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EX-10.2 - EXHIBIT 10.2 - LAS VEGAS SANDS CORPlvs-ex102x03312015.htm

UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________ 
Form 10-Q
____________________________________________________ 
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 001-32373
____________________________________________________ 
LAS VEGAS SANDS CORP.
(Exact name of registration as specified in its charter)
____________________________________________________ 
Nevada
 
27-0099920
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
3355 Las Vegas Boulevard South
 
 
Las Vegas, Nevada
 
89109
(Address of principal executive offices)
 
(Zip Code)
(702) 414-1000
(Registrant’s telephone number, including area code)
 ____________________________________________________
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
 
ý
 
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.
Class
  
Outstanding at May 4, 2015
Common Stock ($0.001 par value)
  
798,636,267 shares



LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Table of Contents
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
 
 
 
 
 
Item 1.
Item 1A.
Item 2.
Item 6.

2


PART 1 FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS

LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
March 31, 2015
 
December 31, 2014
 
(In thousands, except share
and per share data)
(Unaudited)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
2,406,465

 
$
3,506,319

Restricted cash and cash equivalents
6,901

 
6,566

Accounts receivable, net
1,408,381

 
1,510,772

Inventories
42,088

 
41,674

Prepaid expenses and other
122,949

 
125,168

Total current assets
3,986,784

 
5,190,499

Property and equipment, net
15,313,332

 
15,372,474

Deferred financing costs, net
192,411

 
205,596

Deferred income taxes, net
38,285

 
31,720

Leasehold interests in land, net
1,311,454

 
1,353,090

Intangible assets, net
82,094

 
86,260

Other assets, net
121,722

 
122,052

Total assets
$
21,046,082

 
$
22,361,691

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Accounts payable
$
93,728

 
$
112,721

Construction payables
251,430

 
270,929

Accrued interest payable
8,376

 
7,943

Other accrued liabilities
1,703,514

 
1,984,444

Deferred income taxes
13,609

 
12,522

Income taxes payable
268,085

 
224,201

Current maturities of long-term debt
97,165

 
99,734

Total current liabilities
2,435,907

 
2,712,494

Other long-term liabilities
124,677

 
124,614

Deferred income taxes
179,778

 
188,935

Deferred proceeds from sale of The Shoppes at The Palazzo
268,641

 
268,710

Deferred gain on sale of The Grand Canal Shoppes
37,258

 
37,968

Deferred rent from mall sale transactions
115,105

 
115,475

Long-term debt
9,143,833

 
9,892,913

Total liabilities
12,305,199

 
13,341,109

Commitments and contingencies (Note 9)

 

Equity:
 
 
 
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 829,658,423 and 829,280,328 shares issued, 798,636,267 and 798,258,172 shares outstanding
830

 
829

Treasury stock, at cost, 31,022,156 shares
(2,237,952
)
 
(2,237,952
)
Capital in excess of par value
6,449,253

 
6,428,762

Accumulated other comprehensive income (loss)
(6,696
)
 
76,101

Retained earnings
2,938,628

 
2,945,846

Total Las Vegas Sands Corp. stockholders’ equity
7,144,063

 
7,213,586

Noncontrolling interests
1,596,820

 
1,806,996

Total equity
8,740,883

 
9,020,582

Total liabilities and equity
$
21,046,082

 
$
22,361,691

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
Three Months Ended 
 March 31,
 
2015
 
2014
 
(In thousands, except share and per share data)
(Unaudited)
Revenues:
 
 
 
Casino
$
2,376,688

 
$
3,372,065

Rooms
371,413

 
400,222

Food and beverage
189,411

 
202,787

Mall
127,814

 
109,031

Convention, retail and other
134,137

 
137,376

 
3,199,463

 
4,221,481

Less — promotional allowances
(187,841
)
 
(211,097
)
Net revenues
3,011,622

 
4,010,384

Operating expenses:
 
 
 
Casino
1,334,829

 
1,867,612

Rooms
65,791

 
64,263

Food and beverage
99,247

 
100,169

Mall
15,137

 
17,363

Convention, retail and other
68,257

 
90,468

Provision for doubtful accounts
57,350

 
61,918

General and administrative
324,478

 
336,499

Corporate
45,223

 
50,677

Pre-opening
9,579

 
4,300

Development
1,533

 
1,692

Depreciation and amortization
253,922

 
261,047

Amortization of leasehold interests in land
9,838

 
10,026

Loss on disposal of assets
15,323

 
525

 
2,300,507

 
2,866,559

Operating income
711,115

 
1,143,825

Other income (expense):
 
 
 
Interest income
6,378

 
5,803

Interest expense, net of amounts capitalized
(66,255
)
 
(71,126
)
Other income (expense)
15,465

 
(4,657
)
Loss on modification or early retirement of debt

 
(17,964
)
Income before income taxes
666,703

 
1,055,881

Income tax expense
(55,665
)
 
(59,153
)
Net income
611,038

 
996,728

Net income attributable to noncontrolling interests
(99,115
)
 
(220,543
)
Net income attributable to Las Vegas Sands Corp.
$
511,923

 
$
776,185

Earnings per share:
 
 
 
Basic
$
0.64

 
$
0.95

Diluted
$
0.64

 
$
0.95

Weighted average shares outstanding:
 
 
 
Basic
797,935,314

 
814,766,709

Diluted
798,877,040

 
817,537,615

Dividends declared per common share
$
0.65

 
$
0.50

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
Three Months Ended 
 March 31,
 
2015
 
2014
 
(In thousands)
(Unaudited)
Net income
$
611,038

 
$
996,728

Currency translation adjustment, before and after tax
(82,299
)
 
10,223

Total comprehensive income
528,739

 
1,006,951

Comprehensive income attributable to noncontrolling interests
(99,613
)
 
(219,918
)
Comprehensive income attributable to Las Vegas Sands Corp.
$
429,126

 
$
787,033

The accompanying notes are an integral part of these condensed consolidated financial statements.


5


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY 
 
Las Vegas Sands Corp. Stockholders’ Equity
 
 
 
 
 
Common
Stock
 
Treasury
Stock
 
Capital in
Excess of
Par Value
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
 
(In thousands)
(Unaudited)
Balance at January 1, 2014
$
827

 
$
(570,520
)
 
$
6,348,065

 
$
173,783

 
$
1,713,339

 
$
1,835,035

 
$
9,500,529

Net income

 

 

 

 
776,185

 
220,543

 
996,728

Currency translation adjustment

 

 

 
10,848

 

 
(625
)
 
10,223

Exercise of stock options
2

 

 
30,503

 

 

 
1,610

 
32,115

Tax benefit from stock-based compensation

 

 
4,112

 

 

 

 
4,112

Stock-based compensation

 

 
15,480

 

 

 
1,612

 
17,092

Repurchase of common stock

 
(810,009
)
 

 

 

 

 
(810,009
)
Dividends declared

 

 

 

 
(405,807
)
 
(509,391
)
 
(915,198
)
Distributions to noncontrolling interests

 

 

 

 

 
(2,579
)
 
(2,579
)
Balance at March 31, 2014
$
829

 
$
(1,380,529
)
 
$
6,398,160

 
$
184,631

 
$
2,083,717

 
$
1,546,205

 
$
8,833,013

Balance at January 1, 2015
$
829

 
$
(2,237,952
)
 
$
6,428,762

 
$
76,101

 
$
2,945,846

 
$
1,806,996

 
$
9,020,582

Net income

 

 

 

 
511,923

 
99,115

 
611,038

Currency translation adjustment

 

 

 
(82,797
)
 

 
498

 
(82,299
)
Exercise of stock options
1

 

 
5,024

 

 

 
1,113

 
6,138

Tax benefit from stock-based compensation

 

 
3,927

 

 

 

 
3,927

Stock-based compensation

 

 
11,540

 

 

 
833

 
12,373

Dividends declared

 

 

 

 
(519,141
)
 
(308,083
)
 
(827,224
)
Distributions to noncontrolling interests

 

 

 

 

 
(3,652
)
 
(3,652
)
Balance at March 31, 2015
$
830

 
$
(2,237,952
)
 
$
6,449,253

 
$
(6,696
)
 
$
2,938,628

 
$
1,596,820

 
$
8,740,883

The accompanying notes are an integral part of these condensed consolidated financial statements.


6


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Three Months Ended 
 March 31,
 
2015
 
2014
 
(In thousands)
(Unaudited)
Cash flows from operating activities:
 
 
 
Net income
$
611,038

 
$
996,728

Adjustments to reconcile net income to net cash generated from operating activities:
 
 
 
Depreciation and amortization
253,922

 
261,047

Amortization of leasehold interests in land
9,838

 
10,026

Amortization of deferred financing costs and original issue discount
10,739

 
14,562

Amortization of deferred gain on and rent from mall sale transactions
(1,080
)
 
(1,236
)
Non-cash change in deferred proceeds from sale of The Shoppes at The Palazzo
141

 
245

Non-cash loss on modification or early retirement of debt

 
13,467

Loss on disposal of assets
15,323

 
525

Stock-based compensation expense
12,201

 
16,102

Provision for doubtful accounts
57,350

 
61,918

Foreign exchange (gain) loss
(12,366
)
 
951

Excess tax benefits from stock-based compensation
(4,335
)
 
(4,112
)
Deferred income taxes
(10,040
)
 
(9,248
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
20,321

 
(77,087
)
Inventories
(650
)
 
600

Prepaid expenses and other
272

 
(6,050
)
Leasehold interests in land
(1,065
)
 

Accounts payable
(18,156
)
 
12,373

Accrued interest payable
712

 
(5,097
)
Income taxes payable
58,509

 
60,774

Other accrued liabilities
(268,379
)
 
(213,861
)
Net cash generated from operating activities
734,295

 
1,132,627

Cash flows from investing activities:
 
 
 
Change in restricted cash and cash equivalents
(332
)
 
948

Capital expenditures
(367,336
)
 
(251,727
)
Proceeds from disposal of property and equipment
417

 
541

Net cash used in investing activities
(367,251
)
 
(250,238
)
Cash flows from financing activities:
 
 
 
Proceeds from exercise of stock options
6,138

 
32,115

Excess tax benefits from stock-based compensation
4,335

 
4,112

Repurchase of common stock

 
(734,363
)
Dividends paid
(826,960
)
 
(915,072
)
Distributions to noncontrolling interests
(3,652
)
 
(2,579
)
Proceeds from long-term debt (Note 3)

 
1,319,725

Repayments on long-term debt (Note 3)
(624,950
)
 
(828,063
)
Payments of deferred financing costs

 
(57,255
)
Net cash used in financing activities
(1,445,089
)
 
(1,181,380
)
Effect of exchange rate on cash
(21,809
)
 
1,979

Decrease in cash and cash equivalents
(1,099,854
)
 
(297,012
)
Cash and cash equivalents at beginning of period
3,506,319

 
3,600,414

Cash and cash equivalents at end of period
$
2,406,465

 
$
3,303,402



7


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
Three Months Ended 
 March 31,
 
2015
 
2014
 
(In thousands)
(Unaudited)
Supplemental disclosure of cash flow information:
 
 
 
Cash payments for interest, net of amounts capitalized
$
51,285

 
$
57,835

Cash payments for taxes, net of refunds
$
6,410

 
$
6,788

Change in construction payables
$
(19,499
)
 
$
(23,708
)
Non-cash investing and financing activities:
 
 
 
Capitalized stock-based compensation costs
$
172

 
$
990

Change in dividends payable on unvested restricted stock and stock units included in other accrued liabilities
$
264

 
$
126

Change in common stock repurchase payable included in other accrued liabilities
$

 
$
75,646


The accompanying notes are an integral part of these condensed consolidated financial statements.

