e10vk
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2007
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or
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number
001-32373
LAS VEGAS SANDS CORP.
(Exact name of registrant as
specified in its charter)
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Nevada
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27-0099920
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(State or other jurisdiction
of
incorporation or organization)
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(IRS Employer
Identification No.)
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3355 Las Vegas Boulevard South
Las Vegas, Nevada
(Address of principal
executive offices)
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89109
(Zip Code)
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Registrants telephone
number, including Area code:
(702) 414-1000
Securities registered pursuant
to Section 12(b) of the Act:
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock ($0.001 par value)
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New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports); and (2) has been
subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
(§ 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this
Form 10-K
or any amendment to this
Form 10-K. þ
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer
or a small reporting company. See the definitions of large
accelerated filer, accelerated filer and
small reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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
filer þ Accelerated
filer o Non-accelerated
filer o
Smaller
reporting company
o
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the
Act). Yes o No þ
As of June 29, 2007, the last business day of the
registrants most recently completed second fiscal quarter,
the aggregate market value of the registrants common stock
held by non-affiliates of the registrant was $8,001,585,670
based on the closing sale price on that date as reported on the
New York Stock Exchange.
The Company had 355,352,992 shares of common stock
outstanding as of February 21, 2008.
DOCUMENTS
INCORPORATED BY REFERENCE
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Description of document
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Part of the Form 10-K
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Portions of the definitive Proxy Statement to be used in
connection with the registrants 2008 Annual Meeting of
Stockholders
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Part III (Item 10 through Item 14)
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Las Vegas
Sands Corp.
Table of
Contents
ii
PART I
ITEM 1.
BUSINESS
Overview
Las Vegas Sands Corp. and its subsidiaries (we or
the Company) own and operate The Venetian Resort
Hotel Casino (The Venetian), The Palazzo Resort
Hotel Casino (The Palazzo), The Sands Expo and
Convention Center (The Sands Expo Center) and The
Congress Center in Las Vegas, Nevada, and the Sands Macao and
The Venetian Macao Resort Hotel (The Venetian Macao)
in Macao, China. We are also creating a master-planned
development of integrated resort properties, anchored by The
Venetian Macao, which we refer to as the Cotai
StripTM
in Macao. In addition, we are developing Marina Bay Sands, an
integrated resort in Singapore, and Sands Bethworks, an
integrated resort in Bethlehem, Pennsylvania. We are exploring
the possibility of developing and operating integrated resorts
in additional Asian and U.S. jurisdictions, and in Europe.
Our
Company
Las Vegas Sands Corp. was incorporated as a Nevada corporation
in August 2004. Our common stock is traded on the New York Stock
Exchange (the NYSE) under the symbol
LVS. Immediately prior to our initial public
offering in December 2004, we acquired 100% of the capital stock
of Las Vegas Sands, Inc., a Nevada corporation and the direct or
indirect owner and operator of The Venetian, The Sands Expo
Center and Sands Macao, by merging Las Vegas Sands, Inc. with
and into our wholly-owned subsidiary, leaving Las Vegas Sands,
Inc. as the surviving subsidiary. Las Vegas Sands, Inc. was
incorporated in Nevada in April 1988. In July 2005, Las Vegas
Sands, Inc. was converted into a limited liability company and
changed its name to Las Vegas Sands, LLC.
Our principal executive office is located at 3355 Las Vegas
Boulevard South, Las Vegas, Nevada 89109. Our telephone number
at that address is
(702) 414-1000.
Our website address is www.lasvegassands.com. The
information on our website is not part of this Annual Report on
Form 10-K.
Our Annual Reports on
Form 10-K,
Quarterly Reports on
Form 10-Q,
Current Reports on
Form 8-K,
proxy statements and other Securities and Exchange Commission
(SEC) filings, and any amendments to those reports
that we file with or furnish to the SEC under the Securities
Exchange Act of 1934 are made available free of charge on our
website as soon as reasonably practicable after they are
electronically filed with, or furnished to, the SEC.
This Annual Report on
Form 10-K
contains certain forward-looking statements. See
Item 7 Managements Discussion and
Analysis of Financial Condition and Results of
Operations Special Note Regarding Forward-Looking
Statements.
Our principal operating and developmental activities occur in
three geographic areas: Las Vegas, Macao and Singapore.
Management reviews the results of operations for each of our key
operating segments: The Venetian, which includes The Sands Expo
Center and The Congress Center; The Palazzo; Sands Macao; The
Venetian Macao; and Other Asia (comprised primarily of the ferry
operations). The Company also reviews its construction and
development activities for each of its primary projects: The
Venetian; The Palazzo; Sands Macao; The Venetian Macao; a Four
Seasons hotel and casino development (The Four Seasons
Macao); Other Asia (comprised of various other operations
that are ancillary to our properties in Macao); Marina Bay Sands
in Singapore; Other Development Projects (comprised primarily of
our other projects on the Cotai Strip); and Corporate and Other
(comprised primarily of the airplanes and our Sands Bethworks
and Las Vegas condominium projects). See
Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 15 Segment
Information.
Operations
Las
Vegas
Our Las Vegas operations consist of The Venetian, including The
Sands Expo Center and The Congress Center, and The Palazzo. With
the opening of The Palazzo, our Las Vegas properties represent
the worlds largest integrated
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resort with 7,093 suites and approximately 225,000 square
feet of gaming, which includes approximately 260 table games and
3,100 slot machines.
The Venetian has 4,027 suites situated in a 3,014-suite,
35-story three-winged tower rising above the casino and the
1,013-suite, 12-story Venezia tower situated above a parking
garage. The casino at The Venetian has approximately
120,000 square feet of gaming space and includes
approximately 130 table games and 1,700 slot machines.
The Venetian features a variety of amenities for its guests,
including a Paiza
Clubtm;
Canyon Ranch SpaClub, operated by Canyon Ranch; the Guggenheim
Hermitage Museum, an art museum featuring masterpiece
collections from the Guggenheim Museum in New York, the State
Hermitage Museum in St. Petersburg, Russia and other museums;
and a theater/entertainment complex featuring a wide variety of
entertainment. The Venetian also includes an enclosed retail,
dining and entertainment complex of approximately
440,000 square feet (The Grand Canal Shops),
which was sold to General Growth Partners (GGP) in
2004.
The Palazzo, which partially opened on December 30, 2007,
features modern European ambience and design reminiscent of
Italian affluent living, is situated adjacent to and north of
The Venetian, and is directly connected to The Venetian, The
Sands Expo Center and The Congress Center. The casino at The
Palazzo is approximately 105,000 square feet and has
approximately 130 table games and 1,400 slot machines. The
Palazzo has a 50-floor luxury hotel tower with 3,066 suites and
includes a Canyon Ranch SpaClub; a Paiza Club; an entertainment
center; and an enclosed shopping and dining complex of
approximately 400,000 net leasable square feet (The
Shoppes at The Palazzo), which we have contracted to sell
to GGP. We anticipate the transaction to close on
February 29, 2008, or shortly thereafter.
With approximately 1.2 million gross square feet of exhibit
and meeting space, The Sands Expo Center is one of the largest
overall trade show and convention facilities in the United
States (as measured by net leasable square footage). We also own
and operate The Congress Center, an approximately
1.1 million gross square foot meeting and conference
facility that links The Sands Expo Center and the rest of The
Venetian and The Palazzo. Together, we offer approximately
2.3 million gross square feet of state-of-the-art
exhibition and meeting facilities that can be configured to
provide small, mid-size or large meeting rooms
and/or
accommodate large-scale multi-media events or trade shows.
Management believes that these combined facilities, together
with the
on-site
amenities offered by The Venetian and The Palazzo, offer a
flexible and expansive space for large-scale trade shows and
conventions.
Management markets The Congress Center to complement the
operations of The Sands Expo Center for business conferences and
upscale business events typically held during the mid-week
period, thereby generating room-night demand and driving average
daily room rates during the weekday move-in/move-out phases of
The Sands Expo Centers events. Events at The Sands Expo
Center and The Congress Center typically take place during the
week when Las Vegas hotels and casinos experience lower demand,
unlike weekends and holidays during which occupancy and room
rates are at their peak. Our goal is to draw from attendees and
exhibitors at The Sands Expo Center and The Congress Center to
maintain mid-week demand at our hotels from this higher-budget
market segment, when room demand would otherwise be derived from
the lower-budget
tour-and-travel-group
market segment. In 2007, approximately 1.3 million visitors
attended meetings, trade shows and conventions at The Sands Expo
Center and The Congress Center.
Macao
Our Macao operations consist of the Sands Macao, The Venetian
Macao and other ancillary operations that support these
properties.
We own and operate the Sands Macao, the first Las Vegas-style
casino in Macao, pursuant to a
20-year
gaming subconcession. The Sands Macao is situated near the
Macao-Hong Kong Ferry Terminal on a waterfront parcel centrally
located between the Gonbei border gate and the central business
district. This location provides the Sands Macao primary access
to a large customer base, particularly the approximately
9.0 million visitors who arrived in Macao by ferry in 2007.
The Sands Macao includes approximately 229,000 square feet
of gaming space and currently has approximately 630 table games
and 1,350 slot machines or similar electronic gaming devices.
The Sands Macao also includes several restaurants, a spacious
Paiza Club offering services and amenities to premium customers,
luxurious VIP suites and spa facilities, private VIP gaming room
facilities, a theater and other high-end
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services and amenities. We recently opened our new 238-suite
hotel tower, which increased the total number of suites
available to nearly 300.
On August 28, 2007, we opened The Venetian Macao, the
anchor property on our Cotai Strip development, which is located
approximately two miles from Macaos newly opened Taipa
Temporary Ferry Terminal on Macaos Taipa Island. The
casino at The Venetian Macao is approximately
550,000 square feet and has approximately 820 table games
and 2,650 slot machines or similar electronic gaming devices,
and a designed capacity of approximately 1,150 table games and
7,000 slot machines or similar electronic gaming devices. The
Venetian Macao, with a theme similar to that of The Venetian,
also features a 39-floor luxury hotel tower with over 2,900
suites; approximately 1.0 million square feet of retail and
dining offerings; a convention center and meeting room complex
of approximately 1.2 million square feet; and a 15,000-seat
arena that has hosted a wide range of entertainment and sporting
events. An 1,800-seat theater is currently scheduled to open in
July 2008 and will feature an original production from Cirque du
Soleil.
Management believes that the convention center and meeting room
complex combined with the
on-site
amenities offered at The Venetian Macao offers a flexible and
expansive space for large-scale trade shows and conventions. We
market The Venetian Macao similar to our Las Vegas properties,
with events at the convention and meeting room complex typically
taking place during the week when hotels and casinos in Macao
normally experience lower demand, unlike weekends and holidays
during which occupancy and room rates are at their peak. Our
goal is to draw from attendees and exhibitors at our convention
and meeting room complex to maintain mid-week demand at our
hotel from this higher-budget market segment.
United
States Development Projects
Las
Vegas Condominiums
We are in the early stages of constructing a high-rise
residential condominium tower with approximately
1.0 million saleable square feet that will be situated
between The Palazzo and The Venetian. The condominium tower is
currently expected to open in late 2009 and will be built at an
estimated cost of approximately $600.0 million.
Sands
Bethworks
On December 20, 2006, the Pennsylvania Gaming Control Board
announced that our indirect majority-owned subsidiary, Sands
Bethworks Gaming LLC (Sands Bethworks Gaming), had
been awarded a Pennsylvania gaming license. Sands Bethworks
Gaming is a project venture in which we effectively own 86% of
the economic interest. In July 2007, we paid a
$50.0 million licensing fee to the Commonwealth of
Pennsylvania, and in August 2007 were issued our gaming license
by the Pennsylvania Gaming Control Board. We are in the process
of developing a gaming, hotel, shopping and dining complex
called Sands Bethworks, located on the site of the Historic
Bethlehem Steel Works in Bethlehem, Pennsylvania, which is about
70 miles from midtown Manhattan, New York. The
124-acre
development is expected to feature a 300-room hotel,
200,000 square feet of retail space, up to 5,000 slot
machines, a 50,000-square-foot multipurpose event center and a
variety of dining options. We will own the property through our
joint venture with Bethworks Now, LLC, which has yet to
contribute the land in the joint venture. We expect the
contribution to take place in 2008; however, no assurances can
be given as to the timing of the contribution. If the land is
not contributed as required under our agreement with Bethworks
Now, LLC, we could lose all or a substantial part of our
$116.9 million investment in Sands Bethworks as of
December 31, 2007. Sands Bethworks is currently expected to
open in summer 2009 and will be built at an estimated cost of
approximately $600.0 million.
Macao
Development Projects
We have submitted development plans to the Macao government for
six integrated resort developments, in addition to The Venetian
Macao, on an area of approximately 200 acres located on the
Cotai Strip (which we refer to as parcels 2, 3, 5, 6, 7 and 8).
The developments are expected to include hotels, exhibition and
conference facilities, casinos, showrooms, shopping malls, spas,
restaurants, entertainment facilities and other attractions and
amenities, as well as public common areas. We have commenced
construction or pre-construction for these six parcels on the
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Cotai Strip, and we plan to own and operate all of the casinos
in these developments under our Macao gaming subconcession. More
specifically, we intend to develop our other Cotai Strip
properties as follows:
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Parcel 2 is intended to be The Four Seasons Macao, which will be
adjacent to The Venetian Macao and is expected to be a boutique
hotel under the Four Seasons brand with approximately 400 luxury
hotel rooms (including 19 Paiza mansions), distinctive dining
experiences, a full service spa and other amenities,
approximately 70,000 square feet of gaming space,
approximately 220,000 square feet of upscale retail
offerings and approximately 1.0 million square feet of Four
Seasons-serviced and -branded luxury apartment hotel units. We
will own the entire development. We have entered into an
exclusive non-binding letter of intent and are currently
negotiating definitive agreements under which Four Seasons
Hotels Inc. will manage the hotel and serviced luxury apartment
hotel under its Four Seasons brand. The Four Seasons Macao is
expected to open in summer 2008, with the Paiza mansions coming
on line in spring 2009 and the serviced luxury apartment hotel
being completed in summer 2009.
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Parcel 5 is intended to include a three-hotel complex with
approximately 2,300 luxury and mid-scale hotel rooms, a casino,
a retail shopping mall and approximately 320 serviced luxury
apartment hotel units. We will own the entire development and
have entered into management agreements with
Shangri-La Hotels and Resorts to manage two hotels under
its Shangri-La and Traders brands and Starwood
Hotels & Resorts Worldwide to manage a hotel and
serviced luxury apartment hotel under its St. Regis brand.
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Parcel 6 is intended to include a two-hotel complex with
approximately 4,100 luxury and mid-scale hotel rooms, a casino
and a retail shopping mall physically connected to the mall in
the Shangri-La/Traders hotel podium. We will own the entire
development and have entered into a management agreement with
Starwood Hotels & Resorts Worldwide to manage the
hotels under its Sheraton brand.
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Parcels 7 and 8 are intended to include multi-hotel complexes
with a total of approximately 6,150 luxury and mid-scale hotel
rooms, a casino, retail shopping malls and approximately 450
serviced luxury apartment hotel units that are physically
connected to the hotel complexes. We will own the entire
development and have entered into non-binding agreements with
Hilton Hotels to manage Hilton and Conrad brand hotels and
serviced luxury apartment hotels on parcel 7 and Fairmont
Raffles Holdings to manage Fairmont and Raffles brand hotels and
serviced luxury apartment hotels on parcel 8. We are currently
negotiating definitive agreements with Hilton Hotels and
Fairmont Raffles Holdings.
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For parcel 3, we have signed a non-binding memorandum of
agreement with an independent developer. We are currently
negotiating the definitive agreement pursuant to which we will
partner with the developer to build a multi-hotel complex, which
may include a Cosmopolitan hotel. In addition, we have signed a
non-binding letter of intent with Intercontinental Hotels Group
to manage hotels under the Intercontinental and Holiday Inn
International brands, and approximately 205 serviced luxury
apartment hotel units under the Intercontinental brand, on this
site. We are currently negotiating definitive agreements with
Intercontinental Hotels Group. In total, the multi-hotel complex
is intended to include approximately 3,940 hotel rooms, a
casino, a retail shopping mall and serviced luxury apartment
hotels.
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The Four Seasons Macao is currently planned to feature
approximately 130 table games and 225 slot machines. The casinos
on parcels 3, 5, 6, 7 and 8 are currently planned to include a
total of approximately 2,025 table games and 9,250 slot
machines. Upon completion, our developments on the Cotai Strip
(including The Venetian Macao) are currently planned to feature
approximately 19,750 suites/rooms and 1.6 million square
feet of gaming space with a capacity of approximately 3,300
table games and 16,470 slot machines.
Currently, we expect the total cost to build our developments on
the Cotai Strip to be approximately $12.0 billion, which
includes the cost of constructing The Venetian Macao. As of
December 31, 2007, we have capitalized $2.91 billion
in costs on the Cotai Strip. We will need to arrange additional
debt and/or
equity financing to finance the balance of those costs and there
is no assurance that we will be able to obtain all the
additional financing required.
We have received a concession from the Macao government to build
on parcels 1, 2 and 3 on the Cotai Strip, including the site on
which we own and operate The Venetian Macao (parcel 1) and
the site on which we are building The Four Seasons Macao (parcel
2). We do not own these land sites in Macao. However, the land
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concession, which has a term of 25 years and is renewable
at our option, grants us exclusive use of the land. As specified
in the land concession, we are required to pay premiums, which
are payable over four years or are due upon the completion of
the corresponding resort, as well as annual rent for the term of
the land concession.
We do not yet have all the necessary Macao government approvals
that we will need in order to develop all of our planned Cotai
Strip developments. We have commenced construction or
pre-construction for the projects on parcels 5, 6, 7 and 8 on
the Cotai Strip for which we have not yet been granted land
concessions. We are in the process of negotiating with the Macao
government to obtain the land concession for parcels 5 and 6,
and will subsequently negotiate the land concessions for parcels
7 and 8. If we do not obtain land concessions, we could forfeit
all or a substantial part of our $623.0 million in
capitalized construction costs related to these developments as
of December 31, 2007.
Hengqin
Island Development Project
We have entered into a non-binding letter of intent with the
Zhuhai Municipal Peoples Government of the Peoples
Republic of China to work together to create a master plan for,
and develop, a leisure and convention destination resort on
Hengqin Island, which is located within mainland China,
approximately one mile from the Cotai Strip. In January 2007, we
were informed that the Zhuhai Government established a Project
Coordination Committee to act as a government liaison empowered
to work directly with us to advance the development of the
project. We have interfaced with this committee and are working
actively with the committee as we continue to advance our plans.
The project remains subject to a number of conditions, including
further governmental approvals.
Singapore
Development Project
In August 2006, our wholly-owned subsidiary, Marina Bay Sands
Pte. Ltd. (MBS), entered into a development
agreement (the Development Agreement) with the
Singapore Tourism Board (the STB) to build and
operate an integrated resort called the Marina Bay Sands in
Singapore. The Marina Bay Sands is expected to include three 50+
story hotel towers (totaling approximately 2,700 rooms), a
casino, an enclosed retail, dining and entertainment complex of
approximately 850,000 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. Although construction has started on the
Marina Bay Sands, we are continuing to work with the Singapore
government to finalize various design aspects of the integrated
resort and are in the process of finalizing our cost estimates
for the project. We expect the cost to design, develop and
construct the Marina Bay Sands will be in excess of
$4.0 billion, inclusive of payments made in 2006 for land
premium, taxes and other fees. The Marina Bay Sands is expected
to open in late 2009.
United
Kingdom Development Projects
The United Kingdom government announced that the approval for
the countrys first regional super casino had been
rescinded. Should the government approve an alternative super
casino site, we intend to evaluate the efficacy of participating
in the tender process for that site. In addition, we have an
existing agreement to develop and lease a gaming and
entertainment facility with the Glasgow Rangers football club in
the United Kingdom. Our ability to eventually develop and lease
a gaming and entertainment facility under the agreement is
subject to a number of conditions, including the passage of
appropriate legislation and our ability to obtain a gaming
license.
Other
Development Projects
We are currently exploring the possibility of developing and
operating additional properties, including integrated resorts,
in additional Asian and U.S. jurisdictions, and in Europe.
In December 2007, we submitted applications to the Kansas
Lottery Commission for a gaming license and if we are
successful, we plan to develop a casino resort in the Kansas
City, Kansas, metropolitan area.
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The Las
Vegas Market
Competition
for Our Las Vegas Operations
The hotel/casino industry is highly competitive. Hotels on the
Las Vegas Strip compete with other hotels on and off the Las
Vegas Strip, including hotels in downtown Las Vegas. Competitors
of The Venetian and The Palazzo include resorts on the Las Vegas
Strip, such as the Bellagio, Mandalay Bay, Wynn Las Vegas and
Caesars Palace, and properties off the Las Vegas Strip. Several
large projects also are expected to open in the next several
years. Some of these facilities are or will be operated by
companies that may have significant name recognition and
financial and marketing resources, and may target the same
demographic groups as we do. We also compete with legalized
gaming from casinos located on Native American tribal lands. The
proliferation of gaming in California and other areas located in
the same region as The Venetian and The Palazzo could have an
adverse effect on our financial condition, results of operations
or cash flows.
Our Las Vegas hotel/casino operations also compete, to some
extent, with other hotel/casino facilities in Nevada and in
Atlantic City, hotel/casino and other resort facilities
elsewhere in the country and the world, Internet gaming websites
and state lotteries. In addition, certain states have legalized,
and others may legalize, casino gaming in specific areas. The
continued proliferation of gaming venues could significantly and
adversely affect our business. In particular, the legalization
of casino gaming in or near major metropolitan areas from which
we traditionally attract customers could have a material adverse
effect on our business. The current global trend toward
liberalization of gaming restrictions and the resulting
proliferation of gaming venues could result in a decrease in the
number of visitors to our Las Vegas facilities, which could
adversely effect our financial condition, results of operations
or cash flows.
Las Vegas generally competes with trade show and convention
facilities located in and around major U.S. cities. Within
Las Vegas, The Sands Expo Center and The Congress Center compete
with the Las Vegas Convention Center (the LVCC),
which is located off the Las Vegas Strip and currently has
approximately 3.2 million gross square feet of convention
and exhibit facilities. A major expansion project for the LVCC
is expected to be completed in 2010. In addition to the LVCC,
Mandalay Bay, MGM Grand Hotel and Casino, Mirage and Wynn Las
Vegas have convention and conference facilities that are The
Congress Centers primary Las Vegas competition. Several
large projects, which are expected to open in the next several
years, may include additional convention and conference
facilities.
To the extent that any of the competitors of The Venetian and
The Palazzo can offer a hotel/casino experience that is
integrated with substantial trade show and convention,
conference and meeting facilities, our competitive advantage in
attracting trade show and convention, conference and meeting
attendees could be adversely affected. In addition, other
American cities are in the process of developing, or have
announced plans to develop, convention center and other meeting,
trade and exhibition facilities that may compete with ours.
The Macao
Market
Introduction
Macao is regarded as the largest and fastest-growing gaming
market in the world and benefits from being the only market in
China to offer legalized casino gaming.
Macao
as a Gaming and Resort Destination
In May 2004, Sands Macao became the first Las Vegas-style casino
to open in Macao and with our opening of The Venetian Macao in
August 2007, we believe that our high-quality gaming product has
enabled us to capture a meaningful share of the overall market,
including the VIP player market segment, in Macao.
Gaming revenues in Macao in 2007 reached a record
$10.3 billion, a 46.6% increase over 2006. Visits to Macao
were up 22.7% in 2007, when compared to 2006. According to Macao
government statistics, during 2007 (through November), 21.4% of
visitors traveling to Macao stayed overnight in hotels and
guestrooms and, for those who stayed overnight in hotels and
guestrooms, the average length of stay was between 1 and 2
nights. We expect this length of stay to increase with increased
visitation, the expansion of gaming and non-gaming amenities
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including retail, entertainment, meeting and convention facility
offerings, and the addition of upscale hotel resort
accommodations in Macao.
Table games are the dominant form of gaming in Asia with
baccarat being the most popular game, followed by other
traditional U.S. and Asian games. Slot machines are offered
in Macao, but the structure of the gaming market in Macao has
historically favored table gaming. However, with the increase in
the mass gaming market in Macao, slot machines of international
standards are becoming an important feature of the market. We
expect the slot machine business to grow in Macao and we intend
to continue to introduce more modern and popular products that
appeal to the Asian marketplace.
We believe that as new facilities and standards of service are
introduced, Macao will become an even more desirable tourist
destination. The improved experience of visitors to Macao should
lead to longer stays, an increased number of return trips from
existing feeder markets and the opening of several new feeder
markets. In addition, we believe that a wealthier Chinese middle
class will lead to increased travel to Macao and generate
increased demand for gaming, entertainment and resort offerings.
We also believe that the combination of less onerous travel
restrictions, the greater ability of Chinese citizens to bring
renminbi (the Chinese currency) to Macao, increasing regional
wealth and the opening of world-class facilities will transform
Macao to a
multi-day
travel destination similar to Las Vegas.
Proximity
to Major Asian Cities
Approximately 1.0 billion people are estimated to live
within a
three-hour
flight from Macao and approximately 3.0 billion people are
estimated to live within a
five-hour
flight from Macao. According to Macao government statistics,
85.4% of the tourists who visited Macao in 2007 came from Hong
Kong or mainland China and the dominant feeder markets to Macao
have been, and continue to be, Hong Kong and China. Although the
total number of visitors from Hong Kong continues to grow, that
market has shrunk as a percentage of the total visitor
distribution from 44.2% in 2002 to 30.3% in 2007, while visitors
from mainland China made up 55.1% of total visitors to Macao in
2007. Until recently, mainland Chinese were permitted to visit
Macao only as part of a tour group. Now that these travel
restrictions have eased for mainland Chinese from most urban
centers and economically developed regions, individual travel to
Macao is expected to increase, generating increased demand for
casino offerings.
Gaming customers from Hong Kong, southeast China, Taiwan and
other locations in Asia can reach Macao in a relatively short
period of time, using a variety of methods of transportation,
and visitors from more distant locations in Asia can take
advantage of short travel times by air to Macao, Zhuhai,
Shenzhen, Guangzhou or to Hong Kong (followed by a road, ferry
or helicopter trip to Macao). In addition, numerous carriers fly
directly into Macao International Airport from many major cities
in Asia. The relatively easy access from major population
centers promotes Macao as a popular gaming destination in Asia.
Macao draws a significant number of gaming customers from both
visitors to and residents of Hong Kong. One of the major methods
of transportation to Macao from Hong Kong is the jetfoil ferry
service, including our ferry service, The Cotai Strip
CotaiJettm,
which we opened in late 2007. Macao is also accessible from Hong
Kong by helicopter. In addition, the proposed bridge linking
Hong Kong, Macao and Zhuhai is expected to reduce the travel
time between central Hong Kong and Macao. The bridge is expected
be completed sometime between 2012 and 2015.
The Macao pataca and the Hong Kong dollar are linked to each
other and, in many cases, are used interchangeably in Macao.
However, currency exchange controls and restrictions on the
export of currency by certain countries may negatively impact
the success of our operations. For example, there are currently
existing currency exchange controls and restrictions on the
export of the renminbi. In addition, restrictions on the export
of the renminbi may impede the flow of gaming customers from
China to Macao, inhibit the growth of gaming in Macao and
negatively impact our gaming operations.
7
Competition
in Macao
Gaming in Macao is administered through government-sanctioned
concessions awarded to three different concessionaires and three
subconcessionaires, of which we are one. The Macao government is
precluded by contract from granting any additional gaming
concessions until 2009. In addition, the current laws only
permit three gaming concessions, although future subconcessions
are permitted. However, the laws could change and permit the
Macao government to grant additional gaming concessions before
2009. If the Macao government were to allow additional
competitors to operate in Macao through the grant of additional
concessions or subconcessions, we would face additional
competition, which could have a material adverse effect on our
financial condition, results of operations or cash flows.
SJM, controlled by Stanley Ho, holds one of the three
concessions and currently operates 19 facilities throughout
Macao. Historically, SJM was the only gaming operator in Macao,
with over 40 years of operating experience in Macao. Many
of its 19 casinos are relatively small facilities that are
offered as amenities in hotels; however, a number are large
operations enjoying significant recognition by gaming customers
in the marketplace. SJM was obligated to invest at least
approximately 4.7 billion patacas (approximately
$584.6 million at exchange rates in effect on
December 31, 2007) by March 31, 2009, under its
concession agreement with the government of Macao. SJMs
projects include the Grand Lisboa; the Fishermans Wharf
entertainment complex, which opened in December 2005; and other
projects. In addition, MGM MIRAGE has entered into a joint
venture agreement with Stanley Hos daughter, Pansy Ho
Chiu-king, to develop, build and operate two major hotel/casino
resorts in Macao. In April 2005, MGM Grand Paradise Limited
obtained a subconcession allowing it to conduct gaming
operations in Macao. The MGM Grand Macau opened in December 2007
and features approximately 600 rooms, 375 table games, 900 slot
machines, restaurants and entertainment amenities.
Galaxy Casino Company Limited (Galaxy) holds a
concession and has the ability to operate casino properties
independent of us. Galaxy was obligated to invest at least
4.4 billion patacas (approximately $547.3 million at
exchange rates in effect on December 31, 2007) by June
2012 under its concession agreement with the government of
Macao. Galaxy currently operates five casinos in Macao,
including StarWorld Hotel, which opened in October 2006 and has
over 500 hotel rooms and a 140,000 square foot gaming floor
with approximately 260 table games and 500 slot machines.
Wynn Resorts (Macau), S.A. (Wynn Macau), a
subsidiary of Wynn Resorts Limited, holds the third concession.
Wynn Macau opened in September 2006 and expanded the property in
late 2007. Wynn Macau now includes an approximately 600-room
hotel, a casino and other non-gaming amenities. In 2006, Wynn
Macau sold its subconcession right under its gaming concession
to an affiliate of Publishing and Broadcasting Limited
(PBL). The subconcession right permitted the PBL
affiliate to receive a gaming subconcession from the Macao
government. In May 2007, a PBL affiliate opened the Crown Macau,
which includes an approximately 216-room hotel, a casino and
other non-gaming amenities.
Our Macao operations will also face competition from casinos
located in other areas of Asia, such as the major gaming and
resort destination Genting Highlands Resort, located outside of
Kuala Lumpur, Malaysia and casinos in South Korea and the
Philippines, as well as pachinko and pachislot parlors in Japan.
We will also encounter competition from other major gaming
centers worldwide.
Advertising
and Marketing
We advertise in many types of media, including television,
radio, newspapers, magazines and billboards, to promote general
market awareness of our properties as unique vacation, business
and convention destinations due to our first-class hotels,
casinos, retail stores, restaurants and other amenities. We
actively engage in direct marketing as allowed in various
geographic regions, which is targeted at specific market
segments, including the premium slot and table games markets.
8
Regulation
and Licensing
State
of Nevada
The ownership and operation of casino gaming facilities in the
State of Nevada are subject to the Nevada Gaming Control Act and
the regulations promulgated thereunder (collectively, the
Nevada Act) and various local regulations. Our
gaming operations are also subject to the licensing and
regulatory control of the Nevada Gaming Commission (the
Nevada Commission), the Nevada Gaming Control Board
(the Nevada Board) and the Clark County Liquor and
Gaming Licensing Board (the CCLGLB and together with
the Nevada Commission and the Nevada Board, the Nevada
Gaming Authorities).
The laws, regulations and supervisory procedures of the Nevada
Gaming Authorities are based upon declarations of public policy
that are concerned with, among other things:
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the prevention of unsavory or unsuitable persons from having a
direct or indirect involvement with gaming at any time or in any
capacity;
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the establishment and maintenance of responsible accounting
practices and procedures;
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the maintenance of effective controls over the financial
practices of licensees, including establishing minimum
procedures for internal fiscal affairs and the safeguarding of
assets and revenues, providing reliable record-keeping and
requiring the filing of periodic reports with the Nevada Gaming
Authorities;
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the prevention of cheating and fraudulent practices; and
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the establishment of a source of state and local revenues
through taxation and licensing fees.
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Any change in such laws, regulations and procedures could have
an adverse effect on our Las Vegas operations.
Las Vegas Sands, LLC is licensed by the Nevada Gaming
Authorities to operate both The Venetian and The Palazzo as a
single resort hotel as set forth in the Nevada Act. The gaming
license requires the periodic payment of fees and taxes and is
not transferable. Las Vegas Sands, LLC is also registered as an
intermediary company of Venetian Casino Resort, LLC. Venetian
Casino Resort, LLC is licensed as a manufacturer and distributor
of gaming devices. Las Vegas Sands, LLC and Venetian Casino
Resort, LLC are collectively referred to as the licensed
subsidiaries. Las Vegas Sands Corp. is registered with the
Nevada Commission as a publicly-traded corporation (the
registered corporation). As such, we must
periodically submit detailed financial and operating reports to
the Nevada Gaming Authorities and furnish any other information
that the Nevada Gaming Authorities may require. No person may
become a stockholder of, or receive any percentage of the
profits from, the licensed subsidiaries without first obtaining
licenses and approvals from the Nevada Gaming Authorities.
Additionally, the CCLGLB has taken the position that it has the
authority to approve all persons owning or controlling the stock
of any corporation controlling a gaming licensee. We, and the
licensed subsidiaries, possess all state and local government
registrations, approvals, permits and licenses required in order
for us to engage in gaming activities at The Venetian and The
Palazzo.
The Nevada Gaming Authorities may investigate any individual who
has a material relationship to or material involvement with us
or the licensed subsidiaries to determine whether such
individual is suitable or should be licensed as a business
associate of a gaming licensee. Officers, directors and certain
key employees of the licensed subsidiaries must file
applications with the Nevada Gaming Authorities and may be
required to be licensed by the Nevada Gaming Authorities. Our
officers, directors and key employees who are actively and
directly involved in the gaming activities of the licensed
subsidiaries may be required to be licensed or found suitable by
the Nevada Gaming Authorities.
The Nevada Gaming Authorities may deny an application for
licensing or a finding of suitability for any cause they deem
reasonable. A finding of suitability is comparable to licensing;
both require submission of detailed personal and financial
information followed by a thorough investigation. The applicant
for licensing or a finding of suitability, or the gaming
licensee by whom the applicant is employed or for whom the
applicant serves, must pay all the costs of the investigation.
Changes in licensed positions must be reported to the Nevada
Gaming Authorities, and in addition to their authority to deny
an application for a finding of suitability or licensure, the
Nevada Gaming Authorities have jurisdiction to disapprove a
change in a corporate position.
9
If the Nevada Gaming Authorities were to find an officer,
director or key employee unsuitable for licensing or to have an
inappropriate relationship with us or the licensed subsidiaries,
we would have to sever all relationships with such person. In
addition, the Nevada Commission may require us or the licensed
subsidiaries to terminate the employment of any person who
refuses to file appropriate applications. Determinations of
suitability or questions pertaining to licensing are not subject
to judicial review in Nevada.
We, and the licensed subsidiaries, are required to submit
periodic detailed financial and operating reports to the Nevada
Commission. Substantially all of our and our licensed
subsidiaries material loans, leases, sales of securities
and similar financing transactions must be reported to or
approved by the Nevada Commission.
If it were determined that we or a licensed subsidiary violated
the Nevada Act, the registration and gaming licenses we then
hold could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory
procedures. In addition, we and the persons involved could be
subject to substantial fines for each separate violation of the
Nevada Act at the discretion of the Nevada Commission. Further,
a supervisor could be appointed by the Nevada Commission to
operate the casinos, and, under certain circumstances, earnings
generated during the supervisors appointment (except for
the reasonable rental value of the casinos) could be forfeited
to the State of Nevada. Limitation, conditioning or suspension
of any gaming registration or license or the appointment of a
supervisor could (and revocation of any gaming license would)
materially adversely affect our gaming operations.
Any beneficial holder of our voting securities, regardless of
the number of shares owned, may be required to file an
application, be investigated, and have its suitability as a
beneficial holder of our voting securities determined if the
Nevada Commission has reason to believe that such ownership
would otherwise be inconsistent with the declared policies of
the State of Nevada. The applicant must pay all costs of
investigation incurred by the Nevada Gaming Authorities in
conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of
our voting securities to report the acquisition to the Nevada
Commission. The Nevada Act requires that beneficial owners of
more than 10% of our voting securities apply to the Nevada
Commission for a finding of suitability within thirty days after
the Chairman of the Nevada Board mails the written notice
requiring such filing. Under certain circumstances, an
institutional investor as defined in the Nevada Act,
which acquires more than 10% but not more than 15% of our voting
securities, may apply to the Nevada Commission for a waiver of
such finding of suitability if such institutional investor holds
the voting securities only for investment purposes.
An institutional investor will be deemed to hold voting
securities only for investment purposes if it acquires and holds
the voting securities in the ordinary course of business as an
institutional investment and not for the purpose of causing,
directly or indirectly, the election of a majority of the
members of our board of directors, any change in our corporate
charter, by-laws, management, policies or our operations or any
of our gaming affiliates, or any other action which the Nevada
Commission finds to be inconsistent with holding our voting
securities only for investment purposes. Activities that are
deemed consistent with holding voting securities only for
investment purposes include:
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voting on all matters voted on by stockholders;
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making financial and other inquiries of management of the type
normally made by securities analysts for informational purposes
and not to cause a change in management, policies or
operations; and
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such other activities as the Nevada Commission may determine to
be consistent with such investment intent.
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If the beneficial holder of voting securities who must be found
suitable is a corporation, partnership or trust, it must submit
detailed business and financial information including a list of
beneficial owners. If the beneficial holder of nonvoting
securities who must be licensed or found suitable is a
corporation, partnership or trust, it must submit detailed
business and financial information including a list of
beneficial owners. The applicant is required to pay all costs of
investigation.
Any person who fails or refuses to apply for a finding of
suitability or a license within thirty days after being ordered
to do so by the Nevada Commission or the Chairman of the Nevada
Board may be found unsuitable. The same restrictions apply to a
record owner if the record owner, after request, fails to
identify the beneficial owner.
10
Any stockholder found unsuitable and who holds, directly or
indirectly, any beneficial ownership of the common stock of a
registered corporation beyond such period of time as may be
prescribed by the Nevada Commission may be guilty of a criminal
offense. We are subject to disciplinary action if, after we
receive notice that a person is unsuitable to be a stockholder
or to have any other relationship with us or a licensed
subsidiary, we, or any of the licensed subsidiaries:
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allow that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person;
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pay remuneration in any form to that person for services
rendered or otherwise; or
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fail to pursue all lawful efforts to require such unsuitable
person to relinquish his or her voting securities for cash at
fair market value.
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Our charter documents include provisions intended to help us
comply with these requirements.
The Nevada Commission may, in its discretion, require the holder
of any debt security of a registered corporation to file an
application, be investigated and be found suitable to own the
debt security of such registered corporation. If the Nevada
Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the registered
corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada
Commission, it:
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pays to the unsuitable person any dividend, interest, or any
distribution whatsoever;
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recognizes any voting right by such unsuitable person in
connection with such securities;
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pays the unsuitable person remuneration in any form; or
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makes any payment to the unsuitable person by way of principal,
redemption, conversion, exchange, liquidation or similar
transaction.
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We are required to maintain a current stock ledger in Nevada
that may be examined by the Nevada Gaming Authorities at any
time. If any securities are held in trust by an agent or by a
nominee, the record holder may be required to disclose the
identity of the beneficial owner to the Nevada Gaming
Authorities and we are also required to disclose the identity of
the beneficial owner to the Nevada Gaming Authorities. A failure
to make such disclosure may be grounds for finding the record
holder unsuitable. We are also required to render maximum
assistance in determining the identity of the beneficial owner.
The Nevada Commission has the power to require our stock
certificates to bear a legend indicating that such securities
are subject to the Nevada Act. However, to date, the Nevada
Commission has not imposed such a requirement on us.
We cannot make a public offering of any securities without the
prior approval of the Nevada Commission if the securities or the
proceeds from the offering are intended to be used to construct,
acquire or finance gaming facilities in Nevada, or to retire or
extend obligations incurred for such purposes. On
November 16, 2006, the Nevada Commission granted us prior
approval to make public offerings for a period of two years,
subject to certain conditions (the shelf approval).
The shelf approval includes prior approval by the Nevada
Commission permitting us to place restrictions on the transfer
of the membership interests and to enter into agreements not to
encumber the membership interests of Las Vegas Sands, LLC.
However, the shelf approval may be rescinded for good cause
without prior notice upon the issuance of an interlocutory stop
order by the Chairman of the Nevada Board. The shelf approval
does not constitute a finding, recommendation, or approval by
the Nevada Commission or the Nevada Board as to the investment
merits of any securities offered under the shelf approval. Any
representation to the contrary is unlawful.
Changes in our control through a merger, consolidation, stock or
asset acquisition, management or consulting agreement, or any
act or conduct by any person whereby he or she obtains control,
shall not occur without the prior approval of the Nevada
Commission. Entities seeking to acquire control of a registered
corporation must satisfy the Nevada Board and the Nevada
Commission concerning a variety of stringent standards prior to
assuming control of such registered corporation. The Nevada
Commission may also require controlling stockholders, officers,
directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be
investigated and licensed as part of the approval process of the
transaction.
11
The Nevada legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting
securities and corporate defense tactics affecting Nevada gaming
licensees, and registered corporations that are affiliated with
those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a
regulatory scheme to ameliorate the potentially adverse effects
of these business practices upon Nevadas gaming industry
and to further Nevadas policy to:
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assure the financial stability of corporate gaming operators and
their affiliates;
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preserve the beneficial aspects of conducting business in the
corporate form; and
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promote a neutral environment for the orderly governance of
corporate affairs.
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Approvals are, in certain circumstances, required from the
Nevada Commission before we can make exceptional repurchases of
voting securities above the current market price thereof and
before a corporate acquisition opposed by management can be
consummated.
The Nevada Act also requires prior approval of a plan of
recapitalization proposed by the board of directors in response
to a tender offer made directly to the registered
corporations stockholders for the purposes of acquiring
control of the registered corporation.
License fees and taxes, computed in various ways depending upon
the type of gaming or activity involved, are payable to the
State of Nevada and to Clark County, Nevada. Depending upon the
particular fee or tax involved, these fees and taxes are payable
monthly, quarterly or annually and are based upon:
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a percentage of the gross revenues received;
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the number of gaming devices operated; or
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the number of table games operated.
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The tax on gross revenues received is generally 6.75%. In
addition, an excise tax is paid by us on charges for admission
to any facility where certain forms of live entertainment are
provided. Venetian Casino Resort, LLC, is also required to pay
certain fees and taxes to the State of Nevada as a licensed
manufacturer and distributor.
Any person who is licensed, required to be licensed, registered,
required to be registered, or under common control with such
persons (collectively, licensees), and who proposes
to become involved in a gaming operation outside of Nevada, is
required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the
expenses of any investigation by the Nevada Board into their
participation in such foreign gaming operation. The revolving
fund is subject to increase or decrease at the discretion of the
Nevada Commission. Thereafter, licensees are also required to
comply with certain reporting requirements imposed by the Nevada
Act. Licensees are also subject to disciplinary action by the
Nevada Commission if they knowingly violate any laws of any
foreign jurisdiction pertaining to such foreign gaming
operation, fail to conduct such foreign gaming operation in
accordance with the standards of honesty and integrity required
of Nevada gaming operations, engage in activities that are
harmful to the State of Nevada or its ability to collect gaming
taxes and fees, or employ a person in such foreign operation who
has been denied a license or a finding of suitability in Nevada
on the ground of personal unsuitability or who has been found
guilty of cheating at gambling.
The sale of alcoholic beverages by the licensed subsidiaries on
the casino premises and The Sands Expo Center is subject to
licensing, control and regulation by the applicable local
authorities. Our licensed subsidiaries have obtained the
necessary liquor licenses to sell alcoholic beverages. All
licenses are revocable and are not transferable. The agencies
involved have full power to limit, condition, suspend or revoke
any such licenses, and any such disciplinary action could (and
revocation of such licenses would) have a material adverse
effect upon our operations.
Commonwealth
of Pennsylvania
Sands Bethworks Gaming is subject to the rules and regulations
promulgated by the Pennsylvania Gaming Control Board, the
Pennsylvania State Police and other agencies (collectively, the
PaGCB).
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On December 20, 2006, we were awarded one of two category 2
at large gaming licenses available in Pennsylvania,
and a location in the Pocono Mountains was awarded the other
category 2 at large license. On the same day, two
category 2 licenses were awarded to applicants for locations in
Philadelphia, one category 2 license was awarded to an applicant
in Pittsburgh, and six race tracks were awarded permanent
category 1 licenses. The principal difference between category 1
and category 2 licenses is that the former is available only to
certain race tracks. A category 1 or category 2 licensee is
authorized to open with up to 3,000 slot machines and to
increase to up to 5,000 slot machines upon approval of the
PaGCB, which may not take effect earlier than six months after
opening. In July 2007, we paid a $50.0 million licensing
fee to the Commonwealth of Pennsylvania, and in August 2007 were
issued our gaming license by the Pennsylvania Gaming Control
Board. Just prior to the opening of Sands Bethworks, we will be
required to make a deposit of $5.0 million to cover weekly
withdrawals of our appropriate share of the cost of regulation
and the amount withdrawn must be replenished weekly.
We must notify the PaGCB if we become aware of any proposed or
contemplated change of control including more than 5% of the
ownership interests of Sands Bethworks Gaming or of more than 5%
of the ownership interests of any entity that owns, directly or
indirectly, at least 20% of Sands Bethworks Gaming, including
Las Vegas Sands Corp. The acquisition by a person or a group of
persons acting in concert of more than 20% of the ownership
interests of Sands Bethworks Gaming or of any entity that owns,
directly or indirectly, at least 20% of Sands Bethworks Gaming
with the exception of the ownership interest of a person at the
time of the original licensure when the license fee was paid,
would be defined as a change of control under applicable
Pennsylvania gaming law and regulations. Upon a change of
control, the acquirer of the ownership interests would be
required to qualify for licensure and to pay a new license fee
of $50.0 million. The PaGCB retains the discretion to
eliminate the need for qualification and may reduce the license
fee upon a change of control. The PaGCB may provide up to
120 days for any person who is required to apply for a
license and who is found not qualified to completely divest the
persons ownership interest.
Any person who acquires beneficial ownership of 5% or more of
our voting securities will be required to apply to the PaGCB for
licensure, obtain licensure and remain licensed. Licensure
requires, among other things, that the applicant establish by
clear and convincing evidence the applicants good
character, honesty and integrity. Additionally, any trust that
holds 5% or more of our voting securities is required to be
licensed by the PaGCB and each individual who is a grantor,
trustee or beneficiary of the trust is also required to be
licensed by the PaGCB. Under certain circumstances, an
institutional investor as defined under the
regulations of the PaGCB, which acquires beneficial ownership of
10% or more, but less than 15% of our voting securities, may not
be required to be licensed by the PaGCB. In addition, any
beneficial owner of our voting securities, regardless of the
number of shares beneficially owned, may be required at the
discretion of the PaGCB to file an application for licensure.
In the event a security holder is required to be found qualified
and is not found qualified, the security holder may be required
by the PaGCB to divest of the interest at a price not exceeding
the cost of the interest.
Macao
Concession and Our Subconcession
In June 2002, the Macao government granted a concession to
operate casinos in Macao to Galaxy. Galaxy was one of three
entities to be granted a casino license in Macao. During
December 2002, we entered into a subconcession agreement with
Galaxy, which was approved by the Macao government. The
subconcession agreement allows us to develop and operate certain
casino projects in Macao, including Sands Macao and The Venetian
Macao, separately from Galaxy. Under the subconcession
agreement, we were obligated to develop and open The Venetian
Macao and a convention center by December 2007, which we did. We
are also obligated to operate casino games of chance or games of
other forms in Macao and are required to invest, or cause to be
invested, at least 4.4 billion patacas (approximately
$547.3 million at exchange rates in effect on
December 31, 2007) in various development projects in
Macao by June 2009, which have been fulfilled as of
December 31, 2007.
If the Galaxy concession is terminated for any reason, our
subconcession will remain in effect. The subconcession may be
terminated by agreement between ourselves and Galaxy. Galaxy is
not entitled to terminate the subconcession unilaterally.
However, the Macao government, with the consent of Galaxy, may
terminate the subconcession under certain circumstances. Galaxy
will develop hotel and casino projects separately from us.
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We are subject to licensing and control under applicable Macao
law and are required to be licensed by the Macao gaming
authorities to operate a casino. We must pay periodic fees and
taxes, and our gaming license is not transferable. We must
periodically submit detailed financial and operating reports to
the Macao gaming authorities and furnish any other information
that the Macao gaming authorities may require. No person may
acquire any rights over the shares or assets of Venetian Macau
Limited and its subsidiaries (VML) without first
obtaining the approval of the Macao gaming authorities.
Similarly, no person may enter into possession of its premises
or operate them through a management agreement or any other
contract or through step in rights without first obtaining the
approval of, and receiving a license from, the Macao gaming
authorities. The transfer or creation of encumbrances over
ownership of shares representing the share capital of VML or
other rights relating to such shares, and any act involving the
granting of voting rights or other stockholders rights to
persons other than the original owners, would require the
approval of the Macao government and the subsequent report of
such acts and transactions to the Macao gaming authorities.
Our subconcession agreement requires approval of the Macao
government for transfers of shares, or of any rights over such
shares, in any of the direct or indirect stockholders in VML,
including us, provided that such shares or rights are, directly
or indirectly, equivalent to an amount that is equal or higher
than 5% of the share capital in VML. This approval requirement
will not apply, however, if the securities are listed and
tradable on a stock market. In addition, this agreement requires
that the Macao government be given notice of the creation of any
encumbrance or the grant of voting rights or other
stockholders rights to persons other than the original
owners on shares in any of the direct or indirect stockholders
in VML, including us, provided that such shares or rights are
indirectly equivalent to an amount that is equal or higher than
5% of the share capital in VML. This notice requirement will not
apply, however, to securities listed and tradable on a stock
exchange.
The Macao gaming authorities may investigate any individual who
has a material relationship to, or material involvement with, us
to determine whether our suitability
and/or
financial capacity is affected by this individual. Our
shareholders with 5% or more of the share capital, directors and
some of our key employees must apply for and undergo a finding
of suitability process and maintain due qualification during the
subconcession term, and accept the persistent and long-term
inspection and supervision exercised by the Macao government.
VML is required to immediately notify the Macao government
should VML become aware of any fact that may be material to the
appropriate qualification of any shareholder who owns 5% of the
share capital, or any director or key employee. Changes in
licensed positions must be reported to the Macao gaming
authorities, and in addition to their authority to deny an
application for a finding of suitability or licensure, the Macao
gaming authorities have jurisdiction to disapprove a change in
corporate position. If the Macao gaming authorities were to find
one of our officers, directors or key employees unsuitable for
licensing, we would have to sever all relationships with that
person. In addition, the Macao gaming authorities may require us
to terminate the employment of any person who refuses to file
appropriate applications.
Any person who fails or refuses to apply for a finding of
suitability after being ordered to do so by the Macao gaming
authorities may be found unsuitable. Any stockholder found
unsuitable and who holds, directly or indirectly, any beneficial
ownership of the common stock of a registered corporation beyond
the period of time prescribed by the Macao gaming authorities
may lose their rights to the shares. We will be subject to
disciplinary action if, after we receive notice that a person is
unsuitable to be a stockholder or to have any other relationship
with us, we:
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pay that person any dividend or interest upon its shares;
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allow that person to exercise, directly or indirectly, any
voting right conferred through shares held by that person;
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pay remuneration in any form to that person for services
rendered or otherwise; or
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fail to pursue all lawful efforts to require that unsuitable
person to relinquish its shares.
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The Macao gaming authorities also have the authority to approve
all persons owning or controlling the stock of any corporation
holding a gaming license.
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The Macao gaming authorities also require prior approval for the
creation of liens and encumbrances over VMLs assets and
restrictions on stock in connection with any financing.
The Macao gaming authorities must give their prior approval to
changes in control of VML through a merger, consolidation, stock
or asset acquisition, management or consulting agreement or any
act or conduct by any person whereby he or she obtains control.
Entities seeking to acquire control of a registered corporation
must satisfy the Macao gaming authorities concerning a variety
of stringent standards prior to assuming control. The Macao
Gaming Commission may also require controlling stockholders,
officers, directors and other persons having a material
relationship or involvement with the entity proposing to acquire
control, to be investigated and licensed as part of the approval
process of the transaction.
The Macao gaming authorities may consider that some management
opposition to corporate acquisitions, repurchases of voting
securities and corporate defense tactics affecting Macao gaming
licensees, and registered corporations that are affiliated with
those operations, may be injurious to stable and productive
corporate gaming.
The Macao gaming authorities also have the power to supervise
gaming licensees in order to:
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assure the financial stability of corporate gaming operators and
their affiliates;
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preserve the beneficial aspects of conducting business in the
corporate form; and
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promote a neutral environment for the orderly governance of
corporate affairs.
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The subconcession agreement requires the Macao gaming
authorities prior approval of any recapitalization plan
proposed by VMLs board of directors. The Chief Executive
of Macao could also require VML to increase its share capital if
he deemed it necessary.
