31 | $ | 0.20 | ||||||||
| Diluted earnings per share | $ | 0.44 | $ | 0.21 | $ | 1.17 | $ | 0.17 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 729,773,246 | 660,836,841 | 727,309,255 | 660,495,783 | ||||||||||||
| Diluted | 812,543,534 | 789,156,247 | 811,550,683 | 782,156,007 | ||||||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| (In thousands, except share and | ||||||||
| per share data) | ||||||||
| (Unaudited) | ||||||||
Revenues: | ||||||||
Casino | $ | 2,266,493 | $ | 1,664,489 | ||||
Rooms | 267,727 | 231,974 | ||||||
Food and beverage | 153,455 | 145,393 | ||||||
Mall | 71,418 | 55,865 | ||||||
Convention, retail and other | 129,717 | 108,790 | ||||||
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| 2,888,810 | 2,206,511 | |||||||
Less-promotional allowances | (126,068 | ) | (94,592 | ) | ||||
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Net revenues | 2,762,742 | 2,111,919 | ||||||
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Operating expenses: | ||||||||
Casino | 1,207,551 | 921,536 | ||||||
Rooms | 52,786 | 48,453 | ||||||
Food and beverage | 78,301 | 71,703 | ||||||
Mall | 16,301 | 12,104 | ||||||
Convention, retail and other | 79,524 | 75,141 | ||||||
Provision for doubtful accounts | 52,218 | 35,058 | ||||||
General and administrative | 218,717 | 210,485 | ||||||
Corporate | 48,955 | 37,576 | ||||||
Pre-opening | 51,459 | 9,471 | ||||||
Development | 1,198 | 573 | ||||||
Depreciation and amortization | 194,747 | 190,237 | ||||||
Amortization of leasehold interests in land | 9,945 | 13,156 | ||||||
Impairment loss | 42,893 | — | ||||||
Loss on disposal of assets | 593 | 499 | ||||||
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| 2,055,188 | 1,625,992 | |||||||
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Operating income | 707,554 | 485,927 | ||||||
Other income (expense): | ||||||||
Interest income | 5,648 | 2,047 | ||||||
Interest expense, net of amounts capitalized | (64,672 | ) | (73,585 | ) | ||||
Other expense | (3,419 | ) | (4,675 | ) | ||||
Loss on early retirement of debt | (2,831 | ) | — | |||||
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Income before income taxes | 642,280 | 409,714 | ||||||
Income tax expense | (63,171 | ) | (45,211 | ) | ||||
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Net income | 579,109 | 364,503 | ||||||
Net income attributable to noncontrolling interests | (80,167 | ) | (75,180 | ) | ||||
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Net income attributable to Las Vegas Sands Corp. | 498,942 | 289,323 | ||||||
Preferred stock dividends | — | (19,598 | ) | |||||
Accretion to redemption value of preferred stock issued to Principal Stockholder’s family | — | (23,136 | ) | |||||
Preferred stock inducement and repurchase premiums | — | (18,433 | ) | |||||
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Net income attributable to common stockholders | $ | 498,942 | $ | 228,156 | ||||
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Earnings per share: | ||||||||
Basic | $ | 0.66 | $ | 0.32 | ||||
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Diluted | $ | 0.61 | $ | 0.28 | ||||
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Weighted average shares outstanding: | ||||||||
Basic | 760,437,437 | 723,389,226 | ||||||
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Diluted | 818,797,155 | 811,239,242 | ||||||
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Dividends declared per common share | $ | 0.25 | $ | — | ||||
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Condensed Consolidated Statements of Equity and Comprehensive Income
| Las Vegas Sands Corp. Stockholders’ Equity | ||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||
| Capital in | Other | Total | ||||||||||||||||||||||||||||||
| Preferred | Common | Excess of | Comprehensive | Retained | Comprehensive | Noncontrolling | ||||||||||||||||||||||||||
| Stock | Stock | Par Value | Income | Earnings | Income | Interests | Total | |||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
Balance at January 1, 2010 | $ | 234,607 | $ | 660 | $ | 5,114,851 | $ | 26,748 | $ | 473,833 | $ | 1,089,888 | $ | 6,940,587 | ||||||||||||||||||
| Net income | — | — | — | — | 273,885 | 273,885 | 121,311 | 395,196 | ||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | 74,871 | — | 74,871 | (481 | ) | 74,390 | |||||||||||||||||||||||
| Total comprehensive income | 348,756 | 120,830 | 469,586 | |||||||||||||||||||||||||||||
| Exercise of stock options | — | 1 | 6,395 | — | — | — | 6,396 | |||||||||||||||||||||||||
| Tax shortfall from stock-based compensation | — | — | (195 | ) | — | — | — | (195 | ) | |||||||||||||||||||||||
| Stock-based compensation | — | — | 42,674 | — | — | 2,065 | 44,739 | |||||||||||||||||||||||||
| Exercise of warrants | (4 | ) | — | 9 | — | — | — | 5 | ||||||||||||||||||||||||
| Deemed contribution from Principal Stockholder | — | — | 317 | — | — | — | 317 | |||||||||||||||||||||||||
| Acquisition of remaining shares of noncontrolling interest | — | — | 2,345 | — | — | (2,345 | ) | — | ||||||||||||||||||||||||
| Dividends declared, net of amounts previously accrued | — | — | — | — | (63,196 | ) | — | (63,196 | ) | |||||||||||||||||||||||
| 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 | — | — | — | — | (69,408 | ) | — | (69,408 | ) | |||||||||||||||||||||||
Balance at September 30, 2010 | $ | 234,603 | $ | 661 | $ | 5,166,396 | $ | 101,619 | $ | 608,260 | $ | 1,210,438 | $ | 7,321,977 | ||||||||||||||||||
Balance at January 1, 2011 | $ | 207,356 | $ | 708 | $ | 5,444,705 | $ | 129,519 | $ | 880,703 | $ | 1,268,197 | $ | 7,931,188 | ||||||||||||||||||
| Net income | — | — | — | — | 1,124,839 | 1,124,839 | 233,928 | 1,358,767 | ||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | (26,452 | ) | — | (26,452 | ) | (2,192 | ) | (28,644 | ) | ||||||||||||||||||||
| Total comprehensive income | 1,098,387 | 231,736 | 1,330,123 | |||||||||||||||||||||||||||||
| Exercise of stock options | — | 2 | 21,270 | — | — | 1,140 | 22,412 | |||||||||||||||||||||||||
| Tax shortfall from stock-based compensation | — | — | (83 | ) | — | — | — | (83 | ) | |||||||||||||||||||||||
| Stock-based compensation | — | — | 45,735 | — | — | 2,199 | 47,934 | |||||||||||||||||||||||||
| Issuance of restricted stock | — | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||||||||
| Exercise of warrants | (66,625 | ) | 21 | 76,266 | — | — | — | 9,662 | ||||||||||||||||||||||||
| Repurchase of preferred stock | (33,363 | ) | — | — | — | (31,586 | ) | — | (64,949 | ) | ||||||||||||||||||||||
| Disposition of interest in majority owned subsidiary | — | — | — | — | — | 829 | 829 | |||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | (7,806 | ) | (7,806 | ) | |||||||||||||||||||||||
| Dividends declared, net of amounts previously accrued | — | — | — | — | (51,103 | ) | — | (51,103 | ) | |||||||||||||||||||||||
| 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 | — | — | — | — | (69,408 | ) | — | (69,408 | ) | |||||||||||||||||||||||
| Preferred stock inducement premium | — | — | — | — | (16,494 | ) | — | (16,494 | ) | |||||||||||||||||||||||
Balance at September 30, 2011 | $ | 107,368 | $ | 732 | $ | 5,587,892 | $ | 103,067 | $ | 1,830,097 | $ | 1,496,295 | $ | 9,125,451 | ||||||||||||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
Net income | $ | 579,109 | $ | 364,503 | ||||
Currency translation adjustment | 98,878 | 31,956 | ||||||
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Total comprehensive income | 677,987 | 396,459 | ||||||
Comprehensive income attributable to noncontrolling interests | (81,214 | ) | (72,643 | ) | ||||
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Comprehensive income attributable to Las Vegas Sands Corp. | $ | 596,773 | $ | 323,816 | ||||
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Condensed Consolidated Statements of Cash Flows
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
Cash flow from operating activities: | ||||||||
| Net income | $ | 1,358,767 | $ | 395,196 | ||||
| Adjustments to reconcile net income to net cash generated from operating activities: | ||||||||
| Depreciation and amortization | 596,469 | 510,521 | ||||||
| Amortization of leasehold interests in land included in rental expense | 33,333 | 30,690 | ||||||
| Amortization of deferred financing costs and original issue discount | 35,059 | 29,885 | ||||||
| Amortization of deferred gain and rent | (7,182 | ) | (3,870 | ) | ||||
| Non-cash change in deferred proceeds from sale of The Shoppes at The Palazzo | 754 | — | ||||||
| Loss on modification or early retirement of debt | — | 3,756 | ||||||
| Impairment and loss on disposal of assets | 8,879 | 56,634 | ||||||
| Stock-based compensation expense | 47,242 | 42,552 | ||||||
| Provision for doubtful accounts | 92,507 | 72,986 | ||||||
| Foreign exchange losses | 3,013 | 1,183 | ||||||
| Deferred income taxes | 69,219 | 58,042 | ||||||
| Non-cash contribution from Principal Stockholder included in corporate expense | — | 317 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (502,848 | ) | (219,592 | ) | ||||
| Inventories | (1,287 | ) | (479 | ) | ||||
| Prepaid expenses and other | 1,628 | (6,371 | ) | |||||
| Leasehold interests in land | (22,980 | ) | (17,199 | ) | ||||
| Accounts payable | (10,217 | ) | 16,912 | |||||
| Accrued interest payable | (23,319 | ) | (3,920 | ) | ||||
| Income taxes payable | 80,497 | 8,052 | ||||||
| Other accrued liabilities | 169,639 | 232,703 | ||||||
| Net cash generated from operating activities | 1,929,173 | 1,207,998 | ||||||
Cash flows from investing activities: | ||||||||
| Changes in restricted cash and cash equivalents | 590,096 | (836,805 | ) | |||||
| Capital expenditures | (1,087,605 | ) | (1,650,264 | ) | ||||
| Proceeds from disposal of property and equipment | 5,487 | 5,951 | ||||||
| Acquisition of intangible assets | (100 | ) | (44,599 | ) | ||||
| Purchases of investments | — | (173,774 | ) | |||||
| Proceeds from investments | — | 173,774 | ||||||
| Net cash used in investing activities | (492,122 | ) | (2,525,717 | ) | ||||
Cash flows from financing activities: | ||||||||
| Proceeds from exercise of stock options | 22,412 | 6,396 | ||||||
| Proceeds from exercise of warrants | 9,662 | 5 | ||||||
| Dividends paid to preferred stockholders | (57,957 | ) | (70,050 | ) | ||||
| Distributions to noncontrolling interests | (7,806 | ) | — | |||||
| Proceeds from long-term debt (Note 3) | — | 1,399,157 | ||||||
| Repayments on long-term debt (Note 3) | (399,403 | ) | (2,524,602 | ) | ||||
| Repurchase of preferred stock | (64,949 | ) | — | |||||
| Payments of preferred stock inducement premium | (16,494 | ) | — | |||||
| Payments of deferred financing costs | (6,076 | ) | (65,823 | ) | ||||
| Net cash used in financing activities | (520,611 | ) | (1,254,917 | ) | ||||
| Effect of exchange rate on cash | (1,946 | ) | 11,932 | |||||
| Increase (decrease) in cash and cash equivalents | 914,494 | (2,560,704 | ) | |||||
| Cash and cash equivalents at beginning of period | 3,037,081 | 4,955,416 | ||||||
| Cash and cash equivalents at end of period | $ | 3,951,575 | $ | 2,394,712 | ||||
| Las Vegas Sands Corp. Stockholders’ Equity | ||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Capital in | Other | |||||||||||||||||||||||||||
| Preferred | Common | Excess of | Comprehensive | Retained | Noncontrolling | |||||||||||||||||||||||
| Stock | Stock | Par Value | Income | Earnings | Interests | Total | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
Balance at January 1, 2011 | $ | 207,356 | $ | 708 | $ | 5,444,705 | $ | 129,519 | $ | 880,703 | $ | 1,268,197 | $ | 7,931,188 | ||||||||||||||
Net income | — | — | — | — | 289,323 | 75,180 | 364,503 | |||||||||||||||||||||
Currency translation adjustment | — | — | — | 34,493 | — | (2,537 | ) | 31,956 | ||||||||||||||||||||
Exercise of stock options | — | 1 | 8,419 | — | — | 91 | 8,511 | |||||||||||||||||||||
Tax shortfall from stock-based compensation | — | — | (11 | ) | — | — | — | (11 | ) | |||||||||||||||||||
Stock-based compensation | — | — | 20,084 | — | — | 755 | 20,839 | |||||||||||||||||||||
Exercise of warrants | (65,225 | ) | 20 | 70,965 | — | — | — | 5,760 | ||||||||||||||||||||
Repurchase of preferred stock | (2,312 | ) | — | — | — | (2,232 | ) | — | (4,544 | ) | ||||||||||||||||||
Dividends declared, net of amounts previously accrued | — | — | — | — | (12,744 | ) | — | (12,744 | ) | |||||||||||||||||||
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 | ) | |||||||||||||||||||
Preferred stock inducement premium | — | — | — | — | (16,201 | ) | — | (16,201 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at March 31, 2011 | $ | 139,819 | $ | 729 | $ | 5,544,162 | $ | 164,012 | $ | 1,108,859 | $ | 1,341,686 | $ | 8,299,267 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Balance at January 1, 2012 | $ | — | $ | 733 | $ | 5,610,160 | $ | 94,104 | $ | 2,145,692 | $ | 1,588,463 | $ | 9,439,152 | ||||||||||||||
Net income | — | — | — | — | 498,942 | 80,167 | 579,109 | |||||||||||||||||||||
Currency translation adjustment | — | — | — | 97,831 | — | 1,047 | 98,878 | |||||||||||||||||||||
Exercise of stock options | — | 1 | 20,151 | — | — | 1,107 | 21,259 | |||||||||||||||||||||
Stock-based compensation | — | — | 18,383 | — | — | 1,001 | 19,384 | |||||||||||||||||||||
Issuance of restricted stock | — | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||||
Exercise of warrants | — | 88 | 526,080 | — | — | — | 526,168 | |||||||||||||||||||||
Dividends declared | — | — | — | — | (205,689 | ) | (178,218 | ) | (383,907 | ) | ||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | (2,195 | ) | (2,195 | ) | |||||||||||||||||||
|
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|
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|
| |||||||||||||||
Balance at March 31, 2012 | $ | — | $ | 823 | $ | 6,174,773 | $ | 191,935 | $ | 2,438,945 | $ | 1,491,372 | $ | 10,297,848 | ||||||||||||||
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| |||||||||||||||
6
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
Supplemental disclosure of cash flow information: | ||||||||
| Cash payments for interest, net of amounts capitalized | $ | 203,183 | $ | 205,343 | ||||
| Cash payments for taxes, net of refunds | $ | (5,582 | ) | $ | 175 | |||
| Changes in construction payables | $ | (161,295 | ) | $ | (207,574 | ) | ||
Non-cash investing and financing activities: | ||||||||
| Capitalized stock-based compensation costs | $ | 692 | $ | 2,187 | ||||
| Property and equipment acquired under capital lease | $ | — | $ | 3,549 | ||||
| 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 | $ | 69,408 | $ | 69,408 | ||||
| Acquisition of remaining shares of noncontrolling interest | $ | — | $ | 2,345 | ||||
| Disposition of interest in majority owned subsidiary | $ | 829 | $ | — | ||||
| Warrants exercised and settled through tendering of preferred stock | $ | 66,625 | $ | 4 | ||||
7
Condensed Consolidated Statements of Cash Flows
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
Cash flow from operating activities: | ||||||||
Net income | $ | 579,109 | $ | 364,503 | ||||
Adjustments to reconcile net income to net cash generated from operating activities: | ||||||||
Depreciation and amortization | 194,747 | 190,237 | ||||||
Amortization of leasehold interests in land | 9,945 | 13,156 | ||||||
Amortization of deferred financing costs and original issue discount | 11,596 | 11,871 | ||||||
Amortization of deferred gain and rent | (1,236 | ) | (1,290 | ) | ||||
Non-cash change in deferred proceeds from sale of The Shoppes at The Palazzo | 428 | — | ||||||
Loss on early retirement of debt | 815 | — | ||||||
Impairment and loss on disposal of assets | 43,486 | 499 | ||||||
Stock-based compensation expense | 19,166 | 20,239 | ||||||
Provision for doubtful accounts | 52,218 | 35,058 | ||||||
Foreign exchange losses | 724 | 2,462 | ||||||
Deferred income taxes | (4,083 | ) | 35,372 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (223,358 | ) | (119,311 | ) | ||||
Inventories | (4,742 | ) | (1,239 | ) | ||||
Prepaid expenses and other | (27,785 | ) | (3,135 | ) | ||||
Accounts payable | 356 | (26,026 | ) | |||||
Accrued interest payable | (24,903 | ) | (19,148 | ) | ||||
Income taxes payable | 63,134 | 8,631 | ||||||
Other accrued liabilities | (22,166 | ) | (93,501 | ) | ||||
|
|
|
| |||||
Net cash generated from operating activities | 667,451 | 418,378 | ||||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Change in restricted cash and cash equivalents | (195 | ) | 149,962 | |||||
Capital expenditures | (398,260 | ) | (332,508 | ) | ||||
Proceeds from disposal of property and equipment | 761 | 3,097 | ||||||
Acquisition of intangible assets | — | (329 | ) | |||||
|
|
|
| |||||
Net cash used in investing activities | (397,694 | ) | (179,778 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 21,259 | 8,511 | ||||||
Proceeds from exercise of warrants | 526,168 | 5,760 | ||||||
Dividends paid | (383,463 | ) | (19,598 | ) | ||||
Distributions to noncontrolling interests | (2,195 | ) | — | |||||
Repayments on long-term debt (Note 3) | (306,231 | ) | (121,721 | ) | ||||
Repurchase of preferred stock | — | (4,544 | ) | |||||
Payments of preferred stock inducement premium | — | (16,201 | ) | |||||
Payments of deferred financing costs | (114 | ) | — | |||||
|
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|
| |||||
Net cash used in financing activities | (144,576 | ) | (147,793 | ) | ||||
|
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| |||||
Effect of exchange rate on cash | 28,461 | 6,053 | ||||||
|
|
|
| |||||
Increase in cash and cash equivalents | 153,642 | 96,860 | ||||||
Cash and cash equivalents at beginning of period | 3,902,718 | 3,037,081 | ||||||
|
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|
| |||||
Cash and cash equivalents at end of period | $ | 4,056,360 | $ | 3,133,941 | ||||
|
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|
| |||||
Supplemental disclosure of cash flow information: | ||||||||
Cash payments for interest, net of amounts capitalized | $ | 77,786 | $ | 80,881 | ||||
|
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|
| |||||
Cash payments for taxes, net of refunds | $ | 1,955 | $ | (5,726 | ) | |||
|
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| |||||
Changes in construction payables | $ | (48,341 | ) | $ | (38,992 | ) | ||
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| |||||
Non-cash investing and financing activities: | ||||||||
Capitalized stock-based compensation costs | $ | 218 | $ | 600 | ||||
|
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| |||||
Changes in dividends payable on unvested restricted stock and stock units included in other accrued liabilities | $ | 444 | $ | — | ||||
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Property and equipment acquired under capital lease | $ | 340 | $ | — | ||||
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| |||||
Accumulated but undeclared dividend requirement on preferred stock issued to Principal Stockholder’s family | $ | — | $ | 6,854 | ||||
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| |||||
Accretion to redemption value of preferred stock issued to Principal Stockholder’s family | $ | — | $ | 23,136 | ||||
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| |||||
Warrants exercised and settled through tendering of preferred stock | $ | — | $ | 65,225 | ||||
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| |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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, 2010.2011. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). 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 subsidiary, Sands China Ltd. (“SCL,” the indirect owner and operator of the majority of the Company’s operations in the MacauMacao Special Administrative Region (“Macau”Macao”) 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 (“SEHK”). Immediately following the SCL Offering and several transactions consummated in connection with such offering, the Company owned 70.3% of the 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
OperationsMacao
The Company currently owns 70.3% of SCL, which includes the operations of The Venetian Macao, Four Seasons Macao, Sands Macao, Sands Cotai Central 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 Venetian Macao Resort Hotel (“The Venetian Macao”), which anchors the Cotai Strip, the Company’s master-planned development of integrated resort properties on an area of approximately 200 acres in Macao (consisting of parcels referred to as 1, 2, 3, 5 and 6 and 7 and 8). The Venetian Macao (located on parcel 1) includes a 39-floor luxury hotel with over 2,900 suites; approximately 534,000 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 owns the Four Seasons Hotel Macao, Cotai Strip (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 and located on parcel 2, the “Four Seasons Macao”), which features approximately 91,000 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 monetize units within the Four Seasons Apartments after the necessary government approvals are obtained and future demand warrants it.
The Company owns and operates the Sands Macao, the first Las Vegas-style casino in Macao. The Sands Macao offers approximately 197,000 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.
In April 2012, the Company opened phase I of its Sands Cotai Central integrated resort, which is located on parcels 5 and 6 and is situated across the street from The Venetian Macao and Four Seasons Macao. Phase I consists of a hotel tower on parcel 5, which includes approximately 600 five-star rooms and suites under the Conrad brand and approximately 1,200 four-star rooms and suites under the Holiday Inn brand. Phase I also includes completion of the structural work of an adjacent hotel tower, located on parcel 6, to be managed by Sheraton International Inc. and Sheraton Overseas Management Co. (collectively “Starwood”) under the Sheraton Towers brand; a variety of retail offerings; more than 300,000 square feet of meeting space; several food and beverage establishments: along with the 106,000-square-foot casino and VIP gaming areas. Phase IIA, which is currently scheduled to open in the third quarter of 2012, includes the opening of the first hotel tower on parcel 6, which will feature nearly 2,000 Sheraton-branded rooms, along with the second casino and the remaining retail, entertainment, dining and meeting facilities. Phase IIB, which is projected to open in the first quarter of 2013, consists of the second hotel tower on parcel 6 and will feature an additional 2,000 rooms and suites under the Sheraton Towers brand. Upon completion of phases I and II of the project, the integrated resort will feature approximately 5,800 hotel rooms, approximately 300,000 square feet of gaming space, approximately 1.2 million square feet of retail, entertainment, dining and
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
exhibition and conference facilities, and a multipurpose theater. The total cost to complete phases I and II is expected to be approximately $1.2 billion. Phase III of the project is expected to include a fourth hotel and mixed-use tower, located on parcel 5, to be managed by Starwood under the St. Regis brand and the total cost to complete is expected to be approximately $450 million. The Company intends to commence construction of phase III of the project as demand and market conditions warrant it. As of March 31, 2012, the Company has capitalized costs of $3.32 billion for the entire project, including the land premium (net of amortization) and $213.6 million in outstanding construction payables.
Singapore
The Company owns and operates the Marina Bay Sands in Singapore, which features three 55-story hotel towers (totaling approximately 2,600 rooms and suites), the Sands SkyPark (which sits atop the hotel towers and features an infinity swimming pool and several dining options), approximately 160,000 square feet of gaming space, an enclosed retail, dining and entertainment complex of approximately 800,000 net leasable square feet, a convention center and meeting room complex of approximately 1.2 million square feet, theaters and a landmark iconic structure at the bay-front promenade that contains an art/science museum.
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; anentertainment facilities; and enclosed retail, dining and entertainment complexcomplexes located within The Venetian Las Vegas of approximately 440,000 net leasable square feet (“The Grand Canal Shoppes”), and The Palazzo (“The Shoppes at The Palazzo”), both of which waswere 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 2 — Property and Equipment, Net” regarding the sale of The Shoppes at The Palazzo.
Pennsylvania
The Company owns and operates the Company partially opened 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 currently features approximately 152,000 square feet of gaming space, which include table games operations that commenced in July 2010;space; a 300-room hotel tower, which opened in May 2011; a 150,000-square-foot retail facility, with a progressive opening that began in November 2011; an arts and cultural center; and is the broadcast home of the local PBS affiliate. The Company has initiatedrecommenced construction activities on the remaining componentscomponent of the integrated resort, which include a 150,000-square-foot retail facility (with a progressive opening beginning in November 2011) and a 50,000-square-foot multipurpose event center (expected to open in the second quarter of 2012). Sands Bethlehem is also expected to be home to the National Museum of Industrial History. The Company owns 86% of the economic interest ofin 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 ofin the retail portion of the property through its ownership interest in Sands Bethworks Retail LLC. As of September 30, 2011, the Company has capitalized construction costs of $695.2 million for this project (including $6.6 million in outstanding construction payables). The Company expects to spend approximately $30 million to complete construction of the project, on furniture, fixtures and equipment (“FF&E”) and other costs, and to pay outstanding construction payables, as noted above.
8
The Company has suspended portions of its development projects to focus its efforts on those projects with the highest expected rates of return on invested capital. Shouldand should general economic conditions fail to improve, if the Company is unable to obtain sufficient funding or applicable government approvals 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.
Macao
The Company submitted plans to the Macao government for its other Cotai Strip developments, which represent two integrated resort developments (referred to as parcels 3 and 7 and 8). Subject to the approval from the Macao government, as discussed further below, the developments are expected to include hotels, exhibition and conference facilities, gaming areas, showrooms, spas, dining, retail and entertainment facilities, and other amenities. The Company had commenced pre-construction activities on these developments and plans to operate the related gaming areas under the Company’s Macao gaming subconcession. In addition, the Company mayis completing the development of some public areas surrounding its Cotai Strip properties on behalf of the Macao government. The Company currently intends to develop its other Cotai Strip properties as follows:
Parcel 3 — Once completed, the integrated resort on parcel 3 will be subjectconnected to penaltiesThe 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. The Company had commenced pre-construction activities and has capitalized costs of $96.7 million, including the land premium (net of amortization), as of March 31, 2012. The Company intends to commence construction after Sands Cotai Central is complete and necessary government approvals are obtained.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Parcels 7 and 8 — Consistent with its original plans, the Company had commenced pre-construction activities and has capitalized construction costs of $101.1 million as of March 31, 2012. The Company intends to commence construction after Sands Cotai Central and the integrated resort on parcel 3 are completed, necessary government approvals obtained (including the land concession, see below), future demand warrants it and additional financing is obtained. If the Company is successful in winning its judicial appeal and obtaining the land concession for parcels 7 and 8 (as discussed below), and is able to proceed with this portion of the development as planned, the related integrated resort is expected to be similar in size and scope to Sands Cotai Central.
The impact of the delayed construction on the Company’s previously estimated cost to complete its Cotai Strip developments on parcels 3 and 7 and 8 is currently not determinable with certainty. As of March 31, 2012, the Company has capitalized an aggregate of $7.78 billion in construction costs and land premiums (net of amortization) for its Cotai Strip developments, including The Venetian Macao, Four Seasons Macao and Sands Cotai Central, as well as the Company’s investments in transportation infrastructure, including its passenger ferry service operations. In addition to funding phases I and II of Sands Cotai Central with borrowings under the termination clausesCompany’s new $3.7 billion Macao credit facility completed in November 2011 (the “2011 VML Credit Facility”), 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 the additional financing required or on terms suitable to the Company.
