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# UNITED STATESSECURITIES AND
EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

# FORM 10-K

|X| Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year
ended December 31, 2003Or|   | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For The Transition
Period From        To

_________________

Commission File Number
333-42147

_________________

# LAS VEGAS SANDS, INC.(Exact name of
registration as specified in its charter)

|                                                               | 
|-------------------------------------------------------------- | 
|Nevada                                                         | 
|                                                               | 
|(State or other jurisdiction of incorporation or organization) | 
|                                                               | 
|3355 Las Vegas Boulevard South, Room 1A                        | 
|Las Vegas, Nevada                                              | 
|                                                               | 
|(Address of principal offices)                                 | 

(702) 414-1000

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Registrants
telephone number, including Area Code

Securities registered
pursuant to Section 12(b) of the Act: NoneSecurities registered pursuant to Section 12(g)
of the Act: None

Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months; and (2) has been subject
to such filing requirements for the past 90 days. Yes |X| No |   |

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|

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

The aggregate market value of voting
stock held by nonaffiliates of registrant as of June 30, 2003 was $0.

The Company had 1,000,000 shares of
common stock outstanding as of March 30, 2004.

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# Las Vegas Sands,
Inc.

# Table of Contents

|        | Part I | 
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|Item 1  |        | 
|Item 2  |        | 
|Item 3  |        | 
|Item 4  |        | 
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|
|        |        | 
|Item 5  |        | 
|Item 6  |        | 
|Item 7  |        | 
|Item 7A |        | 
|Item 8  |        | 
|Item 9  |        | 
|Item 9A |        | 
|        |        | 
|
|        |        | 
|Item 10 |        | 
|Item 11 |        | 
|Item 12 |        | 
|Item 13 |        | 
|Item 14 |        | 
|        |        | 
|
|        |        | 
|Item 15 |        | 
|        |        | 
|        |        | 

ii

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# PART I

# ITEM 1. BUSINESS

# General

Las
Vegas Sands, Inc. (LVSI) and its subsidiaries (collectively, the
Company) own and operate the Venetian Casino Resort (the Casino
Resort), a Renaissance Venice-themed resort situated at one of the premier locations
on the Las Vegas Strip (the Strip). The Casino Resort is located across from
The Mirage and the Treasure Island Hotel and Casino. The Company completed an expansion of
the Casino Resort during the second quarter of 2003, which opened for business on June 26,
2003 (the Phase 1A Addition). Following its expansion, the Casino Resort
includes the only all-suites hotel on the Strip with 4,049 suites (the Hotel);
a gaming facility of approximately 116,000 square feet (the Casino); an
enclosed retail, dining and entertainment complex of approximately 446,000 net leasable
square feet (the Mall); and a meeting and conference facility of approximately
650,000 square feet (the Congress Center).

The
Casino Resort is physically connected to the approximately 1.15 million square foot Sands
Expo and Convention Center (the Expo Center), one of the largest facilities in
the United States specifically designed for trade shows and conventions. Management
believes that the combined facilities of the Casino Resort and the Expo Center (which is
separately owned by an affiliate of the Companys principal stockholder) is one of
the largest hotel and meeting complexes in the United States.

The
Casino Resort was developed on a stand-alone basis as the first phase of a two-phase
development. The Company has begun extensive design and planning work, is currently
exploring financing alternatives for, and has commenced demolition and clearing work on
the site of, a second similarly sized themed resort. This resort will consist of a hotel,
casino, restaurant, dining and entertainment complex and meeting and conference center
space and will be constructed on a 15-acre site situated between the Casino Resort and
Wynn Las Vegas Resort (the Phase II Resort). The Phase II Resort will be
constructed and developed by a wholly owned, indirect subsidiary of LVSI (the Phase
II Subsidiary).

The
Company is currently exploring various strategic alternatives available to it relating to
the Mall. The Company has not yet made any decision with respect to the Mall.

Venetian
Macau, S.A., a wholly owned subsidiary of the Company (Venetian Macau), is
currently constructing a Las Vegas-style casino in Macau (the Macau Casino)
and expects to open the main casino portion of the Macau Casino during May 2004 and the
remainder of the Macau Casino by June 2004. In addition to the Macau Casino, the Company
tentatively plans to build a 500-suite hotel, casino, and convention center complex, with
a Venetian-style theme similar to that of the Companys Las Vegas property. See
Risk Factors  There are Significant Risks Associated with the
Companys Planned Construction Projects, Which Could Adversely Affect its Financial
Condition, Results of Operations, or Cash Flows and  Venetian Macau may
not be Able to Satisfy its Obligation to the Macau Government to Develop the Macau
Venetian Casino Resort and Invest Approximately $535.6 million in Macau. Failure to
Satisfy this Obligation could Result in the Loss of its Gaming Subconcession.

LVSI
was incorporated in 1988 under the laws of the State of Nevada. In April 1989, LVSI
acquired the Sands Hotel and Casino (the Sands) from MGM Grand. LVSI owned and
operated the Sands from April 1989 to June 1996 when operations ceased to begin demolition
of the Sands and construction of the Casino Resort. Ground breaking for the Casino Resort
occurred in April 1997, the entire Casino Resort (excluding the Mall) opened on May 4,
1999, the Mall opened on June 19, 1999 and substantial completion of the entire Casino
Resort was achieved on November 12, 1999.

1

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LVSI
is the managing member and owner of 100% of the common equity of Venetian Casino Resort,
LLC (Venetian). Venetian is the owner and operator of the Hotel and Congress
Center, and the owner of the Casino. Under a casino lease (the Casino Lease),
Venetian leases the Casino to LVSI, which conducts all gaming operations in the Casino
Resort. Grand Canal Shops II, LLC, an indirect subsidiary of LVSI (the New Mall
Subsidiary) owns and operates the Mall. The executive offices of LVSI are located at
3355 Las Vegas Boulevard South, Room 1A, Las Vegas, Nevada 89109 and its telephone number
is (702) 414-1000.

This
Annual Report on Form 10-K contains certain forward-looking statements. See Item 7
 Managements Discussion and Analysis of Financial Condition and Results of
Operations  Special Note Regarding Forward  Looking Statements.

The
Company is a voluntary filer and files annual reports on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K, amendments to those reports and other information
with the Securities and Exchange Commission (SEC). The public can obtain
copies of these materials by visiting the SEC at 1-800-SEC-0330, or by accessing the
SECs website at www.sec.gov. In addition, a link to the Companys SEC filings
is provided on the Companys website at www.venetian.com.

The Casino Resort

The
Hotel

The
Hotel presently has 4,049 single and multiple bedroom suites situated in a 35-story,
three-winged tower rising above the Casino and a 14-story tower situated above a parking
garage. The lobby features a 65-foot domed ceiling decorated with Venetian-themed,
fresco-style paintings, a main passageway formed by a barrel-vaulted ceiling carried on
ornamental columns, and a replica of the unique three dimensional-style marble floors
found in Venetian palaces.

A
typical Hotel suite approximates 655 to 735 square feet, consisting of a raised sleeping
area and bathroom and a sunken living/working area. The suites bi-level
configuration creates a multi-function living space in which guests can sleep, work and
entertain and includes two queen-size beds or one king-size bed, a writing desk, dual-line
speakerphones, a fax machine and a sitting area. Approximately 318 of the suites are of
larger size for use by gaming customers.

The
Casino Resorts average daily room rates were $204 for the year ended December 31,
2003; $196 for the year ended December 31, 2002 and $196 for the year ended December 31,
2001. Gross room revenues during the year ended December 31, 2003 were $251.4
million, representing an increase of $44.7 million when compared to $206.7 million during
2002 and $204.2 million during 2001. During 2003, 2002, 2001, the occupancy rate for
available guestrooms (including complementaries) in the Hotel was 96.0%, 95.6%, and 94.6%
respectively.

The
Hotel leases space to eight restaurants to well known restaurateurs, (including Thomas
Keller, Emeril Legasse and Wolfgang Puck), that are located adjacent to the Casino and
five other food outlets located in a Venetian-style market food court located at the
casino level of the Hotel. Live entertainment is offered at the 50,000 square foot
entertainment complex, C2K. In addition, the Hotel provides a variety of
amenities for its guests, including a state-of-the-art health spa, operated by Canyon
Ranch Management, LLC, with massage and treatment rooms, exercise and fitness areas. The
Hotel features an outdoor swimming complex (including three pools, spas, pool bars and
cabanas) surrounded by gardens, waterways, fountains and sculptures.

In
addition to the Congress Center, the Hotel includes approximately 63,000 square feet of
exhibition hall space that was completed in October 2001, including the
Guggenheim/Hermitage Museum, an art museum featuring masterpiece collections from the
Guggenheim Museum in New York, the Hermitage in Saint Petersburg, Russia and other
museums. Approximately 59,000 square feet of the exhibition hall space housed the
Guggenheim Art of the Motorcycle exhibit until January 2003. The Company is
currently evaluating alternatives for long-term exhibitions similar to the Art of
the Motorcycle which ran for approximately two years or a potential showroom in the
exhibition hall space.

2

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The
Casino

The
Casino has 116,000 square feet of gaming space and is situated adjacent to the Hotel
lobby. The Casino floor is accessible from each of the Hotel, the Mall, the Congress
Center, the Expo Center and the Strip. The Casino is marketed to attract a broad base of
patrons, with a specific focus on frequent premium gaming customers. The Company markets
the Casino directly to this gaming market segment using database-marketing techniques,
slot clubs and traditional incentives such as reduced room rates and complimentary meals
and suites. The Company offers high roller gaming customers premium suites and
special hotel and casino services.

The
Casino environment is stylized to resemble a Venetian palazzo, with
architectural and interior design features representative of Venices Renaissance era
and its adjacent amenities include several signature restaurants such as
Emeril Lagasses Delmonico and Piero Selvaggios Valentino. The ceiling in the
table games area features fresco-style paintings of Venetian palaces. The gaming
facilities include approximately 2000 slot machines of various denominations, including
popular multi-property, linked progressive games. A high-end slot area, with a private
lounge, provides slot customers with premium slot products and services. The Casinos
approximately 126 table games (excluding baccarat tables) include the traditional games of
blackjack, craps and roulette, Asian games such as Pai Gow and Pai Gow
Poker, and popular progressive table games such as Caribbean Stud Poker
and Let It Ride. In addition, the Casino offers gaming customers an upscale
sportsbook room and an upscale gaming salon featuring baccarat, blackjack and roulette
tables. The gaming salon is specially designed for premium, high roller
gaming, with baccarat, blackjack and roulette, direct access to private cash-out windows
at the Casino cage and direct access to the Casinos credit department.

The Mall

The
Mall offers approximately 446,000 net leasable square feet of shopping, dining and
entertainment space located on two levels within the Casino Resorts main structure,
between the Casino level and the Hotel tower and in a separate approximately 38,000 square
foot retail annex adjacent to the Casino Resorts main structure and directly
accessible from the Strip. The Mall includes eight restaurants, six food court outlets,
three specialty shops and 58 retail stores. Visitors and guests can enter the Mall from
several different directions, including from the Strip via a moving sidewalk, from the
main gaming area of the Casino via escalators, from the Expo Center through the Congress
Center, from a crossover bridge across the Strip and directly from the Hotel.

The
Mall offers an array of quality dining experiences, including upscale restaurants such as
Wolfgang Pucks Postrio, offering international and American regional cuisines. The
Malls retail offerings include exclusive showcase boutiques, popular brand name
mid-priced stores and themed entertainment concepts. Premium branded tenants in the Mall
include Mikimoto, Movado, Burberry and Jimmy Choo. The restaurants and stores are set
along an approximately one-quarter mile Venetian-themed streetscape and front on the
Venetian-themed canal running its length and grouped in piazza-style settings.
Store and restaurant facades are designed to project the Venetian theme.

In
both 2003 and 2002, the Mall leased approximately 90% of its gross leasable space at an
average of approximately $100 per leasable square foot. Additional tenants and increased
proceeds from rents raised Mall revenues to $39.4 million in 2003 from $36.5 million in
2002. The average term of a lease in the Mall is 10 years.

The
Company announced during January 2004 that it has retained an investment-banking firm as
financial advisor, to explore various strategic alternatives available to it relating to
the Grand Canal Shops. Currently no decision has been made as to whether there will be a
sale or any other transaction involving the Grand Canal Shops. The Company is uncertain as
to what strategic alternatives it may ultimately pursue, and there can be no assurance
that, if any transaction is commenced, it will be completed or as to the value that any
such transaction might have for the Company.

The Expo
Center and the Congress Center

With
over 1.15 million gross square feet of exhibit and meeting space, including four exhibit
halls and 20 meeting rooms, the separately owned and operated Expo Center is the largest
privately-owned, and one of the largest overall trade show and convention facilities in
the United States (as measured by net leasable square footage). As part of the Casino
Resort, the Company owns and operates the Congress Center, an approximately 650,000 gross

3

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square
foot meeting and conference facility which links the Expo Center and the rest of the
Casino Resort. The Congress Center includes an approximately 85,000 square foot
column-free Venetian Ballroom, an approximately 13,500 square foot Palazzo
Ballroom, a meeting complex of 60 individual rooms which can be combined to create
three additional ballrooms and an approximately 105,000 square foot exhibition hall.
Together, the Expo Center and the Congress Center offer nearly 1.65 million square feet
of state-of-the-art exhibition and meeting facilities, which can be configured to provide
108 meeting rooms or accommodate large-scale multi-media events.

Management
markets the Congress Center to complement the operations of the Expo Center by target
marketing the Congress Center for business conferences and upscale business events
typically held during the mid-week period, thereby generating room-night demand and
driving average daily room rates during the weekday move-in/move-out phases of Expo Center
events. The Companys goal is to draw from attendees and exhibitors at Expo Center
events and from attendees of Congress Center events to maintain weekday room-night demand
at the Hotel from this higher budget market segment, when room demand would otherwise be
derived from the lower budget tour and travel group market segment.

In
2003, approximately 894,000 visitors attended trade shows and conventions at the Expo
Center during 116 show days. The Expo Center hosted 16 events on the 2003 Trade Show Week
200 list of the largest trade shows in the United States in 2003, including the Spring and
Fall Western Shoe Show and JCK Jewelry Show, as well as the Automotive Service Industry
Association Week, each of which were multiple-location events.

The
Company has no ownership of or financial interest in the Expo Center or Interface
Group-Nevada, Inc. (Interface), the owner of the Expo Center, and does not
exercise any control over the business or management of the Expo Center or Interface. All
of the capital stock of Interface is beneficially owned by Sheldon G. Adelson, the
principal stockholder of the Company (the Principal Stockholder). See
Item 13  Certain Relationships and Related Transactions  Possible
Conflicts of Interest.

Venetian,
the New Mall Subsidiary, Interface and the Phase II Subsidiary are parties to an Amended
and Restated Reciprocal Easement, Use and Operating Agreement (the Cooperation
Agreement), which, among other things, provides for the integrated operation of all
the facilities. Interface, the New Mall Subsidiary and Venetian allocate expenses shared
by the Expo Center, the Casino Resort and the Mall. In addition, the Company and Interface
jointly market the Hotel and Casino, the Mall, the Congress Center and the Expo Center.
Until December 31, 2010, Interface will use commercially reasonable efforts to have the
Hotel designated as the headquarters hotel for trade show and convention
events at the Expo Center, and the Company will use commercially reasonable efforts to
promote the use and occupancy of the Expo Center. In order to obtain the Casino
Resorts headquarters hotel designation, the Company has agreed with
Interface that, except under certain circumstances, trade shows of the type generally held
at the Expo Center will not be held in the Congress Center. The Company will be able to
conduct or permit to be conducted at the meeting and conference space that is a part of
the Phase IA Addition and the Congress Center, tradeshows and expositions of the type
generally held at the Expo Center so long as such space is at most 125,000 square feet and
the Company enters into a preferred reservation system agreement with Interface. Trade
show and convention promoters are under no obligation to select the Casino Resort as the
headquarters hotel for their events. See Item 13  Certain
Relationships and Related Transactions  Cooperation Agreement.

Macau Casino Project

Concession

On
June 26, 2002, the Government of the Macau Special Administrative Region of the
Peoples Republic of China (Macau) granted a provisional concession to
operate casinos in Macau to Galaxy Casino Company Limited (Galaxy), a
consortium of Macau and Hong Kong  based investors. Macau, the former Portuguese
colony located near Hong Kong, currently has annual gaming revenues of approximately $3.2
billion and is widely regarded as one of the fastest growing gaming markets in the world.
Approximately 10.8 million visitors arrived in Macau during 2002 (the latest available
count), according to the Macau Tourism Board. The following factors are expected to
continue to significantly improve Macaus status as a world-class gaming and resort
destination: (i) the increased ease of access from Hong Kong, China and Taiwan and other
Asian regional gaming markets (where casinos are currently banned); (ii) significant
foreign and domestic investment in new and expanded gaming products; and (iii) the
development of Disneyland China and other new resort developments in the region. The
Company believes that the Macau opportunity provides an international platform to expand
its premier Venetian brand and create increased diversification of, and a new source of
significant growth for, its revenue base.

4

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Galaxy
was one of three entities to be granted a casino license in Macau. During December 2002,
Venetian Macau and Galaxy entered into a subconcession agreement. The subconcession
agreement with Galaxy was recognized and approved by the Macau government and allows
Venetian Macau to develop and operate certain casino projects in Macau, including the
Macau Casino, separately from Galaxy. It is expected that Galaxy will in turn develop
hotel and casino projects separate from the Company. Galaxy is currently expected to
complete and open a small casino during the second quarter of 2004.

Under
the subconcession agreement, Venetian Macau is obligated to develop and open the Macau
Venetian Casino Resort, a hotel, casino and convention center complex with a
Venetian-style theme similar to the Casino Resort in the area of Macau known as Cotai by
June 2006. Venetian Macau is also obligated to invest, or cause to be invested, at least
4.4 billion patacas (approximately $535.6 million at exchange rates in effect on December
31, 2003) in various development projects in Macau by June 2009. The construction and
development costs of the Macau Casino will be applied to the fulfillment of this total
investment obligation to the Macau government. It is expected that the construction and
development costs of the Macau Venetian Casino Resort will satisfy the remainder of this
obligation.

The
initial term of the Venetian Macau subconcession agreement is 20 years, beginning on June
27, 2002 and ending on June 26, 2022. The subconcession agreement can be terminated after
the fifteenth year, upon one years prior notice and upon fair and reasonable
compensation for the balance of the term. The Macau government also has the right, after
consultation with Venetian Macau, to unilaterally terminate, without compensation to
Venetian Macau, the subconcession at any time upon the occurrence of specified events of
default. Venetian Macau has the following obligations under the subconcession agreement:

| |  | ensuring
the  proper operation and conduct of casino games;
| | - | -----------------------------------------------------------

| |  | employing
people with appropriate qualifications;
| | - | -------------------------------------------------

| |  | operating
 and  conducting  casino  games of chance in a fair and honest  manner  without  the
 influence  of           criminal activities; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------

| |  | safeguarding
and ensuring Macaus interests in tax revenue from the operation of casinos and
other gaming areas.
| | - | ----------------------------------------------------------------------------------------------------------------

Additionally,
Venetian Macau is subject to certain reporting requirements in Macau, including with the
Macau Gambling Inspection and Coordination Bureau. Venetian Macau is also obligated to pay
to the Macau government an annual premium with a fixed portion equal to 30 million patacas
(approximately $3.7 million at exchange rates in effect on December 31, 2003) and a
variable portion based on the number and type of gaming tables used by Venetian Macau. The
premium will generally become payable upon commencement of operations. Venetian Macau will
also have to pay a special gaming tax of 35% of gross gaming revenues and contribute an
additional 4% of gross gaming revenue to Macau.

Macau
Casinos

Venetian
Macau is currently constructing the Macau Casino and expects to open the main casino
portion of the Macau Casino during May 2004 and the remainder of the Macau Casino by June
2004. In addition, the Company tentatively plans to build the Macau Venetian Casino
Resort, a 500-suite hotel, casino and convention center complex, with a Venetian-style
theme similar to that of the Companys Las Vegas property. The Company currently
anticipates that the Macau Casino construction will be completed at a total cost of $257.9
million. Due to inherent risks in large construction projects in a foreign jurisdiction,
however, there can be no assurance that the Macau Casino will be constructed without
substantial delays or cost increases. See Item 7  Managements Discussion
and Analysis of Financial Condition and Results of Operations  Liquidity and Capital
Resources and Risk Factors  There are Significant Risks Associated
with the Companys Planned Construction Projects, Which Could Adversely Affect its
Financial Condition, Results of Operations or Cash Flows Venetian Macau may
not be able to satisfy its obligation to the Macau Government to develop the Macau
Venetian Casino Resort and invest approximately $535.6 million in Macau. Failure to
satisfy this obligation could result in the loss of its Gaming Subconcession and
Certain Nevada Gaming Laws Apply to the Companys Planned Gaming
Activities and Associations in Macau and Alderney.

5

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During
the year ended December 31, 2003, the Company incurred and expensed $9.4 million of
pre-opening and development expenses and capitalized $52.8 million of capital expenditures
associated with the development of the Macau Casino.

Phase II Resort

The
Company has begun extensive design and planning work on the Phase II Resort and has
incurred demolition and clearing costs on the site of the Phase II Resort. During 2003,
the Company invested $17.0 million toward the development of the Phase II Resort. The
Company has not yet set a date to begin construction of the Phase II Resort. If the
Company determines to construct the Phase II Resort, it will be required to raise
substantial debt and/or equity financings. The Company is currently exploring financing
alternatives for the Phase II Resort and has no commitments to fund the hard construction
costs of the Phase II Resort. In addition, the development of the Phase II
Resort may also require obtaining additional regulatory approvals.

Internet Gaming and
Other New Business Ventures

The
Company is actively pursuing the possibility of developing and operating an Internet
gaming site and is currently exploring other business opportunities for expansion and the
possibility of operating casino resorts in certain foreign jurisdictions, including in the
United Kingdom. The Company has hired consultants to assist it in exploring gaming
opportunities in the United Kingdom. The Company has entered into agreements in principle
subject to the successful negotiation of final documentation with two prominent football
clubs in the United Kingdom to build entertainment and gaming facilities. During March
2003, a subsidiary of the Company received an interactive gaming license and an electronic
betting center license from the Alderney Gambling Control Commission but has not yet
established any operations. Alderney is part of the Channel Islands located between Great
Britain and France. Alderney is a self-governing member of the British Commonwealth. The
Companys Internet and other projects are in developmental or exploratory stages and
there can be no assurance that any of these ventures will prove to be attractive
opportunities, or that if implemented they will be successful. The Company intends to
continue to explore similar new business opportunities.

Business and Marketing
Strategy

The
Companys primary business objective is to become one of the leading global providers
of premium destination casino resort experiences in order to drive superior returns on
invested capital and to increase asset value. To achieve this objective, the Company: (i)
operates a must-see destination resort in Las Vegas; (ii) captures premium
room rates through a differentiated all-suites product; (iii) drives hotel occupancy,
casino use and mall shopping through the link to the Expo Center and the Congress Center;
(iv) caters to a higher budget customer mix by offering a unique combination of
hospitality and gaming facilities; (v) leverages the Casino Resorts premium
co-branding strategy to drive revenues; (vi) targets premium gaming customers and (vii)
strongly pursues development opportunities in foreign markets with attractive gaming
prospects such as Macau and the United Kingdom.

Operate
a "Must-See" Destination Resort in Las Vegas

The
Casino Resort, with its extensive theming, dining, shopping and entertainment, is a
must-see destination located at the heart of the Strip. The Casino Resort is
distinctly themed to provide visitors with the sense of being surrounded by the
architecture, music, art and history of Renaissance Venice. The Venetian-themed setting
along the Casino Resorts frontage on the Strip includes waterways, gondolas and
replicas of Venetian landmarks, such as the Doges Palace, the Rialto Bridge, the Ca
Doro and the Campanile Tower. The Mall features a one-quarter mile Venetian streetscape,
with intimate piazza-style settings. A 630-foot canal runs along the Venetian
streetscape, with gondolas and waterside cafes and crossed by authentically styled
Venetian bridges. Management believes that these attractions generate significant room
demand and foot traffic.

6

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The
Casino Resort has approximately 740 feet of frontage on the east side of the Strip and is
located next to Harrahs and across from some of the most visited casino resorts and
attractions on the Strip, including The Mirage, the Treasure Island Hotel and Casino and
The Forum Shops at Caesars Palace Hotel.

Capture
Premium Room Rates through Differentiated All-Suites Product

The
typical Hotel suite ranges in size from approximately 655 square feet to 735 square feet
(compared to approximately 360 to 400 square feet on average for a standard room in
competing facilities on the Strip), and consists of a sunken living/working area and a
raised sleeping area with a marble bathroom; each area has its own television
entertainment center. Each suite living/working area includes a sitting area and a writing
desk and offers business amenities such as dual-line speakerphones, a fax machine and
dataport access. The bathrooms are oversized, featuring a separate bathtub and shower,
dual sinks and a telephone. In addition, the Hotel offers larger suites, including the
Presidential and penthouse suites.

The
Hotel offers the only all-suites product on the Strip with first-class services, amenities
for business travelers, such as in-room fax machines, two phone lines and high-end resort
facilities. With the completion of the Phase IA Addition which included the addition of a
new 1,013-room hotel tower, Venezia, the Hotel is now the third largest hotel in the
world. In July 2003, the Hotel was awarded three top honors by Travel & Leisure
Magazine: Top 100 Overall in the world Top 100 Continental U.S.
and Canada, and Top 15 for $250 or less in the world.  In 2002,
the Hotel was awarded the Exxon Mobil Four Star Award, Conde Nasts
Best 50 Hotels in North America, AAAs Four Diamond Award and
Meetings and Convention Magazines Prestigious Gold Key Award for meeting
hotels in the United States. In managements experience, business and leisure
travelers consider suites desirable, superior accommodations. For business travelers, the
Hotels suites, which accommodate informal business meetings and social gatherings,
offer guests a unique, single location in which to work and entertain in close proximity
to the Expo Center and the Strip. Leisure travelers appreciate both the Hotels
spacious suites and extensive facilities. The Company believes that the all-suites format,
together with the Casino Resorts many other unique attributes, results in a highly
differentiated destination resort product, allow for premium pricing on rooms and provide
a competitive advantage over other hotel/casino properties on the Strip.

The
Companys mix of hotel sales is as follows: group and convention room sales are
39.0%; hosted casino customers 15.0%; wholesale 12.0% and free and independent travelers
34.0% of total sales. The Hotels average daily room rates were $204 in 2003.

Drive
Hotel  Occupancy,  Casino Use and Mall  Shopping  through the Link to the Expo Center and
the  Congress Center

The
Casino Resort is the first themed entertainment resort in Las Vegas designed specifically
to accommodate large-scale trade shows, conventions, conferences and meetings. These trade
shows, conventions, conferences and meetings often draw more attendees than the Hotel can
accommodate and generate additional non-Hotel traffic. The Expo Center and the Congress
Center provide recurring, predictable demand for mid-week room nights from business
travelers. The Companys diverse business model draws convention attendees from all
parts of the United States and the world. In connection with 116 show days during 2003,
approximately 894,000 visitors attended trade shows and conventions at the Expo Center.
The Hotel had a mid-week occupancy rate of 94.2% in 2003 (compared to an 81.6% mid-week
average occupancy rate on the Strip), due in large part to the Casino Resorts trade
show and convention business. In 2003, the Hotels average daily room rate was
approximately $204. Pursuant to the Cooperation Agreement, the owner of the Expo Center
markets the Casino Resort to promoters of Expo Center trade show conventions and other
events as the headquarters hotel for such events. The Casino Resort offers
attendees of events at the Expo Center and the Congress Center the most convenient hotel
accommodations in Las Vegas.

Cater to
a Higher-Budget Customer Mix by Offering a Unique Combination of Hospitality and Gaming
Facilities

Management
markets the Casino Resort to attract higher-budget business travelers and free and
independent travelers, resulting in a higher-budget customer mix both on weekdays and on
weekends. By appealing to customers in these upscale market segments, the Company has
reduced its reliance on the lower-budget tour and travel market. Management believes that
business travelers typically pay more for rooms and spend more on entertainment than
weekday customers in other categories, such as tour groups. Management believes that the
Casino Resorts central location at the heart of the Strip adjacent to the Expo
Center, and its all-suites hotel product all combine to allow it to compete effectively
for the higher-budget mid-week trade show, convention and meeting attendees. On both
weekdays and weekends, the all-suites product at the Hotel appeals to free and independent
leisure travelers and high-roller gaming customers, also segments of the
travel market who spend more on rooms and entertainment.

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Leverage
the Casino Resort's Premium Co-Branding Strategy to Drive Revenues

The
Company expects to build upon awareness of the Venetian brand by continuing to attract a
unique collection of signature restaurant concepts and premier global retail
brands to the Casino Resort. This strategy allows the Company to focus on its core
competency of providing first-class hotel and meeting facilities while attracting
additional guests and foot traffic because of its own brand name and its concentration of
other premier brands. The Casino Resort has been designed such that foot traffic from the
Strip, the Expo Center, the Congress Center and the Hotel are funneled through the Casino
floor in order to attract and retain a broad base of Casino patrons. The Company seeks to
maximize guest spending from the Casino Resorts target markets by offering a
concentration of fine restaurants, exclusive boutiques, the Canyon Ranch health spa and
the 50,000 square foot entertainment complex, C2K. Several well-known
restaurateurs operate signature restaurants on the premises, such as Thomas
Kellers Bouchon, Emeril Lagasses Delmonico and Wolfgang Pucks Postrio.
The Mall includes premium branded retailers such as Mikimoto and Burberry and nationally
recognized retailers such as Banana Republic, Kenneth Cole and Brookstone. In addition,
the Casino Resort includes the Guggenheim Hermitage Museum, which houses various art
exhibits in conjunction with the Guggenheim Museum in New York and the Hermitage Museum in
St. Petersburg, Russia. The co-branding strategy enhances the Casino Resorts appeal
to the higher budget room guests. The Company believes that the Casino Resorts
premier location on the Strip, its extensive theming as well as its established and
growing concentration of signature restaurant concepts and premier global
retail brands have been an effective strategy for driving revenues and the awareness of
the Venetian brand. The Company expects to build upon the Venetians brand awareness
to provide continued revenue growth opportunities from retail and restaurants to drive
Hotel room rates and Casino patronage.

Target
Premium Gaming Customers

Management
believes that the Casino Resorts all-suites product, themed atmosphere and high-end
amenities, including premium restaurants and shops, offer gaming customers a unique Las
Vegas experience. The Company actively markets the Casino to frequent premium gaming
customers. In particular, the Company seeks to attract high roller gaming
customers by offering premium suites and special hotel services. Because of the all-suites
format in the Hotel, the Casino Resort is able to offer many gaming customers
complimentary suites (considered premium accommodations in Las Vegas) during high
occupancy periods, such as weekends and holidays, when they would not be offered such
suites by the Companys competitors. The premium gaming customers generally require
the issuance of casino credit and in some instances pre-arranged discounts of losses.

Strongly
Pursue  Development  Opportunities in Foreign Markets with Attractive Gaming Prospects
such as Macau and the United Kingdom

The
Company is currently constructing the Macau Casino which it expects to fully complete by
June 2004. The Company believes that Macau is one of the largest and fastest growing
gaming markets in the world. The Company is also committed to constructing a second casino
resort in Macau. The Company is also actively looking at opportunities in the United
Kingdom in anticipation of the enactment of proposed changes to the gaming laws of the
United Kingdom. The Company has entered into agreements in principle subject to the
successful negotiation of final documentation with two prominent football clubs in the
United Kingdom to build entertainment and gaming facilities. In each of these markets, the
Companys strategy is to replicate the successful strategies that it has used with
respect to the Las Vegas market.

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The Las Vegas Market

Las
Vegas is one of the fastest-growing and largest entertainment markets in the country. Las
Vegas hotel occupancy rates are among the highest of any major market in the United
States. According to the Las Vegas Convention and Visitors Authority (the
LVCVA), the number of visitors traveling to Las Vegas has increased at a
steady and significant rate for the last ten years from 23.5 million visitors in 1993 to
35.5 million visitors in 2003, a compound annual growth rate of 4.2%. In addition, the
population of Las Vegas has grown from approximately 890,000 in 1993 to approximately
1,630,000 in 2003, a compound annual growth rate of 6.2%. Management believes that the
growth in the Las Vegas market has been enhanced by a dedicated program of the LVCVA and
major Las Vegas hotels to promote Las Vegas as an exciting vacation and convention site,
the increased capacity of McCarran International Airport and the introduction of large,
themed destination resorts in Las Vegas.

Although
visitation, demand and expectations may be impacted by international and domestic events
and other factors and conditions, the Company expects hotel occupancy rates in Las Vegas
to remain high as a result of the sustained growth in the number of visitors traveling to
Las Vegas and the lack of new construction in Las Vegas, other than Wynn Las Vegas, an
approximately 2,700 room resort to be built on the site of the former Desert Inn, one
block north of the Casino Resort on the corner of Las Vegas Boulevard and Sands Avenue,
anticipated to open in April 2005, and 1,000 hotel room additions to the Bellagio and
Caesars expected to open during 2004.

Las
Vegas as a Trade Show, Convention and Meeting Destination

In
2003, according to the LVCVA, Las Vegas was the most popular trade show destination (with
a 25% market share of the Trade Show Week 200 Shows in terms of net square footage) and
the fourth most popular convention destination in the United States. In 1993,
approximately 2.4 million persons attended trade shows and conventions in Las Vegas and
spent approximately $2.3 billion. In 2003, the number of trade show and convention
attendees had increased to 5.7 million and the amount spent by trade show and convention
attendees was approximately $6.5 billion.

Trade
shows are held for the purpose of getting sellers and buyers of products or services
together in order to conduct business. Trade shows differ from conventions in that trade
shows typically require substantial amounts of space for exhibition purposes and
participant circulation. Conventions generally are gatherings of companies or groups that
require less space for breakout meetings and general meetings of the overall group. Las
Vegas offers trade shows and conventions a unique infrastructure for handling the
worlds largest shows, including the concentration of 48,000 hotel rooms located on
the Strip, three convention centers (the Expo Center, Mandalay Bay Convention Center, and
the Las Vegas Convention Center (the LVCC)) with a total of approximately 6.9
million square feet of convention and exhibition space, convenient air service from major
cities throughout the United States and other countries, and significant entertainment
attractions. In addition to the Expo Center, Mandalay Bay Convention Center, and the LVCC,
the MGM Grand Hotel and Casino has a conference and meeting facility of approximately
300,000 gross square feet, and the Mirage has a 100,000 gross square feet of meeting
space. Mandalay Bay opened its 1.8 million square foot convention center during January
2003. Management believes that Las Vegas will continue to evolve as the countrys
preferred trade show and convention destination.

Expanding
Hotel Market

During
2003, Las Vegas was among the most popular vacation destinations in the United States. Las
Vegas has experienced a period of rapid hotel development with the number of hotel and
motel rooms in Las Vegas increasing by 52.0% over the last 10 years, from 86,053 in 1993
to 130,482 in 2003. The Company expects that the concentration of quality themed casino
hotels and resorts will increase visitor interest in Las Vegas as a business event and
vacation destination, and, as a result, increase overall demand for hotel rooms, gaming
and entertainment.

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Growth
of Las Vegas Retail Sector and Non-Gaming Revenue Expenditures

In
order to draw additional visitors, an increasing number of destination resorts are
developing non-gaming entertainment to complement their gaming activities. According to
the LVCVA, while gaming revenues have increased from $4.7 billion in 1993 to $7.8 billion
in 2003 (a compound annual growth rate of 5.2%), non-gaming tourist revenues increased
from $10.3 billion to $32.8 billion over the same period (a compound annual growth rate of
8.1%). The newer, large themed Las Vegas destination resorts have been designed to
capitalize on this growth by providing better quality hotel rooms at higher rates and by
providing expanded shopping, dining and entertainment opportunities to their patrons in
addition to gaming.

Infrastructure
Improvements

Clark
County and metropolitan Las Vegas have completed several infrastructure improvements to
accommodate the increase in travel to Las Vegas by all modes of transportation. According
to the LVCVA, in 2003 visitors to Las Vegas arrived by the following methods of
transportation: 45% by air; 40% by auto; 8% by recreational vehicle and 7% by bus.

McCarran
International Airport Expansion

During
the past five years, the facilities of McCarran International Airport have been expanded
to accommodate the increased number of airlines and passengers that it services. The
number of passengers traveling through McCarran International Airport has increased from
22.5 million in 1993 to 36.3 million in 2003. Long-term expansion plans for McCarran
International Airport provide for additional runway and related areas. An addition to the
terminal is currently under construction and expected to be completed during 2006.

The Macau Market

The
Company believes that Macau is located in one of the worlds largest gaming markets.
Centrally located, Macau is approximately one hour away from densely populated Hong Kong
via a hydrofoil ferry system and has the advantage of sharing a border with Chinas
Guangdong Province, which has approximately 90 million residents and is considered one of
the most prosperous regions of China. In addition, some of the largest cities in Asia are
located within a two-hour flight of Macau, including Taipei, Kaohsiung and Manila.

Since
the reversion of Macau to China, gaming revenue in Macau has grown from approximately $1.8
billion in 1999 to approximately $2.9 billion in 2002, a 16.6% compound annual growth
rate, and visitor volume has grown from approximately 7.4 million in 1999 to
approximately 11.5 million in 2002, a 15.8% compound annual growth rate. The dominant
feeder market to Macau has been and continues to be Hong Kong. Although the absolute
number of visitors from Hong Kong continues to grow, that market has shrunk as a
percentage of the total visitor distribution from 67.2% in 1997 to 44.2% in 2002. The
number of visitors from China has exhibited consistent growth from 1997 to 2002, with a
51.6% compound annual growth rate in the number of visitors for that period. As the second
fastest growing market, the number of visitors from Taiwan has grown almost 70% from 1997
to 2002.

The
majority of gaming revenue in Macau today is generated by its two most popular properties.
The Company estimates that the Lisboa Hotel and the Jai Alai account for approximately 70%
of total gaming revenue in Macau. The Company believes that as new facilities and
standards of service come on line, Macau will increasingly be perceived as a more
desirable gaming destination. The improved experience of visitors to Macau should lead to
an increased number of return trips from existing markets and open several new markets.

While
none of the primary feeder markets surrounding Macau offer legalized casino gaming, these
markets generate gaming demand. Table games are the dominant form of gaming in Asia.
Baccarat is by far the most popular game, followed by blackjack, big and
small, roulette and other traditional U.S. and Asian games. Slot machines are
offered in Macau, but they are few in number and appear to be used more for filling in
dead-space in the main gaming areas and out-of-the-way spaces than as a viable gaming
option. The Company believes the limited slot product reflects the markets
perception that slots currently offered in Macau are an inferior slot product and the lack
of attention given to this segment by existing Macau casinos. By contrast, in other gaming
venues catering to an Asian clientele, slot machines are in high demand and are quite
profitable.

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The
Company believes that the proposed overhaul by the Macau government of Macaus casino
gaming legal regulatory framework, including the enactment of proposed new regulations on
credit extension, collection and taxes, which will enable the Company to effectively
compete in the VIP gaming market, coupled with a vastly improved gaming product should
allow us to grow this market.

Competition

The
casino/hotel industry is highly competitive. Strip hotels compete with other hotels on the
Strip and with other hotels in downtown Las Vegas. The Casino Resort also competes with a
large number of hotels and motels near Las Vegas. Many of the Companys competitors
are subsidiaries or divisions of large public companies and may have greater financial and
other resources than the Company.

Hotel/Casino
Properties

Competitors
of the Casino Resort include themed resorts on the Strip, such as The Bellagio, Mandalay
Bay and Paris. In November 2002, Steve Wynn began construction of the Wynn Las Vegas
Resort. Wynn Las Vegas is an approximately 2,700 hotel-room resort and casino being
constructed on the site of the former Desert Inn located on Sands Avenue across from the
site of the anticipated Phase II Resort, with an expected completion date of April 2005.
During 2003, Mandalay Bay completed, Bellagio began construction, and Caesars announced
the planned construction, of 1,000 hotel room additions. Management is not aware of any
other new significant developments of casino properties in Las Vegas in the near future.
The Casino Resort may also compete with the Phase II Resort, to the extent, its business
is not complementary to that of the Casino Resort.

The
Company believes that themed resorts are generally more successful at generating higher
traffic volumes and higher revenues and operating income than the large-scale non-themed
properties in Las Vegas. Themed resorts compete on the basis of the quality of theming, as
well as on more traditional bases, such as quality of rooms, pricing and location. Themed
resorts tend to be clustered on the Strip, creating a critical mass of entertainment
experiences, which generate significant traffic for the themed resorts as a group, thereby
capturing a larger portion of the Las Vegas hotel and gaming market than non-themed
properties. The Company believes that the existence of other themed resorts in close
proximity to the Casino Resort directly benefits the Casino Resort. The Casino Resort is
part of a cluster of themed properties, which includes The Mirage, the Treasure Island
Hotel and Casino, The Bellagio and The Forum Shops at Caesars Palace Hotel, and may in the
future include Wynn Las Vegas and the Phase II Resort.

In
addition to the advantages of being a centrally located, themed resort, the Cooperation
Agreement and the Casino Resorts direct connection with the Expo Center provide the
Casino Resort with a unique tie-in to one of the premier trade show and convention
facilities in the United States. With these competitive advantages, the Casino Resort is
positioned to appeal to the mid-week meeting, trade show and convention market composed of
customers who pay higher average room rates and have higher average travel budgets than
other categories of weekday customers, such as tour groups.

