WYNN RESORTS LTD (Form: 10-Q, Received: 05/08/2020 16:33:57)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
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)
Nevada 46-0484987
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3131 Las Vegas Boulevard South - Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)
(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:
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.
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.
Class Outstanding at April 27, 2020
Common stock, par value $0.01    107,868,264



WYNN RESORTS, LIMITED AND SUBSIDIARIES
FORM 10-Q
INDEX
 
Part I. Financial Information
3
4
5
6
7
8
23
38
39
Part II. Other Information
40
40
41
41
42
43

2

Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)

March 31,
2020
December 31,
2019
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,880,971    $ 2,351,904   
Accounts receivable, net of allowance for credit losses of $59,971 and $39,317
380,771    346,429   
Inventories 86,182    88,519   
Prepaid expenses and other 67,440    69,485   
Total current assets 3,415,364    2,856,337   
Property and equipment, net 9,539,407    9,623,832   
Restricted cash 4,930    6,388   
Intangible assets, net 143,857    146,414   
Operating lease assets 446,564    452,919   
Deferred income taxes, net 487,402    562,262   
Other assets 235,823    223,129   
Total assets $ 14,273,347    $ 13,871,281   
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and construction payables $ 194,226    $ 262,437   
Customer deposits 913,395    824,269   
Gaming taxes payable 48,348    168,043   
Accrued compensation and benefits 249,092    180,140   
Accrued interest 106,344    73,136   
Current portion of long-term debt 235,997    323,876   
Other accrued liabilities 137,435    150,983   
Total current liabilities 1,884,837    1,982,884   
Long-term debt 11,133,048    10,079,983   
Long-term operating lease liabilities 156,120    159,182   
Other long-term liabilities 106,862    107,760   
Total liabilities 13,280,867    12,329,809   
Commitments and contingencies (Note 14)
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; 123,403,105 and 122,837,930 shares issued; 107,884,163 and 107,363,943 shares outstanding, respectively
1,234    1,228   
Treasury stock, at cost; 15,518,942 and 15,473,987 shares, respectively
(1,416,525)   (1,410,998)  
Additional paid-in capital 2,526,062    2,512,676   
Accumulated other comprehensive loss (947)   (1,679)  
Retained earnings 132,266    641,818   
Total Wynn Resorts, Limited stockholders' equity 1,242,090    1,743,045   
Noncontrolling interests (249,610)   (201,573)  
Total stockholders' equity 992,480    1,541,472   
Total liabilities and stockholders' equity $ 14,273,347    $ 13,871,281   

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

  Three Months Ended March 31,
  2020 2019
Operating revenues:
Casino $ 570,789    $ 1,185,101   
Rooms 152,681    191,270   
Food and beverage 149,414    173,219   
Entertainment, retail and other 80,832    101,956   
Total operating revenues 953,716    1,651,546   
Operating expenses:
Casino 442,690    750,071   
Rooms 73,480    63,706   
Food and beverage 175,910    148,761   
Entertainment, retail and other 45,580    44,044   
General and administrative 234,328    217,322   
Provision for credit losses 20,613    5,422   
Pre-opening 2,551    27,713   
Depreciation and amortization 178,746    136,557   
Property charges and other 27,229    2,774   
Total operating expenses 1,201,127    1,396,370   
Operating income (loss) (247,411)   255,176   
Other income (expense):
Interest income 7,953    7,287   
Interest expense, net of amounts capitalized (128,827)   (93,180)  
Change in derivatives fair value (15,660)   (1,509)  
Loss on extinguishment of debt (843)   —   
Other 10,335    (6,358)  
Other income (expense), net (127,042)   (93,760)  
Income (loss) before income taxes (374,453)   161,416   
Provision for income taxes (75,800)   (1,685)  
Net income (loss) (450,253)   159,731   
Less: net (income) loss attributable to noncontrolling interests 48,216    (54,859)  
Net income (loss) attributable to Wynn Resorts, Limited $ (402,037)   $ 104,872   
Basic and diluted net income (loss) per common share:
Net income (loss) attributable to Wynn Resorts, Limited:
Basic $ (3.77)   $ 0.98   
Diluted $ (3.77)   $ 0.98   
Weighted average common shares outstanding:
Basic 106,663    106,792   
Diluted 106,663    107,073   
Dividends declared per common share $ 1.00    $ 0.75   

