EX-99 2 pressrelease_2q-2004.htm LVSI SECOND QUARTER PRESS RELEASE

Exhibit 99.1

Venetian Lion Logo   Press Release
For Immediate Release:   Contact:      William P. Weidner
August 10, 2004                     Las Vegas Sands, Inc.
                      (702) 733-5736



Las Vegas Sands, Inc. Reports Record Second Quarter Results

(Las Vegas, NV — August 10, 2004) Las Vegas Sands, Inc., owner and operator of the Venetian Casino Resort in Las Vegas (the “Venetian”), and the Sands Macao Casino, in Macao (the “Sands Macao”), a Special Administrative Region of the People’s Republic of China, today reported its second quarter financial results.

A conference call with management is scheduled today at 1:00 p.m. EST and can be accessed by calling (800) 510-0219 and using the access code 97786250. The conference call will also be simultaneously webcast over the internet; visit the Investor Relations section of The Venetian website at www.venetian.com.

Consolidated Second Quarter 2004 Results

In the second quarter of 2004, Las Vegas Sands, Inc. reported consolidated adjusted property EBITDAR of $105.9 million, compared to $61.5 million in the year-ago quarter, an increase of 72% for the quarter. Income from operations during the second quarter of 2004 was $493.2 million as compared to $42.5 million reported in the second quarter of 2003 (See the accompanying tables and footnotes, which reconcile net income and income from operations to adjusted property EBITDAR). Current quarter results benefited from the Company’s $419.9 million gain on the sale of the Grand Canal Shops on May 17, 2004, the opening of a new 1,013-room hotel tower at the Venetian at the end of the second quarter of 2003 and the opening of the Sands Macao on May 18, 2004.

Las Vegas Sands Inc. reported net income in the second quarter of 2004 of $454.6 million (including the gain on sale of the Grand Canal Shops of $419.9 million) as compared to $9.6 million for the second quarter of 2003.

Las Vegas Sands, Inc. reported net revenue in the second quarter of 2004 of $251.1 million as compared to $150.4 million for the second quarter of 2003.

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William P. Weidner, President and Chief Operating Officer of Las Vegas Sands, Inc., stated, “During the second quarter of 2004 we sold the Grand Canal Shops mall and leased certain other retail and restaurant venues in the Venetian to General Growth Properties Inc. for an aggregate of $766.0 million in cash. After re-payment of the $120.0 million mall debt and taxes associated with the sale, we plan to use the remaining funds for our Phase II Resort. In addition, the Company reached an agreement to sell the multi-level retail space in its proposed Phase II Resort, which will sit adjacent to the Venetian (“the Phase II Mall”) upon its completion for a minimum sales price of $250.0 million with an additional amount based upon net operating income of the Phase II Mall. We plan to use these funds to re-pay a $250.0 million Phase II Mall construction loan, as well as for our additional development activities in Macao and in the United Kingdom. We opened our first Macao casino, the Sands Macao, a one million square foot resort with 277 table games and 460 slots, and in late August 2004, we expect to open 42 additional table games, 8 restaurant/bars and entertainment facilities, 49 of 52 high-end luxury suites, 2 spas and the new Paiza Club in the Sands Macao. Macao is one of the world’s largest and fastest growing gaming markets and we are progressing with the design and commenced site work on a new 3,000-room destination resort in Macao (“The Venetian Macao”) to further serve this market.” The Venetian Macao is part of a master plan of resort casinos on the “Cotai Strip” in Macao.

