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| LVS > SEC Filings for LVS > Form 10-K on 1-Mar-2013 | All Recent SEC Filings |
1-Mar-2013
Annual Report
The following discussion should be read in conjunction with, and is qualified in its entirety by, the audited consolidated financial statements, and the notes thereto and other financial information included in this Form 10-K. Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" are forward-looking statements. See "- Special Note Regarding Forward-Looking Statements."
Operations
We view each of our casino properties as an operating segment. Our Macao operating segments consist of The Venetian Macao, Sands Macao, Four Seasons Macao, Sands Cotai Central and other ancillary operations that support these properties. Approximately 83.2% and 83.0% of the gross revenue at The Venetian Macao for years ended December 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived from room, mall, food and beverage and other non-gaming sources. Approximately 94.5% and 94.4% of the gross revenue at the Sands Macao for the years ended December 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived primarily from food and beverage operations. Approximately 86.5% and 82.6% of the gross revenue at the Four Seasons Macao for the years ended December 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived primarily from mall and room operations. Approximately 86.6% of the gross revenue at Sands Cotai Central for the period ended December 31, 2012, was derived from gaming activities, with the remainder derived primarily from room and food and beverage operations.
Our Singapore operating segment consists of the Marina Bay Sands, which opened progressively throughout 2010. Approximately 74.4% and 76.5% of the gross revenue at the Marina Bay Sands for the years ended December 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived from room, food and beverage, mall and other non-gaming sources.
Our operating segments in the U.S. consist of The Venetian Las Vegas, The Palazzo and Sands Bethlehem. The Venetian Las Vegas and The Palazzo operating segments are managed as a single integrated resort and have been aggregated into our Las Vegas Operating Properties, considering their similar economic characteristics, types of customers, types of services and products, the regulatory business environment of the operations within each segment and the Company's organizational and management reporting structure. Approximately 65.2% and 69.3% of the gross revenue at our Las Vegas Operating Properties for the years ended December 31, 2012 and 2011, respectively, was derived from room, food and beverage and other non-gaming sources, with the remainder derived from gaming activities. The percentage of non-gaming revenue reflects the integrated resort's emphasis on the group convention and trade show business and the resulting high occupancy and room rates throughout the week, including during mid-week periods. Approximately 88.5% and 89.8% of the gross revenue at Sands Bethlehem for the years ended December 31, 2012 and 2011, respectively, was derived from gaming activities, with the remainder derived primarily from food and beverage and other non-gaming sources.
Summary Financial Results
The following table summarizes our results of operations:
Year Ended December 31,
Percent Percent
2012 Change 2011 Change 2010
(Dollars in thousands)
Net revenues $ 11,131,132 18.3 % $ 9,410,745 37.3 % $ 6,853,182
Operating expenses 8,819,750 25.6 % 7,020,858 23.8 % 5,672,596
Operating income 2,311,382 (3.3 )% 2,389,887 102.4 % 1,180,586
Income before income taxes 2,062,576 (1.5 )% 2,094,823 144.7 % 855,905
Net income 1,881,813 (0.1 )% 1,883,119 140.9 % 781,603
Net income attributable to Las Vegas
Sands Corp. 1,524,093 (2.3 )% 1,560,123 160.3 % 599,394
Percent of Net Revenues
Year Ended December 31,
2012 2011 2010
Operating expenses 79.2 % 74.6 % 82.8 %
Operating income 20.8 % 25.4 % 17.2 %
Income before income taxes 18.5 % 22.3 % 12.5 %
Net income 16.9 % 20.0 % 11.4 %
Net income attributable to Las Vegas Sands Corp. 13.7 % 16.6 % 8.7 %
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Our historical financial results will not be indicative of our future results as we continue to develop and open new properties, including the remaining phase of Sands Cotai Central and The Parisian Macao.
Key Operating Revenue Measurements
Operating revenues at The Venetian Macao, Four Seasons Macao, Sands Cotai Central, Marina Bay Sands and our Las Vegas Operating Properties are dependent upon the volume of customers who stay at the hotel, which affects the price that can be charged for hotel rooms and our gaming volume. Operating revenues at Sands Macao and Sands Bethlehem are principally driven by casino customers who visit the properties on a daily basis.
