UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2002
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
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) |
3145 Las Vegas Boulevard SouthLas Vegas, Nevada 89109
(Address of principal executive office) (Zip Code)
(702) 733-4444
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes ¨ No x
The aggregate market value of the Registrants Common Stock held by non-affiliates of the Registrant based on the closing price as reported on the Nasdaq Stock Market on March 10, 2003 was $387,332,484.
As of March 10, 2003, 79,162,234 shares of Registrants Common Stock, $.01 par value, were outstanding.
Portions of the Registrants Proxy Statement for its 2003 Annual Meeting of Stockholders to be filed not later than 120 days after the end of the fiscal year covered by this report are incorporated by reference into Part III of this Form 10-K.
The Registrant is filing this Amendment No. 1 to the Annual Report on Form 10-K for the year ended December 31, 2002 to reflect restricted cash and investments as non-current. The Registrant is only amending Item 15 Exhibits, Financial Statement Schedules and Reports on Form 8-K.
ITEM | 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K |
(a) | 1. Financial StatementsSee the Index to Consolidated Financial Statements on Page F-1 |
2. Financial Statement Schedules filed in Part IV of this report are listed below;
None. We have omitted financial statement schedules because they are not required or are not applicable, or the required information is shown in the financial statements or notes to the financial statements.
3. Exhibits
EXHIBIT INDEX
Exhibit |
Description | |
3.1 |
Second Amended and Restated Articles of Incorporation of the Registrant.(4) | |
3.2 |
Third Amended and Restated Bylaws of the Registrant, as amended.(6) | |
4.1 |
Specimen certificate for shares of Common Stock, $0.01 par value per share of the Registrant.(4) | |
4.2 |
Indenture, dated as of October 30, 2002, governing the 12% Second Mortgage Notes due 2010 by and among Wynn Las Vegas, LLC; Wynn Las Vegas Capital Corp.; Desert Inn Water Company, LLC; Wynn Design & Development, LLC; Wynn Resorts Holdings, LLC; Las Vegas Jet, LLC; World Travel, LLC; Palo, LLC; Valvino Lamore, LLC; the Registrant and Wells Fargo Bank, National Association, Inc., as trustee.(1) | |
4.3 |
Form of Second Mortgage Note (included in Exhibit 4.2)(1) | |
4.4 |
Form of Notation of Guarantee (included in Exhibit 4.2)(1) | |
4.5 |
Guarantee and Collateral Agreement, dated as of October 30, 2002, made by Valvino Lamore, LLC; Wynn Las Vegas Capital Corp.; Palo, LLC; Wynn Resorts Holdings, LLC; Desert Inn Water Company, LLC; World Travel, LLC; Las Vegas Jet, LLC; Wynn Las Vegas, LLC and the other Guarantors from time to time party thereto in favor of Wells Fargo Bank, National Association, as Mortgage Notes Indenture Trustee.(1) | |
4.6 |
Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Wynn Resorts Holdings, LLC in favor of Wells Fargo Bank, National Association, as Mortgage Notes Indenture Trustee.(1) | |
4.7 |
Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Valvino Lamore, LLC in favor of Wells Fargo Bank, National Association, as Mortgage Notes Indenture Trustee.(1) | |
4.8 |
Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Palo, LLC in favor of Wells Fargo Bank, National Association, as Mortgage Notes Indenture Trustee.(1) | |
4.9 |
Deed of Trust, Leasehold Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Wynn Las Vegas, LLC in favor of Wells Fargo Bank, National Association, as Mortgage Notes Indenture Trustee.(1) | |
4.10 |
Parent Guaranty, dated as of October 30, 2002, by the Registrant in favor of Wells Fargo Bank, National Association, as Mortgage Notes Indenture Trustee.(1) | |
10.1 |
2002 Stock Incentive Plan.(1) | |
10.2 |
Agreement between Wynn Design & Development, LLC and Butler/Ashworth Architects, Inc.(4) | |
10.3 |
Agreement for Guaranteed Maximum Price Construction Services Change Order, dated as of August 12, 2002, between Marnell Corrao Associates, Inc. and Wynn Las Vegas, LLC.(2) |
1
Exhibit |
Description | |
10.4 |
Intentionally Omitted. | |
10.5 |
Second Amended and Restated Art Rental and Licensing Agreement, dated September 18, 2002, by and between Stephen A. Wynn and Wynn Resorts Holdings, LLC.(4) | |
10.6 |
Employment Agreement, dated as of September 6, 2002, by and between Wynn Resorts, Limited and Marc H. Rubinstein.(3) | |
10.7 |
Employment Agreement, dated as of September 9, 2002, by and between Resorts, Limited and John Strzemp.(3) | |
10.8 |
Employment Agreement, dated as of September 18, 2002, by and between Wynn Design & Development, LLC and Kenneth R. Wynn.(4) | |
10.9 |
Employment Agreement, dated as of September 26, 2002, by and between Wynn Design & Development, LLC and DeRuyter O. Butler.(4) | |
10.10 |
Tax Indemnification Agreement, effective as of September 24, 2002, by and among Stephen A. Wynn, Aruze USA, Inc., Baron Asset Fun on behalf of the Baron Asset Fund Series, Baron Asset Fund on behalf of the Baron Growth Fund Series, Kenneth R. Wynn Family Trust dated February 20, 1985, Valvino Lamore, LLC and Wynn Resorts, Limited.(4) | |
10.11 |
Form of Stock Option Agreement.(11) | |
10.12 |
Intentionally Omitted. | |
10.13 |
Form of Restricted Stock Agreement.(9) | |
10.14 |
Intentionally Omitted. | |
10.15 |
Agreement re: Provision and Use of Water, dated October 21, 2002, by and among Desert Inn Improvement Co.; Wynn Resorts Holdings, LLC and Wynn Las Vegas, LLC.(1) | |
10.16 |
Agreement re: Provision and Use of Real Property, dated October 21, 2002, by and among Desert Inn Improvement Co.; Wynn Resorts Holdings, LLC and Wynn Las Vegas, LLC.(1) | |
10.17 |
Office Building Lease Agreement, dated October 21, 2002, by and between Valvino Lamore, LLC and Wynn Las Vegas, LLC.(1) | |
10.18 |
Golf Course Lease Agreement, dated October 21, 2002, by and between Wynn Resorts Holdings, LLC and Wynn Las Vegas, LLC.(1) | |
10.19 |
Driving Range Lease, dated October 21, 2002, by and between Valvino Lamore, LLC and Wynn Las Vegas, LLC.(1) | |
10.20 |
Parking Facility Lease, dated October 21, 2002, by and between Valvino Lamore, LLC and Wynn Las Vegas, LLC.(1) | |
10.21 |
Credit Agreement, dated as of October 30, 2002, among Wynn Las Vegas, LLC; the several lenders from time to time parties thereto; Deutsche Bank Trust Company Americas; Banc of America Securities, LLC; Bear, Stearns & Co. Inc.; Bear Stearns Corporate Lending Inc.; Dresdner Bank AG, New York and Grand Cayman Branches and JP Morgan Chase Bank.(1) | |
10.22 |
Registration Rights Agreement, dated October 30, 2002, by and between the Registrant and Stephen A. Wynn.(1) | |
10.23 |
Management Agreement, made as of October 30, 2002, by and among Wynn Las Vegas, LLC and the subsidiaries and affiliates listed on Exhibit A thereto and the Registrant.(1) | |
10.24 |
Loan Agreement, dated as of October 30,2002, by and among Wynn Las Vegas, LLC; Wells Fargo Bank Nevada, N.A., as collateral agent; and the lenders listed on Schedule 1A thereto.(1) | |
10.25 |
Borrower Security Agreement, dated as of October 30, 2002, by Wynn Las Vegas, LLC, in favor of Wells Fargo Bank Nevada, National Association, as collateral agent.(1) |
2
Exhibit |
Description | |
10.26 |
Form of Intercompany Note, dated October 30, 2002, made by World Travel, LLC in favor of Wynn Las Vegas, LLC.(1) | |
10.27 |
Aircraft Security Agreement, dated as of October 30, 2002, among Wells Fargo Bank Northwest, National Association, as trustee, World Travel, LLC and Wynn Las Vegas, LLC.(1) | |
10.28 |
Aircraft Security Agreement Supplement No. 1, dated as of October 30, 2002, among Wells Fargo Bank Northwest, National Association, as trustee, World Travel, LLC and Wynn Las Vegas, LLC.(1) | |
10.29 |
Assignment and Assumption Agreement, dated as of October 30, 2002, by and between Wynn Las Vegas, LLC and Wells Fargo Bank Nevada, National Association, as collateral agent.(1) | |
10.30 |
Completion Guaranty, dated as of October 30, 2002, by Wynn Completion Guarantor, LLC in favor of Deutsche Bank Trust Company Americas, as the Bank Agent, and Wells Fargo Bank, National Association, as Indenture Trustee.(1) | |
10.31 |
FF&E Intercreditor Agreement, dated as of October 30, 2002, by and among Deutsche Bank Trust Company Americas, as administrative agent, Wells Fargo Bank, National Association, as Indenture Trustee, and Wells Fargo Bank Nevada, National Association, as FF&E agent.(1) | |
10.32 |
Project Lenders Intercreditor Agreement, dated as of October 30, 2002, by and among Deutsche Bank Trust Company Americas, as administrative agent and Wells Fargo Bank, National Association, as Indenture Trustee.(1) | |
10.33 |
Management Fee Subordination Agreement, dated as of October 30, 2002, made by Wynn Resorts, Limited, Wynn Las Vegas, LLC, Wynn Las Vegas Capital Corp. and the subsidiaries and affiliates listed on Exhibit A thereto in favor of Deutsche Bank Trust Company Americas, as administrative agent, Wells Fargo Bank Nevada National Association, as collateral agent, and Wells Fargo Bank, National Association, as trustee.(1) | |
10.34 |
Guarantee and Collateral Agreement, dated as of October 30, 2002, made by Valvino Lamore, LLC, Wynn Las Vegas Capital Corp., Palo, LLC, Wynn Resorts Holdings, LLC, Desert Inn Water Company, LLC, World Travel, LLC, Las Vegas Jet, LLC, Wynn Las Vegas, LLC and the other Grantors from time to time party thereto in favor of Deutsche Bank Trust Company Americas, as administrative agent.(1) | |
10.35 |
Parent Guaranty, dated as of October 30, 2002, by Wynn Resorts, Limited in favor of Wells Fargo Bank Nevada, National Association, as collateral agent, the Arrangers, as defined therein, and the Lenders, as defined therein.(1) | |
10.36 |
Parent Guaranty, dated as of October 30, 2002, by Wynn Resorts, Limited in favor of Deutsche Bank Trust Company Americas, as administrative agent.(1) | |
10.37 |
Purchase Agreement, dated October 25, 2002, by and between the Registrant and Stephen A. Wynn.(1) | |
10.38 |
Purchase Agreement, dated October 25, 2002, by and between the Registrant and Aruze USA, Inc.(1) | |
10.39 |
Purchase Agreement, dated October 25, 2002, by and between the Registrant and Baron Asset Fund.(1) | |
10.40 |
Purchase Agreement, dated October 25, 2002, by and between the Registrant and Zenith Insurance Company.(1) | |
10.41 |
Purchase Agreement, dated October 25, 2002, by and among Wynn Las Vegas, LLC, Wynn Las Vegas Capital Corp. and Stephen A. Wynn.(1) | |
10.42 |
Purchase Agreement, dated October 25, 2002, by and among Wynn Las Vegas, LLC, Wynn Las Vegas Capital Corp. and Aruze USA, Inc.(1) |
3
Exhibit |
Description | |
10.43 |
Amended and Restated Continuing Guaranty, dated October 22, 2002, by Austi, Inc. in favor of Wynn Las Vegas, LLC.(1) | |
10.44 |
Easement Agreement, dated as of October 21, 2002, by and among Wynn Resorts Holdings, LLC, Valvino Lamore, LLC and Wynn Las Vegas, LLC.(1) | |
10.45 |
Guaranty Agreement, dated as of October 30, 2002, made by Valvino Lamore, LLC, Wynn Las Vegas Capital Corp., Palo, LLC, Wynn Resorts Holdings, LLC, Desert Inn Water Company, LLC, Wynn Design & Development, LLC, World Travel, LLC, Las Vegas Jet, LLC and the other guarantors from time to time party thereto in favor of the Secured Parties as defined therein.(1) | |
10.46 |
Amended and Restated Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Wynn Las Vegas, LLC in favor of Deutsche Bank Trust Company Americas, as administrative agent.(1) | |
10.47 |
Amended and Restated Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Palo, LLC in favor of Deutsche Bank Trust Company Americas, as administrative agent.(1) | |
10.48 |
Amended and Restated Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Wynn Resorts Holdings, LLC in favor of Deutsche Bank Trust Company Americas, as administrative agent.(1) | |
10.49 |