The Macao government also has the right, after consultation with
Galaxy, to unilaterally terminate the subconcession agreement at
any time upon the occurrence of specified events of default,
including:
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the operation of gaming without permission or operation of
business which does not fall within the business scope of the
subconcession;
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the suspension of operations of our gaming business in Macao
without reasonable grounds for more than seven consecutive days
or more than fourteen non-consecutive days within one calendar
year;
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the unauthorized transfer of all or part of our gaming
operations in Macao;
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the failure to pay taxes, premiums, levies or other amounts
payable to the Macao government;
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the failure to resume operations following the temporary
assumption of operations by the Macao government;
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the repeated failure to comply with decisions of the Macao
government;
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the failure to provide or supplement the guarantee deposit or
the guarantees specified in the subconcession within the
prescribed period;
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the bankruptcy or insolvency of VML;
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fraudulent activity by VML;
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serious and repeated violation by VML of the applicable rules
for carrying out casino games of chance or games of other forms
or the operation of casino games of chance or games of other
forms;
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the grant to any other person of any managing power over
VML; or
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the failure by a controlling shareholder in VML to dispose of
its interest in VML following notice from the gaming authorities
of another jurisdiction in which such controlling shareholder is
licensed to operate casino games of chance to the effect that
such controlling shareholder can no longer own shares in VML.
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In addition, we must comply with various covenants and other
provisions under the subconcession, including obligations to:
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ensure the proper operation and conduct of casino games;
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employ people with appropriate qualifications;
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operate and conduct casino games of chance in a fair and honest
manner without the influence of criminal activities;
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safeguard and ensure Macaos interests in tax revenue from
the operation of casinos and other gaming areas; and
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maintain a specified level of insurance.
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The subconcession agreement also allows the Macao government to
request various changes in the plans and specifications of our
Macao properties and to make various other decisions and
determinations that may be binding on us. For example, the Macao
government has the right to require that we contribute
additional capital to our Macao subsidiaries or that we provide
certain deposits or other guarantees of performance in any
amount determined by the Macao government to be necessary. VML
is limited in its ability to raise additional capital by the
need to first obtain the approval of the Macao gaming and
governmental authorities before raising certain debt or equity.
If our subconcession is terminated, all of our casino gaming
operations and related equipment in Macao would be automatically
transferred to the Macao government without compensation to us
and we would cease to generate any revenues from these
operations. In many of these instances, the subconcession
agreement does not provide a specific cure period within which
any such events may be cured and, instead, we would rely on
consultations and negotiations with the Macao government to give
us an opportunity to remedy any such default.
The Sands Macao and The Venetian Macao are being operated under
our subconcession agreement. This subconcession excludes the
following gaming activities: mutual bets, lotteries, raffles,
interactive gaming and games of chance or other gaming, betting
or gambling activities on ships or planes. Our subconcession is
exclusively governed by Macao law. We are subject to the
exclusive jurisdiction of the courts of Macao in case of any
dispute or conflict relating to our subconcession.
Our subconcession agreement expires on June 26, 2022.
Unless our subconcession is extended, on that date, all our
casino operations and related equipment in Macao will
automatically be transferred to the Macao government without
compensation to us and we will cease to generate any revenues
from these operations. Beginning on December 26, 2017, the
Macao government may redeem our subconcession by giving us at
least one year prior notice and by paying us fair compensation
or indemnity. The amount of such compensation or indemnity will
be determined based on the amount of revenue generated during
the tax year prior to the redemption. See Risk
Factors Risks Associated with Our International
Operations We will stop generating any revenues from
our Macao gaming operations if we cannot secure an extension of
our subconcession in 2022 or if the Macao government exercises
its redemption right.
Under the subconcession, we are obligated to pay to the Macao
government an annual premium with a fixed portion and a variable
portion based on the number and type of gaming tables employed
and gaming machines operated by us. The fixed portion of the
premium is equal to 30.0 million patacas (approximately
$3.7 million at exchange rates in effect on
December 31, 2007). The variable portion is equal to
300,000 patacas per gaming table reserved exclusively for
certain kinds of games or players, 150,000 patacas per gaming
table not so reserved and 1,000 patacas per electrical or
mechanical gaming machine, including slot machines
(approximately $37,314, $18,657 and $124, respectively, at
exchange rates in effect on December 31, 2007), subject to
a minimum of 45.0 million patacas (or $5.6 million at
exchange rates in effect on December 31, 2007). We also
have to pay a special gaming tax of 35% of gross gaming revenues
and applicable withholding taxes. We must also contribute 4% of
our gross gaming revenue to utilities designated by the Macao
government, a portion of which must be used for promotion of
tourism in Macao. This percentage will be subject to change in
2010.
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Currently, the gaming tax in Macao is calculated as a percentage
of gross gaming revenue. However, unlike Nevada, gross gaming
revenue does not include deductions for credit losses. As a
result, if we extend credit to our customers in Macao and are
unable to collect on the related receivables from them, we have
to pay taxes on our winnings from these customers even though we
were unable to collect on the related receivables from them. We
are currently offering credit to customers in Macao on a very
limited basis. If the laws are not changed, our business in
Macao may not be able to realize the full benefits of extending
credit to our customers. Although there are proposals to revise
the gaming tax laws in Macao, there can be no assurance that the
laws will be changed.
We have received an exemption from Macaos corporate income
tax on profits generated by the operation of casino games of
chance for the five-year period ending December 31, 2008.
See Risk Factors Risks Associated with Our
International Operations We are currently not
required to pay corporate income taxes on our casino gaming
operations in Macao. This tax exemption expires at the end of
2008.
Development
Agreement with Singapore Tourism Board
On August 23, 2006, MBS, a wholly-owned subsidiary of the
Company, entered into the Development Agreement with the STB to
design, develop, construct and operate an integrated resort in
Singapore called the Marina Bay Sands. The Development Agreement
includes a concession for MBS to own and operate a casino within
the integrated resort. In addition to the casino, the integrated
resort will include, among other amenities, a hotel, a retail
complex, a convention center and meeting room complex, theaters,
restaurants and an art/science museum. MBS is one of two
companies that has been awarded a concession to operate a casino
in Singapore. Under the Development Agreement, the STB has
provided a ten-year exclusive period during which only two
licensees will be granted the right to operate a casino in
Singapore. In connection with entering into the Development
Agreement, MBS entered into a
60-year
lease with the STB for the parcels underlying the proposed site
and entered into an agreement with the Land Transport Authority
of Singapore for the provision of necessary infrastructure for
rapid transit systems and roadworks within
and/or
outside the proposed site.
The casino concession provided under the Development Agreement
is for 30 years commencing from the date the Development
Agreement was entered into. In order to renew the casino
concession, MBS must give notice to the STB and other relevant
authorities in Singapore at least five years before its
expiration in August 2036. However, the Singapore government may
terminate the casino concession prior to its expiration in order
to serve the best interests of the public, in which event fair
compensation will be paid to MBS.
Under the Development Agreement, MBS is required to be licensed
by the relevant gaming authorities in Singapore before it can
commence operating the casino under the casino concession. In
connection with issuing the gaming license, the relevant gaming
authorities will look into various factors relating to MBS,
including, but not limited to, (i) its reputation,
character, honesty and integrity, (ii) whether or not it is
sound and stable from a financial point of view,
(iii) confirming that it has a satisfactory corporate
ownership structure, (iv) the adequacy of its financial
resources in order to ensure the financial viability of the
proposed casino operations, (v) whether it has engaged and
employed persons who have sufficient experience managing and
operating a casino and that are suitable to act in such
capacities, (vi) its ability to sufficiently establish and
maintain a successful casino operation, (vii) confirming
that there are no business associations with any person, body or
association who is not of good repute, has a disregard for
character, honesty and integrity, or has undesirable or
unsatisfactory financial resources, (viii) determining
whether the persons associated or connected with the ownership,
administration or management of the casino operations or
business are suitable persons to act in such capacity and
(ix) the development and operation plan for the casino.
The Development Agreement contains, among other things,
restrictions limiting the use of the leased land to the
development and operation of the project, requirements that MBS
obtain prior approval from the STB in order to subdivide the
hotel and retail components of the project and prohibitions on
any such subdivision during an exclusivity period of
approximately eleven years from the signing of the Development
Agreement. The Development Agreement also contains provisions
relating to the construction of the project and associated
deadlines for substantial completion and opening; the location
of the casino within the project site and casino licensing
issues; insurance requirements; and limitations on MBS
ability to assign the lease or sub-lease any portion of the land
during the exclusivity period. In addition, the Development
Agreement contains events of default, including, among
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other things, the failure of MBS to perform its obligations
under the Development Agreement and events of bankruptcy or
dissolution.
The Development Agreement requires MBS to invest at least
3.85 billion Singapore dollars (SGD,
approximately $2.66 billion at exchange rates in effect as
of December 31, 2007) in the integrated resort, which
investment is to be allocated in specified amounts among the
casino, hotel, food and beverage outlets, retail areas, meeting,
convention and exhibition facilities, key attractions,
entertainment venues and public areas. This minimum investment
requirement must be satisfied in full upon the earlier of eight
years from the date of the Development Agreement or three years
from the issuance of the casino license. However, the casino
license will not be granted by the relevant authorities in
Singapore until at least 50% of the required investment has been
made and at least 50% of the construction of the integrated
resort is complete. MBS must complete the construction of the
Marina Bay Sands by no later than August 22, 2014. MBS
currently plans to complete and open substantially all of the
integrated resort, including the casino, at the same time in
late 2009. Under the terms of the Development Agreement, MBS has
agreed to design, develop and construct the integrated resort in
accordance with the plans set forth in its response to the
request for proposal which was ultimately accepted by the STB.
Any changes in the overall design and the components of the
integrated resort from what was contained in the response to the
request for proposal will require the prior approval of the
Singapore government.
Under the proposed casino regulations, employees who exercise a
significant influence over, or with respect to, the operations
in the casino will need to be licensed by the relevant
authorities in Singapore. MBS will also have to comply with
proposed regulations concerning the location, floor plans and
layout of the casino; internal controls with respect to casino
operations; relationships with and permitted payments to junket
operators; security; casino access by Singaporeans and
non-Singaporeans; and those relating to social controls and
maintaining law and order. These regulations have not been
published, but MBS is actively engaged in a regular dialogue
with the relevant authorities in Singapore in connection with
the drafting, adoption and compliance with the proposed casino
regulations.
Under the Development Agreement, MBS will have to pay an annual
license fee that will cover the costs of implementing and
enforcing the proposed regulations. This is expected to be
between SGD 12.5 million to SGD 15.0 million
(approximately $8.6 million and $10.4 million,
respectively, at exchange rates in effect as of
December 31, 2007) and will be reviewed every three
years. The Company must continue to be the single largest entity
with a direct or indirect controlling interest in MBS for the
first ten years from the date of the Development Agreement, and
its interest must be at least 20% thereafter. The Company is
currently a 100% indirect controlling shareholder of MBS.
There will be a casino tax of 15% imposed on the gross gaming
revenue from the casino, except in the case of gaming by premium
VIP players, in which case a casino tax of 5% will be imposed on
the gross gaming revenue generated from such VIP players. The
tax rates will not be changed for at least 15 years. The
casino tax will be deductible against the corporate income tax
payable by MBS to the Singapore tax authorities. The provision
for bad debts arising from the extension of credit granted to
gaming patrons will not be deductible against gross gaming
revenue when calculating the casino tax but will be deductible
for the purposes of calculating corporate income tax (subject to
the prevailing law). MBS will not be permitted to extend credit
in connection with gaming at the casino except to premium
players and non-Singapore residents.
The key constraint imposed on the casino under the Development
Agreement is the total size of the gaming area, which must not
be more than 15,000 square meters (approximately
161,000 square feet). The following will not be counted
towards the gaming area: back of house facilities, reception,
toilets, food and beverage areas, retail shops, stairs,
escalators and lift lobbies leading to the gaming area,
aesthetic and decorative displays, performance areas and major
aisles. The casino located within the Marina Bay Sands may not
have more than 2,500 gaming machines, but there is no limit on
the number of tables for casino games permitted in the casino.
Employees
We directly employ approximately 28,000 employees worldwide
and hire temporary employees on an as-needed basis. The
employees at The Venetian and The Palazzo are not covered by
collective bargaining agreements.
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We are not aware of any union activity at our Macao operations.
We believe that we have good relations with our employees.
The unions currently on the Las Vegas Strip include Local 226
Culinary, Workers Union of the Hotel Employees and Restaurant
Employees International Union, the Operating Engineers Union and
the Teamsters Union. Prior to and since the opening of The
Venetian, Local 226 has requested that we recognize it as the
bargaining agent for employees of The Venetian. We have declined
to do so, believing that current and future employees are
entitled to select their own bargaining agent, if any. In the
past, when other hotel/casino operators have taken a similar
position, Local 226 has engaged in certain confrontational and
obstructive tactics, including contacting potential customers,
tenants, and investors, objecting to various administrative
approvals and picketing. Local 226 has engaged in these types of
tactics with respect to The Venetian and may continue to do so.
Although we believe we will be able to operate despite such
dispute, no assurance can be given that we will be able to do so
or that the failure to do so would not result in a material
adverse effect on our financial condition, results of operations
or cash flows. Although no assurances can be given, if employees
decide to be represented by labor unions, management does not
believe that such representation would have a material effect on
our financial condition, results of operations or cash flows.
Certain culinary personnel are hired from time to time for trade
shows and conventions at The Sands Expo Center and are covered
under a collective bargaining agreement between Local 226 and
The Sands Expo Center. This collective bargaining agreement
expired in December 2000. As a result, The Sands Expo Center is
operating under the terms of the expired bargaining agreement
with respect to these employees.
Intellectual
Property
Our principal intellectual property consists of, among others,
the Sands, Venetian, Palazzo
and Paiza trademarks, all of which have been
registered in various classes in the United States. In addition,
we have also applied to register numerous other trademarks in
connection with our properties and development projects in the
U.S., Macao and Singapore. We have also registered
and/or
applied to register many of our trademarks in various foreign
jurisdictions. These trademarks are brand names under which we
market our properties and services. We consider these brand
names to be important to our business since they have the effect
of developing brand identification. We believe that the name
recognition, reputation and image that we have developed attract
customers to our facilities. Once granted, our trademark
registrations are of perpetual duration so long as they are
periodically renewed. It is our intent to maintain our trademark
registrations.
Agreements
Relating to the Malls
The
Grand Canal Shops
On April 12, 2004, we entered into an agreement with GGP to
sell The Grand Canal Shops and lease to GGP certain restaurant
and other retail space at the casino level of The Venetian for
approximately $766.0 million. We completed the sale of The
Grand Canal Shops on May 17, 2004. On the same date, we
leased to GGP 19 spaces on the casino level of The Venetian
currently occupied by various retail and restaurant tenants for
89 years with annual rent of one dollar per year, and GGP
assumed our interest as landlord under the various space leases
associated with these 19 spaces. In addition, on the same date,
we agreed with GGP to:
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continue to be obligated to fulfill certain lease termination
and asset purchase agreements;
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lease the Blue Man Group Theater space located within The Grand
Canal Shops from GGP for a period of 25 years, subject to
an additional 50 years of extension options, with initial
fixed minimum rent of $3.3 million per year;
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lease the gondola retail store and the canal space located
within The Grand Canal Shops from GGP for a period of
25 years, subject to an additional 50 years of
extension options, with initial fixed minimum rent of
$3.5 million per year; and
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lease certain office space from GGP for a period of
10 years, subject to an additional 65 years of
extension options, with initial annual rent of $0.9 million.
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The lease payments relating to the Blue Man Group Theater, the
canal space within The Grand Canal Shops and the office space
from GGP are subject to automatic increases of 5% in the sixth
lease year and each subsequent fifth lease year.
The
Shoppes at The Palazzo
The Shoppes at The Palazzo opened on January 18, 2008, with
some tenants not yet open. We are selling The Shoppes at The
Palazzo to GGP pursuant to a purchase and sale agreement dated
as of April 12, 2004, as amended, regarding the development
and sale of The Shoppes at The Palazzo (the Amended
Agreement). The total purchase price to be paid by GGP for
The Shoppes at The Palazzo is determined by taking The Shoppes
at The Palazzos net operating income, as defined in the
Amended Agreement, for months 19 through 30 of its operations
(assuming that the rent and other periodic payments due from all
tenants in month 30 was actually due in each of months 19
through 30) divided by a capitalization rate. The
capitalization rate is 0.06 for every dollar of net operating
income up to $38.0 million and 0.08 for every dollar of net
operating income above $38.0 million. On the closing date
of the sale of The Shoppes at The Palazzo to GGP, which we
expect to be on February 29, 2008, or shortly thereafter,
GGP will be obligated to make an initial purchase price payment
based on projected net operating income for the first
12 months of operations (but in no event less than
$250.0 million and only taking into account tenants open
for business or paying rent as of the closing date). We are in
the process of finalizing the amount of the initial payment;
however, we expect it to range between $285.0 million and
$295.0 million. Pursuant to the Amended Agreement, at the
fourth, eighth, 12th, 18th, and 24th month after closing,
the required purchase price will be adjusted (up or down, but
will never be less than $250.0 million) based on projected
net operating income for the upcoming 12 months. Subject to
adjustments for certain audit and other issues, the final
adjustment to the purchase price will be made on the
30-month
anniversary of the closing date and will be based on the formula
described above. For all purchase price and purchase price
adjustment calculations, net operating income will
be calculated by using the accrual method of
accounting and the final purchase price adjustment will be
calculated by applying the base rent and other periodic payments
payable by all tenants in the 30th month to the entire
12-month
period, as defined. Based on our continuing relationship with
GGP related to its ownership of The Grand Canal Shops, knowledge
of local market conditions and discussions with tenants,
management believes the total purchase price to be paid by GGP
will be in excess of $700.0 million.
Cooperation
Agreement
Our business plan calls for each of The Venetian, The Palazzo,
The Sands Expo Center, The Congress Center, The Grand Canal
Shops and The Shoppes at The Palazzo, though separately owned,
to be integrally related components of one facility (the
Integrated Resort). In establishing the terms for
the integrated operation of these components, the cooperation
agreement sets forth agreements regarding, among other things,
encroachments, easements, operating standards, maintenance
requirements, insurance requirements, casualty and condemnation,
joint marketing, and the sharing of some facilities and related
costs. Subject to applicable law, the cooperation agreement
binds all current and future owners of all portions of the
Integrated Resort, and has priority over the liens securing Las
Vegas Sands, LLCs senior secured credit facility and any
future liens that may secure any indebtedness of the owners of
any portion of the Integrated Resort. Accordingly, subject to
applicable law, the obligations in the cooperation agreement
will run with the land if any of the components
change hands.
Operating Covenants. The cooperation agreement
regulates certain aspects of the operation of The Sands Expo
Center, The Grand Canal Shops, The Venetian, The Palazzo and The
Shoppes at The Palazzo. For example, under the cooperation
agreement, we are obligated to operate The Venetian continuously
and to use it exclusively in accordance with standards of
first-class Las Vegas Boulevard-style hotels and casinos.
We are also obligated to operate and to use The Sands Expo
Center exclusively in accordance with standards of first-class
convention, trade show and exposition centers. The owners of The
Grand Canal Shops and The Shoppes at The Palazzo are obligated
to operate their properties exclusively in accordance with
standards of first-class restaurant and retail complexes. For so
long as The Venetian is operated in accordance with a
Venetian theme, the owner of The Grand Canal Shops
must operate The Grand Canal Shops in accordance with the
overall Venetian theme.
Maintenance and Repair. We must maintain The
Venetian and The Palazzo as well as some common areas and common
facilities that are to be shared with The Grand Canal Shops and
The Shoppes at The Palazzo. The cost of maintenance of all
shared common areas and common facilities is to be shared
between us and the owners of The Grand Canal Shops and The
Shoppes at The Palazzo. We must also maintain, repair, and
restore The Sands Expo
20
Center and certain common areas and common facilities located in
The Sands Expo Center. The owners of The Grand Canal Shops and
The Shoppes at The Palazzo must maintain, repair, and restore
The Grand Canal Shops and The Shoppes at The Palazzo and certain
common areas and common facilities located within.
Insurance. We and the owners of The Grand
Canal Shops and The Shoppes at The Palazzo must maintain minimum
types and levels of insurance, including property damage,
general liability and business interruption insurance. The
cooperation agreement establishes an insurance trustee to assist
in the implementation of the insurance requirements.
Parking. The cooperation agreement also
addresses issues relating to the use of Intergrated
Resorts parking facilities and easements for access. The
Venetian, The Palazzo, The Grand Canal Shops, The Shoppes at The
Palazzo and The Sands Expo Center may use the parking spaces in
the Integrated Resorts parking facilities on a first
come, first served basis, as long as each property retains
use of sufficient spaces to comply with specified minimum
parking standards. This means that each property shall have the
right to use, at a minimum, sufficient spaces to comply with
applicable laws and to conduct its business as permitted under
the cooperation agreement. The Integrated Resorts parking
facilities are owned, maintained, and operated by us, with the
operating costs proportionately allocated among
and/or
billed to the owners of the components of the Integrated Resort.
Each party to the cooperation agreement has granted to the
others non-exclusive easements and rights to use the roadways
and walkways on each others properties for vehicular and
pedestrian access to the parking garages.
Utility Easement. All property owners have
also granted each other all appropriate and necessary easement
rights to utility lines servicing the Integrated Resort.
Consents, Approvals and Disputes. If any
current or future party to the cooperation agreement has a
consent or approval right or has discretion to act or refrain
from acting, the consent or approval of such party will only be
granted and action will be taken or not taken only if a
commercially reasonable owner would do so and such consent,
approval, action or inaction would not have a material adverse
effect on the property owned by such property owner. The
cooperation agreement provides for the appointment of an
independent expert to resolve some disputes between the parties,
as well as for expedited arbitration for other disputes.
Sale of The Grand Canal Shops or The Shoppes at The Palazzo
by GGP. We have a right of first offer in
connection with any proposed sale of The Grand Canal Shops or
The Shoppes at The Palazzo by GGP. We also have the right to
receive notice of any default by GGP sent by any lender holding
a mortgage on The Grand Canal Shops or The Shoppes at The
Palazzo, if any, and the right to cure such default subject to
our meeting certain net worth tests.
You should carefully consider the risk factors set forth below
as well as the other information contained in this Annual Report
on
Form 10-K
in connection with evaluating the Company. Additional risks and
uncertainties not currently known to us or that we currently
deem to be immaterial may also materially and adversely effect
our business, financial condition, results of operations or cash
flows. Certain statements in Risk Factors are
forward-looking statements. See Item 7
Managements Discussion and Analysis of Financial Condition
and Results of Operations Special Note Regarding
Forward-Looking Statements.
Risks
Related to Our Business
Our
business is particularly sensitive to reductions in
discretionary consumer spending as a result of downturns in the
economy.
Consumer demand for hotel/casino resorts, trade shows and
conventions and for the type of luxury amenities we offer may be
particularly sensitive to downturns in the economy. Changes in
consumer preferences or discretionary consumer spending brought
about by factors such as fears of war, future acts of terrorism,
general economic conditions, disposable consumer income, fears
of recession and changes in consumer confidence in the economy
could reduce customer demand for the luxury products and leisure
services we offer, thus imposing practical limits on pricing and
harming our operations.
21
Our
business is sensitive to the willingness of our customers to
travel. Acts of terrorism, regional political events and
developments in the conflicts in certain countries could cause
severe disruptions in air travel that reduce the number of
visitors to our facilities, resulting in a material adverse
effect on our financial condition, results of operations or cash
flows.
We are dependent on the willingness of our customers to travel.
A substantial number of our customers for The Venetian and The
Palazzo use air travel to come to Las Vegas. On
September 11, 2001, acts of terrorism occurred in New York
City, Pennsylvania and Washington, D.C. As a result of
these terrorist acts, domestic and international travel was
severely disrupted, which resulted in a decrease in customer
visits to Las Vegas, including our properties. Developments in
the conflicts in certain countries, and regional issues such as
tension between the Peoples Republic of China and Taiwan
and issues relating to North Korea could have a similar effect
on domestic and international travel. Most of our customers
travel to reach our Las Vegas and Macao properties. Only a small
amount of our business is generated by local residents.
Management cannot predict the extent to which disruptions in air
or other forms of travel as a result of any further terrorist
act, outbreak of hostilities or escalation of war would
adversely effect our financial condition, results of operations
or cash flows.
An
outbreak of highly infectious disease could adversely affect the
number of visitors to our facilities and disrupt our operations,
resulting in a material adverse effect on our financial
condition, results of operations or cash flows.
In 2003, Taiwan, China, Hong Kong, Singapore and certain other
regions experienced an outbreak of a highly contagious form of
atypical pneumonia now known as severe acute respiratory
syndrome (SARS). As a result of the outbreak, there
was a decrease in travel to and from, and economic activity in,
affected regions, including Macao. In addition, there have been
fears concerning the spread of an avian flu in Asia.
Potential future outbreaks of SARS, avian flu or other highly
infectious diseases may adversely affect the number of visitors
to our operating properties and our other properties we are
currently developing. Furthermore, an outbreak might disrupt our
ability to adequately staff our business and could generally
disrupt our operations. If any of our customers or employees are
suspected of having contracted certain highly contagious
diseases, we may be required to quarantine these customers or
employees or the affected areas of our facilities and
temporarily suspend part or all of our operations at affected
facilities. Any new outbreak of such a highly infectious disease
could have a material adverse effect on our financial condition,
results of operations or cash flows.
There
are significant risks associated with our planned construction
projects, which could adversely effect our financial condition,
results of operations or cash flows from these planned
facilities.
Our ongoing and future construction projects, such as our Cotai
Strip projects, Marina Bay Sands, Sands Bethworks and the Las
Vegas condominiums, entail significant risks. Construction
activity requires us to obtain qualified contractors and
subcontractors, the availability of which may be uncertain.
Construction projects are subject to cost overruns and delays
caused by events outside of our control or, in certain cases,
our contractors control, such as shortages of materials or
skilled labor, unforeseen engineering, environmental
and/or
geological problems, work stoppages, weather interference,
unanticipated cost increases and unavailability of construction
materials or equipment. Construction, equipment or staffing
problems or difficulties in obtaining any of the requisite
materials, licenses, permits, allocations and authorizations
from governmental or regulatory authorities could increase the
total cost, delay, jeopardize, prevent the construction or
opening of our projects, or otherwise affect the design and
features. In addition, the number of ongoing projects and their
locations throughout the world present unique challenges and
risks to our management structure. If our management is unable
to successfully manage our worldwide construction projects, it
could have an adverse effect on our financial condition, results
of operations or cash flows.
We have not entered into a fixed-price or guaranteed maximum
price contract with a single construction manager or general
contractor for the construction of our projects. As a result, we
rely heavily on our in-house development and construction team
to manage construction costs and coordinate the work of the
various trade contractors. The lack of any fixed-price contract
with a construction manager or general contractor will put more
of the risk of cost-overruns on us. If we are unable to manage
costs or we are unable to raise additional capital required,
22
we may not be able to open or complete these projects, which may
have an adverse impact on our business and prospects for growth.
The anticipated costs and completion dates for our projects are
based on budgets, designs, development and construction
documents and schedule estimates that we have prepared with the
assistance of architects and other construction development
consultants and that are subject to change as the design,
development and construction documents are finalized and more
actual construction work is performed. A failure to complete our
projects on budget or on schedule may adversely effect our
financial condition, results of operations or cash flows.
The failure to obtain the necessary financing, or satisfy these
funding conditions, could adversely effect our ability to
construct our development projects.
Because
we are currently dependent upon our properties in two markets
for all of our cash flow, we will be subject to greater risks
than a gaming company with more operating properties or that
operates in more markets.
We currently do not have material assets or operations other
than our Las Vegas and Macao properties. As a result, we will be
entirely dependent upon these properties for all of our cash
flow until we complete the development of our Marina Bay Sands,
Sands Bethworks and remaining Cotai Strip projects.
Given that our operations are currently conducted at properties
in Las Vegas and Macao and that a large portion of our planned
future development is in Macao and Singapore, we will be subject
to greater degrees of risk than a gaming company with more
operating properties in more markets. The risks to which we will
have a greater degree of exposure include the following:
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local economic and competitive conditions;
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inaccessibility due to inclement weather, road construction or
closure of primary access routes;
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decline in air passenger traffic due to higher ticket costs or
fears concerning air travel;
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changes in local and state governmental laws and regulations,
including gaming laws and regulations;
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natural and other disasters, including the risk of typhoons in
the South China region or outbreaks of infectious diseases;
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an increase in the cost of electrical power for our Las Vegas
properties as a result of, among other things, power shortages
in California or other western states with which Nevada shares a
single regional power grid;
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changes in the availability of water; and
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a decline in the number of visitors to Las Vegas or Macao.
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Our
substantial debt could impair our financial condition, results
of operations or cash flows. We may need to incur additional
debt to finance our planned construction projects.
We are highly leveraged and have substantial debt service
obligations. As of December 31, 2007, we had approximately
$7.57 billion of long-term debt outstanding. This
substantial indebtedness could have important consequences to
us. For example, it could:
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make it more difficult for us to satisfy our debt obligations;
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increase our vulnerability to general adverse economic and
industry conditions;
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impair our ability to obtain additional financing in the future
for working capital needs, capital expenditures, development
projects, acquisitions or general corporate purposes;
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require us to dedicate a significant portion of our cash flow
from operations to the payment of principal and interest on our
debt, which would reduce the funds available for our operations
and development projects;
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limit our flexibility in planning for, or reacting to, changes
in the business and the industry in which we operate;
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place us at a competitive disadvantage compared to our
competitors that have less debt; and
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subject us to higher interest expense in the event of increases
in interest rates to the extent a portion of our debt is and
will continue to be at variable rates of interest.
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We expect that all of our current projects will be funded with
additional borrowings from our existing credit facilities, with
the exception of the remaining Cotai Strip developments. We have
a $3.3 billion credit facility for the partial financing of
the Sands Macao expansion, The Venetian Macao, The Four Seasons
Macao and certain of our other Cotai Strip developments. A
significant portion of the Sands Macaos cash flows was
used to finance the construction of The Venetian Macao. This
credit facility will not cover all of the costs of our remaining
Cotai Strip developments. We expect that the construction of the
Cotai Strip developments will require significant additional
debt and/or
equity financings. We cannot assure you that we will obtain all
the financing required for the construction and opening of our
remaining Cotai Strip developments.
The
terms of our debt instruments may restrict our current and
future operations, particularly our ability to finance
additional growth, respond to changes or take some actions that
may otherwise be in our best interests.
Our current debt instruments contain, and any future debt
instruments likely will contain, a number of restrictive
covenants that impose significant operating and financial
restrictions on us, including restrictions on our ability to:
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incur additional debt, including providing guarantees or credit
support;
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incur liens securing indebtedness or other obligations;
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dispose of assets;
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make certain acquisitions;
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pay dividends or make distributions and make other restricted
payments, such as purchasing equity interests, repurchasing
junior indebtedness or making investments in third parties;
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enter into sale and leaseback transactions;
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engage in any new businesses;
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issue preferred stock; and
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enter into transactions with our stockholders and our affiliates.
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In addition, our U.S., Macao and Singapore credit agreements
contain various financial covenants. See
Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 8 Long-Term
Debt for further description of these covenants. Our
future debt agreements could contain financial or other
covenants more restrictive than those applicable under our
existing instruments.
Our
insurance coverage may not be adequate to cover all possible
losses that our properties could suffer. In addition, our
insurance costs may increase and we may not be able to obtain
the same insurance coverage in the future.
Although we have all-risk property insurance for our operating
properties covering damage caused by a casualty loss (such as
fire, natural disasters, acts of war or terrorism), each policy
has certain exclusions. In addition, our property insurance
coverage is in an amount that may be significantly less than the
expected replacement cost of rebuilding the facilities if there
was a total loss. Our level of insurance coverage also may not
be adequate to cover all losses in the event of a major
casualty. In addition, certain casualty events, such as labor
strikes, nuclear events, acts of war, loss of income due to
cancellation of room reservations or conventions due to fear of
terrorism, deterioration or corrosion, insect or animal damage
and pollution, might not be covered at all under our policies.
Therefore, certain acts could expose us to substantial uninsured
losses.
24
We also have builders risk insurance for many of our
projects in Las Vegas, Pennsylvania, Macao and Singapore.
Builders risk insurance provides coverage for projects
during their construction for damage caused by a casualty loss.
In general, our builders risk coverage is subject to the
same exclusions, risks and deficiencies as those described above
for our all-risk property coverage. Our level of builders
risk insurance coverage may not be adequate to cover all losses
in the event of a major casualty.
In addition, although we currently have insurance coverage for
occurrences of terrorist acts with respect to our properties and
for certain losses that could result from these acts, our
terrorism coverage is subject to the same risks and deficiencies
as those described above for our all-risk property coverage. The
lack of sufficient insurance for these types of acts could
expose us to substantial losses in the event that any damages
occur, directly or indirectly, as a result of terrorist attacks
or otherwise, which could have a significant negative impact on
our operations.
In addition to the damage caused to our properties by a casualty
loss, we may suffer business disruption as a result of these
events or be subject to claims by third parties injured or
harmed. While we carry business interruption insurance and
general liability insurance, this insurance may not be adequate
to cover all losses in any such event.
We renew our insurance policies (other than our builders
risk insurance) on an annual basis. The cost of coverage may
become so high that we may need to further reduce our policy
limits or agree to certain exclusions from our coverage. Among
other factors, it is possible that regional political tensions,
homeland security concerns, other catastrophic events or any
change in government legislation governing insurance coverage
for acts of terrorism could materially adversely effect
available insurance coverage and result in increased premiums on
available coverage (which may cause us to elect to reduce our
policy limits), additional exclusions from coverage or higher
deductibles. Among other potential future adverse changes, in
the future we may elect to not, or may not be able to, obtain
any coverage for losses due to acts of terrorism.
Our debt instruments and other material agreements require us to
maintain a certain minimum level of insurance. Failure to
satisfy these requirements could result in an event of default
under these debt instruments or material agreements.
We
depend on the continued services of key managers and employees.
If we do not retain our key personnel or attract and retain
other highly skilled employees, our business will
suffer.
Our ability to maintain our competitive position is dependent to
a large degree on the services of our senior management team,
including Sheldon G. Adelson. Mr. Adelson, William P.
Weidner, Bradley H. Stone, Robert G. Goldstein and Robert P.
Rozek have each entered into employment agreements; however, we
cannot assure you that any of these individuals will remain with
us. We currently do not have a life insurance policy on any of
the members of the senior management team. The death or loss of
the services of any of our senior managers or the inability to
attract and retain additional senior management personnel could
have a material adverse effect on our business.
We are
controlled by a principal stockholder whose interest in our
business may be different than yours.
Mr. Adelson and trusts for the benefit of Mr. Adelson
and/or his
family members beneficially own approximately 69% of our
outstanding common stock as of December 31, 2007.
Accordingly, Mr. Adelson exercises significant influence
over our business policies and affairs, including the
composition of our board of directors and any action requiring
the approval of our stockholders, including the adoption of
amendments to our articles of incorporation and the approval of
a merger or sale of substantially all of our assets. The
concentration of ownership may also delay, defer or even prevent
a change in control of our company and may make some
transactions more difficult or impossible without the support of
Mr. Adelson. Because Mr. Adelson and trusts for the
benefit of Mr. Adelson
and/or his
family members own more than 50% of the voting power of our
company, we are considered a controlled company under the NYSE
listing standards. As such, the NYSE corporate governance
requirements that our board of directors and our compensation
committee be independent, do not apply to us. As a result, the
ability of our independent directors to influence our business
policies and affairs may be reduced. The interests of
Mr. Adelson may conflict with your interests.
25
We are
a parent company and our primary source of cash is and will be
distributions from our subsidiaries.
We are a parent company with limited business operations of our
own. Our main asset is the capital stock of our subsidiaries. We
conduct most of our business operations through our direct and
indirect subsidiaries. Accordingly, our primary sources of cash
are dividends and distributions with respect to our ownership
interests in our subsidiaries that are derived from the earnings
and cash flow generated by our operating properties. Our
subsidiaries might not generate sufficient earnings and cash
flow to pay dividends or distributions in the future. Our
subsidiaries payments to us will be contingent upon their
earnings and upon other business considerations. In addition,
our subsidiaries debt instruments and other agreements
limit or prohibit certain payments of dividends or other
distributions to us. We expect that the debt instruments for the
financing of our other developments, including our Cotai Strip
developments, will contain similar restrictions.
Risks
Associated with Our U.S. Operations
We
face significant competition in Las Vegas which could materially
adversely effect our financial condition, results of operations
or cash flows. Some of our competitors have substantial
resources and access to capital, and several of them are
expanding or renovating their facilities. In addition, any
significant downturn in the trade show and convention business
could significantly and adversely affect our mid-week occupancy
rates and business.
The hotel, resort and casino businesses in Las Vegas are highly
competitive. We also compete, to some extent, with other
hotel/casino facilities in Nevada and in Atlantic City, as well
as hotel/casinos and other resort facilities and vacation
destinations elsewhere in the United States and around the
world. Many of our competitors are subsidiaries or divisions of
large public companies and have substantial financial and other
resources.
In addition, various competitors on the Las Vegas Strip are
expanding and renovating their existing facilities. If demand
for hotel rooms does not keep up with the increase in the number
of hotel rooms, competitive pressures may cause reductions in
average room rates.
We also compete with legalized gaming from casinos located on
Native American tribal lands, including those located in
California. While the competitive impact on our operations in
Las Vegas from the continued growth of Native American gaming
establishments in California remains uncertain, the
proliferation of gaming in California and other areas located in
the same region as The Venetian and The Palazzo could have an
adverse effect on our results of operations.
In addition, certain states have legalized, and others may
legalize, casino gaming in specific areas, including
metropolitan areas from which we traditionally attract
customers. A number of states have permitted or are considering
permitting gaming at racinos, on Native American
reservations and through expansion of state lotteries. The
current global trend toward liberalization of gaming
restrictions and resulting proliferation of gaming venues could
result in a decrease in the number of visitors to our Las Vegas
facilities by attracting customers close to home and away from
Las Vegas, which could adversely effect our financial condition,
results of operations or cash flows.
The Sands Expo Center and The Congress Center provide recurring
demand for mid-week room nights for business travelers who
attend meetings, trade shows and conventions in Las Vegas. The
Sands Expo Center and The Congress Center presently compete with
other large convention centers, including convention centers in
Las Vegas and other cities. Competition will be increasing for
The Sands Expo Center and The Congress Center as a result of
planned additional convention and meeting facilities, as well as
the enhancement or expansion of existing convention and meeting
facilities, in Las Vegas. Also, other American cities are in the
process of developing, or have announced plans to develop,
convention centers and other meeting, trade and exhibition
facilities. To the extent that these competitors are able to
capture a substantially larger portion of the trade show and
convention business, there could be a material adverse effect on
our financial position, results of operations or cash flows.
26
The
loss of our gaming license or our failure to comply with the
extensive regulations that govern our operations could have an
adverse effect on our financial condition, results of operations
or cash flows.
Our gaming operations and the ownership of our securities are
subject to extensive regulation by the Nevada Commission, the
Nevada Board and the CCLGLB. The Nevada Gaming Authorities have
broad authority with respect to licensing and registration of
our business entities and individuals investing in or otherwise
involved with us.
Although we currently are registered with, and Las Vegas Sands,
LLC and Venetian Casino Resort, LLC currently hold gaming
licenses issued by, the Nevada Gaming Authorities, these
authorities may, among other things, revoke the gaming license
of any corporate entity or the registration of a registered
corporation or any entity registered as a holding company of a
corporate licensee for violations of gaming regulations.
In addition, the Nevada Gaming Authorities may, under certain
conditions, revoke the license or finding of suitability of any
officer, director, controlling person, stockholder, noteholder
or key employee of a licensed or registered entity. If our
gaming licenses were revoked for any reason, the Nevada Gaming
Authorities could require the closing of the casino, which would
have a material adverse effect on our business. In addition,
compliance costs associated with gaming laws, regulations or
licenses are significant. Any change in the laws, regulations or
licenses applicable to our business or gaming licenses could
require us to make substantial expenditures or could otherwise
have a material adverse effect on our financial condition,
results of operations or cash flows.
For a more complete description of the gaming regulatory
requirements affecting our business, see
Item 1 Business
Regulation and Licensing.
Certain
beneficial owners of our voting securities may be required to
file an application with, and be investigated by, the Nevada
Gaming Authorities, and the Nevada Commission may restrict the
ability of a beneficial owner to receive any benefit from our
voting securities and may require the disposition of shares of
our voting securities, if a beneficial owner is found to be
unsuitable.
Any person who acquires beneficial ownership of more than 10% of
our voting securities will be required to apply to the Nevada
Commission for a finding of suitability within thirty days after
the Chairman of the Nevada Board mails a written notice
requiring the filing. Under certain circumstances, an
institutional investor as defined under the
regulations of the Nevada Commission, which acquires beneficial
ownership of more than 10% but not more than 15% of our voting
securities, may apply to the Nevada Commission for a waiver of
such finding of suitability requirement if the institutional
investor holds our voting securities only for investment
purposes. In addition, any beneficial owner of our voting
securities, regardless of the number of shares beneficially
owned, may be required at the discretion of the Nevada
Commission to file an application for a finding of suitability
as such. In either case, a finding of suitability is comparable
to licensing and the applicant must pay all costs of
investigation incurred by the Nevada Gaming Authorities in
conducting the investigation.
Any person who fails or refuses to apply for a finding of
suitability or a license within thirty days after being ordered
to do so by the Nevada Gaming Authorities may be found
unsuitable. The same restrictions apply to a record owner if the
record owner, after request, fails to identify the beneficial
owner. Any stockholder found unsuitable and who holds, directly
or indirectly, any beneficial ownership of the common stock of a
registered corporation beyond such period of time as may be
prescribed by the Nevada Commission may be guilty of a criminal
offense. We are subject to disciplinary action if, after we
receive notice that a person is unsuitable to be a stockholder
or to have any other relationship with us or a licensed
subsidiary, we, or any of the licensed subsidiaries:
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allow that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person;
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pay remuneration in any form to that person for services
rendered or otherwise; or
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fail to pursue all lawful efforts to require such unsuitable
person to relinquish his or her voting securities for cash at
fair market value.
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For a more complete description of the Nevada gaming regulatory
requirements applicable to beneficial owners of our voting
securities, see
Item 1 Business
Regulation and Licensing State of Nevada.
27
Certain
beneficial owners of our voting securities may be required to
file a license application with, and be investigated by, the
Pennsylvania Gaming Control Board, the Pennsylvania State Police
and other agencies.
Any person who acquires beneficial ownership of 5% or more of
our voting securities will be required to apply to the PaGCB for
licensure, obtain licensure and remain licensed. Licensure
requires, among other things, that the applicant establish by
clear and convincing evidence the applicants good
character, honesty and integrity. Additionally, any trust that
holds 5% or more of our voting securities is required to be
licensed by the PaGCB and each individual who is a grantor,
trustee or beneficiary of the trust is also required to be
licensed by the PaGCB. Under certain circumstances, an
institutional investor as defined under the
regulations of the PaGCB, which acquires beneficial ownership of
10% or more, but less than 15% of our voting securities, may not
be required to be licensed by the PaGCB. In addition, any
beneficial owner of our voting securities, regardless of the
number of shares beneficially owned, may be required at the
discretion of the PaGCB to file an application for licensure.
Furthermore, a person or a group of persons acting in concert
who acquire(s) more than 20% of our securities, with the
exception of the ownership interest of a person at the time of
original licensure when the license fee was paid, would trigger
a change in control (as defined under applicable
law). Such a change in control could require us to
re-apply for licensure by the PaGCB and incur a
$50.0 million license fee.
In the event a security holder is required to be found qualified
and is not found qualified, the security holder may be required
by the PaGCB to divest of the interest at a price not exceeding
the cost of the interest.
If we
are unable to maintain an acceptable working relationship with
GGP and/or
if GGP breaches any of its material agreements with us, there
could be a material adverse effect on our financial condition,
results of operations or cash flows.
We have entered into agreements with GGP under which, among
other things:
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GGP has agreed to operate The Grand Canal Shops subject to, and
in accordance with, the cooperation agreement;
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leases for The Shoppes at The Palazzo must be jointly approved
by us and GGP; and
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we lease from GGP certain office space and space located within
The Grand Canal Shops in which the canal and the gondola retail
store are located and the Blue Man Group Theater .
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Each of the above-described agreements with GGP could be
adversely affected in ways that could have a material adverse
effect on our financial condition, results of operations or cash
flows if we do not maintain an acceptable working relationship
with GGP. For example:
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if we are unable to agree with GGP on leases for The Shoppes at
The Palazzo, the purchase price we will ultimately be paid for
The Shoppes at The Palazzo could be substantially reduced, and
there would, at least for a certain period of time, be an empty
or partially empty mall within The Palazzo; and
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the cooperation agreement that governs the relationships between
The Shoppes at The Palazzo and The Palazzo and The Grand Canal
Shops and The Venetian requires that the owners cooperate in
various ways and take various joint actions, which will be more
difficult to accomplish, especially in a cost-effective manner,
if the parties do not have an acceptable working relationship.
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There could be similar material adverse consequences to us if
GGP breaches any of its agreements to us, such as its agreement
under the cooperation agreement to operate The Grand Canal Shops
consistent with the standards of first-class restaurant and
retail complexes and the overall Venetian theme, and its various
obligations as our landlord under the leases described above.
Although the various agreements with GGP do provide us with
various remedies in the event of any breaches by GGP and also
include various dispute-resolution procedures and mechanisms,
these remedies, procedures and mechanisms may be inadequate to
prevent a material adverse effect on our operations and
financial condition if breaches by GGP occur or if we do not
maintain an acceptable working relationship with GGP.
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We
extend credit to a large portion of our customers and we may not
be able to collect gaming receivables from our credit
players.
We conduct our gaming activities on a credit basis as well as a
cash basis. This credit is unsecured. Table games players
typically are extended more credit than slot players, and
high-stakes players typically are extended more credit than
patrons who tend to wager lower amounts. High-end gaming is more
volatile than other forms of gaming, and variances in win-loss
results attributable to high-end gaming may have a significant
positive or negative impact on cash flow and earnings in a
particular quarter.
Credit play at our Las Vegas properties is significant while at
our Macao properties table games play is primarily cash play. We
extend credit to those customers whose level of play and
financial resources warrant, in the opinion of management, an
extension of credit. For the year ended December 31, 2007,
our table games drop at our Las Vegas properties was
approximately 62.6% from credit-based guest wagering. These
large receivables could have a significant impact on our
operating results if deemed uncollectible.
While gaming debts evidenced by a credit instrument, including
what is commonly referred to as a marker, and
judgments on gaming debts are enforceable under the current laws
of Nevada, and Nevada judgments on gaming debts are enforceable
in all states under the Full Faith and Credit Clause of the
U.S. Constitution, other jurisdictions may determine that
enforcement of gaming debts is against public policy. Although
courts of some foreign nations will enforce gaming debts
directly and the assets in the United States of foreign debtors
may be reached to satisfy a judgment, judgments on gaming debts
from U.S. courts are not binding on the courts of many
foreign nations.
Risks
Associated with Our International Operations
Conducting
business in Macao and Singapore has certain political and
economic risks which may effect the financial condition, results
of operations or cash flows of our Asian
operations.
We currently own and operate the Sands Macao and The Venetian
Macao. We are developing and plan to operate additional hotels,
casinos and convention centers on the Cotai Strip in Macao. We
also plan to own and operate the Marina Bay Sands in Singapore.
Accordingly, our business development plans, financial
condition, results of operations or cash flows may be materially
and adversely affected by significant political, social and
economic developments in Macao and Singapore, and by changes in
policies of the governments or changes in laws and regulations
or their interpretations. Our operations in Macao are, and our
operations in Singapore will be, also exposed to the risk of
changes in laws and policies that govern operations of companies
based in those countries. Tax laws and regulations may also be
subject to amendment or different interpretation and
implementation, thereby adversely affecting our profitability
after tax. Further, the percentage of our gross gaming revenues
that we must contribute annually to the Macao authorities is
subject to change in 2010. These changes may have a material
adverse effect on our financial condition, results of operations
or cash flows.
As we expect a significant number of consumers to come to our
Macao properties from China, general economic conditions and
policies in China could have a significant impact on our
financial prospects. Any slowdown in economic growth or reversal
of Chinas current policies of liberalizing restrictions on
travel and currency movements could adversely impact the number
of visitors from China to our Macao properties as well as the
amounts they are willing to spend at our properties.
Current Macao laws and regulations concerning gaming and gaming
concessions are, for the most part, fairly recent and there is
little precedent on the interpretation of these laws and
regulations. We believe that our organizational structure and
operations are in compliance in all material respects with all
applicable laws and regulations of Macao. However, these laws
and regulations are complex and a court or an administrative or
regulatory body may in the future render an interpretation of
these laws and regulations, or issue regulations, which differs
from our interpretation and could have a material adverse effect
on our financial condition, results of operations or cash flows.
We expect the Marina Bay Sands to be the first gaming facility
to open in Singapore following the governments adoption of
gaming legislation in 2005. Accordingly, the laws and
regulations relating to gaming and their interpretations are
untested.
29
In addition, our activities in Macao are, and our operations in
Singapore will be, subject to administrative review and approval
by various government agencies. We cannot assure you that we
will be able to obtain all necessary approvals, which may
materially affect our long-term business strategy and
operations. Macao and Singapore laws permit redress to the
courts with respect to administrative actions. However, such
redress is largely untested in relation to gaming issues.
We are
constructing projects on the Cotai Strip in Macao on land for
which we have not yet been granted concessions. If we do not
obtain land concessions, we could forfeit all or a substantial
part of our investment in these sites and would not be able to
build or operate the planned facilities on these
sites.
Land concessions in Macao generally have terms of 25 years,
with automatic extensions at our option of 10 years
thereafter and there are common rates based on land use
generally used to determine the cost of these land concessions.
We have not yet obtained land concessions from the Macao
government for parcels 5, 6, 7 and 8 on the Cotai Strip. We are
currently in the process of negotiating with the Macao
government to obtain the land concession for parcels 5 and 6,
and will subsequently negotiate the land concession for parcels
7 and 8. If we do not obtain a land concession for parcels 5, 6,
7 and/or 8,
we will not be able to open and operate the planned projects on
these sites and we could forfeit all or a substantial part of
our $623.0 million in capitalized construction costs
related to these sites as of December 31, 2007.
The
Macao government can terminate our subconcession under certain
circumstances without compensation to us, which would have a
material adverse effect on our financial condition, results of
operations or cash flows.
The Macao government has the right, after consultation with
Galaxy, to unilaterally terminate our subconcession in the event
of VMLs serious non-compliance with its basic obligations
under the subconcession and applicable Macao laws. Upon
termination of our subconcession, all of our casino gaming
operations and related equipment in Macao would be automatically
transferred to the Macao government without compensation to us
and we would cease to generate any revenues from these
operations. The loss of our subconcession would prohibit us from
conducting gaming operations in Macao, which could have a
material adverse effect on our financial condition, results of
operations or cash flows.
We
will stop generating any revenues from our Macao gaming
operations if we cannot secure an extension of our subconcession
in 2022 or if the Macao government exercises its redemption
right.
Our subconcession agreement expires on June 26, 2022.
Unless our subconcession is extended, on that date, all of our
casino operations and related equipment in Macao will be
automatically transferred to the Macao government without
compensation to us and we will cease to generate any revenues
from these operations. Beginning on December 26, 2017, the
Macao government may redeem the subconcession agreement by
providing us at least one year prior notice. In the event the
Macao government exercises this redemption right, we are
entitled to fair compensation or indemnity. The amount of such
compensation or indemnity will be determined based on the amount
of revenue generated during the tax year prior to the
redemption. We cannot assure you that we will be able to renew
or extend our subconcession agreement on terms favorable to us
or at all. We also cannot assure you that if our subconcession
is redeemed, the compensation paid will be adequate to
compensate us for the loss of future revenues.
Our
Macao operations face intense competition, which could have a
material adverse effect on our financial condition, results of
operations or cash flows.
The hotel, resort and casino businesses are highly competitive.
Our Macao operations currently compete with numerous other
casinos located in Macao. In addition, we expect competition to
increase in the near future from local and foreign casino
operators. SJM, which is controlled by Stanley Ho, currently
operates 19 gaming facilities in Macao, including the Grand
Lisboa; the Fishermans Wharf entertainment complex; and a
number of new hotel/casino projects. In addition, MGM MIRAGE
entered into a joint venture agreement with Stanley Hos
daughter, Pansy Ho Chiu-king, to develop, build and operate two
major hotel/casino resorts in Macao. The MGM Grand
30
Macau opened in December 2007 and features approximately 600
rooms, 375 table games, 900 slot machines, restaurants and
entertainment amenities.
In addition, Wynn Macau opened in September 2006 and expanded
the property in late 2007. Wynn Macau now includes an
approximately 600-room hotel, a casino and other non-gaming
amenities. In May 2007, a PBL Affiliate opened the Crown Macau,
which includes an approximately 216-room hotel, a casino and
other non-gaming amenities. The other concessionaire holder,
Galaxy, currently operates five casinos in Macao, including
StarWorld Hotel that opened in October 2006.
