拉斯維加斯金沙集團 (LVS) 2009 Q4 法說會逐字稿

Good afternoon.

At this time, I would like to welcome everyone to the Las Vegas Sands Corporation's fourth quarter and year-end earnings conference call.

I would like to turn the call over to Mr.

Dan Briggs, Vice President of Investor Relations.

Thank you, Mr.

Briggs, you may begin your conference.

Thank you, operator, and good afternoon, everyone, and thank you for joining us today.

On the call with me today are Mr.

Sheldon G.

Adelson, our Chairman and Chief Executive Officer, Mike Leven, our President and Chief Operating Officer, Rob Goldstein, Executive Vice President and President of the Venetian and Palazzo Las Vegas, Ken Kay, our CFO, Steve Jacobs, CEO of Sands China Limited, and Tom Arasi, CEO of Marina Bay Sands.

Before we begin, I need to remind you that today's conference call will contain forward-looking statements that we are making under the safe harbor provisions of federal securities laws.

I would also like to caution you that the Company's actual results could differ materially from the anticipated results in those forward-looking statements.

Please see today's press release under the caption "forward-looking statements" for a discussion of risks that may affect our results.

In addition, we may discuss adjusted EBITDAR, adjusted net income, adjusted diluted EPS, and adjusted property EBITDAR which are non-GAAP measures.

A definition and a reconciliation of each of these measures to the most comparable GAAP financial measures are included in the press release.

Please note that this presentation is being recorded.

I will now turn the call over to Mr.

Adelson.

Thanks, Dan.

Good afternoon.

Thank you all for joining us today.

I will begin the call today by sharing a few general thoughts on the quarter.

I will then hand the call over to Mike and the team to provide some additional detail.

In Macau, I'm pleased to report that we generated more EBITDA from our three properties during the fourth quarter of 2009, than in any other quarter in the Company's history.

We continue to lead the Macau market in this most important measure of financial performance.

Notwithstanding the often quoted gross gaming market share figures, we firmly believe that EBITDAR is the appropriate measure of overall financial performance, and that that growth in this metric, along with increasing returns on net invested capital, will translate directly into shareholder value.

Total net revenue at our three properties did increase 25% compared to last year's fourth quarter, but most importantly, adjusted property EBITDAR increased a whopping 48% across our portfolio of properties in Macau.

At the Venetian Macau, EBITDAR for the quarter was a record $175 million, an increase of over 55% compared to last year's fourth quarter.

EBITDAR margin increased to 30.6%, another quarterly record.

The Four Seasons Hotel Macau and Plaza Casino also had its best quarter yet.

The strength of our business model in Macau is clearly on display in our quarterly results.

Our focus on the highly profitable mass gaming hotel and retail businesses, together with our attention and cost structure and efficiency, has allowed us to grow our EBITDAR faster than others in the market that rely more heavily on lower margin segments for growth.

A strong quarterly performance provides more (inaudible) - - resumed construction process on our largest Cotai Strip development to date, Parcels five and six directly across the Cotai Strip from the Venetian Macau and Four Season Hotel Macau.

We like to call that development the "game changer" because we believe the addition to the Cotai Strip of a development of that scale at 13.3 million square feet, together with its resident cornucopia of world-class attractions and amenities will change the dynamic in Macau quite dramatically.

The first phase of the development featuring 3700 hotel rooms from the Shangri-la Traders and Sheraton brands will open in June 2011, around 16 months from today.

The second phase of the development will open approximately six months thereafter, and will feature an additional 2300 rooms from the Sheraton Towers brand, totaling 6,000 keys.

We are confident that the addition of our latest integrated resort development will both enhance Macau's appeal as a tourism and MICE destination and extend our position as the leading mass market operator in Macau.

Also during the quarter, we completed the sale of a minority interest on our Macau operations, so the listing of [Sands] China Limited out of Hong Kong Stock Exchange.

[FC] (inaudible) trades in Hong Kong under the listing code 1928, it must have been a good year.

We were pleased to both increase our cash reserves to just under $5 billion of unrestricted cash on our balance sheet, and to offer Asian and other investors the opportunity to participate in the future growth of Macau through Sands China Limited.

Turning to our Marina Bay Sands development in Singapore we are now entering the final stages of our pre opening activities and expect to announce the specific April opening date next week.

[Inde] Singapore opened last Sunday and early indications are that activity is brisk and robust.

This contributes to our enthusiasm about the property's potential to generate both significant growth and strong returns.

We look forward to introducing this iconic destination resort to the world in about ten weeks, and to formally celebrating its debut with the people of Singapore and the grand opening celebration in June.

Finally, let me spend a moment on Las Vegas.

The good news is that good business is returning.

In fact, our group business is up 20% in the first 40 days of 2010 compared to last year.

Forward bookings are also increasing for both 2010 and 2011.

The Venetian and Palazzo were purposefully built to serve this customer segment, and with 2.25 million square feet of exhibition and meeting space, as well as 7,100 all-suite rooms and myriad dining and entertainment amenities, we believe we are extremely well positioned to benefit as the recovery in the group business sector continues.

So overall, from my perspective, I am extremely pleased we built our performance today and our positioning for the future.

I will now turn the call over to Mike.

Thank you, Sheldon.

I will add just a couple of big picture points, because I think the results pretty much speak for themselves, and we want to allow plenty of time for your questions.

Our operating results clearly reflect our right sizing and efficiency initiatives.

We have eliminated over $500 million of costs from our expense base.

We're working hard to make sure that a culture of efficiency and a focus on cost control will be among the most important pillars of our future success.

