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Wynn Resorts, Limited Reports Second Quarter Results

LAS VEGAS--(BUSINESS WIRE)--Jul. 30, 2009-- Wynn Resorts, Limited (Nasdaq: WYNN) today reported financial results for the quarter ended June 30, 2009.

Net revenues for the second quarter of 2009 were $723.3 million, compared to $825.2 million in the second quarter of 2008.

Consolidated adjusted property EBITDA (1) decreased 18.7% to $192.7 million for the second quarter of 2009, compared to $237.0 million in the second quarter of 2008.

On a US GAAP (Generally Accepted Accounting Principles) basis, net income for the quarter was $25.5 million, or $0.21 per diluted share, compared to net income of $272.0 million, or $2.42 per diluted share in 2008. Adjusted net income in the second quarter of 2009 was $11.5 million, or $0.09 per diluted share (adjusted EPS)(2) compared to an adjusted net income of $124.3 million, or $1.11 per diluted share in the second quarter of 2008.

Las Vegas Second Quarter Results

Our results of operations for the periods presented are not comparable as the three months ended June 30, 2009 includes Encore at Wynn Las Vegas, which opened on December 22, 2008. The prior year quarter includes only Wynn Las Vegas.

For the quarter ended June 30, 2009, our Las Vegas operations generated adjusted property EBITDA of $75.5 million, with a 24.1% EBITDA margin on net revenue, compared to $81.8 million in the second quarter of 2008. The EBITDA decline was primarily driven by higher operating expenses associated with the opening of Encore.

Net casino revenues in the second quarter of 2009 were $124.3 million, compared to $120.7 million for the second quarter of 2008. Table games drop was $494.8 million, with win per table per day (before discounts) of $5,007, compared to drop of $493.6 million and win per table per day of $7,742 in the second quarter of 2008. Table games win percentage of 20.7% was slightly below the property’s expected range of 21% to 24%. Slot machine handle of $836.8 million was 1.8% below the comparable period of 2008 and win per unit per day was $155, compared to a win per unit per day of $232 in the second quarter of 2008. The reduction in win per table and win per unit is due primarily to the addition of 82 tables and 812 slot machines with the opening of Encore.

Gross non-casino revenues for the quarter were $231.9 million, a 9.4% increase from the second quarter of 2008, driven primarily by higher hotel and food and beverage revenues resulting from the opening of Encore. Hotel revenues were up 12.9% to $81.5 million during the quarter, versus $72.1 million in the second quarter of 2008 due to the addition of 2,034 suites at Encore. Our Las Vegas operations achieved an Average Daily Rate (ADR) of $218 for the quarter, compared to $302 in the 2008 quarter. Our occupancy was 86.6%, compared to 96.5% during the prior year period, generating revenue per available room (REVPAR) of $188 in the 2009 period (35.4% below the second quarter of 2008 of $292).

Food and beverage revenues increased 18.6% to $99.9 million in the quarter as a result of the additional 12 food and beverage outlets located in the Encore expansion. Retail revenues were $22.1 million in the quarter, flat with last year’s levels. Entertainment revenues decreased $6.6 million (34.9%) from the second quarter of 2008.

Macau Second Quarter Results

In the second quarter of 2009, net revenues were $410.4 million compared to $529.9 million in the second quarter of 2008. Wynn Macau generated adjusted property EBITDA of $117.2 million, compared to $155.2 million in the second quarter of 2008.

Table games turnover in the VIP segment was $12.6 billion for the period, compared to $16.3 billion for the second quarter of 2008. VIP table games win as a percentage of turnover (calculated before discounts and commissions) for the second quarter of 2009 was 2.7%, at the lower end of the expected range of 2.7% to 3.0% and below the 3.0% experienced in the 2008 quarter.

