拉斯維加斯金沙集團 (LVS) 2004 Q4 法說會逐字稿

And good day ladies and gentlemen, and welcome to the Las Vegas Sands fourth quarter and year end earnings conference call.

My name is Emma and I will be your coordinator for today.

(OPERATOR INSTRUCTIONS)

I would now like to turn the presentation over to your host for today's call, Mr. Bill Weidner, President and Chief Operating Officer.

Please proceed, sir.

Thank you, Emma.

And welcome all to Las Vegas Sands Corp's first earnings conference call as a public company.

We'll discuss the earnings for the fourth quarter and the full year '04, and the Company's activities in relation to the strategic growth plan.

If we remember, if we can-as we talk about what we are discussing today and before we start, I'd like to read the following disclaimer.

This conference call contains forward-looking statements that we are making under the Safe Harbor provisions of the federal securities laws.

Forward-looking statements involve risks, uncertainties and other factors beyond our control.

Actual results may differ materially.

Our forward-looking statements are based on our views today and we assume no obligation to update them.

We've had an eventful few months Las Vegas Sands Corporation.

We went public in December of last year.

We sold our Grand Canal Shoppes to General Growth Properties for $766 million and pre-sold our Mall being constructed in our Palazzo Resort here in Las Vegas, for which we expect significant additional payments in mid-'07 and beyond.

We opened the Sands Macao Casino on May 18th.

We financed and began construction of the Palazzo Las Vegas on land between the Venetian and the Wynn Resort.

The Palazzo is a full-fledged destination resort with 3,025 suites, 450,000 square feet of meeting space, malls, spa, concierge room, mega suites, Asian Paiza club, et cetera, a full-fledged $1.6 billion mega-resort that relates directly to the Venetian here.

Las Vegas growth trends continued upward unabated with gaining win on the strip, increasing year over year approximately 12 percent.

Occupancy remaining strong, average daily rates strong, increasing REVPARs.

Convention bookings and booking pace is very strong, and we look forward to adding capacity in this environment here in Las Vegas.

We began construction of Asia's only complete Las-Vegas-style mega resort, the 10.5 million-square-foot Venetian Macao.

We also completed the design and the approval for Asia's new Las Vegas strip, what we call the Cotai Strip in Macau, which comprises 11,500 rooms of multi-branded Las-Vegas-style strip operation on the door step of China and anchored by our Venetian Macao mega resort.

Macao trends continue upward unabated.

Our gaming growth for last year was over 40 percent.

That's over $5 billion U.S.

October, November and December, 39, 23, 38 percent-style growth rates.

And the mainland Chinese government continues to support its policy of fueling Hong Kong and Macau with mainland Chinese visitors.

And that direction was reaffirmed just last month, where the announcement was made by the Tourism Vice bureau chief that they will expand what they call their FIT program.

That's the Facilitated Individual Travel program, whereby residents of selected mainland cities and provinces are allowed to go to Hong Kong and Macau without a visa.

The Tourism Vice bureau chief announced that on the opening of Disney, which is in September, that many more cities will be added to that list of the FIT program.

And then following that, on February 18th, China's state council formally announced that two new cities, that's Tianjin and Xiancheng (ph), with 46 million inhabitants total will be added to the 130 million inhabitants currently on the program, a 35 percent increase in the FIT program with the stroke of the pen of the central government.

We launched several projects to upgrade the competitive position in Las Vegas to add upscale gaming areas, add mega suites, and add our Asian Paiza club brand for Las Vegas to be able to cross-market more effectively with our developments in Macau.

We are constructing two large theaters to house Phantom of the Opera and the Blue Man Group and to address the broader Las Vegas market, and pull (ph) back improvements to better serve the transient market.

We've completed and launched projects to solidify our market position at the Sands Macau.

And late in the third quarter, we opened our high-end Asian Paiza Club for Macau, about 42 tables, 52 individual suites, spas, food and beverage and club amenities aimed at the high-end Asian market.

And we began construction and completed on February 7th our Pearl Casino, to add 40 tables and 183 slot machines to increase mass market capacity.

And we began to deal credit very late in the fourth quarter.

We added two junket reps to help us develop the high-end business late in the fourth quarter, added four more in the first quarter.

So we actually formally began our attack on the high-end market in Macau.

We prepared to take advantage of gaming legislation windilization (ph) in Pennsylvania, in Bethlehem, and the anticipated legislation windilazation in the U.K. and Singapore, Massachusetts, New York and I've been looking into the potential changes in gaming situation in Detroit.

In early 2005, we refinanced our 11 percent mortgage notes, lowering our effective interest expense by approximately $72 million annually, and reduced the interest spread while increasing capacity and financial flexibility in our bank debt.

We've been very busy putting our financial house in order, solidifying and improving the competitive position of our current operations in Las Vegas and in Macau, constructing new capacity additions in Las Vegas and Macau to take advantage of our dominant position in those two dynamic growth markets.

And working to assure that our growth pipeline is filled with new opportunities in the U.K., Singapore, Pennsylvania, Detroit, Massachusetts, New York and elsewhere.

As our earnings release related, the Company generated earnings for the fourth quarter of '04 of $69.3 million, or $0.21 per diluted share.

And earnings for the full year of $495.2 million, or $0.52 per diluted share.

Results were subject to a number of adjustments, as outlined in the release itself, and we'll deal with any questions about that later on in our Q&A in the conference call.

