Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 10-Q/A

(AMENDMENT NO. 1)

 

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x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2004

 

OR

 

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period                  to                 

 

Commission File No. 000-50028

 

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WYNN RESORTS, LIMITED

(Exact name of Registrant as specified in its charter)

 

NEVADA		46-0484987
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

 

3131 Las Vegas Boulevard South - Las Vegas, Nevada 89109

(Address of principal executive office) (Zip Code)

 

(702) 770-7000

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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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  x    No  ¨

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule12b-2 of the Exchange Act).    Yes  x    No  ¨

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class		Outstanding at August 2, 2004
Common stock, $0.01 par value		89,168,484

 

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Explanatory Note

 

Due to inadvertent vendor error, the Quarterly Report on Form 10-Q (the “Quarterly Report”) filed on behalf of the Registrant on August 3, 2004 was not the correct version of the Quarterly Report. This Amendment No. 1 on Form 10-Q/A is the correct version.

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Table of Contents

WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

INDEX

 

Part I.		Financial Information
Item 1.		Condensed Financial Statements
		Condensed Consolidated Balance Sheets - June 30, 2004 (unaudited) and December 31, 2003		3
		Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - Three and six months ended June 30, 2004 and 2003, and the period from inception to June 30, 2004		4
		Condensed Consolidated Statements of Cash Flows (unaudited) - Six months ended June 30, 2004 and 2003, and the period from inception to June 30, 2004		5
		Condensed Notes to Consolidated Financial Statements (unaudited)		6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		35
Item 4.		Controls and Procedures		36
Part II.		Other Information
Item 1.		Legal Proceedings		37
Item 2.		Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities		37
Item 4.		Submission of Matters to a Vote of Security Holders		38
Item 6.		Exhibits and Reports on Form 8-K		39
Signature				41

 

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Table of Contents

Part I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

 

		June 30, 2004				December 31, 2003
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	361,009			$	341,552
Restricted cash and investments			72,650				58,312
Receivables, net			8				78
Inventories			559				204
Prepaid expenses			1,927				2,201
Total current assets			436,153				402,347
Restricted cash and investments			147,495				342,120
Property and equipment, net			1,392,981				897,815
Aircraft held for sale			33,000				—
Water rights			6,400				6,400
Trademark			1,000				1,000
Deferred financing costs			60,760				59,265
Other assets			50,047				24,376
Total assets		$	2,127,836			$	1,733,323
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	555			$	41
Accounts and construction payables			67,328				49,754
Accrued interest			14,966				16,813
Accrued compensation and benefits			4,143				3,378
Accrued expenses and other current liabilities			32,560				1,190
Total current liabilities			119,552				71,176
Construction retention			42,556				23,846
Long-term debt			708,185				635,432
Other long-term liabilities			33,600				—
Total liabilities			903,893				730,454
Minority interest			—				1,054
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01; authorized 40,000,000 shares; zero shares issued and outstanding			—				—
Common stock, par value $0.01; authorized 400,000,000 shares; 88,978,761 and 82,168,484 shares issued and outstanding			890				820
Additional paid-in capital			1,378,848				1,110,813
Deferred compensation - restricted stock			(6,760	)			(9,664	)
Accumulated other comprehensive income			15,079				8,793
Deficit accumulated from inception during the development stage			(164,114	)			(108,947	)
Total stockholders’ equity			1,223,943				1,001,815
Total liabilities and stockholders’ equity		$	2,127,836			$	1,733,323

 

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

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(amounts in thousands, except per share data)

(unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,								From Inception to June 30, 2004
		2004				2003				2004				2003
Revenues:
Airplane		$	44			$	123			$	107			$	173			$	2,275
Art gallery			28				80				98				152				729
Retail			29				79				92				148				668
Water			2				3				4				5				50
Total revenue			103				285				301				478				3,722
Expenses:
Pre-opening costs			16,510				11,231				31,123				20,188				120,958
Depreciation and amortization			1,042				2,180				1,824				4,353				28,708
(Gain) / Loss on sale of assets			520				—				512				(5	)			708
Selling, general and administrative			109				150				292				251				1,920
Facility closure expenses			—				—				—				—				1,579
Cost of water			7				13				13				34				346
Cost of retail sales			27				35				63				74				343
Loss from incidental operations			—				102				—				216				2,514
Total expenses			18,215				13,711				33,827				25,111				157,076
Operating loss			(18,112	)			(13,426	)			(33,526	)			(24,633	)			(153,354	)
Other income (expense):
Interest expense, net			(94	)			(2,394	)			(197	)			(4,153	)			(11,170	)
Interest income			1,511				2,531				3,130				5,410				20,989
Loss on early retirement of debt			(25,628	)			—				(25,628	)			—				(25,628	)
Other income (expense), net			(24,211	)			137				(22,695	)			1,257				(15,809	)
Minority interest			404				612				1,054				1,693				5,049
Net loss accumulated during the development stage			(41,919	)			(12,677	)			(55,167	)			(21,683	)			(164,114	)
Change in fair value of interest rate swaps			18,190				265				6,286				265				15,079
Comprehensive loss		$	(23,729	)		$	(12,412	)		$	(48,881	)		$	(21,418	)		$	(149,035	)
Basic and diluted earnings per common share:
Net income:
Basic		$	(0.49	)		$	(0.16	)		$	(0.67	)		$	(0.28	)		$	(2.96	)
Diluted		$	(0.49	)		$	(0.16	)		$	(0.67	)		$	(0.28	)		$	(2.96	)
Weighted average common shares outstanding:
Basic			84,687				78,164				82,764				78,000				55,488
Diluted			84,687				78,164				82,764				78,000				55,488

 

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

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

(unaudited)

 

		Six Months Ended June 30,								From Inception to June 30, 2004
		2004				2003
Cash flows from operating activities:
Net loss accumulated during the development stage		$	(55,167	)		$	(21,683	)		$	(164,114	)
Adjustments to reconcile net loss accumulated during the development stage to net cash provided by (used in) operating activities:
Depreciation and amortization			1,824				4,353				28,709
Minority interest			(1,054	)			(1,693	)			(5,049	)
Amortization of deferred compensation			1,826				1,500				5,287
Amortization of deferred financing costs			17,426				628				30,297
(Gain) / loss on sale of assets			512				(5	)			708
Incidental operations			4,163				—				10,943
Increase (decrease) in cash from changes in:
Receivables, net			70				125				7,973
Inventories and prepaid expenses			(81	)			(341	)			(1,325	)
Accounts payable and accrued expenses			2,285				(46	)			13,874
Net cash provided used in operating activities			(28,196	)			(17,162	)			(72,697	)
Cash flows from investing activities:
Acquisition of Desert Inn Resort and Casino, net of cash acquired			—				—				(270,718	)
Capital expenditures, net of construction payables			(441,038	)			(132,000	)			(1,006,827	)
Restricted cash and investments			180,287				146,562				(220,145	)
Other assets			(14,085	)			(1,401	)			(30,628	)
Proceeds from sale of equipment			38				5				9,775
Net cash provided by (used in) investing activities			(274,798	)			13,166				(1,518,543	)
Cash flows from financing activities:
Equity contributions			—				—				675,007
Equity distributions			—				—				(110,482	)
Exercise of stock options			—				—				83
Proceeds from issuance of common stock			271,250				45,000				808,094
Third party fees			(3,145	)			(204	)			(40,703	)
Macau minority contributions			—				—				5,050
Proceeds from issuance of long-term debt			187,138				—				943,472
Principal payments of long-term debt			(122,481	)			(18	)			(276,104	)
Payment of deferred financing costs			(10,311	)			(975	)			(82,168	)
Proceeds from issuance of related party loan			—				—				100,000
Principal payments of related party loan			—				—				(70,000	)
Net cash provided by financing activities			322,451				43,803				1,952,249
Cash and cash equivalents:
Increase in cash and cash equivalents			19,457				39,807				361,009
Balance, beginning of period			341,552				109,644				—
Balance, end of period		$	361,009			$	149,451			$	361,009

