Item 4. — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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Item 4. — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II


ITEM 5.		— *MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES*

Market Information

The Company’s common stock trades on the NYSE under the symbol “LVS.” The following table sets forth the high and low sales prices for the common stock on the NYSE for the fiscal quarter indicated.


	High		Low
2008
First Quarter	$	105.38	$	70.00
Second Quarter	$	83.13	$	45.30
Third Quarter	$	59.17	$	30.56
Fourth Quarter	$	37.00	$	2.89
2009
First Quarter	$	9.15	$	1.38
Second Quarter	$	11.84	$	3.08
Third Quarter	$	20.73	$	6.32
Fourth Quarter	$	18.84	$	12.95
2010
First Quarter (through February 19, 2010)	$	19.12	$	14.88

As of February 19, 2010, there were 660,323,374 shares of our common stock issued and outstanding that were held by 439 stockholders of record.

Dividends

We have not declared or paid any dividends on our common stock since our formation in August 2004 and we do not expect to pay dividends on our common stock in the future. We expect to retain our future earnings, if any, for use in the operation and expansion of our business.

Our preferred stock dividend activity is as follows (in thousands):


		Preferred Stock
		Dividends Paid to		Preferred Stock
Board of Directors’		Principal		Dividends Paid to		Total Preferred Stock
Declaration Date	Payment Date	Stockholder’s Family		Public Holders		Dividends Paid
February 5, 2009	February 17, 2009	$	13,125	$	11,347	$	24,472
April 30, 2009	May 15, 2009		13,125		10,400		23,525
July 31, 2009	August 17, 2009		13,125		10,225		23,350
October 30, 2009	November 16, 2009		13,125		10,225		23,350

						$	94,697

February 5, 2010	February 16, 2010	$	13,125	$	10,225	$	23,350

Our Board of Directors will determine whether to pay dividends on our common and preferred stock in the future based on conditions then existing, including our earnings, financial condition, available cash and capital requirements, as well as economic and other conditions deemed relevant. Our ability to declare and pay such dividends is subject to the requirements of Nevada law. In addition, we are a parent company with limited business operations of our own. Accordingly, our primary sources of cash are dividends and distributions with respect to our ownership interest in our subsidiaries that are derived from the earnings and cash flow generated by our operating properties.

Our subsidiaries’ long-term debt arrangements place material restrictions on their ability to pay cash dividends to the Company. This will restrict our ability to pay cash dividends other than from cash on hand. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Restrictions on Distributions” and “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt.”

Recent Sales of Unregistered Securities

There have not been any sales by the Company of equity securities in the last fiscal year that have not been registered under the Securities Act of 1933, except as previously reported by the Company on a Quarterly Report on Form 10-Q or a Current Report on Form 8-K.

Performance Graph

The following performance graph compares the performance of our common stock with the performance of the Standard & Poor’s 500 Index and the Dow Jones US Gambling Index, during the five years ended December 31, 2009. The graph plots the changes in value of an initial $100 investment over the indicated time period, assuming all dividends are reinvested. The stock price performance in this graph is not necessarily indicative of future stock price performance.

(PERFORMANCE GARPH)


	Cumulative Total Return
	12/31/04		12/31/05		12/31/06		12/31/07		12/31/08		12/31/09
Las Vegas Sands Corp.	$	100.00	$	82.23	$	186.42	$	214.69	$	12.35	$	31.13
S&P 500	$	100.00	$	104.91	$	121.48	$	128.16	$	80.74	$	102.11
Dow Jones US Gambling Index	$	100.00	$	101.44	$	147.81	$	169.69	$	45.64	$	71.07

The performance graph should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Exchange Act of 1934, except to the extent the Company specifically incorporates the performance graph by reference therein.


ITEM 6.		— *SELECTED FINANCIAL DATA*

The following reflects selected historical financial data that should be read in conjunction with “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The historical results are not necessarily indicative of the results of operations to be expected in the future.


	Year Ended December 31,
	2009(1)(2)			2008(3)			2007(4)			2006			2005
	(In thousands, except per share data)
STATEMENT OF OPERATIONS DATA
Gross revenues	$	4,929,444		$	4,735,126		$	3,104,422		$	2,340,178		$	1,824,225
Promotional allowances		(366,339	)		(345,180	)		(153,855	)		(103,319	)		(83,313	)

Net revenues		4,563,105			4,389,946			2,950,567			2,236,859			1,740,912
Operating expenses		4,591,845			4,226,283			2,620,557			1,662,762			1,251,461

Operating income (loss)		(28,740	)		163,663			330,010			574,097			489,451
Interest expense, net		(310,748	)		(402,039	)		(172,344	)		(69,662	)		(63,181	)
Other income (expense)		(9,891	)		19,492			(8,682	)		(189	)		(1,334	)
Loss on modification or early retirement of debt		(23,248	)		(9,141	)		(10,705	)		—			(137,000	)

Income (loss) before income taxes		(372,627	)		(228,025	)		138,279			504,246			287,936
Income tax benefit (expense)		3,884			59,700			(21,591	)		(62,243	)		(4,250	)

Net income (loss)		(368,743	)		(168,325	)		116,688			442,003			283,686
Net loss attributable to noncontrolling interests		14,264			4,767			—			—			—

Net income (loss) attributable to Las Vegas Sands Corp.		(354,479	)		(163,558	)		116,688			442,003			283,686
Preferred stock dividends		(93,026	)		(13,638	)		—			—			—
Accretion to redemption value of preferred stock issued to Principal Stockholder’s family		(92,545	)		(11,568	)		—			—			—

Net income (loss) attributable to common stockholders	$	(540,050	)	$	(188,764	)	$	116,688		$	442,003		$	283,686

Per share data:
Basic earnings (loss) per share	$	(0.82	)	$	(0.48	)	$	0.33		$	1.25		$	0.80

Diluted earnings (loss) per share	$	(0.82	)	$	(0.48	)	$	0.33		$	1.24		$	0.80

OTHER DATA
Capital expenditures	$	2,092,896		$	3,789,008		$	3,793,703		$	1,925,291		$	860,621


	December 31,
	2009		2008		2007		2006		2005
	(In thousands)
BALANCE SHEET DATA
Total assets	$	20,572,106	$	17,144,113	$	11,466,517	$	7,126,458	$	3,879,739
Long-term debt	$	10,852,147	$	10,356,115	$	7,517,997	$	4,136,152	$	1,625,901
Total Las Vegas Sands Corp. stockholders’ equity	$	6,506,434	$	4,422,108	$	2,260,274	$	2,075,154	$	1,609,538


(1)		Sands Bethlehem opened on May 22, 2009.

(2)		During the year ended December 31, 2009, we recorded an impairment loss of $169.5 million, a legal settlement expense of $42.5 million and a valuation allowance against our U.S. deferred tax assets of $96.9 million.

(3)		Four Seasons Macao opened on August 28, 2008.

(4)		The Venetian Macao opened on August 28, 2007, and The Palazzo partially opened on December 30, 2007.


ITEM 7.		— *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 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 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 service and products, the regulatory business environment of the operations within each segment and the Company’s organizational and management reporting structure. Approximately 62.7% and 64.9% of gross revenue at our Las Vegas Operating Properties for the years ended December 31, 2009 and 2008, respectively, was derived from room revenues, food and beverage services, and other non-gaming sources, and 37.3% and 35.1%, respectively, was 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 89.9% of gross revenue at Sands Bethlehem for the period ended December 31, 2009, was derived from gaming activities, with the remainder derived from food and beverage services, and other non-gaming sources.

Our Macau operating segments consist of Sands Macao, The Venetian Macao, Four Seasons Macao and other ancillary operations that support these properties and will support our remaining Cotai Strip development projects. Approximately 93.6% and 92.5% of the gross revenue at the Sands Macao for the years ended December 31, 2009 and 2008, respectively, was derived from gaming activities, with the remainder primarily derived from room revenues and food and beverage services. Approximately 81.4% and 78.8% of the gross revenue at The Venetian Macao for years ended December 31, 2009 and 2008, respectively, was derived from gaming activities, with the remainder derived from room revenues, food and beverage services, and other non-gaming sources. Approximately 73.8% and 68.4% of the gross revenue at the Four Seasons Macao for the year ended December 31, 2009 and the period ended December 31, 2008, was derived from gaming activities, with the remainder derived from retail and other non-gaming sources.

Development Projects

Given the challenging conditions in the capital markets and the global economy and their impact on our ongoing operations, we revised our development plan to suspend portions of our development projects and focus our development efforts on those projects with the highest expected rates of return on invested capital. Should general economic conditions fail to improve, if we are unable to obtain sufficient funding such that completion of our suspended projects is not probable, or should management decide to abandon certain projects, all or a portion of our investment to date on our suspended projects could be lost and would result in an impairment charge. In addition, we may be subject to penalties under the termination clauses in our construction contracts or termination rights under our management contracts with certain hotel management companies.

United States Development Project

We were constructing the St. Regis Residences, which is located on the Las Vegas Strip between The Palazzo and The Venetian. As part of our revised development plan, we suspended our construction activities for the project due to reduced demand for Las Vegas Strip condominiums and the overall decline in general economic conditions. We intend to recommence construction when demand and conditions improve and expect that it will take approximately 18 months thereafter to complete construction of the project.

Macau Development Projects

We submitted plans to the Macau government for our other Cotai Strip developments, which represent three integrated resort developments, in addition to The Venetian Macao and Four Seasons Macao, on an area of approximately 200 acres (which we refer to as parcels 3, 5 and 6, and 7 and 8). Subject to the approval from the Macau government, the developments are expected to include hotels, exhibition and conference facilities, gaming areas, showrooms, spas, dining, retail and entertainment facilities and other amenities. We commenced construction or pre-construction on these developments and plan to operate the related gaming areas under our Macau gaming subconcession.

