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EX-10.2 - EXHIBIT 10.2 - LAS VEGAS SANDS CORPlvs-ex102x03312016.htm
EX-10.1 - EXHIBIT 10.1 - LAS VEGAS SANDS CORPlvs-ex101x03312016.htm
EX-32.1 - EXHIBIT 32.1 - LAS VEGAS SANDS CORPlvs-ex321x03312016.htm
EX-31.1 - EXHIBIT 31.1 - LAS VEGAS SANDS CORPlvs-ex311x03312016.htm
EX-32.2 - EXHIBIT 32.2 - LAS VEGAS SANDS CORPlvs-ex322x03312016.htm
EX-31.2 - EXHIBIT 31.2 - LAS VEGAS SANDS CORPlvs-ex312x03312016.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, 2016
¨
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, 2016
Common Stock ($0.001 par value)
  
794,718,776 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,
2016
 
December 31,
2015
 
(In thousands, except share
and per share data)
(Unaudited)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
1,695,643

 
$
2,179,490

Restricted cash and cash equivalents
17,254

 
7,901

Accounts receivable, net
1,081,544

 
1,267,848

Inventories
43,174

 
42,573

Prepaid expenses and other
114,279

 
111,438

Total current assets
2,951,894

 
3,609,250

Property and equipment, net
15,909,760

 
15,731,638

Deferred income taxes, net
10,389

 
23,681

Leasehold interests in land, net
1,279,808

 
1,262,132

Intangible assets, net
68,260

 
71,586

Other assets, net
164,798

 
165,170

Total assets
$
20,384,909

 
$
20,863,457

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Accounts payable
$
110,236

 
$
110,408

Construction payables
344,081

 
364,136

Accrued interest payable
1,501

 
1,863

Other accrued liabilities
1,564,274

 
1,694,305

Income taxes payable
223,588

 
198,056

Current maturities of long-term debt
152,020

 
95,367

Total current liabilities
2,395,700

 
2,464,135

Other long-term liabilities
116,179

 
113,368

Deferred income taxes
207,548

 
201,734

Deferred proceeds from sale of The Shoppes at The Palazzo
268,237

 
268,427

Deferred gain on sale of The Grand Canal Shoppes
34,420

 
35,130

Deferred rent from mall sale transactions
113,625

 
113,995

Long-term debt
9,235,223

 
9,248,681

Total liabilities
12,370,932

 
12,445,470

Commitments and contingencies (Note 9)

 

Equity:
 
 
 
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 830,126,543 and 830,051,259 shares issued, 794,720,594 and 794,645,310 shares outstanding
830

 
830

Treasury stock, at cost, 35,405,949 shares
(2,443,036
)
 
(2,443,036
)
Capital in excess of par value
6,496,469

 
6,484,843

Accumulated other comprehensive loss
(7,592
)
 
(66,283
)
Retained earnings
2,588,317

 
2,840,387

Total Las Vegas Sands Corp. stockholders’ equity
6,634,988

 
6,816,741

Noncontrolling interests
1,378,989

 
1,601,246

Total equity
8,013,977

 
8,417,987

Total liabilities and equity
$
20,384,909

 
$
20,863,457

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,
 
2016
 
2015
 
(In thousands, except share and per share data)
(Unaudited)
Revenues:
 
 
 
Casino
$
2,082,196

 
$
2,376,688

Rooms
366,300

 
371,413

Food and beverage
187,567

 
189,411

Mall
134,931

 
127,814

Convention, retail and other
123,552

 
134,137

 
2,894,546

 
3,199,463

Less — promotional allowances
(178,306
)
 
(187,841
)
Net revenues
2,716,240

 
3,011,622

Operating expenses:
 
 
 
Casino
1,218,928

 
1,334,829

Rooms
65,350

 
65,791

Food and beverage
102,296

 
99,247

Mall
14,481

 
15,137

Convention, retail and other
58,533

 
68,257

Provision for doubtful accounts
45,397

 
57,350

General and administrative
299,200

 
324,478

Corporate
46,628

 
45,223

Pre-opening
8,609

 
9,579

Development
2,377

 
1,533

Depreciation and amortization
259,876

 
253,922

Amortization of leasehold interests in land
9,547

 
9,838

(Gain) loss on disposal of assets
(612
)
 
15,323

 
2,130,610

 
2,300,507

Operating income
585,630

 
711,115

Other income (expense):
 
 
 
Interest income
2,027

 
6,378

Interest expense, net of amounts capitalized
(68,648
)
 
(66,255
)
Other income (expense)
(47,071
)
 
15,465

Income before income taxes
471,938

 
666,703

Income tax expense
(63,025
)
 
(55,665
)
Net income
408,913

 
611,038

Net income attributable to noncontrolling interests
(88,746
)
 
(99,115
)
Net income attributable to Las Vegas Sands Corp.
$
320,167

 
$
511,923

Earnings per share:
 
 
 
Basic
$
0.40

 
$
0.64

Diluted
$
0.40

 
$
0.64

Weighted average shares outstanding:
 
 
 
Basic
794,488,858

 
797,935,314

Diluted
795,032,018

 
798,877,040

Dividends declared per common share
$
0.72

 
$
0.65

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,
 
 
2016
 
2015
 
(In thousands)
(Unaudited)
Net income
 
$
408,913

 
$
611,038

Currency translation adjustment, before and after tax
 
57,485

 
(82,299
)
Total comprehensive income
 
466,398

 
528,739

Comprehensive income attributable to noncontrolling interests
 
(87,540
)
 
(99,613
)
Comprehensive income attributable to Las Vegas Sands Corp.
 
$
378,858

 
$
429,126

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, 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

Balance at January 1, 2016
$
830

 
$
(2,443,036
)
 
$
6,484,843

 
$
(66,283
)
 
$
2,840,387

 
$
1,601,246

 
$
8,417,987

Net income

 

 

 

 
320,167

 
88,746

 
408,913

Currency translation adjustment

 

 

 
58,691

 

 
(1,206
)
 
57,485

Exercise of stock options

 

 
881

 

 

 
598

 
1,479

Tax shortfall from stock-based compensation

 

 
(225
)
 

 

 

 
(225
)
Conversion of equity awards to liability awards

 

 
(771
)
 

 

 
(328
)
 
(1,099
)
Stock-based compensation

 

 
11,741

 

 

 
1,499

 
13,240

Dividends declared

 

 

 

 
(572,237
)
 
(308,138
)
 
(880,375
)
Distributions to noncontrolling interests

 

 

 

 

 
(3,428
)
 
(3,428
)
Balance at March 31, 2016
$
830

 
$
(2,443,036
)
 
$
6,496,469

 
$
(7,592
)
 
$
2,588,317

 
$
1,378,989

 
$
8,013,977

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,
 
2016
 
2015
 
(In thousands)
(Unaudited)
Cash flows from operating activities:
 
 
 
Net income
$
408,913

 
$
611,038

Adjustments to reconcile net income to net cash generated from operating activities:
 
 
 
Depreciation and amortization
259,876

 
253,922

Amortization of leasehold interests in land
9,547

 
9,838

Amortization of deferred financing costs and original issue discount
11,077

 
10,739

Amortization of deferred gain on and rent from mall sale transactions
(1,080
)
 
(1,080
)
Non-cash change in deferred proceeds from sale of The Shoppes at The Palazzo
26

 
141

(Gain) loss on disposal of assets
(612
)
 
15,323

Stock-based compensation expense
13,123

 
12,201

Provision for doubtful accounts
45,397

 
57,350

Foreign exchange (gain) loss
9,882

 
(12,366
)
Excess tax benefits from stock-based compensation
(11
)
 
(4,335
)
Deferred income taxes
14,225

 
(10,040
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
154,843

 
20,321

Inventories
(401
)
 
(650
)
Prepaid expenses and other
(3,474
)
 
272

Leasehold interests in land

 
(1,065
)
Accounts payable
(1,067
)
 
