Table of Contents
FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a–16 OR 15d–16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2015
Commission File Number: 001-33178
MELCO CROWN ENTERTAINMENT LIMITED
36th Floor, The Centrium
60 Wyndham Street
Central
Hong Kong
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20–F or Form 40–F. Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3–2(b) under the Securities Exchange Act of 1934. Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3–2(b): 82– N/A
Table of Contents
MELCO CROWN ENTERTAINMENT LIMITED
Form 6–K
TABLE OF CONTENTS
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MELCO CROWN ENTERTAINMENT LIMITED | ||
| By: | /s/ Geoffrey Davis | |
| Name: | Geoffrey Davis, CFA | |
| Title: | Chief Financial Officer | |
Date: November 27, 2015
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Table of Contents
EXHIBIT INDEX
| Exhibit No. |
Description | |||
| Exhibit 99.1 |
Quarterly Report of MCE Finance Limited | |||
Exhibit 99.1
EXPLANATORY NOTE
MCE Finance Limited’s Quarterly Report
for the Three and Nine Months Ended September 30, 2015
This quarterly report serves to provide holders of MCE Finance Limited’s US$1,000,000,000 5.00% senior notes due 2021 (the “2013 Senior Notes”) with MCE Finance Limited’s unaudited condensed consolidated financial statements, comprising condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated statements of cash flows, for the three and nine months ended September 30, 2015, together with related information, pursuant to the terms of the indenture, dated February 7, 2013, relating to the 2013 Senior Notes. MCE Finance Limited is a wholly owned subsidiary of Melco Crown Entertainment Limited.
MCE Finance Limited
Report for the Third Quarter of 2015
TABLE OF CONTENTS
| INTRODUCTION |
1 | |||
| SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS |
3 | |||
| GLOSSARY |
4 | |||
| EXCHANGE RATE INFORMATION |
6 | |||
| FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
7 | |||
| INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
F-1 | |||
INTRODUCTION
In this quarterly report, unless otherwise indicated:
| • | “2011 Credit Facilities” refers to the credit facilities entered into pursuant to an amendment agreement dated June 22, 2011, as amended from time to time, between, among others, Melco Crown Macau, Deutsche Bank AG, Hong Kong Branch as agent and DB Trustees (Hong Kong) Limited as security agent, comprising a term loan facility and a revolving credit facility, for a total amount of HK$9.36 billion (equivalent to approximately US$1.2 billion); |
| • | “2015 Credit Facilities” refers to the credit facilities entered into pursuant to an amendment agreement dated June 19, 2015, as amended from time to time, between, among others, Melco Crown Macau, Deutsche Bank AG, Hong Kong Branch as agent and DB Trustees (Hong Kong) Limited as security agent, in a total amount of HK$13.65 billion (equivalent to approximately US$1.75 billion), comprising a HK$3.90 billion (equivalent to approximately US$500 million) term loan facility and a HK$9.75 billion (equivalent to approximately US$1.25 billion) revolving credit facility; |
| • | “Altira Developments Limited” refers to our subsidiary, a Macau company through which we hold the land and building for Altira Macau; |
| • | “Altira Macau” refers to an integrated casino and hotel development that caters to Asian rolling chip customers, which opened in May 2007 and owned by Altira Developments Limited; |
| • | “City of Dreams” refers to a casino, hotel, retail and entertainment integrated resort located on two adjacent pieces of land in Cotai, Macau, which opened in June 2009, and currently features casino areas and three luxury hotels, including a collection of retail brands, a wet stage performance theater and other entertainment venues, and owned by Melco Crown (COD) Developments Limited; |
| • | “Cotai” refers to an area of reclaimed land located between the islands of Taipa and Coloane in Macau; |
| • | “HK$” and “H.K. dollars” refer to the legal currency of Hong Kong; |
| • | “Hong Kong” refers to the Hong Kong Special Administrative Region of the PRC; |
| • | “Macau” refers to the Macau Special Administrative Region of the PRC; |
| • | “Melco Crown (COD) Developments Limited” refers to our subsidiary, a Macau company through which we hold the land and buildings for City of Dreams; |
| • | “Melco Crown Macau” refers to our subsidiary, Melco Crown (Macau) Limited, a Macau company and the holder of our gaming subconcession; |
| • | “Mocha Clubs” collectively refers to clubs with gaming machines, the first of which opened in September 2003, and are now the largest non-casino based operations of electronic gaming machines in Macau, and operated by Melco Crown Macau; |
| • | “our gaming subconcession” refers to the Macau gaming subconcession held by Melco Crown Macau; |
| • | “Patacas” and “MOP” refer to the legal currency of Macau; |
1
| • | “PRC” refers to the People’s Republic of China, excluding Hong Kong, Macau and Taiwan from a geographical point of view; |
| • | “US$” and “U.S. dollars” refer to the legal currency of the United States; |
| • | “U.S. GAAP” refers to the accounting principles generally accepted in the United States; and |
| • | “we”, “us”, “our” and “our company” refer to MCE Finance Limited and, as the context requires, its predecessor entities and its consolidated subsidiaries. |
This quarterly report includes our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2015.
Any discrepancies in any table between totals and sums of amounts listed therein are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements that relate to future events, including our future operating results and conditions, our prospects and our future financial performance and condition, all of which are largely based on our current expectations and projections. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. We operate in a heavily regulated and evolving industry, and have a highly leveraged business model. Moreover, we operate in Macau’s gaming sector, a market with intense competition, and therefore new risk factors may emerge from time to time. It is not possible for our management to predict all risk factors, nor can we assess the impact of these factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed or implied in any forward-looking statement. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) growth of the gaming market and visitation in Macau, (ii) capital and credit market volatility, (iii) local and global economic conditions, (iv) our anticipated growth strategies, (v) gaming authority and other governmental approvals and regulations, and (vi) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “target”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “is/are likely to” or other similar expressions.
The forward-looking statements made in this quarterly report relate only to events or information as of the date on which the statements are made in this quarterly report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this quarterly report with the understanding that our actual future results may be materially different from what we expect.