Our Macao operations will also compete to some extent with
casinos located elsewhere in Asia, such as Malaysias
Genting Highlands, as well as gaming venues in Australia, New
Zealand and elsewhere in the world, including Las Vegas. In
addition, certain countries have legalized, and others may in
the future legalize, casino gaming, including Hong Kong, Japan,
Singapore, Taiwan and Thailand and other gaming centers
worldwide. The proliferation of gaming venues in Southeast Asia
could significantly and adversely effect our financial
condition, results of operations or cash flows.
The
Macao and Singapore governments could grant additional rights to
conduct gaming in the future, which could have a material
adverse effect on our financial condition, results of operations
or cash flows.
We hold a subconcession under one of only three gaming
concessions authorized by the Macao government to operate
casinos in Macao. The Macao government is precluded from
granting any additional gaming concessions until 2009. However,
we cannot assure you that the laws will not change and permit
the Macao government to grant additional gaming concessions
before 2009. In addition, the Macao government permits existing
concessionaires to grant subconcessions. If the Macao government
were to allow additional competitors to operate in Macao through
the grant of additional concessions or subconcessions, we would
face additional competition, which could have a material adverse
effect on our financial condition, results of operations or cash
flows.
We hold one of two licenses granted by the Singapore government
to develop an integrated resort, including a casino. The
Singapore government has said that it will not license another
casino for at least ten years. If the Singapore government were
to license additional casinos before then, we would face
additional competition which could have a material adverse
effect on our financial condition, results of operations or cash
flows.
We may
not be able to attract and retain professional staff necessary
for our existing and future properties in Macao and our
operations in Singapore.
Our success depends in large part upon our ability to attract,
retain, train, manage and motivate skilled employees. In
addition, the Macao government requires us to only hire Macao
residents as dealers in our casinos. There is significant
competition in Macao for employees with the skills required to
perform the services we offer and competition for these
individuals is likely to increase as we open our remaining Cotai
Strip developments and as other competitors expand their
operations. We expect competition in Singapore for employees
with the skills we require as we develop and open the Marina Bay
Sands. There can be no assurance that a sufficient number of
skilled employees will continue to be available, or that we will
be successful in training, retaining and motivating current or
future employees. If we are unable to attract, retain and train
skilled employees, our ability to adequately manage and staff
our existing and planned casino and resort properties in Macao
and Singapore could be impaired, which could have a material
adverse effect on our business, financial condition, results of
operations or cash flows.
We are
dependent upon gaming junket operators for a significant portion
of our gaming revenues in Macao.
Junket operators, who organize tours, or junkets, for
high-roller customers to casinos, are responsible for a
significant portion of our gaming revenues in Macao. With the
rise in gaming in Macao, the competition for relationships with
junket operators has increased. While we are undertaking
initiatives to strengthen our relationships with our current
junket operators, there can be no assurance that we will be able
to maintain, or grow, our relationships with junket operators.
If we are unable to maintain or grow our relationships with
junket operators, our
31
ability to grow our gaming revenues will be hampered and we may
seek alternative ways to develop relationships with high-roller
customers, which may not be as profitable as our junket programs.
In addition, the quality of junket operators is important to our
reputation and our ability to continue to operate in compliance
with our gaming licenses. While we strive for excellence in our
associations with junket operators, we cannot assure you that
the junket operators with whom we are associated will meet the
high standards we insist upon. If a junket operator falls below
our standards, we may suffer reputational harm, as well as
worsening relationships with, and possibly sanctions from,
gaming regulators with authority over our operations.
Our
business could be adversely affected by the limitations of the
pataca exchange markets and restrictions on the export of the
renminbi.
Our revenues in Macao are denominated in patacas, the legal
currency of Macao, and Hong Kong dollars. Although currently
permitted, we cannot assure you that patacas will continue to be
freely exchangeable into U.S. dollars. Also, because the
currency market for patacas is relatively small and undeveloped,
our ability to convert large amounts of patacas into
U.S. dollars over a relatively short period may be limited.
As a result, we may experience difficulty in converting patacas
into U.S. dollars.
We are currently prohibited from accepting wagers in renminbi,
the currency of China. There are currently restrictions on the
export of the renminbi outside of mainland China, including to
Macao. Restrictions on the export of the renminbi may impede the
flow of gaming customers from China to Macao, inhibit the growth
of gaming in Macao and negatively impact our gaming operations.
On July 21, 2005, the Peoples Bank of China announced
that the renminbi will no longer be pegged to the
U.S. dollar, but will be allowed to float in a band (and,
to a limited extent, increase in value) against a basket of
foreign currencies. The Macao pataca is pegged to the Hong Kong
dollar. Certain Asian countries have publicly asserted their
desire to eliminate the peg of the Hong Kong dollar to the
U.S. dollar. As a result, we cannot assure you that the
Hong Kong dollar and the Macao pataca will continue to be pegged
to the U.S. dollar or that the current peg rate for these
currencies will remain at the same level. The floating of the
renminbi and possible changes to the peg of the Hong Kong dollar
may result in severe fluctuations in the exchange rate for these
currencies. Any change in such exchange rates could have a
material adverse effect on our operations and on our ability to
make payments on certain of our debt instruments. We do not
currently hedge for foreign currency risk.
Certain
Nevada gaming laws apply to our planned gaming activities and
associations in other jurisdictions where we operate or plan to
operate.
Certain Nevada gaming laws also apply to our gaming activities
and associations in jurisdictions outside the State of Nevada.
We are required to comply with certain reporting requirements
concerning our proposed gaming activities and associations
occurring outside the State of Nevada, including Macao and other
jurisdictions. We will also be subject to disciplinary action by
the Nevada Commission if we:
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knowingly violate any laws of the foreign jurisdiction
pertaining to the foreign gaming operation;
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fail to conduct the foreign gaming operation in accordance with
the standards of honesty and integrity required of Nevada gaming
operations;
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engage in any activity or enter into any association that is
unsuitable for us because it poses an unreasonable threat to the
control of gaming in Nevada, reflects or tends to reflect
discredit or disrepute upon the State of Nevada or gaming in
Nevada, or is contrary to the gaming policies of Nevada;
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engage in any activity or enter into any association that
interferes with the ability of the State of Nevada to collect
gaming taxes and fees; or
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employ, contract with or associate with any person in the
foreign gaming operation who has been denied a license or a
finding of suitability in Nevada on the ground of personal
unsuitability, or who has been found guilty of cheating at
gambling.
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32
In addition, if the Nevada Board determines that one of our
actual or intended activities or associations in a foreign
gaming operation may violate one or more of the foregoing, we
can be required by it to file an application with the Nevada
Commission for a finding of suitability of such activity or
association. If the Nevada Commission finds that the activity or
association in the foreign gaming operation is unsuitable or
prohibited, we will either be required to terminate the activity
or association, or will be prohibited from undertaking the
activity or association. Consequently, should the Nevada
Commission find that our gaming activities or associations in
Macao or certain other jurisdictions where we operate are
unsuitable, we may be prohibited from undertaking our planned
gaming activities or associations in those jurisdictions.
The Macao gaming authorities exercise similar powers for
purposes of assessing suitability in relation to our activities
in jurisdictions outside of Macao.
We may
not be able to monetize some of our real estate
assets.
Part of our business strategy in Macao relies upon our ability
to profitably operate
and/or sell
certain of our real estate assets once developed, including
retail malls and vacation suites, and to use the proceeds of
these operations and sales to refinance, or repay in part our
construction loans for these assets, as well as to provide
investment capital for additional development both in Macao and
elsewhere. Our ability to sell these assets will be subject to
market conditions, applicable legislation, the receipt of
necessary government approvals and other factors. If we are
unable to profitably operate
and/or
monetize these real estate assets, we will have to seek
alternative sources of capital to refinance in part our
construction loans and for other investment capital. These
alternative sources of capital may not be available on
commercially reasonable terms or at all.
VML
may have financial and other obligations to foreign workers
managed by its contractors under government labor
quotas.
The Macao government has granted VML a quota to permit it to
hire foreign workers. VML has effectively assigned the
management of this quota to its contractors for the construction
of The Venetian Macao and other projects on the Cotai Strip.
VML, however, remains ultimately liable for all employer
obligations relating to these employees, including for payment
of wages and taxes and compliance with labor and workers
compensation laws. VML requires each contractor to whom it has
assigned the management of part of its labor quota to indemnify
VML for any costs or liabilities VML incurs as a result of such
contractors failure to fulfill employer obligations.
VMLs agreements with its contractors also contain
provisions that permit it to retain some payments for up to one
year after the contractors complete work on the projects. We
cannot assure you that VMLs contractors will fulfill their
obligations to employees hired under the labor quotas or to VML
under the indemnification agreements, or that the amount of any
indemnification will be sufficient to pay for any obligations
VML may owe to employees managed by contractors under VMLs
quotas. Until we make final payments to our contractors, we have
offset rights to collect amounts they may owe us, including
amounts owed under the indemnities relating to employer
obligations. After we have made the final payments, it may be
more difficult for us to enforce any unpaid indemnity
obligations.
The
transportation infrastructure in Macao may need to be expanded
to meet increased visitation in Macao.
Macao is in the process of expanding its transportation
infrastructure to service the increased number of visitors to
Macao. If the planned expansions of transportation facilities to
and from Macao are delayed or not completed, and Macaos
transportation infrastructure is insufficient to meet the
demands of an increased volume of visitors to Macao, the
desirability of Macao as a gaming and tourist destination, as
well as the results of operations of our Macao properties, could
be negatively impacted.
We
operate a passenger ferry service between Macao and Hong Kong
under a concession granted by the Macao government. The loss of
the ferry concession could have a material adverse effect on our
financial condition, results of operations or cash
flows.
We operate a passenger ferry service between the Cotai Strip in
Macao and Hong Kong under a concession granted by the Macao
government. Another transportation company claims that the grant
of the ferry service was
33
improper and has sued the Macao government seeking a review of
the governments decision. Our inability to operate our
ferry service could result in a significant loss of visitors to
our Cotai Strip properties, including The Venetian Macao, and
could have a material adverse effect on our financial condition,
results of operations or cash flows.
We are
currently not required to pay corporate income taxes on our
casino gaming operations in Macao. This tax exemption expires at
the end of 2008.
We have had the benefit of a corporate tax exemption in Macao,
which exempts us from paying corporate income tax on profits
generated by the operation of casino games. We will continue to
benefit from this tax exemption through the end of 2008. We plan
to file a request for an extension with the Macao government. We
cannot assure you that this tax exemption will be extended
beyond the expiration date and we do not expect this tax
exemption to apply to our non-gaming activities.
Macao
is susceptible to severe typhoons that may disrupt
operations.
Macao is susceptible to severe typhoons. Macao consists of a
peninsula and two islands off the coast of mainland China. On
some occasions, typhoons have caused a considerable amount of
damage to Macaos infrastructure and economy. In the event
of a major typhoon or other natural disaster in Macao, our
business may be severely disrupted and our results of operations
could be adversely affected. Although we have insurance coverage
with respect to these events, we cannot assure you that our
coverage will be sufficient to fully indemnify us against all
direct and indirect costs, including loss of business, that
could result from substantial damage to, or partial or complete
destruction of, our Macao properties or other damage to the
infrastructure or economy of Macao.
Our
Singapore concession can be terminated under certain
circumstances without compensation to us, which would have a
material adverse effect on our financial condition, results of
operations or cash flows.
The Development Agreement between MBS and the STB contains
events of default which could permit the STB to terminate the
agreement without compensation to us. If the Development
Agreement is terminated, we could lose our right to open and
operate the Marina Bay Sands and our investment in Marina Bay
Sands could be lost.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
We own an approximately
63-acre
parcel of land on which The Venetian, The Palazzo and The Sands
Expo Center sit and an approximately
19-acre
parcel of land located to the east of the
60-acre
parcel. We own these parcels of land in fee simple, subject to
certain easements, encroachments and other non-monetary
encumbrances. Las Vegas Sands, LLCs new senior secured
credit facility is, subject to certain exceptions,
collateralized by a first priority security interest (subject to
permitted liens) in substantially all of Las Vegas Sands,
LLCs property.
We have received concessions from the Macao government to build
on a
six-acre
land site for the Sands Macao and parcels 1, 2 and 3 on the
Cotai Strip, including the site on which we own and operate The
Venetian Macao (parcel 1) and the site on which we are
building The Four Seasons Macao (parcel 2). 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, which are payable over four
years or are due upon the completion of the corresponding
resort, as well as annual rent for the term of the land
concession, which may be revised every five years by the Macao
government. See Item 8 Financial
Statements and Supplementary Data Notes to
Consolidated Financial Statements
Note 6 Leasehold Interests in Land, Net
for more information on our payment obligation under these land
concessions.
34
We do not yet have all the necessary Macao government approvals
that we will need in order to develop our remaining Cotai Strip
developments. Although, we have commenced construction or
pre-construction for our projects on parcels 5, 6, 7 and 8 on
the Cotai Strip, we have not yet obtained a land concession for
these parcels from the Macao government, which holds title to
the land. Land concessions in Macao generally have terms of
25 years, with automatic extensions at our option of
10 years thereafter and there are common rates based on
land use generally used to determine the cost of these land
concessions. We are currently in the process of negotiating with
the Macao government to obtain the land concession, which will
require us to pay certain premiums and rent, for parcels 5 and
6, and we will subsequently negotiate the land concession for
parcels 7 and 8. We believe we will be successful in obtaining
the land concessions; however, in the event we are unable to
obtain concessions for the land underlying parcels 5, 6, 7
and/or 8, we
could lose all or a substantial part of our $623.0 million
in capitalized construction costs related to these developments
as of December 31, 2007.
Under the Development Agreement with the STB to build and
operate the Marina Bay Sands in Singapore, we paid SGD
1.2 billion (approximately $830.0 million at exchange
rates in effect on December 31, 2007) in premium
payments for the
60-year
lease of the land on which the resort will be built plus an
additional SGD 105.6 million (approximately
$73.0 million at exchange rates in effect on
December 31, 2007) for various taxes and other fees.
Of this combined amount, $854.4 million has been
capitalized on the balance sheet as leasehold interest in land
with $19.4 million amortized as of December 31, 2007.
The Sands Bethworks development will be located on the
approximately
124-acre
site of the Historic Bethlehem Steel Works in Bethlehem,
Pennsylvania, which is about 70 miles from midtown
Manhattan, New York. The property will be owned by the Company
through its joint venture with Bethworks Now, LLC, which has yet
to contribute the land in the joint venture. We expect the
contribution to take place in 2008; however, no assurances can
be given as to the timing of the contribution. If the land is
not contributed as required under the agreement between the
Company and Bethworks Now, LLC, we could lose all or a
substantial part of our $116.9 million investment in Sands
Bethworks as of December 31, 2007.
In 2004, we entered into a long-term lease with a third party
for airspace over which part of The Shoppes at The Palazzo was
constructed. We acquired fee title to the airspace in order to
build the proposed Las Vegas condominium tower in January 2008.
ITEM 3.
LEGAL PROCEEDINGS
In addition to the matters described below, we are party to
various legal matters and claims arising in the ordinary course
of business. Management has made certain estimates for potential
litigation costs based upon consultation with legal counsel.
Actual results could differ from these estimates; however, in
the opinion of management, such litigation and claims will not
have a material adverse effect on our financial condition,
results of operations or cash flows.
The
Palazzo Construction Litigation
Lido Casino Resort, LLC (Lido), formerly a
wholly-owned subsidiary of the Company and now merged into
Venetian Casino Resort, LLC (VCR), and its
construction manager, Taylor International Corp.
(Taylor), filed suit in March 2006 in the United
States District Court for the District of Nevada (the
District Court) against Malcolm Drilling Company,
Inc. (Malcolm), the contractor on The Palazzo
project responsible for completing certain foundation work (the
District Court Case). Lido and Taylor claim in the
District Court Case that Malcolm was in default of its contract
for performing defective work, failing to correct defective
work, failing to complete its work and causing delay to the
project. Malcolm responded by filing a Notice of a Lien with the
Clerk of Clark County, Nevada in March 2006 in the amount of
approximately $19.0 million (the Lien). In
April 2006, Lido and Taylor moved in the District Court Case to
strike or, in the alternative, to reduce the amount of, the
Lien, claiming, among other things, that the Lien was excessive
for including claims for disruption and delay, which Lido and
Taylor claim are not lienable under Nevada law (the Lien
Motion). Malcolm responded in April 2006 by filing a
complaint against Lido and Taylor in District Court of Clark
County, Nevada seeking to foreclose on the Lien against Taylor,
claiming breach of contract, a cardinal change in the underlying
contract, unjust enrichment against Lido and Taylor and bad
faith and fraud against Taylor (the State Court
Case), and simultaneously filed a motion
35
in the District Court Case, seeking to dismiss the District
Court Case on abstention grounds (the Abstention
Motion). In response, in June 2006, Lido filed a motion to
dismiss the State Court Case based on the principle of the
prior pending District Court Case (the Motion
to Dismiss). In June 2006, the Abstention Motion was
granted in part by the United States District Court, the
District Court Case was stayed pending the outcome of the Motion
to Dismiss in the State Court Case and the Lien Motion was
denied without prejudice. In January 2008, the parties agreed to
the dismissal of the District Court Case without prejudice.
Prior to agreeing on that dismissal, Lido and Malcolm entered
into a stipulation under which Lido withdrew the Motion to
Dismiss, and in July 2006 filed a replacement lien motion in the
State Court Case. The lien motion in the State Court Case was
denied in August 2006 and Lido and Taylor filed a permitted
interlocutory notice of appeal to the Supreme Court of Nevada in
September 2006. In April 2007, Malcolm filed an Amended Notice
of Lien with the Clerk of Clark County, Nevada in the amount of
approximately $16.7 million plus interest, costs and
attorneys fees. In August 2007, Malcolm filed a motion for
partial summary judgment, seeking the dismissal of the
counterclaim filed in the State Court Case by Lido to the extent
the claim sought lost profits. After argument, the motion for
partial summary judgment was denied without prejudice on
October 23, 2007 and a conforming order was entered in
December 2007. The parties have agreed to complete limited
additional discovery by the end of February 2008. Argument on
the appeal of the denial of the lien motion in the State Court
has been scheduled by the Supreme Court for March 2008 and an
initial trial call of the State Court Case also has been
scheduled for March 2008. In January 2008, Malcolm filed a
series of three motions and again sought summary judgment on the
counterclaim filed in the State Court Case. Based upon the
advice of legal counsel, management has determined that based on
proceedings to date, an adverse outcome is not probable. Lido
intends to defend itself against the claims pending in the State
Court Case.
Litigation
Relating to Macao Operations
On October 15, 2004, Richard Suen and Round Square Company
Limited filed an action against Las Vegas Sands Corp.
(LVSC), Las Vegas Sands, Inc., 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 Companys Macao 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. On May 17, 2005, the plaintiffs filed
their first amended complaint. On February 2, 2006,
defendants filed a motion for partial summary judgment with
respect to plaintiffs fraud claims against all the
defendants. On March 16, 2006, an order was filed by the
court granting defendants motion for partial summary
judgment. Pursuant to the order filed March 16, 2006,
plaintiffs fraud claims set forth in the first amended
complaint were dismissed with prejudice as against all
defendants. The order also dismissed with prejudice the first
amended complaint against defendants Sheldon G. Adelson and
William P. Weidner. This action is currently set for trial in
April 2008. Based upon the advice of legal counsel, management
believes that the plaintiffs case against the Company is
without merit. The Company intends to defend this matter
vigorously.
On January 26, 2006, Clive Basset Jones, Darryl Steven
Turok (a/k/a Dax Turok) and Cheong Jose Vai Chi
(a/k/a Cliff
Cheong), filed an action against LVSC, Las Vegas Sands, LLC,
Venetian Venture Development, LLC and various unspecified
individuals and companies in the District Court of Clark County,
Nevada. The plaintiffs assert breach of an agreement to pay a
success fee in an amount equal to 5% of the ownership interest
in the entity that owns and operates the Macao gaming
subconcession as well as other related claims. In April 2006,
LVSC was dismissed as a party without prejudice based on a
stipulation to do so between the parties. Discovery has begun in
this matter and the case is currently set for trial in December
2008. Based upon the advice of legal counsel, management
believes that the plaintiffs case against the Company is
without merit. The Company intends to defend this matter
vigorously.
On February 5, 2007, Asian American Entertainment
Corporation, Limited (AAEC) filed an action against
Las Vegas Sands, Inc. (LVSI), VCR, Venetian Venture
Development, LLC (Venetian Venture Development),
William P. Weidner and David Friedman in the United States
District Court for the District of Nevada. The plaintiffs assert
breach of contract by LVSI, VCR and Venetian Venture Development
of an agreement under which AAEC would work to obtain a gaming
license in Macao and, if successful, AAEC would jointly operate
a casino, hotel and related facilities in Macao with Venetian
Venture Development and Venetian Venture Development would
receive fees and a minority equity interest in the venture and
breach of fiduciary duties by all of the defendants. The
36
plaintiffs have requested an unspecified amount of actual,
compensatory and punitive damages, and disgorgement of profits
related to our Macao gaming license. The Company filed a motion
to dismiss on July 11, 2007. On August 1, 2007, the
Court granted defendants motion to dismiss the complaint
against all defendants without prejudice. The plaintiffs have
appealed this decision. Based upon the advice of legal counsel,
management believes that the plaintiffs case against the
Company is without merit. The Company intends to defend this
matter vigorously.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
37
PART II
ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
Market
Information
The Companys common stock trades on the NYSE under the
symbol LVS. The following table sets forth the high
and low sales prices for the common stock on the NYSE for the
fiscal quarter indicated.
|
|
|
|
|
|
|
|
|
|
|
High
|
|
|
Low
|
|
|
2006
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
58.03
|
|
|
$
|
38.44
|
|
Second Quarter
|
|
$
|
78.90
|
|
|
$
|
54.68
|
|
Third Quarter
|
|
$
|
77.86
|
|
|
$
|
57.68
|
|
Fourth Quarter
|
|
$
|
97.25
|
|
|
$
|
66.06
|
|
2007
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
109.45
|
|
|
$
|
81.00
|
|
Second Quarter
|
|
$
|
91.93
|
|
|
$
|
71.24
|
|
Third Quarter
|
|
$
|
142.75
|
|
|
$
|
75.56
|
|
Fourth Quarter
|
|
$
|
148.76
|
|
|
$
|
102.50
|
|
2008
|
|
|
|
|
|
|
|
|
First Quarter (through February 21, 2008)
|
|
$
|
105.38
|
|
|
$
|
70.70
|
|
As of February 21, 2008, there were 355,352,992 shares
of our common stock issued and outstanding that were held by 259
stockholders of record.
Dividends
We have not declared or paid any dividends since our formation
in August 2004. We do not expect to pay dividends on our common
stock in the future. We expect to retain our future earnings, if
any, for use in the operation and expansion of our business. Our
board of directors will determine whether to pay dividends in
the future based on conditions then existing, including our
earnings, financial condition and capital requirements, as well
as economic and other conditions our board may deem relevant.
Our ability to declare and pay dividends on our common stock is
subject to the requirements of Nevada law. In addition, we are a
parent company with limited business operations of our own.
Accordingly, our primary sources of cash are dividends and
distributions with respect to our ownership interest in our
subsidiaries that are derived from the earnings and cash flow
generated by our operating properties.
Our subsidiaries long-term debt arrangements place
material restrictions on their ability to pay cash dividends to
the Company. This will restrict our ability to pay cash
dividends other than from cash on hand. See
Item 7 Managements Discussion and
Analysis of Financial Condition and Results of
Operations Liquidity and Capital
Resources Restrictions on Distributions and
Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 8 Long-Term
Debt.
Recent
Sales of Unregistered Securities
There have not been any sales by the Company of equity
securities in the last fiscal year that have not been registered
under the Securities Act of 1933.
38
Performance
Graph
The following performance graph compares the performance of our
common stock with the performance of the Standard &
Poors 500 Index and a peer group of companies, during the
period from the Companys initial public offering on
December 15, 2004 through December 31, 2007. The
selected peer group for 2005, 2006 and 2007 is comprised of
three gaming companies considered to be the Companys
closest competitors: Harrahs Entertainment, Inc., MGM
MIRAGE and Wynn Resorts Limited. The selected peer group for
2004 included these three companies, as well as Caesars
Entertainment, Inc. and Mandalay Resort Group. In 2005, Caesars
Entertainment, Inc. was acquired by Harrahs Entertainment,
Inc. and Mandalay Resort Group was acquired by MGM MIRAGE. The
graph plots the changes in value of an initial $100 investment
over the indicated time period, assuming all dividends are
reinvested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative Total Return
|
|
|
|
12/15/04
|
|
|
12/31/04
|
|
|
12/31/05
|
|
|
12/31/06
|
|
|
12/31/07
|
|
|
Las Vegas Sands Corp
|
|
$
|
100.00
|
|
|
$
|
103.09
|
|
|
$
|
84.77
|
|
|
$
|
192.18
|
|
|
$
|
221.33
|
|
S&P 500
|
|
$
|
100.00
|
|
|
$
|
103.40
|
|
|
$
|
108.48
|
|
|
$
|
125.62
|
|
|
$
|
132.52
|
|
Peer Group
|
|
$
|
100.00
|
|
|
$
|
104.38
|
|
|
$
|
102.83
|
|
|
$
|
148.30
|
|
|
$
|
193.98
|
|
The performance graph should not be deemed filed or incorporated
by reference into any other Company filing under the Securities
Act of 1933 or the Exchange Act of 1934, except to the extent
the Company specifically incorporates the performance graph by
reference therein.
ITEM 6.
SELECTED FINANCIAL DATA
The following reflects selected historical financial data that
should be read in conjunction with Item 7
Managements Discussion and Analysis of Financial Condition
and Results of Operations and the consolidated
39
financial statements and notes thereto included elsewhere in
this Annual Report on
Form 10-K.
The historical results are not necessarily indicative of the
results of operations to be expected in the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007(1)
|
|
|
2006
|
|
|
2005
|
|
|
2004(2)
|
|
|
2003
|
|
|
|
(In thousands, except per share data)
|
|
|
STATEMENT OF OPERATIONS DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross revenues
|
|
$
|
3,104,422
|
|
|
$
|
2,340,178
|
|
|
$
|
1,824,225
|
|
|
$
|
1,258,570
|
|
|
$
|
736,610
|
|
Promotional allowances
|
|
|
(153,855
|
)
|
|
|
(103,319
|
)
|
|
|
(83,313
|
)
|
|
|
(61,514
|
)
|
|
|
(44,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
2,950,567
|
|
|
|
2,236,859
|
|
|
|
1,740,912
|
|
|
|
1,197,056
|
|
|
|
691,754
|
|
Operating expenses
|
|
|
2,620,557
|
|
|
|
1,662,762
|
|
|
|
1,251,461
|
|
|
|
578,588
|
|
|
|
505,628
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
330,010
|
|
|
|
574,097
|
|
|
|
489,451
|
|
|
|
618,468
|
|
|
|
186,126
|
|
Interest expense, net
|
|
|
(172,344
|
)
|
|
|
(69,662
|
)
|
|
|
(63,181
|
)
|
|
|
(130,337
|
)
|
|
|
(120,317
|
)
|
Other income (expense)
|
|
|
(8,682
|
)
|
|
|
(189
|
)
|
|
|
(1,334
|
)
|
|
|
(131
|
)
|
|
|
825
|
|
Loss on early retirement of debt
|
|
|
(10,705
|
)
|
|
|
|
|
|
|
(137,000
|
)
|
|
|
(6,553
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
138,279
|
|
|
|
504,246
|
|
|
|
287,936
|
|
|
|
481,447
|
|
|
|
66,634
|
|
Benefit (provision) for income
taxes(3)
|
|
|
(21,591
|
)
|
|
|
(62,243
|
)
|
|
|
(4,250
|
)
|
|
|
13,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
116,688
|
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
$
|
495,183
|
|
|
$
|
66,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Share
Data(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.33
|
|
|
$
|
1.25
|
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
$
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.33
|
|
|
$
|
1.24
|
|
|
$
|
0.80
|
|
|
$
|
1.52
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.44
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
3,793,703
|
|
|
$
|
1,925,291
|
|
|
$
|
860,621
|
|
|
$
|
465,748
|
|
|
$
|
279,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(In thousands)
|
|
|
BALANCE SHEET DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
11,466,517
|
|
|
$
|
7,126,458
|
|
|
$
|
3,879,739
|
|
|
$
|
3,601,478
|
|
|
$
|
1,917,035
|
|
Long-term debt
|
|
$
|
7,517,997
|
|
|
$
|
4,136,152
|
|
|
$
|
1,625,901
|
|
|
$
|
1,485,064
|
|
|
$
|
1,525,116
|
|
Stockholders equity
|
|
$
|
2,260,274
|
|
|
$
|
2,075,154
|
|
|
$
|
1,609,538
|
|
|
$
|
1,316,001
|
|
|
$
|
162,108
|
|
|
|
|
(1) |
|
The Venetian Macao opened on August 28, 2007, and The
Palazzo partially opened on December 30, 2007. |
|
(2) |
|
The Sands Macao opened on May 18, 2004. |
|
(3) |
|
Prior to December 2004, Las Vegas Sands, Inc. had elected to be
taxed as an S corporation and its wholly-owned subsidiaries were
either limited liability companies or S corporations, each of
which was a pass-through entity for federal income tax purposes. |
|
(4) |
|
Earnings per share and shares outstanding for all periods
presented retroactively reflect the impact of the Companys
2004 pre-initial public offering stock split. |
40
ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and
is qualified in its entirety by, the audited consolidated
financial statements, and the notes thereto and other financial
information included in this
Form 10-K.
Certain statements in this Managements Discussion
and Analysis of Financial Condition and Results of
Operations are forward-looking statements. See
Special Note Regarding Forward-Looking
Statements.
Operations
We own and operate integrated resorts in Las Vegas and Macao,
and have current on-going development projects in Macao on the
Cotai Strip, and in Singapore and Pennsylvania.
The Palazzo, which partially opened in December 2007, had an
inconsequential impact on our Las Vegas operations.
Approximately 61.9% of gross revenue at The Venetian, The Sands
Expo Center and The Congress Center for the year ended
December 31, 2007, was derived from hotel rooms, food and
beverage, and other non-gaming sources and 38.1% was derived
from gaming. The percentage of non-gaming revenue for The
Venetian reflects the integrated resorts emphasis on the
group convention and trade show business and the resulting
higher occupancy and room rates during mid-week periods.
Our Macao operations consist of the Sands Macao, The Venetian
Macao, which opened in August 2007, and other ancillary
operations that support these properties and will support our
on-going development projects on the Cotai Strip as well.
Approximately 94.8% of the Sands Macaos gross revenue for
the year ended December 31, 2007, was derived from gaming
activities, with the remainder primarily derived from food and
beverage services. Approximately 81.4% of The Venetian
Macaos gross revenue for the period ended
December 31, 2007, was derived from gaming activities, with
the remainder derived from room revenues, food and beverage
services, and other non-gaming sources.
United
States Development Projects
Las
Vegas Condominiums
We are in the early stages of constructing a high-rise
residential condominium tower with approximately
1.0 million saleable square feet that will be situated
between The Palazzo and The Venetian. The condominium tower is
currently expected to open in late 2009 and will be built at an
estimated cost of approximately $600.0 million.
Sands
Bethworks
We are in the process of developing a gaming, hotel, shopping
and dining complex called Sands Bethworks located on the site of
the Historic Bethlehem Steel Works in Bethlehem, Pennsylvania,
which is about 70 miles from midtown Manhattan, New York.
Sands Bethworks is currently expected to open in summer 2009 and
will be built at an estimated cost of approximately
$600.0 million.
Macao
Development Projects
We have submitted development plans to the Macao government for
six integrated resort developments, in addition to The Venetian
Macao, on an area of approximately 200 acres located on the
Cotai Strip. The developments are expected to include hotels,
exhibition and conference facilities, casinos, showrooms,
shopping malls, spas, restaurants, entertainment facilities and
other attractions and amenities, as well as public common areas.
Upon completion, our developments on the Cotai Strip (including
The Venetian Macao) are currently planned to feature
approximately 19,750 suites/rooms and 1.6 million square
feet of gaming space with a capacity of approximately 3,300
table games and 16,470 slot machines.
41
Singapore
Development Project
In August 2006, MBS entered into the Development Agreement with
the STB to build and operate an integrated resort called the
Marina Bay Sands in Singapore. Although construction has started
on the Marina Bay Sands, we are continuing to work with the
Singapore government to finalize various aspects of the
integrated resort and are in the process of revising our cost
estimates for the project. We expect the cost to develop and
construct the Marina Bay Sands will be in excess of
$4.0 billion, inclusive of payment made in 2006 for the
land premium, taxes and other fees. The Marina Bay Sands is
expected to open in late 2009.
Other
Development Projects
We are currently exploring the possibility of developing and
operating integrated resorts in additional Asian and
U.S. jurisdictions, and in Europe.
Summary
Financial Results
The following table summarizes our results of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
Percent
|
|
|
|
|
|
Percent
|
|
|
|
|
|
|
2007
|
|
|
Change
|
|
|
2006
|
|
|
Change
|
|
|
2005
|
|
|
|
(In thousands, except for percentages)
|
|
|
Net revenues
|
|
$
|
2,950,567
|
|
|
|
31.9
|
%
|
|
$
|
2,236,859
|
|
|
|
28.5
|
%
|
|
$
|
1,740,912
|
|
Operating expenses
|
|
|
2,620,557
|
|
|
|
57.6
|
%
|
|
|
1,662,762
|
|
|
|
32.9
|
%
|
|
|
1,251,461
|
|
Operating income
|
|
|
330,010
|
|
|
|
(42.5
|
)%
|
|
|
574,097
|
|
|
|
17.3
|
%
|
|
|
489,451
|
|
Income before income taxes
|
|
|
138,279
|
|
|
|
(72.6
|
)%
|
|
|
504,246
|
|
|
|
75.1
|
%
|
|
|
287,936
|
|
Net income
|
|
|
116,688
|
|
|
|
(73.6
|
)%
|
|
|
442,003
|
|
|
|
55.8
|
%
|
|
|
283,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of Net Revenues Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Operating expenses
|
|
|
88.8%
|
|
|
|
74.3%
|
|
|
|
71.9%
|
|
Operating income
|
|
|
11.2%
|
|
|
|
25.7%
|
|
|
|
28.1%
|
|
Income before income taxes
|
|
|
4.7%
|
|
|
|
22.5%
|
|
|
|
16.5%
|
|
Net income
|
|
|
4.0%
|
|
|
|
19.8%
|
|
|
|
16.3%
|
|
As a growth company with a significant development pipeline, our
historical financial results will not be indicative of our
future results as we continue to open new properties, including
our remaining Cotai Strip developments and Marina Bay Sands.
Key
Operating Revenue Measurements
Operating revenues at our Las Vegas properties and The Venetian
Macao are dependent upon the volume of customers who stay at the
hotel, which affects the price that can be charged for hotel
rooms and the volume of table games and slot machine play. Hotel
revenues are not material for the Sands Macao as its revenues
are principally driven by casino customers that visit the casino
on a daily basis. Visitors to our Macao properties arrive by
ferry, automobile, bus, airplane or helicopter from Hong Kong,
cities in China, and other Southeast Asian cities in close
proximity to Macao and elsewhere.
The following are the key measurements we use to evaluate
operating revenue:
Casino revenue measurements for Las
Vegas: Table games drop and slot 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 or coin placed into slot machines in
aggregate for the period cited. Drop and handle are
abbreviations for table games drop and slot handle. Based upon
our mix of table games, our table games produce a statistical
average win percentage (calculated before
42
discounts) as measured as a percentage of table game drop of
20.0% to 22.0% and slot machines produce a statistical average
win percentage (calculated before slot club cash incentives) as
measured as a percentage of slot machine handle generally
between 6.0% and 7.0%.
Casino revenue measurements for Macao: Macao
table games are segregated into two groups, consistent with the
Macao markets convention: Rolling Chip play (all VIP play)
and Non-Rolling Chip play (mostly non-VIP players). The volume
measurement for Rolling Chip play is non-negotiable gaming chips
wagered. The volume measurement for Non-Rolling Chip play is
table games drop as described above. Rolling Chip volume and
Non-Rolling Chip volume are not equivalent as Rolling Chip
volume is a measure of amounts wagered versus dropped. Rolling
Chip volume is substantially higher than table games drop. Slot
handle is the gross amount wagered or coins placed into slot
machines in aggregate for the period cited.
We view Rolling Chip table games win as a percentage of Rolling
Chip volume and Non-Rolling Chip table games win as a percentage
of drop. 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 in Macao, our Rolling Chip table games
win percentage (calculated before discounts and commissions) as
measured as a percentage of Rolling Chip volume is expected to
be 3.0% and our Non-Rolling Chip table games are expected to
produce a statistical average win percentage as measured as a
percentage of table game drop of 18.0% to 20.0%. Similar to Las
Vegas, our Macao slot machines produce a statistical average win
percentage as measured as a percentage of slot machine handle of
generally between 6.0% and 7.0%.
Actual win may vary from the statistical average. Generally,
slot machine play is conducted on a cash basis. Credit-based
wagering for our Las Vegas properties was approximately 62.6% of
table games revenues for the year ended December 31, 2007.
Table games play at our Macao properties are conducted primarily
on a cash basis with only 19.4% credit-based wagering for the
year ended December 31, 2007.
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.
Year
Ended December 31, 2007 compared to the Year Ended
December 31, 2006
Operating
Revenues
Our net revenues consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Casino
|
|
$
|
2,250,421
|
|
|
$
|
1,676,061
|
|
|
|
34.3
|
%
|
Rooms
|
|
|
437,357
|
|
|
|
350,606
|
|
|
|
24.7
|
%
|
Food and beverage
|
|
|
238,252
|
|
|
|
187,819
|
|
|
|
26.9
|
%
|
Convention, retail and other
|
|
|
178,392
|
|
|
|
125,692
|
|
|
|
41.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,104,422
|
|
|
|
2,340,178
|
|
|
|
32.7
|
%
|
Less promotional allowances
|
|
|
(153,855
|
)
|
|
|
(103,319
|
)
|
|
|
48.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,950,567
|
|
|
$
|
2,236,859
|
|
|
|
31.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43
Consolidated net revenues were $2.95 billion for the year
ended December 31, 2007, an increase of $713.7 million
compared to $2.24 billion for the year ended
December 31, 2006. The increase in net revenues was due
primarily to the opening of The Venetian Macao in August 2007.
Casino revenues for the year ended December 31, 2007,
increased $574.4 million as compared to the year ended
December 31, 2006. Of the increase, $549.3 million was
attributable to the opening of The Venetian Macao in August 2007
and $32.6 million was attributable to the growth of our
casino operations at the Sands Macao, offset by a slight
decrease at The Venetian of $6.8 million, attributable to a
decrease in win percentage as compared to the year ended
December 31, 2006. The following table summarizes the
results of our casino revenue activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Sands Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
1,296,869
|
|
|
$
|
1,264,290
|
|
|
|
2.6
|
%
|
Non-Rolling Chip table games drop
|
|
$
|
3,525,609
|
|
|
$
|
4,178,655
|
|
|
|
(15.6
|
)%
|
Non-Rolling Chip table games win percentage
|
|
|
18.7
|
%
|
|
|
18.6
|
%
|
|
|
0.1
|
pts
|
Rolling Chip volume
|
|
$
|
26,325,271
|
|
|
$
|
17,114,962
|
|
|
|
53.8
|
%
|
Rolling Chip win percentage
|
|
|
2.97
|
%
|
|
|
3.18
|
%
|
|
|
(0.21
|
)pts
|
Slot handle
|
|
$
|
1,181,050
|
|
|
$
|
1,048,795
|
|
|
|
12.6
|
%
|
Slot hold percentage
|
|
|
6.9
|
%
|
|
|
7.7
|
%
|
|
|
(0.8
|
)pts
|
The Venetian Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
549,298
|
|
|
$
|
|
|
|
|
|
%
|
Non-Rolling Chip table games drop
|
|
$
|
1,115,812
|
|
|
$
|
|
|
|
|
|
%
|
Non-Rolling Chip table games win percentage
|
|
|
17.3
|
%
|
|
|
|
%
|
|
|
|
pts
|
Rolling Chip volume
|
|
$
|
17,071,475
|
|
|
$
|
|
|
|
|
|
%
|
Rolling Chip win percentage
|
|
|
2.64
|
%
|
|
|
|
%
|
|
|
|
pts
|
Slot handle
|
|
$
|
490,068
|
|
|
$
|
|
|
|
|
|
%
|
Slot hold percentage
|
|
|
7.9
|
%
|
|
|
|
%
|
|
|
|
pts
|
The Venetian
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
405,014
|
|
|
$
|
411,771
|
|
|
|
(1.6
|
)%
|
Table games drop
|
|
$
|
1,353,683
|
|
|
$
|
1,266,931
|
|
|
|
6.8
|
%
|
Table games win percentage
|
|
|
22.3
|
%
|
|
|
26.0
|
%
|
|
|
(3.7
|
)pts
|
Slot handle
|
|
$
|
2,483,531
|
|
|
$
|
2,136,267
|
|
|
|
16.3
|
%
|
Slot hold percentage
|
|
|
6.0
|
%
|
|
|
6.5
|
%
|
|
|
(0.5
|
)pts
|
In our experience, average win percentages remain steady when
measured over extended periods of time but can vary considerably
within shorter time periods as a result of the statistical
variances that are associated with games of chance in which
large amounts are wagered. The table above excludes The Palazzo
for 2007 as the two days of operations are not material or
indicative of future results.
Room revenues for the year ended December 31, 2007,
increased $86.8 million as compared to the year ended
December 31, 2006. The increase was primarily attributable
to $63.4 million from The Venetian Macao as well as an
increase in the average daily room rate at The Venetian. The
Palazzo suites were not open to the public until
44
January 2008. The suites at Sands Macao are primarily provided
to casino patrons on a complimentary basis and therefore have
not been included in the following table, which summarizes the
results of our room revenue activity.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Change
|
|
|
The Venetian
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily room rate
|
|
$
|
258
|
|
|
$
|
239
|
|
|
|
7.9
|
%
|
Occupancy rate
|
|
|
98.4
|
%
|
|
|
98.7
|
%
|
|
|
(0.3
|
)pts
|
Revenue per available room
|
|
$
|
254
|
|
|
$
|
236
|
|
|
|
7.6
|
%
|
The Venetian Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily room rate
|
|
$
|
221
|
|
|
$
|
|
|
|
|
|
%
|
Occupancy rate
|
|
|
85.7
|
%
|
|
|
|
%
|
|
|
|
pts
|
Revenue per available room
|
|
$
|
190
|
|
|
$
|
|
|
|
|
|
%
|
Food and beverage revenues for the year ended December 31,
2007, increased $50.4 million as compared to the year ended
December 31, 2006. The increase was primarily attributable
to $21.2 million from The Venetian Macao and increases of
$11.4 million at the Sands Macao due to the increased
number of visitors and $8.0 million at The Venetian from
two of our joint venture restaurants which opened during summer
2007.
Convention, retail and other revenues for the year ended
December 31, 2007, increased $52.7 million as compared
to the year ended December 31, 2006. The increase was
primarily attributable to $41.3 million of revenues from
The Venetian Macao, consisting principally of rental revenues
from the mall, and approximately $9.6 million of other
revenue related to large group room cancellations at The
Venetian.
Operating
Expenses
The breakdown of operating expenses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Casino
|
|
$
|
1,435,662
|
|
|
$
|
925,033
|
|
|
|
55.2
|
%
|
Rooms
|
|
|
94,219
|
|
|
|
85,651
|
|
|
|
10.0
|
%
|
Food and beverage
|
|
|
118,273
|
|
|
|
89,113
|
|
|
|
32.7
|
%
|
Convention, retail and other
|
|
|
97,689
|
|
|
|
64,315
|
|
|
|
51.9
|
%
|
Provision for doubtful accounts
|
|
|
26,369
|
|
|
|
18,067
|
|
|
|
46.0
|
%
|
General and administrative
|
|
|
319,357
|
|
|
|
230,355
|
|
|
|
38.6
|
%
|
Corporate expense
|
|
|
94,514
|
|
|
|
59,570
|
|
|
|
58.7
|
%
|
Rental expense
|
|
|
31,787
|
|
|
|
13,478
|
|
|
|
135.8
|
%
|
Pre-opening expense
|
|
|
189,280
|
|
|
|
37,673
|
|
|
|
402.4
|
%
|
Development expense
|
|
|
9,728
|
|
|
|
26,112
|
|
|
|
(62.7
|
)%
|
Depreciation and amortization
|
|
|
202,557
|
|
|
|
110,771
|
|
|
|
82.9
|
%
|
Loss on disposal of assets
|
|
|
1,122
|
|
|
|
2,624
|
|
|
|
(57.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
2,620,557
|
|
|
$
|
1,662,762
|
|
|
|
57.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses were $2.62 billion for the year ended
December 31, 2007, an increase of $957.8 million as
compared to $1.66 billion for the year ended
December 31, 2006. The increase in operating expenses was
primarily attributable to the higher operating revenues, growth
of our operating businesses in Macao and to a lesser extent in
Las Vegas, and pre-opening activities as more fully described
below.
Casino expenses for the year ended December 31, 2007,
increased $510.6 million as compared to the year ended
December 31, 2006. Of the $510.6 million increase,
$322.1 million was due to the 39.0% gross win tax on higher
casino revenues from our properties in Macao. An additional
$109.6 million in casino-related expenses
45
(exclusive of the aforementioned 39.0% gross win tax) were
attributable to The Venetian Macao. The remaining increase was
primarily attributable to additional payroll-related expenses
and our Rolling Chip program at Sands Macao.
Rooms expense increased $8.6 million, food and beverage
expense increased $29.2 million and convention, retail and
other expense increased $33.4 million. These increases were
primarily due to the associated increase in the respective
revenue categories as noted above.
The provision for doubtful accounts was $26.4 million for
the year ended December 31, 2007, compared to
$18.1 million for the year ended December 31, 2006,
due primarily to a $10.6 million provision for one customer
in the beginning of 2007. 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.
General and administrative expenses for the year ended
December 31, 2007, increased $89.0 million as compared
to the year ended December 31, 2006. The increase was
attributable to the growth of our operating businesses in Las
Vegas and Macao, with $69.5 million of the increase being
incurred at The Venetian Macao and $6.9 million being
incurred in Las Vegas and at Sands Macao related to stock-based
compensation expense.
Corporate expense for the year ended December 31, 2007,
increased $34.9 million as compared to the year ended
December 31, 2006. The increase was attributable to
increases of $16.2 million in legal and professional fees,
$5.2 million in payroll-related expenses, $4.5 million
in travel-related expenses and $9.0 million of other
corporate general and administrative costs as we continue to
build our corporate infrastructure to support our current and
planned growth.
Rental expense for the year ended December 31, 2007,
increased $18.3 million as compared to the year ended
December 31, 2006. The increase is primarily attributable
to a full year of amortization of Singapores leasehold
interest in land, which we entered into in August 2006, and
amortization of the leasehold interest in land for parcels 1, 2
and 3 on the Cotai Strip, which we entered into in February 2007.
Pre-opening and development expenses were $189.3 million
and $9.7 million, respectively, for the year ended
December 31, 2007, as compared to $37.7 million and
$26.1 million, respectively, for the year ended
December 31, 2006. 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
year ended December 31, 2007, were primarily related to the
opening of The Venetian Macao and The Palazzo, and activities at
our other Cotai Strip, Marina Bay Sands and Sands Bethworks
projects. Development expenses include the costs associated with
the Companys evaluation and pursuit of new business
opportunities, which are also expensed as incurred. Development
expenses for the year ended December 31, 2007, were
primarily related to our activities in Hengqin Island, Asia,
Europe and the U.S. We expect that pre-opening and
development expenses will decrease due to the opening of The
Venetian Macao and The Palazzo during 2007.
Depreciation and amortization expense for the year ended
December 31, 2007, increased $91.8 million as compared
to the year ended December 31, 2006. The increase was
primarily the result of The Venetian Macao (totaling
$60.0 million) and a full year of depreciation expense
related to the Sands Macao podium expansion (an increase of
$7.0 million), which was placed into service in August
2006. Additionally, there was $7.5 million in accelerated
deprecation expense during the year ended December 31,
2007, related to the replacement of assets at The Venetian in
connection with the room renovation project.
46
Interest
Expense
The following table summarizes information related to interest
expense on long-term debt:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands, except for percentages)
|
|
|
Interest cost (which includes the amortization of deferred
financing costs and original issue discounts)
|
|
$
|
468,056
|
|
|
$
|
230,447
|
|
Less capitalized interest
|
|
|
(223,248
|
)
|
|
|
(94,594
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
244,808
|
|
|
$
|
135,853
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
438,301
|
|
|
$
|
215,975
|
|
Average total debt balance
|
|
$
|
6,148,835
|
|
|
$
|
2,898,936
|
|
Weighted average interest rate
|
|
|
7.5
|
%
|
|
|
7.9
|
%
|
Interest cost increased $237.6 million as compared to the
year ended December 31, 2006, resulting from the
substantial increase in our average long-term debt balances, the
proceeds from which were primarily used to fund our various
development projects. See Liquidity and
Capital Resources for further detail of our financing
activities. The increase in interest cost was offset by the
capitalization of $223.2 million of interest during the
year ended December 31, 2007, as compared to
$94.6 million of capitalized interest during the year ended
December 31, 2006. We expect our interest cost will
continue to increase as our long-term debt balances increase.
Leasehold interest in land payments made in Macao and Singapore
are not considered qualifying assets and as such, are not
included in the base amount used to determine capitalized
interest.
Other
Factors Affecting Earnings
Interest income for the year ended December 31, 2007, was
$72.5 million, an increase of $6.3 million as compared
to $66.2 million for the year ended December 31, 2006.
The increase was attributable to additional invested cash
balances, primarily from our borrowings under the
U.S. senior secured credit facilities and the Macao credit
facility that have not yet been spent.
Other expense for the year ended December 31, 2007, was
$8.7 million as compared to $0.2 million for the year
ended December 31, 2006. The $8.7 million expense
amount was primarily attributable to foreign exchange
translation losses associated with U.S. denominated debt
held in Macao.
The loss on early retirement of debt of $10.7 million for
the year ended December 31, 2007, was due to the
refinancing of our U.S. senior secured credit facility and
the early retirement of the construction loan related to The
Shoppes at The Palazzo.
Our effective income tax rate for the year ended
December 31, 2007, was 15.6%. The effective tax rate for
the year was significantly lower than the federal statutory rate
due primarily to a zero effective tax rate on our Macao net
income as a result of an income tax exemption in Macao on gaming
operations, which is set to expire at the end of 2008. Based on
Macanese law and the treatment of other gaming operators, we
believe the income tax exemption will be extended for an
additional five-year term. The effective tax rate was 12.3% for
the year ended December 31, 2006, primarily due to the
application of the aforementioned Macao income tax exemption.
The effective income tax rate for 2007 was higher than the 2006
period due to no tax benefit being recorded on certain losses in
some foreign jurisdictions and our geographic income mix.
47
Year
Ended December 31, 2006 compared to the Year Ended
December 31, 2005
Operating
Revenues
Our net revenues consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Casino
|
|
$
|
1,676,061
|
|
|
$
|
1,250,090
|
|
|
|
34.1
|
%
|
Rooms
|
|
|
350,606
|
|
|
|
323,560
|
|
|
|
8.4
|
%
|
Food and beverage
|
|
|
187,819
|
|
|
|
147,510
|
|
|
|
27.3
|
%
|
Convention, retail and other
|
|
|
125,692
|
|
|
|
103,065
|
|
|
|
22.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,340,178
|
|
|
|
1,824,225
|
|
|
|
28.3
|
%
|
Less promotional allowances
|
|
|
(103,319
|
)
|
|
|
(83,313
|
)
|
|
|
24.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,236,859
|
|
|
$
|
1,740,912
|
|
|
|
28.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated net revenues were $2.24 billion for the year
ended December 31, 2006, an increase of $495.9 million
compared to $1.74 billion for the year ended
December 31, 2005. The increase in net revenues was due
primarily to an increase in casino revenues of
$426.0 million, which was primarily attributable to the
growth of our operations at the Sands Macao.
Casino revenues for the year ended December 31, 2006,
increased $426.0 million as compared the year ended
December 31, 2005. Of the increase, $382.1 million was
attributable to the growth of our casino operations at the Sands
Macao due primarily to the formal introduction of our Rolling
Chip program in March 2005 and casino expansion in August 2006.
