NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 — Organization and Business of Company
The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Las Vegas Sands Corp. ("LVSC"), a Nevada corporation, and its subsidiaries (collectively the "Company") for the year ended
December 31, 2017
, and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted pursuant to such rules and regulations; however, the Company believes the disclosures herein are adequate to make the information presented not misleading. In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair statement of the results for the interim period have been included. The interim results reflected in the unaudited condensed consolidated financial statements are not necessarily indicative of expected results for the full year. The Company's common stock is traded on the New York Stock Exchange under the symbol "LVS."
The ordinary shares of the Company's subsidiary, Sands China Ltd. ("SCL," the indirect owner and operator of the majority of the Company's operations in the Macao Special Administrative Region ("Macao") of the People's Republic of China), are listed on The Main Board of The Stock Exchange of Hong Kong Limited ("SEHK"). The shares were not, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent a registration under the Securities Act of 1933, as amended, or an applicable exception from such registration requirements. The Company currently owns
70.0%
of SCL.
The Company has entered into various joint venture agreements with independent third parties, which have been consolidated based on accounting standards for variable interest entities. As of
September 30, 2018
and
December 31, 2017
, the Company's consolidated joint ventures had total assets of
$76 million
and
$77 million
, respectively, and total liabilities of
$220 million
and
$198 million
, respectively. The Company's joint ventures had intercompany liabilities of
$218 million
and
$196 million
as of
September 30, 2018
and
December 31, 2017
, respectively.
On March 8, 2018, the Company entered into a purchase and sale agreement under which PCI Gaming Authority, an unincorporated, chartered instrumentality of the Poarch Band of Creek Indians, will acquire the Sands Bethlehem property in Pennsylvania for a total enterprise value of
$1.30 billion
. The closing of the transaction is subject to regulatory review and other closing conditions.
Development Projects
The Company is constantly evaluating opportunities to improve its product offerings, such as refreshing its meeting and convention facilities, suites and rooms, retail malls, restaurant and nightlife mix and its gaming areas, as well as other anticipated revenue generating additions to the Company's Integrated Resorts.
Macao
The Company previously announced the renovation, expansion and rebranding of the Sands Cotai Central into a new destination integrated resort, The Londoner Macao, by adding extensive thematic elements both externally and internally. The Londoner Macao will feature new attractions and features from London, including some of London’s most recognizable landmarks and expanded retail and food and beverage venues. The Company will add approximately
370
luxury suites in the St. Regis Tower Suites Macao. Design work is nearing completion and construction is being initiated and will be phased to minimize disruption during the property’s peak periods. The Company expects the additional St. Regis Tower Suites Macao to be completed in
the first quarter of 2020
and The Londoner Macao project to be completed in phases throughout
2020
and
2021
.
The Company also previously announced the Four Seasons Tower Suites Macao, which will feature approximately
290
additional premium quality suites. The Company has completed the structural work of the tower and has commenced preliminary build out of the suites. The Company expects the project to be completed in
the first quarter of 2020
.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
The Company anticipates the total costs associated with these development projects to be approximately
$2.2 billion
. The ultimate costs and completion dates for these projects are subject to change as the Company finalizes its planning and design work and completes the projects.
Capital Financing Overview
The Company funds its development projects primarily through borrowings under its credit facilities and operating cash flows.
As of
September 30, 2018
and
December 31, 2017
, the Company held cash, cash equivalents and restricted cash of
$4.79 billion
and
$2.43 billion
, respectively. Restricted cash represents those amounts contractually reserved for substantial mall-related repairs and maintenance expenditures. Cash equivalents are short-term investments with original maturities of less than 90 days and are carried at cost, which is a reasonable estimate of their fair value. The estimated fair value of the Company's cash equivalents is based on level 1 inputs (quoted market prices in active markets). The Company believes the cash on hand and cash flow generated from operations will be sufficient to maintain compliance with the financial covenants of its credit facilities. In the normal course of its activities, the Company will continue to evaluate global capital markets to consider future opportunities for enhancements of its capital structure.
In March 2018, the Company amended its Singapore credit facility, which refinanced the facility in an aggregate amount of
4.80 billion
Singapore dollars ("SGD," approximately
$3.51 billion
at exchange rates in effect on
September 30, 2018
), extended the maturities of the term loans and revolving loans to
March 29, 2024
and
September 29, 2023
, respectively, and amended the amortization schedule and the leverage covenant to provide that the leverage ratio not exceed
4.0
x for all quarterly periods through maturity (see "— Note 4 — Long-Term Debt — 2012 Singapore Credit Facility"). In March 2018, the Company also amended its U.S. credit facility, which refinanced the term loans in an aggregate amount of
$2.16 billion
, extended the maturity of the term loans to
March 27, 2025
, and reduced the applicable margin credit spread for borrowings under the term loans. In June 2018, the Company further amended its U.S. credit facility to, among other things, increase the amount of the term loans by
$1.35 billion
, to an aggregate amount of
$3.51 billion
(see "— Note 4 — Long-Term Debt — 2013 U.S. Credit Facility").
In August 2018, SCL issued, in a private offering, three series of unsecured notes in an aggregate principal amount of
$5.50 billion
(see "— Note 4 — Long-Term Debt — SCL Senior Notes"). In connection with these notes, the Company entered into interest rate swap agreements in August 2018, which were designated as fair value hedges (see "— Note 5 — Derivative Instruments").
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standard update (as subsequently amended) on revenue recognition applicable to all contracts with customers. The update requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The Company adopted the new standard on January 1, 2018, on a full retrospective basis (see disclosures at "— Note 2 — Revenue").
In February 2016, the FASB issued an accounting standard update on leases, which requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. In July 2018, the FASB issued an additional update that allows for an optional transition approach allowing companies to forgo comparative reporting and instead adopt the guidance on a prospective basis
.
The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. The Company will adopt this guidance beginning January 1, 2019. Although the Company is in the process of evaluating the impact the guidance will have on its financial condition and results of operations, the Company currently believes the most significant change will be related to the recognition of right-of-use assets and lease liabilities on the Company's balance sheet for real estate operating leases. The adoption of this guidance will not have a material effect on net income.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
In June 2016, the FASB issued an accounting standard update that revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance is effective for fiscal years beginning after December 15, 2019, including interim reporting periods within that reporting period, and should be applied on a modified retrospective basis, with early adoption permitted. The Company is currently assessing the effect the guidance will have on the Company's financial condition and results of operations, but does not expect it will have a material impact.
In August 2016, the FASB issued an accounting standard update to reduce the diversity on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. In November 2016, the FASB issued an accounting standard update to reduce the diversity on how changes in restricted cash are presented and classified on the statement of cash flows. The Company adopted this guidance on a retrospective basis as of January 1, 2018. The adoption did not have a material effect on the presentation of the Company's statement of cash flows.
In August 2017, the FASB issued an accounting standard update on derivatives and hedging instruments, which is intended to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to the designation and measurement guidance for qualifying hedging relationships, effectiveness assessments and the presentation of hedge results. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. The Company adopted this guidance as of July 1, 2018, with respect to the interest rate swap contracts entered into in August 2018 (see "— Note 5 — Derivative Instruments"). The adoption of this pronouncement had no impact on prior reported amounts, as the Company did not have any material derivative financial instruments at the time of adoption nor in any prior periods presented.
Reclassification
Certain amounts in the accompanying condensed consolidated balance sheet as of
December 31, 2017
, the related condensed consolidated statements of operations and comprehensive income for the three and nine months ended
September 30, 2017
, and the statements of equity and cash flows for the nine months ended
September 30, 2017
, have been reclassified to be consistent with the current period presentation.
Note 2 — Revenue
Revenue from contracts with customers primarily consists of casino wagers, room sales, food and beverage transactions, rental income from the Company’s mall tenants, convention sales and entertainment and ferry ticket sales. These contracts can be written, oral or implied by customary business practices.
Gross casino revenue is the aggregate of gaming wins and losses. The commissions rebated to junket operators and premium players for rolling play, cash discounts and other cash incentives to patrons related to gaming play are recorded as a reduction to gross casino revenue. Gaming contracts include a performance obligation to honor the patron’s wager and typically include a performance obligation to provide a product or service to the patron on a complimentary basis to incentivize gaming or in exchange for points earned under the Company’s loyalty programs.
For wagering contracts that include complimentary products and services provided by the Company to incentivize gaming, the Company allocates the relative stand-alone selling price of each product and service to the respective revenue type. Complimentary products or services provided under the Company's control and discretion, which are supplied by third parties, are recorded as an operating expense.