The
hotel-casino operation of the Casino Resort also competes, to some extent, with other
hotel-casino facilities in Nevada and in Atlantic City, hotel/casino, and other resort
facilities elsewhere in the country and the world, Internet gaming web sites and state
lotteries. In addition, certain states have legalized, and others may legalize, casino
gaming in specific areas. The passage of the Indian Gaming Regulatory Act in 1988, for
example, has led to rapid increases in Native American gaming operations. Such
proliferation of gaming venues could significantly and adversely affect the business of
the Company. In particular, the legalization of casino gaming in or near major
metropolitan areas, such as New York, Los Angeles, San Francisco and Boston, from which
the Company attracts customers, could have a material adverse effect on the business of
the Company. In October 2001, the New York legislature approved a bill for expanded casino
gaming on Native American reservations in that state. The expansion of gaming in New York
could also have a material adverse effect on the business of the Company.

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Trade
Show and Convention Facilities

The
Expo Center, the Congress Center, and Las Vegas generally compete with trade show and
convention facilities located in and around major U.S. cities, including Atlanta, Chicago,
New York, and Orlando. Within Las Vegas, the Expo Center and the Congress Center compete
with the LVCC, which is located off the Strip and currently has 3.2 million gross square
feet of convention and exhibit facilities. In addition to the LVCC competition, Mandalay
Bay has a 1.8 million square foot convention center. The MGM Grand Hotel and Casino has a
conference and meeting facility of approximately 300,000 square feet and the Mirage has a
100,000 gross square feet of meeting space. It is anticipated that Wynn Las Vegas will
have 300,000 square feet of meeting space. The conference and meeting facilities at these
hotel/resorts are the Congress Centers primary competition. The Company expects that
the LVCC and the Mandalay Bay Convention Center will be the primary competitors of the
Expo Center. To the extent that any of the competitors of the Casino Resort can offer a
hotel/casino experience that is integrated with substantial trade show and convention,
conference and meeting facilities, the Casino Resorts competitive advantage in
attracting trade show and convention meeting and conference attendees could be adversely
affected. Other cities such as Boston, Orlando, and Pittsburgh are also in the process of
developing, or have announced plans to develop, convention centers and other meeting,
trade and exhibition facilities.

Mall

The
Mall competes with both themed resorts, which offer shopping, dining and entertainment
opportunities to their patrons, and other retail malls in or near Las Vegas. The
Malls direct competition includes The Forum Shops at Caesars Palace and The Desert
Passage Shops at the Aladdin. Caesars Entertainment recently began construction of an
approximately 200,000 square-foot expansion of The Forum Shops at Caesars Palace. The Mall
also competes with The Fashion Show Mall, a more traditional mall located near the Casino
Resort, which recently expanded to almost double its size. In the future, the Mall may
also compete with the planned retail, dining, and entertainment facilities in the Phase II
Resort. Mandalay Resort Group has begun the development and construction of a retail
center near its Mandalay Bay Resort , which is expected to open during 2004.

Macau

In
Macau, the Company expects to compete with the other two parties granted casino licenses,
which are a group led by Steve Wynn and a group led by Stanley Ho, who, at that time, held
Macaus only existing casino license. The Company also expects to compete with
Galaxy. Steve Wynn has not begun construction of a casino as of this date and Galaxy will
complete and open a small casino during the first quarter of 2004.

Advertising and
Marketing

The
Company advertises in many types of media, including television, radio, newspapers,
magazines, and billboards, to promote general market awareness of the Casino Resort as a
unique vacation, business and convention destination due to its first-class hotel, casino,
retail stores and restaurants. The Mall tenants also pursue their own general advertising
and promotional activity, which benefits the Mall. The Macau Casino will provide
advertising and direct marketing of its casino early in the second quarter of 2004. The
Company actively engages in direct marketing, which is targeted at specific market
segments, such as the meeting, convention and trade show market and the premium gaming
market, and database marketing, which focuses on high frequency, high-margin market
segments such as the high-roller gaming market.

Agreements Relating to
the Casino Resort

Cooperation
Agreement

The
Companys business plan calls for each of the Casino Resort, the Mall, the Expo
Center and if built, the Phase II Resort, though separately owned, to be integrally
related components of one facility. In establishing the terms for the integrated
operation of these components, the Cooperation Agreement sets forth agreements regarding,
among other things, encroachments, easements, operating standards, maintenance
requirements, insurance requirements, casualty and condemnation, joint marketing, the
construction of the Phase II Resort, and the sharing of some facilities and related
costs. Subject to

12

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applicable
law, the Cooperation Agreement binds all current and future owners of the Expo Center,
the Casino Resort, the Mall and the Phase II Resort (and the land on which the Phase II
Resort is expected to be built), and has priority over the liens securing the Companys
senior secured debt entered into on June 4, 2002 (the Senior Secured Credit Facility)
and the Mortgage Notes and any liens securing any indebtedness of the Mall, the Expo
Center or Phase II Resort. Accordingly, subject to applicable law, the obligations in the
Cooperation Agreement will run with the land if any of the components change
hands.

Operating
Covenants

The
Cooperation Agreement regulates certain aspects of the operation of the Expo Center, the
Mall and the Casino Resort. For example, Under the Cooperation Agreement, the Company is
obligated to operate the Casino Resort continuously and to use it exclusively in
accordance with standards of first-class Las Vegas Boulevard style hotels, casinos and
retail and restaurant complexes. In turn, the New Mall Subsidiary is obligated to operate
the Mall exclusively in accordance with standards of first-class restaurant and retail
complexes, and Interface is obligated to operate and to use the Expo Center exclusively in
accordance with standards of first-class convention, trade show and exposition centers.
The Cooperation Agreement also provides that the Company will not and the New Mall
Subsidiary will not (and will not permit any other person to) own, operate, lease, license
or manage any building or other facility, at or in the Casino Resort, Phase II Resort, the
Mall or the land on which the Casino Resort, the Phase II Resort or the Mall sits, that
provides space for shows or expositions of the type generally held at the Expo Center. The
Company is able to conduct or permit to be conducted at the meeting and conference space
that is a part of the Phase IA Addition, and at the Phase II Resort, tradeshows or
expositions of the type generally held at the Expo Center so long as such space is at most
125,000 square feet, and the Company enters into preferred reservation system agreements
with Interface that governs the booking of exposition and tradeshows in the Phase IA
Addition meeting space and in the Phase II Resort, and agreements for Interface to provide
audio-visual, telecommunications, electrical, janitorial and other related services to
group customers of the Phase IA Addition meeting space or the Phase II Resort. See
Item 13  Certain Relationships and Related Transactions  Preferred
Reservation System Agreement and Meeting Services Agreement.

Additionally,
until December 31, 2010, Interface, upon the Companys request, will use commercially
reasonable efforts to have the Casino Resort designated as the headquarters
hotel for trade show and convention events at the Expo Center. In turn, the Company
will use commercially reasonable efforts to promote the use and occupancy of the Expo
Center.

Further,
Interface agreed under the Cooperation Agreement that, until such time as the indebtedness
under the Mortgage Notes has been paid in full, Interface will not incur additional debt
secured by the Expo Center if such additional debt will cause the aggregate indebtedness
secured by the Expo Center to exceed the greater of 85% of the then fair market value of
the Expo Center or $140.0 million plus any additional amounts permitted to be advanced for
equipment leases or equipment financings under the terms of the mortgages encumbering the
Expo Center in 1997.

In
addition, subject to certain exceptions, until December 31, 2010, Interface will not
voluntarily dispose of its interest in the Expo Center and interest in Interface, except
to a buyer of the Casino Resort.

Maintenance
and Repair

Venetian
must maintain the Casino Resort as well as some common areas and common facilities that
are to be shared with the Mall and the Expo Center. The cost of maintenance of all shared
common areas and common facilities is to be shared by the Company, the New Mall Subsidiary
and Interface. The New Mall Subsidiary must maintain, repair and restore the Mall and all
common areas and common facilities located in the Mall, and Interface must maintain,
repair and restore the Expo Center and all common areas and common facilities located in
the Expo Center.

Insurance

The
owners of the Casino Resort, the owner of the Mall and the owner of the Expo Center must
also maintain minimum types and levels of insurance, including property damage, general
liability and business interruption insurance.

The
Cooperation Agreement establishes an insurance trustee to assist in the implementation of
the insurance requirements.

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The
Cooperation Agreement provides that in the event of a casualty affecting all or part of
the Casino Resort, the Expo Center or the Mall, then (a) all insurance proceeds above $1.5
million shall be paid to an insurance trustee to be disbursed in accordance with the
provisions of the cooperation agreement and (b) the owners of the affected properties will
(subject to certain conditions in the case of the Expo Center) agree to permit such
proceeds to be used to restore such property as nearly as reasonably possible to its
condition immediately preceding the casualty; provided, however, that no mortgagee of a
damaged property shall be required to permit such application of the resulting insurance
proceeds unless within 90 days after the casualty (a) the mortgagee receives an opinion
from an independent expert to the effect the damaged property may be completed within one
year after the delivery of the opinion and (b) the mortgagee receives evidence that the
insurance proceeds (together with any other funds committed by the owner) are sufficient
to cover the anticipated costs of the restoration (including scheduled debt service
payments through the anticipated date of completion of the restorations). If the owner of
the affected property is unable to satisfy the foregoing conditions, then the owners
equitable share of the insurance proceeds shall be applied in accordance with the
provisions of its mortgage(s).

In
the event of a condemnation of a part of the Casino Resort, a part of the Mall or a part
of the Expo Center, the Cooperation Agreement requires that the affected owner restore the
affected property as nearly as reasonably possible to its condition at the time of the
partial condemnation less the portion condemned.

The
Cooperation Agreement also requires that insurance proceeds payable in connection with a
casualty that is the result of a terrorist act be allocated equitably among the Casino
Resort, the Mall and the Expo Center in accordance with the damages suffered by each so
long as (a) proceeds in an amount not to exceed the lesser of (i) $105 million, (ii) the
cost of restoring the Mall and the rental income lost by the Mall as a result of the
terrorist act (and covered by such insurance), and (iii) the total amount of such
insurance proceeds, are paid first to the mortgagee of the Mall, and (b) proceeds in an
amount not to exceed the lesser of (i) $137 million, (ii) the cost of restoring the Expo
Center and the income lost by the Expo Center as a result of the terrorist act (and
covered by such insurance, and (iii) the total amount of such insurance proceeds, are paid
second to the mortgagee of the Expo Center. The mortgagee of the Mall also has the benefit
of $15 million of terrorism coverage that is solely for the benefit of the Mall property.

Parking

The
Cooperation Agreement also addresses issues relating to the use of the Casino
Resorts parking facilities, the use of parking facilities planned in connection with
the Phase II Resort and easements for access. The Casino Resort, the Mall and the Expo
Center may use the parking spaces in the Casino Resorts parking garage on a
first come, first served basis, as long as each property retains use of
sufficient spaces to comply with minimum parking standards. This means that each property
uses sufficient spaces to comply with applicable laws to conduct its business. The Casino
Resorts parking garage is owned, maintained, and operated by the Company, with the
proportionately allocated operating costs billed to, the Mall and Interface. After the
completion of the parking garage planned to be built in connection with the Phase II
Resort, the Casino Resort, the Mall and the Expo Center will have the right to use the
Phase II Resort parking garage, with the operating costs allocated among each facility.
All property owners have granted each other non-exclusive easements and rights to use the
roadways and walkways on their properties for vehicular and pedestrian access to the
parking garages.

Utility
Easements

All
property owners have also granted each other all appropriate and necessary easement rights
to utility lines servicing the Casino Resort, the Phase II Resort and the Expo Center.

Relations
between the Casino Resort and the Phase II Resort

The
Company must approve the plans and specifications (such approval not to be unreasonably
withheld) for all portions of the Phase II Resort that will connect with or adjoin the
Casino Resort prior to the commencement of construction of the Phase II Resort. The owner
of the Phase II Resort must use commercially reasonable efforts to minimize such
constructions interference with the operation of the Casino Resort.

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Additionally,
prior to construction of the Phase II Resort, there must be agreement on:

| |  | appropriate
mutual operating covenants for the Casino Resort and the Phase II Resort;
| | - | -------------------------------------------------------------------------------------

| |  | joint
marketing and advertising of the Casino Resort and the Phase II Resort;
| | - | -----------------------------------------------------------------------------

| |  | certain
shared casino operations at the Casino Resort and the Phase II Resort;
| | - | ------------------------------------------------------------------------------

| |  | the
sharing of customer information regarding the Casino Resort and the Phase II Resort;
| | - | ----------------------------------------------------------------------------------------

| |  | the
joint purchasing of insurance for the Casino Resort and the Phase II Resort;
| | - | --------------------------------------------------------------------------------

| |  | shared
security operations for the Casino Resort and the Phase II Resort; and
| | - | -----------------------------------------------------------------------------

| |  | any
other matters that would be of mutual benefit in owning and operating the Casino Resort
and the Phase II Resort.
| | - | --------------------------------------------------------------------------------------------------------------------

Coordinated
Relations with HVAC Provider

As
discussed under HVAC Services Agreement and Related Documents, the
owners of the Casino Resort, the Mall, the Expo Center and the Phase II Resort have or
will have separate services agreements with Sempra Energy Solutions (the HVAC
Provider), the provider of thermal energy.

The
Cooperation Agreement provides mechanisms for these parties to deal with the HVAC Provider
in a coordinated manner. In particular, the Cooperation Agreement establishes conditions
for the owner of the Phase II Resort receiving thermal energy services from the HVAC
Plant. These conditions include the payment by the owner of the Phase II Resort of all
incremental costs attributable to such services and any additional capital improvements
required for such services.

The
Cooperation Agreement also provides mechanisms for the owners of the various properties to
make decisions regarding the termination or extension of the HVAC services agreements. In
general, these provisions permit a property owner that is not receiving adequate HVAC
services to replace the HVAC Provider, as long as the property owner:

| |  | arranges
for an experienced substitute utility operator to take over operation of the HVAC Plant;
and
| | - | -----------------------------------------------------------------------------------------------------

| |  | indemnifies
the other property owners against additional payment obligations arising as a consequence
of the termination of the previous operator of the HVAC Plant.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

Consents,
Approvals and Disputes

If
any property owner has a consent or approval right or has discretion to act or refrain
from acting, consent or approval will only be granted and action will be taken or not
taken only if a commercially reasonable owner would do so and such consent, approval,
action or inaction would not have a material adverse effect on the property owned by such
property owner. The Cooperation Agreement provides for the appointment of an independent
expert to resolve some disputes between the parties, as well as for expedited arbitration
for other disputes.

HVAC
Services Agreement and Related Documents

Sempra
Energy Solutions, successor to Atlantic Pacific Las Vegas, LLC, is a California company
and is beneficially owned by Sempra Energy, a utility holding company.

Thermal
energy (i.e., heating and air conditioning) is provided to the Casino Resort and the Expo
Center by the HVAC Provider using certain heating and air conditioning-related and other
equipment (the HVAC Equipment). In addition, the HVAC Provider provides the
Company with other energy-related services. The central HVAC Plant is located on land

15

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owned
by the Company, which land and HVAC Plant have been leased to the HVAC Provider for a
nominal annual rent. The HVAC Equipment is owned by the HVAC Provider, and the HVAC
Provider has been granted appropriate easements and other rights so as to be able to use
the HVAC Plant and the HVAC Equipment to supply thermal energy to the Casino Resort and
the Expo Center (and, potentially, other buildings), so long as such easements do not
materially interfere with the operations of the Casino Resort and the Expo Center. The
HVAC Provider paid all costs (HVAC Costs) in connection with the purchase and
installation of the HVAC Equipment, which costs totaled $70 million. The HVAC Provider
has entered into separate service contracts (collectively, the HVAC Service
Agreements) with Venetian, Interface, and the predecessor to the New Mall
Subsidiary, for the provision of heat and cooling requirements at agreed-to rates. The
charges payable by all users include a fixed component that enables the HVAC Provider to
recover 85% of the HVAC Costs over the initial term of the service contracts, with
interest at a fixed annual rate of 7.1%. In addition, the users reimburse the HVAC
Provider for the annual cost of operating and maintaining the HVAC Equipment and
providing certain other energy related services, and pay the HVAC Provider a management
fee of $500,000 per year. Each user is allocated a portion of the total agreed-to charges
and fees through its service contract, which portion includes paying 100% of the cost of
services in connection with the HVAC Equipment relating solely to such user. Each user is
not liable for the obligations of the other users; provided, however, that the New Mall
Subsidiary is liable for the obligations of each Mall tenant. The HVAC Service Agreements
expire in 2009, at which time the users will have the right, but not the obligation, to
collectively either extend the term of their agreements for two consecutive periods of
five years each or purchase the HVAC Equipment in accordance with purchase provisions set
forth in the HVAC Service Agreements.

The
Companys rights under the HVAC Service Agreements and related documents were
collaterally assigned to The Bank of Nova Scotia, as agent for the lenders under the
Companys Senior Secured Credit Facility and the holders of the Mortgage Notes as
security for its obligations under the Senior Secured Credit Facility and the Mortgage
Notes, and the Malls rights under the HVAC Services Agreement and related documents
were collaterally assigned to Archon Financial, L.P. as lender under the secured mall
facility to which the Company is a party (the Secured Mall Facility). The HVAC
Provider has consented to the Companys collateral assignment pursuant to a consent
and agreement agreed to by the HVAC Provider. Under the HVAC consent and agreement, the
HVAC Provider has agreed: (i) to acknowledge that the Company has granted a security
interest in its agreements with the HVAC Provider; (ii) under certain conditions, to
recognize the Companys secured lenders rights to step in to the
Companys rights under these agreements, and to keep from exercising termination and
other rights for a time; (iii) not to terminate these agreements or to consent to any
termination or suspension of these agreements without written notice to The Bank of Nova
Scotia, as agent for the lenders, and providing the Companys secured lenders an
opportunity to correct any default or breach that the Company commits; (iv) under certain
conditions, to consent to the transfer of the Companys interest to any of the
secured lenders or a purchaser or grantee at a foreclosure sale and to any purchasers in
lieu of foreclosure; and (v) that in the event one or more of the service contracts is
rejected in any bankruptcy or insolvency proceedings, to execute and deliver to the
secured lenders a new contract that is on the same terms and conditions as the original
HVAC Service Agreements.

Mall
Management Contract

The
New Mall Subsidiary is a party to an agreement with Forest City Enterprises (Forest
City), a subsidiary of Forest City Ratner Enterprises, a leading developer and
manager of retail and commercial real estate developments, whereby Forest City manages the
Mall and supervises and assists in the creation of an advertising and promotional program
and a marketing plan for the Mall. Forest City is also responsible for, among other
things, the preparation of a detailed plan for the routine operation of the Mall,
collection and deposit procedures for rents and other tenant charges, the supervision of
maintenance and repairs and, on an annual basis, the preparation of a detailed budget
(including any anticipated nonrecurring expenses and capital expenditures) for the Mall.
The term of the management contract is five years from June 19, 1999, the date the Mall
opened to the public. Forest City currently receives a management fee of 2% of all gross
rents received from the operation of the Mall with a minimum fee of $600,000 per year.
Forest City is not affiliated with the Principal Stockholder or any of his affiliates.

Agreements Related to
the Macau Casino Construction

The
Company has entered into contracts in Macau for architectural and engineering services,
site work and construction of the Macau Casino. The Company plans to enter into other
contracts during 2004 to complete construction of the Macau Casino during May 2004. The
Company also entered into a construction management agreement with Hsin Chong during 2003
to facilitate construction of the Macau Casino.

16

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Agreements Relating to
the Phase II Resort

The
Casino Resort was developed on a stand-alone basis as the first phase of a planned
two-phase development. The Company has begun extensive design and planning work, is
currently exploring financing alternatives for, and has commenced demolition and clearing
work on the site of the Phase II Resort. In the event that the Phase II Resort is not
constructed, the Casino Resort has all the attributes and facilities to continue to
operate as a stand-alone resort. See Item 13  Certain Relationships and
Related Transactions  Possible Conflicts of Interest.

Phase II
Casino Lease

If
the Phase II Resort is constructed, in order to avoid the need for a separate gaming
license for the Phase II Subsidiary, LVSI or Venetian may operate the casino for the Phase
II Resort pursuant to a lease (the Phase II Casino Lease). The Phase II Casino
Lease may have terms substantially similar to the Casino Lease. The Company or Venetian,
as the case may be, may agree to operate the casino in the Phase II Resort and the Casino
in a substantially similar manner, and the Company or Venetian, as the case may be, may
agree to have common gaming and surveillance operations in such casinos (based on pro rata
allocations of operating costs).

Phase II
HVAC Services Agreement

The
Cooperation Agreement permits the owner of the land on which the Phase II Resort will be
built (the Phase II Land) to enter into an HVAC Services Agreement to receive
HVAC services from the HVAC Plant. Any such agreement would have to be on terms
satisfactory to the HVAC Provider. See Item 13  Certain Relationships and
Related Transactions  Cooperation Agreement.

Regulation and
Licensing

State of
Nevada

The
ownership and operation of casino gaming facilities in the State of Nevada are subject to
the Nevada Gaming Control Act and the regulations promulgated thereunder (collectively,
the Nevada Act) and various local regulations. The Companys gaming
operations are also subject to the licensing and regulatory control of the Nevada Gaming
Commission (the Nevada Commission), the Nevada Gaming Control Board (the
NGCB) and the Clark County Liquor and Gaming Licensing Board (the
CCLGLB and, together with the Nevada Commission and the NGCB, the Nevada
Gaming Authorities).

The
laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based
upon declarations of public policy that are concerned with, among other things: (i) the
prevention of unsavory or unsuitable persons from having a direct or indirect involvement
with gaming at any time or in any capacity; (ii) the establishment and maintenance of
responsible accounting practices and procedures; (iii) the maintenance of effective
controls over the financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and revenues,
providing reliable record-keeping and requiring the filing of periodic reports with the
Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and
(v) the establishment of a source of state and local revenues through taxation and
licensing fees. Any change in such laws, regulations and procedures could have an adverse
effect on the Companys gaming operations or on the operation of the Casino Resort.

The
Company is required to be licensed by the Nevada Gaming Authorities to operate a casino,
and is currently so licensed. The gaming license requires the periodic payment of fees and
taxes and is not transferable. The Company was registered by the Nevada Commission as a
publicly traded corporation (Registered Corporation) and as such, must
periodically submit detailed financial and operating reports to the Nevada Gaming
Authorities and furnish any other information that the Nevada Gaming Authorities may
require. No person may become a stockholder of, or receive any percentage of profits from,
the Company without first obtaining licenses and approvals from the Nevada Gaming
Authorities. The Company operates the Casino pursuant to the Casino Lease between LVSI and
Venetian, which provides for a fixed monthly rental payment. The Company possesses all
state and local government registrations, approvals, permits and licenses required in
order for the Company to engage in gaming activities at the Casino Resort.

17

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The
Nevada Gaming Authorities may investigate any individual who has a material relationship
to or material involvement with, the Company or Venetian to determine whether such
individual is suitable or should be licensed as a business associate of a gaming licensee.
Officers, directors and certain key employees of the Company must file applications and be
licensed by the Nevada Gaming Authorities.

The
Nevada Gaming Authorities may deny an application for licensing or a finding of
suitability for any cause they deem reasonable. A finding of suitability is comparable to
licensing; both require submission of detailed personal and financial information followed
by a thorough investigation. The applicant for licensing or a finding of suitability, or
the gaming licensee by whom the applicant is employed or for whom the applicant serves,
must pay all the costs of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities, and in addition to their authority to deny an
application for a finding of suitability or licensure, the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a corporate position.

If
the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable
for licensing or to have an inappropriate relationship with the Company, the Company would
have to sever all relationships with such person. In addition, the Nevada Commission may
require the Company to terminate the employment of any person who refuses to file
appropriate applications. Determinations of suitability or of questions pertaining to
licensing are not subject to judicial review in Nevada.

The
Company is required to submit periodic detailed financial and operating reports to the
Nevada Commission. Substantially all material loans, leases, sales of securities and
similar financing transactions by the Company must be reported to or approved by the
Nevada Commission.

If
it were determined that the Nevada Act was violated by the Company, the registration and
gaming licenses it then holds could be limited, conditioned, suspended or revoked, subject
to compliance with certain statutory and regulatory procedures. In addition, the Company
and the persons involved could be subject to substantial fines for each separate violation
of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could
be appointed by the Nevada Commission to operate the Casino Resort and, under certain
circumstances, earnings generated during the supervisors appointment (except for the
reasonable rental value of the Casino Resort) could be forfeited to the State of Nevada.
Limitation, conditioning or suspension of any gaming registration or license or the
appointment of a supervisor could (and revocation of any gaming license would) materially
adversely affect the gaming operations of the Company.

Any
beneficial holder of the Companys voting securities, regardless of the number of
shares owned, may be required to file an application, be investigated, and have their
suitability as a beneficial holder of the Companys voting securities determined if
the Nevada Commission has reason to believe that such ownership would otherwise be
inconsistent with the declared policies of the State of Nevada. The applicant must pay all
costs of investigation incurred by the Nevada Gaming Authorities in conducting any such
investigation.

The
Nevada Act requires any person who acquires more than 5% of the Companys voting
securities to report the acquisition to the Nevada Commission. The Nevada Act requires
that beneficial owners of more than 10% of the Companys voting securities apply to
the Nevada Commission for a finding of suitability within thirty days after the Chairman
of the Nevada Board mails the written notice requiring such filing. Under certain
circumstances, an institutional investor as defined in the Nevada Act, which
acquires more than 10% but not more than 15% of the Companys voting securities, may
apply to the Nevada Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities only for investment purposes. An
institutional investor shall not be deemed to hold voting securities only for investment
purposes unless the voting securities were acquired and are held in the ordinary course of
business as an institutional investment and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of directors of the
Company, any change in the Companys corporate charter, bylaws, management, policies
or operations of the Company or any of its gaming affiliates, or any other action which
the Nevada Commission finds to be inconsistent with holding the Companys voting
securities only for investment purposes. Activities that are not deemed to be inconsistent
with holding voting securities only for investment purposes include: (i) voting on all
matters voted on by stockholders; (ii) making financial and other inquiries of management
of the type normally made by securities analysts for informational purposes and not to
cause a change in its management, policies or operations; and (iii) such other activities
as the Nevada Commission may determine to be consistent with such investment intent. If
the beneficial holder of voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and financial information including
a list of beneficial owners.

18

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Under
a provision of the Nevada Act, under certain circumstances, an institutional
investor as defined in the Nevada Act, which intends to acquire not more than 15% of
any class of nonvoting securities of a privately-held corporation, limited partnership or
limited liability company that is also a registered holder or intermediary company of the
holder of a gaming license, may apply to the Nevada Commission for a waiver of the usual
prior licensing or finding of suitability requirements if such institutional investor
holds such nonvoting securities only for investment purposes. An institutional investor
shall not be deemed to hold nonvoting securities only for investment purposes unless the
nonvoting securities were acquired and are held in the ordinary course of business as an
institutional investor, do not give the institutional investor management authority, and
do not, directly or indirectly, allow the institutional investor to vote for the election
or appointment of members of the board of directors, a general partner or manager, cause
any change in the articles of organization, operating agreement, other organic document,
management, polices or operations, or cause any other action that the Nevada Commission
finds to be inconsistent with holding nonvoting securities only for investment purposes.
Activities that are not deemed to be inconsistent with holding nonvoting securities only
for investment purposes include: (i) nominating any candidate for election or appointment
to the entitys board of directors or equivalent in connection with a debt
restructuring; (ii) making financial and other inquiries of management of the type
normally made by securities analysts for informational purposes and not to cause a change
in the entitys management, polices or operations; and (iii) such other activities as
the Nevada Commission may determine to be consistent with such investment intent. If the
beneficial holder of nonvoting securities who must be licensed or found suitable is a
corporation, partnership or trust, it must submit detailed business and financial
information including a list of beneficial owners. The applicant is required to pay all
costs of investigation.

Any
person who fails or refuses to apply for a finding of suitability or a license within
thirty days after being ordered to do so by the Nevada Commission or the Chairman of the
Nevada Board may be found to be unsuitable. The same restrictions apply to a record owner
if the record owner, after request, fails to identify the beneficial owner. Any
stockholder found to be unsuitable and who holds, directly or indirectly, any beneficial
ownership of the common stock of a Registered Corporation beyond such period of time as
may be prescribed by the Nevada Commission may be guilty of a criminal offense. The
Company is subject to disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationship with the Company, it: (i)
pays that person any dividend or interest upon voting securities of the Company; (ii)
allows that person to exercise, directly or indirectly, any voting right conferred through
securities held by that person; (iii) pays remuneration in any form to that person for
services rendered or otherwise; or (iv) fails to pursue all lawful efforts to require such
unsuitable person to relinquish his voting securities for cash at fair market value.
Additionally, the CCLGLB has taken the position that it has the authority to approve all
persons owning or controlling the stock of any corporation holding a gaming license.

The
Nevada Commission may, in its discretion, require the holder of any debt security of a
Registered Corporation to file an application, be investigated and be found suitable to
own the debt security of such Registered Corporation. If the Nevada Commission determines
that a person is unsuitable to own such security, then pursuant to the Nevada Act, the
Registered Corporation can be sanctioned, including the loss of its approvals, if without
the prior approval of the Nevada Commission, it: (i) pays to the unsuitable person any
dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by
such unsuitable person in connection with such securities; (iii) pays the unsuitable
person remuneration in any form; or (iv) makes any payment to the unsuitable person by way
of principal, redemption, conversion, exchange, liquidation, or similar transaction.

LVSI
is required to maintain a current stock ledger in Nevada that may be examined by the
Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or
by a nominee, the record holder may be required to disclose the identity of the beneficial
owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds
for finding the record holder unsuitable. The Company is also required to disclose the
identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such
disclosure may be grounds for finding the record holder unsuitable. The Company is also
required to render maximum assistance in determining the identity of the beneficial owner.
LVSI stock certificates bear a legend indicating that such securities are subject to the
Nevada Act.

19

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Neither
LVSI nor Venetian may make a public offering of any securities without the prior approval
of the Nevada Commission if the securities or the proceeds therefore are intended to be
used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend
obligations incurred for such purposes. The hypothecation of the Companys assets and
restrictions on stock in connection with any public offering also require the prior
approval of the Nevada Commission. In addition, the hypothecation of Venetians
assets and restrictions on stock in respect of any public offering require the approval of
the Nevada Commission to remain effective.

Changes
in control of the Company through a merger, consolidation, stock or asset acquisition,
management or consulting agreement, or any act or conduct by any person whereby he or she
obtains control, shall not occur without the prior approval of the Nevada Commission.
Entities seeking to acquire control of a Registered Corporation must satisfy the NGCB and
the Nevada Commission concerning a variety of stringent standards prior to assuming
control of such Registered Corporation. The Nevada Commission may also require controlling
stockholders, officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated and licensed
as part of the approval process of the transaction.

The
Nevada legislature has declared that some corporate acquisitions opposed by management,
repurchases of voting securities and corporate defense tactics affecting Nevada gaming
licensees, and Registered Corporations that are affiliated with those operations, may be
injurious to stable and productive corporate gaming. The Nevada Commission has established
a regulatory scheme to ameliorate the potentially-adverse effects of these business
practices upon Nevadas gaming industry and to further Nevadas policy to: (i)
assure the financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form; and (iii)
promote a neutral environment for the orderly governance of corporate affairs. Approvals
are, in certain circumstances, required from the Nevada Commission before the Company can
make exceptional repurchases of voting securities above the current market price thereof
and before a corporate acquisition opposed by management can be consummated.

The
Nevada Act also requires prior approval of a plan of recapitalization proposed by the
Companys board of directors in response to a tender offer made directly to the
Registered Corporations stockholders for the purposes of acquiring control of the
Registered Corporation.

License
fees and taxes, computed in various ways depending upon the type of gaming or activity
involved, are payable to the State of Nevada and to Clark County, Nevada. Depending upon
the particular fee or tax involved, these fees and taxes are payable either monthly,
quarterly or annually and are based upon either: (i) a percentage of the gross revenues
received; (ii) the number of gaming devices operated; or (iii) the number of table games
operated. In addition, a casino entertainment tax is paid by the Company to the extent
that certain entertainment is provided in a cabaret, nightclub, cocktail lounge or casino
showroom in connection with the serving or selling of food, refreshments or merchandise.

Any
person who is licensed, required to be licensed, registered, required to be registered, or
under common control with such persons (collectively, Licensees), and who
proposes to become involved in a gaming venture outside of Nevada, is required to deposit
with the NGCB, and thereafter maintain, a revolving fund in the amount of $10,000 to pay
the expenses of any investigation by the NGCB into their participation in such foreign
gaming. The revolving fund is subject to increase or decrease at the discretion of the
Nevada Commission. Thereafter, Licensees are also required to comply with certain
reporting requirements imposed by the Nevada Act. Licensees are also subject to
disciplinary action by the Nevada Commission if they knowingly violate any laws of any
foreign jurisdiction pertaining to such foreign gaming operation, fail to conduct such
foreign gaming operation in accordance with the standards of honesty and integrity
required of Nevada gaming operations, engage in activities that are harmful to the State
of Nevada or its ability to collect gaming taxes and fees, or employ a person in such
foreign operation who has been denied a license or a finding of suitability in Nevada on
the ground of personal unsuitability.

The
sale of alcoholic beverages by the Company on the premises of the Casino Resort is subject
to licensing, control, and regulation by the applicable local authorities. The Company has
obtained Clark County gaming and liquor licenses. All licenses are revocable and are not
transferable. The agencies involved have full power to limit, condition, suspend or revoke
any such licenses, and any such disciplinary action could (and revocation of such licenses
would) have a material adverse effect upon the operations of the Company.

20

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Macau

Venetian
Macau is also subject to licensing and control in Macau. Venetian Macau is required to be
licensed by the Macau gaming authorities to operate a casino. It must pay periodic fees
and taxes, and its gaming license is not transferable. It must periodically submit
detailed financial and operating reports to the Macau gaming authorities and furnish any
other information that the Macau gaming authorities may require. No person may acquire any
rights over its shares or assets without first obtaining the approval of the Macau gaming
authorities. Similarly, no person may enter into possession of its premises or operate
them through a management agreement or any other contract or through step in rights
without first obtaining the approval of, and receiving a license from, the Macau gaming
authorities. The transfer or creation of encumbrances over ownership of shares
representing the share capital of Venetian Macau or other rights relating to such shares,
and any act involving the granting of voting rights or other shareholders rights to
persons other than the original owners, would require the permission of the Macau
government.

The
Macau gaming authorities may investigate any individual who has a material relationship
to, or material involvement with, Venetian Macau to determine whether Venetian
Macaus suitability and/or financial capacity is affected by this individual.
Venetian Macaus officers, directors and some of its key employees must apply and
undergo a finding of suitability process and on-going suitability assessment and, for that
purpose, may be investigated by the Macau gaming authorities at any time. These
authorities may deny an application or a finding of suitability for any cause they deem
reasonable. Changes in licensed positions must be reported to the Macau gaming
authorities, and in addition to their authority to deny an application for a finding of
suitability or licensure, the Macau gaming authorities have jurisdiction to disapprove a
change in corporate position. If the Macau gaming authorities were to find one of Venetian
Macaus officers, directors or key employees unsuitable for licensing, Venetian Macau
would have to sever all relationships with that person. In addition, the Macau Gaming
Commission may require Venetian Macau to terminate the employment of any person who
refuses to file appropriate applications. Determinations of suitability or of questions
pertaining to licensing are not subject to judicial review in Macau.

Venetian
Macaus subconcession agreement requires any person who acquires more than 5% of its
voting securities to report the acquisition to the Macau Gaming Commission.

Any
person who fails or refuses to apply for a finding of suitability after being ordered to
do so by the Macau Gaming Commission may be found unsuitable. Any stockholder found
unsuitable and who holds, directly or indirectly, any beneficial ownership of the common
stock of a registered corporation beyond the period of time prescribed by the Macau Gaming
Commission may lose his rights to the shares. Venetian Macau will be subject to
disciplinary action if, after it receives notice that a person is unsuitable to be a
stockholder or to have any other relationship with us, it:

| |  | pays
that person any dividend or interest upon its shares;
| | - | ----------------------------------------------------------

| |  | allows
that person to exercise, directly or indirectly, any voting right conferred through
shares held by that person;
| | - | ----------------------------------------------------------------------------------------------------------------------

| |  | pays
remuneration in any form to that person for services rendered or otherwise; or
| | - | -----------------------------------------------------------------------------------

| |  | fails
to pursue all lawful efforts to require that unsuitable person to relinquish its shares.
| | - | ----------------------------------------------------------------------------------------------

The
Macau Gaming Commission also has the authority to approve all persons owning or
controlling the stock of any corporation holding a gaming license.

The
Macau Gaming Commission also requires prior approval for the hypothecation of Venetian
Macaus assets and restrictions on stock in connection with any financing.

21

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The
Macau Gaming Commission must give its prior approval to changes in control through a
merger, consolidation, stock or asset acquisition, management or consulting agreement or
any act or conduct by any person whereby he or she obtains control. Entities seeking to
acquire control of a registered corporation must satisfy the Macau Gaming Commission
concerning a variety of stringent standards prior to assuming control. The Macau Gaming
Commission may also require controlling stockholders, officers, directors and other
persons having a material relationship or involvement with the entity proposing to acquire
control, to be investigated and licensed as part of the approval process of the
transaction.

The
Macau Gaming Commission may consider that some management opposition to corporate
acquisitions, repurchases of voting securities and corporate defense tactics affecting
Macau gaming licensees, and registered corporations that are affiliated with those
operations, may be injurious to stable and productive corporate gaming. The Macau Gaming
Commission also has the power to supervise gaming licensees in order to:

| |  | assure
the financial stability of corporate gaming operators and their affiliates;
| | - | ----------------------------------------------------------------------------------

| |  | preserve
the beneficial aspects of conducting business in the corporate form; and
| | - | ---------------------------------------------------------------------------------

| |  | promote
a neutral environment for the orderly governance of corporate affairs.
| | - | ------------------------------------------------------------------------------

The
subconcession agreement requires the Macau Gaming Commissions prior approval of any
recapitalization plan proposed by Venetian Macaus board of directors. The Chief
Executive of Macau could also require Venetian Macau to increase its share capital if he
deemed it necessary.

Non-compliance
with these obligations could lead to the revocation of Venetian Macaus gaming
subconcession.

Alderney

During
March 2003, a subsidiary of the Company received an interactive gaming license and an
electronic betting center license from the Alderney Gambling Control Commission. Alderney
is part of the Channel Islands located between Great Britain and France. Alderney is a
self-governing member of the British Commonwealth. The Companys Internet and other
projects are in developmental or exploratory stages and there can be no assurance that any
of these ventures will prove to be attractive opportunities, or that if implemented they
will be successful. The Company intends to continue to explore similar new business
opportunities.

Employees

The
Company directly employs approximately 5,000 employees in connection with the Casino
Resort and 750 employees in connection with the Macau Casino. The Macau Casino is expected
to employ approximately 4,500 employees upon opening during May 2004. The Casino
Resorts employees are not covered by collective bargaining agreements. Most, but not
all, major casino resorts situated on the Strip have collective bargaining contracts
covering at least some of the labor force at such sites. The unions currently on the Strip
include the Local 226 of the Hotel Employees and Restaurant Employees International Union
(the Local), the Operating Engineers Union and the Teamsters Union. Although
no assurances can be given, if employees decide to be represented by labor unions,
management does not believe that such representation would have a material impact upon the
Companys results of operations, cash flows or financial position.

The
Local has requested the Company to recognize it as the bargaining agent for employees of
the Casino Resort. The Company has declined to do so, believing that current and future
employees are entitled to select their own bargaining agent, if any. In the past, when
other hotel-casino operators have taken a similar position, the Local has engaged in
certain confrontational and obstructive tactics, including contacting potential customers,
tenants and investors, objecting to various administrative approvals and picketing. The
Local has engaged in such tactics with respect to the Casino Resort and may continue to do
so. Although the Company believes it will be able to operate despite such dispute, no
assurance can be given that it will be able to do so or that the failure to do so would
not result in a material adverse effect on the Companys results of operations, cash
flows, or financial position. The Company expects to employ approximately 4,500 employees
at the Macau Casino and is not aware of any union activity at the Macau Casino.

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Risk Factors

The
following risk factors should be read carefully in connection with evaluating the Company
and the forward-looking statements contained in this Annual Report on Form 10-K. Any of
the following risks could materially adversely affect the Company, its operating results,
its financial condition and the actual outcome of matters as to which forward-looking
statements are made in this Annual Report on Form 10-K. Certain statements in Risk
Factors constitute forward-looking statements. Actual results could
differ materially from those projected in the forward-looking statements as a result of
certain factors and uncertainties set forth below and elsewhere in this Annual Report on
Form 10-K. See Item 7  Managements Discussion and Analysis of Financial
Condition and Results of Operation  Special Note Regarding Forward  Looking
Statements.

The
Company's Substantial Debt Could Impair its Financial Condition

The
Company is highly leveraged and has substantial debt service obligations. As of December
31, 2003, the Company had approximately $1.439 billion of indebtedness outstanding. In
addition, there was approximately $35.0 million available for borrowing by Venetian under
the $75.0 million senior secured revolving facility portion (the Revolving
Facility) of the Senior Secured Credit Facility. The availability under the
Revolving Facility was reduced to $15.0 million during January 2004, as a result of
additional letters of credit being issued under the credit agreement. The Companys
Macau subsidiaries have also incurred $160.0 million in additional debt and may incur
additional substantial indebtedness to construct various projects in Macau, including the
Macau Venetian Casino Resort. In addition, the Company may be required to incur
significant additional debt for the financing of the construction of the Phase II Resort.
See Item 8  Financial Statements and Supplementary Data  Notes to
Financial Statements  Note 8  Long-Term Debt.