Our strong results in Macau reflect both our focus on efficiency and a healthy gaming market.

The Venetian Macau remains the clear market leader in mass play in Macau, delivering non rolling drops of $905 million on a record slot handle of $659 million for the quarter.

We strongly believe that the development of critical mass on the Cotai Strip, including the City Of Dreams, as well as Galaxy's planned property on Cotai, and our development Parcels five and six, can not only expand the market, driving greater mass play as well as greater hotel and retail revenues to our current and future properties, but also will contribute to the maturation process of the Cotai Strip and its evolution as Asia's premier business and leisure destination.

Cash flow generation at the Venetian Macau continues to mirror our strategy.

For every dollar of EBITDA generated at the property during the quarter, approximately 49% was produced by less volatile, higher margin mass gaming and slot play.

Approximately 26% was generated from non gaming areas, including our hotel, convention, banquet, and retail operations, and approximately 25% was contributed by the more variable lower margin VIP rolling play.

We remain focused on developing and growing our premium direct business, which is the higher margin segment of VIP rolling play.

The direct VIP play at the Venetian Macau grew to $1.7 billion, or approximately 17% of the more than $10 billion of rolling volume during the quarter.

At the Four Seasons Hotel Macau and Plaza Casino, which is clearly benefiting from our [nineteen pies and mansions], rolling volume grew impressively to $3.8 billion, while direct VIP business accounted for $1.1 billion, or 29% of that amount.

Let me spend a moment on the Sands Macau.

The Sands Macau EBITDA increased 8%, to $56 million for the quarter, reflecting healthy gaming volumes and the execution of the right sizing and efficiency programs.

Our flow-through to EBITDA was less pronounced at the Sands this quarter because of approximately $12 million of higher reserves for receivables, primarily relating to one longtime player.

The Sands remains a market leader in mass play on the peninsula, delivering non rolling drop of $579 million, and a record slot handle of over $352 million, an increase of nearly 40% compared to the fourth quarter of 2008.

Rolling volume of $6.6 billion is the highest at the property since the third quarter of 2008.

The operating momentum of our Macau properties continued in January of this year with strong year-over-year growth despite the fact that Chinese New Year fell in January last year.

So that covers Macau.

Let me spend a moment on Sands Bethlehem before Rob covers Las Vegas.

Historically, it has taken about 17 months, on average, for slot parlors in Pennsylvania to complete their initial ramp-up.

Since we only opened the property in May of last year, it clearly remains early days for Sands Bethlehem.

We continue to believe the property has great potential, particularly given the introduction of table games in the Pennsylvania market, which will occur later this year.

With respect to our current performance, we generated $6 million of EBITDA for the quarter.

We look to improve that performance in the near term through enhanced marketing programs.

We're also dealing with a development strategy in light of the introduction of table games, and are preparing to submit our applications to install table games at Sands Bethlehem with the Pennsylvania Gaming Control Board.

We expect to introduce approximately eight tables to the property in the third quarter.

The table games offering should enable us to have a (technical difficulties) broader customer segment, enhance our revenues, and contribute to greater profitability of the property overall.

With that let's go to Rob and Las Vegas.

Thanks Mike.

The Las Vegas properties delivered EBITDAR of $57 million in the fourth quarter compared to $90 million in the fourth quarter of last year.

In a nutshell, the gaming piece of our business is holding up pretty well, in fact, volume levels today are trending above what they were in 2008.

The problem for us, and for all of Las Vegas remains room rates.

Decreased hotel food and beverage revenues, historically high margin segments of our Las Vegas business, hurt our profitability in this quarter.

In addition, low table hold also negatively impacted our results by about $20 million.

Table game drop was $509 million during the fourth quarter, a modest increase in the fourth quarter 2008, while slot win was $51 million for the quarter, about the same as 2008 fourth quarter.

Our January performance in Las Vegas was quite healthy compared to last year, principally due to revenue growth and continued impact of our right sizing initiatives.

ADR for the month reflected a slight increase from last year.

That's a particularly promising result given that last year's ADR in January included some room blocks that had been booked at the higher pricing levels that existed before the economic downturn.

Looking ahead, we will clearly realize more group rooms in 2010 than we realized in 2009.

The pace of group bookings continues to improve and all signs indicate 2011 will be stronger than 2010.

In 2009 we realized approximately 470,000 group room nights.

As of today, we have more than that number on our books for 2010.

In the month of January, we realized approximately 64,000 group rooms, up 17% from 55,000 group room nights in 2009.

As Sheldon mentioned in his comments, we do expect that pricing will turn around as business expands and the economy eventually strengthens.

Until then, we will continue to focus on providing service to our business customers and work to ensure that our all-suite integrated resort offering remains the most attractive destination for business in the Las Vegas market.

So, in summary, our gaming business is relatively healthy with volumes trending above 2008 levels and our costs are down.

Given that back drop, we are confident that our Las Vegas properties will exhibit significant operating leverage as price in the group business segment improves.

With that, I will turn it over to Ken.

Thanks, Rob.

As Sheldon mentioned earlier, during the quarter we completed the sale of a minority interest in our Macau operations.

We also made marked progress on our de-leveraging strategy and mitigated the financial risk associated with covenant compliance on our credit facilities.

We now have in excess of $5 billion of cash and cash equivalents on our balance sheet.

That cash has significantly increased our financial flexibility and will enable us to execute additional components of our de-leveraging strategy in the future.

Excluding our development financing in Singapore, we have paid down or retired in excess of $1.1 billion of debt during the quarter.

