10-Q 1 wynn-20220331.htm 10-Q wynn-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                 
Commission File No. 000-50028
 WYNN RESORTS, LIMITED
(Exact name of registrant as specified in its charter)
Nevada46-0484987
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
3131 Las Vegas Boulevard South - Las Vegas, Nevada 89109
(Address of principal executive offices) (Zip Code)
(702) 770-7555
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01WYNNNasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes     No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
ClassOutstanding at May 3, 2022
Common stock, par value $0.01  115,964,950



WYNN RESORTS, LIMITED AND SUBSIDIARIES
FORM 10-Q
INDEX
 
Part I.Financial Information
Part II.Other Information

2

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

March 31, 2022December 31, 2021
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents$2,317,352 $2,522,530 
Restricted cash5,735 4,896 
Accounts receivable, net of allowance for credit losses of $100,101 and $111,319
187,007 199,463 
Inventories72,244 69,967 
Prepaid expenses and other83,269 79,061 
Total current assets2,665,607 2,875,917 
Property and equipment, net8,670,727 8,765,308 
Restricted cash 3,327 3,641 
Goodwill and intangible assets, net272,292 307,578 
Operating lease assets363,891 371,365 
Other assets203,466 207,017 
Total assets$12,179,310 $12,530,826 
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts and construction payables$164,934 $170,542 
Customer deposits423,859 436,388 
Gaming taxes payable40,306 73,173 
Accrued compensation and benefits142,490 206,225 
Accrued interest144,110 132,877 
Current portion of long-term debt50,000 50,000 
Other accrued liabilities188,547 218,675 
Total current liabilities1,154,246 1,287,880 
Long-term debt11,872,894 11,884,546 
Long-term operating lease liabilities 113,321 115,187 
Other long-term liabilities72,108 79,428 
Total liabilities13,212,569 13,367,041 
Commitments and contingencies (Note 15)
Stockholders' 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; 131,789,909 and 131,449,806 shares issued; 115,917,961 and 115,714,943 shares outstanding, respectively
1,318 1,314 
Treasury stock, at cost; 15,871,948 and 15,734,863 shares, respectively
(1,448,040)(1,436,373)
Additional paid-in capital3,571,666 3,502,715 
Accumulated other comprehensive income9,301 6,004 
Accumulated deficit(2,471,285)(2,288,078)
Total Wynn Resorts, Limited stockholders' deficit(337,040)(214,418)
Noncontrolling interests(696,219)(621,797)
Total stockholders' deficit(1,033,259)(836,215)
Total liabilities and stockholders' deficit$12,179,310 $12,530,826 

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

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

 Three Months Ended March 31,
 20222021
Operating revenues:
Casino$489,862 $516,218 
Rooms170,376 76,190 
Food and beverage174,020 68,509 
Entertainment, retail and other119,076 75,765 
Total operating revenues953,334 736,682 
Operating expenses:
Casino324,079 351,966 
Rooms58,715 33,535 
Food and beverage146,656 73,948 
Entertainment, retail and other88,904 73,459 
General and administrative196,780 179,774 
Provision for credit losses342 7,367 
Pre-opening2,447 1,627 
Depreciation and amortization184,556 185,121 
Property charges and other45,720 5,617 
Total operating expenses1,048,199 912,414 
Operating loss(94,865)(175,732)
Other income (expense):
Interest income1,280 904 
Interest expense, net of amounts capitalized(152,158)(152,852)
Change in derivatives fair value7,400 4,409 
Loss on extinguishment of debt (1,322)
Other(15,127)(11,093)
Other income (expense), net(158,605)(159,954)
Loss before income taxes(253,470)(335,686)
Provision for income taxes(1,140)(493)
Net loss(254,610)(336,179)
Less: net loss attributable to noncontrolling interests71,286 55,201 
Net loss attributable to Wynn Resorts, Limited$(183,324)$(280,978)
Basic and diluted net loss per common share:
Net loss attributable to Wynn Resorts, Limited:
Basic$(1.59)$(2.53)
Diluted$(1.59)$(2.53)
Weighted average common shares outstanding:
Basic115,030 111,020 
Diluted115,030 111,020 

