永利渡假村 (WYNN) 2009 Q4 法說會逐字稿

Good afternoon, and welcome to the Wynn Resorts fourth quarter and year ended 2009 earnings conference call.

Joining the call on behalf of the company today are Steve Wynn, Marc Schorr, John Strzemp , Matt Maddox, Andrew Pascal, President of Wynn Las Vegas, and on the phone, Ian Coughlan, President of Wynn Macau.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions) Thank you.

Now I would like to turn the call over to Mr.

Matt Maddox.

Please go ahead,

Thank you, and good afternoon, everyone.

Before we get started, I just need to remind everybody we will be making forward-looking statements under the Safe Harbor federal securities laws, and those may or may not come true.

With that, I'm going to turn it over to Steve Wynn for opening comments.

Hello to our investors and analysts and hi to our competitors.

What we have to say I think is going to be very brief, because I think these numbers speak for themselves.

We had a wonderful year in China.

We always want to point out that the most important thing to recognize when looking at numbers in our business is not so much market share, per se.

That's a measurement of sort of casino revenue.

What really is important is to look at the yield per table and the profitability per table.

And I'm very happy to see that, again, for the second or third consecutive year, the profitability and the efficiency of our tables in Macau have continued to climb, in spite of the existence of some very fanciful competition that appeared this year.

The Macau market is beginning to show some maturity.

There are fine buildings that have been opened and are being operated.

And as market conditions have improved, I think that the rest of the construction that was started and temporarily halted will now continue.

That can all -- that's all good news, as we go forward in having that was market be mature.

We've happily established a niche for ourselves, and I think our EBITDA was over $0.5 billion last year.

And although I don't make forward-looking statements as a rule, we're tracking substantially ahead of that the first two months of the year, and we haven't even opened Encore, which is about 60 or 90 days away, I think due April 24, on a Wednesday.

I think Linda decided that we'll do it April 24, and that is the most beautiful thing we've ever done.

And when that kicks in, we're going to have another little boost in our ability to understand and serve the specific needs of our customers.

And our customers are admittedly the top end.

This building, Encore in Macau, and I'm taking just an extra minute or two to comment on it, is a building that was designed after we had two years of experience.

To understand the needs of our particular guests that gamble and visit Macau.

When we built Wynn Macau and opened it in '06 we had done our very best in preopening research and design to have a building that would appeal to what we understood to be that market.

And I'm happy to say that we weren't very far off the mark, and the success that we have enjoyed is a direct reflection of the fact that we were able to get it right, especially in the wonderful employees that we were able to attract to come work for us.

The workforce in Macau is totally delicious.

The people that have come to work for us from Macau, from mainland China, from the Philippines, have the most wonderful desire to be trained and to improve and be successful in their jobs.

That's probably been our main asset, is the people that work for us, which is why we never cut back on salaries or the thirteenth month or why we never did any of the other things that some of our competitors have done, because whether it's in Macau or Las Vegas, our principal asset are our employees, period.

And the ones we have now in China are just absolutely over the moon wonderful, as far as we're concerned.

And we have the organization that's going to be in place to open Encore, I'm happy to say, in a few months.

And I think when everybody gets a whiff of that place, they're going to realize we've set a new study in hospitality facilities and the way we present our product.

It is by far the best thing that I've been part of, and I've been doing this for 40-odd years.

It's 414 rooms and suites, and I'm very excited about April's opening.

I can't wait to share it with everybody.

So much for Macau, we look forward to a very healthy and exciting 2010 and beyond.

I wish I could say the same thing about Las Vegas, but I'm still -- as we have been in the past, unlike some of our competitors who have seen all kinds of glitter and wonderment just around the corner, I think everybody has sort of come clean now that we don't see that.

The policies in Washington, policies of government have taken a terrible toll on the working people in America that come to Las Vegas and the corporations that book conventions and meetings in Las Vegas.

I'm afraid to say that I think the outlook for 2010 is very conservative, at least.

I don't see any major change in the future.

I don't see it getting worse, per se, but I do think that unless there is some signal from Washington that they can control the deficit, that not only Las Vegas but the country faces dire problems.

And I don't see any reason whatsoever to have a speck of confidence in the congress or the administration that's there now.

And in the end, Las Vegas is almost a perfect reflection of the national mood.

So I'm conservative and guarded about the future of Las Vegas, and I think political leadership has now come home to roost as part of every businessman's conference calls.

I mean, imagine that it would be necessary for someone in my position, with my job, to talk to a group of investors and analysts and have to refer to policies in Washington when discussing the relevance of the quarters that lie ahead.

But if anybody's got a speck of sophistication that's listening to my voice now, they'll recognize that that is, in fact, true.

I'll take questions, and so will my colleagues who are sitting around the table.

(Operator Instructions) Your first question comes from the line of Joe Greff with JP Morgan.

Good afternoon, everybody, just a couple of quick cleanup questions before asking a couple more strategic questions.