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
 
  Three Months Ended March 31,
  2020 2019
Net income (loss) $ (450,253)   $ 159,731   
Other comprehensive income (loss):
Foreign currency translation adjustments, before and after tax 1,015    (888)  
Total comprehensive income (loss) (449,238)   158,843   
Less: comprehensive (income) loss attributable to noncontrolling interests 47,933    (54,612)  
Comprehensive income (loss) attributable to Wynn Resorts, Limited $ (401,305)   $ 104,231   

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
(unaudited)

For the Three Months Ended March 31, 2020
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, 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 —    —    —    —    —    (402,037)   (402,037)   (48,216)   (450,253)  
Currency translation adjustment —    —    —    —    732    —    732    283    1,015   
Issuance of restricted stock 620,745      —    6,086    —    —    6,092    629    6,721   
Cancellation of restricted stock (55,570)   —    —    —    —    —    —    —    —   
Shares repurchased by the Company and held as treasury shares (44,955)   —    (5,527)   —    —    —    (5,527)   —    (5,527)  
Cash dividends declared —    —    —    —    —    (107,515)   (107,515)   14    (107,501)  
Distribution to non-controlling interest —    —    —    —    —    —    —    (998)   (998)  
Stock-based compensation —    —    —    7,300    —    —    7,300    251    7,551   
Balances, March 31, 2020 107,884,163    $ 1,234    $ (1,416,525)   $ 2,526,062    $ (947)   $ 132,266    $ 1,242,090    $ (249,610)   $ 992,480   


For the Three Months Ended March 31, 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 —    —    —    —    —    104,872    104,872    54,859    159,731   
Currency translation adjustment —    —    —    —    (641)   —    (641)   (247)   (888)  
Exercise of stock options 77,690      —    4,063    —    —    4,064    —    4,064   
Issuance of restricted stock 396,596      —    14,344    —    —    14,348    785    15,133   
Cancellation of restricted stock (1,045)   —    —    —    —    —    —    —    —   
Shares repurchased by the Company and held as treasury shares (44,818)   —    (5,401)   —    —    —    (5,401)   —    (5,401)  
Cash dividends declared —    —    —    —    —    (80,685)   (80,685)   17    (80,668)  
Stock-based compensation —    —    —    7,540    —    —    7,540    943    8,483   
Balances, March 31, 2019 107,660,449    $ 1,226    $ (1,349,413)   $ 2,483,026    $ (2,591)   $ 945,972    $ 2,078,220    $ (162,977)   $ 1,915,243   

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

  Three Months Ended March 31,
  2020 2019
Cash flows from operating activities:
Net income (loss) $ (450,253)   $ 159,731   
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 178,746    136,557   
Deferred income taxes 74,860    (76)  
Stock-based compensation expense 9,364    10,338   
Amortization of debt issuance costs 6,944    7,594   
Loss on extinguishment of debt 843    —   
Provision for credit losses 20,613    5,422   
Change in derivatives fair value 15,660    1,509   
Property charges and other 16,894    9,133   
Increase (decrease) in cash from changes in:
Receivables, net (56,284)   11,088   
Inventories, prepaid expenses and other 5,135    (13,939)  
Customer deposits 71,736    (37,398)  
Accounts payable and accrued expenses (70,758)   (26,101)  
Net cash (used in) provided by operating activities (176,500)   263,858   
Cash flows from investing activities:
Capital expenditures, net of construction payables and retention (139,316)   (310,279)  
Purchase of intangible and other assets —    (1,000)  
Proceeds from sale of assets and other 2,162    404   
Net cash used in investing activities (137,154)   (310,875)  
Cash flows from financing activities:
Proceeds from issuance of long-term debt 1,469,028    250,000   
Repayments of long-term debt (515,194)   (500,503)  
Repurchase of common stock (5,527)   (5,401)  
Finance lease payment (37)   —   
Proceeds from exercise of stock options 70    4,064   
Dividends paid (107,426)   (80,773)  
Distribution to noncontrolling interest (998)   —   
Payments for financing costs (1,919)   (10,496)  
Net cash provided by (used in) financing activities 837,997    (343,109)  
Effect of exchange rate on cash, cash equivalents and restricted cash 3,266    (2,404)  
Cash, cash equivalents and restricted cash:
Increase (decrease) in cash, cash equivalents and restricted cash 527,609    (392,530)  
Balance, beginning of period 2,358,292    2,219,323   
Balance, end of period $ 2,885,901    $ 1,826,793   
Supplemental cash flow disclosures:
Cash paid for interest, net of amounts capitalized $ 88,438    $ 71,343   
Liability settled with shares of common stock $ 6,720    $ 15,134   
Accounts and construction payables related to property and equipment $ 127,895    $ 226,829   

The accompanying notes are an integral part of these condensed consolidated financial statements.
7

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, and operator of 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, 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.

