Attached files

file filename
EX-32.2 - EXHIBIT 32.2 - LAS VEGAS SANDS CORPlvs-ex322x09302017.htm
EX-32.1 - EXHIBIT 32.1 - LAS VEGAS SANDS CORPlvs-ex321x09302017.htm
EX-31.2 - EXHIBIT 31.2 - LAS VEGAS SANDS CORPlvs-ex312x09302017.htm
EX-31.1 - EXHIBIT 31.1 - LAS VEGAS SANDS CORPlvs-ex311x09302017.htm


UNITED STATES
SECURITIES AND 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 September 30, 2017
¨
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, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
ý
 
Accelerated filer
 
¨
 
 
 
 
Non-accelerated filer
 
¨ (Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨
 
 
 
 
 
 
 
Emerging growth company
 
¨
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
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 November 1, 2017
Common Stock ($0.001 par value)
  
790,480,010 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
 
September 30,
2017
 
December 31,
2016
 
(In millions, except par value)
(Unaudited)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
2,001

 
$
2,128

Restricted cash and cash equivalents
11

 
10

Accounts receivable, net
637

 
776

Inventories
45

 
46

Prepaid expenses and other
142

 
138

Total current assets
2,836

 
3,098

Property and equipment, net
15,498

 
15,903

Leasehold interests in land, net
1,234

 
1,210

Intangible assets, net
93

 
103

Other assets, net
147

 
155

Total assets
$
19,808

 
$
20,469

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Accounts payable
$
141

 
$
128

Construction payables
165

 
384

Other accrued liabilities
1,992

 
1,935

Income taxes payable
229

 
192

Current maturities of long-term debt
134

 
167

Total current liabilities
2,661

 
2,806

Other long-term liabilities
136

 
126

Deferred income taxes
229

 
200

Deferred amounts related to mall sale transactions
408

 
413

Long-term debt
9,483

 
9,428

Total liabilities
12,917

 
12,973

Commitments and contingencies (Note 6)

 

Equity:
 
 
 
Common stock, $0.001 par value, 1,000 shares authorized, 831 and 830 shares issued, 790 and 795 shares outstanding
1

 
1

Treasury stock, at cost, 41 and 35 shares
(2,743
)
 
(2,443
)
Capital in excess of par value
6,569

 
6,516

Accumulated other comprehensive loss
(13
)
 
(119
)
Retained earnings
2,082

 
2,222

Total Las Vegas Sands Corp. stockholders' equity
5,896

 
6,177

Noncontrolling interests
995

 
1,319

Total equity
6,891

 
7,496

Total liabilities and equity
$
19,808

 
$
20,469

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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
 
(In millions, except per share data)
(Unaudited)
Revenues:
 
 
 
 
 
 
 
Casino
$
2,511

 
$
2,307

 
$
7,379

 
$
6,406

Rooms
411

 
402

 
1,194

 
1,123

Food and beverage
198

 
184

 
610

 
559

Mall
160

 
147

 
476

 
422

Convention, retail and other
128

 
141

 
400

 
389

 
3,408


3,181

 
10,059

 
8,899

Less — promotional allowances
(209
)
 
(212
)
 
(613
)
 
(564
)
Net revenues
3,199

 
2,969

 
9,446

 
8,335

Operating expenses:
 
 
 
 
 
 
 
Casino
1,342

 
1,198

 
3,968

 
3,531

Rooms
74

 
67

 
216

 
197

Food and beverage
109

 
101

 
329

 
306

Mall
18

 
16

 
52

 
44

Convention, retail and other
69

 
66

 
200

 
184

Provision for doubtful accounts
23

 
51

 
77

 
139

General and administrative
358

 
330

 
1,050

 
931

Corporate
51

 
39

 
136

 
208

Pre-opening
1

 
86

 
7

 
128

Development
3

 
3

 
8

 
7

Depreciation and amortization
265

 
277

 
913

 
792

Amortization of leasehold interests in land
9

 
10

 
28

 
29

Loss on disposal or impairment of assets
21

 
5

 
27

 
15

 
2,343

 
2,249

 
7,011

 
6,511

Operating income
856

 
720

 
2,435

 
1,824

Other income (expense):
 
 
 
 
 
 
 
Interest income
4

 
2

 
11

 
6

Interest expense, net of amounts capitalized
(83
)
 
(65
)
 
(240
)
 
(198
)
Other income (expense)
(19
)
 
21

 
(80
)
 
(33
)
Loss on modification or early retirement of debt

 
(3
)
 
(5
)
 
(3
)
Income before income taxes
758

 
675

 
2,121

 
1,596

Income tax expense
(73
)
 
(69
)
 
(220
)
 
(187
)
Net income
685

 
606

 
1,901

 
1,409

Net income attributable to noncontrolling interests
(115
)
 
(93
)
 
(306
)
 
(248
)
Net income attributable to Las Vegas Sands Corp.
$
570

 
$
513

 
$
1,595

 
$
1,161

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.72

 
$
0.65

 
$
2.01

 
$
1.46

Diluted
$
0.72

 
$
0.65

 
$
2.01

 
$
1.46

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
791

 
795

 
792

 
795

Diluted
792

 
795

 
793

 
795

Dividends declared per common share
$
0.73

 
$
0.72

 
$
2.19

 
$
2.16

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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
 
(In millions)
(Unaudited)
Net income
$
685

 
$
606

 
$
1,901

 
$
1,409

Currency translation adjustment, before and after tax
33

 
(25
)
 
98

 
62

Total comprehensive income
718

 
581

 
1,999

 
1,471

Comprehensive income attributable to noncontrolling interests
(115
)
 
(93
)
 
(298
)
 
(247
)
Comprehensive income attributable to Las Vegas Sands Corp.
$
603

 
$
488

 
$
1,701

 
$
1,224

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
Loss
 
Retained
Earnings
 
Noncontrolling
Interests
 
Total
 
(In millions)
(Unaudited)
Balance at January 1, 2016
$
1

 
$
(2,443
)
 
$
6,485

 
$
(66
)
 
$
2,840

 
$
1,601

 
$
8,418

Net income

 

 

 

 
1,161

 
248

 
1,409

Currency translation adjustment

 

 

 
63

 

 
(1
)
 
62

Exercise of stock options

 

 
4

 

 

 
1

 
5

Tax shortfall from stock-based compensation

 

 
(8
)
 

 

 

 
(8
)
Conversion of equity awards to liability awards

 

 
(1
)
 

