Item 7. 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 consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K.
Discussion of 2018 items and year-to-year comparisons between 2019 and 2018 that are not included in this Form 10-K can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
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. In October 2020, Wynn Interactive Ltd. ("Wynn Interactive") was formed through the merger of our U.S. online sports betting and gaming business, social casino business, and our strategic partner, BetBull Limited ("BetBull"). Following the merger, Wynn Resorts owns approximately 72% of, and consolidates, Wynn Interactive. The results of Wynn Interactive are presented within Corporate and other.
Recent Developments Related to COVID-19
In January 2020, 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. Several vaccines have been granted authorizations in numerous countries and vaccines are being rolled out to citizens based on their priority of need. There can be no assurance as to when a sufficient number of individuals will be vaccinated, permitting travel restrictions to be lifted.
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 limiting the number of seats per table game, increasing the spacing between active slot machines and visitor entry checks and requirements involving temperature checkpoints, mask wearing, health declarations and proof of negative COVID-19 test results remain in effect at the present time.
Visitation to Macau has fallen significantly since the outbreak of COVID-19, driven by the strong deterrent effect of the COVID-19 Pandemic on travel and social activities, the suspension or reduced availability of the IVS, group tour scheme and other travel visas for visitors, quarantine measures in Macau and elsewhere, travel and entry restrictions and conditions in Macau, the PRC, Hong Kong and Taiwan involving COVID-19 testing, among other things, and the suspension or reduced accessibility of transportation to and from Macau. Total visitation from PRC to Macau decreased by 83.0% in the year ended December 31, 2020, compared with the year ended December 31, 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. At present, bans on entry or enhanced quarantine requirements remain in place for people attempting to enter Macau, depending on various conditions such as the usual visa requirements, their COVID-19 test results, purpose of visit, recent travel history and/or other conditions as applicable.
While many aspects of these travel restrictions and conditions continue to adversely impact visitations to Macau, beginning in June 2020 certain restrictions and conditions have eased to allow for visitation to Macau as certain regions recover from the COVID-19 pandemic. Quarantine-free travel, subject to COVID-19 safeguards such as testing and the usual visa requirements, was reintroduced between Macau and an increasing number of areas and cities within the PRC in progressive phases from June to August 2020, commencing with an area in Guangdong Province, which is adjacent to Macau, and
expanding to additional areas and major cities within Guangdong Province, followed by most other areas of the PRC. On September 23, 2020, PRC authorities fully resumed the IVS exit visa program, which permits individual PRC citizens from nearly 50 PRC cities to travel to Macau for tourism purposes.
Notwithstanding these developments, certain border control, travel-related restrictions and conditions, including certain quarantine and medical observation measures, stringent health declarations, COVID-19 testing and other procedures remain in place, and all visitors need to test negative for COVID-19 before entering Macau.
Given the evolving conditions created by and in response to the COVID-19 pandemic, we are currently unable to determine when travel-related restrictions and conditions will be further lifted. Measures that have been lifted or are expected to be lifted may be reintroduced if there are adverse developments in the COVID-19 situation in Macau and other regions with access to Macau.
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 number of seats per table game, slot machine spacing, temperature checks, mask protection, and suspension of certain entertainment and nightlife offerings. Beginning October 19, 2020, Encore at Wynn Las Vegas adjusted its operating schedule to five days/four nights each week due to currently reduced customer demand levels.
Encore Boston Harbor commenced operations on June 23, 2019. In response to the COVID-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 10, 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 have remained closed, and following the July 10, 2020 reopening, our hotel operations were limited to Thursday through Sunday until their temporary closure on November 6, 2020, pursuant to a state directive limiting the operating hours of certain businesses, including restaurants and casinos. On January 25, 2021, the limitations on operating hours were lifted, and Encore Boston Harbor restored certain operations, including its hotel. We are currently unable to determine when the remaining measures will be lifted.
The disruptions arising from the COVID-19 outbreak have had, during the year ended December 31, 2020, and will continue to have an adverse effect on the Company's results of operations. Our operations are generating extremely limited revenue. 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 the Company’s consolidated 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 modified or cease to be necessary and the resulting impact on the 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 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 18% to 22%.
Results of Operations
Summary annual results
The table summarizes our financial results for the periods presented (in thousands, except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/ (Decrease)
|
|
Percent Change
|
Operating revenues
|
$
|
2,095,861
|
|
|
$
|
6,611,099
|
|
|
$
|
(4,515,238)
|
|
|
(68.3)
|
|
Net income (loss) attributable to Wynn Resorts, Limited
|
(2,067,245)
|
|
|
122,985
|
|
|
(2,190,230)
|
|
|
NM
|
Diluted net income (loss) per share
|
(19.37)
|
|
|
1.15
|
|
|
(20.52)
|
|
|
NM
|
Adjusted Property EBITDA (1)
|
(324,305)
|
|
|
1,815,408
|
|
|
(2,139,713)
|
|
|
(117.9)
|
|
(1) See Item 8—"Financial Statements and Supplemental Data," Note 20, "Segment Information," for a reconciliation of Adjusted Property EBITDA to net income (loss) attributable to Wynn Resorts, Limited.
NM - Not meaningful.
The decrease in operating revenues for the year ended December 31, 2020 was primarily driven by decreases of $2.04 billion, $1.60 billion, $885.5 million, and $2.3 million from Wynn Palace, Wynn Macau, our Las Vegas Operations, and Encore Boston Harbor, respectively. These declines were precipitated by the adverse effects of the COVID-19 pandemic, including travel restrictions, property closures and capacity limitations at our Macau Operations, our Las Vegas Operations and Encore Boston Harbor.
The decrease in net income (loss) attributable to Wynn Resorts, Limited for the year ended December 31, 2020 was primarily related to the adverse effects of the COVID-19 pandemic on the results of our operations.
The decrease in Adjusted Property EBITDA for the year ended December 31, 2020 was driven by decreases of $879.2 million, $736.0 million, $470.2 million, and $46.9 million from Wynn Palace, Wynn Macau, our Las Vegas Operations, and Encore Boston Harbor, respectively, and was primarily related to the adverse effects of the COVID-19 pandemic on the results of our operations.
Financial results for the year ended December 31, 2020 compared to the year ended December 31, 2019.
Operating revenues
The following table presents our operating revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/ (Decrease)
|
|
Percent Change
|
Operating revenues
|
|
|
|
|
|
|
|
Macau Operations:
|
|
|
|
|
|
|
|
Wynn Palace
|
$
|
505,420
|
|
|
$
|
2,543,694
|
|
|
$
|
(2,038,274)
|
|
|
(80.1)
|
|
Wynn Macau
|
474,657
|
|
|
2,070,029
|
|
|
(1,595,372)
|
|
|
(77.1)
|
|
Total Macau Operations
|
980,077
|
|
|
4,613,723
|
|
|
(3,633,646)
|
|
|
(78.8)
|
|
Las Vegas Operations
|
747,947
|
|
|
1,633,457
|
|
|
(885,510)
|
|
|
(54.2)
|
|
Encore Boston Harbor (1)
|
361,666
|
|
|
363,919
|
|
|
(2,253)
|
|
|
(0.6)
|
|
Corporate and other
|
6,171
|
|
|
—
|
|
|
6,171
|
|
|
NM
|
|
$
|
2,095,861
|
|
|
$
|
6,611,099
|
|
|
$
|
(4,515,238)
|
|
|
(68.3)
|
|
(1) Encore Boston Harbor opened on June 23, 2019.
NM - Not meaningful.
The following table presents our casino and non-casino operating revenues (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/ (Decrease)
|
|
Percent Change
|
Operating revenues
|
|
|
|
|
|
|
|
Casino revenues
|
$
|
1,237,230
|
|
|
$
|
4,573,924
|
|
|
$
|
(3,336,694)
|
|
|
(73.0)
|
|
Non-casino revenues:
|
|
|
|
|
|
|
|
Rooms
|
307,973
|
|
|
804,162
|
|
|
(496,189)
|
|
|
(61.7)
|
|
Food and beverage
|
329,584
|
|
|
818,822
|
|
|
(489,238)
|
|
|
(59.7)
|
|
Entertainment, retail and other
|
221,074
|
|
|
414,191
|
|
|
(193,117)
|
|
|
(46.6)
|
|
Total non-casino revenues
|
858,631
|
|
|
2,037,175
|
|
|
(1,178,544)
|
|
|
(57.9)
|
|
|
$
|
2,095,861
|
|
|
$
|
6,611,099
|
|
|
$
|
(4,515,238)
|
|
|
(68.3)
|
|
Casino revenues for the year ended December 31, 2020 were 59.0% of operating revenues, compared to 69.2% for the same period of 2019. Non-casino revenues for the year ended December 31, 2020 were 41.0% of operating revenues, compared to 30.8% for the same period of 2019.
Casino revenues
Casino revenues decreased primarily due to the adverse effects of the COVID-19 pandemic, including the closure of our casino operations in Macau for a 15-day period in February and their subsequent reopening on a reduced basis, and the closures of our Las Vegas Operations from March 17, 2020 until June 4, 2020, and Encore Boston Harbor from March 15, 2020 until July 10, 2020. Each of our properties reopened with certain COVID-19 specific protective measures in place, including limitations on the number of seats per table game and increased spacing between active slot machines. The table below sets forth our casino revenues and associated key operating measures (dollars in thousands, except for win per unit per day):
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/
(Decrease)
|
|
Percent
Change
|
Macau Operations:
|
|
|
|
|
|
|
|
Wynn Palace:
|
|
|
|
|
|
|
|
Total casino revenues
|
$
|
368,284
|
|
|
$
|
2,139,756
|
|
|
$
|
(1,771,472)
|
|
|
(82.8)
|
|
VIP:
|
|
|
|
|
|
|
|
Average number of table games
|
99
|
|
|
109
|
|
|
(10)
|
|
|
(9.2)
|
|
VIP turnover
|
$
|
9,631,018
|
|
|
$
|
45,847,647
|
|
|
$
|
(36,216,629)
|
|
|
(79.0)
|
|
VIP table games win
|
$
|
168,435
|
|
|
$
|
1,519,225
|
|
|
$
|
(1,350,790)
|
|
|
(88.9)
|
|
VIP win as a % of turnover
|
1.75
|
%
|
|
3.31
|
%
|
|
(1.56)
|
|
|
|
Table games win per unit per day
|
$
|
4,850
|
|
|
$
|
38,224
|
|
|
$
|
(33,374)
|
|
|
(87.3)
|
|
Mass market:
|
|
|
|
|
|
|
|
Average number of table games
|
212
|
|
|
216
|
|
|
(4)
|
|
|
(1.9)
|
|
Table drop
|
$
|
1,242,100
|
|
|
$
|
5,122,897
|
|
|
$
|
(3,880,797)
|
|
|
(75.8)
|
|
Table games win
|
$
|
299,181
|
|
|
$
|
1,251,920
|
|
|
$
|
(952,739)
|
|
|
(76.1)
|
|
Table games win %
|
24.1
|
%
|
|
24.4
|
%
|
|
(0.3)
|
|
|
|
Table games win per unit per day
|
$
|
4,009
|
|
|
$
|
15,902
|
|
|
$
|
(11,893)
|
|
|
(74.8)
|
|
Average number of slot machines
|
591
|
|
|
1,054
|
|
|
(463)
|
|
|
(43.9)
|
|
Slot machine handle
|
$
|
999,942
|
|
|
$
|
3,918,554
|
|
|
$
|
(2,918,612)
|
|
|
(74.5)
|
|
Slot machine win
|
$
|
39,175
|
|
|
$
|
195,367
|
|
|
$
|
(156,192)
|
|
|
(79.9)
|
|
Slot machine win per unit per day
|
$
|
188
|
|
|
$
|
508
|
|
|
$
|
(320)
|
|
|
(63.0)
|
|
Wynn Macau:
|
|
|
|
|
|
|
|
Total casino revenues
|
$
|
344,595
|
|
|
$
|
1,796,209
|
|
|
$
|
(1,451,614)
|
|
|
(80.8)
|
|
VIP:
|
|
|
|
|
|
|
|
Average number of table games
|
89
|
|
|
106
|
|
|
(17)
|
|
|
(16.0)
|
|
VIP turnover
|
$
|
5,841,627
|
|
|
$
|
35,426,483
|
|
|
$
|
(29,584,856)
|
|
|
(83.5)
|
|
VIP table games win
|
$
|
185,059
|
|
|
$
|
1,081,934
|
|
|
$
|
(896,875)
|
|
|
(82.9)
|
|
VIP win as a % of turnover
|
3.17
|
%
|
|
3.05
|
%
|
|
0.12
|
|
|
|
Table games win per unit per day
|
$
|
5,925
|
|
|
$
|
27,864
|
|
|
$
|
(21,939)
|
|
|
(78.7)
|
|
Mass market:
|
|
|
|
|
|
|
|
Average number of table games
|
225
|
|
|
207
|
|
|
18
|
|
|
8.7
|
|
Table drop
|
$
|
1,384,537
|
|
|
$
|
5,410,439
|
|
|
$
|
(4,025,902)
|
|
|
(74.4)
|
|
Table games win
|
$
|
259,361
|
|
|
$
|
1,099,353
|
|
|
$
|
(839,992)
|
|
|
(76.4)
|
|
Table games win %
|
18.7
|
%
|
|
20.3
|
%
|
|
(1.6)
|
|
|
|
Table games win per unit per day
|
$
|
3,279
|
|
|
$
|
14,519
|
|
|
$
|
(11,240)
|
|
|
(77.4)
|
|
Average number of slot machines
|
504
|
|
|
807
|
|
|
(303)
|
|
|
(37.5)
|
|
Slot machine handle
|
$
|
830,785
|
|
|
$
|
3,545,899
|
|
|
$
|
(2,715,114)
|
|
|
(76.6)
|
|
Slot machine win
|
$
|
31,153
|
|
|
$
|
170,358
|
|
|
$
|
(139,205)
|
|
|
(81.7)
|
|
Slot machine win per unit per day
|
$
|
176
|
|
|
$
|
578
|
|
|
$
|
(402)
|
|
|
(69.6)
|
|
Poker rake
|
$
|
2,083
|
|
|
$
|
20,835
|
|
|
$
|
(18,752)
|
|
|
(90.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/
(Decrease)
|
|
Percent
Change
|
Las Vegas Operations:
|
|
|
|
|
|
|
|
Total casino revenues
|
$
|
236,826
|
|
|
$
|
394,104
|
|
|
$
|
(157,278)
|
|
|
(39.9)
|
|
Average number of table games
|
214
|
|
|
236
|
|
|
(22)
|
|
|
(9.3)
|
|
Table drop
|
$
|
1,127,309
|
|
|
$
|
1,690,132
|
|
|
$
|
(562,823)
|
|
|
(33.3)
|
|
Table games win
|
$
|
238,490
|
|
|
$
|
395,439
|
|
|
$
|
(156,949)
|
|
|
(39.7)
|
|
Table games win %
|
21.2
|
%
|
|
23.4
|
%
|
|
(2.2)
|
|
|
|
Table games win per unit per day
|
$
|
3,873
|
|
|
$
|
4,581
|
|
|
$
|
(708)
|
|
|
(15.5)
|
|
Average number of slot machines
|
1,703
|
|
|
1,788
|
|
|
(85)
|
|
|
(4.8)
|
|
Slot machine handle
|
$
|
2,452,811
|
|
|
$
|
3,427,820
|
|
|
$
|
(975,009)
|
|
|
(28.4)
|
|
Slot machine win
|
$
|
159,387
|
|
|
$
|
230,954
|
|
|
$
|
(71,567)
|
|
|
(31.0)
|
|
Slot machine win per unit per day
|
$
|
325
|
|
|
$
|
354
|
|
|
$
|
(29)
|
|
|
(8.2)
|
|
Poker rake
|
$
|
3,264
|
|
|
$
|
12,569
|
|
|
$
|
(9,305)
|
|
|
(74.0)
|
|
Encore Boston Harbor (1):
|
|
|
|
|
|
|
|
Total casino revenues
|
$
|
287,525
|
|
|
$
|
243,855
|
|
|
$
|
43,670
|
|
|
17.9
|
|
Average number of table games
|
182
|
|
|
152
|
|
|
30
|
|
|
19.7
|
|
Table drop
|
$
|
697,873
|
|
|
$
|
778,898
|
|
|
$
|
(81,025)
|
|
|
(10.4)
|
|
Table games win
|
$
|
147,512
|
|
|
$
|
151,247
|
|
|
$
|
(3,735)
|
|
|
(2.5)
|
|
Table games win %
|
21.1
|
%
|
|
19.4
|
%
|
|
1.7
|
|
|
|
Table games win per unit per day
|
$
|
3,256
|
|
|
$
|
5,178
|
|
|
$
|
(1,922)
|
|
|
(37.1)
|
|
Average number of slot machines
|
2,159
|
|
|
3,023
|
|
|
(864)
|
|
|
(28.6)
|
|
Slot machine handle
|
$
|
2,303,582
|
|
|
$
|
1,847,080
|
|
|
$
|
456,502
|
|
|
24.7
|
|
Slot machine win
|
$
|
180,207
|
|
|
$
|
138,264
|
|
|
$
|
41,943
|
|
|
30.3
|
|
Slot machine win per unit per day
|
$
|
335
|
|
|
$
|
238
|
|
|
$
|
97
|
|
|
40.8
|
|
Poker rake
|
$
|
5,105
|
|
|
$
|
12,324
|
|
|
$
|
(7,219)
|
|
|
(58.6)
|
|
(1) Encore Boston Harbor opened on June 23, 2019.
Non-casino revenues
The table below sets forth our room revenues and associated key operating measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/
(Decrease)
|
|
Percent
Change
|
Macau Operations:
|
|
|
|
|
|
|
|
Wynn Palace:
|
|
|
|
|
|
|
|
Total room revenues (dollars in thousands)
|
$
|
46,110
|
|
|
$
|
174,576
|
|
|
$
|
(128,466)
|
|
|
(73.6)
|
|
Occupancy
|
29.8
|
%
|
|
97.2
|
%
|
|
(67.4)
|
|
|
|
ADR
|
$
|
235
|
|
|
$
|
269
|
|
|
$
|
(34)
|
|
|
(12.6)
|
|
REVPAR
|
$
|
70
|
|
|
$
|
262
|
|
|
$
|
(192)
|
|
|
(73.3)
|
|
Wynn Macau:
|
|
|
|
|
|
|
|
Total room revenues (dollars in thousands)
|
$
|
39,111
|
|
|
$
|
110,387
|
|
|
$
|
(71,276)
|
|
|
(64.6)
|
|
Occupancy
|
34.8
|
%
|
|
99.2
|
%
|
|
(64.4)
|
|
|
|
ADR
|
$
|
276
|
|
|
$
|
286
|
|
|
$
|
(10)
|
|
|
(3.5)
|
|
REVPAR
|
$
|
96
|
|
|
$
|
284
|
|
|
$
|
(188)
|
|
|
(66.2)
|
|
Las Vegas Operations:
|
|
|
|
|
|
|
|
Total room revenues (dollars in thousands)
|
$
|
202,073
|
|
|
$
|
483,055
|
|
|
$
|
(280,982)
|
|
|
(58.2)
|
|
Occupancy
|
49.6
|
%
|
|
87.5
|
%
|
|
(37.9)
|
|
|
|
ADR
|
$
|
319
|
|
|
$
|
325
|
|
|
$
|
(6)
|
|
|
(1.8)
|
|
REVPAR
|
$
|
158
|
|
|
$
|
284
|
|
|
$
|
(126)
|
|
|
(44.4)
|
|
Encore Boston Harbor (1) (2):
|
|
|
|
|
|
|
|
Total room revenues (dollars in thousands)
|
$
|
20,679
|
|
|
$
|
36,144
|
|
|
$
|
(15,465)
|
|
|
(42.8)
|
|
Occupancy
|
74.5
|
%
|
|
72.6
|
%
|
|
1.9
|
|
|
|
ADR
|
$
|
294
|
|
|
$
|
391
|
|
|
$
|
(97)
|
|
|
(24.8)
|
|
REVPAR
|
$
|
219
|
|
|
$
|
284
|
|
|
$
|
(65)
|
|
|
(22.9)
|
|
(1) Encore Boston Harbor commenced operations on June 23, 2019.
(2) Encore Boston Harbor closed on March 15, 2020 and reopened July 10, 2020. Upon reopening, hotel reservations at Encore Boston Harbor were limited to Thursday through Sunday until their temporary closure on November 6, 2020, pursuant to a state directive limiting the operating hours of certain businesses. Accordingly, Encore Boston Harbor's room key operating measures have been computed based on 141 days of operation for the year ended December 31, 2020.
Room revenues decreased $496.2 million, primarily due to lower occupancy and temporary closures of our Las Vegas Operations and Encore Boston Harbor resulting from the adverse effects of the COVID-19 pandemic.
Food and beverage revenues decreased $489.2 million, primarily due to decreased covers at our restaurants and the reduction of nightlife offerings at our Las Vegas Operations as a result of the adverse effects of the COVID-19 pandemic.
Entertainment, retail and other revenues decreased $193.1 million, primarily due to a decrease in visitation to Macau and our Macau Operations and temporary closures of our Las Vegas Operations and Encore Boston Harbor resulting from the adverse effects of the COVID-19 pandemic. The closure of the Le Reve show at our Las Vegas Operations and rent concessions provided to tenants at our Macau Operations also contributed to the decrease.
