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Howard Stutz

LV Sands posts bigger loss

30 October 2009

LAS VEGAS, Nevada -- Success in Macau and Pennsylvania couldn't save Las Vegas Sands Corp.'s third-quarter earnings.

The casino operator reported a net loss of $123 million in the quarter Thursday, largely due to higher income tax expenses and other accounting measures.

The company, which operates The Venetian and Palazzo, three resorts in Macau, and the Sands Bethlehem in Pennsylvania, said the net loss translated into a loss of 19 cents per share for the quarter ended Sept. 30. A year ago, Las Vegas Sands lost $32.2 million, or 9 cents a share.

Earnings were affected by an income tax expense of $73.7 million. The company also recorded other taxes and accounting actions.

On an adjusted basis, Las Vegas Sands would have earned 3 cents a share. Analysts polled by FactSet Research expected the company to lose a penny a share in the quarter.

Revenues, however, were $1.14 billion, an increase of 3 percent from $1.11 billion in the third quarter of 2008.

"While our current quarter's results in Las Vegas reflected unusually low table games hold, which negatively impacted our revenues by approximately $40 million, the execution of our cost savings programs has positioned us to deliver improved operating margins and cash flows as the economy recovers," Las Vegas Sands Chairman and Chief Executive Officer Sheldon Adelson said in a statement.

On a conference call with analysts to discuss earnings, Adelson said he couldn't discuss the company's planned initial public offering on the Hong Kong Stock Exchange in which the casino operator hopes to raise about $2 billion.

Las Vegas Sands officials said the company's cost-cutting efforts are expected to amount to $500 million annually in savings. The process is about 90 percent complete.

Las Vegas Sands said strong results in Macau offset weakness in Las Vegas.

At The Venetian Macau, revenue was $493.6 million, a decline of 5.5 percent. However, the Sands Macau grew revenues 13 percent to $280.8 million.

In Las Vegas, revenue fell 26 percent to $228 million at The Venetian and Palazzo, due to lower room rates and a low hold on table game wagers.

"The quarter yielded an increase in our slot hold percentage and we saw demand for future group rooms to continue to accelerate," Las Vegas Sands President Mike Leven said. "In fact, we put more future group room nights on the books this quarter than we have during any other 90-day period in our history."

In Bethlehem, the Sands casino that opened in May with 3,000 slot machines reported net revenues of $63 million in its first full quarter of operations. The company said gamblers wagered $813.3 million on slot machines at the casino in the quarter, holding 7.2 percent of the revenues.

Leven said the company is monitoring the continuing debate by Pennsylvania lawmakers considering a bill that would legalize table games in the state's casinos. The Sands Bethlehem would immediately add tables games to the casino if the bill passes, making the property the closest Las Vegas-style casino in proximity to New York City.

"If the table game legislation comes with a favorable tax rate, we will move to expand our business and employment in the Lehigh Valley," Leven said.

Company executives said the $5.4 billion Marina Bay Sands in Singapore is on track to open in the first quarter of 2010.

Las Vegas Sands reported earnings after trading closed on the New York Stock Exchange. Shares of the company finished up $1.59, or 12.07 percent, to close at $14.76. In after-hours trading, the company's shares rose $1.24, or 8.4 percent, to reach $16 at 5:30 p.m. PDT.