 

 

 
(1
)
Stock-based compensation

 

 
24

 

 

 
4

 
28

Dividends declared

 

 

 

 
(1,716
)
 
(630
)
 
(2,346
)
Balance at September 30, 2016
$
1

 
$
(2,443
)
 
$
6,504

 
$
(3
)
 
$
2,285

 
$
1,223

 
$
7,567

Balance at January 1, 2017
$
1

 
$
(2,443
)
 
$
6,516

 
$
(119
)
 
$
2,222

 
$
1,319

 
$
7,496

Cumulative effect adjustment from change in accounting principle

 

 
3

 

 
(2
)
 
(1
)
 

Net income

 

 

 

 
1,595

 
306

 
1,901

Currency translation adjustment

 

 

 
106

 

 
(8
)
 
98

Exercise of stock options

 

 
28

 

 

 
4

 
32

Stock-based compensation

 

 
22

 

 

 
4

 
26

Repurchase of common stock

 
(300
)
 

 

 

 

 
(300
)
Dividends declared

 

 

 

 
(1,733
)
 
(629
)
 
(2,362
)
Balance at September 30, 2017
$
1

 
$
(2,743
)
 
$
6,569

 
$
(13
)
 
$
2,082

 
$
995

 
$
6,891

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
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
(In millions)
(Unaudited)
Cash flows from operating activities:
 
 
 
Net income
$
1,901

 
$
1,409

Adjustments to reconcile net income to net cash generated from operating activities:
 
 
 
Depreciation and amortization
913

 
792

Amortization of leasehold interests in land
28

 
29

Amortization of deferred financing costs and original issue discount
31

 
33

Amortization of deferred gain on and rent from mall sale transactions
(3
)
 
(3
)
Loss on modification or early retirement of debt
5

 
2

Loss on disposal or impairment of assets
27

 
15

Stock-based compensation expense
26

 
28

Provision for doubtful accounts
77

 
139

Foreign exchange loss
38

 
20

Deferred income taxes
21

 
24

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
76

 
280

Other assets
(4
)
 
(22
)
Accounts payable
11

 
12

Other liabilities
75

 
73

Net cash generated from operating activities
3,222

 
2,831

Cash flows from investing activities:
 
 
 
Change in restricted cash and cash equivalents
(1
)
 
(1
)
Capital expenditures
(592
)
 
(1,103
)
Proceeds from disposal of property and equipment
2

 
4

Acquisition of intangible assets

 
(47
)
Net cash used in investing activities
(591
)
 
(1,147
)
Cash flows from financing activities:
 
 
 
Proceeds from exercise of stock options
32

 
5

Repurchase of common stock
(300
)
 

Dividends paid
(2,362
)
 
(2,348
)
Proceeds from long-term debt (Note 3)
654

 
2,260

Repayments of long-term debt (Note 3)
(828
)
 
(1,963
)
Payments of financing costs
(5
)
 
(31
)
Net cash used in financing activities
(2,809
)
 
(2,077
)
Effect of exchange rate on cash
51

 
4

Decrease in cash and cash equivalents
(127
)
 
(389
)
Cash and cash equivalents at beginning of period
2,128

 
2,179

Cash and cash equivalents at end of period
$
2,001

 
$
1,790



7



LAS VEGAS SANDS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
(In millions)
(Unaudited)
Supplemental disclosure of cash flow information:
 
 
 
Cash payments for interest, net of amounts capitalized
$
198

 
$
154

Cash payments for taxes, net of refunds
$
202

 
$
194

Change in construction payables
$
(219
)
 
$
136

Non-cash investing and financing activities:
 
 
 
Change in dividends payable included in other accrued liabilities
$

 
$
(2
)
Property and equipment acquired under capital lease
$

 
$
6

Conversion of equity awards to liability awards
$

 
$
1


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, 2016, 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 ("GAAP") 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. The Company currently owns 70.1% of SCL.
The Company has entered into various joint venture agreements with independent third parties, which have been consolidated based on accounting standards for variable interest entities. As of September 30, 2017 and December 31, 2016, the Company's consolidated joint ventures had total assets of $80 million and $79 million, respectively, and total liabilities of $194 million and $173 million, respectively. The Company's joint ventures had intercompany liabilities of $193 million and $171 million as of September 30, 2017 and December 31, 2016, respectively.
Development Projects
As the Company's integrated resorts mature, the Company continues to reinvest in its portfolio of properties to maintain the high quality products and remain competitive in the markets in which it operates. The Company is constantly evaluating opportunities to improve its product offerings, such as refreshing its meeting and convention facilities, suites and rooms, retail malls, restaurant and nightlife mix and its gaming areas, as well as other anticipated revenue generating additions to the Company's integrated resorts.
Macao
The Plaza Casino and Four Seasons Hotel Macao
In October 2017, the Company announced that The Plaza Casino and Four Seasons Hotel Macao will feature an additional 295 new suites in a separate tower, The Four Seasons Macao Hotel Tower Suites. The Company has completed the structural work of the tower and plans to commence build out of the suites in 2018. The Company expects the project to be completed in 2019.
Sands Cotai Central
In October 2017, the Company announced that it will renovate, expand and rebrand the Sands Cotai Central into a new destination integrated resort, The Londoner Macao. The Londoner Macao will feature new attractions and features from London, including some of London’s most recognizable landmarks, an expanded retail mall and the St. Regis Macao Tower Suites, offering approximately 350 luxurious new suites. The project will commence in 2018 and be phased to minimize disruption during the property’s peak periods. The Company expects the project to be completed in 2020.

