Boyd Gaming Corp (BYD) 2004 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Boyd Gaming third quarter 2004 conference call. My name is Carlo and I will be your coordinator for today. [Operator Instructions]

I would now like to turn the presentation over to your host for today's call, Ellis Landau, Executive Vice President and Chief Financial Officer. Please proceed.

Good afternoon, everyone, and welcome to our third quarter conference call. The call today may contain some forward-looking statements. I want to caution you that the actual results may vary from what's contained in those statements. The variances could be material and we refer you to our public filings for the risk factors you need to know before you invest.

Today's call is being webcast in on boydgaming.com and streetevents.com. Joining me today are Don Snyder, President of our company; Keith Smith, the Chief Operating Officer; and Bob Boughner who is the Chief Executive Officer of Borgata. Don, Bob and I will make remarks and following that, all of us will be available to respond to your questions.

A short while ago we issued a release of our third quarter financial results. Over the years, we've made some great investments, both through acquisitions and developments, and we have excellent operating management and it showed in the third quarter as a bigger, stronger and more profitable Boyd gaming reported record results.

In the third quarter, we reported record adjusted earnings, and that was a record by a large margin, of $0.38 per share, which is 153% above the $0.15 adjusted earnings per share that we reported in 2003's third quarter. And that 153% increase in the EPS was achieved with over 22 million more shares outstanding. Early in the release, we indicate the items we excluded to arrive at adjusted earnings. They are the usual type of non-recurring items that are taken out to present to you, the company's operating earnings.

When we look at EBIDTA results in the third quarter, we reported record EBITDA, of $133 million, an increase of 109% over the $64 million reported last year. While there were many bright spots in the company in the quarter, the two main drivers of the large gains in the EBITDA and EPS were the very strong and impressive Borgata numbers and the addition to our company of Coast Casinos, which had a great quarter as well.

Let's look at revenues, for the quarter revenues were a record $522 million, an increase of 68% over the third quarter last year. Coast and Sam's Town Shreveport, both of which were not in the company last year, were the big contributors to the revenue gains. Keep in mind Borgata is not in our revenue numbers. But let's not forget other contributors for the success of the third quarter.

Same store revenues in the third quarter were up 3.6% and it was broad-based. All four segments in the same store category reported increased revenues. And within those segments, 10 of 12 properties reported increased revenues in the quarter over last year. And in EBITDA category same store EBITDA rose 30% in the quarter, and that, too, was broad-based. And by the way, now Borgata is included when we talk about EBITDA.

Now, all five segments in the same store category reported EBITDA gains and 11 of 13 properties within those segments reported increases in EBITDA in the third quarter versus the prior year. Only two properties reported down comparable numbers in both revenue and EBITDA, and both related to work being done on property improvements. Construction disruption at Delta Downs as we enhanced the casino floor and a rooms remodel at the California Hotel in downtown Las Vegas which took rooms out of service during the quarter.

So you can see, our company is big; we're growing revenues and earnings across the spectrum throughout our diversified company. And we have a lot of exciting growth initiatives in both the planning stages and the construction phase. You'll hear more about that development activity in a few minutes from Don.

Now I would like to spend some time giving you some more information about our third quarter results by segment. First, our Las Vegas locals business is doing very well. We show it in two pieces. First Boulder Strip, which is mostly our Sam's Town property, which operates in the east side of Las Vegas and Henderson. This unit reported a 9% revenue increase in the quarter and a strong 33% EBITDA increase in the quarter, demonstrating a strong flow-through of incremental revenues. This was the fourth straight quarter for EBITDA gains for the Boulder Strip properties and on an LTM basis, their EBITDA is 16%, ahead of the prior LTM period from a year ago.

Continuing in Las Vegas locals market, let's turn to Coast Casinos, which does include to a relatively small extent the Barbary Coast on the strip. Coast is one of the powerful engines in our current earnings momentum. We expected some accretion when we announced the merger early in the year. Well, it's turning out to be a very -- turning out to be very accretive to our earnings.

The group of Coast properties expenses about 25 to $26 million on our depreciation, interest and corporate expense lines. In this quarter they contributed $45 million to EBITDA. And that's the seasonally slowest quarter of the year. Even with the addition of shares outstanding, that's pretty good accretion for Boyd shareholders. In the quarter, coast revenues were up 9.4% over last year when they were an independent company and EBITDA was up 21%, again demonstrating excellent flow-through of incremental revenues.