 

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

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

1. Organization and Basis of Presentation

 

Organization

 

Wynn Resorts, Limited, a Nevada corporation (together with its subsidiaries, “Wynn Resorts” or the “Company”), was formed in June 2002 and consummated an initial public offering on October 25, 2002. Wynn Resorts’ predecessor, Valvino Lamore, LLC (“Valvino”), was formed on April 21, 2000 (date of inception) as a Nevada limited liability company to acquire land and design, develop and finance Wynn Las Vegas, the Company’s first casino resort in Las Vegas, Nevada. In June 2002, Valvino’s majority owned indirect subsidiary, Wynn Resorts (Macau), S.A. (“Wynn Macau, S.A.”), entered into an agreement with the government of the Macau Special Administrative Region of the People’s Republic of China (“Macau”), granting Wynn Macau, S.A. the right to construct and operate one or more casino gaming properties in Macau. Wynn Macau, S.A.’s first casino resort in Macau is hereafter referred to as “Wynn Macau.”

 

On September 24, 2002, Wynn Resorts became the parent company of Valvino when all the members of Valvino contributed 100% of their membership interests in Valvino to Wynn Resorts in exchange for 40,000,000 shares of the common stock of Wynn Resorts. Hereafter, all references to “Wynn Resorts,” or the “Company” refer to Wynn Resorts and its subsidiaries, or Valvino and its subsidiaries, as its predecessor company.

 

Basis of Presentation

 

The Company has spent significant amounts of money in connection with its development activities, primarily for the acquisition of land and other assets and the design, financing and construction of Wynn Las Vegas, and in obtaining the concession in Macau, as well as the design, financing and construction of Wynn Macau. The Company has not commenced operations and therefore revenues are minimal. Consequently, as is customary for a development stage company, the Company has incurred losses in each period from inception to June 30, 2004. Management expects these losses to continue and to increase until operations have commenced with the planned opening of Wynn Las Vegas in April 2005. The acceleration of these costs is expected and is included in the project budgets for Wynn Las Vegas and Wynn Macau.

 

As a development stage company, the Company has risks that may impact its ability to become an operating enterprise or to remain in existence. The Company is subject to many rules and regulations in both the construction and development phases and in operating casino gaming facilities, including, but not limited to, maintaining compliance with debt covenants, receiving the appropriate permits for particular construction activities, securing state and local gaming licenses for the ownership and operation of Wynn Las Vegas and maintaining ongoing suitability requirements in Nevada and Macau, as well as fulfilling the requirements of Macau’s developing gaming regulatory framework. The completion of the Wynn Las Vegas and Wynn Macau projects is dependent upon compliance with these rules and regulations.

 

The accompanying consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and investments in unconsolidated affiliates which are 50% or less owned, that are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated.

 

The accompanying consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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, all adjustments (which include only normal recurring

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

adjustments) necessary for a fair presentation of the results for the interim periods have been made. The results for the three and six months ended June 30, 2004 are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

 

Certain amounts in the consolidated financial statements for the three and six months ended June 30, 2003 have been reclassified to conform to the 2004 presentation. These reclassifications had no effect on the previously reported net loss accumulated during the development stage.

 

2. Earnings Per Share

 

Earnings per share are calculated in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share.” SFAS No. 128 provides for the reporting of “basic”, or undiluted earnings per share (“EPS”), and “diluted” EPS. Basic EPS is computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted EPS reflects the addition of potentially dilutive securities. For all periods presented, the Company has recorded net losses. As a result, basic EPS is equal to diluted EPS for all periods presented. Potentially dilutive securities that were excluded from the calculation of diluted EPS at June 30, 2004 because including them would have been anti-dilutive, included 2,050,500 shares under stock options, 1,328,061 shares under non-vested restricted stock grants and 10,869,550 shares under the assumed conversion of the 6% convertible subordinated debentures (the “Debentures”). At June 30, 2003, potentially dilutive securities that were excluded included 1,285,000 shares under stock options and 1,328,061 shares under non-vested restricted stock grants.

 

3. Employee Stock-Based Compensation

 

As of June 30, 2004, the Company had a stock-based employee compensation plan to provide stock compensation for directors, officers, key employees and consultants. As permitted by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of SFAS No. 123,” the Company continues to apply the provisions of Accounting Principles Board (“APB”) Opinion No. 25 and related interpretations in accounting for its employee stock-based compensation. Accordingly, compensation expense is recognized only to the extent that the market value at the date of grant exceeds the exercise price. The following table illustrates the effect on the net loss if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” to stock-based employee compensation (amounts in thousands).

 

		Three Months Ended June 30,								Six Months Ended June 30,								Period from Inception to June 30 2004
		2004				2003				2004				2003
Net loss as reported		$	(41,919	)		$	(12,677	)		$	(55,167	)		$	(21,683	)		$	(164,114	)
Less: total stock-based employee compensation determined under the fair-value based method for all awards			(992	)			(233	)			(2,256	)			(318	)			(4,558	)
Proforma net loss		$	(42,911	)		$	(12,910	)		$	(57,423	)		$	(22,001	)		$	(168,672	)
Basic and diluted loss per share:
As reported		$	(0.49	)		$	(0.16	)		$	(0.67	)		$	(0.28	)		$	(2.96	)
Proforma		$	(0.51	)		$	(0.17	)		$	(0.69	)		$	(0.28	)		$	(3.04	)

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

4. Supplemental Disclosure of Cash Flow Information

 

Cash paid for interest for the six months ended June 30, 2004 and 2003, and for the period from inception to June 30, 2004 totaled approximately $49.8 million, $36.9 million and $156.9 million, respectively. Interest capitalized for the six months ended June 30, 2004 and 2003, and for the period from inception to June 30, 2004 totaled approximately $55.4 million, $39.1 million and $162.5 million, respectively.

 

Amortization of deferred compensation related to employees dedicated to the construction of Wynn Las Vegas and capitalized into construction in progress for the six months ended June 30, 2004 and 2003, and for the period from inception to June 30, 2004 totaled approximately $1.1 million, $1.6 million, and $3.4 million, respectively.

 

The increase in the fair value of interest rate swaps accounted for as cash flow hedges for the six months ended June 30, 2004 and 2003, and for the period from inception to June 30, 2004, totaled approximately $6.0 million, $265,000, and $14.8 million respectively.

 

Equipment purchases financed by debt totaled approximately $11.7 million, $0 and $40.2 million for the six months ended June 30, 2004 and 2003, and the period from inception to June 30, 2004, respectively.

 

Advances and loans converted to contributed capital amounted to $0, $0 and $32.8 million for the six months ended June 30, 2004 and 2003, and the period from inception to June 30, 2004, respectively.

 

During the period from inception to June 30, 2004, the Company acquired the Desert Inn Water Company, LLC, and $6.4 million of receivables originally recorded as due from a related party on the balance sheet were reclassified as water rights owned by the Company. No such amounts were recorded during the six months ended June 30, 2004 and 2003.

 

During the period from inception to June 30, 2004, the Company reduced the recorded amount of land by approximately $1.4 million representing the amount of excess liabilities accrued at the date of the Desert Inn Resort & Casino purchase in June 2000. No such amounts were recorded during the six months ended June 30, 2004 and 2003.