Land concessions in Macao generally have an initial term of 25 years with automatic extensions of 10 years thereafter in accordance with Macao law. The Company has received land concessions from the Macao government to build on parcels 1, 2, 3 and 5 and 6, including the sites on which The Venetian Macao, the Four Seasons Macao and Sands Cotai Central are located. The Company does not own these land sites in Macao; however, the land concessions grant the Company exclusive use of the land. As specified in the land concessions, the Company is required to pay premiums for each parcel, which are either payable in a single lump sum upon acceptance of the land concessions by the Macao government or in seven semi-annual installments, as well as annual rent for the term of the land concessions. In December 2010, the Company received notice from the Macao government that its application for a land concession for parcels 7 and 8 was not approved and the Company applied to the Chief Executive of Macao for an executive review of the decision. In January 2011, the Company filed a judicial appeal with the Court of Second Instance in Macao, which has yet to issue a decision. Should the Company win its judicial appeal, it is still possible for the Chief Executive of Macao to again deny the land concession based upon public policy considerations. If the Company does not obtain the land concession or does not receive full reimbursement of its capitalized investment in this project, the Company would record a charge for all or some portion of the $101.1 million in capitalized construction contractscosts, as of March 31, 2012, related to its development on parcels 7 and 8.
Under the Company’s land concession for parcel 3, the Company was initially required to complete the corresponding development by August 2011. The Macao 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 land concession for Sands Cotai Central contains a similar requirement that the corresponding development be completed by May 2014. The Company intends to apply for an extension from the Macao government to complete its parcel 3 development as it will be unable to meet the April 2013 deadline. Should the Company determine that it is unable to complete Sands Cotai Central by May 2014, the Company also intends to apply for an extension from the Macao government. No assurances can be given that additional extensions will be granted. If the Company is unable to meet the applicable deadline for Sands Cotai Central and the deadlines for either development are not extended, it could lose its land concessions for parcel 3 or termination rightsSands Cotai Central, which would prohibit the Company from operating any facilities developed under the respective land concessions. As a result, the Company could record a charge for all or some portion of its management contracts with certain hotel management companies.
United States
The Company was constructing a high-rise residential condominium tower (the “Las Vegas Condo Tower”), located on the Las Vegas Strip between The Palazzo and The Venetian Las Vegas. 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.improve. As of September 30, 2011,March 31, 2012, the Company has capitalized construction costs of $178.0$178.3 million for this project. The impact of the suspension on the estimated overall cost of the project is currently not determinable with certainty.
9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
10
Through September 30, 2011,March 31, 2012, the Company has funded its development projects primarily through borrowings under its U.S., MacauMacao and Singapore credit facilities, operating cash flows, proceeds from its equity offerings and proceeds from the disposition of non-core assets.
The U.S. credit facility, as amended in August 2010, requires 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 September 30 and December 31, 2011, decreases to 5.5x for the quarterly periods ended March 31 and June 30, 2012, and then decreases to 5.0x for all quarterly periods thereafter through maturity. One of the Company’s Macau credit facilities, the VML credit facility, as amended in August 2009, requires certain of 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 3.0x for the quarterly periods through maturity. The Company can elect to contribute up to $50 million and $20 million of cash on hand to its Las Vegas and relevant 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”). The Singapore credit facility requires operations of Marina Bay Sands to comply with similar financial covenants, which commenced with the quarterly period ended September 30, 2011, including maintaining a maximum leverage ratio of debt to Adjusted EBITDA. The maximum leverage ratio is 5.5x5.25x for the quarterly period ended September 30, 2011,March 31, 2012, and then decreases by 0.25x every other quarter until September 30, 2014, when it decreases to, and remains at, 3.75x for all quarterly periods thereafter through maturity. The Company’s 2011 VML Credit Facility, entered into in September 2011, will also requirerequires the Company’s MacauMacao operations to comply with similar financial covenants, commencingwhich commenced with the quarterly period ended March 31, 2012, including maintaining a maximum leverage ratio of debt to Adjusted EBITDA. The maximum leverage ratio will beis 4.5x for the quarterly periods ended March 31, 2012 through June 30, 2013, decreases to 4.0x for the quarterly periods ended September 30, 2013 through December 31, 2014, decreases to 3.5x for the quarterly periods ended March 31 through December 31, 2015, and then decreases to, and remains at, 3.0x for all quarterly periods thereafter through maturity. 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 facility 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.financings. Certain defaults under the 2011 VML credit facilityCredit 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.
11
In March 2012, the Company’s wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”), secured a commitment for further disclosure.
Recent Accounting Pronouncements
In January 2010,May 2011, the Financial Accounting Standards Board (“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 8 — Fair Value Measurements” for the required disclosure.
In June 2011, the FASB issued authoritative guidance that amends the presentation of comprehensive income in the financial statements by requiring an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The updateguidance also eliminates the option to present the components of other comprehensive income as part of the statement of equity. The guidance is effective for interim and annual reporting periods beginning on or after December 15, 2011, with early adoption permitted. The adoptionSee the condensed consolidated statements of this guidance will not have a material effect oncomprehensive income for the Company’s financial condition, results of operations or cash flows.
required presentation.
12
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
| NOTE 2 — PROPERTY AND EQUIPMENT, NET |
Property and equipment consists of the following (in thousands):
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| Land and improvements | $ | 431,941 | $ | 410,758 | ||||
| Building and improvements | 11,367,108 | 10,881,936 | ||||||
| Furniture, fixtures, equipment and leasehold improvements | 2,083,422 | 1,990,721 | ||||||
| Transportation | 405,738 | 402,904 | ||||||
| Construction in progress | 3,416,546 | 3,147,750 | ||||||
| 17,704,755 | 16,834,069 | |||||||
| Less — accumulated depreciation and amortization | (2,899,782 | ) | (2,331,872 | ) | ||||
| $ | 14,804,973 | $ | 14,502,197 | |||||
| $15,329,602 | $15,329,602 | |||||||
| March 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
Land and improvements | $ | 439,023 | $ | 436,768 | ||||
Building and improvements | 11,633,890 | 11,456,407 | ||||||
Furniture, fixtures, equipment and leasehold improvements | 2,224,125 | 2,147,326 | ||||||
Transportation | 411,626 | 405,156 | ||||||
Construction in progress | 3,928,031 | 3,677,479 | ||||||
|
|
|
| |||||
| 18,636,695 | 18,123,136 | |||||||
Less — accumulated depreciation and amortization | (3,307,093 | ) | (3,092,157 | ) | ||||
|
|
|
| |||||
| $ | 15,329,602 | $ | 15,030,979 | |||||
|
|
|
| |||||
Construction in progress consists of the following (in thousands):
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
| Sands Cotai Central | $ | 2,612,616 | $ | 2,005,386 | ||||
| Four Seasons Macao (principally the Four Seasons Apartments) | 387,572 | 379,161 | ||||||
| Sands Bethlehem | 59,421 | 101,960 | ||||||
| Marina Bay Sands | 21,872 | 337,835 | ||||||
| Other | 335,065 | 323,408 | ||||||
| $ | 3,416,546 | $ | 3,147,750 | |||||
| $15,329,602 | $15,329,602 | |||||||
| March 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
Sands Cotai Central | $ | 3,119,034 | $ | 2,902,743 | ||||
Four Seasons Macao (principally the Four Seasons Apartments) | 407,946 | 404,650 | ||||||
Other | 401,051 | 370,086 | ||||||
|
|
|
| |||||
| $ | 3,928,031 | $ | 3,677,479 | |||||
|
|
|
| |||||
The $335.1$401.1 million in other construction in progress consists primarily of construction of the Las Vegas Condo Tower and costs incurred at the Cotai Strip parcels 3 and 7 and 8.
Under generally accepted accounting principles, the April 2004 purchase and sale agreement, as amended, between Venetian Casino Resort, LLC (“VCR”) and GGP (the “Amended Agreement”) 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 Amended Agreement (the “Final Purchase Price”) and subject to certain later audit adjustments. The Company and GGP had entered into several amendments to the Amended Agreement to defer the time to reach agreement on the Final Purchase Price as both parties continued to work on various matters related to the calculation of NOI. On June 24, 2011, the Company reached a settlement with GGP regarding the Final Purchase Price. Under the terms of the settlement, the Company retained the $295.4 million of proceeds previously received and participates in certain future revenues earned by GGP. Under generally accepted accounting principles, the transaction has not been accounted for as a sale because the Company’s participation in certain future revenues constitutes continuing involvement in The Shoppes at The Palazzo. Therefore, $266.2 million of the proceeds allocated to the mall sale transaction has been recorded as deferred proceeds (a long-term financing obligation), which will accrue interest at an imputed rate and will be offset by (i) imputed rental income and (ii) rent payments made to GGP related to spaces leased back from GGP by the Company. The property and equipment legally sold to GGP totaling $267.5$260.8 million (net of $43.9$50.6 million of accumulated depreciation) as of September 30, 2011,March 31, 2012, will continue to be recorded on the Company’s condensed consolidated balance sheet and will continue to be depreciated in the Company’s condensed consolidated income statement.
During the three and nine months ended September 30,March 31, 2012 and 2011, and the three and nine months ended September 30, 2010, the Company capitalized interest expense of $34.9 million, $97.3 million, $32.0$22.1 million and $74.3$30.6 million, respectively. During the three and nine months ended September 30,March 31, 2012 and 2011, and the three and nine months ended September 30, 2010, the Company capitalized approximately $3.8 million, $20.8 million, $13.3$2.8 million and $43.4$8.9 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of propertyproperty.
During the three months ended March 31, 2012, the Company terminated its ZAiA show at The Venetian Macao and equipment.
The Company suspended portions of its development projects. As described in “— Note 1 — Organization and Business of Company — Development Projects,” the Company may be required to record an impairment charge related to these developments in the future.
The Company had commenced pre-construction activities on parcels 7 and 8, and has capitalized construction costs of $100.7$101.1 million as of September 30, 2011.March 31, 2012. During December 2010, the Company received notice from the MacauMacao government that its application for a land concession for parcels 7 and 8 was not approved and the Company applied to the Chief Executive of MacauMacao for aan executive review of the decision. In January 2011, the Company filed ana judicial appeal with the Court of Second Instance in Macau,Macao, which has yet to issue a decision. Should the Company win its judicial appeal, it is still possible for the Chief Executive of MacauMacao to again deny the land concession based upon public policy considerations. In order to obtain the land concession and construct the resort, the Company would need to win its appeal and avoid any future denial of the land concession based upon public policy considerations. If the Company does not obtain the land concession or does not receive full reimbursement of its capitalized investment in this project, the Company would record a charge for all or some portion of the $100.7$101.1 million in capitalized construction costs, as of September 30, 2011,March 31, 2012, related to its development on parcels 7 and 8.
13
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
NOTE 3 — LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
| September 30, | December 31, | |||||||
| Corporate and U.S. Related: | 2011 | 2010 | ||||||
| Senior Secured Credit Facility — Term B | $ | 2,140,928 | $ | 2,157,199 | ||||
| Senior Secured Credit Facility — Delayed Draws I and II | 714,900 | 720,332 | ||||||
| 6.375% Senior Notes (net of original issue discount of $591 and $720, respectively) | 189,121 | 188,992 | ||||||
| Airplane Financings | 75,656 | 78,422 | ||||||
| HVAC Equipment Lease | 21,745 | 23,006 | ||||||
| Other | 3,185 | 3,868 | ||||||
Macau Related: | ||||||||
| VML Credit Facility — Term B | 1,452,289 | 1,483,789 | ||||||
| VML Credit Facility — Term B Delayed | 564,779 | 577,029 | ||||||
| VOL Credit Facility — Term | 749,447 | 749,930 | ||||||
| Ferry Financing | 148,549 | 175,011 | ||||||
| Other | 392 | 640 | ||||||
Singapore Related: | ||||||||
| Singapore Credit Facility | 3,676,807 | 3,980,435 | ||||||
| Other | 1,630 | 2,170 | ||||||
| 9,739,428 | 10,140,823 | |||||||
| Less — current maturities | (457,344 | ) | (767,068 | ) | ||||
| Total long-term debt | $ | 9,282,084 | $ | 9,373,755 | ||||
| March 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
Corporate and U.S. Related: | ||||||||
Senior Secured Credit Facility — Term B | $ | 2,130,081 | $ | 2,135,504 | ||||
Senior Secured Credit Facility — Delayed Draws I and II | 711,279 | 713,089 | ||||||
6.375% Senior Notes (net of original issue discount of $547) | — | 189,165 | ||||||
Airplane Financings | 73,813 | 74,734 | ||||||
HVAC Equipment Lease | 20,922 | 21,337 | ||||||
Other | 2,730 | 2,958 | ||||||
Macao Related: | ||||||||
2011 VML Credit Facility | 3,206,733 | 3,206,010 | ||||||
Ferry Financing | 131,557 | 140,268 | ||||||
Other | 562 | 306 | ||||||
Singapore Related: | ||||||||
Singapore Credit Facility | 3,573,132 | 3,548,162 | ||||||
Other | 1,164 | 1,444 | ||||||
|
|
|
| |||||
| 9,851,973 | 10,032,977 | |||||||
Less — current maturities | (469,324 | ) | (455,846 | ) | ||||
|
|
|
| |||||
Total long-term debt | $ | 9,382,649 | $ | 9,577,131 | ||||
|
|
|
| |||||
Senior Secured Credit Facility
As of September 30, 2011,March 31, 2012, the Company had $724.6$520.6 million of available borrowing capacity under the Senior Secured Credit Facility, net of outstanding letters of creditcredit.
Senior Notes
In March 2012, the Company redeemed the Senior Notes for $191.7 million and undrawn amounts committed to be funded by Lehman Brothers Commercial Paper Inc.
2011 VML Credit Facility
As of September 30, 2011, the Company has no available borrowing capacity under the VML Credit Facility.
14
Singapore Credit Facility
As of September 30, 2011,March 31, 2012, the Company had SGD 102.8105.6 million (approximately $79.4$84.1 million at exchange rates in effect on September 30, 2011)March 31, 2012) of available borrowing capacity under the Singapore Credit Facility. In January 2012, the banker’s guarantee was released by the STB and the Singapore Credit Facility net of outstanding banker’s guarantees.
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt and capital lease obligations are as follows (in thousands):
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| Proceeds from VOL Credit Facility | $ | — | $ | 751,169 | ||||
| Proceeds from Singapore Credit Facility | — | 647,988 | ||||||
| $ | — | $ | 1,399,157 | |||||
| Repayments on Singapore Credit Facility | $ | (302,210 | ) | $ | — | |||
| Repayments on VML Credit Facility | (43,750 | ) | (524,701 | ) | ||||
| Repayments on Senior Secured Credit Facility | (21,703 | ) | (1,803,090 | ) | ||||
| Repayments on Ferry Financing | (26,243 | ) | (26,331 | ) | ||||
| Repayments on Airplane Financings | (2,766 | ) | (2,766 | ) | ||||
| Repayments on HVAC Equipment Lease | (1,261 | ) | (1,293 | ) | ||||
| Repayments on FF&E Facility and Other Long-Term Debt | (1,470 | ) | (109,746 | ) | ||||
| Repurchase and cancellation of Senior Notes | — | (56,675 | ) | |||||
| $ | (399,403 | ) | $ | (2,524,602 | ) | |||
15
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
Repayments on Singapore Credit Facility | $ | (98,577 | ) | $ | (97,691 | ) | ||
Repayments on Senior Secured Credit Facility | (7,234 | ) | (7,234 | ) | ||||
Repayments on VML Credit Facility | — | (6,250 | ) | |||||
Redemption of Senior Notes | (189,712 | ) | — | |||||
Repayments on Ferry Financing | (8,779 | ) | (8,745 | ) | ||||
Repayments on Airplane Financings | (922 | ) | (922 | ) | ||||
Repayments on HVAC Equipment Lease | (415 | ) | (426 | ) | ||||
Repayments on Other Long-Term Debt | (592 | ) | (453 | ) | ||||
|
|
|
| |||||
| $ | (306,231 | ) | $ | (121,721 | ) | |||
|
|
|
| |||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
Fair Value of Long-Term Debt
The estimated fair value of the Company’s long-term debt as of September 30,March 31, 2012 and December 31, 2011, was approximately $9.40$9.48 billion, compared to its carrying value of $9.72 billion. As of December 31, 2010, the estimated fair value of the Company’s long-term debt was approximately $9.72$9.83 billion compared to its carrying value of $10.10 billion.and $10.01 billion, respectively. The estimated fair value of the Company’s long-term debt is based on quoted marketlevel 2 inputs (quoted prices if available, or by pricing models based on the value of related cash flows discounted at current market interest rates.
NOTE 4 — EQUITY AND EARNINGS PER SHARE
Preferred Stock and Warrants
On February 15, 2011, the Company paid a dividend of $2.50 per preferred share, totaling $19.6 million (of which $13.1 million was paid to the Principal Stockholder’s family).
On March 2, 2012, the Principal Stockholder’s family exercised all of their outstanding warrants to purchase 87,500,175 shares of the Company’s common stock dividend activity isfor $6.00 per share and paid $525.0 million in cash as follows (in thousands):
| Preferred Stock | ||||||||||||||
| Dividends Paid to | Preferred Stock | Total Preferred | ||||||||||||
| Board of Directors’ | Principal | Dividends Paid to | Stock | |||||||||||
| Declaration Date | Payment Date | Stockholder’s Family | Public Holders | Dividends Paid | ||||||||||
| February 5, 2010 | February 16, 2010 | $ | 13,125 | $ | 10,225 | $ | 23,350 | |||||||
| May 4, 2010 | May 17, 2010 | $ | 13,125 | $ | 10,225 | $ | 23,350 | |||||||
| July 29, 2010 | August 16, 2010 | $ | 13,125 | $ | 10,225 | $ | 23,350 | |||||||
| $ | 70,050 | |||||||||||||
| February 1, 2011 | February 15, 2011 | $ | 13,125 | $ | 6,473 | $ | 19,598 | |||||||
| May 5, 2011 | May 16, 2011 | $ | 13,125 | $ | 6,094 | $ | 19,219 | |||||||
| August 4, 2011 | August 15, 2011 | $ | 13,125 | $ | 6,015 | $ | 19,140 | |||||||
| $ | 57,957 | |||||||||||||
| November 4, 2011 | November 15, 2011 | $ | 13,125 | $ | 4,215 | $ | 17,340 | |||||||
During the ninethree months ended September 30,March 31, 2011, holders of preferred stock exercised 1,258,1201,194,700 warrants to purchase an aggregate of 20,968,70319,911,702 shares of the Company’s common stock at $6.00 per share and tendered 1,161,5001,137,100 shares of preferred stock and $9.7$5.8 million in cash as settlement of the warrant exercise price. In conjunction with certain of these transactions, the Company paid $16.5$16.2 million in premiums to induce the exercise of warrants with settlement through tendering preferred stock. During the ninethree months ended September 30,March 31, 2011, the Company also repurchased and retired 581,62940,300 shares of preferred stock for $64.9$4.5 million and recorded a $31.6$2.2 million repurchase premium as part of the transaction.
Common Stock Dividends
On March 30, 2012, the Company paid a dividend of $0.25 per common share as part of a regular cash dividend program. During the ninethree months ended September 30, 2010,March 31, 2012, the Company recorded $205.7 million as a distribution against retained earnings (of which $107.8 million related to the Principal Stockholder’s family). Of this amount, approximately $0.4 million has been recorded as a liability, which will be paid to holders of preferred stock exercised 126 warrants to purchase an aggregate of 2,099 shares of the Company’s common stock at $6.00 per share and tendered 76 shares of preferredunvested restricted stock and approximately $5,000 in cash as settlement of the warrant exercise price.
In April 2012, the Company’s Board of Directors approveddeclared a quarterly dividend of $0.25 per common share (a total estimated to be approximately $206 million) to be paid on June 29, 2012, to shareholders of record on June 20, 2012.
Noncontrolling Interests
On February 28, 2012, SCL paid a dividend of 0.58 Hong Kong dollars per share (a total of $599.8 million) to SCL shareholders of record on February 20, 2012 (of which the redemption of all of the outstanding preferred stock on November 15, 2011. The Company expects to pay approximately $783.4 million to redeem all of the preferred shares outstanding as of September 30, 2011, and record a redemption premium of approximately $98.5 millionretained $421.6 million). In addition, during the three months ended DecemberMarch 31, 2011.
16
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net income | $ | 505,172 | $ | 268,834 | $ | 1,358,767 | $ | 395,196 | ||||||||
| Currency translation adjustment | (117,492 | ) | 78,886 | (28,644 | ) | 74,390 | ||||||||||
| Total comprehensive income | 387,680 | 347,720 | 1,330,123 | 469,586 | ||||||||||||
| Less: comprehensive income attributable to noncontrolling interests | (78,229 | ) | (58,004 | ) | (231,736 | ) | (120,830 | ) | ||||||||
| Comprehensive income attributable to Las Vegas Sands Corp. | $ | 309,451 | $ | 289,716 | $ | 1,098,387 | $ | 348,756 | ||||||||
Earnings Per Share
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings per share consisted of the following:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Weighted-average common shares outstanding (used in the calculation of basic earnings per share) | 729,773,246 | 660,836,841 | 727,309,255 | 660,495,783 | ||||||||||||
| Potential dilution from stock options, restricted stock and warrants | 82,770,288 | 128,319,406 | 84,241,428 | 121,660,224 | ||||||||||||
| Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share) | 812,543,534 | 789,156,247 | 811,550,683 | 782,156,007 | ||||||||||||
| Antidilutive stock options excluded from the calculation of diluted earnings per share | 5,496,367 | 8,570,205 | 5,512,267 | 9,098,805 | ||||||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
Weighted-average common shares outstanding (used in the calculation of basic earnings per share) | 760,437,437 | 723,389,226 | ||||||
Potential dilution from stock options, warrants and restricted stock and stock units | 58,359,718 | 87,850,016 | ||||||
|
|
|
| |||||
Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share) | 818,797,155 | 811,239,242 | ||||||
|
|
|
| |||||
Antidilutive stock options, warrants and restricted stock and stock units excluded from the calculation of diluted earnings per share | 4,269,417 | 5,334,276 | ||||||
|
|
|
| |||||
17
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
NOTE 5 — VARIABLE INTEREST ENTITIES
The Company consolidates any variable interest entities (“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. 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 September 30, 2011March 31, 2012 and December 31, 2010,2011, the Company’s joint ventures had total assets of $106.5$108.1 million and $95.3$108.4 million, respectively, and total liabilities of $99.3$107.8 million and $78.4$104.3 million, respectively.
NOTE 6 — INCOME TAXES
The Company’s major tax jurisdictions are the U.S., MacauMacao and Singapore. In 2010 and 2011, the Internal Revenue Service (“IRS”) issued a Revenue Agent’s Report (“RAR”)Reports for tax years 2005 through 2008 and 2009, respectively, of which the Company is appealing certain adjustments proposed by the IRS. The Company is in the initial stagesdisagrees with several of the proposed adjustments and submitted a protest and a request for an appeals process withconference to the IRS and while the final outcome of these matters is inherently uncertain, theIRS. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits at March 31, 2012, may decrease by a range betweenof $0 and $23to $24 million within the next twelve months primarily due to the possible settlement of matters presently under consideration at appeals. During the three months ended September 30, 2011,appeals in connection with the IRS completed its field examinationaudit of the Company’s 20092005 through 2008 consolidated federal income tax return and issued an RAR proposing certain adjustments that the Company is currently evaluating.returns. The Company is subject to examination for tax years after 2006 in MacauMacao and Singapore.Singapore and for tax years after 2009 in the U.S. The Company believes it has adequately reserved for its uncertain tax positions; however, there is no assurance that the taxing authorities will not propose adjustments that are more or lessdifferent than the Company’s expected outcome and impact the provision for income taxes.
During the three months ended March 31, 2012, a wholly owned foreign subsidiary paid a dividend resulting in incremental U.S. taxable income. The receipt of the dividend did not result in a cash tax liability for the Company as the incremental U.S. taxable income was fully offset by the utilization of the U.S. federal net operating loss and the U.S. foreign tax credits generated as a result of the dividend. In addition, the dividend generated excess U.S. foreign tax credits that will be available to be carried forward to tax years beyond 2012. The Company recorded valuation allowances on the net deferred tax assets of the Company’sits U.S. operations and certain foreign jurisdictions and does not anticipate recording an income tax benefit related to these deferred tax assets. The Companyjurisdictions. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period andperiod. To the extent it becomes “more-likely-than-not” that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance to the extent that the financial results of these 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 MacauMacao 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. In February 2011, the Company entered into an agreement with the MacauMacao government, effective through the end of 2013 that provides for an annual payment of 14.4 million patacas (approximately $1.8 million at exchange rates in effect on September 30, 2011)March 31, 2012) that is a substitution for a 12% tax otherwise due from VMLVenetian Macau Limited (“VML”) shareholders on dividend distributions paid from VML gaming profits.
18
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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Compensation expense: | ||||||||||||||||
| Stock options | $ | 10,339 | $ | 13,487 | $ | 35,308 | $ | 42,169 | ||||||||
| Restricted shares | 3,614 | 133 | 11,934 | 383 | ||||||||||||
| $ | 13,953 | $ | 13,620 | $ | 47,242 | $ | 42,552 | |||||||||
| Compensation cost capitalized as part of property and equipment | $ | (324 | ) | $ | 659 | $ | 692 | $ | 2,187 | |||||||
LVSC 2004 Plan: | ||||||||||||||||
| Stock options granted | — | 289 | 260 | 4,378 | ||||||||||||
| Weighted average grant date fair value | $ | — | $ | 20.99 | $ | 36.33 | $ | 15.40 | ||||||||
| Restricted shares granted | 506 | 2 | 1,197 | 16 | ||||||||||||
| Weighted average grant date fair value | $ | 42.67 | $ | 28.90 | $ | 45.52 | $ | 25.37 | ||||||||
SCL Equity Plan: | ||||||||||||||||
| Stock options granted | 2,039 | 4,553 | 7,316 | 24,929 | ||||||||||||
| Weighted average grant date fair value | $ | 1.84 | $ | 1.12 | $ | 1.71 | $ | 1.05 | ||||||||
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
Compensation expense: | ||||||||
Stock options | $ | 10,866 | $ | 15,301 | ||||
Restricted stock and stock units | 8,300 | 4,938 | ||||||
|
|
|
| |||||
| $ | 19,166 | $ | 20,239 | |||||
|
|
|
| |||||
Compensation cost capitalized as part of property and equipment | $ | 218 | $ | 600 | ||||
|
|
|
| |||||
LVSC 2004 Plan: | ||||||||
Stock options granted | 51 | 230 | ||||||
|
|
|
| |||||
Weighted average grant date fair value | $ | 35.49 | $ | 36.22 | ||||
|
|
|
| |||||
Restricted stock granted | 497 | 620 | ||||||
|
|
|
| |||||
Weighted average grant date fair value | $ | 53.30 | $ | 48.01 | ||||
|
|
|
| |||||
Restricted stock units granted | 13 | — | ||||||
|
|
|
| |||||
Weighted average grant date fair value | $ | 51.07 | $ | — | ||||
|
|
|
| |||||
SCL Equity Plan: | ||||||||
Stock options granted | 2,435 | 2,746 | ||||||
|
|
|
| |||||
Weighted average grant date fair value | $ | 1.68 | $ | 1.52 | ||||
|
|
|
| |||||
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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 | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
LVSC 2004 Plan: | ||||||||||||||||
| Weighted average volatility | — | % | 89.0 | % | 94.4 | % | 92.7 | % | ||||||||
| Expected term (in years) | — | 6.0 | 6.3 | 5.4 | ||||||||||||
| Risk-free rate | — | % | 3.0 | % | 2.7 | % | 2.9 | % | ||||||||
| Expected dividends | — | — | — | — | ||||||||||||
SCL Equity Plan: | ||||||||||||||||
| Weighted average volatility | 67.7 | % | 73.3 | % | 68.4 | % | 73.6 | % | ||||||||
| Expected term (in years) | 6.3 | 6.3 | 6.3 | 6.2 | ||||||||||||
| Risk-free rate | 0.8 | % | 1.5 | % | 1.4 | % | 2.0 | % | ||||||||
| Expected dividends | — | — | — | — | ||||||||||||
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
LVSC 2004 Plan: | ||||||||
Weighted average volatility | 95.3 | % | 94.3 | % | ||||
Expected term (in years) | 6.3 | 6.3 | ||||||
Risk-free rate | 1.1 | % | 2.8 | % | ||||
Expected dividends | 1.9 | % | — | |||||
SCL Equity Plan: | ||||||||
Weighted average volatility | 70.4 | % | 68.9 | % | ||||
Expected term (in years) | 6.2 | 6.3 | ||||||
Risk-free rate | 0.6 | % | 1.7 | % | ||||
Expected dividends | 4.0 | % | — | |||||
NOTE 8 — 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.
