Wynn Resorts, Limited (WYNN) Q1 2012 Earnings Report, Transcript and Summary

Good afternoon, and welcome to the Wynn Resorts First Quarter 2012 Earnings Call. Joining the call on behalf of the company today are Steve Wynn; Marc Schorr; John Strzemp; Matt Maddox; Marilyn Spiegel; Scott Peterson; and on the phone, Ian Coughlan, President of Wynn Macau; and Robert Gansmo, CFO of Wynn Macau. [Operator Instructions] Now I would like to turn the call over to Mr. Maddox. Please go ahead, sir.

Thank you, and good afternoon, everyone. Before we get started, I just need to remind everybody we will be making forward-looking statements on this call, and those statements may or may not come true. With that, I'm going to go ahead and turn it over to Steve for some opening remarks.

Hello. We usually try and keep this short. Our business in Macau was fine. We haven't felt any terrible impact from competition. Our hold percentage on a comparative basis was a little lower. I think everybody knows that both in the United States and in Macau we get very high play. And so we experienced volatility probably on a little wider or larger scale than others. Sometimes that volatility works against us in short-term comparisons, and sometimes it works in favor of us. If we were to normalize hold percentage, we would have had another $15 million or $18 million in Macau in EBITDA in this first 90-day period. And if -- and in the United States especially, we experienced a premium hold position. As a matter fact, last year, in the first quarter was the largest hold percentage I ever heard in a legalized casino. It was 31%. So the comparatives -- comparative metrics look strange. But at the end of the day, in our business, short-term comparisons are -- in a volatile kind of casino are not really instructive. At the end of the day, it usually ends up, for us, in a normal range. So with that in mind, that sort of covers the numbers that we published in terms of EBITDA for the first quarter. I think everybody knows that we were finally given the green light on our concession, in the land concession, which will lead to imminent groundbreaking in the next few weeks. I'm finishing my negotiations with 1 of 2 major builders that can do the job in China. It's a very big job, so I'm taking my time in the final negotiations of the building contract because there's a chance to be a good shopper, so to speak. There's no new news on Okada legislation, or Okada legal issues, that we have to report. And I think this probably generally covers what I think is important today, and we can move on now to questions.

[Operator Instructions] Your first question comes from the line of Joe Greff. Joseph Greff - JP Morgan Chase & Co, Research Division: Steve, congratulations on Cotai. I know it's something we've been waiting for with bated breath for a while. It's nice to see you getting approved. Can you talk about, other than brown -- breaking ground on it, what the other timetables might be with respect to labor? And when do you start to see some acceleration in project capital spend? I know it's not going to be a lot for some time. And then I know you've had previous comments in prior calls about special dividends, but how do you think of about special dividends in the near term given what's going to be some level of spend in Cotai? And then if I can have a part 2 question. We noticed in March that your junket's Rolling Chip turnover on an absolute basis is nicely better than in February or January. Can you talk about what drove that, if that's additional junkets or additional marketing? What drove that? That'd be helpful.

That was a 2-part question, Joe? Joseph Greff - JP Morgan Chase & Co, Research Division: Or maybe a little bit more than 2-part.