For wagering contracts that include products and services provided to a patron in exchange for points earned under the Company’s loyalty programs, the Company allocates the estimated stand-alone selling price of the points earned to the loyalty program liability. The loyalty program liability is a deferral of revenue until redemption occurs. Upon redemption of loyalty program points for Company-owned products and services, the stand-alone selling price of each product or service is allocated to the respective revenue type. For redemptions of points with third parties, the redemption amount is deducted from the loyalty program liability and paid directly to the third party. Any discounts received by the Company from the third party in connection with this transaction are recorded to other revenue.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
After allocation to the other revenue types for products and services provided to patrons as part of a wagering contract, the residual amount is recorded to casino revenue as soon as the wager is settled. As all wagers have similar characteristics, the Company accounts for its gaming contracts collectively on a portfolio basis versus an individual basis.
Hotel revenue recognition criteria are met at the time of occupancy. Food and beverage revenue recognition criteria are met at the time of service. Convention revenues are recognized when the related service is rendered or the event is held. Deposits for future hotel occupancy, convention space or food and beverage services contracts are recorded as deferred income until the revenue recognition criteria are met. Cancellation fees for hotel, convention space and food and beverage services are recognized upon cancellation by the customer and are included in other revenues. Ferry and entertainment revenue recognition criteria are met at the completion of the ferry trip or event, respectively. Revenue from contracts with a combination of these services is allocated pro rata based on each service’s relative stand-alone selling price.
Revenue from leases is primarily recorded to mall revenue and is generated from base rents and overage rents received through long-term leases with retail tenants. Base rent, adjusted for contractual escalations, is recognized on a straight-line basis over the term of the related lease. Overage rent is paid by a tenant when its sales exceed an agreed upon minimum amount and is not recognized by the Company until the threshold is met.
Revenue Disaggregation
The Company operates Integrated Resorts internationally, in Macao and Singapore, and domestically, in Las Vegas and Pennsylvania. The Company generates revenues at its properties by providing the following types of products and services: gaming, rooms, food and beverage, mall and convention, retail and other. Revenue disaggregated by type of revenue and geographic location is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
Rooms
|
|
Food and Beverage
|
|
Mall
|
|
Convention, Retail and Other
|
|
Net Revenues
|
|
Three Months Ended September 30, 2018
|
(In millions)
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
689
|
|
|
$
|
58
|
|
|
$
|
21
|
|
|
$
|
60
|
|
|
$
|
29
|
|
|
$
|
857
|
|
|
Sands Cotai Central
|
400
|
|
|
85
|
|
|
25
|
|
|
19
|
|
|
8
|
|
|
537
|
|
|
The Parisian Macao
|
321
|
|
|
30
|
|
|
17
|
|
|
13
|
|
|
8
|
|
|
389
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
116
|
|
|
10
|
|
|
6
|
|
|
33
|
|
|
2
|
|
|
167
|
|
|
Sands Macao
|
146
|
|
|
4
|
|
|
6
|
|
|
1
|
|
|
3
|
|
|
160
|
|
|
Ferry Operations and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
42
|
|
|
42
|
|
|
|
1,672
|
|
|
187
|
|
|
75
|
|
|
126
|
|
|
92
|
|
|
2,152
|
|
|
Marina Bay Sands
|
532
|
|
|
106
|
|
|
53
|
|
|
44
|
|
|
31
|
|
|
766
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
88
|
|
|
138
|
|
|
60
|
|
|
—
|
|
|
93
|
|
|
379
|
|
|
Sands Bethlehem
|
121
|
|
|
4
|
|
|
7
|
|
|
1
|
|
|
5
|
|
|
138
|
|
|
|
209
|
|
|
142
|
|
|
67
|
|
|
1
|
|
|
98
|
|
|
517
|
|
|
Intercompany eliminations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(62
|
)
|
|
(63
|
)
|
|
Total net revenues
|
$
|
2,413
|
|
|
$
|
435
|
|
|
$
|
195
|
|
|
$
|
170
|
|
|
$
|
159
|
|
|
$
|
3,372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
Rooms
|
|
Food and Beverage
|
|
Mall
|
|
Convention, Retail and Other
|
|
Net Revenues
|
|
Three Months Ended September 30, 2017
|
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
564
|
|
|
$
|
44
|
|
|
$
|
19
|
|
|
$
|
55
|
|
|
$
|
20
|
|
|
$
|
702
|
|
|
Sands Cotai Central
|
341
|
|
|
78
|
|
|
26
|
|
|
15
|
|
|
7
|
|
|
467
|
|
|
The Parisian Macao
|
341
|
|
|
34
|
|
|
15
|
|
|
16
|
|
|
5
|
|
|
411
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
93
|
|
|
8
|
|
|
7
|
|
|
31
|
|
|
1
|
|
|
140
|
|
|
Sands Macao
|
130
|
|
|
5
|
|
|
6
|
|
|
—
|
|
|
1
|
|
|
142
|
|
|
Ferry Operations and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
40
|
|
|
|
1,469
|
|
|
169
|
|
|
73
|
|
|
117
|
|
|
74
|
|
|
1,902
|
|
|
Marina Bay Sands
|
583
|
|
|
94
|
|
|
46
|
|
|
42
|
|
|
24
|
|
|
789
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
92
|
|
|
138
|
|
|
66
|
|
|
—
|
|
|
91
|
|
|
387
|
|
|
Sands Bethlehem
|
126
|
|
|
4
|
|
|
7
|
|
|
1
|
|
|
6
|
|
|
144
|
|
|
|
218
|
|
|
142
|
|
|
73
|
|
|
1
|
|
|
97
|
|
|
531
|
|
|
Intercompany eliminations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(61
|
)
|
|
(61
|
)
|
|
Total net revenues
|
$
|
2,270
|
|
|
$
|
405
|
|
|
$
|
192
|
|
|
$
|
160
|
|
|
$
|
134
|
|
|
$
|
3,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2018
|
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
2,082
|
|
|
$
|
167
|
|
|
$
|
62
|
|
|
$
|
169
|
|
|
$
|
75
|
|
|
$
|
2,555
|
|
|
Sands Cotai Central
|
1,204
|
|
|
245
|
|
|
77
|
|
|
48
|
|
|
21
|
|
|
1,595
|
|
|
The Parisian Macao
|
920
|
|
|
91
|
|
|
48
|
|
|
43
|
|
|
17
|
|
|
1,119
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
394
|
|
|
29
|
|
|
21
|
|
|
97
|
|
|
3
|
|
|
544
|
|
|
Sands Macao
|
454
|
|
|
12
|
|
|
20
|
|
|
3
|
|
|
5
|
|
|
494
|
|
|
Ferry Operations and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
123
|
|
|
123
|
|
|
|
5,054
|
|
|
544
|
|
|
228
|
|
|
360
|
|
|
244
|
|
|
6,430
|
|
|
Marina Bay Sands
|
1,678
|
|
|
299
|
|
|
156
|
|
|
128
|
|
|
82
|
|
|
2,343
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
268
|
|
|
443
|
|
|
239
|
|
|
—
|
|
|
308
|
|
|
1,258
|
|
|
Sands Bethlehem
|
358
|
|
|
12
|
|
|
19
|
|
|
3
|
|
|
16
|
|
|
408
|
|
|
|
626
|
|
|
455
|
|
|
258
|
|
|
3
|
|
|
324
|
|
|
1,666
|
|
|
Intercompany eliminations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(184
|
)
|
|
(185
|
)
|
|
Total net revenues
|
$
|
7,358
|
|
|
$
|
1,298
|
|
|
$
|
642
|
|
|
$
|
490
|
|
|
$
|
466
|
|
|
$
|
10,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Casino
|
|
Rooms
|
|
Food and Beverage
|
|
Mall
|
|
Convention, Retail and Other
|
|
Net Revenues
|
|
Nine Months Ended September 30, 2017
|
|
|
Macao:
|
|
|
|
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
1,698
|
|
|
$
|
126
|
|
|
$
|
53
|
|
|
$
|
161
|
|
|
$
|
64
|
|
|
$
|
2,102
|
|
|
Sands Cotai Central
|
1,016
|
|
|
207
|
|
|
74
|
|
|
48
|
|
|
20
|
|
|
1,365
|
|
|
The Parisian Macao
|
869
|
|
|
94
|
|
|
46
|
|
|
50
|
|
|
15
|
|
|
1,074
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
273
|
|
|
24
|
|
|
20
|
|
|
94
|
|
|
2
|
|
|
413
|
|
|
Sands Macao
|
438
|
|
|
15
|
|
|
19
|
|
|
—
|
|
|
4
|
|
|
476
|
|
|
Ferry Operations and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
119
|
|
|
119
|
|
|
|
4,294
|
|
|
466
|
|
|
212
|
|
|
353
|
|
|
224
|
|
|
5,549
|
|
|
Marina Bay Sands
|
1,726
|
|
|
268
|
|
|
130
|
|
|
120
|
|
|
69
|
|
|
2,313
|
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
277
|
|
|
424
|
|
|
236
|
|
|
—
|
|
|
287
|
|
|
1,224
|
|
|
Sands Bethlehem
|
373
|
|
|
12
|
|
|
21
|
|
|
3
|
|
|
17
|
|
|
426
|
|
|
|
650
|
|
|
436
|
|
|
257
|
|
|
3
|
|
|
304
|
|
|
1,650
|
|
|
Intercompany eliminations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175
|
)
|
|
(175
|
)
|
|
Total net revenues
|
$
|
6,670
|
|
|
$
|
1,170
|
|
|
$
|
599
|
|
|
$
|
476
|
|
|
$
|
422
|
|
|
$
|
9,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
|
|
|
|
(1)
|
Intercompany eliminations include royalties and other intercompany services (see "— Note 9 — Segment Information).
|
Contract and Contract Related Liabilities
The Company provides numerous products and services to its customers. There is often a timing difference between the cash payment by the customers and recognition of revenue for each of the associated performance obligations. The Company has the following main types of liabilities associated with contracts with customers: (1) outstanding chip liability, (2) loyalty program liability and (3) customer deposits and other deferred revenue for gaming and non-gaming products and services yet to be provided.