We have sequenced the construction of our integrated resort development on parcels 5 and 6 due to difficulties in the capital markets and the overall decline in general economic conditions. Phases I and II of the integrated resort are expected to feature approximately 6,000 Shangri-La-, Traders- and Sheraton-branded hotel rooms, approximately 300,000 square feet of gaming space, approximately 1.2 million square feet of retail, entertainment and dining facilities, exhibition and conference facilities and a multipurpose theater. Phase III of the project is expected to include a fourth St. Regis-branded hotel and mixed-use tower. In connection with receiving commitments of $1.75 billion of project financing in November 2009 (which we expect to close in March 2010) to be used together with a portion of the proceeds from the SCL Offering, we are recommencing construction of phases I and II and expect it will take approximately 16 months to complete phase I, an additional six months thereafter to complete the adjacent Sheraton tower in phase II and an additional 24 months thereafter to complete the remaining retail facilities in phase II. We intend to complete phase III of the project as demand and market conditions warrant it.

We have commenced pre-construction on parcels 7, 8 and 3, and intend to commence construction after the integrated resort on parcels 5 and 6 is complete, necessary government approvals are obtained, regional and global economic conditions improve, future demand warrants it and additional financing is obtained.

Singapore Development Project

In August 2006, MBS entered into the Development Agreement with the STB to build and operate an integrated resort called Marina Bay Sands in Singapore. Marina Bay Sands is expected to include three 55-story hotel towers (totaling approximately 2,600 rooms and suites), a casino, an enclosed retail, dining and entertainment complex of approximately 800,000 net leasable square feet, a convention center and meeting room complex of approximately 1.3 million square feet, theaters and a landmark iconic structure at the bay-front promenade that will contain an art/science museum. Based on our current development plan, we expect to open the Marina Bay Sands on April 27, 2010.

Other Development Projects

When the current economic environment and access to capital improve, we may continue exploring the possibility of developing and operating additional properties, including integrated resorts, in additional Asian and U.S. jurisdictions, and in Europe.

Summary Financial Results

The following table summarizes our results of operations:


	Year Ended December 31,
				Percent						Percent
	2009			Change			2008			Change			2007
	(Dollars in thousands)
Net revenues	$	4,563,105			3.9	%	$	4,389,946			48.8	%	$	2,950,567
Operating expenses		4,591,845			8.6	%		4,226,283			61.3	%		2,620,557
Operating income (loss)		(28,740	)		(117.6	)%		163,663			(50.4	)%		330,010
Income (loss) before income taxes		(372,627	)		63.4	%		(228,025	)		(264.9	)%		138,279
Net income (loss)		(368,743	)		119.1	%		(168,325	)		(244.3	)%		116,688
Net income (loss) attributable to Las Vegas Sands Corp		(354,479	)		116.7	%		(163,558	)		(240.2	)%		116,688


	Percent of Net Revenues
	Year Ended December 31,
	2009			2008			2007
Operating expenses		100.6	%		96.3	%		88.8	%
Operating income (loss)		(0.6	)%		3.7	%		11.2	%
Income (loss) before income taxes		(8.2	)%		(5.2	)%		4.7	%
Net income (loss)		(8.1	)%		(3.8	)%		4.0	%
Net income (loss) attributable to Las Vegas Sands Corp		(7.8	)%		(3.7	)%		4.0	%

Our historical financial results will not be indicative of our future results as we continue to open new properties, including the Marina Bay Sands on April 27, 2010.

Key Operating Revenue Measurements

Operating revenues at our Las Vegas Operating Properties, The Venetian Macao and Four Seasons Macao are dependent upon the volume of customers who stay at the hotel, which affects the price that can be charged for hotel rooms and the volume of table games and slot machine play. Hotel revenues are not material for Sands Macao or Sands Bethlehem as revenues 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 revenue:

Casino revenue measurements for the U.S.: Table games drop (“drop”) and slot handle (“handle”) are volume measurements. Win or hold percentage represents the percentage of drop or handle that is won by the casino and recorded as casino revenue. Table games drop represents the sum of markers issued (credit instruments) less markers paid at the table, plus cash deposited in the table drop box. Slot handle is the gross amount wagered or coins placed into slot machines in aggregate for the period cited. We view table games win as a percentage of drop and slot hold as a percentage of slot handle. Based upon our mix of table games, our table games produce a statistical average win percentage (calculated before discounts) as measured as a percentage of drop of 20.0% to 22.0% and slot machines produce a statistical average hold percentage (calculated before slot club cash incentives) as measured as a percentage of handle generally between 6.0% and 7.0%. Actual win may vary from the statistical average. Generally, slot machine play is conducted on a cash basis, while approximately 57.5% of our table games play, for the year ended December 31, 2009, was conducted on a credit basis.

Casino revenue measurements for Macau: Macau table games are segregated into two groups, consistent with the Macau market’s 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 as previously described. Rolling Chip and Non-Rolling Chip volume measurements are not comparable as the amounts wagered are substantially higher than the amounts dropped. Slot handle is the gross amount wagered or coins placed into slot machines in aggregate 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 table games win percentage (calculated before discounts and commissions) is expected to be 3.0% and our Non-Rolling Chip table games are expected to produce a statistical average win percentage as measured as a percentage of drop of 18.0% to 20.0%. Similar to Las Vegas, our Macau slot machines produce a statistical average win percentage as measured as a percentage of handle of generally between 6.0% and 7.0%. Actual win may vary from the statistical average. Generally, gaming is conducted on a cash basis, with only 31.4% of our table games play, for the year ended December 31, 2009, being conducted on a credit basis. This percentage is expected to increase as we increase the credit extended to our premium players and gaming promoters for table games play.

Hotel revenue measurements: Hotel 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, are used as performance indicators. 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.

Year Ended December 31, 2009 compared to the Year Ended December 31, 2008

Operating Revenues

Our net revenues consisted of the following:


	Year Ended December 31,
	2009			2008			Percent Change
	(Dollars in thousands)
Casino	$	3,524,798		$	3,192,099			10.4	%
Rooms		657,783			767,129			(14.3	)%
Food and beverage		327,699			369,062			(11.2	)%
Convention, retail and other		419,164			406,836			3.0	%

		4,929,444			4,735,126			4.1	%
Less — promotional allowances		(366,339	)		(345,180	)		6.1	%

Total net revenues	$	4,563,105		$	4,389,946			3.9	%

Consolidated net revenues were $4.56 billion for the year ended December 31, 2009, an increase of $173.2 million compared to $4.39 billion for the year ended December 31, 2008. The increase in net revenues was due primarily to a full year of operations of Four Seasons Macao, which opened in August 2008, and the opening of Sands Bethlehem in May 2009.

Casino revenues increased $332.7 million as compared to the year ended December 31, 2008. Of the increase, $161.1 million was attributable to a full year of operations of Four Seasons Macao, $141.8 million was attributable to the opening of Sands Bethlehem and $89.1 million at The Venetian Macao was primarily due to the increase in Non-Rolling Chip win percentage. These increases were partially offset by decreases at our Las Vegas Operating Properties and Sands Macao. The following table summarizes the results of our casino activity:


	Year Ended December 31,
	2009			2008			Change
	(Dollars in thousands)
Macau Operations:
*The Venetian Macao*
Total casino revenues	$	1,699,599		$	1,610,505			5.5	%
Non-Rolling Chip drop	$	3,362,780		$	3,530,065			(4.7	)%
Non-Rolling Chip win percentage		23.6	%		19.9	%		3.7	pts
Rolling Chip volume	$	37,701,027		$	36,893,831			2.2	%
Rolling Chip win percentage		2.80	%		2.97	%		(0.17	)pts
Slot handle	$	2,362,680		$	1,941,895			21.7	%
Slot hold percentage		7.4	%		8.0	%		(0.6	)pts
*Sands Macao*
Total casino revenues	$	1,003,042		$	1,013,063			(1.0	)%
Non-Rolling Chip drop	$	2,413,446		$	2,626,877			(8.1	)%
Non-Rolling Chip win percentage		19.5	%		18.9	%		0.6	pts
Rolling Chip volume	$	21,920,186		$	25,182,225			(13.0	)%
Rolling Chip win percentage		3.01	%		2.64	%		0.37	pts
Slot handle	$	1,256,857		$	1,039,430			20.9	%
Slot hold percentage		6.6	%		7.8	%		(1.2	)pts
*Four Seasons Macao*
Total casino revenues	$	207,191		$	46,094			349.5	%
Non-Rolling Chip drop	$	335,655		$	99,849			236.2	%
Non-Rolling Chip win percentage		23.7	%		21.1	%		2.6	pts
Rolling Chip volume	$	7,059,450		$	630,088			1,020.4	%
Rolling Chip win percentage		2.35	%		4.45	%		(2.1	)pts
Slot handle	$	240,358		$	38,238			528.6	%
Slot hold percentage		5.9	%		5.6	%		0.3	pts
U.S. Operations:
*Las Vegas Operating Properties*
Total casino revenues	$	473,176		$	522,437			(9.4	)%
Table games drop	$	1,769,130		$	1,846,394			(4.2	)%
Table games win percentage		17.3	%		19.8	%		(2.5	)pts
Slot handle	$	2,705,309		$	3,666,072			(26.2	)%
Slot hold percentage		7.5	%		5.7	%		1.8	pts
*Sands Bethlehem*
Total casino revenues	$	141,790		$	—			—	%
Slot handle	$	2,030,529		$	—			—	%
Slot hold percentage		7.0	%		—	%		—	pts