Next time, maybe you'll give me a multiple choice, but, a, timetable. I believe that we will be 36 to 42 months -- 3.5 years, 42 to 46 months in that range for this job in Cotai, number one. Number two, with regard to that structure, we have spent 28 intense months. My design partner, DeRuyter Butler, and Roger Thomas and I, I think the 3 of us have probably done more of these than anybody else, but this is the work of our lifetime, 28 months every week to try and make this hotel in Cotai show the public in Asia and around the world something new. And I -- hopefully, we've achieved that. We've certainly taken enough time and drawn on every spec and every drop of experience that we've had. We've had the benefit of watching our competitors upgrade and improve their designs and presentations to the benefit of Macau, the Venetians, work at Four Seasons and at the Venetian. Certainly, the Galaxy group and the fellows at Melco have all gone to their strong game, and we've had the benefit of seeing all that, coupling it with our own experience and creative resources, and we're going to respond in a very strong way with these 2,000 rooms that we're building on the Cotai land. The property, as you know, is a landfill. So is Wynn in Macau was also -- Wynn Encore was also on a landfill. And we went down for foundations through 60 meters of landfill to get to rock to anchor our current buildings. This time, we're going to go down, in the high-rise portion at least, at the shallowest point of 78 meters and at the deepest point, 92 meters, with caissons that are 3 meters across, 10 feet. It has a lot of deep holes, a lot of concrete and reinforced steel bars. So drying out this land, which was going to drop at 1 meter or 2 in certain parts because it's wet in some places, and getting ready for pilings is going to take us several months. The foundation is the most challenging part of this job. Once we get to driving piles and we get up to grade, the building goes very quickly because it's poured in place concrete and every floor is the same. Even though the podium is very creative and unique and everything in it is unique, getting out of the ground is a trick. After that, it's pretty straightforward and simple, and we take advantage of a lot of economies and speed in China that are really not available in America. It is also true that there's a lot going on in South China, in Macau and Hong Kong in the form of public works and competitive construction. It's a lively part of the world, and there's great things going on. And so labor is an issue. The government is cooperating. They -- the way it works in Macau is the government is thoughtful, and they take thoughtful direction from the central government, I believe, if they think they need it. But the way it works there is that things take a certain amount of time. And then at the end of the period that has just concluded last week, when we got our land concession, the government makes a decision that this project shall now go forward. And when they decide that it shall go forward, then they're cooperative and helpful. That has been our experience exclusively through 2 major construction jobs. And I am confident that, that will be our experience again. If the government doesn't want you to build a building, then they don't give you the concession. When they give you the land concession, that means it's time to go, do a good job and get on with it. And that's what we're about to do. So those are my comments about the Cotai project at the eve of its groundbreaking. And we're going to be going lickety-split to get it done as quick as possible. If along the way we have opportunities to accelerate and foreshorten these periods -- I've been giving you the worst case, and we will. But right now, it looks that way to me. And I'm not yet ready for a final budget on the building we're working on that now, and we'll have that probably by the next quarter that we have one of these phone calls. Joe, you asked me, I think, also about our turn.

Yes, he says...

He asked about special dividend and then...

Special dividends, oh. Special dividends are special dividends. You take those issues as you find them at the end of the year, and you measure all the other factors. My board weighs our financial condition at the time and the obligations that we've got under way and more specific schedule of construction. As you pointed out, though, we do have a healthy lead time and a very strong cash flow in China. So we'll discuss special dividends when it seems appropriate to take them under real-life consideration. I don't have any intelligent comments to make other than that today. And was there anything about the third quarter?

Well, I think, Joe...

The third month?

Yes, I don't think there's anything interesting going on between January, February and March in terms of turnover. What we're seeing all the way up until today is volumes are up over last year in Macau on the VIP side. The market's still very robust.

I also think that the customers are coming back to mama. They tried all the other properties, and they're going to play where they feel the most comfortable. And that seems to -- what I'm seeing now.

We have a big -- we had some big days when Sheldon opened up these new hotels. A lot of people came to town because of the excitement associated with the openings.

Those.

And we had a -- we had $30-odd million days.

Monstrous, monstrous.

We had some monstrous days. So a bunch of 20s and 30s. It was pretty good. But everybody in town did good if you look at those weekly numbers they publish. We were having these big, big volumes, and we were just under 13% of the market. So it shows you that it's still pretty healthy there by any measure that we can see.

Your next question comes from the line of Shaun Kelley with Bank of America.

I just wanted to ask about kind of what you're seeing more on the mass flow. You just touched on VIP in Macau. Mass dropped this quarter. It looked like it was only up low single-digit percentages. And in the market in the first quarter, we saw the market continued to kind of pick up on the mass side, so I just wanted to get your sense of market share-wise. I know you have some capacity constraints with the property, but what you're thinking about growth rates on mass was. And then a second one, if I could, would simply be operating expenses in Macau look like they were up a little bit again sequentially this quarter. Wondering if, a, there's anything in that, that would be nonrecurring; or b, just kind of what -- how to think about the run rate going forward.

