##### Table of Contents



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, 2009
 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
    
    (The NASDAQ Global Select Market)
 
 
 
 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 has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceeding 12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes o No þ
 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):
 o Large accelerated filer
    
    þ 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
    
    
    2PART I
    
    
    3Item 1. Identity Of Directors, Senior Management and Advisers
    
    
    3Item 2. Offer Statistics and Expected Timetable
    
    
    3Item 3. Key Information
    
    
    3A. Selected Financial Data
    
    
    3B. Capitalization and Indebtedness
    
    
    6C. Reasons for the Offer and Use of Proceeds
    
    
    6D. Risk Factors
    
    
    6Item 4. Information on the Company
    
    
    24A. History and Development of the Company
    
    
    24B. Business Overview
    
    
    25C. Organizational Structure
    
    
    38D. Property, Plant and Equipment
    
    
    40Item 4A. Unresolved Staff Comments
    
    
    40Item 5. Operating and Financial Review and Prospects
    
    
    40A. Operating Results
    
    
    40B. Liquidity And Capital Resources
    
    
    49C. Research And Development, Patents And Licenses, Etc.
    
    
    53D. Trend Information
    
    
    54E. Off-Balance Sheet Arrangements
    
    
    54F. Tabular Disclosure Of Contractual Obligations
    
    
    54G. Safe Harbor
    
    
    55Item 6. Directors, Senior Management And Employees
    
    
    56A. Directors And Senior Management
    
    
    56B. Compensation Of Directors And Executive Officers
    
    
    59C. Board Practices
    
    
    59D. Employees
    
    
    63E. Share Ownership
    
    
    64Item 7. Major Shareholders And Related Party Transactions
    
    
    65A. Major Shareholders
    
    
    65B. Related Party Transactions
    
    
    68C. Interests Of Experts And Counsel
    
    
    71




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Item 8. Financial Information
    
    
    71A. Consolidated Statements And Other Financial Information
    
    
    71B. Significant Changes
    
    
    71Item 9. The Offer And Listing
    
    
    71A. Offering And Listing Details
    
    
    71B.
Plan Of Distribution
    
    
    72C. Markets
    
    
    72D. Selling Shareholders
    
    
    72E. Dilution
    
    
    72F. Expenses Of The Issue
    
    
    72Item 10. Additional Information
    
    
    72A. Share Capital
    
    
    72B. Memorandum And Articles Of Association
    
    
    72C. Material Contracts
    
    
    73D. Exchange Controls
    
    
    73E. Taxation
    
    
    73F. Dividends And Paying Agents
    
    
    76G. Statement By Experts
    
    
    76H. Documents On Display
    
    
    76I. Subsidiary Information
    
    
    76Item 11. Quantitative And Qualitative Disclosures About Market Risk
    
    
    77Item 12. Description of Securities other than Equity Securities
    
    
    78PART II
    
    
    79Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    79Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    79Item 15. Controls And Procedures
    
    
    79Item 16A. Audit Committee Financial Expert
    
    
    80Item 16B. Code of Ethics
    
    
    80Item 16C. Principal Accountant Fees and Services
    
    
    81Item 16D. Exemptions From The Listing Standards For Audit Committees
    
    
    81Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    81Item 16F. Change in Registrants Certifying Accountant
    
    
    81Item 16G. Corporate Governance
    
    
    81PART III
    
    
    81Item 17. Financial Statements
    
    
    81Item 18. Financial Statements
    
    
    81Item 19. Exhibits
    
    
    82EX-1.1 AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATIONEX-4.32 TERMINATION AGREEMENTEX 4.37 2006 SHARE INCENTIVE PLANEX-4.41 ORDER OF SECRETARY FOR PUBLIC WORKS AND TRANSPORTATIONEX-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




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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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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
   
    
    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;
    
    our ability to raise additional financing;
    
    our future business development, results of operations and financial condition;
    
    growth of the gaming market and visitation in Macau;
    
    our anticipated growth strategies;
    
    the liberalization of travel restrictions on PRC citizens and convertibility of the
Renminbi;
    
    the uncertainty of tourist behavior related to spending and vacationing at casino
resorts in Macau;
    
    fluctuations in occupancy rates and average daily room rates in Macau;
    
    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, Sands
China, Wynn Macau, Galaxy and MGM Grand Paradise;
    
    the formal grant of an occupancy permit for certain areas of City of Dreams that
remain under construction or development;
    
    obtaining approval from the Macau government for an increase in the developable
gross floor area of the City of Dreams site;
    
    the development of Macau Studio City;
    
    our entering into new development and construction and new ventures;
  2




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
    
    construction cost estimates for our development projects, including projected
variances from budgeted costs;
    
    government regulation of the casino industry, including gaming license approvals and
the legalization of gaming in other jurisdictions;
    
    the completion of
infrastructure projects in Macau; and
    
    other factors described under Risk Factors.
  
 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
  Year Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands of US$, except share and per share data and operating data)Consolidated
Statements of
Operations Data:Net revenues
    
    $
    1,332,873
    
    
    $
    1,416,134
    
    
    $
    358,496
    
    
    $
    36,101
    
    
    $
    17,328Total operating costs
and expenses
    
    
    (1,604,920
    )
    
    
    (1,414,960
    )
    
    
    (554,313
    )
    
    
    (93,754
    )
    
    
    (21,050
    )Operating (loss) income
    
    $
    (272,047
    )
    
    $
    1,174
    
    
    $
    (195,817
    )
    
    $
    (57,653
    )
    
    $
    (3,722
    )Net loss
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )
    
    $
    (73,479
    )
    
    $
    (3,259
    )Loss per share Basic and diluted
    
    $
    (0.210
    )
    
    $
    (0.002
    )
    
    $
    (0.145
    )
    
    $
    (0.116
    )
    
    $
    (0.006
    ) ADS (1)
    
    $
    (0.631
    )
    
    $
    (0.006
    )
    
    $
    (0.436
    )
    
    $
    (0.348
    )
    
    $
    (0.019
    )Shares used in
calculating loss per
share Basic and diluted
    
    
    1,465,974,019
    
    
    
    1,320,946,942
    
    
    
    1,224,880,031
    
    
    
    633,228,439
    
    
    
    522,945,205
  3




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December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands of US$)Consolidated Balance
Sheets Data:Cash and cash equivalents
    
    $
    212,598
    
    
    $
    815,144
    
    
    $
    835,419
    
    
    $
    583,996
    
    
    $
    19,769Restricted cash
    
    
    236,119
    
    
    
    67,977
    
    
    
    298,983
    
    
    
    
    
    
    
    Total assets
    
    
    4,900,369
    
    
    
    4,498,289
    
    
    
    3,620,268
    
    
    
    2,279,920
    
    
    
    421,208Total current liabilities
    
    
    559,167
    
    
    
    450,136
    
    
    
    483,685
    
    
    
    207,613
    
    
    
    138,741Total debts (2)
    
    
    1,798,879
    
    
    
    1,529,195
    
    
    
    616,376
    
    
    
    212,506
    
    
    
    94,577Total liabilities
    
    
    2,391,325
    
    
    
    2,089,685
    
    
    
    1,191,727
    
    
    
    389,554
    
    
    
    163,024Noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,492Total equity
    
    
    2,509,044
    
    
    
    2,408,604
    
    
    
    2,428,541
    
    
    
    1,890,366
    
    
    
    258,184
 
 (1)
    
    Each ADS represents three ordinary shares.(2)
    
    Includes amounts due to shareholders within one year, loans from shareholders and
long-term debt.  
    
    From January 1, 2005 to March 7, 2005, the financial statements reflect the
consolidated financial statements of Mocha Slot Group Limited, or Mocha, Melco
Crown (COD) Developments and Altira Developments because they were under common
control for this period. The contributions by Melco of its 80% interest in Mocha,
70% interest in Altira 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 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, Altira Macau opened and became fully operational on July 14, 2007.
    
    On June 1, 2009, City
of Dreams opened featuring a 420,000 sq. ft. casino with
approximately 500 gaming tables and 1,300 gaming machines, as well as
approximately 600 hotel rooms and 20 food and beverage outlets.
    
    In the last quarter of 2009, a further 800 rooms were progressively added to City
of Dreams following grand opening and operations of Grand Hyatt Macau at City of Dreams.
  4




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Exchange Rate Information
     Noon Buying RatePeriod
    
    Period End
    
    
    Average (1)
    
    
    Low
    
    
    High(Hong Kong dollar per US$1.00)March 2010 (through March 16, 2010)
    
    
    7.7606
    
    
    
    7.7606
    
    
    
    7.7647
    
    
    
    7.7574February 2010
    
    
    7.7619
    
    
    
    7.7670
    
    
    
    7.7716
    
    
    
    7.7619January 2010
    
    
    7.7665
    
    
    
    7.7624
    
    
    
    7.7752
    
    
    
    7.7539December 2009
    
    
    7.7536
    
    
    
    7.7526
    
    
    
    7.7572
    
    
    
    7.7495November 2009
    
    
    7.7500
    
    
    
    7.7497
    
    
    
    7.7501
    
    
    
    7.7495October 2009
    
    
    7.7497
    
    
    
    7.7497
    
    
    
    7.7502
    
    
    
    7.7495September 2009
    
    
    7.7500
    
    
    
    7.7503
    
    
    
    7.7514
    
    
    
    7.74982009
    
    
    7.7536
    
    
    
    7.7513
    
    
    
    7.7618
    
    
    
    7.74952008
    
    
    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
    
    
    
    7.7514
 
 (1)
    
    Annual averages are calculated from month-end rates. Monthly averages
are calculated using the average of the daily rates during the
relevant period.   5




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B. CAPITALIZATION AND INDEBTEDNESS
  
 C. REASONS FOR THE OFFER AND USE OF PROCEEDS
  
 D. RISK FACTORS
  (1)    Risks Relating to Our Early Stage of Operation
 (a)    We are in an early stage of operation 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.
   
    
    fulfill conditions precedent to draw down or roll over funds from current and future credit facilities;
    
    raise additional capital, as required;
    
    respond to changing financing requirements.
    
    operate, support, expand and develop our operations and our facilities;
    
    attract and retain customers and qualified employees;
    
    maintain effective control of our operating costs and expenses;
    
    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 competitive market conditions;
    
    respond to changes in our regulatory environment;
    
    identify suitable locations and enter into new leases or right to use agreements (which are similar to
license agreements) for new Mocha Clubs; and
    
    renew or extend lease
agreements for existing Mocha Clubs.
  6




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(2)    Risks Relating to the Operation of Our Properties
 (a)    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.
  (b)    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.
  (c)    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.
  (d)    We have recruited a substantial number of new employees for each of our properties and
competition may limit our ability to attract or retain suitably qualified management and
personnel.
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(e)    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 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.
  (f)    Our insurance coverage may not be adequate to cover all losses that we may suffer from
our operations. In addition, our insurance costs may increase and we may not be able to
obtain the same insurance coverage in the future.
  (3)    Risks Relating to Our Business and Operations in Macau
 (a)    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;
    
    tightening of 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.
  8




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(b)    The winnings of our patrons could exceed our casino winnings.
  (c)    Theoretical win rates for our casino operations depend on a variety of factors, some beyond
our control.
  (d)    Our gaming business is subject to cheating and counterfeiting.
    9




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(e)    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.
  (f)    Our gaming operations could be adversely affected by restrictions on the export of the
Renminbi and limitations of the Pataca exchange markets.
   (g)    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.
   10




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(h)    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 H1N1 virus (swine flu) or
other contagious disease may have an adverse effect on the economies of certain Asian
countries and may adversely affect our results of operations.
  (i)    Macau is susceptible to severe typhoons that may disrupt our operations.
  (j)    Any fluctuation in the value of the H.K. dollar, U.S. dollar or Pataca may adversely
affect our indebtedness, expenses and profitability.
  (k)    Contract parties may not be able to secure adequate financing.
  (4)    Risks Relating to Our Operations in the Gaming Industry in Macau
 (a)    Because our operations 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.
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(b)    The Macau government could grant additional rights to conduct gaming in the future,
which could significantly increase competition in Macau and cause us to lose or be unable
to gain market share.
  (c)    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
significant by increase
our costs, which could cause our projects to be unsuccessful.
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(d)    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.
        13




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(e)    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.
  (f)    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.
   (g)    We extend credit to a portion of our customers, and we may not be able to collect
gaming receivables from our credit customers.
   14




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(h)    The current credit environment may limit availability of credit to gaming patrons and
may negatively impact our revenue.
  (i)    Our business may face a higher level of volatility due to our focus on the rolling chip
segment of the gaming market.
  (j)    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.
  (k)    We are impacted by 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.
   15




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(l)    Since May 2008, China has imposed government restrictions on Chinese citizens
traveling from mainland China to Macau. If China or other countries impose further
restrictions on travel to Macau, our business or results of operations could be adversely
affected.
     (m)    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.
  (n)    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.
   16




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(5)    Risks Relating to Our Indebtedness
 (a)    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 we have drawn down an amount equivalent to
approximately US$1.68 billion as of the date of this annual report;
and
    
    financing for a significant
portion of the costs of developing Phase II at the City of Dreams site, in an amount which
is as yet undetermined.
  
    
    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 expenditure,
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 bears 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.
 (b)    We may not be able to generate sufficient cash flow to meet our debt service
obligations.
  (c)    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;
  17




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
    
    make certain acquisitions and investments;
    
    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 shares; 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.
  (d)    Drawdown or rollover 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 or roll over 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.
  (e)    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.
   18




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(f)    Recent 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 our
ability to generate revenue from operations at our present and future projects.
  (6)    Risks Relating to Our Corporate Structure and Ownership
 (a)    Our existing shareholders will have a substantial influence over us and their interests
in our business may be different than yours.
   (b)    Business conducted through joint ventures involves certain risks.
  (c)    Melco and Crown may pursue additional casino projects in Asia, which, along with their
current operations, may compete with our projects in Macau which could have material
adverse consequences to us and the interests of our minority shareholders.
   19




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(d)    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.
  (e)    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.
       (f)    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.
   20




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(7)    Risks relating to future developments
  
    
    lack of sufficient or delays in availability of financing;
    
    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 and the spread of
viruses such as H1N1 or H5N1;
    
    weather interferences or delays;
    
    fires, typhoons and other natural disasters;
    
    geological, construction, excavation, regulatory and equipment problems; and
    
    other unanticipated circumstances or cost increases.
  (8)    Risks Relating to the ADSs
 (a)    The trading price of our ADSs has been volatile since our ADSs began trading on Nasdaq
and may be subject to fluctuations in the future, which could result in substantial
losses to investors.
  
    
    uncertainties or delays
relating to the financing, completion and successful operation of our
future 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;
  21




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
    
    changes in financial estimates by securities research analysts;
    
    changes in the economic performance or market valuations of other gaming and leisure industry companies;
    
    changes in our share of the Macau gaming market;
    
    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;
    
    sales or perceived sales of additional ordinary shares or ADSs or securities convertible or
exchangeable or exercisable for ordinary shares or ADSs; and
    
    rumors related to any of the above.
  (b)    We currently do not intend to pay dividends, and we cannot assure you that we will make
dividend payments in the future.
  (c)    Substantial future sales or perceived sales of our ADSs in the public market could
cause the price of our ADSs to decline.
     22




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##### Table of Contents



(d)    Holders of ADSs have fewer rights than shareholders and must act through the depositary
to exercise those rights.
  (e)    Holders of ADSs may be subject to limitations on transfers of your ADSs.
  (f)    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.
   (g)    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,
our shareholders may have less protection in terms of shareholder rights than they would
under U.S. law.
   23