3
GLOSSARY
| “cage” | a secure room within a casino with a facility that allows patrons to exchange cash for chips required to participate in gaming activities, or to exchange chips for cash | |
| “chip” | round token that is used on casino gaming tables in lieu of cash | |
| “concession” | a government grant for the operation of games of fortune and chance in casinos in Macau under an administrative contract pursuant to which a concessionaire, or the entity holding the concession, is authorized to operate games of fortune and chance in casinos in Macau | |
| “drop” | the amount of cash to purchase gaming chips and promotional vouchers that are deposited in a gaming table’s drop box, plus gaming chips purchased at the casino cage | |
| “drop box” | a box or container that serves as a repository for cash, chips, chip purchase vouchers, credit markers and forms used to record movements in the chip inventory on each table game | |
| “electronic table games” | electronic multiple-player gaming seats | |
| “gaming machine” | slot machine and/or electronic table games | |
| “gaming machine handle” | the total amount wagered in gaming machines | |
| “gaming machine win rate” | gaming machine win expressed as a percentage of gaming machine handle | |
| “gaming promoter” | an individual or corporate entity who, for the purpose of promoting rolling chip and other gaming activities, arranges customer transportation and accommodation, provides credit in its sole discretion if authorized by a gaming operator, and arranges food and beverage services and entertainment in exchange for commissions or other compensation from a gaming operator | |
| “integrated resort” | a resort which provides customers with a combination of hotel accommodations, casinos or gaming areas, retail and dining facilities, MICE space, entertainment venues and spas | |
| “junket player” | a player sourced by gaming promoters to play in the VIP gaming rooms or areas | |
| “marker” | evidence of indebtedness by a player to the casino or gaming operator | |
| “mass market patron” | a customer who plays in the mass market segment | |
| “mass market segment” | consists of both table games and gaming machines played by mass market patrons for cash stakes that are typically lower than those in the rolling chip segment | |
| “mass market table games drop” | the amount of table games drop in the mass market table games segment | |
| “mass market table games hold percentage” | mass market table games win as a percentage of mass market table games drop | |
| “mass market table games segment” | the mass market segment consisting of mass market patrons who play table games | |
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| “MICE” | Meetings, Incentives, Conventions and Exhibitions, an acronym commonly used to refer to tourism involving large groups brought together for an event or specific purpose | |
| “non-negotiable chip” | promotional casino chip that is not to be exchanged for cash | |
| “premium direct player” | a rolling chip player who is a direct customer of the concessionaires or subconcessionaires and is attracted to the casino through direct marketing efforts and relationships with the gaming operator | |
| “rolling chip” | non-negotiable chip primarily used by rolling chip patrons to make wagers | |
| “rolling chip patron” | a player who is primarily a VIP player and typically receives various forms of complimentary services from the gaming promoters or concessionaires or subconcessionaires | |
| “rolling chip segment” | consists of table games played in private VIP gaming rooms or areas by rolling chip patrons who are either premium direct players or junket players | |
| “rolling chip volume” | the amount of non-negotiable chips wagered and lost by the rolling chip market segment | |
| “rolling chip win rate” | rolling chip table games win (calculated before discounts and commissions) as a percentage of rolling chip volume | |
| “slot machine” | traditional slot or electronic gaming machine operated by a single player | |
| “subconcession” | an agreement for the operation of games of fortune and chance in casinos between the entity holding the concession, or the concessionaire, a subconcessionaire and the Macau government, pursuant to which the subconcessionaire is authorized to operate games of fortune and chance in casinos in Macau | |
| “table games win” | the amount of wagers won net of wagers lost on gaming tables that is retained and recorded as casino revenues | |
| “VIP gaming room” | gaming rooms or areas that have restricted access to rolling chip patrons and typically offer more personalized service than the general mass market gaming areas | |
| “wet stage performance theater” | the approximately 2,000-seat theater specifically designed to stage The House of Dancing Water show | |
5
EXCHANGE RATE INFORMATION
Although we will have certain expenses and revenues denominated in Patacas, our revenues and expenses will be denominated predominantly in H.K. dollars and, in connection with a portion of our indebtedness and certain expenses, U.S. dollars. Unless otherwise noted, all translations from H.K. dollars to U.S. dollars and from U.S. dollars to H.K. dollars in this quarterly report were made at a rate of HK$7.78 to US$1.00.
The H.K. dollar is freely convertible into other currencies (including the U.S. dollar). Since October 17, 1983, the H.K. dollar has been officially linked to the U.S. dollar at the rate of HK$7.80 to US$1.00. The market exchange rate has not deviated materially from the level of HK$7.80 to US$1.00 since the peg was first established. However, in May 2005, the Hong Kong Monetary Authority broadened the trading band from the original rate of HK$7.80 per U.S. dollar to a rate range of HK$7.75 to HK$7.85 per U.S. dollar. The Hong Kong government has stated its intention to maintain the link at that rate, and it, acting through the Hong Kong Monetary Authority, has a number of means by which it may act to maintain exchange rate stability. However, no assurance can be given that the Hong Kong government will maintain the link at HK$7.75 to HK$7.85 per U.S. dollar or at all.
The noon buying rate on September 30, 2015 in New York City for cable transfers in H.K. dollar per U.S. dollar, as certified for customs purposes by the H.10 weekly statistical release of the Federal Reserve Board of the United States, or the Federal Reserve Board, was HK$7.7499 to US$1.00. On November 13, 2015, the noon buying rate was HK$7.7509 to US$1.00. We make no representation that any H.K. dollar or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or H.K. dollars, as the case may be, at any particular rate or at all.
The Pataca is pegged to the H.K. dollar at a rate of HK$1.00 = MOP1.03. All translations from Patacas to U.S. dollars in this quarterly report were made at the exchange rate of MOP8.0134 = US$1.00. The Federal Reserve Board does not certify for customs purposes a noon buying rate for cable transfers in Patacas.
6
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in connection with our unaudited condensed consolidated financial statements included elsewhere in this quarterly report. Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2014. The historical results are not necessarily indicative of the results of operations to be expected in the future. Certain statements in this “Financial Condition and Results of Operations” are forward-looking statements.
Summary of Financial Results
For the third quarter of 2015, our total net revenues were US$0.88 billion, a decrease of 21.9% from US$1.13 billion of net revenues for the third quarter of 2014. Net income for the third quarter of 2015 was US$90.1 million, as compared to US$177.7 million for the third quarter of 2014. The decline in profitability was primarily attributable to lower group-wide rolling chip revenues and mass market table games revenues.
The following summarizes the results of our operations:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (In thousands of US$) | ||||||||||||||||
| Net revenues |
$ | 882,173 | $ | 1,129,260 | $ | 2,771,685 | $ | 3,709,694 | ||||||||
| Total operating costs and expenses |
$ | (778,791 | ) | $ | (933,587 | ) | $ | (2,431,771 | ) | $ | (3,040,993 | ) | ||||
| Operating income |
$ | 103,382 | $ | 195,673 | $ | 339,914 | $ | 668,701 | ||||||||
| Net income |
$ | 90,139 | $ | 177,737 | $ | 306,608 | $ | 616,649 | ||||||||
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Results of Operations
City of Dreams Third Quarter Results
For the third quarter of 2015, net revenue at City of Dreams was US$671.5 million compared to US$913.7 million in the third quarter of 2014. The decline in net revenue was primarily a result of lower rolling chip revenues and mass market table games revenues.
Rolling chip volume totaled US$9.3 billion for the third quarter of 2015 versus US$17.3 billion in the third quarter of 2014. The rolling chip win rate was 2.9% in the third quarter of 2015 versus 2.7% in the third quarter of 2014. The expected rolling chip win rate range is 2.7%-3.0%.