8


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 — ORGANIZATION AND BUSINESS OF COMPANY
The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K of Las Vegas Sands Corp. (“LVSC”), a Nevada corporation, and its subsidiaries (collectively the “Company”) for the year ended December 31, 2014, and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however, the Company believes that the disclosures herein are adequate to make the information presented not misleading. In the opinion of management, all adjustments and normal recurring accruals considered necessary for a fair statement of the results for the interim period have been included. The interim results reflected in the unaudited condensed consolidated financial statements are not necessarily indicative of expected results for the full year. The Company’s common stock is traded on the New York Stock Exchange under the symbol “LVS.”
The ordinary shares of the Company’s subsidiary, Sands China Ltd. (“SCL,” the indirect owner and operator of the majority of the Company’s operations in the Macao Special Administrative Region (“Macao”) of the People’s Republic of China) are listed on The Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”). The shares were not, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered or sold in the U.S. absent a registration under the Securities Act of 1933, as amended, or an applicable exception from such registration requirements.
Operations
Macao
The Company currently owns 70.1% of SCL, which includes the operations of The Venetian Macao, Sands Cotai Central, Four Seasons Macao, Sands Macao and other ancillary operations that support these properties, as further discussed below. The Company operates the gaming areas within these properties pursuant to a 20-year gaming subconcession agreement, which expires in June 2022.
The Company owns and operates The Venetian Macao Resort Hotel (“The Venetian Macao”), which anchors the Cotai Strip, the Company’s master-planned development of integrated resort properties on an area of approximately 140 acres in Macao. The Venetian Macao includes a 39-floor luxury hotel with over 2,900 suites; approximately 376,000 square feet of gaming space; a 15,000-seat arena; an 1,800-seat theater; a mall with retail and dining space of approximately 925,000 square feet; and a convention center and meeting room complex of approximately 1.2 million square feet.
The Company owns the Sands Cotai Central, an integrated resort situated across the street from The Venetian Macao and Four Seasons Macao (which is further described below). The Sands Cotai Central opened in phases, beginning in April 2012. The property currently features three hotel towers: the first hotel tower, consisting of approximately 600 five-star rooms and suites under the Conrad brand and approximately 1,200 four-star rooms and suites under the Holiday Inn brand; the second hotel tower, consisting of approximately 1,800 rooms and suites under the Sheraton brand; and the third hotel tower, consisting of approximately 2,100 rooms and suites under the Sheraton brand. Within Sands Cotai Central, the Company also owns and currently operates approximately 370,000 square feet of gaming space, approximately 350,000 square feet of meeting space and approximately 330,000 square feet of retail space, as well as entertainment and dining facilities. The Company has begun construction activities on the remaining phase of the project, which will include a fourth hotel and mixed-use tower under the St. Regis brand. The total cost to complete the remaining phase of the project is expected to be approximately $460 million. Upon completion of the project, the integrated resort will feature approximately 370,000 square feet of gaming space, approximately 800,000 square feet of retail, dining and entertainment space, over 550,000 square feet of meeting facilities and a multipurpose theater (to

9





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

open in mid-2015). As of March 31, 2015, the Company has capitalized costs of $4.58 billion for the entire project, including the land premium (net of amortization) and $67.6 million in outstanding construction payables.
 The Company owns the Four Seasons Hotel Macao, Cotai Strip (the “Four Seasons Hotel Macao”), which features 360 rooms and suites under the Four Seasons brand and is located adjacent and connected to The Venetian Macao. Connected to the Four Seasons Hotel Macao, the Company owns and operates the Plaza Casino (together with the Four Seasons Hotel Macao, the “Four Seasons Macao”), which features approximately 105,000 square feet of gaming space; 19 Paiza mansions; retail space of approximately 258,000 square feet, which is connected to the mall at The Venetian Macao; several food and beverage offerings; and conference, banquet and other facilities. This integrated resort will also feature the Four Seasons Apartment Hotel Macao, Cotai Strip (the “Four Seasons Apartments”), an apart-hotel tower that consists of approximately 1.0 million square feet of Four Seasons-serviced and -branded luxury apart-hotel units and common areas. The Company has completed the structural work of the tower and is advancing its plans to monetize units within the Four Seasons Apartments.
The Company owns and operates the Sands Macao, the first Las Vegas-style casino in Macao. The Sands Macao offers approximately 241,000 square feet of gaming space and a 289-suite hotel tower, as well as several restaurants, VIP facilities, a theater and other high-end services and amenities.
Singapore
The Company owns and operates the Marina Bay Sands in Singapore, which features three 55-story hotel towers (totaling approximately 2,600 rooms and suites), the Sands SkyPark (which sits atop the hotel towers and features an infinity swimming pool and several dining options), approximately 160,000 square feet of gaming space, an enclosed retail, dining and entertainment complex of approximately 800,000 net leasable square feet, a convention center and meeting room complex of approximately 1.2 million square feet, theaters and a landmark iconic structure at the bay-front promenade that contains an art/science museum.
United States
Las Vegas
The Company owns and operates The Venetian Resort Hotel Casino (“The Venetian Las Vegas”), a Renaissance Venice-themed resort; The Palazzo Resort Hotel Casino (“The Palazzo”), a resort featuring modern European ambience and design; and an expo and convention center of approximately 1.2 million square feet (the “Sands Expo Center”). These Las Vegas properties, situated on or near the Las Vegas Strip, form an integrated resort with approximately 7,100 suites; approximately 225,000 square feet of gaming space; a meeting and conference facility of approximately 1.1 million square feet; and the Grand Canal Shoppes, which consist of two enclosed retail, dining and entertainment complexes that were sold to GGP Limited Partnership (“GGP,” see “— Note 2 — Property and Equipment, Net”).
Pennsylvania
The Company owns and operates the Sands Casino Resort Bethlehem (the “Sands Bethlehem”), a gaming, hotel, retail and dining complex located on the site of the historic Bethlehem Steel Works in Bethlehem, Pennsylvania. Sands Bethlehem features approximately 145,000 square feet of gaming space; a 300-room hotel tower; a 150,000-square-foot retail facility; an arts and cultural center; and a 50,000-square-foot multipurpose event center. The Company owns 86% of the economic interest in the gaming, hotel and entertainment portion of the property through its ownership interest in Sands Bethworks Gaming LLC and more than 35% of the economic interest in the retail portion of the property through its ownership interest in Sands Bethworks Retail LLC.

10





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Development Projects
Macao
The Company submitted plans to the Macao government for The Parisian Macao, an integrated resort that will be connected to The Venetian Macao and Four Seasons Macao. The Parisian Macao is intended to include a gaming area (to be operated under the Company’s gaming subconcession), a hotel with over 3,000 rooms and suites and retail, entertainment, dining and meeting facilities. The Company has commenced construction and expects the cost to design, develop and construct The Parisian Macao will be approximately $2.7 billion, inclusive of payments made for the land premium. As with projects of this nature, the Company will continue to analyze options for both a full and phased opening of the facility, which is anticipated to open in the second half of 2016, subject to Macao government approval. The Company has capitalized costs of $970.9 million, including the land premium (net of amortization) and $93.5 million in outstanding construction payables, as of March 31, 2015. In addition, the Company will be completing the development of some public areas surrounding its Cotai Strip properties on behalf of the Macao government.
Under the Company’s land concession for The Parisian Macao, the Company is required to complete the development by April 2016. The land concession for Sands Cotai Central contains a similar requirement, which was extended by the Macao government in April 2014, that the development be completed by December 2016. The Company has applied for an extension from the Macao government to complete The Parisian Macao, as the Company believes it will be unable to meet the April 2016 deadline. Should the Company determine that it is unable to complete Sands Cotai Central by December 2016, the Company would then also expect to apply for another extension from the Macao government. If the Company is unable to meet the Sands Cotai Central deadline and the deadlines for either development are not extended, the Company could lose its land concessions for The Parisian Macao or Sands Cotai Central, which would prohibit the Company from operating any facilities developed under the respective land concessions. As a result, the Company could record a charge for all or some portion of its $970.9 million or $4.58 billion in capitalized construction costs and land premiums (net of amortization), as of March 31, 2015, related to The Parisian Macao and Sands Cotai Central, respectively.
United States
The Company was constructing a high-rise residential condominium tower (the “Las Vegas Condo Tower”), located on the Las Vegas Strip between The Palazzo and The Venetian Las Vegas. The Company suspended construction activities for the project due to reduced demand for Las Vegas Strip condominiums and the overall decline in general economic conditions. The Company intends to recommence construction when demand and conditions improve. The impact of the suspension on the estimated overall cost of the project is currently not determinable with certainty. Should demand and conditions fail to improve or management decides to abandon the project, the Company could record a charge for some portion of the $178.6 million in capitalized construction costs as of March 31, 2015.
Other
The Company continues to aggressively pursue new development opportunities globally.
Capital Financing Overview
Through March 31, 2015, the Company has funded its development projects primarily through borrowings under its credit facilities, operating cash flows, proceeds from its equity offerings and proceeds from the disposition of non-core assets.
The Company held unrestricted cash and cash equivalents of $2.41 billion and restricted cash and cash equivalents of $6.9 million as of March 31, 2015. The Company believes the cash on hand and cash flow generated from operations will be sufficient to maintain compliance with the financial covenants of its credit facilities. The Company may elect to arrange additional financing to fund the balance of its Cotai Strip developments. In the normal course of its activities, the Company will continue to evaluate its capital structure and opportunities for enhancements thereof.