Sure. So Shaun, I think one thing to think about in the mass casinos is make sure to look at our table games. If you look year-over-year, we transitioned a lot of table games from mass to VIP. And so our table win per unit in the mass floor was up 27% year-over-year. And so what that is, really is, we're just yielding our floor. We've added more VIP tables. And the drop was actually up over 3% year-on-year with -- but win per unit was up 27%. So we're just continuing to see very good volumes on the mass side and also in VIP. So -- I'm sorry, your other question was about operating expenses?

Yes, basically they were up about $10 million sequentially. It may depend a little bit on the day count there. But yes, so just kind of wondering, the second quarter in a row that -- in Macau that it's been a little bit higher. I'm just kind of wondering what -- if there's anything in there. I think last quarter you called out bad debt a little bit.

So Shaun, Shaun, the answer is if you look on the income statement in the press release, you'll see that bad debt expense was up $8 million. And that was all in Macau. It's -- what we said is we had a few large accounts that went past 150 days. We have a very conservative accounting policy. That is 150 days. We're fully reserved. And so we had a few large accounts go over 150 days. Our bad debt provision went up. We're 55% reserved in Macau right now, and our collections in the second quarter have continued to be very stable and normal.

Your next question comes from the line of Carlo Santarelli with Deutsche Bank.

Matt, I think you largely answered my question with your last response. But if we do look at it on a sequential basis and kind of extrapolate the $8 million that you mentioned against the EBITDA line, could you kind of talk about just general cost pressures at Wynn Macau right now? What you're seeing from labor, what you're seeing from maybe other segments on a fixed basis? That might be helpful.

Ian, do you want to take that?

Sure. We, like the rest of the market, gave a general cost-of-living adjustment to our line employees in March. So you would have seen some effect from that. And also, we're coming into our sixth year of operations, so repair and maintenance expenses are on the increase. But there's nothing unusual there.

Do we have no more questions?

Are we still on, Matt? [Technical Difficulty]

There was a question that was asked.

Your next question comes from the line of Felicia.

Felicia, one moment. Before this call was interrupted technically, a question was asked of Ian Coughlan. And I don't know whether the people on the call heard his answer, but let's repeat that question. It was about...

Additional expenses.

Additional expenses and any cost pressures in Macau...

On the labor market.

On the labor market and that sort. Ian's answer was that we gave a cost of living, like everyone else did, earlier this year, and a part of that -- to our line employees. Part of that filtered in. And we're 6 years old, and there may be a little bit more in repairs and replacements, but...

[indiscernible] nothing.

We didn't see anything abnormal or unusual or -- nor are we feeling the same. And in case we didn't hear Ian's answer, I just repeated it. Now, ma'am, your question.

I think we lost her. [Technical Difficulty]

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

Steve, did you hear our last answers? Were you able...

Yes, we -- yes, I did, Steve.

You did?

Yes. Is that...

We're a little mystified now. When the phone goes silent, we're a little confused about what's in and what's out. But we want to make sure we're responsive.

The good news is we got it twice, so we...

Oh, all right. You got it twice. I'm sorry.

We're good. We're good on that one.

Sorry.

Steve, can you just talk about 2 things? One is, occupancy in the Vegas properties seemed a little bit low, and I was just wondering if that's a part of your policy, to try and hold a premium price or hold rate. Or did I miss something on number of rooms out or something like that?

Yes. We are, in fact, trying to hold the price. Our occupancy was -- our cash was okay, but our occupancy was low. And that had to do with a decision that we made and that impacted us in January. Okay, Marilyn, you want to address that.

Sure. So in the quarter, you saw that we grew rate to $255. That's part of the strategy here to continue to push the rate. You could see that in the fourth quarter of '11, we had achieved a $250 ADR. And so the first month in the quarter, we tried to continue to push rate and verify the strength of the market. And so to have a $15 rate improvement in the first quarter, I think, is pretty amazing. And more importantly, with about 24,000 room nights less than last year, to have our non-gaming revenues grow was an indication that we're really focused on having the right people in our building: again people who stay with us, eat with us, see our shows, shop in our stores. And so we continue to try to press the rates.