 

5. Related Party Transactions

 

The Company periodically incurs costs on behalf of Mr. Wynn and certain other officers of the Company, including costs with respect to personal use of corporate aircraft. Mr. Wynn and these other officers have deposits with the Company to prepay any such items. These deposits are replenished on an ongoing basis as needed. At June 30, 2004 and December 31, 2003, the Company’s net liability to Mr. Wynn and other officers was approximately $85,000 and $60,000, respectively.

 

The Company operated an art gallery and originally leased The Wynn Collection from Mr. and Mrs. Wynn at a monthly rate equal to the gross revenue received by the gallery each month, less direct expenses, subject to a monthly cap. In August 2002, the lease terms were amended to reduce the rental paid to Mr. and Mrs. Wynn to one-half of the net revenue, if any, of the gallery. Under the August 2002 amendment, Mr. and Mrs. Wynn were required to reimburse the Company for the gallery’s net losses. For the period from inception to May 31, 2003, the gallery incurred approximately $103,000 of net losses that were reimbursed by Mr. and Mrs. Wynn and, accordingly, the Company did not make any lease payments during this period. Effective June 1, 2003, the lease

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

terms were further amended. Under the terms of the June 1, 2003 amendment, Mr. and Mrs. Wynn agreed to lease The Wynn Collection to the Company for an annual fee of $1, and the Company was entitled to retain all revenues from the public display of The Wynn Collection and the related merchandising revenues. The Company was responsible for all expenses incurred in exhibiting and safeguarding The Wynn Collection, including the cost of insurance (including terrorism insurance) and taxes relating to the rental of The Wynn Collection. The Company incurred a net loss of approximately $141,000 from the operation of the art gallery for the period from June 1, 2003 through December 31, 2003 and approximately $163,000 for the period from January 1, 2004 through May 6, 2004, when the gallery was closed to the public. The Company intends to open an art gallery as part of Wynn Las Vegas in April 2005.

 

During the period from January 1, 2004 through February 29, 2004, and for the six months ended June 30, 2003, the Company leased office space in Macau from a minority shareholder of Wynn Macau, S.A. on a month-to-month basis for approximately $5,500 per month. During the three and six months ended June 30, 2004, the Company leased an automobile in Macau from an agency owned by a minority investor in Wynn Macau S.A. for approximately $1,100 per month. In addition, the Company rents automobiles in Macau on a daily basis, as needed from this same agency. Furthermore, during the three and six months ended June 30, 2004, the Company leased two apartments in Macau from another investor in Wynn Macau S.A. on a month-to-month basis for a total of approximately $3,500 per month. These leases and rentals were at fair market value.

 

As discussed further in Note 7. Long-Term Debt, below, on June 14, 2004, the Company redeemed approximately $122.4 million of the $370 million in aggregate principal amount of the 12% Second Mortgage Notes due 2010 (the “Notes”) of Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. (collectively, the “Issuers”). The total amount of Notes redeemed included approximately $9 million in aggregate principal amount held by certain directors, officers and affiliates of the Company. Prior to the redemption, these directors, officers and affiliates held approximately $27.2 million in aggregate principal amount of the Notes.

 

6. Property and Equipment

 

Property and equipment as of June 30, 2004 and December 31, 2003, consist of the following (amounts in thousands):

 

		June 30, 2004				December 31, 2003
Land		$	307,297			$	288,422
Leasehold interest			57,000				—
Buildings and improvements			15,879				15,879
Parking garage			1,041				1,041
Aircraft			55,492				38,000
Furniture, fixtures and equipment			9,404				6,455
Construction in progress			967,009				570,988
			1,413,122				920,785
Less: accumulated depreciation			(20,141	)			(22,970	)
		$	1,392,981			$	897,815

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

In May 2004, the Company purchased a Gulfstream aircraft for approximately $11.7 million, plus certain transaction costs and capital improvements. In June 2004, the Company purchased a Boeing Business Jet (the “BBJ”) aircraft for approximately $43.5 million. The Company anticipates selling the Global Express aircraft that it owned prior to these aircraft acquisitions.

 

Construction in progress includes interest and other costs capitalized in conjunction with the Wynn Las Vegas project.

 

7. Long-Term Debt

 

Long-term debt as of June 30, 2004 and December 31, 2003, consists of the following (amounts in thousands):

 

		June 30, 2004				December 31, 2003
12% Second Mortgage Notes, net of original issue discount of approximately $14.2 million and $22.8 million, respectively due November 1, 2010; effective interest at approximately 12.9%		$	233,410			$	347,220
6% Convertible Subordinated Debentures, due July 15, 2015			250,000				250,000
$188.5 Million FF&E Facility; interest at LIBOR plus 4%; (approximately 5.2%)			60,309				38,000
Delay Draw Term Loan Facility; interest at LIBOR plus 5.5% (approximately 6.7%)			9,729				—
Note payable - Gulfstream Aircraft; interest at 5.67%			11,659				—
Land loan; interest at LIBOR plus 5.5% (approximately 6.7%)			143,400				—
Note payable - Land Parcel; at 8%			233				253
			708,740				635,473
Current portion of long-term debt			(555	)			(41	)
		$	708,185			$	635,432

 

On May 3, 2004, the Company amended documents governing its credit facilities to release from certain development and other restrictions the approximately 20 acres on which the remaining buildings of the former Desert Inn Resort and Casino currently stand (the “Phase II Land”). This allowed the Phase II Land to be used as security under the Land Loan (as defined below) and to be available for further development, including the expansion of the Wynn Las Vegas resort. The expansion will include additional casino, hotel and related amenities, and remains subject to the design, budgeting and financing process.

 

In connection with the amendment to the documents governing its credit facilities, on May 3, 2004 the Company borrowed $143.4 million (the “Land Loan”) under a credit agreement outside the previously existing debt agreements of Wynn Las Vegas, LLC. These amounts bear interest at London Interbank Offered Rate (“LIBOR”) plus 5.5%, will be used to fund a portion of the costs of the expansion of Wynn Las Vegas, and are secured by a first-priority security interest in the Phase II Land.

 

To finance the purchase of the Gulfstream aircraft, in May 2004, the Company borrowed $11.7 million under a 5.67% interest-bearing note, which requires monthly payments of principal and interest totaling approximately $97,000 for 84 months and a balloon payment in June 2011 of approximately $7.5 million. The note is secured by a lien on the aircraft. The Company has also arranged to borrow an additional $3.3 million at 5.67% during the third quarter of 2004 to fund expected refurbishments for the aircraft.

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

On June 14, 2004, pursuant to the indenture governing the Notes, the Issuers redeemed approximately $122.4 million of the $370 million in aggregate principal amount outstanding immediately prior to the redemption. As discussed further in Note 9. Capital Stock Transactions, on May 12, 2004, the Company completed the offering of seven million shares of its common stock, resulting in net proceeds before expenses of approximately $268.2 million. A portion of these proceeds were used to fund the redemption. The total price of the redemption was approximately $138.9 million, equal to 112.0% of the aggregate principal amount of the Notes redeemed, plus accrued and unpaid interest thereon. In connection with the redemption, the Company wrote off approximately $7 million of the unamortized original issue discount and approximately $3.9 million of unamortized deferred financing costs associated with the Notes. Accordingly, the Company recognized a loss on the early retirement of debt of approximately $25.6 million to reflect these writeoffs and the $14.7 million redemption premium.