If you could help us maybe, Matt, on the hold -- the net hold impact in Macau and Las Vegas from an EBITDA perspective And then you referenced in the earnings release in the quarter, corporate spent -- had some one-time items.

If you could help us understand what that amount was and what that relates to.

Sure.

In Las Vegas, we held about 18.7%.

If we had been at the midpoint of our range, that would have been approximately $15 million of additional EBITDA, had we held 22%.

In Macau, will you notice we only held 2.7, which is at the low end of our range, so I won't normalize it for you.

But it's the low end of the range on the VIP side, where as normalized, it would be 2.85 --

Which is a lot of money.

-- which is a lot of money in Macau.

So $16 billion of turnover -- $17 billion of turnover versus $11 billion of turnover last year.

Volumes are very strong.

If you look at the corporate expense side, for full year 2008, we had about $36 million of corporate expense, excluding the quarters.

Full year '09, closer to $45 million.

The difference of roughly $8 million or $9 million is attributable to one-time payments related to the Macau IPO.

So 2009 corporate expenses would have been roughly flat with 2008 outside of those one-time expenses.

Thank you.

And Matt or Steve, can you just talk about, in Macau or Las Vegas, collections of credit, and if could you help us understand or refresh us, I know you do probably more conservative job of reserving that, but if you can talk about any changes in collections there.

Joe, I'm glad you brought that up.

I know who is on this call, and so I'm going to talk to all of them, including my competitors.

One of the things that has been really cute about this business of quarterly conference calls is sort of a game of cat and mouse about credit.

This Company, Wynn Resorts, has a policy that originates in our audit committee that is consistent with Sarbanes-Oxley, that is iron-fisted tough about credit, credit reserves and credit accountability.

And you've noticed in that my, I think almost 40-odd years of experience, we've never had a special charge that wasn't reserved in advance.

That's the result of very, very tough cold-blooded assessment of credit when we issue it and when we create our original reserves.

Matt, if you or Scott or anybody wants to talk about our credit reserves and our experiences --

I'll just jump in.

In Las Vegas, we're over -- approximately 45% reserved, in Macau over 60%.

So much higher than I think what is normally considered industry standard.

And if we have a problem, it's that our auditors are saying, now, just a minute boys, don't be trying to create savings accounts.

We know you're collecting this money.

Well, we don't create savings accounts.

That's not permitted by law.

But what we do make sure is that we don't have special charges.

You see that in every one of these other companies.

I don't know whether it's because they want to have fancy quarterly earnings when they don't really have fancy quarterly earnings, but I find that subject to be a bore.

We reserve appropriately, and in my entire career I've never add special assessment because of a bad credit decision.

And we don't have any now.

Great.

And my final question, Steve, if you just could talk about how you're viewing your Philadelphia opportunity, how that property would be positioned, amenities, hotel rooms, maybe how you're thinking about project scope, CapEx, any kind of details on that.

I know it may be early, but anything could share with that would be great.

It is early, but I've spent the last several weeks working almost eight, nine hours a day on the program with my partner, Derider Butler who designed all these hotels with me.

We do our work in-house.

I'm happy to say that we're feeling very good about our opportunity in Philadelphia.

It's not going to be a hotel, it's going to be the cutest casino that you've ever seen.

It's not going to look like slots in a box.

It's going to have a very definite Wynn signature presentation.

It's going to be extraordinarily and very innovatively user friendly, and it's going to have all the bells and whistles that a good-looking fun casino restaurant complex with slot machines and table games and other forms of fun should have.

And I think that's provocative and self-serving enough for the moment.

Great, thank you very much.

No hotel rooms, Joe.

Your next question comes from the line of Chris Woronka with Deutsche Bank.

Hey, good afternoon.

Maybe you can talk a little bit about strategy in Las Vegas.

If the theory's correct and it's a very slow recovery, how do you look at trying to remix that business bringing back the higher end customer with room rates where they are right now?

Good question.

Good question.

Really to the heart of the matter.

If we have a rather cold-blooded look at the near future, the question is, what do you do then?

And once again, here is the oldest story in the book when it comes to our Company.

Capital structure is your salvation.

It's capital structure that allows you to hold your head in a down market.

I don't -- I am not forced with my colleagues to juggle my employees or to juggle my customer service levels.

There's nothing left to do in my industry except do the basics better.

And doing the basics better is what we're all about right now, as we tend to our flock in a market that's sort of rough.

So we're building a $67 million beach club and a new nightclub to add to our existing nightclubs called Surrender, and we're improving Switch, our restaurant, that will all be integrated into the Encore Beach Club.

And it's going to open up on May 21..

What have we got, 90 days to go?

Right on schedule.

And the Encore Beach Club will be, just as our nightclubs, Excess and Trist, have dominated the market.

The Encore Beach Club will take this very profitable sector of the market, the alcoholic beverage, recreational tumult that goes along with nightclubs, and the margins are fabulous.

We have 65% profit margins in these departments, better than blackjack in many respects.

The Encore Beach Club will take the nighttime mentality into the daytime.