We had 2 conventions fall out, which hurt us. We had a couple of technical things that happened during the quarter that probably, had they not happened and they weren't associated with our pricing, would have probably taken our occupancy up, I don't know, Marilyn, how many more points?

Probably 2 or 3.

Yes. But we've learned to live with a little less occupancy to get the right people. As the boss said, to get the right people in. We don't -- our -- this place isn't set up for people that go to McDonald's and stay in the rooms. It's just not our clientele.

And Steve, could I just ask you a little bit more? Could you give -- for the new Cotai project, I know you don't want to give an exact number, but could you at least give us just a general round number of what kind of CapEx? And especially if you're breaking ground in a few weeks, you have -- must have some number in mind, maybe similar to what you've stated in the past?

I have a number in mind all right. I thought it was little high, so we worked to value-engineer the property. And we have been able to do that, but I haven't confirmed what the revised number is. And I'd hate like heck to give a number on a conference call like this, have it get circulated and then have to back off it. So I think this would be a really good time for us to wait another 90 days and plant our flag on solid ground. Steve, I really think that's the best thing to do. We're adjusting some things in favor of reduced cost, and I'd like to confirm that we've done it and that they've resulted in the savings we expect. Then I'd like to put a number out there.

Your next question comes from the line of Felicia Hendrix with Barclays.

Let's try this again. Steve, earlier, when you were talking about your Cotai project, you used the word unique. And I was wondering if you could elaborate on that a bit more. Certainly, every property you've built in these markets has been unique. So I was wondering if you could maybe give us a better idea and, importantly, how your property will be differentiated.

Two things come to mind in my response to you. First of all, we've had 6 years now, 6 full years of experience with the Asian customer. We've also had the benefit of watching the learning curve accelerate for our competitors. And they're very bright people, and if they looked at us and like what we were doing in some respects, they picked up on it. In some cases, they had their own ideas that were developed based upon their experience of these guests, and they've incorporated those things. And they've lifted the game: the customer sensitivity, the guest experience. They've lifted the game above and beyond of what we would find in the United States, except perhaps in our properties, meaning Bellagio or Wynn, the stuff that we've done. I have to say that they've lifted the game. We've taken that into account, and we said to ourselves, "We have to make this hotel on Cotai, in every sense of the word, irresistible to the guests." Now that's an expensive assignment to undertake. And thank goodness, Macau is probably one of the few places in the world today where one could accept the challenge of creating the best, the most irresistible place, dedicate the amount of capital it takes to do that and have it be an intelligent investment. We take Macau to be such a place. I'm sure that Sheldon Adelson found Singapore to be such a place. Asia is where it pays off. Asia is where it's justified. We have this wonderful piece of property that we've been lucky enough to be given a concession to develop. And so for 28 months, in anticipation of this dynamic, my design partner, DeRuyter Butler, and I, in conjunction with Roger Thomas, we've decided that we would take it to another level. And that, meaning that we would take every aspect of this building, from the point of view of the employees, the hotel guests, the restaurateurs, the tourists on the outside, everything, we would take it to another level and make it delicious. Now at some point here, we're going to have to show everybody exactly what that means. And we'll do it with pictures and words prior to the opening of the hotel while it's under construction. And I think the best time to do it with words is when we have the pictures as well. And we'll probably distribute all that in time for our next conference call and show everybody what we're doing. When I -- when we do, I'll be certain that everything is frozen and completely locked in. And it is really in that position already, but I just don't have all the pictures that I'd want to share with you. But we'll also be showing our competitors what we're going to do. And frankly speaking, I'm not in a real hurry to tip them off. There's -- the MGM people have not announced the project yet, and I don't want to show it to them. I'd really love to see them show their hand first, but it probably won't work that way. They'll probably get a peek at what we're doing.

SJM is in the same position.

