UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20192020
OR
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 000-50028
WYNN RESORTS, LIMITED
(Exact name of registrant as specified in its charter)
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Nevada | | 46-0484987 |
(State or other jurisdiction of incorporation or organization)
| | (I.R.S. Employer Identification No.)
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3131 Las Vegas Boulevard South - Las Vegas,, Nevada89109
(Address of principal executive offices) (Zip Code)
(702) (702) 770-7555
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common stock, par value $0.01 | | WYNN | | Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | | ☒ | | Accelerated filer | | ☐ |
Non-accelerated filer | | ☐ | | Smaller reporting company | | ☐ |
| | | | Emerging growth company | | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. |
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Class | | Outstanding at October 31, 2019July 27, 2020 |
Common stock, par value $0.01 | | 107,354,606107,847,969 |
WYNN RESORTS, LIMITED AND SUBSIDIARIES
FORM 10-Q
INDEX
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Part I. | Financial Information | |
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Part II. | Other Information | |
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data) |
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
| (unaudited) | | |
ASSETS |
Current assets: | | | |
Cash and cash equivalents | $ | 1,676,110 |
| | $ | 2,215,001 |
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Receivables, net | 286,611 |
| | 276,644 |
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Inventories | 80,486 |
| | 66,627 |
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Prepaid expenses and other | 68,045 |
| | 83,104 |
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Total current assets | 2,111,252 |
| | 2,641,376 |
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Property and equipment, net | 9,621,268 |
| | 9,385,920 |
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Restricted cash | 6,182 |
| | 4,322 |
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Intangible assets, net | 148,972 |
| | 222,506 |
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Operating lease assets | 444,157 |
| | — |
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Deferred income taxes, net | 719,614 |
| | 736,452 |
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Other assets | 225,613 |
| | 225,693 |
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Total assets | $ | 13,277,058 |
| | $ | 13,216,269 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
Current liabilities: | | | |
Accounts and construction payables | $ | 292,140 |
| | $ | 321,796 |
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Customer deposits | 956,744 |
| | 955,450 |
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Gaming taxes payable | 188,496 |
| | 247,341 |
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Accrued compensation and benefits | 162,752 |
| | 163,966 |
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Accrued interest | 74,340 |
| | 61,595 |
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Current portion of long-term debt | 116,118 |
| | 11,960 |
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Other accrued liabilities | 139,794 |
| | 119,955 |
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Total current liabilities | 1,930,384 |
| | 1,882,063 |
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Long-term debt | 9,421,845 |
| | 9,411,140 |
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Long-term operating lease liabilities | 149,970 |
| | — |
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Other long-term liabilities | 108,980 |
| | 108,277 |
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Total liabilities | 11,611,179 |
| | 11,401,480 |
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Commitments and contingencies (Note 14) |
| |
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Stockholders' equity: | | | |
Preferred stock, par value $0.01; 40,000,000 shares authorized; zero shares issued and outstanding | — |
| | — |
|
Common stock, par value $0.01; 400,000,000 shares authorized; 122,826,131 and 122,115,585 shares issued; 107,362,502 and 107,232,026 shares outstanding, respectively | 1,228 |
| | 1,221 |
|
Treasury stock, at cost; 15,463,629 and 14,883,559 shares, respectively | (1,409,717 | ) | | (1,344,012 | ) |
Additional paid-in capital | 2,507,870 |
| | 2,457,079 |
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Accumulated other comprehensive loss | (2,700 | ) | | (1,950 | ) |
Retained earnings | 822,070 |
| | 921,785 |
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Total Wynn Resorts, Limited stockholders' equity | 1,918,751 |
| | 2,034,123 |
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Noncontrolling interests | (252,872 | ) | | (219,334 | ) |
Total stockholders' equity | 1,665,879 |
| | 1,814,789 |
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Total liabilities and stockholders' equity | $ | 13,277,058 |
| | $ | 13,216,269 |
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| June 30, 2020 | | December 31, 2019 |
| (unaudited) | | |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 3,797,740 | | | $ | 2,351,904 | |
Accounts receivable, net of allowance for credit losses of $88,319 and $39,317 | 296,318 | | | 346,429 | |
Inventories | 84,779 | | | 88,519 | |
Prepaid expenses and other | 57,544 | | | 69,485 | |
Total current assets | 4,236,381 | | | 2,856,337 | |
Property and equipment, net | 9,415,313 | | | 9,623,832 | |
Restricted cash | 4,847 | | | 6,388 | |
Intangible assets, net | 141,299 | | | 146,414 | |
Operating lease assets | 440,075 | | | 452,919 | |
Deferred income taxes, net | 406,947 | | | 562,262 | |
Other assets | 240,813 | | | 223,129 | |
Total assets | $ | 14,885,675 | | | $ | 13,871,281 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
Current liabilities: | | | |
Accounts and construction payables | $ | 215,832 | | | $ | 262,437 | |
Customer deposits | 954,074 | | | 824,269 | |
Gaming taxes payable | 7,484 | | | 168,043 | |
Accrued compensation and benefits | 157,911 | | | 180,140 | |
Accrued interest | 82,655 | | | 73,136 | |
Current portion of long-term debt | 298,050 | | | 323,876 | |
Other accrued liabilities | 153,845 | | | 150,983 | |
Total current liabilities | 1,869,851 | | | 1,982,884 | |
Long-term debt | 12,477,183 | | | 10,079,983 | |
Long-term operating lease liabilities | 154,392 | | | 159,182 | |
Other long-term liabilities | 110,051 | | | 107,760 | |
Total liabilities | 14,611,477 | | | 12,329,809 | |
Commitments and contingencies (Note 14) | | | |
Stockholders' equity: | | | |
Preferred stock, par value $0.01; 40,000,000 shares authorized; 0 shares issued and outstanding | — | | | — | |
Common stock, par value $0.01; 400,000,000 shares authorized; 123,425,898 and 122,837,930 shares issued; 107,869,865 and 107,363,943 shares outstanding, respectively | 1,234 | | | 1,228 | |
Treasury stock, at cost; 15,556,033 and 15,473,987 shares, respectively | (1,419,435) | | | (1,410,998) | |
Additional paid-in capital | 2,543,718 | | | 2,512,676 | |
Accumulated other comprehensive loss | (908) | | | (1,679) | |
Retained earnings (accumulated deficit) | (505,090) | | | 641,818 | |
Total Wynn Resorts, Limited stockholders' equity | 619,519 | | | 1,743,045 | |
Noncontrolling interests | (345,321) | | | (201,573) | |
Total stockholders' equity | 274,198 | | | 1,541,472 | |
Total liabilities and stockholders' equity | $ | 14,885,675 | | | $ | 13,871,281 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2019 | | 2018 | | 2019 | | 2018 | | 2020 | | 2019 | | 2020 | | 2019 |
Operating revenues: | | | | | | | | Operating revenues: | | | | | | | |
Casino | $ | 1,108,364 |
| | $ | 1,222,029 |
| | $ | 3,435,968 |
| | $ | 3,564,195 |
| Casino | $ | 9,413 | | | $ | 1,142,503 | | | $ | 580,202 | | | $ | 2,327,604 | |
Rooms | 205,876 |
| | 183,044 |
| | 595,953 |
| | 559,405 |
| Rooms | 17,415 | | | 198,807 | | | 170,096 | | | 390,077 | |
Food and beverage | 228,508 |
| | 193,874 |
| | 619,749 |
| | 580,963 |
| Food and beverage | 24,007 | | | 218,022 | | | 173,421 | | | 391,241 | |
Entertainment, retail and other | 105,014 |
| | 110,125 |
| | 305,970 |
| | 325,511 |
| Entertainment, retail and other | 34,863 | | | 99,000 | | | 115,695 | | | 200,956 | |
Total operating revenues | 1,647,762 |
| | 1,709,072 |
| | 4,957,640 |
| | 5,030,074 |
| Total operating revenues | 85,698 | | | 1,658,332 | | | 1,039,414 | | | 3,309,878 | |
Operating expenses: | | | | | | | | Operating expenses: | | | | | | | |
Casino | 722,692 |
| | 783,171 |
| | 2,197,750 |
| | 2,254,766 |
| Casino | 131,138 | | | 724,987 | | | 573,828 | | | 1,475,058 | |
Rooms | 75,188 |
| | 62,965 |
| | 205,042 |
| | 189,837 |
| Rooms | 30,367 | | | 66,148 | | | 103,847 | | | 129,854 | |
Food and beverage | 196,661 |
| | 162,311 |
| | 527,502 |
| | 468,265 |
| Food and beverage | 61,889 | | | 182,080 | | | 237,799 | | | 330,841 | |
Entertainment, retail and other | 42,078 |
| | 44,028 |
| | 129,636 |
| | 138,647 |
| Entertainment, retail and other | 16,873 | | | 43,514 | | | 62,453 | | | 87,558 | |
General and administrative | 246,442 |
| | 192,327 |
| | 665,988 |
| | 545,543 |
| General and administrative | 152,081 | | | 202,224 | | | 386,409 | | | 419,546 | |
Litigation settlement | — |
| | — |
| | — |
| | 463,557 |
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Provision for doubtful accounts | 4,036 |
| | 3,285 |
| | 13,039 |
| | 2,586 |
| |
Provision for credit losses | | Provision for credit losses | 28,347 | | | 3,581 | | | 48,960 | | | 9,003 | |
Pre-opening | 1,616 |
| | 13,714 |
| | 99,212 |
| | 35,255 |
| Pre-opening | 2,186 | | | 69,883 | | | 4,737 | | | 97,596 | |
Depreciation and amortization | 172,998 |
| | 137,458 |
| | 449,824 |
| | 411,685 |
| Depreciation and amortization | 179,266 | | | 140,269 | | | 358,012 | | | 276,826 | |
Property charges and other | 8,216 |
| | 18,830 |
| | 17,920 |
| | 30,672 |
| Property charges and other | 6,567 | | | 6,930 | | | 33,796 | | | 9,704 | |
Total operating expenses | 1,469,927 |
| | 1,418,089 |
| | 4,305,913 |
| | 4,540,813 |
| Total operating expenses | 608,714 | | | 1,439,616 | | | 1,809,841 | | | 2,835,986 | |
Operating income | 177,835 |
| | 290,983 |
| | 651,727 |
| | 489,261 |
| |
Operating income (loss) | | Operating income (loss) | (523,016) | | | 218,716 | | | (770,427) | | | 473,892 | |
Other income (expense): | | | | | | | | Other income (expense): | | | | | | | |
Interest income | 6,427 |
| | 6,948 |
| | 19,979 |
| | 21,029 |
| Interest income | 3,983 | | | 6,265 | | | 11,936 | | | 13,552 | |
Interest expense, net of amounts capitalized | (114,652 | ) | | (93,007 | ) | | (300,981 | ) | | (281,132 | ) | Interest expense, net of amounts capitalized | (133,218) | | | (93,149) | | | (262,045) | | | (186,329) | |
Change in derivatives fair value | (2,101 | ) | | (54 | ) | | (6,914 | ) | | (54 | ) | Change in derivatives fair value | (3,294) | | | (3,304) | | | (18,954) | | | (4,813) | |
Change in Redemption Note fair value | — |
| | — |
| | — |
| | (69,331 | ) | |
(Loss) gain on extinguishment of debt | (12,196 | ) | | (198 | ) | | (12,196 | ) | | 2,131 |
| |
Loss on extinguishment of debt | | Loss on extinguishment of debt | (619) | | | — | | | (1,462) | | | — | |
Other | (8,703 | ) | | 11,216 |
| | (3,346 | ) | | 1,039 |
| Other | 2,233 | | | 11,715 | | | 12,568 | | | 5,357 | |
Other income (expense), net | (131,225 | ) | | (75,095 | ) | | (303,458 | ) | | (326,318 | ) | Other income (expense), net | (130,915) | | | (78,473) | | | (257,957) | | | (172,233) | |
Income before income taxes | 46,610 |
| | 215,888 |
| | 348,269 |
| | 162,943 |
| |
Benefit (provision) for income taxes | (19,727 | ) | | 3,884 |
| | (19,421 | ) | | 124,631 |
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Net income | 26,883 |
| | 219,772 |
| | 328,848 |
| | 287,574 |
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Less: net income attributable to noncontrolling interests | (30,379 | ) | | (63,657 | ) | | (132,921 | ) | | (180,010 | ) | |
Income (loss) before income taxes | | Income (loss) before income taxes | (653,931) | | | 140,243 | | | (1,028,384) | | | 301,659 | |
(Provision) benefit for income taxes | | (Provision) benefit for income taxes | (80,938) | | | 1,991 | | | (156,738) | | | 306 | |
Net income (loss) | | Net income (loss) | (734,869) | | | 142,234 | | | (1,185,122) | | | 301,965 | |
Less: net (income) loss attributable to noncontrolling interests | | Less: net (income) loss attributable to noncontrolling interests | 97,305 | | | (47,683) | | | 145,521 | | | (102,542) | |
Net income (loss) attributable to Wynn Resorts, Limited | $ | (3,496 | ) | | $ | 156,115 |
| | $ | 195,927 |
| | $ | 107,564 |
| Net income (loss) attributable to Wynn Resorts, Limited | $ | (637,564) | | | $ | 94,551 | | | $ | (1,039,601) | | | $ | 199,423 | |
Basic and diluted net income (loss) per common share: | | | | | | | | Basic and diluted net income (loss) per common share: | | | | | | | |
Net income (loss) attributable to Wynn Resorts, Limited: | | | | | | | | Net income (loss) attributable to Wynn Resorts, Limited: | | |
Basic | $ | (0.03 | ) | | $ | 1.44 |
| | $ | 1.83 |
| | $ | 1.01 |
| Basic | $ | (5.97) | | | $ | 0.88 | | | $ | (9.74) | | | $ | 1.87 | |
Diluted | $ | (0.03 | ) | | $ | 1.44 |
| | $ | 1.83 |
| | $ | 1.01 |
| Diluted | $ | (5.97) | | | $ | 0.88 | | | $ | (9.74) | | | $ | 1.86 | |
Weighted average common shares outstanding: | | | | | | | | Weighted average common shares outstanding: | | |
Basic | 106,707 |
| | 108,064 |
| | 106,791 |
| | 106,162 |
| Basic | 106,713 | | | 106,876 | | | 106,688 | | | 106,834 | |
Diluted | 106,707 |
| | 108,533 |
| | 107,024 |
| | 106,721 |
| Diluted | 106,713 | | | 107,141 | | | 106,688 | | | 107,089 | |
Dividends declared per common share | $ | 1.00 |
| | $ | 0.75 |
| | $ | 2.75 |
| | $ | 2.00 |
| Dividends declared per common share | $ | — | | | $ | 1.00 | | | $ | 1.00 | | | $ | 1.75 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Six Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Net income (loss) | $ | (734,869) | | | $ | 142,234 | | | $ | (1,185,122) | | | $ | 301,965 | |
Other comprehensive income (loss): | | | | | | | |
Foreign currency translation adjustments, before and after tax | 53 | | | 838 | | | 1,068 | | | (50) | |
Total comprehensive income (loss) | (734,816) | | | 143,072 | | | (1,184,054) | | | 301,915 | |
Less: comprehensive (income) loss attributable to noncontrolling interests | 97,291 | | | (47,450) | | | 145,224 | | | (102,556) | |
Comprehensive income (loss) attributable to Wynn Resorts, Limited | $ | (637,525) | | | $ | 95,622 | | | $ | (1,038,830) | | | $ | 199,359 | |
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| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2019 |
| 2018 | | 2019 | | 2018 |
Net income | $ | 26,883 |
| | $ | 219,772 |
| | $ | 328,848 |
| | $ | 287,574 |
|
Other comprehensive income (loss): | | | | | | | |
Foreign currency translation adjustments, before and after tax | (989 | ) | | (175 | ) | | (1,039 | ) | | (2,121 | ) |
Change in net unrealized (loss) gain on investment securities, before and after tax | — |
| | (19 | ) | | — |
| | 1,292 |
|
Redemption Note credit risk adjustment, net of tax of $2,735 | — |
| | — |
| | — |
| | 9,211 |
|
Total comprehensive income | 25,894 |
| | 219,578 |
| | 327,809 |
| | 295,956 |
|
Less: comprehensive income attributable to noncontrolling interests | (30,104 | ) | | (63,608 | ) | | (132,632 | ) | | (179,419 | ) |
Comprehensive income (loss) attributable to Wynn Resorts, Limited | $ | (4,210 | ) | | $ | 155,970 |
| | $ | 195,177 |
| | $ | 116,537 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | For the Three Months Ended June 30, 2020 | |
| For the Three Months Ended September 30, 2019 | | Common stock | | |
| Common stock | | | | | | | | | | | | | | | | Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings (accumulated deficit) | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity | |
Balances, July 1, 2019 | 107,610,356 |
| | $ | 1,228 |
| | $ | (1,379,644 | ) | | $ | 2,498,316 |
| | $ | (1,986 | ) | | $ | 932,907 |
| | $ | 2,050,821 |
| | $ | (199,882 | ) | | $ | 1,850,939 |
| |
Net income (loss) | — |
| | — |
| | — |
| | — |
| | — |
| | (3,496 | ) | | (3,496 | ) | | 30,379 |
| | 26,883 |
| |
Balances, April 1, 2020 | | Balances, April 1, 2020 | 107,884,163 | | | $ | 1,234 | | | $ | (1,416,525) | | | $ | 2,526,062 | | | $ | (947) | | | $ | 132,266 | | | $ | 1,242,090 | | | $ | (249,610) | | | $ | 992,480 | |
Net loss | | Net loss | — | | | — | | | — | | | — | | | — | | | (637,564) | | | (637,564) | | | (97,305) | | | (734,869) | |
Currency translation adjustment | — |
| | — |
| | — |
| | — |
| | (714 | ) | | — |
| | (714 | ) | | (275 | ) | | (989 | ) | Currency translation adjustment | — | | | — | | | — | | | — | | | 39 | | | — | | | 39 | | | 14 | | | 53 | |
Exercise of stock options | 36,000 |
| | — |
| | — |
| | 2,151 |
| | — |
| | — |
| | 2,151 |
| | — |
| | 2,151 |
| |
Issuance of restricted stock | 27,276 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Issuance of restricted stock | 40,270 | | | — | | | — | | | 617 | | | — | | | — | | | 617 | | | 189 | | | 806 | |
Cancellation of restricted stock | (27,809 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Cancellation of restricted stock | (17,477) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Shares repurchased by the Company and held as treasury shares | (283,321 | ) | | — |
| | (30,073 | ) | | — |
| | — |
| | — |
| | (30,073 | ) | | — |
| | (30,073 | ) | Shares repurchased by the Company and held as treasury shares | (37,091) | | | — | | | (2,910) | | | — | | | — | | | — | | | (2,910) | | | 141 | | | (2,769) | |
Cash dividends declared | — |
| | — |
| | — |
| | — |
| | — |
| | (107,341 | ) | | (107,341 | ) | | (82,949 | ) | | (190,290 | ) | Cash dividends declared | — | | | — | | | — | | | — | | | — | | | 208 | | | 208 | | | 16 | | | 224 | |
Distribution to noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (998 | ) | | (998 | ) | |
Stock-based compensation | — |
| | — |
| | — |
| | 7,403 |
| | — |
| | — |
| | 7,403 |
| | 853 |
| | 8,256 |
| Stock-based compensation | — | | | — | | | — | | | 17,039 | | | — | | | — | | | 17,039 | | | 1,234 | | | 18,273 | |
Balances, September 30, 2019 | 107,362,502 |
| | $ | 1,228 |
| | $ | (1,409,717 | ) | | $ | 2,507,870 |
| | $ | (2,700 | ) | | $ | 822,070 |
| | $ | 1,918,751 |
| | $ | (252,872 | ) | | $ | 1,665,879 |
| |
Balances, June 30, 2020 | | Balances, June 30, 2020 | 107,869,865 | | | $ | 1,234 | | | $ | (1,419,435) | | | $ | 2,543,718 | | | $ | (908) | | | $ | (505,090) | | | $ | 619,519 | | | $ | (345,321) | | | $ | 274,198 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended June 30, 2019 | | | | | | | | | | | | | | | | |
| Common stock | | | | | | | | | | | | | | | | |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
Balances, April 1, 2019 | 107,660,449 | | | $ | 1,226 | | | $ | (1,349,413) | | | $ | 2,483,026 | | | $ | (2,591) | | | $ | 945,972 | | | $ | 2,078,220 | | | $ | (162,977) | | | $ | 1,915,243 | |
Net income | — | | | — | | | — | | | — | | | — | | | 94,551 | | | 94,551 | | | 47,683 | | | 142,234 | |
Currency translation adjustment | — | | | — | | | — | | | — | | | 605 | | | — | | | 605 | | | 233 | | | 838 | |
Exercise of stock options | 180,000 | | | 2 | | | — | | | 8,479 | | | — | | | — | | | 8,481 | | | — | | | 8,481 | |
Issuance of restricted stock | 32,633 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Cancellation of restricted stock | (10,795) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Shares repurchased by the Company and held as treasury shares | (251,931) | | | — | | | (30,231) | | | — | | | — | | | — | | | (30,231) | | | — | | | (30,231) | |
Cash dividends declared | — | | | — | | | — | | | — | | | — | | | (107,616) | | | (107,616) | | | (82,917) | | | (190,533) | |
Distribution to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,727) | | | (2,727) | |
Stock-based compensation | — | | | — | | | — | | | 6,811 | | | — | | | — | | | 6,811 | | | 823 | | | 7,634 | |
Balances, June 30, 2019 | 107,610,356 | | | $ | 1,228 | | | $ | (1,379,644) | | | $ | 2,498,316 | | | $ | (1,986) | | | $ | 932,907 | | | $ | 2,050,821 | | | $ | (199,882) | | | $ | 1,850,939 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended September 30, 2018 |
| Common stock | | | | | | | | | | | | | | |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
Balances, July 1, 2018 | 108,642,371 |
| | $ | 1,220 |
| | $ | (1,184,967 | ) | | $ | 2,435,720 |
| | $ | (1,938 | ) | | $ | 462,950 |
| | $ | 1,712,985 |
| | $ | 106,610 |
| | $ | 1,819,595 |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | 156,115 |
| | 156,115 |
| | 63,657 |
| | 219,772 |
|
Currency translation adjustment | — |
| | — |
| | — |
| | — |
| | (126 | ) | | — |
| | (126 | ) | | (49 | ) | | (175 | ) |
Change in net unrealized loss on investment securities | — |
| | — |
| | — |
| | — |
| | (19 | ) | | — |
| | (19 | ) | | — |
| | (19 | ) |
Exercise of stock options | 126,190 |
| | 1 |
| | — |
| | 9,740 |
| | — |
| | — |
| | 9,741 |
| | — |
| | 9,741 |
|
Issuance of common stock | — |
| | — |
| | — |
| | 27 |
| | — |
| | — |
| | 27 |
| | — |
| | 27 |
|
Issuance of restricted stock | 38,695 |
| | 1 |
| | — |
| | (1 | ) | | — |
| | — |
| | — |
| | — |
| | — |
|
Cancellation of restricted stock | (60,714 | ) | | (1 | ) | | — |
| | — |
| | — |
| | — |
| | (1 | ) | | — |
| | (1 | ) |
Shares repurchased by the Company and held as treasury shares | (15,460 | ) | | — |
| | (2,306 | ) | | — |
| | — |
| | — |
| | (2,306 | ) | | — |
| | (2,306 | ) |
Cash dividends declared | — |
| | — |
| | — |
| | — |
| | — |
| | (81,294 | ) | | (81,294 | ) | | (138,258 | ) | | (219,552 | ) |
Distribution to noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (297,261 | ) | | (297,261 | ) |
Stock-based compensation | — |
| | — |
| | — |
| | 9,871 |
| | — |
| | — |
| | 9,871 |
| | 591 |
| | 10,462 |
|
Balances, September 30, 2018 | 108,731,082 |
| | $ | 1,221 |
| | $ | (1,187,273 | ) | | $ | 2,455,357 |
| | $ | (2,083 | ) | | $ | 537,771 |
| | $ | 1,804,993 |
| | $ | (264,710 | ) | | $ | 1,540,283 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (continued)
(in thousands, except share data)
(unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2019 |
| Common stock | | | | | | | | | | | | | | |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
Balances, January 1, 2019 | 107,232,026 |
| | $ | 1,221 |
| | $ | (1,344,012 | ) | | $ | 2,457,079 |
| | $ | (1,950 | ) | | $ | 921,785 |
| | $ | 2,034,123 |
| | $ | (219,334 | ) | | $ | 1,814,789 |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | 195,927 |
| | 195,927 |
| | 132,921 |
| | 328,848 |
|
Currency translation adjustment | — |
| | — |
| | — |
| | — |
| | (750 | ) | | — |
| | (750 | ) | | (289 | ) | | (1,039 | ) |
Exercise of stock options | 293,690 |
| | 3 |
| | — |
| | 14,693 |
| | — |
| | — |
| | 14,696 |
| | — |
| | 14,696 |
|
Issuance of restricted stock | 456,505 |
| | 4 |
| | — |
| | 14,344 |
| | — |
| | — |
| | 14,348 |
| | 785 |
| | 15,133 |
|
Cancellation of restricted stock | (39,649 | ) | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Shares repurchased by the Company and held as treasury shares | (580,070 | ) | | — |
| | (65,705 | ) | | — |
| | — |
| | — |
| | (65,705 | ) | | — |
| | (65,705 | ) |
Cash dividends declared | — |
| | — |
| | — |
| | — |
| | — |
| | (295,642 | ) | | (295,642 | ) | | (165,849 | ) | | (461,491 | ) |
Distribution to noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (3,725 | ) | | (3,725 | ) |
Stock-based compensation | — |
| | — |
| | — |
| | 21,754 |
| | — |
| | — |
| | 21,754 |
| | 2,619 |
| | 24,373 |
|
Balances, September 30, 2019 | 107,362,502 |
| | $ | 1,228 |
| | $ | (1,409,717 | ) | | $ | 2,507,870 |
| | $ | (2,700 | ) | | $ | 822,070 |
| | $ | 1,918,751 |
| | $ | (252,872 | ) | | $ | 1,665,879 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended September 30, 2018 |
| Common stock | | | | | | | | | | | | | | |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
Balances, January 1, 2018 | 103,005,866 |
| | $ | 1,164 |
| | $ | (1,184,468 | ) | | $ | 1,497,928 |
| | $ | (1,845 | ) | | $ | 635,067 |
| | $ | 947,846 |
| | $ | 130,504 |
| | $ | 1,078,350 |
|
Cumulative effect, change in accounting for credit risk, net of tax of $2,735 | — |
| | — |
| | — |
| | — |
| | (9,211 | ) | | 9,211 |
| | — |
| | — |
| | — |
|
Net income | — |
| | — |
| | — |
| | — |
| | — |
| | 107,564 |
| | 107,564 |
| | 180,010 |
| | 287,574 |
|
Currency translation adjustment | — |
| | — |
| | — |
| | — |
| | (1,530 | ) | | — |
| | (1,530 | ) | | (591 | ) | | (2,121 | ) |
Change in net unrealized loss on investment securities | — |
| | — |
| | — |
| | — |
| | 1,292 |
| | — |
| | 1,292 |
| | — |
| | 1,292 |
|
Redemption Note settlement | — |
| | — |
| | — |
| | — |
| | 9,211 |
| | — |
| | 9,211 |
| | — |
| | 9,211 |
|
Exercise of stock options | 238,780 |
| | 2 |
| | — |
| | 19,805 |
| | — |
| | — |
| | 19,807 |
| | 506 |
| | 20,313 |
|
Issuance of common stock | 5,300,000 |
| | 53 |
| | — |
| | 915,187 |
| | — |
| | — |
| | 915,240 |
| | — |
| | 915,240 |
|
Issuance of restricted stock | 280,834 |
| | 3 |
| | — |
| | 1,295 |
| | — |
| | — |
| | 1,298 |
| | 501 |
| | 1,799 |
|
Cancellation of restricted stock | (75,908 | ) | | (1 | ) | | — |
| | 1 |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Shares repurchased by the Company and held as treasury shares | (18,490 | ) | | — |
| | (2,805 | ) | | — |
| | — |
| | — |
| | (2,805 | ) | | — |
| | (2,805 | ) |
Cash dividends declared | — |
| | — |
| | — |
| | — |
| | — |
| | (214,071 | ) | | (214,071 | ) | | (276,583 | ) | | (490,654 | ) |
Distribution to noncontrolling interest | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | (301,113 | ) | | (301,113 | ) |
Stock-based compensation | — |
| | — |
| | — |
| | 21,141 |
| | — |
| | — |
| | 21,141 |
| | 2,056 |
| | 23,197 |
|
Balances, September 30, 2018 | 108,731,082 |
| | $ | 1,221 |
| | $ | (1,187,273 | ) | | $ | 2,455,357 |
| | $ | (2,083 | ) | | $ | 537,771 |
| | $ | 1,804,993 |
| | $ | (264,710 | ) | | $ | 1,540,283 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, 2020 | | | | | | | | | | | | | | | | |
| Common stock | | | | | | | | | | | | | | | | |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings (accumulated deficit) | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
Balances, January 1, 2020 | 107,363,943 | | | $ | 1,228 | | | $ | (1,410,998) | | | $ | 2,512,676 | | | $ | (1,679) | | | $ | 641,818 | | | $ | 1,743,045 | | | $ | (201,573) | | | $ | 1,541,472 | |
Net loss | — | | | — | | | — | | | — | | | — | | | (1,039,601) | | | (1,039,601) | | | (145,521) | | | (1,185,122) | |
Currency translation adjustment | — | | | — | | | — | | | — | | | 771 | | | — | | | 771 | | | 297 | | | 1,068 | |
Issuance of restricted stock | 661,015 | | | 6 | | | — | | | 6,703 | | | — | | | — | | | 6,709 | | | 818 | | | 7,527 | |
Cancellation of restricted stock | (73,047) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Shares repurchased by the Company and held as treasury shares | (82,046) | | | — | | | (8,437) | | | — | | | — | | | — | | | (8,437) | | | 141 | | | (8,296) | |
Cash dividends declared | — | | | — | | | — | | | — | | | — | | | (107,307) | | | (107,307) | | | 30 | | | (107,277) | |
Distribution to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (998) | | | (998) | |
Stock-based compensation | — | | | — | | | — | | | 24,339 | | | — | | | — | | | 24,339 | | | 1,485 | | | 25,824 | |
Balances, June 30, 2020 | 107,869,865 | | | $ | 1,234 | | | $ | (1,419,435) | | | $ | 2,543,718 | | | $ | (908) | | | $ | (505,090) | | | $ | 619,519 | | | $ | (345,321) | | | $ | 274,198 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Six Months Ended June 30, 2019 | | | | | | | | | | | | | | | | |
| Common stock | | | | | | | | | | | | | | | | |
| Shares outstanding | | Par value | | Treasury stock | | Additional paid-in capital | | Accumulated other comprehensive loss | | Retained earnings | | Total Wynn Resorts, Ltd. stockholders' equity | | Noncontrolling interests | | Total stockholders' equity |
Balances, January 1, 2019 | 107,232,026 | | | $ | 1,221 | | | $ | (1,344,012) | | | $ | 2,457,079 | | | $ | (1,950) | | | $ | 921,785 | | | $ | 2,034,123 | | | $ | (219,334) | | | $ | 1,814,789 | |
Net income | — | | | — | | | — | | | — | | | — | | | 199,423 | | | 199,423 | | | 102,542 | | | 301,965 | |
Currency translation adjustment | — | | | — | | | — | | | — | | | (36) | | | — | | | (36) | | | (14) | �� | | (50) | |
Exercise of stock options | 257,690 | | | 3 | | | — | | | 12,542 | | | — | | | — | | | 12,545 | | | — | | | 12,545 | |
Issuance of restricted stock | 429,229 | | | 4 | | | — | | | 14,344 | | | — | | | — | | | 14,348 | | | 785 | | | 15,133 | |
Cancellation of restricted stock | (11,840) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Shares repurchased by the Company and held as treasury shares | (296,749) | | | — | | | (35,632) | | | — | | | — | | | — | | | (35,632) | | | — | | | (35,632) | |
Cash dividends declared | — | | | — | | | — | | | — | | | — | | | (188,301) | | | (188,301) | | | (82,900) | | | (271,201) | |
Distribution to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (2,727) | | | (2,727) | |
Stock-based compensation | — | | | — | | | — | | | 14,351 | | | — | | | — | | | 14,351 | | | 1,766 | | | 16,117 | |
Balances, June 30, 2019 | 107,610,356 | | | $ | 1,228 | | | $ | (1,379,644) | | | $ | 2,498,316 | | | $ | (1,986) | | | $ | 932,907 | | | $ | 2,050,821 | | | $ | (199,882) | | | $ | 1,850,939 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| | | Nine Months Ended September 30, | | Six Months Ended June 30, | |
| 2019 | | 2018 | | 2020 | | 2019 |
Cash flows from operating activities: | | | | Cash flows from operating activities: | | | |
Net income | $ | 328,848 |
| | $ | 287,574 |
| |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
Net income (loss) | | Net income (loss) | $ | (1,185,122) | | | $ | 301,965 | |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | | Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |
Depreciation and amortization | 449,824 |
| | 411,685 |
| Depreciation and amortization | 358,012 | | | 276,826 | |
Deferred income taxes | 16,838 |
| | (123,516 | ) | Deferred income taxes | 155,316 | | | (2,488) | |
Stock-based compensation expense | 30,444 |
| | 28,762 |
| Stock-based compensation expense | 30,448 | | | 20,168 | |
Amortization of debt issuance costs | 22,171 |
| | 25,241 |
| Amortization of debt issuance costs | 14,155 | | | 14,862 | |
Loss on extinguishment of debt | 12,196 |
| | 2,364 |
| Loss on extinguishment of debt | 1,462 | | | — | |
Provision for doubtful accounts | 13,039 |
| | 2,586 |
| |
Provision for credit losses | | Provision for credit losses | 48,960 | | | 9,003 | |
Change in derivatives fair value | 6,914 |
| | 54 |
| Change in derivatives fair value | 18,954 | | | 4,813 | |
Change in Redemption Note fair value | — |
| | 69,331 |
| |
Property charges and other | 21,238 |
| | 30,464 |
| Property charges and other | 21,228 | | | 4,507 | |
Increase (decrease) in cash from changes in: | | | | Increase (decrease) in cash from changes in: | |
Receivables, net | (23,046 | ) | | (11,038 | ) | Receivables, net | (39) | | | (25,965) | |
Inventories, prepaid expenses and other | (17,380 | ) | | 1,145 |
| Inventories, prepaid expenses and other | 15,579 | | | (43,018) | |
Customer deposits | 2,355 |
| | (212,459 | ) | Customer deposits | 111,967 | | | (59,910) | |
Accounts payable and accrued expenses | (83,556 | ) | | (14,304 | ) | Accounts payable and accrued expenses | (198,907) | | | 8,681 | |
Net cash provided by operating activities | 779,885 |
| | 497,889 |
| |
Net cash (used in) provided by operating activities | | Net cash (used in) provided by operating activities | (607,987) | | | 509,444 | |
Cash flows from investing activities: | | | | Cash flows from investing activities: | | | |
Capital expenditures, net of construction payables and retention | (878,335 | ) | | (1,154,255 | ) | Capital expenditures, net of construction payables and retention | (191,682) | | | (636,002) | |
Purchase of intangible and other assets | (6,000 | ) | | (102,388 | ) | Purchase of intangible and other assets | — | | | (1,000) | |
Proceeds from the sale or maturity of investment securities | — |
| | 359,461 |
| |
Purchase of investment securities | — |
| | (34,098 | ) | |
Proceeds from sale of assets | 592 |
| | 2,387 |
| |
Proceeds from sale of assets and other | | Proceeds from sale of assets and other | 3,733 | | | 441 | |
Net cash used in investing activities | (883,743 | ) | | (928,893 | ) | Net cash used in investing activities | (187,949) | | | (636,561) | |
Cash flows from financing activities: | | | | Cash flows from financing activities: | | | |
Proceeds from issuance of long-term debt | 2,549,072 |
| | 2,288,605 |
| Proceeds from issuance of long-term debt | 2,894,134 | | | 324,754 | |
Repayments of long-term debt | (2,443,367 | ) | | (3,030,526 | ) | Repayments of long-term debt | (527,535) | | | (603,857) | |
Proceeds from note receivable from sale of ownership interest in subsidiary | — |
| | 75,000 |
| |
Proceeds from issuance of common stock, net of issuance costs | — |
| | 915,187 |
| |
Repurchase of common stock | (65,705 | ) | | (2,805 | ) | Repurchase of common stock | (8,437) | | | (35,632) | |
Finance lease payment | (36 | ) | | — |
| Finance lease payment | (74) | | | — | |
Proceeds from exercise of stock options | 14,696 |
| | 20,313 |
| Proceeds from exercise of stock options | 70 | | | 12,545 | |
Dividends paid | (460,139 | ) | | (350,694 | ) | Dividends paid | (108,074) | | | (270,490) | |
Distribution to noncontrolling interest | (3,725 | ) | | (301,113 | ) | Distribution to noncontrolling interest | (998) | | | (2,727) | |
Payments to acquire derivatives | — |
| | (3,900 | ) | |
Payments for financing costs | (22,359 | ) | | (33,787 | ) | Payments for financing costs | (13,196) | | | (10,488) | |
Net cash used in financing activities | (431,563 | ) | | (423,720 | ) | |
Net cash provided by (used in) financing activities | | Net cash provided by (used in) financing activities | 2,235,890 | | | (585,895) | |
Effect of exchange rate on cash, cash equivalents and restricted cash | (1,610 | ) | | 1,090 |
| Effect of exchange rate on cash, cash equivalents and restricted cash | 4,341 | | | 56 | |
Cash, cash equivalents and restricted cash: | | | | Cash, cash equivalents and restricted cash: | | | |
Decrease in cash, cash equivalents and restricted cash | (537,031 | ) | | (853,634 | ) | |
Increase (decrease) in cash, cash equivalents and restricted cash | | Increase (decrease) in cash, cash equivalents and restricted cash | 1,444,295 | | | (712,956) | |
Balance, beginning of period | 2,219,323 |
| | 2,806,634 |
| Balance, beginning of period | 2,358,292 | | | 2,219,323 | |
Balance, end of period | $ | 1,682,292 |
| | $ | 1,953,000 |
| Balance, end of period | $ | 3,802,587 | | | $ | 1,506,367 | |
| | | | | | | |
Supplemental cash flow disclosures: | | | | Supplemental cash flow disclosures: | |
Cash paid for interest, net of amounts capitalized | $ | 265,873 |
| | $ | 276,989 |
| Cash paid for interest, net of amounts capitalized | $ | 238,044 | | | $ | 170,059 | |
Capitalized stock-based compensation | $ | 228 |
| | $ | 6 |
| |
Liability settled with shares of common stock | $ | 15,134 |
| | $ | 1,800 |
| Liability settled with shares of common stock | $ | 6,720 | | | $ | 15,134 | |
Accounts and construction payables related to property and equipment | $ | 202,375 |
| | $ | 174,530 |
| Accounts and construction payables related to property and equipment | $ | 127,674 | | | $ | 282,721 | |
Other liabilities related to intangible assets | $ | 13,463 |
| | $ | — |
| |
Financing costs included in accounts payable and other liabilities | $ | 2,093 |
| | $ | — |
| |
Dividends payable on unvested restricted stock included in other accrued liabilities | $ | 6,306 |
| | $ | 3,164 |
| |
Dividends payable to noncontrolling interests | $ | — |
| | $ | 138,816 |
| |
The accompanying notes are an integral part of these condensed consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 - Organization
Organization
Wynn Resorts, Limited, a Nevada corporation (together with its subsidiaries, "Wynn Resorts" or the "Company") is a designer, developer, owner and operator of destination casino resorts. integrated resorts featuring luxury hotel rooms, high-end retail space, an array of dining and entertainment options, meeting and convention facilities, and gaming.