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

WYNN RESORTS, LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 
 Three Months Ended March 31,
 20222021
Net loss$(254,610)$(336,179)
Other comprehensive income:
Foreign currency translation adjustments, before and after tax4,597 4,032 
Total comprehensive loss(250,013)(332,147)
Less: comprehensive loss attributable to noncontrolling interests69,986 54,066 
Comprehensive loss attributable to Wynn Resorts, Limited$(180,027)$(278,081)

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

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

For the Three Months Ended March 31, 2022
Common stock
Shares
outstanding
Par
value
Treasury
stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income
Accumulated deficitTotal Wynn Resorts, Ltd.
stockholders'
deficit
Noncontrolling
interests
Total
stockholders'
 deficit
Balances, January 1, 2022115,714,943 $1,314 $(1,436,373)$3,502,715 $6,004 $(2,288,078)$(214,418)$(621,797)$(836,215)
Net loss— — — — — (183,324)(183,324)(71,286)(254,610)
Currency translation adjustment— — — — 3,297 — 3,297 1,300 4,597 
Issuance of restricted stock419,198 5 — 9,283 — — 9,288 — 9,288 
Cancellation of restricted stock(79,095)(1)— 1 — — — —  
Shares repurchased by the Company and held as treasury shares(137,085)— (11,667)— — — (11,667)— (11,667)
Distribution to noncontrolling interest— — — — — — — (9,279)(9,279)
Contribution from noncontrolling interest— — — 48,559 — — 48,559 1,474 50,033 
Stock-based compensation— — — 11,108 — 117 11,225 3,369 14,594 
Balances, March 31, 2022115,917,961 $1,318 $(1,448,040)$3,571,666 $9,301 $(2,471,285)$(337,040)$(696,219)$(1,033,259)

For the Three Months Ended March 31, 2021
Common stock
Shares
outstanding
Par
value
Treasury
stock
Additional
paid-in
capital
Accumulated
other
comprehensive
income
Accumulated deficit Total Wynn Resorts, Ltd.
stockholders'
equity (deficit)
Noncontrolling
interests
Total
stockholders'
deficit
Balances, January 1, 2021107,888,336 $1,235 $(1,422,531)$2,598,115 $3,604 $(1,532,420)$(351,997)$(385,320)$(737,317)
Net loss— — — — — (280,978)(280,978)(55,201)(336,179)
Currency translation adjustment— — — — 2,897 — 2,897 1,135 4,032 
Issuance of common stock, net of $17.7 million underwriter discounts, commissions and other expenses
7,475,000 75 — 841,824 — — 841,899 — 841,899 
Issuance of restricted stock335,285 3 — 5,899 — — 5,902 370 6,272 
Cancellation of restricted stock(13,099)— — — — — — —  
Shares repurchased by the Company and held as treasury shares(38,194)— (4,356)— — — (4,356)— (4,356)
Cash dividends declared— — — — — 81 81 9 90 
Stock-based compensation— — — 20,235 — — 20,235 2,385 22,620 
Balances, March 31, 2021115,647,328 $1,313 $(1,426,887)$3,466,073 $6,501 $(1,813,317)$233,683 $(436,622)$(202,939)

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





6

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

 Three Months Ended March 31,
 20222021
Cash flows from operating activities:
Net loss$(254,610)$(336,179)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization184,556 185,121 
Deferred income taxes415 293 
Stock-based compensation expense13,900 24,346 
Amortization of debt issuance costs7,203 6,652 
Loss on extinguishment of debt 1,322 
Provision for credit losses342 7,367 
Change in derivatives fair value(7,400)(4,409)
Property charges and other60,847 16,710 
Increase (decrease) in cash from changes in:
Receivables, net11,868 (22,947)
Inventories, prepaid expenses and other(4,284)(21,411)
Customer deposits(11,435)(131,336)
Accounts payable and accrued expenses(118,787)20,565 
Net cash used in operating activities(117,385)(253,906)
Cash flows from investing activities:
Capital expenditures, net of construction payables and retention(96,343)(40,270)
Purchase of intangible and other assets(901)(8,500)
Proceeds from sale of assets and other29 134 
Net cash used in investing activities(97,215)(48,636)
Cash flows from financing activities:
Proceeds from issuance of long-term debt 50,084 
Repayments of long-term debt(12,500)(1,166,737)
Proceeds from issuance of Wynn Resorts, Limited common stock 841,899 
Repurchase of common stock(11,667)(4,356)
Finance lease payments(4,443)(3,881)
Distribution to noncontrolling interest(9,279) 
Contribution from noncontrolling interest50,033  
Dividends paid(1,163)(295)
Payments for debt financing costs(109)(2,154)
Net cash provided by (used in) financing activities10,872 (285,440)
Effect of exchange rate on cash, cash equivalents and restricted cash(925)(1,131)
Cash, cash equivalents and restricted cash:
Decrease in cash, cash equivalents and restricted cash(204,653)(589,113)
Balance, beginning of period2,531,067 3,486,384 
Balance, end of period$2,326,414 $2,897,271 
Supplemental cash flow disclosures:
Cash paid for interest, net of amounts capitalized$133,637 $138,823 
Liability settled with shares of common stock $9,287 $6,272 
Accounts and construction payables related to property and equipment $49,996 $57,463 
Other liabilities related to intangible assets$5,501 $13,748 
Finance lease liabilities arising from obtaining finance lease assets$1,119 $7,423 
The accompanying notes are an integral part of these condensed consolidated financial statements.
7