Mass market table games drop decreased to US$1,190.3 million compared with US$1,340.4 million in the third quarter of 2014. The mass market table games hold percentage was 35.1% in the third quarter of 2015 compared to 38.9% in the third quarter of 2014.
Gaming machine handle for the third quarter of 2015 was US$1,211.3 million, compared with US$1,551.7 million in the third quarter of 2014.
Total non-gaming revenue at City of Dreams in the third quarter of 2015 was US$72.6 million, compared with US$76.2 million in the third quarter of 2014.
Altira Macau Third Quarter Results
For the third quarter of 2015, net revenue at Altira Macau was US$140.6 million compared to US$160.5 million in the third quarter of 2014. The year-over-year decrease in net revenue was primarily a result of lower rolling chip revenues.
Rolling chip volume totaled US$5.2 billion in the third quarter of 2015 versus US$7.2 billion in the third quarter of 2014. The rolling chip win rate was 3.0% in the third quarter of 2015 versus 2.7% in the third quarter of 2014. The expected rolling chip win rate range is 2.7%-3.0%.
In the mass market table games segment, drop totaled US$156.7 million in the third quarter of 2015, a decrease from US$181.4 million generated in the comparable period in 2014. The mass market table games hold percentage was 19.4% in the third quarter of 2015 compared with 16.2% in the third quarter of 2014.
Gaming machine handle for the third quarter of 2015 was US$11.2 million.
Total non-gaming revenue at Altira Macau in the third quarter of 2015 was US$8.3 million compared with US$9.1 million in the third quarter of 2014.
8
Mocha Clubs Third Quarter Results
Net revenue from Mocha Clubs totaled US$36.1 million in the third quarter of 2015 as compared to US$38.5 million in the third quarter of 2014.
The number of gaming machines in operation at Mocha Clubs averaged approximately 1,200 in the third quarter of 2015, compared to approximately 1,300 in the comparable period in 2014. The reduction in gaming machines reported by Mocha Clubs was primarily due to the transfer of the reporting of one club to Altira Macau in 2015. The net win per gaming machine per day was US$318 in the third quarter of 2015, as compared with US$306 in the comparable period in 2014.
Other Factors Affecting Third Quarter Earnings
Total net non-operating expenses for the third quarter of 2015 were US$12.7 million, which mainly included interest income of US$2.0 million, other income, net, of US$8.1 million, interest expenses, net of capitalized interest, of US$10.0 million, other finance costs of US$6.3 million and foreign exchange loss, net, of US$6.5 million, as compared to a total net non-operating expenses of US$17.2 million for the third quarter of 2014, which included interest income of US$1.6 million, interest expenses, net of capitalized interest, of US$13.3 million, other finance costs of US$4.5 million and foreign exchange loss, net, of US$1.1 million. The year-on-year decrease of US$4.5 million in net non-operating expenses was primarily due to higher capitalized interest in the current quarter and increase in other income.
Depreciation and amortization costs of US$76.9 million were recorded in the third quarter of 2015, of which US$14.3 million was related to the amortization of our gaming subconcession and US$5.2 million was related to the amortization of land use rights.
Nine Months’ Results
For the nine months ended September 30, 2015, our total net revenue was US$2.77 billion compared to US$3.71 billion for the nine months ended September 30, 2014. The year-over-year decrease in net revenue was primarily attributable to lower group-wide rolling chip revenues and mass market table games revenues.
Net income for the first nine months of 2015 was US$306.6 million, compared with net income of US$616.6 million in the comparable period of 2014. The year-over-year decrease in net income was primarily attributable to lower contribution from the group-wide rolling chip segment and mass market table games segment.
9
Liquidity and Capital Resources
We have relied and intend to rely on our cash generated from our operations and our debt and equity financings to meet our financing needs and repay our indebtedness, as the case may be.
As of September 30, 2015, we held unrestricted cash and cash equivalents, bank deposits with original maturity over three months and restricted cash of US$900.0 million, US$497.8 million and US$19.6 million, respectively, and HK$9.75 billion (approximately US$1.25 billion) of the 2015 Credit Facilities remained available for future drawdown.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
| Three Months Ended | Nine Months Ended September 30, |
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| September 30, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (In thousands of US$) | ||||||||||||||||
| Net cash provided by operating activities |
$ | 186,169 | $ | 270,072 | $ | 394,702 | $ | 853,857 | ||||||||
| Net cash used in investing activities |
(504,980 | ) | (621,539 | ) | (625,966 | ) | (218,729 | ) | ||||||||
| Net cash used in financing activities |
(11,035 | ) | (64,193 | ) | (54,793 | ) | (612,585 | ) | ||||||||
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| Net (decrease) increase in cash and cash equivalents |
(329,846 | ) | (415,660 | ) | (286,057 | ) | 22,543 | |||||||||
| Cash and cash equivalents at beginning of period |
1,229,880 | 1,602,885 | 1,186,091 | 1,164,682 | ||||||||||||
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| Cash and cash equivalents at end of period |
$ | 900,034 | $ | 1,187,225 | $ | 900,034 | $ | 1,187,225 | ||||||||
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Operating Activities
Operating cash flows are generally affected by changes in operating income and accounts receivable with VIP table games play and hotel operations conducted on a cash and credit basis and the remainder of the business, including mass market table games play, gaming machine play, food and beverage, and entertainment are conducted primarily on a cash basis.
Net cash provided by operating activities was US$186.2 million for the third quarter of 2015, compared to US$270.1 million for the third quarter of 2014. The decrease in net cash provided by operating activities for the third quarter of 2015 was mainly due to decline in underlying operating performance as described in the foregoing section. While net cash provided by operating activities was US$394.7 million for the nine months ended September 30, 2015, compared to US$853.9 million for the nine months ended September 30, 2014. The decrease in net cash provided by operating activities for the nine months ended September 30, 2015 was mainly due to decline in underlying operating performance as described in the foregoing section and increased working capital for the operations.
10
Investing Activities
Net cash used in investing activities was US$505.0 million for the third quarter of 2015, compared to US$621.5 million for the third quarter of 2014. The decrease in net cash used in investing activities was primarily due to no advance to shareholder during the quarter and decrease in advance payments and deposits for acquisition of property and equipment, partially offset by an increase in placement of bank deposits with original maturity over three months and increased capital expenditure payments in the current quarter.
Net cash used in the investing activities of US$505.0 million for the third quarter of 2015 mainly included placement of bank deposits with original maturity over three months of US$392.8 million, capital expenditure payments of US$100.8 million, advance payments and deposits for acquisition of property and equipment of US$6.0 million and land use rights payment of US$3.7 million.
Net cash used in investing activities of US$621.5 million for the third quarter of 2014 mainly included an advance to shareholder of US$381.8 million, placement of bank deposits with original maturity over three months of US$110.6 million, capital expenditure payments of US$89.1 million, advance payments and deposits for acquisition of property and equipment of US$37.1 million and payment for land use rights of US$3.5 million.
