Boyd Gaming Corp (BYD) 2008 Q1 法說會逐字稿

Good day, ladies and gentlemen and welcome to the first quarter 2008 Boyd Gaming earnings conference call. My name is Fab and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded for replay purposes. I would now like the turn the presentation over to your host for today's call, Mr. Keith Smith, President and CEO, please proceed.

Thank you operator and good morning everyone. Welcome to the first quarter conference call. Joining me on the call this morning is Paul Chakmak our Executive Vice President and Chief Operating Officer. Before we begin, I need to remind you that our comments today will include including statements relating to our future results including the financial outlook and expectations for our second quarter 2008, our expansion and development projects and other market business and property trends that are forward-looking statements within the Private Securities Litigation Reform Act. The Company undertakes no obligation to update or revise the forward-looking statements whether as a result of new information, future events or otherwise. Actuality results may differ materially from those projected in any forward-looking statements as a result of certain risks and uncertainties including but not limited to those noted in our earnings release, our periodic reports and other filings with the SEC. I would also like to remind everyone that during our call today we will make reference to non-GAAP financial measures. For a complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release on Form 8-K furnished to the SEC today both of which are available in the Investors section of our website at Boyd Gaming.com. We do not provide a reconciliation of forward-looking measure due to our inability to project special charges and certain expenses including preopening expenses. Finally, as a reminder, we are broadcasting this call on our website at Boyd Gaming.com and StreetEvents.com.

Earlier this morning, we released our first quarter results, these results were in line with consensus estimates as well as our guidance provided at the conclusion of last quarters call. During the quarter consumers across the country faced an increasing number of challenges including higher food price, higher mortgage payments, unprecedented gasoline prices and the prospects of higher unemployment. As a result of these issues, like many other consumer oriented companies we experienced a difficult quarter as consumers pulled back on discretionary spending, we proactively responded to this downturn in business by refining our operations and adjusting our expense levels to be more in line with current business volumes. I'm extremely pleased with the quick and aggressive actions taken by our management team in dealing with this challenging landscape. This is not the first time we have seen the downturn in the economy and having an experienced management team, has and will enable us to manage through these tough times. We remain confident in our ability to weather these challenges and to emerge in an excellent position to capitalize on long-term growth opportunities across the country.

Now I would like to spend a few moments on our development projects which are heart of our long-term growth potential. In Atlantic City, we are nearing the opening of the spectacular Water Club which is scheduled for the end of June. We have recently completed media events in New York, Boston, Philadelphia and Washington D.C. and are wrapping up our hiring process. We will begin our training program shortly to ensure we deliver on the highly personalized service levels that Water Club will be known for. The Water Club will be unrivaled by any other property in the Atlantic City market place, featuring five swimming pools, three indoor pools and two outdoor pools, a two-story spa located on the 32nd floor, additional meeting space, three two-story residence suites and six designer retail outlets. In Michigan City, Indiana, our $130 million expansion of Blue Chip remains on schedule for an opening this December. As most of you already know, this development project will add a dramatic 22-story hotel tower that will include 300 new up scale guest rooms, a spa and fitness center, additional meeting and event space, a new dining and night life experience, and a new Port of Caesars. We will did formally topping off the hotel later this week. When complete, Blue Chip will become a true regional destination with the most hotel rooms in the market. This added capacity will enable us to expand our reach in the regional destination market and give us the ability to further tap into the 7 million adults living within 150 mile radius of the property.

Move to go the Las Vegas Strip we continue to diligently pursue debt and equity financing for our joint venture with Morgan's Hotel Group. Based on our progress to date we expect to complete the capital raising and begin construction during this summer. Construction on all other aspects of Echelon continue to advance with foundation work nearly complete on our wholly-owned which include Hotel Echelon, the Enclave and Shangrala Las Vegas. In addition, steel erection for the low rise portion of the building began this week and excavation for High Street the retail promenade and the meeting center has been completed and foundation work is well underway. We remain on budget and on schedule for third quarter 2010 opening.

As we move forward into the remainder of '08, the health of the economy will certainly continue to play a key role. Our management team will remain focused on continuing to refine our operations and aggressively manage through whatever challenges present themselves. In addition, we are fortunate to have two exciting projects coming on line during the remainder of 2008. The Water Club and the new Hotel of Blue Chip. These two projects will enable us to continue to grow the business and will be a catalyst for earnings growth over the next 12 to 18 months. Longer term, the Echelon project will provide momentum for the Company to continue to grow well into the future. Thank you for your time this morning. I would now like the turn the call over to Paul Chakmak our Chief Operating Officer.