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, the Company's casino operations at Wynn Palace and Wynn Macau reopened on a reduced basis and have since been fully restored; however, certain health safeguards, such as traveler quarantines, limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, and health declarations remain in effect at the present time. The Company is currently unable to determine when these measures will be lifted.

Visitation to Macau has fallen meaningfully since the outbreak of COVID-19, driven by the outbreak'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, quarantine measures, travel and entry restrictions in Macau, Hong Kong and certain cities and regions in mainland China, the suspension of ferry services and other modes of transportation with Macau and regionally, and the ban on entry or enhanced quarantine requirements for any residents of Greater China attempting to enter Macau. Persons who are not residents of Greater China are barred from entry to Macau at this time.

On March 14, 2020, the Massachusetts Gaming Commission temporarily suspended operations at all casinos in Massachusetts, including Encore Boston Harbor. On March 17, 2020, the Nevada government suspended all casino and non-essential operations, including all operations at Wynn Las Vegas. Accordingly, Encore Boston Harbor and Wynn Las Vegas ceased all operations and closed to the public on March 15, 2020 and March 17, 2020, respectively. Both resorts will remain closed until authorized to re-open under U.S. and state government directives. During the first quarter of 2020, the Company committed to pay salary, tips and benefits continuation for all U.S. employees, inclusive of part-time employees, through May 15, 2020. The Company has accrued $75.7 million of expense related to this commitment for the period from April 1 through May 15, 2020 within the accompanying Condensed Consolidated Financial Statements. In May 2020, the Company announced that it had extended its commitment through May 31, 2020.

The COVID-19 outbreak has had and will continue to have an adverse effect on the Company's results of operations. 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.

8

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
As of March 31, 2020, the Company had total cash and cash equivalents, excluding restricted cash, of $2.88 billion, and had access to $40.9 million and $74.2 million of available borrowing capacity from the WRF Revolving Facility and Wynn Macau Revolving Facility, respectively. In addition, the Company has suspended its quarterly dividend program and has postponed major project capital expenditures. Given the Company's liquidity position at March 31, 2020 and the steps the Company has taken subsequent to March 31, 2020 as further described in Note 6, "Long-Term Debt," the Company believes it is able to support continuing operations and respond to the current COVID-19 pandemic challenges.

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 months ended March 31, 2020 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, 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.

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 allowance estimate reflects specific review of customer accounts and outstanding gaming promoter accounts with a balance over a specified dollar amount, based upon the age of the account, 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 future economic and business conditions and forecasts. Accounts are written off when management deems them to be uncollectible. Recoveries of accounts previously written off are recorded when received.

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 $254.0 million and $589.0 million for the three months ended March 31, 2020 and 2019, respectively.


9

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Recently Adopted Accounting Standards

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 is 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 amends 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 applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted the guidance effective January 1, 2020, and this adoption did not have a material effect on its Condensed Consolidated Financial Statements.

Note 3 - Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash consisted of the following (in thousands):
March 31,
2020
December 31,
2019
Cash and cash equivalents:
   Cash (1)
$ 1,722,706    $ 1,265,502   
   Cash equivalents (2)
1,158,265    1,086,402   
     Total cash and cash equivalents 2,880,971    2,351,904   
Restricted cash (3)
4,930    6,388   
Total cash, cash equivalents and restricted cash $ 2,885,901    $ 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.
10

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):
March 31,
2020
December 31,
2019
Casino $ 333,487    $ 304,137   
Hotel 20,454    22,114   
Other 86,801    59,495   
440,742    385,746   
Less: allowance for credit losses (59,971)   (39,317)  
$ 380,771    $ 346,429   

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of casino receivables. As of March 31, 2020 and December 31, 2019, approximately 82.9% and 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 17.2% and 12.4% of gross casino receivables as of March 31, 2020 and December 31, 2019, respectively. 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.

