拉斯維加斯金沙集團 (LVS) 2011 Q3 法說會逐字稿

Good afternoon. My name is Thea, and I will be the conference operator today. At this time, I would like to welcome everyone to Las Vegas Sands third quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

I will now turn the conference over to Mr. Daniel Briggs, Vice President of Investor Relations. Sir, you may begin.

Thank you, Thea, and thank you for joining us. Before I turn the call over to Mr. Adelson, let me 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. The Company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for a discussion of risks that may discuss affect our results. In addition, we may discuss adjusted net income, adjusted diluted EPS, and adjusted property EBITDA, 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. With that, let me please introduce our Chairman, Mr. Sheldon G. Adelson.

Thank you, Dan, and good afternoon everyone. Thank you all for joining us today, and I would like to again thank those of you who were able to either personally attend our Investor Conference in New York on September 21st, or joined us via the webcast. We sincerely appreciate your continued interest in our Company. As you probably remember, 1 of the key things of our Investor Conference was centered on the predictability and reliability of our operating results. I describe predictable as something that follows trends, and that those trends give you a road map for where you are likely to go in the future.

In our case, the fact that the trends have occurred for so many quarters of the row, it makes them reliable. I also noted that as the scale of our business has increased, the predictability and reliability of our revenue and cash flow growth has also meaningfully increased. If our thesis regarding the predictability and reliability of our business needs any further validation, will the third quarter of 2011 pleased that forward.

For a Company record, $924 million of EBITDA during the quarter, compared to $645 million at the same quarter 1 year ago. Our growth curve has continued unabated. We have now reached 9 consecutive quarters in which our EBITDA has increased. While we are on the topic of EBITDA, let me also point out that based upon the results of this quarter, we now have 2 integrated resorts, each producing run rate EBITDA of more than $1 billion, or in the case of Marina Bay Sands, it is producing actual EBITDA substantially in excess of that.

I would like to congratulate our management team and all of the team members who helped us become the first company in our industry to ever reach that milestone. In addition to the Company record in EBITDA, which was up 43% increase from the third quarter of 2010, the Company's net revenue increased 26% from the same quarter of last year to a record $2.41 billion.

Adjusted earnings per diluted share, which was $0.34 during the third quarter of 2010 rose to $0.55 to per diluted share, a significant 62% increase. Let me repeat something I said during our last earnings call and again during our Investor Conference. We see absolutely no reason, again no catalyst at hand, which would change the upward trend we have been experiencing. If anything, we see a variety of catalysts which could see us maintain this trend line well into the future.

Certainly the most permanent catalyst is the opening of the first phase of Sands Cotai Central, which will happen roughly 5 short months from now. The opening phase will feature approximately 1,800 hotel rooms and suites, significant retail and restaurant space, and VIP and mass gaming facilities. Years ago when I came up with the vision of the Cotai Strip, very few believed in its potential. Now everyone wants to be there, but for the next 3 or 4 years, Sands Cotai Central will be the last significant development on a stretch of the most coveted real estate in our industry.

In Macau, we have remained uniquely positioned to succeed in an environment in which demand exceeds supply, or as our new development comes online, a market in which supply drives additional demand. Another positive catalyst for us is the progress we are making in regards to our VIP business in Macau. We remain extremely confident that the investments we are making today to expand our offerings in the VIP segment will pay meaningful benefits in the quarters ahead.

So with that said, let me now spend a few minutes discussing the Company's results by location. Let's start in Singapore where Marina Bay Sands delivered a property record $414 million in adjusted property EBITDA, with a the 52% EBITDA margin. For those of you with projections well below those numbers, please keep an eye out for one of our egg wiping face towels, which you will be receiving shortly. As you can see, and if anybody wants me to sign, please let me know. I will be happy to sign my signature.

As you can see in the press release, our whole percentage on rolling chip win was lower than normal at 2.69%. So if it was just on normal whole percentage, the property would have achieved EBITDA of approximately $438 million, and when combined with $6 million of nonrecurring expenses, an EBITDA margin of 54.1%. I like them apples. Let me point out that the whole adjusted EBITDA number brings it to an annual run rate of more than $1.75 billion.

We are sorry to those of you who are disappointed with my meager prediction that the property would produce $1 billion in EBITDA this year. At this stage it looks like it was up by a pretty fair amount. So I guess one of those egg wiping face towels will be finding its way to my office as well. But trust me, I will suffer the indignity of being wrong by such a substantial amount.

All facets of our business at Marina Bay Sands (technical difficulties). On the gaming side, and all of these are property records, rolling chip volume, the VIP business, increased 63% from last year to $16.7 billion. Non-rolling chip drop, the mass market, was up 34% over last year to $1.2 billion, and slot handle increased 105%, compared to the third quarter of last year, and reached $2.8 billion. Who said that the market was leveling off? Let me know who it is, we will send another towel.

Evidence of the property's continued ramp up also on display with large year-over-year increases in non-gaming revenue. Combined rooms, food and beverage, and retail revenue increased by more than 95% from the third quarter of 2010. The increased room revenue was led by a 91% increase in RevPAR., moving from $168 last year to $321 this quarter. Compared to a year ago, hotel average daily rates increased 33% to $327, and occupancy was up almost 30 points to 98%.