(18,156
)
Accrued interest payable
(368
)
 
712

Income taxes payable
18,705

 
58,509

Other accrued liabilities
(139,657
)
 
(268,379
)
Net cash generated from operating activities
798,944

 
734,295

Cash flows from investing activities:
 
 
 
Change in restricted cash and cash equivalents
(9,360
)
 
(332
)
Capital expenditures
(343,570
)
 
(367,336
)
Proceeds from disposal of property and equipment
2,175

 
417

Net cash used in investing activities
(350,755
)
 
(367,251
)
Cash flows from financing activities:
 
 
 
Proceeds from exercise of stock options
1,479

 
6,138

Excess tax benefits from stock-based compensation
11

 
4,335

Dividends paid
(880,430
)
 
(826,960
)
Distributions to noncontrolling interests
(3,428
)
 
(3,652
)
Proceeds from long-term debt (Note 3)
350,247

 

Repayments of long-term debt (Note 3)
(418,656
)
 
(624,950
)
Net cash used in financing activities
(950,777
)
 
(1,445,089
)
Effect of exchange rate on cash
18,741

 
(21,809
)
Decrease in cash and cash equivalents
(483,847
)
 
(1,099,854
)
Cash and cash equivalents at beginning of period
2,179,490

 
3,506,319

Cash and cash equivalents at end of period
$
1,695,643

 
$
2,406,465



7


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
Three Months Ended 
 March 31,
 
2016
 
2015
 
(In thousands)
(Unaudited)
Supplemental disclosure of cash flow information:
 
 
 
Cash payments for interest, net of amounts capitalized
$
54,139

 
$
51,285

Cash payments for taxes, net of refunds
$
31,316

 
$
6,410

Change in construction payables
$
(20,055
)
 
$
(19,499
)
Non-cash investing and financing activities:
 
 
 
Capitalized stock-based compensation costs
$
117

 
$
172

Change in dividends payable on unvested restricted stock and stock units included in other accrued liabilities
$
(55
)
 
$
264

Property and equipment acquired under capital lease
$
645

 
$

Conversion of equity awards to liability awards
$
1,099

 
$


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, 2015, 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 Resort Hotel ("The Venetian Macao"); Sands Cotai Central; Four Seasons Hotel Macao, Cotai Strip (the "Four Seasons Hotel Macao") and the Plaza Casino (together with the Four Seasons Hotel Macao, the "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.
Singapore
The Company owns and operates the Marina Bay Sands in Singapore. In April 2016, the Company paid $66.0 million Singapore dollars ("SGD," approximately $48.3 million at exchange rates in effect on March 31, 2016) to the Singapore Casino Regulatory Authority as part of the process to renew its gaming license at Marina Bay Sands and such license now expires in April 2019.
United States
Las Vegas
The Company owns and operates The Venetian Resort Hotel Casino (“The Venetian Las Vegas”), The Palazzo Resort Hotel Casino (“The Palazzo”) and an expo and convention center (the “Sands Expo Center”) in Las Vegas, Nevada, and the Sands Casino Resort Bethlehem (the “Sands Bethlehem”) in Bethlehem, Pennsylvania.
Development Projects
Macao
The Company is constructing The Parisian Macao, which is anticipated to open in the second half of 2016, subject to Macao government approval. The Company 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. The Company has capitalized costs of $1.89 billion, including the land premium (net of amortization) and $167.3 million in outstanding construction payables, as of March 31, 2016. In addition, the Company will be completing the development of some open areas surrounding its Cotai Strip properties.

9





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

Under the Company’s land concessions for Sands Cotai Central and The Parisian Macao, the Company is required to complete these developments by December 2016 and January 2017 (which was recently extended by the Macao government from November 2016), respectively. Should the Company determine that it is unable to complete Sands Cotai Central or The Parisian Macao by their respective deadlines, the Company would then expect to apply for another extension from the Macao government. If the Company is unable to meet the current deadlines and the deadlines for either development are not extended, the Company could lose its land concessions for Sands Cotai Central or The Parisian Macao, 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 $4.88 billion or $1.89 billion in capitalized construction costs and land premiums (net of amortization), as of March 31, 2016, related to Sands Cotai Central and The Parisian Macao, 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 is evaluating the highest return opportunity for the project and 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, 2016.
Other
The Company continues to aggressively pursue new development opportunities globally.
Capital Financing Overview
Through March 31, 2016, 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 $1.70 billion and restricted cash and cash equivalents of $17.3 million as of March 31, 2016. 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.
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, 2017, with early application permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. 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. In August 2015, the FASB issued an accounting standard update to clarify that this guidance is not required to be applied to line-of-credit arrangements. The amendments do not affect the guidance on the recognition and measurement of debt issuance costs. The guidance is required to be applied on a retrospective basis and is effective for fiscal years beginning after

10





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

December 15, 2015. The Company adopted this guidance retrospectively as of January 1, 2016 (see "— Reclassification" and “— Note 3 — Long-Term Debt”). The adoption of this guidance did not have a material effect on the Company's financial condition, results of operations and cash flows.
In July 2015, the FASB issued an accounting standard update that requires inventory measured using any method other than last-in, first-out or the retail inventory method, to be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. If the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss during the period in which it occurs. The guidance is effective for fiscal years beginning after December 15, 2016, and should be applied prospectively, with early adoption permitted. The adoption of this guidance will not have a material effect on the Company’s financial condition, results of operations and cash flows.
In February 2016, the FASB issued an accounting standard update on leases, which requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. The guidance is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within that reporting period, with early adoption permitted. A modified retrospective approach must be applied for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the impact that the guidance will have on the Company's financial condition and results of operations.
In March 2016, the FASB issued an accounting standard update to simplify several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2016, including interim periods within that annual period, with early adoption permitted. The guidance should be applied on a prospective, retrospective or modified retrospective approach depending on the specific portion of the guidance being applied. The Company is currently assessing the impact that the guidance will have on the Company's financial condition and results of operations.
In April 2016, the FASB issued an accounting standard update on revenue recognition. The update adds clarity to the accounting standard update issued in May 2014, also regarding revenue recognition. This update specifically adds guidance to assist an entity with identifying performance obligations in contracts with customers and implementing licensing 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, 2017, with early application permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently assessing the impact that the guidance will have on the Company's financial condition and results of operations.
Reclassification
To be consistent with the current period presentation, the Company retrospectively adopted the new guidance to simplify the presentation of debt issuance costs. As a result, debt issuance costs of $124.0 million related to its term loans were reclassified from deferred financing costs, net to long-term debt and debt issuance costs of $45.7 million related to its revolving debt were reclassified from deferred financing costs, net to other assets in the accompanying condensed consolidated balance sheet as of December 31, 2015. The reclassification did not have an effect on the Company's financial condition, results of operations and cash flows.

11





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

NOTE 2 — PROPERTY AND EQUIPMENT, NET
Property and equipment consists of the following (in thousands):
 
March 31,
2016
 
December 31,
2015
Land and improvements
$
559,478

 
$
556,947

Building and improvements
15,463,427

 
15,308,791

Furniture, fixtures, equipment and leasehold improvements
3,339,241

 
3,281,161

Transportation
456,969

 
456,942

Construction in progress
2,870,711

 
2,633,340

 
22,689,826

 
22,237,181

Less — accumulated depreciation and amortization
(6,780,066
)
 
(6,505,543
)
 
$
15,909,760

 
$
15,731,638

Construction in progress consists of the following (in thousands):
 
March 31,
2016
 
December 31,
2015
The Parisian Macao
$
1,827,580

 
$
1,588,474

Four Seasons Macao (principally the Four Seasons Apartments)
422,713

 
424,273

Sands Cotai Central
272,240

 
270,472

Other
348,178

 
350,121

 
$
2,870,711

 
$
2,633,340

The $348.2 million in other construction in progress as of March 31, 2016, 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 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 $217.5 million (net of $93.9 million of accumulated depreciation) as of March 31, 2016, 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 statement of operations.
During the three months ended March 31, 2016 and 2015, the Company capitalized interest expense of $9.8 million and $4.2 million, respectively. During the three months ended March 31, 2016 and 2015, the Company capitalized approximately $7.7 million and $7.5 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.