The following table shows the movement in the Company's allowance for credit losses recognized for receivables that occurred during the period (in thousands): 
March 31,
2020
March 31,
2019
Balance at beginning of year $ 39,317    $ 32,694   
Provision for credit losses 20,613    5,422   
Write-offs (70)   (2,975)  
Effect of exchange rate 111    (47)  
Balance at end of period $ 59,971    $ 35,094   


Note 5 - Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):
March 31,
2020
December 31,
2019
Buildings and improvements $ 9,708,047    $ 9,367,241   
Land and improvements 1,260,386    1,246,679   
Furniture, fixtures and equipment 2,983,616    2,932,483   
Airplanes 110,623    110,623   
Construction in progress 158,198    477,333   
14,220,870    14,134,359   
Less: accumulated depreciation (4,681,463)   (4,510,527)  
$ 9,539,407    $ 9,623,832   

11

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Depreciation expense for the three months ended March 31, 2020 and 2019 was $172.3 million and $132.3 million, respectively.

Note 6 - Long-Term Debt

Long-term debt consisted of the following (in thousands): 
March 31,
2020
December 31,
2019
Macau Related:
Wynn Macau Credit Facilities (1):
Wynn Macau Term Loan, due 2022 (2)
$ 2,156,491    $ 2,302,540   
Wynn Macau Revolver, due 2022 (3)
676,711    350,232   
WML 4 7/8% Senior Notes, due 2024 600,000    600,000   
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 975,000    987,500   
WRF Revolver, due 2024 791,000    —   
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   
Retail Term Loan, due 2025 (5)
615,000    615,000   
11,474,202    10,515,272   
Less: Unamortized debt issuance costs and original issue discounts and premium, net (105,157)   (111,413)  
11,369,045    10,403,859   
Less: Current portion of long-term debt (235,997)   (323,876)  
Total long-term debt, net of current portion $ 11,133,048    $ 10,079,983   

(1) The 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) Approximately $1.22 billion and $936.6 million of the Wynn Macau Term Loan currently bears interest at a rate of LIBOR plus 1.75% per year and HIBOR plus 1.75% per year, respectively. As of March 31, 2020, the weighted average interest rate was approximately 3.20%.
(3) Approximately $384.8 million and $291.9 million of the Wynn Macau Revolver currently bears interest at a rate of LIBOR plus 1.75% per year and HIBOR plus 1.75% per year, respectively. As of March 31, 2020, the weighted average interest rate was approximately 2.71%. As of March 31, 2020, the available borrowing capacity under the Wynn Macau Revolver was $74.2 million. In April 2020, the Company drew an additional $50.0 million under the Wynn Macau Revolver.
(4) The WRF Credit Facilities bear interest at a rate of LIBOR plus 1.75% per year. As of March 31, 2020, the weighted average interest rate was approximately 2.68%. Additionally, as of March 31, 2020, the available borrowing capacity under the WRF Revolver was $40.9 million, net of $18.1 million in outstanding letters of credit. In April 2020, the Company drew an additional $25.0 million under the WRF Revolver.
(5) The Retail Term Loan bears interest at a rate of LIBOR plus 1.70% per year. As of March 31, 2020, the interest rate was 3.28%.

WRF 7 3/4% Senior Notes, due 2025

On 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 $600.0 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.

The 2025 WRF Notes will mature on April 15, 2025 and bear interest at the rate 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
12

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
all of the 2025 WRF Notes at any time prior to April 15, 2022 at a redemption price equal to 100% of the aggregate principal amount of the 2025 WRF Notes to be redeemed plus a “make-whole” premium and accrued and unpaid interest. In addition, at any time prior to April 15, 2022, the WRF Issuers may, on any one or more occasions, redeem up to 35% of the original aggregate principal amount of the 2025 WRF Notes with the proceeds of one or more equity offerings at a redemption price equal to 107.75% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the applicable redemption date. On or after April 15, 2022, the WRF Issuers may redeem some or all of the 2025 WRF Notes at the redemption prices set forth in the 2025 Indenture plus accrued and unpaid interest. In the event of a change of control triggering event, the WRF Issuers must offer to repurchase the 2025 WRF Notes at a repurchase price equal to 101% of the aggregate principal amount thereof plus any accrued and unpaid interest, to, but not including, the repurchase date. The 2025 WRF Notes are subject to disposition and redemption requirements imposed by gaming laws and regulations of applicable gaming regulatory authorities.

