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

                                    FORM 10-K


Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act 
of 1934

                   For the fiscal year ended December 31, 1998
                                   -----------

                        Commission File Number 333-42147

                                   -----------

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

            Nevada                                    04-3010100      
-------------------------------           ----------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)



     3355 Las Vegas Boulevard South, Room 1A
              Las Vegas, Nevada                           89109           
     ---------------------------------------       -------------------
       (Address of principal offices)                  (Zip Code)


                                 (702) 733-5000
                     ---------------------------------------
               Registrant's telephone number, including Area Code:

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

Securities 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. [ ]

The aggregate market value of voting stock held by nonaffiliates of registrant
as of March 30, 1999 was $0.

The Company had 925,000 shares of Common Stock outstanding as of March 30, 1999.


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                                            Las Vegas Sands, Inc.

                                              Table of Contents

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                                                   Part I
<S>          <C>                                                                                    <C>
Item 1.      Business................................................................................ 1
Item 2.      Properties..............................................................................18
Item 3.      Legal Proceedings.......................................................................19
Item 4.      Submission of Matters to a Vote of Security Holders.....................................20

                                                  Part II

Item 5.      Market for Registrant's Common Equity and Related Stockholder Matters...................21
Item 6.      Selected Financial Data.................................................................22
Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations...23
Item 7A.     Quantitative and Qualitative Disclosures About Market Risk..............................29
Item 8.      Financial Statements and Supplementary Data.............................................30
Item 9.      Changes In and Disagreements With Accountants On Accounting and Financial Disclosure....49

                                                  Part III

Item 10.     Directors and Executive Officers of the Registrant......................................50
Item 11.     Executive Compensation..................................................................51
Item 12.     Security Ownership of Certain Beneficial Owners and Management..........................53
Item 13.     Certain Relationships and Related Transactions..........................................54

                                                  Part IV
Item 14.     Exhibits, Financial Statement Schedules and Reports on Form 8-K.........................57
             Signatures..............................................................................61

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                                     PART I

ITEM 1.--BUSINESS

General

     Las Vegas Sands, Inc. ("LVSI") and its subsidiaries (collectively, the
"Company") are constructing and will 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 at the
site of the former Sands Hotel and Casino (the "Sands"). As planned, the Casino
Resort will include the first all-suites hotel on the Strip with approximately
3,036 suites (the "Hotel"); a gaming facility of approximately 116,000 square
feet (the "Casino"); an enclosed retail, dining and entertainment complex of
approximately 475,000 net leasable square feet (the "Mall"); and a meeting and
conference facility of approximately 500,000 square feet (the "Congress
Center"). The Casino Resort will be physically connected to the approximately
1,150,000 square foot existing 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) will be one of the largest hotel and meeting
complexes in the United States. Ground breaking for the Casino Resort occurred
in April 1997, with an opening to the general public scheduled for the second
quarter of 1999. See " - Construction Schedule and Budget."

     LVSI was incorporated in 1988 under the laws of the State of Nevada. In
April 1989, LVSI acquired the Sands from MGM Grand. LVSI owned and operated the
Sands from April 1989 to June 1996 when hotel operations ceased. Construction of
the Casino Resort commenced in April 1997. 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 Casino Resort. Under a casino lease
(the "Casino Lease"), Venetian will lease the Casino to LVSI, which will conduct
all gaming operations in the Casino Resort. The executive offices of LVSI are
located at 3355 Las Vegas Boulevard South, Room 1A, Las Vegas, Nevada 89109 and
their phone number is (702) 733-5000.

     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 Casino Resort

        The Hotel

     The Hotel will have approximately 3,036 single and multiple bedroom suites
situated in a 35-story, three-winged tower rising above the Casino. The lobby
will feature 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 will be approximately 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 is intended to create a multi-function
living space in which guests can sleep, work or entertain and will include two
queen-size beds or one king-size bed, a writing desk, dual line speaker phones,
a fax machine and a sitting area. Furthermore, approximately 318 of the suites
will be of larger size allowing for the possibility of entertaining from 20 to
100 persons in the living area.

     The Hotel will lease space to approximately six restaurants that will be
located adjacent to the Casino. Hotel guests also will have the option of casual
dining at a 20,000 square foot cafe, to be operated by Cheese Cake Factory, a
nationally-recognized operator of premium casual restaurants, and at a 15,000
square foot Venetian-style market food court, both of which will be located at
the casino level of the Hotel. Live entertainment will be offered at a 50,000
square foot



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entertainment complex. In addition, the Hotel will provide a variety of
amenities for its guests, including a state-of-the-art health spa, operated by
Canyon Ranch, with massage and treatment rooms, exercise and fitness areas. The
Hotel will also feature an outdoor swimming complex (including five pools,
spas, pool bars and cabanas) surrounded by gardens, waterways, fountains and
sculptures. The Hotel has been designed to accommodate future expansion,
including a 1,500 seat showcase theater.

     The Casino

     The Casino will be approximately 116,000 square feet and will be situated
adjacent to the Hotel lobby. The Casino floor will be accessible from each of
the Hotel, the Mall, Congress Center, the Expo Center and the Strip. The Casino
will be marketed to attract a broad base of patrons, with a specific focus on
frequent premium gaming customers. The Company will market 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 will offer "high roller" gaming customers premium suites
and special hotel services.

     The Casino and its adjacent amenities will be stylized to resemble a
Venetian "palazzo," with architectural and interior design features
representative of Venice's Renaissance era. The ceilings in the table games area
will feature fresco-style paintings of Venetian palaces. The gaming facilities
will include approximately 2,500 slot machines of various denominations,
including the popular multi-property, linked progressive games. A high-end slot
area, with a private lounge, will provide slot customers with premium slot
products and services. The Casino's approximately 114 table games (excluding
baccarat tables) will feature 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 will offer gaming customers an upscale sportsbook room, a
keno lounge, a poker room and an upscale baccarat pit. The baccarat pit is
specially designed for premium, "high roller" gaming, with baccarat, blackjack
and roulette, a private lounge with butler service, direct access to private
cash-out windows at the Casino cage and direct access to the Casino's credit
department. Although the Company intends to target "high roller" gaming
customers, it does not expect to target the known top 50 to 100 baccarat players
in the world in order to avoid the risks associated with the amounts wagered by
these players.

     The Mall

     The Mall will offer approximately 475,000 net leasable square feet of
shopping, dining and entertainment space located (i) on two levels within the
Casino Resort's main structure, between the Casino level and the Hotel tower,
and (ii) in a separate approximately 38,000 square foot retail annex adjacent to
the Casino Resort's main structure. The Mall includes six dining establishments
and approximately 70 retail stores. Visitors and guests can enter the Mall from
several different directions, including from the Strip via a moving sidewalk or
by pedestrian bridges, from the main gaming area of the Casino via escalators,
from the Expo Center through the Congress Center, and directly from the Hotel.

     The Mall will include well-known restaurants and retail establishments to
draw on brand name awareness, all offered at various price points in order to
appeal to a broad market. The success of brand name and boutique retailers at
The Forum Shops at Caesars Palace Hotel and the Fashion Show Mall on the Strip,
and the success of brand name, premium restaurants at The Forum Shops at Caesars
Palace Hotel and existing themed resorts has demonstrated the demand in Las
Vegas for quality shopping and dining.

      The Company has planned for an array of quality dining experiences for the
Mall, including upscale restaurants that will offer international and American
regional cuisines. The Mall's retail offerings are expected to include exclusive
showcase boutiques, popular brand name mid-priced stores and themed
entertainment concepts. The restaurants and stores will be set along an
approximately one-quarter mile Venetian-themed streetscape, and will front on
the Venetian-themed canal running its length or will be grouped in
"piazza"-style settings. Store and restaurant facades will be designed to
project the Venetian theme, and state-of-the-art lighting will alternately
simulate a day and night sky in an open-air environment beneath the Mall's
vaulted ceiling.

       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 existing separately owned
and operated Expo Center is one of the largest trade show and convention
facilities in



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the United States (as measured by net leasable square footage). As part of the
Casino Resort, the Company is constructing and will own and operate the Congress
Center, an approximately 500,000 gross square foot meeting and conference
facility which will link the Expo Center and the rest of the Casino Resort. The
Congress Center, which management expects will open concurrently with the Casino
Resort, will include an approximately 80,000 square foot column-free "Venetian
Ballroom," an approximately 13,500 square foot "Palazzo Ballroom" and a meeting
complex of 42 individual rooms which can be combined to create three additional
ballrooms. Together, the Expo Center and the Congress Center will 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 intends to market 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. The Company believes that the Congress Center also
can be marketed to generate room night demand during the 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 1998, approximately 1,050,000 visitors attended the trade shows and
conventions at the Expo Center during 150 show days. The Expo Center hosted 13
events on the 1998 Trade Show Week 200 list of the largest trade shows in the
United States in 1998, including the COMDEX Fall Trade Show, the Spring and Fall
Western Shoe Show and JCK Jewelry Show, as well as the convention of National
Association of Broadcasters, the Automotive Service Industry Association Week,
and the International Consumer Electronics Show, each of which were multiple
location events. In 1999, approximately 15 trade show events included on the
1998 Trade Show Week 200 list and 120 show days are scheduled for the Expo
Center. For 2000, the Expo Center has booked 18 Trade Show Week 200 events and
118 show days are scheduled for the Expo Center.

     It should be noted that the Company has no ownership 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 sole stockholder of
the Company (the "Sole Stockholder"). See "Item 13 - Certain Relationships and
Related Transactions."

     The Company and Interface intend to jointly market the Hotel and Casino,
the Mall and the Expo Center. In order to establish terms for the integrated
operation of these facilities, Venetian, Grand Canal Shops Mall Construction,
LLC (the "Mall Construction Subsidiary") and Interface have entered into the
Amended and Restated Reciprocal Easement, Use and Operating Agreement (the
"Cooperation Agreement"). The Cooperation Agreement provides that 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. Under the
Cooperation Agreement, Interface and Venetian will allocate expenses shared by
the Expo Center and the Casino Resort. It should be noted that trade show and
convention promoters will be 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."

Business and Marketing Strategy

     The Company's business strategy is to (i) create a "must-see" destination
resort at a premier location at the heart of the Las Vegas Strip, (ii) provide a
differentiated superior all-suites product, (iii) capitalize on the link to the
Expo Center and the Congress Center, (iv) utilize the Casino Resort's unique
assets and facilities to appeal to a higher budget customer mix, (v) use the
Casino Resort's themed facilities and location to generate Casino revenues, (vi)
target premium gaming customers and (vii) carefully manage construction costs
and risks.

     Create a "Must-See" Destination Casino Resort at the Heart of the Las 
Vegas Strip

     The Casino Resort, with its extensive theming, dining, shopping and
entertainment, is expected to be a "must-see" destination resort located at the
heart of the Strip. The Casino Resort is designed to provide visitors with the
sense of being



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surrounded by the festivity and splendor of Renaissance Venice's architecture,
music, art and history. The Venetian-themed setting along the Casino Resort's
frontage on the Strip will include 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 will feature a one-quarter mile Venetian streetscape,
with intimate "piazza"-style settings and a 630 foot canal running its length,
with gondolas and water-side cafes and crossed by authentically-styled Venetian
bridges.

     The Company believes that the Casino Resort's Venetian-theming, and its
central location on the Strip will appeal to business travelers, leisure
travelers and gaming customers and will position the Casino Resort to draw
significant pedestrian traffic from the Strip. The Casino Resort will have
approximately 740 feet of frontage on the east side of the Strip and will be
located next to Harrahs 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. As a result, the Company
believes that the Casino Resort will draw substantial foot traffic.


     Provide a Differentiated Superior All-Suites Product

     The Hotel is expected to offer the only all-suites product with first-class
services and facilities on the Strip. In management's experience, business and
leisure travelers consider suites desirable, superior accommodations. For
business travelers, the Hotel's suites, which will accommodate informal business
meetings and social gatherings, will offer guests a unique, single location in
which to work and entertain in close proximity to the Expo Center and the Strip.
Leisure travelers will 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, will result in a highly
differentiated resort product, and provide a competitive advantage over other
Strip hotel/casino properties and resorts.

     The typical Hotel suite will range in size from approximately 655 square
feet to 735 square feet (compared to 360 to 400 square feet on average for a
standard room in competing facilities on the Strip), and will consist of a
sunken living/working area and a raised sleeping area with a marble bathroom.
The suite's living/working area will include a sitting area and a writing desk
and will offer business amenities such as dual-line speaker phones, a fax
machine and dataport access. The bathrooms will be oversized, featuring a
separate bathtub and shower, dual sinks and a phone. In addition, the Hotel will
offer larger suites, including the "Presidential" and penthouse suites, with
exclusive services such as butlers.

     Capitalize on the Link to the Expo Center and the Congress Center

     The Casino Resort will be the first themed entertainment resort in Las
Vegas designed specifically to accommodate large scale trade shows, conventions,
conferences and meetings. The Expo Center and the Congress Center are expected
to provide recurring, predictable demand for mid-week room nights from business
travelers. During 1998, approximately 1,050,000 visitors attended trade shows
and conventions at the Expo Center. Through the Cooperation Agreement, the owner
of the Expo Center has agreed to market the Casino Resort to promoters of Expo
Center trade shows, conventions and other events as the "headquarters hotel" for
such events. The Casino Resort will offer attendees of events at the Expo Center
and the Congress Center the most convenient hotel accommodations in Las Vegas.

     Appeal to a Higher Budget Customer Mix

     Management expects 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 weekends. By appealing to customers in these
market segments, the Company expects to reduce 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 adjacent to the Expo Center and the Strip and its
all-suites hotel product will 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 is expected to appeal to free
and independent leisure travelers and "high-roller" gaming customers, also
segments of the travel market that spend more on rooms and entertainment.

     Use the Casino Resort's Themed Facilities and Location to Generate Casino
     Revenues

     Management believes the Casino will capture gaming revenues from (i) the
foot traffic generated by Expo Center and Congress Center events, (ii) Hotel
guests, (iii) the foot traffic generated by shoppers and diners at the Mall and
(iv) visitors

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attracted to the Casino Resort's unique, Venetian-themed facilities. The Casino
Resort is planned to include a concentration of some of the finest restaurants
in Las Vegas, brand name and exclusive boutique shopping, and themed
entertainment concepts. Leases have been signed with several well-known
restaurateurs, such as Wolfgang Puck, to operate their "signature" restaurants
at the Casino Resort. In addition, the Company has entered into a lease for
50,000 square foot entertainment complex located in the Mall. Management
believes that the combination of brand name awareness and extensive theming will
generate significant foot traffic for the Casino Resort. The Casino Resort has
been designed so 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.

     Target Premium Gaming Customers

     Management believes that the Casino Resort's all-suites product, themed
atmosphere and amenities will offer gaming customers a unique Las Vegas
experience. The Company intends to market the Casino to frequent premium gaming
customers. In particular, the Company will seek 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 will be able to offer many
gaming customers complementary suites (considered premium accommodations in Las
Vegas) during high occupancy periods such as weekends and holidays when they
would not otherwise be offered such suites by the Company's competitors. The
Company believes that the premium gaming customer is a significant market
segment that has been inadequately addressed by the Casino Resort's competitors.
The Casino Resort will be the first all-suites resort on the Strip with
facilities and amenities designed from inception to attract and serve premium
gaming customers.

     Managing Construction Costs and Risks

     The Casino Resort is budgeted to cost approximately $1.0 billion to
develop, equip and open (such costs exclude approximately $70.0 million for
certain heating and air conditioning-related and other equipment (the "HVAC
Equipment") to be owned by a third party, and land acquisition costs). As of
December 31, 1998, approximately $807.9 million of this total budgeted cost has
been expended or incurred. Of the amount expended and incurred, approximately
$95.3 million represents cash contributed to the Company by the Sole
Stockholder, through affiliates of the Company.

     In order to manage its construction risk, the Company has entered into
various agreements designed to protect it against construction delays and cost
overruns including (i) a guaranteed maximum price construction management
contract (as amended, the "Construction Management Contract") for $633.4 million
with Lehrer McGovern Bovis, Inc. (the "Construction Manager"), which protects
the Company against certain cost overruns, (ii) guaranties of the Construction
Manager's obligations (with certain limited exceptions) by its indirect parent,
Bovis, Inc. ("Bovis") and its ultimate parent corporation, Peninsular and
Oriental Steam Navigation Company ("P&O"), and (iii) a liquidated damages
insurance policy for costs of certain construction delays (the "Liquidated
Damages Insurance"). The Sole Stockholder has provided a $25.0 million
collateralized completion guaranty (the "Completion Guaranty"). The Completion
Guaranty is not available to fund any increases in costs attributable to
discretionary "scope changes." Any such "scope changes" may only be implemented
if the Company demonstrates that it has sufficient available funds to cover the
anticipated increased costs, or if the Sole Stockholder increases his Completion
Guaranty by such amount. To the extent that any cost overruns are not covered by
the Construction Management Contract or the other protections described above,
such cost overruns could be substantial and have a material adverse effect on
the Company's liquidity and results of operations and its ability to complete
the Casino Resort.

     To further ensure that there are sufficient funds to construct the Casino
Resort as planned and that such funds are disbursed appropriately, certain
lenders of the Company have entered into a funds disbursement and administration
agreement (the "Disbursement Agreement") to establish the conditions for and the
sequencing of funding construction costs and procedures for approving
construction change orders and amendments to the construction budget and
schedule. The Disbursement Agreement provides that remaining project costs
(other than costs for the HVAC Equipment, furniture, fixtures and other
equipment) will, generally, be funded on a pro rata basis from the proceeds of:
(i) borrowings of approximately $150.0 million under a secured bank credit
facility (the "Bank Credit Facility"), (ii) borrowings of approximately $140.0
million under a secured mall construction loan facility (the "Mall Construction
Loan Facility") and (iii) $425.0 aggregate principal amount of the Company's 
12 1/4% Mortgage Notes due 2004 (the "Mortgage Notes"). The HVAC Equipment will
be funded through the Disbursement Agreement from a separate commitment from
Atlantic-Pacific Las Vegas, LLC (the "HVAC Provider"), subject to limited
exceptions.


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     Under the Disbursement Agreement, a subsidiary of Tishman Corporation
("Tishman"), one of the nation's leading construction managers and largest hotel
developers and owners, acts as construction consultant (the "Construction
Consultant") to such lenders and is required to review each request by the
Company for the disbursement of funds. The disbursement conditions under the
Disbursement Agreement provide that, subject to certain exceptions, funds will
be disbursed to the Company only if it is determined that construction is on
schedule and that there are sufficient available funds to complete the Casino
Resort in accordance with the construction drawings and budget.

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 ("LVCVA"), the number of visitors traveling to Las Vegas has
increased at a steady and significant rate for the last ten years from 18.1
million visitors in 1989 to 30.6 million visitors in 1998, a compound annual
growth rate of 5.3%. Aggregate expenditures by Las Vegas visitors increased at a
compound annual growth rate of 11.3% from $11.9 billion (or $657 per visitor) in
1987 to $24.6 billion (or $803 per visitor) in 1998. In addition, the population
of Las Vegas has grown from approximately 863,000 in 1990 to approximately
1,193,000 in 1997, a compound growth rate of 4.8%. Management believes that the
growth in the Las Vegas market has been enhanced as a result of a dedicated
program by the LVCVA and major Las Vegas hotels to promote Las Vegas as a major
vacation and convention site, the increased capacity of McCarran International
Airport and the introduction of large, themed destination resorts in Las Vegas.

     Las Vegas as a Trade Show, Convention and Meeting Destination

     In 1998, 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
1989, approximately 1.5 million persons attended trade shows and conventions in
Las Vegas and spent approximately $1.1 billion. In 1998, the number of trade
show and convention attendees had increased to more than 3.3 million and the
amount spent by trade show and convention attendees was approximately $4.3
billion.

     Trade shows are held for the purpose of getting sellers and buyers of
products or services together for the purpose of conducting business. Trade
shows differ from conventions in that trade shows typically require substantial
amounts of space for exhibition purposes and circulation. Conventions generally
are group 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 45,000 hotel rooms located on the Strip, two
convention centers with a total of approximately 3.0 million square feet of
convention and exhibition space, convenient air service from major cities
throughout the United States and other countries and significant entertainment
opportunities. Plans have been announced for the addition of 1,000,000 square
feet of meeting and convention space to the Las Vegas Convention Center. The
expansion of the Las Vegas Convention Center is expected to bring convention and
exhibit space in Las Vegas to over 4.5 million square feet. In addition, The MGM
Grand Hotel and Casino has constructed a conference and meeting facility of
approximately 300,000 gross square feet. Management believes that Las Vegas will
continue to evolve as the country's preferred trade show and convention
destination.

     Expanding Hotel Market


     During 1998, Las Vegas was among the most popular vacation destinations in
the United States. Following the opening of The Mirage in 1989, Las Vegas
experienced a period of rapid hotel development with the number of hotel and
motel rooms in Las Vegas increasing by 72% from 67,391 in 1989 to 109,365 in
1998. Other major properties on the Strip opening over this time period include
Excalibur Hotel and Casino, The MGM Grand Hotel and Casino, the Treasure Island
Hotel and Casino, Luxor Hotel, The Monte Carlo Resort and Casino, The
Stratosphere Hotel and Casino, New York-New York Hotel and Casino and the
Bellagio. In addition, a number of existing properties on the Strip embarked on
expansions, including Harrahs, Flamingo Hilton Las Vegas and The Las Vegas
Hilton. Despite this significant increase in the supply of hotel rooms in Las
Vegas, hotel room occupancy rates (which exclude motels), averaged 90.3% in both
1997 and 1998. By the end of 1999, it is anticipated that, in addition to the
Casino Resort, at least another 6,700 hotel rooms will be opened on the Strip,
including the Paris Casino Resort and Mandalay Bay Resort. 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.
In the event that the increased concentration does not substantially increase
visitor interest, overcapacity at these casino hotels and resorts could


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lead to price competition in the form of reduced room rates. Lost revenue from
such reduced room rates could materially impact the Company's financial
condition and results of operations.