Turning now to Macau and the properties operated there by a majority-owned subsidiary, Sands China Ltd., adjusted EBITDA for Macau property operations was $388 million, an increase of 16% from last year's third quarter. If adjusted for normalized whole percentage, adjusted EBITDA would have been $401 million to the quarter, and compared to the second quarter of 2011, when our whole adjusted EBITDA was approximately $365 million. We grew EBITDA sequentially by 10% on a whole adjusted basis.

The Venetian Macau produced $253 million of EBITDA, with a record EBITDA margin of 36.7%. Slot handle increased to $897 million during the quarter, and we saw double digit percentage increases over last year in non-rolling chip drop and rolling chip volume.

As I pointed out last quarter, our non-gaming businesses in Macau continue to grow. Rooms, food and beverage, and retail revenue at the Venetian Macau all saw significant percentage increases over the third quarter of 2010. This trend is particularly exciting as we close in on the opening of Cotai Central, which will obviously feature a wide variety of additional non-gaming components.

The Plaza Casino at the Four Seasons increased its EBITDA to $60 million for the quarter, up 22% from the same quarter last year. As I mentioned in the opening, we have an aggressive plan for the Plaza moving forward, beginning with the addition of 2 new leading VIP operators opening in the next couple of weeks.

The Sands Macau had adjusted property EBITDA of $76 million. The Sands saw strong percentage increases over last year's third quarter. Non-rolling chip drop increased 11%, rolling chip volume increased 26%, and slot handle was up by more than 23% year-over-year.

Turning to our operations here in the US. Our Las Vegas properties, reported a third quarter record EBITDA of $94 million, an increase of 62% versus the same quarter a year ago. The power of our global presence is attracting new players here, and enabled the Venetian Palazzo to record $536 million in table games drop, the second largest quarter in terms of drop in the history of our Las Vegas properties.

Stronger group meeting and convention business at the Venetian Palazzo also contributed to a 33% increase in cash revenues from the sale of hotel rooms, and a 21% increase in food and beverage revenues. Sands Bethlehem in Pennsylvania recorded adjusted property EBITDA of $25 million. The property's new outlet stores will begin previews early next week ahead of a February grand opening. We expect traffic from the retail stores, the 300-room hotel which opened in May, and the forthcoming event center to provide a continued increase in our gaming revenue there.

So that completes an overview of our operating results for the quarter, and at this time, along with Mike, Rob and Ken, who are all here with me, we would be happy to address your questions.

(Operator Instructions)

The first question will come from Joe Greff with JPMorgan.

Hey everybody, how are you?

Good. Hi, Joe.

A question for you on Singapore. Obviously, the VIP volumes were significantly ahead of I think what most of us were expecting, which is great. I was hoping you could maybe just help us understand how you are thinking about reserving there? Whether the reserves, as a percentage of outstanding credit, have changed at all, or your views on that? And then one thing we noticed in the quarter, too, and I think I understand this because it should tie in with the higher volumes, is that it looks like the commissions there to the direct players on a percentage of roll increased sequentially. If you could you help us explain that, please? Thank you.

Yes, Joe. It is Ken. I will take the receivables and Rob will probably address the commissions. As we talked about before, we are reserving somewhere, on a quarterly basis, between 3% and 7% of our rolling win, and this quarter, we are right in the middle, with about 5.4%. And as we talked about before, we go account by account with regard to all of the players down there, and take a look at where we are, and this quarter, based upon the higher volume, we decided to accrue at that 5.4%, and we are adequately reserved at the end of the quarter.

Joe, it's Rob. Obviously, our Singapore business was terrific, as you referenced, and what is really happening is there is a concentration, geographically, but also the type of customers we are getting, it is very high end customer, million plus dollars driving most of that business. So commissions are trading up slightly, because we pay more, based on higher roll. We have bonuses based on higher return. So it is up a bit, and I think that trend, as long as we can roll $17 billion, $16 billion a quarter, we're going to be in this range. Our business, I referenced, is coming from fewer people than with Macau, and clearly we are going to pay more as people are rolling $1 million, $2 million, $10 million whatever. So that is a consequence of having the kind of roll.

I never thought we would be sending Joe Greff a towel, but Dan, send him a towel. (laughter)

Make it a big one.

No, they are all the same size.

And then with regard to Las Vegas, I know we all tend to focus on Asia, but we saw some very good revenue growth and really good flow through there. Is there anything that you are seeing now that would indicate to you that, at least directionally, these trends are not sustainable?

Well, I said that in what I talked about, in my prepared remarks. There is nothing that we can see, either short term, intermediate term, long term, that could be a catalyst to reverse that direction.

Joe, on the gaming side, we referenced it in Sheldon's opening remarks. We just saw at heavy, heavy amount of play on the Asian front, and that's speaks to our belief that our presence globally assists us here in Las Vegas, because customers do come here. It was a quarter that we have never seen, a third quarter or summer quarter, have those kinds of drop numbers, and it evidences our strength in that segment, and I think that will continue to grow as Asia grows, and as our strength in high end Asian market grows.

Great, then my last question. In October so far in Singapore, are you seeing anything that would suggest that the growth is [flat telling]?

I would say, I have to be careful about disclosing here. I would say just the opposite.

Thank you.

Your next question will come from Mark Strawn with Morgan Stanley.

Hi. 2 questions on Singapore. 1, following up on Joe's question. Could you give us some additional color on what drove the sequential increase in VIP volumes? Is that more play out of China and North Asia region? Is it market share, a combination of both, and 1 follow-up after that.