Operating expenses
The table below presents operating expenses (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/ (Decrease)
|
|
Percent Change
|
Operating expenses:
|
|
|
|
|
|
|
|
Casino
|
$
|
1,064,976
|
|
|
$
|
2,924,254
|
|
|
$
|
(1,859,278)
|
|
|
(63.6)
|
|
Rooms
|
172,223
|
|
|
276,095
|
|
|
(103,872)
|
|
|
(37.6)
|
|
Food and beverage
|
398,792
|
|
|
696,498
|
|
|
(297,706)
|
|
|
(42.7)
|
|
Entertainment, retail and other
|
107,228
|
|
|
170,206
|
|
|
(62,978)
|
|
|
(37.0)
|
|
General and administrative
|
720,849
|
|
|
896,670
|
|
|
(175,821)
|
|
|
(19.6)
|
|
Provision for credit losses
|
64,375
|
|
|
21,898
|
|
|
42,477
|
|
|
194.0
|
|
Pre-opening
|
6,506
|
|
|
102,009
|
|
|
(95,503)
|
|
|
(93.6)
|
|
Depreciation and amortization
|
725,502
|
|
|
624,878
|
|
|
100,624
|
|
|
16.1
|
|
Property charges and other
|
67,455
|
|
|
20,286
|
|
|
47,169
|
|
|
232.5
|
|
Total operating expenses
|
$
|
3,327,906
|
|
|
$
|
5,732,794
|
|
|
$
|
(2,404,888)
|
|
|
(41.9)
|
|
Total operating expenses decreased $2.4 billion compared to the year ended December 31, 2019, primarily due to decreased expenses related to the impact of the COVID-19 pandemic on our resorts, partially offset by increased operating expenses following the opening of Encore Boston Harbor in June 2019.
Casino expenses decreased $1.03 billion, $797.8 million, and $49.8 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 declines in casino revenues at each property resulting from the effects of the COVID-19 pandemic as well as lower payroll and other operating costs. These decreases were partially offset by increased casino expenses of $22.3 million from Encore Boston Harbor due to the opening of the property in June 2019.
Room expenses decreased $75.2 million, $20.8 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 occupancy at our Las Vegas Operations and our Macau Operations resulting from the effects of the COVID-19 pandemic as well as the temporary closure of our Las Vegas Operations, as previously noted.
Food and beverage expenses decreased $214.8 million, $48.8 million, $22.8 million, and $11.2 million at our Las Vegas Operations, Wynn Palace, Wynn Macau, and Encore Boston Harbor, respectively. The decreases were primarily a result of lower operating costs related to the declines in food and beverage revenues at each property as well as lower nightlife entertainment costs at our Las Vegas Operations resulting from the effects of the COVID-19 pandemic.
Entertainment, retail and other expenses decreased $59.8 million, $13.9 million, and $7.2 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 entertainment, retail and other revenues at each property resulting from the effects of the COVID-19 pandemic, including the closure of the Le Reve show at our Las Vegas Operations, and were partially offset by increased entertainment, retail and other expenses of $3.3 million at Encore Boston Harbor due to the opening of the property in June 2019.
General and administrative expenses decreased $54.5 million, $31.3 million, and $27.6 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. In addition, corporate and other general and administrative expenses decreased $91.2 million, primarily due to a credit of $30.2 million for the net proceeds of a derivative action settlement recognized during the year ended December 31, 2020, and a fine of $35.0 million assessed by the Massachusetts Gaming Commission which was incurred in 2019. These decreases were partially offset by an increase of $28.7 million of general and administrative expenses from Encore Boston Harbor due to the opening of the property in June 2019.
The provision for credit losses increased $15.1 million, $14.8 million, $10.2 million, and $2.4 million at our Las Vegas Operations, Wynn Palace, Wynn Macau, and Encore Boston Harbor, respectively. The increases 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 credit loss for the respective periods.
For the year ended December 31, 2020, pre-opening expenses totaled $6.5 million, which primarily related to restaurant remodels at our Las Vegas Operations and the meeting and convention expansion at Wynn Las Vegas, which opened in February 2020. For the year ended December 31, 2019, pre-opening expenses totaled $102.0 million, which primarily related to the development of Encore Boston Harbor prior to its opening in June 2019..
Depreciation and amortization increased primarily due to an increase in depreciation expense of $72.5 million associated with the opening of Encore Boston Harbor in June 2019 and an increase of $18.8 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 year ended December 31, 2020 consisted primarily of asset disposals and abandonments of $24.4 million, $12.8 million, and $21.5 million at Wynn Palace, Encore Boston Harbor and Corporate and other, respectively. Our property charges and other expenses for the year ended December 31, 2019 consisted primarily of asset abandonments and retirements.
Interest expense, net of capitalized interest
The following table summarizes information related to interest expense (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/ (Decrease)
|
|
Percent Change
|
Interest expense
|
|
|
|
|
|
|
|
Interest cost, including amortization of debt issuance costs and original issue discount and premium
|
$
|
557,726
|
|
|
$
|
467,946
|
|
|
$
|
89,780
|
|
|
19.2
|
|
Capitalized interest
|
(1,252)
|
|
|
(53,916)
|
|
|
(52,664)
|
|
|
(97.7)
|
|
|
$
|
556,474
|
|
|
$
|
414,030
|
|
|
$
|
142,444
|
|
|
34.4
|
|
|
|
|
|
|
|
|
|
Weighted average total debt balance
|
$
|
12,284,646
|
|
|
$
|
9,287,441
|
|
|
|
|
|
Weighted average interest rate
|
4.54
|
%
|
|
5.04
|
%
|
|
|
|
|
Interest costs increased due to an increase in the weighted average debt balance, partially offset by a decrease in the weighted average interest rate. Capitalized interest decreased primarily due to the completion of Encore Boston Harbor construction activities on June 23, 2019.
Other non-operating income and expenses
We incurred a foreign currency remeasurement gain of $12.8 million and $15.2 million for the years ended December 31, 2020 and 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 gain of $15.7 million for the year ended December 31, 2020 to reflect the fair value of our cost method investment at the date we acquired a controlling interest in BetBull Limited.
We recorded a loss of $13.1 million and $3.2 million for the years ended December 31, 2020 and 2019, respectively, from change in the fair value of an interest rate collar.
We recorded a $4.6 million loss on extinguishment of debt for the year ended December 31, 2020 primarily related to the partial prepayment of the Wynn Macau Term Loan. We recorded a $12.4 million loss on extinguishment of debt for the year ended December 31, 2019 in connection with refinancing our Wynn Resorts Finance (formerly Wynn America) credit facility and Wynn Resorts term loan.
Income Taxes
For the years ended December 31, 2020 and 2019, we recorded an income tax expense of $564.7 million and $176.8 million, respectively. The 2020 income tax expense primarily related to the increase in the valuation allowances for U.S foreign tax credits, intangible assets, U.S. loss carryforwards and other U.S. deferred tax assets. The 2019 income tax expense primarily related to the increase in the valuation allowance for U.S foreign tax credits.
Wynn Macau SA received a five-year exemption from the Macau Complementary Tax on casino gaming profits through December 31, 2020. For the year ended December 31, 2019, we were exempt from the payment of $77.7 million in such taxes. For the year ended December 31, 2020, we did not have any casino gaming profits in Macau. Our non-gaming profits remain subject to the Macau Complementary Tax and casino winnings remain subject to the Macau special gaming tax and other levies together totaling 39% in accordance with our concession agreement.
In August 2016, Wynn Macau SA received an extension of its agreement with the Macau government that provides for an annual payment of 12.8 million Macau patacas (approximately $1.6 million) as complementary tax due by stockholders on dividend distributions through December 31, 2020. In March 2020, Wynn Macau SA applied for an extension of this agreement for an additional five years through 2025. The extension is subject to approval and may only extend through June 26, 2022, the expiration date of the gaming 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.
We have participated in the Internal Revenue Service ("IRS") Compliance Assurance Program ("CAP") for the 2012 through 2020 tax years and will continue to participate in the IRS CAP for the 2021 tax year.
Net income (loss) attributable to noncontrolling interests
Net loss attributable to noncontrolling interests was $259.7 million for the year ended December 31, 2020, compared to net income of $188.4 million for the year ended December 31, 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, 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 (loss), 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.
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 8—"Financial Statements and
Supplementary Data," Note 20, "Segment Information." That footnote also presents a reconciliation of Adjusted Property EBITDA to net income (loss) attributable to Wynn Resorts, Limited.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
|
|
2020
|
|
2019
|
|
Increase/ (Decrease)
|
|
Percent Change
|
Wynn Palace
|
$
|
(149,647)
|
|
|
$
|
729,535
|
|
|
$
|
(879,182)
|
|
|
(120.5)
|
|
Wynn Macau
|
(87,189)
|
|
|
648,837
|
|
|
(736,026)
|
|
|
(113.4)
|
|
Las Vegas Operations
|
(56,356)
|
|
|
413,886
|
|
|
(470,242)
|
|
|
(113.6)
|
|
Encore Boston Harbor (1)
|
(23,762)
|
|
|
23,150
|
|
|
(46,912)
|
|
|
(202.6)
|
|
(1) Encore Boston Harbor commenced operations on June 23, 2019.
Adjusted Property EBITDA at Wynn Palace and Wynn Macau decreased $879.2 million and $736.0 million, respectively, for the year ended December 31, 2020, primarily due to a decline in operating revenues precipitated by the adverse effects of the COVID-19 pandemic during the year ended December 31, 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 our Las Vegas Operations decreased $470.2 million for the year ended December 31, 2020, primarily due to the adverse effects of the COVID-19 pandemic during the year ended December 31, 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 at Encore Boston Harbor was $(23.8) million for the year ended December 31, 2020. Encore Boston Harbor closed to the public on March 15, 2020, and reopened on July 10, 2020 on a reduced basis. In addition, subsequent to reopening, hotel reservations were limited to Thursday through Sunday until the hotel tower's temporary closure on November 6, 2020 for the remainder of 2020, pursuant to a state directive limiting the operating hours of certain businesses, including restaurants and casinos. On January 25, 2021, the limitations on operating hours were lifted, and Encore Boston Harbor restored certain operations, including its hotel, although it remains limited to Thursday through Sunday.
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):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
Cash Flows - Summary
|
2020
|
|
2019
|
Net cash (used in) provided by operating activities
|
$
|
(1,072,425)
|
|
|
$
|
901,070
|
|
Net cash used in investing activities:
|
|
|
|
Capital expenditures, net of construction payables and retention
|
(290,115)
|
|
|
(1,063,293)
|
|
Purchase of intangible and other assets
|
—
|
|
|
(6,000)
|
|
Cash acquired from business combination
|
4,604
|
|
|
—
|
|
Proceeds from sale of assets
|
19,752
|
|
|
695
|
|
Net cash used in investing activities
|
(265,759)
|
|
|
(1,068,598)
|
|
|
|
|
|
Net cash provided by financing activities:
|
|
|
|
Proceeds from issuance of long-term debt
|
4,691,953
|
|
|
3,893,778
|
|
Repayments of long-term debt
|
(2,035,354)
|
|
|
(2,930,015)
|
|
Repurchase of common stock
|
(11,533)
|
|
|
(66,986)
|
|
Finance lease payment
|
(5,916)
|
|
|
(73)
|
|
Proceeds from exercise of stock options
|
70
|
|
|
14,696
|
|
Shares of subsidiary repurchased for share award plan
|
—
|
|
|
(5,384)
|
|
Dividends paid
|
(108,777)
|
|
|
(566,521)
|
|
Distribution to noncontrolling interest
|
(6,238)
|
|
|
(7,745)
|
|
Payments for additional ownership interest in Wynn Interactive
|
(33,621)
|
|
|
—
|
|
Payments for financing costs
|
(27,339)
|
|
|
(32,738)
|
|
Net cash provided by financing activities
|
2,463,245
|
|
|
299,012
|
|
|
|
|
|
Effect of exchange rate on cash, cash equivalents and restricted cash
|
3,031
|
|
|
7,485
|
|
Increase in cash, cash equivalents and restricted cash
|
$
|
1,128,092
|
|
|
$
|
138,969
|
|
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.
During the year ended December 31, 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 year ended December 31, 2019, the decrease in net cash provided by operations was primarily driven by lower operating revenues at our Macau Operations and Las Vegas Operations, offset by operating revenues from Encore Boston Harbor.
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 temporarily postponed major project capital expenditures for 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 year ended December 31, 2020, we incurred capital expenditures of $61.3 million at Encore Boston Harbor primarily for the payment of construction retention and other payables related to its construction, $85.9 million at our Las Vegas Operations for restaurant remodels and maintenance capital expenditures, $45.3 million for the construction of the additional meeting and convention space at Wynn Las Vegas, and $46.7 million and $49.8 million at Wynn Palace and Wynn Macau, respectively, primarily related to maintenance capital expenditures.
During the year ended December 31, 2019, we incurred capital expenditures of $471.4 million at Encore Boston Harbor, primarily related to the construction of the resort which opened in June 2019; $211.1 million related to the construction of the Meeting and Convention Expansion and the reconfiguration of the golf course; $142.1 million at Wynn Macau primarily related to our Encore Tower room remodel and Lakeside Casino expansion; and $66.5 million and $96.9 million at Wynn Palace and our Las Vegas Operations, respectively, primarily related to maintenance capital expenditures.
Financing Activities
During the year ended December 31, 2020, we issued $1.0 billion aggregate principal amount of WML 5 1/2% Senior Notes due 2026, issued $1.35 billion aggregate principal amount of WML 5 5/8% Senior Notes due 2028, issued $600.0 million aggregate principal amount of WRF 7 3/4% Senior Notes due 2025, borrowed $56.5 million, net of amounts repaid, under the Wynn Macau Revolver, borrowed $716.0 million, net of amounts repaid, under the WRF Revolver, paid $1.04 billion of outstanding principal owed under the Wynn Macau Term Loan, and made quarterly amortization payments under the WRF Term Loan totaling $50.0 million.
During the first quarter of 2019 we borrowed an additional $250.0 million term loan under the Wynn Resorts Term Loan. During the third quarter of 2019, we repaid $991.3 million of outstanding principal under the Wynn America Credit Facilities and $746.3 million of outstanding principal under the Wynn Resorts Term Loan along with related financing costs, using proceeds from the borrowing of $1.03 billion under the WRF Credit Facilities and the issuance of $750.0 million of 2029 WRF Notes. During the fourth quarter of 2019, we received net proceeds of $990.2 million from the issuance of the WML 2029 Notes. Throughout the year ended December 31, 2019, we repaid $273.9 million, net of amounts borrowed, on the Wynn Macau Revolver. In addition, we used cash of $566.5 million for the payment of dividends, of which $400.6 million was paid to Wynn Resorts shareholders and $165.9 million was paid to WML shareholders, excluding Wynn Resorts.
Capital Resources
The COVID-19 pandemic has impacted and will continue to impact, materially, our business, financial condition and results of operations. While we believe our 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. Refer to Item 8—"Financial Statements and Supplementary Data," Note 7, "Long-Term Debt" in the accompanying consolidated financial statements for more information regarding each of the Company's debt agreements. The following table is presented by significant financing entity as of December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
Revolver Borrowing Capacity
|
Wynn Resorts (Macau) S.A. and subsidiaries
|
$
|
417,591
|
|
|
$
|
343,526
|
|
Wynn Macau, Limited and subsidiaries (1)
|
2,011,382
|
|
|
—
|
|
Wynn Resorts Finance, LLC and subsidiaries (2)
|
297,856
|
|
|
117,895
|
|
Wynn Resorts, Limited and other
|
755,203
|
|
|
—
|
|
Total
|
$
|
3,482,032
|
|
|
$
|
461,421
|
|
(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 and 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 as of December 31, 2020.
In January 2021, Wynn Macau SA prepaid approximately $412.5 million of the term loan outstanding under the Wynn Macau Credit Facilities using proceeds from WML senior notes issuances.
The Company is currently designing the second phase of Wynn Palace. We do not expect to incur significant capital expenditures related to the construction of this project in 2021.
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 WML board of directors 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 our focus on safeguarding the Company's Macau Operations and the well-being of our employees. As such, WML paid no dividends during 2020. 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.
During 2020, WML issued $1.0 billion of 5 1/2% Senior Notes due 2026 and $1.35 billion of 5 5/8% Senior Notes due 2028 (collectively, the "2026 and 2028 WML Notes"). The Company used the proceeds from the 2026 and 2028 WML Notes to facilitate repayments on the Wynn Macau Credit Facilities and for general corporate purposes.
If our portion of our cash and cash equivalents were repatriated to the U.S. on December 31, 2020, it would be subject to minimal U.S. taxes in the year of repatriation.
Wynn Resorts Finance, LLC and subsidiaries. Wynn Resorts Finance, LLC ("WRF" or "Wynn Resorts Finance") generates cash from distributions from its subsidiaries, which include our Macau Operations, Wynn 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 this cash to service our WRF Credit Facilities, 2025 WRF Notes (as defined below), 2029 WRF Notes, and WLV Notes, and to fund working capital and capital expenditure requirements as needed.
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 WRF'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 temporarily postponed 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 2021.
During 2020, the WRF Credit Agreement was amended to, among other things, implement a financial covenant relief period through April 1, 2022. Through that date, WRF and its restricted subsidiaries are required to maintain liquidity of at least $325.0 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).
In addition, during 2020, WRF issued $600.0 million aggregate principal amount of 7 3/4% Senior Notes due 2025, the net proceeds of which WRF used for general corporate purposes.
The Company repaid $716.0 million of the outstanding borrowings under the WRF Revolver in February 2021, using proceeds from the February 2021 equity offering described below.
Wynn Resorts, Limited and other subsidiaries. Wynn Resorts, Limited is a holding company and, as a result, our ability to pay dividends is 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 and for general corporate purposes.
On May 5, 2020, certain subsidiaries of the Retail Joint Venture entered into an amendment to the existing retail term loan agreement to 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.
On May 6, 2020, the Company announced that it has suspended its quarterly dividend program due to the financial impact of the COVID-19 pandemic.
On February 11, 2021, the Company completed a registered public offering of 7,475,000 newly issued shares of its common stock, par value $0.01 per share, at a price of $115.00 per share for proceeds of $842.4 million, net of $17.2 million in underwriting discounts and commissions. The Company used $716.0 million of the net proceeds from this equity offering to repay the outstanding borrowings under the WRF revolver in February 2021, and intends to use the remaining net proceeds for general corporate purposes.
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 8—"Financial Statements and Supplementary Data," Note 17, "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 December 31, 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 may 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 December 31, 2020, we had outstanding letters of credit totaling $16.1 million.
Contractual Commitments
The following table summarizes our scheduled contractual commitments as of December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due By Period
|
|
Less
Than
1 Year
|
|
1 to 3
Years
|
|
4 to 5
Years
|
|
After
5 Years
|
|
Total
|
Long-term debt obligations (1)
|
$
|
596,408
|
|
|
$
|
1,729,141
|
|
|
$
|
5,098,500
|
|
|
$
|
5,730,000
|
|
|
$
|
13,154,049
|
|
Fixed interest payments
|
502,975
|
|
|
993,554
|
|
|
812,367
|
|
|
687,007
|
|
|
2,995,903
|
|
Estimated variable interest payments (2)
|
82,599
|
|
|
108,151
|
|
|
47,255
|
|
|
—
|
|
|
238,005
|
|
Construction contracts and commitments
|
30,592
|
|
|
49,250
|
|
|
—
|
|
|
—
|
|
|
79,842
|
|
Operating leases
|
20,772
|
|
|
31,847
|
|
|
20,168
|
|
|
450,009
|
|
|
522,796
|
|
Finance leases
|
15,898
|
|
|
31,796
|
|
|
10,821
|
|
|
65,084
|
|
|
123,599
|
|
Employment agreements
|
54,090
|
|
|
35,063
|
|
|
1,450
|
|
|
1,996
|
|
|
92,599
|
|
Massachusetts surrounding community payments (3)
|
13,499
|
|
|
27,626
|
|
|
28,475
|
|
|
112,469
|
|
|
182,069
|
|
Other (4)
|
161,665
|
|
|
109,378
|
|
|
23,805
|
|
|
13,984
|
|
|
308,832
|
|
Total contractual commitments
|
$
|
1,478,498
|
|
|
$
|
3,115,806
|
|
|
$
|
6,042,841
|
|
|
$
|
7,060,549
|
|
|
$
|
17,697,694
|
|
(1) In the Less Than 1 Year column, includes $412.5 million related to the prepayment of the Wynn Macau Term Loan paid in January 2021.
(2) Amounts for all periods represent our estimated future interest payments on our debt facilities based upon amounts outstanding and LIBOR or HIBOR rates as of December 31, 2020. Actual rates will vary.
(3) Represents payments to certain communities surrounding Encore Boston Harbor, required as a condition of the gaming license awarded to Wynn MA, LLC.
(4) Other includes open purchase orders, future charitable contributions, fixed gaming tax payments in Macau, performance contracts and other contracts. As further discussed in Item 8—"Financial Statements and Supplementary Data," Note 13, "Income Taxes," we had $107.7 million of unrecognized tax benefits as of December 31, 2020. Due to the inherent uncertainty of the underlying tax positions, it is not practicable to assign this liability to any particular year and therefore it is not included in the table above as of December 31, 2020.
Critical Accounting Policies and Estimates
The preparation of our consolidated financial statements in conformity with GAAP involves the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements. Certain of our accounting policies require management to apply significant judgment in defining the appropriate assumptions integral to financial estimates and on an ongoing basis, management evaluates those estimates. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and therefore actual results could differ from our estimates.
Allowance for Credit Losses
A substantial portion of our outstanding receivables relates to casino credit play. Credit play, through the issuance of markers, represents a significant portion of the table games volume at our Las Vegas Operations. While offered, the issuance of credit at our Macau Operations and Encore Boston Harbor is less significant when compared to Las Vegas. Our goal is to maintain strict controls over the issuance of credit and aggressively pursue collection from those customers who fail to pay their balances in a timely fashion. These collection efforts may include the mailing of statements and delinquency notices, personal contacts, the use of outside collection agencies, and litigation. Markers issued at our Las Vegas Operations and Encore Boston Harbor are generally legally enforceable instruments in the United States, and United States assets of foreign customers may be used to satisfy judgments entered in the United States.
The enforceability of markers and other forms of credit related to gaming debt outside of the United States varies from country to country. Some foreign countries do not recognize the enforceability of gaming related debt, or make enforcement burdensome. We closely consider the likelihood and difficulty of enforceability, among other factors, when issuing credit to customers who are not residents of the United States. In addition to our internal credit and collection departments, we have a network of legal, accounting and collection professionals to assist us in our determinations regarding enforceability and our overall collection efforts.
We regularly evaluate our reserve for credit losses based on a specific review of customer accounts and outstanding gaming promoter accounts taking into consideration the amount owed, the age of the account, the customer's financial condition, 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.
