Good morning and thank you for participating in the Q3 2014 Earnings Conference Call of Melco Crown Entertainment Limited. At this time all participants are in a listen-only mode. After the call, we will conduct a question-and-answer session. Today's conference call is being recorded. I would now like to turn the call over to Geoffrey Davis, Chief Financial Officer of Melco Crown Entertainment Limited. Please go ahead sir.

Thank you for joining us today for our third quarter 2014 earnings call. On the call with me today are Lawrence Ho, Ted Chan, and Ross Dunwoody. Before we get started, please note that today's discussion may contain forward-looking statements made under Safe Harbor provision of federal securities laws. Our actual results could differ from our anticipated results. I will now turn the call over to Lawrence.

Thank you, Geoff. In the third quarter of 2014, our mass market business at City of Dreams continue to perform strongly which in turn enabled our company to deliver a robust financial performance in a weaker rolling chip environment. Our luck-adjusted property EBITDA margin expanded sequentially to over 28% in 3Q 2014, as a result of a shift of business towards the higher margin mass segment together with a strong focus on cost control and a disciplined casino reinvestment program which more than offset the increase in labor-related costs and the challenging VIP environment in Macau. City of Dreams continues to be the leader at the premium end of the mass market in Macau delivering leading mass table yields which are again significantly above all other integrated resorts in the region. Macau continues to be a highly competitive market with several of our peers doing a solid job of replicating some of the strategies which we have pioneered in the premium mass market. However, illustrating City of Dreams' unique competitive position as a purpose build premium focused integrated resort with a vast array of non-gaming attractions and luxury amenities. We have once again taken share in the mass market segment in the third quarter of 2014. We continue to make meaningful enhancements to City of Dreams Macau as illustrated by the recent opening of Soho, our dining and entertainment precinct located on the second floor of the casino as well as the property's new luxury retail experience which is due to open in 2016. The construction of the fifth and final hotel tower at City of Dreams is well underway, and will be a welcome addition of almost 800 rooms, suites, villas in the first half of 2017. We are excited about the imminent opening of City of Dreams Manila.…

Thanks Lawrence. We reported property EBITDA of approximately $306 million in the third quarter of 2014 compared to approximately $340 million in the third quarter of last year. Our property EBITDA margin in the third quarter of 2014 was approximately 27.5% compared to 27.4% in the third quarter of 2013 and 26.4% in the second quarter of this year. Our luck-adjusted property EBITDA was approximately $325 million while our luck-adjusted property EBITDA margins expanded to over 28.1% despite the impact of increased labor costs from the wage increase and retention programs announced earlier this year. During the third quarter, we were negatively impacted by a low blended win rate of 2.69% which impacted EBITDA by approximately US$20 million in the third quarter of 2014. The EBITDA contribution from our non-VIP segments represents over 85% of luck-adjusted EBITDA at both City of Dreams and on a Group-wide basis. Our capital management program continues to evolve. We've opportunistically returned $100 million of capitals out of our 500 million share purchase program and continue to distribute 30% of net income attributable to MCE in the form of ordinary dividends. As we normally do, we'll give you some guidance on non-operating line items for the upcoming quarter. Total depreciation and amortization expense is expected to be approximately $95 million to $100 million, corporate expense is expected to come in at approximately $30 million and consolidated net interest expense is expected to be approximately $40 million, which includes finance lease interest of $11 million relating to City of Dreams Manila, net of approximately $27 million of total capitalized interest. That concludes our prepared remarks. Operator, back to you for the Q&A. Thank you.

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) Your first comes question comes from the line of Cameron McKnight from Wells Fargo. Please ask your question.

Good evening. Thanks. Question for Lawrence or for Geoff, could you comment on market-wide mass market revenue growth in October? There was commentary yesterday that was suggesting mass revenues were down 8% year-on-year in October. What's your sense of the true underlying rate of mass market growth? And how big an influence do you think has been the reallocation of tables from mass to VIP if that has happened. Thanks.