We've got this gorgeous two-level cabana club that will anchor the north end of our property and liven up this end of the strip.

You can walk from the cabana out onto a French balcony and look over the strip, or on the inside, the cabanas look down on th pool area, which is integrated with the new nightclub Surrender, and our restaurant Switch, which will now have a beautiful terrace dining area.

This whole complex which is on the strip side of Encore where we originally built a porte-cochere.

Unfortunately, the hotels that were supposed to be built across the street from us at the Frontier site and at th Stardust site have been aborted, and we perceive that they will be he aborted for the near and distant future.

I don't see anything happening with the Echelon Place project in the near future, nor do I see anything happening or the Frontier project.

So having a fancy porte-cochere which we unfortunately built for Encore was worthless.

Now, another company would have to live with that.

But because we have such a strong financial statement and because we have the working capital that's necessary to keep us competitive, we take off that unused porte-cochere and we put something on that it will generate profits in 90 days.

And that puts more pressure on our competition, more pressure on every level of our competition.

We're about to refurbish our rooms in Wynn because they're five years old.

It puts more pressure on our competition because our service levels and the targeted attractiveness of our facilities gets more and more effective.

Nothing left to do but the basics better.

And that's the story of Wynn Resorts in Las Vegas.

Okay, very good.

Thank you.

Your next question comes from the line of Steven Kent with Goldman Sachs.

Good afternoon.

Just two questions.

First on Philadelphia, to Joe's question earlier, could you just give us a little bit more detail?

Because I think one of our fears about you going into a market like Pennsylvania is that on the one hand, you want to give a very Wynn experience, a great experience, a great property.

On the other hand, it does have a higher tax rate, and it's hard to see how could you get a return that you historically have been comfortable with.

So how do you balance putting your name on something that might not have sort of the same appeal?

And I guess when I look over my history of looking at the industry, there have been times where people have entered Detroit or Pennsylvania or Mississippi where they have over spent and -- how do you balance that or what constrains you?

Then the second thing is, because Steve, you just mentioned that you could put a lot of pressure on your competition, which I agree you could.

Can you talk about Vegas pricing?

You're certainly the leader here on pricing.

You could stay at these rates and put pressure on the rest of the strip.

At the same time, again, given what is a superior experience, if you discount for too long, don't you teach your customers that they can get a great experience for half off, or whatever the pricing is right now?

Let me take the second part of the question first, because it's fresh in my mind.

The danger that you describe is real.

If rates stay down in Las Vegas, how long do rates stay down in Las Vegas before they become the norm?

You ask me that question, and I say to you, I don't know.

But what should I do?

Have empty rooms?

Steve, can you hear me all right, Steve?

I can hear you.

You make a very valid point.

But there you are.

Revenue has gone up by 3% and capacity has gone up by over 6%, thanks to our friends down the street.

Those buildings were conceived in a different time, but they exist.

So does Encore.

So we make the best of it.

I'll tell you one thing, you better (expletive) well have a strong balance sheet if you want to play on this strip.

And we've got one.

I think our cash is equal to our debt, and we don't have any current maturities.

We have long maturities, low interest rates.

We're protected for stormy weather.

And this is -- again, I said this before, if you don't understand the capital structures, the backbone of your marketing, then you need to go back to business school.

We understand that here.

We don't need to learn that lesson anew.

Now let's go back to Philadelphia, if we can, Steve.

Sure.

I'm building 3,000 slot machines and a bunch of table games and a poker room, Italian restaurant, a steak house, an Asian restaurant, because I'm two blocks from a Vietnamese neighborhood, I'm five blocks from Society Hill.

I'm in a town with seven universities, I'm about four blocks from the Walt Whitman bridge.

My 14 or 15 acres is on the Delaware River -- incidentally, Steve, almost to the foot the same size as my property in Macau.

Two blocks away or four blocks away is the Walt Whitman bridge.

On the other side of the bridge is Cherry Hill, New Jersey, all full of good old -- my old friends, Italians and Jews and every conceivable stripe of ethnic group that love to shoot crap and gamble.

And they're 10 minutes away in their cars, or on a bus from my casino on the Delaware River.

I love the proximity to these people.

I love the proximity to the Vietnamese neighborhood, and I'm going to put in a beautiful Vietnamese restaurant for them.

I'm going to build a very pretty place with my -- with the help of my Wynn design and development team that is perfectly responsive just to that market and not a bit more over the top than that.

That but it will look like a -- it won't be a slots in a box.

I spent some time this past week with a very good friend of mine, Bob Meukian, who has -- it's called Philadelphia Downs.

Parks Casino now.

Now Parks Casino.

And Bob was sharing the results of that casino with me.

And I assure you sir, that that is in the a below-average return on investment.

It is a wonderful return on investment, because of the low cost of marketing.

Listen, no gulf stream jets.

No helicopters.

No nothing.

And the table games and the slot wins are allowing because of the limited amount of machines in the market for returns that are handsome, much better that we get in Las Vegas at the present moment.

So I'm not concerned about over shooting the mark.