SJM is in the same position. And I think that we've -- historically, we've given enough demonstrations to the other guys to last them for a while. And the new stuff, I'd like them to wait and find out. So I'm being a little standoffish about it this time, and I think that's probably a good idea. So I'm not crazy about giving you an idea right now, to be honest. Sorry.

Okay, we'll just have to wait. But actually talking about MGM and SJM actually gets me to my next question because both of them seem optimistic that they're close to obtaining approval. And I'm just wondering, as you think about Cotai of the next 4-or-so years, do you envision seeing lots of cranes? Or do you think the government could stagger new casino construction?

Good question. I know that Galaxy started. They're in Phase 2, and that project is under way. So it's another chunk of development, 1.5 million or 2 million feet, I guess, something like that. SJM and -- is certainly in a position to do something, and they will. And I suspect, based upon what Jim Murren says all the time, they will. I have no reason not to believe him, and I'm sure that one way or another, they'll figure out a way of getting the money together. It's going to be a bit expensive. Again, the price of poker's gone up in China. And based upon what we're building, if anybody has any real, strong ideas about the top end of the market, they're going to have to deal with the new hotel that we're going to build. And dealing with that may be a challenge, and we're lucky to have the site that we have. We're very fortunate to be in that position. But the other guys will do something, sooner or later. When the government gives them the final Gazette publication is something that -- is information to which I am not privy. And speaking of someone who's involved in this kind of processes, the government does it when the government's ready to do it. And there are steps in that. They have land contracts, then they have deposits, then they have the Gazette. And there's a sequence that takes place historically, at least in Macau. And maybe you can ask the people at those hotels or those companies where they are in the sequence. I don't know the answer to the question.

It took us 7 months from the deposit to the...

It took 7 months...

From the time of the contract...

From a contract through deposit to Gazette publication. So there's a piece of information for you. Does that mean it's 7 months for everybody? Not necessarily. That's up to the government. But just to give you a little indication of how that's worked in the past. And I think those kinds of time frames have been historically consistent, from what I'm told. But again, these are things that are strictly under the control of the government. And maybe those companies themselves have a clearer idea, if they answer honestly and candidly. In many cases, the government prefers that applicants for land concessions not publicize or preempt the government's decision making process, and publicity is restricted and statements are restricted until the government has made its decision. The decision occurs when the Gazette is published. Prior to the Gazette publication, you do not have a concession in Macau. Prior to the publication of a Gazette, you do not have the land concession under any legal interpretation that the government recognizes. And that's important to keep in mind.

And then, Matt, just quickly. I know that you guys aren't going to discuss how much the project costs right now, which is understandable. But if we think about how you'll finance it, should we just assume a 25% to 35% equity piece? Or is that not in the ballpark?

It's probably -- we're always conservative, so it'll be between 25% to 40% in equity and the rest will be financing that we'll start working on this year. We're only 2x levered right now on a net basis, so we're in a great position to put in a good financing package down at Cotai to make sure we have a lot of flexibility.

Your next question comes from the line of Bill Lerner with Union Gaming Group.

Steve, a question just back to Cotai for a second. When you -- obviously, the market has more and more strata as it develops, customer-wise. Who aren't you serving now that you might be able to? Or who's not in the market now, customer-wise, that you've designed the place for?

Well, we certainly radically, dramatically increased our non-casino revenue profile at Cotai, more like the model of Las Vegas where the non-casino revenue really grows. Now I know it's very hard to create any kind of a casino where non-casino revenue compares to casino revenue in the People's Republic of China and Macau. I mean, our gaming revenue last year was $4.7 billion to $4.8 billion. It was interesting that with all the volatility that's associated with our American operation, the gaming board tells me that our $775 million casino win at Wynn Encore last year was the highest win ever recorded in the history of Nevada's licensed gaming operations. The previous record was $724 million, which incidentally happened to be Wynn in '07. So imagine -- and then we do $800 million or more in non-casino revenue, so we get more non-casino revenue than casino revenue. That's not going to happen in Macau for anybody, ever. What will happen, however, is that a percentage of our total revenue will grow much more in Cotai because of the entertainment, the shopping, the food and beverage and the room component. We are having 2,000 rooms that are, for all intents and purposes, all suites. So I think that we deal to everybody. But some of the promotional allowances given by our competitors, and the giveaways, the freebies, attract the lower end of the market more aggressively than we do. And that's okay. It's not our primary business. But as far as everything above the lowest end of the market, we're in there each and every day. We've got bus programs. We run dozens of buses from the...