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
Note 1 - Organization

Organization

Wynn Resorts, Limited, a Nevada corporation (together with its subsidiaries, "Wynn Resorts" or the "Company"), is a designer, developer, and operator of integrated resorts featuring luxury hotel rooms, high-end retail space, an array of dining and entertainment options, meeting and convention facilities, and gaming.

In the Macau Special Administrative Region ("Macau") of the People's Republic of China ("PRC"), 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, Encore, an expansion at Wynn Las Vegas, and the Retail Joint Venture as its Las Vegas Operations. In Everett, Massachusetts, the Company owns 100% of and operates Encore Boston Harbor, an integrated resort. The Company also holds an approximately 74% interest in, and consolidates, Wynn Interactive Ltd. ("Wynn Interactive"), through which it operates online sports betting and gaming businesses in the United States and the United Kingdom, as well as a social casino business.

Recent Developments Related to COVID-19

Macau Operations

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, quarantine measures put in place 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. Although there have been periods during which certain restrictions and conditions were eased by the Macau government to allow for greater visitation and quarantine-free travel to Macau, adverse conditions and evolving conditions created by and in response to the COVID-19 pandemic may cause these restrictions and conditions to be reintroduced. The Company is currently unable to determine when protective measures and the suspension of certain offerings in effect at our Macau Operations 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.

Liquidity

The COVID-19 pandemic has materially impacted and is likely to continue to materially impact our business, financial condition and results of operations. As of March 31, 2022, the Company had total cash and cash equivalents, excluding restricted cash, of $2.32 billion, and had access to $835.6 million of available borrowing capacity from the WRF Revolver and $211.9 million of available borrowing capacity from the WM Cayman II Revolver. As a result of the negative impact the COVID-19 pandemic has had, and will likely continue to have, on our operating income, the Company has suspended its dividend program for the foreseeable future. Given the Company's liquidity position as of March 31, 2022, the Company believes it will be able to support continuing operations and respond to the continuing impact of the COVID-19 pandemic and related economic disruptions.

Macau Gaming Concession

The term of the Company's gaming concession agreement with the Macau government ends on June 26, 2022. If the term of this concession agreement is not extended, renewed or replaced by a new gaming concession, all of the Company's gaming operations and related equipment in Macau will be automatically transferred to the Macau government without compensation on that date and the Company will cease to generate gaming revenues from its Macau Operations. In addition, under the indentures governing the Company’s $4.7 billion aggregate principal amount of WML Senior Notes and the facility agreement governing the WM Cayman II Revolver, upon the occurrence of any event after which the Company does not own or manage casino or gaming areas or operate casino games of fortune and chance in Macau in substantially the same manner and scope as of the issue date of the respective senior notes or the date of the facility agreement, for a period of 10 consecutive days or more
8

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
in the case of the WML Senior Notes or a period of 30 consecutive days or more in the case of the WM Cayman II Revolver, and such event has a material adverse effect on the financial condition, business, properties or results of operations of WML and its subsidiaries, taken as a whole, holders of the WML Senior Notes can require the Company to repurchase all or any part of the WML Senior Notes at par, plus any accrued and unpaid interest (the “Special Put Option”), and any amounts owed under the WM Cayman II Revolver may become immediately due and payable (the “Property Mandatory Prepayment Event”).