This
substantial indebtedness could have important consequences to the Company. For example, it
could:

| |  | make
it more difficult for the Company to satisfy its debt obligations;
| | - | -----------------------------------------------------------------------

| |  | increase
the Company's vulnerability to general adverse economic and industry conditions;
| | - | -----------------------------------------------------------------------------------------

| |  | impair
the Companys ability to obtain additional financing in the future for working
capital needs, capital expenditures, acquisitions or general corporate purposes;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | require
the Company to dedicate a significant portion of its cash flow from operations to the
payment of principal and interest on its debt, which would reduce the funds available for
its operations;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | limit
the Companys flexibility in planning for, or reacting to, changes in the business
and the industry in which it operates;
| | - | -------------------------------------------------------------------------------------------------------------------------------

| |  | place
the Company at a competitive disadvantage compared to its competitors that have less
debt; and
| | - | ----------------------------------------------------------------------------------------------------

| |  | subject
the Company to higher interest expense in the event of increases in interest rates to the
extent a portion of its debt is and will continue to be at variable rates of interest.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
Terms of the  Company's  Debt  Instruments  May Restrict  the  Company's  Current and
Future  Operations, Particularly its Ability to Respond to Changes or to Take Some Actions

The
Senior Secured Credit Facility contains, and any future refinancing of this facility
likely would contain, a number of restrictive covenants that impose significant operating
and financial restrictions on the Company. The Senior Secured Credit Facility includes
covenants restricting, among other things, the Companys ability to:

| |  | incur
additional debt, including guarantees;
| | - | --------------------------------------------

| |  | incur
liens;
| | - | ------------

23

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| |  | dispose
of assets;
| | - | ------------------

| |  | make
certain acquisitions;
| | - | --------------------------

| |  | pay
dividends and make other restricted payments;
| | - | -------------------------------------------------

| |  | enter
into sale and leaseback transactions;
| | - | -------------------------------------------

| |  | engage
in any new businesses;
| | - | -----------------------------

| |  | issue
preferred stock; and
| | - | --------------------------

| |  | enter
into transactions with its shareholders and its affiliates.
| | - | -----------------------------------------------------------------

The
Indenture also contains numerous covenants including, among other things, restrictions on
the Companys ability and that of its restricted subsidiaries to:

| |  | incur
additional debt, including guarantees;
| | - | --------------------------------------------

| |  | use
assets as security in other transactions;
| | - | ---------------------------------------------

| |  | create
liens or other encumbrances;
| | - | -----------------------------------

| |  | make
certain payments and investments;
| | - | --------------------------------------

| |  | sell
or otherwise dispose of assets;
| | - | ------------------------------------

| |  | engage
in transactions with its affiliates;
| | - | -------------------------------------------

| |  | enter
into certain leases;
| | - | --------------------------

| |  | merge
or consolidate with another entity; and
| | - | ---------------------------------------------

| |  | transfer
all or substantially all assets.
| | - | -----------------------------------------

The
Senior Secured Credit Facility also includes financial covenants, including requirements
that the Company satisfy:

| |  | a
minimum net worth test;
| | - | -------------------------

| |  | a
maximum capital expenditure test;
| | - | -----------------------------------

| |  | a
minimum interest coverage ratio; and
| | - | --------------------------------------

| |  | a
maximum leverage ratio.
| | - | -------------------------

In
addition, the Companys other debt and future debt or other contracts could contain
financial or other covenants more restrictive than those applicable to the above
instruments.

The
Companys Business is Subject to Significant Contingencies Beyond its Control,
Including the Aftermath of Terrorist Acts, Which May Significantly and Adversely Affect
its Financial Condition, Results Of Operations or Cash Flows

The
Companys operations are subject to significant business, economic and regulatory
uncertainties and contingencies, many of which are beyond its control. On September 11,
2001, acts of terrorism occurred in New York City, Pennsylvania and Washington D.C. As a
result of these terrorist acts, domestic and international travel was severely disrupted.
As approximately 48% of the Companys customers use air travel to come to Las Vegas,
these terrorist acts and travel disruptions temporarily decreased customer visitation to
the Casino Resort. In addition, the war with Iraq could have a similar effect on domestic
and international travel. Management cannot predict the extent to which any further
terrorist act, outbreak of hostilities or escalation of war, could have a material adverse
effect on the economy in general and on the hotel/casino business in particular or could
further disrupt air travel, which would adversely affect the Companys financial
condition, results of operations or cash flows. There can be no assurance that the Company
will continue to manage the Casino Resort on a profitable basis or that it will be able to
attract a sufficient number of guests, gaming customers and other visitors to the Casino
Resort to make its various operations profitable independently or as a whole.

24

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The
Company Faces Significant  Competition Which Could Materially  Adversely Affect its
Financial  Condition, Results of Operations or Cash Flows

The
hotel, resort and casino businesses are highly competitive. See Business
 Competition. The Casino Resort competes with a large number of major
hotel-casinos and a number of smaller casinos located on and near the Strip and in and
near Las Vegas, including other upscale destinations such as The Bellagio, Mandalay Bay
and Paris. Management expects competition to increase with the construction that began in
November 2002 of Wynn Las Vegas, an approximately 2,700-room resort being built on the
site of the former Desert Inn, one block north of the Casino Resort, on the corner of Las
Vegas Boulevard and Sands Avenue (anticipated to open in April 2005) and the opening
during January 2003 of an approximately 1.8 million square foot convention center at
Mandalay Bay. The Company also competes, to some extent, with other hotel-casino
facilities in Nevada and in Atlantic City, as well as hotel-casinos and other resort
facilities and vacation destinations elsewhere in the United States and around the world.
Many of the Companys competitors are subsidiaries or divisions of large public
companies and may have greater financial and other resources than the Company has.

The
Company also competes with legalized gaming from casinos located on Native American tribal
lands. In March 2000, California voters approved an amendment to the California
Constitution permitting Native American tribes in California to operate a limited number
of slot and video poker machines and house-banked card games. The governor of California
has entered into compacts with numerous tribes in California. The federal government has
approved approximately 60 such compacts, and casino-style gaming is now legal on those
tribal lands. While the competitive impact on the Companys operations in Las Vegas
from the continued growth of Native American gaming establishments in California remains
uncertain, the proliferation of gaming in California and other areas located near the
Casino Resort could have an adverse effect on the Companys results of operations.

In
addition, certain states have legalized, and others may legalize, casino gaming in
specific areas, including metropolitan areas from which the Company traditionally attracts
customers, such as New York, Los Angeles, San Francisco, and Boston. In October 2001, the
New York legislature approved a bill for expanded casino gaming on Native American
reservations in the State of New York. Such proliferation of gaming venues, by luring
customers close to home and away from Las Vegas, could adversely affect the Companys
financial condition, results of operations or cash flows.

Competition
will be increasing for the Congress Center and the Expo Center as a result of certain
planned additional convention and meeting facilities as well as the enhancement or
expansion of existing convention and meeting facilities in Las Vegas, which could have a
negative impact on the Companys business. With the expansion of their facilities,
the Las Vegas Convention Center, a 3.2 million square foot convention and exhibition space
facility, and the Mandalay Bay Convention Center, an approximately 1.8 million square foot
convention center, will continue to be major competitors of the Expo Center and will be
able to solely host many large trade shows which had previously split space between the
Las Vegas Convention Center and the Expo Center. In addition, management anticipates
increased competition from the MGM Grand Hotel and Casino and the Mirage, which have
significant conference and meeting facilities. To the extent that these competitors are
able to capture a substantially larger portion of the trade show and convention business
in Las Vegas, there could be a material adverse impact on the Congress Center and on the
Expo Center and in turn, the Companys financial position, results of operations and
cash flows, given the Casino Resorts link to the Expo Center. Other cities such as
Boston, Orlando and Pittsburgh are also in the process of developing, or have announced
plans to develop, convention centers and other meeting, trade and exhibition facilities
that could in the long term materially adversely affect the Company.

The
Company is Involved in a Lawsuit with the Construction Manager Regarding the Original
Construction of The Casino Resort, Which Could Have an Adverse Impact on the Companys
Financial Condition, Results of Operations or Cash Flows

The
original construction of the principal components of the Casino Resort was undertaken by
Lehrer McGovern Bovis, Inc. as construction manager under a construction management
agreement. The construction management agreement established a guaranteed maximum price of
$645.0 million, subject to various exceptions, and a required substantial completion date
for the Casino Resort of April 21, 1999. In July 1999, the Company filed a lawsuit in
federal court against the construction manager for the Casino Resort, the guarantor of the
construction managers obligations and various other parties for breach of contract
and breach of guaranty, including failure to pay trade contractors and vendors and failure
to meet the April 21, 1999 substantial completion date for the Casino Resort. The Company
sought total damages in excess of $100.0 million. In response, the construction manager
filed a complaint against the Company for breach of contract and quantum meruit and also
alleged that the Company defrauded the construction manager in connection with the
construction of the Casino Resort. The construction manager sought damages,
attorneys fees, costs and punitive damages and claimed that it is owed approximately
$90.0 million from the Company.

25

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In
connection with these disputes, the construction manager and its subcontractors filed
mechanics liens against the Casino Resort for approximately $145.6 million and $182.2
million, respectively. The Company then purchased surety bonds for all of the claims
underlying these liens other than approximately $15.0 million of claims with respect to
which the construction manager purchased bonds. As a result, there can be no foreclosure
of the Casino Resort in connection with the claims of the construction manager and its
subcontractors. However, the Company will be required to pay or immediately reimburse the
bonding company if, and to the extent that, the underlying claims are judicially
determined to be valid.

The
Company and the construction manager commenced a trial in state court in Clark County,
Nevada, to litigate certain of their respective claims in August 2002. Many of the
remaining claims that are the subject of the state court action and the federal court
action have been proceeding concurrently in independent arbitration hearings. On June 3,
2003, an approximate 10-month trial was concluded in the state court action when a jury
returned a verdict awarding the construction manager approximately $44.0 million in
additional costs under the construction management agreement and awarding the Company
approximately $2.0 million in damages for defective and incomplete work performed by the
Construction Manager. The verdict also allows each party to seek pre-judgment interest and
reimbursement of attorneys costs. The judge in the action entered the judgment on
December 24, 2003. The Company has appealed the entering of the judgment, requesting a
stay of the verdict until the conclusion of the arbitration proceedings. There can be no
assurance however that these proceedings will result in the lowering of the verdict that
was awarded to the construction manager in the state court action or that they will
provide a basis to increase the amount that was awarded to the Company. If these
arbitration proceedings do not result in the lowering of the verdict and this verdict is
entered against the Company, the Companys financial condition, results of operations
or cash flows could be adversely affected.

There
are  Significant  Risks  Associated  with the  Company's  Planned  Construction
 Projects,  Which Could Adversely Affect its Financial Condition, Results of Operations
or Cash Flows

The
Companys on-going and future construction projects, such as the Macau Casino and
Phase II Resort, entail significant risks. Construction activity requires the Company to
obtain qualified subcontractors, the availability of which may be uncertain. Contractual
projects are subject to overrun and delays not within the Companys control or the
subcontractors control such as shortages of materials or skilled labor, unforeseen
engineering, environmental and/or geological problems, work stoppages, weather
interference, unanticipated cost increases and unavailability of construction equipment.
Construction, equipment or staffing problems or difficulties in obtaining any of the
requisite licenses, permits, allocations and authorizations from governmental or
regulatory authorities could increase the total cost, delay, jeopardize or prevent the
construction or opening of such projects or otherwise affect the design and features of
the Macau Casino or the Phase II Resort or other projects or the Companys ability to
preempt its competition.

The
anticipated costs and completion date for the Macau Casino is based on a budget,
conceptual design documents and schedule estimates that the Company has prepared with the
assistance of architects and are subject to change as the design documents are finalized
and more actual construction work is performed. If the Company incurs significant cost
overruns that are not covered by trade contractors or insurance, it may not be able to
arrange for additional financing to pay for such costs. A failure to complete the Macau
Casino on budget and on schedule may adversely affect the Companys financial
condition, results of operations or cash flows.

Venetian
Macau may not be Able to Satisfy its Obligation to the Macau Government to Develop the
Macau Venetian Casino Resort and Invest Approximately $535.6 million in Macau. Failure to
Satisfy this Obligation could Result in the Loss of its Gaming Subconcession.

Venetian
Macaus rights to develop the Macau Casino were granted to it pursuant to a
subconcession agreement. Under this subconcession agreement, Venetian Macau is obligated
to develop and open the Macau Venetian Casino Resort by June 2006 and invest, or
cause to be invested, at least 4.4 billion patacas (approximately $535.6 million
at exchange rates in effect on December 31, 2003) in various development projects in
Macau by June 2009. The construction and development costs of the Macau Casino will
be applied to the fulfillment of this total investment obligation to the Macau
government. It is expected that the construction and development costs of the Macau
Venetian Casino Resort will satisfy the remainder of this obligation. Assuming that all
of the current estimated construction and development costs of the Macau Casino are
applied towards fulfilling Venetian Macaus investment obligations under its
subconcession, its

26

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remaining
investment obligations under its subconcession will be approximately $277.7 million. The
construction and development of the Macau Venetian Casino Resort will require significant
additional debt and/or equity financing. Venetian Macaus ability to incur
additional debt or to make investments in the entity constructing the Macau Venetian
Casino Resort is limited under the terms of its debt instruments. In addition, Venetian
Macau may not be able to obtain such additional debt or equity financing on commercially
reasonable terms or at all. Construction of the Macau Venetian Casino Resort will also be
subject to significant development and construction risks, and we cannot assure you that
Venetian Macau will be able to complete the development of the Macau Venetian Casino
Resort on schedule or within budget. The Macau government has the right, after
consultation with Venetian Macau, to unilaterally terminate its subconcession to operate
the Macau Casino without compensation to Venetian Macau if Venetian Macau and its
affiliates fail to satisfy its investment and development obligations by failing either
to timely construct and open the Macau Venetian Casino Resort or to otherwise invest the
required amounts. The loss of the subconcession would prohibit Venetian Macau from
operating the Macau Casino.

The Loss
of the Companys Gaming License or its Failure to Comply with the Extensive
Regulations that Govern its Operations Could Have an Adverse Effect on its Financial
Condition, Results of Operations or Cash Flows

The
Companys gaming operations and the ownership of its securities are subject to
extensive regulation by the Nevada Gaming Commission, the Nevada State Gaming Control
Board and the Clark County Liquor and Gaming Licensing Board. These gaming authorities
have broad authority with respect to licensing and registration of the Companys
business entities and individuals involved with the Company.

Although
the Company currently holds a gaming license issued by the Nevada gaming authorities,
these authorities may, among other things, revoke the gaming license of any corporate
entity or the registration of a registered corporation or any entity registered as a
holding company of a corporate licensee for violations of gaming regulations. In addition,
the Nevada gaming authorities may, under certain conditions, revoke the license or finding
of suitability of any officer, director, controlling person, shareholder, noteholder or
key employee of a licensed or registered entity. If the Companys gaming licenses
were revoked for any reason, the Nevada gaming authorities could require the closing of
the casino, which would have a material adverse effect on the Companys business.

From
time to time, the Nevada State Gaming Control Board investigates or reviews the records of
gaming companies for compliance with gaming regulations as part of its regular oversight
functions. The Company has been investigated for a number of violations, which resulted in
a penalty of $660,000 and costs of $340,000 being assessed by the Nevada Gaming
Authorities during February 2004, which amounts were accrued as expenses for the year
ended December 31, 2003. A majority of these incidents occurred in the first three years
of the Companys operations.

In
addition, any future public offering of debt or equity securities by the Company,
including the hypothecation of its assets, requires the prior approval of the Nevada
Gaming Commission if the Company intends to use the securities or the proceeds from the
sale thereof to pay for construction of, or to acquire an interest in, any gaming
facilities in Nevada, to finance the gaming operations of an affiliated company or to
retire or extend obligations incurred for any such purpose.

The
Company and/or its subsidiaries are also subject to licensing and control in other
jurisdictions. The Company is constructing a casino in Macau. Venetian Macau is subject to
regulations and controls as implemented and administered by the government of Macau. A
subsidiary of the Company has received a license to operate an Internet gaming site in
Alderney and is subject to the Internet gaming regulations and controls of the government
of Alderney. The termination of the Macau subconcession or the Alderney licenses could
have an adverse effect on the Company.

27

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Certain
Nevada Gaming Laws Apply to the Company's  Planned Gaming  Activities and  Associations
 in Macau and Alderney

Certain
Nevada gaming laws also apply to the Companys gaming activities and associations in
jurisdictions outside the state of Nevada. The Company is required to comply with certain
reporting requirements concerning its proposed gaming activities and associations
occurring outside the state of Nevada, including Macau and Alderney. The Company is also
subject to disciplinary action by the Nevada Gaming Commission if it:

| |  | knowingly
violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation;
| | - | ---------------------------------------------------------------------------------------------------

| |  | fails
to conduct the foreign gaming operation in accordance with the standards of honesty and
integrity required of Nevada gaming operations;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

| |  | engages
in any activity or enter into any association that is unsuitable for the Company because
it poses an unreasonable threat to the control of gaming in Nevada, reflects or tends to
reflect discredit or disrepute upon the State of Nevada or gaming in Nevada, or is
contrary to the gaming policies of Nevada;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | engages
in any activity or enters into any association that interferes with the ability of the
State of Nevada to collect gaming taxes and fees; or
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------

| |  | employs,
contracts with or associates with any person in the foreign gaming operation who has been
denied a license or a finding of suitability in Nevada on the ground of personal
unsuitability, or who has been found guilty of cheating at gambling.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
addition, if the Nevada State Gaming Control Board determines that one of the
Companys actual or intended activities or associations in a foreign gaming operation
may violate one or more of the foregoing, the Company can be required by it to file an
application with the Nevada Gaming Commission for a finding of suitability of such
activity or association. If the Nevada Gaming Commission finds that the activity or
association in the foreign gaming operation is unsuitable or prohibited, the Company will
either be required to terminate the activity or association, or will be prohibited from
undertaking the activity or association. Consequently, should the Nevada Gaming Commission
find that the Companys gaming activities or associations in Macau or Alderney are
unsuitable; the Company may be prohibited from undertaking its planned gaming activities
or associations in those jurisdictions.

The
Company Depends on the Continued Services of Key Managers and Employees. If the Company
Does Not Retain its Key Personnel, Attract, and Retain Other Highly Skilled Employees,
its Business Will Suffer

The
Companys ability to maintain its competitive position is dependent to a large degree
on the services of its senior management team, including Sheldon G. Adelson, the Principal
Stockholder. Only William Weidner, Bradley Stone and Robert Goldstein have employment
agreements. The employment agreements do not require them to stay with the Company. The
Company cannot assure you that any of these individuals will remain with the Company. The
Company currently does not have a life insurance policy on any of the members of the
senior management team. The death or loss of the services of any of the senior managers or
the inability to attract and retain additional senior management personnel could have a
material adverse effect on the Companys business.

The
 Company's  Business,  Policies,  Affairs,  and all  Major  Corporate  Decisions  are
 Controlled  by the Principal Stockholder Whose Interest may Potentially Conflict with
that of the Company

Mr. Adelson
beneficially owns approximately 95% of the Companys outstanding           common
stock. The Companys board of directors is comprised of two persons,           one
of whom is Mr. Adelson. Mr. Adelson has two votes for all matters before the
          board of directors, whereas the other board member has only one vote. As a
          result, Mr. Adelson controls the Companys business, policies and affairs,
          including the election of directors and all major corporate transactions and
          could prevent a change of control.

28

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Mr.
Adelson owns Interface, the owner of the Expo Center, which may result in
          potential conflicts of interest. The Expo Center, on the one hand, and the
          Congress Center and the meeting and conference space that is a part of the
Phase           IA Addition, on the other hand, are potential competitors in the business
          conference and meetings business. Under the Cooperation Agreement, the Company
          has agreed that, except under certain circumstances with respect to the Phase
IA           Addition, it will not conduct, or permit to be conducted at the Casino
Resort,           trade shows or expositions of the type generally held at the Expo
Center.           Furthermore, marketing practices that are intended to benefit the Expo
Center           may have a detrimental effect on the Casino Resort.

The
Construction of the Phase II Resort Could Have an Adverse Effect on the Casino Resort

The
Casino Resort or the Companys subsidiary, Lido Casino Resort, LLC, is planning to
construct the Phase II Resort, which would consist of a hotel, casino, restaurant, dining
and entertainment complex, and meeting and conference center space on a 15-acre site
adjacent to the Casino Resort. Although the Company intends to construct the Phase II
Resort with minimal impact on the Casino Resort, the Company cannot guaranty that the
construction will not disrupt the operations of the Casino Resort or that it will be
implemented as planned. Therefore, the construction of the Phase II Resort may adversely
impact the businesses, operations and revenues of the Casino Resort.

The
 Common  Ownership  and  Management  of the Casino  Resort and the Phase II Resort  Could
Have an Adverse Effect on the Casino Resort

The
common ownership of the Casino Resort and the Phase II Resort may result in potential
conflicts of interest because the Phase II Resort will be a potential competitor to the
Casino Resort. For example, the Company may offer discounts and other incentives for
visitors to stay at the Phase II Resort, which might result in a competitive advantage of
the Phase II Resort over the Casino Resort. In addition, the Company may also choose to
allocate certain business opportunities, such as potential restaurant, dining and
entertainment tenants or requests for room reservations, to the Phase II Resort instead of
the Casino Resort. Although common ownership of both the Casino Resort and the Phase II
Resort may result in economies of scale, efficiencies and joint business opportunities for
the two resorts, the Casino Resort may, in certain circumstances, bear the greater burden
of the expenses that are shared by both resorts. In addition, the Company expects to lease
and operate the casino for the Phase II Resort, so that managements time may be
split between overseeing the operation of each resort. In certain circumstances,
management may devote more time to the ownership and operations responsibilities of the
Phase II Resort than those of the Casino Resort.

Entering
into New Ventures Involves Business and Financial Risks

The
Company is assessing the possibility of developing and operating an Internet gaming site
and is currently exploring other business opportunities for expansion and the possibility
of operating casino resorts in certain foreign jurisdictions, including in the United
Kingdom. It is unclear how long it would take, or if it would be feasible or attractive,
for the Company to develop, operate, obtain the necessary regulatory approvals for,
acquire land in connection with or take any of the other necessary business risks and
measures to complete any of these ventures. If the Company is successful in launching any
such ventures, if at all, the Company cannot assure you that any of these projects would
be successful, or that they would not have a material adverse effect on the Companys
financial position, results of operations or cash flows.

Conducting
 Business  in Macau has  Certain  Political  and  Economic  Risks  which may Affect the
Results of Operations and Financial Condition of our Asian Operations

The
Company is currently in the process of constructing a casino in Macau and is developing
plans to develop and operate one or more hotel, additional casinos and convention centers
in Macau, Peoples Republic of China. Accordingly, the Companys business
development plans, results of operations and financial condition may be materially and
adversely affected by significant political, social and economic developments in Macau and
China and by changes in policies of the government or changes in laws and regulations or
the interpretation thereof. The Companys operations in Macau are also exposed to the
risk of changes in laws and policies that govern operations of Macau-based companies. Tax
laws and regulations may also be subject to amendment or different interpretation and
implementation, thereby adversely affecting Venetian Macaus profitability after tax.
Further, certain terms of Venetian Macaus subconcession will be subject to
renegotiations between Venetian Macau and the Macau government in the future. The results
of those renegotiations may have a material adverse effect on Venetian Macaus
results of operations and financial condition.

29

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As
we expect a significant number of consumers to come to the Macau Casino from China,
general economic conditions in China could have a significant impact on Venetian
Macaus financial prospects. Any slowdown in economic growth could adversely affect
economic growth in China and impact the number of visitors from China to the Macau Casino
as well as the amounts they are willing to spend in the casino.

The
Companys Insurance Coverage May Not Be Adequate to Cover all Possible Losses that
the Casino Resort Could Suffer. In Addition, the Companys Insurance Costs May
Increase and the Company May Not Be Able to Obtain the Same Insurance Coverage in the
Future

The
Company is dependent on the operations of the Casino Resort, which occupies a single site.
The September 11th terrorist attacks have substantially affected the availability of
insurance coverage for certain types of damages or occurrences. In addition, insurance
premiums during 2002 increased on available coverage, however insurance premiums declined
$1.3 million during the 2003 renewal period. It is possible that the situation in Iraq
could further adversely affect available insurance coverage and result in increased
premiums on available coverage. The Company was able to purchase new insurance policies
and renew its existing policies on terms more favorable than the terms of its prior
policies. The costs of the new insurance policies are lower as a result of the general
decrease in premium levels and coverage. The new insurance policies exclude from coverage
certain losses and damages that were covered under the Companys prior insurance
policies. In particular, the Company has substantially reduced insurance coverage with
respect to occurrences of terrorist acts and any losses that could result from these acts.

Although
the Company currently has certain insurance coverage for occurrences of terrorist acts
with respect to the Casino Resort, the Mall, the Expo Center and/or the Macau Casino, and
certain losses that could result from these acts, the Company cannot provide assurance
that it will have sufficient insurance coverage to cover all terrorist acts or losses that
could result from those acts. The lack of sufficient insurance for these types of acts
could expose the Company to heavy losses in the event that any damages occur, directly or
indirectly, as a result of terrorist attacks, which could have significant negative impact
on its operations.

In
addition to the damage caused to the Companys property by a casualty loss (such as
fire, natural disasters, acts of war or terrorism), the Company may suffer disruption of
its business in such event or be subject to claims by third parties injured or harmed.
While the Company carries business interruption insurance and general liability insurance,
such insurance may not be adequate to cover all losses in such event.

The
Companys current insurance policies terminate in April 2004. The Company renews its
insurance policies annually and expects to complete that process by mid April 2004. In
addition to these policies, the Company has obtained $257.0 million of terrorism insurance
coverage should a terrorist event occur, whereby up to $137.0 million of losses on the
Expo Center and $120.0 million of losses on the Mall would take priority under the policy.
In particular, the Company cannot be assured that losses incurred by the Casino Resort
would be covered by the existing terrorism insurance coverage or that it will be able to
continue to obtain insurance coverage with respect to occurrences of terrorist acts and
any losses that could result from these acts. This could expose the Company to heavy
losses in the event that any damages occur, directly or indirectly, as a result of
terrorist acts. The cost of coverage may become so high that the Company may need to
reduce its policy limits or agree to certain exclusions from its coverage.

In
addition, Venetian Macaus subconcession agreement requires it to maintain a certain
minimum level of insurance. Failure to satisfy these requirements could cause an event of
default under the subconcession, which could result in the unilateral termination of the
subconcession by the Macau government without any compensation to Venetian Macau.

ITEM 2.PROPERTIES

The
Casino Resort sits on an approximately 30-acre parcel of land owned by the Company. The
Phase II Subsidiary owns an additional approximately 15-acre adjacent parcel on which the
conference center for the Phase IA Addition was constructed and the Phase II Resort is
planned to be constructed.

The
Senior Secured Credit Facility is, subject to certain exceptions, secured by a first
priority security interest (subject to permitted liens) in the real property owned by the
Company, including, the 30 acre parcel of land under the Casino Resort, the improvements
thereon, and the Phase IA Addition (including the airspace in which the conference center

30

---

for
the Phase IA Addition was constructed). Subject to limited exceptions, the Mortgage Notes
are also secured on a second-lien basis (subject to permitted liens) by these assets. The
Secured Mall Facility is secured by first priority security interests in all of the
assets of the New Mall Subsidiary, other than the capital stock and other equity
interests of the New Mall subsidiary.

Venetian
Macau has received a concession from the Macau government to use a six-acre land site for
the Macau casino. The land concession will expire in 2028 and is renewable. The land
concession requires Venetian Macau to pay a premium which is payable over a number of
years. In addition, Venetian Macau is also obligated to pay rent annually for the term of
the land concession. The rent amount may be revised every five years by the Macau
government. See Item 8  Financial Statements and Supplementary Data 
Notes to Financial Statements  Note 13  Macau Casino Projects for more
information on the Companys payment obligation under this concession.

ITEM 3.LEGAL
PROCEEDINGS

Except
as described below the Company is party to various legal matters and claims arising in the
ordinary course of business. The Company does not expect that the final resolution of
these matters will have a material adverse impact on the financial position, results of
operations or cash flows of the Company.

Construction
Litigation

The
construction of the principal components of the Casino Resort was undertaken by Lehrer
McGovern Bovis, Inc. (the Construction Manager) pursuant to a construction
management agreement and certain amendments thereto (as so amended, the Construction
Management Contract). The Construction Management Contract established a final
guaranteed maximum price (the Final GMP) of $645.0 million, so that, subject
to certain exceptions (including an exception for cost overruns due to scope
changes), the Construction Manager was responsible for any costs of the work covered
by the Construction Management Contract in excess of $645.0 million. The Construction
Management Contract also established a required substantial completion date
(the date on which the construction of the Casino Resort was sufficiently complete,
including the receipt of necessary permits, licenses and approvals, so that all components
of the Casino Resort could be open to the general public) of April 21, 1999 (subject to
extensions on account of scope changes and force majeure events), with a
per-day liquidated damages penalty for failure to meet such deadline.

The
obligations of the Construction Manager under the Construction Management Contract were
guaranteed by Bovis, Inc. (Bovis), the Construction Managers direct
parent at the time the Construction Management Contract was entered into (such guaranty,
the Bovis Guaranty). Bovis obligations under the Bovis Guaranty were
guaranteed by The Peninsula and Oriental Steam Navigation Company (P&O), a
British public company and the Construction Managers ultimate parent at the time the
Construction Management Contract was entered into (such guaranty, the P&O
Guaranty).

The
Construction Manager obtained, on behalf of the Company (and at the Companys
expense), a liquidated damages insurance policy (the LD Policy). The LD Policy
covers (with certain exceptions) liquidated damages for delays of not less than one month
and not more than four months in achieving substantial completion beyond the date
substantial completion was required to be achieved under the Construction Management
Contract.

On
July 30, 1999, Venetian filed a complaint against the Construction Manager and Bovis in
United States District Court for the District of Nevada. The action alleges breach of
contract by the Construction Manager of its obligations under the Construction Management
Contract and a breach of contract by Bovis of its obligations under the Bovis Guaranty,
including failure to fully pay trade contractors and vendors and failure to meet the April
21, 1999 guaranteed completion date. The Company amended this complaint on November 23,
1999 to add P&O as an additional defendant. The suit is intended to ask the courts,
among other remedies, to require the Construction Manager and its guarantors to pay its
contractors, to compensate Venetian for the Construction Managers failure to perform
its duties under the Construction Management Contract and to pay the Company the agreed
upon liquidated damages penalty for failure to meet the guaranteed substantial completion
date. Venetian seeks total damages in excess of $100.0 million. The Construction Manager
subsequently filed motions to dismiss the Companys complaint on various grounds,
which the Company opposed. The Construction Managers motions were either denied by
the court or voluntarily withdrawn.

31

---

| | 
| | 

In
response to Venetians breach of contract claims against the Construction Manager,
Bovis and P&O, the Construction Manager filed a complaint on August 3, 1999 against
Venetian in the District Court of Clark County, Nevada. The action alleges a breach of
contract and quantum meruit claims under the Construction Management Contract and also
alleges that Venetian defrauded the Construction Manager in connection with the
construction of the Casino Resort. The Construction Manager seeks damages, attorneys
fees and costs and punitive damages. In the lawsuit, the Construction Manager claims that
it is owed approximately $90.0 million from Venetian and its affiliates. This complaint
was subsequently amended by the Construction Manager, which also filed an additional
complaint against the Company relating to work done and funds advanced with respect to the
contemplated development of the Phase II Resort.

In
connection with these disputes, as of December 31, 1999 the Construction Manager and its
subcontractors filed mechanics liens against the Casino Resort for $145.6 million and
$182.2 million, respectively. The Company believes that a major reason these lien amounts
exceed the Construction Managers claims of $90.0 million is based upon a duplication
of liens through the inclusion of lower-tier claims by subcontractors in the liens of
higher-tier contractors, including the lien of the Construction Manager. As of December
31, 1999, the Company had purchased surety bonds for virtually all of the claims
underlying these liens (other than approximately $15.0 million of claims with respect to
which the Construction Manager purchased bonds). As a result, there can be no foreclosure
of the Casino Resort in connection with the claims of the Construction Manager and its
subcontractors. However, the Company will be required to pay or immediately reimburse the
bonding company if and to the extent that the underlying claims are judicially determined
to be valid. If such claims are not settled, it is likely to take a significant amount of
time for their validity to be judicially determined.

On
August 9, 1999, the Company notified the insurance companies providing coverage under
the LD Policy that it has a claim under the LD Policy. The LD Policy provides insurance
coverage for the failure of the Construction Manager to achieve substantial completion of
the portions of the Casino Resort covered by the Construction Management Contract within
30 days of the April 21, 1999 deadline, with a maximum liability under the LD Policy
of approximately $24.1 million and with coverage being provided, on a per-day basis, for
days 31-120 of the delay in the achievement of substantial completion. Because the Company
believes that substantial completion was not achieved until November 12, 1999, the
Companys claim under the LD Policy is likely to be for the above-described maximum
liability of $24.1 million. The Company expects the LD Policy insurers to assert many of
the same claims and defenses that the Construction Manager has asserted or will assert in
the above-described litigations. Liability under the LD Policy may ultimately be
determined by binding arbitration.

In
June 2000, the Company purchased an insurance policy (the Insurance Policy)
for loss coverage in connection with all litigation relating to the construction of the
Casino Resort (the Construction Litigation). Under the Insurance Policy, the
Company will self-insure the first $45.0 million and the insurer will insure up to the
next $80.0 million of any possible covered losses. The Insurance Policy provides coverage
for any amounts determined in the Construction Litigation to be owed to the Construction
Manager or its subcontractors relating to claimed delays, inefficiencies, disruptions,
lack of productivity/unauthorized overtime or schedule impact, allegedly caused by the
Company during construction of the Casino Resort, as well as any defense costs.

The
Company and the Construction Manager commenced a trial in state court in Clark County,
Nevada, to litigate certain of their respective claims in August 2002. Many of the
remaining claims that are the subject of the state and federal court actions have been
proceeding concurrently in independent arbitration hearings. On June 3, 2003, an
approximate 10-month trial was concluded in the state court action when a jury returned a
verdict awarding the Construction Manager approximately $44.0 million in additional costs
under the Construction Management Contract and awarding the Company approximately $2.0
million in damages for defective and incomplete work performed by the Construction
Manager. The verdict also allows each party to seek pre-judgment interest and
reimbursement of attorneys costs. The judge in this action entered the judgment on
December 24, 2003. The Company has appealed the entering of the judgment, requesting a
stay of the verdict until the conclusion of the arbitration proceedings, which proceedings
the Company believes will result in the lowering of the verdict that was awarded to the
Construction Manager in the state court action and will provide a basis to increase the
amount that was awarded to the Company.

If
the state court decision is upheld or other litigation or other lien proceedings
concerning the claims of the Construction Manager or its subcontractors were decided
adversely to the Company, such decision, litigation or other lien proceedings could have
an adverse effect on the financial position, results of operations or cash flows of the
Company, to the extent such litigation or lien proceedings are not covered by the
Insurance Policy.

32

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ITEM 4.SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not
applicable.

33

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# PART II

ITEM 5.MARKET
FOR  REGISTRANT'S  COMMON  EQUITY,  RELATED  STOCKHOLDER  MATTERS AND ISSUER  PURCHASES
 OF EQUITY SECURITIES

Market Information

There
is no established trading market for the common stock of LVSI and the Company is not aware
of any bid quotations for the common stock of LVSI.

Holders

As
of March 30, 2004, there were seven holders of record of the common stock of LVSI.

Dividends

LVSI
declared and accrued dividends of $4,198,000 during 2003 and none during 2002. The
Companys current long-term debt arrangements generally restrict the payment of cash
dividends. The dividends accrued during 2003 related to allowed tax distributions under
the long-term debt arrangements. See Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations  Liquidity and Capital
Resources and Item 8  Financial Statements and Supplementary Data 
Notes to Financial Statements  Note 8  Long-Term Debt.

See
Item 12  Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters for information on the Companys securities
authorized for issuance under the Companys equity compensation plans.

34

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ITEM 6.SELECTED
FINANCIAL DATA

The
historical selected financial data set forth below should be read in conjunction with
Item 7  Managements Discussion and Analysis of Financial Condition and
Results of Operations and the financial statements and notes thereto included
elsewhere in this Annual Report on Form 10-K. The statement of operations data for the
years ended December 31, 2003, 2002 and 2001, and the balance sheet data at December 31,
2003 and 2002 are derived from, and are qualified by reference to, the audited financial
statements included elsewhere in this Annual Report on Form 10-K. The statement of
operations data for the years ended December 31, 2000 and 1999 and the balance sheet data
at December 31, 2001, 2000 and 1999 are derived from the Companys audited financial
statements that do not appear herein. The historical results are not necessarily
indicative of the results of operations to be expected in the future.

|                                         | Year Ended December 31, |  |   |           |  
|---------------------------------------- | ----------------------- |  | - | --------- | -
|
|                                         |                         | 
|
|                                         |                         | 
|STATEMENT OF OPERATIONS DATA             |                         |  |   |           |  
|Gross revenues                           |                         |  | $ | 686,325   |  
|Promotional allowances                   |                         |  |   | (44,856   | )
|                                         |                         |  |   |           |  
|                                         |                         | 
|Net revenues                             |                         |  |   | 641,469   |  
|Operating expenses                       |                         |  |   | (465,434  | )
|                                         |                         |  |   |           |  
|Operating income (loss)                  |                         |  |   | 176,035   |  
|Interest expense, net                    |                         |  |   | (113,208  | )
|Other income (expense)                   |                         |  |   | 825       |  
|Loss on early retirement of debt (2)     |                         |  |   |          |  
|                                         |                         |  |   |           |  
|                                         |                         | 
|Income (loss) before preferred return    |                         |  |   | 63,652    |  
|Preferred return on Redeemable Preferred |                         | 
|Interest in Venetian Casino Resort, LLC  |                         |  |   | (26,217   | )
|                                         |                         |  |   |           |  
|                                         |                         | 
|Net income (loss)                        |                         |  | $ | 37,435    |  
|                                         |                         |  |   |           |  
|                                         |                         | 
|Per Share Data                           |                         |  |   |           |  
|                                         |                         | 
|Basic earnings (loss) per share (3)      |                         |  | $ | 37.44     |  
|                                         |                         |  |   |           |  
|                                         |                         | 
|Diluted earnings (loss) per share        |                         |  | $ | 37.36     |  
|                                         |                         |  |   |           |  
|                                         |                         | 
|Dividends declared per share             |                         |  | $ | 4.20      |  
|                                         |                         |  |   |           |  
|                                         |                         | 
|OTHER DATA                               |                         |  |   |           |  
|Capital expenditures                     |                         |  | $ | 279,211   |  
|                                         |                         | 
|
|                                         |                         | 
|                                         |                         |  |   | 2003      |  
|                                         |                         | 
|BALANCE SHEET DATA                       |                         |  |   |           |  
|Total assets                             |                         |  | $ | 1,831,894 |  
|Longterm debt                           |                         |  | $ | 1,426,350 |  
|Stockholders' equity (deficit)           |                         |  | $ | (16,989   | )

---

|(1) | The
Casino Resort opened May 4, 1999.
|--- | -------------------------------------

|(2) | In
April 2002, the Financial Accounting Standards Board issued statement No. 145           (SFAS
145) Recession of FASB Statements Nos. 4, 44 and 64 and           Amendment
of FASB Statement No. 13. SFAS 145 addresses the presentation           for losses
on early retirements of debt in the statement of operations to the           extent they
do not meet the requirements of APB Opinion No. 30. The Company has           adopted
SFAS 145 and no longer present losses on early retirements of debt as an
          extraordinary item. Accordingly, prior period losses on early retirement of
debt           have been reclassified to other income (expense) to conform to this new
          presentation in the accompanying table.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net
income (loss) per share and shares outstanding for all periods presented
          retroactively reflect the impact of the Companys first quarter 2002 stock
          split which increased the number of shares of common stock outstanding from
          925,000 to 1,000,000. The impact of outstanding options to purchase 5,500
shares           of the Companys common stock has not been included in the
computation of           diluted earnings (loss) per share for the year ended December
31, 2002, as their           impact would have been antidilutive. There were no options
outstanding for the           years 1999-2001.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

35

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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 consolidated financial statements and the notes thereto and other financial
information included in the Companys Annual Report on 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.

General

The
Company owns and operates the Venetian Casino Resort, a large-scale Renaissance
Venice-themed hotel, casino, retail, meeting and entertainment complex in Las Vegas,
Nevada, a major expansion of which was completed and opened for business during the second
quarter of 2003. Approximately 82% of the Companys revenues in 2003 were derived
from gaming and hotel rooms at the Casino Resort of which approximately 42.5% is derived
from gaming and 39.2% is derived from hotel rooms. Las Vegas has continued to experience
an upward trend in visitation, convention and trade show attendees, and gaming win, hotel
occupancy and hotel average daily room rates. The Casino Resort has benefited from these
trends along with low interest rates during 2003 and the first quarter of 2004.