In addition to our cash balances at December 31st, we have approximately $850 million of availability under our undrawn credit facilities at current exchange rates, principally through our Singapore credit facility.

So together, we have approximately $5.85 billion of cash, cash equivalents, and available sources of liquidity.

The principal uses for that $5.85 billion include approximately $1.5 billion of capital expenditures pre-opening FF&E and construction period interest to spend on our Marina Bay Sands development in Singapore through the end of calendar 2010.

An additional $400 million, principally retainage payments on the development, will be paid out of cash flow from the completed property in 2011.

Further, approximately $400 million in additional equity contributions will be made toward the development of Parcels five and six on the Cotai Strip in Macau.

In addition, in March, we expect to close the previously announced $1.75 billion credit facility to fund construction of Parcels five and six in Macau.

The equity and project financing is sufficient to complete the first two phases of that development, which will feature over 6,000 hotel rooms and all the major cash flow generating components of the development.

As of December 31st, total debt was $11 billion, while our cost of borrowing remains low.

Our weighted average interest rate for the quarter was approximately 4% compared to 6.1% in the fourth quarter 2008.

At our current levels of operating performance, our cash balances provide ample cushion for compliance (inaudible) covenant compliance purposes at December 31st, 2009 are trailing 12-month EBITDA was $412 million.

Our total gross domestic debt was $5.2 billion.

Our cash balances within the US restricted group were $3 billion and our calculated net debt was $2.2 billion.

Our leverage ratio was 5.3 times compared to a maximum leverage covenant under our US credit facility of 6.5 times.

For the Venetian Macau restricted group at December 31st, 2009, our trailing 12 month EBITDA for compliance purposes was $940 million.

Total gross debt at the Venetian Macau restricted group was $2.6 billion, and our leverage ratio was 2.81 times, compared to a maximum leverage covenant of 4.5 times.

We remain focused on maximizing operating profitability to enable debt reduction.

While our business will naturally generate a significant amount of free cash flow that will enable de-leveraging in the future, we also expect to execute, in due course, the sale of non-core assets which will enable significant debt repayments and enhanced return on investment.

With that, I will turn the call back over to Sheldon.

Thanks.

Before we go to Q and A, let me make a couple of final points.

We worked very aggressively over the last year to right size our cost structure and to clean up our balance sheet.

The results of those efforts are now clear.

We just completed the most successful quarter in our history, generating record revenues and EBITDAR.

And our balance sheet now has more than $5 billion of cash, providing significant financial flexibility, enabling to us continue our industry leading growth strategy.

We stand today on the cusp of our next major phase of firm growth.

In about ten weeks, Marina Bay Sands will open its doors to the public, introducing to the people of South Asia convention based integrated resort destination that will be unique in the world.

And less than 18 months from today, we will open additional integrated resort destinations on Parcels five and six on Macau's Cotai Strip, including the Shangri-la Traders Sheraton, and extend the Sheraton brands, in extending our position in the world's largest gaming market on the doorstep of the world's fastest growing major economy.

And while the Las Vegas market may not shine quite as brightly as our Asian properties, in the near term, our convention based business model remains compelling, and we remain confident that our group business strategy, together with our reduced cost base will enable us to perform well in Las Vegas in the years ahead, particularly in comparison with our competitors.

With that, we will move to your questions.

(Operator Instructions) And your first question comes from Joe Greff with JPMorgan.

Good afternoon, everyone.

Thank you, Mike, for clarifying about the Sands Macau reserve being largely one longtime customer.

Can you help us understand, and if you could do it by property, if you want to do for Macau in the aggregate at the end of the fourth quarter, what sort of outstanding receivables you have out there, and what's reserved against that?

And if you can talk about, sort of, collections history in general.

Obvious we're all reading articles about China tightening - - is how concerned are you that you're adequately reserved?

And then the second Macau related question, if you can help us understand what percentage of your VIP junket related business is on a revenue share basis, and then where are you on a percentage of revenues relative to what you think the market, or where the market is right now?

That's about ten questions.

I have a couple more, too, could I ask.

Let me address the receivables.

Joe, the memory is the first thing to go.

I can't remember all those questions.

Second.

Let me address the receivables, then Steve will take the rest of it.

At the end of the year, you've got to break down the total receivables between casino, hotel and other, but I think what you're focusing is more on casino.

We've got about, let's call it, $440 million approximately of receivables.

We have about a 22% reserve for doubtful accounts against that.

(Inaudible) a little bit higher than that in Vegas, about 28%, but in Macau you have to break it out between, kind of, the junkets and non junkets.

If you back out the [junket portion](technical difficulties), there's a fairly modest reserve against that, a reserve against the remaining receivable balance is about 32%.

Which we think is adequate.

And, part of, I think what went on during the course of 2009, was a little bit of catch-up with regard to some of the slower paying accounts and thus approaching it more conservatively in that regard.

Joe, I think the second part of your question was what percent of the junkets have switched over to revenue share versus the volume base.

We had 19 contracts that were up for renewal at the end of the year, and of those 19, 15, 16 of those actually chose the volume base.

I will tell you at the end of our next quarter, what the actual share will be, because we've got, as you expect, month to month changes between the revenue base and the volume base.

Thank you.

Your next question comes from Felicia Hendrix with Barclays Capital.

Hi, good afternoon.

Hi, Felicia.

Hi.

Just a few questions for you.

In Macau, some pluses and minuses in terms of holds, some places better, some places lower than that.

Is there a net impact you can give us so we help [parse] through that?

Sure.

In the quarter, the hold impact was probably about a little bit north of $50 million that were favorable.

