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Las Vegas Sands 10-Q 2005

Documents found in this filing:

  1. 10-Q
  2. Ex-31
  3. Ex-31
  4. Ex-32
  5. Ex-32
  6. Ex-32


UNITED STATES SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2005

[   ]        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   333-42147


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.
[X] Yes [   ] No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). [   ]Yes [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of August 10, 2005

Class
Outstanding at August 10, 2005
Common Stock, $0.001 par value 354,160,692 shares





LAS VEGAS SANDS CORP.
 
Table of Contents
 
Part I
FINANCIAL INFORMATION
 

   
Item 1     Financial Statments (unaudited)        

   
      Condensed Consolidated Balance Sheets at June 30, 2005 and December 31, 2004       1  

   
      Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2005 and June 30, 2004       2  

   
      Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2005 and June 30, 2004       4  

   
      Notes to Condensed Consolidated Financial Statements       5  

   
Item 2     Management's Discussion and Analysis of Financial Condition and Results of Operation       24  

   
Item 3     Quantitative and Qualitative Disclosures About Market Risk       43  

   
Item 4     Controls and Procedures       44  

   
Part II
OTHER INFORMATION
     
Item 1     Legal Proceedings       45  

   
Item 2     Unregistered Sales of Equity Securities and Use of Proceeds       45  

   
Item 4     Submission of Matters to a Vote of Security Holders       46  

   
Item 5     Other Information       47  

   
Item 6     Exhibits       48  

   
      Signatures       49  

   Table of Contents

LAS VEGAS SANDS CORP.

ITEM 1 – CONSOLIDATED FINANCIAL STATEMENTS

LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)


June 30,
2005

December 31,
2004

ASSETS              
Current assets:            
    Cash and cash equivalents   $ 650,194   $ 1,294,898  
    Restricted cash and cash equivalents    20,879    20,528  
    Accounts receivable, net    66,386    56,582  
    Inventories    8,769    8,010  
    Deferred income taxes    35,592    13,311  
    Prepaid expenses       13,683     11,797  




Total current assets    795,503    1,405,126  

  
Property and equipment, net    2,093,013    1,756,090  
Deferred offering costs, net    34,933    52,375  
Restricted cash and cash equivalents    361,776    356,946  
Deferred income taxes    8,446    425  
Other assets, net    31,985    30,516  





  
    $ 3,325,656   $ 3,601,478  





  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
    Accounts payable   $ 54,021   $ 33,383  
    Construction payables    92,801    87,376  
    Construction payables-contested    7,232    7,232  
    Accrued interest payable    6,850    9,187  
    Other accrued liabilities    177,124    170,518  
    Current maturities of long-term debt    56,442    304,864  





  
Total current liabilities    394,470    612,560  

  
Other long-term liabilities    8,125    9,033  
Deferred gain on sale of Grand Canal Shops    69,861    71,593  
Deferred rent from Grand Canal Shops transaction    106,613    107,227  
Long-term debt    1,330,108    1,485,064  





  
     1,909,177    2,285,477  





  
Stockholders’ equity:            
Common stock, $.001 par value, 1,000,000,000 shares authorized,            
    354,168,780 and 354,160,692 shares issued and outstanding    354    354  
    Capital in excess of par value    963,622    956,385  
    Deferred compensation    (300 )    
    Retained earnings    452,803    359,262  





  
     1,416,479    1,316,001  





  
    $ 3,325,656   $ 3,601,478  




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

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   Table of Contents

LAS VEGAS SANDS CORP.

LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)


Three Months Ended
Six Months Ended
June 30, June 30,
2005
2004
2005
2004
Revenues:                        
   Casino   $ 274,808   $ 133,889   $ 540,594   $ 228,597  
   Rooms    83,983    79,230    170,060    164,597  
   Food and beverage    34,698    33,026    78,187    65,681  
   Retail and other       24,354     33,273     52,808     73,489  








     417,843    279,418    841,649    532,364  
Less-promotional allowances    (19,022 )  (12,761 )  (39,034 )  (26,521 )









  
   Net revenues    398,821    266,657    802,615    505,843  









  
Operating expenses:                      
   Casino    146,546    61,945    278,499    98,536  
   Rooms    20,227    18,676    41,342    38,717  
   Food and beverage    17,879    17,338    38,844    32,831  
   Retail and other    13,723    15,232    28,099    31,275  
   Provision for doubtful accounts    782    3,448    4,168    6,692  
   General and administrative    48,214    39,799    93,987    76,192  
   Corporate expense    6,620    3,203    17,502    5,704  
   Rental expense    3,682    2,442    7,387    5,096  
   Pre-opening expense    504    8,502    504    16,345  
   Development expense    5,562    2,226    10,737    2,762  
   Depreciation and amortization    21,097    16,856    41,062    32,383  
   (Gain)/loss on disposal of assets    (158 )  125    1,005    149  
   Gain on sale of Grand Canal Shops        (418,222 )      (418,222 )








     284,678    (228,430 )  563,136    (71,540 )








Operating income    114,143    495,087    239,479    577,383  

  
Other income (expense):                      
   Interest income    7,133    638    14,527    1,094  
   Interest expense, net of amounts capitalized    (17,969 )  (32,464 )  (45,052 )  (65,291 )
   Other expense    (1,291 )      (1,291 )  (9 )
   Loss on early retirement of debt    (4,166 )  (1,371 )  (137,000 )  (1,371 )








Income before income taxes    97,850    461,890    70,663    511,806  

  
(Provision) benefit for income taxes    (11,421 )      22,878      








Net income   $ 86,429   $ 461,890   $ 93,541   $ 511,806  








Basic earnings per share   $ 0.24   $ 1.42   $ 0.26   $ 1.58  








Diluted earnings per share   $ 0.24   $ 1.42   $ 0.26   $ 1.57  









  
Dividends declared per share   $   $   $   $ 0.33  









  
Weighted average shares outstanding:                      
   Basic    354,160,692    324,658,394    354,160,692    324,658,394  








   Diluted    354,795,833    325,040,683    354,853,970    325,040,683  









  
Pro forma data                      
(reflecting change in tax status):                      
Net income before income taxes         $ 461,890         $ 511,806  
Provision for income taxes         (162,255 )       (179,771 )




Net income         $ 299,635         $ 332,035  





  
Pro forma net income per share of                      
common stock (reflecting change in tax status):                      
   Basic     $ 0.92     $ 1.02  
   Diluted     $ 0.92     $ 1.02  
  

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

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LAS VEGAS SANDS CORP.