19
| Fair Value Measurements Using: | ||||||||||||||||
| Total | Quoted Market | Significant Other | Significant | |||||||||||||
| Carrying | Prices in Active | Observable Inputs | Unobservable | |||||||||||||
| Value | Markets (Level 1) | (Level 2) | Inputs (Level 3) | |||||||||||||
As of September 30, 2011 | ||||||||||||||||
| Cash equivalents(1) | $ | 2,229,081 | $ | 2,229,081 | $ | — | $ | — | ||||||||
| Interest rate caps(2) | $ | 1,418 | $ | — | $ | 1,418 | $ | — | ||||||||
As of December 31, 2010 | ||||||||||||||||
| Cash equivalents(1) | $ | 2,490,809 | $ | 2,490,809 | $ | — | $ | — | ||||||||
| Interest rate caps(2) | $ | 1,617 | $ | — | $ | 1,617 | $ | — | ||||||||
| Fair Value Measurements Using: | ||||||||||||||||
| Total Carrying Value | Quoted Market Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
As of March 31, 2012 | ||||||||||||||||
Cash equivalents(1) | $ | 2,796,052 | $ | 2,796,052 | $ | — | $ | — | ||||||||
Interest rate caps(2) | $ | 201 | $ | — | $ | 201 | $ | — | ||||||||
As of December 31, 2011 | ||||||||||||||||
Cash equivalents(1) | $ | 2,766,796 | $ | 2,766,796 | $ | — | $ | — | ||||||||
Interest rate caps(2) | $ | 1,195 | $ | — | $ | 1,195 | $ | — | ||||||||
| (1) | The Company has short-term investments classified as cash equivalents as the original maturities are less than 90 days. | |
| (2) | As of |
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 9 — 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 claimscosts 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.
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 MacauMacao 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 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 appealed the verdict to the Nevada Supreme Court. On November 17, 2010, the Nevada Supreme Court reversed the judgment and remanded the case to the District Court of Clark County for a new trial. In its decision reversing the monetary judgment against the Company, the Nevada Supreme Court also made several other rulings which may affect the outcome of the new trial, including overturning the pre-trial dismissal of the plaintiffs’ breach of contract claim and deciding several evidentiary matters, some of which confirmed and some of which overturned rulings made by the District Court of Clark County. On February 27, 2012, the District Court of Clark County set a date of March 25, 2013, for the new trial. As such, the Company is unable at this time to determine the probability of the outcome or range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On October 20, 2010, Steven C. Jacobs, the former Chief Executive Officer of SCL, filed an action against LVSC and SCL in the District Court of Clark County, Nevada, alleging breach of contract against LVSC and SCL and breach of the implied covenant of good faith and fair dealing and tortious discharge in violation of public policy against LVSC. On March 16, 2011, an amended complaint was filed, which added Sheldon G. Adelson as a defendant and alleged a claim of defamation per se against him, LVSC and SCL. On June 9, 2011, the District Court of Clark County dismissed the defamation claim and certified the decision as to Sheldon G. Adelson as a final judgment. On July 1, 2011, the plaintiff filed a notice of appeal regarding the final judgment as to Sheldon G. Adelson. On August 26, 2011, the Nevada Supreme Court issued a writ of mandamus instructing the District Court of Clark County to hold an evidentiary hearing on whether personal jurisdiction exists over SCL and stayed the case until after the district court’s decision. On January 17, 2012, Mr. Jacobs filed his opening brief with the Supreme Court of Nevada regarding his appeal of the defamation claim against Mr. Adelson. On January 30, 2012, Mr. Adelson filed his reply to Mr. Jacobs’ opening brief. On March 8, 2012, the District Court of Clark County set a hearing date for the week of June 25-29, 2012, for the evidentiary hearing on personal jurisdiction over SCL. Mr. Jacobs is seeking unspecified damages. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On February 9, 2011, LVSC received a subpoena from the Securities and Exchange Commission requesting that the Company produce documents relating to its compliance with the Foreign Corrupt Practices Act (the “FCPA”). The Company has also been advised by the Department of Justice that it is conducting a similar investigation. It is the Company’s belief that the subpoena may have emanated from allegations contained in the lawsuit filed by Steven C. Jacobs described above. The Company intends to cooperateis cooperating with the investigations. Based on proceedings to date, management is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any.
20
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
through press releases, investor conference calls and other means from August 2, 2007 through November 6, 2008. The amended complaint seeks, among other relief, class certification, compensatory damages and attorneys’ fees and costs. On January 10, 2011, the defendants filed a motion to dismiss the amended complaint, which, on August 24, 2011, was granted in part, and denied in part, with the dismissal of certain allegations. TheOn November 7, 2011, the defendants will be answeringfiled their answer to the allegations remaining in the amended complaint and starting thecomplaint. The discovery process.process has also begun. This consolidated action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On March 9, 2011, Benyamin Kohanim filed a shareholder derivative action (the “Kohanim action”) on behalf of the Company in the District Court of Clark County, Nevada, against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint alleges, among other things, breach of fiduciary duties in failing to properly implement, oversee and maintain internal controls to ensure compliance with the FCPA. The complaint seeks to recover for the Company unspecified damages, including restitution and disgorgement of profits, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiff. On April 18, 2011, Ira J. Gaines, Sunshine Wire and Cable Defined Benefit Pension Plan Trust dated 1/1/92 and Peachtree Mortgage Ltd. filed a shareholder derivative action (the “Gaines action”) on behalf of the Company in the District Court of Clark County, Nevada, against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint raises substantially similar claims as alleged in the Kohanim action. The complaint seeks to recover for the Company unspecified damages, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiffs. The Kohanim and Gaines actions have been consolidated and will beare reported as one consolidated matter in the future.matter. On July 25, 2011, the plaintiffs filed a first verified amended consolidated complaint. The plaintiffs have twice agreed to stay the proceedings. A 120-day stay was entered by the court in October 2011. It was extended for another 90 days in February 2012 and is set to expire in May 2012. This consolidated action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On April 1, 2011, Nasser Moradi, Richard Buckman, Douglas Tomlinson and Matt Abbeduto filed a shareholder derivative action (the “Moradi action”), as amended on April 15, 2011, on behalf of the Company in the U.S. District Court, against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint raises substantially similar claims as alleged in the Kohanim and Gaines actions. The complaint seeks to recover for the Company unspecified damages, including exemplary damages and restitution, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiffs.
21
On March 23, 2012, Ernest Kleinschmidt filed a shareholder derivative action (the “Kleinschmidt action”) on behalf of the Company entered into a development agreement, as amended by a supplementary agreement on December 11, 2009 (the “Development Agreement”), within the Singapore TourismDistrict Court of Clark County, Nevada, against Sheldon G. Adelson, Michael A. Leven, Irwin A. Siegel, Jeffrey H. Schwartz, Jason N. Ader, Charles D. Forman, Irwin Chafetz and George P. Koo, who are currently members of the Board (the “STB”), which requiresof Directors, and Wing T. Chao, Andrew R. Heyer, James Purcell, Bradley H. Stone and William P. Weidner, who are former members of the Board of Directors and/or executives of the Company. The complaint alleges, among other things, breach of fiduciary duties for disseminating false and misleading information, failing to maintain internal controls and failing to properly oversee and manage the Company, and unjust enrichment. The complaint seeks, among other relief, unspecified damages, direction to constructLVSC to take unspecified actions to improve its corporate governance and operate the Marina Bay Sands in accordance with the Company’s proposalinternal procedures, restitution and disgorgement of profits, and attorneys’ fees, costs and related expenses for the integrated resort and in accordance with the agreement.plaintiff. The Company entered into the SGD 5.44 billion (approximately $4.20 billion at exchange rates in effect on September 30, 2011) Singapore Credit Facility to fund a significant portion of the construction, operating and other development costs of the Marina Bay Sands.
On January 19, 2012, Asian American Entertainment Corporation, Limited (“AAEC”) filed a claim (the “Macao action”) with the Macao Judicial Court (Tribunal Judicial de Base) against VML, LVS (Nevada) International Holdings, Inc. (“LVS (Nevada)”), Las Vegas Sands, LLC (“LVSLLC”) and
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Venetian Casino Resort, LLC (“VCR,” and collectively, the Company does not ultimately meet the December 31, 2011, deadline, the STB will be entitled to draw on the SGD 192.6 million“Defendants”). The claim is for 3.0 billion patacas (approximately $148.8$375.1 million at exchange rates in effect on September 30, 2011) security deposit underMarch 31, 2012) as compensation for damages resulting from the Singapore Credit Facility.
As previously disclosed by the Company, on February 5, 2007, AAEC brought a similar claim (the “Prior Action”) in the U.S. District Court, against Las Vegas Sands Inc. (now known as well as a brand serviced luxury apart-hotel, as partLas Vegas Sands, LLC), VCR and Venetian Venture Development, LLC, which are subsidiaries of Sands Cotai Central in Macau. The management agreement imposes certain construction and opening obligations and deadlines on the Company, and certain past and/or anticipated delays would allow StarwoodWilliam P. Weidner and David Friedman, who are former executives of the Company. The U.S. District Court entered an order on April 16, 2010, dismissing the Prior Action. On April 20, 2012, LVSLLC, VCR and LVS (Nevada) filed an injunctive action (the “Nevada Action”) against AAEC in the U.S. District Court seeking to terminate its agreement.enjoin AAEC from proceeding with the Macao Action based on AAEC’s filing, and the U.S. District Court’s dismissal, of the Prior Action. The CompanyU.S. District Court has recommenced construction activities at Sands Cotai Central and is negotiating an amendment to its management agreement with Starwood to provide for new opening timelines. If negotiations are unsuccessful and Starwood exercises its rights to terminate its agreement,not ruled on the Company would have to find a new manager and brand for these projects. Nevada Action.
Other Agreements
The Company’s agreement with Starwood related to the sales and marketing of the Las Vegas Condo Tower has been terminated.terminated in connection with the suspension of the project and management is currently evaluating alternatives for branding the project. If the Company is unsuccessful in finding a new brand inrebranding its Las Vegas itCondo Tower, such measures could have a material adverse effect on the Company’s financial condition, results of operations and cash flows.
22
The Company’s principal operating and developmental activities occur in three geographic areas: United States, MacauMacao, Singapore and Singapore.the U.S. The Company reviews the results of operations for each of its key operating segments: The Venetian Las Vegas, which includes theMacao; 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)Macao); and Marina Bay Sands. The Company also reviews construction and development activities for each of its primary projects:Sands; The Venetian Las Vegas;Vegas, which includes the Sands Expo Center; The Palazzo; and Sands Bethlehem; Sands Macao; The Venetian Macao; Four Seasons Macao; Other Asia; Marina Bay Sands; Other Development Projects (Sands Cotai Central and Cotai Strip parcels 3 and 7 and 8); and Corporate and Other (comprised primarily of airplanes and the Las Vegas Condo Tower).Bethlehem. 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 serviceservices and products, the regulatory business environment of the operations within each segment and the Company’s organizational and management reporting structure. The Company also reviews construction and development activities for each of its primary projects under development, some of which have been suspended, in addition to its reportable segments noted above. The Company’s primary projects under development are Sands Cotai Central (which opened phase I in April 2012) and Cotai Strip parcels 3 and 7 and 8 (included in Other Development Projects) in Macao and the Las Vegas Condo Tower (included in Corporate and Other) in the U.S. Corporate and Other also includes the corporate activities of the Company. The information for the three months ended March 31, 2011, has been reclassified to conform to the current presentation. The Company’s segment information as of September 30, 2011March 31, 2012 and December 31, 2010,2011, and for the three and nine months ended September 30,March 31, 2012 and 2011, and 2010, is as follows (in thousands):
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net Revenues: | ||||||||||||||||
| Macau: | ||||||||||||||||
| The Venetian Macao | $ | 689,243 | $ | 620,745 | $ | 2,062,917 | $ | 1,751,472 | ||||||||
| Sands Macao | 307,420 | 288,235 | 961,173 | 874,253 | ||||||||||||
| Four Seasons Macao | 169,050 | 160,367 | 461,914 | 406,807 | ||||||||||||
| Other Asia | 43,190 | 28,403 | 109,413 | 80,961 | ||||||||||||
| 1,208,903 | 1,097,750 | 3,595,417 | 3,113,493 | |||||||||||||
| United States: | ||||||||||||||||
| Las Vegas Operating Properties | 347,446 | 290,690 | 985,043 | 902,419 | ||||||||||||
| Sands Bethlehem | 106,720 | 82,843 | 294,870 | 218,708 | ||||||||||||
| 454,166 | 373,533 | 1,279,913 | 1,121,127 | |||||||||||||
| Marina Bay Sands | 792,427 | 485,886 | 2,114,921 | 702,279 | ||||||||||||
| Intersegment eliminations | (46,121 | ) | (48,397 | ) | (123,861 | ) | (98,763 | ) | ||||||||
| Total net revenues | $ | 2,409,375 | $ | 1,908,772 | $ | 6,866,390 | $ | 4,838,136 | ||||||||
23
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
Net Revenues: | ||||||||
Macao: | ||||||||
The Venetian Macao | $ | 772,760 | $ | 638,269 | ||||
Sands Macao | 349,083 | 322,793 | ||||||
Four Seasons Macao | 299,604 | 172,107 | ||||||
Other Asia | 35,568 | 33,773 | ||||||
|
|
|
| |||||
| 1,457,015 | 1,166,942 | |||||||
Marina Bay Sands | 848,669 | 584,925 | ||||||
United States: | ||||||||
Las Vegas Operating Properties | 384,603 | 305,075 | ||||||
Sands Bethlehem | 115,562 | 91,030 | ||||||
|
|
|
| |||||
| 500,165 | 396,105 | |||||||
Intersegment eliminations | (43,107 | ) | (36,053 | ) | ||||
|
|
|
| |||||
Total net revenues | $ | 2,762,742 | $ | 2,111,919 | ||||
|
|
|
| |||||
Adjusted Property EBITDA(1) | ||||||||
Macao: | ||||||||
The Venetian Macao | $ | 281,933 | $ | 228,400 | ||||
Sands Macao | 106,956 | 92,648 | ||||||
Four Seasons Macao | 67,519 | 57,547 | ||||||
Other Asia | (5,722 | ) | (4,606 | ) | ||||
|
|
|
| |||||
| 450,686 | 373,989 | |||||||
Marina Bay Sands | 472,519 | 284,471 | ||||||
United States: | ||||||||
Las Vegas Operating Properties | 115,806 | 65,165 | ||||||
Sands Bethlehem | 27,502 | 22,109 | ||||||
|
|
|
| |||||
| 143,308 | 87,274 | |||||||
|
|
|
| |||||
Total adjusted property EBITDA | 1,066,513 | 745,734 | ||||||
Other Operating Costs and Expenses | ||||||||
Stock-based compensation | (9,169 | ) | (8,295 | ) | ||||
Corporate | (48,955 | ) | (37,576 | ) | ||||
Pre-opening | (51,459 | ) | (9,471 | ) | ||||
Development | (1,198 | ) | (573 | ) | ||||
Depreciation and amortization | (194,747 | ) | (190,237 | ) | ||||
Amortization of leasehold interests in land | (9,945 | ) | (13,156 | ) | ||||
Impairment loss | (42,893 | ) | — | |||||
Loss on disposal of assets | (593 | ) | (499 | ) | ||||
|
|
|
| |||||
Operating income | 707,554 | 485,927 | ||||||
Other Non-Operating Costs and Expenses | ||||||||
Interest income | 5,648 | 2,047 | ||||||
Interest expense, net of amounts capitalized | (64,672 | ) | (73,585 | ) | ||||
Other expense | (3,419 | ) | (4,675 | ) | ||||
Loss on early retirement of debt | (2,831 | ) | — | |||||
Income tax expense | (63,171 | ) | (45,211 | ) | ||||
|
|
|
| |||||
Net income | $ | 579,109 | $ | 364,503 | ||||
|
|
|
| |||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Adjusted Property EBITDA(1) | ||||||||||||||||
| Macau: | ||||||||||||||||
| The Venetian Macao | $ | 252,720 | $ | 211,496 | $ | 739,486 | $ | 574,240 | ||||||||
| Sands Macao | 75,821 | 74,103 | 264,042 | 225,076 | ||||||||||||
| Four Seasons Macao | 59,719 | 48,962 | 154,886 | 101,456 | ||||||||||||
| Other Asia | 2,515 | (5,563 | ) | (11,321 | ) | (16,149 | ) | |||||||||
| 390,775 | 328,998 | 1,147,093 | 884,623 | |||||||||||||
| United States: | ||||||||||||||||
| Las Vegas Operating Properties | 94,311 | 58,271 | 252,385 | 229,555 | ||||||||||||
| Sands Bethlehem | 25,170 | 16,361 | 68,318 | 39,450 | ||||||||||||
| 119,481 | 74,632 | 320,703 | 269,005 | |||||||||||||
| Marina Bay Sands | 413,893 | 241,589 | 1,103,723 | 336,055 | ||||||||||||
| Total adjusted property EBITDA | 924,149 | 645,219 | 2,571,519 | 1,489,683 | ||||||||||||
Other Operating Costs and Expenses | ||||||||||||||||
| Stock-based compensation expense | (7,280 | ) | (8,309 | ) | (22,477 | ) | (22,880 | ) | ||||||||
| Corporate expense | (54,031 | ) | (28,686 | ) | (133,983 | ) | (78,116 | ) | ||||||||
| Rental expense | (10,143 | ) | (9,186 | ) | (33,333 | ) | (30,690 | ) | ||||||||
| Pre-opening expense | (15,823 | ) | (10,107 | ) | (43,472 | ) | (97,684 | ) | ||||||||
| Development expense | (3,308 | ) | (425 | ) | (6,301 | ) | (1,258 | ) | ||||||||
| Depreciation and amortization | (200,071 | ) | (186,738 | ) | (596,469 | ) | (510,521 | ) | ||||||||
| Impairment loss | — | (16,057 | ) | — | (16,057 | ) | ||||||||||
| Loss on disposal of assets | (937 | ) | (2,406 | ) | (8,879 | ) | (40,577 | ) | ||||||||
| Operating income | 632,556 | 383,305 | 1,726,605 | 691,900 | ||||||||||||
Other Non-Operating Costs and Expenses | ||||||||||||||||
| Interest income | 2,369 | 2,661 | 8,444 | 6,367 | ||||||||||||
| Interest expense, net of amounts capitalized | (70,761 | ) | (76,723 | ) | (214,938 | ) | (231,875 | ) | ||||||||
| Other income (expense) | (6,617 | ) | 6,444 | (9,384 | ) | (6,205 | ) | |||||||||
| Loss on modification or early retirement of debt | — | (21,692 | ) | — | (18,555 | ) | ||||||||||
| Income tax expense | (52,375 | ) | (25,161 | ) | (151,960 | ) | (46,436 | ) | ||||||||
| Net income | $ | 505,172 | $ | 268,834 | $ | 1,358,767 | $ | 395,196 | ||||||||
| (1) | Adjusted property EBITDA is net income before royalty fees, stock-based compensation expense, corporate expense, |
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Intersegment Revenues | ||||||||||||||||
| Macau: | ||||||||||||||||
| The Venetian Macao | $ | 801 | $ | 1,535 | $ | 2,624 | $ | 6,701 | ||||||||
| Other Asia | 9,857 | 17,942 | 27,340 | 48,376 | ||||||||||||
| 10,658 | 19,477 | 29,964 | 55,077 | |||||||||||||
| Las Vegas Operating Properties | 35,202 | 28,872 | 93,187 | 43,234 | ||||||||||||
| Marina Bay Sands | 261 | 48 | 710 | 452 | ||||||||||||
| Total intersegment revenues | $ | 46,121 | $ | 48,397 | $ | 123,861 | $ | 98,763 | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
Intersegment Revenues | ||||||||
Macao: | ||||||||
The Venetian Macao | $ | 913 | $ | 895 | ||||
Other Asia | 6,416 | 7,901 | ||||||
|
|
|
| |||||
| 7,329 | 8,796 | |||||||
Marina Bay Sands | 488 | 197 | ||||||
Las Vegas Operating Properties | 35,290 | 27,060 | ||||||
|
|
|
| |||||
Total intersegment revenues | $ | 43,107 | $ | 36,053 | ||||
|
|
|
| |||||
24
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
Capital Expenditures | ||||||||
Corporate and Other | $ | 5,024 | $ | 2,845 | ||||
Macao: | ||||||||
The Venetian Macao | 20,606 | — | ||||||
Sands Macao | 4,729 | — | ||||||
Four Seasons Macao | 16,705 | 1,293 | ||||||
Sands Cotai Central | 262,986 | 140,993 | ||||||
Other Asia | 232 | 2,819 | ||||||
Other Development Projects | 44 | — | ||||||
|
|
|
| |||||
| 305,302 | 145,105 | |||||||
Marina Bay Sands | 62,391 | 157,984 | ||||||
United States: | ||||||||
Las Vegas Operating Properties | 16,509 | 8,402 | ||||||
Sands Bethlehem | 9,034 | 18,172 | ||||||
|
|
|
| |||||
| 25,543 | 26,574 | |||||||
|
|
|
| |||||
Total capital expenditures | $ | 398,260 | $ | 332,508 | ||||
|
|
|
| |||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
Capital Expenditures | ||||||||
| Corporate and Other | $ | 12,728 | $ | 9,746 | ||||
| Macau: | ||||||||
| The Venetian Macao | 9,770 | 35,618 | ||||||
| Sands Macao | 4,130 | 2,500 | ||||||
| Four Seasons Macao | 16,525 | 29,348 | ||||||
| Other Asia | 5,220 | 2,524 | ||||||
| Other Development Projects | 571,730 | 200,292 | ||||||
| 607,375 | 270,282 | |||||||
| United States: | ||||||||
| Las Vegas Operating Properties | 27,872 | 16,076 | ||||||
| Sands Bethlehem | 46,562 | 34,077 | ||||||
| 74,434 | 50,153 | |||||||
| Marina Bay Sands | 393,068 | 1,320,083 | ||||||
| Total capital expenditures | $ | 1,087,605 | $ | 1,650,264 | ||||
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Total Assets | ||||||||
| Corporate and Other | $ | 1,204,990 | $ | 1,574,180 | ||||
| Macau: | ||||||||
| The Venetian Macao | 3,985,225 | 3,194,598 | ||||||
| Sands Macao | 481,722 | 483,678 | ||||||
| Four Seasons Macao | 1,135,993 | 1,155,243 | ||||||
| Other Asia | 361,037 | 370,525 | ||||||
| Other Development Projects | 3,191,418 | 3,140,905 | ||||||
| 9,155,395 | 8,344,949 | |||||||
| United States: | ||||||||
| Las Vegas Operating Properties | 4,051,444 | 3,966,754 | ||||||
| Sands Bethlehem | 830,778 | 757,993 | ||||||
| 4,882,222 | 4,724,747 | |||||||
| Marina Bay Sands | 6,722,644 | 6,400,432 | ||||||
| Total assets | $ | 21,965,251 | $ | 21,044,308 | ||||
| September 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
Total Long-Lived Assets | ||||||||
| Corporate and Other | $ | 307,756 | $ | 308,438 | ||||
| Macau: | ||||||||
| The Venetian Macao | 2,011,398 | 2,138,419 | ||||||
| Sands Macao | 294,142 | 315,380 | ||||||
| Four Seasons Macao | 993,485 | 1,024,302 | ||||||
| Other Asia | 219,811 | 230,640 | ||||||
| Other Development Projects | 2,923,377 | 2,303,959 | ||||||
| 6,442,213 | 6,012,700 | |||||||
| United States: | ||||||||
| Las Vegas Operating Properties | 3,291,618 | 3,429,997 | ||||||
| Sands Bethlehem | 613,777 | 608,021 | ||||||
| 3,905,395 | 4,038,018 | |||||||
| Marina Bay Sands | 5,532,148 | 5,541,881 | ||||||
| Total long-lived assets | $ | 16,187,512 | $ | 15,901,037 | ||||
| March 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
Total Assets | ||||||||
Corporate and Other | $ | 1,622,256 | $ | 644,645 | ||||
Macao: | ||||||||
The Venetian Macao | 2,865,502 | 3,199,194 | ||||||
Sands Macao | 506,535 | 485,231 | ||||||
Four Seasons Macao | 1,329,780 | 1,267,977 | ||||||
Sands Cotai Central | 3,690,709 | 4,333,406 | ||||||
Other Asia | 356,681 | 328,415 | ||||||
Other Development Projects | 206,885 | 206,150 | ||||||
|
|
|
| |||||
| 8,956,092 | 9,820,373 | |||||||
Marina Bay Sands | 7,194,070 | 6,794,258 | ||||||
United States: | ||||||||
Las Vegas Operating Properties | 4,208,296 | 4,105,618 | ||||||
Sands Bethlehem | 890,318 | 879,229 | ||||||
|
|
|
| |||||
| 5,098,614 | 4,984,847 | |||||||
|
|
|
| |||||
Total assets | $ | 22,871,032 | $ | 22,244,123 | ||||
|
|
|
| |||||
| March 31, | December 31, | |||||||
| 2012 | 2011 | |||||||
Total Long-Lived Assets | ||||||||
Corporate and Other | $ | 315,433 | $ | 312,860 | ||||
Macao: | ||||||||
The Venetian Macao | 1,967,123 | 2,002,751 | ||||||
Sands Macao | 289,176 | 291,620 | ||||||
Four Seasons Macao | 998,287 | 1,006,441 | ||||||
Sands Cotai Central | 3,315,125 | 3,053,551 | ||||||
Other Asia | 212,936 | 216,030 | ||||||
Other Development Projects | 197,819 | 197,079 | ||||||
|
|
|
| |||||
| 6,980,466 | 6,767,472 | |||||||
Marina Bay Sands | 5,619,695 | 5,471,376 | ||||||
United States: | ||||||||
Las Vegas Operating Properties | 3,204,503 | 3,244,090 | ||||||
Sands Bethlehem | 623,854 | 625,649 | ||||||
|
|
|
| |||||
| 3,828,357 | 3,869,739 | |||||||
|
|
|
| |||||
Total long-lived assets | $ | 16,743,951 | $ | 16,421,447 | ||||
|
|
|
| |||||
25
LVSLLC, VCR, Mall Intermediate Holding Company, LLC, Venetian Transport, LLC, Venetian Marketing, Inc., Lido Intermediate Holding Company, LLC, Lido Casino Resort Holding Company, LLC, Interface Group-Nevada, Inc., Palazzo Condo Tower, LLC, Sands Pennsylvania, Inc., Phase II Mall Holding, LLC, LVS (Nevada) International Holdings, Inc. and LVS Management Services, LLC (collectively, the “Guarantor“Restricted Subsidiaries”), have jointly and severally guaranteedare all part of the Senior Notes; however, not on a full and unconditional basis as a result of subsidiaries being able to be released as guarantors under certain circumstances customary for such arrangements. The voting stock of all entities included as Guarantor Subsidiaries is 100% owned directly or indirectly by Las Vegas Sands Corp.Secured Credit Facility. The noncontrolling interest amount included in the GuarantorRestricted 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 underGGP; however, 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 participation in certain future revenues earned by GGP. Certain of the assets, liabilities and operating results 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 GuarantorRestricted Subsidiaries, and therefore are included in the “Guarantor“Restricted Subsidiaries” columns in the following condensed consolidating financial information. As a result, net assetsliabilities of $0.7$6.6 million (consisting of $267.5$260.8 million of property and equipment, offset by $266.8$267.4 million of liabilities consisting primarily of deferred proceeds from the sale) and $38.0$3.0 million (consisting of $282.1$264.1 million of property and equipment, offset by $244.1$267.1 million of liabilities consisting primarily of deferred proceeds from the sale) as of September 30, 2011March 31, 2012 and December 31, 2010,2011, respectively, and a net loss (consisting primarily of depreciation expense) of $4.2 million and $15.4$3.8 million for the three and nine ended September 30, 2011, respectively, and $2.5 million and $9.9 million for the three and nine months ended September 30, 2010, respectively,March 31, 2012, related to the mall and are being accounted for by the GuarantorRestricted 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.