9






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

Capital Financing Overview
The Company funds its development projects primarily through borrowings under its credit facilities and operating cash flows.
The Company held unrestricted cash and cash equivalents of $2.0 billion and restricted cash and cash equivalents of $11 million as of September 30, 2017. 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. In the normal course of its activities, the Company will continue to evaluate its capital structure and opportunities for enhancements thereof. In March 2017, the Company entered into an agreement to amend its U.S. credit facility, which refinanced the term loans in an aggregate amount of $2.18 billion, extended the maturity of the term loans to March 29, 2024, removed the requirement to prepay outstanding revolving loans and/or permanently reduce revolving commitments in certain circumstances and lowered the applicable margin credit spread for borrowings under the term loans (see "— Note 3 — Long-Term Debt — 2013 U.S. Credit Facility").
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Boards ("FASB") issued an accounting standard update (as subsequently amended) 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. The Company plans to adopt the new standard on January 1, 2018, on a full retrospective basis. The Company continues to assess the impact the new standard will have on the Company's financial condition, results of operations, cash flows and related disclosures. Upon adoption, management expects the standard to change the presentation of, and accounting for, complimentary revenues and promotional allowances currently presented in the statements of operations in accordance with current industry standards. It is anticipated a majority of total promotional allowances will be netted against casino revenue and expenses will be allocated among the respective categories in a different manner. Management also anticipates a change in the manner the Company assigns value to accrued customer benefits related to its frequent players programs. The resulting liability will be recorded using the retail value of such benefits less estimated breakage and will be offset against casino revenue. When the benefits are redeemed, revenue will be recognized in the resulting category of the goods or services provided. The adoption of this guidance is not expected to have a material impact on the Company's financial condition or 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, classification in the statement of cash flows and electing an accounting policy to either estimate the number of forfeitures or account for forfeitures when they occur. The Company adopted this guidance effective January 1, 2017, and as a result, excess tax benefits or deficiencies related to the exercise or vesting of share-based awards are now reflected in the accompanying condensed consolidated statements of operations as a component of income tax expense, whereas previously they were recognized in stockholders' equity when realized. As a result of the prior guidance that required that deferred tax assets are not recognized for net operating loss carryforwards or credit carryforwards resulting from windfall tax benefits, the Company had windfall tax benefits of $379 million as of December 31, 2016, that were not reflected in deferred tax assets. With the adoption of the new accounting standard, the Company recorded these deferred tax assets, but established a full valuation allowance against those deferred tax assets based on the determination that it was "more-likely-than-not" that those deferred tax assets would not be realized. The accompanying condensed consolidated statements of cash flows present excess tax benefits as an operating activity on a retrospective basis. The reclassification of the prior period had an immaterial impact on the Company's cash flows from operating and financing activities. The Company has elected to account for forfeitures as they occur rather than account for forfeitures based upon an estimated rate. This change in accounting policy was adopted on a modified retrospective basis and resulted in a $2 million cumulative effect adjustment to retained earnings.

10






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

Reclassification
Certain amounts in the condensed consolidated balance sheet as of December 31, 2016, and the condensed consolidated statement of cash flows for the nine months ended September 30, 2016, have been reclassified to be consistent with the current year presentation. The reclassification had no impact on the Company's financial condition, results of operations or cash flows.
Note 2 — Property and Equipment, Net
Property and equipment consists of the following:
 
September 30,
2017
 
December 31,
2016
 
(In millions)
Land and improvements
$
659

 
$
626

Building and improvements
17,598

 
17,478

Furniture, fixtures, equipment and leasehold improvements
3,890

 
3,720

Transportation
455

 
454

Construction in progress
1,141

 
1,094

 
23,743

 
23,372

Less — accumulated depreciation and amortization
(8,245
)
 
(7,469
)
 
$
15,498

 
$
15,903

Construction in progress consists of the following:
 
September 30,
2017
 
December 31,
2016
 
(In millions)
The Plaza Macao and Four Seasons Hotel Macao
$
441

 
$
430

Sands Cotai Central
292

 
286

Other
408

 
378

 
$
1,141

 
$
1,094

The $408 million in other construction in progress as of September 30, 2017, consists primarily of construction of a high-rise residential condominium tower (the "Las Vegas Condo Tower") and various projects at The Venetian Macao.
During the nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, the Company capitalized $1 million, $12 million and $33 million, respectively, of interest expense. During the three and nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, the Company capitalized approximately $6 million, $18 million, $8 million and $22 million, respectively, of internal costs, consisting primarily of compensation expense for individuals directly involved with the development and construction of property.
During the three months ended September 30, 2017, the Company completed an evaluation of the estimated useful lives of its property and equipment. The timing of this review was based on a combination of factors accumulating over time that provided the Company with updated information to make a better estimate on the economic lives of certain property and equipment. These factors included (1) the accumulation of historical asset replacement data at the Company's operating properties, which reflects the actual length of time the Company uses certain property and equipment, (2) the stabilization of the operating, regulatory and competitive environment in each jurisdiction the Company operates in, which includes meeting the final land concession government imposed deadlines for the Company's Macao properties on the Cotai Strip, (3) transitioning to more predictable renovation cycles at the Company's operating properties and (4) consideration of the estimated useful lives assigned to buildings of the Company's peers in the gaming and hospitality industry. Based on these factors, as well as the anticipated use and condition of the assets

11






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

evaluated, the Company determined that changes to the useful lives of certain property and equipment were appropriate. As a result, the Company revised the estimated useful lives of its buildings, building improvements and land improvements from a range of 15 to 40 years to 10 to 50 years and certain other furniture, fixtures and equipment from 3 to 6 years to 5 to 10 years to better reflect the estimated periods during which these assets are expected to remain in service.
This change in estimated useful lives was accounted for as a change in accounting estimate effective July 1, 2017. The impact of this change for the three and nine months ended September 30, 2017, was a decrease in depreciation and amortization expense and an increase in operating income of $51 million, and an increase in net income of $46 million, or earnings per share of $0.06 on a basic and diluted basis.
Note 3 — Long-Term Debt
Long-term debt consists of the following:
 
September 30,
2017
 
December 31,
2016
 
(In millions)
Corporate and U.S. Related(1):
 
 
 
2013 U.S. Credit Facility — Extended Term B (net of unamortized original issue discount and deferred financing costs of $11)
$
2,155

 
$

2013 U.S. Credit Facility — Term B (net of unamortized original issue discount and deferred financing costs of $13)

 
2,170

2013 U.S. Credit Facility — Extended Revolving

 
36

Airplane Financings

 
56

HVAC Equipment Lease
13

 
14

Macao Related(1):
 
 
 
2016 VML Credit Facility — Term (net of unamortized deferred financing costs of $59 and $69, respectively)
4,041

 
4,049

2016 VML Credit Facility — Non-Extended Term (net of unamortized deferred financing costs of $3 and $4, respectively)
252

 
266

Other
6

 
8

Singapore Related(1):
 
 
 
2012 Singapore Credit Facility — Term (net of unamortized deferred financing costs of $35 and $44, respectively)
3,150

 
2,996

 
9,617

 
9,595

Less — current maturities
(134
)
 