LAS VEGAS SANDS CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)

Six Months Ended
June 30,
2005
2004
Cash flows from operating activities:              
Net income   $ 93,541   $ 511,806  
Adjustments to reconcile net income to net cash            
  provided by operating activities:            
     Depreciation and amortization    41,062    32,383  
     Amortization of debt offering costs and original issue discount    5,010    4,524  
     Amortization of deferred revenue    (2,346 )  (573 )
     Deferred rent from Grand Canal Shops transaction        109,220  
     Loss on early retirement of debt    137,000    1,371  
     Loss on disposal of assets    1,005    148  
     Gain on sale of Grand Canal Shops        (418,222 )
     Provision for doubtful accounts    4,168    6,692  
     Changes in operating assets and liabilities:            
       Accounts receivable    (13,972 )  (9,453 )
       Inventories    (759 )  (99 )
       Prepaid expenses    (1,886 )  (6,468 )
       Deferred income taxes    (22,878 )    
       Other assets    (1,469 )  (8,062 )
       Accounts payable    20,638    5,330  
       Accrued interest payable    (2,337 )  192  
       Other accrued liabilities    26,750    4,793  




Net cash provided by operating activities    283,527    233,582  





  
Cash flows from investing activities:            
Proceeds from sale of Grand Canal Shops, net of transaction costs        649,568  
Change in restricted cash    (5,181 )  108,055  
Increase in receivables from stockholders        (557 )
Capital expenditures    (373,565 )  (236,093 )




Net cash provided by (used in) investing activities    (378,746 )  520,973  





  
Cash flows from financing activities:            
Dividends paid to shareholders    (21,052 )  (107,909 )
Repayments on 11% mortgage notes    (843,640 )  (6,360 )
Proceeds from 6.375% senior notes, net of discount    247,722      
Repayments on secured mall facility          (120,000 )
Repayments on senior secured credit facility-term A-prior           (3,333 )
Repayments on senior secured credit facility-term B-prior        (1,250 )
Proceeds from senior secured credit facility-term B    305,000      
Proceeds from phase II mall construction loan    10,500      
Repayments on Venetian Macao senior secured notes-tranche A    (75,000 )    
Repayments on Venetian Macao senior secured notes-tranche B    (45,000 )    
Proceeds from Macao revolver        10,000  
Proceeds from Venetian Intermediate credit facility        10,000  
Repayments on FF&E credit facility    (600 )  (600 )
Repayments on Interface Nevada note payable        (3,187 )
Repayments on Interface mortgage note payable    (2,448 )    
Repurchase premiums incurred in connection with refinancing transactions    (113,311 )    
Transaction costs, initial public offering    (487 )    
Payments of debt offering costs    (11,169 )  (227 )




Net cash used in financing activities    (549,485 )  (222,866 )




Increase (decrease) in cash and cash equivalents    (644,704 )  531,689  
Cash and cash equivalents at beginning of period    1,294,898    152,793  




Cash and cash equivalents at end of period   $ 650,194   $ 684,482  





  
Supplemental disclosure of cash flow information:            
Cash payments for interest   $ 51,494   $ 63,216  




Payment of dividends included in accrued liablities   $ 21,052   $  




Property and equipment asset acquisitions included in construction            
   accounts payable   $ 92,801   $ 59,132  




Property and equipment acquisitions included in accounts payable dividends   $   $ 7,892  




Deferred gain on sale of Grand Canal Shops   $   $ 77,217  




Decrease in other assets related to Grand Canal Shops sale   $   $ 13,569  




Non cash tax benefit from stock option exercises included in deferred income taxes   $ 7,424   $  





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

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 the Company for the year ended December 31, 2004. The year-end balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles. In addition, certain amounts in the 2004 financial statements have been reclassified to conform to the 2005 presentation. 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.

Las Vegas Sands Corp. (“LVSC”) was incorporated in Nevada during August 2004 and completed an initial public offering of its common stock on December 20, 2004. Immediately prior to the initial public offering LVSC acquired 100% of the capital stock of Las Vegas Sands, Inc. The acquisition of Las Vegas Sands, Inc. by LVSC has been accounted for as a reorganization of entities under common control, in a manner similar to pooling-of-interests. LVSC is traded on the NYSE under the symbol LVS. On July 28, 2005, Las Vegas Sands, Inc. was converted into a Nevada limited liability company and changed its name to Las Vegas Sands, LLC.

Las Vegas Properties

LVSC and its subsidiaries (collectively, the “Company”) own and operate the Venetian Hotel Resort Casino (the “Venetian Casino Resort”), a Renaissance Venice-themed resort situated on the Las Vegas Strip (the “Strip”). The Venetian Casino Resort is located across from The Mirage and the Treasure Island Hotel and Casino. The Venetian Casino Resort includes the first all-suites hotel on the Strip with 4,027 suites (the “Hotel”); a gaming facility of approximately 116,000 square feet (the “Casino”); an enclosed retail, dining and entertainment complex of approximately 446,000 net leasable square feet (“The Grand Canal Shops” or the “Mall”), which was sold to a third party in 2004; a meeting and conference facility of approximately 650,000 square feet (the “Congress Center”); and an expo and convention center of approximately 1,150,000 square feet (the “Sands Expo Center”). The Company has begun design and construction work and has completed demolition and clearing on the site of the Palazzo Casino Resort (the “Palazzo” or the “Palazzo Casino Resort”), a second resort similar in size to the Venetian Casino Resort, which will be situated on a 14-acre site situated adjacent to the Venetian Casino Resort and the Sands Expo Center and across Sands Boulevard from the Wynn Las Vegas Resort. The Palazzo is expected to open during mid-2007. The Palazzo is expected to consist of an all-suite, 50-floor luxury hotel tower with approximately 3,025 rooms, a gaming facility of approximately 105,000 square feet, an enclosed shopping, dining and entertainment complex of approximately 375,000 square feet, which we have already pre-sold to a third party (the “Phase II Mall”), and additional meeting and conference space of approximately 450,000 square feet. The Palazzo Casino Resort project is expected to cost approximately $1.6 billion (exclusive of land), of which the Phase II Mall is expected to cost approximately $280.0 million.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 – ORGANIZATION AND BUSINESS OF COMPANY (Continued)

Macao Projects

We also own and operate the Sands Macao, a Las Vegas-style casino in Macao. We opened the Sands Macao on May 18, 2004. In addition to the Sands Macao, we are also constructing the Venetian Macao Hotel Resort Casino (the “Venetian Macao Resort”), an all-suites hotel, casino, and convention center complex, with a Venetian-style theme similar to that of our Las Vegas property. Under our gaming subconcession in Macao, we are obligated to develop and open the Venetian Macao Resort by June 2006 and a convention center by December 2006, and invest, or cause to be invested, at least 4.4 billion Patacas (approximately $527.7 million at exchange rates in effect on June 30, 2005) in various development projects in Macao by June 2009. We expect that the cost of the Sands Macao and the construction of the Venetian Macao Resort will satisfy these investment obligations but we will need an extension of the June 2006 construction deadline for the Venetian Macao Resort, which we currently expect to open in mid-2007. Unless we obtain an extension, we will lose our right to continue to operate the Sands Macao or any other facilities development under our Macao gaming concession. In addition, we expect to break ground in September 2005 on an expansion of the Sands Macao that will enhance the size and scope of the property and increase gaming capacity by more than 65 percent. Construction of the Venetian Macao is moving along according to plan and we have decided to build out all 3,000 rooms in the initial phase, instead of the previously announced 1,500 rooms. We also plan to build a 400 room luxury hotel under the Four Seasons brand, which will also include approximately 600 serviced apartment units and over 100,000 square feet of retail space. We are also master planning two additional 3,000 room hotels, to be built in multiple phases, with serviced apartments and a combined 450,000 square feet of retail space across the Cotai Strip™ from the Venetian Macao. We will own these properties and operate them under internationally recognized third party hotel brands. We expect to make land premium payments relating to the Venetian Macao Resort and other Macao properties under development in amounts to be determined. We currently estimate that the cost for the Venetian Macao Resort will be approximately $2.0 billion (exclusive of land) and that we will need to arrange additional debt financing to finance these costs. We have not yet finalized our estimate of the cost of the other Cotai Strip™ developments; however we will need to arrange additional debt financing to finance those costs as well.