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 decreased $109.3 million as compared to the year ended December 31, 2008. Room revenues decreased as room rates were reduced to maintain occupancy at our Las Vegas Operating Properties and at The Venetian Macao. This decrease was partially offset by a $16.6 million increase in revenues attributable to a full year of operations of Four Seasons Macao. 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,
	2009			2008			Change
	(Room revenues in thousands)
Macau Operations:
*The Venetian Macao*
Total room revenues	$	173,319		$	200,594			(13.6	)%
Average daily room rate	$	205		$	226			(9.3	)%
Occupancy rate		83.6	%		85.3	%		(1.7	)pts
Revenue per available room	$	171		$	193			(11.4	)%
*Sands Macao*
Total room revenues	$	26,558		$	27,074			(1.9	)%
Average daily room rate	$	260		$	266			(2.3	)%
Occupancy rate		97.7	%		98.4	%		(0.7	)pts
Revenue per available room	$	254		$	261			(2.7	)%
*Four Seasons Macao*
Total room revenues	$	20,276		$	3,664			453.4	%
Average daily room rate	$	295		$	344			(14.2	)%
Occupancy rate		52.3	%		32.0	%		20.3	pts
Revenue per available room	$	154		$	110			40.0	%
U.S. Operations:
*Las Vegas Operating Properties*
Total room revenues	$	437,630		$	535,797			(18.3	)%
Average daily room rate	$	195		$	232			(15.9	)%
Occupancy rate		87.4	%		91.3	%		(3.9	)pts
Revenue per available room	$	170		$	212			(19.8	)%

Food and beverage revenues decreased $41.4 million as compared to the year ended December 31, 2008. The decrease is due to a $66.2 million decrease across our operating properties driven by a decrease in banquet and in-suite dining operations resulting from lower occupancy at our properties, as noted above, and a lower proportion of group and corporate businesses. This decrease was offset by $13.3 million attributable to Sands Bethlehem and an increase of $11.5 million attributable to a full year of operations of Four Seasons Macao.

Convention, retail and other revenues increased $12.3 million as compared to the year ended December 31, 2008. The increase is primarily due to an increase of $24.2 million attributable to the mall at Four Seasons Macao due to a full year of operations and $21.1 million in our Other Asia segment driven by our passenger ferry service operations in Macau as we increased the frequency of sailings and commenced night sailings in the summer of 2008. These increases were partially offset by a decrease of $27.0 million at our Las Vegas Operating Properties and $7.9 million at The Venetian Macao, primarily driven by the decrease in our convention operations resulting from the decline in global economic conditions.

Operating Expenses

The breakdown of operating expenses is as follows:


	Year Ended December 31,
	2009		2008		Percent Change
	(Dollars in thousands)
Casino	$	2,349,422	$	2,214,235		6.1	%
Rooms		121,097		154,615		(21.7	)%
Food and beverage		165,977		186,551		(11.0	)%
Convention, retail and other		240,377		213,351		12.7	%
Provision for doubtful accounts		103,802		41,865		147.9	%
General and administrative		526,199		550,529		(4.4	)%
Corporate expense		132,098		104,355		26.6	%
Rental expense		29,899		33,540		(10.9	)%
Pre-opening expense		157,731		162,322		(2.8	)%
Development expense		533		12,789		(95.8	)%
Depreciation and amortization		586,041		506,986		15.6	%
Impairment loss		169,468		37,568		351.1	%
Loss on disposal of assets		9,201		7,577		21.4	%

Total operating expenses	$	4,591,845	$	4,226,283		8.6	%

Operating expenses were $4.59 billion for the year ended December 31, 2009, an increase of $365.6 million as compared to $4.23 billion for the year ended December 31, 2008. The increase in operating expenses was primarily attributable to a full year of operations of Four Seasons Macao, the opening of Sands Bethlehem, recognizing impairment losses and a legal settlement included in corporate expense, and increases in our provision for doubtful accounts, and depreciation and amortization, partially offset by a decrease in operating expenses driven by decreased revenues as well as our cost-cutting measures.

Casino expenses increased $135.2 million as compared to the year ended December 31, 2008. Of the increase, $103.2 million was attributable to Sands Bethlehem and $95.1 million was due to the 39.0% gross win tax on our casino revenues at our Macau properties, driven primarily by increases at Four Seasons Macao and The Venetian Macao, as previously described, as well as a $36.5 million (exclusive of the 39.0% gross win tax on casino revenues) attributable to a full year of operations of Four Seasons Macao. These increases were partially offset by a combined decrease of $99.6 million at our operating properties driven by our cost-cutting measures.

Rooms expense decreased $33.5 million and food and beverage expense decreased $20.6 million as compared to the year ended December 31, 2008. These decreases were driven by the associated decreases in the related revenues described above, as well as our cost-cutting measures.

Convention, retail and other expense increased $27.0 million, as compared to the year ended December 31, 2008. The increase was primarily attributable to a $43.4 million increase in our passenger ferry service operations in Macau, partially offset by a $15.3 million decrease at our Las Vegas Operating Properties driven by the associated decrease in the related revenues, as well as our cost-cutting measures.

The provision for doubtful accounts was $103.8 million for the year ended December 31, 2009, compared to $41.9 million for the year ended December 31, 2008. Of the increase, $39.0 million related to our casino operations as we granted more credit to our premium players in Macau in response to the opening of new properties and $16.6 million related to our mall operations as some of our tenants experienced difficulties driven by reduced visitation and consumer spending as a result of the economic downturn. The amount of this provision can vary over short periods of time because of factors specific to the customers who owe us money from gaming activities at any given time. We believe that the amount of our provision for doubtful accounts in the future will depend upon the state of the economy, our credit standards, our risk assessments and the judgment of our employees responsible for granting credit.

General and administrative expenses decreased $24.3 million as compared to the year ended December 31, 2008. The decrease was primarily attributable to a $55.8 million decrease across our operating properties driven by our cost-cutting measures, with $25.6 million, $19.3 million and $10.9 million at our Las Vegas Operating Properties, The Venetian Macao, and Sands Macao, respectively, as well as a $17.7 million decrease in Other Asia. The decrease was partially offset by expenses of $25.0 million and $24.2 million attributable to Sands Bethlehem and Four Season Macao, respectively.

Corporate expense increased $27.7 million as compared to the year ended December 31, 2008. The increase was attributable to a $42.5 million legal settlement (see “Item 3 — Legal Proceedings”), partially offset by a decrease $14.8 million of other corporate costs driven by our cost-cutting measures.

Pre-opening expenses were $157.7 million for the year ended December 31, 2009, as compared to $162.3 million for the year ended December 31, 2008. Pre-opening expense represents personnel and other costs incurred prior to the opening of new ventures, which are expensed as incurred. Pre-opening expenses for the year ended December 31, 2009, were primarily related to activities at Marina Bay Sands and Sands Bethlehem, as well as costs associated with suspension activities at our Cotai Strip developments. Development expenses, which were not material for the years ended December 31, 2009 and 2008, include the costs associated with the Company’s evaluation and pursuit of new business opportunities, which are also expensed as incurred.

Depreciation and amortization expense increased $79.1 million as compared to the year ended December 31, 2008. The increase was primarily attributable to a full year of depreciation expense related to the Four Seasons Macao and the opening of Sands Bethlehem, which contributed $37.6 million and $17.5 million, respectively. Additionally, increases of $11.8 million and $7.9 million were attributable to The Venetian Macao and The Palazzo, respectively, as both properties had unopened areas during the entire year ended December 31, 2008.

Impairment loss was $169.5 million for the year ended December 31, 2009, consisting primarily of $94.0 million related to a reduction in the expected proceeds to be received from the sale of The Shoppes at The Palazzo, $57.2 million related to our indefinite suspension of plans to expand the Sands Expo Center and $15.0 million related to certain real estate that was previously utilized in connection with marketing activities in Asia.

Adjusted Property EBITDAR

Adjusted property EBITDAR is used by management as the primary measure of the operating performance of our segments. Adjusted property EBITDAR is net loss attributable to Las Vegas Sands Corp. before interest, income taxes, depreciation and amortization, pre-opening expense, development expense, other income (expense), loss on modification or early retirement of debt, impairment loss, loss on disposal of assets, rental expense, corporate expense, stock-based compensation expense and net loss attributable to noncontrolling interests. The following table summarizes information related to our segments (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 17 — Segment Information” for discussion of our operating segments and a reconciliation of adjusted property EBITDAR to net loss attributable to Las Vegas Sands Corp.):


	Year Ended December 31,
	2009			2008			Percent Change
	(Dollars in thousands)
Macau:
The Venetian Macao	$	556,547		$	499,025			11.5	%
Sands Macao		244,925			214,573			14.1	%
Four Seasons Macao		40,527			7,567			435.6	%
Other Asia		(32,610	)		(49,465	)		(34.1	)%
United States:
Las Vegas Operating Properties		259,206			392,139			(33.9	)%
Sands Bethlehem		17,566			—			—	%

Total adjusted property EBITDAR	$	1,086,161		$	1,063,839			2.1	%

Adjusted property EBITDAR across our operating properties includes the savings benefits from our cost-cutting measures, which management expects to generate approximately $500 million in total annualized savings across our operations, driven primarily by decreases in payroll-related expenses. These cost-cutting measures, which were fully implemented by the end of 2009, are expected to generate annualized savings of approximately $200 million in Las Vegas and approximately $300 million in Macau. Management believes that these cost savings will provide enhanced operating leverage once the global economy improves.