The outstanding chip liability represents the collective amounts owed to junket operators and patrons in exchange for gaming chips in their possession. Outstanding chips are expected to be recognized as revenue or redeemed for cash within one year of being purchased. The loyalty program liability represents a deferral of revenue until patron redemption of points earned. The loyalty program points are expected to be redeemed and recognized as revenue within one year of being earned. Customer deposits and other deferred revenue represent cash deposits made by customers for future services provided by the Company. With the exception of mall deposits, which typically extend beyond a year based on the terms of the lease, the majority of these customer deposits and other deferred revenue are expected to be recognized as revenue or refunded to the customer within one year of the date the deposit was recorded.
The following table summarizes the liability activity related to contracts with customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Chip Liability
|
|
Loyalty Program Liability
|
|
Customer Deposits and Other Deferred Revenue
(1)
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Balance at January 1
|
$
|
478
|
|
|
$
|
525
|
|
|
$
|
63
|
|
|
$
|
69
|
|
|
$
|
714
|
|
|
$
|
633
|
|
|
Balance at September 30
|
479
|
|
|
535
|
|
|
67
|
|
|
65
|
|
|
799
|
|
|
680
|
|
|
Increase (decrease)
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
85
|
|
|
$
|
47
|
|
____________________
|
|
|
|
(1)
|
Of this amount,
$152 million
,
$145 million
,
$139 million
and
$131 million
as of
September 30, 2018
, January 1,
2018
,
September 30, 2017
, and January 1,
2017
, respectively, relates to mall deposits that are accounted for based on lease terms usually greater than one year.
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Significant Impacts of Adoption
The adoption of the change in accounting standards related to revenue from contracts with customers resulted in the following significant impacts: (1) promotional allowances line item was eliminated from the condensed consolidated statement of operations with the amount being deducted from casino revenue, (2) the valuation of points associated with the Company’s loyalty programs was changed from cost to fair value; the loyalty program expense, previously charged to casino expense, was deducted from casino revenue to defer revenue recognition until redemption of the loyalty program points occurs; and redemption of the loyalty program points at third parties is now deducted from the loyalty program liability and paid directly to the third party, with any discounts received from the third party recorded to other revenue, and (3) the portion of junket commissions that was previously recorded to casino expense is now deducted from casino revenue. These adjustments resulted in a decrease to net revenues and operating expenses of
$38 million
and
$37 million
, respectively, and a decrease in operating income of
$1 million
for the three months ended September 30, 2017, and a decrease to net revenues and operating expenses of
$109 million
and
$110 million
, respectively, and an increase in operating income of
$1 million
for the nine months ended September 30, 2017. The cumulative effect of the adoption was recognized as a decrease in retained earnings of
$8 million
on January 1, 2017.
Note 3 — Property and Equipment, Net
Property and equipment consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
|
Land and improvements
|
$
|
653
|
|
|
$
|
672
|
|
|
Building and improvements
|
17,815
|
|
|
17,703
|
|
|
Furniture, fixtures, equipment and leasehold improvements
|
4,128
|
|
|
3,999
|
|
|
Transportation
|
434
|
|
|
455
|
|
|
Construction in progress
|
1,190
|
|
|
1,179
|
|
|
|
24,220
|
|
|
24,008
|
|
|
Less — accumulated depreciation and amortization
|
(9,034
|
)
|
|
(8,492
|
)
|
|
|
$
|
15,186
|
|
|
$
|
15,516
|
|
During the
three and nine
months ended
September 30, 2018
, the Company capitalized
$1 million
and
$2 million
of interest expense and during the nine months ended
September 30, 2017
, the Company capitalized
$1 million
of interest expense. During the
three and nine
months ended
September 30, 2018
and the
three and nine
months ended
September 30, 2017
, the Company capitalized approximately
$9 million
,
$22 million
,
$6 million
and
$18 million
, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.
During the year ended December 31, 2017, the Company completed an evaluation of the estimated useful lives of its property and equipment and determined that changes to the useful lives of certain property and equipment were appropriate. This change in estimated useful lives was accounted for as a change in accounting estimate effective July 1, 2017. The impact of this change for the nine months ended
September 30, 2018
, was a decrease in depreciation and amortization expense and an increase in operating income of
$127 million
, and an increase in net income attributable to LVSC of
$93 million
, or earnings per share of
$0.12
on a basic and diluted basis.
During the
three and nine
months ended
September 30, 2018
, the Company recognized a loss on disposal or impairment of assets of
$4 million
and
$114 million
, respectively, consisting primarily of
$2 million
and
$94 million
, respectively, of costs related to the Four Seasons Tower Suites Macao project. During the
three and nine
months ended
September 30, 2017
, the Company recognized a loss on disposal or impairment of assets of
$21 million
and
$27 million
, respectively.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Note 4 — Long-Term Debt
Long-term debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
|
Corporate and U.S. Related
(1)
:
|
|
|
|
|
2013 U.S. Credit Facility — Extended Term B (net of unamortized original issue discount and deferred financing costs of $22 and $11, respectively)
|
$
|
3,471
|
|
|
$
|
2,150
|
|
|
HVAC Equipment Lease
|
12
|
|
|
12
|
|
|
Macao Related
(1)
:
|
|
|
|
|
4.600% Senior Notes due 2023 (net of unamortized original issue discount and deferred financing costs of $15 and a cumulative fair value adjustment of $2)
|
1,783
|
|
|
—
|
|
|
5.125% Senior Notes due 2025 (net of unamortized original issue discount and deferred financing costs of $16 and a cumulative fair value adjustment of $2)
|
1,782
|
|
|
—
|
|
|
5.400% Senior Notes due 2028 (net of unamortized original issue discount and deferred financing costs of $21 and a cumulative fair value adjustment of $3)
|
1,876
|
|
|
—
|
|
|
2016 VML Credit Facility — Term (net of unamortized deferred financing costs of $56)
|
—
|
|
|
4,043
|
|
|
2016 VML Credit Facility — Non-Extended Term (net of unamortized deferred financing costs of $2)
|
—
|
|
|
247
|
|
|
Other
|
5
|
|
|
5
|
|
|
Singapore Related
(1)
:
|
|
|
|
|
2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $45 and $32, respectively)
|
3,051
|
|
|
3,183
|
|
|
|
11,980
|
|
|
9,640
|
|
|
Less — current maturities
|
(111
|
)
|
|
(296
|
)
|
|
Total long-term debt
|
$
|
11,869
|
|
|
$
|
9,344
|
|
____________________
|
|
|
|
(1)
|
Unamortized deferred financing costs of
$19 million
and
$24 million
as of
September 30, 2018
and
December 31, 2017
, respectively, related to the U.S., Macao and Singapore revolving credit facilities are included in other assets, net in the accompanying condensed consolidated balance sheets.
|
2013 U.S. Credit Facility
During March 2018, the Company entered into an agreement (the "Fifth Amendment Agreement") to amend the existing 2013 U.S. Credit Facility to, among other things, refinance the term loans (by way of continuing or replacing existing term loans) in an aggregate amount of
$2.16 billion
and to lower the applicable margin credit spread for adjusted Eurodollar rate term loans from
2.0%
to
1.75%
per annum and for alternative base rate term loans from
1.0%
to
0.75%
per annum (the interest rate was set at
4.0%
as of
September 30, 2018
). Additionally, the Fifth Amendment Agreement extended the maturity date of the term loans from
March 29, 2024
to
March 27, 2025
. The Company recorded a
$3 million
loss on modification of debt during the
nine
months ended
September 30, 2018
, in connection with the Fifth Amendment Agreement.