     Expanding Gaming Market

     The expansion of gaming in the United States has been accompanied by an
increasing acceptance of gaming as a form of entertainment. Gaming has continued
to be a strong and growing business in Las Vegas. Since 1989, Las Vegas gaming
revenues have increased at a compound annual rate of 6.2% from $3.4 billion in
1989 to $6.3 billion in 1998. With the increased popularity and public
acceptance of gaming, Las Vegas has sought to increase its popularity as an
overall vacation resort destination.

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

     An increasing number of destination resorts are developing non-gaming
entertainment to complement their gaming activities in order to draw additional
visitors. According to the LVCVA, while gaming revenues have increased from $3.4
billion in 1989 to $6.3 billion in 1998, the percentage of an average tourist's
budget spent on gaming has declined from 29.0% in 1989 to 26.0% in 1998, with
non-gaming tourist revenues increasing from $8.5 billion in 1989 to $18.2
billion in 1998. The newer large themed Las Vegas destination resorts have been
designed to capitalize on this development 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 commenced or completed several
infrastructure improvements to accommodate the increase in travel to Las Vegas
by all modes of transportation. According to the LVCVA, in 1998 visitors to Las
Vegas arrived by the following methods of transportation: 44% by air; 41% by
auto; 7% by bus; and 8% by recreational vehicle.

     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 which it services. The number of
passengers traveling through McCarran International Airport has increased from
17.1 million in 1989 to 30.2 million in 1998, a compound annual rate of 5.7%. A
$200 million expansion project was completed in 1995. Long-term expansion plans
for McCarran International Airport provide for additional runway and related
areas (a new runway was completed in October 1997) and a new terminal and
additional gates in 1998. To the extent that McCarran International Airport is
not expanded in accordance with its plans, the occupancy rates and average daily
hotel room rates in Las Vegas could be adversely affected due to the planned
construction of new hotel rooms.

     Spring Mountain Road Improvements. A new high-speed off-ramp is being
constructed from Interstate 15 (the primary vehicular access from Los Angeles)
onto Spring Mountain Road to ease traffic congestion on the Strip. Spring
Mountain Road becomes Sands Avenue and intersects the Strip adjacent to the
44-acre project site (the "Project Site"). This major interchange will be
located approximately one-half mile from the Casino Resort and is scheduled to
be completed in 1999.


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 will also compete with a large number of hotels and motels in and
near Las Vegas. Many of the competitors of the Company 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 will include new themed resorts on the
Strip, such as Mandalay Bay and Paris


                                        7


<PAGE>

Casino Resort. These projects and others are expected to add approximately 6,700
hotel rooms to the Las Vegas inventory by the end of 1999. The Casino Resort
will also compete with a planned second casino resort to be owned by a
subsidiary of the Company (the "Phase II Resort"), to the extent its business is
not complementary to that of the Casino Resort. The future operating results of
the Company could be adversely affected by excess Las Vegas room, gaming,
conference center and trade show capacity.

     The Company believes that themed resorts are generally more successful at
generating high volume traffic and higher revenues and operating income when
compared with large-scale non-themed properties in Las Vegas.

     The Company also believes that recently developed integrated themed resorts
have been more successful than expansions to existing Strip hotels. 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 competitive themed resorts in close proximity to the Casino
Resort directly benefits the Casino Resort. The Casino Resort will be 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. The
Company believes that the Casino Resort will benefit from the significant
traffic drawn to these properties. 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 will provide the Casino Resort a
unique tie-in with one of the premier trade show and convention facilities in
the United States. With these competitive advantages, the Casino Resort will be
positioned to appeal to the mid-week meeting, trade show, convention and meeting
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 will also compete, to some
extent, with other hotel/casino facilities in Nevada and in Atlantic City, with
hotel/casino facilities elsewhere in the world and with state lotteries. In
addition, certain states have recently legalized, and others may legalize,
casino gaming in specific areas, and passage of the Indian Gaming Regulatory Act
in 1988 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 metropolitan areas, such as New York, Los Angeles, San Francisco and
Boston, from which the Company intends to attract customers, could have a
material adverse effect on the business of the Company. In 1998, California
passed Proposition 5 which expands casino gaming on Indian Reservations in that
state. Although the legality of Proposition 5 is currently being challenged in
the California Courts, the expansion of Indian gaming could also have a material
adverse effect on the business of the Company.


     Trade Show and Convention Facilities

     The Expo Center and Las Vegas generally compete, and the Congress Center
will compete, with trade show and convention facilities located in and around
major cities, including Atlanta, Chicago, New York and Orlando. Within Las
Vegas, the Expo Center competes, and the Congress Center will compete, with the
Las Vegas Convention Center, which is located off the Strip and currently has
1.3 million gross square feet of convention and exhibit facilities. An expansion
of 300,000 square feet of meeting and exhibition space was completed for the Las
Vegas Convention Center in 1998 and an additional expansion of 1,000,000 square
feet of meeting and exhibition space is planned for the Las Vegas Convention
Center in 2000. In addition, The MGM Grand Hotel and Casino has opened a new
conference and meeting facility of approximately 300,000 square feet and several
other existing or planned major Strip hotel/casino properties are intending to
expand or construct conference facilities. The conference and meeting facilities
at these hotel/resorts are expected to be the Congress Center's primary
competition. However, because none of these hotel/resorts plans to offer
convention and trade show facilities on the same relative size as the Expo
Center (over 1.15 million gross square feet), the Las Vegas Convention Center is
expected to remain the primary competitor of the Expo Center. To the extent that
any of the competitors of the Casino Resort can offer substantial integrated
hotel/casino and trade show and convention or conference and meeting facilities,
the Casino Resort's competitive advantage in attracting trade show and
convention meeting and conference attendees could be adversely affected.


                                        8

<PAGE>

     Mall


     The Mall will compete with both themed resorts, which offer shopping,
dining and entertainment opportunities to their patrons and other retail malls
in or near Las Vegas. The direct competition of the Mall will include The Forum
Shops at Caesars Palace Hotel and other similar themed mall attractions under
construction, such as the mall to be constructed on the site of the Aladdin
Hotel and Casino. The Forum Shops at Caesars Palace Hotel has recently undergone
an expansion of approximately 250,000 square feet and may undergo additional
expansions in the future. The Mall also will compete with The Fashion Show Mall,
a more traditional mall located near the Casino Resort, which is currently
undergoing or plans to undergo expansions which will almost double such
facility's size and the planned retail, dining and entertainment mall in the
Phase II Resort. Circus Circus has also announced the possibility of developing
a retail center near its new Mandalay Bay Resort.


Construction Schedule and Budget


     The Casino Resort is expected to be developed on a stand-alone basis as the
first phase of the planned two-phase redevelopment of the Sands. In the planned
second phase of the redevelopment, it is contemplated that a subsidiary of
Venetian (the "Phase II Subsidiary") will construct and develop the Phase II
Resort, which also is planned to be a themed resort. The completion and full
operation of the Casino Resort is not contingent upon the subsequent financing
or completion of the Phase II Resort, and the Casino Resort has all the
attributes and facilities to operate as a stand-alone resort. See "Item 13 -
Certain Relationships and Related Transactions."

     Formal groundbreaking for the Casino Resort occurred in April 1997 with an
opening to the general public scheduled for the second quarter of 1999. The
Construction Management Agreement provides that the date of substantial
completion for the Casino Resort will be April 21, 1999. The Construction
Manager has requested that this date be extended to June 20, 1999. The Company
does not believe that the requested extension is warranted, has rejected the
Construction Manager's request and has advised it to proceed on the current
construction schedule. The Company believes that this request by the
Construction Manager was intended to preserve the Construction Manager's claims
for overtime and delay relating to the project, which claims the Company
believes are unfounded and has contested. Based on the construction progress to
date, the Company believes that the Casino Resort will be substantially
completed by April 1999.

     The Casino Resort (excluding the HVAC Equipment) is budgeted to cost
approximately $1.0 billion. In order to manage its construction risk, the
Company has entered into various agreements designed to protect it against
construction delays and cost overruns. The Company and the Construction Manager
have entered into the Construction Management Contract pursuant to which the
Construction Manager has agreed to construct the Casino Resort (with certain
exceptions, but including the HVAC Equipment) for a final guaranteed maximum
price of $624.4 million (subject to certain conditions and limitations, such as
an exclusion from the guaranteed maximum price of cost overruns due to "scope
changes"). To date, the Company has approved change orders to the GMP in the
amount of approximately $9.0 million, increasing this amount to approximately
$633.4 million. The Construction Management Contract and the guaranteed maximum
price does not include certain construction costs, including approximately $82.2
million of owner managed construction costs. The Construction Management
Contract contains certain incentives designed to put downward pressure on the
construction budget and actual construction costs; however, given the risks
inherent in the construction process, it is possible that construction costs
could be significantly higher. See "- Business and Marketing Strategy - Managing
Construction Costs and Risks," "- Agreements Relating to the Casino Resort" and
"Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources."

Advertising and Marketing

       The Casino Resort's project budget included a $9.4 million pre-opening
marketing and advertising budget, including a planned pre-opening marketing
campaign targeted at select core markets such as Southern California. Most of
this budget item has been expended, committed or incurred. The Company created
the Casino Resort's two preview centers, one of which opened in August 1997 on
the Las Vegas Strip and was closed December 1998 to facilitate final
construction of the Resort Casino, and a second which includes a model of the
Casino Resort and a full scale model suite and a preview center in the Expo
Center. The Company uses the preview center to market the Casino Resort and Expo
Center events. The Company will advertise in many types of media, including
television, radio, newspapers, magazines and billboards. The pre-opening
advertising will promote general market awareness of the Casino Resort as a
unique vacation, business and


                                        9

<PAGE>

convention destination for its first-class hotel, casino, retail stores and
restaurants. It is also expected that Mall tenants will pursue their own general
advertising and promotional activity, which the Company expects to benefit the
Mall. The Company will also actively engage in direct marketing which will be
targeted at specific market segments, such as the meeting, convention and trade
show market and the premium gaming market, and database marketing which will
focus on high-frequency, high-margin market segments such as the "high-roller"
gaming market.


Design and Construction Team

     The Company has assembled what it believes to be a highly qualified team of
specialists to design and construct the Casino Resort.

     Lehrer McGovern Bovis, Inc.

     The Casino Resort is being constructed by Lehrer McGovern Bovis, Inc., a
leading international construction concern. The Construction Manager is an
indirectly owned subsidiary of Bovis whose ultimate parent company is P&O. The
Construction Manager is primarily engaged in the business of providing
construction management services. The Construction Manager also provides
construction consulting, project and program management, pre-construction,
estimating, design-build and mortgage loan-monitoring services. Major market
sectors include commercial, education, transportation, sports and recreation,
healthcare, research and development, correctional, civic and cultural. Services
are performed under contracts whereby the Construction Manager acts as an agent
for an owner supervising the construction activity of trade subcontractors and
others. Projects are also performed under fixed or guaranteed maximum price
arrangements and on certain of these projects, the Construction Manager may
contract directly with trade subcontractors performing the construction
activities.

     Bovis

     Bovis has worked on a number of hotel and resort projects throughout the
world including the Trump Castle Expansion program and the Atlantic City Seaside
Resort in Atlantic City, the Embassy Suites Hotels in New York, La Jolla,
California and Washington, D.C., the Parc Fifty Five Hotel in San Francisco,
California, the Hyatt Regency Grand Cypress and Universal Studios Florida Theme
Park in Orlando, Florida, the 1996 Summer Olympic Games in Atlanta, Georgia, the
Grand Intercontinental Hotel in Yokohama Japan, The Langham and Canary Wharf in
London, England, and Euro Disney Theme Park in France.

     P&O

     P&O is a corporation based in the United Kingdom and is listed on the
London Stock Exchange. P&O is a holding company which through its subsidiaries
provides a variety of services throughout the world. P&O's businesses include
operating cruise ships and ferries, providing container, cargo and bulk shipping
services, home construction and building and managing construction projects.

     Architects

     Wimberly Allison Tong & Goo ("WATG") and The Stubbins Associates Design
Group ("TSA") are the principal architects for the Casino Resort. WATG is an
architectural, planning and consultant firm active throughout the world. WATG
specializes in the design and planning of resorts and hotels, and in the related
fields of entertainment and leisure design, new town and environmental design,
residential projects from high to low density, mixed-use and retail centers,
office buildings, conference and recreational facilities. WATG has designed and
completed projects in over 65 countries, including The Palace of the Lost City
in South Africa, The Ritz-Carlton Laguna Niguel in California, Hotel Bora Bora
in French Polynesia, Shangri-La Garden Wing in Singapore, Grand Hyatt Bali in
Indonesia, Cheju Shilla Hotel in South Korea, Hyatt Regency Kauai in Hawaii,
Four Seasons Chinzan-so in Tokyo, and Disney's Grand Floridian Beach Resort in
Orlando.


     TSA is an international architecture, planning and interior design firm.
TSA's professional services include: feasibility studies, programming and master
planning; architectural, interior and landscape design; and technical services
including construction documentation and construction administration. Among
TSA's completed hotel/casino projects are: the Spa at Bally's Park Place Hotel
and Casino and the interior design for Harrahs Marina Hotel Casino in Atlantic
City. In addition, TSA was the principal architect for the Expo Center.


                                            10

<PAGE>
     Tishman

     Tishman Construction Corporation of Nevada, a subsidiary of Tishman, is
providing construction management consulting services on behalf of the various
lenders. The Construction Consultant also has agreed to review, on behalf of the
lenders, contribution plans and the progress of construction. In addition, the
Construction Consultant will review and approve, on behalf of the lenders,
proposed contracts, proposed plan changes, proposed budget changes and
disbursement requests during the course of construction. Tishman is one of the
nation's leading construction companies and is one of the nation's largest hotel
developers and owners. As a developer and owner, Tishman has developed 5,665
rooms around the country in various types of lodging markets including downtown
commercial, convention and resort hotels. In its capacity as owner and builder
of hotels, Tishman has worked with virtually every major hotel operator/owner
including Hilton, Sheraton, Westin, Hyatt, Marriott, Ritz Carlton, Holiday Inn
Crown Plaza, Four Seasons, The Walt Disney Company, Golden Nugget, Nikko Hotels
International, Fairmont and Loews.

     Other Consultants

     Wilson & Associates, Inc. ("Wilson") and Dougall Designs ("Dougall") are
designing the interior of the Casino Resort. Wilson specializes in the interior
architectural design of hotels, restaurants, clubs and casinos and offers a full
range of interior architectural design services from initial space planning and
design through construction documents and construction administration. Wilson
has designed and installed more than 75,000 guest rooms in over 150 hotels
world-wide. Wilson's interior design credits include The MGM Grand Hotel and
Casino, The Mirage Resorts' Beau Rivage and Caesars Palace Hotel in Atlantic
City and Las Vegas.

     Dougall specializes in the interior design of casino resorts. Dougall's
projects in Las Vegas include The Luxor, The Monte Carlo Resort and Casino, The
Forum Shops at Caesars Palace Hotel, Stardust Resort and Casino and Harrahs.

     Martin & Peltyn ("Martin & Peltyn") is providing structural engineering
services in connection with the construction of the Casino Resort. Martin &
Peltyn has provided structural engineering services for over twenty hotel/
casinos in the United States, including the following Las Vegas resorts: The MGM
Grand Hotel and Casino, The Mirage, the Treasure Island Hotel and Casino,
Tropicana Resort and Casino and The Las Vegas Hilton.

Agreements Relating to the Casino Resort

     Construction Management Contract

     The construction of the principal components of the Casino Resort was
undertaken under the Construction Management Contract between LVSI and the
Construction Manager. The Construction Management Contract provided that the
Company and the Construction Manager would establish a final guaranteed maximum
price ("Final GMP") after completion of final design documents and the execution
of trade contracts for 90% (by dollar amount) of the trade contracts portion of
the guaranteed maximum price. The Company entered into the Final GMP amendment
to the Construction Management Contract (the "Final GMP Amendment") during the
quarter ended September 30, 1998. Subject to certain exceptions, if the cost of
work covered by the Construction Management Contract exceeds the Final GMP plus
any approved scope changes, the Construction Manager is responsible for such
excess costs. The Final GMP Amendment provides that the date for substantial
completion of the Casino Resort is April 21, 1999 and provides that the
Construction Manager will use its best efforts to achieve substantial completion
by April 13, 1999. See "-Construction Schedule and Budget." A Final GMP for
work included within the scope of work of the Construction Manager was set at
$624.4 million and was subsequently increased to $633.4 million with approved
scope changes. As contemplated by the project documents, certain funds, such as
the original $40.0 million general project contingency, realized cost savings
and other available funds have been reallocated to this Final GMP amount to
balance the project budget. Included within the scope of the Final GMP amount is
up to $70.0 million to construct and install the heating, ventilating and air
conditioning equipment which the HVAC Provider will own and operate. In
addition, the $25.0 million Sole Stockholder's collateralized completion
guaranty is available or has been allocated to pay for cost overruns.


                                       11
<PAGE>
     The Company began paying the Construction Manager a construction management
fee of 1 1/2% of the Final GMP, payable in monthly installments commencing in
May 1997 and will pay such fee through completion.

      The obligations of the Construction Manager under the Construction
Management Contract are guaranteed by Bovis, pursuant to a guaranty (the
"Construction Management Contract Guaranty"), and Bovis's obligations under such
guaranty are guaranteed by P&O, pursuant to a guaranty (the "P&O Guaranty").
With respect to the Construction Manager's obligation to complete construction
on schedule, (i) for the first 30 days of any delay in such scheduled
completion, the Construction Manager solely (and not Bovis or P&O) is liable for
liquidated damages, (ii) for the 90-day period thereafter, only the insurers
under the Liquidated Damages Insurance procured by the Construction Manager on
behalf of the Company (and not the Construction Manager, Bovis or P&O), subject
to certain conditions and exceptions (including the failure of the Construction
Manager to make "good faith efforts" to prevent or mitigate any delay), are
liable for liquidated damages, and (iii) Bovis and P&O are liable for liquidated
damages only to the extent, if any, that the Construction Manager misses the
required deadline by more than 120 days.

     Liquidated Damages Insurance

     The Construction Manager has obtained on behalf of the Company (and at the
Company's expense) the Liquidated Damages Insurance. The Liquidated Damages
Insurance covers liquidated damages for any delay in achieving "Substantial
Completion" (the stage in the progress of the development of the Casino Resort
when it is sufficiently complete, including the receipt of necessary permits,
licenses and approvals, so that all aspects of the Casino Resort can be open to
the general public) beyond April 1999 (the "Required Completion Date") as
assessed under the Construction Management Contract, provided that the
Liquidated Damages Insurance does not cover liquidated damages with respect to
the first 30 days of any delay in achieving Substantial Completion by the
Required Completion Date. Commencing with the 31st day of any such delay, and
continuing until the 60th day thereof, the Company will receive under the
Liquidated Damages Insurance approximately $300,000 per day until Substantial
Completion is achieved. Commencing with the 61st day of any such delay, and
continuing until the 120th day thereof, the Company will receive under the
Liquidated Damages Insurance approximately $250,000 per day until Substantial
Completion is achieved. The Liquidated Damages Insurance does not cover
penalties assessed after the 120th day of any such delay. Additionally, the
Liquidated Damages Insurance contains various exceptions. For example, the
Liquidated Damages Insurance does not cover delays caused by (i) certain events
of "force majeure" (with respect to some of which the Company will have other
insurance coverage), (ii) any failure by the Construction Manager to make "good
faith efforts" to timely achieve Substantial Completion and to avoid or mitigate
any delay when an event likely to cause a delay occurs (which failure is a
breach by Construction Manager under the Construction Management Contract with
respect to which the Construction Manager, Bovis and P&O, pursuant to the
Construction Management Contract, Construction Management Contract Guaranty and
the P&O Guaranty, respectively, are jointly and severally liable for damages)
and (iii) the "insolvency and/or financial default" of the Construction Manager,
the Company, any trade contractor or any other person or entity.

