拉斯維加斯金沙集團 (LVS) 2011 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen.

My name is Moe, and I'll be your conference operator today.

At this time, I would like to welcome everyone to the Las Vegas Sands Corp fourth quarter earnings 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 would now like to turn this call over to Mr.

Daniel Briggs, Vice President of Investor Relations.

Mr.

Briggs, the floor is yours.

Thank you very much.

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 Provision of federal securities laws.

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 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.

In addition, we have made some presentation slides available on our website.

With that, let me please introduce our Chairman, Mr.

Sheldon G.

Adelson.

Thank you, Dan.

Good afternoon, everyone.

For our company, 2011 was a landmark year in which we broke company records, and at the same time, we believe most industry records, for revenue, EBITDA, and earnings per share.

I want to walk you through a more detailed look at the previous quarter, which includes record results in Macao and Singapore; and incredible growth in our mass gaming hotel and retail businesses.

But first, let me provide some additional perspective on 2011 and share my thoughts on where the company is headed in 2012.

Thanks to our financial strength and significant liquidity, we are happy to announce that the LVS Board of Directors has approved an annual dividend of $1 per share, which will be paid at $0.$0.25 per quarter.

That is $0.25 a quarter.

Our geographic diversity and the strength of our operations in each of our business locations, or as I have said in the past, the reliability and predictability of our operating results and cash flow, has put us in a unique and enviable position, one which allows us to offer a much-deserved dividend to our shareholders, while at the same time providing us ample resources to aggressively pursue new development opportunities around the [globe].

As a testament to the work of our corporate executive team led by Mike, Rob and Ken, our property management leadership team, and all of our team members worldwide; the Company increased its net revenue from $6.9 billion in 2010 to a record $9.4 billion in 2011, an increase of 37%.

Since gross revenue seems to be on people's minds, even though EBITDA is still what you take to the bank, I'm happy to point out the all-time industry record $11.5 billion in total gross revenue, the company produced in 2011.

Others report gross revenue figures, as it is a measurement of overall growth, so we thought we would share the figure with you as well.

While we're on the topic of gross revenue, let me also point out, since it seems to be grabbing some headlines today, that our gross gaming market share in Macao grows from 15% last January to 19% in January of 2012.

Not that we run our business for market share, but our re-affiliation with Macao's most important gaming promoters can help drive our market share above 25% or even higher in the future.

I remember discussing this on a previous telephone call, that I expect that our new relationships with new Junket Reps would bring us back to the mid-20s.

I'm now optimistic after moving so fast with so few new, comparatively, so few new Junket Reps, that we moved up to 19.7% I think it is, it depends whose report you read.

Now, let me get back to topic a little closer to my heart, and that is EBITDA.

Our 2011 company-wide EBITDA soared from $2.2 billion in 2010 to an industry record, an all-time industry record, of $3.53 billion last year, a remarkable 58% increase.

In addition, earnings per diluted share in 2011 increased a whopping 106% over the previous quarter.

These over -- sorry, that should be year instead of quarter.

Earnings per diluted share in 2011 increased a whopping 106% over the previous year.

These overall results also reflect another substantial accomplishment.

In another industry first, we had two properties in two different markets, Marina Bay Sands in Singapore and the Venetian Macao in Macao, that both produced EBITDA in excess of $1 billion.

In fact, every single one of our properties saw meaningful percentage increases in EBITDA in 2011 when compared to 2010.

This past year truly showed the power of our Integrated Resort business model and its ability to generate tremendous revenue and of course, EBITDA.

You know, our company did not make its debut on the Fortune 500 until 2010.

Since that time, we've been fortunate enough to surpass all of our industry competitors on that prestigious list.

Also important to note, our growth is not just fueled by single revenue source, either.

You could point to strong growth in retail, food and beverage, meetings and conventions, or the $1 billion of room revenue the Company did in 2011, as clear evidence that we are much better described as an international integrated resort developer, rather than simply as a gaming company.

We expect to build on our success in 2012, and that [starts] with the opening of Cotai Central, which will happen just about two months from now.

Cotai Central represents an important aspect of the maturization of Macao as a leisure and business destination.

The additional room capacity provided by the nearly 6,000 rooms we will open over the course of the year, along with a wide variety of non-gaming attractions and amenities, will help Macao continue to build even further on its fast-growing tourism sector.

We believe there are three important components to long-term growth in Macao.

Transportation and infrastructure development, which is being enhanced as we speak; hotel room inventory, which of course, we will meaningfully contributing to, with the opening of Cotai Central; and lastly the continued growth of the Chinese urban population, who equipped with sufficient disposal of income, will visit Macao and significantly expand on the record 28 million tourist arrivals that occurred in 2011.

So it goes without saying, the opening of Sands Cotai Central is an important catalyst to what we expect to accomplish in 2012.

I expect 2012 will also see significant progress on the development front, which is important because at our core, we will always be a growth company.

Mike and I have made it our personal priority to aggressively pursue, and ultimately secure, new development opportunities for the company this year; and we have made recent trips to Asia to support these efforts.

As we have mentioned before, we are highly interested in exploring the opportunities specifically in Japan, Korea, Taiwan and Vietnam.

And, our efforts are clearly progressing, as our most recent conversations have advanced to the point, with details such as (inaudible) have been discussed.

Finally, before we get to a discussion about fourth quarter results, let me specifically highlight a segment of our business that I'm particularly excited about.

Together [remaining] gross revenue from our retail models in Macao and Singapore rose to $106 million in the fourth quarter of 2011, an increase of 47% compared to the same quarter a year ago.

The combined operating profit margin from that segment, 83%.

For the full year of 2011, sales per square foot at the Grand Canal Shoppes at the Venetian Macao was $1,087.

I might add that that is 280 -- almost 300 tenants, so we're averaging, that includes restaurants which are typically lower per square foot sales.

At the Four Seasons mall in Macao was $3,386 and in Singapore, Marina Bay Sands sales per square foot was $1,231.

Just to put a little perspective on that, the largest mall in the United States was -- the highest producing sales per square foot was the Forum Shops here in Las Vegas across the street from us, that went up originally to $1,200 a foot.