I think we can build a lovely single-level -- what appears to be a single level on the outside.

You put the valet parking and the employee parking on grade, then you lift the casino by 12 or 14 feet, and you drive up to that on the porte-cochere, so it looks like it's on grade, and then you have two or three levels of park on either side of the casino so you can walk right into the casino from the garages.

And we make this a super-friendly place for users.

And they can run in, gamble for three hours and run out, have a great steak or an Italian dinner, or noodles.

Or a slice of pizza.

Or a slice of pizza, and it will be just the right lighting and great colors, all those things, all those little things that have always given us market superiority.

We're going to put them to work for the first time in a straightforward casino, not destination integrated resort which involves all those bells and whistles that are so expensive that you're familiar with in the past.

So don't misunderstand the assignment that we have or our clear vision of what we have to do.

I don't know if that makes you feel any better.

Are you owning our stock these days?

Unfortunately, as a sell side analyst, I can't, but I am looking forward to the casino opening up.

We're going to do it real quick, because it's not a high-rise hotel.

We're going get out of the blocks as quickly as quickly as we can.

I'm testifying -- We have some conditions that have to be met, but I'm testifying next Wednesday in Harrisburg.

Great.

I'm ready for the next question, and the boys are sitting here and the ladies.

Your next question comes from the line of Carmen McKnight with Buckingham Research.

Hi, guys, it's Cameron McKnight of Buckingham.

How are you?

Hi.

Are you a sell or buy side guy?

I'm a sell side guy.

Okay.

Just a couple questions if I may, Steve.

Could you comment on general conditions in China at the moment?

There are a lot of analysts who have been writing about a VIP bubble in real estate prices having hit a peak.

What are your thoughts, and how are you thinking the about macro environment in Macau now?

Ian, I know you're up.

What do you think about that question?

Ian Coughlan, the CEO of Macau is on the call.

I'd love to have you hear from him.

I think in the three-and-a-half years I've been in Macau, there's constant stories percolating about restrained activity, liquidity issues, visa restrictions, and the market continues to grow.

When I look ahead over the next 12 months, we've had a very good start to the year, and Encore is the only casino property opening in Macau in 2010.

So we have a pretty optimistic view ahead.

What happens in China is hard to predict at times, but looking ahead, we believe strongly in Macau and we feel we're going to have a good year.

If the first two months of this year were any better, I'd be suspicious.

If we go straight ahead where we have been, and incidentally, we're not holding high.

We're holding low, is that right, John?

Yes.

What are we holding the first two months?

The first two months --

Listen to this.

I'm going to make a forward-looking statement.

I'm going to give you a look at the first quarter.

We caught up.

283.

Okay.

We're at 2.8.

But Steve, you know what?

And our earnings are up an enormous amount, and I'm just delighted.

Our franchise in Macau is real.

Our customers know and expect us to be consistent, and we do not disappoint them.

Steve, what I don't think everyone understands is -- it's Marc Schorr speaking, that 48% of our EBITDA dollars comes from general casino and slots alone, not just VIP.

That's right, but our general casino customer is different than the other general casino customer by a lot.

By a lot.

And I like to say that three times.

By a lot.

We build a better mouse trap, so to speak, we build a facility more user friendly.

And there's nothing left in our business but to do the basics better.

People come to a casino with a very specific and clear-cut goal in mind.

They want to sit down, enjoy the excitement of gambling, have something good to eat and be well served.

That sounds very simple, except that's not usually what happens.

They want to be able to see the cards.

The lighting has to be right.

They want an environment that's emotionally pleasing to them, which has to do with colors and all kinds of minute details that take years and years and year of experience to learn about.

And we've got years and years and years of experience that we've learned about.

It's unfortunately not the kind of a thing that you can pick up in three weeks with a big bank roll and a bombastic wave of your arm.

Nobody becomes master of the universe in this business just because they say they are.

Bigger ain't better.

Better's better.

Next question.

Your next question comes from the line of Dennis Farrell with Wells Fargo Securities.

Good afternoon, guys.

I have two quick questions.

Are you a buy side guy?

I am a sell side high-yield analyst.

Okay.

First question is, do you plan on financing Philadelphia through an unrestricted subsidiary of Wynn resorts or through the Wynn Las Vegas level?

And second, in terms of strategy, as you look forward, as you're -- obviously this is your big foray back into the regional markets.

Do you potentially see looking at other greenfield opportunities throughout the US to drive demand to Vegas or maybe other acquisitions?

On the financing side, it would be through unrestricted subsidiary, project finance, similar to what we've done.

Not at the Wynn Las Vegas level.

And the second part of your question, the answer is yes.

I think that we really know that region.

We don't -- I don't want to use too self-serving a term, but I will.

We dominated the Atlantic City market for the seven years we were there, regardless of the fact that we were the smallest casino.

Not one single quarter did we not make more money than the other guys, in spite of how many places opened.

We love the south Jersey market, we like the Philadelphia market.

And Atlantic was a difficult place for us for a number of reasons.