Secured Credit Facility.
26
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
The Company revised its condensed consolidating statements of cash flows for three months ended March 31, 2011, to correct the classification of dividends received by Las Vegas Sands Corp. from the Restricted Subsidiaries. The revision was made to appropriately classify dividends received that represent a return on investment as an operating activity. The revision resulted in an increase of $28.6 million to the Las Vegas Sands Corp.’s “net cash generated from operating activities” for the three months ended March 31, 2011, with a corresponding decrease to “net cash generated from investing activities.” The Company will revise the Las Vegas Sands Corp. column in the condensed consolidating statements of cash flows to increase “net cash generated from operating activities” by $49.1 million and $85.3 million, for the six months ended June 30, 2011, and the nine months ended September 30, 2011, respectively, with a corresponding decrease to “net cash generated from investing activities” the next time they are filed. The Company will also revise the Restricted Subsidiaries column in the condensed consolidating statements of cash flows to increase “net cash generated from operating activities” by $60.0 million for the nine months ended September 30, 2011, with a corresponding decrease to “net cash generated from investing activities” the next time they are filed. The revision will be made to appropriately classify dividends received by the Restricted Subsidiaries from the non-restricted subsidiaries that represent a return on investment. These revisions, which the Company determined are not material, had no impact on any financial statements or footnotes, except for the Las Vegas Sands Corp. and Restricted Subsidiaries columns of the condensed consolidating statements of cash flows.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The condensed consolidating financial information of LVSC, the GuarantorRestricted Subsidiaries and the non-guarantornon-restricted subsidiaries on a combined basis as of September 30, 2011March 31, 2012 and December 31, 2010,2011, and for the three and nine months ended September 30,March 31, 2012 and 2011, and 2010, is as follows (in thousands):
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Cash and cash equivalents | $ | 815,051 | $ | 642,486 | $ | 2,494,038 | $ | — | $ | 3,951,575 | ||||||||||
| Restricted cash and cash equivalents | — | 398 | 183,968 | — | 184,366 | |||||||||||||||
| Intercompany receivables | 112,243 | 86,277 | 23,253 | (221,773 | ) | — | ||||||||||||||
| Accounts receivable, net | 959 | 211,119 | 904,460 | (3,642 | ) | 1,112,896 | ||||||||||||||
| Inventories | 2,311 | 9,958 | 21,193 | — | 33,462 | |||||||||||||||
| Deferred income taxes, net | — | 24,810 | 128 | (15,274 | ) | 9,664 | ||||||||||||||
| Prepaid expenses and other | 8,844 | 6,885 | 35,761 | (797 | ) | 50,693 | ||||||||||||||
| Total current assets | 939,408 | 981,933 | 3,662,801 | (241,486 | ) | 5,342,656 | ||||||||||||||
| Property and equipment, net | 132,054 | 3,437,383 | 11,235,536 | — | 14,804,973 | |||||||||||||||
| Investment in subsidiaries | 7,467,949 | 5,885,648 | — | (13,353,597 | ) | — | ||||||||||||||
| Deferred financing costs, net | 648 | 23,185 | 102,586 | — | 126,419 | |||||||||||||||
| Restricted cash and cash equivalents | — | 4,327 | 31,183 | — | 35,510 | |||||||||||||||
| Intercompany receivables | 31,086 | 107,956 | — | (139,042 | ) | — | ||||||||||||||
| Intercompany notes receivable | — | 757,147 | — | (757,147 | ) | — | ||||||||||||||
| Deferred income taxes, net | 63,328 | — | — | (48,967 | ) | 14,361 | ||||||||||||||
| Leasehold interests in land, net | — | — | 1,382,539 | — | 1,382,539 | |||||||||||||||
| Intangible assets, net | 690 | — | 81,856 | — | 82,546 | |||||||||||||||
| Other assets, net | 113 | 22,520 | 153,614 | — | 176,247 | |||||||||||||||
| Total assets | $ | 8,635,276 | $ | 11,220,099 | $ | 16,650,115 | $ | (14,540,239 | ) | $ | 21,965,251 | |||||||||
| Accounts payable | $ | 22,318 | $ | 24,888 | $ | 59,755 | $ | (3,642 | ) | $ | 103,319 | |||||||||
| Construction payables | 184 | 2,271 | 353,231 | — | 355,686 | |||||||||||||||
| Intercompany payables | 23,253 | 112,243 | 86,277 | (221,773 | ) | — | ||||||||||||||
| Accrued interest payable | 1,602 | 1,055 | 16,661 | — | 19,318 | |||||||||||||||
| Other accrued liabilities | 19,308 | 192,915 | 1,106,634 | — | 1,318,857 | |||||||||||||||
| Income taxes payable | — | 1 | 79,243 | (797 | ) | 78,447 | ||||||||||||||
| Deferred income taxes | 15,274 | — | — | (15,274 | ) | — | ||||||||||||||
| Current maturities of long-term debt | 3,687 | 30,572 | 423,085 | — | 457,344 | |||||||||||||||
| Total current liabilities | 85,626 | 363,945 | 2,124,886 | (241,486 | ) | 2,332,971 | ||||||||||||||
| Other long-term liabilities | 26,760 | 11,398 | 43,792 | — | 81,950 | |||||||||||||||
| Intercompany payables | 59,857 | — | 79,185 | (139,042 | ) | — | ||||||||||||||
| Intercompany notes payable | — | — | 757,147 | (757,147 | ) | — | ||||||||||||||
| Deferred income taxes | — | 49,113 | 134,782 | (48,967 | ) | 134,928 | ||||||||||||||
| Deferred amounts related to mall transactions | — | 435,080 | — | — | 435,080 | |||||||||||||||
| Long-term debt | 261,090 | 2,847,001 | 6,173,993 | — | 9,282,084 | |||||||||||||||
| Total liabilities | 433,333 | 3,706,537 | 9,313,785 | (1,186,642 | ) | 12,267,013 | ||||||||||||||
| Preferred stock issue to Principal Stockholder’s family | 572,787 | — | — | — | 572,787 | |||||||||||||||
| Total Las Vegas Sands Corp. stockholders’ equity | 7,629,156 | 7,513,157 | 5,840,440 | (13,353,597 | ) | 7,629,156 | ||||||||||||||
| Noncontrolling interests | — | 405 | 1,495,890 | — | 1,496,295 | |||||||||||||||
| Total equity | 7,629,156 | 7,513,562 | 7,336,330 | (13,353,597 | ) | 9,125,451 | ||||||||||||||
| Total liabilities and equity | $ | 8,635,276 | $ | 11,220,099 | $ | 16,650,115 | $ | (14,540,239 | ) | $ | 21,965,251 | |||||||||
CONDENSED CONSOLIDATING BALANCE SHEETS
March 31, 2012
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Restricted | Non-Restricted | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
Cash and cash equivalents | $ | 179,599 | $ | 850,810 | $ | 3,025,951 | $ | — | $ | 4,056,360 | ||||||||||
Restricted cash and cash equivalents | — | 34 | 4,840 | — | 4,874 | |||||||||||||||
Intercompany receivables | 179,686 | 47,999 | — | (227,685 | ) | — | ||||||||||||||
Accounts receivable, net | 1,565 | 263,950 | 1,264,825 | — | 1,530,340 | |||||||||||||||
Inventories | 2,459 | 11,975 | 25,580 | — | 40,014 | |||||||||||||||
Deferred income taxes, net | — | 33,837 | 610 | (19,381 | ) | 15,066 | ||||||||||||||
Prepaid expenses and other | 11,968 | 9,814 | 54,654 | (351 | ) | 76,085 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total current assets | 375,277 | 1,218,419 | 4,376,460 | (247,417 | ) | 5,722,739 | ||||||||||||||
Property and equipment, net | 139,704 | 3,352,544 | 11,837,354 | — | 15,329,602 | |||||||||||||||
Investment in subsidiaries | 8,426,648 | 6,545,431 | — | (14,972,079 | ) | — | ||||||||||||||
Deferred financing costs, net | 281 | 18,673 | 144,265 | — | 163,219 | |||||||||||||||
Restricted cash and cash equivalents | — | 2,466 | — | — | 2,466 | |||||||||||||||
Intercompany receivables | 31,423 | 145,581 | — | (177,004 | ) | — | ||||||||||||||
Intercompany notes receivable | — | 829,788 | — | (829,788 | ) | — | ||||||||||||||
Deferred income taxes, net | 65,879 | — | — | (46,990 | ) | 18,889 | ||||||||||||||
Leasehold interests in land, net | — | — | 1,414,349 | — | 1,414,349 | |||||||||||||||
Intangible assets, net | 690 | — | 77,327 | — | 78,017 | |||||||||||||||
Other assets, net | 113 | 24,392 | 117,246 | — | 141,751 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 9,040,015 | $ | 12,137,294 | $ | 17,967,001 | $ | (16,273,278 | ) | $ | 22,871,032 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Accounts payable | $ | 19,708 | $ | 23,129 | $ | 62,368 | $ | — | $ | 105,205 | ||||||||||
Construction payables | 1,722 | 5,324 | 304,522 | — | 311,568 | |||||||||||||||
Intercompany payables | — | 174,271 | 53,414 | (227,685 | ) | — | ||||||||||||||
Accrued interest payable | 101 | 1,039 | 5,797 | — | 6,937 | |||||||||||||||
Other accrued liabilities | 10,248 | 196,662 | 1,216,021 | — | 1,422,931 | |||||||||||||||
Income taxes payable | — | 7 | 177,197 | (351 | ) | 176,853 | ||||||||||||||
Deferred income taxes | 19,381 | — | — | (19,381 | ) | — | ||||||||||||||
Current maturities of long-term debt | 3,688 | 30,549 | 435,087 | — | 469,324 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total current liabilities | 54,848 | 430,981 | 2,254,406 | (247,417 | ) | 2,492,818 | ||||||||||||||
Other long-term liabilities | 35,326 | 10,729 | 58,984 | — | 105,039 | |||||||||||||||
Intercompany payables | 73,240 | — | 103,764 | (177,004 | ) | — | ||||||||||||||
Intercompany notes payable | — | — | 829,788 | (829,788 | ) | — | ||||||||||||||
Deferred income taxes | — | 47,156 | 159,261 | (46,990 | ) | 159,427 | ||||||||||||||
Deferred amounts related to mall transactions | — | 433,251 | — | — | 433,251 | |||||||||||||||
Long-term debt | 70,125 | 2,831,733 | 6,480,791 | — | 9,382,649 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities | 233,539 | 3,753,850 | 9,886,994 | (1,301,199 | ) | 12,573,184 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Las Vegas Sands Corp. stockholders’ equity | 8,806,476 | 8,383,039 | 6,589,040 | (14,972,079 | ) | 8,806,476 | ||||||||||||||
Noncontrolling interests | — | 405 | 1,490,967 | — | 1,491,372 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total equity | 8,806,476 | 8,383,444 | 8,080,007 | (14,972,079 | ) | 10,297,848 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities and equity | $ | 9,040,015 | $ | 12,137,294 | $ | 17,967,001 | $ | (16,273,278 | ) | $ | 22,871,032 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
27
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2010
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Cash and cash equivalents | $ | 1,031,844 | $ | 412,226 | $ | 1,593,011 | $ | — | $ | 3,037,081 | ||||||||||
| Restricted cash and cash equivalents | — | 2,179 | 162,136 | — | 164,315 | |||||||||||||||
| Intercompany receivables | 11,843 | 65,834 | 22,927 | (100,604 | ) | — | ||||||||||||||
| Accounts receivable, net | 298 | 156,012 | 561,217 | (608 | ) | 716,919 | ||||||||||||||
| Inventories | 2,174 | 11,755 | 18,331 | — | 32,260 | |||||||||||||||
| Deferred income taxes, net | — | 24,496 | 47,389 | (10,279 | ) | 61,606 | ||||||||||||||
| Prepaid expenses and other | 15,272 | 4,782 | 30,432 | (3,760 | ) | 46,726 | ||||||||||||||
| Total current assets | 1,061,431 | 677,284 | 2,435,443 | (115,251 | ) | 4,058,907 | ||||||||||||||
| Property and equipment, net | 133,901 | 3,570,465 | 10,797,831 | — | 14,502,197 | |||||||||||||||
| Investment in subsidiaries | 6,273,755 | 4,996,023 | — | (11,269,778 | ) | — | ||||||||||||||
| Deferred financing costs, net | 767 | 29,198 | 125,413 | — | 155,378 | |||||||||||||||
| Restricted cash and cash equivalents | — | 4,616 | 640,989 | — | 645,605 | |||||||||||||||
| Intercompany receivables | 31,996 | 97,813 | — | (129,809 | ) | — | ||||||||||||||
| Intercompany notes receivable | — | 638,986 | — | (638,986 | ) | — | ||||||||||||||
| Deferred income taxes, net | 62,638 | — | — | (52,215 | ) | 10,423 | ||||||||||||||
| Leasehold interests in land, net | — | — | 1,398,840 | — | 1,398,840 | |||||||||||||||
| Intangible assets, net | 590 | — | 89,215 | — | 89,805 | |||||||||||||||
| Other assets, net | 78 | 27,104 | 155,971 | — | 183,153 | |||||||||||||||
| Total assets | $ | 7,565,156 | $ | 10,041,489 | $ | 15,643,702 | $ | (12,206,039 | ) | $ | 21,044,308 | |||||||||
| Accounts payable | $ | 5,750 | $ | 26,975 | $ | 81,388 | $ | (608 | ) | $ | 113,505 | |||||||||
| Construction payables | — | 2,179 | 514,802 | — | 516,981 | |||||||||||||||
| Intercompany payables | 22,926 | 11,843 | 65,835 | (100,604 | ) | — | ||||||||||||||
| Accrued interest payable | 4,629 | 7,689 | 30,307 | — | 42,625 | |||||||||||||||
| Other accrued liabilities | 15,692 | 175,011 | 969,531 | — | 1,160,234 | |||||||||||||||
| Income taxes payable | — | — | 3,760 | (3,760 | ) | — | ||||||||||||||
| Deferred income taxes | 10,279 | — | — | (10,279 | ) | — | ||||||||||||||
| Current maturities of long-term debt | 3,687 | 30,606 | 732,775 | — | 767,068 | |||||||||||||||
| Total current liabilities | 62,963 | 254,303 | 2,398,398 | (115,251 | ) | 2,600,413 | ||||||||||||||
| Other long-term liabilities | 26,761 | 10,911 | 40,568 | — | 78,240 | |||||||||||||||
| Intercompany payables | 45,336 | — | 84,473 | (129,809 | ) | — | ||||||||||||||
| Intercompany notes payable | — | — | 638,986 | (638,986 | ) | — | ||||||||||||||
| Deferred income taxes | — | 53,034 | 114,400 | (52,215 | ) | 115,219 | ||||||||||||||
| Deferred amounts related to mall transactions | — | 442,114 | — | — | 442,114 | |||||||||||||||
| Long-term debt | 263,726 | 2,869,931 | 6,240,098 | — | 9,373,755 | |||||||||||||||
| Total liabilities | 398,786 | 3,630,293 | 9,516,923 | (936,261 | ) | 12,609,741 | ||||||||||||||
| Preferred stock issue to Principal Stockholder’s family | 503,379 | — | — | — | 503,379 | |||||||||||||||
| Total Las Vegas Sands Corp. stockholders’ equity | 6,662,991 | 6,410,791 | 4,858,987 | (11,269,778 | ) | 6,662,991 | ||||||||||||||
| Noncontrolling interests | — | 405 | 1,267,792 | — | 1,268,197 | |||||||||||||||
| Total equity | 6,662,991 | 6,411,196 | 6,126,779 | (11,269,778 | ) | 7,931,188 | ||||||||||||||
| Total liabilities and equity | $ | 7,565,156 | $ | 10,041,489 | $ | 15,643,702 | $ | (12,206,039 | ) | $ | 21,044,308 | |||||||||
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Restricted | Non-Restricted | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
Cash and cash equivalents | $ | 12,849 | $ | 689,642 | $ | 3,200,227 | $ | — | $ | 3,902,718 | ||||||||||
Restricted cash and cash equivalents | — | 185 | 4,643 | — | 4,828 | |||||||||||||||
Intercompany receivables | 127,302 | 43,793 | — | (171,095 | ) | — | ||||||||||||||
Accounts receivable, net | 1,047 | 226,869 | 1,108,901 | — | 1,336,817 | |||||||||||||||
Inventories | 2,434 | 9,633 | 22,923 | — | 34,990 | |||||||||||||||
Deferred income taxes, net | 38,806 | 32,867 | 519 | — | 72,192 | |||||||||||||||
Prepaid expenses and other | 10,263 | 4,259 | 31,085 | — | 45,607 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total current assets | 192,701 | 1,007,248 | 4,368,298 | (171,095 | ) | 5,397,152 | ||||||||||||||
Property and equipment, net | 137,044 | 3,391,316 | 11,502,619 | — | 15,030,979 | |||||||||||||||
Investment in subsidiaries | 7,891,281 | 6,263,974 | — | (14,155,255 | ) | — | ||||||||||||||
Deferred financing costs, net | 608 | 20,677 | 152,351 | — | 173,636 | |||||||||||||||
Restricted cash and cash equivalents | — | 2,315 | — | — | 2,315 | |||||||||||||||
Intercompany receivables | 31,162 | 128,270 | — | (159,432 | ) | — | ||||||||||||||
Intercompany notes receivable | — | 794,286 | — | (794,286 | ) | — | ||||||||||||||
Deferred income taxes, net | 544 | — | — | (391 | ) | 153 | ||||||||||||||
Leasehold interests in land, net | — | — | 1,390,468 | — | 1,390,468 | |||||||||||||||
Intangible assets, net | 690 | — | 79,378 | — | 80,068 | |||||||||||||||
Other assets, net | 112 | 18,778 | 150,462 | — | 169,352 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total assets | $ | 8,254,142 | $ | 11,626,864 | $ | 17,643,576 | $ | (15,280,459 | ) | $ | 22,244,123 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Accounts payable | $ | 15,084 | $ | 23,397 | $ | 65,632 | $ | — | $ | 104,113 | ||||||||||
Construction payables | 280 | 4,477 | 355,152 | — | 359,909 | |||||||||||||||
Intercompany payables | — | 119,203 | 51,892 | (171,095 | ) | — | ||||||||||||||
Accrued interest payable | 4,674 | 1,087 | 25,907 | — | 31,668 | |||||||||||||||
Other accrued liabilities | 28,100 | 212,279 | 1,198,731 | — | 1,439,110 | |||||||||||||||
Income taxes payable | — | 4 | 108,056 | — | 108,060 | |||||||||||||||
Current maturities of long-term debt | 3,688 | 30,561 | 421,597 | — | 455,846 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total current liabilities | 51,826 | 391,008 | 2,226,967 | (171,095 | ) | 2,498,706 | ||||||||||||||
Other long-term liabilities | 26,215 | 10,723 | 52,507 | — | 89,445 | |||||||||||||||
Intercompany payables | 65,201 | — | 94,231 | (159,432 | ) | — | ||||||||||||||
Intercompany notes payable | — | — | 794,286 | (794,286 | ) | — | ||||||||||||||
Deferred income taxes | — | 48,471 | 157,358 | (391 | ) | 205,438 | ||||||||||||||
Deferred amounts related to mall transactions | — | 434,251 | — | — | 434,251 | |||||||||||||||
Long-term debt | 260,211 | 2,839,369 | 6,477,551 | — | 9,577,131 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities | 403,453 | 3,723,822 | 9,802,900 | (1,125,204 | ) | 12,804,971 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Las Vegas Sands Corp. stockholders’ equity | 7,850,689 | 7,902,637 | 6,252,618 | (14,155,255 | ) | 7,850,689 | ||||||||||||||
Noncontrolling interests | — | 405 | 1,588,058 | — | 1,588,463 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total equity | 7,850,689 | 7,903,042 | 7,840,676 | (14,155,255 | ) | 9,439,152 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total liabilities and equity | $ | 8,254,142 | $ | 11,626,864 | $ | 17,643,576 | $ | (15,280,459 | ) | $ | 22,244,123 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
28
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2011
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Casino | $ | — | $ | 124,258 | $ | 1,778,884 | $ | — | $ | 1,903,142 | ||||||||||
| Rooms | — | 114,046 | 148,306 | — | 262,352 | |||||||||||||||
| Food and beverage | — | 43,675 | 103,548 | — | 147,223 | |||||||||||||||
| Convention, retail and other | — | 74,333 | 188,250 | (38,742 | ) | 223,841 | ||||||||||||||
| — | 356,312 | 2,218,988 | (38,742 | ) | 2,536,558 | |||||||||||||||
| Less — promotional allowances | (167 | ) | (20,007 | ) | (106,606 | ) | (403 | ) | (127,183 | ) | ||||||||||
| Net revenues | (167 | ) | 336,305 | 2,112,382 | (39,145 | ) | 2,409,375 | |||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Casino | — | 71,088 | 922,953 | (663 | ) | 993,378 | ||||||||||||||
| Rooms | — | 35,589 | 17,904 | — | 53,493 | |||||||||||||||
| Food and beverage | — | 22,711 | 50,569 | (1,499 | ) | 71,781 | ||||||||||||||
| Convention, retail and other | — | 20,069 | 85,766 | (6,606 | ) | 99,229 | ||||||||||||||
| Provision for doubtful accounts | — | 260 | 33,693 | — | 33,953 | |||||||||||||||
| General and administrative | — | 65,396 | 175,480 | (204 | ) | 240,672 | ||||||||||||||
| Corporate expense | 48,539 | 58 | 35,607 | (30,173 | ) | 54,031 | ||||||||||||||
| Rental expense | — | — | 10,143 | — | 10,143 | |||||||||||||||
| Pre-opening expense | — | — | 15,823 | — | 15,823 | |||||||||||||||
| Development expense | 3,308 | — | — | — | 3,308 | |||||||||||||||
| Depreciation and amortization | 4,654 | 55,669 | 139,748 | — | 200,071 | |||||||||||||||
| Loss on disposal of assets | — | — | 937 | — | 937 | |||||||||||||||
| 56,501 | 270,840 | 1,488,623 | (39,145 | ) | 1,776,819 | |||||||||||||||
| Operating income (loss) | (56,668 | ) | 65,465 | 623,759 | — | 632,556 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 416 | 29,268 | 1,769 | (29,084 | ) | 2,369 | ||||||||||||||
| Interest expense, net of amounts capitalized | (3,453 | ) | (24,704 | ) | (71,688 | ) | 29,084 | (70,761 | ) | |||||||||||
| Other expense | — | (2,145 | ) | (4,472 | ) | — | (6,617 | ) | ||||||||||||
| Income from equity investments in subsidiaries | 461,957 | 393,673 | — | (855,630 | ) | — | ||||||||||||||
| Income before income taxes | 402,252 | 461,557 | 549,368 | (855,630 | ) | 557,547 | ||||||||||||||
| Income tax benefit (expense) | 22,627 | (16,715 | ) | (58,287 | ) | — | (52,375 | ) | ||||||||||||
| Net income | 424,879 | 444,842 | 491,081 | (855,630 | ) | 505,172 | ||||||||||||||
| Net income attributable to noncontrolling interests | — | (487 | ) | (79,806 | ) | — | (80,293 | ) | ||||||||||||
| Net income attributable to Las Vegas Sands Corp. | $ | 424,879 | $ | 444,355 | $ | 411,275 | $ | (855,630 | ) | $ | 424,879 | |||||||||
| Las Vegas Sands Corp. | Restricted Subsidiaries | Non-Restricted Subsidiaries | Consolidating/ Eliminating Entries | Total | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Casino | $ | — | $ | 158,694 | $ | 2,107,799 | $ | — | $ | 2,266,493 | ||||||||||
Rooms | — | 113,449 | 154,278 | — | 267,727 | |||||||||||||||
Food and beverage | — | 47,854 | 105,601 | — | 153,455 | |||||||||||||||
Mall | — | — | 71,418 | — | 71,418 | |||||||||||||||
Convention, retail and other | — | 75,840 | 91,278 | (37,401 | ) | 129,717 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| — | 395,837 | 2,530,374 | (37,401 | ) | 2,888,810 | |||||||||||||||
Less — promotional allowances | (233 | ) | (22,385 | ) | (102,997 | ) | (453 | ) | (126,068 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net revenues | (233 | ) | 373,452 | 2,427,377 | (37,854 | ) | 2,762,742 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating expenses: | ||||||||||||||||||||
Casino | — | 78,164 | 1,130,005 | (618 | ) | 1,207,551 | ||||||||||||||
Rooms | — | 33,126 | 19,661 | (1 | ) | 52,786 | ||||||||||||||
Food and beverage | — | 22,796 | 56,600 | (1,095 | ) | 78,301 | ||||||||||||||
Mall | — | — | 16,301 | — | 16,301 | |||||||||||||||
Convention, retail and other | — | 20,712 | 62,117 | (3,305 | ) | 79,524 | ||||||||||||||
Provision for doubtful accounts | — | 6,548 | 45,670 | — | 52,218 | |||||||||||||||
General and administrative | — | 68,489 | 150,444 | (216 | ) | 218,717 | ||||||||||||||
Corporate | 46,195 | 91 | 35,281 | (32,612 | ) | 48,955 | ||||||||||||||
Pre-opening | — | — | 51,460 | (1 | ) | 51,459 | ||||||||||||||
Development | 1,204 | — | — | (6 | ) | 1,198 | ||||||||||||||
Depreciation and amortization | 3,587 | 55,899 | 135,261 | — | 194,747 | |||||||||||||||
Amortization of leasehold interests in land | — | — | 9,945 | — | 9,945 | |||||||||||||||
Impairment loss | — | — | 42,893 | — | 42,893 | |||||||||||||||
Loss on disposal of assets | — | 402 | 191 | — | 593 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 50,986 | 286,227 | 1,755,829 | (37,854 | ) | 2,055,188 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating income (loss) | (51,219 | ) | 87,225 | 671,548 | — | 707,554 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 98 | 31,476 | 5,292 | (31,218 | ) | 5,648 | ||||||||||||||
Interest expense, net of amounts capitalized | (3,358 | ) | (25,368 | ) | (67,164 | ) | 31,218 | (64,672 | ) | |||||||||||
Other income (expense) | (47 | ) | 339 | (3,711 | ) | — | (3,419 | ) | ||||||||||||
Loss on early retirement of debt | (2,831 | ) | — | — | — | (2,831 | ) | |||||||||||||