The following are the key measurements we use to evaluate operating revenues:
Casino revenue measurements for Macao and Singapore: Macao and Singapore table games are segregated into two groups, consistent with the Macao and Singapore markets' convention: Rolling Chip play (all VIP players) and Non-Rolling Chip play (mostly non-VIP players). The volume measurement for Rolling Chip play is non-negotiable gaming chips wagered and lost. The volume measurement for Non-Rolling Chip play is table games drop ("drop"), which is the sum of markers issued (credit instruments) less markers paid at the table, plus cash deposited in the table drop box. Rolling Chip and Non-Rolling Chip volume measurements are not comparable as the amounts wagered and lost are substantially higher than the amounts dropped. Slot handle ("handle"), also a volume measurement, is the gross amount wagered for the period cited.
We view Rolling Chip win as a percentage of Rolling Chip volume, Non-Rolling Chip win as a percentage of drop and slot hold as a percentage of slot handle. Win or hold percentage represents the percentage of Rolling Chip volume, Non-Rolling Chip drop or slot handle that is won by the casino and recorded as casino revenue. Based upon our mix of table games, our Rolling Chip win percentage (calculated before discounts and commissions) is expected to be 2.7% to 3.0%. Generally, slot machine play is conducted on a cash basis. In Macao and Singapore, 31.5% and 33.2%, respectively, of our table games play was conducted on a credit basis for the year ended December 31, 2012.
Casino revenue measurements for the U.S.: The volume measurements in the U.S. are table games drop and slot handle, as previously described. We view table games win as a percentage of drop and slot hold as a percentage of handle. As in Macao and Singapore, slot machine play is generally conducted on a cash basis. Approximately 72.4% of our table games play in Las Vegas, for the year ended December 31, 2012, was conducted on a credit basis, while our table games play in Pennsylvania is primarily conducted on a cash basis.
Hotel revenue measurements: Performance indicators used are occupancy rate, which is the average percentage of available hotel rooms occupied during a period, and average daily room rate, which is the average price of occupied rooms per day. The calculations of the hotel occupancy and average daily room rates include the impact of rooms provided on a complimentary basis. Complimentary room rates are determined based on an analysis of retail (or cash) room rates by customer segment and type of room product to ensure the complimentary room rates are consistent with retail rates. Revenue per available room represents a summary of hotel average daily room rates and occupancy. Because not all available rooms are occupied, average daily room rates are normally higher than revenue per available room. Reserved rooms where the guests do not show up for their stay and lose their deposit may be re-sold to walk-in guests. These rooms are considered to be occupied twice for statistical purposes due to obtaining the original deposit and the walk-in guest revenue. In cases where a significant number of rooms are resold, occupancy rates may be in excess of 100% and revenue per available room may be higher than the average daily room rate.
Mall revenue measurements: Occupancy, base rent per square foot and tenant sales per square foot are used as performance indicators. Occupancy represents gross leasable occupied area ("GLOA") divided by gross leasable area ("GLA") at the end of the reporting period. GLOA is the sum of: (1) tenant occupied space under lease and (2) tenants no longer occupying space, but paying rent. GLA does not include space that is currently under development or not on the market for lease. Base rent per square foot is the 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.
Year Ended December 31, 2012 Compared to the Year Ended December 31, 2011
Operating Revenues
Our net revenues consisted of the following:
Year Ended December 31,
2012 2011 Percent Change
(Dollars in thousands)
Casino $ 9,008,158 $ 7,437,002 21.1 %
Rooms 1,154,024 1,000,035 15.4 %
Food and beverage 628,528 598,823 5.0 %
Mall 396,927 325,123 22.1 %
Convention, retail and other 497,032 501,351 (0.9 )%
11,684,669 9,862,334 18.5 %
Less - promotional allowances (553,537 ) (451,589 ) (22.6 )%
Total net revenues $ 11,131,132 $ 9,410,745 18.3 %
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Consolidated net revenues were $11.13 billion for the year ended December 31, 2012, an increase of $1.72 billion compared to $9.41 billion for the year ended December 31, 2011. The increase was driven by $1.05 billion of net revenues at Sands Cotai Central and increases of $408.2 million and $210.8 million at Four Seasons Macao and The Venetian Macao, respectively.