Our total capital expenditure payments for the third quarter of 2015 were US$100.8 million, as compared to US$89.1 million for the third quarter of 2014. Such capital expenditures for both periods were mainly associated with enhancements to our integrated resort offerings at City of Dreams. The increase was primarily due to the development of various projects at City of Dreams, including the fifth hotel tower and expansion of retail precinct. We also paid US$3.7 million for the scheduled installment of City of Dreams’ land premium payment for the third quarter of 2015.
Net cash used in investing activities was US$626.0 million for the nine months ended September 30, 2015, compared to US$218.7 million for the nine months ended September 30, 2014. The increase in net cash used in investing activities was primarily due to net placement of bank deposits with original maturity over three months, increased capital expenditure payments, increase in restricted cash, partially offset by the net repayment of advance to shareholder in the current period and the decrease in advance payments and deposits for acquisition of property and equipment.
11
Net cash used in investing activities of US$626.0 million for the nine months ended September 30, 2015 mainly included a net increase in bank deposits with original maturity over three months of US$387.2 million, capital expenditure payments of US$253.8 million, increase in restricted cash of US$18.9 million, advance payments and deposits for acquisition of property and equipment of US$18.2 million and land use rights payment of US$7.3 million, partially offset with the proceed from the net repayment of advance to shareholder of US$62.1 million.
Net cash used in investing activities was US$218.7 million for the nine months ended September 30, 2014, primarily due to our advance to shareholder of US$458.6 million, capital expenditure payments of US$177.7 million, advance payments and deposits for acquisition of property and equipment of US$54.9 million and land use rights payment of US$3.6 million, partially offset by a net decrease in bank deposits with original maturity over three months of US$476.5 million.
The net increase in the amount of bank deposits with original maturity over three months was due to the new deposits placed during the period, partially offset by the withdrawal upon maturity of the deposits.
Our total capital expenditure payments for the nine months ended September 30, 2015 were US$253.8 million, as compared to US$177.7 million for nine months ended September 30, 2014. Such capital expenditures for both periods were mainly associated with enhancements to our integrated resort offerings at City of Dreams. The increase was primarily due to the development of various projects at City of Dreams, including the fifth hotel tower and expansion of retail precinct. We also paid US$7.3 million for the scheduled installment of City of Dreams’ land premium payment for the nine months ended September 30, 2015.
Financing Activities
Net cash used in financing activities amounted to US$11.0 million for the third quarter of 2015 primarily represented the payment of debt issuance cost of US$33.6 million associated with the 2015 Credit Facilities, offset in part by advance from an affiliated company of US$22.6 million.
Net cash used in financing activities amounted to US$64.2 million for the third quarter of 2014 primarily represented the scheduled repayment of the term loan under 2011 Credit Facilities.
Net cash used in financing activities amounted to US$54.8 million for the nine months ended September 30, 2015 primarily represented the dividends payment of US$150.0 million, the scheduled repayments of the term loan under 2011 Credit Facilities of US$64.2 million and the payment of debt issuance cost of US$46.5 million associated with the 2015 Credit Facilities, offset in part by the net proceeds from the refinancing of 2011 Credit Facilities by 2015 Credit Facilities of US$148.3 million and advance from an affiliated company of US$57.7 million.
Net cash used in financing activities amounted to US$612.6 million for the nine months ended September 30, 2014 primarily represented the dividends payments of US$420.0 million and the scheduled repayments of the term loan under 2011 Credit Facilities of US$192.5 million.
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Indebtedness
The following table presents a summary of our indebtedness as of September 30, 2015:
| As of September 30, | ||||
| 2015 | ||||
| (In thousands of US$) | ||||
| 2013 Senior Notes |
$ | 1,000,000 | ||
| 2015 Credit Facilities |
501,285 | |||
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| $ | 1,501,285 | |||
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There was no change in our indebtedness as of September 30, 2015 as compared to June 30, 2015.
Our company commenced expansion of its retail precinct at City of Dreams, which is expected to open in the first half of 2016. Our company has also continued the development of the fifth hotel tower at City of Dreams although its development plan and schedule is currently under review and may be subject to change after taking into account a range of factors, including the current and expected future operating environment in Macau and other potential uses of cash and future cash flow.
Any other future developments may be subject to further financing and a number of other factors, many of which are beyond our control.
13
MCE Finance Limited
Index To Unaudited Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2015
| Page | ||||
| Unaudited MCE Finance Limited Condensed Consolidated Financial Statements |
F-2 | |||
| Unaudited MCE Finance Limited — Restricted Subsidiaries Group Condensed Consolidated Financial Statements |
F-5 | |||
| Unaudited Reconciliation of Financial Condition and Results of Operations of MCE Finance Limited — Restricted Subsidiaries Group to MCE Finance Limited |
F-8 | |||
F-1
MCE Finance Limited
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share and per share data)
| September 30, 2015 |
December 31, 2014 |
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| (Unaudited) | (Audited) | |||||||
| ASSETS |
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| CURRENT ASSETS |
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| Cash and cash equivalents |
$ | 900,034 | $ | 1,186,091 | ||||
| Bank deposits with original maturity over three months |
497,792 | 110,616 | ||||||
| Restricted cash |
19,558 | 629 | ||||||
| Accounts receivable, net |