     Disbursement Agreement


     LVSI, Venetian, the Mall Construction Subsidiary, US Bank Trust National
Association, as Mortgage Note trustee (the "Mortgage Note Trustee"), The Bank of
Nova Scotia, as administrative agent under the Bank Credit Facility (the "Bank
Agent"), the lender under the Mall Construction Loan Facility (the "Mall
Construction Lender"), The Bank of Nova Scotia, as disbursement agent (the
"Disbursement Agent") and the HVAC Provider have entered into the Disbursement
Agreement. The Disbursement Agreement sets forth the material obligations of the
Company to construct and complete the Casino Resort and establishes a line item
budget for the Casino Resort and a schedule for construction of the Casino
Resort. The Disbursement Agreement also establishes the conditions to, and the
relative sequencing of, the making of disbursements from the Cash Contribution,
the proceeds from the offering of the Notes, the Bank Credit Facility, the Mall
Construction Loan Facility and the funding commitment of the HVAC Provider, and
establishes the obligations of the Mortgage Note Trustee, the Bank Agent, the
Mall Construction Lender and the HVAC Provider to make disbursements under their
respective funding commitments upon satisfaction of such conditions. The
Disbursement Agreement further sets forth (i) the mechanics for allocating
disbursement requests among the funding sources, (ii) the mechanics for
approving change orders and amendments to the project budget and schedule during
the construction period, (iii) certain representations, warranties, covenants
and events of default that are common to the various credit facilities, (iv) the
conditions for release of the Mall and certain related assets (collectively, the
"Mall Collateral") from the lien of the collateral documents and (v) the
conditions to the exercise of the Disbursement Agent's right to draw on the
irrevocable, stand-by letters of credit furnished by the HVAC Provider if the
HVAC Provider does not comply with its funding obligations set forth in the
Disbursement Agreement.


                                       12

<PAGE>

     Cooperation Agreement

     The Company's business plan calls for the Hotel and Casino, the Mall and
the Expo Center, 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 Casino), the Mall Construction
Subsidiary and Interface have entered into the Cooperation Agreement. See "Item
13 - Certain Relationships and Related Transactions - Cooperation Agreement."

Agreements Relating to the Mall

     Sale and Contribution Agreement

     Venetian, the Mall Construction Subsidiary and Grand Canal Shops Mall, LLC,
a Delaware limited liability company and indirect subsidiary of the Company
formed separately to own and operate the Mall after completion (the "Mall
Subsidiary"), have entered into a Sale and Contribution Agreement (the "Sale and
Contribution Agreement"), whereby upon the opening of the Casino Resort, the
Mall Construction Subsidiary agreed to sell and the Mall Subsidiary agreed to
purchase, among other things, (i) all of its right, title and interest (whether
in fee or in leasehold) in and to the property and improvements that constitute
the Mall in their "as is" condition on the date of Completion (as defined in the
Disbursement Agreement), (ii) monies deposited in certain reserve accounts
relating to the Mall, (iii) all right, title and interest of the Mall
Construction Subsidiary in and to a lease for an entertainment complex which is
adjacent to the casino floor and (iv) all right, title and interest of the Mall
Construction Subsidiary (a) as landlord under Mall tenant leases, (b) under the
Cooperation Agreement, (c) in and to all other easements, fixtures and
improvements appurtenant thereto, (d) under an Energy Services Agreement, dated
as of June 1, 1997, with the HVAC Provider and any other mall intangible
property rights (the "Energy Services Agreement"), and (e) in and to all mall
personal property (collectively, the "Mall Assets"). In connection with the sale
of the Mall, the Mall Construction Subsidiary also will transfer to the Mall
Subsidiary the proceeds of the final draw under the Mall Construction Loan (and,
under certain circumstances, a specified amount under the Completion Guaranty).
As consideration for such transfers, the Mall Subsidiary shall, among other
things, repay or assume in full the outstanding balance of the indebtedness
under the Mall Construction Loan Facility (or certain refinancings thereof),
including the amount of the final draw thereunder.

     Mall Management Contract

     The Mall Subsidiary has entered into 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 Enterprises will manage the Mall and supervise and assist in
the creation of an advertising and promotional program and a marketing plan for
the Mall. Forest City will also be 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 the date the Mall opens for business to the public. Forest City will
receive a management fee of 2% of all gross rents received from the operation of
the Mall; provided, that Forest City will receive a minimum fee of $450,000 per
year. Forest City is not affiliated with the Sole Stockholder or any of his
affiliates.

     Mall Leasing Contract

     LVSI has engaged the San Francisco and Los Angeles offices of Blatteis
Realty Co. ("BRC") as its retail leasing consultant (the "BRC Contract"). BRC is
a national real estate brokerage organization specializing in the leasing and
sales of high profile retail properties and representation of a select portfolio
of retailers and restaurants. Recent retail leasing transactions that BRC has
been involved with (at locations other than the Casino Resort) have included the
following tenants: Emporio Armani, Giorgio Armani, Jose Eber, Prada, Salvatore
Ferragamo, Barnes & Noble Superstore, The Pottery Barn, the Disney Store,
Williams-Sonoma, Planet Hollywood and Cafe Med. BRC will assist with planning,
marketing and leasing of the Mall. BRC also will advise the Company and its
architects, designers, consultants and other agents with respect to the Mall's
tenant mix and the conceptual layout of tenant space. The term of the BRC
Contract was signed for a period of 18 months from December 1, 1996, and the
agreement has continued on a month-to-month basis since the expiration date of
its intial term. BRC, which is not affiliated with the Sole Stockholder or any
of his affiliates,


                                       13

<PAGE>

receives a monthly consulting fee of $10,000 plus a refundable monthly sum of
$10,000 as an advance against, and credited to the payment of, lease brokerage
commissions. Leasing commissions payable to BRC are calculated on the basis of
$8.00 per leased square foot or $4.00 per leased square foot, depending upon the
location of the applicable leased space within the Mall.

HVAC Services Agreement and Related Documents

     The HVAC Provider is a Delaware limited liability company whose members are
comprised of (a) Atlantic Thermal Systems, Inc., an indirect subsidiary of
Atlantic Energy, Inc., a utility holding company and (b) an indirect subsidiary
of Pacific Enterprises, a utility holding company.

     Thermal energy (i.e., heating and air conditioning) will be provided to the
Casino Resort and the Expo Center by the HVAC Provider, using the HVAC
Equipment. In addition, the HVAC Provider also will provide other energy-related
services. Pursuant to the Construction Management Contract, the HVAC facility
(the "HVAC Plant") is being constructed by the Construction Manager on land
owned by Venetian, which land and HVAC Plant has been leased to the HVAC
Provider for a nominal annual rent. The HVAC Equipment is and will be 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 Expo Center (and, potentially,
other buildings), so long as such easements do not materially interfere with the
operations of the Casino Resort and Expo Center. The HVAC Provider will pay all
costs ("HVAC Costs") in connection with the purchase and installation of the
HVAC Equipment, up to $70 million. Venetian is acting as the HVAC Provider's
agent to cause such purchase and installation to be accomplished, and is
responsible for any costs in connection therewith in excess of $70.0 million.
The HVAC Provider has entered into separate service contracts with (i) Venetian;
(ii) Interface; and (iii) the Mall Construction Subsidiary, and will enter into
separate service contracts with each Mall tenant, for the provision of heat and
cooling requirements at agreed-to rates. The charges payable by all users will
include a fixed component derived using a fixed annual interest rate of 8.5%
(subject to adjustment based on the change in the rate on 10-year Treasury
Constant Maturities from January 23, 1997 until the service commencement date)
applied to the HVAC Costs paid by the HVAC Provider to recover a portion of the
fair value of the HVAC Equipment over the initial term of the service contracts
and leave an agreed-upon residual value (the "Fixed Rate Portion"). In addition,
the users will reimburse the HVAC Provider for the annual cost of operating and
maintaining the HVAC Equipment providing certain other energy related services
(such reimbursement to include an agreed upon margin to compensate the HVAC
Provider for operating and maintaining the HVAC Equipment). Each user will be
allocated a portion of the total agreed-to charges through its service contract,
which portion shall include paying 100% of the cost of services in connection
with the HVAC Equipment relating solely to such user. Each user will not be
liable for the obligations of the other users; provided, however, that the Mall
Subsidiary will be liable for the obligations of each Mall tenant. In the event
of any substantial capital improvements to the HVAC Equipment, the costs of such
improvements will be spread over the lesser of (i) the useful life of such
improvements and (ii) the remaining term of thermal energy service agreements
with Venetian, Interface and the Mall Construction Subsidiary to receive HVAC
services from the HVAC Plant (collectively, the "HVAC Service Agreements"), and
will include reimbursement to the HVAC Provider for use of its money at a market
rate. The HVAC Service Agreements have an initial term of ten years, and provide
that upon expiration of such term 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 service contracts.

Agreements Relating to the Lido Casino Resort

     If the Phase II Resort is constructed, the following agreements may be
entered into by the Phase II Subsidiary and its subsidiaries, on one hand, and
the Company, Venetian and the Mall Subsidiary, on the other hand:

     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 that
they shall operate the casino in the Phase II Resort and the Casino in
substantially similar manners, and the Company or Venetian, as the case may be,
may agree to have common gaming and surveillance operations in such casinos
(based on equal allocations of revenues and operating costs).


                                       14

<PAGE>

     Phase II HVAC Services Agreement

     The Cooperation Agreement permits the owner of 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."

     Phase II Mall Arrangements

     With respect to the future development of the Phase II Resort, the
Cooperation Agreement provides that, prior to the commencement of construction
of the Phase II Resort, Venetian may approve the plans and specifications for
the Phase II Resort, subject to the rights of certain lenders of the Company to
approve any construction or operation of a restaurant or retail mall complex
located in the Phase II Resort and connected to the Mall. Additionally, Venetian
and the Phase II Subsidiary will agree in good faith, and upon commercially
reasonable terms, on: (i) appropriate mutual operating covenants for the Hotel
and the Casino and the Phase II Resort other than the Phase II Mall, (ii) joint
marketing and advertising of the Hotel and the Casino and the Phase II Resort
other than the Phase II Mall, (iii) certain shared casino operations at the
Hotel and the Casino and the Phase II Resort other than the Phase II Mall, (iv)
the sharing of customer information with respect to the Hotel and the Casino and
the Phase II Resort other than the Phase II Mall, (v) the joint purchasing of
insurance for the Hotel and the Casino and the Phase II Resort other than the
Phase II Mall, (vi) shared security operations for the Hotel and the Casino and
the Phase II Resort other than the Phase II Mall and (vii) any other matters
that would be of mutual benefit in owning and operating the Hotel and the Casino
and the Phase II Resort other than the Phase II Mall.

Regulation and Licensing

     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 subject to the licensing and
regulatory control of the Nevada Gaming Commission (the "Nevada Commission"),
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) providing 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 will be
required to be, and has applied for, registration by the Nevada Commission as a
publicly traded corporation ("Registered Corporation") and as such, will be
required periodically to submit detailed financial and operating reports to the
Nevada Commission and furnish any other information that the Nevada Commission
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 will operate the Casino pursuant to
the Casino Lease between LVSI and Venetian, which will provide for a fixed
monthly rental payment. The Company possesses, has applied for, or will apply
for, 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. There can be no assurance that the Company will be granted all of
such approvals.

    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 with the Nevada Gaming
Authorities and may be required to be licensed by the Nevada Gaming Authorities.


                                       15
<PAGE>
    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 continue having a relationship with the
Company or Venetian, it 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 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, the "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 for investment purposes only. An
institutional investor shall not be deemed to hold voting securities for
investment purposes unless the voting securities were acquired and are held in
the ordinary course of business as an institutional investor 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 for
investment purposes only. Activities that are not deemed to be inconsistent with
holding voting securities for investment purposes only 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. 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 unsuitable. The same
restrictions apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found 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


                                       16

<PAGE>
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 or Venetian 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
controlling 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 a Registered Corporation, such as
the Notes. 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.

    LVSI and Venetian may not make a public offering of any securities without
the prior approval of the Nevada Commission if the securities or the proceeds
therefrom 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 will require the prior approval of the
Nevada Commission. In addition, if Venetian receives a gaming license, the
hypothecation of its assets and restrictions on stock in respect of any public
offering will require the approval of the Nevada Commission to remain effective.

    Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by any person whereby he or she obtains control, may 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: (1) 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.


                                       17

<PAGE>
    License fees and taxes, computed in various ways depending on 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. A casino
entertainment tax also is paid by the Company where 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 is 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 investigation by
the NGCB of their participation in such foreign gaming. The revolving fund is
subject to increase or decrease at the discretion of the Nevada Commission. The
Venetian has deposited $25,000 with the NGCB for this purpose. 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 the foreign
jurisdiction pertaining to the foreign gaming operation, fail to conduct the
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 the 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 will also be required to apply for and receive a Clark
County gaming license. All licenses are revocable and are not transferable. The
agencies involved have full power to limit, condition, suspend or revoke any
such license, and any such disciplinary action could (and revocation would) have
a material adverse effect upon the operations of the Company.

    Employees

    The Company anticipates that it will directly employ approximately 3,800
employees in connection with the Casino Resort. The Company has undertaken a
major recruiting and training program prior to the opening of the Casino Resort
at a time when other major new facilities are also recruiting employees. The
Company believes that it will be able to attract and retain a sufficient number
of qualified individuals to operate the Casino Resort. The Company does not know
whether or to what extent the Casino Resort's employees will be covered by
collective bargaining agreements, as that determination will ultimately be made
by the employees. 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, management does not believe that the representation of its employees by
labor unions would have a material impact upon the Company's results of
operations, liquidity or financial position.

    The Local has requested the Company to recognize it as the bargaining agent
for future employees of the Casino Resort. The Company has declined to do so,
believing that the 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
opening of the Site at the Casino Resort. 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 and that such failure would not
result in a material adverse effect on the Company.

ITEM 2.--PROPERTIES

    Prior to October 1998, Venetian owned approximately 44 acres of land on or
near the Strip on the site of the former Sands. Such property includes the site
on which the Casino Resort is being constructed. Approximately 14 acres of such
land were transferred to the Phase II Subsidiary in October 1998. The Phase II
Resort is planned to be constructed adjacent to the Casino Resort.


                                       18

<PAGE>
ITEM 3.--LEGAL PROCEEDINGS

    The Company and its subsidiaries are parties to various claims and legal
actions arising from the construction of the Casino Resort, in the ordinary
course of their businesses and in the ordinary course of business of the Sands.
Although the amount of any liability that could arise with respect to these
claims and actions cannot be accurately predicted, the Company believes that any
such liability will not have a material adverse effect on the Company.


























                                       19
<PAGE>
ITEM 4.--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


Not applicable.





























                                       20
<PAGE>
                                     PART II

ITEM 5.--MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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, 1999, the Sole Stockholder was the only holder of record of
the common stock of LVSI.

Dividends

     LVSI did not pay any dividends in 1998. On July 31, 1997 and September 30,
1997, LVSI paid cash dividends of $20.0 million and $7.6 million, respectively,
from capital in excess of par value to the Sole Stockholder. The Company's
current long-term debt arrangements prohibit or restrict the payment of cash
dividends. 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 7 Long-Term Debt."




























                                            21

<PAGE>
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, 1998, 1997 and 1996, and the
balance sheet data at December 31, 1998 and 1997 are derived from, and are
qualified by reference to, the audited historical financial statements included
elsewhere in this Annual Report on Form 10-K. The statement of operations data
for the years ended December 31, 1995 and 1994 and the balance sheet data at
December 31, 1996, 1995 and 1994 are derived from the Company's audited
historical 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.
<TABLE>
<CAPTION>
                                                                                     Year ended December 31,
                                                          1998              1997          1996(1)          1995(2)         1994(2)
                                                          ----              ----          -------          -------         -------
                                                                             (In thousands, except per share data)
<S>                                                   <C>              <C>              <C>              <C>             <C>   
STATEMENT OF OPERATIONS DATA
 Gross revenues                                      $      937        $     895        $  44,044        $  95,469       $  93,182
 Promotional allowance                                       --               --           (3,483)          (7,046)         (6,779)
                                                      ---------        ---------        ---------        ---------       ---------
 Net revenues                                               937              895           40,561           88,423          86,403
 Operating expenses                                       8,822           (1,727)          99,890           84,449          82,712
                                                      ---------        ---------        ---------        ---------       ---------
 Operating income (loss)                                 (7,885)           2,622          (59,329)           3,974           3,691
 Interest income (expense), net                         (21,878)          (3,142)          (3,666)          (7,352)        (10,190)
                                                      ---------        ---------        ---------        ---------       ---------
 Net loss                                            $  (29,763)       $    (520)       $ (62,995)       $  (3,378)      $  (6,499)
                                                      =========        =========        =========        =========       =========
Per Share Data

 Basic and diluted loss per share                    $   (46.93)       $   (0.56)       $  (68.10)       $   (2.54)      $   (4.13)
                                                      =========        =========        =========        =========       =========

OTHER DATA
 Capital expenditures                                $  504,008        $ 130,827        $  18,829        $   1,661       $  25,412
 Cash dividends per common share                     $     --          $   29.84        $    --          $    --         $    --



                                                                                   As of December 31,
                                                          1998            1997            1996              1995           1994
                                                      ---------        ---------        ---------        ---------        ---------
BALANCE SHEET DATA
 Total assets                                        $1,005,944        $ 747,767        $ 114,109        $ 178,099       $  187,774
 Long-term debt                                         744,154          515,612               --          120,066          115,639
 Stockholders' equity                                    67,937          111,347          106,335           45,989           53,755
</TABLE>

(1) Results of operations include a charge for the write-down of property and
equipment of $45,042 resulting from a revaluation of the Company's assets as of
June 30, 1996, the date the Company approved a quasi-reorganization.

(2) Financial data has been restated to reflect the December 1995 merger of LVSI
and Nevada Funding Group, Inc. ("NFG"), the common stock of which was owned
entirely by the Sole Stockholder (the "NFG Merger").


                                       22

<PAGE>

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 Financial Statements and the notes thereto and
other financial information included elsewhere in this 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."

Development Activities

     In response to increasing competition and rapid market changes, management
decided to strategically redirect the Company's business, and on June 30, 1996,
the Company closed the Sands and subsequently demolished the facility to make
way for a planned Venetian-themed hotel-casino resort.


     The Company is constructing and will own and operate the Casino Resort, a
large-scale Venetian-themed hotel, casino, retail, meeting and entertainment
complex in Las Vegas, Nevada. Formal ground breaking occurred in April 1997. In
June 1997, LVSI transferred the Project Site to Venetian. Venetian will lease
the casino in the Casino Resort to LVSI, which will conduct all gaming
operations. In connection with the financing for the Casino Resort, the Company
entered into a series of transactions during 1997 to provide for the development
and construction of the Casino Resort. In November 1997, the Company issued
$425.0 million aggregate principal amount of the Mortgage Notes and $97.5
million aggregate principal amount of 14 1/4 % Senior Subordinated Notes in a
private placement (the "Senior Subordinated Notes" and, together with the
Mortgage Notes, collectively the "Notes"). On June 1, 1998, LVSI and Venetian
completed a registered exchange offer to exchange such notes for notes with
substantially the same terms. In November 1997, LVSI, Venetian and a syndicate
of lenders entered into the Bank Credit Facility. The Bank Credit Facility
provides up to $150.0 million in multiple draw term loans to the Company for
construction and development of the Casino Resort. Up to $20.0 million of
additional credit in the form of revolving loans is available generally for
working capital. In November 1997, LVSI, Venetian, Mall Construction and a major
non-bank lender entered into the Mall Construction Loan Facility to provide up
to $140.0 million in financing for the retail mall in the Casino Resort. In
December 1997, the Company entered into an agreement (the "FF&E Credit
Facility") with certain lenders to provide for $97.7 million of financing for
certain furniture, fixtures and equipment to be secured under the FF&E Credit
Facility and an electrical substation.


     The Construction Management Agreement provides that the date of substantial
completion for the Casino Resort will be April 21, 1999. The Construction
Manager has requested that this date be extended to June 20, 1999. The Company
does not believe that the requested extension is warranted, has rejected the
Construction Manager's request and has advised it to proceed on the current
construction schedule. The Company believes that this request by the
Construction Manager was intended to preserve the Construction Manager's claims
for overtime and delay relating to the project, which claims the Company
believes are unfounded and has contested. Based on the construction progress to
date, the Company believes that the Casino Resort will be substantially
completed by April 1999.


Results of Operations


     On June 30, 1996 the Company suspended operations and closed the Sands to
begin the construction of the Casino Resort. The Company's operating income
since June 30, 1996 primarily consists of rental and royalty income. Pre-opening
activities associated with the opening of the Casino Resort commenced during the
second quarter of 1998 and related costs are included in operating expenses.
Other income and expense consists of interest income earned and non-capitalized
interest expense associated with financing the development of the Casino Resort.


Year Ended December 31, 1998 compared to the Year Ended December 31, 1997

     Operating Revenues


     Revenues for the years ended December 31, 1998 and 1997 were each 
$0.9 million and consisted primarily of rental and royalty income.


                                       23

<PAGE>

     Operating Expenses

     Operating expenses during 1998 include pre-opening expenses of $8.7
million. No pre-opening expenses were incurred in 1997. Pre-opening expenses
included payroll, advertising, professional services and other general and
administrative expenses related to the opening of the Casino Resort. The credit
amount reflected in selling, general and administrative expense of $(1.8)
million during 1997 resulted from a re-evaluation of the accrued closing costs
associated with the closing of the Sands. Amortization expense was $0.1 million
for both years.

     Interest Income (Expense)

     Interest income increased to $17.1 million during 1998 from $3.4 million
during 1997 primarily as a result of investing proceeds received from the sale
of the Notes in the aggregate principal amount of $522.5 million on November 14,
1997. The increase in interest expense to $39.0 million, excluding capitalized
interest of $39.7 million, during 1998 from $6.6 million, excluding capitalized
interest of $2.2 million, during 1997 represents the non-capitalized interest
expense resulting from debt incurred related to the financing of the Casino
Resort.