$50 million favorable.

Yes.

(inaudible - - multiple speakers) on EBITDA.

(inaudible - - multiple speakers)

Okay, and now just to go back to that bad debt, at Sands Macau, (inaudible) you did clarify the bad debt issue, but (audio difficulties).

We're having a really hard time hearing you on the cell phone.

you must be moving around on a cell phone, because we can't understand you.

Your voice is distorted.

we heard something about margin degradation at the Sands Macau, can you try to restate the question?

Is this better?

Yes.

Okay.

I was sitting, but now I'm - - so what I was wondering is, as part of the differential (inaudible) debt expense, but it also fell short of expectations.

I was wondering, other than hold, is there anything not there that would be impacting margins?

I couldn't understand what she said.

She's talking about the margin impact.

I think the question is the perceived degradation of the margin at Sands.

Is that correct?

Correct.

Okay.

There's a couple of things that are going on.

One, we talked about the reserve that we took for a longtime outstanding receivable, that was about $12 million.

The second has to do with the incentive comp, which we booked fourth quarter, which is our bonus.

Typically that is accrued quarter to quarter.

(Audio difficulties) As we came into the tail end of our fourth quarter, we went ahead and we reserved all of our bonus for the fourth quarter.

Okay.

That's helpful.

And then just, are you guys seeing at the Venetian Macau - - City Of Dreams has now started a new marketing program.

Are you guys seeing any kind of impact from that at all, anything promotional coming from them?

We certainly see their volume picking up, which is very positive for Cotai Strip.

That's their "get lucky" campaign and you can't miss it, everywhere you go, even on do not disturb sign it has the "get lucky", which is quite clever and creative.

I don't know how many people are getting lucky, but certainly there's more people in their casinos.

We'll research on that.

Yes, we'll research that later.

The overall traffic at Cotai, from what we can tell, is going up, and is going up favorable (inaudible) [our accounts], which are by no means conclusive, but rather directionally correct.

Okay, thanks.

Then finally.

Felicia, I would just like to clarify what Steve said before about that write-off.

That was not really a long-term write-off.

The debt started about a year ago, and a long term write-off, in our terms, I mean write-off of a long-term debt would be somewhat in excess of a year.

Payments are being made on this.

Not as much as we would like.

The man was a major - he wasn't a player, he was also a player, but he was also a junket rep.

And the amount of money that was built up was not on the basis of him playing, but it was as a junket rep.

So, we cut our junket rep relationship with him.

He does have other assets, he's been a customer of our Company and certain executives in the Company for over 20 years, and has always paid his debts.

And we feel confident, frankly, I had a sort of a warm discussion with our CFO about the necessity to take that - - it was really heated, I was going to take my cane and beat him over the head.

I was dissuaded from hitting him, only because he's about a foot taller than me.

And so I objected to that write-off, but he claims that TW required us to write it off [PWC].

In any event, that was an extraordinary write-off.

That's not a usual kind of write-off.

Understood.

Thank you.

Rob, in Las Vegas, are you seeing any promotional activity in gaming and play at all?

On the gaming side?

There's increased pressure on the high end on some discounting and air fare, but I don't think it's exceptional.

The problem in Las Vegas remains room rates.

I don't think the gaming issue is really up - - for us it's not really an issue, it's more room rate - - remains in all segments that pressure.

And, then on that subject, obviously a competitor is trying to build market share in the convention business.

I was wondering what you guys are doing to try to maintain your market share?

We've actually -- I know that one of our competitors has been boasting about taking business from us.

The bottom line is that we've done a calculation, and we've taken more business from them than they have from us.

And, we allowed them to take some business from us because in one case, there was a group of thousands of room nights that they gave an $80 less rate on the rooms than what we quoted and what we were willing to give.

We gave up that group, let it go to the [Aria], wherever they went, for one year.

The group has come back and signed us at the more realistic rates for the following three years.

They talk about -- MGM talks about stealing business us from.

We take more business from them than they do from us.

And the fact of the matter is that they just don't have the experience, from having been on the other side of the desk, in dealing with conventions they don't understand the service and the issues that have to be addressed.

So, we don't want to buy that business.

We were complimented by a competitor with whom one of our colleagues had dinner last week, and that colleague, that competitor, said that the industry recognized that we were the only one that was holding our rates up there, and everybody wishes they, too, could hold their rates up.

But maybe we'll set a leadership role and perhaps they will keep their rates up.

Okay, thanks a lot.

Thanks, Felicia.

Your next question comes from Cameron McKnight with Buckingham.

Good afternoon, guys.

How are you?

Good.

Just - - Sheldon, just wondering if you could elaborate for us on the current quarter to date conditions that you are seeing in Macau, especially in the mass market in January and February?

First, this is a quarter we can't get into that because we're public in Macau, and we can't disclose any information, through January and February, [here it over, yes] when SCL hasn't disclosed it yet.

got it.

Good try.

Are you able to comment generally on Chinese New Year and how - -

Let's put it this way, over the results, we're smiling, we're not frowning.

Sheldon, just put a couple things in - -

I just got shot.

A couple things into context with regards to Macau, this isn't our numbers, these are Macau numbers.

If you look at January '09 versus '08, up significantly.

If you look at a press clipping that came out yesterday or the day before, for the expectation for Chinese New Year, exceptionally strong.

We dominate the mass market.

We always have.

Nothing has changed.

So, as Sheldon said, we're quite pleased with where we sit today, vis-a-vis our expectation for Q1.

Right.

Thanks.

And, some have been talking about a commission war erupting with SJM.

Are you seeing any evidence of that?