We have casino promotions to promote the junkets.

We have casino promotions. We have the best group of junket operators. We're very aggressive provided that we're left with a bottom line that makes sense. So I think that we're pretty much going to be going forward the way we are now. Also, I think I probably should add that there's a convention going on that's going to be added to the Cotai property that we'll be able to accommodate a convention component that's much more sizable than anything we've anticipated in the past.

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

I wonder if you could give us any updated thoughts on Japan and what you think the potential timing there could be and likelihood in Japan. And then also, I know in your initial comments about the dispute with Okada you said there was no update to that process. I wonder if you could just convey one thing. I guess is this something that -- an issue that both sides would like to settle or is everybody kind of prepared for this to take the years that a full legal process would take? Or would both parties kind of like to see things settled? Maybe you could just give us any thoughts on that.

Well, Robin, I don't have any idea. I thought I did, but I don't anymore have any idea what Mr. Okada's mental attitude is towards anything. So I've given up on that. We acted, and we have completed our action. We redeemed the shares. We issued the note. And that stands. In our very, very comfortable opinion, it will stand, period. Now Mr. Okada has obviously filed a 100-page, mostly foolish countersuit, very much like the foolishness of the gift to the university. There's nothing we can do about frivolous lawsuits and -- except sit here and respond to them. And we will. We're totally prepared to do that. And we've also instituted our own lawsuit based upon the discoveries we made about Mr. Okada's behavior while he was on the board of the Macau Hotel and as an officer of an American company, Wynn Resorts -- as an officer and a director of an American company, and he was also the President, Treasurer and Secretary of Aruze USA. Mr. Okada comes under a host of legal requirements and laws and statutes, and it'll be his problem to deal with those. And we will prosecute our case for violation of fiduciary duty and conflict of interest until they're resolved. And whether Mr. Okada wants to settle or not, and how he would be able to do that, is a very serious problem and question for him. And naturally, as a company, we don't relish any lawsuits, especially those that we're forced to file as plaintiffs. And we certainly don't like being defendants in any lawsuit, but sometimes corporate governance and probity gave my Board of Directors absolutely no choice based upon the extensive evidence, the irrefutable evidence, that was put before us and on which major law firms, both in Nevada concerning gaming and suitability and corporate governance and the Foreign Corrupt Practices Act kinds of issues, we were given unequivocal legal advice as a board, as an American board, that was tantamount to telling us we had no choice. And so the actions taken were really not optional under any rational interpretation of corporate governance as described by the statutes that govern public companies today, from Sarbanes-Oxley to all the rest, the Securities Act of '33, as amended in '34, which -- and the Foreign Corrupt Practices Act. My Board of Directors had no choice whatsoever, which is why the vote was so unanimous on an issue as inflammatory as doing a redemption. So we did what we had to do in spite of the fact that there would undoubtedly be a countersuit, frivolous or otherwise. And we did it. And it's done. What happens next, your guess is as good as mine. We will prosecute the case here in Nevada for breach of fiduciary duty and conflict of interest with great gusto, armed with a number of facts that are documented and irrefutable. Mr. Okada will have to deal with that in due course. What his response to all of this is, is something I can't predict. Was there anymore? Did I miss a part of the questions?

Just on Japan and potential legalization?

I don't have anything to tell you about Japan. The progress of potential legalization in that country has been staccato at best. And Kim?

Well, there's really nothing new. And it's not moving along any more quickly than it has for a long time.

It isn't rushing forward. There isn't any major development that I can -- that we're aware of. Everybody's sort of kept track of it, of course, but...