The 2025 WRF Notes are jointly and severally guaranteed by each of WRF’s existing domestic restricted subsidiaries that guarantee indebtedness under the 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 2025 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 2025 Indenture.

The 2025 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 2025 Indenture allows either the Trustee or the holders of at least 25% in aggregate principal amount of the 2025 WRF Notes, as applicable, issued under such 2025 Indenture to accelerate the amounts due under the 2025 WRF Notes, or in the case of a bankruptcy or insolvency, will automatically cause the acceleration of the amounts due under the 2025 WRF Notes.

The 2025 WRF Notes were offered pursuant to an exemption under the Securities Act of 1933, as amended (the "Securities Act"). The 2025 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 2025 WRF Notes have not been and will not be registered under the Securities Act or under any state securities laws. Therefore, the WRF 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.

WRF Credit Agreement Amendment

On April 10, 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”) among Deutsche Bank AG New York Branch, as administrative agent and collateral agent, and the other lenders party thereto.

The WRF Credit Agreement Amendment amends the WRF Credit Agreement to, among other things, implement 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 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 (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 restricted payments (including restrictions on a portion of dividends received from WRF’s subsidiaries) during the Financial Covenant Relief Period and the Financial Covenant Increase Period, and amend the definition of “Material Adverse Effect” in the WRF Credit Agreement to take into consideration COVID-19.

During the Financial Covenant Relief Period, the existing consolidated first lien net leverage ratio financial covenant will be replaced with a minimum liquidity financial covenant that requires WRF and its restricted subsidiaries to maintain liquidity of at least $300.0 million at all times (with liquidity being the sum of unrestricted operating cash, as defined in the WRF Credit Agreement, and the available borrowing capacity under the WRF Revolver). Following the Financial Covenant Relief Period
13

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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.

Debt Covenant Compliance

As of March 31, 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 March 31, 2020 and December 31, 2019, was approximately $9.96 billion and $10.80 billion, respectively, compared to its carrying value, excluding debt issuance costs and original issue discount and premium, of $11.47 billion and $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 and 2019, the Company paid a cash dividend of $1.00 and $0.75 per share, respectively, and recorded $107.5 million and $80.7 million as a reduction of retained earnings from cash dividends declared, respectively.

On May 6, 2020, the Company announced that it had suspended its quarterly dividend program due to the financial impact of the COVID-19 pandemic.

Noncontrolling Interests

During the three months ended March 31, 2020, the Retail Joint Venture made aggregate distributions of approximately $1.0 million to its non-controlling interest holder in the normal course of business. During the three months ended March 31, 2019, the Retail Joint Venture did not make any distribution to its non-controlling interest holder. For more information on the Retail Joint Venture, see Note 15, "Retail Joint Venture".



14

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:
March 31,
2020
Quoted
Market
Prices in
Active
Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents $ 1,158,265    $ 400,839    $ 757,426    —   
Restricted cash $ 4,930    $ 2,053    $ 2,877    —   
Liabilities:
Interest rate collar $ 19,508    —    $ 19,508    —   
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    —   

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):
March 31, 2020 December 31, 2019 Increase (decrease) March 31, 2019 December 31, 2018 Increase (decrease)
Casino outstanding chips and front money deposits (1)
$ 857,233    $ 769,053    $ 88,180    $ 863,160    $ 905,561    $ (42,401)  
Advance room deposits and ticket sales (2)
29,293    49,834    (20,541)   47,128    42,197    4,931   
Other gaming-related liabilities (3)
5,485    13,970    (8,485)   7,904    12,694    (4,790)  
Loyalty program and related liabilities (4)
20,397    21,148    (751)   16,504    18,148    (1,644)  
$ 912,408    $ 854,005    $ 58,403    $ 934,696    $ 978,600    $ (43,904)  
(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.

15

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 March 31,
  2020 2019
Casino (1)
$ (896)   $ 2,584   
Rooms 349    218   
Food and beverage 637    332   
Entertainment, retail and other 73    44   
General and administrative 9,201    6,830   
Pre-opening —    330   
Total stock-based compensation expense 9,364    10,338   
Total stock-based compensation capitalized 217    64   
Total stock-based compensation costs $ 9,581    $ 10,402   
(1) For the three months ended March 31, 2020, reflects the reversal of $3.3 million of compensation cost previously recognized for awards forfeited in connection with the departure of an employee.