Casino revenues increased $1.57 billion compared to the year ended December 31, 2011. The increase is primarily attributable to $960.3 million of revenues at Sands Cotai Central, a $394.1 million increase at Four Seasons Macao, driven by an increase in Rolling Chip volume due to the expanded VIP gaming area and a $198.7 million increase at The Venetian Macao, driven by increases in Non-Rolling Chip drop and win percentage. The following table summarizes the results of our casino activity:
Year Ended December 31,
2012 2011 Change
(Dollars in thousands)
Macao Operations:
The Venetian Macao
Total casino revenues $ 2,628,868 $ 2,430,144 8.2 %
Non-Rolling Chip drop $ 4,482,318 $ 4,178,865 7.3 %
Non-Rolling Chip win percentage 30.6 % 27.3 % 3.3 pts
Rolling Chip volume $ 48,825,435 $ 52,016,771 (6.1 )%
Rolling Chip win percentage 3.05 % 2.95 % 0.10 pts
Slot handle $ 4,946,114 $ 3,564,612 38.8 %
Slot hold percentage 5.3 % 6.4 % (1.1 )pts
Sands Macao
Total casino revenues $ 1,219,400 $ 1,251,084 (2.5 )%
Non-Rolling Chip drop $ 2,872,468 $ 2,811,966 2.2 %
Non-Rolling Chip win percentage 21.0 % 20.5 % 0.5 pts
Rolling Chip volume $ 25,184,583 $ 31,537,280 (20.1 )%
Rolling Chip win percentage 3.14 % 2.79 % 0.35 pts
Slot handle $ 2,476,673 $ 2,055,911 20.5 %
Slot hold percentage 4.3 % 5.5 % (1.2 )pts
Four Seasons Macao
Total casino revenues $ 977,616 $ 583,476 67.6 %
Non-Rolling Chip drop $ 433,264 $ 388,290 11.6 %
Non-Rolling Chip win percentage 40.8 % 40.3 % 0.5 pts
Rolling Chip volume $ 41,604,458 $ 18,983,716 119.2 %
Rolling Chip win percentage 2.79 % 2.88 % (0.09 )pts
Slot handle $ 962,540 $ 833,525 15.5 %
Slot hold percentage 5.3 % 5.7 % (0.4 )pts
Sands Cotai Central
Total casino revenues $ 960,286 $ - - %
Non-Rolling Chip drop $ 1,863,923 $ - - %
Non-Rolling Chip win percentage 20.8 % - % - pts
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Year Ended December 31,
2012 2011 Change
(Dollars in thousands)
Rolling Chip volume $ 26,046,168 $ - - %
Rolling Chip win percentage 2.83 % - % - pts
Slot handle $ 2,939,426 $ - - %
Slot hold percentage 3.5 % - % - pts
Singapore Operations:
Marina Bay Sands
Total casino revenues $ 2,271,869 $ 2,364,922 (3.9 )%
Non-Rolling Chip drop $ 4,612,227 $ 4,445,232 3.8 %
Non-Rolling Chip win percentage 23.1 % 23.0 % 0.1 pts
Rolling Chip volume $ 52,568,238 $ 49,843,694 5.5 %
Rolling Chip win percentage 2.47 % 2.88 % (0.41 )pts
Slot handle $ 10,793,348 $ 9,959,670 8.4 %
Slot hold percentage 5.3 % 5.3 % - pts
U.S. Operations:
Las Vegas Operating Properties
Total casino revenues $ 512,647 $ 430,758 19.0 %
Table games drop $ 2,084,490 $ 1,967,258 6.0 %
Table games win percentage 21.1 % 17.9 % 3.2 pts
Slot handle $ 1,944,618 $ 1,829,923 6.3 %
Slot hold percentage 8.7 % 8.7 % - pts
Sands Bethlehem
Total casino revenues $ 437,472 $ 376,618 16.2 %
Table games drop $ 885,359 $ 653,203 35.5 %
Table games win percentage 15.3 % 14.8 % 0.5 pts
Slot handle $ 4,029,326 $ 3,773,734 6.8 %
Slot hold percentage 7.2 % 7.2 % - pts
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In our experience, average win percentages remain steady when measured over extended periods of time, but can vary considerably within shorter time periods as a result of the statistical variances that are associated with games of chance in which large amounts are wagered.