(167
)
Total long-term debt
$
9,483

 
$
9,428

____________________
(1)
Unamortized deferred financing costs of $27 million and $35 million as of September 30, 2017 and December 31, 2016, 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
During March 2017, the Company entered into an agreement (the "Amendment Agreement") to amend the existing 2013 U.S. Credit Facility to, among other things, refinance the term loans (by way of continuing or replacing existing term loans) in an aggregate amount of $2.18 billion (the "2013 Extended U.S. Term B Facility") and to lower the applicable margin credit spread for adjusted Eurodollar rate term loans from 2.25% to 2.00% per annum and for alternative base rate term loans from 1.25% to 1.00% per annum (the interest rate was set at 3.2% as of September 30, 2017). Additionally, the Amendment Agreement removed the requirement to prepay outstanding revolving loans and/or permanently reduce revolving commitments in certain circumstances and extended the maturity date of the term loans from December 19, 2020 to March 29, 2024. The 2013 Extended U.S. Term B Facility is subject to quarterly

12






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

amortization payments of $5 million, which began on March 31, 2017, followed by a balloon payment of $2.03 billion due on March 29, 2024. The Company recorded a $5 million loss on modification of debt during the nine months ended September 30, 2017, in connection with the Amendment Agreement.
As of September 30, 2017, the Company had $1.15 billion of available borrowing capacity under the 2013 Extended U.S. Revolving Facility, net of outstanding letters of credit.
Airplane Financings
In March 2017, the Company repaid the outstanding $56 million balance under the Airplane Financings.
2016 VML Credit Facility
As of September 30, 2017, the Company had $1.99 billion of available borrowing capacity under the 2016 VML Revolving Facility.
2012 Singapore Credit Facility
As of September 30, 2017, the Company had 495 million Singapore dollars ("SGD," approximately $364 million at exchange rates in effect on September 30, 2017) of available borrowing capacity under the 2012 Singapore Revolving Facility, net of outstanding letters of credit. 
Debt Covenant Compliance
As of September 30, 2017, management believes the Company was in compliance with all debt covenants.
Cash Flows from Financing Activities
Cash flows from financing activities related to long-term debt and capital lease obligations are as follows:
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
(In millions)
Proceeds from 2016 VML Credit Facility
$
649

 
$
1,000

Proceeds from 2013 U.S. Credit Facility
5

 
260

Proceeds from 2011 VML Credit Facility

 
1,000

 
$
654

 
$
2,260

Repayments on 2016 VML Credit Facility
$
(662
)
 
$
(1,000
)
Repayments on 2013 U.S. Credit Facility
(57
)
 
(907
)
Repayments on 2012 Singapore Credit Facility
(50
)
 
(50
)
Repayments on Airplane Financings
(56
)
 
(3
)
Repayments on HVAC Equipment Lease and Other Long-Term Debt
(3
)
 
(3
)
 
$
(828
)
 
$
(1,963
)
Fair Value of Long-Term Debt
The estimated fair value of the Company's long-term debt as of September 30, 2017 and December 31, 2016, was approximately $9.57 billion and $9.58 billion, respectively, compared to its carrying value of $9.71 billion and $9.70 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).

13






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

Note 4 — Equity and Earnings Per Share
Common Stock
Dividends
On March 31, June 30 and September 29, 2017, the Company paid a dividend of $0.73 per common share as part of a regular cash dividend program. During the nine months ended September 30, 2017, the Company recorded $1.73 billion as a distribution against retained earnings (of which $946 million related to the Principal Stockholder and his family and the remaining $787 million related to all other shareholders).
On March 31, June 30 and September 30, 2016, the Company paid a dividend of $0.72 per common share as part of a regular cash dividend program. During the nine months ended September 30, 2016, the Company recorded $1.72 billion as a distribution against retained earnings (of which $933 million related to the Principal Stockholder and his family and the remaining $784 million related to all other shareholders).
In October 2017, the Company's Board of Directors declared a quarterly dividend of $0.73 per common share (a total estimated to be approximately $577 million) to be paid on December 29, 2017, to shareholders of record on December 21, 2017.
In October 2017, the Company announced that its Board of Directors increased the dividend for the 2018 calendar year to $3.00 per common share, or $0.75 per common share per quarter.
Repurchase Program
In October 2014, the Company's Board of Directors authorized the repurchase of $2.0 billion of its outstanding common stock, which expired in October 2016. In November 2016, the Company's Board of Directors authorized the repurchase of $1.56 billion of its outstanding common stock, which expires in November 2018. 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 nine months ended September 30, 2017, the Company repurchased 5,107,237 shares of its common stock for $300 million (including commissions) under the current program. During the nine months ended September 30, 2016, no shares were repurchased under the previous program. All share repurchases of the Company's common stock have been recorded as treasury stock.
Noncontrolling Interests
On February 24 and June 23, 2017, SCL paid a dividend of 0.99 Hong Kong dollars ("HKD") and HKD 1.00 per share, respectively, to SCL shareholders (a total of $2.07 billion, of which the Company retained $1.45 billion during the nine months ended September 30, 2017). On February 26 and June 24, 2016, SCL paid a dividend of HKD 0.99 and HKD 1.00 per share, respectively, to SCL shareholders (a total of $2.07 billion, of which the Company retained $1.45 billion during the nine months ended September 30, 2016).
During the nine months ended September 30, 2017 and 2016, the Company distributed $10 million and $11 million, respectively, to certain of its noncontrolling interests.

14






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

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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
 
(In millions)
Weighted-average common shares outstanding (used in the calculation of basic earnings per share)
791

 
795

 
792

 
795

Potential dilution from stock options and restricted stock and stock units
1

 

 
1

 

Weighted-average common and common equivalent shares (used in the calculation of diluted earnings per share)
792

 
795

 
793

 
795

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

 
7

 
7

 
7

Accumulated Other Comprehensive Loss
As of September 30, 2017 and December 31, 2016, accumulated other comprehensive loss consisted solely of foreign currency translation adjustments.
Note 5 — Fair Value Measurements
The Company currently uses foreign currency forward contracts as effective economic hedges to manage a portion of 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 $144 million and $427 million as of September 30, 2017 and December 31, 2016, 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 condensed consolidated statements of operations.
The following table provides the assets and liabilities carried at fair value:
 
 
 
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)
 
(In millions)
As of September 30, 2017
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Cash equivalents(1)
$
694

 
$
694

 
$

 
$

Liabilities
 
 
 
 
 
 
 
Forward contracts(2)
$
4

 
$

 
$
4

 
$

As of December 31, 2016
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
Cash equivalents(1)
$
931

 
$
931

 
$

 
$

Forward contracts(2)
$
12

 
$

 
$
12

 
$

____________________
(1)
The Company has short-term investments classified as cash equivalents as the original maturities are less than 90 days.