Adjusted property EBITDAR at The Venetian Macao increased $57.5 million as compared to the year ended December 31, 2008. The increase was primarily due to an increase in net revenues of $47.4 million as well as reduced expenses driven by our cost-cutting measures, as previously described.

Adjusted property EBITDAR at Sands Macao increased $30.4 million as compared to the year ended December 31, 2008. The increase was primarily due to a decrease in operating expenses driven by our cost-cutting measures, with a $31.7 million decrease in casino expenses (exclusive of the 39% gross win tax on casino revenues) and a $10.9 million decrease in general and administrative expenses. These decreases in expenses were partially offset by an increase of $17.7 million in the provision for doubtful accounts.

Adjusted property EBITDAR in our Other Asia segment increased $16.9 million as compared to the year ended December 31, 2008. As previously described, our passenger ferry service operations increased due to the increased number of sailings.

Adjusted property EBITDAR at our Las Vegas Operating Properties decreased $132.9 million as compared to the year ended December 31, 2008. The decrease was primarily due to a decrease in net revenues of $234.7 million, partially offset by decreases in the associated operating expenses and a decrease of $25.6 million in general and administrative expenses driven by our cost-cutting measures, of which $10.8 million were payroll-related expenses.

Adjusted property EBITDAR at Four Seasons Macao and Sands Bethlehem do not have a comparable prior-year period. Results of the operations of Four Seasons Macao and Sands Bethlehem are as previously described.

Interest Expense

The following table summarizes information related to interest expense on long-term debt:


	Year Ended December 31,
	2009			2008
	(Dollars in thousands)
Interest cost (which includes the amortization of deferred financing costs and original issue discounts)	$	387,319		$	553,040
Less — capitalized interest		(65,449	)		(131,215	)

Interest expense, net	$	321,870		$	421,825

Cash paid for interest	$	353,001		$	516,912
Weighted average total debt balance	$	10,994,928		$	9,081,135
Weighted average interest rate		3.5	%		6.1	%

Interest cost decreased $165.7 million as compared to the year ended December 31, 2008, resulting from a decrease in the weighted average interest rate, partially offset by an increase in our weighted average long-term debt balances. Capitalized interest decreased $65.8 million as compared to the year ended December 31, 2008, primarily due to the suspension of our Cotai Strip developments, the completion of Four Seasons Macao and Sands Bethlehem, and the decrease in the weighted average interest rate.

Leasehold interest in land payments made in Macau and Singapore are not considered qualifying assets and as such, are not included in the base amount used to determine capitalized interest.

Other Factors Effecting Earnings

Other expense was $9.9 million for the year ended December 31, 2009, as compared to other income of $19.5 million for the year ended December 31, 2008. The expense during the year ended December 31, 2009, was primarily attributable to a decrease in the fair value of our interest rate cap agreements held in Singapore.

The loss on modification or early retirement of debt was $23.2 million for the year ended December 31, 2009, as compared to $9.1 million for the year ended December 31, 2008. During the year ended December 31, 2009, a $17.1 million loss resulted from the early retirement of the $600.0 million exchangeable bonds (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt — Macau Related Debt — Exchangeable Bonds”) and a $6.0 million loss resulted from the write-off of deferred financing costs related to a $500.0 million required pay down of the Macau credit facility in connection with the SCL Offering (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt — Macau Related Debt — Macau Credit Facility”).

Our effective income tax rate was a beneficial rate of 1.0% for the year ended December 31, 2009, as compared to a beneficial rate of 26.2% for the year ended December 31, 2008. The effective income tax rate for the year ended December 31, 2009, includes the recording of a valuation allowance on the net deferred tax assets of our U.S. operations and a zero percent tax rate from our Macau gaming operations due to our income tax exemption in Macau, which is set to expire in 2013. The non-deductible pre-opening expenses of foreign subsidiaries and the non-realizable net operating losses in the U.S. and foreign jurisdictions unfavorably impacted our effective income tax rate. Management does not anticipate recording an income tax benefit related to deferred tax assets generated by our U.S. operations; however, to the extent that the financial results of our U.S. operations improve and it becomes more likely than not that the deferred tax assets are realizable, we will be able to reduce the valuation allowance through earnings.

Year Ended December 31, 2008 compared to the Year Ended December 31, 2007

Operating Revenues

Our net revenues consisted of the following:


	Year Ended December 31,
	2008			2007			Percent Change
	(Dollars in thousands)
Casino	$	3,192,099		$	2,250,421			41.8	%
Rooms		767,129			437,357			75.4	%
Food and beverage		369,062			238,252			54.9	%
Convention, retail and other		406,836			178,392			128.1	%

		4,735,126			3,104,422			52.5	%
Less — promotional allowances		(345,180	)		(153,855	)		124.4	%

Total net revenues	$	4,389,946		$	2,950,567			48.8	%

Consolidated net revenues were $4.39 billion for the year ended December 31, 2008, an increase of $1.44 billion compared to $2.95 billion for the year ended December 31, 2007. The increase in net revenues was due primarily to a full year of operations of The Venetian Macao, which opened in August 2007, and The Palazzo, which opened in December 2007, and the opening of the Four Seasons Macao in August 2008.

Casino revenues increased $941.7 million as compared to the year ended December 31, 2007. Of the increase, $1.06 billion was attributable to a full year of operations of The Venetian Macao and $46.1 million was attributable to the opening of Four Seasons Macao, offset by a $283.8 million decrease at Sands Macao due primarily to increased competition as compared to the year ended December 31, 2007. Casino revenues at our Las Vegas Operating Properties increased $118.2 million driven by the opening of The Palazzo, offset by lower than expected table games volume and win percentage as compared to the year ended December 31, 2007. The following table summarizes the results of our casino activity:


	Year Ended December 31,
	2008			2007			Change
	(Dollars in thousands)
Macau Operations:
*The Venetian Macao*
Total casino revenues	$	1,610,505		$	549,298			193.2	%
Non-Rolling Chip drop	$	3,530,065		$	1,115,812			216.4	%
Non-Rolling Chip win percentage		19.9	%		17.3	%		2.6	pts
Rolling Chip volume	$	36,893,831		$	17,071,475			116.1	%
Rolling Chip win percentage		2.97	%		2.64	%		0.33	pts
Slot handle	$	1,941,895		$	490,068			296.2	%
Slot hold percentage		8.0	%		7.9	%		0.1	pts
*Sands Macao*
Total casino revenues	$	1,013,063		$	1,296,869			(21.9	)%
Non-Rolling Chip drop	$	2,626,877		$	3,525,609			(25.5	)%
Non-Rolling Chip win percentage		18.9	%		18.7	%		0.2	pts
Rolling Chip volume	$	25,182,225		$	26,325,271			(4.3	)%
Rolling Chip win percentage		2.64	%		2.97	%		(0.33	)pts
Slot handle	$	1,039,430		$	1,181,050			(12.0	)%
Slot hold percentage		7.8	%		6.9	%		0.9	pts
*Four Seasons Macao*
Total casino revenues	$	46,094		$	—			—	%
Non-Rolling Chip drop	$	99,849		$	—			—	%
Non-Rolling Chip win percentage		21.1	%		—	%		—	pts
Rolling Chip volume	$	630,088		$	—			—	%
Rolling Chip win percentage		4.45	%		—	%		—	pts
Slot handle	$	38,238		$	—			—	%
Slot hold percentage		5.6	%		—	%		—	pts
U.S. Operations:
*Las Vegas Operating Properties*
Total casino revenues	$	522,437		$	404,254			29.2	%
Table games drop	$	1,846,394		$	1,359,004			35.9	%
Table games win percentage		19.8	%		22.1	%		(2.3	)pts
Slot handle	$	3,666,072		$	2,489,329			47.3	%
Slot hold percentage		5.7	%		6.0	%		(0.3	)pts

Room revenues increased $329.8 million as compared to the year ended December 31, 2007, due primarily to a full year of operations of The Venetian Macao and The Palazzo. The increase at our Las Vegas Operating Properties was offset by reduced ADR and occupancy rates that were negatively impacted by a reduction of room rates in order to increase visitation to The Palazzo and excess suite inventory as the new resort ramps up its operations, respectively, and the overall decline in general economic conditions. Room revenues at Four Seasons Macao were negatively impacted by a low occupancy rate due to the slow ramp up of the property, offset by ADR of $344 during the period ended December 31, 2008. The suites at Sands Macao are primarily provided to casino patrons on a complimentary basis and therefore revenues of $27.1 million and $11.6 million for the years ended December 31, 2008 and 2007, respectively, and related statistics have not been included in the following table, which summarizes the results of our room activity.


	Year Ended December 31,
	2008			2007			Change
	(Room revenues in thousands)
Macau Operations:
*The Venetian Macao*
Total room revenues	$	200,594		$	63,378			216.5	%
Average daily room rate	$	226		$	221			2.3	%
Occupancy rate		85.3	%		85.7	%		(0.4	)pts
Revenue per available room	$	193		$	190			1.6	%
*Four Seasons Macao*
Total room revenues	$	3,664		$	—			—	%
Average daily room rate	$	344		$	—			—	%
Occupancy rate		32.0	%		—	%		—	pts
Revenue per available room	$	110		$	—			—	%
U.S. Operations:
*Las Vegas Operating Properties*
Total room revenues	$	535,797		$	362,404			47.8	%
Average daily room rate	$	232		$	258			(10.1	)%
Occupancy rate		91.3	%		98.4	%		(7.1	)pts
Revenue per available room	$	212		$	254			(16.5	)%

Food and beverage revenues increased $130.8 million as compared to the year ended December 31, 2007. The increase was primarily attributable to a full year of operations of The Venetian Macao, which increased $44.0 million, and The Palazzo, which was the primary driver of the $85.0 million increase at our Las Vegas Operating Properties, as well as several of our joint venture restaurants that opened in 2008.