Income from equity investments in subsidiaries | 528,287 | 420,352 | — | (948,639 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income before income taxes | 470,930 | 514,024 | 605,965 | (948,639 | ) | 642,280 | ||||||||||||||
Income tax benefit (expense) | 28,012 | (27,375 | ) | (63,808 | ) | — | (63,171 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income | 498,942 | 486,649 | 542,157 | (948,639 | ) | 579,109 | ||||||||||||||
Net income attributable to noncontrolling interests | — | (525 | ) | (79,642 | ) | — | (80,167 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income attributable to Las Vegas Sands Corp. | $ | 498,942 | $ | 486,124 | $ | 462,515 | $ | (948,639 | ) | $ | 498,942 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
29
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended September 30, 2010
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Casino | $ | — | $ | 116,554 | $ | 1,457,297 | $ | — | $ | 1,573,851 | ||||||||||
| Rooms | — | 105,649 | 102,511 | — | 208,160 | |||||||||||||||
| Food and beverage | — | 34,304 | 82,882 | — | 117,186 | |||||||||||||||
| Convention, retail and other | — | 63,501 | 115,858 | (32,180 | ) | 147,179 | ||||||||||||||
| — | 320,008 | 1,758,548 | (32,180 | ) | 2,046,376 | |||||||||||||||
| Less — promotional allowances | (128 | ) | (39,908 | ) | (96,626 | ) | (942 | ) | (137,604 | ) | ||||||||||
| Net revenues | (128 | ) | 280,100 | 1,661,922 | (33,122 | ) | 1,908,772 | |||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Casino | — | 73,740 | 809,234 | (796 | ) | 882,178 | ||||||||||||||
| Rooms | — | 24,218 | 12,648 | — | 36,866 | |||||||||||||||
| Food and beverage | — | 15,144 | 37,141 | (1,379 | ) | 50,906 | ||||||||||||||
| Convention, retail and other | — | 18,206 | 56,582 | (4,185 | ) | 70,603 | ||||||||||||||
| Provision for doubtful accounts | — | 5,681 | 32,152 | — | 37,833 | |||||||||||||||
| General and administrative | — | 62,389 | 131,400 | (313 | ) | 193,476 | ||||||||||||||
| Corporate expense | 24,931 | 47 | 30,141 | (26,433 | ) | 28,686 | ||||||||||||||
| Rental expense | — | — | 9,186 | — | 9,186 | |||||||||||||||
| Pre-opening expense | 178 | 3 | 9,942 | (16 | ) | 10,107 | ||||||||||||||
| Development expense | 425 | — | — | — | 425 | |||||||||||||||
| Depreciation and amortization | 3,295 | 55,345 | 128,098 | — | 186,738 | |||||||||||||||
| Impairment loss | — | — | 16,057 | — | 16,057 | |||||||||||||||
| Loss on disposal of assets | — | 322 | 2,084 | — | 2,406 | |||||||||||||||
| 28,829 | 255,095 | 1,274,665 | (33,122 | ) | 1,525,467 | |||||||||||||||
| Operating income (loss) | (28,957 | ) | 25,005 | 387,257 | — | 383,305 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 1,174 | 23,131 | 1,151 | (22,795 | ) | 2,661 | ||||||||||||||
| Interest expense, net of amounts capitalized | (3,505 | ) | (26,172 | ) | (69,841 | ) | 22,795 | (76,723 | ) | |||||||||||
| Other income (expense) | (1,500 | ) | 725 | 7,219 | — | 6,444 | ||||||||||||||
| Loss on modification or early retirement of debt | — | (21,692 | ) | — | — | (21,692 | ) | |||||||||||||
| Income from equity investments in subsidiaries | 240,507 | 213,614 | — | (454,121 | ) | — | ||||||||||||||
| Income before income taxes | 207,719 | 214,611 | 325,786 | (454,121 | ) | 293,995 | ||||||||||||||
| Income tax benefit (expense) | 6,778 | 3,285 | (35,224 | ) | — | (25,161 | ) | |||||||||||||
| Net income | 214,497 | 217,896 | 290,562 | (454,121 | ) | 268,834 | ||||||||||||||
| Net income attributable to noncontrolling interests | — | — | (54,337 | ) | — | (54,337 | ) | |||||||||||||
| Net income attributable to Las Vegas Sands Corp. | $ | 214,497 | $ | 217,896 | $ | 236,225 | $ | (454,121 | ) | $ | 214,497 | |||||||||
| Las Vegas Sands Corp. | Restricted Subsidiaries | Non-Restricted Subsidiaries | Consolidating/ Eliminating Entries | Total | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Casino | $ | — | $ | 83,123 | $ | 1,581,366 | $ | — | $ | 1,664,489 | ||||||||||
Rooms | — | 112,874 | 119,100 | — | 231,974 | |||||||||||||||
Food and beverage | — | 50,307 | 95,086 | — | 145,393 | |||||||||||||||
Mall | — | — | 55,865 | — | 55,865 | |||||||||||||||
Convention, retail and other | — | 64,543 | 74,194 | (29,947 | ) | 108,790 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| — | 310,847 | 1,925,611 | (29,947 | ) | 2,206,511 | |||||||||||||||
Less — promotional allowances | (163 | ) | (17,626 | ) | (76,396 | ) | (407 | ) | (94,592 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net revenues | (163 | ) | 293,221 | 1,849,215 | (30,354 | ) | 2,111,919 | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating expenses: | ||||||||||||||||||||
Casino | — | 64,368 | 857,745 | (577 | ) | 921,536 | ||||||||||||||
Rooms | — | 32,248 | 16,205 | — | 48,453 | |||||||||||||||
Food and beverage | — | 23,596 | 49,563 | (1,456 | ) | 71,703 | ||||||||||||||
Mall | — | — | 12,104 | — | 12,104 | |||||||||||||||
Convention, retail and other | — | 21,153 | 58,478 | (4,490 | ) | 75,141 | ||||||||||||||
Provision for doubtful accounts | — | 6,096 | 28,962 | — | 35,058 | |||||||||||||||
General and administrative | — | 60,732 | 149,973 | (220 | ) | 210,485 | ||||||||||||||
Corporate | 32,980 | 55 | 28,152 | (23,611 | ) | 37,576 | ||||||||||||||
Pre-opening | — | — | 9,471 | — | 9,471 | |||||||||||||||
Development | 573 | — | — | — | 573 | |||||||||||||||
Depreciation and amortization | 4,183 | 52,813 | 133,241 | — | 190,237 | |||||||||||||||
Amortization of leasehold interests in land | — | — | 13,156 | — | 13,156 | |||||||||||||||
(Gain) loss on disposal of assets | — | (55 | ) | 554 | — | 499 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 37,736 | 261,006 | 1,357,604 | (30,354 | ) | 1,625,992 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating income (loss) | (37,899 | ) | 32,215 | 491,611 | — | 485,927 | ||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest income | 557 | 25,275 | 1,292 | (25,077 | ) | 2,047 | ||||||||||||||
Interest expense, net of amounts capitalized | (3,450 | ) | (23,072 | ) | (72,140 | ) | 25,077 | (73,585 | ) | |||||||||||
Other expense | — | (717 | ) | (3,958 | ) | — | (4,675 | ) | ||||||||||||
Income from equity investments in subsidiaries | 328,939 | 277,722 | — | (606,661 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income before income taxes | 288,147 | 311,423 | 416,805 | (606,661 | ) | 409,714 | ||||||||||||||
Income tax benefit (expense) | 1,176 | (9,052 | ) | (37,335 | ) | — | (45,211 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income | 289,323 | 302,371 | 379,470 | (606,661 | ) | 364,503 | ||||||||||||||
Net income attributable to noncontrolling interests | — | — | (75,180 | ) | — | (75,180 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income attributable to Las Vegas Sands Corp. | $ | 289,323 | $ | 302,371 | $ | 304,290 | $ | (606,661 | ) | $ | 289,323 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
30
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
For the NineThree Months Ended September 30, 2011
| �� | Consolidating/ | |||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Casino | $ | — | $ | 312,504 | $ | 5,117,399 | $ | — | $ | 5,429,903 | ||||||||||
| Rooms | — | 339,851 | 394,171 | — | 734,022 | |||||||||||||||
| Food and beverage | — | 141,555 | 297,077 | — | 438,632 | |||||||||||||||
| Convention, retail and other | — | 208,032 | 484,375 | (103,269 | ) | 589,138 | ||||||||||||||
| — | 1,001,942 | 6,293,022 | (103,269 | ) | 7,191,695 | |||||||||||||||
| Less — promotional allowances | (502 | ) | (53,850 | ) | (269,774 | ) | (1,179 | ) | (325,305 | ) | ||||||||||
| Net revenues | (502 | ) | 948,092 | 6,023,248 | (104,448 | ) | 6,866,390 | |||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Casino | — | 195,274 | 2,695,844 | (1,791 | ) | 2,889,327 | ||||||||||||||
| Rooms | — | 101,818 | 50,861 | — | 152,679 | |||||||||||||||
| Food and beverage | — | 69,661 | 151,421 | (4,463 | ) | 216,619 | ||||||||||||||
| Convention, retail and other | — | 62,783 | 245,578 | (16,863 | ) | 291,498 | ||||||||||||||
| Provision for doubtful accounts | — | 6,851 | 85,656 | — | 92,507 | |||||||||||||||
| General and administrative | — | 189,830 | 485,447 | (559 | ) | 674,718 | ||||||||||||||
| Corporate expense | 118,588 | 196 | 95,971 | (80,772 | ) | 133,983 | ||||||||||||||
| Rental expense | — | — | 33,333 | — | 33,333 | |||||||||||||||
| Pre-opening expense | — | 15 | 43,457 | — | 43,472 | |||||||||||||||
| Development expense | 6,301 | — | — | — | 6,301 | |||||||||||||||
| Depreciation and amortization | 13,315 | 172,282 | 410,872 | — | 596,469 | |||||||||||||||
| (Gain) loss on disposal of assets | 7,663 | 2,027 | (811 | ) | — | 8,879 | ||||||||||||||
| 145,867 | 800,737 | 4,297,629 | (104,448 | ) | 5,139,785 | |||||||||||||||
| Operating income (loss) | (146,369 | ) | 147,355 | 1,725,619 | — | 1,726,605 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 3,504 | 81,722 | 4,362 | (81,144 | ) | 8,444 | ||||||||||||||
| Interest expense, net of amounts capitalized | (10,353 | ) | (70,638 | ) | (215,091 | ) | 81,144 | (214,938 | ) | |||||||||||
| Other expense | — | (1,873 | ) | (7,511 | ) | — | (9,384 | ) | ||||||||||||
| Income from equity investments in subsidiaries | 1,233,759 | 1,039,759 | — | (2,273,518 | ) | — | ||||||||||||||
| Income before income taxes | 1,080,541 | 1,196,325 | 1,507,379 | (2,273,518 | ) | 1,510,727 | ||||||||||||||
| Income tax benefit (expense) | 44,298 | (43,736 | ) | (152,522 | ) | — | (151,960 | ) | ||||||||||||
| Net income | 1,124,839 | 1,152,589 | 1,354,857 | (2,273,518 | ) | 1,358,767 | ||||||||||||||
| Net income attributable to noncontrolling interests | — | (1,779 | ) | (232,149 | ) | — | (233,928 | ) | ||||||||||||
| Net income attributable to Las Vegas Sands Corp. | $ | 1,124,839 | $ | 1,150,810 | $ | 1,122,708 | $ | (2,273,518 | ) | $ | 1,124,839 | |||||||||
| Las Vegas Sands Corp. | Restricted Subsidiaries | Non-Restricted Subsidiaries | Consolidating/ Eliminating Entries | Total | ||||||||||||||||
Net income | $ | 498,942 | $ | 486,649 | $ | 542,157 | $ | (948,639 | ) | $ | 579,109 | |||||||||
Currency translation adjustment | 97,831 | 83,269 | 98,878 | (181,100 | ) | 98,878 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive income | 596,773 | 569,918 | 641,035 | (1,129,739 | ) | 677,987 | ||||||||||||||
Comprehensive income attributable to noncontrolling interests | — | (525 | ) | (80,689 | ) | — | (81,214 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Comprehensive income attributable to Las Vegas Sands Corp. | $ | 596,773 | $ | 569,393 | $ | 560,346 | $ | (1,129,739 | ) | $ | 596,773 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
31
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
For the NineThree Months Ended September 30, 2010
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Revenues: | ||||||||||||||||||||
| Casino | $ | — | $ | 374,801 | $ | 3,555,121 | $ | — | $ | 3,929,922 | ||||||||||
| Rooms | — | 345,885 | 233,824 | — | 579,709 | |||||||||||||||
| Food and beverage | — | 119,099 | 195,245 | — | 314,344 | |||||||||||||||
| Convention, retail and other | — | 158,593 | 264,010 | (51,943 | ) | 370,660 | ||||||||||||||
| — | 998,378 | 4,248,200 | (51,943 | ) | 5,194,635 | |||||||||||||||
| Less — promotional allowances | (375 | ) | (131,352 | ) | (222,500 | ) | (2,272 | ) | (356,499 | ) | ||||||||||
| Net revenues | (375 | ) | 867,026 | 4,025,700 | (54,215 | ) | 4,838,136 | |||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Casino | — | 228,572 | 2,141,160 | (1,972 | ) | 2,367,760 | ||||||||||||||
| Rooms | — | 72,469 | 28,125 | (1 | ) | 100,593 | ||||||||||||||
| Food and beverage | — | 51,481 | 96,127 | (4,601 | ) | 143,007 | ||||||||||||||
| Convention, retail and other | — | 56,043 | 148,597 | (10,307 | ) | 194,333 | ||||||||||||||
| Provision for doubtful accounts | — | 23,376 | 49,610 | — | 72,986 | |||||||||||||||
| General and administrative | — | 182,424 | 311,081 | (851 | ) | 492,654 | ||||||||||||||
| Corporate expense | 67,238 | 179 | 47,132 | (36,433 | ) | 78,116 | ||||||||||||||
| Rental expense | — | — | 30,690 | — | 30,690 | |||||||||||||||
| Pre-opening expense | 535 | 6 | 97,193 | (50 | ) | 97,684 | ||||||||||||||
| Development expense | 1,258 | — | — | — | 1,258 | |||||||||||||||
| Depreciation and amortization | 9,331 | 171,475 | 329,715 | — | 510,521 | |||||||||||||||
| Impairment loss | — | — | 16,057 | — | 16,057 | |||||||||||||||
| Loss on disposal of assets | — | 9,026 | 31,551 | — | 40,577 | |||||||||||||||
| 78,362 | 795,051 | 3,327,038 | (54,215 | ) | 4,146,236 | |||||||||||||||
| Operating income (loss) | (78,737 | ) | 71,975 | 698,662 | — | 691,900 | ||||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest income | 2,493 | 65,164 | 2,507 | (63,797 | ) | 6,367 | ||||||||||||||
| Interest expense, net of amounts capitalized | (11,669 | ) | (82,880 | ) | (201,123 | ) | 63,797 | (231,875 | ) | |||||||||||
| Other income (expense) | (1,500 | ) | 454 | (5,159 | ) | — | (6,205 | ) | ||||||||||||
| Gain (loss) on modification or early retirement of debt | 3,358 | (21,692 | ) | (221 | ) | — | (18,555 | ) | ||||||||||||
| Income from equity investments in subsidiaries | 376,674 | 322,268 | — | (698,942 | ) | — | ||||||||||||||
| Income before income taxes | 290,619 | 355,289 | 494,666 | (698,942 | ) | 441,632 | ||||||||||||||
| Income tax benefit (expense) | (16,734 | ) | 2,555 | (32,257 | ) | — | (46,436 | ) | ||||||||||||
| Net income | 273,885 | 357,844 | 462,409 | (698,942 | ) | 395,196 | ||||||||||||||
| Net income attributable to noncontrolling interests | — | — | (121,311 | ) | — | (121,311 | ) | |||||||||||||
| Net income attributable to Las Vegas Sands Corp. | $ | 273,885 | $ | 357,844 | $ | 341,098 | $ | (698,942 | ) | $ | 273,885 | |||||||||
| Las Vegas Sands Corp. | Restricted Subsidiaries | Non-Restricted Subsidiaries | Consolidating/ Eliminating Entries | Total | ||||||||||||||||
Net income | $ | 289,323 | $ | 302,371 | $ | 379,470 | $ | (606,661 | ) | $ | 364,503 | |||||||||
Currency translation adjustment | 34,493 | 28,252 | 31,956 | (62,745 | ) | 31,956 | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total comprehensive income | 323,816 | 330,623 | 411,426 | (669,406 | ) | 396,459 | ||||||||||||||
Comprehensive income attributable to noncontrolling interests | — | — | (72,643 | ) | — | (72,643 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Comprehensive income attributable to Las Vegas Sands Corp. | $ | 323,816 | $ | 330,623 | $ | 338,783 | $ | (669,406 | ) | $ | 323,816 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
32
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the NineThree Months Ended September 30, 2011
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Net cash generated from (used in) operating activities | $ | (128,534 | ) | $ | 232,218 | $ | 1,825,489 | $ | — | $ | 1,929,173 | |||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Change in restricted cash and cash equivalents | — | 2,070 | 588,026 | — | 590,096 | |||||||||||||||
| Capital expenditures | (11,284 | ) | (29,229 | ) | (1,047,092 | ) | — | (1,087,605 | ) | |||||||||||
| Proceeds from disposal of property and equipment | — | — | 5,487 | — | 5,487 | |||||||||||||||
| Acquisition of intangible assets | (100 | ) | — | — | — | (100 | ) | |||||||||||||
| Dividends received from Guarantor Subsidiaries | 85,265 | — | — | (85,265 | ) | — | ||||||||||||||
| Notes receivable to non-guarantor subsidiaries | — | (42,963 | ) | — | 42,963 | — | ||||||||||||||
| Dividends received from non-guarantor subsidiaries | — | 127,472 | — | (127,472 | ) | — | ||||||||||||||
| Repayments of receivable from non-guarantor subsidiaries | — | 700 | — | (700 | ) | — | ||||||||||||||
| Capital contributions to subsidiaries | (50,026 | ) | — | — | 50,026 | — | ||||||||||||||
| Net cash generated from (used in) investing activities | 23,855 | 58,050 | (453,579 | ) | (120,448 | ) | (492,122 | ) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from exercise of stock options | 20,390 | — | 2,022 | — | 22,412 | |||||||||||||||
| Proceeds from the exercise of warrants | 9,662 | — | — | — | 9,662 | |||||||||||||||
| Dividends paid to preferred stockholders | (57,957 | ) | — | — | — | (57,957 | ) | |||||||||||||
| Distributions to noncontrolling interests | — | (1,779 | ) | (6,027 | ) | — | (7,806 | ) | ||||||||||||
| Dividends paid to Las Vegas Sands Corp. | — | (85,265 | ) | — | 85,265 | — | ||||||||||||||
| Dividends paid to Guarantor Subsidiaries | — | — | (127,472 | ) | 127,472 | — | ||||||||||||||
| Capital contributions received | — | 50,000 | 26 | (50,026 | ) | — | ||||||||||||||
| Borrowings from Guarantor Subsidiaries | — | — | 42,963 | (42,963 | ) | — | ||||||||||||||
| Repayments on borrowings from Guarantor Subsidiaries | — | — | (700 | ) | 700 | — | ||||||||||||||
| Repayments on Singapore credit facility | — | — | (302,210 | ) | — | (302,210 | ) | |||||||||||||
| Repayments on VML credit facility | — | — | (43,750 | ) | — | (43,750 | ) | |||||||||||||
| Repayments on senior secured credit facility | — | (21,703 | ) | — | — | (21,703 | ) | |||||||||||||
| Repayments on ferry financing | — | — | (26,243 | ) | — | (26,243 | ) | |||||||||||||
| Repayments on airplane financings | (2,766 | ) | — | — | — | (2,766 | ) | |||||||||||||
| Repayments on HVAC equipment lease | — | (1,261 | ) | — | — | (1,261 | ) | |||||||||||||
| Repayments on FF&E facility and other long-term debt | — | — | (1,470 | ) | — | (1,470 | ) | |||||||||||||
| Repurchase of preferred stock | (64,949 | ) | — | — | — | (64,949 | ) | |||||||||||||
| Payments of preferred stock inducement premium | (16,494 | ) | — | — | — | (16,494 | ) | |||||||||||||
| Payments of deferred financing costs | — | — | (6,076 | ) | — | (6,076 | ) | |||||||||||||
| Net cash used in financing activities | (112,114 | ) | (60,008 | ) | (468,937 | ) | 120,448 | (520,611 | ) | |||||||||||
| Effect of exchange rate on cash | — | — | (1,946 | ) | — | (1,946 | ) | |||||||||||||
| Increase (decrease) in cash and cash equivalents | (216,793 | ) | 230,260 | 901,027 | — | 914,494 | ||||||||||||||
| Cash and cash equivalents at beginning of period | 1,031,844 | 412,226 | 1,593,011 | — | 3,037,081 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 815,051 | $ | 642,486 | $ | 2,494,038 | $ | — | $ | 3,951,575 | ||||||||||
| Las Vegas Sands Corp. | Restricted Subsidiaries | Non-Restricted Subsidiaries | Consolidating/ Eliminating Entries | Total | ||||||||||||||||
Net cash generated from operating activities | $ | 22,116 | $ | 273,221 | $ | 472,362 | $ | (100,248 | ) | $ | 667,451 | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Change in restricted cash and cash equivalents | — | — | (195 | ) | — | (195 | ) | |||||||||||||
Capital expenditures | (4,805 | ) | (16,694 | ) | (376,761 | ) | — | (398,260 | ) | |||||||||||
Proceeds from disposal of property and equipment | — | 11 | 750 | — | 761 | |||||||||||||||
Notes receivable to non-restricted subsidiaries | — | (5,198 | ) | — | 5,198 | — | ||||||||||||||
Dividends received from non-restricted subsidiaries | — | 268,000 | — | (268,000 | ) | — | ||||||||||||||
Repayment of receivable from non-restricted subsidiaries | — | 250 | — | (250 | ) | — | ||||||||||||||
Capital contributions to subsidiaries | (33 | ) | (250,000 | ) | — | 250,033 | — | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash used in investing activities | (4,838 | ) | (3,631 | ) | (376,206 | ) | (13,019 | ) | (397,694 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from exercise of stock options | 19,183 | — | 2,076 | — | 21,259 | |||||||||||||||
Proceeds from the exercise of warrants | 526,168 | — | — | — | 526,168 | |||||||||||||||
Dividends paid | (205,245 | ) | — | (178,218 | ) | — | (383,463 | ) | ||||||||||||
Distributions to noncontrolling interests | — | (525 | ) | (1,670 | ) | — | (2,195 | ) | ||||||||||||
Dividends paid to Las Vegas Sands Corp. | — | (100,248 | ) | — | 100,248 | — | ||||||||||||||
Dividends paid to Restricted Subsidiaries | — | — | (268,000 | ) | 268,000 | — | ||||||||||||||
Capital contributions received | — | — | 250,033 | (250,033 | ) | — | ||||||||||||||
Borrowings from Restricted Subsidiaries | — | — | 5,198 | (5,198 | ) | — | ||||||||||||||
Repayments on borrowings from Restricted Subsidiaries | — | — | (250 | ) | 250 | — | ||||||||||||||
Repayments on Singapore credit facility | — | — | (98,577 | ) | — | (98,577 | ) | |||||||||||||
Repayments on senior secured credit facility | — | (7,234 | ) | — | — | (7,234 | ) | |||||||||||||
Redemption of senior notes | (189,712 | ) | — | — | — | (189,712 | ) | |||||||||||||
Repayments on ferry financing | — | — | (8,779 | ) | — | (8,779 | ) | |||||||||||||
Repayments on airplane financings | (922 | ) | — | — | — | (922 | ) | |||||||||||||
Repayments on HVAC | — | (415 | ) | — | — | (415 | ) | |||||||||||||
Repayments on other long-term debt | — | — | (592 | ) | — | (592 | ) | |||||||||||||
Payments of deferred financing costs | — | — | (114 | ) | — | (114 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net cash generated from (used in) financing activities | 149,472 | (108,422 | ) | (298,893 | ) | 113,267 | (144,576 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Effect of exchange rate on cash | — | — | 28,461 | — | 28,461 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Increase (decrease) in cash and cash equivalents | 166,750 | 161,168 | (174,276 | ) | — | 153,642 | ||||||||||||||
Cash and cash equivalents at beginning of period | 12,849 | 689,642 | 3,200,227 | — | 3,902,718 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash and cash equivalents at end of period | $ | 179,599 | $ | 850,810 | $ | 3,025,951 | $ | — | $ | 4,056,360 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
33
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(UNAUDITED)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
For the NineThree Months Ended September 30, 2010
| Consolidating/ | ||||||||||||||||||||
| Las Vegas | Guarantor | Non-Guarantor | Eliminating | |||||||||||||||||
| Sands Corp. | Subsidiaries | Subsidiaries | Entries | Total | ||||||||||||||||
| Net cash generated from (used in) operating activities | $ | (86,402 | ) | $ | 243,909 | $ | 1,050,491 | $ | — | $ | 1,207,998 | |||||||||
| Cash flows from investing activities: | ||||||||||||||||||||
| Change in restricted cash and cash equivalents | — | 159 | (836,964 | ) | — | (836,805 | ) | |||||||||||||
| Capital expenditures | (5,261 | ) | (20,308 | ) | (1,624,695 | ) | — | (1,650,264 | ) | |||||||||||
| Proceeds from disposal of property and equipment | — | 823 | 5,128 | — | 5,951 | |||||||||||||||
| Acquisition of intangible assets | (590 | ) | — | (44,009 | ) | — | (44,599 | ) | ||||||||||||
| Purchases of investments | — | — | (173,774 | ) | — | (173,774 | ) | |||||||||||||
| Proceeds from investments | — | — | 173,774 | — | 173,774 | |||||||||||||||
| Notes receivable to non-guarantor subsidiaries | — | (43,312 | ) | — | 43,312 | — | ||||||||||||||
| Dividends from Guarantor Subsidiaries | 5,265,485 | — | — | (5,265,485 | ) | — | ||||||||||||||