Sure. Mark, it is a number of customers coming out of Mainland China continues to be more important to Singapore. So does Hong Kong. There is some play out of Singapore itself, mostly PR play. Indonesia, Malaysia, Korea, Japan, all important, but clearly the strength of that Rim business resides in Mainland China, whether it be Mainland Chinese themselves living in Mainland or having a second home in Singapore. So I think the strength of the growth we are seeing in Singapore is primarily driven by Mainland Hong Kong, but Singapore itself, there's some business there as well, and the markets we mentioned, Indonesia, Japan, Korea et cetera.

Is there anything that you are doing differently on the international marketing side to drive some of that play, or is it really just more our players are aware of the property, and it is as simple as that?

I think it is a combination of the property has now being open for in excess of a year. It is a great property, it is a great place to do business. People really enjoy going to Singapore. Mainland Chinese people, in particular, seem to have a cultural predisposition to go there. I think our marketing team in the field is extraordinarily strong. It gets better as we hire more people all time, and I think what you are seeing is a lot of years of being in that business and trying to contemplate the day we have multiple properties in Asia, and it is paying off in dividends now. So it is a concentrated business, but we have people who work in Asia at this everyday, and focus on it, and you are seeing some of the benefits. I think that is the best way. We have always said slow and steady wins the race. We were not going to do anything that we were uncomfortable with. We stayed very, very consistent in our thinking, and I think you are seeing the results of that thinking at this point.

That does not include the attraction of good looks and charm.

Right. (laughter)

Okay. I have 1 final question. Could you give additional color on the one-time expenses you mentioned in Singapore as well? And also, if possible, do you the bad debt expense number in Singapore for the quarter?

Yes sure. With regard to kind of the nonrecurring expenses, was composed of 2 items. We finally got the property tax assessment from the government, and as a result of that part of what we had to accrue this quarter pertained to 2010. So there was about $3.6 million of it was prior year, and then there was about $2.4 million of kind of one-time, or nonrecurring, expenses associated with the entertainment program. And then with regard to the receivable reserves, based upon accruing at that kind of 5.4% of rolling win, it amounted to about $24 million of reserve provision.

Thanks a lot.

Thanks Mark.

That is not the total, that is the quarter.

Correct, for the Singapore. Right.

Your next question will come from Steven Kent with Goldman Sachs.

Hi. A couple of questions. First, how far along are you, and maybe this is for Rob, on revamping the VIP offerings in Macau? I know you talked about at the Analyst Day just a few weeks ago, but are we in the implementation stage? Are you starting to see some of those higher quality junket operators coming through? So when do we start to see that? And in similar tone, the marketing program for Cotai Central. What is the plan there, in part to offset the cannibalization for the existing businesses there? A different strategy for Cotai Central that you can talk to?

Steve, it is Rob.

Sure.

We have talked about this now for about the better part of year, and it actually kicks off. I'm in Macau next week. We kick off our first, Shel referenced in his opening remarks, we kick off our first few junket groups taking over space in the Four Seasons Plaza. It continues throughout the balance of this year, and throughout the first 2 quarters of 2012. We are very, very comfortable, very happy what has happened over there in terms of our 5 or 6 key junket groups that have not been heretofore and part of our business mix. We feel very confident. In fact, both Cotai and the Four Seasons, but also the Venetian and also the Sands. So the strategy always was to have literally hundreds of new customers, thousands of new opportunities to grow our business. It is in place. It kicks off next week. It's about another 7 months before it is fully implemented. It goes throughout the first quarter and second quarter, but the answer is it is happening. We are very comfortable with our relationships, we are very comfortable with our deals. We are fully sold out on all of our 5, 6 opportunities, and I will let Mike address some of the marketing thinking for Sands Cotai.

I would just clarify that. We are all sold out all of the VIP rooms, and we have a waiting list.

Right, our VIP demand has outstripped our supply. It is a wonderful problem to have. I think the strength of what we did in Cotai enables this company to do something unique, unlike other people that have a property. We have all these different places to fill, and for the top junket people, we are a very desirable partner. That is paying off big time in terms of our VIP business, and I think you'll see it next week, the beginning phases of it, but it is still another 6, 7 months to go to finish the whole thing, but by the end of Q2, we feel very good about.

This is Sheldon. I want to point out that I have heard the word cannibalization over the last several years, but I have not seen a single instance of 1 property cannibalizing the other, period. We were hoping to cannibalize, and I think we have cannibalized a lot of the properties on the peninsula, with my idea about the Cotai Strip and Asia's Las Vegas. And as I said in my prepared remarks, where was everybody when it was a swamp and a bay, and nobody wanted to take the land there? I had to go back to the government and say, You send me out, you said out land is out here in Cotai. I said, Where is it? They said it is under the water, but you are going to have to bring it up. So at a time when nobody wanted it, now everybody talks about it.

We are not cannibalizing any of our properties. We can tell you that. If anything, the critical mass, the fundamental rudimentary premise of Asia's Las Vegas, the Cotai Strip, is based upon supply. I don't want to use the trite old phrase that says, Build it and then they will come, but we are building it and they are coming. I think the community has to recognize, both the analyst and investor community, should recognize that this is the supply driven industry. There is nobody out there with picket signs and sleeping over in tents and saying, We insist that a casino or an integrated resort be built here. We build it, they come.

