Exhibit 99.2
EXPLANATORY NOTE
Studio City Finance Limited’s Quarterly Report
for the Three and Nine Months Ended September 30, 2013
This quarterly report serves to provide holders of Studio City Finance Limited’s US$825,000,000 8.50% senior notes due 2020 (the “Studio City Notes”) with Studio City Finance Limited’s unaudited condensed consolidated financial statements, comprising condensed consolidated balance sheets, condensed consolidated statements of operations and condensed consolidated statements of cash flows, for the three and nine months ended September 30, 2013, together with the related information, pursuant to the terms of the indenture, dated November 26, 2012, relating to the Studio City Notes. Studio City Finance Limited is a subsidiary of Melco Crown Entertainment Limited.
Studio City Finance Limited
Report for the Third Quarter of 2013
TABLE OF CONTENTS
| | | | |
INTRODUCTION | | | 1 | |
| |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | | | 3 | |
| |
EXCHANGE RATE INFORMATION | | | 4 | |
| |
FINANCIAL CONDITION AND RESULTS OF OPERATIONS | | | 5 | |
| |
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | | | F-1 | |
INTRODUCTION
In this quarterly report, unless otherwise indicated:
| • | | “Cotai” refers to an area of reclaimed land located between the islands of Taipa and Coloane in Macau; |
| • | | “HK$” and “H.K. dollars” refer to the legal currency of Hong Kong; |
| • | | “HKSE” refers to The Stock Exchange of Hong Kong Limited; |
| • | | “Macau” and “Macau SAR” refer to the Macau Special Administrative Region of the People’s Republic of China; |
| • | | “MCE” refers to Melco Crown Entertainment Limited, a company incorporated in the Cayman Islands whose shares are listed on both the NASDAQ Global Market and HKSE, and which, through its wholly owned subsidiary MCE Cotai Investments Limited, owns a 60% interest in SCI; |
| • | | “New Cotai Holdings” refers to New Cotai Holdings, LLC, a Delaware limited liability company primarily owned by U.S. investment funds managed by Silver Point Capital, L.P. and Oaktree Capital Management, L.P.; |
| • | | “New Cotai, LLC” refers to New Cotai, LCC, a Delaware limited liability company owned by New Cotai Holdings; |
| • | | “Parent” refers to Melco Crown Entertainment Limited, a Cayman Islands exempted company with limited liability; |
| • | | “Patacas” and “MOP” refer to the legal currency of Macau; |
| • | | “SCI” refers to Studio City International Holdings Limited (formerly known as Cyber One Agents Limited), a company incorporated in the British Virgin Islands with limited liability, and an indirect parent of our company; |
| • | | “Shareholders” refers to MCE Cotai Investments Limited, a wholly-owned, indirect subsidiary of MCE, and New Cotai, LLC, a wholly-owned, indirect subsidiary of the U.S. Shareholders; |
| • | | “Studio City” refers to a cinematically-themed integrated entertainment, retail and gaming resort in Cotai, Macau to be developed, consisting of the Studio City Project; |
| • | | “Studio City Holdings” refers to Studio City Holdings Limited, a company incorporated in the British Virgin Islands and our immediate holding company; |
| • | | “Studio City Hong Kong” refers to Studio City (HK) Limited, a Hong Kong incorporated company and a wholly owned subsidiary of SCI; |
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| • | | “Studio City Notes” refer to Studio City Finance Limited’s US$825,000,000 8.50% senior notes due 2020; |
| • | | “Studio City Project” or the “Project” refers to the first phase of our project to develop the Studio City site into a large-scale integrated leisure resort called “Studio City” combining 5-star luxury hotel and related facilities, gaming capacity, retail, attractions and entertainment venues (including a multipurpose entertainment studio); |
| • | | “Studio City Project Facility” refers to the senior secured project facility, dated January 28, 2013, entered into between, among others, Studio City Company Limited as borrower and certain subsidiaries as guarantors for a total sum of HK$10,855,880,000 (equivalent to approximately US$1.4 billion) and consisting of a delayed draw term loan facility and revolving credit facility; |
| • | | “US$” and “U.S. dollars” refer to the legal currency of the United States; |
| • | | “U.S. GAAP” refers to the accounting principles generally accepted in the United States; and |
| • | | “we”, “us”, “our company” and “our” refer to Studio City Finance Limited and, as the context requires, its predecessor entities and its consolidated subsidiaries. |
This quarterly report includes our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2013.