The
Company completed an expansion of the Casino Resort during the second quarter of 2003,
which opened for business on June 26, 2003. The expansion included a 1,013-room hotel
tower on top of the Casino Resorts existing parking garage, an approximately
1,000-parking space expansion to the existing parking garage and approximately 150,000
square feet of additional meeting and conference space. Following its expansion, the
Casino Resort includes the only all-suites hotel on the Las Vegas Strip with 4,049 suites;
a gaming facility of approximately 116,000 square feet; an enclosed retail, dining and
entertainment complex of approximately 446,000 net leasable square feet; and a meeting and
conference facility of approximately 650,000 square feet of convention space. The total
cost of the Phase IA Addition construction was approximately $285.0 million, including
$9.0 million to expand the Casino Resorts heating, ventilation and air conditioning
facility (the HVAC Plant Expansion) to accommodate the Phase IA Addition.

The
Company has begun extensive design and planning work, is currently exploring financial
alternatives for, and has commenced design, demolition and work on the site of, the Phase
II Resort. During 2003, the Company invested $17.0 million toward the development of the
Phase II Resort. The Company is currently exploring financing alternatives to develop and
construct the Phase II Resort.

The
Company announced during January 2004 that it has retained an investment-banking firm, as
financial advisor, to explore various strategic alternatives available to it relating to
the Grand Canal Shops. No decision has been made as to whether there will be a sale or any
other transaction involving the Grand Canal Shops. The Company is uncertain as to what
strategic alternatives it may ultimately pursue and there can be no assurance that, if any
transaction is commenced, it will be completed or as to the value that any such
transaction might have for the Company.

During
2003, Venetian Macau, a subsidiary of the Company, commenced construction of the Macau
Casino, a Las Vegas style casino on an approximately six-acre, waterfront parcel near the
Macau-Hong Kong Ferry Terminal in the Macau Special Administrative Region of the
Peoples Republic of China under a subconcession agreement. In addition, under the
subconcession agreement, Venetian Macau is obligated to develop and open the Macau
Venetian Casino Resort by June 2006 and invest, or cause to be invested, at least
4.4 billion patacas (approximately $535.6 million at exchange rates in effect on
December 31, 2003) in various development projects in Macau by June 2009.

36

---

Venetian
Macau began construction of the Macau Casino in December 2002 and expects to open the main
casino portion of the Macau Casino during April 2004 and the remainder of the Macau Casino
by June 2004. The Company currently estimates that the total cost of constructing,
developing and operating the Macau Casino, including design costs, construction costs,
equipment costs, working capital and pre-opening expenses, will be approximately
$257.9 million. Through December 31, 2003, the Company has expended pre-opening and
developmental expenses and capital expenditures of $70.5 million, in connection with the
Macau Casino project. See Liquidity and Capital Resources  Macau Casino
Projects.

The
Company is assessing the feasibility of, and developing, an Internet gaming site. Through
December 31, 2003, the Company had invested $1.3 million in development costs of an
Internet gaming site. The Company received an interactive gaming license and an electronic
betting center license from the Alderney Gambling Control Commission during March 2003,
but has not yet established any operations. The Company has entered into agreements in
principle subject to the successful negotiation of final documentation with two prominent
football clubs in the United Kingdom to build entertainment and gaming facilities.

Critical Accounting
Policies and Estimates

Management
has identified the following critical accounting policies that affect the Companys
more significant judgments and estimates used in the preparation of the Companys
consolidated financial statements. The preparation of the Companys financial
statements in conformity with accounting principles generally accepted in the United
States of America requires the Companys 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. On an on-going basis, management
evaluates those estimates, including those related to asset impairment, accruals for slot
marketing points, self-insurance, compensation and related benefits, revenue recognition,
allowance for doubtful accounts, contingencies and litigation. The Company states these
accounting policies in the notes to the consolidated financial statements and in relevant
sections in this discussion and analysis. These estimates are based on the information
that is currently available to the Company and on various other assumptions that
management believes to be reasonable under the circumstances. Actual results could vary
from those estimates.

The
Company believes that the following critical accounting policies affect significant
judgments and estimates used in the preparation of its consolidated financial statements:

| |  | The
Company maintains an allowance for doubtful accounts for estimated losses resulting from
the failure of its customers to make required payments, which results in bad debt
expense. Management determines the adequacy of this allowance by continually evaluating
individual customer receivables, considering the customers financial condition,
credit history and current economic conditions. If the financial condition of customers
were to deteriorate, or if a customer refuses to pay or disputes any such payment,
additional allowances may be required. The Companys estimate of its provision for
doubtful accounts was $8.1 million during 2003 as compared to $21.4 million and $20.2
million for the years 2002 and 2001 respectively. The Company has historically estimated
its provision for doubtful accounts related to table games receivables both on a specific
identification basis for high dollar accounts, and on a percentage of table games credit
volume for the balance of the receivable portfolio. During 2003 the Company experienced
improved collections of receivables associated with high end table games play as a result
of better collection experience with larger customers, and more stringent marketing and
credit procedures.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
Company maintains accruals for health and workers compensation self-insurance, slot club
point redemption and group sales commissions, which are classified in other accrued
liabilities in the consolidated balance sheets. Management determines the adequacy of
these accruals by periodically evaluating the historical experience and projected trends
related to these accruals. If such information indicates that the accruals are overstated
or understated, or if business conditions indicate the Company should adjust the
assumptions utilized in the methodologies, the Company will reduce or provide for
additional accruals as appropriate.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

37

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| |  | The
Company is subject to various claims and legal actions, including lawsuits with its
construction manager, Lehrer McGovern Bovis, Inc., for the original construction of the
Casino Resort. Some of these matters relate to personal injuries to customers and damage
to customers personal assets. Management has established no accrual for any gain or
loss in connection with the construction litigation because such gain or loss while
reasonably possible has not been determined to be probable, nor can it be measured with
any reasonable certainty. It is reasonably possible that this position could change in
the near term as arbitration proceedings are concluded, and such amount could be
material. Management estimates guest claims expense and accrues for such liabilities
based upon historical experience in the other accrued liability category in its
consolidated balance sheet.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | At
December 31, 2003, the Company had net property and equipment of $1.4 billion
representing 78.2% of its total assets. The Company depreciates 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. Future events,
such as property expansions, property developments, new competition, or new regulations,
could result in a change in the manner in which the Company uses certain assets requiring
a change in the estimated useful lives of such assets. In assessing the recoverability of
the carrying value of property and equipment if events and circumstance warrant such an
assessment, the Company must make assumptions regarding estimated future cash flows and
other factors. If these estimates or the related assumptions change, the Company may be
required to record an impairment loss for these assets. Such an impairment loss would be
recognized as a non-cash component of operating income.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Summary Financial
Results

The
Company currently offers hotel, gaming, dining, entertainment, retail and spa amenities at
one location in the Casino Resort in Las Vegas and under one operating segment.
Approximately 42.5% of the Company revenue is derived from gaming, while 39.2% is derived
from hotel rooms. The percentage of gaming revenue is one of the lowest on the Las Vegas
Strip because of the Companys emphasis on the group convention and trade show
business and the resulting higher occupancy and room rates during mid-week periods.

The
following table summarizes the Companys results of operations:

|                                      | Year Ended December 31, |          |  |     |    
|------------------------------------- | ----------------------- | -------- |  | --- | ---
|
|
|
|
|
|Net revenues                          |                         | $641,469 |  | 12  | .2%
|Operating income                      |                         | 176,035  |  | 19  | .7%
|General and administrative expenses   |                         | 107,523  |  | 13  | .9%
|Income (loss) before preferred return |                         | 63,652   |  | 522 | .7%
|Net income (loss)                     |                         | 37,435   |  | 197 | .5%

|                                    | Percent of Net Revenues |      |   |  | 
|----------------------------------- | ----------------------- | ---- | - |  | 
|
|
|Operating income                    |                         | 27.4 | % |  | 
|General and administrative expenses |                         | 16.8 | % |  | 
|Income before preferred return      |                         | 9.9  | % |  | 
|Net income (loss)                   |                         | 5.8  | % |  | 

38

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Year Ended December
31, 2003 compared to the Year Ended December 31, 2002

Operating
Revenues

Key
operating revenue measurements:

The Casino
Resorts operating revenue is dependent upon the volume of customers that 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. Following are the key measurements the Company uses to
evaluate operating revenue.

Hotel
revenue measurements: hotel occupancy is the average percentage of available hotel rooms
occupied during a period. Average daily room rate (ADR) is the average price
of occupied rooms per day. Revenue per available room (Rev Par) represents a
summary of hotel average daily room rates and occupancy.

Casino
revenue measurements: table games drop and slot handles are volume measurements. Win or
hold percentage represents the percentage of drop or handle that is won by the casino.
Normal table games win percentage is 19% to 21% of table games drop and normal slot
machine win percentage is 6% to 7% of slot handle. Generally, slot machine play is
conducted on a cash basis, while the Casino Resorts table games revenue is from
higher wagering guests, generally on a credit basis.

The
breakdown of the Companys net revenues is as follows:

|                              | Year Ended December 31, |           |  
|----------------------------- | ----------------------- | --------- | -
|
|
|
|Net Revenues                  |                         |           |  
|Casino                        |                         | $ 272,804 |  
|Rooms                         |                         | 251,397   |  
|Food and beverage             |                         | 82,882    |  
|Grand Canal Shops             |                         | 39,374    |  
|Retail                        |                         | 8,623     |  
|Other                         |                         | 31,245    |  
|                              |                         |           |  
|                              |                         | $ 686,325 |  
|                              |                        
|Less - Promotional Allowances |                         | (44,856   | )
|                              |                         |           |  
|                              |                        
|Total net revenues            |                         | $ 641,469 |  
|                              |                         |           |  

Consolidated
net revenues for the year ended December 31, 2003 were $641.5 million, representing an
increase of $69.8 million or 12.2% when compared with $571.7 million of consolidated net
revenues during 2002. The increase in net revenues was due to: (1) an increase of casino
revenue of $16.3 million, primarily as a result of increased slot machine revenue; (2) an
increase in room revenue of $44.7 million as a result of (a) adding an additional 1,013
new hotel rooms during June 2003 as part of the Phase IA Addition project (b) an increase
in average daily hotel room rates and (c) a slight increase in hotel room occupancy; and
(3) an increase in food and beverage revenue of $12.6 million which resulted from the
additional rooms and the associated increased banquet revenues; and (4) an increase in
other revenues from $79.2 million during 2003 as compared to $72.4 million during 2002.

Casino
revenues were $272.8 million in the year ended December 31, 2003, an increase of $16.3
million or 6.4% from 2002. The increase was attributable to several factors, including
that the slot handle (volume) in the year ended December 31, 2003 increased to $1.902
billion from $1.658 billion during 2002, primarily as a result of adding 1,013 new hotel
rooms (slot machine win percentage as a percentage of slot handle was within a normal
range during 2003 and 2002); and offset by more stringent table games marketing parameters
during 2003 that resulted in decreased table games volume. Table games drop (volume)
decreased to $829.0 million in 2003 from $867.3 million during 2002. Table game win as a
percentage of table games drop was within a normal range during both 2003 and 2002 (table
games and slot machine win percentage is reasonably predictable over time, but may vary
considerably during shorter periods).

39

---

The
Casino Resort maintained an average daily room rate of $204 in 2003 as compared to $196 in
2002. The Casino Resort generated revenue per available room of $195 during 2003 as
compared to $187 during 2002. Room revenues during 2003 were $251.4 million, representing
an increase of $44.7 million or 21.6% when compared to $206.7 million during 2002. The
increase in room revenues was the result of an increase in the number of hotel rooms,
after the opening of the Phase IA Addition on June 27, 2003, an increase in the average
daily room rate and a slight increase in room occupancy.

Food
and beverage revenues were $82.9 million during 2003, representing an increase of $12.6
million or 17.9% compared to $70.3 million for 2002. The increase was attributable to the
additional hotel rooms, and higher room occupancy.

Mall
revenues, which are included in retail and other revenues, were $39.4 million during 2003,
compared to $36.5 million during 2002. The 7.9% increase was attributable to higher foot
traffic, additional tenants and increased proceeds from rents calculated on tenant gross
revenues.

Retail
and other revenues (excluding the Mall) increased $3.9 million or 10.9% to $39.8 million
in 2003 from $35.9 million in 2002. The increase was primarily attributable to the new
hotel rooms.

Operating
Expenses

Variations
in the Companys operating expenses are generally based upon volume of guests staying
in the hotel and utilizing the Casino Resorts amenities, including the casino, food
and beverage, spa and retail outlets. Operating expenses not related to the operations of
the Casino Resort such as, corporate, pre-opening and pre-developmental expenses are not
based upon guests of the Casino Resort but on strategic decisions as to new opportunities
for the Company such as in Macau and Internet gaming.

The
breakdown of operating expenses is as follows:

|                                      | Year Ended December 31, |          | 
|------------------------------------- | ----------------------- | -------- | 
|
|
|
|Operating Expenses                    |                         |          | 
|Casino                                |                         | $128,339 | 
|Rooms                                 |                         | 64,819   | 
|Food and beverage                     |                         | 40,797   | 
|Retail and other                      |                         | 33,468   | 
|Provision for doubtful accounts       |                         | 8,084    | 
|General and administrative            |                         | 107,523  | 
|Corporate                             |                         | 10,914   | 
|Rental expense                        |                         | 10,128   | 
|Pre-opening and developmental expense |                         | 10,525   | 
|Depreciation and amortization         |                         | 50,837   | 
|                                      |                         |          | 
|                                      |                        
|Total operating expenses              |                         | $465,434 | 
|                                      |                         |          | 

40

---

Operating
expenses (including pre-opening, developmental and corporate expenses) were $465.4 million
2003, representing an increase of $40.8 million or 9.6% when compared to $424.6 million
during 2002. The increase in operating expenses was primarily attributable to higher
operating revenues and business volumes in all departments of the Casino Resort due to the
completion of the Phase IA Addition, increased pre-opening and development expense
associated with the construction of the Macau Casino, increased general and administrative
costs, partially offset by a decrease in the provision for doubtful accounts. Casino
department expenses increased $9.1 million or 7.7% as a result of increased slot machine
volume and increased table games marketing cost. Rooms department expense increased
$11.4 million or 21.3% as a result of the addition of 1,013 hotel rooms and slightly
higher room occupancy. Food and beverage expense increased $5.6 million or 15.8% as a
result of increased food and beverage sales. General and administrative cost increased
$13.1 million primarily as the result of increased utility cost, legal expense, management
bonus program and property taxes.

Mall
operating expenses, which are included in retail and other expenses, were $23.7 million
during 2003 compared to $22.9 million during 2002.

The
provision for doubtful accounts was $8.1 million in 2003, representing a decrease of $13.3
million when compared to $21.4 million during 2002. The decrease was primarily the result
of improved collections of table games receivables during 2003. Net casino receivables
were $28.6 million in 2003 as compared to $37.8 million in 2002. Net hotel receivables
were $21.0 million in 2003 as compared to $11.9 million in 2002. The $9.1 million increase
in hotel receivables was the result of the increase in the number of hotel rooms and group
convention and banquet business. Hotel receivables are generally secured by credit cards
or cash deposits, and therefore rarely have significant allowances associated with
outstanding balances.

Corporate
expense was $10.9 million in 2003, compared with $11.0 million in 2002.

Pre-opening
and developmental expense was $10.5 million as compared to $5.9 million during 2002 and an
increase of $4.6 million or 78%. The increase was primarily as a result of the
Companys pre-development activity associated with the development of the Macau
Casino and the opening of the Phase IA Addition to the Casino Resort.

Fixed
payment obligations (rent expense) primarily related to the HVAC Plant for 2003 were $10.1
million, including $7.5 million for the Casino Resort and $2.6 million for the Mall. Fixed
payment obligations were $7.6 million during 2002, including $5.2 million for the Casino
Resort and $2.4 million for the Mall.

Interest
Income (Expense)

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

|                                                   | Year Ended December 31, |            
|-------------------------------------------------- | ----------------------- | -----------
|
|
|
|
|Interest cost                                      |                         | $   120,564
|Less: Capitalized interest                         |                         | 5,640      
|                                                   |                         |            
|                                                   |                        
|Interest expense, net                              |                         | $   114,924
|                                                   |                         |            
|                                                   |                        
|Cash paid for interest, net of amounts capitalized |                         | $   111,805
|Average total debt balance                         |                         | $1,335,371 
|Weighted average interest rate                     |                         | 9.0%       

41

---

Interest
expense net of amounts capitalized was $114.9 million for 2003, compared to $114.4 million
in 2002. Of the net interest expense incurred during 2003, $107.3 million was related to
the Casino Resort (excluding the Mall), $5.3 million was related to the Mall and $2.3
million was related to the Macau Casino. The increase in interest expense was attributable
to increased borrowings associated with the construction of the Phase IA Addition and the
Macau Casino, partially offset by decreases in interest rates on the Companys
variable rate debt during 2003.

Interest
income was $1.7 million and $2.6 million for the years ended December 31, 2003 and 2002,
respectively. The decrease was due to a decline in restricted cash balances for the Phase
IA Addition and Macau Casino construction and declining interest rates on investments.

Year Ended December
31, 2002 compared to the Year Ended December 31, 2001

Operating
Revenues

The
breakdown of net revenues is as follows:

|                              | Year Ended December 31, |           |  
|----------------------------- | ----------------------- | --------- | -
|
|
|
|Net Revenues                  |                         |           |  
|Casino                        |                         | $ 256,484 |  
|Hotel                         |                         | 206,706   |  
|Food and beverage             |                         | 70,300    |  
|Grand Canal Shops             |                         | 36,493    |  
|Retail                        |                         | 8,030     |  
|Other                         |                         | 27,872    |  
|                              |                         |           |  
|                              |                         | $ 605,885 |  
|Less - Promotional Allowances |                         | (34,208   | )
|                              |                         |           |  
|                              |                        
|Total net revenues            |                         | $ 571,677 |  
|                              |                         |           |  

Consolidated
net revenues in 2002 were $571.7 million, representing an increase of $47.8 million when
compared with $523.9 million of consolidated net revenues during 2001. The increase in net
revenues was due to: (1) an increase of casino revenue of $29.2 million primarily as a
result of increased table games win percentage; (2) an increase in rooms revenue of $2.5
million as a result of higher hotel room occupancy; and (3) an increase in food and
beverage revenue of $8.3 million which resulted from higher room occupancy and increased
banquet revenues, all of which was partially offset by a decrease in other revenues of
$0.6 million as a result of reduced group cancellation fees.

Casino
revenues were $256.5 million in 2002, an increase of $29.2 million from 2001. The increase
was attributable to several factors, including higher table games win percentage
(calculated before discounts) of 21.4% during 2002 as compared to 15.3% during 2001 (the
table games win percentage is reasonably predictable over time, but may vary considerably
during shorter periods), offset by more stringent table games marketing parameters during
2002 that resulted in decreased table games volume. Table games drop (volume) decreased to
$867.3 million in 2002 from $966.6 million during 2001. Slot handle (volume) in 2002
decreased to $1.658 billion from $1.825 billion reported during 2001 because of more
stringent marketing parameters.

The
Casino Resort maintained an average daily room rate of $196 for each of 2002 and 2001.
Room revenues during 2002 were $206.7 million, representing an increase of $2.5 million
when compared to $204.2 million during 2001. The increase in room revenues was the result
of an increase of the occupancy of available guestrooms to 95.6% during 2002 as compared
to 94.6% during 2001.

42

---

Food
and beverage revenues were $70.3 million during 2002, representing an increase of $8.3
million compared to $62.0 million for 2001. The increase was attributable to higher room
occupancy and related banquet sales.

Mall
revenues, which are included in retail and other revenues, were $36.5 million during 2002,
compared to $33.5 million during 2001. The increase was attributable to higher foot
traffic, additional tenants and increased proceeds from rents calculated on tenant gross
revenues.

Retail
and other revenues (excluding the Mall) decreased $3.6 million to $35.9 million in 2002
from $39.5 million in 2001. The decrease was primarily attributable to group cancellation
fees of $5.2 million during 2001. Retail and other revenue for 2002 includes the
Companys share of net revenues from the Art of the Motorcycle exhibition at the
Guggenheim Las Vegas Museum. The exhibit opened to the public on October 7, 2001 and
closed on January 6, 2003.

Operating
Expenses

|                                      | Year Ended December 31, |          | 
|------------------------------------- | ----------------------- | -------- | 
|
|
|
|Operating Expenses                    |                         |          | 
|Casino                                |                         | $119,186 | 
|Hotel                                 |                         | 53,435   | 
|Food and beverage                     |                         | 35,217   | 
|Retail and other                      |                         | 32,736   | 
|Provision for doubtful accounts       |                         | 21,393   | 
|General and administrative            |                         | 94,410   | 
|Corporate                             |                         | 11,015   | 
|Rental expense                        |                         | 7,640    | 
|Pre-opening and developmental expense |                         | 5,925    | 
|Depreciation and amortization         |                         | 43,638   | 
|                                      |                         |          | 
|                                      |                        
|Total operating expenses              |                         | $424,595 | 
|                                      |                         |          | 

Operating
expenses (including pre-opening, developmental, and corporate expenses) were $424.6
million in 2002, representing an increase of $10.0 million when compared to $414.6 million
during 2001. The increase in operating expenses was primarily attributable to higher
operating revenues and business volumes in all departments of the Casino Resort and
increased general and administrative costs and partially offset by reduced advertising
costs during 2002. Casino department expenses decreased $20.7 million as a result of
reduced drop (table games volume), and reduced casino marketing costs. Rooms
department expense increased $3.4 million resulting from higher room occupancy. Food and
beverage expense increased $5.6 million as a result of increased food and beverage sales.
General and administrative costs increased $7.5 million primarily as the result of
increased utility, property tax, and insurance costs.

Mall
operating expenses, which are included in retail and other expenses, were $22.9 million
during 2002 compared to $20.9 million during 2001. The increase in Mall operating expenses
was primarily attributable to increased utility costs during 2002 as compared to 2001.

Corporate
expense was $11.0 million in 2002, compared with $6.4 million in 2001. The increase was
due to increased incentive compensation and transportation costs.

43

---

Pre-opening
and developmental expense was $5.9 million as a result of the Companys
pre-development activity associated with the development of the Macau Casino.

Fixed
payment obligations (rent expense) primarily related to the HVAC Plant in 2002 were $7.6
million, including $5.2 million for the Casino Resort and $2.4 million for the Mall. Fixed
payment obligations were $8.1 million during 2001, including $5.9 million for the Casino
Resort and $2.2 million for the Mall.

Interest
Income (Expense)

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

|                                                   | Year Ended December 31, |            
|-------------------------------------------------- | ----------------------- | -----------
|
|
|
|
|Interest cost                                      |                         | $   116,914
|Less: Capitalized interest                         |                         | 2,556      
|                                                   |                         |            
|                                                   |                        
|Interest expense, net                              |                         | 114,358    
|                                                   |                         |            
|                                                   |                        
|Cash paid for interest, net of amounts capitalized |                         | 114,401    
|Average total debt balance                         |                         | 1,165,036  
|Weighted average interest rate                     |                         | 10.0%      

Interest
expense net of amounts capitalized was $114.4 million for 2002, compared to $110.7 million
in 2001. Of the net interest expense incurred during 2002, $105.9 million was related to
the Casino Resort (excluding the Mall) and $8.5 million was related to the Mall. The
increase in interest expense was attributable to increased borrowings associated with the
Refinancing Transactions partially offset by decreases in interest rates on the
Companys variable rate debt during 2002.

Interest
income was $2.6 million and $1.4 million for 2002 and 2001, respectively. The increase was
due to increased cash balances and restricted cash balances to be used for Phase IA
Addition.

Other Factors
Affecting Earnings

Depreciation
expense in 2003 was $50.8 million as compared to $43.6 million in 2002. The increase was
attributable to placing the Phase IA Addition into service during the second quarter of
2003.

During
2003 and 2002, $26.2 million and $23.3 million, respectively, were accrued on the Series B
preferred interest in Venetian (the Series B Preferred Interest) related to
the contributions made.

44

---

Liquidity and Capital
Resources

Cash
Flows  Summary

The
Companys cash flows consisted of the following:

|                                          | Year Ended December 31, |  |  
|----------------------------------------- | ----------------------- |  | -
|
|
|
|
|Net cash provided by operations           |                         |  | $
|                                          |                         |  |  
|                                          |                         | 
|Investing cash flows:                     |                         |  |  
|Capital expenditures                      |                         |  |  
|Increase in restricted cash               |                         |  |  
|Shareholder loans                         |                         |  |  
|                                          |                         |  |  
|                                          |                         | 
|Net cash used in investing activities     |                         |  |  
|                                          |                         |  |  
|                                          |                         | 
|Financing cash flows:                     |                         |  |  
|Repayments of long-term debt              |                         |  |  
|Issuance of long-term debt                |                         |  |  
|Other                                     |                         |  |  
|                                          |                         |  |  
|                                          |                         | 
|Net cash provided by financing activities |                         |  |  
|                                          |                         |  |  
|                                          |                         | 
|Net increase in cash and cash equivalents |                         |  | $
|                                          |                         |  |  

Cash Flows Operating
Activities

The
Casino Resorts slot machine and retail hotel rooms business are generally conducted
on a generally cash basis while the Casino Resorts table games, group hotel, and
banquet businesses are conducted on a credit basis resulting in operating cash flows being
generally affected by changes in operating income and accounts receivables. As of December
31, 2003 and December 31, 2002, the Company held unrestricted cash and cash equivalents of
$142.4 million and $93.7 million, respectively. Net cash provided by operating activities
for 2003 was $133.1 million, compared with $78.1 million for 2002. The Companys
operating cash flow in 2003 was positively impacted as compared to the prior year
primarily because of the $29.0 million increase in operating income. The increase in
operating income was primarily the result of an increase of $33.3 million in the Casino
Resorts room division operating profit during 2003 as compared to 2002. Net trade
receivables were $52.5 million as of December 31, 2003 compared to $53.3 million as of
December 31, 2002.

45

---

Capital Expenditures

Capital
expenditures during 2003 were $279.2 million, of which $176.0 million was attributable to
construction of the Phase IA Addition and $52.8 million was attributable to the Macau
Casino project with the balance having been incurred for operating capital expenditures at
the Casino Resort. The Company expects capital expenditures (excluding the Phase II
Resort) in 2004 to total approximately $230.0 million, including Macau Casino construction
costs of approximately $190.0 million, and approximately $40.0 million for operating
capital expenditures at the Casino Resort. The Phase II Resort design, planning, and other
development costs during 2003 were $16.4 million. The Company has proceeded with Phase II
design, demolition and site work during the first quarter of 2004 and plans to continue
development work on the Phase II Resort during 2004. The Company is pursuing and
evaluating alternatives to finance the development and construction of the Phase II
Resort. The construction and development of the Phase II Resort will require significant
additional debt and/or equity financing and there can be no assurance that such funds will
be available or that such funds will be on terms that will be favorable to the Company.
The Company currently estimates the cost to develop and construct the Phase II Resort to
be approximately $1.4 billion, excluding the cost of the land, capitalized interest and
pre-opening expenses.

The
Company also held restricted cash balances of $122.5 million as of December 31, 2003. Of
this amount, $117.1 million was held in restricted accounts and invested in cash or
permitted investments by a disbursement agent for the holders of the senior secured notes
due 2008 of Venetian Macau (the Venetian Macau Senior Secured Notes) until
required for the Macau Casino project costs under the disbursement terms of the Venetian
Macau Senior Secured Notes.

Aggregate
Indebtedness and Other Known Contractual Obligations

The
Companys total long-term indebtedness and other known contractual obligations, are
summarized below as of December 31, 2003:

|                                                 | Payments due by Period |  |   |        | 
|------------------------------------------------ | ---------------------- |  | - | ------ | 
|
|
|
|
|Long -Term Indebtedness                          |                        |  |   |        | 
|Mortgage Notes                                   |                        |  | $ |       | 
|Senior Secured Credit Facility -  Term A(1)      |                        |  |   | 8,333  | 
|Senior Secured Credit Facility - Term B(1)       |                        |  |   | 2,500  | 
|Secured Mall Facility(2)                         |                        |  |   |       | 
|FF&E Credit Facility(3)                          |                        |  |   | 1,800  | 
|Venetian Macau Senior Secured Notes Tranche A(4) |                        |  |   |       | 
|Venetian Macau Senior Secured Notes Tranche B(4) |                        |  |   |       | 
|Venetian Intermediate Credit Facility(5)         |                        |  |   |       | 
|                                                 |                        | 
|                                                 |                        | 
|Other Contractual Obligations                    |                        | 
|HVAC Provider fixed payments(6)                  |                        |  |   | 7,657  | 
|Former Tenants(7)                                |                        |  |   | 8,650  | 
|Macau Casino Land Lease(8)                       |                        |  |   | 5,733  | 
|Macau Casino Operating Leases                    |                        |  |   | 458    | 
|                                                 |                        |  |   |        | 
|Total                                            |                        |  | $ | 35,131 | 
|                                                 |                        |  |   |        | 

---

| | (1) | The
Senior Secured Credit Facility  Term B will mature on June 4, 2008 and
          will be subject to nominal quarterly amortization payments, beginning from
          September 30, 2002 through June 30, 2007, and equal quarterly amortization
          payments of the balance of this facility thereafter. The Senior Secured Credit
          Facility  Term A for draw down and amounts borrowed at December 31, 2003
          will mature on June 4, 2007 and is subject to quarterly amortization payments
          commencing on December 31, 2003. Indebtedness under the senior secured
revolving           credit facility will mature on June 4, 2007 with no interim
amortization.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The
$120.0 million Secured Mall Facility will mature on June 10, 2005 (subject           to
extension for two terms of one year each), with no amortization.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The
$15.0 million FF&E Facility will mature on July 1, 2008 and is subject           to
quarterly amortization payments.
| | --- | ------------------------------------------------------------------------------------------------------------------------

46

---

| | (4) | The
Venetian Macau Senior Secured Notes Tranche A will mature on August 21, 2008
          and are subject to mandatory annual redemption. The Venetian Macau Senior
          Secured Noted Tranche B will mature on August 21, 2008 and are not subject to
          mandatory annual redemption.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The
$40.0 million Venetian Intermediate Credit Facility will mature on March 27,
          2006, with no amortization.
| | --- | ----------------------------------------------------------------------------------------------------------------------

| | (6) | The
Company and the New Mall Subsidiary are           parties to a services agreement with a
third party for thermal energy (heating,           ventilating and air conditioning) for
the Casino Resort. The total remaining           payment obligation under these
arrangements was $42.1 million as of December 31,           2003, payable in equal
monthly installments through July 1, 2009.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | The
Company and the Mall Subsidiary are party to tenant lease termination and           asset
purchase agreements. The total remaining payment obligations under these
          arrangements was $23.2 million as of December 31, 2003.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | The
Macau Subsidiary is party to a long-term land lease of 25 years, the total
          remaining payment obligation under this arrangement is $17.9 million as of
          December 31, 2003.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Under
the terms of its existing indebtedness, the Company has debt principal payments due
aggregating $12.6 million during the next twelve months, representing principal payments
on the Senior Secured Credit Facility and the FF&E Credit Facility. Based on current
outstanding indebtedness and current interest rates on the Senior Secured Credit Facility,
the Secured Mall Facility, the FF&E Facility, the Venetian Intermediate Credit
Facility and the Venetian Macau Senior Secured Notes, the Company has estimated total
interest payments during the next twelve months (excluding noncash amortization of debt
offering costs) of approximately $106.2 million for indebtedness secured by the Casino
Resort, (including the Venetian Intermediate Credit Facility), approximately $3.6 million
for indebtedness secured by the Mall, and $6.3 for indebtedness secured by the Macau
Casino. In addition, Venetian Macau is required to obtain, and is in the process of
seeking, an additional $25.0 million of FF&E indebtedness to complete the Macau Casino
which would require additional interest expense. If Venetian Macau is unable to obtain
this Financing, LVSI, Venetian or another of their subsidiaries is obligated to either
purchase gaming equipment or other assets with a cost of up to $25.0 million or enter into
lease or other arrangements with Venetian Macau or enter into other transactions with
Venetian Macau that will enable it to purchase this gaming equipment or these assets. See
Item 8  Financial Statements and Supplementary Data  Notes to Financial
Statements  Note 8  Long-Term Debt.

The
Company also has fixed payments obligations due during the next twelve months of $7.7
million under its energy service agreements with the HVAC Provider. The total remaining
payment obligation under this arrangement is $42.1 million, payable in equal monthly
installments during the period from January 1, 2004 through July 1, 2009.

Off -
Balance Sheet Arrangements

During
1997, the Company and the Mall Subsidiary entered into off-balance sheet arrangements with
a heating and air conditioning (HVAC) provider (the HVAC
Provider). Under the terms of these energy service agreements, HVAC energy and
services will be purchased by the Company, the New Mall Subsidiary, its mall tenants and
Interface over initial terms expiring in 2009 with an option to collectively extend the
terms of their agreements for two consecutive five-year periods. The Company has fixed
payments obligations due during the next twelve months of $7.7 million under its energy
services agreements with the HVAC Provider. The total remaining payment obligations under
these arrangements was $42.1 million as of December 31, 2003, payable in equal monthly
installments through July 1, 2009. The Company has the right to terminate the agreement
based upon the failure of the HVAC Provider to provide HVAC service. The Company has no
other off-balance sheet arrangements.

Capital
and Liquidity

For
the next twelve months, the Company expects to fund Casino Resort operations, capital
expenditures, the Macau Casino construction, the Phase II Resort development costs, and
debt service requirements from existing cash balances, operating cash flow, borrowings
under the Revolving Facility, and borrowings by the Phase II Subsidiary in each case, to
the extent permitted under the terms of the Companys indebtedness. The Company is
pursuing and evaluating alternatives to finance the development and construction of the
Phase II Resort. The construction and development of the Phase II Resort will require
significant additional debt and/or equity financing and, there can be no assurance that
such funds will be available or that such funds will be on terms that will be favorable to
the Company. The Company currently estimates the cost to develop and construct the Phase
II Resort to be approximately $1.4 billion, excluding the cost of the land, capitalized
interest and pre-opening expenses. As of December 31, 2003, the Company had $142.4 million
in cash and cash equivalents (plus $117.9 million in restricted cash for Macau) and there
was $35.0 million available for borrowing under the Revolving Facility. As discussed
below, the availability under the Revolving Facility has since decreased to $15.0 million
as a result of additional letters of credit being issued under the credit agreement.

47

---

Debt
Instruments

The
Companys existing debt instruments contain certain restrictions that, among other
things, limit the ability of the Company and/or 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 assets of the Company without prior approval of the lenders or
noteholders. Financial covenants included in the Senior Secured Credit Facility include
total debt to EBITDA ratios, EBITDA to interest coverage ratios, minimum net worth
covenants and maximum capital expenditure limitations. The financial covenants in the
Senior Secured Credit Facility involving EBITDA are applied on a rolling four-quarter
basis. For purposes of debt compliance, EBITDA is defined as net income plus interest
expense, income taxes and depreciation and amortization expenses. The inability of the
Company to incur additional indebtedness because it does not meet the financial ratios
required to incur additional debt under such debt instruments could restrict the
Companys ability to develop the Phase II Resort, or invest additional funds in its
Macau Subsidiaries. As of December 31, 2003, the Company was in compliance with all
required covenants and ratios under its debt instruments. See Item 8 
Financial Statements and Supplementary Data  Notes to Financial Statements 
Note 8  Long-Term Debt.

Macau
Casino Projects

On
June 26, 2002, the Macau government granted a provisional concession to operate
casinos in Macau to the Companys subsidiary Venetian Macau and to Galaxy. During
December 2002, Venetian Macau and Galaxy entered into a subconcession agreement. The
subconcession agreement with Galaxy was recognized and approved by the Macau government
and allows Venetian Macau to develop and operate certain casino projects, including the
Macau Casino, separately from Galaxy.

In
addition to the Macau Casino, the Company also intends to build in Macau a hotel, casino
and convention center complex with a Venetian-style theme similar to the Companys
Las Vegas property (the Macau Venetian Casino Resort).

Under
the subconcession agreement, Venetian Macau is obligated to develop and open the Macau
Venetian Casino Resort by June 2006 and invest, or cause to be invested, at least
4.4 billion patacas (approximately $535.6 million at exchange rates in effect on
December 31, 2003) in various development projects in Macau by June 2009. The
construction and development costs of the Macau Casino will be applied to the fulfillment
of this total investment obligation to the Macau government. The Company currently
estimates the total cost of constructing, developing and operating the Macau Casino,
including design costs, construction costs, equipment costs, working capital and
pre-opening expenses, will be approximately $257.9 million, all of which qualifies to
meet the investment obligation to the Macau government. Assuming that all of the current
estimated construction and development costs of the Macau Casino are applied towards
fulfilling the investment obligations under the subconcession agreement, remaining
investment obligations under the subconcession agreement will be approximately $277.7
million. It is expected that the construction and development costs of the Macau Venetian
Casino Resort will satisfy the remainder of this obligation. To support this obligation, a
Macau bank and a subsidiary of the Company, Lido Casino Resort Holding Company, LLC, have
guaranteed 500 million patacas (approximately $60.9 million at exchange rates in effect on
December 31, 2003) of Venetian Macaus legal and contractual liabilities to the Macau
government until March 31, 2007. These development and investment obligations may be
satisfied by Venetian Macau and/or its affiliates, including the Company.

As
of December 31, 2003, approximately $70.5 million of these costs relating to the
Macau Casino had been expended. The Company anticipates funding the remaining estimated
costs of construction from a combination of the following sources:

| |  | operating
cash flow of the Company (although the Senior Secured Credit Facility and the Indenture
for the Mortgage Notes limit the Companys ability to make investments in the Macau
projects); as of December 31, 2003 the Company had the ability to invest approximately
$41.0 million in unrestricted subsidiaries (including the Macau Subsidiaries);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

48

---

| |  | borrowings
of $50.0 million under the Venetian Intermediate Credit Agreement (See Note 8  Venetian
Intermediate Credit Facility). As of December 31, 2003, $40.0 million had been borrowed
under this facility;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | net
proceeds from the issuance and sale of $120 million in aggregate principal amount of the
Venetian Macau Senior Secured Notes. The Venetian Macau Senior Secured Notes were issued
by a wholly owned subsidiary of Venetian Macau and guaranteed by Venetian Macau on August
21, 2003. The Venetian Macau Senior Secured Notes and the guarantee are secured by all
assets of Venetian Macau and its subsidiaries, subject to certain exceptions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | borrowings
under the $20.0 million revolving credit facility entered into by Venetian Macau and the
issuer of the Venetian Macau Senior Secured Notes with a group of lenders (the Macau
Revolver). The Macau Revolver is secured on a pari passu basis with the same
collateral as the Venetian Macau Senior Secured Notes. The facility matures in 2006. The
entire amount outstanding under this facility bears interest at LIBOR or at a base rate,
in each case plus 3.75%;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a
completion guaranty issued by LVSI and Venetian, guaranteeing payment of certain costs of
the Macau Casino in excess of available funds (the Completion Guaranty). The
Completion Guaranty is supported by a $10.0 million letter of credit issued in January
2004 under the Companys Senior Secured Credit Facility (See Note 8  Senior
Secured Credit Facility). The remainder of the Completion Guaranty is expected to be
funded by borrowings of up to $15.0 million under the Macau Revolver;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | borrowings
under proposed furnishings, fixtures & equipment facilities and vendor financings
which the Company expects to be able to enter into in the aggregate principal amount of
$25.0 million (the FF&E Facilities) to finance certain equipment and
other assets of the Macau Casino. If Venetian Macau is unable to obtain the FF&E
Facilities or vendor financing, LVSI, Venetian or another of their subsidiaries have
agreed to either:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | purchase,
 or cause to be purchased  assets with a cost of up to $25.0  million and enter into
lease or other                       arrangements with Venetian Macau or
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | otherwise
assist Venetian Macau in securing such facilities, including by issuing guarantees in
connection with any such facilities or otherwise lending such amounts to Venetian Macau
for purposes of securing such equipment
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | in
each case, to the extent permitted under the Senior Secured Credit Facility and the
Indenture for the Mortgage Notes.
| | ------------------------------------------------------------------------------------------------------------------------

The
Company expects the funds provided by these sources to be sufficient to construct, develop
and operate the Macau Casino, assuming there are no significant delay costs or
construction cost overruns. If Venetian Macau incurs significant cost overruns, it may
need to arrange for additional financing to pay for these costs. If it requires additional
financing, the Company or its affiliates may incur additional bank borrowings or debt or
equity financing. However, no assurance can be given that such funds will be available or
that such funds will be on terms that will be favorable to the Company. In addition, the
construction and development of the Macau Venetian Casino Resort will require significant
additional debt and/or equity financing.

Venetian
Macau, Venetian Intermediate and the Companys other Macau subsidiaries are not
guarantors under the Mortgage Notes or the Senior Secured Credit Facility and, subject to
certain limited exceptions, are not restricted subsidiaries under the Indenture for the
Mortgage Notes or the Senior Secured Credit Facility. Restrictions have been placed on the
payment of dividends to LVSI from Venetian Macau and its subsidiaries. As a result of the
restrictions, approximately $117.9 in net assets for the Venetian Macau at December 31,
2003 are not available at the parent level and are considered to be restricted net assets
of subsidiaries at such date.