When we look ahead at the fourth quarter, these strong trends in revenue and flow-through appear to be continuing in Las Vegas locals market, represented by the Boulder Strip and Coast segments.

Stardust, on the Las Vegas strip had a very nice turnaround from last year. In the summer of 2003, the property with new management in place, spent heavily on marketing and promotions, which early on did not help the bottom line. Well, now those efforts are bearing -- those efforts and other improvements are bearing fruit, and the Stardust is headed for its best EBITDA year in six years.

Our downtown Las Vegas properties did well to have a small EBITDA increase in the quarter despite a couple of obstacles. One was a room's remodel at the California Hotel that depressed customer counts there in the summer and I am pleased to report that the property is back to full strength and doing well. The other issue is much higher jet fuel costs from our charter planes -- for our charter planes that bring our customers in from Hawaii.

Even with the California room's remodel, the three downtown Las Vegas properties had a nice EBITDA gains, but these gains were mostly wiped out by the fuel surcharges in our air charter operations. Still, downtown Las Vegas is doing well and our operations there are very solid.

The central region commonly called the riverboat division as it consists of five riverboats and our Delta Downs racino reported higher revenue and higher EBITDA in the third quarter both in reported terms and same short terms. Sam's Town Shreveport joined this group in May 2004, so there are no comparable figures in our financial statements for that property. The Shreveport Boulder City market has been a tough market as you know, and we have been spending fairly heavily on marketing for our re-branded property. We do expect the property to be a healthy contributor to earnings, as we go forward.

Of the five properties with quarter-over-quarter comparisons, only Delta Downs fell sort of prior year results and that was due to construction disruptions as they remodeled and reconfigured their Casino. That's now done and they are working on reintroducing a much-improved product to the marketplace. The four remaining properties, each showed revenue and EBITDA gains.

Treasure Chest was closed for almost three days due to the hurricane, so this up quarter was pretty impressive. And Paradise has cycled through the year of onerous tax increase comparables and showed a nice gain in their EDITDA.

And now for Borgata, Bob will talk about Borgata in a few moments so I won't steal his thunder too much. In summary, by so many measures more than our occurrence now Borgata had a great quarter. In every quarter this year, Borgata had the highest EBITDA of any property in the Atlantic City market.

In the third quarter, when the much larger properties had the advantage because they have the capacity for the larger summer crowds, we still came out on top. Table games remained very strong and we are lengthening our lead in slots. Here are the stats. Our slot win per unit per day over the last four quarters went like this. Fifth place, second place, first place by $9 and then first place by $25.

Let me make three more quick points. One, Borgata is on its way to roughly $200 million EBITDA a year in its first full calendar year of operations. That's a big number. Two, last quarter I said we were following the adage that you can't have enough of a good thing and as we all make - and we are going to make Borgata bigger. Well, we are making Borgata even bigger than bigger. Bob will have more to say about our Phase II expansion plans in a few minutes. Three, let's look at how we're doing going into the fourth quarter.

I can tell that you I've been to Atlantic City, in July, and I have been to Atlantic City in October. And I can tell that you in this seaside resort town, October is no July. Except if you look at Borgata's gaming win.

One other note, our tax provision in the third quarter with the addition of Coast and with some internal corporate restructuring, was at 37% of pretax income, we expect this number to be pretty good going forward. Finally, looking ahead at the fourth quarter, given the current trends and assessing the seasonality in our diversified operations, we expect that fourth quarter adjusted EPS and adjusted EBITDA, will be right around the proudly reported levels that we achieved in the third quarter. And with that I would like to turn the presentation over to the President of our company, Don Synder.

Thank you Ellis and good afternoon. This company really has undergone a significant broad-based transformation in recent years. The third quarter results speak to both the wisdom and the success of that transformation. And for purposes of emphasis and not just being redundant, the third quarter results that Ellis talked about that were highlighted in our quarterly release really speak to that, with the overall record results with adjusted earnings up 153%, with record EBITDA also more than double last year with same store EBITDA up 30% and broadly based as it was Ellis mentioned.

But also in the third quarter, the merger with Coast Casinos with those properties experiencing strong EBITDA growth and the integration of the coast family into the Boyd family, going very well. And finally, of course, the continuing and remarkable progression of the strong operating results at Borgata.

We have told you consistently over the past several years that our number one priority was to build an increasingly strong operating foundation. We are proud of how we have delivered on that promise, and we will not lose our focus in that regard as we move forward. Our operating teams, which are producing these results have grown, have strengthened and are well positioned under very capable leadership of three strong operating professionals, Bob Boughner, Keith Smith and of course Michael Gagne the newest member of the operating leadership team in our company.