252,131 | 253,111 | ||||||
| Amounts due from affiliated companies |
326,283 | 263,959 | ||||||
| Inventories |
18,453 | 18,749 | ||||||
| Prepaid expenses and other current assets |
41,683 | 43,107 | ||||||
|
|
|
|
|
|||||
| Total current assets |
2,055,934 | 1,876,262 | ||||||
|
|
|
|
|
|||||
| PROPERTY AND EQUIPMENT, NET |
2,355,895 | 2,273,419 | ||||||
| GAMING SUBCONCESSION, NET |
384,866 | 427,794 | ||||||
| INTANGIBLE ASSETS, NET |
4,220 | 4,220 | ||||||
| GOODWILL |
81,915 | 81,915 | ||||||
| LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS |
73,647 | 98,699 | ||||||
| ADVANCE TO SHAREHOLDER |
599,221 | 664,147 | ||||||
| DEFERRED FINANCING COSTS, NET |
113,179 | 79,387 | ||||||
| LAND USE RIGHTS, NET |
359,983 | 375,687 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 6,028,860 | $ | 5,881,530 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Accounts payable |
$ | 14,902 | $ | 10,837 | ||||
| Accrued expenses and other current liabilities |
612,328 | 724,675 | ||||||
| Income tax payable |
2,116 | 2,804 | ||||||
| Capital lease obligations, due within one year |
167 | 163 | ||||||
| Current portion of long-term debt |
11,279 | 256,717 | ||||||
| Amount due to shareholder |
20,659 | 20,559 | ||||||
| Amounts due to affiliated companies |
23,431 | 19,328 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
684,882 | 1,035,083 | ||||||
|
|
|
|
|
|||||
| LONG-TERM DEBT |
1,490,006 | 1,160,449 | ||||||
| OTHER LONG-TERM LIABILITIES |
42,136 | 26,270 | ||||||
| DEFERRED TAX LIABILITIES |
15,438 | 16,024 | ||||||
| CAPITAL LEASE OBLIGATIONS, DUE AFTER ONE YEAR |
451 | 577 | ||||||
| LAND USE RIGHT PAYABLE |
— | 3,788 | ||||||
| SHAREHOLDER’S EQUITY |
||||||||
| Ordinary shares (1) |
— | — | ||||||
| Additional paid-in capital |
1,841,725 | 1,841,725 | ||||||
| Accumulated other comprehensive income |
2,635 | 2,635 | ||||||
| Retained earnings |
1,951,587 | 1,794,979 | ||||||
|
|
|
|
|
|||||
| Total shareholder’s equity |
3,795,947 | 3,639,339 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES AND EQUITY |
$ | 6,028,860 | $ | 5,881,530 | ||||
|
|
|
|
|
|||||
| (1) | The authorized share capital of MCE Finance Limited was 5,000,000 shares of US$0.01 par value per share, as of September 30, 2015 and December 31, 2014, 1,202 shares of US$0.01 par value per share were issued and fully paid. |
F-2
MCE Finance Limited
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands of U.S. dollars)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| OPERATING REVENUES |
||||||||||||||||
| Casino |
$ | 817,773 | $ | 1,083,955 | $ | 2,594,159 | $ | 3,569,443 | ||||||||
| Rooms |
33,832 | 34,225 | 102,066 | 101,818 | ||||||||||||
| Food and beverage |
19,610 | 21,435 | 60,629 | 62,938 | ||||||||||||
| Entertainment, retail and others |
52,414 | 34,540 | 139,975 | 109,218 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross revenues |
923,629 | 1,174,155 | 2,896,829 | 3,843,417 | ||||||||||||
| Less: promotional allowances |
(41,456 | ) | (44,895 | ) | (125,144 | ) | (133,723 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net revenues |
882,173 | 1,129,260 | 2,771,685 | 3,709,694 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| OPERATING COSTS AND EXPENSES |
||||||||||||||||
| Casino |
(574,773 | ) | (740,936 | ) | (1,848,544 | ) | (2,477,727 | ) | ||||||||
| Rooms |
(4,259 | ) | (3,171 | ) | (11,250 | ) | (9,372 | ) | ||||||||
| Food and beverage |
(5,850 | ) | (6,607 | ) | (15,063 | ) | (17,447 | ) | ||||||||
| Entertainment, retail and others |
(14,328 | ) | (17,435 | ) | (43,492 | ) | (47,011 | ) | ||||||||
| General and administrative |
(94,539 | ) | (87,687 | ) | (269,152 | ) | (246,263 | ) | ||||||||
| Pre-opening costs |
(8,147 | ) | (1,841 | ) | (13,509 | ) | (4,680 | ) | ||||||||
| Amortization of gaming subconcession |
(14,309 | ) | (14,309 | ) | (42,928 | ) | (42,928 | ) | ||||||||
| Amortization of land use rights |
(5,234 | ) | (5,234 | ) | (15,704 | ) | (15,704 | ) | ||||||||
| Depreciation and amortization |
(57,352 | ) | (56,076 | ) | (171,828 | ) | (177,623 | ) | ||||||||
| Property charges and others |
— | (291 | ) | (301 | ) | (2,238 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating costs and expenses |
(778,791 | ) | (933,587 | ) | (2,431,771 | ) | (3,040,993 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| OPERATING INCOME |
103,382 | 195,673 | 339,914 | 668,701 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NON-OPERATING INCOME (EXPENSES) |
||||||||||||||||
| Interest income |
1,989 | 1,626 | 4,485 | 5,696 | ||||||||||||
| Interest expenses, net of capitalized interest |
(10,040 | ) | (13,263 | ) | (30,773 | ) | (42,193 | ) | ||||||||
| Other finance costs |
(6,308 | ) | (4,498 | ) | (15,060 | ) | (13,726 | ) | ||||||||
| Foreign exchange (loss) gain, net |
(6,460 | ) | (1,083 | ) | (3,394 | ) | 41 | |||||||||
| Other income, net |
8,135 | — | 14,034 | — | ||||||||||||
| Loss on extinguishment of debt |
— | — | (481 | ) | — | |||||||||||
| Costs associated with debt modification |
(47 | ) | — | (592 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-operating expenses, net |
(12,731 | ) | (17,218 | ) | (31,781 | ) | (50,182 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCOME BEFORE INCOME TAX |
90,651 | 178,455 | 308,133 | 618,519 | ||||||||||||
| INCOME TAX EXPENSE |
(512 | ) | (718 | ) | (1,525 | ) | (1,870 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NET INCOME |
$ | 90,139 | $ | 177,737 | $ | 306,608 | $ | 616,649 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
F-3
MCE Finance Limited
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands of U.S. dollars)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||
| Net cash provided by operating activities |
$ | 186,169 | $ | 270,072 | $ | 394,702 | $ | 853,857 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||||||
| Placement of bank deposits with original maturity over three months |
(392,802 | ) | (110,616 | ) | (497,792 | ) | (110,616 | ) | ||||||||
| Payment for acquisition of property and equipment |
(100,754 | ) | (89,113 | ) | (253,770 | ) | (177,659 | ) | ||||||||
| Advance to shareholder |
— | (381,792 | ) | (43,313 | ) | (458,624 | ) | |||||||||
| Changes in restricted cash |
(812 | ) | — | (18,929 | ) | — | ||||||||||
| Advance payments and deposits for acquisition of property and equipment |
(5,969 | ) | (37,120 | ) | (18,176 | ) | (54,949 | ) | ||||||||
| Payment for land use rights |
(3,696 | ) | (3,518 | ) | (7,302 | ) | (3,559 | ) | ||||||||