Amended and Restated Deed of Trust, Assignment of Rents and Leases, Security Agreement and Fixture Filing, dated as of October 30, 2002, made by Valvino Lamore, LLC in favor of Deutsche Bank Trust Company Americas, as administrative agent.(1) | |
10.50 |
Master Disbursement Agreement, dated as of October 30, 2002, by and among Wynn Las Vegas, LLC, Wynn Las Vegas Capital Corp., Wynn Design & Development, LLC, Deutsche Bank Trust Company Americas, as initial Bank Agent, Wells Fargo Bank, National Association, as initial Indenture Trustee, Wells Fargo Bank Nevada, National Association, as initial FF&E Agent and Deutsche Bank Trust Company Americas, as initial Disbursement Agent.(7) | |
10.51 |
Amendment to Loan Agreement, dated as of December 3, 2002, by and among Wynn Las Vegas, LLC, Wells Fargo Bank Nevada, as collateral agent, and each of the lenders listed therein.(7) | |
10.52 |
Asset and Land Purchase Agreement, dated as of April 28, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton Desert Inn Corporation, Valvino Lamore, LLC and Stephen A. Wynn.(8) | |
10.53 |
First Amendment to Asset and Land Purchase Agreement, dated as of May 26, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton Desert Inn Corporation, Valvino Lamore, LLC and Stephen A. Wynn.(8) | |
10.54 |
Second Amendment to Asset and Land Purchase Agreement, dated as of June 16, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton Desert Inn Corporation, Valvino Lamore, LLC, Stephen A. Wynn, Rambas Marketing Co., LLC, and Desert Inn Water Company, LLC.(8) | |
10.55 |
Third Amendment to Asset and Land Purchase Agreement, dated as of June 22, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton Desert Inn Corporation, Valvino Lamore, LLC, Stephen A. Wynn, Rambas Marketing Co., LLC, and Desert Inn Water Company, LLC.(8) | |
10.56 |
Fourth Amendment to Asset and Land Purchase Agreement, dated as of October 27, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton SGC Sub Corporation, Valvino Lamore, LLC, Stephen A. Wynn, Rambas Marketing Co., LLC, and Desert Inn Water Company, LLC.(8) |
4
Exhibit |
Description | |
10.57 |
Fifth Amendment to Asset and Land Purchase Agreement, dated as of November 3, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton SGC Sub Corporation, Valvino Lamore, LLC, Stephen A. Wynn, Rambas Marketing Co., LLC, and Desert Inn Water Company, LLC.(8) | |
10.58 |
License Agreement, dated October 31, 2002, by and between Wynn Las Vegas, LLC and Calitri Services and Licensing Limited Liability Company.(12) | |
10.59 |
Lease Agreement, dated November 1, 2001, by and between Valvino Lamore, LLC and Wynn Resorts Holdings, LLC.(8) | |
10.60 |
Production Services Agreement, dated October 31, 2002, by and between Wynn Las Vegas, LLC and Productions Du Dragon, S.A.(12) | |
10.61 |
Stockholders Agreement, dated as of April 11, 2002, by and among Stephen A. Wynn, Baron Asset Fund and Aruze USA, Inc.(8) | |
10.62 |
Agreement for Guaranteed Maximum Price Construction Services between Wynn Las Vegas, LLC and Marnell Corrao Associates, Inc. for Le Rêve.(8) | |
10.63 |
Continuing Guaranty, dated June 4, 2002, by Austi, Inc. in favor of Wynn Las Vegas, LLC.(8) | |
10.64 |
Design/Build Agreement, dated June 6, 2002, by and between Wynn Las Vegas, LLC and Bomel Construction Company, Inc.(8) | |
10.65 |
Form of Indemnity Agreement.(9) | |
10.66 |
Employment Agreement, dated April 1, 2002, by and between Wynn Resorts Holdings, LLC and Ronald J. Kramer.(2) | |
10.67 |
Contribution Agreement, dated as of June 11, 2002 by and among Stephen A. Wynn, Aruze USA, Inc., Baron Asset Fund, the Kenneth R. Wynn Family Trust dated February 1985 and Wynn Resorts, Limited.(2) | |
10.68 |
Intentionally Omitted. | |
10.69 |
Intentionally Omitted. | |
10.70 |
Agreement, dated as of June 13, 2002, by and between Stephen A. Wynn and Wynn Resorts, Limited.(2) | |
10.71 |
Purchase Agreement, dated May 30, 2002, between Stephen A. Wynn and Valvino Lamore, LLC.(2) | |
10.72 |
Employment Agreement, dated as of May 31, 2002, by and between Valvino Lamore, LLC and Matt Maddox.(2) | |
10.73 |
Concession Contract for the Operation of Games of Chance or Other Games in Casinos in the Macau Special Administrative Region, dated June 24, 2002, between the Macau Special Administrative Region and Wynn Resorts (Macau), S.A. (English translation of Portuguese version of Concession Agreement).(2) | |
10.74 |
Amended and Restated Commitment Letter Agreement, dated June 14, 2002, among Deutsche Bank Trust Company Americas, Deutsche Bank Securities Inc., Bank of America, N.A., Banc of America Securities LLC, Bear Stearns Corporate Lending, Inc., Bear Stearns & Co. Inc., Wynn Resorts Holdings, LLC and Wynn Las Vegas, LLC.(2) | |
10.75 |
Concession Contract for Operating Casino Gaming or Other Forms of Gaming in the Macao Special Administrative Region, dated June 24, 2002, between the Macau Special Administrative Region and Wynn Resorts (Macau) S.A. (English translation of Chinese version of Concession Agreement).(3) | |
10.76 |
Professional Design Services Agreement, effective as of October 5, 2001, between Wynn Design Development, LLC and A.A. Marnell II, Chtd.(3) |
5
Exhibit |
Description | |
10.77 |
General Conditions to the Professional Design Services Agreement.(3) | |
10.78 |
Trademark/Service Mark Purchase Agreement, dated June 7, 2001, between Wynn Resorts and The STAD Trust.(3) | |
10.79 |
Purchase Agreement, dated as of April 1, 2001, between Stephen A. Wynn and Valvino Lamore, LLC.(3) | |
10.80 |
Second Amended and Restated Operating Agreement of Valvino Lamore, LLC.(12) | |
10.81 |
Intentionally Omitted. | |
10.82 |
Intentionally Omitted. | |
10.83 |
First Amendment, dated December 11, 2002, to the Employment Agreement dated as of September 9, 2002, by and between Wynn Resorts, Limited and John Strzemp.(12) | |
10.84 |
Intentionally Omitted. | |
10.85 |
Employment Agreement, dated as of July 7, 2000, by and between Wynn Design & Development, LLC and William Todd Nisbet.(3) | |
10.86 |
Employment Agreement, dated as of October 4, 2002, by and between Wynn Resorts, Limited and Stephen A. Wynn.(4) | |
10.87 |
Letter of Intent, dated May 24, 2002, by and between Valvino Lamore, LLC and Ferrari North America, Inc.(9) | |
10.88 |
First Amendment to Letter of Intent, dated as of October 4, 2002, by and between Valvino Lamore, LLC and Ferrari North America, Inc.(9) | |
10.89 |
Letter of Intent, dated May 24, 2002, by and between Valvino Lamore, LLC and Maserati North America, Inc.(9) | |
10.90 |
First Amendment to Letter of Intent, dated as of October 4, 2002, by and between Valvino Lamore, LLC and Maserati North America, Inc.(9) | |
10.91 |
Employment Agreement, dated as of October 4, 2002, by and between Wynn Resorts, Limited and Marc D. Schorr.(9) | |
10.92 |
Distribution Agreement and Assignment, effective as of October 17, 2002, by and between Wynn Resorts, Limited and Valvino Lamore, LLC.(9) | |
10.93 |
Share Subscription and Stockholders Agreement, made and entered into as of October 15, 2002, by and among S.H.W. & Co. Limited, SKKG Limited, LArc de Triomphe Limited, Classic Wave Limited, Yany Kwan Yan Chi, Li Tai Foon, Kwan Yan Ming, Wong Chi Seng, Wynn Resorts International, Ltd., and Wynn Resorts (Macau) Holdings, Ltd.(9) | |
10.94 |
Stockholders Agreement, made and entered into as of October 15, 2002, by and among Wong Chi Seng, Wynn Resorts International, Ltd., Wynn Resorts (Macau), Limited and Wynn Resorts (Macau), S.A.(9) | |
10.95 |
Mortgage, Security Agreement and Assignment, dated as of February 28, 2002, between World Travel, LLC and Bank of America, N.A.(9) | |
10.96 |
FF&E Facility Commitment Letter, dated October 3, 2002, from Deutsche Bank Trust Company Americas, Bank of America, N.A. and Bear Stearns Corporate Lending, Inc. to Bank of America, National Association.(5) | |
10.97 |
FF&E Facility Commitment Letter, dated September 16, 2002, from Bank of America, N.A. to Bank of America, National Association.(5) | |
10.98 |
FF&E Facility Commitment Letter, dated August 22, 2002, from The CIT Group/Equipment Financing, Inc. to Bank of America, National Association.(5) |
6
Exhibit |
Description | |
10.99 |
FF&E Facility Commitment Letter, dated October 18, 2002, from General Electric Capital Corporation to Bank of America, National Association.(5) | |
10.100 |
FF&E Facility Commitment Letter, dated September 13, 2002, from SG Cowen Securities and Societe Generale to Deutsche Bank Securities Inc.(5) | |
10.101 |
FF&E Facility Commitment Letter, dated October 22, 2002, from GMAC Commercial Mortgage Corporation to Bank of America, National Association.(5) | |
16.1 |
Letter from Arthur Andersen LLP(10) | |
21.1 |
Subsidiaries of the Registrant.(12) | |
*23.1 |
Consent of Deloitte & Touche LLP | |
*99.1 |
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
*99.2 |
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith. |
(1) | Previously filed with the Current Report on Form 8-K filed by the Registrant on November 18, 2002. |
(2) | Previously filed with Amendment No. 1 to the Form S-1 filed by the Registrant on August 20, 2002 (File No. 333-90600). |
(3) | Previously filed with Amendment No. 3 to the Form S-1 filed by the Registrant on September 18, 2002 (File No. 333-90600). |
(4) | Previously filed with Amendment No. 4 to the Form S-1 filed by the Registrant on October 7, 2002 (File No. 333-90600). |
(5) | Previously filed with Amendment No. 7 to the Form S-1 filed by the Registrant on October 23, 2002 (File No. 333-90600). |
(6) | Previously filed with the Quarterly Report on Form 10-Q filed by the Registrant on December 9, 2002. |
(7) | Previously filed with the Current Report on Form 8-K filed by the Registrant on December 6, 2002. |
(8) | Previously filed with the Form S-1 filed by the Registrant on June 17, 2002. |
(9) | Previously filed with Amendment No. 5 to the Form S-1 filed by the Registrant on October 21, 2002 (File No. 333-90600). |
(10) | Previously filed with Amendment No. 2 to the Form S-1 filed by the Registrant on August 26, 2002 (File No. 333-90600). |
(11) | Previously filed with the Form S-8 filed by the Registrant on October 31, 2002. |
(12) | Previously filed with the Annual Report on Form 10-K filed by the Registrant on March 28, 2003 |
(b) Reports on Form 8K
The Company filed the following Current Reports on Form 8-K during the three month period ended December 31, 2002:
Current Report on Form 8-K dated November 18, 2002, to file final versions of certain of the documents previously filed with the Registration Statements on Form S-1, reporting such items under Item 5 and Item 7.
Current Report on Form 8-K dated December 6, 2002, to file an amendment to the loan agreement governing the furniture, fixtures and equipment loan facility and to refile the Master Disbursement Agreement entered into by Wynn Las Vegas, LLC, Wynn Las Vegas Capital Corp. and Wynn Design & Development, LLC to reflect certain corrections to Section 3.3.24 and Section 5.5 of such agreement; reporting such items under Item 5 and Item 7.
7
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page | ||
F-2 | ||
F-3 | ||
F-4 | ||
F-5 | ||
F-6 | ||
F-7 |
F-1
To the Board of Directors and Stockholders of
Wynn Resorts, Limited
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheets of Wynn Resorts, Limited and subsidiaries (a development stage company) as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders equity, and cash flows for the years ended December 31, 2002 and 2001 and for the periods from April 21, 2000 (date of inception) to December 31, 2000 and 2002. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of Wynn Resorts, Limited and subsidiaries as of December 31, 2002 and 2001, and the consolidated results of their operations and their cash flows for the years ended December 31, 2002 and 2001 and for the periods from April 21, 2000 (date of inception) to December 31, 2000 and 2002, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 14, the accompanying financial statements have been revised to reflect restricted cash and investments as non-current assets.