The following table presents key statistics related to our casino accounts receivable (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Casino accounts receivable
|
$
|
207,823
|
|
|
$
|
304,137
|
|
Allowance for casino credit losses
|
$
|
98,035
|
|
|
$
|
37,652
|
|
Allowance as a percentage of casino accounts receivable
|
47.2
|
%
|
|
12.4
|
%
|
The increase in allowance for casino credit losses as shown in the table above 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. Our allowance for credit losses is based on our estimates of amounts collectible and depends on the risk assessments and judgments by management regarding realizability, the current and expected future state of the economy and our credit policy. Our reserve methodology is applied similarly to credit extended at each of our resorts. As of December 31, 2020 and 2019, 50.0% and 61.0%, respectively, of our outstanding casino accounts receivable balance originated at our Macau Operations, which include advances to gaming promoters, which are settled within five days of period end.
As of December 31, 2020, a 100 basis point change in the allowance for credit losses as a percentage of casino accounts receivable would change the provision for credit losses by approximately $2.1 million.
As our customer payment experience evolves, we will continue to refine our estimated allowance for credit losses. Accordingly, the associated provision for credit losses may fluctuate. Because individual customer account balances can be significant, the reserve and the provision can change significantly between periods as we become aware of additional information about a customer or changes occur in a region's economy or legal system.
Development, Construction and Property, and Equipment Estimates
During the construction and development of a resort or other projects, pre-opening or start-up costs are expensed when incurred. In connection with the construction and development of our resorts, significant start-up costs are incurred and charged to pre-opening costs through their respective openings. Once our resorts open, expenses associated with the opening of the resorts are no longer charged as pre-opening costs.
During the construction and development stage, direct costs such as those incurred for the design and construction of our resorts, including applicable portions of interest, are capitalized. Accordingly, the recorded amounts of property and equipment increase significantly during construction periods. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. We determine the estimated useful lives based on our experience with similar assets, estimates of the usage of the asset and other factors specific to the asset. Depreciation expense related to capitalized construction costs and fixed assets commences when the related assets are placed in service. The remaining estimated useful lives of assets are periodically reviewed and adjusted as necessary.
Costs of repairs and maintenance are charged to expense when incurred. The cost and accumulated depreciation of property and equipment retired or otherwise disposed of are eliminated from the respective accounts and any resulting gain or loss is included in property charges and other.
Impairment of Long-lived Assets, Intangible assets, and Goodwill
We evaluate our property and equipment and other long-lived assets for impairment in accordance with applicable accounting standards. For assets to be disposed of we recognize the asset at the lower of carrying value or fair market value less costs of disposal, as estimated based on comparable asset sales, solicited offers, or a discounted cash flow model. For assets to be held and used, we review for impairment whenever indicators of impairment exist. In reviewing for impairment, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, an impairment is recorded based on the fair value of the asset, typically measured using a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs. All recognized impairment losses, whether for assets to be disposed of or assets to be held and used, are recorded as operating expenses.
During the year ended December 31, 2020, Wynn Palace, Wynn Macau, the Company's Las Vegas Operations, and Encore Boston Harbor each experienced a significant decline in revenues, operating income, and cash provided by operations as a result of the COVID-19 pandemic as noted in Note 1, "Organization and Business." As a result, we concluded that a triggering event occurred at each of these asset groups. We tested our asset groups for recoverability as of December 31, 2020 and concluded no impairment existed at that date as the estimated undiscounted future cash flows exceeded the net carrying amount for each of the asset groups. The tests for recoverability include estimates of future cash flows and the useful lives of our primary assets. These estimates are subjective and may change should the COVID-19 pandemic, including travel restrictions and operating capacity limitations, persist longer than expected. Unfavorable changes in the Company's estimates could require an impairment charge in the future.
The Company tests goodwill for impairment as of October 1 of each year, or more frequently if events or changes in circumstances indicate that this asset may be impaired. The Company’s test of goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. For the quantitative analysis, the Company compares the fair value of its reporting unit to its carrying value. If the estimated fair value exceeds its carrying value, goodwill is considered not to be impaired and no additional steps are necessary. However, if the fair value of the reporting unit is less than book value, then under the second step the carrying amount of the goodwill is compared to its implied fair value. Prior to 2020, the Company had an immaterial amount of goodwill. Most of the Company’s goodwill recorded as of December 31, 2020 was the result of an acquisition during the fourth quarter of 2020.
Litigation and Contingency Estimates
We are subject to various claims, legal actions and other contingencies, and we accrue for these matters when they are both probable and estimable. For matters that arose on or prior to the balance sheet date, we estimate any accruals based on the relevant facts and circumstances available through the date of issuance of the financial statements. We include the accruals associated with any contingent matters in other accrued liabilities on the consolidated balance sheets.
Income Taxes
We are subject to income taxes in the United States and other foreign jurisdictions where we operate. Accounting standards require the recognition of deferred tax assets, net of applicable reserves, and liabilities for the estimated future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on the income tax provision and deferred tax assets and liabilities generally is recognized in the results of operations in the period that includes the enactment date. Accounting standards require recognition of a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied.
As of December 31, 2020, we had deferred tax assets of $3 billion including a foreign tax credit ("FTC") carryforward of $2.5 billion and a deferred tax asset related to interest expense carryforwards of $138.3 million. As of December 31, 2020, we have recorded a valuation allowance of $3.0 billion against the FTC carryforward, disallowed interest expense carryforward and the other deferred tax assets based on our estimate of future realization. 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. In this assessment, appropriate consideration was given to all positive and negative evidence including recent operating profitability, forecasts of future earnings, ability to carryback, the reversal of net taxable temporary differences, the duration of statutory carryforward periods, and tax planning strategies. As of December 31, 2020, the Company no longer relies on forecast of future taxable income due to recent tax legislation that reduces future sources of taxable income as well as the uncertainty caused by the COVID-19 pandemic and relies solely on the reversal of net taxable temporary differences.
Our income tax returns are subject to examination by the IRS and other tax authorities in the locations where we operate. We assess potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes. The accounting standards prescribe a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements.
Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a two-step approach for evaluating tax positions. The tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon settlement.
As applicable, we recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes.
Recently Adopted Accounting Standards and Accounting Standards Issued But Not Yet Adopted
See Item 8—"Financial Statements and Supplementary Data," Note 2, "Basis of Presentation and Significant Accounting Policies."
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Wynn Resorts, Limited and subsidiaries
Opinion on Internal Control Over Financial Reporting
We have audited Wynn Resorts, Limited and subsidiaries’ internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Wynn Resorts, Limited and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on the COSO criteria.
As indicated in the accompanying Management Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of BetBull, Limited, which are included in the 2020 consolidated financial statements of the Company and constituted less than 2% of total assets (goodwill constituted 1% of total assets) as of December 31, 2020 and less than 1% of operating revenues and net loss for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of BetBull, Limited.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Las Vegas, Nevada
February 26, 2021
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Wynn Resorts, Limited and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Wynn Resorts, Limited and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity (deficit) and cash flows for each of the three years in the period ended December 31, 2020, and the related notes and financial statement schedule listed in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 26, 2021 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.
Allowance for Credit Losses on Casino Receivables
|
|
|
|
|
|
Description of the Matter
|
At December 31, 2020, the Company’s allowance for credit losses on accounts receivable was $100.3 million, primarily consisting of casino receivables. As discussed in Note 2 to the consolidated financial statements, casino receivables primarily consist of credit issued to patrons in the form of markers and advances paid to gaming promoters. The Company records an estimated allowance for credit losses to reduce the Company’s receivables to their carrying amount, which reflects the net amount the Company expects to collect. The Company estimates the allowance based on specific review of customer and outstanding gaming promoter accounts taking into consideration the amount due from the patron and gaming promoters, 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.
Auditing management’s estimate of the allowance for credit losses on casino receivables is complex due to the highly judgmental nature of the qualitative factors used to estimate the collectability of casino receivables and high degree of subjectivity in evaluating management’s judgments related to the collectability of patron accounts receivable.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s allowance for credit losses process. For example, we tested controls over the issuance of markers to patrons, the collection processes and management’s review controls over the assessment of the expected collection of casino receivables and evaluation of the allowance for credit losses, including the information used by management in those controls.
To test the allowance for credit losses, our audit procedures included, among others: testing management’s historical collections analysis by obtaining evidence related to the original issuance of the credit to patrons on a sample of casino accounts receivable and examining support for subsequent settlement, if any; corroborating management’s representations for specific provisions made for certain individual casino patrons with internal data and examination of publicly available information of the customers’ financial condition; evaluating management’s assumptions regarding future collectability in comparison to current business trends, third-party macroeconomic data and peer data; and evaluating management’s use of this information in establishing the allowance for credit losses as of December 31, 2020.
In addition, we performed sensitivity analyses over the Company's significant assumptions and evaluated the overall allowance for credit losses by performing a retrospective analysis of the Company’s historical estimates, which consisted of comparing the Company’s estimates to subsequent settlements and write-offs.
|
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2006.
Las Vegas, Nevada
February 26, 2021
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
ASSETS
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
3,482,032
|
|
|
$
|
2,351,904
|
|
Accounts receivable, net of allowance for credit losses of $100,329 and $39,317
|
200,158
|
|
|
346,429
|
|
Inventories
|
66,285
|
|
|
88,519
|
|
Prepaid expenses and other
|
64,672
|
|
|
69,485
|
|
Total current assets
|
3,813,147
|
|
|
2,856,337
|
|
Property and equipment, net
|
9,196,644
|
|
|
9,623,832
|
|
Restricted cash
|
4,352
|
|
|
6,388
|
|
Goodwill and intangible assets, net
|
278,195
|
|
|
146,414
|
|
Operating lease assets
|
398,594
|
|
|
452,919
|
|
Deferred income taxes, net
|
—
|
|
|
562,262
|
|
Other assets
|
178,615
|
|
|
223,129
|
|
Total assets
|
$
|
13,869,547
|
|
|
$
|
13,871,281
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
Current liabilities:
|
|
|
|
Accounts and construction payables
|
$
|
148,478
|
|
|
$
|
262,437
|
|
Customer deposits
|
646,856
|
|
|
824,269
|
|
Gaming taxes payable
|
66,346
|
|
|
168,043
|
|
Accrued compensation and benefits
|
126,846
|
|
|
180,140
|
|
Accrued interest
|
136,421
|
|
|
73,136
|
|
Current portion of long-term debt
|
596,408
|
|
|
323,876
|
|
Other accrued liabilities
|
159,533
|
|
|
150,983
|
|
Total current liabilities
|
1,880,888
|
|
|
1,982,884
|
|
Long-term debt
|
12,469,362
|
|
|
10,079,983
|
|
Long-term operating lease liabilities
|
123,124
|
|
|
159,182
|
|
Other long-term liabilities
|
133,490
|
|
|
107,760
|
|
Total liabilities
|
14,606,864
|
|
|
12,329,809
|
|
Commitments and contingencies (Note 17)
|
|
|
|
Stockholders' equity (deficit):
|
|
|
|
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; 123,482,836 and 122,837,930 shares issued; 107,888,336 and 107,363,943 shares outstanding, respectively
|
1,235
|
|
|
1,228
|
|
Treasury stock, at cost; 15,594,500 and 15,473,987 shares, respectively
|
(1,422,531)
|
|
|
(1,410,998)
|
|
Additional paid-in capital
|
2,598,115
|
|
|
2,512,676
|
|
Accumulated other comprehensive income (loss)
|
3,604
|
|
|
(1,679)
|
|
Retained earnings (accumulated deficit)
|
(1,532,420)
|
|
|
641,818
|
|
Total Wynn Resorts, Limited stockholders' equity (deficit)
|
(351,997)
|
|
|
1,743,045
|
|
Noncontrolling interests
|
(385,320)
|
|
|
(201,573)
|
|
Total stockholders' equity (deficit)
|
(737,317)
|
|
|
1,541,472
|
|
Total liabilities and stockholders' equity (deficit)
|
$
|
13,869,547
|
|
|
$
|
13,871,281
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Operating revenues:
|
|
|
|
|
|
Casino
|
$
|
1,237,230
|
|
|
$
|
4,573,924
|
|
|
$
|
4,784,990
|
|
Rooms
|
307,973
|
|
|
804,162
|
|
|
751,800
|
|
Food and beverage
|
329,584
|
|
|
818,822
|
|
|
754,128
|
|
Entertainment, retail and other
|
221,074
|
|
|
414,191
|
|
|
426,742
|
|
Total operating revenues
|
2,095,861
|
|
|
6,611,099
|
|
|
6,717,660
|
|
Operating expenses:
|
|
|
|
|
|
Casino
|
1,064,976
|
|
|
2,924,254
|
|
|
3,036,907
|
|
Rooms
|
172,223
|
|
|
276,095
|
|
|
254,549
|
|
Food and beverage
|
398,792
|
|
|
696,498
|
|
|
611,706
|
|
Entertainment, retail and other
|
107,228
|
|
|
170,206
|
|
|
183,113
|
|
General and administrative
|
720,849
|
|
|
896,670
|
|
|
761,415
|
|
Litigation settlement
|
—
|
|
|
—
|
|
|
463,557
|
|
Provision for credit losses
|
64,375
|
|
|
21,898
|
|
|
6,527
|
|
Pre-opening
|
6,506
|
|
|
102,009
|
|
|
53,490
|
|
Depreciation and amortization
|
725,502
|
|
|
624,878
|
|
|
550,596
|
|
Property charges and other
|
67,455
|
|
|
20,286
|
|
|
60,256
|
|
Total operating expenses
|
3,327,906
|
|
|
5,732,794
|
|
|
5,982,116
|
|
Operating income (loss)
|
(1,232,045)
|
|
|
878,305
|
|
|
735,544
|
|
Other income (expense):
|
|
|
|
|
|
Interest income
|
15,384
|
|
|
24,449
|
|
|
29,866
|
|
Interest expense, net of amounts capitalized
|
(556,474)
|
|
|
(414,030)
|
|
|
(381,849)
|
|
Change in derivatives fair value
|
(13,060)
|
|
|
(3,228)
|
|
|
(4,520)
|
|
Change in Redemption Note fair value
|
—
|
|
|
—
|
|
|
(69,331)
|
|
(Loss) gain on extinguishment of debt
|
(4,601)
|
|
|
(12,437)
|
|
|
104
|
|
Other
|
28,521
|
|
|
15,159
|
|
|
(4,074)
|
|
Other income (expense), net
|
(530,230)
|
|
|
(390,087)
|
|
|
(429,804)
|
|
Income (loss) before income taxes
|
(1,762,275)
|
|
|
488,218
|
|
|
305,740
|
|
(Provision) benefit for income taxes
|
(564,671)
|
|
|
(176,840)
|
|
|
497,344
|
|
Net income (loss)
|
(2,326,946)
|
|
|
311,378
|
|
|
803,084
|
|
Less: net (income) loss attributable to noncontrolling interests
|
259,701
|
|
|
(188,393)
|
|
|
(230,654)
|
|
Net income (loss) attributable to Wynn Resorts, Limited
|
$
|
(2,067,245)
|
|
|
$
|
122,985
|
|
|
$
|
572,430
|
|
Basic and diluted net income (loss) per common share:
|
|
|
|
|
|
Net income (loss) attributable to Wynn Resorts, Limited:
|
|
|
|
|
|
Basic
|
$
|
(19.37)
|
|
|
$
|
1.15
|
|
|
$
|
5.37
|
|
Diluted
|
$
|
(19.37)
|
|
|
$
|
1.15
|
|
|
$
|
5.35
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
Basic
|
106,745
|
|
|
106,745
|
|
|
106,529
|
|
Diluted
|
106,745
|
|
|
106,985
|
|
|
107,032
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Net income (loss)
|
$
|
(2,326,946)
|
|
|
$
|
311,378
|
|
|
$
|
803,084
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
Foreign currency translation adjustments, before and after tax
|
7,367
|
|
|
376
|
|
|
(1,936)
|
|
Change in net unrealized loss on investment securities, before and after tax
|
—
|
|
|
—
|
|
|
1,292
|
|
Redemption Note credit risk adjustment, net of tax of $2,735
|
—
|
|
|
—
|
|
|
9,211
|
|
Total comprehensive income (loss)
|
(2,319,579)
|
|
|
311,754
|
|
|
811,651
|
|
Less: comprehensive (income) loss attributable to noncontrolling interests
|
257,617
|
|
|
(188,498)
|
|
|
(230,115)
|
|
Comprehensive income (loss) attributable to Wynn Resorts, Limited
|
$
|
(2,061,962)
|
|
|
$
|
123,256
|
|
|
$
|
581,536
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
|
Par
value
|
|
Treasury
stock
|
|
Additional
paid-in
capital
|
|
Accumulated
other
comprehensive
income (loss)
|
|
Retained
earnings (accumulated deficit)
|
|
Total
Wynn Resorts, Limited
stockholders'
equity (deficit)
|
|
Noncontrolling
interests
|
|
Total stockholders'
equity (deficit)
|
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
572,430
|
|
|
572,430
|
|
|
230,654
|
|
|
803,084
|
|
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,397)
|
|
|
—
|
|
|
(1,397)
|
|
|
(539)
|
|
|
(1,936)
|
|
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
|
261,470
|
|
|
2
|
|
|
—
|
|
|
21,463
|
|
|
—
|
|
|
—
|
|
|
21,465
|
|
|
506
|
|
|
21,971
|
|
Issuance of common stock
|
5,300,000
|
|
|
53
|
|
|
—
|
|
|
915,187
|
|
|
—
|
|
|
—
|
|
|
915,240
|
|
|
—
|
|
|
915,240
|
|
Issuance of restricted stock
|
288,270
|
|
|
3
|
|
|
—
|
|
|
1,295
|
|
|
—
|
|
|
—
|
|
|
1,298
|
|
|
501
|
|
|
1,799
|
|
Cancellation of restricted stock
|
(125,908)
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Shares repurchased by the Company and held as treasury shares
|
(1,497,672)
|
|
|
—
|
|
|
(159,544)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(159,544)
|
|
|
—
|
|
|
(159,544)
|
|
Shares of subsidiary repurchased for share award plan
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,497)
|
|
|
—
|
|
|
—
|
|
|
(4,497)
|
|
|
(1,735)
|
|
|
(6,232)
|
|
Cash dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(294,923)
|
|
|
(294,923)
|
|
|
(276,528)
|
|
|
(571,451)
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(305,372)
|
|
|
(305,372)
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
25,702
|
|
|
—
|
|
|
—
|
|
|
25,702
|
|
|
2,675
|
|
|
28,377
|
|
Balances, December 31, 2018
|
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122,985
|
|
|
122,985
|
|
|
188,393
|
|
|
311,378
|
|
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
—
|
|
|
271
|
|
|
105
|
|
|
376
|
|
Exercise of stock options
|
293,690
|
|
|
3
|
|
|
—
|
|
|
14,693
|
|
|
—
|
|
|
—
|
|
|
14,696
|
|
|
—
|
|
|
14,696
|
|
Issuance of restricted stock
|
472,480
|
|
|
5
|
|
|
—
|
|
|
14,343
|
|
|
—
|
|
|
—
|
|
|
14,348
|
|
|
785
|
|
|
15,133
|
|
Cancellation of restricted stock
|
(43,825)
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Shares repurchased by the Company and held as treasury shares
|
(590,428)
|
|
|
—
|
|
|
(66,986)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(66,986)
|
|
|
—
|
|
|
(66,986)
|
|
Shares of subsidiary repurchased for share award plan
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,885)
|
|
|
—
|
|
|
—
|
|
|
(3,885)
|
|
|
(1,499)
|
|
|
(5,384)
|
|
Cash dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(402,952)
|
|
|
(402,952)
|
|
|
(165,835)
|
|
|
(568,787)
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,745)
|
|
|
(7,745)
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
30,445
|
|
|
—
|
|
|
—
|
|
|
30,445
|
|
|
3,557
|
|
|
34,002
|
|
Balances, December 31, 2019
|
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
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,067,245)
|
|
|
(2,067,245)
|
|
|
(259,701)
|
|
|
(2,326,946)
|
|
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,283
|
|
|
—
|
|
|
5,283
|
|
|
2,084
|
|
|
7,367
|
|
Issuance of restricted stock
|
886,014
|
|
|
9
|
|
|
—
|
|
|
6,711
|
|
|
—
|
|
|
—
|
|
|
6,720
|
|
|
823
|
|
|
7,543
|
|
Cancellation of restricted stock
|
(241,108)
|
|
|
(2)
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Shares repurchased by the Company and held as treasury shares
|
(120,513)
|
|
|
—
|
|
|
(11,533)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,533)
|
|
|
—
|
|
|
(11,533)
|
|
Cash dividends declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(106,993)
|
|
|
(106,993)
|
|
|
44
|
|
|
(106,949)
|
|
Wynn Interactive transactions
|
—
|
|
|
—
|
|
|
—
|
|
|
26,262
|
|
|
—
|
|
|
—
|
|
|
26,262
|
|
|
73,768
|
|
|
100,030
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,238)
|
|
|
(6,238)
|
|
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
52,464
|
|
|
—
|
|
|
—
|
|
|
52,464
|
|
|
5,473
|
|
|
57,937
|
|
Balances, December 31, 2020
|
107,888,336
|
|
|
$
|
1,235
|
|
|
$
|
(1,422,531)
|
|
|
$
|
2,598,115
|
|
|
$
|
3,604
|
|
|
$
|
(1,532,420)
|
|
|
$
|
(351,997)
|
|
|
$
|
(385,320)
|
|
|
$
|
(737,317)
|
|
The accompanying notes are an integral part of these consolidated financial statements.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Cash flows from operating activities:
|
|
|
|
|
|
Net income (loss)
|
$
|
(2,326,946)
|
|
|
$
|
311,378
|
|
|
$
|
803,084
|
|
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
725,502
|
|
|
624,878
|
|
|
550,596
|
|
Deferred income taxes
|
562,484
|
|
|
174,190
|
|
|
(498,654)
|
|
Stock-based compensation expense
|
62,254
|
|
|
40,372
|
|
|
35,040
|
|
Amortization of debt issuance costs
|
28,932
|
|
|
28,954
|
|
|
36,917
|
|
Loss on extinguishment of debt
|
4,601
|
|
|
12,437
|
|
|
4,391
|
|
Provision for credit losses
|
64,375
|
|
|
21,898
|
|
|
6,527
|
|
Change in derivatives fair value
|
13,060
|
|
|
3,228
|
|
|
4,520
|
|
Change in Redemption Note fair value
|
—
|
|
|
—
|
|
|
69,331
|
|
Property charges and other
|
38,933
|
|
|
5,122
|
|
|
56,974
|
|
Increase (decrease) in cash from changes in:
|
|
|
|
|
|
Receivables, net
|
81,646
|
|
|
(86,712)
|
|
|
(59,157)
|
|
Inventories, prepaid expenses and other
|
27,660
|
|
|
(37,907)
|
|
|
(5,212)
|
|
Customer deposits
|
(192,451)
|
|
|
(134,858)
|
|
|
(92,395)
|
|
Accounts payable and accrued expenses
|
(162,475)
|
|
|
(61,910)
|
|
|
49,527
|
|
Net cash (used in) provided by operating activities
|
(1,072,425)
|
|
|
901,070
|
|
|
961,489
|
|
Cash flows from investing activities:
|
|
|
|
|
|
Capital expenditures, net of construction payables and retention
|
(290,115)
|
|
|
(1,063,293)
|
|
|
(1,475,972)
|
|
Purchase of intangible and other assets
|
—
|
|
|
(6,000)
|
|
|
(126,414)
|
|
Proceeds from the sale or maturity of investment securities
|
—
|
|
|
—
|
|
|
359,461
|
|
Purchase of investment securities
|
—
|
|
|
—
|
|
|
(34,098)
|
|
Cash acquired from business combination
|
4,604
|
|
|
—
|
|
|
—
|
|
Proceeds from sale of assets and other
|
19,752
|
|
|
695
|
|
|
54,213
|
|
Net cash used in investing activities
|
(265,759)
|
|
|
(1,068,598)
|
|
|
(1,222,810)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
Proceeds from issuance of long-term debt
|
4,691,953
|
|
|
3,893,778
|
|
|
2,788,925
|
|
Repayments of long-term debt
|
(2,035,354)
|
|
|
(2,930,015)
|
|
|
(3,032,267)
|
|
Proceeds from note receivable from sale of ownership interest in subsidiary
|
—
|
|
|
—
|
|
|
75,000
|
|
Proceeds from issuance of common stock, net of issuance costs
|
—
|
|
|
—
|
|
|
915,240
|
|
Repurchase of common stock
|
(11,533)
|
|
|
(66,986)
|
|
|
(159,544)
|
|
Finance lease payments
|
(5,916)
|
|
|
(73)
|
|
|
—
|
|
Proceeds from exercise of stock options
|
70
|
|
|
14,696
|
|
|
21,971
|
|
Shares of subsidiary repurchased for share award plan
|
—
|
|
|
(5,384)
|
|
|
(6,232)
|
|
Dividends paid
|
(108,777)
|
|
|
(566,521)
|
|
|
(569,781)
|
|
Distributions to noncontrolling interest
|
(6,238)
|
|
|
(7,745)
|
|
|
(305,372)
|
|
Payments for additional ownership interest in Wynn Interactive
|
(33,621)
|
|
|
—
|
|
|
—
|
|
Payment to acquire derivatives
|
—
|
|
|
—
|
|
|
(3,900)
|
|
Payments for financing costs
|
(27,339)
|
|
|
(32,738)
|
|
|
(48,297)
|
|
Net cash provided by (used in) financing activities
|
2,463,245
|
|
|
299,012
|
|
|
(324,257)
|
|
Effect of exchange rate on cash, cash equivalents and restricted cash
|
3,031
|
|
|
7,485
|
|
|
(1,733)
|
|
Cash, cash equivalents and restricted cash:
|
|
|
|
|
|
Increase (decrease) in cash, cash equivalents and restricted cash
|
1,128,092
|
|
|
138,969
|
|
|
(587,311)
|
|
Balance, beginning of period
|
2,358,292
|
|
|
2,219,323
|
|
|
2,806,634
|
|
Balance, end of period
|
$
|
3,486,384
|
|
|
$
|
2,358,292
|
|
|
$
|
2,219,323
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures
|
|
|
|
|
|
Cash paid for interest, net of amounts capitalized
|
$
|
463,458
|
|
|
$
|
373,052
|
|
|
$
|
378,023
|
|
Capitalized stock-based compensation
|
$
|
2,212
|
|
|
$
|
350
|
|
|
$
|
11
|
|
Cash paid for income taxes (income tax refunds received)
|
$
|
1,433
|
|
|
$
|
(16,811)
|
|
|
$
|
1,885
|
|
Property and equipment acquired under finance leases
|
$
|
56,215
|
|
|
$
|
1,413
|
|
|
$
|
—
|
|
Liability settled with shares of common stock
|
$
|
6,720
|
|
|
$
|
15,134
|
|
|
$
|
1,800
|
|
Accounts and construction payables related to property and equipment
|
$
|
62,956
|
|
|
$
|
163,471
|
|
|
$
|
202,981
|
|
Other liabilities related to intangible assets
|
$
|
13,822
|
|
|
$
|
13,945
|
|
|
$
|
—
|
|
Financing costs included in accounts payable and other liabilities
|
$
|
3,116
|
|
|
$
|
1,857
|
|
|
$
|
—
|
|
Dividends payable on unvested restricted stock included in other accrued liabilities
|
$
|
3,564
|
|
|
$
|
6,690
|
|
|
$
|
4,375
|
|
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Organization and Business
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.