Convention, retail and other revenues increased $228.4 million as compared to the year ended December 31, 2007. The increase was primarily attributable to an increase of $125.1 million at The Venetian Macao, which consisted primarily of a full year of rental revenues from the mall, $52.1 million at our Las Vegas Operating Properties, driven primarily by a full year of operations of The Palazzo, and $39.9 million in Other Asia, which consisted primarily of our passenger ferry service operations.

Operating Expenses

The breakdown of operating expenses is as follows:


	Year Ended December 31,
	2008		2007		Percent Change
	(Dollars in thousands)
Casino	$	2,214,235	$	1,435,662		54.2	%
Rooms		154,615		94,219		64.1	%
Food and beverage		186,551		118,273		57.7	%
Convention, retail and other		213,351		97,689		118.4	%
Provision for doubtful accounts		41,865		26,369		58.8	%
General and administrative		550,529		319,357		72.4	%
Corporate expense		104,355		94,514		10.4	%
Rental expense		33,540		31,787		5.5	%
Pre-opening expense		162,322		189,280		(14.2	)%
Development expense		12,789		9,728		31.5	%
Depreciation and amortization		506,986		202,557		150.3	%
Impairment loss		37,568		—		—	%
Loss on disposal of assets		7,577		1,122		575.3	%

Total operating expenses	$	4,226,283	$	2,620,557		61.3	%

Operating expenses were $4.23 billion for the year ended December 31, 2008, an increase of $1.61 billion as compared to $2.62 billion for the year ended December 31, 2007. The increase in operating expenses was primarily attributable to a full year of operations of The Venetian Macao and The Palazzo, the opening of Four Seasons Macao, growth of our operating businesses in Macau and Las Vegas, and depreciation and amortization costs, as more fully described below.

Casino expenses for increased $778.6 million as compared to the year ended December 31, 2007. Of the increase, $507.2 million was due to the 39.0% gross win tax on casino revenues of The Venetian Macao, offset by a $112.5 million decrease in gross win tax at Sands Macao due to the decrease in casino revenues as noted above. An additional $238.5 million increase in casino-related expenses (exclusive of the aforementioned 39.0% gross win tax) were attributable to The Venetian Macao, primarily related to payroll-related expenses and commissions paid under the Rolling Chip program. Casino expenses at our Las Vegas Operating Properties increased $119.9 million primarily due to The Palazzo, consisting principally of payroll-related expenses and gaming-related taxes, and an increase in costs of providing promotional allowances.

Rooms expense increased $60.4 million and food and beverage expense increased $68.3 million as compared to the year ended December 31, 2007. These increases were primarily due to The Venetian Macao, The Palazzo and Four Seasons Macao.

Convention, retail and other expense increased $115.7 million as compared to the year ended December 31, 2007, of which $37.8 million was attributable to The Venetian Macao, $29.5 million was attributable to our Las Vegas Operating Properties and the remaining increase was primarily attributable to our passenger ferry service operations in Macau.

The provision for doubtful accounts was $41.9 million for the year ended December 31, 2008, compared to $26.4 million for the year ended December 31, 2007. The amount of this provision can vary over short periods of time because of factors specific to the customers who owe us money from gaming activities at any given time. We believe that the amount of our provision for doubtful accounts in the future will depend upon the state of the economy, our credit standards, our risk assessments and the judgment of our employees responsible for granting credit.

General and administrative expenses increased $231.2 million as compared to the year ended December 31, 2007. The increase was primarily attributable to the growth of our operating businesses in Las Vegas, Macau and our Other Asia segment, with $92.7 million of the increase being incurred at our Las Vegas Operating Properties, $112.0 million being incurred at The Venetian Macao and $15.1 million being incurred in Other Asia.

Pre-opening and development expenses were $162.3 million and $12.8 million, respectively, for the year ended December 31, 2008, as compared to $189.3 million and $9.7 million, respectively, for the year ended December 31, 2007. Pre-opening expense represents personnel and other costs incurred prior to the opening of new ventures, which are expensed as incurred. Pre-opening expenses for the year ended December 31, 2008, were primarily related to activities at Four Seasons Macao, our other Cotai Strip developments, Marina Bay Sands, Sands Bethlehem and St. Regis Residences. Development expenses include the costs associated with the Company’s evaluation and pursuit of new business opportunities, which are also expensed as incurred. Development expenses for year ended December 31, 2008, were primarily related to our activities in Hengqin Island, Asia, Europe and the U.S.

Depreciation and amortization expense increased $304.4 million as compared to the year ended December 31, 2007. The increase was primarily attributable to The Venetian Macao (totaling $130.5 million), The Palazzo (totaling $131.3 million) and the Four Seasons Macao (totaling $16.4 million).

An impairment loss of $37.6 million for the year ended December 31, 2008, primarily related to certain real estate and transportation assets that were previously utilized in connection with marketing activities in Asia.

Adjusted Property EBITDAR

Adjusted property EBITDAR is used by management as the primary measure of the operating performance of our segments. Adjusted property EBITDAR is net income (loss) attributable to Las Vegas Sands Corp. before interest, income taxes, depreciation and amortization, pre-opening expense, development expense, other income (expense), loss on modification or early retirement of debt, impairment loss, loss on disposal of assets, rental expense, corporate expense, stock-based compensation expense and net loss attributable to noncontrolling interests. The following table summarizes information related to our segments (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 17 — Segment Information” for discussion of our operating segments and a reconciliation of adjusted property EBITDAR to net income (loss) attributable to Las Vegas Sands Corp.):


	Year Ended December 31,
	2008			2007			Percent Change
	(Dollars in thousands)
Macau:
The Venetian Macao	$	499,025		$	144,417			245.5	%
Sands Macao		214,573			373,507			(42.6	)%
Four Seasons Macao		7,567			—			—	%
Other Asia		(49,465	)		(4,250	)		(1,063.9	)%
Las Vegas Operating Properties		392,139			361,076			8.6	%

Total Adjusted Property EBITDAR	$	1,063,839		$	874,750			21.6	%

Adjusted property EBITDAR at Sands Macao decreased $158.9 million, as compared to the year ended December 31, 2007. As previously described, the decrease was primarily attributable to the decrease in casino revenues of $283.8 million, offset by a $112.5 million decrease in gross win tax on reduced casino revenues. As a result of increased competition, we expect the 2008 results for Sands Macao to be more representative of future results than prior periods.

With the opening of The Palazzo, adjusted property EBITDAR at our Las Vegas Operating Properties increased $31.1 million, as compared to the year ended December 31, 2007. This increase was primarily attributable to an increase of $350.9 million in net revenue, offset by an increase of $165.8 million in payroll-related expenses, increases in operating expenses associated with the increase in the related revenue categories and an increase in general and administrative expenses to support the growth of our Las Vegas Operating Properties.

Adjusted property EBITDAR at The Venetian Macao, Four Seasons Macao and our Other Asia segments do not have comparable prior-year periods. Results of the operations of these segments are as previously described. Our Other Asia segment is composed primarily of our passenger ferry service between Macau and Hong Kong, which initiated evening sailings and increased its frequency of sailings during peak hours in June 2008.

Interest Expense

The following table summarizes information related to interest expense on long-term debt:


	Year Ended December 31,
	2008			2007
	(Dollars in thousands)
Interest cost (which includes the amortization of deferred financing costs and original issue discounts)	$	553,040		$	468,056
Less — capitalized interest		(131,215	)		(223,248	)

Interest expense, net	$	421,825		$	244,808

Cash paid for interest	$	516,912		$	438,301
Weighted average total debt balance	$	9,081,135		$	6,148,835
Weighted average interest rate		6.1	%		7.6	%

Interest cost increased $85.0 million as compared to the year ended December 31, 2007, resulting from the substantial increase in our weighted average long-term debt balances, the proceeds from which were primarily used to fund our various development projects, partially offset by a decrease in interest rates. See “— Liquidity and Capital Resources” for further detail of our financing activities. Capitalized interest decreased $92.0 million as compared to the year ended December 31, 2007, due primarily to the openings of The Venetian Macao and The Palazzo in 2007 and the Four Seasons Macao in August 2008. Capitalized interest is expected to decrease in 2009 as we have discontinued capitalizing interest on our recently suspended projects. Leasehold interest in land payments made in Macau and Singapore are not considered qualifying assets and as such, are not included in the base amount used to determine capitalized interest.

Other Factors Effecting Earnings

Interest income for the year ended December 31, 2008, was $19.8 million, a decrease of $52.7 million as compared to $72.5 million for the year ended December 31, 2007. The decrease was attributable to a reduction of invested cash balances during the year, primarily from our borrowings under the U.S. senior secured credit facility and the Macau credit facility, which was spent on construction-related activities, as well as a decrease in interest rates.

Other income for the year ended December 31, 2008 was $19.5 million compared to other expense of $8.7 million for the year ended December 31, 2007. The other income and other expense amounts were primarily attributable to foreign exchange gains and losses associated with U.S. denominated debt held in Macau, and the change in the fair value of our Singapore interest rate caps entered into in 2008.

The loss on early retirement of debt of $9.1 million for the year ended December 31, 2008, was due to the conversion of the $475.0 million Convertible Senior Notes to shares of common stock and the refinancing of the Singapore bridge facility.