11





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued an accounting standard update on revenue recognition that will be applied to all contracts with customers. The update requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. It also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance will be required to be applied on a retrospective basis, using one of two methodologies, and will be effective for fiscal years beginning after December 15, 2016, with early application not being permitted. The Company is currently assessing the impact that the guidance will have on the Company's financial condition and results of operations.
In April 2015, the FASB issued an accounting standard update to simplify the presentation of debt issuance costs. The update requires that debt issuance costs be reported as a deduction of the face amount of the related debt (rather than as an asset) and that the amortization of debt issuance costs continue to be reported as interest expense. The amendments do not affect the guidance on the recognition and measurement of debt issuance costs. The guidance will be required to be applied on a retrospective basis and will be effective for fiscal years beginning after December 31, 2015. Early adoption is permitted for financial statements that have not been previously issued. The adoption of this guidance will not have a material effect on the Company's financial condition, results of operations or cash flows.
NOTE 2 — PROPERTY AND EQUIPMENT, NET
Property and equipment consists of the following (in thousands):
 
March 31, 2015
 
December 31, 2014
Land and improvements
$
548,859

 
$
551,625

Building and improvements
15,046,535

 
15,187,427

Furniture, fixtures, equipment and leasehold improvements
3,088,446

 
3,065,859

Transportation
454,837

 
454,278

Construction in progress
2,057,504

 
1,796,554

 
21,196,181

 
21,055,743

Less — accumulated depreciation and amortization
(5,882,849
)
 
(5,683,269
)
 
$
15,313,332

 
$
15,372,474

Construction in progress consists of the following (in thousands):
 
March 31, 2015
 
December 31, 2014
The Parisian Macao
$
916,255

 
$
749,176

Four Seasons Macao (principally the Four Seasons Apartments)
418,452

 
417,920

Sands Cotai Central
398,202

 
289,518

Other
324,595

 
339,940

 
$
2,057,504

 
$
1,796,554

The $324.6 million in other construction in progress as of March 31, 2015, consists primarily of construction of the Las Vegas Condo Tower and various projects at The Venetian Macao.
In accordance with the April 2004 purchase and sale agreement, as amended, between Venetian Casino Resort, LLC (“VCR”) and GGP (the “Amended Agreement”), the Company sold the portion of the Grand Canal Shoppes located within The Palazzo (formerly referred to as "The Shoppes at the Palazzo"). Under the terms of the settlement with GGP on June 24, 2011, the Company retained the $295.4 million of proceeds previously received and participates in certain potential future revenues earned by GGP. Under generally accepted accounting principles, the transaction has not been accounted for as a sale because the Company’s participation in certain potential future revenues constitutes continuing involvement in The Shoppes at The Palazzo. Therefore, $266.2 million of the proceeds allocated to the mall

12





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

sale transaction has been recorded as deferred proceeds (a long-term financing obligation), which will accrue interest at an imputed rate and will be offset by (i) imputed rental income and (ii) rent payments made to GGP related to spaces leased back from GGP by the Company. The property and equipment legally sold to GGP totaling $226.3 million (net of $85.1 million of accumulated depreciation) as of March 31, 2015, will continue to be recorded on the Company’s condensed consolidated balance sheet and will continue to be depreciated in the Company’s condensed consolidated income statement.
During the three months ended March 31, 2015 and 2014, the Company capitalized interest expense of $4.2 million and $1.7 million, respectively. During the three months ended March 31, 2015 and 2014, the Company capitalized approximately $7.5 million and $7.9 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.
NOTE 3 — LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
 
March 31, 2015
 
December 31, 2014
Corporate and U.S. Related:
 
 
 
2013 U.S. Credit Facility — Term B (net of original issue discount of $9,241 and $9,643, respectively)
$
2,212,634

 
$
2,217,857

2013 U.S. Credit Facility — Revolving
860,000

 
1,020,000

Airplane Financings
62,750

 
63,671

HVAC Equipment Lease
16,243

 
16,619

Other
219

 
401

Macao Related:
 
 
 
2011 VML Credit Facility — Extended Term
2,388,858

 
2,388,244

2011 VML Credit Facility — Extended Revolving
379,864

 
820,024

Other
5,346

 
5,694

Singapore Related:
 
 
 
2012 Singapore Credit Facility — Term
3,315,084

 
3,460,137

 
9,240,998

 
9,992,647

Less — current maturities
(97,165
)
 
(99,734
)
Total long-term debt
$
9,143,833

 
$
9,892,913

2013 U.S. Credit Facility
As of March 31, 2015, the Company had $386.0 million of available borrowing capacity under the 2013 U.S. Revolving Facility, net of outstanding letters of credit.
2011 VML Credit Facility
As of March 31, 2015, the Company had $1.62 billion of available borrowing capacity under the Extended 2011 VML Revolving Facility.
In April 2015, the Company entered into a joinder agreement (the "Joinder Agreement") to the 2011 VML Credit Facility. Under the Joinder Agreement, certain lenders have agreed to provide term loan commitments of $1.0 billion (the "2011 VML Accordion Term"), which was funded on April 30, 2015 (the “Joinder Funding Date”).
The 2011 VML Accordion Term bears interest, at the Company's option, at either the adjusted Eurodollar rate or Hong Kong Inter-bank Offered Rate (“HIBOR”), plus a credit spread, or an alternative base rate, plus a credit spread, which credit spread in each case is determined based on the consolidated total leverage ratio as set forth in the Joinder Agreement. The credit spread ranges from 0.25% to 1.125% per annum for loans accruing interest at the base rate and from 1.25% to 2.125% per annum for loans accruing interest at an adjusted Eurodollar or HIBOR rate. The initial credit spread as of April 30, 2015 (the date the term was funded), was 0.25% per annum for loans accruing interest at a base rate and 1.25% per annum for loans accruing at an adjusted Eurodollar or HIBOR rate.

13





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

The 2011 VML Accordion Term will mature on March 30, 2021. Commencing with the quarterly period ending June 30, 2018, and at the end of each subsequent quarter through March 31, 2019, the Joinder Agreement requires the borrower to repay the outstanding 2011 VML Accordion Term on a pro rata basis in an amount equal to 2.5% of the aggregate principal amount outstanding as of the Joinder Funding Date. Commencing with the quarterly period ending on June 30, 2019, and at the end of each subsequent quarter through March 31, 2020, the borrower is required to repay the outstanding 2011 VML Accordion Term on a pro rata basis in an amount equal to 5.0% of the aggregate principal amount outstanding as of the Joinder Funding Date. For the quarterly periods ending on June 30 through December 31, 2020, the borrower is required to repay the outstanding 2011 VML Accordion Term on a pro rata basis in an amount equal to 12.0% of the aggregate principal amount outstanding as of the Joinder Funding Date. The remaining balance on the 2011 VML Accordion Term is due on the maturity date.
2012 Singapore Credit Facility
As of March 31, 2015, the Company had 487.5 million Singapore dollars ("SGD," approximately $354.9 million at exchange rates in effect on March 31, 2015) of available borrowing capacity under the 2012 Singapore Revolving Facility, net of outstanding letters of credit. 
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt and capital lease obligations are as follows (in thousands):
 
Three Months Ended 
 March 31,
 
2015
 
2014
Proceeds from 2011 VML Credit Facility
$

 
$
819,725

Proceeds from 2013 U.S. Credit Facility

 
500,000

 
$

 
$
1,319,725

Repayments on 2011 VML Credit Facility
$
(440,416
)
 
$
(819,680
)
Repayments on 2013 U.S. Credit Facility
(165,625
)
 
(5,625
)
Repayments on 2012 Singapore Credit Facility
(17,082
)
 

Repayments on Airplane Financings
(922
)
 
(922
)
Repayments on HVAC Equipment Lease and Other Long-Term Debt
(905
)
 
(1,836
)
 
$
(624,950
)
 
$
(828,063
)
Fair Value of Long-Term Debt
The estimated fair value of the Company’s long-term debt as of March 31, 2015 and December 31, 2014, was approximately $9.06 billion and $9.78 billion, respectively, compared to its carrying value of $9.23 billion and $9.98 billion, respectively. The estimated fair value of the Company’s long-term debt is based on level 2 inputs (quoted prices in markets that are not active).
NOTE 4 — EQUITY AND EARNINGS PER SHARE
Common Stock
Dividends
On March 31, 2015, the Company paid a dividend of $0.65 per common share as part of a regular cash dividend program. During the three months ended March 31, 2015, the Company recorded $519.1 million as a distribution against retained earnings (of which $280.6 million related to the Principal Stockholder’s family and the remaining $238.5 million related to all other shareholders).

14





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

On March 31, 2014, the Company paid a dividend of $0.50 per common share as part of a regular cash dividend program. During the three months ended March 31, 2014, the Company recorded $405.8 million as a distribution against retained earnings (of which $215.8 million related to the Principal Stockholder’s family and the remaining $190.0 million related to all other shareholders).
In April 2015, the Company’s Board of Directors declared a quarterly dividend of $0.65 per common share (a total estimated to be approximately $519 million) to be paid on June 30, 2015, to shareholders of record on June 22, 2015.
Repurchase Program
In June 2013, the Company’s Board of Directors approved a stock repurchase program with an initial authorization of $2.0 billion, which expires in June 2015, but was substantially completed during the year ended December 31, 2014. In October 2014, the Company's Board of Directors authorized the repurchase of an additional $2.0 billion of its outstanding common stock, which expires in October 2016. Repurchases of the Company’s common stock are made at the Company’s discretion in accordance with applicable federal securities laws in the open market or otherwise. The timing and actual number of shares to be repurchased in the future will depend on a variety of factors, including the Company’s financial position, earnings, legal requirements, other investment opportunities and market conditions. During the three months ended March 31, 2015, there were no share repurchases under this program. During the three months ended March 31, 2014, the Company repurchased 10,023,353 shares of its common stock for $810.0 million (including commissions) under this program. All share repurchases of the Company’s common stock have been recorded as treasury stock.
Noncontrolling Interests
On February 27, 2015, SCL paid a dividend of 0.99 Hong Kong dollars ("HKD") per share to SCL shareholders (a total of $1.03 billion, of which the Company retained $722.4 million during the three months ended March 31, 2015). On February 26, 2014, SCL paid a dividend of HKD 0.87 per share and a special dividend of HKD 0.77 per share to SCL shareholders (a total of $1.71 billion, of which the Company retained $1.20 billion during the three months ended March 31, 2014).
During the three months ended March 31, 2015 and 2014, the Company distributed $3.7 million and $2.6 million, respectively, to certain of its noncontrolling interests.
Earnings Per Share
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted earnings per share consisted of the following:
 
Three Months Ended 
 March 31,
 
2015
 
2014
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)
797,935,314

 
814,766,709

Potential dilution from stock options, warrants and restricted stock and stock units
941,726

 
2,770,906

Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)
798,877,040

 
817,537,615

Antidilutive stock options excluded from the calculation of diluted earnings per share
5,925,307