Your next question comes from the line of Cameron McKnight with Wells Fargo.

Steve, a quick question on Cotai. When you're sitting down with the contractors that you're talking to, are you aiming for a guaranteed maximum price contract? And are you talking to. . .

Absolutely.

Okay. And are you talking to some of the same folks that you used for the construction of Wynn in Encore?

And others. Leighton and others and a fine firm like Gammon, which is a joint venture with a British company, and Jardine Matheson, old trading company of Hong Kong with a big construction company that builds all over the place in Hong Kong and Macau. Actually, Gammon built The Venetian. So we -- we're dealing with more than one builder.

And when you, Ian and Linda are speaking to customers in China, what's the body language? What's the -- what are you hearing and seeing from them?

Good question. Our customers seem to be sanguine. And -- but they're poker players. If they have felt any differently, I'm not sure they would share it with us. But they seem to be enjoying their disposable income with the same kind of enthusiasm that they have in the past, if that's the right way of expressing this.

Our retail numbers...

Our retail numbers. Dig this. We have 52,000 square feet of retail in that hotel. It's going to 60,000. It's in the process of going to 60,000, but we have 52,000 at year end. We did over $1 billion in sales, and our rents were in excess of $120 million in a 52,000-foot store, group of stores. I mean, such numbers are unheard of. This -- the yield per foot is in excess of $20,000 a foot. We're at $40,000 at the -- we've got numbers of around $40,000 at Louis Vuitton, Chanel. And each of our stores, I have been told, represents either the best store in the world that they have or the highest yield per foot in the world that they enjoy or the #1 store in Asia that they have. And it goes on and on that way. It's extraordinary. Yes, in April, we opened up and doubled this. Louis Vuitton last year did $115 million in 2,850 feet. They just doubled this. We gave them the Tiffany space of 2,000 feet because Tiffany moved across the hall. And now Louis Vuitton, for the last 30-odd days, has got twice the store, and you still can't get it the place. We have to put stanchions in the hallway outside the doors to observe fire code occupancy levels within the space of the store. Now if you observe this in person, I don't know if you've been to Macau, it's quite something to see and even more puzzling to explain, except this -- and I offer this as an explanation about everything in China. If I can take a minute, I'm going to -- I have to give a little background to my comment. But I -- I'm welcoming this opportunity to share this with people who invest in my company and who cover gaming. People say that the Chinese people have an almost genetic predisposition to gamble. And I want to say that, that is not my opinion. My father, my grandfather came to America in the late 1890s along with all the other Europeans through Ellis Island impoverished, seeking a better life, worked for anything they could get and had children around 1915 and 1916, before World War I, and they had nothing. And those children mostly -- Frank Sinatra was born in 1915, my -- and Dean Martin, both of my parents were born in '16 -- none of them graduated high school, I think, to speak of. And they never had a good day. They were too young for World War I. They went off to fight in World War II or work in defense industries. But they came of age in the Great Depression, and that generation of Americans that are the parents of the baby boomers basically hadn't seen a good day in their life until after World War II in 1945. And they came home to bump into the greatest period of expansion in American history. And they worked hard and they were entrepreneurial, and they got a taste of the good life. And they were the first ones in all of their family trees to have anything like disposable income of any size. And what did they want? Cadillacs, diamond rings, mink stoles. They want to go to Miami, they wanted to see casinos, they wanted to see Frank Sinatra and Abbott & Costello and Dean Martin and Jerry Lewis. They wanted the good life because they had heard about it and dreamt about it, and for the first time in life, they could find and experience the good life. Casino gambling is colorful and dramatic and theatrical. It was part of the good life. And that generation, my father, my ex-wife's dad, they were all gamblers. They shot crap and bet baseball and football and were rather cavalier about their income for a solid reason: they made it themselves. Money was whatever they thought it was because they created their own wealth or their own income. And if they wanted to dispose of it in a way that other people might think was a little free, too bad because they could always go and make more. At least that's the way they thought in their heads. Well, let's take a -- and so that generation gambled. The second generation of that family, guys like myself, the baby boomers, had a slightly different -- we had the benefit of their -- our parents sending us to college. We were more sophisticated, in a manner of speaking, and our tastes ran differently than our parents and maybe gambling wasn't a priority. Different things became important. Think of China today. Nobody had any money before 35 or 40 years ago. It's all new money. What you're seeing is an explosion of pent-up demand for the good life. And so you want a real Louis Vuitton bag, you want a real Kelly bag from Hermes or the Birkin bag. You want a real Louis Vuitton or Chanel. You don't -- we've got a Rolex store that must be 500 or 600 square feet, does $80-odd thousand a day. And yet across the border in Zhuhai about 10 minutes away, you can buy what looks like a Rolex for $0.01 on a dollar. But they don't want any parts of the Lindy, the fake, the copy. They want the real thing. And that's the only logical explanation for what we're seeing in retail sales. And it also spills over and explains why men who've made their way in the world and made their own money feel that they have a right to play baccarat if they damn well feel like it. Now second generations have a different mentality and a different sensibility, and that shows up in Hong Kong as well. The sons of some of these people don't gamble as much. But Hong Kong and China are making millionaires and new money at a rate that the world has never seen before. So I don't see this diminishing the supply of people that want to have the good life. And that means that our job is to provide it for them. End of presentation.

