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As
filed with the Securities and Exchange Commission on March 31, 2009
   UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 
 Commission file number 001-33178
 MELCO CROWN ENTERTAINMENT LIMITED
  
  
 Cayman Islands
  
 
 
 
 
  Title of Each Class
    
    Name of Each Exchange on Which RegisteredAmerican depositary shares
    
    The NASDAQ Stock Market LLCeach representing three ordinary shares
 
 
 
 Indicate the number of outstanding shares of each of the issuers classes of capital or common
stock as of the close of the period covered by the annual report.
  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act. YesoNoþ
 If this report is an annual or transition report, indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes o No þ
 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 (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in
Rule 12b-2 of the Exchange Act. (Check one):
 þ Large accelerated filer
    
    o Accelerated filer
    
    o Non-accelerated filer
 Indicate by check mark which basis of accounting the registrant has used to prepare the financial
statements included in this filing:
 U.S. GAAPþ
    
    International Financial Reporting Standards as issued
by the International Accounting Standards Boardo
    
    Othero
 If Other has been checked in response to the previous question, indicate by check mark which
financial statement item the registrant has elected to follow. Item 17 o Item 18 o
 If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes o No þ
 (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
 Indicate by check mark whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court. Yes o No o




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INTRODUCTION
    
    
    1SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    3PART I
    
    
    5Item 1. Identity Of Directors, Senior Management and Advisers
    
    
    5Item 2. Offer Statistics and Expected Timetable
    
    
    5Item 3. Key Information
    
    
    5A. Selected Financial Data
    
    
    5B. Capitalization and Indebtedness
    
    
    8C. Reasons for the Offer and Use of Proceeds
    
    
    8D. Risk Factors
    
    
    8Item 4. Information on the Company
    
    
    41A. History and Development of the Company
    
    
    41B. Business Overview
    
    
    42C. Organizational Structure
    
    
    65D. Property, Plant and Equipment
    
    
    67Item 4A. Unresolved Staff Comments
    
    
    67Item 5. Operating and Financial Review and Prospects
    
    
    67A. Operating Results
    
    
    67B. Liquidity And Capital Resources
    
    
    81C. Research And Development, Patents And Licenses, Etc.
    
    
    87D. Trend Information
    
    
    88E. Off-Balance Sheet Arrangements
    
    
    88F. Tabular Disclosure Of Contractual Obligations
    
    
    88G. Safe Harbor
    
    
    89Item 6. Directors, Senior Management And Employees
    
    
    89A. Directors And Senior Management
    
    
    89B. Compensation Of Directors And Executive Officers
    
    
    95C. Board Practices
    
    
    95D. Employees
    
    
    101E. Share Ownership
    
    
    102Item 7. Major Shareholders And Related Party Transactions
    
    
    103A. Major Shareholders
    
    
    103B. Related Party Transactions
    
    
    107C. Interests Of Experts And Counsel
    
    
    108Item 8. Financial Information
    
    
    108A. Consolidated Statements And Other Financial Information
    
    
    108
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B. Significant Changes
    
    
    108Item 9. The Offer And Listing
    
    
    109A. Offering And Listing Details
    
    
    109B. Plan Of Distribution
    
    
    109C. Markets
    
    
    109D. Selling Shareholders
    
    
    109E. Dilution
    
    
    110F. Expenses Of The Issue
    
    
    110Item 10. Additional Information
    
    
    110A. Share Capital
    
    
    110B. Memorandum And Articles Of Association
    
    
    110C. Material Contracts
    
    
    110D. Exchange Controls
    
    
    110E. Taxation
    
    
    111F. Dividends And Paying Agents
    
    
    115G. Statement By Experts
    
    
    115H. Documents On Display
    
    
    116I. Subsidiary Information
    
    
    116Item 11. Quantitative And Qualitative Disclosures About Market Risk
    
    
    116Item 12. Description of Securities other than Equity Securities
    
    
    118PART II
    
    
    118Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    118Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    118Item 15. Controls And Procedures
    
    
    119Item 16A. Audit Committee Financial Expert
    
    
    120Item 16B. Code of Ethics
    
    
    120Item 16C. Principal Accountant Fees and Services
    
    
    121Item 16D. Exemptions From The Listing Standards For Audit Committees
    
    
    121Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    121Item 16F. Change in Registrants Certifying Accountant
    
    
    121Item 16G. Corporate governance
    
    
    121PART III
    
    
    122Item 17. Financial Statements
    
    
    122Item 18. Financial Statements
    
    
    122
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Item 19. Exhibits
    
    
    122EX-4.6 AMENDMENT AGREEMENTEX-4.7 SECOND AMENDMENT AGREEMENTEX-4.8 THIRD AMENDMENT AGREEMENTEX-4.20 NOVATION AND TERMINATION AGREEMENTEX-4.21 MANAGEMENT AGREEMENTEX-4.23 NOVATION AGREEMENTEX-4.27 NOVATION AGREEMENTEX-4.29 EXTENSION LETTEREX-4.30 EXTENSION LETTEREX-4.31 EXTENSION LETTEREX-8.1 LIST OF SUBSIDIARIESEX-11.1 CODE OF BUSINESS CONDUCT AND ETHICSEX-12.1 CEO CERTIFICATION PURSUANT TO SECTION 302EX-12.2 CFO CERTIFICATION PURSUANT TO SECTION 302EX-13.1 CEO CERTIFICATION PURSUANT TO SECTION 906EX-13.2 CFO CERTIFICATION PURSUANT TO SECTION 906EX-15.1 CONSENT OF WALKERS
   iii




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INTRODUCTION
  
    
    China, mainland China and PRC are to the Peoples Republic of China, excluding
Hong Kong, Macau and Taiwan;
    
    Greater China is to mainland China, Hong Kong, Macau and Taiwan, collectively;
    
    HK$ and H.K. dollars are to the legal currency of Hong Kong;
    
    Hong Kong is to the Hong Kong Special Administration Region of the Peoples
Republic of China;
    
    Macau and the Macau SAR are to the Macau Special Administrative Region of the
Peoples Republic of China;
    
    Patacas and MOP are to the legal currency of Macau;
    
    Renminbi and RMB are to the legal currency of China;
    
    US$ and U.S. dollars are to the legal currency of the United States; and
    
    U.S. GAAP is to the accounting principles generally accepted in the United States.
   1




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2




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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
    
    growth of the gaming market and visitation in Macau;
    
    satisfaction of and compliance with conditions and covenants under the
US$1.75 billion City of Dreams Project Facility, or City of Dreams Project Facility, to
maintain the facility;
    
    the completion of the construction of our City of Dreams project;
    
    obtaining approval from the Macau government for an increase in the developable
gross floor area of the City of Dreams site;
    
    the formal grant of an occupancy permit for the City of Dreams;
    
    our acquisition and development of the Macau peninsula site;
    
    the development of Macau Studio City;
    
    construction cost estimates for our development projects;
  3




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
    
    increased competition and other planned casino hotel and resort projects in Macau
and elsewhere in Asia, including in Macau from Sociedade de Jogos de Macau, S.A, or
SJM, Venetian Macau, Wynn Macau, Galaxy and MGM Grand Paradise;
    
    the completion of infrastructure projects in Macau;
    
    government regulation of the casino industry, including gaming license approvals and
the legalization of gaming in other jurisdictions;
    
    our ability to raise additional financing;
    
    the uncertainty of tourist behavior related to spending and vacationing at casino
resorts in Macau;
    
    our entering into new development and construction and new ventures;
    
    the liberalization of travel restrictions and convertibility of the Renminbi by
China;
    
    fluctuations in occupancy rates and average daily room rates in Macau;
    
    our anticipated growth strategies; and
    
    our future business development, results of operations and financial condition.
   4




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PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 
 A. SELECTED FINANCIAL DATA
  For the
    
    
    For theFor the Year
    
    
    For the Year
    
    
    For the Year
    
    
    For the Year
    
    
    Period from
    
    
    Period fromEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    June 9, 2004
    
    
    January 1,December
    
    
    December
    
    
    December
    
    
    December
    
    
    to December
    
    
    2004 to June31, 2008
    
    
    31, 2007
    
    
    31, 2006
    
    
    31, 2005
    
    
    31, 2004
    
    
    8, 2004(Successor)
    
    
    (Successor)
    
    
    (Successor)
    
    
    (Successor)
    
    
    (Successor)
    
    
    (Predecessor)(In thousands of US$, except share and per share data and operating data)Consolidated Statement
of Operations Data:Net revenues
    
    $
    1,416,134
    
    
    $
    358,496
    
    
    $
    36,101
    
    
    $
    17,328
    
    
    $
    6,071
    
    
    $
    1,896Total operating costs
and expenses
    
    
    (1,414,960
    )
    
    
    (554,313
    )
    
    
    (93,754
    )
    
    
    (21,050
    )
    
    
    (7,001
    )
    
    
    (1,286
    )Operating income (loss)
    
    $
    1,174
    
    
    $
    (195,817
    )
    
    $
    (57,653
    )
    
    $
    (3,722
    )
    
    $
    (930
    )
    
    $
    610Net (loss) income
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )
    
    $
    (3,259
    )
    
    $
    (1,007
    )
    
    $
    494Loss per share Basic and diluted
    
    $
    (0.002
    )
    
    $
    (0.145
    )
    
    $
    (0.116
    )
    
    $
    (0.006
    )
    
    $
    (0.002
    )
    
    

    
    * ADS(1)
    
    $
    (0.006
    )
    
    $
    (0.436
    )
    
    $
    (0.348
    )
    
    $
    (0.019
    )
    
    $
    (0.005
    )
    
    
    
    *Shares used in
calculating loss per
share Basic and diluted
    
    
    1,320,946,942
    
    
    
    1,224,880,031
    
    
    
    633,228,439
    
    
    
    522,945,205
    
    
    
    625,000,000
    
    
    

    
    *
 December 31,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(Successor)
    
    
    (Successor)
    
    
    (Successor)
    
    
    (Successor)
    
    
    (Successor)(In thousands of US$)Consolidated Balance Sheet Data:Cash and cash equivalents
    
    $
    815,144
    
    
    $
    835,419
    
    
    $
    583,996
    
    
    $
    19,769
    
    
    $
    5,537Restricted cash
    
    
    67,977
    
    
    
    298,983
    
    
    
    
    
    
    
    
    
    
    
    Total assets
    
    
    4,498,289
    
    
    
    3,620,268
    
    
    
    2,279,920
    
    
    
    421,208
    
    
    
    106,112Total current liabilities
    
    
    450,136
    
    
    
    483,685
    
    
    
    207,613
    
    
    
    138,741
    
    
    
    17,524Total debts(2)
    
    
    1,529,195
    
    
    
    616,376
    
    
    
    212,506
    
    
    
    94,577
    
    
    
    11,930Total liabilities
    
    
    2,089,685
    
    
    
    1,191,727
    
    
    
    389,554
    
    
    
    163,024
    
    
    
    23,845Minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,492
    
    
    
    35Total shareholders equity
    
    
    2,408,604
    
    
    
    2,428,541
    
    
    
    1,890,366
    
    
    
    238,692
    
    
    
    82,232
 
 *
    
    Figures not provided as the number of shares of our predecessor and our company are not
directly comparable.(1)
    
    Each ADS represents three ordinary shares.(2)
    
    Includes amounts due to shareholders within one year, loans from shareholders and
long-term debt.  5




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
    
    From January 1, 2004 to June 8, 2004, the consolidated financial statements of Mocha
Slot Group Limited, or Mocha, have been prepared for the purpose of presenting the
financial information of our predecessor. Mocha is considered as our predecessor
because we succeeded to substantially all of the business of Mocha and our own
operations prior to the succession were insignificant relative to the operations
assumed or acquired.
    
    From June 9, 2004 for Mocha, July 20, 2004 for Melco Crown (COD) Developments and
November 9, 2004 for Melco Crown (CM) Developments through March 7, 2005, the financial
statements reflect the consolidated financial statements of Mocha, Melco Crown (COD)
Developments and Melco Crown (CM) Developments because they were under common control
for this period. The contributions by Melco of its 80% interest in Mocha, 70% interest
in Melco Crown (CM) Developments and 50.8% interest in the City of Dreams project to
MPEL (Greater China) Limited, formerly Melco PBL Entertainment (Greater China) Limited,
a company previously 80% indirectly owned by us and 20% owned by Melco, and cash
contributions by Crown of US$163 million, which were completed on March 8, 2005, were
accounted for as the formation of a joint venture for which a carryover basis of
accounting has been adopted.
    
    In December 2004, we began construction of Crown Macau.
    
    In September 2006, we acquired a Macau subconcession. Prior to this date we did not
hold a concession or subconcession to operate gaming activities in Macau and we
operated under a services agreement with SJM.
    
    In April 2006, we commenced construction of the City of Dreams project.
    
    On May 12, 2007, Crown Macau opened and became fully operational on July 14, 2007.
 Exchange Rate Information
   6




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Noon Buying RatePeriod
    
    Period End
    
    
    Average(1)
    
    
    Low
    
    
    High(Hong Kong dollar per US$1.00)March 2009 (through March 20, 2009)
    
    
    7.7499
    
    
    
    7.7545
    
    
    
    7.7593
    
    
    
    7.7499February 2009
    
    
    7.7551
    
    
    
    7.7534
    
    
    
    7.7551
    
    
    
    7.7511January 2009
    
    
    7.7544
    
    
    
    7.7563
    
    
    
    7.7618
    
    
    
    7.7504December 2008
    
    
    7.7499
    
    
    
    7.7504
    
    
    
    7.7522
    
    
    
    7.7497November 2008
    
    
    7.7501
    
    
    
    7.7507
    
    
    
    7.7560
    
    
    
    7.7497October 2008
    
    
    7.7503
    
    
    
    7.7589
    
    
    
    7.7736
    
    
    
    7.7503September 2008
    
    
    7.7659
    
    
    
    7.7854
    
    
    
    7.8094
    
    
    
    7.75822008
    
    
    7.7499
    
    
    
    7.7814
    
    
    
    7.8159
    
    
    
    7.74972007
    
    
    7.7984
    
    
    
    7.8008
    
    
    
    7.8289
    
    
    
    7.74972006
    
    
    7.7771
    
    
    
    7.7685
    
    
    
    7.7928
    
    
    
    7.75062005
    
    
    7.7533
    
    
    
    7.7755
    
    
    
    7.7999
    
    
    
    7.75142004
    
    
    7.7723
    
    
    
    7.7899
    
    
    
    7.8010
    
    
    
    7.7632
 
 (1)
    
    Annual averages are calculated from month-end rates. Monthly averages are calculated
using the average of the daily rates during the relevant period.   7




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B. CAPITALIZATION AND INDEBTEDNESS
  
 C. REASONS FOR THE OFFER AND USE OF PROCEEDS
  
 D. RISK FACTORS
  Risks Relating to Our Early Stage of Development
 We are in an early stage of development of our business and properties, and so we are subject
to significant risks and uncertainties. Our limited operating history may not serve as an adequate
basis to judge our future operating results and prospects.
   
    
    satisfying and complying with conditions and covenants under the $1.75 billion City
of Dreams Project Facility to rollover existing revolving loans drawn down under the
facility and to maintain the facility; and
    
    acquiring an ownership interest in the company that owns the Macau peninsula site,
which is subject to significant conditions in the control of third parties unrelated to
us and the seller, and to obtaining Macau governmental approvals, and obtaining
financing commitments for the acquisition and development of the Macau peninsula
project.
  8




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
    
    complete our construction projects within their anticipated time schedules and
budgets;
    
    identify suitable locations and enter into new leases or right to use agreements
(which are similar to license agreements) for new Mocha Clubs;
    
    renew lease agreements for existing Mocha Clubs;
    
    attract and retain customers and qualified employees;
    
    operate, support, expand and develop our operations and our facilities;
    
    maintain effective control of our operating costs and expenses;
    
    raise additional capital, as required;
    
    fulfill conditions precedent to draw down funds from current and future credit
facilities;
    
    develop and maintain internal personnel, systems, controls and procedures to assure
compliance with the extensive regulatory requirements applicable to the gaming business
as well as regulatory compliance as a public company;
    
    respond to changes in our regulatory environment;
    
    respond to competitive market conditions; and
    
    respond to changing financing requirements.
  We could encounter problems that substantially increase the costs to develop our projects.
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
    
    changes to plans and specifications;
    
    engineering problems, including defective plans and specifications;
    
    shortages of, and price increases in, energy, materials and skilled and unskilled
labor, and inflation in key supply markets;
    
    delays in obtaining or inability to obtain necessary permits, licenses and
approvals;
    
    changes in laws and regulations, or in the interpretation and enforcement of laws
and regulations, applicable to gaming, leisure, residential, real estate development or
construction projects;
    
    labor disputes or work stoppages;
    
    disputes with and defaults by contractors and subcontractors;
    
    environmental, health and safety issues, including site accidents;
    
    weather interferences or delays;
    
    fires, typhoons and other natural disasters;
    
    geological, construction, excavation, regulatory and equipment problems; and
    
    other unanticipated circumstances or cost increases.
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We could encounter problems in the pre-opening phase of the City of Dreams which could delay its
opening and operation.
  We may require debt and equity funding to complete our pipeline of future projects and we may
be required to incur significant additional indebtedness or sell convertible bonds, ADSs or other
equity or equity-linked securities. Our ability to obtain additional financing may be limited,
which could delay or prevent the opening of one or more of our projects.
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
    
    limitations on our ability to incur additional debt, including as a result of
prospective lenders evaluations of our creditworthiness and pursuant to restrictions
on incurrence of debt in our existing and anticipated credit facilities, which
currently prohibits Melco Crown Gaming and our other subsidiaries from incurring
additional indebtedness with only limited exceptions, and the fact that our senior
creditors have pledges over our operating assets, including Crown Macau and Mocha
Clubs;
    
    limitations on our ability to raise capital from the credit markets, especially if
the current turmoil in the credit markets continues;
    
    investors and lenders perception of, and demand for, debt and equity securities of
gaming, leisure and hospitality companies, as well as the offerings of competing
financing and investment opportunities in Macau by our competitors;
    
    whether it is necessary to obtain further credit support or other assurances from
Melco and Crown on terms and conditions and in amounts that are commercially acceptable
to them;
    
    Melco Crown Gamings ability to obtain consent from the Macau government as required
under our subconcession contract;
    
    conditions of the U.S., Macau, Hong Kong, and other capital markets in which we may
seek to raise funds;
    
    our future results of operations, financial condition and cash flows;
    
    requirements for approval for certain transactions from Macau, Hong Kong or
Australian authorities, the Nasdaq, our principal lenders and/or shareholders of Melco
and/or Crown, among others;
    
    Macau governmental regulation of gaming in Macau; and
    
    economic, political and other conditions in Macau, China and the Asian region.
  
    
    service the existing indebtedness obligations of our subsidiaries;
    
    complete the development of our existing projects or acquire and develop new
projects;
    
    pay the outstanding land premium for our sites;
    
    acquire necessary rights, assets or businesses;
  12




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##### Table of Contents




    
    expand our operations in Macau;
    
    hire, train and retain employees;
    
    market our programs, services and products; or
    
    respond to competitive pressures or unanticipated funding requirements.
  Servicing the debt of our subsidiaries requires a significant amount of cash, and our
subsidiaries may not generate a sufficient level of cash flow from their businesses to make
scheduled payments on their debt.
  Even if our development projects are completed as planned, they may not be financially
successful, which would limit our cash flow and would adversely affect our operations and our
ability to repay our debt.
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Risks Relating to the Completion and Operation of Our Projects
 For the City of Dreams project, we have directly negotiated and entered into contracts with
our construction contractors and vendors, which may increase the risk of delay and cost overruns.
  Our insurance coverage may not be adequate to cover all losses that we may suffer from our
projects. In addition, our insurance costs may increase and we may not be able to obtain the same
insurance coverage in the future.
    14