Year Ended December 31, 1997 compared to the Year Ended December 31, 1996

     Operating Revenues

     Overall revenues were impacted by the closure of the Sands in June 1996.
Operating revenues during 1996, included casino revenue of $23.1 million, room
revenues of $8.5 million and food and beverage revenue of $9.7 million all of
which declined to $0 during the year ended December 31, 1997. Other revenue
declined from $2.8 million to $0.9 million.

     Operating Expenses

     Overall operating expenses decreased to $(1.7) million from $99.9 million,
a decrease of $101.6 million. Declines in casino, room, food and beverage, and
other expenses were directly attributable to no operations during 1997 as a
result of the June 1996 closure of the Sands. The credit amount reflected in
selling, general and administrative expenses of $1.8 million during 1997 results
from a reevaluation of the accrued closing costs associated with the closing of
the Sands. This amount compares to $18.8 million during 1996. The write down of
property and equipment of $45.0 million during 1996 was related to the
quasi-reorganization, which was effective as of June 30, 1996.

     Interest Income (Expense)

     Interest income increased to $3.4 million during 1997 from $0.5 million
during 1996 as a result of investing proceeds received from the offering of the
Notes. The increase in interest expense to $6.6 million, excluding capitalized
interest of $2.2 million, during 1997 from $0 during 1996 represents the
non-capitalized interest expense resulting from the sale of the Notes in the
principal amount of $522.5 million on November 14, 1997 to fund the construction
of the Casino Resort.

Liquidity and Capital Resources

     Venetian Casino Resort

     As of December 31, 1998 and 1997, the Company held cash and cash
equivalents of $2.3 million and $0.9 million, respectively. As of December 31,
1998 and 1997, the Company held restricted cash and investments of $133.9
million and $426.9 million, respectively. Net cash used in operating activities
for the year ended 1998 was $33.2 million, compared with net cash provided by
operating activities of $3.9 million in 1997.

     Capital expenditures during the year ended 1998 were $504.0 million,
consisting of construction of the Casino Resort. Of the cost expended or
incurred during 1998, $124.9 million, $102.7 million, and $13.9 million were
drawn from the Bank Credit Facility (including $8.9 million under the revolving
credit facility), Mall Construction Loan Facility and FF&E Credit Facility,
respectively. The balance of the capital expenditures represent proceeds from
the Notes and period end accruals for construction payables and contractor
retention amounts. As of December 31, 1998, approximately $807.8 million of the
total project cost of approximately $1.0 billion (excluding the HVAC Equipment
and land acquisition costs) had been expended or incurred to fund construction
and development of the Casino Resort. The remaining approximately $192.2 million
of estimated construction and development costs for the Casino Resort is
expected to be funded from a combination of (i) continued borrowings under the
Bank Credit Facility, (ii) remaining proceeds from the offering of the Mortgage
Notes, (iii) continued borrowings under the Mall Construction Loan Facility and
(iv) borrowings under the FF&E

                                       24
<PAGE>
Credit Facility. In addition, the HVAC Provider, a heating, ventilating and air
conditioning provider, will separately contribute up to $70.0 million for the
purchase and installation of heating, ventilating and air conditioning equipment
which the HVAC Provider will own and operate.

     The construction of the principal components of the Casino Resort was
undertaken under the Construction Management Contract. The Construction
Management Contract provided that the Company and the Construction Manager would
establish a final guaranteed maximum price. The Final GMP Amendment provides for
a Final GMP for work included within the scope of work of the Construction
Manager of $624.4 million. Since then, the Final GMP has been increased to
$633.4 million with approved scope changes. Included within the scope of the
Final GMP amount is up to $70.0 million to construct and install the HVAC
Equipment. Subject to certain exceptions, if the cost of the work covered by the
Construction Management Contract exceeds the amount of the Final GMP plus
approved change orders, the Construction Manager is responsible for such excess
costs. As contemplated by the project documents, certain funds, such as the
original $40.0 million general project contingency, realized cost savings and
other available funds have been reallocated to this Final GMP amount to balance
the project budget. The Sole Stockholder's collateralized completion guaranty of
$25.0 million is available or has been allocated to pay for cost overruns or
additional change orders that may increase the Construction Manager's Final GMP.

     The Bank Credit Facility consists of (i) multiple draw "Term Loans"
(multiple draw term loans of up to $150.0 million) which may be drawn to fund
the development and construction of the Casino Resort, and will be available for
a period commencing upon the closing date of the Bank Credit Facility (the
"Closing Date") and ending on the earlier to occur of (a) April 21, 1999,
subject to extension under the Disbursement Agreement (the "Outside Completion
Deadline") and (b) the Completion Date (as defined in the Disbursement
Agreement) and (ii) "Revolving Loans" (revolving credit loans of up to $20.0
million) which may be drawn to fund certain start-up operational costs of the
Casino Resort, and will be available for a period commencing six months prior to
the opening date and ending two years from the initial draw on the Revolving
Loans (but in no event later than the second anniversary of Completion) (the
"Term Loan Commitment Termination Date"), at which time all Revolving Loans must
be repaid. The Term Loans mature not later than six years from the Issuance Date
(as defined in the Disbursement Agreement) and are subject to quarterly
amortization payments which begin on the earlier of (i) 120 days after the
opening date of the Hotel, Casino or Mall, (ii) the Completion Date and (iii)
the Outside Completion Deadline. Amortization during the first four quarters
following the amortization commencement date will be 3.75% of principal per
quarter; during the second four quarters, 5% of principal per quarter; during
the third four quarters, 7.5% of principal per quarter; and during the fourth
four quarters, 8.75% of principal per quarter. All amounts outstanding under the
Bank Credit Facility bear interest, at the option of the Company (subject to
certain limitations) as follows: (A) with respect to the period prior to the
Substantial Completion Date (as defined in the Bank Credit Facility), (i) at a
base rate plus 2.00% per annum; or (ii) at a reserve adjusted eurodollar rate
plus 3.00% per annum; (B) with respect to outstandings under the Bank Credit
Facility for the period between the Substantial Completion Date and ending on
the second full fiscal quarter following the Substantial Completion Date, (i) at
a base rate plus 1.50%; or (ii) at a reserve adjusted eurodollar rate plus 2.50%
per annum; and (C) with respect to outstandings under the Bank Credit Facility
for the period commencing on the second full fiscal quarter following the
Substantial Completion Date, at a base rate or reserve adjusted eurodollar rate,
as the case may be, plus the relevant margin based on certain leverage ratios
set forth in the Bank Credit Facility loan agreement. As of December 31, 1998,
$116.0 million had been drawn under the Bank Credit Facility.


     The Mall Construction Loan Facility consists of (i) a $105.0 million
tranche (the "Tranche A Loan") and (ii) a $35.0 million tranche (the "Tranche B
Loan"). Borrowings under the Tranche B Loan will be used to fund the development
and construction of the Casino Resort, and were available as of the closing of
the Mall Construction Loan Facility. Borrowings under the Tranche A Loan will be
used to fund the development and construction of the Casino Resort but will not
be drawn until the Tranche B Loan is fully funded. Borrowings under the Tranche
A Loan are available until the earlier to occur of (i) the Completion Date and
(ii) the Outside Completion Deadline. The Mall Construction Loan Facility
matures on May 1, 2000 (unless extended). The interest rate on indebtedness
outstanding under the Mall Construction Loan Facility is 275 basis points over
30-day LIBOR. As of December 31, 1998, $102.7 million had been drawn under the
Mall Construction Loan Facility.

     The FF&E Credit Facility consists of a $97.7 million multiple draw, interim
loan prior to completion of the Casino Resort, which converts to a term loan for
a period of 60 months after completion of the Casino Resort. If the FF&E Credit
Facility is not fully funded on the Project Construction Completion Date (as
defined in the Disbursement Agreement), the unused portion of the commitment
under the FF&E Credit Facility may be drawn in whole and placed in a cash
collateral account and used to fund the purchase and installation of Specified
FF&E for a period of 120 days, with any proceeds remaining in such cash
collateral account after such 120-day period being used by the lenders under the
FF&E Credit


                                       25
<PAGE>
Facility (the "FF&E Lenders") to prepay an equivalent portion of the outstanding
borrowings at such time interest on the interim loan, if paid on a current
basis, will be due quarterly in arrears at a floating rate equal to 30-day
reserve adjusted LIBOR plus 375 basis points or at the Base Rate (the greater of
the Prime Rate or the Federal Funds Rate plus 50 basis points) plus 100 basis
points, whichever the Company elects. Upon the same date as the Project
Construction Completion Date but no later than November 1, 1999 (or January 31,
2000 if certain casualty events occur after November 1, 1998 and the Casino
Resort can be repaired on or before January 31, 2000) (the "Basic Loan
Commencement Date"), but subject to certain conditions, the interim loan will
convert to a sixty-month term loan with quarterly amortization payments (the
"FF&E Basic Loan"). Amortization on the FF&E Basic Loan will be 3% of principal
for the first four quarters and 5.5% of principal for the last 16 quarters.
Interest on the FF&E Basic Loan is a floating monthly rate calculated at the
higher of (a) the reserve-adjusted 30-day LIBOR plus 375 basis points or (b) the
eurodollar interest rate margin in effect on the Bank Credit Facility plus 125
basis points. As of December 31, 1998, $13.9 million had been drawn under the
FF&E Credit Facility.

     The funds provided by these sources (together with amounts to be provided
by the HVAC Provider) are expected to be sufficient to develop, construct and
commence operations of the Casino Resort, assuming there are no delay costs or
construction cost overruns. If there are any delay costs and construction cost
overruns, the Company expects to use cash received from the following sources to
fund such delay costs and cost overruns (including interest on the Notes): (i)
the Liquidated Damages Insurance and the proceeds of other (e.g., casualty)
insurance policies, (ii) the Construction Manager, Bovis or P&O, pursuant to the
Construction Management Contract, the Construction Management Contract Guaranty
and the P&O Guaranty, respectively, (iii) other third parties, pursuant to their
liability to the Company under their agreements with the Company and (iv) the
Sole Stockholder, pursuant to his liability under the collateralized Completion
Guaranty of up to $25.0 million. The Completion Guaranty provides that, subject
to certain conditions and limitations, if available funds are not sufficient to
fund all construction and development costs, the Sole Stockholder is obligated
to fund excess costs up to a maximum aggregate amount of $25.0 million. The Sole
Stockholder's obligation to fund such excess construction and development costs
is collateralized by $25.0 million of cash or cash equivalents pledged to the
Disbursement Agent. If the Sole Stockholder provides funds under the Completion
Guaranty, the amount of such funds will be treated as a junior subordinated loan
from the Sole Stockholder to Venetian.

     Following the completion of the Casino Resort, the Company expects to fund
its operations and capital requirements from (i) operating cash flow, (ii)
additional indebtedness of up to $20.0 million of Revolving Loans under the Bank
Credit Facility (although $7.1 million and $1.8 million have been drawn to fund
as of December 31, 1998 FF&E deposits and undrawn letters of credit,
respectively, such amounts will be repaid from the FF&E Credit Facility and the
Term Loan of the Bank Credit Facility, respectively) and (iii) its ability to
obtain additional working capital indebtedness of up to $20.0 million under the
existing debt convenants and the indentures entered into in connection with the
Notes. Although no assurance may be given, the Company plans to use the
additional working capital debt capacity described in clause (iii) above and to
increase the Revolving Loan limit to $40.0 million effective upon completion.
Assuming an opening of the Casino Resort in April 1999, the aggregate scheduled
principal payments due under the Bank Credit Facility, including the revolving
loans and the FF&E Credit Facility will be $13.8 million, $25.6 million, $37.0
million, $44.1 million, and $15.8 million, payable in 1999, 2000, 2001, 2002 and
2003, respectively. In addition, the Company expects that the indebtedness under
the Mall Construction Loan Facility will be refinanced upon completion of the
Casino Resort.

     The Company will seek, if necessary and to the extent permitted under the
indentures entered into in connection with the issuance of each of the Mortgage
Notes and the Senior Subordinated Notes (collectively the "Indentures") and the
terms of the Bank Credit Facility and the Mall Construction Loan Facility,
additional financing through additional bank borrowings or debt or equity
financings. There can be no assurance that additional financing, if needed, will
be available to the Company, and, if available, that the financing will be on
terms favorable to the Company, or that the Sole Stockholder or any of his
affiliates will provide any such financing. Finally, there can be no assurance
that new business developments or other unforeseen events will not occur
resulting in the need to raise additional funds.

     Mall Subsidiary and Transfer of Mall Assets

     Upon the completion of the Casino Resort and the satisfaction of certain
other conditions, the Mall Construction Subsidiary will transfer the Mall Assets
to the Mall Subsidiary pursuant to the Sale and Contribution Agreement. Upon
such transfer, (i) the Mall will be released by the Mortgage Note Trustee and
the Bank Agent and will not be available as security to the holders of the
Mortgage Notes or for the indebtedness under the Bank Credit Facility, and (ii)
the indebtedness under the Mall Construction Loan Facility will either be repaid
or assumed by the Mall Subsidiary (and the Company and its subsidiary guarantors
will be released from all obligations under such indebtedness).

                                       26
<PAGE>
     To finance the obligations of the Mall Subsidiary under the Sale and
Contribution Agreement, Goldman Sachs Mortgage Company ("GSMC") and an entity
wholly owned by the Sole Stockholder (the "Tranche B Take-out Lender")
separately have entered into commitment agreements with the Mall Subsidiary
whereby GSMC has agreed to provide debt financing to the Mall Subsidiary of up
to $105.0 million (the "Tranche A Take-out Financing") and the Tranche B
Take-out Lender has agreed to provide debt financing to the Mall Subsidiary of
up to $35.0 million (the "Tranche B Take-out Financing" and, together with the
Tranche A Take-out Financing, the "Mall Take-out Financing"). The consummation
of the Tranche A Take-out Financing is subject to certain conditions, including
completion of the Casino Resort and delivery of legal opinions (including
certain substantive non-consolidation opinions).

     Because the Mall Subsidiary will not be a guarantor of any indebtedness of
the Company, creditors of the Company (including the holders of the Notes) will
not have a direct claim against the assets of the Mall Subsidiary. As a result,
indebtedness of the Company (including the Notes) will be effectively
subordinated to indebtedness of the Mall Subsidiary. The Mall Subsidiary is not
restricted by any of the debt instruments of LVSI, Venetian or the Company's
subsidiary guarantors (including the Indentures) from incurring any
indebtedness. Any indebtedness incurred by the Mall Subsidiary (including the
Tranche A Take-Out Financing) may include material restrictions on the ability
of the Mall Subsidiary to pay dividends or to make distributions or loans to the
Company and its subsidiaries.

     Phase II Resort and Transfer of Phase II Land

      If the Phase II Subsidiary determines to construct the Phase II Resort,
the Phase II Subsidiary will be required to raise substantial debt and/or equity
financings. Currently, there are no commitments to fund any portion of the
construction and development costs of the Phase II Resort. In accordance with
the Disbursement Agreement, land on which the Phase II Resort (the "Phase II
Land") will be built was transferred to the Phase II Subsidiary in October 1998.

     The development, construction and opening of the Casino Resort is not
dependent on the construction and opening of the Phase II Resort. The
development of the Phase II Resort may require obtaining additional regulatory
approvals. Under its debt instruments, the Company has agreed that it will not
commence construction of the Phase II Resort (other than the parking garage on
the Phase II Land) until a temporary certificate of occupancy has been issued
for the Casino Resort.

       Because the Phase II Subsidiary will not be a guarantor of the Company's
indebtedness, creditors of the Company (including the holders of the Notes) will
not have a direct claim against the assets of the Phase II Subsidiary. As a
result, the indebtedness of the Company (including the Notes) will be
effectively subordinated to indebtedness of the Phase II Subsidiary. The Phase
II Subsidiary is not subject to any of the restrictive covenants of the debt
instruments of the Company (including, without limitation, the covenants with
respect to the limitations on indebtedness and restrictions on the ability to
pay dividends or to make distributions or loans to the Company and its
subsidiaries). Any indebtedness incurred by the Phase II Subsidiary is expected
to include material restrictions on the ability of the Phase II Subsidiary to
pay dividends or make distributions or loans to the Company and its
subsidiaries.

     However, such debt instruments of the Company limit the ability of
Venetian, LVSI or any of their subsidiaries to guarantee or otherwise become
liable for any indebtedness of the Phase II Subsidiary. Such debt instruments
also restrict the sale or other disposition by the Company and its subsidiaries
of capital stock of the Phase II Subsidiary, including the sale of any such
capital stock to the Sole Stockholder or any affiliate of the Sole Stockholder.
In addition, prior to commencement of construction of the Phase II Resort,
Venetian has the right to approve the plans and specifications for the Phase II
Resort.

Risk Related To The Subordination Structure Of the Mortgage Notes

     The Mortgage Notes represent senior secured debt obligations of LVSI and
Venetian, secured by second priority liens on the collateral securing the
Mortgage Notes (the "Note Collateral") and third priority liens on the Mall
Collateral. The Mortgage Notes are also guaranteed on a senior secured basis by
the Mall Construction Subsidiary and are secured by third priority liens on the
Mall Collateral held by such subsidiary. However, the guarantees of the Mortgage
Notes by its subsidiaries, Mall Intermediate Holding Company, LLC and Lido
Intermediate Holding Company, LLC (collectively, the "Subordinated Guarantors")
are unsecured, subordinated debt obligations of the guarantors. The structure of
these guarantees present certain risks for holders of the Mortgage Notes. For
example, if the Note Collateral and the Mall Collateral were insufficient to pay
the debt secured by such liens, or such liens were found to be invalid, then
holders of the

                                       27
<PAGE>
Mortgage Notes would have a senior claim against any remaining assets of the
Company, Venetian and the Mall Costruction Subsidiary. In contrast, because of
the subordination provision with respect to the Subordinated Guarantors, holders
of the Mortgage Notes will always be fully subordinated to the claims of holders
of senior indebtedness of the Subordinated Guarantors.

Future Accounting Requirements

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Standards No 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 will become effective for the Company in
2000. The adoption of SFAS 133 is not expected to have a material effect on the
Company's financial position, results of operations or cash flow.

Year 2000

     The Company is in the process of purchasing and installing new computer
hardware and software to operate the Casino Resort. The Company is addressing
the issue of computer programs and embedded computer chips being unable to
distinguish between the years 1900 and 2000. The Company has established an
internal review system to ensure that all new systems purchased and installed to
operate the Casino Resort are year 2000 compliant. The new systems are scheduled
for implementation upon the opening of the Casino Resort during April, 1999. The
review system includes requiring all computer software vendors to certify in
writing that the software being acquired is year 2000 compliant and testing all
new systems for year 2000 compliance by the Company prior to opening the Casino
Resort. The review system is being undertaken under the direction of the Casino
Resort's Vice President of Information Systems.

     Cost

     The total cost associated with required testing of systems to become year
2000 compliant is not expected to be material to the Company's financial
position. Funds for the screening and testing of the new systems are included in
the project budget for the purchase of computer systems.

     Risks

     Due to the general uncertainty inherent in the year 2000 problem, resulting
in part from the uncertainty of the year 2000 readiness of third party suppliers
and customers, the Company is unable to determine at this time whether the
consequences of year 2000 failures will have a material impact of the Company's
results of operations, liquidity or financial condition. The Company believes
that with the screening process in place the possibility of significant
interruptions of normal operations should be reduced. The Company is presently
making inquiries to determine whether the year 2000 issue will have any effect
on its suppliers and business partners. The Company has not, however, determined
the adequacy of year 2000 compliance for other industries that the Casino Resort
will rely upon, including but not limited to, airline industry and telephone
service suppliers. See "- Special Note Regarding Forward-Looking Statements."

Special Note Regarding Forward-Looking Statements

     Certain statements in this section and elsewhere in this Annual report 10-K
(as well as information included in oral statements or other written statement
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. 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 others, the risks associated with entering into a new
venture and new construction, competition and other planned construction in Las
Vegas, year 2000 risks, government regulation related to the casino industry
(including the legalization of gaming in certain jurisdictions, such as Indian
reservations in the state of California), leverage and debt service (including
sensitivity to fluctuations in interest rates), uncertainty of casino spending
and vacationing in casino resorts in Las Vegas, 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, the completion of
infrastructure improvements in Las Vegas, including the recent expansion of
McCarran International Airport, and general economic and business conditions
which may impact levels of disposable income of consumers and pricing of hotel
rooms.


                                       28

<PAGE>

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 under the Bank Credit Facility, the Mall
Construction Loan Facility and the FF&E Credit Facility, and by use of interest
rate cap and floor agreements. The ability to enter into interest rate cap and
floor agreements will allow the Company to manage its interest rate risk
associated with its variable rate debt. 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 7 Long-Term Debt."



















                                       29

<PAGE>

ITEM 8--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS
                                                                                        Page
<S>                                                                                      <C>
Report of Independent Accountants                                                        31
Consolidated Balance Sheets at December 31, 1998 and 1997                                32
Consolidated Statements of Operations for each of the three
  years in the period ended December 31, 1998                                            33
Consolidated Statements of Stockholder's Equity for each of the
  three years in the period ended December 31, 1998                                      34
Consolidated Statements of Cash Flows for each of the three
  years in the period ended December 31, 1998                                            35
Notes to Financial Statements                                                            36

     All 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.
</TABLE>















                                       30

<PAGE>





                        Report of Independent Accountants


To the Directors and Sole Stockholder of Las Vegas Sands, Inc.


     In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of stockholder's equity and of
cash flows present fairly, in all material respects, the financial position of
Las Vegas Sands, Inc. at December 31, 1998 and 1997, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
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
generally accepted auditing standards 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 the opinion expressed
above.