In the Macau Special Administrative Region of the People's Republic of China ("Macau"), the Company owns approximately 72% of Wynn Macau, Limited ("WML"), which includes the operations of the Wynn Palace and Wynn Macau resorts. The Company refers to Wynn Palace and Wynn Macau as its Macau Operations. In Las Vegas, Nevada, the Company operates and, with the exception of certain retail space, owns 100% of Wynn Las Vegas. Additionally, the Company is a 50.1% owner and managing member of a joint venture that owns and leases certain retail space at Wynn Las Vegas (the "Retail Joint Venture"). The Company refers to Wynn Las Vegas and the Retail Joint Venture as its Las Vegas Operations. On June 23, 2019, the Company opened Encore Boston Harbor, an integrated resort in Everett, Massachusetts.Massachusetts, that is owned 100% by the Company.
Recent Developments Related to COVID-19
As previously disclosed, in January 2020, an outbreak of a new strain of coronavirus, COVID-19 ("COVID-19"), was identified. Since then, COVID-19 has spread around the world, and steps have been taken by various countries, including those in which the Company operates, to advise citizens to avoid non-essential travel, to restrict inbound international travel, to implement closures of non-essential operations, and to implement quarantines and lockdowns to contain the spread of the virus. Currently, no fully effective treatments or vaccines have been developed, and there can be no assurance as to if or when an effective treatment or vaccine will be discovered.
Macau Operations
In response to the COVID-19 pandemic, the Macau government announced on February 4, 2020 the closure of all casino operations in Macau, including those at Wynn Palace and Wynn Macau, for a period of 15 days. On February 20, 2020, casino operations at Wynn Palace and Wynn Macau reopened on a reduced basis and have since been fully restored; however, certain COVID-19 specific protective measures, such as traveler quarantines, limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, COVID-19 negative test results requirements for entry to gaming areas, and health declarations remain in effect at the present time.
Visitation to Macau has fallen significantly since the outbreak of COVID-19, driven by the pandemic's strong deterrent effect on travel and social activities, the Chinese government's suspension of its visa and group tour schemes that allow mainland Chinese residents to travel to Macau, various quarantine measures in Macau and elsewhere, travel and entry restrictions in Macau, Hong Kong, Taiwan, and mainland China, and the suspension of ferry services to Macau from Hong Kong and mainland China and other modes of transportation within Macau. Regionally, bans on entry or enhanced quarantine requirements, depending on the person’s residency and their recent travel history, for any Macau residents, PRC citizens, Hong Kong residents and Taiwan residents attempting to enter Macau are drastically impacting visitation. Persons who are not residents of the Greater China area are barred from entry to Macau at this time.
While most of the foregoing travel restrictions and quarantine requirements continue to weigh on visitation to Macau, beginning in June 2020 certain of these restrictions are being eased as the region gradually recovers from the COVID-19 pandemic. In July 2020, Guangdong Province, a Chinese province adjacent to Macau, eased certain quarantine requirements for those traveling between Guangdong Province and Macau, subject to certain testing requirements and health declarations. Quarantine requirements for those traveling between Hong Kong and Macau have been announced to remain effective until at least September 20, 2019,7, 2020, at which time they may be lifted. In the initial phase of opening travel channels between Macau and concurrentlyother regions, it is expected that all visitors seeking entry to Macau will need to test negative for COVID-19 before entering Macau. Although Mainland China and Macau have recently announced several policies or changes to policies which relax certain visa issuance, border control and quarantine requirements, stringent health declarations, testing and other procedures remain in place and the Individual Visitor Scheme which, prior to its suspension by the PRC government due to COVID-19 travel restrictions, permitted individual PRC citizens from nearly 50 PRC cities to travel to Macau for tourism purposes, has yet to restart.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Las Vegas Operations and Encore Boston Harbor
Wynn Las Vegas closed on March 17, 2020, and reopened on June 4, 2020 with certain COVID-19 specific protective measures in place, such as limiting the Refinancing Transactions (as definednumber of seats per table game, slot machine spacing, temperature checks, mask protection, and discussedsuspension of certain entertainment and nightlife offerings.
Encore Boston Harbor closed on March 15, 2020, for the remainder of the first and second quarters of 2020. On July 12, 2020, Encore Boston Harbor reopened with certain COVID-19 specific protective measures in place, such as limiting the number of seats per table game, slot machine spacing, temperature checks, and mask protection. In addition, certain food and beverage outlets remain closed and hotel reservations have been limited to Thursday through Sunday.
Summary
The COVID-19 pandemic has had and will continue to have an adverse effect on the Company's results of operations. The Company is currently unable to determine when protective measures in effect at our Macau Operations, Las Vegas Operations, and Encore Boston Harbor will be lifted. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, management cannot reasonably estimate the impact to the Company's future results of operations, cash flows, or financial condition.
As of June 30, 2020, the Company had total cash and cash equivalents, excluding restricted cash, of $3.80 billion, and had access to $15.9 million and $24.1 million of available borrowing capacity from the WRF Revolving Facility and Wynn Macau Revolving Facility, respectively. In addition, the Company has suspended its dividend program and has postponed major project capital expenditures. Given the Company's liquidity position at June 30, 2020 and the steps the Company has taken as further described in Note 6, "Long-Term Debt"), Wynn Resorts contributed all of its equity interests in Wynn Group Asia, Inc. ("Wynn Asia")Debt," the Company believes it is able to Wynn Resorts Finance, LLC, which was formerly known as Wynn America, LLC ("WRF"), making Wynn Asia a wholly owned subsidiary of WRF. WRF is an indirect wholly owned subsidiary of Wynn Resorts. Wynn Asia is a holding company that holds Wynn Resorts' approximately 72% controlling interest in WML.support continuing operations and respond to the current COVID-19 pandemic challenges.
Development Projects
The Company is currently constructing an approximately 430,000 square foot meeting and convention facility at Wynn Las Vegas. The facility will feature approximately 217,000 square feet of state-of-the-art meeting and convention space available for group reservations. The Company expects to open the additional meeting and convention facility in the first quarter of 2020. The Company opened the newly reconfigured Wynn Las Vegas golf course on October 11, 2019.
Note 2 - Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures herein are adequate to make the information presented not misleading. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to a fair presentation of the results for the interim periods presented. The results for the three and ninesix months ended SeptemberJune 30, 20192020 are not necessarily indicative of results to be expected for the full fiscal year. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.2019.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities ("VIEs") of which the Company is determined to be the primary beneficiary. For information on the Company's VIEs, see Note 15, "Retail Joint Venture." All significant intercompany accounts and transactions have been eliminated.
Accounts Receivable
Accounts receivable, including casino and hotel receivables, are typically non-interest bearing and are recorded at amortized cost. Casino receivables primarily consist of credit issued to patrons in the form of markers and advances paid to gaming promoters. The Company issues credit based on factors such as level of play and financial resources, following background and credit checks. The casino credit extended by the Company is generally unsecured and due on demand. Gaming promoter advances are settled shortly after each month end.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Leases
Lessee Arrangements
An estimated allowance for credit losses is maintained to reduce the Company's receivables to their carrying amount, which reflects the net amount the Company expects to collect. The Company isallowance estimate reflects specific review of customer accounts and outstanding gaming promoter accounts with a balance over a specified dollar amount, based upon the lessee under non-cancelable real estate and equipment leases. Beginning on January 1, 2019 (the dateage of the Company's adoptionaccount, the customer's financial condition as well as management's experience with historical and current collection trends, current economic and business conditions, and management's expectations of Topic 842, as definedfuture economic and discussed further in "Recently Adopted Accounting Standards"), operating lease assetsbusiness conditions and liabilitiesforecasts. Accounts are measured andwritten off when management deems them to be uncollectible. Recoveries of accounts previously written off are recorded upon lease commencement at the present value of the future minimum lease payments. The Company combines lease and nonlease components in its determination of minimum lease payments, except for certain asset classes that have significant nonlease components. As the interest rate implicit in its leases is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of lease payments. The Company does not record an asset or liability for operating leases with a term of less than one year. Variable lease costs generally arise from changes in an index, such as the consumer price index. Variable lease costs are expensed as incurred and are not included in the determination of lease assets or liabilities. Prior to the adoption of Topic 842 on January 1, 2019, the Company did not record an asset or liability for any of its operating leases.when received.
Lessor Arrangements
The Company is the lessor under non-cancelable operating leases for retail and food and beverage outlet space at its integrated resorts, which represents approximately 101,000, 59,000, 142,000, and 36,000 square feet of space at Wynn Palace, Wynn Macau, Wynn Las Vegas, and Encore Boston Harbor, respectively. The lease arrangements generally include minimum base rent and contingent rental clauses based on a percentage of net sales. Generally, the terms of the leases range between five and 10 years. The Company records revenue on a straight-line basis over the term of the lease, and recognizes revenue for contingent rentals when the contingency has been resolved. The Company has elected to combine lease and nonlease components for the purpose of measuring lease revenue. Revenue is recorded in entertainment, retail and other revenue on the Condensed Consolidated Statements of Operations.
Gaming Taxes
The Company is subject to taxes based on gross gaming revenues in the jurisdictions in which it operates, subject to applicable jurisdictional adjustments. These gaming taxes are recorded as casino expenses in the accompanying Condensed Consolidated Statements of Operations. These taxes totaled $543.9$12.5 million and $638.4$561.8 million for the three months ended SeptemberJune 30, 2020 and 2019, respectively, and 2018,$266.4 million and $1.69 billion and $1.81$1.15 billion for the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, respectively.
Pre-opening expenses
Pre-opening expenses represent personnel, advertising, and other costs incurred prior to the opening of new ventures and are expensed as incurred. During the nine months ended September 30, 2019 and 2018, the Company incurred pre-opening expenses primarily in connection with the development of Encore Boston Harbor.
Recently Adopted Accounting Standards
Leases
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases ("Topic 842"), which requires recognition of lease assets and liabilities on the balance sheet and disclosure of additional information about leasing activities. The Company adopted this standard using a modified retrospective transition approach with an initial application date of January 1, 2019. As a result, prior periods were not retrospectively adjusted and are not comparable to current periods. The Company elected the practical expedient permitting lessees to carry forward historical lease classifications for existing arrangements. The following is a summary of the significant impacts on the Company's balance sheet as of January 1, 2019:
The Company recognized operating lease assets and liabilities of $154.1 million, which represented the discounted future minimum lease payments of all existing leases on the initial application date.
The net carrying amount of a definite-lived intangible asset, which related to a leasehold interest in land and totaled $88.1 million, was reclassified to operating lease assets.
Leasehold interests in land, net, which totaled $206.9 million, were reclassified to operating lease assets from property and equipment, net.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Certain other initial direct cost assets, prepaid lease assets, and deferred rent accrued liabilities were reclassified to operating lease assets.
As the Company elected to carry forward historical lease classifications, an arrangement concluded to contain a capital lease under the previous standard was deemed a finance lease under Topic 842, with no resultant change in accounting other than the reclassification of associated initial direct costs from other assets to property and equipment, net. There was no impact on the Company's operating income, net income or cash flows as a result of adopting Topic 842.
Accounting Standards Issued But Not Yet Adopted
Financial Instruments - Credit Losses
The FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) in 2016. The new guidance replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For trade and other receivables, loans and other financial instruments, the Company will beis required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. The Company adopted the guidance effective January 1, 2020, and this adoption did not have a material effect on its Condensed Consolidated Financial Statements.
Cloud Computing Arrangement Implementation Costs
In August 2018, the FASB issued ASU No. 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The ASU is intended to eliminate potential diversity in practice in accounting for costs incurred to implement cloud computing arrangements that are service contracts by requiring customers in such arrangements to follow internal-use software guidance with respect to such costs, with any resulting deferred implementation costs recognized over the term of the contract in the same income statement line item as the fees associated with the hosting element of the arrangement. The Company adopted the guidance effective January 1, 2020, and this adoption did not have a material effect on its Condensed Consolidated Financial Statements.
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The new guidance willamends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying, and adding certain disclosures on fair value measurements in ASC 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be effectiveapplied prospectively for only the Company beginning January 1, 2020. Applicationmost recent interim or annual period presented in the initial fiscal year of theadoption. All other amendments is through a cumulative-effect adjustmentshould be applied retrospectively to retained earnings as of theall periods presented upon their effective date. The Company is currently assessingadopted the impact that theguidance effective January 1, 2020, and this adoption of the new guidance will have on its Consolidated Financial Statements, but doesdid not expect that it will have a material impact.effect on its Condensed Consolidated Financial Statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 3 - Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following (in thousands):
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Cash and cash equivalents: | | | |
Cash (1) | $ | 1,191,948 |
| | $ | 1,455,744 |
|
Cash equivalents (2) | 484,162 |
| | 759,257 |
|
Total cash and cash equivalents | 1,676,110 |
| | 2,215,001 |
|
Restricted cash (3) | 6,182 |
| | 4,322 |
|
Total cash, cash equivalents and restricted cash | $ | 1,682,292 |
| | $ | 2,219,323 |
|
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Cash and cash equivalents: | | | |
Cash (1) | $ | 2,407,678 | | | $ | 1,265,502 | |
Cash equivalents (2) | 1,390,062 | | | 1,086,402 | |
Total cash and cash equivalents | 3,797,740 | | | 2,351,904 | |
Restricted cash (3) | 4,847 | | | 6,388 | |
Total cash, cash equivalents and restricted cash | $ | 3,802,587 | | | $ | 2,358,292 | |
(1) Cash consists of cash on hand and bank deposits.
(2) Cash equivalents consist of bank time deposits and money market funds.
(3) Restricted cash consists of cash collateral associated with obligations and cash held in a trust in accordance with WML's share award plan.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 4 - Receivables, net
Accounts Receivable and Credit Risk
Receivables, net consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Casino | $ | 264,186 | | | $ | 304,137 | |
Hotel | 8,197 | | | 22,114 | |
Other | 112,255 | | | 59,495 | |
| 384,637 | | | 385,746 | |
Less: allowance for credit losses | (88,319) | | | (39,317) | |
| $ | 296,318 | | | $ | 346,429 | |
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Casino | $ | 239,813 |
| | $ | 229,594 |
|
Hotel | 21,272 |
| | 22,086 |
|
Other | 58,407 |
| | 57,658 |
|
| 319,492 |
| | 309,338 |
|
Less: allowance for doubtful accounts | (32,881 | ) | | (32,694 | ) |
| $ | 286,611 |
| | $ | 276,644 |
|
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of casino receivables. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, approximately 80.2%82.3% and 85.0%79.0%, respectively, of the Company's markers were due from customers residing outside the United States, primarily in Asia. Business or economic conditions or other significant events in the countries in which our customers reside could affect the collectability of such receivables. The Company believes the concentration of its credit risk in casino receivables is mitigated substantially by its credit investigation process, credit policies and collection procedures.
The Company’s allowance for casino credit losses was 31.9% and 12.4% of gross casino receivables as of June 30, 2020 and December 31, 2019, respectively. The increase in allowance for casino credit losses is primarily due to the impact of historical collection patterns and expectations of current and future collection trends in light of the COVID-19 pandemic, as well as the specific review of customer accounts. Although the Company believes that its allowance is adequate, it is possible the estimated amounts of cash collections with respect to receivables could change. The Company’s allowance for credit losses from its hotel and other receivables is not material.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table shows the movement in the Company's allowance for credit losses recognized for receivables that occurred during the period (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | June 30, 2019 |
Balance at beginning of year | $ | 39,317 | | | $ | 32,694 | |
Provision for credit losses | 48,960 | | | 9,003 | |
Write-offs | (144) | | | (12,391) | |
Recoveries of receivables previously written-off | 60 | | | — | |
Effect of exchange rate | 126 | | | 54 | |
Balance at end of period | $ | 88,319 | | | $ | 29,360 | |
Note 5 - Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
| | | September 30, 2019 | | December 31, 2018 | | June 30, 2020 | | December 31, 2019 |
Buildings and improvements | $ | 9,288,609 |
| | $ | 7,707,467 |
| Buildings and improvements | $ | 9,737,338 | | | $ | 9,367,241 | |
Land and improvements | 1,225,849 |
| | 1,141,032 |
| Land and improvements | 1,260,749 | | | 1,246,679 | |
Furniture, fixtures and equipment | 2,923,900 |
| | 2,288,370 |
| Furniture, fixtures and equipment | 2,999,880 | | | 2,932,483 | |
Leasehold interests in land | — |
| | 313,516 |
| |
Airplanes | 110,623 |
| | 110,623 |
| Airplanes | 110,623 | | | 110,623 | |
Construction in progress | 445,098 |
| | 1,912,801 |
| Construction in progress | 155,393 | | | 477,333 | |
| 13,994,079 |
|
| 13,473,809 |
| | 14,263,983 | | | 14,134,359 | |
Less: accumulated depreciation | (4,372,811 | ) | | (4,087,889 | ) | Less: accumulated depreciation | (4,848,670) | | | (4,510,527) | |
| $ | 9,621,268 |
|
| $ | 9,385,920 |
| | $ | 9,415,313 | | | $ | 9,623,832 | |
As of September 30, 2019, construction in progress consisted primarily of costs capitalized, including interest, for the construction of the additional meeting and convention space at Wynn Las Vegas. As of December 31, 2018, construction in progress consisted primarily of costs capitalized, including interest, for the construction of Encore Boston Harbor. On June 23, 2019, Encore Boston Harbor opened and its associated construction in progress balance was placed into service.
The Company capitalized interest of $3.3 millionDepreciation expense for the three months ended SeptemberJune 30, 2020 and 2019 primarily in connection with the construction of the additional meetingwas $172.8 million and convention space at Wynn Las Vegas. The Company capitalized interest of $16.2$135.6 million, and depreciation expense for the threesix months ended SeptemberJune 30, 2018,2020 and $50.22019 was $345.1 million and $37.7$267.9 million, for the nine months ended September 30, 2019 and 2018, respectively, primarily in connection with the construction of Encore Boston Harbor.respectively.
Beginning January 1, 2019, leasehold interests in land, net of related accumulated amortization were reclassified to operating lease assets with the adoption of Topic 842.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 6 - Long-Term Debt
Long-term debt consisted of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Macau Related: | | | |
Wynn Macau Credit Facilities (1): | | | |
Wynn Macau Term Loan, due 2022 (2) | $ | 2,156,960 | | | $ | 2,302,540 | |
Wynn Macau Revolver, due 2022 (3) | 726,995 | | | 350,232 | |
WML 4 7/8% Senior Notes, due 2024 | 600,000 | | | 600,000 | |
WML 5 1/2% Senior Notes, due 2026 | 750,000 | | | — | |
WML 5 1/2% Senior Notes, due 2027 | 750,000 | | | 750,000 | |
WML 5 1/8% Senior Notes, due 2029 | 1,000,000 | | | 1,000,000 | |
| | | |
U.S. and Corporate Related: | | | |
WRF Credit Facilities (4): | | | |
WRF Term Loan, due 2024 | 962,500 | | | 987,500 | |
WRF Revolver, due 2024 | 816,000 | | | — | |
WLV 4 1/4% Senior Notes, due 2023 | 500,000 | | | 500,000 | |
WLV 5 1/2% Senior Notes, due 2025 | 1,780,000 | | | 1,780,000 | |
WLV 5 1/4% Senior Notes, due 2027 | 880,000 | | | 880,000 | |
WRF 5 1/8% Senior Notes, due 2029 | 750,000 | | | 750,000 | |
WRF 7 3/4% Senior Notes, due 2025 | 600,000 | | | — | |
Retail Term Loan, due 2025 (5) | 615,000 | | | 615,000 | |
| 12,887,455 | | | 10,515,272 | |
Less: Unamortized debt issuance costs and original issue discounts and premium, net | (112,222) | | | (111,413) | |
| 12,775,233 | | | 10,403,859 | |
Less: Current portion of long-term debt | (298,050) | | | (323,876) | |
Total long-term debt, net of current portion | $ | 12,477,183 | | | $ | 10,079,983 | |
|
| | | | | | | |
| September 30, 2019 | | December 31, 2018 |
Macau Related: | | | |
Wynn Macau Credit Facilities: | | | |
Senior Term Loan Facility, due 2022 (1) | $ | 2,295,759 |
| | $ | 2,296,999 |
|
Senior Revolving Credit Facility, due 2022 (2) | 448,982 |
| | 623,921 |
|
4 7/8% Senior Notes, due 2024 | 600,000 |
| | 600,000 |
|
5 1/2% Senior Notes, due 2027 | 750,000 |
| | 750,000 |
|
| | | |
U.S. and Corporate Related: | | | |
WRF Senior Secured Credit Facilities (3): | | | |
WRF Term Loan, due 2024 | 1,000,000 |
| | — |
|
WRF Revolver, due 2024 | 25,000 |
| | — |
|
WLV 4 1/4% Senior Notes, due 2023 | 500,000 |
| | 500,000 |
|
WLV 5 1/2% Senior Notes, due 2025 | 1,780,000 |
| | 1,780,000 |
|
WLV 5 1/4% Senior Notes, due 2027 | 880,000 |
| | 880,000 |
|
WRF 5 1/8% Senior Notes, due 2029 | 750,000 |
| | — |
|
Retail Term Loan, due 2025 (4) | 615,000 |
| | 615,000 |
|
Wynn America Senior Term Loan Facility, due 2021 (5) | — |
| | 994,780 |
|
Wynn Resorts Term Loan, due 2024 (5) | — |
| | 500,000 |
|
| 9,644,741 |
| | 9,540,700 |
|
Less: Unamortized debt issuance costs and original issue discounts and premium, net | (106,778 | ) | | (117,600 | ) |
| 9,537,963 |
| | 9,423,100 |
|
Less: Current portion of long-term debt | (116,118 | ) | | (11,960 | ) |
Total long-term debt, net of current portion | $ | 9,421,845 |
| | $ | 9,411,140 |
|
(1) Approximately $1.31The borrowings under the Wynn Macau Credit Facilities bear interest at LIBOR or HIBOR plus a margin of 1.50% to 2.25% per annum based on Wynn Resorts Macau S.A.’s leverage ratio.
(2) As of June 30, 2020, approximately $1.22 billion and $990.8$937.0 million of the Wynn Macau Senior Term Loan Facility bearsbore interest at a rate of LIBOR plus 1.75% per year and HIBOR plus 1.75% per year, respectively. As of SeptemberJune 30, 2019,2020, the weighted average interest rate was approximately 3.73%2.04%.
(2) Approximately $256.5(3) As of June 30, 2020, approximately $413.3 million and $192.4$313.7 million of the Wynn Macau Senior Revolving Credit Facility bearsRevolver bore interest at a rate of LIBOR plus 1.75% per year and HIBOR plus 1.75% per year, respectively. As of SeptemberJune 30, 2019,2020, the weighted average interest rate was approximately 3.80%, and2.09%. As of June 30, 2020, the available borrowing capacity under the Wynn Macau Revolver was $298.3$24.1 million.
(3)(4) The Wynn Resorts FinanceWRF Credit Facilities bear interest at a rate of LIBOR plus 1.75% per year. As of SeptemberJune 30, 2019,2020, the weighted average interest rate was 3.80%approximately 1.93%. Additionally, as of SeptemberJune 30, 2019,2020, the available borrowing capacity under the Revolving Credit FacilityWRF Revolver was $806.9$15.9 million, net of $18.1 million in outstanding letters of credit.
(4)(5) The Retail Term Loan bears interest at a rate of LIBOR plus 1.70% per year. As of SeptemberJune 30, 2019,2020, the interest rate was 3.80%1.87%.
(5)
WML 5 1/2% Senior Notes, due 2026
On June 19, 2020, WML issued $750.0 million aggregate principal amount of 5 1/2% Senior Notes due 2026 (the "2026 WML Notes") pursuant to an indenture (the "2026 Indenture").
The Wynn America Credit Facilities,2026 WML Notes will mature on January 15, 2026 and bear interest at the rate of 5 1/2% per annum payable in arrears semi-annually on January 15 and July 15 of each year, beginning on January 15, 2021. At any time prior to June 15, 2022, WML may use the net cash proceeds from certain equity offerings to redeem up to 35% of the aggregate principal amount of the 2026 WML Notes at a redemption price equal to 105.500% of the aggregate principal amount of the 2026 WML Notes, plus accrued and unpaid interest, if any. At any time prior to June 15, 2022, WML may redeem the 2026 WML Notes in whole or in part at a redemption price equal to the greater of (a) 100% of the aggregate principal amount of the 2026 WML
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Notes to be redeemed, or (b) a make-whole amount as determined by an independent investment banker in accordance with the terms of the 2026 Indenture, in either case, plus accrued and unpaid interest.
In addition, on or after June 15, 2022, WML may redeem the 2026 WML Notes in whole or in part at a premium decreasing annually from 104.125% of the applicable principal amount to 100.000%, plus accrued and unpaid interest. If WML undergoes a Change of Control (as defined in the 2026 Indenture), it must offer to repurchase the 2026 WML Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest. In addition, WML may redeem the 2026 WML Notes, in whole but not in part, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest, in response to any change in or amendment to certain tax laws or tax positions. Further, if a holder or beneficial owner of the 2026 WML Notes fails to meet certain requirements imposed by any Gaming Authority (as defined in the 2026 Indenture), WML may require the holder or beneficial owner to dispose of or redeem its 2026 WML Notes.
Upon the occurrence of (a) any event after which includednone of WML or any subsidiary of WML has the applicable gaming concessions or authorizations in Macau in substantially the same manner and scope as WML and its subsidiaries are entitled to at the date on which the 2026 WML Notes are issued, for a period of ten consecutive days or more, and such event has a material adverse effect on WML and its subsidiaries, taken as a whole; or (b) the termination or modification of any such concessions or authorizations which has a material adverse effect on WML and its subsidiaries, taken as a whole, each holder of the 2026 WML Notes will have the right to require WML to repurchase all or any part of such holder's 2026 WML Notes at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest.