During June 2018, the Company further amended the 2013 U.S. Credit Facility (the "Sixth Amendment Agreement") to, among other things, increase the amount of the term loans by
$1.35 billion
, to an aggregate amount of
$3.51 billion
. The additional
$1.35 billion
, which was fully drawn on the closing date, matures on
March 27, 2025
, and has terms substantially identical to those applicable to the term loans outstanding under the then existing credit agreement. The 2013 Extended U.S. Term B Facility is subject to
quarterly
amortization payments of
$9 million
, which began on
June 30, 2018
, followed by a balloon payment of
$3.27 billion
due on
March 27, 2025
.
As of
September 30, 2018
, the Company had
$1.15 billion
of available borrowing capacity under the 2013 Extended U.S. Revolving Facility, net of outstanding letters of credit.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
SCL Senior Notes
On August 9, 2018, SCL issued, in a private offering, three series of senior unsecured notes in an aggregate principal amount of
$5.50 billion
, consisting of
$1.80 billion
of
4.600%
Senior Notes due
August 8, 2023
(the "2023 Notes"),
$1.80 billion
of
5.125%
Senior Notes due
August 8, 2025
(the "2025 Notes") and
$1.90 billion
of
5.400%
Senior Notes due
August 8, 2028
(the "2028 Notes" and, together with the 2023 Notes and the 2025 Notes, the "SCL Senior Notes"). A portion of the net proceeds from the offering was used to repay in full the outstanding borrowings under the 2016 VML Credit Facility. There are
no
interim principal payments on the SCL Senior Notes and interest is payable semi-annually in arrears on each February 8 and August 8, commencing on
February 8, 2019
. In connection with the SCL Senior Notes, the Company entered into fixed-to-variable interest rate swap contracts (see " — Note 5 — Derivative Instruments").
The SCL Senior Notes are general senior obligations of SCL. Each series of SCL Senior Notes rank equally in right of payment with all of SCL's existing and future senior unsecured debt and rank senior in right of payment to all of SCL's future subordinated debt, if any. The SCL Senior Notes are effectively subordinated in right of payment to all of SCL's future secured debt (to the extent of the value of the collateral securing such debt) and are structurally subordinated to all of the liabilities of SCL's subsidiaries. None of SCL's subsidiaries guarantee the SCL Senior Notes.
The SCL Senior Notes were issued pursuant to an indenture, dated August 9, 2018 (the "Indenture"), between SCL and U.S. Bank National Association, as trustee. Upon the occurrence of certain events described in the Indenture, the interest rate on the SCL Senior Notes may be adjusted. The Indenture contains covenants, subject to customary exceptions and qualifications, that limit the ability of SCL and its subsidiaries to, among other things, incur liens, enter into sale and leaseback transactions and consolidate, merge, sell or otherwise dispose of all or substantially all of SCL's assets on a consolidated basis. The Indenture also provides for customary events of default.
2016 VML Credit Facility
As previously described, the proceeds from the SCL Senior Notes were used to repay the outstanding borrowings under the 2016 VML Credit Facility. As a result, the Company recorded a
$52 million
loss on early retirement of debt during the
three and nine
months ended
September 30, 2018
. As of
September 30, 2018
, the Company had
$1.99 billion
of available borrowing capacity under the 2016 VML Revolving Facility.
2012 Singapore Credit Facility
During March 2018, the Company amended its 2012 Singapore Credit Facility, which refinanced the facility in an aggregate amount of SGD
4.80 billion
(approximately
$3.51 billion
at exchange rates in effect on
September 30, 2018
), pursuant to which consenting lenders of borrowings under the 2012 Singapore Term Facility extended the maturity to
March 29, 2024
, and consenting lenders of borrowings under the 2012 Singapore Revolving Facility extended the maturity to
September 29, 2023
. As of
September 30, 2018
, the Company had SGD
495 million
(approximately
$362 million
at exchange rates in effect on
September 30, 2018
) of available borrowing capacity under the 2012 Singapore Revolving Facility, net of outstanding letters of credit.
Commencing with the
quarterly
period ended
June 30, 2018
, and at the end of each subsequent quarter through March 31, 2022, the amended facility agreement requires the borrower to repay the outstanding 2012 Singapore Term Facility in the amount of
0.5%
of the aggregate principal amount outstanding as of March 19, 2018 (the "Singapore Restatement Date"). Commencing with the quarterly period ending June 30, 2022, and at the end of each subsequent quarter through March 31, 2023, the Company is required to repay the outstanding 2012 Singapore Term Facility in the amount of
5.0%
of the aggregate principal amount outstanding as of the Singapore Restatement Date. For the quarterly periods ending June 30, 2023 through the termination date of
March 29, 2024
, the borrower is required to repay the outstanding 2012 Singapore Term Facility in the amount of
18.0%
of the aggregate principal amount outstanding as of the Singapore Restatement Date. The interest rate on the 2012 Singapore Term Facility was set at
2.8%
as of
September 30, 2018
.
The leverage covenant was amended to provide that the leverage ratio not exceed
4.0
x on the last day of each fiscal quarter through maturity.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Debt Covenant Compliance
As of
September 30, 2018
, management believes the Company was in compliance with all debt covenants.
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt and capital lease obligations are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Proceeds from SCL Senior Notes
|
$
|
5,500
|
|
|
$
|
—
|
|
|
Proceeds from 2013 U.S. Credit Facility
|
1,347
|
|
|
5
|
|
|
Proceeds from 2016 VML Credit Facility
|
746
|
|
|
649
|
|
|
|
$
|
7,593
|
|
|
$
|
654
|
|
|
Repayments on 2016 VML Credit Facility
|
$
|
(5,083
|
)
|
|
$
|
(662
|
)
|
|
Repayments on 2012 Singapore Credit Facility
|
(49
|
)
|
|
(50
|
)
|
|
Repayments on 2013 U.S. Credit Facility
|
(18
|
)
|
|
(57
|
)
|
|
Repayments on Airplane Financings
|
—
|
|
|
(56
|
)
|
|
Repayments on HVAC Equipment Lease and Other Long-Term Debt
|
(3
|
)
|
|
(3
|
)
|
|
|
$
|
(5,153
|
)
|
|
$
|
(828
|
)
|
Fair Value of Long-Term Debt
The estimated fair value of the Company's long-term debt as of
September 30, 2018
and
December 31, 2017
, was approximately
$12.06 billion
and
$9.61 billion
, respectively, compared to its carrying value of
$12.08 billion
and
$9.72 billion
, respectively. The estimated fair value of the Company's long-term debt is based on level 2 inputs (quoted prices in markets that are not active).
Note 5 — Derivative Instruments
Accounting standards require an entity to recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. If specific conditions are met, a derivative may be designated as a hedge of specific financial exposures. The accounting for changes in fair value of a derivative depends on the intended use of the derivative and, if used in hedging activities, on its effectiveness as a hedge. 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 Company's exposure to market fluctuation throughout the hedge period.
Changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices, can impact the Company’s results of operations. The Company’s primary exposures to market risk are interest rate risk associated with long-term debt and foreign currency exchange rate risk associated with the Company’s operations outside the United States. The Company has a policy aimed at managing interest rate risk associated with its current and anticipated future borrowings and foreign currency exchange rate risk associated with operations of its foreign subsidiaries. This policy enables the Company to use any combination of interest rate swaps, futures, options, caps, forward contracts and similar instruments. The Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions.
In August 2018, the Company entered into interest rate swap agreements (the “IR Swaps”), which were designated as fair value hedges, swapping fixed-rate for variable-rate interest to hedge changes in the fair value of the SCL Senior Notes. These IR Swaps have a total notional value of
$5.50 billion
and expire in
August 2020
. These derivatives qualified for hedge accounting and were designated as fair value hedges.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
In the accompanying condensed consolidated balance sheets, the total fair value of the IR Swaps of
$7 million
was recorded as a liability in other long-term liabilities with an equal corresponding adjustment recorded against the carrying value of the SCL Senior Notes. The fair value of the IR Swaps was estimated using level 2 inputs from recently reported market transactions of interest rates. Gains and losses due to changes in fair value of the IR Swaps completely offset changes in the fair value of the hedged portion of the underlying debt; therefore,
no
gain or loss has been recognized due to hedge ineffectiveness. Additionally, for the
three and nine
months ended
September 30, 2018
, the Company recorded
$4 million
as a reduction to interest expense related to the realized amount associated with the IR Swaps.