12





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

NOTE 3 — LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
 
March 31,
2016
 
December 31,
2015
Corporate and U.S. Related:
 
 
 
2013 U.S. Credit Facility — Term B (net of unamortized original issue discount and deferred financing costs of $15,290 and $16,102, respectively)
$
2,184,085

 
$
2,188,898

2013 U.S. Credit Facility — Revolving(1)
235,000

 
630,000

Airplane Financings (net of unamortized deferred financing costs of $51 and $65, respectively)
59,012

 
59,918

HVAC Equipment Lease
14,794

 
15,155

Other
111

 
140

Macao Related:
 
 
 
2011 VML Credit Facility — Extended Term (net of unamortized deferred financing costs of $43,753 and $46,943, respectively)
2,344,656

 
2,342,608

2011 VML Credit Facility — Accordion Term (net of unamortized deferred financing costs of $9,610 and $10,147, respectively)
989,742

 
989,792

2011 VML Credit Facility — Extended Revolving(1)
350,226

 

Other
4,494

 
4,353

Singapore Related:
 
 
 
2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $57,083 and $58,743, respectively)
3,205,123

 
3,113,184

 
9,387,243

 
9,344,048

Less — current maturities
(152,020
)
 
(95,367
)
Total long-term debt
$
9,235,223

 
$
9,248,681

____________________
(1)
Unamortized deferred financing costs of $43.0 million and $45.7 million as of March 31, 2016 and December 31, 2015, respectively, related to the U.S., Macao and Singapore revolving credit facilities are included in other assets, net in the accompanying condensed consolidated balance sheets.

2013 U.S. Credit Facility
As of March 31, 2016, the Company had $1.01 billion 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, 2016, the Company had $1.65 billion of available borrowing capacity under the Extended 2011 VML Revolving Facility.
2012 Singapore Credit Facility
As of March 31, 2016, the Company had 494.4 million SGD (approximately $361.4 million at exchange rates in effect on March 31, 2016) of available borrowing capacity under the 2012 Singapore Revolving Facility, net of outstanding letters of credit. 

13





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

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,
 
2016
 
2015
Proceeds from 2011 VML Credit Facility
$
350,247

 
$

Repayments on 2013 U.S. Credit Facility
$
(400,625
)
 
$
(165,625
)
Repayments on 2011 VML Credit Facility

 
(440,416
)
Repayments on 2012 Singapore Credit Facility
(16,215
)
 
(17,082
)
Repayments on Airplane Financings
(922
)
 
(922
)
Repayments on HVAC Equipment Lease and Other Long-Term Debt
(894
)
 
(905
)
 
$
(418,656
)
 
$
(624,950
)
Fair Value of Long-Term Debt
The estimated fair value of the Company’s long-term debt as of March 31, 2016 and December 31, 2015, was approximately $9.29 billion and $9.22 billion, respectively, compared to its carrying value of $9.49 billion and $9.46 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, 2016, the Company paid a dividend of $0.72 per common share as part of a regular cash dividend program. During the three months ended March 31, 2016, the Company recorded $572.2 million as a distribution against retained earnings (of which $310.9 million related to the Principal Stockholder and his family and the remaining $261.3 million related to all other shareholders).
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 and his family and the remaining $238.5 million related to all other shareholders).
In April 2016, the Company’s Board of Directors declared a quarterly dividend of $0.72 per common share (a total estimated to be approximately $572 million) to be paid on June 30, 2016, to shareholders of record on June 22, 2016.
Repurchase Program
In October 2014, the Company's Board of Directors authorized the repurchase of $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, 2016 and 2015, there were no share repurchases under this program. All share repurchases of the Company's common stock are recorded as treasury stock.

14





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

Noncontrolling Interests
On February 26, 2016, SCL paid a dividend of 0.99 Hong Kong dollars ("HKD") to SCL shareholders (a total of $1.03 billion, of which the Company retained $722.7 million during the three months ended March 31, 2016). On February 27, 2015, SCL paid a dividend of HKD 0.99 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).
During the three months ended March 31, 2016 and 2015, the Company distributed $3.4 million and $3.7 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,
 
 
2016
 
2015
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)
 
794,488,858

 
797,935,314

Potential dilution from stock options and restricted stock and stock units
 
543,160

 
941,726

Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)
 
795,032,018

 
798,877,040

Antidilutive stock options excluded from the calculation of diluted earnings per share
 
6,685,342

 
5,925,307

Accumulated Other Comprehensive Income (Loss)
As of March 31, 2016 and December 31, 2015, accumulated other comprehensive 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, 2016 and December 31, 2015, the Company’s consolidated joint ventures had total assets of $78.7 million and $79.4 million, respectively, and total liabilities of $154.2 million and $148.4 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. and Singapore, and tax years beginning in 2011 in Macao. 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.

15





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

The Company does not consider current year’s tax earnings and profits of its foreign subsidiaries to be permanently reinvested. Beginning with the year ended December 31, 2015, certain of the Company’s foreign subsidiaries distributed, and may continue to distribute, earnings in excess of their current year’s tax earnings and profits in order to meet the Company’s liquidity needs. The Company has a plan for its other foreign subsidiaries demonstrating that earnings attributable to periods before January 1, 2016, will be indefinitely reinvested in the applicable jurisdictions. The Company has not provided deferred taxes for these foreign earnings as the Company expects there will be sufficient creditable foreign taxes to offset any 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, 2016) that is a substitution for a 12% tax otherwise due from Venetian Macau Limited (“VML”) shareholders on dividend distributions paid from VML gaming profits.
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,
 
2016
 
2015
Compensation expense:
 
 
 
Stock options
$
8,316

 
$
8,995

Restricted stock and stock units
5,378

 
3,206

 
$
13,694

 
$
12,201

Compensation cost capitalized as part of property and equipment
$
117

 
$
172

LVSC 2004 Plan:
 
 
 
Stock options granted
1,112

 
308

Weighted average grant date fair value
$
8.52

 
$
12.35

Restricted stock granted
44

 
22

Weighted average grant date fair value
$
40.87

 
$
55.41

Restricted stock units granted

 

Weighted average grant date fair value
$

 
$

SCL Equity Plan:
 
 
 
Stock options granted
17,429

 
648

Weighted average grant date fair value
$
0.73

 
$
1.06

Restricted stock units granted

 
119

Weighted average grant date fair value
$

 
$
4.90


During the three months ended March 31, 2016, SCL paid $0.2 million to settle vested restricted stock units that were previously classified as equity awards.

16





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

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,
 
 
2016
 
2015
LVSC 2004 Plan:
 
 
 
 
Weighted average volatility
 
35.3
%
 
38.0
%
Expected term (in years)
 
5.8

 
5.8

Risk-free rate
 
1.5
%
 
1.3
%
Expected dividends
 
6.0
%
 
4.7
%
SCL Equity Plan:
 
 
 
 
Weighted average volatility
 
40.9
%
 
44.6
%
Expected term (in years)
 
4.4

 
4.0

Risk-free rate
 
1.3
%
 
1.0
%
Expected dividends
 
5.5
%
 
5.5
%
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 Company currently uses certain derivatives as effective economic hedges to offset interest rate risk associated with its current and anticipated future borrowings and foreign currency forward contracts to manage its foreign currency exposure. Foreign currency forward contracts involve the purchase and sale of a designated currency at an agreed upon rate for settlement on a specified date. The aggregate notional value of these foreign currency contracts was $669.4 million and $672.7 million as of March 31, 2016 and December 31, 2015, respectively. As these derivatives have not been designated and/or do not qualify for hedge accounting, the changes in fair value are recognized as other income (expense) in the accompanying consolidated statements of operations.