Steve, let me mention a few things about Macau in terms of Cotai Central. Also just repeat what Sheldon said, we will be opening the first 1,800 rooms, which is a 1,200 room Holiday Inn and a 600 room Conrad By Hilton at the end of the first quarter. At the end of the third quarter, the first Sheraton Tower of 2,000 rooms will also open, in end of third quarter '12., and then the first quarter of '13, as we have said before, in previous calls, we will open the last 2,000 rooms at the Sheraton. Last week in Macau there was a tour of the properties, checking on the opening, looking at the facilities. It is going to be beautiful. The casinos will be beautiful, as well as the room products. The [MICE] product et cetera. We reviewed, for the brand launch, all of the people in the room. We went over all the marketing strategies. We are now capable on Cotai. They have different price tiers, particularly for the mass market, as well as for the luxury market, going all the way from the Four Seasons down to the Holiday Inn. So essentially, our rate structure and rate packages have all been done for various segments.

So there will not be any cannibalization. The sales team is all out all over the area, and all over Asia, and in Mainland China giving tour packages. That is all in the program. We will be opening an operating budget, as well as the ongoing budgets, and had a rigorous review of all these marketing for the Venetian, the Plaza, Four Seasons, Holiday Inn, and for the Conrad in the early going. All of this, with substantial financial participation, will help us to build that volume. Our expectations are very high., and we believe that, with the VIP rooms done on the high-end VIP side, we are fine, and on the mass market, we will continue to dominate that, and that's what these plans are all doing. So I think you feel very comfortable that we have a very targeted and strategic marketing plan in place to be able to eliminate any cannibalization and get the greatest share of not only the existing marketplace that is not in those buildings, but the ongoing growth of the Macau market, which would help dramatically with the high-speed rail that will be coming early next year as well. So we are in a very good position that way.

And Ken or Rob, maybe just a separate question. The Marina Bay Sands hold percentage was 2.69 this quarter end year ago. I talked about a theoretical range of 2.7 to 3.0, but, over the past year-and-a-half or so, it has been bouncing around anywhere from 2.5 to 3.1. I was just wondering if there's anything driving it, customers moving, shorter times at the same table, or do you simply need more players to smooth this out over the next couple of years? In other words, is that 2.7 the right range, or should we start to adjust and expect a wider range?

I wouldn't do a thing Steve. I think our range is just where it should be. I think you'll see it to be where it should be at the end of the year, and look, it is a business that, to do these kind of numbers, let's say we did $50 billion, $60 billion, $70 billion, you are going to get there, and whether it is this quarter 2.6, next quarter is 3.5, I think it is silly to think the range is going to change. We have been doing this for a lot of years in Las Vegas. There's billions of dollars of evidence. If anything, I think in Asia, if you follow the high-end business, you have a different positive, and that is that the customer stayed for weeks, not days, and they gamble. This is not an American customer. They sit there for hours and hours and hours. The product is extraordinary in Singapore. The product keeps the customers there. I wouldn't be the least bit concerned to adjust your numbers. I think when it is all said and done, we will hit and exceed our range. Andrew and the team over there, Mark Juliano, Andrew McDonald, Jeremy Bach, watch these numbers daily. We are very comfortable with our forecast being 2.8% to 3%, and I would not be concerned at all. We will have plenty of business and plenty of time.

It is the law of averages. It is always going to come out a moving average calculation. We will show it at 2.85. At different parts of the world, you may get, depending upon how people play Blackjack, on luck or by the rules. You might come up with a 2.93 or 2.95 over in Asia, but it is always going to be in between that number.

In Las Vegas we've done this for 11 years now. Our hold percentage is roughly 10 points higher than the Blackjack in the American business, because of the Asians. I would give you every confidence that in Singapore, this is the right place to be for taking high-end business, sitting there for huge amounts of time, and we are not the least bit concerned.

Steve, you should know that looking at these numbers, year-to-date, our hold percentage is 2.82. We track this everyday. It is a little more disconcerting for us than you, because it does go up and down, but we know in the end, after all this time is coming out just where should be.

Okay thanks very much.

Your next question will come from Janet Brashear with Sanford Bernstein.

Thank you. Rob, I wanted to ask you about the VIP business at the Four Seasons. Are you using any of the unsold apartment space their for either junkets or VIP customers, and if so, how much of it are you using?

Not the apartments, you are talking about the mansions?

No. I'm talking about the apartments that you ultimately wanted to sell.

Let's discuss this, Joe. We are using it as levels 2, 3, and 4, all approved by government. The other things you referenced, I believe, are in discussion, but the government will make the decisions, not us.

And then a follow-up on Sands Macau. Is it your understanding that the ferry terminal on the peninsula will close in 2013 when the [packon] terminal is finished, and if so, how does that affect Sands Macau?

Janet, we have heard about that. There is some conversation. You probably see in the news as well as we do. I believe SJM has lodged some objections to that happening. We will be involved and participate in that situation. We would still like that terminal to stay open as long as possible, but it will be a government decision. But I just saw it today, actually, that SJM has made from some commentary to the government. So I don't know what their thinking, or what the exact thinking or timing would be, but we are watching it.

