The settlement of a 15-year-old lawsuit over how much help a Hong Kong businessman provided Las Vegas Sands Corp. in opening its first Macau casino contributed to a 54 percent decline in the company’s first quarter net income.
In a statement Wednesday, Las Vegas Sands said decreases in high-end play in Singapore and a “nonrecurring legal settlement” caused the company’s net income to fall to $744 million in the quarter that ended March 30.
Richard Suen (l) and Sheldon Adelson.
Within an exhibit in the company’s press release announcing the earnings, Las Vegas Sands said the nonrecurring legal settlement was $96 million. No explanation for the settlement was given. The settlement cost the company 12 cents per share in the quarter.
Las Vegas Sands executives did not make any comments about the settlement on a conference call with analysts to discuss the quarter’s results. Sands Chairman and CEO Sheldon Adelson, 85, who is undergoing treatment for non-Hodgkin’s lymphoma, did not participate in the conference call, the second straight earnings call in which he has been absent.
“As you know Sheldon is still receiving medical treatment, so he will not be on the call with us today,” Sands President Rob Goldstein said on the outset of the call. “We look forward to his recovery in due course.”
A Sands spokesman declined comment on the nonrecurring legal settlement.
Las Vegas Sands and Richard Suen, through his company Round Square Ltd., reached an undisclosed settlement in their lawsuit in Las Vegas on March 15. The settlement came on the second day of hearings in the case, the third time a Clark County jury was scheduled to hear evidence regarding the amount of help Suen gave Las Vegas Sands in Macau in the early 2000s.
Suen won jury verdicts and judgments of $43 million and $70 million in the two previous trials, in 2008 and 2013, but the Nevada Supreme Court remanded the case back to the District Court each time. Suen asserted that Las Vegas Sands breached an agreement to pay him a success fee of $5 million plus 2 percent of the net profit of the company’s Macau resort operations.
In a March 20 filing with the Securities and Exchange Commission, Las Vegas said in a one-sentence statement that “the parties entered into a confidential settlement through which Round Square Company Limited dismissed all claims brought in the District Court of Clark County, Nevada against Las Vegas Sands, LLC and released all claims as of the settlement date.”
The settlement marked the third time the company has confidentially ended litigation surrounding its Macau casinos.
in 2009, Las Vegas Sands paid three men $42.5 million to settle lawsuit over their assistance in the Macau licensing efforts. The settlement was initially undisclosed, but the company revealed the amount during a quarterly earnings release, saying the figure contributed to its net loss.
In May 2016, Las Vegas Sands settled a six-year-long lawsuit filed by Steven Jacobs, a former top executive of its Macau operations, for an undisclosed amount. In its second quarter earnings release, the company said it had a $78.885 million “nonrecurring corporate expense” related to “nonrecurring legal costs.”
First quarter results
Las Vegas Sands said the $744 million in net income in the first quarter compared to $1.62 billion a year earlier, which included a nonrecurring non-cash income tax benefit of $670 million.
Las Vegas Sands’ earnings per share in the quarter was 75 cents, a decrease of 59.2 percent compared to a year ago.
Net revenue for Las Vegas Sands in the quarter grew 1.9 percent to $3.65 billion. The company said its Macau resort operations grew revenues 8 percent to $2.33 billion in the quarter, which offset revenue declines of 12 percent in Singapore and 1.2 percent in Las Vegas.
Cashflow in Macau was $858 million, up 9 percent from a year ago. Goldstein said the Parisian property had a record quarter the company was moving forward on renovations to its Four Seasons Tower Suites and the conversion of the Sand Cotai Central in the Londoner Macau.
“Next month we will celebrate the 15th anniversary of the Sands Macau opening, which marked the beginning of Macau’s amazing transformation into a world-class tourism destination for leisure and business travelers,” Goldstein said.
Earlier this month, the Las Vegas Sands announced an agreement with the Singapore government to extend the company’s license for the Marina Bay Sands and will invest $3.3 billion into the property that will include a 15,000-seat arena, a 1,000-room hotel, and additional convention space.
“We believe the expansion of Marina Bay Sands will meaningfully enhance Singapore’s appeal as a leisure and business tourism destination while creating an outstanding platform for growth for the company,” Adelson said in a statement in the press release.
Share of Las Vegas Sands closed at $67.91 on the New York Stock Exchange, down 25 cents or 0.37 percent. Shares rose almost 3 percent in after hours trading.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