Subsidiaries

The consolidated financial statements include the accounts of LVSC and its subsidiaries (the “Subsidiaries”), including Las Vegas Sands, LLC, formerly known as Las Vegas Sands, Inc. (“Las Vegas Sands Opco”), Venetian Casino Resort, LLC (“Venetian”), Interface Group-Nevada, Inc. (“Interface”), Interface Employee Leasing, LLC, Mall Intermediate Holding Company, LLC (“Mall Intermediate”), Grand Canal Shops Mall Subsidiary, LLC, Grand Canal Shops Mall MM Subsidiary, Inc., Venetian Hotel Operations, LLC (“Mall Construction”), Las Vegas Sands (Wolverhampton) Limited, Las Vegas Sands (Stoke City) Limited, Las Vegas Sands (Sunderland City) Limited, Las Vegas Sands (Ibrox) Limited, Las Vegas Sands (Sheffield) Limited, Las Vegas Sands (Murrayfield) Limited, Las Vegas Sands (Reading) Limited, Las Vegas Sands (UK) Limited, Lido Intermediate Holding Company, LLC (“Lido Intermediate”), Lido Casino Resort Holding Company, LLC, Lido Casino Resort, LLC (the “Phase II Subsidiary”), Lido Casino Resort MM, Inc., Sands Pennsylvania, Inc., Phase II Mall Holding, LLC, Phase II Mall Subsidiary, LLC, Venetian Transport, LLC (“Venetian Transport”), Venetian Venture Development, LLC (“Venetian Venture”), Venetian Venture Development Intermediate Limited, Venetian Venture Development Intermediate I, Venetian Venture Development Intermediate II, Venetian Global Holdings Limited, Venetian Macao Finance Company, VI Limited, Venetian Macao Limited (“Venetian Macao”), Venetian Cotai Limited, Venetian Marketing, Inc. (“Venetian Marketing”), Venetian Far East Limited, Venetian Operating Company, LLC (“Venetian Operating”), Venetian Resort Development Limited, World Sourcing Services Limited, Sands Garden City Pte. Ltd., Marble Works, LLC, Yona Venetian, LLC, V-HK Services Limited, Venetian Zhuhai Development Limited, VI Limited and TK Las Vegas, LLC (collectively, and including all other direct and indirect subsidiaries of LVSC, the “Company”). Each of LVSC and the Subsidiaries is a separate legal entity and the assets of each such entity are intended to be available only to the creditors of such entity, except to the extent of guarantees on indebtedness. See “Note 4 – Long-Term Debt.”

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 1 – ORGANIZATION AND BUSINESS OF COMPANY (Continued)

Recent Accounting Pronouncements

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which supersedes FASB Opinion No. 25, “Accounting for Stock Issued to Employees”. This statement requires compensation costs related to share based payment transactions to be recognized in financial statements. The provisions of this statement are effective as of the first annual reporting period that begins after January 1, 2006. This statement requires public entities to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). This cost will be recognized over the period during which an employee is required to provide service in exchange for the award. This statement also addresses the accounting for the tax effects of share-based compensation awards. We currently expect to adopt this standard on January 1, 2006 using a Black-Scholes model. Under the Black-Scholes model, we expect to expense the cost of share-based compensation awards issued after January 1, 2006. Additionally, we expect to recognize compensation cost for the portion of awards outstanding on January 1, 2006 for which the requisite service has not been rendered as the requisite service is rendered on or after January 1, 2006. We are currently evaluating the provisions of SFAS 123R to determine its impact on our future financial statements.

NOTE 2 – STOCKHOLDERS' EQUITY AND PER SHARE DATA

        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
June 30,

Six Months Ended
June 30,

2005
2004
2005
2004
Weighted-average common shares                  
   outstanding (used in the calculation                 
   of basic earnings per share)   354,160,692 324,658,394 354,160,692 324,658,394
Potential dilution from stock options and restricted stock   635,141   382,289   693,278   382,289  





 
Weighted-average common and common                 
   equivalent shares (used in the calculations                  
   of diluted earnings per share)  354,795,833 325,040,683 354,853,970 325,040,683




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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2 – STOCKHOLDERS' EQUITY AND PER SHARE DATA (Continued)

A summary of the status of the Company’s stock option plan is presented below:


Six Months Ended June 30, 2005
  Shares
Weighted
Average Exercise
Price

 
Outstanding at the beginning             3,170,105   $ 21.67  
Granted             22,820     47.16  
Exercised             (931,115 )   5.64  
Terminated             (122,600 )   29.00  





  
Outstanding at end of period             2,139,210   $ 28.98  




Exercisable at end of period             53,207   $ 1.02  





The Company has elected to follow Accounting Principles Board Opinion No. 25 “Accounting For Stock Issued to Employees” and accounts for its stock-based compensation to employees using the intrinsic value method. Under this method, compensation expense is the difference between the market value of the Company’s stock and the stock option’s exercise price at the measurement date. Under APB 25, if the exercise price of the stock options is equal to or greater than the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Had the Company accounted for the plan under the fair value method allowed by Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), the Company’s net income, and earnings per share would have been adjusted to the following pro forma amounts (dollars in thousands, except per share data):

Three Months
Ended
June 30, 2005

Three Months
Ended
June 30, 2004

Six Months
Ended
June 30, 2005

Six Months
Ended
June 30, 2004

Net income, as reported     $ 86,429   $ 461,890   $ 93,541   $ 511,806  

  
Less: Stock-based employee                      
    compensation expense determined                      
    under the Black Scholes option-                      
    pricing model, net of tax       (818 )       (1,624 )    