The 2026 WML Notes are WML's general unsecured obligations and rank pari passu in right of payment with all of WML's existing and future senior unsecured indebtedness; will rank senior to all of WML's future subordinated indebtedness, if any; will be effectively subordinated to all of WML's future secured indebtedness to the extent of the value of the assets securing such debt; and will be structurally subordinated to all existing and future obligations of WML's subsidiaries, including WML's existing credit facilities. The 2026 WML Notes are not registered under the Securities Act of 1933, as amended (the "Securities Act"), and the 2026 WML Notes are subject to restrictions on transferability and resale.
The 2026 Indenture contains covenants limiting WML's (and certain of its subsidiaries') ability to, among other things: merge or consolidate with another company; transfer or sell all or substantially all of its properties or assets; and lease all or substantially all of its properties or assets. The terms of the 2026 Indenture contain customary events of default, including, but not limited to: default for 30 days in the payment when due of interest on the 2026 WML Notes; default in the payment when due of the principal of, or premium, if any, on the 2026 WML Notes; failure to comply with any payment obligations relating to the repurchase by WML of the 2026 WML Notes upon a change of control; failure to comply with certain covenants in the 2026 Indenture; certain defaults on certain other indebtedness; failure to pay judgments against WML or certain subsidiaries that, in the aggregate, exceed $50 million; and certain events of bankruptcy or insolvency. In the case of an event of default arising from certain events of bankruptcy or insolvency, all 2026 WML Notes then outstanding will become due and payable immediately without further action or notice.
WML intends to use the net proceeds from the 2026 WML Notes for general corporate purposes until WML's business recovers from the effects of the COVID-19 pandemic, and then to facilitate the repayment of a portion of the amounts outstanding under the Wynn AmericaMacau Credit Facilities. In addition, WML used a portion of the net proceeds from the 2026 WML Notes to pay related fees and expenses totaling $7.1 million, which was recorded as debt issuance costs within the Condensed Consolidated Balance Sheet.
WRF 7 3/4% Senior Term Loan Facility, and the Wynn Resorts Term Loan were prepaid in full on September 20, 2019, in connection with the Refinancing Transactions, as defined and discussed below.Notes, due 2025
Refinancing Transactions
On September 20, 2019,April 14, 2020, WRF and its subsidiary Wynn Resorts Capital Corp. (collectively with WRF, the "WRF Issuers"), each an indirect wholly owned subsidiary of the Company, issued $750.0$600.0 million aggregate principal amount of 5 1/8%7 3/4% Senior Notes due 20292025 (the "2029"2025 WRF Notes") pursuant to an indenture (the "2029"2025 Indenture") among the WRF Issuers, the guarantors party thereto, and U.S. Bank National Association, as trustee (the "Trustee"), in a private offering. The 20292025 WRF Notes were issued at par.
Concurrently withThe 2025 WRF Notes will mature on April 15, 2025 and bear interest at the issuancerate of 7 3/4% per annum payable in arrears semi-annually on April 15 and October 15 of each year, beginning on October 15, 2020. The WRF Issuers may redeem some or all of the 20292025 WRF Notes WRF entered intoat any time prior to April 15, 2022 at a credit agreement (the "WRF Credit Agreement") providing for a new first lien term loan facility in anredemption price equal to 100% of the aggregate principal amount of $1.0 billion (the "WRF Term Loan")the 2025 WRF Notes to be redeemed plus a "make-whole" premium and a new first lien revolving credit facility in an aggregate principal amount of $850.0 million (the "WRF Revolver"accrued and together withunpaid interest. In addition, at any time prior to April 15, 2022, the WRF Term Loan,Issuers may, on any one or more occasions, redeem up to 35% of the "WRF Senior Secured Credit Facilities") (the WRF Senior Secured Credit Facilities and 2029 Notes are collectively referred to as the "Refinancing Transactions").
original
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
aggregate principal amount of the 2025 WRF used the net proceeds from the Refinancing Transactions to refinance the existing Wynn America credit facilities and the Wynn Resorts term loan and to pay related fees and expenses totaling $18.8 million, of which $14.8 million was recorded as debt issuance costs within the Condensed Consolidated Balance Sheet. The Company recognized the Refinancing Transactions primarily as a modification of existing debtNotes with the related unamortized debt issuance costs reallocated to the new debt instruments. For those componentsproceeds of debt that were deemed extinguished, the Company recognized a loss on extinguishment of debt of $12.2 million.
WRF Senior Secured Credit Facilities
Subject to certain exceptions, the WRF Senior Secured Credit Facilities bear interest at LIBOR plus 1.75% per annum. The annual fee required to pay for unborrowed amounts under the WRF Revolver, if any, is 0.25% per annum, payable quarterly in arrears, calculated based on the daily average of the unborrowed amounts under such credit facilities. The Company is required to make quarterly repayments on the WRF Term Loan of $12.5 million beginning in the fourth quarter of 2019, with any remaining principal amount outstanding repayable in full on September 20, 2024.
The WRF Credit Agreement contains customary representations and warranties, events of default and negative and affirmative covenants, including, but not limited to, covenants that restrict our ability to pay dividendsone or distributions to any direct or indirect subsidiaries, to incur and/or repay indebtedness, to make certain restricted payments, and to enter into mergers and acquisitions, negative pledges, liens, transactions with affiliates, and sales of assets. In addition, Wynn Resorts Finance is subject to financial covenants, including maintaining a Consolidated First Lien Net Leverage Ratio, as defined in the WRF Credit Agreement. Commencing with the fourth quarter of 2019, the Consolidated Senior Secured Net Leverage Ratio is not to exceed 3.75 to 1.00.
The WRF Credit Facilities are guaranteed by each of WRF's existing and future wholly owned domestic restricted subsidiaries (the "Guarantors"), subject to certain exceptions, and are secured by a first priority lien on substantially all of WRF's and each of the guarantors' existing and future property and assets, subject to certain exceptions, including a limitation on the amount of collateral granted by Wynn Las Vegas, LLC ("WLV") and its subsidiaries so as to not violate the indenture governing WLV's outstanding senior notes.
2029 Notes
The 2029 Notes will mature on October 1, 2029 and bear interest at the rate of 5 1/8% per annum, payable in arrears semi-annually on April 1 and October 1 of each year, beginning on April 1, 2020. The WRF Issuers may redeem some or all of the 2029 Notes at any timemore equity offerings at a redemption price equal to 100%107.75% of the aggregate principal amount of the 2029 Notes to be redeemedthereof, plus a make-whole premium, as defined in the 2029 Indenture, and accrued and unpaid interest.interest, if any, to, but not including, the applicable redemption date. On or after July 1, 2029,April 15, 2022, the WRF Issuers may redeem some or all of the 20292025 WRF Notes at the redemption prices set forth in the 20292025 Indenture plus accrued and unpaid interest. In the event of a change of control triggering event, the WRF Issuers will be required tomust offer to repurchase the 20292025 WRF Notes at a repurchase price equal to 101% of the aggregate principal amount thereof plus any accrued and unpaid interest, if any, to, but not including, the repurchase date. The 20292025 WRF Notes are also subject to disposition and redemption requirements imposed by gaming laws and regulations of applicable gaming regulatory authorities.
The 2029 Notes are the2025 WRF Issuers' senior unsecured obligations and rank pari passu in right of payment with the WLV senior notes due 2023, 2025, and 2027, and rank equally in right of payment with Wynn Las Vegas' guarantee of the WRF Senior Secured Credit Facilities, and rank senior in right of payment to all of the Issuers' existing and future subordinated debt. The 2029 Notes are effectively subordinated in right of payment to all of the WRF Issuers' existing and future secured debt (to the extent of the value of the collateral securing such debt), and structurally subordinated to all of the liabilities of any of the WRF Issuers' subsidiaries that do not guarantee the 2029 Notes, including WML and its subsidiaries.
The 2029 Notes are jointly and severally guaranteed by each of WRF'sWRF’s existing domestic restricted subsidiaries that guarantee indebtedness under the Credit Agreement,WRF's senior secured credit facilities and the WRF Issuers' existing 5 1/8% senior notes due 2029, including Wynn Las Vegas, LLC and each of its subsidiaries that guarantees its existing senior notes due 2023, 2025 and 2027. The guarantees are senior unsecured obligations of the Guarantors and rank senior in right of payment to all of their future subordinated debt. The guarantees rank equally in right of payment with all existing and future liabilities of the Guarantors that are not so subordinated and will be effectively subordinated in right of payment to all of such Guarantors' existing and future secured debt (to the extent of the collateral securing such debt).
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The 20292025 Indenture contains covenants that limit the ability of the WRF Issuers and the guarantors to, among other things, enter into sale-leaseback transactions, create or incur liens to secure debt, and merge, consolidate or sell all or substantially all of the WRF Issuers' assets. These covenants are subject to exceptions and qualifications set forth in the 20292025 Indenture.
The 20292025 Indenture also contains customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain covenants, failure to pay certain other indebtedness, certain events of bankruptcy and insolvency, and failure to pay certain judgments. An event of default under the 20292025 Indenture allows either the Trustee or the holders of at least 25% in aggregate principal amount of the 20292025 WRF Notes, as applicable, issued under such 20292025 Indenture to accelerate the amounts due under the 20292025 WRF Notes, or in the case of a bankruptcy or insolvency, will automatically cause the acceleration of the amounts due under the 20292025 WRF Notes.
The 20292025 WRF Notes were offered pursuant to an exemption under the Securities Act of 1933, as amended (the "Securities Act"). The 20292025 WRF Notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act or outside the United States to certain persons in reliance on Regulation S under the Securities Act. The 20292025 WRF Notes have not been and will not be registered under the Securities Act or under any state securities laws. Therefore, the 2029WRF 2025 Notes may not be offered or sold within the United States to, or for the account or benefit of, any United States person unless the offer or sale would qualify for a registration exemption from the Securities Act and applicable state securities laws.
Wynn AmericaWRF used the net proceeds from the 2025 WRF Notes offering for general corporate purposes and to pay related fees and expenses totaling $5.6 million, of which $5.2 million was recorded as debt issuance costs within the Condensed Consolidated Balance Sheet.
WRF Credit FacilitiesAgreement Amendment
On September 20, 2019, the Wynn America credit facilities were repaid in full in connection with the Refinancing TransactionsApril 10, 2020, WRF and the Wynn Americacertain of its subsidiaries entered into an amendment (the "WRF Credit Agreement Amendment") to its existing credit agreement was terminated.
Wynn Resorts Term Loan
On October 30, 2018, the Company and certain subsidiaries of the Company entered into a credit agreement (as subsequently amended, the "WRL(the "WRF Credit Agreement") to provide for a $500.0 million six year term loan facility (the "WRL Term Loan I"). On March 8, 2019,among Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the Company, certain subsidiaries ofother lenders party thereto.
The WRF Credit Agreement Amendment amends the Company, and certain incremental term facility lenders entered into an incremental joinder agreement that amended the WRLWRF Credit Agreement to, among other things, provideimplement a financial covenant relief period (the "Financial Covenant Relief Period") through April 1, 2021 (unless earlier terminated by WRF), implement a financial covenant increase period (the "Financial Covenant Increase Period") commencing on the Company with an additional $250.0 million term loan (the "WRL Term Loan II,"first day after the expiration of the Financial Covenant Relief Period and collectively withending on the WRL Term Loan I,first day of the "Wynn Resorts Term Loan")fourth fiscal quarter after the expiration of the Financial Covenant Relief Period (unless earlier terminated by WRF), amend the definition of "Consolidated EBITDA" in the WRF Credit Agreement during the Financial Covenant Increase Period, amend WRF's financial reporting obligations (including extensions to certain deadlines), add certain restrictions on substantially similar terms asrestricted payments (including restrictions on a portion of dividends received from WRF's subsidiaries) during the WRL Term Loan I. On September 20, 2019, the Wynn Resorts Term Loan was prepaid in full in connection with the Refinancing TransactionsFinancial Covenant Relief Period and the WRLFinancial Covenant Increase Period, and amend the definition of "Material Adverse Effect" in the WRF Credit Agreement was terminated.to take into consideration COVID-19.
Commitment Letter
On March 8, 2019, in connection withDuring the WRL Term Loan II,Financial Covenant Relief Period, the Company agreed to terminate the remaining $250.0 million of the lenders' commitments under the commitment letter. Accordingly, there are 0 remaining commitments under the commitment letter.
Redemption Price Promissory Note
On February 18, 2012, pursuant to its articles of incorporation, the Company redeemed and canceled all Aruze USA, Inc.'s ("Aruze") 24,549,222 shares of Wynn Resorts' common stock. In connection with the redemption of the shares, the Company issued a promissory note (the "Redemption Note")existing consolidated first lien net leverage ratio financial covenant will be replaced with a principal amountminimum liquidity financial covenant that requires WRF and its restricted subsidiaries to maintain liquidity of $1.94 billion, a maturity dateat least $300.0 million at all times (with liquidity being the sum of February 18, 2022 and an interest rate of 2% per annum, payable annuallyunrestricted operating cash, as defined in arrears on each anniversary of the date of the Redemption Note. The Redemption Note was recorded at fair value in accordance with applicable accounting guidance. The Company repaid the principal amount in full on March 30, 2018. On March 30, 2018, the Company also paid an additional $463.6 million in settlement of certain legal claims concerning the Redemption Note, which is recorded as a litigation settlement expense on the Condensed Consolidated Statements of Operations.
Debt Covenant Compliance
As of September 30, 2019, management believes the Company was in compliance with all debt covenants.
WRF Credit
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Agreement, and the available borrowing capacity under the WRF Revolver). Following the Financial Covenant Relief Period and for as long as the Financial Covenant Increase Period is in effect, WRF may not permit the consolidated first lien net leverage ratio as of the last day of any fiscal quarter to exceed for the first fiscal quarter of the Financial Covenant Increase Period, 4.50 to 1.00, for the second fiscal quarter of the Financial Covenant Increase Period, 4.25 to 1.00, for the third fiscal quarter of the Financial Covenant Increase Period, 4.00 to 1.00, and for each subsequent fiscal quarter thereafter (including from and including the first fiscal quarter during which the Financial Covenant Increase Period has been terminated by WRF), 3.75 to 1.00.
Retail Term Loan Agreement Amendment
On May 5, 2020, Wynn/CA Plaza Property Owner, LLC and Wynn/CA Property Owner, LLC (collectively, the "Retail Borrowers"), subsidiaries of the Retail Joint Venture, entered into an amendment (the "Retail Term Loan Agreement Amendment") to its existing retail term loan agreement (the "Retail Term Loan Agreement"). The Retail Term Loan Agreement Amendment amends the Retail Term Loan Agreement to, among other things, temporarily suspend the requirement to maintain certain financial ratios to avoid triggering excess cash sweep provisions from the first quarter of 2020 through the fourth quarter of 2021.
Debt Covenant Compliance
As of June 30, 2020, management believes the Company was in compliance with all debt covenants.
Fair Value of Long-Term Debt
The estimated fair value of the Company's long-term debt as of SeptemberJune 30, 20192020 and December 31, 2018,2019, was approximately $9.81$12.03 billion and $8.97$10.80 billion, respectively, compared to its carrying value, excluding debt issuance costs and original issue discount and premium, of $9.64$12.89 billion and $9.54$10.52 billion, respectively. The estimated fair value of the Company's long-term debt is based on recent trades, if available, and indicative pricing from market information (Level 2 inputs).
Note 7 - Stockholders' Equity
Dividends
During the first quarter of 2020, the Company paid a cash dividend of $1.00 per share, and recorded $107.5 million as a reduction of retained earnings from cash dividends declared.
On February 26,May 6, 2020, the Company announced that it had suspended its quarterly dividend program due to the financial impact of the COVID-19 pandemic.
During the first and second quarter of 2019, the Company paid a cash dividend of $0.75 and on May 30, 2019 and August 27, 2019, the Company paid cash dividends of $1.00 per share, respectively. During the threerespectively, and nine months ended September 30, 2019, the Company recorded $107.3$80.7 million and $295.6$107.6 million, respectively, as a reduction of retained earnings from cash dividends declared.
On February 27, 2018, the Company paid a cash dividend of $0.50 and on May 29, 2018 and August 28, 2018, the Company paid cash dividends of $0.75 per share, respectively. During the three and nine months ended September 30, 2018, the Company recorded $81.4 million and $214.1 million, respectively, as a reduction of retained earnings from cash dividends declared.
On November 6, 2019, the Company announced a cash dividend of $1.00 per share, payable on November 22, 2019, to stockholders of record as of November 14, 2019.
Noncontrolling Interests
On September 16,The board of directors of WML concluded not to recommend the payment of a dividend with respect to the year ended December 31, 2019 WML paid a cash dividenddue to the financial impact of HK$0.45 per share for a total of $298.0 million. The Company's share of this dividend was $215.1 million with a reduction of $82.9 million to noncontrolling interest in the accompanying Condensed Consolidated Balance Sheet.COVID-19 pandemic.
OnDuring the three months ended June 19,30, 2019, WML paid a cash dividend of HK$0.45 per share for a total of $298.0 million. The Company's share of this dividend was $215.0 million with a reduction of $82.9$83.0 million to noncontrolling interest in the accompanying Condensed Consolidated Balance Sheet.
On August 17, 2018 WML announced a cash dividend of HK$0.75 per share for a total of $496.6 million, which was paid on October 5, 2018. The Company's share of this dividend was $358.3 million with a reduction of $138.3 million to noncontrolling interest in the accompanying Condensed Consolidated Balance Sheet.
On April 25, 2018, WML paid a cash dividend of HK$0.75 per share for a total of $497.1 million. The Company's share of this dividend was $358.8 million with a reduction of $138.3 million to noncontrolling interest in the accompanying Condensed Consolidated Balance Sheet.
During the three and nine months ended September 30, 2019, the Retail Joint Venture made aggregate distributions of $1.0 million and $3.7 million, respectively, to its non-controlling interest holder made in the normal course of business. During the three and nine months ended September 30, 2018, the Retail Joint Venture made aggregate distributions of $297.3 million, and $301.1 million, respectively, to its non-controlling interest holder in connection with the distribution of the net proceeds of the Retail Term Loan and distributions made in the normal course of business. For more information on the Retail Joint Venture, see Note 15, "Retail Joint Venture".
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss
The following table presents the changes by component, net of tax and noncontrolling interests, in accumulated other comprehensive loss of the Company (in thousands):
|
| | | |
| Foreign currency translation |
January 1, 2019 | $ | (1,950 | ) |
Change in net unrealized loss | (750 | ) |
Other comprehensive loss | (750 | ) |
September 30, 2019 | $ | (2,700 | ) |
|
| | | | | | | | | | | | | | | |
| Foreign currency translation | | Unrealized loss on investment securities | | Redemption Note | | Total |
January 1, 2018 | $ | (553 | ) | | $ | (1,292 | ) | | $ | — |
| | $ | (1,845 | ) |
Cumulative credit risk adjustment (1) | — |
| | — |
| | (9,211 | ) | | (9,211 | ) |
Change in net unrealized loss | (1,530 | ) | | (1,510 | ) | | 7,690 |
| | 4,650 |
|
Amounts reclassified to net income (2) | — |
| | 2,802 |
| | 1,521 |
| | 4,323 |
|
Other comprehensive income (loss) | (1,530 | ) | | 1,292 |
| | 9,211 |
| | 8,973 |
|
September 30, 2018 | $ | (2,083 | ) | | $ | — |
| | $ | — |
| | $ | (2,083 | ) |
(1) On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") No. 2016-01, Financial Instruments. The adjustment to the beginning balance represents the cumulative effect of the change in instrument-specific credit risk on the Redemption Note.
(2) The amounts reclassified to net income include $1.8 million for other-than-temporary impairment losses and $1.0 million in realized losses, both related to investment securities, and a $1.5 million realized gain related to the repayment of the Redemption Note.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 8 - Fair Value Measurements
The following tables present assets and liabilities carried at fair value (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Fair Value Measurements Using: | | | | |
| June 30, 2020 | | Quoted Market Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Cash equivalents | $ | 1,390,062 | | | $ | 503,794 | | | $ | 886,268 | | | — | |
Restricted cash | $ | 4,847 | | | $ | 2,054 | | | $ | 2,793 | | | — | |
| | | | | | | |
Liabilities: | | | | | | | |
Interest rate collar | $ | 22,802 | | | — | | | $ | 22,802 | | | — | |
| | | | | | | |
| | | Fair Value Measurements Using: | | | | |
| December 31, 2019 | | Quoted Market Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Cash equivalents | $ | 1,086,402 | | | — | | | $ | 1,086,402 | | | — | |
Restricted cash | $ | 6,388 | | | $ | 2,048 | | | $ | 4,340 | | | — | |
| | | | | | | |
Liabilities: | | | | | | | |
Interest rate collar | $ | 3,847 | | | — | | | $ | 3,847 | | | — | |
|
| | | | | | | | | | | | | | |
| | | Fair Value Measurements Using: |
| September 30, 2019 | | Quoted Market Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Cash equivalents | $ | 484,162 |
| | — |
| | $ | 484,162 |
| | — |
|
Restricted cash | $ | 6,182 |
| | $ | 2,041 |
| | $ | 4,141 |
| | — |
|
| | | | | | | |
Liabilities: | | | | | | | |
Interest rate collar | $ | 7,533 |
| | — |
| | $ | 7,533 |
| | — |
|
| | | | | | | |
| | | Fair Value Measurements Using: |
| December 31, 2018 | | Quoted Market Prices in Active Markets (Level 1) | | Other Observable Inputs (Level 2) | | Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Cash equivalents | $ | 759,257 |
| | — |
| | $ | 759,257 |
| | — |
|
Restricted cash | $ | 4,322 |
| | $ | 2,015 |
| | $ | 2,307 |
| | — |
|
| | | | | | | |
Liabilities: | | | | | | | |
Interest rate collar | $ | 619 |
| | — |
| | $ | 619 |
| | — |
|
Note 9 - Customer Contract Liabilities
In providing goods and services to its customers, there is often a timing difference between the Company receiving cash and the Company recording revenue for providing services or holding events.
The Company's primary liabilities associated with customer contracts are as follows (in thousands):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2019 | | December 31, 2018 | | Increase/ (Decrease) | | September 30, 2018 | | December 31, 2017 | | Increase/ (Decrease) |
Casino outstanding chips and front money deposits (1) | $ | 907,598 |
| | $ | 905,561 |
| | $ | 2,037 |
| | $ | 785,988 |
| | $ | 991,957 |
| | $ | (205,969 | ) |
Advance room deposits and ticket sales (2) | 43,086 |
| | 42,197 |
| | 889 |
| | 42,036 |
| | 48,065 |
| | (6,029 | ) |
Other gaming-related liabilities (3) | 9,297 |
| | 12,694 |
| | (3,397 | ) | | 13,644 |
| | 12,765 |
| | 879 |
|
Loyalty program and related liabilities (4) | 22,918 |
| | 18,148 |
| | 4,770 |
| | 18,756 |
| | 18,421 |
| | 335 |
|
| $ | 982,899 |
| | $ | 978,600 |
| | $ | 4,299 |
| | $ | 860,424 |
| | $ | 1,071,208 |
| | $ | (210,784 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 | | Increase (decrease) | | June 30, 2019 | | December 31, 2018 | | Increase (decrease) |
Casino outstanding chips and front money deposits (1) | $ | 904,792 | | | $ | 769,053 | | | $ | 135,739 | | | $ | 865,578 | | | $ | 905,561 | | | $ | (39,983) | |
Advance room deposits and ticket sales (2) | 28,874 | | | 49,834 | | | (20,960) | | | 36,185 | | | 42,197 | | | (6,012) | |
Other gaming-related liabilities (3) | 5,592 | | | 13,970 | | | (8,378) | | | 7,405 | | | 12,694 | | | (5,289) | |
Loyalty program and related liabilities (4) | 21,566 | | | 21,148 | | | 418 | | | 18,166 | | | 18,148 | | | 18 | |
| $ | 960,824 | | | $ | 854,005 | | | $ | 106,819 | | | $ | 927,334 | | | $ | 978,600 | | | $ | (51,266) | |
(1) Casino outstanding chips generally represent amounts owed to gaming promoters and customers for chips in their possession, and casino front money deposits represent funds deposited by customers before gaming play occurs. These amounts are included in customer deposits on the Condensed Consolidated Balance Sheets and may be recognized as revenue or redeemed for cash in the future.
(2) Advance room deposits and ticket sales represent cash received in advance for goods or services to be provided in the future. These amounts are included in customer deposits on the Condensed Consolidated Balance Sheets and will be recognized as revenue when the goods or services are provided or the events are held. Decreases in this balance generally represent the recognition of revenue and increases in the balance represent additional deposits made by customers. The deposits are expected to primarily be recognized as revenue within one year.
(3) Other gaming-related liabilities generally represent unpaid wagers primarily in the form of unredeemed slot, race and sportsbook tickets or wagers for future sporting events. The amounts are included in other accrued liabilities on the Condensed Consolidated Balance Sheets.
(4) Loyalty program and related liabilities represent the deferral of revenue until the loyalty points or other complimentaries are redeemed. The amounts are included in other accrued liabilities on the Condensed Consolidated Balance Sheets and are expected to be recognized as revenue within one year of being earned by customers.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 10 - Stock-Based Compensation
The total compensation cost for stock-based compensation plans was recorded as follows (in thousands):
| | | | | | | | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| Three Months Ended September 30, | | Nine Months Ended September 30, | | 2020 | | 2019 | | 2020 | | 2019 |
| 2019 | | 2018 | | 2019 | | 2018 | |
Casino | $ | 1,880 |
| | $ | 1,305 |
| | $ | 6,254 |
| | $ | 4,432 |
| |
Casino (1) | | Casino (1) | $ | 3,196 | | | $ | 1,790 | | | $ | 2,300 | | | $ | 4,374 | |
Rooms | 296 |
| | 108 |
| | 737 |
| | 314 |
| Rooms | 346 | | | 223 | | | 695 | | | 441 | |
Food and beverage | 372 |
| | 258 |
| | 1,181 |
| | 868 |
| Food and beverage | 666 | | | 477 | | | 1,303 | | | 809 | |
Entertainment, retail and other | 9 |
| | 34 |
| | 115 |
| | 111 |
| Entertainment, retail and other | 84 | | | 62 | | | 157 | | | 106 | |
General and administrative | 7,719 |
| | 9,914 |
| | 21,487 |
| | 22,540 |
| |
General and administrative (2) | | General and administrative (2) | 16,792 | | | 6,938 | | | 25,993 | | | 13,768 | |
Pre-opening | — |
| | 213 |
| | 670 |
| | 497 |
| Pre-opening | — | | | 340 | | | — | | | 670 | |
Total stock-based compensation expense | 10,276 |
| | 11,832 |
| | 30,444 |
| | 28,762 |
| Total stock-based compensation expense | 21,084 | | | 9,830 | | | 30,448 | | | 20,168 | |
Total stock-based compensation capitalized | 81 |
| | — |
| | 228 |
| | 6 |
| Total stock-based compensation capitalized | 486 | | | 83 | | | 703 | | | 147 | |
Total stock-based compensation costs | $ | 10,357 |
|
| $ | 11,832 |
| | $ | 30,672 |
| | $ | 28,768 |
| Total stock-based compensation costs | $ | 21,570 | | | $ | 9,913 | | | $ | 31,151 | | | $ | 20,315 | |
(1) For the six months ended June 30, 2020, reflects the reversal of $3.3 million of compensation cost previously recognized for awards forfeited in connection with the departure of an employee.
(2) For the three and six months ended June 30, 2020, reflects compensation cost of $4.4 million recognized in connection with the vesting of restricted stock performance awards.
Certain members of the Company's executive management team receive a portion of their annual incentive bonus in shares of the Company's stock. The number of shares is determined based on the closing stock price on the date the annual incentive bonus is settled. As the number of shares is variable, the Company records a liability for the fixed monetary amount over the service period. The Company recorded stock-based compensation expense associated with these awards of $2.1 million and $1.3 million for the three months ended September 30, 2019 and 2018, respectively, and $6.3 million and $5.5 million for the nine months ended September 30, 2019 and 2018, respectively.
Note 11 - Income Taxes
The Company recorded an income tax expense of $19.7$80.9 million and an income tax benefit of $3.9$2.0 million for the three months ended SeptemberJune 30, 2020 and 2019, respectively, and 2018, respectively. The Company recorded an income tax expense of $19.4$156.7 million and an income tax benefit of $124.6$0.3 million for the ninesix months ended SeptemberJune 30, 20192020 and 2018, respectively. 2019. The 20192020 income tax expense primarily related to the increase in the valuation allowanceallowances for U.S foreign tax credits and the 2018U.S. loss carryforwards. The 2019 income tax benefit primarily related to the settlement ofdecrease in the Redemption Note.valuation allowance for U.S foreign tax credits.
The Company records valuation allowances on certain of its U.S. and foreign deferred tax assets. In assessing the need for a valuation allowance, the Company considers whether it is more likely than not that the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. In the assessment of the valuation allowance, appropriate consideration is given to all positive and negative evidence including recent operating profitability, forecast of future earnings and the duration of statutory carryforward periods.
Wynn Macau SA received a five year exemption from Macau's 12% Complementary Tax on casino gaming profits through December 31, 2020. Accordingly, for the three months ended SeptemberJune 30, 2019, and 2018, the Company was exempt from the payment of such taxes totaling $13.4 million and $26.8 million, respectively.$19.8 million. For the ninesix months ended SeptemberJune 30, 2019, and 2018, the Company was exempt from the payment of such taxes totaling $56.0 million$42.6 million. For the three and $73.7 million, respectively.six months ended June 30, 2020, the Company did not have any casino gaming profits exempt from the Macau Complementary Tax. The Company's non-gaming profits remain subject to the Macau Complementary Tax and its casino winnings remain subject to the Macau special gaming tax and other levies in accordance with its concession agreement.
In April 2020, Wynn Macau SA received an extension of the exemption from Macau’s 12% Complementary Tax on casino gaming profits earned from January 1, 2021 to June 26, 2022, the expiration date of the gaming concession agreement.