Hi, Cameron, it's Lawrence here. I'll pass on the in-depth part for Ted to answer, but I ultimately the downturn in the market has also affected the premium mass segment. I think we are – there are a lot of uncertainties in the market and I think a lot people including ourselves are concerned. And as we have said previously before, our premium customers are no less sophisticated or affluent than most of the VIP customers. And what has been going on with the Chinese economy and the bulk of the issue is the anticorruption drive and the fear that has really been driven into the hearts of most of the middle to upper class has also affected the premium segment. So, I'm not surprised to see a year-on-year decline in October. But in terms of reclassification, maybe I'll leave that to Ted or Geoff to…

Hi, Cameron, it's Ted here. Yes, we actually in this – sometime in the second half of October, we converted most of our premium mass tables into VIP and that's part of the reclassification that you might notice in October. In actual fact, if we convert that to the normal number that we report in October, our COD year-on-year growth is slightly positive compared to the market negative curve.

Cameron, its Geoff. Given that there is some speculation that there's been widespread reclassification that's difficult or impossible for us to verify. We couldn't really estimate the overall impact to the market, but as Ted said, we were slightly up on a like-for-like basis.

Right. Okay. Got it. And then a follow-on for Lawrence and again, then perhaps for Geoff, what are your thoughts on the optimal capital structure for the company. I mean Studio City is going to open next year, City of Dreams Manila is open in the next few months, Japan seems to change day-by-day. The U.S.-listed casinos or the U.S.-based casino companies all operate with a few turns of debt. What's your thought on buying back more stock and taking on a bit of additional leverage?

Well, for example in the third quarter, Cameron, we've accelerated our return of capital programs with the share repurchase of 100 million and we'll continue to consider further purchases going forward. Where we are as a company in our growth profile, I think at this point the primary consideration is having the optionality to pursue transformational growth to the extent that we become a more mature company with fewer transformational growth opportunities then target leverage ratio will be more of a driving factor for us going forward. But, to the extent we would see large opportunities such as Japan fall away, that would meaningfully change our view and our policy on capital allocation and share repurchase and dividend.

Perfect. Thanks very much.

Thank you. Your next question comes from the line of David Bain from Sterne. Please ask your question.

Great. Thank you. Just to follow up on Cameron's question on a clarification, when a game is reclassified in a clubroom to VIP the margins outside of a small reclassification fee to the government. That doesn't change just because of that reclassification or title of the table correct, the margins for you?

Correct.

Okay, great. And then one on – Lawrence I guess a couple of competitors have commented on their earnings call now on premium mass and mass margins. One was vocal it's going lower due to its promotions, another was kind of opaque and then yet another saw no reason to promote more aggressively given the premium players more interested in services and hardware, which is something you've cited in the past. Has the landscape changed a little bit on the promotion front?

Well, let me – I'll let Ted elaborate from the high level. Our company philosophy remains the same, we wanted to compete based on product and services and we believe that we're one of the top companies with the hardware to really back up the premium business; I think that's why you see on top of our market-leading analytical team, the product that was really built for the premium business. But at the same time, given how uncertain the environment is and all of this is very current because if you look at the decline in October, by far this is the biggest decline of the year in many – the biggest declining month in many years. We have heard one of our competitors potentially becoming more promotional making use their extremely large room base. I think that is a concern, but at the same time we are confident with the product that we have and ultimately I think our product will is more sticky than just being overly promotional. But maybe I'll let Ted elaborate further.

Yes, Lawrence. So our approach to customer or player management has never changed in the last few years, it is more about strategic approach in those player management. And also more importantly, it's all about the premium product aligned with the premium customers. And so in the Q-on-Q basis, I would say overall margin will stay intact in these two quarters. Having said that, we did see some promotional impact and also intent in those premium mass segment as well. So this is what's happening very recently and we see this is a little bit concern on the going forward basis.

Okay, great. And just one last big picture one, I guess for Lawrence or anyone really, but there seems to be an investor perception that the President coming to Macau may cause revenue to struggle in December just due to tightened visas and so forth. But do you believe his visit could actually benefit the market heading into 2015, particularly with the psychological mindset of the VIP or any substantive gifts to mark the handover or anything like that?