Pro forma net income   $ 85,611   $ 461,890   $ 91,917   $ 511,806  








Basic earnings per share, as reported   $ 0.24   $ 1.42   $ 0.26   $ 1.58  








Basic earnings per share, proforma   $ 0.24   $ 1.42   $ 0.26   $ 1.58  








Diluted earnings per share, as reported   $ 0.24   $ 1.42   $ 0.26   $ 1.57  








Diluted earnings per share, proforma   $ 0.24   $ 1.42   $ 0.26   $ 1.57  









The estimated grant date fair value of options granted during the three and six months ended June 30, 2005 was $19.49 per share and was computed using the Black Scholes option-pricing model with the following weighted average assumptions: risk free interest rate of 3.86%; no expected dividend yields; expected volatility of 35.29% and expected life of 6 years.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in thousands):

June 30,
2005

December 31,
2004

Land and land improvements     $ 200,792   $ 170,056  
Building and improvements    1,271,453    1,239,291  
Equipment, furniture, fixtures and leasehold improvements    326,491    297,287  
Construction in progress       605,193     319,640  




     2,403,929    2,026,274  
Less: accumulated depreciation and amortization    (310,916 )  (270,184 )




    $ 2,093,013   $ 1,756,090  





During the three and six month periods ended June 30, 2005 and the three and six month periods ended June 30, 2004, the Company capitalized interest expense of $5.0 million, $9.1 million, $1.2 million, and $2.4 million, respectively.

NOTE 4 – LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

June 30,
2005

December 31,
2004

 
Indebtedness of the Company and its Subsidiaries              
other than the Macao Subsidiaries:            

  
11% Mortgage Notes   $   $ 843,640  
Senior Secured Credit Facility - Term B    970,000    665,000  
FF&E Credit Facility    11,400    12,000  
Interface Mortgage Loan    96,840    99,288  
6.375% Senior Notes (net of oringinal issue discount of $2,190)    247,810      
Phase II Mall Construction Loan    10,500      

  
Indebtedness of the Macao Subsidiaries:            

  
Venetian Macao Senior Secured Notes - Tranche A        75,000  
Venetian Macao Senior Secured Notes - Tranche B        45,000  
Venetian Intermediate Credit Facility       50,000     50,000  




     1,386,550    1,789,928  

  
Less: current maturities    (56,442 )  (304,864 )





  
Total long-term debt   $ 1,330,108   $ 1,485,064  





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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 4 – LONG-TERM DEBT (Continued)

2005 Refinancing Transactions

On June 4, 2002, the Company issued $850.0 million in aggregate principal amount of 11.0% mortgage notes due 2010 (the “11% Mortgage Notes”) and on August 20, 2004, Las Vegas Sands Opco and Venetian entered into a $1.010 billion Senior Secured Credit Facility (the “Prior Senior Secured Credit Facility”).

On February 1, 2005, the Company completed the exercise of an equity claw back under the 11% Mortgage Notes indenture pursuant to which the Company retired $291.1 million of the 11% Mortgage Notes and paid $32.0 million of redemption premiums with the proceeds from its initial public offering.

On February 10, 2005, the Company sold in a private placement transaction $250.0 million in aggregate principal amount of its 6.375% Senior Notes due 2015 (the “Senior Notes”) with an original issue discount of $2.3 million. Net proceeds after offering costs and original issue discount were $244.8 million. The Company, the subsidiary guarantors (including Las Vegas Sands Opco and Venetian) and the initial purchasers of the Senior Notes also entered into a registration rights agreement. Under the registration rights agreement, the Company and each subsidiary guarantor granted certain exchange and registration rights to the holders of the Senior Notes. On July 21, 2005, the Company completed an exchange offer to exchange the 6.375% Senior Notes for a new series of 6.375% Senior Notes with substantially the same terms that were registered under the Securities Act of 1933.

On February 22, 2005, Las Vegas Sands Opco and Venetian entered into the Senior Secured Credit Facility (the “Senior Secured Credit Facility”), which amended and restated their $1.010 billion Prior Senior Secured Credit Facility. The Senior Secured Credit Facility consists of a $970.0 million funded term loan (the “Term B Facility”), a $200.0 million Term B Delayed Draw Facility available until August 20, 2005 and a $450.0 million revolving credit facility (the “Revolving Facility”). As of June 30, 2005, no amounts have been drawn under either the Term B Delayed Draw Facility or the Revolving Facility. Las Vegas Sands Opco has guaranteed borrowings under a $50.0 million credit facility of its wholly owned subsidiary, Venetian Intermediate, to fund construction and development costs of the Macao Casino. These guarantees are supported by $50.0 million of letters of credit that were issued under the Revolving Facility. As a result of the issuance of these letters of credit, the amount available for working capital loans under the Revolving Facility is $400.0 million as of June 30, 2005.

On February 22, 2005, Las Vegas Sands Opco and Venetian repurchased $542.3 million in aggregate principal amount of their 11% Mortgage Notes pursuant to a tender offer plus a make-whole premium and accrued interest of $90.3 million, with proceeds from the Senior Notes offering, initial public offering, cash on hand and proceeds from the Senior Secured Credit Facility. On March 24, 2005, Las Vegas Sands Opco and Venetian redeemed the remaining $10.2 million aggregate principal amount of the outstanding 11% Mortgage Notes plus a make-whole premium and accrued interest of $1.7 million with cash on hand.

On May 23, 2005, the Company utilized existing cash to retire the $120.0 million Venetian Macao Senior Secured Notes. The Company incurred a charge of $4.2 million for loss on early retirement of indebtedness during the second quarter of 2005 as a result of retiring the Venetian Macao Senior Secured Notes.

The indebtedness under the Senior Secured Credit Facility is guaranteed by certain of the Company’s domestic subsidiaries (the “Guarantors”). The obligations under the Senior Secured Credit Facility and the guarantees of the Guarantors are secured by a first-priority security interest in substantially all of the Company’s and Guarantors’ assets, other than capital stock. Borrowings under the term loan facilities and revolving loan facilities bear interest, at the Company’s option, at either an adjusted Eurodollar rate or at an alternative base rate, plus a spread of 1.75% or 0.75%, respectively, which spreads will decrease by 0.25% if the loans achieve a rating of Ba2 or higher by Moody’s and BB or higher by S&P subject to certain additional conditions. The Senior Secured Credit Facility contains certain covenants and events of default customary for such financings. The average interest rate for the Senior Secured Credit Facility was 4.7% during the six months ended June 30, 2005.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Construction Litigation

The following disclosure summarizes our previous disclosure regarding this matter and discusses recent developments since the filing of our Annual Report on Form 10-K for the year ended December 31, 2004.

The construction of the principal components of the Venetian Casino Resort was undertaken by Lehrer McGovern Bovis, Inc. (“Bovis”) pursuant to a construction management agreement, as amended. Bovis’ obligations were guaranteed by its corporate parent companies. In 1999, Venetian Casino Resort, LLC filed a complaint against Bovis in the United States District Court for the District of Nevada relating to the construction of the Venetian Casino Resort. In response, Bovis filed a complaint against Venetian Casino Resort, LLC in the District Court of Clark County, Nevada (the “State Court Action”). Commencing in 2000, the construction manager and we engaged in certain arbitration proceedings ordered by the federal court. Pursuant to agreement between the parties, certain claims brought by Bovis relating to infrastructure for the Palazzo, which is currently under construction (the “Lido Claims”), were severed from the State Court Action and are scheduled for trial in January 2006.