15






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

(2)
As of September 30, 2017 and December 31, 2016, the Company had 8 and 18 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. During the nine months ended September 30, 2017 and the three and nine months ended September 30, 2016, the Company recorded in other income (expense) a $16 million loss, $10 million gain and $18 million loss, respectively, related to the change in fair value of the forward contracts.
Note 6 — 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 and has accrued a nominal amount for such costs as of September 30, 2017. 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.
Round Square Company Limited v. Las Vegas Sands Corp.
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 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 $44 million. On June 30, 2008, a judgment was entered in this matter in the amount of $59 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 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 million. On May 28, 2013, a judgment was entered in the matter in the amount of $102 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 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 its answering brief. On January 12, 2015, the defendants filed their reply brief. On January 27, 2015, Roundsquare filed its 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

16






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

rehearing. The Nevada Supreme Court ordered an answer by the Company, which the Company filed on May 4, 2016. On May 12, 2016, Roundsquare filed a motion for leave to file a reply brief in support of its petition for rehearing, and on May 19, 2016, the Company filed an opposition to that motion. On June 24, 2016, the Nevada Supreme Court issued an order granting Roundsquare's petition for rehearing and submitting the appeal for decision on rehearing without further briefing or oral argument. On July 22, 2016, the Nevada Supreme Court once again ordered a new trial as to plaintiff Roundsquare on the issue of quantum merit damages. A pre-trial hearing was set in District Court for December 12, 2016. At the December 12, 2016 hearing, the District Court indicated that it would allow a scope of trial and additional discovery into areas the Company opposed as inconsistent with the Nevada Supreme Court's remand. The District Court issued a written order on the scope of retrial and discovery dated December 15, 2016. On January 5, 2017, the Company moved for a stay of proceedings in the District Court, pending the Nevada Supreme Court's resolution of the Company's petition for writ of mandamus or prohibition, which was filed on January 13, 2017. On February 13, 2017, the District Court denied the motion to stay proceedings and, on February 16, 2017, the Nevada Supreme Court denied the writ. The parties are presently engaged in document discovery. The Company has accrued a nominal amount for estimated costs related to this legal matter as of September 30, 2017. In the event that the Company's assumptions used to evaluate this matter change in future periods, it may be required to record an additional liability for an adverse outcome.
Frank J. Fosbre, Jr. v. Las Vegas Sands Corp., Sheldon G. Adelson and William P. Weidner
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 was 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

17






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

Second Amended Complaint. Discovery in the matter resumed. 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, defendants filed motions for summary judgment. Plaintiffs filed an opposition to the motions for summary judgment on March 11, 2016. Defendants filed their replies in support of summary judgment on April 8, 2016. Summary judgment in favor of the defendants was entered on January 4, 2017. The plaintiffs filed a notice of appeal on February 2, 2017, and their opening brief in support of their appeal on July 14, 2017. Defendants filed their answering briefs in opposition to the appeal on October 13, 2017. The Company intends to defend this matter vigorously.
Benyamin Kohanim v. Adelson, et al.
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 Foreign Corrupt Practices Act. The complaint seeks to recover for the Company unspecified damages, including restitution and disgorgement of profits, and also seeks to recover attorneys' fees, costs and related expenses for the plaintiff. On April 18, 2011, Ira J. Gaines, Sunshine Wire and Cable Defined Benefit Pension Plan Trust dated 1/1/92 and Peachtree Mortgage Ltd. filed a shareholder derivative action (the "Gaines action") on behalf of the Company in the District Court against Sheldon G. Adelson, Jason N. Ader, Irwin Chafetz, Charles D. Forman, George P. Koo, Michael A. Leven, Jeffrey H. Schwartz and Irwin A. Siegel, the members of the Board of Directors at the time. The complaint raises substantially similar claims as alleged in the Kohanim action. The complaint seeks to recover for the Company unspecified damages, and also seeks to recover attorneys' fees, costs and related expenses for the plaintiffs. The Kohanim and Gaines actions have been consolidated and are reported as one consolidated matter. On July 25, 2011, the plaintiffs filed a first verified amended consolidated complaint. The plaintiffs have twice agreed to stay the proceedings. A 120-day stay was entered by the District Court in October 2011. It was extended for another 90 days in February 2012 and expired in May 2012. The parties agreed to an extension of the May 2012 deadline that expired on October 30, 2012. The defendants filed a motion to dismiss on November 1, 2012, based on the fact that the plaintiffs have suffered no damages. On January 23, 2013, the District Court denied the motion to dismiss in part, deferred the remainder of the motion to dismiss and stayed the proceedings until July 22, 2013. The District Court granted several successive stays since that time, but lifted the stay on April 25, 2017, following an in-chambers status check. On July 20, 2017, the District Court ordered counsel of record for all parties to appear for an August 10, 2017 status check. The District Court subsequently ordered the parties to submit supplemental briefing on the pending motion to dismiss and a hearing on that motion is scheduled for November 9, 2017. 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.
Nasser Moradi, et al. v. Adelson, et al.
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,

18






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

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. Pursuant to a series of court orders, the parties have filed a number of status reports during the pendency of the stay, including most recently on June 16, 2017.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.
Asian American Entertainment Corporation, Limited v. Venetian Macau Limited, et al.
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 $373 million at exchange rates in effect on September 30, 2017) as compensation for damages resulting from the alleged breach of agreements entered into between AAEC and LVS (Nevada), LVSLLC and VCR (collectively, the "U.S. 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 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 U.S. Defendants.
On March 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 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 U.S. Defendants at the present time, although in principle an application for a stay of the proceedings against the 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 U.S. Defendants applied to the Macao Judicial

19






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

Court to dismiss the claims against them as res judicata. AAEC filed its response to that application on June 30, 2015. The 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 were submitted May 23, 2016. AAEC replied to the legal arguments on or about July 14, 2016, which was three days late, upon payment of a penalty. The U.S. Defendants submitted a response on September 20, 2016. On December 13, 2016, the Macao Judicial Court confirmed its earlier decision not to stay the proceedings pending appeal. As of the end of December 2016, all appeals (including VML's dismissal and the res judicata appeals) were being transferred to the Macao Second Instance Court. On May 11, 2017, the Macao Second Instance Court notified the parties of its decision of refusal to deal with the appeals at the present time. The Macao Second Instance Court ordered that the court file be transferred back to the Macao Judicial Court. Evidence gathering by the Macao Judicial Court has commenced by letters rogatory. On June 30, 2017, the Macao Judicial Court sent letters rogatory to the Public Prosecutor's office, for onward transmission to relevant authorities in the U.S. and Hong Kong.
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 September 28, 2016, the Conselho Superior de Advocacia invited comments on the defense, which had been lodged by AAEC's Macao lawyer.
On July 9, 2014, the plaintiff filed another action in the U.S. District Court against LVSC, LVSLLC, VCR (collectively, the "LVSC entities"), 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 LVSC entities on November 10, 2014. Plaintiff failed to timely respond and on December 2, 2014, the LVSC entities 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 LVSC entities' 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 LVSC entities' sanctions motion. The Macao 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.
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.