The following table summarizes the results of our casino revenue
activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Sands Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
1,264,290
|
|
|
$
|
882,175
|
|
|
|
43.3
|
%
|
Non-Rolling Chip table games drop
|
|
$
|
4,178,655
|
|
|
$
|
4,002,635
|
|
|
|
4.4
|
%
|
Non-Rolling Chip table games win percentage
|
|
|
18.6
|
%
|
|
|
16.5
|
%
|
|
|
2.1
|
pts
|
Rolling Chip volume
|
|
$
|
17,114,962
|
|
|
$
|
9,982,942
|
|
|
|
71.4
|
%
|
Rolling Chip win percentage
|
|
|
3.18
|
%
|
|
|
2.40
|
%
|
|
|
0.78
|
pts
|
Slot handle
|
|
$
|
1,048,795
|
|
|
$
|
720,085
|
|
|
|
45.6
|
%
|
Slot hold percentage
|
|
|
7.7
|
%
|
|
|
8.4
|
%
|
|
|
(0.7
|
)pts
|
The Venetian
|
|
|
|
|
|
|
|
|
|
|
|
|
Total casino revenues
|
|
$
|
411,771
|
|
|
$
|
367,915
|
|
|
|
11.9
|
%
|
Table games drop
|
|
$
|
1,266,931
|
|
|
$
|
1,184,468
|
|
|
|
7.0
|
%
|
Table games win percentage
|
|
|
26.0
|
%
|
|
|
20.0
|
%
|
|
|
6.0
|
pts
|
Slot handle
|
|
$
|
2,136,267
|
|
|
$
|
2,039,224
|
|
|
|
4.8
|
%
|
Slot hold percentage
|
|
|
6.5
|
%
|
|
|
6.3
|
%
|
|
|
0.2
|
pts
|
In our experience, average win percentages remain steady when
measured over extended periods of time, but can vary
considerably within shorter time periods as a result of the
statistical variances that are associated with games of chance
in which large amounts are wagered.
48
Room revenues for the year ended December 31, 2006,
increased $27.0 million as compared to the year ended
December 31, 2005. The increase was attributable to the
increase in the average daily room rate as well as a slight
increase in the occupancy rate. The following table summarizes
the results of our room revenue activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Change
|
|
|
The Venetian
|
|
|
|
|
|
|
|
|
|
|
|
|
Average daily room rate
|
|
$
|
239
|
|
|
$
|
225
|
|
|
|
6.2
|
%
|
Occupancy rate
|
|
|
98.7
|
%
|
|
|
97.3
|
%
|
|
|
1.4
|
pts
|
Revenue per available room
|
|
$
|
236
|
|
|
$
|
218
|
|
|
|
8.3
|
%
|
Food and beverage revenues were $187.8 million for the year
ended December 31, 2006, an increase of $40.3 million
as compared to $147.5 million for the year ended
December 31, 2005. The increase was primarily attributable
to food and beverage revenues at The Venetian, which increased
$32.2 million due to increased group business resulting
primarily from approximately 450,000 square feet of
additional meeting space at the property.
Convention, retail and other revenues for the year ended
December 31, 2006, increased $22.6 million as compared
to the year ended December 31, 2005. The increase is
primarily attributable to $7.6 million of additional
convention revenues from The Sands Expo Center and
$10.4 million in revenues associated with the Blue Man
Group, the Phantom of the Opera and the Gordie Brown
performances, which began in October 2005, June 2006 and October
2006, respectively.
Operating
Expenses
The breakdown of operating expenses is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
Percent Change
|
|
|
|
(In thousands, except for percentages)
|
|
|
Casino
|
|
$
|
925,033
|
|
|
$
|
656,590
|
|
|
|
40.9
|
%
|
Rooms
|
|
|
85,651
|
|
|
|
82,058
|
|
|
|
4.4
|
%
|
Food and beverage
|
|
|
89,113
|
|
|
|
76,736
|
|
|
|
16.1
|
%
|
Convention, retail and other
|
|
|
64,315
|
|
|
|
58,068
|
|
|
|
10.8
|
%
|
Provision for doubtful accounts
|
|
|
18,067
|
|
|
|
9,358
|
|
|
|
93.1
|
%
|
General and administrative
|
|
|
230,355
|
|
|
|
192,806
|
|
|
|
19.5
|
%
|
Corporate expense
|
|
|
59,570
|
|
|
|
38,297
|
|
|
|
55.5
|
%
|
Rental expense
|
|
|
13,478
|
|
|
|
14,841
|
|
|
|
(9.2
|
)%
|
Pre-opening expense
|
|
|
37,673
|
|
|
|
3,732
|
|
|
|
909.5
|
%
|
Development expense
|
|
|
26,112
|
|
|
|
22,238
|
|
|
|
17.4
|
%
|
Depreciation and amortization
|
|
|
110,771
|
|
|
|
95,296
|
|
|
|
16.2
|
%
|
Loss on disposal of assets
|
|
|
2,624
|
|
|
|
1,441
|
|
|
|
82.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
$
|
1,662,762
|
|
|
$
|
1,251,461
|
|
|
|
32.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses were $1.66 billion for the year ended
December 31, 2006, an increase of $411.3 million as
compared to $1.25 billion for the year ended
December 31, 2005. The increase in operating expenses was
primarily attributable to the higher operating revenues and
growth of our operating businesses in Macao and to a lesser
extent in Las Vegas, as more fully described below.
Casino expenses for the year ended December 31, 2006,
increased $268.4 million as compared to the year ended
December 31, 2005. Of the increase in casino expenses,
$176.1 million was due to the 39.0% gross win tax on casino
revenues in Macao. Despite the higher gross win tax, casino
operating margins at Sands Macao are similar to those at The
Venetian primarily because of lower labor, marketing and sales
expenses in Macao. As the Rolling Chip volume increases as a
percentage of our total gaming operations, casino margins will
decrease due to the commissions paid under the Rolling Chip
program. The remaining increase was primarily attributable to
the
49
additional payroll related expenses related to the continued
growth of our operations at Sands Macao and the casino expansion
in August 2006.
Food and beverage expense increased $12.4 million and
convention, retail and other expense increased
$6.2 million. These increases were primarily due to the
associated increase in the respective revenue categories as
noted above.
The provision for doubtful accounts was $18.1 million for
the year ended December 31, 2006, compared to
$9.4 million for the year ended December 31, 2005, due
primarily to an increase in casino and hotel receivables during
the year. 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.
General and administrative expenses for the year ended
December 31, 2006, increased $37.5 million as compared
to the year ended December 31, 2005. The increase was
attributable to the growth of our operating businesses in Las
Vegas and Macao as well as $7.1 million related to
stock-based compensation expense recorded in connection with the
adoption of Statement of Financial Accounting Standards
(SFAS) No. 123R.
Corporate expense for the year ended December 31, 2006,
increased $21.3 million as compared to the year ended
December 31, 2005. Of the increase in corporate expense,
$19.5 million was related to payroll and other operating
expenses as we increase our headcount in the corporate area to
support our continued expansion activities and $5.4 million
related to stock-based compensation recorded in connection with
the adoption of SFAS No. 123R, partially offset by a
$5.0 million charitable contribution that was made in 2005
that did not recur in 2006.
Pre-opening and development expenses were $37.7 million and
$26.1 million, respectively, for the year ended
December 31, 2006, compared to $3.7 million and
$22.2 million, respectively, for the year ended
December 31, 2005. 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
year ended December 31, 2006, were primarily related to The
Venetian Macao project and to the expansion of the Sands Macao.
Development expenses include the costs associated with the
Companys evaluation and pursuit of new business
opportunities, which are also expensed as incurred. Development
expenses for the year ended December 31, 2006, were
primarily related to our activities in Singapore, Pennsylvania
and Europe. We expect that pre-opening and development expenses
will continue to increase as we progress with The Venetian Macao
and other Cotai Strip projects in Macao, The Palazzo in Las
Vegas, Marina Bay Sands in Singapore, Hengqin Island and
Pennsylvania, as well as our continued pursuit of development
opportunities elsewhere.
Depreciation and amortization expense for the year ended
December 31, 2006, increased $15.5 million as compared
to the year ended December 31, 2005. The increase was
primarily due to additional depreciation expense as a result of
capital improvements at The Venetian and Sands Macao.
Interest
Expense
The following table summarizes information related to interest
expense on long-term debt:
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except for percentages)
|
|
|
Interest cost (which includes the amortization of deferred
financing costs and original issue discounts)
|
|
$
|
230,447
|
|
|
$
|
118,992
|
|
Less capitalized interest
|
|
|
(94,594
|
)
|
|
|
(22,700
|
)
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
$
|
135,853
|
|
|
$
|
96,292
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
215,975
|
|
|
$
|
111,066
|
|
Average total debt balance
|
|
$
|
2,898,936
|
|
|
$
|
1,520,913
|
|
Weighted average interest rate
|
|
|
7.9
|
%
|
|
|
7.8
|
%
|
50
Interest expense, net of amounts capitalized, for the year ended
December 31, 2006, increased $39.6 million as compared
to the year ended December 31, 2005. This increase is
primarily attributable to an increase in our average long-term
debt balances resulting primarily from the completion of the
$2.5 billion Macao credit facility, in May 2006, to support
our development activities in Macao and the $1.53 billion
Singapore bridge facility, in August 2006, to support the
development of the Marina Bay Sands. We expect interest expense
will continue to increase as our long-term debt balances and
interest rates increase. This increase was offset by the
capitalization of $94.6 million of interest during the year
ended December 31, 2006, compared to $22.7 million of
capitalized interest during the year ended December 31,
2005. We expect capitalized interest will continue to increase
as The Venetian Macao and The Palazzo projects approach their
anticipated 2007 opening dates and as we increase our
construction activities on the Cotai Strip, at Marina Bay Sands
and Sands Bethworks.
Other
Factors Affecting Earnings
Interest income for the year ended December 31, 2006, was
$66.2 million, an increase of $33.1 million as
compared to $33.1 million for the year ended
December 31, 2005. The increase was attributable to
additional invested cash balances, primarily from our borrowings
under the U.S. senior secured credit facility and the Macao
credit facility.
The loss on early retirement of debt of $137.0 million
during the year ended December 31, 2005, was the result of
the redemption of Las Vegas Sands, Inc.s
$843.6 million in aggregate principal amount of 11%
mortgage notes and VMLs $120.0 million in aggregate
principal amount of senior secured notes.
Our effective income tax rate for the year ended
December 31, 2006, was 12.3%. The effective tax rate for
the year was significantly lower than the federal statutory rate
due primarily to a zero effective tax rate on our Macao net
income as a result of an income tax exemption in Macao on gaming
operations, which is set to expire at the end of 2008. The
effective tax rate was 1.5% for the year ended December 31,
2005, primarily due to the tax benefit associated with the loss
on early retirement of debt in the 2005 period, as well as the
application of the aforementioned Macao income tax exemption.
51
Liquidity
and Capital Resources
Cash
Flows Summary
Our cash flows consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Net cash provided by (used in) operations
|
|
$
|
365,457
|
|
|
$
|
(196,720
|
)
|
|
$
|
589,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(3,793,703
|
)
|
|
|
(1,925,291
|
)
|
|
|
(860,621
|
)
|
Change in restricted cash
|
|
|
556,276
|
|
|
|
(310,565
|
)
|
|
|
(265,386
|
)
|
Acquisition of gaming license included in other assets
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(3,287,427
|
)
|
|
|
(2,235,856
|
)
|
|
|
(1,126,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing cash flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid to shareholders
|
|
|
|
|
|
|
|
|
|
|
(21,052
|
)
|
Proceeds from exercise of stock options
|
|
|
30,221
|
|
|
|
7,226
|
|
|
|
313
|
|
Proceeds from long term-debt
|
|
|
5,135,076
|
|
|
|
2,619,995
|
|
|
|
812,222
|
|
Repayments of long-term debt
|
|
|
(1,775,801
|
)
|
|
|
(132,746
|
)
|
|
|
(969,127
|
)
|
Other
|
|
|
(66,631
|
)
|
|
|
(51,493
|
)
|
|
|
(125,074
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
3,322,865
|
|
|
|
2,442,982
|
|
|
|
(302,718
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
(11,811
|
)
|
|
|
814
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
389,084
|
|
|
$
|
11,220
|
|
|
$
|
(838,052
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows Operating Activities
Table games play at our Las Vegas properties is conducted on a
cash and credit basis while table games play at our Macao
properties is conducted primarily on a cash basis. Slot machine
play is primarily conducted on a cash basis. The retail hotel
rooms business is generally conducted on a cash basis, the group
hotel rooms business is conducted on a cash and credit basis,
and banquet business is conducted primarily on a credit basis
resulting in operating cash flows being generally affected by
changes in operating income and accounts receivable. Net cash
provided by operating activities for the year ended
December 31, 2007, was $365.5 million, an increase of
$562.2 million as compared with cash used in operating
activities of $196.7 million for the year ended
December 31, 2006. The main factor contributing to the
increase is the payments of leasehold interests in land. In
2006, we paid $786.7 million for the Singapore leasehold
interest in land and in 2007, we made payments totaling
$235.2 million for the Macao leasehold interests in land
related to parcels 1, 2 and 3 and the Sands Macao hotel tower
expansion. This increase is offset by a decrease in operating
income (as previously described) during the year ended
December 31, 2007, as compared to the year ended
December 31, 2006.
Cash
Flows Investing Activities
Capital expenditures for the year ended December 31, 2007,
totaled $3.79 billion, including $1.96 billion for
construction and development activities in Macao (including the
Sands Macao, The Venetian Macao and our other developments on
the Cotai Strip); $1.18 billion for construction and
development activities at The Palazzo and The Shoppes at The
Palazzo; $364.6 million for construction and development
activities in Singapore; $152.2 million on expansions,
improvements and maintenance capital expenditures at The
Venetian and The Sands Expo Center in Las Vegas; and
$129.9 million for corporate and other activities,
primarily for the purchase of aircraft and the construction of
Sands Bethworks.
52
Restricted cash decreased $556.3 million due primarily to
decreases in restricted cash balances at The Venetian, The
Palazzo and The Sands Expo Center, which totaled
$413.7 million, due primarily to construction payments
related to The Palazzo and, to a lesser extent, the refinancing
of the new $5.0 billion senior secured credit facility,
which removed restrictions on certain cash balances. There was
also a $406.2 million decrease in the restricted cash
balances in Macao due to the use of proceeds from loan draws to
fund additional construction costs for The Venetian Macao and a
$50.0 million decrease related to the payment for our
Pennsylvania gaming license, offset by an increase of
$318.5 million in restricted cash balances held in
Singapore for construction-related payments.
Cash
Flows Financing Activities
For the year ended December 31, 2007, net cash flows
provided from financing activities were $3.32 billion. The
net increase was primarily attributable to the net borrowings of
$2.99 billion under the new U.S. senior secured credit
facility, $1.55 billion under the Macao credit facility,
$339.8 million under the Singapore bridge facility and
$89.5 million under the airplane financings, offset by the
net repayment of existing U.S. borrowings of
$1.43 billion for the prior senior secured credit facility,
$114.5 million for The Shoppes at The Palazzo construction
loan and $90.9 million for The Sands Expo Center mortgage
loan.
Capital
and Liquidity
As previously described, we have a number of significant
development projects underway in the United States, Macao and
Singapore for which we expect construction to continue through
2011. In the United States, the estimated costs to build the Las
Vegas condominium tower and the Sands Bethworks project are each
approximately $600.0 million, of which we have capitalized
approximately $82.1 million and $66.9 million,
respectively. In Macao, the estimated cost to build our
developments on the Cotai Strip (including The Venetian Macao)
is approximately $12.0 billion, of which we have
capitalized approximately $2.91 billion. In Singapore,
although construction has started on the Marina Bay Sands, we
are continuing to work with the Singapore government to finalize
various design aspects of the integrated resort and are in the
process of finalizing our cost estimates for the project. We
expect that the cost to design, develop and construct the Marina
Bay Sands will be in excess of $4.0 billion (inclusive of
payments made in 2006 for the land premium, taxes and other
fees) of which we have incurred approximately $1.39 billion.
We have principally funded our global development projects
through borrowings under the bank credit facilities of our
operating subsidiaries, operating cash flows and proceeds from
the disposition of non-core assets. In 2007, we began to execute
our financing strategy to secure additional borrowing capacity
to fund our existing and future development projects and
operations in Asia, including Macao and Singapore, and the
United States.
In April 2007, we increased the size of our Macao credit
facility to fund our Macao development projects from
$2.5 billion to $3.3 billion by exercising our right
to access an additional $800.0 million of incremental
facilities under the accordion feature provided under the Macao
credit facility. The incremental $800.0 million consisted
of an additional $600.0 million of term loans and an
increase of $200.0 million to the revolving credit facility
to $700.0 million. In connection with the increase in the
Macao credit facility, the lenders also approved a reduction of
the interest rate margin for all classes of loans by
50 basis points, thereby reducing our overall interest
expense under the Macao credit facility. As of December 31,
2007, we had approximately $449.0 million available for
borrowing under the revolving credit facility portion of the
Macao credit facility. We are currently in the preliminary
stages of exploring our options with respect to refinancing our
Macao credit facility, the proceeds of which would be used to
refinance the amount currently outstanding under the Macao
credit facility as well as provide incremental borrowings to
continue to fund our development projects on the Cotai Strip in
Macao.
In May 2007, we initiated our U.S. refinancing efforts by
entering into a $5.0 billion senior secured credit
facility. A portion of the proceeds of this facility was used to
refinance the indebtedness collateralized by our Las Vegas
integrated resort, including The Venetian, The Palazzo, The
Shoppes at The Palazzo and The Sands Expo Center, and to fund
design, development and construction costs incurred in the
connection with the completion of The Palazzo, which partially
opened on December 30, 2007, The Shoppes at The Palazzo and
the Las Vegas condominiums. We completed our
U.S. refinancing efforts by entering into a
$167.0 million amended and restated
53
FF&E credit facility in August 2007, the proceeds of which
are being used to finance or refinance the acquisition of
furniture, fixtures and equipment located in The Venetian and
The Palazzo. As of December 31, 2007, we had approximately
$1.97 billion and $105.0 million of available
borrowing capacity under the senior secured credit facility and
the amended and restated FF&E credit facility,
respectively. The senior secured credit facility permits us to
make investments in our foreign subsidiaries and our other
development projects outside of Las Vegas in an amount not to
exceed $2.1 billion, and permits us to invest in our Sands
Bethworks project so long as no more than 30% of any such
investment is in the form of equity. As of December 31,
2007, we have used approximately $705.8 million of the
permitted $2.1 billion to fund a portion of our required
equity contribution to the Marina Bay Sands project and
investments with respect to our other Asian development
projects, including in Macao.
In December 2007, we entered into a SGD 5.44 billion credit
facility (approximately $3.76 billion at exchange rates in
effect at December 31, 2007) to fund construction
costs and expenses at the Marina Bay Sands, which closed and
funded in January 2008. A portion of the proceeds of this
facility, together with a portion of our initial
SGD 800.0 million (approximately $553.4 million
at exchange rates in effect at December 31,
2007) equity contribution, were used to repay outstanding
borrowings of approximately SGD 1.92 billion (approximately
$1.33 billion at exchange rates in effect at
December 31, 2007) on the existing Singapore bridge
facility. The remaining funds available for borrowing under the
Singapore credit facility will be used to fund a significant
portion of the design, development and construction costs of the
Marina Bay Sands project. Under the terms of the Singapore
credit facility, we are obligated to fund at least 20% of the
total costs and expenses incurred in connection with the design,
development and construction of the Marina Bay Sands project
with equity contributions or subordinated intercompany loans,
with the remaining 80% funded with debt, including debt under
the Singapore credit facility. We have funded our current equity
contribution requirement through borrowings under our
U.S. senior secured credit facility.
Due to these substantial development activities, included in
current liabilities were construction payables of approximately
$717.5 million as of December 31, 2007. As a portion
of the current liabilities will be funded out of our long-term
borrowing capacity, we had a working capital deficit of
approximately $114.2 million as of December 31, 2007.
Subsequent to year-end, we borrowed approximately
$450.0 million on our credit facilities, of which
approximately $225.0 million was used to pay construction
payables outstanding as of December 31, 2007.
We held unrestricted and restricted cash and cash equivalents of
approximately $857.2 million and $411.8 million,
respectively, as of December 31, 2007. We believe that our
existing cash balances, operating cash flows from The Venetian
and The Palazzo and the proceeds from the anticipated sale of
The Shoppes at the Palazzo to GGP and our Las Vegas condominium
units, together with our available borrowing capacity under the
U.S. senior secured credit facility and the FF&E
credit facility, will be sufficient to fund the estimated
development and construction costs for the Las Vegas
condominiums and the Sands Bethworks projects during 2008. In
addition, we believe that these funds will also enable us to
fund our equity contribution requirement for the Marina Bay
Sands project and provide additional capital to our Macao
subsidiaries to fund a portion of our development projects on
the Cotai Strip in Macao during this same time period.
Existing restricted and unrestricted cash balances at our Macao
subsidiaries, operating cash flows from the Sands Macao and The
Venetian Macao and available borrowing capacity under the Macao
credit facility, together with funds made available under our
U.S. senior secured credit facility, will be used to fund
current development and construction costs for the Cotai Strip
development activities in the short term. However, we will need
to arrange additional debt
and/or
equity financing in the near term to continue to fund our
design, development and construction activities at the remaining
Cotai Strip development projects. We expect to complete this
refinancing in 2008.
In the near term, we will continue to borrow significant amounts
under our existing and future bank credit facilities as we fund
our global construction and development projects. In connection
with such borrowing needs, we regularly evaluate conditions in
the global credit markets. However, we may not be able to obtain
additional borrowings when necessary or on credit terms as
favorable as our existing credit facilities. If we are not able
to obtain the requisite financing or the terms are not as
favorable as we anticipate, we may be required to slow or
suspend our global development activities, including our Cotai
Strip development, until such financing or other sources of
funds become available.
54
Aggregate
Indebtedness and Other Known Contractual Obligations
Our total long-term indebtedness and other known contractual
obligations are summarized below as of December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period Ending December 31,
2007(12)
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than
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|
|
|
|
|
|
1 Year
|
|
|
2-3 Years
|
|
|
4-5 Years
|
|
|
5 Years
|
|
|
Total
|
|
|
|
(In thousands)
|
|
|
Long-Term Debt
Obligations(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Senior Secured Credit Facility Term B
|
|
$
|
30,000
|
|
|
$
|
60,000
|
|
|
$
|
60,000
|
|
|
$
|
2,835,000
|
|
|
$
|
2,985,000
|
|
6.375% Senior Notes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
|
|
|
250,000
|
|
Airplane Financings
|
|
|
3,688
|
|
|
|
7,375
|
|
|
|
7,375
|
|
|
|
71,046
|
|
|
|
89,484
|
|
FF&E Financing
|
|
|
6,142
|
|
|
|
29,940
|
|
|
|
25,334
|
|
|
|
|
|
|
|
61,416
|
|
Other U.S.
|
|
|
1,819
|
|
|
|
3,556
|
|
|
|
1,482
|
|
|
|
|
|
|
|
6,857
|
|
Macao Credit Facility Term B and Local Term
|
|
|
4,500
|
|
|
|
93,813
|
|
|
|
935,437
|
|
|
|
866,250
|
|
|
|
1,900,000
|
|
Macao Credit Facility Term B Delayed
|
|
|
1,750
|
|
|
|
14,000
|
|
|
|
684,250
|
|
|
|
|
|
|
|
700,000
|
|
Macao Credit Facility Revolving Facility
|
|
|
|
|
|
|
|
|
|
|
251,000
|
|
|
|
|
|
|
|
251,000
|
|
Other Macao
|
|
|
6,434
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,434
|
|
Singapore Bridge Facility Term Loan
|
|
|
|
|
|
|
|
|
|
|
311,053
|
|
|
|
283,351
|
|
|
|
594,404
|
|
Singapore Bridge Facility Floating Rate Notes
|
|
|
|
|
|
|
|
|
|
|
380,176
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|
|
|
349,179
|
|
|
|
729,355
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Fixed Interest Payments
|
|
|
16,025
|
|
|
|
31,875
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|
|
|
31,875
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|
|
|
34,531
|
|
|
|
114,306
|
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Variable Interest
Payments(2)
|
|
|
468,824
|
|
|
|
921,258
|
|
|
|
786,165
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|
|
|
334,375
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|
|
|
2,510,622
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|
Contractual Obligations
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HVAC Provider Fixed
Payments(3)
|
|
|
6,826
|
|
|
|
5,119
|
|
|
|
|
|
|
|
|
|
|
|
11,945
|
|
Former
Tenants(4)
|
|
|
650
|
|
|
|
1,300
|
|
|
|
1,300
|
|
|
|
7,377
|
|
|
|
10,627
|
|
Employment
Agreements(5)
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|
|
7,974
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|
|
|
7,633
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|
|
|
|
|
|
|
|
|
|
|
15,607
|
|
Macao Leasehold Interests in
Land(6)
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|
|
59,575
|
|
|
|
36,414
|
|
|
|
6,187
|
|
|
|
60,385
|
|
|
|
162,561
|
|
Mall
Leases(7)
|
|
|
7,660
|
|
|
|
15,927
|
|
|
|
16,086
|
|
|
|
129,567
|
|
|
|
169,240
|
|
Macao Fixed Gaming
Tax(8)
|
|
|
35,192
|
|
|
|
70,384
|
|
|
|
70,384
|
|
|
|
334,324
|
|
|
|
510,284
|
|
Ferries Purchase
Commitment(9)
|
|
|
28,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,667
|
|
Parking Lot
Lease(10)
|
|
|
1,200
|
|
|
|
2,400
|
|
|
|
2,400
|
|
|
|
109,500
|
|
|
|
115,500
|
|
Other Operating
Leases(11)
|
|
|
5,199
|
|
|
|
6,110
|
|
|
|
13,506
|
|
|
|
|
|
|
|
24,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
692,125
|
|
|
$
|
1,307,104
|
|
|
$
|
3,584,010
|
|
|
$
|
5,664,885
|
|
|
$
|
11,248,124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
See Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 8 Long-Term
Debt for further details on these financing transactions. |
|
(2) |
|
Based on December 31, 2007, LIBOR rate of 4.7%, HIBOR rate
of 3.5% and Singapore SWAP Offer rate of 2.5% plus the
applicable interest rate spread in accordance with the
respective debt agreements. |
|
(3) |
|
We are party to a services agreement with a third party for
heating, ventilation and air conditioning (HVAC),
and other energy-related services for our Las Vegas integrated
resort. We have the right to terminate the agreement based upon
the failure of the HVAC provider under this agreement to provide
HVAC services. Upon the sale of The Grand Canal Shops on
May 17, 2004, GGP assumed the responsibility for
$1.6 million of annual payments to this HVAC provider. |
55
|
|
|
(4) |
|
We are party to tenant lease termination and asset purchase
agreements. Under the agreement for The Grand Canal Shops sale,
we are obligated to fulfill the lease termination and asset
purchase agreements. |
|
(5) |
|
We are party to employment agreements with five of our senior
executives, with remaining terms of two years. |
|
(6) |
|
We are party to long-term land leases of 25 years with
automatic extensions at our option of 10 years thereafter. |
|
(7) |
|
We are party to certain leaseback agreements for the Blue Man
Group Theater, gondola and certain office space related to The
Grand Canal Shops sale. |
|
(8) |
|
In addition to the 39% gross gaming win tax in Macao (which is
not included in this table as the amount we pay is variable in
nature), we are required to pay an annual fixed gaming tax of
approximately $35.2 million per year to the government of
Macao through the termination of the gaming subconcession in
June 2022. |
|
(9) |
|
We entered into agreements to purchase ten ferries at an
aggregate cost of approximately $155.4 million to be built
for our Macao operations. Subsequent to year-end, we agreed to
purchase an additional four ferries at an aggregate cost of
approximately $72.0 million. |
|
(10) |
|
We are party to a long-term lease agreement of 99 years for
a parking structure located adjacent to The Venetian. |
|
(11) |
|
We are party to certain operating leases for real estate,
various equipment and service arrangements. |
|
(12) |
|
We adopted the provisions of Financial Accounting Standards
Board Interpretation (FIN) No. 48,
Accounting for Uncertainty in Income Taxes an
interpretation of FASB Statement No. 109, on
January 1, 2007, and as of December 31, 2007, had a
$15.5 million liability related to unrecognized tax
benefits and related interest expense. We are unable to
reasonably estimate the timing of the FIN No. 48
liability and interest payments in individual years beyond
12 months due to uncertainties in the timing of the
effective settlement of tax positions. |
Off-Balance
Sheet Arrangements
We have not entered into any transactions with special purpose
entities, nor have we engaged in any derivative transactions
other than interest rate caps.
Restrictions
on Distributions
We are a parent company with limited business operations. Our
main asset is the stock and membership interests of our
subsidiaries. The debt instruments of our U.S., Macao 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 three fiscal years.
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 its 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
56
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 and pricing of hotel
rooms;
|
|
|
|
the uncertainty of tourist behavior related to spending and
vacationing at casino-resorts in Las Vegas, Macao and Singapore;
|
|
|
|
disruptions or reductions in travel due to conflicts with Iraq
and any future terrorist incidents;
|
|
|
|
outbreaks of infectious diseases, such as severe acute
respiratory syndrome or avian flu, in our market areas;
|
|
|
|
our dependence upon properties in Las Vegas and Macao for all of
our cash flow;
|
|
|
|
new developments, construction and ventures, including The
Venetian Macao and other Cotai Strip developments, Marina Bay
Sands in Singapore, Sands Bethworks and the Las Vegas
condominiums;
|
|
|
|
our ability to obtain sufficient funding for our developments,
including our developments on the Cotai Strip;
|
|
|
|
the passage of new legislation and receipt of governmental
approvals for our proposed developments in Macao, Singapore and
other jurisdictions where we are planning to operate;
|
|
|
|
our substantial leverage and debt service (including sensitivity
to fluctuations in interest rates and other capital markets
trends);
|
|
|
|
our insurance coverage, including the risk that we have not
obtained sufficient coverage against acts of terrorism or will
only be able to obtain additional coverage at significantly
increased rates;
|
|
|
|
government regulation of the casino industry, including gaming
license regulation, the legalization of gaming in certain
domestic jurisdictions, including Native American reservations,
and regulation of gaming on the Internet;
|
|
|
|
increased competition and additional construction in Las Vegas,
including recent and upcoming increases in hotel rooms, meeting
and convention space and retail space;
|
|
|
|
fluctuations in the demand for all-suites rooms, occupancy rates
and average daily room rates in Las Vegas;
|
|
|
|
the popularity of Las Vegas as a convention and trade show
destination;
|
|
|
|
new taxes or changes to existing tax rates;
|
|
|
|
our ability to meet certain development deadlines in Macao and
Singapore;
|
|
|
|
our ability to maintain our gaming subconcession in Macao;
|
|
|
|
the completion of infrastructure projects in Macao;
|
|
|
|
increased competition and other planned construction projects in
Macao; and
|
|
|
|
any 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.
57
Critical
Accounting Policies and Estimates
The preparation of our consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires our management to make
estimates and judgments that affect the reported amounts of
assets and liabilities, revenues and expenses, and related
disclosures of contingent assets and liabilities. These
estimates and judgments are based on historical information,
information 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 results of operations and
financial condition. We believe that the critical accounting
policies discussed below affect our more significant judgments
and estimates used in the preparation of our consolidated
financial statements.
Allowance
for Doubtful Casino Accounts
We maintain an allowance, or reserve, for doubtful casino
accounts at our operating casino resorts in Las Vegas and Macao.
We regularly evaluate the allowance for doubtful casino
accounts. We specifically analyze the collectability of each
account with a balance over a specified dollar amount, based
upon the age of the account, the customers financial
condition, collection history and any other known information,
and we apply standard reserve percentages to aged account
balances under the specified dollar amount. We also monitor
regional and global economic conditions and forecasts in our
evaluation of the adequacy of the recorded reserves. Credit or
marker play is significant at our Las Vegas properties as credit
table games play represented approximately 62.6% of total table
games play. In Macao where table games play is primarily cash
play, credit table games play represented approximately 19.4% of
total table games play at our Macao resorts. Our allowance for
doubtful casino accounts was 26.5% and 25.8% of gross casino
receivables for the years ended December 31, 2007 and 2006,
respectively. Our allowance for doubtful accounts from our hotel
and other receivables is not material.
Self-Insurance
Accruals
We maintain accruals for health and workers compensation
self-insurance, which are classified in other accrued
liabilities in the consolidated balance sheets. We determine the
adequacy of these accruals by periodically evaluating the
historical experience and projected trends related to these
accruals and in consultation with outside actuarial experts. If
such information indicates that the accruals are overstated or
understated, or if business conditions indicate we should adjust
the assumptions utilized, we will reduce or provide for
additional accruals as appropriate.
Litigation
Accrual
We are subject to various claims and legal actions. We estimate
the accruals for these claims and legal actions in accordance
with SFAS No. 5, Accounting for
Contingencies, and include such accruals in other accrued
liabilities in the consolidated balance sheets.
Property
and Equipment
At December 31, 2007, we had net property and equipment of
$8.57 billion, representing 74.8% of our total assets. We
depreciate property and equipment on a straight-line basis over
their estimated useful lives. The estimated useful lives are
based on the nature of the assets as well as current operating
strategy and legal considerations such as contractual life.
Future events, such as property expansions, property
developments, new competition, or new regulations, could result
in a change in the manner in which we use certain assets
requiring a change in the estimated useful lives of such assets.
For assets to be held and used, fixed assets are reviewed for
impairment whenever indicators of impairment exist. If an
indicator of impairment exists, we first group our assets with
other assets and liabilities at the lowest level for which
identifiable cash flows are largely independent of the cash
flows of other assets and liabilities (the asset
group). Secondly, we estimate the undiscounted future cash
flows that are directly associated with and expected to arise
from the use of and eventual disposition of such asset group. We
estimate the undiscounted cash flows over the remaining useful
life of the primary asset within the asset group. If the
undiscounted cash flows exceed the carrying
58
value, no impairment is indicated. If the undiscounted cash
flows do not exceed the carrying value, then an impairment is
measured based on fair value compared to carrying value, with
fair value typically based on a discounted cash flow model. If
an asset is still under development, future cash flows include
remaining construction costs.
For assets to be held for sale, the fixed assets (the
disposal group) are measured at the lower of their
carrying amount or fair value less cost to sell. Losses are
recognized for any initial or subsequent write-down to fair
value less cost to sell, while gains are recognized for any
subsequent increase in fair value less cost to sell, but not in
excess of the cumulative loss previously recognized. Any gains
or losses not previously recognized that results from the sale
of the disposal group shall be recognized at the date of sale.
Fixed assets are not depreciated while classified as held for
sale.
Capitalized
Interest
Interest costs associated with our major construction projects
are capitalized and included in the cost of the projects. When
no debt is incurred specifically for construction projects, we
capitalize interest on amounts expended using the
weighted-average cost of our outstanding borrowings.
Capitalization of interest ceases when the project is
substantially complete or construction activity is suspended for
more than a brief period.
Leasehold
Interest in Land
Leasehold interest in land represents payments made for the use
of land over an extended period of time. The leasehold interests
in land are amortized on a straight-line basis over the expected
term of the related lease agreements. Such assets are not
considered qualifying assets for purposes of capitalizing
interest and as such, are not included in the base used to
determine capitalized interest.
Stock-Based
Compensation
SFAS No. 123R, Share-Based Payment,
requires the recognition of compensation expense in the
consolidated statements of operations related to the fair value
of employee stock-based compensation. Determining the fair value
of stock-based awards at the grant date requires judgment,
including estimating the expected term that stock options will
be outstanding prior to exercise, the associated volatility and
the expected dividends. Expected volatilities are based on the
historical volatilities from a selection of companies from our
peer group due to our lack of historical information. We used
the simplified method for estimating expected option life, as
the options qualify as plain-vanilla options and we
will continue to use the simplified method beyond
December 31, 2007, due to the lack of historical
information as allowed under Staff Accounting
Bulletin No. 110, Share-Based Payment. We
believe that the valuation technique and the approach utilized
to develop the underlying assumptions are appropriate in
calculating the fair values of our stock options granted.
Judgment is also required in estimating the amount of
stock-based awards expected to be forfeited prior to vesting. If
actual forfeitures differ significantly from these estimates,
stock-based compensation expense could be materially impacted.
All employee stock options were granted with an exercise price
equal to the fair market value (as defined in the Companys
2004 Equity Award Plan). We adopted SFAS No. 123R
effective January 1, 2006. During the years ended
December 31, 2007 and 2006, we recorded stock-based
compensation expense of $33.2 million and
$14.7 million, respectively. No such expense was recorded
in 2005. As of December 31, 2007, there was
$113.7 million of unrecognized compensation cost, net of
estimated forfeitures of 8.0%, related to nonvested stock
options and there was $4.1 million of unrecognized
compensation cost related to nonvested restricted stock. The
stock option and restricted stock costs are expected to be
recognized over a weighted average period of 3.3 years and
1.7 years, respectively.
Income
Taxes
We are subject to income taxes in the U.S. (including
federal and state) and numerous foreign jurisdictions in which
we operate. Deferred income tax balances reflect the effects of
temporary differences between the carrying amounts of assets and
liabilities and their tax bases and are stated at enacted tax
rates expected to be in effect when taxes are actually paid or
recovered. SFAS No. 109, Accounting for Income
Taxes, requires that deferred tax assets be evaluated for
future realization and reduced by a valuation allowance to the
extent we believe a portion will
59
not be realized. We consider many factors when assessing the
likelihood of future realization of our deferred tax assets,
including our recent cumulative earnings experience and
expectations of future taxable income by taxing jurisdiction,
the carry-forward periods available to us for tax reporting
purposes, and other relevant factors.
Significant judgment is required in evaluating our tax positions
and determining our provision for income taxes. During the
ordinary course of business, there are many transactions and
calculations for which the ultimate tax determination is
uncertain. Effective January 1, 2007, we adopted the
provisions of FIN No. 48, which contains a two-step
approach to recognizing and measuring uncertain tax positions
accounted for in accordance with SFAS No. 109. The
first step is to evaluate the tax position for recognition by
determining if the weight of available evidence indicates it is
more likely than not that the position will be sustained on
audit, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit
as the largest amount which is more than 50% likely of being
realized upon ultimate settlement. We consider many factors when
evaluating and estimating our tax positions and tax benefits,
which may require periodic adjustments and which may not
accurately anticipate actual outcomes.
We are subject to income tax examination by tax authorities for
the years after 2003. There are currently no income tax returns
being examined by the Internal Revenue Service or other major
tax authorities.
Recent
Accounting Pronouncements
See related disclosure at Item 8
Financial Statements and Supplementary Data Notes to
Consolidated Financial Statements
Note 2 Summary of Significant Accounting
Policies.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Market risk is the risk of loss arising from adverse changes in
market rates and prices, such as interest rates, foreign
currency exchange rates and commodity prices. Our primary
exposure to market risk is interest rate risk associated with
our long-term debt. We attempt to manage our interest rate risk
by managing the mix of our long-term fixed-rate borrowings and
variable rate borrowings, and by use of interest rate cap
agreements. The ability to enter into interest rate cap
agreements allows us to manage our interest rate risk associated
with our variable rate debt. We do not hold or issue financial
instruments for trading purposes and do not enter into
derivative transactions that would be considered speculative
positions. Our derivative financial instruments consist
exclusively of interest rate cap agreements, which do not
qualify for hedge accounting. Interest differentials resulting
from these agreements are recorded on an accrual basis as an
adjustment to interest expense.
To manage exposure to counterparty credit risk in interest rate
cap agreements, we enter into agreements with highly rated
institutions that can be expected to fully perform under the
terms of such agreements. Frequently, these institutions are
also members of the bank group providing our credit facilities,
which management believes further minimizes the risk of
nonperformance.
The table below provides information about our financial
instruments that are sensitive to changes in interest rates. For
debt obligations, the table presents notional amounts and
weighted average interest rates by contractual maturity dates.
Notional amounts are used to calculate the contractual payments
to be exchanged under the contract. Weighted average variable
rates are based on December 31, 2007, LIBOR, HIBOR and
Singapore SWAP Offer
60
rates 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
Companys reporting currency, for the years ending December
31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair
|
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
Thereafter
|
|
|
Total
|
|
|
Value(1)
|
|
|
|
(In millions, except for percentages)
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
250.0
|
|
|
$
|
250.0
|
|
|
$
|
232.5
|
|
Average interest
rate(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.4
|
%
|
|
|
6.4
|
%
|
|
|
7.7
|
%
|
Variable rate
|
|
$
|
54.3
|
|
|
$
|
97.8
|
|
|
$
|
110.9
|
|
|
$
|
1,061.2
|
|
|
$
|
1,594.9
|
|
|
$
|
4,404.8
|
|
|
$
|
7,323.9
|
|
|
$
|
7,323.9
|
|
Average interest
rate(2)
|
|
|
6.5
|
%
|
|
|
6.4
|
%
|
|
|
6.4
|
%
|
|
|
6.2
|
%
|
|
|
6.5
|
%
|
|
|
6.3
|
%
|
|
|
6.3
|
%
|
|
|
6.3
|
%
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cap
Agreements(3)
|
|
$
|
|
|
|
$
|
0.1
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
|
|
(1) |
|
The fair values are based on the borrowing rates currently
available for debt instruments with similar terms and maturities
and market quotes of our publicly traded debt. |
|
(2) |
|
Based upon contractual interest rates for fixed rate
indebtedness or current LIBOR, HIBOR and Singapore SWAP Offer
rates for variable rate indebtedness. Based on variable rate
debt levels as of December 31, 2007, an assumed
100 basis point change in LIBOR, HIBOR and Singapore SWAP
Offer rates would cause our annual interest cost to change
approximately $74.3 million. |
|
(3) |
|
As of December 31, 2007, we have eight interest rate cap
agreements with an aggregate fair value of $0.1 million
based on a quoted market value from the institutions holding the
agreements. |
Borrowings under the $5.0 billion senior secured credit
facility bear interest at our election, at either an adjusted
Eurodollar rate or at an alternative base rate plus a credit
spread. The revolving facility and term loans bear interest at
the alternative base rate plus 0.5% or 0.75% per annum,
respectively, or at the adjusted Eurodollar rate plus 1.5% per
annum or 1.75% per annum, respectively, subject to downward
adjustments based upon our credit rating. Borrowings under the
Macao credit facility bear interest at our election, at either
an adjusted Eurodollar rate (or in the case of the Local Term
Loan, adjusted HIBOR) plus 2.25% per annum or at an alternative
base rate plus 1.25% per annum, and is subject to a downward
adjustment of 0.25% per annum from the beginning of the first
interest period following the substantial completion of The
Venetian Macao. Borrowings under the Singapore permanent
facilities bear interest at the Singapore SWAP Offer Rate plus a
spread of 2.25% per annum. $69.8 million and
$19.7 million of the borrowings under the airplane
financings bear interest at LIBOR plus 1.5% and 1.25% per annum,
respectively.
Foreign currency transaction losses for the year ended
December 31, 2007, were $5.3 million primarily due to
U.S. denominated debt held in Macao. We may be vulnerable
to changes in the U.S. dollar/pataca exchange rate. Based
on balances as of December 31, 2007, an assumed 1% change
in the U.S. dollar/pataca exchange rate would cause a
foreign currency transaction gain/loss of approximately
$28.4 million. We do not hedge our exposure to foreign
currencies; however, we maintain a significant amount of our
operating funds in the same currencies in which we have
obligations thereby reducing our exposure to currency
fluctuations.
See also Liquidity and Capital Resources
and Item 8 Financial Statements and
Supplementary Data Notes to Consolidated Financial
Statements Note 8 Long-Term
Debt.
61
ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO
FINANCIAL STATEMENTS
|
|
|
|
|
Financial Statements:
|
|
|
|
|
|
|
|
63
|
|
|
|
|
64
|
|
|
|
|
65
|
|
|
|
|
66
|
|
|
|
|
67
|
|
|
|
|
68
|
|
Financial Statement Schedule:
|
|
|
|
|
Schedule II Valuation and Qualifying Accounts
|
|
|
116
|
|
The financial information included in the financial statement
schedule should be read in conjunction with the consolidated
financial statements. All other financial statement schedules
have been omitted because they are not applicable or the
required information is included in the consolidated financial
statements or the notes thereto.
62
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors and Stockholders of Las Vegas Sands Corp.
In our opinion, the consolidated financial statements listed in
the accompanying index, present fairly, in all material
respects, the financial position of Las Vegas Sands Corp. and
its subsidiaries at December 31, 2007 and 2006, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 2007, in
conformity with accounting principles generally accepted in the
United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set
forth therein when read in conjunction with the related
consolidated financial statements. Also in our opinion, the
Company maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2007,
based on criteria established in Internal Control
Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The
Companys management is responsible for these financial
statements and financial statement schedule, for maintaining
effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over
financial reporting, included in Managements Annual Report
on Internal Control Over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on these
financial statements, on the financial statement schedule, and
on the Companys internal control over financial reporting
based on our integrated audits. We conducted our audits in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material
misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our
audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an
understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.
As discussed in Note 2 to the consolidated financial
statements, the Company changed the manner in which it accounts
for income tax uncertainties in 2007 and the manner in which it
accounts for stock-based compensation in 2006.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Las Vegas, Nevada
February 28, 2008
63
LAS VEGAS
SANDS CORP.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands,
|
|
|
|
except share data)
|
|
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
857,150
|
|
|
$
|
468,066
|
|
Restricted cash
|
|
|
232,944
|
|
|
|
398,762
|
|
Accounts receivable, net
|
|
|
187,195
|
|
|
|
173,683
|
|
Inventories
|
|
|
19,902
|
|
|
|
12,291
|
|
Deferred income taxes
|
|
|
32,471
|
|
|
|
15,688
|
|
Prepaid expenses and other
|
|
|
49,424
|
|
|
|
25,067
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
1,379,086
|
|
|
|
1,093,557
|
|
Property and equipment, net
|
|
|
8,574,614
|
|
|
|
4,582,325
|
|
Deferred financing costs, net
|
|
|
107,338
|
|
|
|
70,381
|
|
Restricted cash
|
|
|
178,824
|
|
|
|
555,132
|
|
Leasehold interests in land, net
|
|
|
1,069,609
|
|
|
|
809,856
|
|
Other assets, net
|
|
|
157,046
|
|
|
|
15,207
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
11,466,517
|
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
99,023
|
|
|
$
|
51,038
|
|
Construction payables
|
|
|
717,541
|
|
|
|
329,375
|
|
Accrued interest payable
|
|
|
11,465
|
|
|
|
8,496
|
|
Other accrued liabilities
|
|
|
610,911
|
|
|
|
318,901
|
|
Income taxes payable
|
|
|
|
|
|
|
20,352
|
|
Current maturities of long-term debt
|
|
|
54,333
|
|
|
|
6,486
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
1,493,273
|
|
|
|
734,648
|
|
Other long-term liabilities
|
|
|
28,674
|
|
|
|
10,742
|
|
Deferred income taxes
|
|
|
1,553
|
|
|
|
324
|
|
Deferred gain on sale of The Grand Canal Shops
|
|
|
61,200
|
|
|
|
64,665
|
|
Deferred rent from The Grand Canal Shops transaction
|
|
|
103,546
|
|
|
|
104,773
|
|
Long-term debt
|
|
|
7,517,997
|
|
|
|
4,136,152
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
9,206,243
|
|
|
|
5,051,304
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 11)
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 1,000,000,000 shares
authorized, 355,271,070 and 354,492,452 shares issued and
outstanding
|
|
|
355
|
|
|
|
354
|
|
Capital in excess of par value
|
|
|
1,064,878
|
|
|
|
990,429
|
|
Accumulated other comprehensive loss
|
|
|
(2,493
|
)
|
|
|
(580
|
)
|
Retained earnings
|
|
|
1,197,534
|
|
|
|
1,084,951
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
2,260,274
|
|
|
|
2,075,154
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
11,466,517
|
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
64
LAS VEGAS
SANDS CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except share and per share data)
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
2,250,421
|
|
|
$
|
1,676,061
|
|
|
$
|
1,250,090
|
|
Rooms
|
|
|
437,357
|
|
|
|
350,606
|
|
|
|
323,560
|
|
Food and beverage
|
|
|
238,252
|
|
|
|
187,819
|
|
|
|
147,510
|
|
Convention, retail and other
|
|
|
178,392
|
|
|
|
125,692
|
|
|
|
103,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,104,422
|
|
|
|
2,340,178
|
|
|
|
1,824,225
|
|
Less promotional allowances
|
|
|
(153,855
|
)
|
|
|
(103,319
|
)
|
|
|
(83,313
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
2,950,567
|
|
|
|
2,236,859
|
|
|
|
1,740,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
1,435,662
|
|
|
|
925,033
|
|
|
|
656,590
|
|
Rooms
|
|
|
94,219
|
|
|
|
85,651
|
|
|
|
82,058
|
|
Food and beverage
|
|
|
118,273
|
|
|
|
89,113
|
|
|
|
76,736
|
|
Convention, retail and other
|
|
|
97,689
|
|
|
|
64,315
|
|
|
|
58,068
|
|
Provision for doubtful accounts
|
|
|
26,369
|
|
|
|
18,067
|
|
|
|
9,358
|
|
General and administrative
|
|
|
319,357
|
|
|
|
230,355
|
|
|
|
192,806
|
|
Corporate expense
|
|
|
94,514
|
|
|
|
59,570
|
|
|
|
38,297
|
|
Rental expense
|
|
|
31,787
|
|
|
|
13,478
|
|
|
|
14,841
|
|
Pre-opening expense
|
|
|
189,280
|
|
|
|
37,673
|
|
|
|
3,732
|
|
Development expense
|
|
|
9,728
|
|
|
|
26,112
|
|
|
|
22,238
|
|
Depreciation and amortization
|
|
|
202,557
|
|
|
|
110,771
|
|
|
|
95,296
|
|
Loss on disposal of assets
|
|
|
1,122
|
|
|
|
2,624
|
|
|
|
1,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,620,557
|
|
|
|
1,662,762
|
|
|
|
1,251,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
330,010
|
|
|
|
574,097
|
|
|
|
489,451
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
72,464
|
|
|
|
66,191
|
|
|
|
33,111
|
|
Interest expense, net of amounts capitalized
|
|
|
(244,808
|
)
|
|
|
(135,853
|
)
|
|
|
(96,292
|
)
|
Other expense
|
|
|
(8,682
|
)
|
|
|
(189
|
)
|
|
|
(1,334
|
)
|
Loss on early retirement of debt
|
|
|
(10,705
|
)
|
|
|
|
|
|
|
(137,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
138,279
|
|
|
|
504,246
|
|
|
|
287,936
|
|
Provision for income taxes
|
|
|
(21,591
|
)
|
|
|
(62,243
|
)
|
|
|
(4,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
116,688
|
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
0.33
|
|
|
$
|
1.25
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
0.33
|
|
|
$
|
1.24
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
354,807,700
|
|
|
|
354,277,941
|
|
|
|
354,161,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
355,789,619
|
|
|
|
355,264,444
|
|
|
|
354,526,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
65
LAS VEGAS
SANDS CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Capital
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
in Excess
|
|
|
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
|
|
of
|
|
|
|
|
|
of Par
|
|
|
Deferred
|
|
|
Income
|
|
|
Retained
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Value
|
|
|
Compensation
|
|
|
(Loss)
|
|
|
Earnings
|
|
|
Total
|
|
|
|
(In thousands, except share data)
|
|
|
Balance at
January 1, 2005
|
|
|
354,160,692
|
|
|
$
|
354
|
|
|
$
|
956,385
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
359,262
|
|
|
$
|
1,316,001
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
283,686
|
|
|
|
283,686
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,726
|
|
|
|
|
|
|
|
1,726
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
285,412
|
|
Exercise of stock options
|
|
|
10,800
|
|
|
|
|
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
Tax benefit from stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
8,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,149
|
|
Issuance of restricted stock
|
|
|
8,088
|
|
|
|
|
|
|
|
300
|
|
|
|
(300
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
150
|
|
Initial public offering transaction costs
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2005
|
|
|
354,179,580
|
|
|
|
354
|
|
|
|
964,660
|
|
|
|
(150
|
)
|
|
|
1,726
|
|
|
|
642,948
|
|
|
|
1,609,538
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
442,003
|
|
|
|
442,003
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,306
|
)
|
|
|
|
|
|
|
(2,306
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
439,697
|
|
Exercise of stock options
|
|
|
240,912
|
|
|
|
|
|
|
|
7,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,226
|
|
Tax benefit from stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
1,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,876
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
16,667
|
|
|
|
150
|
|
|
|
|
|
|
|
|
|
|
|
16,817
|
|
Issuance of restricted stock
|
|
|
71,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2006
|
|
|
354,492,452
|
|
|
|
354
|
|
|
|
990,429
|
|
|
|
|
|
|
|
(580
|
)
|
|
|
1,084,951
|
|
|
|
2,075,154
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116,688
|
|
|
|
116,688
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,913
|
)
|
|
|
|
|
|
|
(1,913
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114,775
|
|
Exercise of stock options
|
|
|
727,692
|
|
|
|
1
|
|
|
|
30,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,222
|
|
Tax benefit from stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
7,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,526
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
36,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,702
|
|
Issuance of restricted stock
|
|
|
50,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative effect from adoption of FIN No. 48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,105
|
)
|
|
|
(4,105
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
December 31, 2007
|
|
|
355,271,070
|
|
|
$
|
355
|
|
|
$
|
1,064,878
|
|
|
$
|
|
|
|
$
|
(2,493
|
)
|
|
$
|
1,197,534
|
|
|
$
|
2,260,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
66
LAS VEGAS
SANDS CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
116,688
|
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
202,557
|
|
|
|
110,771
|
|
|
|
95,296
|
|
Amortization of leasehold interests in land included in rental
expense
|
|
|
23,439
|
|
|
|
809
|
|
|
|
748
|
|
Amortization of deferred financing costs and original issue
discount
|
|
|
26,786
|
|
|
|
13,894
|
|
|
|
9,192
|
|
Amortization of deferred gain and rent
|
|
|
(4,692
|
)
|
|
|
(4,690
|
)
|
|
|
(4,692
|
)
|
Loss on early retirement of debt
|
|
|
10,705
|
|
|
|
|
|
|
|
137,000
|
|
Loss on disposal of assets
|
|
|
1,122
|
|
|
|
2,624
|
|
|
|
1,441
|
|
Stock-based compensation expense
|
|
|
33,224
|
|
|
|
14,728
|
|
|
|
150
|
|
Provision for doubtful accounts
|
|
|
26,369
|
|
|
|
18,067
|
|
|
|
9,358
|
|
Foreign exchange loss
|
|
|
5,317
|
|
|
|
|
|
|
|
|
|
Excess tax benefits from stock-based compensation
|
|
|
(7,112
|
)
|
|
|
(1,401
|
)
|
|
|
8,149
|
|
Deferred income taxes
|
|
|
(15,554
|
)
|
|
|
3,914
|
|
|
|
(5,542
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(39,881
|
)
|
|
|
(106,972
|
)
|
|
|
(37,554
|
)
|
Inventories
|
|
|
(7,611
|
)
|
|
|
(2,324
|
)
|
|
|
(1,957
|
)
|
Prepaid expenses and other
|
|
|
(115,303
|
)
|
|
|
(13,933
|
)
|
|
|
(3,205
|
)
|
Leasehold interests in land
|
|
|
(235,235
|
)
|
|
|
(786,700
|
)
|
|
|
|
|
Accounts payable
|
|
|
47,985
|
|
|
|
16,235
|
|
|
|
1,420
|
|
Accrued interest payable
|
|
|
2,969
|
|
|
|
578
|
|
|
|
(1,269
|
)
|
Other accrued liabilities
|
|
|
306,509
|
|
|
|
73,449
|
|
|
|
97,695
|
|
Income taxes payable
|
|
|
(12,825
|
)
|
|
|
22,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
365,457
|
|
|
|
(196,720
|
)
|
|
|
589,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
556,276
|
|
|
|
(310,565
|
)
|
|
|
(265,386
|
)
|
Capital expenditures
|
|
|
(3,793,703
|
)
|
|
|
(1,925,291
|
)
|
|
|
(860,621
|
)
|
Acquisition of gaming license included in other assets
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(3,287,427
|
)
|
|
|
(2,235,856
|
)
|
|
|
(1,126,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction costs from initial public offering of common stock
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
Dividends paid to shareholders
|
|
|
|
|
|
|
|
|
|
|
(21,052
|
)
|
Proceeds from exercise of stock options
|
|
|
30,221
|
|
|
|
7,226
|
|
|
|
313
|
|
Excess tax benefits from stock-based compensation
|
|
|
7,112
|
|
|
|
1,401
|
|
|
|
|
|
Proceeds from long-term debt (Note 8)
|
|
|
5,135,076
|
|
|
|
2,619,995
|
|
|
|
812,222
|
|
Repayments of long-term debt (Note 8)
|
|
|
(1,775,801
|
)
|
|
|
(132,746
|
)
|
|
|
(969,127
|
)
|
Repurchase premiums incurred in connection with refinancing
transactions
|
|
|
|
|
|
|
|
|
|
|
(113,311
|
)
|
Payments of deferred financing costs
|
|
|
(73,743
|
)
|
|
|
(52,894
|
)
|
|
|
(11,276
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
3,322,865
|
|
|
|
2,442,982
|
|
|
|
(302,718
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
(11,811
|
)
|
|
|
814
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
389,084
|
|
|
|
11,220
|
|
|
|
(838,052
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
468,066
|
|
|
|
456,846
|
|
|
|
1,294,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
857,150
|
|
|
$
|
468,066
|
|
|
$
|
456,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for interest
|
|
$
|
438,301
|
|
|
$
|
215,975
|
|
|
$
|
111,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash payments for taxes
|
|
$
|
60,000
|
|
|
$
|
34,750
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment asset acquisitions included in
construction payables
|
|
$
|
717,541
|
|
|
$
|
329,375
|
|
|
$
|
163,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utilization of deposit to purchase property and equipment
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
consolidated financial statements.