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##### Table of Contents



(h)    You may have difficulty enforcing judgments obtained against us.
  (i)    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
         24




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B. BUSINESS OVERVIEW
 Overview
             25




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Operations
 City of Dreams
  Altira Macau
        26




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Mocha Clubs
   Taipa Square Casino
  Development Projects
 General
  Future Pipeline Projects
  City of Dreams Phase II
  Macau Studio City Project
   27




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Macau Peninsula Site
  Our Objective and Strategies
  Maintain a Strong Balance Sheet and Conservative Capital Structure, De-Leverage and
Remain Alert to Opportunistic Growth Opportunities
  Develop a Targeted Product Portfolio of Well-Recognized Branded Experiences
   Utilize Melco Crown Gamings Subconcession to Maximize Our Business and Revenue Potential
  Develop Comprehensive Marketing Programs
   28




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
    
    create a cross-platform sales and marketing department to promote all
of our brands to potential customers throughout Asia in accordance
with applicable laws;
    
    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 Operating First Class Facilities
    Leverage the Experiences and Resources of Our Founders
  Our Properties
  City of Dreams
    29




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##### Table of Contents



Altira Macau
    Mocha Clubs
  GamingMocha Club
    
    Opening Date
    
    Location
    
    Area(in sq. ft.)Mocha Altira
    
    December 2008
    
    Level 1 of Altira 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
    30




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Taipa Square Casino
  Other Premises
  Advertising and Marketing
  Competition
       31




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Intellectual Property
  Legal and Administrative Proceedings
   32




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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;
    
    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.
   33




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
    
    a percentage of the gross revenues received; or
    
    the number and type of gaming devices operated.
       Anti-Money Laundering Regulations in Macau
   34




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
    
    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.
   Subconcession Contract
  Subconcession Term.
 Development of Gaming Projects/Financial Obligations.
 Payments.
  35




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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;
    
    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.
  36




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Others.
 Tax
      Dividend Distribution
 Restrictions on Distributions.
 Distribution of Profits.
  37




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C. ORGANIZATIONAL STRUCTURE
 Current Corporate Structure
       38




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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.  39




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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
 City of Dreams
  Altira Macau
   Mocha Clubs
  Taipa Square Casino
   40




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Future Pipeline Projects
 The Macau Studio City Project
  Summary of Financial Results
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands of US$)Net revenues
    
    $
    1,332,873
    
    
    $
    1,416,134
    
    
    $
    358,496Total operating costs and expenses
    
    
    (1,604,920
    )
    
    
    (1,414,960
    )
    
    
    (554,313
    )Operating (loss) income
    
    
    (272,047
    )
    
    
    1,174
    
    
    
    (195,817
    )Net loss
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )
  
    
    On June 1, 2009, City of Dreams opened featuring a 420,000 sq. ft. casino with
approximately 500 gaming tables and 1,300 gaming machines, as well as
approximately 600 hotel rooms and 20 food and beverage outlets.
    
    Following construction completion of Grand Hyatt Macau at City of Dreams in
December 2009, a further 800 rooms were added.
    
    On May 12, 2007, Altira Macau opened and was fully operational by July 14, 2007.
  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 to purchase gaming chips plus gaming chips
purchased at the casino cage.
    
    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.
    
    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.
  41




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##### Table of Contents




    
    Rolling chip volume: the amount of non-negotiable gaming chips
wagered and lost by the VIP market segment, therefore tracking the sum
of all losing wagers.
    
    Rolling chip hold percentage: 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, therefore tracking the initial purchase of chips.
    
    Non-rolling chip hold percentage: 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.
    
    Hotel occupancy rate: the average percentage of available hotel rooms occupied during a period
    
    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.
    Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Revenues
   42




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##### Table of Contents



Casino.
    Rooms.
 Food, beverage and others.
 Operating costs and expenses
  Casino.
 Rooms.
 Food, beverage and others.
 General and administrative.
  43




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##### Table of Contents



Pre-opening costs.
 Amortization of gaming subconcession.
 Amortization of land use rights.
 Depreciation and amortization.
 Property
charges and others.
 Non-operating (expenses) income
      Income tax credit
  Net loss
   44




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##### Table of Contents



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Revenues
   Casino.
 Rooms.
 Food, beverage and others.
 Operating costs and expenses
  Casino.
 Rooms.
 Food, beverage and others.
 General and administrative.
 Pre-opening costs.
  45




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##### Table of Contents



Amortization
of gaming subconcession.
 Amortization
of land use rights.
 Depreciation
and amortization.
 Property
charges and others.
 Non-operating
(expenses) income
      Income tax credit
  Net loss
  Critical Accounting Policies and Estimates
   46




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Property
and equipment and other long-lived assets
      Goodwill and purchased intangible assets
     47




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Share-based compensation
   Revenue recognition
        48




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Accounts Receivable and Credit Risk
  Income Tax
  Derivative Instruments and Hedging Activities
  Recent changes in accounting standards
  
 B. LIQUIDITY AND CAPITAL RESOURCES
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands of US$)Net cash (used in) provided by operating activities
    
    $
    (112,257
    )
    
    $
    (11,158
    )
    
    $
    147,372Net cash used in investing activities
    
    
    (1,143,639
    )
    
    
    (913,602
    )
    
    
    (972,620
    )Net cash provided by financing activities
    
    
    653,350
    
    
    
    904,485
    
    
    
    1,076,671Net (decrease) increase in cash and cash equivalents
    
    
    (602,546
    )
    
    
    (20,275
    )
    
    
    251,423Cash and cash equivalents at beginning of year
    
    
    815,144
    
    
    
    835,419
    
    
    
    583,996Cash and cash equivalents at end of year
    
    $
    212,598
    
    
    $
    815,144
    
    
    $
    835,419
 Operating activities
   49




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Investing activities
   Financing activities
 Proceeds from Our Financing. .
 Shareholder Loans and Contributions.
  City of Dreams Project Facility.
  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
follow-on offering in December 2006 and November 2007 respectively.
  50




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Drawdowns
    Repayment
    Accounts
  Interest and Fees
   51




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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;
    
    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.
  52




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
    
    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
    Sources and Uses
   Other Liquidity Matters
  
 C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
   53




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##### Table of Contents



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)
    
    
    44.5
    
    
    
    793.1
    
    
    
    845.6
    
    
    
    
    
    
    
    1,683.2Operating lease obligations:Leases for office space, VIP lounge,
recruitment and training center, staff
quarter and Mocha Clubs locations
    
    
    10.0
    
    
    
    11.6
    
    
    
    9.0
    
    
    
    9.7
    
    
    
    40.3Other contractual commitments:Government land use fees payable for Altira Macau
land (3)
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.3
    
    
    
    2.8
    
    
    
    3.6Government land use fees payable for City of
Dreams land (4)
    
    
    1.2
    
    
    
    2.4
    
    
    
    2.4
    
    
    
    22.0
    
    
    
    28.0Interest on land premium for City of Dreams
land (4)
    
    
    1.1
    
    
    
    2.8
    
    
    
    0.2
    
    
    
    
    
    
    
    4.1Construction, plant and equipment
acquisition commitments (5)
    
    
    32.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32.6Buses and limousines services commitments
    
    
    2.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.6Fixed premium on gaming subconcession
    
    
    3.7
    
    
    
    7.5
    
    
    
    7.5
    
    
    
    28.0
    
    
    
    46.7Trademark and memorabilia license fee
commitments
    
    
    0.9
    
    
    
    1.8
    
    
    
    1.8
    
    
    
    4.0
    
    
    
    8.5Consultancy and other services commitments
    
    
    2.7
    
    
    
    1.3
    
    
    
    0.8
    
    
    
    
    
    
    
    4.8Total contractual obligations
    
    $
    99.5
    
    
    
    936.4
    
    
    
    867.6
    
    
    
    66.5
    
    
    
    1,970.0
 (1)
    
    Excludes the working capital loans provided by Melco and Crown, which had an outstanding balance of US$25,000 as of
December 31, 2009. As of December 31, 2009, the balance of the outstanding term loans from Melco and Crown, amounting to
approximately US$115.6 million was repayable in May 2011. The term loan from Melco as of December 31, 2009 is bearing
interest at 3-months HIBOR per annum and at three months HIBOR plus
1.5% per annum only during the period from May 16, 2008 to
May 15, 2009. The term loan from Crown as of December 31,
2009 bearing interest at 3-months
HIBOR.  54




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##### Table of Contents



(2)
    
    Other long-term debt represents US$1.75 billion under the City of
Dreams Project Facility. The City of Dreams Project Facility consists
of a US$1.5 billion term loan facility and a US$250 million revolving
credit facility. The term loan facility matures in September 2014 and
is subject to quarterly amortization payments commencing in
December 2010. The revolving credit facility matures in September
2012 or, if earlier, the date of repayment, prepayment or cancellation
in full of the term loan facility and has no interim amortization
payment.(3)
    
    Annual government land use fees payable is approximately MOP 1.4 million
(US$171,000) and is adjusted every five years as agreed between the
Macau government and Altira 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 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 required 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 of which approximately MOP 467.5 million
(US$58.3 million) has been paid as of December 31, 2009 and the
remaining amount of approximately MOP 374.6 million (US$46.8 million), accrued with 5%
interest per annum, will be paid in
six biannual installments. In November 2009, Melco Crown (COD)
Developments and Melco Crown Gaming accepted in principle the initial
terms for the revision of the land lease agreement from the Macau
government for the increased developable gross floor area for City of
Dreams and recognized additional land premium of approximately MOP
257.4 million (US$32.1 million) payable to the Macau government. In March 2010, Melco Crown (COD)
Developments and Melco Crown Gaming accepted the final terms for the
revision of the land lease agreement and
fully paid the additional land premium to the Macau government. The total outstanding
balances of
the land use right has been included in accrued expenses and other
current liabilities and land use right payable as of December 31,
2009. We have also provided a guarantee deposit of approximately
MOP 3.4 million (US$424,000), upon signing of the government lease in February
2008. According to the terms of the revised offer from the Macau
government, payment in the form of government land use fees in an aggregate
amount of approximately MOP 9.5 million (US$1.2 million) per annum is
payable to Macau government and such amount may be adjusted every five
years as agreed between the Macau government and Melco Crown
(COD) Developments in accordance with the market rates from time to
time.(5)
    
    The amount as of December 31, 2009 mainly represents construction
contracts for the design and construction, plant and equipment
acquisitions of City of Dreams of approximately US$31.4 million.
The balance includes the remaining payment obligations for Altira
Macau and Mocha Clubs. 
 G. SAFE HARBOR
   55




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##### Table of Contents



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
 A. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Executive Officers
  Name
    
    Age
    
    Position/TitleLawrence (Yau Lung) Ho
    
    
    33
    
    
    Co-Chairman and Chief Executive OfficerJames D. Packer
    
    
    42
    
    
    Co-ChairmanJohn Wang
    
    
    49
    
    
    DirectorClarence Chung
    
    
    47
    
    
    DirectorTodd Nisbett
    
    
    42
    
    
    DirectorRowen B. Craigie
    
    
    54
    
    
    DirectorJames A. C. MacKenzie
    
    
    56
    
    
    Independent DirectorThomas Jefferson Wu
    
    
    37
    
    
    Independent DirectorAlec Tsui
    
    
    60
    
    
    Independent DirectorRobert Mactier
    
    
    45
    
    
    Independent DirectorSimon Dewhurst
    
    
    40
    
    
    Chief Financial OfficerStephanie Cheung
    
    
    47
    
    
    Executive Vice President and Chief Legal OfficerNigel Dean
    
    
    56
    
    
    Executive Vice President and Chief Internal Audit OfficerAkiko Takahashi
    
    
    56
    
    
    Executive Vice President and Chief Human
Resources/Corporate Social Responsibility OfficerRichard Tsiang
    
    
    49
    
    
    Executive Vice President and Chief Development OfficerGreg Hawkins
    
    
    46
    
    
    President of City of DreamsTed (Ying Tat) Chan
    
    
    38
    
    
    President of Altira MacauConstance (Ching Hui) Hsu
    
    
    36
    
    
    President of Mocha Clubs
 Directors
 Mr. Lawrence (Yau Lung) Ho
 Mr. James D. Packer
 Mr. John Peter Ben Wang
 Mr. Clarence (Yuk Man) Chung
  56




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##### Table of Contents



Mr. Todd Nisbet
 Mr. Rowen B. Craigie
 Mr. James A. C. MacKenzie
 Mr. Thomas Jefferson Wu
 Mr. Alec Tsui
  57




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##### Table of Contents



Mr. Robert W. Mactier
 Executive Officers
 Mr. Simon Dewhurst
 Ms. Stephanie Cheung
 Mr. Nigel Dean
 Ms. Akiko Takahashi
 Mr. Richard Tsiang
  58




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##### Table of Contents



Mr. Greg Hawkins
 Mr. Ted (Yin Tat) Chan
 Ms. Constance (Ching Hui) Hsu
 
 B. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
   
 C. BOARD PRACTICES
 Composition of Board of Directors
  Duties of Directors
   59




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
    
    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;
    
    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.
  
    
    considering a tendering process for the appointment of the independent
auditor every five years, 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, undertaking a
performance evaluation of the independent auditor on an annual basis
and reporting the results of such evaluation to the Chief Executive
Officer;
  60




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##### Table of Contents




    
    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$256,000 per transaction or series of transactions, or of an unusual
or non standard nature 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;
    
    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.
 Nominating and Corporate Governance Committee
   61




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##### Table of Contents




    
    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.
 Interested Transactions
  Remuneration and Borrowing
  Qualification
  Benefits Upon Termination
  Employment Agreements
   62




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D. EMPLOYEES
 Employees
  December 31,2009
    
    
    2008
    
    
    2007Number of
    
    
    Percentage
    
    
    Number of
    
    
    Percentage
    
    
    Number of
    
    
    PercentageEmployees
    
    
    of Total
    
    
    Employees
    
    
    of Total
    
    
    Employees
    
    
    of TotalMocha
    
    
    757
    
    
    
    7.8
    %
    
    
    615
    
    
    
    12.8
    %
    
    
    545
    
    
    
    11.1
    %Altira Macau
    
    
    2,753
    
    
    
    28.6
    
    
    
    3,540
    
    
    
    73.7
    
    
    
    4,201
    
    
    
    85.2City of Dreams
    
    
    5,718
    
    
    
    59.4
    
    
    
    317
    
    
    
    6.6
    
    
    
    83
    
    
    
    1.7Corporate and
centralized
services
    
    
    403
    
    
    
    4.2
    
    
    
    331
    
    
    
    6.9
    
    
    
    99
    
    
    
    2.0Total
    
    
    9,631
    
    
    
    100
    %
    
    
    4,803
    
    
    
    100
    %
    
    
    4,928
    
    
    
    100
    %
    63




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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.
  Vesting Schedule.
  Number ofExercise
    
    unvestedprice/grant date
    
    share optionsfair value per
    
    / restricted
    
    
    VestingADS
    
    shares
    
    
    PeriodShare Options2007 Long Term Incentive Plan
    
    $14.15$15.19
    
    
    335,181
    
    
    4 to 5 years2008 Long Term Incentive Plan
    
    $12.04$14.08
    
    
    373,101
    
    
    4 years2008 Retention Program
    
    $3.04
    
    
    13,002,339
    
    
    3 years2009 Cancel and Re-issue
Program
    
    $4.28
    
    
    3,612,327
    
    
    4 years2009 Long Term Incentive Plan
    
    $3.04$3.26
    
    
    4,654,500
    
    
    4 years21,977,448Restricted Shares2008 Long Term Incentive Plan
    
    $3.99$12.04
    
    
    434,794
    
    
    3 to 4 years2008 Retention Program
    
    $3.04
    
    
    2,167,059
    
    
    3 years2009 Long Term Incentive Plan
    
    $3.26
    
    
    644,178
    
    
    4 years3,246,031
  64




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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 
 A. MAJOR SHAREHOLDERS
  Ordinary shares beneficiallyowned (1)Name
    