Venetian Casino Resort Second Quarter Operating Results

The Venetian’s adjusted property EBITDAR for the second quarter of 2004 was $83.5 million as compared to $61.5 million during the second quarter of 2003. The Venetian’s operating income for the second quarter of 2004 was $484.3 million (including the gain on sale of the Grand Canal Shops of $419.9 million), as compared to $44.4 million during the second quarter of 2003. Hotel revenues at the Venetian were $79.2 million during the second quarter of 2004; an increase of 40 percent when compared to $56.4 million in the second quarter of 2003. The increase was primarily related to the 1,013 hotel rooms added at the end of the second quarter of 2003 in the Venezia Tower at the Venetian. The Venetian’s occupancy of available guestrooms was 98.8 percent during the second quarter of 2004, compared with 97.9 percent during the prior year’s second quarter, generating revenue per available room (REVPAR) of $218 during the second quarter of 2004, as compared to $202 in the second quarter of 2003. The Venetian’s average daily room rate (ADR) was $221 during the second quarter of 2004, as compared to $206 during the prior year’s second quarter. Weidner remarked, “In the second quarter, we continued to improve hotel occupancy along with higher average daily room rates, and continued to generate strong room demand for the Venezia Tower and its club level suites, without affecting occupancy and room rates of the original Venetian Hotel Tower.”

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Casino revenues at the Venetian were $76.2 million in the second quarter of 2004, an increase of 20 percent when compared to $63.4 million in second quarter of 2003. Table games win percentage was within normal ranges in both quarters. Casino win percentage is reasonably predictable over time, but can fluctuate significantly over shorter periods, such as between fiscal quarters. Table games drop (volume) was $222.6 million in the second quarter of 2004 as compared to $198.5 million in the prior year’s second quarter, or an increase of 12 percent. Slot machine handle (volume) was $521.4 million in the second quarter of 2004, as compared to $452.6 million during the second quarter of 2003, an increase of 15 percent.

Food and beverage revenues at the Venetian were $31.8 million in the second quarter of 2004, an increase of 53 percent, when compared to $20.8 million in the second quarter of 2003. The increase in food and beverage revenue was a continuing indicator of the Venetian’s strong group banquet business and the addition of 150,000 square feet of new state-of-the-art meeting rooms and the new Venezia Tower hotel rooms.

Sands Macao Second Quarter Operating Results

On May 18, 2004, the Company opened its first casino in Macao, the Sands Macao, at a total development cost of approximately $265.0 million. The Sands Macao adjusted property EBITDAR for the partial period of May 18, 2004 to June 30, 2004 was $22.4 million. The Sands Macao operating income was $11.3 million during this period. Casino revenues were $57.6 million in this period. Table Games drop (volume) was $392.2 million during this period and slot handle (volume) was $36.2 million. Weidner stated, “In addition to the Casino, the Sands Macao will open its high end gaming rooms including 42 additional table games and, the Paiza Club, several restaurants and 49 of 52 high end suites during late August.” Weidner also stated, “Our ongoing market research and feedback from several focus groups indicates continuing acceptance of Las Vegas style resorts in Macao.”

Consistent with the Company’s policy of sharing preliminary information on newly opened facilities in past earnings releases, preliminary Sands Macao operating metrics for July are as follows: adjusted property EBITDAR of $23.6 million, operating income of $20.8 million, table games drop of $326.6 million, table game win of $50.2 million and slot win of $3.2 million.

Other Factors Affecting Earnings

Consolidated net interest expense was $30.7 million for the second quarter of 2004, of which $1.5 million was related to the Sands Macao, as compared to net interest expense of $27.2 million during the second quarter of 2003. The increase was a result of additional indebtedness of the Venetian and the Sands Macao and capitalized interest of $1.2 million during the second quarter of 2004 as compared to $2.7 million of capitalized interest during the second quarter of 2003.

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Depreciation expense was $16.1 million for the second quarter of 2004, as compared to $11.3 million for the second quarter of 2003. The increase was the result of placing into service the Sands Macao during the second quarter of 2004, and the Venezia Tower and meeting room expansion at the end of the second quarter of 2003.

Pre-opening and developmental expenses in the second quarter were $10.7 million, of which, $8.4 million were related to the Sands Macao, and $2.3 million were related to United Kingdom projects.

Balance Sheet Items

Cash and cash equivalents at June 30, 2004 were $683.7 million, including restricted cash balances of $12.5 million.

Total debt outstanding including the current portion at June 30 2004 was $1.327 billion, of which $14.9 million is due within the next twelve months. Of the total debt outstanding, $180.0 million is associated with the Company’s Macao subsidiaries. During the second quarter, the Company retired $120.0 million of debt associated with the Grand Canal Shops Mall.