Yes, I think longer term, I think the Macau story for us structurally and fundamentally is very strong long-term. And I think the President's visit again in the long term will be great because I think ultimately there's been speculation that he might bring along a gift bag and the gift bag would include a 24-hour border crossing between Hong Kong and I mean between Macau and China something that Hong Kong has had for many years. I think that would be a clear catalyst going forward when there are more hotel rooms and also when infrastructure improves on the Macau side. But in the short-term at the same time this has happened two times in the past already when the President does come, Macau generally is more quite during that those few days in that week. So, but again I think we just got to bite the bullet and enjoy the long-term benefits of that.

Okay, great. Thank you guys.

Thank you.

Thank you.

The next question is from the line of Anil Daswani from Citigroup. Please ask your question.

Good evening guys. I've got a few questions, the first one is we saw a very promising turnaround at Altira. Can you tell us is that really been driven by Sun City? And how far along in the ramp do you feel that Sun City got to? I know it's just started but I mean is that really what drove Altira in the third quarter?

Yes, Anil. Yes, you're right. Sun City just started operation in September, middle of September. And I think it has started to ramp-up. And I would say that it's not full speed ahead yet and we see some potential. In terms of Altira, I think our strategy is to looking to more larger and quality junket operator getting into Altira whereby we've already optimized some of the table, VIP table in Altira already. So the next step is really about invitation of those big and quality junket operator we had in there. So this is our fundamental strategy in Altira. And you will see some of the improvement going forward.

Thank you. The second question I had is you guys reported 100% occupancy in the third quarter COD. Can you just give us a sense, either Lawrence or Ted, of how many customers you're having to turn away in this environment because obviously when you're running at 100 for the quarter you're obviously giving up some business, right?

Yes Anil, you're right. Just to give you a sense of the magnitudes or as a percentage, I think that a year ago that we basically have to turn away those qualified customer in a matter of perhaps in a need of 40% to 45% of the qualified customer. But now I think over the year with the numbers actually reduced to somewhere close to 30% which means we have still a lot of new quality customer but substantially improve in terms of the percentage.

Okay. And my final question is what does sneak peek at MCP Manila mean in December. Can you give us an idea of what will be open in December and what changes will come to that product by the grand opening in Chinese New Year?

Anil, its Lawrence here. As you know we inherited the Manila product from our Philippines partner. And so we inherited a lot of the base build and also MEP system. And we just want to be extra safe, I think given that we want a best possible first impression that sneak peak we want to run more like full on stress test simulation. But at the same time pretty much everything will be opened, but at the same time I guess we don't want to host the grand opening until sometime in the first quarter. It's the first time we're in that market, it's the new jurisdiction and given that we didn't really build up the entire property from the ground. I think this is the safest approach. But I think the sneak peak is the way for us to give back to the local people as well and at the same time we have 5000 very enthusiastic employees who are ready to get started.

Fantastic. Thank you, Lawrence.

Thanks Anil.

Thank you. Your next question comes from the line of Billy Ng from Bank of America Merrill Lynch. Please ask your question.

Hi, good evening, team. I have three quick questions on two things. One is for the mass market margin. I just want to confirm that if the margin trend is going up, flat or down for the mass market margin of the overall margin. And then my second question is, for the reclassifications you guys mentioned that there is some tables being reclassed during October from mass market to VIP tables. Just want to clarify one thing. The comment you guys made is the mass market revenue for October for you guys should be up year-on-year and month-on-month as well if we undo the reclassification, can we confirm that?

Just to clarify that's a year-on-year comment without the reclassification.

That's year-on-year. That's year-on-year, okay, not month-on-month. Okay. In terms of mass market?

And with respect of overall mass market. Yes, in terms of overall mass market margin it's essentially flat Q-on-Q.

Okay, thanks. Thanks a lot. That's all I had. Thanks.

Thanks Billy.

Thanks you. The next question comes from the line of Karen Tang from Deutsche Bank. Please ask your question.

Hi, yes. My question is with regards to Studio City and at what stage roughly do you start planning on the mass hiring or have you started hiring the senior managers? And my second question is with regards to Hengqin Island, a couple of your competitors have talked about potential opportunities in Hengqin particularly with the President coming in December. Can you walk us through your thoughts there? Thank you.