49

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Phase II
Resort

The
Company has begun extensive design and planning work on the Phase II Resort and has
incurred demolition and clearing costs on the site of the Phase II Resort. During 2003,
the Company invested $17.0 million toward the development of the Phase II Resort. The
Company has not yet set a date to begin construction of the Phase II Resort. If the
Company determines to construct the Phase II Resort, it will be required to raise
substantial debt and/or equity financings. The Company is currently exploring financing
alternatives for the Phase II Resort and has no commitments to fund the hard construction
costs of the Phase II Resort. In addition, the development of the Phase II
Resort may also require obtaining additional regulatory approvals. The Phase II Subsidiary
is an unrestricted subsidiary that is not subject to the terms of the Indenture or the
Senior Secured Credit Facility and is not a guarantor under the Mortgage Notes or the
Senior Secured Credit Facility.

Litigation
Contingencies and Available Resources

The
Company is a party to certain litigation matters and claims related to the construction of
the Casino Resort and is subject to a $42.0 million net judgment awarded to the
Construction Manager, pending the outcome of remaining arbitration and various appeals. If
the Company is required to pay any of the Construction Managers judgment or
contested construction costs (the Contested Construction Costs) which are not
covered by the Insurance Policy, the Company may use cash received from the following
sources to fund such costs: (i) the Construction Manager, Bovis and P&O pursuant to
the Construction Management Contract, the Bovis Guarantee and the P&O Guaranty,
respectively; (ii) third parties, pursuant to their liability to the Company under their
agreements with the Company; (iii) borrowings under the Revolving Facility; (iv)
additional debt or equity financings; and (v) operating cash flow.

Based
on the recent judgment in the State Court Action and the remaining open items in the
arbitration proceedings, the Company estimates that its range of loss in this matter is
from none (or a gain if all remaining matters are determined in the Companys favor
and considering the existing accrual of approximately $7.2 million for unpaid construction
costs) to approximately $28.0 million if the Company were to lose all remaining
arbitration matters and related pending actions and appeals that counsel has advised are
possible of loss, and which are not already included in the State Court Action.  Such
range of loss is before attorney costs and interest, which have not yet been considered by
the State Court and the total amounts of which cannot currently be quantified.  While
the range of loss is possibly as high as $70.0 million, (the original verdict of $42.0
million plus the above referenced arbitration matters) plus attorneys fees and
interest, the Insurance Policy is available to provide coverage of amounts, together with
any other in excess of $45.0 million. At this time, no amount within the range of loss can
be reasonably determined as an estimated loss.  It is possible that the arbitration
proceedings will be concluded (or interim decisions be rendered) in the near future, at
which time an estimate of loss could be determined.  Such loss could be material to
the Companys results of operations in the period that the estimate is recorded.

Recent Accounting
Pronouncements

In
August 2001, the Financial Accounting Standards Board issued Statement No. 143 (SFAS
143), Accounting for Obligations Associated with the Retirement of Long-Lived
Assets. The objectives of SFAS 143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation and its associated asset
retirement cost. SFAS 143 is effective for fiscal years beginning after June 15, 2002, and
was adopted by the Company on January 1, 2003.

In
June 2002, the Financial Accounting Standard Board issued Statement No. 146 (SFAS
146) Accounting for Costs Associated with Exit or Disposal Activities.
The provisions of SFAS 146 become effective for exit or disposal activities commenced
subsequent to December 31, 2002. SFAS 146 was adopted by the Company on January 1, 2003.

50

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In
November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45
(FIN 45), Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. This
Interpretation elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that it has
issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor
is required to recognize at the inception of a guarantee, a liability for the fair value
of the obligations undertaken in issuing the guarantee, excluding those for guarantees
among entities within a consolidated group. At December 31, 2003, the Company does not
have any guarantees outside of its consolidated group.

In
December 2002 the Financial Accounting Standards Board issued Statement No. 148
(SFAS 148) Accounting for Stock-Based Compensation. The provisions
of SFAS 148 became effective on December 15, 2002. The Company has adopted the disclosure
requirements of SFAS 148.

In
January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities. This
Interpretation addresses the requirements for business enterprises to consolidate related
entities in which they are determined to be the primary economic beneficiary as a result
of their variable economic interests. The Interpretation is intended to provide guidance
in judging multiple economic interests in an entity and in determining the primary
beneficiary. The Interpretation outlines disclosure requirements for variable interest
entities in existence prior to January 31, 2003, and outlines consolidation requirements
for variable interest entities created after January 31, 2003. The Company has reviewed
its major relationships and its overall economic interests with other companies consisting
of related parties, companies in which it has an equity position and other suppliers to
determine the extent of its variable economic interest in these parties.

The
adoptions of SFAS 143, SFAS 146, SFAS 148 and FIN 45 and FIN 46 did not have a material
impact on the Companys financial condition, results of operations or cash flows.

In
May 2003, the Financial Accounting Standards Board issued Statement No. 150 (SFAS
150) Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. The Company is considered a non-public entity, as defined by
SFAS 150. Accordingly, for the Company, the provisions of SFAS 150 will become effective
during the quarter ending March 31, 2004. Upon adoption of SFAS 150, the Company
anticipates that the Series B Preferred Interest in Venetian will no longer be presented
as members interest but rather will be reclassified as a liability and
dividends will be classified as interest expense.

In
December 2003, the FASB issued a revision to SFAS No. 132, Employers
Disclosure about Pensions and Other Postretirement Benefits, an Amendment of FASB
Statements No. 87, 88 and 106 and a revision of FASB Statement No. 132 (SFAS
132R). This statement requires additional disclosure in relation to the types of
plan assets, investment strategy, measurement date(s), plan obligations, cash flows and
components of net periodic benefit cost recognized during interim periods. The provisions
of this statement are effective for financial statements with fiscal years ending after
December 15, 2003. The interim period disclosures are effective for interim periods
beginning after December 15, 2003. The Company adopted SFAS 132R in December 2003. The
adoption of this statement did not have a material impact on the Companys financial
position, results of operations or cash flows.

Special Note Regarding
Forward-Looking Statements

Certain
statements in this section, and elsewhere in this Annual Report on Form 10-K (as well as
information included in oral statements or other written statements made or to be made by
the Company) constitute forward-looking statements. Such forward-looking
statements include the discussions of the business strategies of the Company and
expectations concerning future operations, margins, profitability, liquidity and capital
resources. In addition, in certain portions of this Form 10-K, the words: anticipates,
believes, estimates, seeks, expects,
plans, intends and similar expressions, as they relate to the
Company or its management, are intended to identify forward-looking statements. Although
the Company believes that such forward-looking statements are reasonable, it can give no
assurance that any forward-looking statements will prove to be correct. Such
forward-looking statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements expressed
or implied by such forward-looking statements. Such factors include, among

51

---

others, the risks associated with
entering into new construction and new ventures, including the Macau Casino and the Phase
II Resort, increased competition and other planned construction in Las Vegas, including
the expected opening of the Wynn casino resort on the site of the former Desert Inn and
upcoming increases in meeting and convention space, the completion of infrastructure
projects in Las Vegas, government regulation of the casino industry, including gaming
license approvals and regulation in foreign jurisdictions, the legalization of gaming in
certain jurisdictions, such as Native American reservations in the States of California
and New York and regulation of gaming on the Internet, leverage and debt service
(including sensitivity to fluctuations in interest rates and other capital markets
trends), uncertainty of casino spending and vacationing at casino resorts in Las Vegas,
disruptions or reductions in travel to Las Vegas due to terrorist acts, the situation in
Iraq and any future terrorist incidents, outbreaks of SARS illness in the Companys
market areas, new taxes or changes to existing tax rates, fluctuations in occupancy rates
and average daily room rates in Las Vegas, demand for all-suites rooms, the popularity of
Las Vegas as a convention and trade show destination, insurance risks, including the risk
that the Company has not obtained sufficient coverage against acts of terrorism or will
only be able to obtain additional coverage at significantly increased rates, litigation
risks, including the final outcome of the pending disputes with the Construction Manager
and its subcontractors, and general economic and business conditions which may impact
levels of disposable income, consumer spending and pricing of hotel rooms.

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. The Companys
primary exposure to market risk is interest rate risk associated with its long-term debt.
The Company attempts to manage its interest rate risk by managing the mix of its long-term
fixed-rate borrowings and variable rate borrowings, and by use of interest rate cap and
floor agreements. The ability to enter into interest rate cap and floor agreements allows
the Company to manage its interest rate risk associated with its variable rate debt.
Transactions in Macau are primarily conducted in Hong Kong dollars and Macau patacas .
Currently both these currencies are fixed to the US dollar at approximately 8 to 1, which
limits the Companys foreign currency exchange rate risk.

The
Company does not hold or issue financial instruments for trading purposes and does not
enter into derivative transactions that would be considered speculative positions. The
Companys derivative financial instruments consist exclusively of interest rate cap
and floor 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 and floor agreements, the
Company enters into agreements with highly rated institutions that can be expected to
perform fully under the terms of such agreements. Frequently, these institutions are also
members of the lending group providing the Companys Senior Secured Credit Facility,
which management believes further minimizes the risk of nonperformance.

The
table below provides information about the Companys 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 the twelve
month periods ended December 31:

|                          |  |   |    |     |  |     |     | FAIR
|------------------------- |  | - | -- | --- |  | --- | --- | ----
|
|                          |  |  
|
|                          |  |  
|LIABILITIES               |  |   |    |     |  |     |     |     
|Short-term debt:          |  |   |    |     |  |     |     |     
|Variable rate             |  | $ | 12 | .6  |  |    |     |     
|Average interest rate (2) |  |   | 4  | .2% |  |    |     |     
|Long-term debt:           |  |   |    |     |  |     |     |     
|Fixed rate                |  |   |   |     |  |    |     |     
|Average interest rate (2) |  |   |   |     |  |    |     |     
|Variable rate             |  |   |   |     |  | 144 | .9  |     
|Average interest rate (2) |  |   |   |     |  | 3   | .9% |     

---

| | (1) | The
fair values for debt with no public market are based on the borrowing rates
               currently available for debt instruments with similar terms and
maturities, and                for publicly traded debt are based on market quotes.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Based
upon contractual interest rates for fixed rate indebtedness or current
               LIBOR rates for variable rate indebtedness.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

52

---

Foreign
currency translation gains and losses were not material to the Companys results of
operations in 2003, but may be in future periods in relation to activities associated with
Venetian Macau.

See
also Item 7  Managements Discussion and Analysis of Financial Condition
and Results of Operations  Liquidity and Capital Resources and Item 8
 Financial Statements and Supplementary Data  Notes to Financial Statements
 Note 8  Long-Term Debt.

53

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ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL
STATEMENTS

Financial Statements:

|                                                                          |   
|------------------------------------------------------------------------- | --
|Report of Independent Auditors                                            | 55
|                                                                          |   
|Consolidated Balance Sheets at December 31, 2003 and 2002                 | 56
|                                                                         
|Consolidated Statements of Operations for each of the three               |   
|years in the period ended December 31, 2003                               | 57
|                                                                          |   
|Consolidated Statements of Stockholders' Equity (Deficit) for each of the
|three years in the period ended December 31, 2003                         | 58
|                                                                          |   
|Consolidated Statements of Cash Flows for each of the three               |   
|years in the period ended December 31, 2003                               | 59
|                                                                          |   
|Notes to Financial Statements                                             | 60
|                                                                          |   
|Financial Statement Schedules:                                            |   
|Report of Independent Auditors on Financial Schedule                      | 93
|Schedule II - Valuation and Qualifying Accounts                           | 94

The financial information included in
the financial statement schedule should be read in conjunction with the consolidated
financial statements. All other financial statement schedules have been omitted because
they are not applicable or the required information is included in the consolidated
financial statements or the notes thereto.

54

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# Report of Independent
Auditors

To the Directors and
Stockholders of Las Vegas Sands, Inc.

In
our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations, of stockholders equity (deficit) and of cash flows present
fairly, in all material respects, the financial position of Las Vegas Sands, Inc. and its
subsidiaries at December 31, 2003 and 2002, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2003 in conformity
with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Companys management; our
responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

PricewaterhouseCoopers
LLP

Las Vegas, NevadaJanuary
30, 2004

55

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# Las Vegas Sands,
IncConsolidated Balance Sheets (Dollars in thousands, except per share data )

|                                                    | December 31, | December 31,
|--------------------------------------------------- | ------------ | ------------
|
|ASSETS                                              |              |             
|Current assets:                                     |              |             
|Cash and cash equivalents                           |              |             
|Restricted cash and cash equivalents                |              |             
|Accounts receivable, net                            |              |             
|Inventories                                         |              |             
|Prepaid expenses                                    |              |             
|                                                    |              |             
|Total current assets                                |              |             
|                                                    |              |             
|Property and equipment, net                         |              |             
|Deferred offering costs, net                        |              |             
|Restricted cash                                     |              |             
|Other assets, net                                   |              |             
|                                                    |              |             
|                                                    |              |             
|                                                    |              |             
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)      |              |             
|Current liabilities:                                |              |             
|Accounts payable                                    |              |             
|Construction payables                               |              |             
|Construction payables-contested                     |              |             
|Accrued interest payable                            |              |             
|Other accrued liabilities                           |              |             
|Current maturities of long-term debt                |              |             
|                                                    |              |             
|Total current liabilities                           |              |             
|Other long-term liabilities                         |              |             
|Long-term debt                                      |              |             
|                                                    |              |             
|                                                    |              |             
|                                                    |              |             
|Redeemable Preferred Interest in Venetian Casino    |              |             
|Resort, LLC, a wholly owned subsidiary              |              |             
|                                                    |              |             
|Stockholders' equity (deficit):                     |              |             
|Common stock, $.10 par value, 3,000,000 shares      |              |             
|authorized, 1,000,000 shares issued and outstanding |              |             
|Notes receivable from stockholders                  |              |             
|Capital in excess of par value                      |              |             
|Accumulated deficit                                 |              |             
|                                                    |              |             
|                                                    |              |             
|                                                    |              |             
|                                                    |              |             
|                                                    |              |             

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

56

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# Las Vegas Sands, Inc Consolidated Statements
of Operations(Dollars in thousands,
except per share data )

|                                                          | Year Ended December 31, |  |  
|--------------------------------------------------------- | ----------------------- |  | -
|
|
|Revenues:                                                 |                         |  |  
|Casino                                                    |                         |  | $
|Rooms                                                     |                         |  |  
|Food and beverage                                         |                         |  |  
|Retail and other                                          |                         |  |  
|                                                          |                         |  |  
|                                                          |                         |  |  
|Less-promotional allowances                               |                         |  |  
|                                                          |                         |  |  
|Net revenues                                              |                         |  |  
|                                                          |                         |  |  
|Operating expenses:                                       |                         |  |  
|Casino                                                    |                         |  |  
|Rooms                                                     |                         |  |  
|Food and beverage                                         |                         |  |  
|Retail and other                                          |                         |  |  
|Provision for doubtful accounts                           |                         |  |  
|General and administrative                                |                         |  |  
|Corporate expense                                         |                         |  |  
|Rental expense                                            |                         |  |  
|Pre-opening and developmental expense                     |                         |  |  
|Depreciation and amortization                             |                         |  |  
|                                                          |                         |  |  
|                                                          |                         |  |  
|                                                          |                         |  |  
|Operating income                                          |                         |  |  
|                                                          |                         | 
|Other income (expense):                                   |                         |  |  
|Interest income                                           |                         |  |  
|Interest expense, net of amounts capitalized              |                         |  |  
|Interest expense on indebtedness to Principal Stockholder |                         |  |  
|Other income (expense)                                    |                         |  |  
|Loss on early retirement of debt                          |                         |  |  
|                                                          |                         |  |  
|Income (loss) before preferred return                     |                         |  |  
|Preferred return on Redeemable Preferred Interest         |                         |  |  
|in Venetian Casino Resort, LLC                            |                         |  |  
|                                                          |                         |  |  
|Net income (loss)                                         |                         |  | $
|                                                          |                         |  |  
|Basic earnings (loss) per share                           |                         |  | $
|                                                          |                         |  |  
|Diluted earnings (loss) per share                         |                         |  | $
|                                                          |                         |  |  
|Dividends declared per share                              |                         |  | $
|                                                          |                         |  |  

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

57

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# Las Vegas Sands, IncConsolidated Statements of Stockholders Equity (Deficit)(Dollars in thousands)

|                                  | Common Stock |  |  |           |  |  
|--------------------------------- | ------------ |  |  | --------- |  | -
|
|
|
|
|                                  |              | 
|Balance at December 31, 2000      |              |  |  | 925,000   |  | $
|Net loss                          |              |  |  |          |  |  
|                                  |              |  |  |           |  |  
|                                  |              | 
|Balance at December 31, 2001      |              |  |  | 925,000   |  |  
|Stock split                       |              |  |  | 75,000    |  |  
|Net loss                          |              |  |  |          |  |  
|                                  |              |  |  |           |  |  
|                                  |              | 
|Balance at December 31, 2002      |              |  |  | 1,000,000 |  |  
|                                  |              | 
|Declared and unpaid dividends     |              |  |  |          |  |  
|Notes receivable from stockholder |              |  |  |          |  |  
|Net income                        |              |  |  |          |  |  
|                                  |              |  |  |           |  |  
|                                  |              | 
|Balance at December 31, 2003      |              |  |  | 1,000,000 |  | $
|                                  |              |  |  |           |  |  

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

58

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# Las Vegas Sands, IncConsolidated
Statements of Cash Flows (Dollars in thousands)

|                                                                         | Year Ended December 31, |  |  
|------------------------------------------------------------------------ | ----------------------- |  | -
|
|
|Cash flows from operating activities:                                    |                         |  |  
|Net income (loss)                                                        |                         |  | $
|Adjustments to reconcile net income (loss) to net cash                   |                         |  |  
|provided by operating activities:                                        |                         |  |  
|Depreciation and amortization                                            |                         |  |  
|Amortization of debt offering costs and original issue discount          |                         |  |  
|Non-cash preferred return on Redeemable Preferred Interest in Venetian   |                         |  |  
|Loss on early retirement of debt                                         |                         |  |  
|Loss on disposition of fixed asset                                       |                         |  |  
|Non-cash interest on completion guaranty loan                            |                         |  |  
|Provision for doubtful accounts                                          |                         |  |  
|Changes in operating assets and liabilities:                             |                         |  |  
|Accounts receivable                                                      |                         |  |  
|Inventories                                                              |                         |  |  
|Prepaid expenses                                                         |                         |  |  
|Other assets                                                             |                         |  |  
|Accounts payable                                                         |                         |  |  
|Accrued interest payable                                                 |                         |  |  
|Other accrued liabilities                                                |                         |  |  
|                                                                         |                         |  |  
|Net cash provided by operating activities                                |                         |  |  
|                                                                         |                         |  |  
|Cash flows from investing activities:                                    |                         |  |  
|Increase in restricted cash                                              |                         |  |  
|Notes receivable from stockholders                                       |                         |  |  
|Capital expenditures                                                     |                         |  |  
|                                                                         |                         |  |  
|Net cash used in investing activities                                    |                         |  |  
|                                                                         |                         |  |  
|Cash flows from financing activities:                                    |                         |  |  
|Repayments on 12 1⁄4 % mortgage notes                                      |                         |  |  
|Proceeds from 11% mortgage notes                                         |                         |  |  
|Repayments on senior subordinated notes                                  |                         |  |  
|Proceeds from secured mall facility                                      |                         |  |  
|Repayments on mall-tranche A take-out Loan                               |                         |  |  
|Repayments on mall-tranche B take-out Loan                               |                         |  |  
|Repayments on completion guaranty loan                                   |                         |  |  
|Repayments on senior secured credit facility-term A                      |                         |  |  
|Proceeds from senior secured credit facility-term A                      |                         |  |  
|Repayments on senior secured credit facility-term B                      |                         |  |  
|Proceeds from senior secured credit facility-term B                      |                         |  |  
|Repayments on bank credit facility-tranche A term loan                   |                         |  |  
|Repayments on bank credit facility-tranche B term loan                   |                         |  |  
|Repayments on bank credit facility-tranche C term loan                   |                         |  |  
|Proceeds from bank credit facility-tranche C term loan                   |                         |  |  
|Proceeds from Venetian Macau senior secured notes-tranche A              |                         |  |  
|Proceeds from Venetian Macau senior secured notes-tranche B              |                         |  |  
|Proceeds from Venetian Intermediate credit facility                      |                         |  |  
|Repayments on bank credit term facility                                  |                         |  |  
|Proceeds from bank credit term facility                                  |                         |  |  
|Repayments on bank credit facility-revolver                              |                         |  |  
|Proceeds from bank credit facility-revolver                              |                         |  |  
|Repayments on FF&E credit facility                                       |                         |  |  
|Proceeds from FF&E credit facility                                       |                         |  |  
|Proceeds from (repayments on) Phase II Subsidiary credit faciltiy        |                         |  |  
|Proceeds from (repayments on) Phase II Subsidiary unsecured bank loan    |                         |  |  
|Repurchase premiums incurred in connection with refinancing transactions |                         |  |  
|Payments of debt offering costs                                          |                         |  |  
|                                                                         |                         |  |  
|                                                                         |                         | 
|Net cash provided by financing activities                                |                         |  |  
|                                                                         |                         |  |  
|                                                                         |                         | 
|Increase in cash and cash equivalents                                    |                         |  |  
|Cash and cash equivalents at beginning of year                           |                         |  |  
|                                                                         |                         |  |  
|                                                                         |                         | 
|Cash and cash equivalents at end of year                                 |                         |  | $
|                                                                         |                         |  |  
|                                                                         |                         | 
|Supplemental disclosure of cash flow information:                        |                         |  |  
|Cash payments for interest                                               |                         |  | $
|                                                                         |                         |  |  
|Non-cash interest on completion guaranty loan                            |                         |  | $
|                                                                         |                         |  |  
|Declared and unpaid dividends included in accrued liablities             |                         |  | $
|                                                                         |                         |  |  
|Property and equipment asset acquisitions included in accounts payable   |                         |  | $
|                                                                         |                         |  |  

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

59

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LAS VEGAS SANDS, INC.Notes to Financial Statements Note 1 Organization and Business of Company

Las
Vegas Sands, Inc. (LVSI) and its subsidiaries (collectively, the
Company) own and operate the Venetian Casino Resort (the Casino
Resort), a Renaissance Venice-themed resort situated at one of the premier locations
on the Las Vegas Strip (the Strip). The Casino Resort is located across from
The Mirage and the Treasure Island Hotel and Casino. The Casino Resort includes the only
all-suites hotel on the Strip with 4,049 suites (the Hotel); a gaming facility
of approximately 116,000 square feet (the Casino); an enclosed retail, dining
and entertainment complex of approximately 446,000 net leasable square feet (the
Mall); and a meeting and conference facility of approximately 650,000 square
feet (the Congress Center).

The
Company is involved in significant litigation relating to the cost of construction of the
Casino Resort. See Note 13  Commitments and Contingencies.

The
consolidated financial statements include the accounts of LVSI and its subsidiaries (the
Subsidiaries), including Venetian Casino Resort, LLC (Venetian),
Mall Intermediate Holding Company, LLC (Mall Intermediate), Grand Canal Shops
Mall Subsidiary, LLC (the New Mall Subsidiary), Grand Canal Shops II, LLC (the
Mall II Subsidiary), Grand Canal Shops Mall MM Subsidiary, Inc., Venetian
Hotel Operations, LLC (Mall Construction), Lido Intermediate Holding Company,
LLC (Lido Intermediate), Lido Casino Resort Holding Company, LLC, Lido Casino
Resort, LLC (the Phase II Subsidiary), Lido Casino Resort MM, Inc., Venetian
Transport, LLC (Venetian Transport), Venetian Venture Development, LLC
(Venetian Venture), Venetian Venture Development Intermediate Limited,
Venetian Venture Development Intermediate I, Venetian Venture Development Intermediate II,
Venetian Macau Finance Company, VI Limited, Las Vegas Sands (UK) Limited, Venetian Macau
Limited (Venetian Macau), Venetian Macau Holdings Limited, Venetian Marketing,
Inc. (Venetian Marketing), Venetian Far East Limited and Venetian Operating
Company, LLC (Venetian Operating) (collectively, and including all other
direct and indirect subsidiaries of LVSI, the Company). Each of LVSI and the
Subsidiaries is a separate legal entity and the assets of each such entity are intended to
be available only to the creditors of such entity, except to the extent of guarantees on
indebtedness. See Note 8- Long-Term Debt.

Venetian
was formed on March 20, 1997 to own and operate certain portions of the Casino Resort.
LVSI is the managing member and owns 100% of the common voting equity in Venetian. The
entire preferred interest in Venetian is owned by Interface Group Holding Company, Inc.
(Interface Holding), which is wholly owned by LVSIs principal
stockholder (the Principal Stockholder).

Various
Subsidiaries are guarantors or co-obligors of certain indebtedness related to the Casino
Resort. See Note 8  Long-Term Debt.

The
Mall II Subsidiary is an indirect, wholly owned subsidiary of LVSI, and owns and operates
the Mall. The Mall II Subsidiary was formed on May 31, 2002 and became a successor to the
Mall Subsidiary in connection with the refinancing of the Malls indebtedness. See
Note 8  Long-Term Debt.

The
Company announced during January 2004 that it has retained an investment-banking firm, as
financial advisor, to explore various strategic alternatives available to it relating to
the Grand Canal Shops. No decision has been made as to whether there will be a sale or any
other transaction involving the Grand Canal Shops. The Company is uncertain as to what
strategic alternatives it may ultimately pursue, and there can be no assurance that, if
any transaction is commenced, it will be completed or as to the value that any such
transaction might have for the Company.

Venetian
Macau is an indirect, wholly owned subsidiary of LVSI, and owns and will operate the Macau
Casino. See Note 8  Long-Term Debt.

60

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 1  Organization and Business of
Company (continued)

The
Casino Resort is physically connected to the approximately 1.15 million square foot Sands
Expo and Convention Center (the Expo Center). Interface Group-Nevada, Inc.
(Interface), the owner of the Expo Center, is beneficially owned by the
Principal Stockholder. Venetian, the Mall II Subsidiary, and Interface transact business
with each other and are parties to certain agreements. The nature of such transactions and
the amounts involved are disclosed in the notes to the financial statements.

Note 2  Summary
of Significant Accounting Policies

Principles of
Consolidation

The
consolidated financial statements include the accounts of the Company and its
subsidiaries. Significant intercompany balances and transactions have been eliminated.

Significant Accounting
Policies and Estimates

The
preparation of the consolidated financial statements in accordance with generally accepted
accounting principles requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an on-going basis, management evaluates those
estimates, including those related to asset impairment, accruals for slot marketing
points, self-insurance, compensation and related benefits, revenue recognition, allowance
for doubtful accounts, contingencies and litigation. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or
conditions.

Cash and Cash
Equivalents

Cash
and cash equivalents consist of cash and short-term investments with original maturities
not in excess of 90 days.

Inventories

Inventories
are stated at the lower of cost or market. Cost is determined by the first-in, first-out
and specific identification methods. Inventories consist primarily of food, beverage and
retail products.

Accounts Receivable

Accounts
receivable are due within one year and are recorded net of amounts estimated to be
uncollectible.

Property and Equipment

Property
and equipment are stated at cost. Depreciation and amortization are provided on a
straight-line basis over the estimated useful lives of the assets as follows:

|                                  |               
|--------------------------------- | --------------
|Building and improvements         | 15 to 40 years
|Furniture, fixtures and equipment | 3 to 15 years 
|Leasehold improvements            | 5 to 10 years 

Maintenance,
repairs and renewals that neither materially add to the value of the property nor
appreciably prolong its life are charged to expense as incurred. Gains or losses on
disposition of property and equipment are included in the statements of operations.

61

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 2  Summary of Significant Accounting
Policies (continued)

Management
reviews assets for possible impairment of long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of such assets exceeds their fair value.
Impairment losses are recognized when estimated future undiscounted cash flows expected to
result from the use of the assets and their eventual disposition are less than their
carrying amounts. Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 144 (SFAS 144), Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement retains the prior requirements of
SFAS No. 121, Accounting for the Impairment of Long-Lived assets and for Long-Lived
Assets to Be Disposed Of to recognize impairments on property, plant and equipment.
The adoption of SFAS No. 144 had no impact on the Companys financial condition,
results of operations or cash flows.

Capitalized Interest

Interest
costs associated with major construction projects are capitalized. Interest is capitalized
on amounts expended using the weighted-average cost of the Companys outstanding
borrowings. Capitalization of interest ceases when the project is substantially complete.

Pre-opening and
Developmental Costs

Pre-opening
and developmental costs, representing primarily direct personnel and other costs incurred
prior to the opening of new ventures are expensed as incurred.

Debt Discount and
Deferred Offering Costs

Debt
discount and offering costs are amortized based on the terms of the related debt
instruments using the effective interest method.

Earnings (loss) Per
Share

Basic
and diluted income (loss) per share is calculated based upon the weighted average number
of shares outstanding. The impact of the unexercised options to purchase shares of the
Companys common stock have been included in the computation of diluted earnings per
share for the twelve months ended December 31, 2003, but have been excluded from the
computation of earnings per share for the twelve months ended December 31, 2002 as their
impact would have been antidilutive.

As
further described in Note 10, in the first quarter of 2002, the Company completed a stock
split whereby the number of common shares outstanding was increased to 1,000,000 from
925,000. Accordingly, all earnings per share calculations have been adjusted to
retroactively give effect to the increase in shares outstanding to 1,000,000.

The
Company has elected to follow Accounting Principles Board Opinion No. 25 entitled
Accounting For Stock Issued to Employees and accounts for its stock-based
compensation to employees using the intrinsic value method. Under this method,
compensation expense is the difference between the market value of the Companys
stock and the stock options exercise price at the measurement date. Under APB 25, if
the exercise price of the stock options is equal to or greater than the market price of
the underlying stock on the date of grant, no compensation expense is recognized. The
Companys stock-based employee compensation plan is more fully discussed in Note 10.

62

---

LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 2  Summary of Significant Accounting
Policies (continued)

Had
the Company accounted for the plan under the fair value method allowed by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation (SFAS 123), the Companys net income and earnings per
share would have been reduced to the following pro forma amounts:

|                                          | For Year Ended December 31, |                |  
|----------------------------------------- | --------------------------- | -------------- | -
|
|
|
|Net income (loss), as reported            |                             | $      37,435  |  
|Deduct: Total stock-based employee        |                             |                |  
|compensation expense determined under the |                             |                |  
|minimum value method for all awards, net  |                             |                |  
|of related tax effects                    |                             | (3             | )
|Add:  Forfeitures of options to purchase  |                             | 1              |  
|                                          |                             |                |  
|Pro forma net income (loss)               |                             | $      37,433  |  
|                                          |                             |                |  
|                                          |                            
|Basic earnings per share, as reported     |                             | $        37.44 |  
|                                          |                             |                |  
|Basic earnings per share, pro-forma       |                             | $        37.36 |  
|                                          |                             |                |  
|                                          |                            
|Diluted earnings per share, as reported   |                             | $        37.36 |  
|                                          |                             |                |  
|Diluted earnings per share, pro-forma     |                             | $        37.36 |  
|                                          |                             |                |  

The
fair value of the option grant during 2003 was estimated on the date of grant using an
appraisal of the value of LVSI and its common stock. The fair value of the option grant
was estimated to equal the option strike price on the date of grant. The estimated fair
value of options granted and outstanding as of December 31, 2002 was $1 per share and was
computed using the minimum valve method with the following weighted average assumptions:
risk free interest rate of 3.84%; no expected dividend yields; and expected lives of 2
years.

Revenue Recognition

The
Company recognizes revenue when persuasive evidence of an arrangement exists, performance
of the service or delivery of the product has occurred, the sales price is fixed or
determinable and collectibility is probable.

63

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LAS VEGAS SANDS,
INC.Notes to Financial Statements (continued) Note 2  Summary of Significant
Accounting Policies (continued)

Casino
Revenue and Promotional Allowances

Casino
revenue is the aggregate of gaming wins and losses. Effective in the first quarter of
2001, the Company adopted Emerging Issues Task Force Issue 00-22 (EITF 00-22).
EITF 00-22 requires that cash discounts and other cash incentives related to gaming play
be recorded as a reduction of gross casino revenues. In connection with the adoption of
EITF 00-22 in the first quarter of 2001, the Company reclassified $6.1 million of such
discounts in the 2000 financial statements. In addition, in accordance with industry
practice, the retail value of accommodations, food and beverage, and other services
furnished to hotel/casino guests without charge is included in gross revenue and then
deducted as promotional allowances. The estimated departmental cost of providing such
promotional allowances is included primarily in casino operating expenses as follows (in
thousands):

|                  | Cost |  |  
|----------------- | ---- |  | -
|
|
|
|Food and Beverage |      |  | $
|Rooms             |      |  |  
|Other             |      |  |  
|                  |      |  |  
|                  |      |  | $
|                  |      |  |  

The
estimated retail value of such promotional allowances is included in operating revenues as
follows (in thousands):

|                  | Revenue |  |  
|----------------- | ------- |  | -
|
|
|
|Food and Beverage |         |  | $
|Rooms             |         |  |  
|Other             |         |  |  
|                  |         |  |  
|                  |         |  | $
|                  |         |  |  

Rental
Revenue

Minimum
rental revenues are recognized on a straight-line basis over the terms of the related
lease. Percentage rents are recognized in the period in which the tenants exceed their
respective percentage rent thresholds. Charges to tenants for real estate taxes, insurance
and other shopping center operating expenses are recognized as revenues in the period
billed which approximates the period in which the applicable costs are incurred.

Hotel
and Food and Beverage Revenues

Hotel
revenue recognition criteria are generally met at the time of occupancy. Food and beverage
revenue recognition criteria are generally met at the time of service. Deposits for future
hotel occupancy or food and beverage services contracts are recorded as deferred income
until revenue recognition criteria are met. Cancellation fees for hotel and food and
beverage services are recognized upon cancellation by the customer as defined by a written
contract entered into with the customer.

64

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 2  Summary of Significant Accounting
Policies (continued)

Slot Club Promotion
and Progressive Jackpot Payouts

The
Company has established a promotional club to encourage repeat business from frequent and
active slot machine customers and table games patrons. Members earn points based on gaming
activity and such points can be redeemed for cash. The Company accrues for club points as
a reduction to revenue based upon the estimates for expected redemptions. The Company
maintains a number of progressive slot machines and table games. As wagers are made on the
respective progressive games, the amount available to win (to be paid out when the
appropriate jackpots are hit) increases. The Company has recorded the progressive jackpots
as a liability with a corresponding charge against casino revenue.

Income Taxes

LVSI
has elected to be taxed as an S Corporation and its wholly owned subsidiaries are either
limited liability companies or S Corporations, each of which is a tax pass-through entity
for federal income tax purposes. Nevada does not levy a corporate income tax and the
Company has an income tax holiday in Macau through 2007. Accordingly, no provision for
federal, state, or foreign income taxes is included in the statement of operations. The
Companys debt instruments provides for dividends to be paid to stockholders to pay
income taxes associated with taxable income of the Company attributable to each
stockholder. During 2003, the Company declared and accrued $4.2 million of tax dividends.

Advertising Costs

Costs
for advertising are expensed as incurred, except costs for direct-response advertising,
which are capitalized and amortized over the period of the related program.
Direct-response advertising consists primarily of mailing costs associated with the
direct-mail programs. Capitalized advertising costs, included in prepaid expense, were
immaterial at December 31, 2003 and 2002. Advertising costs that were expensed during the
year were $2.6 million, $3.6 million and $5.6 million in 2003, 2002 and 2001,
respectively.

Concentrations of
Credit Risk

Financial
instruments, which potentially subject the Company to concentrations of credit risk,
consist principally of short-term investments and receivables. The short-term investments
(including restricted cash equivalents) are placed with a high credit quality financial
institution, which invests primarily in money market funds.

Accounting for
Derivative Instruments and Hedging Activities

In
June 1998, the Financial Accounting Standards Board adopted Statement of Financial
Accounting Standards No. 133 (SFAS 133), entitled Accounting for
Derivative Instruments and Hedging Activities, which establishes accounting and
reporting standards for derivative instruments and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. If specific conditions
are met, a derivative may be specifically designated as a hedge of specific financial
exposures. The accounting for changes in the fair value of a derivative depends on the
intended use of the derivative and, if used in hedging activities, it depends on its
effectiveness as a hedge. The Company adopted SFAS 133 on January 1, 2001.

65

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 2  Summary of Significant Accounting
Policies (continued)

The
Company, from time to time, uses interest rate caps and floors and similar financial
instruments to assist in managing interest incurred on its long-term debt. The difference
between amounts received and amounts paid under such agreements, as well as any costs or
fees, is recorded as a reduction of, or addition to, interest expense as incurred over the
life of the cap and floor or similar financial instruments.

The
Company has a policy aimed at managing interest rate risk associated with its current and
anticipated future borrowings. This policy enables the Company to use any combination of
interest rate swaps, futures, options, cap and similar instruments. To the extent the
Company employs such financial instruments pursuant to this policy, and the instruments
qualify for hedge accounting, they are accounted for as hedging instruments. In order to
qualify for hedge accounting, the underlying hedged item must expose the Company to risks
associated with market fluctuations and the financial instrument used must be designated
as a hedge and must reduce the Companys exposure to market fluctuation throughout
the hedge period. If these criteria are not met, a change in the market value of the
financial instrument is recognized as a gain or loss in the period of change. Otherwise,
gains and losses are not recognized except to the extent that the financial instrument is
disposed of prior to maturity. Net interest paid or received pursuant to the financial
instrument is included as interest expense in the period.

Losses on Retirement
of Indebtedness

In
April 2002, the Financial Accounting Standards Board issued Statement No. 145 (SFAS
145) Rescission of FASB Statements Nos. 4, 44 and 64 and Amendment of FASB
Statement No. 13. SFAS 145 addresses the presentation for losses on early
retirements of debt in the statement of operations. During 2002, the Company adopted SFAS
145 and has not presented losses on early retirements of debt as an extraordinary item.
Additionally, during 2002 prior period extraordinary losses were reclassified to conform
to this new presentation. Adoption of SFAS 145 had no impact on the Companys
financial condition or cash flows.

Reclassifications

The
consolidated financial statements and footnotes for prior years reflect certain
reclassifications to conform with the current year presentation, which have no effect on
previously reported net income (loss).

Recent Accounting
Pronouncements

In
August 2001, the Financial Accounting Standards Board issued Statement No. 143 (SFAS
143), Accounting for Obligations Associated with the Retirement of Long-Lived
Assets. The objectives of SFAS 143 are to establish accounting standards for the
recognition and measurement of an asset retirement obligation and its associated asset
retirement cost. SFAS 143 is effective for fiscal years beginning after June 15, 2002, and
was adopted by the Company on January 1, 2003.

In
June 2002, the Financial Accounting Standard Board issued Statement No. 146 (SFAS
146) Accounting for Costs Associated with Exit or Disposal Activities.
The provisions of SFAS 146 become effective for exit or disposal activities commenced
subsequent to December 31, 2002. SFAS 146 was adopted by the Company on January 1, 2003.

In
November 2002, the Financial Accounting Standards Board issued FASB Interpretation No. 45
(FIN 45), Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. This
Interpretation elaborates on the disclosures to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that it has
issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor
is required to recognize at the inception of a guarantee, a liability for the fair value
of the obligations undertaken in issuing the guarantee, excluding those for guarantees
among entities within a consolidated group. At December 31, 2003, the Company does not
have any guarantees outside of its consolidated group.

66

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 2  Summary of Significant Accounting
Policies (continued)

In
December 2002 the Financial Accounting Standards Board issued Statement No. 148
(SFAS 148) Accounting for Stock-Based Compensation. The provisions
of SFAS 148 became effective on December 15, 2002. The Company has adopted the disclosure
requirements of SFAS 148.

In
January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46
(FIN 46), Consolidation of Variable Interest Entities. This
Interpretation addresses the requirements for business enterprises to consolidate related
entities in which they are determined to be the primary economic beneficiary as a result
of their variable economic interests. The Interpretation is intended to provide guidance
in judging multiple economic interests in an entity and in determining the primary
beneficiary. The Interpretation outlines disclosure requirements for variable interest
entities in existence prior to January 31, 2003, and outlines consolidation requirements
for variable interest entities created after January 31, 2003. The Company has reviewed
its major relationships and its overall economic interests with other companies consisting
of related parties, companies in which it has an equity position and other suppliers to
determine the extent of its variable economic interest in these parties.

The
adoptions of SFAS 143, SFAS 146, SFAS 148 and FIN 45 and FIN 46 did not have a material
impact on the Companys financial condition, results of operations or cash flows.

In
May 2003, the Financial Accounting Standards Board issued Statement No. 150 (SFAS
150) Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity. The Company is considered a non-public entity, as defined by
SFAS 150. Accordingly, for the Company, the provisions of SFAS 150 will become effective
during the quarter ending March 31, 2004. Upon adoption of SFAS 150, the Company
anticipates that the Series B Preferred Interest in Venetian will no longer be presented
as members interest but rather will be reclassified as a liability and
dividends will be classified as interest expenses.

In
December 2003, the FASB issued a revision to SFAS No. 132, Employers
Disclosure about Pensions and Other Postretirement Benefits, an Amendment of FASB
Statements No. 87, 88 and 106 and a revision of FASB Statement No. 132 (SFAS
132R). This statement requires additional disclosure in relation to the types of
plan assets, investment strategy, measurement date(s), plan obligations, cash flows and
components of net periodic benefit cost recognized during interim periods. The provisions
of this statement are effective for financial statements with fiscal years ending after
December 15, 2003. The interim period disclosures are effective for interim periods
beginning after December 15, 2003. The Company adopted SFAS 132R in December 2003. The
adoption of this statement did not have a material impact on the Companys financial
position, results of operations or cash flows.