Capital Expenditures

Capital expenditures during the six months ending 2004 totaled $235.8 million. Of this total, $68.5 million was utilized for improvements and maintenance capital expenditures at the Venetian in Las Vegas; $129.9 million was utilized for the Sands Macao construction and development activities in Macao, and $37.4 million for design and site work costs of the Phase II Resort in Las Vegas.

Other Events

On July 29, 2004, the Company acquired all of the capital stock of Interface Group Holding Company, Inc. (“Interface Holding”) from Mr. Sheldon Adelson in exchange for the issuance to Mr. Adelson of 220,370 additional shares of the Company’s common stock. Interface Holding indirectly owns the Sands Expo and Convention Center and holds a $252.6 million preferred interest in Venetian Casino Resort, LLC. Following this acquisition, the Company made a contribution of $27 million to Interface Group-Nevada, Inc., the direct owner of the Sands Expo and Convention Center. On July 29, 2004, Interface Group-Nevada refinanced the outstanding indebtedness under its prior mortgage loan with these proceeds and the proceeds of a new $100.0 million mortgage loan.

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Forward-looking Statements

This press release contains forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks, uncertainties or other factors beyond the Company’s control, which may cause material differences in actual results, performance, or other expectations. These factors include, but are not limited to general economic conditions, competition, new ventures, government regulation, and legalization of gaming, interest rates, future terrorist acts, insurance, and other factors detailed in the reports filed by Las Vegas Sands, Inc. with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Las Vegas Sands, Inc. assumes no obligation to update such information.

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Las Vegas Sands, Inc.
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)



Three Months Ended Six Months Ended
June 30, June 30,
2004
 2003
 2004
 2003
 
Revenues:                            
  Casino   $ 133,889   $ 63,378   $ 228,597   $ 136,691  
  Rooms    79,230    56,439    164,597    113,930  
  Food and Beverage    34,073    20,817    67,528    40,885  
  Grand Canal Shops    5,356    9,265    15,977    18,793  
  Retail    2,427    2,082    4,635    3,969  
  Other       8,889     7,874     17,091     14,256  
       263,864    159,855    498,425    328,524  
  Less - Promotional Allowances    (12,761 )  (9,433 )  (26,521 )  (19,437 )
       251,103    150,422    471,904    309,087  

  
Operating Costs and Expenses:                      
  Casino-Hotel Operations    143,624    84,817    255,625    175,703  
  Grand Canal Shops Operations    1,612    4,124    6,490    8,282  
  Rental Expense    2,238    2,524    4,689    5,067  
  Corporate Expense    3,445    2,188    6,105    4,789  
  Pre-opening and Developmental Expense    10,728    3,018    19,107    4,845  
  Depreciation and Amortization    16,081    11,251    30,862    21,988  
     177,728    107,922    322,878    220,674  

  
  Gain on disposition of assets    419,874    –    419,874    –  

  
  Operating income    493,249    42,500    568,900    88,413  

  
  Interest Cost, net of amounts capitalized    (30,704 )  (27,196 )  (61,750 )  (54,732 )
  Interest Expense on Redeemable Preferred                      
    Interest in Venetian Casino Resort, LLC (1)    (7,150 )  –    (14,300 )  –  
  Interest Income    539    378    897    824  
  Other income (expense)    –    259    (9 )  819  
  Loss on early retirement of debt    (1,371 )  –    (1,371 )  –  
Income before preferred return    454,563    15,941    492,367    35,324  

  
  Preferred Return on Redeemable Preferred                      
    Interest in Venetian Casino Resort, LLC(1)    –    (6,364 )  –    (12,727 )
Net Income   $ 454,563   $ 9,577   $ 492,367   $ 22,597  


(1) The Company has adopted SFAS No. 150 “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”, which requires that the Preferred Interest in Venetian Casino Resort, LLC be reclassified as a liability and the related preferred dividends are now classified as interest expense.