None to date, but I wouldn't necessarily carve out SJM.

With the new restrictions on the junket commission caps, you have seen, over the last, really five to six months, a fair amount of jockeying from all of the different concessionaires.

The simple truth in Macau is you can buy business through commission, and you can move share a point, two points, three points through changing those commission rates.

But it's not sustainable, you can't build a business on gimmicks or on incentives, it's got to be built on the fundamentals.

So, notwithstanding the fact that from time to time some of our competitors raised their commission rates, at the end of the day, it comes back to haunt them, and everything settles back down to a sustainable level.

Oh, great, thanks.

And finally, Sheldon, could you give us some color on the convention calendar in Singapore?

I understand you have [Lei Qwan Yu] speaking at a lawyers' conference in early May.

Tom, do you have anything to say about that?

Tom Arasi is the CEO of Singapore.

Yes, hi.

We have a significant piece of group business, the IPBA coming in at that time, end of the month.

And, there is discussion about potential VIP speakers there.

We're not aware that anyone is absolutely confirmed, however.

We understand that Al Gore is speaking and [Lei Qwan Yu] is speaking.

(multiple speakers) Singapore?

Yes.

We also have another group, a bank, having a big group just the following week.

Yes.

The calendar is building, particularly as we get closer to announcing opening dates, particularly as people see everything coming together.

So, we're pleased how well that's moving along.

Right.

Thanks very much, guys.

Thanks, Cameron.

Your next question comes from Larry Klatzkin with Chapdelaine.

Hey, guys.

(multiple speakers) Hi, Larry.

Nice to see the Four Seasons starting to respond.

Couple things; one, the bonus reserve, you said it all did it in the fourth quarter this year.

How did that compare to what you reserved in the bonus -- fourth quarter last year?

There wasn't a bonus last year.

(multiple speakers).

All right.

Okay.

As far as table games up side in Bethlehem, I know it's kind of minor for you guys, but what are you guys thinking?

You said eight tables?

80 [tables]

80.

I misheard it there.

So you think - - you think it could be a significant gain to the property?

Well, all of the forecasts for Bethlehem at the table games, which have been published by many of the analyst community, is just about where we're projecting the situation.

We think that, at 80 tables appropriately run and trained, can generate the numbers that have been published.

All right.

It should be a big impact, not only on our - - not only in table games and sales but on the rest of the facility in terms of restaurants and all of that as well.

We'll be the closest casino to New York City, and, of course, to northern New Jersey.

And, as far as we can see by Atlantic City, they continue to decline.

We may pick up an incremental chunk of business out of Atlantic City, too.

Okay.

As far as - - that's good.

As far as the VIP commission rate and Singapore, what are you guys seeing?

I know Genting has talked about high numbers.

What are you guys expecting the commission rate to be, in your opinion?

There's commission rate, and there's commission rate, Larry, as you probably recall, from the equity days.

The commission rate for a junket rep in the field, which I call a field sales person, is capped at a few thousand dollars, but it's not the Macau style commission.

So, the second commission rate is the Macau style commission rate for which the junket reps perform three functions.

One, they find the customer, two, they provide the credit, three, they get the money into our venue, from where they come.

Obviously, we can't have anything to do directly with that, and we're not going to, and to the best of our knowledge, they say, Genting says, they intend to pay 1.5.

But the Singapore Government continues to maintain unequivocally, and when the Singapore government maintains something unequivocally, you can go to sleep on it.

You can bank on it.

They say there will be no junket reps of the Macau style.

They don't want people to come in and earn 40%, 50% or more of the gross income and they, to the best of our knowledge, they have received very, very few applications.

Probably only applications from somebody in the former category of junket reps, not the ones who provide the credit.

So it's still a moving target.

My personal take on this is that, if there are junket reps, they will be of the former type, and not because the government won't necessarily approve them, but because they're not going to apply.

Everybody, every one of our companies' directors that has applied, including myself, say it is the most comprehensive, the most detailed application they've ever had to fill out in their lifetime.

So I don't think, while I'm positive, that the junket reps in Macau are not going to provide the information that Singapore gaming control authorities want.

Alright, so, you still have to give the gamblers their kind of discount.

So, what do you guys think, you're probably giving .7 to .9 to the gamblers or combination thereof, versus the 1.25 you're giving in Singapore?

Is that reasonable?

I suspect, and all my estimates have been figured on about .7 to .75 or .8, direct to the players that want to get compensated, and even out the - - neutralize the house advantage a little bit.

We would rather - - we're going to give them the option of the Las Vegas way or the rolling chip way.

So, if somebody says, I don't want to do a rolling chip, so, I just want to know that if I lose, I want a discount of X%.

And we'd much rather have it that way because on the roll, we to have pay win or lose.

On the losses, we pay on that, and we're much better off that way, in my opinion.

So, this could actually mean maybe an extra, what, 15, 20 basis points of margin compared to Macau?

Well, if we don't get - - I feel that we should be getting 30 to 40 percentage - - 30 or 40 basis points, -- not basis points.

30% to 40% more.

Right, right.

Just on the taxes alone, we'll pick up at least 24%.

And, in our integrated resort model, if we make 28% or 30% and we add another 24%, never mind the savings on the junket reps, we're at 54% of gross.

And, if we pick up - - depends upon the ratio of high end versus mass, but let's take a round number of 50/50.

It's 44% we'd save at 1.25, and let's say we get half of that, so we would save .22 on the total, and if we give half of that to the player, we save about 11%, which could bring this to an extraordinary EBITDAR margin.