Hi, Karen, its Lawrence. As we talked about in the prepared remarks, Studio City we've topped out and we are onto the fit-out which is usually the more difficult portion of the property. But so far we are on track and on target to open in the middle of 2015. Usually when we do mass recruitment that's five to six months before the actual opening and so we haven't started yet. And I think we are actively watching out for our competitor Galaxy which should be opening earlier than us to start their mass recruitment drive. But I guess there is going to be an early mover advantage in terms of recruitment as well, because I do think that both Galaxy and ourselves would be able to fill the necessary positions. And in terms of Hengqin Island and the President's visit we have – I think we've talked about this previously, we are predominantly an integrated resort developer with a keen interest in gaming. So I think although as you can see with our properties, entertainment and attractions are part of our core values and DNA, we do believe that the gaming component is necessary to – in order for us to do all the fun and crazy things that we do. With Hengqin Island I think that could potentially be a great area for a lot of our supporting functions and supporting dormitories. We haven't actively looked into Hengqin Island because as you can tell we've had a very full slate already with Manila and Studio City and then the expansion at City of Dreams. But I think at a later stage we will take a look at it and see if we could have more supporting functions there.

Okay, cool. And I guess I'll ask you the same question with regards to hiring in the next conference call. Thank you.

Thanks Karen.

Thank you. Your next question comes from the line of Grant Govertsen from Union Gaming Macau. Please ask your question.

Great, thanks. Good evening, guys. Question for in the Philippines, in the context of what we are seeing with the Macau VIP market being weighed down by anticorruption and seemingly some other regional markets experiencing VIP growth, have your thoughts changed or have your conversations changed with the junkets as you look at the outlook for VIP play once you open COD Manila.

Well, Grant, it's Lawrence here. I think we've talked about in the past; we have more demand than available rooms and tables for junket partners in the Philippines. That remains to be the same. Philippines is going to be the fastest growing gaming market in the world this year by default, so we are encouraged about it. But at the same time I think the anticorruption campaign it doesn't just relate to Macau, because this effectively anybody travelling or spending money abroad whether it be in Macau, Korea, Philippines, Korea, Las Vegas are all being hit. So I think that strategy remains the same. The product looks great down there. It's unfortunate that it's taking a bit longer to finish it. But at the same time we are -- we will be very proud of it.

Great. Thanks for that. And I don't know if you have it in front of you, Ted, but do you have the mass versus the VIP table counts at the properties? And to the extent you can, post-October that number as well with the reclassification.

Grant, it's Geoff; I can give you the numbers through the third quarter. So at Altira we had about 95 tables in VIP, 30 tables in mass. At City of Dreams 185 VIP tables and 310 mass market tables.

Got it. Okay. Thank you.

Thank you. Your next question comes from the line of Praveen Choudhary from Morgan Stanley. Please ask your question.

Thank you. Hi, Lawrence, hi, Geoff, hi, everyone else. Two simple questions, the first one is about premium mass and grind mass. Second one is about smoking. First question I'm trying to understand is you are more focused on premium mass obviously. It sounds like this anticorruption campaign is impacting both VIP and premium mass and less to the grind mass. So if you help us understand how you are able to grow faster than the market with the reclassification you just mentioned that would help. And second thing we all want to understand is do you see, to the extent that you are looking at the market as well as your own business that the slowdown that we have seen in VIP and premium mass is creeping slowly into grind mass. That would be very helpful to understand. I'll follow up with the smoking question later.

All right, Praveen. Let me get that to you. Right. So how do we outperform the market in terms of premium mass or mass area. I think as I said earlier in the other question, so it's really about the combination of our player management system and also the quality of product and services we offer. And that's actually – you can witness that stickiness in the hold percentage that we've performed in the last few years, particular, in the last few quarters you're looking at COD's hold percentage has improved to somewhere close to 37%, 38% which means these fundamental key aspects of the services is really paying off in our area. We do not really go to market and then buy business. It's all about quality property aligned with the customer. In that sense if you were the same customer COD is easier for us to market to those customers compared to a lower quality of property. I think that's quite fundamental and is also suggested in numbers which is hold percentage. I hope that answers your question.

Thank you. Next question comes from the line of Richard Yu from CLSA. Please ask your question.

Yes, just two questions. The first one is just trying to follow up on Praveen's earlier question. I mean do you see any major impact from the implementation of the smoking ban on the mass gaming floor? And the second is that with the recent development in both the slowdown in the VIP and the mass gaming segment is there any changes that you've made to how you want to probably position Studio City in the next upcoming project or maybe adjust the – potentially the opening time of the Studio City project given the recent market softness. Thank you.