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Las Vegas Sands, Inc.
Supplemental Data Schedule
(In thousands)
(Unaudited)



The following are reconciliations of Operating Income to EBITDA and Adjusted Property EBITDAR



Three Months Ended June 30, 2004
 
Operating
Income (Loss)
 Depreciation
and
Amortization
 Gain on
Disposition
of Assets
 Adjusted
EBITDA
 Pre-Opening
and Developmental
Expenses
 Corporate
Expense
 Rent
 Adjusted
EBITDAR
Venetian Resort &                                            
   Grand Canal Shops   $ 484,278   $ 14,034   $(419,874 ) $ 78,438   $ –   $ 2,894   $ 2,140   $ 83,472  

  
United Kingdom    (2,281 )  –    –    (2,281 )  2,281    –    –    –  

  
Sands Macau       11,252     2,047     –     13,299     8,447     551     98     22,395  
    $ 493,249   $ 16,081   $ (419,874 ) $ 89,456   $ 10,728   $ 3,445   $ 2,238   $ 105,867  


Three Months Ended June 30, 2003
 
Operating
Income (Loss)
 Depreciation
and
Amortization
 Gain on
Disposition
of Assets
 Adjusted
EBITDA
 Pre-Opening
and Developmental
Expenses
 Corporate
Expense
 Rent
 Adjusted
EBITDAR
Venetian Resort &                                                    
   Grand Canal Shops   $ 44,391   $ 11,251   $ –   $ 55,642   $ 1,127   $ 2,188   $ 2,524   $ 61,481  

  
Sands Macau    (1,891 )  –    –    (1,891 )  1,891    –    –   $ –  
    $ 42,500   $ 11,251   $ –   $ 53,751   $ 3,018   $ 2,188   $ 2,524   $ 61,481  


Six Months Ended June 30, 2004
 
Operating
Income (Loss)
 Depreciation
and
Amortization
 Gain on
Disposition
of Assets
 Adjusted
EBITDA
 Pre-Opening
and Developmental
Expenses
 Corporate
Expense
 Rent
 Adjusted
EBITDAR
Venetian Resort &                                                    
   Grand Canal Shops   $ 567,405   $ 28,752   $ (419,874 ) $ 176,283   $ 965   $ 5,554   $ 4,591   $ 187,393  

  
United Kingdom    (2,762 )  –    –    (2,762 )  2,762    –    –    –  

  
Sands Macau    4,257    2,110    –    6,367    15,380    551    98    22,396  
    $ 568,900   $ 30,862   $ (419,874 ) $ 179,888   $ 19,107   $ 6,105   $ 4,689   $ 209,789  


Six Months Ended June 30, 2003
 
Operating
Income (Loss)
 Depreciation
and
Amortization
 Gain on
Disposition
of Assets
 Adjusted
EBITDA
 Pre-Opening
and Developmental
Expenses
 Corporate
Expense
 Rent
 Adjusted
EBITDAR
Venetian Resort &                                                    
   Grand Canal Shops   $ 92,132   $ 21,988   $ –   $ 114,120   $ 1,126   $ 4,789   $ 5,067   $ 125,102  

  
Sands Macau    (3,719 )  –    –    (3,719 )  3,719    –    –    –  
    $ 88,413   $ 21,988   $ –   $ 110,401   $ 4,845   $ 4,789   $ 5,067   $ 125,102  

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Las Vegas Sands, Inc.
Supplemental Data Schedule
(In thousands)
(Unaudited)



The following is a reconciliation of Net Income to EBITDA and Adjusted Property EBITDAR:



Three Months Ended
June 30,		 Six Months Ended
June 30,
2004
 2003
 2004
 2003
 
Net Income     $ 454,563   $ 9,577   $ 492,367   $ 22,597  
  Add (Deduct):                      
     Interest Expense on Redeemable Preferred Interest                      
       in Venetian Casino Resort, LLC    7,150    6,364    14,300    12,727  
     Other income (expense)    –    (259 )  9    (819 )
     Interest income    (539 )  (378 )  (897 )  (824 )
     Interest expense    30,704    27,196    61,750    54,732  
     Loss on early retirement of debt    1,371    –    1,371    –  
     Gain on disposition of assets    (419,874 )  –    (419,874 )  –  
     Depreciation and amortization       16,081     11,251     30,862     21,988  