In October 2020, Wynn Interactive Ltd. ("Wynn Interactive") was formed through the merger (the "BetBull Acquisition") of Wynn Resorts' digital gaming businesses and Wynn Resorts' strategic partner, BetBull Limited ("BetBull"). The merger was effected through a series of transactions which resulted in the Company contributing to BetBull its interests in WSI US, LLC and Wynn Social Gaming, LLC, which operate Wynn Resorts' existing U.S. online sports betting and gaming business and social casino business, respectively. Following the merger, Wynn Resorts holds an approximately 72% controlling interest in Wynn Interactive. The results of its operations are presented within Corporate and other in the accompanying consolidated financial statements, except where otherwise noted. For more information on the Betbull Acquisition, see Note 19, "Business Combination."
Macau Operations
Wynn Palace, which opened in August 2016, features a luxury hotel tower with 1,706 guest rooms, suites and villas, approximately 424,000 square feet of casino space, 14 food and beverage outlets, approximately 37,000 square feet of meeting and convention space, approximately 107,000 square feet of retail space, public attractions including a performance lake and floral art displays, and recreation and leisure facilities.
Wynn Macau features two luxury hotel towers with a total of 1,010 guest rooms and suites, approximately 252,000 square feet of casino space, 12 food and beverage outlets, approximately 31,000 square feet of meeting and convention space, approximately 59,000 square feet of retail space, a rotunda show and recreation and leisure facilities.
Las Vegas Operations
Wynn Las Vegas features two luxury hotel towers with a total of 4,748 guest rooms, suites and villas, approximately 194,000 square feet of casino space, 31 food and beverage outlets, approximately 513,000 square feet of meeting and convention space, approximately 152,000 square feet of retail space (the majority of which is owned and operated under a joint venture of which the Company owns 50.1%), as well as two theaters, three nightclubs and a beach club and recreation and leisure facilities.
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. The property features a luxury hotel tower with a total of 671 guest rooms and suites, approximately 208,000 square feet of casino space, 16 food and beverage outlets, approximately 71,000 square feet of meeting and convention space, and approximately 8,000 square feet of retail space. Public attractions include a waterfront park, floral displays, and water shuttle service to downtown Boston.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Recent Developments Related to COVID-19
In January 2020, 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. Several vaccines have been granted authorizations in numerous countries and vaccines are being rolled out to citizens based on their priority of need. There can be no assurance as to when a sufficient number of individuals will be vaccinated, permitting travel restrictions to be lifted.
Macau Operations
In response to the COVID-19 pandemic, casino operations in Macau were closed for a 15-day period in February 2020 and resumed on a reduced basis on February 20, 2020. On March 20, 2020 casino operations were fully restored; however, certain COVID-19 specific protective measures, such as limiting the number of seats per table game, increasing the spacing between active slot machines and visitor entry checks and requirements involving temperature checkpoints, mask wearing, health declarations and proof of negative COVID-19 test results remain in effect at the present time.
Visitation to Macau has fallen significantly since the outbreak of COVID-19, driven by the strong deterrent effect of the COVID-19 Pandemic on travel and social activities, the suspension or reduced availability of the Individual Visit Scheme (the “IVS”), group tour scheme and other travel visas for visitors, quarantine measures in Macau and elsewhere, travel and entry restrictions and conditions in Macau, the PRC, Hong Kong and Taiwan involving COVID-19 testing, among other things, and the suspension or reduced accessibility of transportation to and from Macau. At present, bans on entry or enhanced quarantine requirements remain in place for people attempting to enter Macau, depending on various conditions such as the usual visa requirements, their COVID-19 test results, purpose of visit, recent travel history and/or other conditions as applicable.
While many aspects of these travel restrictions and conditions continue to adversely impact visitations to Macau, beginning in June 2020 certain restrictions and conditions have eased to allow for visitation to Macau as certain regions recover from the COVID-19 pandemic. Quarantine-free travel, subject to COVID-19 safeguards such as testing and the usual visa requirements, was reintroduced between Macau and an increasing number of areas and cities within the PRC in progressive phases from June to August 2020, commencing with an area in Guangdong Province, which is adjacent to Macau, and expanding to additional areas and major cities within Guangdong Province, followed by most other areas of the PRC. On September 23, 2020, PRC authorities fully resumed the IVS exit visa program, which permits individual PRC citizens from nearly 50 PRC cities to travel to Macau for tourism purposes.
Notwithstanding these developments, certain border control, travel-related restrictions and conditions, including certain quarantine and medical observation measures, stringent health declarations, COVID-19 testing and other procedures remain in place, and all visitors need to test negative for COVID-19 before entering Macau.
Given the evolving conditions created by and in response to the COVID-19 pandemic, the Company is currently unable to determine when travel-related restrictions and conditions will be further lifted. Measures that have been lifted or are expected to be lifted may be reintroduced if there are adverse developments in the COVID-19 situation in Macau and other regions with access to Macau.
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 number of seats per table game, slot machine spacing, temperature checks, mask protection, and suspension of certain entertainment and nightlife offerings. Beginning October 19, 2020, Encore at Wynn Las Vegas adjusted its operating schedule to five days/four nights each week due to currently reduced customer demand levels.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Encore Boston Harbor ceased all operations and closed to the public on March 15, 2020, and reopened on July 10, 2020 with certain COVID-19 specific protective measures in place, such as limiting the number of seats per table game, slot machine spacing, temperature checks, capacity restrictions, and mask protection. Subsequent to reopening, certain food and beverage outlets have remained temporarily closed and our hotel operations were limited to Thursday through Sunday. On November 6, 2020, pursuant to a Massachusetts directive implementing an overnight curfew on certain businesses, Encore Boston Harbor limited its daily operating hours and temporarily closed the hotel tower. On January 25, 2021, the limitations on operating hours were lifted, and Encore Boston Harbor restored certain operations and reopened its hotel tower on a Thursday through Sunday weekly schedule. The protective measures, including capacity restrictions, are still in place. The Company is currently unable to determine when the remaining measures will be lifted.
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 December 31, 2020, the Company had total cash and cash equivalents, excluding restricted cash, of $3.48 billion, and had access to $117.9 million of available borrowing capacity from the WRF Revolving Facility and $343.5 million of available borrowing capacity from the Wynn Macau Revolving Facility. The Company has suspended its dividend program and has postponed major project capital expenditures. In addition, the Company raised $842.5 million in an equity offering in February 2021. Given the Company's liquidity position at December 31, 2020 and the steps the Company has taken as further described in Note 7, "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 and Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and 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 18, "Retail Joint Venture." All significant intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or less and include both U.S. dollar-denominated and foreign currency-denominated securities. Cash equivalents are carried at cost, which approximates fair value. Restricted cash consists of cash collateral associated with obligations and cash held in a trust in accordance with WML's share award plan.
Accounts Receivable and Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of casino accounts receivable. The Company issues credit in the form of "markers" to approved casino customers following investigations of creditworthiness.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 taking into consideration the amount owed, the age of the account, the customer's financial condition, 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.
Inventories
Inventories consist of retail merchandise and food and beverage items, which are stated at the lower of cost or net realizable value, and certain operating supplies. Cost is determined by the first-in, first-out, weighted average and specific identification methods.
Property and Equipment
Purchases of property and equipment are stated at cost, and when placed into service, are depreciated over the estimated useful lives of the assets using the straight-line method as follows:
|
|
|
|
|
|
|
Estimated Useful Life in Years
|
Buildings and improvements
|
10 - 45
|
Land improvements
|
10 - 45
|
Furniture, fixtures and equipment
|
3 - 20
|
Leasehold interest in land
|
25
|
Airplanes
|
20
|
Costs related to improvements are capitalized, while costs of repairs and maintenance are charged to expense as incurred. The cost and accumulated depreciation of property and equipment retired or otherwise disposed of are eliminated from the respective accounts and any resulting gain or loss is included in property charges and other.
Capitalized Interest
The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. Interest capitalization ceases once a project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. When no debt is specifically identified as being incurred in connection with a construction project, the Company capitalizes interest on amounts expended on the project using the weighted average cost of the Company's outstanding borrowings. Interest of $1.3 million, $53.9 million, and $57.3 million was capitalized for the years ended December 31, 2020, 2019, and 2018, respectively.
Business Combinations
The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values in accordance with the applicable accounting standards. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes estimates and assumptions to determine the fair value of intangible assets.
Estimates in valuing certain intangible assets include, but are not limited to future expected cash flows from acquired technology and acquired trademarks from a market participant perspective, useful lives, and discount rates. Management’s
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.
During the measurement period, which is not to exceed one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to the Consolidated Statements of Operations.
Goodwill
Goodwill represents the excess of the purchase price in a business combination over the fair value of the tangible and intangible assets acquired and the liabilities assumed. Goodwill is not amortized, but rather is subject to an annual impairment test.
The Company tests goodwill for impairment as of October 1 of each year, or more frequently if events or changes in circumstances indicate that this asset may be impaired. The Company’s test of goodwill impairment starts with a qualitative assessment to determine whether it is necessary to perform a quantitative goodwill impairment test. If qualitative factors indicate that the fair value of the reporting unit is more likely than not less than its carrying amount, then a quantitative goodwill impairment test is performed. For the quantitative analysis, the Company compares the fair value of its reporting unit to its carrying value. If the estimated fair value exceeds its carrying value, goodwill is considered not to be impaired and no additional steps are necessary. However, if the fair value of the reporting unit is less than book value, then under the second step the carrying amount of the goodwill is compared to its implied fair value.
Intangible Assets other than goodwill
The Company's intangible assets other than goodwill consist primarily of finite-lived intangible assets, including its Macau gaming concession and Massachusetts gaming license. Finite-lived intangible assets are amortized over the shorter of their contractual terms or estimated useful lives. The Company's indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually.
Long-Lived Assets
Long-lived assets, which are to be held and used, including finite-lived intangible assets and property and equipment, are periodically reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model. If an asset is still under development, future cash flows include remaining construction costs.
Leases
Lessee Arrangements
The Company is the lessee under non-cancelable real estate and equipment leases. Operating lease assets and liabilities are measured and 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.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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, 140,000, and 35,500 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. Lease revenue includes the impact of rent concessions provided to tenants at the Company's Macau operations due to the adverse effects of the COVID-19 pandemic and is recorded in Entertainment, retail and other revenue in the accompanying Consolidated Statements of Operations.
Debt Issuance Costs
Direct and incremental costs and original issue discounts and premiums incurred in connection with the issuance of long-term debt are deferred and amortized to interest expense using the effective interest method or, if the amounts approximate the effective interest method, on a straight-line basis. Debt issuance costs incurred in connection with the issuance of the Company's revolving credit facilities are presented in noncurrent assets on the Consolidated Balance Sheets. All other debt issuance costs are presented as a direct reduction of long-term debt on the Consolidated Balance Sheets. Approximately $28.9 million, $29.0 million, and $36.9 million was amortized to interest expense during the years ended December 31, 2020, 2019, and 2018, respectively.
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") with a principal amount of $1.94 billion, a maturity date of February 18, 2022 and an interest rate of 2% per annum, payable annually 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.
In determining this fair value, the Company estimated the Redemption Note's present value using discounted cash flows with a probability weighted expected return for redemption assumptions and a discount rate, which included time value and non-performance risk adjustments commensurate with the risk of the Redemption Note.
In determining the appropriate discount rate to be used to calculate the estimated present value, the Company considered the Redemption Note's subordinated position and credit risk relative to all other debt in the Company's capital structure and credit ratings associated with the Company's traded debt. Observable inputs for the risk free rate were based on Federal Reserve rates for U.S. Treasury securities and the credit risk spread was based on a yield curve index of similarly rated debt.
Derivative Financial Instruments
The Company has an interest rate collar to manage interest rate exposure on its Retail Term Loan (as defined in Note 7, "Long-Term Debt"). The Company measures the fair value of the interest rate collar at each balance sheet date based on a Black-Scholes option pricing model, which incorporates observable market inputs such as market volatility and interest rates. The fair value of the interest rate collar is recognized as an asset or liability at each balance sheet date, with changes in fair value recorded in earnings as the Company's interest rate collar does not qualify for hedge accounting. The fair value approximates the amount the Company would pay if the interest rate collar was settled at the respective valuation date.
Revenue Recognition
The Company's revenue from contracts with customers primarily consists of casino wagers and sales of rooms, food and beverage, entertainment, retail and other goods and services.
Gross casino revenues are measured by the aggregate net difference between gaming wins and losses. The Company applies a practical expedient by accounting for its casino wagering transactions on a portfolio basis versus an individual basis as all wagers have similar characteristics. Commissions rebated to customers either directly or indirectly through games promoters
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
and cash discounts and other cash incentives earned by customers are recorded as a reduction of casino revenues. In addition to the wager, casino transactions typically include performance obligations related to complimentary goods or services provided to incentivize future gaming or in exchange for points earned under the Company's loyalty programs.
For casino transactions that include complimentary goods or services provided by the Company to incentivize future gaming, the Company allocates the standalone selling price of each good or service to the appropriate revenue type based on the good or service provided. Complimentary goods or services that are provided under the Company's control and discretion and supplied by third parties are recorded as an operating expense.
The Company offers loyalty programs at each of its resorts. Customers earn points based on their level of table games and slots play, which can be redeemed for slots free play, gifts and complimentary goods or services provided by the Company. For casino transactions that include points earned under the Company's loyalty programs, the Company defers a portion of the revenue by recording the estimated standalone selling price of the earned points that are expected to be redeemed as a liability.
Upon redemption of the points for Company-owned goods or services, the standalone selling price of each good or service is allocated to the appropriate revenue type based on the good or service provided. Upon the redemption of points with third parties, the redemption amount is deducted from the liability and paid directly to the third party with any difference between the amount paid and the stand-alone selling price recorded as Entertainment, retail and other revenue in the accompanying Consolidated Statements of Operations.
After allocating amounts to the complimentary goods or services provided and to the points earned under the Company's loyalty programs, the residual amount is recorded as casino revenue when the wager is settled.
The transaction price for rooms, food and beverage, entertainment, retail and other transactions is the net amount collected from the customer for such goods and services and is recorded as revenue when the goods are provided, services are performed or events are held. Sales tax and other applicable taxes collected by the Company are excluded from revenues. Advance deposits on rooms and advance ticket sales are performance obligations that are recorded as customer deposits until services are provided to the customer. Revenues from contracts with multiple goods or services are allocated to each good or service based on its relative standalone selling price. As previously noted, Entertainment, retail and other revenue also includes lease revenue, which is recognized in accordance with the relevant accounting principles.
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 Consolidated Statements of Operations. These taxes totaled $527.5 million, $2.24 billion, and $2.44 billion for the years ended December 31, 2020, 2019, and 2018, respectively.
Advertising Costs
The cost of advertising is expensed as incurred, and totaled $28.3 million, $61.3 million, and $40.6 million for the years ended December 31, 2020, 2019, and 2018, 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 years ended December 31, 2020, the Company incurred pre-opening expenses primarily in connection with restaurant remodels at our Las Vegas Operations and the meeting and convention expansion at Wynn Las Vegas, which opened in February 2020. During the years ended December 31, 2019, and 2018, the Company incurred pre-opening expenses primarily in connection with the development of Encore Boston Harbor.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Income Taxes
The Company is subject to income taxes in the U.S. and foreign jurisdictions where it operates. Accounting standards require the recognition of deferred tax assets, net of applicable reserves, and liabilities for the estimated future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on the income tax provision and deferred tax assets and liabilities generally is recognized in the results of operations in the period that includes the enactment date. Accounting standards also require recognition of a future tax benefit to the extent that realization of such benefit is more likely than not; otherwise, a valuation allowance is applied.
The Company's income tax returns are subject to examination by the Internal Revenue Service ("IRS") and other tax authorities in the locations where it operates. The Company assesses potentially unfavorable outcomes of such examinations based on accounting standards for uncertain income taxes. The accounting standards prescribe a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.
Uncertain tax position accounting standards apply to all tax positions related to income taxes. These accounting standards utilize a two-step approach for evaluating tax positions. If a tax position, based on its technical merits, is deemed more likely than not to be sustained, then the tax benefit is measured as the largest amount of benefit that is more likely than not to be realized upon settlement.
As applicable, the Company will recognize accrued penalties and interest related to unrecognized tax benefits in the provision for income taxes.
Foreign Currency
Gains or losses from foreign currency remeasurements are included in Other income (expense) in the accompanying Consolidated Statements of Operations. Balance sheet accounts are translated at the exchange rate in effect at each balance sheet date and income statement accounts are translated at the average rate of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss).
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and all other non-stockholder changes in equity or other comprehensive income (loss). Components of the Company's comprehensive income (loss) are reported in the accompanying Consolidated Statements of Stockholders' Equity (Deficit) and Consolidated Statements of Comprehensive Income (Loss).