We are also supporting these operating teams with the capital to enhance and grow the business. At the Orleans, the new hotel tower opened ahead of schedule by the way in October, bringing the room count at this impressive property to nearly 1,900. The experienced and very capable management team at the Orleans has a great facility and we feel good about the additional 460 rooms, giving them even more to work with.

We are nearing at Delta Downs; we are nearing the end of our $55 million expansion project at Delta Downs. As you know, there has been some construction disruption and through the course of the project, and now that it is nearly complete, we are beginning to get that message out to our customers, the casino is now totally complete, and the hotel is expected to be completed in the first quarter of 2005.

We are confident that our customers will find the new casino environment a big improvement on the previous facility. The new food court and entertainment lounge are impressive, and with the hotel addition, coming on, here in the next few months, the new Delta Downs will offer a much more complete entertainment experience that we're going to be very proud of.

In Michigan City, Indiana, Blue Chip's $150 million expansion and renovation project is well under way. This project will nearly completely redo, completely enhance the gaming entertainment experience at this very successful property. When complete, we will have a totally new gaming facility which will put all the gaming activity in one level, something that will substantially enhance that gaming experience. Not only will building this new facility create a much better gaming experience but during the course of construction it eliminates a great deal of the construction disruption normally experienced with this type of a project. So, we expect to there will be very little disruption until the very end of that expansion project.

Turning to the Borgata for a minute. The last quarter we announced plans to expands the Borgata as Ellis has highlighted but as we did - as we move through that planning process, it became very clear to us that it made sense to consider doing more; to add a hotel tower to the project and a few other amenities which Bob is going to talk about in more depth here in a few more minutes. We are actively involved in the planning stage for this Phase II expansion and are excited about the potential to do more at the Borgata and produce the type of results that are capable in that marketplace based on our early results at the property.

We are also pleased that not only have we had the success in the marketplace and the market has certainly accepted the type of product that Borgata offers but we are also pleased that in master planning the site we and MGM-Mirage provided for the expansion and the development of a bigger and better Borgata.

The second of our strategic priorities, which we have shared with you consistently over the years, is to create growth strategically and thoughtfully. With five acquisitions of single property operations in the past eight years, with the very successful development and now operation of the Borgata, and finally with the merger with Coast Casinos on July 1st of this year, we are proud to stand on our record in regard to this promise.

Importantly, we have accomplished more than just growth with the execution of this strategy. We have transformed and strengthened the operating foundation of the company while creating opportunities for significant internal growth, along with developing the experience and financial results continue to grow strategically and thoughtfully as we move forward. Beyond the expansion projects that I just discussed we have clear opportunities for additional growth. Some underway, some poised for development in the near term that follows where we are today.

At South Coast, we have a growth opportunity that obviously came to us with the Coast merger. It is a project that is now well under construction in the strong Las Vegas locals market, in a rapidly growing part of the valley which is largely unserved at this point. The construction of the South Coast Hotel and Casino continues to gain momentum and we continue on schedule for an opening around the end of next year.

The basement structure is nearing completion and the sheer walls have begun to frame the exterior. The foundation of the exhibit hall has started. The foundations for the casino basement and walls are 90% complete, and the first floor is 20% poured. Steel erection is scheduled to begin by the end of November. The foundation for the hotel, for the hotel tower and basement walls are 100% complete. The core tower is completed to the second level, and the second floor slab has just been poured. The foundation for the parking garage and the first four columns are now 100% complete.

Hotel and garage tower cranes have been erected, the foundation for the valet parking garage and columns are 100% complete. The mass excavation work is complete and final grading is now 20% complete. Silverado road drainage project, which is managed by the Clark County is also 20% complete and is an important part of this project being served by traffic. The foundations for the central plant for the South Coast as well as the walls and second floor have been completed and mechanical, electrical and plumbing installation is in progress.

The I-15 and Silverado Ranch interchange is moving ahead nicely; our engineering group expects to see completion of this project in mid-December 2005. And that's obviously an important part of this project as well. It will come as no surprise to those of you on the phone that we are experiencing the cost pressures that we have mentioned in our press release. At this point, approximately 80% of the project has been bid out and we have seen an escalation in pricing in almost all categories.

The most significant increases are in steel and concrete prices, also petroleum-based products have -- those parts of the project that have petroleum-based products in it have also seen significant increases. The increases we are seeing reflect both national and to a certain extent considerable extent international trends as well as local trends related to the significant volume of construction occurring here in the Las Vegas valley.