  
EBITDA    89,456    53,751    179,888    110,401  

  
  Add:                      
     Rental expense    2,238    2,524    4,689    5,067  
     Pre-opening and developmental expense    10,728    3,018    19,107    4,845  
     Corporate expense    3,445    2,188    6,105    4,789  
Adjusted Property EBITDAR   $ 105,867   $ 61,481   $ 209,789   $ 125,102  

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Las Vegas Sands, Inc.
Supplemental Data Schedule
(In thousands except room and other information)
(Unaudited)

Three Months Ended
June 30,
 Six Months Ended
June 30,
2004
 2003
 2004
 2003
 
Total Adjusted Property EBITDAR(1):     $ 105,867   $ 61,481   $ 209,789   $ 125,102  

  
Room Statistics for the Venetian:                      
   Occupancy %    98.8 %  97.9 %  98.8 %  97.7 %
   Average Daily Room Rate (ADR)(2)   $ 221   $ 206   $ 228   $ 211  
   Revenue per available room (REVPAR)(3)   $ 218   $ 202   $ 225   $ 207  

  
Other information:                      
   Venetian:                      
     Table games drop per unit per day   $ 17,725   $ 17,173   $ 19,793   $ 18,144  
     Slot Machine handle per unit per day   $ 2,865   $ 2,497   $ 2,757   $ 2,486  
     Average number of table games    138    127    134    128  
     Average number of slot machines    2,000    1,992    2,001    2,005  

  
  Macao:                      
    Table games drop per unit per day   $ 32,183   $ –   $ 32,183   $ –  
    Slot Machine handle per unit per day   $ 1,788   $ –   $ 1,788   $ –  
    Average number of table games    277    –    277    –  
    Average number of slot machines    460    –    460    –  


(1) Adjusted Property EBITDAR consists of Operating Income before depreciation, amortization, rent, pre-opening and developmental expenses, the gain on the sale of the Grand Canal Shops and corporate expenses. Adjusted Property EBITDAR and EBITDA are supplemental non-GAAP financial measures used by management, as well as industry analysts, to evaluate operations. In particular, management utilizes Adjusted Property EBITDAR to compare the operating profitability of its casinos with those of its competitors. Rental expense is added to EBITDA because the Company leases its HVAC plant and believes this provides a comparison of operating profitability to Las Vegas competitors who own their HVAC plants. Las Vegas Sands, Inc. is also presenting Adjusted Property EBITDAR because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements. Gaming companies have historically reported EBITDAR as a supplemental performance measure to GAAP financial measures. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Las Vegas Sands, Inc., have historically excluded pre-opening expenses, which are non-recurring or infrequent, and corporate expenses, which do not relate to the management of specific casino properties from their EBITDAR calculations. When evaluating Adjusted Property EBITDAR, investors should consider, among other factors, (1) increasing or decreasing trends in Adjusted Property EBITDAR and (2) how Adjusted Property EBITDAR compares to levels of debt and interest expense. However, Adjusted Property EBITDAR should not be interpreted as an alternative to income from operations (as an indicator of operating performance) or to cash flows from operations (as a measure of liquidity) as determined in accordance with generally accepted accounting principles. Las Vegas Sands, Inc. has significant uses of cash flow, including capital expenditures, interest payments and debt principal repayments, which are not reflected in Adjusted Property EBITDAR. Not all companies calculate EBITDAR in the same manner. As a result, Adjusted Property EBITDAR as presented by Las Vegas Sands, Inc. may not be comparable to similarly titled measures presented by other companies.
(2) ADR is Average Daily Rate and is calculated by dividing total room revenue by total rooms occupied.
(3) REVPAR is defined as Revenue Per Available Room and is calculated by dividing total room revenue by rooms available.