/S/ DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 21, 2003 (May 5, 2003 as to Note 14)
F-2
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
(amounts in thousands, except share data)
December 31, |
||||||||
2002 |
2001 |
|||||||
(as revisedsee Note 14) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
109,644 |
|
$ |
39,268 |
| ||
Receivables, net |
|
184 |
|
|
534 |
| ||
Inventories |
|
212 |
|
|
284 |
| ||
Prepaid expenses |
|
2,010 |
|
|
1,020 |
| ||
Total current assets |
|
112,050 |
|
|
41,106 |
| ||
Restricted cash and investments |
|
792,877 |
|
|
524 |
| ||
Property and equipment, net |
|
420,496 |
|
|
337,467 |
| ||
Water rights |
|
6,400 |
|
|
6,400 |
| ||
Trademark |
|
1,000 |
|
|
1,000 |
| ||
Deferred financing costs |
|
60,159 |
|
|
|
| ||
Other assets |
|
5,619 |
|
|
2,046 |
| ||
Total assets |
$ |
1,398,601 |
|
$ |
388,543 |
| ||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Current portion of long-term debt |
$ |
38 |
|
$ |
35 |
| ||
Accounts and construction payable |
|
10,208 |
|
|
2,077 |
| ||
Accrued interest |
|
8,159 |
|
|
|
| ||
Accrued compensation and benefits |
|
1,359 |
|
|
1,025 |
| ||
Accrued expenses and other current liabilities |
|
888 |
|
|
885 |
| ||
Total current liabilities |
|
20,652 |
|
|
4,022 |
| ||
Long-term debt |
|
382,153 |
|
|
291 |
| ||
Total liabilities |
|
402,805 |
|
|
4,313 |
| ||
Minority interest |
|
4,183 |
|
|
|
| ||
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; 78,972,511 and 39,403,891 shares issued and outstanding |
|
790 |
|
|
394 |
| ||
Additional paid-in capital |
|
1,065,649 |
|
|
412,178 |
| ||
Deferred compensationrestricted stock |
|
(14,771 |
) |
|
|
| ||
Deficit accumulated from inception during the development stage |
|
(60,055 |
) |
|
(28,342 |
) | ||
Total stockholders equity |
|
991,613 |
|
|
384,230 |
| ||
Total liabilities and stockholders equity |
$ |
1,398,601 |
|
$ |
388,543 |
| ||
The accompanying notes are an integral part of these consolidated financial statements
F-3
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands, except per share data)
Year Ended December 31, 2002 |
Year Ended December 31, 2001 |
Period from Inception to December 31, 2000 |
Period from Inception to December 31, 2002 |
|||||||||||||
Revenues: |
||||||||||||||||
Airplane |
$ |
629 |
|
$ |
1,077 |
|
$ |
87 |
|
$ |
1,793 |
| ||||
Art gallery |
|
279 |
|
|
35 |
|
|
|
|
|
314 |
| ||||
Retail |
|
237 |
|
|
27 |
|
|
|
|
|
264 |
| ||||
Water |
|
14 |
|
|
18 |
|
|
|
|
|
32 |
| ||||
Net revenues |
|
1,159 |
|
|
1,157 |
|
|
87 |
|
|
2,403 |
| ||||
Expenses: |
||||||||||||||||
Pre-opening costs |
|
25,147 |
|
|
11,862 |
|
|
5,706 |
|
|
42,715 |
| ||||
Depreciation and amortization |
|
8,934 |
|
|
8,163 |
|
|
4,045 |
|
|
21,142 |
| ||||
(Gain) / Loss on sale of assets |
|
(21 |
) |
|
394 |
|
|
|
|
|
373 |
| ||||
Selling, general and administrative |
|
622 |
|
|
376 |
|
|
|
|
|
998 |
| ||||
Facility closure expenses |
|
|
|
|
373 |
|
|
1,206 |
|
|
1,579 |
| ||||
Cost of water |
|
59 |
|
|
40 |
|
|
|
|
|
99 |
| ||||
Cost of retail sales |
|
118 |
|
|
9 |
|
|
|
|
|
127 |
| ||||
Loss from incidental operations |
|
700 |
|
|
|
|
|
1,163 |
|
|
1,863 |
| ||||
Total expenses |
|
35,559 |
|
|
21,217 |
|
|
12,120 |
|
|
68,896 |
| ||||
Operating loss |
|
(34,400 |
) |
|
(20,060 |
) |
|
(12,033 |
) |
|
(66,493 |
) | ||||
Other income (expense): |
||||||||||||||||
Interest expense, net |
|
(1,897 |
) |
|
(28 |
) |
|
(17 |
) |
|
(1,942 |
) | ||||
Interest income |
|
3,718 |
|
|
2,362 |
|
|
1,434 |
|
|
7,514 |
| ||||
|
1,821 |
|
|
2,334 |
|
|
1,417 |
|
|
5,572 |
| |||||
Minority interest |
|
866 |
|
|
|
|
|
|
|
|
866 |
| ||||
Net loss accumulated during the development stage |
$ |
(31,713 |
) |
$ |
(17,726 |
) |
$ |
(10,616 |
) |
$ |
(60,055 |
) | ||||
Basic and diluted earnings per common share: |
||||||||||||||||
Net loss: |
||||||||||||||||
Basic |
$ |
(0.68 |
) |
$ |
(0.45 |
) |
$ |
(0.28 |
) |
$ |
(1.44 |
) | ||||
Diluted |
$ |
(0.68 |
) |
$ |
(0.45 |
) |
$ |
(0.28 |
) |
$ |
(1.44 |
) | ||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
|
46,706 |
|
|
38,984 |
|
|
37,945 |
|
|
41,576 |
| ||||
Diluted |
|
46,706 |
|
|
38,984 |
|
|
37,945 |
|
|
41,576 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-4
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(amounts in thousands, except share data)
Common stock |
Additional paid-in capital |
Deferred compensation restricted stock |
Net loss accumulated during the development stage |
Total stockholders equity |
|||||||||||||||||
Shares outstanding |
Par value |
||||||||||||||||||||
Balances, Inception (April 21, 2000) |
|
$ |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
| ||||||
Capital contributions |
37,944,544 |
|
379 |
|
512,675 |
|
|
|
|
|
|
|
|
513,054 |
| ||||||
Distributions |
|
|
|
|
(110,482 |
) |
|
(110,482 |
) | ||||||||||||
Third party fees |
|
|
|
|
(10,000 |
) |
|
|
|
|
|
|
|
(10,000 |
) | ||||||
Net loss accumulated during the development stage |
|
|
|
|
|
|
|
|
|
|
(10,616 |
) |
|
(10,616 |
) | ||||||
Balances, December 31, 2000 |
37,944,544 |
|
379 |
|
392,193 |
|
|
|
|
|
(10,616 |
) |
|
381,956 |
| ||||||
Capital contributions |
1,459,347 |
|
15 |
|
20,785 |
|
|
|
|
|
|
|
|
20,800 |
| ||||||
Third party fees |
|
|
|
|
(800 |
) |
|
|
|
|
|
|
|
(800 |
) | ||||||
Net loss accumulated during the development stage |
|
|
|
|
|
|
|
|
|
|
(17,726 |
) |
|
(17,726 |
) | ||||||
Balances, December 31, 2001 |
39,403,891 |
|
394 |
|
412,178 |
|
|
|
|
|
(28,342 |
) |
|
384,230 |
| ||||||
Capital contributions |
596,109 |
|
6 |
|
173,488 |
|
|
|
|
|
|
|
|
173,494 |
| ||||||
Issuance of common stock through initial public offering |
34,615,000 |
|
346 |
|
426,024 |
|
|
|
|
|
|
|
|
426,370 |
| ||||||
Issuance of common stock through over-allotment option |
3,219,173 |
|
32 |
|
38,888 |
|
|
|
|
|
|
|
|
38,920 |
| ||||||
Issuance of restricted stock |
1,138,338 |
|
12 |
|
15,071 |
|
|
(15,083 |
) |
|
|
|
|
|
| ||||||
Amortization of deferred compensationrestricted stock |
|
|
|
|
|
|
|
312 |
|
|
|
|
|
312 |
| ||||||
Net loss accumulated during the development stage |
|
|
|
|
|
|
|
|
|
|
(31,713 |
) |
|
(31,713 |
) | ||||||
Balances, December 31, 2002 |
78,972,511 |
$ |
790 |
$ |
1,065,649 |
|
$ |
(14,771 |
) |
$ |
(60,055 |
) |
$ |
991,613 |
| ||||||
The accompanying notes are an integral part of these consolidated financial statements
F-5
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
Year Ended December 31, 2002 |
Year Ended December 31, 2001 |
Period from Inception to December 31, 2000 |
Period from Inception to December 31, 2002 |
|||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net loss accumulated during the development stage |
$ |
(31,713 |
) |
$ |
(17,726 |
) |
$ |
(10,616 |
) |
$ |
(60,055 |
) | ||||
Adjustments to reconcile net loss accumulated during the development stage to net cash used in operating activities: |
||||||||||||||||
Depreciation and amortization |
|
8,934 |
|
|
8,163 |
|
|
4,045 |
|
|
21,142 |
| ||||
Minority interest |
|
(866 |
) |
|
|
|
|
|
|
|
(866 |
) | ||||
Amortization of deferred compensation |
|
134 |
|
|
|
|
|
|
|
|
134 |
| ||||
(Gain) / Loss on sale of fixed assets |
|
(21 |
) |
|
394 |
|
|
|
|
|
373 |
| ||||
Incidental operations |
|
1,971 |
|
|
3,611 |
|
|
1,198 |
|
|
6,780 |
| ||||
Increase (decrease) in cash from changes in: |
||||||||||||||||
Receivables, net |
|
350 |
|
|
477 |
|
|
6,970 |
|
|
7,797 |
| ||||
Inventories and prepaid expenses |
|
(918 |
) |
|
(95 |
) |
|
(48 |
) |
|
(1,061 |
) | ||||
Accounts payable and accrued expenses |
|
11,603 |
|
|
585 |
|
|
(8,986 |
) |
|
3,202 |
| ||||
Total adjustments |
|
21,187 |
|
|
13,135 |
|
|
3,179 |
|
|
37,501 |
| ||||
Net cash used in operating activities |
|
(10,526 |
) |
|
(4,591 |
) |
|
(7,437 |
) |
|
(22,554 |
) | ||||
Cash flows from investing activities: |
||||||||||||||||
Acquisition of Desert Inn Resort and Casino, net of cash acquired |
|
|
|
|
|
|
|
(270,718 |
) |
|
(270,718 |
) | ||||
Capital expenditures, net of construction payables |
|
(66,077 |
) |
|
(29,082 |
) |
|
(55,641 |
) |
|
(150,800 |
) | ||||
Restricted cash and investments |
|
(792,353 |
) |
|
(524 |
) |
|
(792,877 |
) | |||||||
Other assets |
|
(3,573 |
) |
|
(1,707 |
) |
|
(1,299 |
) |
|
(6,579 |
) | ||||
Proceeds from sale of equipment |
|
8,007 |
|
|
775 |
|
|
776 |
|
|
9,558 |
| ||||
Net cash used in investing activities |
|
(853,996 |
) |
|
(30,538 |
) |
|
(326,882 |
) |
|
(1,211,416 |
) | ||||
Cash flows from financing activities: |
||||||||||||||||
Equity contributions |
|
173,494 |
|
|
20,800 |
|
|
480,713 |
|
|
675,007 |
| ||||
Equity distributions |
|
|
|
|
|
|
|
(110,482 |
) |
|
(110,482 |
) | ||||
Proceeds from issuance of common stock |
|
491,844 |
|
|
|
|
|
|
|
|
491,844 |
| ||||
Third party fees |
|
(26,554 |
) |
|
(800 |
) |
|
(10,000 |
) |
|
(37,354 |
) | ||||
Macau minority contributions |
|
5,050 |
|
|
|
|
|
|
|
|
5,050 |
| ||||
Proceeds from issuance of long-term debt |
|
381,334 |
|
|
|
|
|
125,000 |
|
|
506,334 |
| ||||
Principal payments of long-term debt |
|
(28,535 |
) |
|
(32 |
) |
|
(125,018 |
) |
|
(153,585 |
) | ||||
Deferred financing costs |
|
(61,735 |
) |
|
|
|
|
(1,465 |
) |
|
(63,200 |
) | ||||
Proceeds from issuance of related party loan |
|
|
|
|
|
|
|
100,000 |
|
|
100,000 |
| ||||
Principal payments of related party loan |
|
|
|
|
|
|
|
(70,000 |
) |
|
(70,000 |
) | ||||
Net cash provided by financing activities |
|
934,898 |
|
|
19,968 |
|
|
388,748 |
|
|
1,343,614 |
| ||||
Cash and cash equivalents: |
||||||||||||||||
Increase (decrease) in cash and cash equivalents |
|
70,376 |
|
|
(15,161 |
) |
|
54,429 |
|
|
109,644 |
| ||||
Balance, beginning of period |
|
39,268 |
|
|
54,429 |
|
|
|
|
|
|
| ||||
Balance, end of period |
$ |
109,644 |
|
$ |
39,268 |
|
$ |
54,429 |
|
$ |
109,644 |
| ||||
Supplemental cash flow disclosures: |
||||||||||||||||
Cash paid for interest, net of amounts capitalized |
$ |
1,443 |
|
$ |
28 |
|
$ |
17 |
|
$ |
1,488 |
| ||||
Advances and loans converted to contributed capital |
$ |
458 |
|
$ |
|
|
$ |
32,300 |
|
$ |
32,758 |
| ||||
Equipment purchases financed by debt |
$ |
28,500 |
|
$ |
|
|
$ |
|
|
$ |
28,500 |
| ||||
Due from related party reclassified to Water rights |
$ |
|
|
$ |
6,400 |
|
$ |
|
|
$ |
6,400 |
| ||||
Purchase accounting reduction of land for excess liabilities |
$ |
|
|
$ |
1,400 |
|
$ |
|
|
$ |
1,400 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-6
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Basis of Presentation
Organization
Wynn Resorts, Limited, a Nevada corporation (Wynn Resorts) was formed in June 2002 to offer shares of its common stock for sale to the public in an initial public offering. Wynn Resorts predecessor, Valvino Lamore, LLC (Valvino), was formed in April 2000 as a Nevada limited liability company to acquire land and design, develop and finance a new resort casino/hotel project named Le Rêve. In addition, in June 2002, Valvino, through its majority owned indirect subsidiary, Wynn Resorts (Macau) S.A. (Wynn Macau), entered into an agreement with the government of Macau, granting Wynn Macau the right to construct and operate one or more casino gaming properties in the Macau Special Administrative Region of the Peoples Republic of China (Macau), located 37 miles southwest of Hong Kong.
As more fully described in below, on September 24, 2002, Wynn Resorts became the parent company of Valvino when all the members of Valvino contributed 210,834 shares comprising 100% of the membership interests of Valvino to Wynn Resorts in exchange for 40,000,000 shares of the common stock of Wynn Resorts as discussed below. Hereafter, all references to the Company refer to Wynn Resorts and its subsidiaries or Valvino and its subsidiaries, as its predecessor company. Direct and indirect subsidiaries of the Company include Valvino; Wynn Design and Development, LLC; Wynn Resorts Holdings, LLC; Wynn Las Vegas, LLC; Wynn Completion Guarantor, LLC; Wynn Las Vegas Capital Corp.; World Travel, LLC; Las Vegas Jet, LLC; Rambas Marketing Company, LLC; Palo, LLC; Toasty, LLC; WorldWide Wynn, LLC; Kevyn, LLC; Desert Inn Water Company, LLC; Desert Inn Improvement Company; Wynn Group Asia, Inc.; Wynn Resorts International, Ltd.; Wynn Resorts (Macau) Holdings, Ltd.; Wynn Resorts (Macau), Limited; and Wynn Macau.