Any discrepancies in any table between totals and sums of amounts listed therein are due to rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements that relate to future events, including our future operating results and conditions, our prospects and our future financial performance and condition, all of which are largely based on our current expectations and projections. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Moreover, because we operate in a heavily regulated and evolving industry, may become highly leveraged, and operate in Macau, a market that has recently experienced extremely rapid growth and intense competition, new risk factors may emerge from time to time. It is not possible for our management to predict all risk factors, nor can we assess the impact of these factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed or implied in any forward-looking statement. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors include, but are not limited to, (i) growth of the gaming market and visitation in Macau, (ii) capital and credit market volatility, (iii) local and global economic conditions, (iv) our anticipated growth strategies, and (v) our future business development, results of operations and financial condition. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will”, “expect”, “anticipate”, “target”, “aim”, “estimate”, “intend”, “plan”, “believe”, “potential”, “continue”, “is/are likely to” or other similar expressions.
The forward-looking statements made in this quarterly report relate only to events or information as of the date on which the statements are made in this quarterly report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this quarterly report with the understanding that our actual future results may be materially different from what we expect.
3
EXCHANGE RATE INFORMATION
Although we will have certain expenses and revenues denominated in Patacas, our revenues and expenses will be denominated predominantly in H.K. dollars and in connection with a portion of our indebtedness and certain expenses, U.S. dollars. Unless otherwise noted, all translations from H.K. dollars to U.S. dollars and from U.S. dollars to H.K. dollars in this quarterly report were made at a rate of HK$7.78 to US$1.00.
The H.K. dollar is freely convertible into other currencies (including the U.S. dollar). Since October 17, 1983, the H.K. dollar has been officially linked to the U.S. dollar at the rate of HK$7.80 to US$1.00. The market exchange rate has not deviated materially from the level of HK$7.80 to US$1.00 since the peg was first established. However, in May 2005, the Hong Kong Monetary Authority broadened the trading band from the original rate of HK$7.80 per U.S. dollar to a rate range of HK$7.75 to HK$7.85 per U.S. dollar. The Hong Kong government has stated its intention to maintain the link at that rate, and it, acting through the Hong Kong Monetary Authority, has a number of means by which it may act to maintain exchange rate stability. However, no assurance can be given that the Hong Kong government will maintain the link at HK$7.75 to HK$7.85 per U.S. dollar or at all.
The noon buying rate on September 30, 2013 in New York City for cable transfers in H.K. dollar per U.S. dollar, as certified for customs purposes by the H.10 weekly statistical release of the Federal Reserve Board of the United States, or the Federal Reserve Board, was HK$7.7551 to US$1.00. On November 22, 2013, the noon buying rate was HK$7.7531 to US$1.00. We make no representation that any H.K. dollar or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or H.K. dollars, as the case may be, at any particular rate or at all.
The Pataca is pegged to the H.K. dollar at a rate of HK$1.00 = MOP1.03. All translations from Patacas to U.S. dollars in this quarterly report were made at the exchange rate of MOP8.0134 = US$1.00. The Federal Reserve Board does not certify for customs purposes a noon buying rate for cable transfers in Patacas.
4
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in connection with our unaudited condensed consolidated financial statements included elsewhere in this quarterly report. Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. The historical results are not necessarily indicative of the results of operations to be expected in the future. Certain statements in this “Financial Condition and Results of Operations” are forward-looking statements.
Results of Operations
We are currently in the development stage, and as a result there is no revenue and cash provided by our intended operations. Accordingly, the activities reflected in our consolidated statements of operations mainly relate to general and administrative expenses, amortization of land use right, interest expenses, other finance costs and pre-opening costs. Consequently, as is typical for a development stage company, we have incurred losses to date and expect these losses to continue to increase until we commence commercial operations with the planned opening of the Studio City Project in mid-2015.
Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012
For the third quarter of 2013, we had a net loss of US$20.5 million, an increase of US$16.5 million from a net loss of US$4.0 million for the third quarter of 2012, primarily due to our continuous development on Studio City, resulting an overall increase in our operating costs as well as an increase in interest expenses, net and other finance costs.
Amortization of land use rights expenses for the third quarter of 2013 were US$3.0 million, in-line with the same period in 2012.
Pre-opening costs for the third quarter of 2013 were US$0.7 million, compared to US$0.8 million incurred for the third quarter of 2012.
Interest expenses, net for the third quarter of 2013 were US$9.7 million. The net interest expenses mainly represented US$17.5 million interest expenses incurred for the Studio City Notes issued in November 2012 and US$1.0 million interest expenses on Studio City land use right payable, offset in part by the interest capitalization of US$8.8 million associated with the Studio City construction and development projects.