17





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

The following table provides the assets and liabilities 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, 2016
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Cash equivalents(1)
$
612,291

 
$
612,291

 
$

 
$

Interest rate caps(2)
$

 
$

 
$

 
$

Liabilities
 
 
 
 
 
 
 
Forward contracts(3)
$
32,865

 
$

 
$
32,865

 
$

As of December 31, 2015
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Cash equivalents(1)
$
905,276

 
$
905,276

 
$

 
$

Forward contracts(3)
$
4,197

 
$

 
$
4,197

 
$

Interest rate caps(2)
$

 
$

 
$

 
$

____________________
(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, 2016 and December 31, 2015, the Company had one interest rate cap agreement with a nominal aggregate fair value based on recently reported market transactions of interest rates, which was recorded in prepaid expenses and other in the accompanying condensed consolidated balance sheets.
(3)
As of March 31, 2016 and December 31, 2015, the Company had 22 and 19 foreign currency forward contracts, respectively, with fair values based on recently reported market transactions of forward rates. Assets were included in prepaid expenses and other and liabilities were included in other accrued liabilities in the accompanying condensed consolidated balance sheets. For the three months ended March 31, 2016, the Company recorded a $35.8 million loss related to the change in fair value of the forward contracts. The Company did not have forward contracts during the three months ended March 31, 2015.
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 and cash flows.
On October 15, 2004, Richard Suen and Round Square Company Limited (“Roundsquare”) 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 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

18





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

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 Roundsquare 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 plaintiff's 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, Roundsquare 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, Roundsquare filed their answering brief. On January 12, 2015, the defendants filed their reply brief. On January 27, 2015, Roundsquare filed their reply brief. The Nevada Supreme Court set oral argument for December 17, 2015, before a panel of justices only to reset it for January 26, 2016, en banc. Oral arguments were presented to the Nevada Supreme Court as scheduled. On March 11, 2016, the Nevada Supreme Court issued an order affirming the judgment of liability, but reversing the damages award and remanding for a new trial on damages. On March 29, 2016, Roundsquare filed a petition for rehearing. The Nevada Supreme Court ordered an answer by the Company, which the Company filed on May 4, 2016. No ruling date on Roundsquare's petition for a rehearing has been set, nor is one estimable. The Company believes that the Nevada Supreme Court had valid bases in law and fact to reverse the damages award. As a result, the Company believes that the likelihood that the amount of the original 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, plaintiff 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 plaintiff's 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,

19





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

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 decided 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 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 had been fully briefed to the Nevada Supreme Court on or before August 30, 2013. 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.
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 could amend his complaint except for the defamation claim against Mr. Adelson until the remittitur from the Nevada Supreme Court was received. The District Court also allowed the sanctions hearing to move forward and reviewed 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,

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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 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 17, 2014, SCL filed a motion to reconsider the District Court’s March 27, 2013, order concerning a discovery dispute. 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 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 District 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, sought a stay 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 concluded on May 7, 2015. On May 28, 2015, the District Court issued an order finding specific and general jurisdiction over SCL. On June 19, 2015, SCL filed a petition for writ of mandamus seeking review of the decision. On June 23, 2015, the Nevada Supreme Court entered an Order Directing Answer to the jurisdictional writ petition and staying the May 28, 2015 order. Also on June 23, 2015, SCL filed a writ petition challenging the District Court's order requiring the deposition of an SCL independent board member on U.S. soil. In conjunction with the June 23 writ petition, SCL also moved to stay the scheduled deposition and plaintiff filed his opposition to the motion. The Nevada Supreme Court filed its June 23, 2015 order granting the emergency stay, accepting the writ and accepting plaintiff's opposition to the motion to stay as the answer to the June 23 petition. On June 26, 2015, defendants filed a writ petition challenging the expedited trial date and discovery schedule set by the District Court, followed by a June 29, 2015 motion to stay all proceedings pending a decision on the writ petition. Plaintiff opposed the motion to stay on June 30, 2015. On July 1, 2015, the Nevada Supreme Court entered an order consolidating

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the three pending writ petitions, granting in part the stay sought in conjunction with the June 26 petition, ordering briefing on that petition. The Nevada Supreme Court's July 1, 2015 order vacated the expedited trial date and the pretrial motions set by the District Court. On July 22, 2015, the plaintiff filed his answer to the writ petition challenging the expedited trial date and related pretrial deadlines, and on July 23, plaintiff answered the writ petition challenging the May 28 jurisdiction order. On September 1, 2015, the Nevada Supreme Court held a consolidated oral argument on all three pending writ petitions.
On September 18, 2015, plaintiff filed, with leave of court, a Fifth Amended Complaint, adding VML as a defendant on the two breach of contract claims alleged in the complaint. The Fifth Amended Complaint alleges that LVSC entered into a term sheet with plaintiff in which it promised certain benefits in the event that plaintiff was terminated without cause. Plaintiff claims that, in connection with SCL’s initial public offering, LVSC assigned the term sheet to both SCL and VML, which (together with LVSC) allegedly assumed liability for breaches of the term sheet. In Count I of the Fifth Amended Complaint, plaintiff alleges that he was terminated without cause and that LVSC, SCL and VML breached the term sheet by not paying the severance required under those circumstances. In Count II, plaintiff claims that certain stock options in SCL purportedly awarded to him should have vested when he was terminated and seeks damages from LVSC, SCL and VML for SCL’s refusal to recognize the options. Count III is a claim for breach of an implied covenant of good faith and fair dealing against LVSC, SCL and VML. Count IV repeats plaintiff’s earlier claim for tortious discharge in violation of public policy and is alleged against LVSC alone. Count V repeats plaintiff’s claims for defamation per se and is alleged against Mr. Adelson, LVSC and SCL. Count VI repeats a tortious discharge in violation of public policy claim against Mr. Adelson, which the District Court previously dismissed with prejudice. On November 13, 2015, the District Court granted Mr. Adelson's motion to strike Count VI in light of its prior dismissal of that count. Count VII alleges aiding and abetting tortious discharge in violation of public policy against SCL. Count VIII alleges a conspiracy between LVSC and SCL to tortiously discharge plaintiff in violation of public policy. LVSC, SCL and Mr. Adelson have answered the Fifth Amended Complaint and LVSC has re-filed its previously filed counterclaim against plaintiff.
On October 19, 2015, VML moved to quash service of the summons and on October 21, 2015, further moved to dismiss all claims against VML. VML also filed a peremptory challenge to the judge presiding over the case, causing it to be reassigned to another judge. On October 27, 2015, the new judge struck the peremptory challenge and the case was reassigned to the original judge. On November 3, 2015, VML filed a petition for a writ of prohibition or mandamus in the Nevada Supreme Court challenging the decision to strike its peremptory challenge; at the same time, VML filed a motion with the Nevada Supreme Court to stay all proceedings before the original judge pending the outcome of its writ petition. On November 4, 2015, the Nevada Supreme Court granted a stay with respect to proceedings against VML only and directed plaintiff to answer the writ petition within 30 days. Instead of answering, on December 18, 2015, plaintiff voluntarily dismissed VML from the action, without prejudice and then filed a notice with the Nevada Supreme Court claiming that VML’s petition was moot. On December 30, 2015, VML filed a motion with the Nevada Supreme Court asking it to grant its writ petition or, in the alternative, to permit the dismissal of VML only if it is with prejudice. The Nevada Supreme Court dismissed VML's writ petition as moot on March 17, 2016, declining to reach the question of whether VML's dismissal should be with prejudice.
On November 4, 2015, the Nevada Supreme Court issued an order granting in part and denying in part the three pending writ petitions filed by SCL that were argued on September 1, 2015. The Nevada Supreme Court held that the District Court had erred in concluding that it had general and transient jurisdiction over SCL, but held that plaintiff had met his burden of making a preliminary showing of specific jurisdiction over SCL in Nevada with respect to the particular claims plaintiff had made. The Nevada Supreme Court held that defendants’ writ petition addressing the expedited trial date was moot in light of the District Court’s order vacating that date; the Nevada Supreme Court noted, however, that defendants were correct that the previous stay of proceedings tolled the five-year time period for bringing the case to trial. The Nevada Supreme Court granted SCL’s writ petition to overturn the District Court’s order compelling one of SCL’s independent directors to appear for a deposition on U.S. soil. The Nevada Supreme Court also ruled on the previously stayed $250,000 sanction, upholding the amount but requiring the payment to be reallocated on remand. Finally, the Nevada Supreme Court denied defendants’ request that the case be reassigned to a different judge.

