01—Abstract
Summary
Summary of the 10-K filed February 27, 2015. Cited figures are marked; the original filing is the authoritative source.
Las Vegas Sands Corp. (LVSC), a Nevada corporation listed on the NYSE as "LVS", describes itself as a Fortune 500 developer of integrated resorts and operates properties in Macao (through its 70.1%a ownership of Sands China Ltd.), Singapore (Marina Bay Sands), and the United States (The Venetian Las Vegas, The Palazzo, Sands Expo Center and Sands Bethlehem).
For the year ended December 31, 2014, net revenues were $14.58 billionb, up from $13.77 billion in 2013, operating income was $4.10 billion versus $3.41 billion, and net income attributable to Las Vegas Sands Corp. was $2.84 billion versus $2.31 billion. Diluted earnings per share were $3.52 compared with $2.79 in 2013. Total adjusted property EBITDA rose to $5.42 billion from $4.76 billion, with Macao and Marina Bay Sands driving the increase while the Las Vegas Operating Properties declined.
The balance sheet at year-end 2014 showed total assets of $22.36 billionc, long-term debt of $9.89 billion, and unrestricted cash of approximately $3.51 billion. Net cash generated from operating activities was $4.83 billion. The company paid $2.39 billion in dividends and repurchased $1.68 billion of common stock during 2014, and its board declared a quarterly dividend of $0.65 per share in January 2015 that it expects to continue through 2015.
The filing also highlights development risk, including The Parisian Macao (anticipated to open in 2016, subject to Macao government approval) and a land-concession deadline for it in April 2016, as well as the suspended Las Vegas Condo Tower and an ongoing Macao subconcession that expires in June 2022. The filing also details significant legal matters, including a $101.6 milliond judgment in the Round Square Company litigation that the company is appealing without accruing a reserve, a Steven Jacobs lawsuit with unspecified damages, an SEC and DOJ inquiry under the Foreign Corrupt Practices Act, and several shareholder derivative and class actions. Management states that the company does not expect the legal proceedings generally to have a material adverse effect on its financial condition, although the company has not recorded a reserve for the Round Square judgment.
02—Key points
Key Highlights
- Net revenues rose 5.9% to $14.58 billion in 2014, with Macao operations contributing a $605.0 million increase and Marina Bay Sands a $245.8 million increase.
- Net income attributable to Las Vegas Sands Corp. increased to $2.84 billion ($3.52 diluted EPS) from $2.31 billion ($2.79 diluted EPS) in 2013.
- Total adjusted property EBITDA increased 13.8% to $5.42 billion, led by Sands Cotai Central (up 35.4%) and Marina Bay Sands (up 24.5%), while Las Vegas Operating Properties declined 10.8%.
- Shareholder returns were significant: $2.39 billion in dividends paid and $1.68 billion of share repurchases in 2014, with the company completing its $2.0 billion repurchase program during the year and authorizing another $2.0 billion in October 2014.
- Quarterly dividend declared at $0.65 per share in January 2015 (approximately $519 million), with management expecting this level to continue through 2015.
- Long-term debt stood at $9.89 billion at December 31, 2014, and the company reported unrestricted cash of approximately $3.51 billion; the Macao and Singapore credit facilities were in compliance with covenants.
- Development risk remains elevated: The Parisian Macao is anticipated to open in 2016, with a land concession completion deadline of April 2016, and $804.3 million in capitalized costs for that project and $4.47 billion for the Sands Cotai Central remaining phase at risk if deadlines are not extended.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 27, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $14.58B$13.77B | +5.9% |
| SG&A Expenses | $1.26B$1.33B | −5.4% |
| Operating Expenses | $10.48B$10.36B | +1.2% |
| Operating Income | $4.10B$3.41B | +20.3% |
| Interest Expense | $274.00M$271.21M | +1.0% |
| Net Income | $2.84B$2.31B | +23.2% |
| EPS (Basic) | $3.52$2.80 | +25.7% |
| EPS (Diluted) | $3.52$2.79 | +26.2% |
| Shares Outstanding (Basic) | 806.00M822.28M | −2.0% |
| Shares Outstanding (Diluted) | 808.00M826.32M | −2.2% |
05—Questions
Frequently Asked Questions
How did Las Vegas Sands perform financially in 2014 compared with 2013?
Net revenues increased to $14.58 billion from $13.77 billion, operating income rose to $4.10 billion from $3.41 billion, and net income attributable to Las Vegas Sands Corp. grew to $2.84 billion from $2.31 billion. Diluted earnings per share increased to $3.52 from $2.79. The Macao and Singapore operations drove most of the growth, while the U.S. segment's adjusted property EBITDA declined.
What are the main growth drivers and development projects?
Growth was driven primarily by casino revenues at Macao properties, particularly Sands Cotai Central, and by Marina Bay Sands. The principal projects under development are The Parisian Macao (expected cost of approximately $2.7 billion and anticipated opening in 2016, subject to Macao government approval), the St. Regis tower at Sands Cotai Central (to open mid-2015 for the multipurpose theater, with completion of the remaining phase expected to cost approximately $550 million), and the Four Seasons apart-hotel tower. Construction of the Las Vegas Condo Tower is suspended.
How is the company returning cash to shareholders?
In 2014 the company paid $2.39 billion in dividends and repurchased $1.68 billion of common stock. Quarterly dividends of $0.50 per share were paid during 2014, rising to $0.65 per share declared in January 2015. The board authorized an additional $2.0 billion repurchase program in October 2014, expiring in October 2016.
What are the most significant risks disclosed in the filing?
Key risks include concentration of all cash flow in properties in Macao, Singapore and Las Vegas; the Macao subconcession expiring in June 2022 with a possible government redemption right starting December 2017; the requirement to complete The Parisian Macao and Sands Cotai Central by April and December 2016 to retain land concessions; dependence on VIP play and junket operators; and the influence of Chairman Sheldon G. Adelson's family, which owns approximately 54% of common stock.
What legal proceedings could materially affect the company?
The Round Square Company litigation produced a jury verdict of $70.0 million and a judgment of $101.6 million including pre-judgment interest, which the company is appealing; no reserve has been recorded because management believes the loss is not probable or estimable. The company also faces a Steven Jacobs lawsuit with unspecified damages, a Macao action by Asian American Entertainment Corporation seeking 3.0 billion patacas, and an SEC and DOJ investigation under the Foreign Corrupt Practices Act, along with several shareholder suits. The filing states that management does not expect these matters to have a material adverse effect beyond the Round Square exposure.
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