01—Abstract
Summary
Summary of the 10-K filed March 1, 2011. Cited figures are marked; the original filing is the authoritative source.
Las Vegas Sands Corp. (LVS) reported net revenues of $6.85 billiona for 2010, up from $4.56 billion in 2009, driven primarily by the April 2010 opening of Marina Bay Sands in Singapore ($1.26 billion of net revenues) and a $849.5 million increase across Macau properties.
Operating income rose to $1.18 billionb from a loss of $28.7 million in 2009, and net income attributable to Las Vegas Sands Corp. was $599.4 million versus a loss of $354.5 million a year earlier. Results were also affected by a 39.0% gross win tax on Macau casino revenues, which increased casino expenses by $408.2 million. The balance sheet shows total assets of $21.04 billion and long-term debt of $9.37 billion at December 31, 2010, with cash and cash equivalents of $3.04 billion and restricted cash of $809.9 million.
The company has suspended several development projects, including the Las Vegas Condo Tower, and continues to carry significant capitalized construction costs on Cotai Strip parcels 5 and 6 ($2.01 billionc) and on parcels 7 and 8 ($102.1 million), which are subject to a Macau land concession denial under appeal. Management also disclosed that it received an SEC subpoena and a Department of Justice inquiry regarding FCPA compliance on February 9, 2011, and that several securities class actions and other litigation are pending. For investors, the filing shows a strong recovery in operating results led by Macau and Singapore, alongside continued heavy leverage, dependence on three markets for all cash flow, and execution risks tied to the Cotai Strip build-out and additional financing requirements.
02—Key points
Key Highlights
- Net revenues rose 50.2% to $6.85 billion in 2010 from $4.56 billion in 2009, with Marina Bay Sands contributing $1.26 billion.
- Operating income was $1.18 billion in 2010 versus an operating loss of $28.7 million in 2009; net income attributable to Las Vegas Sands Corp. was $599.4 million versus a $354.5 million loss.
- Adjusted property EBITDA increased to $2.23 billion from $1.09 billion, with Macau contributing $1.22 billion and Marina Bay Sands $641.9 million.
- Long-term debt was $9.37 billion at December 31, 2010, and the company stated it had $3.04 billion of unrestricted cash and cash equivalents.
- Net cash generated from operating activities was $1.87 billion in 2010, compared with $638.6 million in 2009, while capital expenditures totaled $2.02 billion.
- Cotai Strip parcels 7 and 8 land concession was not approved by the Macau government in December 2010; the company has appealed, and $102.1 million of capitalized costs is at risk.
- On February 9, 2011, the company received an SEC subpoena and was informed of a Department of Justice investigation relating to FCPA compliance.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 1, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $6.85B$4.56B | +50.2% |
| R&D Expenses | $1.78M$533K | +234.5% |
| SG&A Expenses | $683.30M$526.20M | +29.9% |
| Operating Expenses | $5.67B$4.59B | +23.5% |
| Operating Income | $1.18B-$28.74M | +4207.8% |
| Interest Expense | $306.81M$321.87M | −4.7% |
| Net Income | $599.39M-$354.48M | +269.1% |
| EPS (Basic) | $0.61$-0.82 | +174.4% |
| EPS (Diluted) | $0.51$-0.82 | +162.2% |
| Shares Outstanding (Basic) | 667.46M656.84M | +1.6% |
| Shares Outstanding (Diluted) | 791.76M656.84M | +20.5% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue and profitability in 2010?
The filing attributes the increase in net revenues primarily to $1.26 billion of net revenues at Marina Bay Sands, which opened in April 2010, and an $849.5 million increase across Macau properties, along with a $106.8 million increase at the Las Vegas Operating Properties. Casino revenues increased $2.01 billion, primarily driven by Rolling Chip activity in Macau.
What are the main risks to the company's Cotai Strip development plans?
The filing notes the Macau government denied the land concession application for parcels 7 and 8, with an appeal pending; construction labor quotas are not yet obtained for parcels 5 and 6, so the timing of completing phases I and II is not determinable; and the company must complete parcel 3 by April 2013 and parcels 5 and 6 by May 2014 or risk losing those land concessions. Additional financing for the balance of the Cotai Strip developments is also required, with no assurance it will be obtained.
How leveraged is the company and what covenants apply?
Long-term debt was $10.14 billion as of December 31, 2010, including current maturities, and the filing describes it as highly leveraged. The U.S. credit facility requires a maximum leverage ratio of 6.5x through June 30, 2011, and the company reported a U.S. leverage ratio of 5.2x at year-end. The Macau leverage ratio was 1.6x against a 3.5x maximum.
What is the status of the Shoppes at The Palazzo sale to GGP?
The company received $295.4 million of proceeds, but the final purchase price is not yet determined because it depends on net operating income calculated 30 months after closing. The parties have amended the agreement several times to defer agreement, and the company may be required to record a loss on the sale depending on the final resolution.
Does the company pay dividends on its common stock?
No. The company has not declared or paid dividends on its common stock since its formation in August 2004 and does not expect to pay them in the future. It does pay dividends on its 10% Series A Cumulative Perpetual Preferred Stock, totaling $93.4 million paid in 2010.
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