67
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
Note 1 Organization
and Business of Company
Las Vegas Sands Corp. (LVSC or together with its
subsidiaries, the Company) was incorporated in
Nevada during August 2004 and completed an initial public
offering of its common stock in December 2004. Immediately prior
to the initial public offering, LVSC acquired 100% of the
capital stock of Las Vegas Sands, Inc., which was converted into
a Nevada limited liability company, Las Vegas Sands, LLC
(LVSLLC) in July 2005. LVSCs common stock is
traded on the New York Stock Exchange under the symbol
LVS.
Operations
The Company owns and operates The Venetian Resort Hotel Casino
(The Venetian), a Renaissance Venice-themed resort
situated on the Las Vegas Strip (the Strip). The
Venetian includes the first all-suites hotel on the Strip with
4,027 suites; a gaming facility of approximately
120,000 square feet; an enclosed retail, dining and
entertainment complex of approximately 440,000 net leasable
square feet (The Grand Canal Shops), which was sold
to General Growth Partners (GGP) in 2004; a meeting
and conference facility of approximately 1.1 million square
feet (The Congress Center); and an expo and
convention center of approximately 1.2 million square feet
(The Sands Expo Center).
The Company owns and operates The Palazzo Resort Hotel Casino
(The Palazzo), a second resort similar in size to
The Venetian, which is situated on a
14-acre site
next to The Venetian. The Palazzo, which partially opened in
December 2007, includes a 50-floor luxury hotel tower with 3,066
suites; a gaming facility of approximately 105,000 square
feet; an entertainment center; and an enclosed shopping and
dining complex of approximately 400,000 square feet
(The Shoppes at The Palazzo), which the Company has
contracted to sell to GGP. The Company anticipates the
transaction to close on February 29, 2008, or shortly
thereafter.
The Company also owns and operates the Sands Macao, the first
Las Vegas-style casino in Macao, China, pursuant to a
20-year
gaming subconcession. The Sands Macao offers over
229,000 square feet of gaming space, as well as several
restaurants, VIP facilities, a theater, and other high-end
services and amenities. In addition, the completion of the hotel
tower in September 2007 increased the number of suites from 51
to 289.
On August 28, 2007, the Company opened The Venetian Macao
Resort Hotel (The Venetian Macao) on the Cotai
Striptm,
a master-planned development of resort properties in Macao,
China. With a theme similar to that of The Venetian, The
Venetian Macao includes a 39-floor luxury hotel with over 2,900
suites; a casino floor of approximately 550,000 square
feet; a 15,000-seat arena; retail space of approximately
1.0 million square feet; and a convention center and
meeting room complex of approximately 1.2 million square
feet.
United
States Development Projects
Las Vegas
Condominiums
The Company is in the early stages of constructing a high-rise
residential condominium tower with approximately
1.0 million saleable square feet that will be situated
between The Palazzo and The Venetian. The condominium tower is
currently expected to open in late 2009.
Sands
Bethworks
On December 20, 2006, the Pennsylvania Gaming Control Board
announced that the Companys subsidiary, Sands Bethworks
Gaming LLC (Sands Bethworks Gaming), had been
awarded a Pennsylvania gaming license. Sands Bethworks Gaming
will develop a gaming, hotel, shopping and dining complex called
Sands Bethworks, located on the site of the Historic Bethlehem
Steel Works in Bethlehem, Pennsylvania, which is about
70 miles from midtown Manhattan, New York. In its first
phase, the
124-acre
development is expected to feature a 300-room hotel,
200,000 square feet of retail space, up to 5,000 slot
machines, a 50,000-square-foot multipurpose event center and a
variety of dining options. Sands Bethworks is also expected to
be home to the National Museum of Industrial
68
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
History, an arts and cultural center, and the broadcast home of
the local PBS affiliate. In July 2007, the Company paid a
$50.0 million licensing fee to the Commonwealth of
Pennsylvania, and in August 2007 was issued its gaming license
by the Pennsylvania Gaming Control Board. The Company will own
the property through its joint venture with Bethworks Now, LLC,
which has yet to contribute the land in the joint venture. The
Company expects the contribution to take place in 2008; however,
no assurances can be given as to the timing of the contribution.
If the land is not contributed as required under the
Companys agreement with Bethworks Now, LLC, the Company
could lose all or a substantial portion of its
$116.9 million investment in Sands Bethworks as of
December 31, 2007. Sands Bethworks is expected to open in
summer 2009.
Macao
Development Projects
The Company has submitted development plans to the Macao
government for six integrated resort developments, in addition
to The Venetian Macao, on an area of approximately
200 acres located on the Cotai Strip (referred to as
parcels 2, 3, 5, 6, 7 and 8). The developments are expected to
include hotels, exhibition and conference facilities, casinos,
showrooms, shopping malls, spas, restaurants, entertainment
facilities and other attractions and amenities, as well as
public common areas. The Company has commenced construction or
pre-construction for these six parcels on the Cotai Strip and
plans to own and operate all of the casinos in these
developments under its Macao gaming subconcession. More
specifically, the Company intends to develop its other Cotai
Strip properties as follows:
|
|
|
|
|
Parcel 2 is intended to be a Four Seasons hotel and casino
development (The Four Seasons Macao), which will be
adjacent to The Venetian Macao and is expected to be a boutique
hotel under the Four Seasons brand with approximately 400 luxury
hotel rooms (including 19
Paizatm
mansions), distinctive dining experiences, a full service spa
and other amenities, approximately 70,000 square feet of
gaming space, approximately 220,000 square feet of upscale
retail offerings and approximately 1.0 million square feet
of Four Seasons-serviced and -branded luxury apartment hotel
units. The Company will own the entire development. The Company
has entered into an exclusive non-binding letter of intent and
is currently negotiating definitive agreements under which Four
Seasons Hotels Inc. will manage the hotel and serviced luxury
apartment hotel under its Four Seasons brand. The Four Seasons
Macao is expected to open in summer 2008, with the Paiza
mansions coming on line in spring 2009 and the serviced luxury
apartment hotel being completed in summer 2009.
|
|
|
|
Parcel 5 is intended to include a three-hotel complex with
approximately 2,300 luxury and mid-scale hotel rooms, a casino,
a retail shopping mall and approximately 320 serviced luxury
apartment hotel units. The Company will own the entire
development and has entered into management agreements with
Shangri-La Hotels and Resorts to manage two hotels under
its Shangri-La and Traders brands and Starwood
Hotels & Resorts Worldwide to manage a hotel and
serviced luxury apartment hotel under its St. Regis brand.
|
|
|
|
Parcel 6 is intended to include a two-hotel complex with
approximately 4,100 luxury and mid-scale hotel rooms, a casino
and a retail shopping mall physically connected to the mall in
the Shangri-La/Traders hotel podium. The Company will own the
entire development and has entered into a management agreement
with Starwood Hotels & Resorts Worldwide to manage the
hotels under its Sheraton brand.
|
|
|
|
Parcels 7 and 8 are intended to include multi-hotel complexes
with a total of approximately 6,150 luxury and mid-scale hotel
rooms, a casino, retail shopping malls and approximately 450
serviced luxury apartment hotel units that are physically
connected to the hotel complexes. The Company will own the
entire development and has entered into non-binding agreements
with Hilton Hotels to manage Hilton and Conrad brand hotels and
serviced luxury apartment hotels on parcel 7 and Fairmont
Raffles Holdings to manage Fairmont and Raffles brand hotels and
serviced luxury apartment hotels on parcel 8. The Company is
currently negotiating definitive agreements with Hilton Hotels
and Fairmont Raffles Holdings.
|
69
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
For parcel 3, the Company has signed a non-binding memorandum of
agreement with an independent developer. The Company is
currently negotiating the definitive agreement pursuant to which
it will partner with the developer to build a multi-hotel
complex, which may include a Cosmopolitan hotel. In addition,
the Company has signed a non-binding letter of intent with
Intercontinental Hotels Group to manage hotels under the
Intercontinental and Holiday Inn International brands, and
approximately 205 serviced luxury apartment hotel units under
the Intercontinental brand, on this site. The Company is
currently negotiating definitive agreements with
Intercontinental Hotels Group. In total, the multi-hotel complex
is intended to include approximately 3,940 hotel rooms, a
casino, a retail shopping mall and serviced luxury apartment
hotels.
|
The Four Seasons Macao is currently planned to feature
approximately 130 table games and 225 slot machines. The casinos
on parcels 3, 5, 6, 7 and 8 are currently planned to include a
total of approximately 2,025 table games and 9,250 slot
machines. Upon completion, the Companys developments on
the Cotai Strip (including The Venetian Macao) are currently
planned to feature approximately 19,750 suites/rooms and
1.6 million square feet of gaming space with a capacity of
approximately 3,300 table games and 16,470 slot machines.
The Company has received a concession from the Macao government
to build on parcels 1, 2 and 3 on the Cotai Strip, including the
site on which the Company owns and operates The Venetian Macao
(parcel 1) and the site on which it is building The Four
Seasons Macao (parcel 2). The Company does not own these land
sites in Macao; however, the land concession, which has a term
of 25 years and is renewable at the Companys option,
grants the Company exclusive use of the land. As specified in
the land concession, the Company is required to pay premiums,
which are payable over four years or are due upon the completion
of the corresponding resort, as well as annual rent for the term
of the land concession.
The Company does not yet have all the necessary Macao government
approvals that it will need in order to develop all of its
planned Cotai Strip developments. The Company has commenced
construction or pre-construction for the projects on parcels 5,
6, 7 and 8 on the Cotai Strip for which it has not yet been
granted land concessions. The Company is in the process of
negotiating with the Macao government to obtain the land
concession for parcels 5 and 6, and will subsequently
negotiate the land concession for parcels 7 and 8. If the
Company does not obtain land concessions, it could forfeit all
or a substantial part of its $623.0 million in capitalized
construction costs related to these Cotai Strip projects as of
December 31, 2007.
Hengqin
Island Development Project
The Company has entered into a non-binding letter of intent with
the Zhuhai Municipal Peoples Government of the
Peoples Republic of China to work together to create a
master plan for, and develop, a leisure and convention
destination resort on Hengqin Island, which is located within
mainland China, approximately one mile from the Cotai Strip. In
January 2007, the Company was informed that the Zhuhai
Government established a Project Coordination Committee to act
as a government liaison empowered to work directly with the
Company to advance the development of the project. The Company
has interfaced with this committee and is working actively with
the committee as it continues to advance its plans. The project
remains subject to a number of conditions, including further
governmental approvals.
Singapore
Development Project
In August 2006, the Companys wholly-owned subsidiary,
Marina Bay Sands Pte. Ltd. (MBS), entered into a
development agreement (the Development Agreement)
with the Singapore Tourism Board (the STB) to build
and operate an integrated resort called the Marina Bay Sands in
Singapore. The Marina Bay Sands is expected to include three 50+
story hotel towers (totaling approximately 2,700 rooms), a
casino, an enclosed retail, dining and entertainment complex of
approximately 850,000 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. The Marina Bay Sands is expected to open in
late 2009.
70
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
United
Kingdom Development Projects
The United Kingdom government announced that the approval for
the countrys first regional super casino had been
rescinded. Should the government approve an alternative super
casino site, the Company intends to evaluate the efficacy of
participating in the tender process for that site. In addition,
the Company has an existing agreement to develop and lease a
gaming and entertainment facility with the Glasgow Rangers
football club in the United Kingdom. The Companys ability
to eventually develop and lease a gaming and entertainment
facility under the agreement is subject to a number of
conditions, including the passage of appropriate legislation and
the ability to obtain a gaming license.
Other
Development Projects
The Company is currently exploring the possibility of developing
and operating additional properties, including integrated
resorts, in other Asian and U.S. jurisdictions, and in
Europe. In December 2007, the Company submitted applications to
the Kansas Lottery Commission for a gaming license and if
successful, the Company plans to develop a casino resort in the
Kansas City, Kansas, metropolitan area.
Development
Financing Strategy
As previously described, the Company has a number of significant
development projects underway in the United States, Macao and
Singapore for which construction is expected to continue through
2011. In the United States, the estimated costs to build the Las
Vegas condominium tower and the Sands Bethworks project are each
approximately $600.0 million, of which the Company has
capitalized approximately $82.1 million and
$66.9 million, respectively. In Macao, the estimated cost
to build the Companys developments on the Cotai Strip
(including The Venetian Macao) is approximately
$12.0 billion, of which the Company has capitalized
approximately $2.91 billion. In Singapore, although
construction has started on the Marina Bay Sands, the Company is
continuing to work with the Singapore government to finalize
various design aspects of the integrated resort and is in the
process of finalizing its cost estimates for the project. The
Company expects that the cost to design, develop and construct
the Marina Bay Sands will be in excess of $4.0 billion,
(inclusive of payments made in 2006 for the land premium, taxes
and other fees), of which the Company has capitalized
approximately $1.39 billion.
The Company has principally funded its global development
projects through borrowings under the bank credit facilities of
its operating subsidiaries, operating cash flows and proceeds
from the disposition of non-core assets. In 2007, the Company
began to execute its financing strategy to secure additional
borrowing capacity to fund its existing and future development
projects and operations in Asia, including Macao and Singapore,
and the United States.
In April 2007, the Company increased the size of its Macao
credit facility to fund the Companys Macao development
projects from $2.5 billion to $3.3 billion by
exercising its right to access an additional $800.0 million
of incremental facilities under the accordion feature provided
under the Macao credit facility. The incremental
$800.0 million consisted of an additional
$600.0 million of term loans and an increase of
$200.0 million to the revolving credit facility to
$700.0 million. In connection with the increase in the
Macao credit facility, the lenders also approved a reduction of
the interest rate margin for all classes of loans by
50 basis points, thereby reducing the Companys
overall interest expense under the Macao credit facility. As of
December 31, 2007, the Company had approximately
$449.0 million available under the revolving credit
facility portion of the Macao credit facility. The Company is
currently in the preliminary stages of exploring its options
with respect to refinancing the Macao credit facility, the
proceeds of which would be used to refinance the amount
currently outstanding under the Macao credit facility as well as
provide incremental borrowings to continue to fund the
development projects on the Cotai Strip in Macao.
In May 2007, the Company initiated its U.S. refinancing
efforts by entering into a $5.0 billion senior secured
credit facility. A portion of the proceeds of this facility was
used to refinance the indebtedness secured by the
71
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Companys Las Vegas integrated resort, including The
Venetian, The Palazzo, The Shoppes at The Palazzo and The Sands
Expo Center, and to fund design, development and construction
costs incurred in the connection with the completion of The
Palazzo, which partially opened on December 30, 2007, The
Shoppes at The Palazzo and the Las Vegas condominiums. The
Company completed its U.S. refinancing efforts by entering
into a $167.0 million amended and restated FF&E credit
facility in August 2007, the proceeds of which are being used to
finance or refinance the acquisition of furniture, fixtures and
equipment located in The Venetian and The Palazzo. As of
December 31, 2007, the Company had approximately
$1.97 billion and $105.0 million of available
borrowing capacity under the senior secured credit facility and
the amended and restated FF&E credit facility,
respectively. The senior secured credit facility permits the
Company to make investments in its foreign subsidiaries and
other development projects outside of Las Vegas in an amount not
to exceed $2.1 billion, and permits the Company to invest
in its Sands Bethworks project so long as no more than 30% of
any such investment is in the form of equity. As of
December 31, 2007, the Company has used approximately
$705.8 million of the permitted $2.1 billion to fund a
portion of its required equity contribution to the Marina Bay
Sands project and investments with respect to its other Asian
development projects, including in Macao.
In December 2007, the Company entered into a 5.44 billion
Singapore dollar credit facility (SGD, approximately
$3.76 billion at exchange rates in effect at
December 31, 2007) to fund construction costs and
expenses at the Marina Bay Sands, which closed and funded in
January 2008. A portion of the proceeds of this facility,
together with a portion of our initial SGD 800.0 million
(approximately $553.4 million at exchange rates in effect
at December 31, 2007) equity contribution, were used
to repay outstanding borrowings of approximately SGD
1.92 billion (approximately $1.33 billion at exchange
rates in effect at December 31, 2007) on the existing
Singapore bridge facility. The remaining funds available for
borrowing under the Singapore credit facility will be used to
fund a significant portion of the design, development and
construction costs of the Marina Bay Sands project. Under the
terms of the Singapore credit facility, the Company is obligated
to fund at least 20% of the total costs and expenses incurred in
connection with the design, development and construction of the
Marina Bay Sands project with equity contributions or
subordinated intercompany loans, with the remaining 80% funded
with debt, including debt under the Singapore credit facility.
The Company has funded its current equity contribution
requirement through borrowings under its U.S. senior
secured credit facility.
Due to these substantial development activities, included in
current liabilities were construction payables of approximately
$717.5 million as of December 31, 2007. As a portion
of the current liabilities will be funded out of the
Companys long-term borrowing capacity, the Company had a
working capital deficit of approximately $114.2 million as
of December 31, 2007. Subsequent to year-end, the Company
borrowed approximately $450.0 million on its credit
facilities, of which approximately $225.0 million was used
to pay construction payables outstanding as of December 31,
2007.
The Company held unrestricted and restricted cash and cash
equivalents of approximately $857.2 million and
$411.8 million, respectively, as of December 31, 2007.
The Company believes that its existing cash balances, operating
cash flows from The Venetian and The Palazzo and the proceeds
from the anticipated sale of The Shoppes at the Palazzo to GGP
and Las Vegas condominium units, together with its available
borrowing capacity under the U.S. senior secured credit
facility and the FF&E credit facility, will be sufficient
to fund the estimated development and construction costs for the
Las Vegas condominiums and the Sands Bethworks projects during
2008. In addition, the Company believes that these funds will
also enable it to fund the Companys equity contribution
requirement for the Marina Bay Sands project and provide
additional capital to its Macao subsidiaries to fund a portion
of the development projects on the Cotai Strip in Macao during
this same time period.
Existing restricted and unrestricted cash balances at the
Companys Macao subsidiaries, operating cash flows from the
Sands Macao and The Venetian Macao and available borrowing
capacity under the Macao credit facility, together with funds
made available under the Companys U.S. senior secured
credit facility, will be used to fund current development and
construction costs for the Cotai Strip development activities in
the short term. However, the Company will need to arrange
additional debt
and/or
equity financing in the near term to continue to fund its
72
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
design, development and construction activities at the remaining
Cotai Strip development projects. The Company expects to
complete this refinancing in 2008.
In the near term, the Company will continue to borrow
significant amounts under its existing and future bank credit
facilities as it funds its global construction and development
projects. In connection with such borrowing needs, the Company
regularly evaluates conditions in the global credit markets.
However, the Company may not be able to obtain additional
borrowings when necessary or on credit terms as favorable as the
Companys existing credit facilities. If the Company is not
able to obtain the requisite financing or the terms are not as
favorable as it anticipates, the Company may be required to slow
or suspend its global development activities, including its
Cotai Strip development, until such financing or other sources
of funds become available.
Note 2 Summary
of Significant Accounting Policies
Principles
of Consolidation
The consolidated financial statements include the accounts of
the Company, its majority-owned subsidiaries and variable
interest entities (VIEs) in which the Company is the
primary beneficiary. The equity attributable to minority
shareholders interests in subsidiaries, which is not
material, is included in other long-term liabilities in the
accompanying consolidated balance sheets. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Managements determination of the appropriate accounting
method with respect to the Companys variable interests is
based on Financial Accounting Standards Board (FASB)
Interpretation (FIN) No. 46R,
Consolidation of Variable Interest Entities an
Interpretation of ARB No. 51. The Company
consolidates any VIEs in which it is the primary beneficiary and
discloses significant variable interests in VIEs of which it is
not the primary beneficiary, if any.
The Company entered into several joint ventures, formed with
well-known and highly-regarded chefs and restaurateurs, to own
and operate restaurants located within The Venetian and The
Palazzo. In connection with these joint ventures, the Company
obtained financial interests in which, based upon its
evaluation, the Company was determined to be the primary
beneficiary. In accordance with FIN No. 46R, the
Company has consolidated these entities as of, and for the year
ended, December 31, 2007.
Use of
Estimates
The preparation of the consolidated financial statements in
conformity with accounting principles generally accepted in the
United States of America requires the Company 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 the Company and on various other
assumptions that the Company believes to be reasonable under the
circumstances. Actual results could vary from those estimates.
Cash
and Cash Equivalents
Cash and cash equivalents consist of cash and short-term
investments with original maturities of less than 90 days.
Such investments are carried at cost, which approximates their
fair value. Cash equivalents are placed with high credit quality
financial institutions and are primarily in money market funds.
Accounts
Receivable and Credit Risk
Accounts receivable are principally comprised of casino and
hotel receivables, which do not bear interest and are recorded
at cost. The Company extends credit to approved casino customers
following background checks and investigations of
creditworthiness. Business or economic conditions, the legal
enforceability of gaming debts, or
73
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
other significant events in foreign countries could affect the
collectibility of receivables from customers residing in these
countries.
The allowance for doubtful accounts represents the
Companys best estimate of the amount of probable credit
losses in the Companys existing accounts receivable. The
Company determines the allowance based on specific customer
information, historical write-off experience and current
industry and economic data. Account balances are charged off
against the allowance when the Company believes it is probable
the receivable will not be recovered. Management believes that
there are no concentrations of credit risk for which an
allowance has not been established. Although management believes
that the allowance is adequate, it is possible that the
estimated amount of cash collections with respect to accounts
receivable could change.
Inventories
Inventories consist primarily of food, beverage and retail
products, and operating supplies, which are stated at the lower
of cost or market. Cost is determined by the
first-in,
first-out and specific identification methods.
Property
and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are provided on a straight-line basis over the
estimated useful lives of the assets, which do not exceed the
lease term for leasehold improvements, as follows:
|
|
|
Land improvements, building and building improvements
|
|
15 to 40 years
|
Furniture, fixtures and equipment
|
|
3 to 15 years
|
Leasehold improvements
|
|
5 to 10 years
|
Transportation
|
|
20 years
|
Maintenance and repairs that neither materially add to the value
of the asset nor appreciably prolong its life are charged to
expense as incurred. Gains or losses on disposition of property
and equipment are included in the consolidated statements of
operations.
The Company evaluates its property and equipment and other
long-lived assets for impairment in accordance with Statement of
Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets. For assets to be disposed of, the Company
recognizes the asset to be sold at the lower of carrying value
or fair value less costs of disposal. Fair value for assets to
be disposed of is estimated based on comparable asset sales,
solicited offers or a discounted cash flow model.
For assets to be held and used, fixed assets are reviewed for
impairment whenever indicators of impairment exist. If an
indicator of impairment exists, the Company first groups its
assets with other assets and liabilities at the lowest level for
which identifiable cash flows are largely independent of the
cash flows of other assets and liabilities (the asset
group). Secondly, the Company estimates the undiscounted
future cash flows that are directly associated with and expected
to arise from the use and eventual disposition of such asset
group. The Company estimates the undiscounted cash flows over
the remaining useful life of the primary asset within the asset
group. If the undiscounted cash flows exceed the carrying value,
no impairment is indicated. If the undiscounted cash flows do
not exceed the carrying value, then an impairment is measured
based on fair value compared to carrying value, with fair value
typically based on a discounted cash flow model. If an asset is
still under development, future cash flows include remaining
construction costs.
For assets to be held for sale, the fixed assets (the
disposal group) are measured at the lower of their
carrying amount or fair value less cost to sell. Losses are
recognized for any initial or subsequent write-down to fair
value less cost to sell, while gains are recognized for any
subsequent increase in fair value less cost to sell, but not in
excess of the cumulative loss previously recognized. Any gains
or losses not previously recognized that results from the sale
74
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
of the disposal group shall be recognized at the date of sale.
Fixed assets are not depreciated while classified as held for
sale.
Capitalized
Interest
Interest costs associated with major construction projects are
capitalized and included in the cost of the projects. When no
debt is incurred specifically for construction projects,
interest is capitalized on amounts expended using the
weighted-average cost of the Companys outstanding
borrowings. Capitalization of interest ceases when the project
is substantially complete or construction activity is suspended
for more than a brief period. During the years ended
December 31, 2007, 2006 and 2005, the Company capitalized
interest expense of $223.2 million, $94.6 million and
$22.7 million, respectively.
Deferred
Financing Costs and Original Issue Discounts
Deferred financing costs and original issue discounts are
amortized to interest expense based on the terms of the related
debt instruments using the effective interest method.
Leasehold
Interest in Land
Leasehold interest in land represents payments made for the use
of land over an extended period of time. The leasehold interests
in land are amortized on a straight-line basis over the expected
term of the related lease agreements. Such assets are not
considered qualifying assets for purposes of capitalizing
interest and as such, are not included in the base used to
determine capitalized interest.
Indefinite
Useful Life Assets
Assets with indefinite useful lives are not subject to
amortization and are tested for impairment annually or more
frequently if events or circumstances indicate that the assets
might be impaired. The impairment test consists of a comparison
of the fair value of the asset with its carrying amount. If the
carrying amount of the asset exceeds its fair value, an
impairment will be recognized in an amount equal to that excess.
If the carrying amount of the asset does not exceed the fair
value, no impairment is recognized.
Revenue
Recognition and Promotional Allowances
Casino revenue is the aggregate of gaming wins and losses. Cash
discounts, commissions and other cash incentives to customers
related to gaming play are recorded as a reduction of gross
casino revenues. Hotel revenue recognition criteria are met at
the time of occupancy. Food and beverage revenue recognition
criteria are met at the time of service. Deposits for future
hotel occupancy or food and beverage services contracts are
recorded as deferred income until revenue recognition criteria
are met. Cancellation fees for hotel and food and beverage
services are recognized upon cancellation by the customer.
Convention revenues are recognized when the related service is
rendered or the event is held. Minimum rental revenues, adjusted
for contractual base rent escalations, are included in
convention, retail and other revenue and are recognized on a
straight-line basis over the terms of the related lease.
In accordance with industry practice, the retail value of
accommodations, food and beverage, and other services furnished
to hotel/casino guests without charge is included in gross
revenue and then deducted as
75
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
promotional allowances. The estimated retail value of such
promotional allowances is included in operating revenues as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Rooms
|
|
$
|
71,908
|
|
|
$
|
48,005
|
|
|
$
|
42,354
|
|
Food and beverage
|
|
|
63,805
|
|
|
|
44,768
|
|
|
|
34,760
|
|
Convention, retail and other
|
|
|
18,142
|
|
|
|
10,546
|
|
|
|
6,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
153,855
|
|
|
$
|
103,319
|
|
|
$
|
83,313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The estimated departmental cost of providing such promotional
allowances is included primarily in casino operating expenses as
follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Rooms
|
|
$
|
15,864
|
|
|
$
|
11,505
|
|
|
$
|
10,862
|
|
Food and beverage
|
|
|
40,622
|
|
|
|
29,302
|
|
|
|
23,153
|
|
Convention, retail and other
|
|
|
18,325
|
|
|
|
5,040
|
|
|
|
5,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
74,811
|
|
|
$
|
45,847
|
|
|
$
|
39,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frequent
Players Program
The Company has established promotional clubs to encourage
repeat business from frequent and active slot machine customers
and table games patrons. Members earn points based on gaming
activity and such points can be redeemed for cash or free play.
The Company accrues for club points as a reduction to gaming
revenue based upon the estimates for expected redemptions.
Pre-Opening
and Development Expenses
The Company accounts for costs incurred in the development and
pre-opening phases of new ventures in accordance with Statement
of Position
No. 98-5,
Reporting on the Costs of
Start-Up
Activities. Pre-opening expenses represent personnel and
other costs incurred prior to the opening of new ventures and
are expensed as incurred. Development expenses include the costs
associated with the Companys evaluation and pursuit of new
business opportunities, which are also expensed as incurred.
Advertising
Costs
Costs for advertising are expensed the first time the
advertising takes place or as incurred. Advertising costs for
ongoing operations are included in general and administrative
expense and totaled $12.2 million, $6.0 million and
$4.6 million for the years ended December 31, 2007,
2006 and 2005, respectively.
Corporate
Expenses
Corporate expense represents payroll, travel, professional fees
and various other expenses not allocated or directly related to
the Companys integrated resort operations.
Foreign
Currency
The Company accounts for currency translation in accordance with
SFAS No. 52, Foreign Currency Translation.
Gains or losses from foreign currency remeasurements are
currently included in net income. Balance sheet accounts are
translated at the exchange rate in effect at each balance sheet
date and income statement accounts
76
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
are translated at the average exchange rates during the year.
Translation adjustments resulting from this process are charged
or credited to other comprehensive income.
Comprehensive
Income
Comprehensive income includes net income and all other
non-stockholder changes in equity, or other comprehensive
income. Elements of the Companys comprehensive income are
reported in the accompanying consolidated statements of
stockholders equity and comprehensive income, and the
cumulative balance of other comprehensive income consisted
solely of foreign currency translation adjustments.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Weighted-average common shares outstanding (used in the
calculations of basic earnings per share)
|
|
|
354,807,700
|
|
|
|
354,277,941
|
|
|
|
354,161,165
|
|
Potential dilution from stock options and restricted stock
|
|
|
981,919
|
|
|
|
986,503
|
|
|
|
365,439
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common and common equivalent shares (used in
the calculations of diluted earnings per share)
|
|
|
355,789,619
|
|
|
|
355,264,444
|
|
|
|
354,526,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antidilutive stock options and restricted stock excluded from
the calculation of diluted earnings per share
|
|
|
1,097,900
|
|
|
|
882,900
|
|
|
|
42,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-Based
Employee Compensation
Effective January 1, 2006, the Company adopted the
provisions of SFAS No. 123R, Share-Based
Payment, which establishes accounting for equity
instruments exchanged for employee services. Under the
provisions of SFAS No. 123R, stock-based compensation
cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized over the employees
requisite service period (generally the vesting period of the
equity grant). Prior to January 1, 2006, the Company
accounted for stock-based compensation to employees in
accordance with Accounting Principles Board (APB)
Opinion No. 25 Accounting for Stock Issued to
Employees, and related interpretations. The Company also
followed the disclosure requirements of SFAS No. 123,
Accounting for Stock-Based Compensation, as amended
by SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure. The
Company elected to adopt the modified prospective application
transition method as provided by SFAS No. 123R and,
accordingly, financial statement amounts for the prior periods
presented in this
Form 10-K
have not been restated to reflect the fair value method of
recording stock-based compensation. The Companys
stock-based employee compensation plan is more fully discussed
in Note 12 Stock-Based
Employee Compensation.
77
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Company had previously adopted the provisions of
SFAS No. 123, as amended by SFAS No. 148,
for disclosure purposes only. Had the Company accounted for the
plan under the fair value method allowed by
SFAS No. 123, the Companys net income and
earnings per share would have been adjusted to the following
pro forma amounts for the year ended December 31, 2005
(dollars in thousands, except per share data):
|
|
|
|
|
Net income, as reported
|
|
$
|
283,686
|
|
Add: Stock-based compensation expense included in reported net
income, net of tax
|
|
|
96
|
|
Deduct: Total stock-based employee compensation expense
determined under the minimum value method
|
|
|
|
|
Deduct: Total stock-based employee compensation expense
determined under Black-Scholes option-pricing model, net of tax
|
|
|
(3,791
|
)
|
|
|
|
|
|
Pro forma net income
|
|
$
|
279,991
|
|
|
|
|
|
|
Basic earnings per share, as reported
|
|
$
|
0.80
|
|
|
|
|
|
|
Basic earnings per share, pro forma
|
|
$
|
0.79
|
|
|
|
|
|
|
Diluted earnings per share, as reported
|
|
$
|
0.80
|
|
|
|
|
|
|
Diluted earnings per share, pro forma
|
|
$
|
0.79
|
|
|
|
|
|
|
Income
Taxes
The Company is subject to income taxes in the
U.S. (including federal and state) and numerous foreign
jurisdictions in which it operates. Deferred income tax balances
reflect the effects of temporary differences between the
carrying amounts of assets and liabilities and their tax bases
and are stated at enacted tax rates expected to be in effect
when taxes are actually paid or recovered.
SFAS No. 109, Accounting for Income Taxes,
requires that deferred tax assets be evaluated for future
realization and reduced by a valuation allowance to the extent
the Company believes a portion will not be realized. The Company
considers many factors when assessing the likelihood of future
realization of its deferred tax assets, including its recent
cumulative earnings experience and expectations of future
taxable income by taxing jurisdiction, the carry-forward periods
available to it for tax reporting purposes, and other relevant
factors.
Significant judgment is required in evaluating the
Companys tax positions and determining the provision for
income taxes. During the ordinary course of business, there are
many transactions and calculations for which the ultimate tax
determination is uncertain. Effective January 1, 2007, the
Company adopted the provisions of FIN No. 48,
Accounting for Uncertainty in Income Taxes an
interpretation of FASB Statement No. 109.
FIN No. 48 contains a two-step approach to recognizing
and measuring uncertain tax positions accounted for in
accordance with SFAS No. 109. The first step is to
evaluate the tax position for recognition by determining if the
weight of available evidence indicates it is more likely than
not that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any.
The second step is to measure the tax benefit as the largest
amount which is more than 50% likely of being realized upon
ultimate settlement. The Company considers many factors when
evaluating and estimating its tax positions and tax benefits,
which may require periodic adjustments and which may not
accurately anticipate actual outcomes.
The Company is subject to income tax examination by tax
authorities for the years after 2003. There are currently no
income tax returns being examined by the Internal Revenue
Service or other major tax authorities.
78
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Tax
Indemnification
In connection with the conversion of LVSLLC from a subchapter
S corporation to a taxable C corporation for income tax
purposes in 2004, LVSLLC entered into an indemnification
agreement pursuant to which it agreed to:
|
|
|
|
|
indemnify those of the Companys stockholders who were
stockholders of Las Vegas Sands, Inc. prior to the 2004 initial
public offering against certain tax liabilities incurred by
these stockholders as a result of adjustments (pursuant to a
determination by, or a settlement with, a taxing authority or
court, or pursuant to the filing of an amended tax return) to
the taxable income of Las Vegas Sands, Inc. with respect to
taxable periods during which Las Vegas Sands, Inc. was a
subchapter S corporation for income tax purposes; and
|
|
|
|
indemnify the Principal Stockholder against certain tax
liabilities incurred by him as a result of adjustments (pursuant
to a determination by, or a settlement with, a taxing authority
or court, or pursuant to the filing of an amended tax return) to
the taxable income of Interface Group Holding Company Inc. with
respect to taxable periods during which it was a subchapter
S corporation for income tax purposes.
|
Accounting
for Derivative Instruments and Hedging Activities
Generally accepted accounting principles require that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at
fair value. If specific conditions are met, a derivative may be
specifically designated as a hedge of specific financial
exposures. The accounting for changes in the fair value of a
derivative depends on the intended use of the derivative and, if
used in hedging activities, it depends on its effectiveness as a
hedge.
The Company has a policy aimed at managing interest rate risk
associated with its current and anticipated future borrowings.
This policy enables the Company to use any combination of
interest rate swaps, futures, options, caps and similar
instruments. To the extent the Company employs such financial
instruments pursuant to this policy, and the instruments qualify
for hedge accounting, they are accounted for as hedging
instruments. In order to qualify for hedge accounting, the
underlying hedged item must expose the Company to risks
associated with market fluctuations and the financial instrument
used must be designated as a hedge and must reduce the
Companys exposure to market fluctuation throughout the
hedge period. If these criteria are not met, a change in the
market value of the financial instrument is recognized as a gain
or loss in results of operations in the period of change.
Otherwise, gains and losses are recognized in comprehensive
income or loss except to the extent that the financial
instrument is disposed of prior to maturity. Net interest paid
or received pursuant to the financial instrument is included as
interest expense in the period.
Recent
Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements, which defines fair value,
establishes a framework for measuring fair value and expands
disclosures about fair value measurements.
SFAS No. 157 applies under other accounting
pronouncements that require or permit fair value measurement.
SFAS No. 157 does not require any new fair value
measurements. The provisions of SFAS No. 157 are
effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods
within those fiscal years. In January 2008, the FASB deferred
the effective date for one year for certain non-financial assets
and non-financial liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a
recurring basis (at least annually). The Company is still
evaluating the impact of this standard; however, the Company
does not expect the adoption of SFAS No. 157 will have
a material effect on its financial condition, results of
operations or cash flows.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Liabilities
Including an Amendment of FASB Statement No. 115.
Under SFAS No. 159, the Company may elect to measure
many financial instruments and certain other items at fair
value, which are not otherwise currently required to be measured
at fair value. The decision to measure items at fair value is
made at specific election dates on an
79
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
irrevocable
instrument-by-instrument
basis and requires recognition of the changes in fair value in
earnings and expensing upfront costs and fees associated with
the item for which the fair value option is elected. Fair value
instruments for which the fair value option has been elected and
similar instruments measured using another measurement attribute
are to be distinguished on the face of the statement of
financial position. SFAS No. 159 is effective for
financial statements beginning after November 15, 2007. The
Company is still evaluating the impact of this standard;
however, the Company does not expect the adoption of
SFAS No. 159 will have a material effect on its
financial condition, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 141R,
Business Combinations, which replaces FASB Statement
No. 141, Business Combinations.
SFAS No. 141R requires an acquirer to recognize the
identifiable assets acquired, the liabilities assumed, any
noncontrolling interest in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited
exceptions specified in the statement. SFAS No. 141R
applies prospectively to business combinations for which the
acquisition date is on or after the beginning of an
entitys fiscal year that begins after December 15,
2008. The Company is in the process of evaluating the impact of
this standard; however, the Company does not expect the adoption
of SFAS No. 141R will have a material effect on its
financial condition, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial
Statements An Amendment of ARB No. 51.
SFAS No. 160 establishes accounting and reporting
standards for the noncontrolling interest in a subsidiary and
for the deconsolidation of a subsidiary. Specifically, this
statement requires the recognition of a noncontrolling interest
(minority interest) as equity in the consolidated financial
statements and separate from the parents equity. The
amount of net income attributable to the noncontrolling interest
will be included in consolidated net income on the face of the
income statement. SFAS No. 160 clarifies that changes
in a parents ownership interest in a subsidiary that do
not result in deconsolidation are equity transactions if the
parent retains its controlling financial interest. In addition,
this statement requires that a parent recognize a gain or loss
in net income when a subsidiary is deconsolidated and also
requires expanded disclosures regarding the interests of the
parent and the interests of the noncontrolling owners. The
provisions of SFAS No. 160 are effective for fiscal
years, and interim periods within those fiscal years, beginning
on or after December 15, 2008. The Company is in the
process of evaluating the impact of this standard; however, the
Company does not expect the adoption of SFAS No. 160
will have a material effect on its financial condition, results
of operations or cash flows.
In connection with the Companys new U.S senior secured
credit facility (see Note 8
Long-Term Debt Corporate and U.S. Related
Debt New Senior Secured Credit Facility),
restrictions on cash proceeds related to the prior senior
secured credit facility, The Sands Expo Center mortgage loan and
the loan to fund the construction of The Shoppes at The Palazzo
were eliminated. At December 31, 2006, restricted cash
balances related to these eliminated restrictions were
$418.8 million.
As required by the Companys Macao credit facility entered
into in May 2006 (see Note 8
Long-Term Debt Macao Related Debt Macao
Credit Facility), certain loan proceeds available under
this facility and certain cash flows generated by our existing
Macao operations have been deposited into restricted accounts,
invested in cash or cash equivalents, and pledged to a
collateral agent for the Macao credit facility lenders. This
restricted cash amount will be used as required to fund
construction of the Sands Macao, The Venetian Macao and other
Cotai Strip project costs in accordance with terms specified in
this facility. The restricted accounts are subject to a security
interest in favor of the lenders under the Macao credit
facility. As of December 31, 2007 and 2006, the cash
balances in the restricted accounts were $59.2 million and
$465.4 million, respectively.
As required by the Companys Singapore bridge facility
entered into in August 2006 (see
Note 8 Long-Term
Debt Singapore Related Debt Singapore
Bridge Facility), proceeds available under this facility
have been deposited into accounts, invested in cash or cash
equivalents, and pledged to a security trustee for the benefit
of the Singapore bridge facility lenders. This restricted cash
amount will be used as required to fund construction and
80
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
other operating and development costs of the Marina Bay Sands.
These accounts are subject to a security interest in favor of
the lenders under the Singapore bridge facility. As of
December 31, 2007 and 2006, the restricted cash balance was
$338.1 million and $19.6 million, respectively.
In addition, restricted cash includes $14.5 million related
to other items as of December 31, 2007. During the year
ended December 31, 2007, the Company was issued a gaming
license in Pennsylvania and $50.0 million in restricted
cash at December 31, 2006, was transferred to the
Pennsylvania Gaming Control Board as payment for the license
(see Note 1 Organization and
Business of Company United States Development
Projects Sands Bethworks).
Restricted cash balances classified as current are primarily
equivalent to the related construction payables that are also
classified as current.
Note 4 Accounts
Receivable, Net
Accounts receivable consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Casino
|
|
$
|
117,193
|
|
|
$
|
119,514
|
|
Hotel
|
|
|
63,895
|
|
|
|
36,160
|
|
Other
|
|
|
39,223
|
|
|
|
53,485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
220,311
|
|
|
|
209,159
|
|
Less allowance for doubtful accounts
|
|
|
(33,116
|
)
|
|
|
(35,476
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
187,195
|
|
|
$
|
173,683
|
|
|
|
|
|
|
|
|
|
|
Note 5 Property
and Equipment, Net
Property and equipment consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Land and improvements
|
|
$
|
297,678
|
|
|
$
|
207,144
|
|
Building and improvements
|
|
|
4,435,934
|
|
|
|
1,622,783
|
|
Furniture, fixtures, equipment and leasehold improvements
|
|
|
1,013,138
|
|
|
|
456,230
|
|
Transportation
|
|
|
176,897
|
|
|
|
72,652
|
|
Construction in progress
|
|
|
3,258,750
|
|
|
|
2,694,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,182,397
|
|
|
|
5,052,989
|
|
Less accumulated depreciation and amortization
|
|
|
(607,783
|
)
|
|
|
(470,664
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,574,614
|
|
|
$
|
4,582,325
|
|
|
|
|
|
|
|
|
|
|
81
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Construction in progress consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
The Venetian Macao
|
|
|
110,759
|
|
|
|
1,474,312
|
|
The Four Seasons Macao
|
|
|
359,889
|
|
|
|
70,310
|
|
Other Macao Development Projects (Principally Cotai Strip
parcels 5 and 6)
|
|
|
714,701
|
|
|
|
130,355
|
|
Marina Bay Sands
|
|
|
552,850
|
|
|
|
30,511
|
|
The Palazzo and The Shoppes at The Palazzo
|
|
|
1,297,390
|
|
|
|
916,302
|
|
Other
|
|
|
223,161
|
|
|
|
72,390
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,258,750
|
|
|
$
|
2,694,180
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007, portions of The Venetian Macao,
The Palazzo and The Shoppes at The Palazzo were under
construction and are scheduled to be completed during 2008.
Approximately $429.0 million in construction in progress as
of December 31, 2007, related to The Shoppes at the
Palazzo, which is being sold to GGP (see
Note 10 Mall Sale
The Shoppes at The Palazzo). The $223.2 million in
other construction in progress consists primarily of the
construction of Sands Bethworks and the Las Vegas condominiums,
airplane-related purchases at corporate and other projects in
Las Vegas.
As of December 31, 2007, the cost of property and equipment
that the Company is leasing to tenants as part of its Macao mall
operations was $216.4 million with accumulated depreciation
of $3.4 million.
During the three months ended June 30, 2007, the Company
recorded a charge of $4.8 million to properly account for
pre-opening expenses that had been previously capitalized on the
balance sheets during the years ended December 31, 2005 and
2006, and the three months ended March 31, 2007. Because
the amounts involved were not material to the Companys
financial statements in any individual prior period and the
cumulative amount was not material to the results of operations
for the year ended December 31, 2007, the Company recorded
the effect of correcting this item, which increased pre-opening
expense and reduced property and equipment by $4.8 million,
during the three months ended June 30, 2007.
Note 6 Leasehold
Interests in Land, Net
Leasehold interests in land consists of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Marina Bay Sands
|
|
$
|
854,386
|
|
|
$
|
806,021
|
|
Sands Macao
|
|
|
22,625
|
|
|
|
10,237
|
|
The Venetian Macao (parcel 1)
|
|
|
163,753
|
|
|
|
|
|
The Four Seasons Macao (parcel 2)
|
|
|
27,890
|
|
|
|
|
|
Parcel 3
|
|
|
29,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,098,493
|
|
|
|
816,258
|
|
Less accumulated amortization
|
|
|
(28,884
|
)
|
|
|
(6,402
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,069,609
|
|
|
$
|
809,856
|
|
|
|
|
|
|
|
|
|
|
The Company will amortize the leasehold interests in land for
Marina Bay Sands, Sands Macao and the three parcels on the Cotai
Strip on a straight-line basis over the expected term of the
leases at approximately $14.2 million, $1.2 million
and $10.3 million, respectively, annually at exchange rates
in effect as of December 31, 2007.
82
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During the year ended December 31, 2007, the Company made
payments of 1.32 billion patacas (approximately
$163.8 million at exchange rates in effect on
December 31, 2007) for the full payment of the land
premium for parcel 1 and partial payments of 224.2 million
patacas and 239.9 million patacas (approximately
$27.9 million and $29.8 million, respectively, at
exchange rates in effect on December 31, 2007) towards
the land premiums for parcels 2 and 3, respectively. The balance
on parcel 2 will be due upon completion of The Four Seasons
Macao, which is expected to be completed in summer 2008. The
balance on parcel 3 will either be due upon the completion of
the resorts on the parcel or will be payable through seven equal
semi-annual payments (one of which was made in 2007), bearing
interest at 5% per annum. The Company received a credit in the
amount of 193.4 million patacas (approximately
$24.1 million at exchange rates in effect on
December 31, 2007) towards the aggregate land premium
related to reclamation work and other works done on the land,
and the installation costs of an electrical substation.
In addition to the land premium payments for the Macao leasehold
interests in land, the Company is required to make annual rent
payments in the amounts and at the times specified in the land
concessions. The rent amounts may be revised every five years by
the Macao government. As of December 31, 2007, the Company
was obligated under its concessions to make future premium and
rental payments as follows (in thousands):
|
|
|
|
|
2008
|
|
$
|
59,575
|
|
2009
|
|
|
18,207
|
|
2010
|
|
|
18,207
|
|
2011
|
|
|
3,047
|
|
2012
|
|
|
3,140
|
|
Thereafter
|
|
|
60,385
|
|
|
|
|
|
|
|
|
$
|
162,561
|
|
|
|
|
|
|
|
|
Note 7
|
Other
Accrued Liabilities
|
Other accrued liabilities consist of the following (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Customer deposits
|
|
$
|
143,053
|
|
|
$
|
78,313
|
|
Payroll and related
|
|
|
92,103
|
|
|
|
65,350
|
|
Taxes and licenses
|
|
|
140,003
|
|
|
|
78,922
|
|
Outstanding gaming chips and tokens
|
|
|
152,962
|
|
|
|
51,752
|
|
Other accruals
|
|
|
82,790
|
|
|
|
44,564
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
610,911
|
|
|
$
|
318,901
|
|
|
|
|
|
|
|
|
|
|
83
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 8
Long-Term Debt
Long-term debt consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Corporate and U.S. Related:
|
|
|
|
|
|
|
|
|
New Senior Secured Credit Facility Term B
|
|
$
|
2,985,000
|
|
|
$
|
|
|
Senior Secured Credit Facility Term B and Term B
Delayed Draw
|
|
|
|
|
|
|
1,170,000
|
|
Senior Secured Credit Facility Revolving Facility
|
|
|
|
|
|
|
260,128
|
|
6.375% Senior Notes (net of original issue discount of
$1,620 and $1,847, respectively)
|
|
|
248,380
|
|
|
|
248,153
|
|
Airplane Financings
|
|
|
89,484
|
|
|
|
|
|
FF&E Financings
|
|
|
61,416
|
|
|
|
44,977
|
|
Other
|
|
|
6,857
|
|
|
|
|
|
The Sands Expo Center Mortgage Loan
|
|
|
|
|
|
|
90,868
|
|
Construction Loan for The Shoppes at The Palazzo
|
|
|
|
|
|
|
114,500
|
|
Macao Related:
|
|
|
|
|
|
|
|
|
Macao Credit Facility Term B and Local Term
|
|
|
1,900,000
|
|
|
|
1,300,000
|
|
Macao Credit Facility Term B Delayed
|
|
|
700,000
|
|
|
|
|
|
Macao Credit Facility Revolving Facility
|
|
|
251,000
|
|
|
|
|
|
Other
|
|
|
6,434
|
|
|
|
|
|
Singapore Related:
|
|
|
|
|
|
|
|
|
Singapore Bridge Facility Term Loan
|
|
|
594,404
|
|
|
|
393,510
|
|
Singapore Bridge Facility Floating Rate Notes
|
|
|
729,355
|
|
|
|
520,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,572,330
|
|
|
|
4,142,638
|
|
Less current maturities
|
|
|
(54,333
|
)
|
|
|
(6,486
|
)
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
$
|
7,517,997
|
|
|
$
|
4,136,152
|
|
|
|
|
|
|
|
|
|
|
Corporate
and U.S. Related Debt
New
Senior Secured Credit Facility
In May 2007, the Company entered into a $5.0 billion senior
secured credit facility (the New Senior Secured Credit
Facility), which consists of a $3.0 billion funded
term loan (the Term B Facility), a
$600.0 million delayed draw term loan available for
12 months after closing (the Delayed Draw I
Facility), a $400.0 million delayed draw term loan
available for 18 months after closing (the Delayed
Draw II Facility) and a $1.0 billion revolving
credit facility, of which up to $100.0 million may be drawn
on a swingline basis (the Revolving Facility).