Note 12 - Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing net income (loss) attributable to Wynn Resorts by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net income attributable to Wynn Resorts by the weighted average number of common shares outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potential dilutive securities had been issued. Potentially dilutive securities include outstanding stock options and unvested restricted stock.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted EPS consisted of the following (in thousands, except per share amounts):
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2019 | | 2018 | | 2019 | | 2018 |
Numerator: | | | | | | | |
Net income (loss) attributable to Wynn Resorts, Limited | $ | (3,496 | ) | | $ | 156,115 |
| | $ | 195,927 |
| | $ | 107,564 |
|
| | | | | | | |
Denominator: | | | | | | | |
Weighted average common shares outstanding | 106,707 |
| | 108,064 |
| | 106,791 |
| | 106,162 |
|
Potential dilutive effect of stock options and restricted stock | — |
| | 469 |
| | 233 |
| | 559 |
|
Weighted average common and common equivalent shares outstanding | 106,707 |
| | 108,533 |
| | 107,024 |
| | 106,721 |
|
| | | | | | | |
Net income (loss) attributable to Wynn Resorts, Limited per common share, basic | $ | (0.03 | ) | | $ | 1.44 |
| | $ | 1.83 |
| | $ | 1.01 |
|
Net income (loss) attributable to Wynn Resorts, Limited per common share, diluted | $ | (0.03 | ) | | $ | 1.44 |
| | $ | 1.83 |
| | $ | 1.01 |
|
| | | | | | | |
Anti-dilutive stock options and restricted stock excluded from the calculation of diluted net income per share | 850 |
| | 234 |
| | 379 |
| | 109 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Six Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Numerator: | | | | | | | |
Net income (loss) attributable to Wynn Resorts, Limited | $ | (637,564) | | | $ | 94,551 | | | $ | (1,039,601) | | | $ | 199,423 | |
| | | | | | | |
Denominator: | | | | | | | |
Weighted average common shares outstanding | 106,713 | | | 106,876 | | | 106,688 | | | 106,834 | |
Potential dilutive effect of stock options, nonvested, and performance nonvested shares | — | | | 265 | | | — | | | 255 | |
Weighted average common and common equivalent shares outstanding | 106,713 | | | 107,141 | | | 106,688 | | | 107,089 | |
| | | | | | | |
Net income (loss) attributable to Wynn Resorts, Limited per common share, basic | $ | (5.97) | | | $ | 0.88 | | | $ | (9.74) | | | $ | 1.87 | |
Net income (loss) attributable to Wynn Resorts, Limited per common share, diluted | $ | (5.97) | | | $ | 0.88 | | | $ | (9.74) | | | $ | 1.86 | |
| | | | | | | |
Anti-dilutive stock options, nonvested, and performance nonvested shares excluded from the calculation of diluted net income per share | 1,127 | | | 287 | | | 1,127 | | | 365 | |
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 13 - Leases
Lessee Arrangements
The following table summarizes the balance sheet classification of the Company's lease assets and liabilities (in thousands):
|
| | | | | |
| Balance Sheet Classification | | September 30, 2019 |
Assets | | | |
Operating leases | Operating lease assets | | $ | 444,157 |
|
Finance leases | Property and equipment, net | | $ | 26,411 |
|
| | | |
Current liabilities | | | |
Operating leases | Other accrued liabilities | | $ | 15,802 |
|
Finance leases | Other accrued liabilities | | $ | 162 |
|
| | | |
Non-current liabilities | | | |
Operating leases | Long-term operating lease liabilities | | $ | 149,970 |
|
Finance leases | Other long-term liabilities | | $ | 17,789 |
|
The following tables disclose the components of the Company's lease cost, supplemental cash flow disclosures, and other information regarding the Company's lease arrangements (dollars in thousands):
|
| | | | | | | |
| Three Months Ended September 30, 2019 | | Nine Months Ended September 30, 2019 |
Lease cost: | | | |
Operating lease cost | $ | 8,367 |
| | $ | 24,691 |
|
Short-term lease cost | 6,836 |
| | 17,576 |
|
Amortization of leasehold interests in land | 3,416 |
| | 9,956 |
|
Variable lease cost | 1,209 |
| | 3,685 |
|
Finance lease interest cost | 273 |
| | 785 |
|
Total lease cost | $ | 20,101 |
| | $ | 56,693 |
|
|
| | | |
| Nine Months Ended September 30, 2019 |
Supplemental cash flow disclosures: | |
Operating lease liabilities arising from obtaining operating lease assets | $ | 29,261 |
|
Finance lease liabilities arising from obtaining finance lease assets | $ | 1,413 |
|
Cash paid for amounts included in the measurement of lease liabilities: | |
Cash used in operating activities - Operating leases | $ | 23,073 |
|
Cash used in financing activities - Finance leases | $ | 36 |
|
|
| | |
| September 30, 2019 |
Other information: | |
Weighted-average remaining lease term - Operating leases | 37.8 years |
|
Weighted-average remaining lease term - Finance leases | 42.9 years |
|
| |
Weighted-average discount rate - Operating leases | 6.5 | % |
Weighted-average discount rate - Finance leases | 6.2 | % |
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents an analysis of lease liability maturities (in thousands): |
| | | | | | | |
Years Ending December 31, | Operating Leases | | Finance Leases |
2019 (excluding the nine months ended September 30, 2019) | $ | 7,988 |
| | $ | 300 |
|
2020 | 26,424 |
| | 1,203 |
|
2021 | 21,872 |
| | 1,203 |
|
2022 | 18,106 |
| | 1,203 |
|
2023 | 17,149 |
| | 1,203 |
|
Thereafter | 481,084 |
| | 67,490 |
|
Total undiscounted cash flows | $ | 572,623 |
| | $ | 72,602 |
|
Present value | | | |
Short-term lease liabilities | $ | 15,802 |
| | $ | 162 |
|
Long-term lease liabilities | 149,970 |
| | 17,789 |
|
Total lease liabilities | $ | 165,772 |
| | $ | 17,951 |
|
Interest on lease liabilities | $ | 406,851 |
| | $ | 54,651 |
|
Ground Leases
Undeveloped Land - Las Vegas
The Company leases approximately 16 acres of undeveloped land on Las Vegas Boulevard directly across from Wynn Las Vegas in Las Vegas, Nevada, which expires in 2097. The ground lease payments, which increase at a fixed rate over the term of the lease, are $3.8 million per year until 2023 and total payments of $367.8 million thereafter. As of September 30, 2019, the liability associated with this lease was $62.5 million.
At September 30, 2019, operating lease assets included approximately $87.2 million related to an amount allocated to the leasehold interest in land upon the acquisition of a group of assets in 2018. The Company expects that the amortization of this amount will be $1.1 million each year from 2020 through 2096 and $0.7 million in 2097.
Macau Land Concessions
Wynn Palace and Wynn Macau were built on land that is leased under Macau land concession contracts each with terms of 25 years from May 2012 and August 2004, respectively, which may be renewed with government approval for successive 10-year periods in accordance with Macau legislation. The land concession payments are expected to be $1.6 million per year through 2023 and total payments of $17.0 million thereafter through 2037. At September 30, 2019, the total liability associated with these leases was $15.7 million.
At September 30, 2019, operating lease assets included $194.2 million of leasehold interests in land related to the Wynn Palace and Wynn Macau land concessions. The Company expects that the amortization associated with these leasehold interests will be approximately $12.5 million per year from 2020 through 2028 and approximately $9.1 million per year thereafter through 2037.
Lessor Arrangements
The following table presents the minimum and contingent operating lease income for the periods presented (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | Six Months Ended June 30, | | |
| 2020 | | 2019 | | 2020 | | 2019 |
Minimum rental income | $ | 28,073 | | | $ | 33,671 | | | $ | 59,723 | | | $ | 66,379 | |
Contingent rental income | 1,839 | | | 11,945 | | | 8,519 | | | 26,916 | |
Total rental income | $ | 29,912 | | | $ | 45,616 | | | $ | 68,242 | | | $ | 93,295 | |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2019 |
| 2018 | | 2019 | | 2018 |
Minimum rental income | $ | 33,643 |
| | $ | 29,901 |
| | $ | 100,022 |
| | $ | 92,204 |
|
Contingent rental income | 13,589 |
| | 11,177 |
| | 40,505 |
| | 39,795 |
|
Total rental income | $ | 47,232 |
| | $ | 41,078 |
| | $ | 140,527 |
| | $ | 131,999 |
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following table presents the future minimum rentals to be received under operating leases (in thousands):
|
| | | |
Years Ending December 31, | Operating Leases |
2019 (excluding the nine months ended September 30, 2019) | $ | 34,889 |
|
2020 | 144,887 |
|
2021 | 87,673 |
|
2022 | 69,826 |
|
2023 | 53,091 |
|
Thereafter | 162,779 |
|
Total future minimum rentals | $ | 553,145 |
|
Note 14 - Commitments and Contingencies
Litigation
In addition to the actions noted below, the Company and its affiliates are involved in litigation arising in the normal course of business. In the opinion of management, such litigation is not expected to have a material effect on the Company's financial condition, results of operations, and cash flows.
Massachusetts Gaming License Related Actions
On September 17, 2014, the Massachusetts Gaming Commission ("MGC") designated Wynn MA LLC ("Wynn MA") the award winner of the Greater Boston (Region A) gaming license (the "Boston area license"). On November 7, 2014, the gaming license became effective.
Massachusetts Gaming Commission Investigation and Adjudicatory Hearing
On January 31, 2018, the Investigations & Enforcement Bureau ("IEB")
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Revere Action
On October 16, 2014, the City of Revere, the host community to the unsuccessful bidder for the Boston area license, the International Brotherhood of Electrical Workers, Local 103, ("IBEW"), and several individuals, filed a complaint against the MGC and its gaming commissioners in Suffolk Superior Court in Boston, Massachusetts (the "Revere Action"). Mohegan Sun ("Mohegan") the other applicant for the Boston area license, joined the lawsuit and challenged the MGC's award of the Boston area license. On December 3, 2015, the court granted the MGC's motion to dismiss the claims asserted in the Revere Action and the court dismissed all claims except Mohegan's claim alleging procedural error by the MGC in granting the license to Wynn MA. The plaintiffs appealed. After multiple appeals and cross appeals, only two claims remained: (1) individual plaintiffs' claim for violation of the open meeting laws; and (2) Mohegan's claim for procedural error. On July 12, 2019, the Suffolk Superior Court granted the MGC's motion for summary judgment and dismissed the open meeting law claim, leaving only Mohegan's procedural claim.
On August 2, 2019, Mohegan filed a motion to file a second amended complaint, to add new claims related to the MGC's allegedly inadequate 2013 investigation, using information, documents and testimony from the Massachusetts Gaming Commission Investigation and Adjudicatory Hearing.investigation. On October 15, 2019, the court granted Mohegan's motion to amend and allowed it to file a second amended intervenor's complaint.
Wynn MA was not named in the Revere Action. The MGC retained private legal representation at its own nontaxpayer-funded expense.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Suffolk Action
On September 17, 2018, Sterling Suffolk Racecourse, LLC, owner of the property proposed for location of a casino by an unsuccessful bidder for the Boston area license filed a complaint in the United States District Court, District of Massachusetts, against the Company, Wynn MA, certain current and former officers of the Company, FBT Everett Realty, LLC, former owner of the land on which Encore Boston Harbor is located ("FBT"), and Paul Lohnes, a member of FBT. The complaint alleges, among other things, the defendants violated the RICO Act, conspired to circumvent the application process for the Boston area license and violated Massachusetts law with respect to unfair methods of competition. The plaintiff seeks $1.0 billion in compensatory damages and treble damages. All defendants filed motions to dismiss the complaint. On May 7, 2019, the court held a hearing on the motions to dismiss and stayed all discovery pending a decision on the motions.
The Company will vigorously defend against the claims asserted. This action is in preliminary stages and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of this action or the range of reasonably possible loss, if any.
Nevada Gaming Control Board Investigation
On January 25, 2019, the Nevada Gaming Control Board filed a complaint against the Company and its indirect subsidiary, Wynn Las Vegas, LLC ("NGCB Respondents"), related to the alleged inappropriate personal conduct by Stephen A. Wynn in the workplace. Simultaneously, the NGCB Respondents entered into a Stipulation for Settlement of the complaint, under which, among other things, the NGCB Respondents agreed to pay a fine in an amount to be determined by the Nevada Gaming Commission, and the Nevada Gaming Control Board agreed not to seek to revoke or limit the NGCB Respondents' licenses, findings of suitability or any other gaming approvals. On February 26, 2019, the Nevada Gaming Commission approved the Stipulation for Settlement and fined the Company $20.0 million, which was paid during the three months ended March 31, 2019.
Derivative Litigation
A number of stockholder derivative actions have been filed in state and federal court located in Clark County, Nevada against certain current and former members of the Company's Board of Directors and, in some cases, the Company's current and former officers. Each of the complaints alleges, among other things, breach of fiduciary duties in failing to detect, prevent and remedy alleged inappropriate personal conduct by Stephen A. Wynn in the workplace. On September 19, 2018, the Board established a Special Litigation Committee (the "SLC") to investigate the allegations in the State Derivative Case (as defined below).
The actions filed in the Eighth Judicial District Court of Clark County, Nevada have beenwere consolidated as In re Wynn Resorts, Ltd. Derivative Litigation(" ("State Derivative Case"). On October 26, 2018, the SLC filed a motion to intervene and stay the State Derivative Case pending completion of its investigation, which the court granted (the "SLC Stay"). A status hearing considering a number of matters related to the State Derivative Case is scheduled for November 13, 2019.granted.
In 2018, several actions filed in the United States District Court, District of Nevada were consolidated as In re Wynn Resorts, Ltd. Derivative Litigation ("Federal Derivative Case"), which also claim corporate waste and violation of Section 14(a) of the Exchange Act. In June 2018, the Company filed a motion to dismiss and a motion to stay pending resolution of the Securities Action (described below). On March 29, 2019, the Court granted the Company's request for a stay.
On March 25, 2019, a separate stockholder derivative action was filed in the United States District Court, District of Nevada alleging identical causes of action as the Federal Derivative Case with the additional allegation that the Board of Directors improperly refused the stockholder's demand to commence litigation against the officers and directors of the Company. On June 10, 2019, the Company filed a motion to dismiss, or alternatively to consolidate this action into the Federal Derivative Case, which is stayed. The motion is currently pending before the court.
On June 3, 2019, a separate stockholder derivative action was filed in the Eighth Judicial District Court of Clark County, Nevada alleging substantially similar causes of action as the State Derivative Case with the additional allegation that various of the Company's attorneys committed professional malpractice, and certain current and former executives also breached fiduciary duties and aided and abetted the breach of fiduciary duties, in connection with the alleged inappropriate personal conduct by Stephen A. Wynn in the workplace. On July 26, 2019, the plaintiff voluntarily dismissed Matt Maddox, Stephen A. Wynn, Kimmarie Sinatra, John J. Hagenbuch, Ray R. Irani, Jay L. Johnson, Robert J. Miller, Patricia Mulroy, Clark T. Randt, Jr., Alvin V. Shoemaker, J. Edward Virtue, D. Boone Wayson, and one of the Company's law firms from the action. On September 19, 2019, the court entered an order consolidating this action into the State Derivative Case, and on December 2, 2019, further clarified that this action may not proceed as a separate action apart from the effectState Derivative Case.
On November 27, 2019, the State Derivative Case parties agreed to terms of whicha settlement agreement. The court approved the settlement agreement on February 12, 2020, and entered a written order approving the settlement on March 10, 2020. Following dismissal of the only appeal, the settlement agreement has now become effective and final. Following the dismissal, the Company is seeking clarification.has received net proceeds of $27.7 million, which has been recognized as a reduction of general and administrative expense within the accompanying Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020.
In 2018, several actions filed in the United States District Court, District of Nevada were consolidated as In re Wynn Resorts, Ltd. Derivative Litigation ("Federal Derivative Case"), which also claim corporate waste and violation of Section 14(a) of the Exchange Act. In June 2018, the Company filed a motion to dismiss and a motion to stay pending resolution of the Securities Action (described below). On March 29, 2019, the Court granted the Company's request for a stay. On March 25, 2020, the parties stipulated to dismiss the Federal Derivative Case given the approved settlement in the State Derivative Case.
On March 25, 2019, a separate stockholder derivative action was filed in the United States District Court, District of Nevada alleging identical causes of action as the Federal Derivative Case with the additional allegation that the Board of Directors improperly refused the stockholder's demand to commence litigation against the officers and directors of the
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Company. On June 10, 2019, the Company filed a motion to dismiss, or alternatively to consolidate this action into the Federal Derivative Case. On March 23, 2020, the court denied the Company’s motion to dismiss as moot given the approved settlement in the State Derivative Case. On April 30, 2020, the Company filed a motion for summary judgment, seeking dismissal of the claims given the approved settlement in the State Derivative Case.
Each of the actions seeks to recover for the Company unspecified damages, including restitution and disgorgement of profits, and also seeks to recover attorneys' fees, costs and related expenses for the plaintiff.
Individual Stockholder Actions
A number of stockholders have filed individual actions in the Eighth Judicial District Court of Clark County, Nevada against certain current and former members of the Company's Board of Directors and certain of the Company's current and former officers ("Individual Stockholder Actions"). Each of the complaints alleges that defendants, among other things, breached their fiduciary duties in failing to detect, prevent and remedy alleged inappropriate personal conduct by Stephen A. Wynn in the workplace causing injury to each of the individual stockholders.
On January 29, 2019, the defendants filed motions to dismiss each of the Individual Stockholder Actions. TheOn December 12, 2019, the district court held a hearing on defendants'entered an order denying the motions to dismiss, which the defendants appealed to the Nevada Supreme Court on September 18, 2019, and tookDecember 24, 2019.On January 7, 2020, the matter under advisement.Nevada Supreme Court stayed the underlying Individual Stockholder Actions pending a decision on the defendants' appeal. On July 27, 2020, the Supreme Court issued an order mandating that the district court dismiss the action.
Securities Action
On February 20, 2018, a putative securities class action was filed against the Company and certain current and former officers of the Company in the United States District Court, Southern District of New York (which was subsequently transferred to the United States District Court, District of Nevada) by John V. Ferris and Joann M. Ferris on behalf of all persons who purchased the Company's common stock between February 28, 2014 and January 25, 2018. The complaint alleges, among other things, certain violations of federal securities laws and seeks to recover unspecified damages as well as attorneys' fees, costs and related expenses for the plaintiffs. The defendants haveOn April 15, 2019, the Company filed motionsa motion to dismiss, which are currently pending before the court.court granted on May 27, 2020, with leave to amend. On July 1, 2020, the plaintiffs filed an amended complaint. The Company is now preparing a motion to dismiss the amended complaint.
The defendants in these actions will vigorously defend against the claims pleaded against them. These actions are in preliminary stages and management has determined that based on proceedings to date, it is currently unable to determine the probability of the outcome of these actions or the range of reasonably possible loss, if any.
Aruze and Affiliates LitigationFederal Investigation
On February 18, 2012,From time to time, the BoardCompany receives regulatory inquiries about compliance with anti-money laundering laws. The Company received requests for information from the U.S. Attorney’s Office for the Southern District of Directors of Wynn Resorts determined that Universal Entertainment Corp., Aruze (together with Universal Entertainment Corp, the "Universal Parties") and Kazuo Okada, and the related parties (collectively, the "Okada Parties") were "unsuitable persons" under the Company's articles and redeemed and canceled Aruze's 24,549,222 shares of Wynn Resorts' common stock, and, pursuantCalifornia relating to its articlesanti-money laundering policies and procedures, and in the first half of incorporation,2020, received two grand jury subpoenas regarding various transactions at Wynn Resorts issuedLas Vegas relating to certain patrons and agents who reside or operate in foreign jurisdictions. The Company continues to cooperate with the Redemption NoteU.S. Attorney’s Office in its investigation, which remains ongoing. Because no charges or claims have been brought, the Company is unable to Aruze in redemptionpredict the outcome of the shares. The next day, Wynn Resorts filed an action alleging breachesinvestigation, or reasonably estimate the possible loss or range of fiduciary duty and relatedloss, if any, which could be associated with the resolution of any possible charges or claims (the "Redemption Action"). The Okada Parties denied the claims and asserted counterclaims.
On March 8, 2018, the Company entered into a settlement agreement (the "Settlement Agreement") by and between the Company and its individual directors and officers (the "Wynn Parties"), and the Universal Parties. The Settlement Agreement resolved all legal proceedings pending between the settling parties in the Redemption Action. The Universal Parties further released any claimsthat may be brought against the Wynn Parties and their affiliates in any other jurisdiction, including a proceeding pending in Macau against Wynn Resorts (Macau) S.A. ("Wynn Macau SA") and certain related individuals ("Macau Litigation"). Subsequently the Company voluntarily dismissed its claim for breach of fiduciary duty against Kazuo Okada.Company.
In 2015, the Okada Parties filed a complaint in the Court of First Instance of Macau ("Macau Court") against Wynn Macau SA and certain individuals who are or were directors of Wynn Macau SA or WML (collectively, the "Wynn Macau Parties"). On July 11, 2017, the Macau Court dismissed all of the Okada Parties' claims as unfounded, fined the Okada Parties, and ordered the Okada Parties to pay for court costs and the Wynn Macau Parties' attorney's fees. On or about October 16, 2017, the Okada Parties formally appealed in Macau. On February 21, 2019, the Macau Appellate Panel dismissed the appeal. Mr. Okada, who was at that time the only remaining claimant after the Universal Parties' withdrawal pursuant to the Settlement Agreement, failed to appeal within the prescribed time, resulting in the final resolution of the lawsuit in favor of the Wynn Macau Parties.
Derivative Litigation Related to Redemption Action
NaN state derivative actions were commenced against the Company and all members of its Board of Directors in the Eighth Judicial District Court of Clark County, Nevada by the IBEW Local 98 Pension Fund and Danny Hinson (collectively, the "Derivative Plaintiffs") regarding the Redemption Action. On March 15, 2019, the parties filed a stipulation and order to dismiss
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
the action, with prejudice, which the court entered on March 18, 2019. Neither the Company nor any of the individual defendants made any form of payment in exchange for the dismissal of the action.
Note 15 - Retail Joint Venture
As of SeptemberJune 30, 20192020 and December 31, 2018,2019, the Retail Joint Venture had total assets of $95.3$97.0 million and $85.0$90.0 million, respectively, and total liabilities of $629.3$640.5 million and $619.6$622.4 million, respectively. As of SeptemberJune 30, 20192020 and December 31, 2018,2019, the Retail Joint Venture's liabilities included long-term debt of $611.6$612.0 million and $611.1$611.7 million, respectively, net of debt issuance costs, related to the outstanding borrowings under the Retail Term Loan.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 16 - Segment Information
The Company reviews the results of operations for each of its operating segments, and identifies reportable segments based upon factors such as geography, regulatory environment, and the Company's organizational and management reporting structure. Wynn Macau and Encore, an expansion at Wynn Macau, are managed as a single integrated resort and have been aggregated as 1one reportable segment ("Wynn Macau"). Wynn Palace is presented as a separate reportable segment and is combined with Wynn Macau for geographical presentation. Wynn Las Vegas, Encore, an expansion at Wynn Las Vegas, and the Retail Joint Venture are managed as a single integrated resort and have been aggregated as 1one reportable segment ("Las Vegas Operations"). On June 23, 2019, the Company opened Encore Boston Harbor, an integrated resort in Everett, Massachusetts. Encore Boston Harbor is presented as 1one reportable segment.
The Company also reviews construction and development activities for each of its projects under development, in addition to its reportable segments. Other Macau primarily represents the assets for the Company's Macau holding company.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The following tables present the Company's segment information (in thousands):
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2019 | | 2018 | | 2019 | | 2018 | | 2020 | | 2019 | | 2020 | | 2019 |
Operating revenues | | | | | | | | Operating revenues | | | | | | | |
Macau Operations: | | | | | | | | Macau Operations: | |
Wynn Palace | | | | | | | | Wynn Palace | |
Casino | $ | 497,657 |
| | $ | 625,586 |
| | $ | 1,649,377 |
| | $ | 1,719,072 |
| Casino | $ | (11,428) | | | $ | 528,545 | | | $ | 196,148 | | | $ | 1,151,720 | |
Rooms | 44,884 |
| | 44,296 |
| | 131,382 |
| | 125,461 |
| Rooms | 2,431 | | | 43,183 | | | 22,141 | | | 86,498 | |
Food and beverage | 30,256 |
| | 27,619 |
| | 87,691 |
| | 80,519 |
| Food and beverage | 4,231 | | | 28,810 | | | 17,529 | | | 57,434 | |
Entertainment, retail and other (1) | 25,374 |
| | 33,071 |
| | 85,259 |
| | 91,952 |
| Entertainment, retail and other (1) | 13,484 | | | 28,378 | | | 32,413 | | | 59,886 | |
| 598,171 |
| | 730,572 |
| | 1,953,709 |
| | 2,017,004 |
| | 8,718 | | | 628,916 | | | 268,231 | | | 1,355,538 | |
Wynn Macau |
|
| |
| |
|
| |
| Wynn Macau | | | | | | | |
Casino | 408,820 |
| | 503,557 |
| | 1,340,266 |
| | 1,515,859 |
| Casino | (3,524) | | | 481,204 | | | 186,604 | | | 931,446 | |
Rooms | 26,740 |
| | 28,091 |
| | 82,071 |
| | 83,575 |
| Rooms | 2,631 | | | 26,465 | | | 18,542 | | | 55,331 | |
Food and beverage | 19,584 |
| | 17,693 |
| | 60,688 |
| | 55,193 |
| Food and beverage | 3,684 | | | 20,129 | | | 13,215 | | | 41,105 | |
Entertainment, retail and other (1) | 19,137 |
| | 30,279 |
| | 61,621 |
| | 86,518 |
| Entertainment, retail and other (1) | 9,097 | | | 18,676 | | | 23,016 | | | 42,483 | |
| 474,281 |
| | 579,620 |
| | 1,544,646 |
| | 1,741,145 |
| | 11,888 | | | 546,474 | | | 241,377 | | | 1,070,365 | |
Total Macau Operations | 1,072,452 |
| | 1,310,192 |
| | 3,498,355 |
| | 3,758,149 |
| Total Macau Operations | 20,606 | | | 1,175,390 | | | 509,608 | | | 2,425,903 | |
| | | | | | | | | | | | | | | |
Las Vegas Operations: |
|
| |
| |
|
| |
| Las Vegas Operations: | |
Casino | 87,002 |
| | 92,886 |
| | 318,439 |
| | 329,264 |
| Casino | 24,365 | | | 119,753 | | | 95,660 | | | 231,437 | |
Rooms | 116,072 |
| | 110,657 |
| | 362,715 |
| | 350,369 |
| Rooms | 12,353 | | | 127,554 | | | 118,458 | | | 246,644 | |
Food and beverage | 149,708 |
| | 148,562 |
| | 438,525 |
| | 445,251 |
| Food and beverage | 16,092 | | | 165,197 | | | 122,071 | | | 288,816 | |
Entertainment, retail and other (1) | 46,724 |
| | 46,775 |
| | 145,002 |
| | 147,041 |
| Entertainment, retail and other (1) | 12,076 | | | 51,638 | | | 52,521 | | | 98,278 | |
Total Las Vegas Operations | 399,506 |
| | 398,880 |
| | 1,264,681 |
| | 1,271,925 |
| Total Las Vegas Operations | 64,886 | | | 464,142 | | | 388,710 | | | 865,175 | |
| | | | | | | | | | | | | | | |
Encore Boston Harbor: | | | | | | | | Encore Boston Harbor: | |
Casino | 114,885 |
| | — |
| | 127,886 |
| | — |
| Casino | — | | | 13,001 | | | 101,790 | | | 13,001 | |
Rooms | 18,180 |
| | — |
| | 19,785 |
| | — |
| Rooms | — | | | 1,605 | | | 10,955 | | | 1,605 | |
Food and beverage | 28,960 |
| | — |
| | 32,845 |
| | — |
| Food and beverage | — | | | 3,886 | | | 20,606 | | | 3,886 | |
Entertainment, retail and other (1) | 13,779 |
| | — |
| | 14,088 |
| | — |
| Entertainment, retail and other (1) | 206 | | | 308 | | | 7,745 | | | 308 | |
Total Encore Boston Harbor | 175,804 |
| | — |
| | 194,604 |
| | — |
| Total Encore Boston Harbor | 206 | | | 18,800 | | | 141,096 | | | 18,800 | |
| | | | | | | | | | | | | | | |
Total operating revenues | $ | 1,647,762 |
| | $ | 1,709,072 |
| | $ | 4,957,640 |
| | $ | 5,030,074 |
| Total operating revenues | $ | 85,698 | | | $ | 1,658,332 | | | $ | 1,039,414 | | | $ | 3,309,878 | |
| | | | | | | | |
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| 2019 | | 2018 | | 2019 | | 2018 | | 2020 | | 2019 | | 2020 | | 2019 |
Adjusted Property EBITDA (2) | | | | | | | | Adjusted Property EBITDA (2) | | | | | | | |
Macau Operations: | | | | | | | | Macau Operations: | |
Wynn Palace | $ | 162,167 |
| | $ | 226,141 |
| | $ | 551,918 |
| | $ | 617,317 |
| Wynn Palace | $ | (110,908) | | | $ | 167,165 | | | $ | (100,732) | | | $ | 389,751 | |
Wynn Macau | 138,989 |
| | 182,928 |
| | 478,751 |
| | 565,677 |
| Wynn Macau | (82,646) | | | 175,873 | | | (63,438) | | | 339,762 | |
Total Macau Operations | 301,156 |
| | 409,069 |
| | 1,030,669 |
| | 1,182,994 |
| Total Macau Operations | (193,554) | | | 343,038 | | | (164,170) | | | 729,513 | |
Las Vegas Operations | 88,046 |
| | 95,298 |
| | 333,747 |
| | 362,051 |
| |
Encore Boston Harbor | 7,744 |
| | — |
| | 7,890 |
| | — |
| |
Las Vegas Operations (3) | | Las Vegas Operations (3) | (75,564) | | | 137,399 | | | (97,641) | | | 245,701 | |
Encore Boston Harbor (4) | | Encore Boston Harbor (4) | (53,779) | | | 146 | | | (66,415) | | | 146 | |
Total | 396,946 |
| | 504,367 |
| | 1,372,306 |
| | 1,545,045 |
| Total | (322,897) | | | 480,583 | | | (328,226) | | | 975,360 | |
Other operating expenses | | | | | | | | Other operating expenses | |
Litigation settlement | — |
| | — |
| | — |
| | 463,557 |
| |
Pre-opening | 1,616 |
| | 13,714 |
| | 99,212 |
| | 35,255 |
| Pre-opening | 2,186 | | | 69,883 | | | 4,737 | | | 97,596 | |
Depreciation and amortization | 172,998 |
| | 137,458 |
| | 449,824 |
| | 411,685 |
| Depreciation and amortization | 179,266 | | | 140,269 | | | 358,012 | | | 276,826 | |
Property charges and other | 8,216 |
| | 18,830 |
| | 17,920 |
| | 30,672 |
| Property charges and other | 6,567 | | | 6,930 | | | 33,796 | | | 9,704 | |
Corporate expenses and other | 26,005 |
| | 31,763 |
| | 123,849 |
| | 86,350 |
| |
Stock-based compensation (3) | 10,276 |
| | 11,619 |
| | 29,774 |
| | 28,265 |
| |
Corporate expenses and other (5) | | Corporate expenses and other (5) | (8,984) | | | 35,295 | | | 15,208 | | | 97,844 | |
Stock-based compensation (6) | | Stock-based compensation (6) | 21,084 | | | 9,490 | | | 30,448 | | | 19,498 | |
Total other operating expenses | 219,111 |
| | 213,384 |
| | 720,579 |
| | 1,055,784 |
| Total other operating expenses | 200,119 | | | 261,867 | | | 442,201 | | | 501,468 | |
Operating income | 177,835 |
| | 290,983 |
| | 651,727 |
| | 489,261 |
| |
Operating income (loss) | | Operating income (loss) | (523,016) | | | 218,716 | | | (770,427) | | | 473,892 | |
Other non-operating income and expenses | | | | | | | | Other non-operating income and expenses | | | | | | | |
Interest income | 6,427 |
| | 6,948 |
| | 19,979 |
| | 21,029 |
| Interest income | 3,983 | | | 6,265 | | | 11,936 | | | 13,552 | |
Interest expense, net of amounts capitalized | (114,652 | ) | | (93,007 | ) | | (300,981 | ) | | (281,132 | ) | Interest expense, net of amounts capitalized | (133,218) | | | (93,149) | | | (262,045) | | | (186,329) | |
Change in derivatives fair value | (2,101 | ) | | (54 | ) | | (6,914 | ) | | (54 | ) | Change in derivatives fair value | (3,294) | | | (3,304) | | | (18,954) | | | (4,813) | |
Change in Redemption Note fair value | — |
| | — |
| | — |
| | (69,331 | ) | |
(Loss) gain on extinguishment of debt | (12,196 | ) | | (198 | ) | | (12,196 | ) | | 2,131 |
| |
Loss on extinguishment of debt | | Loss on extinguishment of debt | (619) | | | — | | | (1,462) | | | — | |
Other | (8,703 | ) | | 11,216 |
| | (3,346 | ) | | 1,039 |
| Other | 2,233 | | | 11,715 | | | 12,568 | | | 5,357 | |
Total other non-operating income and expenses | (131,225 | ) | | (75,095 | ) | | (303,458 | ) | | (326,318 | ) | Total other non-operating income and expenses | (130,915) | | | (78,473) | | | (257,957) | | | (172,233) | |
Income before income taxes | 46,610 |
| | 215,888 |
| | 348,269 |
| | 162,943 |
| |
Benefit (provision) for income taxes | (19,727 | ) | | 3,884 |
| | (19,421 | ) | | 124,631 |
| |
Net income | 26,883 |
| | 219,772 |
| | 328,848 |
| | 287,574 |
| |
Net income attributable to noncontrolling interests | (30,379 | ) | | (63,657 | ) | | (132,921 | ) | | (180,010 | ) | |
Income (loss) before income taxes | | Income (loss) before income taxes | (653,931) | | | 140,243 | | | (1,028,384) | | | 301,659 | |
(Provision) benefit for income taxes | | (Provision) benefit for income taxes | (80,938) | | | 1,991 | | | (156,738) | | | 306 | |
Net income (loss) | | Net income (loss) | (734,869) | | | 142,234 | | | (1,185,122) | | | 301,965 | |
Net (income) loss attributable to noncontrolling interests | | Net (income) loss attributable to noncontrolling interests | 97,305 | | | (47,683) | | | 145,521 | | | (102,542) | |
Net income (loss) attributable to Wynn Resorts, Limited | $ | (3,496 | ) | | $ | 156,115 |
| | $ | 195,927 |
| | $ | 107,564 |
| Net income (loss) attributable to Wynn Resorts, Limited | $ | (637,564) | | | $ | 94,551 | | | $ | (1,039,601) | | | $ | 199,423 | |
(1) Includes lease revenue accounted for under lease accounting guidance. For more information on leases, see Note 13, "Leases".