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Construction at our projects is subject to hazards that may cause personal injury or loss of
life, thereby subjecting us to liabilities and possible losses, which may not be covered by
insurance.
  We may continue to encounter all of the risks associated with the development and construction
of our projects in the future.
  If we are unable to obtain approval for an increase in the developable gross floor area of the
City of Dreams site and the consequent amendments to the terms of our recently obtained land
concession, we could forfeit all or a substantial part of our investment in the site and we would
not be able to complete and fully operate the facility as planned.
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We will need to recruit a substantial number of new employees before each of our projects can
open and competition may limit our ability to attract qualified management and personnel.
  Our contractors may face difficulties in finding sufficient labor at an acceptable cost, which
could cause delays and increase construction costs of our projects.
  Our business depends substantially on the continuing efforts of our senior management, and our
business may be severely disrupted if we lose their services or their other responsibilities cause
them to be unable to devote sufficient time and attention to our company.
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Because we are and will be dependent upon a limited number of properties for a substantial
portion of our cash flow, we are and will be subject to greater risks than a gaming company with
more operating properties.
  Risks Relating to Our Operations in the Gaming Industry in Macau
 Because our operations will face intense competition in Macau and elsewhere in Asia, we may
not be able to compete successfully and we may lose or be unable to gain market share.
     17




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Gaming is a highly regulated industry in Macau and adverse changes or developments in gaming
laws or regulations could be difficult to comply with or significantly increase our costs, which
could cause our projects to be unsuccessful.
     18




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Under Melco Crown Gamings subconcession, the Macau government may terminate the subconcession
under certain circumstances without compensation to Melco Crown Gaming, which would prevent it from
operating casino gaming facilities in Macau and could result in
defaults under our indebtedness and a partial or complete loss of our investments in our projects.
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The Macau government could grant additional rights to conduct gaming in the future, which
could significantly increase the already intense competition in Macau and cause us to lose or be
unable to gain market share.
  Melco Crown Gamings subconcession contract expires in 2022 and if we were unable to secure an
extension of its subconcession in 2022 or if the Macau government were to exercise its redemption
right in 2017, we would be unable to operate casino gaming in Macau.
  While Melco Crown Gaming will not initially be required to pay corporate income taxes on
income from gaming operations under the subconcession, this tax exemption will expire in 2011, and
it may not be extended.
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We extend credit to a portion of our customers, and we may not be able to collect gaming
receivables from our credit customers.
   The current credit environment may limit availability of credit to gaming patrons and may
negatively impact our revenue.
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Our business may face a higher level of volatility due to our focus on the rolling chip
segment of the gaming market.
  We depend upon gaming promoters for a portion of our gaming revenue and if we are unable to
establish, maintain and increase the number of successful relationships with gaming promoters, our
ability to attract rolling chip patrons may be adversely affected. If we are unable to ensure high
standards of probity and integrity in the gaming promoters with whom we are associated, our
reputation may suffer or we may be subject to sanctions, including the loss of Melco Crown Gamings
subconcession.
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We are dependent on the reputation and integrity of the parties with whom we engage in
business activities and we cannot assure you that these parties will always maintain high standards
or suitability throughout the term of our association with them. Failure to maintain such high
standards or suitability may cause us and our shareholders to suffer harm to our and the
shareholders reputation, as well as impaired relationships with, and possibly sanctions from,
gaming regulators.
  The consolidation of operations of gaming promoters at Crown Macau under Ama International
Limited, or Ama, has resulted in a significant proportion of our business becoming consolidated
under one commercial arrangement, and has introduced into Macau the concept of an aggregator of
gaming promoters, either of which could have an adverse impact on our future prospects.
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We cannot assure you that anti-money laundering policies that we have implemented, and
compliance with applicable anti-money laundering laws, will be effective to prevent our casino
operations from being exploited for money laundering purposes.
  If Macaus transportation infrastructure does not adequately support the development of
Macaus gaming and leisure industry, visitation to Macau may not increase as currently expected,
which may adversely affect our projects.
  Risks Relating to Our Indebtedness
 Our current, projected and potential future indebtedness could impair our financial condition,
which could further exacerbate the risks associated with our significant leverage.
  
    
    approximately US$1.75 billion under the City of Dreams Project Facility primarily
for the development and construction of City of Dreams, of which an amount equivalent
to the entire facility amount less US$50 million has been drawn down as of the date of
this annual report on Form 20-F;
    
    financing for a significant portion of the costs of developing the Macau peninsula
site in an amount which is as yet undetermined; and
    
    financing for a significant portion of the costs of developing an apartment hotel
complex at the City of Dreams site, in an amount which is as yet undetermined.
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
    
    increase our vulnerability to general adverse economic and industry conditions;
    
    impair our ability to obtain additional financing in the future for working capital
needs, capital expenditures, acquisitions or general corporate purposes;
    
    require us to dedicate a significant portion of our cash flow from operations to the
payment of principal and interest on our debt, which would reduce the funds available
to us for our operations;
    
    limit our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate;
    
    subject us to higher interest expense in the event of increases in interest rates to
the extent a portion of our debt will bear interest at variable rates;
    
    cause us to incur additional expenses by hedging interest rate exposures of our debt
and exposure to hedging counterparties failure to pay under such hedging arrangements,
which would reduce the funds available for us for our operations; and
    
    in the event we or one of our subsidiaries were to default, result in the loss of
all or a substantial portion of our and our subsidiaries assets, over which our
lenders have taken or will take security.
 We are in a development stage and currently do not generate sufficient cash flow to service
our existing and projected indebtedness and after all our projects commence operations, we may not
be able to generate sufficient cash flow to meet our debt service obligations because our ability
to generate cash depends on many factors beyond our control.
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The terms of our and our subsidiaries indebtedness may restrict our current and future
operations and harm our ability to complete our projects and grow our business operations to
compete successfully against our competitors.
  
    
    incur additional debt, including guarantees;
    
    create security or liens;
    
    dispose of assets;
    
    make certain acquisitions and investments;
    
    pay dividends, including to us, during the construction of the City of Dreams
project;
    
    make other restricted payments or apply revenues earned in one part of our
operations to fund development costs or cover operating losses in another part of our
operations;
    
    enter into sale and leaseback transactions;
    
    engage in new businesses;
    
    issue preferred stock; and
    
    enter into transactions with shareholders and affiliates.
  
    
    Consolidated Leverage Ratio, as defined in the City of Dreams
Project Facility;
    
    Consolidated Interest Cover Ratio, as defined in the City of Dreams
Project Facility; and
    
    Consolidated Cash Cover Ratio, as defined in the City of Dreams
Project Facility.
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Draw down of advances under our debt facilities involve satisfaction of extensive conditions
precedent and our failure to satisfy such conditions precedent will result in our inability to
access loan advances under such facilities. We do not guarantee that we are able to satisfy all
conditions precedent under our current or future debt facilities.
  Our failure to comply with the covenants contained in our or our subsidiaries indebtedness,
including failure as a result of events beyond our control, could result in an event of default
that could materially and adversely affect our cash flow, operating results and our financial
condition.
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Current turmoil in the credit markets taken together with the role of the credit agencies may
affect our ability to maintain current financing or obtain future financing which could result
in delays in our project development schedule and could impact on our ability to generate revenue
from present and future projects.
  Rolling over existing revolving loans drawn down under the City of Dreams Project Facility
involves satisfaction of conditions precedent and our failure to satisfy such conditions precedent
will result in our inability to rollover such revolving loans. We do not guarantee that we are able
to satisfy all conditions precedent to rollover such revolving loans.
  Risks Relating to Our Business and Operations in Macau
 Conducting business in Macau has certain political and economic risks that may lead to
significant volatility and have a material adverse effect on our results of operations.
  
    
    changes in Macaus and Chinas political, economic and social conditions;
    
    further travel restrictions to Macau which may be imposed by China;
    
    changes in policies of the government or changes in laws and regulations, or in the
interpretation or enforcement of these laws and regulations;
    
    changes in foreign exchange regulations;
    
    measures that may be introduced to control inflation, such as interest rate
increases or bank account withdrawal controls; and
    
    changes in the rate or method of taxation.
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Because we depend upon our properties in one market for all of our cash flow, we will be
subject to greater risks than a gaming company that operates in more markets.
  
    
    dependence on the gaming and leisure market in Macau and limited diversification of
our businesses and sources of revenue;
    
    a decline in economic, competitive and political conditions in Macau or generally in
Asia;
    
    inaccessibility to Macau due to inclement weather, road construction or closure of
primary access routes;
    
    a decline in air or ferry passenger traffic to Macau due to higher ticket costs,
fears concerning travel or otherwise;
    
    travel restrictions to Macau imposed now or in the future by China;
    
    changes in Macau governmental laws and regulations, or interpretations thereof,
including gaming laws and regulations;
    
    natural and other disasters, including typhoons, outbreaks of infectious diseases or
terrorism, affecting Macau;
    
    that the number of visitors to Macau does not increase at the rate that we have
expected; and
    
    a decrease in gaming activities at our properties.
  Our gaming operations could be adversely affected by restrictions on the export of the
Renminbi and limitations of the Pataca exchange markets.
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Terrorism and the uncertainty of war, economic downturns and other factors affecting
discretionary consumer spending and leisure travel may reduce visitation to Macau and harm our
operating results.
  An outbreak of the highly pathogenic avian influenza caused by the H5N1
virus (avian flu or bird flu), Severe Acute Respiratory Syndrome, or SARS, or other contagious disease may have an
adverse effect on the economies of certain Asian countries and may adversely affect our results of
operations.
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Macau is susceptible to severe typhoons that may disrupt our operations.
  Any fluctuation in the value of the H.K. dollar, U.S. dollar or Pataca may adversely affect
our expenses and profitability.
  Contract parties may not be able to secure adequate financing.
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Risks Relating to Our Corporate Structure and Ownership
 Our existing shareholders will have a substantial influence over us and their interests in our
business may be different than yours.
   Melco and Crown may pursue additional casino projects in Asia, which, along with their current
operations, may compete with our projects in Macau which may have adverse consequences to us and
the interests of our minority shareholders.
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Business conducted through joint ventures involves certain risks.
  Changes in our share ownership, including a change of control or a change in the amounts or
relative percentages of our shares owned by Melco and Crown, could result in our inability to draw
loans or events of default under our indebtedness.
  We are a holding company and our only material sources of cash are and are expected to be
dividends, distributions and payments under shareholder loans from our subsidiaries.
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Crowns investment in our company is subject to regulatory review in several jurisdictions and
if regulators in those jurisdictions were to find that we, Crown or Melco failed to comply with
certain regulatory requirements and standards, then Crown maybe required to withdraw from the joint
venture.
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Risks Relating to the ADSs
 The trading price of our ADSs has been volatile and may continue to be volatile regardless of
our operating performance.
  
    
    uncertainties or delays relating to the financing, completion and successful
operation of our projects;
    
    developments in the Macau market or other Asian gaming markets, including the
announcement or completion of major new projects by our competitors;
    
    regulatory developments affecting us or our competitors;
    
    actual or anticipated fluctuations in our quarterly operating results;
    
    changes in financial estimates by securities research analysts;
    
    changes in the economic performance or market valuations of other gaming and leisure
industry companies;
    
    addition or departure of our executive officers and key personnel;
    
    fluctuations in the exchange rates between the U.S. dollar, Hong Kong dollar, Pataca
and Renminbi;
    
    release or expiry of lock-up or other transfer restrictions on our outstanding
ordinary shares or ADSs; and
    
    sales or perceived sales of additional ordinary shares or ADSs.
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We currently do not intend to pay dividends, and we cannot assure you that we will make
dividend payments in the future.
  Substantial future sales or perceived sales of our ADSs in the public market could cause the
price of our ADSs to decline.
    Holders of ADSs have fewer rights than shareholders and must act through the depositary to
exercise those rights.
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You may be subject to limitations on transfers of your ADSs.
  Your right to participate in any future rights offerings may be limited, which may cause
dilution to your holdings and you may not receive cash dividends if it is unlawful or impractical
to make them available to you.
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We are a Cayman Islands exempted company and, because judicial precedent regarding the rights
of shareholders is more limited under Cayman Islands law than that under U.S. law, you may have
less protection for your shareholder rights than you would under U.S. law.
   You may have difficulty enforcing judgments obtained against us.
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We may be treated as a passive foreign investment company, which could result in adverse
United States federal income tax consequences to U.S. Holders.
  
 ITEM 4. INFORMATION ON THE COMPANY
 
 A. HISTORY AND DEVELOPMENT OF THE COMPANY
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B. BUSINESS OVERVIEW
 Overview
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Operations
 Crown Macau
   43




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Mocha Clubs
   Taipa Square Casino
  Development Projects
 City of Dreams
   45




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
    
    The Casinos. We plan to offer casinos and a gaming area of approximately
420,000 sq. ft. housing approximately 520 gaming tables and approximately 1,350 gaming
machines with potential for future expansion.
    
    The Hotels. City of Dreams will include three full service luxury hotels and
is planned to include an apartment hotel complex, with a total of approximately 2,200
rooms, consisting of: (1) a luxury premium hotel designed with the aim of exceeding the
average five-star hotel in Macau, to be operated under the Crown Towers brand by us
with approximately 300 rooms, suites and villas; (2) a themed hotel to be operated
under the Hard Rock brand with approximately 300 rooms and suites; (3) a twin-tower
hotel to be operated under the Grand Hyatt brand with approximately 800 rooms and
suites; and (4) an 800-unit luxury apartment hotel complex, planned for future
development. This development is subject to the availability of additional financing,
the Macau governments approval and the approval of our lenders under our existing and
any future debt facilities. We expect to market the sale of shares in the apartment
hotel in advance of project completion, subject to
compliance with legal and regulatory provisions.
    
    The Bubble Theatre. A dome-shaped theatre is being designed as one of the
iconic landmarks located at City of Dreams. The 10-minute Dragons Treasure feature
show will be an immersive multi-media experience combining high-definition video
content, a sweeping musical score, over 29,000 theatrical LED lights and a variety of
sensory effects to create a unique multi-media event.
    
    Theatre of Dreams. A wet stage performance theatre, Theatre of Dreams,
offering approximately 2,000 seats is included at City of Dreams. The performance
theatre, designed by the award winning Pei Partnership Architects according to the
specifications of Dragone, is a purpose-built theatre catering to the preferences of
the Asian mass market. The performance theatre will offer a new live stage water-themed
production created exclusively for City of Dreams by Franco Dragone, the co-producer
and creator of Celine Dions A New Day show. The artistic director and founder of
Dragone was formerly the creator and director of several Cirque du Soleil shows.
    
    The Boulevard. City of Dreams includes a retail area of approximately
175,000 sq. ft. The Boulevard is designed to feature a wide range of luxury
retailers, designed to cater to the needs of residential guests and to attract other
visitors to the resort. City of Dreams is collaborating with DFS Group, the worlds
largest luxury travel retailer, to develop the first 85,000 sq. ft. of retail space in
The Boulevard, a lifestyle precinct offering
a combination of outstanding
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shopping together with regional and international dining, which directly
links the main casino gaming areas and all the hotels with the anchor entertainment
venues and the key entry and exit points for the property. Two distinct shopping
zones have been developed within The Boulevard: Fashion Ready to Wear and
Accessories World on level one and Watches & Jewellery World on level two. DFS will
showcase many of the worlds premier luxury brands, delivering a superior shopping
and lifestyle experience to visitors of City of Dreams.
    
    Food and Beverage.City of Dreams is positioned as one of the leading
destinations for food and beverage in Macau and will include a diverse range of
world-class and Asian-inspired restaurants. Over 20 venues are planned to include mid-
to high-end restaurants, a noodle bar, a modern food court and a number of relaxed bars
and lounges offering a variety of cuisines and dining styles. We currently expect to
open a significant portion of the food and beverage outlets at the initial opening.
    
    Conference Rooms and Ballrooms.Approximately 100,000 sq. ft. of high quality
conference, banqueting and ballroom facilities, featuring some of the latest audio and
visual equipment, are included within City of Dreams. We will aim to make these
facilities the venue of choice in Macau for high-end banqueting and corporate
hospitality. These facilities will be located adjacent to the twin-tower Grand Hyatt
hotel.
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Future Pipeline Projects
  Macau Peninsula Site
  Macau Studio City Project
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Our Objective and Strategies
    Maintain a Strong Balance Sheet and Conservative Capital Structure, De-Leverage Swiftly and
Remain Alert to Opportunistic Growth Opportunities
  Develop a Targeted Product Portfolio of Well-Recognized Branded Experiences
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Utilize Melco Crown Gamings Subconcession to Maximize Our Business and Revenue Potential
  Develop a Comprehensive Marketing Program
   
    
    create a cooperative platform to work with the marketing team of Crown and to
leverage their strengths and key markets;
    
    create a cross-platform sales and marketing department to promote all of our brands
to potential customers throughout Asia in accordance with applicable laws;
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
    
    utilize special product offers, special events, tournaments and promotions to build
and maintain relationships with our guests, in order to increase repeat visits and help
fill capacity during lower-demand periods;
    
    refine our own customer loyalty programs to further build a significant database of
repeat customers, which we closely modeled on Crowns successful Crown Club
program; and
    
    implement complimentary incentive programs and commission based programs with
selected promoters to attract high-end customers.
 Focus on Building First Class Facilities
  Leverage the Experiences and Resources of Our Founders
  Our Properties
  Crown Macau
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Mocha Clubs
  GamingMocha Club
    
    Opening Date
    
    Location
    
    Area(in sq. ft.)Mocha Crown
    
    December 2008
    
    Level 1 of Crown Macau
    
    
    4,200Mocha Square
    
    October 2007
    
    1/F, 2/F and 3/F of Mocha Square
    
    
    6,000Marina Plaza
    
    December 2006
    
    1/F and 2/F of Marina Plaza
    
    
    12,500Hotel Taipa
    
    January 2006
    
    G/F of Hotel Taipa
    
    
    6,100Sintra
    
    November 2005
    
    G/F and 1/F of Hotel Sintra
    
    
    5,110Taipa Square
    
    March 2005
    
    G/F, 1/F and 2/F of Hotel Taipa Square
    
    
    14,500Kingsway
    
    April 2004
    
    G/F of Kingsway Commercial Centre
    
    
    6,100Royal
    
    September 2003
    
    Lobby and 1/F of Hotel Royal
    
    
    8,500Total
    
    
    
    
    
    
    63,010
   Taipa Square Casino
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City of Dreams
    Macau Peninsula Site
  Other Premises
   54




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Advertising and Marketing
  Competition
     55




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Intellectual Property
  Legal and Administrative Proceedings
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GAMING REGULATIONS
   
    
    the prevention of unsavory or unsuitable persons from having a direct or indirect
involvement with gaming at any time or in any capacity;
 
    
    the adequate operation and exploitation of games of fortune and chance;
 
    
    the fair and honest operation and exploitation of games of fortune and chance free
of criminal influence;
 
    
    the protection of the Macau SAR interest in receiving the taxes resulting from the
gaming operation; and
 
    
    the development of the tourism industry, social stability and economic development
of the Macau SAR.
   