The Term B Facility and the Delayed Draw I Facility mature on
May 23, 2014. The Term B Facility is subject to quarterly
amortization payments of $7.5 million, which began in
September 2007, followed by a balloon payment of
$2.80 billion due on May 23, 2014. The Delayed Draw I
Facility is subject to quarterly amortization payments of
$1.5 million, which begin on September 30, 2008,
followed by a balloon payment of $565.5 million due on
May 23, 2014. The Delayed Draw II Facility matures on
May 23, 2013, and is subject to quarterly amortization
payments of $1.0 million, which begin on March 31,
2009, followed by a balloon payment of $383.0 million due
on May 23, 2013. The Revolving Facility matures on
May 23, 2012, and has no interim amortization. As of
December 31, 2007, no amounts are outstanding under the
Revolving Facility and no amounts have been drawn under the
delayed draw facilities.
84
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The New Senior Secured Credit Facility is guaranteed by certain
of the Companys domestic subsidiaries (the
Guarantors). The obligations under the New Senior
Secured Credit Facility and the guarantees of the Guarantors are
collateralized by a first-priority security interest in
substantially all of LVSLLCs and the Guarantors
assets, other than capital stock and similar ownership
interests, certain furniture, fixtures and equipment, and
certain other excluded assets.
Borrowings under the New Senior Secured Credit Facility bear
interest, at the Companys option, at either an adjusted
Eurodollar rate or at an alternative base rate plus a credit
spread. For base rate borrowings, the initial credit spread is
0.5% per annum and 0.75% per annum for the Revolving Facility
and the term loans, respectively. For Eurodollar rate
borrowings, the initial credit spread is 1.5% per annum and
1.75% per annum for the Revolving Facility and the term loans,
respectively (6.6% as of December 31, 2007). These spreads
will be reduced by 0.25% if the Companys corporate
rating (as defined in the New Senior Secured Credit
Facility) is increased to at least Ba2 by Moodys and at
least BB by Standard & Poors Ratings Group,
subject to certain additional conditions. The spread for the
Revolving Facility will be further reduced by 0.25% if the
Companys corporate rating is increased to at
least Ba1 or higher by Moodys and at least BB+ or higher
by S&P, subject to certain additional conditions. The
weighted average interest rate for the New Senior Secured Credit
Facility was 7.1% during the year ended December 31, 2007.
The Company will pay a commitment fee of 0.375% per annum on the
undrawn amounts under the Revolving Facility, which will be
reduced by 0.125% if certain ratings are achieved, subject to
certain additional conditions. The Company will also pay a
commitment fee equal to 0.75% per annum and 0.5% per annum on
the undrawn amounts under the Delayed Draw I Facility and the
Delayed Draw II Facility, respectively. The New Senior
Secured Credit Facility contains affirmative and negative
covenants customary for such financings, including, but not
limited to, minimum ratios of adjusted earnings before interest,
taxes, depreciation and amortization (EBITDA) to
interest expense and maximum ratios of total debt outstanding to
adjusted EBITDA. The New Senior Secured Credit Facility also
contains conditions and events of default customary for such
financings. In addition, there are provisions that limit or
prohibit certain payments of dividends and other distributions
to LVSC. At December 31, 2007, the net assets of LVSLLC
were $5.86 billion, a substantial portion of which were
restricted from being distributed under the terms of the New
Senior Secured Credit Facility.
To meet the requirements of the New Senior Secured Credit
Facility, the Company entered into an interest rate cap
agreement in August 2007 with a notional amount of
$1.64 billion, which expires on May 31, 2009. The
provisions of this interest rate cap agreement entitle the
Company to receive from the counterparty the amounts, if any, by
which the selected market interest rate exceeds the strike rate
of 6.75%. The Company has three additional interest rate cap
agreements that it entered into as part of the prior senior
secured credit facility with notional amounts of
$500.0 million, $50.0 million and $10.0 million,
which all expire on March 30, 2008. The provisions of these
interest rate cap agreements entitle the Company to receive from
the counterparties the amounts, if any, by which the selected
market interest rates exceed the strike rates of 5.75%, 6.5% and
6.375%, respectively. There was no net effect on interest
expense as a result of these four interest rate cap agreements
for the year ended December 31, 2007.
A portion of the proceeds of the Term B Facility was used to
refinance the prior senior secured credit facility, repay the
construction loan related to The Shoppes at The Palazzo and The
Sands Expo Center mortgage loan, pay for certain construction
and development related expenses incurred in connection with The
Palazzo, and for fees and expenses related to the New Senior
Secured Credit Facility. The Company incurred a charge of
approximately $10.7 million for loss on early retirement of
debt during 2007 as a result of refinancing the facility.
Senior
Notes
On February 10, 2005, LVSC sold in a private placement
transaction $250.0 million in aggregate principal amount of
its 6.375% Senior Notes due 2015 (the Senior
Notes) with an original issue discount of
$2.3 million. Net proceeds after offering costs and
original issue discount were $244.8 million. The Senior
Notes will mature on
85
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
February 15, 2015. LVSC has the option to redeem all or a
portion of the Senior Notes at any time prior to
February 15, 2010, at a make-whole redemption
price. Thereafter, LVSC has the option to redeem all or a
portion of the Senior Notes at any time at fixed prices that
decline ratably over time. The Senior Notes are unsecured senior
obligations of LVSC and are jointly and severally guaranteed on
a senior unsecured basis by certain of LVSCs existing
domestic subsidiaries, which includes LVSLLC and Venetian Casino
Resort, LLC (VCR). The indenture governing the
Senior Notes contains covenants that, subject to certain
exceptions and conditions, limit the ability of LVSC and the
subsidiary guarantors to enter into sale and leaseback
transactions in respect of their principal properties, create
liens on their principal properties and consolidate, merge or
sell all or substantially all their assets. In June 2005, the
Senior Notes were exchanged for substantially similar Senior
Notes, which have been registered under the federal securities
laws. In connection with entering into the New Senior Secured
Credit Facility, the Senior Notes were collateralized on an
equal and ratable basis with the obligations under the New
Senior Secured Credit Facility.
Airplane
Financings
In February 2007, the Company entered into promissory notes
totaling $72.0 million to finance the purchase of one
airplane and to finance two others that were already owned. The
notes consist of balloon payment promissory notes and amortizing
promissory notes, all of which have ten year maturities and are
collateralized by the related aircraft. The notes bear interest
at three-month LIBOR plus 1.5% per annum (6.6% as of
December 31, 2007). The amortizing notes, totaling
$28.8 million, are subject to quarterly principal and
interest payments, which began June 1, 2007. The balloon
notes, totaling $43.2 million, are subject to quarterly
interest payments, which began June 1, 2007, with the
principal payments due in full on March 1, 2017. The
weighted average interest rate on the notes was 7.0% during the
year ended December 31, 2007.
In April 2007, the Company entered into promissory notes
totaling $20.3 million to finance the purchase of an
additional airplane. The notes have ten year maturities and
consist of a balloon payment promissory note and an amortizing
promissory note. The notes bear interest at three-month LIBOR
plus 1.25% per annum (6.1% as of December 31, 2007). The
$8.1 million amortizing note is subject to quarterly
principal and interest payments, which began June 30, 2007.
The $12.2 million balloon note is subject to quarterly
interest payments, which began June 30, 2007, with the
principal payment due in full on March 31, 2017. The
weighted average interest rate on the notes was 6.6% during the
year ended December 31, 2007.
FF&E
Financings
In December 2006, certain of the Companys subsidiaries,
including LVSLLC and VCR, entered into an FF&E credit
facility agreement (the FF&E Facility) with a
group of lenders and General Electric Capital Corporation as
administrative agent to provide up to $142.9 million to
finance or refinance the acquisition of certain furniture,
fixtures and equipment (FF&E) located in The
Venetian and The Palazzo. The FF&E Facility consisted of a
$7.9 million funded term loan which proceeds refinanced a
prior FF&E loan and a $135.0 million delayed draw term
loan. In August 2007, the parties to the FF&E Facility
entered into an amended and restated FF&E credit and
guarantee agreement (the Amended and Restated FF&E
Facility) which, among other things, increased the overall
size of the delayed draw term loan facility to
$167.0 million, repaid the funded term loan under the
FF&E Facility and conformed the affirmative and negative
covenants and events of default to those set forth in the New
Senior Secured Credit Facility. The delayed draw term loan
commitment under the Amended and Restated FF&E Facility
terminates on June 30, 2008, and as of December 31,
2007, $61.4 million was drawn under the delayed draw term
loan.
The remaining proceeds of the Amended and Restated FF&E
Facility may be used by LVSLLC and VCR to finance
and/or
refinance the acquisition of certain FF&E to be located in
The Venetian and The Palazzo. The Amended and Restated FF&E
Facility is collateralized by the FF&E financed
and/or
refinanced with the proceeds
86
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
of the Amended and Restated FF&E Facility, and is
guaranteed by the same subsidiaries of the Company that
guarantee the obligations under the New Senior Secured Credit
Facility.
Borrowings under the Amended and Restated FF&E Facility
bear interest, at the Companys option, at either an
adjusted Eurodollar rate or at a base rate, plus an applicable
margin. The initial applicable margin is 1.0% per annum for
loans accruing interest at the base rate, and 2.0% per annum for
loans accruing interest at the adjusted Eurodollar rate (6.8% as
of December 31, 2007). The applicable margins may be
reduced by 0.25% under certain circumstances similar to those
set forth in the New Senior Secured Credit Facility. The Company
will also pay a commitment fee of 0.50% per annum on the undrawn
amount of the term delayed draw loan.
The delayed draw term loan matures in June 2011. The Company is
required to make principal payments in quarterly installments
commencing on July 1, 2008, in an amount equal to 5.0% of
the aggregate principal amount of the delayed draw term loan
outstanding on July 1, 2008, with the remainder due in four
equal quarterly installments ending on the maturity date. The
Amended and Restated FF&E Facility also requires the
Company to make mandatory prepayments of the delayed draw term
loan under certain specified circumstances. The weighted average
interest rate on the Amended and Restated FF&E Facility was
7.4% during the year ended December 31, 2007.
Macao
Related Debt
Macao
Credit Facility
On May 25, 2006, two subsidiaries of the Company, VML US
Finance, LLC (the Borrower) and Venetian Macau
Limited (VML), as guarantor, entered into a credit
agreement (the Macao Credit Facility). The Macao
Credit Facility originally consisted of a $1.2 billion
funded term B loan (the Macao Term B Facility), a
$700.0 million delayed draw term B loan (the Macao
Term B Delayed Draw Facility), a $100.0 million
funded local currency term loan (the Macao Local Term
Facility) and a $500.0 million revolving credit
facility (the Macao Revolving Facility). In March
2007, the Macao Credit Facility was amended to expand the use of
proceeds and remove certain restrictive covenants. In April
2007, the lenders of the Macao Credit Facility approved a
reduction of the interest rate margin for all classes of loans
by 50 basis points and the Borrower exercised its rights
under the Macao Credit Facility to access the
$800.0 million of incremental facilities under the
accordion feature set forth therein, which increased the funded
Macao Term B Facility by $600.0 million, the Macao
Revolving Facility by $200.0 million, and the total Macao
Credit Facility to $3.3 billion. As of December 31,
2007, the Company had fully drawn $700.0 million under the
Macao Term B Delayed Draw Facility and $251.0 million under
the Macao Revolving Facility.
The indebtedness under the Macao Credit Facility is guaranteed
by VML, Venetian Cotai Limited and certain of the Companys
other foreign subsidiaries (the Macao Guarantors).
The obligations under the Macao Credit Facility and the
guarantees of the Macao Guarantors are collateralized by a
first-priority security interest in substantially all of the
Borrowers and the Macao Guarantors assets, other
than (1) capital stock of the Borrower and the Macao
Guarantors, (2) assets that secure permitted furniture,
fixtures and equipment financings, (3) VMLs gaming
subconcession contract and (4) certain other excluded
assets.
Borrowings under the Macao Credit Facility bear interest, at the
Companys option, at either an adjusted Eurodollar rate
(or, in the case of the Macao Local Term Facility, adjusted
HIBOR) or at an alternative base rate, plus a spread of 2.25% or
1.25%, respectively (5.7% for the Macao Local Term Facility and
7.1% for the remainder of the Macao Credit Facility at
December 31, 2007). The Borrower also pays a standby
commitment fee of 0.5% on the undrawn amounts under the Macao
Revolving Facility.
For the years ended December 31, 2007 and 2006, the
weighted average interest rates for the Macao Local Term
Facility were 6.8% and 6.9%, respectively, and the weighted
average interest rates for the remainder of the Macao Credit
Facility were 7.8% and 8.1%, respectively.
87
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
To meet the requirements of the Macao Credit Facility, the
Company entered into four separate interest rate cap agreements
in September 2006, May 2007 and October 2007 (collectively, the
Macao Cap Agreements) with notional amounts of
$1.0 billion, $325.0 million, $165.0 million and
$160.0 million, all of which expire on September 21,
2009. The provisions of the Macao Cap Agreements entitle the
Company to receive from the counterparties the amounts, if any,
by which the selected market interest rates exceed the strike
rate of 6.75% as stated in such agreement. There was no net
effect on interest expense as a result of the Macao Cap
Agreements for the year ended December 31, 2007.
The Macao Revolving Facility and the Macao Local Term Facility
have a five year maturity. The Macao Term B Delayed Draw
Facility and the Macao Term B Facility mature in six and seven
years, respectively. The Macao Term B Delayed Draw and the Macao
Term B Facility are subject to nominal amortization for the
first five and six years, respectively, commencing in the
first quarter following substantial completion of The Venetian
Macao, which occurred in 2007, with the remainder of the loans
payable in four equal installments in the last year immediately
preceding their maturity dates. Subsequent to substantial
completion of The Venetian Macao, the Macao Local Term Facility
is subject to quarterly amortization in an amount of
approximately $6.3 million per quarter, with the
remainder of the loan payable in four equal quarterly
installments in the last year immediately preceding the maturity
date.
The Macao Credit Facility contains affirmative and negative
covenants customary for such financings, including, but not
limited to, limitations on incurring additional liens, incurring
additional indebtedness, making certain investments, paying
dividends and making other restricted payments, and acquiring
and selling assets. The Macao Credit Facility also requires the
Borrower and the Macao Guarantors to comply with financial
covenants, including, but not limited to, generating a minimum
EBITDA for a period of time and, thereafter, ratios of EBITDA to
interest expense and total indebtedness to EBITDA, as well as
maximum annual capital expenditures. The Macao Credit Facility
also contains events of default customary for such financings.
Ferry
Financing
Subsequent to year-end, the Company entered into a
1.21 billion Hong Kong dollar (approximately
$155.0 million at exchange rates in effect on
December 31, 2007) secured credit facility to finance
the purchase of ten ferries. The proceeds from the secured
credit facility will be used to reimburse the Company for cash
spent to date on construction of the ferries and to finance the
progress payments on those ferries not yet delivered from the
manufacturer. The facility is secured by the ferries and
guaranteed by VML.
Singapore
Related Debt
MBS entered into the Singapore bridge facility in August 2006,
as further detailed below, as bridge financing to commence
construction of Marina Bay Sands. As the facility would mature
in full in 2008, the Company signed the Singapore permanent
facilities, as further detailed below, in December 2007. Upon
closing in January 2008, a portion of the borrowings under the
Singapore permanent facilities, as well as contributions made by
the Company to MBS, were used to repay the outstanding balances
on the Singapore bridge facility, and to pay fees, costs and
expenses related to entering into the Singapore permanent
facilities agreement. As a result of the closing of the
permanent financing in January 2008, the Singapore bridge
facility balances outstanding as of December 31, 2007, have
been classified as long-term in accordance with terms of the
permanent facility.
Singapore
Bridge Facility
On August 18, 2006, MBS entered into agreements (together,
the Singapore Bridge Facility) providing for a SGD
1.1 billion (approximately $763.6 million at exchange
rates in effect on December 31, 2007) floating rate
notes facility (the Singapore Floating Rate Notes)
and a SGD 1.1 billion (approximately $763.6 million at
exchange rates in effect on December 31, 2007) term
loan facility (the Singapore Term Loan). The
Singapore Floating Rate Notes consist of a funded SGD
788.6 million (approximately $545.5 million at
exchange rates in
88
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
effect on December 31, 2007) facility and a SGD
315.4 million (approximately $218.2 million at
exchange rates in effect on December 31, 2007) delayed
draw facility. The Singapore Term Loan consists of a funded SGD
596.0 million (approximately $412.3 million at
exchange rates in effect on December 31,
2007) facility, a SGD 315.4 million (approximately
$218.2 million at exchange rates in effect on
December 31, 2007) delayed draw facility, and a SGD
192.6 million (approximately $133.2 million at
exchange rates in effect on December 31,
2007) facility to provide bank guarantees for a security
deposit required to be delivered to the STB under the
Development Agreement. As of December 31, 2007, SGD
1.06 billion (approximately $729.4 million at exchange
rates in effect on December 31, 2007) has been drawn
on the Singapore Floating Rate Notes,
SGD 859.9 million (approximately $594.4 million
at exchange rates in effect on December 31, 2007) has
been drawn on the Singapore Term Loan, and SGD
192.6 million (approximately $133.2 million at
exchange rates in effect on December 31, 2007) under
the Singapore Term Loan has been committed to provide a
guarantee for a security deposit required to be delivered to the
STB under the Development Agreement.
The indebtedness under the Singapore Floating Rate Notes is
guaranteed by LVSC on an unsecured basis and the indebtedness
under the Singapore Term Loan is collateralized by a
first-priority security interest in substantially all of
MBS assets, other than capital stock and certain other
assets.
Borrowings under both the Singapore Floating Rate Notes and the
Singapore Term Loan bear interest at the Singapore SWAP Offer
Rate plus a spread of 1.35% per annum during the first twelve
months that amounts are outstanding under such facilities and a
spread of 1.60% per annum during the second twelve months that
amounts are outstanding (4.1% and 3.5% on the Singapore Floating
Rate Notes and the Singapore Term Loan, respectively, at
December 31, 2007). MBS will also pay a standby fee of
0.375% per annum on the undrawn amounts under the Singapore
Bridge Facility. The Singapore Bridge Facility has a two year
maturity and the aggregate amount outstanding matures in full on
August 22, 2008. MBS is permitted, at its option, to redeem
or prepay all or a portion of the outstanding Singapore Bridge
Facility, at par, without premium or penalty, under certain
circumstances. The weighted average interest rate on the
Singapore Floating Rate Notes was 4.4% and 5.0% for the years
ended December 31, 2007 and 2006, respectively. The
weighted average interest rate on the Singapore Term Loan was
4.3% and 5.0% for the years ended December 31, 2007 and
2006, respectively.
The Singapore Bridge Facility contains affirmative and negative
covenants customary for such financings, including, but not
limited to, limitations on liens, indebtedness, investments,
acquisitions and asset sales, restricted payments, affiliate
transactions and use of proceeds from the facility, as well as
requirements to comply with applicable law and maintain adequate
insurance.
Singapore
Permanent Facilities
In December 2007, MBS signed a facility agreement (the
Singapore Permanent Facility Agreement) providing
for a SGD 2.0 billion (approximately $1.38 billion at
exchange rates in effect on December 31, 2007) term
loan (Singapore Permanent Facility A) that was
funded in January 2008, a SGD 2.75 billion (approximately
$1.90 billion at exchange rates in effect on
December 31, 2007) term loan (Singapore
Permanent Facility B) that is available on a delayed draw
basis until December 31, 2010, a SGD 192.6 million
(approximately $133.2 million at exchange rates in effect
on December 31, 2007) bankers guarantee facility
(Singapore Permanent Facility C) to provide the
bankers guarantees in favor of the STB required under the
Development Agreement that was fully drawn in January 2008, and
a SGD 500.0 million (approximately $345.9 million at
exchange rates in effect on December 31,
2007) revolving credit facility (Singapore Permanent
Facility D and collectively, the Singapore Permanent
Facilities) that is available until February 28, 2015.
The indebtedness under the Singapore Permanent Facility
Agreement is collateralized by a first-priority security
interest in substantially all of MBSs assets, other than
capital stock and similar ownership interests, certain
furniture, fixtures, fittings and equipment and certain other
excluded assets.
89
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The Singapore Permanent Facilities mature on March 31,
2015, with MBS required to repay or prepay the Singapore
Permanent Facilities under certain circumstances. Commencing
March 31, 2011, and at the end of each quarter thereafter,
MBS is required to repay the outstanding Singapore Permanent
Facility A and Facility B loans on a pro rata basis in an
aggregate amount equal to SGD 125.0 million (approximately
$86.5 million at exchange rates in effect on
December 31, 2007) per quarter. In addition,
commencing at the end of the third full quarter of operations of
the Marina Bay Sands, MBS is required to further prepay the
outstanding Singapore Permanent Facility A and Facility B loans
on a pro rata basis with a percentage of excess free cash flow
(as defined by the Singapore Permanent Facility Agreement).
Borrowings under the Singapore Permanent Facilities will bear
interest at the Singapore SWAP Offer Rate plus a spread of 2.25%
per annum. MBS will pay a standby interest fee of 1.125% per
annum and 0.90% per annum on the undrawn amounts under Singapore
Permanent Facility B and Facility D, respectively. MBS will pay
a commission of 2.25% per annum on the bankers guarantees
outstanding under the Singapore Permanent Facilities for the
period during which any bankers guarantees are outstanding.
The Singapore Permanent Facility Agreement contains affirmative
and negative covenants customary for such financings, including,
but not limited to, limitations on liens, annual capital
expenditures other than project costs, indebtedness, loans and
guarantees, investments, acquisitions and asset sales,
restricted payments, affiliate transactions and use of proceeds
from the facilities. The Singapore Permanent Facility Agreement
also requires MBS to comply with financial covenants as of the
end of the first full quarter beginning not less than
183 days after the commencement of operations of the Marina
Bay Sands, including maximum ratios of total indebtedness to
EBITDA, minimum ratios of EBITDA to interest expense, minimum
EBITDA requirements and positive net worth. The Singapore
Permanent Facility Agreement also contains events of default
customary for such financings.
90
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Cash
Flows from Financing Activities
Cash flows from financing activities related to long-term debt
are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Proceeds from New Senior Secured Credit Facility
Term B
|
|
$
|
3,000,000
|
|
|
$
|
|
|
|
$
|
|
|
Proceeds from Macao Credit Facility
|
|
|
1,551,000
|
|
|
|
1,350,000
|
|
|
|
|
|
Proceeds from Singapore Bridge Facility
|
|
|
339,788
|
|
|
|
892,076
|
|
|
|
|
|
Proceeds from airplane financings
|
|
|
92,250
|
|
|
|
|
|
|
|
|
|
Proceeds from senior secured credit facility revolver
|
|
|
62,000
|
|
|
|
254,129
|
|
|
|
31,000
|
|
Proceeds from The Shoppes at The Palazzo construction loan
|
|
|
52,000
|
|
|
|
86,000
|
|
|
|
28,500
|
|
Proceeds from FF&E financings and other long-term debt
|
|
|
38,038
|
|
|
|
37,790
|
|
|
|
|
|
Proceeds from 6.375% Senior Notes, net of discount
|
|
|
|
|
|
|
|
|
|
|
247,722
|
|
Proceeds from senior secured credit facility term B
and term B delayed
|
|
|
|
|
|
|
|
|
|
|
505,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
5,135,076
|
|
|
$
|
2,619,995
|
|
|
$
|
812,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments on senior secured credit facility term B
and term B delayed
|
|
$
|
(1,170,000
|
)
|
|
$
|
|
|
|
$
|
|
|
Repayments on senior secured credit facility revolver
|
|
|
(322,128
|
)
|
|
|
(25,000
|
)
|
|
|
|
|
Repayments on The Shoppes at The Palazzo construction loan
|
|
|
(166,500
|
)
|
|
|
|
|
|
|
|
|
Repayments on The Sands Expo Center mortgage loan
|
|
|
(90,868
|
)
|
|
|
(4,733
|
)
|
|
|
(3,687
|
)
|
Repayments on New Senior Secured Credit Facility
Term B
|
|
|
(15,000
|
)
|
|
|
|
|
|
|
|
|
Repayments on FF&E financings and other long-term debt
|
|
|
(8,539
|
)
|
|
|
(3,013
|
)
|
|
|
(1,800
|
)
|
Repayments on airplane financings
|
|
|
(2,766
|
)
|
|
|
|
|
|
|
|
|
Repayments on Venetian Intermediate credit facility
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
Repayments on Macao Credit Facility
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
Repayments on 11% mortgage notes
|
|
|
|
|
|
|
|
|
|
|
(843,640
|
)
|
Repayments on Venetian Macao Limited senior secured
notes tranches A and B
|
|
|
|
|
|
|
|
|
|
|
(120,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,775,801
|
)
|
|
$
|
(132,746
|
)
|
|
$
|
(969,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Scheduled
Maturities of Long-Term Debt
Maturities of long-term debt outstanding at December 31,
2007, are summarized as follows (in thousands):
|
|
|
|
|
2008
|
|
$
|
54,333
|
|
2009
|
|
|
97,749
|
|
2010
|
|
|
110,935
|
|
2011
|
|
|
1,061,180
|
|
2012
|
|
|
1,594,927
|
|
Thereafter
|
|
|
4,654,826
|
|
|
|
|
|
|
|
|
$
|
7,573,950
|
|
|
|
|
|
|
Fair
Values of Long-Term Debt
The fair value of the Senior Notes as of December 31, 2007
and 2006, was $232.5 million and $243.4 million,
respectively. The fair value of the Senior Notes is based on
quoted market prices. The fair values of other indebtedness
approximate their respective carrying amounts based on the
nature of these variable interest rate facilities. The fair
values of the interest rate cap agreements are based upon quotes
from brokers which were $0.1 million and $0.6 million
as of December 31, 2007 and 2006, respectively.
Note 9
Income Taxes
The components of the provision for income taxes are as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Federal:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
36,850
|
|
|
$
|
58,329
|
|
|
$
|
1,627
|
|
Deferred
|
|
|
(15,383
|
)
|
|
|
3,914
|
|
|
|
2,623
|
|
Foreign:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
295
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
(171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income tax provision
|
|
$
|
21,591
|
|
|
$
|
62,243
|
|
|
$
|
4,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of the statutory federal income tax rate and
the Companys effective tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Statutory federal income tax rate
|
|
|
35.00
|
%
|
|
|
35.00
|
%
|
|
|
35.00
|
%
|
Increase (decrease) in tax rate resulting from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign and U.S. tax rate differential
|
|
|
(20.57
|
)%
|
|
|
(16.41
|
)%
|
|
|
(23.14
|
)%
|
Tax exempt income of foreign subsidiary (Macao)
|
|
|
(36.56
|
)%
|
|
|
(10.20
|
)%
|
|
|
(14.07
|
)%
|
Non-deductible pre-opening expenses of foreign subsidiaries
|
|
|
11.59
|
%
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
|
21.16
|
%
|
|
|
1.26
|
%
|
|
|
2.61
|
%
|
Change in tax reserve
|
|
|
3.03
|
%
|
|
|
0.27
|
%
|
|
|
0.57
|
%
|
Other, net
|
|
|
1.96
|
%
|
|
|
2.42
|
%
|
|
|
0.51
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
15.61
|
%
|
|
|
12.34
|
%
|
|
|
1.48
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The effective tax rate for the year was significantly lower than
the federal statutory rate due primarily to a zero effective tax
rate on our Macao net income as a result of an income tax
exemption in Macao on gaming operations, which is set to expire
at the end of 2008. Based on Macanese law and the treatment of
other gaming operators, the Company believes the income tax
exemption will be extended for an additional five-year term. Had
the Company been required to pay income taxes in Macao,
consolidated net income would have been reduced by
$43.9 million and $45.2 million, and diluted earning
per share would have been reduced by $0.12 per share for each of
the years ended December 31, 2007 and 2006, respectively.
Consolidated income before taxes for domestic and international
operations is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Domestic
|
|
$
|
15,590
|
|
|
$
|
162,592
|
|
|
$
|
3,271
|
|
International
|
|
|
122,689
|
|
|
|
341,654
|
|
|
|
284,665
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
138,279
|
|
|
$
|
504,246
|
|
|
$
|
287,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The primary tax affected components of the Companys net
deferred tax assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Deferred tax assets
|
|
|
|
|
|
|
|
|
Bad debt reserve
|
|
$
|
10,926
|
|
|
$
|
12,170
|
|
Accrued expenses
|
|
|
6,800
|
|
|
|
7,314
|
|
Deferred gain on the sale of The Grand Canal Shops
|
|
|
59,303
|
|
|
|
60,945
|
|
Other
|
|
|
7,434
|
|
|
|
4,712
|
|
Pre-opening expenses of foreign subsidiaries
|
|
|
12,522
|
|
|
|
|
|
Net operating loss carryforward of foreign subsidiaries
|
|
|
33,970
|
|
|
|
23,582
|
|
Less valuation allowance
|
|
|
(46,343
|
)
|
|
|
(23,582
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets
|
|
|
84,612
|
|
|
|
85,141
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
(50,559
|
)
|
|
|
(67,807
|
)
|
Prepaid expenses
|
|
|
(3,135
|
)
|
|
|
(1,970
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax liabilities
|
|
|
(53,694
|
)
|
|
|
(69,777
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
30,918
|
|
|
$
|
15,364
|
|
|
|
|
|
|
|
|
|
|
The Company adopted the provisions of FIN No. 48 on
January 1, 2007. As a result of the implementation of
FIN No. 48, the Company recognized a $4.1 million
increase in the liability for unrecognized tax benefits, which
was accounted for as a reduction to opening retained earnings.
At the adoption date of January 1, 2007, the
93
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Company had $8.6 million of unrecognized tax benefits. A
reconciliation of the beginning and ending amounts of
unrecognized tax benefits is as follows (in thousands):
|
|
|
|
|
Balance as of January 1, 2007
|
|
$
|
8,552
|
|
Tax positions related to the current year:
|
|
|
|
|
Additions
|
|
|
4,205
|
|
Tax positions related to the prior year:
|
|
|
|
|
Additions
|
|
|
2,209
|
|
|
|
|
|
|
Balance as of December 31, 2007
|
|
$
|
14,966
|
|
|
|
|
|
|
Included in the balance at December 31, 2007, are
$9.8 million of uncertain tax benefits that would affect
the effective income tax rate if recognized.
The Company files income tax returns in the U.S., various states
and foreign jurisdictions. The Company is subject to federal,
state and local, or foreign income tax examinations by tax
authorities for years after 2003. The Company is not presently
under examination by any major tax jurisdiction.
The Company recognizes interest and penalties, if any, related
to unrecognized tax positions in the provision for income taxes
on the statement of operations. At January 1, 2007, the
date of adoption, the Company did not accrue any significant
interest or penalties. The Company had approximately
$0.6 million of interest accrued at December 31, 2007.
No penalties were accrued for at December 31, 2007. The
Company does not expect a significant increase or decrease in
unrecognized tax benefits over the next twelve months.
Operating loss carryforwards of the Companys foreign
subsidiaries were $282.2 million and $195.2 million
for the years ended December 31, 2007 and 2006,
respectively, which begin to expire in 2008. At
December 31, 2007 and 2006, there was a valuation allowance
of $46.3 million and $23.6 million, respectively,
provided on the foreign net operating loss carryforwards and
other foreign deferred tax assets because management believes
these assets do not meet the more likely than not
criteria for recognition under SFAS No. 109.
Management believes all other deferred tax assets are more
likely than not to be realized because of the future reversal of
existing taxable temporary differences and expected future
taxable income. Accordingly, there are no other valuation
allowances provided at December 31, 2007 and 2006.
Undistributed earnings of subsidiaries are accounted for as a
temporary difference, except that deferred tax liabilities are
not recorded for undistributed earnings of foreign subsidiaries
that are deemed to be indefinitely reinvested in foreign
jurisdictions. The Company has a plan for reinvestment of
undistributed earnings of its foreign subsidiaries which
demonstrates that such earnings will be indefinitely reinvested
in the applicable jurisdictions. Should the Company change its
plans, it would be required to record a significant amount of
deferred tax liabilities. For the years ended December 31,
2007 and 2006, the amount of undistributed earnings of foreign
subsidiaries that the Company does not intend to repatriate was
$837.2 million and $719.1 million, respectively.
Should these earnings be distributed in the form of dividends or
otherwise, the distributions would be subject to
U.S. federal income tax at the statutory rate of 35%, less
foreign tax credits applicable to distributions, if any. In
addition, such distributions would be subject to withholding
taxes in the various tax jurisdictions.
Note 10
Mall Sale
The
Grand Canal Shops at The Venetian
On April 12, 2004, the Company entered into an agreement to
sell The Grand Canal Shops and lease certain restaurant and
other retail space at the casino level of The Venetian (the
Master Lease) to GGP for approximately
$766.0 million (the Mall Sale). The Mall Sale
closed on May 17, 2004 and the Company realized a gain of
$417.6 million in connection with the Mall Sale. Under the
Master Lease agreement, The Venetian leased nineteen spaces on
the casino level of The Venetian currently occupied by various
tenants to GGP for 89 years with annual
94
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
rent of one dollar per year and GGP assumed the various leases.
Under generally accepted accounting principles, the Master Lease
agreement does not qualify as a sale of the related assets,
which were not separately legally demised. Accordingly,
$109.2 million of the transaction has been deferred as
prepaid operating lease payments to The Venetian, which will
amortize into income on a straight-line basis over the
89-year
lease term. During each of the years ended December 31,
2007, 2006 and 2005, $1.2 million of this deferred item was
amortized and is included in convention, retail and other
revenue. In addition, the Company agreed with GGP to:
(i) continue to be obligated to fulfill certain lease
termination and asset purchase agreements as further described
in Note 11 Commitments and
Contingencies Other Ventures and Commitments;
(ii) lease the Blue Man Group Theater space located within
The Grand Canal Shops from GGP for a period of 25 years
with fixed minimum rent of $3.3 million per year with cost
of living adjustments; (iii) operate the Gondola ride under
an operating agreement for a period of 25 years for an
annual fee of $3.5 million; and (iv) lease certain
office space from GGP for a period of 10 years, subject to
extension options for a period of up to 65 years, with
annual rent of approximately $0.9 million. The lease
payments under clauses (ii) through (iv) above are
subject to automatic increases beginning on the sixth lease
year. The net present value of the lease payments under
clauses (ii) through (iv) is $77.2 million. Under
generally accepted accounting principles, a portion of the
transaction must be deferred in an amount equal to the present
value of the minimum lease payments set forth in the lease back
agreements. This deferred gain will be amortized to reduce lease
expense on a straight-line basis over the life of the leases.
$3.5 million of this deferred item was amortized during
each of the years ended December 31, 2007, 2006 and 2005,
and was included as an offset to convention, retail and other
expense.
As of December 31, 2007, the Company was obligated under
(ii), (iii), and (iv) above to make future payments as
follows (in thousands):
|
|
|
|
|
2008
|
|
$
|
7,660
|
|
2009
|
|
|
7,884
|
|
2010
|
|
|
8,043
|
|
2011
|
|
|
8,043
|
|
2012
|
|
|
8,043
|
|
Thereafter
|
|
|
129,567
|
|
|
|
|
|
|
|
|
$
|
169,240
|
|
|
|
|
|
|
The
Shoppes at The Palazzo
The Shoppes at The Palazzo opened on January 18, 2008, with
some tenants not yet open. The Company is selling The Shoppes at
The Palazzo to GGP pursuant to a purchase and sale agreement
dated as of April 12, 2004, as amended, regarding the
development and sale of The Shoppes at The Palazzo (the
Amended Agreement). The total purchase price to be
paid by GGP for The Shoppes at The Palazzo is determined by
taking The Shoppes at The Palazzos net operating income,
as defined in the Amended Agreement, for months 19 through 30 of
its operations (assuming that the rent and other periodic
payments due from all tenants in month 30 was actually due in
each of months 19 through 30) divided by a capitalization
rate. The capitalization rate is 0.06 for every dollar of net
operating income up to $38.0 million and 0.08 for every
dollar of net operating income above $38.0 million. On the
closing date of the sale of The Shoppes at The Palazzo to GGP,
which the Company expects to be on February 29, 2008, or
shortly thereafter, GGP will be obligated to make an initial
purchase price payment based on projected net operating income
for the first 12 months of operations (but in no event less
than $250.0 million and only taking into account tenants
open for business or paying rent as of the closing date). The
Company is in the process of finalizing the amount of the
initial payment; however, the Company expects it to range
between $285.0 million and $295.0 million. Pursuant to
the Amended Agreement, at the fourth, eighth, 12th, 18th, and
24th month after closing, the required purchase price will
be adjusted (up or down, but will never be less than
$250.0 million) based on projected net operating income for
the upcoming 12 months. Subject to adjustments for certain
audit and other
95
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
issues, the final adjustment to the purchase price will be made
on the
30-month
anniversary of the closing date and will be based on the formula
described above. For all purchase price and purchase price
adjustment calculations, net operating income will
be calculated by using the accrual method of
accounting and the final purchase price adjustment will be
calculated by applying the base rent and other periodic payments
payable by all tenants in the 30th month to the entire
12-month
period, as defined. Based on the Companys continuing
relationship with GGP related to its ownership of The Grand
Canal Shops, knowledge of local market conditions and
discussions with tenants, management believes the total purchase
price to be paid by GGP will be in excess of $700.0 million.
Note 11
Commitments and Contingencies
Litigation
The Company is involved in other litigation in addition to those
noted below, arising in the normal course of business.
Management has made certain estimates for potential litigation
costs based upon consultation with legal counsel. Actual results
could differ from these estimates; however, in the opinion of
management, such litigation and claims will not have a material
effect on the Companys financial condition, results of
operations or cash flows.
The
Palazzo Construction Litigation
Lido Casino Resort, LLC (Lido), formerly a
wholly-owned subsidiary of the Company and now merged into
Venetian Casino Resort, LLC (VCR), and its
construction manager, Taylor International Corp.
(Taylor), filed suit in March 2006 in the United
States District Court for the District of Nevada (the
District Court) against Malcolm Drilling Company,
Inc. (Malcolm), the contractor on The Palazzo
project responsible for completing certain foundation work (the
District Court Case). Lido and Taylor claim in the
District Court Case that Malcolm was in default of its contract
for performing defective work, failing to correct defective
work, failing to complete its work and causing delay to the
project. Malcolm responded by filing a Notice of a Lien with the
Clerk of Clark County, Nevada in March 2006 in the amount of
approximately $19.0 million (the Lien). In
April 2006, Lido and Taylor moved in the District Court Case to
strike or, in the alternative, to reduce the amount of, the
Lien, claiming, among other things, that the Lien was excessive
for including claims for disruption and delay, which Lido and
Taylor claim are not lienable under Nevada law (the Lien
Motion). Malcolm responded in April 2006 by filing a
complaint against Lido and Taylor in District Court of Clark
County, Nevada seeking to foreclose on the Lien against Taylor,
claiming breach of contract, a cardinal change in the underlying
contract, unjust enrichment against Lido and Taylor and bad
faith and fraud against Taylor (the State Court
Case), and simultaneously filed a motion in the District
Court Case, seeking to dismiss the District Court Case on
abstention grounds (the Abstention Motion). In
response, in June 2006, Lido filed a motion to dismiss the State
Court Case based on the principle of the prior
pending District Court Case (the Motion to
Dismiss). In June 2006, the Abstention Motion was granted
in part by the United States District Court, the District Court
Case was stayed pending the outcome of the Motion to Dismiss in
the State Court Case and the Lien Motion was denied without
prejudice. In January 2008, the parties agreed to the dismissal
of the District Court Case without prejudice. Prior to agreeing
on that dismissal, Lido and Malcolm entered into a stipulation
under which Lido withdrew the Motion to Dismiss, and in July
2006 filed a replacement lien motion in the State Court Case.
The lien motion in the State Court Case was denied in August
2006 and Lido and Taylor filed a permitted interlocutory notice
of appeal to the Supreme Court of Nevada in September 2006. In
April 2007, Malcolm filed an Amended Notice of Lien with the
Clerk of Clark County, Nevada in the amount of approximately
$16.7 million plus interest, costs and attorneys
fees. In August 2007, Malcolm filed a motion for partial summary
judgment, seeking the dismissal of the counterclaim filed in the
State Court Case by Lido to the extent the claim sought lost
profits. After argument, the motion for partial summary judgment
was denied without prejudice on October 23, 2007 and a
conforming order was entered in December 2007. The parties have
agreed to complete limited additional discovery by the end of
February 2008. Argument on the appeal of the denial of the lien
motion in the State Court has been scheduled by the Supreme
Court for March 2008 and an initial trial call of the State
Court Case also has been scheduled for March 2008. In January
2008, Malcolm filed a series of
96
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
three motions and again sought summary judgment on the
counterclaim filed in the State Court Case. Based upon the
advice of legal counsel, management has determined that based on
proceedings to date, an adverse outcome is not probable. Lido
intends to defend itself against the claims pending in the State
Court Case.
Litigation
Relating to Macao Operations
On October 15, 2004, Richard Suen and Round Square Company
Limited filed an action against Las Vegas Sands Corp.
(LVSC), Las Vegas Sands, Inc., 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 Companys Macao 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. On May 17, 2005, the plaintiffs filed
their first amended complaint. On February 2, 2006,
defendants filed a motion for partial summary judgment with
respect to plaintiffs fraud claims against all the
defendants. On March 16, 2006, an order was filed by the
court granting defendants motion for partial summary
judgment. Pursuant to the order filed March 16, 2006,
plaintiffs fraud claims set forth in the first amended
complaint were dismissed with prejudice as against all
defendants. The order also dismissed with prejudice the first
amended complaint against defendants Sheldon G. Adelson and
William P. Weidner. This action is currently set for trial in
April 2008. Based upon the advice of legal counsel, management
believes that the plaintiffs case against the Company is
without merit. The Company intends to defend this matter
vigorously.
On January 26, 2006, Clive Basset Jones, Darryl Steven
Turok (a/k/a Dax Turok) and Cheong Jose Vai Chi
(a/k/a Cliff
Cheong), filed an action against LVSC, Las Vegas Sands, LLC,
Venetian Venture Development, LLC and various unspecified
individuals and companies in the District Court of Clark County,
Nevada. The plaintiffs assert breach of an agreement to pay a
success fee in an amount equal to 5% of the ownership interest
in the entity that owns and operates the Macao gaming
subconcession as well as other related claims. In April 2006,
LVSC was dismissed as a party without prejudice based on a
stipulation to do so between the parties. Discovery has begun in
this matter and the case is currently set for trial in December
2008. Based upon the advice of legal counsel, management
believes that the plaintiffs case against the Company is
without merit. The Company intends to defend this matter
vigorously.
On February 5, 2007, Asian American Entertainment
Corporation, Limited (AAEC) filed an action against
Las Vegas Sands, Inc. (LVSI), VCR, Venetian Venture
Development, LLC (Venetian Venture Development),
William P. Weidner and David Friedman in the United States
District Court for the District of Nevada. The plaintiffs assert
breach of contract by LVSI, VCR and Venetian Venture Development
of an agreement under which AAEC would work to obtain a gaming
license in Macao and, if successful, AAEC would jointly operate
a casino, hotel and related facilities in Macao with Venetian
Venture Development and Venetian Venture Development would
receive fees and a minority equity interest in the venture and
breach of fiduciary duties by all of the defendants. The
plaintiffs have requested an unspecified amount of actual,
compensatory and punitive damages, and disgorgement of profits
related to our Macao gaming license. The Company filed a motion
to dismiss on July 11, 2007. On August 1, 2007, the
Court granted defendants motion to dismiss the complaint
against all defendants without prejudice. The plaintiffs have
appealed this decision. Based upon the advice of legal counsel,
management believes that the plaintiffs case against the
Company is without merit. The Company intends to defend this
matter vigorously.
Macao
Concession and Subconcession
On June 26, 2002, the Macao government granted a concession
to operate casinos in Macao through June 26, 2022, subject
to certain qualifications, to Galaxy Casino Company Limited
(Galaxy), a consortium of Macao and Hong Kong-based
investors. During December 2002, VML and Galaxy entered into a
subconcession agreement which was recognized and approved by the
Macao government and allows VML to develop and operate casino
97
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
projects, including the Sands Macao, separately from Galaxy.
Beginning on December 26, 2017, the Macao government may
redeem the subconcession agreement by providing the Company at
least one year prior notice.
Under the subconcession, the Company is obligated to pay to the
Macao government an annual premium with a fixed portion and a
variable portion based on the number and type of gaming tables
it employs and gaming machines it operates. The fixed portion of
the premium is equal to 30.0 million patacas (approximately
$3.7 million at exchange rates in effect on
December 31, 2007). The variable portion is equal to
300,000 patacas per gaming table reserved exclusively for
certain kinds of games or players, 150,000 patacas per gaming
table not so reserved and 1,000 patacas per electrical or
mechanical gaming machine, including slot machines
(approximately $37,314, $18,657 and $124, respectively, at
exchange rates in effect on December 31, 2007), subject to
a minimum of 45.0 million patacas (or $5.6 million at
exchange rates in effect on December 31, 2007). The Company
is also obligated to pay a special gaming tax of 35% of gross
gaming revenues and applicable withholding taxes. The Company
must also contribute 4% of its gross gaming revenue to utilities
designated by the Macao government, a portion of which must be
used for promotion of tourism in Macao. As of December 31,
2007, the Company was obligated under its subconcession to make
minimum future payments of approximately $35.2 million in
each of the next five years and approximately
$334.3 million thereafter through June 2022. These amounts
are expected to increase substantially as the Company completes
the other Cotai Strip properties, which are planned to have
approximately 2,100 table games and approximately 9,500 slot
machines in total.
Currently, the gaming tax in Macao is calculated as a percentage
of gross gaming revenue. However, unlike Nevada, gross gaming
revenue does not include deductions for credit losses. As a
result, if the Company extends credit to its customers in Macao
and is unable to collect on the related receivables, the Company
must pay taxes on its winnings from these customers even though
it was unable to collect on the related receivables. If the laws
are not changed, the Companys business in Macao may not be
able to realize the full benefits of extending credit to its
customers. Although there are proposals to revise the gaming tax
laws in Macao, there can be no assurance that the laws will be
changed.
Singapore
Development Project
On August 23, 2006, the Company entered into the
Development Agreement, which requires it to construct and
operate the Marina Bay Sands in accordance with the
Companys proposal for this integrated resort and in
accordance with that agreement. Although construction has
started, the Company is continuing to work with the Singapore
government to finalize various design aspects of the integrated
resort and is in the process of finalizing its cost estimates
for the project. The cost to design, develop and construct the
Marina Bay Sands is expected to be in excess of
$4.0 billion, which is inclusive of the land premium, taxes
and other fees previously paid. As discussed in
Note 8 Long-Term
Debt Singapore Related Debt Singapore
Permanent Facilities, the Company entered into the SGD
5.44 billion (approximately $3.76 billion at exchange
rates in effect in December 31, 2007) Singapore
Permanent Facilities to fund the construction, operating and
other development costs of the Marina Bay Sands.
Leases
Energy
Services Agreements
During 1997, VCR, Interface Group-Nevada Inc.
(Interface) and others entered into separate energy
service agreements with a heating, ventilation and air
conditioning (HVAC) provider (the HVAC
Provider). Under the terms of the energy services
agreement and other separate energy services agreements, HVAC
energy and services will be purchased by VCR, Interface and
others over initial terms expiring in 2009 with an option to
collectively extend the terms of their agreements for two
consecutive five-year periods. The HVAC plant was constructed on
land owned by the Company and leased to the HVAC Provider. The
HVAC equipment is owned by the HVAC Provider, which paid all
costs (HVAC Costs) in connection with the purchase
and installation of the HVAC equipment. The total HVAC Costs
were $70.0 million. The charges payable under the separate
energy services
98
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
agreements include a fixed component applied to the HVAC Costs
paid by the HVAC Provider, reimbursement of operational and
related costs and a management fee.
As of December 31, 2007, VCR and Interface were obligated
under the energy services agreements to make future minimum
payments of $6.8 million and $5.1 million during the
years ended December 31, 2008 and 2009, respectively.
Expenses incurred under the energy services agreements were
$6.8 million for each of the three years ended
December 31, 2007.
Operating
Lease Agreements
The Company leases real estate and various equipment under
operating lease arrangements and is also party to several
service agreements with terms in excess of one year.
At December 31, 2007, the Company was obligated under
non-cancelable operating leases to make future minimum lease
payments as follows (in thousands):
|
|
|
|
|
2008
|
|
$
|
6,399
|
|
2009
|
|
|
4,440
|
|
2010
|
|
|
4,070
|
|
2011
|
|
|
13,474
|
|
2012
|
|
|
2,432
|
|
Thereafter
|
|
|
109,500
|
|
|
|
|
|
|
Total minimum payments
|
|
$
|
140,315
|
|
|
|
|
|
|
Expenses incurred under these operating lease agreements totaled
$12.2 million, $8.3 million and $7.0 million for
the years ended December 31, 2007, 2006 and 2005,
respectively.
The Company is party to other operating lease agreements, which
are short-term and variable-rate in nature. Expenses incurred
under these operating lease agreements totaled
$2.1 million, $1.5 million and $1.6 million for
the years ended December 31, 2007, 2006 and 2005,
respectively.
Other
Ventures and Commitments
The Company has entered into employment agreements with five of
the Companys senior executives, with remaining terms of
two years. As of December 31, 2007, the Company was
obligated to make future payments of $8.0 million and
$7.6 million during the years ended December 31, 2008
and 2009, respectively.
During 2003, the Company entered into three lease termination
and asset purchase agreements with The Grand Canal Shops
tenants. In each case, the Company has obtained title to
leasehold improvements and other fixed assets, which were
originally purchased by The Grand Canal Shops tenants, and which
have been recorded at estimated fair market value, which
approximated the discounted present value of the Companys
obligation to the former tenants. As of December 31, 2007,
the Company was obligated under these agreements to make future
payments of $0.7 million for each of the next five years
and $7.4 million thereafter.
During 2006, the Company entered into agreements to purchase ten
ferries to be built for our Macao operations. The total
remaining payments related to the construction of the ferries as
of December 31, 2007, was $28.7 million. Subsequent to
year-end, the Company agreed to purchase an additional four
ferries.
99
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The
Grand Canal Shops at The Venetian Macao
The Company leases mall space in The Grand Canal Shops at The
Venetian Macao to various retailers. These leases are
non-cancellable operating leases with lease periods that vary
from 6 months to 10 years. The leases include minimum
base rents with escalated contingent rent clauses. At
December 31, 2007, the minimum future rentals on these
non-cancelable leases are as follows (in thousands, at exchange
rates in effect at December 31, 2007):
|
|
|
|
|
2008
|
|
$
|
102,731
|
|
2009
|
|
|
104,196
|
|
2010
|
|
|
93,644
|
|
2011
|
|
|
59,667
|
|
2012
|
|
|
52,642
|
|
Thereafter
|
|
|
90,231
|
|
|
|
|
|
|
Total minimum future rentals
|
|
$
|
503,111
|
|
|
|
|
|
|
The total minimum future rentals does not include the escalated
contingent rent clauses. Contingent rentals amounted to
$0.3 million for the period August 27, 2007 to
December 31, 2007.
Note 12
Stock-Based Employee Compensation
The Company has two nonqualified stock option plans, the 1997
Plan and the 2004 Plan, which are described below. The plans
provide for the granting of stock options pursuant to the
applicable provisions of the Internal Revenue Code and
regulations.
LVSLLC
1997 Fixed Stock Option Plan
The 1997 Plan provides for 19,952,457 shares (on a
post-split basis) of common stock of LVSLLC to be reserved for
issuance to officers and other key employees or consultants of
LVSLLC or any LVSLLC Affiliates or Subsidiaries (each as defined
in the 1997 Plan) pursuant to options granted under the 1997
Plan.