(2) Adjusted"Adjusted Property EBITDAEBITDA" is net income (loss) before interest, income taxes, depreciation and amortization, litigation settlement expense, pre-opening expenses, property charges and other, management and license fees, corporate expenses and other (including intercompany golf course and water rights leases), stock-based compensation, (loss) gain on extinguishment of debt, change in derivatives fair value, change in Redemption Note fair valueloss on extinguishment of debt, and other non-operating income and expenses. Adjusted Property EBITDA is presented exclusively as a supplemental disclosure because management believes that it is widely used to measure the performance, and as a basis for valuation, of gaming companies. Management uses Adjusted Property EBITDA as a measure of the operating performance of its segments and to compare the operating performance of its properties with those of its competitors, as well as a basis for determining certain incentive compensation. The CompanyWe also presentspresent Adjusted Property EBITDA because it is used by some investors to measure a company's ability to incur and service debt, make capital expenditures and meet working capital requirements. Gaming companies have historically reported EBITDA as a supplement to GAAP. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their EBITDA calculations pre-openingpreopening expenses, property charges, corporate expenses and stock-based compensation, that do not relate to the management of specific casino properties. However, Adjusted Property EBITDA should not be considered as an alternative to operating income as an indicator of the Company'sour performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. Unlike net income, Adjusted Property EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. The Company hasWe have significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, income taxes and other non-recurring charges, which are not reflected in Adjusted Property EBITDA. Also, the Company'sour calculation of Adjusted Property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
(3) For the three months ended June 30, 2020, excludes $56.4 million of expense accrued during the first quarter of 2020 related to the Company's commitment to pay salary, tips, and benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020.
(4) For the three months ended June 30, 2020, excludes $19.3 million of expense accrued during the first quarter of 2020 related to the Company's commitment to pay salary, tips, and benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020.
(5) For the three and six months ended June 30, 2020, includes a $27.7 million net gain recorded in relation to a derivative litigation settlement. For the six months ended June 30, 2019, includes a $35.0 million nonrecurring regulatory expense.
(6) Excludes$0.4 million and $0.7 million included in pre-opening expenses for the ninethree and six months ended SeptemberJune 30, 2019, and $0.2 million and $0.5 million for the three and nine months ended September 30, 2018, respectively.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
| | | | | | | | | | | |
| June 30, 2020 | | December 31, 2019 |
Assets | | | |
Macau Operations: | | | |
Wynn Palace | $ | 3,568,590 | | | $ | 3,734,210 | |
Wynn Macau | 1,586,192 | | | 1,656,625 | |
Other Macau | 1,709,555 | | | 1,023,411 | |
Total Macau Operations | 6,864,337 | | | 6,414,246 | |
Las Vegas Operations | 3,060,303 | | | 2,806,972 | |
Encore Boston Harbor | 2,331,115 | | | 2,456,667 | |
Corporate and other | 2,629,920 | | | 2,193,396 | |
Total | $ | 14,885,675 | | | $ | 13,871,281 | |
|
| | | | | | | |
| September 30, 2019 |
| December 31, 2018 |
Assets |
|
|
|
Macau Operations: |
|
|
|
|
|
Wynn Palace | $ | 3,730,804 |
|
| $ | 3,858,904 |
|
Wynn Macau | 1,680,088 |
|
| 1,903,921 |
|
Other Macau | 71,485 |
|
| 68,487 |
|
Total Macau Operations | 5,482,377 |
|
| 5,831,312 |
|
Las Vegas Operations | 2,835,398 |
|
| 2,792,508 |
|
Encore Boston Harbor | 2,481,267 |
|
| 1,865,286 |
|
Corporate and other | 2,478,016 |
|
| 2,727,163 |
|
Total | $ | 13,277,058 |
|
| $ | 13,216,269 |
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with, and is qualified in its entirety by, the condensed consolidated financial statements and the notes thereto included elsewhere in this Form 10-Q and the consolidated financial statements appearing in our annual report on Form 10-K for the year ended December 31, 2018.2019. Unless the context otherwise requires, all references herein to the "Company," "we," "us," or "our," or similar terms, refer to Wynn Resorts, Limited, a Nevada corporation, and its consolidated subsidiaries. This discussion and analysis contains forward-looking statements. Please refer to the section below entitled "Special Note Regarding Forward-Looking Statements."
Overview
We are a designer, developer, owner and operator of destination casino resorts. Inintegrated resorts featuring luxury hotel rooms, high-end retail space, an array of dining and entertainment options, meeting and convention facilities, and gaming, all supported by an unparalleled focus on our guests, our people, and our community. Through our approximately 72% ownership of WML, we operate two integrated resorts in the Macau Special Administrative Region of the People's Republic of China ("Macau"), we own approximately 72% of Wynn Macau, Limited ("WML"), which includes the operations of the Wynn Palace and Wynn Macau resorts, which we refer to as(collectively, our Macau Operations."Macau Operations"). In Las Vegas, Nevada, we operate and, with the exception of certain retail space, own 100% of Wynn Las Vegas. Additionally,Vegas, which we are a 50.1% owner and managing member of a joint venture that owns and leases certain retail space at Wynn Las Vegas (the "Retail Joint Venture"). Wealso refer to Wynn Las Vegas and the Retail Joint Venture as our Las Vegas Operations. On June 23, 2019, we opened Encore Boston Harbor, an integrated resort in Everett, Massachusetts.
Recent Developments Related to COVID-19
As previously disclosed, in January 2020, an outbreak of a new strain of coronavirus, COVID-19 ("COVID-19"), was identified. Since then, COVID-19 has spread around the world, and steps have been taken by various countries, including those in which we operate, to advise citizens to avoid non-essential travel, to restrict inbound international travel, to implement closures of non-essential operations, and to implement quarantines and lockdowns to contain the spread of the virus. Currently, no fully effective treatments or vaccines have been developed, and there can be no assurance as to if or when an effective treatment or vaccine will be discovered.
Macau Operations
We operate our Macau Operations under a 20-year casino concession agreement granted by the Macau government in June 2002. We lease from the Macau government approximately 51 acres of land in the Cotai area of Macau where Wynn Palace is located and 16 acres of land in downtown Macau's inner harbor where Wynn Macau is located.
Wynn Palace features the following as of September 30, 2019:
Approximately 424,000 square feet of casino space, offering 24-hour gaming and a full range of games with 381 table games and 1,137 slot machines, private gaming salons and sky casinos;
A luxury hotel with a total of 1,706 guest rooms, suites and villas;
14 food and beverage outlets;
Approximately 106,000 square feet of high-end, brand-name retail space;
Approximately 37,000 square feet of meeting and convention space;
Recreation and leisure facilities, including a gondola ride, health club, spa, salon and pool; and
Public attractions including a performance lake, floral art displays and fine art displays.
Wynn Macau features the following as of September 30, 2019:
Approximately 272,000 square feet of casino space, offering 24-hour gaming and a full range of games with 329 table games and 706 slot machines, private gaming salons, sky casinos and a poker pit;
Two luxury hotel towers with a total of 1,010 guest rooms and suites;
12 food and beverage outlets;
Approximately 59,000 square feet of high-end, brand-name retail space;
Approximately 31,000 square feet of meeting and convention space;
Recreation and leisure facilities, including two health clubs, spas, a salon and a pool; and
A rotunda show featuring a Chinese zodiac-inspired ceiling along with gold "prosperity tree" and "dragon of fortune" attractions.
In response to our evaluationthe COVID-19 pandemic, the Macau government announced on February 4, 2020 the closure of ourall casino operations in Macau, Operationsincluding those at Wynn Palace and our commitmentWynn Macau, for a period of 15 days. On February 20, 2020, casino operations at Wynn Palace and Wynn Macau reopened on a reduced basis and have since been fully restored; however, certain COVID-19 specific protective measures, such as traveler quarantines, limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, COVID-19 negative test results requirements for entry to creating a unique customer experience, we have madegaming areas, and expecthealth declarations remain in effect at the present time.
Visitation to Macau has fallen significantly since the outbreak of COVID-19, driven by the pandemic's strong deterrent effect on travel and social activities, the Chinese government's suspension of its visa and group tour schemes that allow mainland Chinese residents to travel to Macau, various quarantine measures in Macau and elsewhere, travel and entry restrictions in Macau, Hong Kong, Taiwan, and mainland China, and the suspension of ferry services to Macau from Hong Kong and mainland China and other modes of transportation within Macau. Total visitation from mainland China to Macau decreased by 99.3% and 83.7% in the three and six months ended June 30, 2020, compared to the same periods in 2019. Regionally, bans on entry or enhanced quarantine requirements, depending on the person’s residency and their recent travel history, for any Macau residents, PRC citizens, Hong Kong residents and Taiwan residents attempting to enter Macau are drastically impacting visitation. Persons who are not residents of the Greater China area are barred from entry to Macau at this time.
While most of the foregoing travel restrictions and quarantine requirements continue to make enhancementsweigh on visitation to Macau, beginning in June 2020 certain of these restrictions are being eased as the region gradually recovers from the COVID-19 pandemic. In July 2020, Guangdong Province, a Chinese province adjacent to Macau, eased certain quarantine requirements for those traveling between Guangdong Province and refinementsMacau, subject to these resorts.
certain testing requirements and health declarations. Quarantine requirements for those traveling between Hong Kong and Macau have been announced to remain effective until at least September 7, 2020, at which time they may be lifted. In the initial phase of opening travel channels between Macau and other regions, it is expected that all visitors seeking entry to Macau will need to test negative for COVID-19 before entering Macau. Although Mainland China and Macau have recently announced several policies or changes to policies which relax certain visa issuance, border control and quarantine requirements, stringent health declarations, testing and other procedures
remain in place and the Individual Visitor Scheme which, prior to its suspension by the PRC government due to COVID-19 travel restrictions, permitted individual PRC citizens from nearly 50 PRC cities to travel to Macau for tourism purposes, has yet to restart.
Las Vegas Operations and Encore Boston Harbor
Wynn Las Vegas is located atclosed on March 17, 2020, and reopened on June 4, 2020 with certain COVID-19 specific protective measures in place, such as limiting the intersectionnumber of the Las Vegas Stripseats per table game, slot machine spacing, temperature checks, mask protection, and Sands Avenue,suspension of certain entertainment and occupies approximately 215 acres of land fronting the Las Vegas Strip.nightlife offerings.
Wynn Las Vegas features the following as of September 30, 2019:
Approximately 194,000 square feet of casino space, offering 24-hour gaming and a full range of games with 236 table games and 1,789 slot machines, private gaming salons, a sky casino, a poker room, and a race and sports book;
Two luxury hotel towers with a total of 4,748 guest rooms, suites and villas;
33 food and beverage outlets;
Approximately 160,000 square feet of high-end, brand-name retail space (the majority of which is owned and operated by the Retail Joint Venture);
Approximately 290,000 square feet of meeting and convention space;
Two nightclubs and a beach club;
Recreation and leisure facilities, including swimming pools, private cabanas, two full service spas and salons, and a wedding chapel; and
A specially designed theater presenting "Le Rêve—The Dream," a water-based theatrical production and a theater presenting entertainment productions and various headliner entertainment acts.
In response to our evaluation of our Las Vegas Operations and our commitment to creating a unique customer experience, we have made and expect to continue to make enhancements and refinements to this resort.
Encore Boston Harbor
On June 23, 2019, the Company opened Encore Boston Harbor, an integrated resort in Everett, Massachusetts, adjacent to Boston along the Mystic River, which occupies approximately 33 acres of land.
Encore Boston Harbor featurescommenced operations on June 23, 2019. In response to the followingCOVID-19 pandemic, Encore Boston Harbor ceased all operations and closed to the public on March 15, 2020, for the remainder of the first and second quarters of 2020. On July 12, 2020, Encore Boston Harbor reopened with certain COVID-19 specific protective measures in place, such as limiting the number of September 30, 2019:
Approximately 210,000 square feet of casino space, offering 24-hour gamingseats per table game, slot machine spacing, temperature checks, and a full range of games with 145 table games and 3,101 slot machines, private and high-limit gaming areas, and a poker room;
A luxury hotel tower with a total of 671 guest rooms and suites;
13mask protection. In addition, certain food and beverage outlets;outlets remain closed and hotel reservations have been limited to Thursday through Sunday.
One nightclub;
Approximately 8,000 square feet of retail space;
Approximately 71,000 square feet of meetingThe disruptions arising from the COVID-19 outbreak have had, during the three and convention space;
Recreationsix months ended June 30, 2020, and leisure facilities, including a spa and salon; and
Public attractions including a waterfront park, floral displays, and water shuttle service to downtown Boston.
In response to our evaluation of Encore Boston Harbor and our commitment to creating a unique customer experience, we have made and expect towill continue to make enhancementshave an adverse effect on the Company's results of operations. Our operations are generating extremely limited revenue. Given the uncertainty around the extent and refinements to this resort.
Construction and Development Opportunities
We recently completed our reconfigurationtiming of the Wynn Las Vegas golf coursepotential future spread or mitigation of COVID-19 and openedaround the golf courseimposition or relaxation of protective measures, the impact on October 11, 2019. We are constructing an approximately 430,000 square foot meetingthe Company’s consolidated results of operations, cash flows and convention facilityfinancial condition in 2020 and potentially thereafter will be material, but cannot be reasonably estimated at Wynn Las Vegas. The facilitythis time as it is unknown when the COVID-19 pandemic will feature approximately 217,000 square feet of state-of-the-art meetingend, when or if our properties will return to pre-pandemic demand and convention space available for group reservations. Based onpricing, when or how quickly the current designs, we estimate the total project budgettravel restrictions will be modified or cease to be approximately $425.0 million. As of September 30, 2019, we have incurred $302.7 million in total project costs. We expect to opennecessary and the additional meeting and convention space in the first quarter of 2020.
We are currently reconfiguring the West Casino at Wynn Macau. When completed, the enhanced space will consist of approximately 44 mass market table games, a refurbished high-limit slot area, two new restaurants and approximately 7,000 square feet of retail space, and will provide for improved pedestrian access from the boardwalk. We estimate the total project budget to be approximately $70.0 million. We expect to complete the gaming enhancements and open the new restaurants in the fourth quarter of 2019, and we expect to open the new retail space at varying times in the fourth quarter of 2019 and first quarter of 2020.
We are in the preliminary planning and design stages of developing the Crystal Pavilion at Wynn Palace. We expect the Crystal Pavilion will become a unique world-class cultural destination, incorporating an art museum, an immersive theater and interactive installations, an expansive food hall, additional hotel rooms, and several signature entertainment features. We estimate construction of the initial phase of the Crystal Pavilion will begin in late 2021.
We are exploring various development opportunities with respect to the approximately 38 acres of land locatedresulting impact on the Las Vegas Strip directly across from Wynn Las Vegas.
We continually seek out new opportunities for additional gaming or related businesses, in the United States, and worldwide.Company’s business.
Key Operating Measures
Certain key operating measures specific to the gaming industry are included in our discussion of our operational performance for the periods for which the Condensed Consolidated Statements of Operations are presented. These key operating measures are presented as supplemental disclosures because management and/or certain investors use these measures to better understand period-over-period fluctuations in our casino and hotel operating revenues. These key operating measures are defined below:
•Table drop in mass market for our Macau Operations is the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage.
•Table drop for our Las Vegas Operations is the amount of cash and net markers issued that are deposited in a gaming table's drop box.
•Table drop for Encore Boston Harbor is the amount of cash and gross markers issued that are deposited in a gaming table's drop box.
•Rolling chips are non-negotiable identifiable chips that are used to track turnover for purposes of calculating incentives within our Macau Operations' VIP program.
•Turnover is the sum of all losing rolling chip wagers within our Macau Operations' VIP program.
•Table games win is the amount of table drop or turnover that is retained and recorded as casino revenues. Table games win is before discounts, commissions and the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis. Table games win does not include poker rake.
•Slot machine win is the amount of handle (representing the total amount wagered) that is retained by us and is recorded as casino revenues. Slot machine win is after adjustment for progressive accruals and free play, but before discounts and the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis.
•Poker rake is the portion of cash wagered by patrons in our poker rooms that is retained by the casino as a service fee, after adjustment for progressive accruals, but before the allocation of casino revenues to rooms, food and beverage and other revenues for services provided to casino customers on a complimentary basis. Poker tables are not included in our measure of average number of table games.
•Average daily rate ("ADR") is calculated by dividing total room revenues, including complimentaries (less service charges, if any), by total rooms occupied.
•Revenue per available room ("REVPAR") is calculated by dividing total room revenues, including complimentaries (less service charges, if any), by total rooms available.
•Occupancy is calculated by dividing total occupied rooms, including complimentary rooms, by the total rooms available.
Below is a discussion of the methodologies used to calculate win percentages at our resorts.
In our VIP operations in Macau, customers primarily purchase rolling chips from the casino cage and can only use them to make wagers. Winning wagers are paid in cash chips. The loss of the rolling chips in the VIP operations is recorded as turnover and provides a base for calculating VIP win percentage. It is customary in Macau to measure VIP play using this rolling chip method. We expect our win as a percentage of turnover from these operations to be within the range of 2.7% to 3.0%.
In our mass market operations in Macau, customers may purchase cash chips at either the gaming tables or at the casino cage. The measurements from our VIP and mass market operations are not comparable as the measurement method used in our mass market operations tracks the initial purchase of chips at the table and at the casino cage, while the measurement method from our VIP operations tracks the sum of all losing wagers. Accordingly, the base measurement from the VIP operations is much larger than the base measurement from the mass market operations. As a result, the expected win percentage with the same amount of gaming win is lower in the VIP operations when compared to the mass market operations.
In Las Vegas, customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers at the gaming tables or at the casino cage. The cash and markers, net of redemptions, used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 22% to 26%.
At Encore Boston Harbor, customers purchase chips at the gaming tables in exchange for cash and markers. Customers may then redeem markers only at the casino cage. The cash and gross markers used to purchase chips are deposited in the gaming table's drop box. This is the base of measurement that we use for calculating win percentage. Each type of table game has its own theoretical win percentage. Our expected table games win percentage is 16% to 20%.
Results of Operations
Summary of thirdsecond quarter 20192020 results
The following table summarizes our financial results for the periods presented (in thousands, except per share data):
| |
| Three Months Ended September 30, | | | | Nine Months Ended September 30, | | | | | | Three Months Ended June 30, | | | | | | Six Months Ended June 30, | | | | |
| 2019 |
| 2018 |
| Increase/ (Decrease) |
| Percent Change | | 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating revenues | $ | 1,647,762 |
| | $ | 1,709,072 |
| | $ | (61,310 | ) | | (3.6 | ) | | $ | 4,957,640 |
| | $ | 5,030,074 |
| | $ | (72,434 | ) |
| (1.4 | ) | Operating revenues | $ | 85,698 | | | $ | 1,658,332 | | | $ | (1,572,634) | | | (94.8) | | | $ | 1,039,414 | | | $ | 3,309,878 | | | $ | (2,270,464) | | | (68.6) | |
Net income (loss) attributable to Wynn Resorts, Limited | (3,496 | ) | | 156,115 |
| | (159,611 | ) | | (102.2 | ) | | 195,927 |
| | 107,564 |
| | 88,363 |
| | 82.1 |
| Net income (loss) attributable to Wynn Resorts, Limited | (637,564) | | | 94,551 | | | (732,115) | | | (774.3) | | | (1,039,601) | | | 199,423 | | | (1,239,024) | | | (621.3) | |
Diluted net income (loss) per share | (0.03 | ) | | 1.44 |
| | (1.47 | ) | | (102.1 | ) | | 1.83 |
| | 1.01 |
| | 0.82 |
| | 81.2 |
| Diluted net income (loss) per share | (5.97) | | | 0.88 | | | (6.85) | | | (778.4) | | | (9.74) | | | 1.86 | | | (11.60) | | | (623.7) | |
Adjusted Property EBITDA (1) | 396,946 |
| | 504,367 |
| | (107,421 | ) | | (21.3 | ) | | 1,372,306 |
| | 1,545,045 |
| | (172,739 | ) | | (11.2 | ) | Adjusted Property EBITDA (1) | (322,897) | | | 480,583 | | | (803,480) | | | (167.2) | | | (328,226) | | | 975,360 | | | (1,303,586) | | | (133.7) | |
(1) See Item 1—"Financial Statements," Note 16, "Segment Information," for a reconciliation of Adjusted Property EBITDA to net income (loss) attributable to Wynn Resorts, Limited.
The decrease in operating revenues for the three months ended SeptemberJune 30, 20192020 was primarily driven by decreases of $132.4$620.2 million, $534.6 million, and $105.3$399.3 million from Wynn Palace, and Wynn Macau, and our Las Vegas Operations, respectively. Operating revenuesThese declines were precipitated by the continued adverse effects of the COVID-19 pandemic, including travel restrictions and
capacity limitations which remain in effect in Macau and the closure of our Las Vegas Operations from March 17, 2020 until June 4, 2020. Encore Boston Harbor were $175.8 million.closed to the public on March 15, 2020 and remained closed until July 12, 2020.
The decrease in net income (loss) attributable to Wynn Resorts, Limited for the three months ended SeptemberJune 30, 20192020 was primarily driven by a decrease in VIP turnoverrelated to the adverse effects of the COVID-19 pandemic on the results of our operations. Net income (loss) attributable to Wynn Resorts, Limited for the three months ended June 30, 2020 excludes the impact of $75.7 million of expense related to our commitment to pay salary, tips, and VIP table games win atbenefits continuation for all of our Macau Operations and increased depreciation expenseU.S. employees for the period from Encore Boston Harbor.April 1 through May 15, 2020, which we accrued during the first quarter of 2020.
The decrease in Adjusted Property EBITDA for the three months ended SeptemberJune 30, 20192020 was driven by decreases of $64.0$278.1 million, $43.9$258.5 million, and $7.3$213.0 million from Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively. Adjusted Property EBITDA from Encore Boston Harbor was $7.7$(53.8) million.
Financial results for the three months ended SeptemberJune 30, 20192020 compared to the three months ended SeptemberJune 30, 2018.2019.
Operating revenues
The following table presents our operating revenues (in thousands): | | | Three Months Ended September 30, | | | | | | Three Months Ended June 30, | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating revenues | | | | | | | | Operating revenues | | | | | | | |
Macau Operations: | | | | | | | | Macau Operations: | |
Wynn Palace | $ | 598,171 |
| | $ | 730,572 |
| | $ | (132,401 | ) | | (18.1 | ) | Wynn Palace | $ | 8,718 | | | $ | 628,916 | | | $ | (620,198) | | | (98.6) | |
Wynn Macau | 474,281 |
| | 579,620 |
| | (105,339 | ) | | (18.2 | ) | Wynn Macau | 11,888 | | | 546,474 | | | (534,586) | | | (97.8) | |
Total Macau Operations | 1,072,452 |
| | 1,310,192 |
| | (237,740 | ) | | (18.1 | ) | Total Macau Operations | 20,606 | | | 1,175,390 | | | (1,154,784) | | | (98.2) | |
Las Vegas Operations | 399,506 |
| | 398,880 |
| | 626 |
| | 0.2 |
| Las Vegas Operations | 64,886 | | | 464,142 | | | (399,256) | | | (86.0) | |
Encore Boston Harbor (1) | 175,804 |
| | — |
| | 175,804 |
| | — |
| Encore Boston Harbor (1) | 206 | | | 18,800 | | | (18,594) | | | (98.9) | |
| $ | 1,647,762 |
| | $ | 1,709,072 |
| | $ | (61,310 | ) | | (3.6 | ) | | $ | 85,698 | | | $ | 1,658,332 | | | $ | (1,572,634) | | | (94.8) | |
(1) Encore Boston Harbor openedcommenced operations on June 23, 2019.
The following table presents our casino and non-casino operating revenues (in thousands): | | | Three Months Ended September 30, | | | | | | Three Months Ended June 30, | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating revenues | | | | | | | | Operating revenues | | | | | | | |
Casino revenues | $ | 1,108,364 |
| | $ | 1,222,029 |
| | $ | (113,665 | ) | | (9.3 | ) | Casino revenues | $ | 9,413 | | | $ | 1,142,503 | | | $ | (1,133,090) | | | (99.2) | |
Non-casino revenues: | | | | | | |
|
| Non-casino revenues: | |
Rooms | 205,876 |
| | 183,044 |
| | 22,832 |
| | 12.5 |
| Rooms | 17,415 | | | 198,807 | | | (181,392) | | | (91.2) | |
Food and beverage | 228,508 |
| | 193,874 |
| | 34,634 |
| | 17.9 |
| Food and beverage | 24,007 | | | 218,022 | | | (194,015) | | | (89.0) | |
Entertainment, retail and other | 105,014 |
| | 110,125 |
| | (5,111 | ) | | (4.6 | ) | Entertainment, retail and other | 34,863 | | | 99,000 | | | (64,137) | | | (64.8) | |
Total non-casino revenues | 539,398 |
| | 487,043 |
| | 52,355 |
| | 10.7 |
| Total non-casino revenues | 76,285 | | | 515,829 | | | (439,544) | | | (85.2) | |
| $ | 1,647,762 |
| | $ | 1,709,072 |
| | $ | (61,310 | ) | | (3.6 | ) | | $ | 85,698 | | | $ | 1,658,332 | | | $ | (1,572,634) | | | (94.8) | |
Casino revenues for the three months ended SeptemberJune 30, 20192020 were 67.3%11.0% of operating revenues, compared to 71.5%68.9% for the same period of 2018.2019. Non-casino revenues for the three months ended SeptemberJune 30, 20192020 were 32.7%89.0% of operating revenues, compared to 28.5%31.1% for the same period of 2018.2019.
Casino revenues
Casino revenues decreased primarily due to decreased VIP turnoverthe adverse effects of the COVID-19 pandemic, including widespread travel restrictions and VIP table games win atcapacity limitations and the closure of our MacauLas Vegas Operations partially offset by increased mass market table drop and slot machine handle at our Macau Operations and casino revenues from March 17, 2020 until June 4, 2020. Encore Boston Harbor totaling $114.9 million.closed to the public on March 15, 2020, and remained closed through the second quarter. The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day):
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change |
Macau Operations: | | | | | | | |
Wynn Palace: | | | | | | | |
Total casino revenues | $ | 497,657 |
| | $ | 625,586 |
| | $ | (127,929 | ) | | (20.4 | ) |
VIP: | | | | | | | |
Average number of table games | 108 |
| | 112 |
| | (4 | ) | | (3.6 | ) |
VIP turnover | $ | 10,517,685 |
| | $ | 15,525,637 |
| | $ | (5,007,952 | ) | | (32.3 | ) |
VIP table games win | $ | 335,277 |
| | $ | 528,219 |
| | $ | (192,942 | ) | | (36.5 | ) |
VIP win as a % of turnover | 3.19 | % | | 3.40 | % | | (0.21 | ) | | |
Table games win per unit per day | $ | 33,595 |
| | $ | 51,463 |
| | $ | (17,868 | ) | | (34.7 | ) |
Mass market: | | | | | | | |
Average number of table games | 216 |
| | 206 |
| | 10 |
| | 4.9 |
|
Table drop | $ | 1,298,827 |
| | $ | 1,189,895 |
| | $ | 108,932 |
| | 9.2 |
|
Table games win | $ | 324,177 |
| | $ | 308,149 |
| | $ | 16,028 |
| | 5.2 |
|
Table games win % | 25.0 | % | | 25.9 | % | | (0.9 | ) | | |
Table games win per unit per day | $ | 16,346 |
| | $ | 16,291 |
| | $ | 55 |
| | 0.3 |
|
Average number of slot machines | 1,087 |
| | 1,056 |
| | 31 |
| | 2.9 |
|
Slot machine handle | $ | 973,676 |
| | $ | 922,514 |
| | $ | 51,162 |
| | 5.5 |
|
Slot machine win | $ | 47,289 |
| | $ | 46,044 |
| | $ | 1,245 |
| | 2.7 |
|
Slot machine win per unit per day | $ | 473 |
| | $ | 474 |
| | $ | (1 | ) | | (0.2 | ) |
Wynn Macau: | | | | | | | |
Total casino revenues | $ | 408,820 |
| | $ | 503,557 |
| | $ | (94,737 | ) | | (18.8 | ) |
VIP: | | | | | | | |
Average number of table games | 104 |
| | 109 |
| | (5 | ) | | (4.6 | ) |
VIP turnover | $ | 8,024,990 |
| | $ | 13,966,931 |
| | $ | (5,941,941 | ) | | (42.5 | ) |
VIP table games win | $ | 221,097 |
| | $ | 420,864 |
| | $ | (199,767 | ) | | (47.5 | ) |
VIP win as a % of turnover | 2.76 | % | | 3.01 | % | | (0.25 | ) | | |
Table games win per unit per day | $ | 23,036 |
| | $ | 42,061 |
| | $ | (19,025 | ) | | (45.2 | ) |
Mass market: | | | | | | | |
Average number of table games | 205 |
| | 200 |
| | 5 |
| | 2.5 |
|
Table drop | $ | 1,319,405 |
| | $ | 1,183,667 |
| | $ | 135,738 |
| | 11.5 |
|
Table games win | $ | 272,511 |
| | $ | 250,229 |
| | $ | 22,282 |
| | 8.9 |
|
Table games win % | 20.7 | % | | 21.1 | % | | (0.4 | ) | | |
Table games win per unit per day | $ | 14,440 |
| | $ | 13,625 |
| | $ | 815 |
| | 6.0 |
|
Average number of slot machines | 786 |
| | 845 |
| | (59 | ) | | (7.0 | ) |
Slot machine handle | $ | 999,985 |
| | $ | 895,249 |
| | $ | 104,736 |
| | 11.7 |
|
Slot machine win | $ | 46,981 |
| | $ | 34,769 |
| | $ | 12,212 |
| | 35.1 |
|
Slot machine win per unit per day | $ | 649 |
| | $ | 447 |
| | $ | 202 |
| | 45.2 |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Macau Operations: | | | | | | | |
Wynn Palace: | | | | | | | |
Total casino revenues | $ | (11,428) | | | $ | 528,545 | | | $ | (539,973) | | | (102.2) | |
VIP: | | | | | | | |
Average number of table games | 100 | | | 112 | | | (12) | | | (10.7) | |
VIP turnover | $ | 1,719,825 | | | $ | 13,388,646 | | | $ | (11,668,821) | | | (87.2) | |
VIP table games win | $ | (29,806) | | | $ | 404,408 | | | $ | (434,214) | | | (107.4) | |
VIP win as a % of turnover | (1.73) | % | | 3.02 | % | | (4.75) | | | |
Table games win per unit per day | $ | (3,276) | | | $ | 39,827 | | | $ | (43,103) | | | (108.2) | |
Mass market: | | | | | | | |
Average number of table games | 221 | | | 214 | | | 7 | | | 3.3 | |
Table drop | $ | 22,029 | | | $ | 1,267,153 | | | $ | (1,245,124) | | | (98.3) | |
Table games win | $ | 7,168 | | | $ | 296,852 | | | $ | (289,684) | | | (97.6) | |
Table games win % | 32.5 | % | | 23.4 | % | | 9.1 | | | |
Table games win per unit per day | $ | 357 | | | $ | 15,232 | | | $ | (14,875) | | | (97.7) | |
Average number of slot machines | 480 | | | 1,099 | | | (619) | | | (56.3) | |
Slot machine handle | $ | 39,415 | | | $ | 937,842 | | | $ | (898,427) | | | (95.8) | |
Slot machine win | $ | 2,395 | | | $ | 43,567 | | | $ | (41,172) | | | (94.5) | |
Slot machine win per unit per day | $ | 55 | | | $ | 436 | | | $ | (381) | | | (87.4) | |
Wynn Macau: | | | | | | | |
Total casino revenues | $ | (3,524) | | | $ | 481,204 | | | $ | (484,728) | | | (100.7) | |
VIP: | | | | | | | |
Average number of table games | 91 | | | 110 | | | (19) | | | (17.3) | |
VIP turnover | $ | 607,144 | | | $ | 9,275,628 | | | $ | (8,668,484) | | | (93.5) | |
VIP table games win | $ | (12,161) | | | $ | 305,809 | | | $ | (317,970) | | | (104.0) | |
VIP win as a % of turnover | (2.00) | % | | 3.30 | % | | (5.30) | | | |
Table games win per unit per day | $ | (1,471) | | | $ | 30,560 | | | $ | (32,031) | | | (104.8) | |
Mass market: | | | | | | | |
Average number of table games | 229 | | | 205 | | | 24 | | | 11.7 | |
Table drop | $ | 40,817 | | | $ | 1,347,435 | | | $ | (1,306,618) | | | (97.0) | |
Table games win | $ | 3,391 | | | $ | 279,127 | | | $ | (275,736) | | | (98.8) | |
Table games win % | 8.3 | % | | 20.7 | % | | (12.4) | | | |
Table games win per unit per day | $ | 163 | | | $ | 14,929 | | | $ | (14,766) | | | (98.9) | |
Average number of slot machines | 440 | | | 827 | | | (387) | | | (46.8) | |
Slot machine handle | $ | 62,011 | | | $ | 925,784 | | | $ | (863,773) | | | (93.3) | |
Slot machine win | $ | 2,626 | | | $ | 42,815 | | | $ | (40,189) | | | (93.9) | |
Slot machine win per unit per day | $ | 66 | | | $ | 569 | | | $ | (503) | | | (88.5) | |
Poker rake | $ | — | | | $ | 4,674 | | | $ | (4,674) | | | (100.0) | |
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change |
Las Vegas Operations: | | | | | | | |
Total casino revenues | $ | 87,002 |
| | $ | 92,886 |
| | $ | (5,884 | ) | | (6.3 | ) |
Average number of table games | 237 |
| | 235 |
| | 2 |
| | 0.9 |
|
Table drop | $ | 430,837 |
| | $ | 404,033 |
| | $ | 26,804 |
| | 6.6 |
|
Table games win | $ | 85,738 |
| | $ | 86,709 |
| | $ | (971 | ) | | (1.1 | ) |
Table games win % | 19.9 | % | | 21.5 | % | | (1.6 | ) | | |
Table games win per unit per day | $ | 3,927 |
| | $ | 4,003 |
| | $ | (76 | ) | | (1.9 | ) |
Average number of slot machines | 1,783 |
| | 1,823 |
| | (40 | ) | | (2.2 | ) |
Slot machine handle | $ | 883,931 |
| | $ | 810,120 |
| | $ | 73,811 |
| | 9.1 |
|
Slot machine win | $ | 58,176 |
| | $ | 55,937 |
| | $ | 2,239 |
| | 4.0 |
|
Slot machine win per unit per day | $ | 355 |
| | $ | 334 |
| | $ | 21 |
| | 6.3 |
|
Encore Boston Harbor (1): | | | | | | | |
Total casino revenues | $ | 114,885 |
| | $ | — |
| | $ | 114,885 |
| | — |
|
Average number of table games | 145 |
| | — |
| | 145 |
| | — |
|
Table drop | $ | 379,626 |
| | $ | — |
| | $ | 379,626 |
| | — |
|
Table games win | $ | 74,882 |
| | $ | — |
| | $ | 74,882 |
| | — |
|
Table games win % | 19.7 | % | | — | % | | 19.7 |
| | |
Table games win per unit per day | $ | 5,631 |
| | $ | — |
| | $ | 5,631 |
| | — |
|
Average number of slot machines | 3,101 |
| | — |
| | 3,101 |
| | — |
|
Slot machine handle | $ | 892,706 |
| | $ | — |
| | $ | 892,706 |
| | — |
|
Slot machine win | $ | 62,381 |
| | $ | — |
| | $ | 62,381 |
| | — |
|
Slot machine win per unit per day | $ | 219 |
| | $ | — |
| | $ | 219 |
| | — |
|
(1) Encore Boston Harbor opened on June 23, 2019.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Las Vegas Operations: | | | | | | | |
Total casino revenues | $ | 24,365 | | | $ | 119,753 | | | $ | (95,388) | | | (79.7) | |
Average number of table games | 221 | | | 238 | | | (17) | | | (7.1) | |
Table drop | $ | 90,873 | | | $ | 440,766 | | | $ | (349,893) | | | (79.4) | |
Table games win | $ | 17,918 | | | $ | 126,395 | | | $ | (108,477) | | | (85.8) | |
Table games win % | 19.7 | % | | 28.7 | % | | (9.0) | | | |
Table games win per unit per day | $ | 2,998 | | | $ | 5,832 | | | $ | (2,834) | | | (48.6) | |
Average number of slot machines | 1,752 | | | 1,789 | | | (37) | | | (2.1) | |
Slot machine handle | $ | 246,393 | | | $ | 811,639 | | | $ | (565,246) | | | (69.6) | |
Slot machine win | $ | 17,523 | | | $ | 55,128 | | | $ | (37,605) | | | (68.2) | |
Slot machine win per unit per day | $ | 371 | | | $ | 339 | | | $ | 32 | | | 9.4 | |
Poker rake | $ | — | | | $ | 4,119 | | | $ | (4,119) | | | (100.0) | |
Note: Encore Boston Harbor casino revenues and associated key operating measures have been omitted from the table. As a result of the COVID-19 pandemic, our operations at Encore Boston Harbor were closed throughout the second quarter in 2020. In addition, the results of the eight days of its operations during the second quarter of 2019 between its June 23, 2019 opening and June 30, 2019 are not considered material to our consolidated results of operations for the three months ended June 30, 2019.