 

In June 2004, the Company drew approximately $9.7 million under its $250 million delay draw senior secured term loan facility (the “Term Loan Facility”). The proceeds were applied to Wynn Las Vegas construction costs. The Term Loan Facility is guaranteed by Wynn Resorts as the parent company, Valvino and its subsidiaries (excluding Wynn Completion Guarantor, LLC, and Desert Inn Improvement Company, LLC) and certain of Valvino’s affiliates. The Term Loan Facility also is secured by a first priority security interest in a $30.0 million liquidity reserve account, a first priority pledge of all equity interests in, and a first priority security interest in substantially all the assets of, the Issuers and certain of their affiliates, first mortgages on all real property constituting Wynn Las Vegas, and a second priority security interest on the furniture, fixtures and equipment securing the FF&E facility described below. The Term Loan Facility matures in October 2009 and, prior to the opening of Wynn Las Vegas, annual interest is charged on outstanding borrowings at LIBOR plus 5.5%. Subsequent to the opening of Wynn Las Vegas, the applicable interest rate will be adjusted based upon the Company’s leverage ratio. In addition, the Term Loan Facility requires quarterly payments on the unused available borrowings at an annual rate of 4%.

 

In June 2004, the Company drew an additional $22.3 million under its $188.5 million FF&E facility (the “FF&E Facility”), increasing the outstanding balance at June 30, 2004 to approximately $60.3 million. The FF&E Facility provides financing for furniture, fixtures and equipment for Wynn Las Vegas. Obligations under the FF&E Facility are guaranteed by the same guarantors as those which guarantee the obligations under the Term Loan Facility, on a senior unsecured basis. The borrowings mature in October 2009, and bear annual interest at LIBOR plus 4%. In addition, fees are charged on the unused available borrowings at an annual rate of 4%.

 

The Company seeks to manage the interest rate risk associated with its variable rate borrowings, through balancing fixed-rate and variable-rate borrowings and the use of derivative financial instruments. The Company’s interest rate swaps have been designated as cash flow hedges of its revolving credit facility, its Term Loan Facility and its FF&E Facility in accordance SFAS No. 133. As of June 30, 2004 and December 31, 2003, the Company recorded approximately $14.8 million and $8.8 million in other assets, respectively, to reflect their fair value. These fair value amounts approximate the amount the Company would receive if these contracts were settled at these dates. Approximately $6.3 million of the increase in fair value of $6.0 million was recorded as a component of comprehensive income for the six months ended June 30, 2004, while approximately $300,000 was recorded as a component of interest cost. The net increase in the asset was primarily due to higher short-term interest rates at June 30, 2004, compared to those rates at December 31, 2003. Fair value is estimated based upon current, and predictions of future, interest rate levels along a yield curve, the remaining duration of the instruments and other market conditions, and therefore, is subject to significant estimation and a high degree of variability of fluctuation between periods.

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

8. Commitments and Contingencies

 

Las Vegas

 

Wynn Las Vegas’ project budget, including amendments as of June 30, 2004, was approximately $2.7 billion. This amount includes the cost of acquiring approximately 217 acres of land, costs of design and construction, capitalized interest, pre-opening expenses and financing fees. Also included in this amount are approximately $61 million for a portion of the anticipated budget on a planned future expansion of the resort, which will include an additional hotel and casino and related amenities. Although the scope and design of the future expansion continues to be developed, the budget to date includes amounts for a parking addition, office relocation, demolition and certain interest and financing costs and professional fees.

 

At June 30, 2004, the Company had various contractual commitments for developing, constructing and equipping Wynn Las Vegas totaling approximately $2.3 billion of which approximately $1.6 billion has been funded. Included in the $2.3 billion of contractual commitments are guaranteed maximum price contracts with the three prime contractors for the construction of the hotel and casino for approximately $992.7 million, construction of the Wynn Las Vegas golf course for approximately $17.4 million and construction of the parking garage for approximately $10.1 million. The parking structure is substantially complete and is currently used for parking by construction personnel.

 

The Company has entered into leases for five retail outlets, license and distribution agreements for four additional retail outlets, and joint venture agreements for the operation of three other retail outlets. Each of these retail outlets will open concurrently with the opening of Wynn Las Vegas. In connection with these arrangements, Wynn Las Vegas has provided some of the retail tenants an allowance for improvements. These improvement allowances are included in the budgeted costs to construct Wynn Las Vegas.

 

In addition to the above, for its preopening efforts the Company leases office space at three locations, a hangar for its corporate aircraft and certain warehouse facilities. These leases expire at various dates between June 2005 and February 2007.

 

The Company has entered into long-term agreements with a creative production company and its affiliated production services company for the licensing, creation, development and executive production of the water-based production show at Wynn Las Vegas. Under these agreements the Company is required to pay certain up-front creation and licensing fees, production costs and, upon opening of the production, a royalty of 10% of net ticket revenues and retail sales, and 50% of the show and retail profits to the production companies as calculated in accordance with the terms of the agreements. The term of each of the agreements is ten years after the opening date of the show, which will coincide with the opening of Wynn Las Vegas, with one five-year renewal option.

 

The Company also has an option with the same production and services companies for the development of a second production show for Wynn Las Vegas or for another project. The exercise of the option will require the payment of an additional $1 million and any additional project will require additional funds to develop.

 

In June 2004, the Company also entered into an agreement to purchase the rights to stage “Avenue Q,” a musical production currently playing on Broadway in New York. The Company also entered into a Production Services Agreement with an affiliate of the New York producer for all production services. The Company expects to present this show at Wynn Las Vegas’ second showroom, which is scheduled for completion in the second half of 2005.

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

At June 30, 2004 and December 31, 2003, other assets included $20.7 million and $8.7 million respectively, of amounts paid or accrued for creation and development costs in conjunction with these entertainment agreements.

 

Macau

 

Wynn Macau, S.A. has entered into a 20-year concession agreement with the government of Macau permitting it to construct and operate one or more casinos in Macau. The concession agreement obligates Wynn Macau, S.A. to invest 4 billion patacas (approximately US $498.3 million as of June 30, 2004) in one or more casino projects in Macau by June 2009, and to commence operations of its first permanent casino resort in Macau no later than December 2006. If Wynn Macau, S.A. does not invest 4 billion patacas by June 26, 2009, it is obligated to invest the remaining amount in projects related to its gaming operations in Macau that the Macau government approves, or in projects of public interest designated by the Macau government.

 

At June 30, 2004, Wynn Macau, S.A., had total assets, which are held in Macau, of approximately $70.4 million (including approximately $65 million of design and development work included in construction in progress), total liabilities of approximately $71.9 million and a total deficit of approximately $1.5 million (including an inception to date net loss of approximately $30.4 million).

 

The Legislative Assembly in Macau enacted legislation, effective July 1, 2004, that enables casinos operating in Macau to lawfully extend credit to gaming customers and to enforce gaming debts. Effective July, 2004, Wynn Macau, S.A. entered into a Land Concession Contract for the Wynn Macau project site in Macau’s inner harbor area opposite the Hotel Lisboa, Macau’s largest and best known hotel casino. Under the Land Concession Contract, Wynn Macau, S.A. leases a parcel of approximately 16 acres from the government for an initial term of 25 years, with a right to renew for additional periods. Wynn Macau is required to make an initial payment to the government of approximately $40 million (which is to be paid in 10 semi-annual installments) and to pay approximately $17 million to Nam Van Development Company for its relinquishment of rights to a portion of the land. During the term of the Land Concession Contract, Wynn Macau, S.A. is required to make annual lease payments of up to $400,000.

 

On June 4, 2004, the Company and Wynn Macau, S.A. entered into an underwriting agreement with Deutsche Bank AG, Hong Kong, and Société Générale Asia Limited, as Global Coordinating Lead Arrangers, for a fully underwritten senior bank facility of $397 million to finance in part the development and construction of the Wynn Macau project. The underwritten senior debt facility includes a term loan in the amount of US$382 million, which may be borrowed in either Hong Kong dollars or US dollars (in an apportionment to be determined), and a working capital facility of HK$117 million (approximately US$15 million), which may be borrowed in either Macau patacas or Hong Kong dollars (in an apportionment to be determined). Subject to the satisfaction of certain conditions precedent, each of the Global Coordinating Lead Arrangers will underwrite the equivalent of US$198.5 million for Wynn Macau. It is currently anticipated that the term loan will have a term of seven years and that the working capital facility will have a term of three years, in each case from the date of signing of the definitive financing documentation. Wynn Macau, S.A. has agreed to pay customary fees and expenses in connection with the financing.