Our view (ph) on the lack of history as a new public company, and particularly in our Macau start-up operations, I think it would be more meaningful to walk through more detailed operational analysis of the Venetian Las Vegas and the Sands Macao operations and give some update and context to our construction progress of the Palazzo in Las Vegas and the Venetian in Macau.

So with that overview, broad overview, I'd like to now turn the presentation over to Brad Stone, our Executive Vice President in charge of Operations and Development to discuss those issues.

Brad?

Thank you, Bill.

I'm going to take you through the operating results of both Las Vegas and Macau.

First I'm going to talk about the fourth quarter and then we'll discuss the year-end performance.

In Las Vegas, as Bill said, the business lines continue to be strong.

Rooms revenue increased here at the fourth quarter from $69.7 million in '03 to $75.5 million in '04.

This is an increase of $5.8 million, or 8 percent.

ADR was up 19 from 204 in '03 to 223 in '04.

Occupancy showed a slight improvement, going from 92.8 percent in '03 to 93.2 percent in '04.

Table volumes increased significantly.

Table drop increased from $213 million in '03 to 272.5 million in the fourth quarter of '04, approximately a $60 million or 28 percent increase.

Table hold was negatively affected.

We held 16.1 percent, which is 4.4 percent below our 20.5 normalized hold.

This affected revenue by approximately $12 million and operating profit a lead (ph) by an estimated $11 million.

The hold was also down from the 18.2 we held in the fourth quarter of '03.

This negatively affected revenues by $5.7 million and impacted operating profits by $5.3 million.

Slot handle in the fourth quarter increased 14 percent to $558 million, up from $489 million in handle in the fourth quarter of '03.

Slot wins showed a $1.7 million increase to $35.6 million.

And food and beverage revenue driven by increased catering business grew from $19.3 million in the fourth quarter of '04 to $21.4 million in the fourth quarter of '04, a 11 percent increase.

The Grand Canal Shoppes and associated leases, as Bill mentioned, were sold to General Growth last May.

The loss of this lease profitability decreased EBITDAR in the fourth quarter by $8.5 million.

EBITDAR for the fourth quarter of '04 was $54.1 million.

EBITDAR for the fourth quarter of '03 was $62.5 million, a difference year to year of $8.4 million.

The combination of the loss of the $8.5 million Grand Canal Shoppes EBITDAR, and the $5.3 estimated loss due to lower hold percentage year over year, negatively affected EBITDAR in the fourth quarter of '04 by $13.8 million.

Again, when normalizing hold and the total effective EBITDAR including, was $11 million on a normalized basis in the fourth quarter of this year.

So, overall, in the fourth quarter we saw rooms revenue increase, table game revenue increase, slot revenue increase, food and beverage revenues increase.

We were negatively affected by hold percentage and, of course, the loss of the $8.5 million concretion (ph) from the Grand Canal Shoppes.

Now to discuss the year ending '04 at the Venetian Las Vegas.

It was certainly an outstanding year for the property.

Room revenue grew from $60.3 million to $311.7 million.

This is a 24 percent increase for the full year of the Venezia expansion.

Despite the additional room availability in the first half because of Venezia, the additional room nights, we still achieved an average rate growth of 8 percent from $204 in '03 to $220 in the year of '04.

Occupancy also grew from 96 percent in '03 to 97 percent in '04.

Table games showed dramatic improvement.

Table drop grew 22.5 percent from $829 million in 2003 to $1.24 billion in '04.

This is an $145 million increase.

Hold percentage was relatively equal and in the normal range, year to year.

We held 20.7 percent in '04, slightly below the 21 percent we held in the year of '03.

The result was strong table growth, win table win was $211.8 million, up from the $179.2 million in '03.

This is a $37.6 million increase or a 21.6 percentage increase.

Slot handle grew 10 percent and slot win grew 16.6 percent or $20 million to $139.7 million.

With the expanded meeting space that was built simultaneously with Venezia in place for the whole year, food and beverage revenues grew $25.5 million from-up to $105.7 million, up from $80.2 million the prior year, a 32 percent increase.

Adjusted EBITDAR for the year was $299.4 million, versus $257.7 in '03, an increase of $41.7 million or 16 percent.

And when you eliminate those (ph) years of the Grand Canal Shoppes contribution, the adjusted EBITDAR would have been $285.7 million at the Venetian in '04, versus $225.1 million in '03, an increase of $60.6 million, or 27 percent.

We'll talk now about Macao (ph).

Again, the Macao property opened in mid-May of '04, so we'll go to-- for comparison's sake, compare the fourth quarter of '04 to that in the third quarter of '04.

Table drop increased quarter to quarter to $1.23 billion in the fourth quarter, up from $972 million in the third quarter, an increase of $51 million.

This, despite the fact that during this time period of table units in Macao increased from 873 to 1,165, or 33 percent, a substantial increase in units.

I think what's interesting about that $1.23 billion table drop number in the fourth quarter of Macao, that's exactly what the Venetian did for the entire year of 2004.

So it shows the strength of that market.

Mac table drop decreased slightly, from $927 million to $882 million, quarter to quarter, about 4.8 percent.

On the flip side, the VIP table drop increased from $45 million in third quarter to $144 million, a 215 percent increase as we begin initially marketing of the Sands premium gaming assets, namely, the Paiza Club, the gaming environment, the suites and the restaurant products.

We expect this marketing to start showing meaningful increases in gaming volumes in the second half of this current quarter.