And, then we started out the Grand Canal Shoppes here at the Venetian Las Vegas at $1,000 to $1,100 a foot.

So, when you talk about $3,386 average for about 100 tenants, the DFS high-end, luxury tenant that we have on the first floor of the mall -- the shops at the Four Seasons was $5,500 plus or minus sales per square foot for 2011.

That is really a whopping percentage.

No mall in the world, to the best of our knowledge and inquiries of other real estate mall developers, ever get close to that figure.

As we mentioned before, being in the retail mall business and owning some of the largest properties in the [world] will provide meaningful value for us, particularly as the retail market in Asia continues to grow.

It doesn't take a big leap of faith to add another growth factor, just on today's number, and so take 106 you can extrapolate that -- you could annualize that, and you could apply four times -- 4% cap rate.

In Asia, there was one of the top real estate guys in the United States, went to the mall, saw it, came back and said, I wouldn't argue with the possibility that you might get a 3.5% cap rate.

But we're not looking at that.

If you take a 4 to 5% cap rate, say 4%, and you multiplied it by the hundreds of millions of dollars; so, that's 25 times that amount of money.

You're talking about a huge amount of money that equals our debt, which means that if those malls were sold, we would be net cash, debt-free.

Let me now take a minute to summarize our fourth quarter results and then we'll take a quick look at our operations by location before we get to your questions.

For the tenth straight quarter, the Company increased its EBITDA from the previous quarter.

Did I say something about reliability and predictability?

We once again produced company records and EBITDA, $961 million for the quarter; and net revenue, which was $2.5 billion, and once again applied the metric others use, our gross revenue was $3.1 billion.

Our EBITDA margin increased 110 basis points to almost 38%, and adjusted EPS increased nearly 36% to $0.57 versus last year's fourth quarter.

For a review of our operating results, let me start Macao with the properties operated by our majority-owned subsidiary, Sands China Ltd., turned in, as you could guess, record results.

Our adjusted EBITDA for Macao property operations was $434 million for the quarter, an impressive 27% increase from last year's fourth quarter.

At the Venetian Macao, EBITDA for the fourth quarter of 2011 was a record $283 million, an increase of 20% over last year's fourth quarter, and EBITDA margin was a record 37.1%.

On the gaming side of the business, Rolling Chip volume VIP was a record $13.6 billion, an increase of 15% compared to the same quarter last year.

Non-Rolling Chip drop to the mass market also increased nearly 15% to a record $1.1 billion, and slot handle increased 52% versus last year's fourth quarter and was a record $1.1 million -- $1.1 billion.

The legend of the Venetian Macao continues to grow, and it clearly remains Macao's most visited destination.

The growth in non-gaming revenues was significant during the fourth quarter of 2011.

Food and beverage revenue increased 30%, room revenue increased 15%, mall revenue was up 35%, and additional non-gaming areas such as conventions, revenue were up 32% when compared to the fourth quarter of 2010.

At the Sands Macao, adjusted property EBITDA was $88 million for the quarter.

Non-Rolling Chip Drop was $687 million and Rolling Chip volume was $7.6 billion.

Both were increases versus the same quarter last year.

Slot handle at the Sands increased 58% to a record $621 million.

Finally, the initiatives we have undertaken over the past several months to improve our VIP business in Macao are now bearing significant fruit.

Evidence of that success is reflected in this past quarter's results by Rolling Chip volume at the Plaza Casino at the Four Seasons increased 64% over the fourth quarter of last year and was a record $7.5 billion.

The property also had its best EBITDA quarter ever, recording $63 million over the three-month period.

Slot handle at the Plaza Casino reached $244 million, up 82% versus quarter four of last year.

As with the Venetian Macao, non-gaming revenue sources all saw significant increases over last year.

Specifically, The Shoppes at the Four Seasons, where mall revenue increased 54% over the same quarter last year and was a record $24.5 million.

Let's move down to Singapore, and to give this section a little perspective, let me start by saying that when we opened our first Integrated Resort in 1999, the Venetian here in Las Vegas, it cost approximately $1.1 billion to build for the first 3,000 suites.

Fast forward to today and that figure turns out to be less than the $1.5 billion in EBITDA Marina Bay Sands generated in 2011 alone.

Cost us a little more to build than the original Venetian, but with these results, you'll hardly hear me complain about that.

And that is -- to give that a little perspective, I want to point out to some of you who know that there were competitors around, and some analysts perhaps, that estimate in our first 12-month period, the one just ended, we will earn -- people made money wagers on the over and under number was $300 million EBITDA for the year.

I'm happy to report, and when I said two years ago that I thought we could earn $1 billion in 2011, I'm sorry I was wrong.

I'm very happy our competitors were wrong and they lost their bets.

We are only five times what that bet was, that we would make only $300 million.

One has to wonder where the upside potential is for Singapore.

If you're of the school of thought that says that we've already hit the top and we have no growth left, you have to make the assumption that we're the most phenomenal marketing people in the history of the casino industry because we found every VIP player that exists.

Therefore, there are no more VIP players to exist and there won't be anymore players, potential players, that have made money and will make money; and therefore, we can't grow.

Now, if you're of the school of thought that we think we are, and you are more objectively and independently making the judgment about where Singapore is going to go, you have to consider the fact that nobody in the history of gaming ever saturated the market by bringing up -- by saying that we have eaten up all the -- and we've identified and we have contacted and we have interacted with every single player that exists in the 1.3 billion population of China, the 128 million of Japan, and the 44 million of Korea, the 24 million of Taiwan, the 90 million of Vietnam, 75 million of Thailand, 240 million people in Indonesia, and 28 million people in Malaysia.

Did I miss a few countries?

So, add a few 100 million more.

I would like to feel that we are the best, and we've accomplished things that nobody could ever dream of.

But, let's be realistic; we have a long way to go.

And, there is nobody that believes that there is a threshold that we won't go beyond.

The hurdles are falling at every threshold, and we are of the belief that our growth -- actually my middle name, my parents did not name me Gary, which they did, my middle initial in SGA would stand for Sheldon Growth Adelson.