    Number
    
    
    %Melco Leisure and Entertainment Group Limited (2)(3)(4)
    
    
    533,750,000
    
    
    
    33.45Crown Asia Investments Pty. Ltd. (5)
    
    
    533,750,000
    
    
    
    33.45
 (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.(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 Executive Director of Melco,
personally holds 7,890,617 ordinary shares of Melco, representing
approximately 0.6% of Melcos ordinary shares outstanding as of March
2, 2010. In addition, 115,509,024 shares are held by Lasting Legend
Ltd., 288,532,606 shares are held by Better Joy Overseas Ltd. and
7,294,000 shares are held by The L3G Capital Trust, all of which
companies are owned by persons and or trusts affiliated with
Mr. Lawrence Ho. Therefore, we believe that for purposes of
Rule 13d-3, Mr. Ho beneficially owns 419,226,247 ordinary shares of
Melco, representing approximately 34.08% of Melcos ordinary shares
outstanding as of March 2, 2010. This does not include 298,982,188
shares which may be issued by Melco to Great Respect Limited as a
result of any future conversion of conversion rights in full by Great
Respect Limited under the amended convertible loan 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), upon the issuance of the land certificate for the City of
Dreams site.(4)
    
    As of March 2, 2010, 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 298,982,188 shares which may be issued by Melco to
Great Respect Limited as a result of any future conversion of
conversion rights in full by Great Respect Limited under the amended
convertible loan notes held by Great Respect Limited upon the issuance
of the land certificate for the City of Dreams site.(5)
    
    Crown Asia Investments Pty. Ltd., formerly PBL Asia Investments
Limited, was incorporated in the Cayman Islands but is now a
registered Australian company and is 100% indirectly owned by Crown.
The address of Crown and Crown Asia Investments Pty. Ltd. is Level 3,
Crown Towers, 8 Whiteman Street, Southbank, Victoria 3006, Australia.
Crown is listed on the Australian Stock Exchange. As of February 28
2010, Crown was approximately 40.02% owned by Consolidated Press
Holdings Group, which is a group of companies owned by the Packer
family.  65




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##### Table of Contents



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;
    
    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;
  66




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##### Table of Contents




    
    The shares of Altira 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.
 Transfer of Shares.
 Events of Default.
 Notice from a Regulatory Authority.
 Term.
   67




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##### Table of Contents



B. RELATED PARTY TRANSACTIONS
  Year Ended December 31,2009
    
    
    2008
    
    
    2007(in thousands of US$)Amounts paid/payable to affiliated companiesAdvertising and promotional expenses
    
    $
    211
    
    
    $
    597
    
    
    $
    65Consultancy fee capitalized in construction in progress
    
    
    1,312
    
    
    
    246
    
    
    
    2,294Consultancy fee recognized as expense
    
    
    1,301
    
    
    
    1,168
    
    
    
    4,150Management fees
    
    
    45
    
    
    
    1,698
    
    
    
    Network support fee
    
    
    28
    
    
    
    52
    
    
    
    238Office rental
    
    
    2,354
    
    
    
    1,466
    
    
    
    1,114Operating and office supplies
    
    
    257
    
    
    
    255
    
    
    
    707Project management fees capitalized in construction in progress
    
    
    
    
    
    
    
    
    
    
    1,442Property and equipment
    
    
    59,482
    
    
    
    16,327
    
    
    
    12,141Repairs and maintenance
    
    
    87
    
    
    
    655
    
    
    
    41Service fee expense
    
    
    748
    
    
    
    781
    
    
    
    Traveling expense capitalized in construction in progress
    
    
    65
    
    
    
    66
    
    
    
    Traveling expense recognized as expense
    
    
    2,809
    
    
    
    1,387
    
    
    
    746Amounts received/receivable from affiliated companiesOther service fee income
    
    
    896
    
    
    
    276
    
    
    
    Rooms and food and beverage income
    
    
    23
    
    
    
    100
    
    
    
    41Sales proceeds for disposal of property and equipment
    
    
    
    
    
    
    2,788
    
    
    
    Amounts paid/payable to shareholdersInterest charges capitalized in construction in progress
    
    
    963
    
    
    
    3,367
    
    
    
    4,167Interest charges recognized as expense
    
    
    215
    
    
    
    
    
    
    
    758
  (a)
    
    Amounts Due From Affiliated Companies
   68




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(b)
    
    Amounts Due To Affiliated Companies
       69




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##### Table of Contents



(c)
    
    Amounts Due To/Loans From Shareholders
      (d)
    
    On May 17, 2006, MPEL Macau Peninsula entered into a conditional agreement to acquire a
third development site located on the shoreline of Macau Peninsula near the current
Macau Ferry Terminal or Macau Peninsula site. The acquisition was through the purchase of the entire issued share capital of a
company holding title to the Macau Peninsula site. Dr. Stanley
Ho was one of the directors but held no shares in such company. Dr. Stanley Ho is the father of Mr. Lawrence Ho, the chairman of Melco until he
resigned this position in March 2006. The title holding company holds the rights to the land lease of Macau
Peninsula site which was approximately 6,480 square meters. The aggregate consideration was
US$192.8 million, payable in cash of which a deposit of US$12.9 million was paid upon
signing of the sale and purchase agreement, financed from Melco and Crown, equally. The
targeted completion date of July 27, 2009 for the acquisition of the Macau Peninsula site passed
and the acquisition agreement was terminated by the relevant parties on December 17, 2009. The
deposit under the acquisition agreement was refunded to us in December 2009.
  70




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Employment
Agreements
  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
  
 ITEM 9. THE OFFER AND LISTING
 
 A. OFFERING AND LISTING DETAILS
   71




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Sales PriceHigh
    
    
    LowMonthly High and LowMarch 2010 (through March 16, 2010)
    
    
    4.97
    
    
    
    4.05February 2010
    
    
    4.17
    
    
    
    3.30January 2010
    
    
    4.35
    
    
    
    3.32December 2009
    
    
    4.67
    
    
    
    3.26November 2009
    
    
    5.37
    
    
    
    4.02October 2009
    
    
    7.35
    
    
    
    4.95September 2009
    
    
    8.45
    
    
    
    5.62Quarterly High and LowFirst Quarter 2010 (up to March 16, 2010)
    
    
    4.97
    
    
    
    3.30Forth Quarter 2009
    
    
    7.35
    
    
    
    3.26Third Quarter 2009
    
    
    8.45
    
    
    
    4.05Second Quarter 2009
    
    
    6.60
    
    
    
    3.29First Quarter 2009
    
    
    4.65
    
    
    
    2.27Fourth Quarter 2008
    
    
    4.89
    
    
    
    2.31Third Quarter 2008
    
    
    9.63
    
    
    
    3.77Second Quarter 2008
    
    
    14.76
    
    
    
    9.00First Quarter 2008
    
    
    13.23
    
    
    
    8.20Annual High and Low2009
    
    
    8.45
    
    
    
    2.272008
    
    
    14.76
    
    
    
    2.312007
    
    
    22.34
    
    
    
    9.952006
    
    
    23.55
    
    
    
    18.88
 
 B. PLAN OF DISTRIBUTION
  
 C. MARKETS
  
 D. SELLING SHAREHOLDERS
  
 E. DILUTION
  
 F. EXPENSES OF THE ISSUE
  
 ITEM 10. ADDITIONAL INFORMATION
 
 A. SHARE CAPITAL
  
 B. MEMORANDUM AND ARTICLES OF ASSOCIATION
   72




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C. MATERIAL CONTRACTS
  
 D. EXCHANGE CONTROLS
 Foreign Currency Exchange
  
 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 their securities 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.
  73




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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
     74




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##### Table of Contents



Sale, Exchange or Other Disposition of the ADSs or Ordinary Shares
  Passive Foreign Investment Company
    de minimis
   75




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##### Table of Contents



Information Reporting and Backup Withholding
   Disclosure Requirements for Specified Foreign Financial Assets
  
 F. DIVIDENDS AND PAYING AGENTS
  
 G. STATEMENT BY EXPERTS
  
 H. DOCUMENTS ON DISPLAY
     
 I. SUBSIDIARY INFORMATION
   76




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##### Table of Contents



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
   Foreign Exchange Risk
  Credit Risk
   77




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##### Table of Contents



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 A. DEBT SECURITIES
  B. WARRANT AND RIGHTS
  C. OTHER SECURITIES
  D. AMERICAN DEPOSITORY SHARES
  
    
    Expenses incurred by the depositary, the custodian or their respective agents in
connection with inspections of the relevant share register maintained by the local
registrar: an annual fee of U.S.$1.00 per 100 ADSs (such fee to be assessed against holders
of record as at the date or dates set by the depositary as it sees fit and collected at the
discretion of the depositary, subject to the Companys prior consent, by billing such
holders for such fee or by deducting such fee from one or more cash dividends or other cash
distributions);
 
    
    Taxes and other governmental charges incurred by the depositary or the custodian on any
ADR or ordinary shares underlying an ADR, including any applicable interest and penalties
thereon, and any share transfer or other taxes and other governmental charges;
 
    
    Cable, telex, electronic transmission and delivery expenses;
 
    
    Transfer or registration fees for the registration of transfer of deposited securities
on any applicable register in connection with the deposit or withdrawal of deposited
securities including those of a central depository for securities (where applicable);
 
    
    Expenses of the depositary in connection with the conversion of foreign currency into
U.S. dollars;
 
    
    Fees and expenses incurred by the depositary in connection with compliance with exchange
control regulations and other regulatory requirements applicable to the shares, deposited
securities and ADSs;
 
    
    the fees and expenses incurred by the depositary in connection with the delivery of
deposited securities, including any fees of a central depository for securities in the
local market, where applicable; and
 
    
    Any other fees, charges, costs or expenses that may be incurred by the depositary from
time to time.
    78




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##### Table of Contents



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
    
 ITEM 15. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   79




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##### Table of Contents



Managements Annual Report on Internal Control Over Financial Reporting
          Changes in Internal Controls Over Financial Reporting
  
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  
 ITEM 16B. CODE OF ETHICS
   80




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##### Table of Contents



ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Year EndedDecember 31,2009
    
    
    2008(In thousands of US$)Audit fees (1)
    
    $
    1,070
    
    
    $
    1,356Audit-related fees (2)
    
    
    75
    
    
    
    139Tax fees (3)
    
    
    69
    
    
    
    24All other fees (4)
    
    
    400
    
    
    
    
 
 (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, 2009 and 2008.(3)
    
    Tax fees include fees billed for tax consultations.(4)
    
    All other fees includes the aggregate fees billed in respect of our
follow-on public offerings in May 2009 and August 2009, 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
  
 PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
   81




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ITEM 19. EXHIBITS
 ExhibitNumber
    
    Description of Document1.1
    *
    
    Amended and Restated Memorandum and Articles of Association amended by EGM in May 20092.1
    
    
    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)2.6
    
    
    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
from 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)
  82




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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 Agent (Incorporated by reference to Exhibit 4.6 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.7
    
    
    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 Agent (Incorporated by reference to Exhibit 4.7 from our
From 20-F registration statement (File No. 001-33178), filed with the SEC on March
31, 2009)4.8
    
    
    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 Agent (Incorporated by reference to Exhibit 4.8 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.9
    
    
    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 Altira Developments (its former names were Melco Crown
(CM) Developments, 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)4.13
    
    
    Agreement dated March 17, 2005 Relating to transfer of 30% shareholding in
Altira Developments (its former names were Melco Crown (CM) Developments, 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 Altira Developments (its former names were Melco Crown (CM)
Developments, 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)
  83




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ExhibitNumber
    
    Description of Document4.16
    
    
    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)4.19
    
    
    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 Limited (Incorporated
by reference to Exhibit 4.20 from our From 20-F registration statement (File No.
001-33178), filed with the SEC on March 31, 2009)4.21
    
    
    Management Agreement dated August 30, 2008 between Melco Crown COD (GH) Hotel Limited
and Hyatt of Macau Ltd (Incorporated by reference to Exhibit 4.21 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009) .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 Limited (Incorporated by reference to Exhibit 4.23 from
our From 20-F registration statement (File No. 001-33178), filed with the SEC on
March 31, 2009)4.24
    
    
    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)
  84




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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 Limited (Incorporated by reference to Exhibit
4.27 from our From 20-F registration statement (File No. 001-33178), filed with the
SEC on March 31, 2009)4.28
    
    
    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, 2007 (Incorporated by reference to Exhibit 4.29 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.30
    
    
    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, 2007 (Incorporated by reference to Exhibit 4.30 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.31
    
    
    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, 2008
(Incorporated by reference to Exhibit 4.31 from our From 20-F registration statement
(File No. 001-33178), filed with the SEC on March 31, 2009)4.32
    *
    
    Promissory Transfer of Shares Termination Agreement dated 17 December 2009 in
connection with the termination of share purchase of Sociedade de Fomento Predial
Omar, Limitada (Omar) between Double Margin Limited, Leong On Kei, a.k.a. Angela
Leong, MPEL (Macau Peninsula) Limited and Omar4.33
    
    
    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)4.34
    
    
    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)4.35
    
    
    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)4.36
    
    
    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)4.37
    *
    
    2006 Share Incentive Plan Amended by AGM in May 20094.38
    
    
    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)4.39
    
    
    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)
  85




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ExhibitNumber
    
    Description of Document4.40
    
    
    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)4.41
    *
    
    English Translation of Order of Secretary for Public Works and Transportation
published in Macau Offical Gazette No.25/2008 in relation to the City of Dreams Land
Concession.8.1
    *
    
    List of Subsidiaries11.1
    *
    
    Code of Business Conduct and Ethics, amended and approved as of September 29, 200912.1
    *
    
    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  86




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MELCO CROWN ENTERTAINMENT LIMITED




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2009, 2008 and 2007
 PageReport of Independent Registered Public Accounting Firm
    
    
    F-2Report of Independent Registered Public Accounting Firm
    
    
    F-3Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    F-4Consolidated Statements of Operations for the years ended
December 31, 2009, 2008 and 2007
    
    
    F-5Consolidated Statements of Shareholders Equity for the years ended
December 31, 2009, 2008 and 2007
    
    
    F-6Consolidated Statements of Cash Flows for the years ended
December 31, 2009, 2008 and 2007
    
    
    F-7Notes to Consolidated Financial Statements for the years ended
December 31, 2009, 2008 and 2007
    
    
    F-9Schedule 1
 Melco Crown Entertainment Limited Condensed Financial
Statements as of December 31, 2009 and 2008 and for the years ended
December 31, 2009, 2008 and 2007
    
    
    F-38
  F - 1




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##### Table of Contents



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




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##### Table of Contents



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




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands of U.S. dollars, except share and per share data)
 December 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    212,598
    
    
    $
    815,144Restricted cash
    
    
    236,119
    
    
    
    67,977Accounts receivable, net (Note 3)
    
    
    299,700
    
    
    
    72,755Amounts due from affiliated companies (Note 19(a))
    
    
    1
    
    
    