The fact that I reported increases in all categories of the Sands shows that the Sands still has the Sands affect, put that in quotes, and still is the first foreign operated casino on the peninsula. We are increasing, and obviously, as I said earlier, we are not cannibalizing the Sands. We obviously seem to be doing a good job keeping the Sands patronage. The customers keep coming in there, because our numbers keep increasing.

And can I ask you another question, that is mostly Macau related, but really hits the whole company. As you look at next year's CapEx, what is your anticipated spend? I know most of that will be Cotai Central, but if you just look at your existing projects that you're aware of, what do you get for next year?

If you take out Cotai Central, our existing capital spend, the annual is going to be in the vicinity of about $400 million.

And then with Cotai Central?

You are referring to maintenance number, Right? The maintenance capital in the existing buildings.

Right, and then from a project standpoint, we are probably close to about $1.2 billion

Okay, great.

The bulk of that, obviously, is Sands Cotai Central, and then we have some retainage payments, obviously, to make on Marina Bay Sands.

Thanks Ken.

Your next question will come from Shaun Kelley with Bank of America.

Hello, good afternoon guys. I just wanted to touch, ask real quickly on Singapore, just there have been a lot of questions on the VIP side, and obviously the roll numbers were huge, but I just wanted to ask about the mass market side, because you continue to show very solid sequential growth there. Maybe, Rob, if you could give us a little bit more color on what you guys are seeing on the slots in particular, just what is driving, maybe breaking down that in terms of visitation, spend per visit, maybe where some of those customers are coming from?

Right. Well, obviously we are in 2 very unique businesses there, and they're both extraordinary. I'll start with mass tables. We ramped up from Q4 of last year, our drop just keeps growing. We hit, this year we are anticipating $100 million a month in total casino win out of that segment, and I think on a table side of that equation, it just gets better and better. We are holding in the 22, 23 range, which speaks to the customers' willingness to gamble and stay at the table, and the drop is increasing considerably. The good news, from our perspective, is that mostly a tourist customer. I would say the majority of our business comes out of non-rated side, which is a wonderful customer, both in terms of margins and consistency.

We are fortunate, and think about having tens of thousands of hotel rooms in the neighborhood that feed that market. It is tourist driven, and we believe that, as we keep ramping, we have more and more ability to grow our table win, and our hold percentage stays consistent. So on the slot side of the equation, it is more rated customers. We believe that market, you saw the increases, the wins keep going up every quarter, steady increases that we [peaked] this quarter at $147 gross win on the slot side, $271 the table side, $4.6 million a day. Our goal is to, obviously, get to $5 million in the future. That would yield about $100 million a month of very, very sticky EBITDA.

So this is an extraordinary business. I have worked in a lot of different markets, never seen any place like in terms of both consistency, demand, margin. It is just a wonderful opportunity, Shaun, and I don't see how it gets worse. Everyone keeps talking about the leveling off, but for us, if you look at the drop and the wins, and both mass tables and slots, they just keep improving quarter after quarter. We have never had a decline, and the hold percentages hold consistent. So people laughed when we said we can do $3 million a day, than we did $4 million a day. We are heading to $5 million a day. The focus in Singapore, obviously, a lot of people focus on (technical difficulties) the story they should be talking about is consistency. To Sheldon's comments, the opening remarks, the consistency, predictability, stability of this mass table and slot business in Singapore is extraordinary, and it is driving great tourism for the building. The building is exceptional, our food and beverage and retail. So people want to see this place, and I think the evidence is in these numbers, which are just terrific. Our team there is, again, Jeremy and Andrew and Mark, and the team there has done a great job.

That's really helpful Rob, and just to be clear, are you seeing visitation counts increase into the property this point? I know they were kind of stable in the first 2 quarters.

Dan wants to take it. He's handing me a chart.

Visitation is relatively flat, Shaun, between the second quarter and the third quarter into the casino, but visitation to the property continues to increase, and will continue to increase as you bring more folks into the area with the trains coming first quarter next year.

We think Shaun, to that point, the MRT stop, which is Q1 '12 and the cruise terminal Q2 '12, (technical difficulty) 2012, the Singapore sports hub, are unique opportunities to continue to grow this mass slots and table business. Unlike maybe a New York or the US, where people do not take mass transit, it is well-regarded in Singapore. It is safe, and I think it is going to be a very, very big boom, both to the retail, and I also think this property will just get stronger because of how wonderful it is. Architecturally, food and beverage, the retail, It is an exceptional property that everybody comes back from it talks about. So I think our growth here, how high is high, I don't know. I know 1 thing, we are not seeing a lack of demand. We keep wanting to open more tables and more slot machine on weekends, and it looks very steady and very strong.

You ought to see the reaction of foreigners, government officials, ministers that come in, tourism people, and they come in and say, the first thing they do is point at the building and say, Can you build one of those for me? Or something like it? It is the greatest reference sight in the history of buildings, and clearly, a lot of people call it, not at our urging, but thankfully, the Eighth Wonder of the World, and too bad we couldn't reproduce it. We certainly wouldn't do that to the architect or to the City of Singapore. It's got to be one-of-a-kind, but if we could we would, but we cannot. We will come up with other great designs, and that's why people want to come there.

Remember that the non-gaming profitability is a very high percentage level. So besides the gaming, we make -- the rooms as I said, continue to rise. Mike said yesterday, a couple of days ago that after looking at the month's numbers, he said he has never known of a property to achieve this RevPAR in 50 years of being in the hotel business.