| Dividends from non-guarantor subsidiaries | — | 41,100 | — | (41,100 | ) | — | ||||||||||||||
| Capital contributions to subsidiaries | (4,467,037 | ) | (16,537 | ) | — | 4,483,574 | — | |||||||||||||
| Net cash generated from (used in) investing activities | 792,597 | (38,075 | ) | (2,500,540 | ) | (779,699 | ) | (2,525,717 | ) | |||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||
| Proceeds from exercise of stock options | 6,396 | — | — | — | 6,396 | |||||||||||||||
| Proceeds from exercise of warrants | 5 | — | — | — | 5 | |||||||||||||||
| Dividends paid to preferred stockholders | (70,050 | ) | — | — | — | (70,050 | ) | |||||||||||||
| Dividends paid to Las Vegas Sands Corp. | — | (5,265,485 | ) | — | 5,265,485 | — | ||||||||||||||
| Dividends paid to Guarantor Subsidiaries | — | — | (41,100 | ) | 41,100 | — | ||||||||||||||
| Capital contributions received | — | 4,300,037 | 183,537 | (4,483,574 | ) | — | ||||||||||||||
| Borrowings from Guarantor Subsidiaries | — | — | 43,312 | (43,312 | ) | — | ||||||||||||||
| Proceeds from VOL credit facility | — | — | 751,169 | — | 751,169 | |||||||||||||||
| Proceeds from Singapore credit facility | — | — | 647,988 | — | 647,988 | |||||||||||||||
| Repayments on senior secured credit facility | — | (1,803,090 | ) | — | — | (1,803,090 | ) | |||||||||||||
| Repayments on VML credit facility | — | — | (524,701 | ) | — | (524,701 | ) | |||||||||||||
| Repurchase and cancellation of senior notes | (56,675 | ) | — | — | — | (56,675 | ) | |||||||||||||
| Repayments on ferry financing | — | — | (26,331 | ) | — | (26,331 | ) | |||||||||||||
| Repayments on airplane financings | (2,766 | ) | — | — | — | (2,766 | ) | |||||||||||||
| Repayments on HVAC equipment lease | — | (1,293 | ) | — | — | (1,293 | ) | |||||||||||||
| Repayments on FF&E facility and other long-term debt | — | (108,549 | ) | (1,197 | ) | — | (109,746 | ) | ||||||||||||
| Payments of deferred financing costs | — | (9,905 | ) | (55,918 | ) | — | (65,823 | ) | ||||||||||||
| Net cash generated from (used in) financing activities | (123,090 | ) | (2,888,285 | ) | 976,759 | 779,699 | (1,254,917 | ) | ||||||||||||
| Effect of exchange rate on cash | — | — | 11,932 | — | 11,932 | |||||||||||||||
| Increase (decrease) in cash and cash equivalents | 583,105 | (2,682,451 | ) | (461,358 | ) | — | (2,560,704 | ) | ||||||||||||
| 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 | $ | 837,361 | $ | 351,174 | $ | 1,206,177 | $ | — | $ | 2,394,712 | ||||||||||
| Las Vegas Sands Corp. | Restricted Subsidiaries | Non-Restricted Subsidiaries | Consolidating/ Eliminating Entries | Total | ||||||||||||||||
Net cash generated from (used in) operating activities | $ | (21,295 | ) | $ | 46,192 | $ | 422,045 | $ | (28,564 | ) | $ | 418,378 | ||||||||
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Cash flows from investing activities: | ||||||||||||||||||||
Change in restricted cash and cash equivalents | — | — | 149,962 | — | 149,962 | |||||||||||||||
Capital expenditures | (2,429 | ) | (8,760 | ) | (321,319 | ) | — | (332,508 | ) | |||||||||||
Proceeds from disposal of property and equipment | — | — | 3,097 | — | 3,097 | |||||||||||||||
Acquisition of intangible assets | (100 | ) | — | (229 | ) | — | (329 | ) | ||||||||||||
Notes receivable to non-restricted subsidiaries | — | (18,110 | ) | — | 18,110 | — | ||||||||||||||
Dividends received from non-restricted subsidiaries | — | 23,400 | — | (23,400 | ) | — | ||||||||||||||
Capital contributions to subsidiaries | (50,000 | ) | — | — | 50,000 | — | ||||||||||||||
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Net cash used in investing activities | (52,529 | ) | (3,470 | ) | (168,489 | ) | 44,710 | (179,778 | ) | |||||||||||
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Cash flows from financing activities: | ||||||||||||||||||||
Proceeds from exercise of stock options | 8,420 | — | 91 | — | 8,511 | |||||||||||||||
Proceeds from the exercise of warrants | 5,760 | — | — | — | 5,760 | |||||||||||||||
Dividends paid | (19,598 | ) | — | — | — | (19,598 | ) | |||||||||||||
Dividends paid to Las Vegas Sands Corp. | — | (28,564 | ) | — | 28,564 | — | ||||||||||||||
Dividends paid to Restricted Subsidiaries | — | — | (23,400 | ) | 23,400 | — | ||||||||||||||
Capital contributions received | — | 50,000 | — | (50,000 | ) | — | ||||||||||||||
Borrowings from Restricted Subsidiaries | — | — | 18,110 | (18,110 | ) | — | ||||||||||||||
Repayments on Singapore credit facility | — | — | (97,691 | ) | — | (97,691 | ) | |||||||||||||
Repayments on senior secured credit facility | — | (7,234 | ) | — | — | (7,234 | ) | |||||||||||||
Repayments on VML credit facility | — | — | (6,250 | ) | — | (6,250 | ) | |||||||||||||
Repayments on ferry financing | — | — | (8,745 | ) | — | (8,745 | ) | |||||||||||||
Repayments on airplane financings | (922 | ) | — | — | — | (922 | ) | |||||||||||||
Repayments on HVAC | — | (426 | ) | — | — | (426 | ) | |||||||||||||
Repayments on other long-term debt | — | — | (453 | ) | — | (453 | ) | |||||||||||||
Repurchase of preferred stock | (4,544 | ) | — | — | — | (4,544 | ) | |||||||||||||
Payments of preferred stock inducement premium | (16,201 | ) | — | — | — | (16,201 | ) | |||||||||||||
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Net cash generated from (used in) financing activities | (27,085 | ) | 13,776 | (118,338 | ) | (16,146 | ) | (147,793 | ) | |||||||||||
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Effect of exchange rate on cash | — | — | 6,053 | — | 6,053 | |||||||||||||||
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Increase (decrease) in cash and cash equivalents | (100,909 | ) | 56,498 | 141,271 | — | 96,860 | ||||||||||||||
Cash and cash equivalents at beginning of period | 1,031,844 | 412,226 | 1,593,011 | — | 3,037,081 | |||||||||||||||
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Cash and cash equivalents at end of period | $ | 930,935 | $ | 468,724 | $ | 1,734,282 | $ | — | $ | 3,133,941 | ||||||||||
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34
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 Macao Special Administrative Region (“Macao”) of the People’s Republic of China consist of The Venetian Macao Resort Hotel (“The Venetian Macao”); the Four Seasons Hotel Macao, Cotai Strip and the Plaza Casino (collectively, the “Four Seasons Macao”); the Sands Macao; Sands Cotai Central, which opened phase I in April 2012; and other ancillary operations in that region (“Other Asia”). Our operating segment in Singapore is the Marina Bay Sands. 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 serviceservices and products, the regulatory business environment of the operations within each segment and our organizational and management reporting structure. Our operating segments in
Macao
We own 70.3% of Sands China Ltd. (“SCL”), which includes the Macau Special Administrative Region (“Macau”) of the People’s Republic of China consistoperations of the Sands Macao;Macao, The Venetian Macao, Resort Hotel (“The Venetian Macao”); the Four Seasons Hotel Macao, Sands Cotai Strip™ and the Plaza Casino (collectively, the “Four Seasons Macao”);Central 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 Venetian Macao, which anchors the Cotai Strip, our master-planned development of integrated resort properties on an area of approximately 200 acres in Macao (consisting of parcels referred to as 1, 2, 3, 5 and 6 and 7 and 8). The Venetian Macao (located on parcel 1) includes a 39-floor luxury hotel with over 2,900 suites; approximately 534,000 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. Approximately 83.8% and 84.0% of the gross revenue at The Venetian Macao for the three months ended March 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived from room, mall, food and beverage and other non-gaming sources.
We own the Four Seasons Macao, which is located on parcel 2 and is adjacent and connected to The Venetian Macao. The Four Seasons Macao is an integrated resort that region (“Other Asia”includes 360 rooms and suites managed and operated by Four Seasons Hotels Inc., and features 19 Paiza mansions; approximately 91,000 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. This integrated resort will also feature the Four Seasons Apartment Hotel Macao, Cotai Strip (the “Four Seasons Apartments”). Our operating segment, 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 units within the Four Seasons Apartments after the necessary government approvals are obtained and future demand warrants it. Approximately 91.0% and 89.8% of the gross revenue at the Four Seasons Macao for the three months ended March 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived from mall and other non-gaming sources.
We own and operate the Sands Macao, the first Las Vegas-style casino in Macao. The Sands Macao includes approximately 197,000 square feet of gaming space; a 289-suite hotel tower; several restaurants; VIP facilities; a theater and other high-end services and amenities. Approximately 95.0% and 94.6% of the gross revenue at the Sands Macao for the three months ended March 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder primarily derived from food and beverage.
In April 2012, we opened phase I of our Sands Cotai Central integrated resort, which is located on parcels 5 and 6 and is situated across the street from The Venetian Macao and Four Seasons Macao. Phase I consists of a hotel tower on parcel 5, which includes approximately 600 five-star rooms and suites under the Conrad brand and approximately 1,200 four-star rooms and suites under the Holiday Inn brand. Phase I also includes completion of the structural work of an adjacent hotel tower, located on parcel 6, to be managed by Sheraton International Inc. and Sheraton Overseas Management Co. (collectively “Starwood”) under the Sheraton Towers brand; a variety of retail offerings; more than 300,000 square feet of meeting space; several food and beverage establishments; along with the 106,000-square-foot casino and VIP gaming areas. Phase IIA, which is currently scheduled to open in the third quarter of 2012, includes the opening of the first hotel tower on parcel 6, which will feature nearly 2,000 Sheraton-branded rooms, along with the second casino and the remaining retail, entertainment, dining and meeting facilities. Phase IIB, which is projected to open in the
first quarter of 2013, consists of the second hotel tower on parcel 6 and will feature an additional 2,000 rooms and suites under the Sheraton Towers brand. Upon completion of phases I and II of the project, the integrated resort will feature approximately 5,800 hotel rooms, approximately 300,000 square feet of gaming space, approximately 1.2 million square feet of retail, entertainment, dining and exhibition and conference facilities, and a multipurpose theater. The total cost to complete phases I and II is expected to be approximately $1.2 billion. Phase III of the project is expected to include a fourth hotel and mixed-use tower, located on parcel 5, to be managed by Starwood under the St. Regis brand and the total cost to complete is expected to be approximately $450 million. We intend to commence construction of phase III of the project as demand and market conditions warrant it. As of March 31, 2012, we have capitalized costs of $3.32 billion for the entire project, including the land premium (net of amortization) and $213.6 million in outstanding construction payables.
Singapore
We own and operate the Marina Bay Sands opened on April 27, 2010.
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 Club,™ offering services and amenities to premium customers, including luxurious VIP suites, spa facilities and private VIP gaming room facilities; entertainment facilities; anfacilities and enclosed retail, dining and entertainment complexcomplexes located within The Venetian Las Vegas of approximately 440,000 net leasable square feet (“The Grand Canal Shoppes”) and The Palazzo (“The Shoppes at The Palazzo”), both of which waswere 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 2 — Property and Equipment, Net” regarding the sale of The Shoppes at The Palazzo.
Approximately 70.0%61.1% and 63.9%74.3% of gross revenue at our Las Vegas Operating Properties for the ninethree months ended September 30,March 31, 2012 and 2011, and 2010, respectively, was derived from room, revenues, food and beverage services, and other non-gaming sources, and 30.0%38.9% and 36.1%25.7%, 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 own and operate 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 currently features approximately 152,000 square feet of gaming space, which include table games operations that commenced in July 2010;space; a 300-room hotel tower, which opened in May 2011; a 150,000-square-foot retail facility, with a progressive opening that began in November 2011; an arts and cultural center; and is the broadcast home of the local PBS affiliate. We have initiatedrecommenced construction activities on the remaining componentscomponent of the integrated resort, which include a 150,000-square-foot retail facility (with a progressive opening beginning in November 2011) and a 50,000-square-foot multipurpose event center (expected to open in the second quarter of 2012). Sands Bethlehem is also expected to be home to the National Museum of Industrial History. We own 86% of the economic interest ofin 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 ofin the retail portion of the property through our ownership interest in Sands Bethworks Retail LLC. Approximately 90.3%89.5% and 91.2%92.0% of the gross revenue at Sands Bethlehem for the ninethree months ended September 30,March 31, 2012 and 2011, and 2010, respectively, was derived from gaming activities, with the remainder derived from food and beverage services and other non-gaming sources.
35
36
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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 and judgments 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 20102011 Annual Report on Form 10-K filed on March 1, 2011.
February 29, 2012.
38
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 September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
| Percent | Percent | |||||||||||||||||||||||
| 2011 | 2010 | Change | 2011 | 2010 | Change | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Net revenues | $ | 2,409,375 | $ | 1,908,772 | 26.2 | % | $ | 6,866,390 | $ | 4,838,136 | 41.9 | % | ||||||||||||
| Operating expenses | 1,776,819 | 1,525,467 | 16.5 | % | 5,139,785 | 4,146,236 | 24.0 | % | ||||||||||||||||
| Operating income | 632,556 | 383,305 | 65.0 | % | 1,726,605 | 691,900 | 149.5 | % | ||||||||||||||||
| Income before income taxes | 557,547 | 293,995 | 89.6 | % | 1,510,727 | 441,632 | 242.1 | % | ||||||||||||||||
| Net income | 505,172 | 268,834 | 87.9 | % | 1,358,767 | 395,196 | 243.8 | % | ||||||||||||||||
| Net income attributable to Las Vegas Sands Corp. | 424,879 | 214,497 | 98.1 | % | 1,124,839 | 273,885 | 310.7 | % | ||||||||||||||||
| Percent of Net Revenues | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Operating expenses | 73.7 | % | 79.9 | % | 74.9 | % | 85.7 | % | ||||||||
| Operating income | 26.3 | % | 20.1 | % | 25.1 | % | 14.3 | % | ||||||||
| Income before income taxes | 23.1 | % | 15.4 | % | 22.0 | % | 9.1 | % | ||||||||
| Net income | 21.0 | % | 14.1 | % | 19.8 | % | 8.2 | % | ||||||||
| Net income attributable to Las Vegas Sands Corp. | 17.6 | % | 11.2 | % | 16.4 | % | 5.7 | % | ||||||||
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Percent Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Net revenues | $ | 2,762,742 | $ | 2,111,919 | 30.8 | % | ||||||
Operating expenses | 2,055,188 | 1,625,992 | 26.4 | % | ||||||||
Operating income | 707,554 | 485,927 | 45.6 | % | ||||||||
Income before income taxes | 642,280 | 409,714 | 56.8 | % | ||||||||
Net income | 579,109 | 364,503 | 58.9 | % | ||||||||
Net income attributable to Las Vegas Sands Corp. | 498,942 | 289,323 | 72.5 | % | ||||||||
| Percent of Net Revenues | ||||||||
| Three Months Ended March 31, | ||||||||
| 2012 | 2011 | |||||||
Operating expenses | 74.4 | % | 77.0 | % | ||||
Operating income | 25.6 | % | 23.0 | % | ||||
Income before income taxes | 23.2 | % | 19.4 | % | ||||
Net income | 21.0 | % | 17.3 | % | ||||
Net income attributable to Las Vegas Sands Corp. | 18.1 | % | 13.7 | % | ||||
Operating Results
Key Operating Revenue Measurements
Operating revenues at our Las Vegas Operating Properties, The Venetian Macao, Four Seasons Macao, andSands Cotai Central (which opened in April 2012), Marina Bay Sands and our Las Vegas Operating Properties are dependent upon the volume of customers who stay at the hotel, which affects the price that can be charged for hotel rooms and the volume of table games and slot machine play.play (including similar electronic gaming devices). Operating revenues at Sands Macao and Sands Bethlehem are principally driven by casino customers who visit the properties on a daily basis.
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 in Las Vegas have produced a trailing 12-month win percentage (calculated before discounts) of 17.5%. Slot machines in Las Vegas and Pennsylvania have produced a trailing 12-month hold percentage (calculated before slot club cash incentives) of 8.2% and 7.3%, respectively. Actual win may vary from the trailing 12-month win and hold percentages. Generally, slot machine play is conducted on a cash basis, whereas in Las Vegas, approximately 70.9% of our table games play for the nine months ended September 30, 2011, was conducted on a credit basis. In Pennsylvania, our table games play, which commenced in July 2010, was primarily conducted on a cash basis. We expect to increase the credit extended to our players as operations ramp up at Sands Bethlehem.
39
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 (calculated before discounts) of 27.0%27.3%, 20.2%20.5%, 34.8%40.3% and 22.4%23.0% at The Venetian Macao, Sands Macao, Four Seasons Macao and Marina Bay Sands, respectively. Our slot machines have produced a trailing 12-month hold percentage (calculated before slot club cash incentives) of 6.8%6.4%, 6.0%5.5%, 6.0%5.7% and 5.4%5.3% at The Venetian Macao, Sands Macao, Four Seasons Macao and Marina Bay Sands, respectively. Actual win may vary from the trailing 12-month win and hold percentages. Generally, slot machine play is conducted on a cash basis. In Macau, 26.6%Macao and Singapore, 31.2% and 37.3%, respectively of our table games play was conducted on a credit basis for the ninethree months ended September 30, 2011. This percentage is expected to increase as we continue to extend credit to our premium players and junket operatorsMarch 31, 2012.
Casino revenue measurements for the U.S.:The volume measurements in the U.S. are table games play. Indrop and slot handle, as previously described. We view table games win as a percentage of drop and slot hold as a percentage of handle. As in Macao and Singapore, 34.6%slot machine play is generally conducted on a cash basis. Based upon our mix of table games, our table games have produced a trailing 12-month win percentage (calculated before discounts) of 17.9% and 14.8% at our Las Vegas Operating Properties and at Sands Bethlehem, respectively. Our slot machines have produced a trailing 12-month hold percentage (calculated before slot club cash incentives) of 8.7% and 7.2% at our Las Vegas Operating Properties and at Sands Bethlehem, respectively. Actual win may vary from the trailing 12-month win and hold percentages. Approximately 75.6% of our table games play in Las Vegas, for three months ended March 31, 2012, was conducted on a credit basis, for the nine months ended September 30, 2011. This percentagewhile our table games play in Pennsylvania is expected to increase as we increase the credit extended to our premium players and as our operations ramp up at Marina Bay Sands.
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.
Mall revenue measurements: Occupancy, base rent per square foot and tenant sales per square foot are used as performance indicators. Occupancy represents gross leasable occupied area (“GLOA”) divided by gross leasable area (“GLA”) at the end of the reporting period. GLOA is the sum of: (1) tenant occupied space under lease and (2) tenants no longer occupying space, but paying rent. GLA does not include space that is currently under development or not on the market for lease. Base rent per square foot is the weighted average base or minimum rent charge in effect at the end of the reporting period for all tenants that would qualify to be included in occupancy. Tenant sales per square foot is the sum of reported comparable sales for the trailing 12 months divided by the comparable square footage for the same period. Only tenants that have been open for a minimum of 12 months are included in the tenant sales per square foot calculation.
Three Months Ended September 30, 2011March 31, 2012 Compared to the Three Months Ended September 30, 2010
Operating Revenues
Our net revenues consisted of the following:
| Three Months Ended September 30, | ||||||||||||
| Percent | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Casino | $ | 1,903,142 | $ | 1,573,851 | 20.9 | % | ||||||
| Rooms | 262,352 | 208,160 | 26.0 | % | ||||||||
| Food and beverage | 147,223 | 117,186 | 25.6 | % | ||||||||
| Convention, retail and other | 223,841 | 147,179 | 52.1 | % | ||||||||
| 2,536,558 | 2,046,376 | 24.0 | % | |||||||||
| Less — promotional allowances | (127,183 | ) | (137,604 | ) | 7.6 | % | ||||||
| Total net revenues | $ | 2,409,375 | $ | 1,908,772 | 26.2 | % | ||||||
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Percent Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Casino | $ | 2,266,493 | $ | 1,664,489 | 36.2 | % | ||||||
Rooms | 267,727 | 231,974 | 15.4 | % | ||||||||
Food and beverage | 153,455 | 145,393 | 5.5 | % | ||||||||
Mall | 71,418 | 55,865 | 27.8 | % | ||||||||
Convention, retail and other | 129,717 | 108,790 | 19.2 | % | ||||||||
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| |||||||||
| 2,888,810 | 2,206,511 | 30.9 | % | |||||||||
Less - promotional allowances | (126,068 | ) | (94,592 | ) | (33.3 | )% | ||||||
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| |||||||||
Total net revenues | $ | 2,762,742 | $ | 2,111,919 | 30.8 | % | ||||||
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| |||||||||
Consolidated net revenues were $2.41$2.76 billion for the three months ended September 30, 2011,March 31, 2012, an increase of $500.6$650.8 million compared to $1.91$2.11 billion for the three months ended September 30, 2010.March 31, 2011. The increase in net revenues was driven by an increase of $306.5$290.1 million from the progressive openingacross all of theour Macao operations and a $263.7 million increase at Marina Bay Sands, as well as increases at our Macau and U.S. operations.
Sands.