Other finance costs for the third quarter of 2013 of US$6.7 million, included US$0.4 million of amortization of deferred financing costs associated with the Studio City Notes issued in November 2012 and loan commitment fees of US$6.3 million associated with the Studio City Project Facility.
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Nine Months Ended September 30, 2013 Compared to Nine Months Ended September 30, 2012
For the nine months ended September 30, 2013, we had a net loss of US$64.6 million, an increase of US$56.7 million from a net loss of US$7.9 million for the nine months ended September 30, 2012, primarily due to our continuous development on Studio City, resulting an overall increase in our operating costs and expenses relating to amortization of land use right as well as an increase in interest expenses, net and other finance costs.
Amortization of land use rights expenses for the nine months ended September 30, 2013 were US$9.1 million, an increase of US$3.3 million from US$5.8 million incurred for the nine months ended September 30, 2012. The increase was primarily due to the amended Studio City land concession contract in July 2012.
Pre-opening costs for the nine months ended September 30, 2013 were US$2.1 million, compared with US$2.0 million incurred for the nine months ended September 30, 2012.
Interest expenses, net for the nine months ended September 30, 2013 were US$34.4 million. The net interest expenses mainly represented US$53.5 million interest expenses incurred for the Studio City Notes issued in November 2012 and US$3.4 million interest expenses on Studio City land use right payable, offset in part by the interest capitalization of US$22.5 million associated with the Studio City construction and development projects.
Other finance costs for the nine months ended September 30, 2013 of US$18.0 million, included US$1.1 million of amortization of deferred financing costs associated with the Studio City Notes issued in November 2012 and loan commitment fees of US$16.9 million associated with the Studio City Project Facility.
Liquidity and Capital Resources
We have relied and intend to rely on shareholder equity contributions and/or subordinated loans from our shareholders, net proceeds from Studio City Notes and a portion of the Studio City Project Facility to meet our development project needs through the opening of the Studio City Project. As a development stage company relying on such financing sources, our working capital balance may be negative from time to time as the source of funds will be from long-term debt while our liabilities are current. See “— Indebtedness and Capital Contributions” for further details. In addition, we expect our cash outflow to increase as we will have substantial payment obligations relating to various development capital expenditure, pre-opening and working capital expenses and debt financing obligations during the construction period.
As of September 30, 2013, we held restricted cash and cash equivalents of approximately US$783.0 million. The restricted cash comprised of net proceeds from offering of Studio City Notes and the unspent cash from the capital injection for the Studio City Project from the advance from immediate holding company, Studio City Holdings, both of which were restricted only for payment of construction and development costs and other project costs of the Studio City Project in accordance with Studio City Notes and Studio City Project Facility terms.
6
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated:
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (In thousands of US$) | |
Net cash used in operating activities | | $ | (11,307 | ) | | $ | (1,754 | ) | | $ | (41,210 | ) | | $ | (3,603 | ) |
Net cash used in investing activities | | | (150,316 | ) | | | (14,792 | ) | | | (234,553 | ) | | | (78,450 | ) |
Net cash provided by financing activities | | | 161,623 | | | | 21,622 | | | | 275,763 | | | | 86,493 | |
| | | | | | | | | | | | | | | | |
Net increase in cash and cash equivalents | | | — | | | | 5,076 | | | | — | | | | 4,440 | |
Cash and cash equivalents at beginning of period | | | — | | | | 4,757 | | | | — | | | | 5,393 | |
| | | | | | | | | | | | | | | | |
Cash and cash equivalents at end of period | | $ | — | | | $ | 9,833 | | | $ | — | | | $ | 9,833 | |
| | | | | | | | | | | | | | | | |
Operating Activities
We are currently developing the Studio City Project and therefore there is no revenue and cash generated from our intended operations. Net cash used in operating activities during the presented periods in this quarterly report mainly represents general and administrative expenses and pre-opening costs paid during the period. For the three months ended September 30, 2013 and 2012, net cash used in operating activities were US$11.3 million and US$1.8 million, respectively. While for the nine months ended September 30, 2013 and 2012, net cash used in operating activities were US$41.2 million and US$3.6 million respectively.