Our effective tax rate for the year ended December 31, 2008, is a beneficial rate of 26.2%. The effective tax rate benefit for the year reflects a pre-tax book loss in the U.S., which has a statutory rate of 35%, and a zero tax rate from the income tax exemption on our Macau gaming operations, which is set to expire in 2013. The non-deductible pre-opening expenses in foreign subsidiaries and the non-realizable net operating losses in foreign jurisdictions unfavorably impacted the rate. The effective tax rate for the year ended December 31, 2007, was 15.6% and was primarily attributable to the aforementioned Macau income tax exemption. The effective tax rate changed primarily due to the pre-tax domestic loss for the year ended December 31, 2008, and the pre-tax foreign income for the year ended December 31, 2007.

Liquidity and Capital Resources

Cash Flows — Summary

Our cash flows consisted of the following:


	Year Ended December 31,
	2009			2008			2007
	(In thousands)
Net cash generated from operating activities	$	638,613		$	124,872		$	360,936

Cash flows from investing activities:
Change in restricted cash		78,630			218,044			556,276
Capital expenditures		(2,092,896	)		(3,789,008	)		(3,793,703	)
Proceeds from disposal of property and equipment		4,203			—			—
Acquisition of gaming license included in other assets		—			—			(50,000	)

Net cash used in investing activities		(2,010,063	)		(3,570,964	)		(3,287,427	)

Cash flows from financing activities:
Proceeds from exercise of stock options		51			6,834			30,222
Proceeds from sale of noncontrolling interest, net of transaction costs		2,386,387			—			—
Proceeds from common stock issued, net of transaction costs		—			1,053,695			—
Proceeds from convertible senior notes from Principal Stockholder’s family		—			475,000			—
Dividends paid to preferred stockholders		(94,697	)		—			—
Proceeds from preferred stock and warrants issued to Principal Stockholder’s family, net of transaction costs		—			523,720			—
Proceeds from preferred stock and warrants issued, net of transaction costs		—			503,625			—
Proceeds from long term-debt		1,831,528			4,616,201			5,135,076
Repayments of long-term debt		(776,972	)		(1,725,908	)		(1,775,801	)
Proceeds from the sale of The Shoppes at The Palazzo		—			243,928			—
Other		(40,324	)		(88,942	)		(62,111	)

Net cash generated from financing activities		3,305,973			5,608,153			3,327,386

Effect of exchange rate on cash		(17,270	)		18,952			(11,811	)

Increase in cash and cash equivalents	$	1,917,253		$	2,181,013		$	389,084

Cash Flows — Operating Activities

Table games play at our Las Vegas properties is conducted on a cash and credit basis while table games play at our Macau properties is conducted primarily on a cash basis. Slot machine play is primarily conducted on a cash basis. The retail hotel rooms business is generally conducted on a cash basis, the group hotel rooms business is conducted on a cash and credit basis, and banquet business is conducted primarily on a credit basis resulting in operating cash flows being generally affected by changes in operating income and accounts receivable. Net cash provided by operating activities increased $513.7 million as compared to the year ended December 31, 2008. The increase was attributable to a reduction of cash paid for interest of $98.1 million, an increase of $53.5 million in income tax refunds received and favorable changes in our working capital, driven by accounts receivable and accrued liabilities during the year ended December 31, 2009.

Cash Flows — Investing Activities

Capital expenditures for the year ended December 31, 2009, totaled $2.09 billion, including $1.34 billion for construction and development activities in Singapore; $247.7 million for construction and development activities in Pennsylvania; $404.3 million for construction and development activities in Macau (primarily for the unopened areas of Four Seasons Macao and our other Cotai Strip developments); $65.9 million at our Las Vegas Operating Properties (primarily for The Shoppes at The Palazzo); and $36.8 million for corporate and other activities.

Cash Flows — Financing Activities

Net cash flows provided from financing activities were $3.31 billion for the year ended December 31, 2009, which primarily included: proceeds of $2.39 billion from the SCL Offering and related transactions (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Equity — Noncontrolling Interests”) and $600.0 million from our exchangeable bond offering; net borrowings of $1.20 billion under the Singapore credit facility; repayments of $662.6 million under the Macau credit facility and $40.0 million under the U.S. credit facility; and payments of $94.7 million of preferred stock dividends and $40.4 million of deferred financing costs.

Development Financing Strategy

Through December 31, 2009, we have funded our development projects primarily through borrowings under our U.S., Macau and Singapore credit facilities (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt”), operating cash flows, proceeds from our recent equity offerings and proceeds from the disposition of non-core assets.

The U.S. credit facility and FF&E facility require our Las Vegas operations to comply with certain financial covenants at the end of each quarter, including maintaining a maximum leverage ratio of net debt, as defined, to trailing twelve-month adjusted earnings before interest, income taxes, depreciation and amortization, as defined (“Adjusted EBITDA”). The maximum leverage ratio is 6.5x for the quarterly period ended December 31, 2009, and decreases by 0.5x every other quarter until it decreases to, and remains at, 5.0x for all quarterly periods thereafter through maturity (commencing with the quarterly period ending March 31, 2011). The Macau credit facility, as amended in August 2009, requires our Macau operations to comply with similar financial covenants, including maintaining a maximum leverage ratio of debt to Adjusted EBITDA. The maximum leverage ratio is 4.5x for the quarterly period ended December 31, 2009, and decreases by 0.5x every other quarter until it decreases to, and remains at, 3.0x for all quarterly periods thereafter through maturity (commencing with the quarterly period ending March 31, 2011). We can elect to contribute up to $50 million and $20 million of cash on hand to our Las Vegas and Macau operations, respectively, on a bi-quarterly basis; such contributions having the effect of increasing Adjusted EBITDA by the corresponding amount during the applicable quarter for purposes of calculating compliance with the maximum leverage ratio (the “EBITDA true-up”). If we are unable to maintain compliance with the financial covenants under these credit facilities, we would be in default under the respective credit facilities. A default under our U.S. credit facilities would trigger a cross-default under our airplane financings, which, if the respective lenders chose to accelerate the indebtedness outstanding under these agreements, would result in a default under our senior notes. A default under our Macau credit facility would trigger a cross-default under our ferry financing. Any defaults or cross-defaults under these agreements would allow the lenders, in each case, to exercise their rights and remedies as defined under their respective agreements. If the lenders were to exercise their rights to accelerate the due dates of the indebtedness outstanding, there can be no assurance that we would be able to repay or refinance any amounts that may become due and payable under such agreements, which could force us to restructure or alter our operations or debt obligations.

In 2008, we completed a $475.0 million convertible senior notes offering and a $2.1 billion common and preferred stock and warrants offering. During 2009, we completed a $600.0 million exchangeable bond offering and the $2.5 billion SCL Offering (see “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt — Macau Related Debt — Exchangeable Bonds” and “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 9 — Equity — Noncontrolling Interests”). A portion of the proceeds from these offerings was used in the U.S. to exercise the EBITDA true-up provision during the quarterly periods ended March 31 and September 30, 2009, and additional proceeds were contributed to Las Vegas Sands, LLC to reduce its net debt in order to maintain compliance with the maximum leverage ratio for the quarterly periods during the year ended December 31, 2009. As of December 31, 2009, our U.S. leverage ratio was 5.3x, compared to the maximum leverage ratio allowed of 6.5x. Proceeds were also used in Macau to exercise the EBITDA true-up provision during the quarterly period ended June 30, 2009, and cash on hand was used to pay down $125.0 million of indebtedness under the Macau credit facility in March 2009 in order to maintain compliance with the maximum leverage ratio for the quarterly periods during the year ended December 31, 2009. In November 2009, in connection with the SCL Offering, we were required to repay and permanently reduce $500.0 million of borrowings under our Macau credit facility. As of December 31, 2009, our Macau leverage ratio was 2.8x, compared to the maximum leverage ratio allowed of 4.5x.

We held unrestricted and restricted cash and cash equivalents of approximately $4.96 billion and $118.6 million, respectively, as of December 31, 2009. Management believes that the cash on hand, cash flow from operations and available borrowings under our credit facilities will be sufficient to fund our revised development plan, as described in “Item 1 — Business — Development Projects,” and maintain compliance with the financial covenants of our U.S. and Macau credit facilities. In the normal course of our activities, we will continue to evaluate our capital structure and opportunities for enhancements thereof. Additionally, in connection with receiving proceeds from the proposed $1.75 billion project financing credit facility (which we expect to close in March 2010) to be used together with $500.0 million of proceeds from the SCL Offering, we are recommencing construction of phases I and II of our Cotai Strip development on parcel 5 and 6.