40
| Three Months Ended September 30, | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Macau Operations: | ||||||||||||
The Venetian Macao | ||||||||||||
| Total casino revenues | $ | 586,945 | $ | 540,284 | 8.6 | % | ||||||
| Non-Rolling Chip drop | $ | 1,074,230 | $ | 956,867 | 12.3 | % | ||||||
| Non-Rolling Chip win percentage | 27.6 | % | 26.6 | % | 1.0 | pts | ||||||
| Rolling Chip volume | $ | 12,706,769 | $ | 11,035,144 | 15.1 | % | ||||||
| Rolling Chip win percentage | 2.66 | % | 3.05 | % | (0.39 | )pts | ||||||
| Slot handle | $ | 897,109 | $ | 853,705 | 5.1 | % | ||||||
| Slot hold percentage | 6.4 | % | 6.5 | % | (0.1 | )pts | ||||||
Sands Macao | ||||||||||||
| Total casino revenues | $ | 299,761 | $ | 281,764 | 6.4 | % | ||||||
| Non-Rolling Chip drop | $ | 722,595 | $ | 649,605 | 11.2 | % | ||||||
| Non-Rolling Chip win percentage | 20.0 | % | 20.3 | % | (0.3 | )pts | ||||||
| Rolling Chip volume | $ | 7,902,923 | $ | 6,275,044 | 25.9 | % | ||||||
| Rolling Chip win percentage | 2.65 | % | 3.00 | % | (0.35 | )pts | ||||||
| Slot handle | $ | 536,479 | $ | 435,713 | 23.1 | % | ||||||
| Slot hold percentage | 5.3 | % | 5.7 | % | (0.4 | )pts | ||||||
Four Seasons Macao | ||||||||||||
| Total casino revenues | $ | 140,598 | $ | 142,256 | (1.2 | )% | ||||||
| Non-Rolling Chip drop | $ | 107,610 | $ | 98,537 | 9.2 | % | ||||||
| Non-Rolling Chip win percentage | 38.9 | % | 29.5 | % | 9.4 | pts | ||||||
| Rolling Chip volume | $ | 4,160,488 | $ | 4,740,576 | (12.2 | )% | ||||||
| Rolling Chip win percentage | 2.90 | % | 3.08 | % | (0.18 | )pts | ||||||
| Slot handle | $ | 201,540 | $ | 120,328 | 67.5 | % | ||||||
| Slot hold percentage | 6.4 | % | 5.4 | % | 1.0 | pts | ||||||
U.S Operations: | ||||||||||||
Las Vegas Operating Properties | ||||||||||||
| Total casino revenues | $ | 124,258 | $ | 116,554 | 6.6 | % | ||||||
| Table games drop | $ | 536,109 | $ | 476,492 | 12.5 | % | ||||||
| Table games win percentage | 20.4 | % | 17.1 | % | 3.3 | pts | ||||||
| Slot handle | $ | 490,244 | $ | 663,607 | (26.1 | )% | ||||||
| Slot hold percentage | 8.7 | % | 7.9 | % | 0.8 | pts | ||||||
Sands Bethlehem | ||||||||||||
| Total casino revenues | $ | 99,652 | $ | 78,522 | 26.9 | % | ||||||
| Table games drop | $ | 188,908 | $ | 72,910 | 159.1 | % | ||||||
| Table games win percentage | 14.3 | % | 13.0 | % | 1.3 | pts | ||||||
| Slot handle | $ | 988,426 | $ | 934,586 | 5.8 | % | ||||||
| Slot hold percentage | 7.1 | % | 7.2 | % | (0.1 | )pts | ||||||
Singapore Operations: | ||||||||||||
Marina Bay Sands | ||||||||||||
| Total casino revenues | $ | 651,928 | $ | 414,471 | 57.3 | % | ||||||
| Non-Rolling Chip drop | $ | 1,199,171 | $ | 892,079 | 34.4 | % | ||||||
| Non-Rolling Chip win percentage | 22.6 | % | 22.1 | % | 0.5 | pts | ||||||
| Rolling Chip volume | $ | 16,720,235 | $ | 10,254,561 | 63.1 | % | ||||||
| Rolling Chip win percentage | 2.69 | % | 2.65 | % | 0.04 | pts | ||||||
| Slot handle | $ | 2,792,485 | $ | 1,358,705 | 105.5 | % | ||||||
| Slot hold percentage | 5.3 | % | 5.9 | % | (0.6 | )pts | ||||||
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Macao Operations: | ||||||||||||
The Venetian Macao | ||||||||||||
Total casino revenues | $ | 673,874 | $ | 553,417 | 21.8 | % | ||||||
Non-Rolling Chip drop | $ | 1,105,557 | $ | 980,605 | 12.7 | % | ||||||
Non-Rolling Chip win percentage | 30.7 | % | 27.9 | % | 2.8 | pts | ||||||
Rolling Chip volume | $ | 13,801,574 | $ | 12,388,979 | 11.4 | % | ||||||
Rolling Chip win percentage | 2.93 | % | 2.69 | % | 0.24 | pts | ||||||
Slot handle | $ | 1,240,841 | $ | 743,071 | 67.0 | % | ||||||
Slot hold percentage | 5.6 | % | 6.9 | % | (1.3 | )pts | ||||||
Sands Macao | ||||||||||||
Total casino revenues | $ | 341,078 | $ | 315,674 | 8.0 | % | ||||||
Non-Rolling Chip drop | $ | 707,845 | $ | 688,680 | 2.8 | % | ||||||
Non-Rolling Chip win percentage | 21.2 | % | 20.3 | % | 0.9 | pts | ||||||
Rolling Chip volume | $ | 6,433,477 | $ | 8,269,381 | (22.2 | )% | ||||||
Rolling Chip win percentage | 3.73 | % | 2.75 | % | 0.98 | pts | ||||||
Slot handle | $ | 663,244 | $ | 435,865 | 52.2 | % | ||||||
Slot hold percentage | 4.4 | % | 6.5 | % | (2.1 | )pts | ||||||
Four Seasons Macao | ||||||||||||
Total casino revenues | $ | 282,914 | $ | 160,823 | 75.9 | % | ||||||
Non-Rolling Chip drop | $ | 105,934 | $ | 82,443 | 28.5 | % | ||||||
Non-Rolling Chip win percentage | 41.7 | % | 40.1 | % | 1.6 | pts | ||||||
Rolling Chip volume | $ | 12,703,170 | $ | 3,947,963 | 221.8 | % | ||||||
Rolling Chip win percentage | 2.83 | % | 3.90 | % | (1.07 | )pts | ||||||
Slot handle | $ | 198,247 | $ | 187,504 | 5.7 | % | ||||||
Slot hold percentage | 6.0 | % | 6.5 | % | (0.5 | )pts | ||||||
Singapore Operations: | ||||||||||||
Marina Bay Sands | ||||||||||||
Total casino revenues | $ | 701,282 | $ | 464,397 | 51.0 | % | ||||||
Non-Rolling Chip drop | $ | 1,167,013 | $ | 986,444 | 18.3 | % | ||||||
Non-Rolling Chip win percentage | 22.2 | % | 22.6 | % | (0.4 | )pts | ||||||
Rolling Chip volume | $ | 12,804,546 | $ | 10,132,339 | 26.4 | % | ||||||
Rolling Chip win percentage | 3.58 | % | 2.56 | % | 1.02 | pts | ||||||
Slot handle | $ | 2,740,649 | $ | 2,041,765 | 34.2 | % | ||||||
Slot hold percentage | 5.4 | % | 5.3 | % | 0.1 | pts | ||||||
U.S. Operations: | ||||||||||||
Las Vegas Operating Properties | ||||||||||||
Total casino revenues | $ | 158,694 | $ | 83,123 | 90.9 | % | ||||||
Table games drop | $ | 609,019 | $ | 476,582 | 27.8 | % | ||||||
Table games win percentage | 24.0 | % | 13.3 | % | 10.7 | pts | ||||||
Slot handle | $ | 483,826 | $ | 407,348 | 18.8 | % | ||||||
Slot hold percentage | 8.5 | % | 8.5 | % | — | pts | ||||||
Sands Bethlehem | ||||||||||||
Total casino revenues | $ | 108,651 | $ | 87,055 | 24.8 | % | ||||||
Table games drop | $ | 201,504 | $ | 118,965 | 69.4 | % | ||||||
Table games win percentage | 14.9 | % | 16.7 | % | (1.8 | )pts | ||||||
Slot handle | $ | 1,033,651 | $ | 881,378 | 17.3 | % | ||||||
Slot hold percentage | 7.3 | % | 7.4 | % | (0.1 | )pts | ||||||
41
Room revenues increased $54.2$35.8 million compared to the three months ended September 30, 2010. Of theMarch 31, 2011. The increase $36.5was primarily due to a $21.3 million was attributable toincrease at Marina Bay Sands as well as increasesand a $12.0 million increase at our Las Vegas PropertiesMacao operations driven by increased room rates and at The Venetian Macao driven by increasedincreases in occupancy and average daily room rates. The hotel tower at Sands Bethlehem opened in May 2011. 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:
| Three Months Ended September 30, | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Macau Operations: | ||||||||||||
The Venetian Macao | ||||||||||||
| Total room revenues | $ | 57,083 | $ | 50,614 | 12.8 | % | ||||||
| Occupancy rate | 94.1 | % | 90.1 | % | 4.0 | pts | ||||||
| Average daily room rate | $ | 232 | $ | 217 | 6.9 | % | ||||||
| Revenue per available room | $ | 218 | $ | 195 | 11.8 | % | ||||||
Sands Macao | ||||||||||||
| Total room revenues | $ | 6,157 | $ | 6,089 | 1.1 | % | ||||||
| Occupancy rate | 92.9 | % | 96.6 | % | (3.7 | )pts | ||||||
| Average daily room rate | $ | 251 | $ | 239 | 5.0 | % | ||||||
| Revenue per available room | $ | 233 | $ | 231 | 0.9 | % | ||||||
Four Seasons Macao | ||||||||||||
| Total room revenues | $ | 8,257 | $ | 7,632 | 8.2 | % | ||||||
| Occupancy rate | 70.8 | % | 70.9 | % | (0.1 | )pts | ||||||
| Average daily room rate | $ | 335 | $ | 309 | 8.4 | % | ||||||
| Revenue per available room | $ | 237 | $ | 219 | 8.2 | % | ||||||
U.S. Operations: | ||||||||||||
Las Vegas Operating Properties | ||||||||||||
| Total room revenues | $ | 114,046 | $ | 105,649 | 7.9 | % | ||||||
| Occupancy rate | 92.7 | % | 93.7 | % | (1.0 | )pts | ||||||
| Average daily room rate | $ | 191 | $ | 174 | 9.8 | % | ||||||
| Revenue per available room | $ | 177 | $ | 163 | 8.6 | % | ||||||
Sands Bethlehem | ||||||||||||
| Total room revenues | $ | 2,144 | $ | — | — | % | ||||||
| Occupancy rate | 47.3 | % | — | % | — | pts | ||||||
| Average daily room rate | $ | 168 | $ | — | — | % | ||||||
| Revenue per available room | $ | 79 | $ | — | — | % | ||||||
Singapore Operations: | ||||||||||||
Marina Bay Sands | ||||||||||||
| Total room revenues | $ | 74,665 | $ | 38,176 | 95.6 | % | ||||||
| Occupancy rate | 98.1 | % | 68.2 | % | 29.9 | pts | ||||||
| Average daily room rate | $ | 327 | $ | 246 | 32.9 | % | ||||||
| Revenue per available room | $ | 321 | $ | 168 | 91.1 | % | ||||||
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Change | ||||||||||
| (Room revenues in thousands) | ||||||||||||
Macao Operations: | ||||||||||||
The Venetian Macao | ||||||||||||
Total room revenues | $ | 58,968 | $ | 50,225 | 17.4 | % | ||||||
Occupancy rate | 93.4 | % | 86.5 | % | 6.9 | pts | ||||||
Average daily room rate | $ | 244 | $ | 227 | 7.5 | % | ||||||
Revenue per available room | $ | 228 | $ | 197 | 15.7 | % | ||||||
Sands Macao | ||||||||||||
Total room revenues | $ | 6,155 | $ | 5,535 | 11.2 | % | ||||||
Occupancy rate | 93.8 | % | 84.9 | % | 8.9 | pts | ||||||
Average daily room rate | $ | 252 | $ | 251 | 0.4 | % | ||||||
Revenue per available room | $ | 236 | $ | 213 | 10.8 | % | ||||||
Four Seasons Macao | ||||||||||||
Total room revenues | $ | 10,096 | $ | 7,506 | 34.5 | % | ||||||
Occupancy rate | 82.3 | % | 64.6 | % | 17.7 | pts | ||||||
Average daily room rate | $ | 360 | $ | 341 | 5.6 | % | ||||||
Revenue per available room | $ | 296 | $ | 220 | 34.5 | % | ||||||
Singapore Operations: | ||||||||||||
Marina Bay Sands | ||||||||||||
Total room revenues | $ | 77,136 | $ | 55,834 | 38.2 | % | ||||||
Occupancy rate | 98.4 | % | 86.3 | % | 12.1 | pts | ||||||
Average daily room rate | $ | 341 | $ | 285 | 19.6 | % | ||||||
Revenue per available room | $ | 335 | $ | 246 | 36.2 | % | ||||||
U.S. Operations: | ||||||||||||
Las Vegas Operating Properties | ||||||||||||
Total room revenues | $ | 113,449 | $ | 112,874 | 0.5 | % | ||||||
Occupancy rate | 83.4 | % | 83.9 | % | (0.5 | )pts | ||||||
Average daily room rate | $ | 214 | $ | 212 | 0.9 | % | ||||||
Revenue per available room | $ | 178 | $ | 178 | — | % | ||||||
Sands Bethlehem | ||||||||||||
Total room revenues | $ | 1,923 | $ | — | — | % | ||||||
Occupancy rate | 50.3 | % | — | % | — | pts | ||||||
Average daily room rate | $ | 139 | $ | — | — | % | ||||||
Revenue per available room | $ | 70 | $ | — | — | % | ||||||
Food and beverage revenues increased $30.0$8.1 million compared to the three months ended September 30, 2010.March 31, 2011. The increase was due to a $4.2 million increase at The Venetian Macao and a $3.9 million increase at Marina Bay Sands.
Mall revenues increased $15.6 million compared to the three months ended March 31, 2011. The increase was primarily due to a $17.2$6.9 million increase at the Marina Bay Sands, anddriven by an increase in mall occupancy, as well as a $10.0$5.2 million increase at our Las Vegas Operating PropertiesFour Seasons Macao, driven by increased banquet activities.
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Change | ||||||||||
| (Mall revenues in thousands) | ||||||||||||
Macao Operations: | ||||||||||||
The Grand Canal Shoppes at The Venetian Macao | ||||||||||||
Total mall revenues | $ | 26,115 | $ | 22,950 | 13.8 | % | ||||||
Mall gross leasable area (in square feet) | 817,361 | 834,324 | (2.0 | )% | ||||||||
Occupancy | 89.8 | % | 91.1 | % | (1.3 | )pts | ||||||
Base rent per square foot | $ | 133 | $ | 118 | 12.7 | % | ||||||
Tenant sales per square foot | $ | 1,121 | $ | 800 | 40.1 | % | ||||||
The Shoppes at Four Seasons | ||||||||||||
Total mall revenues | $ | 10,459 | $ | 5,292 | 97.6 | % | ||||||
Mall gross leasable area (in square feet) | 189,082 | 192,172 | (1.6 | )% | ||||||||
Occupancy | 91.6 | % | 93.3 | % | (1.7 | )pts | ||||||
Base rent per square foot | $ | 155 | $ | 144 | 7.6 | % | ||||||
Tenant sales per square foot | $ | 3,744 | $ | 2,218 | 68.8 | % | ||||||
Singapore Operations: | ||||||||||||
The Shoppes at Marina Bay Sands | ||||||||||||
Total mall revenues | $ | 34,534 | $ | 27,623 | 25.0 | % | ||||||
Mall gross leasable area (in square feet) | 629,982 | 621,913 | 1.3 | % | ||||||||
Occupancy | 94.9 | % | 72.5 | % | 22.4 | pts | ||||||
Base rent per square foot | $ | 198 | $ | 148 | 33.8 | % | ||||||
Tenant sales per square foot(1) | $ | 1,302 | $ | — | — | % | ||||||
U.S. Operations: | ||||||||||||
The Shoppes at Sands Bethlehem(2) | ||||||||||||
Total mall revenues | $ | 310 | $ | — | — | % | ||||||
Mall gross leasable area (in square feet) | 129,216 | — | — | % | ||||||||
Occupancy | 39.3 | % | — | % | — | pts | ||||||
| (1) | The Shoppes at Marina Bay Sands opened in April 2010. |
| (2) | Base rent per square foot and tenant sales per square foot are excluded from the table as a progressive opening of The Shoppes at Sands Bethlehem began in November 2011. |
Convention, retail and other revenues increased $76.7$20.9 million compared to the three months ended September 30, 2010.March 31, 2011. The increase was primarily due to increasesa $9.4 million increase at the Marina Bay Sands, The Venetian Macao, and Four Seasons Macao of $38.0 million, $10.3 million and $7.7 million, respectively, driven by mall operationsincreased entertainment revenue, as well as a $4.1 million increase at these properties.
Marina Bay Sands.
42
The breakdown of operating expenses is as follows:
| Three Months Ended September 30, | ||||||||||||
| Percent | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Casino | $ | 993,378 | $ | 882,178 | 12.6 | % | ||||||
| Rooms | 53,493 | 36,866 | 45.1 | % | ||||||||
| Food and beverage | 71,781 | 50,906 | 41.0 | % | ||||||||
| Convention, retail and other | 99,229 | 70,603 | 40.5 | % | ||||||||
| Provision for doubtful accounts | 33,953 | 37,833 | (10.3 | )% | ||||||||
| General and administrative | 240,672 | 193,476 | 24.4 | % | ||||||||
| Corporate expense | 54,031 | 28,686 | 88.4 | % | ||||||||
| Rental expense | 10,143 | 9,186 | 10.4 | % | ||||||||
| Pre-opening expense | 15,823 | 10,107 | 56.6 | % | ||||||||
| Development expense | 3,308 | 425 | 678.4 | % | ||||||||
| Depreciation and amortization | 200,071 | 186,738 | 7.1 | % | ||||||||
| Impairment loss | — | 16,057 | (100.0 | )% | ||||||||
| Loss on disposal of assets | 937 | 2,406 | (61.1 | )% | ||||||||
| Total operating expenses | $ | 1,776,819 | $ | 1,525,467 | 16.5 | % | ||||||
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Percent Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Casino | $ | 1,207,551 | $ | 921,536 | 31.0 | % | ||||||
Rooms | 52,786 | 48,453 | 8.9 | % | ||||||||
Food and beverage | 78,301 | 71,703 | 9.2 | % | ||||||||
Mall | 16,301 | 12,104 | 34.7 | % | ||||||||
Convention, retail and other | 79,524 | 75,141 | 5.8 | % | ||||||||
Provision for doubtful accounts | 52,218 | 35,058 | 48.9 | % | ||||||||
General and administrative | 218,717 | 210,485 | 3.9 | % | ||||||||
Corporate | 48,955 | 37,576 | 30.3 | % | ||||||||
Pre-opening | 51,459 | 9,471 | 443.3 | % | ||||||||
Development | 1,198 | 573 | 109.1 | % | ||||||||
Depreciation and amortization | 194,747 | 190,237 | 2.4 | % | ||||||||
Amortization of leasehold interests in land | 9,945 | 13,156 | (24.4 | )% | ||||||||
Impairment loss | 42,893 | — | — | |||||||||
Loss on disposal of assets | 593 | 499 | 18.8 | % | ||||||||
|
|
|
| |||||||||
Total operating expenses | $ | 2,055,188 | $ | 1,625,992 | 26.4 | % | ||||||
|
|
|
| |||||||||
Operating expenses were $1.78$2.06 billion for the three months ended September 30, 2011,March 31, 2012, an increase of $251.4$429.2 million compared to $1.53$1.63 billion for the three months ended September 30, 2010.March 31, 2011. The increase in operating expenses was primarily attributable to the progressive opening of Marina Bay Sands.
Casino expenses increased $111.2$286.0 million compared to the three months ended September 30, 2010.March 31, 2011. Of the increase, $68.3 million was attributable to the Marina Bay Sands and $30.0$154.4 million was due to the 39.0% gross win tax on increased casino revenues across all of our Macau operations.
Room, food and beverage, mall and convention, retail and other expenses increased $16.6$4.3 million, $20.9$6.6 million, $4.2 million and $28.6$4.4 million, respectively, compared to the three months ended September 30, 2010.March 31, 2011. The increases were driven by the associated increases in the related revenues described above.
The provision for doubtful accounts was $34.0$52.2 million for the three months ended September 30, 2011,March 31, 2012, compared to $37.8$35.1 million for the three months ended September 30, 2010.March 31, 2011. The increase was primarily due to a $13.0 million increase at Marina Bay Sands driven by
an increase in accounts receivable related to credit extended to gaming patrons. 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.
Corporate expenses increased $47.2$11.4 million compared to the three months ended September 30, 2010, primarily attributable to the $31.3 million increase at the Marina Bay Sands.
Pre-opening expenses were $15.8$51.5 million for the three months ended September 30, 2011,March 31, 2012, compared to $10.1$9.5 million for the three months ended September 30, 2010.March 31, 2011. 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 September 30,March 31, 2012 and 2011 were primarily related to activities at Sands Cotai Central. Pre-opening expensesCentral, phase I of which opened in April 2012.
The impairment loss of $42.9 million for the three months ended September 30, 2010, were primarily related to activities at Sands Cotai Central and Marina Bay Sands.
Venetian Macao.
43
Adjusted property EBITDA is used by management as the primary measure of the operating performance of our segments. Adjusted property EBITDA is net income before royalty fees, stock-based compensation expense, corporate expense, rental expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, impairment loss, loss on disposal of assets, interest, other income (expense), loss on modification or early retirement of debt and income taxes. The following table summarizes information related to our segments (see “Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 10 — Segment Information” for discussion of our operating segments and a reconciliation of adjusted property EBITDA to net income):
| Three Months Ended September 30, | ||||||||||||
| Percent | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Macau: | ||||||||||||
| The Venetian Macao | $ | 252,720 | $ | 211,496 | 19.5 | % | ||||||
| Sands Macao | 75,821 | 74,103 | 2.3 | % | ||||||||
| Four Seasons Macao | 59,719 | 48,962 | 22.0 | % | ||||||||
| Other Asia | 2,515 | (5,563 | ) | 145.2 | % | |||||||
| 390,775 | 328,998 | 18.8 | % | |||||||||
| United States: | ||||||||||||
| Las Vegas Operating Properties | 94,311 | 58,271 | 61.8 | % | ||||||||
| Sands Bethlehem | 25,170 | 16,361 | 53.8 | % | ||||||||
| 119,481 | 74,632 | 60.1 | % | |||||||||
| Marina Bay Sands | 413,893 | 241,589 | 71.3 | % | ||||||||
| Total adjusted property EBITDA | $ | 924,149 | $ | 645,219 | 43.2 | % | ||||||
| Three Months Ended March 31, | ||||||||||||
| Percent | ||||||||||||
| 2012 | 2011 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Macao: | ||||||||||||
The Venetian Macao | $ | 281,933 | $ | 228,400 | 23.4 | % | ||||||
Sands Macao | 106,956 | 92,648 | 15.4 | % | ||||||||
Four Seasons Macao | 67,519 | 57,547 | 17.3 | % | ||||||||
Other Asia | (5,722 | ) | (4,606 | ) | (24.2 | )% | ||||||
|
|
|
| |||||||||
| 450,686 | 373,989 | 20.5 | % | |||||||||
Marina Bay Sands | 472,519 | 284,471 | 66.1 | % | ||||||||
United States: | ||||||||||||
Las Vegas Operating Properties | 115,806 | 65,165 | 77.7 | % | ||||||||
Sands Bethlehem | 27,502 | 22,109 | 24.4 | % | ||||||||
|
|
|
| |||||||||
| 143,308 | 87,274 | 64.2 | % | |||||||||
|
|
|
| |||||||||
Total adjusted property EBITDA | $ | 1,066,513 | $ | 745,734 | 43.0 | % | ||||||
|
|
|
| |||||||||
Adjusted property EBITDA at our MacauMacao operations increased $61.8$76.7 million compared to the three months ended September 30, 2010,March 31, 2011, led by an increase of $41.2$53.5 million at The Venetian Macao. As previously described, the increase across the properties was primarily attributable to an increase in net revenues of $111.2$290.1 million, partially offset by an increase of $30.0$154.4 million in gross win tax on increased casino revenues.
Adjusted property EBITDA at Marina Bay Sands increased $188.0 million compared to the three months ended March 31, 2011. The increase was primarily attributable to an increase in net revenues of $263.7 million, partially offset by an increase of $56.0 million in casino expenses driven by increased casino activity, as well as increases in the associated operating expenses.
Adjusted property EBITDA at our Las Vegas Operating Properties increased $36.0$50.6 million compared to the three months ended September 30, 2010.March 31, 2011. As previously described, the increase was primarily attributable to an increase in net revenues of $52.8$70.4 million (excluding intersegment royalty revenue), partially offset by increases in the associated operating expenses as a result of higher revenues.
Adjusted property EBITDA at Sands Bethlehem increased $8.8$5.4 million compared to the three months ended September 30, 2010.March 31, 2011. The increase was primarily attributable to an increase in net revenues of $23.9$24.5 million, driven by the commencement of table games operationsan increase in July 2010casino activity and the opening of the 300-room hotel tower in May 2011, partially offset by increases in the associated operating expenses.
Interest Expense
The following table summarizes information related to interest expense on long-term debt:
| Three Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| (Dollars in thousands) | ||||||||
| Interest cost (which includes the amortization of deferred financing costs and original issue discount) | $ | 101,688 | $ | 107,841 | ||||
| Add — imputed interest on deferred proceeds from sale of The Shoppes at The Palazzo | 4,004 | 885 | ||||||
| Less — capitalized interest | (34,931 | ) | (32,003 | ) | ||||
| Interest expense, net | $ | 70,761 | $ | 76,723 | ||||
| Cash paid for interest | $ | 89,070 | $ | 102,367 | ||||
| Weighted average total debt balance | $ | 10,102,791 | $ | 10,502,487 | ||||
| Weighted average interest rate | 4.0 | % | 4.1 | % | ||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| (Dollars in thousands) | ||||||||
Interest cost (which includes the amortization of deferred financing costs and original issue discount) | $ | 83,022 | $ | 104,196 | ||||
Add - imputed interest on deferred proceeds from sale of The Shoppes at The Palazzo | 3,776 | — | ||||||
Less - capitalized interest | (22,126 | ) | (30,611 | ) | ||||
|
|
|
| |||||
Interest expense, net | $ | 64,672 | $ | 73,585 | ||||
|
|
|
| |||||
Cash paid for interest | $ | 99,912 | $ | 111,492 | ||||
Weighted average total debt balance | $ | 10,088,641 | $ | 10,162,989 | ||||
Weighted average interest rate | 3.3 | % | 4.1 | % | ||||
44
Other Factors Effecting Earnings
Other expense was $6.6$3.4 million for the three months ended September 30, 2011,March 31, 2012, compared to other income of $6.4$4.7 million for the three months ended September 30, 2010.March 31, 2011. The amounts in both periods were primarily attributable to foreign exchange gainslosses and losses, principallydecreases in Macau.
Our effective income tax rate was 9.4%9.8% for the three months ended September 30, 2011,March 31, 2012, compared to 8.6%11.0% for the three months ended September 30, 2010.March 31, 2011. The effective income tax rate for the three months ended September 30, 2011,March 31, 2012, reflects a 17% statutory tax rate on our Singapore operations;operations and a zero percent tax rate fromon our MacauMacao gaming operations due to our income tax exemption in Macau,Macao, which, is set toif not extended, will expire in 2013; and non-realizable deferred tax assets in the U.S. and certain foreign jurisdictions, which unfavorably impacted our effective income tax rate. Management does not anticipate recording an income tax benefit2013. We have recorded a valuation allowance related to deferred tax assets generated by operations in the U.S. and certain foreign jurisdictions; however, to the extent that the financial results of these operations improve and it becomes more likely than not“more-likely-than-not” that these deferred tax assets or portion thereof are realizable, we will reduce the valuation allowances in the period such determination is made.
The net income attributable to our noncontrolling interests was $80.3$80.2 million for the three months ended September 30, 2011,March 31, 2012, compared to $54.3$75.2 million for the three months ended September 30, 2010, and wasMarch 31, 2011. These amounts are primarily attributablerelated to the noncontrolling interest of SCL for both periods.
Development Projects
We have suspended portions of our development projects and should general economic conditions fail to improve, if we are unable to obtain sufficient funding or applicable government approvals 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.
Nine Months Ended September 30, 2011 ComparedMacao
We submitted plans to the Nine Months Ended September 30, 2010
| Nine Months Ended September 30, | ||||||||||||
| Percent | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Casino | $ | 5,429,903 | $ | 3,929,922 | 38.2 | % | ||||||
| Rooms | 734,022 | 579,709 | 26.6 | % | ||||||||
| Food and beverage | 438,632 | 314,344 | 39.5 | % | ||||||||
| Convention, retail and other | 589,138 | 370,660 | 58.9 | % | ||||||||
| 7,191,695 | 5,194,635 | 38.4 | % | |||||||||
| Less — promotional allowances | (325,305 | ) | (356,499 | ) | 8.8 | % | ||||||
| Total net revenues | $ | 6,866,390 | $ | 4,838,136 | 41.9 | % | ||||||
Parcel 3 — Once completed, the nine months ended September 30, 2011, an increase of $2.03 billion comparedintegrated resort on parcel 3 will be connected to $4.84 billion for the nine months ended September 30, 2010. The increase in net revenues was driven by a $1.41 billion increase from the progressive opening of the Marina Bay Sands, as well as increases at our Macau and U.S. operations.
45
Parcels 7 and 8 — Consistent with our Las Vegas Operating Properties driven by a decreaseoriginal plans, we had commenced pre-construction activities and have capitalized construction costs of $101.1 million as of March 31, 2012. We intend to commence construction after Sands Cotai Central and the integrated resort on parcel 3 are completed, necessary government approvals are obtained (including the land concession), future demand warrants it and additional financing is obtained. If we are successful in slot handle. winning our judicial appeal and obtaining the land concession for parcels 7 and 8 (as discussed below), the related integrated resort is expected to be similar in size and scope to Sands Cotai Central.