Fair Value Measurements
The Company measures certain of its financial assets and liabilities, at fair value on a recurring basis pursuant to accounting standards for fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. These accounting standards establish a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers include:
•Level 1 - Observable inputs such as quoted prices in active markets.
•Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable.
•Level 3 - Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Stock-Based Compensation
The Company accounts for stock-based compensation in accordance with accounting standards, which require the compensation cost relating to share-based payment transactions be recognized in the Company's Consolidated Statements of Operations. The cost is measured at the grant date, based on the estimated fair value of the award using the Black-Scholes option pricing model for stock options, and based on the closing share price of the Company's stock on the grant date for
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
nonvested share awards. Dividend yield is based on the estimate of annual dividends expected to be paid at the time of the grant. Expected volatility is based on implied and historical factors related to the Company's common stock. The risk-free interest rate used for each period presented is based on the U.S. Treasury yield curve for stock options issued under the Wynn Resorts Omnibus Plan and Wynn Interactive Omnibus Plan (as defined and discussed in Note 12, "Stock-Based Compensation") and the Hong Kong Exchange Fund rates for stock options issued under the Share Option Plan (as defined in Note 12, "Stock-Based Compensation"), both at the time of grant for the period equal to the expected term. Expected term represents the weighted average time between the option's grant date and its exercise date. The Company uses historical award exercise activity and termination activity in estimating the expected term for the Omnibus Plan and Share Option Plan. The cost is recognized as an expense on a straight-line basis over the employee's requisite service period (the vesting period of the award), and forfeitures are recognized as they occur. The Company's stock-based employee compensation arrangements are more fully discussed in Note 12, "Stock-Based Compensation."
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. Application of the amendments is through a cumulative-effect adjustment to retained earnings. The Company adopted the guidance effective January 1, 2020, and this adoption did not have a material effect on its Consolidated Financial Statements.
Note 3 - Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Cash and cash equivalents:
|
|
|
|
Cash (1)
|
$
|
2,501,452
|
|
|
$
|
1,265,502
|
|
Cash equivalents (2)
|
980,580
|
|
|
1,086,402
|
|
Total cash and cash equivalents
|
3,482,032
|
|
|
2,351,904
|
|
Restricted cash (3)
|
4,352
|
|
|
6,388
|
|
Total cash, cash equivalents and restricted cash
|
$
|
3,486,384
|
|
|
$
|
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.
Note 4 - Receivables, net
Receivables, net consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Casino
|
$
|
207,823
|
|
|
$
|
304,137
|
|
Hotel
|
7,075
|
|
|
22,114
|
|
Other
|
85,589
|
|
|
59,495
|
|
|
300,487
|
|
|
385,746
|
|
Less: allowance for credit losses
|
(100,329)
|
|
|
(39,317)
|
|
|
$
|
200,158
|
|
|
$
|
346,429
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
As of December 31, 2020 and 2019, approximately 77.3% 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’s allowance for casino credit losses was 47.2% and 12.4% of gross casino receivables as of December 31, 2020 and 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.
The following table shows the movement in the Company's allowance for credit losses recognized for receivables that occurred during the period (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Balance at beginning of year
|
$
|
39,317
|
|
|
$
|
32,694
|
|
Provision for credit losses
|
64,375
|
|
|
21,898
|
|
Write-offs
|
(4,692)
|
|
|
(15,438)
|
|
Recoveries of receivables previously written-off
|
1,264
|
|
|
84
|
|
Effect of exchange rate
|
65
|
|
|
79
|
|
Balance at end of period
|
$
|
100,329
|
|
|
$
|
39,317
|
|
Note 5 - Property and Equipment, net
Property and equipment, net consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Buildings and improvements
|
$
|
9,758,846
|
|
|
$
|
9,367,241
|
|
Land and improvements
|
1,265,510
|
|
|
1,246,679
|
|
Furniture, fixtures and equipment
|
3,093,481
|
|
|
2,932,483
|
|
Airplanes
|
110,623
|
|
|
110,623
|
|
Construction in progress
|
136,390
|
|
|
477,333
|
|
|
14,364,850
|
|
|
14,134,359
|
|
Less: accumulated depreciation
|
(5,168,206)
|
|
|
(4,510,527)
|
|
|
$
|
9,196,644
|
|
|
$
|
9,623,832
|
|
As of December 31, 2020, construction in progress consisted primarily of costs capitalized for various capital enhancements at our properties. As of December 31, 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, which was placed into service during the first quarter of 2020.
Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $699.6 million, $602.9 million, and $546.1 million, respectively.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 6 - Goodwill and Intangible Assets, net
Goodwill and intangible assets, net consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Finite-lived intangible assets:
|
|
|
|
Macau gaming concession
|
$
|
42,300
|
|
|
$
|
42,300
|
|
Less: accumulated amortization
|
(38,731)
|
|
|
(36,348)
|
|
|
3,569
|
|
|
5,952
|
|
|
|
|
|
Massachusetts gaming license
|
117,700
|
|
|
117,700
|
|
Less: accumulated amortization
|
(11,944)
|
|
|
(4,098)
|
|
|
105,756
|
|
|
113,602
|
|
|
|
|
|
Other finite-lived intangible assets
|
16,998
|
|
|
—
|
|
Less: accumulated amortization
|
(620)
|
|
|
—
|
|
|
16,378
|
|
|
—
|
|
|
|
|
|
Total finite-lived intangible assets
|
125,703
|
|
|
119,554
|
|
|
|
|
|
Indefinite-lived intangible assets:
|
|
|
|
Water rights and other
|
8,397
|
|
|
8,397
|
|
Total indefinite-lived intangible assets
|
8,397
|
|
|
8,397
|
|
|
|
|
|
Goodwill:
|
|
|
|
Balance at beginning of year
|
18,463
|
|
|
—
|
|
Acquisitions
|
121,039
|
|
|
18,463
|
|
Foreign currency translation
|
4,593
|
|
|
—
|
|
Balance end of period
|
144,095
|
|
|
18,463
|
|
|
|
|
|
Total goodwill and intangible assets, net
|
$
|
278,195
|
|
|
$
|
146,414
|
|
The Macau gaming concession is a finite-lived intangible asset that is being amortized over the 20 year life of the concession. The Company expects that amortization of the Macau gaming concession will be $2.4 million in 2021 and $1.2 million in 2022.
The Massachusetts gaming license is a finite-lived intangible asset that is being amortized over the 15 year life of the license. The Company expects that amortization of the Massachusetts gaming license will be $7.8 million each year from 2021 through 2033, and $3.7 million in 2034.
The Other finite-lived intangible assets consist of trademarks and customer lists acquired in connection with the Betbull Acquisition and are being amortized over ten and three years, respectively. For more information on the Betbull Acquisition, see Note 19, "Business Combination." The Company expects that amortization of Other intangible assets will be $3.4 million each year from 2021 through 2022, $2.9 million for 2023, and approximately $1.0 million each year from 2024 through 2030.
The Company recognized goodwill of $121.0 million in 2020 in connection with the Betbull Acquisition, and the Company recognized $18.5 million of goodwill related to an insignificant acquisition in 2019. Goodwill is included in Corporate and other as of December 31, 2020 and 2019.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 7 - Long-Term Debt
Long-term debt consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Macau Related:
|
|
|
|
Wynn Macau Credit Facilities (1):
|
|
|
|
Wynn Macau Term Loan, due 2022 (2)
|
$
|
1,268,106
|
|
|
$
|
2,302,540
|
|
Wynn Macau Revolver, due 2022 (3)
|
407,443
|
|
|
350,232
|
|
WML 4 7/8% Senior Notes, due 2024
|
600,000
|
|
|
600,000
|
|
WML 5 1/2% Senior Notes, due 2026
|
1,000,000
|
|
|
—
|
|
WML 5 1/2% Senior Notes, due 2027
|
750,000
|
|
|
750,000
|
|
WML 5 5/8% Senior Notes, due 2028
|
1,350,000
|
|
|
—
|
|
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
|
937,500
|
|
|
987,500
|
|
WRF Revolver, due 2024
|
716,000
|
|
|
—
|
|
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 7 3/4% Senior Notes, due 2025
|
600,000
|
|
|
—
|
|
WRF 5 1/8% Senior Notes, due 2029
|
750,000
|
|
|
750,000
|
|
Retail Term Loan, due 2025 (5)
|
615,000
|
|
|
615,000
|
|
|
13,154,049
|
|
|
10,515,272
|
|
Less: Unamortized debt issuance costs and original issue discounts and premium, net
|
(88,279)
|
|
|
(111,413)
|
|
|
13,065,770
|
|
|
10,403,859
|
|
Less: Current portion of long-term debt
|
(596,408)
|
|
|
(323,876)
|
|
Total long-term debt, net of current portion
|
$
|
12,469,362
|
|
|
$
|
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 $717.3 million and $550.8 million of the Wynn Macau Term Loan bears interest at a rate of LIBOR plus 2.25% per year and HIBOR plus 2.25% per year, respectively. As of December 31, 2020 and 2019, the weighted average interest rate was approximately 2.41% and 3.95%, respectively.
(3) Approximately $231.7 million and $175.7 million of the Wynn Macau Revolver bears interest at a rate of LIBOR plus 2.25% per year and HIBOR plus 2.25% per year, respectively. As of December 31, 2020 and 2019, the weighted average interest rate was approximately 2.44% and 3.92%, respectively. As of December 31, 2020, the available borrowing capacity under the Wynn Macau Revolver was $343.5 million.
(4) The WRF Credit Facilities bear interest at a rate of LIBOR plus 1.75% per year. As of December 31, 2020 and 2019, the weighted average interest rate was 1.90% and 3.55%, respectively. Additionally, as of December 31, 2020, the available borrowing capacity under the WRF Revolver was $117.9 million, net of $16.1 million in outstanding letters of credit. The Company repaid $716.0 million of the outstanding borrowings under the WRF Revolver in February 2021.
(5) The Retail Term Loan bears interest at a rate of LIBOR plus 1.70% per year. As of December 31, 2020 and 2019, the effective interest rate was 2.70% and 3.41%, respectively.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Macau Related Debt
Wynn Macau Credit Facilities
The Company's Wynn Macau credit facilities consist of an approximately $1.27 billion equivalent senior secured term loan facility (the "Wynn Macau Term Loan") and an approximately $751 million equivalent senior secured revolving credit facility (the "Wynn Macau Revolver" and together with the Wynn Macau Term Loan, the "Wynn Macau Credit Facilities"). The borrower is Wynn Resorts (Macau) S.A. ("Wynn Macau SA"), an indirect subsidiary of WML. Wynn Macau SA borrows and repays its revolving credit facility from time to time as cash needs permit.
The Wynn Macau Term Loan is repayable in graduating installments of between 2.875% to 4.50% of the principal amount on a quarterly basis commencing September 30, 2020, with a final installment of 75% of the principal amount repayable in June 2022; and the final maturity of any outstanding borrowings from the Wynn Macau Revolver is in June 2022. The Company prepaid $938.2 million, excluding contractual amortization payments of $100.7 million, on the Wynn Macau Term Loan during 2020 using the proceeds from issuances of WML Senior Notes and operating cash. In January 2021, the Company prepaid $412.5 million of the Wynn Macau Term Loan, and accordingly, has presented that amount as a current liability on the accompany Consolidated Balance Sheet as of December 31, 2020. The commitment fee required to be paid for unborrowed amounts under the Wynn Macau Revolver, if any, is between 0.52% and 0.79%, per annum, based on Wynn Macau SA's Leverage Ratio. The annual commitment fee is payable quarterly in arrears and is calculated based on the daily average of the unborrowed amounts.
The Wynn Macau Credit Facilities contain a requirement that Wynn Macau SA must make mandatory repayments of indebtedness from specified percentages of excess cash flow. If Wynn Macau SA's Leverage Ratio is greater than 4.5 to 1, then 25% of Excess Cash Flow (as defined in the Wynn Macau Credit Facilities) must be used for prepayment of indebtedness and cancellation of available borrowings under the Wynn Macau Credit Facilities. There is no mandatory prepayment in respect of Excess Cash Flow if Wynn Macau SA's Leverage Ratio is equal to or less than 4.5 to 1.
The Wynn Macau Credit Facilities contain customary covenants restricting certain activities including, but not limited to: the incurrence of additional indebtedness, the incurrence or creation of liens on any of its property, sale and leaseback transactions, the ability to dispose of assets, and making loans or other investments. In addition, Wynn Macau SA is required by the financial covenants to maintain a Leverage Ratio of not greater than 4.00 to 1 for the fiscal year ending December 31, 2020 and thereafter, and an Interest Coverage Ratio (as defined in the Wynn Macau Credit Facilities) of not less than 2.00 to 1 at any time.
Borrowings under the Wynn Macau Credit Facilities are guaranteed by Palo Real Estate Company Limited ("Palo"), a subsidiary of Wynn Macau SA, and by certain subsidiaries of the Company that own equity interests in Wynn Macau SA, and are secured by substantially all of the assets of Wynn Macau SA and Palo, and the equity interests in Wynn Macau SA. Borrowings under the Wynn Macau Credit Facilities are not guaranteed by the Company or WML.
WML Senior Notes
During 2020, WML issued $1.0 billion of 5 1/2% Senior Notes due 2026 and $1.35 billion of 5 5/8% Senior Notes due 2028 (the “2026 and 2028 WML Senior Notes” and collectively with the WML 4 7/8% Senior Notes, due 2024, the WML 5 1/2% Senior Notes, due 2027, and the WML 5 1/8% Senior Notes, due 2029, the “WML Senior Notes”). The Company used the proceeds from the 2026 and 2028 WML Senior Notes to facilitate repayments on the Wynn Macau Credit Facilities and for general corporate purposes. The WML Senior Notes bear interest at each of their respective interest rates and interest is payable semi-annually. In connection with the issuance of the 2026 and 2028 WML Senior Notes, the Company paid fees and expenses totaling $20.7 million, which were recorded as debt issuance costs within the Consolidated Balance Sheets.
The WML Senior 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 the Wynn Macau Credit Facilities. The WML Senior Notes are not registered under the Securities Act of 1933, as amended (the "Securities Act") and the WML Notes are subject to restrictions on transferability and resale.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The WML Senior Notes were issued pursuant to indentures between WML and Deutsche Bank Trust Company Americas, as trustee (the “WML Senior Notes Indentures”). The WML Senior Notes Indentures contain 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 WML Senior Notes Indentures also contain customary events of default. In the case of an event of default arising from certain events of bankruptcy or insolvency, all WML Senior Notes then outstanding will become due and payable immediately without further action or notice.
Upon the occurrence of (a) any event after which none 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 each of the WML Senior Notes are issued, for a period of 10 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 WML Senior Notes will have the right to require WML to repurchase all or any part of such holder’s WML Senior Notes at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest. If WML undergoes a Change of Control (as defined in the WML Senior Notes Indentures), it must offer to repurchase the WML Senior Notes at a price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest.
U.S. and Corporate Related Debt
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 WRF Senior 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").
Concurrently with the issuance of the 2029 WRF Senior Notes, WRF entered into a credit agreement (the "WRF Credit Agreement") providing for a new first lien term loan facility in an aggregate principal amount 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 Credit Facilities") (the WRF Credit Facilities and 2029 WRF Notes are collectively referred to as the "Refinancing Transactions").
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 $19.3 million, of which $15.1 million was recorded as debt issuance costs within the Consolidated Balance Sheet. The Company recognized the Refinancing Transactions primarily as a modification of existing debt with the related unamortized debt issuance costs reallocated to the new debt instruments. For those components of debt that were deemed extinguished, the Company recognized a loss on extinguishment of debt of $12.4 million.
WRF Credit Facilities
Subject to certain exceptions, the WRF 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. 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 dividends 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, WRF 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
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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.
On April 10, 2020 and November 27, 2020, the WRF Credit Agreement was collectively amended to, among other things, implement a financial covenant relief period (the "Financial Covenant Relief Period") through April 1, 2022 (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 was replaced with a minimum liquidity financial covenant that requires WRF and its restricted subsidiaries to maintain liquidity of at least $325.0 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 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.
WRF Senior Notes
On April 14, 2020, the WRF Issuers issued $600.0 million aggregate principal amount of 7 3/4% Senior Notes due 2025 (the "2025 WRF Senior Notes" and collectively with the 2029 WRF Senior Notes, the “WRF Senior Notes”) pursuant to an indenture (the "2025 Indenture" and collectively with the 2029 Indenture, the “WRF Indentures”) among the WRF Issuers, the guarantors party thereto, and the Trustee. The Company intends to use the proceeds from the 2025 Senior Notes for general corporate purposes. The WRF Senior Notes bear interest at each of their respective interest rates and interest is payable semi-annually. In connection with the issuance of the 2025 WRF Senior Notes and the 2029 WRF Senior Notes, the Company paid fees and expenses totaling $13.5 million, which were recorded as debt issuance costs within the Consolidated Balance Sheets.
The WRF Senior Notes are the WRF Issuers' senior unsecured obligations and rank pari passu in right of payment with the WLV Senior Notes (as defined below), and rank equally in right of payment with Wynn Las Vegas' guarantee of the WRF Credit Facilities, and rank senior in right of payment to all of the WRF Issuers' existing and future subordinated debt. The WRF Senior 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 WRF Senior Notes, including WML and its subsidiaries.
The WRF Senior Notes are jointly and severally guaranteed by each of WRF's existing domestic restricted subsidiaries that guarantee indebtedness under the WRF Credit Agreement, including Wynn Las Vegas, LLC and each of its subsidiaries that guarantees the WLV Senior Notes. 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).
The WRF Indentures 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 WRF Indentures. The WRF Indentures also contain customary events of default, including, but not limited to, failure to make required payments, failure to comply with certain covenants, certain events of bankruptcy and insolvency, and failure to pay certain judgments.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The WRF Senior Notes were offered pursuant to an exemption under the Securities Act of 1933, as amended (the "Securities Act"). The WRF Senior Notes were offered only to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The WRF Senior Notes have not been and will not be registered under the Securities Act or under any state securities laws. Therefore, the WRF Senior 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.
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") with a principal amount of $1.94 billion, a maturity date of February 18, 2022 and an interest rate of 2% per annum, payable annually 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 Consolidated Statements of Operations for the year ended December 31, 2018.
WLV Senior Notes
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. ("Capital Corp." and together with Wynn Las Vegas, LLC, the "Issuers") issued $500.0 million 4 1/4% Senior Notes due 2023 (the "2023 WLV Senior Notes"), $1.8 billion 5 1/2% Senior Notes due 2025 (the “2025 WLV Senior Notes”), and $900.0 million 5 1/4% Senior Notes due 2027 (the 2027 WLV Senior Notes) pursuant to indentures, dated as of May 22, 2013 (the "2023 Indenture"), February 18, 2015 (the “2025 Indenture”), and May 11, 2017 (the "2027 Indenture"), respectively, among the Issuers, the Guarantors (as defined below) and the Trustee. The 2023 WLV Senior Notes, 2025 WLV Senior Notes, and 2027 WLV Senior Notes are collectively referred to as the “WLV Senior Notes.” The 2023 Indenture, 2025 Indenture, and 2027 Indenture are collectively referred to as the “WLV Indentures.”
The WLV Senior Notes are the WLV Issuers' senior unsecured obligations and each rank pari passu in right of payment. The WLV Senior Notes are unsecured, except by the first priority pledge by Wynn Las Vegas Holdings, LLC ("WLVH"), a direct wholly owned subsidiary of Wynn Resorts Finance, LLC, of its equity interests in Wynn Las Vegas, LLC. If Wynn Resorts receives an investment grade rating from one or more ratings agencies, the first priority pledge securing the WLV Senior Notes will be released.
The WLV Senior Notes are jointly and severally guaranteed by all of the Issuers' subsidiaries, other than Capital Corp., which was a co-issuer. The guarantees are senior unsecured obligations of the guarantors and rank senior in right of payment to all of their existing and 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).
The WLV Indentures contain covenants limiting the WLV Issuers' and the guarantors' ability to create liens on assets to secure debt; enter into sale-leaseback transactions; and merge or consolidate with another company. These covenants are subject to a number of important and significant limitations, qualifications and exceptions.
Events of default under the WLV Indentures include, among others, the following: default for 30 days in the payment of interest when due on the WLV Senior Notes; default in payment of the principal or premium, if any, when due on the WLV Senior Notes; failure to comply with certain covenants in the WLV Indentures; and certain events of bankruptcy or insolvency. In the case of an event of default arising from certain events of bankruptcy or insolvency with respect to the WLV Issuers or any guarantor, all WLV Senior Notes then outstanding will become due and payable immediately without further action or notice.
In 2018, Wynn Resorts purchased $20.0 million principal amount of the 2025 WLV Senior Notes and 2027 WLV Senior Notes, respectively through open market purchases. As of December 31, 2020, Wynn Resorts holds this debt and has not contributed it to its wholly owned subsidiary, Wynn Las Vegas, LLC.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The WLV Issuers and certain of their subsidiaries will guarantee and secure their obligation under the WRF Credit Facilities with liens on substantially all of their assets, with such liens limiting the amount of such obligations secured to 15% of their total assets.
The WLV Senior Notes were offered pursuant to an exemption under the Securities Act only to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The WLV Senior Notes have not been and will not be registered under the Securities Act or under any state securities laws. Therefore, the WLV Senior 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.
Retail Term Loan
On July 25, 2018, Wynn/CA Plaza Property Owner, LLC and Wynn/CA Property Owner, LLC (collectively, the "Retail Borrowers"), subsidiaries of the Retail Joint Venture, entered into a term loan agreement (the "Retail Term Loan Agreement").
The Retail Term Loan Agreement provides for a term loan facility to the Retail Borrowers of $615.0 million (the "Retail Term Loan"). The Retail Term Loan is secured by substantially all of the assets of the Retail Borrowers. The Retail Term Loan matures on July 24, 2025 and bears interest at a rate of LIBOR plus 1.70% per annum. In accordance with the Retail Term Loan Agreement, the Retail Borrowers entered into an interest rate collar agreement with a LIBOR floor of 1.00% and a ceiling of 3.75%. The Retail Borrowers distributed approximately $589 million of the net proceeds of the Retail Term Loan to their members on a proportionate basis to each member's ownership percentage. At any time subsequent to July 25, 2019, the Retail Borrowers may prepay the Retail Term Loan, in whole or in part, with no premium above the principal amount.