    
    pay that person any dividend or interest upon our shares;
 
    
    allow that person to exercise, directly or indirectly, any voting right conferred
through shares held by that person;
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
    
    pay remuneration in any form to that person for services rendered or otherwise; or
 
    
    fail to pursue all lawful efforts to require that unsuitable person to relinquish
his or her shares.
      
    
    a percentage of the gross revenues received; or
 
    
    the number and type of gaming devices operated.
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Anti-Money Laundering Regulations in Macau
   
    
    identify any customer or transaction where there is a sign of money laundering or
financing of terrorism or which involves significant sums of money in the context of
the transaction, even if any sign of money laundering is absent;
 
    
    refuse to deal with any of our customers who fail to provide any information
requested by us;
 
    
    keep records following the identification of a customer for a period of five years;
 
    
    notify the Finance Information Bureau if there is any sign of money laundering or
financing of terrorism; and
 
    
    cooperate with the Macau government by providing all required information and
documentation requested in relation to anti-money laundering activities.
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Subconcession Contract
  Subconcession Term.
 Development of Gaming Projects/Financial Obligations.
 Payments.
  61




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Termination Rights.
 
    
    the operation of gaming without permission or operation of business which does not
fall within the business scope of the subconcession;
 
    
    abandonment of approved business or suspension of operations of our gaming business
in Macau without reasonable grounds for more than seven consecutive days or more than
14 non-consecutive days within one calendar year;
 
    
    transfer of all or part of Melco Crown Gamings operation in Macau in violation of
the relevant laws and administrative regulations governing the operation of games of
fortune or chance and other casino games in Macau and without Macau government
approval;
 
    
    failure to pay taxes, premiums, levies or other amounts payable to the Macau
government;
 
    
    refusal or failure to resume operations following the temporary assumption of
operations by the Macau government;
 
    
    repeated opposition to the supervision and inspection by the Macau government and
failure to comply with decisions and recommendations of the Macau government,
especially those of the DICJ, applicable to us;
 
    
    failure to provide or supplement the guarantee deposit or the guarantees specified
in the subconcession within the prescribed period;
 
    
    bankruptcy or insolvency of Melco Crown Gaming;
 
    
    fraudulent activity harming the public interest;
 
    
    serious and repeated violation of the applicable rules for carrying out casino games
of chance or games of other forms or damage to the fairness of casino games of chance
or games of other forms;
 
    
    systematic non-compliance with the Macau Gaming Laws basic obligations;
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
    
    the grant to any other person of any managing power over the gaming business of
Melco Crown Gaming or the grant of a subconcession or entering into any agreement to
the same effect; or
 
    
    failure by a controlling shareholder in Melco Crown Gaming to dispose of its
interest in Melco Crown Gaming, within 90 days, following notice from the gaming
authorities of another jurisdiction in which such controlling shareholder is licensed
to operate casino games of chance to the effect that such controlling shareholder no
longer wishes to own shares in Melco Crown Gaming.
  Ownership and Capitalization.
 Others.
 Tax
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Dividend Distribution
 Restrictions on Distributions.
 Distribution of Profits.
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C. ORGANIZATIONAL STRUCTURE
 Current Corporate Structure
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1
    
    In respect of shares of each Macau subsidiary shown
above, the shares are owned as to 96% by Melco Crown Gaming (Macau) Limited and
4% by MPEL Nominee Two Limited, except for the subsidiary referred to in
footnote 2 below.2
    
    The shares of this company
are owned as to 99.98% by Melco Crown
Gaming (Macau) Limited, 0.01% by MPEL Nominee Three Limited and 0.01% by MPEL
Nominee Two Limited.  66




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D. PROPERTY, PLANT AND EQUIPMENT
  
 ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 The following discussion should be read in conjunction with, and is qualified in its entirety
by, the audited consolidated financial statements and the notes thereto in this Annual Report on
Form 20-F. Certain statements in this Operating and Financial Review and Prospects are
forward-looking statements. See Special Note Regarding Forward-Looking Statements regarding these
statements.
  Overview
  
 A. OPERATING RESULTS
 Operations
 Crown Macau
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Mocha Clubs
  Taipa Square Casino
  Development Projects
 City of Dreams
  Future Pipeline Projects
 The Macau Peninsula Site
  The Macau Studio City Project
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Summary of Financial Results
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands of US$)Net revenues
    
    $
    1,416,134
    
    
    $
    358,496
    
    
    $
    36,101Total operating costs and expenses
    
    
    (1,414,960
    )
    
    
    (554,313
    )
    
    
    (93,754
    )Operating income (loss)
    
    
    1,174
    
    
    
    (195,817
    )
    
    
    (57,653
    )Net loss
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )
  
    
    On May 12, 2007, Crown Macau opened and was fully operational by July 14, 2007.
    
    From September 2006 up until the opening of Crown Macau in May 2007, Mocha
Clubs was our sole operating business.
    
    On September 8, 2006, we acquired a Macau subconcession for consideration of
US$900.0 million.
  Key Performance Indicators (KPIs)
   
    
    Table games win: the amount of wagers won net of wagers lost that is retained and
recorded as casino revenue.
 
    
    Drop: the amount of cash and net markers issued that are deposited in a gaming
tables drop box.
 
    
    Turnover: the sum of all wagers.
 
    
    Gaming machine handle (volume): the total amount wagered in gaming machines in
aggregate for the period cited.
 
    
    Win percentage-gaming machines: actual win expressed as a percentage of gaming
machine handle.
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
    
    Hold percentage: the amount of win (calculated before discounts and commissions) as
a percentage of drop.
 
    
    Expected hold percentage: casino win based upon our mix of games as a percentage of
drop assuming theoretical house advantage is achieved.
  
    
    Rolling chip volume: the amount of non-negotiable gaming chips wagered and lost by
the VIP market segment.
 
    
    Rolling chip performance indicator: VIP table games win as a percentage of rolling
chip volume.
 
    
    Non-rolling chip volume: the amount of table games drop in the mass market segment.
 
    
    Non-rolling chip performance indicator: Mass market table games win as a percentage
of non-rolling chip volume.
    
    
    Average Daily Rate, or ADR: calculated by dividing total room revenue (less service
charges, if any) by total rooms occupied, i.e., average price of occupied rooms per
day.
 
    
    Revenue per Available Room, or REVPAR: calculated by dividing total room revenue
(less service charges, if any) by total rooms available, thereby representing a summary
of hotel average daily room rates and occupancy.
 
    
    Hotel occupancy rate: the average percentage of available hotel rooms occupied
during a period.
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Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Revenues
   Casino.
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Rooms.
 Food, beverage and others.
 Operating costs and expenses
  Casino.
 Rooms.
 Food, beverage and others.
 General and administrative.
 Pre-opening costs.
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Amortization of gaming subconcession.
 Amortization of land use rights.
 Depreciation and amortization.
 Non-operating (expenses) income
       73




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Income tax credit
  Net loss
  Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Revenues
   Casino.
 Rooms.
 Food, beverage and others.
 Operating costs and expenses
   74




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##### Table of Contents



Casino.
 Rooms.
 Food, beverage and others.
 General and administrative.
 Pre-opening costs.
 Amortization of gaming subconcession.
 Amortization of land use rights.
 Depreciation and amortization.
  75




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Non-operating income (expenses)
      Income tax credit
  Minority interest
  Net loss
   76




---



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Critical Accounting Policies and Estimates
   Valuation of long-lived assets, including goodwill and purchased intangible assets
    77




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Impairment of long-lived assets (other than goodwill)
  Business combinations
  Share-based compensation
   78




---



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Revenue recognition
        Accounts Receivable and Credit Risk
   79




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Income Tax
   Accounting for Derivative Instruments and Hedging Activities
   80




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Recent changes in accounting standards
  
 B. LIQUIDITY AND CAPITAL RESOURCES
  For the Years Ended December 31,2008
    
    
    2007
    
    
    2006(in thousands of US$)Net cash (used in) provided by operating activities
    
    $
    (11,158
    )
    
    $
    147,372
    
    
    $
    (20,237
    )Net cash used in investing activities
    
    
    (913,602
    )
    
    
    (972,620
    )
    
    
    (38,645
    )Net cash provided by financing activities
    
    
    904,485
    
    
    
    1,076,671
    
    
    
    623,109Net (decrease) increase in cash and cash equivalents
    
    
    (20,275
    )
    
    
    251,423
    
    
    
    564,227Cash and cash equivalents at beginning of year
    
    
    835,419
    
    
    
    583,996
    
    
    
    19,769Cash and cash equivalents at end of year
    
    $
    815,144
    
    
    $
    835,419
    
    
    $
    583,996
 Operating activities
  Investing activities
   81




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Financing activities
 Proceeds from Our Financing.
 Shareholder Loans and Contributions.
  City of Dreams Project Facility.
  82




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Description of Our Indebtedness
 City of Dreams Project Facility
  
    
    cashflow generated from the operations of our existing businesses;
 
    
    borrowings under the US$1.75 billion City of Dreams Project Facility; and
 
    
    a portion of the net proceeds from our initial offering and our second public
offering in December 2006 and November 2007 respectively.
 Drawdowns
    Repayment
   83




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Accounts
  Interest and Fees
   84




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##### Table of Contents



Melco and Crown Support
  Security
  
    
    a first priority mortgage over all land and all present and future buildings on and
fixtures to such land, and an assignment of land use rights under land concession
agreements or equivalent held by the relevant entities in the Borrowing Group;
 
    
    the letters of credit described above in Description of Our IndebtednessCity of
Dreams Project FacilityMelco and Crown Support;
 
    
    charges over the bank accounts in respect of the Borrowing Group;
 
    
    assignment of the Borrowing Groups rights under certain insurance policies;
 
    
    first priority security over the Borrowing Groups chattels, receivables and other
assets which are not subject to any security under any other security documentation;
 
    
    pledge over equipment and tools used in the gaming business by Melco Crown
Gaming; and
 
    
    first priority charges over the issued share capital of the Borrowing Group.
 Covenants
  
    
    create or permit to subsist further charge or any form of encumbrance over its
assets, property or revenues except as permitted under the City of Dreams Project
Facility;
 
    
    sell, transfer or dispose of any of its assets unless such sale is conducted on an
arms length basis at a fair market value permitted in accordance with the terms of the
City of Dreams Project Facility and the proceeds from the sale shall be credited to the
relevant accounts over which the lenders have a first priority charge on;
  85




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
    
    make any payment of fees under any agreement with Melco or Crown (or their
affiliates) other than fees approved by the Majority Lenders or, after a certain date,
in accordance with the waterfall, or enter into agreements with Melco or Crown or their
affiliates except in certain limited circumstances;
 
    
    make any loan or guarantee indebtedness except for certain identified indebtedness
and guarantees permitted;
 
    
    create any subsidiaries except as permitted under the City of Dreams Project
Facility, such as those necessary for completion and operation of City of Dreams; or
 
    
    make investments other than within agreed upon limitations.
  
    
    Consolidated Leverage Ratio, as defined in the City of Dreams
Project Facility, cannot exceed 4.50 to 1 for the reporting
periods ending September 30, 2010, December 31, 2010, March 31, 2011 and June 30, 2011,
cannot exceed 4.00 to 1 for the reporting periods ending September 30, 2011, December
31, 2011 and March 31, 2012, and cannot exceed 3.75 to 1 for the reporting periods
ending June 30, 2012 onwards;
 
    
    Consolidated Interest Cover Ratio, as defined in the City of Dreams
Project Facility, must be greater than or equal to 2.50
to 1 for the reporting periods ending September 30, 2010, December 31, 2010 and March
31, 2011, and must be greater than or equal to 3.00 to 1 for the reporting periods
ending June 30, 2011 onwards; and
 
    
    Consolidated Cash Cover Ratio, as defined in the City of Dreams
Project Facility, must be greater than or equal to 1.10 to
1 for the reporting periods ending September 30, 2010 onwards.
 Events of Default
   86




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Sources and Uses
   Other Liquidity Matters
  
 C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
   87




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D. TREND INFORMATION
  
 E. OFF-BALANCE SHEET ARRANGEMENTS
   
 F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More than1 year
    
    
    years
    
    
    years
    
    
    5 years
    
    
    Total(in millions of US$)Contractual obligationsLong-term debt obligations:Loans from shareholders (1)
    
    $
    
    
    
    $
    115.6
    
    
    $
    
    
    
    $
    
    
    
    $
    115.6Other long-term debt (2)
    
    
    
    
    
    
    367.2
    
    
    
    706.3
    
    
    
    339.0
    
    
    
    1,412.5Operating lease obligations:Rent payable for Crown Macau land (3)
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    3.0
    
    
    
    3.8Rent payable for City of Dreams land (4)
    
    
    0.7
    
    
    
    1.8
    
    
    
    1.8
    
    
    
    17.7
    
    
    
    22.0Leases for office space, VIP lounge, recruitment
and training center, staff quarter and Mocha Clubs
locations
    
    
    9.9
    
    
    
    13.9
    
    
    
    11.6
    
    
    
    13.3
    
    
    
    48.7Other contractual commitments:Interest on land premium for
City of Dreams land (4)
    
    
    3.2
    
    
    
    4.3
    
    
    
    1.2
    
    
    
    
    
    
    
    8.7Construction, plant and equipment acquisition
commitments (5)
    
    
    467.5
    
    
    
    20.6
    
    
    
    
    
    
    
    
    
    
    
    488.1Buses and limousines services commitments
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8Consultancy and other services commitments
    
    
    2.2
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    3.4Total contractual obligations
    
    $
    484.5
    
    
    $
    524.9
    
    
    $
    721.2
    
    
    $
    373.0
    
    
    $
    2,103.6
 (1)
    
    Excludes the working capital loans provided by Melco and Crown, which had an outstanding
balance of US$1.0 million as of December 31, 2008. As of December 31, 2008, the balance of
the outstanding term loans from Melco and Crown, amounting to approximately US$115.6 million,
was repayable in May 2010. The term loan from Melco as of December 31, 2008 bearing interest
at three months HIBOR to May 15, 2008 and subsequently at three months HIBOR plus 1.5% per
annum. The term loan from Crown as of December 31, 2008 bearing interest at three months
HIBOR.  88




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(2)
    
    Other long-term debt represents US$1.75 billion under the City of Dreams Project Facility.
The loan matures in September 2014 and is subject to quarterly amortization payments
commencing in September 2010.(3)
    
    Annual rent payable is approximately MOP 1.4 million (US$171,000) and is adjusted every five
years as agreed between the Macau government and Melco Crown (CM) Developments in accordance
with the applicable market rates from time to time.(4)
    
    In April 2005, the Macau government offered to grant a medium-term lease of 25 years for the
City of Dreams to Melco Crown (COD) Developments, and Melco Crown (COD) Developments
preliminarily accepted the offer on May 10, 2005. In February 2008, Melco Crown (COD)
Developments and Melco Crown Gaming accepted the final terms of the land lease agreement,
which require us to pay a land premium of approximately MOP 842.1 million (US$105.1 million).
We paid MOP 300.0 million (US$37.4 million) of the land premium upon our acceptance of the
final terms on February 11, 2008. On August 13, 2008 the Macau government formally granted
the land concession to Melco Crown (COD) Developments. The remaining premium balance of MOP
542.1 million (US$67.7 million) is payable in nine equal semi-annual installments bearing
interest at 5% per annum commencing from February 2009. The principal amount outstanding has
been included in the accrued expenses and other current liabilities and land use right payable
as of December 31, 2008. We have also provided a guarantee deposit of approximately MOP 3.4
million (US$424,000), subject to adjustments, in accordance with the relevant amount of rent
payable during the year. The annual rent payable during the construction period is
approximately MOP 3.4 million (US$424,000). The annual rent payable after completion of
construction is approximately MOP 7.2 million (US$903,000). The rent payable shall be adjusted
every five years as agreed between the Macau government and Melco Crown (COD) Developments and
Melco Crown Gaming in accordance with the market rates from time to time.(5)
    
    The amount as of December 31, 2008 mainly represents construction contracts for the design
and construction, plant and equipment acquisitions of the City of Dreams project of US$488.1
million. The balance includes the remaining payment obligations for the Crown Macau project
and Mocha Clubs. 
 G. SAFE HARBOR
  
 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
 A. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Executive Officers
  Name
    
    Age
    
    Position/TitleLawrence (Yau Lung) Ho
    
    32
    
    Co-Chairman and Chief Executive OfficerJames D. Packer
    
    41
    
    Co-ChairmanJohn Wang
    
    48
    
    DirectorClarence Chung
    
    46
    
    DirectorJohn H. Alexander
    
    57
    
    DirectorRowen B. Craigie
    
    53
    
    DirectorJames A C MacKenzie
    
    55
    
    Independent DirectorThomas Jefferson Wu
    
    36
    
    Independent DirectorAlec Tsui
    
    59
    
    Independent DirectorRobert Mactier
    
    44
    
    Independent DirectorSimon Dewhurst
    
    39
    
    Chief Financial OfficerStephanie Cheung
    
    46
    
    Executive Vice President and Chief Legal OfficerNigel Dean
    
    55
    
    Executive Vice President and Chief Internal Audit Officer
  89




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Name
    
    Age
    
    Position/TitleAkiko Takahashi
    
    55
    
    Executive Vice President and Chief HumanResources/Corporate Social Responsibility OfficerRichard Tsiang
    
    48
    
    Executive Vice President and Chief Development OfficerGreg Hawkins
    
    45
    
    President of City of DreamsTed (Ying Tat) Chan
    
    37
    
    President of Crown MacauConstance (Ching Hui) Hsu
    
    35
    
    President of Mocha Clubs
 Directors
 Mr. Lawrence (Yau Lung) Ho
 Mr. James D. Packer
 Mr. John Wang
  90




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Mr. Clarence (Yuk Man) Chung
 Mr. John H. Alexander
 Mr. Rowen B. Craigie
 Mr. James A C MacKenzie
  91




---



##### Table of Contents



Mr. Thomas Jefferson Wu
 Mr. Alec Tsui
  92




---



##### Table of Contents



Mr. Robert W. Mactier
 Executive Officers
 Mr. Simon Dewhurst
 Ms. Stephanie Cheung
 Mr. Nigel Dean
  93




---



##### Table of Contents



Ms. Akiko Takahashi
 Mr. Richard Tsiang
 Mr. Greg Hawkins
 Mr. Ted (Yin Tat) Chan
  94




---



##### Table of Contents



Ms. Constance (Ching Hui) Hsu
 
 B. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
   
 C. BOARD PRACTICES
 Composition of Board of Directors
   95




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##### Table of Contents



Duties of Directors
   
    
    convening shareholders annual general meetings and reporting its work to
shareholders at such meetings;
 
    
    declaring dividends and distributions;
 
    
    appointing officers and determining the term of office of officers;
 
    
    exercising the borrowing powers of our company and mortgaging the property of our
company; and
 
    
    approving the transfer of shares of our company, including the registering of such
 shares in our share register.
  Terms of Directors and Executive Officers
  Committees of the Board of Directors
  Audit Committee
  
    
    the integrity of the financial statements of our company;
 
    
    the qualifications and independence of our independent auditors;
  96




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
    
    the performance of our independent auditors;
 
    
    the integrity of our systems of internal accounting and financial controls;
 
    
    legal and regulatory issues relating to the financial statements of our company,
including the oversight of the independent auditor, the review of the financial
statements and related material, the internal audit process and the procedure for
receiving complaints regarding accounting, internal accounting controls, auditing or
other related matters;
 
    
    the disclosure, in accordance with our relevant policies, of any material
information regarding the quality or integrity of our financial statements, which is
brought to its attention by our disclosure committee, which we expect to set up and
will comprise certain members of our senior management; and
 
    
    the integrity and effectiveness of our internal audit function and risk management
policies, procedures and practices.
  