| Payment for entertainment production costs |
(966 | ) | (310 | ) | (2,750 | ) | (1,356 | ) | ||||||||
| Proceeds from sale of property and equipment |
19 | 930 | 52 | 940 | ||||||||||||
| Repayment of advance to shareholder |
— | — | 105,398 | — | ||||||||||||
| Withdrawals of bank deposits with original maturity over three months |
— | — | 110,616 | 587,094 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(504,980 | ) | (621,539 | ) | (625,966 | ) | (218,729 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||||||
| Dividends paid |
— | — | (150,000 | ) | (420,000 | ) | ||||||||||
| Principal payments on long-term debt |
— | (64,179 | ) | (64,179 | ) | (192,538 | ) | |||||||||
| Payment of deferred financing costs |
(33,560 | ) | — | (46,481 | ) | — | ||||||||||
| Principal payments on capital lease obligations |
(42 | ) | (14 | ) | (126 | ) | (47 | ) | ||||||||
| Advance from an affiliated company |
22,567 | — | 57,695 | — | ||||||||||||
| Proceeds from long-term debt |
— | — | 148,298 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in financing activities |
(11,035 | ) | (64,193 | ) | (54,793 | ) | (612,585 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(329,846 | ) | (415,660 | ) | (286,057 | ) | 22,543 | |||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
1,229,880 | 1,602,885 | 1,186,091 | 1,164,682 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 900,034 | $ | 1,187,225 | $ | 900,034 | $ | 1,187,225 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS |
||||||||||||||||
| Cash paid for interest (net of capitalized interest) |
$ | (19,953 | ) | $ | (25,761 | ) | $ | (42,809 | ) | $ | (54,726 | ) | ||||
| Cash paid for tax |
(4 | ) | (5 | ) | (2,799 | ) | (5,596 | ) | ||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES |
||||||||||||||||
| Construction costs and property and equipment funded through accrued expenses and other current liabilities and other long-term liabilities |
(19,294 | ) | 4,199 | 30,093 | 55,969 | |||||||||||
| Deferred financing costs funded through accrued expenses and other current liabilities |
(33,304 | ) | — | 618 | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
F-4
MCE Finance Limited – Restricted Subsidiaries Group
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands of U.S. dollars, except share and per share data)
| September 30, 2015 |
December 31, 2014 |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS |
||||||||
| Cash and cash equivalents |
$ | 900,034 | $ | 1,186,091 | ||||
| Bank deposits with original maturity over three months |
497,792 | 110,616 | ||||||
| Restricted cash |
19,558 | 629 | ||||||
| Accounts receivable, net |
252,131 | 253,111 | ||||||
| Amounts due from affiliated companies |
326,287 | 263,959 | ||||||
| Amounts due from unconsolidated subsidiaries |
2 | 2 | ||||||
| Inventories |
18,453 | 18,749 | ||||||
| Prepaid expenses and other current assets |
41,683 | 43,107 | ||||||
|
|
|
|
|
|||||
| Total current assets |
2,055,940 | 1,876,264 | ||||||
|
|
|
|
|
|||||
| PROPERTY AND EQUIPMENT, NET |
2,355,895 | 2,273,419 | ||||||
| GAMING SUBCONCESSION, NET |
384,866 | 427,794 | ||||||
| INTANGIBLE ASSETS, NET |
4,220 | 4,220 | ||||||
| GOODWILL |
81,915 | 81,915 | ||||||
| LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS |
73,647 | 98,699 | ||||||
| INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES |
1,634,011 | 1,696,096 | ||||||
| DEFERRED FINANCING COSTS, NET |
113,179 | 79,387 | ||||||
| LAND USE RIGHTS, NET |
359,983 | 375,687 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 7,063,656 | $ | 6,913,481 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
| CURRENT LIABILITIES |
||||||||
| Accounts payable |
$ | 14,902 | $ | 10,837 | ||||
| Accrued expenses and other current liabilities |
612,328 | 724,675 | ||||||
| Income tax payable |
2,116 | 2,804 | ||||||
| Capital lease obligations, due within one year |
167 | 163 | ||||||
| Current portion of long-term debt |
11,279 | 256,717 | ||||||
| Amount due to shareholder |
20,655 | 20,555 | ||||||
| Amounts due to affiliated companies |
23,431 | 19,324 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
684,878 | 1,035,075 | ||||||
|
|
|
|
|
|||||
| LONG-TERM DEBT |
1,490,006 | 1,160,449 | ||||||
| OTHER LONG-TERM LIABILITIES |
42,136 | 26,270 | ||||||
| DEFERRED TAX LIABILITIES |
15,438 | 16,024 | ||||||
| CAPITAL LEASE OBLIGATIONS, DUE AFTER ONE YEAR |
451 | 577 | ||||||
| LAND USE RIGHT PAYABLE |
— | 3,788 | ||||||
| ADVANCE FROM SHAREHOLDER |
1,034,784 | 1,031,943 | ||||||
| SHAREHOLDER’S EQUITY |
||||||||
| Ordinary shares (1) |
— | — | ||||||
| Additional paid-in capital |
1,841,725 | 1,841,725 | ||||||
| Accumulated other comprehensive income |
2,635 | 2,635 | ||||||
| Retained earnings |
1,951,603 | 1,794,995 | ||||||
|
|
|
|
|
|||||
| Total shareholder’s equity |
3,795,963 | 3,639,355 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES AND EQUITY |
$ | 7,063,656 | $ | 6,913,481 | ||||
|
|
|
|
|
|||||
| (1) | The authorized share capital of MCE Finance Limited was 5,000,000 shares of US$0.01 par value per share, as of September 30, 2015 and December 31, 2014, 1,202 shares of US$0.01 par value per share were issued and fully paid. |
F-5
MCE Finance Limited – Restricted Subsidiaries Group
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands of U.S. dollars)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| OPERATING REVENUES |
||||||||||||||||
| Casino |
$ | 817,773 | $ | 1,083,955 | $ | 2,594,159 | $ | 3,569,443 | ||||||||
| Rooms |
33,832 | 34,225 | 102,066 | 101,818 | ||||||||||||
| Food and beverage |
19,610 | 21,435 | 60,629 | 62,938 | ||||||||||||
| Entertainment, retail and others |
52,414 | 34,540 | 139,975 | 109,218 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross revenues |
923,629 | 1,174,155 | 2,896,829 | 3,843,417 | ||||||||||||
| Less: promotional allowances |
(41,456 | ) | (44,895 | ) | (125,144 | ) | (133,723 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net revenues |
882,173 | 1,129,260 | 2,771,685 | 3,709,694 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| OPERATING COSTS AND EXPENSES |
||||||||||||||||
| Casino |
(574,773 | ) | (740,936 | ) | (1,848,544 | ) | (2,477,727 | ) | ||||||||
| Rooms |
(4,259 | ) | (3,171 | ) | (11,250 | ) | (9,372 | ) | ||||||||
| Food and beverage |
(5,850 | ) | (6,607 | ) | (15,063 | ) | (17,447 | ) | ||||||||
| Entertainment, retail and others |
(14,328 | ) | (17,435 | ) | (43,492 | ) | (47,011 | ) | ||||||||
| General and administrative |
(94,539 | ) | (87,687 | ) | (269,152 | ) | (246,263 | ) | ||||||||