Investing Activities
Net cash used in investing activities was US$150.3 million for the three months ended September 30, 2013, an increase of US$135.5 million compared to US$14.8 million for the three months ended September 30, 2012. Such increase was primarily due to the increase in capital expenditure payments of US$69.5 million, advance payments for constructions of US$37.9 million, payment for land use right of US$22.6 million and increase in restricted cash of US$5.5 million.
The increase in restricted cash of US$5.5 million was primarily due to the funds transfer from Studio City Holdings, our immediate holding company, of US$162.1 million as described below, partially offset by the payments of Studio City Project costs of US$156.6 million during the three months ended September 30, 2013 from bank accounts that are restricted for Studio City Project costs in accordance with the terms of the Studio City Notes and Studio City Project Facility.
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Cash used in investing activities was US$14.8 million for the three months ended September 30, 2012, mainly due to the capital expenditure payments.
Net cash used in investing activities was US$234.6 million for the nine months ended September 30, 2013, as compared to US$78.5 million for the nine months ended September 30, 2012, primarily due to capital expenditure payments of US$197.6 million, advance payments for constructions of US$76.5 million and payment of land use right of US$44.7 million, partially offset by the decrease in restricted cash of US$84.2 million.
The decrease in restricted cash of US$84.2 million was primarily due to the payments of Studio City Project costs of US$414.9 million during the nine months ended September 30, 2013 from bank accounts that are restricted for Studio City Project costs in accordance with the terms of the Studio City Notes and Studio City Project Facility, partially offset by the funds transfer from Studio City Holdings, our immediate holding company, of US$330.7 million as described below.
Cash used in investing activities was US$78.4 million for the nine months ended September 30, 2012, primarily due to the capital expenditure payments of US$43.0 million and payment of land use right of US$35.4 million.
Financing Activities
Net cash provided by financing activities was US$161.6 million for the three months ended September 30, 2013, primarily from the advances from Studio City Holdings, our immediate holding company, which are unsecured and non-interest bearing, of US$162.1 million. The advances from Studio City Holdings of US$162.1 million was sourced through capital injections from MCE and New Cotai, LLC, shareholders of SCI. These were offset in part by the prepaid debt issuance costs of US$0.5 million associated with Studio City Project Facility.
Cash provided by financing activities were US$21.6 million for the three months ended September 30, 2012. The amounts represent fund transfer from Studio City Hong Kong, our affiliated company.
Net cash provided by financing activities was US$275.8 million for the nine months ended September 30, 2013, primarily from the advances from Studio City Holdings, our immediate holding company, which are unsecured and non-interest bearing, of US$330.7 million. The advances from Studio City Holdings of US$330.7 million was sourced through capital injections from MCE and New Cotai, LLC, shareholders of SCI. These were offset in part by the prepaid debt issuance costs of US$53.4 million associated with Studio City Project Facility and payment of debt issuance cost associated with Studio City Notes of US$1.5 million.
Cash provided by financing activities were US$86.5 million for the nine months ended September 30, 2012. The amounts represent fund transfer from Studio City Hong Kong, our affiliated company.
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Indebtedness and Capital Contributions
As of September 30, 2013, our indebtedness amounted to US$825.0 million which represented the outstanding principal balance under the Studio City Notes. Under our Studio City Project Facility, we have HK$10,855,880,000 (equivalent to approximately US$1.4 billion), comprising a five year HK$10,080,460,000 (equivalent to approximately US$1.3 billion) delayed draw term loan facility and a HK$775,420,000 (equivalent to approximately US$100 million) revolving credit facility. The entire Studio City Project Facility remains available for future drawdown, subject to satisfaction of certain conditions precedent.
There was no change in our indebtedness as of September 30, 2013 as compared to June 30, 2013.
Subsequent to September 30, 2013, MCE and New Cotai, LLC, shareholders of SCI, further contributed US$410.0 million to the Studio City Project in accordance with the shareholder agreement. As of the date of this quarterly report, MCE and New Cotai, LLC, have contributed US$1,050.0 million in total (including US$225.0 million as completion support cash collateral) to the Studio City Project in accordance with the shareholder agreement. We believe that the significant equity investments of our shareholders provide us with a balanced capital structure.