     As discussed in Note 3 to the financial statements, the Company approved a
quasi-reorganization effective June 30, 1996.




PRICEWATERHOUSECOOPERS LLP


Los Angeles, California
February 26, 1999










                                                31


<PAGE>
LAS VEGAS SANDS, INC.
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                                      December 31,
                                                                                             1998                     1997
                                                                                          -----------               ---------
<S>                                                                                       <C>                       <C>      
ASSETS
Current assets:
    Cash and cash equivalents                                                             $     2,285               $     857
    Restricted cash and investments                                                           133,936                 341,725
    Other current assets                                                                          187                     213
                                                                                          -----------               ---------

Total current assets                                                                          136,408                 342,795

    Property and equipment, net                                                               833,054                 279,770
    Restricted investments                                                                                             85,186
    Deferred offering costs, net                                                               35,101                  38,618
    Other assets                                                                                1,381                   1,398
                                                                                          -----------               ---------

                                                                                          $ 1,005,944               $ 747,767
                                                                                          ===========               =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
    Accounts payable                                                                      $       265               $   1,701
    Construction payables                                                                      77,025                  32,141
    Other accrued liabilities                                                                  12,074                   9,913
    Current maturities of long-term debt                                                       13,788
                                                                                          -----------               ---------
Total current liabilities                                                                     103,152                  43,755
Long-term debt                                                                                744,154                 515,612
                                                                                          -----------               ---------

                                                                                              847,306                 559,367
                                                                                          -----------               ---------

Redeemable Preferred Interest in Venetian Casino Resort, LLC,
    a wholly owned subsidiary                                                                  90,701                  77,053
                                                                                          -----------               ---------

Commitments and contingencies

Stockholder's equity:
    Common stock, $.10 par value, 3,000,000 shares authorized, 925,000 shares
       issued and outstanding                                                                      92                      92
    Capital in excess of par value                                                             99,330                 112,977
    Accumulated deficit since June 30, 1996                                                   (31,485)                 (1,722)
                                                                                          -----------               ---------
                                                                                               67,937                 111,347
                                                                                          -----------               ---------
                                                                                          $ 1,005,944               $ 747,767
                                                                                          ===========               =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                       32

<PAGE>

LAS VEGAS SANDS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                                     Year Ended December 31,

                                                         1998               1997                1996
                                                      ---------            -------            -------- 
<S>                                                   <C>                  <C>                <C>      
Revenues:
   Casino                                             $      -             $    -             $ 23,058
   Rooms                                                                                         8,500
   Food and beverage                                                                             9,713
   Other                                                    937                895               2,773
                                                      ---------            -------            -------- 
                                                            937                895              44,044
Less--promotional allowances                                                                    (3,483)
                                                      ---------            -------            -------- 
   Net revenues                                             937                895              40,561

Operating expenses:
   Casino                                                                                       15,235
   Rooms                                                                                         3,531
   Food and beverage                                                                             8,136
   Other operating                                                                               4,377
   Pre-opening                                            8,722
   Selling, general and administrative                                      (1,827)             18,752
   Depreciation and amortization                            100                100               4,817
   Write-down of property and equipment                                                         45,042
                                                      ---------            -------            -------- 

   Total operating expenses                               8,822             (1,727)             99,890
                                                      ---------            -------            -------- 

Operating income (loss)                                  (7,885)             2,622             (59,329)
                                                      ---------            -------            -------- 

Other income (expense):
  Interest income                                        17,137              3,439                 450
  Interest expense, net of amounts capitalized          (39,015)            (6,581)
  Interest expense to related party                                                             (4,116)
                                                      ---------            -------            -------- 

Net loss                                              $ (29,763)           $  (520)           $(62,995)
                                                      =========            =======            ======== 

Basic and diluted loss per share                      $  (46.93)           $ (0.56)           $ (68.10)
                                                      =========            =======            ======== 
</TABLE>
The accompanying notes are an integral part of these consolidated 
financial statements.

                                       33
<PAGE>


LAS VEGAS SANDS, INC.
Consolidated Statements of Stockholder's Equity
(Dollars in thousands)
<TABLE>
<CAPTION>
                                               Common Stock
                                                                 Capital in
                                          Number                 Excess of    Accumulated
                                          Shares      Amount     Par Value      Deficit         Total
                                          ------      ------     ----------   -----------       -----
<S>                                      <C>         <C>         <C>         <C>                <C>      
Balance at December 31, 1995            925,000     $92         $ 139,129   $ (93,232)         $45,989
Capital contribution                                                71,601                       71,601
Net loss for the six months ended
 June 30, 1996                                                                 (61,793)         (61,793)
Elimination of deficit through quasi-
 reorganization at June 30, 1996                                  (155,025)    155,025
Adjustment to assets through 
 quasi-reorganization                                               51,740                       51,740
Net loss for the six months ended
 December 31, 1996                                                              (1,202)          (1,202)
                                        -------       --          --------     -------          ------- 
Balance at December 31, 1996            925,000       92           107,445      (1,202)         106,335
Capital contributions                                               33,132                       33,132
Dividends                                                          (27,600)                     (27,600)
Net loss                                                                          (520)            (520)
                                        -------       --          --------     -------          ------- 
Balance at December 31, 1997            925,000       92           112,977      (1,722)         111,347
Preferred return                                                   (13,647)                     (13,647)
Net loss                                                                       (29,763)         (29,763)
                                        -------     ----          --------     -------          ------- 
Balance at December 31, 1998            925,000     $ 92          $ 99,330   $ (31,485)        $ 67,937
                                        =======     ====          ========     =======          =======

The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>




                                       34

<PAGE>
LAS VEGAS SANDS, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                          Year Ended December 31,
                                                                                  1998             1997             1996
                                                                                --------           ------         --------
<S>                                                                             <C>                <C>            <C> 
Cash flows from operating activities:
Net loss                                                                        $(29,763)          $ (520)        $(62,995)
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
        Depreciation and amortization                                                100              100            4,817
        Non-cash interest expense due to related party                                                               3,087
        Loss on disposal of assets                                                                                   2,906
        Write-down of property and equipment                                                                        45,042
        Interest earned on restricted investments                                 (4,251)            (791)
        Changes in assets and liabilities:
          Other current assets                                                        26              149            6,354
          Other assets                                                               (83)             137            3,275
          Accounts payable                                                        (1,436)             (77)          (1,306)
          Other accrued liabilities                                                2,161            4,861           (3,780)
                                                                                --------           ------         --------
Net cash provided by (used in) operating activities                              (33,246)           3,859           (2,600)
                                                                                --------           ------         --------
Cash flows from investing activities:
Proceeds from sale of (purchase of) investments                                  297,226         (426,120)
Proceeds from the sale of fixed assets                                                                               1,766
Construction of Casino Resort                                                   (504,008)        (130,827)         (18,829)
                                                                                --------           ------         --------
Net cash used in investing activities                                           (206,782)        (556,947)         (17,063)
                                                                                --------           ------         --------
Cash flows from financing activities:
Proceeds from capital contributions                                                                25,500           11,134
Proceeds from preferred interest in Venetian                                                       77,053
Proceeds from mortgage notes                                                                      425,000
Proceeds from senior subordinated notes                                                            90,500
Proceeds from Mall Construction Loan Facility                                    102,713
Proceeds from Bank Credit Facility-term loan                                     116,000
Proceeds from Bank Credit Facility-revolver                                        8,885
Proceeds from FF&E Credit Facility                                                13,858
Payments of deferred offering costs                                                               (37,387)
Payment of dividends                                                                              (27,600)
                                                                                --------           ------         --------
Net cash provided by financing activities                                        241,456          553,066           11,134
                                                                                --------           ------         --------
Increase (decrease) in cash and cash equivalents                                   1,428              (22)          (8,529)
Cash and cash equivalents at beginning of year                                       857              879            9,408
                                                                                --------           ------         --------
Cash and cash equivalents at end of year                                        $  2,285          $   857          $   879
                                                                                ========           ======         ========
Supplemental disclosure of cash flow information:
  Cash payments for interest                                                    $ 70,435          $   357          $     -
Non-cash investing and financing activities:
  Retirement of notes through stockholder contribution                          $      -          $     -          $59,454
                                                                                ========           ======         ========
Acquisition of Expo Center by IGN
   Property and equipment sold                                                  $      -          $     -         $(66,775)
                                                                                --------           ------         --------
   Reduction of notes                                                                                               65,500
   Reduction of other related party liabilities                                                                      2,288
                                                                                --------           ------         --------
   Increase of capital in excess of par value                                   $      -          $     -         $  1,013
                                                                                ========           ======         ========
Contribution of land by Sole Stockholder                                        $      -          $ 7,632         $      -
                                                                                ========           ======         ========
</TABLE>


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




                                       35


<PAGE>

LAS VEGAS SANDS, INC.
Notes to Financial Statements

Note 1 Organization and Business of Company

     Las Vegas Sands, Inc. ("LVSI") is a Nevada corporation. On April 28, 1989,
LVSI commenced gaming operations in Las Vegas, Nevada, by acquiring the Sands
Hotel and Casino (the "Sands"). On June 30, 1996, LVSI closed the Sands and
subsequently demolished the facility to make way for a planned two phase
hotel-casino resort. The first phase of the hotel-casino resort (the "Casino
Resort") will include approximately 3,036 suites, casino space approximating
116,000 square feet, approximately 500,000 square feet of convention space, and
approximately 475,000 gross leasable square feet of retail shops and
restaurants. In connection with the closing of the Sands, LVSI effected a
quasi-reorganization (Note 3).

     The consolidated financial statements as of December 31, 1998 and December
31, 1997 include the accounts of LVSI and its wholly owned subsidiaries (the
"Subsidiaries"), including Venetian Casino Resort, LLC ("Venetian"), Grand Canal
Shops Mall, LLC (the "Mall Subsidiary"), Lido Casino Resort, LLC (the "Phase II
Subsidiary"), Mall Intermediate Holding Company, LLC ("Mall Intermediate"),
Grand Canal Shops Mall Construction, LLC ("Mall Construction"), Lido
Intermediate Holding Company, LLC ("Lido Intermediate"), Grand Canal Shops Mall
Holding Company, LLC, Lido Casino Resort Holding Company, LLC, Grand Canal Shops
Mall MM, Inc. and Lido Casino Resort MM, Inc. (collectively, the "Company"). The
December 31, 1996 period includes only the accounts of LVSI. 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.

     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 sole stockholder (the "Sole Stockholder") (Note 8).

     Mall Intermediate, Mall Construction and Lido Intermediate are special
purpose companies, which are wholly owned subsidiaries of Venetian. They are
guarantors or co-obligors of certain indebtedness related to the construction of
the Casino Resort.

     The Mall Subsidiary is an indirect wholly-owned subsidiary of Mall
Intermediate and was formed on March 20, 1997 to own and operate the retail mall
in the Casino Resort.

     Construction of the Casino Resort commenced in April 1997 and completion is
scheduled for the second quarter of 1999. The Company expects to expend
approximately $1.0 billion to complete construction and open the Casino Resort.

     The Company has transacted business with a number of related parties
including Interface Group-Nevada, Inc. ("IGN") and Nevada Funding Group, Inc.
("NFG"). The nature of such transactions and the amounts involved are disclosed
on the face of the financial statements and in the notes thereto.

     In addition to its gaming operations, the Company also owned and leased the
Sands Expo and Convention Center (the "Expo Center") prior to January 1996. As
discussed in Note 10, the Expo Center was acquired by IGN in January 1996.

Note 2 Summary of Significant Accounting Policies

Cash and Cash Equivalents

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

Property and Equipment

     Property and equipment are generally stated at cost or, in the case of
assets under capital lease, at the present value of future minimum lease
payments, calculated as of the date of inception. Owned assets prior to June 30,
1996 were depreciated using the straight-line method over estimated useful lives
ranging from three to thirty years.

     Subsequent to the closing of the Sands, depreciable property and equipment
consist of equipment, furniture and




                                       36

<PAGE>

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

Note 2 Summary of Significant Accounting Policies (continued)

fixtures which are being depreciated using the straight-line method over their
estimated useful life of five 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.

     Management reviews assets for possible impairment of long-lived assets
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. Impairment losses are recognized when
estimated future cash flows expected to result from the use of the assets and
their eventual disposition are less than their carrying amounts. See Note 3 for
adjustment of carrying values as a result of the quasi-reorganization.

Capitalized Interest

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

Pre-opening Costs

     Pre-opening costs, representing primarily direct personnel and other costs
incurred prior to the opening of the Casino Resort are expensed as incurred.
During the year ended December 31, 1998, the Company incurred $8.7 million in
pre-opening costs.

Debt Discount and Deferred Offering Costs

      Debt discount and offering costs are amortized based on the terms of the
related debt instruments using the straight-line method, which approximates the
effective interest method. During the years ended December 31, 1998 and 1997,
$7.2 million and $0.6 million of debt discount and offering costs, respectively,
are included in construction in progress.

Per Share Data

     Basic and diluted loss per share are calculated based upon the weighted
average number of shares outstanding. The weighted average number of shares
outstanding used in the computation of loss per share of common stock was
925,000 for all periods presented. The net loss available to common stockholders
used in computing 1998 basic and diluted loss per share includes a preferred
return of $13.6 million.

Casino Revenue and Promotional Allowances

     In accordance with industry practice, the Company recognizes as casino
revenue the net win from gaming activities, which is the difference between
gaming wins and losses. The retail value of accommodations, food and beverage,
and other services furnished to hotel-casino guests without charge is included
in gross revenues and deducted as promotional allowances. The estimated cost of
providing such promotional allowances has been classified primarily as casino
costs and expenses as follows (in thousands):
                                                  Year Ended December 31,
                                           1998            1997           1996
                                           ----           ----            ----
Rooms                                      $--            $--          $   592
Food and Beverage                                                        2,348
Other                                                                       38
                                          ----            ----         -------
                                           $--            $--          $ 2,978
                                          ====            ====         =======


                                       37

<PAGE>

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

Note 2 Summary of Significant Accounting Policies (continued)

Income Taxes

     LVSI has elected to be taxed as an S Corporation and its wholly owned
subsidiaries are limited liability companies, each of which is a tax pass
through entity for federal income tax purposes. Nevada does not levy a corporate
income tax. Accordingly, no provision for federal or state income taxes is
included in the statement of operations.

Concentrations of Credit Risk

     Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of restricted investments.
These restricted investments are placed with a high credit quality financial
institution which invests primarily in U.S. Government-backed repurchase
agreements. At December 31, 1998, the Company had no significant concentrations
of credit risk.

Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Segment Reporting

     The Company will report by operating segment upon opening of the Casino
Resort.

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 to make way for a new hotel-casino resort (Note 1). As a result,
approximately 1,400 employee positions were eliminated. The severance and
related closing costs of $6.7 million are included in selling, general and
administrative expense for 1996. In December 1997, the Company reevaluated its
accrued closing costs and determined the remaining liability to be approximately
$0.9 million. As a result, the Company credited the remaining unutilized closing
costs of $1.8 million to selling, general and administrative expense.

     In connection with the closing of the Sands (Note 1), the Company's
director and sole 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
was eliminated against the cost basis of the remaining property, and the
accumulated deficit of $155.0 million as of June 30, 1996, was transferred to
capital in excess of par value.

Note 4 Restricted Cash and Investments

     The net proceeds of the Company's 12 1/4% Mortgage Notes due 2004 (the
"Mortgage Notes") and its 14 1/4% Senior Subordinated Notes due 2005 (the
"Senior Subordinated Notes" and, together with the Mortgage Notes, the "Notes")
were deposited into restricted accounts and invested in cash or permitted
investments by a disbursement agent for the Company's lenders until required for
project costs under the terms of the disbursement agreement with certain of the
Company's lenders (the "Disbursement Agreement") (Note 7). Additional amounts
have been deposited to other restricted accounts, which are controlled by the
Company, but which are also restricted as to use under the terms of the
Disbursement Agreement.


                                       38

<PAGE>

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

Note 4 Restricted Cash and Investments (continued)

     At December 31, 1998, all of the Company's investments were classified as
held-to-maturity, which consists of securities that management has the ability
and intent to hold to maturity. These investments are carried at cost plus
accrued interest, which approximates fair value. There were no sales or
transfers of securities classified as held-to-maturity during 1998.

Note 5 Property and Equipment

     Property and equipment includes costs incurred to construct the Casino
Resort and consists of the following (in thousands):
                                                  December 31,
                                                  ------------
                                             1998              1997
                                             ----              ----
        Land and land improvements        $ 93,634           $ 93,634
        Equipment, furniture and fixtures      392                422
        Construction in progress           739,028            185,714
                                          --------           --------
                                          $833,054           $279,770
                                          ========            =======

     The Casino Resort serves as collateral for various financing facilities
(Note 7).


     Construction in progress at December 31, 1998 and 1997 consists of payments
for construction of the Casino Resort, including capitalized interest of $41.9
million and $2.2 million, respectively.


Note 6 Other Accrued Liabilities

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

                                                  December 31,
                                                  ------------
                                             1998              1997
                                             ----              ----
        Accrued closing costs             $   783           $   924
        Accrued interest                    9,069             7,809
        Other accruals                      2,222             1,180
                                          -------           -------
                                          $12,074           $ 9,913
                                          =======           =======

     Accrued closing costs consist primarily of accrued medical costs for
severed employees and legal costs as a result of the closing of the Sands (Note
3).

 Note 7 Long-Term Debt

   Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
                                                                   December 31,
                                                                   ------------
                                                              1998              1997
                                                              ----              ----
<S>                                                         <C>              <C>     
   12 1/4% Mortgage Notes, due November 15, 2004            $425,000         $425,000
   14 1/4% Senior Subordinated Notes, due November 15, 2005
    (Net of unamortized discount of $6,014 in 1998
          and $6,888 in 1997)                                 91,486           90,612

   Mall Construction Loan Facility                           102,713
   Bank Credit Facility-revolver                               8,885
   Bank Credit Facility-term loan                            116,000
   FF&E Credit Facility                                       13,858
   Less: current maturities                                  (13,788)     
                                                            --------         ---------
        Total long-term debt                                $744,154         $515,612
                                                            ========         ========
</TABLE>

                                       39

<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)

Note 7 Long-Term Debt (continued)

     Mortgage Notes and Senior Subordinated Notes


     In November 1997, the Company issued $425.0 million aggregate principal
amount of the Mortgage Notes and $97.5 million aggregate principal amount of the
Senior Subordinated Notes in a private placement. Interest on the Notes is
payable each May 15 and November 15, commencing on May 15, 1998. On June 1, 1998
LVSI and the Venetian completed an exchange offer to exchange the notes for
notes with substantially the same terms.

     The Mortgage Notes are secured by second priority liens on the Note
Collateral (defined as real estate improvements and personal property with
certain exceptions) and third priority liens on the Mall Collateral (defined as
improvements to the retail mall space). Pending disbursement of the proceeds of
the Mortgage Notes, the Mortgage Notes also will be secured by a first priority
pledge of the proceeds in the Mortgage Notes Proceeds Account (as defined in the
Disbursement Agreement). The Senior Subordinated Notes are unsecured. As of
December 31, 1998, $315.4 million proceeds from the Mortgage Notes and $90.5
million of the proceeds from the Senior Subordinated Notes had been expended.
The Notes are redeemable at the option of LVSI and Venetian at prices ranging
from 100% to 106.125% during specified years as set forth in the Notes and the
indentures pursuant to which the Notes were issued (the "Indentures"). Upon a
change of control (as defined in the Indentures), each Note holder may require
LVSI and Venetian to repurchase such Notes at 101% of the principal amount
thereof (or with respect to the Senior Subordinated Notes, prior to November 15,
1999, the original issue price plus accrued original issue discount) plus
accrued interest and other amounts which are then due, if any. The Notes are not
subject to a sinking fund requirement.

     The Senior Subordinated Notes bear cash interest at the rate of 10% per
annum through November 15, 1999, and thereafter at a rate of 14 1/4% per annum.
The Senior Subordinated Notes were sold at a $7.0 million discount to their face
amount in order to yield 14 1/4% per annum to maturity and will accrue to par by
the second anniversary date of the issuance.


     Bank Credit Facility

     In November 1997, LVSI, Venetian and a syndicate of lenders entered into a
bank credit facility (the "Bank Credit Facility"). The Bank Credit Facility
provides up to $150.0 million in multiple draw term loans to the Company for
construction and development of the Casino Resort. The term loans mature not
later than the sixth anniversary of the closing date and are subject to
quarterly amortization payments which, subject to certain exceptions, begin at
the end of either the first or second fiscal quarter following the earlier of
(i) two years after the closing date or (ii) the date completion of the Casino
Resort occurs.


     The indebtedness under the Bank Credit Facility is secured by first
priority liens on the Note Collateral (other than the Mortgage Notes Proceeds
Account) and second priority liens on the Mall Collateral. As of December 31,
1998, $116.0 million of the term loans had been drawn under the Bank Credit
Facility.

     Up to $20.0 million of additional credit in the form of revolving loans
under the Bank Credit Facility is available generally for working capital
beginning six months prior to the completion date. The revolving loan will
mature on the second anniversary of the initial draw. During the construction of
the Casino Resort, up to $15.0 million of the revolving loans will be available
to fund purchases of certain furniture, fixtures and equipment (the "Specified
FF&E") (including deposits) and provide letters of credit for construction
activities. Any amounts borrowed to purchase the Specified FF&E are expected to
be repaid from the proceeds of a $97.7 million credit facility secured by the
Specified FF&E (the "FF&E Credit Facility"). As of December 31, 1998, $8.9
million had been drawn under the revolving loans.