    650Inventories
    
    
    6,534
    
    
    
    2,170Prepaid expenses and other current assets
    
    
    19,768
    
    
    
    17,556Total current assets
    
    
    774,720
    
    
    
    976,252PROPERTY AND EQUIPMENT, NET (Note 4)
    
    
    2,786,646
    
    
    
    2,107,722GAMING SUBCONCESSION, NET (Note 5)
    
    
    713,979
    
    
    
    771,216INTANGIBLE ASSETS, NET (Note 6)
    
    
    4,220
    
    
    
    4,220GOODWILL (Note 6)
    
    
    81,915
    
    
    
    81,915LONG-TERM PREPAYMENT AND DEPOSITS
    
    
    52,365
    
    
    
    60,894DEFERRED TAX ASSETS (Note 14)
    
    
    
    
    
    
    28DEFERRED FINANCING COST
    
    
    38,948
    
    
    
    49,336DEPOSIT FOR ACQUISITION OF LAND INTEREST (Note 7)
    
    
    
    
    
    
    12,853LAND USE RIGHTS, NET (Note 8)
    
    
    447,576
    
    
    
    433,853TOTAL
    
    $
    4,900,369
    
    
    $
    4,498,289LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccounts payable
    
    $
    8,719
    
    
    $
    2,494Accrued expenses and other current liabilities (Note 9)
    
    
    497,767
    
    
    
    442,671Income tax payable
    
    
    768
    
    
    
    1,954Current portion of long-term debt (Note 10)
    
    
    44,504
    
    
    
    Amounts due to affiliated companies (Note 19(b))
    
    
    7,384
    
    
    
    1,985Amounts due to shareholders (Note 19(c))
    
    
    25
    
    
    
    1,032Total current liabilities
    
    
    559,167
    
    
    
    450,136LONG-TERM DEBT (Note 10)
    
    
    1,638,703
    
    
    
    1,412,516OTHER LONG-TERM LIABILITIES (Note 11)
    
    
    20,619
    
    
    
    38,304DEFERRED TAX LIABILITIES (Note 14)
    
    
    17,757
    
    
    
    19,191LOANS FROM SHAREHOLDERS (Note 19(c))
    
    
    115,647
    
    
    
    115,647LAND USE RIGHT PAYABLE (Note 18(a))
    
    
    39,432
    
    
    
    53,891COMMITMENTS AND CONTINGENCIES (Note 18)SHAREHOLDERS EQUITYOrdinary
shares at US$0.01 par value per share
(Authorized  2,500,000,000 and 1,500,000,000 shares and issued  1,595,617,550
and 1,321,550,399 shares as of December 31, 2009 and 2008 (Note 13))
    
    
    15,956
    
    
    
    13,216Treasury
shares, at US$0.01 par value per share
(471,567 and 385,180 shares as of December 31, 2009 and 2008 (Note 13))
    
    
    (5
    )
    
    
    (4
    )Additional paid-in capital
    
    
    3,088,768
    
    
    
    2,689,257Accumulated other comprehensive losses
    
    
    (29,034
    )
    
    
    (35,685
    )Accumulated losses
    
    
    (566,641
    )
    
    
    (258,180
    )Total shareholders equity
    
    
    2,509,044
    
    
    
    2,408,604TOTAL
    
    $
    4,900,369
    
    
    $
    4,498,289
   F - 4




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands of U.S. dollars, except share and per share data)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007OPERATING REVENUESCasino
    
    $
    1,304,634
    
    
    $
    1,405,932
    
    
    $
    348,725Rooms
    
    
    41,215
    
    
    
    17,084
    
    
    
    5,670Food and beverage
    
    
    28,180
    
    
    
    16,107
    
    
    
    11,121Entertainment, retail and others
    
    
    11,877
    
    
    
    5,396
    
    
    
    1,964Gross revenues
    
    
    1,385,906
    
    
    
    1,444,519
    
    
    
    367,480Less: promotional allowances
    
    
    (53,033
    )
    
    
    (28,385
    )
    
    
    (8,984
    )Net revenues
    
    
    1,332,873
    
    
    
    1,416,134
    
    
    
    358,496OPERATING COSTS AND EXPENSESCasino
    
    
    (1,130,302
    )
    
    
    (1,159,930
    )
    
    
    (303,922
    )Rooms
    
    
    (6,357
    )
    
    
    (1,342
    )
    
    
    (2,222
    )Food and beverage
    
    
    (16,853
    )
    
    
    (12,745
    )
    
    
    (10,541
    )Entertainment, retail and others
    
    
    (4,004
    )
    
    
    (1,240
    )
    
    
    (504
    )General and administrative
    
    
    (130,986
    )
    
    
    (90,707
    )
    
    
    (82,773
    )Pre-opening costs
    
    
    (91,882
    )
    
    
    (21,821
    )
    
    
    (40,032
    )Amortization of gaming subconcession
    
    
    (57,237
    )
    
    
    (57,237
    )
    
    
    (57,190
    )Amortization of land use rights
    
    
    (18,395
    )
    
    
    (18,269
    )
    
    
    (17,276
    )Depreciation and amortization
    
    
    (141,864
    )
    
    
    (51,379
    )
    
    
    (39,466
    )Property charges and others
    
    
    (7,040
    )
    
    
    (290
    )
    
    
    (387
    )Total operating costs and expenses
    
    
    (1,604,920
    )
    
    
    (1,414,960
    )
    
    
    (554,313
    )OPERATING (LOSS) INCOME
    
    
    (272,047
    )
    
    
    1,174
    
    
    
    (195,817
    )NON-OPERATING (EXPENSES) INCOMEInterest income
    
    
    498
    
    
    
    8,215
    
    
    
    18,640Interest expenses, net of capitalized interest
    
    
    (31,824
    )
    
    
    
    
    
    
    (770
    )Amortization of deferred financing costs
    
    
    (5,974
    )
    
    
    (765
    )
    
    
    (1,005
    )Loan commitment fees
    
    
    (2,253
    )
    
    
    (14,965
    )
    
    
    (4,760
    )Foreign exchange gain, net
    
    
    491
    
    
    
    1,436
    
    
    
    3,832Other income, net
    
    
    2,516
    
    
    
    972
    
    
    
    275Total non-operating (expenses) income
    
    
    (36,546
    )
    
    
    (5,107
    )
    
    
    16,212LOSS BEFORE INCOME TAX
    
    
    (308,593
    )
    
    
    (3,933
    )
    
    
    (179,605
    )INCOME TAX CREDIT (Note 14)
    
    
    132
    
    
    
    1,470
    
    
    
    1,454NET LOSS
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )LOSS PER SHARE:Basic and diluted
    
    $
    (0.210
    )
    
    $
    (0.002
    )
    
    $
    (0.145
    )SHARES USED IN LOSS PER SHARE CALCULATION:Basic and diluted
    
    
    1,465,974,019
    
    
    
    1,320,946,942
    
    
    
    1,224,880,031
   F - 5




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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, 2007
    
    
    1,180,931,146
    
    
    $
    11,809
    
    
    
    
    
    
    $
    
    
    
    $
    1,955,383
    
    
    $
    740
    
    
    $
    (77,566
    )
    
    $
    1,890,366Net 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
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308,461
    )
    
    
    (308,461
    )
    
    $
    (308,461
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )Change in fair value of interest rate swap
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,662
    
    
    
    
    
    
    
    6,662
    
    
    
    6,662Share-based compensation
(Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,807
    
    
    
    
    
    
    
    
    
    
    
    11,807Shares issued, net of offering expenses
(Note 13)
    
    
    263,155,335
    
    
    
    2,631
    
    
    
    
    
    
    
    
    
    
    
    380,898
    
    
    
    
    
    
    
    
    
    
    
    383,529Shares issued upon restricted shares vested
(Note 13)
    
    
    8,297,110
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    6,831
    
    
    
    
    
    
    
    
    
    
    
    6,914Shares issued for future vesting of restricted
shares (Note 13)
    
    
    2,614,706
    
    
    
    26
    
    
    
    (2,614,706
    )
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of shares for restricted shares vested
(Note 13)
    
    
    
    
    
    
    
    
    
    
    2,528,319
    
    
    
    25
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2009
    
    
    1,595,617,550
    
    
    $
    15,956
    
    
    
    (471,567
    )
    
    $
    (5
    )
    
    $
    3,088,768
    
    
    $
    (29,034
    )
    
    $
    (566,641
    )
    
    $
    2,509,044
    
    
    $
    (301,810
    )
   F - 6




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands of U.S. dollars)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    217,496
    
    
    
    126,885
    
    
    
    113,932Amortization of deferred financing costs
    
    
    5,974
    
    
    
    765
    
    
    
    1,005Impairment loss recognized on property and equipment
    
    
    3,137
    
    
    
    17
    
    
    
    421Loss (gain) on disposal of property and equipment
    
    
    640
    
    
    
    (328
    )
    
    
    585Allowance for doubtful debts
    
    
    16,757
    
    
    
    5,378
    
    
    
    2,733Share-based compensation
    
    
    11,385
    
    
    
    6,855
    
    
    
    5,256Changes in operating assets and liabilities:Accounts receivable
    
    
    (243,702
    )
    
    
    (28,743
    )
    
    
    (51,711
    )Amounts due from affiliated companies
    
    
    649
    
    
    
    89
    
    
    
    151Inventories
    
    
    (4,364
    )
    
    
    (686
    )
    
    
    (1,288
    )Prepaid expenses and other current assets
    
    
    (5,824
    )
    
    
    (1,503
    )
    
    
    (13,924
    )Long-term prepayment and deposits
    
    
    (1,712
    )
    
    
    1,219
    
    
    
    (7,899
    )Deferred tax assets
    
    
    28
    
    
    
    (28
    )
    
    
    Accounts payable
    
    
    6,225
    
    
    
    (3,670
    )
    
    
    3,172Accrued expenses and other current liabilities
    
    
    193,009
    
    
    
    (110,567
    )
    
    
    273,166Income tax payable
    
    
    (1,186
    )
    
    
    394
    
    
    
    1,301Amounts due to affiliated companies
    
    
    (1,220
    )
    
    
    (3,461
    )
    
    
    428Amounts due to shareholders
    
    
    25
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    321
    
    
    
    784
    
    
    
    950Deferred tax liabilities
    
    
    (1,434
    )
    
    
    (2,095
    )
    
    
    (2,755
    )Net cash (used in) provided by operating activities
    
    
    (112,257
    )
    
    
    (11,158
    )
    
    
    147,372CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property and equipment
    
    
    (937,074
    )
    
    
    (1,053,992
    )
    
    
    (668,281
    )Deposits for acquisition of property and equipment
    
    
    (2,712
    )
    
    
    (34,699
    )
    
    
    (5,356
    )Prepayment of show production cost
    
    
    (21,735
    )
    
    
    (16,127
    )
    
    
    Changes in restricted cash
    
    
    (168,142
    )
    
    
    231,006
    
    
    
    (298,983
    )Payment for land use rights
    
    
    (30,559
    )
    
    
    (42,090
    )
    
    
    Proceeds from sale of property and equipment
    
    
    3,730
    
    
    
    2,300
    
    
    
    Refund of deposit for acquisition of land interest
    
    
    12,853
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (1,143,639
    )
    
    
    (913,602
    )
    
    
    (972,620
    )CASH FLOWS FROM FINANCING ACTIVITIESPayment of deferred financing costs
    
    
    (870
    )
    
    
    (7,641
    )
    
    
    (49,735
    )Loans from shareholders
    
    
    
    
    
    
    (181
    )
    
    
    (96,583
    )Payment of principal of capital leases
    
    
    
    
    
    
    
    
    
    
    (16
    )Proceeds from issue of share capital
    
    
    383,529
    
    
    
    
    
    
    
    722,796Proceeds from long-term debt
    
    
    270,691
    
    
    
    912,307
    
    
    
    500,209Net cash provided by financing activities
    
    
    653,350
    
    
    
    904,485
    
    
    
    1,076,671NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (602,546
    )
    
    
    (20,275
    )
    
    
    251,423CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR
    
    
    815,144
    
    
    
    835,419
    
    
    
    583,996CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    212,598
    
    
    $
    815,144
    
    
    $
    835,419
   F - 7




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands of U.S. dollars)
 Year Ended December 31,2009
    
    
    2008
    
    
    2007SUPPLEMENTAL DISCLOSURES OF CASH FLOWSCash paid for interest (net of capitalized interest)
    
    $
    (27,978
    )
    
    $
    (181
    )
    
    $
    (596
    )Cash paid for tax
    
    $
    (2,457
    )
    
    $
    
    
    
    $
    NON-CASH INVESTING ACTIVITIESConstruction
costs and property and equipment funded through accrued expenses and
other current liabilities
    
    $
    91,648
    
    
    $
    246,998
    
    
    $
    132,356Land use right cost funded through land use right payable,
accrued expenses and other current liabilities and
loans from shareholders
    
    $
    22,462
    
    
    $
    
    
    
    $
    41,680Costs of property and equipment funded through amounts
due from (to) affiliated companies
    
    $
    4,427
    
    
    $
    1,562
    
    
    $
    1,598Disposal of property and equipment through amount due
from an affiliated company
    
    $
    
    
    
    $
    (2,788
    )
    
    $
    Deferred financing costs funded through accounts payable and
accrued expenses and other current liabilities
    
    $
    
    
    
    $
    1,427
    
    
    $
    575Provision of bonus funded through restricted shares issued
and vested
    
    $
    6,914
    
    
    $
    
    
    
    $
    
   F - 8




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 ConsolidationThe consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America (US GAAP).The consolidated financial statements include the accounts of the Company and its
subsidiaries. All intercompany accounts and transactions have been eliminated on
consolidation.(b)
    
    Use of EstimatesThe preparation of consolidated financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect certain reported
amounts of assets and liabilities, revenues and expenses and related disclosures of
contingent assets and liabilities. These estimates and judgements are based on
historical information, information that is currently available to the Company and on
various other assumptions that the Company believes to be reasonable under the
circumstances. Accordingly, actual results could differ from those estimates.(c)
    
    Fair Value MeasurementsFair values are measured in accordance with the accounting standards for fair value
measurements. The Company partially adopted by the provisions effective on January
1, 2008 for financial assets, financial liabilities and non-financial assets and
non-financial liabilities recognized or disclosed at fair value in
the consolidated financial
statements, and adopted the remaining provisions effective on January 1, 2009 for all
non-recurring fair value measurements of non-financial assets and non-financial
liabilities.  These accounting standards define fair value as the price that would be
received to sell the asset or paid to transfer a liability (i.e. the exit price) in
an orderly transaction between market participants at the measurement date.The carrying values of the Companys financial instruments, including cash and cash
equivalents, restricted cash, accounts receivable, other current assets, amounts due
from (to) affiliated companies, accounts payable, accrued expenses and other current
liabilities, amounts due to shareholders, loans from shareholders, land use right
payable, interest rate swap agreements and debt instruments approximate their fair
values.
  F - 9




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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
 (d)
    
    Cash and Cash EquivalentsCash and cash equivalents consist of cash on hand, demand deposits and highly liquid
investments which are unrestricted as to withdrawal and use, and which have
maturities of three months or less when purchased.Cash equivalents are placed with financial institutions with high-credit ratings and
quality.(e)
    