Note 3  Strategic
Redirection and Quasi-Reorganization

During
1996, in response to increasing competition and rapid market changes, management decided
to strategically redirect the Companys business. On June 30, 1996, the Company
suspended operations and closed the existing Sands property in order to construct a new
hotel-casino resort (Note 1).

In
connection with the closing of the Sands (Note 1), the Companys director and
Principal Stockholder approved a quasi-reorganization, effective as of June 30, 1996,
pursuant to which the Company revalued certain of its assets as of that date. This
revaluation, in accordance with the accounting principles applicable to a
quasi-reorganization, permitted the Company to eliminate the adjusted accumulated deficit
account as of that date, by a charge against capital in excess of par value, and to
establish a new retained earnings account for the accumulation of the results of future
operations. The quasi-reorganization resulted in an increase in the carrying value of land
of $51.7 million and a corresponding decrease of $45.0 million in buildings and other
property and equipment, net of accumulated depreciation and $6.7 million in severance and
related closing costs. The remaining accumulated depreciation against the cost basis of
the remaining property was eliminated, and the accumulated deficit of $155.0 million as of
June 30, 1996, was transferred to capital in excess of par value.

67

---

LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 4  Restricted Cash and Cash
Equivalents

The
Venetian Macau Senior Secured Notes issued on August 21, 2003 provided for a $120.0
million single draw. The Venetian Macau Senior Secured Notes proceeds of $117.1 million
(net of financing fees and costs) were deposited into restricted accounts invested in cash
or permitted investments and pledged to the holders of the Venetian Macau Senior Secured
Notes. The December 31, 2003 restricted cash balance of $117.1 million will be used as
required for the Macau Casino project costs under disbursement terms specified in the
Venetian Macau Senior Secured Notes agreements.

The
senior secured credit facility that the Company entered into on June 4, 2002 (the
Senior Secured Credit Facility) provided for a $250.0 million single draw
senior secured term loan facility (the Term B Facility). Term B Facility
proceeds of $185.0 million were deposited into restricted accounts invested in cash or
permitted investments and pledged to a disbursement agent for the Senior Secured Credit
Facility lenders. The $185.0 million was used as required for Phase IA Addition project
costs under disbursement terms specified in the Senior Secured Credit Facility. The
disbursement account was subject to a security interest in favor of the lenders under the
Senior Secured Credit Facility. As of December 31, 2002 the Phase IA disbursement, account
balance was $101.2 million all of which was expended during 2003 in connection with the
completion of constructions of the Phase IA Addition.

Pursuant
to the terms of the Secured Mall Facility (Note 8), the Mall II Subsidiary is also
required to maintain certain funds in escrow for debt service and property taxes. At
December 31, 2003 and 2002, $2.4 million and $1.9 million, respectively was held by the
lenders agent in escrow for these purposes. The amounts in escrow are classified as
restricted cash in the accompanying financial statements.

Note 5  Accounts
Receivable

Components
of accounts receivable were as follows (thousands):

|                                                     | December 31, | 
|---------------------------------------------------- | ------------ | 
|
|
|
|Casino                                               |              | 
|Hotel                                                |              | 
|Other                                                |              | 
|                                                     |              | 
|                                                     |              | 
|Less:  allowance for doubtful accounts and discounts |              | 
|                                                     |              | 
|                                                     |              | 
|                                                     |              | 

The
Company extends credit to approved casino customers following background checks and
investigations of creditworthiness. At December 31, 2003, a substantial portion of the
Companys casino receivables were due from customers residing in foreign countries.
Business or economic conditions, the legal enforceability of gaming debts, or other
significant events in these countries could affect the collectibility of such receivables.

An
estimated allowance for doubtful accounts and discounts is maintained to reduce the
Companys receivables to their estimated net realizable value. Although management
believes the allowance is adequate, it is possible that the estimated amount of cash
collections with respect to the casino accounts receivable could change.

68

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 6  Property and Equipment, Net

Property
and equipment includes costs incurred to construct the Casino Resort which amount is
disputed in litigation (See  Note 13  Commitments and
Contingencies) and other new ventures and consist of the following (in thousands):

|                                                          | For Year Ended December 31, | 
|--------------------------------------------------------- | --------------------------- | 
|
|
|
|Land and land improvements                                |                             | 
|Building and improvements                                 |                             | 
|Equipment, furniture, fixtures and leasehold improvements |                             | 
|Construction in progress                                  |                             | 
|                                                          |                             | 
|                                                          |                             | 
|Less:  accumulated depreciation and amortization          |                             | 
|                                                          |                             | 
|                                                          |                             | 
|                                                          |                             | 

Construction
in progress at December 31, 2003 consists of the following:

|                | For Year Ended December 31, | 
|--------------- | --------------------------- | 
|
|
|
|Macau Casino    |                             | 
|Phase IA        |                             | 
|Phase II Resort |                             | 
|Other           |                             | 
|                |                             | 
|                |                             | 
|                |                             | 

The
Casino Resort serves as collateral for various financing facilities (Note 8).

During
the years ended December 31, 2003, 2002 and 2001, the Company capitalized interest expense
of $5.6 million, $2.6 million and $2.0 million, respectively.

Note 7  Other
Accrued Liabilities

Other
accrued liabilities consist of the following (in thousands):

|                                    | For Year Ended December 31, | 
|----------------------------------- | --------------------------- | 
|
|
|
|Customer deposits                   |                             | 
|Payroll and related                 |                             | 
|Taxes and licenses                  |                             | 
|Outstanding gaming chips and tokens |                             | 
|Accrued dividends payable           |                             | 
|Other accruals                      |                             | 
|                                    |                             | 
|                                    |                             | 
|                                    |                             | 

Customer
deposits relate to Casino front money, hotel, and banquet advance payments and are all due
within one year.

69

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)Note 8  Long-Term Debt

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

|                                                 | For Year Ended December 31, | 
|------------------------------------------------ | --------------------------- | 
|
|
|
|Indebtedness of the Company and its Subsidiaries |                             | 
|other than the Mall II and Macau Subsidiaries:   |                             | 
|                                                 |                             | 
|11% Mortgage Notes, due June 15, 2010            |                             | 
|Senior Secured Credit Facility - Term B          |                             | 
|Senior Secured Credit Facility - Term A          |                             | 
|FF&E Credit Facility                             |                             | 
|                                                 |                             | 
|Indebtedness of the Mall II Subsidiary:          |                             | 
|                                                 |                             | 
|Secured Mall Facility                            |                             | 
|                                                 |                             | 
|Indebtedness of the Macau Subsidiaries:          |                             | 
|                                                 |                             | 
|Venetian Macau Senior Secured Notes - Tranche A  |                             | 
|Venetian Macau Senior Secured Notes - Tranche B  |                             | 
|Venetian Intermediate Credit Facility            |                             | 
|                                                 |                             | 
|                                                 |                             | 
|                                                 |                             | 
|                                                 |                             | 
|Less: current maturities                         |                             | 
|                                                 |                             | 
|                                                 |                             | 
|Total long-term debt                             |                             | 
|                                                 |                             | 

On
June 4, 2002, the Company completed a series of refinancing transactions (collectively,
the Refinancing Transactions) including: (1) the issuance of
$850.0 million in aggregate principal amount of 11% mortgage notes due 2010 (the
Mortgage Notes) in a private placement; (2) entering into a new senior secured
credit facility (the Senior Secured Credit Facility) with a syndicate of
lenders in an aggregate amount of $375.0 million; and (3) entering into a secured
mall facility (the Secured Mall Facility) in an aggregate amount of $105.0
million, which was subsequently increased to $120.0 million on June 28, 2002. The Company
used the proceeds of the Refinancing Transactions to repay, redeem or repurchase all of
its previously outstanding indebtedness, to finance the construction and development of
the Phase IA Addition and to pay all fees and expenses associated with the Refinancing
Transactions. In addition, the completion guarantee provided by the Principal Stockholder
relating to the construction of the Casino Resort was terminated upon the consummation of
the Refinancing Transactions and the remaining cash collateral was returned to the
Principal Stockholder.

70

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LAS VEGAS SANDS, INC. Notes
to Financial Statements (continued) Note 8  Long-Term Debt (continued) Mortgage
Notes

The
Mortgage Notes bear interest at 11%, payable each June 15th and December 15th. The
Mortgage Notes are secured by second priority liens on certain assets of the Company (the
personal property and the real estate improvements that comprise the hotel, the casino,
and the convention space, with certain exceptions). The Mortgage Notes are redeemable at
the option of LVSI and Venetian at prices ranging from 100% to 105.5% commencing on or
after June 15, 2006, as set forth in the Mortgage Notes and the indenture pursuant to
which the Mortgage Notes were issued (the Indenture). Prior to June 15, 2006,
LVSI and Venetian may redeem the Mortgage Notes at their principal amount plus an
applicable make-whole premium. Upon a change of control (as defined in the Indenture),
each Mortgage Note holder may require LVSI and Venetian to repurchase such Mortgage Notes
at 101% of the principal amount thereof plus accrued interest and other amounts which are
then due, if any. On or prior to June 15, 2005, the Company may redeem up to 35% of the
Mortgage Notes with the net cash proceeds of one or more offerings of equity securities at
a redemption price of 111% of the principal amount of the Mortgage Notes, plus accrued and
unpaid interest. Upon an event of loss or certain asset sales, the Company may also be
required to offer to purchase all or a portion of the Mortgage Notes with the proceeds of
such event of loss or sale. The Mortgage Notes are not subject to a sinking fund
requirement.

On
December 27, 2002, the Company completed an exchange offer to exchange the Mortgage Notes
for publicly traded mortgage notes with substantially the same terms.

Senior Secured Credit
Facility

The
Senior Secured Credit Facility provides for a $250.0 million single draw senior secured
term loan facility (the Term B Facility), a $50.0 million senior secured
delayed draw facility (the Term A Facility) and a $75.0 million senior secured
revolving facility (the Revolving Facility). The net proceeds from the Term A
and Term B Facilities of $235.0 million were deposited into a disbursement account for the
Phase IA Addition, invested in cash or permitted investments, pledged to a disbursement
agent for the Senior Secured Credit Facility lenders and used as required for Phase IA
Addition project costs under disbursement terms specified in the Senior Secured Credit
Facility.

The
Term B Facility matures on June 4, 2008 and is subject to quarterly amortization payments
in the amount of $625,000 from September 30, 2002 until September 30, 2007, followed by
four equal quarterly amortization payments of $59.4 million until the maturity date. The
Term A Facility was drawn in full on May 26, 2003, matures on June 4, 2007 and is subject
to quarterly amortization payments commencing on December 31, 2003 in the amount of
$1,666,667 for three quarters, $2,500,000 for the succeeding four quarters, $3,750,000 for
the next four quarters and $5,000,000 for the final four quarters.

The
Revolving Facility matures on June 4, 2007 and has no interim amortization. No amounts had
been drawn under the Revolving Facility as of December 31, 2003. However, as described
below, LVSI has guaranteed borrowings under a $50 million credit facility of Venetian
Venture Development Intermediate Limited, a wholly owned subsidiary of the Company
(Venetian Intermediate), to fund construction and development costs of the
Macau Casino. These guarantees will be supported by $50 million of letters of credit to be
issued under the Revolving Facility of which $40.0 million had been issued as of December
31, 2003. In addition, LVSI will guarantee funding of certain cost overruns of the Macau
Casino as further described in Note 13. The guaranty is supported by a $10 million letter
of credit issued under the Revolving Facility during January 2004. As a result of the
issuance of these letters of credit, the amount available for working capital loans under
the Revolving Facility has decreased from the $35.0 million of availability as of December
31, 2003 to $15.0 million during January 2004.

71

---

LAS VEGAS SANDS,
INC.Notes to Financial Statements (continued) Note 8  Long-Term Debt (continued)

All
amounts outstanding under the Senior Secured Credit Facility bear interest at the option
of the Company at the prime rate plus 2% per annum, or at the reserve adjusted Eurodollar
rate plus 3% per annum. Since the substantial completion of the Phase IA Addition, the
applicable margin for amounts outstanding under the Term A Facility and the Revolving
Facility is determined by a grid based upon a leverage ratio. The leverage ratio is
calculated as the ratio of consolidated total debt as of the last day of each fiscal
quarter to EBITDA (as defined in the Senior Secured Credit Facility) for the four-fiscal
quarter period ending on such date. Commitment fees equal to 0.50% per annum of the daily
average unused portion of the commitment under the Revolving Facility are payable
quarterly in arrears. The average interest rate for the Senior Secured Credit Facility was
4.2% during the twelve months ended December 31, 2003.

The
Senior Secured Credit Facility is secured by a first priority lien on certain assets of
the Company (the personal property and the real estate improvements that comprise the
hotel, the casino, and the convention space, with certain exceptions). The Senior Secured
Credit Facility contains affirmative, negative and financial covenants including
limitations on indebtedness, liens, investments, guarantees, restricted junior payments,
mergers and acquisitions, sales of assets, leases, transactions with affiliates and
scope-changes and modifications to material contracts. Additionally, the Company is
required to comply with certain financial ratios and other financial covenants including
total debt to EBITDA ratios, EBITDA to interest coverage ratios, minimum net worth
covenants and maximum capital expenditure limitations. At December 31, 2003, the Company
was in compliance with all required covenants and ratios under the Senior Secured Credit
Facility.

Pursuant
to the terms of the Senior Secured Credit Facility, the Company is also required to
maintain certain funds in escrow for insurance and property taxes. At December 31, 2003,
$2.1 million was held by the lenders agent in escrow for these purposes. The amounts
in escrow are classified as restricted cash in the accompanying financial statements.

FF&E Financing

In
September 2003, the Company and a lender entered into a credit facility (the
FF&E Credit Facility) to provide $15.0 million of financing for the Phase
IA Addition. The proceeds from the FF&E Credit Facility were used to finance certain
furniture, fixtures and equipment (the Specified FF&E) for the Phase IA
Addition and the facility is secured by the specified FF&E. The FF&E Credit
Facility provides for a 60-month basic term loan. Interest on the term loan is three month
LIBOR plus 3.00% and is payable quarterly. The FF&E Credit Facility is subject to
nineteen quarterly amortization payments of $600,000 beginning January 1, 2004, and one
final payment of $3,600,000 on October 1, 2008. The average interest rate for the FF&E
Credit Facility was 4.2% during the period the Facility was outstanding during 2003.

Secured Mall Facility

In
June 2002, the Company also entered into an agreement (the Secured Mall
Facility) with certain lenders to provide for a $105.0 million loan (subsequently
increased to $120.0 million on June 28, 2002) to the Mall II Subsidiary. The initial
$105.0 million of proceeds (net of financing costs) from the Secured Mall Facility, along
with the proceeds of a $37.9 million capital contribution in Mall II Subsidiary by
Venetian, were used to repay the Mall Take-out Financing and costs previously owed by the
Mall Subsidiary. Upon the consummation of the Refinancing Transactions, the assets of the
Mall were transferred to the Mall II Subsidiary, the borrower under the Secured Mall
Facility. The additional $15.0 million of proceeds (net of financing costs) were
distributed to Venetian and used for general corporate purposes. The indebtedness under
the Secured Mall Facility is secured by a first priority lien on the assets that comprise
the Mall (the Mall Assets). The average interest rate for the Secured Mall
Facility was 3.1% during the twelve month ended December 31, 2003.

72

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 8  Long-Term Debt (continued)

The
amounts outstanding under the Secured Mall Facility bear interest at the adjusted one
month Eurodollar rate plus 1.875% per annum. Interest is paid monthly and there is no
scheduled principal amortization. The Secured Mall Facility is due in full on June 10,
2005 and provides for two one-year extensions at the option of the Company, subject to
certain criteria. The Secured Mall Facility contains affirmative, negative and financial
covenants including net operating income performance standards. Failure to meet these
financial covenants in certain circumstances allows the lenders agent to control
collection of rents, to approve operating budgets and provides for a cash sweep of excess
cash flow to reduce amounts outstanding under the Secured Mall Facility.

The
Company is required to maintain an interest rate cap agreement to limit the impact of
increases in interest rates on its floating rate debt derived from the Secured Mall
Facility. To meet the requirements of the Secured Mall Facility, the Company entered into
a cap agreement during June 2002 (the Mall Cap Agreement) that resulted in a
premium payment to counterparties based upon notional principal amounts for a term equal
to the term of the Secured Mall Facility. The provisions of the Mall Cap Agreement entitle
the Company to receive from the counterparties the amounts, if any, by which the selected
market interest rates exceed the strike rates stated in such agreement. There was no net
effect on interest expense as a result of the Mall Cap Agreement for the twelve months
ended December 31, 2003. The notional amount of the Mall Cap Agreement (which expires on
June 28, 2005) at December 31, 2003 was $120.0 million.

Venetian Intermediate
Credit Facility

As
further described in Note 6, Venetian Macau is currently constructing the Macau Casino,
which it expects to complete by June 2004. On March 27, 2003, Venetian Intermediate
entered into a credit agreement (Venetian Intermediate Credit Agreement) with
a lender to provide $50.0 million of financing for the Macau Casino. Venetian Intermediate
owns 100% of Venetian Macau. The obligations under the loans to be made under the Venetian
Intermediate Credit Agreement are guaranteed by the Company and Venetian and supported by
letters of credit to be issued under the Revolving Facility in favor of the Venetian
Intermediate Credit Agreement lenders. As a result of the issuance of the letters of
credit, the amounts available for working capital loans under the Revolving Facility have
been reduced on a dollar for dollar basis. The amounts outstanding under the Venetian
Intermediate Credit Facility bear interest at the base rate or the adjusted Eurodollar
rate plus 0.5% per annum. Interest is payable on the base rate loans on a quarterly basis
and is payable on Eurodollar loans at the end of the applicable interest period, and there
is no scheduled principal amortization. The credit facility is due in full on March 27,
2006. As of December 31, 2003, $40.0 million was outstanding under the Venetian
Intermediate Credit Agreement and was supported by $40.0 million of letters of credit
issued under the Revolving Facility. The average interest rate during 2003 was $1.7%.

Venetian Macau Senior
Secured Notes

On
August 21, 2003, a wholly owned subsidiary of Venetian Macau, Venetian Macau Finance
Company issued $120.0 million in aggregate principal amount of floating rate senior
secured notes due August 2008 (the Venetian Macau Senior Secured Notes). The
Venetian Macau Senior Secured Notes issued by Venetian Macau Finance Company are
guaranteed by Venetian Macau. All assets of Venetian Macau and its subsidiaries secure the
Venetian Macau Senior Secured Notes and the guarantee and restrictions have been placed on
the payment of dividends to LVSI from Venetian Macau and its subsidiaries. As a result of
the restrictions, approximately $117.9 in net assets for the Venetian Macau at December
31, 2003 are not available at the parent level and are considered to be restricted net
assets of subsidiaries at such date.

$75.0
million in aggregate principal amount of the Venetian Macau Senior Secured Notes bear
interest at the rate of three month U.S. dollar LIBOR plus 3.25%, payable quarterly (Tranche
A Notes), and $45 million in aggregate principal amount of the Venetian Macau
Senior Secured Notes bear interest at the rate of three month U.S. dollar LIBOR plus
4.00%, payable quarterly (Tranche B Notes). The Tranche A Notes have a
mandatory redemption of $7.5 million on August 21, 2005, $11.2 million on August 21,
2006, $18.8 million on August 21, 2007 and $37.5 million on August 21, 2008. The Tranche
B Notes have no interim amortization and are due in full on August 21, 2008. The average
interest rate on the Venetian Macau Senior Secured Notes during 2003 was 4.8%.

73

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 8  Long-Term Debt (continued) Macau
Revolver

On
December 18, 2003, Venetian Macau and Venetian Macau Finance Company entered into a $20.0
million revolving credit facility (Macau Revolver) with a group of lenders.
The Macau Revolver is secured on a pari passu basis with the same collateral as the
Venetian Macau Senior Secured Notes. The Macau Revolver matures December 18, 2006 and
bears interest at Libor plus 3.75%. No amounts have been drawn under the Macau Revolver.

Scheduled
Maturities of Long-Term Debt

Scheduled
maturities of long-term debt outstanding at December 31, 2003 are summarized as follows
(in thousands):

|           | 
|---------- | 
|2004       | 
|2005       | 
|2006       | 
|2007       | 
|2008       | 
|Thereafter | 
|           | 
|           | 
|           | 

Fair
Value

Estimated
fair values of the Companys debt and related financial instruments are as follows
(in thousands):

|                                        | For Year Ended December 31, |  |   |        
|--------------------------------------- | --------------------------- |  | - | -------
|
|
|
|11% Mortgage Notes                      |                             |  | $ | 850,000
|Senior Secured Credit Facility - Term A |                             |  |   | 48,333 
|Senior Secured Credit Facility - Term B |                             |  |   | 246,250
|Secured Mall Facility                   |                             |  |   | 120,000
|FF&E Credit Facility                    |                             |  |   | 14,400 
|Venetian Macau Senior Secured Notes     |                             |  |   | 120,000
|Venetian Intermediate Credit Facility   |                             |  |   | 40,000 
|Cap and Floor Agreement                 |                             |  |   |       
|Cap Agreement                           |                             |  |   | (1     

The
fair values of the Mortgage Notes are based on quoted market prices. The fair values of
other indebtedness and the FF&E Credit Facility approximate their respective carrying
amounts based on the variable nature of these facilities. The fair value of the Cap
Agreement is based upon quotes from brokers.

74

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 9  Redeemable Preferred Interest in
Venetian Casino Resort, LLC

During
1997, Interface Holding contributed $77.1 million in cash to Venetian in exchange for a
Series A preferred interest (the Series A Preferred Interest) in Venetian. By
its terms, the Series A Preferred Interest was convertible at any time into a Series B
preferred interest in Venetian (the Series B Preferred Interest). In August
1998, the Series A Preferred Interest was converted into the Series B Preferred Interest.
The rights of the Series B Preferred Interest include the accrual of a preferred return of
12% from the date of contribution in respect of the Series A Preferred Interest. Until the
indebtedness under the Senior Secured Credit Facility is repaid and cash payments are
permitted under the restricted payment covenants of the Indenture relating to the Mortgage
Notes, the preferred return on the Series B Preferred Interest will accrue but will not be
paid in cash. Commencing on June 30, 2011, distributions must be made to the extent of the
positive capital account of the holder. During the second and third quarters of 1999,
Interface Holding contributed $37.3 million and $7.1 million, respectively, in cash in
exchange for an additional Series B Preferred Interest. During the years ended December
31, 2003, 2002 and 2001, $26.2 million, $23.3 million and $20.8 million, respectively,
were accrued on the Series B Preferred Interest related to the contributions made. There
were no distributions of preferred interest or preferred return paid during 2003, 2002 or
2001.

Note 10 Stockholders Equity
and Per Share Data

The
Company established a nonqualified stock option plan, which provides for the granting of
stock options pursuant to the applicable provisions of the Internal Revenue Code and
regulations. The stock option plan provides that the Principal Stockholder may assume the
obligations of the Company under the plan and provides for the granting of up to 75,000
shares of common stock to officers and other key employees of the Company.

During
the first quarter of 2002, the Company entered into a stockholders agreement (the
Stockholders Agreement) with the employees to whom options were granted
(the Additional Stockholders) and the Principal Stockholder. The
Stockholders Agreement restricts the ability of the Additional Stockholders and any
of their permitted transferees, who have agreed to be bound by the terms and conditions of
the agreement to sell, assign, pledge, encumber or otherwise dispose of any shares of
common stock of LVSI, except in accordance with the provisions of the Stockholders
Agreement. If at any time before LVSI completes an initial public offering, the Principal
Stockholder wishes to sell 20% or more of his ownership interest in LVSI to any third
party transferee, each Additional Stockholder shall have the right to participate in such
sale on the same terms as those offered to the Principal Stockholder. The Additional
Stockholders also have certain piggyback registration rights. Finally, if at any time
prior to the completion by LVSI of an initial public offering LVSI wishes to issue any new
securities, the Additional Stockholders will have the right to purchase that number of
shares of LVSI common stock, at the proposed purchase price of the new securities, such
that the Additional Stockholders percentage ownership of LVSI would remain the same
following such issuance.

As
of December 31, 2003, there were unexercised options to purchase 2,000 shares of the
Companys common stock. During the year ended December 31, 2003 options to purchase
5,000 shares of common stock were exercised and 1,000 options to purchase common stock
were forfeited.

The
Companys stock option plan is administered by the Board of Directors. Salaried
officers, directors, and other key employees of the Company and its subsidiaries are
eligible to receive options. The options have 10-year terms.

75

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)Note 10 Stockholders Equity and
Per Share Data (continued)

There
were no options granted prior to January 1, 2002. A summary of the status of the
Companys stock option plan for the years ended December 31, 2003 and 2002 is
presented below:

|                                               |  |  | Weighted
|---------------------------------------------- |  |  | --------
|
|
|
|
|Outstanding, December 31, 2001                 |  |  |         
|Granted                                        |  |  |         
|Exercised                                      |  |  |         
|Forfeited                                      |  |  |         
|                                               |  |  |         
|Outstanding and exercisable, December 31, 2002 |  |  |         
|                                               |  |  |         
|Granted                                        |  |  |         
|Exercised                                      |  |  |         
|Forfeited                                      |  |  |         
|                                               |  |  |         
|Outstanding and exercisable, December 31, 2003 |  |  |         
|                                               |  |  |         

Note 11  Employee
Savings Plan

Participation
in the Venetian Casino Resort, LLC 401 (k) employee savings plan is available for all full
time employees. The savings plan allows participants to defer, on a pre-tax basis, a
portion of their salary and accumulate tax-deferred earnings as a retirement fund.
Venetian matches 150% of the first $390 of employee contributions and 50% of employee
contributions in excess of $390 up to a maximum of 3% of participating employees
eligible gross wages. For the year ended December 31, 2003, 2002 and 2001, contributions
accrued under the savings plan were $2.1 million, $2.1 million and $2.0 million,
respectively.

Note 12  Related
Party Transactions

The
Principal Stockholder is a partner in four entities that operate restaurants in the Casino
Resort. The terms and conditions of the leases granted by the Company for such restaurants
are at amounts which management believes would be no less favorable than those negotiated
with independent third parties. Valentino Las Vegas LLC and Night Market, LLC paid
Venetian $1.1 million, $1.0 million and $1.0 million, and Postrio Las Vegas LLC and
Carnevale Coffee Bar LLC paid the Mall Subsidiary $1.0 million, $1.1 million and $1.1
million for the years ended December 31, 2003, 2002 and 2001, respectively. The Casino
Resort purchased the lease interest and assets of Carnevale Coffee Bar LLC during 2003 for
$3.1 million, payable $625,000 during 2003 and $250,000 annually over ten years, beginning
in 2004 through September 1, 2013.

During
2001, the Principal Stockholder guaranteed a $2.9 million bank loan made to architects of
the Phase II Subsidiary to secure a trade payable owed to the architects by the Phase II
Subsidiary. The loan was repaid during 2002 and the guarantee was released.

During
November 1999, the Principal Stockholder purchased idle construction equipment from the
Company (tower cranes) for $2.0 million, the cost basis of the equipment, which was its
estimated fair value at the time of purchase. During 2003 the Company repurchased the
tower cranes for $0.8 million and paid the Principal Stockholder $1.2 million of rent for
the tower cranes for use during the Phase IA Addition construction period.

76

---

LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 12  Related Party Transactions
(continued)

In
2003, LVSI received from, and rendered to, Interface and its affiliates certain
administrative and other services such as travel. Any such services were provided at
amounts which management believes would be no less favorable than those negotiated with
independent third parties. The Company paid certain affiliates $7.4 million, $3.7 million,
and $1.1 million for these services during 2003, 2002 and 2001, respectively.

Interface
provides audio visual, telecommunications, electrical, janitorial and other related
services to group customers of the Casino Resort. These services are provided pursuant to
a contract that provides for an equal sharing of revenues after direct operating expenses.
The Company received $2.7 million, $2.6 million, and $2.5 million pursuant to this
contract during 2003, 2002 and 2001, respectively. The relationship between the Phase IA
Addition meeting space and the Expo Center will be governed by the Cooperation Agreement,
a preferred reservation system agreement, and a meeting services agreement with Interface.

The
Company, the New Mall Subsidiary, the Phase II Subsidiary and Interface are parties to an
Amended and Restated Reciprocal Easement, Use and Operating Agreement (the
Cooperation Agreement) which, among other things, provides for the integrated
operation of all the facilities and addresses, encroachments, joint marketing and the
sharing of certain facilities and costs related thereto.

In
conjunction with the Phase II Subsidiary Credit Facility on October 19, 2001, the Phase II
Subsidiary leased the Phase II Land to Venetian for five years at an annual rent of $8.0
million, which amounts eliminate in consolidation. The lease was terminated on June 4,
2002 and the accrued rent was forgiven. Prior to October 2001, Interface leased parking
spaces on the Phase II Land from the Phase II Subsidiary for rent of $5,000 per month.

In
2002, Venetian entered into a long-term lease, at nominal rent, with the Phase II
Subsidiary for the lease of the airspace in which the meeting and conference space for the
Phase IA Addition is being constructed. The airspace was designated as a separate legal
parcel and conveyed to the Venetian from the Phase II Subsidiary for nominal consideration
in August 2002, which amounts eliminate in consolidation. The lease terminated as a result
of such transfer.

Note 13 Commitments
and Contingencies

Energy
Services Agreements

During
1997, Venetian and the Mall Subsidiary entered into separate energy service agreements
with a heating and air conditioning (HVAC) provider (the HVAC
Provider). Under the terms of the energy services agreement and other separate
energy services agreements, HVAC energy and services will be purchased by Venetian, the
New Mall Subsidiary, its mall tenants and Interface over initial terms expiring in 2009
with an option to collectively extend the terms of their agreements for two consecutive
five-year periods.

Pursuant
to the Companys construction management contract (as more fully defined under
Litigation below), the HVAC plant was constructed by the Construction Manager
on land owned by the Company and leased to the HVAC Provider. The HVAC equipment is owned
by the HVAC Provider, which paid all costs (HVAC Costs) in connection with the
purchase and installation of the HVAC equipment. The total HVAC Costs were $70.0 million.

The
charges payable under the separate energy services agreements include a fixed component
applied to the HVAC Costs paid by the HVAC Provider, reimbursement of operational and
related costs and a management fee.

77

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LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 13 Commitments and Contingencies
(continued)

As
of December 31, 2003, Venetian and the New Mall Subsidiary were obligated under the energy
services agreements to make future minimum payments as follows (in thousands):

|Years Ending December 31, | 
|------------------------- | 
|2004                      | 
|2005                      | 
|2006                      | 
|2007                      | 
|2008                      | 
|Thereafter                | 
|                          | 
|Total minimum payments    | 
|                          | 

Expenses
incurred under the energy services agreements were $7.7 million, $5.6 million and $6.2
million ($7.657 million less leasee reimbursements) for the years ended December 31, 2003,
2002 and 2001, respectively. The New Mall Subsidiary is responsible for 19% of energy
services rental payments and these amounts exclude payments by IGN.

Operating
Lease Agreements

Expenses
incurred under short-term, variable rate operating lease agreements totaled $1.7 million,
$1.7 million and $1.7 million for the years ended December 31, 2003, 2002 and 2001,
respectively.

Construction
Litigation

The
construction of the principal components of the Casino Resort was undertaken by Lehrer
McGovern Bovis, Inc. (the Construction Manager) pursuant to a construction
management agreement and certain amendments thereto (as so amended, the Construction
Management Contract). The Construction Management Contract established a final
guaranteed maximum price (the Final GMP) of $645.0 million, so that, subject
to certain exceptions (including an exception for cost overruns due to scope
changes), the Construction Manager was responsible for any costs of the work covered
by the Construction Management Contract in excess of $645.0 million. The Construction
Management Contract also established a required substantial completion date
(the date on which the construction of the Casino Resort was sufficiently complete,
including the receipt of necessary permits, licenses and approvals, so that all components
of the Casino Resort could be open to the general public) of April 21, 1999 (subject to
extensions on account of scope changes and force majeure events), with a
per-day liquidated damages penalty for failure to meet such deadline.

The
obligations of the Construction Manager under the Construction Management Contract were
guaranteed by Bovis, Inc. (Bovis), the Construction Managers direct
parent at the time the Construction Management Contract was entered into (such guaranty,
the Bovis Guaranty). Bovis obligations under the Bovis Guaranty were
guaranteed by The Peninsula and Oriental Steam Navigation Company (P&O), a
British public company and the Construction Managers ultimate parent at the time the
Construction Management Contract was entered into (such guaranty, the P&O
Guaranty).

78

---

LAS VEGAS SANDS,
INC.Notes to Financial Statements (continued) Note 13 Commitments and Contingencies
(continued)

On
July 30, 1999, Venetian filed a complaint against the Construction Manager and Bovis in
the United States District Court for the District of Nevada (the Federal Court
Action). The action alleges breach of contract by the Construction Manager of its
obligations under the Construction Management Contract and a breach of contract by Bovis
of its obligations under the Bovis Guaranty, including failure to fully pay trade
contractors and vendors and failure to meet the April 21, 1999 guaranteed completion date.
The Company amended this complaint on November 23, 1999 to add P&O as an additional
defendant. In response to Venetians breach of contract claims against the
Construction Manager, Bovis and P&O, the Construction Manager filed a complaint on
August 3, 1999 against Venetian in the District Court of Clark County, Nevada (the
State Court Action). The action alleges a breach of contract and quantum
meruit claims under the Construction Management Contract and also alleges that Venetian
defrauded the Construction Manager in connection with the construction of the Casino
Resort. The Construction Manager seeks damages, attorneys fees and costs and
punitive damages. In the lawsuit, the Construction Manager claims that it is owed
approximately $90.0 million from Venetian and its affiliates. This complaint was
subsequently amended by the Construction Manager, which also filed an additional complaint
against the Company relating to work done and funds advanced with respect to the
contemplated development of the Phase II Resort. Simultaneously, commencing in March 2000,
the Construction Manager and the Company engaged in arbitration proceedings ordered by the
Federal Court to determine the cost and schedule impact of any changes in the scope of
services of the Construction Manager under the Construction Management Contract (the
Arbitration Proceedings).

In
connection with these disputes, as of December 31, 1999 the Construction Manager and its
subcontractors filed mechanics liens against the Casino Resort for $145.6 million and
$182.2 million, respectively. The Company believes that a major reason these lien amounts
exceeded the Construction Managers claims of $90.0 million is based upon a
duplication of liens through the inclusion of lower-tier claims by subcontractors in the
liens of higher-tier contractors, including the lien of the Construction Manager. As of
December 31, 1999, the Company had purchased surety bonds for virtually all of the claims
underlying these liens (other than approximately $15.0 million of claims with respect to
which the Construction Manager purchased bonds). As a result, there can be no foreclosure
of the Casino Resort in connection with the claims of the Construction Manager and its
subcontractors. However, the Company will be required to pay or immediately reimburse the
bonding company if and to the extent that the underlying claims are judicially determined
to be valid. If such claims are not settled, it is likely to take a significant amount of
time for their validity to be judicially determined.

In
June 2000, the Company purchased an insurance policy (the Insurance Policy)
for loss coverage in connection with all litigation relating to the construction of the
Casino Resort (the Construction Litigation). Under the Insurance Policy, the
Company will self-insure the first $45.0 million and the insurer will insure up to the
next $80.0 million of any possible covered losses. The Insurance Policy provides coverage
for any amounts determined in the Construction Litigation to be owed to the Construction
Manager or its subcontractors relating to claimed delays, inefficiencies, disruptions,
lack of productivity/unauthorized overtime or schedule impact, allegedly caused by the
Company during construction of the Casino Resort, as well as any defense costs.

On
June 3, 2003, an approximate 10-month trial was concluded in the State Court Action when a
jury returned a verdict, which the Construction Manager contends approximately $44.0
million in additional costs under the Construction Management Contract and awarding the
Company approximately $2.0 million in damages for defective and incomplete work performed
by the Construction Manager. The verdict also allows each party to seek pre-judgment
interest and reimbursement of attorneys costs. The judge in the State Court Action
arguably entered judgment on the verdict on December 24, 2003. The Company has appealed
the entering of the judgment, requesting a stay of the verdict until the conclusion of the
Arbitration Proceedings, which proceedings the Company contends must be considered in
determination of any final award between the parties. The Company believes that results of
the Arbitration Proceedings will result in the lowering of the verdict that was awarded to
Construction Manager in the State Court Action and will provide a basis to increase the
amount that was awarded to the Company.

79

---

LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 13 Commitments and Contingencies
(continued)

While
there are pending subcontractor claims against the Construction Manager and the Company
and related claims for indemnity by and against the Construction Manager, The Company
believes that all such claims asserted against the Company in those actions would be
subsumed within the verdict in the State Court Action and that the Companys
liability will be limited to the amount of any final judgment which may be ultimately
entered in the State Court Action. If a judgment for the Construction Manager is entered
on the verdict and such a judgment can be executed upon by the Construction Manager
following the resolution of all appeals, the Company believes its payment of such a
judgment shall be in satisfaction of and shall be capped at its $45.0 million
self-insurance requirement under the Insurance Policy. The Company intends to seek an
elimination or reduction of the Construction Managers and its subcontractors
mechanics liens in an amount to be consistent with any final judgment on the
verdict.

Notwithstanding
the entry of judgment in the State Court Action, the Company has continued to pursue
certain claims in the Arbitration Proceedings to determine, among other things, the impact
of certain changes which determination by the arbitrator the Company believes may provide
a basis for reducing the amount awarded to the Construction Manager in the State Court
Action and raising the amount of the verdict for the Company or otherwise establishing a
basis for claims for the Company against the Construction Manager. The Company also
intends to pursue additional affirmative claims in the Federal Court Action and in other
proceedings that were not resolved by the verdict in the State Court Action. Because of
the magnitude of remaining open items in the Arbitration Proceedings, which the Company
believes must be considered in any ultimate award between the parties the Company is not
able to determine with any reasonable certainty the value of such claims or the
probability of success on such claims at this time. Accordingly, no accrual for a
liability has been reflected in the accompanying financial statements for this matter,
other than approximately $7.2 million which the Company had previously accrued in 1999 for
unpaid construction costs and which have not yet been paid pending outcome of the
litigation.

Based
on the recent judgment in the State Court Action and the remaining open items in the
Arbitration Proceedings, the Company estimates that its range of loss in this matter is
from none (or a gain if all remaining matters are determined in the Companys favor
and considering the existing accrual of approximately $7.2 million for unpaid construction
costs) to approximately $28 million if the Company were to lose all remaining arbitration
matters and related pending actions and appeals that counsel has advised are possible of
loss, and which are not already included in the State Court Action.  Such range of
loss is before attorney costs and interest, which have not yet been considered by the
State Court and the total amounts of which cannot currently be quantified.  While the
range of loss is possibly as high as $70.0 million, (the original verdict of $42.0 million
plus the above referenced arbitration matters) plus attorneys fees and interest, the
Insurance Policy is available to provide coverage of amounts, together with any other in
excess of $45.0 million. At this time, no amount within the range of loss can be
reasonably determined as an estimated loss.  It is possible that the Arbitration
Proceedings will conclude (or interim decisions rendered) in the near future, at which
time an estimate of loss could be determined.  Such loss could be material to the
Companys results of operations in the period that the estimate is recorded.

Macau
Casino Projects

On
June 26, 2002, the Macau government granted a provisional concession to operate
casinos in Macau to the Companys subsidiary Venetian Macau and to Galaxy Casino
Company Limited, a consortium of Macau and Hong Kong-based investors (Galaxy).
During December 2002, Venetian Macau and Galaxy entered into a subconcession
agreement. The subconcession agreement with Galaxy was recognized and approved by the
Macau government and allows Venetian Macau to develop and operate certain casino projects,
including the Macau Casino, separately from Galaxy.

In
addition to the Macau Casino, the Company also intends to build in Macau a hotel, casino
and convention center complex with a Venetian-style theme similar to the Companys
Las Vegas property (the Macau Venetian Casino Resort).

80

---

LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)Note 13 Commitments and Contingencies
(continued)

Under
the subconcession agreement, Venetian Macau is obligated to develop and open the Macau
Venetian Casino Resort by June 2006 and invest, or cause to be invested, at least
4.4 billion patacas (approximately $535.6 million at exchange rates in effect on
December 31, 2003) in various development projects in Macau by June 2009. The
construction and development costs of the Macau Casino will be applied to the fulfillment
of this total investment obligation to the Macau government. The Company currently
estimates the total cost of constructing, developing and operating the Macau Casino,
including design costs, construction costs, equipment costs, working capital and
pre-opening expenses, will be approximately $257.9 million, all of which qualifies to
meet the investment obligation to the Macau government. Assuming that all of the current
estimated construction and development costs of the Macau Casino are applied towards
fulfilling the investment obligations under the subconcession agreement, remaining
investment obligations under the subconcession agreement will be approximately $277.7
million. It is expected that the construction and development costs of the Macau Venetian
Casino Resort will satisfy the remainder of this obligation. To support this obligation, a
Macau bank and a subsidiary of the Company, Lido Casino Resort Holding Company, LLC, have
guaranteed 500 million patacas (approximately $60.9 million at exchange rates in effect on
December 31, 2003) of Venetian Macaus legal and contractual liabilities to the Macau
government until March 31, 2007. These development and investment obligations may be
satisfied by Venetian Macau and/or its affiliates, including the Company.