That is really helpful, and I guess, I just had 1 about Macau, and I will yield the floor. Just the margins at the Venetian this quarter were exceptional. They may have been a record at 36.7. I am just trying to understand, as you guys go forward, and you get a little bit of mix shift back towards junket-based VIP, we would expect that those probably actually come down, but your volume and your dollars probably keep going up. Any sense of kind of kind of your thoughts behind how that mix shift is going to play out, or if this margin level is a little bit more sustainable than we might think?

I think it is sustainable in our current business model in the casino, but hopefully will go down significantly as we grow a lot more junket business, which, as you know, is much slimmer margins. But I think when you look at some of the numbers that Galaxy and Wynn, our competitors, have thrown off in the segment, I would rather have more EBITDA and less margin. Because we have left behind some dollars there, and I think, yes. You know the answer, Shaun. If we do our job right, and we are right about the VIP segment, we may contribute a lower margin but a much higher EBITDA, and last time I checked, EBITDA is more important than margin. So I am very excited to drive the margins down and EBITDA up.

Hey that's my line, Rob.

So you know if we do our job right, margin will come down. The motivation is extraordinary. Ed and David and that team has done a great job of driving margin, but I think that as they drive the next piece of that business, you are going to see a movement to more EBITDA, along with that a very fat margin.

Very good. Thank you very much.

Our next question will come from Jon Oh, with CLSA.

Hi, good afternoon everyone.

Hello Jon.

Just a couple of questions on Singapore. I will start with just trying to understand, again, the VIP segment. I think that is the biggest surprise to everyone. I am just trying to ascertain how much of this growth that we are seeing sequentially that is coming from an overall growth of the market, which has been pretty flat in the last few quarters, of roughly, I think, around $24 billion of rolling chip per quarter, and how much of it is actually you cannibalizing Genting, in your estimate anyway? Any comments on that?

Yes, I don't know Genting's numbers, so I have no idea how to tell you what the market is doing. I can only speak to our numbers. People keep telling me, I have this discussion regularly, people telling me how flat the market is, and I get confused, I guess, because I look at the last 4 quarters, our growth has been 8 to 10 to 12, now to 16. To me that looks at pretty good growth. I cannot speak to our friends at Genting, I hope they are doing great numbers, because we hope the market grows together, but our growing volume this last year just has done very well. We are very proud of our success, and I don't know. I hope it is not at their expense. I like to believe they are growing with us. That would be my desire, that a competitors/partner that grows the market together, but I can only speak to our numbers, and I think they are pretty damn good.

And my other question is, the VIP segment is presumably very capital intensive. Have you allocated any incremental capital, for example in growing your cage cash balance in the VIP from Marina Bay Sands, and can you give us any color on how much capital are you actually allocating right now to grow that business to be roughly averaging around $5.5 billion, so far, rolling chip per month?

I have to tell you, I do not see it being capital intensive. Jon. We have some airplanes we use, and we have some high-end (inaudible) areas for high-end players with nice suites, but on a return on invested capital basis, I would venture to say that it is incredibly efficient. Off the top of my head, I'm looking at Ken for advice here, but don't think we are spending a whole lot. As far as the cage, the answer to that is no. As far as spending money, we are adding some suites next year, we are adding 7 or 8 suites, subject to government approval. We continue to provide a high level of service.

The good news is, this is a rather small market, and very honestly, as long as you provide excellent service, terrific food, good casino people to handle the business, it's not that capital-intense. So I don't think it's a significant number to talk about. Our other businesses are more capital intense; the hotel business and the mass table and slot business, but Baccarat-shaped tables are pretty reasonable, and VIP suites, and there some labor against. We have VIP people that make sure the customers are comfortable and provide adequate service, but I don't think, Ken unless I am missing something, that it is a capital intense business from our perspective. We roll $50 billion or $60 billion or $70 billion, I do not think it changed a whole lot. It is capital intense from the perspective of reinvestment on the commission fees, but that's about it.

You also have to pay, obviously, the gaming tax and the GST tax money when you win the money on a monthly basis, which works out to about 8.5% or so. We will pay 8.5% for the taxes and carry the receivable balance as long as we are collecting that. It is a very efficient business.

Okay, all right. Thank you.

Sure.

The next question will come from Felicia Hendrix with Barclays Capital.

Hi good afternoon. Rob, as we think about growth in Singapore, I was just wondering, could you talk about your capacity utilization there?

Sure. Are we talking VIP, Felicia? Are we talking mass?

I think we should talk about mass, because it is more relevant to mass, right?

Right. I think so. Well, it is not an issue at all VIP, let's be clear. We have plenty of VIP space. It is very interesting market, but on the VIP side there is absolutely no challenges even Saturday night or New Year's Eve, finding a space to gamble. On the slot machines, obviously we are capped by government regulation. We run a very high utilization, probably the highest I have ever seen. On weekends and holidays we get into the 80s. In my mind, you cannot get a whole lot higher. So yes, the answer is, we definitely have on the slot machines, these machines the next year we do, let's say, $700 million. This is the highest numbers in the industry, so clearly we have high capacity and high usage. It's an issue at times, but frankly I would say if you have 21 shifts a week, it is probably an issue with 2 shifts, maybe it is Saturday night, maybe it's Saturday morning or afternoon.