Note 11 - Income Taxes

The Company recorded an income tax expense of $75.8 million and $1.7 million for the three months ended March 31, 2020 and 2019, respectively. The 2020 and 2019 income tax expense primarily related to the increase in the 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 March 31, 2019, the Company was exempt from the payment of such taxes totaling $22.8 million. For the three months ended March 31, 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.


16

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 March 31,
2020 2019
Numerator:
Net income (loss) attributable to Wynn Resorts, Limited $ (402,037)   $ 104,872   
Denominator:
Weighted average common shares outstanding 106,663    106,792   
Potential dilutive effect of stock options, nonvested, and performance nonvested shares —    281   
Weighted average common and common equivalent shares outstanding 106,663    107,073   
Net income (loss) attributable to Wynn Resorts, Limited per common share, basic $ (3.77)   $ 0.98   
Net income (loss) attributable to Wynn Resorts, Limited per common share, diluted $ (3.77)   $ 0.98   
Anti-dilutive stock options, nonvested, and performance nonvested shares excluded from the calculation of diluted net income per share 1,209    355   

Note 13 - Leases
Lessor Arrangements
The following table presents the minimum and contingent operating lease income for the periods presented (in thousands):
Three Months Ended March 31,
2020 2019
Minimum rental income $ 31,650    $ 32,708   
Contingent rental income 6,679    14,971   
Total rental income $ 38,329    $ 47,679   


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 the award winner of the Greater Boston (Region A) gaming license (the "Boston area license"). On November 7, 2014, the gaming license became effective.

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, 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
17

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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. 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.

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 were 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.

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 State Derivative Case.

On November 27, 2019, the State Derivative Case parties agreed to terms of a settlement agreement. The court approved the settlement agreement on February 12, 2020, and entered a written order approving the settlement on March 10, 2020. The settlement agreement becomes effective following the exhaustion of any appeals.

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 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. On March 23, 2020, the court denied the Company’s motion to dismiss as moot 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.

18

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
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. On December 12, 2019, the court entered an order denying the motions to dismiss, which the defendants appealed to the Nevada Supreme Court on December 24, 2019. On January 7, 2020, the Nevada Supreme Court stayed the underlying Individual Stockholder Actions pending a decision on the defendants' appeal.

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 have filed motions to dismiss, which are currently pending before the court.

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.

Note 15 - Retail Joint Venture

As of March 31, 2020 and December 31, 2019, the Retail Joint Venture had total assets of $92.8 million and $90.0 million, respectively, and total liabilities of $637.4 million and $622.4 million, respectively. As of March 31, 2020 and December 31, 2019, the Retail Joint Venture's liabilities included long-term debt of $611.9 million and $611.7 million, respectively, net of debt issuance costs, related to the outstanding borrowings under the Retail Term Loan.

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 one 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 one 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 one reportable segment. Other Macau primarily represents the assets for the Company's Macau holding company.



19

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 March 31,
2020 2019
Operating revenues
Macau Operations:
Wynn Palace
Casino $ 207,576    $ 623,175   
Rooms 19,710    43,314   
Food and beverage 13,298    28,625   
Entertainment, retail and other (1)
18,929    31,508   
259,513    726,622   
Wynn Macau
Casino 190,128    450,242   
Rooms 15,911    28,867   
Food and beverage 9,531    20,975   
Entertainment, retail and other (1)
13,919    23,807   
229,489    523,891   
            Total Macau Operations 489,002    1,250,513   
Las Vegas Operations:
Casino 71,295    111,684   
Rooms 106,105    119,089   
Food and beverage 105,979    123,619   
Entertainment, retail and other (1)
40,445    46,641   
             Total Las Vegas Operations 323,824    401,033   
Encore Boston Harbor:
Casino 101,790    —   
Rooms 10,955    —   
Food and beverage 20,606    —   
Entertainment, retail and other (1)
7,539    —   
            Total Encore Boston Harbor 140,890    —   
Total operating revenues $ 953,716    $ 1,651,546   