As Bill mentioned, we've had more junket reps on board and we've ramped up, and are starting, as Bill said, to attack the premium part of the Macau market and take advantage of that opportunity.

We've been cautious so far and we continue to make sure we do the right thing, but we do now see the opportunity to start growing that business.

Slot one continues to show solid growth, growing from $9.9 million in the third quarter to $11.4 million in the fourth quarter, a 15 percent increase.

The Pearl Casino, as Bill mentioned, opened early in February of this year.

It's pre-opening cost, along with the related ramping up of the premium gaming market affected expenses and profitability in the fourth quarter.

EBITDAR for the fourth quarter was $67.3 million, down slightly from the third quarter's $69.2 million.

As we look forward into 2005, we expect to see increased gaming volume in the premium segment and look to take advantage of the opportunity provided by the gaming expansion and the recently expanded Pearl Casino operation in Macau.

(inaudible) -for a few moment to talk about some more detail on the development opportunity activities, both in Las Vegas and Macau.

First at the Venetian, we have recently completed the renovation of 18 suites and have constructed five new 8,000-square-foot Chairman suites.

And we'll soon open, at the end of-the beginning of April, the Venetian's version of the Paiza Club.

This completes a much stronger suite product, Paiza Club product, and expanded baccarat pit to help position us against the opportunities in the high end gaming sector as provided by the Macau operation in the very lucrative southeast Asian market.

To support the rooms revenue, as Bill mentioned, the free independent traveler business, we're currently undergoing a major renovation of our pool deck.

It's a $20 million project which will be opening this spring.

It will address what we consider to be one of the Venetian's primary product weaknesses.

Bill mentioned the two theaters that are currently under construction.

Blue Man is being built in the former C2K Theater.

That theater will open in mid-September.

And the Phantom Theater presented by Clear Channel is being built in the Guggenheim Art of the Motorcycle space and that will open in the spring.

In Las Vegas, the Palazzo construction continues with a target of a spring '07 opening.

Excavation and retaining wall construction continues in the underground parking facility.

Foundation work in the tower is expected to commence in May.

Work on the Phase II Congress Center (ph), which is the meeting space that is being added to the Phase II project, is actually well ahead of schedule and should be complete by next spring, a year ahead of the remaining property.

So again, progress is going along well there and we look to continue to meet the spring '07 schedule.

In Macau, the Venetian construction is significantly gearing up.

Land reclamation and soil stabilization is complete.

Ore pile work and heavy duty pile work in the hotel tower has been progressing for several months.

Piling work has commenced throughout the site.

We have currently 40 piling rigs working seven days a week, 12 to 14 hours a day.

We are finalizing the super structure package for the hotel tower and have begun mobilizing contractors to begin starting the construction of the tower once we finalize the bore pilings and the pile cap systems.

And again we're still targeting a late March '04 as the opening date of that property.

So that gives you an update on the operating metrics of the properties, as well as an update on the properties in Macau and Las Vegas.

And with that, I'll turn it back to Bill.

Thanks, Brad.

We've been busy also domestically and internationally, looking for opportunities to be able to keep our growth pipeline robust.

In the U.K., we expect by April 7th to actually have an approved liberalized gaming legislation.

There are moves afoot to try to modify and change that legislation.

But our folks on the ground there tell us that they feel it's fairly solid going through the House of Lords, and they would expect the legislation to be passed by April 7th.

We announced signed development deals with the Glasgow Rangers at their Ibrox Stadium redevelopment, which is right next to a major highway there in Glasgow, Scotland.

And we announced our deal with Sheffield United on the Bramall Lanes Stadium regeneration, which is an urban project related to the Sheffield United Football Club.

Some of our potential partners have outed us recently, as you may have seen.

Manchester United made an announcement that they were discussing a development deal with us with Old Trafford Council.

The Birmingham Football Club disclosed our discussions with them relating to their discussions with Birmingham Council.

The Sunderland Football Club outed us as talking with them about the north-with the Northeast Regional Development Authority.

And what I wanted to make sure I did was clarify the difference between the deals that we've actually announced and those pieces of information that may be out there.

I want to make it clear, we have not as yet finalized with Birmingham or Manchester, or Sunderland.

But there are articles out there published, talking of us in the context of these clubs.

We have only signed with Glasgow Rangers and Sheffield United, although we are active with dozens of clubs for development deals there.

Just wanted to make sure we were clear about that.

In Singapore, we submitted responses to Singapore's request for a concept for an integrated resort.

We are leveraging our long-standing relationship with Guggenheim as part of what we're developing there.

We've submitted plans for a large comprehensive, architecturally iconic, significant development that we think responds well to Singapore's request for concept.

A decision will be made in April on a go, no-go for Singapore in terms of pursuing the idea of a large integrated resort such as what we've-a concept that we've submitted.

We would assume that if all goes well, in the ensuing months there will be a process of announcing who are the finalists and more discussions there.

But we did, in fact, submit on February 28th for our concept for Singapore.

In Bethlehem, Pennsylvania, we made a proposal to the State of Pennsylvania and the city of Bethlehem, to redevelop the old Bethlehem Steel site.

It's approximately 140-acre.

It involves a master plan anchored by a large casino entertainment facility.

We would expect some sort of decision later this year, but probably flipping on over into '06 before those decisions will be made.

In Detroit, the MGM-announced sale of their Motor City property, made for a due diligence process that led to the feasibility, our own feasibility studies of entering that market.