Table games drop in the mass market category was approximately $481 million during the period, a 23.3% decrease from $626.9 million in the second quarter of 2008. Mass market table games win percentage (calculated before discounts) of 21.5% was above our expected range of 18% to 20% and higher than the 18.9% experienced in the second quarter of 2008.

Slot machine win increased 3.2% compared to the second quarter of 2008 and win per unit per day was $383, 6.6% higher than in the second quarter of 2008.

Wynn Macau achieved an Average Daily Rate (ADR) of $263 for the second quarter of 2009, compared to $277 in the 2008 quarter. The property’s occupancy was 86.7%, compared to 87.9% during the prior year period, generating revenue per available room (REVPAR) of $228 in the 2009 period, 6.6% below 2008 levels of $244.

Encore at Wynn Macau

Construction continues on a further expansion of Wynn Macau. Encore at Wynn Macau is expected to open in the first half of 2010, adding a fully-integrated resort hotel to Wynn Macau with approximately 400 luxury suites and four villas, along with additional gaming spaces, food and beverage and retail amenities. The current project budget is approximately $650 million.

As of June 30, 2009, we have incurred $309.5 million associated with the construction of Encore at Wynn Macau.

Other Factors Affecting Earnings

Interest expense, net of $2.3 million in capitalized interest, was $53.7 million for the second quarter of 2009. Depreciation and amortization expenses were $102.7 million. Corporate expense and other was $13.1 million in the second quarter, including $6.4 million in stock based compensation. Property charges and other were a credit of $5.9 million primarily related to the refund of an aircraft purchase deposit.

Balance Sheet and Capital Expenditures

Our total cash balances on June 30, 2009 were $1.1 billion. Total debt outstanding at the end of the quarter was $4.1 billion, including approximately $2.6 billion of Wynn Las Vegas debt and $1.5 billion of Wynn Macau debt.

Capital expenditures during the second quarter of 2009 of approximately $125 million included the payment of certain construction payables and retention associated with Encore at Wynn Las Vegas and ongoing construction of Encore at Wynn Macau.

During the quarter, we repaid the remaining $375 million under the Wynn Resorts Term Loan Facility at a discounted price of 97.25% and recognized an $8.8 million gain on early retirement of debt. We also purchased $26.5 million face amount of the Wynn Las Vegas 6 5/8% First Mortgage Notes due 2014 at a discount. This transaction resulted in a gain on early extinguishment of debt of $3.1 million.

Conference Call Information

The Company will hold a conference call to discuss its results on Thursday, July 30th, 2009 at 9:00 a.m. PT (12:00 p.m. ET). Interested parties are invited to join the call by accessing a live audio webcast at http://www.wynnresorts.com (Investor Relations).

Forward-looking Statements

This release contains forward-looking statements regarding operating trends and future results of operations. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us. The risks and uncertainties include, but are not limited to, competition in the casino/hotel and resorts industries, the Company’s dependence on existing management, levels of travel, leisure and casino spending, general economic conditions, and changes in gaming laws or regulations. Additional information concerning potential factors that could affect the Company's financial results is included in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and the Company's other periodic reports filed with the Securities and Exchange Commission. The Company is under no obligation to (and expressly disclaims any such obligation to) update its forward-looking statements as a result of new information, future events or otherwise.

Non-GAAP financial measures

(1) “Adjusted property EBITDA” is earnings before interest, taxes, depreciation, amortization, pre-opening costs, property charges and other, corporate expenses, stock-based compensation, and other non-operating income and expenses, and includes equity in income (loss) from unconsolidated affiliates. 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. The Company also presents adjusted property EBITDA because it is used by some investors as a way 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 financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”). In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including Wynn Resorts, Limited, have historically excluded from their EBITDA calculations pre-opening expenses, property charges and corporate expenses, that do not relate to the management of specific casino properties. However, adjusted property EBITDA should not be considered as an alternative to operating income as an indicator of the Company’s performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP. Unlike net income, adjusted property EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. The Company compensates for these limitations by using adjusted property EBITDA as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Such GAAP measurements include operating income (loss), net income (loss), cash flows from operations and cash flow data. The Company has significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in adjusted property EBITDA. Also, Wynn Resorts’ calculation of adjusted property EBITDA may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

The Company has included schedules in the tables that accompany this release that reconcile (i) net income to adjusted net income, and (ii) operating income to adjusted property EBITDA and adjusted property EBITDA to net income.