Non-casino revenues
The table below sets forth our room revenues and associated key operating measures: |
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change |
Macau Operations: | | | | | | | |
Wynn Palace: | | | | | | | |
Total room revenues (dollars in thousands) | $ | 44,884 |
| | $ | 44,296 |
| | $ | 588 |
| | 1.3 |
|
Occupancy | 97.2 | % | | 96.0 | % | | 1.2 |
| | |
ADR | $ | 273 |
| | $ | 275 |
| | $ | (2 | ) | | (0.7 | ) |
REVPAR | $ | 265 |
| | $ | 264 |
| | $ | 1 |
| | 0.4 |
|
Wynn Macau: | | | | | | | |
Total room revenues (dollars in thousands) | $ | 26,740 |
| | $ | 28,091 |
| | $ | (1,351 | ) | | (4.8 | ) |
Occupancy | 99.4 | % | | 99.0 | % | | 0.4 |
| | |
ADR | $ | 283 |
| | $ | 276 |
| | $ | 7 |
| | 2.5 |
|
REVPAR | $ | 281 |
| | $ | 273 |
| | $ | 8 |
| | 2.9 |
|
Las Vegas Operations: | | | | | | | |
Total room revenues (dollars in thousands) | $ | 116,072 |
| | $ | 110,657 |
| | $ | 5,415 |
| | 4.9 |
|
Occupancy | 87.9 | % | | 89.6 | % | | (1.7 | ) | | |
ADR | $ | 306 |
| | $ | 289 |
| | $ | 17 |
| | 5.9 |
|
REVPAR | $ | 269 |
| | $ | 259 |
| | $ | 10 |
| | 3.9 |
|
Encore Boston Harbor (1): | | | | | | | |
Total room revenues (dollars in thousands) | $ | 18,180 |
| | $ | — |
| | $ | 18,180 |
| | — |
|
Occupancy | 69.6 | % | | — | % | | 69.6 |
| | |
ADR | $ | 465 |
| | $ | — |
| | $ | 465 |
| | — |
|
REVPAR | $ | 324 |
| | $ | — |
| | $ | 324 |
| | — |
|
(1) | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Macau Operations: | | | | | | | |
Wynn Palace: | | | | | | | |
Total room revenues (dollars in thousands) | $ | 2,431 | | | $ | 43,183 | | | $ | (40,752) | | | (94.4) | |
Occupancy | 4.4 | % | | 97.4 | % | | (93.0) | | | |
ADR | $ | 339 | | | $ | 265 | | | $ | 74 | | | 27.9 | |
REVPAR | $ | 15 | | | $ | 258 | | | $ | (243) | | | (94.2) | |
Wynn Macau: | | | | | | | |
Total room revenues (dollars in thousands) | $ | 2,631 | | | $ | 26,465 | | | $ | (23,834) | | | (90.1) | |
Occupancy | 7.5 | % | | 98.9 | % | | (91.4) | | | |
ADR | $ | 342 | | | $ | 281 | | | $ | 61 | | | 21.7 | |
REVPAR | $ | 25 | | | $ | 278 | | | $ | (253) | | | (91.0) | |
Las Vegas Operations: | | | | | | | |
Total room revenues (dollars in thousands) | $ | 12,353 | | | $ | 127,554 | | | $ | (115,201) | | | (90.3) | |
Occupancy | 43.7 | % | | 90.1 | % | | (46.4) | | | |
ADR | $ | 226 | | | $ | 333 | | | $ | (107) | | | (32.1) | |
REVPAR | $ | 99 | | | $ | 300 | | | $ | (201) | | | (67.0) | |
Note: Encore Boston Harbor opened onroom revenues and associated key operating measures have been omitted from the table. As a result of the COVID-19 pandemic, our operations at Encore Boston Harbor were closed throughout the second quarter in 2020. In addition, the results of the eight days of its operations during the second quarter of 2019 are not considered material to our consolidated results of operations for the three months ended June 23,30, 2019.
Room revenues increased $22.8decreased $181.4 million, primarily due to $18.2 million from Encore Boston Harborlower occupancy at Wynn Palace and higher ADR atWynn Macau and the closure of our Las Vegas Operations partially offset by rooms outresulting from the adverse effects of service for renovations at Wynn Macau.the COVID-19 pandemic.
Food and beverage revenues increased $34.6decreased $194.0 million, primarily due to $29.0 million from Encore Boston Harbor and increaseddecreased covers at our high-volume restaurants at our Macau Operations.Operations and the closure of our Las Vegas Operations resulting from the adverse effects of the COVID-19 pandemic.
Entertainment, retail and other revenues decreased $5.1$64.1 million, primarily due to a decrease in visitation to our Macau Operations and the closure of certain owned retail outlets at Wynn Macau and their conversion to leased outlets beginning inour Las Vegas Operations resulting from the first quarteradverse effects of 2019, the effect of which was partially offset by Entertainment, retail and other revenues of $13.8 million from Encore Boston Harbor. During the third quarter of 2018, Wynn Palace and Wynn Macau recorded business interruption insurance proceeds of $5.4 million and $5.3 million, respectively, related to the full settlement of claims from Typhoon Hato in 2017. COVID-19 pandemic.
Operating expenses
The table below presents operating expenses (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating expenses: | | | | | | | |
Casino | $ | 131,138 | | | $ | 724,987 | | | $ | (593,849) | | | (81.9) | |
Rooms | 30,367 | | | 66,148 | | | (35,781) | | | (54.1) | |
Food and beverage | 61,889 | | | 182,080 | | | (120,191) | | | (66.0) | |
Entertainment, retail and other | 16,873 | | | 43,514 | | | (26,641) | | | (61.2) | |
General and administrative | 152,081 | | | 202,224 | | | (50,143) | | | (24.8) | |
Provision for credit losses | 28,347 | | | 3,581 | | | 24,766 | | | 691.6 | |
Pre-opening | 2,186 | | | 69,883 | | | (67,697) | | | (96.9) | |
Depreciation and amortization | 179,266 | | | 140,269 | | | 38,997 | | | 27.8 | |
Property charges and other | 6,567 | | | 6,930 | | | (363) | | | (5.2) | |
Total operating expenses | $ | 608,714 | | | $ | 1,439,616 | | | $ | (830,902) | | | (57.7) | |
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, |
|
|
|
|
| 2019 |
| 2018 |
| Increase/ (Decrease) |
| Percent Change |
Operating expenses: |
|
|
|
|
|
|
|
Casino | $ | 722,692 |
|
| $ | 783,171 |
|
| $ | (60,479 | ) |
| (7.7 | ) |
Rooms | 75,188 |
|
| 62,965 |
|
| 12,223 |
|
| 19.4 |
|
Food and beverage | 196,661 |
|
| 162,311 |
|
| 34,350 |
|
| 21.2 |
|
Entertainment, retail and other | 42,078 |
|
| 44,028 |
|
| (1,950 | ) |
| (4.4 | ) |
General and administrative | 246,442 |
|
| 192,327 |
|
| 54,115 |
|
| 28.1 |
|
Provision for doubtful accounts | 4,036 |
|
| 3,285 |
|
| 751 |
|
| 22.9 |
|
Pre-opening | 1,616 |
|
| 13,714 |
|
| (12,098 | ) |
| (88.2 | ) |
Depreciation and amortization | 172,998 |
|
| 137,458 |
|
| 35,540 |
|
| 25.9 |
|
Property charges and other | 8,216 |
|
| 18,830 |
|
| (10,614 | ) |
| (56.4 | ) |
Total operating expenses | $ | 1,469,927 |
|
| $ | 1,418,089 |
|
| $ | 51,838 |
|
| 3.7 |
|
Total operating expenses increased $51.8decreased $830.9 million compared to the thirdsecond quarter of 2018,2019, primarily due to decreased expenses related to the impact of the COVID-19 pandemic on our resorts, partially offset by increased operating expenses associated withfollowing the opening of Encore Boston Harbor onin June 23, 2019, partially offset by decreased casino2019. Operating expenses for the second quarter of 2020 exclude $75.7 million of expense related to our commitment to pay salary, tips, and pre-opening expenses.
benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020, which we accrued during the first quarter of 2020.
Casino expenses decreased $311.8 million, $260.3 million, and $27.7 million at Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively. These decreases were primarily due to reductions in gaming tax expense commensurate with the decreasedeclines in casino revenues at our Macau Operations and Las Vegas Operations, partially offset by $64.8 millioneach property resulting from Encore Boston Harbor.
Roomthe effects of the COVID-19 pandemic. Casino expenses increased primarily due to $9.5for the second quarter of 2020 exclude expense of $7.9 million from Encore Boston Harbor and an increase$12.8 million from our Las Vegas Operations related to our commitment to pay salary, tips, and benefits continuation for all of $2.0our U.S. employees for the period from April 1 through May 15, 2020, which we accrued during the first quarter of 2020.
Room expenses decreased $28.7 million, $6.6 million, and $2.1 million at our Las Vegas Operations.Operations, Wynn Palace, and Wynn Macau respectively. The increasedecreases were primarily a result of lower operating costs related to the decline in occupancy at our Las Vegas Operations was primarily due to increased payroll costs.
Food and beverageeach property resulting from the effects of the COVID-19 pandemic. Room expenses increased primarily due to $28.3for the second quarter of 2020 exclude expense of $1.5 million from Encore Boston Harbor and increases$8.3 million from our Las Vegas Operations related to our commitment to pay salary, tips, and benefits continuation for all of $2.2our U.S. employees for the period from April 1 through May 15, 2020, which we accrued during the first quarter of 2020.
Food and beverage expenses decreased $100.5 million, $15.3 million, and $7.3 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The decreases were primarily a result of lower operating costs related to the declines in food and beverage revenues at each property resulting from the effects of the COVID-19 pandemic. Food and beverage expenses for the second quarter of 2020 exclude expense of $20.8 million from our Las Vegas Operations and $4.8 million from Encore Boston Harbor related to our commitment to pay salary, tips, and benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020, which we accrued during the first quarter of 2020.
Entertainment, retail and other expenses decreased $20.5 million, $5.4 million, and $2.4 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The decreases were primarily a result of lower operating costs related to the declines in entertainment, retail and other revenues at each property resulting from the effects of the COVID-19 pandemic. Entertainment, retail and other expenses exclude expense of $4.1 million from our Las Vegas Operations and
$0.7 million from Encore Boston Harbor related to our commitment to pay salary, tips, and benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020, which we accrued during the first quarter of 2020.
General and administrative expenses decreased primarily due to decreases of $14.6 million, $7.0 million and $14.6 million at Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively. These decreases were primarily attributable to the effects of the COVID-19 pandemic. General and administrative expenses exclude expense of $10.2 million from our Las Vegas Operations and $4.4 million from Encore Boston Harbor related to our commitment to pay salary, tips, and benefits continuation for all of our U.S. employees for the period from April 1 through May 15, 2020, which we accrued during the first quarter of 2020. In addition, corporate and other general and administrative expenses decreased $37.2 million, primarily due to a credit of $27.7 million for the net proceeds of a derivative action settlement recognized during the three months ended June 30, 2020. These decreases were partially offset by an increase of $23.3 million of general and administrative expenses from Encore Boston Harbor due to the opening of the property in June 2019.
Provision for credit losses increased primarily due to increases of $6.4 million, $12.0 million and $5.6 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The increases at Wynn Palace and Wynn Macau were driven by incremental costs associated with opening new food and beverage outlets at Wynn Palace and increased costs of goods sold.
Entertainment, retail and other expenses decreased $2.0 million, primarily due to the closureimpact of certain owned retail outlets at Wynn Macauhistorical collection patterns and their conversion to leased outlets beginningexpectations of current and future collection trends in light of the first quarterCOVID-19 pandemic, as well as the specific review of 2019.
General and administrative expenses increased primarily due tocustomer accounts, on our estimated credit loss for the opening of Encore Boston Harbor, partially offset by a decrease of $8.9 million primarily related to corporate and other general and administrative expenses. The decrease in corporate and other general and administrative expenses was primarily due to a decrease in legal expenses.
respective periods.
For the three months ended SeptemberJune 30, 2019,2020, pre-opening expenses totaled $1.6$2.2 million, which primarily related to the additional meeting and convention facilityrestaurant remodels at our Las Vegas Operations. For the three months ended SeptemberJune 30, 2018,2019, pre-opening expenses totaled $13.7$69.9 million, which primarily related to the development of Encore Boston Harbor.
Depreciation and amortization increased primarily due to additional depreciation expense of $36.3$36.9 million associated with the opening of Encore Boston Harbor.Harbor in June 2019.
asset disposals, abandonments and retirements of $3.6 million and $1.0 million at Encore Boston Harbor and Wynn Palace, respectively.
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars in thousands):
|
| | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | |
| 2019 |
| 2018 | | Increase/ (Decrease) | | Percent Change |
Interest expense | | | | | | | |
Interest cost, including amortization of debt issuance costs and original issue discount and premium | $ | 117,960 |
| | $ | 109,176 |
| | $ | 8,784 |
| | 8.0 |
|
Capitalized interest | (3,308 | ) | | (16,169 | ) | | 12,861 |
| | (79.5 | ) |
| $ | 114,652 |
| | $ | 93,007 |
| | $ | 21,645 |
| | 23.3 |
|
| | | | | | | |
Weighted average total debt balance | $ | 9,261,889 |
| | $ | 8,875,084 |
| | | | |
Weighted average interest rate | 5.08 | % | | 4.92 | % | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended June 30, | | | | | | |
| | | | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Interest expense | | | | | | | | | | | |
Interest cost, including amortization of debt issuance costs and original issue discount and premium | | | | | $ | 133,218 | | | $ | 117,276 | | | $ | 15,942 | | | 13.6 | |
Capitalized interest | | | | | — | | | (24,127) | | | (24,127) | | | (100.0) | |
| | | | | $ | 133,218 | | | $ | 93,149 | | | $ | 40,069 | | | 43.0 | |
| | | | | | | | | | | |
Weighted average total debt balance | | | | | $ | 12,143,644 | | | $ | 9,204,417 | | | | | |
Weighted average interest rate | | | | | 4.38 | % | | 5.08 | % | | | | |
Interest costs increased due to an increase in the weighted average debt balance, andpartially offset by a decrease in the weighted average interest rate. Capitalized interest decreased due to the completion of Encore Boston Harbor construction activities on June 23, 2019.
Other non-operating income and expenses
We recorded a $12.2 million loss on extinguishment of debt for the three months ended September 30, 2019 related to the Refinancing Transactions. For more information on the Refinancing Transactions, see "Liquidity and Capital Resources."
We incurred a foreign currency remeasurement lossgain of $8.7$2.2 million and gain of $11.2$11.7 million for the three months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. The impact of the exchange rate fluctuation of the Macau pataca, in relation to the U.S. dollar, on the remeasurements of U.S. dollar denominated debt and other obligations from our Macau-related entities drove the variability between periods.
We recorded a loss of $3.3 million and $3.3 million for the three months ended June 30, 2020 and 2019, respectively, from change in derivatives fair value.
Income taxes
We recorded an income tax expense of $19.7$80.9 million and an income tax benefit of $3.9$2.0 million for the three months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. The 20192020 income tax expense primarily related to the increase in the valuation allowanceallowances for U.S foreign tax credits and the 2018U.S. loss carryforwards. The 2019 income tax benefit primarily related to an increasethe decrease in deferredthe valuation allowance for U.S foreign tax assets.credits.
Net income (loss) attributable to noncontrolling interests
Net incomeloss attributable to noncontrolling interests was $30.4$97.3 million for the three months ended SeptemberJune 30, 2019,2020, compared to $63.7net income of $47.7 million for the same period of 2018.2019. These amounts are primarily related to the noncontrolling interests' share of net income (loss) from WML.
Financial results for the ninesix months ended SeptemberJune 30, 20192020 compared to the ninesix months ended SeptemberJune 30, 2018.2019.
Operating revenues
The following table presents our operating revenues (in thousands):
| | | Nine Months Ended September 30, | | | | | | Six Months Ended June 30, | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating revenues | | | | | | | | Operating revenues | | | | | | | |
Macau Operations: | | | | | | | | Macau Operations: | |
Wynn Palace | $ | 1,953,709 |
| | $ | 2,017,004 |
| | $ | (63,295 | ) | | (3.1 | ) | Wynn Palace | $ | 268,231 | | | $ | 1,355,538 | | | $ | (1,087,307) | | | (80.2) | |
Wynn Macau | 1,544,646 |
| | 1,741,145 |
| | (196,499 | ) | | (11.3 | ) | Wynn Macau | 241,377 | | | 1,070,365 | | | (828,988) | | | (77.4) | |
Total Macau Operations | 3,498,355 |
| | 3,758,149 |
| | (259,794 | ) | | (6.9 | ) | Total Macau Operations | 509,608 | | | 2,425,903 | | | (1,916,295) | | | (79.0) | |
Las Vegas Operations | 1,264,681 |
| | 1,271,925 |
| | (7,244 | ) | | (0.6 | ) | Las Vegas Operations | 388,710 | | | 865,175 | | | (476,465) | | | (55.1) | |
Encore Boston Harbor (1) | 194,604 |
| | — |
| | 194,604 |
| | — |
| Encore Boston Harbor (1) | 141,096 | | | 18,800 | | | 122,296 | | | 650.5 | |
| $ | 4,957,640 |
| | $ | 5,030,074 |
| | $ | (72,434 | ) | | (1.4 | ) | | $ | 1,039,414 | | | $ | 3,309,878 | | | $ | (2,270,464) | | | (68.6) | |
(1) Encore Boston Harbor openedcommenced operations on June 23, 2019.
The following table presents casino and non-casino operating revenues (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating revenues | | | | | | | |
Casino revenues | $ | 580,202 | | | $ | 2,327,604 | | | $ | (1,747,402) | | | (75.1) | |
Non-casino revenues: | | | | | | | |
Rooms | 170,096 | | | 390,077 | | | (219,981) | | | (56.4) | |
Food and beverage | 173,421 | | | 391,241 | | | (217,820) | | | (55.7) | |
Entertainment, retail and other | 115,695 | | | 200,956 | | | (85,261) | | | (42.4) | |
Total non-casino revenues | 459,212 | | | 982,274 | | | (523,062) | | | (53.3) | |
| $ | 1,039,414 | | | $ | 3,309,878 | | | $ | (2,270,464) | | | (68.6) | |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change |
Operating revenues | | | | |
| |
|
Casino revenues | $ | 3,435,968 |
| | $ | 3,564,195 |
| | $ | (128,227 | ) | | (3.6 | ) |
Non-casino revenues: | | | | |
| |
|
Rooms | 595,953 |
| | 559,405 |
| | 36,548 |
| | 6.5 |
|
Food and beverage | 619,749 |
| | 580,963 |
| | 38,786 |
| | 6.7 |
|
Entertainment, retail and other | 305,970 |
| | 325,511 |
| | (19,541 | ) | | (6.0 | ) |
Total non-casino revenues | 1,521,672 |
| | 1,465,879 |
| | 55,793 |
| | 3.8 |
|
| $ | 4,957,640 |
| | $ | 5,030,074 |
| | $ | (72,434 | ) | | (1.4 | ) |
Casino revenues for the ninesix months ended SeptemberJune 30, 20192020 were 69.3%55.8% of operating revenues, compared to 70.9%70.3% for the same period of 2018.2019. Non-casino revenues for the ninesix months ended SeptemberJune 30, 20192020 were 30.7%44.2% of operating revenues, compared to 29.1%29.7% for the same period of 2018.2019.
Casino revenues
Casino revenues decreased primarily due to decreased VIP turnoverthe adverse effects of the COVID-19 pandemic, including the closure of our casino operations in Macau for a 15-day period in February and VIP table games win at our Macau Operationstheir subsequent reopening on a reduced basis, and decreased table drop atthe closure of our Las Vegas Operations partially offset by increased mass market table drop at our Macau Operations and casino revenues from March 17, 2020 until June 4, 2020. Encore Boston Harbor totaling $127.9 million.closed to the public on March 15, 2020, and remained closed through the second quarter. The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day):
| | | Nine Months Ended September 30, | | | | | | Six Months Ended June 30, | | |
| 2019 | | 2018 | | Increase/(Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/(Decrease) | | Percent Change |
Macau Operations: | | | | | | | | Macau Operations: | | | | | | | |
Wynn Palace: | | | | | | | | Wynn Palace: | |
Total casino revenues | $ | 1,649,377 |
| | $ | 1,719,072 |
| | $ | (69,695 | ) | | (4.1 | ) | Total casino revenues | $ | 196,148 | | | $ | 1,151,720 | | | $ | (955,572) | | | (83.0) | |
VIP: | | | | | | | | VIP: | |
Average number of table games | 111 |
| | 114 |
| | (3 | ) | | (2.6 | ) | Average number of table games | 95 | | | 112 | | | (17) | | | (15.2) | |
VIP turnover | $ | 36,533,594 |
| | $ | 44,940,535 |
| | $ | (8,406,941 | ) | | (18.7 | ) | VIP turnover | $ | 6,512,279 | | | $ | 26,015,909 | | | $ | (19,503,630) | | | (75.0) | |
VIP table games win | $ | 1,232,870 |
| | $ | 1,348,291 |
| | $ | (115,421 | ) | | (8.6 | ) | VIP table games win | $ | 109,763 | | | $ | 897,592 | | | $ | (787,829) | | | (87.8) | |
VIP win as a % of turnover | 3.37 | % | | 3.00 | % | | 0.37 |
| |
| VIP win as a % of turnover | 1.69 | % | | 3.45 | % | | (1.76) | | |
Table games win per unit per day | $ | 40,868 |
| | $ | 43,302 |
| | $ | (2,434 | ) | | (5.6 | ) | Table games win per unit per day | $ | 6,865 | | | $ | 44,464 | | | $ | (37,599) | | | (84.6) | |
Mass market: | | | | | | | | Mass market: | |
Average number of table games | 213 |
| | 209 |
| | 4 |
| | 1.9 |
| Average number of table games | 201 | | | 212 | | | (11) | | | (5.2) | |
Table drop | $ | 3,869,904 |
| | $ | 3,625,959 |
| | $ | 243,945 |
| | 6.7 |
| Table drop | $ | 497,252 | | | $ | 2,571,076 | | | $ | (2,073,824) | | | (80.7) | |
Table games win | $ | 936,497 |
| | $ | 898,876 |
| | $ | 37,621 |
| | 4.2 |
| Table games win | $ | 137,882 | | | $ | 612,320 | | | $ | (474,438) | | | (77.5) | |
Table games win % | 24.2 | % | | 24.8 | % | | (0.6 | ) | |
| Table games win % | 27.7 | % | | 23.8 | % | | 3.9 | | |
Table games win per unit per day | $ | 16,071 |
| | $ | 15,750 |
| | $ | 321 |
| | 2.0 |
| Table games win per unit per day | $ | 4,075 | | | $ | 15,929 | | | $ | (11,854) | | | (74.4) | |
Average number of slot machines | 1,092 |
| | 1,062 |
| | 30 |
| | 2.8 |
| Average number of slot machines | 596 | | | 1,095 | | | (499) | | | (45.6) | |
Slot machine handle | $ | 2,886,566 |
| | $ | 2,921,582 |
| | $ | (35,016 | ) | | (1.2 | ) | Slot machine handle | $ | 464,129 | | | $ | 1,912,890 | | | $ | (1,448,761) | | | (75.7) | |
Slot machine win | $ | 142,257 |
| | $ | 145,993 |
| | $ | (3,736 | ) | | (2.6 | ) | Slot machine win | $ | 20,800 | | | $ | 94,968 | | | $ | (74,168) | | | (78.1) | |
Slot machine win per unit per day | $ | 477 |
| | $ | 503 |
| | $ | (26 | ) | | (5.2 | ) | Slot machine win per unit per day | $ | 208 | | | $ | 479 | | | $ | (271) | | | (56.6) | |
Wynn Macau: | | | | | | | | Wynn Macau: | |
Total casino revenues | $ | 1,340,266 |
| | $ | 1,515,859 |
| | $ | (175,593 | ) | | (11.6 | ) | Total casino revenues | $ | 186,604 | | | $ | 931,446 | | | $ | (744,842) | | | (80.0) | |
VIP: | | | | |
| |
| VIP: | |
Average number of table games | 109 |
| | 111 |
| | (2 | ) | | (1.8 | ) | Average number of table games | 86 | | | 111 | | | (25) | | | (22.5) | |
VIP turnover | $ | 27,494,650 |
| | $ | 44,982,849 |
| | $ | (17,488,199 | ) | | (38.9 | ) | VIP turnover | $ | 3,571,290 | | | $ | 19,469,660 | | | $ | (15,898,370) | | | (81.7) | |
VIP table games win | $ | 822,204 |
| | $ | 1,223,219 |
| | $ | (401,015 | ) | | (32.8 | ) | VIP table games win | $ | 110,464 | | | $ | 601,107 | | | $ | (490,643) | | | (81.6) | |
VIP win as a % of turnover | 2.99 | % | | 2.72 | % | | 0.27 |
| |
| VIP win as a % of turnover | 3.09 | % | | 3.09 | % | | — | | |
Table games win per unit per day | $ | 27,634 |
| | $ | 40,204 |
| | $ | (12,570 | ) | | (31.3 | ) | Table games win per unit per day | $ | 7,623 | | | $ | 29,824 | | | $ | (22,201) | | | (74.4) | |
Mass market: | | | | | | | | Mass market: | |
Average number of table games | 205 |
| | 202 |
| | 3 |
| | 1.5 |
| Average number of table games | 208 | | | 206 | | | 2 | | | 1.0 | |
Table drop | $ | 4,018,533 |
| | $ | 3,799,636 |
| | $ | 218,897 |
| | 5.8 |
| Table drop | $ | 619,052 | | | $ | 2,699,128 | | | $ | (2,080,076) | | | (77.1) | |
Table games win | $ | 816,180 |
| | $ | 758,748 |
| | $ | 57,432 |
| | 7.6 |
| Table games win | $ | 121,333 | | | $ | 543,669 | | | $ | (422,336) | | | (77.7) | |
Table games win % | 20.3 | % | | 20.0 | % | | 0.3 |
| |
| Table games win % | 19.6 | % | | 20.1 | % | | (0.5) | | |
Table games win per unit per day | $ | 14,551 |
| | $ | 13,747 |
| | $ | 804 |
| | 5.8 |
| Table games win per unit per day | $ | 3,472 | | | $ | 14,608 | | | $ | (11,136) | | | (76.2) | |
Average number of slot machines | 813 |
| | 902 |
| | (89 | ) | | (9.9 | ) | Average number of slot machines | 529 | | | 827 | | | (298) | | | (36.0) | |
Slot machine handle | $ | 2,720,137 |
| | $ | 2,861,703 |
| | $ | (141,566 | ) | | (4.9 | ) | Slot machine handle | $ | 428,549 | | | $ | 1,720,151 | | | $ | (1,291,602) | | | (75.1) | |
Slot machine win | $ | 127,690 |
| | $ | 116,960 |
| | $ | 10,730 |
| | 9.2 |
| Slot machine win | $ | 15,921 | | | $ | 80,709 | | | $ | (64,788) | | | (80.3) | |
Slot machine win per unit per day | $ | 575 |
| | $ | 475 |
| | $ | 100 |
| | 21.1 |
| Slot machine win per unit per day | $ | 179 | | | $ | 539 | | | $ | (360) | | | (66.8) | |
Poker rake | | Poker rake | $ | 2,083 | | | $ | 10,426 | | | $ | (8,343) | | | (80.0) | |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/(Decrease) | | Percent Change |
Las Vegas Operations: | | | | | | | |
Total casino revenues | $ | 318,439 |
| | $ | 329,264 |
| | $ | (10,825 | ) | | (3.3 | ) |
Average number of table games | 238 |
| | 237 |
| | 1 |
| | 0.4 |
|
Table drop | $ | 1,275,676 |
| | $ | 1,344,344 |
| | $ | (68,668 | ) | | (5.1 | ) |
Table games win | $ | 323,503 |
| | $ | 342,129 |
| | $ | (18,626 | ) | | (5.4 | ) |
Table games win % | 25.4 | % | | 25.4 | % | | — |
| |
|
|
Table games win per unit per day | $ | 4,982 |
| | $ | 5,297 |
| | $ | (315 | ) | | (5.9 | ) |
Average number of slot machines | 1,793 |
| | 1,824 |
| | (31 | ) | | (1.7 | ) |
Slot machine handle | $ | 2,484,880 |
| | $ | 2,332,700 |
| | $ | 152,180 |
| | 6.5 |
|
Slot machine win | $ | 167,848 |
| | $ | 154,618 |
| | $ | 13,230 |
| | 8.6 |
|
Slot machine win per unit per day | $ | 343 |
| | $ | 310 |
| | $ | 33 |
| | 10.6 |
|
Encore Boston Harbor (1): | | | | | | | |
Total casino revenues | $ | 127,886 |
| | $ | — |
| | $ | 127,886 |
| | — |
|
Average number of table games | 144 |
| | — |
| | 144 |
| | — |
|
Table drop | $ | 416,202 |
| | $ | — |
| | $ | 416,202 |
| | — |
|
Table games win | $ | 81,482 |
| | $ | — |
| | $ | 81,482 |
| | — |
|
Table games win % | 19.6 | % | | — | % | | 19.6 |
| | |
Table games win per unit per day | $ | 5,639 |
| | $ | — |
| | $ | 5,639 |
| | — |
|
Average number of slot machines | 3,105 |
| | — |
| | 3,105 |
| | — |
|
Slot machine handle | $ | 990,634 |
| | $ | — |
| | $ | 990,634 |
| | — |
|
Slot machine win | $ | 70,880 |
| | $ | — |
| | $ | 70,880 |
| | — |
|
Slot machine win per unit per day | $ | 228 |
| | $ | — |
| | $ | 228 |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/(Decrease) | | Percent Change |
Las Vegas Operations: | | | | | | | |
Total casino revenues | $ | 95,660 | | | $ | 231,437 | | | $ | (135,777) | | | (58.7) | |
Average number of table games | 233 | | | 238 | | | (5) | | | (2.1) | |
Table drop | $ | 505,806 | | | $ | 844,839 | | | $ | (339,033) | | | (40.1) | |
Table games win | $ | 100,584 | | | $ | 237,765 | | | $ | (137,181) | | | (57.7) | |
Table games win % | 19.9 | % | | 28.1 | % | | (8.2) | | | |
Table games win per unit per day | $ | 4,152 | | | $ | 5,517 | | | $ | (1,365) | | | (24.7) | |
Average number of slot machines | 1,762 | | | 1,798 | | | (36) | | | (2.0) | |
Slot machine handle | $ | 911,226 | | | $ | 1,600,949 | | | $ | (689,723) | | | (43.1) | |
Slot machine win | $ | 64,197 | | | $ | 109,672 | | | $ | (45,475) | | | (41.5) | |
Slot machine win per unit per day | $ | 350 | | | $ | 337 | | | $ | 13 | | | 3.9 | |
Poker rake | $ | 2,175 | | | $ | 6,579 | | | $ | (4,404) | | | (66.9) | |
Encore Boston Harbor (1): | | | | | | | |
Total casino revenues | $ | 101,790 | | | $ | 13,001 | | | $ | 88,789 | | | — | |
Average number of table games | 160 | | | — | | | 160 | | | — | |
Table drop | $ | 275,631 | | | $ | — | | | $ | 275,631 | | | — | |
Table games win | $ | 57,286 | | | $ | — | | | $ | 57,286 | | | — | |
Table games win % | 20.8 | % | | — | % | | 20.8 | | | |
Table games win per unit per day | $ | 4,826 | | | $ | — | | | $ | 4,826 | | | — | |
Average number of slot machines | 2,837 | | | — | | | 2,837 | | | — | |
Slot machine handle | $ | 767,739 | | | $ | — | | | $ | 767,739 | | | — | |
Slot machine win | $ | 59,448 | | | $ | — | | | $ | 59,448 | | | — | |
Slot machine win per unit per day | $ | 283 | | | $ | — | | | $ | 283 | | | — | |
Poker rake | $ | 5,105 | | | $ | — | | | $ | 5,105 | | | — | |
(1) Encore Boston Harbor opened on June 23, 2019.