The Retail Term Loan Agreement contains customary representations and warranties, events of default and affirmative and negative covenants for debt facilities of this type, including, among other things, limitations on leasing matters, incurrence of indebtedness, distributions and transactions with affiliates. The Retail Term Loan Agreement also provides for customary sweeps of the Retail Borrowers' excess cash in the event of a default or in the event the Retail Borrowers fail to maintain certain financial ratios as defined in the Retail Term Loan Agreement. In addition, the Company will indemnify the lenders under the Retail Term Loan and be liable, in each case, for certain customary environmental and non-recourse carve out matters pursuant to a hazardous materials indemnity agreement and a recourse indemnity agreement, each entered into concurrently with the execution of the Retail Term Loan Agreement.
In accordance with the terms of the Retail Term Loan Agreement, the Retail Borrowers entered into a five year interest rate collar with a notional value of $615.0 million for a cash payment of $3.9 million in July 2018. The interest rate collar establishes a range whereby the Retail Borrowers will pay the counterparty if one-month LIBOR falls below the established floor rate of 1.00%, and the counterparty will pay the Retail Borrowers if one-month LIBOR exceeds the ceiling rate of 3.75%. The interest rate collar settles monthly commencing in August 2019 through the termination date in August 2024. No payments or receipts are exchanged on interest rate collar contracts unless interest rates rise above or fall below the pre-determined ceiling or floor rate, respectively. The Company measures the fair value of the interest rate collar at each balance sheet date based on a Black-Scholes option pricing model, which incorporates observable market inputs such as market volatility and interest rates, with changes in fair value recorded in earnings. As of December 31, 2020, the fair value of the interest rate collar was a liability of $16.9 million, of which $5.4 million was recorded in Other accrued liabilities and $11.5 million was recorded in Other long-term liabilities in the accompanying Consolidated Balance Sheets.
On May 5, 2020, the Retail Borrowers 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 December 31, 2020, management believes the Company was in compliance with all debt covenants.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Scheduled Maturities of Long-Term Debt
Scheduled maturities of long-term debt as of December 31, 2020 were as follows (in thousands):
|
|
|
|
|
|
Years Ending December 31,
|
|
2021 (1)
|
$
|
596,408
|
|
2022
|
1,179,141
|
|
2023
|
550,000
|
|
2024
|
2,103,500
|
|
2025
|
2,995,000
|
|
Thereafter
|
5,730,000
|
|
|
13,154,049
|
|
Unamortized debt issuance costs and original issue discounts and premium, net
|
(88,279)
|
|
|
$
|
13,065,770
|
|
(1) Includes $412.5 million related to the prepayment of the Wynn Macau Term Loan paid in January 2021. The remaining contractual amortization payments were reduced on a pro rata basis by $412.5 million.
Fair Value of Long-Term Debt
The estimated fair value of the Company's long-term debt as of December 31, 2020 and 2019, was approximately $13.35 billion and $10.80 billion, respectively, compared to its carrying value, excluding debt issuance costs and original issue discount and premium, of $13.15 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 8 - Stockholders' Equity (Deficit)
Equity Offerings
On April 3, 2018, the Company completed a registered public offering of 5,300,000 newly issued shares of its common stock, par value $0.01 per share, at a price of $175 per share for proceeds of $915.2 million, net of $11.7 million in underwriting discounts and $0.6 million in offering expenses. The Company used the net proceeds from this equity offering to repay all amounts borrowed under a Wynn Resorts bridge facility, together with all interest accrued thereon, and used the remaining net proceeds to repay certain other indebtedness of the Company in April 2018.
On February 11, 2021, the Company completed a registered public offering of 7,475,000 newly issued shares of its common stock, par value $0.01 per share, at a price of $115.00 per share for proceeds of $842.4 million, net of $17.2 million in underwriting discounts and commissions. The Company intends to use the net proceeds from this equity offering for general corporate purposes, including the repayment of debt.
Common Stock
The Company's board of directors has authorized an equity repurchase program of up to $1.0 billion, which may include repurchases from time to time through open market purchases or negotiated transactions, depending on market conditions. During the year ended December 31, 2020, the Company did not repurchase any of its shares under the program. During the years ended December 31, 2019 and December 31, 2018, the Company repurchased 413,439 and 1,478,552 shares, respectively, at a net cost of $43.2 million and $156.7 million, respectively, under the equity repurchase program. As of December 31, 2020, the Company had $800.1 million in repurchase authority under the program.
During the years ended December 31, 2020, 2019, and 2018, the Company withheld a total of 120,513 shares, 176,989 shares, and 19,120 shares, respectively, in satisfaction of tax withholding obligations on vested restricted stock and stock option exercises.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Dividends
During the first quarter of 2020, the company paid a cash dividend of $1.00 per share. 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.
During the first quarter of 2019, the Company paid a cash dividend of $0.75 per share and $1.00 per share for each of the the three subsequent quarters, for annual cash dividends of $3.75 per share. During the first quarter of 2018, the Company paid a cash dividend of $0.50 per share and $0.75 per share for each of the three subsequent quarters, for annual cash dividends of $2.75 per share. During the years ended December 31, 2020, 2019 and 2018, the Company recorded $107.5 million, $403.0 million, and $294.9 million, respectively, as a reduction of retained earnings from cash dividends declared.
Noncontrolling Interests
In October 2009, WML, the developer, owner and operator of Wynn Macau and Wynn Palace, listed its ordinary shares of common stock on The Stock Exchange of Hong Kong Limited through an initial public offering. The Company currently owns approximately 72% of this subsidiary's common stock. The shares of WML were not and will not be registered under the Securities Act and may not be offered or sold in the United States absent a registration under the Securities Act, or an applicable exception from such registration requirements.
The WML board of directors concluded not to recommend the payment of a dividend with respect to the year ended December 31, 2019 due to the financial impact of the COVID-19 pandemic.
On September 16, 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 $215.1 million with a reduction of $82.9 million to noncontrolling interest in the accompanying Consolidated Balance Sheet.
On June 19, 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 $83.0 million to noncontrolling interest in the accompanying Consolidated Balance Sheet.
On October 5, 2018, WML paid a cash dividend of HK$0.75 per share for a total of $496.6 million. The Company's share of this dividend was $358.3 million with a reduction of $138.3 million to noncontrolling interest in the accompanying 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 Consolidated Balance Sheet.
During the years ended December 31, 2020 and 2019, the Retail Joint Venture made aggregate distributions of $6.2 million and $7.7 million, respectively to its non-controlling interest holder made in the normal course of business. During the year ended December 31, 2018, the Retail Joint Venture made aggregate distributions of $305.4 million 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 18, "Retail Joint Venture".
Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)
The following tables presents the changes by component, net of tax and noncontrolling interests, in accumulated other comprehensive loss of the Company (in thousands):
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 gain (loss)
|
(1,397)
|
|
|
(1,510)
|
|
|
7,690
|
|
|
4,783
|
|
Amounts reclassified to net income (2)
|
—
|
|
|
2,802
|
|
|
1,521
|
|
|
4,323
|
|
Other comprehensive income (loss)
|
(1,397)
|
|
|
1,292
|
|
|
9,211
|
|
|
9,106
|
|
December 31, 2018
|
(1,950)
|
|
|
—
|
|
|
—
|
|
|
(1,950)
|
|
Change in net unrealized gain
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
Other comprehensive income
|
271
|
|
|
—
|
|
|
—
|
|
|
271
|
|
December 31, 2019
|
(1,679)
|
|
|
—
|
|
|
—
|
|
|
(1,679)
|
|
Change in net unrealized gain
|
5,283
|
|
|
—
|
|
|
—
|
|
|
5,283
|
|
Other comprehensive income
|
5,283
|
|
|
—
|
|
|
—
|
|
|
5,283
|
|
December 31, 2020
|
$
|
3,604
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,604
|
|
(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.
Note 9 - Fair Value Measurements
The following tables present assets and liabilities carried at fair value (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using:
|
|
December 31, 2020
|
|
Quoted
Market
Prices in
Active
Markets
(Level 1)
|
|
Other
Observable
Inputs
(Level 2)
|
|
Unobservable
Inputs
(Level 3)
|
Assets:
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
980,580
|
|
|
$
|
504,980
|
|
|
$
|
475,600
|
|
|
$
|
—
|
|
Restricted cash
|
$
|
4,352
|
|
|
$
|
2,054
|
|
|
$
|
2,298
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
Interest rate collar
|
$
|
16,908
|
|
|
$
|
—
|
|
|
$
|
16,908
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
—
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 10 - Benefit Plans
Defined Contribution Plans
The Company established a retirement savings plan under Section 401(k) of the Internal Revenue Code covering its U.S. non-union employees in July 2000. The plan allows employees to defer, within prescribed limits, a percentage of their income on a pre-tax basis through contributions to this plan. The Company matches 50% of employee contributions, up to 6% of employees' eligible compensation. During the year ended December 31, 2020, the Company did not match employee contributions. During the years ended December 31, 2019 and 2018, the Company recorded matching contribution expenses of $6.9 million, and $6.4 million, respectively.
Wynn Macau SA also operates a defined contribution retirement benefit plan (the "Wynn Macau Plan"). Eligible employees are allowed to contribute 5% of their base salary to the Wynn Macau Plan and the Company matches any contributions. On July 1 2019, the Company offered the option for the eligible Macau resident employees to join the non-mandatory central provident fund (the "CPF") system. Eligible Macau resident employees joining the Company from July 1, 2019 onwards will enroll in the CPF system while the Company's existing Macau resident employees who are currently members of the Wynn Macau Plan will be provided with the option of joining the CPF system or staying in the existing Wynn Macau Plan, which will continue to be in effect in parallel. The CPF system allows eligible employees to contribute 5% or more of their base salary to the CPF while the Company matches with a 5% of such salary as employer's contribution to the CPF. The Company's matching contributions vest to the employee at 10% per year with full vesting in ten years. The assets of the Wynn Macau Plan and the CPF are held separately from those of the Company in independently administered funds, and the assets of the CPF are also overseen by the Macau government. Forfeitures of unvested contributions are used to reduce the Company's liability for its contributions payable. During the years ended December 31, 2020, 2019 and 2018, the Company recorded matching contribution expenses of $19.5 million, $17.8 million, and $16.6 million, respectively.
Multi-Employer Pension Plan
Wynn Las Vegas, LLC contributes to a multi-employer defined benefit pension plan for certain of its union employees under the terms of the Southern Nevada Culinary and Bartenders Union collective-bargaining agreement, which expires in July 2023. The term of the collective bargaining agreement was extended through Memoranda of Agreement ("MOA") that the Company and the Culinary and Bartenders’ Unions entered into in April 2020 and January 2021, respectively. The MOA further provided for a partial deferral of the 2020 and 2021 contractual wage increases until 2023, and allowed the Company additional flexibility in scheduling during the pandemic. The legal name of the multi-employer pension plan is the Southern Nevada Culinary and Bartenders Pension Plan (the "Plan") (EIN: 88-6016617 Plan Number: 1). The Company recorded expenses of $7.0 million, $11.9 million, and $11.9 million for contributions to the Plan for the years ended December 31, 2020, 2019 and 2018, respectively. For the 2019 plan year, the most recent for which plan data is available, the Company's contributions were identified by the Plan to exceed 5% of total contributions for that year. Based on information the Company received from the Plan, it was certified to be in neither endangered nor critical status for the 2019 plan year. Risks of participating in a multi-employer plan differ from single-employer plans for the following reasons: (1) assets contributed to a multi-employer plan by one employer may be used to provide benefits to employees of other participating employers; (2) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; (3) if a participating employer stops participating, it may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability; and (4) if the plan is terminated by withdrawal of all employers and if the value of the nonforfeitable benefits exceeds plan assets and withdrawal liability payments, employers are required by law to make up the insufficient difference.
Note 11 - 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.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company's primary liabilities associated with customer contracts are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
December 31, 2019
|
|
Increase/ (Decrease)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Increase/ (Decrease)
|
Casino outstanding chips and front money deposits (1)
|
$
|
596,463
|
|
|
$
|
769,053
|
|
|
$
|
(172,590)
|
|
|
$
|
769,053
|
|
|
$
|
905,561
|
|
|
$
|
(136,508)
|
|
Advance room deposits and ticket sales (2)
|
29,224
|
|
|
49,834
|
|
|
(20,610)
|
|
|
49,834
|
|
|
42,197
|
|
|
7,637
|
|
Other gaming-related liabilities (3)
|
7,882
|
|
|
13,970
|
|
|
(6,088)
|
|
|
13,970
|
|
|
12,694
|
|
|
1,276
|
|
Loyalty program and related liabilities (4)
|
22,736
|
|
|
21,148
|
|
|
1,588
|
|
|
21,148
|
|
|
18,148
|
|
|
3,000
|
|
|
$
|
656,305
|
|
|
$
|
854,005
|
|
|
$
|
(197,700)
|
|
|
$
|
854,005
|
|
|
$
|
978,600
|
|
|
$
|
(124,595)
|
|
(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 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 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 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 Consolidated Balance Sheets and are expected to be recognized as revenue within one year of being earned by customers.
Note 12 - Stock-Based Compensation
The Company has adopted equity plans that allow for grants of stock-based compensation awards. The following sections describe each of these plans.
Wynn Resorts, Limited 2014 Omnibus Incentive Plan (the "WRL Omnibus Plan")
On May 16, 2014, the Company adopted the WRL Omnibus Plan after approval from its stockholders, which was adopted for a period of 10 years. The WRL Omnibus Plan allows for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other share-based awards to eligible participants. The Company reserved 4,409,390 shares of its common stock for issuance under the WRL Omnibus Plan. On June 25, 2020, the Company's shareholders approved an amendment to the WRL Omnibus Plan that increases the shares authorized for issuance by 1,500,000 shares, for an aggregate number of shares authorized for issuance to 5,909,390 shares.
As of December 31, 2020, the Company had an aggregate of 3,495,890 shares of its common stock available for grant as share-based awards under the WRL Omnibus Plan.
Wynn Macau, Limited Share Option and Share Award Plans
The Company's majority-owned subsidiary, WML, has two stock-based compensation plans that provide awards based on shares of WML's common stock. The shares available for issuance under these plans are separate and distinct from the common stock of Wynn Resorts' share plan and are not available for issuance for any awards under the Wynn Resorts share plan.
WML Share Option Plan ("WML Share Option Plan")
WML adopted the WML Share Option Plan for the grant of stock options to purchase shares of WML to eligible directors and employees of WML and its subsidiaries. The WML Share Option Plan is administered by WML's Board of Directors, which has the discretion on the vesting and service requirements, exercise price, performance targets to exercise if applicable and other conditions, subject to certain limits.
The WML Share Option Plan was adopted for a period of 10 years commencing from May 30, 2019. The maximum number of shares which may be issued pursuant to the WML Share Option Plan is 519,695,860 shares. As of December 31, 2020, there were 510,800,860 shares available for issuance under the WML Share Option Plan.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
WML Employee Share Ownership Scheme (the "WML Share Award Plan")
On June 30, 2014, WML adopted the WML Share Award Plan. The Share Award Plan allows for the grant of nonvested shares of WML's common stock to eligible employees. The WML Share Award Plan has been mandated under the plan to allot, issue and process the transfer of a maximum of 75,000,000 shares. As of December 31, 2020, there were 50,290,387 shares available for issuance under the WML Share Award Plan.
Wynn Interactive Ltd. 2020 Omnibus Incentive Plan (the "WIL Omnibus Plan")
On October 23, 2020, the Wynn Interactive board of directors adopted the WIL Omnibus Plan. The WIL Omnibus Plan, which is administered by the Wynn Interactive board of directors, allows for an aggregate number of shares totaling 101,419 for the grant of stock options, restricted stock, restricted stock units, stock appreciation rights, performance awards, and other share-based awards to eligible participants. As of December 31, 2020, there were 20,573 shares available to grant under the WIL Omnibus Plan.
Stock Options
The summary of stock option activity for the year ended December 31, 2020 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
WRL Omnibus Plan
|
|
|
|
|
|
|
|
Outstanding as of January 1, 2020
|
23,700
|
|
|
$
|
80.42
|
|
|
|
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Exercised
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Forfeited or expired
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Outstanding as of December 31, 2020
|
23,700
|
|
|
$
|
80.42
|
|
|
5.16
|
|
$
|
768,046
|
|
Fully vested and expected to vest as of December 31, 2020
|
23,700
|
|
|
$
|
80.42
|
|
|
5.16
|
|
$
|
768,046
|
|
Exercisable as of December 31, 2020
|
23,700
|
|
|
$
|
80.42
|
|
|
5.16
|
|
$
|
768,046
|
|
|
|
|
|
|
|
|
|
WML Share Option Plan
|
|
|
|
|
|
|
|
Outstanding as of January 1, 2020
|
11,013,400
|
|
|
$
|
2.51
|
|
|
|
|
|
Granted
|
8,895,000
|
|
|
$
|
2.16
|
|
|
|
|
|
Exercised
|
(50,000)
|
|
|
$
|
1.41
|
|
|
|
|
|
Forfeited or expired
|
—
|
|
|
—
|
|
|
|
|
|
Outstanding as of December 31, 2020
|
19,858,400
|
|
|
$
|
2.36
|
|
|
7.52
|
|
$
|
305,363
|
|
Fully vested and expected to vest as of December 31, 2020
|
19,858,400
|
|
|
$
|
2.36
|
|
|
7.52
|
|
$
|
305,363
|
|
Exercisable as of December 31, 2020
|
7,033,400
|
|
|
$
|
2.53
|
|
|
5.03
|
|
$
|
233,592
|
|
|
|
|
|
|
|
|
|
WIL Omnibus Plan
|
|
|
|
|
|
|
|
Outstanding as of January 1, 2020
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Granted
|
80,846
|
|
|
$
|
1,236.00
|
|
|
|
|
|
Assumed in business combination
|
9,452
|
|
|
$
|
264.00
|
|
|
|
|
|
Forfeited or expired
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Outstanding as of December 31, 2020
|
90,298
|
|
|
$
|
1,134.00
|
|
|
9.92
|
|
$
|
(57,716)
|
|
Fully vested and expected to vest as of December 31, 2020
|
90,298
|
|
|
$
|
1,134.00
|
|
|
9.92
|
|
$
|
(57,716)
|
|
Exercisable as of December 31, 2020
|
4,229
|
|
|
$
|
238.00
|
|
|
9.69
|
|
$
|
1,088
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following is provided for stock options under the Company's stock-based compensation plans (in thousands, except weighted average grant date fair value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
WRL Omnibus Plan (1)
|
|
|
|
|
|
Intrinsic value of stock options exercised
|
$
|
—
|
|
|
$
|
24,731
|
|
|
$
|
22,387
|
|
Cash received from the exercise of stock options
|
$
|
—
|
|
|
$
|
14,696
|
|
|
$
|
20,148
|
|
|
|
|
|
|
|
WML Share Option Plan (2)
|
|
|
|
|
|
Weighted average grant date fair value
|
$
|
0.54
|
|
|
$
|
0.55
|
|
|
$
|
0.57
|
|
Intrinsic value of stock options exercised
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
1,715
|
|
Cash received from the exercise of stock options
|
$
|
70
|
|
|
$
|
—
|
|
|
$
|
1,823
|
|
|
|
|
|
|
|
WIL Omnibus Plan (3)
|
|
|
|
|
|
Weighted average grant date fair value
|
$
|
147
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1) As of December 31, 2020, there was no unamortized compensation expense related to stock options.
(2) As of December 31, 2020, there was $6.2 million of unamortized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 4.03 years.
(3) As of December 31, 2020, there was $12.8 million of unamortized compensation expense related to stock options, which is expected to be recognized over a weighted average period of 3.78 years.
Option Valuation Inputs
There were no stock options granted under the WRL Omnibus Plan during the years ended December 31, 2020, 2019, and 2018.
The fair value of stock options granted under WML's Share Option Plan was estimated on the date of grant using the following weighted average assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Expected dividend yield
|
4.7
|
%
|
|
5.7
|
%
|
|
5.7
|
%
|
Expected volatility
|
42.6
|
%
|
|
40.7
|
%
|
|
40.2
|
%
|
Risk-free interest rate
|
1.0
|
%
|
|
1.4
|
%
|
|
2.3
|
%
|
Expected term (years)
|
6.5
|
|
6.5
|
|
6.5
|
The fair value of stock options granted under the WIL Omnibus Plan was estimated on the date of grant using the following weighted average assumptions:
|
|
|
|
|
|
|
Year Ended December 31,
|
|
2020
|
Expected dividend yield
|
—
|
%
|
Expected volatility
|
50.0
|
%
|
Risk-free interest rate
|
0.61
|
%
|
Expected term (years)
|
6.5
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Nonvested and performance nonvested shares
The summary of nonvested and performance nonvested share activity under the Company's stock-based compensation plans for the year ended December 31, 2020 is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
WRL Omnibus Plan
|
|
|
|
Nonvested as of January 1, 2020
|
744,451
|
|
|
$
|
123.62
|
|
Granted
|
841,226
|
|
|
$
|
99.21
|
|
Vested
|
(414,934)
|
|
|
$
|
97.84
|
|
Forfeited
|
(241,108)
|
|
|
$
|
127.04
|
|
Nonvested as of December 31, 2020
|
929,635
|
|
|
$
|
112.11
|
|
|
|
|
|
WML Share Award Plan
|
|
|
|
Nonvested as of January 1, 2020
|
9,666,163
|
|
|
$
|
2.36
|
|
Granted
|
6,747,501
|
|
|
$
|
1.86
|
|
Vested
|
(4,526,175)
|
|
|
$
|
1.67
|
|
Forfeited
|
(1,008,711)
|
|
|
$
|
2.47
|
|
Nonvested as of December 31, 2020
|
10,878,778
|
|
|
$
|
2.33
|
|
Certain members of the executive management team receive grants of nonvested share awards that are subject to service and performance conditions. Generally, these awards vest if certain revenue and Adjusted Property EBITDA fair share metrics (as approved by the Company's Compensation Committee of the Board of Directors) are attained over a three-year performance period. The Company records expense for these awards if it determines that vesting is probable. At December 31, 2020, all performance nonvested awards were deemed to be probable of vesting; however, none of the performance criteria contingencies have been resolved. The activity for these performance nonvested shares is included in the table above.