    
    selecting our independent auditors and pre-approving all auditing and non-auditing
services permitted to be performed by our independent auditors;
 
    
    at least annually, obtaining a written report from our independent auditor
describing matters relating to its independence;
 
    
    discussing with our independent auditor, among other things, issues regarding
accounting and auditing principles and practices and the managements internal control
report;
 
    
    approving related-party transactions, amounting to more than US$120,000 per
transaction or series of transactions, which are brought to its attention;
 
    
    establishing and overseeing procedures for the handling of complaints and whistle
blowing;
 
    
    deciding whether any material information regarding the quality or integrity of the
Companys financial statements, which is brought to its attention by our disclosure
committee, should be disclosed;
 
    
    approving the internal audit charter and annual audit plans;
 
    
    assessing and approving any policies and procedures to identify, accept, mitigate,
allocate or otherwise manage various types of risks presented by management, and making
recommendations with respect to our risk management process;
  97




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
    
    together with our board, evaluating the performance of the audit committee;
 
    
    assessing the adequacy of its charter; and
 
    
    cooperating with the other board committees in any areas of overlapping
responsibilities.
 Compensation Committee
     
    
    in consultation with senior management, making recommendations on our general
compensation philosophy and overseeing the development and implementation of our
compensation programs;
 
    
    making recommendation to the board with respect to the compensation packages of our
directors and approving the compensation package of our senior executive officers,
including the chief executive officer;
 
    
    overseeing our regulatory compliance with respect to compensation matters;
 
    
    together with the board, evaluating the performance of the compensation committee;
 
    
    assessing the adequacy of its charter; and
 
    
    cooperating with the other board committees in any areas of overlapping
responsibilities.
  98




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Nominating and Corporate Governance Committee
   
    
    the identification of qualified candidates to become members and chairs of the board
committees and to fill any such vacancies;
 
    
    oversight of our compliance with legal and regulatory requirements, in particular
the legal and regulatory requirements of the Macau SAR (including the relevant laws
related to the gaming industry), of the Cayman Islands, of the SEC and of the Nasdaq;
 
    
    the development and recommendation to our board of a set of corporate governance
principles applicable to our company; and
 
    
    the disclosure, in accordance with our relevant policies, of any material
information (other than that regarding the quality or integrity of our financial
statements), which is brought to its attention by the disclosure committee.
  
    
    identifying and recommending to the board nominees for election or re-election to
the board committees, or for appointment to fill any such vacancy;
 
    
    developing a set of corporate governance principles and reviewing such principles at
least annually;
 
    
    deciding whether any material information (other than that regarding the quality or
integrity of our financial statements), which is brought to its attention by the
disclosure committee, should be disclosed;
 
    
    together with the board, evaluating the performance of the committee;
 
    
    assessing the adequacy of its charter; and
 
    
    cooperating with the other board committees in any areas of overlapping
responsibilities.
  99




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Interested Transactions
  Remuneration and Borrowing
  Qualification
  Benefits Upon Termination
  Employment Agreements
    100




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D. EMPLOYEES
 Employees
  As of December 31,2008
    
    
    2007
    
    
    2006Number of
    
    
    Percentage
    
    
    Number of
    
    
    Percentage
    
    
    Number of
    
    
    PercentageEmployees
    
    
    of Total
    
    
    Employees
    
    
    of Total
    
    
    Employees
    
    
    of TotalMocha
    
    
    615
    
    
    
    12.8
    %
    
    
    545
    
    
    
    11.1
    %
    
    
    459
    
    
    
    76.6
    %Crown Macau
    
    
    3,540
    
    
    
    73.7
    
    
    
    4,201
    
    
    
    85.2
    
    
    
    134
    
    
    
    22.4City of Dreams
    
    
    317
    
    
    
    6.6
    
    
    
    83
    
    
    
    1.7
    
    
    
    
    
    
    
    Corporate and
centralized
services
    
    
    331
    
    
    
    6.9
    
    
    
    99
    
    
    
    2.0
    
    
    
    6
    
    
    
    1.0Total
    
    
    4,803
    
    
    
    100
    %
    
    
    4,928
    
    
    
    100
    %
    
    
    599
    
    
    
    100
    %
    101




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##### Table of Contents



E. SHARE OWNERSHIP
  2006 Share Incentive Plan
   Types of Awards.
 
    
    options to purchase our ordinary shares; and
    
    restricted shares.
 Plan Administration.
 Award Agreement.
 Eligibility.
 Exercise Price and Term of Awards.
  102




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Vesting Schedule.
  Share-basedExercise
    
    
    
    
    
    
    
    
    
    compensation expensesprice/grant date
    
    
    
    
    
    
    
    
    
    recognized for year endedfair value
    
    No. of shares
    
    




December 31, 2008(1)(2)per ADS
    
    Granted
    
    
    Forfeited
    
    
    (In thousands of US$)
    
    
    Vesting PeriodShare Options2007 Long Term Incentive Plan
    
    $14.15$15.19
    
    
    3,908,390
    
    
    
    815,133
    
    
    
    1,089
    
    
    4 to 5 years2008 Long Term Incentive Plan
    
    $12.04$14.08
    
    
    5,589,948
    
    
    
    1,379,559
    
    
    
    1,239
    
    
    4 years2008 Retention Program
    
    $3.04
    
    
    14,968,395
    
    
    
    
    
    
    
    270
    
    
    3 years24,466,733
    
    
    
    2,194,692
    
    
    
    2,598Restricted SharesPre-IPO Award
    
    $19.00
    
    
    2,532,010
    
    
    
    750,453
    
    
    
    3,672
    
    
    6 months to 5 years2008 Long Term Incentive Plan
    
    $3.99$12.04
    
    
    630,689
    
    
    
    151,752
    
    
    
    370
    
    
    3 to 4 years2008 Share Exchange and
Retention Program
    
    $3.04
    
    
    5,899,155
    
    
    
    
    
    
    
    378
    
    
    3 months to 3 years9,061,854
    
    
    
    902,205
    
    
    
    4,4207,018
 (1)
    
    Share-based compensation expenses on restricted shares and share options granted are measured
in accordance with U.S. GAAP, which is based on the fair value of the award on the date of
grant recognized over the service period, the vesting period in the case of our awards. Of the
22,270,246 outstanding share options as of December 31, 2008, there were no vested share
options that were in-the-money.(2)
    
    During the year ended December 31, 2008, share-based compensation expenses of approximately
US$163,000 were capitalized to construction in progress. 
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 
 A. MAJOR SHAREHOLDERS
  Ordinary shares beneficially owned(1)Name
    
    Number
    
    
    %Melco Leisure and Entertainment Group Limited (2)(3)(4)
    
    
    500,000,000
    
    
    
    37.57PBL Asia Investments Limited (5)
    
    
    500,000,000
    
    
    
    37.57Janus Capital Management LLC(6)
    
    
    74,439,336
    
    
    
    5.59
 
 (1)
    
    Beneficial ownership is determined in accordance with Rule 13d-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, and includes
voting or investment power with respect to the securities. Melco and Crown continue to have a
shareholders agreement relating to certain aspects of the voting and disposition of our
ordinary shares held by them, and may accordingly constitute a group within the meaning of
Rule 13d-3. See Melco Crown Joint Venture. However, Melco and Crown each disclaim
beneficial ownership of the shares of our company owned by the other.  103




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(2)
    
    Melco Leisure and Entertainment Group Limited is incorporated in the British Virgin
Islands and is a wholly owned subsidiary of Melco. The address of Melco and Melco Leisure and
Entertainment Group Limited is c/o The Penthouse, 38th Floor, The Centrium, 60 Wyndham Street,
Central, Hong Kong. Melco is listed on the Main Board of the Hong Kong Stock Exchange.(3)
    
    Mr. Lawrence Ho, our Co-Chairman and Chief Executive Officer and the Chairman, Chief
Executive Officer and Managing Director of Melco, personally holds 7,416,628 ordinary shares
of Melco, representing approximately 0.6% of Melcos ordinary shares outstanding as of
February 18, 2009. In addition, 115,509,024 shares are held by Lasting Legend Ltd., and
288,532,606 shares are held by Better Joy Overseas Ltd., both of which companies are owned by
persons and trusts affiliated with Mr. Lawrence Ho. Therefore, we believe that for purposes of
Rule 13d-3, Mr. Ho beneficially owns 411,458,258 ordinary shares of Melco, representing
approximately 33.46% of Melcos ordinary shares outstanding as of February 18, 2009. This does
not include 117,912,694 shares into which convertible notes held by Great Respect Limited, a
company controlled by a discretionary trust formed for the benefit of members of the Ho family
(including Mr. Ho and Dr. Ho), may be converted upon the issuance of the land certificate for
the City of Dreams site. None of the beneficiaries of the trust control the voting or
disposition of shares held by the trust or Great Respect Limited.(4)
    
    As of March 4, 2009, Dr. Stanley Ho personally held 18,587,789 ordinary shares of
Melco. In addition, 3,127,107 shares of Melco are held by Lanceford Company Limited, a company
100% owned by Dr. Stanley Ho. Therefore, for purposes of Rule 13d-3, Dr. Ho may be deemed to
beneficially own 21,714,896 ordinary shares representing approximately 1.77% of Melcos
outstanding shares. Dr. Hos beneficial ownership does not include 117,912,694 shares into
which convertible notes held by Great Respect Limited may be converted upon the issuance of
the land certificate for the City of Dreams site.(5)
    
    PBL Asia Investments Limited is incorporated in the Cayman Islands and is 100%
indirectly owned by Crown. The address of Crown is Level 3, Crown Towers, 8 Whiteman Street,
Southbank, Victoria 3006, Australia. The address of PBL Asia Investments Limited is
c/o Walkers Corporate Services Limited, Walker House, 87 Mary Street, George Town, Grand
Cayman KY1-9002, Cayman Islands. Crown is listed on the Australian Stock Exchange. As of March
4, 2009, Crown was approximately 35.82% owned by Consolidated Press Holdings Group, which is a
group of companies owned by the Packer family.(6)
    
    Janus Capital Management LLC, or Janus Capital, is a Delaware company. The address
of Janus Capital is 151 Detroit Street, Denver, Colorado 80206, USA. Janus Capital has a
direct 89.9% ownership stake in INTECH Investment Management, or INTECH, and a direct 78.4%
ownership stake in Perkins Investment Management LLC, or Perkins. Janus Capital, Perkins and
INTECH are registered investment advisers, each furnishing investment advice to various
investment companies registered under Section 8 of the Investment Company Act of 1940 and to
individual and institutional clients, or the Managed Portfolios. As a result of its role as
investment adviser or sub-adviser to the Managed Portfolios, Janus Capital may be deemed to be
the beneficial owner of our shares held by such Managed Portfolios. However Janus Capital
does not have the right to receive any dividends from, or the proceeds from the sale of, the
securities held in the Managed Portfolios and disclaims any ownership associated with such
rights.    104




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Melco Crown Joint Venture
   Original and Amended Shareholders Deed
  Memorandum of Agreement
  
    
    Melco and PBL are to share on a 50/50 basis all the economic value and benefits with
respect to all gaming projects in the Territory;
 
    
    Melco and PBL are to appoint an equal number of members to our board of directors,
with no casting vote in the event of a deadlock or other deadlock resolution
provisions;
  105




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
    
    All of the class A shares of Melco Crown Gaming, representing 28% of all the
outstanding capital stock of Melco Crown Gaming, are to be owned by PBL Asia Limited
(as to 18%) and the Managing Director of Melco Crown Gaming (as to 10%), respectively.
Mr. Lawrence Ho has been appointed to serve as the Managing Director of Melco Crown
Gaming. The holders of the class A shares, as a class, will have the right to one vote
per share, receive an aggregate annual dividend of MOP 1 and return of capital of an
aggregate amount of MOP 1 on a wind up or liquidation, but will have no right to
participate in the winding up or liquidation assets;
 
    
    All of the class B shares of Melco Crown Gaming, representing 72% of all the
outstanding capital stock of Melco Crown Gaming are to be owned by MPEL Investments,
our wholly owned subsidiary. As the holder of class B shares, we will have the right to
one vote per share, receive the remaining distributable profits of Melco Crown Gaming
after payment of dividends on the class A shares, to return of capital after payment on
the class A shares on a winding up or liquidation of Melco Crown Gaming, and to
participate in the winding up and liquidation assets of Melco Crown Gaming;
 
    
    The shares of Melco Crown (CM) Developments and Melco Crown (COD) Developments and
the operating assets of Mocha would be transferred to Melco Crown Gaming;
 
    
    MPEL (Greater China) and Mocha are to be liquidated or remain dormant; and
 
    
    The provisions of the shareholders deed relating to the operation of our company
are to apply to Melco Crown Gaming.
 Shareholders Deed
  Exclusivity.
 Directors.
  106




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Transfer of Shares.
 Events of Default.
 Notice from a Regulatory Authority.
 Term.
  
 B. RELATED PARTY TRANSACTIONS
  Employment Agreements
   107




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Equity Incentive Plan
  
 C. INTERESTS OF EXPERTS AND COUNSEL
  
 ITEM 8. FINANCIAL INFORMATION
 
 A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
  Legal and Administrative Proceedings
  Dividend Policy
    
 B. SIGNIFICANT CHANGES
   108




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ITEM 9. THE OFFER AND LISTING
 
 A. OFFERING AND LISTING DETAILS
   Sales PriceHigh
    
    
    LowMonthly High and LowMarch 2009 (through March 25, 2009)
    
    
    3.68
    
    
    
    2.52February 2009
    
    
    3.23
    
    
    
    2.27January 2009
    
    
    4.65
    
    
    
    2.76December 2008
    
    
    3.69
    
    
    
    2.71November 2008
    
    
    4.75
    
    
    
    2.51October 2008
    
    
    4.89
    
    
    
    2.31September 2008
    
    
    6.73
    
    
    
    3.77Quarterly High and LowFirst Quarter 2009 (up to March 25, 2009)
    
    
    4.65
    
    
    
    2.27Forth Quarter 2008
    
    
    4.89
    
    
    
    2.31Third Quarter 2008
    
    
    9.63
    
    
    
    3.77Second Quarter 2008
    
    
    14.76
    
    
    
    9.00First Quarter 2008
    
    
    13.23
    
    
    
    8.20Fourth Quarter 2007
    
    
    19.09
    
    
    
    11.34Third Quarter 2007
    
    
    17.00
    
    
    
    9.95Second Quarter 2007
    
    
    19.45
    
    
    
    11.29First Quarter 2007
    
    
    22.34
    
    
    
    14.12Annual High and Low2008
    
    
    14.76
    
    
    
    2.312007
    
    
    22.34
    
    
    
    9.952006
    
    
    23.55
    
    
    
    18.88
 
 B. PLAN OF DISTRIBUTION
  
 C. MARKETS
  
 D. SELLING SHAREHOLDERS
   109




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E. DILUTION
  
 F. EXPENSES OF THE ISSUE
  
 ITEM 10. ADDITIONAL INFORMATION
 
 A. SHARE CAPITAL
  
 B. MEMORANDUM AND ARTICLES OF ASSOCIATION
  
 C. MATERIAL CONTRACTS
  
 D. EXCHANGE CONTROLS
 Foreign Currency Exchange
   110




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E. TAXATION
 Cayman Islands Taxation
  United States Federal Income Taxation
   
    
    banks;
 
    
    insurance companies;
 
    
    dealers in securities;
 
    
    certain former citizens or residents of the United States;
 
    
    persons that elect to mark to market;
 
    
    tax-exempt entities;
 
    
    real estate investment trusts;
 
    
    regulated investment companies;
 
    
    persons holding an ADS or ordinary share as part of a straddle, hedging, conversion
or other integrated transaction;
 
    
    persons that actually or constructively own 10% or more of our voting stock; or
 
    
    persons who acquired ADSs or ordinary shares pursuant to the exercise of any
employee share option or otherwise as compensation or pursuant to the conversion of
another instrument.
  111




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U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF U.S. FEDERAL TAX
RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS U.S. STATE AND LOCAL AND NON-U.S. TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE ADSs OR ORDINARY SHARES.
  
    
    an individual who is a citizen or resident of the United States;
 
    
    a corporation created or organized under the laws of the United States, any State
thereof or the District of Columbia;
 
    
    an estate whose income is subject to U.S. federal income taxation regardless of its
source; or
 
    
    a trust that (1) is subject to the supervision of a court within the United States
and the control of one or more U.S. persons or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S. person.
  Tax Treatment of ADSs
  Dividends and Other Distributions on the ADSs or Ordinary Shares
   112




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Sale, Exchange or Other Disposition of the ADSs or Ordinary Shares
  Passive Foreign Investment Company
    113




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de minimis
  114




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Information Reporting and Backup Withholding
   
 F. DIVIDENDS AND PAYING AGENTS
  
 G. STATEMENT BY EXPERTS
   115




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H. DOCUMENTS ON DISPLAY
     
 I. SUBSIDIARY INFORMATION
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   116




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Interest Rate Risk
   Foreign Exchange Risk
  Construction Materials Risk
   117




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Credit Risk
  
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
  Use of Proceeds
   118




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ITEM 15. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Annual Report on Internal Control Over Financial Reporting
       119




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Changes in Internal Controls Over Financial Reporting
  
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
   120




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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  For the Years Ended December 31,2008
    
    
    2007(In thousands of US$)Audit fees (1)
    
    $
    1,356
    
    
    $
    1,480Audit-related fees (2)
    
    
    139
    
    
    
    100Tax fees (3)
    
    
    24
    
    
    
    34All other fees (4)
    
    
    
    
    
    
    300
 
 (1)
    
    Audit fees means the aggregate fees billed in each of the fiscal years indicated for our
calendar year audits.(2)
    
    Audit-related fees means the aggregate fees billed in respect of the review of our interim
financial statement for the six months ended June 30, 2008 and 2007.(3)
    
    Tax fees include fees billed for tax consultations.(4)
    
    All other fees means the aggregate fees billed in respect of our second public offering in
November 2007, which amounted to US$300,000. de minimis
 
 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  
 ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  
 ITEM 16G. CORPORATE GOVERNANCE
   121




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PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  
 ITEM 19. EXHIBITS
 ExhibitNumber
    
    Description of Document1.1
    
    
    Amended and Restated Memorandum and Articles of Association (incorporated
by reference to Exhibit 1.1 from our annual report on Form 20-F for the
fiscal year ended December 31, 2006 (File No. 001-33172 as amended
initially filed with the SEC on March 30, 2007)2.1
    
    
    Form of Registrants American Depositary Receipt (included in Exhibit 2.3)2.2
    
    
    Registrants Specimen Certificate for Ordinary Shares (incorporated by
reference to Exhibit 4.2 from our F-1 registration statement (File
No. 333-139088), as amended, initially filed with the SEC on December 1,
2006)2.3
    