In Detroit, Prepress disclosed our discussions with the mayor and the governor of Michigan, and so we have been working there.

In Massachusetts, we took a collateralized lender interest in Wonderland Dog Track, which is in suburban north Boston, to secure a basis to develop a racino if Massachusetts approves slots at the race tracks there.

In New York, we've retained representation in New York State to follow the gaming development as New York struggles to find new revenue sources to balance its budget.

It appears that they will pick this up in the fall session in terms of the budget issues there, and we're following the potential development of gaming legislation there.

We will continue to aggressively pursue development opportunities to keep our development pipeline filled for years to come to provide visible growth opportunity for the Company, a very important part of our strategy moving forward.

I would now like to turn the presentation over to Scott Henry, our Chief Financial Officer, to discuss our financial activities for the quarter and for the year.

Scott?

Thank you, Bill.

On a consolidated basis, we reported EBITDAR before pre-opening and development expenses of $124 million for the fourth quarter, almost double the $63.4 million reported in the fourth quarter of 2003.

We also reported $474 million of EBITDAR for the full year 2004, versus $270.8 million for the full year 2003.

The increases in the 2004 periods were primarily driven from the opening of the Sands Macao in mid-2004, the benefits of a full year of operations for the Venezia Tower at the Venetian in Las Vegas.

Offset by a reduction in recurring cash flow associated with the sale of the Grand Canal Shoppes.

Corporate expense in the quarter totaled $2.5 million, versus $3.6 million in the year-ago quarter.

2004 was a year where we evolved from a one property company into a multi-property company and, as such, certain expenses previously captured as corporate expenses of Venetian are now shared among multiple entities and/or captured as predevelopment or pre-opening expenses.

Corporate expense for the year, excluding non-recurring compensation and intensive (ph) charges, was $14 million in the quarter-for the year, up from $10.2 million in the prior year.

Pre-opening and predevelopment expenses increased to $9.4 million in the fourth quarter from $3.8 million in the prior period.

The increase relates to continued predevelopment expenses in Macau and heightened development efforts in other jurisdictions.

For the full year, pre-opening and predevelopment expenses were $33.9 million, up from $10.5 million in 2003.

Of the $33.9 million, $18 million was attributed to the opening of the Sands Macao and other development activities in Macau; $11 million to our development efforts in the United Kingdom, and the balance between our Las Vegas operations and development efforts in other jurisdictions.

Depreciation expense was $17.7 million in the fourth quarter, $19.2 million before a third quarter adjustment of approximately $1.5 million.

Versus $15.4 million in the fourth quarter of '03.

Depreciation for the full year 2004 increased to $69.4 million from $53.9 million in the prior year.

The increases primarily relate to the opening of the Sands Macao in May of 2004.

Net interest expense was $33.9 million in Q4 '04 and $130.3 million for the full year, as compared to $31.1 and $120.3 million for the 2003 periods.

The higher figures resulted from increased borrowings related to the construction of the Palazzo in Las Vegas and the Sands in Macau.

Capitalized interest in 2004 was $1.9 million for the quarter and $4.6 million for the full year.

In mid-December 2004, the Company converted from a flow-through tax entity to a tax-paying entity.

As part of this conversion, we reported a $13.7 million tax benefit in the fourth quarter, which also affects the full year.

Our corporate tax rate on our U.S. operations is 35 percent.

In Macau, we've been granted an income tax waiver on all gaming income through 2008.

Since virtually all of our generated income in Macau is from gaming operations, our effective corporate tax rate on our Macau operations is essentially zero.

Adjusted net income for the fourth quarter was $63.5 million, or $0.19 per diluted share, as compared to $8.2 million and $0.03 per diluted share for the fourth quarter of '03.

Adjusted net income for the full year was $210.4 million, or $0.64 per diluted share, versus $48.6 million or $0.15 per diluted share in the 2003 period.

As Bill mentioned, we completed our IPO in December of 2004.

We raised net proceeds of approximately $744 million.

As of December 31, 2004, we had unrestricted cash balances of approximately $1.3 billion and restricted cash balances of $377.5 million.

Of the restricted cash balances, $357 million is restricted for construction of the Palazzo Casino Resort in Las Vegas.

Total debt outstanding on December 31, 2004, including the current portion, was $1.79 billion.

In February, 2005, we completed a series of transactions designed to streamline and further strengthen our capital structure.

We exercised the equity call-back option on our 11 percent mortgage notes to be 2010, redeeming a third of the issue, including related premiums and accrued interest, with 327 million of proceeds from our IPO.

We amended and expanded our senior secured credit facility, lowering our borrowing rate by 75 basis points to LIBOR plus 175, and increasing the total size of the facility b $610 million to $1.62 billion.

We presently have approximately $400 million of availability under the revolver component of the bank facility.

We issued $250 million of ten-year 6-3/8 percent senior notes at the parent company level, and we used the proceeds from this notes offering, along with proceeds from the expanded bank facility, to fund the redemption of the balance of the 11 percent mortgage notes.

Upon completion of these transactions, our total debt outstanding was reduced to approximately $1.5 billion, with a weighted average interest rate of approximately 4.9 percent at today's rates.

These transactions, at today's rates, result in pro forma pretax annualized interest expense savings of approximately $74 million, as I said, on an annualized basis.

That concludes the prepared remarks for our presentation.

And now, at this point, we'd like to open up for question and answer.

Thank you, sir.

(OPERATOR INSTRUCTIONS)

And our first question comes from the line of Robin Farley from UBS.