In January 2022, the Macau government published a draft of its proposed revisions to the gaming law which is currently under review by the Macau Legislative Assembly. On March 3, 2022, the Macau government announced its intention to extend the term of Macau’s six gaming concession and subconcession contracts until December 31, 2022 in order to ensure sufficient time to complete the amendment to the Macau gaming law and to conduct a public tender for the awarding of new gaming concessions contracts. The Macau government invited Wynn Resorts (Macau) S.A. ("WRM") to submit a formal request for an extension along with a commitment to pay the Macau government approximately 47.0 million Macau pataca (MOP) (approximately $5.8 million) and provided a bank guarantee to secure the fulfillment of WRM’s payment obligations towards its employees should WRM be unsuccessful in tendering for a new concession contract after its concession expires. WRM submitted a request for an extension of its concession agreement on March 11, 2022, which is subject to approval by the Macau government. The Company is monitoring developments with respect to the Macau government’s concession extension and renewal process, and at this time believes that its concession agreement will be extended and renewed beyond June 26, 2022. If the Company is unable to extend or renew its concession agreement or obtain a new gaming concession agreement, and an election by the WML Senior Note holders to exercise the Special Put Option and the triggering of the Property Mandatory Prepayment Event would have a material adverse effect on the Company's business, financial condition, results of operations, and cash flows.

Note 2 -    Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures herein are adequate to make the information presented not misleading. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to a fair presentation of the results for the interim periods presented. The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for any other interim period or the full fiscal year ending December 31, 2022. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company's Annual Report on Form 10-K for the year ended December 31, 2021. 

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and entities the Company identifies as variable interest entities ("VIEs") of which the Company is determined to be the primary beneficiary. For information on the Company's VIEs, see Note 16, "Retail Joint Venture." All significant intercompany accounts and transactions have been eliminated. Certain amounts in the condensed consolidated financial statements for the first quarter of 2021 have been reclassified to be consistent with the current quarter presentation. These reclassifications had no effect on the previously reported net loss or operating loss.

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. Significant estimates and assumptions reflected in the financial statements relate to and include, but are not limited to, inputs into the Company's estimated allowance for credit losses, estimates regarding the useful lives and recoverability of the cost of long-lived assets, fair value estimates of intangible assets and their estimated useful lives, and litigation and contingency estimates.

9

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

The Company is subject to taxes based on gross gaming revenues in the jurisdictions in which it operates, subject to applicable jurisdictional adjustments. These gaming taxes are recorded as casino expenses in the accompanying Condensed Consolidated Statements of Operations. These taxes totaled $176.9 million and $212.0 million for the three months ended March 31, 2022 and 2021, respectively.

Recently Issued Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"). ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates and, particularly, the planned cessation of the London Interbank Offered Rate (referred to as "LIBOR"), regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. ASU 2020-04 also provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. ASU 2020-04 must be adopted no later than December 1, 2022 with early adoption permitted. The Company is currently assessing the impact the adoption of the new guidance will have 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):
March 31, 2022December 31, 2021
Cash and cash equivalents:
   Cash (1)
$1,765,903 $2,021,553 
   Cash equivalents (2)
551,449 500,977 
     Total cash and cash equivalents 2,317,352 2,522,530 
Restricted cash (3)
9,062 8,537 
Total cash, cash equivalents and restricted cash $2,326,414 $2,531,067 
(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 subject to certain contractual restrictions, cash collateral associated with obligations and cash held in a trust in accordance with WML's share award plan.

Note 4 -    Receivables, net

Accounts Receivable and Credit Risk

Receivables, net consisted of the following (in thousands):
March 31, 2022December 31, 2021
Casino$191,884 $199,030 
Hotel29,545 36,749 
Other65,679 75,003 
287,108 310,782 
Less: allowance for credit losses(100,101)(111,319)
$187,007 $199,463 

As of March 31, 2022 and December 31, 2021, approximately 70.2% and 70.3%, 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 the Company's customers reside could affect the collectability of such receivables.

10

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company’s allowance for casino credit losses was 50.0% and 53.7% of gross casino receivables as of March 31, 2022 and December 31, 2021, respectively. Although the Company believes that its allowance is adequate, it is possible the estimated amounts of cash collections with respect to receivables could change. The Company’s allowance for credit losses from its hotel and other receivables is not material.

