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Rod Smith

Casino Earnings: A Simply Smashing Quarter

28 April 2004

LAS VEGAS -- Las Vegas Sands, owner of The Venetian, Tuesday posted record-smashing results for the first quarter of 2004 with cash flow of $103.9 million, edging out the Bellagio's standout $99 million first-quarter cash flow.

Las Vegas Sands President Bill Weidner said in the history of Las Vegas no other single property has ever posted higher quarterly cash flow numbers, a key measure of profitability generally defined as earnings before interest, taxes, depreciation and amortization.

In addition, Las Vegas Sands' net income for the first quarter of 2004 passed any full-year's net income since The Venetian opened in 1999.

"It was a very, very strong quarter. They had some benefit from good table game hold percentages, but the volumes across-the-board were stronger than (Wall Street) expected -- in line with the Las Vegas market," Bear, Stearns & Co. analyst John Mulkey said.

Deutsche Bank analyst Marc Falcone also noted that The Venetian's performance was another indication that Las Vegas is stronger than it has been in the past five years.

"The first-quarter operating results certainly support this theory, with tremendous earnings reports from MGM (Mirage), Mandalay (Resort Group), Caesars (Entertainment), Harrah's (Entertainment) and now Las Vegas Sands," he said.

Las Vegas Sands net income for the 2004 first quarter was $37.8 million, up 190.8 percent from $13 million in the 2003 first quarter.

The company's $103.9 million first-quarter cash flow was up 63.4 percent from $63.6 million in the first quarter of 2003.

And net revenue for the first quarter of 2004 was $220.8 million, up 39.1 percent from $158.7 million in the same period a year earlier.

"We think these results support the overall strength and healthiness of the Las Vegas market and they're a testament to the success of the Las Vegas Sands' well-thought out business model," Falcone said.

The Venetian's new records crossed all of its business segments, with hotel revenues up 49 percent ($85.4 million from $57.5 million), food and beverage up 67 percent ($33.5 million from $20.1 million), casino revenues up 29 percent ($94.7 million from $73.3 million) and table volumes, driven by a strong Chinese New Year, up 17.5 percent ($259.5 million from $220.8 million), he said.

Falcone also said revenue per available room was up 10.4 percent ($235 from $217), "which is impressive given the 1,000 rooms added last June," and occupancy was 98.9 percent compared with 97.4 percent last year.

In addition, Weidner said room demand remained strong at the company's new Venezia Tower and its club level suites without affecting occupancy and room rates in the original Venetian Hotel Tower.

However, Mulkey cautioned that The Venetian's revenue per available room increase was slightly lower than the MGM Mirage's during the quarter, although he said it was in line with its closest competitor, Bellagio, which increased RevPAR by 10 percent.

"We believe the combination of both strong casino and hotel revenues indicate that strong visitation from high-end customers is once again returning to Las Vegas," he said.

Buoyed by his company's recent performance and the strength of the Las Vegas economy, Weidner said Las Vegas Sands is poised for taking The Venetian and its sister operations "to the next level."

The much-anticipated Sands Macau is expected to open in mid-May with 319 table games, 600 slots, and 18 restaurant, bars and entertainment venues.

In addition, the company has already started evaluating bids for site work at its proposed 3,000-room Venetian Macau project on the Cotai Strip in Macau.