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Howard Stutz

Earnings: Las Vegas Sands' Earnings Increase

15 February 2006

Revenue and profit rose in the last three months of 2005 for Las Vegas Sands Corp., fueled by free-spending Chinese customers at the company's gambling palace in Macau, the casino operator said Tuesday.

Las Vegas Sands, which also operates The Venetian, said net income in its fourth quarter, ended Dec. 31, was $110 million, or 31 cents per share, compared with $69.3 million, or 21 cents per share, a year earlier.

The quarterly earnings beat the consensus of 27 cents per share estimated by analysts polled by Thomson First Call.

Revenue rose 42.8 percent to $523.8 million from $366.7 million.

Within minutes after releasing its earnings, Las Vegas Sands announced it had registered with the Securities and Exchange Commission to sell 55 million shares in a secondary stock offering.

Company Chairman Sheldon Adelson, Las Vegas Sands' principal stockholder, several trusts covering Adelson's family, and other company executives, are selling the shares.

In a statement, the company said the shares were being sold by the stockholders and Las Vegas Sands would not receive any proceeds from the offering. No sale price was given and the offering is expected to close by the end of March.

As of Jan. 31, there were more than 354.1 million shares of Las Vegas Sands stock outstanding held by 133 stockholders of record.

During a conference call with analysts and investors, Las Vegas Sands President Bill Weidner said he and other company executives were restricted from answering questions about the stock offering.

Weidner did say the company's Macau casino benefited from a booming Chinese economy that he expects will continue to grow over the next few years. At the same time, Las Vegas Sands will continue to expand its influence over the region, serving as the master-developer for eight casino-resorts along the Cotai Strip, which will include a $2 billion version of The Venetian that is expected to open in the summer of 2007.

"The Chinese economy is strong and the wealthy Chinese love to travel and spend money," Weidner said.

At the Sands Macau, fourth-quarter casino revenue rose 61.3 percent to $270 million, while operating income rose 56.7 percent to $93.3 million. Weidner said the increase reflected the strength of both the casino's high-end play and a growing interest in slot machines by the Chinese customers.

In addition to the Cotai Strip development, the Sands Macau will face competition from new hotel-casinos being built by Wynn Resorts Ltd. and MGM Mirage.

However, Weidner said Chinese visitation could increase as the government eases restrictions allowing 25 million more Chinese to freely travel around the region.

In a note to investors about the growing Macau casino market released earlier this month, Goldman Sachs gaming analyst Steven Kent said he thought shares of Las Vegas Sands could have skittish price fluctuations as competing casinos open in the next year.

"As much as we think Las Vegas Sands shares will trade up as Macau continues to show strength we also note that the market's volatility is wide and investor and operator experience remains relatively low," Kent said. "Questions will likely linger about new supply impact and cause volatility in Las Vegas Sands shares ... but we continue to feel confident that Sands Macau can increase market share."

The company announced earnings after the close of stock market trading Tuesday and shares in Las Vegas Sands closed at $50.41 on the New York Stock Exchange, up 16 cents or 0.32 percent.

Results at the company's Venetian on the Strip also increased from the previous year.

Venetian net revenue was $211.7 million during the fourth quarter, up 28.4 percent from $164.9 million a year earlier.

"We are seeing the benefits of our targeted capital investments at The Venetian," Weidner said.

He said additional meeting space at the Strip property, the new Blue Man Group theater and Tao restaurant-nightclub attractions are bringing more visitors and more revenue to the property.

For all of 2005, Las Vegas Sands reported net revenue of $1.74 billion, a 46.2 percent increase compared with $1.19 billion in 2004.

Net income in 2005 was $283.7 million or 80 cents per share, compared with $495.2 million or $1.52 per share in 2004 when results included a gain on the sale of the Grand Canal Shoppes of $417.6 million, as well as $63.2 million in nonrecurring incentive expenses related to another portion of the sale.