 

This financing, together with the legislation discussed above, satisfied the preconditions to commencement of construction of Wynn Macau previously established by the Company. Accordingly, June 28, 2004, was established as the date of commencement under a guaranteed maximum price construction contract with Leighton Contractors (Asia) Limited, China State Construction Engineering (Hong Kong) Limited and China Construction Engineering (Macau) Company Limited, acting together as general contractor, for the design and

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

construction of the project. Under the construction contract, the contractors are responsible for both the construction and design of the project (other than certain limited portions to be designed by an affiliate of Wynn Macau) based on an existing scope of work and design specifications provided by Wynn Macau. The contractors are obligated to substantially complete the project within 26 months after the date of commencement for a guaranteed maximum price of $255.5 million (including the contractors’ fee and contingency). We anticipate that the guaranteed maximum price will be increased to approximately $285 million to reflect the addition of a parking structure and certain other site work to the project description. With the increase, the current total design and construction costs are estimated to be approximately $425 million out of the total current budget, before potential expansion and improvements, of approximately $705 million. Both the contract time and guaranteed maximum price are subject to further adjustment under the circumstances specified in the contract. The performance of the contractors will be backed by a full completion guarantee given jointly and severally by Leighton Holdings Limited and China Overseas Holdings Limited, the parent companies of the contracting entities, as well as a performance bond issued by a bank in an amount equal to ten percent of the guaranteed maximum price.

 

Wynn Resorts has invested approximately $23.8 million in Wynn Macau, S.A. through June 30, 2004 and, in addition, loaned Wynn Macau, S.A. a total of $10 million, bearing interest at 6.25% and currently payable on demand. Wynn Resorts intends to invest additional capital in Wynn Macau, S.A. to enable Wynn Macau, S.A. to continue to fund the design, development and construction efforts. The minority investors in Wynn Macau S.A. are obligated, subject to certain limitations, to make additional capital contributions in proportion to their economic interests (17.5% in the aggregate) to fund the construction, development and other activities of Wynn Macau, S.A. It is expected that significant additional financing will be needed to fund the development, construction and operation of one or more casinos in Macau. Wynn Macau, S.A. continues to work with the Macau government to obtain certain determinations related to Macau tax regulations. The Company cannot ensure that it will be able to obtain the determinations related to such regulations before it commences operations, or at all.

 

Wynn Macau, S.A. is required under the Macau concession agreement to obtain a 700 million pataca (approximately US $87.2 million as of June 30, 2004) bank guarantee for the period from the execution of the concession agreement until March 31, 2007. The amount of this required guarantee will be reduced to 300 million patacas (approximately US $37.4 million as of June 30, 2004) for the period from April 1, 2007 until 180 days after the end of the term of the concession agreement. Wynn Macau, S.A. currently has an uncollateralized bank guarantee from Banco National Ultramarino, S.A. in the required amount, which is expected to be replaced by another guarantee suitable under the concession agreement now that Wynn Macau, S.A. has commenced construction of Wynn Macau. Wynn Macau, S.A. currently pays a commission to the bank in the amount of 0.50% per year of the guarantee amount. The purpose of this bank guarantee is to guarantee Wynn Macau, S.A.’s performance under the concession agreement, including the payment of premiums, fines and any indemnity for failure to perform the concession agreement.

 

Self-insurance

 

The Company’s domestic subsidiaries are self-insured for medical and workers’ compensation up to a maximum of $40,000 per year for each insured person under the medical plan and $350,000 for each workers’ compensation claim. Amounts in excess of these thresholds are covered by the Company’s insurance programs, subject to customary policy limits.

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

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 with specified annual increases, and often contain provisions for guaranteed 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).

 

Litigation

 

The Company occasionally is a party to lawsuits. As with all litigation, no assurance can be provided as to the outcome of such matters and we note that litigation inherently involves significant costs.

 

The Company was involved in litigation related to its ownership and development of the former Desert Inn golf course and the residential lots around the golf course. Based on a settlement reached with the plaintiffs, all actions relating to the litigation were dismissed with prejudice on or prior to April 15, 2004. As part of the settlement, in March 2004, the Company purchased the ten remaining residential lots for approximately $23 million from its existing cash.

 

9. Capital Stock Transactions

 

On May 12, 2004, pursuant to an effective shelf registration statement, the Company completed the offering of seven million shares of its $0.01 par value common stock at a price of $38.75 per share for gross proceeds of approximately $271.3 million. Underwriting discounts and commissions of $0.44 per share or approximately $3.1 million reduced the net proceeds to the Company, before expenses, to approximately $268.2 million. The Company used a portion of the proceeds of the offering to redeem a portion of the Notes (see Note 7. Long-Term Debt above), and intends to use remaining net proceeds to help finance Wynn Macau and for general corporate purposes.

 

10. Subsequent Events

 

Corporate Aircraft Transactions

 

As discussed in Note 6. Property and Equipment, in June 2004, the Company completed the purchase of the BBJ aircraft. To finance the purchase, the Company intends to amend its FF&E Facility to increase the available commitments thereunder to $195.5 million from the previous $188.5 million and will draw upon the $7 million of increased availability. In addition, the Company sold its Global Express aircraft in August 2004 for $33.0 million. The remaining $3.5 million for the purchase price of the new aircraft was funded from existing corporate cash.

 

Land Purchase Transaction

 

In July 2004, the Company amended its bank credit facilities as provided for in the documents, to increase the $750 million senior secured revolving credit facility by $50 million to $800 million to finance the purchase of certain land and buildings adjacent to Wynn Las Vegas for future development of an additional parking facility for the resort. The purchase price was $45 million, and transaction, closing and certain other costs increased the required funding by an additional $5 million.

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

 

Additional Parent Loan for Wynn Macau

 

In July 2004, Wynn Resorts loaned Wynn Macau, S.A. an additional $25 million, bearing interest at 6.25% and payable on demand, to continue preopening and construction efforts.

 

11. Consolidating Financial Information of Guarantors and Issuers

 

The following consolidating financial statements present information related to Wynn Resorts (the “Parent”), which is the issuer of the Debentures, Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. (the “Notes Issuers”) as the issuers of the 12% Second Mortgage Notes, the Notes Guarantors (other than Wynn Resorts), Wynn Resorts Funding, LLC (the “Convertible Debentures Guarantor”) and non-guarantor subsidiaries as of June 30, 2004 and December 31, 2003, for the three- and six-month periods ended June 30, 2004 and 2003 and for the period from inception to June 30, 2004.

