01—Abstract
Summary
Summary of the 10-K filed February 29, 2012. Cited figures are marked; the original filing is the authoritative source.
Las Vegas Sands Corp. (LVS), the leading global developer of destination integrated resorts, reported net revenues of $9.41 billiona for 2011, up from $6.85 billion in 2010, with operating income of $2.39 billion versus $1.18 billion.
Net income attributable to Las Vegas Sands Corp. was $1.56 billionb, compared with $599.4 million in 2010, and diluted earnings per share were $1.56. The growth was driven mainly by the progressive opening of Marina Bay Sands in Singapore, along with increased Macao casino activity, particularly Rolling Chip volume. Adjusted property EBITDA rose to $3.53 billion from $2.23 billion.
The balance sheet shows total assets of $22.24 billionc, long-term debt of $9.58 billion, and cash and cash equivalents of $3.90 billion at December 31, 2011. The company redeemed all of its preferred stock in November 2011 for $763.0 million, and the Principal Stockholder's family indicated it would exercise its warrants for $525.0 million in March 2012. The company also entered a $3.7 billion 2011 VML Credit Facility to refinance Macao debt and fund Sands Cotai Central, whose first phase is expected to open in April 2012.
The filing also flags material risks. Sands Cotai Central and parcel 3 face land concession development deadlines, and the company says it will be unable to meet the April 2013 deadline for parcel 3. A $101.1 milliond investment on parcels 7 and 8 is subject to a pending judicial appeal.
The company also faces an SEC and DOJ investigation under the Foreign Corrupt Practices Act, several shareholder lawsuits, and a Macao subconcession running through June 2022. The Principal Stockholder's family's ownership, about 47% at year-end and expected to rise to about 52% after warrant exercise, gives Mr. Adelson significant influence over the company.
02—Key points
Key Highlights
- Net revenues rose 37.3% to $9.41 billion in 2011, led by a $1.66 billion increase from the progressive opening of Marina Bay Sands.
- Operating income more than doubled to $2.39 billion from $1.18 billion, and net income attributable to Las Vegas Sands Corp. reached $1.56 billion versus $599.4 million in 2010.
- Adjusted property EBITDA grew to $3.53 billion from $2.23 billion, with Macao contributing $1.58 billion and Marina Bay Sands $1.53 billion.
- The company redeemed all outstanding preferred stock on November 15, 2011, paying $763.0 million, and the Principal Stockholder's family plans to pay $525.0 million to exercise warrants in March 2012.
- Long-term debt was $9.58 billion at year-end, and cash and cash equivalents were $3.90 billion, with $1.10 billion available for borrowing under the revolving portions of its U.S., Macao, and Singapore credit facilities.
- The company declared a quarterly cash dividend of $0.25 per share, payable March 30, 2012, and SCL declared a dividend of approximately $601.0 million, of which the company retains 70.3%.
- Development risk is significant: the parcel 3 land concession requires completion by April 2013, which the company says it will be unable to meet, and $3.06 billion in Sands Cotai Central costs is at risk if deadlines are not extended.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed February 29, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $9.41B$6.85B | +37.3% |
| SG&A Expenses | $836.92M$683.30M | +22.5% |
| Operating Expenses | $7.02B$5.67B | +23.8% |
| Operating Income | $2.39B$1.18B | +102.4% |
| Interest Expense | $282.95M$306.81M | −7.8% |
| Net Income | $1.56B$599.39M | +160.3% |
| EPS (Basic) | $1.74$0.61 | +185.2% |
| EPS (Diluted) | $1.56$0.51 | +205.9% |
| Shares Outstanding (Basic) | 728.34M667.46M | +9.1% |
| Shares Outstanding (Diluted) | 811.82M791.76M | +2.5% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue and operating income in 2011?
Net revenues increased $2.56 billion to $9.41 billion. The filing attributes $1.66 billion of the increase to the progressive opening of Marina Bay Sands, plus $719.2 million across Macao operations and $111.5 million at the Las Vegas Operating Properties. Casino revenue rose $1.90 billion, and operating income rose to $2.39 billion from $1.18 billion.
How is the company funding its development projects?
The company funded development primarily through its U.S., Macao, and Singapore credit facilities, operating cash flows, equity offerings, and disposals of non-core assets. In November 2011 it completed a $3.7 billion 2011 VML Credit Facility, including a $3.2 billion term loan, to repay the VML and VOL facilities and continue funding Sands Cotai Central. Management believes cash on hand, operating cash flow, and borrowing availability will be sufficient for projects under construction.
What are the main risks to the Macao development plans?
The parcel 3 land concession must be completed by April 2013, and the company states it will be unable to meet that deadline and intends to seek an extension. Sands Cotai Central must be completed by May 2014. If deadlines are not extended, the company could lose the land concessions and record a charge against $96.0 million for parcel 3 and $3.06 billion for Sands Cotai Central. The company also has $101.1 million of capitalized costs on parcels 7 and 8, whose land concession was denied and is under judicial appeal.
How much influence does the Principal Stockholder's family have?
The Principal Stockholder's family beneficially owned approximately 47% of common stock as of December 31, 2011, excluding unexercised warrants for 87.5 million shares. They indicated intent to exercise those warrants in March 2012, which would raise ownership to approximately 52%. The filing states Mr. Adelson exercises significant influence over business policies, board composition, and matters requiring stockholder approval, and that his interests may conflict with those of other investors.
What legal and regulatory matters are disclosed?
The company received an SEC subpoena on February 9, 2011 relating to Foreign Corrupt Practices Act compliance, and the Department of Justice is conducting a similar investigation. Several shareholder class actions and derivative suits are pending, along with the Richard Suen litigation, for which a new trial is set for March 25, 2013. The company says it cannot currently determine the probability of outcome or the range of reasonably possible loss for these matters.
06—Continue