Las Vegas Sands Corp. Reports Fourth Quarter and Full Year 2009 Results

Las Vegas Sands Corp. (NYSE: LVS) today reported financial results for the quarter ended December 31, 2009.

Company-Wide Operating Results

Net revenue for the fourth quarter of 2009 was $1.28 billion, an increase of 17.5% compared to $1.09 billion in the fourth quarter of 2008. Consolidated adjusted property EBITDAR in the fourth quarter of 2009 increased 25.5% to $306.2 million, compared to $244.0 million in the year-ago quarter.

On a GAAP (Generally Accepted Accounting Principles) basis, operating income in the fourth quarter of 2009 was $43.9 million, compared to an operating loss of $34.4 million in the fourth quarter of 2008, an increase of $78.3 million. The increase in operating income was principally due to stronger gaming volumes and the continued realization of cost savings and efficiency initiatives across our properties, which contributed to stronger margins overall and a record operating performance in Macau. The record results in Macau were partially offset by lower operating results in Las Vegas.

Adjusted net income (see Note 1) increased $38.7 million to $20.9 million, or $0.03 per diluted share, compared to adjusted net loss of $17.8 million in the fourth quarter of 2008, or a loss of $0.04 per diluted share.

On a GAAP basis, net loss attributable to common stockholders in the fourth quarter of 2009 was $113.9 million, compared to net loss of $136.5 million in the fourth quarter of 2008. Diluted loss per share was $0.17 compared to a diluted loss of $0.27 in the prior year quarter. The decrease in net loss attributable to common stockholders of $22.6 million reflects an increase in operating income and a decrease in interest expense, partially offset by a loss on the early retirement of debt, a smaller income tax benefit, and increases in preferred stock dividends and accretion of preferred stock.

Full year 2009 net revenue increased 3.9% to $4.56 billion, compared to $4.39 billion in 2008. Adjusted net income was $48.2 million in 2009, an increase of 7.6% compared to $44.8 million in 2008. On a GAAP basis, net loss attributable to common stockholders was $540.1 million in 2009, compared to a net loss of $188.8 million in 2008. The increase in GAAP net loss attributable to common stockholders of $351.3 million was principally driven by increases in non-cash impairment losses, losses on early retirement of debt, preferred stock dividends and accretion of preferred stock, partially offset by increased revenue and decreased interest expense.

Fourth Quarter and Full Year Overview

Sheldon G. Adelson, chairman and CEO, stated, "I am pleased to report that we delivered record revenues and EBITDAR during the fourth quarter of 2009, led by our properties in Macau, which achieved a record $251.5 million in EBITDAR. That performance was driven by healthy gaming volumes in combination with the continued realization of cost savings from the efficiency initiatives we implemented throughout the year. The performance in Macau provides strong momentum as we resume construction activities on our latest integrated resort development in Macau. That 13.3 million square foot development, which is located directly across the Cotai Strip from The Venetian Macao and Four Seasons Hotel Macao, will feature 6,400 hotel rooms from the Shangri-La, Traders, Sheraton, Sheraton Towers and St. Regis brands.

"While our current quarter's results in Las Vegas reflect lower room and food and beverage revenues, principally because of less group business in Las Vegas, our gaming volumes have stabilized, and the execution of our cost savings programs has positioned us to deliver improved operating margins and cash flows as the economy and our group business recover. We believe 2010 will reflect a recovery in the group business in Las Vegas, as recent booking trends reflect increases compared to 2009.

"In Singapore, we are rapidly approaching the opening of Marina Bay Sands, the first phase of which will open in late April. We have ramped up pre-opening activities for each of the major operational areas of the property and look forward to introducing our convention-based integrated resort business model to Singapore about 10 weeks from today.

"Finally, we made steady progress during the year on our de-leveraging strategy. The completion of the listing of Sands China Ltd. on the Hong Kong Stock Exchange significantly strengthened our balance sheet, which now includes nearly $5.0 billion of cash and cash equivalents."

The Venetian Macao Fourth Quarter Operating Results

The Venetian Macao delivered a quarterly record of $174.7 million in adjusted property EBITDAR for the fourth quarter of 2009. Gaming volumes at The Venetian Macao were strong during the quarter, with year-over-year increases in each segment of the casino. Slot handle increased 15.2% compared to the quarter one year ago, while Non-Rolling table drop at The Venetian Macao continued to lead the market at $904.6 million for the quarter. Rolling Volume play increased 18.0% during the quarter to $10.0 billion, with the direct play portion increasing to approximately 16.8% of that total.

Sands Macao Fourth Quarter Operating Results

Sands Macao's fourth quarter operating performance reflected solid gaming volumes with adjusted property EBITDAR increasing to $56.4 million in the quarter, an increase of 7.8% compared to the fourth quarter of 2008. EBITDAR margin decreased to 19.8% in the quarter, compared to 21.2% in the year-ago quarter. The quarter's results reflected an increase in reserves for slower paying customers of $12.4 million during the fourth quarter of 2009, compared to the fourth quarter of 2008. Sands Macao gaming volumes remain healthy across the board, including slot handle which was up 39.6% compared to the same quarter last year, and continue to reflect the strong market positioning of the Sands Macao on the Macau peninsula.