(2) Adjusted net income (loss) is net income (loss) before pre-opening costs, property charges and other non-cash non-operating income and expenses. Adjusted net income (loss) and adjusted net income (loss) per share (“EPS”) are presented as supplemental disclosures because management believes that these financial measures are widely used to measure the performance, and as a principal basis for valuation, of gaming companies. These measures are used by management and/or evaluated by some investors, in addition to income and EPS computed in accordance with GAAP, as an additional basis for assessing period-to-period results of our business. Adjusted net income (loss) and adjusted net income (loss) per share may be different from the calculation methods used by other companies and, therefore, comparability may be limited.

WYNN RESORTS, LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands, except per share data)

(unaudited)

     
Three Months Ended Six Months Ended
June 30, June 30,
2009   2008 2009   2008
 
Operating revenues:
Casino $ 508,345 $ 623,637 $ 1,049,999 $ 1,215,408
Rooms 95,185 86,811 193,591 172,073
Food and beverage 111,550 96,955 221,141 188,020
Entertainment, retail and other   69,472     72,958     132,604     141,112  
Gross revenues 784,552 880,361 1,597,335 1,716,613
Less: promotional allowances   (61,296 )   (55,204 )   (134,124 )   (112,750 )
Net revenues   723,256     825,157     1,463,211     1,603,863  
 
Operating costs and expenses:
Casino 327,298 399,947 703,803 788,325
Rooms 25,099 20,412 50,055 40,743
Food and beverage 64,171 55,125 124,159 106,796
Entertainment, retail and other 40,017 43,257 76,034 87,874
General and administrative 83,105 84,973 176,598 164,235
Provision for doubtful accounts 3,935 1,194 7,829 12,716
Pre-opening costs 40 6,821 40 12,144
Depreciation and amortization 102,731 63,961 204,199 126,693
Property charges and other   (5,938 )   5,298     10,547     29,565  
Total operating costs and expenses 640,458 680,988 1,353,264 1,369,091
 
Operating income   82,798     144,169     109,947     234,772  
 
Other income (expense):
Interest income 524 5,495 838 17,384
Interest expense, net of capitalized interest (53,689 ) (40,982 ) (110,721 ) (86,250 )
Increase in swap fair value 3,261 23,919 4,356 8,707
Gain on extinguishment of debt 11,878 - 22,513 -

Equity in income (loss) from unconsolidated affiliates

(33 ) 163 (38 ) 971
Other   287     926     211     111  
Other income (expense), net   (37,772 )   (10,479 )   (82,841 )   (59,077 )
 
Income before income taxes 45,026 133,690 27,106 175,695
 
Benefit (provision) for income taxes   (19,547 )   138,280     (35,441 )   143,152  
 
Net income (loss) $ 25,479   $ 271,970   $ (8,335 ) $ 318,847  
 
 
Basic and diluted income (loss) per common share:
Net income (loss):

 

Basic $ 0.21 $ 2.45 $ (0.07 ) $ 2.85
Diluted $ 0.21 $ 2.42 $ (0.07 ) $ 2.82
Weighted average common shares outstanding:
Basic 122,161 111,128 117,391

 

111,770
Diluted 122,386 112,365 117,391 112,986

WYNN RESORTS, LIMITED AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS)

TO ADJUSTED NET INCOME (LOSS)

(amounts in thousands)

(unaudited)