20






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

Note 7 — 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; The Parisian Macao, which opened in September 2016; The Plaza Macao and Four Seasons Hotel Macao; Sands Macao; Marina Bay Sands; Las Vegas Operating Properties; and Sands Bethlehem. The Company also reviews construction and development activities for each of its primary projects under development, in addition to its reportable segments noted above, which include the renovation, expansion and rebranding of Sands Cotai Central and the Four Seasons Macao Hotel Tower Suites in Macao, and our Las Vegas Condo Tower (which construction currently is suspended) in the United States. The Company has included Ferry Operations and Other (comprised primarily of the Company's ferry operations and various other operations that are ancillary to its properties in Macao) to reconcile to condensed consolidated results of operations and financial condition. The Company has included Corporate and Other (which includes the Las Vegas Condo Tower and corporate activities of the Company) to reconcile to condensed consolidated financial condition. The Company's segment information as of September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016, is as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
 
(In millions)
Net Revenues
 
 
 
 
 
 
 
Macao:
 
 
 
 
 
 
 
The Venetian Macao
$
718

 
$
773

 
$
2,146

 
$
2,188

Sands Cotai Central
474

 
518

 
1,386

 
1,521

The Parisian Macao
418

 
69

 
1,097

 
69

The Plaza Macao and Four Seasons Hotel Macao
147

 
161

 
427

 
434

Sands Macao
143

 
167

 
486

 
527

Ferry Operations and Other
44

 
46

 
130

 
126

 
1,944

 
1,734

 
5,672

 
4,865

Marina Bay Sands
793

 
762

 
2,329

 
2,076

United States:
 
 
 
 
 
 
 
Las Vegas Operating Properties
378

 
384

 
1,196

 
1,125

Sands Bethlehem
148

 
147

 
437

 
432

 
526

 
531

 
1,633

 
1,557

Intersegment eliminations
(64
)
 
(58
)
 
(188
)
 
(163
)
Total net revenues
$
3,199

 
$
2,969

 
$
9,446

 
$
8,335

 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
 
(In millions)
Intersegment Revenues
 
 
 
 
 
 
 
Macao:
 
 
 
 
 
 
 
The Venetian Macao
$
1

 
$
2

 
$
4

 
$
5

Ferry Operations and Other
10

 
10

 
30

 
29

 
11

 
12

 
34

 
34

Marina Bay Sands
2

 
2

 
6

 
6

Las Vegas Operating Properties
51

 
44

 
148

 
123

Total intersegment revenues
$
64

 
$
58

 
$
188

 
$
163



21






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

 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
2017
 
2016
 
(In millions)
Adjusted Property EBITDA
 
 
 
 
 
 
 
Macao:
 
 
 
 
 
 
 
The Venetian Macao
$
263

 
$
315

 
$
808

 
$
827

Sands Cotai Central
155

 
176

 
431

 
484

The Parisian Macao
135

 
19

 
323

 
19

The Plaza Macao and Four Seasons Hotel Macao
52

 
62

 
162

 
154

Sands Macao
41

 
46

 
134

 
125

Ferry Operations and Other
6

 
10

 
18

 
25

 
652

 
628

 
1,876

 
1,634

Marina Bay Sands
442

 
391

 
1,299

 
1,023

United States:
 
 
 
 
 
 
 
Las Vegas Operating Properties
76

 
86

 
277

 
245

Sands Bethlehem
40

 
37

 
113

 
113

 
116

 
123

 
390

 
358

Consolidated adjusted property EBITDA(1)
1,210

 
1,142

 
3,565

 
3,015

Other Operating Costs and Expenses
 
 
 
 
 
 
 
Stock-based compensation
(4
)
 
(2
)
 
(11
)
 
(12
)
Corporate
(51
)
 
(39
)
 
(136
)
 
(208
)
Pre-opening
(1
)
 
(86
)
 
(7
)
 
(128
)
Development
(3
)
 
(3
)
 
(8
)
 
(7
)
Depreciation and amortization
(265
)
 
(277
)
 
(913
)
 
(792
)
Amortization of leasehold interests in land
(9
)
 
(10
)
 
(28
)
 
(29
)
Loss on disposal or impairment of assets
(21
)
 
(5
)
 
(27
)
 
(15
)
Operating income
856

 
720

 
2,435

 
1,824

Other Non-Operating Costs and Expenses
 
 
 
 
 
 
 
Interest income
4

 
2

 
11

 
6

Interest expense, net of amounts capitalized
(83
)
 
(65
)
 
(240
)
 
(198
)
Other income (expense)
(19
)
 
21

 
(80
)
 
(33
)
Loss on modification or early retirement of debt

 
(3
)
 
(5
)
 
(3
)
Income tax expense
(73
)
 
(69
)
 
(220
)
 
(187
)
Net income
$
685

 
$
606

 
$
1,901

 
$
1,409

 ____________________
(1)
Consolidated adjusted property EBITDA, which is a non-GAAP financial measure, is net income before 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 or impairment of assets, interest, other income or expense, gain or loss on modification or early retirement of debt and income taxes. Consolidated 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 consolidated adjusted property EBITDA to compare the operating profitability of its operations with those of its competitors, as well as a basis for determining certain incentive compensation. Integrated resort companies have historically reported adjusted property EBITDA as a supplemental performance measure to GAAP financial measures. In order to view the operations of their properties on a more stand-alone basis, integrated resort companies, including Las Vegas Sands Corp., have historically excluded certain expenses that do not relate to the management of specific properties, such as pre-opening expense, development expense and corporate expense, from their adjusted property EBITDA calculations. Consolidated adjusted property EBITDA should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity), in each case, as determined in accordance with GAAP. The Company has significant uses of cash flow, including capital expenditures, dividend payments, interest payments and debt principal repayments, which are not reflected in consolidated adjusted property EBITDA.