| Pre-opening costs |
(8,147 | ) | (1,841 | ) | (13,509 | ) | (4,680 | ) | ||||||||
| Amortization of gaming subconcession |
(14,309 | ) | (14,309 | ) | (42,928 | ) | (42,928 | ) | ||||||||
| Amortization of land use rights |
(5,234 | ) | (5,234 | ) | (15,704 | ) | (15,704 | ) | ||||||||
| Depreciation and amortization |
(57,352 | ) | (56,076 | ) | (171,828 | ) | (177,623 | ) | ||||||||
| Property charges and others |
— | (291 | ) | (301 | ) | (2,238 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total operating costs and expenses |
(778,791 | ) | (933,587 | ) | (2,431,771 | ) | (3,040,993 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| OPERATING INCOME |
103,382 | 195,673 | 339,914 | 668,701 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NON-OPERATING INCOME (EXPENSES) |
||||||||||||||||
| Interest income |
1,989 | 1,626 | 4,485 | 5,696 | ||||||||||||
| Interest expenses, net of capitalized interest |
(10,040 | ) | (13,263 | ) | (30,773 | ) | (42,193 | ) | ||||||||
| Other finance costs |
(6,308 | ) | (4,498 | ) | (15,060 | ) | (13,726 | ) | ||||||||
| Foreign exchange (loss) gain, net |
(6,460 | ) | (1,083 | ) | (3,394 | ) | 41 | |||||||||
| Other income, net |
8,135 | — | 14,034 | — | ||||||||||||
| Loss on extinguishment of debt |
— | — | (481 | ) | — | |||||||||||
| Costs associated with debt modification |
(47 | ) | — | (592 | ) | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-operating expenses, net |
(12,731 | ) | (17,218 | ) | (31,781 | ) | (50,182 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| INCOME BEFORE INCOME TAX |
90,651 | 178,455 | 308,133 | 618,519 | ||||||||||||
| INCOME TAX EXPENSE |
(512 | ) | (718 | ) | (1,525 | ) | (1,870 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NET INCOME |
$ | 90,139 | $ | 177,737 | $ | 306,608 | $ | 616,649 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
F-6
MCE Finance Limited – Restricted Subsidiaries Group
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands of U.S. dollars)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||
| Net cash provided by operating activities |
$ | 186,169 | $ | 270,072 | $ | 394,702 | $ | 853,857 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||||||
| Placement of bank deposits with original maturity over three months |
(392,802 | ) | (110,616 | ) | (497,792 | ) | (110,616 | ) | ||||||||
| Payment for acquisition of property and equipment |
(100,754 | ) | (89,113 | ) | (253,770 | ) | (177,659 | ) | ||||||||
| Advance to unconsolidated subsidiary |
— | (381,792 | ) | (43,313 | ) | (458,624 | ) | |||||||||
| Changes in restricted cash |
(812 | ) | — | (18,929 | ) | — | ||||||||||
| Advance payments and deposits for acquisition of property and equipment |
(5,969 | ) | (37,120 | ) | (18,176 | ) | (54,949 | ) | ||||||||
| Payment for land use rights |
(3,696 | ) | (3,518 | ) | (7,302 | ) | (3,559 | ) | ||||||||
| Payment for entertainment production costs |
(966 | ) | (310 | ) | (2,750 | ) | (1,356 | ) | ||||||||
| Proceeds from sale of property and equipment |
19 | 930 | 52 | 940 | ||||||||||||
| Repayment of advance to unconsolidated subsidiary |
— | — | 105,398 | — | ||||||||||||
| Withdrawals of bank deposits with original maturity over three months |
— | — | 110,616 | 587,094 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(504,980 | ) | (621,539 | ) | (625,966 | ) | (218,729 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||||||
| Dividends paid |
— | — | (150,000 | ) | (420,000 | ) | ||||||||||
| Principal payments on long-term debt |
— | (64,179 | ) | (64,179 | ) | (192,538 | ) | |||||||||
| Payment of deferred financing costs |
(33,560 | ) | — | (46,481 | ) | — | ||||||||||
| Principal payments on capital lease obligations |
(42 | ) | (14 | ) | (126 | ) | (47 | ) | ||||||||
| Advance from an affiliated company |
22,567 | — | 57,695 | — | ||||||||||||
| Proceeds from long-term debt |
— | — | 148,298 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net cash used in financing activities |
(11,035 | ) | (64,193 | ) | (54,793 | ) | (612,585 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
(329,846 | ) | (415,660 | ) | (286,057 | ) | 22,543 | |||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
1,229,880 | 1,602,885 | 1,186,091 | 1,164,682 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 900,034 | $ | 1,187,225 | $ | 900,034 | $ | 1,187,225 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS |
||||||||||||||||
| Cash paid for interest (net of capitalized interest) |
$ | (19,953 | ) | $ | (25,761 | ) | $ | (42,809 | ) | $ | (54,726 | ) | ||||
| Cash paid for tax |
(4 | ) | (5 | ) | (2,799 | ) | (5,596 | ) | ||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES |
||||||||||||||||
| Construction costs and property and equipment funded through accrued expenses and other current liabilities and other long-term liabilities |
(19,294 | ) | 4,199 | 30,093 | 55,969 | |||||||||||
| Deferred financing costs funded through accrued expenses and other current liabilities |
(33,304 | ) | — | 618 | — | |||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
F-7
MCE Finance Limited
Unaudited Reconciliation of Financial Condition and Results of Operations
of MCE Finance Limited – Restricted Subsidiaries Group to MCE Finance Limited
For the Nine Months Ended September 30, 2015
(In thousands of U.S. dollars, except share and per share data)
| Unrestricted Subsidiaries | ||||||||||||||||||||
| Consolidated Total for MCE Finance Limited – Restricted Subsidiaries Group |
Melco Crown (Macau Peninsula) Hotel Limited |
Melco Crown (Macau Peninsula) Developments Limited |
Elimination | Consolidated Total for MCE Finance Limited |
||||||||||||||||
| Condensed Consolidated Balance Sheets (Unaudited) |
||||||||||||||||||||
| As of September 30, 2015 |
||||||||||||||||||||
| ASSETS |
||||||||||||||||||||
| CURRENT ASSETS |
||||||||||||||||||||
| Cash and cash equivalents |
$ | 900,034 | $ | $ | $ | $ | 900,034 | |||||||||||||
| Bank deposits with original maturity over three months |
497,792 | 497,792 | ||||||||||||||||||
| Restricted cash |
19,558 | 19,558 | ||||||||||||||||||
| Accounts receivable, net |
252,131 | 252,131 | ||||||||||||||||||
| Amounts due from affiliated companies |
326,287 | (2 | ) | (2 | ) | 326,283 | ||||||||||||||
| Amounts due from unconsolidated subsidiaries |
2 | (2 | ) | — | ||||||||||||||||
| Inventories |
18,453 | 18,453 | ||||||||||||||||||
| Prepaid expenses and other current assets |
41,683 | 41,683 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total current assets |