Aggregate Indebtedness and Other Known Contractual Obligations

Our total long-term indebtedness and other known contractual obligations are summarized below as of December 31, 2009:


	Payments Due by Period Ending December 31, 2009(11)
	Less than						More than
	1 Year		2-3 Years		4-5 Years		5 Years		Total
	(In thousands)
Long-Term Debt Obligations(1)
Senior Secured Credit Facility — Term B	$	30,000	$	60,000	$	2,835,000	$	—	$	2,925,000
Senior Secured Credit Facility — Delayed Draw I		6,000		12,000		573,000		—		591,000
Senior Secured Credit Facility — Delayed Draw II		4,000		8,000		384,000		—		396,000
Senior Secured Credit Facility — Revolving		—		775,860		—		—		775,860
6.375% Senior Notes		—		—		—		250,000		250,000
FF&E Financing		39,663		68,887		—		—		108,550
Airplane Financings		3,688		7,375		7,375		63,672		82,110
Other U.S.		1,777		3,001		—		—		4,778
Macau Credit Facility — Term B		18,000		755,393		728,396		—		1,501,789
Macau Credit Facility — Term B Delayed		7,000		577,029		—		—		584,029
Macau Credit Facility — Revolving		—		479,640		—		—		479,640
Macau Credit Facility — Local		26,349		41,348		—		—		67,697
Ferry Financing		35,127		70,254		70,254		35,127		210,762
Other Macau		—		11,016		—		—		11,016
Singapore Credit Facility		—		711,917		711,917		1,589,844		3,013,678
Fixed Interest Payments		15,938		31,875		31,875		2,656		82,344
Variable Interest Payments(2)		314,641		520,136		233,677		14,368		1,082,822
HVAC Equipment Lease(3)
HVAC Equipment Lease		1,711		3,292		3,094		16,620		24,717
HVAC Equipment Lease Interest Payments		1,794		3,211		2,731		4,563		12,299
Contractual Obligations
Former Tenants(4)		650		1,300		977		6,400		9,327
Employment Agreements(5)		9,373		9,163		—		—		18,536
Macau Leasehold Interests in Land(6)		55,599		99,218		54,787		96,931		306,535
Mall Leases(7)		8,789		17,647		17,423		116,983		160,842
Macau Annual Premium(8)		32,364		64,728		64,728		242,728		404,548
Parking Lot Lease(9)		1,200		2,400		2,400		107,100		113,100
Other Operating Leases(10)		5,796		10,536		8,807		10,830		35,969

Total	$	619,459	$	4,345,226	$	5,730,441	$	2,557,822	$	13,252,948


(1)		See “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt” for further details on these financing transactions.

(2)		Based on December 31, 2009, London Inter-Bank Offered Rate (“LIBOR”) of 0.3%, Hong Kong Inter-Bank Offered Rate (“HIBOR”) of 0.1% and Singapore Swap Offer Rate (“SOR”) of 0.6% plus the applicable interest rate spread in accordance with the respective debt agreements.

(3)		In July 2009, the Company entered into a capital lease agreement with its current heating, ventilation and air conditioning (“HVAC”) provider (the “HVAC Equipment Lease”) to provide the operation and maintenance services for the HVAC equipment in Las Vegas. The lease has a 10-year term with a purchase option at the third, fifth, seventh and tenth anniversary dates. The Company is obligated under the agreement to make monthly payments of approximately $300,000 for the first year with automatic decreases of approximately $14,000 per month on every anniversary date. The HVAC Equipment Lease has been capitalized at the present value of the future minimum lease payments at lease inception.

(4)		We are party to tenant lease termination and asset purchase agreements. Under the agreement for The Grand Canal Shoppes sale, we are obligated to fulfill the lease termination and asset purchase agreements.


(5)		We are party to employment agreements with eight of our executive officers, with remaining terms of one to three years.

(6)		We are party to long-term land leases of 25 years with automatic extensions at our option of 10 years thereafter in accordance with Macau law. The land lease for our Cotai Strip parcels 5 and 6 is not effective until it is published in Macau’s Official Gazette. Management expects that this will occur in the first quarter of 2010 and has included the related premium and rent payments accordingly.

(7)		We are party to certain leaseback agreements for the Blue Man Group Theater, gondola and certain office and retail space related to the sales of The Grand Canal Shoppes and The Shoppes at the Palazzo.

(8)		In addition to the 39% gross gaming win tax in Macau (which is not included in this table as the amount we pay is variable in nature), we are required to pay an annual premium with a fixed portion and a variable portion, which is based on the number and type of gaming tables and gaming machines we operate. Based on the gaming tables and gaming machines in operation as of December 31, 2009, the annual premium is approximately $32.4 million payable to the Macau government through the termination of the gaming subconcession in June 2022.

(9)		We are party to a long-term lease agreement of 99 years for a parking structure located adjacent to The Venetian Las Vegas.

(10)		We are party to certain operating leases for real estate, various equipment and service arrangements.

(11)		We adopted the accounting standards for uncertainty in income tax on January 1, 2007, and as of December 31, 2009, had a $66.1 million liability related to unrecognized tax benefits and related interest expense. We are unable to reasonably estimate the timing of the liability and interest payments related to the adoption these accounting standards in individual years beyond 12 months due to uncertainties in the timing of the effective settlement of tax positions.

Off-Balance Sheet Arrangements

We have not entered into any transactions with special purpose entities, nor have we engaged in any derivative transactions other than interest rate caps.

Restrictions on Distributions

We are a parent company with limited business operations. Our main asset is the stock and membership interests of our subsidiaries. The debt instruments of our U.S., Macau and Singapore subsidiaries contain certain restrictions that, among other things, limit the ability of certain subsidiaries to incur additional indebtedness, issue disqualified stock or equity interests, pay dividends or make other distributions, repurchase equity interests or certain indebtedness, create certain liens, enter into certain transactions with affiliates, enter into certain mergers or consolidations or sell our assets of our company without prior approval of the lenders or noteholders.

Inflation

We believe that inflation and changing prices have not had a material impact on our sales, revenues or income from continuing operations during the past three fiscal years.

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include the discussions of our business strategies and expectations concerning future operations, margins, profitability, liquidity and capital resources. In addition, in certain portions included in this report, the words: “anticipates,” “believes,” “estimates,” “seeks,” “expects,” “plans,” “intends” and similar expressions, as they relate to our company or management, are intended to identify forward-looking statements. Although we believe that these forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. These forward- looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the risks associated with:

	•		our substantial leverage, debt service and debt covenant compliance (including sensitivity to fluctuations in interest rates and other capital markets trends);

	•		disruptions in the global financing markets and our ability to obtain sufficient funding for our current and future developments, including our Cotai Strip, Singapore, Pennsylvania and Las Vegas developments;

	•		general economic and business conditions which may impact levels of disposable income, consumer spending, pricing of hotel rooms and retail and mall sales;

	•		the impact of the suspensions of certain of our development projects and our ability to meet certain development deadlines, including Macau and Singapore;

	•		the uncertainty of tourist behavior related to spending and vacationing at casino-resorts in Las Vegas, Macau and Singapore;

	•		regulatory policies in mainland China or other countries in which our customers reside, including visa restrictions limiting the number of visits or the length of stay for visitors from mainland China to Macau and restrictions on foreign currency exchange or importation of currency;

	•		our dependence upon properties primarily in Las Vegas and Macau and, following the opening of Marina Bay Sands, Singapore for all of our cash flow;

	•		the expected annualized savings and enhanced operating leverage to be generated from our cost-cutting measures may not be fully realized;

	•		our relationship with GGP or any successor owner of The Shoppes at The Palazzo and The Grand Canal Shoppes, and the ability of GGP to perform under the purchase and sale agreement for The Shoppes at The Palazzo, as amended;

	•		new developments, construction and ventures, including our Cotai Strip developments, Marina Bay Sands, Sands Bethlehem and the St. Regis Residences;

	•		the passage of new legislation and receipt of governmental approvals for our proposed developments in Macau, Singapore and other jurisdictions where we are planning to operate;

	•		our insurance coverage, including the risk that we have not obtained sufficient coverage or will only be able to obtain additional coverage at significantly increased rates;

	•		disruptions or reductions in travel due to acts of terrorism;

	•		disruptions or reductions in travel, as well as disruptions in our operations, due to outbreaks of infectious diseases, such as severe acute respiratory syndrome, avian flu or swine flu;

	•		government regulation of the casino industry, including gaming license regulation, the legalization of gaming in other jurisdictions and regulation of gaming on the Internet;

	•		increased competition and additional construction in Las Vegas, including recent and upcoming increases in hotel rooms, meeting and convention space, and retail space;

	•		fluctuations in the demand for all-suites rooms, occupancy rates and average daily room rates in Las Vegas and Macau;

	•		the popularity of Las Vegas and Macau and, following the opening of Marina Bay Sands, Singapore as convention and trade show destinations;

	•		new taxes, changes to existing tax rates or proposed changes in tax legislation;

	•		our ability to maintain our Macau gaming subconcession and Pennsylvania gaming licence and obtain a Singapore gaming license;

	•		the completion of infrastructure projects in Macau and Singapore;

	•		increased competition and other planned construction projects in Macau and Singapore; and

	•		the outcome of any ongoing and future litigation.

All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Readers are cautioned not to place undue reliance on these forward-looking statements. We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or developments, except as required by federal securities laws.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to us and on various other assumptions that management believes to be reasonable under the circumstances. Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations. Changes in these estimates and assumptions may have a material effect on our results of operations and financial condition. We believe that the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Allowance for Doubtful Casino Accounts

We maintain an allowance, or reserve, for doubtful casino accounts at our operating casino resorts in Las Vegas and Macau. We regularly evaluate the allowance for doubtful casino accounts. We specifically analyze the collectability of each account with a balance over a specified dollar amount, based upon the age of the account, the customer’s financial condition, collection history and any other known information, and we apply standard reserve percentages to aged account balances under the specified dollar amount. We also monitor regional and global economic conditions and forecasts in our evaluation of the adequacy of the recorded reserves. Credit or marker play was 57.5% and 31.4% of table games play at our Las Vegas properties and Macau properties, respectively, during the year ended December 31, 2009. Our allowance for doubtful casino accounts was 29.9% and 24.6% of gross casino receivables from customers for the years ended December 31, 2009 and 2008, respectively. As the credit extended to our junkets can be offset by the commissions payable to said junkets, the allowance for doubtful accounts related to receivables from junkets is not material. Our allowance for doubtful accounts from our hotel and other receivables is also not material.