Thanks good morning everybody. Before I talk about our results, I'd like to begin with an update on our branding initiative. We successfully launched the first phase of our nationwide consolidated players club program last quarter when our Las Vegas locals properties were united under a new Club Coast Card. While it is early, initial results from our One Card launch have shown positive trends. Las Vegas locals rated play per customer for our top tiers, that's Sapphire and Emerald have grown nearly 12% year-over-year. Additionally, accounts with Cross Property play increased 35% from Q1 '07 to Q1 '08 in the Las Vegas locals market. These findings while preliminary, show our new tiers Club Coast program has been well accepted by our most loyal customers. We are now preparing to seize on the same success we have experienced initially in the Las Vegas locals market on a larger scale. Blue Chip recently introduced their new players club program to wide spread customer acceptance. As we roll out Be-Connected across the Midwest and South region we expect to see similar benefits in terms of increasing loyalty and building Cross Property play with our core customers. We are introducing programs such as, Play Your Way to Vegas, that provides us a unique opportunity to drive visitation to our exiting Las Vegas properties. When the program launch is completed, players will be able to use their cards at Boyd Gaming properties in Nevada, Illinois, Indiana, Louisiana, and Mississippi. We are confident that the defining aspects of our One Card loyalty program will provide us a key competitive advantage in the coming months and years. As Keith stated earlier this is a very challenging environment to operate in.

In forecasting the Las Vegas locals market has been difficult. By some measures the effects of a slowing economy are less noticeable, the population is still growing by over 5300 residence per month and the number of people employed is flat to last year; however, a sharp decrease in home values as well as a decrease in both residential and commercial construction has clearly shaken consumer confidence. As a result, EBITDA for our Las Vegas logo segments decreased $7.9 million or 11% from prior year levels. In the near-term, we will have to be patient as our local customers exercise more caution with their entertainment dollars; however, history has shown that each cycle of new construction on the Strip has been accompanied by increased visitation and job creation. There's no question in our minds that as the new Strip Resorts come on line, local gaming will rebound along side of them.

In downtown Las Vegas, EBITDA declined $3.7 million from prior year results due to a combination of decreased gaming revenues as well as increased losses with our Hawaii Charter business which has been impacted by sharply higher fuel costs. The Midwest and South region has been the most resilient to the economic downturn. While Blue Chip EBITDA was $13 million on a year-over-year basis, the balance of the region collectively increased EBITDA by $1.4 million or 3.9%. Blue Chip continues to be impacted by new competition but as construction progresses on the new hotel we will be better positioned to expand our reach and improve our market share.

In Atlantic City, Borgata's Gaming revenues in the quarter declined 4.6% from prior year levels and resulted in our share of Borgata's operating income decreasing by $2.9 million. Increased gasoline prices, competition from the Pennsylvania Slot Parlors and general economic worries all contribute to the decrease. Borgata, none the less remains atop the Atlantic City market leading in virtually every key gaming area.

The results for the first quarter have given us a much better perspective on 2008. Consumers are clearly shaken by the economy and we expect the first half of the year to remain challenging. In the near-term we will operate our businesses as efficiently as possible and remain focused on our growth in branding initiatives. With those factors in mind, for the second quarter 2008, we are estimating adjusted EPS from continuing operations to range between $0.28 and $0.33 per share with a corresponding adjusted EBITDA of 118 million $128 million. Operator at this time we would be happy to take some questions.

(OPERATOR INSTRUCTIONS) We will pause a brief moment to compile a list. And your first question comes from the line of Larry Klatzkin with Jefferies. Please proceed.

Hello, guys. A couple questions here. The construction cost for Echelon Place and for the Blue Chip property, can you just embellish on that.

Well, construction cost for both of those projects are running on budget. We haven't updated any budget numbers on either of those projects because they both continue to remain on budget. I don't know if there's any other clarity to provide.

That's good news. What does it take forward as it go forward?

Can you repeat that.

Paul, what does it take or what does it take to go forward in Florida, anything you are looking for to reconsider when the timing event?

We are obviously watching closely some of the legislative action relative to tax rate. As we have all taken a look at that market, the revenues coming from that market for the mutual has been less than anticipated as a result with the tax rate over 50% it is certainly challenging to make an investment there. So I think, a key factor in our mind would be some rationalization of the ultimate tax rate to spur economic development there.