The 1997 Plan provides that the Principal Stockholder may, at
any time, assume the 1997 Plan or certain obligations under the
1997 Plan, in which case the Principal Stockholder will have all
the rights, powers and responsibilities granted LVSLLC or its
board of directors under the 1997 Plan with respect to such
assumed obligations. The Principal Stockholder assumed
LVSLLCs obligations under the 1997 Plan to sell shares to
optionees upon the exercise of their options with respect to
options granted prior to July 15, 2004. LVSLLC is
responsible for all other obligations under the 1997 Plan. LVSC
assumed all of the obligations of LVSLLC and the Principal
Stockholder under the 1997 Plan (other than the obligation of
the Principal Stockholder to issue 984,321 shares under
options granted prior to July 15, 2004), in connection with
its initial public offering.
The Board of Directors agreed not to grant any additional stock
options under the 1997 Plan following the initial public
offering and there were no options outstanding under it during
the years ended December 31, 2007 and 2006. The total
intrinsic value of options exercised under the 1997 Plan during
the year ended December 31, 2005, was $38.2 million.
Las
Vegas Sands Corp. 2004 Equity Award Plan
The Company adopted the 2004 Plan for grants of options to
purchase its common stock. The purpose of the 2004 Plan is to
give the Company a competitive edge in attracting, retaining,
and motivating employees, directors and consultants and to
provide the Company with a stock plan providing incentives
directly related to increases in its stockholder value. Any of
the Companys subsidiaries or affiliates
employees, directors or officers and many of its consultants are
eligible for awards under the 2004 Plan. The 2004 Plan provides
for an aggregate of
100
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
26,344,000 shares of the Companys common stock to be
available for awards. The 2004 Plan has a term of ten years and
no further awards may be granted after the expiration of the
term. The compensation committee may grant awards of
nonqualified stock options, incentive (qualified) stock options,
stock appreciation rights, restricted stock awards, restricted
stock units, stock bonus awards, performance compensation awards
or any combination of the foregoing. As of December 31,
2007, there were 18,307,565 shares available for grant
under the 2004 Plan.
Stock option awards are granted with an exercise price equal to
the fair market value (as defined in the 2004 Plan) of the
Companys stock on the date of grant. The outstanding stock
options generally vest over four years and have
10-year
contractual terms. Compensation cost for all stock option
grants, which all have graded vesting, is net of estimated
forfeitures and is recognized on a straight-line basis over the
awards respective requisite service periods. The Company
estimates the fair value of stock options using the
Black-Scholes option-pricing model. Expected volatilities are
based on the historical volatilities from a selection of
companies from the Companys peer group due to the
Companys lack of historical information. The Company used
the simplified method for estimating expected option life, as
the options qualify as plain-vanilla options. The
risk-free interest rate for periods equal to the expected term
of the stock option is based on the U.S. Treasury yield
curve in effect at the time of grant.
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Weighted average volatility
|
|
|
30.60
|
%
|
|
|
31.25
|
%
|
|
|
31.45
|
%
|
Expected term (in years)
|
|
|
6.0
|
|
|
|
6.0
|
|
|
|
6.0
|
|
Risk-free rate
|
|
|
4.51
|
%
|
|
|
4.54
|
%
|
|
|
4.14
|
%
|
Expected dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
A summary of the status of the Companys 2004 Plan for the
year ended December 31, 2007, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
Life (Years)
|
|
|
Value
|
|
|
Outstanding at January 1, 2007
|
|
|
4,575,502
|
|
|
$
|
45.61
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3,323,373
|
|
|
|
83.13
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(727,692
|
)
|
|
|
41.53
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(245,126
|
)
|
|
|
50.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2007
|
|
|
6,926,057
|
|
|
$
|
63.85
|
|
|
|
8.58
|
|
|
$
|
271,501,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at December 31, 2007
|
|
|
528,627
|
|
|
$
|
39.99
|
|
|
|
7.49
|
|
|
$
|
33,335,219
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Restricted
Stock Awards
A summary of the status of the Companys nonvested
restricted shares for the year ended December 31, 2007, is
presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
|
|
|
Grant Date
|
|
|
|
Shares
|
|
|
Fair Value
|
|
|
Nonvested at January 1, 2007
|
|
|
71,960
|
|
|
$
|
44.12
|
|
Granted
|
|
|
50,926
|
|
|
|
86.56
|
|
Vested
|
|
|
(26,959
|
)
|
|
|
46.67
|
|
|
|
|
|
|
|
|
|
|
Nonvested at December 31, 2007
|
|
|
95,927
|
|
|
$
|
65.93
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007, there was $113.7 million of
unrecognized compensation cost, net of estimated forfeitures of
8.0%, related to nonvested stock options and there was
$4.1 million of unrecognized compensation cost related to
nonvested restricted stock. The stock option and restricted
stock costs are expected to be recognized over a weighted
average period of 3.3 years and 1.7 years,
respectively.
The stock-based compensation activity for the 2004 Plan is as
follows for the three years ended December 31, 2007 (in
thousands, except weighted average grant date fair values):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005(1)
|
|
|
Compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
$
|
30,845
|
|
|
$
|
13,470
|
|
|
$
|
|
|
Restricted shares
|
|
|
2,379
|
|
|
|
1,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
33,224
|
|
|
$
|
14,728
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit recognized in the consolidated statement of
operations
|
|
$
|
8,155
|
|
|
$
|
3,618
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation cost capitalized as part of property and equipment
|
|
$
|
3,478
|
|
|
$
|
2,090
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options granted
|
|
|
3,323
|
|
|
|
3,164
|
|
|
|
305
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average grant date fair value
|
|
$
|
32.60
|
|
|
$
|
21.24
|
|
|
$
|
13.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options exercised:
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrinsic value
|
|
$
|
44,463
|
|
|
$
|
10,299
|
|
|
$
|
108
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received
|
|
$
|
30,221
|
|
|
$
|
7,226
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit realized for tax deductions from stock-based
compensation
|
|
$
|
7,526
|
|
|
$
|
1,876
|
|
|
$
|
8,149
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
In accordance with APB Opinion No. 25, the Company did not
recognize compensation expense for employee stock option awards
for the year ended December 31, 2005 for those options
where the exercise price of the Companys employee stock
awards equaled the market price of the underlying stock on the
date of grant. |
For the years ended December 31, 2007 and 2006, basic and
diluted earnings per share were $0.07 and $0.03 lower,
respectively, than if the Company had continued to account for
stock-based compensation under APB Opinion No. 25.
102
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 13
Employee Benefit Plans
The Company is self-insured for health care and workers
compensation benefits for its U.S. employees. The liability
for claims filed and estimates of claims incurred but not filed
is included in other accrued liabilities in the consolidated
balance sheet.
Participation in the VCR 401(k) employee savings plan is
available for all full-time employees after a three-month
probation period. The savings plan allows participants to defer,
on a pre-tax basis, a portion of their salary and accumulate
tax-deferred earnings as a retirement fund. The Company matches
150% of the first $390 of employee contributions and 50% of
employee contributions in excess of $390 up to a maximum of 5%
of participating employees eligible gross wages. For the
years ended December 31, 2007, 2006 and 2005, the
Companys matching contributions under the savings plan
were $5.0 million, $4.5 million and $3.1 million,
respectively.
Participation in VMLs provident retirement fund is
available for all permanent employees after a three-month
probation period. VML contributes 5% of each employees
basic salary to the fund and the employee is eligible to receive
30% of these contributions after working for three consecutive
years, gradually increasing to 100% after working for ten years.
For the year ended December 31, 2007 and 2006, VMLs
contributions into the provident fund were $8.5 million and
$4.9 million, respectively. No contributions were made
during 2005.
Note 14
Related Party Transactions
The Company paid approximately $5.9 million,
$4.3 million and $3.0 million during the years ended
December 31, 2007, 2006 and 2005, respectively, to a travel
agent and charter tour operator for travel related services,
which is controlled by the Principal Stockholder.
During the year ended December 31, 2005, the Principal
Stockholder purchased certain banquet room and catering goods
and services from The Venetian of approximately
$1.0 million. No such goods or services were purchased
during 2007 and 2006.
The Company purchased hotel guest amenities from a company that
is controlled by the Principal Stockholders brother. The
total amount paid was approximately $1.0 million,
$1.2 million and $1.8 million during the years ended
December 31, 2007, 2006 and 2005, respectively.
During the years ended December 31, 2007, 2006 and 2005,
the Company incurred and paid certain expenses totaling
$2.0 million, $1.3 million and $0.7 million,
respectively, to its Principal Stockholder related to the
Companys use of his personal aircraft for business
purposes. In addition, during the years ended December 31,
2007, 2006 and 2005, the Company charged and received from the
Principal Stockholder $5.3 million, $3.3 million and
$1.2 million, respectively, related to aviation costs
incurred by the Company for the Principal Stockholders use
of Company aviation personnel and assets for personal purposes.
Note 15
Segment Information
The Companys principal operating and developmental
activities occur in three geographic areas: Las Vegas, Macao and
Singapore. The Company reviews the results of operations for
each of its key operating segments: The Venetian, which includes
The Sands Expo Center and The Congress Center; The Palazzo;
Sands Macao; The Venetian Macao; and Other Asia (comprised
primarily of the ferry operations). The Company also reviews its
construction and development activities for each of its primary
projects: The Venetian; The Palazzo; Sands Macao; The Venetian
Macao; The Four Seasons Macao; Other Asia (comprised of various
other operations that are ancillary to our properties in Macao);
Marina Bay Sands in Singapore; Other Development Projects (on
Parcels 3, 5, 6, 7 and 8 of the Cotai Strip); and Corporate and
Other (comprised of the airplanes and the Sands Bethworks and
Las Vegas condominium projects). The information for the years
ended December 31, 2006 and 2005, have been reclassified
103
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
to conform to the current presentation. The Companys
segment information is as follows for the three years ended
December 31, 2007 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian and The Palazzo
|
|
$
|
984,125
|
|
|
$
|
959,700
|
|
|
$
|
844,313
|
|
Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Sands Macao
|
|
|
1,314,733
|
|
|
|
1,277,159
|
|
|
|
896,599
|
|
The Venetian Macao
|
|
|
650,496
|
|
|
|
|
|
|
|
|
|
Other Asia
|
|
|
1,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net revenues
|
|
$
|
2,950,567
|
|
|
$
|
2,236,859
|
|
|
$
|
1,740,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDAR(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian and The Palazzo
|
|
$
|
361,076
|
|
|
$
|
373,460
|
|
|
$
|
323,549
|
|
Macao
|
|
|
|
|
|
|
|
|
|
|
|
|
Sands Macao
|
|
|
373,507
|
|
|
|
457,998
|
|
|
|
341,747
|
|
The Venetian Macao
|
|
|
144,417
|
|
|
|
|
|
|
|
|
|
Other Asia
|
|
|
(4,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjusted EBITDAR
|
|
|
874,750
|
|
|
|
831,458
|
|
|
|
665,296
|
|
Other Operating Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate expense
|
|
|
(94,514
|
)
|
|
|
(59,570
|
)
|
|
|
(38,297
|
)
|
Rental expense
|
|
|
(31,787
|
)
|
|
|
(13,478
|
)
|
|
|
(14,841
|
)
|
Stock-based compensation expense
|
|
|
(15,752
|
)
|
|
|
(7,133
|
)
|
|
|
|
|
Depreciation and amortization
|
|
|
(202,557
|
)
|
|
|
(110,771
|
)
|
|
|
(95,296
|
)
|
Loss on disposal of assets
|
|
|
(1,122
|
)
|
|
|
(2,624
|
)
|
|
|
(1,441
|
)
|
Pre-opening expense
|
|
|
(189,280
|
)
|
|
|
(37,673
|
)
|
|
|
(3,732
|
)
|
Development expense
|
|
|
(9,728
|
)
|
|
|
(26,112
|
)
|
|
|
(22,238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
330,010
|
|
|
|
574,097
|
|
|
|
489,451
|
|
Other Non-Operating Costs and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
72,464
|
|
|
|
66,191
|
|
|
|
33,111
|
|
Interest expense, net of amounts capitalized
|
|
|
(244,808
|
)
|
|
|
(135,853
|
)
|
|
|
(96,292
|
)
|
Other expense
|
|
|
(8,682
|
)
|
|
|
(189
|
)
|
|
|
(1,334
|
)
|
Loss on early retirement of debt
|
|
|
(10,705
|
)
|
|
|
|
|
|
|
(137,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
138,279
|
|
|
|
504,246
|
|
|
|
287,936
|
|
Provision for income taxes
|
|
|
(21,591
|
)
|
|
|
(62,243
|
)
|
|
|
(4,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
116,688
|
|
|
$
|
442,003
|
|
|
$
|
283,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted EBITDAR is net income before interest, income taxes,
depreciation and amortization, pre-opening expense, development
expense, other expense, loss on disposal of assets, loss on
early retirement of debt, rental expense, corporate expense and
stock-based compensation expense included in general and
administrative expense. Adjusted EBITDAR is used by management
as the primary measure of operating performance of its
properties and to compare the operating performance of its
properties with those of its competitors. |
104
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Capital Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Sands Corp. and Other
|
|
$
|
129,908
|
|
|
$
|
49,506
|
|
|
$
|
529
|
|
Las Vegas:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian
|
|
|
152,207
|
|
|
|
109,119
|
|
|
|
138,015
|
|
The Palazzo
|
|
|
1,184,781
|
|
|
|
530,455
|
|
|
|
333,835
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
|
Sands Macao
|
|
|
120,919
|
|
|
|
98,498
|
|
|
|
39,486
|
|
The Venetian Macao
|
|
|
970,990
|
|
|
|
954,534
|
|
|
|
347,322
|
|
The Four Seasons Macao
|
|
|
279,157
|
|
|
|
69,263
|
|
|
|
982
|
|
Other Asia
|
|
|
34,834
|
|
|
|
43
|
|
|
|
193
|
|
Other Development Projects
|
|
|
556,327
|
|
|
|
100,716
|
|
|
|
259
|
|
Singapore
|
|
|
364,580
|
|
|
|
13,157
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital expenditures
|
|
$
|
3,793,703
|
|
|
$
|
1,925,291
|
|
|
$
|
860,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Total Assets
|
|
|
|
|
|
|
|
|
Las Vegas Sands Corp. and Other
|
|
$
|
380,646
|
|
|
$
|
209,701
|
|
Las Vegas:
|
|
|
|
|
|
|
|
|
The Venetian
|
|
|
1,771,764
|
|
|
|
1,991,566
|
|
The Palazzo
|
|
|
2,434,186
|
|
|
|
1,179,157
|
|
Macao:
|
|
|
|
|
|
|
|
|
Sands Macao
|
|
|
550,479
|
|
|
|
537,990
|
|
The Venetian Macao
|
|
|
3,158,091
|
|
|
|
2,068,225
|
|
The Four Seasons Macao
|
|
|
391,506
|
|
|
|
70,246
|
|
Other Asia
|
|
|
85,817
|
|
|
|
1,300
|
|
Other Development Projects
|
|
|
777,740
|
|
|
|
169,205
|
|
Singapore
|
|
|
1,916,288
|
|
|
|
899,068
|
|
|
|
|
|
|
|
|
|
|
Total consolidated assets
|
|
$
|
11,466,517
|
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
Note 16
Condensed Consolidating Financial Information
LVSC is the obligor of the 6.375% Senior Notes due 2015
issued by LVSC on February 10, 2005. LVSLLC, VCR, Mall
Intermediate Holding Company, LLC, Venetian Venture Development,
Venetian Transport, LLC, Venetian Marketing, Inc., Interface,
Palazzo Condo Tower, LLC, Sands Pennsylvania, Inc., Lido
Intermediate Holding Company, LLC, Lido Casino Resort Holding
Company, LLC, Phase II Mall Holding, LLC, Phase II
Mall Subsidiary, LLC and Lido Casino Resort, LLC, which was
merged into VCR in March 2007 (collectively, the Guarantor
Subsidiaries), have jointly and severally guaranteed the
6.375% Senior Notes on a full and unconditional basis. In
conjunction with entering into the New Senior Secured Credit
Facility, LVSC, the Guarantor Subsidiaries and the trustee
entered into a supplemental indenture related to the Senior
Notes, whereby the following subsidiaries were included as
guarantors: Interface, Palazzo Condo Tower, LLC, Sands
Pennsylvania, Inc., Phase II Mall Holding, LLC, and
Phase II Mall Subsidiary, LLC. As a result of the change in
Guarantor
105
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Subsidiaries and non-guarantor subsidiaries, the Company has
reclassified prior periods to conform to the current
presentation as these are all entities under common control.
The condensed consolidating financial information of the
Company, the Guarantor Subsidiaries and the non-guarantor
subsidiaries on a combined basis as of December 31, 2007
and 2006, and for each of the three years in the period ended
December 31, 2007, is as follows (in thousands).
106
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING BALANCE SHEETS
December 31,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Cash and cash equivalents
|
|
$
|
73,489
|
|
|
$
|
130,625
|
|
|
$
|
653,036
|
|
|
$
|
|
|
|
$
|
857,150
|
|
Restricted cash
|
|
|
|
|
|
|
5,118
|
|
|
|
227,826
|
|
|
|
|
|
|
|
232,944
|
|
Intercompany receivables
|
|
|
195,675
|
|
|
|
155,768
|
|
|
|
|
|
|
|
(351,443
|
)
|
|
|
|
|
Accounts receivable, net
|
|
|
1,995
|
|
|
|
113,638
|
|
|
|
71,562
|
|
|
|
|
|
|
|
187,195
|
|
Intercompany notes receivable
|
|
|
73,562
|
|
|
|
55,992
|
|
|
|
|
|
|
|
(129,554
|
)
|
|
|
|
|
Inventories
|
|
|
132
|
|
|
|
10,086
|
|
|
|
9,684
|
|
|
|
|
|
|
|
19,902
|
|
Deferred income taxes
|
|
|
1,368
|
|
|
|
30,994
|
|
|
|
109
|
|
|
|
|
|
|
|
32,471
|
|
Prepaid expenses and other
|
|
|
19,960
|
|
|
|
15,792
|
|
|
|
14,004
|
|
|
|
(332
|
)
|
|
|
49,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
366,181
|
|
|
|
518,013
|
|
|
|
976,221
|
|
|
|
(481,329
|
)
|
|
|
1,379,086
|
|
Property and equipment, net
|
|
|
160,524
|
|
|
|
3,775,263
|
|
|
|
4,638,827
|
|
|
|
|
|
|
|
8,574,614
|
|
Investment in subsidiaries
|
|
|
2,105,436
|
|
|
|
1,485,317
|
|
|
|
|
|
|
|
(3,590,753
|
)
|
|
|
|
|
Deferred financing costs, net
|
|
|
1,556
|
|
|
|
58,584
|
|
|
|
47,198
|
|
|
|
|
|
|
|
107,338
|
|
Restricted cash
|
|
|
|
|
|
|
|
|
|
|
178,824
|
|
|
|
|
|
|
|
178,824
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
1,343
|
|
|
|
(1,343
|
)
|
|
|
|
|
Leasehold interest in land, net
|
|
|
|
|
|
|
|
|
|
|
1,069,609
|
|
|
|
|
|
|
|
1,069,609
|
|
Other assets, net
|
|
|
116
|
|
|
|
26,885
|
|
|
|
130,045
|
|
|
|
|
|
|
|
157,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,633,813
|
|
|
$
|
5,864,062
|
|
|
$
|
7,042,067
|
|
|
$
|
(4,073,425
|
)
|
|
$
|
11,466,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
4,881
|
|
|
$
|
49,020
|
|
|
$
|
45,121
|
|
|
$
|
|
|
|
$
|
99,022
|
|
Construction payables
|
|
|
|
|
|
|
169,089
|
|
|
|
548,452
|
|
|
|
|
|
|
|
717,541
|
|
Intercompany payables
|
|
|
|
|
|
|
125,693
|
|
|
|
225,750
|
|
|
|
(351,443
|
)
|
|
|
|
|
Accrued interest payable
|
|
|
6,350
|
|
|
|
3,320
|
|
|
|
1,795
|
|
|
|
|
|
|
|
11,465
|
|
Other accrued liabilities
|
|
|
8,141
|
|
|
|
191,103
|
|
|
|
411,668
|
|
|
|
|
|
|
|
610,912
|
|
Intercompany notes payable
|
|
|
|
|
|
|
|
|
|
|
129,554
|
|
|
|
(129,554
|
)
|
|
|
|
|
Income taxes payable
|
|
|
|
|
|
|
|
|
|
|
332
|
|
|
|
(332
|
)
|
|
|
|
|
Current maturities of long-term debt
|
|
|
3,688
|
|
|
|
36,141
|
|
|
|
14,504
|
|
|
|
|
|
|
|
54,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
23,060
|
|
|
|
574,366
|
|
|
|
1,377,176
|
|
|
|
(481,329
|
)
|
|
|
1,493,273
|
|
Other long-term liabilities
|
|
|
15,532
|
|
|
|
171,860
|
|
|
|
6,028
|
|
|
|
|
|
|
|
193,420
|
|
Deferred income taxes
|
|
|
770
|
|
|
|
2,126
|
|
|
|
|
|
|
|
(1,343
|
)
|
|
|
1,553
|
|
Long-term debt
|
|
|
334,177
|
|
|
|
3,010,274
|
|
|
|
4,173,546
|
|
|
|
|
|
|
|
7,517,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
373,539
|
|
|
|
3,758,626
|
|
|
|
5,556,750
|
|
|
|
(482,672
|
)
|
|
|
9,206,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
2,260,274
|
|
|
|
2,105,436
|
|
|
|
1,485,317
|
|
|
|
(3,590,753
|
)
|
|
|
2,260,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity and liabilities
|
|
$
|
2,633,813
|
|
|
$
|
5,864,062
|
|
|
$
|
7,042,067
|
|
|
$
|
(4,073,425
|
)
|
|
$
|
11,466,517
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING BALANCE SHEETS
December 31,
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Cash and cash equivalents
|
|
$
|
69,100
|
|
|
$
|
96,219
|
|
|
$
|
302,747
|
|
|
$
|
|
|
|
$
|
468,066
|
|
Restricted cash
|
|
|
50,076
|
|
|
|
95,139
|
|
|
|
253,547
|
|
|
|
|
|
|
|
398,762
|
|
Intercompany receivables
|
|
|
170,844
|
|
|
|
49,509
|
|
|
|
|
|
|
|
(220,353
|
)
|
|
|
|
|
Accounts receivable, net
|
|
|
137
|
|
|
|
121,375
|
|
|
|
52,171
|
|
|
|
|
|
|
|
173,683
|
|
Intercompany notes receivable
|
|
|
73,154
|
|
|
|
52,736
|
|
|
|
|
|
|
|
(125,890
|
)
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
10,273
|
|
|
|
2,018
|
|
|
|
|
|
|
|
12,291
|
|
Deferred income taxes
|
|
|
1,583
|
|
|
|
14,064
|
|
|
|
41
|
|
|
|
|
|
|
|
15,688
|
|
Prepaid expenses and other
|
|
|
1,793
|
|
|
|
8,286
|
|
|
|
14,988
|
|
|
|
|
|
|
|
25,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
366,687
|
|
|
|
447,601
|
|
|
|
625,512
|
|
|
|
(346,243
|
)
|
|
|
1,093,557
|
|
Property and equipment, net
|
|
|
85,758
|
|
|
|
2,437,074
|
|
|
|
2,059,493
|
|
|
|
|
|
|
|
4,582,325
|
|
Investment in subsidiaries
|
|
|
1,919,079
|
|
|
|
829,647
|
|
|
|
|
|
|
|
(2,748,726
|
)
|
|
|
|
|
Deferred financing costs, net
|
|
|
1,176
|
|
|
|
24,124
|
|
|
|
45,081
|
|
|
|
|
|
|
|
70,381
|
|
Restricted cash
|
|
|
|
|
|
|
323,668
|
|
|
|
231,464
|
|
|
|
|
|
|
|
555,132
|
|
Deferred income taxes
|
|
|
|
|
|
|
1,794
|
|
|
|
3,254
|
|
|
|
(5,048
|
)
|
|
|
|
|
Leasehold interest in land, net
|
|
|
|
|
|
|
|
|
|
|
809,856
|
|
|
|
|
|
|
|
809,856
|
|
Other assets, net
|
|
|
78
|
|
|
|
12,538
|
|
|
|
2,591
|
|
|
|
|
|
|
|
15,207
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,372,778
|
|
|
$
|
4,076,446
|
|
|
$
|
3,777,251
|
|
|
$
|
(3,100,017
|
)
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
884
|
|
|
$
|
29,038
|
|
|
$
|
21,116
|
|
|
$
|
|
|
|
$
|
51,038
|
|
Construction payables
|
|
|
674
|
|
|
|
75,155
|
|
|
|
253,546
|
|
|
|
|
|
|
|
329,375
|
|
Intercompany payables
|
|
|
|
|
|
|
44,732
|
|
|
|
175,621
|
|
|
|
(220,353
|
)
|
|
|
|
|
Accrued interest payable
|
|
|
5,977
|
|
|
|
1,442
|
|
|
|
1,077
|
|
|
|
|
|
|
|
8,496
|
|
Other accrued liabilities
|
|
|
13,231
|
|
|
|
149,390
|
|
|
|
156,280
|
|
|
|
|
|
|
|
318,901
|
|
Intercompany notes payable
|
|
|
|
|
|
|
|
|
|
|
125,890
|
|
|
|
(125,890
|
)
|
|
|
|
|
Income taxes payable
|
|
|
20,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,352
|
|
Deferred income taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
|
|
|
|
6,486
|
|
|
|
|
|
|
|
|
|
|
|
6,486
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
41,118
|
|
|
|
306,243
|
|
|
|
733,530
|
|
|
|
(346,243
|
)
|
|
|
734,648
|
|
Other long-term liabilities
|
|
|
2,981
|
|
|
|
177,199
|
|
|
|
|
|
|
|
|
|
|
|
180,180
|
|
Deferred income taxes
|
|
|
5,372
|
|
|
|
|
|
|
|
|
|
|
|
(5,048
|
)
|
|
|
324
|
|
Long-term debt
|
|
|
248,153
|
|
|
|
1,673,925
|
|
|
|
2,214,074
|
|
|
|
|
|
|
|
4,136,152
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
297,624
|
|
|
|
2,157,367
|
|
|
|
2,947,604
|
|
|
|
(351,291
|
)
|
|
|
5,051,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity
|
|
|
2,075,154
|
|
|
|
1,919,079
|
|
|
|
829,647
|
|
|
|
(2,748,726
|
)
|
|
|
2,075,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity and liabilities
|
|
$
|
2,372,778
|
|
|
$
|
4,076,446
|
|
|
$
|
3,777,251
|
|
|
$
|
(3,100,017
|
)
|
|
$
|
7,126,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
108
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
For the
year ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
|
$
|
404,255
|
|
|
$
|
1,846,166
|
|
|
$
|
|
|
|
$
|
2,250,421
|
|
Rooms
|
|
|
|
|
|
|
362,404
|
|
|
|
74,953
|
|
|
|
|
|
|
|
437,357
|
|
Food and beverage
|
|
|
|
|
|
|
144,745
|
|
|
|
94,043
|
|
|
|
(536
|
)
|
|
|
238,252
|
|
Convention, retail and other
|
|
|
38,909
|
|
|
|
126,364
|
|
|
|
53,791
|
|
|
|
(40,672
|
)
|
|
|
178,392
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
38,909
|
|
|
|
1,037,768
|
|
|
|
2,068,953
|
|
|
|
(41,208
|
)
|
|
|
3,104,422
|
|
Less promotional allowances
|
|
|
(1,045
|
)
|
|
|
(75,187
|
)
|
|
|
(77,623
|
)
|
|
|
|
|
|
|
(153,855
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
37,864
|
|
|
|
962,581
|
|
|
|
1,991,330
|
|
|
|
(41,208
|
)
|
|
|
2,950,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
|
195,206
|
|
|
|
1,240,858
|
|
|
|
(402
|
)
|
|
|
1,435,662
|
|
Rooms
|
|
|
|
|
|
|
82,275
|
|
|
|
11,944
|
|
|
|
|
|
|
|
94,219
|
|
Food and beverage
|
|
|
|
|
|
|
71,573
|
|
|
|
48,463
|
|
|
|
(1,763
|
)
|
|
|
118,273
|
|
Convention, retail and other
|
|
|
|
|
|
|
64,825
|
|
|
|
32,864
|
|
|
|
|
|
|
|
97,689
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
25,126
|
|
|
|
1,243
|
|
|
|
|
|
|
|
26,369
|
|
General and administrative
|
|
|
|
|
|
|
212,138
|
|
|
|
146,262
|
|
|
|
(39,043
|
)
|
|
|
319,357
|
|
Corporate expense
|
|
|
91,548
|
|
|
|
366
|
|
|
|
2,600
|
|
|
|
|
|
|
|
94,514
|
|
Rental expense
|
|
|
|
|
|
|
8,348
|
|
|
|
23,439
|
|
|
|
|
|
|
|
31,787
|
|
Pre-opening expense
|
|
|
2,282
|
|
|
|
23,510
|
|
|
|
163,488
|
|
|
|
|
|
|
|
189,280
|
|
Development expense
|
|
|
6,030
|
|
|
|
|
|
|
|
3,698
|
|
|
|
|
|
|
|
9,728
|
|
Depreciation and amortization
|
|
|
6,571
|
|
|
|
89,571
|
|
|
|
106,415
|
|
|
|
|
|
|
|
202,557
|
|
Loss on disposal of assets
|
|
|
505
|
|
|
|
53
|
|
|
|
564
|
|
|
|
|
|
|
|
1,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,936
|
|
|
|
772,991
|
|
|
|
1,781,838
|
|
|
|
(41,208
|
)
|
|
|
2,620,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(69,072
|
)
|
|
|
189,590
|
|
|
|
209,492
|
|
|
|
|
|
|
|
330,010
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
9,217
|
|
|
|
41,712
|
|
|
|
28,625
|
|
|
|
(7,090
|
)
|
|
|
72,464
|
|
Interest expense, net of amounts capitalized
|
|
|
(18,837
|
)
|
|
|
(115,438
|
)
|
|
|
(117,623
|
)
|
|
|
7,090
|
|
|
|
(244,808
|
)
|
Other expense
|
|
|
(6
|
)
|
|
|
(1,009
|
)
|
|
|
(7,667
|
)
|
|
|
|
|
|
|
(8,682
|
)
|
Loss on early retirement of debt
|
|
|
|
|
|
|
(10,705
|
)
|
|
|
|
|
|
|
|
|
|
|
(10,705
|
)
|
Income from equity investment in subsidiaries
|
|
|
188,785
|
|
|
|
110,579
|
|
|
|
|
|
|
|
(299,364
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
110,087
|
|
|
|
214,729
|
|
|
|
112,827
|
|
|
|
(299,364
|
)
|
|
|
138,279
|
|
Benefit (provision) for income taxes
|
|
|
6,601
|
|
|
|
(25,944
|
)
|
|
|
(2,248
|
)
|
|
|
|
|
|
|
(21,591
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
116,688
|
|
|
$
|
188,785
|
|
|
$
|
110,579
|
|
|
$
|
(299,364
|
)
|
|
$
|
116,688
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
For the
year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
|
$
|
411,771
|
|
|
$
|
1,264,290
|
|
|
$
|
|
|
|
$
|
1,676,061
|
|
Rooms
|
|
|
|
|
|
|
343,995
|
|
|
|
6,611
|
|
|
|
|
|
|
|
350,606
|
|
Food and beverage
|
|
|
|
|
|
|
137,006
|
|
|
|
51,129
|
|
|
|
(316
|
)
|
|
|
187,819
|
|
Convention, retail and other
|
|
|
33,408
|
|
|
|
123,257
|
|
|
|
3,549
|
|
|
|
(34,522
|
)
|
|
|
125,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
33,408
|
|
|
|
1,016,029
|
|
|
|
1,325,579
|
|
|
|
(34,838
|
)
|
|
|
2,340,178
|
|
Less promotional allowances
|
|
|
(625
|
)
|
|
|
(66,140
|
)
|
|
|
(36,554
|
)
|
|
|
|
|
|
|
(103,319
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
32,783
|
|
|
|
949,889
|
|
|
|
1,289,025
|
|
|
|
(34,838
|
)
|
|
|
2,236,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
|
187,431
|
|
|
|
737,839
|
|
|
|
(237
|
)
|
|
|
925,033
|
|
Rooms
|
|
|
|
|
|
|
85,420
|
|
|
|
231
|
|
|
|
|
|
|
|
85,651
|
|
Food and beverage
|
|
|
|
|
|
|
66,121
|
|
|
|
24,106
|
|
|
|
(1,114
|
)
|
|
|
89,113
|
|
Convention, retail and other
|
|
|
|
|
|
|
62,300
|
|
|
|
2,015
|
|
|
|
|
|
|
|
64,315
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
17,645
|
|
|
|
422
|
|
|
|
|
|
|
|
18,067
|
|
General and administrative
|
|
|
|
|
|
|
195,508
|
|
|
|
68,334
|
|
|
|
(33,487
|
)
|
|
|
230,355
|
|
Corporate expense
|
|
|
59,220
|
|
|
|
|
|
|
|
350
|
|
|
|
|
|
|
|
59,570
|
|
Rental expense
|
|
|
|
|
|
|
12,669
|
|
|
|
809
|
|
|
|
|
|
|
|
13,478
|
|
Pre-opening expense
|
|
|
|
|
|
|
1,369
|
|
|
|
36,304
|
|
|
|
|
|
|
|
37,673
|
|
Development expense
|
|
|
3,280
|
|
|
|
(35
|
)
|
|
|
22,867
|
|
|
|
|
|
|
|
26,112
|
|
Depreciation and amortization
|
|
|
2,906
|
|
|
|
67,469
|
|
|
|
40,396
|
|
|
|
|
|
|
|
110,771
|
|
Loss on disposal of assets
|
|
|
|
|
|
|
684
|
|
|
|
1,940
|
|
|
|
|
|
|
|
2,624
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,406
|
|
|
|
696,581
|
|
|
|
935,613
|
|
|
|
(34,838
|
)
|
|
|
1,662,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(32,623
|
)
|
|
|
253,308
|
|
|
|
353,412
|
|
|
|
|
|
|
|
574,097
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
12,457
|
|
|
|
33,027
|
|
|
|
28,730
|
|
|
|
(8,023
|
)
|
|
|
66,191
|
|
Interest expense, net of amounts capitalized
|
|
|
(16,921
|
)
|
|
|
(83,002
|
)
|
|
|
(43,953
|
)
|
|
|
8,023
|
|
|
|
(135,853
|
)
|
Other income (expense)
|
|
|
2,422
|
|
|
|
(570
|
)
|
|
|
(2,041
|
)
|
|
|
|
|
|
|
(189
|
)
|
Income from equity investment in subsidiaries
|
|
|
470,823
|
|
|
|
337,978
|
|
|
|
|
|
|
|
(808,801
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
436,158
|
|
|
|
540,741
|
|
|
|
336,148
|
|
|
|
(808,801
|
)
|
|
|
504,246
|
|
Benefit (provision) for income taxes
|
|
|
5,845
|
|
|
|
(69,918
|
)
|
|
|
1,830
|
|
|
|
|
|
|
|
(62,243
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
442,003
|
|
|
$
|
470,823
|
|
|
$
|
337,978
|
|
|
$
|
(808,801
|
)
|
|
$
|
442,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF OPERATIONS
For the
year ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
$
|
|
|
|
$
|
367,915
|
|
|
$
|
882,175
|
|
|
$
|
|
|
|
$
|
1,250,090
|
|
Rooms
|
|
|
|
|
|
|
318,830
|
|
|
|
4,730
|
|
|
|
|
|
|
|
323,560
|
|
Food and beverage
|
|
|
|
|
|
|
116,402
|
|
|
|
31,108
|
|
|
|
|
|
|
|
147,510
|
|
Convention, retail and other
|
|
|
17,909
|
|
|
|
98,879
|
|
|
|
4,186
|
|
|
|
(17,909
|
)
|
|
|
103,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
17,909
|
|
|
|
902,026
|
|
|
|
922,199
|
|
|
|
(17,909
|
)
|
|
|
1,824,225
|
|
Less promotional allowances
|
|
|
(762
|
)
|
|
|
(56,951
|
)
|
|
|
(25,600
|
)
|
|
|
|
|
|
|
(83,313
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
|
17,147
|
|
|
|
845,075
|
|
|
|
896,599
|
|
|
|
(17,909
|
)
|
|
|
1,740,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
|
|
|
|
|
166,912
|
|
|
|
489,678
|
|
|
|
|
|
|
|
656,590
|
|
Rooms
|
|
|
|
|
|
|
81,778
|
|
|
|
280
|
|
|
|
|
|
|
|
82,058
|
|
Food and beverage
|
|
|
|
|
|
|
62,564
|
|
|
|
14,172
|
|
|
|
|
|
|
|
76,736
|
|
Convention, retail and other
|
|
|
|
|
|
|
54,647
|
|
|
|
3,421
|
|
|
|
|
|
|
|
58,068
|
|
Provision for doubtful accounts
|
|
|
|
|
|
|
9,101
|
|
|
|
257
|
|
|
|
|
|
|
|
9,358
|
|
General and administrative
|
|
|
|
|
|
|
163,515
|
|
|
|
47,200
|
|
|
|
(17,909
|
)
|
|
|
192,806
|
|
Corporate expense
|
|
|
38,200
|
|
|
|
|
|
|
|
97
|
|
|
|
|
|
|
|
38,297
|
|
Rental expense
|
|
|
|
|
|
|
14,094
|
|
|
|
747
|
|
|
|
|
|
|
|
14,841
|
|
Pre-opening expense
|
|
|
|
|
|
|
678
|
|
|
|
3,054
|
|
|
|
|
|
|
|
3,732
|
|
Development expense
|
|
|
646
|
|
|
|
217
|
|
|
|
21,375
|
|
|
|
|
|
|
|
22,238
|
|
Depreciation and amortization
|
|
|
2,037
|
|
|
|
67,689
|
|
|
|
25,570
|
|
|
|
|
|
|
|
95,296
|
|
Loss on disposal of assets
|
|
|
|
|
|
|
1,104
|
|
|
|
337
|
|
|
|
|
|
|
|
1,441
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,883
|
|
|
|
622,299
|
|
|
|
606,188
|
|
|
|
(17,909
|
)
|
|
|
1,251,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(23,736
|
)
|
|
|
222,776
|
|
|
|
290,411
|
|
|
|
|
|
|
|
489,451
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
12,365
|
|
|
|
20,687
|
|
|
|
9,093
|
|
|
|
(9,034
|
)
|
|
|
33,111
|
|
Interest expense, net of amounts capitalized
|
|
|
(9,178
|
)
|
|
|
(82,369
|
)
|
|
|
(13,779
|
)
|
|
|
9,034
|
|
|
|
(96,292
|
)
|
Other income (expense)
|
|
|
|
|
|
|
(1,335
|
)
|
|
|
1
|
|
|
|
|
|
|
|
(1,334
|
)
|
Loss on early retirement of debt
|
|
|
|
|
|
|
(132,834
|
)
|
|
|
(4,166
|
)
|
|
|
|
|
|
|
(137,000
|
)
|
Income from equity investment in subsidiaries
|
|
|
298,967
|
|
|
|
283,211
|
|
|
|
|
|
|
|
(582,178
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
278,418
|
|
|
|
310,136
|
|
|
|
281,560
|
|
|
|
(582,178
|
)
|
|
|
287,936
|
|
Benefit (provision) for income taxes
|
|
|
5,268
|
|
|
|
(11,169
|
)
|
|
|
1,651
|
|
|
|
|
|
|
|
(4,250
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
283,686
|
|
|
$
|
298,967
|
|
|
$
|
283,211
|
|
|
$
|
(582,178
|
)
|
|
$
|
283,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the
year ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(135,852
|
)
|
|
$
|
211,815
|
|
|
$
|
289,494
|
|
|
$
|
|
|
|
$
|
365,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
50,076
|
|
|
|
413,689
|
|
|
|
92,511
|
|
|
|
|
|
|
|
556,276
|
|
Capital expenditures
|
|
|
(88,016
|
)
|
|
|
(1,327,335
|
)
|
|
|
(2,378,352
|
)
|
|
|
|
|
|
|
(3,793,703
|
)
|
Acquisition of gaming license included in other assets
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
(50,000
|
)
|
Repayment of receivable from Guarantor Subsidiaries
|
|
|
73,715
|
|
|
|
|
|
|
|
|
|
|
|
(73,715
|
)
|
|
|
|
|
Repayment of receivable from Non-Guarantor Subsidiaries
|
|
|
125,464
|
|
|
|
58,521
|
|
|
|
|
|
|
|
(183,985
|
)
|
|
|
|
|
Intercompany receivable to Guarantor Subsidiaries
|
|
|
(114,902
|
)
|
|
|
|
|
|
|
|
|
|
|
114,902
|
|
|
|
|
|
Intercompany receivable to Non-Guarantor Subsidiaries
|
|
|
(32,338
|
)
|
|
|
(126,513
|
)
|
|
|
|
|
|
|
158,851
|
|
|
|
|
|
Capital contributions to subsidiaries
|
|
|
|
|
|
|
(548,088
|
)
|
|
|
|
|
|
|
548,088
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities
|
|
|
13,999
|
|
|
|
(1,529,726
|
)
|
|
|
(2,335,841
|
)
|
|
|
564,141
|
|
|
|
(3,287,427
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
30,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,221
|
|
Excess tax benefits from stock-based compensation
|
|
|
7,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,112
|
|
Capital contributions received
|
|
|
|
|
|
|
|
|
|
|
548,088
|
|
|
|
(548,088
|
)
|
|
|
|
|
Borrowings from Las Vegas Sands Corp.
|
|
|
|
|
|
|
114,902
|
|
|
|
32,338
|
|
|
|
(147,240
|
)
|
|
|
|
|
Borrowings from Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
126,513
|
|
|
|
(126,513
|
)
|
|
|
|
|
Repayment on borrowings from Guarantor Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
(58,521
|
)
|
|
|
58,521
|
|
|
|
|
|
Repayment on borrowings from Las Vegas Sands Corp.
|
|
|
|
|
|
|
(73,715
|
)
|
|
|
(125,464
|
)
|
|
|
199,179
|
|
|
|
|
|
Proceeds from Macao credit facility
|
|
|
|
|
|
|
|
|
|
|
1,551,000
|
|
|
|
|
|
|
|
1,551,000
|
|
Proceeds from Singapore bridge facility
|
|
|
|
|
|
|
|
|
|
|
339,788
|
|
|
|
|
|
|
|
339,788
|
|
Proceeds from airplane financing
|
|
|
92,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,250
|
|
Proceeds from new senior secured credit facility-term B
|
|
|
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
|
3,000,000
|
|
Proceeds from senior secured credit facility-revolver
|
|
|
|
|
|
|
62,000
|
|
|
|
|
|
|
|
|
|
|
|
62,000
|
|
Proceeds from construction loan for The Shoppes at The Palazzo
|
|
|
|
|
|
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
52,000
|
|
Proceeds from FF&E financings and other long-term debt
|
|
|
|
|
|
|
23,834
|
|
|
|
14,204
|
|
|
|
|
|
|
|
38,038
|
|
Repayments on new senior secured credit facility-term B
|
|
|
|
|
|
|
(15,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(15,000
|
)
|
Repayment on senior secured credit facility-term B and term B
delayed
|
|
|
|
|
|
|
(1,170,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,170,000
|
)
|
Repayment on senior secured credit facility-revolver
|
|
|
|
|
|
|
(322,128
|
)
|
|
|
|
|
|
|
|
|
|
|
(322,128
|
)
|
Repayments on airplane financing
|
|
|
(2,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,766
|
)
|
Repayments on FF&E financings and other long-term debt
|
|
|
|
|
|
|
(7,334
|
)
|
|
|
(1,205
|
)
|
|
|
|
|
|
|
(8,539
|
)
|
Repayments on construction loan for The Shoppes at The Palazzo
|
|
|
|
|
|
|
(166,500
|
)
|
|
|
|
|
|
|
|
|
|
|
(166,500
|
)
|
Repayments on The Sands Expo Center mortgage loan
|
|
|
|
|
|
|
(90,868
|
)
|
|
|
|
|
|
|
|
|
|
|
(90,868
|
)
|
Payments of deferred financing costs
|
|
|
(575
|
)
|
|
|
(54,874
|
)
|
|
|
(18,294
|
)
|
|
|
|
|
|
|
(73,743
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
126,242
|
|
|
|
1,352,317
|
|
|
|
2,408,447
|
|
|
|
(564,141
|
)
|
|
|
3,322,865
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
(11,811
|
)
|
|
|
|
|
|
|
(11,811
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and cash equivalents
|
|
|
4,389
|
|
|
|
34,406
|
|
|
|
350,289
|
|
|
|
|
|
|
|
389,084
|
|
Cash and cash equivalents at beginning of year
|
|
|
69,100
|
|
|
|
96,219
|
|
|
|
302,747
|
|
|
|
|
|
|
|
468,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
73,489
|
|
|
$
|
130,625
|
|
|
$
|
653,036
|
|
|
$
|
|
|
|
$
|
857,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the
year ended December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(28,167
|
)
|
|
$
|
198,931
|
|
|
$
|
(367,484
|
)
|
|
$
|
|
|
|
$
|
(196,720
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(24
|
)
|
|
|
174,001
|
|
|
|
(484,542
|
)
|
|
|
|
|
|
|
(310,565
|
)
|
Capital expenditures
|
|
|
(49,519
|
)
|
|
|
(643,338
|
)
|
|
|
(1,232,434
|
)
|
|
|
|
|
|
|
(1,925,291
|
)
|
Notes receivable to Non-Guarantor Subsidiaries
|
|
|
(115,000
|
)
|
|
|
(75,000
|
)
|
|
|
|
|
|
|
190,000
|
|
|
|
|
|
Repayment of notes receivable from Non-Guarantor Subsidiaries
|
|
|
165,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
(190,000
|
)
|
|
|
|
|
Intercompany receivable to Las Vegas Sands Corp.
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
(20,000
|
)
|
|
|
|
|
Repayment of receivable from Las Vegas Sands Corp.
|
|
|
|
|
|
|
(20,000
|
)
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Intercompany receivable to Non-Guarantor Subsidiaries
|
|
|
(104,464
|
)
|
|
|
(18,408
|
)
|
|
|
|
|
|
|
122,872
|
|
|
|
|
|
Capital contributions to subsidiaries
|
|
|
(9,549
|
)
|
|
|
(6,989
|
)
|
|
|
|
|
|
|
16,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(113,556
|
)
|
|
|
(544,734
|
)
|
|
|
(1,716,976
|
)
|
|
|
139,410
|
|
|
|
(2,235,856
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options
|
|
|
7,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,226
|
|
Excess tax benefits from stock-based compensation
|
|
|
1,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,401
|
|
Capital contributions received
|
|
|
|
|
|
|
9,549
|
|
|
|
6,989
|
|
|
|
(16,538
|
)
|
|
|
|
|
Borrowings from Las Vegas Sands Corp.
|
|
|
|
|
|
|
|
|
|
|
219,464
|
|
|
|
(219,464
|
)
|
|
|
|
|
Borrowings from Guarantor Subsidiaries
|
|
|
20,000
|
|
|
|
|
|
|
|
93,408
|
|
|
|
(113,408
|
)
|
|
|
|
|
Repayment on borrowings from Guarantor Subsidiaries
|
|
|
(20,000
|
)
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
45,000
|
|
|
|
|
|
Repayment on borrowings from Las Vegas Sands Corp.
|
|
|
|
|
|
|
|
|
|
|
(165,000
|
)
|
|
|
165,000
|
|
|
|
|
|
Proceeds from Macao credit facility
|
|
|
|
|
|
|
|
|
|
|
1,350,000
|
|
|
|
|
|
|
|
1,350,000
|
|
Proceeds from Singapore bridge facility
|
|
|
|
|
|
|
|
|
|
|
892,076
|
|
|
|
|
|
|
|
892,076
|
|
Proceeds from senior secured credit facility-revolver
|
|
|
|
|
|
|
254,129
|
|
|
|
|
|
|
|
|
|
|
|
254,129
|
|
Proceeds from construction loan for The Shoppes at The Palazzo
|
|
|
|
|
|
|
86,000
|
|
|
|
|
|
|
|
|
|
|
|
86,000
|
|
Proceeds from FF&E financings and other long-term debt
|
|
|
|
|
|
|
37,715
|
|
|
|
75
|
|
|
|
|
|
|
|
37,790
|
|
Repayments on Venetian Intermediate credit facility
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
(50,000
|
)
|
Repayments on Macao credit facility
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
|
|
(50,000
|
)
|
Repayment on senior secured credit facility-revolver
|
|
|
|
|
|
|
(25,000
|
)
|
|
|
|
|
|
|
|
|
|
|
(25,000
|
)
|
Repayments on FF&E financings and other long-term debt
|
|
|
|
|
|
|
(2,999
|
)
|
|
|
(14
|
)
|
|
|
|
|
|
|
(3,013
|
)
|
Repayments on The Sands Expo Center mortgage loan
|
|
|
|
|
|
|
(4,733
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,733
|
)
|
Payments of deferred financing costs
|
|
|
|
|
|
|
(2,283
|
)
|
|
|
(50,611
|
)
|
|
|
|
|
|
|
(52,894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
8,627
|
|
|
|
352,378
|
|
|
|
2,221,387
|
|
|
|
(139,410
|
)
|
|
|
2,442,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
814
|
|
|
|
|
|
|
|
814
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(133,096
|
)
|
|
|
6,575
|
|
|
|
137,741
|
|
|
|
|
|
|
|
11,220
|
|
Cash and cash equivalents at beginning of year
|
|
|
202,196
|
|
|
|
89,644
|
|
|
|
165,006
|
|
|
|
|
|
|
|
456,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
69,100
|
|
|
$
|
96,219
|
|
|
$
|
302,747
|
|
|
$
|
|
|
|
$
|
468,066
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
CONDENSED
CONSOLIDATING STATEMENTS OF CASH FLOWS
For the
year ended December 31, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidating/
|
|
|
|
|
|
|
Las Vegas
|
|
|
Guarantor
|
|
|
Non-Guarantor
|
|
|
Eliminating
|
|
|
|
|
|
|
Sands Corp.
|
|
|
Subsidiaries
|
|
|
Subsidiaries
|
|
|
Entries
|
|
|
Total
|
|
|
Net cash provided by (used in) operating activities
|
|
$
|
(4,102
|
)
|
|
$
|
186,823
|
|
|
$
|
407,195
|
|
|
$
|
|
|
|
$
|
589,916
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in restricted cash
|
|
|
(50,052
|
)
|
|
|
(215,338
|
)
|
|
|
4
|
|
|
|
|
|
|
|
(265,386
|
)
|
Capital expenditures
|
|
|
(1,217
|
)
|
|
|
(432,152
|
)
|
|
|
(427,252
|
)
|
|
|
|
|
|
|
(860,621
|
)
|
Capital contributions to subsidiaries
|
|
|
(564,260
|
)
|
|
|
(49,220
|
)
|
|
|
|
|
|
|
613,480
|
|
|
|
|
|
Note receivable to Non-Guarantor Subsidiaries
|
|
|
(121,784
|
)
|
|
|
|
|
|
|
|
|
|
|
121,784
|
|
|
|
|
|
Intercompany payment for airplane transfer
|
|
|
(40,000
|
)
|
|
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(777,313
|
)
|
|
|
(656,710
|
)
|
|
|
(427,248
|
)
|
|
|
735,264
|
|
|
|
(1,126,007
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction costs, initial public offering
|
|
|
(487
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(487
|
)
|
Dividends paid to shareholders
|
|
|
|
|
|
|
(21,052
|
)
|
|
|
|
|
|
|
|
|
|
|
(21,052
|
)
|
Proceeds from exercise of stock options
|
|
|
313
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
313
|
|
Capital contributions received
|
|
|
|
|
|
|
564,260
|
|
|
|
49,220
|
|
|
|
(613,480
|
)
|
|
|
|
|
Borrowings from Las Vegas Sands Corp.
|
|
|
|
|
|
|
|
|
|
|
121,784
|
|
|
|
(121,784
|
)
|
|
|
|
|
Repayments on 11% mortgage notes
|
|
|
|
|
|
|
(843,640
|
)
|
|
|
|
|
|
|
|
|
|
|
(843,640
|
)
|
Proceeds from 6.375% senior note, net of discount
|
|
|
247,722
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
247,722
|
|
Proceeds from senior secured credit facility-term B
|
|
|
|
|
|
|
305,000
|
|
|
|
|
|
|
|
|
|
|
|
305,000
|
|
Proceeds from senior secured credit facility-term B delayed
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
Proceeds from construction loan for The Shoppes at The Palazzo
|
|
|
|
|
|
|
28,500
|
|
|
|
|
|
|
|
|
|
|
|
28,500
|
|
Repayments on Venetian Macao senior secured
notes-tranches A and B
|
|
|
|
|
|
|
|
|
|
|
(120,000
|
)
|
|
|
|
|
|
|
(120,000
|
)
|
Proceeds from senior secured credit facility-revolver
|
|
|
|
|
|
|
31,000
|
|
|
|
|
|
|
|
|
|
|
|
31,000
|
|
Repayments on FF&E financings
|
|
|
|
|
|
|
(1,800
|
)
|
|
|
|
|
|
|
|
|
|
|
(1,800
|
)
|
Repayments on The Sands Expo Center mortgage loan
|
|
|
|
|
|
|
(3,687
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,687
|
)
|
Repurchase premiums incurred in connection with refinancing
transactions
|
|
|
|
|
|
|
(113,311
|
)
|
|
|
|
|
|
|
|
|
|
|
(113,311
|
)
|
Payments of deferred financing costs
|
|
|
(1,438
|
)
|
|
|
(9,838
|
)
|
|
|
|
|
|
|
|
|
|
|
(11,276
|
)
|
Net change in intercompany accounts
|
|
|
(7,426
|
)
|
|
|
35,895
|
|
|
|
(28,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities
|
|
|
238,684
|
|
|
|
171,327
|
|
|
|
22,535
|
|
|
|
(735,264
|
)
|
|
|
(302,718
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
|
|
|
|
|
|
|
|
757
|
|
|
|
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
(542,731
|
)
|
|
|
(298,560
|
)
|
|
|
3,239
|
|
|
|
|
|
|
|
(838,052
|
)
|
Cash and cash equivalents at beginning of year
|
|
|
744,927
|
|
|
|
388,204
|
|
|
|
161,767
|
|
|
|
|
|
|
|
1,294,898
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
202,196
|
|
|
$
|
89,644
|
|
|
$
|
165,006
|
|
|
$
|
|
|
|
$
|
456,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114
LAS VEGAS
SANDS CORP. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Note 17
Selected Quarterly Financial Results (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
|
|
|
|
First
|
|
|
Second
|
|
|
Third(1)
|
|
|
Fourth(2)
|
|
|
Total
|
|
|
|
|
|
|
(In thousands, except per share data)
|
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
628,218
|
|
|
$
|
612,926
|
|
|
$
|
660,950
|
|
|
$
|
1,048,473
|
|
|
$
|
2,950,567
|
|
Operating income (loss)
|
|
|
131,006
|
|
|
|
86,233
|
|
|
|
(20,794
|
)
|
|
|
133,565
|
|
|
|
330,010
|
|
Net income (loss)
|
|
|
90,914
|
|
|
|
34,398
|
|
|
|
(48,507
|
)
|
|
|
39,883
|
|
|
|
116,688
|
|
Basic earnings (loss) per share
|
|
|
0.26
|
|
|
|
0.10
|
|
|
|
(0.14
|
)
|
|
|
0.11
|
|
|
|
0.33
|
|
Diluted earnings (loss) per share
|
|
|
0.26
|
|
|
|
0.10
|
|
|
|
(0.14
|
)
|
|
|
0.11
|
|
|
|
0.33
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
530,364
|
|
|
$
|
517,007
|
|
|
$
|
553,228
|
|
|
$
|
636,260
|
|
|
$
|
2,236,859
|
|
Operating income
|
|
|
148,880
|
|
|
|
125,415
|
|
|
|
133,478
|
|
|
|
166,324
|
|
|
|
574,097
|
|
Net income
|
|
|
121,783
|
|
|
|
109,329
|
|
|
|
97,251
|
|
|
|
113,640
|
|
|
|
442,003
|
|
Basic earnings per share
|
|
|
0.34
|
|
|
|
0.31
|
|
|
|
0.27
|
|
|
|
0.32
|
|
|
|
1.25
|
|
Diluted earnings per share
|
|
|
0.34
|
|
|
|
0.31
|
|
|
|
0.27
|
|
|
|
0.32
|
|
|
|
1.24
|
|
|
|
|
(1) |
|
The Venetian Macao opened on August 28, 2007. |
|
(2) |
|
The Palazzo partially opened on December 30, 2007. |
Because earnings per share amounts are calculated using the
weighted average number of common and dilutive common equivalent
shares outstanding during each quarter, the sum of the per share
amounts for the four quarters may not equal the total earnings
per share amounts for the respective year.