The success of Marina Bay Sands continues to roll on, as the property delivered record results for the fourth quarter of 2011.

Property EBITDA was $427 million, a nearly 40% increase over the $306 million from the same quarter a year ago.

Gaming volumes in Singapore were very strong during the quarter.

With Rolling Chip volume up 32%, Non-Rolling Chip drop up 22%, and slot handle increasing by nearly 50%, compared to last year's quarter.

Did I forget to say something about growth?

Total mass win per day, compared to last year's fourth quarter -- total mass win per day during the quarter was $4.6 million, an increase of 44% under the same period a year ago.

Talk about growth.

The property saw huge percentage year-over-year increases in several revenue streams.

Food and beverage revenue was up 41%.

Mall revenue was up 56%.

And, hotel room revenue increased by more than 50%, with ADR, RevPAR, and occupancy all up significantly compared to last year.

Back here in the US -- let me just make a comment that I believe that the mall revenue here, on a stand-alone basis, when we extrapolate it and estimate what it's worth, will go up to -- will be very significant, that we'll easily be able to sell the mall, and pay off all our financing, and put some more money back in our pocket.

So -- but back here in the US, the Venetian and the Palazzo in Las Vegas delivered $81 million in EBITDA during the fourth quarter.

Strong group meeting and convention business totaled 16% increase in cash revenues from the sale of hotel rooms, compared to last year's fourth quarter.

And, food and beverage revenue also increased 10%, compared to the same quarter a year ago.

Table game drop also increased during the fourth quarter.

It was $532 million versus $463 million last year.

In Pennsylvania, Sands Bethlehem turned in EBITDA of $22.5 million, with a quarter which was a 15% increase over last year's results.

Table game drop was up 91% and slot handle increased 14% versus the same quarter last year.

In addition, the hotel generated over $2 million revenue and will continue to grow as the property adds even more amenities, such as the event center, which will host its first show May 15.

The retail mall at the property will celebrate its grand opening on February 15, and new meeting rooms at the complex are expected to be completed by March 1.

So, that completes an overview of our operating results for the quarter and year end 2011.

At this time, along with Mike, Rob and Ken, who are all here with me, we would be happy to answer -- I don't know we'd be so happy, but we will.

Trust me, we'll be happy.

Don't ask any tough questions; just give us soft ones.

(Operator Instructions)

Mark Strawn, Morgan Stanley.

Two questions in Singapore.

First, given the sequential declines you're seeing -- you saw in the 4Q in both mass and VIP, can you comment on the trends you're seeing there overall?

And, is there a consistent seasonality to that business?

The follow-up to that is, what are you doing on a property-level basis to drive that business forward, in terms of whether it's international marketing or things in the local level on the mass side?

Mark, I think you know we have, obviously, a very intense marketing program in Singapore throughout the region, and with regional offices for the premium direct.

We are somewhat restricted by the government in terms of local marketing inside Singapore itself.

But, to answer your question, we're in this property about 20 months since we opened it, and again, I think the success speaks for itself.

We far exceed our own expectations, the billion dollars in full year one.

The seasonality issue has yet to be determined.

I think it's clear that we're finding our way as we go, and every quarter is a new one.

Obviously, the year-on-year comparisons are terrific; the quarter-to-quarter, not as strong.

It's a highly concentrated market in terms of the VIP rolling direct.

As you're aware, there's not a junket involvement there.

So, we deal directly with those customers, both from the credit and marketing perspective.

The team here I think is excellent.

Larry Chew and his guys are out there in the field.

We're constantly looking for new customers, and I think we saw in the fourth quarter a lot of people in Asia gambled.

Perhaps they didn't gamble in Singapore as much as they did in Macao and Las Vegas, and as you know, we're players in both those markets.

I think the shifting, the concentration will create volatility, as we said in the past, as it relates to the rolling segment.

We're convinced that segment's far from mature, as Sheldon referenced, if anything, it's still growing.

And, I think will continue to move.

As far as the mass side of the business, I don't know how we can be more honest.

We're just thrilled with the success of that segment.

What started as a $1.6 million day combined slot table income on the mass side, we exceeded $4.6 million a day.

I think that's astounding tribute to the team there.

I think Andrew Macdonald and Eric [Percy] and the guys they work with every day in the field, did a terrific job and I think that market -- we're moving towards $5 million in my opinion.

When that happens, I don't know, but I think it's achievable -- it's a $5 million per day.

And, I think there's a lot of factors that drive that.

There's internal and external factors.

On the external side, we're really happy to say that the new MRT station opened, the botanical gardens opening, the eventual cruise ship terminal, and of course, the growing tourism in Singapore bode well for the future of mass gaming in Singapore.

But, I really think the other success is the guys looking forward there, the team there, Andrew and Eric, really have done a great job -- an exemplary job moving machines around to maximize their value.

You're aware of our pressure in terms of weekend capacity issues, and we work to avoid that.

I think we've done pretty successfully so far a good job.

But to Sheldon's point, I'm a firm believer we're going to get to $5 million a day on the mass side.

I'm an even stronger believer that although it's concentrated, the premium business, the premium direct will grow.

There's billions of Asians, and as their wealth increases and they have an oversized proclivity to gamble, I think we're going to see more and more business there.

But on a more regional, or more of a bigger picture, Las Vegas Sands (inaudible) is the only company to have presence in Macao, Singapore, and Las Vegas.

So wherever they gamble, we're capturing more and more of that database and getting more and more of that business.

And Las Vegas was the recipient of huge amounts of play in December, which helped Las Vegas.

It didn't help Singapore.

Our take is there's good news ahead.

That's really helpful.

One last follow-up for Ken, perhaps.

Have you quantified the impact of the Singapore exchange rate on the quarter's EBITDA results?

No, we typically don't get into that level of detail, so I pass on answering that question.

Okay, thanks.

I would like to make an observation.

I watch the exchange rate daily, just out of curiosity.

And generally, the quarter -- the fourth quarter exchange rate was relatively stable.

It was between $1.20, $1.21 to $1.30, Singapore dollars to the US dollar.

It fluctuated, so it's all within the same range.