Turning to the Stardust site for a moment. This is probably the most visible of the future development opportunities in the company. We have told you over the course of the past few quarters that you can expect to hear more specific thoughts about future development of the 60 or so acres that we control under and around the Stardust by the summer of next year. We have now initiated a process which will -- which we expect will lead us in that direction.

This process will start with the team of professionals assembled to evaluate the site and the marketplace, then the creation of a master plan, which we feel, will ascribe the highest and best use of this very strategically located piece of real estate in the same thoughtful way we have done the same exercise in Atlantic City. This process will be essential to deciding what to do with the site, when to start the development, and how to do it. How we phase it, whether we do it alone or with others and those types of questions. We have the luxury of taking the time to do this project right, and we have what we feel is relevant experience from managing a very similar effort in Atlantic City.

In summary, there are a few things that I hope that you take away from my comments here this afternoon. First, we are extremely pleased with where we are today as a company, and how we're positioned for the future. Our operating foundation is diverse and is performing well and we expect that performance to continue. We have clear growth opportunities and we have a strong commitment to continue growing our business, especially in three primary markets, all of which have opportunities that we control.

First is the Las Vegas locals market with the South Coast, and with a franchise that we feel deserves and needs to be expanded beyond the South Coast and the other properties that we currently have today.

Second, is the Las Vegas strip. The time really is right to initiate a thoughtful process of how we develop this extremely valuable and very strategic piece of land and we have initiated that process.

And finally, in Atlantic City, at the Renaissance Point with more Borgata. Borgata has been a market defining; company-defining project as we have shared with you over the course of the past several quarters and we think that there is room for more. And on that final note, I know that you're anxious to hear from Bob Boughner, about how the Borgata results look and more importantly how we think about the future as we look to the next stage of Borgata. With that I'll turn it over to Bob.

Thanks Don and good afternoon everybody. In a nutshell, we developed a plan, we're sticking to the plan, and in our view it's working very well. I like to share about five observations with you about our business, and starting with the year-over-year growth in the third quarter.

We achieved net revenue of $186 million in the quarter. That was about $4 million higher than one of our major competitors a very large competitor, and that was a significant number in net revenue for us and in fact it translated to the $63 million in EBITDA that we achieved during the quarter, which is more than double that we -- over the prior year. We're very proud of that result, we have high expectations of our potential, and as we told many of you last year, we did not expect to see our first quarter of operation be our best quarter. We've just gotten better every quarter since then.

In that context, let me just recap that for you. In round numbers, in our first quarter of operation, we did roughly $31 million of EBITDA, then followed by 34, then 40, then 52, now 63. We're very proud of that EBITDA growth and it's in part a result from increasing revenues, but also significant margin improvement.

Looking back to the third quarter of the prior year, 2003, we did a margin of 20.4%, as we invested heavily in programs to advertise Borgata in major metropolitan areas that serve as feeder markets to us. In the fourth quarter we ratcheted that up to 24% margin. In the first quarter of this year, that went to 27.5 and then nearly 32% in the second quarter of this year, and then finally a 34% margin in the third quarter. We're very proud of that result, and it's a result of the efforts of a lot of women and men here at Borgata who strive to make this business better all the time.

Another point that I'd like to mention deals with the growing trend in the market. Looking back a year, that was the billion-dollar question that many people were asking, Is, will Borgata succeed and what will happen to the market? And with regard to the most recent quarter, what's nice to note, that total casino win in the market, without Borgata, grew a nice 2.2% over the summer months. The industry with Borgata was 4.3%, even nicer. Borgata's share was 21%, so we grew at roughly ten times the rate of the balance of the market in terms of our total casino win.

We're very proud of that, and that is a result of our continued efforts at developing our patron database, and innovative programs as far as promotions are concerned, and at the same time our very aggressive program of entertainment principally driven by Larry Mullen and his staff to make Borgata truly a place that's different than the rest of the market.

Another point that I want to focus on deals with the notion of Borgata is in fact a different business model than the rest of the city. We focus on both slot and table play and our slot hold percentage in the most recent quarter is actually the lowest in the market. And that's by design. On the table games side, we run a lower hold percentage than the balance of the market, we're comfortable with that given the nature of our odds and limits and the size of our operation. Having said that, we are a very, very high producer of gaming revenue at this property.