    Restricted CashRestricted cash consists of cash deposited into bank accounts and restricted in
accordance with the Companys senior secured credit facility (City of Dreams Project
Facility) as disclosed in Note 10 to the consolidated financial statements. This
restricted cash will be immediately released upon the final completion of the City of
Dreams Project and until this time is available for use as required for the City of
Dreams project costs under disbursement terms specified in the City of Dreams Project
Facility. As of December 31, 2009 and 2008, the restricted cash balance was $236,119
and $67,977, respectively.(f)
    
    Accounts Receivable and Credit RiskFinancial instruments that potentially subject the Company to concentrations of
credit risk consist principally of casino receivables. The Company issues credit in
the form of markers to approved casino customers following investigations of
creditworthiness. As of December 31, 2009 and 2008, a substantial portion of the
Companys markers were due from customers residing in foreign countries.Accounts receivable, including casino and hotel receivables, is typically
non-interest bearing and is initially recorded at cost. Amounts are written off when
management deems it is probable the receivable is uncollectible. Recoveries of
amounts previously written off are recorded when received. An estimated allowance
for doubtful debts is maintained to reduce the Companys receivables to their
carrying amounts, which approximates fair value. The allowance is estimated based on
specific review of customer accounts as well as managements experience with
collection trends in the casino industry and current economic and business
conditions.(g)
    
    InventoriesInventories consist of retail merchandise, food and beverage items, which are stated
at the lower of cost or market value, and certain operating supplies. Cost is
calculated using the first-in, first-out, average and specific identification
methods. Write downs of potentially obsolete or slow-moving inventory are recorded
based on managements specific analysis of inventory.
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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 EquipmentProperty and equipment are stated at cost less accumulated depreciation and
impairment losses. Gains or losses on dispositions of property and equipment are
included in operating income (loss). Major additions, renewals and betterments are
capitalized, while maintenance and repairs are expensed as incurred.Depreciation is provided over the estimated useful lives of the assets using the
straight-line method from the time the assets are placed in service. Estimated
useful lives are as follows:
 Classification
    
    Estimated useful lifeBuildings
    

7 to 25 years or over the term of the land use right
agreement, whichever is shorterFurniture, fixtures and equipment
    
    2 to 7 yearsPlant and gaming machinery
    
    3 to 5 yearsLeasehold improvements
    
    10 years or over the lease term, whichever is shorterMotor vehicles
    
    5 years
 Direct and incremental costs related to the construction of assets, including costs
under the construction contracts, duties and tariffs, equipment installation and
shipping costs, are capitalized.(i)
    
    Capitalization of Interest and Amortization of Deferred Financing CostsInterest and amortization of deferred financing costs
incurred on funds used to
construct the Companys casino gaming and entertainment resort facilities during the
active construction period are capitalized. Interest subject to
capitalization primarily includes interest paid or payable on loans from shareholders,
City of Dreams Project
Facility and interest rate swap agreements. The capitalization of interest and amortization of deferred
financing costs ceases once a project is substantially complete or development
activity is suspended for more than a brief period. The amount to be capitalized is
determined by applying the weighted-average interest rate of the Companys
outstanding borrowings to the average amount of accumulated capital expenditures for
assets under construction during the year and is added to the cost of the underlying
assets and amortized over their respective useful lives. Total
interest expenses incurred amounted to $82,310, $49,629 and $14,490,
of which $50,486, $49,629 and $13,720 were capitalized for the years
ended December 31, 2009, 2008 and 2007, respectively. Additionally, deferred
financing costs of  $4,414, $7,262 and $1,011 were capitalized for the years ended December 31, 2009, 2008 and 2007,
respectively.(j)
    
    Gaming Subconcession, NetThe gaming subconcession is capitalized based on the fair value of the gaming
subconcession agreement as of the date of acquisition of Melco Crown Gaming, and
amortized using the straight-line method over the term of agreement which is due to
expire in June 2022.(k)
    
    Goodwill and Intangible Assets, NetGoodwill represents the excess of acquisition costs over the fair value of tangible
and identifiable intangible net assets of any business acquired. Goodwill is not
amortized, but is tested for impairment at the reporting unit level on an annual
basis, and between annual tests in certain circumstances that indicate the carrying
value of the goodwill may not be recoverable, and written down when impaired.Intangible assets other than goodwill are amortized over their useful lives unless
their lives are determined to be indefinite in which case they are not amortized.
Intangible assets are carried at cost, less accumulated amortization. The Companys
finite-lived intangible asset consists of the gaming subconcession. Finite-lived
intangible assets are amortized over the shorter of their contractual terms or
estimated useful lives. The Companys intangible assets with indefinite lives
represent Mocha Clubs trademarks.
  F - 11




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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)The Company evaluates the recoverability of long-lived assets with finite lives
whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the estimated
undiscounted future cash flows expected to be generated by the asset. If the
carrying amount of an asset exceeds its estimated future cash flows, an impairment
charge is recognized in the amount by which the carrying amount of the asset exceeds
its fair value. During the years ended December 31, 2009, 2008 and 2007, impairment
losses amounting to $282, $17 and $421, respectively, were recognized to write off
gaming equipment due to the reconfiguration of the casino at Altira Macau to meet the
evolving demands of gaming patrons and target specific segments. During the year
ended December 31, 2009, an impairment loss amounting to $2,855 was recognized to write
off the construction in progress carried out at the Macau Peninsula site following termination of the
related acquisition agreement as disclosed in Note 7 to the
consolidated financial statements. These impairment losses were included in Property
Charges and Others line item in the consolidated statements of operations.(m)
    
    Deferred Financing CostsDirect and incremental costs incurred in obtaining loans are capitalized and
amortized over the terms of the related debt agreements using the effective interest
method. Approximately $10,388, $8,027 and $2,016 were amortized during the years
ended December 31, 2009, 2008 and 2007, respectively, of which a portion was
capitalized as mentioned in Note 2(i) to the consolidated financial statements.(n)
    
    Land Use Rights, NetLand use rights are recorded at cost less accumulated amortization. Amortization is
provided over the estimated lease term of the land on a straight-line basis.(o)
    
    Revenue Recognition and Promotional AllowancesThe Company recognizes revenue at the time persuasive evidence of an arrangement
exists, the service is provided or the retail goods are sold, prices are fixed or
determinable and collection is reasonably assured.Casino revenues are measured by the aggregate net difference between gaming wins and
losses less accruals for the anticipated payouts of progressive slot jackpots, with
liabilities recognized for funds deposited by customers before gaming play occurs and
for chips in the customers possession.The Company follows the accounting standards for reporting revenue gross as a
principal versus net as an agent, when accounting for operations of Taipa Square Casino
and Grand Hyatt Macau hotel. For the operations of Taipa Square Casino, given the
Company operates the casino under a right to use agreement with the owner of the casino
premises and has full responsibility for the casino operations in accordance with its
gaming subconcession, it is the principal and casino revenue is therefore recognized on
a gross basis. For the operations of Grand Hyatt Macau hotel, the Company is the owner
of the hotel property, and the hotel manager operates the hotel under a management
agreement providing management services to the Company, and the Company receives all
rewards and takes substantial risks associated with the hotel business, it is the
principal and the transactions of the hotel are therefore recognized on a gross basis.Rooms, food and beverage, entertainment, retail and other revenues are recognized
when services are provided. Advance deposits on rooms are recorded as customer
deposits until services are provided to the customer. Minimum operating and right to
use fee, adjusted for contractual base fee and operating fee escalations, are
included in entertainment, retail and other revenues and are recognized on a
straight-line basis over the terms of the related agreement.
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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 continuedRevenues are recognized net of certain sales incentives which are required to be
recorded as a reduction of revenue; consequently, the Companys casino revenues are
reduced by discounts, commissions and points earned in customer loyalty programs,
such as the players club loyalty program.The retail value of rooms, food and beverage, and other services furnished to
guests without charge is included in gross revenues and then deducted as promotional
allowances. The estimated cost of providing such promotional allowances for the
years ended December 31, 2009, 2008 and 2007, is primarily included in casino
expenses as follows:
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Rooms
    
    $
    6,778
    
    
    $
    4,240
    
    
    $
    903Food and beverage
    
    
    17,296
    
    
    
    9,955
    
    
    
    7,029Entertainment, retail and others
    
    
    3,448
    
    
    
    
    
    
    
    $
    27,522
    
    
    $
    14,195
    
    
    $
    7,932
 (p)
    
    Point-Loyalty ProgramsThe Company operates different loyalty programs in certain of its properties to
encourage repeat business from loyal slot machine customers and table games patrons.
Members earn points based on gaming activity and such points can be redeemed for free
play and other free goods and services. The Company accrues for loyalty program
points expected to be redeemed for cash and free play as a reduction to gaming
revenue and accrues for loyalty program points expected to be redeemed for free goods
and services as casino expense. The accruals are based on managements estimates and
assumptions regarding the redemption value, age and history with expiration of unused
points results in a reduction of the accruals.(q)
    
    Gaming TaxThe Company is subject to taxes based on gross gaming revenue in Macau. These gaming
taxes are an assessment on the Companys gaming revenue and are recorded as an
expense within the Casino line item in the consolidated statements of operations.
These taxes totaled $737,485, $767,544 and $187,875 for the years ended December 31,
2009, 2008 and 2007, respectively.(r)
    
    Pre-Opening CostsPre-opening costs, consist primarily of marketing expenses and other expenses related
to new or start-up operations and are expensed as incurred. The Company incurred
pre-opening costs in connection with Altira Macau prior to its opening in May 2007
and City of Dreams prior to its opening in June 2009 and continues to incur such
costs related to remaining portion of City of Dreams project and other one-off
activities related to the marketing of new facilities and operations.(s)
    
    Advertising ExpensesThe Company expenses all advertising costs as incurred. Advertising costs incurred
during development periods are included in pre-opening costs. Once a project is
completed, advertising costs are mainly included in general and administrative
expenses. Total advertising costs were $29,018, $5,283 and $26,854 for the years
ended December 31, 2009, 2008 and 2007, respectively.
  F - 13




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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
 (t)
    
    Foreign Currency Transactions and TranslationsAll transactions in currencies other than functional currencies of the Company during
the year are remeasured at the exchange rates prevailing on the respective
transaction dates. Monetary assets and liabilities existing at the balance sheet
date denominated in currencies other than functional currencies are remeasured at the
exchange rates existing on that date. Exchange differences are recorded in the
consolidated statements of operations.The functional currencies of the Company and its major subsidiaries are
the U.S. dollars and, Hong Kong dollars or the Macau Patacas, respectively. All
assets and liabilities are translated at the rates of exchange prevailing at the
balance sheet date and all income and expense items are translated at the average
rates of exchange over the year. All exchange differences arising from the
translation of subsidiaries financial statements are recorded as a component of
comprehensive loss.(u)
    
    Share-Based Compensation ExpensesThe Company issued restricted shares and share options under its share incentive plan
during the years ended December 31, 2009, 2008 and 2007.The Company measures the cost of employee services received in exchange for an award
of equity instruments based on the grant-date fair value of the award and recognizes
that cost over the service period. Compensation is attributed to the periods of
associated service and such expense is being recognized on a straight-line basis over
the vesting period of the awards. Forfeitures are estimated at the time of grant,
with such estimate updated periodically and with actual forfeitures recognized
currently to the extent they differ from the estimate.Further information on the Companys share-based compensation arrangements is
included in Note 15 to the consolidated financial statements.(v)
    
    Income TaxThe Company is subject to income taxes in Hong Kong, Macau, the United States of
America and other jurisdictions where it operates.Deferred income taxes are recognized for all significant temporary differences
between the tax basis of assets and liabilities and their reported amounts in the
consolidated financial statements. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. The components of
the deferred tax assets and liabilities are individually classified as current and
non-current based on the characteristics of the underlying assets and liabilities.
Current income taxes are provided for in accordance with the laws of the relevant
taxing authorities.The Companys income tax returns are subject to examination by tax authorities in the
jurisdictions where it operates.  The Company assesses potentially unfavorable
outcomes of such examinations based on accounting standards for uncertain income
taxes which the Company adopted on January 1, 2007. These accounting standards
utilize a two-step approach to recognizing and measuring uncertain tax positions. The
first step is to evaluate the tax position for recognition by determining if the
weight of available evidence indicates it is more likely than not that the position
will be sustained on audit, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest
amount which is more than 50% likely, based solely on the technical merits, of being
sustained on examinations.
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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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
 (w)
    
    Loss Per ShareBasic loss per share is calculated by dividing the net loss available to ordinary
shareholders by the weighted-average number of ordinary shares outstanding during the
year.Diluted loss per share is calculated by dividing the net loss available to ordinary
shareholders by the weighted-average number of ordinary shares outstanding adjusted
to include the potentially dilutive effect of outstanding stock-based awards.The weighted-average number of ordinary and ordinary equivalent shares used in the
calculation of basic and diluted loss per share consisted of the following:
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Weighted-average number of ordinary shares
outstanding used in the calculation of basic
loss per share
    
    
    1,465,974,019
    
    
    
    1,320,946,942
    
    
    
    1,224,880,031Incremental weighted-average number of
ordinary shares from assumed exercised
of restricted shares and share options
using the treasury stock method
    
    
    
    
    
    
    
    
    
    
    Weighted-average number of ordinary shares
outstanding used in the calculation of diluted
loss per share
    
    
    1,465,974,019
    
    
    
    1,320,946,942
    
    
    
    1,224,880,031
 During the years ended December 31, 2009, 2008 and 2007, the Company had securities
which would potentially dilute basic loss per share in the future, but which were
excluded from the computation of diluted loss per share as their effect would have
been anti-dilutive. Such outstanding securities consist of restricted shares and
share options which result in an incremental weighted-average number of 13,931,088,
3,897,756 and 2,380,112 ordinary shares from the assumed conversion of these
restricted shares and share options using the treasury stock method for the years
ended December 31, 2009, 2008 and 2007, respectively.(x)
    
    Accounting for Derivative Instruments and Hedging ActivitiesThe Company uses derivative financial instruments such as floating-for-fixed interest
rate swap agreements to hedge its risks associated with interest rate fluctuations in
accordance with lenders requirements under the City of Dreams Project Facility. The
Company accounts for derivative financial instruments in accordance with applicable
accounting standards. All derivative instruments are recognized in the consolidated
financial statements at fair value at the balance sheet date. Any changes in fair
value are recorded in the consolidated statement of operations or in other
comprehensive income (loss), depending on whether the derivative is designated and
qualifies for hedge accounting, the type of hedge transaction and the effectiveness
of the hedge. The estimated fair values of interest rate swap agreements are based
on a standard valuation model that projects future cash flows and discounts those
future cash flows to a present value using market-based observable inputs such as
interest rate yields.Further information on the Companys outstanding financial instrument arrangements as
of December 31, 2009 is included in Note 11 to the consolidated financial statements.
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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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)
    
    Accumulated Other Comprehensive Income (Loss)Accumulated other comprehensive income (loss) represents foreign currency translation
adjustments and changes in the fair value of interest rate swap agreements. As of
December 31, 2009 and 2008, the Companys accumulated other comprehensive income
(loss) consisted of the following:
 December 31,2009
    
    
    2008Foreign currency translation adjustment
    
    $
    (956
    )
    
    $
    (945
    )Changes in the fair value of interest rate swap agreements
    
    
    (28,078
    )
    
    
    (34,740
    )$
    (29,034
    )
    
    $
    (35,685
    )
 (z)
    
    ReclassificationsThe consolidated financial statements for prior years reflect certain
reclassifications, which have no effect on previously reported net loss or other
subtotals of the Companys consolidated financial statements, to conform to the
current year presentation.(aa)
    
    Recent Changes in Accounting StandardsIn June 2009, the Financial
Accounting Standards Board (FASB) issued new accounting
standards regarding the FASB accounting standards codification and
the hierarchy of generally accepted accounting principles. FASB
accounting standards codification (Codification) is to be
the single source of authoritative on governmental US GAAP recognized
by FASB although rules and interpretive releases of the U.S.
Securities and Exchange Commission (SEC) under authority
of federal securities laws are also sources of authoritative US GAAP
for SEC registrants. These new accounting standards are effective for
interim and annual periods ending after September 15, 2009. On the
effective date of these new accounting standards, the Codification
will supersede all then-existing non-SEC accounting and reporting
standards. The adoption of these new accounting standards did not
have a material impact on the Companys financial position,
results of operations and cash flows.In January 2010, the FASB issued new accounting
standards regarding new requirements for disclosures about transfers
into and out of Levels 1 and 2 and separate disclosures about
purchases, sales, issuances and settlements relating to Level 3
measurement on a gross basis rather than as a net basis as currently
required. Those accounting standards also clarify existing fair value
disclosures about the level of disaggregation and about inputs and
valuation techniques used to measure fair value and are effective for
annual and interim periods beginning after December 15, 2009, except
for the requirement to provide the level 3 activity of purchases,
sales, issuances, and settlements on a gross basis, which will be
effective for annual and interim periods beginning after December 15,
2010. Early application is permitted and in the period of initial
adoption, entities are not required to provide the amended
disclosures for any previous periods presented for comparative
purposes. The adoption of these new accounting standards is not
expected to have a material impact on the Companys financial position,
results of operations and cash flows.
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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 3.
    