22






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

Not all companies calculate adjusted property EBITDA in the same manner. As a result, consolidated adjusted property EBITDA as presented by the Company may not be directly comparable to similarly titled measures presented by other companies.
 
Nine Months Ended 
 September 30,
 
2017
 
2016
 
(In millions)
Capital Expenditures
 
 
 
Corporate and Other
$
5

 
$
6

Macao:
 
 
 
The Venetian Macao
113

 
50

Sands Cotai Central
58

 
97

The Parisian Macao
149

 
798

The Plaza Macao and Four Seasons Hotel Macao
19

 
9

Sands Macao
6

 
13

Ferry Operations and Other
4

 
3

 
349

 
970

Marina Bay Sands
137

 
50

United States:
 
 
 
Las Vegas Operating Properties
86

 
57

Sands Bethlehem
15

 
20

 
101

 
77

Total capital expenditures
$
592

 
$
1,103

 
 
September 30,
2017
 
December 31,
2016
 
(In millions)
Total Assets
 
 
 
Corporate and Other
$
463

 
$
465

Macao:
 
 
 
The Venetian Macao
2,173

 
2,642

Sands Cotai Central
3,722

 
4,152

The Parisian Macao
2,523

 
2,711

The Plaza Macao and Four Seasons Hotel Macao
928

 
966

Sands Macao
300

 
316

Ferry Operations and Other
271

 
281

 
9,917

 
11,068

Marina Bay Sands
4,988

 
5,031

United States:
 
 
 
Las Vegas Operating Properties
3,749

 
3,214

Sands Bethlehem
691

 
691

 
4,440

 
3,905

Total assets
$
19,808

 
$
20,469

 

23






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

 
September 30,
2017
 
December 31,
2016
 
(In millions)
Total Long-Lived Assets(1)
 
 
 
Corporate and Other
$
251

 
$
264

Macao:
 
 
 
The Venetian Macao
1,705

 
1,726

Sands Cotai Central
3,532

 
3,720

The Parisian Macao
2,400

 
2,572

The Plaza Macao and Four Seasons Hotel Macao
859

 
874

Sands Macao
225

 
245

Ferry Operations and Other
149

 
157

 
8,870

 
9,294

Marina Bay Sands
4,294

 
4,192

United States:
 
 
 
Las Vegas Operating Properties
2,773

 
2,815

Sands Bethlehem
544

 
548

 
3,317

 
3,363

Total long-lived assets
$
16,732

 
$
17,113

 ____________________
(1)
Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and leasehold interests in land, net of accumulated amortization.


24



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
Generally, we view each of our integrated resort 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; Sands Cotai Central; The Parisian Macao, which opened on September 13, 2016; The Plaza Macao and Four Seasons Hotel Macao; and the Sands Macao. Our operating segment in Singapore is the Marina Bay Sands. Our operating segments in the U.S. consist of the Las Vegas Operating Properties, which includes The Venetian Las Vegas, The Palazzo and the Sands Expo Center; and the Sands Bethlehem.
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 currently available to us and on various other assumptions 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 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, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" presented in our 2016 Annual Report on Form 10-K filed on February 24, 2017.
With the exception of the change in the useful lives of certain property and equipment (see "Item 1 — Financial Statements — Notes to Condensed Consolidated Financial Statements — Note 2 — Property and Equipment, Net"), there were no newly identified significant accounting estimates during the nine months ended September 30, 2017, nor were there any material changes to the critical accounting policies and estimates discussed in our 2016 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 September 30,
 
Nine Months Ended September 30,
 
 
2017
 
2016
 
Percent
Change
 
2017
 
2016
 
Percent
Change
 
 
(Dollars in millions)
Net revenues
 
$
3,199

 
$
2,969

 
7.7
%
 
$
9,446

 
$
8,335

 
13.3
%
Operating expenses
 
2,343

 
2,249

 
4.2
%
 
7,011

 
6,511

 
7.7
%
Operating income
 
856

 
720

 
18.9
%
 
2,435

 
1,824

 
33.5
%
Income before income taxes
 
758

 
675

 
12.3
%
 
2,121

 
1,596

 
32.9
%
Net income
 
685

 
606

 
13.0
%
 
1,901

 
1,409

 
34.9
%
Net income attributable to Las Vegas Sands Corp.
 
570

 
513

 
11.1
%
 
1,595

 
1,161

 
37.4
%

25



The increase in operating income was due to The Parisian Macao, which opened in September 2016, stronger results at Marina Bay Sands in Singapore and the impact of the change in useful lives of certain property and equipment. The increase in net income and net income attributable to Las Vegas Sands Corp. reflected the increase in operating income, partially offset by increases in net income attributable to noncontrolling interests, other expense, interest expense and income tax expense, as further described below.
Operating Results
Key Operating Revenue Measurements
Operating revenues at The Venetian Macao, Sands Cotai Central, The Parisian Macao, The Plaza Macao and Four Seasons Hotel 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: Rolling Chip play (composed of 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 net markers issued (credit instruments), cash deposited in the table drop boxes and gaming chips purchased at the cage. Rolling Chip and Non-Rolling Chip volume measurements are not comparable as they are two distinct measures of volume. The amounts wagered and lost for Rolling Chip play are substantially higher than the amounts dropped for Non-Rolling Chip play. 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 (amount won by the casino) as a percentage of slot handle. Win or hold percentage represents the percentage of Rolling Chip volume, Non-Rolling Chip drop or slot handle that is won by the casino and recorded as casino revenue. Beginning with the three months ended March 31, 2017, we revised the expected range for our Macao operations due to the Rolling Chip win percentage experience over the last several years. Our Rolling Chip win percentage (calculated before discounts and commissions) is expected to be 3.0% to 3.3% in Macao and 2.7% to 3.0% in Singapore, and our Non-Rolling Chip table games have produced a trailing 12-month win percentage (calculated before discounts) of 24.7%, 20.1%, 19.3%, 21.8%, 19.4% and 28.5% at The Venetian Macao, Sands Cotai Central, The Parisian Macao, The Plaza Macao and Four Seasons Hotel 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 5.0%, 3.9%, 3.7%, 7.1%, 3.4% and 4.4% at The Venetian Macao, Sands Cotai Central, The Parisian Macao, The Plaza Macao and Four Seasons Hotel 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, 14.9% and 34.9%, respectively, of our table games play was conducted on a credit basis for the nine months ended September 30, 2017.
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. Beginning with the three months ended March 31, 2017, we revised the expected range for our Las Vegas Operating Properties due to the win percentage experienced over the last several years. Based upon our mix of table games, our table games are expected to produce a win percentage (calculated before discounts) of 18% to 26% for Baccarat and 16% to 24% for non-Baccarat. Table games at Sands Bethlehem have produced a trailing 12-month win percentage of 20.0%. Our slot machines have produced a trailing 12-month hold percentage (calculated before slot club cash incentives) of 8.0% and 6.6% 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. Similar to Macao and Singapore, slot machine play is generally conducted on a cash basis. Approximately 59.2% of our table games play at our Las Vegas Operating Properties, for the nine months ended September 30, 2017, was conducted on a credit basis, while our table games play in Pennsylvania is primarily conducted on a cash basis.