The results of the eight days of its operations during the second quarter of 2019 are not considered material to our consolidated results of operations for the six months ended June 30, 2019. Accordingly, Encore Boston Harbor key operating measures for the six months ended June 30, 2019 have been omitted from the table.
Non-casino revenues
The table below sets forth our room revenues and associated key operating measures:
| | | Nine Months Ended September 30, | | | | | | Six Months Ended June 30, | | |
| 2019 | | 2018 | | Increase/(Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/(Decrease) | | Percent Change |
Macau Operations: | | | | | | | | Macau Operations: | | | | | | | |
Wynn Palace: | | | | | | | | Wynn Palace: | |
Total room revenues (dollars in thousands) | $ | 131,382 |
| | $ | 125,461 |
| | $ | 5,921 |
| | 4.7 |
| Total room revenues (dollars in thousands) | $ | 22,141 | | | $ | 86,498 | | | $ | (64,357) | | | (74.4) | |
Occupancy | 97.3 | % | | 96.3 | % | | 1.0 |
| | | Occupancy | 23.5 | % | | 97.3 | % | | (73.8) | | |
ADR | $ | 270 |
| | $ | 261 |
| | $ | 9 |
| | 3.4 |
| ADR | $ | 298 | | | $ | 268 | | | $ | 30 | | | 11.2 | |
REVPAR | $ | 262 |
| | $ | 251 |
| | $ | 11 |
| | 4.4 |
| REVPAR | $ | 70 | | | $ | 261 | | | $ | (191) | | | (73.2) | |
Wynn Macau: | | | | | | | | Wynn Macau: | |
Total room revenues (dollars in thousands) | $ | 82,071 |
| | $ | 83,575 |
| | $ | (1,504 | ) | | (1.8 | ) | Total room revenues (dollars in thousands) | $ | 18,542 | | | $ | 55,331 | | | $ | (36,789) | | | (66.5) | |
Occupancy | 99.2 | % | | 99.1 | % | | 0.1 |
| | | Occupancy | 28.4 | % | | 99.1 | % | | (70.7) | | |
ADR | $ | 285 |
| | $ | 280 |
| | $ | 5 |
| | 1.8 |
| ADR | $ | 324 | | | $ | 285 | | | $ | 39 | | | 13.5 | |
REVPAR | $ | 282 |
| | $ | 277 |
| | $ | 5 |
| | 1.8 |
| REVPAR | $ | 92 | | | $ | 283 | | | $ | (191) | | | (67.5) | |
Las Vegas Operations: | | | | | | | | Las Vegas Operations: | |
Total room revenues (dollars in thousands) | $ | 362,715 |
| | $ | 350,369 |
| | $ | 12,346 |
| | 3.5 |
| Total room revenues (dollars in thousands) | $ | 118,458 | | | $ | 246,644 | | | $ | (128,186) | | | (52.0) | |
Occupancy | 86.9 | % | | 87.1 | % | | (0.2 | ) | | | Occupancy | 70.6 | % | | 86.3 | % | | (15.7) | | |
ADR | $ | 325 |
| | $ | 313 |
| | $ | 12 |
| | 3.8 |
| ADR | $ | 350 | | | $ | 335 | | | $ | 15 | | | 4.5 | |
REVPAR | $ | 283 |
| | $ | 273 |
| | $ | 10 |
| | 3.7 |
| REVPAR | $ | 247 | | | $ | 290 | | | $ | (43) | | | (14.8) | |
Encore Boston Harbor (1): | | | | | | | | Encore Boston Harbor (1): | |
Total room revenues (dollars in thousands) | $ | 19,785 |
| | $ | — |
| | $ | 19,785 |
| | — |
| Total room revenues (dollars in thousands) | $ | 10,955 | | | $ | 1,605 | | | $ | 9,350 | | | — | |
Occupancy | 69.3 | % | | — | % | | 69.3 |
| | | Occupancy | 75.8 | % | | — | % | | 75.8 | | |
ADR | $ | 493 |
| | $ | — |
| | $ | 493 |
| | — |
| ADR | $ | 292 | | | $ | — | | | $ | 292 | | | — | |
REVPAR | $ | 341 |
| | $ | — |
| | $ | 341 |
| | — |
| REVPAR | $ | 222 | | | $ | — | | | $ | 222 | | | — | |
(1) Encore Boston Harbor opened on June 23, 2019. The results of the eight days of its operations during the second quarter of 2019 are not considered material to our consolidated results of operations for the six months ended June 30, 2019. Accordingly, Encore Boston Harbor key operating measures for the six months ended June 30, 2019 have been omitted from the table.
Room revenues increased $36.5decreased $220.0 million, primarily due to $19.8 millionlower occupancy at Wynn Palace and Wynn Macau and the closure of our Las Vegas Operations resulting from the adverse effects of the COVID-19 pandemic. Room revenues from Encore Boston Harbor and higher ADR at Wynn Palace and our Las Vegas Operations, partially offset by rooms out of service for renovations at Wynn Macau.were $11.0 million.
Food and beverage revenues increased $38.8decreased $217.8 million, primarily due to $32.8 milliondecreased covers at our restaurants at our Macau Operations and closure of our Las Vegas Operations resulting from the adverse effects of the COVID-19 pandemic. Food and beverage revenues from Encore Boston Harbor and increased covers at our high-volume restaurants at our Macau Operations.were $20.6 million.
Entertainment, retail and other revenues decreased $19.5$85.3 million, primarily due to thea decrease in visitation to our Macau Operations and closure of certain owned retail outlets at Wynn Macau and their conversion to leased outlets beginning inour Las Vegas Operations resulting from the first quarteradverse effects of 2019, the effect of which was partially offset byCOVID-19 pandemic. Entertainment, retail and other revenues of $14.1 million from Encore Boston Harbor. During the third quarter of 2018, Wynn Palace and Wynn Macau recorded business interruption insurance proceeds of $5.4 million and $5.3 million, respectively, related to the full settlement of claims from Typhoon Hato in 2017.Harbor were $7.7 million.
Operating expenses
The table below presents operating expenses (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Operating expenses: | | | | | | | |
Casino | $ | 573,828 | | | $ | 1,475,058 | | | $ | (901,230) | | | (61.1) | |
Rooms | 103,847 | | | 129,854 | | | (26,007) | | | (20.0) | |
Food and beverage | 237,799 | | | 330,841 | | | (93,042) | | | (28.1) | |
Entertainment, retail and other | 62,453 | | | 87,558 | | | (25,105) | | | (28.7) | |
General and administrative | 386,409 | | | 419,546 | | | (33,137) | | | (7.9) | |
Provision for credit losses | 48,960 | | | 9,003 | | | 39,957 | | | 443.8 | |
Pre-opening | 4,737 | | | 97,596 | | | (92,859) | | | (95.1) | |
Depreciation and amortization | 358,012 | | | 276,826 | | | 81,186 | | | 29.3 | |
Property charges and other | 33,796 | | | 9,704 | | | 24,092 | | | 248.3 | |
Total operating expenses | $ | 1,809,841 | | | $ | 2,835,986 | | | $ | (1,026,145) | | | (36.2) | |
|
| | | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change |
Operating expenses: | | | | | | | |
Casino | $ | 2,197,750 |
| | $ | 2,254,766 |
| | $ | (57,016 | ) | | (2.5 | ) |
Rooms | 205,042 |
| | 189,837 |
| | 15,205 |
| | 8.0 |
|
Food and beverage | 527,502 |
| | 468,265 |
| | 59,237 |
| | 12.7 |
|
Entertainment, retail and other | 129,636 |
| | 138,647 |
| | (9,011 | ) | | (6.5 | ) |
General and administrative | 665,988 |
| | 545,543 |
| | 120,445 |
| | 22.1 |
|
Litigation settlement | — |
| | 463,557 |
| | (463,557 | ) | | (100.0 | ) |
Provision for doubtful accounts | 13,039 |
| | 2,586 |
| | 10,453 |
| | 404.2 |
|
Pre-opening | 99,212 |
| | 35,255 |
| | 63,957 |
| | 181.4 |
|
Depreciation and amortization | 449,824 |
| | 411,685 |
| | 38,139 |
| | 9.3 |
|
Property charges and other | 17,920 |
| | 30,672 |
| | (12,752 | ) | | (41.6 | ) |
Total operating expenses | $ | 4,305,913 |
| | $ | 4,540,813 |
| | $ | (234,900 | ) | | (5.2 | ) |
Total operating expenses decreased $234.9 million$1.03 billion compared to the ninesix months ended SeptemberJune 30, 2018,2019, primarily due to a prior year litigation settlement expensedecreased expenses related to the impact of $463.6 million. The decrease wasthe COVID-19 pandemic on our resorts, partially offset by increased operating expenses associated withfollowing the opening of Encore Boston Harbor onin June 23, 2019.
Casino expenses decreased commensurate with the decrease in casino revenues at our Macau Operations and Las Vegas Operations, partially offset by $73.0$547.4 million, of casino expenses from Encore Boston Harbor.
Room expenses increased primarily due to $10.0 million from Encore Boston Harbor and increases of $3.0$407.7 million, and $1.5 million from our Las Vegas Operations and Wynn Palace, respectively. The increases from Wynn Palace and our Las Vegas Operations were primarily driven by increased payroll costs.
Food and beverage expenses increased primarily due to $31.9 million from Encore Boston Harbor and increases of $11.9 million, $8.7 million and $6.6 million at Wynn Palace, Wynn Macau and our Las Vegas Operations, respectively. The increases at Wynn Palace and Wynn Macau were driven by incremental costs associated with opening new food and beverage outlets at Wynn Palace and increased cost of goods sold. The increase at our Las Vegas Operations was primarily driven by increased payroll costs.
Entertainment, retail and other expenses decreased $9.0 million, primarily due to the closure of certain owned retail outlets at Wynn Macau and their conversion to leased outlets beginning in the first quarter of 2019.
General and administrative expenses increased primarily due to $67.1 million from Encore Boston Harbor and increases of $4.7 million, $9.2 million, and $4.9$19.2 million at Wynn Palace, Wynn Macau, and our Las Vegas Operations, respectively. These increasesdecreases were primarily due to reductions in gaming tax expense commensurate with the declines in casino revenues at each property resulting from the effects of the COVID-19 pandemic, and were partially offset by increased casino expenses of $73.1 million from Encore Boston Harbor.
Room expenses decreased $25.2 million, $9.4 million. and $2.6 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The decreases were primarily a result of lower operating costs related to the decline in occupancy at each property resulting from the effects of the COVID-19 pandemic, and were partially offset by increased room expenses of $11.3 million from Encore Boston Harbor.
Food and beverage expenses decreased $87.6 million, $24.4 million, and $10.2 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The decreases were primarily a result of lower operating costs related to the declines in food and beverage revenues at each property resulting from the effects of the COVID-19 pandemic, and were partially offset by increased food and beverage expenses of $29.1 million at Encore Boston Harbor.
Entertainment, retail and other expenses decreased primarily due to decreases of $17.3 million, $9.8 million and $4.6 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The decreases were primarily a result of lower operating costs related to the declines in entertainment, retail and other revenues at each property resulting from the effects of the COVID-19 pandemic, and were partially offset by increased entertainment, retail and other expenses of $6.6 million at Encore Boston Harbor.
General and administrative expenses decreased primarily due to decreases of $18.9 million and $7.6 million at Wynn Palace and Wynn Macau, respectively. These decreases were primarily attributable to increased payroll costs and property taxes at our Macau Operations and increased advertising costs at our Las Vegas Operations. Corporatethe effects of the COVID-19 pandemic. In addition, corporate and other general and administrative expenses increased $34.6decreased $74.0 million, primarily due to a credit of $27.7 million for the net proceeds of a derivative action settlement recognized during the three months ended June 30, 2020, and a fine of $35.0 million assessed by the Massachusetts Gaming Commission.
Litigation settlement expense of $463.6 millionCommission which was incurred induring the first quarterthree months ended March 31, 2019. These decreases were partially offset by an increase of 2018 in connection with$68.9 million of general and administrative expenses from Encore Boston Harbor due to the repaymentopening of the Redemption Note for claims related to the allegedly below-market interest rate of the Redemption Note.property in June 2019.
The provision for doubtful accountscredit losses increased $8.0$18.0 million, $13.8 million and $1.3$6.5 million at our Las Vegas Operations, Wynn Palace, and Wynn Macau, respectively. The change wasincreases were primarily due to the impact of historical collection patterns and expectations of current and future collection trends in light of the COVID-19 pandemic, as well as the specific review of customer accounts, on our estimated allowancecredit loss for the respective periods.
For the ninesix months ended SeptemberJune 30, 2019 and 2018,2020, pre-opening expenses totaled $99.2$4.7 million, and $35.3which primarily related to restaurant remodels at our Las Vegas Operations. For the six months ended June 30, 2019, pre-opening expenses totaled $97.6 million, respectively, which primarily related to the development of Encore Boston Harbor.
Depreciation and amortization increased primarily due to additional depreciation expense of $41.6$73.8 million associated with the opening of Encore Boston Harbor.Harbor and an increase of $6.8 million at our Las Vegas Operations associated with the opening of the meeting and convention expansion in February 2020.
Our property charges and other expenses for the six months ended June 30, 2020 consisted primarily of asset disposals, abandonments and retirements of $23.3 million and $3.9 million at Wynn Palace and Encore Boston Harbor, respectively.
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | | | | | |
| 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Interest expense | | | | | | | |
Interest cost, including amortization of debt issuance costs and original issue discount and premium | $ | 263,297 | | | $ | 233,174 | | | $ | 30,123 | | | 12.9 | |
Capitalized interest | (1,252) | | | (46,845) | | | (45,593) | | | (97.3) | |
| $ | 262,045 | | | $ | 186,329 | | | $ | 75,716 | | | 40.6 | |
| | | | | | | |
Weighted average total debt balance | $ | 11,496,999 | | | $ | 9,209,480 | | | | | |
Weighted average interest rate | 4.57 | % | | 5.05 | % | | | | |
|
| | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change |
Interest expense | | | | | | | |
Interest cost, including amortization of debt issuance costs and original issue discount and premium | $ | 351,135 |
| | $ | 318,792 |
| | $ | 32,343 |
| | 10.1 |
Capitalized interest | (50,154 | ) | | (37,660 | ) | | (12,494 | ) | | 33.2 |
| $ | 300,981 |
| | $ | 281,132 |
| | $ | 19,849 |
| | 7.1 |
| | | | | | | |
Weighted average total debt balance | 9,277,142 |
| | 9,022,065 |
| | | | |
Weighted average interest rate | 5.00 | % | | 4.71 | % | | | | |
Interest costs increased due to an increase in the weighted average debt balance, andpartially offset by a decrease in the weighted average interest rate. Capitalized interest increaseddecreased due to the completion of Encore Boston Harbor construction activities. Encore Boston Harbor openedactivities on June 23, 2019.
Other non-operating income and expenses
During the first quarter of 2018, we repaid the $1.94 billion principal amount of the Redemption Note and recorded a loss of $69.3 million from the change in the fair value of the Redemption Note.
We recorded a $12.2 million loss on extinguishment of debt for the nine months ended September 30, 2019 related to the Refinancing Transactions. For more information on the Refinancing Transactions, see "Liquidity and Capital Resources." We recorded a $2.1 million net gain on extinguishment of debt for the nine months ended September 30, 2018, related to the repayment of the Redemption Note, Wynn Resorts' purchase of $40.0 million of Wynn Las Vegas' 5 1/2% Senior Notes due 2025 and 5 1/4% Senior Notes due 2027 and the execution of the supplemental indenture related to Wynn Las Vegas' 4 1/4% Senior Notes due 2023.
We incurred a foreign currency remeasurement lossgain of $3.3$12.6 million and gain of $1.0$5.4 million for the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. The changes were primarily due to the impact of the exchange rate fluctuation of the Macau pataca, in relation to the U.S. dollar, on the remeasurements of U.S. dollar denominated debt and other obligations from our Macau-related entities.entities drove the variability between periods.
We recorded a loss of $19.0 million and $4.8 million for the six months ended June 30, 2020 and 2019, respectively, from change in derivatives fair value.
Income taxes
We recorded an income tax expense of $19.4$156.7 million and an income tax benefit of $124.6$0.3 million for the ninesix months ended SeptemberJune 30, 20192020 and 2018,2019, respectively. The 20192020 income tax expense is primarily related to the increase in the valuation allowanceallowances for U.S foreign tax credits and 2018U.S. loss carryforwards. The 2019 income tax benefit primarily related to the settlement ofdecrease in the Redemption Note.valuation allowance for U.S foreign tax credits.
Net income (loss) attributable to noncontrolling interests
Net incomeloss attributable to noncontrolling interests was $132.9$145.5 million for the ninesix months ended SeptemberJune 30, 2019,2020, compared to $180.0net income of $102.5 million for the same period of 2018.2019. These amounts are primarily related to the noncontrolling interests' share of net income (loss) from WML.
Adjusted Property EBITDA
We use Adjusted Property EBITDA to manage the operating results of our segments. Adjusted Property EBITDA is net income (loss) before interest, income taxes, depreciation and amortization, litigation settlement expense, pre-opening expenses, property charges and other, management and license fees, corporate expenses and other (including intercompany golf course and water rights leases), stock-based compensation, (loss) gain on extinguishment of debt, change in derivatives fair value, change in Redemption Note fair valueloss on extinguishment of debt, and other non-operating income and expenses. Adjusted Property EBITDA is presented exclusively as a supplemental disclosure because we believemanagement believes that it is widely
used to measure the performance, and as a basis for valuation, of gaming companies. We useManagement uses Adjusted Property EBITDA as a measure of the operating performance of ourits segments and to compare the operating performance of ourits properties with those of ourits competitors, as well as a basis for determining certain incentive compensation. We also present Adjusted Property EBITDA because it is used by some investors to measure a company's ability to incur and service debt, make capital expenditures and meet working capital requirements. Gaming companies have historically reported EBITDA as a supplement to GAAP. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Wynn Resorts, Limited,us, have historically excluded from their EBITDA calculations pre-openingpreopening expenses, property charges, corporate expenses and stock-based compensation, that do not relate to the management of specific casino properties. However, Adjusted Property EBITDA should not be considered as an alternative to operating income as an indicator of the Company'sour performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. Unlike net income, Adjusted Property EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. The Company hasWe have significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, income taxes and other non-recurring charges, which are not reflected in Adjusted Property EBITDA. Also, the Company'sour calculation of Adjusted Property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.
The following table summarizes Adjusted Property EBITDA (in thousands) for Wynn Palace, Wynn Macau, Las Vegas Operations, and Encore Boston Harbor as reviewed by management and summarized in Item 1—"Notes to Condensed Consolidated Financial Statements," Note 16, "Segment Information." That footnote also presents a reconciliation of Adjusted Property EBITDA to net income (loss) attributable to Wynn Resorts, Limited.
| | | Three Months Ended September 30, | | | | | | Nine Months Ended September 30, | | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | | |
| 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change | | 2019 | | 2018 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change | | 2020 | | 2019 | | Increase/ (Decrease) | | Percent Change |
Wynn Palace | $ | 162,167 |
| | $ | 226,141 |
| | $ | (63,974 | ) | | (28.3 | ) | | $ | 551,918 |
| | $ | 617,317 |
| | $ | (65,399 | ) | | (10.6 | ) | Wynn Palace | $ | (110,908) | | | $ | 167,165 | | | $ | (278,073) | | | (166.3) | | | $ | (100,732) | | | $ | 389,751 | | | $ | (490,483) | | | (125.8) | |
Wynn Macau | 138,989 |
| | 182,928 |
| | (43,939 | ) | | (24.0 | ) | | 478,751 |
| | 565,677 |
| | (86,926 | ) | | (15.4 | ) | Wynn Macau | (82,646) | | | 175,873 | | | (258,519) | | | (147.0) | | | (63,438) | | | 339,762 | | | (403,200) | | | (118.7) | |
Las Vegas Operations | 88,046 |
| | 95,298 |
| | (7,252 | ) | | (7.6 | ) | | 333,747 |
| | 362,051 |
| | (28,304 | ) | | (7.8 | ) | Las Vegas Operations | (75,564) | | | 137,399 | | | (212,963) | | | (155.0) | | | (97,641) | | | 245,701 | | | (343,342) | | | (139.7) | |
Encore Boston Harbor | 7,744 |
| | — |
| | 7,744 |
| | — |
| | 7,890 |
| | — |
| | 7,890 |
| | — |
| |
Encore Boston Harbor (1) | | Encore Boston Harbor (1) | (53,779) | | | 146 | | | (53,925) | | | NM | | (66,415) | | | 146 | | | (66,561) | | | NM |
|
Adjusted Property EBITDA at Wynn Palace decreased 28.3% and 10.6% for the three and nine months ended September 30, 2019, respectively, primarily due to a decrease in VIP turnover and VIP table games win.
Adjusted Property EBITDA at Wynn Macau decreased 24.0% for the three months ended September 30, 2019, primarily due to a decrease in VIP turnover and VIP table games win. Adjusted Property EBITDA at Wynn Macau decreased 15.4% for the nine months ended September 30, 2019 primarily due to a decrease in VIP turnover and VIP table games win, a decrease in entertainment, retail and other revenues primarily related to the closure of certain owned retail outlets, and increased general and administrative expenses.
Adjusted Property EBITDA at our Las Vegas Operations decreased 7.6% for the three months ended September 30, 2019, primarily due to a decrease in table games win percentage and increases in general and administrative expenses and provision for doubtful accounts. Adjusted Property EBITDA at our Las Vegas Operations decreased 7.8% for the nine months ended September 30, 2019 primarily due to decreased table drop, increased food and beverage expenses, general and administrative expenses and provision for doubtful accounts.
Adjusted Property EBITDA at Encore Boston Harbor was $7.7 million and $7.9 million for the three and nine months ended September 30, 2019.(1) Encore Boston Harbor opened on June 23, 2019.
NM - Not meaningful.
Adjusted Property EBITDA at Wynn Palace decreased $278.1 million and $490.5 million for the three and six months ended June 30, 2020, respectively, primarily due to a decline in operating revenues precipitated by the adverse effects of the COVID-19 pandemic during the three and six months ended June 30, 2020, which include the closure of our casino operations in Macau for a 15-day period and their subsequent reopening on a reduced basis.
Adjusted Property EBITDA at Wynn Macau decreased $258.5 million and $403.2 million for the three and six months ended June 30, 2020, respectively, primarily due to a decline in operating revenues precipitated by the adverse effects of the COVID-19 pandemic during the three and six months ended June 30, 2020, which include the closure of our casino operations in Macau for a 15-day period and their subsequent reopening on a reduced basis.
Adjusted Property EBITDA decreased $213.0 million and $343.3 million at our Las Vegas Operations, primarily due to the adverse effects of the COVID-19 pandemic during the three and six months ended June 30, 2020, including the closure of our Las Vegas Operations on March 17, 2020 for a 79-day period and their subsequent reopening on a reduced basis.
Adjusted Property EBITDA from Encore Boston Harbor for the three and six months ended June 30, 2020 was $(53.8) million and $(66.4) million, respectively. Encore Boston Harbor closed to the public on March 15, 2020, and remained closed through the second quarter.
Refer to the discussions above regarding the specific details of our results of operations.
Liquidity and Capital Resources
Our cash flows were as follows (in thousands):
| | | | | | | | | | | |
| Six Months Ended June 30, | | |
Cash Flows - Summary | 2020 | | 2019 |
Net cash (used in) provided by operating activities | $ | (607,987) | | | $ | 509,444 | |
Net cash used in investing activities: | | | |
Capital expenditures, net of construction payables and retention | (191,682) | | | (636,002) | |
Purchase of intangible and other assets | — | | | (1,000) | |
Proceeds from sale of assets and other | 3,733 | | | 441 | |
Net cash used in investing activities | (187,949) | | | (636,561) | |
| | | |
Net cash provided by (used in) financing activities: | | | |
Proceeds from issuance of long-term debt | 2,894,134 | | | 324,754 | |
Repayments of long-term debt | (527,535) | | | (603,857) | |
Repurchase of common stock | (8,437) | | | (35,632) | |
Finance lease payment | (74) | | | — | |
Proceeds from exercise of stock options | 70 | | | 12,545 | |
Dividends paid | (108,074) | | | (270,490) | |
Distribution to noncontrolling interest | (998) | | | (2,727) | |
Payments for financing costs | (13,196) | | | (10,488) | |
Net cash provided by (used) in financing activities | 2,235,890 | | | (585,895) | |
| | | |
Effect of exchange rate on cash, cash equivalents and restricted cash | 4,341 | | | 56 | |
Increase (decrease) in cash, cash equivalents and restricted cash | $ | 1,444,295 | | | $ | (712,956) | |
|
| | | | | | | |
| Nine Months Ended September 30, |
Cash Flows - Summary | 2019 | | 2018 |
Net cash provided by operating activities | $ | 779,885 |
| | $ | 497,889 |
|
Net cash used in investing activities: | | | |
Capital expenditures, net of construction payables and retention | (878,335 | ) | | (1,154,255 | ) |
Purchase of intangible and other assets | (6,000 | ) | | (102,388 | ) |
Proceeds from the sale or maturity of investment securities | — |
| | 359,461 |
|
Purchase of investment securities | — |
| | (34,098 | ) |
Proceeds from sale of assets | 592 |
| | 2,387 |
|
Net cash used in investing activities | (883,743 | ) | | (928,893 | ) |
| | | |
Net cash used in financing activities: | | | |
Proceeds from issuance of long-term debt | 2,549,072 |
| | 2,288,605 |
|
Repayments of long-term debt | (2,443,367 | ) | | (3,030,526 | ) |
Proceeds from note receivable from sale of ownership interest in subsidiary | — |
| | 75,000 |
|
Proceeds from issuance of common stock, net of issuance costs | — |
| | 915,187 |
|
Repurchase of common stock | (65,705 | ) | | (2,805 | ) |
Finance lease payment | (36 | ) | | — |
|
Proceeds from exercise of stock options | 14,696 |
| | 20,313 |
|
Dividends paid | (460,139 | ) | | (350,694 | ) |
Distribution to noncontrolling interest | (3,725 | ) | | (301,113 | ) |
Payments to acquire derivatives | — |
| | (3,900 | ) |
Payments for financing costs | (22,359 | ) | | (33,787 | ) |
Net cash used in financing activities | (431,563 | ) | | (423,720 | ) |
| | | |
Effect of exchange rate on cash, cash equivalents and restricted cash | (1,610 | ) | | 1,090 |
|
Decrease in cash, cash equivalents and restricted cash | $ | (537,031 | ) | | $ | (853,634 | ) |
Operating Activities
Our operating cash flows primarily consist of operating income (excluding depreciation and amortization and other non-cash charges), interest paid and earned, and changes in working capital accounts such as receivables, inventories, prepaid expenses, and payables. Our table games play is a mix of cash play and credit play, while our slot machine play is conducted primarily on a cash basis. A significant portion of our table games revenue is attributable to the play of a limited number of premium international customers who gamble on credit. The ability to collect these gaming receivables may impact our operating cash flow for the period. Our rooms, food and beverage, and entertainment, retail and other revenue is conducted on a cash and credit basis. Accordingly, operating cash flows will be impacted by changes in operating income and accounts receivable, net.
TheDuring the six months ended June 30, 2020, the decrease in net cash provided by operations was primarily due to the adverse effects of the COVID-19 pandemic on the results of our operations. During the six months ended June 30, 2019, the increase in net cash provided by operations was primarily driven by changes in our working capital accounts and an increase in deferred tax assets related to the settlement of the Redemption Note during the nine months ended September 30, 2018. In the nine months ended September 30, 2018, the Company recorded and paid a $463.6 million litigation settlement expense.net income.
Investing Activities
Our investing activities primarily consist of project capital expenditures, such as the construction of Encore Boston Harbor, which opened in June 2019, and the construction of the meeting and convention expansion at Wynn Las Vegas, which opened in February 2020, as well as maintenance capital expenditures associated with maintaining and continually refining our world-class integrated resort properties. In light of the unprecedented COVID-19 pandemic and our focus on safeguarding the Company's operations and the well-being of our employees, we expect to temporarily postpone major project capital expenditures for the remainder of fiscal year 2020, including the Wynn Tower room remodel at Wynn Las Vegas. We will be continuously monitoring the situation and conditions in the markets in which we operate, and will resume such project capital expenditures when conditions have stabilized.
During the ninesix months ended SeptemberJune 30, 2020, we incurred capital expenditures of $48.1 million at Encore Boston Harbor primarily for the payment of construction retention and other payables related to its construction, $57.5 million at our Las Vegas Operations for restaurant remodels and maintenance capital expenditures, $23.1 million for the construction of the additional meeting and convention space at Wynn Las Vegas, and $27.5 million and $32.5 million at Wynn Palace and Wynn Macau, respectively, primarily related to maintenance capital expenditures.
During the six months ended June 30, 2019, we incurred capital expenditures of $421.4$335.9 million related to the construction of Encore Boston Harbor $104.1and $106.8 million at Wynn Macau primarily related to the room remodel and West Casino renovation, $47.2 million and $71.9 million at Wynn Palace and our Las Vegas Operations, respectively, primarily related to
maintenance capital expenditures, and $166.4 million primarily related to the construction of the additional meeting and convention space at Wynn Las Vegas and the reconfiguration of the Wynn Las Vegas golf course. During the nine months ended September 30, 2018, we incurred $603.6 million in capital expenditures, for Encore Boston Harbor and $336.2 million for the acquisition of land on the Las Vegas Strip directly across from Wynn Las Vegas.