Your final question comes from the line of Jon Oh with CLSA.

[Indiscernible]. [Audio Gap] Jon T. Oh - Credit Agricole Securities (USA) Inc., Research Division: Evaluate incremental investments going forward. And maybe perhaps on Cotai, if you could share on how should we think about a return on investment as a benchmark or as a hurdle. Sheldon Adelson publicly declares that he does not evaluate anything unless it hits the 20% cash on cash ROIC. I wonder if you have any of that, that you can share with us on what is appropriate for you. And also broadly, on your appetite for incremental investments, how many simultaneous projects do you think -- are you able to, for example, do 2 at one time given your understanding of the size of your company and also your appetite for putting on debt on to your books?

That's a good question. We have an enormous amount of capacity. And in terms of -- I think you say Shelly said he wants 20% cash on cash? Oh my God, we invested $1.5 billion in China. We made $1.2 billion last year. Our cash on cash is 80% or something like that. So I think Sheldon has outlined a very intelligent -- made a very intelligent remark. I would subscribe to what he said. We wouldn't do it either unless it was 20% cash on cash. But I think we can handle that number comfortably, building to it once. If -- when Singapore came up, we had to withdraw because we were 8 months away from opening Las Vegas and about 18 months away from opening -- or 15 months away from opening Macau. We had neither hotel. We had $3.7 billion worth of start-up, and we had no cash flow. It was impossible for us to undertake an assignment in Singapore under those circumstances without being deemed to be reckless. And we're conservative, not reckless. However, that has all changed now. We have capacity, we have organization, we have outposts in Asia and in America and the kind of a balance sheet that let us do pretty much -- take advantage of any opportunity that made sense. Could we do 2 at once? Well, now we could because I just finished 28 months of design development. This project now goes into construction mode and the more -- and the wonderful challenges of staffing and other preparatory things of that sort. But in terms of designing another place, I'm ready. DeRuyter Butler, who's sitting next to me, and I could start right away. The Wynn design development team is very busy in executing what we've -- what we're doing now in China. But the first step on another project would be the creation of the concept, and we're ready to do that. So we could handle 2. We could handle another project now, easily and anywhere. You won't see us withdrawing from something that we believe in at this stage of our company. But in 2004 and 2003, we were a much different company. To compare us, for example, to Sheldon Adelson's Sands Corp., his 8- or 9-year head start on us as a company -- remember, the Wynn Resorts didn't exist before 2002. Our current size and everything else about us is only 10 years old. The Singapore business, for example, came when we were almost prenatal. So it's changed now. We're alive and well. We're a jumping teenager. We got our best years in front of us, but it hasn't always been that way. So I subscribe to what Sheldon said as a minimum return, absolutely, and I think we can do better.

Thank you, everyone, for joining today.

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