RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
The following information is being furnished under Item 2.02 — Results of Operations and Financial Condition.
On January 30, 2013, Las Vegas Sands Corp. (the “Company”) issued a press release announcing its results of operations for the fourth quarter ended December 31, 2012. The press release is attached as Exhibit 99.1 to this report and is incorporated by reference into this item.
Within the Company’s fourth quarter 2012 press release, the Company makes reference to certain non-GAAP financial measures including “adjusted net income,” “adjusted earnings per diluted share,” and “adjusted property EBITDA,” which have directly comparable generally accepted accounting principles ("GAAP") financial measures along with “hold-adjusted adjusted property EBITDA”. The Company believes that these measures represent important internal measures of financial performance. Whenever such information is presented, the Company has complied with the provisions of the rules under Regulation G and Item 2.02 of Form 8-K. The specific reasons why the Company’s management believes that the presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition, results of operations and cash flows are as follows:
Adjusted net income and adjusted earnings per diluted share are presented as supplemental disclosures as management believes they are (1) each widely used measures of performance by industry analysts and investors and (2) a principal basis for valuation of gaming companies, as these non-GAAP measures are considered by many as an alternative measure on which to base expectations for future results. These measures also form the basis of certain internal management performance expectations. Accordingly, these non-GAAP measures are presented so that investors have the same financial data that management uses in evaluating financial performance with the belief that it will assist the investment community in properly assessing the underlying financial performance of the Company on a year-over-year and a quarter sequential basis.
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 adjusted property EBITDA to compare the operating profitability of its casinos with those of its competitors, as well as a basis for determining certain incentive compensation. The Company is also presenting adjusted property EBITDA because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements. Gaming companies have historically reported EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific casino properties, such as pre-opening expense, development expense and corporate expense, from their EBITDA calculations. When evaluating adjusted property EBITDA, investors should consider, among other factors, (1) increasing or decreasing trends in adjusted property EBITDA and (2) how adjusted property EBITDA compares to levels of debt and interest expense. However, 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, interest payments and debt principal repayments, which are not reflected in adjusted property EBITDA. Not all companies calculate EBITDA in the same manner. As a result, adjusted property EBITDA as presented by Las Vegas Sands Corp. may not be directly comparable to similarly titled measures presented by other companies. Adjusted property EBITDA consists of adjusted EBITDA for a particular property, such as The Venetian and The Palazzo in Las Vegas, The Venetian Macao, the Sands Macao, the Four Seasons Hotel Macao and Plaza Casino, and Sands Cotai Central in Macao and the Marina Bay Sands in Singapore. Accordingly, the measures are presented so that investors have the same financial data that management uses in evaluating performance with the belief that it will assist the investment community in properly assessing the underlying performance of the Company on a year-over-year and a quarter sequential basis.
Hold-adjusted 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 addition to the aforementioned reasons for the presentation of adjusted property EBITDA in the Company’s financial reporting, hold-adjusted adjusted property EBITDA is presented to adjust for the impact of certain variances in table games’ win percentages, which can vary from period to period and are out of the Company’s control. The hold-adjusted adjusted property EBITDA measure presents a consistent measure for evaluating the operating performance of our properties from period to period and has been presented so that investors have the same financial data that management uses in evaluating performance with the belief that it will assist the investment community in properly assessing the underlying performance of the Company on a year-over-year basis.