The following table shows the movement in the Company's allowance for credit losses recognized for receivables that occurred during the periods presented (in thousands): 

March 31,
20222021
Balance at beginning of year$111,319 $100,329 
   Provision for credit losses342 7,367 
   Write-offs(11,720)(5,653)
   Recoveries of receivables previously written off378 501 
   Effect of exchange rate(218)(132)
Balance at end of period$100,101 $102,412 

Note 5 -    Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

March 31, 2022December 31, 2021
Buildings and improvements$9,768,023 $9,785,514 
Land and improvements1,281,292 1,278,010 
Furniture, fixtures and equipment3,016,722 3,067,793 
Airplanes110,623 110,623 
Construction in progress323,439 250,378 
14,500,099 14,492,318 
Less: accumulated depreciation(5,829,372)(5,727,010)
$8,670,727 $8,765,308 

As of March 31, 2022 and December 31, 2021, construction in progress consisted primarily of costs capitalized for various capital enhancements at the Company's properties, including the Wynn Las Vegas room remodel.

Depreciation expense for the three months ended March 31, 2022 and 2021 was $176.3 million and $177.7 million, respectively.

Encore Boston Harbor Real Estate Sale and Leaseback

On February 14, 2022, Wynn MA, LLC, the owner and operator of Encore Boston Harbor and an indirect, wholly owned subsidiary of WRL (“Wynn MA”), entered into a sale-leaseback arrangement with respect to certain real estate assets related to Encore Boston Harbor. Upon closing of the related transactions, which are currently expected to take place in the fourth quarter of 2022 subject to the receipt of required regulatory approvals and customary closing conditions, the Company expects to receive cash consideration of approximately $1.7 billion in exchange for the sale of such real estate assets to an unrelated third party, and to concurrently enter into a master lease agreement whereby Wynn MA and certain of its affiliates will lease such real estate assets for the purpose of continuing to operate the Encore Boston Harbor property. The master lease agreement provides for an initial annual rent of $100.0 million for a term of 30 years with one 30-year renewal option, subject to certain annual rent escalations. The Company expects to use the cash proceeds from the sale of the real estate assets for general corporate purposes, which may include the repayment of certain debt obligations.

11

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 6 -    Goodwill

The following table shows the movement in the Company's goodwill balance that occurred during the periods presented (in thousands): 
March 31,
20222021
Balance at beginning of year $129,738 $144,095 
  Foreign currency translation(961)1,312 
  Impairment (30,250) 
Balance at end of period $98,527 $145,407 

During the three months ended March 31, 2022, as a result of changes in forecasts and other industry-specific factors, the Company identified interim indicators of impairment related to the goodwill assigned to the reporting units comprising Wynn Interactive. After revisiting the estimated fair value of those reporting units based on a combination of the income and market approaches, the Company recognized impairment of $30.3 million, which is recorded in Property charges and other in the accompanying Condensed Consolidated Statements of Operations.

Note 7 -    Long-Term Debt

Long-term debt consisted of the following (in thousands):
 
March 31, 2022December 31, 2021
Macau Related:
WM Cayman II Revolver, due 2025 (1)
$1,283,922 $1,287,766 
WML 4 7/8% Senior Notes, due 2024600,000 600,000 
WML 5 1/2% Senior Notes, due 20261,000,000 1,000,000 
WML 5 1/2% Senior Notes, due 2027750,000 750,000 
WML 5 5/8% Senior Notes, due 20281,350,000 1,350,000 
WML 5 1/8% Senior Notes, due 20291,000,000 1,000,000 
U.S. and Corporate Related:
WRF Credit Facilities (2):
WRF Term Loan, due 2024875,000 887,500 
WLV 4 1/4% Senior Notes, due 2023500,000 500,000 
WLV 5 1/2% Senior Notes, due 20251,780,000 1,780,000 
WLV 5 1/4% Senior Notes, due 2027880,000 880,000 
WRF 7 3/4% Senior Notes, due 2025600,000 600,000 
WRF 5 1/8% Senior Notes, due 2029750,000 750,000 
Retail Term Loan, due 2025 (3)
615,000 615,000 
11,983,922 12,000,266 
Less: Unamortized debt issuance costs and original issue discounts and premium, net(61,028)(65,720)
11,922,894 11,934,546 
Less: Current portion of long-term debt(50,000)(50,000)
Total long-term debt, net of current portion$11,872,894 $11,884,546 
(1) The borrowings under the WM Cayman II Revolver bear interest at LIBOR or HIBOR plus a margin of 1.875% to 2.875% per annum based on WM Cayman II’s leverage ratio on a consolidated basis. Approximately $268.2 million and $1.02 billion of the WM Cayman II Revolver bears interest at a rate of LIBOR plus 2.625% per year and HIBOR plus 2.625% per year, respectively. As of March 31, 2022, the weighted average interest rate was approximately 2.96%. As of March 31, 2022, the available borrowing capacity under the WM Cayman II Revolver was $211.9 million.
(2) The WRF Credit Facilities bear interest at a rate of LIBOR plus 1.75% per year. As of March 31, 2022, the weighted average interest rate was approximately 2.21%. Additionally, as of March 31, 2022, the available borrowing capacity under the WRF Revolver was $835.6 million, net of $14.4 million in outstanding letters of credit.
(3) The Retail Term Loan bears interest at a rate of LIBOR plus 1.70% per year. As of March 31, 2022, the effective interest rate was 2.70%.
12