We also focus on in our business model, quality room occupancy and driving our average daily rate. We have a very powerful and successful food and beverage program at Borgata, and that has also been instrumental to the attraction of the property and our success overall. Top name entertainment, special events and also pricing leverage that has led to increasing margins. That's been a significant part of our success of the property. I'd now would like to talk a little bit about the progress on our Phase I expansion.

Our Phase I expansion, which we announced earlier is on track, actually our first bids are currently on the street now, and we have ground breaking scheduled for December. The scope, which we have previously discussed and disclosed, has not changed in any material way, and all of the drawing and the design work of the project is starting to come to a close so that we can go out as we did the first time when we built Borgata; is design it right, buy it right, with the expectation that it will be well received by the public.

You're also now aware that we are currently in a very thoughtful process of planning the possibility of a second phase expansion or a Phase II. Phase II expansion would allow us to construct approximately 500 of our classic guest rooms, approximately 100 suites and 200 resort residential condominiums. This all contained in a single tower, which would be perpendicular to the existing Borgata tower. It will have an outdoor pool and recreational area, a lavish spa, indoor pool and fitness center and roughly another 19,000 square feet of meeting space and incremental retail as well.

This facility will have a separate guest registration and value parking and in addition to that separate access and a separate identity from the Borgata Hotel tower. It will also have direct access to the existing and expanded Borgata casino floor. We're excited about the prospect of moving forward with this project, it is subject to various approvals and authorizations, and at the point in time that we have made it through that process, we will move forward with the development of this second phase project. And with that I'd like turn the mike back to Ellis Landau.

Operator we're ready for questions at this point.

Thank you, sir. [Operator Instructions] Sir we do have a question from Larry Klatzkin, with Jefferies.

Hi guys, a couple of quick questions, one breakout of the riverboats, is this something you are going to stop giving out the segments for individual riverboats at this point, or is this you know can we appeal what you're doing here?

I think what you see in this release is the way we're going to continue to do it, so we won't be breaking out the individual boats. We're going to look at the company in these segments, the way we think of the company now as a larger company, we'll be doing these consolidations. So what you see now is what you'll see in the future.

All right. Second, the strike in Atlantic City. Are you -- I'm hearing that all the properties are feeling it, even though - you know it is obviously the ones being struck feeling it the most, are you feeling it in October, will we expect to see something in the fourth quarter.

This is Bob Boughner Larry, I would say that our October really has been much of the continuation of the summer. The summer really never stopped for us. I would argue that based on my anecdotal observations, that the properties in the market are pretty strong on the weekends, light midweek, and that there's maybe less visitation overall coming into the market, and that perhaps Borgata is getting a little bit more than it would under normal circumstances, some new trial, but I would say on balance it's probably revenue neutral to us so far.

OK, good. Glad to hear it. Nebraska, any word on how that looks. Obviously you guys were one of the front-runners if it's happens. It's looking less and less likely. Is that a good read on that?

Larry, this is Don. We obviously know that it's difficult getting things like this approved through the election process, and through the legislative process for that matter. We think it has a chance, we monitor it, it's very fluid at this point. But our philosophy is if the voters of Nebraska approves it we do that we are very well positioned to take advantage of the opportunity and that marketplace is very attractive. So we're encouraged by what we see in terms of the market. We're cautious in terms of what we see relative to the polling that's being done, and we'll just wait and see.

All right, no, no, I agree you guys are well positioned if it happens. As far as Phase II in the Borgata, timeshare or condominium, what are you guys thinking about?

This is Bob again, our view is resort condominium, vis-a-vis timeshare.

OK, OK great, guys, again, you know it's nice to see you guys continue this to meet our expectations and go ahead. Thanks.

[Operator Instructions]. Sir, we have a question from the line of Dennis Forst with Key McDonald.

Yeah, good afternoon, wanted to get an idea of the timing and cost of Phase II for Borgata.

This is Bob Boughner again. With regard to timing, we're of course as we have indicated actively involved in the planning process, we believe that if the project receives all the required approvals, we'd be in a position to commence construction on it next July, July 2005, and with the completion roughly about 24 months later. We have not formalized cost estimates at this point in time, and at the point in time that the project is more fully developed; we'll make that information available.

OK Bob when you say that if you get all the approvals, are you talking about New Jersey approvals?

In order for the project to move forward, it requires the approval of the boards of both Boyd Gaming and MGM Mirage. It requires approval of the Department of Community Affairs and other New Jersey entities as well.

So both boards and the state of New Jersey? OK. And then lastly, is this a defensive move, because of Pennsylvania, or is it an offensive move because of the strength of your business, or both?