As
of December 31, 2003, approximately $70.5 million of these costs relating to the
Macau Casino had been expended. The Company anticipates funding the remaining estimated
costs of construction from a combination of the following sources:

| |  | operating
cash flow of the Company (although the Senior Secured Credit Facility and the Indenture
for the Mortgage Notes limit the Companys ability to make investments in the Macau
projects); as of December 31, 2003 the Company had the ability to invest approximately
$41.0 million in unrestricted subsidiaries (including the Macau Subsidiaries);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | borrowings
of $50.0 million under the Venetian Intermediate Credit Agreement (See Note 8  Venetian
Intermediate Credit Facility). As of December 31, 2003, $40.0 million had been borrowed
under this facility;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | net
proceeds from the issuance and sale of $120 million in aggregate principal amount of the
Venetian Macau Senior Secured Notes. The Venetian Macau Senior Secured Notes were issued
by a wholly owned subsidiary of Venetian Macau and guaranteed by Venetian Macau on August
21, 2003. The Venetian Macau Senior Secured Notes and the guarantee are secured by all
assets of Venetian Macau and its subsidiaries, subject to certain exceptions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | borrowings
under the $20.0 million revolving credit facility entered into by Venetian Macau and the
issuer of the Venetian Macau Senior Secured Notes with a group of lenders (the Macau
Revolver). The Macau Revolver is secured on a pari passu basis with the same
collateral as the Venetian Macau Senior Secured Notes. The facility matures in 2006. The
entire amount outstanding under this facility bears interest at LIBOR or at a base rate,
in each case plus 3.75%;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a
completion guaranty issued by LVSI and Venetian, guaranteeing payment of certain costs of
the Macau Casino in excess of available funds (the Completion Guaranty). The
Completion Guaranty is supported by a $10.0 million letter of credit issued in January
2004 under the Companys Senior Secured Credit Facility (See Note 8  Senior
Secured Credit Facility). The remainder of the Completion Guaranty is expected to be
funded by borrowings of up to $15.0 million under the Macau Revolver;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

81

---

LAS VEGAS SANDS,
INC.Notes to Financial Statements (continued) Note 13 Commitments and Contingencies
(continued)

| |  | borrowings
under proposed furnishings, fixtures & equipment facilities and vendor financings
which the Company expects to be able to enter into in the aggregate principal amount of
$25.0 million (the FF&E Facilities) to finance certain equipment and
other assets of the Macau Casino. If Venetian Macau is unable to obtain the FF&E
Facilities or vendor financing, LVSI, Venetian or another of their subsidiaries have
agreed to either:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | purchase,
 or cause to be purchased  assets with a cost of up to $25.0  million and enter into
lease or other                       arrangements with Venetian Macau or
| |  | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | otherwise
assist Venetian Macau in securing such facilities, including by issuing guarantees in
connection with any such facilities or otherwise lending such amounts to Venetian Macau
for purposes of securing such equipment
| |  | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | in
each case, to the extent permitted under the Senior Secured Credit Facility and the
Indenture for the Mortgage Notes.
| | ------------------------------------------------------------------------------------------------------------------------

The
Company expects the funds provided by these sources to be sufficient to construct,
develop, and operate the Macau Casino, assuming there are no significant delay costs or
construction cost overruns. If Venetian Macau incurs significant cost overruns, it may
need to arrange for additional financing to pay for these costs. If it requires additional
financing, the Company or its affiliates may incur additional bank borrowings or debt or
equity financing. However, no assurance can be given that such funds will be available or
that such funds will be on terms that will be favorable to the Company. In addition, the
construction and development of the Macau Venetian Casino Resort will require significant
additional debt and/or equity financing.

During
2003, Venetian Macau entered into a 25-year land lease agreement with the Macau government
for the land on which the Macau Casino is being constructed. As of December 31, 2003
Venetian Macau was obligated under its leases to make future payments as follows (in
thousands):

|           | 
|---------- | 
|2004       | 
|2005       | 
|2006       | 
|2007       | 
|2008       | 
|Thereafter | 
|           | 
|           | 
|           | 

82

---

LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)Note 13 Commitments and Contingencies
(continued)

Other
Ventures and Commitments

During
2003, the Company entered into three lease termination and asset purchase agreements with
Mall tenants. The first agreement provided for payments by the Company to a tenant of
$800,000 during 2003, with 27 additional annual payments of $400,000, thereafter. The
second agreement provided for an initial deposit of $5.0 million which was paid by the
Company during May 2003 and 15 subsequent monthly payments totaling $10.0 million
beginning January 2004 plus interest at 6% per annum. The lease termination and asset
transfer is expected to be completed during April 2004. The subsequent monthly payments
will commence beginning January 2004. The third agreement and asset purchase agreement
provided for an initial payment of $500,000 during 2003 and subsequent quarterly payments
of $62,500 for ten years. In each case, the Company has obtained title to leasehold
improvements and other fixed assets, which were originally purchased by the Mall tenants,
and which have been recorded at estimated fair market value, which approximated the
discounted present value of the Companys obligation to the former tenants. The
Company is negotiating with other potential tenants for the spaces to be vacated under the
above-described agreements.

The
Company entered into a joint venture to develop a new restaurant in the Casino Resort and
invested $7.4 million of capital into the joint venture, which amount includes $2.0
million of tenant allowances. The investment was funded during the fourth quarter of 2003
and the first quarter of 2004 through available cash flow provided by operating activities
of the Casino Resort. As of December 31, 2003 the joint venture had no operating
activities.

Note 14  Minimum
Lease Income

The
Company has entered into a number of operating leases in relation to the New Mall
Subsidiary and various retail and food and beverage outlets in the Casino Resort, which
range in length from 5 to 20 years. The future minimum lease income under these leases (of
which approximately 90% is attributable to the New Mall Subsidiary) consisted of the
following at December 31, 2003 (in thousands):

|           | 
|---------- | 
|2004       | 
|2005       | 
|2006       | 
|2007       | 
|2008       | 
|Thereafter | 
|           | 
|Total      | 
|           | 

Most
of the leases include provisions for reimbursements of other charges including real estate
taxes, utilities and other operating costs. Total reimbursements amounted to $11.5
million, $11.8 million and $11.4 million in 2003, 2002 and 2001, respectively.

A
predecessor to the New Mall Subsidiary has entered into an agreement with Forest City
Enterprises (the Mall Manager), a subsidiary of Forest City Ratner
Enterprises, a leading developer and manager of retail and commercial real estate
developments, whereby the Mall Manager manages the Mall and supervises and assists in the
creation of an advertising and promotional program and a marketing plan for the Mall. The
Mall Manager is also responsible for, among other things, preparation of a detailed plan
for the routine operation of the Mall, collection and deposit procedures for rents and
other tenant charges, supervision of maintenance and repairs and, on an annual basis,
preparation of a detailed budget (including any anticipated extraordinary expenses and
capital expenditures) for the Mall. The term of the management contract is five years from
June 19, 1999, the date the Mall opened to the public. The Mall Manager receives a
management fee of 2% of all gross rents received from the operation of the Mall with a
minimum fee of $600,000 per year. For the years ended December 31, 2003, 2002 and 2001,
management fees paid to the Mall Manager were $600,000, $525,000 and $450,000,
respectively.

83

---

LAS VEGAS SANDS,
INC.Notes to Financial Statements (continued) Note 15  Condensed Financial
Information

LVSI
and Venetian are co-obligors of the Mortgage Notes and the indebtedness under the Senior
Secured Credit Facility and are jointly and severally liable for such indebtedness.
Venetian, Mall Intermediate, Mall Construction, Lido Intermediate, Venetian Venture,
Venetian Athens, Venetian Marketing and Venetian Operating (collectively, the
Subsidiary Guarantors) are subsidiaries of LVSI, all of the capital stock of
which is owned by LVSI and Venetian. The Subsidiary Guarantors have jointly and severally
guaranteed (and Venetian is a co-obligors of) such debt on a full and unconditional basis.
The Mall is owned by the Mall II Subsidiary, a non-guarantor subsidiary which is the
borrower under the Secured Mall Facility.

Separate
financial statements and other disclosures concerning each of Venetian and the Subsidiary
Guarantors are not presented below because management believes that they are not material
to investors. In accordance with Rule 3-10 of Regulation S-X of the Securities and
Exchange commission, condensed consolidating financial information of LVSI, Venetian, the
Subsidiary Guarantors and the non-guarantor subsidiaries on a combined basis as of
December 31, 2003 and December 31, 2002, and for each of the three years in for the period
ended December 31, 2003, is as follows (in thousands):

84

---

# LAS VEGAS SANDS, INC.Notes to Financial
Statements (continued) Note 15 - Summarized Financial
Information (continued)

# CONDENSED BALANCE
SHEETS December 31, 2003

|                                          |  |  | Other | Other Non- | Consolidating/ |  
|----------------------------------------- |  |  | ----- | ---------- | -------------- | -
|
|
|
|Cash and cash equivalents                 |  |  | $     | 73,049     |                | $
|Restricted cash and cash equivalents      |  |  |       |           |                |  
|Intercompany receivable                   |  |  |       |           |                |  
|Accounts receivable, net                  |  |  |       | 28,772     |                |  
|Inventories                               |  |  |       |           |                |  
|Prepaid expenses                          |  |  |       | 687        |                |  
|                                          |  |  |       |            |                |  
|                                          |  | 
|Total current assets                      |  |  |       | 102,508    |                |  
|                                          |  | 
|Property and equipment, net               |  |  |       | 4,687      |                |  
|Investment in subsidiaries                |  |  |       | 1,078,595  |                |  
|Deferred offering costs, net              |  |  |       |           |                |  
|Restricted cash and cash equivalents      |  |  |       |           |                |  
|Other assets, net                         |  |  |       | 3,922      |                |  
|                                          |  |  |       |            |                |  
|                                          |  |  | $     | 1,189,712  |                | $
|                                          |  |  |       |            |                |  
|Accounts payable                          |  |  | $     | 2,076      |                | $
|Construction payables                     |  |  |       |           |                |  
|Construction payables-contested           |  |  |       |           |                |  
|Intercompany payables                     |  |  |       | 16,526     |                |  
|Accrued interest payable                  |  |  |       |           |                |  
|Other accrued liabilities                 |  |  |       | 29,116     |                |  
|Current maturities of long-term debt (1)  |  |  |       | 12,633     |                |  
|                                          |  |  |       |            |                |  
|                                          |  | 
|Total current liabilities                 |  |  |       | 60,351     |                |  
|                                          |  | 
|Other long-term liabilities               |  |  |       |           |                |  
|Long-term debt (1)                        |  |  |       | 1,146,350  |                |  
|                                          |  |  |       |            |                |  
|                                          |  |  |       | 1,206,701  |                |  
|                                          |  |  |       |            |                |  
|Redeemable Preferred Interest in Venetian |  |  |       |           |                |  
|                                          |  |  |       |            |                |  
|Stockholders' equity (deficit)            |  |  |       | (16,989    | )              |  
|                                          |  |  |       |            |                |  
|                                          |  |  | $     | 1,189,712  |                | $
|                                          |  |  |       |            |                |  

(1)    
          As more fully described in Note 8  Long-Term Debt, LVSI and Venetian are
          co-obligors of certain of the Companys indebtedness. Accordingly, such
          indebtedness has been presented as an obligation of both entities in the above
          balance sheets.

85

---

# LAS VEGAS SANDS, INC.Notes to Financial
Statements (continued) Note 15  Summarized
Financial Information (continued)

# CONDENSED BALANCE
SHEETSDecember 31, 2002

|                                          |  | Venetian | Other | Other Non- | Consolidating/ |  
|----------------------------------------- |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Cash and cash equivalents                 |  |          | $     | 46,746     |                | $
|Restricted cash and cash equivalents      |  |          |       |           |                |  
|Intercompany receivable                   |  |          |       | 686        |                |  
|Accounts receivable, net                  |  |          |       | 37,853     |                |  
|Inventories                               |  |          |       |           |                |  
|Prepaid expenses                          |  |          |       | 562        |                |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|Total current assets                      |  |          |       | 85,847     |                |  
|                                          |  |         
|Property and equipment, net               |  |          |       | 4,722      |                |  
|Investment in subsidiaries                |  |          |       | 981,077    |                |  
|Deferred offering costs, net              |  |          |       |           |                |  
|Restricted cash                           |  |          |       |           |                |  
|Other assets, net                         |  |          |       | 4,115      |                |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|                                          |  |          | $     | 1,075,761  |                | $
|                                          |  |          |       |            |                |  
|                                          |  |         
|Accounts payable                          |  |          | $     | 1,655      |                | $
|Construction payables                     |  |          |       |           |                |  
|Construction payables-contested           |  |          |       |           |                |  
|Intercompany payables                     |  |          |       |           |                |  
|Accrued interest payable                  |  |          |       |           |                |  
|Other accrued liabilities                 |  |          |       | 24,739     |                |  
|Current maturities of long-term debt (1)  |  |          |       | 2,500      |                |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|Total current liabilities                 |  |          |       | 28,894     |                |  
|                                          |  |         
|Other long-term liabilities               |  |          |       |           |                |  
|Long-term debt (1)                        |  |          |       | 1,096,250  |                |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|                                          |  |          |       | 1,125,144  |                |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|Redeemable Preferred Interest in Venetian |  |          |       |           |                |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|Stockholders' equity (deficit)            |  |          |       | (49,383    | )              |  
|                                          |  |          |       |            |                |  
|                                          |  |         
|                                          |  |          | $     | 1,075,761  |                | $
|                                          |  |          |       |            |                |  

(1)    
          As more fully described in Note 8  Long-Term Debt, LVSI and Venetian are
          co-obligors of certain of the Companys indebtedness. Accordingly, such
          indebtedness has been presented as an obligation of both entities in the above
          balance sheets.

86

---

# LAS VEGAS SANDS, INC.Notes to Financial
Statements (continued)Note 15  Summarized
Financial Information (continued)

# CONDENSED STATEMENT OF
OPERATIONS For the year ended
December 31, 2003

|                                                                |  | Venetian | Other | Other Non- | Consolidating/ |  
|--------------------------------------------------------------- |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Revenues:                                                       |  |          |       |            |                |  
|Casino                                                          |  |          | $     | 272,804    |                | $
|Rooms                                                           |  |          |       |           |                |  
|Food and beverage                                               |  |          |       |           |                |  
|Casino rental revenues from LVSI                                |  |          |       |           |                |  
|Retail and other                                                |  |          |       | 970        |                |  
|                                                                |  |          |       |            |                |  
|Total revenues                                                  |  |          |       | 273,774    |                |  
|Less promotional allowances                                     |  |          |       |           |                |  
|                                                                |  |          |       |            |                |  
|Net revenues                                                    |  |          |       | 273,774    |                |  
|                                                                |  |          |       |            |                |  
|                                                                |  |         
|Operating expenses:                                             |  |          |       |            |                |  
|Casino                                                          |  |          |       | 253,237    |                |  
|Rooms                                                           |  |          |       |           |                |  
|Food and beverage                                               |  |          |       |           |                |  
|Retail and other                                                |  |          |       |           |                |  
|Provision for doubtful accounts                                 |  |          |       | 7,724      |                |  
|General and administrative                                      |  |          |       | 4,499      |                |  
|Corporate expense                                               |  |          |       | 5,963      |                |  
|Rental expense                                                  |  |          |       | 738        |                |  
|Pre-opening and developmental expense                           |  |          |       |           |                |  
|Depreciation and amortization                                   |  |          |       | 1,905      |                |  
|                                                                |  |          |       |            |                |  
|                                                                |  |          |       | 274,066    |                |  
|                                                                |  |          |       |            |                |  
|Operating income (loss)                                         |  |          |       | (292       | )              |  
|                                                                |  |          |       |            |                |  
|Other income (expense):                                         |  |          |       |            |                |  
|Interest income                                                 |  |          |       | 478        |                |  
|Interest expense, net of amounts capitalized                    |  |          |       | (53        | )              |  
|Other income (expense)                                          |  |          |       |           |                |  
|Income from equity investment in Grand Canal Shops II           |  |          |       | 347        |                |  
|Income (loss) from equity investment in VCR and    subsidiaries |  |          |       | 63,172     |                |  
|                                                                |  |          |       |            |                |  
|                                                                |  |         
|Income (loss) before preferred return                           |  |          |       | 63,652     |                |  
|                                                                |  |         
|Preferred return on Redeemable Preferred                        |  |          |       |            |                |  
|Interest in Venetian Casino Resort, LLC                         |  |          |       | (26,217    | )              |  
|                                                                |  |          |       |            |                |  
|                                                                |  |         
|Net income (loss)                                               |  |          | $     | 37,435     |                | $
|                                                                |  |          |       |            |                |  

87

---

# LAS VEGAS SANDS,
INC.Notes to Financial Statements (continued) Note 15  Summarized Financial
Information (continued)

# CONDENSED STATEMENT OF
OPERATIONS For the year ended December 31, 2002

|                                                              |  | Venetian | Other | Other Non- | Consolidating/ |  
|------------------------------------------------------------- |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Revenues:                                                     |  |          |       |            |                |  
|Casino                                                        |  |          | $     | 256,484    |                | $
|Rooms                                                         |  |          |       |           |                |  
|Food and beverage                                             |  |          |       |           |                |  
|Casino rental revenue from LVSI                               |  |          |       |           |                |  
|Retail and other                                              |  |          |       | 1,743      |                |  
|                                                              |  |          |       |            |                |  
|Total revenue                                                 |  |          |       | 258,227    |                |  
|Less promotional allowances                                   |  |          |       |           |                |  
|                                                              |  |          |       |            |                |  
|Net revenues                                                  |  |          |       | 258,227    |                |  
|                                                              |  |          |       |            |                |  
|                                                              |  |         
|Operating expenses:                                           |  |          |       |            |                |  
|Casino                                                        |  |          |       | 232,995    |                |  
|Rooms                                                         |  |          |       |           |                |  
|Food and beverage                                             |  |          |       |           |                |  
|Retail and other                                              |  |          |       |           |                |  
|Provision for doubtful accounts                               |  |          |       | 14,470     |                |  
|General and administrative                                    |  |          |       | 2,553      |                |  
|Corporate expense                                             |  |          |       | 5,895      |                |  
|Rental expense                                                |  |          |       | 924        |                |  
|Pre-opening and developmental expense                         |  |          |       |           |                |  
|Depreciation and amortization                                 |  |          |       | 429        |                |  
|                                                              |  |          |       |            |                |  
|                                                              |  |          |       | 257,266    |                |  
|                                                              |  |          |       |            |                |  
|                                                              |  |         
|Operating income (loss)                                       |  |          |       | 961        |                |  
|                                                              |  |          |       |            |                |  
|Other income (expense):                                       |  |          |       |            |                |  
|Interest income                                               |  |          |       | 460        |                |  
|Interest expense, net of amounts capitalized                  |  |          |       | (17        | )              |  
|Interest expense on indebtedness to Principal     Stockholder |  |          |       |           |                |  
|Other income                                                  |  |          |       |           |                |  
|Loss on early retirement of debt                              |  |          |       |           |                |  
|Loss from equity investment in Grand Canal Shops II           |  |          |       | 161        |                |  
|Loss from equity investment in VCR and subsidiaries           |  |          |       | (16,624    | )              |  
|                                                              |  |          |       |            |                |  
|                                                              |  |         
|Income (loss) before preferred return                         |  |          |       | (15,059    | )              |  
|                                                              |  |         
|Preferred return on Redeemable Preferred                      |  |          |       |            |                |  
|Interest in Venetian Casino Resort, LLC                       |  |          |       | (23,333    | )              |  
|                                                              |  |          |       |            |                |  
|                                                              |  |         
|Net income (loss)                                             |  |          | $     | (38,392    | )              | $
|                                                              |  |          |       |            |                |  

88

---

# LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)Note 15  Summarized Financial Information
(continued)

# CONDENSED STATEMENT OF
OPERATIONS For the year ended December 31, 2001

|                                                          |  | Venetian | Other | Other Non- | Consolidating/ |  
|--------------------------------------------------------- |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Revenues:                                                 |  |          |       |            |                |  
|Casino                                                    |  |          | $     | 227,240    |                | $
|Rooms                                                     |  |          |       |           |                |  
|Food and beverage                                         |  |          |       |           |                |  
|Casino rental revenue from LVSI                           |  |          |       |           |                |  
|Retail and other                                          |  |          |       | 1,417      |                |  
|                                                          |  |          |       |            |                |  
|Total revenue                                             |  |          |       | 228,657    |                |  
|Less promotional allowances                               |  |          |       |           |                |  
|                                                          |  |          |       |            |                |  
|Net revenues                                              |  |          |       | 228,657    |                |  
|                                                          |  |          |       |            |                |  
|                                                          |  |         
|Operating expenses:                                       |  |          |       |            |                |  
|Casino                                                    |  |          |       | 207,587    |                |  
|Rooms                                                     |  |          |       |           |                |  
|Food and beverage                                         |  |          |       |           |                |  
|Retail and other                                          |  |          |       |           |                |  
|Provision for doubtful accounts                           |  |          |       | 18,200     |                |  
|General and administrative                                |  |          |       | 2,711      |                |  
|Corporate expense                                         |  |          |       | 2,459      |                |  
|Rental expense                                            |  |          |       | 914        |                |  
|Pre-opening and developmental expense                     |  |          |       |           |                |  
|Depreciation and amortization                             |  |          |       |           |                |  
|                                                          |  |          |       |            |                |  
|                                                          |  |          |       | 231,871    |                |  
|                                                          |  |          |       |            |                |  
|                                                          |  |         
|Operating income (loss)                                   |  |          |       | (3,214     | )              |  
|                                                          |  |          |       |            |                |  
|Other income (expense):                                   |  |          |       |            |                |  
|Interest income                                           |  |          |       | 643        |                |  
|Interest expense, net of amounts capitalized              |  |          |       |           |                |  
|Interest expense on indebtedness to Principal Stockholder |  |          |       |           |                |  
|Other income                                              |  |          |       |           |                |  
|Loss on early retirement of debt                          |  |          |       |           |                |  
|Loss from equity investment in Grand Canal Shops II       |  |          |       | (35        | )              |  
|Loss from equity investment in VCR and subsidiaries       |  |          |       | (795       | )              |  
|                                                          |  |          |       |            |                |  
|                                                          |  |         
|Income (loss) before preferred return                     |  |          |       | (3,401     | )              |  
|                                                          |  |         
|Preferred return on Redeemable Preferred                  |  |          |       |            |                |  
|Interest in Venetian Casino Resort, LLC                   |  |          |       | (20,766    | )              |  
|                                                          |  |          |       |            |                |  
|                                                          |  |         
|Net income (loss)                                         |  |          | $     | (24,167    | )              | $
|                                                          |  |          |       |            |                |  

89

---

# LAS VEGAS SANDS, INC. Notes to Financial
Statements (continued) Note 15  Summarized
Financial Information (continued)

# CONDENSED STATEMENTS
OF CASH FLOWS  For the year ended December 31, 2003

|                                                                |  | Venetian | Other | Other Non- | Consolidating/ |  
|--------------------------------------------------------------- |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Net cash provided by (used in) operating activities             |  |          | $     | 11,804     |                | $
|                                                                |  |          |       |            |                |  
|                                                                |  |         
|Cash flows from investing activities:                           |  |          |       |            |                |  
|(Increase) decrease in restricted cash                          |  |          |       |           |                |  
|Notes receivable from stockholders                              |  |          |       | (843       | )              |  
|Capital expenditures                                            |  |          |       | (1,870     | )              |  
|                                                                |  |          |       |            |                |  
|Net cash used in investing activities                           |  |          |       | (2,713     | )              |  
|                                                                |  |          |       |            |                |  
|                                                                |  |         
|Cash flows from financing activities:                           |  |          |       |            |                |  
|Repayments on senior secured credit facility-term A             |  |          |       |           |                |  
|Proceeds from senior secured credit facility-term A             |  |          |       |           |                |  
|Repayments on senior secured credit facility-term B             |  |          |       |           |                |  
|Proceeds from Venetian Macau senior secured notes-    tranche A |  |          |       |           |                |  
|Proceeds from Venetian Macau senior secured notes-    tranche B |  |          |       |           |                |  
|Proceeds from Venetian Intermediate credit facility             |  |          |       |           |                |  
|Repayments on bank credit facility-revolver                     |  |          |       |           |                |  
|Proceeds from bank credit facility-revolver                     |  |          |       |           |                |  
|Repayments on FF&E credit facility                              |  |          |       |           |                |  
|Proceeds from FF&E credit facility                              |  |          |       |           |                |  
|Payments of deferred offering costs                             |  |          |       |           |                |  
|Net change in intercompany accounts                             |  |          |       | 17,212     |                |  
|                                                                |  |          |       |            |                |  
|Net cash provided by financing activities                       |  |          |       | 17,212     |                |  
|                                                                |  |          |       |            |                |  
|Increase (decrease) in cash and cash equivalents                |  |          |       | 26,303     |                |  
|Cash and cash equivalents at beginning of year                  |  |          |       | 46,746     |                |  
|                                                                |  |          |       |            |                |  
|                                                                |  |         
|Cash and cash equivalents at end of year                        |  |          | $     | 73,049     |                | $
|                                                                |  |          |       |            |                |  

90

---

# LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 15  Summarized Financial Information
(continued)

# CONDENSED
STATEMENTS OF CASH FLOWSFor the year ended December 31, 2002

|                                                                             |  | Venetian | Other | Other Non- | Consolidating/ |  
|---------------------------------------------------------------------------- |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Net cash provided by (used in) operating activities:                         |  |          | $     | 3,293      |                | $
|                                                                             |  |          |       |            |                |  
|Cash flows from investing activities:                                        |  |          |       |            |                |  
|Increase in restricted cash                                                  |  |          |       |           |                |  
|Capital expenditures                                                         |  |          |       |           |                |  
|Dividend from Grand Canal Shops II LLC                                       |  |          |       |           |                |  
|Capital contributions to subsidiaries                                        |  |          |       |           |                |  
|                                                                             |  |          |       |            |                |  
|Net cash provided by (used in) investing activities                          |  |          |       |           |                |  
|                                                                             |  |          |       |            |                |  
|Cash flows from financing activities:                                        |  |          |       |            |                |  
|Dividend to Venetian Casino Resort LLC                                       |  |          |       |           |                |  
|Capital contribution from Venetian Casino Resort LLC                         |  |          |       |           |                |  
|Repayments on 12 1⁄4% mortgage notes                                           |  |          |       |           |                |  
|Proceeds from 11% mortgage notes                                             |  |          |       |           |                |  
|Repayments on senior subordinated notes                                      |  |          |       |           |                |  
|Proceeds from secured mall facility                                          |  |          |       |           |                |  
|Repayments on mall-tranche A take-out loan                                   |  |          |       |           |                |  
|Repayments on mall-tranche B take-out loan                                   |  |          |       |           |                |  
|Repayments on completion guaranty loan                                       |  |          |       |           |                |  
|Repayments on senior secured credit facility-term B                          |  |          |       |           |                |  
|Proceeds from senior secured credit facility-term B                          |  |          |       |           |                |  
|Repayments on bank credit facility-term                                      |  |          |       |           |                |  
|Repayments on bank credit facility-revolver                                  |  |          |       |           |                |  
|Proceeds from bank credit facility-revolver                                  |  |          |       |           |                |  
|Repayments on FF&E credit facility                                           |  |          |       |           |                |  
|Repayments on Phase II Subsidiary credit facility                            |  |          |       |           |                |  
|Repayments on Phase II Subsidiary unsecured bank loan                        |  |          |       |           |                |  
|Repurchase premiums incurred in connection with     refinancing transactions |  |          |       |           |                |  
|Payments of deferred offering costs                                          |  |          |       |           |                |  
|Net change in intercompany accounts                                          |  |          |       | 6,086      |                |  
|                                                                             |  |          |       |            |                |  
|Net cash provided by (used in) financing activities                          |  |          |       | 6,086      |                |  
|                                                                             |  |          |       |            |                |  
|Increase (decrease) in cash and cash equivalents                             |  |          |       | 9,379      |                |  
|Cash and cash equivalents at beginning of year                               |  |          |       | 37,367     |                |  
|                                                                             |  |          |       |            |                |  
|Cash and cash equivalents at end of year                                     |  |          | $     | 46,746     |                | $
|                                                                             |  |          |       |            |                |  

91

---

# LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued) Note 15  Summarized Financial Information
(continued)

# CONDENSED STATEMENTS
OF CASH FLOWSFor the year ended December 31, 2001

|                                                       |  | Venetian | Other | Other Non- | Consolidating/ |  
|------------------------------------------------------ |  | -------- | ----- | ---------- | -------------- | -
|
|
|
|Net cash provided by operating activities              |  |          | $     | 2,444      |                | $
|                                                       |  |          |       |            |                |  
|                                                       |  |         
|Cash flows from investing activities:                  |  |          |       |            |                |  
|Increase in restricted cash                            |  |          |       |           |                |  
|Capital expenditures                                   |  |          |       |           |                |  
|                                                       |  |          |       |            |                |  
|Net cash used in investing activities                  |  |          |       |           |                |  
|                                                       |  |          |       |            |                |  
|Cash flows from financing activities:                  |  |          |       |            |                |  
|Repayments on bank credit facility-tranche A term loan |  |          |       |           |                |  
|Repayments on bank credit facility-tranche B term loan |  |          |       |           |                |  
|Repayments on bank credit facility-tranche C term loan |  |          |       |           |                |  
|Proceeds from bank credit facility-tranche C term loan |  |          |       |           |                |  
|Repayments on bank credit term facility                |  |          |       |           |                |  
|Proceeds from bank credit term facility                |  |          |       |           |                |  
|Repayments on bank credit facility-revolver            |  |          |       |           |                |  
|Proceeds from bank credit facility-revolver            |  |          |       |           |                |  
|Repayments on FF&E credit facility                     |  |          |       |           |                |  
|Proceeds from Phase II Subsidiary credit facility      |  |          |       |           |                |  
|Proceeds from Phase II Subsidiary unsecured bank loan  |  |          |       |           |                |  
|Payments of deferred offering costs                    |  |          |       |           |                |  
|Net change in intercompany accounts                    |  |          |       | (409       | )              |  
|                                                       |  |          |       |            |                |  
|Net cash provided by (used in) financing activities    |  |          |       | (409       | )              |  
|                                                       |  |          |       |            |                |  
|Increase in cash and cash equivalents                  |  |          |       | 2,035      |                |  
|Cash and cash equivalents at beginning of year         |  |          |       | 35,332     |                |  
|                                                       |  |          |       |            |                |  
|                                                       |  |         
|Cash and cash equivalents at end of year               |  |          | $     | 37,367     |                | $
|                                                       |  |          |       |            |                |  

92

---

# Report of Independent
Auditors on Financial Statement Schedule

To the Board of
Directors of Las Vegas Sands, Inc.

Our
audits of the consolidated financial statements referred to in our report dated February
3, 2004 appearing in this Annual Report on Form 10-K also included an audit of the
financial statement schedule listed in Item 15 (a)(2) of this Form 10-K. In our opinion,
this financial statement schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related consolidated
financial statements.

PricewaterhouseCoopers
LLP

Las Vegas, NevadaJanuary
30, 2004

93

---

# LAS VEGAS SANDS, INC.Notes
to Financial Statements (continued)Financial Statement Schedule

# SCHEDULE II - VALUATION
AND QUALIFYING ACCOUNTS(In thousands)

|                                               |  | Additions | Deductions |       
|---------------------------------------------- |  | --------- | ---------- | ------
|
|Allowance for doubtful accounts and discounts: |  |           |            |       
|Year ended December 31:                        |  |           |            |       
|                                               |  |          
|2001                                           |  |           | $          | 22,913
|                                               |  |           |            |       
|2002                                           |  |           | $          | 23,993
|                                               |  |           |            |       
|2003                                           |  |           | $          | 26,045
|                                               |  |           |            |       

94

---

ITEM 9.CHANGES IN
AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS
AND PROCEDURES

Controls and
Procedures

| | a)        Evaluation
of Disclosure Controls and Procedures. Disclosure controls and procedures are designed to
provide reasonable assurance that information required to be disclosed in the reports
that the Company files or submits, is recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange Commissions rules
and forms. The Companys Chief Executive Officer and its Vice President-Finance (its
principal financial officer) have evaluated the disclosure controls and procedures (as
defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) of the
Company as of December 31, 2003 and have concluded that           they are effective
within the reasonable assurance threshold described above.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b)        Changes
in Internal Control over Financial Reporting. There were no changes in           our
internal control over financial reporting that occurred during the fourth
          quarter covered by this report that have materially affected, or are reasonably
          likely to materially affect, our internal control over financial reporting.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

It
should be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the system are
met. In addition, the design of any control system is based in part upon certain
assumptions about the likelihood of future events. Because of these and other inherent
limitations of control systems, there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of how
remote.

95

---

# PART III

ITEM 10. DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT

LVSI
has a Board of Directors comprised of two persons. One director is the Principal
Stockholder, who has two votes for all matters before the Board of Directors. In the event
that LVSI increases the number of directors comprising the Board of Directors, the number
of votes which the Principal Stockholder has will be increased so that the Principal
Stockholder will have one more vote than the number of votes of all of the other directors
aggregated. The other director has one vote for all matters before the Board of Directors.
The other director is required to file an application for a gaming license with the Nevada
Gaming Authorities.

The
table below sets forth the executive officers and the directors of the Company.

|Name                  | Age | Position
|--------------------- | --- | --------
|Sheldon G. Adelson    |     | 70      
|Robert F. List        |     | 67      
|William P. Weidner    |     | 58      
|Bradley H. Stone      |     | 49      
|Robert G. Goldstein   |     | 48      
|Harry D. Miltenberger |     | 60      

Sheldon
G. Adelson has been the Chairman of the Board, Chief Executive Officer and a director of
the Company since April 1988 when the Company was formed to own and operate the former
Sands Hotel and Casino. Mr. Adelson has extensive experience in the convention, trade
show, tour and travel businesses. Mr. Adelson also has investments in other business
enterprises. He has been President and Chairman of Interface since the mid-1970s and
Chairman of Interface Group-Massachusetts Inc. since 1990. Mr. Adelson created and
developed the COMDEX Trade Shows, including the COMDEX/Fall Trade Show, the worlds
largest computer show, all of which were sold to Softbank Corporation in April 1995.

Robert
F. List was elected as Director of LVSI in April 2000. Mr. List is the Chief Executive
Officer of the Robert List Company, a Las Vegas-based consulting firm, and serves on
Boards of Directors of other companies. Mr. List served as Executive Vice President,
Corporate Counsel and Member of the Board of Directors of Boomtown, Inc. from 1992 to
1999. Mr. List has served in various elected positions in the State of Nevada including
Attorney General from 1970 to 1978 and Governor from 1978 to 1982.

William
P. Weidner has been the President and Chief Operating Officer of the Company since
December 1995. From 1985 to 1995, Mr. Weidner was President and Chief Operating Officer
and served on the board of Pratt Hotel Corporation. From February 1991 to December 1995,
Mr. Weidner was also the President of Pratts Hollywood Casino-Aurora subsidiary and
from June 1992 until December 1995, he served on the board of the Hollywood Casino
Corporation. Since September 1993, Mr. Weidner has served on the Board of Directors of
Shorewood Packaging Corporation. Mr. Weidner directed the opening of Hollywood Casino, one
of Chicagos first riverboat casino hotels, New York Citys Maxims de
Paris (now the Peninsula), and hotels in Orlando and Palm Springs.

Bradley
H. Stone has been Executive Vice President of the Company since December 1995. From June
1984 through December 1995, Mr. Stone was President and Chief Operating Officer of the
Sands Hotel in Atlantic City. Mr. Stone also served as an Executive Vice President of the
parent Pratt Hotel Corporation from June 1986 through December 1995.

Robert
G. Goldstein has been Senior Vice President of the Company since December 1995. From 1992
until joining the Company in December 1995, Mr. Goldstein was the Executive Vice President
of Marketing at the Sands in Atlantic City as well as an Executive Vice President of the
parent Pratt Hotel Corporation.

96

---

Harry
D. Miltenberger is a certified public accountant and has been Vice President-Finance of
the Company since February 1997.

The
Company currently has a general code of ethics that applies to all of its officers,
directors and employees, including its Chief Executive Officer and principal financial
officer, principal accounting officer or controller, or persons performing similar
functions. The Companys current code of ethics however does not include in it the
elements of financial reporting and disclosure that are set forth under Item 406 of
Regulation S-K under the Securities Exchange Act of 1934. Accordingly, the Company intends
to amend its code of ethics in the near future to include these elements.

The
Companys Board of Directors acts as audit committee. Because the Company has no
publicly traded equity securities, the Company has determined not to have an audit
committee financial expert on its audit committee. However, the Company believes
that the members of the audit committee have the requisite financial background,
experience, and knowledge of the Company and its affairs to adequately carry out their
duties.

There
have been no material changes in the procedures by which security holders may recommend
nominees to the Companys Board of Directors.

ITEM 11. EXECUTIVE
COMPENSATION

The
following table sets forth certain information concerning the compensation for the last
three fiscal years of those persons who were, at December 31, 2003, the Chief Executive
Officer and the four highest paid executive officers of LVSI (the Named Executive
Officers), which is the managing member of Venetian. Under the limited liability
company agreement of Venetian, LVSI is entitled to be reimbursed for all expenses incurred
in connection with its activities as the managing member of Venetian, including all
employee compensation costs.

|                                |  | Annual Compensation | Long TermCompensationAwards |           | 
|------------------------------- |  | ------------------- | --------------------------- | --------- | 
|
|Sheldon G. Adelson              |  | 2003                |                             | 1,500,000 | 
|Chairman of the Board and Chief |  | 2002                |                             | 3,000,000 | 
|Executive Officer               |  | 2001                |                             |          | 
|                                | 
|William P. Weidner              |  | 2003                |                             | 1,187,648 | 
|President and Chief Operating   |  | 2002                |                             | 1,139,600 | 
|Officer                         |  | 2001                |                             | 1,038,462 | 
|                                | 
|Bradley H. Stone                |  | 2003                |                             | 950,118   | 
|Executive Vice President        |  | 2002                |                             | 911,680   | 
|                                |  | 2001                |                             | 830,769   | 
|                                | 
|Robert G. Goldstein             |  | 2003                |                             | 890,736   | 
|Senior Vice President           |  | 2002                |                             | 854,700   | 
|                                |  | 2001                |                             | 778,846   | 
|                                | 
|David Friedman(2)               |  | 2003                |                             | 500,000   | 
|Assistant to Chairman of the    |  | 2002                |                             | 496,406   | 
|Board and Secretary             |  | 2001                |                             | 415,385   | 

---

|(1) | Represents
Group Life Insurance, Interest, Corporate Air.
|--- | ---------------------------------------------------------

|(2) | On
March 1, 2004, Mr. Friedman resigned from his position as Assistant to
               Chairman of the Board and Secretary of the Company.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------

97

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Employment Agreements

William
P. Weidner, Bradley H. Stone and Robert G. Goldstein each have entered into employment
agreements with the Company through December 31, 2005, with automatic one-year extension
rights. Pursuant to the employment agreements, these executive officers have such powers,
duties and responsibilities as are generally associated with their offices, as may be
modified or assigned by the Companys Chairman of the Board of Directors (or the
Companys President, in the case of Mr. Stone) and subject to the supervision of the
Board of Directors (and the President, in the case of Mr. Stone). During the terms of
their employment, these officers may not engage in any other business or professional
pursuit unless consented to by the Company in writing.

Mr. Weidner,
Mr. Stone and Mr. Goldstein currently receive annual base salaries of
          $1,2337,350, $989,880 and $928,031 and annual bonuses based upon certain
          performance based criteria. Their base salaries are increased annually by 4%.
          These officers are also entitled to receive other employee benefits.

In
the event of a termination of employment for cause, voluntary termination by the employee
or similar circumstances set forth in the employment agreements, all salary and benefits
immediately cease (subject to any requirements of law) and shares of stock held by these
employees may be redeemed pursuant to the terms of the stock option plan described below.
In the event of a termination caused by breach of the employment agreements by the
Company, or similar circumstances set forth in the agreements, the Company is obligated to
pay to the executive officer his salary for the rest of the term of his employment
agreement. If the officer becomes employed elsewhere, the Company is obligated to pay the
difference, if any, in the income earned in such other employment and the salary payable
under his employment agreement with the Company.

If
a company breach termination, constructive termination or involuntary termination (each as
defined in the employment agreements) had occurred with respect to Mr. Weidner, Mr. Stone
and Mr. Goldstein on December 31, 2003, the amounts that Mr. Weidner, Mr. Stone and Mr.
Goldstein would have been entitled to receive pursuant to their employment agreements as
continued salary through December 31, 2005 would have been approximately $2,524,194,
$2,019,355 and $1,893,146. In the case of a death termination, the Company would pay
salary through the date of death, and all shares held by the officer would be redeemed by
the Company for a price payable by the Company to the officers estate equal to the
fair market value of such shares, reduced by any amounts still owed under the terms of the
secured loan from the Principal Stockholder to such officer for the stock option exercise
price, payable in 36 equal consecutive monthly installments with interest at the
applicable federal rate. See Item 13  Certain Relationships and Related Party
Transactions  Stock Option Loans. In the case of a disability termination, the
Company will continue salary, less any applicable disability insurance payments, for a
period six months following the date of termination and all options and shares will be
treated in the same way as upon a death termination. The employment agreements may not be
amended, changed or modified except by a written document signed by each of the parties.