I think that average probably in the fourth quarter $1.25, $1.27.

It's moving back up a little bit now, and I think we're knocking on the door of $0.80 US for a Singapore dollar.

But, it doesn't have a significant impact.

It does from the beginning of our development of this project, when the Singapore dollar was at 1.65 Singapore dollars to the US dollar.

That made a big difference over the years.

But, that only affects our projected income at the time.

Great, thanks very much.

Joe Greff, JPMorgan.

I have a couple of buckets of questions here.

First, on Singapore, if you mentioned it, I didn't catch it.

But, if you adjust for the above average hold in Singapore, what would normalized EBITDA and normalized margins be in the quarter?

Yes, hold on one second.

You should note, Joe, that on the adjustment for the year, if you look at the entire year of Singapore, it came in I think at 2.85, exactly where it was supposed to be for the year.

So in the last quarter, we had a negative adjustment.

Okay.

The number is 380.

The rolling moving average was 2.85 for the entire year.

So the impact in the fourth quarter from a revenue standpoint was, probably between $45 million, $50 million, and when you adjust for that plus, if you add back some of the impact of the bad debt reserve, which was higher in the fourth quarter, you get to a margin that's kind of in the middle of the range that we've talked about before for Singapore, which was, remember we talked about a 50% to 55% margin approximately, you end up probably in the middle of that range.

The other consideration, Joe, obviously there along with the reserve is the mix of business, obviously the mass accelerates, the mass slot is going to help that margin, because the mix changes, this time the next quarter is not as [stable] as in previous quarters.

That, coupled with the bad debt reserves, drove the margin down.

And then second, on Singapore and just a little bit more about the sequential declines on mass and slots, do you think that implies that your plateauing or hitting the saturation point in yielding more on the floor?

And then with respect to VIP --

No.

Then with respect to VIP segment in Singapore, how do you view seasonality from here?

I know it's hard.

We struggle with it on this side of the fence, and we often think 1Q and 3Q should be about 50% of the role, 40% in 2Q and 4Q.

If you can share any data points maybe with January to date, volumes or roll, and maybe that kind of helps understand it as well.

And then I'll wait for those answers and ask one additional question.

Joe, it's Mike.

The reason you can't look sequentially is exactly what you said about January.

January is a Chinese New Year month.

Last year it wasn't a Chinese New Year month.

Therefore, if you compare January to December, you're going to have very significant differences in the sequential role that goes on, from January to the quarter.

I think you got to look quarter -- you got to look year-over-year to see whether in fact you're gaining, you're continuing to gain in both the mass or in the roll.

When it comes to the roll also, it can be three or four players in the course of a quarter that can make a very significant difference if they show up two weeks after the quarter or in the previous quarter.

So, you're going to get potential variances because of the nature of that business.

But, I think if you compare quarter-to-quarter, year-over-year, you've got the best way of looking at a seasonality.

Plus, we need still at least another year of Singapore's operation to get to a relative maturity in terms of looking at the historical consequences of each month, so December versus December and so forth.

And, that will give you a lot more help as we get a little older in that business.

This is Sheldon.

Last time we had dinner with some important people from Singapore, and the discussion was what percentage of the people are [prized].

Our number continues to grow every day of visitation.

And, the foreigner percentage has increased to about 80%, which is very good because the foreigners come in with more money than the local Singaporeans.

We haven't done a study of that, but it's common sense that somebody that comes in from foreign territory will carry more money with them to play because they are here less frequently, or they are there less frequently.

One issue is that we are running at such a tremendous occupancy rate, in the high 90s in the hotel, we are talking to the government about possibly getting some more land to build more hotel rooms because we turn away a lot of reservations.

We're trying to fine tune the segments of the hotel occupancy, so we can maximize the return.

But I don't think we mentioned the ADR -- did I mention ADR?

I don't think so, but it's very high and in the mid 3s.

So, that tells us if we put another 1,000 or 1,500 rooms in, it will significantly increase the quarter.

Okay.

Then, one final question.

Venetian Macao margins were 37.1%, much higher than we were expecting.

Even with a greater VIP revenue skew than we were forecasting, was there anything within the VIP segment with either direct or junkets in terms of adverse or favorable hold that skewed the overall margins?

I guess I'm trying to get to the sustainability of a 37% margin going forward from here.

Joe, while we're flipping the pages to find the exact whole percentages, I just want to say to you that we haven't seen yet a real move in the junket side there that we're growing, but we have to -- the concentration has been the Four Seasons, so I think it's negligible in terms of the whole percentage.

You guys have a hard number on the whole percentage --?

There's no juice -- (multiple speakers)

So my question is did you hold luck on the direct side -- (multiple speakers)

What you're seeing, Joe, is we're getting better -- there's four wonderful segments to make money in Macao.

We're doing better in the junket segment.

We got a lot of room to move there.

The direct premium, we're getting much better at, but let's be honest, our strength in the [east] has always been, and hopefully will continue to be, mass tables, slot ETG segment, and that segment gets better by the day.

We want to dominate that segment and grow in that segment, which is obviously margin intense, but also improve our VIP position, which hasn't really happened yet that much for the Venetian.

So, I don't think it's out of the ordinary to see what you saw this quarter, and it is sustainable, yes.

Okay.

I want to give you some figures.

The hotel ADR increased 29.1% to $333, and occupancy increased 98.8%.

How's them apples?

All right.

My final, final question here, if we adjust for the low hold at the Four Seasons Plaza Casino, where you approximate normalized EBITDA there?

Thank you.

Whole percent at the Four Seasons?

Well, it would -- you're saying what would the adjustment be to EBITDA in Macao--

For the Four Seasons-- (multiple speakers)

Yes, if we assume 2.85 versus 2.61.

Yes, it's probably about $7 million, $8 million.

I'm sorry, say that again, please?

$7 million or $8 million.

Shaun Kelley, Bank of America.

First of all, in Singapore, just to follow up on the bad debt comment, could you just give us two quick numbers, the bad debt reserve that was taken or maybe the percentage as it's compared to the prior quarters, as well as the receivable balance in Singapore at the end of the quarter?

Sure.