I mean, it's so large I don't even want to - - it sounds like blue sky, but I don't see any reason why it can't occur.

Larry, keep in mind that the rolling direct to the customer, also the big variable there is credit, right?

It's not just about -- since there's no junket reps, it's a question of not what we pay or Genting pays.

The questions is who wants to issue and collect the credit.

That will determine in part what the rolling number is.

Have you guys put aside a chunk of money that you're willing to use for credit in Singapore since it will be significant?

Yes, in our mind we'll be in the credit business in Singapore with credit worthy customers and with the right people we can collect from in a direct fashion, yes.

Is this new ruling with win on credit collection, you think, significant?

You mean the Hong Kong decision?

The Hong Kong decision.

(multiple speakers) model.

I can only speak for Macau, but I can tell you that it has had profound impacts on your ability to get people's attention to come back and play or pay.

It was a very big watershed event for those that extend credit in Macau.

The fact that you can now collect through Hong Kong.

So, it's a big deal.

Good, guys.

Thanks, I appreciate it.

Thanks, Larry.

Larry, I want to say that we experienced between a 1% and 2% default rate here in Las Vegas.

I think, my personal opinion is, that if we're judicious in our granting of credit.

Which we're certainly going to make an effort to be.

We will experience a very low single-digit credit default rate because the Asian people are far more face sensitive if somebody tries to collect money.

Particularly if you collect money from gambling, because of the stigma that it -- that is present in their social circles and the last thing they want to do is let their government find out they're doing this.

So, I think that we'll have a much higher collection success rate than otherwise thought.

Your next question comes from Janet Brashear with Sanford Bernstein.

Are you whistling at us, Janet?

Not me - - I don't know where that's coming from.

Thank you.

My question is about the rates at the Venetian and the Palazzo.

We know that last year the Venetian was doing $163.

The Palazzo was doing $179.

And, as Rob was talking about the rate pressure, I'm wondering what you would expect for 2010?

Any segment in particular?

Just in general?

Well, across the board.

I know you have your group rates booked in largely for the year at least at the same levels as last year.

I'd be curious to know how those rates are trending, and then, what the overall impact is on your REVPAR?

We're trending down, relative to 2009 rates.

We're at $211 for actual group segment for the year.

We're down in the $180 range for 2010, high $170's, low $180's.

And again, the competitive pressure is pretty relentless, I mean, to be honest with you, it's not slowing down.

And everyone's numbers in town - - you have to factor in the segment that's growing tremendously, and that is the - - everybody in town is not dissed.

They're comping room is off to slot and table players at a higher rate than ever.

So whenever you factor that in, it's going to be a big driver of your ADR.

I mean, our ADR, you know obviously, there's rate pressure across the board in every segment.

No one is immune to it.

I'm hoping we can maintain a better cash ADR than we'd hoped to in the past, but, look, rate pressure will determine that and the market will determine that.

Every day, you can look at the e-mails, you look at the offers out there.

There's pressure, whether it be the casino segment, the FIT, the wholesale, and you have to factor in, these days, the non cash REVPAR segment which is driven by the growing use of comp rooms in every hotel in this town.

So, I'm not trying to elude you with changes every day.

And we're going to have to -- we're trying to maintain rate, I think Sheldon and Mike both referenced.

Our intention is to stay above the market somewhat, but group rates are slightly down, and that's a function of the marketplace, and I don't see how that changes until the market starts trending upward.

(technical difficulty).

It varies.

I want to address that, excuse me, Rob.

It varies from show to show and event to event.

We have the largest convention facility in the world.

We have 330 meeting rooms, including ball rooms, and we could hold, somewhere, in the 50,000 person category simultaneously.

There's no need for 50,000 people to sit simultaneously, but we can have overlap of smaller groups.

And so if we have a group that needs the facilities that only we could provide, and nobody else can provide, we maintain the leverage on the room rates.

So far, the room rates on the groups have been what we've had have been in the two's for the most part, and Rob is shaking his head - - he said I'm right about that.

We're trending up now.

Rob said that they were trending down because of the competition, but there's two packages of competition.

The people that small, and they don't need a lot of the breakout rooms, they can go somewhere else, and the larger groups that need our breakout rooms that nobody else can provide.

So, we maintain some leverage, and besides, there is just - - they're coming out - - it's like a tsunami of groups that are signing up.

I don't want to wish us anything, but we do have a government group coming in that we can't say the name of that - - that's paying a pretty good rate.

And we've got to face it, Las Vegas is the best convention, most cost effective, most efficient convention city in the world, and we're the leader in the conventions in this market.

The group segment obviously continues to be the most desirable segment in the city in terms of both ADR and when they attend midweek.

And, I think we'll survive and prosper in that segment, but it has been challenging.

The more challenging segments are everybody FIT wholesale.

And, those segments, you can see those every day on the Internet and see who is doing what, and it's challenging, by anyone's - - any way you look at this thing, it's a very difficult FIT wholesale market.

If you factor in all those segments, is it fair to assume that your REVPAR will be down in 2010 versus 2009?

Our what?

Our REVPAR.

Jan, it's Mike.

I think it will be slightly down because there was a hangover in 2009 in the first four or five months of new business and other business that we booked in 2008.

But I think the REVPAR - I think there's been a lot of commentary by others about their REVPAR's improving and going up.

And I'm sure you've seen some of that.

I think, honestly, we don't know what the sum is going to look like at this point, which is going to determine, where that number is really going to end up where we don't have groups.

We Don't have a lot of groups.

Where we have groups, I think our REVPAR will hold.

Where we don't have groups, it may be very difficult in the summer to hold it.