In connection with these disputes, Bovis and its subcontractors filed certain mechanics liens against the Venetian Casino Resort. We have purchased surety bonds for virtually all of the claims underlying these liens. As a result, there can be no foreclosure of the Venetian Casino Resort in connection with the claims of the construction manager and its subcontractors. However, we will be required to pay or immediately reimburse the bonding company if and to the extent that the underlying claims are judicially determined to be valid. It is likely to take a significant amount of time for their validity to be judicially determined.

We have purchased an insurance policy for loss coverage in connection with all litigation relating to the construction of the Venetian Casino Resort (the “Insurance Policy”). Under the Insurance Policy, we will self-insure the first $45.0 million of covered losses (excluding defense costs) and the insurer will insure defense costs and other covered losses up to the next $80.0 million. Approximately $29.0 million of the $80.0 million of policy limits has been utilized to date in connection with the litigation, primarily for defense costs. The Insurance Policy provides coverage (subject to certain exceptions) for amounts determined in the construction litigation to be owed to Bovis, and lien claims of, or acquired by, Bovis as well as any defense costs. The principal exclusions from coverage are lien claims of Bovis’ subcontractors directly against us (“Direct Claims”) and Lido Claims. However, up to $36.5 million in Direct Claims and $8.5 million in Lido Claims can be applied to satisfaction of the $45.0 million self-insured retention under the Insurance Policy.

After trial in the State Court Action, the jury awarded Bovis approximately $44.0 million in damages and awarded us approximately $2.0 million in damages. We have filed a notice of appeal to the Nevada Supreme Court.

Notwithstanding the entry of judgment in the State Court Action, we have continued to pursue certain claims in the federal court ordered arbitration proceedings, which we believe may provide a basis for reducing the amount awarded to Bovis in the State Court Action. Because of the magnitude of the remaining open items in the federal arbitration proceedings, which we believe must be considered in any ultimate award between the parties, the magnitude of the Direct Claims, the payment of which we contend should reduce the amount awarded to Bovis in the State Court Action, and the issues raised on appeal; we are not able to determine with any reasonable certainty the value of the entirety of these claims or the probability of success on these claims at this time. Accordingly, no accrual for a liability has been reflected in the accompanying financial statements for this matter, other than approximately $7.2 million, which we had previously accrued for unpaid construction costs and which have not yet been paid pending outcome of the litigation.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5 – COMMITMENTS AND CONTINGENCIES (Continued)

Based on the judgment in the State Court Action and the remaining open items in the federal arbitration proceedings, the Direct Claims and the Lido Claims, we estimate that our range of loss in this matter, before the benefit of the approximately $51 million of the remaining policy limits under the Insurance Policy, is from zero (or under certain circumstances a gain) to $114.6 million.

The low end of the range assumes all remaining matters are determined in our favor, including a reversal of the jury award to Bovis by the Nevada Supreme Court following our appeal and considers the existing accrual of approximately $7.2 million for unpaid construction costs.

The high end of the range assumes that (i) we lose all remaining arbitration matters and related pending actions and appeals that counsel has advised are possible of loss, and that are not already included in the State Court Action; (ii) we are not permitted to offset against the State Court Action award amounts we pay for Direct Claims consisting of interest and attorneys’ fees, but we are permitted to offset the remaining amounts of the Direct Claims; and (iii) we lose the entire disputed Lido Claim. Substantially all of our attorneys’ fees and costs related to the defense and prosecution of claims arising out of this matter are being paid by the Insurance Policy.

There are three ways the state court judgment may change before it can be executed on by Bovis. First, if we are successful in proving our remaining claims in the federal court ordered arbitrations, the arbitration credit awards, in total, could, in our opinion, offset up to $28.0 million of the verdict. Second, we believe that certain elements of the verdict should be preempted because they are duplicative of items ordered to arbitration by federal court before the state court jury trial began. It is our position that the arbitration awards should be substituted for the portions of the verdict which overlap. In a March 2004 hearing, the state court judge acknowledged that the verdict and the judgment on the verdict will need to be adjusted after the completion of the arbitrations. Third, any amounts of principal and interest which we are obligated to pay to Bovis’ sub-contractors as a result of the Direct Claims for which we do not receive indemnity from Bovis should, in our opinion, be offset against principal and interest awarded in the state court judgment.

From the summer of 2000 to the present, we actively defended approximately 25 Direct Claims lawsuits in Nevada State Court brought by various Bovis sub-contractors, which brought claims directly against us for monies due the sub-contractors from Bovis as permitted by Nevada lien law, pre- and post-judgment interest on such amounts and related claims. Five Direct Claim trials ended in judgments in favor of the sub-contractors in the aggregate amounts of approximately $17.2 million including awarded interest, costs and attorneys’ fees, but not inclusive of post judgment interest which continues to accrue, but if paid, should be deductible from any post judgment interest due Bovis on its judgment. We are appealing all of these judgments. We cannot predict the outcomes of our appeals at this time. Our costs of appeal are being paid by the Insurance Policy and payments, if any, we make following the conclusion of the appeals will be credited toward our self-insured retention under the Insurance Policy, along with other payments relating to Direct Claims, up to an aggregate of $36.5 million.

A number of additional Direct Claims are scheduled for trial in the next 12 months. We intend to vigorously defend against each of these claims and cannot predict the outcomes of these matters at this time. Our defense costs in these matters are being paid by the Insurance Policy. In May 2005, we attempted to settle a Direct Claim brought by Midwest Drywall Company, one of the sub-contractors. The settlement was conditioned upon the Bovis state court trial judge agreeing to offset the principal and interest payments made by us to Midwest against the Bovis jury award and interest thereon, respectively, in the State Court Action. The judge denied the offset based on Bovis’ arguments that the offset was premature and the settlement did not go forward.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 5 – COMMITMENTS AND CONTINGENCIES (Continued)

Bovis has made claims against us (the previously mentioned Lido Claims) for approximately $16.0 million for loans made to us, and for work allegedly performed, in connection with construction of the Palazzo resort, plus related interest and attorneys’ fees. Bovis has recently made an offer of judgment in connection with its claims under which Bovis would accept $13.5 million in full settlement of all of the Lido Claims. We dispute the size and characterization of the claims and dispute that interest or fees are due in connection therewith. We intend to vigorously defend against these claims at trial.

Because of the possibility of offsetting credits that may be awarded in the arbitrations described above and the elimination of duplicative claims through the substitution of arbitration awards, and/or payments in connection with the Direct Claims in the State Court Action verdict and the pendency of various appeals, no single amount within our estimated range of any loss from this matter can be reasonably determined as an estimated loss. If there is a loss, such loss could be material to our results of operations in the period that the estimate is recorded.