Note 6 — Equity and Earnings Per Share
Preferred Stock
The Company is authorized to issue up to
50,000,000
shares of preferred stock. The Company's Board of Directors is authorized, subject to limitations prescribed by Nevada law and the Company's articles of incorporation, to determine the terms and conditions of the preferred stock, including whether the shares of preferred stock will be issued in one or more series, the number of shares to be included in each series and the powers, designations, preferences and rights of the shares. The Company's Board of Directors also is authorized to designate any qualifications, limitations or restrictions on the shares without any further vote or action by the stockholders.
Common Stock
Dividends
On
March 30, June 28 and September 27, 2018
, the Company paid a dividend of
$0.75
per common share as part of a regular cash dividend program. During the
nine
months ended
September 30, 2018
, the Company recorded
$1.77 billion
as a distribution against retained earnings (of which
$972 million
related to the principal stockholder and his family and the remaining
$799 million
related to all other shareholders).
On March 31, June 30 and September 29, 2017, the Company paid a dividend of
$0.73
per common share as part of a regular cash dividend program. During the
nine
months ended
September 30, 2017
, the Company recorded
$1.73 billion
as a distribution against retained earnings (of which
$946 million
related to the principal stockholder and his family and the remaining
$787 million
related to all other shareholders).
In October 2018, the Company's Board of Directors declared a quarterly dividend of
$0.75
per common share (a total estimated to be approximately
$588 million
) to be paid on
December 27, 2018
, to shareholders of record on
December 18, 2018
.
In October 2018, the Company announced that its Board of Directors increased the dividend for the 2019 calendar year to
$3.08
per common share, or
$0.77
per common share per quarter.
Repurchase Program
In November 2016, the Company's Board of Directors authorized the repurchase of
$1.56 billion
of its outstanding common stock, which was to expire in
November 2018
. In June 2018, the Company's Board of Directors authorized increasing the remaining repurchase amount of
$1.11 billion
to
$2.50 billion
and extending the expiration date to
November 2020
. Repurchases of the Company's common stock are made at the Company's discretion in accordance with applicable federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company's financial position, earnings, legal requirements, other investment opportunities and market conditions. During the
nine
months ended
September 30, 2018
and
2017
, the Company repurchased
6,903,564
and
5,107,237
shares, respectively, of its common stock for
$475 million
and
$300 million
, respectively, (including commissions) under the program. All share repurchases of the Company's common stock have been recorded as treasury stock.
Noncontrolling Interests
On
February 23 and June 22, 2018
, SCL paid a dividend of
0.99
Hong Kong dollars ("HKD") and HKD
1.00
per share, respectively, to SCL shareholders (a total of
$2.05 billion
, of which the Company retained
$1.44 billion
during
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
the
nine
months ended
September 30, 2018
). On February 24 and June 23, 2017, SCL paid a dividend of HKD
0.99
and HKD
1.00
per share, respectively, to SCL shareholders (a total of
$2.07 billion
, of which the Company retained
$1.45 billion
during the
nine
months ended
September 30, 2017
).
During the
nine
months ended
September 30, 2018
and
2017
, the Company distributed
$9 million
and
$10 million
, respectively, to certain of its noncontrolling interests.
Earnings Per Share
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings per share consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)
|
786
|
|
|
791
|
|
|
788
|
|
|
792
|
|
|
Potential dilution from stock options and restricted stock and stock units
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)
|
787
|
|
|
792
|
|
|
789
|
|
|
793
|
|
|
Antidilutive stock options excluded from the calculation of diluted earnings per share
|
2
|
|
|
6
|
|
|
1
|
|
|
7
|
|
Accumulated Other Comprehensive Income (Loss)
As of
September 30, 2018
and
December 31, 2017
, accumulated other comprehensive income (loss) consisted solely of foreign currency translation adjustments.
Note 7 — Income Taxes
The Company's effective income tax rate was
(15.8)%
for the
nine
months ended
September 30, 2018
, compared to
10.4%
for the
nine
months ended
September 30, 2017
. The effective income tax rate for the
nine
months ended
September 30, 2018
, would have been
10.2%
without the discrete benefit of
$670 million
, as discussed further below. The effective income tax rate for the
nine
months ended
September 30, 2018
, reflects a
17%
statutory tax rate on the Company's Singapore operations, a
21%
corporate income tax rate for its domestic operations and a
zero percent
tax rate on its Macao gaming operations due to the Company's income tax exemption in Macao.
In December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Act"). The Company recorded a discrete benefit of
$526 million
in the fourth quarter of 2017 related to the reduction of the valuation allowance on certain deferred tax assets previously determined not likely to be utilized and also the revaluation of its U.S. deferred tax liabilities at the reduced corporate income tax rate of
21%
. This discrete benefit was the provisional impact of enactment of the Act subject to Staff Accounting Bulletin ("SAB") 118, which provides for a 12-month remeasurement period to complete the accounting required under Accounting Standards Codification ("ASC") 740.
The Act made significant changes to U.S. income tax laws, including transitioning from a worldwide tax system to a territorial tax system. This change in the U.S. international tax system included the introduction of several new tax regimes that are effective as of January 1, 2018. One of the new taxes introduced is the Global Intangible Low-Taxed Income ("GILTI"), which effectively taxes the foreign earnings of U.S. multinational companies at
10.5%
, half of the current corporate tax rate. During the three months ended March 31, 2018, the Company concluded how the foreign tax credits associated with this income, and allowed against the U.S. tax liability, would be utilized and the potential impact on the foreign tax credit deferred tax asset and related valuation allowance. As a result, the Company recorded a tax benefit of
$670 million
relating to the reduction of the valuation allowance on certain U.S. foreign tax credit assets generated prior to 2018 that were previously determined not likely to be utilized.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
While management believes the provisional amounts recorded during the
nine
months ended
September 30, 2018
and the year ended
December 31, 2017
, represent reasonable estimates of the ultimate impact U.S. tax reform will have on the Company's consolidated financial statements, it is possible the Company may continue to materially adjust these amounts for related administrative guidance, notices, implementation regulations, potential legislative amendments and interpretations as the Act continues to evolve. These adjustments could have an impact on the Company's tax assets and liabilities, effective tax rate, net income and earnings per share.
In August 2018, Venetian Macau Limited ("VML"), a subsidiary of SCL, received a fourth exemption from Macao's corporate income tax on profits generated by the operation of casino games of chance for the period January 1, 2019 through
June 26, 2022
, the date VML's subconcession agreement expires. In May 2014, VML entered into an agreement with the Macao government effective through the end of 2018 that provides for an annual payment of
42 million
patacas (approximately
$5 million
at exchange rates in effect on September 30, 2018) as a substitution for a
12%
tax otherwise due from VML shareholders on dividend distributions. In September 2018, VML requested an additional agreement with the Macao government to correspond to the income tax exemption for gaming operations; however, there is no assurance VML will receive the additional agreement.
Note 8 — 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 and has accrued a nominal amount for such costs as of
September 30, 2018
. Actual results could differ from these estimates; however, in the opinion of management, such litigation and claims will not have a material effect on the Company's financial condition, results of operations and cash flows.
Round Square Company Limited v. Las Vegas Sands Corp.