Hi, its Lawrence here. I think for Studio City we – I think we care more about ultimately how well we open ourselves. And I think judging from history you couldn't have opened the property at a worse time than we opened City of Dreams at the tail end of the global financial crisis. But we've made that work over time. And so I think ultimately when we are ready to open, we will open. And I do still believe that the early openings in Cotai, the second wave of the early openings will have a relative competitive advantage being first movers. And in terms of the design of Studio City, we've had three years to design it. Given its location being right next to the Lotus Bridge border, and if that border really becomes 24 hour border crossing it will really help our investment thesis back in the day, which is to have a – it's still a premium mass property, it's still mass property focused more on mid-tier mass. But I think having had a look at it and compared to some of the other products being brought to the market I think we will still be above it. But at the same time, as we talked about on the call early on, we are doubling our room inventory supply. So I think we can make use of a lot of our customer database, people that we've been turning away who are on the borderline of being turned away, there is going to be a new experience there. And Studio City is a great, it will also be a great day trip given all the attractions and amenities that we have created for families as well. So, I don't think we'll have any major changes but in terms of your question about smoking, maybe I'll let – hand it of to Ted.

Yes, implementing the smoking ban on the mass casino floor, first of all, I think it's well understood that smokers really play longer hours when they can smoke, so this is well understood. And definitely there will be some negative impact on the casino floor when they cannot smoke. So during the October time we did add a couple of smoking rooms in the mass casino floor area in both COD and Altira. I think it's quite well received. I think the overall situation is contained, but effectively we see of course some negative impact or disruption in terms of smoking ban in those mass casino floors.

Thank you. That's very helpful. Thank you.

Thank you. Your next question comes from the line of Joe Greff from JPMorgan. Please ask you question.

Hello, all. In the most recent quarter can you give us a breakout of the mass revenues between premium mass and base mass? And if you can help us understand where margins are in each. And then my second question relates to some of the shifts of games from the premium mass area to the VIP area. My understanding is that I guess the DICJ for the lack of a better term is still negotiating with Macau's Health Department on those shifting tables. Can you talk about that a little bit and where you are in that process if I understand that correctly. Thank you.

Joe, on the first question, this is Geoff. The percentage of our overall City of Dreams mass business that is represented by premium mass ranges between 50% to 60%.

And I think, Joe, its Lawrence here. In terms of the smoking and the government department DICJ and health bureau, all we have to say is we are – we have always been utmost respectful of the rules and laws of Macau and we believe that we are in complete total utter compliance with the law as specified by the government with regards to smoking regulations. Joe Greff – JPMorgan: Great, and the margins question, Geoff? If you don't want to give a specific number would you say they are materially different than what the folks at LVS have disclosed?

We haven't really done much disclosure on any aspect of our premium mass business. But it's safe to say that the margin differential between premium mass and mass is de minimis. Joe Greff – JPMorgan: Thank you.

Thank you. And next question comes from the line of Janet Lu from Goldman Sachs. Please ask your question.

Good morning – good evening, thanks for taking my question. My first question is on Macau Studio City. Given the soft market conditions, how do you think about the potential return for Studio City. And if the market continues to be weak would you consider to delay its opening. I will follow up with another question.

Hi Janet. I think again I think I mentioned – I might have answered that earlier on, but I think when we are ready to open I do believe that – things do change very quickly in China and could change. Although I don't believe similar to the global financial crisis where there was a light switch event, this time around I do not think there is a light switch event. But at the same time the anticorruption crackdown – the way that has scared people and scared consumers, it's very much a physiological thing. So I think if you look at the European debt crisis or other crisis in the past I think the moment people get used to the concept of this being with us going forward I think people will spend again. So we will have no plans to delay the opening of it. When we are ready to open we will open because ultimately we believe that assuming that there is no negative consumer sentiment on the market that the additional rooms should drive incremental revenue. But on your other question, sorry it was a bit – in the early part of your question I didn't really get that.

It's actually how would you think about a potential return given the soft market conditions.

On returns, so maybe, Geoff, you can talk about our – based on soft market conditions because we have a hurdle rate, but we…

I think we still maintain a 20% cash-on-cash return, even with a downturn in the market that should be achievable.