It rarely is a problem beyond that. In fact, you walk into Singapore, I will be there next week, and you walk in. When I usually arrive, in the middle of the night -- you get there on Tuesday on Wednesday night, there is plenty of room to gamble. On the table side, we are actually hiring more dealers and being more aggressive to maximize this wonderful market, and that is to open it. Andrew and the team have strived, and George, to get more dealers on board so we can get more tables open and use every one of our tables situations, because on holidays and weekends, we do hit some awfully high utilization numbers. We think if this market keeps going, you cannot do $2 billion in that space without hitting some high utilization on weekends and holidays, but I would caution you that Sunday through Thursday is not, I looked at accounts, and we are not challenged at all five-and-a-half days of the week.

Okay.

But clearly, you do these kinds of numbers, you're going to have some fast issues at times, sure.

So with the shoulder periods kind of being weaker, are you trying to push or lobby for getting more capacity on the slot side, in particular?

No. The government makes those decisions, not us, and we abide by government regulation which is clearly that we are capped and we are where we are.

Okay great, and then just switching gears to Macau. Clearly you say it is a lot of upside as you integrate to the new junkets, but I am just wondering, as you transition to the new relationships, do you foresee any kind of disruption or any kind of risk in that transition period? Maybe perhaps from now until Chinese New Year where you could see your VIP revenues dip as you transition?

To be blunt, we have under-performed the market in that segment. We are extraordinarily strong in the mass, and we're great in our slot business, but let's be clear, we think we have under-performed and we all believe that there is such huge upside. I don't think that is going to hurt us at all, I think, if anything, it is all upside.

Okay.

I am going to be there next week. I cannot think of a reason why we trade down. I think it is just all upside from here.

Okay, so that you cannot make the case that, even though you are underperforming, that over the next few months the junkets that are currently there might feel disenfranchised, or dislocated, or just that it could get a little worse before gets better?

I really can't. I am listening and I am thinking to myself as you asked the question, but the answer is no. I think just the opposite. I think everyone in this room and Ed and David and the team in Macau, everyone is very, very excited about this new phase of LVSs experience in Macau. We are really excited to have ourselves get into the group of pure station and very high-end, the roll business, and get with the right people in the room to drive it. I do not think there is any risk at all with that. No.

Okay that's good to hear. Thank you very much.

Sure.

The next question will come from Harry Curtis with Nomura.

Good afternoon. A quick question, Sheldon, on your growth opportunities. (technical difficulties) a sense of the status of your growth opportunities in Asia, and if new development opportunities take longer to gestate, what would you like to see done with the free cash flow?

What would I like to see done? First of all, there are development opportunities but some of which we are enthused about, some of which that are not open yet, some of which, a couple are within the States we are not that enthused about. There is some obstacles to the 1 in Massachusetts and in Florida. But in Asia, which would be our first choice, it appears as though Korea and Japan are making louder and more current and more urgent moves in the direction of legalizing casino gaming at integrated resorts. Since we are the leader in integrated resorts on the world, but we created the concept of integrated resorts. Everybody knows that we are the most probable winner of any competition out there, but it all depends where and when.

We think that Korea and Japan, and if 1 of those legalizes it, the other one is going to do it in a heartbeat. There is a competition between the countries, who is going to get out there first, and both of them are concerned that the other one may get it done ahead of them. So they are accelerating their efforts. As far as the cash is concerned, I think my wife would like dividends. My children would like dividends and so would I, but we happen to have a few shares to which the dividend may apply, and I may be able to get a new plane, or maybe even something more than my 10 meter sports fishermen boat. I think, as I said at the Investor Day, Harry, and I think you were there, I said we are definitely going to consider it next year. So, I can tell you that the subject matter is not gathering cobwebs. It is a topical subject for the Board of Directors with whom we had a meeting yesterday, and I think that we will keep our, I will not say commitment, but we will keep our feelings about strong consideration for dividends in 2012.

Okay that's great, and I had a follow-up question. I don't know if Ed is on the phone, but there is an awful lot of concern about, at least amongst the economists who follow China, about the state of the shadow banking system. And if someone could give us their view of if there is any linkage at all between the shadow banking system and the source of funding for your Macau junkets?

Harry, I was in Macau last week. We had these discussions, and everybody that I have spoken to does not see any significant problem in that particular area, but to be very candid, I am not sure anybody that we speak to, including Ed who is on the phone, he cannot to speak to you, but I know he is on the phone from Macau, we do not see any indication or hear any indication about it, but in fairness to everybody, I do not think anybody really knows. That is probably why it is called shadow banking. But at this date, with all the conversations we have had with the people who are involved in that end of the business, they have not given us any indication, in fact, just the opposite, in our conversations as of last week.

The clippings, the news clippings that I see, say that the central government is not going to allow any banks or shadow banks, or whatever they're called, they are not going to allow developers to get hurt, because it is only in 1 province, [Wan Jiu] I'm not sure how to pronounce that, but I want to remind you, Harry, that the government of the Society of China is a centrally controlled government. They could turn an aircraft carrier on a dime, and it would take this country, with all of the agencies and all of the special interests we have to go through, it would take is the Pacific Ocean to turn an aircraft carrier around. So they get things done. I have never in my years of watching China, I have never heard of a macroeconomic crisis in China. So I think if people are talking about 1 or pointing to 1 in the making, I just think that they do not really understand how the country is run. And it is unlikely that, in my mind, that there will be any, unless the government wants to take money, then there will not be any taking of money. If they do, there will be. But there is no indication that they are going to do that.