Unfortunately, it had to do with the local planning and environmental sort of community leadership.

We think that this location on the Delaware River next to Society Hill and the Walt Whitman bridge is a dandy.

We like it a lot.

We like being so close to the customers that we served when we were in Atlantic City in the early and mid '80s.

I am very happy about that, and I think Marc looked at it the other day.

In our current customer base, we had 107,000 rated players in the neighborhood within 60 minutes of that casino.

We know those people, we know what they like.

And it will also provide some benefit to us here in Las Vegas, because we can offer them a chance to come here, because we have a more intimate relationship with them.

And if another regional opportunity presents itself that we understand, we will jump on it, because we've got the capital and the experience to do so.

Thank you.

Your next question comes from the line of David M.

Katz with Oppenheimer.

Afternoon.

Can you hear me?

Good afternoon.

Hi.

Sorry about that.

You used -- Steve, in your opening comments, you used the word mature, or maturing, relative to the Macau market.

And I wanted to try and place that in some kind of a relative basis, because early on, or at earlier stages, we may have seen growth rates that are 30%, 40%, 50%, and perhaps now by maturing, and I don't want to put words your mouth, you may mean something more in the teens, which if we put that perhaps in a US market, it would seem robust, and I just wanted to get a sense for that you meant by that.

I'm sorry, I didn't mean it that way.

I was talking about it maturing in sense of the facilities that were available, the choices.

One of the reasons that Las Vegas has been so successful for so many years is the public has had a wonderful menu of choices.

Not one hotel, but several that were all different and had a variety of options available to tourists.

Macau was very limited when it was a monopoly.

And then as the years have gone by, since the opening of the Sands and then ourselves and people from Melbourne, and then this past year, the Four Seasons opened, the Sands people opened the Four Seasons and the Melco people opened the City of Dreams.

That's what I meant by maturity.

And then here we come with this sexy little thing called Encore.

These are wonderful choices.

I notice that the business for Chinese New Year was a little softer, even though Baccarat was good last year.

And I think one of the reasons is that business exploded for Chinese New Year in Macau, and I think it's because now the choices in China are so wonderful who live in south China, they can go to Macau, they don't have to travel all the way to Las Vegas.

Now again, we had a very big Baccarat year last year in Las Vegas, in spite of everything else.

But I'm convinced that the choices that are presenting themselves to people in Asia, just as the government intended -- the reason they broke the monopoly and added a couple more concessions was so that Macau would become more attractive to a broader range of people, and that's exactly what's happening.

And that's the kind of maturity I was talking the about.

As far as growth rate, Macau was jumping this year.

What's happened is growth rate is keeping up with the expansion.

The more places are resulting in more business by a lot.

That's what we're seeing, at least this first quarter.

So if I may follow that up, it sounds like you're not terribly concerned about demand, but really access and infrastructure to support increasing supply.

Very well put.

That's exactly what -- my feeling.

Very good, thank you much.

Yes, sir.

Next.

Your next question comes from the line of [Larry Klackskin] with Chet Delaine.

Hey Steve, I guess when you come to Philly you're going say Steve's back?

I don't think the people will remember me.

It's been 23 years since I left.

I remember your commercials with Frank Sinatra.

They were pretty extraordinary.

They're part of the archives.

Maybe you bring them back.

That would be a (expletive) of a trick.

If I could bring Frank Sinatra back, I don't have to worry about slot machines any more.

(laughter)

Philly spend, do you have a round figure that you may be spending there?

Really, Larry, we just thought --

Nice try, Larry.

Thought would be worth it.

The blood just drained out of his face.

No, but it's not going to be an earth shaking number, Larry.

I told you what we're building.

Yes, no, it's -- you're right on that.

How about --

It's a three-story building, it's a three-story structure, including parking.

Would you still look to us United States if Japan or something with happen in the future?

In an instantaneous heart beat.

Listen, we're more of a Chinese company than American company today as we're having this call.

I love it.

Thank God for being outside the United States today.

There isn't an executive in the world that isn't thrilled about being outside the United States today.

What are we supposed to do, draw great hope and satisfaction from the behavior of the senate and the house of representatives?

Iff that isn't enough to give you heartburn,, I don't know what it is.

(laughter) I'm not going to argue there.

I don't think anybody in America is arguing.

There's a furiousness in the country about the irresponsibility.

$100 million a month we're supposed to borrow?

$100 billion a month we're supposed to borrow for the next five or six years?

Why, it's totally unstainable.

It's lunacy.

I remember the nexus to Toqueville, I think it was around 1909, the great political philosopher from France wrote, "The American system of democracy will thrive until that moment when the politicians discover they can bribe the electric with their own money".

And those (expletive) fools have done it.

Is you're not hearing any argument here.

A question on Vegas.

Did the beach club cost you guys any money from disruption, or is it , or it's not a major effect?

And would have any effect until it

I'm sorry, no no, we didn't have disruption.

We were able to build from the the outside, Larry.

Okay, perfect.

Thanks guys.

And it's come along great, it's on budget, on time.