       
Three Months Ended Six Months Ended
June 30, June 30,
2009   2008 2009   2008
 
Net income (loss) $ 25,479 $ 271,970 $ (8,335 ) $ 318,847
Pre-opening costs 40 6,821 40 12,144
Gain on extinguishment of debt (11,878 ) - (22,513 ) -
Increase in swap fair value (3,261 ) (23,919 ) (4,356 ) (8,707 )
Property charges and other (5,938 ) 5,298 10,547 29,565
Adjustment for income taxes 7,047 4,763 6,050 (8,562 )
Recognition of foreign tax credit   -     (140,655 )   -     (140,655 )
Adjusted net income (loss) (2) $ 11,489   $ 124,278   $ (18,567 ) $ 202,632  
 
 

Adjusted net income (loss) per diluted share

$ 0.09   $ 1.11   $ (0.16 ) $ 1.79  

WYNN RESORTS, LIMITED AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED PROPERTY EBITDA

AND ADJUSTED PROPERTY EBITDA TO NET INCOME

(amounts in thousands)

(unaudited)

       
Three Months Ended June 30, 2009

Wynn Las
Vegas

 

Wynn
Macau

 

Corporate and
Other

Total
 
Operating income (loss) $ (8,346 ) $ 73,660 $ 17,484 $ 82,798
 
Pre-opening costs - 40 - 40
Depreciation and amortization 78,425 23,462 844 102,731
Property charges and other (6,646 ) 703 5 (5,938 )

Corporate expense, management fees, royalties and other

9,865 18,077 (21,226 ) 6,716
Stock-based compensation 2,386 1,231 2,748 6,365

Equity in income/(loss) from unconsolidated affiliates

(178 ) - 145 (33 )
       
Adjusted Property EBITDA (1) $ 75,506   $ 117,173 $ -   $ 192,679  
 
Three Months Ended June 30, 2008

Wynn Las
Vegas

Wynn
Macau

Corporate and
Other

Total
 
Operating income $ 20,343 $ 102,943 $ 20,883 $ 144,169
 
Pre-opening costs 6,832 - (11 ) 6,821
Depreciation and amortization 40,794 22,339 828 63,961
Property charges and other 566 4,732 - 5,298

Corporate expense, management fees, royalties and other

10,892 24,266 (23,724 ) 11,434
Stock-based compensation 2,412 907 1,817 5,136

Equity in income/(loss) from unconsolidated affiliates

(44 ) - 207 163
       
Adjusted Property EBITDA (1) $ 81,795   $ 155,187 $ -   $ 236,982  
 
Three Months Ended
June 30,
2009 2008
Adjusted Property EBITDA (1) $ 192,679 $ 236,982
 
Pre-opening costs (40 ) (6,821 )
Depreciation and amortization (102,731 ) (63,961 )
Property charges and other 5,938 (5,298 )
Corporate expenses and other (6,716 ) (11,434 )
Stock-based compensation (6,365 ) (5,136 )
Interest income 524 5,495
Interest expense, net of capitalized interest (53,689 ) (40,982 )
Increase in swap fair value 3,261 23,919
Gain on extinguishment of debt 11,878 -
Other 287 926
Benefit (provision) for income taxes (19,547 ) 138,280
   
Net income $ 25,479   $ 271,970  

WYNN RESORTS, LIMITED AND SUBSIDIARIES

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED PROPERTY EBITDA

AND ADJUSTED PROPERTY EBITDA TO NET INCOME (LOSS)

(amounts in thousands)

(unaudited)

       
Six Months Ended June 30, 2009

Wynn Las
Vegas

 

Wynn
Macau

 

Corporate and
Other

Total
 
Operating income (loss) $ (66,730 ) $ 142,394 $ 34,283 $ 109,947
 
Pre-opening costs - 40 - 40
Depreciation and amortization 155,869 46,833 1,497 204,199
Property charges and other 7,294 1,748 1,505 10,547