As far as corporate expense, your corporate expense is a lot lower than people were thinking for the first quarter. Should we still think it being higher in the second quarter like you had previously indicated.

The expectations for the second quarter what we said on the last call was for the full year corporate expense was going to run about 8 to $10 million higher than 2007 and we said that increase would predominantly be the first half of the year as a results of the One Card launch. To Keith's comments, and as you would expect we have had a very sharp eye on expenses. With that said, we think it is very important to launch the Be-Connected initiative throughout the Midwest and South region and so though, corporate expense was only about a $1.5 million higher in Q1 versus the same period in '07, you should expect it to be higher than an abnormally low corporate expense in the second quarter of '07 more along the lines of what I estimated previously and then I would suggest that we would go back to a more normal pattern.

Okay. That's fair. And then the last thing, Michigan City's proposing some kind of smoking ban. Is anything going on with that?

There has been a little written about that recently. The facts, as we understand them is they're simply, individual out there collecting information we have talked to the Mayor. We have talked to various counsel people. They understand the importance of the Blue Chip to the community and so it is more of an information gathering not a proposed smoking ban. I think there's probably just some misinformation out there.

Thanks, guys, great results.

Thanks, Larry.

Your next question is from Celeste Brown with Morgan Stanley.

Hi guys, good afternoon or good morning just thinking about the Water Club expansion. I know times have changed quite a bit since you originally announced it and particularly with the economy and the smoking ban and everything, but how do you think about the return now on the cumulative investment there, I think you said about $600 million with the gaming expansion and the hotel tower. Are you still thinking around 15% or should we temper our expectations in this environment?

Well as you indicated with the economy, with competition from Philadelphia and smoking it has a much bigger impact than when we first anticipated and developed this project. So I think returns are probably a little lower than we originally anticipated. We are certainly expecting big things from the Water Club. It is a beautiful property, beautiful hotel when you get a chance to see it. We've had good early demand for the rooms as we have opened up sales. So, but returns probably be a little lower than initially expected.

How do you think about this now full smoking ban in AC. Have you felt the full impact considering how much of the (inaudible) has been cut down or is there maybe a bit more impact now that there's a full ban in place.

The full ban actually goes into place some time between now and October 15 or said another way by October 15 we need to be 100% nonsmoking on the Casino floor. So between and then we are still allowed to have the same 25% we are restricted to the last little while, we are working on plans to accommodate our guests smoking. We think it will have some impact, I don't know that it will be a significant change to what you are seeing today.

Okay. Thank you.

Your next question will come from the line of Joe Greff with Bear Stearns.

Good morning, guys.

Hey, Joe.

Paul, can you talk about our willingness to provide I guess financing for Morgan hotel joint venture. You referenced it earlier in the call. I joined late.

Well I think our direction at this point continues to be along the lines of raising some additional equity given the current status of the debt markets from third-parties, as well as providing what is effectively project financing on the overall Morgans complex. I think obviously we believe the monitor on the (inaudible) play an important part of the overall complex and Morgans adds value in managing those particular hotels. At the same time, we certainly have to be practical about the resources that Boyd Gaming has and so we certainly balance those out. At the current pace we certainly expect to be able to complete the financing we are anticipating in the Summer as Keith mentioned and then we will be fully designed and bid out and ready to start construction.

Okay. Maybe more you can be quantitative as you want to provide a qualitative response. When you look to the back part of this year and into next year, what sort of impact (inaudible) on your overall locals revenue and EBITDA margins and EBITDA performance and is there a way that you can operate that property any differently so that you can preserve margins?

Well, we have been making significant investment in Las Vegas if particular. That would be the only proper they that would be impacted as the Cannery East is adjacent to Las Vegas but really miles away from the other three properties that make up the major Las Vegas local properties. We have gone about very diligently making significant public space improvements and will continue to dos so at Sam's Town Las Vegas, where from a total investment standpoint we are obviously well, well in excess of what the Cannery will be putting forward as far as product offering is concerned both in terms of public space hotel rooms, meeting space et cetera. And obviously have a very loyal clientele out there and have competed certainly heads up in that market with others including many of the station properties. There---

About 25% of total EBITDA roughly; right.

For the Las Vegas locals market?

Yes.

It is a little less than that but in that ball park. And there's certainly always an impact when some new entrance comes into a market. Capacity in the Boulder Strip region as we increased our estimation about 15%. And obviously there will be come canalization associated with a 15% increase in gaming position that will be shared throughout the region.