     Funds borrowed under the Bank Credit Facility bear interest through Project
Completion (as defined in the Bank Credit Facility) at (i) a base rate plus 2%
per annum or (ii) a reserve adjusted eurodollar rate plus 3% per annum. Upon
completion and for six months thereafter, the interest rate will be at (i) a
base rate plus 1 1/2% or (ii) a reserve adjusted


                                       40

<PAGE>
LAS VEGAS SANDS, INC.
Notes to Financial Statements (continued)

Note 7 Long-Term Debt (continued)

eurodollar rate plus 2 1/2% per annum. From six months after completion, the
interest rate will be at a base rate or a reserve adjusted eurodollar rate plus
a margin based on certain leverage ratios set forth in the Bank Credit Facility
to 9%.

     The Company is required to enter into an interest rate cap agreement to
limit the impact of increases in interest rates on its floating rate debt
derived from the Bank Credit Facility. To meet the requirements of the Bank
Credit Facility, the Company entered into a cap and floor agreement during 1998
(the "Cap and Floor Agreement") which resulted in a premium payment to counter
parties and receipt of an equal payment from the counter parties, based upon
notional principal amounts for a term equal to the term of the Bank Credit
Facility. The interest rate cap provisions of the Cap and Floor Agreement
entitle the Company to receive from the counter parties the amounts, if any, by
which the selected market interest rates exceed the strike rates stated in such
agreement. Conversely, the interest rate floor provisions of the Cap and Floor
Agreement require the Company to pay the counter parties the amounts, if any, by
which the selected market interest rates are less than the strike rates stated
in such agreement. The fair value of the Cap and Floor Agreement is estimated by
obtaining quotes from brokers and represents the cash requirement if the
existing contracts had been settled at year-end. The notional amount of the Cap
and Floor Agreement at December 31, 1998 was $51.1 million.

     The other parties to the Cap and Floor Agreement expose the Company to
credit loss in the event of nonperformance. However, the Company considers the
risk of nonperformance to be minimal because the parties to the Cap and Floor
Agreement are members of the Bank Credit Facility syndicate of lenders.


     Under the terms of the Bank Credit Facility, a commitment fee equal to
0.50% per annum times the daily average unused portion under the Bank Credit
Facility is payable quarterly in arrears.

     Mall Construction Loan Facility

     In November 1997, LVSI, Venetian, Mall Construction and a major non-bank
lender entered into a mall construction loan facility to provide up to $140.0
million in financing for the retail mall in the Casino Resort (the "Mall
Construction Loan Facility"). The credit facility consists of two loan tranches:
a Tranche A loan in the amount up to $105.0 million and a Tranche B loan in the
amount up to $35.0 million. All indebtedness under the Mall Construction Loan
Facility matures on May 1, 2000 with an option to extend the maturity of such
indebtedness to November 14, 2000 based on certain conditions and upon payment
of a $0.4 million extension fee.

     The indebtedness under the Mall Construction Loan Facility is secured by
first priority liens on the Mall Collateral. Upon completion of the Casino
Resort, the retail mall is expected to be transferred to the Mall Subsidiary and
the indebtedness under the Mall Construction Loan Facility either will be repaid
with the proceeds of borrowings by the Mall Subsidiary or will be assumed by the
Mall Subsidiary. The annual interest rate on the facility is 275 basis points
over 30-day Libor. As of December 31, 1998, $102.7 million had been drawn under
the Mall Construction Loan Facility.

     The Company has obtained commitments to refinance the Mall Construction
Loan Facility upon the completion of the retail mall under specified conditions.
The availability of such commitments are subject to certain conditions,
including the delivery of certain legal opinions.

     FF&E Financing

     In December 1997, the FF&E Credit Facility was entered into with certain
lenders (the "FF&E Lenders") to provide $97.7 million of financing for the
Specified FF&E and an electrical substation. The financing provides for an
interim loan during construction and a 60-month basic term loan after completion
of the Casino Resort. In the initial and subsequent draws, the FF&E Lenders will
reimburse the Company for any amounts spent by the Company for Specified FF&E
prior to the initial draw.


                                       41

<PAGE>

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

Note 7 Long-Term Debt (continued)

     Under the terms of the FF&E Credit Facility, a commitment fee equal to
0.50% per annum times the daily average unused portion under the FF&E Credit
Facility is payable monthly in arrears.

     Interest on the interim loan is at a floating rate equal to the 30-day
reserve adjusted LIBOR plus 375 basis points or at a base rate (the greater of
the prime rate or the federal funds rate plus 50 basis points) plus 100 basis
points. If the Company elects to pay interest on the interim loan currently,
interest is due quarterly in arrears.

     Interest on the basic term loan is a floating monthly rate calculated at
the higher of (a) the reserve adjusted 30-day LIBOR plus 375 basis points or (b)
the eurodollar interest rate margin in effect on the Bank Credit Facility plus
125 basis points. Amortization on the FF&E basic loan will be 3% of the
principal for the first four quarters following the opening of the Casino Resort
and 5.5% of the principal for the next 16 quarters. As of December 31, 1998,
$13.9 million had been drawn under the FF&E Credit Facility.

     The debt instruments described above contain certain covenants and
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.

     Additionally, the Company is a party to certain intercreditor arrangements
and the Disbursement Agreement. The intercreditor agreements set forth the
lender's interests and claims in the Company's assets as collateral for
borrowings. The Disbursement Agreement establishes conditions to and the
sequencing of funding construction costs and procedures for approving
construction change orders and amendments to the construction budget and
schedule.

    As support for the development of the Casino Resort, the Sole Stockholder or
his affiliates have provided the following:

    (i) a $25.0 million construction completion guaranty collateralized by cash
    or cash equivalents. Such construction completion guaranty may be increased
    under certain circumstances for scope changes (as defined in the
    Disbursement Agreement) to the Casino Resort;

    (ii) a $35.0 million guarantee of the Mall Construction Loan Facility and a
    commitment to provide $35.0 million to refinance a portion of the Mall
    Construction Loan Facility, collateralized by cash or cash equivalents; and

    (iii) a $20.0 million unsecured guaranty of the take-out financing for the
    Mall Construction Loan Facility of $105.0 million.

Scheduled maturities of long-term debt outstanding at December 31, 1998 are
summarized as follows: $13.8 million for 1999, $128.3 million for 2000, $36.9
million for 2001, $44.1 million for 2002, $15.8 million for 2003 and $525.0
million (which includes unamortized discount on Senior Subordinated Notes)
thereafter.

     Fair Value

Estimated fair values of the Company's debt and related financial instruments at
December 31, 1998 are as follows:

                                                    Carrying         Fair
                                                    Amount          Value
                                                    --------        ------
     12 1/4% Mortgage Notes                        $425,000       $433,500
     14 1/4% Senior Subordinated Notes               91,486         87,750
     Mall Construction Loan Facility                102,713        102,713
     Bank Credit Facility                           124,885        124,885
     FF&E Credit Facility                            13,858         13,858
     Cap and Floor Agreement                           ----           (600)


                                       42

<PAGE>

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

Note 7 Long-Term Debt (continued)

     The fair value of the Mortgage Notes and Senior Subordinated Notes is based
on quoted market prices. The fair value of the Senior Subordinated Notes are
based upon the $97.5 million face amounts. The fair value of the Mall
Construction Loan Facility, Bank Credit Facility and FF&E Credit Facility
approximates their respective carrying amounts based on the variable nature of
these facilities. The fair value of the Cap and Floor Agreement is based upon
quotes from brokers.

Note 8 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 Bank Credit Facility is repaid and cash payments are
permitted under the restricted payment covenants of the indentures entered into
in connection with the Notes, the preferred return on the Series B Preferred
Interest will accrue and will not be paid in cash. Commencing in November 2009,
distributions must be made to the extent of the positive capital account of the
holder. During the year ended December 1998, $13.6 million was accrued on the
Series B Preferred Interest related to the contributions made during 1997 and
there were no distributions of preferred interest or preferred return paid.

Note 9 Stockholder's Equity

Increase in Shares Authorized and Outstanding

     In November 1997, the Company's Board of Directors increased the number of
authorized shares of LVSI from 100,000 to 3,000,000 and authorized and consented
to increase the number of shares outstanding with respect to the outstanding
shares of common stock of LVSI, so that each share of such common stock would
henceforth be deemed to represent 18.4996 shares of common stock, resulting in
925,000 shares of common stock outstanding on such date. The par value remained
$.10 per share. All references to share and per share data herein have been
adjusted retroactively to give effect to the change in shares outstanding.

1997 Fixed Stock Option Plan

     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 for the
granting of up to 75,000 shares of common stock to officers and other key
employees of the Company. Upon approval of the plan by the Nevada Gaming
Commission, options are intended to be granted to certain key executives. The
Company has committed to grant options to purchase shares of the Company's
common stock at an exercise price to be determined by a formula involving the
value of LVSI's land and certain capital contributions. If fully exercised,
shares acquired under such options would represent approximately 5% of the
Company's then outstanding stock.

Dividends

     During the year ended December 31, 1997, LVSI declared and paid liquidating
cash dividends totaling $27.6 million from capital in excess of par value, to
its Sole Stockholder. No dividends were declared or paid in 1998.

Note 10 Related Party Transactions

Prior year's financial statements include significant transactions and balances
involving affiliates of the Company. Interest expense relating to the second
mortgage notes (the "Second Mortgage Notes") and other notes (the "Third
Mortgage Notes") totaling $4.1 million, was paid or was payable to IGN. During
1996, IGN acquired from the Company the Expo Center building and related land
and equipment at its carrying value of $66.8 million in exchange for all of the
Second Mortgage Notes and a portion of the Third Mortgage Notes of the Company
held by IGN totaling $65.5 million. In connection with the transaction, the
above lease was canceled, and the Company subsequently retired the

                                       43
<PAGE>

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

Note 10 Related Party Transactions (continued)

Second and Third Mortgage Notes received including $59.5 million of Third
Mortgage Notes previously held by IGN and contributed by the Sole Stockholder.

Note 11 Commitments and Contingencies

Construction Costs

     Ground breaking for the Casino Resort occurred in April 1997. The
redevelopment of the site of the Sands is expected to be completed in two phases
(with the first phase being construction of the Casino Resort), subject to
receipt of appropriate regulatory approvals, permits and licenses. There can be
no assurance, however, as to when, or if, such construction will be completed
due to risks and uncertainties inherent in the development process. The cost of
the Casino Resort is currently estimated at approximately $1 billion. In
connection with the construction of the Casino Resort, the Company has signed a
construction management agreement (the "Construction Management Agreement") with
a major construction management firm (the "Construction Manager"). Such
agreement provides for a maximum guaranteed price for certain construction costs
currently set at $624.4 million, subsequently increased to $633.4 million with
approved change orders, and a guaranteed completion period of 24 months from the
effective starting date of construction. As of December 31, 1998, the Company
was committed to approximately $948 million for capital expenditures relating to
the Casino Resort. Development costs are funded pro rata among the proceeds of
the Mortgage Notes and draws on the Bank Credit Facility and the Mall
Construction Loan Facility (Note 7).

Energy Services Agreement

     During 1997, the Company entered into an energy services agreement with a
heating and air conditioning ("HVAC") provider. Under the terms of the energy
services agreement and other separate energy services agreements, HVAC energy
and services will be purchased by the Company, the Mall Subsidiary, its mall
tenants and IGN over initial terms of 10 years with an option to collectively
extend the terms of their agreements for two consecutive five year periods.

     Pursuant to the Construction Management Agreement, the HVAC plant is being
constructed by the Construction Manager on land owned by the Company and leased
to the HVAC provider. The HVAC equipment is and will be owned by the HVAC
provider, which will pay all costs ("HVAC Costs") in connection with the
purchase and installation of the HVAC equipment, up to $70.0 million.

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

Litigation

     The Company is party to litigation matters and claims related to its
operations. The financial statements include provisions for estimated losses
related thereto. Management, based upon advice from legal counsel, does not
expect that the final resolution of these matters will have a material impact on
the financial position, results of operations and cash flows of the Company.

Note 12 Summarized Financial Information

     Venetian and LVSI are co-obligors of the Notes and certain other
indebtedness related to construction of the Casino Resort and are jointly and
severally liable for such indebtedness (including the Notes). Venetian and Mall
Intermediate, Mall Construction, and Lido Intermediate (collectively, the
"Subsidiary Guarantors") are wholly owned subsidiaries of LVSI. The Subsidiary
Guarantors have jointly and severally guaranteed (or are co-obligators of) such
debt on a full and unconditional basis (other than indebtedness under the Mall
Construction Loan Facility, which is guaranteed only by Mall


                                       44

<PAGE>

LAS VEGAS SANDS, INC.
Notes to the Financial Statements (continued)

Note 12 Summarized Financial Information (continued)

Intermediate and Mall Construction). No other subsidiary of LVSI is an obligor
or guarantor of any of the Casino Resort financing.

     Venetian, the Mall Construction Subsidiary and the Mall Subsidiary have
entered into a Sale and Contribution Agreement (the "Sale and Contribution
Agreement") whereby, upon opening of the Casino Resort, the Mall Construction
Subsidiary, a guarantor, has agreed to sell and the Mall Subsidiary has agreed
to purchase, among other things, (i) all of its right, title and interest
(whether in fee or in leasehold) in and to the property and improvements that
constitute the Mall in their "as is" condition on the date of Completion (as
defined in the Disbursement Agreement), (ii) monies deposited in certain reserve
accounts relating to the Mall, (iii) all right, title and interest of the Mall
Construction Subsidiary in and to a lease for an entertainment complex which is
adjacent to the casino floor and (iv) all right, title and interest of the Mall
Construction Subsidiary (a) as landlord under Mall Tenant leases, (b) under the
Cooperation Agreement, (c) in and to all other easements, fixtures and
improvements appurtenant thereto, (d) under an Energy Services Agreement, dated
as of June 1, 1997, with the HVAC Provider and any other mall intangible
property rights, and (e) in and to all mall personal property (collectively, the
"Mall Assets"). In connection with the sale of the Mall, the Mall Construction
Subsidiary also will transfer to the Mall Subsidiary the proceeds of the final
draw under the Mall Construction Loan (and, under certain circumstances, a
specified amount under the Completion Guaranty). As consideration for such
transfers, the Mall Subsidiary shall, among other things, repay or assume in
full the outstanding balance of the indebtedness under the Mall Construction
Loan Facility (or certain refinancings thereof), including the amount of the
final draw thereunder.

      Because the Mall Subsidiary will not be a guarantor of any indebtedness of
the Company, creditors of the Company (including the holders of the Notes) will
not have a direct claim against the assets of the Mall Subsidiary. As a result,
indebtedness of the Company (including the Notes) will be effectively
subordinated to indebtedness of the Mall Subsidiary. The Mall Subsidiary is not
restricted by any of the debt instruments of the Company (including the
Indentures) from incurring any indebtedness. Any indebtedness incurred by the
Mall Subsidiary (including the Tranche A Take-Out Financing) may include
material restrictions on the ability of the Mall Subsidiary to pay dividends or
to make distributions or loans to the Company and its subsidiaries.

      Prior to October 1998, Venetian owned approximately 44 acres of land on or
near the Strip on the site of the former Sands. Such property includes the site
on which the Casino Resort is being constructed. Approximately 14 acres of such
land was transferred to the Phase II Subsidiary in October 1998. The Phase II
Resort is planned to be constructed adjacent to the Casino Resort. Because the
Phase II Subsidiary will not be a guarantor of the Company's indebtedness,
creditors of the Company (including the holders of the Notes) will not have a
direct claim against the assets of the Phase II Subsidiary. As a result, the
indebtedness of the Company (including the Notes) will be effectively
subordinated to indebtedness of the Phase II Subsidiary. The Phase II Subsidiary
is not subject to any of the restrictive covenants of the debt instruments of
the Company (including the Notes). Any indebtedness incurred by the Phase II
Subsidiary is expected to include material restrictions on the ability of the
Phase II Subsidiary to pay dividends or make distributions or loans to the
Company and its subsidiaries.

      Separate financial statements and other disclosures concerning each of
Venetian and the Subsidiary Guarantors are not presented because management
believes that they are not material to investors. Summarized financial
information of LVSI, Venetian, the Subsidiary Guarantors and the non-guarantor
subsidiaries on a combined basis as of and for the years ended December 31, 1998
and 1997 are as follows (in thousands):



                                       45

<PAGE>

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

Note 12 Summarized Financial Information (continued)

                            CONDENSED BALANCE SHEETS
                                December 31, 1998


<TABLE>
<CAPTION>
                                                                                                    Grand Canal
                                                                           Lido          Mall        Shops Mall   
                                                          Venetian     Intermediate  Intermediate   Construction 
                                           Las Vegas    Casino Resort     Holding       Holding         LLC      
                                           Sands, Inc.       LLC       Company LLC    Company LLC       (1)      
                                           -----------  -------------  ------------  ------------   ------------
<S>                                         <C>          <C>                <C>          <C>          <C>        
Cash and cash equivalents                   $   1,216    $   1,025          $ 5          $ 5          $       5  
Restricted cash and investments                            133,936                                               
Amounts due from Venetian                         563                                                     3,225  
Amounts due from Lido                                          170                                               
Other current assets                                           187                                               
                                            ---------    ---------          ---          ---          ---------  
  Total current assets                          1,779      135,318            5            5              3,230  
                                            ---------    ---------          ---          ---          ---------  
Property and equipment, net                                700,491                                      103,394  
Investment in Subsidiaries                    114,225       29,331                                               
Deferred offering costs                                     28,384                                        6,717  
Other assets                                    1,317           64                                               
                                            ---------    ---------          ---          ---          ---------  
                                            $ 117,321    $ 893,588          $ 5          $ 5          $ 113,341  
                                            =========    =========          ===          ===          =========  
                                                                                                    
Accounts payable                            $            $     265          $            $            $          
Construction payable                                        66,402                                       10,623  
Amounts due to LVSI                                            563                                               
Amounts due to Grand Canal                                   3,225                                               
Amounts due to Venetian                                                                                          
Other accrued liabilities                       1,948       10,126                                               
Current maturities of long term debt                        13,788                                               
                                            ---------    ---------          ---          ---          ---------  
  Total current liabilities                     1,948       94,369                                       10,623  
                                                                                                     
Long-term debt                                             641,441                                      102,713  
                                            ---------    ---------          ---          ---          ---------  
                                                1,948      735,810                                      113,336  
                                                                                                     
Redeemable Preferred interest in Venetian                   90,701                                               
                                            ---------    ---------          ---          ---          ---------  
Stockholder's equity                          115,373       67,077            5            5                  5  
                                            ---------    ---------          ---          ---          ---------  
                                            $ 117,321    $ 893,588          $ 5          $ 5          $ 113,341  
                                            =========    =========          ===          ===          =========  
<CAPTION>
                                               Non-
                                             Guarantor    Consolidating/
                                            Subsidiaries   Eliminating
                                                (2)          Entries        Total
                                            ------------ --------------  ----------
<S>                                           <C>          <C>           <C>          
Cash and cash equivalents                     $     29     $             $    2,285
Restricted cash and investments                                             133,936
Amounts due from Venetian                                     (3,788)
Amounts due from Lido                                           (170)
Other current assets                                                            187
                                              --------     ---------     ----------
  Total current assets                              29        (3,958)       136,408
                                              --------     ---------     ----------
Property and equipment, net                     29,169                      833,054
Investment in Subsidiaries                                  (143,556)
Deferred offering costs                                                      35,101
Other assets                                                                  1,381
                                              --------     ---------     ----------
                                              $ 29,198     $(147,514)    $1,005,944
                                              ========     =========     ==========
                                           
Accounts payable                              $            $             $      265
Construction payable                                                         77,025
Amounts due to LVSI                                             (563)
Amounts due to Grand Canal                                    (3,225)
Amounts due to Venetian                            170          (170)
Other accrued liabilities                                                    12,074
Current maturities of long term debt                                         13,788
                                              --------     ---------     ----------
  Total current liabilities                        170        (3,958)       103,152
                                           
Long-term debt                                                              744,154
                                              --------     ---------     ----------
                                                   170        (3,958)       847,306
                                           
Redeemable Preferred interest in Venetian                                    90,701
                                              --------     ---------     ----------
Stockholder's equity                            29,028      (143,556)        67,937
                                              --------     ---------     ----------
                                              $ 29,198     $(147,514)    $1,005,944
                                              ========     =========     ==========
</TABLE>                                   
                                           
(1)  The assets and liabilities of Grand Canal Shops Mall Construction, LLC, a
     guarantor, will be transferred to Grand Canal Shops, LLC, a non-guarantor
     subsidiary, upon opening of the Casino Resort.

(2)  Land with a historical cost basis of $29,169 was transferred from Venetian
     Casino Resort, LLC, a co-obligor of the Notes to Lido Casino Resort, LLC,
     a non-guarantor subsidiary, in October 1998.