 
627,034


15





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

Accumulated Other Comprehensive Income (Loss)
As of March 31, 2015 and December 31, 2014, accumulated other comprehensive income (loss) consisted solely of foreign currency translation adjustments.
NOTE 5 — VARIABLE INTEREST ENTITIES
The Company consolidates any variable interest entities (“VIEs”) in which it is the primary beneficiary and discloses significant variable interests in VIEs for which it is not the primary beneficiary, if any, which management determines such designation based on accounting standards for VIEs.
The Company has entered into various joint venture agreements with independent third parties. The operations of these joint ventures have been consolidated by the Company due to the Company’s significant investment in these joint ventures, its power to direct the activities of the joint ventures that would significantly impact their economic performance and the obligation to absorb potentially significant losses or the rights to receive potentially significant benefits from these joint ventures. The Company evaluates its primary beneficiary designation on an ongoing basis and assesses the appropriateness of the VIE’s status when events have occurred that would trigger such an analysis.
As of March 31, 2015 and December 31, 2014, the Company’s consolidated joint ventures had total assets of $84.7 million and $85.0 million, respectively, and total liabilities of $136.2 million and $130.6 million, respectively.
NOTE 6 — INCOME TAXES
The Company’s major tax jurisdictions are the U.S., Macao and Singapore. The Company is subject to examination for tax years beginning 2010 in the U.S., Macao and Singapore. The Inland Revenue Authority of Singapore is performing a compliance review of the Marina Bay Sands tax return for tax years 2010 through 2012. The Company believes it has adequately reserved for its uncertain tax positions; however, there is no assurance that the taxing authorities will not propose adjustments that are different from the Company’s expected outcome, which may impact the provision for income taxes.
The Company does not consider the current year's tax earnings and profits of certain foreign subsidiaries to be permanently reinvested. The Company has not provided deferred taxes for these foreign earnings as the Company expects there will be sufficient creditable foreign taxes to offset the U.S. income tax that would result from the repatriation of foreign earnings. The Company recorded valuation allowances on certain net deferred tax assets of its U.S. operations and certain foreign jurisdictions. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period and to the extent it becomes “more-likely-than-not” that the deferred tax assets are realizable, the Company will reduce the valuation allowance in the period such determination is made.
In October 2013, the Company received a 5-year income tax exemption in Macao that exempts the Company from paying corporate income tax on profits generated by gaming operations. The Company will continue to benefit from this tax exemption through the end of 2018. In May 2014, the Company entered into an agreement with the Macao government, effective through the end of 2018, that provides for an annual payment of 42.4 million patacas (approximately $5.3 million at exchange rates in effect on March 31, 2015) that is a substitution for a 12% tax otherwise due from Venetian Macau Limited (“VML”) shareholders on dividend distributions paid from VML gaming profits.

16





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

NOTE 7 — STOCK-BASED EMPLOYEE COMPENSATION
Stock-based compensation activity under the LVSC 2004 and SCL Equity Plans is as follows (in thousands, except weighted average grant date fair values):
 
Three Months Ended 
 March 31,
 
2015
 
2014
Compensation expense:
 
 
 
Stock options
$
8,995

 
$
8,830

Restricted stock and stock units
3,206

 
7,272

 
$
12,201

 
$
16,102

Compensation cost capitalized as part of property and equipment
$
172

 
$
990

LVSC 2004 Plan:
 
 
 
Stock options granted
308

 
55

Weighted average grant date fair value
$
12.35

 
$
33.08

Restricted stock granted
22

 
24

Weighted average grant date fair value
$
55.41

 
$
75.26

Restricted stock units granted

 

Weighted average grant date fair value
$

 
$

SCL Equity Plan:
 
 
 
Stock options granted
648

 
5,841

Weighted average grant date fair value
$
1.06

 
$
3.66

Restricted stock units granted
119

 
189

Weighted average grant date fair value
$
4.90

 
$
7.37

The fair value of each option grant was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:
 
Three Months Ended 
 March 31,
 
2015
 
2014
LVSC 2004 Plan:
 
 
 
Weighted average volatility
38.0
%
 
60.4
%
Expected term (in years)
5.8

 
5.5

Risk-free rate
1.3
%
 
1.7
%
Expected dividends
4.7
%
 
2.7
%
SCL Equity Plan:
 
 
 
Weighted average volatility
44.6
%
 
65.6
%
Expected term (in years)
4.0

 
6.3

Risk-free rate
1.0
%
 
1.3
%
Expected dividends
5.5
%
 
2.9
%

17





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

NOTE 8 — FAIR VALUE MEASUREMENTS
Under applicable accounting guidance, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance also establishes a valuation hierarchy for inputs in measuring fair value that maximizes the use of observable inputs (inputs market participants would use based on market data obtained from sources independent of the Company) and minimizes the use of unobservable inputs (inputs that reflect the Company’s assumptions based upon the best information available in the circumstances) by requiring that the most observable inputs be used when available. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the assets or liabilities, either directly or indirectly. Level 3 inputs are unobservable inputs for the assets or liabilities. Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following table provides the assets carried at fair value (in thousands):
 
 
 
Fair Value Measurements Using:
 
Total Carrying
Value
 
Quoted Market
Prices in Active
Markets (Level 1)
 
Significant Other
Observable
Inputs (Level 2)
 
Significant
Unobservable
Inputs (Level 3)
As of March 31, 2015
 
 
 
 
 
 
 
Cash equivalents(1)
$
903,456

 
$
903,456

 
$

 
$

Interest rate caps(2)
$

 
$

 
$

 
$

As of December 31, 2014
 
 
 
 
 
 
 
Cash equivalents(1)
$
2,072,177

 
$
2,072,177

 
$

 
$

Interest rate caps(2)
$
3

 
$

 
$
3

 
$

____________________
(1)
The Company has short-term investments classified as cash equivalents as the original maturities are less than 90 days.
(2)
As of March 31, 2015 and December 31, 2014, the Company had 4 interest rate cap agreements with a nominal aggregate fair value based on quoted market values from the institutions holding the agreements.
NOTE 9 — COMMITMENTS AND CONTINGENCIES
Litigation
The Company is involved in other litigation in addition to those noted below, arising in the normal course of business. Management has made certain estimates for potential litigation costs based upon consultation with legal counsel. Actual results could differ from these estimates; however, in the opinion of management, such litigation and claims will not have a material effect on the Company’s financial condition, results of operations or cash flows.
On October 15, 2004, Richard Suen and Round Square Company Limited (“RSC”) filed an action against LVSC, Las Vegas Sands, Inc. (“LVSI”), Sheldon G. Adelson and William P. Weidner in the District Court of Clark County, Nevada (the “District Court”), asserting a breach of an alleged agreement to pay a success fee of $5.0 million and 2.0% of the net profit from the Company’s Macao resort operations to the plaintiffs as well as other related claims. In March 2005, LVSC was dismissed as a party without prejudice based on a stipulation to do so between the parties. Pursuant to an order filed March 16, 2006, plaintiffs’ fraud claims set forth in the first amended complaint were dismissed with prejudice against all defendants. The order also dismissed with prejudice the first amended complaint against defendants Sheldon G. Adelson and William P. Weidner. On May 24, 2008, the jury returned a verdict for the plaintiffs in the amount of $43.8 million. On June 30, 2008, a judgment was entered in this matter in the amount of $58.6 million (including pre-judgment interest). The Company appealed the verdict to the Nevada Supreme Court. On November 17, 2010, the Nevada Supreme Court reversed the judgment and remanded the case to the District Court for a new trial. In

18





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

its decision reversing the monetary judgment against the Company, the Nevada Supreme Court also made several other rulings, including overturning the pre-trial dismissal of the plaintiffs’ breach of contract claim and deciding several evidentiary matters, some of which confirmed and some of which overturned rulings made by the District Court. On February 27, 2012, the District Court set a date of March 25, 2013, for the new trial. On June 22, 2012, the defendants filed a request to add experts and plaintiffs filed a motion seeking additional financial data as part of their discovery. The District Court granted both requests. The retrial began on March 27 and on May 14, 2013, the jury returned a verdict in favor of RSC in the amount of $70.0 million. On May 28, 2013, a judgment was entered in the matter in the amount of $101.6 million (including pre-judgment interest). On June 7, 2013, the Company filed a motion with the District Court requesting that the judgment be set aside as a matter of law or in the alternative that a new trial be granted. On July 30, 2013, the District Court denied the Company’s motion. On October 17, 2013, the District Court entered an order granting plaintiffs' request for certain costs and fees associated with the litigation in the amount of approximately $1.0 million. On December 6, 2013, the Company filed a notice of appeal of the jury verdict with the Nevada Supreme Court. The Company filed its opening appellate brief with the Nevada Supreme Court on June 16, 2014. On August 19, 2014, the Nevada Supreme Court issued an order granting plaintiffs additional time until September 15, 2014, to file their answering brief. On September 15, 2014, RSC filed a request to the Nevada Supreme Court to file a brief exceeding the maximum number of words, which was granted. On October 10, 2014, RSC filed their answering brief. On January 9, 2015, the defendants filed their reply brief. The Company believes that it has valid bases in law and fact to appeal these verdicts. As a result, the Company believes that the likelihood that the amount of the judgments will be affirmed is not probable, and, accordingly, that the amount of any loss cannot be reasonably estimated at this time. Because the Company believes that this potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. In the event that the Company’s assumptions used to evaluate this matter as neither probable nor estimable change in future periods, it may be required to record a liability for an adverse outcome.
On October 20, 2010, Steven C. Jacobs, the former Chief Executive Officer of SCL, filed an action against LVSC and SCL in the District Court alleging breach of contract against LVSC and SCL and breach of the implied covenant of good faith and fair dealing and tortious discharge in violation of public policy against LVSC. On March 16, 2011, an amended complaint was filed, which added Sheldon G. Adelson as a defendant and alleged a claim of defamation per se against him, LVSC and SCL. On June 9, 2011, the District Court dismissed the defamation claim and certified the decision as to Sheldon G. Adelson as a final judgment. On July 1, 2011, the plaintiff filed a notice of appeal regarding the final judgment as to Sheldon G. Adelson. On August 26, 2011, the Nevada Supreme Court issued a writ of mandamus instructing the District Court to hold an evidentiary hearing on whether personal jurisdiction exists over SCL and stayed the case until after the District Court’s decision. On January 17, 2012, Mr. Jacobs filed his opening brief with the Nevada Supreme Court regarding his appeal of the defamation claim against Mr. Adelson. On January 30, 2012, Mr. Adelson filed his reply to Mr. Jacobs’ opening brief. On March 8, 2012, the District Court set a hearing date for the week of June 25-29, 2012, for the evidentiary hearing on personal jurisdiction over SCL. On May 24, 2012, the District Court vacated the hearing date previously set for June 25-29 and set a status conference for June 28, 2012. At the June 28 status hearing, the District Court set out a hearing schedule to resolve a discovery dispute and did not reset a date for the jurisdictional hearing. From September 10 to September 12, 2012, the District Court held a hearing to determine the outcome of certain discovery disputes and issued an Order on September 14, 2012. In its Order, the District Court fined LVSC $25,000 and, for the purposes of the jurisdictional discovery and evidentiary hearing, precluded the defendants from relying on the Macao Data Privacy Act as an objection or defense under its discovery obligations. On December 21, 2012, the District Court ordered the defendants to produce documents from a former counsel to LVSC containing attorney client privileged information. On January 23, 2013, the defendants filed a writ with the Nevada Supreme Court challenging this order (the “January Writ”). On January 29, 2013, the District Court granted defendants' motion for a stay of the order. On February 15, 2013, the Nevada Supreme Court ordered the plaintiff to answer the January Writ. On February 28, 2013, the District Court ordered a hearing on plaintiff’s request for sanctions and additional discovery (the “February 28th Order”). On April 8, 2013, the defendants filed a writ with the Nevada Supreme Court challenging the February 28th Order (the “April Writ”); and the Nevada Supreme Court ordered the plaintiff to answer the April Writ by May 20, 2013. The defendants also filed and were granted a stay of the February 28th Order by the District Court until such time as the Nevada Supreme Court decides the April Writ. On June 18, 2013, the District Court scheduled the jurisdictional hearing for July 16-22, 2013 and issued an order allowing the plaintiff access to