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
WM Cayman II Revolver Amendment

On May 5, 2022, WM Cayman II and its lenders agreed to waive certain financial covenants in the facility agreement under the WM Cayman II Revolver in respect of the relevant periods ending on the following applicable test dates: (a) June 30, 2022; (b) September 30, 2022; (c) December 31, 2022; and (d) March 31, 2023; and to provide for a floor on the interest rate margin of 2.625% per annum through June 30, 2023. WML, as guarantor, may be subject to certain restrictions on payments of dividends or distributions to its shareholders, unless certain financial criteria have been satisfied through the facility agreement.

Debt Covenant Compliance

As of March 31, 2022, management believes the Company was in compliance with all debt covenants.

Fair Value of Long-Term Debt

The estimated fair value of the Company's long-term debt as of March 31, 2022 and December 31, 2021, was approximately $11.34 billion and $11.72 billion, respectively, compared to its carrying value, excluding debt issuance costs and original issue discount and premium, of $11.98 billion and $12.00 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' Deficit

Equity Offering

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 $841.9 million, net of $17.7 million in underwriting discounts and commissions. The Company used the net proceeds from this equity offering for general corporate purposes, including the repayment of debt.

Noncontrolling Interests

Retail Joint Venture

During the three months ended March 31, 2022, the Retail Joint Venture made aggregate distributions of approximately $9.3 million to its non-controlling interest holder. During the three months ended March 31, 2021, the Retail Joint Venture did not make any distributions to its non-controlling interest holder. For more information on the Retail Joint Venture, see Note 16, "Retail Joint Venture".

During the three months ended March 31, 2022, in exchange for cash consideration of $50.0 million, the Company sold to Crown Acquisitions Inc. ("Crown") a 49.9% interest in certain retail space contributed by the Company to the Retail Joint Venture. In connection with this transaction, the Company recorded $48.6 million of additional paid-in capital and $1.5 million of noncontrolling interest, within Contribution from noncontrolling interest in the accompanying Condensed Consolidated Statement of Stockholders' Deficit for the three months ended March 31, 2022.

13

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
Note 9 -    Fair Value Measurements

The following tables present assets and liabilities carried at fair value (in thousands): 

Fair Value Measurements Using:
March 31, 2022Quoted
Market
Prices in
Active Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents$551,449 $ $551,449 $ 
Restricted cash$9,062 $7,789 $1,273 $ 
Interest rate collar$2,670 $ $2,670 $ 
Liabilities:
Interest rate collar$817 $ $817 $ 
Fair Value Measurements Using:
December 31, 2021Quoted
Market
Prices in
Active Markets
(Level 1)
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents$500,977 $ $500,977 $ 
Restricted cash $8,537 $6,950 $1,587 $ 
Liabilities:
Interest rate collar$5,548 $ $5,548 $ 