Acquisitions
Pursuant to an Asset and Land Purchase Agreement dated as of April 28, 2000, by and among Starwood Hotels & Resorts Worldwide, Inc., Sheraton Gaming Corporation, Sheraton Desert Inn Corporation, Valvino and Stephen A. Wynn (Mr. Wynn), the Company acquired the assets and liabilities of the Desert Inn Resort and Casino for approximately $270 million plus an adjustment for working capital, as defined therein. Upon receiving all necessary regulatory approvals, the purchase was completed on June 22, 2000. The acquisition was accounted for using the purchase method of accounting and the purchase price was allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of acquisition. Later in 2000 and early 2001, the Company acquired all of the remaining lots located in the interior of, and some of the lots around, the former Desert Inn Resort and Casino golf course for a total of $47.8 million.
On August 28, 2000, the Company permanently closed the Desert Inn Resort and Casino with the exception of the golf course and its related retail, food and beverage operations, which were subsequently closed in June 2002. Since then, operations of the Company have been primarily limited to the design, development and financing of a new casino/hotel project named Le Rêve and the acquisition of a concession to operate casinos in Macau, as more fully described below.
On April 1, 2001, the Company acquired Kevyn, LLC, a previously unconsolidated affiliate which was wholly owned by Mr. Wynn and whose principal asset was an airplane, for approximately $10 million. The acquisition was treated as a reorganization of entities under common control. In accordance with Statement of Financial Accounting Standard (SFAS) No. 141, Business Combinations, the assets and liabilities acquired have been recorded at the carrying value at the time of the acquisition and the operating results of Kevyn, LLC are included in the operating statements of the Company from the earliest period presented. As a result, the
F-7
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
previously separate historical financial position and results of operations of Kevyn, LLC are combined with the financial position and results of operations of the Company for all periods presented.
Additionally, effective June 28, 2001, the Public Utilities Commission of Nevada approved the transfer of ownership of Desert Inn Water Company, also a previously unconsolidated affiliate and wholly owned company of Mr. Wynn, to the Company. As the Desert Inn Water Company consisted entirely of all of the shares of Desert Inn Improvement Company whose assets primarily consisted of water rights, this transaction was treated as an acquisition of assets for financial reporting purposes. The Company exchanged the receivable from the Desert Inn Water Company in this acquisition, which was equivalent to the fair market value of the water rights of $6.4 million.
In May 2002, the Company acquired World Travel, LLC and Las Vegas Jet, LLC (entities previously wholly-owned by Mr. Wynn). The acquisitions were accounted for as reorganizations of entities under common control. In accordance with SFAS No. 141, Business Combinations, the assets and liabilities of the entities acquired have been recorded 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. As a result, the previously separate historical financial position and results of operations of World Travel, LLC and Las Vegas Jet, LLC are combined with the financial position and results of operations of the Company for all periods presented.
Capital Contributions
At formation, Valvinos sole member was Mr. Wynn. Pursuant to the Amended and Restated Operating Agreement (the Agreement) dated October 3, 2000, the Company admitted a new 50% member, Aruze USA, Inc. (Aruze USA), in exchange for a capital contribution of $260 million. As part of this capital acquisition, the Company paid a fee of $10 million to a third party. The Company again amended the Agreement on April 16, 2001 when a third member, Baron Asset Fund, was admitted as a 3.7% member in exchange for a capital contribution of $20.8 million. As part of this capital contribution, the Company paid a fee of $800,000 to a third party.
Upon completion of various legal agreements and transactions in April 2002, Mr. Wynn contributed approximately $32 million of cash to the Company. This included the assignment to the Company by Mr. Wynn of his rights to approximately $22.5 million deposited in a Macau bank account which was committed to the Macau project, and an additional $8.6 million of cash. In addition, Mr. Wynn also contributed to the Company his 90% ownership interest in Wynn Macau and the right to be reimbursed for approximately $825,000 of expenses incurred by Mr. Wynn on behalf of Wynn Macau. At the time of the capital contribution, the assets held by Wynn Macau principally consisted of the intangible asset associated with the provisional license to negotiate a concession with the government of Macau. The provisional license had no historical cost basis but the members of Valvino negotiated a fair value of $56 million. In accordance with SFAS No. 141, Business Combinations, because the transactions occurred between entities under common control, the contribution of the 90% interest in Wynn Macau by Mr. Wynn was recorded at its historical cost basis with the primary asset recorded in the financial statements being the approximate $22.5 million of cash. However, Mr. Wynns ownership interest in the Company after these contributions reflects the fair value of his 90% ownership interest in Wynn Macau relative to the fair value of the contributions from Aruze USA, Inc. and Baron Asset Fund as described below.
Concurrent with Mr. Wynns contributions above, Aruze USA contributed an additional $120 million in cash and Baron Asset Fund contributed an additional $20.3 million in cash.
F-8
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
While neither Mr. Wynn nor Aruze USA received additional shares in connection with the above-described capital contributions, immediately following these additional capital contributions, Mr. Wynn and Aruze USA each owned 47.5% of the membership interests in the Company, and Baron Asset Fund owned 5% of the membership interests in the Company.
In April 2002, the Company converted approximately $458,000 of advances to Wynn Macau into capital contributions.
In June 2002, the Kenneth R. Wynn Family Trust contributed $1.2 million cash in exchange for a 0.146% membership interest in the Company.
During the third quarter of 2002, the Company received approximately $2.2 million of capital contributions from minority stockholders for Wynn Macau. Upon the final execution of the stockholder agreements in November 2002, the Companys ownership interest in Wynn Macau was reduced from 90% to 82.5%.
Wynn Resorts Exchange
At December 31, 2001, there were approximately 207,692 common shares of Valvino outstanding. The most recent sale of shares prior to December 31, 2001 occurred at a price of approximately $2,704 per share. Consistent with the management structure permitted under applicable Nevada law, the Agreement provided that each share was entitled to one vote on all matters requiring the vote of the members. The Agreement also included several additional management provisions. First, Mr. Wynn, as the managing member, had authority to make decisions regarding the day-to-day activities of Valvino. Second, certain fundamental decisions had to be approved by the four-member Board of Representatives. Mr. Wynn and Aruze USA each appointed two representatives to the Board of Representatives. Mr. Wynn acted as Chairman of the Board of Representatives and had certain rights in that capacity, including the right to make the tie-breaking vote with respect to board action. Allocations of Valvinos profits and losses were made based on the common shares of each member, subject to applicable tax law requirements. Non-liquidating distributions were to be made first based on the initial positive capital account of each member (as determined under federal tax law book accounting) and then based on each members percentage interest in Valvinos profits and losses. Liquidating distributions were to be made based solely on each members positive capital account.
As discussed above, on September 24, 2002, all the members of Valvino contributed 100% of the membership interests in Valvino to the Company in exchange for 40,000,000 shares of the Companys common stock, making Valvino and its subsidiaries wholly-owned subsidiaries of the Company (hereafter referred to as the Exchange).
The contributions under the Exchange were tax-free contributions under the Internal Revenue Code, and for financial statement accounting purposes the Exchange was considered to be a recapitalization. Because the ownership interests in the Company after the Exchange were identical to the previous ownership interests in Valvino, the Exchange was considered to be non-substantive. In accordance with Financial Accounting Standards Board (FASB) Technical Bulletin 85-5, Issues Relating to Accounting for Business Combinations, the Company recognized the assets and liabilities transferred at their carrying value in the books and records of Valvino at the time of exchange. The Companys consolidated financial statements report the impact of the Exchange as if it had occurred at the beginning of the periods presented.
F-9
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
2. Summary of Significant Accounting Policies
Development Stage Risk Factors
As a development stage company, the Company has spent significant amounts in its development activities primarily in the acquisition of land and other assets, in the design and construction of Le Rêve and in obtaining the concession in Macau. As is customary for a development stage company, the Company has not commenced principal operations and therefore revenues are not significant. Consequently, the Company has incurred losses in each period from inception to December 31, 2002. Management expects these losses to continue until planned principal operations have commenced. However, 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 gaming facilities, including, but not limited, to receiving the appropriate permits for particular construction activities, securing a Nevada state gaming license for the ownership and operation of the Le Rêve project, maintaining ongoing suitability requirements in Nevada and Macau as well as fulfilling the requirements of Macaus largely untested regulatory framework. The completion of the Le Rêve and Macau projects is dependent upon compliance with these rules and regulations. Management anticipates Le Rêve will cost approximately $2.4 billion to design and construct, including the cost of all 212 acres of land, capitalized interest, pre-opening expenses and financing fees. In addition, the Company is currently obligated to invest at least 4 billion Patacas (equivalent to approximately US $520 million at the December 31, 2002 rate of exchange) in Macau by June 2009.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.
Reclassifications
Certain amounts in the December 31, 2001 and 2000 consolidated financial statements have been reclassified to conform to the December 31, 2002 presentation. These reclassifications had no effect on the previously reported net loss.
Cash and Cash Equivalents
Cash and cash equivalents are comprised of highly liquid investments with a maturity of three months or less. Cash equivalents are carried at cost, which approximates fair value.
Restricted Cash
Restricted cash consists of certificates of deposits to collateralize certain construction insurance claims, cash deposits for certain required sales taxes, and certain of the proceeds of the Companys financing activities
F-10
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
invested in money market funds restricted by the agreements governing the Companys debt instruments for the payment of certain approved construction and development costs relating to Le Rêve.
Restricted Investments
Restricted investments reflect the invested net proceeds of certain of the financing activities of the Company which are restricted by the agreements governing the Companys debt instruments for the payment of certain approved construction and development costs relating to Le Rêve. These proceeds are invested in certain approved marketable securities, which are limited to government-backed treasury notes and interest-only strips.
The Company classifies its marketable securities in one of three categories: held-to-maturity, trading or available-for-sale, in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. In accordance with SFAS No. 115, held-to-maturity securities are those securities for which the Company has the ability and intent to hold until maturity. Trading securities are those bought and held principally for the purpose of selling them in the near term. All other securities are classified as available-for-sale. All of the Companys marketable securities are classified as held-to-maturity. Accordingly, these are recorded at cost, adjusted for the amortization of premiums of accretion of discounts.
The balance of restricted investments at December 31, 2002 also includes approximately $3.8 million of accrued interest receivable on the marketable securities.
Inventories
Retail, food and beverage inventories are stated at the lower of cost or market value. Cost is determined by the first-in, first-out and specific identification methods.
Property and Equipment
The allocation of the purchase price of the Desert Inn Resort and Casino to these asset categories was based upon an appraisal and managements estimate of the fair value of the assets acquired. Subsequent purchases of property and equipment are stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method as follows:
Buildings and improvements |
1 to 3 years | |
Parking garage |
15 years | |
Airplane |
7 to 20 years | |
Furniture, fixtures and equipment |
5 to 20 years |
The design and development costs for the Le Rêve project are capitalized. Costs of building repairs and maintenance are charged to expense as incurred. The cost and accumulated depreciation of property and equipment retired or otherwise disposed of are eliminated from the respective accounts and any resulting gain or loss is included in operating income or loss.
In connection with the acquisition of the Desert Inn Resort and Casino, the Company acquired several parcels of land, some of which will be available for future development. The Companys decision on whether to proceed with any new gaming opportunity is dependent upon future economic and regulatory factors, the availability of financing and competitive and strategic considerations. As many of these considerations are
F-11
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
beyond the Companys control, no assurances can be made that the Company will be able to obtain appropriate licensing or be able to secure additional acceptable financing in order to proceed with any particular project. As of December 31, 2002 and 2001, the Company had approximately 20 acres of land held for future development with a book value of approximately $78.6 million.
Capitalized Interest
The Company capitalizes interest costs associated with debt incurred in connection with its major construction projects. Interest capitalization will cease once the project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. When no debt is specifically identified as being incurred in connection with such construction projects, the Company capitalizes interest on amounts expended on the project at the Companys weighted average cost of borrowed money. Interest of $13.5 million, $0, $6.3 million and $19.8 million was capitalized for the years ended December 31, 2002 and 2001, for the period from inception to December 31, 2000, and for the period from inception to December 31, 2002, respectively.
Intangible Assets
The Company has recorded its trademarks at cost and the water rights acquired as part of the overall purchase price of the Desert Inn Resort and Casino, at appraised value. Radio frequencies, which are included in other assets, are recorded at cost. These intangible assets have indefinite useful lives, and accordingly, are not amortized, but are periodically reviewed for impairment.
Deferred Financing Costs
Costs incurred in obtaining loans or with the issuance of long-term debt are capitalized and amortized to interest over the terms of the related debt agreements using the effective interest rate method. Approximately $1.6 million, $0, $1.5 million and $3.1 million was amortized to interest during the years ended December 31, 2002 and 2001, for the period from inception to December 31, 2000, and for the period from inception to December 31, 2002, respectively. Accumulated amortization amounted to $3.1 million and $1.5 million as of December 31, 2002 and 2001, respectively.
Long-Lived Assets
Long-lived assets, which are not to be disposed of, including intangibles and property and equipment, are periodically reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. As of December 31, 2002 and 2001, management does not believe any assets have been impaired.
Pre-Opening Costs
Pre-opening costs consisting primarily of salaries and wages, legal and consulting fees, insurance, utilities and travel are expensed as incurred.
Incidental Operations
Upon completion of the acquisition of the Desert Inn Resort and Casino on June 22, 2000, the Company announced its intention to close the property and to plan the development of a new resort casino/hotel project
F-12
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
named Le Rêve on the existing site. In accordance with SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, both the resort casino/hotel operation and the golf course and related operations are being accounted for as separate incidental operations. Under this method, incidental operations with a net income are excluded from the Companys consolidated operating results and the net income from each is recorded as a reduction in the carrying value of land. Incidental operations with a net loss are stated separately on the consolidated statements of operations. The amount of net income from incidental operations recorded as a reduction in the carrying value of land was approximately $2.0 million,$3.6 million, $1.2 million and $6.8 million for the years ended December 31, 2002 and 2001, for the period from inception to December 31, 2000, and for the period from inception to December 31, 2002, respectively.
