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Howard Stutz
 

Lawsuit plays factor in LV Sands net loss

31 July 2009

LAS VEGAS, Nevada –- Las Vegas Sands Corp. paid three men $42.5 million to settle a lawsuit in June, according to the operator's second-quarter earnings release Thursday.

The figure contributed to the company's net loss of $222.2 million in the quarter ended June 30. Las Vegas Sands also blamed the challenging economy, a noncash impairment charge of $151.2 million and an increase in certain expenses that drove the company to its sixth straight quarterly loss.

The casino operator said the loss translated into 34 cents a share for the quarter. A year ago, the company's net loss was $8.8 million, or 2 cents a share.

Quarterly revenues decreased 4.8 percent to $1.06 billion, compared with $1.11 billion a year ago.

"While our operating results reflect the challenging economic environment, we remain pleased that our properties in both Las Vegas and Macau continue to generate solid cash flow," Las Vegas Sands Chairman Sheldon Adelson said.

Adelson and Las Vegas Sands President Michael Leven said the company had implemented 69 percent of a planned $500 million cost-savings program.

Leven said all the savings should be realized by the end of the year.

"We continue to make progress in reducing our cost structure and in the implementation of operating efficiencies across our organization worldwide," Leven said.

The company said the lawsuit settlement played a factor in the net loss.

In June, Las Vegas Sands would not divulge the cost to settle a Clark County District Court lawsuit just as the case was about to go to trial. Three men -- Clive Bassett Jones, Dax Turok and Cliff Cheong -- sued the company over payment for their assistance in helping Las Vegas Sands acquire a Macau gaming license in 2002.

Donald Campbell, the attorney for the three men, and Las Vegas Sands spokesman Ron Reese both refused comment on the case Thursday, citing a confidentiality agreement.

In its quarterly earnings press release, Las Vegas Sands included a paragraph saying: "Corporate expense was $64.3 million in the second quarter of 2009, compared to $33.6 million in the second quarter of 2008. The increase in corporate expense was entirely due to the settlement of a litigation matter during the quarter and increased legal expenses, which were partially offset by reductions in other corporate expenses."

Within the company's financial statement charts, under the heading "Non-GAAP Measure -- Adjusted Net Income and Adjusted Earnings Per Diluted Share," a line item for "Legal Settlement Expense" includes the figure, $42.5 million.

The lawsuit was the second such action the company faced over its Macau licensing efforts in 14 months. In May 2008, a Clark County jury awarded Hong Kong businessman Richard Suen almost $60 million for his help in introducing Las Vegas Sands executives to Chinese government officials.

Las Vegas Sands reported earnings after trading closed Thursday on the New York Stock Exchange. Shares of the company were up 95 cents, or 9.31 percent, to close at $11.15. However, in after-hours trading, company shares fell $1.05, or 9.42 percent, to $10.10 at 6 p.m. PDT.