Please proceed, sir.

Thanks.

I actually have three questions.

Two of them are just housekeeping.

I wonder if you could tell us how many shares outstanding going forward from this point on?

It looks like it's totally different than Q4.

Also, I wonder if you could give us the split between pre-opening and pre-development costs, because pre-development is not usually added back to earnings?

So I'm just wondering how much of that is pre-development.

And then third question.

First, there has been chatter from Macau, I guess no official numbers out on January and February, but showing a lower revenue growth rate than the market overall.

And I wonder if you can just comment on that.

Okay, one at a time.

I guess, Scott, do you want to take the first couple?

The fully diluted share count is 354 million shares outstanding that we had to account on a weighted average basis for the purposes of our financial reporting in this quarter.

As far as, Robin, the split between pre-development and pre-opening charges, we're in the midst of changing some of our corporate reporting.

And on a going-forward basis, we'll be breaking those out separately so that we can include predevelopment alongside of corporate expense, as opposed to alongside of pre-opening charges.

At this point, I don't have the specific breakout available for you, but we will have that available by the end of the month when we file our 10-K.

Okay.

And as far as, I think you referred to it as the Macau chatter?

I'll hand that over to Bill.

First time I-that we-it's Bill Weidner - the first time we really heard anything about the Macau chatter was the, I guess the announcement from the-from someone talking about what February looked like.

We really didn't keep our ear to the ground all that much in terms of what the market-wide numbers were.

Obviously, we are new in the market so we're operating for the first time in the February environment.

January, for the market overall, was a reasonably strong growth rate that we believe is in the double-digit range, in the 20-percent-ish range.

February, for our first operation there in February, it was kind of interesting, shall we say.

What we find in Chinese new years here in Las Vegas, that most visitors from China come for just about the entire 14, 15 days of the Chinese New Year celebration.

There in China, closer to home, the first four days, four to five days, are very family oriented.

So we saw that our traffic counts were the lowest we'd ever seen in the first few days before Chinese New Year.

And then just an explosion of people coming in during-right after the fourth day of Chinese New Year.

So we then had-we went from record low attendance to record high attendance in the matter of two days, in the two day swing.

So for us, it was kind of unusual to see that kind of a pattern.

We didn't see anything different about February overall.

The volumes looked reasonably strong.

And marketwise, it was kind of surprising to us to see that kind of a low growth rate.

It is traditional in China that during the Chinese New Year, a lot of the high-end players kind of avoid Macau, simply because it is as crowded as we found it to be.

And when there are 50,000-plus people coming through the building, it's hard to move around, let along be comfortable.

So that probably did affect some of the high-end play overall.

But we felt that February was reasonably strong in terms of the kind of traffic that we saw, except for that extraordinarily low lull period right before Chinese New Year.

Okay, great.

Thank you.

And our next question comes from the line of Michael Rietbrock from Smith Barney.

Please proceed, sir.

Hey, guys, a few questions.

The first couple on Macau.

Could you give us a feel for how the Pearl expansion has gone and what your thoughts are on, I guess you call it the platform expansion?

Is that something that you'd wait for a while to do and see how the market absorbs the capacity?

Or is that something, you know, you'd think about moving forward on at this point?

Well, our belief is that the market will continue to grow, particularly, again, with the announcements I've talked about in the last few days from the central government continuing to support the concept of the FIT, the individual travel program to Macau.

We are continuing with our plans to increase capacity, mass market capacity.

We see that in the fourth quarter, with all of those new table games that came on between third and fourth quarter, they actually had about a tripling of capacity in Macau.

Between the-about 600 tables have come on line in Macau, including ours, in terms of the opening of our facility overall.

And we still see a very strong mass base of business coming through the door, and we have the better mousetrap, both in terms of location and physical facility.

Although we do see, call it curiosity visitation to the new places, the new places that have opened and the new capacity that's been added is inferior by a long shot to what it is that we have.

So our plans are to continue to plan for expansion.

Certainly we opened the Pearl at a propitious time because we knew the Chinese New Year would (inaudible) the 10th or 11th, would dramatically increase foot traffic.

So the Pearl Casino, we opened to intercept that foot traffic.

Traditionally in Macau, as the spring comes, you have higher visitations.

January and February are somewhat lulls. even in March, April and May, we see ourselves using more of that additional capacity.

We do want to get our arms around what the kinds of wins per unit will be in the environment as we begin to lap ourselves year on year.

But we're in a good position to be able to add more capacity quickly, because we do have in place the plans overall and we plan to move forward in adding more capacity.

Because we see, again, as the board has opened more and more, there's a lot more foot traffic coming to Macau.

Right.

Thanks.

And then just a few other quick ones.

Bill, could you comment on the management change that you made there?

I think that was subsequent to the IPO.

And then a quick update on the bridge from Hong Kong.

Are you still confident that that's going to happen, and what are you thinking in terms of timing?

And then the last question is for Scott.

Scott, we discussed it earlier, but I think since this is your first call, useful to clarify what the guidance policy here is, sort of the guidance.

The non-guidance policy, I guess, is going to be going forward for people.

Okay, one at a time.

First one.

In deference to prior management, it was our intention to find a more aggressive style.

I think that's the best way to put it.

We wanted someone at a broader basis in terms of multiple operations around the world, so a multiple operation like Casinos Austria was a logical place to look.