Corporate expense, management fees, royalties and other

18,789 38,342 (42,447 ) 14,684
Stock-based compensation 4,564 2,459 4,771 11,794

Equity in income/(loss) from unconsolidated affiliates

(429 ) - 391 (38 )
       
Adjusted Property EBITDA (1) $ 119,357   $ 231,816 $ -   $ 351,173  
 
Six Months Ended June 30, 2008

Wynn Las
Vegas

Wynn
Macau

Corporate and
Other

Total

 
Operating income $ 11,470 $ 183,271 $ 40,031 $ 234,772
 
Pre-opening costs 12,143 1 - 12,144
Depreciation and amortization 80,274 44,951 1,468 126,693
Property charges and other 21,079 8,380 106 29,565

Corporate expense, management fees, royalties and other

20,651 46,523 (45,058 ) 22,116
Stock-based compensation 4,379 1,456 2,719 8,554

Equity in income/(loss) from unconsolidated affiliates

237 - 734 971
       
Adjusted Property EBITDA (1) $ 150,233   $ 284,582 $ -   $ 434,815  
 
Six Months Ended
June 30,
2009 2008
Adjusted Property EBITDA (1) $ 351,173 $ 434,815
 
Pre-opening costs (40 ) (12,144 )
Depreciation and amortization (204,199 ) (126,693 )
Property charges and other (10,547 ) (29,565 )
Corporate expenses and other (14,684 ) (22,116 )
Stock-based compensation (11,794 ) (8,554 )
Interest income 838 17,384
Interest expense, net of capitalized interest (110,721 ) (86,250 )
Increase in swap fair value 4,356 8,707
Gain on extinguishment of debt 22,513 -
Other 211 111
Benefit (provision) for income taxes (35,441 ) 143,152
   
Net income (loss) $ (8,335 ) $ 318,847  

WYNN RESORTS, LIMITED AND SUBSIDIARIES

SUPPLEMENTAL DATA SCHEDULE

     
Three Months Ended     Six Months Ended

June 30,
2009

 

June 30,
2008

   

June 30,
2009

 

June 30,
2008

Room Statistics for Las Vegas operations5:    
Occupancy % 86.6% 96.5% 88.0% 96.2%
Average Daily Rate (ADR)1 $ 218 $ 302 $ 220 $ 300
Revenue per available room (REVPAR)2 $ 188 $ 292 $ 194 $ 289
 
Other information for Las Vegas operations5:
Table games win per unit per day3 $ 5,007 $ 7,742 $ 4,702 $ 8,175
Table Win % 20.7% 20.4% 19.2% 20.2%
Slot machine win per unit per day4 $ 155 $ 232 $ 167 $ 230
Average number of table games 225 143 229 139
Average number of slot machines 2,780 1,968 2,781 1,947
 
Room Statistics for Macau:
Occupancy % 86.7% 87.9% 85.0% 88.2%
Average Daily Rate (ADR)1 $ 263 $ 277 $ 265 $ 277
Revenue per available room (REVPAR)2 $ 228 $ 244 $ 225 $ 244
 
Other information for Macau:
Table games win per unit per day3 $ 13,178 $ 17,289 $ 13,957 $ 16,740
Slot machine win per unit per day4 $ 383 $ 359 $ 412 $ 335
Average number of table games 367 381 368 382
Average number of slot machines 1,217 1,258 1,233 1,250

(1) ADR is Average Daily Rate and is calculated by dividing total room revenue (less service charges, if any) by total rooms occupied.

(2) REVPAR is Revenue per Available Room and is calculated by dividing total room revenue by total rooms available.

(3) Table games win per unit per day is shown before discounts and commissions.

(4) Slot machine win per unit per day is net of participation fees and progressive accruals.

(5) Wynn Las Vegas, including Encore for 2009.

Source: Wynn Resorts, Limited

Wynn Resorts, Limited
Samanta Stewart, 702-770-7555
investorrelations@wynnresorts.com