We're going to open it up on May 21.

It will be open for Memorial Day, cookin'.

Excellent, well, good luck with that.

Thanks, guys.

.

Your next question comes from the line of Dennis Forst with Keybanc.

Hey, good afternoon.

Wanted to ask Matt about the management -- I'm sorry, the minority interest in Macau.

Can you give us an idea of how that number is calculated?

Just walk us through the mathenations, Matt?

Sure.

They play at 27.7% of Macau net income.

So not EBITDA, but net income.

Right.

So that's what's attributed to the minority -- to the stake that we sold.

You'll see net income is 100%, and then we have to back that number out.

So if we take that three-month operating income number of $89 million, and then adjust that, what, 27 --

Dennis, you'll be able to get to the calculations once we announce our Wynn Macau earnings later this month.

You will see it quite clearly.

Okay, you will release those in the United States also, or we will get those through the Hong Kong SEC?

They will be publicly available on the internet and on our website.

We'll be filing the with the Hong Kong SEC.

Okay, good.

Thank you.

Next question.

Your next question comes from the line of Robin Farley with UBS.

Hello, Robin.

Great, hi, thanks.

I wonder if you can talk a little bit about timing of Cotai, just given the growth in that market balanced against the restart of a couple of other projects.

Is your design process at this point, is that the real timing issue, or other capacity in that market?

I guess if you could share your thought process with us.

We're very keen about our Cotai project.

We think it conceivably could be the most beautiful hotel in the world after Encore, which opens up this year.

And we can't think of a better place to build it, all things considered, namely the work force end of government policies.

We are constrained by the political process itself of getting the entitlements and the details done through planning and public works in Macau.

We're full tilt at that, and our own planning process, it's an ambitious project.

It will involve a couple of billion dollars.

But it's not 4,000 or 5,000 rooms or anything like that.

It's one hotel on the property and it has some very novel and new ideas.

And so we're taking our time with the design, Robin, because we design the hotel first, then we build it.

We raise our money before we break ground so that when we do start to build it, we have all of our money together.

Now I know these are sort of old fashioned concepts.

Design the hotel before you build it and have the money before you start.

But we're in the process of doing all that, and I think it's going to take another several months before we can answer specific questions that you're asking me today.

Okay, great.

I guess one other question about Las Vegas, and I know you definitely made a very clear point about how you -- the economy impacting things, but I wonder to the degree that grew business on the books you have a little more visibility on -- than (inaudible) Is there a point, is it too early to say that maybe 2011 would be better?

In other words, how your 2011 bookings are versus 2010 or just any comments on volume of bookings or rate of bookings for 2010 or 2011, just to get a sense of whether you see that change at all.

If you're talking about strictly convention bookings, you can say that 2010 is better than '09.

And you can say you see trend of increased bookings.

It is totally irresponsible and naive to say based upon this life trend, we project this infinitely into the future and give you some rosy baloney story about what's going to happen in 20'11.

I am warning my investors that may be on the call, to the extent that you hear any of that from our competitors, beware.

There are more questions afoot in this market, in America, that will impact 2011 that I have hair on my head, I'm happy to say, and I still have a full head of hair.

No, you will not get any of that us.

I don't see it.

I have more questions that answers, I have more pessimism that I had before, and it's based upon the political environment in which we are living today.

And it definitely is impacting Las Vegas.

The President of the United States hasn't missed one single opportunity to squelch Las Vegas.

In our particular case, it's cost us millions of dollars from companies affected by the President's remarks that have no connection whatsoeer to federal bailouts.

But we get phone calls, and I'm not going to mention the names of the companies, from chairman who say we don't want to appear to be profligate because Barack Obama said this or that about Las Vegas.

But it's had an effect on us.

The hospitality industry in the United States of America as a whole has suffered disproportionately during this recession.

Maybe automobile workers got a break.

But all of the hundreds and hundreds of thousands of people that work in hotels, restaurants and bars in the United States of America have been totally and completely overlooked in this aborted rescue attempt that has squandered billions of dollars in the United States.

And I'm being very harsh about it, and I've got the data to back it up, and so is everybody else in the hospitality industry.

Job formation and kinds of companies that make jobs are under attack in the United States of America.

MGM aside for a moment, in last year we created almost 5,000 jobs and immediately became the target of the administration.

Businesses that created jobs, let alone gaming companies that created jobs had to be no good.

It is preposterous that businesses are under attack in the United States of America.

Anybody that makes over $250,000 in the form of a personal income tax return is now, by Washington definition, a rich person, when everybody who has got a college degree knows that the personal income tax rate in the United States of America is the business tax of America.

Every subchapter S, every individual proprietorship and every partnership in the United States of America files tax returns as individuals.

And when they do, and they show that they made $2 million or $3 million or God forbit $4 million, they pay the income tax rate, they deduct their working expenses, their living expenses, and then they invest in a new sore, a new shop, and most of the time, 25% of their "profits" are tied up in accounts receivable or inventory.