Litigation Relating to Macao Casino

The following disclosure summarizes our previous disclosure regarding this matter and discusses recent developments since the filing of our Annual Report on Form 10-K for the year ended December 31, 2004.

In October 15, 2004, Richard Suen and Round Square Company Limited filed an action against LVSC, Las Vegas Sands Opco, Sheldon Adelson, and William Weidner in the District Court of Clark County, Nevada, 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. We intend to defend this matter vigorously. In March 2005, LVSC was dismissed as a party without prejudice based on a stipulation to do so between the parties. On May 17, 2005, the plaintiffs filed an amended complaint. The defendants responded with a motion to dismiss for failure to state a claim upon which relief can be granted. Other than the motion to dismiss, there is currently no pending activity in the matter. This action is in a preliminary stage and the Company’s legal counsel is currently not able to determine the probability of the outcome of this action.

Other Litigation

The Company is involved in other litigation 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 position, results of operations or cash flows.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 – SEGMENT INFORMATION

The Company reviews the results of operations based on the following distinct segments, which are the Venetian Casino Resort on the Las Vegas Strip, the Sands Expo Center in Las Vegas, and the Sands Macao in Macao. The Company’s segments are based on geographic locations (Las Vegas and Macao) or on the type of business (casino resort or convention operations). The Company’s segment information is as follows for the three and six month periods ended June 30, 2005 and 2004 (in thousands):

Three Months Ended
Six Months Ended
June 30, June 30,
2005
2004
2005
2004
Net Revenues                        
    Venetian Casino Resort   $ 180,360   $ 189,963   $ 390,265   $ 409,964  
    Expo Center    13,388    16,606    32,221    35,791  
    Macao Casino       205,073     60,088     380,129     60,088  








       Total net revenues     $ 398,821   $ 266,657   $ 802,615   $ 505,843  









  
Adjusted EBITDA(1)                      
    Venetian Casino Resort     $ 63,151   $ 79,928   $ 150,357   $ 181,054  
    Expo Center    3,777    4,937    11,490    12,538  
    Macao Casino    80,840    22,912    148,442    22,912  








       Total adjusted EBITDA    147,768    107,777    310,289    216,504  









  
Other Operating Costs and Expenses                      
    Corporate expense    (6,620 )  (3,203 )  (17,502 )  (5,704 )
    Depreciation and amortization    (21,097 )  (16,856 )  (41,062 )  (32,383 )
    Gain (loss) on disposal of assets    158    418,097    (1,005 )  418,073  
    Pre-opening expenses    (504 )  (8,502 )  (504 )  (16,345 )
    Development expense    (5,562 )  (2,226 )  (10,737 )  (2,762 )








       Total operating income    114,143    495,087    239,479    577,383  









  
Other Non-operating Costs and Expenses                      
    Interest expense, net of amounts capitalized    (17,969 )  (32,464 )  (45,052 )  (65,291 )
    Interest income    7,133    638    14,527    1,094  
    Other expenses    (1,291 )      (1,291 )  (9 )
    Loss on early retirement of debt    (4,166 )  (1,371 )  (137,000 )  (1,371 )
    Benefit (provision) for income taxes    (11,421 )      22,878      








Net income   $ 86,429   $ 461,890   $ 93,541   $ 511,806  










(1) Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, pre-opening and development expenses, other income or expense and loss on early retirement of debt. Adjusted EBITDA is used by management as the primary measure of operating performance of its properties and to compare the operating performance of its properties with those of its competitors.

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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6 – SEGMENT INFORMATION (Continued)

Six Months Ended June 30,
2005
2004
Capital Expenditures                
Venetian Casino Resort   $ 52,772   $ 68,479  
Expo Center    294    321  
Macao Projects    148,311    129,883  
Palazzo    172,188    37,410  




Total capital expenditures   $ 373,565   $ 236,093  





June 30, December 31,
2005
2004
Total Assets                
Las Vegas Sands Corp.     $ 333,689   $ 744,927  
Venetian Casino Resort       1,899,470     2,065,307  
Expo Center       75,309     76,278  
Macao Projects       584,205     455,249  
Palazzo       432,983     259,717  




Total consolidated assets   $ 3,325,656   $ 3,601,478  





NOTE 7 – INCOME TAXES

Reconciliation of the statutory federal income tax rate and the Company’s effective tax rate for the three and six months ended June 30, 2005 is as follows:

Three Months
Ended
June 30, 2005

Six Months
Ended
June 30, 2005

 
Statutory federal income tax rate   35.00 % 35.00 %
    Nondeductible losses of foreign subsidiary (UK)  0.25 % 1.38 %
    Nondeductible losses of foreign subsidiary (Alderney)  0.06 % 0.65 %
    Other permanent differences  0.66 % 1.39 %
    Tax exempt income of foreign subsidiary (Macao)  (24.15 )% (62.30 )%
    Tax effect of net operating loss recognition relate         
        to loss on early retirement of debt   (0.15 )% (8.50 )%


Effective tax rate (benefit)  11.67 % (32.38 )%



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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION

LVSC is the obligor of the Senior Notes. Las Vegas Sands Opco, Venetian, Mall Intermediate, Lido Intermediate, Venetian Venture, Venetian Transport, Venetian Marketing, Venetian Operating and Phase II Subsidiary (collectively, the “Guarantor Subsidiaries”) have jointly and severally guaranteed the Senior Notes on a full and unconditional basis.

Separate financial statements and other disclosure concerning each of Las Vegas Sands Opco, Venetian and the Guarantor Subsidiaries are not presented below because management believes that they are not material to investors. The following information represents the summarized financial information of Las Vegas Sands Corp. the Guarantor Subsidiaries of the Senior Notes, and the non-guarantor subsidiaries on a combined basis as of December 31, 2004 and June 30, 2005, and for the three and six month periods ended June 30, 2005 and June 30, 2004. In addition, certain amounts in the 2004 information have been reclassified to conform to the 2005 presentation.