Las Vegas Sands, Inc.
1997 Fixed Stock Option Plan

The
Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan (the Plan) provides for
75,000 shares of common stock of LVSI to be reserved for issuance by the Company to
officers and other key employees or consultants of the Company or any of its Affiliates
or Subsidiaries (each as defined in the Plan) pursuant to options granted under the Plan.
The issuance of shares of the Companys common stock in connection with the exercise
of these options is subject to approval by the Nevada Gaming Authorities. The purpose of
the Plan is to promote the interest of the Company and its Principal Stockholder by (i)
attracting and retaining exceptional officers and other key employees and consultants to
the Company and its Affiliates and Subsidiaries and (ii) enabling such individuals to
participate in the long-term growth and financial success of the Company. The Board of
Directors has the authority to determine the participants to whom options are granted,
the number of shares covered by each option or any repurchase or other disposition of
shares thereunder, the exercise price therefore, and the conditions and limitations
applicable to the exercise of the option. The Board of Directors is authorized to make
adjustments in

98

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the
terms and conditions of, and the criteria included in, options, in the case of certain
unusual or nonrecurring events, whenever the Board of Directors determines that such
adjustments are appropriate in order to prevent dilution or enlargement of benefits or
potential benefits under the Plan. Options granted under the Plan expire on the earlier
of (i) a specified number of years from the date of grant, (ii) the date three days prior
to a Change in Control Acceleration Event (as defined in the Plan) and (iii) the date
three days prior to a Public Offering Acceleration Event (as defined in the Plan). In the
event of any Acceleration Event (as defined in the Plan) any outstanding options then
held by the participants which are unexercisable or otherwise unvested, shall
automatically become fully vested and shall be exercisable pursuant to the applicable
award agreement. The Plan provides that the Principal Stockholder may, at any time,
assume the Plan or certain obligations under the Plan, in which case the Principal
Stockholder will be the administrator of the Plan, the issuer of the options, and will
have all the rights, powers, and responsibilities granted to the Company or the Board of
Directors under the Plan with respect to such assumed obligations.

The
Board of Directors may amend, alter, suspend, discontinue or terminate the Plan or any
portion thereof at any time, provided that any such action shall not be taken without
shareholder approval if such approval is necessary to comply with any tax or regulatory
requirement applicable to the Plan and provided that any such amendment, alteration,
suspension, discontinuance or termination that would impair the rights of any holder of an
option already granted shall not be effective without the holders consent.

The
Principal Stockholder has assumed the obligations of the Company under the Plan and grants
options to acquire shares of common stock of the Company from time to time under the Plan.
See Item 13  Certain Relationships and Related Transactions  Stock
Option Loans. Shares issued to the other Named Executive Officers pursuant to the
exercise of an option and held at the time of each such other Named Executive
Officers termination of employment are subject to redemption by the Principal
Stockholder.

Options Granted In
Fiscal 2003

During
2003, options to purchase an additional 2,500 shares of the Companys common stock
were granted by the Principal Shareholder under the stock option plan at the exercise
price of $271 per share. The issuance of shares of the Companys common stock in
connection with the exercise of these options are subject to approval by the Nevada gaming
authorities.

None
of these options were granted to the Named Executive Officers.

No
Named Executive Officer exercised any options in 2003.

99

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ITEM 12.SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Beneficial Ownership

The
following table sets forth certain information as of March 30, 2004 with respect to the
beneficial ownership of the common stock of LVSI by (i) each person who, to the knowledge
of LVSI, beneficially owns more than 5% of its outstanding common stock, (ii) the
directors of LVSI, (iii) all Named Executive Officers and (iv) all executive officers and
directors of LVSI as a group.

|                                         |  | Percentage of
|---------------------------------------- |  | -------------
|
|
|Sheldon G. Adelson                       |  | 945,100      
|Robert F. List                           |  |             
|William P. Weidner                       |  | 19,960       
|Bradley H. Stone                         |  | 14,970       
|Robert G. Goldstein                      |  | 9,980        
|David Friedman(3)                        |  | 4,990        
|All executive officers and the directors |  |              
|of the Company as a group                |  | 1,000,000    

---

| | * | Less
than 1%
| | - | ------------

| | (1) | The
address of each person named above is c/o the Company, 3355 Las Vegas
               Boulevard South, Room 1A, Las Vegas, NV 89109, other than Mr. List, whose
               address is 3993 Howard Hughes Parkway, Suite 850, Las Vegas, NV 89109.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | This
amount includes 1,000 shares that may be purchased from Sheldon G. Adelson
               upon exercise of options granted by the Principal Stockholder to one of
the                Companys executive officers under the Plan. See Item 11
               Executive Compensation Las Vegas Sands, Inc. 1997 Fixed Stock Option
Plan.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | On
March 1, 2004, Mr. Friedman resigned from his position as Assistant to
               Chairman of the Board and Secretary of the Company. Mr. Friedman is included in this table
only because                he was a Named Executive Officer of the Company in 2003.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
shares of common stock held by the Named Executive Officers (other than the Principal
Stockholder) have been pledged as collateral for loans made by the Principal Stockholder
in connection with the exercise of options by such Named Executive Officers. See
Item 13  Certain Relationships and Related Transactions  Stock Option
Loans.

Stockholders'
Agreement

Messrs. Weidner,
Stone, Goldstein and Friedman (the Named Optionees), the           Principal
Stockholder and the Company are parties to a Stockholders          Agreement (the
Stockholders Agreement). The Stockholders          Agreement
provides that no Named Optionee, nor any of their permitted           transferees who has
agreed to be bound by the terms and conditions of the           Stockholders Agreement
(together with the Named Optionees, the           Additional Stockholders),
will sell, assign, pledge, encumber or           otherwise dispose of any shares of
common stock of the Company, except in           accordance with the provisions of the
Stockholders Agreement. The           Stockholders Agreement provides the
Additional Stockholders with certain           tag-along rights, piggyback registration
rights and preemptive rights.

100

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Equity Participation
Plan Information

The
following table gives information about LVSIs stock option plan as of December 31,
2003.

|                              | (a) | (b)   | (c)
|----------------------------- | --- | ----- | ---
|
|
|
|
|
|
|Equity compensation plans     |     |       |    
|approved by security holders  |     | 2,000 |    
|                              |    
|Equity compensation plans not |     |       |    
|approved by security holder   |     |      |    
|                              |     |       |    
|Total                         |     | 2,000 |    
|                              |     |       |    

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Redeemable Preferred
Interest

Venetian
currently has two members, the Company and Interface Holding which owns all of the capital
stock of Interface. LVSI is the managing member of Venetian and owns 100% of the common
equity interest in Venetian. Interface Holding currently holds the Series B Preferred
Interest. The Series B Preferred Interest are non-voting, not subject to mandatory
redemption or redemption at the option of the holder and have a preferred return of 12%.
Commencing on June 30, 2011, to the extent of the positive capital account of the holders
of the Series B Preferred Interest, there must be a distribution on the Series B Preferred
Interest. Until the indebtedness under the Senior Secured Credit Facility is repaid and
cash payments are permitted under the restricted payment covenants under the Indenture for
the Mortgage Notes, the preferred return on the Series B Preferred Interest will accrue
but will not be paid in cash. Subject to the foregoing, distributions with respect to the
preferred capital of the holders of the Series B Preferred Interest may, at the option of
the Company, be made at any time.

Cooperation Agreement

The
Companys business plan calls for each of the Hotel, the Casino and Congress Center,
the Mall and the Expo Center (and, potentially, the Phase II Resort), though separately
owned, to be part of an integrally related project. In order to establish terms for the
integrated operation of these facilities, Venetian (as owner of the Hotel and its, Casino
and Congress Center), the New Mall Subsidiary, the Phase II Subsidiary and Interface are
parties to the Cooperation Agreement. The Cooperation Agreement sets forth agreements
among the parties regarding, among other things, encroachments, easements, operating
standards, maintenance requirements, insurance requirements, casualty and condemnation,
joint marketing, the sharing of certain facilities and costs relating thereto. The
obligations set forth in the Cooperation Agreement run with the land and so
bind the respective property owners and their successors.

The
Cooperation Agreement contains cross encroachment provisions which permit the Mall to
encroach, to a limited extent, on other portions of the Casino Resort, and which will
permit other portions of the Casino Resort to encroach, to a limited extent, on the Mall.

The
Cooperation Agreement also contains certain covenants respecting the operation of the Expo
Center and the Casino Resort. Such covenants include, for example, (a) a covenant by
Venetian to operate the Hotel and Casino continuously and to use the Hotel and the Casino
exclusively in accordance with standards of first-class Las Vegas Boulevard-style hotels
and casinos; (b) a covenant by the New Mall Subsidiary to operate and to use the Mall
exclusively in accordance with standards of first-class retail and restaurant complexes;
and (c) a covenant by Interface to operate and to use the Expo Center exclusively in
accordance with standards of first-class convention, trade show and exposition centers.
Additionally, with respect to the joint marketing of the Casino Resort and the Expo
Center, the Cooperation Agreement provides that until December 31, 2010, Interface (upon
request from the owner of the Hotel and Casino) will use commercially reasonable efforts
to have the Hotel designated as the headquarters hotel for trade show and
convention events at the Expo Center, and the owner of the Hotel and Casino will use
commercially reasonable efforts to promote the use and occupancy of the Expo Center. It
should be noted that trade show and convention promoters will be under no obligation to
designate the Hotel as the headquarters hotel for their events.

101

---

The
Cooperation Agreement also requires each of the owners of each component of the Casino
Resort and the owner of the Expo Center, to maintain certain minimum types and levels of
insurance, including property damage, general liability and business interruption
insurance. See Item 1  Business  Agreements Relating to the Casino
Resort  Cooperation Agreement.

Administrative
Services Agreement

Pursuant
to a certain services agreement (the Services Sharing Agreement) among LVSI,
certain its subsidiaries and Interface Holding (collectively, the
Participants), the Participants have agreed to share ratably in the costs of,
and under certain circumstances provide to one another, shared services, including legal
services, accounting services, insurance administration, benefits administration, travel
services and such other services as each party may request of the other. In addition,
under the Services Sharing Agreement, the Participants have agreed to share ratably the
costs of any shared office space. The Company utilizes a Gulfstream III aircraft, which is
operated by an affiliate of the Principal Stockholder. The aircraft is used primarily for
the benefit of the Companys executive officers, including the Principal Stockholder.
Charge-backs to the Company in connection with this use are based on the actual costs to
operate the aircraft allocated in accordance with the purpose for which the aircraft is
used. Total payments made by the Company to Interface and its affiliates pursuant to the
Services Sharing Agreement were $7.4 million in 2003.

Temporary Lease

On
November 1, 1996, LVSI and Interface entered into a lease agreement whereby LVSI agreed to
lease approximately 5,000 square feet in the Expo Center to be used as its temporary
executive offices during the construction of the Casino Resort. Management believes that
the lease agreement, which provides for monthly rent of $5,000 to be paid by LVSI to
Interface, is at least as favorable as the Company could have obtained from an independent
third party. The initial term of the lease agreement expired on November 1, 1998, but LVSI
and Interface have extended this term for a period of 5 years and 8 months, subject to
additional extension for two consecutive terms of 1 year each. Total payments made by LVSI
to Interface pursuant to the lease agreement in 2003 totaled $20,000. As of May 1, 2003,
this lease was terminated.

Audio Visual Services

IGN
provides audio visual services, telecommunications, electrical, janitorial and other
related services to group customers of the Casino Resort. These services are provided
pursuant to a contract that provides for an equal sharing of revenues after direct
operating expenses. The Company received $2.7 million pursuant to this contract during
2003.

102

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Possible Conflicts of
Interest

The
common ultimate ownership of the Casino Resort, the Phase II Resort and the Expo Center
may present potential conflicts of interest. For example, management may offer discounts
and other incentives for visitors to stay at the Phase II Resort which might result in a
competitive advantage of the Phase II Resort over the Casino Resort. In addition,
management may choose to allocate certain business opportunities to the Phase II Resort
rather than to the Casino Resort. Although common ownership of both the Casino Resort and
the Phase II Resort often may result in economies, efficiencies and joint business
opportunities for the two resorts in the aggregate, the Casino Resort may, in certain
circumstances, bear the greater burden of the expenses that are shared by both resorts. In
addition, inasmuch as there may be a common management for both the Casino Resort and the
Phase II Resort, managements time may be split between overseeing the operation of
each resort, and management, in certain circumstances, may devote more time to its
ownership and operations responsibilities of the Phase II Resort than those of the Casino
Resort. Finally, because it is expected that the Company will lease and operate the casino
for the Phase II Resort, potential conflicts may arise from the common operation of the
Casino and the Phase II Resort casino, such as the allocation of managements time.
In order to share expenses and provide for efficient management and operations of the
Casino Resort and Phase II Resort and shared facilities, Venetian and the Phase II
Subsidiary entered into the Cooperation Agreement and may in the future enter into
additional cost sharing and easement agreements.

The
common ultimate ownership, and management, of the Casino Resort and the Expo Center also
may result in potential conflicts of interest. The Expo Center and the Congress Center are
potential competitors in the business conference and meetings business. Under the
Cooperation Agreement, Venetian has agreed that it will not conduct, or permit to be
conducted at the Casino Resort, trade shows or expositions of the type generally held at
the Expo Center. The Company will be able to conduct or permit to be conducted at the
meeting and conference space that is a part of the Phase IA Addition, and at the Casino
Resort, tradeshows and expositions of the type generally held at the Expo Center so long
as such space is at most 125,000 square feet and the Company enters into a preferred
reservation system agreement with Interface. Furthermore, marketing practices may be
implemented that are intended to benefit the Expo Center and may have a detrimental effect
on the Casino Resort.

Restaurant Leases

The
Principal Stockholder is a partner in four entities that operate restaurants in the Casino
Resort. Management believes that the terms and conditions of the leases granted by the
Company for such restaurants are no less favorable than those negotiated with independent
third parties. Valentino Las Vegas LLC and Night Market, LLC paid Venetian $1.1 million,
and Postrio Las Vegas LLC and Carnevale Coffee Bar LLC paid the Mall Subsidiary $1.0
million, under those leases in 2003. The Casino Resort purchased the lease interest and
assets of Carnevale Coffee Bar LLC during 2003 for $3.0 million, payable $500,000 during
2003 and $263,000 annually over ten years, beginning in 2004.

Phase IA Lease

Lido
Casino Resort, LLC as landlord, and Venetian, as tenant, entered into a lease pursuant to
which Lido Casino Resort, LLC leased to Venetian a portion of the airspace above the Phase
II Resort for a nominal annual rent. The meeting space component of the land for the site
of the Phase IA Addition is located within this airspace. Venetian owns all improvements
to be made within the portion of the building that will be constructed within this
airspace during the term of the lease. The lease provides that, when and if such airspace
becomes a separate legal and tax parcel, Lido Casino Resort, LLC will be obligated to
transfer fee title in and to this parcel of airspace to Venetian, and the lease will
terminate upon such transfer. The airspace became a separate legal parcel and fee title in
and to this parcel of airspace was transferred to Venetian in August 2002 pursuant to the
terms of the lease. The lease terminated as a result of such transfer.

Equipment Purchases

During
November 1999, the Principal Stockholder purchased idle construction equipment from the
Company (tower cranes) for $2.0 million, the cost basis of the equipment, which was its
estimated fair value at the time of purchase. During 2003, the Company repurchased the
tower cranes for $0.8 million and paid the Principal Stockholder $1.2 million of rent for
the tower cranes for use during the Phase IA Addition construction period.

103

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Stock Option Loans

In
January 2002, the Principal Stockholder made loans to each of the other Named Executive
Officers to enable them to exercise options that they had been granted to purchase common
stock of the Company from the Principal Stockholder. Each loan is evidenced by a full
recourse demand promissory note with interest at the short term annual applicable federal
rate (as defined in Section 7872 of the Internal Revenue Code) determined to be a market
rate at the date of issuance consistent with the financial profile of the borrower, to be
adjusted each January, and compounding annually. Following termination of any of such
Named Executive Officers employment with the Company under certain circumstances,
the interest rate of the loan to that person may change to the Companys weighted
average cost of capital, if greater than the rate in effect at the time of such
termination. Payments of a portion of accrued interest are due each year ten days
following the filing of the individuals income tax return. Payments on the
outstanding principal are payable on demand or following a sale of shares by the Named
Executive Officers in excess of 25% of his holdings. A loan will immediately be due upon
an individual filing for bankruptcy or upon other similar actions. Each note is a full
recourse loan and is collateralized by a pledge of the common stock issued to the Named
Executive Officers. Other than in limited circumstances, the additional such Named
Executive Officers may not dispose of his shares of common stock prior to repayment of his
loan.

Preferred Reservation
System Agreement

The
Company entered into a preferred reservation system agreement with Interface that governs
the booking of exposition and tradeshows in the Phase IA Addition meeting space and in the
Expo Center. The agreement provides the Expo Center with the first opportunity or right of
first refusal to book or host expositions and tradeshows prior to such expositions and
tradeshows being offered to the Phase IA Addition meeting space.

Meeting Services
Agreement

The
Company entered into an agreement for Interface to provide audio-visual,
telecommunications, electrical, janitorial and other related services to group customers
of the Phase IA Addition meeting space. The agreement provides for an equal sharing of
revenues after deduction of all direct operating expenses.

ITEM 14. PRINCIPAL
ACCOUNTANTS FEES AND SERVICES

The
Companys audit committee of the Board of Directors has the following duties related
to our external auditors:

| |  | appoint
and retain,  establish  compensation  for,  evaluate and  terminate  when  appropriate,
 the external              auditors;
| | - | ------------------------------------------------------------------------------------------------------------------------------------

| |  | pre-approve
all audit and permissible non-audit services to be performed by the external auditors and
establish policies and procedures for the engagement of the external auditors to provide
those services; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | consider,
at least annually the independence of the external auditors, including whether the
external auditors performance of permissible non-audit services is compatible with
the external auditors independence.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
following is a summary of fees and services approved by the Companys audit committee
and performed by the Companys external auditors, PricewaterhouseCoopers LLP, for the
years ended December 31, 2003 and 2002:

104

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| | Audit
Fees  The aggregate fees billed for each of the last two fiscal years for
professional services rendered by PricewaterhouseCoopers LLP for the audit of the Companys
annual financial statements included in the Form 10-K and the review of the Companys
interim financial statements included in quarterly reports of Form 10-Q for the periods
ended March 31, June30, and September 30, 2003 and 2002; were:
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                     
| |  | ------------------------------------
| |  | Fiscal Year ended December 31, 2003:
| |  | Fiscal Year ended December 31, 2002:

| | Audit-Related
Fees The aggregate fees billed in each of the last two fiscal years for
audit-related services rendered by PricewaterhouseCoopers LLP including (i) accounting
consultations concerning financial accounting and reporting standards; (ii) services
relating to comfort letters; (iii) consents and assistance in connection with other
filings and public offering documents filed with the Securities and Exchange Commission,
and (iv) other non-statutory attestation services for those years were:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                     
| |  | ------------------------------------
| |  | Fiscal Year ended December 31, 2003:
| |  | Fiscal Year ended December 31 2002: 

| | Tax
Fees The aggregate fees billed in each of the last two fiscal years for
professional services rendered by PricewaterhouseCoopers LLP for tax compliance, tax
advice and tax planning were:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                     
| |  | ------------------------------------
| |  | Fiscal Year ended December 31, 2003:
| |  | Fiscal Year ended December 31, 2002:

| | All
Other Fees The aggregate fees billed in each of the last two fiscal years for
other products and services provided by PricewaterhouseCoopers LLP were:
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |                                     
| |  | ------------------------------------
| |  | Fiscal Year ended December 31, 2003:
| |  | Fiscal Year ended December 31, 2002:

The
audit committee has adopted the following guidelines regarding the engagement of the
Companys independent auditors to perform services for the Company. For audit
services (including audits of the Companys employee benefit plan), the independent
auditors will provide the audit committee with an engagement letter each year prior to
commencement of the audit services outlining the scope of the audit services proposed to
be performed during the fiscal year. If the terms of the engagement letter are agreed to
by the audit committee, the engagement letter will be formally accepted. For tax services,
the independent auditors will provide the audit committee with a separate engagement
letter each year prior to commencement of the year outlining the scope of the tax services
proposed to be performed during the fiscal year. If the terms of the tax engagement letter
are agreed to by the audit committee, the tax engagement letter will be formally accepted.
All other non-audit services will require pre-approval from the Board of Directors on a
case-by-case basis.

105

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# PART IV

ITEM 15.EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

|(a) | Documents
filed as part of the report.
|--- | --------------------------------------

|(1) | List of Financial Statements
      Report of Independent Auditors
      Consolidated Balance Sheets
      Consolidated Statements of Stockholders'Equity
      Consolidated Statements of Cash Flows
      Notes
to Financial Statements
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | List of Financial Statement Schedules
      Report of Independent Auditors on Financial Statement Schedule
      Schedule II - Valuation and Qualifying Accounts
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | List
of Exhibits
|--- | ----------------

|Exhibit No. |  | Description of Document
|----------- |  | -----------------------

|3.1 |  | Amended
 and  Restated  Articles  of  Incorporation  of Las Vegas  Sands,  Inc.  (incorporated
 by                    reference  from Exhibit 3.1 to the Company's  Quarterly  Report on
Form 10-Q for the quarter ended                    June 30, 2002).
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Amended
and Restated By-laws of Las Vegas Sands, Inc.  (incorporated by reference from Exhibit
3.2                    to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.1 |  | Indenture,
 dated as of June 4, 2002,  by and among Las Vegas  Sands,  Inc.  and  Venetian  Casino
                   Resort,  LLC,  as  issuers,  Mall  Intermediate  Holding  Company,
 LLC,  Grand  Canal  Shops Mall                    Construction,  LLC, Lido Intermediate
 Holding Company,  LLC, Venetian Casino Resort Athens,  LLC,                    Venetian
Venture Development,  LLC, Venetian Operating Company,  LLC and Venetian Marketing,  Inc.
                   (as "Subsidiary  Guarantors")  and U.S. Bank National  Association,
 as trustee  (incorporated  by                    reference  from Exhibit 4.1 to the
Company's  Quarterly  Report on Form 10-Q for the quarter ended                    June
30, 2002).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.3 |  | Security
Agreement,  dated as of June 4, 2002, by and among Las Vegas Sands, Inc., Venetian Casino
                   Resort,  LLC, the  Subsidiary  Guarantors  and The Bank of Nova
 Scotia,  as  Intercreditor  Agent                    (incorporated  by reference  from
Exhibit 4.3 to the Company's  Quarterly  Report on Form 10-Q for                    the
quarter ended June 30, 2002).
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.4 |  | Deed
of Trust,  Leasehold Deed of Trust,  Assignment of Rents and Leases,  Security  Agreement
and                    Fixture  Filing,  dated as of June 4, 2002,  made by  Venetian
 Casino  Resort,  LLC and Las Vegas                    Sands,  Inc.,  jointly and
severally as trustor,  to First American Title  Insurance  Company,  as
                   trustee,  for the Mortgage Note Indenture Trustee, as beneficiary
 (incorporated by reference from                    Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.5 |  | Intercreditor
 Agreement,  dated as of June 4, 2002, by and among The Bank of Nova Scotia, as Bank
                   Agent and  Intercreditor  Agent, and U.S. Bank National  Association,
 as Mortgage Notes Indenture                    Trustee  (incorporated  by reference
 from Exhibit 4.5 to the Company's  Quarterly  Report on Form                    10-Q for
the quarter ended June 30, 2002).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.6 |  | Unsecured
 Indemnity  Agreement,  dated as of June 4, 2002, by and among Las Vegas Sands, Inc. and
                   Venetian  Casino Resort,  LLC, to and for the benefit of U.S. Bank
National  Association,  and the                    Indemnified  Parties defined therein
 (incorporated by reference from Exhibit 4.6 to the Company's
                   Quarterly Report on Form 10-Q for the quarter ended June 30, 2002).
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

106

---

|Exhibit No. |  | Description of Document
|----------- |  | -----------------------

|10.1 |  | Bank
Credit  Agreement,  dated as of June 4, 2002,  by and among Las Vegas Sands,  Inc.,
 Venetian                    Casino Resort,  LLC, the Subsidiary  Guarantors,  the
lenders party thereto,  Goldman Sachs Credit                    Partners,  L.P., as joint
lead arranger,  joint bookrunner and syndication  agent, and The Bank of
                   Nova  Scotia,  as joint  lead  arranger,  joint  bookrunner  and
 administrative  agent (the "Bank                    Agreement")  (incorporated  by
reference  from Exhibit 99.1 to the  Company's  report on Form 8-K,
                   dated as of June 18, 2002).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Deed
of Trust,  Assignment of Rents and Leases and Security  Agreement,  dated as of June 4,
2002,                    made by Venetian Casino Resort,  LLC and Las Vegas Sands,  Inc.,
jointly and severally as trustor,                    to First American Title Insurance
Company, as trustee,  for the benefit of The Bank of Nova Scotia                    (as
 administrative  agent),  as beneficiary  (incorporated  by reference from Exhibit 10.2
to the                    Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Subsidiary
 Guaranty,  dated as of June 4, 2002, by the  Subsidiary  Guarantors for the benefit of
                   The Bank of Nova Scotia, as Administrative  Agent  (incorporated by
reference from Exhibit 10.3 to                    the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2002).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Disbursement
 Account  Agreement,  dated as of June 4, 2002,  by and among Las Vegas Sands,  Inc.,
                   Venetian  Casino  Resort,  LLC and The  Bank of Nova  Scotia,  as
 secured  party  and  securities                    intermediary  (incorporated  by
reference from Exhibit 10.4 to the Company's  Quarterly  Report on
                   Form 10-Q for the quarter ended June 30, 2002).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Environmental
 Indemnity  Agreement,  dated as of June 4, 2002, by and among Las Vegas Sands, Inc.
                   and  Venetian  Casino  Resort,  LLC,  to and for the  benefit  of The
 Bank  of  Nova  Scotia,  as                    Administrative  Agent for itself and for
the other lenders under the Bank Agreement  (incorporated                    by
 reference  from Exhibit 10.5 to the  Company's  Quarterly  Report on Form 10-Q for the
quarter                    ended June 30, 2002).
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | Loan
Agreement,  dated as of June 4, 2002, by and between Archon Financial,  L.P., as lender,
 and                    Grand Canal Shops II, LLC (incorporated by reference from Exhibit
10.6 to the Company's  Quarterly                    Report on Form 10-Q for the quarter
ended June 30, 2002).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Amendment
 No. 1 to Loan  Agreement,  dated June 28, 2002, by and between  Goldman Sachs  Mortgage
                   Company (as successor in interest to Archon  Financial,  L.P.),  as
lender,  and Grand Canal Shops                    II, LLC, as borrower  (incorporated  by
reference  from Exhibit  10.7 to the  Company's  Quarterly                    Report on
Form 10-Q for the quarter ended June 30, 2002).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Indemnity
 Agreement,  dated as of August 25, 2000, by and among Las Vegas Sands,  Inc.,  Venetian
                   Casino Resort,  LLC, Grand Canal Shops Mall Subsidiary,  LLC, Grand
Canal Shops Mall Construction,                    LLC,  Grand Canal Shops Mall,  LLC,
 Interface  Group  Holding  Company,  and  American  Insurance
                   Companies  (of which  American  Home  Assurance  Company  is a member
 company)  (incorporated  by                    reference from Exhibit 10.8 to the
Company's  Quarterly  Report on Form 10-Q for the quarter ended                    June
30, 2002).
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.9 |  | Energy
 Services  Agreement,  dated as of November 14, 1997, by and between  Atlantic  Pacific
Las                    Vegas,  LLC and Venetian Casino Resort,  LLC  (incorporated  by
reference from Exhibit 10.3 to the                    Company's Registration Statement on
Form S-4 (File No. 333-42147)).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.10 |  | Energy
 Services  Agreement  Amendment  No. 1, dated as of July 1, 1999,  by and between
 Atlantic                    Pacific Las Vegas,  LLC and Venetian Casino Resort,  LLC
 (incorporated  by reference from Exhibit                    10.4 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1999).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.11 |  | Energy
 Services  Agreement,  dated as of November 14, 1997, by and between  Atlantic  Pacific
Las                    Vegas, LLC and Grand Canal Shops Mall  Construction,  LLC
 (incorporated by reference from Exhibit                    10.4 to the Company's
Registration Statement on Form S-4 (File No. 333-42147)).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.12 |  | Energy
 Services  Agreement  Amendment  No. 1, dated as of July 1, 1999,  by and between
 Atlantic                    Pacific Las Vegas,  LLC and Grand Canal Shops Mall
 Construction,  LLC  (incorporated by reference                    from Exhibit  10.10 to
the Company's  Annual  Report on Form 10-K for the year ended  December 31,
                   1999).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.13 |  | Ground
Lease,  dated November 14, 1997,  between Venetian Casino Resort,  LLC and Atlantic
Pacific                    Las Vegas,  LLC  (incorporated  by reference  from  Exhibit
 10.10 to the  Company's  Registration                    Statement on Form S-4 (File No.
333-42147)).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

107

---

|Exhibit No. |  | Description of Document
|----------- |  | -----------------------

|10.14 |  | Construction
 Management Agreement,  dated as of February 15, 1997, between Las Vegas Sands, Inc.,
                   as owner,  and Lehrer  McGovern  Bovis,  Inc  (incorporated  by
reference from Exhibit 10.5 to the                    Company's Registration Statement on
Form S-4  (File No. 333-42147)).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.15 |  | Assignment,
 Assumption and Amendment of Construction  Management Agreement,  dated as of November
                   14, 1997, by and among Las Vegas Sands,  Inc.,  Venetian  Casino
Resort,  LLC and Lehrer  McGovern                    Bovis, Inc.  (incorporated by
reference from Exhibit 10.6 to the Company's  Registration Statement
                   on Form S-4 (File No. 333-42147)).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.16 |  | Guaranteed
 Maximum Price Amendment to  Construction  Management  Agreement,  dated as of June 17,
                   1998  (effective  September 9, 1998),  between Lehrer  McGovern
 Bovis,  Inc. and Venetian  Casino                    Resort,  LLC  (incorporated  by
reference from Exhibit 10.1 to the Company's  Quarterly  Report on
                   Form 10-Q for the quarter ended September 30, 1998).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.17 |  | Guaranty
of Performance,  dated as of August 19, 1997, by Peninsular and Steam Navigation  Company
                   in favor of Las Vegas  Sands,  Inc.,  as assigned  by Las Vegas
 Sands,  Inc.  to Venetian  Casino                    Resort,  LLC by that certain
 Assignment,  Assumption and Amendment of Contracts  (incorporated by
                   reference  from  Exhibit  10.24 to the  Company's  Registration
 Statement  on Form S-4  (File No.                    333-42147)).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.18 |  | Guaranty
of Performance and Completion,  dated as of August 19, 1997, by Bovis,  Inc., in favor of
                   Las  Vegas  Sands,   Inc.   (incorporated  by  reference  from
 Exhibit  10.25  to  the  Company's                    Registration Statement on Form S-4
(File No. 333-42147)).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.19 |  | Management
 Agreement,  dated as of July 24, 1997,  by and between  Grand Canal Shops Mall II, LLC
                   and Forrest  City  Commercial  Management  (incorporated  by reference
 from Exhibit  10.22 to the                    Company's Registration Statement on Form
S-4 (File No. 333-42147)).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.20 |  | Primary
 Liquidated  Damages Insurance  Agreement,  dated as of August 4, 1997, by and between
the                    Construction  Manager and C.J.  Coleman  Companies,  Ltd.
 (incorporated by reference from Exhibit                    10.23 to the Company's
Registration Statement on Form S-4 (File No. 333-42147)).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.21 |  | Amended
and Restated Reciprocal Easement,  Use and Operating  Agreement,  dated as of November
14,                    1997, by and among Interface  Group-Nevada,  Inc.,  Grand Canal
Shops Mall  Construction,  LLC and                    Venetian  Casino  Resort,  LLC
 (incorporated  by reference  from  Exhibit  10.8 to the  Company's
                   Registration Statement on Form S-4 (File No. 333-42147)).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.22 |  | First
Amendment to Amended and Restated Reciprocal Easement,  Use and Operating  Agreement,
 dated                    as of  December  20,  1999,  by and among  Interface
 Group-Nevada,  Inc.,  Grand Canal Shops Mall                    Subsidiary,  LLC,  Lido
Casino  Resort,  LLC and Venetian  Casino  Resort,  LLC  (incorporated  by
                   reference  from  Exhibit  10.16 to the  Company's  Annual  Report on
Form 10-K for the year  ended                    December 31, 1999).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.23 |  | Second
Amendment to Amended and Restated Reciprocal Easement,  Use and Operating Agreement,
 dated                    as of June 4, 2002, by and among  Interface  Group-Nevada,
 Inc.,  Grand Canal Shops II, LLC, Lido                    Casino Resort,  LLC and
Venetian Casino Resort,  LLC  (incorporated by reference from Exhibit 10.9
                   to the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.24 |  | Casino
 Lease,  dated as of November 14, 1997,  by and between Las Vegas Sands,  Inc. and
Venetian                    Casino Resort,  LLC  (incorporated  by reference from Exhibit
10.14 to the Company's  Registration                    Statement on Form S-4 (File No.
333-42147)).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.25 |  | Amended
and  Restated  Services  Agreement,  dated as of  November  14,  1997,  by and among
LVSI,                    Venetian Casino Resort, LLC, Interface Group Holding Company,
Inc., Interface Group-Nevada,  Inc.,                    Lido Casino Resort MM, Inc.,
Grand Canal Shops Mall MM Subsidiary,  Inc. and certain  subsidiaries
                   of Venetian Casino Resort, LLC named therein  (incorporated by
reference from Exhibit 10.15 to the                    Company's Registration Statement
on Form S-4 (File No. 333-42147)).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.26 |  | Construction
 Agency  Agreement,  dated as of November 14, 1997,  by and between  Venetian  Casino
                   Resort,  LLC and Atlantic Pacific Las Vegas, LLC  (incorporated by
reference from Exhibit 10.21 to                    the Company's Registration Statement
on Form S-4 (File No. 333-42147)).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.27 |  | Sands
Resort Hotel and Casino  Agreement,  dated as of February  18,  1997,  by and between
 Clark                    County and Las Vegas Sands,  Inc.  (incorporated  by reference
from Exhibit 10.27 to the Company's                    Registration Statement on Form S-4
(File No. 333-42147)).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

108

---

|Exhibit No. |  | Description of Document
|----------- |  | -----------------------

|10.28 |  | Amended
and Restated Las Vegas Sands,  Inc. 1997 Fixed Stock Option Plan (the "Stock Option
Plan")                    (incorporated  by reference from Exhibit 10.10 to the Company's
 Quarterly Report on Form 10-Q for                    the quarter ended June 30, 2002).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.29 |  | First
 Amendment to the Stock  Option Plan,  dated June 4, 2002  (incorporated  by reference
 from                    Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2002).
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.30 |  | Assumption
 Agreement,  dated as of January 2, 2002,  by Sheldon G.  Adelson  with  respect to the
                   Stock Option Plan  (incorporated by reference from Exhibit 10.5 to the
Company's  Quarterly Report                    on Form 10-Q for the quarter ended March
31, 2002).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.31 |  | Stockholders'
Agreement,  dated as of January 2, 2002, by and among Las Vegas Sands, Inc., Sheldon
                   G.  Adelson,  William P.  Weidner,  Bradley  H.  Stone,  Robert G.
 Goldstein  and David  Friedman                    (incorporated  by reference from
Exhibit 10.6 to the Company's  Quarterly  Report on Form 10-Q for                    the
quarter ended March 31, 2002).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.32 |  | Amended
and Restated Employment  Agreement,  dated as of January 1, 2002, by and between Las
Vegas                    Sands, Inc. and William P. Weidner  (incorporated by reference
from Exhibit 10.12 to the Company's                    Quarterly Report on Form 10-Q for
the quarter ended June 30, 2002).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.33 |  | Stock
Option Agreement,  dated as of January 2, 2002, by and among Las Vegas Sands,  Inc.,
Sheldon                    G. Adelson and William P. Weidner  (incorporated  by reference
 from Exhibit 10.1 to the Company's                    Quarterly Report on Form 10-Q for
the quarter ended March 31, 2002).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.34 |  | Amended
and Restated Employment  Agreement,  dated as of January 1, 2002, by and between Las
Vegas                    Sands,  Inc. and Bradley H. Stone  (incorporated  by reference
from Exhibit 10.13 to the Company's                    Quarterly Report on Form 10-Q for
the quarter ended June 30, 2002).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.35 |  | Stock
Option  Agreement,  dated as of January 2, 2002, by and among Las Vegas Sands Inc.,
 Sheldon                    G.  Adelson and Bradley H. Stone  (incorporated  by reference
 from Exhibit 10.2 to the  Company's                    Quarterly Report on Form 10-Q for
the quarter ended March 31, 2002).
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.36 |  | Amended
and Restated Employment  Agreement,  dated as of January 1, 2002, by and between Las
Vegas                    Sands,  Inc.  and  Robert G.  Goldstein  (incorporated  by
 reference  from  Exhibit  10.14 to the                    Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002).
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.37 |  | Stock
Option Agreement, dated as of January 2, 2002, by and among Las Vegas Sands Inc., Sheldon
                   G. Adelson and Robert G. Goldstein (incorporated by reference from
Exhibit 10.3 to the Company's                    Quarterly Report on Form 10-Q for the
quarter ended March 31, 2002).
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.38 |  | Stock
Option Agreement,  dated as of January 2, 2002, by and among Las Vegas Sands, Inc.,
Sheldon                    G.  Adelson and David  Friedman  (incorporated  by reference
 from  Exhibit 10.4 to the  Company's                    Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.39 |  | Catastrophic
 Equity  Protection  Insurance  Agreement,  dated as of June 28,  2000,  by and among
                   American  Home  Assurance  Company,  Las  Vegas  Sands,  Inc.  and
 Venetian  Casino  Resort,  LLC                    (incorporated  by reference from
Exhibit 10.15 to the Company's  Quarterly Report on Form 10-Q for                    the
quarter ended June 30, 2002).
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.40 |  | Concession
 Contract  for  Operating  Casino  Games of Chance or Games of Other Forms in the Macau
                   Special  Administrative  Region,  June 26,  2003,  by and among the
Macau  Special  Administrative                    Region and Galaxy Casino Company
Limited.
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21.1 |  | Subsidiaries
of the registrant.(1)
|---- |  | ----------------------------------

|24.1 |  | Powers
of Attorney (included on signature pages).
|---- |  | -------------------------------------------------

|31.1 |  | Certification
of the Chief Executive Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of
                   2002.(1)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------

|31.2 |  | Certification
of the Vice  President-Finance (the principal financial officer) pursuant to Section
                   302 of the Sarbanes-Oxley Act of 2002.(1)
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

---

(1)       
          Filed herewith.

109

---

Instruments defining the rights of
holders of certain issues of long-term debt of Las Vegas Sands, Inc. and its consolidated
subsidiaries and of any of its unconsolidated subsidiaries for which financial statements
are required to be filed with this Form 10-K, have not been filed as exhibits to this Form
10-K because the authorized principal amount of any one of such issues does not exceed 10%
of the total assets of Las Vegas Sands, Inc. and its subsidiaries on a consolidated basis.
Las Vegas Sands, Inc. agrees to furnish a copy of each of such instruments to the
Commission upon request.

(b)   Reports on Form
8-K

| | Current
report on Form 8-K furnished to the Securities and Exchange Commission on October 30,
2003 regarding the Companys results of operations for the quarter ended September
30, 2003.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Current
report on Form 8-K furnished to the Securities and Exchange Commission on November 5,
2003 including the transcript of the Companys earnings call and webcast for the
quarter ended September 30, 2003.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Current
report on Form 8-K filed with the Securities and Exchange Commission on December 19,
2003.
| | --------------------------------------------------------------------------------------------------

110

---

# SIGNATURES

Pursuant to the requirements of
Section 13 or 15(d) 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.

| |  | LAS VEGAS SANDS, INC./s/ Sheldon G. Adelson
Sheldon G. AdelsonChairman of the Board andChief Executive Officer
| |  | ----------------------------------------------------------------------------------------------------------------------------

We,
the undersigned officers and directors of Las Vegas Sands, Inc., hereby severally
constitute William P. Weidner and David Friedman and each of them singly, our true and
lawful attorneys with full power to them, and each of them singly, to sign for us and in
our names in the capacities indicated below, any and all amendments to this Annual Report
on Form 10-K, and generally do all such things in our name and behalf in such capacities
to enable Las Vegas Sands, Inc. to comply with the applicable provisions of the Securities
Exchange Act of 1934, and all requirements of the Securities and Exchange Commission, and
we hereby ratify and confirm our signatures as they may be signed by our said attorneys,
or either of them, to any and all such amendments.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed by
the following persons in the capacities and on the dates indicated.

|SIGNATURE                 | TITLE                             | DATE          
|------------------------- | --------------------------------- | --------------
|                         
|                         
|/s/ Sheldon G. Adelson    | Chairman of the Board, Chief      | March 30, 2004
|Sheldon G. Adelson        | Executive Officer and Director   
|                         
|/s/ Robert F. List        | Director                          | March 30, 2004
|Robert F. List           
|                         
|/s/ Harry D. Miltenberger | Vice PresidentFinance (principal | March 30, 2004
|Harry D. Miltenberger     | financial and accounting officer)

111

---

# Supplemental
Information to be Furnished With Reports FiledPursuant to Section 15(d)
of the Act by Registrants Which Have Not RegisteredSecurities Pursuant to Section 12 of the Act

During
the last fiscal year, the Company did not provide an annual report to security holders or
send a proxy statement or other soliciting material to its stockholders.

112

---