19





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

privileged communications of counsel to the Company (the “June 18th Order”). On June 21, 2013, the Company filed another writ with the Nevada Supreme Court challenging the June 18th Order (the “June Writ”). The Nevada Supreme Court accepted the June Writ on June 28, 2013, and issued a stay of the June 18th Order. On June 28, 2013, the District Court vacated the jurisdictional hearing. On July 3, 2013, the Company filed a motion with the Nevada Supreme Court to consolidate the pending writs (each of which have been fully briefed to the Nevada Supreme Court as of the date of this filing). On October 9, 2013, the Nevada Supreme Court heard arguments on the January Writ and plaintiff’s appeal of the District Court’s dismissal of plaintiff’s defamation claim against Mr. Adelson. The Nevada Supreme Court has taken both matters under advisement pending a decision. On January 29, 2014, the defendants filed Supplemental Authority and a Motion to Recall Mandate with the Nevada Supreme Court to (i) inform the Nevada Supreme Court of a recently decided U.S. Supreme Court case involving similar jurisdictional issues to this matter and (ii) given this new precedent, to review anew its August 26, 2011, writ of mandamus to the District Court, respectively. On February 27, 2014, the Nevada Supreme Court ruled in favor of the Company on the January Writ, which became effective on March 24, 2014. On March 3, 2014, the Nevada Supreme Court heard oral arguments on the April and June Writs. On May 30, 2014, the Nevada Supreme Court overturned the District Court’s dismissal of Mr. Jacob’s defamation claim against Mr. Adelson and remanded the claim for further determination. On June 17, 2014, Mr. Adelson filed a petition for rehearing with the Nevada Supreme Court and, on June 20, 2014, the Nevada Supreme Court ordered Mr. Jacobs to answer the petition for rehearing, which he did on July 7, 2014. On June 26, 2014, SCL filed a Motion for Summary Judgment with respect to jurisdiction with the District Court, which was denied on July 29, 2014. On June 30, 2014, Mr. Jacobs filed a motion for leave to file a second amended complaint. The defendants filed a notice of intent to oppose the motion for leave to file the second amended complaint. On July 1, 2014, Mr. Jacobs filed a motion to reconsider the dismissal of the defamation claim. On July 3, 2014, Mr. Adelson filed a notice of intent to oppose the motion to reconsider and requested oral argument. Also on July 3, 2014, the defendants filed a motion to continue the stay of the District Court’s March 26, 2013, order compelling the production of documents from Macao and a notice of intent to oppose plaintiff’s motion to reconsider the dismissal of his defamation claim against LVSC and SCL. On July 22, 2014, the defendants filed a motion for leave to file a reply in support of their petition for rehearing on the defamation claim with the Nevada Supreme Court. On July 22, 2014, SCL filed its reply in support of its Motion for Summary Judgment on jurisdiction and opposition to plaintiff’s counter Motion for Summary Judgment. On July 25, 2014, the Nevada Supreme Court granted defendants’ motion for leave to file a reply. On July 29, 2014, the Nevada Supreme Court heard the Motions for Summary Judgment and denied them both. On August 7, 2014, the Nevada Supreme Court denied the writ challenging the District Court’s order on plaintiff’s March 26, 2013, Renewed Motion for Sanctions. On August 7, 2014, the Nevada Supreme Court granted in part defendants’ writ with respect to the District Court’s June 19, 2013, order requiring the production of privileged material. On August 7, 2014, the Nevada Supreme Court also denied rehearing on its reversal of the dismissal of the defamation claim by a vote of 4-3. On August 13, 2014, the District Court ruled that plaintiff may amend his complaint except for the defamation claim against Mr. Adelson until the remittitur from the Nevada Supreme Court is received. The District Court also allowed the sanctions hearing to move forward and is reviewing documents in camera to determine whether they were properly withheld on privilege grounds. On September 4, 2014, SCL filed its pre-hearing memorandum regarding the sanctions hearing regarding plaintiff’s March 26, 2013, Renewed Motion for Sanctions. On September 12, 2014, the plaintiff filed a motion for release of the privileged documents from the District Court appointed document custodian on the grounds of waiver. On September 16, 2014, the plaintiff filed a motion seeking to stop defendants from modifying their privilege log and seeking a waiver of all privilege claims as a result of alleged deficiencies in the original privilege. On September 26, 2014, after the Nevada Supreme Court issued its remittitur, plaintiff filed his motion for leave to file a third amended complaint against LVSC, SCL and Mr. Adelson. On September 26, 2014, the defendants filed their opposition to plaintiff’s motion for release of documents on the grounds of waiver. On October 3, 2014, the plaintiff filed his reply in support of his two waiver motions relating to the documents held by the District Court appointed custodian. On October 9, 2014, the District Court granted plaintiff's motion in part and denied the remainder. On October 17, 2014, SCL filed a motion to reconsider the District Court’s March 27, 2013, order concerning a discovery dispute. On October 10, 2014, Mr. Adelson filed his opposition to plaintiff's motion to file a third amended complaint, which SCL and LVSC joined on October 14, 2014. On October 30, 2014, the plaintiff filed his reply in support of his motion to file a third amended complaint. On November 5, 2014, the District Court ordered that SCL waived privilege on three confidential reports. On November 7, 2014, the District Court granted plaintiff's motion to file a third amended complaint. On November 7, 2014, defendants

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

filed a motion for partial re-consideration of the November 5, 2014, order waiving privilege. On January 6, 2015, the District Court scheduled a sanctions hearing for February 9, 2015, and the evidentiary hearing on jurisdiction for April 20, 2015. On January 12, 2015, defendants each filed their motions to dismiss the third amended complaint. Defendants’ motions to dismiss the third amended complaint were fully briefed on February 19, 2015, and the District Court heard oral argument on February 27, 2015. In an order entered on March 30, 2015, the District Court denied Mr. Adelson’s motion to dismiss the defamation claim, but granted his motion to dismiss with respect to plaintiff’s wrongful discharge claim on the ground that Mr. Adelson was not the plaintiff’s employer. The District Court denied LVSC’s motion to dismiss and strike certain allegations in the complaint. The District Court reserved judgment on SCL’s motion to dismiss until after it ruled on jurisdiction. On April 7, 2015, LVSC filed a motion for reconsideration of the order on the limited ground that the court had erroneously stated that LVSC was in fact Plaintiff’s employer rather than stating that Plaintiff had alleged that he was LVSC’s employee. Plaintiff conceded that point in his response filed on April 20, 2015. A hearing was held on the motion for reconsideration on April 21, 2015.
The sanctions hearing was held over six days, beginning on February 9 and ending on March 3, 2015. On March 6, 2015, the District Court issued a decision and order imposing sanctions on SCL for violating its September 14, 2012 Order, which the District Court construed as prohibiting SCL from redacting any documents produced in response to jurisdictional discovery requests to comply with the Macao Data Privacy Act. On March 6, 2015, the District Court ordered additional discovery to be provided by SCL. The District Court also ordered SCL to pay a total of $250,000 to five different law-related entities. Finally, the District Court imposed evidentiary sanctions on SCL, prohibiting it from offering any affirmative evidence at the hearing on jurisdiction scheduled to begin on April 20, 2015, and stating that it would adversely infer, subject to SCL’s ability to rebut the inference within the evidentiary constraints imposed on it, that any document redacted to comply with the Macao Data Privacy Act would support plaintiff’s assertion of personal jurisdiction over SCL and would contradict SCL’s denial. SCL sought a stay of the order from the District Court on March 13, 2015, and when that was denied, from the Nevada Supreme Court on March 16, 2015. The Nevada Supreme Court granted a partial stay on March 17, 2015, staying SCL’s obligation to pay $250,000 and to run additional searches, but declining to stay the April 20, 2015 hearing on jurisdiction. SCL filed a petition for mandamus in the Nevada Supreme Court on March 20, 2015. Plaintiff filed his response on March 27, 2015, and SCL filed its reply on March 31, 2015. On April 2, 2015, the Nevada Supreme Court denied the mandamus petition with respect to everything but the $250,000 sanction and lifted the stay except with respect to that sanction. The jurisdictional hearing began on April 20, 2015, and is expected to continue through at least May 5, 2015.
Mr. Jacobs is seeking unspecified damages. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On February 9, 2011, LVSC received a subpoena from the Securities and Exchange Commission (the “SEC”) requesting that the Company produce documents relating to its compliance with the Foreign Corrupt Practices Act (the “FCPA”). The Company has also been advised by the Department of Justice (the “DOJ”) that it is conducting a similar investigation. It is the Company’s belief that the subpoena may have emanated from the lawsuit filed by Steven C. Jacobs described above.
After the Company’s receipt of the subpoena from the SEC on February 9, 2011, the Board of Directors delegated to the Audit Committee, comprised of three independent members of the Board of Directors, the authority to investigate the matters raised in the SEC subpoena and related inquiry of the DOJ.
As part of the 2012 annual audit of the Company’s financial statements, the Audit Committee advised the Company and its independent accountants that it had reached certain preliminary findings, including that there were likely violations of the books and records and internal controls provisions of the FCPA and that in recent years, the Company has improved its practices with respect to books and records and internal controls.
Based on the information provided to management by the Audit Committee and its counsel, the Company believes, and the Audit Committee concurs, that the preliminary findings:
do not have a material impact on the financial statements of the Company;