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On November 17, 2015, plaintiff filed a petition for rehearing en banc in the Nevada Supreme Court, asking the Nevada Supreme Court to reconsider its ruling on the location of the deposition of SCL’s independent director. On November 24, 2015, SCL filed a petition for rehearing en banc in the Nevada Supreme Court, asking the Nevada Supreme Court to reconsider its conclusion that plaintiff had met his burden of making a preliminary showing of specific jurisdiction over SCL. On December 23, 2015, the Nevada Supreme Court issued an order requiring answers to both petitions for rehearing. Plaintiff filed his answer on January 8, 2016, and SCL filed its answer on January 22, 2016. On February 24, 2016, the Nevada Supreme Court granted plaintiff’s petition for rehearing concluding SCL is responsible for producing its director for a noticed deposition, the location of which may be determined by the District Court. On the same day, the Nevada Supreme Court denied SCL’s petition for rehearing regarding the finding of specific jurisdiction over SCL.
On November 19, 2015, SCL filed its answer to plaintiffs’ Fifth Amended Complaint, denying each of plaintiff’s claims and raising a number of affirmative and other defenses. Discovery is ongoing with respect to the Company and SCL. The District Court has entered a scheduling order under which discovery will close on May 5, 2016, and the case is to be tried to a jury beginning on or after June 27, 2016.
On December 18, 2015, plaintiff served a notice of the deposition of a Company executive. On December 31, 2015, counsel for the executive and defendants filed a motion for protective order. The District Court denied the motion in part and ordered the executive to appear for a deposition prior to January 12, 2016. The executive appeared for a deposition on January 11, 2016. When questions were posed during the deposition regarding the executive’s alleged communications with third parties, including the media, about media coverage of the court and the Jacobs case and about the purchase of the Las Vegas Review-Journal by members of the Adelson family, counsel for the executive instructed him not to answer. At a hearing the next day, the District Court “overruled” counsel’s instruction to the executive, but devised a procedure under which the executive’s counsel could refer objections to questions about his alleged communications with third parties, including the media, concerning the Jacobs litigation to a discovery master and/or a different judge, rather than to the presiding judge. On January 13, 2016, the executive filed a motion to expand the scope of the issues that would be referred to a discovery master to include all of the questions his counsel had instructed him not to answer, on the ground that comments the court had made to the media called into question the executive’s ability to obtain a fair and impartial hearing of his objections. On the same day, the Company filed a motion to disqualify the judge based on comments the court made to the media and during hearings related to the deposition of the executive, which raised reasonable doubts about the court’s impartiality. On January 15, 2016, the judge filed an affidavit regarding her contacts with the media involving this case and denying any bias. The motion to disqualify was set for hearing on February 18, 2016, before the Chief Judge of the District Court, but on January 29, 2016, the Chief Judge denied the motion to disqualify without providing the Company the opportunity to respond to the presiding judge’s affidavit.
On February 9, 2016, the Company filed a motion requesting the Chief Judge withdraw and reconsider the order denying the Company’s motion to disqualify the presiding judge. On February 12, 2016, the presiding judge filed an additional affidavit further denying any bias toward or against defendants. On the same day, the Company filed a request for the motion for reconsideration to be heard in open court. On February 16, 2016, in support of the motion for reconsideration, the Company filed a declaration of a legal scholar confirming the presiding judge’s contacts with the media created the appearance of partiality. On February 17, 2016, from chambers, the Chief Judge denied the Company’s request for reconsideration finding the record showed no evidence of judicial bias. On February 19, 2016, plaintiff filed a reply to the Company’s counterclaim.
On February 23, 2016, defendants filed a writ petition in the Nevada Supreme Court challenging the Chief Judge’s denial of the disqualification of the presiding judge. In conjunction with the writ, the defendants also filed an emergency motion to stay the proceedings in the District Court. Although the Nevada Supreme Court denied that motion, the District Court decided on March 10, 2016, not to conduct any hearings or to rule on any pending motions until the Nevada Supreme Court rules on the disqualification issue. The Nevada Supreme Court held oral arguments on defendants' writ petition on April 5, 2016.

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Discovery has continued and additional motions relating to discovery issues have been filed, although the District Court has not ruled on any of them. On March 8, 2016, defendants filed a motion for partial summary judgment on plaintiff's claim that certain stock options in SCL purportedly awarded to him should have vested when he was terminated. Plaintiff filed his opposition to that motion on April 1, 2016, and filed a countermotion for a determination that if the jury finds he was terminated without cause, then he would be entitled to prevail on his claim to the SCL options. Defendants filed their reply in support of their motion and their opposition to plaintiff's countermotion on April 19, 2016. On April 14, 2016, defendants filed a motion to continue the trial date and to extend the current discovery deadlines. Plaintiff filed his opposition to defendants' motion to continue the trial and extend discovery on May 2, 2016.
On January 29, 2016, Mr. Jacobs filed a complaint against VML in the United States District Court for the District of Nevada (the "U.S. District Court") alleging a breach of contract claim similar to the one he had brought against VML in the District Court and then dismissed. VML filed a motion to dismiss the complaint, which was fully briefed on March 31, 2016. The Company intends to defend the matter vigorously.
Mr. Jacobs is seeking unspecified damages against VML. 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;
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, 2016.
On April 7, 2016, the SEC announced a comprehensive civil administrative settlement with the Company in which the Company neither admitted nor denied allegations related to the internal controls and books and records provisions of the FCPA pursuant to Section 21(c) of the Securities Exchange Act of 1934, as amended. The Company’s cooperation through the Audit Committee and its remedial actions, which began prior to the government’s investigation, including separation of individuals, were credited by the SEC in the settlement, which included a $9.0 million civil monetary penalty and an undertaking to retain an independent consultant for a period of two years to review and evaluate the Company’s FCPA compliance procedures and make recommendations for adoption by the Company. The Company will recommend consultant candidates to the SEC as part of the selection process of the independent consultant.
The conclusion of the SEC investigation was consistent with preliminary findings of the Company’s Audit Committee set forth above.
The Company continues to respond to all remaining government inquiries. Based on proceedings to date, management is currently unable to determine the probability of the outcome of the remaining inquiries, the extent of materiality, or the range of reasonably possible loss, if any. 

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On May 24, 2010, Frank J. Fosbre, Jr. 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 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 U.S. District Court's order dated August 24, 2011, striking additional portions of the plaintiffs' complaint and reducing the class period to a period of February 4 to November 6, 2008. On August 7, 2012, the plaintiffs 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, which was granted by the U.S. District Court on June 15, 2015. Fact discovery closed on July 31, 2015, and expert discovery closed on December 18, 2015. On January 22, 2016, the Company filed a motion for summary judgment as did co-defendant Mr. Weidner. Plaintiffs filed an opposition to the Company's motion for summary judgment on March 11, 2016. The Company filed its reply in support of summary judgment on April 8, 2016. No hearing date for the summary judgment has been set. 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 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.