The following is provided for the share awards under the Company's stock-based compensation plans (in thousands, except weighted average grant date fair value):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
WRL Omnibus Plan
|
|
|
|
|
|
Weighted average grant date fair value
|
$
|
99.21
|
|
|
$
|
119.61
|
|
|
$
|
170.13
|
|
Fair value of shares vested
|
$
|
34,068
|
|
|
$
|
19,428
|
|
|
$
|
13,024
|
|
|
|
|
|
|
|
WML Share Award Plan
|
|
|
|
|
|
Weighted average grant date fair value
|
$
|
1.86
|
|
|
$
|
2.43
|
|
|
$
|
3.07
|
|
Fair value of shares vested
|
$
|
8,371
|
|
|
$
|
5,139
|
|
|
$
|
12,442
|
|
As of December 31, 2020, there was $63.4 million of unamortized compensation expense related to nonvested shares, which is expected to be recognized over a weighted average period of 1.66 years under the WRL Omnibus Plan. As of December 31, 2020, there was $14.1 million of unamortized compensation expense, which is expected to be recognized over a weighted average period of 1.35 years under the WML Share Award Plan.
Annual Incentive Bonus
Certain members of the Company's 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 $5.7 million for the year ended December 31, 2020, and $6.7 million for each of the years ended December 31, 2019 and 2018. The Company settled its
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
obligations for the 2020, 2019, and 2018 annual incentive bonuses by issuing 58,058, 44,788, 58,783 of vested shares with a weighted-average grant date fair value of $108.03, $150.03, and $113.55, in January of the respective following year.
Compensation Cost
The total compensation cost for stock-based compensation plans was recorded as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Casino (1)
|
$
|
8,538
|
|
|
$
|
7,903
|
|
|
$
|
5,946
|
|
Rooms
|
1,618
|
|
|
1,046
|
|
|
437
|
|
Food and beverage
|
3,189
|
|
|
1,807
|
|
|
1,125
|
|
Entertainment, retail and other
|
432
|
|
|
174
|
|
|
111
|
|
General and administrative
|
48,477
|
|
|
28,772
|
|
|
28,872
|
|
Pre-opening
|
—
|
|
|
670
|
|
|
750
|
|
Property charges and other (2)
|
—
|
|
|
—
|
|
|
(2,201)
|
|
Total stock-based compensation expense
|
62,254
|
|
|
40,372
|
|
|
35,040
|
|
Total stock-based compensation capitalized
|
2,212
|
|
|
350
|
|
|
11
|
|
Total stock-based compensation costs
|
$
|
64,466
|
|
|
$
|
40,722
|
|
|
$
|
35,051
|
|
(1) In 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) In 2018, reflects the reversal of compensation cost previously recognized for awards forfeited in connection with the departure of an employee.
During the years ended December 31, 2020, 2019 and 2018, the Company recognized income tax benefits in the Consolidated Statements of Operations of $9.3 million, $5.8 million, and $5.7 million, respectively, related to stock-based compensation expense. Additionally, during the years ended December 31, 2020, 2019, and 2018, the Company realized tax benefits of $3.7 million, $8.4 million, and $4.6 million, respectively, related to stock option exercises and restricted stock vesting that occurred in those years.
Note 13 - Income Taxes
Consolidated income (loss) before taxes for United States ("U.S.") and foreign operations consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
United States
|
$
|
(821,012)
|
|
|
$
|
(158,937)
|
|
|
$
|
(491,523)
|
|
Foreign
|
(941,263)
|
|
|
647,155
|
|
|
797,263
|
|
Total
|
$
|
(1,762,275)
|
|
|
$
|
488,218
|
|
|
$
|
305,740
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The income tax provision (benefit) attributable to income before income taxes is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
Current
|
|
|
|
|
|
U.S. Federal
|
$
|
(2)
|
|
|
$
|
(14)
|
|
|
$
|
(637)
|
|
U.S. State
|
309
|
|
|
868
|
|
|
198
|
|
Foreign
|
1,879
|
|
|
1,796
|
|
|
1,749
|
|
Total
|
2,186
|
|
|
2,650
|
|
|
1,310
|
|
Deferred
|
|
|
|
|
|
U.S. Federal
|
563,658
|
|
|
170,508
|
|
|
(483,681)
|
|
U.S. State
|
(1,095)
|
|
|
3,682
|
|
|
(14,973)
|
|
Foreign
|
(78)
|
|
|
—
|
|
|
—
|
|
Total
|
562,485
|
|
|
174,190
|
|
|
(498,654)
|
|
Total income tax provision (benefit)
|
$
|
564,671
|
|
|
$
|
176,840
|
|
|
$
|
(497,344)
|
|
The reconciliation of the U.S. federal statutory tax rate to the actual tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
U.S. Federal statutory rate
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
Foreign tax credits, net of valuation allowance
|
(31.8)
|
%
|
|
13.1
|
%
|
|
(154.9)
|
%
|
Non-taxable foreign income
|
(2.2)
|
%
|
|
(27.4)
|
%
|
|
(48.8)
|
%
|
Foreign tax rate differential
|
(5.3)
|
%
|
|
(10.4)
|
%
|
|
(20.8)
|
%
|
Global intangible low-taxed income
|
—
|
%
|
|
10.1
|
%
|
|
28.3
|
%
|
Valuation allowance, other
|
(11.1)
|
%
|
|
20.6
|
%
|
|
9.3
|
%
|
Other, net
|
(2.6)
|
%
|
|
9.2
|
%
|
|
3.2
|
%
|
Effective income tax rate
|
(32.0)
|
%
|
|
36.2
|
%
|
|
(162.7)
|
%
|
Wynn Macau SA received a five year exemption from Macau's 12% Complementary Tax on casino gaming profits through December 31, 2020. For the years ended December 31, 2019 and 2018, the Company was exempt from the payment of such taxes totaling $77.7 million and $96.8 million or $0.73 and $0.90 per diluted share, respectively. For the year ended December 31, 2020, the Company did not have any casino gaming profits in Macau. 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.
Wynn Macau SA also entered into an agreement with the Macau government that provides for an annual payment of MOP 12.8 million (approximately $1.6 million) as complementary tax otherwise due by stockholders of Wynn Macau SA on dividend distributions through 2020. As a result of the stockholder dividend tax agreements, income tax expense includes $1.6 million for each of the years ended December 31, 2020, 2019, and 2018. In March 2020, Wynn Macau SA applied for an extension of this agreement for an additional five years through 2025. The extension is subject to approval and may only extend through June 26, 2022, the expiration date of the gaming concession agreement.
The Macau special gaming tax is 35% of gross gaming revenue. U.S. tax laws only allow a foreign tax credit ("FTC") up to 21% of foreign source income. In February 2010, the Company and the IRS entered into a Pre-Filing Agreement ("PFA") providing that the Macau special gaming tax qualifies as a tax paid in lieu of an income tax and could be claimed as a U.S. FTC.
During the year ended December 31, 2020, the Company did not recognize any tax benefits for FTCs generated by the earnings of Wynn Macau SA. During the years ended December 31, 2019 and 2018, the Company recognized tax benefits of
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
$32.9 million and $82.8 million, respectively (net of valuation allowance and uncertain tax positions) for FTCs generated from the earnings of Wynn Macau SA.
Accounting standards require recognition of a future tax benefit to the extent that realization of such benefit is more likely than not; otherwise, a valuation allowance is applied. During the years ended December 31, 2020 and 2019, the aggregate valuation allowance for deferred tax assets increased by $227.3 million and $115.5 million, respectively. The 2020 increase is primarily related to the realizability of FTCs, intangible assets, U.S. loss carryforwards and other U.S. deferred tax assets. The 2019 increase is primarily related to the realizability of deferred tax assets related to disallowed interest expense carryforwards.
The Company recorded tax benefits resulting from the exercise of nonqualified stock options and the value of vested restricted stock and accrued dividends of $1.2 million, $5.7 million, and $2.0 million for the years ended December 31, 2020, 2019, and 2018, respectively, in excess of the amounts reported for such items as compensation costs under accounting standards related to stock-based compensation.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Deferred tax assets—U.S.:
|
|
|
|
Foreign tax credit carryforwards
|
$
|
2,540,400
|
|
|
$
|
3,070,914
|
|
Disallowed interest expense carryforward
|
138,339
|
|
|
88,319
|
|
Net operating loss carryforward
|
45,015
|
|
|
—
|
|
Lease liability
|
22,826
|
|
|
23,650
|
|
Property and Equipment
|
3,048
|
|
|
—
|
|
Receivables, inventories, accrued liabilities and other
|
25,882
|
|
|
15,279
|
|
Stock-based compensation
|
7,528
|
|
|
6,479
|
|
Other tax credit carryforwards
|
10,049
|
|
|
7,224
|
|
Intangibles and related other
|
50,750
|
|
|
—
|
|
Other
|
5,502
|
|
|
4,719
|
|
|
2,849,339
|
|
|
3,216,584
|
|
Less: valuation allowance
|
(2,812,808)
|
|
|
(2,604,497)
|
|
|
36,531
|
|
|
612,087
|
|
Deferred tax liabilities—U.S.:
|
|
|
|
Property and equipment
|
—
|
|
|
(8,887)
|
|
Lease asset
|
(22,826)
|
|
|
(23,650)
|
|
Prepaid insurance, maintenance and taxes
|
(13,606)
|
|
|
(15,956)
|
|
Other
|
(400)
|
|
|
(1,332)
|
|
|
(36,832)
|
|
|
(49,825)
|
|
Deferred tax assets—Foreign:
|
|
|
|
Net operating loss carryforwards
|
107,653
|
|
|
96,657
|
|
Property and equipment
|
61,428
|
|
|
50,709
|
|
Pre-opening expenses
|
3,832
|
|
|
6,126
|
|
Other
|
6,529
|
|
|
10,114
|
|
|
179,442
|
|
|
163,606
|
|
Less: valuation allowance
|
(173,876)
|
|
|
(154,934)
|
|
|
5,566
|
|
|
8,672
|
|
Deferred tax liabilities—Foreign:
|
|
|
|
Property and equipment
|
(4,234)
|
|
|
(8,672)
|
|
Intangibles
|
(2,402)
|
|
|
—
|
|
|
(6,636)
|
|
|
(8,672)
|
|
|
|
|
|
Net deferred tax (liability) asset
|
$
|
(1,371)
|
|
|
$
|
562,262
|
|
FTC carryforwards of $530.4 million expired on December 31, 2020. As of December 31, 2020, the Company had FTC carryforwards (net of uncertain tax positions) of $2.5 billion. Of this amount, $540.3 million will expire in 2021, $756.0 million in 2023, $710.7 million in 2024, $47.2 million in 2025 and $486.2 million in 2027. The Company has a disallowed interest carryforward of $604.2 million which does not expire. The Company has U.S. federal tax loss carryforwards of $197.2 million and state tax loss carryforwards of $51.6 million. The Company incurred foreign tax losses of $378.6 million, $376.8 million and $340.0 million during the tax years ended December 31, 2020, 2019 and 2018, respectively. The majority of foreign tax loss carryforwards expire in 2023, 2022 and 2021, respectively.
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
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
the valuation allowance, appropriate consideration is given to all positive and negative evidence including recent operating profitability, forecast of future earnings, ability to carryback, the reversal of net taxable temporary differences, the duration of statutory carryforward periods and tax planning strategies. For the year ended December 31, 2019, the Company relied on the forecast of future taxable income and tax planning strategies in assessing the need for a valuations allowance.Due to recent tax legislation that reduces future sources of taxable income as well as the uncertainty caused by the COVID-19 pandemic, the Company relies solely on the reversal of net taxable temporary differences in assessing the need for a valuation allowance in the current year.
As of December 31, 2020 and 2019, the Company had valuation allowances provided on its deferred tax assets as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
Foreign tax credits
|
$
|
2,540,400
|
|
|
$
|
2,509,786
|
|
Disallowed interest expense carryforwards
|
138,339
|
|
|
88,318
|
|
Intangible assets
|
48,395
|
|
|
—
|
|
U.S. loss carryforwards
|
45,015
|
|
|
—
|
|
Other U.S. deferred tax assets
|
40,659
|
|
|
6,393
|
|
Foreign loss carryforwards
|
106,737
|
|
|
96,657
|
|
Other foreign deferred tax assets
|
67,139
|
|
|
58,277
|
|
Total
|
$
|
2,986,684
|
|
|
$
|
2,759,431
|
|
The Company had the following activity for unrecognized tax benefits as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
Balance at beginning of period
|
$
|
104,295
|
|
|
$
|
99,470
|
|
|
$
|
95,236
|
|
Increases based on tax positions of the current year
|
7,061
|
|
|
8,986
|
|
|
8,926
|
|
Reductions due to lapse in statutes of limitations
|
(3,695)
|
|
|
(4,161)
|
|
|
(4,692)
|
|
Balance at end of period
|
$
|
107,661
|
|
|
$
|
104,295
|
|
|
$
|
99,470
|
|
As of December 31, 2020, 2019 and 2018, unrecognized tax benefits of $107.7 million, $104.3 million and $99.5 million, respectively, were recorded as reductions in deferred income taxes, net. The Company had no unrecognized tax benefits recorded in other long-term liabilities as of December 31, 2020, 2019 and 2018.
As of December 31, 2020, 2019 and 2018, $40.2 million, $36.6 million and $31.0 million, respectively, of unrecognized tax benefits would, if recognized, impact the effective tax rate.
The Company recognizes penalties and interest related to unrecognized tax benefits in the provision for income taxes. During the each of the years ended December 31, 2020, 2019 and 2018, the Company recognized no interest and penalties.
The Company anticipates that the 2016 statute of limitations will expire in the next 12 months for certain foreign tax jurisdictions. Also, the Company's unrecognized tax benefits include certain income tax accounting methods, which govern the timing and deductibility of income tax deductions. As a result, the Company's unrecognized tax benefits could increase up to $1.4 million over the next 12 months.
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company's income tax returns are subject to examination by the IRS and other tax authorities in the locations where it operates. The Company's 2002 to 2016 domestic income tax returns remain subject to examination by the IRS to the extent tax attributes carryforward to future years. The Company's 2017 to 2019 domestic income tax returns also remain subject to examination by the IRS. The Company's 2016 to 2019 Macau income tax returns remain subject to examination by the Financial Services Bureau.
The Company has participated in the IRS Compliance Assurance Program ("CAP") for the 2012 through 2020 tax years and will continue to participate in the IRS CAP for the 2021 tax year.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
In February 2018, May 2019, and July 2020, the Company received notification that the IRS completed its examination of the Company's 2016, 2017, and 2018 U.S. income tax returns, respectively. In February 2021, the Company received notification that the IRS completed its examination of the Company's 2019 U.S. income tax return. There were no changes in its unrecognized tax benefits as a result of the completion of these examinations.
On December 31, 2018, 2019 and 2020, the statute of limitations for the 2013, 2014, and 2015 Macau Complementary tax return expired, respectively. As a result of the expiration of the statute of limitations for the Macau Complementary Tax return, the total amount of unrecognized tax benefits decreased by $4.7 million, $4.2 million, and $3.7 million, respectively.
In July 2018, the Financial Services Bureau issued final tax assessments for the Company's Macau income tax returns of Wynn Macau SA for the years 2013 and 2014. While no additional tax was due, adjustments were made to the Company's tax loss carryforwards.
In February 2018, the Financial Services Bureau concluded its examination of the 2013 and 2014 Macau income tax returns of Palo with no changes.
In January of 2020, the Financial Services Bureau commenced an examination of the 2015 and 2016 Macau income tax returns of Palo. In July 2020, the Financial Services Bureau issued final tax assessments for Palo for the years 2015 and 2016 and the examination resulted in no change to the tax returns.
In July 2020, the Financial Services Bureau issued final tax assessments for the Company's Macau income tax returns of Wynn Macau SA for the years 2015 and 2016, while no additional tax was due, adjustments were made to the Company's tax loss carryforwards.
Note 14 - Earnings Per Share
Basic earnings per share ("EPS") is computed by dividing net income attributable to Wynn Resorts by the weighted average number of common shares outstanding during the year. 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, to the extent such impact is not anti-dilutive. Potentially dilutive securities include outstanding stock options and unvested restricted stock.
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):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Numerator:
|
|
|
|
|
|
Net income (loss) attributable to Wynn Resorts, Limited
|
$
|
(2,067,245)
|
|
|
$
|
122,985
|
|
|
$
|
572,430
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
Weighted average common shares outstanding
|
106,745
|
|
|
106,745
|
|
|
106,529
|
|
Potential dilutive effect of stock options, nonvested, and performance nonvested shares
|
—
|
|
|
240
|
|
|
503
|
|
Weighted average common and common equivalent shares outstanding
|
106,745
|
|
|
106,985
|
|
|
107,032
|
|
|
|
|
|
|
|
Net income (loss) attributable to Wynn Resorts, Limited per common share, basic
|
$
|
(19.37)
|
|
|
$
|
1.15
|
|
|
$
|
5.37
|
|
Net income (loss) attributable to Wynn Resorts, Limited per common share, diluted
|
$
|
(19.37)
|
|
|
$
|
1.15
|
|
|
$
|
5.35
|
|
|
|
|
|
|
|
Anti-dilutive stock options, nonvested, and performance nonvested shares excluded from the calculation of diluted net income per share
|
1,044
|
|
|
277
|
|
|
102
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 15 - Leases
Lessee Arrangements
The following table summarizes the balance sheet classification of the Company's lease assets and liabilities (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
Balance Sheet Classification
|
|
2020
|
|
2019
|
Assets
|
|
|
|
|
|
Operating leases
|
Operating lease assets
|
|
$
|
398,594
|
|
|
$
|
452,919
|
|
Finance leases
|
Property and equipment, net
|
|
$
|
73,201
|
|
|
$
|
23,061
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Operating leases
|
Other accrued liabilities
|
|
$
|
13,627
|
|
|
$
|
18,893
|
|
Finance leases
|
Other accrued liabilities
|
|
$
|
13,879
|
|
|
$
|
164
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
Operating leases
|
Long-term operating lease liabilities
|
|
$
|
123,124
|
|
|
$
|
159,182
|
|
Finance leases
|
Other long-term liabilities
|
|
$
|
54,379
|
|
|
$
|
17,759
|
|
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):
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
Lease cost:
|
|
|
|
Operating lease cost
|
$
|
29,574
|
|
|
$
|
33,126
|
|
Short-term lease cost
|
11,363
|
|
|
24,634
|
|
Amortization of leasehold interests in land
|
13,885
|
|
|
13,373
|
|
Variable lease cost
|
194
|
|
|
1,487
|
|
Finance lease interest cost
|
1,604
|
|
|
1,058
|
|
Total lease cost
|
$
|
56,620
|
|
|
$
|
73,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
Supplemental cash flow disclosures:
|
|
|
|
Operating lease liabilities arising from obtaining operating lease assets
|
$
|
11,625
|
|
|
$
|
45,435
|
|
Finance lease liabilities arising from obtaining finance lease assets
|
$
|
56,215
|
|
|
$
|
1,413
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
Cash used in operating activities - Operating leases
|
$
|
28,873
|
|
|
$
|
30,409
|
|
Cash used in financing activities - Finance leases
|
$
|
5,916
|
|
|
$
|
73
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
Other information:
|
|
|
|
Weighted-average remaining lease term - Operating leases
|
43.9 years
|
|
35.4 years
|
Weighted-average remaining lease term - Finance leases
|
13.6 years
|
|
42.8 years
|
|
|
|
|
Weighted-average discount rate - Operating leases
|
6.5
|
%
|
|
6.4
|
%
|
Weighted-average discount rate - Finance leases
|
4.5
|
%
|
|
6.2
|
%
|
The following table presents an analysis of lease liability maturities as of December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ending December 31,
|
|
Operating Leases
|
|
Finance Leases
|
2021
|
|
$
|
20,772
|
|
|
$
|
15,898
|
|
2022
|
|
16,849
|
|
|
15,898
|
|
2023
|
|
14,998
|
|
|
15,898
|
|
2024
|
|
10,857
|
|
|
9,618
|
|
2025
|
|
9,311
|
|
|
1,203
|
|
Thereafter
|
|
450,009
|
|
|
65,084
|
|
Total undiscounted cash flows
|
|
$
|
522,796
|
|
|
$
|
123,599
|
|
Present value
|
|
|
|
|
Short-term lease liabilities
|
|
$
|
13,627
|
|
|
$
|
13,879
|
|
Long-term lease liabilities
|
|
123,124
|
|
|
54,379
|
|
Total lease liabilities
|
|
$
|
136,751
|
|
|
$
|
68,258
|
|
Interest on lease liabilities
|
|
$
|
386,045
|
|
|
$
|
55,341
|
|
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, pursuant to a lease agreement 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 December 31, 2020 and 2019, the liability associated with this lease was $63.2 million and $62.6 million, respectively.
At December 31, 2020 and 2019, operating lease assets included approximately $85.8 million and $87.0 million, respectively, 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 2021 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 2025 and total payments of $14.0 million thereafter through 2037. At December 31, 2020 and 2019, the total liability associated with these leases was $15.4 million and $16.0 million, respectively.
At December 31, 2020 and 2019, operating lease assets included $180.3 million and $188.6 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 $12.7 million per year from 2021 through 2028 and approximately $9.4 million per year thereafter through 2037.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Rent Expense
Rent expense for the year ended December 31, 2018 was $27.1 million.
Lessor Arrangements
The following table presents the minimum and contingent operating lease income for the periods presented (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Minimum rental income (1)
|
$
|
77,946
|
|
|
$
|
136,612
|
|
|
$
|
126,192
|
|
Contingent rental income
|
56,889
|
|
|
57,807
|
|
|
52,347
|
|
Total rental income
|
$
|
134,835
|
|
|
$
|
194,419
|
|
|
$
|
178,539
|
|
(1) For the year ended December 31, 2020, reflects the impact of rent concessions provided to tenants.
