01—Abstract
Summary
Summary of the 10-K filed February 24, 2017. Cited figures are marked; the original filing is the authoritative source.
Las Vegas Sands Corp. (LVSC), a Fortune 500 company, operates integrated resorts in Macao (through its 70.1%a ownership of Sands China Ltd.), Singapore (Marina Bay Sands) and the United States (Las Vegas Operating Properties and Sands Bethlehem).
For 2016, net revenues were $11.41 billionb, down from $11.69 billion in 2015, while operating income fell to $2.49 billion from $2.84 billion. Net income attributable to Las Vegas Sands Corp. was $1.67 billion ($2.10 per diluted share) versus $1.97 billion in 2015. Casino revenues declined $312 million, driven by lower Rolling Chip (VIP) volume at Macao and Marina Bay Sands, partially offset by $359 million from The Parisian Macao, which opened on September 13, 2016.
Cash generated from operations rose to $4.04 billionc in 2016, and capital expenditures were $1.40 billion, including $925 million for The Parisian Macao. Total long-term debt was $9.43 billion at year-end, and the company reported $2.13 billion of unrestricted cash and cash equivalents. Dividends paid totaled $2.91 billion, and the Board declared a quarterly dividend of $0.73 per share for March 31, 2017.
The company's U.S., Macao and Singapore leverage ratios were 0.8xd, 2.0x and 2.4x, within covenant maximums. Shareholder dependence on Macao, Singapore and Las Vegas for all cash flow, and the 2022 expiration of the Macao subconcession, remain key risks noted in the filing. The filing also discloses that the company entered into a non-prosecution agreement with the DOJ on January 19, 2017, and a civil administrative settlement with the SEC on April 7, 2016, resolving FCPA investigations.
Several shareholder derivative and class actions remain pending, and the company's principal stockholder, Sheldon G. Adelson and family, beneficially owned approximately 54% of common stock as of December 31, 2016.
02—Key points
Key Highlights
- Net revenues of $11.41 billion in 2016, down from $11.69 billion in 2015; operating income of $2.49 billion versus $2.84 billion.
- Net income attributable to Las Vegas Sands Corp. of $1.67 billion, or $2.10 per diluted share, compared with $1.97 billion and $2.47 per share in 2015.
- The Parisian Macao opened September 13, 2016, contributing $359 million in casino revenues and $114 million in adjusted property EBITDA in 2016.
- Net cash generated from operating activities was $4.04 billion in 2016, up from $3.45 billion, while capital expenditures totaled $1.40 billion.
- Total long-term debt was $9.43 billion at December 31, 2016, with $3.46 billion available for borrowing under the U.S., Macao and Singapore credit facilities.
- Quarterly dividend of $0.72 per share paid throughout 2016 ($2.88 declared for the year); a $0.73 per share quarterly dividend was declared in January 2017.
- The Macao subconcession expires June 26, 2022, and the Macao government may redeem it beginning December 26, 2017 with at least one year's notice.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 24, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $11.41B$11.69B | −2.4% |
| SG&A Expenses | $1.29B$1.27B | +1.6% |
| Operating Expenses | $8.77B$8.85B | −0.9% |
| Operating Income | $2.50B$2.84B | −11.9% |
| Interest Expense | $274.00M$265.00M | +3.4% |
| Net Income | $1.68B$1.97B | −14.6% |
| EPS (Basic) | $2.11$2.47 | −14.6% |
| EPS (Diluted) | $2.11$2.47 | −14.6% |
| Shares Outstanding (Basic) | 795.00M797.00M | −0.3% |
| Shares Outstanding (Diluted) | 795.00M798.00M | −0.4% |
05—Questions
Frequently Asked Questions
Why did revenues and operating income decline in 2016?
Net revenues fell $278 million, driven by a $522 million decrease in casino revenues at Macao properties (excluding The Parisian Macao) due to lower Rolling Chip volume as VIP demand declined, and a $152 million decrease in casino revenues at Marina Bay Sands. These were partially offset by $359 million in casino revenue from The Parisian Macao and a $29 million increase in net revenues at the Las Vegas Operating Properties. Operating expenses rose to $8.92 billion, including $299 million from The Parisian Macao and higher depreciation and pre-opening costs.
How strong is the company's balance sheet and debt position?
At December 31, 2016, the company held $2.13 billion of unrestricted cash and cash equivalents and had $9.43 billion of long-term debt. Its U.S., Macao and Singapore leverage ratios were 0.8x, 2.0x and 2.4x, compared with covenant maximums of 5.5x, 4.0x and 3.5x. Total Las Vegas Sands Corp. stockholders' equity was $6.18 billion, and the company reported that it believed cash on hand, operating cash flow and available credit would be sufficient to meet its obligations.
What are the major risks to the company's Macao business?
The Macao subconcession expires June 26, 2022, and unless extended, the casinos and gaming equipment transfer to the Macao government without compensation. The government may redeem the subconcession beginning December 26, 2017 with at least one year's notice. The company also cites dependence on visitors from mainland China, competition from new Cotai resorts with openings planned for 2017 and 2018, and the expiration at the end of 2018 of its corporate income tax exemption and the related dividend tax arrangement.
How much does the company return to shareholders?
The company paid $2.91 billion in dividends during 2016, or $0.72 per share each quarter, and recorded $2.29 billion as a distribution against retained earnings. No common stock was repurchased in 2016. The board authorized a new $1.56 billion repurchase program in November 2016, expiring November 2, 2018. In January 2017, the board declared a $0.73 per share quarterly dividend, totaling approximately $580 million, payable March 31, 2017, and said it expects this level to continue through 2017.
What legal and regulatory matters were resolved or are pending?
The company entered a comprehensive civil administrative settlement with the SEC on April 7, 2016, including a $9 million civil monetary penalty, and a Non-Prosecution Agreement with the DOJ on January 19, 2017, including a $7 million penalty, resolving FCPA investigations. Several shareholder derivative and class actions remain pending, including Sokolowski IV, which was dismissed with a final judgment entered January 23, 2017 and appealed. The company has accrued only nominal amounts for the pending matters and says it intends to defend them vigorously.
06—Continue