On October 15, 2004, Richard Suen and Round Square Company Limited ("Roundsquare") filed an action against LVSC, Las Vegas Sands, Inc. ("LVSI"), Sheldon G. Adelson and William P. Weidner in the District Court of Clark County, Nevada (the "District Court"), asserting a breach of an alleged agreement to pay a success fee of
$5 million
and
2.0%
of the net profit from the Company's 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. Pursuant to an order filed March 16, 2006, plaintiffs' fraud claims set forth in the first amended complaint were dismissed with prejudice against all defendants. The order also dismissed with prejudice the first amended complaint against defendants Sheldon G. Adelson and William P. Weidner. On May 24, 2008, the jury returned a verdict for the plaintiffs in the amount of
$44 million
. On June 30, 2008, a judgment was entered in this matter in the amount of
$59 million
(including pre-judgment interest). The Company appealed the verdict to the Nevada Supreme Court. On November 17, 2010, the Nevada Supreme Court reversed the judgment and remanded the case to the District Court for a new trial. In its decision reversing the monetary judgment against the Company, the Nevada Supreme Court also made several other rulings, including overturning the pre-trial dismissal of the plaintiffs' breach of contract claim and deciding several evidentiary matters, some of which confirmed and some of which overturned rulings made by the District Court. On February 27, 2012, the District Court set a date of March 25, 2013, for the new trial. On June 22, 2012, the defendants filed a request to add experts and plaintiffs filed a motion seeking additional financial data as part of their discovery. The District Court granted both requests. The retrial began on March 27 and on May 14, 2013, the jury returned a verdict in favor of Roundsquare in the amount of
$70 million
. On May 28, 2013, a judgment was entered in the matter in the amount of
$102 million
(including pre-judgment interest). On June 7, 2013, the Company filed a motion with the District Court requesting the judgment be set aside as a matter of law or in the alternative that a new trial be granted. On July 30, 2013, the District Court denied the Company's motion. On October 17, 2013, the District Court entered an order granting plaintiff's request for certain costs and fees associated with the litigation in the amount of approximately
$1 million
. On December 6, 2013, the Company filed a notice of appeal of the jury verdict with the Nevada Supreme Court. The Company filed its opening appellate brief with the Nevada Supreme Court on June 16, 2014. On August 19, 2014, the Nevada Supreme Court issued an order granting plaintiffs additional time until September 15, 2014, to
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
file their answering brief. On September 15, 2014, Roundsquare filed a request to the Nevada Supreme Court to file a brief exceeding the maximum number of words, which was granted. On October 10, 2014, Roundsquare filed its answering brief. On January 12, 2015, the defendants filed their reply brief. On January 27, 2015, Roundsquare filed its reply brief. The Nevada Supreme Court set oral argument for December 17, 2015, before a panel of justices only to reset it for January 26, 2016, en banc. Oral arguments were presented to the Nevada Supreme Court as scheduled. On March 11, 2016, the Nevada Supreme Court issued an order affirming the judgment of liability, but reversing the damages award and remanding for a new trial on damages. On March 29, 2016, Roundsquare filed a petition for rehearing. The Nevada Supreme Court ordered an answer by the Company, which the Company filed on May 4, 2016. On May 12, 2016, Roundsquare filed a motion for leave to file a reply brief in support of its petition for rehearing, and on May 19, 2016, the Company filed an opposition to that motion. On June 24, 2016, the Nevada Supreme Court issued an order granting Roundsquare's petition for rehearing and submitting the appeal for decision on rehearing without further briefing or oral argument. On July 22, 2016, the Nevada Supreme Court once again ordered a new trial as to plaintiff Roundsquare on the issue of quantum merit damages. A pre-trial hearing was set in District Court for December 12, 2016. At the December 12, 2016 hearing, the District Court indicated it would allow a scope of trial and additional discovery into areas the Company opposed as inconsistent with the Nevada Supreme Court's remand. The District Court issued a written order on the scope of retrial and discovery dated December 15, 2016. On January 5, 2017, the Company moved for a stay of proceedings in the District Court, pending the Nevada Supreme Court's resolution of the Company's petition for writ of mandamus or prohibition, which was filed on January 13, 2017. On February 13, 2017, the District Court denied the motion to stay proceedings and, on February 16, 2017, the Nevada Supreme Court denied the writ. The parties are presently engaged in discovery and the damages trial date has been set to begin on March 4, 2019. The Company has accrued a nominal amount for estimated costs related to this legal matter as of
September 30, 2018
. In the event the Company's assumptions used to evaluate this matter change in future periods, it may be required to record an additional liability for an adverse outcome. The Company intends to defend this matter vigorously.
Frank J. Fosbre, Jr. v. Las Vegas Sands Corp., Sheldon G. Adelson and William P. Weidner
On May 24, 2010, Frank J. Fosbre, Jr. filed a purported class action complaint in the U.S. District Court, against LVSC, Sheldon G. Adelson and William P. Weidner. The complaint alleged that LVSC, through the individual defendants, disseminated or approved materially false information, or failed to disclose material facts, through press releases, investor conference calls and other means from August 1, 2007 through November 6, 2008. The complaint sought, among other relief, class certification, compensatory damages and attorneys' fees and costs. On July 21, 2010, Wendell and Shirley Combs filed a purported class action complaint in the U.S. District Court, against LVSC, Sheldon G. Adelson and William P. Weidner. The complaint alleged that LVSC, through the individual defendants, disseminated or approved materially false information, or failed to disclose material facts, through press releases, investor conference calls and other means from June 13, 2007 through November 11, 2008. The complaint, which was substantially similar to the Fosbre complaint, discussed above, sought, among other relief, class certification, compensatory damages and attorneys' fees and costs. On August 31, 2010, the U.S. District Court entered an order consolidating the Fosbre and Combs cases, and appointed lead plaintiffs and lead counsel. As such, the Fosbre and Combs cases are reported as one consolidated matter. On November 1, 2010, a purported class action amended complaint was filed in the consolidated action against LVSC, Sheldon G. Adelson and William P. Weidner. The amended complaint alleges that LVSC, through the individual defendants, disseminated or approved materially false and misleading information, or failed to disclose material facts, through press releases, investor conference calls and other means from August 2, 2007 through November 6, 2008. The amended complaint seeks, among other relief, class certification, compensatory damages and attorneys' fees and costs. On January 10, 2011, the defendants filed a motion to dismiss the amended complaint, which, on August 24, 2011, was granted in part and denied in part, with the dismissal of certain allegations. On November 7, 2011, the defendants filed their answer to the allegations remaining in the amended complaint. On July 11, 2012, the U.S. District Court issued an order allowing defendants' Motion for Partial Reconsideration of the U.S. District Court's order dated August 24, 2011, striking additional portions of the plaintiffs' complaint and reducing the class period to a period of February 4 to November 6, 2008. On August 7, 2012, the plaintiffs filed a purported class action second amended complaint (the "Second Amended Complaint") seeking to expand their allegations back to a time period of 2007 (having previously been cut back to 2008 by the U.S. District Court) essentially alleging very similar matters that had been previously stricken by the U.S. District Court. On October 16, 2012, the defendants filed a new motion to dismiss the Second
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Amended Complaint. The plaintiffs responded to the motion to dismiss on November 1, 2012, and defendants filed their reply on November 12, 2012. On November 20, 2012, the U.S. District Court granted a stay of discovery under the Private Securities Litigation Reform Act pending a decision on the new motion to dismiss and therefore, the discovery process was suspended. On April 16, 2013, the case was reassigned to a new judge. On July 30, 2013, the U.S. District Court heard the motion to dismiss and took the matter under advisement. On November 7, 2013, the judge granted in part and denied in part defendants' motions to dismiss. On December 13, 2013, the defendants filed their answer to the Second Amended Complaint. Discovery in the matter resumed. On January 8, 2014, plaintiffs filed a motion to expand the certified class period, which was granted by the U.S. District Court on June 15, 2015. Fact discovery closed on July 31, 2015, and expert discovery closed on December 18, 2015. On January 22, 2016, defendants filed motions for summary judgment. Plaintiffs filed an opposition to the motions for summary judgment on March 11, 2016. Defendants filed their replies in support of summary judgment on April 8, 2016. Summary judgment in favor of the defendants was entered on January 4, 2017. The plaintiffs filed a notice of appeal on February 2, 2017, and their opening brief in support of their appeal on July 14, 2017. Defendants filed their answering briefs in opposition to the appeal on October 13, 2017. Plaintiffs filed their reply brief in support of their appeal on December 14, 2017. On May 1, 2018, a three judge panel of the U.S. Court of Appeals for the Ninth Circuit unanimously affirmed the U.S. District Court's summary judgment ruling for the defendants. Plaintiffs have failed to file a certiorari petition with the United Supreme Court by the deadline and therefore, this matter is concluded.
Asian American Entertainment Corporation, Limited v. Venetian Macau Limited, et al.
On January 19, 2012, Asian American Entertainment Corporation, Limited ("AAEC") filed a claim (the "Macao action") with the Macao Judicial Court (Tribunal Judicial de Base) against VML, LVS (Nevada) International Holdings, Inc. ("LVS (Nevada)"), Las Vegas Sands, LLC ("LVSLLC") and VCR (collectively, the "Defendants"). The claim is for
3.0 billion
patacas (approximately
$373 million
at exchange rates in effect on
September 30, 2018
) as compensation for damages resulting from the alleged breach of agreements entered into between AAEC and LVS (Nevada), LVSLLC and VCR (collectively, the "U.S. Defendants") for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. On July 4, 2012, the Defendants filed their defense to the Macao action with the Macao Judicial Court. AAEC then filed a reply that included several amendments to the original claim, although the amount of the claim was not amended. On January 4, 2013, the Defendants filed an amended defense to the amended claim with the Macao Judicial Court. On September 23, 2013, the U.S. Defendants filed a motion with the Macao Second Instance Court, seeking recognition and enforcement of the U.S. Court of Appeals ruling in the Prior Action, referred to below, given on April 10, 2009, which partially dismissed AAEC's claims against the U.S. Defendants.