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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 July 22, 2013. The District Court has granted several successive stays since that time, with the case currently stayed until October 17, 2016. 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 District 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 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 District Court action in Kohanim described above. Following a January 22, 2016, status report by the parties, on January 27, 2016, the judge ordered another status report on May 16, 2016. 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 against Sheldon

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

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. Plaintiff 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. By order dated June 16, 2015, the U.S. District Court granted defendants’ motions to dismiss. The U.S. District Court did not dismiss the claims with prejudice, but it did not provide for further leave to amend and directed that the clerk close the case. On June 16, 2015, the U.S. District Court entered a “Judgment In A Civil Case” pursuant to the U.S. District Court’s order. On June 29, 2015, plaintiff moved to re-open the dismissal order to request further leave to amend, arguing that no judgment was entered. On July 16, 2015, the Company filed an opposition to that motion. On July 27, 2015, plaintiff filed a reply in support of the motion. On July 30, 2015, the U.S. District Court denied the motion, affirming that it had entered a final judgment and had denied further leave to amend. On July16, 2015, the Company also filed a motion requesting the U.S. District Court make the findings regarding Federal Rules of Civil Procedure ("Rule 11") compliance required at the conclusion of an Exchange Act case, and to find that plaintiff's counsel violated Rule 11 by filing and defending the amended complaint. On August 27, 2015, plaintiff filed an opposition to the Company's motion. On September 21, 2015, the Company filed a reply in further support of the motion. On January 27, 2016, the judge denied the Company's request for sanctions. The time to appeal the judgment has expired and plaintiff did not appeal. Hence, the matter is now closed.
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 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.

27





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

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 $375.5 million at exchange rates in effect on March 31, 2016) 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. On May 8, 2014, AAEC lodged an appeal against that decision. 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. AAEC appealed against the recognition decision to the Macao Court of Final Appeal, which, on May 6, 2015, dismissed the appeal and held the U.S. judgment to be final and have preclusive effect. The Macao Court of Final Appeal's decision became final on May 21, 2015. On June 5, 2015, the three U.S. Defendants applied to the Macao Judicial Court to dismiss the claims against them as res judicata. AAEC filed its response to that application on June 30, 2015. The three U.S. Defendants filed their reply on July 23, 2015. On September 14, 2015, the Macao Judicial Court admitted two further legal opinions from Portuguese and U.S. law experts. On March 16, 2016, the Macao Judicial Court dismissed the defense of res judicata. An appeal against that decision was lodged on April 7, 2016, together with a request that the appeal be heard immediately. By a decision dated April 13, 2016, the Macao Judicial Court accepted that the appeal be heard immediately. Legal arguments are required to be submitted on or before May 23, 2016. On March 25, 2015, application was made by the U.S. Defendants to the Macao Judicial 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 below. The Macao Public Prosecutor has opposed the action on the ground of lack of evidence that AAEC's financial position has improved. No decision has been issued in respect to that application up to the present time. A complaint against AAEC's Macao lawyer arising from certain conduct in relation to recent U.S. proceedings was submitted to the Macao Lawyer's Association on October 19, 2015. A letter dated February 26, 2016, has been received from the Conselho Superior de Advocacia of the Macao Bar Association advising that disciplinary proceedings have commenced. A further letter dated April 5, 2016, was received from the Conselho Superior de Advocacia requesting confirmation that the signatories of the complaint were acting within their corporate authority. By a letter dated April 14, 2016, such confirmation has been provided. 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 bringing a 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. On August 31, 2015, the judge dismissed the U.S. action and the Defendants' sanctions motion. The Macao action is in a preliminary stage and management has determined that based on proceedings to date, it is currently

28





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

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.
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.
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 information available to date 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.

29





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

NOTE 10 — SEGMENT INFORMATION
The Company’s principal operating and developmental activities occur in three geographic areas: Macao, Singapore and the U.S. 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 remainder of Sands Cotai Central and the Four Seasons Apartments in Macao, and the Las Vegas Condo Tower (which construction currently is 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, 2016 and December 31, 2015, and for the three months ended March 31, 2016 and 2015, is as follows (in thousands):
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
Net Revenues
 
 
 
 
Macao:
 
 
 
 
The Venetian Macao
 
$
748,954

 
$
787,191

Sands Cotai Central
 
530,280

 
571,764

Four Seasons Macao
 
148,266

 
161,251

Sands Macao
 
175,091

 
225,371

Other Asia
 
38,589

 
35,479

 
 
1,641,180

 
1,781,056

Marina Bay Sands
 
603,653

 
784,816

United States:
 
 
 
 
Las Vegas Operating Properties
 
384,876

 
376,383

Sands Bethlehem
 
138,668

 
127,699

 
 
523,544

 
504,082

Intersegment eliminations
 
(52,137
)
 
(58,332
)
Total net revenues
 
$
2,716,240

 
$
3,011,622

 
 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
Intersegment Revenues
 
 
 
 
Macao:
 
 
 
 
The Venetian Macao
 
$
1,682

 
$
1,493

Sands Cotai Central
 
112

 
78

Other Asia
 
9,218

 
10,212

 
 
11,012

 
11,783

Marina Bay Sands
 
2,161

 
2,799

Las Vegas Operating Properties
 
38,964

 
43,750

Total intersegment revenues
 
$
52,137

 
$
58,332



30





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

 
 
Three Months Ended 
 March 31,
 
 
2016
 
2015
Adjusted Property EBITDA(1)
 
 
 
 
Macao:
 
 
 
 
The Venetian Macao
 
$
267,806

 
$
269,942

Sands Cotai Central
 
163,466

 
155,910

Four Seasons Macao
 
48,186

 
44,472

Sands Macao
 
30,971

 
57,378

Other Asia
 
7,660

 
3,532

 
 
518,089

 
531,234

Marina Bay Sands
 
274,872

 
415,272

United States:
 
 
 
 
Las Vegas Operating Properties
 
86,898

 
74,109

Sands Bethlehem
 
37,725

 
29,893

 
 
124,623

 
104,002

Total adjusted property EBITDA
 
917,584

 
1,050,508

Other Operating Costs and Expenses
 
 
 
 
Stock-based compensation
 
(5,529
)
 
(3,975
)
Corporate
 
(46,628
)
 
(45,223
)
Pre-opening
 
(8,609
)
 
(9,579
)
Development
 
(2,377
)
 
(1,533
)
Depreciation and amortization
 
(259,876
)
 
(253,922
)
Amortization of leasehold interests in land
 
(9,547
)
 
(9,838
)
Gain (loss) on disposal of assets
 
612

 
(15,323
)
Operating income
 
$
585,630

 
$
711,115

 ____________________
(1)
Adjusted property EBITDA is operating 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, gain or loss on disposal of assets and loss on modification or early retirement of debt. Adjusted property EBITDA is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. In particular, management utilizes adjusted property EBITDA to compare the operating profitability of its casinos with those of its competitors, as well as a basis for determining certain incentive compensation. The Company is also presenting adjusted property EBITDA because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements.

 

31





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

 
Three Months Ended 
 March 31,
 
2016
 
2015
Capital Expenditures
 
 
 
Corporate and Other
$
838

 
$
2,691

Macao:
 
 
 
The Venetian Macao
12,755

 
24,055

Sands Cotai Central
40,195

 
123,416

Four Seasons Macao
2,346

 
5,295

Sands Macao
3,256

 
9,594

Other Asia
1,228

 
592

The Parisian Macao
247,476

 
163,549

 
307,256

 
326,501

Marina Bay Sands
13,058

 
23,465

United States:
 
 
 
Las Vegas Operating Properties
16,200

 
11,578

Sands Bethlehem
6,218

 
3,101

 
22,418

 
14,679

Total capital expenditures
$
343,570

 
$
367,336

 
 
March 31,
2016
 
December 31,
2015
Total Assets
 
 
 
Corporate and Other
$
643,565

 
$
463,272

Macao:
 
 
 
The Venetian Macao
2,290,606

 
2,949,533

Sands Cotai Central
4,312,412

 
4,393,716

Four Seasons Macao
1,021,271

 
1,038,573

Sands Macao
329,945

 
373,113

Other Asia
272,675

 
288,178

The Parisian Macao
1,897,528

 
1,648,562

Other Development Projects
76

 
82

 
10,124,513

 
10,691,757

Marina Bay Sands
5,531,925

 
5,497,556

United States:
 
 
 