    ACCOUNTS RECEIVABLE, NET
 December 31,2009
    
    
    2008Components of accounts receivable, net are as follows:Casino
    
    $
    320,789
    
    
    $
    78,649Hotel
    
    
    2,457
    
    
    
    1,647Other
    
    
    681
    
    
    
    572Sub-total
    
    $
    323,927
    
    
    $
    80,868Less: allowance for doubtful debts
    
    
    (24,227
    )
    
    
    (8,113
    )$
    299,700
    
    
    $
    72,755
 During the years ended December 31, 2009 and 2008, the Company has provided allowance for
doubtful debts of $16,114 and $5,378 and has written off accounts receivables of $643 and
nil, respectively.
 4.
    
    PROPERTY AND EQUIPMENT, NET
 December 31,2009
    
    
    2008CostBuildings
    
    $
    2,219,127
    
    
    $
    312,007Furniture, fixtures and equipment
    
    
    307,305
    
    
    
    77,289Plant and gaming machinery
    
    
    114,983
    
    
    
    69,104Leasehold improvements
    
    
    97,188
    
    
    
    36,770Motor vehicles
    
    
    3,375
    
    
    
    1,502Sub-total
    
    $
    2,741,978
    
    
    $
    496,672Less: accumulated depreciation
    
    
    (249,780
    )
    
    
    (107,847
    )Sub-total
    
    $
    2,492,198
    
    
    $
    388,825Construction in progress
    
    
    294,448
    
    
    
    1,718,897Property and equipment, net
    
    $
    2,786,646
    
    
    $
    2,107,722
  5.
    
    GAMING SUBCONCESSION, NET
 December 31,2009
    
    
    2008Deemed cost
    
    $
    900,000
    
    
    $
    900,000Less: accumulated amortization
    
    
    (186,021
    )
    
    
    (128,784
    )Gaming subconcession, net
    
    $
    713,979
    
    
    $
    771,216
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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 31,2009
    
    
    2008Altira Macau
    
    $
    141,543
    
    
    $
    141,543City of Dreams
    
    
    376,021
    
    
    
    343,903517,564
    
    
    
    485,446Less: accumulated amortization
    
    
    (69,988
    )
    
    
    (51,593
    )Land use rights, net
    
    $
    447,576
    
    
    $
    433,853
  F - 18




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 8.
    
    LAND USE RIGHTS, NET continued
   9.
    
    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
 December 31,2009
    
    
    2008Construction costs payable
    
    $
    80,668
    
    
    $
    246,998Customer deposits
    
    
    50,829
    
    
    
    9,808Outstanding gaming chips and tokens
    
    
    136,774
    
    
    
    54,758Other gaming related accruals
    
    
    53,294
    
    
    
    32,699Gaming tax accruals
    
    
    67,376
    
    
    
    42,038Land use right payable
    
    
    29,781
    
    
    
    13,763Operating expense accruals
    
    
    67,701
    
    
    
    42,607Interest rate swap liabilities
    
    
    11,344
    
    
    
    $
    497,767
    
    
    $
    442,671
 10.
    
    LONG-TERM DEBT
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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 10.
    
    LONG-TERM DEBT continued
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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 10.
    
    LONG-TERM DEBT continued
   Year ending December 31,2010
    
    $
    44,5042011
    
    
    267,0242012
    
    
    526,1022013
    
    
    385,7022014
    
    
    459,8751,683,207Current portion of long-term debt
    
    
    (44,504
    )$
    1,638,703
 11.
    
    OTHER LONG-TERM LIABILITIES
 December 31,2009
    
    
    2008Interest rate swap liabilities
    
    $
    16,727
    
    
    $
    34,733Deferred rent liabilities
    
    
    3,613
    
    
    
    3,371Other deposits received
    
    
    279
    
    
    
    200$
    20,619
    
    
    $
    38,304
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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 12.
    
    FAIR VALUE MEASUREMENTS
  Quoted PricesIn Active
    
    
    SignificantMarket for
    
    
    Other
    
    
    Significant
    
    
    BalanceIdentical
    
    
    Observable
    
    
    Unobservable
    
    
    as ofAssets
    
    
    Inputs
    
    
    Inputs
    
    
    December 31,(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    2009Interest rate swap liabilities
    
    $
    
    
    
    $
    28,071
    
    
    $
    
    
    
    $
    28,071
  13.
    
    CAPITAL STRUCTURE
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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 13.
    
    CAPITAL STRUCTURE continued
   14.
    
    INCOME TAX CREDIT
     Year Ended December 31,2009
    
    
    2008
    
    
    2007Income tax provision for current year:Macau Complementary Tax
    
    $
    190
    
    
    $
    
    
    
    $
    Hong Kong Profits Tax
    
    
    731
    
    
    
    892
    
    
    
    1,301Sub-total
    
    
    921
    
    
    
    892
    
    
    
    1,301Under (over) provision of income tax in prior years:Macau Complementary Tax
    
    $
    2
    
    
    $
    
    
    
    $
    Hong Kong Profits Tax
    
    
    351
    
    
    
    (239
    )
    
    
    Sub-total
    
    
    353
    
    
    
    (239
    )
    
    
    Deferred tax (credit) charge:Macau Complementary Tax
    
    $
    (1,537
    )
    
    $
    (2,038
    )
    
    $
    (2,812
    )Hong Kong Profits Tax
    
    
    131
    
    
    
    (85
    )
    
    
    57Sub-total
    
    
    (1,406
    )
    
    
    (2,123
    )
    
    
    (2,755
    )Total income tax credit
    
    $
    (132
    )
    
    $
    (1,470
    )
    
    $
    (1,454
    )
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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 31,2009
    
    
    2008
    
    
    2007Loss before income tax
    
    $
    (308,593
    )
    
    $
    (3,933
    )
    
    $
    (179,605
    )Macau Complementary Tax rate
    
    
    12
    %
    
    
    12
    %
    
    
    12
    %Income tax credit at Macau Complementary Tax rate
    
    
    (37,031
    )
    
    
    (472
    )
    
    
    (21,553
    )Effect of different tax rates of subsidiaries operating
in other jurisdiction
    
    
    235
    
    
    
    126
    
    
    
    641Under (over) provision in prior year
    
    
    353
    
    
    
    (239
    )
    
    
    Effect of income for which no income tax expense
is payable
    
    
    (633
    )
    
    
    (1,102
    )
    
    
    (2,671
    )Effect of expense for which no income tax benefit
is receivable
    
    
    2,978
    
    
    
    779
    
    
    
    1,048Effect of tax holiday granted by Macau government
    
    
    
    
    
    
    (8,855
    )
    
    
    Losses that cannot be carried forward
    
    
    15,639
    
    
    
    
    
    
    
    20,045Change in valuation allowance
    
    
    18,327
    
    
    
    8,293
    
    
    
    1,036$
    (132
    )
    
    $
    (1,470
    )
    
    $
    (1,454
    )
     F - 24




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 14.
    
    INCOME TAX CREDIT continued
  December 31,2009
    
    
    2008Deferred income tax assetsNet operating loss carryforwards
    
    $
    33,085
    
    
    $
    16,088Depreciation and amortization
    
    
    
    
    
    
    28Sub-total
    
    
    33,085
    
    
    
    16,116Valuation allowanceCurrent
    
    
    (7,311
    )
    
    
    (1,330
    )Long-term
    
    
    (25,774
    )
    
    
    (14,758
    )Sub-total
    
    
    (33,085
    )
    
    
    (16,088
    )Total net deferred income tax assets
    
    $
    
    
    
    $
    28Deferred income tax liabilitiesLand use rights
    
    $
    (17,149
    )
    
    $
    (18,686
    )Intangible assets
    
    
    (505
    )
    
    
    (505
    )Unrealized capital allowance
    
    
    (103
    )
    
    
    Net deferred income tax liabilities
    
    $
    (17,757
    )
    
    $
    (19,191
    )
      F - 25




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 15.
    
    SHARE-BASED COMPENSATION
       F - 26




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 15.
    
    SHARE-BASED COMPENSATION continued
   December 31,2009
    
    
    2008
    
    
    2007Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    Expected stock price volatility
    
    
    74.60
    %
    
    
    57.65
    %
    
    
    38.26
    %Risk-free interest rate
    
    
    1.45
    %
    
    
    1.67
    %
    
    
    3.96
    %Forfeiture rate
    
    
    
    
    
    
    
    
    
    
    Expected average life of options (years)
    
    
    5.5
    
    
    
    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
    
    
    $
    5.02Granted
    
    
    20,558,343
    
    
    $
    1.83Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (2,003,178
    )
    
    $
    4.34Expired
    
    
    (1,795
    )
    
    $
    5.06Outstanding at December 31, 2008
    
    
    22,270,246
    
    
    $
    2.14Granted
    
    
    4,792,536
    
    
    $
    1.07Granted under option exchange program
    
    
    3,612,327
    
    
    $
    1.43Exercised
    
    
    
    
    
    
    Forfeited
    
    
    (2,809,419
    )
    
    $
    1.93Expired
    
    
    (104,738
    )
    
    $
    4.58Cancelled under option exchange
program
    
    
    (5,418,554
    )
    
    $
    4.39Outstanding at December 31, 2009
    
    
    22,342,398
    
    
    $
    1.26
    
    
    
    8.8
    
    
    $
    1,600Exercisable at December 31, 2009
    
    
    364,950
    
    
    $
    4.62
    
    
    
    7.9
    
    
    
    
  F - 27




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 15.
    
    SHARE-BASED COMPENSATION continued
 Share Options
  VestedWeighted-Weighted-
    
    
    AverageNumber
    
    
    Average
    
    
    Remaining
    
    
    Aggregateof Share
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Price per Share
    
    
    Term
    
    
    ValueRange of
exercise prices per share
($4.01 - $5.06) (Note)
    
    
    364,950
    
    
    $
    4.62
    
    
    
    7.9
    
    
    
    
  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)
    
    
    21,977,448
    
    
    $
    1.21
    
    
    
    8.8
    
    
    $
    1,600
    F - 28




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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, 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 and January 1, 2009
    
    
    7,538,076
    
    
    $
    2.02Granted
    
    
    7,071,741
    
    
    
    1.09Vested
    
    
    (10,825,445
    )
    
    
    1.61Forfeited
    
    
    (538,341
    )
    
    
    1.61Unvested at December 31, 2009
    
    
    3,246,031
    
    
    $
    1.41
    Year Ended December 31,2009
    
    
    2008
    
    
    2007Share options
    
    $
    5,169
    
    
    $
    2,598
    
    
    $
    518Restricted shares
    
    
    6,638
    
    
    
    4,420
    
    
    
    4,828Total share-based compensation expenses
    
    
    11,807
    
    
    
    7,018
    
    
    
    5,346Less: share-based compensation expenses capitalized
    
    
    (422
    )
    
    
    (163
    )
    
    
    (90
    )Share-based compensation recognized in general
and administrative expenses
    
    $
    11,385
    
    
    $
    6,855
    
    
    $
    5,256
 16.
    
    EMPLOYEE BENEFIT PLANS
   F - 29




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 17.
    
    DISTRIBUTION OF PROFITS
   18.
    
    COMMITMENTS AND CONTINGENCIES
 (a)
    
    Capital CommitmentsAs of December 31, 2009, the Company had capital commitments contracted for but not
provided mainly for the construction and acquisition of property and equipment for
the City of Dreams project totaling $32,602.Melco Crown (COD) Developments and Melco Crown Gaming, subsidiaries of the Company,
accepted in principle an offer from the Macau government to acquire the Cotai Land in
Macau, where the City of Dreams site located, for approximately $105,091, with
$37,437 paid 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 for
approximately $105,091, of which $58,340 has been paid as of December 31, 2009 and
the remaining amount of $46,751, accrued with 5% interest per annum, will be paid in
six biannual instalments. In November 2009, Melco Crown (COD) Developments and Melco
Crown Gaming accepted in principle the initial terms for the revision of the land
lease agreement from the Macau government and recognized additional land premium of
$32,118 payable to the Macau government for the increased developable gross floor area of Cotai Land for
City of Dreams. The total outstanding balances of the land use right has been
included in accrued expenses and other current liabilities in an amount of $29,781
and in land use right payable in an amount of $39,432, respectively as of December
31, 2009. A guarantee deposit of approximately $424 was also paid upon signing of
the government lease in February 2008. According to the terms of the revised offer
from the Macau government, payment in the form of government land
use fees in an aggregate
amount of $1,185 per annum is payable to the Macau government and such amount may be
adjusted every five years as agreed between the Macau government and Melco Crown
(COD) Developments, using the applicable market rates in effect at the time of the
adjustment. As of December 31, 2009, the Companys total commitments of payment in
form of government land
use fees for the City of Dreams site was $27,938. In March 2010,
Melco Crown (COD) Developments and Melco Crown Gaming accepted
the final terms for the
revision of the land lease agreement and fully paid the additional land
premium to the Macau government. Following the publication in the
Macau official gazette of such revision, the land
grant amendment process will be complete.In 2006, the Macau government had officially granted the Taipa Land to Altira
Developments Limited (Altira Developments), a subsidiary of the Company. A
guarantee deposit of approximately $20 was paid upon signing of the lease in 2006.
Payment in the form of government land
use fees in an aggregate amount of $171 per annum
became payable to the Macau government and such amount may be adjusted every five
years as agreed between the Macau government and Altira Developments, using the
applicable market rates in effect at the time of the adjustment. As of December 31,
2009, the Companys total commitments of payment in form of government land
use fees for the
Altira Macau site was $3,624.
  F - 30




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 18.
    