Note 10 - Customer Contract Liabilities

In providing goods and services to its customers, there is often a timing difference between the Company receiving cash and the Company recording revenue for providing services or holding events.
The Company's primary liabilities associated with customer contracts are as follows (in thousands):
March 31, 2022December 31, 2021Increase / (decrease)March 31, 2021December 31, 2020Increase / (decrease)
Casino outstanding chips and front money deposits (1)
$335,426 $352,830 $(17,404)$461,343 $596,463 $(135,120)
Advance room deposits and ticket sales (2)
60,150 55,438 4,712 40,062 29,224 10,838 
Other gaming-related liabilities (3)
25,745 26,515 (770)9,608 7,882 1,726 
Loyalty program and related liabilities (4)
37,355 34,695 2,660 24,967 22,736 2,231 
$458,676 $469,478 $(10,802)$535,980 $656,305 $(120,325)
(1) Casino outstanding chips generally represent amounts owed to gaming promoters and customers for chips in their possession, and casino front money deposits represent funds deposited by customers before gaming play occurs. These amounts are included in customer deposits on the Condensed Consolidated Balance Sheets and may be recognized as revenue or redeemed for cash in the future. As of March 31, 2022 and December 31, 2021, the Company had no agreements in place with gaming promoters.
(2) Advance room deposits and ticket sales represent cash received in advance for goods or services to be provided in the future. These amounts are included in customer deposits on the Condensed Consolidated Balance Sheets and will be recognized as revenue when the goods or services are provided or the events are held. Decreases in this balance generally represent the recognition of revenue and increases in the balance represent additional deposits made by customers. The deposits are expected to primarily be recognized as revenue within one year.
(3) Other gaming-related liabilities generally represent unpaid wagers primarily in the form of unredeemed slot, race and sportsbook tickets or wagers for future sporting events. The amounts are included in other accrued liabilities on the Condensed Consolidated Balance Sheets.
(4) Loyalty program and related liabilities represent the deferral of revenue until the loyalty points or other complimentaries are redeemed. The amounts are included in other accrued liabilities on the Condensed Consolidated Balance Sheets and are expected to be recognized as revenue within one year of being earned by customers.
14

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

Note 11 - Stock-Based Compensation

The total compensation cost for stock-based compensation plans was recorded as follows (in thousands):

 Three Months Ended March 31,
 20222021
Casino$2,255 $3,891 
Rooms187 506 
Food and beverage362 1,150 
Entertainment, retail and other3,895 4,300 
General and administrative7,201 14,499 
Total stock-based compensation expense13,900 24,346 
Total stock-based compensation capitalized679 905 
Total stock-based compensation costs$14,579 $25,251 

Note 12 - Income Taxes

The Company recorded an income tax expense of $1.1 million and $0.5 million for the three months ended March 31, 2022 and 2021, respectively. Income tax expense in both periods primarily related to the Macau dividend tax agreement that provides for an annual payment as complementary tax otherwise due by stockholders of WRM.

In March 2021, the Company received an extension of its Macau dividend tax agreement, providing for a payment of MOP 12.8 million (approximately $1.6 million) for 2021 and MOP 6.3 million (approximately $0.8 million) for the period ending June 26, 2022.

The Company records valuation allowances on certain of its U.S. and foreign deferred tax assets. The Company continues to rely solely on the reversal of net taxable temporary differences in assessing a need for a valuation allowance.

In April 2020, WRM 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.

For the three months ended March 31, 2022 and 2021, the Company did not have any casino gaming profits exempt from the Macau Complementary Tax. The Company's non-gaming profits remain subject to the Macau Complementary Tax and its casino winnings remain subject to the Macau special gaming tax and other levies in accordance with its gaming concession agreement.

In March 2021, the Financial Services Bureau concluded its review of the 2017 and 2018 Macau income tax returns of Palo Real Estate Company Limited, a subsidiary of WRM, with no changes.

In January 2022, the Financial Services Bureau issued final tax assessments for WRM for the year 2017 and 2018. While no additional tax was due, adjustments were made to WRM's tax loss carryforwards.

Note 13 - Earnings Per Share

Basic earnings per share ("EPS") is computed by dividing net loss attributable to Wynn Resorts by the weighted average number of common shares outstanding during the period. Diluted EPS is computed by dividing net loss 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.
15

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The weighted average number of common and common equivalent shares used in the calculation of basic and diluted EPS consisted of the following (in thousands, except per share amounts): 

Three Months Ended March 31,
20222021
Numerator:
Net loss attributable to Wynn Resorts, Limited$(183,324)$(280,978)
Denominator:
Weighted average common shares outstanding115,030 111,020 
Potential dilutive effect of stock options, nonvested, and performance nonvested shares  
Weighted average common and common equivalent shares outstanding115,030 111,020 
Net loss attributable to Wynn Resorts, Limited per common share, basic$(1.59)$(2.53)
Net loss attributable to Wynn Resorts, Limited per common share, diluted$(1.59)$(2.53)
Anti-dilutive stock options, nonvested, and performance nonvested shares excluded from the calculation of diluted net income per share825 1,235 