The receivable balance at the end of the quarter was about $650 million, and against that, we had a reserve of about 18%.

Now, to answer the question with regard to the expense taken during the quarter, remember on one of the previous calls we talked about a percentage of rolling win as approximate reserve that we would be taking.

We talked about a 3% to 7% range.

This quarter, we were higher than that.

We were at about 10 -- a little bit over 10%.

If you look at it on the annual basis for the year, for the entire year, we were about 6%, a little bit north of 6%.

So, on an annual basis, we were right in the middle of the range, if you will.

And, from quarter to quarter, it's going to vary some.

Sometimes it will be a little bit above that; sometimes a little bit below that.

But, we ended the year really within the range that we expected to be in and feel that we're prudently reserved at the end of the year.

Great, that's helpful color.

Then, second question might be just a little bit broader outlook.

But, there's been a lot of discussion questions around -- because of Chinese New Year shifting this year, how to think about the outlook of both Macao and Singapore for the first quarter, and really throughout the balance of the year in terms of what's the right growth rate to think about.

So, just directionally more than exact numbers, although we'll take the exact numbers if you'll give them to us, how are you guys thinking about the health of the consumer over there, and just what are you seeing on the ground as far as traffic levels, and uptake at the property?

We heard about some solid visitation statistics out of Sands China, but just wanted to get your broader thoughts on the macro.

Sean, let me talk about it.

I think that in spite of the fact that a lot of the press is talking about slow downs in China and all of these kinds of situations.

We are essentially seeing nothing that would indicate that Macao and Singapore will not continue on their present paths upward.

And, our planning is on that basis with our staffing and all of our marketing models to go against those kinds of growth numbers.

There's nothing that we have seen over the last number of months, or see today, that indicates that there isn't a positive outlook for all of our properties at this point.

That's helpful.

Last question would be there was a lot of discussion, obviously, around the return of capital to shareholders on the dividend front.

Could you maybe just give us a sense, and specifically I would love Sheldon's thoughts, on how you guys balance the idea of a dividend versus a buyback, and how you think about that going forward?

Thank you very much.

Felicia Hendrix, Barclays Capital.

Hold on a second, Felicia.

That was a question we still have to answer here.

I'll try not to breathe heavily.

This is a board decision.

I try to stay out of it because of my substantial interest in the company.

And, I don't want to create any appearance of conflict.

But the -- we don't see that our stock -- we see a tremendous upside for our shares, and we don't -- the share price is -- we think -- I believe the board has thought that we would be better off in the best interest of shareholders to distribute the dividend as opposed to buying back shares.

This dividend will cost us on the fully diluted basis, about $800 million-plus a year.

And, we can't get -- we can't have a tremendous buyback impact for $800 million a year.

We can -- it doesn't help us in appealing to those investors that are mandated by their regulations, or their composition of their funds, to only invest in companies that pay dividends.

We thought that would be the first thing to do.

But I think about -- in order to make any kind of impact on stock buyback, it would take many billions of dollars, and I think that money is better put to use for expansion, holding enough money for expansion.

Because it probably is not going to be too long, as each month goes by, that we end up with one of those Asian countries or more than one location, we're shooting for two locations in each of those countries.

The top two cities essentially.

But who knows what we'll get.

Everybody believes that we are the leading candidates because of our fundamental business model and our fundamental marketing strategy that's convention-based.

And, the whole world knows about that, and the whole world knows that we are the originators of the Integrated Resort model, notwithstanding what some of our competitors say about themselves.

You can't compare a competitor with 17 meeting rooms and no exhibition space to us, with between 300 and 350 meeting rooms per property and exhibition space, plus huge ballroom space for exhibitions.

So, we're just in a different class than the rest of the market.

But, we want to make sure that we have enough money -- buy back stock will take many billions of dollars to have a substantive impact, but the dividends, it still takes a few bucks.

But -- a billion here, a billion there; we all know the rest.

That's good; it's good.

It makes more people happy.

It thanks the shareholders for their level of confidence in us.

And, we become more attractive to those who have a mandate to invest only in dividend-paying stocks.

Felicia?

I'm now unmuted.

While we're on that topic of your balance sheet, I have a few questions there and then I have some operations questions.

You're obviously giving us a nice positive and if you look at the current yield, kind of relative to the gaming, lodging, and leisure area, our area, it's a nice yield.

But, as you generate more cash flow, I'm just wondering -- you should be able to increase that yield, so I'm wondering -- or the dividend rather, I'm wondering if you've discussed an optimum level?

Have we discussed an optimum level of dividend pay?

Like of the payout ratio, basically.

I don't know.

How high is the sky?

Well, that's actually my question.

I mean, do you guys have a limit, or as you grow your cash flow -- I mean, do you have a limit in mind, or is this something that can just grow with your cash flow?

I think you've said it, Felicia.

Basically as the cash flow increases, we have to balance the needs to pay out dividends with the needs for development.

We felt that this was a very adequate stock for paying the dividend, that it would satisfy our shareholders, and as we go forward in the year, we would like to be able to increase dividends as we go.

But, it has to be balanced with our need to develop because the earnings will grow substantially if we add more development as well.

So, it's going to be a decision the board will make on an annual basis, based on performance and what the opportunities for using cash.

I think we're in a great position.

Most companies aren't there, particularly in our sector.

And, we'll have the opportunity, hopefully, to both raise dividends and do the kind of developments while we continue to increase the earnings per share of the company.

Great.

And then --

Nobody ever accused me of being a shrinking violet.

I've been accused of a lot of other things.

But, this company is a growth company, and Mike and I are fully focused on growth opportunities.

I, too, in 2010 or '11, I forget, my chief pilot told me that I flew almost 700 hours.

And, I didn't fly that to go back and forth to Hawaii and sit on the beach.

I went all around the world talking to heads of state, and whoever I could talk to, about putting up Integrated Resorts in their country, and what we've done for other places, what we did in Vegas, Macao and Singapore, and even Bethlehem.

And, what we think we could do for their country.

So, this is -- we are in a class by ourselves.