Room revenues increased $154.0 million compared to the year ended December 31, 2011. The increase is attributable to $83.8 million of revenues at Sands Cotai Central and a $57.0 million increase at Marina Bay Sands, driven by increases in occupancy and average daily room rates. The hotel tower at Sands Bethlehem opened in May 2011. The suites at Sands Macao are primarily provided to casino patrons on a complimentary basis. The following table summarizes the results of our room activity:
Year Ended December 31,
2012 2011 Change
(Room revenues in thousands)
Macao Operations:
The Venetian Macao
Total room revenues $ 224,177 $ 220,116 1.8 %
Occupancy rate 91.9 % 91.4 % 0.5 pts
Average daily room rate $ 237 $ 232 2.2 %
Revenue per available room $ 218 $ 212 2.8 %
Sands Macao
Total room revenues $ 24,441 $ 23,820 2.6 %
Occupancy rate 95.3 % 90.5 % 4.8 pts
Average daily room rate $ 245 $ 251 (2.4 )%
Revenue per available room $ 234 $ 227 3.1 %
Four Seasons Macao
Total room revenues $ 39,813 $ 32,233 23.5 %
Occupancy rate 80.1 % 69.9 % 10.2 pts
Average daily room rate $ 362 $ 334 8.4 %
Revenue per available room $ 290 $ 234 23.9 %
Sands Cotai Central
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Year Ended December 31,
2012 2011 Change
(Room revenues in thousands)
Total room revenues $ 83,833 $ - - %
Occupancy rate 83.4 % - % - pts
Average daily room rate $ 155 $ - - %
Revenue per available room $ 129 $ - - %
Singapore Operations:
Marina Bay Sands
Total room revenues $ 325,470 $ 268,480 21.2 %
Occupancy rate 98.9 % 93.6 % 5.3 pts
Average daily room rate $ 355 $ 311 14.1 %
Revenue per available room $ 351 $ 291 20.6 %
U.S. Operations:
Las Vegas Operating Properties
Total room revenues $ 446,241 $ 450,487 (0.9 )%
Occupancy rate 86.1 % 88.6 % (2.5 )pts
Average daily room rate $ 203 $ 199 2.0 %
Revenue per available room $ 175 $ 177 (1.1 )%
Sands Bethlehem
Total room revenues $ 10,049 $ 4,899 105.1 %
Occupancy rate 65.1 % 50.5 % 14.6 pts
Average daily room rate $ 140 $ 162 (13.6 )%
Revenue per available room $ 91 $ 82 11.0 %
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Food and beverage revenues increased $29.7 million compared to the year ended December 31, 2011. The increase was primarily attributable to $39.8 million of revenues at Sands Cotai Central and a $10.5 million increase at The Venetian Macao, partially offset by a $21.4 million decrease at our Las Vegas Operating Properties, driven by a decrease in banquet operations.