Las Vegas Operating Properties
3,397,569

 
3,517,816

Sands Bethlehem
687,337

 
693,056

 
4,084,906

 
4,210,872

Total assets
$
20,384,909

 
$
20,863,457

 

32





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

 
March 31,
2016
 
December 31,
2015
Total Long-Lived Assets
 
 
 
Corporate and Other
$
328,485

 
$
334,540

Macao:
 
 
 
The Venetian Macao
1,761,748

 
1,795,042

Sands Cotai Central
3,883,482

 
3,943,966

Four Seasons Macao
893,297

 
903,649

Sands Macao
259,655

 
266,399

Other Asia
165,030

 
167,540

The Parisian Macao
1,892,871

 
1,645,881

 
8,856,083

 
8,722,477

Marina Bay Sands
4,572,721

 
4,476,064

United States:
 
 
 
Las Vegas Operating Properties
2,882,244

 
2,909,294

Sands Bethlehem
550,035

 
551,395

 
3,432,279

 
3,460,689

Total long-lived assets
$
17,189,568

 
$
16,993,770



33


LAS VEGAS SANDS CORP. AND SUBSIDIARIES
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and the notes thereto, and other financial information included in this Form 10-Q. Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements. See “—Special Note Regarding Forward-Looking Statements.”
Operations
We view each of our casino properties as an operating segment. Our operating segments in the Macao Special Administrative Region (“Macao”) of the People’s Republic of China consist of The Venetian Macao Resort Hotel (“The Venetian Macao”); Sands Cotai Central; the Four Seasons Hotel Macao, Cotai Strip and the Plaza Casino (collectively, the “Four Seasons Macao”); the Sands Macao; and other ancillary operations in that region (“Other Asia”). Our operating segment in Singapore is the Marina Bay Sands. Our operating segments in the United States consist of The Venetian Resort Hotel Casino (“The Venetian Las Vegas”), The Palazzo Resort Hotel Casino (“The Palazzo”) and the Sands Casino Resort Bethlehem (the “Sands Bethlehem”). The Venetian Las Vegas and The Palazzo operating segments are managed as a single integrated resort and have been aggregated into 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 our organizational and management reporting structure. For the three months ended March 31, 2016 and 2015, gross revenue at our reportable segments was derived as follows:
At The Venetian Macao, approximately 83.4% and 81.8%, respectively, was derived from gaming activities, with the remainder derived from mall, room, food and beverage and other non-gaming sources.
At Sands Cotai Central, approximately 80.3% and 80.4%, respectively, was derived from gaming activities, with the remainder derived primarily from room and food and beverage operations.
At Four Seasons Macao, approximately 70.3% and 72.3%, respectively, was derived from gaming activities, with the remainder derived primarily from mall, room and food and beverage operations.
At Sands Macao, approximately 92.2% and 92.7%, respectively, was derived from gaming activities, with the remainder derived primarily from food and beverage operations.
At Marina Bay Sands, approximately 69.9% and 75.8%, respectively, was derived from gaming activities, with the remainder derived from room, food and beverage, mall and other non-gaming sources.
At our Las Vegas Operating Properties, approximately 74.6% and 72.0%, respectively, was derived from room, food and beverage and other non-gaming sources, with the remainder derived from gaming activities. The percentage of non-gaming revenue reflects the integrated resort’s emphasis on the group convention and trade show business.
At Sands Bethlehem, approximately 89.1% and 88.3%, respectively, was derived from gaming activities, with the remainder derived primarily from food and beverage and other non-gaming sources.
Critical Accounting Policies and Estimates
The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to us and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations. Changes in these estimates and assumptions may have a material effect on our financial condition and results of operations. We believe that these critical accounting policies affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements. For a discussion of our significant accounting policies and estimates,

34


please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” presented in our 2015 Annual Report on Form 10-K filed on February 26, 2016.
There were no newly identified significant accounting estimates during the three months ended March 31, 2016, nor were there any material changes to the critical accounting policies and estimates discussed in our 2015 Annual Report.
Recent Accounting Pronouncements
See related disclosure at “Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 1 — Organization and Business of Company — Recent Accounting Pronouncements.”
Summary Financial Results
The following table summarizes our results of operations:
 
 
Three Months Ended March 31,
 
 
2016
 
2015
 
Percent
Change
 
 
(Dollars in thousands)
Net revenues
 
$
2,716,240

 
$
3,011,622

 
(9.8
)%
Operating expenses
 
2,130,610

 
2,300,507

 
(7.4
)%
Operating income
 
585,630

 
711,115

 
(17.6
)%
Income before income taxes
 
471,938

 
666,703

 
(29.2
)%
Net income
 
408,913

 
611,038

 
(33.1
)%
Net income attributable to Las Vegas Sands Corp.
 
320,167

 
511,923

 
(37.5
)%
 
 
Percent of Net Revenues
 
Three Months Ended March 31,
 
2016
 
2015
Operating expenses
78.4
%
 
76.4
%
Operating income
21.6
%
 
23.6
%
Income before income taxes
17.4
%
 
22.1
%
Net income
15.1
%
 
20.3
%
Net income attributable to Las Vegas Sands Corp.
11.8
%
 
17.0
%
Operating Results
Key Operating Revenue Measurements
Operating revenues at The Venetian Macao, Sands Cotai Central, Four Seasons Macao, Marina Bay Sands and our Las Vegas Operating Properties are dependent upon the volume of customers who stay at the hotel, which affects the price that can be charged for hotel rooms and our gaming volume. Operating revenues at Sands Macao and Sands Bethlehem are principally driven by casino customers who visit the properties on a daily basis.
The following are the key measurements we use to evaluate operating revenues:
Casino revenue measurements for Macao and Singapore: Macao and Singapore table games are segregated into two groups, consistent with the Macao and Singapore markets’ convention: Rolling Chip play (all VIP players) and Non-Rolling Chip play (mostly non-VIP players). The volume measurement for Rolling Chip play is non-negotiable gaming chips wagered and lost. The volume measurement for Non-Rolling Chip play is table games drop (“drop”), which is the sum of markers issued (credit instruments), cash deposited in the table drop box and gaming chips purchased at the cage. Rolling Chip and Non-Rolling Chip volume measurements are not comparable as the amounts wagered and lost are substantially higher than the amounts dropped. Slot handle (“handle”), also a volume measurement, is the gross amount wagered for the period cited.
We view Rolling Chip win as a percentage of Rolling Chip volume, Non-Rolling Chip win as a percentage of drop and slot hold as a percentage of slot handle. Win or hold percentage represents the percentage of Rolling Chip