Got you and then an easy question. Construction in progress at the end of the quarter. What was the balance?

About 400 million.

And planned CapEx for this year, has it changed from the last call?

No, no changes.

Great. Thanks, guys.

Your next question is from the line of Felicia Hendrix with Lehman Brothers.

Hi, good morning. Just getting back to your financial flexibility, I was wondering if you could just walk me through what kind of flexibility you have for raising capital, for example could you still leverage Borgata, can you increase your revolver, those sorts of thing .

Well, on the revolver side, Felicia, the total revolver size is $4 billion. So obviously we have significant capacity under that overall facility with a covenant package that ramps up as far as total leverage is concerned as spend on Echelon progresses. So that provides us certainly significant liquidity and is a competitive advantage to us. We certainly know that very well and we are very protective of that. As it relates to additional capital needs, Borgata continues to be under levered from a corporate finance perspective, we have always said that we wanted to get the Water Club open and operational and then we would look in 2009 and beyond with MGM to really right size the capital structure, certainly affords us the opportunity to take a dividend out of Borgat in excess of what are already very large dividends based on the existing operation base. So Borgata's a real opportunity I think for both the companies that own it.

Okay. Great, thanks, staying on Borgata. Maybe this is the same way of asking the question a different way, when I think about the EBITDA margin after you open are you looking to kind of hit and go back to more normalized levels or because the environment is so different now you are going to look toward something in between those levels that you used to do and what you, what we have been seeing now? Can you maybe just give us an idea where you think margins might come out.

Sure, it is a little more difficult. What will happen when the Water Club opens, the revenue mix of the property will continue to change as we open up a property that will have fairly high hotel rates and will have good flow through on those rates as we bring more people into the building that dine in the restaurants, those margins are somewhat different than the casino. So the mix of revenues will continue to change there and I couldn't today give you an indication of where those margins will settle in because once again, the business mix will change as we fill up that hotel.

Okay. And then just to your Las Vegas locals operation, I was wondering if you have looked at your FTE levels and if you have kind of analyzed where they are, particularly in this environment if perhaps they're too high and are you planning on maybe cutting those numbers. I know a lot of your competitors have.

Sure. We have been preparing, looking at the situation since late in the year, late in 2007 and began in early 2008 implementing a plan to refine the operations and to take cost out of the business where we thought cost could come out. And we were very careful about it and very thorough about it and have been executing on that plan for the entire first quarter. So we have reduced head counts throughout the organization, throughout the Company we have reduced expenses where appropriate throughout the, throughout the company, but we have done it in a very systemic and very quite fashion once again over many, many months so you haven't seen any real blips or maybe to your point we haven't seen it show up in the news paper but we have taken significant amount of cost out of the business already during the quarter.

Okay. Great. That's it. Thank you.

Your next question will come from the line of Larry Haverty with GAMCO.

Yes, hi, a couple of questions, one, what is your best guess for CapEx in 2009 and 2010 and then one follow up question.

Well we haven't given specific guidance and haven't historically given guidance, Larry relative to CapEx beyond 2008. Obviously, the preponderance of the capital spending in those two year will be related to Echelon and I think directionally we have said we will be fairly equally weighted over the course of the next three years and frankly trailing then even into 2011. So opening as retentions are released and bills are wrapped up and finally paid. Other than that, relative to major capital spending, Blue Chip and obviously the Water Club are completed in 2008 and there are no other major projects other than Echelon in the spending forecast so it would really be limited to about $120 million of maintenance CapEx we have on an an on going basis for the Company, annually.

What is your net debt at the end of the quarter?

About 2.25 million.

With the troubles in the Las Vegas housing market that you alluded to, I am just curious, do you see a set of changes in the construction market where maybe six months to a year from now because things are as bad as they appear to be and probably for the rest of the world aren't going get better because they don't have that $4 billion revolver that you do, that you could be up here and say say we've had a decline in construction estimates or is it the looseness allows you to maintain your budgets in light of pretty nasty material increases in things like steel, et cetera.

Your question was in relation to the Echelon budget?

Yes.