The following table presents the future minimum rentals to be received under operating leases (in thousands):
|
|
|
|
|
|
Years Ending December 31,
|
Operating Leases
|
2021
|
$
|
98,604
|
|
2022
|
95,642
|
|
2023
|
80,334
|
|
2024
|
70,900
|
|
2025
|
54,300
|
|
Thereafter
|
103,879
|
|
Total future minimum rentals
|
$
|
503,659
|
|
Note 16 - Related Party Transactions
Home Purchase
In May 2010, the Company entered into an employment agreement with Linda Chen ("Ms. Chen"), who is the President and Executive Director of Wynn Macau SA. Under the terms of the employment agreement, the Company purchased a home in Macau for use by Ms. Chen and has made renovations to the home with a total cost of $11.0 million. In addition, Ms. Chen has the option to purchase the home for no further consideration at any time before the expiration of her employment contract.
Cooperation Agreement
On August 3, 2018, the Company entered into a Cooperation Agreement (the "Cooperation Agreement") with Elaine P. Wynn regarding the composition of the Company's Board of Directors and certain other matters, including, among other things, the appointment of Mr. Philip G. Satre to the Company's Board of Directors, standstill restrictions, releases, non-disparagement, reimbursement of expenses and the grant of certain complimentary privileges. The term of the Cooperation Agreement expires on the later of (i) the date that Mr. Satre no longer serves as Chair of the Board and (ii) the day after the conclusion of the 2020 annual meeting of the Company's stockholders, unless earlier terminated pursuant to the circumstances described in the Cooperation Agreement.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Amounts Due to Officers, Directors and Former Directors
The Company periodically provides services to certain executive officers, directors or former directors of the Company, including the personal use of employees, construction work and other personal services, for which the officers, directors or former directors reimburse the Company. The Company requires prepayment for any such services, which amounts are replenished on an ongoing basis as needed. As of December 31, 2020 and 2019, these net deposit balances with the Company were immaterial, as were the services provided.
Note 17 - Commitments and Contingencies
Employment Agreements
The Company has entered into employment agreements with several executive officers, other members of management and certain key employees. These agreements generally have three to five year terms and typically indicate a base salary and often contain provisions for discretionary bonuses. Certain of the executives are also entitled to a separation payment if terminated without "cause" or upon voluntary termination of employment for "good reason" following a "change of control" (as these terms are defined in the employment contracts). As of December 31, 2020, the Company was obligated to make future payments of $54.1 million, $28.3 million, $6.8 million, $1.0 million, $0.4 million, and $2.0 million during the years ending December 31, 2021, 2022, 2023, 2024, 2025, and thereafter, respectively.
Other Commitments
The Company has additional commitments for gaming tax payments in Macau, open purchase orders, construction contracts, payment obligations to communities surrounding Encore Boston Harbor, and performance and other miscellaneous contracts. As of December 31, 2020, the Company was obligated under these arrangements to make future minimum payments as follows (in thousands):
|
|
|
|
|
|
Years Ending December 31,
|
|
2021
|
$
|
205,756
|
|
2022
|
138,278
|
|
2023
|
47,977
|
|
2024
|
30,207
|
|
2025
|
22,073
|
|
Thereafter
|
126,453
|
|
Total minimum payments
|
$
|
570,744
|
|
Letters of Credit
As of December 31, 2020, the Company had outstanding letters of credit of $16.1 million.
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.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 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 is not a party to and is not named in the Revere Action.
Derivative Litigation
A number of stockholder derivative actions were 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 alleged, 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.
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 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. This case was consolidated in September 2019 into 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. Following the Nevada Supreme Court’s dismissal of the only appeal, the settlement agreement became effective and final. Following the dismissal, the Company received net proceeds of $30.2 million, which has been recognized as a reduction of general and administrative expense within the accompanying Consolidated Statements of Operations for the nine months ended September 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 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. On January 12, 2021, the court granted the Company’s motion for summary judgment of this action and denied the stockholder’s request to vacate the parties stipulation to dismiss the Federal Derivative Case. Absent an appeal of the court’s decision, this matter is resolved.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Each of the actions sought to recover for the Company unspecified damages, including restitution and disgorgement of profits, and also sought to recover attorneys' fees, costs and related expenses for the plaintiff.
Individual Stockholder Actions
A number of stockholders 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 alleged 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 district court entered an order denying the motions to dismiss, which the defendants appealed to the Nevada Supreme Court on December 24, 2019. On July 27, 2020, the Supreme Court issued an order mandating that the district court dismiss the actions. As of September 2, 2020, all of the Individual Stockholder Actions have been dismissed.
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. On April 15, 2019, the Company filed a motion to dismiss, which the court granted on May 27, 2020, with leave to amend. On July 1, 2020, the plaintiffs filed an amended complaint. On August 14, 2020, the Company filed a motion to dismiss the amended complaint, which is pending decision from 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.
Federal Investigation
From time to time, the Company 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 California relating to its anti-money laundering policies and procedures, and in the first half of 2020, received two grand jury subpoenas regarding various transactions at Wynn Las Vegas relating to certain patrons and agents who reside or operate in foreign jurisdictions. The Company continues to cooperate with the U.S. Attorney’s Office in its investigation, which remains ongoing. Because no charges or claims have been brought, the Company is unable to predict the outcome of the investigation, the extent of the materiality of the outcome, or reasonably estimate the possible range of loss, if any, which could be associated with the resolution of any possible charges or claims that may be brought against the Company.
Note 18 - Retail Joint Venture
In December 2016, the Company entered into the Retail Joint Venture with Crown Acquisitions Inc. ("Crown") to own and operate approximately 88,000 square feet of existing retail space at Wynn Las Vegas. In November 2017, the Company contributed approximately 74,000 square feet of additional retail space to the Retail Joint Venture. The Company opened the additional retail space during the fourth quarter of 2018. The Company maintains a 50.1% ownership in the Retail Joint Venture and is the managing member. The Company's responsibilities with respect to the Retail Joint Venture include day-to-day business operations, property management services and a role in the leasing decisions of the retail space.
The Company assessed its ownership in the Retail Joint Venture based on consolidation accounting guidance with an evaluation being performed to determine if the Retail Joint Venture is a VIE, if the Company has a variable interest in the Retail Joint Venture and if the Company is the primary beneficiary of the Retail Joint Venture. The primary beneficiary is the party who has the power to direct the activities of a VIE that most significantly impact the entity's economic performance and who
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
has an obligation to absorb losses of the entity or a right to receive benefits from the entity that could potentially be significant to the entity.
The Company concluded that the Retail Joint Venture is a VIE and the Company is the primary beneficiary based on its involvement in the leasing activities of the Retail Joint Venture. As a result, the Company consolidates all of the Retail Joint Venture's assets, liabilities and results of operations. The Company will evaluate its primary beneficiary designation on an ongoing basis and will assess the appropriateness of the Retail Joint Venture's VIE status when changes occur.
As of December 31, 2020 and 2019, the Retail Joint Venture had total assets of $96.3 million and $90.0 million, respectively, and total liabilities of $633.5 million and $622.4 million, respectively. The Retail Joint Venture's total liabilities as of December 31, 2020 included long-term debt of $612.3 million, net of debt issuance costs, related to the outstanding borrowings under the Retail Term Loan.
Note 19 - Business Combination
On October 23, 2020, the Company acquired a controlling interest in Wynn Interactive, which was formed in stages through the merger of Wynn Resorts' digital gaming businesses and BetBull (the “BetBull Acquisition”). BetBull is licensed to operate online sports and casino wagering in the United Kingdom and develops mobile applications for that purpose. This acquisition provides the Company with access to the online market in the United Kingdom, synergies in mobile application development, and digital gaming operations expertise.
Prior to the BetBull Acquisition, the Company held a 22.5% interest in BetBull, which was accounted for as a cost method investment. Immediately prior to the BetBull Acquisition, the book and fair values of this cost method investment were $21.5 million and $37.2 million, respectively. The Company recorded a gain of $15.7 million to reflect the fair value of its interest at the date of acquisition, which was recorded in Other non-operating income (expense) on the Consolidated Statement of Operations for the year ended December 31, 2020.
As consideration for a controlling interest in Wynn Interactive, the Company contributed its interests in WSI US, LLC (“WSI”) and Wynn Social Gaming, LLC (“Wynn Social”) both of which make up the Company’s existing digital operations. The fair value of the combined interests contributed totaled $49.5 million. Consideration also included the settlement of transactions from the Company’s pre-existing relationship with BetBull and the fair value of vested replacement stock options, all of which totaled $6.0 million. The fair value of non-controlling interest at the consummation of the BetBull Acquisition was approximately $72.0 million.
The fair values of WSI, Wynn Social and BetBull were all determined using the market approach given the early stages of each of the businesses. The income approach was also used as a cross-check to determine the reasonableness of the market approach as well as to determine the fair value of BetBull immediately prior to the BetBull Acquisition. The settlement of pre-existing transactions was valued based on the contractual amounts owed to either party.
The BetBull Acquisition was accounted for as a business combination. The assets acquired and liabilities assumed were recognized at their fair values at the acquisition date, which was estimated using both level 2 (observable) and level 3 (unobservable) inputs.
The following table sets forth the preliminary purchase price allocation (in thousands):
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
Consideration
|
|
Total consideration
|
$
|
164,671
|
|
Less: Cash acquired
|
4,604
|
|
Total consideration, net of cash acquired
|
160,067
|
|
Identifiable assets acquired and liabilities assumed
|
|
Other current assets
|
1,735
|
|
Property and equipment
|
32,092
|
|
Intangible assets other than goodwill
|
16,393
|
|
Goodwill
|
121,039
|
|
Deferred tax liabilities
|
(1,249)
|
|
Liabilities assumed
|
(9,943)
|
|
Total identifiable assets acquired and liabilities assumed
|
$
|
160,067
|
|
Acquired intangible assets included in the above table are being amortized on a straight-line basis over their estimated useful life of ten years for trademarks and three years for customer lists. In addition, the Company acquired software totaling $31.5 million, which is included in Property and equipment in the table above and is being amortized over an estimated useful life of three years. The estimated useful lives approximate the pattern in which the economic benefits of the intangible assets and software are expected to be realized. The purchase price allocation is preliminary as the Company is determining its final deferred tax assets and working capital adjustments.
Immediately after the BetBull Acquisition, the Company contributed $78.0 million to Wynn Interactive and purchased approximately $33.6 million of Wynn Interactive shares from non-controlling shareholders (the "Secondary Transaction"). After the BetBull Acquisition and the Secondary Transaction, the Company holds an approximately 72% interest in Wynn Interactive, which owns 100% of BetBull, WSI, and Wynn Social.
The Secondary Transaction was recorded as an adjustment to Stockholders’ equity (deficit) on the Consolidated Balance Sheet as the Company had a controlling interest in BetBull at the time of the transaction.
Pro forma results of operations for this acquisition have not been presented because they are not material to the consolidated statements of operations.
Note 20 - 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. Other Macau primarily represents the assets for the Company's Macau holding company. 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.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following tables present the Company's segment information (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Operating revenues
|
|
|
|
|
|
Macau Operations:
|
|
|
|
|
|
Wynn Palace
|
|
|
|
|
|
Casino
|
$
|
368,284
|
|
|
$
|
2,139,756
|
|
|
$
|
2,356,022
|
|
Rooms
|
46,110
|
|
|
174,576
|
|
|
170,067
|
|
Food and beverage
|
43,198
|
|
|
117,376
|
|
|
110,638
|
|
Entertainment, retail and other (1)
|
47,828
|
|
|
111,986
|
|
|
120,839
|
|
|
505,420
|
|
|
2,543,694
|
|
|
2,757,566
|
|
Wynn Macau
|
|
|
|
|
|
Casino
|
344,595
|
|
|
1,796,209
|
|
|
1,994,885
|
|
Rooms
|
39,111
|
|
|
110,387
|
|
|
113,495
|
|
Food and beverage
|
33,094
|
|
|
81,576
|
|
|
76,369
|
|
Entertainment, retail and other (1)
|
57,857
|
|
|
81,857
|
|
|
109,776
|
|
|
474,657
|
|
|
2,070,029
|
|
|
2,294,525
|
|
Total Macau Operations
|
980,077
|
|
|
4,613,723
|
|
|
5,052,091
|
|
|
|
|
|
|
|
Las Vegas Operations:
|
|
|
|
|
|
Casino
|
236,826
|
|
|
394,104
|
|
|
434,083
|
|
Rooms
|
202,073
|
|
|
483,055
|
|
|
468,238
|
|
Food and beverage
|
216,426
|
|
|
558,782
|
|
|
567,121
|
|
Entertainment, retail and other (1)
|
92,622
|
|
|
197,516
|
|
|
196,127
|
|
Total Las Vegas Operations
|
747,947
|
|
|
1,633,457
|
|
|
1,665,569
|
|
|
|
|
|
|
|
Encore Boston Harbor:
|
|
|
|
|
|
Casino
|
287,525
|
|
|
243,855
|
|
|
—
|
|
Rooms
|
20,679
|
|
|
36,144
|
|
|
—
|
|
Food and beverage
|
36,866
|
|
|
61,088
|
|
|
—
|
|
Entertainment, retail and other (1)
|
16,596
|
|
|
22,832
|
|
|
—
|
|
Total Encore Boston Harbor
|
361,666
|
|
|
363,919
|
|
|
—
|
|
|
|
|
|
|
|
Corporate and other:
|
|
|
|
|
|
Entertainment, retail and other
|
6,171
|
|
|
—
|
|
|
—
|
|
Total Corporate and other
|
6,171
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
Total operating revenues
|
$
|
2,095,861
|
|
|
$
|
6,611,099
|
|
|
$
|
6,717,660
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Adjusted Property EBITDA (2)
|
|
|
|
|
|
Macau Operations:
|
|
|
|
|
|
Wynn Palace
|
$
|
(149,647)
|
|
|
$
|
729,535
|
|
|
$
|
843,902
|
|
Wynn Macau
|
(87,189)
|
|
|
648,837
|
|
|
733,238
|
|
Total Macau Operations
|
(236,836)
|
|
|
1,378,372
|
|
|
1,577,140
|
|
Las Vegas Operations
|
(56,356)
|
|
|
413,886
|
|
|
467,273
|
|
Encore Boston Harbor
|
(23,762)
|
|
|
23,150
|
|
|
—
|
|
Corporate and other
|
(7,351)
|
|
|
—
|
|
|
—
|
|
Total
|
(324,305)
|
|
|
1,815,408
|
|
|
2,044,413
|
|
Other operating expenses
|
|
|
|
|
|
Litigation settlement
|
—
|
|
|
—
|
|
|
463,557
|
|
Pre-opening
|
6,506
|
|
|
102,009
|
|
|
53,490
|
|
Depreciation and amortization
|
725,502
|
|
|
624,878
|
|
|
550,596
|
|
Property charges and other
|
67,455
|
|
|
20,286
|
|
|
60,256
|
|
Corporate expenses and other (3)
|
46,023
|
|
|
150,228
|
|
|
144,479
|
|
Stock-based compensation (4)
|
62,254
|
|
|
39,702
|
|
|
36,491
|
|
Total other operating expenses
|
907,740
|
|
|
937,103
|
|
|
1,308,869
|
|
Operating income (loss)
|
(1,232,045)
|
|
|
878,305
|
|
|
735,544
|
|
Other non-operating income and expenses
|
|
|
|
|
|
Interest income
|
15,384
|
|
|
24,449
|
|
|
29,866
|
|
Interest expense, net of amounts capitalized
|
(556,474)
|
|
|
(414,030)
|
|
|
(381,849)
|
|
Change in derivatives fair value
|
(13,060)
|
|
|
(3,228)
|
|
|
(4,520)
|
|
Change in Redemption Note fair value
|
—
|
|
|
—
|
|
|
(69,331)
|
|
(Loss) gain on extinguishment of debt
|
(4,601)
|
|
|
(12,437)
|
|
|
104
|
|
Other
|
28,521
|
|
|
15,159
|
|
|
(4,074)
|
|
Total other non-operating income and expenses
|
(530,230)
|
|
|
(390,087)
|
|
|
(429,804)
|
|
Income (loss) before income taxes
|
(1,762,275)
|
|
|
488,218
|
|
|
305,740
|
|
(Provision) benefit for income taxes
|
(564,671)
|
|
|
(176,840)
|
|
|
497,344
|
|
Net income (loss)
|
(2,326,946)
|
|
|
311,378
|
|
|
803,084
|
|
Net income (loss) attributable to noncontrolling interests
|
259,701
|
|
|
(188,393)
|
|
|
(230,654)
|
|
Net income (loss) attributable to Wynn Resorts, Limited
|
$
|
(2,067,245)
|
|
|
$
|
122,985
|
|
|
$
|
572,430
|
|
(1)Includes lease revenue accounted for under lease accounting guidance. For more information on leases, see Note 15, "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 (loss), 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 year ended December 31, 2020, includes a $30.2 million net gain recorded in relation to a derivative litigation settlement. For the year ended December 31, 2019, includes a $35.0 million nonrecurring regulatory expense.
(4)Excludes $0.7 million included in pre-opening expenses for the years ended December 31, 2019 and 2018. Excludes a credit of $2.2 million included in property charges and other expenses in 2018.
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
2020
|
|
2019
|
|
2018
|
Capital expenditures
|
|
|
|
|
|
Macau Operations:
|
|
|
|
|
|
Wynn Palace
|
$
|
46,717
|
|
|
$
|
66,545
|
|
|
$
|
89,617
|
|
Wynn Macau
|
49,845
|
|
|
142,112
|
|
|
62,542
|
|
Total Macau Operations
|
96,562
|
|
|
208,657
|
|
|
152,159
|
|
Las Vegas Operations
|
85,882
|
|
|
96,928
|
|
|
73,029
|
|
Encore Boston Harbor
|
61,342
|
|
|
471,381
|
|
|
791,250
|
|
Corporate and other
|
46,329
|
|
|
286,327
|
|
|
459,534
|
|
Total
|
$
|
290,115
|
|
|
$
|
1,063,293
|
|
|
$
|
1,475,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
Assets
|
|
|
|
|
|
Macau Operations:
|
|
|
|
|
|
Wynn Palace
|
$
|
3,393,790
|
|
|
$
|
3,734,210
|
|
|
$
|
3,858,904
|
|
Wynn Macau
|
1,202,709
|
|
|
1,656,625
|
|
|
1,903,921
|
|
Other Macau
|
2,026,098
|
|
|
1,023,411
|
|
|
68,487
|
|
Total Macau Operations
|
6,622,597
|
|
|
6,414,246
|
|
|
5,831,312
|
|
Las Vegas Operations
|
2,992,870
|
|
|
2,806,972
|
|
|
2,792,508
|
|
Encore Boston Harbor
|
2,300,016
|
|
|
2,456,667
|
|
|
1,865,286
|
|
Corporate and other
|
1,954,064
|
|
|
2,193,396
|
|
|
2,727,163
|
|
Total
|
$
|
13,869,547
|
|
|
$
|
13,871,281
|
|
|
$
|
13,216,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2020
|
|
2019
|
|
2018
|
Long-lived assets
|
|
|
|
|
|
Macau
|
$
|
3,989,797
|
|
|
$
|
4,321,970
|
|
|
$
|
4,387,051
|
|
United States
|
5,738,343
|
|
|
5,909,847
|
|
|
5,166,537
|
|
Total
|
$
|
9,728,140
|
|
|
$
|
10,231,817
|
|
|
$
|
9,553,588
|
|
WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Quarterly Consolidated Financial Information (Unaudited)
The following tables (in thousands, except per share data) present selected quarterly financial information for 2020 and 2019, as previously reported. Because income (loss) per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters may not equal the total income per share amounts for the year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2020
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
Operating revenues
|
$
|
953,716
|
|
|
$
|
85,698
|
|
|
$
|
370,452
|
|
|
$
|
685,995
|
|
|
$
|
2,095,861
|
|
Operating loss
|
$
|
(247,411)
|
|
|
$
|
(523,016)
|
|
|
$
|
(283,007)
|
|
|
$
|
(178,611)
|
|
|
$
|
(1,232,045)
|
|
Net loss
|
$
|
(450,253)
|
|
|
$
|
(734,869)
|
|
|
$
|
(831,533)
|
|
|
$
|
(310,291)
|
|
|
$
|
(2,326,946)
|
|
Net loss attributable to Wynn Resorts, Limited
|
$
|
(402,037)
|
|
|
$
|
(637,564)
|
|
|
$
|
(758,142)
|
|
|
$
|
(269,502)
|
|
|
$
|
(2,067,245)
|
|
Basic loss per share
|
$
|
(3.77)
|
|
|
$
|
(5.97)
|
|
|
$
|
(7.10)
|
|
|
$
|
(2.53)
|
|
|
$
|
(19.37)
|
|
Diluted loss per share
|
$
|
(3.77)
|
|
|
$
|
(5.97)
|
|
|
$
|
(7.10)
|
|
|
$
|
(2.53)
|
|
|
$
|
(19.37)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
Year
|
Operating revenues
|
$
|
1,651,546
|
|
|
$
|
1,658,332
|
|
|
$
|
1,647,762
|
|
|
$
|
1,653,459
|
|
|
$
|
6,611,099
|
|
Operating income
|
$
|
255,176
|
|
|
$
|
218,716
|
|
|
$
|
177,835
|
|
|
$
|
226,578
|
|
|
$
|
878,305
|
|
Net income (loss)
|
$
|
159,731
|
|
|
$
|
142,234
|
|
|
$
|
26,883
|
|
|
$
|
(17,470)
|
|
|
$
|
311,378
|
|
Net income (loss) attributable to Wynn Resorts, Limited
|
$
|
104,872
|
|
|
$
|
94,551
|
|
|
$
|
(3,496)
|
|
|
$
|
(72,942)
|
|
|
$
|
122,985
|
|
Basic income (loss) per share
|
$
|
0.98
|
|
|
$
|
0.88
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.68)
|
|
|
$
|
1.15
|
|
Diluted income (loss) per share
|
$
|
0.98
|
|
|
$
|
0.88
|
|
|
$
|
(0.03)
|
|
|
$
|
(0.68)
|
|
|
$
|
1.15
|
|