Mall revenues increased $71.8 million compared to the year ended December 31, 2011. The increase was primarily attributable to increases of $18.6 million at Marina Bay Sands, driven by an increase in mall occupancy and overage rents, $18.3 million at The Venetian Macao, driven by higher base rents due to renewed contracts as well as an increase in overage rents, and $17.5 million at Four Seasons Macao, driven by an increase in overage rents and the expansion of the mall during November 2012. The following table summarizes the results of our mall activity:
Year Ended December 31,
2012 2011 Change
(Mall revenues and expenses in
thousands)
Macao Operations:
The Grand Canal Shoppes at The Venetian Macao
Total mall revenues $ 139,522 $ 121,191 15.1 %
Total mall expenses(1) $ 22,917 $ 25,457 (10.0 )%
Mall gross leasable area (in square feet) 805,976 817,251 (1.4 )%
Occupancy 92.3 % 90.0 % 2.3 pts
Base rent per square foot $ 147 $ 131 12.2 %
Tenant sales per square foot $ 1,214 $ 1,087 11.7 %
The Shoppes at Four Seasons(2)
Total mall revenues $ 83,477 $ 65,973 26.5 %
Total mall expenses(1) $ 5,946 $ 6,395 (7.0 )%
Mall gross leasable area (in square feet) 239,718 189,170 26.7 %
Occupancy 92.1 % 92.3 % (0.2 )pts
Base rent per square foot $ 150 $ 148 1.4 %
Tenant sales per square foot $ 4,356 $ 3,386 28.6 %
The Shoppes at Sands Cotai Central(3)
Total mall revenues $ 16,074 $ - - %
Total mall expenses(1) $ 3,711 $ - - %
Mall gross leasable area (in square feet) 210,143 - - %
Occupancy 100.0 % - % - pts
Base rent per square foot $ 112 $ - - %
Singapore Operations:
The Shoppes at Marina Bay Sands
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Year Ended December 31,
2012 2011 Change
(Mall revenues and expenses in
thousands)
Total mall revenues $ 156,319 $ 137,765 13.5 %
Total mall expenses(1) $ 34,756 $ 26,970 28.9 %
Mall gross leasable area (in square feet) 637,980 629,428 1.4 %
Occupancy 96.0 % 95.3 % 0.7 pts
Base rent per square foot $ 215 $ 186 15.6 %
Tenant sales per square foot $ 1,393 $ 1,231 13.2 %
U.S. Operations:
The Outlets at Sands Bethlehem(4)
Total mall revenues $ 1,535 $ 194 691.2 %
Total mall expenses(1) $ 1,433 $ 361 297.0 %
Mall gross leasable area (in square feet) 129,216 129,216 - %
Occupancy 71.3 % 24.1 % 47.2 pts
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(1) Mall expenses consist of common area maintenance, management fees and other direct operating expenses, but exclude depreciation and amortization, certain general and administrative costs (including property taxes) and provision for doubtful accounts, which are presented separately in our consolidated statements of operations. Other mall operating companies may use different methodologies for deriving mall expenses, and accordingly, our mall expenses may not be comparable to other mall operating companies.
(2) In November 2012, The Shoppes at Four Seasons expanded the duty-free luxury shops, resulting in an additional 51,000 square feet of gross leasable space.
(3) Phases I and II of The Shoppes at Sands Cotai Central opened in April and September 2012, respectively.
(4) Base rent per square foot and tenant sales per square foot are excluded from the table as a progressive opening of The Outlets at Sands Bethlehem began in November 2011.
Convention, retail and other revenues decreased $4.3 million compared to the year ended December 31, 2011. The decrease was primarily due to a $15.4 million decrease at Marina Bay Sands, driven by a decrease in entertainment revenue primarily due to the closing of a show at the property, partially offset by $8.7 million of revenues at Sands Cotai Central.
Operating Expenses
The breakdown of operating expenses is as follows:
Year Ended December 31,
2012 2011 Percent Change
(Dollars in thousands)
Casino $ 5,128,036 $ 4,007,887 27.9 %
Rooms 237,303 210,052 13.0 %
Food and beverage 331,210 307,446 7.7 %
Mall 68,763 59,183 16.2 %
Convention, retail and other 304,263 338,109 (10.0 )%
Provision for doubtful accounts 239,332 150,456 59.1 %
General and administrative 1,061,935 836,924 26.9 %
Corporate 207,030 185,694 11.5 %
Pre-opening 143,795 65,825 118.5 %
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