And, I don't think when you guys compare our EBITDA multiple or EPS multiple to the others -- I mean take a look at this, nobody in the history of this industry has ever reached $3 billion, never mind with only a first 12-month period in 2011, that we reached $1.5 billion-something in Singapore.

Nobody ever estimated that the first year would ever be anything like that.

How many years did it take before the first company with x amount of properties emanating out of Vegas, or any other company, made even the first billion?

So, it was decades of industry existence.

We are in a class by itself.

Now, we have to be the shot point at the edge of the spare and the arrow to lead the way into growth opportunities, and to, frankly I think be priced at a much higher level than the other guys, because our growth opportunities and our profitability in terms of EBITDA margin, thanks to our Integrated Resort model is unprecedented.

Thank you, Sheldon.

You spent a lot of time on the call talking about the success of the Canal Shoppes at -- The Grand Canal Shoppes at the Venetian Macao.

I was wondering -- I wouldn't think that it would be something that you would want to sell today, given the good statistics, given that Sands Cotai Central hasn't opened yet, but can you give us a sense of timing there for a potential sell?

No, because it's very tempting not to sell it now because when you're talking about 30%, 40%, 50% and more growth year-to-year in retail, that and more and more of the almost 300 tenants in The Grand Canal Shoppes pass their basic rent.

And, they're into 12.5% to 18% of revenue rents, so with the basic rent plus percentage of revenue rents, the temptation is not to sell.

But, we're going to look at what the best value is for shareholders.

If we're going to sell it, I don't think we would reach maturity -- you know some could estimate we'll do it in two years.

Then you find in two years you just grew 50% from the year before.

You say, well, is this the right deal?

And, the answer is no.

So, I don't know, if ever we start to level out, and we become a value investment instead of a growth investment; or less growth, but more value; or more growth and less value; we got to give the buyer some opportunity to grow.

But the point is, this was like a secret bank account, a secret savings account that we've saved up all this money, and if we chose to tap that account, we would be debt-free.

Okay --

That is a very, very significant and valuable savings account.

The amount of cash -- I just saw an analyst report this morning said that next year we'll have free cash flow of an excess of $3 billion.

Think about the 75 or 80-year history of Las Vegas, that nobody has ever even approached that amount of money.

So, again, I think we deserve a significantly higher multiple because we have growth and we have the solidity of reliability and predictability.

Thanks, and Rob and Mike, obviously the investment you've made in Macao is paying dividends.

The numbers were spectacular.

Just wanted to make sure I'm not reading too much into something you put in the release.

Because it did say that in Macao, you'll continue investing in the VIP arena through 2012, and as you talked about it before, you said the program would be complete by the end of the second quarter.

So, are we looking at kind of the start of a Phase II?

And if we are, can you give us some details on that?

It's not a timing issue.

It's more an issue of as we see -- look, we're going to control 1,500 tables and 6,000 slot ETG positions at the end of this year.

The issue for us is how to maximize the growth and the opportunity to drive EBITDA regardless of the segment.

So, if we can invert tables from mass until we the junkets over-perform, we'll move in that direction.

It's a never-ending process.

We had a conference call this morning with David, talked about this very issue.

David Sisk, who has just done a really good job in this area.

And, I think the question -- we have a very unique advantage there.

We've got all this space on Cotai, which is where the junkets want to be.

We're going to have 9,300 sleeping rooms in Macao once we complete the end of this year, which gives a huge advantage on the mass gaming side because the number one driver of mass gaming performance is sleeping rooms.

So, we have all these advantages.

And the problem we have, is trying to manage where we can get the highest yield, be it junket, VIP direct, mass gaming, slot ETG.

And, our goal is -- all of our managers over there are thinking about what is the highest and best use of the real estate, how to drive EBITDA.

So, I guess we started this junket thing, we saw upside, but we see a much larger upside than we first anticipated.

But, we also see, I think, incredible growth in all the segments.

So, our goal as managers is to maximize that huge advantage we have with sleeping rooms, VIP, the Cotai performance, and not where it comes from, this will be a never-ending process.

It won't end in February of this year or the year after.

It's a never-ending process.

That's our goal is to drive our performance, mass and VIP, to the highest levels in Macao.

Beyond the $125 million in CapEx that you allocated to that, is there anything else you're allocating to?

Or, is it more of a strategic management that you're talking about?

We will go to the capital committee and request capital if we think there's opportunity.

And yes, we think there's more opportunity.

Okay, great.

Thank you so much.

Jon Oh, CLSA.

I have a few questions.

I'll start off with, just on the point that Rob brought up about the Venetian margin's at 37%, and you said that you think that's sustainable.

To the point that -- where do you see the most incremental uplift coming from the Venetian going forward?

Is it the Rolling Chip business, or is it still the mass or the premium mass market that will surprise us the most in the future?

And, how does that play with this whole margin, which right now is speaking at the 37% level going forward?

I'm going to let Rob answer that question after I say something that hasn't been discussed.

We have applied to the government and submitted drawings for about a 4,000 room lot-free development.

Now, everybody -- the analyst community are giving points and value to MGM, to SJM, to Wynn because they are in line to get lots; and they don't have the lots yet.

We own this lot; lock, stock and barrel.

We paid for it years ago, and now we think that in consultation with the government as to what they want, we're going to make a mass market, plus a separate tower for VIP play on lot three.

And, so far we're getting positive reaction on -- it will be at the [Maddock]property.

And, we lead the pack because we already own and pay for this lot.

So, we have the right to put the building up as soon as possible.

The second item is that we have probably doubled the 38 VIP rooms with about 100-some odd, in the low hundreds, tables.

We've doubled that because of VIP demand at Cotai Central.

I think the industry under-appreciates the growth potential of Cotai Central because it's probably taken so long, people forgot what it was supposed to be all about.

I walked through it a week or two ago, and it is magnificent.

Magnificent.

We've taken some unusual steps to make it look -- there's a mountain-style casino and mountain-theme, and there's a Polynesian, or Pacifica-theme.

They are absolutely gorgeous, particularly the ceiling is a new step in the typical copper and soffit, we've gotten away from that and we've created a new step.

It will be one of the most beautiful casinos in the world.

That's on the mass side.