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

do not warrant any restatement of the Company’s past financial statements; and
do not represent a material weakness in the Company’s internal controls over financial reporting as of March 31, 2015.
The investigation by the Audit Committee is complete. The Company is cooperating with all investigations. Based on proceedings to date, management is currently unable to determine the probability of the outcome of this matter, the extent of materiality, or the range of reasonably possible loss, if any. 
On May 24, 2010, Frank J. Fosbre, Jr. filed a purported class action complaint in the United States District Court for the District of Nevada (the “U.S. District Court”), against LVSC, Sheldon G. Adelson, and William P. Weidner. The complaint alleged that LVSC, through the individual defendants, disseminated or approved materially false information, or failed to disclose material facts, through press releases, investor conference calls and other means from August 1, 2007 through November 6, 2008. The complaint sought, among other relief, class certification, compensatory damages and attorneys’ fees and costs. On July 21, 2010, Wendell and Shirley Combs filed a purported class action complaint in the U.S. District Court, against LVSC, Sheldon G. Adelson, and William P. Weidner. The complaint alleged that LVSC, through the individual defendants, disseminated or approved materially false information, or failed to disclose material facts, through press releases, investor conference calls and other means from June 13, 2007 through November 11, 2008. The complaint, which was substantially similar to the Fosbre complaint, discussed above, sought, among other relief, class certification, compensatory damages and attorneys’ fees and costs. On August 31, 2010, the U.S. District Court entered an order consolidating the Fosbre and Combs cases, and appointed lead plaintiffs and lead counsel. As such, the Fosbre and Combs cases are reported as one consolidated matter. On November 1, 2010, a purported class action amended complaint was filed in the consolidated action against LVSC, Sheldon G. Adelson and William P. Weidner. The amended complaint alleges that LVSC, through the individual defendants, disseminated or approved materially false and misleading information, or failed to disclose material facts, through press releases, investor conference calls and other means from August 2, 2007 through November 6, 2008. The amended complaint seeks, among other relief, class certification, compensatory damages and attorneys’ fees and costs. On January 10, 2011, the defendants filed a motion to dismiss the amended complaint, which, on August 24, 2011, was granted in part, and denied in part, with the dismissal of certain allegations. On November 7, 2011, the defendants filed their answer to the allegations remaining in the amended complaint. On July 11, 2012, the U.S. District Court issued an order allowing defendants’ Motion for Partial Reconsideration of the court’s order dated August 24, 2011, striking additional portions of the plaintiff’s complaint and reducing the class period to a period of February 4 to November 6, 2008. On August 7, 2012, the plaintiff filed a purported class action second amended complaint (the “Second Amended Complaint”) seeking to expand their allegations back to a time period of 2007 (having previously been cut back to 2008 by the U.S. District Court) essentially alleging very similar matters that had been previously stricken by the U.S. District Court. On October 16, 2012, the defendants filed a new motion to dismiss the Second Amended Complaint. The plaintiffs responded to the motion to dismiss on November 1, 2012, and defendants filed their reply on November 12, 2012. On November 20, 2012, the U.S. District Court granted a stay of discovery under the Private Securities Litigation Reform Act pending a decision on the new motion to dismiss and therefore, the discovery process has been suspended. On April 16, 2013, the case was reassigned to a new judge. On July 30, 2013, the U.S. District Court heard the motion to dismiss and took the matter under advisement. On November 7, 2013, the judge granted in part and denied in part defendants' motions to dismiss. On December 13, 2013, the defendants filed their answer to the Second Amended Complaint. Discovery in the matter has re-started. On January 8, 2014, plaintiffs filed a motion to expand the certified class period. On February 3, 2014, the judge agreed to the parties' stipulation to defer briefing on the issue of expanding the class period until the U.S. Supreme Court issues a decision in the case of Halliburton Co. v. Erica P. John Fund, Inc. On September 26, 2014, the U.S. Supreme Court denied plaintiffs' motion to expand the class period without prejudice to re-filing a similar motion. The U.S. Supreme Court decided the Halliburton case on June 23, 2014, and, on October 3, 2014, the parties stipulated to a case management schedule wherein they agree to a briefing schedule on class certification. On November 7, 2014, plaintiffs filed a motion to expand the class period and on January 9, 2015, defendants filed their opposition to the motion. This consolidated action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.

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LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

On March 9, 2011, Benyamin Kohanim filed a shareholder derivative action (the “Kohanim action”) on behalf of the Company in the District Court against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint alleges, among other things, breach of fiduciary duties in failing to properly implement, oversee and maintain internal controls to ensure compliance with the FCPA. The complaint seeks to recover for the Company unspecified damages, including restitution and disgorgement of profits, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiff. On April 18, 2011, Ira J. Gaines, Sunshine Wire and Cable Defined Benefit Pension Plan Trust dated 1/1/92 and Peachtree Mortgage Ltd. filed a shareholder derivative action (the “Gaines action”) on behalf of the Company in the District Court against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint raises substantially similar claims as alleged in the Kohanim action. The complaint seeks to recover for the Company unspecified damages, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiffs. The Kohanim and Gaines actions have been consolidated and are reported as one consolidated matter. On July 25, 2011, the plaintiffs filed a first verified amended consolidated complaint. The plaintiffs have twice agreed to stay the proceedings. A 120-day stay was entered by the District Court in October 2011. It was extended for another 90 days in February 2012 and expired in May 2012. The parties agreed to an extension of the May 2012 deadline that expired on October 30, 2012. The defendants filed a motion to dismiss on November 1, 2012, based on the fact that the plaintiffs have suffered no damages. On January 23, 2013, the District Court denied the motion to dismiss in part, deferred the remainder of the motion to dismiss and stayed the proceedings until a July 22, 2013, status hearing. On July 22, 2013, the District Court extended the stay until December 2, 2013, and then on December 2, 2013, extended it again until March 3, 2014. On March 3, 2014, the judge extended the stay until a status hearing set for September 4, 2014, when the judge extended the stay until the next status hearing set for March 5, 2015. At a status conference on March 5, 2015, the judge extended the stay for another 120 days. This consolidated action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On April 1, 2011, Nasser Moradi, Richard Buckman, Douglas Tomlinson and Matt Abbeduto filed a shareholder derivative action (the “Moradi action”), as amended on April 15, 2011, on behalf of the Company in the U.S. District Court, against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint raises substantially similar claims as alleged in the Kohanim and Gaines actions. The complaint seeks to recover for the Company unspecified damages, including exemplary damages and restitution, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiffs. On April 18, 2011, the Louisiana Municipal Police Employees Retirement System filed a shareholder derivative action (the “LAMPERS action”) on behalf of the Company in the U.S. District Court, against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time, and Wing T. Chao, a former member of the Board of Directors. The complaint raises substantially similar claims as alleged in the Kohanim, Moradi and Gaines actions. The complaint seeks to recover for the Company unspecified damages, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiff. On April 22, 2011, John Zaremba filed a shareholder derivative action (the “Zaremba action”) on behalf of the Company in the U.S. District Court, against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time, and Wing T. Chao, a former member of the Board of Directors. The complaint raises substantially similar claims as alleged in the Kohanim, Moradi, Gaines and LAMPERS actions. The complaint seeks to recover for the Company unspecified damages, including restitution, disgorgement of profits and injunctive relief, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiff. On August 25, 2011, the U.S. District Court consolidated the Moradi, LAMPERS and Zaremba actions and such actions are reported as one consolidated matter. On November 17, 2011, the defendants filed a motion to dismiss or alternatively to stay the federal action due to the parallel state court action described above. On May 25, 2012, the case was transferred to a new judge. On August 27, 2012, the U.S. District Court granted the motion to stay pending a further update of the Special Litigation Committee due on October 30, 2012. On October 30, 2012, the

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LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

defendants filed the update asking the judge to determine whether to continue the stay until January 31, 2013, or to address motions to dismiss. On November 7, 2012, the U.S. District Court denied defendants request for an extension of the stay but asked the parties to brief the motion to dismiss. On November 21, 2012, defendants filed their motion to dismiss. On December 21, 2012, plaintiffs filed their opposition and on January 18, 2013, defendants filed their reply. On May 31, 2013, the case was reassigned to a new judge. On April 11, 2014, the judge denied the motion to dismiss without prejudice and ordered the case stayed pending the outcome of the state court action in Kohanim described above. The judge also ordered the parties to file a joint status report with the U.S. District Court by September 10, 2014, which was filed. This consolidated action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On January 23, 2014, W.A. Sokolowski filed a shareholder derivative action (the "Sokolowski action") purporting to act on behalf of the Company and in his individual capacity as a shareholder in the U.S. District Court for the District of Nevada against Sheldon G. Adelson, Michael A. Leven, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Charles A. Koppelman, Jeffrey H. Schwartz, Victor Chaltiel and Irwin A. Siegel, each of whom was serving on the Board of Directors (collectively, the “Directors”), as well as against Frederick Hipwell, a partner at PricewaterhouseCoopers LLP (“PwC”), the Company’s former auditor. The complaint alleges, among other things, that the Directors breached their fiduciary duties to the Company by attempting to conceal certain alleged misrepresentations and wrongdoing by the Company’s management, concealed certain facts in connection with audits performed by PwC and caused the issuance of a false or misleading proxy statement in 2013. The complaint seeks, among other things the appointment of a conservator or special master to oversee the Company’s discussions with governmental agencies as well as to recover for the Company unspecified damages, including restitution and disgorgement of profits, and also seeks to recover attorneys’ fees, costs and related expenses for the plaintiff. The Company filed a motion to dismiss the complaint on February 13, 2014. On February 28, 2014, defendant Hipwell filed his motion to dismiss the complaint. On March 12, 2014, the plaintiff filed its response to the Company’s motion to dismiss and on March 26, 2014, the Company filed its reply. On March 31, 2014, the plaintiff filed its response to Hipwell’s motion to dismiss and on April 10, 2014, Hipwell filed his reply. On April 1, 2014, the plaintiff filed a renewed motion for expedited discovery (the first motion was filed on January 24, 2014 and was denied by the judge). The Company filed its response on April 18, 2014. On May 2, 2014, the U.S. District Court denied this second motion. On May 9, 2014, Directors Ader, Chafetz, Chaltiel, Forman, Koppelman and Leven filed their motion to dismiss. On June 10, 2014, the plaintiff filed its opposition to these Directors motion to dismiss. On June 30, 2014, these Directors filed their reply. On July 30, 2014, the U.S. District Court granted the Company’s motion to dismiss the complaint, finding plaintiff had failed to allege stock ownership facts demonstrating standing to sue, with leave for plaintiff to amend his complaint to demonstrate stock ownership with more particularity. On August 29, 2014, the plaintiff filed an amended complaint and, on September 15, 2014, the served defendants filed their motions to dismiss the amended complaint. The plaintiff's opposition to the Company's motion to dismiss was filed on October 22, 2014, and to the individuals' motions to dismiss on October 29, 2014. Plaintiffs also filed an opposition to Hipwell's motion on November 3, 2014, and opposed Mr. Adelson's joinder on December 9, 2014. The served defendants' reply briefs were filed on November 24, 25 and 26, 2014. On December 16, 2014, Mr. Adelson filed a reply brief. On March 3, 2015, the U.S. District Court denied, without prejudice, plaintiff's motion to substitute the estates of the late Messrs. Chaltiel and Schwartz. This action is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this matter or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On March 6, 2014, the Board of Directors of the Company received a shareholder demand letter from a purported shareholder named the John F. Scarpa Foundation ("Scarpa"). This letter recites substantially the same allegations as the complaint filed in the Sokolowski action and demands that the same claims be asserted by the Company, which was delivered to the Company by the same counsel representing Mr. Sokolowski. The Company responded, through its counsel, on March 26, 2014. Scarpa then sent a revised demand letter to the Board of Directors on March 31, 2014. The Company responded, through its counsel, on April 8, 2014. Scarpa then sent an additional demand letter dated August 14, 2014 to which the Company responded on August 22, 2014. This matter is in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of