Financing Activities
During the ninesix months ended SeptemberJune 30, 2019,2020, we issued $750.0 million aggregate principal amount of WML 5 1/2% Senior Notes due 2026, issued $600.0 million aggregate principal amount of WRF 7 3/4% Senior Notes due 2025, borrowed an additional $250.0$376.0 million, term loannet of amounts repaid, under the Wynn Resorts Credit Agreement, and in connection withMacau Revolver, borrowed $816.0 million under the Refinancing Transactions described below, we repaid $991.3WRF Revolver, prepaid $150.2 million of outstanding principal owed under the Wynn America Credit Facilities and $746.3 million of outstanding principal under the Wynn ResortsMacau Term Loan, along with related financing costs, using proceeds from the borrowing of $1.03 billionand made quarterly amortization payments under the WRF Credit Facilities and issuanceTerm Loan totaling $25.0 million. In addition, we used cash of $750.0$108.1 million for the payment of WRF 2029 notes. We alsodividends.
During the six months ended June 30, 2019, we repaid $174.7$523.7 million, net of amounts borrowed, on the Wynn Macau Senior Revolving Credit Facility. In addition, weFacility, borrowed an additional $250.0 million term loan under the Wynn Resorts Term Loan, and used cash of $460.1$270.5 million for the payment of dividends.
During the nine months ended September 30, 2018, we repaid the Redemption Note principal amount of $1.94 billion using cash on hand and amounts borrowed under the Bridge Facility and the WA Senior Revolving Credit Facility. In April 2018, we repaid all amounts borrowed under the Bridge Facility and the WA Senior Revolving Credit Facility using net proceeds of $915.2 million from a registered public equity offering. In addition, during the nine months ended September 30, 2018, we borrowed $624.4 million under the Macau Senior Revolving Credit Facility, $615.0 million under the Retail Term Loan, and we used cash of $350.7 million for the payment of dividends and $301.1 million for distributions to noncontrolling interest holders of the Retail Joint Venture.
Capital Resources
The COVID-19 pandemic has caused, and is continuing to cause, significant disruption in the financial markets both globally and in the United States, and has impacted and will continue to impact, materially, our business, financial condition and results of operations. While we believe our strong liquidity position will enable us to fund our current obligations for the foreseeable future, COVID-19 has resulted in significant disruption, which has had and will continue to have a negative impact on our operating income and could have a negative impact on our ability to access capital in the future. We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities.
The following table summarizes our unrestricted cash and cash equivalents and available revolver borrowing capacity under the Company as of SeptemberJune 30, 20192020 (in thousands):
| | | | | | | | | | | |
| Total Cash and Cash Equivalents | | Revolver Borrowing Capacity |
Wynn Resorts (Macau) S.A. and subsidiaries | $ | 734,640 | | | $ | 24,066 | |
Wynn Macau, Limited and subsidiaries (1) | 1,698,726 | | | — | |
Wynn Resorts Finance, LLC (2) | 403,378 | | | 15,950 | |
Wynn Resorts, Limited and other | 960,996 | | | — | |
Total cash and cash equivalents | $ | 3,797,740 | | | $ | 40,016 | |
|
| | | | | | | |
| Total Cash and Cash Equivalents | | Revolver Borrowing Capacity |
Wynn Macau, Limited | $ | 947,206 |
| | $ | 298,322 |
|
Wynn Resorts Finance, LLC | 17,001 |
| | 806,950 |
|
Wynn Resorts, Limited and other | 712,625 |
| | — |
|
Total cash and cash equivalents | $ | 1,676,832 |
| | $ | 1,105,272 |
|
(1) Excluding Wynn Resorts (Macau) S.A. and subsidiaries.
(2) Excluding Wynn Macau, Limited and subsidiaries.
Wynn Resorts (Macau) S.A. and subsidiaries. Wynn Resorts (Macau) S.A. ("Wynn Macau SA") generates cash from our Macau Operations which weand utilizes its revolver to fund short term working capital requirements as needed. We expect to use this cash to service our existing Wynn Macau Credit Facilities, make distributions to WML, and fund working capital and capital expenditure requirements at our Macau Operations.
The Wynn Macau Credit Facilities contain customary negative and financial covenants, including, but not limited to, leverage ratio and interest coverage ratio tests (as defined in the Wynn Macau Credit Facilities) that could restrict its ability to make distributions to WML and incur additional indebtedness. Wynn Macau SA is required to maintain a leverage ratio of not greater than 4.00 to 1 and an interest coverage ratio of not less than 2.00 to 1. Wynn Macau SA complied with these ratios for the three months ended June 30, 2020.
Wynn Macau, Limited and subsidiaries. Wynn Macau, Limited ("WML") primarily generates cash through distributions from Wynn Macau SA. We expect to use WML's cash to service our existing WML Notes, pay dividends to shareholders of WML (of which we own approximately 72%), and fund working capital requirements at WML.
The board of directors of WML concluded not to recommend the payment of a dividend with respect to the year ended December 31, 2019, in light of the unprecedented COVID-19 pandemic and capital expenditure requirements.our focus on safeguarding the Company's Macau Operations and the well-being of our employees. The WML board of directors will be continuously monitoring the situation and market conditions in Macau and Greater China and may consider a special dividend in the future when such conditions have stabilized.
On June 19, 2020, WML issued $750.0 million aggregate principal amount of 5 1/2% Senior Notes due 2026 (the "2026 WML Notes") pursuant to an indenture (the "2026 Indenture"). The 2026 WML Notes were issued at par. WML plans to use the net proceeds from the offering for general corporate purposes until our business recovers from the effects of the COVID-19 Pandemic, and then to facilitate the repayment of a portion of the amounts outstanding under the Wynn Macau Credit Facilities contain customary negative covenantsFacilities.
If our portion of our cash and financial covenants, including, but not limitedcash equivalents were repatriated to covenants that restrict our abilitythe U.S. on June 30, 2020, it would be subject to pay dividends or distributions to any direct or indirect subsidiaries.minimal U.S. taxes in the year of repatriation.
Wynn Resorts Finance, LLC (formerly known asand subsidiaries. Wynn America, LLC)Resorts Finance, LLC ("WRF" or "Wynn Resorts Finance") generates cash from dividends and distributions from its subsidiaries, includingwhich include our Macau Operations, Wynn Macau, Limited,Las Vegas, and Encore Boston Harbor, and contributions from Wynn Resorts, as required. In addition, WRF may utilize its available revolving borrowing capacity as needed. We expect to use WRFthis cash to service our WRF Senior Secured Credit Facilities, 2025 WRF Notes (as defined below), 2029 WRF Notes, and WLV Notes, make distributions to Wynn Resorts, and to fund working capital and capital expenditure requirements.requirements as needed.
In April 2020, WRF and its subsidiary, Wynn Resorts Capital Corp. (collectively with WRF, the "WRF Issuers"), each an indirect wholly-owned subsidiary of the Company, issued $600 million aggregate principal amount of 7 3/4% Senior Notes due 2025 (the "2025 WRF Notes") pursuant to an indenture (the "2025 Indenture") among the WRF Issuers, the guarantors party thereto and U.S. Bank National Association, as trustee (the "Trustee"), in a private offering. The 2025 WRF Notes were issued at par. WRF plans to use the net proceeds from the offering for general corporate purposes and to pay related fees and expenses.
In April 2020, WRF and certain of its subsidiaries entered into an amendment (the "WRF Credit Agreement Amendment") to its existing credit agreement (the "WRF Credit Agreement"). The WRF Senior Secured Credit Facilities containAgreement Amendment provides for a financial covenant relief period through April 1, 2021, during which the existing consolidated first lien net leverage ratio financial covenant is replaced by a requirement for WRF to maintain minimum liquidity of at least $300.0 million at all times. Following the financial covenant relief period, WRF is subject to a financial covenant increase period beginning on the first day after the expiration of the financial covenant relief period and ending on the first day of the fourth fiscal quarter after the expiration of the financial covenant relief period, during which WRF must maintain a consolidated first lien net leverage ratio no greater than 4.50 to 1 during the first quarter of the financial covenant increase period, no greater than 4.25 to 1 for the second fiscal quarter, no greater than 4.00 to 1 for the third fiscal quarter, and no greater than 3.75 to 1 for the fourth fiscal quarter of the financial covenant increase period and for each subsequent fiscal quarter thereafter. The WRF Credit Agreement Amendment also adds certain restrictions on restricted payments during the financial covenant relief period and the financial covenant increase period.
WRF is a holding company and, as a result, its ability to pay dividends to Wynn Resorts is dependent on WRF receiving distributions from its subsidiaries, which include WML, Wynn Las Vegas, LLC, and Wynn MA, LLC (the owner and operator of Encore Boston Harbor). The WRF Credit Agreement contains customary negative and financial covenants, including, but not limited to, covenants that restrict ourWRF's ability to pay dividends or distributions and incur additional indebtedness.
As previously disclosed, we are in the planning phase of a room remodel of the Wynn Tower at Wynn Las Vegas. We have concluded to any direct or indirecttemporarily postpone the remodel until conditions have stabilized (as discussed above within Investing Activities). Accordingly, at this time we do not expect to incur significant capital expenditures associated with the Wynn Tower room remodel during the remainder of fiscal year 2020.
Wynn Resorts, Limited and other subsidiaries.
Wynn Resorts, Limited is a holding company and, as a result, our ability to pay dividends is highly dependent on our ability to obtain funds and our subsidiaries' ability to provide funds to us. Wynn Resorts, Limited and other primarily generates cash from royalty and management agreements with our resorts, dividends and distributions from our subsidiaries, and the operations of the Retail Joint Venture of which we own 50.1%. We expect to use this cash to service our Retail Term Loan fund the construction of the additional meeting and convention space in Las Vegas, and pay dividends.for general corporate purposes.
Refinancing Transactions
On September 20, 2019, WRF and its subsidiary Wynn Resorts Capital Corp. (collectively with WRF, the "WRF Issuers"), each an indirect wholly owned subsidiary of the Company, issued $750.0 million aggregate principal amount of 5 1/8% Senior
Notes due 2029 (the "2029 Notes") pursuant to an indenture (the "2029 Indenture") among the WRF Issuers, the guarantors party thereto, and U.S. Bank National Association, as trustee (the "Trustee"), in a private offering. The 2029 Notes were issued at par. Concurrently with the issuanceOn May 5, 2020, certain subsidiaries of the 2029 Notes, WRFRetail Joint Venture entered into a credit agreement (the "WRF Credit Agreement") providing for a new first lienan amendment to the existing retail term loan facility in an aggregate principal amountagreement to temporarily suspend the requirement to maintain certain financial ratios to avoid triggering excess cash sweep provisions from the first quarter of $1.0 billion (the "WRF Term Loan") and a new first lien revolving credit facility in an aggregate principal amount of $850.0 million (the "WRF Revolver" and together with the WRF Term Loan, the "WRF Senior Secured Credit Facilities") (the WRF Senior Secured Credit Facilities and 2029 Notes are collectively referred to as the "Refinancing Transactions").
Subject to certain exceptions, the WRF Senior Secured Credit Facilities bear interest at LIBOR plus 1.75% per annum. The annual fee required to pay for unborrowed amounts under the WRF Revolver, if any, is 0.25% per annum, payable quarterly in arrears, calculated based on the daily average of the unborrowed amounts under such credit facilities. The Company is required to make quarterly repayments on the WRF Term Loan of $12.5 million beginning in2020 through the fourth quarter of 2019, with any remaining principal amount outstanding repayable in full on September 20, 2024.2021.
The WRF Credit Agreement contains restrictionsOn May 6, 2020, the Company announced that limitit has suspended its quarterly dividend program due to the amount of certain restricted payments WRF and its restricted subsidiaries may make, including dividends and distributions paid to Wynn Resorts. Such restrictions include WRF's requirement to maintain a Fixed Charge Coverage Ratio (as defined in the WRF Credit Agreement) greater than or equal to 2.00 to 1.00 and a Consolidated Total Net Leverage Ratio (as defined in the WRF Credit Agreement) not to exceed 5.50 to 1.00 at each fiscal quarter. WRF may make ordinary course dividends or distributions to Wynn Resorts in an amount not to exceed $1.0 billion in any fiscal year, with certain carryover provisions for unused amounts from the two preceding fiscal years, and unlimited provided that the Consolidated Total Net Leverage Ratio does not exceed 5.50 to 1.00 on a pro forma basis for the distribution, plus certain other amounts subject to thresholds and limitations.
The 2029 Notes will mature on October 1, 2029 and bear interest at the rate of 5 1/8% per annum, payable in arrears semi-annually on April 1 and October 1 of each year, beginning on April 1, 2020. The 2029 Indenture contains covenants that limit the abilityfinancial impact of the WRF Issuers and the guarantors to, among other things, create or incur liens to secure debt in excess of the greater of $1.85 billion or an amount that would cause the Consolidated Senior Secured Net Leverage Ratio (as defined in the 2029 Indenture) to be greater than 3.00 to 1.00.COVID-19 pandemic.
Wynn Resorts Finance used the net proceeds from the Refinancing Transactions to refinance the existing Wynn America Credit Facilities and the Wynn Resorts Term Loan and to pay related fees and expenses.
For more information on the Refinancing Transactions, see Item 1—"Notes to Condensed Consolidated Financial Statements," Note 6, "Long-Term Debt."
Other Factors Affecting Liquidity
We may refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of the indebtedness on acceptable terms or at all.
Legal proceedings in which we are involved also may impact our liquidity. No assurance can be provided as to the outcome of such proceedings. In addition, litigation inherently involves significant costs. For information regarding legal proceedings, see Item 1—"Notes to Condensed Consolidated Financial Statements," Note 14, "Commitments and Contingencies."
Our Board of Directors has authorized an equity repurchase program of up to $1.0 billion. Under the equity repurchase program, we may repurchase the Company's outstanding shares from time to time through open market purchases, in privately negotiated transactions, and under plans complying with Rules 10b5-1 and 10b-18 under the Exchange Act. As of SeptemberJune 30, 2019,2020, we had $800.1 million in repurchase authority remaining under the program.
We have in the past repurchased, and in the future, we may periodically consider repurchasing our outstanding notes for cash. The amount of any notes to be repurchased, as well as the timing of any repurchases, will be based on business, market and other conditions and factors, including price, contractual requirements or consents, and capital availability.
New business developments or other unforeseen events may occur, resulting in the need to raise additional funds. We continue to explore opportunities to develop additional gaming or related businesses in domestic and international markets. There can be no assurances regarding the business prospects with respect to any other opportunity. Any new development wouldmay require us to
obtain additional financing. We may decide to conduct any such development through Wynn Resorts, Limited or through subsidiaries separate from the Las Vegas, Boston or Macau-related entities.
Off-Balance Sheet Arrangements
We have not entered into any transactions with special purpose entities nor do we engage in any derivatives except for an interest rate collar associated with our Retail Term Loan. We do not have any retained or contingent interest in assets transferred to an unconsolidated entity. As of SeptemberJune 30, 2019,2020, we had outstanding letters of credit totaling $18.1 million.
Contractual Commitments
During the nine months ended September 30, 2019, there have been no material changes to the contractual obligations previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018, other than an increase in our fixed interest rate long-term debt obligations of $750.0 million and an increase in our annual fixed interest payments of $38.4 million, offset by a decrease in our variable interest rate long-term debt obligations of $646.0 million and a decrease in our annual estimated variable interest payments of $47.5 million, primarily in connection with the Refinancing Transactions as described above.
Critical Accounting Policies and Estimates
A description of our critical accounting policies is included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2018.2019. There have been no significant changes to these policies for the ninesix months ended SeptemberJune 30, 2019.2020.
Recently Adopted Accounting Standards and Accounting Standards Issued But Not Yet Adopted
See related disclosure in Item 1—"Notes to Condensed Consolidated Financial Statements," Note 2, "Basis of Presentation and Significant Accounting Policies."
Special Note Regarding Forward-Looking Statements
We make forward-looking statements in this QuarterlyAnnual Report on Form 10-Q10-K based upon the beliefs and assumptions of our management and on information currently available to us. Forward-looking statements include, but are not limited to, information about our business strategy, development activities, competition and possible or assumed future results of operations, throughout this report and are often preceded by, followed by or include the words "may," "will," "should," "would," "could," "believe," "expect," "anticipate," "estimate," "intend," "plan," "continue" or the negative of these terms or similar expressions.
Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those we express in these forward-looking statements, including the risks and uncertainties in Item 1A — "Risk1A—"Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2018 and other factors we describe from time to time in our periodic filings with the Securities and Exchange Commission ("SEC"),SEC, such as:
controversy•the duration and litigationseverity of the COVID-19 pandemic, the adverse effects of the COVID-19 pandemic, including government-mandated property closures, travel restrictions or social distancing or quarantine measures, the macroeconomic conditions during and after the COVID-19 pandemic, including potential higher unemployment rates, declines in income levels and loss of personal wealth resulting from the COVID-19 pandemic and its impact on consumer behavior related to Stephen A. Wynndiscretionary spending and his separation from the Company;traveling;
•extensive regulation of our business and the cost of compliance or failure to comply with applicable laws and regulations;
•pending or future claims and legal proceedings, regulatory or enforcement actions or probity investigations;
•our ability to maintain our gaming licenses and concessions;
•our dependence on key employees;
•general global political and economic conditions, in the U.S. and China (including COVID-19 and the Chinese government's ongoing anti-corruption campaign), which may impact levels of travel, leisure, and consumer spending;
•restrictions or conditions on visitation (caused by COVID-19 or otherwise) by citizens of mainland China to Macau;
•the impact on the travel and leisure industry from factors such as an outbreak of an infectious disease, such as COVID-19, public incidents of violence, riots, demonstrations, extreme weather patterns or natural disasters, military conflicts, civil unrest, and any future security alerts and/or terrorist attacks;
•doing business in foreign locations such as Macau;
•our ability to maintain our customer relationships and collect and enforce gaming receivables;
•our relationships with Macau gaming promoters;
•our dependence on a limited number of resorts and locations for all of our cash flow and our subsidiaries' ability to pay us dividends and distributions;
competition in the casino/hotel and resort industries and actions taken by our competitors, including new development and construction activities of competitors;
•factors affecting the development and success of new gaming and resort properties (including limited labor resources, government labor and gaming policies and transportation infrastructure in Macau; and cost increases, environmental regulation, and our ability to secure necessary permits and approvals in Everett, Massachusetts)approvals);
•construction risks (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems; shortages of materials or skilled labor; environment, health and safety issues; and unanticipated cost increases);
•legalization and growth of gaming in other jurisdictions;
•any violations by us of the anti-money laundering laws or Foreign Corrupt Practices Act;
•adverse incidents or adverse publicity concerning our resorts or our corporate responsibilities;
•changes in gaming laws or regulations;
•changes in federal, foreign, or state tax laws or the administration of such laws;
potential violations of law by Mr. Kazuo Okada, a former stockholder of ours;
•continued compliance with all provisions in our debt agreements;
•conditions precedent to funding under our credit facilities;
•leverage and debt service (including sensitivity to fluctuations in interest rates);
•cybersecurity risk, including misappropriationcyber and physical security breaches, system failure, computer viruses, and negligent or intentional misuse by customers, company employees, or employees of customer information or other breaches of information security;third-party vendors;
•our ability to protect our intellectual property rights; and
•our current and future insurance coverage levels.
Further information on potential factors that could affect our financial condition, results of operations and business are included in this report and our other filings with the SEC. You should not place undue reliance on any forward-looking statements, which are based only on information available to us at the time this statement is made. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.
Interest Rate Risks
One of our primary exposures to market risk is interest rate risk associated with our debt facilities that bear interest based on floating rates. We attempt to manage interest rate risk by managing the mix of long-term fixed rate borrowings and variable rate borrowings, supplemented by hedging activities as believed by us to be appropriate. We cannot assure you that these risk management strategies will have the desired effect, and interest rate fluctuations could have a negative impact on our results of operations.
Interest Rate Sensitivity
As of SeptemberJune 30, 2019,2020, approximately 54.5%59% of our long-term debt was based on fixed rates. Based on our borrowings as of SeptemberJune 30, 2019,2020, an assumed 100 basis point change in the variable rates would cause our annual interest expense to change by $43.8$52.8 million.
In order to mitigate exposure to interest rate fluctuations on the Retail Term Loan, the Company entered into a five year interest rate collar with a notional value of $615.0 million. The interest rate collar establishes a range whereby the Company will pay the counterparty if one-month LIBOR falls below the established floor rate of 1.00%, and the counterparty will pay the Company if one-month LIBOR exceeds the ceiling rate of 3.75%.
Foreign Currency Risks
We expect most of the revenues and expenses for any casino that we operate in Macau will be denominated in Hong Kong dollars or Macau patacas; however, a significant portion of our Wynn Macau, Limited debt is denominated in U.S. dollars. Fluctuations in the exchange rates resulting in weakening of the Macau pataca or the Hong Kong dollar in relation to the U.S. dollar could have materially adverse effects on our results, financial condition and ability to service debt. Based on our balances
as of SeptemberJune 30, 2019,2020, an assumed 1% change in the U.S. dollar/Hong Kong dollar exchange rate would cause a foreign currency transaction gain/loss of $27.7$27.1 million.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
The Company's management, with the participation of the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, the Company's Chief Executive OfficerCEO and Chief Financial OfficerCFO have concluded that, as of the end of such period covered by this report, the Company's disclosure controls and procedures were effective, at the reasonable assurance level, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive OfficerCEO and Chief Financial Officer,CFO, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter to which this report relates that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
We are occasionally party to lawsuits. As with all litigation, no assurance can be provided as to the outcome of such matters and we note that litigation inherently involves significant costs. For information regarding the Company's legal proceedings see Item 1—"Notes to Condensed Consolidated Financial Statements," Note 14, "Commitments and Contingencies" of Part I in this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
A description of our risk factors can be found in Item 1A, Part I of our Annual Report on Form 10-K for the year ended December 31, 2018.2019. There were no material changes to those risk factors during the ninesix months ended SeptemberJune 30, 20192020 other than resolutionthe risk factor described below:
The outbreak of the novel coronavirus COVID-19 ("COVID-19") has had and will likely continue to have an adverse effect on our business, operations, financial condition and operating results, and the ability of our subsidiaries to pay dividends and distributions.
In January 2020, an outbreak of a new strain of coronavirus, COVID-19, was identified and has spread around the world including the United States. Currently, there are no fully effective vaccines or treatments and there can be no assurance that an effective vaccine or treatment will be developed. The spread of COVID-19 and the recent developments surrounding the global pandemic are currently having negative impacts on all aspects of our business.
The current, and uncertain future, impact of the COVID-19 pandemic, including its effect on the ability or desire of people to travel (including to and from our properties), is expected to continue to impact our results, operations, outlooks, plans, goals, growth, reputation, cash flows and liquidity.
The U.S. government has put in place restrictions on travel to the United States from Europe and Asia, and could expand the restrictions. A significant portion of our business in the United States relies on the willingness and ability of premium international customers to travel to the United States. As such, our Las Vegas Operations and operations at Encore Boston Harbor have been and may continue to be adversely impacted.
Furthermore, in response to and as part of a continuing effort to reduce the spread of COVID-19, we temporarily closed all operations at Wynn Las Vegas and at Encore Boston Harbor, and they remained closed until authorized to re-open under U.S. and state government directives, on June 4, 2020 and July 12, 2020, respectively. Since reopening, we have implemented certain litigationCOVID-19 specific protective measures at each location, such as discussedlimiting the number of seats per table game, slot machine spacing, temperature checks, and mask protection. In addition, we have been, and will continue to be further, negatively impacted by related developments, including heightened governmental regulations and travel advisories, including recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, the casino resort industry.
Our casino operations in Item 1—"NotesMacau were closed for a 15-day period in February 2020 and resumed operations on a reduced basis on February 20, 2020. On March 20, 2020, our casinos’ operations were fully restored; however certain COVID-19 specific protective measures, such as various traveler quarantines, limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, COVID-19 negative test results requirements for entry to Condensed Consolidated Financial Statements," Note 14, "Commitmentsgaming areas, and Contingencies"health declarations remain in effect at the present time. Visitation to Macau has significantly decreased since the outbreak of Part ICOVID-19, driven by the pandemic’s strong deterrent effect on travel and social activities, the Chinese government’s suspension of many of its visa and group tour schemes that allow mainland Chinese residents to travel to Macau, various quarantine measures in Macau and elsewhere, travel and entry restrictions and conditions in Macau, Hong Kong, Taiwan, and mainland China, and the suspension of ferry services to Macau from Hong Kong and mainland China and other modes of transportation within Macau. Regionally, bans on entry, testing requirements, and enhanced quarantine requirements depending on the person’s residency and their recent travel history, for any Macau residents, PRC citizens, Hong Kong residents, and Taiwan residents attempting to enter Macau are drastically impacting visitation. Persons who are not residents of the Greater China area are barred from entry to Macau at this Quarterly Reporttime.
While most of the foregoing travel restrictions and quarantine and testing requirements continue to weigh on Form 10-Q.visitation to Macau, beginning in June 2020 certain of these restrictions are being eased as certain regions gradually recover from the COVID-19 pandemic. In July 2020, Guangdong Province, a Chinese province adjacent to Macau, eased certain quarantine requirements for those traveling between Guangdong Province and Macau, subject to certain testing requirements and health
declarations. Quarantine requirements for those traveling between Hong Kong and Macau have been announced to remain effective until at least September 7, 2020, at which time they may be lifted. In the initial phase of opening travel channels between Macau and other regions, it is expected that all visitors seeking entry to Macau will need to test negative for COVID-19 before entering Macau. Although Mainland China and Macau have recently announced several policies or changes to policies which relax certain visa issuance, border control and quarantine requirements, stringent health declarations, testing and other procedures remain in place and the Individual Visitor Scheme ("IVS") has yet to restart, which prior to its suspension by the PRC government due to COVID-19 travel restrictions, permitted individual PRC citizens from nearly 50 PRC cities to travel to Macau for tourism purposes. We are currently unable to determine when these measures will be lifted from additional regions and cities throughout China and lifted measures may be reintroduced if there are adverse developments in the COVID-19 situation in Macau and other regions with access to Macau.
Until the IVS resumes, we do not expect business volumes to materially improve. We cannot predict when the IVS will resume or which PRC cities will resume issuance of IVS travel permits.
Although all our properties are currently open, we cannot predict whether future closures would be appropriate or could be mandated. For instance, a confirmed COVID-19 case being found in the casinos in future could result in all casino operations in Macau, including those of Wynn Palace and Wynn Macau, being suspended by the Macau government.
We cannot predict the effects of the conditions upon which we have been permitted by governmental authorities to reopen our operations. Moreover, even once travel advisories and restrictions are lifted, demand for casino resorts may remain weak for a significant length of time and we cannot predict if and when our properties will return to pre-outbreak demand or pricing. In particular, consumer behavior related to discretionary spending and traveling, including demand for casino resorts, may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of the COVID-19 pandemic. In addition, we cannot predict the impact that the COVID-19 pandemic will have on our partners, such as tenants, travel agencies, suppliers and other vendors. We may be adversely impacted as a result of the adverse impact that our partners suffer.
As a result of all of the foregoing, we may be required to raise additional capital in the future and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. If our credit ratings were to be downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt financing will be further negatively impacted. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect. There is no guarantee that debt financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations.
In addition, the COVID-19 pandemic has significantly increased economic and demand uncertainty. The current outbreak and continued spread of COVID-19 could cause a global recession or depression, which would have a further adverse impact on our financial condition and operations. Current economic forecasts for significant increases in unemployment in the U.S. and other regions due to the adoption of social distancing and other policies to slow the spread of the virus is likely to have a negative impact on demand for casino resorts, and these impacts could exist for an extensive period of time.
The extent of the effects of the outbreak on our business and the casino resort industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the pandemic, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume.
The COVID-19 pandemic has had and will continue to have an adverse effect on our results of operations and the ability of our subsidiaries to pay dividends and distributions. Given the uncertainty around the extent and timing of the potential future spread or mitigation of COVID-19 and around the imposition or relaxation of protective measures, the impact on our results of operations, cash flows, and financial condition in 2020 and potentially thereafter will be material, but cannot be reasonably estimated at this time as it is unknown when the COVID-19 pandemic will end, when or if our properties will return to pre-pandemic demand and pricing, when or how quickly the current travel restrictions will be eased and the resulting impact on our business and operations.
To the extent the COVID-19 pandemic adversely affects our business, operations, financial condition and operating results, it may also have the effect of heightening many of the other risks related to our business, including, but not limited to, those relating to our high level of indebtedness, our need to generate sufficient cash flows to service our indebtedness, and our ability to comply with the covenants contained in the agreements that govern our indebtedness.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table summarizes the share repurchases made by the Company under its equity repurchase program during the quarter ended September 30, 2019:
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| | | | | | | | | | | | | | |
For the Month Ended | | Number of Shares Repurchased | | Weighted Average Price Paid Per Share | | Shares Repurchased as Part of a Publicly Announced Program | | Approximate Dollar Value Remaining Under the Program (in thousands) (1) |
July 31, 2019 | | — |
| | $ | — |
| | — |
| | $ | 828,366 |
|
August 31, 2019 | | 269,617 |
| | $ | 104.63 |
| | 269,617 |
| | $ | 800,149 |
|
September 30, 2019 | | — |
| | $ | — |
| | — |
| | $ | 800,149 |
|
(1) The Company's Board of Directors authorized an equity repurchase program in April of 2016 of up to $1.0 billion of our common stock. Repurchases may be made at the discretion of the Company from time to time on the open market or in privately negotiated transactions. The Company is not obligated to make any repurchases, and the repurchase program may be discontinued at any time. Any shares acquired are available for general corporate purposes. Any shares repurchased during the periods presented are recorded in Treasury Stock.
The following table summarizes the shares repurchased in satisfaction of tax withholding obligations on vested restricted stock during the quarter ended SeptemberJune 30, 2019, which2020:
| | | | | | | | | | | | | | | | | | | | |
For the Month Ended | | Number of Shares Repurchased | | Weighted Average Price Paid Per Share | | Approximate Dollar Value of Repurchased Shares (in thousands) |
April 30, 2020 | | 343 | | | $ | 82.01 | | | $ | 28 | |
May 31, 2020 | | 4,344 | | | $ | 86.28 | | | $ | 375 | |
June 30, 2020 | | 32,376 | | | $ | 76.90 | | | $ | 2,490 | |
None of the foregoing repurchases that occurred during the three months ended June 30, 2020 were not part of the Company's publicly announced repurchase program:program. As of June 30, 2020, we had $800.1 million in repurchase authority under the program.
|
| | | | | | | | | | | |
For the Month Ended | | Number of Shares Repurchased | | Weighted Average Price Paid Per Share | | Approximate Dollar Value of Repurchased Shares (in thousands) |
July 31, 2019 | | 11,644 |
| | $ | 139.37 |
| | $ | 1,623 |
|
August 31, 2019 | | 1,150 |
| | $ | 114.73 |
| | $ | 132 |
|
September 30, 2019 | | 910 |
| | $ | 109.97 |
| | $ | 101 |
|
Item 5. Other Information
None.
Item 6. Exhibits
(a)Exhibits
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| | | | | | |
Exhibit No.
| | Description | |
3.1 | | | |
3.2 | | | |
*4.1 | | Indenture, dated as of September 20, 2019,June 17, 2020, by and amongbetween Wynn Resorts Finance, LLC,Macau, Limited and Wynn Resorts Capital Corp.,Deutsche Bank Trust Company Americas, as joint and several obligors and the Guarantors named therein and U.S. Bank National Association, as trustee.trustee, related to senior notes due 2026. | |
*10.1 | | CreditFirst Amendment to Term Loan Agreement, dated as of September 20, 2019,May 5, 2020, by and among Wynn Resorts Finance,Wynn/CA Plaza Property Owner, LLC and Wynn/CA Property Owner, LLC, as borrower, the subsidiaries of borrower party hereto, as guarantors, Deutscheborrowers, United Overseas Bank AGLimited, New York Branch,Agency, as administrative agent, and as collateral agent.the lenders party thereto. | |
*31.1 | | | |
*31.2 | | | |
*32 | | | |
101 | | The following material from Wynn Resorts, Limited's Quarterly Report on Form 10-Q, formatted in Inline XBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20192020 and December 31, 2018;2019; (ii) the Condensed Consolidated Statements of Operations for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018;2019; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018;2019; (iv) the Condensed Consolidated Statements of Stockholders' Equity for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018;2019; (v) the Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 20192020 and 2018;2019; and (vi) Notes to Condensed Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
104 | | Cover Page Interactive Data File - The cover page XBRL tags are embedded within the Inline XBRL document. | |
Wynn Resorts, Limited agrees to furnish to the U.S. Securities and Exchange Commission, upon request, a copy of each agreement with respect to long-term debt not filed herewith in reliance upon the exemption from filing applicable to any series of debt which does not exceed 10% of the total consolidated assets of the company.
* Filed herewith
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | | | WYNN RESORTS, LIMITED |
| | | | |
Dated: August 6, 2020 | | By: | | WYNN RESORTS, LIMITED |
| | |
Dated: November 6, 2019 | | By: | | /s/ Craig S. Billings |
| | Craig S. Billings | | |
| | President, Chief Financial Officer and Treasurer | | |
| | (Principal Financial and Accounting Officer) | | |