    
    Form of Deposit Agreement among the Registrant, the depositary and Owners
and Beneficial Owners of the American Depositary Shares issued thereunder
(incorporated by reference to Exhibit 4.3 from our F-1 registration
statement (File No. 333-139088), as amended, initially filed with the SEC
on December 1, 2006)2.4
    
    
    Holdco 1 Subscription Agreement dated December 23, 2004 among the
Registrant (formerly known as Melco PBL Holdings Limited), Melco, PBL and
PBL Asia Investments Limited (incorporated by reference to Exhibit 4.4
from our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)2.5
    
    
    Supplemental Agreement to the Memorandum of Agreement dated May 26, 2006
between Melco and PBL (incorporated by reference to Exhibit 4.7 from our
F-1 registration statement (File No. 333-139088), as amended, initially
filed with the SEC on December 1, 2006)
  122




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ExhibitNumber
    
    Description of Document2.6
    
    
    Deed of Variation and Amendment relating to the Registrant dated July 27,
2007 between Melco Leisure and Entertainment Group Limited, Melco
International Development Limited, PBL Asia Investments Limited,
Publishing and Broadcasting Limited, Crown Limited and the Registrant
(incorporated by reference to Exhibit 4.11 from our F-1 registration
statement (File No. 333-146780), as amended, initially filed with the SEC
on October 18, 2007)2.7
    
    
    Amended and Restated Shareholders Deed Relating to the Registrant dated
December 12, 2007 among the Registrant, Melco Leisure and Entertainment
Group Limited, Melco, PBL Asia Investments Limited and Crown Limited
(incorporated by reference to Exhibit 2.7 form our Form 20-F registration
statement (File No. 001-33178), filed with the SEC on April 9, 2008)2.8
    
    
    Form of Post-IPO Shareholders Agreement among the Registrant, Melco
Leisure and Entertainment Group Limited, Melco, PBL Asia Investments
Limited and PBL (incorporated by reference to Exhibit 4.9 from our F-1
registration statement (File No. 333-139088), as amended, initially filed
with the SEC on December 1, 2006)2.9
    
    
    Form of Registration Rights Agreement among the Registrant, Melco and PBL
(incorporated by reference to Exhibit 4.10 from our F-1 registration
statement (File No. 333-139088), as amended, initially filed with the SEC
on December 1, 2006)4.1
    
    
    Form of Indemnification Agreement with the Registrants directors and
executive officers (incorporated by reference to Exhibit 10.1 from our F-1
registration statement (File No. 333-139088), as amended, initially filed
with the SEC on December 1, 2006)4.2
    
    
    Form of Directors Agreement of the Registrant (incorporated by reference
to Exhibit 10.2 from our F-1 registration statement (File No. 333-139088),
as amended, initially filed with the SEC on December 1, 2006)4.3
    
    
    Form of Employment Agreement between the Registrant and an Executive
Officer of the Registrant (incorporated by reference to Exhibit 10.3 from
our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)4.4
    
    
    English Translation of Subconcession Contract for operating casino games
of chance or games of other forms in the Macau Special Administrative
Region between Wynn Macau and PBL Macau, dated September 8, 2006
(incorporated by reference to Exhibit 10.4 from our F-1 registration
statement (File No. 333-139088), as amended, initially filed with the SEC
on December 1, 2006)
  123




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ExhibitNumber
    
    Description of Document4.5
    
    
    Senior Facilities Agreement dated September 5, 2007 for Melco PBL Gaming
(Macau) Limited as Original Borrower, arranged by Australia and New
Zealand Banking Group Limited, Banc of America Securities Asia Limited,
Barclays Capital, Deutsche Bank AG, Hong Kong Branch and UBS AG Hong Kong
Branch as Coordinating Lead Arrangers with Deutsche Bank AG, Hong Kong
Branch acting as Agent and DB Trustees (Hong Kong) Limited acting as
Security Agent (incorporated by reference to Exhibit 10.32 from our F-1
registration statement (File No. 333-146780), as amended, initially filed
with the SEC on October 18, 2007)4.6
    *
    
    Amendment Agreement in Respect of Senior Facilities Agreement dated
December 7, 2007 for Melco PBL Gaming (Macau) Limited as Company and
Deutsche Bank AG, Hong Kong Branch, as Agent4.7
    *
    
    Second Amendment Agreement in Respect of Senior Facilities Agreement dated
September 1, 2008 for Melco Crown Gaming (Macau) Limited as Company and
Deutsche Bank AG, Hong Kong Branch, as Agent4.8
    *
    
    Third Amendment Agreement in Respect of Senior Facilities Agreement dated
December 1, 2008 for Melco Crown Gaming (Macau) Limited as Company and
Deutsche Bank AG, Hong Kong Branch, as Agent4.9
    
    
    Agreement dated May 9, 2006 between Dr. Stanley Ho and MPBL International,
regarding sale and transfer of Mocha Slot Group Limited, together with
Deed of Assignment dated May 9, 2006 between Dr. Ho, as assignor, and MPBL
International, as assignee (incorporated by reference to Exhibit 10.8 from
our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)4.10
    
    
    English Translation of Sale and Purchase Agreement dated September 21,
2006 between Mocha and Melco PBL Gaming (now Melco Crown Gaming)
(incorporated by reference to Exhibit 10.9 from our F-1 registration
statement (File No. 333-139088), as amended, initially filed with the SEC
on December 1, 2006)4.11
    
    
    Letter Agreement in relation to termination of the Mocha service
arrangement dated March 15, 2006 among Mocha, SJM and Melco (incorporated
by reference to Exhibit 10.10 from our F-1 registration statement (File
No. 333-139088), as amended, initially filed with the SEC on December 1,
2006)4.12
    
    
    First Supplementary Agreement to Joint Venture dated February 8, 2005
Relating to transfer of 70% interests in Melco Crown (CM) Developments
(its former names were MPBL Crown Macau Developments and Great Wonders) to
MPBL (Greater China) (formerly known as Melco Entertainment Limited) among
STDM, Melco and MPBL (Greater China) (incorporated by reference to
Exhibit 10.11 from our F-1 registration statement (File No. 333-139088),
as amended, initially filed with the SEC on December 1, 2006)
  124




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ExhibitNumber
    
    Description of Document4.13
    
    
    Agreement dated March 17, 2005 Relating to transfer of 30% shareholding in
Melco Crown (CM) Developments (its former names were MPBL Crown Macau
Developments and Great Wonders) from STDM to Melco among STDM, Melco and
MPBL (Greater China) (formerly known as Melco Entertainment Limited)
(incorporated by reference to Exhibit 10.12 from our F-1 registration
statement (File No. 333-139088), as amended, initially filed with the SEC
on December 1, 2006)4.14
    
    
    English Translation of Order of the Secretary for Public Works and
Transportation published in Macau Official Gazette no. 9 of March 1, 2006
(incorporated by reference to Exhibit 10.13 from our F-1 registration
statement (File No. 333-139088), as amended, initially filed with the SEC
on December 1, 2006)4.15
    
    
    Contract Document dated November 24, 2004 for the design and construction
of the hotel and casino at Junction of Avenida Dr. Sun Yat Sen and Avenida
de Kwong Tung, Taipa, Macau between Melco Crown (CM) Developments (its
former names were MPBL Crown Macau Developments and Great Wonders) and
Paul Y. Construction Company Limited (incorporated by reference to
Exhibit 10.14 from our F-1 registration statement (File No. 333-139088),
as amended, initially filed with the SEC on December 1, 2006)4.16
    
    
    Agreement dated March 9, 2005 between Melco Leisure and Entertainment
Group Limited and MPBL (Greater China) (formerly known as Melco
Entertainment Limited) (incorporated by reference to Exhibit 10.15 from
our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)4.17
    
    
    Assignment Agreement dated May 11, 2005 in relation to a memorandum of
agreement dated October 28, 2004 and a subscription agreement in relation
to convertible loan notes in the aggregate principal amount of
HK$1,175,000,000 to be issued by Melco among Great Respect, as assignor,
MPBL (Greater China) (formerly known as Melco Entertainment Limited), as
assignee, and Melco, as issuer (incorporated by reference to Exhibit 10.16
from our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)4.18
    
    
    Transfer Deed in relation to the entire issued equity capital of Melco
Crown (COD) Developments (formerly known as MPBL (COD) Developments) and
Assignment Deed in relation to a memorandum of agreement dated October 28,
2004, dated May 17, 2005, between Melco Leisure and Entertainment Group
Limited and MPBL (Greater China) (incorporated by reference to
Exhibit 10.16 from our F-1 registration statement (File No. 333-139088),
as amended, initially filed with the SEC on December 1, 2006)
  125




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ExhibitNumber
    
    Description of Document4.19
    
    
    Construction Management Agreement dated August 22, 2007 for the
Construction and Commissioning of City of Dreams, Macau for Melco
Crown (COD) Developments Limited (formerly known as MPBL (COD)
Developments) (incorporated by reference to Exhibit 10.33 from our F-1
registration statement (File No. 333-146780), as amended, initially filed
with the SEC on October 18, 2007)4.20
    *
    
    Novation and Termination Agreement (with respect to the Management
Agreement for Grand Hyatt Macau dated June 18, 2006 and the Management
Agreement for Hyatt Regency Macau dated June 18, 2006) dated August 30,
2008 between Hyatt of Macau Ltd., Melco Crown (COD) Developments Limited
and Melco Crown COD (GH) Hotel Limited4.21
    *
    
    Management Agreement dated August 30, 2008 between Melco Crown COD (GH)
Hotel Limited and Hyatt of Macau Ltd.4.22
    
    
    Hotel Trademark License Agreement by and between Hard Rock Holdings
Limited and Melco Crown (COD) Developments (formerly known as Melco PBL
(COD) Developments Limited and Melco Hotel and Resorts (Macau) Limited)
dated January 22, 2007 (incorporated by reference to Exhibit 4.21 from our
annual report on Form 20-F for the fiscal year ended December 31, 2006
(File No. 001-33178), as amended, initially filed with the SEC on
March 30, 2007)4.23
    *
    
    Novation Agreement (in respect of Hotel Trademark License Agreement) dated
August 30, 2008 between Hard Rock Holdings Limited, Melco Crown (COD)
Developments Limited and Melco Crown COD (HR) Hotel Limited4.24
    
    
    Casino Trademark License Agreement by and between Hard Rock Holdings
Limited and Melco PBL Gaming (now Melco Crown Gaming) dated January 22,
2007 (incorporated by reference to Exhibit 4.22 from our annual report on
Form 20-F for the fiscal year ended December 31, 2006 (File
No. 001-33178), as amended, initially filed with the SEC on March 30,
2007)4.25
    
    
    Memorabilia Lease (casino) between Hard Rock Cafe International (STP) Inc.
and Melco PBL Gaming (now Melco Crown Gaming) dated January 22, 2007
(incorporated by reference to Exhibit 4.23 from our annual report on
Form 20-F for the fiscal year ended December 31, 2006 (File
No. 001-33178), as amended, initially filed with the SEC on March 30,
2007)4.26
    
    
    Memorabilia Lease (hotel) between Hard Rock Cafe International (STP) Inc.
and Melco Crown (COD) Developments dated January 22, 2007 (incorporated by
reference to Exhibit 4.24 from our annual report on Form 20-F for the
fiscal year ended December 31, 2006 (File No. 001-33178), as amended,
initially filed with the SEC on March 30, 2007)
  126




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ExhibitNumber
    
    Description of Document4.27
    *
    
    Novation Agreement (in respect of Hotel Memorabilia Lease) dated August
30, 2008 between Hard Rock Café International (STP), Inc., Melco Crown
(COD) Developments Limited and Melco Crown COD (HR) Hotel Limited4.28
    
    
    Promissory Transfer of Shares Agreement dated May 17, 2006 with respect to
the sale and transfer of Omar Limited (incorporated by reference to
Exhibit 10.21 from our F-1 registration statement (File No. 333-139088),
as amended, initially filed with the SEC on December 1, 2006)4.29
    *
    
    Extension Letter (with respect to the Promissory Transfer of Shares
Agreement) to Melco PBL (Macau Peninsula) Limited from Double Margin,
Angela Leong and Omar dated January 25, 20074.30
    *
    
    Extension Letter (with respect to the Promissory Transfer of Shares
Agreement) to Melco PBL (Macau Peninsula) Limited from Double Margin and
Angela Leong dated July 17, 20074.31
    *
    
    Extension Letter (with respect to the Promissory Transfer of Shares
Agreement) to MPEL (Macau Peninsula) Limited from Double Margin and Angela
Leong dated July 2, 20084.32
    
    
    Shareholders Agreement relating to Melco PBL Gaming (now Melco Crown
Gaming) dated November 22, 2006 among PBL Asia Limited, MPBL Investments,
Manuela António and Melco PBL Gaming (incorporated by reference to
Exhibit 10.22 from our F-1 registration statement (File No. 333-139088),
as amended, initially filed with the SEC on December 1, 2006)4.33
    
    
    Termination Letter dated December 15, 2006 in connection with Shareholders
Agreement Relating to Melco PBL Gaming (Macau) Limited dated November 22,
2006 (incorporated by reference to Exhibit 4.27 from our annual report on
Form 20-F for the fiscal year ended December 31, 2006 (File
No. 001-33178), as amended, initially filed with the SEC on March 30,
2007)4.34
    
    
    Letter dated December 15, 2006 in connection with appointment of
Mr. Lawrence Ho as the managing director of Melco PBL Gaming (Macau)
Limited (incorporated by reference to Exhibit 4.28 from our annual report
on Form 20-F for the fiscal year ended December 31, 2006 (File
No. 001-33178), as amended, initially filed with the SEC on March 30,
2007)4.35
    
    
    Termination Agreement relating to the Shareholders Agreement dated
December 15, 2006 among PBL Asia Limited, Melco PBL Investments Limited,
Lawrence Yau Lung Ho and Melco PBL Gaming (Macau) Limited (incorporated by
reference to Exhibit 4.5 from our F-3 registration statement (File
No. 333-148849), filed with the SEC on January 25, 2008)
  127




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ExhibitNumber
    
    Description of Document4.36
    
    
    2006 Share Incentive Plan (incorporated by reference to Exhibit 10.23 from
our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)4.37
    
    
    Trade Mark License dated November 30, 2006 between Crown Limited and the
Registrant as the licensee (incorporated by reference to Exhibit 10.24
from our F-1 registration statement (File No. 333-139088), as amended,
initially filed with the SEC on December 1, 2006)4.38
    
    
    Agreement between the Registrant and Melco Leisure and Entertainment Group
Limited dated March 27, 2007 (incorporated by reference to Exhibit 4.32
from our annual report on Form 20-F for the fiscal year ended December 31,
2006 (File No. 001-33178), as amended, initially filed with the SEC on
March 30, 2007)4.39
    
    
    Agreement between the Registrant and PBL Asia Investments Limited dated
March 27, 2007 (incorporated by reference to Exhibit 4.33 from our annual
report on Form 20-F for the fiscal year ended December 31, 2006 (File
No. 001-33178), as amended, initially filed with the SEC on March 30,
2007)8.1
    *
    
    List of Subsidiaries11.1
    *
    
    Code of Business Conduct and Ethics, amended and approved as of November
14, 200812.1
    *
    
    CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2
    *
    
    CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200213.1
    *
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2
    *
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1
    *
    
    Consent of Walkers
 
 *
    
    Filed with this Annual Report on Form 20-F  128




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MELCO CROWN ENTERTAINMENT LIMITED




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 and 2006
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-3Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    F-4Consolidated Statements of Operations for the years ended
December 31, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Shareholders Equity for the years ended
December 31, 2008, 2007 and 2006
    
    
    F-6Consolidated Statements of Cash Flows for the years ended
December 31, 2008, 2007 and 2006
    
    
    F-7Notes to Consolidated Financial Statements for the years ended
December 31, 2008, 2007 and 2006
    
    
    F-9Schedule 1  Melco Crown Entertainment Limited Condensed Financial
Statements as of December 31, 2008 and 2007 and for the years ended
December 31, 2008, 2007 and 2006
    
    
    F-42
  F - 1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        Deloitte Touche Tohmatsu
  F - 2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Deloitte Touche Tohmatsu
  F - 3




---



##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 
 CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except share and per share data)
 December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    815,144
    
    
    $
    835,419Restricted cash
    
    
    67,977
    
    
    
    298,983Accounts receivable, net (Note 3)
    
    
    72,755
    
    
    
    49,390Amounts due from affiliated companies (Note 19(a))
    
    
    650
    
    
    
    Inventories
    
    
    2,170
    
    
    
    1,484Prepaid expenses and other current assets
    
    
    17,556
    
    
    
    15,715Total current assets
    
    
    976,252
    
    
    
    1,200,991PROPERTY AND EQUIPMENT, NET (Note 4)
    
    
    2,107,722
    
    
    
    980,241GAMING SUBCONCESSION, NET (Note 5)
    
    
    771,216
    
    
    
    828,453INTANGIBLE ASSETS, NET (Note 6)
    
    
    4,220
    
    
    
    4,220GOODWILL (Note 6)
    
    
    81,915
    
    
    
    81,915LONG-TERM PREPAYMENT AND DEPOSITS
    
    
    60,894
    
    
    
    15,832DEFERRED TAX ASSETS (Note 14)
    
    
    28
    
    
    
    DEFERRED FINANCING COST
    
    
    49,336
    
    
    
    48,295DEPOSIT FOR ACQUISITION OF LAND INTEREST (Note 7)
    
    
    12,853
    
    
    
    12,853LAND USE RIGHTS, NET (Note 8, 18(a))
    
    
    433,853
    
    
    
    447,468TOTAL
    
    $
    4,498,289
    
    
    $
    3,620,268LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    2,494
    
    
    $
    5,736Accrued expenses and other current liabilities (Note 9)
    
    
    442,671
    
    
    
    468,236Income tax payable
    
    
    1,954
    
    
    
    1,560Amounts due to affiliated companies (Note 19(b))
    
    
    1,985
    
    
    
    6,602Amounts due to shareholders (Note 19(c))
    
    
    1,032
    
    
    
    1,551Total current liabilities
    
    
    450,136
    
    
    
    483,685LONG-TERM DEBT (Note 10)
    
    
    1,412,516
    
    
    
    500,209OTHER LONG-TERM LIABILITIES (Note 11)
    
    
    38,304
    
    
    
    11,074DEFERRED TAX LIABILITIES (Note 14)
    
    
    19,191
    
    
    
    21,286LOANS FROM SHAREHOLDERS (Note 19(c))
    
    
    115,647
    
    
    
    114,616LAND USE RIGHT PAYABLE (Note 18(a))
    
    
    53,891
    
    
    
    60,857COMMITMENTS AND CONTINGENCIES (Note 18)SHAREHOLDERS EQUITYOrdinary shares at US$0.01 par value per share
(Authorized  1,500,000,000 shares and issued  1,321,550,399
and 1,320,938,902 shares as of December 31, 2008 and 2007 (Note 13))
    
    
    13,216
    
    
    
    13,209Treasury shares, at US$0.01 par value per share
(385,180 and nil shares as of December 31, 2008 and 2007 (Note 13))
    
    
    (4
    )
    
    
    Additional paid-in capital
    
    
    2,689,257
    
    
    
    2,682,125Accumulated other comprehensive losses
    
    
    (35,685
    )
    