We put the VIP -- there wasn't enough room to expand at the first level, so we put it in the third level, and we had a lot more space than we thought.

Fortunately, we have the room to expand.

Rob, do you want to continue?

Yes, Jon, first of all, somebody said something about raining cash in Macao, and that's how we see the Venetian.

It's Raining cash; a smart guy wrote that once.

And, I think it's appropriate we look at our profit -- the Venetian has a couple exceptional advantages, right?

It's themed, which I think is appropriate for the Macao market.

It's got a lot of sleeping rooms, which is incredibly important for the mass.

It's probably the most attractive retail for everybody to come to in terms of the mass, which ties back and helps the gaming floor.

I think Eric and the team over there and Tim have done an extraordinary job with the slot ETG.

You read about a recent move on the slot side.

I think that just bodes real well, but to be honest with you, I don't know where to concentrate.

David believes the junkets have extraordinary upside in the Venetian.

We believe so, as we fix the space and make it more appealing and get the right people in that segment working for us.

Look, we under-performed the junket segment dramatically prior to 2010.

We're now going to over-perform that segment, I believe.

But, I wouldn't ignore the slot ETG market.

It's been incredibly important to us.

We're hitting numbers we never thought we would see.

When Sheldon first initiated slots in Macao, people kind of chuckled.

And, now we see it growing where we're exceeding monthly what the entire win account was in 2003.

Then lastly, our strength will always be mass tables because we've got tables, and we've got lots of them.

And, we've got lots of sleeping room.

So, I don't know how to identify what the most advantageous segment is to grow Venetian Macao, but I promise you it's going to grow and grow.

And, I think we're very focused on the huge advantage we have in Cotai, especially as the mass market gravitates towards Cotai.

Okay, thanks.

The other question I have is on Singapore.

When I look at the revenues, and I compare that against the previous quarter, it seems to be quite flat.

I mean, it grew by a little bit.

But, when I look at EBITDA, it was probably about roughly 3% on an adjusted level.

Could you maybe just give us some color?

How much of that strength of the EBITDA could potentially be coming from the non-gaming segment?

How profitable are your rooms and F&B and retail?

I mean retail, I know Sheldon gave us some color.

But, maybe on the rooms and F&B, how should we think about margins in that segment?

Well, I think, Jon, any business would like to have those margins.

Our margins in rooms run about 83%.

Margins in food and beverage, close to 30%.

The volumes continue to increase and our banquet margins are terrific.

We have some pricing opportunities left there, of course; and we are managing our rooms in a way to maximize our room rates all the time.

Singapore is an amazing place.

I've never seen a property in all my years ramped to the level of this property in every area.

And, you've got an 83% margin in retail as well.

So, all these non-gaming areas represent significant margin, and they will continue to operate at that level.

Our costs continue to escalate in our buildings in Macao and Singapore because they are inflating in both places.

So, we have pricing power in our facilities to be able to maintain those margins as we go forward, even with the increased costs.

All right, great.

Just one final question on this raining cash theme on your dividends, which I like very much.

Could you give us some color on the Sands China dividend?

I know your LVS dividend, you're guiding for $0.25 for every quarter.

How should we think about Sands China's dividend, the HKD0.58 that you declared, is that a biannual number, an annual number, or should we think of it as a recurrent or a special?

How should we go about forecasting that?

The anticipation is that the Sands China board will approve in June the same dividend as was given out in the first quarter.

Legally, the shareholders -- I'm sorry, the shareholders have to approve at the June meeting.

But the anticipation is that it will be an annual dividend given in two slots, one in February, and one in I think July.

Okay, thank you very much.

One newspaper said we were adhering to feng shui practice.

So, five, the number five, is a very good number in the year of the dragon.

And, eight is a perpetual good number, so that's always a good number.

So, five eight?

Sounds good, let's do it.

It was intended to be semi-annual, regular dividend.

Carlo Santarelli, Deutsche Bank.

I don't want to beat a dead horse, and I know this has been talked about a lot, but I've always heard the concept and it makes empirical sense that when hold is high, Rolling Chip tends to be depressed.

I'm wondering if you could maybe clarify if that was an issue at Marina Bay Sands.

Then, I just had one follow-up about slides 5 and 6.

I don't believe that the case -- it's nice, it's a convenient excuse, but I don't think that's the case.

I think it's simply a case of where the players went to, and we experienced a great year-on-year growth, Carlo, as you saw.

We didn't experience the third quarters had more players had more money, driving more roll.

And, I think that's a weak excuse to use, and I wouldn't go there.

I think you have to accept the numbers for what they are.

Understood.

With respect to 5 and 6, could you guys maybe talk about what's left under the table cap, and how you plan to utilize that?

And, from my understanding, a lot of that will come from the Sands.

Have you guys put any more thought into how that table ramp will play out here over -- as you open the property in stages?

Are you saying 5 and 6 as you move tables around?

Yes.

Yes.

I mean, what we're doing daily, and I think Ed and David and the guys over there are looking at each of the different places, and it's a complicated equation.

We'll move tables based on where we think demand is; not just between the properties, but also between mass and VIP.

It's a never-ending -- it won't ever end.

If we see stronger performance out of when you move tables out of Sands, if we find it's weaker, vis-a-vis the Cotai Strip, and I think that's going to be the goal is keep moving tables.

We're seeing -- what surprised us is the amount of junket demand we have for Cotai Central, and we'll address that as time gets nearer.

But, as long as we're inside the table cap and the government's aware of our moves, I think we'll move to the market, so to speak.

Our performance in the Four Seasons has been very gratifying.

As we move to the Venetian Sands in 5 and 6, we'll continue to strive -- the goal is to get the best operators with the most tables to drive the highest win per unit per day.

Wherever that falls, that's what we'll move the tables to.

If and when we do [mark 3] that will be an additional tables.

It's not going to be moving around the tables that we have.

The tables that we have will be spread around most effectively between The Sands Macao, Venetian Macao, Plaza Casino at the Four Seasons and Cotai Central.

Great.

Thank you both.

And, we have time for one last question.

Harry Curtis, Nomura.

Let's go back to Macao for a quick sec.