But all of a sudden, all of those people who make over $250,000 are rich folks to be fleeced.

And if that's job formation stimulation in America, I'm Mary Poppins.

And if I sound angry about it and disgusted, I am disgusted and angry at the apparent ignorance of the administration and the congress to recognize the fact that the individual tax rate in the United States of America is, in fact, the business tax of America.

And if you keep banging on that, you will you destroy the incentive for job formation in the United States of America.

And that's simple truth.

Simple truth.

And whether politicians like it or don't like it means nothing to he me.

And that's why I'm pessimistic about Las Vegas, because those are our customers!

Those people out there hustling their businesses and God forbid, showing they made a million dollars as partnership or as an individual, yes, they're the enemy now, they're the rich folks.

Well, until we get over this, America is in for hard times.

Because what's going to happen is, the people that are going to suffer from what's going on are the working class of America.

My 15 to 20,000 employees, they're the ones that are in trouble.

The reason they're in trouble is this demolition of the dollar is going to reduce the buying power of the working class of America assure as (expletive) as if we gave them a salary cut of 25%.

And that's another thing.

It doesn't seem to be clear to the brilliant people in Washington, DC.

They are not just our customers, they are my employees.

And until my employees get the drift of what's being done to them, America is in trouble.

Next question.

Thanks for the color.

Your next question comes from the line of David Bain with Sterne Agee.

Most of my questions have been answered, but back to Pennsylvania quickly.

In terms of a return, outside of a return on capital, and I understand the synergies that go with it, you mentioned you spend eight to nine hours a day on it.

Is it a type of return that's worthwhile in terms of not detracting -- I guess one of the concerns could be that could detract from larger projects with a bigger influence on a forecast?

Are you talking about a larger project in America?

No, pretty much worldwide.

Well, we don't have any trouble raising capital worldwide.

We financed China 100% with Asian financing.

He's talking about you personal time.

Oh, my time.

I'm sorry, I didn't understand.

Well, I'm happy to say this organization is a lot deeper than just me.

I'm just one shooting my mouth off today.

And if you're politically sensitive, you're probably cringing at my criticism of the government.

I'm fine.

It's become a factor in our life everyday on the job here.

As far as my time is concerned, I don't think that Philadelphia, if that's what we're talking about, is detractive.

I think that's a constructive use of my time.

And I will certainly have time, when and if opportunities -- I mean, I work on Philadelphia and I work on Cotai.

That's basically what I do now, along with everything else that goes along with being a CEO of the parent company, but we find that very comfortable.

Okay.

Our capacity.

Okay, and then if you take a view on Cotai, with regard to Galaxy sites five and six, a lot of supply.

And I know that you're essential viewing is Macau, at least it sounds like, as supply driven.

But from a broad strategy point of view, is Cotai where you really begin to go after the mass player, and the peninsula will become even more focused on VIP?

It will change your strategy for Wynn Macau or Wynn Encore?

I love the idea that they're going start five and six because it's Sheraton, they're lower end products, and that's lots of folks, and then they -- Sheldon built all those ferry boats.

I think that's great, too.

And he was subsidizing everybody else on Cotai by those ferry boats, and it's also worked out well for him.

That's all great stuff.

It all happened, and what I'm looking forward to is opening the nicest place in that neighborhood and skimming off the top end of the business, just like we did downtown in Las Vegas on the strip, in Atlantic City and we're doing now in Macau.

That's our shtick.

We do that.

That we love overdeveloped markets.

It's where we thrive.

Okay, great.

Thank you.

Your next question comes from the line of [Kenneth Hong] with Nomura.

Hi, good afternoon, guys.

I am a sell side analyst covering Wynn Macau in Hong Kong.

So one question on Singapore competition.

There's been marketing concern that Singapore is going after the direct VIP market which Wynn Macau is very strong about.

So what's your take on that, and do you see any threat potentially going forward?

And also, what is the percentage of a VIP customer actually coming from southeast Asia?

Okay, first of all, your question is well put.

If I can rephrase it, if Singapore is designed to take the top end customer away from us, four hours away in a jet, the equivalent of New York to LA.

are we worried?

Now, this hotel in Singapore is going to be beautiful, I hope.

I suspect that it it will be.

It's going to open up in April, the one that the Venetian folks have built.

Now, right down the street for 25 minutes from our hotel in Macau, this same company built the Four Seasons designed, by their own public announcement, to take our business away.

People didn't to have travel four hours on a jet.

They decided to do it right down the street.

And they weren't able to do it.

So I hardly can be concerned about a threat four hours by jet away from me if I wasn't concerned about one that was four miles away from me on Cotai.

Does that answer your question?

How about from the southeast Asia customer perspective, though?

It's less than 5%.

Of the overall VIP?

Yes.

Our customers are from China, and Singapore is further away.

They did a clever thing with the taxation in Singapore.

I think that Singapore will develop its own market closer to itself in a very organic and well considered way.

But to think of the two casinos in Macau and Singapore as a direct threat to Macau I think is to misunderstand the Singapore market.

