Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Joseph Greff – J.P. Morgan.
Joseph Greff – J.P. Morgan
Paul, in the third quarter Las Vegas locals market I guess the operating leverage there was worse than what you saw in the first two quarters. Obviously the year-over-year revenue change was greater. Is that a function of the revenue performance? Is that a function of you spending more in front of a competitor opening? Is it just that you’ve done a good job the first half in terms of taking out expenses? And I guess, how do we think about the operating leverage going forward.
Paul J. Chakmak
Well Joe we’ve worked very hard this year refining the expense profile with the shear fact that obviously revenues are down. As you saw a continued decline in the Las Vegas local revenue base we were still able to certainly preserve some of that profitability but to your point, margins did erode in the third quarter based on the higher decline in the quarter than in previous quarters. We continue to work very hard at adjusting the operating expense side of the overall plan.
I think the fact of the matter is there is a significant amount of competition that’s been created obviously in the Las Vegas locals market as a result of just competitive pressure between companies and certainly some new openings so certainly a part of that was associated with being strong and competitive in the wake of those events. So, it’s a little bit of both.
Joseph Greff – J.P. Morgan
I know you’re not going to give operating items for the 4Q but can you walk through what you think the cap ex will be outside of the Echelon spend? And, you mentioned that you’re going to be capitalizing interest on Echelon through the end of December. Is there a chance that you capitalize some of it through the first quarter of next year if you’re spending slips in to the first quarter?
Paul J. Chakmak
On the Echelon question first, it is probably unlikely that it will go in to the first quarter, this is really driven by different account rules and the magnitude of that spend to the extent we do spend what we anticipate in the fourth quarter the smaller amount that will trail in to the first quarter, the number Keith gave probably would not allow us to capitalize in the first quarter. But, if that timing changes certainly we will be forced to revisit that decision.
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