Income Taxes
During the period in which it operated as a limited-liability company, the Company was classified as a partnership for federal income tax purposes. Accordingly, no provision was made for federal income taxes, as such taxes were liabilities of the members during this period.
Upon completion of the Exchange, the Company accounted for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires the recognition of deferred tax assets, net of applicable reserves, and liabilities for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on the income tax provision and deferred tax assets and liabilities is recognized in the results of operations in the period that includes the enactment date.
SFAS No. 109 also requires recognition of a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied. The Company, in its development stage, has accumulated significant net operating losses. Accordingly, because of the uncertainty of near-term future taxable income, as of December 31, 2002, the Companys potential net future domestic and foreign tax benefits of approximately $7.5 million and $747,000, respectively are fully reserved.
Currency translation
The Company accounts for currency translation in accordance with SFAS No. 52, Foreign Currency Translation. The Macau results of operations and the balance sheet are translated from Macau Patacas to U.S. dollars. Balance sheet accounts are translated at the exchange rate in effect at each year-end. Income statement accounts are translated at the average rate of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to other comprehensive income (loss). During the period from inception to December 31, 2002, the effect of foreign currency translation was immaterial.
Acquisition of the Desert Inn Resort & Casino
The acquisition of the Desert Inn Resort & Casino has been accounted for as a purchase. Accordingly, the purchase price is allocated to the assets acquired and liabilities assumed based upon the estimated fair values at the acquisition date. Estimated fair values were determined based on independent appraisals, discounted cash
F-13
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
flows, market prices for comparable assets and estimates made by management. The allocation of the purchase price was completed within one year from the acquisition date and is as follows:
Description of Assets |
Allocated | ||
($ in Millions) | |||
Land |
$ |
248 | |
Buildings & Improvements |
|
16 | |
Personal Property |
|
5 | |
Receivables, net |
|
1 | |
Total Purchase Price |
$ |
270 | |
Earnings Per Share
Earnings per share are calculated in accordance with 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 the year ended December 31, 2001, and for the period from inception to December 31, 2000, the Company had no potentially dilutive securities. For all periods presented, the Company has recorded net losses. Accordingly, for the year ended, and the period from inception to, December 31, 2002, the assumed exercise of stock options was anti-dilutive. 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 December 31, 2002 because to do so would have been anti-dilutive, totaled 1,328,061.
Employee Stock-Based Compensation
As of December 31, 2002, the Company has a stock-based employee compensation plan as more fully described in Note 8. As permitted by SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement 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 to stock-based employee compensation (amounts in thousands).
Year Ended December 31, 2002 |
Period from Inception to |
|||||||
Net loss as reported |
$ |
(31,713 |
) |
$ |
(60,055 |
) | ||
Less: total stock-based employee compensation expenses determined under the fair-value based method for all awards |
|
(309 |
) |
|
(309 |
) | ||
Pro forma net loss |
$ |
(32,022 |
) |
$ |
(60,364 |
) | ||
Basic and diluted loss per share: |
||||||||
As reported |
$ |
(0.68 |
) |
$ |
(1.44 |
) | ||
Pro forma |
$ |
(0.69 |
) |
$ |
(1.45 |
) | ||
F-14
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Equity Instruments Issued to Consultants and Vendors
The Companys accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (EITF) 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services and EITF 00-18, Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendors performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 prohibits the pooling of interests method of accounting for business combinations initiated after June 30, 2001. SFAS No. 142, which was effective for the Company as of January 1, 2002, requires, among other things, the discontinuance of goodwill amortization. In addition, the standard includes provisions for the reclassification of certain existing intangibles as goodwill, reassessment of the useful lives of existing intangibles and ongoing assessments of potential impairment of existing goodwill. As of December 31, 2001, the Company had no goodwill but did have intangible assets consisting of trademarks and water rights with indefinite useful lives. Accordingly, the adoption of this statement on January 1, 2002 did not have a material impact on the Companys consolidated financial position or results of operations.
In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to legal obligations associated with the retirement of certain obligations of lessees. This Statement is effective for fiscal years beginning after June 15, 2002. The Company does not expect adoption of SFAS No. 143 will have a material impact on the Companys consolidated financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The provisions of this Statement are effective for fiscal years beginning after December 15, 2001. The Company adopted SFAS No. 144 on January 1, 2002 with no material impact on the Companys consolidated financial position or results of operations.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. Among other things, this statement rescinds SFAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, which required all gains and losses from extinguishment of debt to be aggregated and, if material, classified as an extraordinary item, net of related income tax effect. As a result, the criteria in APB Opinion No. 30, Reporting the Results of OperationsReporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, will now be used to classify those gains and losses. The Company does not anticipate that adoption of this statement on January 1, 2003, will have a material impact on its consolidated financial position or results of operations.
F-15
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No.146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. A fundamental conclusion reached by the FASB in this statement is that an entitys commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. Management does not anticipate that adoption of this statement will have a material impact on the Companys consolidated financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation (FIN) No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an interpretation of FASB Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34. FIN No. 45 elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued, and requires a guarantor to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. A fundamental conclusion reached by the FASB in this interpretation is the exclusion from the liability recognition provisions of guarantees issued between entities under common control or parent or subsidiary guarantees of third party debt on behalf of that parent or subsidiary. Such guarantees, however, are not excluded from the enhanced disclosure provisions. The initial recognition and measurement provisions of FIN No. 45 are applicable on a prospective basis to guarantees issued or modified after December 31, 2002, however the disclosure provisions are effective for financial statements of interim or annual periods ending after December 15, 2002. As a result, the Company adopted the disclosure provisions of FIN No. 45 for its 2002 annual consolidated financial statements, which had no material impact. The Company will adopt the recognition and measurement provisions on January 1, 2003, and does not expect such adoption will have a material impact upon its consolidated financial position or results of operations.
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based CompensationTransition and Disclosure, an amendment of FASB Statement No. 123. SFAS No.148 amends SFAS No. 123 to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of Statement 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS No. 148 permits companies to continue to apply the intrinsic value based method of accounting for stock-based employee compensation as provided for in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, however it requires that companies that elect to do so, provide specific tabular pro forma disclosures required by SFAS No. 123 in the Summary of Significant Accounting Policies. In addition, SFAS No.148 requires these disclosures in financial reports for interim periods. The Company continues to apply the intrinsic value based method of accounting for stock-based employee compensation as allowed by SFAS No. 148, and therefore adoption of this statement did not have a material impact upon its consolidated financial position or results of operations. However, the Company provided the required disclosures for the 2002 annual consolidated financial statements and will provide the required disclosures in consolidated financial statements provided prospectively on an interim basis.
F-16
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
3. 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 the corporate aircraft. In the past, these balances were settled at regular intervals, usually monthly. At December 31, 2001, receivables from officers amounted to approximately $344,000. The outstanding balance was settled in August 2002, and the Company terminated the arrangements pursuant to which costs were incurred and later reimbursed. Currently, Mr. Wynn and other officers have deposited $105,000 with the Company to prepay any such items. These deposits are replenished on an ongoing basis as needed. At December 31, 2002, the Companys net liability to Mr. Wynn and other officers was approximately $35,000.
The Company previously 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. Under the new terms, one-half of the net income, if any, of the gallery is credited to the Company. If the gallery incurs a net loss, Mr. and Mrs. Wynn have agreed to reimburse the Company to the extent of that loss. The Company made no lease payments during the period from inception to December 31, 2002.
4. Receivables
Components of receivables as of December 31, 2002 and 2001 are as follows (amounts in thousands):
2002 |
2001 |
|||||||
Casino |
$ |
556 |
|
$ |
610 |
| ||
Hotel |
|
131 |
|
|
166 |
| ||
Other |
|
159 |
|
|
385 |
| ||
|
846 |
|
|
1,161 |
| |||
Less: allowance for doubtful accounts |
|
(662 |
) |
|
(627 |
) | ||
$ |
184 |
|
$ |
534 |
| |||
The Company maintains an allowance for doubtful accounts, which is based on managements estimate of the amount expected to be uncollectible considering historical experience and the information management obtains regarding the credit worthiness of the customer.
5. Property and Equipment
Property and equipment as of December 31, 2002 and 2001 consist of the following (in thousands):
2002 |
2001 |
|||||||
Land |
$ |
288,422 |
|
$ |
289,521 |
| ||
Buildings and improvements |
|
15,879 |
|
|
15,879 |
| ||
Parking garage |
|
1,041 |
|
|
1,041 |
| ||
Airplane |
|
38,000 |
|
|
9,489 |
| ||
Furniture, fixtures and equipment |
|
4,192 |
|
|
3,877 |
| ||
Construction in progress |
|
90,189 |
|
|
27,475 |
| ||
|
437,723 |
|
|
347,282 |
| |||
Less: accumulated depreciation |
|
(17,227 |
) |
|
(9,815 |
) | ||
$ |
420,496 |
|
$ |
337,467 |
| |||
Construction in progress includes interest and other costs capitalized in conjunction with the new resort casino/hotel project.
F-17
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
6. Long-Term Debt
Long-term debt consists of the following (amounts in thousands):
2002 |
2001 |
|||||||
12% Second Mortgage Notes, net of original issue discount of approximately $26.1 million, due November 1, 2010 |
$ |
343,900 |
|
$ |
|
| ||
$188.5 Million FF&E Facility |
|
38,000 |
|
|
|
| ||
Note payableLand Parcel |
|
291 |
|
|
326 |
| ||
|
382,191 |
|
|
326 |
| |||
Current portion of long-term debt |
|
(38 |
) |
|
(35 |
) | ||
$ |
382,153 |
|
$ |
291 |
| |||
Loan Payable to Mr. Wynn
On June 15, 2000, the Company entered into a loan agreement with Mr. Wynn, for unsecured borrowings totaling $100 million with an original maturity date of June 15, 2002. The interest rate during the loan period was 7.9%, as defined in the loan agreement. Pursuant to the Amended and Restated Operating Agreement dated October 3, 2000, $70 million of this loan was repaid on October 10, 2000. The remaining $30 million principal and $2.3 million accrued interest was converted to equity as a member contribution.
Note Payable to Bank
On July 10, 2000, the Company entered into a loan agreement with Deutsche Bank Securities Inc., as lead arranger, and Bankers Trust Company, as administrative agent, for a loan in the amount of $125 million with an original maturity date of July 10, 2001. These borrowings were used to make an equity distribution of approximately $110.5 million to Mr. Wynn. The interest during the loan period was 7.9%, as defined in the loan agreement. The loan was collateralized by certain real and personal property of the Company and by a guaranty from Mr. Wynn. Pursuant to the Amended and Restated Operating Agreement dated October 3, 2000, this loan was repaid on October 10, 2000.
Note Payable for Desert Inn Resort and Casino Land Parcel
The balance at December 31, 2002 and 2001 totals approximately $253,000 and $291,000, respectively, net of the current portion of approximately $38,000 and $35,000, respectively, and represents a note payable related to the acquisition of a parcel of land in 1994. Both the land and related note payable were acquired as part of the acquisition of the Desert Inn Resort and Casino. The note carries an interest rate of 8% and provides for payments of principal and interest totaling $5,000 per month until February 2009.
Second Mortgage Notes
On October 30, 2002, Wynn Las Vegas, LLC (Wynn Las Vegas) and Wynn Las Vegas Capital Corp. (Wynn Capital), two wholly-owned subsidiaries of the Company (collectively, the Issuers), issued $370 million aggregate principal amount of 12% second mortgage notes (the Notes) maturing November 1, 2010 with semi-annual interest payments beginning in May 2003. The Notes are unconditionally guaranteed by Wynn Resorts as the parent company and certain other subsidiary guarantors, are secured by a first priority security interest in the net proceeds of the offering and a second priority security interest in substantially all the assets of
F-18
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
the Issuers and certain restricted subsidiaries, and rank senior in right of payment to all of the Issuers existing and future subordinated indebtedness. In addition, the Notes contain certain affirmative and negative covenants applicable to the Issuers and the restricted entities, including limitations on additional indebtedness, declarations of dividends, issuance of preferred stock and equity interests of wholly-owned subsidiaries, certain payments or investments, golf course and Phase II land development, transactions with affiliates, asset sales, sale-leaseback transactions, and various other restrictions as defined in the indenture governing the Notes (the Indenture). While Wynn Resorts is not subject to a majority of the restrictive covenants in the Indenture, pursuant to the terms of its parent guaranty, if it grants specified liens to secure other guarantees or indebtedness it will be required to grant pari passu liens on the same assets to secure its parent guaranty of the Notes. As of December 31, 2002, the Company is in compliance with all such covenants.
The Notes were issued on October 30, 2002, for approximately $343.3 million, net of an original issue discount of approximately $26.7 million. The proceeds were further reduced by approximately $10.1 million of underwriting discounts and commissions and approximately $4.3 million of legal and professional expenses, all of which are capitalized and amortized over the term of the Notes using the effective interest method. Net proceeds were approximately $328.9 million and will be used to finance the development and construction of Le Rêve, to pay pre-opening expenses and meet debt service obligations.