 

Guarantors of the Notes (other than Wynn Resorts) are Valvino, Wynn Design & Development, LLC, Wynn Resorts Holdings, LLC, Palo, LLC, Desert Inn Water Company, LLC, Wynn Show Performers, LLC, World Travel, LLC and Las Vegas Jet, LLC. Wynn Resorts Funding, LLC is a guarantor of the Debentures but not of the Notes. Wynn Group Asia, Inc. and all of its subsidiaries; Wynn Completion Guarantor, LLC; Desert Inn Improvement Company; Rambas Marketing, LLC; Worldwide Wynn, LLC; Toasty, LLC, Bora, LLC, Bora Bora, LLC, World Travel G-IV, LLC, World Travel BBJ, LLC, Wynn Golf, LLC and Kevyn, LLC are not guarantors of the Notes. In October 2002, Valvino transferred certain of its assets, including its equity interests in certain of its subsidiaries which do not guarantee the Notes, to Wynn Resorts. In addition, Valvino transferred certain of its assets, including its equity interests in Las Vegas Jet, LLC and World Travel, LLC directly to Wynn Las Vegas. Because these transfers were between entities under common control, in accordance with SFAS No. 141, “Business Combinations,” the assets and liabilities of the entities acquired have been recorded by the acquiring subsidiary at the carrying value at the time of the acquisition and the operating results of the entities are included in the operating statements of the Company from the earliest period presented. The Parent records the investment in its respective subsidiaries based on the equity method of accounting. Elimination of the Parent’s investment is included in the “Eliminations” column.

 

The following condensed consolidating financial statements are presented in the provided form because: (i) the Notes Issuers and Guarantors and the Convertible Debentures Guarantor are wholly owned subsidiaries of the Company; (ii) the guarantees are considered to be full and unconditional, that is, if the Parent or the Notes Issuers fail to make a scheduled payment, the Notes Guarantors or the Convertible Debentures Guarantor, as applicable; are obligated to make the scheduled payment immediately and, if they do not, any holder of the Notes or Debentures may immediately bring suit directly against these Guarantors for payment of all amounts due and payable; and (iii) the guarantees are joint and several.

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING BALANCE SHEET INFORMATION

AS OF JUNE 30, 2004

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Convertible Debentures Guarantor Subsidiary			Non-guarantor Subsidiaries				Eliminating Entries				Total
ASSETS
Current assets:
Cash and cash equivalents		$	346,335			$	16,565			$	(5,150	)		$	—		$	3,259			$	—			$	361,009
Restricted cash and investments			—				72,650				—				—			—				—				72,650
Receivables, net			—				1				—				—			7				—				8
Inventories			—				435				124				—			—				—				559
Prepaid expenses			297				873				753				—			4				—				1,927
Total current assets			346,632				90,524				(4,273	)			—			3,270				—				436,153
Restricted cash and investments			—				7,413				23				36,996			103,063				—				147,495
Property and equipment, net			389				1,121,245				76,005				—			195,342				—				1,392,981
Aircraft held for sale			—				—				33,000				—			—				—				33,000
Water rights			—				256				6,144				—			—				—				6,400
Trademark			—				1,000				—				—			—				—				1,000
Deferred financing costs			8,413				42,515				—				—			9,832				—				60,760
Investment in subsidiaries			505,774				7,397				433,637				—			—				(946,808	)			—
Other assets			5,000				41,638				3,391				—			18				—				50,047
Intercompany balances			615,700				(803,896	)			279,440				7,500			(98,744	)			—				—
Total assets		$	1,481,908			$	508,092			$	827,367			$	44,496		$	212,781			$	(946,808	)		$	2,127,836
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	—			$	—			$	43			$	—		$	512			$	—			$	555
Accounts and construction payable			—				1,551				65,451				—			326				—				67,328
Accrued interest			6,875				7,199				—				—			892				—				14,966
Accrued compensation and benefits			1,085				1,915				913				—			230				—				4,143
Accrued expenses and other			5				5,999				1,260				—			25,296				—				32,560
Total current liabilities			7,965				16,664				67,667				—			27,256				—				119,552
Construction retention			—				—				42,556				—			—				—				42,556
Long-term debt			250,000				303,448				190				—			154,547				—				708,185
Other long-term liabilities			—				1,600				—				—			32,000				—				33,600
Total liabilities			257,965				321,712				110,413				—			213,803				—				903,893
Commitments and contingencies
Stockholders’ equity:
Common stock			890				—				—				—			18				(18	)			890
Additional paid-in capital			1,378,848				237,075				893,990				44,024			30,027				(1,205,116	)			1,378,848
Deferred compensation - restricted stock			(6,760	)			—				(8,377	)			—			—				8,377				(6,760	)
Accumulated other comprehensive income			15,079				15,079				30,159				—			—				(45,238	)			15,079
Deficit accumulated from inception during the development stage			(164,114	)			(65,774	)			(198,818	)			472			(31,067	)			295,187				(164,114	)
Total stockholders’ equity			1,223,943				186,380				716,954				44,496			(1,022	)			(946,808	)			1,223,943
Total liabilities and stockholders’ equity		$	1,481,908			$	508,092			$	827,367			$	44,496		$	212,781			$	(946,808	)		$	2,127,836

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING BALANCE SHEET INFORMATION

AS OF DECEMBER 31, 2003

(amounts in thousands)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Convertible Debentures Guarantor Subsidiary			Non-guarantor Subsidiaries				Eliminating Entries				Total
ASSETS
Current assets:
Cash and cash equivalents		$	328,745			$	18,236			$	(7,326	)		$	—		$	1,897			$	—			$	341,552
Restricted cash and investments			—				58,312				—				—			—				—				58,312
Receivables, net			36				10				27				—			5				—				78
Inventories			—				—				204				—			—				—				204
Prepaid expenses			204				247				1,691				—			59				—				2,201
Total current assets			328,985				76,805				(5,404	)			—			1,961				—				402,347
Restricted cash and investments			—				247,508				23				44,268			50,321				—				342,120
Property and equipment, net			410				728,663				162,983				—			5,759				—				897,815
Water rights			—				256				6,144				—			—				—				6,400
Trademark			—				1,000				—				—			—				—				1,000
Deferred financing costs			8,294				50,971				—				—			—				—				59,265
Investment in subsidiaries			548,763				8,041				503,809				—			—				(1,060,613	)			—
Other assets			—				18,745				5,607				—			24				—				24,376
Intercompany balances			373,669				(513,826	)			190,691				—			(50,534	)			—				—
Total assets		$	1,260,121			$	618,163			$	863,853			$	44,268		$	7,531			$	(1,060,613	)		$	1,733,323
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	—			$	—			$	41			$	—		$	—			$	—			$	41
Accounts and construction payable			—				562				48,874				—			318				—				49,754
Accrued interest			7,375				9,438				—				—			—				—				16,813
Accrued compensation and benefits			912				875				1,082				—			509				—				3,378
Accrued expenses and other			19				173				990				—			8				—				1,190
Total current liabilities			8,306				11,048				50,987				—			835				—				71,176
Construction retention			—				—				23,846				—			—				—				23,846
Long-term debt			250,000				385,220				212				—			—				—				635,432
Total liabilities			258,306				396,268				75,045				—			835				—				730,454
Minority interest			—				—				—				—			—				1,054				1,054
Commitments and contingencies
Stockholders’ equity:
Common stock			820				—				—				—			18				(18	)			820
Additional paid-in capital			1,110,813				237,075				893,989				44,024			30,027				(1,205,115	)			1,110,813
Deferred compensation - restricted stock			(9,664	)			—				(10,531	)			—			—				10,531				(9,664	)
Accumulated other comprehensive income			8,793				8,793				17,585				—			—				(26,378	)			8,793
Deficit accumulated from inception during the development stage			(108,947	)			(23,973	)			(112,235	)			244			(23,349	)			159,313				(108,947	)
Total stockholders’ equity			1,001,815				221,895				788,808				44,268			6,696				(1,061,667	)			1,001,815
Total liabilities and stockholders’ equity		$	1,260,121			$	618,163			$	863,853			$	44,268		$	7,531			$	(1,060,613	)		$	1,733,323