35


volume, Non-Rolling Chip drop or slot handle that is won by the casino and recorded as casino revenue. Based upon our mix of table games, our Rolling Chip win percentage (calculated before discounts and commissions) is expected to be 2.7% to 3.0% and our Non-Rolling Chip table games have produced a trailing 12-month win percentage (calculated before discounts) of 24.5%, 21.6%, 21.6%, 17.9% and 28.0% at The Venetian Macao, Sands Cotai Central, Four Seasons Macao, Sands Macao and Marina Bay Sands, respectively. Our slot machines have produced a trailing 12-month hold percentage (calculated before slot club cash incentives) of 4.7%, 3.6%, 6.6%, 3.5% and 4.4% at The Venetian Macao, Sands Cotai Central, Four Seasons Macao, Sands Macao and Marina Bay Sands, respectively. Actual win may vary from our expected win percentage and the trailing 12-month win and hold percentages. Generally, slot machine play is conducted on a cash basis. In Macao and Singapore, 15.7% and 31.5%, respectively, of our table games play was conducted on a credit basis for the three months ended March 31, 2016.
Casino revenue measurements for the U.S.: The volume measurements in the U.S. are slot handle, as previously described, and table games drop which is the total amount of cash and net markers issued that are deposited in the table drop box. We view table games win as a percentage of drop and slot hold as a percentage of handle. Based upon our mix of table games, our table games are expected to produce a win percentage (calculated before discounts) of 21% to 29% for Baccarat and 16% to 20% for non-Baccarat. Table games at Sands Bethlehem have produced a trailing 12-month win percentage of 18.5%. Our slot machines have produced a trailing 12-month hold percentage (calculated before slot club cash incentives) of 8.2% and 7.0% at our Las Vegas Operating Properties and at Sands Bethlehem, respectively. Actual win may vary from our expected win percentage and the trailing 12-month win and hold percentages. As in Macao and Singapore, slot machine play is generally conducted on a cash basis. Approximately 63.3% of our table games play at our Las Vegas Operating Properties, for the three months ended March 31, 2016, was conducted on a credit basis, while our table games play in Pennsylvania is primarily conducted on a cash basis.
Hotel revenue measurements: Performance indicators used are occupancy rate, which is the average percentage of available hotel rooms occupied during a period, and average daily room rate, which is the average price of occupied rooms per day. The calculations of the hotel occupancy and average daily room rates include the impact of rooms provided on a complimentary basis. Complimentary room rates are determined based on an analysis of retail (or cash) room rates by customer segment and type of room product to ensure the complimentary room rates are consistent with retail rates. Revenue per available room represents a summary of hotel average daily room rates and occupancy. Because not all available rooms are occupied, average daily room rates are normally higher than revenue per available room. Reserved rooms where the guests do not show up for their stay and lose their deposit may be re-sold to walk-in guests. These rooms are considered to be occupied twice for statistical purposes due to obtaining the original deposit and the walk-in guest revenue. In cases where a significant number of rooms are resold, occupancy rates may be in excess of 100% and revenue per available room may be higher than the average daily room rate.
Mall revenue measurements: Occupancy, base rent per square foot and tenant sales per square foot are used as performance indicators. Occupancy represents gross leasable occupied area (“GLOA”) divided by gross leasable area (“GLA”) at the end of the reporting period. GLOA is the sum of: (1) tenant occupied space under lease and (2) tenants no longer occupying space, but paying rent. GLA does not include space that is currently under development or not on the market for lease. Base rent per square foot is the annualized base, or minimum, rent charge in effect at the end of the reporting period, which is calculated on a weighted average basis, for all tenants that would qualify to be included in occupancy. Tenant sales per square foot is the sum of reported comparable sales for the trailing 12 months divided by the comparable square footage for the same period. Only tenants that have been open for a minimum of 12 months are included in the tenant sales per square foot calculation.

36


Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015
Operating Revenues
Our net revenues consisted of the following:
 
Three Months Ended March 31,
 
2016
 
2015
 
Percent
Change
 
(Dollars in thousands)
Casino
$
2,082,196

 
$
2,376,688

 
(12.4
)%
Rooms
366,300

 
371,413

 
(1.4
)%
Food and beverage
187,567

 
189,411

 
(1.0
)%
Mall
134,931

 
127,814

 
5.6
 %
Convention, retail and other
123,552

 
134,137

 
(7.9
)%
 
2,894,546

 
3,199,463

 
(9.5
)%
Less — promotional allowances
(178,306
)
 
(187,841
)
 
5.1
 %
Total net revenues
$
2,716,240

 
$
3,011,622

 
(9.8
)%
Consolidated net revenues were $2.72 billion for the three months ended March 31, 2016, a decrease of $295.4 million compared to $3.01 billion for the three months ended March 31, 2015. The decrease in net revenues was driven by decreases of $181.2 million at Marina Bay Sands, primarily due to decreased casino revenue and partially due to the impact of a stronger U.S. dollar in the current period, and $143.0 million at our Macao operating properties, primarily due to decreased casino revenue.

37


Casino revenues decreased $294.5 million compared to the three months ended March 31, 2015. The decrease is primarily attributable to decreases of $178.8 million at Marina Bay Sands, driven by a lower Rolling Chip win percentage and a stronger U.S. dollar in the current period, and $119.5 million at our Macao operating properties, driven by a decrease in Rolling Chip volume due to decreased demand in the VIP market. The following table summarizes the results of our casino activity:
 
Three Months Ended March 31,
 
2016
 
2015
 
Change
 
(Dollars in thousands)
Macao Operations:
 
 
 
 
 
The Venetian Macao
 
 
 
 
 
Total casino revenues
$
654,929

 
$
676,914

 
(3.2)%

Non-Rolling Chip drop
$
1,770,100

 
$
1,868,018

 
(5.2)%

Non-Rolling Chip win percentage
25.1
%
 
25.0
%
 
0.1 pts

Rolling Chip volume
$
8,226,010

 
$
8,518,038

 
(3.4)%

Rolling Chip win percentage
3.21
%
 
2.83
%
 
0.38 pts

Slot handle
$
1,069,989

 
$
1,062,476

 
0.7%

Slot hold percentage
4.4
%
 
4.9
%
 
(0.5) pts

Sands Cotai Central
 
 
 
 
 
Total casino revenues
$
459,031

 
$
493,023

 
(6.9)%

Non-Rolling Chip drop
$
1,504,047

 
$
1,645,066

 
(8.6)%

Non-Rolling Chip win percentage
20.9
%
 
20.8
%
 
0.1 pts

Rolling Chip volume
$
3,603,356

 
$
6,082,952

 
(40.8)%

Rolling Chip win percentage
3.92
%
 
2.76
%
 
1.16 pts

Slot handle
$
1,559,058

 
$
1,643,766

 
(5.2)%

Slot hold percentage
3.5
%
 
3.2
%
 
0.3 pts

Four Seasons Macao
 
 
 
 
 
Total casino revenues
$
111,190

 
$
125,397

 
(11.3)%

Non-Rolling Chip drop
$
300,114

 
$
228,964

 
31.1%

Non-Rolling Chip win percentage
19.1
%
 
23.1
%
 
(4.0) pts

Rolling Chip volume
$
2,621,484

 
$
3,962,573

 
(33.8)%

Rolling Chip win percentage
3.22
%
 
2.81
%
 
0.41 pts

Slot handle
$
90,168

 
$
133,923

 
(32.7)%

Slot hold percentage
6.8
%
 
4.8
%
 
2.0 pts

Sands Macao
 
 
 
 
 
Total casino revenues
$
169,523

 
$
218,821

 
(22.5)%

Non-Rolling Chip drop
$
699,864

 
$
789,909

 
(11.4)%

Non-Rolling Chip win percentage
16.9
%
 
19.1
%
 
(2.2) pts

Rolling Chip volume
$
2,241,016

 
$
2,526,188

 
(11.3)%

Rolling Chip win percentage
2.45
%
 
2.86
%
 
(0.41) pts

Slot handle
$
657,733

 
$
707,077

 
(7.0)%

Slot hold percentage
3.3
%
 
3.5
%
 
(0.2) pts

Singapore Operations:
 
 
 
 
 
Marina Bay Sands
 
 
 
 
 
Total casino revenues
$
453,116

 
$
631,928

 
(28.3)%

Non-Rolling Chip drop
$
1,006,505

 
$
1,108,749

 
(9.2)%

Non-Rolling Chip win percentage
29.1
%
 
25.3
%
 
3.8 pts

Rolling Chip volume
$
9,632,109

 
$
10,089,956

 
(4.5)%

Rolling Chip win percentage
1.42
%
 
3.41
%
 
(1.99) pts

Slot handle
$
3,355,403

 
$
3,084,269

 
8.8%

Slot hold percentage
4.3
%
 
4.6
%
 
(0.3) pts

U.S. Operations:
 
 
 
 
 
Las Vegas Operating Properties
 
 
 
 
 
Total casino revenues
$
104,356

 
$
111,787

 
(6.6)%

Table games drop
$
483,520

 
$
533,053

 
(9.3)%

Table games win percentage
15.9
%
 
16.6
%
 
(0.7) pts

Slot handle
$
586,459

 
$
578,548

 
1.4%

Slot hold percentage
8.1
%
 
7.6
%
 
0.5 pts

Sands Bethlehem