And as we enter into the high-end markets and as we broaden our activities there, we wanted a more senior level executive to take responsibility for both the operations of the Sands and then the subsequent development and opening of the Venetian Macao.

So it was an appropriate time to make a change.

That's comment number one.

Number two, what was number two?

Update on the bridge.

Bridge?

We constantly hear feedback from Hopewell and others who are bidding on the bridge that they are going forward, or that the government is going forward.

The next thing that we'll hear, I think, is the environmental report that's due sometime this spring.

The environmental report will then give a better indication of what it's going to take to mitigate whatever environmental issues there may be, and we'll get a better idea of the actual completion date.

But from the feedback that we hear, we have one of our consultants there who has actually prepared the information on, in terms of economic impact, for the Hong Kong government and the central government.

We are in touch with him, since he helped us in our Singapore bid.

Had discussions with him as late as last week, and the indications from inside and outside of government is that the bridge development is proceeding apace.

I will get a better idea of the timing, again, when the economic impact is produced sometime this spring.

That's the best information that I know.

Thanks.

And the third question was?

The guidance.

The non-guidance policy.

We've made a determination, after a long sort of deliberation with our board and among the Management team, not to provide forward guidance at this point, for the following reasons.

One, we are largely still a development-oriented company.

We have $3.5 billion in projects in the ground that are, you know, be coming to fruition over the next 2 to 2.5 years.

We're still relatively young into our experience in the Macau market.

I've said to many of you, over a time you've heard from me and from others, that the Macau market, to a degree, is still a laboratory for us in some respects.

We just went through our first February.

We're now going through our first March.

And, interestingly, after conversations with nearly a dozen large investors, you know, we came to the conclusion that guidance was far less important for us to be providing than it may be for some of our peers, given the nature of our, let's say, evolution.

In addition to that, there have been trends that we've seen, where many, many companies that were historically providing guidance, not just within our industry but outside of our industry, have stopped providing guidance.

And it's also been the advice of our counsel, as well as the advice of our audit committee, not to do so.

So we've made a determination not to do so.

Okay.

Thanks, guys.

We want to try to provide, Mike, some additional visibility into our operations and numbers, so why you have such an exhaustive release that we've provided.

That we felt that, you know, real high-quality deep information into our specific operations and segments would be far more useful than an EPS range going forward.

Yes.

Thanks.

And your next question comes from the line of Lawrence Klatzkin from Jefferies and Company.

Please proceed, sir.

Hey, guys.

A couple of questions.

Can you give out the win per unit in Vegas and Macau?

Just exact numbers.

And also, maybe what the year-end number of units were in each market and maybe what the units are right now?

If we could do that-the win per unit in the fourth quarter in Las Vegas, in tables, was 3,556 per day, up from 3, 384 per day in '03, fourth quarter '03.

Win per unit per day in slots was -- let me just look through here.

Yes.

And by the way, the count there, Larry, the number of tables in '03 were 124.

The number of tables in '04 were 134.

In slots, the units are almost identical, right at about 2000.

The win per unit per day in the fourth quarter was 184.

The win per unit per day in the fourth quarter of '04 was 193.

In Macau, we had 281 table games in the third quarter of '04, 300 table games in the fourth quarter of '04.

The win per unit was 5,900, roughly, in the third quarter, 5,650 in the fourth quarter.

They were lower a whole percentage in more units, even though dropped activity was up.

And on slots, we-well, we saw an increase in slot revenue.

The number of units went from 519 to 666.

I guess these are weighted averages because there was a lot of activity on the slot side.

And the win per unit per day was 207 versus 177.

207 for the fourth quarter this year?

Third quarter, and 187 for the fourth quarter.

Do you have what the-at the end of the year-

Current counts right now, you know, because I can't give you right at the end of the year.

Current counts of slots are 840 at the Sands and 352 tables.

352, okay.

Second question.

Any movement on the law on deductibility of bad debt?

I assume that's not going to happen until you get close to opening your other property?

We've had conversations with government and they're looking at different ways of dealing with the issue.

One of the issues is something of a political issue in terms of mainland Chinese visiting Macau, so there's some political sensitivities in that regard.

And they are working on ways of being able to deal with the issue.

I guess the best that I can give you now.

All right.

And then, how about as far as timing on-anything going on in Thailand?

You didn't mention-that's one market you didn't mention.

Is that kind of like dead for now?

Not totally dead, I believe.

I mean, we, weirdly enough, we continue to have discussions with members of government in Macau through our activities in the U.K., particularly the football team.

You probably read a while ago that the Thailand government was contemplating actually buying the Liverpool Football Club.

So it is through discussions in Liverpool, in Liverpool, Everton, and so forth, that we have been in touch with them.

There isn't a lot of movement right now, but it's still out there as a possibility.

All right.

And then, Scott, one question.

If you can give us what-just what you expect us to use for corporate and maybe development over the next-because obviously development in the fourth quarter was a lot higher because of the U.K.

So what may you see us as using for the rest-for this year?

I think just part of-my general counsel is sitting here shaking his head at me, Larry.

Somebody's (ph) not giving guidance, still give corporate and development?

I think we'll get back to you with an answer, with an answer on that.

We don't want you to be kind of flying around in the vapor, but at the same time, we don't want to give part guidance there.

So we'll have to review that amongst ourselves and with our counsel, and get back.

All right.

All right.

And, good.

Well, guys, good results.

Thanks.

And our next question comes from the line of Steve Kent from Goldman Sachs.

Please proceed.

Hi, good morning.