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION

THREE MONTHS ENDED JUNE 30, 2004

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Convertible Debentures Guarantor Subsidiary				Non-guarantor Subsidiaries				Eliminating Entries				Total
Revenues:
Airplane		$	—			$	—			$	1,011			$	—			$	—			$	(967	)		$	44
Art gallery			—				—				28				—				—				—				28
Retail			—				—				29				—				—				—				29
Royalty			1,500				—				—				—				—				(1,500	)			—
Water			—				—				—				—				10				(8	)			2
Total revenues			1,500				—				1,068				—				10				(2,475	)			103
Expenses:
Pre-opening costs			5,024				8,756				1,431				3				2,254				(958	)			16,510
Depreciation and amortization			20				285				597				—				140				—				1,042
(Gain) / Loss on sale of assets			—				—				520				—				—				—				520
Selling, general and administrative			—				—				118				—				1,503				(1,512	)			109
Cost of water			—				2				5				—				5				(5	)			7
Cost of retail sales			—				—				27				—				—				—				27
Loss from incidental operations			—				92				(92	)			—				—				—				—
Total expenses			5,044				9,135				2,606				3				3,902				(2,475	)			18,215
Operating loss			(3,544	)			(9,135	)			(1,538	)			(3	)			(3,892	)			—				(18,112	)
Other income (expense):
Interest expense, net			—				—				—				—				(278	)			184				(94	)
Interest income			1,064				336				—				111				184				(184	)			1,511
Loss on extinguishment of debt			—				(25,628	)			—				—				—				—				(25,628	)
Equity in loss of subsidiaries			(39,439	)			(604	)			(70,160	)			—				—				110,203				—
Other income (expense), net			(38,375	)			(25,896	)			(70,160	)			111				(94	)			110,203				(24,211	)
Minority interest			—				—				—				—				—				404				404
Net loss accumulated during the development stage		$	(41,919	)		$	(35,031	)		$	(71,698	)		$	108			$	(3,986	)		$	110,607			$	(41,919	)

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION

THREE MONTHS ENDED JUNE 30, 2003

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminating Entries				Total
Revenues:
Airplane		$	—			$	—			$	695			$	—			$	(572	)		$	123
Art gallery			—				—				80				—				—				80
Retail			—				—				79				—				—				79
Royalty			1,500				—				—				—				(1,500	)			—
Water			—				—				—				12				(9	)			3
Total revenues			1,500				—				854				12				(2,081	)			285
Expenses:
Pre-opening costs			4,879				3,465				1,538				1,891				(542	)			11,231
Depreciation and amortization			1				13				2,166				—				—				2,180
Selling, general and administrative			—				—				175				1,505				(1,530	)			150
Cost of water			—				—				9				13				(9	)			13
Cost of retail sales			—				—				35				—				—				35
Loss from incidental operations			—				74				28				—				—				102
Total expenses			4,880				3,552				3,951				3,409				(2,081	)			13,711
Operating loss			(3,380	)			(3,552	)			(3,097	)			(3,397	)			—				(13,426	)
Other income (expense):
Interest expense, net			—				(2,279	)			(6	)			(109	)			—				(2,394	)
Interest income			252				2,096				4				179				—				2,531
Equity in loss of subsidiaries			(9,549	)			(215	)			(7,966	)			—				17,730				—
Other income (expense), net			(9,297	)			(398	)			(7,968	)			70				17,730				137
Minority interest			—				—				—				—				612				612
Net loss accumulated during the development stage		$	(12,677	)		$	(3,950	)		$	(11,065	)		$	(3,327	)		$	18,342			$	(12,677	)

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION

SIX MONTHS ENDED JUNE 30, 2004

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Convertible Debentures Guarantor Subsidiary				Non-guarantor Subsidiaries				Eliminating Entries				Total
Revenues:
Airplane		$	—			$	—			$	1,984			$	—			$	—			$	(1,877	)		$	107
Art gallery			—				—				98				—				—				—				98
Retail			—				—				92				—				—				—				92
Royalty			3,000				—				—				—				—				(3,000	)			—
Water			—				—				—				—				17				(13	)			4
Total revenues			3,000				—				2,174				—				17				(4,890	)			301
Expenses:
Pre-opening costs			9,557				15,877				2,995				4				4,531				(1,841	)			31,123
Depreciation and amortization			38				444				1,202				—				140				—				1,824
(Gain) / Loss on sale of assets			—				—				512				—				—				—				512
Selling, general and administrative			3				—				333				—				2,998				(3,042	)			292
Cost of water			—				2				9				—				11				(9	)			13
Cost of retail sales			—				—				63				—				—				—				63
Loss from incidental operations			—				179				(179	)			—				—				—				—
Total expenses			9,598				16,502				4,935				4				7,680				(4,892	)			33,827
Operating loss			(6,598	)			(16,502	)			(2,761	)			(4	)			(7,663	)			2				(33,526	)
Other income (expense):
Interest expense, net			—				—				—				—				(381	)			184				(197	)
Interest income			1,784				972				—				232				326				(184	)			3,130
Loss on extinguishment of debt			—				(25,628	)			—				—				—				—				(25,628	)
Equity in loss of subsidiaries			(50,353	)			(643	)			(83,822	)			—				—				134,818				—
Other income (expense), net			(48,569	)			(25,299	)			(83,822	)			232				(55	)			134,818				(22,695	)
Minority interest			—				—				—				—				—				1,054				1,054
Net loss accumulated during the development stage		$	(55,167	)		$	(41,801	)		$	(86,583	)		$	228			$	(7,718	)		$	135,874			$	(55,167	)

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION

SIX MONTHS ENDED JUNE 30, 2003

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminating Entries				Total
Revenues:
Airplane		$	—			$	—			$	1,568			$	—			$	(1,395	)		$	173
Art gallery			—				—				152				—				—				152
Retail			—				—				148				—				—				148
Royalty			6,067				—				—				—				(6,067	)			—
Water			—				—				—				29				(24	)			5
Total revenues			6,067				—				1,868				29				(7,486	)			478
Expenses:
Pre-opening costs			8,511				6,387				3,230				3,398				(1,338	)			20,188
Depreciation and amortization			1				23				4,329				—				—				4,353
(Gain) / Loss on sale of assets			—				—				(5	)			—				—				(5	)
Selling, general and administrative			—				—				306				6,072				(6,127	)			251
Cost of water			—				—				21				34				(21	)			34
Cost of retail sales			—				—				74				—				—				74
Loss from incidental operations			—				150				66				—				—				216
Total expenses			8,512				6,560				8,021				9,504				(7,486	)			25,111
Operating loss			(2,445	)			(6,560	)			(6,153	)			(9,475	)			—				(24,633	)
Other income (expense):
Interest expense, net			—				(3,923	)			(12	)			(218	)			—				(4,153	)
Interest income			499				4,554				4				353				—				5,410
Equity in loss of subsidiaries			(19,737	)			(461	)			(12,895	)			—				33,093				—
Other income (expense), net			(19,238	)			170				(12,903	)			135				33,093				1,257
Minority interest			—				—				—				—				1,693				1,693
Net loss accumulated during the development stage		$	(21,683	)		$	(6,390	)		$	(19,056	)		$	(9,340	)		$	34,786			$	(21,683	)