I think we are very comfortable today with the Echelon budget , given where we are at with the project. We have another 2.5 years to go certainly, before that project is ready to be unveiled but we are comfortable with today's budget and today's construction climate and we are getting good interest from contractors to work on the job. We have a lot of bidding going on on the project, there is a tremendous amount of interest and looking out into the future it is difficult. I am not sure my crystal ball is any better than anybody

Let look into the past with the situation you just described nine months ago what you would have thought it would have been, that good in terms of people interest to the prices or is it more or less stable from nine months ago.

Nine months ago if you play back the tape we were very confident about our budget, we were very confident we would have a lot of interest in the job and to get bidders on the project. When you fast forward to today, we have right where we thought we would be.

The biggest, probably difference between what everyone was taking about nine months ago and today was the availability of labor and construction labor in particular and obviously, with the slow down to put it mildly of the residential market in the region, labor is certainly no longer an issue on anybody's radar screen.

Okay. Great. That's very helpful.

Your next question will come from the line of Steven Kent from Goldman Sachs.

Hi, good morning. Can you just talk about the negative operating leverage that occurred in the first quarter. I know somebody earlier asked about expense controls and it sounds like you have done quite a bit but you are still getting almost two to one decline of revenue, decline of profits. Just wondering if that's all of the charter issues you referred to in the downtown properties. Are there other things you can do to reduce that negative operating leverage over the next couple of quarters and finally, just the lower tax rate in the quarter, what are you looking for for the rest of the year?

Well, as I indicated, we spend a good amount of time during the quarter taking expense out trying to manage the operation to the best of our ability. We will continue to do that as we go forward throughout the rest of the year. I think each of the regions if you will are different in terms of what they are seeing. You have mentioned the downtown region, fuel prices having an issue as well as simply the cost of air fares, people getting from the, getting from Hawaii, getting from the islands over to Las Vegas, so there's an impact on the disposable income that the consume has once they get here. The Midwest, as Paul indicated in his comments are having different issues, the impact is not as severe as maybe the Las Vegas locals market. Each region is somewhat different. We continue to manage the business as effectively and efficiently as we can. We will continue to work through that.

On the tax rate question specifically, on the last call, we highlighted the fact we expected the tax rate for 2008 to be about 36.5%. It was a bit lower than that in the first quarter. That was driven by the write down of the Dania assets in particular but I would continue to use 36.5% as our best guess at this point for the remaining quarter of the year.

Okay. Thank you.

Your next question will come from Jeff Logsdon with Bank of Montreal.

Thank you. Could you just go back over your expectations now, total project cost on Echelon and your contribution to it, just to refresh our memories.

Well, the total project cost for the wholly-owned aspects of Echelon is $3.3 billion. All of this is detailed quite well in the 10-K, in particular. So that is all really funded by Boyd Gaming. Then you have two joint venture components. You have the Morgan's joint venture with an estimated project cost of $950 million of which we, per our agreement with Morgans will put in 6.1 acres of land valued at $91.5 million and Morgans will put in a like amount of cash. And then the retail joint venture with General Growth properties which has a total estimated budget of $500 million of which again Boyd Gaming would put in this case air rights, Morgan's would match that amounts with $100 million of cash and at this point in time it is anticipated that both companies would fund the balance of the project cost equally.

Great. Thanks.

Your next question are come from the line of Bill Lerner with DB.

Great. Thanks, guys. I guess your not letting Josh talk yet? Just two questions. One on the locals side of things. The number while it was down is probably better than some anticipated especially after looking at January and February down in the higher single-digits. The first question, is that attributable to, the Player Card initiative or something else going on there or is on the Olympia JV in north Las Vegas, just essentially the data is probably too much supply in the pipeline up there. But what are you doing with your acreage up there and a little color around that would be helpful. Thanks.

Well, Bill, it is Paul, they're sill try to go beat the CFO out of me here so, Josh, has a ways to go. The Las Vegas locals business itself and the margins, I mean, clearly, we believe there is benefit to the business in the first quarter relative to the new Club Cost program. Case in point from some of the stats that I put out, in my comments, we are really quite pleased in what is obviously a tough business environment to be able to show gains like that at our top tiers. I think that certainly does help drive the business whether it is good time or more difficult times and we are obviously well positioned as markets recover overall. To Keith's point, we have also very systemically tried to address cost issues, not only at corporate but also in each one of the operating units. As you know from our past comments we have been focused over an extended period of time of really just right sizing and blending in the original three Coast properties into the Boyd style of operation. So all that really comes together to garner the results that were announced.