2,055,940 | (2 | ) | (2 | ) | (2 | ) | 2,055,934 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| PROPERTY AND EQUIPMENT, NET |
2,355,895 | 2,355,895 | ||||||||||||||||||
| GAMING SUBCONCESSION, NET |
384,866 | 384,866 | ||||||||||||||||||
| INTANGIBLE ASSETS, NET |
4,220 | 4,220 | ||||||||||||||||||
| GOODWILL |
81,915 | 81,915 | ||||||||||||||||||
| LONG-TERM PREPAYMENTS, DEPOSITS AND OTHER ASSETS |
73,647 | 73,647 | ||||||||||||||||||
| INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES |
1,634,011 | (1,634,011 | ) | — | ||||||||||||||||
| ADVANCE TO SHAREHOLDER |
— | 1,634,005 | (1,034,784 | ) | 599,221 | |||||||||||||||
| ADVANCE TO GROUP COMPANIES |
— | 17,795 | (17,795 | ) | — | |||||||||||||||
| DEFERRED FINANCING COSTS, NET |
113,179 | 113,179 | ||||||||||||||||||
| LAND USE RIGHTS, NET |
359,983 | 359,983 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| TOTAL ASSETS |
$ | 7,063,656 | $ | (2 | ) | $ | 1,651,798 | $ | (2,686,592 | ) | $ | 6,028,860 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||||||||||||||
| CURRENT LIABILITIES |
||||||||||||||||||||
| Accounts payable |
$ | 14,902 | $ | $ | $ | $ | 14,902 | |||||||||||||
| Accrued expenses and other current liabilities |
612,328 | 612,328 | ||||||||||||||||||
| Income tax payable |
2,116 | 2,116 | ||||||||||||||||||
| Capital lease obligations, due within one year |
167 | 167 | ||||||||||||||||||
| Current portion of long-term debt |
11,279 | 11,279 | ||||||||||||||||||
| Amount due to shareholder |
20,655 | 2 | 2 | 20,659 | ||||||||||||||||
| Amounts due to affiliated companies |
23,431 | 23,431 | ||||||||||||||||||
| Amounts due to group companies |
— | 1 | 1 | (2 | ) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total current liabilities |
684,878 | 3 | 3 | (2 | ) | 684,882 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| LONG-TERM DEBT |
1,490,006 | 1,490,006 | ||||||||||||||||||
| OTHER LONG-TERM LIABILITIES |
42,136 | 42,136 | ||||||||||||||||||
| DEFERRED TAX LIABILITIES |
15,438 | 15,438 | ||||||||||||||||||
| CAPITAL LEASE OBLIGATIONS, DUE AFTER ONE YEAR |
451 | 451 | ||||||||||||||||||
| ADVANCE FROM SHAREHOLDER |
1,034,784 | (1,034,784 | ) | — | ||||||||||||||||
| ADVANCE FROM GROUP COMPANIES |
— | 1,651,800 | (1,651,800 | ) | — | |||||||||||||||
| SHAREHOLDER’S EQUITY |
||||||||||||||||||||
| Ordinary shares (1) |
— | 3 | 3 | (6 | ) | — | ||||||||||||||
| Additional paid-in capital |
1,841,725 | 1,841,725 | ||||||||||||||||||
| Accumulated other comprehensive income |
2,635 | 2,635 | ||||||||||||||||||
| Retained earnings |
1,951,603 | (8 | ) | (8 | ) | 1,951,587 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total shareholder’s equity |
3,795,963 | (5 | ) | (5 | ) | (6 | ) | 3,795,947 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| TOTAL LIABILITIES AND EQUITY |
$ | 7,063,656 | $ | (2 | ) | $ | 1,651,798 | $ | (2,686,592 | ) | $ | 6,028,860 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (1) | The authorized share capital of MCE Finance Limited was 5,000,000 shares of US$0.01 par value per share, as of September 30, 2015, 1,202 shares of US$0.01 par value per share was issued and fully paid. |
F-8
MCE Finance Limited
Unaudited Reconciliation of Financial Condition and Results of Operations
of MCE Finance Limited – Restricted Subsidiaries Group to MCE Finance Limited
For the Nine Months Ended September 30, 2015
(In thousands of U.S. dollars)
| Unrestricted Subsidiaries | ||||||||||||||||||||
| Consolidated Total for MCE Finance Limited – Restricted Subsidiaries Group |
Melco Crown (Macau Peninsula) Hotel Limited |
Melco Crown (Macau Peninsula) Developments Limited |
Elimination | Consolidated Total for MCE Finance Limited |
||||||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||||||||||
| For the Nine Months Ended September 30, 2015 |
||||||||||||||||||||
| OPERATING REVENUES |
||||||||||||||||||||
| Casino |
$ | 2,594,159 | $ | $ | $ | $ | 2,594,159 | |||||||||||||
| Rooms |
102,066 | 102,066 | ||||||||||||||||||
| Food and beverage |
60,629 | 60,629 | ||||||||||||||||||
| Entertainment, retail and others |
139,975 | 139,975 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Gross revenues |
2,896,829 | — | — | — | 2,896,829 | |||||||||||||||
| Less: promotional allowances |
(125,144 | ) | (125,144 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net revenues |
2,771,685 | — | — | — | 2,771,685 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| OPERATING COSTS AND EXPENSES |
||||||||||||||||||||
| Casino |
(1,848,544 | ) | (1,848,544 | ) | ||||||||||||||||
| Rooms |
(11,250 | ) | (11,250 | ) | ||||||||||||||||
| Food and beverage |
(15,063 | ) | (15,063 | ) | ||||||||||||||||
| Entertainment, retail and others |
(43,492 | ) | (43,492 | ) | ||||||||||||||||
| General and administrative |
(269,152 | ) | (269,152 | ) | ||||||||||||||||
| Pre-opening costs |
(13,509 | ) | (13,509 | ) | ||||||||||||||||
| Amortization of gaming subconcession |
(42,928 | ) | (42,928 | ) | ||||||||||||||||
| Amortization of land use rights |
(15,704 | ) | (15,704 | ) | ||||||||||||||||
| Depreciation and amortization |
(171,828 | ) | (171,828 | ) | ||||||||||||||||
| Property charges and others |
(301 | ) | (301 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total operating costs and expenses |
(2,431,771 | ) | — | — | — | (2,431,771 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| OPERATING INCOME |
339,914 | — | — | — | 339,914 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| NON-OPERATING INCOME (EXPENSES) |
||||||||||||||||||||
| Interest income |
4,485 | 4,485 | ||||||||||||||||||
| Interest expenses, net of capitalized interest |
(30,773 | ) | (30,773 | ) | ||||||||||||||||
| Other finance costs |
(15,060 | ) | (15,060 | ) | ||||||||||||||||
| Foreign exchange loss, net |
(3,394 | ) | (3,394 | ) | ||||||||||||||||
| Other income, net |
14,034 | 14,034 | ||||||||||||||||||
| Loss on extinguishment of debt |
(481 | ) | (481 | ) | ||||||||||||||||
| Costs associated with debt modification |
(592 | ) | (592 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-operating expenses, net |
(31,781 | ) | — | — | — | (31,781 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| INCOME BEFORE INCOME TAX |
308,133 | — | — | — | 308,133 | |||||||||||||||
| INCOME TAX EXPENSE |
(1,525 | ) | (1,525 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| NET INCOME |
$ | 306,608 | $ | — | $ | — | $ | — | $ | 306,608 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
F-9