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION

FROM INCEPTION TO JUNE 30, 2004

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Convertible Debentures Guarantor Subsidiary				Non-guarantor Subsidiaries				Eliminating Entries				Total
Revenues:
Airplane		$	—			$	—			$	11,266			$	—			$	—			$	(8,991	)		$	2,275
Art gallery			—				—				729				—				—				—				729
Retail			—				—				668				—				—				—				668
Royalty			12,067				—				—				—				—				(12,067	)			—
Water			—				—				—				—				229				(179	)			50
Total revenues			12,067				—				12,663				—				229				(21,237	)			3,722
Expenses:
Pre-opening costs			32,644				38,326				41,962				3				16,749				(8,726	)			120,958
Depreciation and amortization			59				627				25,810				—				2,212				—				28,708
(Gain) / Loss on sale of assets			—				—				639				—				69				—				708
Selling, general and administrative			3				—				1,830				—				12,456				(12,369	)			1,920
Facility closure expenses			—				—				1,579				—				—				—				1,579
Cost of water			—				2				315				—				171				(142	)			346
Cost of retail sales			—				—				343				—				—				—				343
Loss from incidental operations			—				697				1,817				—				—				—				2,514
Total expenses			32,706				39,652				74,295				3				31,657				(21,237	)			157,076
Operating loss			(20,639	)			(39,652	)			(61,632	)			(3	)			(31,428	)			—				(153,354	)
Other income (expense):
Interest expense, net			(3,532	)			(6,062	)			(945	)			—				(815	)			184				(11,170	)
Interest income			3,979				10,097				5,446				475				1,176				(184	)			20,989
Loss on extinguishment of debt			—				(25,628	)			—				—				—				—				(25,628	)
Equity in loss of subsidiaries			(143,922	)			(4,529	)			(141,687	)			—				—				290,138				—
Other income (expense), net			(143,475	)			(26,122	)			(137,186	)			475				361				290,138				(15,809	)
Minority interest			—				—				—				—				—				5,049				5,049
Net loss accumulated during the development stage		$	(164,114	)		$	(65,774	)		$	(198,818	)		$	472			$	(31,067	)		$	295,187			$	(164,114	)

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENTS OF CASH FLOWS INFORMATION

SIX MONTHS ENDED JUNE 30, 2004

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Convertible Debentures Guarantor Subsidiary				Non-guarantor Subsidiaries				Eliminating Entries				Total
Cash flows from operating activities:
Net loss accumulated during the development stage		$	(55,167	)		$	(41,801	)		$	(86,583	)		$	228			$	(7,718	)		$	135,874			$	(55,167	)
Adjustments to reconcile net loss accumulated during the development stage to net cash provided by (used in) operating activities:
Depreciation and amortization			38				444				1,202				—				140				—				1,824
Minority interest			—				—				—				—				—				(1,054	)			(1,054	)
Amortization of deferred compensation			1,826				—				—				—				—				—				1,826
Amortization of deferred financing costs			360				17,066				—				—				—				—				17,426
(Gain) / Loss on sale of assets			—				—				512				—				—				—				512
Equity in loss of subsidiaries			50,353				645				83,822				—				—				(134,820	)			—
Incidental operations			—				—				4,085				—				78				—				4,163
Increase (decrease) in cash from changes in:
Receivables, net			36				9				27				—				(2	)			—				70
Inventories and prepaid expenses			(93	)			(1,061	)			1,018				—				55				—				(81	)
Accounts payable and accrued expenses			(341	)			1,615				102				—				909				—				2,285
Net cash provided by (used in) operating activities			(2,988	)			(23,083	)			4,185				228				(6,538	)			—				(28,196	)
Cash flows from investing activities:
Capital expenditures, net of construction payables			(17	)			(356,361	)			(26,344	)			—				(58,316	)			—				(441,038	)
Restricted cash and Investments			—				225,757				—				7,272				(52,742	)			—				180,287
Other assets			(5,000	)			(11,307	)			2,216				—				6				—				(14,085	)
Intercompany balances			(242,031	)			253,705				22,101				(7,500	)			(26,275	)			—				—
Proceeds from sale of equipment			—				—				38				—				—				—				38
Net cash provided by (used in) investing activities			(247,048	)			111,794				(1,989	)			(228	)			(137,327	)			—				(274,798	)
Cash flows from financing activities:
Proceeds from issuance of common stock			271,250				—				—				—				—				—				271,250
Third party fees			(3,145	)			—				—				—				—				—				(3,145	)
Principal payments of long-term debt			—				(122,420	)			(20	)			—				(41	)			—				(122,481	)
Proceeds from issuance of long-term debt			—				32,038				—				—				155,100				—				187,138
Deferred financing costs			(479	)			—				—				—				(9,832	)			—				(10,311	)
Net cash provided by (used in) financing activities			267,626				(90,382	)			(20	)			—				145,227				—				322,451
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents			17,590				(1,671	)			2,176				—				1,362				—				19,457
Balance, beginning of period			328,745				18,236				(7,326	)			—				1,897				—				341,552
Balance, end of period		$	346,335			$	16,565			$	(5,150	)		$	—			$	3,259			$	—			$	361,009

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENTS OF CASH FLOWS INFORMATION

SIX MONTHS ENDED JUNE 30, 2003

(amounts in thousands)

(unaudited)

 

		Parent				2nd Mortgage Notes Issuer Subsidiaries				2nd Mortgage Notes Guarantor Subsidiaries				Non-guarantor Subsidiaries				Eliminating Entries				Total
Cash flows from operating activities:
Net loss accumulated during the development stage		$	(21,683	)		$	(6,390	)		$	(19,056	)		$	(9,340	)		$	34,786			$	(21,683	)
Adjustments to reconcile net loss accumulated during the development stage to net cash provided by (used in) operating activities:
Depreciation and amortization			1				23				4,329				—				—				4,353
Minority interest			—				—				—				—				(1,693	)			(1,693	)
Amortization of deferred compensation			1,500				—				—				—				—				1,500
Amortization of deferred financing costs			—				628				—				—				—				628
(Gain) / Loss on sale of assets			—				—				(5	)			—				—				(5	)
Equity in loss of subsidiaries			19,737				461				12,895				—				(33,093	)			—
Increase (decrease) in cash from changes in:
Receivables, net			—				11				114				—				—				125
Inventories and prepaid expenses			(248	)			(45	)			(48	)			—				—				(341	)
Accounts payable and accrued expenses			279				(385	)			14				46				—				(46	)
Net cash provided by (used in) operating activities			(414	)			(5,697	)			(1,757	)			(9,294	)			—				(17,162	)
Cash flows from investing activities:
Capital expenditures, net of construction payables			(85	)			(129,050	)			(79	)			(2,786	)			—				(132,000	)
Restricted cash and Investments			—				149,678				(2,765	)			(351	)			—				146,562
Other assets			—				(1,208	)			13				(206	)			—				(1,401	)
Intercompany balances			7,587				(12,313	)			3,982				744				—				—
Proceeds from sale of equipment			—				—				5				—				—				5
Net cash provided by (used in) investing activities			7,502				7,107				1,156				(2,599	)			—				13,166
Cash flows from financing activities:
Proceeds from issuance of common stock			45,000				—				—				—				—				45,000
Third party fees			(204	)			—				—				—				—				(204	)
Principal payments of long-term debt			—				—				(18	)			—				—				(18	)
Deferred financing costs			(975	)			—				—				—				—				(975	)
Net cash provided by (used in) financing activities			43,821				—				(18	)			—				—				43,803
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents			50,909				1,410				(619	)			(11,893	)			—				39,807
Balance, beginning of period			79,234				7,508				(1,178	)			24,080				—				109,644
Balance, end of period		$	130,143			$	8,918			$	(1,797	)		$	12,187			$	—			$	149,451

 

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WYNN RESORTS, LIMITED AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

 

CONSOLIDATING STATEMENTS OF CASH FLOWS INFORMATION

FROM INCEPTION TO JUNE 30, 2004

(amounts in thousands)

(unaudited)

 

Parent

2nd Mortgage Notes Issuer Subsidiaries

2nd Mortgage Notes Guarantor Subsidiaries

Convertible Debentures Guarantor Subsidiary

Non-guarantor Subsidiaries

Eliminating Entries

Total

Cash flows from operating activities:

Net loss accumulated during the development stage

$

(164,114

)