26



Hotel revenue measurements: Performance indicators used are occupancy rate (a volume indicator), which is the average percentage of available hotel rooms occupied during a period and average daily room rate ("ADR," a price indicator), which is the average price of occupied rooms per day. Available rooms exclude those rooms unavailable for occupancy during the period due to renovation, development or other requirements. The calculations of the occupancy rate and ADR 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 type of customer and room product to ensure the complimentary room rates are consistent with retail rates. Revenue per available room ("RevPAR") represents a summary of hotel ADR and occupancy. Because not all available rooms are occupied, ADR is normally higher than RevPAR. Reserved rooms where the guests do not show up for their stay and lose their deposit, or where guests check out early, may be resold 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 RevPAR may be higher than the ADR.
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 weighted average base, or minimum, rent charge in effect at the end of the reporting period 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.
Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016
Operating Revenues
Our net revenues consisted of the following:
 
Three Months Ended September 30,
 
2017
 
2016
 
Percent
Change
 
(Dollars in millions)
Casino
$
2,511

 
$
2,307

 
8.8%
Rooms
411

 
402

 
2.2%
Food and beverage
198

 
184

 
7.6%
Mall
160

 
147

 
8.8%
Convention, retail and other
128

 
141

 
(9.2)%
 
3,408

 
3,181

 
7.1%
Less — promotional allowances
(209
)
 
(212
)
 
1.4%
Total net revenues
$
3,199

 
$
2,969

 
7.7%
Consolidated net revenues were $3.20 billion for the three months ended September 30, 2017, an increase of $230 million compared to $2.97 billion for the three months ended September 30, 2016. The increase was primarily due to increases of $349 million at The Parisian Macao, which opened in September 2016, and $31 million at Marina Bay Sands, primarily due to increased casino revenues, partially offset by a $137 million decrease at our Macao properties (excluding The Parisian Macao), driven by decreased casino revenues.

27



Casino revenues increased $204 million compared to the three months ended September 30, 2016. The increase was due to increases of $321 million at The Parisian Macao and $37 million at Marina Bay Sands, driven primarily by an increase in Rolling Chip volume. This increase was partially offset by a $145 million decrease at our Macao properties (excluding The Parisian Macao), driven primarily by a decrease in Rolling Chip win percentage. The following table summarizes the results of our casino activity:
 
Three Months Ended September 30,
 
2017
 
2016
 
Change
 
(Dollars in millions)
Macao Operations:
 
 
 
 
 
The Venetian Macao
 
 
 
 
 
Total casino revenues
$
617

 
$
670

 
(7.9)%
Non-Rolling Chip drop
$
1,892

 
$
1,714

 
10.4%
Non-Rolling Chip win percentage
22.8
%
 
25.6
%
 
(2.8) pts
Rolling Chip volume
$
6,898

 
$
6,868

 
0.4%
Rolling Chip win percentage
3.28
%
 
3.75
%
 
(0.47) pts
Slot handle
$
718

 
$
958

 
(25.1)%
Slot hold percentage
5.1
%
 
4.7
%
 
0.4 pts
Sands Cotai Central
 
 
 
 
 
Total casino revenues
$
390

 
$
443

 
(12.0)%
Non-Rolling Chip drop
$
1,442

 
$
1,557

 
(7.4)%
Non-Rolling Chip win percentage
20.4
%
 
20.2
%
 
0.2 pts
Rolling Chip volume
$
2,846

 
$
2,817

 
1.0%
Rolling Chip win percentage
2.66
%
 
4.16
%
 
(1.50) pts
Slot handle
$
1,182

 
$
1,477

 
(20.0)%
Slot hold percentage
4.4
%
 
3.6
%
 
0.8 pts
The Parisian Macao
 
 
 
 
 
Total casino revenues
$
379

 
$
58

 
553.4%
Non-Rolling Chip drop
$
1,001

 
$
190

 
426.8%
Non-Rolling Chip win percentage
20.9
%
 
19.9
%
 
1.0 pts
Rolling Chip volume
$
6,948

 
$
748

 
828.9%
Rolling Chip win percentage
3.11
%
 
3.01
%
 
0.10 pts
Slot handle
$
927

 
$
171

 
442.1%
Slot hold percentage
3.1
%
 
5.2
%
 
(2.1) pts
The Plaza Macao and Four Seasons Hotel Macao
 
 
 
 
 
Total casino revenues
$
109

 
$
124

 
(12.1)%
Non-Rolling Chip drop
$
297

 
$
270

 
10.0%
Non-Rolling Chip win percentage
23.1
%
 
23.8
%
 
(0.7) pts
Rolling Chip volume
$
3,132

 
$
2,007

 
56.1%
Rolling Chip win percentage
2.23
%
 
3.67
%
 
(1.44) pts
Slot handle
$
117

 
$
113

 
3.5%
Slot hold percentage
6.6
%
 
5.5
%
 
1.1 pts
Sands Macao
 
 
 
 
 
Total casino revenues
$
138

 
$
162

 
(14.8)%
Non-Rolling Chip drop
$
603

 
$
671

 
(10.1)%
Non-Rolling Chip win percentage
18.7
%
 
19.3
%
 
(0.6) pts
Rolling Chip volume
$
680

 
$
1,416

 
(52.0)%
Rolling Chip win percentage
1.13
%
 
2.03
%
 
(0.90) pts
Slot handle
$
602

 
$
665

 
(9.5)%
Slot hold percentage
3.4
%
 
3.3