We currently turn down a significant amount of hotel revenue most days. We reported that we achieved virtually 90, rather virtually 100% occupancy for the third quarter. Very strong occupancy continues, we routinely turn down about as many reservations for the weekends as we have capacity in the current hotel. So in that context, it's very much an offensive move to be able to capitalize on the demand for our product. Will it help us in terms of the property's perception in relationship to Pennsylvania? I think so, but that's certainly not the motivation.

OK. And what is your take on Pennsylvania? Do you have a feeling of when or if slots are going to actually exist there?

I would turn that back to Don.

OK.

I think it's not a matter of if; it's just a matter of when. We do feel that there will be slot machines there, it, there will be a substantial, a number of them, but the offerings will be limited. There's just no way you can build the Borgatas of the world with that type of tax rate, with that price of admission, and so we -- we feel that it will be there, but it's not going to affect the Borgata in any adverse way. And I will just reinforce Bob's statement in Atlantic City we were playing totally offensive.

OK. Great, thank you.

[Operator Instructions]. Sir, we have a question from the line of Ray Cheeseman with Jeffries & Company.

Congratulations, Bob on a phenomenal sequence of performances down at your property. I was wondering, with the mid-November expected opening of The Quarter, what you feel it will do to the city. Is it another one of the things that Atlantic City needs to really mature and grow and become all it can be, and you will get the benefit of it as well? Or does it mean that there's some people in the fourth quarter who might run down to check it out? 42 retailers is you know a lot to offer. Give me your gut feel?

I would say that our view towards The Quarter is as follows. When the property is fully open, we think it will make a great contribution to Atlantic City, particularly on the restaurant side. They are bringing in some very good restaurant operators, PF Chang's, Palm Steakhouse and others, Carmine's from New York. I think that they will be very well received. At this point in time, we turn down a lot of dining reservations at Borgata, so I am not particularly concerned about diluting the volume of our business with bringing that competitor in the market, but frankly I'm glad it's going to be there, be very glad when it's open because it will provide a nice alternative for some of the Borgata customers until they wait for the restaurants we're going to open in 2005.

Mr. Snyder, I was wondering you talked about Delta Downs being almost complete through its disruption period. Almost complete is also Pinnacle Entertainment's, enormous project. I know that you have added additional amenities to your offering to be more full service to your customers. Do you expect 2005 will be a challenging year, I mean you'll have more but he has so much more? And clearly you're -- there's not much support from the (inaudible) of the world and Harrah's of the world, they are not adding this much to their properties. So, you have but clearly the battle is a tough one.

Well I am going to let Keith Smith answer the question in more depth, but I will tell you that we like our location, we like the amenities that we are offering to the property. And we like the fact there will be more cars on the freeway driving past our place. So with that, I will let Keith add his perspective.

As Don said, we certainly have a location advantage, which we think is important to us. It will be a challenging year nonetheless when you add that type of capacity, and that quality of a product to the market. It will present some challenges. I believe the Lake Charles boats that will have many more challenges than we will but we are prepared. The amenities we're adding are things that our customers have asked for and will keep them coming back to the property. And we also have the advantage of having been in the market for a while and being last in the market certainly has its challenges, we've experienced that in other places. So, we do expect a challenging year and we are up for the challenge and we think we will fair OK.

And then lastly you mentioned last into the market you purchased the Shreveport property kind of joining the Shreveport market last. You came into the first quarter pretty good, and wondering what you're seeing going forward. You mentioned it's tough market, it takes a lot of marketing and then we have an Oklahoma election coming up that could add additional capacity to the competitive environment. What do you see for that for Q4 and '05?

Q3 was a kind of a building quarter for us at Shreveport. We spent the quarter introducing the property and re-branding it and once again we had to change the name, getting new signups for our slot club, which continued to be - continue to come at a very high rate and we were pleased with the progress in Q3 and so far the progress in Q4 in terms of revenues and profitability. We fought not only the changing of the property but the opening of Louisiana Downs at about the same time we entered the market. The expansion of that property and a new hotel in the Isle of Capri but we are happy with the progress we are making there.

Congratulations, I can only wish good luck on the new guy who is going to be coming to town.

Thank you.

And sir we have no further questions. Back over to you, Mr. Landau for any closing remarks.

Well, thank you all for joining us today and on this call, and we look forward to doing this again in February when we report our full year, our fourth quarter and full year results. Thanks very much.

Ladies and gentlemen, we thank you for your participation in today's conference and this concludes your presentation, you may now disconnect.