Thank you. My second question is on the dividend payout. So given the current market conditions and your ongoing CapEx requirement for Studio City and also Manila, how would you think about a dividend payout fourth quarter and also going into 2015?

Well, if I understand the question, the dividend payout ratio is set at 30%. And we anticipate retaining or maintaining that dividend payout ratio going out forward. No anticipation of changing it at this time.

Thank you. My final question is a follow-up question on Altira. So I think you have earlier mentioned in the call that there is still some upside in Altira given the new junkets added earlier this quarter. So what would be your expectation for a normalized EBITDA run rate for Altira going forward? Thanks.

We normally do not give the EBITDA forecast on those numbers. But as you know the productivity per table in Altira is actually substantially lower than COD level. And I think our goal is actually by inviting more larger and quality junket operators in here after our optimization of tables almost have finished in the last few quarters you will see a substantial improvement in the next few quarters in terms of the productivity per table in rolling basis in the coming quarters.

Thank you. That's very helpful.

Thank you. Your next question comes from the line of Philip Chung from Standard Chartered Bank. Please ask your question.

Thanks guys for taking my question. Still on the premium mass reclassified business, I just want to confirm that is – that's rebate business and that's credit business that's exactly like your in-house premium direct VIP? Or is that a cash rolling type of thing?

That's all cash non-rebate, non-program business, it's all cash business. It's no different to our previous premium mass segment. And the margin remains intact.

Okay. Thanks, Ted. Appreciate that.

Thank you. Your next question comes from the line of Bryan Maher from Craig-Hallum Capital. Please ask your question.

Yes, just real quick and I apologize if I missed this earlier on but on Studio City I just want to clarify that the budget has not changed. And can you also talk about your view on number of tables at that property when it initially opens and what you would expect it to ramp up to ultimately?

This is Geoff. I can confirm no change to the budget at Studio City.

Hi, it's Lawrence here. In terms of number of tables I think like all of our competitors building properties on Cotai the truth of the matter is we honestly don't know because the government have not -- the government is kind of one that is in transition. As you know there will be a new government that will be sworn in, in December under the same Chief Executive but a lot of the Ministers will probably be different. And at this stage they have not communicated to us what the table allocations are. I think ultimately they might be saying the same stuff to all of us, be saying that our requested allocation seems fair and reasonable but to be honest we are concerned.

And if you are concerned and you don't get the number of tables that you initially would like to open the property, I'm assuming that you would possibly do some table moving from maybe Altira and City of Dreams to make sure that you have what you need at that property, or how do you think about that?

In our case it's a bit complicated.

Okay. All right. Thank you.

Thank you.

Thank you. Your next question comes from the line of Praveen Choudhary from Morgan Stanley.

Sorry, I didn't realize I asked such a difficult question that I was cut off and didn't – I was not allowed to come back in for the second question. But that's great. I think someone already asked the smoking – I wanted to ask the same thing, about how do you see the impact apart from how much time longer they play that you had to take this drastic action of changing premium mass rooms and paying higher taxes to the VIP side. And what happens to 50% remaining business at least whatever you've seen in October three weeks if you have to extrapolate it do you think it's a 2% impact, 3% impact or is there any way to quantify that? Thank you.

Hi, Praveen. In terms of impact we all believe that when we look at the players profile I think we have a large portion of our players really enjoy smoking. And that's – we also understand that it's important and essential for them. So that's why we think that it's important that we provide every important aspect of the customer's life. Smoking is one of the important elements, so that's why we would seriously implement what we think is all compliant with government and we do it. In actual fact, we actually did whatever the government advised us to improve those areas, including that we heavily invest into the ventilation system and also a tailor-made air curtain on tables to protect our employees. So to answer the question, yes, negative impact observed and that's some negative impact but we couldn't quantify the number. But in terms of the customer profile we have a large portion of customers as smokers. I hope that I answered your questions Praveen.

Yes, absolutely. Thank you so much.

Thank you. (Operator Instructions) As there are no further questions, I would now like to hand the call back to speakers of today.

Great. Thanks, operator. And thanks, everyone, for joining us today. We'll be back with you in three months. Thanks.