The following table summarizes the results of our casino activity:
| Nine Months Ended September 30, | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Macau Operations: | ||||||||||||
The Venetian Macao | ||||||||||||
| Total casino revenues | $ | 1,788,833 | $ | 1,521,090 | 17.6 | % | ||||||
| Non-Rolling Chip drop | $ | 3,079,081 | $ | 2,776,469 | 10.9 | % | ||||||
| Non-Rolling Chip win percentage | 27.0 | % | 25.5 | % | 1.5 | pts | ||||||
| Rolling Chip volume | $ | 38,465,676 | $ | 30,850,448 | 24.7 | % | ||||||
| Rolling Chip win percentage | 2.95 | % | 3.11 | % | (0.16 | )pts | ||||||
| Slot handle | $ | 2,498,423 | $ | 2,226,029 | 12.2 | % | ||||||
| Slot hold percentage | 6.6 | % | 7.0 | % | (0.4 | )pts | ||||||
Sands Macao | ||||||||||||
| Total casino revenues | $ | 939,165 | $ | 856,778 | 9.6 | % | ||||||
| Non-Rolling Chip drop | $ | 2,124,760 | $ | 1,842,682 | 15.3 | % | ||||||
| Non-Rolling Chip win percentage | 20.1 | % | 20.4 | % | (0.3 | )pts | ||||||
| Rolling Chip volume | $ | 23,925,627 | $ | 19,902,862 | 20.2 | % | ||||||
| Rolling Chip win percentage | 2.79 | % | 3.08 | % | (0.29 | )pts | ||||||
| Slot handle | $ | 1,434,961 | $ | 1,204,842 | 19.1 | % | ||||||
| Slot hold percentage | 5.8 | % | 5.8 | % | — | pts | ||||||
Four Seasons Macao | ||||||||||||
| Total casino revenues | $ | 399,733 | $ | 365,253 | 9.4 | % | ||||||
| Non-Rolling Chip drop | $ | 286,982 | $ | 293,102 | (2.1 | )% | ||||||
| Non-Rolling Chip win percentage | 38.8 | % | 27.7 | % | 11.1 | pts | ||||||
| Rolling Chip volume | $ | 11,464,101 | $ | 13,303,508 | (13.8 | )% | ||||||
| Rolling Chip win percentage | 3.05 | % | 2.91 | % | 0.14 | pts | ||||||
| Slot handle | $ | 589,621 | $ | 376,638 | 56.5 | % | ||||||
| Slot hold percentage | 6.1 | % | 5.5 | % | 0.6 | pts | ||||||
U.S Operations: | ||||||||||||
Las Vegas Operating Properties | ||||||||||||
| Total casino revenues | $ | 312,503 | $ | 374,801 | (16.6 | )% | ||||||
| Table games drop | $ | 1,434,904 | $ | 1,440,665 | (0.4 | )% | ||||||
| Table games win percentage | 17.9 | % | 18.5 | % | (0.6 | )pts | ||||||
| Slot handle | $ | 1,309,108 | $ | 1,972,181 | (33.6 | )% | ||||||
| Slot hold percentage | 8.7 | % | 7.8 | % | 0.9 | pts | ||||||
Sands Bethlehem | ||||||||||||
| Total casino revenues | $ | 278,726 | $ | 206,751 | 34.8 | % | ||||||
| Table games drop | $ | 459,413 | $ | 72,910 | 530.1 | % | ||||||
| Table games win percentage | 14.8 | % | 13.0 | % | 1.8 | pts | ||||||
| Slot handle | $ | 2,817,673 | $ | 2,803,567 | 0.5 | % | ||||||
| Slot hold percentage | 7.2 | % | 7.0 | % | 0.2 | pts | ||||||
Singapore Operations: | ||||||||||||
Marina Bay Sands | ||||||||||||
| Total casino revenues | $ | 1,710,943 | $ | 605,249 | 182.7 | % | ||||||
| Non-Rolling Chip drop | $ | 3,300,078 | $ | 1,430,375 | 130.7 | % | ||||||
| Non-Rolling Chip win percentage | 22.5 | % | 21.9 | % | 0.6 | pts | ||||||
| Rolling Chip volume | $ | 39,081,385 | $ | 14,138,555 | 176.4 | % | ||||||
| Rolling Chip win percentage | 2.75 | % | 2.52 | % | 0.23 | pts | ||||||
| Slot handle | $ | 7,214,905 | $ | 1,841,031 | 291.9 | % | ||||||
| Slot hold percentage | 5.3 | % | 6.3 | % | (1.0 | )pts | ||||||
46
| Nine Months Ended September 30, | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
Macau Operations: | ||||||||||||
The Venetian Macao | ||||||||||||
| Total room revenues | $ | 158,697 | $ | 145,953 | 8.7 | % | ||||||
| Occupancy rate | 90.1 | % | 91.6 | % | (1.5 | )pts | ||||||
| Average daily room rate | $ | 227 | $ | 207 | 9.7 | % | ||||||
| Revenue per available room | $ | 205 | $ | 190 | 7.9 | % | ||||||
Sands Macao | ||||||||||||
| Total room revenues | $ | 17,270 | $ | 18,919 | (8.7 | )% | ||||||
| Occupancy rate | 88.6 | % | 97.2 | % | (8.6 | )pts | ||||||
| Average daily room rate | $ | 248 | $ | 248 | — | % | ||||||
| Revenue per available room | $ | 220 | $ | 241 | (8.7 | )% | ||||||
Four Seasons Macao | ||||||||||||
| Total room revenues | $ | 23,315 | $ | 21,117 | 10.4 | % | ||||||
| Occupancy rate | 67.8 | % | 71.0 | % | (3.2 | )pts | ||||||
| Average daily room rate | $ | 333 | $ | 295 | 12.9 | % | ||||||
| Revenue per available room | $ | 225 | $ | 209 | 7.7 | % | ||||||
U.S Operations: | ||||||||||||
Las Vegas Operating Properties | ||||||||||||
| Total room revenues | $ | 339,850 | $ | 345,885 | (1.7 | )% | ||||||
| Occupancy rate | 88.5 | % | 94.3 | % | (5.8 | )pts | ||||||
| Average daily room rate | $ | 201 | $ | 191 | 5.2 | % | ||||||
| Revenue per available room | $ | 178 | $ | 180 | (1.1 | )% | ||||||
Sands Bethlehem | ||||||||||||
| Total room revenues | $ | 2,803 | $ | — | — | % | ||||||
| Occupancy rate | 47.7 | % | — | % | — | pts | ||||||
| Average daily room rate | $ | 168 | $ | — | — | % | ||||||
| Revenue per available room | $ | 80 | $ | — | — | % | ||||||
Singapore Operations: | ||||||||||||
Marina Bay Sands | ||||||||||||
| Total room revenues | $ | 192,087 | $ | 47,835 | 301.6 | % | ||||||
| Occupancy rate | 91.8 | % | 64.8 | % | 27.0 | pts | ||||||
| Average daily room rate | $ | 303 | $ | 242 | 25.2 | % | ||||||
| Revenue per available room | $ | 278 | $ | 157 | 77.1 | % | ||||||
47
| Nine Months Ended September 30, | ||||||||||||
| Percent | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Casino | $ | 2,889,327 | $ | 2,367,760 | 22.0 | % | ||||||
| Rooms | 152,679 | 100,593 | 51.8 | % | ||||||||
| Food and beverage | 216,619 | 143,007 | 51.5 | % | ||||||||
| Convention, retail and other | 291,498 | 194,333 | 50.0 | % | ||||||||
| Provision for doubtful accounts | 92,507 | 72,986 | 26.7 | % | ||||||||
| General and administrative | 674,718 | 492,654 | 37.0 | % | ||||||||
| Corporate expense | 133,983 | 78,116 | 71.5 | % | ||||||||
| Rental expense | 33,333 | 30,690 | 8.6 | % | ||||||||
| Pre-opening expense | 43,472 | 97,684 | (55.5 | )% | ||||||||
| Development expense | 6,301 | 1,258 | 400.9 | % | ||||||||
| Depreciation and amortization | 596,469 | 510,521 | 16.8 | % | ||||||||
| Impairment loss | — | 16,057 | (100.0 | )% | ||||||||
| Loss on disposal of assets | 8,879 | 40,577 | (78.1 | )% | ||||||||
| Total operating expenses | $ | 5,139,785 | $ | 4,146,236 | 24.0 | % | ||||||
48
| Nine Months Ended September 30, | ||||||||||||
| Percent | ||||||||||||
| 2011 | 2010 | Change | ||||||||||
| (Dollars in thousands) | ||||||||||||
| Macau: | ||||||||||||
| The Venetian Macao | $ | 739,486 | $ | 574,240 | 28.8 | % | ||||||
| Sands Macao | 264,042 | 225,076 | 17.3 | % | ||||||||
| Four Seasons Macao | 154,886 | 101,456 | 52.7 | % | ||||||||
| Other Asia | (11,321 | ) | (16,149 | ) | 29.9 | % | ||||||
| 1,147,093 | 884,623 | 29.7 | % | |||||||||
| United States: | ||||||||||||
| Las Vegas Operating Properties | 252,385 | 229,555 | 9.9 | % | ||||||||
| Sands Bethlehem | 68,318 | 39,450 | 73.2 | % | ||||||||
| 320,703 | 269,005 | 19.2 | % | |||||||||
| Marina Bay Sands | 1,103,723 | 336,055 | 228.4 | % | ||||||||
| Total adjusted property EBITDA | $ | 2,571,519 | $ | 1,489,683 | 72.6 | % | ||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| (Dollars in thousands) | ||||||||
| Interest cost (which includes the amortization of deferred financing costs and original issue discount) | $ | 308,232 | $ | 302,659 | ||||
| Add — imputed interest on deferred proceeds from sale of The Shoppes at The Palazzo | 4,004 | 3,542 | ||||||
| Less — capitalized interest | (97,298 | ) | (74,326 | ) | ||||
| Interest expense, net | $ | 214,938 | $ | 231,875 | ||||
| Cash paid for interest | $ | 300,482 | $ | 279,669 | ||||
| Weighted average total debt balance | $ | 10,140,505 | $ | 10,771,226 | ||||
| Weighted average interest rate | 4.1 | % | 3.7 | % | ||||
49
Land concessions in Macao generally have an initial term of 25 years with automatic extensions of 10 years thereafter in accordance with Macao law. We have received land concessions from the Macao government to build on parcels 1, 2, 3 and 5 and 6, including the sites on which The Venetian Macao, Four Seasons Macao and Sands Cotai Central are located. We do not own these land sites in Macao; however, the land concessions grant us exclusive use of the land. As specified in the land concessions, we are required to pay premiums for each parcel, which are either payable in a single lump sum upon acceptance of the land concessions by the Macao government or in seven semi-annual installments, as well as annual rent for the term of the land concessions. In December 2010, we received notice from the Macao government that our application for a land concession for parcels 7 and 8 was not approved and we applied to the Chief Executive of Macao for an executive review of the decision. In January 2011, we filed a judicial appeal with the Court of Second Instance in Macao, which has yet to issue a decision. Should we win our judicial appeal, it is still possible for the Chief Executive of Macao to again deny the land concession based upon public policy considerations. If we do not obtain the land concession or do not receive full reimbursement of our capitalized investment in this project, we would record a charge for all or some portion of the $101.1 million in capitalized construction costs, as of March 31, 2012, related to our development on parcels 7 and 8.
Under our land concession for parcel 3, we were initially required to complete the corresponding development by August 2011. The Macao government has granted us a two-year extension to complete the development of parcel 3, which now must be completed by April 2013. The land concession for Sands Cotai Central contains a similar requirement that the corresponding development be completed by May 2014. We intend to apply for an extension from the Macao government to complete our parcel 3 development as we will be unable to meet the April 2013 deadline. Should we determine that we are unable to complete Sands Cotai Central by May 2014, we also intend to apply for an extension from the Macao government. No assurances can be given that additional extensions will be granted. If we are unable to meet the applicable deadline for Sands Cotai Central and the deadlines for either development are not extended, we could lose our land concessions for parcel 3 or Sands Cotai Central, which would prohibit us from operating any facilities developed under the respective land concessions. As a result, we could record a charge for all or some portion of the $96.7 million and $3.32 billion in capitalized construction costs and land premiums (net of amortization), as of March 31, 2012, related to our development on parcel 3 or Sands Cotai Central, respectively.
United States
We were constructing a high-rise residential condominium tower (the “Las Vegas Condo Tower”), located on the Las Vegas Strip between The Palazzo and The Venetian Las Vegas. 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. As of March 31, 2012, we have capitalized construction costs of $178.3 million for this project. The impact of the suspension on the estimated overall cost of the project is currently not determinable with certainty.
Other
We continue to aggressively pursue a variety of new development opportunities around the world.
Liquidity and Capital Resources
Cash Flows —- Summary
Our cash flows consisted of the following:
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2011 | 2010 | |||||||
| (Dollars in thousands) | ||||||||
| Net cash generated from operations | $ | 1,929,173 | $ | 1,207,998 | ||||
| Investing cash flows: | ||||||||
| Changes in restricted cash and cash equivalents | 590,096 | (836,805 | ) | |||||
| Capital expenditures | (1,087,605 | ) | (1,650,264 | ) | ||||
| Proceeds from disposal of property and equipment | 5,487 | 5,951 | ||||||
| Acquisition of intangible assets | (100 | ) | (44,599 | ) | ||||
| Purchases of investments | — | (173,774 | ) | |||||
| Proceeds from investments | — | 173,774 | ||||||
| Net cash used in investing activities | (492,122 | ) | (2,525,717 | ) | ||||
| Financing cash flows: | ||||||||
| Proceeds from exercise of stock options | 22,412 | 6,396 | ||||||
| Proceeds from exercise of warrants | 9,662 | 5 | ||||||
| Dividends paid to preferred stockholders | (57,957 | ) | (70,050 | ) | ||||
| Distributions to noncontrolling interests | (7,806 | ) | — | |||||
| Proceeds from long-term debt | — | 1,399,157 | ||||||
| Repayments on long-term debt | (399,403 | ) | (2,524,602 | ) | ||||
| Repurchase of preferred stock | (64,949 | ) | — | |||||
| Payments of preferred stock inducement premium | (16,494 | ) | — | |||||
| Payments of deferred financing costs | (6,076 | ) | (65,823 | ) | ||||
| Net cash used in financing activities | (520,611 | ) | (1,254,917 | ) | ||||
| Effect of exchange rate on cash | (1,946 | ) | 11,932 | |||||
| Increase (decrease) in cash and cash equivalents | $ | 914,494 | $ | (2,560,704 | ) | |||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| (In thousands) | ||||||||
Net cash generated from operating activities | $ | 667,451 | $ | 418,378 | ||||
|
|
|
| |||||
Cash flows from investing activities: | ||||||||
Change in restricted cash and cash equivalents | (195 | ) | 149,962 | |||||
Capital expenditures | (398,260 | ) | (332,508 | ) | ||||
Proceeds from disposal of property and equipment | 761 | 3,097 | ||||||
Acquisition of intangible assets | — | (329 | ) | |||||
|
|
|
| |||||
Net cash used in investing activities | (397,694 | ) | (179,778 | ) | ||||
|
|
|
| |||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 21,259 | 8,511 | ||||||
Proceeds from exercise of warrants | 526,168 | 5,760 | ||||||
Dividends paid | (383,463 | ) | (19,598 | ) | ||||
Distributions to noncontrolling interests | (2,195 | ) | — | |||||
Repayments on long-term debt | (306,231 | ) | (121,721 | ) | ||||
Repurchase of preferred stock | — | (4,544 | ) | |||||
Payments of preferred stock inducement premium | — | (16,201 | ) | |||||
Payments of deferred financing costs | (114 | ) | — | |||||
|
|
|
| |||||
Net cash used in financing activities | (144,576 | ) | (147,793 | ) | ||||
|
|
|
| |||||
Effect of exchange rate on cash | 28,461 | 6,053 | ||||||
|
|
|
| |||||
Increase in cash and cash equivalents | $ | 153,642 | $ | 96,860 | ||||
|
|
|
| |||||
50
Table games play at our properties is conducted on a cash and credit 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 ninethree months ended September 30, 2011,March 31, 2012, increased $721.2$249.1 million compared to the ninethree months ended September 30, 2010.March 31, 2011. The increase was primarily attributable to the increase in our operating resultsincome during the ninethree months ended September 30, 2011,March 31, 2012, as previously described.
Cash Flows — Investing Activities
Capital expenditures for the ninethree months ended September 30, 2011,March 31, 2012, totaled $1.09 billion,$398.3 million, including $607.4$305.3 million for construction and development activities in MacauMacao (primarily for our Sands Cotai Central development), $393.1; $62.4 million for construction activities in Singapore, $46.6Singapore; $9.0 million for construction activities at Sands Bethlehem; and $40.6$21.6 million at our Las Vegas Operating Properties and for corporate and other activities.
Cash Flows — Financing Activities
Net cash flows used in financing activities were $520.6$144.6 million for the ninethree months ended September 30, 2011,March 31, 2012, which was primarily attributable to $383.5 million in dividend payments, $189.7 million for the repaymentsredemption of $302.2our Senior Notes and $98.6 million in repayments under our Singapore credit facility, and $43.8partially offset by $525.0 million under our VML credit facility, and payments of $64.9 million for preferred stock repurchases, $58.0 million for preferred stock dividends and $16.5 million to induceproceeds from the exercise of warrants with settlement through tendering of preferred stock.
As of September 30, 2011,March 31, 2012, we had $1.80$1.10 billion available for borrowing under our U.S., MacauMacao and Singapore credit facilities, net of letters of credit, outstanding banker’s guarantees and undrawn amounts committed to be funded by Lehman Brothers-related subsidiaries.
Development Financing Strategy
Through September 30, 2011,March 31, 2012, we have funded our development projects primarily through borrowings under our U.S., MacauMacao and Singapore credit facilities, operating cash flows, proceeds from our equity offerings and proceeds from the disposition of non-core assets.
The U.S. credit facility, as amended in August 2010, requires 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 September 30 and December 31, 2011, decreases to 5.5x for the quarterly periods ended March 31 and June 30, 2012, and then decreases to 5.0x for all quarterly periods thereafter through maturity. One of our Macau credit facilities, the VML credit facility, as amended in August 2009, requires certain of 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 3.0x for all quarterly periods through maturity. We can elect to contribute up to $50 million and $20 million of cash on hand to our Las Vegas and relevant 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”). The Singapore credit facility requires operations of Marina Bay Sands to comply with similar financial covenants, which commenced with the quarterly period ended September 30, 2011, including maintaining a
51
We held unrestricted and restricted cash and cash equivalents of approximately $3.95$4.06 billion and $219.9$7.3 million, respectively, as of September 30, 2011,March 31, 2012, of which approximately $2.45$2.97 billion of the unrestricted amount is held by non-U.S. subsidiaries. Of the $2.45$2.97 billion, approximately $1.56$2.36 billion is available to be repatriated to the U.S. with minimal taxes owed on such amounts due to the Company’s significant foreign taxes we paid, which would ultimately generate U.S. foreign tax credits if cash is repatriated. The remaining unrestricted amounts are not available for repatriation primarily due to bank compliance requirements or dividend requirements to third party public shareholders in the case of funds being repatriated from SCL. We believe the cash on hand, cash flow generated from operations and available borrowings under our credit facilities will be sufficient to fund our developments currently under construction and maintain compliance with the financial covenants of our U.S., MacauMacao and Singapore credit facilities. In the normal course of our activities, we will continue to evaluate our capital structure and opportunities for enhancements thereof. We recommenced construction activities at Sands Cotai Central in May 2010 using proceeds from the $1.75 billion VOL credit facility together with $500.0 million of proceeds from the SCL Offering. In SeptemberNovember 2011, we entered intocompleted the $3.7 billion 2011 VML Credit Facility, which upon funding that is expected to occur in November 2011, will bewas used to repay the outstanding indebtedness under the VML and VOL credit facilities, as well as continue to fund the development, construction and completion of certain components of Sands Cotai Central. The 2011 VML Credit Facility will significantly reduce our interest expense, extend our Macau debt maturities to 2016, enhance our financial flexibilityIn March 2012, we redeemed the outstanding balance of Senior Notes for $191.7 million and further strengthen our financial position. The 2011 VML Credit Facility is expected to fund in November 2011 and we expect to recordrecorded a $21.5$2.8 million loss on modification or extinguishmentearly retirement of debt in conjunction with the refinancing.
On February 28, 2012, SCL paid a dividend of 0.58 Hong Kong dollars per share (a total of $599.8 million) to SCL shareholders of record on February 20, 2012 (of which we retained $421.6 million). On March 30, 2012, we paid a dividend of $0.25 per common share as part of a regular cash dividend program. During the three months ended March 31, 2012, we recorded $205.7 million as a distribution against retained earnings (of which $107.8 million related to our Principal Stockholder’s family). In April 2012, our Board of Directors declared a quarterly dividend of $0.25 per common share (a total estimated to be approximately $206 million) to be paid on June 29, 2012, to shareholders of record on June 20, 2012.
On March 2, 2012, our Principal Stockholder’s family exercised all of their outstanding warrants to purchase 87,500,175 shares of our common stock and paid $525.0 million in cash as settlement of the exercise price.
In March 2012, our wholly owned subsidiary, Marina Bay Sands Pte. Ltd. (“MBS”), secured a commitment for a new 5.1 billion Singapore dollar (“SGD,” approximately $4.06 billion at exchange rates in effect on March 31, 2012) credit facility, which is expected to consist of a SGD 4.6 billion (approximately $3.66 billion at exchange rates in effect on March 31, 2012) term loan and a SGD 500.0 million (approximately $398.1 million at exchange rates in effect on March 31, 2012) revolving facility, which will include a SGD 100.0 million (approximately $79.6 million at exchange rates in effect on March 31, 2012) swingline facility. The proceeds from the new facility will be used to refinance the existing Singapore credit facility, to pay related fees and expenses, and for general corporate purposes. MBS has commenced marketing of the new facility.
During the three months ended June 30, 2012, we intend to repay the outstanding balance of $131.6 million on the ferry financing using unrestricted cash on hand. This early repayment of the ferry financing will result in an estimated average annual interest expense saving of approximately $2.3 million and an estimated total interest expense saving of approximately $8.8 million. It also further simplifies our capital structure.
Aggregate Indebtedness and Other Known Contractual Obligations
As of September 30, 2011,March 31, 2012, 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, 2010, except for the signing of the 2011 VML Credit Facility, which we expect to fund in November 2011. See “Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Notes 3 — Long-Term Debt” for additional information on this credit facility.
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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., MacauMacao 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.
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:
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;
53our substantial leverage, debt service and debt covenant compliance (including the pledge of our assets as security for our indebtedness);
disruptions in the global financing markets and our ability to obtain sufficient funding for our current and future developments;
the extensive regulations to which we are subject to and the costs of compliance with such regulations;
increased competition for labor and materials due to other planned construction projects in Macao and quota limits on the hiring of foreign workers;
the impact of the suspensions of certain of our development projects and our ability to meet certain development deadlines;
the uncertainty of tourist behavior related to discretionary spending and vacationing at casino-resorts in Macao, Singapore, Las Vegas and Pennsylvania;
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 Macao, restrictions on foreign currency exchange or importation of currency, and the judicial enforcement of gaming debts;
our dependence upon properties primarily in Macao, Singapore and Las Vegas for all of our cash flow;
our relationship with GGP or any successor owner of The Shoppes at The Palazzo and The Grand Canal Shoppes;
new developments, construction and ventures, including our Cotai Strip developments;
the passage of new legislation and receipt of governmental approvals for our proposed developments in Macao 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 natural or man-made disasters, outbreaks of infectious diseases, such as avian flu, SARS and H1N1 flu, terrorist activity or war;
government regulation of the casino industry (as well as new laws and regulations and changes to existing laws and regulations), including gaming license regulation, the requirement for certain beneficial owners of our securities to be found suitable by gaming authorities, the legalization of gaming in other jurisdictions and regulation of gaming on the Internet;
increased competition in Macao and Las Vegas, including recent and upcoming increases in hotel rooms, meeting and convention space, retail space and potential additional gaming licenses;
fluctuations in the demand for all-suites rooms, occupancy rates and average daily room rates in Macao, Singapore and Las Vegas;
the popularity of Macao, Singapore and Las Vegas as convention and trade show destinations;
new taxes, changes to existing tax rates or proposed changes in tax legislation;
our ability to maintain our gaming licenses, certificate and subconcession;
the continued services of our key management and personnel;
any potential conflict between the interests of our Principal Stockholder and us;
the ability of our subsidiaries to make distribution payments to us;
our failure to maintain the integrity of our internal or customer data;
the completion of infrastructure projects in Macao 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.
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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 September 30, 2011,March 31, 2012, 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 yearstwelve months ending September 30:
| 2012 | 2013 | 2014 | 2015 | 2016 | Thereafter | Total | Fair Value(1) | |||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||||||
| Fixed rate | $ | — | $ | — | $ | — | $ | 189.7 | $ | — | $ | — | $ | 189.7 | $ | 191.1 | ||||||||||||||||
| Average interest rate(2) | — | — | — | 6.4 | % | — | — | 6.4 | % | |||||||||||||||||||||||
| Variable rate(3) | $ | 454.7 | $ | 529.3 | $ | 1,320.9 | $ | 3,268.0 | $ | 2,301.4 | $ | 1,652.3 | $ | 9,526.6 | $ | 9,206.7 | ||||||||||||||||
| Average interest rate(2) | 2.5 | % | 2.4 | % | 2.1 | % | 2.5 | % | 2.6 | % | 2.8 | % | 2.5 | % | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
| Cap agreements(4) | $ | — | $ | 0.1 | $ | 1.3 | $ | — | $ | — | $ | — | $ | 1.4 | $ | 1.4 | ||||||||||||||||
| 2013 | 2014 | 2015 | 2016 | 2017 | Thereafter | Total | Fair Value(1) | |||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||
LIABILITIES | ||||||||||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||||||
Variable rate | $ | 466.7 | $ | 540.9 | $ | 4,108.0 | $ | 1,287.3 | $ | 3,426.4 | $ | — | $ | 9,829.3 | $ | 9,478.4 | ||||||||||||||||
Average interest rate(2) | 2.7 | % | 2.6 | % | 2.5 | % | 2.7 | % | 2.8 | % | — | 2.6 | % | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||||||
Cap agreements(3) | $ | — | $ | — | $ | 0.2 | $ | — | $ | — | $ | — | $ | 0.2 | $ | 0.2 | ||||||||||||||||
| (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 | |
| (3) | As of March 31, 2012, we have | |
Borrowings under the U.S. credit facility, as amended, bear interest, at our election, at either an adjusted Eurodollar rate or at an alternative base rate plus a credit spread. The portions of the revolving facility and term loans that were not extended bear interest at the alternative base rate plus 0.25% per annum or 0.5% per annum, respectively, or at the adjusted Eurodollar rate plus 1.25% per annum or 1.5% per annum, respectively. The extended revolving facility and extended term loans bear interest at the alternative base
rate plus 1.0% per annum or 1.5% per annum, respectively, or at the adjusted Eurodollar rate plus 2.0% per annum or 2.5% per annum, respectively. Applicable spreads under the U.S. credit facility are subject to downward adjustments based upon our credit rating. Borrowings under the 2011 VML 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 VML revolving facility are subject to a downward adjustment if certain consolidated leverage ratios are satisfied. Borrowings under the VOL credit facilityCredit Facility bear interest at either the adjusted Eurodollar rate or an alternative base rate (in the case of U.S. dollar denominated loans) or HIBOR (in the case of Hong Kong dollar and Macau pataca denominated loans), as applicable, plus a spread of 4.5% per annum. Borrowings under the 2011 VML Credit Facility will bear interest at either the adjusted Eurodollar rate or an alternative base rate (in the case of U.S. dollar denominated loans) or HIBOR (in the case of Hong Kong dollar and MacauMacao pataca denominated loans), as applicable, plus a spread of 2.25% for theuntil May 13, 2012 (the first 180 days after the closing date (as defined per the agreement)date). Beginning 180 days after the closing date,May 14, 2012, the spread for all borrowings is subject to reduction based on a specified consolidated leverage ratio. 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.
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See also “Liquidity and Capital Resources.”
| ITEM 4 — |
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 the Company’s management, including its 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 September 30, 2011,March 31, 2012, and have concluded that they are effective at the reasonable assurance level.
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
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, 2010,2011, and “Part I — Item 1 —Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 9 — Commitments and Contingencies” of this Quarterly Report on Form 10-Q.
ITEM 1A — RISK FACTORS
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, 2010.
List of Exhibits
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Exhibit No. |
Description of Document | ||||
| 10.1 | Terms of Continued Employment, dated as of | |||
| 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. | |||
| 101.INS* | XBRL Instance Document | |||
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |||
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |||
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |||
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |||
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |||
| * | Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections. |
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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 9, 2012 | ||||
| By: | /s/ Kenneth J. Kay | |||
| Kenneth J. Kay | ||||
| Chief Financial Officer | ||||
| May 9, 2012 | ||||
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