    
    (11,076
    )Accumulated losses
    
    
    (258,180
    )
    
    
    (255,717
    )Total shareholders equity
    
    
    2,408,604
    
    
    
    2,428,541TOTAL
    
    $
    4,498,289
    
    
    $
    3,620,268
   F - 4




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share data)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006OPERATING REVENUESCasino- Affiliated customer (Note 19(a))
    
    $
    
    
    
    $
    
    
    
    $
    16,276- External customers
    
    
    1,405,932
    
    
    
    348,725
    
    
    
    19,108Sub-total
    
    
    1,405,932
    
    
    
    348,725
    
    
    
    35,384Rooms
    
    
    17,084
    
    
    
    5,670
    
    
    
    Food and beverage
    
    
    16,107
    
    
    
    11,121
    
    
    
    1,523Entertainment, retail and others
    
    
    5,396
    
    
    
    1,964
    
    
    
    Gross revenues
    
    
    1,444,519
    
    
    
    367,480
    
    
    
    36,907Less: promotional allowances
    
    
    (28,385
    )
    
    
    (8,984
    )
    
    
    (806
    )Net revenues
    
    
    1,416,134
    
    
    
    358,496
    
    
    
    36,101OPERATING COSTS AND EXPENSESCasino
    
    
    (1,146,893
    )
    
    
    (291,045
    )
    
    
    (18,777
    )Rooms
    
    
    (1,342
    )
    
    
    (2,222
    )
    
    
    Food and beverage
    
    
    (12,745
    )
    
    
    (10,541
    )
    
    
    (530
    )Entertainment, retail and others
    
    
    (1,240
    )
    
    
    (504
    )
    
    
    General and administrative
    
    
    (104,034
    )
    
    
    (96,037
    )
    
    
    (18,616
    )Pre-opening costs
    
    
    (21,821
    )
    
    
    (40,032
    )
    
    
    (11,679
    )Amortization of gaming subconcession
    
    
    (57,237
    )
    
    
    (57,190
    )
    
    
    (14,309
    )Amortization of land use rights
    
    
    (18,269
    )
    
    
    (17,276
    )
    
    
    (12,358
    )Depreciation and amortization
    
    
    (51,379
    )
    
    
    (39,466
    )
    
    
    (9,845
    )Impairment loss recognized on slot lounge services
agreement (Note 6)
    
    
    
    
    
    
    
    
    
    
    (7,640
    )Total operating costs and expenses
    
    
    (1,414,960
    )
    
    
    (554,313
    )
    
    
    (93,754
    )OPERATING INCOME (LOSS)
    
    
    1,174
    
    
    
    (195,817
    )
    
    
    (57,653
    )NON-OPERATING (EXPENSES) INCOMEInterest income
    
    
    8,215
    
    
    
    18,640
    
    
    
    816Interest expenses, net of capitalized interest
    
    
    
    
    
    
    (770
    )
    
    
    (11,184
    )Write off of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    (12,698
    )Amortization of deferred financing costs
    
    
    (765
    )
    
    
    (1,005
    )
    
    
    Loan commitment fees
    
    
    (14,965
    )
    
    
    (4,760
    )
    
    
    Foreign exchange gain, net
    
    
    1,436
    
    
    
    3,832
    
    
    
    55Other income, net
    
    
    972
    
    
    
    275
    
    
    
    285Total non-operating (expenses) income
    
    
    (5,107
    )
    
    
    16,212
    
    
    
    (22,726
    )LOSS BEFORE INCOME TAX
    
    
    (3,933
    )
    
    
    (179,605
    )
    
    
    (80,379
    )INCOME TAX CREDIT (Note 14)
    
    
    1,470
    
    
    
    1,454
    
    
    
    1,885LOSS BEFORE MINORITY INTERESTS
    
    
    (2,463
    )
    
    
    (178,151
    )
    
    
    (78,494
    )MINORITY INTERESTS
    
    
    
    
    
    
    
    
    
    
    5,015NET LOSS
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )LOSS PER SHARE:Basic and diluted
    
    $
    (0.002
    )
    
    $
    (0.145
    )
    
    $
    (0.116
    )SHARES USED IN LOSS PER SHARE CALCULATION:Basic and diluted
    
    
    1,320,946,942
    
    
    
    1,224,880,031
    
    
    
    633,228,439
   F - 5




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands of U.S. dollars, except share and per share data)
 AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    TotalCommon Shares
    
    
    Treasury Shares
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Shareholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Losses
    
    
    Equity
    
    
    LossBALANCE AT JANUARY 1, 2006
    
    
    500,000,000
    
    
    $
    5,000
    
    
    
    
    
    
    $
    
    
    
    $
    237,779
    
    
    $
    
    
    
    $
    (4,087
    )
    
    $
    238,692Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,479
    )
    
    
    (73,479
    )
    
    $
    (73,479
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740
    
    
    
    
    
    
    
    740
    
    
    
    740Share-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278
    
    
    
    
    
    
    
    
    
    
    
    278Shares issued upon initial public offering,
net of offering expenses (Note 13)
    
    
    180,931,146
    
    
    
    1,809
    
    
    
    
    
    
    
    
    
    
    
    1,065,665
    
    
    
    
    
    
    
    
    
    
    
    1,067,474Shares issued during the year (Note 13)
    
    
    500,000,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    315,000
    
    
    
    
    
    
    
    
    
    
    
    320,000Capital contributions from shareholders
(Note 19 (c))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Contribution from Melco
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,170
    
    
    
    
    
    
    
    
    
    
    
    109,170Contribution of Melco Crown Gaming from
PBL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,491
    
    
    
    
    
    
    
    
    
    
    
    77,491BALANCE AT DECEMBER 31, 2006
    
    
    1,180,931,146
    
    
    
    11,809
    
    
    
    
    
    
    
    
    
    
    
    1,955,383
    
    
    
    740
    
    
    
    (77,566
    )
    
    
    1,890,366
    
    
    $
    (72,739
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (178,151
    )
    
    
    (178,151
    )
    
    $
    (178,151
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,685
    )
    
    
    
    
    
    
    (1,685
    )
    
    
    (1,685
    )Change in fair value of interest rate swap
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,131
    )
    
    
    
    
    
    
    (10,131
    )
    
    
    (10,131
    )Share-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,346
    
    
    
    
    
    
    
    
    
    
    
    5,346Shares issued, net of offering expenses
(Note 13)
    
    
    139,612,500
    
    
    
    1,396
    
    
    
    
    
    
    
    
    
    
    
    721,400
    
    
    
    
    
    
    
    
    
    
    
    722,796Shares issued upon restricted shares vested
(Note 13)
    
    
    395,256
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2007
    
    
    1,320,938,902
    
    
    
    13,209
    
    
    
    
    
    
    
    
    
    
    
    2,682,125
    
    
    
    (11,076
    )
    
    
    (255,717
    )
    
    
    2,428,541
    
    
    $
    (189,967
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,463
    )
    
    
    (2,463
    )
    
    $
    (2,463
    )Change in fair value of interest rate swap
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,609
    )
    
    
    
    
    
    
    (24,609
    )
    
    
    (24,609
    )Reversal of over-accrued offering expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    117Share-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,018
    
    
    
    
    
    
    
    
    
    
    
    7,018Shares issued upon restricted shares vested
(Note 13)
    
    
    226,317
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    Shares issued for future exercises of share
options (Note 13)
    
    
    385,180
    
    
    
    4
    
    
    
    (385,180
    )
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2008
    
    
    1,321,550,399
    
    
    $
    13,216
    
    
    
    (385,180
    )
    
    $
    (4
    )
    
    $
    2,689,257
    
    
    $
    (35,685
    )
    
    $
    (258,180
    )
    
    $
    2,408,604
    
    
    $
    (27,072
    )
   F - 6




---



##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    126,885
    
    
    
    113,932
    
    
    
    36,512Amortization of deferred financing costs
    
    
    765
    
    
    
    1,005
    
    
    
    Impairment loss recognized on slot lounge services
agreement
    
    
    
    
    
    
    
    
    
    
    7,640Impairment loss recognized on property and equipment
    
    
    17
    
    
    
    421
    
    
    
    1,116(Gain) loss on disposal of property and equipment
    
    
    (328
    )
    
    
    585
    
    
    
    24Allowance for doubtful debts
    
    
    5,378
    
    
    
    2,733
    
    
    
    Share-based compensation
    
    
    6,855
    
    
    
    5,256
    
    
    
    278Minority interests
    
    
    
    
    
    
    
    
    
    
    (5,015
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (28,743
    )
    
    
    (51,711
    )
    
    
    (377
    )Amounts due from affiliated companies
    
    
    89
    
    
    
    151
    
    
    
    1,276Inventories
    
    
    (686
    )
    
    
    (1,288
    )
    
    
    (109
    )Prepaid expenses and other current assets
    
    
    (1,503
    )
    
    
    (13,924
    )
    
    
    10,330Long-term prepayment and deposits
    
    
    1,219
    
    
    
    (7,899
    )
    
    
    (1,638
    )Deferred tax assets
    
    
    (28
    )
    
    
    
    
    
    
    Accounts payable
    
    
    (3,670
    )
    
    
    3,172
    
    
    
    2,360Accrued expenses and other current liabilities
    
    
    (110,567
    )
    
    
    273,166
    
    
    
    3,015Income tax payable
    
    
    394
    
    
    
    1,301
    
    
    
    (356
    )Amounts due to affiliated companies
    
    
    (3,461
    )
    
    
    428
    
    
    
    Other long-term liabilities
    
    
    784
    
    
    
    950
    
    
    
    Deferred tax liabilities
    
    
    (2,095
    )
    
    
    (2,755
    )
    
    
    (1,814
    )Net cash (used in) provided by operating activities
    
    
    (11,158
    )
    
    
    147,372
    
    
    
    (20,237
    )CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property and equipment
    
    
    (1,053,992
    )
    
    
    (668,281
    )
    
    
    (22,743
    )Deposits for acquisition of property and equipment
    
    
    (34,699
    )
    
    
    (5,356
    )
    
    
    (3,555
    )Payment for long-term prepayment
    
    
    (16,127
    )
    
    
    
    
    
    
    Restricted cash
    
    
    231,006
    
    
    
    (298,983
    )
    
    
    Payment for land use rights
    
    
    (42,090
    )
    
    
    
    
    
    
    (12,371
    )Proceeds from sale of property and equipment
    
    
    2,300
    
    
    
    
    
    
    
    24Net cash used in investing activities
    
    
    (913,602
    )
    
    
    (972,620
    )
    
    
    (38,645
    )CASH FLOWS FROM FINANCING ACTIVITIESPayment of deferred financing costs
    
    
    (7,641
    )
    
    
    (49,735
    )
    
    
    Loans from shareholders
    
    
    (181
    )
    
    
    (96,583
    )
    
    
    75,544Amounts due to affiliated companies
    
    
    
    
    
    
    
    
    
    
    (45,643
    )Payment of principal of capital leases
    
    
    
    
    
    
    (16
    )
    
    
    (5
    )Issue of share capital
    
    
    
    
    
    
    722,796
    
    
    
    1,067,474Cash from contribution of Melco Crown Gaming from PBL
    
    
    
    
    
    
    
    
    
    
    25,739Proceeds from long-term debt
    
    
    912,307
    
    
    
    500,209
    
    
    
    Repayment of bank loan
    
    
    
    
    
    
    
    
    
    
    (500,000
    )Net cash provided by financing activities
    
    
    904,485
    
    
    
    1,076,671
    
    
    
    623,109NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (20,275
    )
    
    
    251,423
    
    
    
    564,227CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR
    
    
    835,419
    
    
    
    583,996
    
    
    
    19,769CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    815,144
    
    
    $
    835,419
    
    
    $
    583,996
   F - 7




---



##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands of U.S. dollars)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006SUPPLEMENTAL DISCLOSURES OF CASH FLOWSCash paid for interest (net of capitalized interest)
    
    $
    (181
    )
    
    $
    (596
    )
    
    $
    (10,328
    )Cash paid for tax
    
    $
    
    
    
    $
    
    
    
    $
    (285
    )NON-CASH INVESTING ACTIVITIESConstruction costs funded through accrued expenses and
other current liabilities
    
    $
    246,998
    
    
    $
    132,356
    
    
    $
    61,383Construction costs funded through loans from shareholders
    
    $
    
    
    
    $
    
    
    
    $
    127,287Inception of capital leases on property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    10Land use right cost funded through land use right payable,
accrued expenses and other current liabilities and
loans from shareholders
    
    $
    
    
    
    $
    41,680
    
    
    $
    63,411Costs of property and equipment funded through amounts
due from (to) affiliated companies
    
    $
    1,562
    
    
    $
    1,598
    
    
    $
    5,616Disposal of property and equipment through amount due
from an affiliated company
    
    $
    (2,788
    )
    
    $
    
    
    
    $
    Acquisition of additional 20% share of Mocha Slot Group
funded through loans from shareholders
    
    $
    
    
    
    $
    
    
    
    $
    32,051Acquisition of shareholder loan advanced by Dr. Stanley Ho
funded through loans from shareholders
    
    $
    
    
    
    $
    
    
    
    $
    5,859Deposit for acquisition of land interest funded through
loans from shareholders
    
    $
    
    
    
    $
    
    
    
    $
    12,853Contribution of Melco Crown Gaming from PBL
    
    $
    
    
    
    $
    
    
    
    $
    77,491Contribution of interest in MPEL (Greater China)
    
    $
    
    
    
    $
    
    
    
    $
    109,170Deferred financing costs funded through accounts payable and
accrued expenses and other current liabilities
    
    $
    1,427
    
    
    $
    575
    
    
    $
    
   F - 8




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of U.S. dollars, except share and per share data)
 1.
    
    COMPANY INFORMATION
      2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 (a)
    
    Basis of Presentation and Principles of Consolidation
   (b)
    
    Use of Estimates
   F - 9




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (c)
    
    Fair Value Measurements
   (d)
    
    Cash and Cash Equivalents
   (e)
    
    Restricted Cash
  (f)
    
    Accounts Receivable and Credit Risk
   (g)
    
    Inventories
   F - 10




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (h)
    
    Property and Equipment
   Classification
    
    Estimated useful lifeBuildings
    
    25 years or over the term of the land use right agreement, whichever is shorterFurniture, fixtures and equipment
    
    3 to 7 yearsPlant and gaming machinery
    
    3 to 5 yearsLeasehold improvements
    
    10 years or over the lease term, whichever is shorterMotor vehicles
    
    5 years
  (i)
    
    Capitalization of Interest and Amortization of Deferred Financing Costs
  (j)
    
    Gaming Subconcession, Net
  (k)
    
    Goodwill and Intangible Assets, Net
    F - 11




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (l)
    
    Impairment of Long-Lived Assets (Other Than Goodwill)
  (m)
    
    Deferred Financing Costs
  (n)
    
    Land Use Rights, Net
  (o)
    
    Revenue Recognition and Promotional Allowances
      F - 12




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (o)
    
    Revenue Recognition and Promotional Allowances  Continued
    Year Ended December 31,2008
    
    
    2007
    
    
    2006Rooms
    
    $
    4,240
    
    
    $
    903
    
    
    $
    Food and beverage
    
    
    9,955
    
    
    
    7,029
    
    
    
    596$
    14,195
    
    
    $
    7,932
    
    
    $
    596
 (p)
    
    Point-Loyalty Programs
  (q)
    
    Pre-Opening Costs
  (r)
    
    Advertising Expenses
   F - 13




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (s)
    
    Foreign Currency Transactions and Translations
   (t)
    
    Share-Based Compensation Expenses
    (u)
    
    Income Tax
     F - 14




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (v)
    
    Loss Per Share
    Year Ended December 31,2008
    
    
    2007
    
    
    2006Weighted-average number of ordinary shares
outstanding used in the calculation of basic
and diluted loss per share
    
    
    1,320,946,942
    
    
    
    1,224,880,031
    
    
    
    633,228,439
  (w)
    
    Accounting for Derivative Instruments and Hedging Activities
   (x)
    
    Accumulated Other Comprehensive Income (Loss)
  December 31,2008
    
    
    2007Foreign currency translation adjustments
    
    $
    (945
    )
    
    $
    (945
    )Changes in the fair value of interest rate swap agreements
    
    
    (34,740
    )
    
    
    (10,131
    )$
    (35,685
    )
    
    $
    (11,076
    )
  F - 15




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (y)
    
    Reclassifications
  (z)
    
    Recent Changes in Accounting Standards
      F - 16




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 2.
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued
 (z)
    
    Recent Changes in Accounting Standards Continued
       F - 17




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 3.
    
    ACCOUNTS RECEIVABLE, NET
 December 31,2008
    
    
    2007Components of accounts receivable, net are as follows:Casino
    
    $
    78,649
    
    
    $
    50,710Hotel
    
    
    1,647
    
    
    
    1,157Other
    
    
    572
    
    
    
    258Sub-total
    
    $
    80,868
    
    
    $
    52,125Less: allowance for doubtful debts
    
    
    (8,113
    )
    
    
    (2,735
    )$
    72,755
    
    
    $
    49,390
  4.
    
    PROPERTY AND EQUIPMENT, NET
 December 31,2008
    
    
    2007CostBuildings
    
    $
    312,007
    
    
    $
    300,437Furniture, fixtures and equipment
    
    
    77,289
    
    
    
    62,165Plant and gaming machinery
    
    
    69,104
    
    
    
    67,731Leasehold improvements
    
    
    36,770
    
    
    
    22,903Motor vehicles
    
    
    1,502
    
    
    
    1,400Sub-total
    
    $
    496,672
    
    
    $
    454,636Less: accumulated depreciation
    
    
    (107,847
    )
    
    
    (52,638
    )Sub-total
    
    $
    388,825
    
    
    $
    401,998Construction in progress
    
    
    1,718,897
    
    
    
    578,243Property and equipment, net
    
    $
    2,107,722
    
    
    $
    980,241
  5.
    
    GAMING SUBCONCESSION, NET
 December 31,2008
    
    
    2007Deemed cost
    
    $
    900,000
    
    
    $
    900,000Less: accumulated amortization
    
    
    (128,784
    )
    
    
    (71,547
    )Gaming subconcession, net
    
    $
    771,216
    
    
    $
    828,453
  F - 18




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 5.
    
    GAMING SUBCONCESSION, NET Continued
  6.
    
    GOODWILL AND INTANGIBLE ASSETS, NET
   7.
    
    DEPOSIT FOR ACQUISITION OF LAND INTEREST
  8.
    
    LAND USE RIGHTS, NET
  December 31,2008
    
    
    2007Crown Macau
    
    $
    141,543
    
    
    $
    141,543City of Dreams
    
    
    343,903
    
    
    
    339,249485,446
    
    
    
    480,792Less: accumulated amortization
    
    
    (51,593
    )
    
    
    (33,324
    )Land use rights, net
    
    $
    433,853
    
    
    $
    447,468
   F - 19




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 9.
    
    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
 December 31,2008
    
    
    2007Construction costs payable
    
    $
    246,998
    
    
    $
    132,356Customer deposits
    
    
    9,808
    
    
    
    12,926Outstanding gaming chips and tokens
    
    
    54,758
    
    
    
    166,691Other gaming related accruals
    
    
    32,699
    
    
    
    44,105Gaming tax accruals
    
    
    42,038
    
    
    
    34,434Rental payable
    
    
    226
    
    
    
    1,936Land use right payable
    
    
    13,763
    
    
    
    44,234Operating expense accruals
    
    
    42,381
    
    
    
    31,554$
    442,671
    
    
    $
    468,236
 10.
    