Note 14 - Leases
Lessor Arrangements

The following table presents the minimum and contingent operating lease income for the periods presented (in thousands):

Three Months Ended March 31,
20222021
Minimum rental income$24,601 $22,738 
Contingent rental income20,623 26,006 
Total rental income$45,224 $48,744 

Note 15 - Commitments and Contingencies

Litigation

In addition to the actions noted below, the Company and its affiliates are involved in litigation arising in the normal course of business. In the opinion of management, such litigation is not expected to have a material effect on the Company's financial condition, results of operations, and cash flows.

Macau Litigation Related to Dore

WRM has been named as a defendant in lawsuits filed in the Macau Court of First Instance by individuals who claim to be investors in or persons with credit in accounts maintained by Dore Entertainment Company Limited (“Dore”), an independent, Macau registered and licensed company that operated a gaming promoter business at Wynn Macau. In connection with the alleged theft, embezzlement, fraud and/or other crime(s) perpetrated by a former employee of Dore (the “Dore Incident”), the plaintiffs of the lawsuits allege that Dore failed to honor withdrawal of funds deposited with Dore as investments or gaming deposits that allegedly resulted in certain losses for these individuals. The principal allegations common to the lawsuits are that WRM, as a gaming concessionaire, should be held responsible for Dore’s conduct on the basis that WRM is responsible for the supervision of Dore’s activities at Wynn Macau that resulted in the purported losses.

16

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
On November 19, 2021, the Macau Court of Final Appeal issued a final ruling (the “Ruling”) with respect to one such lawsuit that WRM was held jointly liable to a plaintiff. Pursuant to the Ruling, WRM was required to pay approximately $1.2 million, inclusive of accumulated interest, to such plaintiff.

The Company believes most remaining cases are without merit and unfounded and intends to vigorously defend against the remaining claims pleaded against WRM in these lawsuits. The Company has made estimates for potential litigation costs based upon its assessment of the likely outcome and has recorded provisions for such amounts in the accompanying condensed consolidated financial statements. No assurances can be provided as to the outcome of the pending Dore cases, and actual results may differ from these estimates.

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. On July 28, 2021, the court granted in part, and denied in part, the Company's motion to dismiss the amended complaint, dismissing certain of plaintiffs' claims, including all claims against Mr. Billings and the individual directors, and allowing other claims to proceed against the Company and several of the Company's former executive officers, including Mr. Maddox, Stephen A. Wynn, Kimmarie Sinatra, and Steven Cootey.

The defendants in this action intend to vigorously defend against the claims pleaded against them. This action is in the 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 reasonably estimate the range of 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 beginning in 2020 received several 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 16 - Retail Joint Venture

As of March 31, 2022 and December 31, 2021, the Retail Joint Venture had total assets of $95.3 million and $98.0 million, respectively, and total liabilities of $619.2 million and $624.4 million, respectively. As of March 31, 2022 and December 31, 2021, the Retail Joint Venture's liabilities included long-term debt of $613.0 million and $612.9 million, respectively, net of debt issuance costs, related to the outstanding borrowings under the Retail Term Loan.

Note 17 - Segment Information

The Company has identified its reportable segments based on factors such as geography, regulatory environment, the information reviewed by its chief operating decision maker, and the Company's organizational and management reporting structure.

17

WYNN RESORTS, LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)
The Company has identified the following reportable segments: (i) Wynn Macau, representing the aggregate of Wynn Macau and Encore, an expansion at Wynn Macau, which are managed as a single integrated resort; (ii) Wynn Palace; (iii) Las Vegas Operations, representing the aggregate of Wynn Las Vegas, Encore, an expansion at Wynn Las Vegas, and the Retail Joint Venture, which are managed as a single integrated resort; (iv) Encore Boston Harbor; and (v) Wynn Interactive. For geographical reporting purposes, Wynn Macau, Wynn Palace, and Other Macau (which represents the assets of the Company's Macau holding company and other ancillary entities) have been aggregated into Macau Operations.

The following tables present the Company's segment information (in thousands):

Three Months Ended March 31,
20222021
Operating revenues
Macau Operations:
Wynn Palace
Casino $114,413 $185,909 
Rooms13,831 17,012 
Food and beverage11,443 11,672 
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