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LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

the outcome of this matter, whether this matter will result in litigation or the range of reasonably possible loss, if any. The Company intends to defend this matter vigorously.
On January 19, 2012, Asian American Entertainment Corporation, Limited (“AAEC”) filed a claim (the “Macao action”) with the Macao Judicial Court (Tribunal Judicial de Base) against VML, LVS (Nevada) International Holdings, Inc. (“LVS (Nevada)”), Las Vegas Sands, LLC (“LVSLLC”) and VCR (collectively, the “Defendants”). The claim is for 3.0 billion patacas (approximately $375.6 million at exchange rates in effect on March 31, 2015) as compensation for damages resulting from the alleged breach of agreements entered into between AAEC and the Defendants for their joint presentation of a bid in response to the public tender held by the Macao government for the award of gaming concessions at the end of 2001. On July 4, 2012, the Defendants filed their defense to the Macao action with the Macao Judicial Court. AAEC then filed a reply that included several amendments to the original claim, although the amount of the claim was not amended. On January 4, 2013, the Defendants filed an amended defense to the amended claim with the Macao Judicial Court. On September 23, 2013, the three U.S. Defendants filed a motion with the Macao Second Instance Court, seeking recognition and enforcement of the U.S. Court of Appeals ruling in the Prior Action, referred to below, given on April 10, 2009, which partially dismissed AAEC’s claims against the three U.S. Defendants. On April 24, 2014, the Macao Judicial Court issued a Decision (Despacho Seneador) holding that AAEC’s claim against VML is unfounded and that VML be removed as a party to the proceedings, and that the claim should proceed exclusively against the three U.S. Defendants. The Macao Judicial Court further held that the existence of the pending application for recognition and enforcement of the U.S. Court of Appeals ruling before the Macao Second Instance Court did not justify a stay of the proceedings against the three U.S. Defendants at the present time, although in principle an application for a stay of the proceedings against the three U.S. Defendants could be reviewed after the Macao Second Instance Court had issued its decision. On June 25, 2014, the Macao Second Instance Court delivered a decision, which gave formal recognition to and allowed enforcement in Macao of the judgment of the U.S. Court of Appeals, dismissing AAEC's claims against the U.S. Defendants. Subject to an appeal by AAEC, the U.S. Defendants intend to apply to the Macao First Instance Court to dismiss AAEC's claims in full. On March 25, 2015, application was made by the U.S. Defendants to the Macao First Instance Court to revoke the legal aid granted to AAEC, accompanied by a request for evidence taking from AAEC, relating to the fees and expenses that they incurred and paid in the U.S. subsequent action referred to in the following sentence. On July 9, 2014, the plaintiff filed yet another action in the U.S. District Court against LVSC, LVSLLC, VCR, Sheldon G. Adelson, William P. Weidner, David Friedman and Does 1-50 for declaratory judgment, equitable accounting, misappropriation of trade secrets, breach of confidence and conversion based on a theory of copyright law. The claim is for $5.0 billion. On November 4, 2014, plaintiff finally effected notice on the LVSC entities which was followed by a motion to dismiss by the U.S. Defendants on November 10, 2014. Plaintiff failed to timely respond and on December 2, 2014, the U.S. Defendants moved for immediate dismissal and sanctions against plaintiff and his counsel for the bringing of frivolous lawsuit. On December 19, 2014, plaintiff filed an incomplete and untimely response which was followed by plaintiff's December 27, 2014 notice of withdrawal of the lawsuit and the U.S. Defendants' December 29, 2014, reply in favor of sanctions and dismissal with prejudice. The judge dismissed the U.S. action and the Defendants' sanctions motion remains pending. The Macao action and this most recently filed action are in a preliminary stage and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of these matters or the range of reasonably possible loss, if any. The Company intends to defend these matters vigorously.
As previously disclosed by the Company, on February 5, 2007, AAEC brought a similar claim (the “Prior Action”) in the U.S. District Court, against LVSI (now known as LVSLLC), VCR and Venetian Venture Development, LLC, which are subsidiaries of the Company, and William P. Weidner and David Friedman, who are former executives of the Company. The U.S. District Court entered an order on April 16, 2010, dismissing the Prior Action. On April 20, 2012, LVSLLC, VCR and LVS (Nevada) filed an injunctive action (the “Nevada Action”) against AAEC in the U.S. District Court seeking to enjoin AAEC from proceeding with the Macao Action based on AAEC’s filing, and the U.S. District Court’s dismissal, of the Prior Action. On June 14, 2012, the U.S. District Court issued an order that denied the motions requesting the Nevada Action, thereby effectively dismissing the Nevada Action.
The Company previously received subpoenas from the U.S. Attorney’s Office for the Central District of California (the “USAO”) requesting the production of documents relating to two prior customers of the Company’s properties. In

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

August 2013, the USAO completed its investigation and entered into an agreement with the Company, whereby the Company agreed to voluntarily return $47.4 million to the U.S. Treasury, which represented funds received from or on behalf of one of its customers, and provide written reports to the USAO regarding certain of its casino-related activities. The amount was paid during the year ended December 31, 2013, and the matter has been closed.
On February 11, 2014, the Company disclosed that it was the victim of a sophisticated cyber-attack on its computer networks in the United States. As a result of this criminal attack, the U.S. government has commenced investigations into the source of the attack. In addition, the Company is working with internal and external forensic information technology systems experts in connection with this effort. As a result of the investigations and the Company’s efforts, which are ongoing, the Company has learned that certain customer and employee data was compromised at its Bethlehem facility and other data may have been stolen in the attack as well as that the attack may have destroyed certain other Company data. The Company is cooperating fully with the investigations. Based on the preliminary status of the investigations and the absence of claims asserted thus far, management is currently unable to determine the probability of the outcome of any matters relating to the cyber-attack, the extent of materiality or the range of reasonably possible loss, if any.
NOTE 10 — SEGMENT INFORMATION
The Company’s principal operating and developmental activities occur in three geographic areas: Macao, Singapore and the United States. The Company reviews the results of operations for each of its operating segments: The Venetian Macao; Sands Cotai Central; Four Seasons Macao; Sands Macao; Other Asia (comprised primarily of the Company’s ferry operations and various other operations that are ancillary to the Company’s properties in Macao); Marina Bay Sands; The Venetian Las Vegas, which includes the Sands Expo Center; The Palazzo; and Sands Bethlehem. The Venetian Las Vegas and The Palazzo operating segments are managed as a single integrated resort and have been aggregated as one reportable segment (the “Las Vegas Operating Properties”), considering their similar economic characteristics, types of customers, types of services and products, the regulatory business environment of the operations within each segment and the Company’s organizational and management reporting structure. The Company also reviews construction and development activities for each of its primary projects under development, in addition to its reportable segments noted above. The Company’s primary projects under development are The Parisian Macao, the St. Regis tower (the remaining phase of Sands Cotai Central) and the Four Seasons Apartments in Macao, and the Las Vegas Condo Tower (which construction is currently suspended and is included in Corporate and Other) in the U.S. The corporate activities of the Company are also included in Corporate and Other. The Company’s segment information as of March 31, 2015 and December 31, 2014, and for the three months ended March 31, 2015 and 2014, is as follows (in thousands):
 
Three Months Ended 
 March 31,
 
2015
 
2014
Net Revenues
 
 
 
Macao:
 
 
 
The Venetian Macao
$
787,191

 
$
1,184,591

Sands Cotai Central
571,764

 
827,583

Four Seasons Macao
161,251

 
370,016

Sands Macao
225,371

 
313,961

Other Asia
35,479

 
35,161

 
1,781,056

 
2,731,312

Marina Bay Sands
784,816

 
835,423

United States:
 
 
 
Las Vegas Operating Properties
376,383

 
382,658

Sands Bethlehem
127,699

 
117,183

 
504,082

 
499,841

Intersegment eliminations
(58,332
)
 
(56,192
)
Total net revenues
$
3,011,622

 
$
4,010,384

 

26





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

 
Three Months Ended 
 March 31,
 
2015
 
2014
Intersegment Revenues
 
 
 
Macao:
 
 
 
The Venetian Macao
$
1,493

 
$
1,127

Sands Cotai Central
78

 
69

Other Asia
10,212

 
9,866

 
11,783

 
11,062

Marina Bay Sands
2,799

 
2,874

Las Vegas Operating Properties
43,750

 
42,256

Total intersegment revenues
$
58,332

 
$
56,192


 
Three Months Ended 
 March 31,
 
2015
 
2014
Adjusted Property EBITDA(1)
 
 
 
Macao:
 
 
 
The Venetian Macao
$
269,942

 
$
470,084

Sands Cotai Central
155,910

 
265,206

Four Seasons Macao
44,472

 
113,041

Sands Macao
57,378

 
91,438

Other Asia
3,532

 
(1,414
)
 
531,234

 
938,355

Marina Bay Sands
415,272

 
435,161

United States:
 
 
 
Las Vegas Operating Properties
74,109

 
79,652

Sands Bethlehem
29,893

 
26,531

 
104,002

 
106,183

Total adjusted property EBITDA
1,050,508

 
1,479,699

Other Operating Costs and Expenses
 
 
 
Stock-based compensation
(3,975
)
 
(7,607
)
Corporate
(45,223
)
 
(50,677
)
Pre-opening
(9,579
)
 
(4,300
)
Development
(1,533
)
 
(1,692
)
Depreciation and amortization
(253,922
)
 
(261,047
)
Amortization of leasehold interests in land
(9,838
)
 
(10,026
)
Loss on disposal of assets
(15,323
)
 
(525
)
Operating income
711,115

 
1,143,825

Other Non-Operating Costs and Expenses
 
 
 
Interest income
6,378

 
5,803

Interest expense, net of amounts capitalized
(66,255
)
 
(71,126
)
Other income (expense)
15,465

 
(4,657
)
Loss on modification or early retirement of debt

 
(17,964
)
Income tax expense
(55,665
)
 
(59,153
)
Net income
$
611,038

 
$
996,728

 ____________________
(1)
Adjusted property EBITDA is net income before intersegment royalty fees, stock-based compensation expense, corporate expense, pre-opening expense, development expense, depreciation and amortization, amortization of leasehold interests in land, loss on disposal of assets, interest, other income (expense), loss on modification or early retirement of debt and income taxes. Adjusted property EBITDA is used by management as the primary measure of operating performance of the Company’s properties and to compare the operating performance of the Company’s properties with that of its competitors.