Other than mandatory redemption required by gaming authorities resulting from unsuitable persons, the Issuers will not be required to make mandatory redemption or sinking fund payments. However, if a change of control occurs, the holders of the Notes may require the Issuers to repurchase all or part of the Notes at 101% of the principal amount, plus accrued interest. In addition, after November 1, 2006, the Issuers may elect to redeem all or part of the Notes at the redemption prices below, plus accrued interest on the redemption date, if redeemed during the twelve-month period beginning on November 1 of the years below:
Year |
Percentage |
||
2006 |
112 |
% | |
2007 |
108 |
% | |
2008 |
104 |
% | |
2009 and thereafter |
100 |
% |
Credit Facilities
Effective October 30, 2002, Wynn Las Vegas entered into a $750 million senior secured revolving credit facility (the Revolver) and a $250 million delay draw senior secured term loan facility (the Term Loan, and together with the Revolver, the Credit Facilities) for additional construction financing for Le Rêve. The Credit Facilities are 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 Valvinos affiliates. While Wynn Resorts is not subject to the restrictive covenants in the Credit Facilities, pursuant to the terms of its parent guaranty, if it grants specified liens to secure other guarantees or indebtedness it will be required to grant pari passu liens on the same assets to secure its parent guaranty of the Credit Facilities. The Credit Facilities are also secured by a first priority security interest in a $30.0 million liquidity reserve account as further described below, a first priority pledge of all equity interests in, and a first priority security interest in substantially all the assets of, Wynn Las Vegas, Wynn Capital and the restricted entities, first mortgages on all real property constituting Le Rêve, and a second priority security interest on the furniture, fixtures and equipment securing the FF&E facility described below.
The Revolver and the Term Loan mature in October 2008 and October 2009, respectively. Prior to the opening of Le Rêve, annual interest is charged on outstanding borrowings at the London Interbank Offered Rate
F-19
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
(LIBOR) plus 4% on the Revolver and LIBOR plus 5.5% on the Term Loan. Subsequent to the opening of Le Rêve, the rates will be adjusted based upon a leverage ratio. In addition, the Revolver will require quarterly payments on the unused available borrowings at an annual rate of 2%, while the Term Loan will require quarterly payments at an annual rate of 2.5% through December 31, 2002, 3% from January 1, 2003 to June 30, 2003 and 4% thereafter.
When borrowings outstanding under the Revolver equal or exceed $200 million, lead arrangers holding a majority of the commitments will have the right to convert $100 million to $400 million of the amounts outstanding to term loans with the same terms and conditions as those made under Term Loan facility.
The Term Loan provides for draws of funds under one or more term loans no more frequently than once per month for 27 months after the closing. Once repaid, term loans may not be reborrowed.
The Issuers and guarantors are required to comply with several affirmative and negative covenants, including limitations on additional indebtedness, guarantees, dividends, transactions with affiliates, capital expenditures, asset sales and others. There are also several financial covenants including the maintenance of a minimum fixed charge coverage ratio, minimum earnings before interest, taxes, depreciation and amortization (EBITDA), total debt to EBITDA and net worth. As of December 31, 2002, the Company is in compliance with all such covenants.
FF&E Facility
Effective October 30, 2002, Wynn Las Vegas entered into a $188.5 million FF&E facility (the FF&E Facility) to provide financing and refinancing for furniture, fixtures and equipment to be used at Le Rêve. The proceeds from the FF&E Facility may also be used to refinance a replacement corporate aircraft, in which case, Wynn Las Vegas would request the FF&E lenders to increase the total commitment under the FF&E Facility by $10 million to $198.5 million.
In connection with the acquisitions of World Travel, LLC and Las Vegas Jet, LLC, the Company partially financed the purchase of a private jet aircraft for $38.0 million with the issuance of a note payable for $28.5 million collateralized by the aircraft. In November 2002, the Company withdrew $38.0 million against the FF&E Facility to repay the note payable secured by the aircraft acquired in connection with the acquisition of World Travel, LLC. The unused portion of the draw will be used for construction of Le Rêve.
The FF&E Facility is guaranteed by the same guarantors as the Credit Facilities, on a senior unsecured basis, matures in October 2009, and has substantially the same interest rates and elections as the Revolver discussed above.
Disbursement Agreement
The Company has entered into an agreement (the Disbursement Agreement) with Deutsche Bank Trust Company Americas, as the bank agent and disbursement agent, Wells Fargo Bank, National Association, as the second mortgage note trustee, and Wells Fargo Bank Nevada, National Association as the FF&E agent, which sets forth the Companys material obligations to construct and complete Le Rêve, establishes a line-item budget and schedule for its construction and establishes the conditions to, and the relative sequencing of, the making of disbursements from the proceeds of the Notes, the Credit Facilities and the FF&E Facility. The Disbursement Agreement restricts the Companys use of the proceeds of the Notes, the Credit Facilities and the FF&E Facility to only project costs related to Le Rêve and, subject to certain limitations, corporate overhead and related costs.
F-20
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
In order to facilitate the funding of disbursements in accordance with the Disbursement Agreement, the Company established certain accounts including, but not limited to, the Completion Guarantee Deposit Account and the Liquidity Reserve Account discussed in further detail below, which are pledged to the lenders under the Credit Facilities and, with respect to the secured account holding the proceeds of the Notes, the holders of the Notes. Prior to borrowing any amounts under the Credit Facilities or the FF&E Facility or receiving any disbursements from the secured account holding the proceeds of the Notes, the Company is required to use a substantial portion of the equity offering proceeds and other available funds to commence construction of Le Rêve. At that point the proceeds of the Notes, other than amounts sufficient to pay interest, will be used; followed thereafter by the proceeds of the Credit Facilities and the FF&E Facility. However, as a condition to borrowing amounts under the Credit Facilities or the FF&E Facility or receiving any disbursements from the secured account holding the proceeds of the Notes, the Company is required to submit evidence acceptable to the third-party construction consultant that construction of Le Rêve has been completed at the time of such borrowing in accordance with the plans and specifications, on budget and on schedule.
Completion Guarantee and Liquidity Reserve
The Company contributed $50 million of the net proceeds of the equity offering to Wynn Completion Guarantor, LLC, a special purpose subsidiary of Wynn Las Vegas formed in October 2002 to provide a completion guarantee in favor of the lenders under the Credit Facilities and the Notes to secure completion of Le Rêve. The funds were deposited into a required escrow Completion Guarantee Deposit Account. These funds will gradually be available to apply to the cost of the project, commencing after 50% of the construction work has been completed. After completion of Le Rêve, any remaining amounts will be released to the Company.
In addition, the Company deposited $30.0 million from the net proceeds of the equity offering into a required escrow Liquidity Reserve Account to secure the completion and opening of Le Rêve. The lenders under the Credit Facilities have a first priority security interest and the holders of the Notes have a perfected second priority security interest in these funds. These funds will gradually be available to apply to the cost of the project, commencing after 50% of the construction work has been completed. Any amounts remaining upon completion will be used for debt service under the Credit Facilities and the Notes, and if consolidated EBITDA levels permit, the Revolver.
Fair Value of Long-term Debt
The estimated fair value of the Notes and the FF&E Facility based upon most recent trades at December 31, 2002 was approximately $373.7 million and $36.5 million respectively.
Scheduled maturities of long-term debt are as follows (amounts in thousands):
Years Ending December 31, |
||||
2003 |
$ |
38 |
| |
2004 |
|
41 |
| |
2005 |
|
2,420 |
| |
2006 |
|
9,548 |
| |
2007 |
|
9,552 |
| |
Thereafter |
|
386,692 |
| |
|
408,291 |
| ||
Less: original issue discount |
|
(26,100 |
) | |
$ |
382,191 |
| ||
F-21
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
7. Stockholders Equity
Common Stock
The Company is authorized to issue up to 400,000,000 shares of its common stock, $0.01 par value per share (the Common Stock). On October 25, 2002, the Company completed the initial public offering of 34,615,000 shares of its Common Stock at a $13 per share price. The Common Stock trades on the NASDAQ National Market under the symbol WYNN. Stephen A. Wynn, Chairman of the Board, CEO and a principal stockholder of Wynn Resorts, and Aruze USA, another principal stockholder of Wynn Resorts, collectively purchased approximately 11,150,000 of these shares directly from the Company at $13the same price the shares were offered to the public. Total proceeds of approximately $450 million were reduced by underwriting discounts and commissions of approximately $19.5 million and approximately $4.1 million in legal and professional expenses, for net proceeds to the Company of approximately $426.4 million, which will be used to finance construction of Le Rêve and to provide $40.0 million for the development of the Companys concession in Macau.
On November 11, 2002, the underwriters to the initial public offering exercised a 3,219,173 share over-allotment option in full, resulting in additional net proceeds of approximately $38.9 million, net of underwriters discounts and commissions of approximately $2.9 million.
As of December 31, 2002, 78,972,511 shares of the Companys Common Stock were issued and are outstanding. Except as otherwise provide by the Companys articles of incorporation or Nevada law, each holder of the Common Stock is entitled to one vote for each share held of record on each matter submitted to a vote of stockholders. Holders of the Common Stock have no cumulative voting, conversion, redemption or preemptive rights or other rights to subscribe for additional shares. Subject to any preferences that may be granted to the holders of the Companys preferred stock, each holder of Common Stock is entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefore, as well as any distributions to the stockholders and, in the event of liquidation, dissolution or winding up of the Company, is entitled to share ratably in all assets of the Company remaining after payment of liabilities.
Preferred Stock
The Company is authorized to issue up to 40,000,000 shares of undesignated preferred stock, $0.01 par value per share (the Preferred Stock). During the period from inception to, and as of, December 31, 2002, the Company had not issued any Preferred Stock. The Board of Directors, without further action by the holders of Common Stock, may designate and issue shares of Preferred Stock in one or more series and may fix or alter the rights, preferences, privileges and restrictions, including the voting rights, redemption provisions (including sinking fund provisions), dividend rights, dividend rates, liquidation rates, liquidation preferences, conversion rights and the description and number of shares constituting any wholly unissued series of Preferred Stock. The issuance of such shares of Preferred Stock could adversely affect the rights of the holders of Common Stock. The issuance of shares of Preferred Stock under certain circumstances could also have the effect of delaying or preventing a change of control of the Company or other corporate action.
8. Benefit Plans
Employee Savings Plan
The Company established a retirement savings plan under Section 401(k) of the Internal Revenue Code covering its non-union employees on July 27, 2000. The plan allows employees to defer, within prescribed limits, up to 18% of their income on a pre-tax basis through contributions to this plan. The Company matches the
F-22
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
contributions, within prescribed limits, with an amount equal to 100% of the participants initial 2% tax deferred contribution and 50% of the tax deferred contribution between 2% and 4% of the participants compensation. The Company recorded charges for matching contributions of approximately $170,000, $134,000, $57,000 and $361,000 for the years ended December 31, 2002 and 2001, the period from inception to December 31, 2000, and for the period from inception to December 31, 2002, respectively.
Union employees are covered by various multi-employer pension plans. The Company recorded expenses of approximately $127,000, $181,000, $376,000 and $684,000 under such plans for the years ended December 31, 2002 and 2001, the period from inception to December 31, 2000, and for the period from inception to December 31, 2002, respectively. Information from the plans sponsors is not available to permit the Company to determine its share of unfunded vested benefits, if any.
Stock Based Compensation Plan
The Company has adopted the 2002 Stock Incentive Plan (the Stock Plan) to provide stock compensation arrangements for directors, officers and key employees, and others. The Stock Plan includes provisions for the grant of (i) Incentive Stock Options (ISO), (ii) compensatory (i.e. non qualified) stock options (NQSO) and (iii) restricted shares of Common Stock. Officers, key employees, directors (whether employee or nonemployee) and independent contractors or consultants of the Company and its subsidiaries are eligible to participate in the Stock Plan. However, only employees of the Company and its subsidiaries are eligible to receive incentive stock options.
A maximum of 9,750,000 shares of Common Stock has been reserved for issuance under the Stock Plan. Options are granted at the current market price at the date of grant. The Stock Plan provides for a variety of vesting schedules, including immediate, twenty-five percent after two years and 25% each year for the next 3 years thereafter, cliff vest at the vesting date, and others to be determined at the time of grant. All options expire ten years from the date of grant.
The Stock Plan will terminate ten years from the date of adoption, unless terminated earlier by the Board of Directors, and no options or restricted shares may be granted under the Stock Plan after such date. Summarized information for the Stock Plan is as follows:
Year Ended December 31, 2002 |
Period from Inception to December 31, 2002 | |||||||||
Options |
Weighted Average Exercise Price |
Options |
Weighted Average Exercise Price | |||||||
Outstanding at beginning of period |
|
$ |
|
|
$ |
| ||||
Granted |
375,000 |
$ |
13.32 |
375,000 |
$ |
13.32 | ||||
Exercised |
|
$ |
|
|
$ |
| ||||
Canceled |
|
$ |
|
|
$ |
| ||||
Outstanding at ending of period |
375,000 |
$ |
13.32 |
375,000 |
$ |
13.32 | ||||
Exercisable at ending of period |
50,000 |
$ |
13.74 |
50,000 |
$ |
13.74 | ||||
Options available for Grant |
8,236,662 |
8,236,662 |
||||||||
F-23
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
No options were granted, canceled, exercised or outstanding during the year ended December 31, 2001 or for the period from inception to December 31, 2000.
The following table summarizes information about the options outstanding at December 31, 2002:
Exercise Prices |
Number of Options Outstanding at December 31, 2002 |
Number of Options Exercisable at December 31, 2002 |
Weighted Average Remaining Contractual Life (Years) | |||
$13.25 |
325,000 |
|
9.9 | |||
$13.74 |
50,000 |
50,000 |
9.9 |
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing method with the following weighted-average assumptions:
Year Ended December 31, 2002 |
Period from Inception to December 31, 2002 |
|||||||
Expected dividend yield |
|
|
|
|
|
| ||
Expected stock price volatility |
|
40.00 |
% |
|
40.00 |
% | ||
Risk-free interest rate |
|
3.00 |
% |
|
3.00 |
% | ||
Expected average life of options (years) |
|
6.00 |
|
|
6.00 |
| ||
Expected fair value of each option granted |
$ |
5.76 |
|
$ |
5.76 |
|
In addition to options, restricted stock grants of 1,138,338 shares were issued to employees during the year ended, and the period from inception to, December 31, 2002. No restricted stock grants took place during the year ended December 31, 2001 or the period from inception to December 31, 2000. The effect of these grants is to increase the issued and outstanding shares of the Companys Common Stock and decrease the number of shares available for grant in the plan. Deferred compensation is recorded for the restricted stock grants equal to the market value of the Common Stock on the date of grant. The deferred compensation is amortized over the period the restricted stock vests and is recorded as compensation expense or capitalized into construction in progress, as appropriate.