                            CONDENSED BALANCE SHEETS
                                December 31, 1997

<TABLE>
<CAPTION>
                                                              Venetian      Consolidating/  
                                              Las Vegas    Casino Resort     Eliminating    
                                             Sands, Inc.       LLC            Entries           Total
                                            ---------       ------------     ---------        ---------
<S>                                         <C>             <C>              <C>              <C>         
Cash and cash equivalents                   $     142       $     715        $                $     857
Restricted cash and investments                               341,725                           341,725                     
Amounts due from Venetian                         894                             (894)                
Other current assets                              118              95                               213      
                                            ---------       ---------        ---------        ---------
  Total current assets                          1,154         342,535             (894)         342,795
                                            ---------       ---------        ---------        ---------
Property and equipment, net                                   279,770                           279,770                     
Restricted Investments                                         85,186                            85,186                     
Investment in Subsidiaries                    114,132                         (114,132)                      
Deferred offering costs                                        38,618                            38,618                     
Other assets                                    1,358              40                             1,398      
                                            ---------       ---------        ---------        ---------
                                            $ 116,644       $ 746,149        $(115,026)       $ 747,767
                                            =========       =========        =========        =========
Accounts payable                            $               $   1,701        $                $   1,701
Construction payable                                           32,141                            32,141                     
Amounts due to LVSI                                               894             (894)                      
Other accrued liabilities                       2,045           7,868                             9,913      
                                            ---------       ---------        ---------        ---------
  Total current liabilities                     2,045          42,604             (894)          43,755
                                                                                              
Long-term debt                                                515,612                           515,612                     
                                            ---------       ---------        ---------        ---------
                                                2,045         558,216             (894)         559,367
                                                                                              
Redeemable Preferred interest in Venetian                      77,053                            77,053                     
                                            ---------       ---------        ---------        ---------
Stockholder's equity                          114,599         110,880         (114,132)         111,347
                                            ---------       ---------        ---------        ---------
                                            $ 116,644       $ 746,149        $(115,026)       $ 747,767
                                            =========       =========        =========        =========
</TABLE>                                                                   

                                       46
<PAGE>

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

Note 12 Summarized Financial Information (continued)


                        CONDENSED STATEMENT OF OPERATIONS
                      For the year ended December 31, 1998

<TABLE>
<CAPTION>
                                                                                   Lido           Mall       Grand Canal   
                                                                  Venetian      Intermediate  Intermediate   Shops Mall   
                                                   Las Vegas    Casino Resort     Holding        Holding     Construction 
                                                  Sands, Inc.       LLC         Company LLC   Company LLC        LLC      
                                                  -----------   -------------   -----------   -----------    ------------ 
<S>                                                  <C>        <C>                <C>           <C>           <C>        
Revenues                                             $ 814      $     123          $   -         $   -         $   -      
Operating expenses                                     100          8,341             45            65            45      
                                                     -----      ---------          -----         -----         -----      
Operating income (loss)                                714         (8,218)           (45)          (65)          (45)     
Other income (expense):                                                                                                   
    Interest income                                     60         17,077                                                 
    Interest expense, net of amounts capitalized                  (39,015)                                                
                                                     -----      ---------          -----         -----         -----      
Net income (loss)                                    $ 774      $ (30,156)         $ (45)        $ (65)        $ (45)     
                                                     =====      =========          =====         =====         =====      
<CAPTION>
                                                       Non-      Consolidating/
                                                    Guarantor    Eliminating
                                                   Subsidiaries     Entries       Total
                                                   ------------  -------------- ---------
<S>                                                   <C>                                
Revenues                                              $             $           $     937
Operating expenses                                       226                        8,822
                                                      ------       -----------  --------- 
Operating income (loss)                                 (226)                      (7,885)
Other income (expense):                                                         
    Interest income                                                                17,137
    Interest expense, net of amounts capitalized                                  (39,015)
                                                      ------       -----------  --------- 
Net income (loss)                                     $ (226)      $            $ (29,763)
                                                      ======       ===========  ========= 
</TABLE>

                        CONDENSED STATEMENT OF OPERATIONS
                      For the year ended December 31, 1997

<TABLE>
<CAPTION>
                                                               Venetian      Consolidating/
                                                 Las Vegas   Casino Resort    Eliminating
                                                Sands, Inc.       LLC           Entries         Total
                                                -----------  -------------   --------------     -----
<S>                                                <C>           <C>                             <C>  
Revenues                                           $   895       $                 $ -           $ 895
Operating expenses                                  (1,727)                                     (1,727)
                                                   -------       --------          ---          ------ 
Operating income (loss)                              2,622                                       2,622
Other income (expense):
    Interest income                                    110          3,329                        3,439
    Interest expense, net of amounts capitalized                   (6,581)                      (6,581)
                                                   -------       --------          ---          ------ 
Net income (loss)                                  $ 2,732       $ (3,252)         $ -          $ (520)
                                                   =======       ========          ===          ====== 
</TABLE>

                                       47

<PAGE>

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

Note 12 Summarized Financial Information (continued)

                       CONDENSED STATEMENTS OF CASH FLOWS
                      For the year ended December 31, 1998

<TABLE>
<CAPTION>
                                                                                       Lido           Mall        Grand Canal
                                                                      Venetian      Intermediate   Intermediate    Shops Mall    
                                                       Las Vegas   Casino Resort       Holding       Holding      Construction   
                                                      Sands, Inc.       LLC          Company LLC   Company LLC         LLC       
                                                      -----------  -------------    ------------   ------------   ------------   
<S>                                                     <C>        <C>                 <C>             <C>           <C>         
Net cash provided by (used in) operating                                                                                         
  activities                                            $ 1,167    $ (34,202)          $ (45)          $ (65)        $ (45)      
                                                        -------    ---------           -----           -----         -----       
Cash flows from investing activities:                                                                                            
  Proceeds from purchases of investments                             297,226                                                     
  Investment in subsidiaries                                (93)        (162)                                                    
  Construction of Casino Resort                                     (504,008)                                                    
                                                        -------    ---------           -----           -----         -----       
Net cash used in investing activities                       (93)    (206,944)                                                    
                                                                                                                                 
Cash flows from financing activities:                                                                                            
  Proceeds from Mall Construction Loan Facility                      102,713                                                     
  Proceeds from Bank Credit Facility-term loan                       116,000                                                     
  Proceeds from Bank Credit Facility-revolver                          8,885                                                     
  Proceeds from FF&E Credit Facility                                  13,858                                                     
  Proceeds from capital contributions                                                     50              70            50       
                                                        -------    ---------           -----           -----         -----       
Net cash provided by financing activities                            241,456              50              70            50       
                                                        -------    ---------           -----           -----         -----       
Increase (decrease) in cash and cash equivalents          1,074          310               5               5             5       
Cash and cash equivalents at beginning of period            142          715                                                     
                                                        -------    ---------           -----           -----         -----       
Cash and cash equivalents at end of year                $ 1,216    $   1,025           $   5           $   5         $   5       
                                                        =======    =========           =====           =====         =====       

<CAPTION>
                                                   
                                                         Non-       Consolidating/
                                                      Guarantor      Eliminating
                                                     Subsidiaries      Entries           Total
                                                     ------------   --------------     ---------
<S>                                                    <C>            <C>                        
Net cash provided by (used in) operating                                             
  activities                                           $ (56)         $                $ (33,246)
                                                       -----          ------           ---------
Cash flows from investing activities:                                                
  Proceeds from purchases of investments                                                 297,226
  Investment in subsidiaries                                            255          
  Construction of Casino Resort                                                         (504,008)
                                                       -----          ------           ---------
Net cash used in investing activities                                   255             (206,782)
                                                                                     
Cash flows from financing activities:                                                
  Proceeds from Mall Construction Loan Facility                                          102,713
  Proceeds from Bank Credit Facility-term loan                                           116,000
  Proceeds from Bank Credit Facility-revolver                                              8,885
  Proceeds from FF&E Credit Facility                                                      13,858
  Proceeds from capital contributions                     85           (255)         
                                                       -----          ------           ---------
Net cash provided by financing activities                 85           (255)             241,456
                                                       -----          ------           ---------
Increase (decrease) in cash and cash equivalents          29                               1,428
Cash and cash equivalents at beginning of period                                             857
                                                       -----          ------           ---------
Cash and cash equivalents at end of year               $  29          $                $   2,285
                                                       =====          ======           =========
</TABLE>                                                                       
                                                                                
                       CONDENSED STATEMENTS OF CASH FLOWS                       
                      For the year ended December 31, 1997                      
                                                                                
<TABLE>                                                                         
<CAPTION>                                                                       
                                                                            Venetian      Consolidating/
                                                         Las Vegas       Casino Resort     Eliminating
                                                        Sands, Inc.           LLC            Entries           Total
                                                        -----------      -------------    --------------     ---------
<S>                                                       <C>              <C>                <C>                       
Net cash provided by (used in) operating                                        
  activities                                              $   (838)        $  4,697          $               $   3,859
                                                          --------         --------          --------        ---------
                                                                              
Cash flows from investing activities:                                         
  Proceeds from sale of investments                                        (426,120)                          (426,120)
  Construction of Casino Resort                            (25,399)        (105,428)                          (130,827)

                                                          --------         --------                          ---------
Net cash used in investing activities                      (25,399)        (531,548)                          (556,947)
                                                                                
Cash flows from financing activities:                                         
  Proceeds from preferred interest in Venetian                               77,053                             77,053
  Proceeds from mortgage notes                                              425,000                            425,000
  Proceeds from senior subordinated notes                                    90,500                             90,500
  Proceeds from capital contributions                       25,500                                              25,500
  Proceeds (payments) of intercompany
    dividends                                               27,600          (27,600)
  Payments of deferred offering costs                                       (37,387)                           (37,387)
  Payments of dividends                                    (27,600)                                            (27,600)
                                                          --------         --------          --------        ---------

Net cash provided by financing activities                   25,500          527,566                            553,066
                                                          --------         --------          --------        ---------

Increase (decrease) in cash and cash equivalents              (737)             715                                (22)
Cash and cash equivalents at beginning of period               879                                                 879
                                                          --------         --------          --------        ---------

Cash and cash equivalents at end of year                  $    142         $    715          $    -          $     857
                                                          ========         ========          ========        =========
</TABLE>

                                       48
<PAGE>
     ITEM 9.--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

None.




















                                              49

<PAGE>

                                    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
Sole 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 Sole Stockholder has will
be increased so that the Sole Stockholder will have one more vote than the
number of votes of all of the other directors aggregated. The second director,
(the "Special Director"), is unaffiliated with the Sole Stockholder or any other
affiliate of the Sole Stockholder, has no other position with LVSI or Venetian
and has one vote for all matters before the Board of Directors. To the extent
the Special Director receives compensation, it is paid by LVSI from sources
unrelated to and independent from the Sole Stockholder and its affiliates (other
than LVSI and Venetian). The Special 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.
<TABLE>
<CAPTION>
       Name                    Age       Position
-----------------------       ----       --------------------------------------------------
<S>                            <C>       <C>                                                  
Sheldon G. Adelson             65        Chairman of the Board, Chief Executive Officer and
                                         Director
William J. Raggio              72        Special Director
William P. Weidner             53        President and Chief Operating Officer
Bradley H. Stone               43        Executive Vice President
Robert G. Goldstein            43        Senior Vice President
David Friedman                 42        Assistant to Chairman of the Board and Secretary
Harry D. Miltenberger          55        Vice President--Finance
</TABLE>

     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. 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.

     William J. Raggio was elected as Special Director of the Company upon
consummation of the Offering in November 1997. Since 1991, Mr. Raggio has been
an attorney and shareholder in the law firm of Vargas & Bartlett, and since 1998
with its successor Jones and Vargas. Since 1972, he has served as an elected
member of the Nevada State Senate, holding the positions of Senate Majority
Leader and Chairman of the Senate Finance Committee. Mr. Raggio has also been a
member of the Board of Directors of Sierra Health Services since 1984 and was a
member of the Board of Directors and an Executive Vice President of Santa Fe
Gaming Corp. from 1987 to 1998.

     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.



                                       50

<PAGE>
     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.

     David Friedman has been Assistant to the Chairman of Interface since
October 1995. Subsequently, Mr. Friedman became both Assistant to the Chairman
of the Company and Secretary of the Company. Mr. Friedman is also an officer of
other companies owned by Mr. Adelson. Prior to joining the Company, Mr. Friedman
was the Senior Vice President of Development and Legal Affairs for President
Casinos, Inc. from May 1993 to October 1995.

     Harry D. Miltenberger is a certified public accountant and has been Vice
President--Finance of the Company since February 1997. From March 1995 until
February 1997 he was Senior Vice President and Chief Financial Officer of SUB, a
banking company; from April 1993 to March 1995 he was a Director of Winco
Product Corp.

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, 1998, the five highest paid executive officers of LVSI, which is
the managing member of Venetian. Sheldon G. Adelson, the Chairman of the Board
and Chief Executive Officer of LVSI, received no compensation in 1996, 1997 and
1998. Notwithstanding the foregoing, in future years, LVSI plans to provide
salary, bonus or other compensation to Mr. Adelson in his capacity as Chairman
of the Board and Chief Executive Officer of LVSI. 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.
<TABLE>
<CAPTION>
                                                                            Long Term
                                                                           Compensation
                                                                              Awards

                                               Annual Compensation          Securities       All Other
                                                                            Underlying     Compensation
       Name and Principal Position        Year       Salary      Bonus       Options           (1)
       ---------------------------        ----       ------      -----       -------           ---
<S>                                      <C>        <C>         <C>             <C>          <C>  
William P. Weidner                       1998      $779,917                     --            2,592
 President and Chief Operating Officer   1997       794,915     50,000          --            6,570
                                         1996       772,717                                  26,832

Bradley H. Stone                         1998       500,806                     --              918
 Executive Vice President                1997       510,430     40,000          --              918
                                         1996       493,606                                  20,697

Robert G. Goldstein                      1998       376,970                     --              918
 Senior Vice President                   1997       384,220     40,000          --              918
                                         1996       369,770                                  15,859

David Friedman                           1998       306,347    105,000          --              914
 Assistant to Chairman of the            1997       228,654     90,000          --              816
 Board and Secretary                     1996       196,154                                  21,849

Harry D. Miltenberger                    1998       195,000                     --            2,848
 Vice President-Finance                  1997       147,769     30,000          --           12,307
                                         1996            --         --          --               --
</TABLE>

(1) Represents moving expense and other miscellaneous expenses.

Employment Agreements

     William P. Weidner, Bradley H. Stone and Robert G. Goldstein each has an
employment agreement (collectively, the "Employment Agreements") with the
Company continuing through December 31, 2000 (the "Initial Term"). The
agreements originally had a termination date of December 31, 1998, but have been
extended by the Company through December 31, 2000, in accordance with two-year
extension rights of the Company. Pursuant to the Employment Agreements, the
officers have such powers, duties and responsibilities as are generally
associated with their offices, as may be modified or assigned by the Chairman of
the Board of Directors (or the President in the case of Mr. Stone and Mr.


                                       51
<PAGE>
Goldstein), and subject to the supervision of the Board of Directors (and the
President in the case of Mr. Stone and Mr. Goldstein). The agreements provide
that, during the terms of their employment, the officers will not engage in any
other business or professional pursuit unless consented to by the Company in
writing.

     The terms of the Employment Agreements provide for an annual base salary
for Mr. Weidner, Mr. Stone and Mr. Goldstein of $779,917, $500,806 and $376,970,
respectively. The foregoing salaries were adjusted for a cost-of-living
adjustments, effective January 1, 1999. The employment agreements also provide
for the grant of options to acquire shares of common stock of the Company
representing 2%, 1.5% and 1.0%, respectively, of the shares issued and
outstanding upon the issuance of all shares for which options have been granted
under the Employment Agreements. However, none of such options are effective for
any purpose whatsoever until and unless the grant of such options has been
approved by the Nevada Commission. See "-Las Vegas Sands, Inc. 1997 Fixed Stock
Option Plan." The officers are also entitled to receive other employee benefits
of the Company. The agreements may be terminated by either the Company or the
officer upon proper notice, pursuant to the terms of the Employment Agreements.
Under the agreements, in the event of a Cause Termination, Breach Termination,
Voluntary Termination or Licensing Termination (each as defined therein), all
salary and benefits shall immediately cease subject to any requirements of law,
all unexercised options shall be canceled and forfeited and all shares of common
stock held shall be redeemed by the Company at a price equal to the lesser of
the exercise price of such shares or the Fair Market Value (as defined therein)
on the date of termination, payable in sixty equal consecutive monthly
installments with interest at the Applicable Federal Rate (as defined therein).
In the event of a Company Breach Termination, Constructive Termination or
Involuntary Termination (each as defined therein), the Company is obliged to pay
to the officer involved his salary for the rest of the term of the Employment
Agreement until the officer becomes gainfully employed elsewhere, in which event
the Company is obliged to pay the difference in the income earned in such other
employment and the salary payable under the agreement with the Company. The
amount that the officer is entitled to receive upon termination will depend upon
the amount of time remaining in the term of such agreement as of the date of the
officer's termination of employment. If a Company Breach Termination,
Constructive Termination or Involuntary Termination occurred with respect to Mr.
Weidner, Mr. Stone and Mr. Goldstein on December 31, 1998, 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,
2000 would have been $1,559,834, $1,001,612 and $753,940, respectively, based on
their salaries of $779,917, $500,806 and $376,970, respectively. Such amounts
would have been subject to mitigation, as described above, if the officer became
gainfully employed elsewhere. In addition, all unexercised options shall be
canceled and forfeited and all shares of the Company held by the officer shall
be redeemed by the Company at a price equal to the greater of the exercise price
for such shares or the Fair Market Value on the date of termination, payable in
36 equal consecutive monthly installments with interest at the Applicable
Federal Rate. In the case of a Death Termination (as defined therein), salary
shall be paid through the date of death, all unexercised options shall be
automatically cancelled, and all shares of the Company held by the officer shall
be redeemed by the Company for a price payable by the Company to the officer's
estate equal to all sums paid by the officer for the shares plus the difference
between (x) the exercise price paid for the shares and (y) the Fair Market Value
of such shares, payable in 36 equal consecutive monthly installments with
interest at the Applicable Federal Rate. In the case of Disability Termination,
salary, less any applicable disability insurance payments, shall be continued
for a period of six months following the date of termination and all options and
shares shall 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 the Company 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. None of the options granted
under the Plan will become effective for any purpose whatsoever until and unless
the grant of such options has been approved by the Nevada Commission. The
purpose of the Plan is to promote the interest of the Company and its Sole
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 therefor, and the conditions and limitations
applicable to the exercise of the option. The Board of Directors is authorized
to make adjustments in 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. 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 Sole Stockholder may, at any time, assume the Plan or certain obligations
under the
                                       52
<PAGE>

Plan, in which case the Sole 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 such shall not be
made 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 Plan expires, and no options may be
granted under the Plan after the year 2007.

     Upon approval of the Plan by the Nevada Commission, options are intended to
be granted under the Plan to Mr. Weidner, Mr. Stone, Mr. Goldstein, Mr. Friedman
and Mr. Miltenberger (the "Named Optionees") (as well as other individuals) to
acquire shares representing 2.0%, 1.5%, 1.0%, 0.5% and 0.1%, respectively, of
the common stock of the Company. The Plan allows Mr. Adelson to assume the
obligations under the Plan relating to such options and to enter into award
agreements with the Named Optionees. The options granted to the Named Optionees
are expected to be immediately vested and exercisable upon grant, except with
respect to Mr. Miltenberger whose option is expected to be subject to certain
vesting provisions. It is intended that the options will expire on the earlier
of (i) the eighth anniversary of the date of grant, (ii) the date three days
prior to a Change in Control Acceleration Event (as defined in the Plan) (iii)
the date three days prior to a Public Offering Acceleration Event (as defined in
the Plan) and, (iv) in the case of Mr. Friedman and Mr. Miltenberger, on or
shortly following each Named Optionee's termination of employment in accordance
with the terms of the applicable Award Agreement. Shares issued to the Named
Optionees pursuant to the exercise of an option and held at the time of each
Named Optionee's termination of employment are subject to redemption by the
Company or Mr. Adelson, if he so issued them, in accordance with the terms of
the applicable award agreements of the Named Optionees and for Messrs. Weidner,
Stone and Goldstein, also consistent with the terms of the Employment
Agreements, as described in "Employment Agreements" above.

ITEM 12.--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information as of March 26, 1999
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 executive
officers named in the summary compensation table in "Item 11 - Executive
Compensation" and (iv) all executive officers and directors of LVSI as a group.

                                                    Shares of
                                                      Common
BeneficialOwner(1)                                     Stock        Percentage
-----------------                                   ---------       ----------
Sheldon G. Adelson                                   925,000           100%
William J. Raggio                                          0             0%
William P. Weidner (2)                                     0             0%
Bradley H. Stone (2)                                       0             0%
Robert G. Goldstein (2)                                    0             0%
David Friedman (2)                                         0             0%
Harry D. Miltenberger (2)                                  0             0%
All executive officers and the directors of
 the Company as a group                              925,000           100%


(1) The address of each person named below is c/o the Company, 3355 Las Vegas
    Boulevard South, Room 1A, Las Vegas, Nevada 89109.

(2) Does not include options to purchase common stock of the Company not 
    exercisable within 60 days of the date hereof in connection with the
    development of the Casino Resort and pursuant to the terms of each of their
    employment agreements or other agreements with the Company, each of Messrs.
    Weidner, Stone, Goldstein, Friedman and Miltenberger are to be granted
    options to purchase common stock of LVSI representing 2.0%, 1.5%, 1.0%,
    0.5% and 0.1%, respectively, of the shares of common stock of LVSI
    outstanding after giving effect to the issuance of all shares for which
    options have been granted. However, none of such options are effective for
    any purpose whatsoever until and unless the grant of such options has been
    approved by the Nevada Commission. See "Item 11 - Executive Compensation -
    Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan."