I've got a couple of questions there.

The first question is, if your sense, working with the junkets, is whether or not they are having any collection issues that's been out there?

And, I would like to put that to rest if it's correct.

The second question that I had was on the out-performance of your slot business.

It's really been terrific over the past three to six months.

And, I'm wondering if that's more a function of marketing, is it more a function of a change in equipment or a combination of the two?

Then, the last question that I had is related to Sands Cotai, and your expectation for how the pieces of the business are going to perform when you open?

In other words, which pieces of the business might come out of the gate faster?

And, which would you expect to have a slower ramp?

I'll take the first one.

The junkets we're seeing, no issues on the collections side.

It's been addressed previously.

We remain steadfast in our belief that we've got the best people in the industry working with us, and we're very comfortable with the exposure there.

Same thing on our direct business.

We have no issues that we're concerned about whatsoever.

We review it monthly.

On the slot performance, we appreciate recognizing what this team has accomplished.

I think we, again, not to be redundant, but to be complimentary to extraordinary team of people we have assembled on the slot side.

You're going to see it continue.

I predict that we're going to outperform the market on the slot ETG.

We get -- the equipment's absolutely an issue, the marking is an issue, but the real driver is people walking that floor and constantly looking.

I go back quite a bit, and I was there a few weeks ago.

The floor moves consistently with the market, and we also have one incredible advantage, and that is the combination of the non-gaming amenities.

We have many, many rooms.

The number one driver of gaming performance is where people sleep.

We have more sleeping rooms than anybody in the market, by far.

As a result, we have a huge built-in advantage at the Venetian, and soon to be at Cotai Central, coupled with great equipment, coupled with the best retail malls that drive more traffic.

So, I would be surprised if what you're seeing in the slot performance doesn't continue to grow and grow.

A lot of confidence in that segment, a lot of pride we've accomplished there.

I think Eric and his team performance there is exemplary, and I appreciate you recognizing it.

Cotai, I'll let Mike speak to Cotai because we're very excited about it on all segments.

Well, I think we mentioned the last time, or we mentioned somewhere, that all our VIP rooms are sold out on Cotai Central, so they will start very quickly as we get to grand opening.

They will probably be in there the first day.

So, I expect that will ramp up very quickly.

And the early going, we'll get a lot of trial in the main casino on mass market, but I think VIP will start faster.

These hotels are branded, as you know, Conrad and Holiday Inn, as well as Sheridan coming in afterwards.

We are already getting some significant inquiries through their systems on the reservation side.

There's been a lot of press lately that there weren't enough rooms at the right price for many Chinese tourists.

We were able to price more effectively to get that business.

But, I think I would look for VIP to start faster than mass, but then mass will catch up over time.

I just wanted to tell you (inaudible).

What's been really nice for us is to watch the demand on Cotai, supply the junkets for the segment.

And I think, Cotai Central has that unique combination of many, many rooms; wonderful retail; a sister hotel at the Venetian and Four Seasons; and lots of gaming space, ETG slots, almost 2,600 games and growing.

So I think it's -- now I can't tell you which performs faster, but I can tell you in the end, all segments are going to perform at those buildings over the next ten to twelve months.

Just as a follow-up, how has the slot floor changed physically over the past six months?

And then following up on the last comment, your pipeline of MICE business, is that still in the, like the third inning, or thereabout on Cotai?

I would say probably in the fourth inning now, Harry.

We had an increase this year, significantly better than last year, in business that was in the properties.

And, I think you'll see it -- it's a gradual growth, but it's going to continue to grow.

The Macao itself, the country is very active in building their MICE business.

In Singapore, of course, as we mentioned we pretty much sold out in '12 in the ballroom, the grand ballroom and other space.

But in Macao, it's a little bit slow, but we're moving up inning by inning.

It's not a quantum leap there.

We have to grow and we continue to grow, but it's better every year.

Slot floor, Harry, continues to move.

It's radical and consistent changes literally weekly.

Our latest move you saw at IGT.

I just think our guys are looking at the best equipment, and it moves all the time.

We've changed configurations; we've changed everything about that slot floor.

Every time I go there, there's radical changes, and I think that results in the kind of numbers you're seeing, coupled with the non-gaming amenities of rooms and shopping.

I think that advantage is a big LVS advantage, not just for that property, but for all the properties in Cotai.

It's a radical change; it's a consistent change.

It's a very, very good change.

It produces very good profitability in that segment; and again, that segment is one to watch at this company in Macao in general.

Okay.

Any further questions?

Operator, are you there?

Yes, sir, there are no further questions.

No further questions.

Thank you very much for your help.

I just want to reiterate that I -- it's very gratifying to me as the CEO and Chairman of the Company, to have entered into a new category of entertainment, lodging, hospitality, resort development, and gaming to a level that if you took the top four hotel companies that have a different business model of not making investments, but just getting fee income, that our EBITDA has equaled the top four of almost 10,000 hotels, the top hotels, and we equaled or exceeded Carnival Cruise Lines, which is the most profitable cruise line company in the world.

So, we're now in a totally different category.

That was before the Costa Concordia, right?

Hopefully it comes out well for them.

Actually, a company I was involved with sold the first two ships to the Arison family, to Ted Arison, because he worked for us in running the two ships in a company back in the 60s and 70s.

And, he took the one ship called the Carnival, named the company Carnival Cruise Lines and became the biggest operator in the world.

So anyway, we're in a totally different category, and it's very gratifying to me to have been involved with the company.

And, I want to thank not only the senior management, I want to thank all the management and all the team members of the company.

And, we certainly have a lot to look forward to, particularly where nobody has spoke about or mentioned lot 3 in a long, long time.

So we've applied for that and everybody else is getting credit for saying, well we're going to get something in Cotai.

I remember the days when I wanted other people to join me in developing Cotai, when it was a swamp and a bay and other people said they didn't think it was right, would never work.

So, the way that worked our other plans will work as well.

Thank you all very much.

We appreciate your confidence us in and continue to have that.

Thank you.

That's the end of our call.

Ladies and gentlemen, with this we conclude today's conference call.

We thank you for your participation.

You may now disconnect.