I think the another thing, Bill just about those results is when you look at March in particular, the way the timing of Easter this year and fallen over the first week end of the NCA Tournaments had probably a larger impact than most people anticipated, certainly than we anticipate on the March results. Traditionally, a very high volume weekend; with full occupancies that was not a high volume weekend and denied a full occupancy. With respect to Olympia, the Olympia site is not an approved zone site right now. We are going through the process of attempting to get that solved.. It is part of the master plan community. It is a little closer to the center of the population or what will be the center of the population in north Las Vegas, our site is a little further on the out skirts and if we are able to successfully get this project approved and zoned we would end up deed restricting our site and selling it.

So in other words you would Gaming entitlement from it?

Yes.

Okay. Thanks, guys.

Your next question come the line of Jeff Sebastiano with Morgan Joseph.

Thank, hey, guys. How are the trends in April compared to those in February and March in the locals market?

I don't think we will get into specific trends in April. It is embedded within the guidance for the quarter overall. I think from an overall marking perspective I would say they're pretty consistent with what we have seen over really a relatively extended period of time of 12 to 18 months so nothing really new there relative to competition, certainly there have been changes in the way companies have marketed both from our perspective and from the competitors to adjust to new programs. But we see that as really part of the, really the normal course of business.

Okay. And at the corporate expense level, how much of that was related to spending on the One Card initiative in the first quarter?

Well, we said that, in our last call, that we expected the 8 to $10 million of increased corporate spending for 2008 to be really associated primarily with the launch One Card. That would imply rough estimate 4 to $5 million in the first quarter certainly, that was offset by obviously some, some more frugal spending in other areas and frankly, not a full spend overall of that launch budget.

Okay. So what you guys were able to cut out of first quarter X the One Card initiative, are you going to then put that back for the balance of the year in order to get back to that number that was basically 8 to 10 million above previous years corporate expenses to get on the same run rate you were talking about the fourth quarter conference call.

Relative to the second quarter I would, as I said earlier stick with a estimate of it being up 4 to $5 million. As far as the balance of that budget given the current business climate I wouldn't necessarily expect it would slip into the third quarter at this point in time.

All right. So, is there enough fat left in the cost structure to continue to realign these expense levels or at least in second quarter?

Well, I don't might take offense to the term fat.

No offense intended.

Just joking. We continue to look through it. I think, you no you can always continue to look at the business and find ways to refine it. The key is matching up expense levels to revenue trends and you have to manage that on a daily, weekly basis and we will continue to do that. Is there more low hanging fruit or maybe fat to cut out, no, I think we have pretty much gone through that. There's continued opportunities to refine the business, I think there is always continued opportunity to refine the business and we will continue to stay focused on them.

Okay. Thanks, guys.

You're welcome.

The next question will come from the line of Dennis Forst with KeyBanc.

Hey, good morning.

Morning.

Had a question about interest. What is your current cost of capital? It looks like if you add back the capitalized interest in the quarter and you get a gross interest expense it is lower than the first quarter of '07 even though you are total debt is up a couple hundred million dollars.

Our-- and this is being driven by LIBOR rates obviously being as low as where they are in the floating component. Our overall blended cost to capital-- debt capital is about 5% right now.

5%. How much floating versus fixed?

We are about 60% fixed. A portion of that is obviously, our bonds and there is additional portion that is, of the bank credit facility that is swapped fixed. So right now 60 fixed, 40 floating.

And I think earlier you said, your net debt was 2.25?

Yes, it is about 2.2, I guess when you look at the numbers.

Now, in the press release it said 2.4 debt, so what is the difference between the debt in the press release and the 2.2 net debt?

Just the cash, the cash that's on the line below it.

Just the cash. Okay. And then, lastly, how much capitalized interest for the year, is it any different from what you said I think in the first quarter call or fourth quarter call, you said about 50 million, for the year.

Yes, yes that's correct.

Okay. And then on a different subject, the locals market, I think in the first quarter or first I keep saying that. In the fourth quarter, you gave a qualitative assessment that you thought your market share had gone up a little bit in the December-quarter. Can you give us some qualitative guess at where your market share is now after the first quarter?

I don't think we have any additional color on that other than just some of the stats that we put out relative to the club.

Okay. Thank you very much.

There are no further questions in the queue. I would now like the turn the call back over to Mr. Keith Smith for closing remarks.

I want to thank everybody for joining us this morning. We look forward to speaking with you again for our second quarter conference call. Have a good day.

Thank you for your participation in today's conference. This concludes the presentation, you may now disconnect. Have a wonderful day.