Maybe if we could just move back to Vegas for a moment.

Bill or Brad, could you give us an update on how conference convention activity is shaping up for the balance of the year?

Is there any shifting of major conferences or conventions that you think could affect you quarter to quarter, and just generally the tone of business that part of the market?

Yes.

That business continues to remain strong.

As far as the activity goes, we're where we think we need to be.

As far as looking at our booking pace for the year, I think we're somewhere, if you count tentative group bookings.

And tentative group bookings here at the Venetian we define as deals that have been made, the contracts are waiting for signage.

We're at about, I think it's 85 percent of our need for this year on the books right now, which, obviously, we still have the rest of the year to book, other months.

So we feel comfortable there.

As I think we've said in other meetings, we have locked in some long-term trade shows with Reed (ph) and done that to stabilize, you know, our position in the trade show market.

The market overall, we think, you know, continues to show a lot of interest in Las Vegas, and we are definitely the place in Las Vegas.

And certainly as we get closer to opening the Palazzo and we, you know, are able to free up rooms, meeting room space, perhaps in advance of the opening, that will just make us that much more desirable.

Okay.

Thanks.

And our next question comes from the line of Bill Lerner from Prudential.

Please proceed, sir.

Thanks.

I apologize for the speaker phone.

Can you guys give us a sense, because there seems to be some, maybe, confusion, out there about this.

But in Macau, if you were to strip out the impact from promotional expense to get the credit business ramped, what would EBITDA have been?

Seems like your table business got more efficient on an individual basis.

You obviously had tables.

So I don't think that's where the slippage sequentially of $2 million came from.

But what was it all promotional and you're basically standing on the come (ph) here?

Thanks.

You have a combination of a quarter-to-quarter difference of whole percentage of about 50 basis points, approximately.

That represents $3 million-plus, and then there's a couple of million dollars of additional expense in terms of getting ready to ramp up for the credit business and the high end business.

We really had a couple of things that affected our margins.

One, as Bill said, the support in the opening of the Pearl Casino.

As you know, we tend to not hire dealers, we tend to develop dealers.

That's what we did at the opening.

That's what we continue to do.

We also put dealer training on second games, because of our growth and that affected our cost somewhat.

But that will yield improved schedule efficiencies.

And we also did some promotional in the supervisory area.

We do have a slight increase, probably a percentage point, that relates to promotional allowances and junket commissions and all.

So that just may be one margin point, and the labor affected is probably about another margin point.

And then, as Bill said, you know, we're down about $5 million effect on hold, and with a 40 percent tax, that would have been about a $3 million hit, quarter to quarter.

Okay, that's real helpful.

And then a follow-up is just in terms of credit play in general.

When do we start to actually see the-you know, the actual benefit?

Are you experiencing in this quarter, obviously, you know, win per table sub-6,000 suggests it's mostly cash play right now.

Now, obviously, it will change, but should we anticipate, you know, much higher win per table in the future?

Maybe at what stage, number one, and number two, the lower margins associated with the credit play relative to cash play going forward?

Are you referring to credit play or VIP play?

Or both?

Well, you know, really, credit play.

I guess both.

Well, I mean, credit play will continue to be a fairly minor part of the mix until we can figure out with government how to deal with this big idea of the writeoffs.

It's just too high a risk to take to be in a significant credit-granting mode with a 39 percent effective gross tax.

We are only extending credit to people that we know quite well in the region that have established credit here in Las Vegas and that we have an experience with them in the collection cycle, or they have a reputation that we know well.

So we're very cautious in that regard.

We do see increases coming and we are experiencing increases now, as we did in the fourth quarter, of increases in junket-style rep play.

As we add licensable junket representatives to our mix of marketers (ph) to the high end.

So I do believe that you will see, and we have plugged into our plans here, fairly dramatic increases from a relatively low base in high-end play.

We will see some volatility, certainly, because high-end play, as in Las Vegas, has a tendency to bounce around in terms of win percentage.

You'll see some effect on margin, since the commissions to be paid to those reps will come out of the revenue mix and add to the expense mix.

But I think that we're confident that you'll see an increase in high-end play, particularly out of what we call our Paiza Club there.

And that we'll see improvements in the volume, certainly in the win per table volume.

Okay, that's real helpful.

So, before you roll out the credit play here, essentially we'll see higher win per table-well, I mean, we'll see higher win per table because of VIP play going forward, even excluding the move into credit play going forward.

That sounds right.

You'll see a higher mix of high-end play in the overall win.

The amount of total play, to a certain extent, will be based somewhat on seasonality and somewhat on the border-opening process, because the new capacity at the Pearl Casino and the more effective utilization in terms of occupancy on the floor of the mass business will then relate to the number of visitors that come to Macau on a seasonal basis.

And as new visitors come from mainland China.

So the combination of those two.

There will be a seasonality to the mass play.

We've seen that in some of the cycle now.

But, as we get into the spring and summer, I think we'll see more foot traffic, generally, as we-

As people experience the other inferior products, I think we'll see them, their rate of return and attention return, we think will-is significantly below that which we experience at the Sands.

So we'll see the market go into places like Greek Mythology, you know, Golden Dragon, and a couple of the other conversions of ballrooms, lobbies, broom closets and anything else, to add more table capacity to.

But we think that-that as people cycle through and see what the competitors have to offer, we'll see a better utilization of our mass floor, too.

Thanks.

That's a helpful clarification.

I appreciate it.