9. Equity Instruments Issued to Non-employees
On October 21, 2002, the Company entered into an amended production services agreement with the executive producer of the aquatic live theatrical attraction (the Show) anticipated to be exhibited at the Le Rêve showroom. As additional compensation for the production services to be rendered, the Company has granted 189,723 restricted shares of Common Stock which will fully vest on June 30, 2006, provided that a complete run of the Show at Le Rêve has commenced. The value of the stock grant is accrued as a deferred compensation liability over the period the restricted stock vests, adjusted each reporting period for changes in the market price of the Companys stock, and capitalized as part of the Shows production costs. As of December 31, 2002, the Company had accrued and capitalized approximately $130,000 relating to this grant. As a result of vesting conditions, the grant has no effect on the Companys shares issued and outstanding.
F-24
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
10. Income Taxes
The Company files a consolidated federal income tax return. The income tax benefit differs from that computed at the federal statutory corporate tax rate as follows:
Year Ended December 31, 2002 |
Period from Inception to December 31, 2002 |
|||||
Federal statutory rate |
35.0 |
% |
35.0 |
% | ||
Foreign tax rate differential |
(3.8 |
)% |
(3.8 |
)% | ||
Valuation allowance |
(31.2 |
)% |
(31.2 |
)% | ||
Effective tax rate |
0.0 |
% |
0.0 |
% | ||
The tax effects of significant temporary differences representing net deferred tax assets and liabilities are as follows (amounts in thousands):
December 31, 2002 |
||||
Deferred tax assetsUS: |
||||
Current: |
||||
Receivables, inventories, accrued liabilities and other |
$ |
345 |
| |
Long-term: |
||||
Goodwill |
|
11,341 |
| |
Pre-opening costs |
|
7,480 |
| |
Syndication costs |
|
3,780 |
| |
Other intangibles |
|
575 |
| |
|
23,521 |
| ||
Less: valuation allowance |
|
(7,459 |
) | |
|
16,062 |
| ||
Deferred tax assetsForeign: |
||||
Pre-opening costs |
|
747 |
| |
Less: valuation allowance |
|
(747 |
) | |
|
|
| ||
Deferred tax liabilities: |
||||
Property and equipment |
|
(16,062 |
) | |
Net deferred tax asset |
$ |
|
| |
The Company recorded a 100% valuation allowance at December 31, 2002 to fully reserve all tax benefits because of the uncertainty of future taxable income.
11. Commitments and Contingencies
Construction Contracts
The Company has entered into an agreement with a construction contractor for guaranteed maximum price construction services, effective as of June 4, 2002, and amended by Change Order No. 1, effective as of August 12, 2002 (as amended, the Construction Agreement). The Construction Agreement covers approximately $919
F-25
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
million of the approximate $1,407 million budgeted cost to construct Le Rêve, subject to increases based on, among other items, changes in the scope of the work. The Construction Agreement provides that the guaranteed maximum price will be increased and the deadline for the completion of construction extended on account of certain circumstances. The guaranteed maximum price also provides for an owner contingency of approximately $7.6 million to cover various items including delays and scope changes resulting from Wynn Las Vegas actions.
The Company has also entered into an agreement with a construction contractor for the design and construction of a parking structure for a maximum cost of $9.9 million, subject to specified exceptions, effective as of June 6, 2002. Other construction contracts and committed construction purchase orders at December 31, 2002 totaled approximately $117.3 million. As a result, a total of approximately $1.05 billion has been committed as of December 31, 2002. Of this amount, approximately $66.7 million has been spent through December 31, 2002. Future committed costs at December 31, 2002 under these contracts, therefore, total approximately $979.4 million.
Macau
Wynn Macau 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 to invest 4 billion patacas (approximately US $520 million as of December 31, 2002) in one or more casino projects in Macau by June 26, 2009 and to commence operations of its first permanent casino resort in Macau no later than December 2006. If Wynn Macau 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. After construction of Wynn Macaus first casino resort, Wynn Macau intends to satisfy its remaining financial obligations under the concession agreement through the development of future phased expansions and, possibly, additional casino resorts.
The Company intends to invest at least $40 million of the net proceeds from the initial public offering in Wynn Macau as part of the financing of the Macau opportunity. The indirect minority investors in Wynn Macau have agreed to participate in this additional investment along with Wynn Resorts to the extent of their proportionate effective interests in Wynn Macau. 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 has entered into a $574,000 pre-construction services agreement with a third-party joint venture for: (i) development of the Contractors Proposal, (ii) negotiation of the Contractors Proposal, and (iii) negotiation and execution of the construction contract and has begun preliminary discussions to arrange the additional financing, and is considering different alternatives, including debt financing or additional equity financing at the Wynn Macau level or at the level of Wynn Macaus intermediary holding companies. At the present time, Wynn Macau has not yet determined the amount of financing that will be required. If Wynn Resorts decides to raise additional equity at the Wynn Resorts level or at the Wynn Macau or intermediary holding company level to fund the Macau opportunity, its stockholders would suffer direct or indirect dilution of their interests. Wynn Macau currently has no commitments relating to any third party financing. Except for Wynn Resorts, the Company does not expect financing for any such project to be provided by or through any of the issuers or guarantors of the Notes or any other financing relating to the Le Rêve project.
In compliance with the Macau concession agreement, Wynn Macau has obtained an uncollateralized bank guarantee from Banco National Ultramarino, S.A. in the required amount of 700 million patacas (approximately US $90.9 million as of December 31, 2002) 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
F-26
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
US $39.0 million as of December 31, 2002) for the period from April 1, 2007 until 180 days after the end of the term of the concession agreement. Wynn Macau 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 Macaus performance under the concession agreement, including the payment of premiums, fines and any indemnity for failure to perform the concession agreement.
Leases
No significant third party leases exist as of December 31, 2002 or 2001.
Entertainment Services
The Company has entered into a long-term agreement with a creative production company for the creation, development and executive production of the Show, whereby the Company is required to pay certain up-front creation and licensing fees, pay production costs and, upon opening of the show, pay a royalty of 10% of net ticket revenues and retail sales and 50% of the Show and retail profits with the production company as calculated in accordance with the terms of the agreement. The term of the agreement is ten years after the opening date of the show, which will coincide with the opening of Le Rêve, with a five-year renewal option.
The Company also has an option with respect to a second production for Le Rêve or for another project, which will require the payment of an additional $1 million to exercise.
At December 31, 2002 and 2001, other assets include $4.8 million and $1.6 million, respectively, of amounts paid in conjunction with the agreement.
Self-insurance
The Company is self-insured for medical and workers compensation claims. The individual Stop Loss Attachment Point for each claim is $40,000 for medical and $250,000 for workers compensation claims with a maximum payout of $960,000 and $1,000,000, respectively.
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). These separation payments are generally the base salary of the remaining term of the employment contract plus foregone bonuses and certain other payments. At December 31, 2002, the total contractual commitment under these employment contracts is approximately $42.4 million over the next five years.
Litigation
The Company is a defendant in various lawsuits relating to routine matters incidental to its business. As with all litigation, no assurance can be provided as to the outcome of the following matters. The Company also notes that litigation inherently involves significant costs.
Valvino is currently involved in litigation related to its ownership and development of the former Desert Inn golf course and the residential lots around the golf course. Valvino acquired some, but not all, of the residential lots located in the interior of and around the former Desert Inn golf course when it acquired the former Desert Inn Resort & Casino from Starwood Hotels & Resorts Worldwide, Inc. Valvino later acquired all of the remaining
F-27
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
lots located in the interior of, and some of the remaining lots around, the former Desert Inn golf course. In total, Valvino acquired 63 of the 75 residential lots, with Clark County having acquired two of the lots through eminent domain in 1994 as part of the widening of Desert Inn Road. The residential lots, previously known collectively as the Desert Inn Country Club Estates, were subject to various conditions, covenants and restrictions recorded against the lots in 1956 and amended from time to time since then.
On October 31, 2000, Ms. Stephanie Swain, as trustee of the Mark Swain Revocable Trust, filed an action in Clark County District Court against Valvino and the then directors of the Desert Inn Country Club Estates Homeowners Association. Subsequently, the other remaining homeowners were joined in this lawsuit and asserted claims against Valvino. The plaintiffs are seeking various forms of declaratory relief concerning the continued existence and governance of the homeowners association. In addition, the plaintiffs have challenged the termination in June 2001 of the conditions, covenants and restrictions recorded against the residential lots. The plaintiffs also seek to establish certain easement rights that Ms. Swain and the other homeowners claim to possess. Specifically, the remaining homeowners seek to establish implied easement rights to enter upon the golf course for exercise and other leisure purposes, and to use the perimeter roadways for entrance and exit purposes. Additionally, plaintiffs claim that they are entitled to maintain their view of the golf course property. At least two of the plaintiffs also have alleged the existence of an equitable implied restriction prohibiting any alternative commercial development of the golf course. Due to plaintiffs failure to properly frame all of the issues and to assert claims against all necessary parties, Valvino filed an action seeking damages based upon a number of legal theories, including abuse of process. This action was consolidated with the action filed by Ms. Swain. Two subsequent actions were filed, one by Ms. Swain against certain homeowners association officers and directors and one by Valvino seeking declaratory and injunctive relief similar to the original action. Because the issues in the subsequent actions are present in the original action, both of the subsequent actions have been stayed pending the outcome of the original action. In addition, three of Valvinos subsidiaries which now own the golf course land and several of the residential lots, have been substituted into the original action as counter-defendants and plaintiffs.
The trial in this matter is scheduled for October 2003. The court has, nonetheless, entered several preliminary injunction orders concerning the parties respective property rights. Among other things, the court has ordered that Valvino is free to develop the golf course and the remainder of its property as it deems fit, subject to all applicable legal restraints. In that regard, Valvino was permitted to remove all homes and structures on its properties surrounding the golf course and those located on the Country Club Lane cul de sac, which ran to the interior of the golf course. Valvino has removed all structures that were on its lots, together with the cul-de-sac, and has relandscaped the property to blend into the existing golf course. The court has also entered an order prohibiting Ms. Swain from filing a lis pendens against the golf course property and expunging the lis pendens that was filed against the residential lots. A lis pendens is a notice filed on public records to warn all persons that the title to certain property is in litigation and that the effect of such litigation will be binding on the owner of the property. The court has also permitted construction of Le Rêve utilities in Country Club Lane, resulting in temporary closure of one of three access gates for the plaintiffs.
The plaintiffs have sought, and successfully obtained, a preliminary injunction to compel Valvino to subsidize security to homeowners who reside near the project. Valvino has appealed this ruling to the Nevada Supreme Court. The appeal has now been submitted, without oral argument, to the Southern Nevada Panel of the Nevada Supreme Court.
Discovery in this case is currently ongoing. While no assurances can be made with respect to any litigation, Valvino is vigorously contesting all of the homeowners claims and will continue to do so. However, if the plaintiffs prevail on their claims and the conditions, covenants and restrictions on the lots remain in effect, the
F-28
WYNN RESORTS LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)
Company may have to adjust its current plans for the construction of the Le Rêve golf course by redesigning some of the holes located on the periphery of the course. In addition, if the court finds that there is an implied equitable restriction on the golf course lots, any future development of the golf course parcel for an alternative use may be restricted.
Several of the remaining homeowners have also filed two separate actions seeking judicial review and/or a petition for a writ of mandamus and/or prohibition against Clark County and the Clark County Commissioners in Clark County District Court. One action concerns the Clark County Planning Commissions approval of Valvinos application for a use permit. Valvino is not a party to this action. The other action concerns the Clark County Planning Commissions approval of Valvinos application for design review of a maintenance facility that Valvino intends to build on the perimeter of the golf course property. Valvino and Wynn Resorts are parties to this action. Both of these actions are in the initial stages of litigation. Valvino intends to vigorously contest the homeowners claims.
12. Consolidating Financial Information of Guarantors and Issuers
The following consolidating financial statements present information related to Wynn Resorts (the Parent), the Issuers of the Notes, their guarantors (other than Wynn Resorts) and non-guarantors as of December 31, 2002 and 2001, for the years ended December 31, 2002 and 2001 and for the periods from inception to December 31, 2002 and 2000.
Guarantors of the Notes are Valvino, Wynn Design and Development, LLC, Wynn Resorts Holdings, LLC, Palo, LLC, Desert Inn Water Company, LLC, World Travel, LLC and Las Vegas Jet, LLC. In October 2002, Valvino transferred certain of its assets, including its equity interests in certain of its subsidiaries such as Wynn Group Asia, Inc.; Kevyn, LLC; Rambas Marketing Co., LLC; Toasty, LLC and World Wide Wynn, LLC 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 following condensed consolidating financial statements are presented in the provided form because: (i) the Issuers and guarantors are wholly owned subsidiaries of the Company; (ii) the guarantees are considered to be full and unconditional, that is, if the issuers fail to make a scheduled payment, the guarantors are obligated to make the scheduled payment immediately and, if they dont, any holder of the Notes may immediately bring suit directly against the guarantors for payment of all amounts due and payable; and (iii) the guarantees are joint and several.