We just moved a group into the summer.

Yes we just had a group move from September (multiple speakers).

A big one, a big show.

I think we're sort of in the early going, as we've said, in the early going, we seem to be holding up here.

But, I think that candidly, I think if you're looking purely at REVPAR, which I personally think is a misleading number due to all of the casino comps that go around the city.

Because people can use casino comps to buck, to big -- to build up their REVPAR by putting a special rate on it.

We don't do that, but others do.

I think we'll probably be closer to losing a little REVPAR this year than last year.

But, I don't think it's going to affect our EBITDAR in any way, actually.

I think it all depends on what happens closer to the last half of the year.

If the, if we continue to pick up group bookings between now and the end of the year, I think the ADR will increase if we maintain that level of bookings, so I'm on the optimistic side of comparison to last year.

If could I ask one more question on the group side, but this time in Macau.

Now that you have extra hotel rooms on Cotai Strip with the Hyatt rooms from City Of Dreams, and you've got five and six in the works, where's the tipping point where you become -- where Macau and Cotai Strip becomes an important convention destination and you have a high utilization of your space there?

When the Chinese and the Asian population shrink to a fraction of what they are today.

I mean, it's 1.3 billion people.

There's 120 million in Japan, there's 44 million in Korea, there's 24 million in Taiwan.

I don't understand how anybody could say, one of the analysts, I read the report last night, said that it's very clear that the opening of Genting in Singapore made it abundantly clear that this truly is an industry that supply creates the demand.

Everybody who says, where's the tipping point?

I can guarantee you this-- there will be no tipping point in my lifetime, and Janet, there will be no tipping point in your lifetime, and I know you're a lot younger than I am.

At least you look so.

I'm sure you are.

So, there is no tipping point.

How can you say there's a tipping point?

We haven't had enough critical mass of hotel rooms to be able to bring on other conventions, and now we're starting to book more and more conventions in Macau.

We got -- I met yesterday with a show producer here in the United States that has 45 shows, big ones that they want to start duplicating them over in Asia, and they're going to go and take a look at both Macau and Singapore.

And, I don't understand.

You've got 1.3 billion people, and these populations are not shrinking, they're growing.

So, there is no such thing.

It's supply creates demand.

It's not demand creates supply.

I think just to add to that point, the point of inflection, where we'll start hosting more meaningful and more frequent events, is actually when you get five and six open.

The 1400 rooms across the street, the City Of Dreams, did not give us sufficient girth to be able to host the additional shows.

With the opening of five and six and 6,000 rooms, personal opinion, then you're starting to talk about a meaningful capacity to book very large groups and take advantage of the infrastructure that's in there.

That's why we call it the game changer.

It's the game changer.

So I think we are well within 16, 18 months to see a very profound change.

And, interestingly, you're starting to see it now.

I don't know if you follow the local Hong Kong and Macau papers, but, about three, four weeks ago on the inside front page of Hong Kong paper, you saw that the Hong Kong airshow now is going to alternate every other year between Hong Kong and Macau.

And, that's a very calculated event which, in connection with the airport authority and the Macau government, we sat down last year and we said, in keeping with the mandates to diversify the economy, let's start attacking and identifying some of these larger trade shows that we can start to migrate into Macau that will have a profound impact so that when the extra rooms from Galaxy, City Of Dreams, and five and six come onboard, we can actually start to use the infrastructure that we built to its best and highest use.

So, we need the critical mass of five and six, it's not a tipping point.

The tipping point is that it allows us to reach the threshold of critical mass a lot faster.

It will give us 10,000 rooms.

The problem with City Of Dreams is that, putting up four separate buildings, and they only hold 350 to 400 rooms each, and that's not sufficient capacity for each one of those brands to make an effort to send in a lot of business because the properties are too small.

Hyatt is not interested in filling Hard Rock and Hard Rock is not interested in filling -- what do they call it?

The Hyatt, or what's it -- the Crown.

Crown.

We have 4,000 Sheraton rooms.

4000 plus another 400 or 500 St.

Regis to be built in the third phase, or maybe along with this phase.

The issue is that with 4,000 rooms, Sheraton has to put a major full court press on filling up those rooms, and we are going to be, along with Shangri-la and Traders, there's dozens of Shangri-la with a very good reputation.

I've stayed in several of them myself.

I think they're very good.

And, you can't, with 300 rooms at a Hard Rock Hotel, offer yourself as a convention property.

You can't, with one Hyatt of 350, the other Hyatt at 300, you can't do that.

And I think that even though they resemble an integrated resort, they're not truly an integrated resort that can focus, or they can specialize in the convention and trade show market.

Thank you.

Thanks, Janet.

Your next question comes from David Bain with Sterne, Agee.

First, I was hoping to clarify something that was said earlier.

The whole benefit in Macau, was that a $50 million benefit to net revenue or EBITDAR?

I haven't done the math yet, but it was mentioned earlier.

EBITDAR.

Okay.

And, I guess the first question, or I had a question on policy shifts with regard to the tightening of credit in China and its impact to your business in Macau.

I didn't really hear the answer if there was one.

I don't know that we gave one.

I think it was one of the questions that were wrapped in with Joe's, so I apologize for that.

Clearly, there is a lot of press, a lot of discussion going on right now in terms of the liquidity and the excess thereof in the China marketplace, and the impact on Macau when and if they start to really restrict the additional credit.

That will have a far more pronounced impact on the VIP business, and I think on the junket business, and it will for ours, primarily because the majority of our business is mass oriented.