Thank you.

And our next question comes from the line of Harry Curtis from J.P. Morgan.

Please proceed, sir.

Hi, guys.

Most of my questions have been answered.

Just going back to the bridge.

Just for what it's worth, we got some information today that Beijing has given final approval for that bridge.

Well, good.

And the question I have is do you have any sense where in Macau it might reach landfall?

There are two proposals that they are still studying as part of this impact study I mentioned before.

One lands just to the north of the current ferry terminal that is a few hundred yards from the doorway of the Sands.

The other actually routes south all together around the airport and either lands somewhere where we're developing on the Cotai Strip, or somewhere somewhat south of that and lands actually on Tianjin Island to be the landing in mainland China.

Again, and that would be about a quarter of a mile or so south of the Cotai Strip.

So either landing point, you know, will be helpful.

Our thought is it would be better, quite frankly, for the landing point to land near the Sands, simply because the mass market, the strategic position of the Sands being right there at the doorstep of that landing point would continue to be superior to others in the marketplace.

And the strategy for the Cotai Strip is really a destination, multi-day-stay strategy.

So it's not as important for the Cotai Strip to be exposed to the mass market.

The Cotai Strip, as I say, is more of a Las-Vegas-style destination.

So either place, I mean, it would be a real boon, I think, to the Cotai Strip.

But either place, that bridge is an incredible addition to the infrastructure, if you think about it.

You could leave Hong Kong Airport and be in Macau sooner than you could be in downtown Hong Kong.

So it's a pretty amazing addition to the infrastructure for Macau.

And my second question is when you think about the trends in January and February, are they reasonably comparable to those seen in the fourth quarter, or are you seeing some acceleration or any change in the rate of growth?

We don't really have any official numbers.

January certainly was at a similar pace to what happened in the fourth quarter, but we haven't seen the official numbers in February.

With respect to your property, though?

Our property?

I mean, you know, this-again, the problem is we haven't lapped ourselves, so is a typical February pattern or a typical Chinese New Year pattern the same all the time?

I assume that it is.

So it's hard for us.

It certainly felt busy in February, I mean, when you walked through the building.

And it certainly was busy, certainly during the Chinese New Year in February.

But we didn't discern a whole bunch of difference between, quite frankly, January and February.

I think when we average out the total traffic count, they were similar in January and February as far as foot traffic in the building.

Very good.

Thank you.

And our next question comes from the line of Felicia Hendricks from Lehman Brothers.

Please proceed, ma'am.

Hi, guys.

Two questions.

One is, I guess under the-somewhat under the housekeeping category.

Just wondering when your construction borrowing for Macau is really going to pick up, just from a modeling perspective?

And then, the second question is, if we just look towards Vegas, just wondering, you know, what kind of trends you're seeing there over the next few months into the spring?

Specifically, if you could talk a little bit about what kind of room rate trends you're seeing?

Sure, we can talk about Macau.

I think what we've told people previously about Macau from a borrowing capacity issue is to keep pace with our capital expenditure projection budget for the year, we really don't need to borrow any incremental money in Macau until the end of the year.

We told folks during the IPO road show, Felicia, that we were exploring the opportunity to do some financing there, and we are presently doing that exploring.

And, you know, we expect before the end of this year that we'll be in a position to announce a deal in Macau.

And what we told folks during the IPO road show is that we thought we'd be able to do that without, you know, making any significant infusion of capital from Las Vegas to make that happen, and we still believe that is the case.

Okay, so pretty much status quo from what you said and no change there.

Does that answer your question?

Not really?

I wanted to know about the stuff that you're not talking about you're not talking about yet, but that's okay.

Okay.

Good try.

And then Vegas?

As far as Vegas trends go, I think, you know.

First of all, on the gaming side, I think, at this particular property, you know, we continue to see results of our association with the Venetian, the Sands Macao.

We opened some major assets which should be helpful to us.

The difference we're going to have year over year is just the fact we held so well in the fourth quarter of-the first quarter, rather, of '04, with, I think it was like a 29 percent hold percentage.

So that's going to be the challenge, and I think that it will be recognized as that anomaly.

You know, rooms business remains strong.

I think you're going to see that the patterns here are-we had great growth in '04 and I think we're going to continue to see strong performance in '05.

Maybe not as strong as we saw in the '04 period in terms of growth, yes.

Percentage relative business.

Right, I got it.

Okay, thanks.

This concludes the question-and-answer session.

I will turn it back to Mr. Weidner for closing remarks.

Thank you.

And thank you all for participating in today's conference call.

We had a reasonable quarter on strong gross demand metrics, table hold in Las Vegas affected us in the fourth quarter, but it was normal for the year.

A 50 basis points difference in table hold percentage quarter to quarter in Macau, and increased cost in Macau to get ready for the next stage of our market development there that is attacking the high end did affect results.

But results provided us a good base to continue to pursue our strategic direction to solidify and improve our current operations to position ourselves to efficiently and effectively finance our development growth pipeline.

And to put capacity in place to take advantage of a growing Las Vegas and a burgeoning Macau market.

We are very aware that we're very fortunate to be in the right places at the right time, and we want to take complete advantage of that opportunity.

We also have sought to create a robust development pipeline to assure growth into the foreseeable future.

And with that, we conclude Las Vegas Sands Corporation's first earnings conference call as a public company.

We thank you for your attendance, and we look forward to talking to you again in the very near future.

Thank you.

Thank you, sir.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Have a good day.