F-29
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATING BALANCE SHEET INFORMATION (as revised)
AS OF DECEMBER 31, 2002
(amounts in thousands)
Parent |
Issuers |
Guarantor Subsidiaries |
Non-guarantor Subsidiaries |
Eliminating Entries |
Total |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
$ |
79,234 |
|
$ |
7,508 |
|
$ |
(1,178 |
) |
$ |
24,080 |
|
$ |
|
|
$ |
109,644 |
| ||||||
Receivables, net |
|
|
|
|
12 |
|
|
166 |
|
|
6 |
|
|
|
|
|
184 |
| ||||||
Inventories |
|
|
|
|
|
|
|
212 |
|
|
|
|
|
|
|
|
212 |
| ||||||
Prepaid expenses |
|
344 |
|
|
93 |
|
|
1,518 |
|
|
55 |
|
|
|
|
|
2,010 |
| ||||||
Total current assets |
|
79,578 |
|
|
7,613 |
|
|
718 |
|
|
24,141 |
|
|
|
|
|
112,050 |
| ||||||
Restricted cash and investments |
|
|
|
|
742,605 |
|
|
23 |
|
|
50,249 |
|
|
|
|
|
792,877 |
| ||||||
Property and equipment, net |
|
|
|
|
251,881 |
|
|
168,309 |
|
|
306 |
|
|
|
|
|
420,496 |
| ||||||
Water rights |
|
|
|
|
|
|
|
|
|
|
6,400 |
|
|
|
|
|
6,400 |
| ||||||
Trademark |
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
1,000 |
| ||||||
Deferred financing costs |
|
|
|
|
60,159 |
|
|
|
|
|
|
|
|
|
|
|
60,159 |
| ||||||
Investment in subsidiaries |
|
593,212 |
|
|
11,925 |
|
|
551,868 |
|
|
|
|
|
(1,157,005 |
) |
|
|
| ||||||
Other assets |
|
|
|
|
5,599 |
|
|
20 |
|
|
|
|
|
|
|
|
5,619 |
| ||||||
Intercompany balances |
|
379,758 |
|
|
(454,927 |
) |
|
132,236 |
|
|
(57,067 |
) |
|
|
|
|
|
| ||||||
Total assets |
$ |
1,052,548 |
|
$ |
625,855 |
|
$ |
853,174 |
|
$ |
24,029 |
|
$ |
(1,157,005 |
) |
$ |
1,398,601 |
| ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Current portion of long-term debt |
$ |
|
|
$ |
|
|
$ |
38 |
|
$ |
|
|
$ |
|
|
$ |
38 |
| ||||||
Accounts and construction payable |
|
9 |
|
|
3,099 |
|
|
6,974 |
|
|
126 |
|
|
|
|
|
10,208 |
| ||||||
Accrued interest |
|
|
|
|
8,159 |
|
|
|
|
|
|
|
|
|
|
|
8,159 |
| ||||||
Accrued compensation and benefits |
|
186 |
|
|
381 |
|
|
792 |
|
|
|
|
|
|
|
|
1,359 |
| ||||||
Accrued expenses and other |
|
|
|
|
|
|
|
880 |
|
|
8 |
|
|
|
|
|
888 |
| ||||||
Total current liabilities |
|
195 |
|
|
11,639 |
|
|
8,684 |
|
|
134 |
|
|
|
|
|
20,652 |
| ||||||
Long-term debt |
|
|
|
|
381,900 |
|
|
253 |
|
|
|
|
|
|
|
|
382,153 |
| ||||||
Total liabilities |
|
195 |
|
|
393,539 |
|
|
8,937 |
|
|
134 |
|
|
|
|
|
402,805 |
| ||||||
Minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,183 |
|
|
4,183 |
| ||||||
Commitments and contingencies |
||||||||||||||||||||||||
Stockholders equity: |
||||||||||||||||||||||||
Common stock |
|
790 |
|
|
|
|
|
|
|
|
18 |
|
|
(18 |
) |
|
790 |
| ||||||
Additional paid-in capital |
|
1,065,649 |
|
|
237,075 |
|
|
899,017 |
|
|
30,027 |
|
|
(1,166,119 |
) |
|
1,065,649 |
| ||||||
Deferred compensationrestricted stock |
|
(4,895 |
) |
|
|
|
|
(9,876 |
) |
|
|
|
|
|
|
|
(14,771 |
) | ||||||
Deficit accumulated from inception during the development stage |
|
(9,191 |
) |
|
(4,759 |
) |
|
(44,904 |
) |
|
(6,150 |
) |
|
4,949 |
|
|
(60,055 |
) | ||||||
Total stockholders equity |
|
1,052,353 |
|
|
232,316 |
|
|
844,237 |
|
|
23,895 |
|
|
(1,161,188 |
) |
|
991,613 |
| ||||||
Total liabilities and stockholders equity |
$ |
1,052,548 |
|
$ |
625,855 |
|
$ |
853,174 |
|
$ |
24,029 |
|
$ |
(1,157,005 |
) |
$ |
1,398,601 |
| ||||||
F-30
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATING BALANCE SHEET INFORMATION
AS OF DECEMBER 31, 2001
(amounts in thousands)
Parent |
Issuers |
Guarantor Subsidiaries |
Non-guarantor Subsidiaries |
Eliminating Entries |
Total |
||||||||||||||||||
ASSETS |
|||||||||||||||||||||||
Current assets: |
|||||||||||||||||||||||
Cash and cash equivalents |
$ |
|
$ |
(49 |
) |
$ |
39,317 |
|
$ |
|
|
$ |
|
|
$ |
39,268 |
| ||||||
Receivables, net |
|
|
|
|
|
|
527 |
|
|
7 |
|
|
|
|
|
534 |
| ||||||
Inventories |
|
|
|
|
|
|
284 |
|
|
|
|
|
|
|
|
284 |
| ||||||
Prepaid expenses |
|
|
|
|
|
|
1,020 |
|
|
|
|
|
|
|
|
1,020 |
| ||||||
Total current assets |
|
|
|
(49 |
) |
|
41,148 |
|
|
7 |
|
|
|
|
|
41,106 |
| ||||||
Restricted cash and investments |
|
|
|
500 |
|
|
24 |
|
|
|
|
|
|
|
|
524 |
| ||||||
Property and equipment, net |
|
|
|
2 |
|
|
326,258 |
|
|
11,207 |
|
|
|
|
|
337,467 |
| ||||||
Water rights |
|
|
|
|
|
|
|
|
|
6,400 |
|
|
|
|
|
6,400 |
| ||||||
Trademark |
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
1,000 |
| ||||||
Other assets |
|
|
|
252 |
|
|
1,812 |
|
|
|
|
|
(18 |
) |
|
2,046 |
| ||||||
Intercompany balances |
|
|
|
(2,498 |
) |
|
20,780 |
|
|
(18,282 |
) |
|
|
|
|
|
| ||||||
Total assets |
$ |
|
$ |
(793 |
) |
$ |
390,022 |
|
$ |
(668 |
) |
$ |
(18 |
) |
$ |
388,543 |
| ||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|||||||||||||||||||||||
Current liabilities: |
|||||||||||||||||||||||
Current portion of long-term debt |
$ |
|
$ |
|
|
$ |
35 |
|
$ |
|
|
$ |
|
|
$ |
35 |
| ||||||
Accounts and construction payable |
|
|
|
57 |
|
|
2,016 |
|
|
4 |
|
|
|
|
|
2,077 |
| ||||||
Accrued compensation and benefits |
|
|
|
28 |
|
|
989 |
|
|
8 |
|
|
|
|
|
1,025 |
| ||||||
Accrued expenses and other |
|
|
|
|
|
|
856 |
|
|
29 |
|
|
|
|
|
885 |
| ||||||
Total current liabilities |
|
|
|
85 |
|
|
3,896 |
|
|
41 |
|
|
|
|
|
4,022 |
| ||||||
Long-term debt |
|
|
|
|
|
|
291 |
|
|
|
|
|
|
|
|
291 |
| ||||||
Total liabilities |
|
|
|
85 |
|
|
4,187 |
|
|
41 |
|
|
|
|
|
4,313 |
| ||||||
Commitments and contingencies |
|||||||||||||||||||||||
Stockholders equity: |
|||||||||||||||||||||||
Common stock |
|
|
|
|
|
|
394 |
|
|
18 |
|
|
(18 |
) |
|
394 |
| ||||||
Additional paid-in capital |
|
|
|
|
|
|
412,178 |
|
|
|
|
|
|
|
|
412,178 |
| ||||||
Deficit accumulated from inception during the development stage |
|
|
|
(878 |
) |
|
(26,737 |
) |
|
(727 |
) |
|
|
|
|
(28,342 |
) | ||||||
Total stockholders equity |
|
|
|
(878 |
) |
|
385,835 |
|
|
(709 |
) |
|
(18 |
) |
|
384,230 |
| ||||||
Total liabilities and stockholders equity |
$ |
|
$ |
(793 |
) |
$ |
390,022 |
|
$ |
(668 |
) |
$ |
(18 |
) |
$ |
388,543 |
| ||||||
F-31
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2002
(amounts in thousands)
Parent |
Issuers |
Guarantor Subsidiaries |
Non-guarantor Subsidiaries |
Eliminating Entries |
Total |
|||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Airplane |
$ |
|
|
$ |
|
|
$ |
3,455 |
|
$ |
|
|
$ |
(2,826 |
) |
$ |
629 |
| ||||||
Art gallery |
|
|
|
|
|
|
|
279 |
|
|
|
|
|
|
|
|
279 |
| ||||||
Retail |
|
|
|
|
|
|
|
237 |
|
|
|
|
|
|
|
|
237 |
| ||||||
Water |
|
|
|
|
|
|
|
|
|
|
76 |
|
|
(62 |
) |
|
14 |
| ||||||
Total revenue |
|
|
|
|
|
|
|
3,971 |
|
|
76 |
|
|
(2,888 |
) |
|
1,159 |
| ||||||
Expenses: |
||||||||||||||||||||||||
Pre-opening costs |
|
5,278 |
|
|
4,536 |
|
|
13,088 |
|
|
4,963 |
|
|
(2,718 |
) |
|
25,147 |
| ||||||
Depreciation and amortization. |
|
|
|
|
9 |
|
|
8,480 |
|
|
445 |
|
|
|
|
|
8,934 |
| ||||||
(Gain)/Loss on sale of assets |
|
|
|
|
|
|
|
(90 |
) |
|
69 |
|
|
|
|
|
(21 |
) | ||||||
Selling, general and administrative |
|
|
|
|
|
|
|
631 |
|
|
111 |
|
|
(120 |
) |
|
622 |
| ||||||
Cost of water |
|
|
|
|
|
|
|
50 |
|
|
59 |
|
|
(50 |
) |
|
59 |
| ||||||
Cost of retail sales |
|
|
|
|
|
|
|
118 |
|
|
|
|
|
|
|
|
118 |
| ||||||
Loss from incidental operations |
|
|
|
|
91 |
|
|
609 |
|
|
|
|
|
|
|
|
700 |
| ||||||
Total expenses |
|
5,278 |
|
|
4,636 |
|
|
22,886 |
|
|
5,647 |
|
|
(2,888 |
) |
|
35,559 |
| ||||||
Operating loss |
|
(5,278 |
) |
|
(4,636 |
) |
|
(18,915 |
) |
|
(5,571 |
) |
|
|
|
|
(34,400 |
) | ||||||
Other income (expense): |
||||||||||||||||||||||||
Interest expense, net |
|
|
|
|
(1,014 |
) |
|
(883 |
) |
|
|
|
|
|
|
|
(1,897 |
) | ||||||
Interest income |
|
170 |
|
|
1,769 |
|
|
1,631 |
|
|
148 |
|
|
|
|
|
3,718 |
| ||||||
Equity in loss from Macau |
|
(4,083 |
) |
|
|
|
|
|
|
|
|
|
|
4,083 |
|
|
|
| ||||||
Other income, net |
|
(3,913 |
) |
|
755 |
|
|
748 |
|
|
148 |
|
|
4,083 |
|
|
1,821 |
| ||||||
Minority interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
866 |
|
|
866 |
| ||||||
Net loss accumulated during the development stage |
$ |
(9,191 |
) |
$ |
(3,881 |
) |
$ |
(18,167 |
) |
$ |
(5,423 |
) |
$ |
4,949 |
|
$ |
(31,713 |
) | ||||||
F-32
WYNN RESORTS, LIMITED AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATING STATEMENT OF OPERATIONS INFORMATION
YEAR ENDED DECEMBER 31, 2001
(amounts in thousands)
Parent |
Issuers |
Guarantor Subsidiaries |
Non-guarantor Subsidiaries |
Eliminating Entries |
Total |
||||||||||||||||||
Revenues: |
|||||||||||||||||||||||
Airplane |
$ |
|
$ |
|
|
$ |
2,006 |
|
$ |
|
|
$ |
(929 |
) |
$ |
1,077 |
| ||||||
Art gallery |
|
|
|
|
|
|
35 |
|
|
|
|
|
|
|
|
35 |
| ||||||
Retail |
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
27 |
| ||||||
Water |
|
|
|
|
|
|
|
|
|
77 |
|
|
(59 |
) |
|
18 |
| ||||||
Total revenue |
|
|
|
|
|
|
2,068 |
|
|
77 |
|
|
(988 |
) |
|
1,157 |
| ||||||
Expenses: |
|||||||||||||||||||||||
Pre-opening costs |
|
|
|
878 |
|
|
12,772 |
|
|
(947 |
) |
|
(841 |
) |
|
11,862 |
| ||||||
Depreciation and amortization. |
|
|
|
|
|
|
6,901 |
|
|
1,262 |
|
|
|
|
|
8,163 |
| ||||||
(Gain) / Loss on sale of assets. |
|
|
|
|
|
|
394 |
|
|
|
|
|
|
|
|
394 |
| ||||||
Selling, general and administrative |
|
|
|
|
|
|
129 |
|
|
267 |
|
|
(20 |
) |
|
376 |
| ||||||
Facility closure |
|
|
|
|
|
|
373 |
|
|
|
|
|
|
|
|
373 |
| ||||||
Cost of water |
|
|
|
|
|
|
|
|
|
167 |
|
|
(127 |
) |
|
40 |
| ||||||
Cost of retail sales |
|
|
|
|
|
|
9 |
|
|
|
|
|
|
|