    LONG-TERM DEBT
      F - 20




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 10.
    
    LONG-TERM DEBT Continued
         F - 21




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 10.
    
    LONG-TERM DEBT Continued
     Year2009
    
    $
    2010
    
    
    84,7512011
    
    
    282,5032012
    
    
    324,8792013
    
    
    381,379Over 2013
    
    
    339,004$
    1,412,516
 11.
    
    OTHER LONG-TERM LIABILITIES
 December 31,2008
    
    
    2007Interest rate swap liabilities
    
    $
    34,733
    
    
    $
    10,124Deferred rent liabilities
    
    
    3,371
    
    
    
    950Other deposits
    
    
    200
    
    
    
    $
    38,304
    
    
    $
    11,074
     F - 22




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 12.
    
    FAIR VALUE MEASUREMENTS
  Level 1:
    
    Observable inputs such as quoted prices (unadjusted) in active markets for
identical assets or liabilities.Level 2:
    
    Inputs other than quoted prices that are observable for the asset or
liability, either directly or indirectly. These include quoted prices for similar
assets or liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not active.Level 3:
    
    Unobservable inputs that reflect the reporting entitys own assumptions.
  Quoted PricesIn Active
    
    
    SignificantMarket for
    
    
    Other
    
    
    Significant
    
    
    BalanceIdentical
    
    
    Observable
    
    
    Unobservable
    
    
    as ofAssets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31,(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2008Other long-term liabilitiesInterest rate swap liabilities
    
    $
    
    
    
    $
    34,733
    
    
    $
    
    
    
    $
    34,733
   F - 23




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 13.
    
    CAPITAL STRUCTURE
       14.
    
    INCOME TAX CREDIT
    F - 24




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 14.
    
    INCOME TAX CREDIT Continued
   Year Ended December 31,2008
    
    
    2007
    
    
    2006Income tax provision for current year:Hong Kong Profits Tax
    
    $
    892
    
    
    $
    1,301
    
    
    $
    Over provision of income tax in prior years:Macau Complementary Tax
    
    $
    
    
    
    $
    
    
    
    $
    (71
    )Hong Kong Profits Tax
    
    
    (239
    )
    
    
    
    
    
    
    Sub-total
    
    
    (239
    )
    
    
    
    
    
    
    (71
    )Deferred tax (credit) charge:Macau Complementary Tax
    
    $
    (2,038
    )
    
    $
    (2,812
    )
    
    $
    (1,814
    )Hong Kong Profits Tax
    
    
    (85
    )
    
    
    57
    
    
    
    Sub-total
    
    
    (2,123
    )
    
    
    (2,755
    )
    
    
    (1,814
    )Total income tax credit
    
    $
    (1,470
    )
    
    $
    (1,454
    )
    
    $
    (1,885
    )
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Loss before income tax
    
    $
    (3,933
    )
    
    $
    (179,605
    )
    
    $
    (80,379
    )Macau Complementary Tax rate
    
    
    12
    %
    
    
    12
    %
    
    
    12
    %Income tax credit at Macau Complementary Tax rate
    
    
    (472
    )
    
    
    (21,553
    )
    
    
    (9,645
    )Effect of different tax rates of subsidiaries operating
in other jurisdiction
    
    
    126
    
    
    
    641
    
    
    
    Overprovision in prior year
    
    
    (239
    )
    
    
    
    
    
    
    (71
    )Effect of income for which no income tax expense
is payable
    
    
    (1,102
    )
    
    
    (2,671
    )
    
    
    (255
    )Effect of expense for which no income tax benefit
is receivable
    
    
    779
    
    
    
    1,048
    
    
    
    1,404Effect of tax holiday granted by Macau government
    
    
    (8,855
    )
    
    
    
    
    
    
    Losses that cannot be carried forward
    
    
    
    
    
    
    20,045
    
    
    
    Change in valuation allowance
    
    
    8,293
    
    
    
    1,036
    
    
    
    6,682$
    (1,470
    )
    
    $
    (1,454
    )
    
    $
    (1,885
    )
  F - 25




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 14.
    
    INCOME TAX CREDIT ContinuedThe deferred income tax assets and liabilities as of December 31, 2008 and 2007, consisted of the following:
 December 31,2008
    
    
    2007Deferred income tax assetsNet operating loss carryforwards
    
    $
    16,088
    
    
    $
    7,795Depreciation and amortization
    
    
    28
    
    
    
    Sub-total
    
    
    16,116
    
    
    
    7,795Valuation allowanceCurrent
    
    
    (1,330
    )
    
    
    (62
    )Long-term
    
    
    (14,758
    )
    
    
    (7,733
    )Sub-total
    
    
    (16,088
    )
    
    
    (7,795
    )Total net deferred income tax assets
    
    $
    28
    
    
    $
    Deferred income tax liabilitiesLand use rights
    
    $
    (18,686
    )
    
    $
    (20,724
    )Intangible assets
    
    
    (505
    )
    
    
    (505
    )Unrealized capital allowance
    
    
    
    
    
    
    (57
    )Net deferred income tax liabilities
    
    $
    (19,191
    )
    
    $
    (21,286
    )
 ,
      F - 26




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 14.
    
    INCOME TAX CREDIT Continued
   15.
    
    SHARE-BASED COMPENSATION
      F - 27




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 15.
    
    SHARE-BASED COMPENSATION ContinuedThe fair value per option was estimated on the date of grant using the following weighted-average assumptions:
 December 31,2008
    
    
    2007
    
    
    2006Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected stock price volatility
    
    
    57.65
    %
    
    
    38.26
    %
    
    
    Risk-free interest rate
    
    
    1.67
    %
    
    
    3.96
    %
    
    
    Forfeiture rate
    
    
    
    
    
    
    
    
    
    
    Expected average life of options (years)
    
    
    4.7
    
    
    
    5.2
    
    
    
    
 Share Options
  Weighted-Weighted-
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof Share
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    Term
    
    
    ValueOutstanding at January 1, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    3,908,390
    
    
    $
    5.02Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (191,514
    )
    
    $
    5.06Expired
    
    
    
    
    
    
    Outstanding at December 31, 2007
    
    
    3,716,876
    
    
    $
    5.02
    
    
    
    
    
    
    
    Granted
    
    
    20,558,343
    

    
    $
    1.83Exercised
    

    
    
    
    

    
    Forfeited
    
    
    (2,003,178
    )
    
    $
    4.34Expired
    
    
    (1,795
    )
    
    $
    5.06Outstanding at December 31, 2008
    
    
    22,270,246
    
    
    $
    2.14
    
    
    
    9.6
    
    
    
    Exercisable at December 31, 2008
    
    
    383,385
    
    
    $
    4.97
    
    
    
    8.8
    
    
    
    
  F - 28




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 15.
    
    SHARE-BASED COMPENSATION ContinuedShare Options ContinuedA summary of share options vested and expected to vest at December 31, 2008 are presented below:
 VestedWeighted-Weighted-
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof Share
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    Term
    
    
    ValueRange of exercise prices per share
($4.72  $5.06) (Note)
    
    
    383,385
    
    
    $
    4.97
    
    
    
    8.8
    
    
    
    
  Expected to VestWeighted-Weighted-
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof Share
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    Term
    
    
    ValueRange of exercise prices per share
($1.01  $5.06)
    
    
    21,886,861
    
    
    $
    2.09
    
    
    
    9.6
    
    
    
    
    F - 29




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 15.
    
    SHARE-BASED COMPENSATION Continued
 Restricted Shares
  Number of
    
    
    Weighted-Restricted
    
    
    Average GrantShares
    
    
    Date Fair ValueUnvested at January 1, 2006
    
    
    
    
    
    $
    Granted
    
    
    2,532,010
    
    
    
    6.33Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Unvested at December 31, 2006 and January 1, 2007
    
    
    2,532,010
    
    
    $
    6.33Granted
    
    
    
    
    
    
    Vested
    
    
    (395,256
    )
    
    
    6.33Forfeited
    
    
    (130,310
    )
    
    
    6.33Unvested at December 31, 2007 and January 1, 2008
    
    
    2,006,444
    
    
    $
    6.33Granted
    
    
    6,529,844
    
    
    
    1.30Vested
    
    
    (226,317
    )
    
    
    6.33Forfeited
    
    
    (771,895
    )
    
    
    5.88Unvested at December 31, 2008
    
    
    7,538,076
    
    
    $
    2.02
    Year Ended December 31,2008
    
    
    2007
    
    
    2006Share options
    
    $
    2,598
    
    
    $
    518
    
    
    $
    Restricted shares
    
    
    4,420
    
    
    
    4,828
    
    
    
    278Total share-based compensation expenses
    
    
    7,018
    
    
    
    5,346
    
    
    
    278Less: share-based compensation expenses capitalized
    
    
    (163
    )
    
    
    (90
    )
    
    
    Share-based compensation recognized in general
and administrative expenses
    
    $
    6,855
    
    
    $
    5,256
    
    
    $
    278
  F - 30




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 16.
    
    EMPLOYEE BENEFIT PLANS
  17.
    
    DISTRIBUTION OF PROFITS
   18.
    
    COMMITMENTS AND CONTINGENCIES
 (a)
    
    Capital Commitments
     F - 31




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 18.
    
    COMMITMENTS AND CONTINGENCIES Continued
 (a)
    
    Capital Commitments Continued
  (b)
    
    Lease Commitments
   Operating Leases
 Year2009
    
    $
    9,9082010
    
    
    7,9062011
    
    
    5,9892012
    
    
    5,8822013
    
    
    5,681Over 2013
    
    
    13,364Total minimum lease payments
    
    $
    48,730
 (c)
    
    Other Commitments
  i)
    
    To make a minimum investment in Macau of $499,164 (MOP
4,000,000,000) by December 2010.
 ii)
    
    To pay the Macau government a fixed annual premium of $3,744
(MOP30,000,000) starting from June 26, 2009 if the hotel, casino and resort
projects operated by the Companys subsidiaries are not completed by then.
 iii)
    
    To pay the Macau government a variable premium depending on the
number and type of gaming tables and gaming machines that the Company operates.
The variable premium is calculated as follows:
 
    
    $37 (MOP300,000) per year for each gaming table (subject to a minimum
of 100 tables) reserved exclusively for certain kind of games or to
certain players;
 
    
    $19 (MOP150,000) per year for each gaming table (subject to a minimum
of 100 tables) not reserved exclusively for certain kind of games or to
certain players; and
 
    
    $0.1 (MOP1,000) per year for each electrical or mechanical gaming
machine, including the slot machine.
  F - 32




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 18.
    
    COMMITMENTS AND CONTINGENCIES Continued
 (c)
    
    Other Commitments Continued
 iv)
    
    To pay the Macau government a sum of 1.6% of the gross revenues
of the gaming business operations on a monthly basis, that will be made
available to a public foundation for the promotion, development and study of
social, cultural, economic, educational, scientific, academic and charity
activities, to be determined by the Macau government.
 v)
    
    To pay the Macau government a sum of 2.4% of the gross revenues
of the gaming business operations on a monthly basis, which will be used for
urban development, tourist promotion and the social security of Macau.
 vi)
    
    To pay special gaming tax to the Macau government of an amount
equal to 35% of the gross revenues of the gaming business operations on a
monthly basis.
 vii)
    
    Melco Crown Gaming must maintain two bank guarantees issued by a
specific bank with the Macau government as the beneficiary in a maximum amount
of $62,395 (MOP500,000,000) from September 8, 2006 to September 8, 2011 and a
maximum amount of $37,437 (MOP300,000,000) from that date until the 180th day
after the termination date of the gaming subconcession. A sum of 1.75% of the
guarantee amount will be payable by Melco Crown Gaming quarterly to such bank.
   (d)
    
    Contingencies
 Note 18(c)(vii)
   F - 33




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 19.
    
    RELATED PARTY TRANSACTIONS
  Year Ended December 31,2008
    
    
    2007
    
    
    2006Amounts paid/payable to affiliated companiesAdvertising and promotional expenses
    
    $
    597
    
    
    $
    65
    
    
    $
    Consultancy fee capitalized in construction in progress
    
    
    246
    
    
    
    2,294
    
    
    
    3,015Consultancy fee recognized as expense
    
    
    1,168
    
    
    
    4,150
    
    
    
    2,525Interest charges
    
    
    
    
    
    
    
    
    
    
    413Management fees
    
    
    1,698
    
    
    
    
    
    
    
    144Network support fee
    
    
    52
    
    
    
    238
    
    
    
    193Project management fees capitalized in construction in progress
    
    
    
    
    
    
    1,442
    
    
    
    1,420Operating and office supplies
    
    
    255
    
    
    
    707
    
    
    
    Property and equipment
    
    
    16,327
    
    
    
    12,141
    
    
    
    11,991Office rental
    
    
    1,466
    
    
    
    1,114
    
    
    
    473Repairs and maintenance
    
    
    655
    
    
    
    41
    
    
    
    Service fee expense
    
    
    781
    
    
    
    
    
    
    
    1,988Traveling expense capitalized in construction in progress
    
    
    66
    
    
    
    
    
    
    
    Traveling expense recognized as expense
    
    
    1,387
    
    
    
    746
    
    
    
    375Amounts received/receivable from affiliated companiesRooms and food and beverage income
    
    
    100
    
    
    
    41
    
    
    
    Sales proceeds for disposal of property and equipment
    
    
    2,788
    
    
    
    
    
    
    
    Service fee income
    
    
    
    
    
    
    
    
    
    
    16,276Other service fee income
    
    
    276
    
    
    
    
    
    
    
    Amounts paid/payable to shareholdersInterest charges capitalized in construction in progress
    
    
    3,367
    
    
    
    4,167
    
    
    
    586Interest charges recognized as expense
    
    
    
    
    
    
    758
    
    
    
    1,814
  (a)
    
    Amounts Due From Affiliated Companies
     F - 34




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 19.
    
    RELATED PARTY TRANSACTIONS Continued
 (b)
    
    Amounts Due To Affiliated Companies
        F - 35




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 19.
    
    RELATED PARTY TRANSACTIONS Continued
 (b)
    
    Amounts Due To Affiliated Companies Continued
    (c)
    
    Amounts Due To/Loans From Shareholders
       F - 36




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 19.
    
    RELATED PARTY TRANSACTIONS Continued
 (c)
    
    Amounts Due To/Loans From Shareholders Continued
   (d)
    
    Melco contributed its interest in Melco Crown (COD) Developments to the Company
pursuant to a shareholders agreement. Pursuant to an agreement signed on May 11, 2005,
a subsidiary of Melco acquired from Great Respect Limited the remaining 49.2% interest
in the City of Dreams project for $150,641 and contributed it to MPEL (Greater China),
subject to certain conditions precedent. The acquisition was completed on September 5,
2005 and $48,077 out of $150,641 was financed by a loan from Melco and PBL. The price
paid to acquire the additional interest was previously classified as other assets.
Since the construction work for the City of Dreams project commenced in April 2006, the
amount was reclassified to the land use right as of that date.
 (e)
    
    On April 21, 2005, a consent was issued by the Macau government to Melco Crown
(COD) Developments pursuant to which the Macau government offered to Melco Crown (COD)
Developments the right to be granted a medium term lease of Cotai Land, to construct
and develop the City of Dreams project. The construction work for the City of Dreams
project commenced in April 2006. The land use right and related payable to the Macau
government of $63,411 has been included in the land use right, accrued expenses and
other current liabilities, and land use right payable as of December 31, 2006. In
October 2007, the Macau government revised the terms of the land use right of Cotai
Land with land use right and related payables increased to $105,091. The revised amount
has been included in the land use right, accrued expenses and other current
liabilities, and land use right payable as of December 31, 2007. In January 2008, the
Company received from the Macau government the final terms of the land lease agreement
of $105,091 and paid $37,437 at signing of the government lease in February 2008. In
August 2008, Melco Crown (COD) Developments obtained the official title of this land
use right and the remaining balance of approximately $67,654 due in nine half-yearly
installments bearing interest at 5% per annum with the first installment payable in
February 2009, six months from the date of publication of the land grant in the Macau
government gazette. The outstanding balance has been included in the accrued expenses
and other current liabilities and land use right payable as of December 31, 2008. The
expiry date of the lease of the Cotai Land is August 2033 and the Company amortizes the
land use right from the commencement date of the construction work to the expiry date.
  F - 37




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 19.
    
    RELATED PARTY TRANSACTIONS Continued
 (f)
    
    On February 8, 2005, Melco completed the acquisition of an additional 20% equity
interest in Melco Crown (CM) Developments from STDM for $16,360 in convertible notes of
Melco. Melco then transferred this 20% equity interest to the Company together with the
50% interest in Melco Crown (CM) Developments purchased in the year ended December 31,
2004. On July 28, 2005, the Group completed the acquisition of the remaining 30%
interest in Melco Crown (CM) Developments from STDM for $51,282, of which $25,641 was
financed by an advance from Melco and PBL.
   (g)
    
    On November 11, 2004, Melco Crown (CM) Developments entered into letters of
confirmation with SJM pursuant to which SJM would lease the casino premises at and
operate the casino gaming activities at the Crown Macau project pursuant to an
arrangement under which Melco Crown (CM) Developments would receive fees and rentals
based on a percentage of the revenues from such gaming operations. The letters of
confirmation were terminated subsequently in March 2006 when PBL entered into an
agreement with Wynn Macau to acquire a gaming subconcession under Wynn Macaus
concession.
 (h)
    
    The Company completed a reorganization in October 2006. As a result of the
restructuring, the Company acquired Melco Crown Gaming, the holder of the gaming
subconcession in Macau, and Melcos 20% interest in MPEL (Greater China), the holding
company of Mocha Slot Group, Melco Crown (CM) Developments and Melco Crown (COD)
Developments.
 (i)
    
    On March 15, 2006, in contemplation of the grant of the gaming subconcession to
Melco Crown Gaming, and for the purposes of continuity of the slot lounge services
provision business, Melco, Mocha Slot Group Limited, Mocha Slot Management Limited, one
of the subsidiaries of MPEL and SJM entered into an agreement for the conditional
termination of all existing services agreements of Mocha Slot. The termination became
effective subsequent to the grant of gaming subconcession to Melco Crown Gaming in
September 2006.
  (j)
    
    On May 9, 2006, MPEL International entered into a sale and purchase agreement
(Sale and Purchase Agreement) to acquire the remaining 20% of Mocha Slot held by Dr.
Stanley Ho and repaid the shareholder loan advanced from Dr. Stanley Ho to Mocha Slot
for an aggregate consideration of approximately $37,910. The Sale and Purchase
Agreement was completed on the same date on which the Sale and Purchase Agreement was
signed.
  F - 38




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 19.
    
