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Howard Stutz

Expenses drag down LV Sands earnings

3 May 2007

LAS VEGAS, Nevada – Preopening expenses surrounding $7.6 billion in resort projects on the Strip, in Macau and Singapore took a toll on Las Vegas Sands Corp.'s quarterly earnings.

The company said Wednesday its first-quarter profit fell 25 percent in the three-month period ended March 31 because of costs associated with the expected end-of-the-year opening of the $1.6 billion Palazzo on the Strip and the late August opening of the $2.4 billion Venetian Macau on the Cotai Strip. Costs involved with the $3.6 billion Marina Bay Sands in Singapore, which broke ground in February, also played into the company's profits.

"We delivered solid operating results at both our Las Vegas and Macau properties and made steady progress in the execution of our development plans as we lead the historic effort to create Asia's Las Vegas," Las Vegas Sands President Bill Weidner said.

The casino operator said its net income in the quarter was $90.9 million, or 26 cents a share, compared to $121.8 million, or 34 cents a share, the year before. Analysts polled by Thomson First Call expected the company to earn 32 cents a share.

Revenues rose 18.4 percent to $628.2 million from $530.4 million.

The results were somewhat anticlimatic as Las Vegas Sands preannounced earnings of its Venetian resort on April 13 to help aid marketing of a planned $5 billion domestic credit facility.

"In Las Vegas, consistent with (pre-announced earnings), we delivered strong results across the board, with both gaming and hotel revenues reflecting healthy increases compared to the quarter one year ago," Weidner said.

At The Venetian, casino revenues were $119.6 million in the quarter, an increase of 23.2 percent from $97.1 million a year earlier. Hotel revenues were $96.1 million, a 7.3 percent increase. Operating income for The Venetian increased 12.9 percent to $90.3 million compared with $80 million in the first quarter of 2006.

Weidner said much of The Venetian, including the guest rooms in the resort's original tower, were renovated in the past year in preparation for its integration with the 3,000-room Palazzo, which is under construction next door. The two resorts will encompass more than 7,100 hotel rooms.

"The benefits of our targeted capital investments are contributing to solid top-line performance at The Venetian," Weidner said. "We believe the combined Venetian and Palazzo complex will provide an excellent platform for profitable growth in Las Vegas for years to come."

At the Sands Macau, casino revenues were $346.1 million, a 24.4 percent increase compared with $278.2 million in the 2006 first quarter. Cash flow at the casino was $102.3 million, compared with $103.4 million a year ago while operating income was $90.6 million compared with $93.9 million.

Las Vegas Sands executives blamed the reduction on a $12 million expense associated with human resources and the company's promotional chip program. Both items were involved with the preparation associated with the Venetian Macau opening.

Weidner said the Sands Macau continued to increase its customer levels despite competition from Wynn Macau, which opened in September, and the recent opening of an expanded Lisboa, which is operated by Chinese billionaire Stanley Ho.

"Despite the introduction of significant high-quality, competitive product in the Macau marketplace, our VIP business has shown strong growth, our mass business remains extremely healthy, our visitation statistics continue to increase, and our operating performance remains strong," Weidner said.

Las Vegas Sands released earnings after the close of stock market Wednesday. Shares in the company, traded on the New York Stock Exchange, increased $2.92, or 3.41 percent, to close at $88.54.