The other thing that I would throw out there for consideration is, everyone assumes that there's a one to one relationship between the credit market and liquidity and the role of Macau.

It would have to be profoundly different, in my opinion, for it to have a material near term impact, because the people that come, particularly on a frequent basis, aren't coming on credit.

They're fairly liquid individuals themselves.

Okay, and, I mean, as that does sort of bleed in there over time, if it does, can you, just given your liquidity situation yourselves, be a little bit flexible with your balance sheet and loan additionally to junkets with a track record to extend to their players?

If anything, we've gotten a bit more stringent over the last couple quarters.

We've put in some standards, and we don't tend to deviate from those standards.

It works well for us and it works well for the junkets.

I think we are on par with our competitors in terms of the premium direct.

So, long answer to a short question, no, we don't see us using our balance sheet to offset any liquidity issues from the mainland.

Okay, and then just final one - -

Bear in mind that we're actually in a [part] competitor because we want to increase our direct play.

So, we don't necessarily think it's contributory to that end to start loaning more money to the junket reps.

Okay, and then a final one, if we can get an update on the progress or potential time line for the sale of the Four Seasons apartments.

We have not made any official announcement on that.

We are well aware that there is north of a billion dollars of value tied up in that asset, and as prudent management, you should expect us to be evaluating different ways to free that.

Okay, great.

Thank you.

Your next question comes from Dennis Forst with KeyBanc Capital.

Good Afternoon.

I had a question about -- hello?

Are you still around?

Yes.

This is Sheldon.

You're around, I know it's Sheldon.

If you're around, I'm around.

Okay, well I remember meeting you 20-some-odd years ago.

uh-huh.

I thought I was the only guy that had the stamina to go this far.

My wife likes to eat three meals a day.

I'm only joking with you, Dennis.

Yes, I know.

I wanted to ask, I've been so busy putting the numbers in that I may have missed this comment on the call.

Have you taken out a minority interest for SCL in the quarter?

Is there someplace where that is reflected in the income statement?

Yeah, if you look on the income statement, it's the line just below net loss, and it shows a net loss attributable to non controlling interest of - -

$6.6 million.

Correct.

Okay, was there something in the third quarter also for that?

Not for SCL.

That would have only been in the fourth quarter.

What was it then in the third quarter, Ken?

Well, it would have been mostly for Pennsylvania and then some other kind of joint venture arrangements we have.

Okay, but the lion's share of that $6.6 million was SCL related now?

That's correct.

(inaudible).

Say again.

Just for the month of December.

Right, only the one month.

And then when will SCL have to release their detailed results?

Not that it can be any more detailed than you've already done, but I'm just wondering on the Hong Kong Exchange, what their requirements are for disclosure.

We will release our FP&A on March 1st, and then we'll release our Annual towards the tail end of April.

End of April, okay, great, thanks a lot.

Your next question comes from Robin Farley with UBS.

Thanks.

Most of my questions have been answered.

Just one I wanted to clarify.

You gave a dollar amount of receivables for the whole Company and then you talked about reserve percentages by region.

But I don't know if you specified, what is the dollar amount of receivables, just in Vegas versus last year?

The total amount of receivables in Vegas, including casino and hotel and other, or just the casino number?

Just casino, I guess, versus the prior year in Vegas.

I don't have the prior year on me, but the gross receivable casinos for Vegas was about 100 and - - a little bit short of $160 million.

I'm sorry, that would 1-6-0 ?

Yes.

Okay, great, thank you.

Your next question comes from Chris Woronka with Deutsche Bank.

Hi, good afternoon.

I was hoping maybe, we could get a little color on your thoughts on potential development in South Florida.

Maybe some higher level things, what needs to happen before you move forward and just general thoughts on that?

Thanks.

Well, let's see - an exclusivity for the entire United States - - .

A nice condo sitting out in Bal Harbour.

Besides that, and we don't have to wait in line at Rascal House, the deli.

Seriously, I think that we -- tax rate is priority one.

If they maintain a very high tax rate, we won't be in.

If they - particularly on table games.

If they allow too many [pari-mutuel Racinos] and it would interrupt where we think we'd like to go, then that might be a deal breaker for us.

I've expressed -- I've been to Florida, personally, several times.

As you can see, I like it.

And I think there are just too many places.

We learned from the Sands, and we learned from what they're talking about in Massachusetts and then other states like Ohio, like Kentucky, and Texas.

They're talking about 12 tracks and 12 Racinos in Texas and they're talking about another 12 casinos.

The point is, if we can't do our song and dance of an integrated resort, it becomes less and less attractive.

We think that South Florida attracts an enormous number of people from Latin and South America - - a number of high rollers.

So, if we can do an IR there, in spite of the fact that there are a lot of local casinos in the Racino category, we might still be able to do it, but that then depends upon the tax rate.

So, that's where we are on South Florida, and the same in any other US state.

They're becoming more plentiful now, so we'll have to decide whether or not we want to be in the $50 million a year casino business or we want to be in the half a billion or billion dollar integrated resort

Okay, very good.

Thanks.

I hope it's very good.

(Operator Instructions) Management, are there any closing remarks?

I would like to ask everybody, anybody have a question or comment about Singapore?

I guess not.

Okay.

Well, if that's it, do we have any other comments?

Mike?

Ken?

Okay, Steve, Tom, nobody?

That's it.

Thank you, everybody, for joining our call and having an interest in our Company.

And for those investors that are on the line, we want to thank you for your confidence in our Company.

We will do everything we can to increase shareholder value.

Thank you.

This concludes the call.

This concludes today's conference.

You may now disconnect.