Very good. Thank you.

Our next question is from Carlo Santarelli with Deutsche Bank.

Hello guys, thanks. Most of my questions have been answered, but if you wouldn't mind, maybe Rob, comment a little bit on this. Some of the recent trends in Macau maybe post-Golden week, and also if you could kind of categorize the environment you are seeing amongst your competitors for VIP business in the market as it stands now, that would be great. Thank you.

Obviously, our quarter speaks the numbers that I can speak to. I cannot speak beyond them, but I think business in Macau, everyone talks about the concerns, the economic concerns and the cannibalization, but I keep looking at the numbers, and from my perspective it is still an extraordinary market, that the Galaxy guys delivered some terrific numbers, that I think indicate the depth of that market. And I think our goal is simply to keep participating in the mass slots and table business and increase our share of the VIP. I hate to sound redundant, but I think we have a lot of growth opportunity there, and I think Macau -- I started with Macau in 2004, when we opened the Sands, and I remember people saying, Gee, could it ever surpass Las Vegas is terms of revenue?

At the time they were neck and neck, and last time I checked, they are dong better than Las Vegas in Macau. I've a lot of confidence that Macau is not going to be an issue. I think there is plenty of business there, to Sheldon's point. It is just an extraordinary growth market, I think the transportation issues, as the bridges and the trains et cetera -- the growth into the outer provinces are going to make that market grow and grow. The VIP speaks to itself. Those numbers are extraordinary. Galaxy proved it can be done, and they also didn't cannibalize their operations on the peninsula. So I hope we can emulate that and grow our VIP, but that market just continues to surprise anybody and everybody, anybody who's honest about it would be wrong about that market in Macau., and are certainly more people who have yet to come to Macau, but we feel very bullish about it, in every way.

Yes, Rob, thank you. I think maybe part of my question more had to with maybe what some of your competitors are doing around commissions, things like that. Are you seeing anybody acting more aggressive in the present environment than they were previously?

We've always tried to be conservative, and I think we continue. We think we are privileged in the sense that we've got so much real estate to offer our junket partners that we can participate that way. I think that what lacks -- let's be honest, let's be blunt on this call. What LVS has that no one else has is capacity. 5 hotel casinos open next year, no one has that. Of our major competitors, we are simply the biggest user of land in Cotai. We have what everyone wants, which is capacity and tables and slot machines. That is an extraordinary advantage to this company, that we simply have to continue to do better at, and so as we open Cotai in the next year, in 2012, and we will just keep looking at our margins and doing the best job we can to maximize our revenues. I thought the Galaxy numbers were very strong, obviously on the high end, and they show the way in terms of what can be done. Are we more margin conscious the most? Yes, I think we are. Are we going to trade and be too aggressive and do things that were foolish? No we are not. We are being very conservative focused, and grow our business that way.

I appreciate it. Thank you.

The final question will come from Robin Farley with UBS.

Great thanks. Such a great quarter in Singapore, I do not have a question there.

Come on, Robin, ask something.

No, I have 1 on Macau. Just I wonder if you can give the same color, because I think it sounded like the reserve percentage you were talking about as a percentage of rolling win, that was Singapore. Can you give us a little color on Macau reserves and how that compares to previous quarters?

Yes, when you look at kind of what we recorded as reserves for the quarter, it is actually very consistent, both on a quarter-over-quarter basis, year-over-year, and then also on a sequential basis. So really not much change in that regard, and our percentages with regard to the reserves against the outstanding balances has stayed relatively flat. Doing a great job collecting, and there really has been no need to kind of change what we have been doing. So it is kind of steady as she goes.

Okay great. That was it. Thank you.

At this time I would like to turn the conference back over to management for any closing remarks.

Yes, I would like to just make 1 comment for those on the phone. I think that 1 of the things you begin to see now is a steady, more consistent management group that has now been in place, which is helping to produce the results and the EBITDA margins. Also the restructuring of the casino organization, which took place about 11 months ago, which is really driving the international marketing piece, as well as some other situations on the slot side. And in general, I think we are very, very pleased and satisfied with the commitment that we have gotten from our people all over the company this year. And as the year is ending, this last quarter, I want to just take this opportunity to publicly thank everybody for what they have done and for the contribution they are making, and I think, just to echo what Sheldon has said before, to be predictable and reliable requires not only the products that we put on the marketplace and continue to put on the marketplace, and the demands we are getting from other countries for our kind of products, but having the human resources to be able to continue to deliver the kind of earnings per share increases that you see in this quarter.

And this is Sheldon. I would like to publicly thank Mike Leven for joining us and for doing a fabulous job he is by bringing in other people and contributing to more efficient and profitable operations, and I want to thank Rob Goldstein for accepting the position of being the President of Global Gaming, and I think between Mike and Rob, and all the people, and 30,000 employees below them, I want to thank everybody for bringing us to the point where we are the largest company in the history of gaming in all categories, except number of units, which only validates our contention that we make more profitability in our dollar investment than our competitors can do, but we wish them well, as well as we do because a rising tide carries all boats. So Mike, Rob and Ken, everybody else, thank you very much for all of your contribution, and we look forward to another hopefully very good quarter coming up. Thank you all.

Ladies and gentlemen, thank you for participating sitting in today's conference call. You may now disconnect.