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   Table of Contents

LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED BALANCE SHEETS
June 30, 2005


Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
 
Cash and cash equivalents     $ 313,169   $ 184,762   $ 152,263   $   $ 650,194  
Restricted cash and cash equivalents        1,201    19,678        20,879  
Intercompany receivable        35,079    4,379    (39,458 )    
Accounts receivable, net    117    63,100    3,169        66,386  
Notes receivable    70,307            (70,307 )    
Inventories        7,668    1,101        8,769  
Deferred income taxes    9,097    25,888    607        35,592  
Prepaid expenses    393    7,870    5,420        13,683  










  Total current assets    393,083    325,568    186,617    (109,765 )  795,503  

  
Property and equipment, net        1,542,947    550,066        2,093,013  
Investment in subsidiaries    1,269,300    306,209        (1,575,509 )    
Deferred offering costs, net    1,357    28,968    4,608        34,933  
Restricted cash and cash equivalents        361,776            361,776  
Deferred income taxes    9,556    285    (1,395 )      8,446  
Other assets, net        24,533    7,452        31,985  










    $ 1,673,296   $ 2,590,286   $ 747,348   $ (1,685,274 ) $ 3,325,656  










Accounts payable   $   $ 13,141   $ 40,880   $   $ 54,021  
Construction payables        44,224    48,577        92,801  
Construction payables-contested        7,232            7,232  
Intercompany payables    1,863        37,595    (39,458 )    
Accrued interest payable    6,154    232    464        6,850  
Other accrued liabilities    990    92,836    83,298        177,124  
Notes payable            70,307    (70,307 )    
Current maturities of long-term debt        2,400    54,042        56,442  










  Total current liabilities    9,007    160,065    335,163    (109,765 )  394,470  

  
Other long-term liabilities        181,921    2,678        184,599  
Long-term debt       247,810     979,000     103,298         1,330,108  










     256,817    1,320,986    441,139    (109,765 )  1,909,177  










Stockholders' equity    1,416,479    1,269,300    306,209    (1,575,509 )  1,416,479  










    $ 1,673,296   $ 2,590,286   $ 747,348   $ (1,685,274 ) $ 3,325,656  










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LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED BALANCE SHEETS
December 31, 2004


Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
 
Cash and cash equivalents     $ 744,927   $ 388,338   $ 161,633   $   $ 1,294,898  
Restricted cash and cash equivalents        1,193    19,335        20,528  
Intercompany receivable        39,268    4,801    (44,069 )    
Accounts receivable, net        54,887    1,695        56,582  
Inventories        6,945    1,065        8,010  
Deferred income taxes        13,000    311        13,311  
Prepaid expenses        7,510    4,287        11,797  










  Total current assets    744,927    511,141    193,127    (44,069 )  1,405,126  

  
Property and equipment, net        1,361,749    394,341        1,756,090  
Investment in subsidiaries    576,293    425,784        (1,002,077 )    
Deferred offering costs, net        41,609    10,766        52,375  
Restricted cash and cash equivalents        356,946            356,946  
Redeemable Preferred Interest in Venetian            255,154    (255,154 )    
Deferred income taxes        (31 )  456        425  
Other assets, net        23,829    6,687        30,516  










    $ 1,321,220   $ 2,721,027   $ 860,531   $ (1,301,300 ) $ 3,601,478  











  
Accounts payable   $   $ 21,495   $ 11,888   $   $ 33,383  
Construction payables        37,431    49,945        87,376  
Construction payables-contested        7,232            7,232  
Intercompany payables    5,219        38,850    (44,069 )    
Accrued interest payable        8,087    1,100        9,187  
Other accrued liabilities        109,859    60,659        170,518  
Current maturities of long-term debt        292,940    11,924        304,864  










  Total current liabilities    5,219    477,044    174,366    (44,069 )  612,560  

  
Other long-term liabilities        184,836    3,017        187,853  
Redeemable Preferred Interest in                           
  Venetian Casino Resort, LLC                           
  a wholly owned subsidiary        255,154        (255,154 )    
Long-term debt        1,227,700    257,364        1,485,064  










     5,219    2,144,734    434,747    (299,223 )  2,285,477  











  
Stockholders' equity    1,316,001    576,293    425,784    (1,002,077 )  1,316,001  










    $ 1,321,220   $ 2,721,027   $ 860,531   $ (1,301,300 ) $ 3,601,478  










17


   Table of Contents

LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED STATEMENT OF OPERATIONS
For the three months ended June 30, 2005


Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
Revenues:                                  
  Casino   $   $ 73,719   $ 201,089   $   $ 274,808  
  Rooms        82,981    1,002        83,983  
  Food and beverage        28,574    6,853    (729 )  34,698  
  Retail and other    3,554    5,997    15,618    (815 )  24,354  










  Total revenues    3,554    191,271    224,562    (1,544 )  417,843  
Less promotional allowances    (287 )  (13,448 )  (5,287 )      (19,022 )










  Net revenues    3,267    177,823    219,275    (1,544 )  398,821  











  
Operating expenses:                           
  Casino        38,711    107,835        146,546  
  Rooms        20,116    111        20,227  
  Food and beverage        14,649    3,285    (55 )  17,879  
  Retail and other        7,112    7,500    (889 )  13,723  
  Provision for doubtful accounts        659    123        782  
  General and administrative        33,417    15,397    (600 )  48,214  
  Corporate expense    6,619        1        6,620  
  Rental expense        3,308    374        3,682  
  Pre-opening expense        504            504  
  Development expense    147    2,283    3,132        5,562  
  Depreciation and amortization        13,850    7,247        21,097  
  Loss (Gain) on disposal of assets        (165 )  7        (158 )










     6,766    134,444    145,012    (1,544 )  284,678  











  
Operating income (loss)    (3,499 )  43,379    74,263        114,143  










Other income (expense):                           
    Interest income    2,766    4,110    2,281    (2,024 )  7,133  
    Interest expense, net of amounts capitalized    (4,073 )  (10,507 )  (5,413 )  2,024    (17,969 )
    Other expense        (1,220 )  (71 )      (1,291 )
    Loss on early retirement of debt            (4,166 )      (4,166 )
    Gain from equity investment in subsidiaries    89,999    66,859        (156,858 )    










Income before income taxes    85,193    102,621    66,894    (156,858 )  97,850  

  
    Income tax benefit (provision)    1,236    (12,622 )  (35 )      (11,421 )










Net income   $ 86,429   $ 89,999   $ 66,859   $ (156,858 ) $ 86,429  










18


   Table of Contents

LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED STATEMENT OF OPERATIONS
For the three months ended June 30, 2004


Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
 
Revenues:                                  
  Casino   $   $ 76,246   $ 57,643   $   $ 133,889  
  Rooms        79,230            79,230  
  Food and beverage        31,768    2,305    (1,047 )  33,026  
  Retail and other        11,176    22,638    (541 )  33,273  










  Total revenues        198,420    82,586    (1,588 )  279,418  
Less promotional allowances        (12,761 )          (12,761 )










  Net revenues        185,659    82,586    (1,588 )  266,657  










Operating expenses:                           
  Casino        32,977    29,025    (57 )  61,945  
  Rooms        18,676            18,676  
  Food and beverage        15,303    2,495    (460 )  17,338  
  Retail and other        6,405    9,656    (829 )  15,232  
  Provision for doubtful accounts        3,448            3,448  
  General and administrative        29,882    9,917        39,799  
  Corporate expense        2,894    551    (242 )  3,203  
  Rental expense        1,883    559        2,442  
  Pre-opening expense        56    8,446        8,502  
  Development expense        (445 )  2,671        2,226  
  Depreciation and amortization        13,556    3,300        16,856  
  (Gain)/loss on disposal of assets        (12 )  137        125  
  Gain on sale of Grand Canal Shops        (418,222 )          (418,222 )