27





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

 
 
Three Months Ended 
 March 31,
 
2015
 
2014
Capital Expenditures
 
 
 
Corporate and Other
$
2,691

 
$
10,016

Macao:
 
 
 
The Venetian Macao
24,055

 
24,816

Sands Cotai Central
123,416

 
76,060

Four Seasons Macao
5,295

 
6,773

Sands Macao
9,594

 
6,784

Other Asia
592

 
300

The Parisian Macao
163,549

 
95,449

 
326,501

 
210,182

Marina Bay Sands
23,465

 
12,690

United States:
 
 
 
Las Vegas Operating Properties
11,578

 
15,782

Sands Bethlehem
3,101

 
3,057

 
14,679

 
18,839

Total capital expenditures
$
367,336

 
$
251,727

 
 
March 31, 2015
 
December 31, 2014
Total Assets
 
 
 
Corporate and Other
$
622,707

 
$
613,683

Macao:
 
 
 
The Venetian Macao
2,963,369

 
3,900,921

Sands Cotai Central
4,256,853

 
4,761,907

Four Seasons Macao
1,094,304

 
1,157,502

Sands Macao
427,220

 
414,689

Other Asia
301,784

 
304,463

The Parisian Macao
972,213

 
805,220

Other Development Projects
78

 
91

 
10,015,821

 
11,344,793

Marina Bay Sands
5,931,768

 
6,106,397

United States:
 
 
 
Las Vegas Operating Properties
3,815,385

 
3,623,808

Sands Bethlehem
660,401

 
673,010

 
4,475,786

 
4,296,818

Total assets
$
21,046,082

 
$
22,361,691

 

28





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

 
March 31, 2015
 
December 31, 2014
Total Long-Lived Assets
 
 
 
Corporate and Other
$
351,479

 
$
357,071

Macao:
 
 
 
The Venetian Macao
1,861,725

 
1,893,032

Sands Cotai Central
3,860,061

 
3,814,699

Four Seasons Macao
924,894

 
932,034

Sands Macao
283,096

 
286,640

Other Asia
175,491

 
177,335

The Parisian Macao
970,884

 
804,328

 
8,076,151

 
7,908,068

Marina Bay Sands
4,646,755

 
4,874,263

United States:
 
 
 
Las Vegas Operating Properties
2,993,663

 
3,024,380

Sands Bethlehem
556,738

 
561,782

 
3,550,401

 
3,586,162

Total long-lived assets
$
16,624,786

 
$
16,725,564


NOTE 11 — CONDENSED CONSOLIDATING FINANCIAL INFORMATION
LVSLLC, as the issuer and primary obligor of the 2013 U.S. Credit Facility, VCR, Venetian Marketing, Inc., Sands Expo & Convention Center, Inc. and Sands Pennsylvania, Inc. (collectively, the “Restricted Subsidiaries”), are all guarantors under the 2013 U.S. Credit Facility. The noncontrolling interest amounts included in the Restricted Subsidiaries’ condensed consolidating financial information are related to non-voting preferred stock of one of the subsidiaries held by third parties.
In February 2008, all of the capital stock of Phase II Mall Subsidiary, LLC (a subsidiary of VCR) was sold to GGP; however, the sale is not complete from an accounting perspective due to the Company’s continuing involvement in the transaction related to the participation in certain potential future revenues earned by GGP. Certain of the assets, liabilities and operating results related to the ownership and operation of the mall by Phase II Mall Subsidiary, LLC subsequent to the sale will continue to be accounted for by the Restricted Subsidiaries, and therefore are included in the “Restricted Subsidiaries” columns in the following condensed consolidating financial information. As a result, net liabilities of $42.4 million (consisting of $268.7 million of liabilities, primarily comprised of deferred proceeds from the sale, partially offset by $226.3 million of property and equipment) and $40.3 million (consisting of $268.8 million of liabilities, primarily comprised of deferred proceeds from the sale, partially offset by $228.5 million of property and equipment) as of March 31, 2015 and December 31, 2014, respectively, and a net loss (consisting primarily of depreciation expense) of $2.3 million and $3.1 million for the three months ended March 31, 2015 and 2014, respectively, related to the mall and are being accounted for by the Restricted Subsidiaries. These balances and amounts are not collateral for the 2013 U.S. Credit Facility.

29





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

The following condensed consolidating financial information of LVSC, a non-guarantor parent; the Restricted Subsidiaries, including LVSLLC as the issuer; and the non-restricted subsidiaries on a combined basis as of March 31, 2015 and December 31, 2014, and for the three months ended March 31, 2015 and 2014, is being presented in order to meet the reporting requirements under the 2013 U.S. Credit Facility, and is not intended to comply with SEC Regulation S-X 3-10 (in thousands):
CONDENSED CONSOLIDATING BALANCE SHEETS
March 31, 2015
 
LVSC
(Non-Guarantor
Parent)
 
Restricted
Subsidiaries
 
Non-Restricted
Subsidiaries
 
Consolidating/
Eliminating
Entries
 
Total
Cash and cash equivalents
$
117,883

 
$
549,114

 
$
1,739,468

 
$

 
$
2,406,465

Restricted cash and cash equivalents

 

 
6,901

 

 
6,901

Intercompany receivables
488,031

 
268,479

 

 
(756,510
)
 

Intercompany notes receivable

 

 
372,722

 
(372,722
)
 

Accounts receivable, net
951

 
279,324

 
1,128,106

 

 
1,408,381

Inventories
6,097

 
11,428

 
24,563

 

 
42,088

Deferred income taxes, net
6,426

 
31,505

 
695

 
(38,626
)
 

Prepaid expenses and other
25,929

 
14,100

 
85,494

 
(2,574
)
 
122,949

Total current assets
645,317

 
1,153,950

 
3,357,949

 
(1,170,432
)
 
3,986,784

Property and equipment, net
126,114

 
2,949,106

 
12,238,112

 

 
15,313,332

Investments in subsidiaries
6,884,048

 
5,295,138

 

 
(12,179,186
)
 

Deferred financing costs, net
108

 
23,757

 
168,546

 

 
192,411

Intercompany receivables
215

 
38,763

 

 
(38,978
)
 

Intercompany notes receivable

 
1,297,676

 

 
(1,297,676
)
 

Deferred income taxes, net

 

 
136,641

 
(98,356
)
 
38,285

Leasehold interests in land, net

 

 
1,311,454

 

 
1,311,454

Intangible assets, net
690

 

 
81,404

 

 
82,094

Other assets, net
415

 
23,523

 
97,784

 

 
121,722

Total assets
$
7,656,907

 
$
10,781,913

 
$
17,391,890

 
$
(14,784,628
)
 
$
21,046,082

Accounts payable
$
4,794

 
$
26,774

 
$
62,160

 
$

 
$
93,728

Construction payables
16

 
5,202

 
246,212

 

 
251,430

Intercompany payables

 
460,535

 
295,975

 
(756,510
)
 

Intercompany notes payable
372,722

 

 

 
(372,722
)
 

Accrued interest payable
75

 
890

 
7,411

 

 
8,376

Other accrued liabilities
16,746

 
215,558

 
1,471,210

 

 
1,703,514

Deferred income taxes

 

 
52,235

 
(38,626
)
 
13,609

Income taxes payable

 

 
270,659

 
(2,574
)
 
268,085

Current maturities of long-term debt
3,688

 
24,057

 
69,420

 

 
97,165

Total current liabilities
398,041

 
733,016

 
2,475,282

 
(1,170,432
)
 
2,435,907

Other long-term liabilities
3,001

 
9,048

 
112,628

 

 
124,677

Intercompany payables

 

 
38,978

 
(38,978
)
 

Intercompany notes payable

 

 
1,297,676

 
(1,297,676
)
 

Deferred income taxes
52,740

 
45,616

 
179,778

 
(98,356
)
 
179,778

Deferred amounts related to mall sale transactions

 
421,004

 

 

 
421,004

Long-term debt
59,062

 
3,065,039

 
6,019,732

 

 
9,143,833

Total liabilities
512,844

 
4,273,723

 
10,124,074

 
(2,605,442
)
 
12,305,199

Total Las Vegas Sands Corp. stockholders’ equity
7,144,063

 
6,507,785

 
5,671,401

 
(12,179,186
)
 
7,144,063

Noncontrolling interests

 
405

 
1,596,415

 

 
1,596,820

Total equity
7,144,063

 
6,508,190

 
7,267,816

 
(12,179,186
)
 
8,740,883

Total liabilities and equity
$
7,656,907

 
$
10,781,913

 
$
17,391,890

 
$
(14,784,628
)
 
$
21,046,082



30





LAS VEGAS SANDS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS
December 31, 2014
 
LVSC
(Non-Guarantor
Parent)
 
Restricted
Subsidiaries
 
Non-Restricted
Subsidiaries
 
Consolidating/
Eliminating
Entries
 
Total
Cash and cash equivalents
$
114,125

 
$
345,399

 
$
3,046,795

 
$

 
$
3,506,319

Restricted cash and cash equivalents

 

 
6,566

 

 
6,566

Intercompany receivables
431,754

 
255,371

 

 
(687,125
)
 

Intercompany notes receivable

 

 
370,836

 
(370,836
)
 

Accounts receivable, net
15,144

 
270,838

 
1,224,790

 

 
1,510,772

Inventories
5,238

 
10,745

 
25,691

 

 
41,674

Deferred income taxes, net
6,803

 
31,240

 
1,196

 
(39,239
)
 

Prepaid expenses and other
26,210

 
11,889

 
87,530

 
(461
)
 
125,168

Total current assets
599,274

 
925,482

 
4,763,404

 
(1,097,661
)
 
5,190,499

Property and equipment, net
130,155

 
2,979,485

 
12,262,834

 

 
15,372,474

Investments in subsidiaries
7,010,357

 
5,864,848

 

 
(12,875,205
)
 

Deferred financing costs, net
123

 
25,153

 
180,320

 

 
205,596

Intercompany receivables
226

 
38,763

 

 
(38,989
)
 

Intercompany notes receivable

 
1,250,544

 

 
(1,250,544
)
 

Deferred income taxes, net

 

 
127,963

 
(96,243
)
 
31,720

Leasehold interests in land, net

 

 
1,353,090

 

 
1,353,090

Intangible assets, net
690

 

 
85,570

 

 
86,260

Other assets, net
714

 
19,736

 
101,602

 

 
122,052

Total assets
$
7,741,539

 
$
11,104,011

 
$
18,874,783

 
$
(15,358,642
)
 
$
22,361,691

Accounts payable
$
8,065

 
$
25,489

 
$
79,167

 
$