On March 24, 2014, the Macao Judicial Court issued a Decision (Despacho Seneador) holding that AAEC's claim against VML is unfounded and that VML be removed as a party to the proceedings, and the claim should proceed exclusively against the U.S. Defendants. On May 8, 2014, AAEC lodged an appeal against that decision. The Macao Judicial Court further held that the existence of the pending application for recognition and enforcement of the U.S. Court of Appeals ruling before the Macao Second Instance Court did not justify a stay of the proceedings against the U.S. Defendants at the present time, although in principle an application for a stay of the proceedings against the U.S. Defendants could be reviewed after the Macao Second Instance Court had issued its decision. On June 25, 2014, the Macao Second Instance Court delivered a decision, which gave formal recognition to and allowed enforcement in Macao of the judgment of the U.S. Court of Appeals, dismissing AAEC's claims against the U.S. Defendants.
AAEC appealed against the recognition decision to the Macao Court of Final Appeal, which, on May 6, 2015, dismissed the appeal and held the U.S. judgment to be final and have preclusive effect. The Macao Court of Final Appeal's decision became final on May 21, 2015. On June 5, 2015, the U.S. Defendants applied to the Macao Judicial Court to dismiss the claims against them as res judicata. AAEC filed its response to that application on June 30, 2015. The U.S. Defendants filed their reply on July 23, 2015. On September 14, 2015, the Macao Judicial Court admitted two further legal opinions from Portuguese and U.S. law experts. On March 16, 2016, the Macao Judicial Court dismissed the defense of res judicata. An appeal against that decision was lodged on April 7, 2016, together with a request that the appeal be heard immediately. By a decision dated April 13, 2016, the Macao Judicial Court accepted that the appeal be heard immediately. Legal arguments were submitted May 23, 2016. AAEC replied to the legal arguments on or
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
about July 14, 2016, which was three days late, upon payment of a penalty. The U.S. Defendants submitted a response on September 20, 2016. On December 13, 2016, the Macao Judicial Court confirmed its earlier decision not to stay the proceedings pending appeal. As of the end of December 2016, all appeals (including VML's dismissal and the res judicata appeals) were being transferred to the Macao Second Instance Court. On May 11, 2017, the Macao Second Instance Court notified the parties of its decision of refusal to deal with the appeals at the present time. The Macao Second Instance Court ordered the court file be transferred back to the Macao Judicial Court. Evidence gathering by the Macao Judicial Court has commenced by letters rogatory. On June 30, 2017, the Macao Judicial Court sent letters rogatory to the Public Prosecutor's office, for onward transmission to relevant authorities in the U.S. and Hong Kong. On August 10, 2017, the Hong Kong Mutual Legal Assistance Unit, International Law Division, Hong Kong Department of Justice ("HKMLAU") responded to the Public Prosecutor and requested additional information. On August 18, 2017, the Public Prosecutor forwarded the HKMLAU request to the Macao Judicial Court. On November 14, 2017, the Public Prosecutor replied to the HKMLAU. The HKMLAU sent a further communication to the Public Prosecutor on November 29, 2017, again requesting the Macao Judicial Court provide further information to enable processing of the Hong Kong letter rogatory. On January 6, 2018, the Macao Judicial Court notified the parties accordingly. On February 10, 2018, the Macao Judicial Court notified the parties that a communication dated January 25, 2018, had been received from the U.S. Department of Justice. The Macao Judicial Court has extended the time for processing the letters rogatory until the end of June 2018. On May 7, 2018, the Macao Judicial Court further extended the time for processing one of the letters rogatory until mid-September 2018, which was further extended on August 16, 2018, to mid-November 2018.
On March 25, 2015, application was made by the U.S. Defendants to the Macao Judicial Court to revoke the legal aid granted to AAEC, accompanied by a request for evidence taking from AAEC, relating to the fees and expenses that they incurred and paid in the U.S. subsequent action referred to below. The Macao Public Prosecutor has opposed the action on the ground of lack of evidence that AAEC's financial position has improved. No decision has been issued in respect to that application up to the present time. A complaint against AAEC's Macao lawyer arising from certain conduct in relation to recent U.S. proceedings was submitted to the Macao Lawyer's Association on October 19, 2015. A letter dated February 26, 2016, has been received from the Conselho Superior de Advocacia of the Macao Bar Association advising that disciplinary proceedings have commenced. A further letter dated April 5, 2016, was received from the Conselho Superior de Advocacia requesting confirmation that the signatories of the complaint were acting within their corporate authority. In a letter dated April 14, 2016, such confirmation was provided. On September 28, 2016, the Conselho Superior de Advocacia invited comments on the defense, which had been lodged by AAEC's Macao lawyer.
On July 9, 2014, the plaintiff filed another action in the U.S. District Court against LVSC, LVSLLC, VCR (collectively, the "LVSC entities"), Sheldon G. Adelson, William P. Weidner, David Friedman and Does 1-50 for declaratory judgment, equitable accounting, misappropriation of trade secrets, breach of confidence and conversion based on a theory of copyright law. The claim is for
$5.0 billion
. On November 4, 2014, plaintiff finally effected notice on the LVSC entities, which was followed by a motion to dismiss by the LVSC entities on November 10, 2014. Plaintiff failed to timely respond, and on December 2, 2014, the LVSC entities moved for immediate dismissal and sanctions against plaintiff and his counsel for bringing a frivolous lawsuit. On December 19, 2014, plaintiff filed an incomplete and untimely response, which was followed by plaintiff's December 27, 2014 notice of withdrawal of the lawsuit and the LVSC entities' December 29, 2014, reply in favor of sanctions and dismissal with prejudice. On August 31, 2015, the judge dismissed the U.S. action and the LVSC entities' sanctions motion. The Macao action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
As previously disclosed by the Company, on February 5, 2007, AAEC brought a similar claim (the "Prior Action") in the U.S. District Court, against LVSI (now known as LVSLLC), VCR and Venetian Venture Development, LLC, which are subsidiaries of the Company, and William P. Weidner and David Friedman, who are former executives of the Company. The U.S. District Court entered an order on April 16, 2010, dismissing the Prior Action. On April 20, 2012, LVSLLC, VCR and LVS (Nevada) filed an injunctive action (the "Nevada Action") against AAEC in the U.S. District Court seeking to enjoin AAEC from proceeding with the Macao Action based on AAEC's filing, and the U.S.
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
District Court's dismissal, of the Prior Action. On June 14, 2012, the U.S. District Court issued an order that denied the motions requesting the Nevada Action, thereby effectively dismissing the Nevada Action.