Litigation Accrual

We are subject to various claims and legal actions. We estimate the accruals for these claims and legal actions in accordance with accounting standards regarding contingencies and include such accruals in other accrued liabilities in the consolidated balance sheets.

Property and Equipment

At December 31, 2009, we had net property and equipment of $13.35 billion, representing 64.9% of our total assets. We depreciate property and equipment on a straight-line basis over their estimated useful lives. The estimated useful lives are based on the nature of the assets as well as current operating strategy and legal considerations such as contractual life. Future events, such as property expansions, property developments, new competition, or new regulations, could result in a change in the manner in which we use certain assets requiring a change in the estimated useful lives of such assets.

For assets to be held and used, fixed assets are reviewed for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we first group our assets with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities (the “asset group”). Secondly, we estimate the undiscounted future cash flows that are directly associated with and expected to arise from the use of and eventual disposition of such asset group. We estimate the undiscounted cash flows over the remaining useful life of the primary asset within the asset group. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then an impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.

For assets to be held for sale, the fixed assets (the “disposal group”) are measured at the lower of their carrying amount or fair value less cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Fixed assets are not depreciated while classified as held for sale.

Capitalized Interest

Interest costs associated with our major construction projects are capitalized and included in the cost of the projects. When no debt is incurred specifically for construction projects, we capitalize interest on amounts expended using the weighted-average cost of our outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or construction activity is suspended for more than a brief period.

Leasehold Interests in Land

Leasehold interests in land represent payments made for the use of land over an extended period of time. The leasehold interests in land are amortized on a straight-line basis over the expected term of the related lease agreements. Such assets are not considered qualifying assets for purposes of capitalizing interest and as such, are not included in the base used to determine capitalized interest.

Indefinite Useful Life Assets

At December 31, 2009, we had a $50.0 million asset related to our Sands Bethlehem gaming license, which was determined to have an indefinite useful life. Assets with indefinite useful lives are not subject to amortization and are tested for impairment annually or more frequently if events or circumstances indicate that the assets might be impaired. The impairment test consists of a comparison of the fair value of the asset with its carrying amount. If the carrying amount of the asset exceeds its fair value, an impairment will be recognized in an amount equal to that excess. If the carrying amount of the asset does not exceed the fair value, no impairment is recognized.

The fair value of our Sands Bethlehem gaming license was estimated using our expected adjusted property EBITDAR, combined with estimated future tax-affected cash flows and a terminal value using the Gordon growth methodology, which were discounted to present value at rates commensurate with our capital structure and the prevailing borrowing rates within the casino industry in general. Adjusted property EBITDAR and discounted cash flows are common measures used to value cash-incentive businesses such as casinos. Determining the fair value of the gaming license is judgmental in nature and requires the use of significant estimates and assumptions, including adjusted property EBITDAR growth rates, discount rates and future market conditions, among others. Future changes to our estimates and assumptions based upon unanticipated changes in macro-economic factors, operating results, or management’s intentions may result in future changes to the fair value of the gaming license.

Stock-Based Compensation

Accounting standards regarding share-based payments require the recognition of compensation expense in the consolidated statements of operations related to the fair value of employee stock-based compensation. Determining the fair value of stock-based awards at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated volatility and the expected dividends. Expected volatilities are based on a combination of our historical volatility and the historical volatilities from a selection of companies from our peer group due to our lack of historical information. We used the simplified method for estimating expected option life, as the options qualify as “plain-vanilla” options and we will continue to use the simplified method beyond December 31, 2009, due to the lack of historical information as allowed under related accounting standards. We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair values of our stock options granted. Judgment is also required in estimating the amount of stock-based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from these estimates, stock-based compensation expense could be materially impacted. All employee stock options were granted with an exercise price equal to the fair market value (as defined in the Company’s 2004 Equity Award Plan). During the years ended December 31, 2009 and 2008, we recorded stock-based compensation expense of $45.5 million and $53.9 million, respectively. As of December 31, 2009, there was $87.3 million of unrecognized compensation cost, net of estimated forfeitures of 10.0% per year, related to unvested stock options and there was $0.3 million of unrecognized compensation cost related to unvested restricted stock. The stock option and restricted stock costs are expected to be recognized over a weighted average period of 2.5 years and 0.8 years, respectively.

Income Taxes

We are subject to income taxes in the U.S. (including federal and state) and numerous foreign jurisdictions in which we operate. We record income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives.

Our U.S. operations are in a cumulative loss position for the three-year period ended December 31, 2009. For purposes of assessing the realization of the U.S. deferred tax assets, we considered the scheduled reversal of deferred tax liabilities, sources of taxable income and tax planning strategies. Based on related accounting standards, our cumulative loss position has caused management to conclude that it is more likely than not that its U.S. deferred tax assets will not be fully realized. As such, we recorded a valuation allowance on the net deferred tax assets of our U.S. operations; this valuation allowance was $96.9 million as of December 31, 2009.

Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of our U.S. operations improve and it becomes more likely than not that the deferred tax assets are realizable, we will be able to reduce the valuation allowance through earnings.

Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. We consider many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments and which may not accurately anticipate actual outcomes.

Our major tax jurisdictions are the U.S., Macau, and Singapore. We are under examination for years after 2004 in the U.S. and are subject to examination for years after 2004 in Macau and Singapore.

Recent Accounting Pronouncements

See related disclosure at “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 2 — Summary of Significant Accounting Policies.”


ITEM 7A.		— *QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK*

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk is interest rate risk associated with our variable rate long-term debt, which we attempt to manage through the use of interest rate cap agreements. We do not hold or issue financial instruments for trading purposes and do not enter into derivative transactions that would be considered speculative positions. Our derivative financial instruments consist exclusively of interest rate cap agreements, which do not qualify for hedge accounting. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense.

To manage exposure to counterparty credit risk in interest rate cap agreements, we enter into agreements with highly rated institutions that can be expected to fully perform under the terms of such agreements. Frequently, these institutions are also members of the bank group providing our credit facilities, which management believes further minimizes the risk of nonperformance.

The table below provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations, the table presents notional amounts and weighted average interest rates by contractual maturity dates. For interest rate cap agreements, notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted average variable rates are based on December 31, 2009, LIBOR, HIBOR and SOR plus the applicable interest rate spread in accordance with the respective debt agreements. The information is presented in U.S. dollar equivalents, which is the Company’s reporting currency, for the years ending December 31:


																						Fair
	2010			2011			2012			2013			2014			Thereafter			Total			Value(1)
	(In millions)
LIABILITIES
Long term debt
Fixed rate	$	—		$	—		$	—		$	—		$	—		$	250.0		$	250.0		$	224.7
Average interest rate(2)		—	%		—	%		—	%		—	%		—	%		6.4	%		6.4	%
Variable rate	$	171.6		$	1,346.9		$	2,234.8		$	1,543.2		$	3,766.8		$	1,688.6		$	10,751.9		$	9,438.9
Average interest rate(2)		3.0	%		4.0	%		3.3	%		3.5	%		2.1	%		2.8	%		2.9	%
ASSETS
Cap Agreements(3)	$	—		$	0.1		$	2.4		$	—		$	—		$	—		$	2.5		$	2.5


(1)		The estimated fair values are based on quoted market prices, if available, or by pricing models based on the value of related cash flows discounted at current market interest rates.

(2)		Based upon contractual interest rates for fixed rate indebtedness or current LIBOR, HIBOR and SOR for variable rate indebtedness. Based on variable rate debt levels as of December 31, 2009, an assumed 100 basis point change in LIBOR, HIBOR and SOR would cause our annual interest cost to change approximately $107.9 million.

(3)		As of December 31, 2009, we have twenty four interest rate cap agreements with an aggregate fair value of $2.5 million based on quoted market values from the institutions holding the agreements.

Borrowings under the $5.0 billion senior secured credit facility bear interest at our election, at either an adjusted Eurodollar rate or at an alternative base rate plus a credit spread. The revolving facility and term loans bear interest at the alternative base rate plus 0.5% per annum or 0.75% per annum, respectively, or at the adjusted Eurodollar rate plus 1.5% per annum or 1.75% per annum, respectively, subject to downward adjustments based upon our credit rating. Borrowings under the Macau credit facility, as amended, bear interest at our election, at either an adjusted Eurodollar rate (or in the case of the local term loan, adjusted HIBOR) plus 4.5% per annum or at an alternative base rate plus 3.5% per annum. Applicable spreads under the Macau revolving facility and the local term loan are subject to a downward adjustment if certain consolidated leverage ratios are satisfied. Borrowings under the Singapore credit facility bear interest at SOR plus a spread of 2.25% per annum. Borrowings under the airplane financings bear interest at LIBOR plus approximately 1.5% per annum. Borrowings under the ferry financing, as amended, bear interest at HIBOR plus 2.5% per annum.

Foreign currency transaction losses for the year ended December 31, 2009, were $0.7 million primarily due to U.S. denominated debt held in Macau. We may be vulnerable to changes in the U.S. dollar/pataca exchange rate. Based on balances as of December 31, 2009, an assumed 1% change in the U.S. dollar/pataca exchange rate would cause a foreign currency transaction gain/loss of approximately $25.6 million. We do not hedge our exposure to foreign currencies; however, we maintain a significant amount of our operating funds in the same currencies in which we have obligations thereby reducing our exposure to currency fluctuations.

See also “— Liquidity and Capital Resources” and “Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note 8 — Long-Term Debt.”

Previous: Item 3. — LEGAL PROCEEDINGS · Next: Item 8. — FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Item 4. — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Item 4. — SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

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