    COMMITMENTS AND CONTINGENCIES continued
 (b)
    
    Lease Commitments and Other ArrangementsOperating Leases  As a lesseeThe Company leases office space, Mocha Club sites, staff quarters and certain
equipment under non-cancellable operating lease agreements that expire at various
dates through December 2021. Those lease agreements provide for periodic rental
increases based on both contractual agreed incremental rates and on the general
inflation rate once agreed by the Company and its lessor. During the years ended
December 31, 2009, 2008 and 2007, the Company incurred rental expenses amounting to
$14,557, $12,060 and $11,716, respectively.As of December 31, 2009, minimum lease payments under all
non-cancellable leases were as follows:
 Year ending December 31,2010
    
    $
    10,0132011
    
    
    6,3062012
    
    
    5,3182013
    
    
    5,1822014
    
    
    3,853Over 2014
    
    
    9,667Total minimum lease payments
    
    $
    40,339
 As grantor of operating and right to use arrangementThe Company entered into non-cancellable operating and right to use agreements for
mall spaces in the City of Dreams site with various retailers that expire at various
dates through May 2016. Certain of the operating and right to use agreements include
minimum base fee and operating fee with escalated contingent fee clauses. During the
years ended December 31, 2009, 2008 and 2007, the Company received contingent fees
amount to $5,547, nil and nil, respectively.As of December 31, 2009, minimum future fees to be received under all non-cancellable
operating and right to use agreements were as follows:
 Year ending December 31,2010
    
    $
    8,2932011
    
    
    8,2872012
    
    
    7,7932013
    
    
    7,1852014
    
    
    7,182Over 2014
    
    
    4,590Total
minimum future fees to be received
    
    $
    43,330
 The total minimum future fees do not include the escalated contingent fee clauses.(c)
    
    Other CommitmentsOn September 8, 2006, the Macau government granted a gaming subconcession to Melco
Crown Gaming to operate the gaming business in Macau. Pursuant to the gaming
subconcession agreement, Melco Crown Gaming has committed to the following:
 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 or earlier, if the hotel, casino and
resort projects operated by the Companys subsidiaries are not completed by
then.
  F - 31




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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
 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.
 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.
 As of December 31, 2009, the Company had other commitments contracted for but not
provided in respect of shuttle buses and limousines services mainly for the
operations of Altira Macau and the City of Dreams projects totaling $2,590. Expenses
for the shuttle buses and limousines services during the years ended December 31,
2009 and 2008 amounted to $10,653 and $3,457, respectively.As of December 31, 2009, the Company had other commitments contracted for but not
provided in respect of cleaning, maintenance, consulting, marketing and other
services mainly for the operations of Altira Macau and the City of Dreams projects
totaling $4,786. Expenses for such services during the years ended December 31, 2009
and 2008 amounted to $5,561 and $2,432, respectively.As of December 31, 2009, the Company had other commitments contracted but not
provided in respect of trademark and memorabilia license fee for operations of City
of Dreams hotels and casino totalling $8,479. Expenses for the trademark and
memorabilia license fee during the years ended 31 December 2009 and 2008 amounted to
$889 and nil, respectively.(d)
    
    ContingenciesAs of December 31, 2009, the Melco Crown Gaming has issued a promissory note
(livranca) of $68,635 (MOP550,000,000) to a bank in respect of bank guarantees
issued to the Macau government as disclosed in Note 18(c)(vii) to the consolidated
financial statements.As of December 31, 2009, the Company has entered into two deeds of guarantee with
third parties to guarantee certain payment obligations of the City of Dreams
operations amounted to $10,000.As of December 31, 2009, the Company has entered into a bank guarantee issued to the
Macau government amounting to $22,462 (MOP180,000,000) to guarantee payment of
additional land premium payable as disclosed in Note 8 to the consolidated financial
statements.
  F - 32




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (In thousands of U.S. dollars, except share and per share data)
 18.
    
    COMMITMENTS AND CONTINGENCIES  continued
 (e)
    
    LitigationThe Company is currently a
party to certain legal proceedings which
relate to matters arising out of the ordinary course of its business. Management does not believe that the outcome
of such proceedings will have a material adverse effect on the Companys financial position
or results of operations.
 19.
    
    RELATED PARTY TRANSACTIONS
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Amounts paid/payable to affiliated companiesAdvertising and promotional expenses
    
    $
    211
    
    
    $
    597
    
    
    $
    65Consultancy fee capitalized in construction in progress
    
    
    1,312
    
    
    
    246
    
    
    
    2,294Consultancy fee recognized as expense
    
    
    1,301
    
    
    
    1,168
    
    
    
    4,150Management fees
    
    
    45
    
    
    
    1,698
    
    
    
    Network support fee
    
    
    28
    
    
    
    52
    
    
    
    238Office rental
    
    
    2,354
    
    
    
    1,466
    
    
    
    1,114Operating and office supplies
    
    
    257
    
    
    
    255
    
    
    
    707Project management fees capitalized in construction in progress
    
    
    
    
    
    
    
    
    
    
    1,442Property and equipment
    
    
    59,482
    
    
    
    16,327
    
    
    
    12,141Repairs and maintenance
    
    
    87
    
    
    
    655
    
    
    
    41Service fee expense
    
    
    748
    
    
    
    781
    
    
    
    Traveling expense capitalized in construction in progress
    
    
    65
    
    
    
    66
    
    
    
    Traveling expense recognized as expense
    
    
    2,809
    
    
    
    1,387
    
    
    
    746Amounts received/receivable from affiliated companiesOther service fee income
    
    
    896
    
    
    
    276
    
    
    
    Rooms and food and beverage income
    
    
    23
    
    
    
    100
    
    
    
    41Sales proceeds for disposal of property and equipment
    
    
    
    
    
    
    2,788
    
    
    
    Amounts paid/payable to shareholdersInterest charges capitalized in construction in progress
    
    
    963
    
    
    
    3,367
    
    
    
    4,167Interest charges recognized as expense
    
    
    215
    
    
    
    
    
    
    
    758
  (a)
    
    Amounts Due From Affiliated CompaniesMelcos subsidiary and its associated company  Melcos subsidiary and its associated
company purchased rooms and food and beverage services from the Company during the
years ended December 31, 2009, 2008 and 2007. Property and equipment was purchased
from Melcos associated company during the year ended December 31, 2009. The
outstanding balances due from Melcos subsidiary and its associated company as of
December 31, 2009 and 2008 were $1 and $28, respectively, and the amounts were
unsecured, non-interest bearing and repayable on demand.
  F - 33




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 CompaniesElixir International Limited, or Elixir  The Company purchased property and
equipment and services including repairs and maintenance, operating and office
supplies, network support and consultancy from Elixir, a wholly-owned subsidiary of
Melco, primarily related to the Altira Macau and City of Dreams projects during the
years ended December 31, 2009, 2008 and 2007. Certain gaming machines were sold to
Elixir during the year ended December 31, 2008 and Elixir purchased rooms and food
and beverage services from the Company during the years ended December 31, 2009, 2008
and 2007. As of December 31, 2009, the outstanding balance due to Elixir of $5,046.
As of December 31, 2008, the outstanding balance was a receivable from Elixir of
$622. These amounts were unsecured, non-interest bearing and repayable on demand.Sociedade de Turismo e Diversões de Macau, S.A.R.L., or STDM and its subsidiaries
(together with STDM referred to STDM Group) and Shun Tak Holdings Limited and its
subsidiaries (referred to Shun Tak Group)  The Company incurred expenses associated
with its use of STDM and Shun Tak Group ferry and hotel accommodation services within
Hong Kong and Macau during the years ended December 31, 2009, 2008 and 2007.
Relatives of Mr. Lawrence Ho, the Companys Co-Chairman and Chief Executive Officer,
have beneficial interests within those companies. The traveling expenses in
connection with construction of the Altira Macau and City of Dreams
projects were capitalized as costs related to
construction in progress during the construction period. STDM Group and Shun Tak
Group provided advertising and promotional services to the Company during the years
ended December 31, 2009, 2008 and 2007. The Company incurred rental expense from
leasing office premises from STDM Group and Shun Tak Group during the years ended
December 31, 2009, 2008 and 2007. As of December 31, 2009 and 2008, the outstanding
balances due to STDM Group of $171 and $215 and Shun Tak Group of $440 and $8,
respectively, were unsecured, non-interest bearing and repayable on demand.Melcos subsidiaries and its associated companies  Melcos subsidiaries and its
associated companies provided services to the Company primarily for
the construction of Altira Macau
and City of Dreams projects and the operations which included management of general and
administrative matters for the years ended December 31, 2009, 2008 and 2007,
consultancy fees during the years ended December 31, 2009 and 2008, and advertising
and promotion, network support, system maintenance and administration support and
repairs and maintenance fee during the years ended December 31, 2008 and 2007. The
Company incurred rental expense from leasing office premises from Melcos
subsidiaries during the years ended December 31, 2009, 2008 and 2007. The Company
purchased property and equipment from Melcos subsidiaries and its associated
companies during the years ended December 31, 2009, 2008 and 2007 and purchased
operating and office supplies during the years ended December 31, 2008 and 2007. The
Company reimbursed Melcos subsidiaries for service fees incurred on its behalf for
rental, office administration, travel and security coverage for the operation of the
office of the Companys Chief Executive Officer during the years ended December 31,
2009 and 2008. Melcos subsidiaries and its associated companies purchased rooms and
food and beverage services from the Company during the years ended December 31,
2009, 2008 and 2007. Other service fee income was received from Melcos subsidiary
during the year ended December 31, 2009. Melcos subsidiaries fees charged for
management of general administrative services, project management and consultancy,
were determined based on actual cost incurred during the year ended December 31, 2007.
The project management fee and consultancy fee in connection with the
construction of Altira Macau
and City of Dreams projects were capitalized as costs related to construction in progress during the
construction period during the year ended December, 31, 2007 and no further project
management fee incurred for 2008 and 2009.As of December 31, 2009 and 2008, the outstanding balances due to Melcos subsidiaries
and its associated companies of $720 and $1,507, respectively, were unsecured,
non-interest bearing and repayable on demand.Lisboa Holdings Limited, or Lisboa and Sociedade de Jogos de Macau S.A., or SJM -
During the years ended December 31, 2009, 2008 and 2007, the Company paid rental
expenses and service fees for Mocha Clubs gaming premises to Lisboa and SJM, companies
in which a relative of Mr. Lawrence Ho has beneficial interest. There was no
outstanding balance as of December 31, 2009 and 2008.
  F - 34




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 continuedCrowns subsidiary  Crowns subsidiary
provided services to the Company primarily for
the construction of Altira Macau and the City of Dreams projects and the operations which included general
consultancy and management of sale representative offices during the years ended
December 31, 2009, 2008 and 2007. Part of the consultancy
charges was capitalized as costs related to
construction in progress during construction period for the years ended December 31,
2009, 2008 and 2007. The Company reimbursed Crowns subsidiary
for associated costs
including traveling expenses during the years ended December 31, 2009, 2008 and 2007.
The Company purchased property and equipment from Crowns subsidiary during the years
ended December 31, 2009, 2008 and 2007. The Company received other service fee income
from Crowns subsidiary during the years ended December 31, 2009 and 2008. Crowns
subsidiary purchased rooms and food and beverage services from the Company during the
years ended December 31, 2008 and 2007. As of December 31, 2009 and 2008, the
outstanding balances due to Crowns subsidiary of $975 and $241, respectively, were
unsecured, non-interest bearing and repayable on demand.Shuffle Master Asia Limited, or Shuffle Master, and Stargames Corporation Pty.
Limited, or Stargames  The Company purchased spare parts, property and equipment and
lease of equipment with Shuffle Master during the years ended December 31, 2009, 2008
and 2007. The Company incurred repairs and maintenance expense with Shuffle Master
and Stargames during the year ended December 31, 2008 and purchased property and
equipment and lease of equipment with Stargames during the year ended December 31,
2007, in which the Companys former Chief Operating Officer during this period was an
independent non-executive director of its parent company. There was no outstanding
balance with Stargames as of December 31, 2009 and 2008. As of December 31, 2009 and
2008, the outstanding balances due to Shuffle Master of nil and $4, respectively,
were unsecured, non-interest bearing and repayable on demand.Chang Wah Garment Manufacturing Company Limited, or Chang Wah  The Company purchased
uniforms from Chang Wah during the years ended December 31, 2009 and 2008, a company
in which a relative of Mr. Lawrence Ho has beneficial interest, for Altira Macau and
the City of Dreams projects. As of December 31, 2009 and 2008, the outstanding
balance due to Chang Wah of $32 and $10, respectively, were unsecured, non-interest
bearing and repayable on demand.MGM Grand Paradise Limited, or MGM  The Company paid rental expenses and purchased
property and equipment from MGM during the year ended December 31, 2009, a company in
which a relative of Mr. Lawrence Ho has beneficial interest, for the City of Dreams
project. There was no outstanding balance with MGM as of December 31, 2009.(c)
    
    Amounts Due To/Loans From ShareholdersMelco and Crown provided loans to the Company mainly used for working capital
purposes, for the acquisition of the Altira Macau and the City of Dreams sites and
for construction of Altira Macau and City of Dreams.The outstanding loan balances due to Melco as of December 31, 2009 and 2008 amounted
to $74,367 in each of those years, were unsecured and interest bearing at 3-months
HIBOR per annum and at 3-months HIBOR plus 1.5% per annum only during the period from
May 16, 2008 to May 15, 2009. As of December 31, 2009, the loan balance due to Melco
was repayable in May 2011.Melco purchased rooms and food and beverage services from the Company during the year
ended December 31, 2009. The amounts of $17 and $916 due to Melco as of December 31, 2009 and
2008, respectively, mainly related to interest payable on the
outstanding loan balances, were unsecured, non-interest bearing and repayable on demand.The outstanding loan balances due to Crown as of December 31, 2009 and 2008 amounted to
$41,280 in each of those years, were unsecured and interest bearing at 3-months HIBOR
per annum. As of December 31, 2009, the loan balance due to Crown was repayable in
May 2011.
  F - 35




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 continuedThe amounts of $8 and $116
due to Crown as of December 31, 2009 and 2008, respectively,
related to interest payable on the outstanding loan balances, were unsecured,
non-interest bearing and repayable on demand.(d)
    
    As disclosed in Note 7 to the consolidated financial statements, on May 17,
2006, MPEL Macau Peninsula entered into a conditional agreement to acquire a third
development site located on the shoreline of Macau Peninsula near the current
Macau Ferry Terminal or Macau Peninsula site. The acquisition was
through the purchase of the entire issued share
capital of a company holding title to the Macau Peninsula site.
Dr. Stanley Ho was one of the directors but
held no shares in such company. Dr. Stanley Ho is the father of Mr. Lawrence Ho, the
chairman of Melco until he resigned this position in March 2006.
The title holding company holds the
rights to the land lease of Macau Peninsula site which was approximately 6,480 square
meters. The aggregate consideration was $192,802, payable in cash of which a
deposit of $12,853 was paid upon signing of the sale and purchase agreement, financed
from Melco and Crown, equally. The targeted completion date of July 27, 2009 for the
acquisition of the Macau Peninsula site passed and the acquisition agreement was
terminated by the relevant parties on December 17, 2009.  The deposit under the
acquisition agreement was refunded to the Company in December 2009.
 20.
    