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Studio City Finance Limited
(A Development Stage Company)
Index To Unaudited Condensed Consolidated Financial Statements
For the Three and Nine Months Ended September 30, 2013
| | | | |
| | | Page | |
| |
Unaudited Condensed Consolidated Balance Sheets | | | F-2 | |
| |
Unaudited Condensed Consolidated Statements of Operations | | | F-3 | |
| |
Unaudited Condensed Consolidated Statements of Cash Flows | | | F-4 | |
F-1
Studio City Finance Limited
(A Development Stage Company)
Condensed Consolidated Balance Sheets
(In thousands of U.S. dollars, except share and per share data)
| | | | | | | | |
| | | September 30, 2013 | | | December 31, 2012 | |
| | | (Unaudited) | | | (Audited) | |
ASSETS | | | | | | | | |
| | |
CURRENT ASSETS | | | | | | | | |
Restricted cash | | $ | 648,546 | | | $ | 125,463 | |
Amounts due from affiliated companies | | | 2,866 | | | | 540 | |
Prepaid expenses and other current assets | | | 2,966 | | | | 2,669 | |
| | | | | | | | |
Total current assets | | | 654,378 | | | | 128,672 | |
| | | | | | | | |
| | |
PROPERTY AND EQUIPMENT, NET | | | 511,069 | | | | 272,421 | |
LONG-TERM PREPAYMENT, DEPOSITS AND OTHER ASSETS | | | 152,651 | | | | 20,371 | |
RESTRICTED CASH | | | 134,406 | | | | 741,683 | |
DEFERRED FINANCING COST | | | 15,522 | | | | 16,546 | |
LAND USE RIGHT, NET | | | 157,357 | | | | 166,435 | |
| | | | | | | | |
TOTAL ASSETS | | $ | 1,625,383 | | | $ | 1,346,128 | |
| | | | | | | | |
| | |
LIABILITIES AND SHAREHOLDER’S EQUITY | | | | | | | | |
| | |
CURRENT LIABILITIES | | | | | | | | |
Accrued expenses and other current liabilities | | $ | 159,881 | | | $ | 104,018 | |
Amounts due to affiliated companies | | | 1,282 | | | | 1,547 | |
Amount due to ultimate holding company | | | 211 | | | | 354 | |
| | | | | | | | |
Total current liabilities | | | 161,374 | | | | 105,919 | |
| | | | | | | | |
| | |
LONG-TERM DEBT | | | 825,000 | | | | 825,000 | |
ADVANCE FROM IMMEDIATE HOLDING COMPANY | | | 420,806 | | | | 90,084 | |
OTHER LONG-TERM LIABILITIES | | | 6,226 | | | | 1,608 | |
LAND USE RIGHT PAYABLE | | | 24,376 | | | | 71,358 | |
| | |
SHAREHOLDER’S EQUITY | | | | | | | | |
Ordinary shares (1) | | | — | | | | — | |
Additional paid-in capital | | | 298,596 | | | | 298,596 | |
Accumulated other comprehensive loss | | | (65 | ) | | | (65 | ) |
Deficit accumulated during the development stage | | | (110,930 | ) | | | (46,372 | ) |
| | | | | | | | |
Total shareholder’s equity | | | 187,601 | | | | 252,159 | |
| | | | | | | | |
TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY | | $ | 1,625,383 | | | $ | 1,346,128 | |
| | | | | | | | |
| (1) | The authorized share capital of Studio City Finance Limited was 50,000 shares of US$1 par value per share, as of September 30, 2013 and December 31, 2012, 1 share of US$1 par value per share was issued and fully paid. |
F-2
Studio City Finance Limited
(A Development Stage Company)
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands of U.S. dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | | | From
inception
on August 22, 2000 to | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | | | September 30, 2013 | |
OPERATING REVENUE | | | | | | | | | | | | | | | | | | | | |
Other revenue | | $ | 899 | | | $ | 127 | | | $ | 2,215 | | | $ | 162 | | | $ | 2,870 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
OPERATING COSTS AND EXPENSES | | | | | | | | | | | | | | | | | | | | |
General and administrative | | | (1,180 | ) | | | (220 | ) | | | (3,016 | ) | | | (303 | ) | | | (23,424 | ) |
Amortization of land use right | | | (3,026 | ) | | | (3,026 | ) | | | (9,078 | ) | | | (5,791 | ) | | | (21,103 | ) |
Depreciation | | | — | | | | — | | | | — | | | | — | | | | (238 | ) |
Pre-opening costs | | | (688 | ) | | | (835 | ) | | | (2,059 | ) | | | (1,989 | ) | | | (5,871 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total operating costs and expenses | | | (4,894 | ) | | | (4,081 | ) | | | (14,153 | ) | | | (8,083 | ) | | | (50,636 | ) |
| | | | | | | | | | | | | | | | | | | | |
OPERATING LOSS | | | (3,995 | ) | | | (3,954 | ) | | | (11,938 | ) | | | (7,921 | ) | | | (47,766 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