I am not -- I am very optimistic about that Singapore market, don't misunderstand me.

But I think the Singapore market will be Malaysian.

I think it will be Indonesian, I think it would be that sort of thing, and Thailand and even Brunei, those places that are close, within an hour or two.

That's how it works for Macau and that's how it will work for Singapore.

You can count the amount of people within the range that I've just described, and you can take a look at their ethnicity.

There's a big Muslim population in that part of the world.

And you can consider what the size of that market will be.

But I don't think -- don't look at Singapore versus Macau in terms of taking customers away.

I think will you miss the boat on that one.

Thank you very much.

Your next question comes from the line of [Charles Cokely] with Stifel Nicolaus.

I'm glad to be on the call.

I'm neither a sell side or a buy side analyst.

I'm stock jockey and a fan of yours for quite awhile.

And a personal stockholder.

Okay.

That being said --

That's new.

Well, I've listened to your calls forever, and I think it's the most enjoyable call I get to listen to on a quarterly basis.

That being said, looking backwards at that the Encore, the hopes that you had in the beginning, of course the rug was pulled out under all of us with the political climate and what happened to the economy.

Is it what you thought it would be, and is it helping Wynn and how do you feel long term about the strength of the twins next to each other?

Good question.

No, it's not what I thought it would be.

I thought that it would add at least $200 million or $250 million of EBITDA to our bottom line, and nothing remotely like that has happened.

Of course, it was conceived in a market that was entirely different today, as you've just pointed out.

It is a beautiful thing that cost $2.3 billion.

Now, we made a certain amount of money last year in Las Vegas.

That money, we made more money than that without Encore, let alone with it.

So now you have to ask yourself a question.

If we had had no Encore, if we didn't have those other 2,000-odd rooms, would we have made even less?

Or would we just be better off because we would have had $2.3 billion in cash more than we do now?

I would love to have the ability to reconsider that decision at that time moment, but I don't.

I know this.

That there's a wonderful powerful synergy that we're seeing in people that stay at Encore and love it and come back.

They're not paying enough for the rooms to suit me and to suit our pro forma, but neither is that happening anywhere else in America that I know of, or in Europe.

So would I build Encore if I had to do it today?

No, I'd keep my money.

Fortunately we had enough money that we don't sweat it.

We have planned that businesses can -- business cycles go up, business cycles go down.

Any sophisticated company plans and has built into its capital structure an ability to survive such predictable events.

So when Encore opened, we were ready.

But I don't know when Encore's power will kick into -- at full tilt.

I know that when the beach club opens up in a few months, that we're going to have a lot more people in Encore than we do now, especially on that side, on the strip side of the property, and that those tables and those slot machines are going to be much more fully utilized, and there's going to be a big profit margin in the beach club and in the Surrender night club and in the Switch restaurant.

And a lot more excitement on the north end of the strip because of the facades and the structure itself that anchor our land holdings here on the strip, so I'm very happy about what what we've added to Encore.

But as far as the rooms and what they're doing for us, we're on hold here.

And as I said before, I think we're on hold for awhile unless the government in Washington gives the world a message that America -- Lee Kwan Eu, speaking of Singapore, was in the United States and went to visit the President of the United States.

Before -- the day before he went to visit the President, he was on television on Charlie Rose's show.

And Charlie Rose asked this brilliant, most elder statesman in the world, the man who founded Singapore, he asked Lee Kwan Eu, "What about America and what advice would you give the President of the United States?" And this sage, Mount Rushmore caliber man said on television, on PBS, and I'm sure he repeated it in the White House, but I wasn't there, of course, he said, "Unless the government and the administration can learn to control government expenditures, they're wildly out of control.

The value of the dollar will be decimated and destroyed to the detriment of the people of the world -- and the United States and the world".

That's what he said.

And until he we have he a signal that such discipline and common sense has he regained its footing, I don't know how to answer the kinds of questions that you're asking.

And I don't think any other businessman does, either.

He sounds like Thomas Jefferson if you do a little reading.

Last comment, personal.

I had the most memorable dinner of my life, and let me add also most expensive, at Bartalata's with my entire family.

And that's the type of memories, that why you go back to Wynn and Encore.

I wish you wouldn't have mentioned the price.

Worth every dime.

Thank you, Steve.

Thank you, sir.

Nice to talk to a stockholder.

At this time we have reached the allotted time for questions.

I would like to turn the call back over to management for closing remarks.

Ian in Macau, would you like to add anything?

We're just looking forward to great year ahead.

Andrew for Las Vegas?

You've been very quiet.

I've sort of stolen your -- do you want to comment on the end?

I think you covered it, it all gets down to doing basics better.

The basics better.

Matt?

Marc?

Everything's said.

John?

Well said.

I think we've given you our story, and I'm looking forward to the next quarter.

Maybe -- things seem to be coming to a head in Washington.

Maybe we'll have a more optimistic moment as businessmen in America the next time we all get together.

Bye-bye, everyone.

Thank you.

This concludes today's conference call.

You may now disconnect.