Four Seasons Hotel Macao and Plaza Casino Fourth Quarter Operating Results

The Four Seasons Hotel Macao and Plaza Casino delivered $20.4 million of adjusted property EBITDAR for the fourth quarter, an increase of $15.8 million, or 343%, compared to $4.6 million during the prior year quarter. Net revenue for the property was $97.8 million during the fourth quarter, with casino revenues representing $77.4 million of that total. The property's performance benefited from the first full quarter of its Paiza mansion suite offerings, which drove healthy Rolling Chip volume of $3.75 billion during the quarter. Rolling Chip win percentage for the quarter was 2.12%, below our expected Rolling Chip win percentage of 3.0%. Approximately 29% of that Rolling Chip play was generated in our higher-margin direct rolling program. The mass gaming business at the Four Seasons Hotel Macao and Plaza Casino continued to grow during the quarter with $79.7 million in slot handle, an increase of $49.4 million, or 163.0%, over last year's quarter, while Non-Rolling Chip table games drop was $85.2 million. Hotel occupancy reached nearly 70%, up from approximately 32% in the same quarter last year.

Las Vegas Fourth Quarter Operating Results

The Venetian Las Vegas and The Palazzo had a disappointing quarter, primarily due to decreases in room and food and beverage revenues. Table gaming volumes were flat, while slot handle decreased. Adjusted property EBITDAR was $56.9 million for the quarter. Table games hold was 17.1%, compared to our expected hold of 20% to 22%, negatively impacting our operating performance. Lower group meeting and convention business also negatively impacted the operating results this quarter.

Despite low table games hold and reduced room revenues, we saw demand for future group rooms continue to improve. We expect to realize significantly more group room nights in 2010 than the approximately 470,000 we realized in 2009.

Sands Bethlehem Fourth Quarter Operating Results

Net revenues for Sands Bethlehem in Bethlehem, Pennsylvania were $57.5 million and adjusted property EBITDAR was $6.4 million for the fourth quarter. Slot handle at the property continued to grow as the property matures, and reached $847.6 million for the quarter, compared to $813.3 million in the third quarter of 2009, an increase of 4.2%. Slot hold percentage was 6.3% during the quarter.

Recently enacted legislation introducing table games into the Pennsylvania market, as well as additional marketing programs, which are currently being implemented, will benefit the property in the future. The company will submit its application for table games at Sands Bethlehem to the Pennsylvania Gaming Control Board very shortly and expects to introduce approximately 80 table games to the property in the third quarter.

Other Factors Affecting Earnings

Other Asia adjusted property EBITDAR was negative $8.6 million, which was mainly from losses generated by our CotaiJet ferry service in the quarter.

Pre-opening expenses, related principally to Marina Bay Sands in Singapore and Sites 5 & 6 on the Cotai Strip, decreased to $42.1 million in the fourth quarter of 2009, compared to $56.9 million in the fourth quarter of 2008.

Depreciation and amortization expense was $154.5 million in the fourth quarter of 2009, compared to $142.2 million in the fourth quarter of 2008. The increase was principally driven by increased depreciation related to the openings of the Four Seasons Hotel Macao and Plaza Casino and Sands Bethlehem.

The company recorded a non-cash impairment loss of $18.3 million during the quarter primarily related to real estate used for marketing activities in Asia.

Interest expense, net of amounts capitalized, was $97.4 million for the fourth quarter of 2009, compared to $128.1 million during the fourth quarter of 2008. Our average borrowing cost in the fourth quarter of 2009 was 4.0%, compared to 6.1% in the fourth quarter of 2008. Capitalized interest was $20.3 million during the fourth quarter of 2009, compared to $30.6 million during the fourth quarter of 2008.

Corporate expense was $26.8 million in the fourth quarter of 2009, compared to $21.8 million in the fourth quarter of 2008. The increase in corporate expense was principally driven by increases in incentive compensation.

Other expense was $3.4 million in the fourth quarter of 2009, compared to other income of $7.9 million in the fourth quarter of 2008. The other expense relates principally to foreign exchange losses and decreases in the value of interest rate caps in the quarter.

Loss on modification of debt was $23.0 million during the quarter, compared to $5.1 million during the 2008 quarter. The 2009 loss reflected the modification of the Venetian Macau Credit Facility as well as the write-off of fees associated with the issuance of exchangeable bonds, which were exchanged for Sands China Ltd. shares during the quarter.

The company's effective tax rate for the fourth quarter reflects the recording of a tax benefit recognized as a result of the recently enacted Worker, Homeownership and Business Assistance Act of 2009.

The company attributed losses to non-controlling interests during the fourth quarter of $6.6 million, which was principally related to minority interests in Sands Bethlehem and Sands China Ltd.

Balance Sheet Items

Unrestricted cash balances as of December 31, 2009, were $4.96 billion, while restricted cash balances were $118.6 million. Of the restricted cash balances, $17.2 million is restricted for Macau-related construction, interest and principal payments under our Venetian Macau Credit Facility and $88.3 million is restricted for construction of Marina Bay Sands in Singapore.

As of December 31, 2009, total debt outstanding, including the current portion, was $11.03 billion. Scheduled principal payments required in 2010 and 2011 total $173.3 million and $1.35 billion, respectively.

Capital Expenditures

Capital expenditures during the fourth quarter totaled $553.8 million, including construction and development activities of $419.8 million at Marina Bay Sands, $85.7 million in Macau, $35.1 million at Sands Bethlehem, and $13.2 million in Las Vegas.