20

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Three Months Ended March 31,
2020 2019
Adjusted Property EBITDA (2)
   Macau Operations:
Wynn Palace $ 10,176    $ 222,586   
Wynn Macau 19,208    163,889   
              Total Macau Operations 29,384    386,475   
    Las Vegas Operations (3)
(22,077)   108,302   
    Encore Boston Harbor (4)
(12,636)   —   
Total (5,329)   494,777   
Other operating expenses
Pre-opening 2,551    27,713   
Depreciation and amortization 178,746    136,557   
Property charges and other 27,229    2,774   
Corporate expenses and other 24,192    62,549   
Stock-based compensation (5)
9,364    10,008   
Total other operating expenses 242,082    239,601   
Operating income (loss) (247,411)   255,176   
Other non-operating income and expenses
Interest income 7,953    7,287   
Interest expense, net of amounts capitalized (128,827)   (93,180)  
Change in derivatives fair value (15,660)   (1,509)  
Loss on extinguishment of debt (843)   —   
Other 10,335    (6,358)  
Total other non-operating income and expenses (127,042)   (93,760)  
Income (loss) before income taxes (374,453)   161,416   
Provision for income taxes (75,800)   (1,685)  
Net income (loss) (450,253)   159,731   
Net (income) loss attributable to noncontrolling interests 48,216    (54,859)  
Net income (loss) attributable to Wynn Resorts, Limited $ (402,037)   $ 104,872   
(1) Includes lease revenue accounted for under lease accounting guidance. For more information on leases, see Note 13, "Leases".
(2) "Adjusted Property EBITDA" is net income (loss) before interest, income taxes, depreciation and amortization, 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, change in derivatives fair value, loss 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. 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 us, have historically excluded from their EBITDA calculations preopening 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 our 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. We 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, our 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 March 31, 2020, includes $56.4 million of expense accrued during the quarter 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 March 31, 2020, includes $19.3 million of expense accrued during the quarter 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) Excludes $0.3 million included in pre-opening expenses for the three months ended March 31, 2019.

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WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
March 31,
2020
December 31,
2019
Assets
Macau Operations:
Wynn Palace $ 3,666,518    $ 3,734,210   
Wynn Macau 1,713,929    1,656,625   
Other Macau 1,030,508    1,023,411   
              Total Macau Operations 6,410,955    6,414,246   
Las Vegas Operations 3,122,987    2,806,972   
Encore Boston Harbor 2,371,999    2,456,667   
Corporate and other 2,367,406    2,193,396   
Total $ 14,273,347    $ 13,871,281   


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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, 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, and operator of integrated 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"), Wynn Palace and Wynn Macau (collectively, our "Macau Operations"). In Las Vegas, Nevada, we operate and, with the exception of certain retail space, own 100% of Wynn Las Vegas, which we also refer to 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

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, our casino operations at Wynn Palace and Wynn Macau reopened on a reduced basis and have since been fully restored; however, certain health safeguards, such as traveler quarantines, limiting the number of seats per table game, slot machine spacing, temperature checks, mask protection, and health declarations remain in effect at the present time. We are currently unable to determine when these measures will be lifted.

Visitation to Macau has fallen meaningfully since the outbreak of COVID-19. Total visitation from mainland China to Macau decreased by 97.2% and 96.3% in February and March 2020, respectively, compared to the same periods in 2019. The decrease in visitation is driven by the numerous measures put in place by the governments of China and Macau, including the Chinese government's suspension of its visa and group tour schemes that allow mainland Chinese residents to travel to Macau, traveler quarantine measures, travel and entry restrictions in Macau, Hong Kong, and certain cities and regions in mainland China, the suspension of ferry services and other modes of transportation with Macau and regionally, and the ban on entry or enhanced quarantine requirements for any residents of Greater China attempting to enter Macau. Persons who are not residents of Greater China are barred from entry to Macau at this time. The Company is currently unable to determine when these restrictions will be modified or lifted.

Las Vegas Operations and Encore Boston Harbor

On March 14, 2020, the Massachusetts Gaming Commission temporarily suspended operations at all casinos in Massachusetts, including Encore Boston Harbor. On March 17, 2020, the Nevada government suspended all casino and non-essential operations, including all operations at Wynn Las Vegas. Accordingly, Encore Boston Harbor and Wynn Las Vegas ceased all operations and closed to the public on March 15, 2020 and March 17, 2020, respectively. Both resorts will remain closed until authorized to re-open under U.S. and state government directives. During the first quarter of 2020, the Company committed to pay salary, tips and benefits continuation for all U.S. employees, inclusive of part-time employees, through May 15, 2020. The Company has accrued $75.7 million of expense related to this commitment for the period from April 1 through
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