115
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
For the Years Ended December 31, 2007, 2006 and 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
for
|
|
|
Write-offs,
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
Doubtful
|
|
|
net of
|
|
|
at End
|
|
Description
|
|
Of Year
|
|
|
Accounts
|
|
|
Recoveries
|
|
|
of Year
|
|
|
|
(In thousands)
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
$
|
20,309
|
|
|
|
9,358
|
|
|
|
(187
|
)
|
|
$
|
29,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
29,480
|
|
|
|
18,067
|
|
|
|
(12,071
|
)
|
|
$
|
35,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
35,476
|
|
|
|
26,369
|
|
|
|
(28,729
|
)
|
|
$
|
33,116
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
|
|
Balance
|
|
|
|
Beginning
|
|
|
|
|
|
|
|
|
at End
|
|
Description
|
|
of Year
|
|
|
Additions
|
|
|
Deductions
|
|
|
of Year
|
|
|
Deferred income tax asset valuation allowance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
$
|
6,175
|
|
|
|
11,211
|
|
|
|
|
|
|
$
|
17,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
17,386
|
|
|
|
6,196
|
|
|
|
|
|
|
$
|
23,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
23,582
|
|
|
|
22,761
|
|
|
|
|
|
|
$
|
46,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
116
ITEM 9. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports that the
Company files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized, and reported within the
time periods specified in the SECs rules and forms and
that such information is accumulated and communicated to our
management, including our principal executive officer and
principal financial officer, as appropriate, to allow for timely
decisions regarding required disclosure. The Companys
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 December 31, 2007 and have concluded
that they are effective to provide reasonable assurance that the
desired control objectives were achieved.
It should be noted that any system of controls, however well
designed and operated, can provide only reasonable, and not
absolute, assurance that the objectives of the system are met.
In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control
systems, there can be no assurance that any design will succeed
in achieving its stated goals under all potential future
conditions, regardless of how remote.
Changes
in Internal Control over Financial Reporting
There were no changes in the Companys internal control
over financial reporting that occurred during the fourth quarter
covered by this Annual Report on
Form 10-K
that have materially affected, or are reasonably likely to
materially affect, the Companys internal control over
financial reporting, other than in connection with the opening
of The Palazzo in December 2007, we implemented controls and
procedures at The Palazzo similar to those in effect at our
other facilities.
Managements
Annual Report on Internal Control Over Financial
Reporting
The Companys management is responsible for establishing
and maintaining adequate internal control over financial
reporting, as defined in
Rules 13a-15(f)
and
15d-15(f) of
the Securities Exchange Act of 1934. The Companys internal
control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for
external purposes in accordance with generally accepted
accounting principles. The Companys internal control over
financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the
transactions and dispositions of the Companys assets;
(2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles and that the Companys receipts and expenditures
are being made only in accordance with authorizations of its
management and directors; and
(3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition
of the Companys assets that could have a material effect
on the financial statements.
117
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
The Companys management assessed the effectiveness of the
Companys internal control over financial reporting as of
December 31, 2007. In making this assessment, the
Companys management used the framework set forth by the
Committee of Sponsoring Organizations of the Treadway Commission
in Internal Control Integrated Framework.
Based on this assessment, management concluded that, as of
December 31, 2007, the Companys internal control over
financial reporting is effective based on this framework.
The effectiveness of the Companys internal control over
financial reporting as of December 31, 2007, has been
audited by PricewaterhouseCoopers LLP, an independent registered
public accounting firm, as stated in their report which appears
herein.
ITEM 9B.
OTHER INFORMATION
On February 25, 2008, the Company paid supplemental bonuses
to certain of its officers in the following amounts: William P.
Weidner, $450,000; Bradley H. Stone, $350,000; Robert G.
Goldstein, $295,000; Robert P. Rozek, $50,000; and Scott D.
Henry, $155,000. These payments were made in recognition of the
significant contributions made by these individuals to the
Company during 2007, including in connection with the openings
of The Venetian Macao and The Palazzo, and the continuing
progress of the Companys other projects, including Marina
Bay Sands and Sands Bethworks.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
We incorporate by reference the information responsive to this
Item appearing in our definitive Proxy Statement for our 2008
Annual Meeting of Stockholders, which we expect to file with the
Securities and Exchange Commission on or about April 29,
2008 (the Proxy Statement), including under the
captions Board of Directors, Executive
Officers, Section 16(a) Beneficial Ownership
Reporting Compliance and Information Regarding the
Board of Directors and Its Committees.
We have adopted a Code of Business Conduct and Ethics which is
posted on our website at www.lasvegassands.com, along
with any amendments or waivers to the Code. Copies of the Code
of Business Conduct and Ethics are available without charge by
sending a written request to the Corporate Secretary at the
following address: Las Vegas Sands Corp., 3355 Las Vegas
Boulevard South, Las Vegas, Nevada 89109.
ITEM 11.
EXECUTIVE COMPENSATION
We incorporate by reference the information responsive to this
Item appearing in the Proxy Statement, including under the
captions Executive Compensation and Other
Information, Director Compensation,
Information Regarding the Board of Directors and Its
Committees and Compensation Committee Report
(which report is deemed to be furnished and is not deemed to be
filed in any Company filing under the Securities Act of 1933 or
the Securities Exchange Act of 1934).
118
PART IV
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of the Annual Report on
Form 10-K.
(1) List of Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders Equity and
Comprehensive Income
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) List of Financial Statement Schedule
Schedule II Valuation and Qualifying Accounts
(3) List of Exhibits
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
3
|
.1
|
|
Certificate of Amended and Restated Articles of Incorporation of
Las Vegas Sands Corp. (incorporated by reference from
Exhibit 3.1 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
3
|
.2
|
|
Amended and Restated By-laws of Las Vegas Sands Corp.
(incorporated by reference from Exhibit 3.2 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2007 and filed on
November 9, 2007).
|
|
4
|
.1
|
|
Form of Specimen Common Stock Certificate of Las Vegas Sands
Corp. (incorporated by reference from Exhibit 4.1 to the
Companys Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
4
|
.2
|
|
Indenture, dated as of February 10, 2005, by and between
Las Vegas Sands Corp., as issuer, and U.S. Bank National
Association, as trustee (the 6.375% Notes Indenture)
(incorporated by reference from Exhibit 4.2 to the
Companys Current Report on
Form 8-K
filed on February 15, 2005).
|
|
4
|
.3
|
|
Supplemental Indenture to the 6.375% Notes Indenture, dated
as of February 22, 2005, by and among Las Vegas Sands, Inc.
(n/k/a Las Vegas Sands, LLC), Venetian Casino Resort, LLC, Mall
Intermediate Holding Company, LLC, Lido Intermediate Holding
Company, LLC, Lido Casino Resort, LLC, (which was merged into
Venetian Casino Resort, LLC in March 2007), Venetian Venture
Development, LLC, Venetian Operating Company, LLC (which was
merged into Venetian Casino Resort, LLC in March 2006), Venetian
Marketing, Inc. and Venetian Transport, LLC, as guarantors, Las
Vegas Sands Corp., as issuer and U.S. Bank National Association,
as trustee) (incorporated by reference from Exhibit 4.1 to
the Companys Current Report on
Form 8-K
filed on February 23, 2005).
|
|
4
|
.4
|
|
Second Supplemental Indenture to the 6.375% Notes
Indenture, dated as of May 23, 2007, by and among Interface
Group Nevada, Inc., Lido Casino Resort Holding Company, LLC,
Phase II Mall Holding, LLC, Phase II Mall Subsidiary,
LLC, Sands Pennsylvania, Inc. and Palazzo Condo Tower, as
guaranteeing subsidiaries, the guarantors party to the first
supplemental indenture, Las Vegas Sands Corp., as issuer, and
U.S. Bank National Association, as trustee (incorporated by
reference from Exhibit 4.1 to the Companys Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.1
|
|
Credit and Guarantee Agreement, dated as of May 23, 2007,
by and among Las Vegas Sands, LLC, the affiliates of Las Vegas
Sands, LLC named therein as guarantors, the lenders party hereto
from time to time, The Bank of Nova Scotia, as administrative
agent for the Lenders and as collateral agent, Goldman Sachs
Credit Partners L.P., Lehman Brothers Inc. and Citigroup Global
Markets Inc., as joint lead arrangers and joint bookrunners and
as syndication agents, and JPMorgan Chase Bank, as documentation
agent (incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
120
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.2
|
|
Security Agreement, dated as of May 23, 2007, between each
of the parties named as a grantor therein and The Bank of Nova
Scotia, as collateral agent for the secured parties, as defined
therein (incorporated by reference from Exhibit 10.5 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.3
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by
Phase II Mall Subsidiary, LLC, as trustor, as of
May 23, 2007 in favor of First American
Title Insurance Company, as trustee, for the benefit of The
Bank of Nova Scotia, in its capacity as collateral agent, as
beneficiary (incorporated by reference from Exhibit 10.6 to
the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.4
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Las Vegas
Sands, LLC, as trustor, as of May 23, 2007 in favor of
First American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.7 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.5
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Venetian
Casino Resort, LLC, as trustor, as of May 23, 2007 in favor
of First American Title Insurance Company, as trustee, for
the benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.8 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.6
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Venetian
Casino Resort, LLC and Las Vegas Sands, LLC, jointly and
severally as trustors, as of May 23, 2007 in favor of First
American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.9 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.7
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Interface
Group-Nevada, Inc., as trustor, as of May 23, 2007 in favor
of First American Title Insurance Company, as trustee, for
the benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.10 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.8
|
|
Amended and Restated FF&E Credit and Guarantee Agreement,
dated as of August 21, 2007, by and among Las Vegas Sands,
LLC, as the borrower, certain affiliates of the borrower as
guarantors, the lenders party thereto from time to time, General
Electric Capital Corporation, as administrative agent for the
lenders and as collateral agent and GE Capital Markets, Inc., as
lead arranger and book runner (incorporated by reference from
Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2007 and filed on
November 9, 2007).
|
|
10
|
.9
|
|
Amended and Restated Security Agreement, dated as of
August 21, 2007, between each of the grantors party thereto
and General Electric Capital Corporation, as collateral agent
for the secured parties (incorporated by reference from
Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2007 and filed on
November 9, 2007).
|
|
10
|
.10
|
|
Indemnity Agreement, dated as of August 25, 2000, by and
among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, Grand
Canal Shops Mall Subsidiary, LLC, Grand Canal Shops Mall
Construction, LLC, Grand Canal Shops Mall, LLC, Interface Group
Holding Company, and American Insurance Companies (of which
American Home Assurance Company is a member company)
(incorporated by reference from Exhibit 10.8 to Las Vegas
Sands, Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002 and filed on
August 14, 2002).
|
|
10
|
.11
|
|
Energy Services Agreement, dated as of November 14, 1997,
by and between Atlantic Pacific Las Vegas, LLC and Venetian
Casino Resort, LLC (incorporated by reference from
Exhibit 10.3 to Amendment No. 2 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)
dated March 27, 1998).
|
121
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.12
|
|
Energy Services Agreement Amendment No. 1, dated as of
July 1, 1999, by and between Atlantic Pacific Las Vegas,
LLC and Venetian Casino Resort, LLC (incorporated by reference
from Exhibit 10.8 to Las Vegas Sands, Inc.s Annual
Report on
Form 10-K
for the year ended December 31, 1999 and filed on
March 30, 2000).
|
|
10
|
.13
|
|
Energy Services Agreement Amendment No. 2, dated as of
July 1, 2006, by and between Atlantic Pacific Las Vegas,
LLC and Venetian Casino Resort, LLC (incorporated by reference
from Exhibit 10.77 to the Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 and filed on
February 28, 2007).
|
|
10
|
.14
|
|
Energy Services Agreement, dated as of November 14, 1997,
by and between Atlantic-Pacific Las Vegas, LLC and Interface
Group-Nevada, Inc. (incorporated by reference from
Exhibit 10.8 to Amendment No. 1 of the Companys
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.15
|
|
Energy Services Agreement Amendment No. 1, dated as of
July 1, 1999, by and between Atlantic-Pacific Las Vegas,
LLC and Interface Group-Nevada, Inc. (incorporated by reference
from Exhibit 10.9 to the Companys Amendment
No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.16
|
|
Amended and Restated Services Agreement, dated as of
November 14, 1997, by and among Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC, Interface Group Holding Company,
Inc., Interface Group-Nevada, Inc., Lido Casino Resort MM, Inc.,
Grand Canal Shops Mall MM Subsidiary, Inc. and certain
subsidiaries of Venetian Casino Resort, LLC named therein
(incorporated by reference from Exhibit 10.15 to Amendment
No. 1 to Las Vegas Sands, Inc.s Registration
Statement on
Form S-4
(File
No. 333-42147)
dated February 12, 1998).
|
|
10
|
.17
|
|
Assignment and Assumption Agreement, dated as of
November 8, 2004, by and among Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC, Interface Group Holding Company,
Inc., Interface Group-Nevada, Inc., Interface Operations LLC,
Lido Casino Resort MM, Inc., Grand Canal Shops Mall MM
Subsidiary, Inc. and certain subsidiaries of Venetian Casino
Resort, LLC named therein (incorporated by reference from
Exhibit 10.52 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.18
|
|
Construction Agency Agreement, dated as of November 14,
1997, by and between Venetian Casino Resort, LLC and Atlantic
Pacific Las Vegas, LLC (incorporated by reference from
Exhibit 10.21 to Amendment No. 2 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)
dated March 27, 1998).
|
|
10
|
.19
|
|
Sands Resort Hotel and Casino Agreement, dated as of
February 18, 1997, by and between Clark County and Las
Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.27 to Amendment No. 1 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)
dated February 12, 1998).
|
|
10
|
.20
|
|
Addendum to Sands Resort Hotel & Casino Agreement,
dated as of September 16, 1997, by and between Clark County
and Las Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.20 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.21
|
|
Improvement Phasing Agreement by and between Clark County and
Lido Casino Resort, LLC (incorporated by reference from
Exhibit 10.21 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.22
|
|
Amended and Restated Las Vegas Sands, Inc. 1997 Fixed Stock
Option Plan (the 1997 Stock Option Plan)
(incorporated by reference from Exhibit 10.10 to Las Vegas
Sands, Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002 and filed on
August 14, 2002).
|
|
10
|
.23
|
|
First Amendment to the 1997 Stock Option Plan, dated
June 4, 2002 (incorporated by reference from
Exhibit 10.11 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002 and filed on
August 14, 2002).
|
|
10
|
.24
|
|
Assumption Agreement, dated as of January 2, 2002, by
Sheldon G. Adelson with respect to the 1997 Stock Option Plan
(incorporated by reference from Exhibit 10.5 to Las Vegas
Sands, Inc.s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2002 and filed on
May 8, 2002).
|
122
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.25
|
|
Assumption Agreement, dated as of July 15, 2004, by Las
Vegas Sands, Inc. with respect to the 1997 Stock Option Plan
(incorporated by reference from Exhibit 10.25 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.26
|
|
Assignment and Assumption Agreement, dated as of
December 20, 2004, by and among Las Vegas Sands, Inc., Las
Vegas Sands Corp. and Sheldon G. Adelson (incorporated by
reference from Exhibit 10.27 to the Companys Current
Report on
Form 8-K
filed on April 4, 2005).
|
|
10
|
.27
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and William
P. Weidner (incorporated by reference from Exhibit 10.27 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.28
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and Bradley
H. Stone (incorporated by reference from Exhibit 10.30 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.29
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and Robert G.
Goldstein (incorporated by reference from Exhibit 10.33 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.30
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and Sheldon
G. Adelson (incorporated by reference from Exhibit 10.36 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.31
|
|
Employment Agreement, dated as of June 1, 2006, among Las
Vegas Sands Corp., Las Vegas Sands, LLC and Robert Rozek
(incorporated by reference from Exhibit 10.3 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006 and filed on
August 9, 2006).
|
|
10
|
.32
|
|
Concession Contract for Operating Casino Games of Chance or
Games of Other Forms in the Macao Special Administrative Region,
June 26, 2002, by and among the Macao Special
Administrative Region and Galaxy Casino Company Limited
(incorporated by reference from Exhibit 10.40 to Las Vegas
Sands, Inc.s
Form 10-K
for the year ended December 31, 2002 and filed on
March 31, 2003).
|
|
10
|
.33
|
|
Land Concession Agreement, dated as of December 10, 2003,
issued by the Macao Special Administrative Region to Venetian
Macau Limited (incorporated by reference from Exhibit 10.39
to the Companys Amendment No. 1 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.34
|
|
Land Concession Agreement, dated as of February 23, 2007,
issued by the Macau Special Administrative Region to Venetian
Cotai Limited and Venetian Macau Limited (incorporated by
reference from Exhibit 10.3 to the Companys Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2007 and filed on
May 10, 2007).
|
|
10
|
.35
|
|
Subconcession Contract for Operating Casino Games of Chance or
Games of Other Forms in the Macao Special Administrative Region,
dated December 19, 2002, between Galaxy Casino Company
Limited, as concessionaire, and Venetian Macau S.A., as
subconcessionaire (incorporated by reference from
Exhibit 10.65 to the Companys Amendment No. 5 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 10, 2004).
|
|
10
|
.36
|
|
Purchase and Sale Agreement, dated April 12, 2004, by and
among Grand Canal Shops Mall Subsidiary, LLC, Grand Canal Shops
Mall MM Subsidiary, Inc. and GGP Limited Partnership
(incorporated by reference from Exhibit 10.1 to Las Vegas
Sands, Inc.s Current Report on
Form 8-K
filed on April 16, 2004).
|
|
10
|
.37
|
|
Agreement, made as of April 12, 2004, by and between Lido
Casino Resort, LLC and GGP Limited Partnership (incorporated by
reference from Exhibit 10.2 to Las Vegas Sands, Inc.s
Current Report on
Form 8-K
filed on April 16, 2004).
|
123
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.38
|
|
Assignment and Assumption of Agreement and First Amendment to
Agreement, dated September 30, 2004, made by Lido Casino
Resort, LLC, as assignor, to Phase II Mall Holding, LLC, as
assignee, and to GGP Limited Partnership, as buyer (incorporated
by reference from Exhibit 10.60 to the Companys
Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.39
|
|
Registration Rights Agreement, dated as of December 20,
2004, by and among Las Vegas Sands Corp. and the stockholders
named therein (incorporated by reference from Exhibit 10.39
to the Companys Current Report on
Form 8-K
filed on April 4, 2005).
|
|
10
|
.40
|
|
Form of Notice of Restricted Stock Award under the Las Vegas
Sands Corp. 2004 Equity Award Plan (incorporated by reference
from Exhibit 10.40 to the Companys Annual Report on
Form 10-K
for the year ended December 31, 2005 and filed on
March 2, 2006).
|
|
10
|
.41
|
|
Las Vegas Sands Corp. 2004 Equity Award Plan (incorporated by
reference from Exhibit 10.41 to the Companys
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2005 and filed on
May 16, 2005).
|
|
10
|
.42
|
|
Las Vegas Sands Corp. Executive Cash Incentive Plan
(incorporated by reference from Exhibit 10.42 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2005 and filed on
May 16, 2005).
|
|
10
|
.43
|
|
Agreement, dated as of July 8, 2004, by and between Sheldon
G. Adelson and Las Vegas Sands, Inc. (incorporated by reference
from Exhibit 10.47 to the Companys Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.44
|
|
Venetian Hotel Service Agreement, dated as of June 28,
2001, by and between Venetian Casino Resort, LLC and Interface
Group-Nevada, Inc. d/b/a Sands Expo and Convention Center
(incorporated by reference from Exhibit 10.49 to the
Companys Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.45
|
|
First Amendment to Venetian Hotel Service Agreement, dated as of
June 28, 2004, by and between Venetian Casino Resort, LLC
and Interface Group-Nevada, Inc. d/b/a Sands Expo and Convention
Center (incorporated by reference from Exhibit 10.50 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.46
|
|
Tax Indemnification Agreement, dated as of December 17,
2004, by and among Las Vegas Sands Corp., Las Vegas Sands, Inc.
and the stockholders named therein (incorporated by reference
from Exhibit 10.56 to the Companys Current Report on
Form 8-K
filed on April 4, 2005).
|
|
10
|
.47
|
|
Las Vegas Sands Corp. Deferred Compensation Plan (incorporated
by reference from Exhibit 10.63 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.48
|
|
Form of Restricted Stock Award Agreements under the 2004 Equity
Award Plan (incorporated by reference from Exhibit 10.70 to
the Companys Amendment No. 4 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.49
|
|
Form of Stock Option Agreements under the 2004 Equity Award Plan
(incorporated by reference from Exhibit 10.71 to the
Companys Amendment No. 4 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.50
|
|
Amended Aircraft Interchange Agreement, dated as of May 23,
2007, by and between Interface Operations LLC and Las Vegas
Sands Corp. (incorporated by reference from Exhibit 10.1 to
the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.51
|
|
Aircraft Time Share Agreement, dated as of May 23, 2007, by
and between Interface Operations LLC and Las Vegas Sands Corp.
(incorporated by reference from Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.52
|
|
Aircraft Time Sharing Agreement, dated as of January 1,
2005, by and between Interface Operations LLC and Las Vegas
Sands, Inc. (incorporated by reference from Exhibit 10.3 to
the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2005 and filed
November 15, 2005).
|
124
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.53
|
|
Aircraft Time Sharing Agreement, dated as of June 18, 2004,
by and between Interface Operations LLC and Las Vegas Sands,
Inc. (incorporated by reference from Exhibit 10.48 to the
Companys Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.54
|
|
Form of Notice of Grant of Stock Option under the Las Vegas
Sands Corp. 2004 Equity Award Plan (incorporated by reference
from Exhibit 10.65 to the Companys Quarterly Report
on
Form 10-K
for the year ended December 31, 2005 and filed on
March 2, 2006).
|
|
10
|
.55
|
|
Credit Agreement, dated as of May 25, 2006, by and among
VML US Finance LLC, Venetian Macau Limited, the financial
institutions listed therein as lenders, The Bank of Nova Scotia,
Banco Nacional Ultramarino, S.A., Sumitomo Mitsui Banking
Corporation, Goldman Sachs Credit Partners L.P., Lehman Brothers
Inc. and Citigroup Global Markets, Inc. (incorporated by
reference from Exhibit 10.1 to the Companys Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2006 and filed on
August 9, 2006).
|
|
10
|
.56
|
|
Disbursement Agreement, dated as of May 25, 2006, by and
among VML US Finance LLC, Venetian Cotai Limited, Venetian Macau
Limited and The Bank of Nova Scotia (incorporated by reference
from Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006 and filed on
August 9, 2006).
|
|
10
|
.57
|
|
First Amendment to Credit Agreement and Disbursement Agreement,
dated as of March 5, 2007, among Venetian Macau Limited,
VML US Finance LC, Venetian Cotai Limited and The Bank of Nova
Scotia, as administrative agent and disbursement agent
(incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007 and filed on
May 10, 2007).
|
|
10
|
.58
|
|
First Amendment to Disbursement Agreement, dated as of
March 5, 2007, among VML US Finance LLC, Venetian Cotai
Limited, Venetian Macau Limited and The Bank of Nova Scotia, as
disbursement agent and bank agent. (incorporated by reference
from Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007 and filed on
May 10, 2007).
|
|
10
|
.59*
|
|
Facility Agreement, dated as of December 28, 2007, among
Marina Bay Sands Pte. Ltd., as borrower, Goldman Sachs Foreign
Exchange (Singapore) Pte., DBS Bank Ltd., UOB Asia Limited,
Oversea-Chinese Banking Corporation Limited, as coordinators,
and DBS Bank Ltd., as technical bank, agent and security trustee.
|
|
10
|
.60*
|
|
Sponsor Support Agreement, dated as of December 28, 2007,
among Las Vegas Sands Corp., as sponsor, Sands Mauritius
Holdings and MBS Holdings Pte. Ltd., as holding company, Marina
Bay Sands Pte. Ltd., as borrower and DBS Bank Ltd., as security
trustee.
|
|
10
|
.61
|
|
Development Agreement, dated August 23, 2006, between the
Singapore Tourism Board and Marina Bay Sands Pte. Ltd.
(incorporated by reference from Exhibit 10.3 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
10
|
.62
|
|
Third Amended and Restated Reciprocal Easement, Use and
Operating Agreement, dated as of July 26, 2006, by and
among Venetian Casino Resort, LLC, Lido Casino Resort, LLC,
Phase II Mall Subsidiary, LLC, Grand Canal Shops II, LLC,
and Interface Group-Nevada, Inc. (incorporated by reference from
Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
10
|
.63
|
|
Form of Restricted Stock Award Agreement (incorporated by
reference from Exhibit 10.1 to the Companys Current
Report on
Form 8-K
filed on February 9, 2007).
|
|
10
|
.64
|
|
First Amendment, dated as of February 5, 2007, to the Las
Vegas Sands Corp. 2004 Equity Award Plan (incorporated by
reference from Exhibit 10.76 to the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2006 and filed on
February 28, 2007).
|
|
10
|
.65
|
|
Facility Agreement, dated as of August 18, 2006, among
Marina Bay Sands Pte. Ltd., as borrower, Goldman Sachs
(Singapore) Pte., DBS Bank Ltd., UOB Asia Limited and
Oversea Chinese Banking Corporation Limited, as
mandated lead arrangers, Goldman Sachs (Singapore) Pte. and DBS
Bank Ltd., as coordinators, DBS Bank Ltd., as agent and security
trustee, and the financial institutions listed therein as
original lenders (incorporated by reference from
Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
125
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.66
|
|
Purchase Agreement, dated as of August 18, 2006, among
Marina Bay Sands Pte. Ltd., as issuer, the purchasers named
therein, Las Vegas Sands Corp., as guarantor, and Goldman Sachs
(Singapore) Pte. and DBS Bank Ltd., as lead managers
(incorporated by reference from Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
21
|
.1*
|
|
Subsidiaries of Las Vegas Sands Corp.
|
|
23
|
.1*
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
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.
|
|
|
*
|
Filed herewith.
|
|
|
Confidential treatment has been requested and granted with
respect to portions of this exhibit, and such confidential
portions have been deleted and replaced with ** and
filed separately with the Securities and Exchange Commission
pursuant to Rule 406 under the Securities Act of 1933.
|
126
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this Annual Report on
Form 10-K
to be signed on its behalf by the undersigned thereunto duly
authorized.
LAS VEGAS SANDS CORP.
February 28, 2008
Sheldon G. Adelson,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Annual Report on
Form 10-K
has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Sheldon
G. Adelson
Sheldon
G. Adelson
|
|
Chairman of the Board, Chief
Executive Officer and Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ Irwin
Chafetz
Irwin
Chafetz
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ Charles
D. Forman
Charles
D. Forman
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ Andrew
R. Heyer
Andrew
R. Heyer
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ Michael
A. Leven
Michael
A. Leven
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ James
L. Purcell
James
L. Purcell
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ Irwin
A. Siegel
Irwin
A. Siegel
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ William
P. Weidner
William
P. Weidner
|
|
President, Chief Operating Officer
and Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ Robert
P. Rozek
Robert
P. Rozek
|
|
Senior Vice President
and Chief Financial Officer
|
|
February 28, 2008
|
127
Index to
Exhibits
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
3
|
.1
|
|
Certificate of Amended and Restated Articles of Incorporation of
Las Vegas Sands Corp. (incorporated by reference from
Exhibit 3.1 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
3
|
.2
|
|
Amended and Restated By-laws of Las Vegas Sands Corp.
(incorporated by reference from Exhibit 3.2 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2007 and filed on
November 9, 2007).
|
|
4
|
.1
|
|
Form of Specimen Common Stock Certificate of Las Vegas Sands
Corp. (incorporated by reference from Exhibit 4.1 to the
Companys Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
4
|
.2
|
|
Indenture, dated as of February 10, 2005, by and between
Las Vegas Sands Corp., as issuer, and U.S. Bank National
Association, as trustee (the 6.375% Notes Indenture)
(incorporated by reference from Exhibit 4.2 to the
Companys Current Report on
Form 8-K
filed on February 15, 2005).
|
|
4
|
.3
|
|
Supplemental Indenture to the 6.375% Notes Indenture, dated
as of February 22, 2005, by and among Las Vegas Sands, Inc.
(n/k/a Las Vegas Sands, LLC), Venetian Casino Resort, LLC, Mall
Intermediate Holding Company, LLC, Lido Intermediate Holding
Company, LLC, Lido Casino Resort, LLC, (which was merged into
Venetian Casino Resort, LLC in March 2007), Venetian Venture
Development, LLC, Venetian Operating Company, LLC (which was
merged into Venetian Casino Resort, LLC in March 2006), Venetian
Marketing, Inc. and Venetian Transport, LLC, as guarantors, Las
Vegas Sands Corp., as issuer and U.S. Bank National Association,
as trustee) (incorporated by reference from Exhibit 4.1 to
the Companys Current Report on
Form 8-K
filed on February 23, 2005).
|
|
4
|
.4
|
|
Second Supplemental Indenture to the 6.375% Notes
Indenture, dated as of May 23, 2007, by and among Interface
Group Nevada, Inc., Lido Casino Resort Holding Company, LLC,
Phase II Mall Holding, LLC, Phase II Mall Subsidiary,
LLC, Sands Pennsylvania, Inc. and Palazzo Condo Tower, as
guaranteeing subsidiaries, the guarantors party to the first
supplemental indenture, Las Vegas Sands Corp., as issuer, and
U.S. Bank National Association, as trustee (incorporated by
reference from Exhibit 4.1 to the Companys Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.1
|
|
Credit and Guarantee Agreement, dated as of May 23, 2007,
by and among Las Vegas Sands, LLC, the affiliates of Las Vegas
Sands, LLC named therein as guarantors, the lenders party hereto
from time to time, The Bank of Nova Scotia, as administrative
agent for the Lenders and as collateral agent, Goldman Sachs
Credit Partners L.P., Lehman Brothers Inc. and Citigroup Global
Markets Inc., as joint lead arrangers and joint bookrunners and
as syndication agents, and JPMorgan Chase Bank, as documentation
agent (incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.2
|
|
Security Agreement, dated as of May 23, 2007, between each
of the parties named as a grantor therein and The Bank of Nova
Scotia, as collateral agent for the secured parties, as defined
therein (incorporated by reference from Exhibit 10.5 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.3
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by
Phase II Mall Subsidiary, LLC, as trustor, as of
May 23, 2007 in favor of First American
Title Insurance Company, as trustee, for the benefit of The
Bank of Nova Scotia, in its capacity as collateral agent, as
beneficiary (incorporated by reference from Exhibit 10.6 to
the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.4
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Las Vegas
Sands, LLC, as trustor, as of May 23, 2007 in favor of
First American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.7 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
128
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.5
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Venetian
Casino Resort, LLC, as trustor, as of May 23, 2007 in favor
of First American Title Insurance Company, as trustee, for
the benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.8 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.6
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Venetian
Casino Resort, LLC and Las Vegas Sands, LLC, jointly and
severally as trustors, as of May 23, 2007 in favor of First
American Title Insurance Company, as trustee, for the
benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.9 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.7
|
|
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing made by Interface
Group-Nevada, Inc., as trustor, as of May 23, 2007 in favor
of First American Title Insurance Company, as trustee, for
the benefit of The Bank of Nova Scotia, in its capacity as
collateral agent, as beneficiary (incorporated by reference from
Exhibit 10.10 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.8
|
|
Amended and Restated FF&E Credit and Guarantee Agreement,
dated as of August 21, 2007, by and among Las Vegas Sands,
LLC, as the borrower, certain affiliates of the borrower as
guarantors, the lenders party thereto from time to time, General
Electric Capital Corporation, as administrative agent for the
lenders and as collateral agent and GE Capital Markets, Inc., as
lead arranger and book runner (incorporated by reference from
Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2007 and filed on
November 9, 2007).
|
|
10
|
.9
|
|
Amended and Restated Security Agreement, dated as of
August 21, 2007, between each of the grantors party thereto
and General Electric Capital Corporation, as collateral agent
for the secured parties (incorporated by reference from
Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2007 and filed on
November 9, 2007).
|
|
10
|
.10
|
|
Indemnity Agreement, dated as of August 25, 2000, by and
among Las Vegas Sands, Inc., Venetian Casino Resort, LLC, Grand
Canal Shops Mall Subsidiary, LLC, Grand Canal Shops Mall
Construction, LLC, Grand Canal Shops Mall, LLC, Interface Group
Holding Company, and American Insurance Companies (of which
American Home Assurance Company is a member company)
(incorporated by reference from Exhibit 10.8 to Las Vegas
Sands, Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002 and filed on
August 14, 2002).
|
|
10
|
.11
|
|
Energy Services Agreement, dated as of November 14, 1997,
by and between Atlantic Pacific Las Vegas, LLC and Venetian
Casino Resort, LLC (incorporated by reference from
Exhibit 10.3 to Amendment No. 2 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)
dated March 27, 1998).
|
|
10
|
.12
|
|
Energy Services Agreement Amendment No. 1, dated as of
July 1, 1999, by and between Atlantic Pacific Las Vegas,
LLC and Venetian Casino Resort, LLC (incorporated by reference
from Exhibit 10.8 to Las Vegas Sands, Inc.s Annual
Report on
Form 10-K
for the year ended December 31, 1999 and filed on
March 30, 2000).
|
|
10
|
.13
|
|
Energy Services Agreement Amendment No. 2, dated as of
July 1, 2006, by and between Atlantic Pacific Las Vegas,
LLC and Venetian Casino Resort, LLC (incorporated by reference
from Exhibit 10.77 to the Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 and filed on
February 28, 2007).
|
|
10
|
.14
|
|
Energy Services Agreement, dated as of November 14, 1997,
by and between Atlantic-Pacific Las Vegas, LLC and Interface
Group-Nevada, Inc. (incorporated by reference from
Exhibit 10.8 to Amendment No. 1 of the Companys
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.15
|
|
Energy Services Agreement Amendment No. 1, dated as of
July 1, 1999, by and between Atlantic-Pacific Las Vegas,
LLC and Interface Group-Nevada, Inc. (incorporated by reference
from Exhibit 10.9 to the Companys Amendment
No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
129
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.16
|
|
Amended and Restated Services Agreement, dated as of
November 14, 1997, by and among Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC, Interface Group Holding Company,
Inc., Interface Group-Nevada, Inc., Lido Casino Resort MM, Inc.,
Grand Canal Shops Mall MM Subsidiary, Inc. and certain
subsidiaries of Venetian Casino Resort, LLC named therein
(incorporated by reference from Exhibit 10.15 to Amendment
No. 1 to Las Vegas Sands, Inc.s Registration
Statement on
Form S-4
(File
No. 333-42147)
dated February 12, 1998).
|
|
10
|
.17
|
|
Assignment and Assumption Agreement, dated as of
November 8, 2004, by and among Las Vegas Sands, Inc.,
Venetian Casino Resort, LLC, Interface Group Holding Company,
Inc., Interface Group-Nevada, Inc., Interface Operations LLC,
Lido Casino Resort MM, Inc., Grand Canal Shops Mall MM
Subsidiary, Inc. and certain subsidiaries of Venetian Casino
Resort, LLC named therein (incorporated by reference from
Exhibit 10.52 to the Companys Amendment No. 2 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.18
|
|
Construction Agency Agreement, dated as of November 14,
1997, by and between Venetian Casino Resort, LLC and Atlantic
Pacific Las Vegas, LLC (incorporated by reference from
Exhibit 10.21 to Amendment No. 2 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)
dated March 27, 1998).
|
|
10
|
.19
|
|
Sands Resort Hotel and Casino Agreement, dated as of
February 18, 1997, by and between Clark County and Las
Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.27 to Amendment No. 1 to Las Vegas Sands,
Inc.s Registration Statement on
Form S-4
(File
No. 333-42147)
dated February 12, 1998).
|
|
10
|
.20
|
|
Addendum to Sands Resort Hotel & Casino Agreement,
dated as of September 16, 1997, by and between Clark County
and Las Vegas Sands, Inc. (incorporated by reference from
Exhibit 10.20 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.21
|
|
Improvement Phasing Agreement by and between Clark County and
Lido Casino Resort, LLC (incorporated by reference from
Exhibit 10.21 to the Companys Amendment No. 1 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 22, 2004).
|
|
10
|
.22
|
|
Amended and Restated Las Vegas Sands, Inc. 1997 Fixed Stock
Option Plan (the 1997 Stock Option Plan)
(incorporated by reference from Exhibit 10.10 to Las Vegas
Sands, Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2002 and filed on
August 14, 2002).
|
|
10
|
.23
|
|
First Amendment to the 1997 Stock Option Plan, dated
June 4, 2002 (incorporated by reference from
Exhibit 10.11 to Las Vegas Sands, Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2002 and filed on
August 14, 2002).
|
|
10
|
.24
|
|
Assumption Agreement, dated as of January 2, 2002, by
Sheldon G. Adelson with respect to the 1997 Stock Option Plan
(incorporated by reference from Exhibit 10.5 to Las Vegas
Sands, Inc.s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2002 and filed on
May 8, 2002).
|
|
10
|
.25
|
|
Assumption Agreement, dated as of July 15, 2004, by Las
Vegas Sands, Inc. with respect to the 1997 Stock Option Plan
(incorporated by reference from Exhibit 10.25 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.26
|
|
Assignment and Assumption Agreement, dated as of
December 20, 2004, by and among Las Vegas Sands, Inc., Las
Vegas Sands Corp. and Sheldon G. Adelson (incorporated by
reference from Exhibit 10.27 to the Companys Current
Report on
Form 8-K
filed on April 4, 2005).
|
|
10
|
.27
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and William
P. Weidner (incorporated by reference from Exhibit 10.27 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.28
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and Bradley
H. Stone (incorporated by reference from Exhibit 10.30 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.29
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and Robert G.
Goldstein (incorporated by reference from Exhibit 10.33 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
130
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.30
|
|
Employment Agreement, dated as of November 18, 2004, by and
among Las Vegas Sands Corp., Las Vegas Sands, Inc. and Sheldon
G. Adelson (incorporated by reference from Exhibit 10.36 to
the Companys Amendment No. 2 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.31
|
|
Employment Agreement, dated as of June 1, 2006, among Las
Vegas Sands Corp., Las Vegas Sands, LLC and Robert Rozek
(incorporated by reference from Exhibit 10.3 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006 and filed on
August 9, 2006).
|
|
10
|
.32
|
|
Concession Contract for Operating Casino Games of Chance or
Games of Other Forms in the Macao Special Administrative Region,
June 26, 2002, by and among the Macao Special
Administrative Region and Galaxy Casino Company Limited
(incorporated by reference from Exhibit 10.40 to Las Vegas
Sands, Inc.s
Form 10-K
for the year ended December 31, 2002 and filed on
March 31, 2003).
|
|
10
|
.33
|
|
Land Concession Agreement, dated as of December 10, 2003,
issued by the Macao Special Administrative Region to Venetian
Macau Limited (incorporated by reference from Exhibit 10.39
to the Companys Amendment No. 1 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.34
|
|
Land Concession Agreement, dated as of February 23, 2007,
issued by the Macau Special Administrative Region to Venetian
Cotai Limited and Venetian Macau Limited (incorporated by
reference from Exhibit 10.3 to the Companys Quarterly
Report on
Form 10-Q
for the quarter ended March 31, 2007 and filed on
May 10, 2007).
|
|
10
|
.35
|
|
Subconcession Contract for Operating Casino Games of Chance or
Games of Other Forms in the Macao Special Administrative Region,
dated December 19, 2002, between Galaxy Casino Company
Limited, as concessionaire, and Venetian Macau S.A., as
subconcessionaire (incorporated by reference from
Exhibit 10.65 to the Companys Amendment No. 5 to
Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 10, 2004).
|
|
10
|
.36
|
|
Purchase and Sale Agreement, dated April 12, 2004, by and
among Grand Canal Shops Mall Subsidiary, LLC, Grand Canal Shops
Mall MM Subsidiary, Inc. and GGP Limited Partnership
(incorporated by reference from Exhibit 10.1 to Las Vegas
Sands, Inc.s
Form 8-K
Current Report on filed on April 16, 2004).
|
|
10
|
.37
|
|
Agreement, made as of April 12, 2004, by and between Lido
Casino Resort, LLC and GGP Limited Partnership (incorporated by
reference from Exhibit 10.2 to Las Vegas Sands, Inc.s
Current Report on
Form 8-K
filed on April 16, 2004).
|
|
10
|
.38
|
|
Assignment and Assumption of Agreement and First Amendment to
Agreement, dated September 30, 2004, made by Lido Casino
Resort, LLC, as assignor, to Phase II Mall Holding, LLC, as
assignee, and to GGP Limited Partnership, as buyer (incorporated
by reference from Exhibit 10.60 to the Companys
Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.39
|
|
Registration Rights Agreement, dated as of December 20,
2004, by and among Las Vegas Sands Corp. and the stockholders
named therein (incorporated by reference from Exhibit 10.39
to the Companys Current Report on
Form 8-K
filed on April 4, 2005).
|
|
10
|
.40
|
|
Form of Notice of Restricted Stock Award under the Las Vegas
Sands Corp. 2004 Equity Award Plan (incorporated by reference
from Exhibit 10.40 to the Companys Annual Report on
Form 10-K
for the year ended December 31, 2005 and filed on
March 2, 2006).
|
|
10
|
.41
|
|
Las Vegas Sands Corp. 2004 Equity Award Plan (incorporated by
reference from Exhibit 10.41 to the Companys
Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2005 and filed on
May 16, 2005).
|
|
10
|
.42
|
|
Las Vegas Sands Corp. Executive Cash Incentive Plan
(incorporated by reference from Exhibit 10.42 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2005 and filed on
May 16, 2005).
|
|
10
|
.43
|
|
Agreement, dated as of July 8, 2004, by and between Sheldon
G. Adelson and Las Vegas Sands, Inc. (incorporated by reference
from Exhibit 10.47 to the Companys Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
131
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.44
|
|
Venetian Hotel Service Agreement, dated as of June 28,
2001, by and between Venetian Casino Resort, LLC and Interface
Group-Nevada, Inc. d/b/a Sands Expo and Convention Center
(incorporated by reference from Exhibit 10.49 to the
Companys Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.45
|
|
First Amendment to Venetian Hotel Service Agreement, dated as of
June 28, 2004, by and between Venetian Casino Resort, LLC
and Interface Group-Nevada, Inc. d/b/a Sands Expo and Convention
Center (incorporated by reference from Exhibit 10.50 to the
Companys Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated September 3, 2004).
|
|
10
|
.46
|
|
Tax Indemnification Agreement, dated as of December 17,
2004, by and among Las Vegas Sands Corp., Las Vegas Sands, Inc.
and the stockholders named therein (incorporated by reference
from Exhibit 10.56 to the Companys Current Report on
Form 8-K
filed on April 4, 2005).
|
|
10
|
.47
|
|
Las Vegas Sands Corp. Deferred Compensation Plan (incorporated
by reference from Exhibit 10.63 to the Companys
Amendment No. 2 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated November 22, 2004).
|
|
10
|
.48
|
|
Form of Restricted Stock Award Agreements under the 2004 Equity
Award Plan (incorporated by reference from Exhibit 10.70 to
the Companys Amendment No. 4 to Registration
Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.49
|
|
Form of Stock Option Agreements under the 2004 Equity Award Plan
(incorporated by reference from Exhibit 10.71 to the
Companys Amendment No. 4 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated December 8, 2004).
|
|
10
|
.50
|
|
Amended Aircraft Interchange Agreement, dated as of May 23,
2007, by and between Interface Operations LLC and Las Vegas
Sands Corp. (incorporated by reference from Exhibit 10.1 to
the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.51
|
|
Aircraft Time Share Agreement, dated as of May 23, 2007, by
and between Interface Operations LLC and Las Vegas Sands Corp.
(incorporated by reference from Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2007 and filed on
August 9, 2007).
|
|
10
|
.52
|
|
Aircraft Time Sharing Agreement, dated as of January 1,
2005, by and between Interface Operations LLC and Las Vegas
Sands, Inc. (incorporated by reference from Exhibit 10.3 to
the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2005 and filed
November 15, 2005).
|
|
10
|
.53
|
|
Aircraft Time Sharing Agreement, dated as of June 18, 2004,
by and between Interface Operations LLC and Las Vegas Sands,
Inc. (incorporated by reference from Exhibit 10.48 to the
Companys Amendment No. 1 to Registration Statement on
Form S-1
(Reg.
No. 333-118827)
dated October 25, 2004).
|
|
10
|
.54
|
|
Form of Notice of Grant of Stock Option under the Las Vegas
Sands Corp. 2004 Equity Award Plan (incorporated by reference
from Exhibit 10.65 to the Companys Quarterly Report
on
Form 10-K
for the year ended December 31, 2005 and filed on
March 2, 2006).
|
|
10
|
.55
|
|
Credit Agreement, dated as of May 25, 2006, by and among
VML US Finance LLC, Venetian Macau Limited, the financial
institutions listed therein as lenders, The Bank of Nova Scotia,
Banco Nacional Ultramarino, S.A., Sumitomo Mitsui Banking
Corporation, Goldman Sachs Credit Partners L.P., Lehman Brothers
Inc. and Citigroup Global Markets, Inc. (incorporated by
reference from Exhibit 10.1 to the Companys Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2006 and filed on
August 9, 2006).
|
|
10
|
.56
|
|
Disbursement Agreement, dated as of May 25, 2006, by and
among VML US Finance LLC, Venetian Cotai Limited, Venetian Macau
Limited and The Bank of Nova Scotia (incorporated by reference
from Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006 and filed on
August 9, 2006).
|
|
10
|
.57
|
|
First Amendment to Credit Agreement and Disbursement Agreement,
dated as of March 5, 2007, among Venetian Macau Limited,
VML US Finance LC, Venetian Cotai Limited and The Bank of Nova
Scotia, as administrative agent and disbursement agent
(incorporated by reference from Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007 and filed on
May 10, 2007).
|
132
|
|
|
|
|
Exhibit No.
|
|
Description of Document
|
|
|
10
|
.58
|
|
First Amendment to Disbursement Agreement, dated as of
March 5, 2007, among VML US Finance LLC, Venetian Cotai
Limited, Venetian Macau Limited and The Bank of Nova Scotia, as
disbursement agent and bank agent. (incorporated by reference
from Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2007 and filed on
May 10, 2007).
|
|
10
|
.59*
|
|
Facility Agreement, dated as of December 28, 2007, among
Marina Bay Sands Pte. Ltd., as borrower, Goldman Sachs Foreign
Exchange (Singapore) Pte., DBS Bank Ltd., UOB Asia Limited,
Oversea-Chinese Banking Corporation Limited, as coordinators,
and DBS Bank Ltd., as technical bank, agent and security trustee.
|
|
10
|
.60*
|
|
Sponsor Support Agreement, dated as of December 28, 2007,
among Las Vegas Sands Corp., as sponsor, Sands Mauritius
Holdings and MBS Holdings Pte. Ltd., as holding company, Marina
Bay Sands Pte. Ltd., as borrower and DBS Bank Ltd., as security
trustee.
|
|
10
|
.61
|
|
Development Agreement, dated August 23, 2006, between the
Singapore Tourism Board and Marina Bay Sands Pte. Ltd.
(incorporated by reference from Exhibit 10.3 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
10
|
.62
|
|
Third Amended and Restated Reciprocal Easement, Use and
Operating Agreement, dated as of July 26, 2006, by and
among Venetian Casino Resort, LLC, Lido Casino Resort, LLC,
Phase II Mall Subsidiary, LLC, Grand Canal Shops II, LLC,
and Interface Group-Nevada, Inc. (incorporated by reference from
Exhibit 10.4 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
10
|
.63
|
|
Form of Restricted Stock Award Agreement (incorporated by
reference from Exhibit 10.1 to the Companys Current
Report on
Form 8-K
filed on February 9, 2007).
|
|
10
|
.64
|
|
First Amendment, dated as of February 5, 2007, to the Las
Vegas Sands Corp. 2004 Equity Award Plan (incorporated by
reference from Exhibit 10.76 to the Companys Annual
Report on
Form 10-K
for the year ended December 31, 2006 and filed on
February 28, 2007).
|
|
10
|
.65
|
|
Facility Agreement, dated as of August 18, 2006, among
Marina Bay Sands Pte. Ltd., as borrower, Goldman Sachs
(Singapore) Pte., DBS Bank Ltd., UOB Asia Limited and
Oversea Chinese Banking Corporation Limited, as
mandated lead arrangers, Goldman Sachs (Singapore) Pte. and DBS
Bank Ltd., as coordinators, DBS Bank Ltd., as agent and security
trustee, and the financial institutions listed therein as
original lenders (incorporated by reference from
Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
10
|
.66
|
|
Purchase Agreement, dated as of August 18, 2006, among
Marina Bay Sands Pte. Ltd., as issuer, the purchasers named
therein, Las Vegas Sands Corp., as guarantor, and Goldman Sachs
(Singapore) Pte. and DBS Bank Ltd., as lead managers
(incorporated by reference from Exhibit 10.2 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2006 and filed on
November 9, 2006).
|
|
21
|
.1*
|
|
Subsidiaries of Las Vegas Sands Corp.
|
|
23
|
.1*
|
|
Consent of PricewaterhouseCoopers LLP.
|
|
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.
|
|
|
*
|
Filed herewith.
|
|
|
Confidential treatment has been requested and granted with
respect to portions of this exhibit, and such confidential
portions have been deleted and replaced with ** and
filed separately with the Securities and Exchange Commission
pursuant to Rule 406 under the Securities Act of 1933.
|
133