    SEGMENT INFORMATION
  Total Assets
 December 31,2009
    
    
    2008Mocha Clubs
    
    $
    144,455
    
    
    $
    166,241Altira Macau
    
    
    594,743
    
    
    
    617,383City of Dreams
    
    
    3,093,310
    
    
    
    2,117,951Corporate and Others
    
    
    1,067,861
    
    
    
    1,596,714Total consolidated assets
    
    $
    4,900,369
    
    
    $
    4,498,289
 Capital Expenditures
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Mocha Clubs
    
    $
    11,448
    
    
    $
    15,491
    
    
    $
    13,297Altira Macau
    
    
    6,712
    
    
    
    6,275
    
    
    
    203,845City of Dreams
    
    
    808,424
    
    
    
    1,148,098
    
    
    
    519,522Corporate and Others
    
    
    2,152
    
    
    
    21,334
    
    
    
    4,219Total capital expenditures
    
    $
    828,736
    
    
    $
    1,191,198
    
    
    $
    740,883
  F - 36




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 31,2009
    
    
    2008
    
    
    2007NET REVENUESMocha Clubs
    
    $
    97,984
    
    
    $
    91,967
    
    
    $
    81,343Altira Macau
    
    
    658,043
    
    
    
    1,313,047
    
    
    
    277,153City of Dreams
    
    
    552,141
    
    
    
    
    
    
    
    Corporate and Others
    
    
    24,705
    
    
    
    11,120
    
    
    
    Total net revenues
    
    
    1,332,873
    
    
    
    1,416,134
    
    
    
    358,496ADJUSTED
EBITDA
(1)Mocha Clubs
    
    
    25,416
    
    
    
    25,805
    
    
    
    22,056Altira Macau
    
    
    13,702
    
    
    
    162,487
    
    
    
    (22,444
    )City of Dreams
    
    
    56,666
    
    
    
    (23
    )
    
    
    (314
    )Total adjusted EBITDA
    
    
    95,784
    
    
    
    188,269
    
    
    
    (702
    )OPERATING COSTS AND EXPENSESPre-opening costs
    
    
    (91,882
    )
    
    
    (21,821
    )
    
    
    (40,032
    )Amortization of gaming subconcession
    
    
    (57,237
    )
    
    
    (57,237
    )
    
    
    (57,190
    )Amortization of land use rights
    
    
    (18,395
    )
    
    
    (18,269
    )
    
    
    (17,276
    )Depreciation and amortization
    
    
    (141,864
    )
    
    
    (51,379
    )
    
    
    (39,466
    )Share-based compensation
    
    
    (11,385
    )
    
    
    (6,855
    )
    
    
    (5,256
    )Marketing expense relating to Altira Macau opening
    
    
    
    
    
    
    
    
    
    
    (11,959
    )Property charges and others
    
    
    (7,040
    )
    
    
    (290
    )
    
    
    (387
    )Corporate and others expenses
    
    
    (40,028
    )
    
    
    (31,244
    )
    
    
    (23,549
    )Total operating costs and expenses
    
    
    (367,831
    )
    
    
    (187,095
    )
    
    
    (195,115
    )OPERATING (LOSS) INCOME
    
    
    (272,047
    )
    
    
    1,174
    
    
    
    (195,817
    )NON-OPERATING (EXPENSES) INCOMEInterest income
    
    
    498
    
    
    
    8,215
    
    
    
    18,640Interest expenses, net of capitalized interest
    
    
    (31,824
    )
    
    
    
    
    
    
    (770
    )Amortization of deferred financing costs
    
    
    (5,974
    )
    
    
    (765
    )
    
    
    (1,005
    )Loan commitment fees
    
    
    (2,253
    )
    
    
    (14,965
    )
    
    
    (4,760
    )Foreign exchange gain, net
    
    
    491
    
    
    
    1,436
    
    
    
    3,832Other income, net
    
    
    2,516
    
    
    
    972
    
    
    
    275Total non-operating (expenses) income
    
    
    (36,546
    )
    
    
    (5,107
    )
    
    
    16,212LOSS BEFORE INCOME TAX
    
    
    (308,593
    )
    
    
    (3,933
    )
    
    
    (179,605
    )INCOME TAX CREDIT
    
    
    132
    
    
    
    1,470
    
    
    
    1,454NET LOSS
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )
 Note(1)
    
    Adjusted EBITDA is earnings before interest, taxes, depreciation,
amortization, other expenses (including pre-opening costs, share-based compensation,
marketing expense relating to Altira Macau opening in May 2007, property charges and
others and non-operating income (expenses)). The chief operating
decision maker used Adjusted EBITDA to
measure the operating performance of Mocha Clubs, Altira Macau and City of Dreams.
  F - 37




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 31,2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    34,358
    
    
    $
    163,014Amounts due from subsidiaries
    
    
    64,676
    
    
    
    580,423Prepaid expenses and other current assets
    
    
    12,605
    
    
    
    720Total current assets
    
    
    111,639
    
    
    
    744,157INVESTMENTS IN SUBSIDIARIES
    
    
    2,697,541
    
    
    
    1,967,503LONG-TERM PREPAYMENT AND DEPOSITS
    
    
    1,178
    
    
    
    1,715TOTAL
    
    $
    2,810,358
    
    
    $
    2,713,375LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESAccrued expenses and other current liabilities
    
    $
    3,302
    
    
    $
    4,907Income tax payable
    
    
    387
    
    
    
    1,296Amounts due to affiliated companies
    
    
    1,620
    
    
    
    1,553Amounts due to subsidiaries
    
    
    180,336
    
    
    
    180,336Amounts due to shareholders
    
    
    22
    
    
    
    1,032Total current liabilities
    
    
    185,667
    
    
    
    189,124LOANS FROM SHAREHOLDERS
    
    
    115,647
    
    
    
    115,647SHAREHOLDERS EQUITYOrdinary
shares at US$0.01 par value per share
(Authorized  2,500,000,000 and 1,500,000,000 shares and issued  1,595,617,550
and 1,321,550,399 shares as of December 31, 2009 and 2008 (Note 13))
    
    
    15,956
    
    
    
    13,216Treasury
shares, at US$0.01 par value per share
(471,567 and 385,180 shares as of December 31, 2009 and 2008 (Note 13)
    
    
    (5
    )
    
    
    (4
    )Additional paid-in capital
    
    
    3,088,768
    
    
    
    2,689,257Accumulated other comprehensive losses
    
    
    (29,034
    )
    
    
    (35,685
    )Accumulated losses
    
    
    (566,641
    )
    
    
    (258,180
    )Total shareholders equity
    
    
    2,509,044
    
    
    
    2,408,604TOTAL
    
    $
    2,810,358
    
    
    $
    2,713,375
  F - 38




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 31,2009
    
    
    2008
    
    
    2007REVENUE
    
    $
    
    
    
    $
    
    
    
    $
    OPERATING EXPENSESGeneral and administrative
    
    
    (21,089
    )
    
    
    (22,115
    )
    
    
    (16,323
    )Total operating expenses
    
    
    (21,089
    )
    
    
    (22,115
    )
    
    
    (16,323
    )OPERATING LOSS
    
    
    (21,089
    )
    
    
    (22,115
    )
    
    
    (16,323
    )NON-OPERATING (EXPENSES) INCOMEInterest income
    
    
    96
    
    
    
    5,755
    
    
    
    11,159Interest expenses
    
    
    (215
    )
    
    
    
    
    
    
    (758
    )Foreign exchange (loss) gain, net
    
    
    (115
    )
    
    
    (409
    )
    
    
    5,138Other income, net
    
    
    15,127
    
    
    
    18,291
    
    
    
    16,106Share of results of subsidiaries
    
    
    (301,368
    )
    
    
    (3,866
    )
    
    
    (192,296
    )Total non-operating (expenses) income
    
    
    (286,475
    )
    
    
    19,771
    
    
    
    (160,651
    )LOSS BEFORE INCOME TAX
    
    
    (307,564
    )
    
    
    (2,344
    )
    
    
    (176,974
    )INCOME TAX EXPENSE
    
    
    (897
    )
    
    
    (119
    )
    
    
    (1,177
    )NET LOSS
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )
  F - 39




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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, 2007
    
    
    1,180,931,146
    
    
    $
    11,809
    
    
    
    
    
    
    $
    
    
    
    $
    1,955,383
    
    
    $
    740
    
    
    $
    (77,566
    )
    
    $
    1,890,366Net 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
    )Net loss for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (308,461
    )
    
    
    (308,461
    )
    
    $
    (308,461
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )Change in fair value of interest rate swap
agreements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,662
    
    
    
    
    
    
    
    6,662
    
    
    
    6,662Share-based compensation
(Note 15)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,807
    
    
    
    
    
    
    
    
    
    
    
    11,807Shares issued, net of offering expenses
(Note 13)
    
    
    263,155,335
    
    
    
    2,631
    
    
    
    
    
    
    
    
    
    
    
    380,898
    
    
    
    
    
    
    
    
    
    
    
    383,529Shares issued upon restricted shares vested
(Note 13)
    
    
    8,297,110
    
    
    
    83
    
    
    
    
    
    
    
    
    
    
    
    6,831
    
    
    
    
    
    
    
    
    
    
    
    6,914Shares issued for future vesting of restricted
shares (Note 13)
    
    
    2,614,706
    
    
    
    26
    
    
    
    (2,614,706
    )
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of shares for restricted shares vested
(Note 13)
    
    
    
    
    
    
    
    
    
    
    2,528,319
    
    
    
    25
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    BALANCE AT DECEMBER 31, 2009
    
    
    1,595,617,550
    
    
    $
    15,956
    
    
    
    (471,567
    )
    
    $
    (5
    )
    
    $
    3,088,768
    
    
    $
    (29,034
    )
    
    $
    (566,641
    )
    
    $
    2,509,044
    
    
    $
    (301,810
    )
  F - 40




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##### Table of Contents



MELCO CROWN ENTERTAINMENT 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 31,2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (308,461
    )
    
    $
    (2,463
    )
    
    $
    (178,151
    )Adjustments to reconcile net loss to net cash (used in)
provided by operating activities:Share-based compensation
    
    
    11,385
    
    
    
    6,855
    
    
    
    5,256Share of results of subsidiaries
    
    
    301,368
    
    
    
    3,866
    
    
    
    192,296Changes in operating assets and liabilities:Amounts due from affiliated companies
    
    
    
    
    
    
    2
    
    
    
    28Prepaid expenses and other current assets
    
    
    (11,885
    )
    
    
    2,753
    
    
    
    (3,052
    )Long-term prepayment and deposits
    
    
    537
    
    
    
    (1,715
    )
    
    
    126Accrued expenses and other current liabilities
    
    
    (1,605
    )
    
    
    2,119
    
    
    
    (1,216
    )Income tax payable
    
    
    (909
    )
    
    
    119
    
    
    
    1,177Amounts due to shareholders
    
    
    (1,973
    )
    
    
    
    
    
    
    Amounts due to affiliated companies
    
    
    67
    
    
    
    (2,108
    )
    
    
    1,361Amounts due to subsidiaries
    
    
    
    
    
    
    (9
    )
    
    
    60Net cash (used in) provided by operating activities
    
    
    (11,476
    )
    
    
    9,419
    
    
    
    17,885CASH FLOWS FROM INVESTING ACTIVITIESAdvances to subsidiaries
    
    
    (1,023,370
    )
    
    
    
    
    
    
    Amounts due from subsidiaries
    
    
    522,661
    
    
    
    (420,055
    )
    
    
    (399,878
    )Net cash used in investing activities
    
    
    (500,709
    )
    
    
    (420,055
    )
    
    
    (399,878
    )CASH FLOWS FROM FINANCING ACTIVITIESLoans from shareholders
    
    
    
    
    
    
    
    
    
    
    (96,583
    )Proceeds from issue of share capital
    
    
    383,529
    
    
    
    
    
    
    
    722,796Cash provided by financing activities
    
    
    383,529
    
    
    
    
    
    
    
    626,213NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (128,656
    )
    
    
    (410,636
    )
    
    
    244,220CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR
    
    
    163,014
    
    
    
    573,650
    
    
    
    329,430CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    34,358
    
    
    $
    163,014
    
    
    $
    573,650
  F - 41




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##### Table of Contents



MELCO CROWN ENTERTAINMENT LIMITED
 ADDITIONAL INFORMATION  FINANCIAL STATEMENTS SCHEDULE 1
FINANCIAL INFORMATION OF PARENT COMPANY
NOTES TO FINANCIAL STATEMENTS SCHEDULE 1
(In thousands of U.S. dollars, except share and per share data)
 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, 2009 and 2008, approximately $1,543,000 and $1,832,000,
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, 2009, 2008 and 2007.2.
    
    Basis of presentationThe condensed financial information has been prepared using the same accounting policies as
set out in the Companys consolidated financial statements except that the parent company
has used equity method to account for its investments in subsidiaries.
  F - 42




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##### Table of Contents



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




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Document1.1
    *
    
    Amended and Restated Memorandum and Articles of Association amended by EGM in May 20092.1
    
    
    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)2.6
    
    
    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
from 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)4.5
    
    
    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)




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##### Table of Contents



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 Agent (Incorporated by reference to Exhibit 4.6 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.7
    
    
    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 Agent (Incorporated by reference to Exhibit 4.7 from our
From 20-F registration statement (File No. 001-33178), filed with the SEC on March
31, 2009)4.8
    
    
    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 Agent (Incorporated by reference to Exhibit 4.8 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.9
    
    
    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 Altira Developments (its former names were Melco Crown
(CM) Developments, 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)4.13
    
    
    Agreement dated March 17, 2005 Relating to transfer of 30% shareholding in
Altira Developments (its former names were Melco Crown (CM) Developments, 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 Altira Developments (its former names were Melco Crown (CM)
Developments, 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)




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##### Table of Contents



ExhibitNumber
    
    Description of Document4.17
    
    
    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)4.19
    
    
    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 Limited (Incorporated
by reference to Exhibit 4.20 from our From 20-F registration statement (File No.
001-33178), filed with the SEC on March 31, 2009)4.21
    
    
    Management Agreement dated August 30, 2008 between Melco Crown COD (GH) Hotel Limited
and Hyatt of Macau Ltd (Incorporated by reference to Exhibit 4.21 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009) .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 Limited (Incorporated by reference to Exhibit 4.23 from
our From 20-F registration statement (File No. 001-33178), filed with the SEC on
March 31, 2009)4.24
    
    
    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)4.27
    
    
    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 Limited (Incorporated by reference to Exhibit
4.27 from our From 20-F registration statement (File No. 001-33178), filed with the
SEC on March 31, 2009)4.28
    
    
    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)




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##### Table of Contents



ExhibitNumber
    
    Description of Document4.29
    
    
    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, 2007 (Incorporated by reference to Exhibit 4.29 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.30
    
    
    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, 2007 (Incorporated by reference to Exhibit 4.30 from our From 20-F
registration statement (File No. 001-33178), filed with the SEC on March 31, 2009)4.31
    
    
    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, 2008
(Incorporated by reference to Exhibit 4.31 from our From 20-F registration statement
(File No. 001-33178), filed with the SEC on March 31, 2009)4.32
    *
    
    Promissory Transfer of Shares Termination Agreement dated 17 December 2009 in
connection with the termination of share purchase of Sociedade de Fomento Predial
Omar, Limitada (Omar) between Double Margin Limited, Leong On Kei, a.k.a. Angela
Leong, MPEL (Macau Peninsula) Limited and Omar4.33
    
    
    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)4.34
    
    
    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)4.35
    
    
    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)4.36
    
    
    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)4.37
    *
    
    2006 Share Incentive Plan Amended by AGM in May 20094.38
    
    
    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)4.39
    
    
    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)4.40
    
    
    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)4.41
    *
    
    English Translation of Order of Secretary for Public Works and Transportation
published in Macau Offical Gazette No.25/2008 in relation to the City of Dreams Land
Concession.8.1
    *
    
    List of Subsidiaries11.1
    *
    
    Code of Business Conduct and Ethics, amended and approved as of September 29, 2009




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##### Table of Contents



ExhibitNumber
    
    Description of Document12.1
    *
    
    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