                                       53

<PAGE>
ITEM 13.--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Redeemable Preferred Interest

     Venetian currently has two members, the Company and Interface Group Holding
Company, Inc. ("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 interests in Venetian. Interface Holding currently holds a Series B
preferred interest (the "Series B Preferred Interest") in Venetian. The rights
of the Series B Preferred Interest are non-voting, not subject to mandatory
redemption or redemption at the option of the holder and will have a preferred
return of 12% and upon the 12th anniversary of the closing of the Offering, 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 Bank Credit Facility is repaid and
cash payments are permitted under the restricted payment covenants under the
Indentures, the preferred return on the Series B Preferred Interest will accrue
and 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.

Sole Stockholder Guaranty of Mall Construction Loan Facility and Take-out 
Financing

     The Sole Stockholder has guaranteed up to $35.0 million of indebtedness
outstanding under Tranche B of the Mall Construction Loan Facility. The Sole
Stockholder's obligations under such guaranty are collateralized by a cash
collateral account. If any amounts are drawn on the guaranty of Tranche B of the
Mall Construction Loan Facility, the Sole Stockholder will have the right to
elect to treat such amounts as a subordinated loan (the "SubstituteTranche B
Loan") from the Sole Stockholder to Venetian and the Mall Construction
Subsidiary. The Substitute Tranche B Loan will be subordinated in right of
payment to indebtedness under the Bank Credit Facility, the Mall Construction
Loan Facility and the Mortgage Notes. If the Sole Stockholder makes this
election: (i) the interest rate will not exceed that which was applicable to
Tranche B of the Mall Construction Loan; (ii) there will be no scheduled
principal amortization for the Substitute Tranche B Loan and the Substitute
Tranche B Loan will mature on the same date as the Senior Subordinated Notes;
(iii) irrespective of the stated interest payment schedules, no payments will be
permitted on the Substitute Tranche B Loan unless all payments then due on any
debt secured by the Mall Collateral on a senior basis at that time have been
paid in full, and any cash payments that are due but that are prohibited will
accrue; (iv) the Substitute Tranche B Loan will, until completion and transfer
of the Mall to the Mall Subsidiary, be pari passu in right of payment with the
Senior Subordinated Notes; (v) the Substitute Tranche B Loan provides that
Venetian and the Mall Construction Subsidiary will be released from further
liability with respect to the Substitute Tranche B Loan upon satisfaction of the
conditions to the release of the Mall Collateral and the Substitute Tranche B
Loan will be assumed by the Mall Subsidiary; and (vi) the loan documents will
contain certain subordination provisions (such as no right to object to
modifications of debt secured on a senior basis by the Mall Collateral, and no
right to exercise remedies without consent from the senior lenders and the
holders of the Senior Subordinated Notes).

     The indebtedness under the Tranche A Take-out Financing must be repaid
within three years and is expected to be a $105.0 million loan secured by the
Mall. The Sole Stockholder has agreed to guarantee, on an unsecured basis, $20.0
million of indebtedness under the Tranche A Take-out Financing. An affiliate of
the Sole Stockholder has also agreed to provide the Tranche B Take-out
Financing. See "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources."

Completion Guaranty

     Pursuant to the Completion Guaranty, the Sole Stockholder has guaranteed,
subject to certain conditions and limitations, payment of construction and
development costs in excess of available funds, up to a maximum of $25.0
million. The Sole Stockholder's obligation to fund such excess construction and
development costs is collateralized by $25.0 million in cash or cash equivalents
pledged to the Disbursement Agent. If the LVSI or Venetian want to implement a
scope change or change order, and such scope change or change order would cause
construction and development costs to exceed available funds, such scope change
or change order cannot be implemented unless the Sole Stockholder increases the
maximum amount available under the Completion Guaranty, and pledges to the
Disbursement Agent additional cash or cash equivalents, in the amount of such
excess. The Completion Guaranty does not provide for the incurrence by the Sole
Stockholder, directly or indirectly, of any obligation, contingent or otherwise,
for the payment of the principal, premium and interest on the Notes, or any
other indebtedness under the financings described herein. If the Sole
Stockholder provides funds under the Completion Guaranty, the amount of such
funds, up to a maximum of $25.0 million, will be treated as a loan from the Sole
Stockholder to LVSI and Venetian that is subordinated in right of payment to the
indebtedness under the
                                       54
<PAGE>
Bank Credit Facility, the Mall Construction Loan Facility, the FF&E Credit
Facility, the Mortgage Notes and the Senior Subordinated Notes. Although
interest may accrue on such loan, no cash payments with respect to such loan may
be made until all senior indebtedness (including the Senior Subordinated Notes)
is repaid, except for payments made from certain construction-related
recoveries.

Cooperation Agreement

     The Company's business plan calls for the Hotel and Casino, the Mall and
the Expo Center, 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 Casino and the Phase II Land),
the Mall Construction Subsidiary, and Interface have entered into the
Cooperation Agreement. The Cooperation Agreement sets forth agreements among the
parties regarding, among other things, construction of the Casino Resort,
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 bind the respective properties (including (i) the Expo
Center, (ii) the Hotel and Casino, (iii) the Mall and (iv) the Phase II Land)
with priority over the liens securing the Bank Credit Facility and the Mortgage
Notes and the liens encumbering the Mall to secure the Mall Construction Loan
and the Mall Take-out Financings. Conversely, certain of the obligations under
the Cooperation Agreement are not senior to the previously recorded mortgages
encumbering the Expo Center. Accordingly, the obligations under the Cooperation
Agreement "run with the land" in the event of transfers of the respective
properties (other than a transfer by foreclosure of the existing mortgages
encumbering the Expo Center).

     The Cooperation Agreement sets forth covenants to effect and facilitate
construction of the Casino Resort. The Cooperation Agreement contains cross
encroachment provisions which will 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
parcel.

     The Cooperation Agreement also contains certain covenants respecting the
operation of the Expo Center and, once the Casino Resort is completed, the
Casino Resort. Such covenants include, for example, to operate continuously and
to use the Hotel and the Casino exclusively in accordance with standards of
first-class Las Vegas Boulevard-style hotels and casinos, the Mall Subsidiary
covenants to operate and to use the Mall exclusively in accordance with
standards of first-class retail and restaurant complexes, and 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.

     The Cooperation Agreement also requires each of (a) the owners of the
Casino Resort (including both the Hotel and Casino and the Mall) and (b) the
owner of the Expo Center, to maintain certain minimum types and levels of
insurance, including property damage, general liability and delay in opening or
business interruption insurance.

Administrative Services Agreement

     Pursuant to a certain services agreement (the "Services Sharing Agreement")
among LVSI, certain of its subsidiaries and Interface Holdings (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, 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.

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 on a month-to-month basis.

                                       55
<PAGE>
Retirement Plan

     All of the employees of Interface were eligible to participate in the Las
Vegas Sands, Inc. 401(k) Retirement Plan sponsored by LVSI through 1998. In
1999, LVSI established a new plan and Interface assumed the original LVSI plan.
Costs related to the administration of the 1998 plan of LVSI are shared with
LVSI based on the number of employees of each of Interface and LVSI
participating in the plan.

Airplane Expenses

     LVSI utilizes a Gulfstream III aircraft, which is operated by an affiliate
of the Sole Stockholder. The aircraft is used primarily for the benefit of
LVSI's executive officers, including the Sole Stockholder. Charge-backs to LVSI
in connection with such use are based on the actual costs to operate the
aircraft allocated in accordance with the purpose for which the aircraft is
used. During 1998 the Company reimbursed the affiliate $450,000 for use of the
aircraft.

Possible Conflicts of Interest

     The common 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, LVSI, Venetian and the Phase II
Subsidiary are expected to enter into certain cost sharing and easement
agreements, such as the Cooperation Agreement.

     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. As a result, the Casino Resort could engage in certain
businesses which may have an adverse impact on the Expo Center. However, 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. Furthermore, management may engage in
marketing practices with respect to the Casino Resort that are intended to
benefit the Expo Center and may have a detrimental effect on the Casino Resort.

Other Transactions

     In 1998, LVSI received from, and rendered to, Interface and its affiliates,
certain administrative and other services such as travel. Any such services are
provided either on an arm's-length basis or at a cost based on the actual costs
incurred to provide such services. The Company paid certain affiliates $1.3
million for these services during 1998.






                                       56
<PAGE>
                                     PART IV

ITEM 14.--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 Accountants
      Consolidated Balance Sheets
      Consolidated Statements of Operations
      Consolidated Statements of Stockholders' Equity
      Consolidated Statements of Cash Flows
      Notes to Financial Statements

   (2) List of Financial Statement Schedules

   Schedules are omitted because they are either not applicable or the required
   information is shown in the financial statements or notes thereto.

   (3) List of Exhibits
<TABLE>
<CAPTION>
    Exhibit No. Description of Document
<S>             <C> 
    3.1         Amended and Restated Articles of Incorporation of LVSI.*
    3.2         Certificate  of  Amendment  of Amended and  Restated  Articles of  Incorporation  of LVSI.*
    3.3         Amended and Restated By-laws of LVSI.*
    3.4         Amended and Restated Limited Liability Company Agreement of Venetian.*
    4.1         Indenture, dated as of November 14, 1997, among LVSI and Venetian, as issuers, Mall
                Intermediate Holding Company, LLC ("Mall Intermediate"), Lido Intermediate Holding
                Company,  LLC ("Lido  Intermediate") and Mall Construction  Subsidiary,  as Mortgage Note
                guarantors, and the Mortgage Note Trustee.*
    4.2         Indenture, dated as of November 14, 1997, among LVSI and
                Venetian, as issuers, Mall Intermediate, Lido Intermediate and
                Mall Construction Subsidiary, as Senior Subordinated
                Note  guarantors, and First Union National Bank ("First Union"), as Senior Subordinated
                Note trustee.*
    4.3         Registration Rights Agreement, dated as of November 14, 1997, among LVSI, Venetian,
                Mall Intermediate, Lido Intermediate and Mall Construction Subsidiary, and
                Goldman, Sachs & Co. and Bear, Stearns & Co. Inc. (the "Initial Purchasers").*
    4.4         Funding Agents' Disbursement and Administration Agreement, dated as of November 14,
                1997, among LVSI, Venetian, Mall Construction Subsidiary,
                jointly and severally, the Bank Agent, First Trust, the HVAC Provider and the Disbursement
                Agent.* 
    4.5         Company Security Agreement, dated as of November 14, 1997, by and among LVSI,
                Venetian, Mall Construction Subsidiary and The Bank of Nova Scotia ("Scotiabank"),
                as the Intercreditor Agent.*
    4.6         Mall Construction Subsidiary Security Agreement, dated as of November 14, 1997, between
                Mall Construction Subsidiary and Scotiabank, as the Intercreditor Agent.*
    4.7         Deed of Trust, Assignment of Rents and Leases and Security Agreement made by Venetian
                and LVSI, jointly and severally as trustor, to Lawyer's Title of Nevada, Inc. ("Lawyer's
                Title"), as trustee, for the benefit of U.S. Bank Trust National Association, (previously 
                known as First Trust National Association) in its capacity as the Mortgage Note trustee (the
                "Mortgage Note Trustee"), as Beneficiary.*
   4.8          First Amendment to Deed of Trust, Assignment of Rents and Leases and Security Agreement made 
                by Venetian and LVSI, jointly and severally as trustor, to Lawyer's Title, as trustee,
                for the benefit of the Mortgage Note Trustee, as Beneficiary.***

                                       57


<PAGE>

   Exhibit No.  Description of Document


    4.9         Leasehold Deed of Trust, Assignment of Rents and Leases and Security Agreement made by
                Mall Construction Subsidiary, as trustor, to Lawyer's Title, as trustee, for the benefit 
                of the Mortgage Note Trustee, as Beneficiary.*
    4.10        First Amendment to Leasehold Deed of Trust, Assignment of Rents and Leases and Security 
                Agreement made by Mall Construction Subsidiary, as trustor, to Lawyer's Title, as
                trustee, for the benefit of the Mortgage Note Trustee, as Beneficiary.***
    4.11        Disbursement Collateral Account Agreement, dated as of November 14, 1997, by and among
                LVSI, Venetian, Mall Construction Subsidiary and Scotiabank, as Disbursement Agent and as
                Securities Intermediary.*
    4.12        Mortgage Notes Proceeds Collateral Account Agreement, dated as of November 14, 1997, by
                and among LVSI, Venetian and Scotiabank, as Disbursement Agent.*
    4.13        Mortgage Notes Proceeds Account Third-Party Account Agreement, dated as of November
                14, 1997, by and among LVSI, Venetian, Scotiabank, as Disbursement Agent, and
                Goldman, Sachs & Co., as Securities Intermediary.*
    4.14        Intercreditor Agreement, dated as of November 14, 1997, among Scotiabank, as Bank Agent
                and Intercreditor Agent, the Mortgage Note Trustee, GMAC Commercial Mortgage
                Corporation   ("GMAC"),   as  Interim  Mall  Lender  and  First  Union,   as  Senior Subordinated
                Note trustee.*
    4.15        Completion Guaranty, dated as of November 14, 1997, made by Sheldon G. Adelson, in favor of 
                Scotiabank, as the Bank Agent acting on behalf of the Bank Lenders, GMAC, as
                the Interim Mall Lender, and First Trust, as the Mortgage Note trustee.*
    4.16        Completion Guaranty Collateral Account Agreement, dated as of November 14, 1997,
                by and between Sheldon G. Adelson, as Pledgor, and Scotiabank, as Disbursement Agent.*
    4.17        Completion Guaranty Third-Party Account Agreement, dated as of November 14, 1997,
                by and among Sheldon G. Adelson, Scotiabank, as Disbursement Agent, and Goldman,
                Sachs & Co., as Securities Intermediary.*
    4.18        Unsecured Indemnity Agreement, dated as of November 14, 1997, by LVSI, Venetian and Mall 
                Construction Subsidiary, to and for the benefit of First Trust.*
   10.1         Bank Credit Agreement, dated as of November 14, 1997, among LVSI, Venetian, the lender
                parties thereto, Goldman Sachs Credit Partners, L.P. ("GSCP"), as arranger and syndication
                agent, and Scotiabank, as administrative agent.*
   10.2         Credit Agreement, dated as of November 14, 1997, among LVSI,
                Venetian, Mall Construction Subsidiary and GMAC.*
   10.3         Energy Services Agreement, dated as of November 14, 1997, by and between the HVAC
                Provider and Venetian.*
   10.4         Energy Services Agreement, dated as of November 14, 1997, by and
                between the HVAC Provider and Mall Construction Subsidiary.*
   10.5         Construction Management Agreement, dated as of February 15,1997, between LVSI, as
                owner, and the Construction Manager.*
   10.6         Assignment, Assumption and Amendment of Construction Management
                Agreement, dated as of November 14, 1997, by and between LVSI,
                Venetian and the Construction Manager.*
   10.7         Agreement, effective as of January 1, 1996, between Venetian, as owner, and the architect, a
                collaboration between the firms of TSA of Nevada, LLP and WAT&G, Inc., Nevada.* 
   10.8         Amended and Restated Reciprocal Easement, Use and Operating Agreement, dated as of
                November 14, 1997, among Interface, Mall Construction Subsidiary and Venetian.* 
   10.9         Sale and Contribution Agreement, dated as of November 14, 1997, among Venetian, the Mall
                Subsidiary and Mall Construction Subsidiary.*
   10.10        Indenture of Lease, dated as of November 14, 1997, by and between Venetian, as landlord,
                and Mall Construction Subsidiary, as tenant.*
   10.11        Commitment Letter, dated as of November 14, 1997, among LVSI, the Mall Subsidiary and
                GSMC.*
   10.12        Commitment Letter, dated as of November 14, 1997, between the Mall Subsidiary and the
                Sole Stockholder.*
   10.13        Tri-Party Agreement, dated as of November 14, 1997, among LVSI, Venetian, the Mall 
                Subsidiary, Mall Construction Subsidiary, the Sole Stockholder, GSMC and GMAC.*

                                       58
<PAGE>
Exhibit No.     Description of Document

   10.14        Casino Lease, dated as of November 14, 1997, by and between LVSI and Venetian.* 
   10.15        Amended and Restated Services Agreement, dated as of November 14, 1997, by and 
                between Venetian, Interface Holding, Interface, Lido Casino Resort MM, Inc., Grand Canal
                Shops Mall MM, Inc. and certain subsidiaries of Venetian named therein.*
   10.16        Completion Guaranty Loan Subordinated Note, dated as of November 14, 1997, made by
                Venetian in favor of the Sole Stockholder.*
   10.17        Substitute Tranche B Loan Subordinated Note, dated as of November 14, 1997, made by 
                Venetian and Mall Construction Subsidiary in favor of the Sole Stockholder.*
   10.18        Intercreditor Agreement, dated as of November 14, 1997, by and among Scotiabank,
                as the Administrative Agent, the Mortgage Note Trustee, GMAC, as the Interim Mall
                Lender, First Union, as Subordinated Note trustee, LVSI, Venetian, Mall
                Construction Subsidiary and the Sole Stockholder.*
   10.19        Unsecured Indemnity Agreement, dated as of November 14, 1997,
                by LVSI, Venetian and Mall Construction Subsidiary, to and for the benefit of
                Scotiabank, as Administrative Agent under the Bank Credit Facility.*
   10.20        Unsecured Indemnity Agreement, dated as of November 14, 1997, by LVSI, Venetian 
                and Mall Construction Subsidiary, to and for the benefit of GMAC.*
   10.21        Construction Agency Agreement, dated as of November 14, 1997, by and between
                Venetian and the HVAC Provider.*
   10.22        Management Agreement, dated as of April 23, 1997, by and between LVSI and Forest City
                Commercial Management, Inc., as assigned by LVSI to Mall Construction Subsidiary, by that
                certain Assignment and Assumption of Contracts.*
   10.23        Primary Liquidated Damages Insurance Agreement, dated August 4, 1997, by and between
                the Construction Manager and C.J. Coleman & Companies, Ltd.*
   10.24        Guaranty of Performance, dated as of August 19, 1997, by P&O in
                favor of LVSI, as assigned by LVSI to Venetian by that certain Assignment,
                Assumption and Amendment of Contracts.*
   10.25        Guaranty of Performance and Completion, dated as of August 19, 1997, by Bovis, LVSI,
                Venetian and Mall Construction Subsidiary, for the benefit of Scotiabank, as the Intercreditor Agent.*
   10.26        Consulting and Lease Brokerage Agreement between BRC and LVSI, dated as of January 23, 1997.*
   10.27        Sands Resort Hotel and Casino Agreement, dated February 18, 1997, by and between Clark
                County and LVSI, and all amendments thereto.*
   10.28        Las Vegas Sands, Inc. 1997 Fixed Stock Option Plan.*
   10.29        Employment Agreement, dated as of November 1, 1995, between LVSI and William P. Weidner.*
   10.30        Employment Agreement, dated as of November 1, 1995, between LVSI and Bradley H. Stone.*
   10.31        Employment Agreement, dated as of November 1, 1995, between LVSI and Robert G. Goldstein.*
   10.32        First Amendment to Credit Agreement, dated as of January 30, 1998, by and among LVSI,
                Venetian, the lender parties thereto, GSCP, as arranger and syndication agent, and
                Scotiabank, as administrative agent.*
   10.33        Term Loan and Security Agreement, dated as of December 22, 1997, among LVSI and Venetian,
                as Borrowers, the lender parties thereto, BancBoston Leasing, Inc., as co-agent,
                and General Electric Capital Corporation ("GECC"), as administrative agent.*
   10.34        Intercreditor Agreement, dated as of December 22, 1997, by and among Scotiabank, as Bank
                Agent, First Trust, as Mortgage Note trustee, GMAC and GECC.*
   10.35        Guaranteed Maximum Price Amendment to Construction Management Agreement, dated
                June 17, 1998 (effective September 9, 1998), between Lehrer
                McGovern Bovis, Inc. and Venetian.**
   21.1         Subsidiaries of the Issuers and Guarantors.*
   24.1         Powers of Attorney (included on signature pages).
   27.1         Financial Data Schedule.***
</TABLE>
                                                 59
<PAGE>
   * Incorporated  by reference from  Registration  Statement on Form S-4 of 
     the Company and certain of its subsidiaries (File No. 333-42147).

 **  Incorporated by reference from the Company's Quarterly Report on Form 10-Q
     for the Quarter ended September 30, 1998.

*** Filed herewith.

(b)  Reports on Form 8-K

No report on Form 8-K was filed during the quarter ended December 31, 1998.





























                                                 60
<PAGE>


                                   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. Adelson,
                                               Chairman of the Board and
                                               Chief 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.
<TABLE>
<CAPTION>
     SIGNATURE                      TITLE                                 DATE
     ---------                      -----                                 ----
<S>                         <C>                                       <C> 
/s/ Sheldon G. Adelson     Chairman of the Board, Chief              March 30, 1999
----------------------     Executive Officer and Director           
Sheldon  G. Adelson         

/s/ William J. Raggio      Special Director                          March 30, 1999
 ---------------------                                                            
William J. Raggio

/s/ Harry D. Miltenberger  Vice President--Finance (principal        March 30, 1999
-------------------------  financial and accounting officer)
Harry D. Miltenberger        

</TABLE>













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