NON-OPERATING EXPENSES | | | | | | | | | | | | | | | | | | | | |
Interest expenses, net | | | (9,738 | ) | | | (10 | ) | | | (34,405 | ) | | | (30 | ) | | | (43,362 | ) |
Other finance costs | | | (6,719 | ) | | | — | | | | (17,996 | ) | | | — | | | | (18,119 | ) |
Foreign exchange gain (loss), net | | | 2 | | | | (13 | ) | | | (219 | ) | | | 10 | | | | (245 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total non-operating expenses | | | (16,455 | ) | | | (23 | ) | | | (52,620 | ) | | | (20 | ) | | | (61,726 | ) |
| | | | | | | | | | | | | | | | | | | | |
NET LOSS | | $ | (20,450 | ) | | $ | (3,977 | ) | | $ | (64,558 | ) | | $ | (7,941 | ) | | $ | (109,492 | ) |
| | | | | | | | | | | | | | | | | | | | |
F-3
Studio City Finance Limited
(A Development Stage Company)
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands of U.S. dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | | | From inception
on August 22, 2000 to | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | | | September 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | | | | | | | | | |
Net cash used in operating activities | | $ | (11,307 | ) | | $ | (1,754 | ) | | $ | (41,210 | ) | | $ | (3,603 | ) | | $ | (66,528 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | | | | | | | | | |
Payment for acquisition of property and equipment | | | (84,302 | ) | | | (14,814 | ) | | | (197,600 | ) | | | (43,022 | ) | | | (405,264 | ) |
Advance payments and deposits for acquisition of property and equipment | | | (37,868 | ) | | | 22 | | | | (76,428 | ) | | | — | | | | (76,428 | ) |
Payment for land use right | | | (22,636 | ) | | | — | | | | (44,719 | ) | | | (35,428 | ) | | | (107,037 | ) |
Changes in restricted cash | | | (5,510 | ) | | | — | | | | 84,194 | | | | — | | | | (782,952 | ) |
Proceeds from sale of property and equipment | | | — | | | | — | | | | — | | | | — | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | (150,316 | ) | | | (14,792 | ) | | | (234,553 | ) | | | (78,450 | ) | | | (1,371,679 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | | | | | | | | |
Prepayment of deferred financing cost | | | (519 | ) | | | — | | | | (53,404 | ) | | | — | | | | (72,216 | ) |
Payment of deferred financing cost | | | — | | | | — | | | | (1,555 | ) | | | — | | | | (16,649 | ) |
Advance from immediate holding company | | | 162,142 | | | | — | | | | 330,722 | | | | — | | | | 420,806 | |
Amount due to an affiliated company | | | — | | | | 21,622 | | | | — | | | | 86,493 | | | | 239,856 | |
Proceeds from long-term debt | | | — | | | | — | | | | — | | | | — | | | | 825,000 | |
Loan from intermediate holding company | | | — | | | | — | | | | — | | | | — | | | | 41,409 | |
| | | | | | | | | | | | | | | | | | | | |
Net cash provided by financing activities | | | 161,623 | | | | 21,622 | | | | 275,763 | | | | 86,493 | | | | 1,438,206 | |
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EFFECT OF FOREIGN EXCHANGE ON CASH AND CASH EQUIVALENTS | | | — | | | | — | | | | — | | | | — | | | | 1 | |
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NET INCREASE IN CASH AND CASH EQUIVALENTS | | | — | | | | 5,076 | | | | — | | | | 4,440 | | | | — | |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | | | — | | | | 4,757 | | | | — | | | | 5,393 | | | | — | |
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CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | — | | | $ | 9,833 | | | $ | — | | | $ | 9,833 | | | $ | — | |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOWS | | | | | | | | | | | | | | | | | | | | |
Cash paid for interest (net of capitalized interest) | | $ | — | | | $ | — | | | $ | (23,449 | ) | | $ | — | | | $ | (23,449 | ) |
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NON-CASH INVESTING ACTIVITIES | | | | | | | | | | | | | | | | | | | | |
Construction costs and property and equipment funded through accrued expenses and other current liabilities and other long-term liabilities | | $ | 46,024 | | | $ | 7,261 | | | $ | 89,638 | | | $ | 19,350 | | | $ | 93,037 | |
Land use right cost funded through land use right payable | | $ | — | | | $ | — | | | $ | — | | | $ | 69,057 | | | $ | 71,358 | |
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F-4