         (293,599 )  66,757    (1,588 )  (228,430 )










Operating income        479,258    15,829        495,087  










Other income (expense):                           
    Interest income        497    1,280    (1,139 )  638  
    Interest expense, net of amounts capitalized        (28,347 )  (5,256 )  1,139    (32,464 )
    Loss on early retirement of debt        (224 )  (1,147 )      (1,371 )
    Preferred return on Redeemable Preferred                           
       Interest in Venetian Casino Resort LLC        (7,150 )  7,150          
    Gain from equity investment in subsidiaries    461,890    17,856        (479,746 )    










Net income   $ 461,890   $ 461,890   $ 17,856   $ (479,746 ) $ 461,890  










19


   Table of Contents

LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED STATEMENT OF OPERATIONS
For the six months ended June 30, 2005


Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
 
Revenues:                             
  Casino   $   $ 168,467   $ 372,127   $   $ 540,594  
  Rooms        168,410    1,650        170,060  
  Food and beverage        64,775    15,090    (1,678 )  78,187  
  Retail and other    6,641    11,371    36,689    (1,893 )  52,808  










  Total revenues    6,641    413,023    425,556    (3,571 )  841,649  
Less promotional allowances    (511 )  (27,247 )  (11,276 )      (39,034 )










  Net revenues    6,130    385,776    414,280    (3,571 )  802,615  











  
Operating expenses:                           
  Casino        79,620    198,879        278,499  
  Rooms        41,185    157        41,342  
  Food and beverage        31,805    7,135    (96 )  38,844  
  Retail and other        13,729    16,645    (2,275 )  28,099  
  Provision for doubtful accounts        4,045    123        4,168  
  General and administrative        64,682    30,505    (1,200 )  93,987  
  Corporate expense    17,411        91        17,502  
  Rental expense        6,607    780        7,387  
  Pre-opening expense        504            504  
  Development expense    147    4,090    6,500        10,737  
  Depreciation and amortization        26,790    14,272        41,062  
  Loss on disposal of assets        998    7        1,005  










     17,558    274,055    275,094    (3,571 )  563,136  










Operating income (loss)    (11,428 )  111,721    139,186        239,479  










Other income (expense):                           
    Interest income    5,589    8,473    4,050    (3,585 )  14,527  
    Interest expense, net of amounts capitilized    (6,285 )  (30,722 )  (11,630 )  3,585    (45,052 )
    Other expense        (1,220 )  (71 )      (1,291 )
    Loss on early retirement of debt        (132,834 )  (4,166 )      (137,000 )
    Gain from equity investment in subsidiaries    94,259    125,831        (220,090 )    










Income before income taxes    82,135    81,249    127,369    (220,090 )  70,663  

  
    Income tax benefit (provision)    11,406    13,010    (1,538 )      22,878  










Net income   $ 93,541   $ 94,259   $ 125,831   $ (220,090 ) $ 93,541  










20


   Table of Contents

LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED STATEMENT OF OPERATIONS
For the six months ended June 30, 2004

Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
 
Revenues:                             
  Casino   $   $ 170,954   $ 57,643   $   $ 228,597  
  Rooms        164,597            164,597  
  Food and beverage        65,223    2,305    (1,847 )  65,681  
  Retail and other        21,586    53,297    (1,394 )  73,489  










  Total revenues        422,360    113,245    (3,241 )  532,364  
Less promotional allowances        (26,521 )          (26,521 )










  Net revenues        395,839    113,245    (3,241 )  505,843  











  
Operating expenses:                           
  Casino        69,605    29,025    (94 )  98,536  
  Rooms        38,717            38,717  
  Food and beverage        30,801    2,495    (465 )  32,831  
  Retail and other        11,701    21,855    (2,281 )  31,275  
  Provision for doubtful accounts        6,692            6,692  
  General and administrative        61,420    14,772        76,192  
  Corporate expense        5,554    551    (401 )  5,704  
  Rental expense        3,705    1,391        5,096  
  Pre-opening expense        965    15,380        16,345  
  Development expense            2,762        2,762  
  Depreciation and amortization        26,928    5,455        32,383  
  Loss on disposal of assets        12    137        149  
  Gain on sale of Grand Canal Shops        (418,222 )          (418,222 )










         (162,122 )  93,823    (3,241 )  (71,540 )











  
Operating income        557,961    19,422        577,383  











  
Other income (expense):                           
    Interest income        908    2,318    (2,132 )  1,094  
    Interest expense, net of amounts capitalized        (56,411 )  (11,012 )  2,132    (65,291 )
    Other expense            (9 )      (9 )
    Loss on early retirement of debt        (224 )  (1,147 )      (1,371 )
    Preferred return on Redeemable Preferred                           
       Interest in Venetian Casino Resort LLC        (14,300 )  14,300          
    Gain from equity investment in subsidiaries    511,806    23,872        (535,678 )    










Net income   $ 511,806   $ 511,806   $ 23,872   $ (535,678 ) $ 511,806  










21


   Table of Contents

LAS VEGAS SANDS CORP.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8 – CONDENSED CONSOLIDATING FINANCIAL INFORMATION


CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2005


Las Vegas
Sands Corp.

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries

Consolidating/
Eliminating
Entries

Total
 
Net cash provided by (used in) operating activities     $ (75,666 ) $ 93,891   $ 265,302   $   $ 283,527  











  
Cash flows from investing activities:                           
  Change in restricted cash        (4,838 )  (343 )      (5,181 )
  Capital expenditures        (202,193 )  (171,372 )      (373,565 )
  Capital contributions to subsidiaries    (598,570 )  (9,846 )      608,416      
  Dividend from Yona Venetian, LLC        40,009        (40,009 )    










Net cash used in investing activities    (598,570 )  (176,868 )  (171,715 )  568,407    (378,746 )











  
Cash flows from financing activities:                           
  Transaction cost, initial public offering    (487 )              (487 )
  Dividends paid to shareholders        (21,052 )          (21,052 )
  Capital contribution from Las Vegas Sands Corp.        558,570    40,000    (598,570 )    
  Capital contribution from Venetian Casino Resort LLC            9,846    (9,846 )    
  Dividend to Las Vegas Sands, Inc.            (40,009 )  40,009      
  Repayments on 11% mortgage notes        (843,640 )          (843,640 )
  Proceeds from 6.375% senior note, net of discount    247,722                247,722  
  Proceeds from senior secured credit facility-term B        305,000            305,000  
  Proceeds from phase II mall construction loan            10,500        10,500  
  Repayments on Venetian Macao senior secured notes-tranche A            (75,000 )      (75,000 )
  Repayments on Venetian Macao senior secured notes-tranche B            (45,000 )      (45,000 )
  Repayments on FF&E credit facility        (600 )          (600 )
  Repayments on Interface mortgage note payable            (2,448 )      (2,448 )
  Repurchase premiums incurred in connection with refinancing     transactions        (113,311 )          (113,311