Note 9 — Segment Information
The Company's principal operating and developmental activities occur in three geographic areas: Macao, Singapore and the U.S. The Company reviews the results of operations for each of its operating segments: The Venetian Macao; Sands Cotai Central; The Parisian Macao; The Plaza Macao and Four Seasons Hotel Macao; Sands Macao; Marina Bay Sands; Las Vegas Operating Properties; and Sands Bethlehem. The Company also reviews construction and development activities for each of its primary projects currently under development, in addition to its reportable segments noted above, which include the renovation, expansion and rebranding of Sands Cotai Central to The Londoner Macao, the St. Regis Tower Suites Macao and the Four Seasons Tower Suites Macao in Macao, and the Las Vegas Condo Tower (for which construction currently is suspended) in the United States. The Company has included Ferry Operations and Other (comprised primarily of the Company's ferry operations and various other operations that are ancillary to its properties in Macao) to reconcile to condensed consolidated results of operations and financial condition. The Company has included Corporate and Other (which includes the Las Vegas Condo Tower and corporate activities of the Company) to reconcile to the condensed consolidated financial condition. The segment information as of
December 31, 2017
and for the
three and nine
months ended
September 30, 2017
, has been reclassified to conform to the current presentation. The Company's segment information as of
September 30, 2018
and
December 31, 2017
, and for the
three and nine
months ended
September 30, 2018
and
2017
, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Net Revenues
|
|
|
|
|
|
|
|
|
Macao:
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
857
|
|
|
$
|
702
|
|
|
$
|
2,555
|
|
|
$
|
2,102
|
|
|
Sands Cotai Central
|
537
|
|
|
467
|
|
|
1,595
|
|
|
1,365
|
|
|
The Parisian Macao
|
389
|
|
|
411
|
|
|
1,119
|
|
|
1,074
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
167
|
|
|
140
|
|
|
544
|
|
|
413
|
|
|
Sands Macao
|
160
|
|
|
142
|
|
|
494
|
|
|
476
|
|
|
Ferry Operations and Other
|
42
|
|
|
40
|
|
|
123
|
|
|
119
|
|
|
|
2,152
|
|
|
1,902
|
|
|
6,430
|
|
|
5,549
|
|
|
Marina Bay Sands
|
766
|
|
|
789
|
|
|
2,343
|
|
|
2,313
|
|
|
United States:
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
379
|
|
|
387
|
|
|
1,258
|
|
|
1,224
|
|
|
Sands Bethlehem
|
138
|
|
|
144
|
|
|
408
|
|
|
426
|
|
|
|
517
|
|
|
531
|
|
|
1,666
|
|
|
1,650
|
|
|
Intersegment eliminations
|
(63
|
)
|
|
(61
|
)
|
|
(185
|
)
|
|
(175
|
)
|
|
Total net revenues
|
$
|
3,372
|
|
|
$
|
3,161
|
|
|
$
|
10,254
|
|
|
$
|
9,337
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Intersegment Revenues
|
|
|
|
|
|
|
|
|
Macao:
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
Ferry Operations and Other
|
6
|
|
|
6
|
|
|
18
|
|
|
17
|
|
|
|
7
|
|
|
8
|
|
|
21
|
|
|
21
|
|
|
Marina Bay Sands
|
2
|
|
|
2
|
|
|
7
|
|
|
6
|
|
|
Las Vegas Operating Properties
|
54
|
|
|
51
|
|
|
157
|
|
|
148
|
|
|
Total intersegment revenues
|
$
|
63
|
|
|
$
|
61
|
|
|
$
|
185
|
|
|
$
|
175
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Adjusted Property EBITDA
|
|
|
|
|
|
|
|
|
Macao:
|
|
|
|
|
|
|
|
|
The Venetian Macao
|
$
|
344
|
|
|
$
|
264
|
|
|
$
|
1,023
|
|
|
$
|
809
|
|
|
Sands Cotai Central
|
188
|
|
|
154
|
|
|
565
|
|
|
431
|
|
|
The Parisian Macao
|
122
|
|
|
136
|
|
|
352
|
|
|
324
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
53
|
|
|
51
|
|
|
198
|
|
|
162
|
|
|
Sands Macao
|
41
|
|
|
41
|
|
|
140
|
|
|
134
|
|
|
Ferry Operations and Other
|
6
|
|
|
5
|
|
|
15
|
|
|
17
|
|
|
|
754
|
|
|
651
|
|
|
2,293
|
|
|
1,877
|
|
|
Marina Bay Sands
|
419
|
|
|
442
|
|
|
1,328
|
|
|
1,298
|
|
|
United States:
|
|
|
|
|
|
|
|
|
Las Vegas Operating Properties
|
76
|
|
|
76
|
|
|
294
|
|
|
277
|
|
|
Sands Bethlehem
|
33
|
|
|
40
|
|
|
92
|
|
|
113
|
|
|
|
109
|
|
|
116
|
|
|
386
|
|
|
390
|
|
|
Consolidated adjusted property EBITDA
(1)
|
1,282
|
|
|
1,209
|
|
|
4,007
|
|
|
3,565
|
|
|
Other Operating Costs and Expenses
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
(3
|
)
|
|
(4
|
)
|
|
(10
|
)
|
|
(11
|
)
|
|
Corporate
|
(55
|
)
|
|
(51
|
)
|
|
(144
|
)
|
|
(135
|
)
|
|
Pre-opening
|
(2
|
)
|
|
(1
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
Development
|
(4
|
)
|
|
(3
|
)
|
|
(9
|
)
|
|
(8
|
)
|
|
Depreciation and amortization
|
(284
|
)
|
|
(265
|
)
|
|
(822
|
)
|
|
(913
|
)
|
|
Amortization of leasehold interests in land
|
(8
|
)
|
|
(9
|
)
|
|
(26
|
)
|
|
(28
|
)
|
|
Loss on disposal or impairment of assets
|
(4
|
)
|
|
(21
|
)
|
|
(114
|
)
|
|
(27
|
)
|
|
Operating income
|
922
|
|
|
855
|
|
|
2,877
|
|
|
2,436
|
|
|
Other Non-Operating Costs and Expenses
|
|
|
|
|
|
|
|
|
Interest income
|
22
|
|
|
4
|
|
|
36
|
|
|
11
|
|
|
Interest expense, net of amounts capitalized
|
(126
|
)
|
|
(83
|
)
|
|
(308
|
)
|
|
(240
|
)
|
|
Other income (expense)
|
16
|
|
|
(19
|
)
|
|
34
|
|
|
(80
|
)
|
|
Loss on modification or early retirement of debt
|
(52
|
)
|
|
—
|
|
|
(55
|
)
|
|
(5
|
)
|
|
Income tax (expense) benefit
|
(83
|
)
|
|
(73
|
)
|
|
407
|
|
|
(220
|
)
|
|
Net income
|
$
|
699
|
|
|
$
|
684
|
|
|
$
|
2,991
|
|
|
$
|
1,902
|
|
____________________
|
|
|
|
(1)
|
Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is net income before stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, gain or loss on disposal or impairment of assets, interest, other income or expense, gain or loss on modification or early retirement of debt and income taxes. Consolidated adjusted property EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. In particular, management utilizes consolidated adjusted property EBITDA to compare the operating profitability of its operations with those of its competitors, as well as a basis for determining certain incentive compensation. Integrated Resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, Integrated Resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. The Company has significant uses of cash flow, including capital expenditures, dividend payments, interest payments, debt principal repayments and income taxes, which are not reflected in consolidated adjusted property EBITDA. Not all companies calculate adjusted property EBITDA in the same
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
manner. As a result, consolidated adjusted property EBITDA as presented by the Company may not be directly comparable to similarly titled measures presented by other companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
2017
|
|
|
(In millions)
|
|
Capital Expenditures
|
|
|
|
|
Corporate and Other
|
$
|
56
|
|
|
$
|
5
|
|
|
Macao:
|
|
|
|
|
The Venetian Macao
|
109
|
|
|
113
|
|
|
Sands Cotai Central
|
88
|
|
|
58
|
|
|
The Parisian Macao
|
101
|
|
|
149
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
36
|
|
|
19
|
|
|
Sands Macao
|
16
|
|
|
6
|
|
|
Ferry Operations and Other
|
1
|
|
|
4
|
|
|
|
351
|
|
|
349
|
|
|
Marina Bay Sands
|
116
|
|
|
137
|
|
|
United States:
|
|
|
|
|
Las Vegas Operating Properties
|
82
|
|
|
86
|
|
|
Sands Bethlehem
|
18
|
|
|
15
|
|
|
|
100
|
|
|
101
|
|
|
Total capital expenditures
|
$
|
623
|
|
|
$
|
592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
|
Total Assets
|
|
|
|
|
Corporate and Other
|
$
|
1,909
|
|
|
$
|
953
|
|
|
Macao:
|
|
|
|
|
The Venetian Macao
|
2,815
|
|
|
2,640
|
|
|
Sands Cotai Central
|
4,267
|
|
|
3,891
|
|
|
The Parisian Macao
|
2,465
|
|
|
2,496
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
|
879
|
|
|
930
|
|
|
Sands Macao
|
282
|
|
|
282
|
|
|
Ferry Operations and Other
|
264
|
|
|
275
|
|
|
|
10,972
|
|
|
10,514
|
|
|
Marina Bay Sands
|
4,743
|
|
|
5,054
|
|
|
United States:
|
|
|
|
|
Las Vegas Operating Properties
|
5,082
|
|
|
3,530
|
|
|
Sands Bethlehem
|
633
|
|
|
636
|
|
|
|
5,715
|
|
|
4,166
|
|
|
Total assets
|
$
|
23,339
|
|
|
$
|
20,687
|
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
(In millions)
|
|
Total Long-Lived Assets
(1)
|
|
|
|
|
Corporate and Other
|
$
|
262
|
|
|
$
|
249
|
|
|
Macao:
|
|
|
|
|
The Venetian Macao
|
1,741
|
|
|
1,728
|
|
|
Sands Cotai Central
|
3,469
|
|
|
3,516
|
|
|
The Parisian Macao
|
2,334
|
|
|
2,375
|
|
|
The Plaza Macao and Four Seasons Hotel Macao
(2)
|
787
|
|
|
853
|
|
|
Sands Macao
|
223
|
|
|
222
|
|
|
Ferry Operations and Other
|
134
|
|
|
146
|
|
|
|
8,688
|
|
|
8,840
|
|
|
Marina Bay Sands
|
4,142
|
|
|
4,336
|
|
|
United States:
|
|
|
|
|
Las Vegas Operating Properties
|
2,751
|
|
|
2,779
|
|
|
Sands Bethlehem
|
550
|
|
|
549
|
|
|
|
3,301
|
|
|
3,328
|
|
|
Total long-lived assets
|
$
|
16,393
|
|
|
$
|
16,753
|
|
____________________
|
|
|
|
(1)
|
Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and leasehold interests in land, net of accumulated amortization.
|
|
|
|
|
(2)
|
During the nine months ended September 30, 2018, the Company recognized a loss on disposal or impairment of assets of
$94 million
related to the Four Seasons Tower Suites Macao project (see "— Note 3 — Property and Equipment, Net").
|
LAS VEGAS SANDS CORP. AND SUBSIDIARIES