    RELATED PARTY TRANSACTIONS Continued
 (k)
    
    On May 17, 2006, MPEL Macau Peninsula entered into an agreement to purchase the
entire issued share capital of a company of which Dr. Stanley Ho is one of the
directors but in which he holds no shares. Dr. Stanley Ho is the father of Mr.
Lawrence Ho, Co-Chairman and Chief Executive Officer of the Company and the chairman of
Melco until he resigned this position in March 2006. The company holds the rights to a
land lease in respect of a plot of land with an area of 6,480 square meters located at
Zona dos Novos Aterros do Porto Exterior, on the Macau peninsula. The aggregate
consideration is $192,802, which is payable in cash and an amount of $12,853 was paid
as down payment upon signing of the sale and purchase agreement, which was financed
from Melco and PBL, equally, and is included in deposit for acquisition of land
interest. The balance is payable on completion of the acquisition, which is subject to
conditions that are not under the control of the Company. The agreement completion
deadline was first extended in January 2007 and again in July 2007 and July 2008 when
the Company negotiated an extension of the completion deadline for the conditional
agreement to the end of July 2009. Other than the extension of the purchase completion
deadline, all other provisions of the agreement remain in force, and there were no fees
associated with any of the extensions.
 20.
    
    SEGMENT INFORMATION
  Total Assets
 December 31,2008
    
    
    2007Mocha Clubs
    
    $
    166,241
    
    
    $
    149,524Crown Macau
    
    
    617,383
    
    
    
    781,832City of Dreams
    
    
    2,117,951
    
    
    
    918,198Corporate and Others
    
    
    1,596,714
    
    
    
    1,770,714Total consolidated assets
    
    $
    4,498,289
    
    
    $
    3,620,268
 Capital Expenditures
 Year Ended December 31,2008
    
    
    2007
    
    
    2006Mocha Clubs
    
    $
    15,491
    
    
    $
    13,297
    
    
    $
    19,977Crown Macau
    
    
    6,275
    
    
    
    203,845
    
    
    
    139,500City of Dreams
    
    
    1,148,098
    
    
    
    519,522
    
    
    
    61,786Corporate and Others
    
    
    21,334
    
    
    
    4,219
    
    
    
    426Total capital expenditures
    
    $
    1,191,198
    
    
    $
    740,883
    
    
    $
    221,689
  F - 39




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 20.
    
    SEGMENT INFORMATION Continued
   Year Ended December 31,2008
    
    
    2007
    
    
    2006NET REVENUESMocha Clubs
    
    $
    91,967
    
    
    $
    81,343
    
    
    $
    36,101Crown Macau
    
    
    1,313,047
    
    
    
    277,153
    
    
    
    Corporate and Others
    
    
    11,120
    
    
    
    
    
    
    
    Total net revenues
    
    
    1,416,134
    
    
    
    358,496
    
    
    
    36,101ADJUSTED EBITDA (1)Mocha Clubs
    
    
    25,805
    
    
    
    22,056
    
    
    
    12,846Crown Macau
    
    
    162,969
    
    
    
    (22,444
    )
    
    
    (1,901
    )Total adjusted EBITDA
    
    
    188,774
    
    
    
    (388
    )
    
    
    10,945OPERATING COSTS AND EXPENSESPre-opening costs
    
    
    (21,821
    )
    
    
    (40,032
    )
    
    
    (11,679
    )Amortization of gaming subconcession
    
    
    (57,237
    )
    
    
    (57,190
    )
    
    
    (14,309
    )Amortization of land use rights
    
    
    (18,269
    )
    
    
    (17,276
    )
    
    
    (12,358
    )Depreciation and amortization
    
    
    (51,379
    )
    
    
    (39,466
    )
    
    
    (9,845
    )Stock-based compensation
    
    
    (6,855
    )
    
    
    (5,256
    )
    
    
    (278
    )Marketing expense relating to Crown Macau opening
    
    
    
    
    
    
    (11,959
    )
    
    
    Impairment loss recognized on slot lounge services
agreement
    
    
    
    
    
    
    
    
    
    
    (7,640
    )Corporate and others expenses
    
    
    (32,039
    )
    
    
    (24,250
    )
    
    
    (10,538
    )Minority interest included in adjusted EBITDA
Mocha Clubs
    
    
    
    
    
    
    
    
    
    
    (1,951
    )Total operating costs and expenses
    
    
    (187,600
    )
    
    
    (195,429
    )
    
    
    (68,598
    )OPERATING INCOME (LOSS)
    
    
    1,174
    
    
    
    (195,817
    )
    
    
    (57,653
    )NON-OPERATING (EXPENSES) INCOMEInterest income
    
    
    8,215
    
    
    
    18,640
    
    
    
    816Interest expenses, net of capitalized interest
    
    
    
    
    
    
    (770
    )
    
    
    (11,184
    )Write off of deferred financing costs
    
    
    
    
    
    
    
    
    
    
    (12,698
    )Amortization of deferred financing costs
    
    
    (765
    )
    
    
    (1,005
    )
    
    
    Loan commitment fees
    
    
    (14,965
    )
    
    
    (4,760
    )
    
    
    Foreign exchange gain, net
    
    
    1,436
    
    
    
    3,832
    
    
    
    55Other income, net
    
    
    972
    
    
    
    275
    
    
    
    285Total non-operating (expenses) income
    
    
    (5,107
    )
    
    
    16,212
    
    
    
    (22,726
    )LOSS BEFORE INCOME TAX
    
    
    (3,933
    )
    
    
    (179,605
    )
    
    
    (80,379
    )INCOME TAX CREDIT
    
    
    1,470
    
    
    
    1,454
    
    
    
    1,885LOSS BEFORE MINORITY INTERESTS
    
    
    (2,463
    )
    
    
    (178,151
    )
    
    
    (78,494
    )MINORITY INTERESTS
    
    
    
    
    
    
    
    
    
    
    5,015NET LOSS
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )
  F - 40




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 20.
    
    SEGMENT INFORMATION Continued
  (1)
    
    Adjusted EBITDA is earnings before interest, taxes, depreciation,
amortization, other expenses (including pre-opening costs, share-based compensation,
marketing expense relating to Crown Macau opening in May 2007, non-operating income
(expenses) and impairment loss recognized on the slot lounge services agreement). The
Adjusted EBITDA is presented for results of Mocha Clubs and Crown Macau. Prior to the
opening of the casino operation of Crown Macau in May 2007, the management of the
Company used Adjusted EBITDA for Mocha Clubs to measure the operating performance of
the Company as Mocha Clubs was the Companys business until then. Subsequent to the
opening of the casino operation of Crown Macau in May 2007, the management of the
Company used Adjusted EBITDA of Mocha Clubs and Crown Macau to measure their operating
performance as they are the two primary operations of the Company. The management of
the Company does not use Adjusted EBITDA on the City of Dreams project to measure its
operating performance since it is still in its development stage.
  F - 41




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 
 ADDITIONAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE 1
 FINANCIAL INFORMATION OF PARENT COMPANY
 BALANCE SHEETS
 (In thousands of U.S. dollars, except share and per share data)
 December 31,2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    163,014
    
    
    $
    573,650Amounts due from affiliated companies
    
    
    
    
    
    
    2Amounts due from subsidiaries
    
    
    580,423
    
    
    
    163,223Prepaid expenses and other current assets
    
    
    720
    
    
    
    3,473Total current assets
    
    
    744,157
    
    
    
    740,348INVESTMENTS IN SUBSIDIARIES
    
    
    1,967,503
    
    
    
    1,992,448LONG-TERM PREPAYMENT AND DEPOSITS
    
    
    1,715
    
    
    
    TOTAL
    
    $
    2,713,375
    
    
    $
    2,732,796LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccrued expenses and other current liabilities
    
    $
    4,907
    
    
    $
    2,905Income tax payable
    
    
    1,296
    
    
    
    1,177Amounts due to affiliated companies
    
    
    1,553
    
    
    
    3,661Amounts due to subsidiaries
    
    
    180,336
    
    
    
    180,345Amounts due to shareholders
    
    
    1,032
    
    
    
    1,551Total current liabilities
    
    
    189,124
    
    
    
    189,639LOANS FROM SHAREHOLDERS
    
    
    115,647
    
    
    
    114,616SHAREHOLDERS EQUITYOrdinary shares at US$0.01 par value per share
(Authorized  1,500,000,000 shares and issued  1,321,550,399
and 1,320,938,902 shares as of December 31, 2008 and 2007 (Note 13))
    
    
    13,216
    
    
    
    13,209Treasury shares, at US$0.01 par value per share, 385,180 and nil shares as of
December 31, 2008 and 2007 (Note 13)
    
    
    (4
    )
    
    
    Additional paid-in capital
    
    
    2,689,257
    
    
    
    2,682,125Accumulated other comprehensive losses
    
    
    (35,685
    )
    
    
    (11,076
    )Accumulated losses
    
    
    (258,180
    )
    
    
    (255,717
    )Total shareholders equity
    
    
    2,408,604
    
    
    
    2,428,541TOTAL
    
    $
    2,713,375
    
    
    $
    2,732,796
  F - 42




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 ADDITIONAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE 1
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share data)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006REVENUE
    
    $
    
    
    
    $
    
    
    
    $
    OPERATING EXPENSESGeneral and administrative
    
    
    (22,115
    )
    
    
    (16,323
    )
    
    
    (4,282
    )Total operating expenses
    
    
    (22,115
    )
    
    
    (16,323
    )
    
    
    (4,282
    )OPERATING LOSS
    
    
    (22,115
    )
    
    
    (16,323
    )
    
    
    (4,282
    )NON-OPERATING INCOME (EXPENSES)Interest income
    
    
    5,755
    
    
    
    11,159
    
    
    
    240Interest expenses
    
    
    
    
    
    
    (758
    )
    
    
    Foreign exchange (loss) gain, net
    
    
    (409
    )
    
    
    5,138
    
    
    
    2Other income, net
    
    
    18,291
    
    
    
    16,106
    
    
    
    Share of results of subsidiaries
    
    
    (3,866
    )
    
    
    (192,296
    )
    
    
    (69,439
    )Total non-operating income (expenses)
    
    
    19,771
    
    
    
    (160,651
    )
    
    
    (69,197
    )LOSS BEFORE INCOME TAX
    
    
    (2,344
    )
    
    
    (176,974
    )
    
    
    (73,479
    )INCOME TAX EXPENSE
    
    
    (119
    )
    
    
    (1,177
    )
    
    
    NET LOSS
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )
  F - 43




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 ADDITIONAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE 1
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF SHAREHOLDERS EQUITY
(In thousands of U.S. dollars, except share and per share data)
 AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    TotalCommon Shares
    
    
    Treasury Shares
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    Shareholders
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Losses
    
    
    Equity
    
    
    LossBALANCE AT JANUARY 1, 2006
    
    
    500,000,000
    
    
    $
    5,000
    
    
    
    
    
    
    $
    
    
    
    $
    237,779
    
    
    $
    
    
    
    $
    (4,087
    )
    
    $
    238,692Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,479
    )
    
    
    (73,479
    )
    
    $
    (73,479
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    740
    
    
    
    
    
    
    
    740
    
    
    
    740Share-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    278
    
    
    
    
    
    
    
    
    
    
    
    278Shares issued upon initial public offering,
net of offering expenses (Note 13)
    
    
    180,931,146
    
    
    
    1,809
    
    
    
    
    
    
    
    
    
    
    
    1,065,665
    
    
    
    
    
    
    
    
    
    
    
    1,067,474Shares issued during the year (Note 13)
    
    
    500,000,000
    
    
    
    5,000
    
    
    
    
    
    
    
    
    
    
    
    315,000
    
    
    
    
    
    
    
    
    
    
    
    320,000Capital contributions from shareholders
(Note 19 (c))
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Contribution from Melco
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    109,170
    
    
    
    
    
    
    
    
    
    
    
    109,170Contribution of Melco Crown Gaming from
PBL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,491
    
    
    
    
    
    
    
    
    
    
    
    77,491BALANCE AT DECEMBER 31, 2006
    
    
    1,180,931,146
    
    
    
    11,809
    
    
    
    
    
    
    
    
    
    
    
    1,955,383
    
    
    
    740
    
    
    
    (77,566
    )
    
    
    1,890,366
    
    
    $
    (72,739
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (178,151
    )
    
    
    (178,151
    )
    
    $
    (178,151
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,685
    )
    
    
    
    
    
    
    (1,685
    )
    
    
    (1,685
    )Change in fair value of interest rate swap
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,131
    )
    
    
    
    
    
    
    (10,131
    )
    
    
    (10,131
    )Share-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,346
    
    
    
    
    
    
    
    
    
    
    
    5,346Shares issued, net of offering expenses
(Note 13)
    
    
    139,612,500
    
    
    
    1,396
    
    
    
    
    
    
    
    
    
    
    
    721,400
    
    
    
    
    
    
    
    
    
    
    
    722,796Shares issued upon restricted shares vested
(Note 13)
    
    
    395,256
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2007
    
    
    1,320,938,902
    
    
    
    13,209
    
    
    
    
    
    
    
    
    
    
    
    2,682,125
    
    
    
    (11,076
    )
    
    
    (255,717
    )
    
    
    2,428,541
    
    
    $
    (189,967
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,463
    )
    
    
    (2,463
    )
    
    $
    (2,463
    )Change in fair value of interest rate swap
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,609
    )
    
    
    
    
    
    
    (24,609
    )
    
    
    (24,609
    )Reversal of over-accrued offering expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    117Share-based compensation (Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,018
    
    
    
    
    
    
    
    
    
    
    
    7,018Shares issued upon restricted shares vested
(Note 13)
    
    
    226,317
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    Shares issued for future exercises of share
options (Note 13)
    
    
    385,180
    
    
    
    4
    
    
    
    (385,180
    )
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2008
    
    
    1,321,550,399
    
    
    $
    13,216
    
    
    
    (385,180
    )
    
    $
    (4
    )
    
    $
    2,689,257
    
    
    $
    (35,685
    )
    
    $
    (258,180
    )
    
    $
    2,408,604
    
    
    $
    (27,072
    )
  F - 44




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 ADDITIONAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE 1
FINANCIAL INFORMATION OF PARENT COMPANY
STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
 Year Ended December 31,2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Share-based compensation
    
    
    6,855
    
    
    
    5,256
    
    
    
    278Share of results of subsidiaries
    
    
    3,866
    
    
    
    192,296
    
    
    
    69,439Changes in operating assets and liabilities:Amounts due from affiliated companies
    
    
    2
    
    
    
    28
    
    
    
    (30
    )Prepaid expenses and other current assets
    
    
    2,753
    
    
    
    (3,052
    )
    
    
    (421
    )Long-term prepayment and deposits
    
    
    (1,715
    )
    
    
    126
    
    
    
    (126
    )Accrued expenses and other current liabilities
    
    
    2,119
    
    
    
    (1,216
    )
    
    
    4,121Income tax payable
    
    
    119
    
    
    
    1,177
    
    
    
    Amounts due to affiliated companies
    
    
    (2,108
    )
    
    
    1,361
    
    
    
    2,299Amounts due to subsidiaries
    
    
    (9
    )
    
    
    60
    
    
    
    1,965Net cash provided by operating activities
    
    
    9,419
    
    
    
    17,885
    
    
    
    4,046CASH FLOWS FROM INVESTING ACTIVITIESAmounts due from subsidiaries
    
    
    (420,055
    )
    
    
    (399,878
    )
    
    
    (742,664
    )Net cash used in investing activities
    
    
    (420,055
    )
    
    
    (399,878
    )
    
    
    (742,664
    )CASH FLOWS FROM FINANCING ACTIVITIESLoans from shareholders
    
    
    
    
    
    
    (96,583
    )
    
    
    Issue of share capital
    
    
    
    
    
    
    722,796
    
    
    
    1,067,474Net cash provided by financing activities
    
    
    
    
    
    
    626,213
    
    
    
    1,067,474NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (410,636
    )
    
    
    244,220
    
    
    
    328,856CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR
    
    
    573,650
    
    
    
    329,430
    
    
    
    574CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    163,014
    
    
    $
    573,650
    
    
    $
    329,430
  F - 45




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
(FORMERLY KNOWN AS MELCO PBL ENTERTAINMENT (MACAU) LIMITED)
 ADDITIONAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE 1
FINANCIAL INFORMATION OF PARENT COMPANY
NOTES TO FINANCIAL STATEMENTS SCHEDULE 1
 1.
    
    Schedule 1 has been provided pursuant to the requirements of Rule 12-04(a) and 4-08(e)(3) of
Regulation S-X, which require condensed financial information as to financial position,
changes in financial position and results and operations of a parent company as of the same
dates and for the same periods for which audited consolidated financial statements have been
presented when the restricted net assets of the consolidated and unconsolidated subsidiaries
together exceed 25 percent of consolidated net assets as of end of the most recently completed
fiscal year. As of December 31, 2008 and 2007, approximately $1,832,000 and $1,864,000,
respectively of the restricted net assets not available for distribution, and as such, the
condensed financial information of the Company has been presented for the years ended December
31, 2008, 2007 and 2006.
 2.
    
    Basis of presentation
   F - 46




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##### Table of Contents



SIGNATURES
  MELCO CROWN ENTERTAINMENT LIMITEDBy:
    /s/ Lawrence HoName:
    Lawrence HoTitle:
    Co-Chairman and Chief Executive Officer




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Document4.6
    
    
    Amendment Agreement in Respect of Senior Facilities Agreement dated December 7,
2007 for Melco PBL Gaming (Macau) Limited as Company and Deutsche Bank AG, Hong
Kong Branch, as Agent4.7
    
    
    Second Amendment Agreement in Respect of Senior Facilities Agreement dated
September 1, 2008 for Melco Crown Gaming (Macau) Limited as Company and Deutsche
Bank AG, Hong Kong Branch, as Agent4.8
    
    
    Third Amendment Agreement in Respect of Senior Facilities Agreement dated
December 1, 2008 for Melco Crown Gaming (Macau) Limited as Company and Deutsche
Bank AG, Hong Kong Branch, as Agent4.20
    
    
    Novation and Termination Agreement (with respect to the Management Agreement for
Grand Hyatt Macau dated June 18, 2006 and the Management Agreement for Hyatt
Regency Macau dated June 18, 2006) dated August 30, 2008 between Hyatt of Macau
Ltd., Melco Crown (COD) Developments Limited and Melco Crown COD (GH) Hotel
Limited4.21
    
    
    Management Agreement dated August 30, 2008 between Melco Crown COD (GH) Hotel
Limited and Hyatt of Macau Ltd.4.23
    
    
    Novation Agreement (in respect of Hotel Trademark License Agreement) dated
August 30, 2008 between Hard Rock Holdings Limited, Melco Crown (COD)
Developments Limited and Melco Crown COD (HR) Hotel Limited4.27
    
    
    Novation Agreement (in respect of Hotel Memorabilia Lease) dated August 30, 2008
between Hard Rock Café International (STP), Inc., Melco Crown (COD) Developments
Limited and Melco Crown COD (HR) Hotel Limited4.29
    
    
    Extension Letter (with respect to the Promissory Transfer of Shares Agreement)
to Melco PBL (Macau Peninsula) Limited from Double Margin, Angela Leong and Omar
dated January 25, 20074.30
    
    
    Extension Letter (with respect to the Promissory Transfer of Shares Agreement)
to Melco PBL (Macau Peninsula) Limited from Double Margin and Angela Leong dated
July 17, 20074.31
    
    
    Extension Letter (with respect to the Promissory Transfer of Shares Agreement)
to MPEL (Macau Peninsula) Limited from Double Margin and Angela Leong dated July
2, 20088.1
    
    
    List of Subsidiaries11.1
    
    
    Code of Business Conduct and Ethics, amended and approved as of November 14, 200812.1
    
    
    CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200212.2
    
    
    CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200213.1
    
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2
    
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1
    
    
    Consent of Walkers