Wynn Resorts reports Q3 results

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Wynn Resorts, Limited (Nasdaq: WYNN) today reported financial results for the quarter ended September 30, 2006.

Net Revenues for the quarter were $318.1 million, 26.5% higher than in the third quarter of 2005. Results for this quarter include 25 days of operations of Wynn Macau, which opened on September 6, 2006. On a US GAAP (Generally Accepted Accounting Principles) basis, net income for the quarter was $715.7 million, or $6.43 per diluted share, compared to a loss of $9.2 million, or $0.09 per diluted share, in the third quarter of 2005. The significant increase in net income was due to the completion of the sale of the subconcession right in Macau in the third quarter of 2006. Adjusted net loss was $1.3 million, or ($0.01) per diluted share (adjusted EPS)(1) compared to an adjusted net loss of $2.2 million, or ($0.02) per diluted share in the third quarter of 2005.

Consolidated adjusted EBITDA(2) in the quarter was $79.6 million, an increase of 8.7% from $73.2 million in third quarter of 2005.

Wynn Las Vegas Results

For the quarter ended September 30, 2006, Wynn Las Vegas generated adjusted EBITDA of $77.3 million, an increase of 5.6% from the third quarter of 2005, with a 28.3% EBITDA margin on net revenue.

Net casino revenues in the third quarter of 2006 were $131.9 million compared to $123.0 million for the third quarter of 2005. Table games drop was $458.2 million, with win per table per day (before discounts) of $7,779 for the quarter compared to drop of $414.6 million and win per table per day of $7,339 last year. Table games win percentage of 22.3% was slightly above the property's expected range of 19% to 22% and the 21.9% generated last year. Slot machine win per unit per day was $248 on handle (volume) of $1,017.2 million in the quarter compared to a win per unit per day of $243 on handle of $897.1 million during the comparable period of 2005. Slot handle increased during the three months of 2006 as compared to 2005, however, during the three months of 2006, the slot win percentage was slightly less than the expected range of 5% to 6%.

Gross non-casino revenues for the quarter were $178.4 million, an 8.5% increase from the third quarter of 2005. Hotel revenues were up 4.8% to $64.3 million during the quarter, versus $61.4 million in the third quarter of 2005. Wynn Las Vegas achieved an Average Daily Rate (ADR) of $271 for the quarter, compared to $264 in the third quarter of 2005. The property's occupancy was 94.9% compared to 93.0% during the prior year period, generating revenue per available room (REVPAR) of $257 in the 2006 period (4.5% higher than in 2005).

Food and beverage revenues increased 13.2% to $69.3 million in the quarter compared to $61.2 million in the third quarter of 2005. Retail revenues were $19.2 million in the quarter compared to $17.0 million in the third quarter of 2005, an increase of 12.7%. Entertainment revenues were approximately $14.1 million, matching the $14.0 million generated in the third quarter of 2005. Food and beverage revenue increases in 2006 compared to 2005 were primarily from increased revenues from the nightclub located in Wynn Las Vegas.

Wynn Macau Results

The first phase of Wynn Macau opened on September 6, 2006 featuring 600 hotel rooms and suites, approximately 212 table games and 375 slot machines in approximately 100,000 square feet of casino gaming space, seven restaurants, approximately 26,000 square feet of retail space, a spa, a salon, entertainment lounges, and meeting facilities.

Wynn Macau generated net revenues (after discounts and commissions) of $45.0 million and EBITDA of $2.3 million in the property's first 25 days of operations. Approximately 81.2% of revenues were derived from table games play at Wynn Macau.

Table games results are segregated into two distinct reporting segments, the mass market segment and the VIP segment.

Table games drop in the mass market segment was approximately $134 million during the 25 day period. Mass market table games win percentage (calculated before discounts and incentives) was 15.7%, below the expected range of 17% to 19%.

Table games turnover in the VIP segment was $1.5 billion for the 25 day period. VIP table games win percentage (calculated before discounts and commissions) was 1.9%, which is significantly less than the expected range of 2.5% to 2.8%.

Slot machine win per unit per day was $387 on handle (volume) of $60.6 million for the 25 day period.

Since our opening on September 6, 2006, Wynn Macau has generated an average daily room rate (ADR) of $201, with occupancy averaging 75.9%. Net non-casino revenues for the 25 days were $4.9 million.

As of September 30, 2006, the Company has expended approximately $816 million of a total project budget for Wynn Macau of approximately $1.2 billion (including the expansion).

Wynn Macau Expansion

Construction of the second phase of Wynn Macau on the remaining five acres continues. This expansion will be fully integrated with the first phase of Wynn Macau and will open in stages in 2007, commencing with approximately 119 table games and 300 slot machines in February. The second phase will include an additional approximately 135,000 square feet of casino space, two restaurants, retail space, a theater, and a dramatic front feature attraction.

Cotai

The Company has submitted an application to the Macau government for a land concession for an additional 54 acres of land on the Cotai Strip in Macau for future development.

Encore at Wynn Las Vegas

On March 31, 2006, Wynn Las Vegas, LLC's lenders approved a $1.74 billion project budget and the related plans and specifications for Encore (the "Encore Budget, Plans and Specs"). The Company continues to refine the design of Encore and is evaluating certain enhancements, which may increase the project budget. In addition, we are negotiating the final guaranteed maximum price contract for Encore with our general contractor. Any increase to the Encore budget would be funded by contributions of debt and/or equity from Wynn Resorts. Encore's current design includes a 2,042-room hotel tower fully integrated with Wynn Las Vegas, consisting of 132 suites and 1,910 guest rooms, as well as an approximately 54,000 square foot casino, additional convention and meeting space, as well as restaurants, a nightclub, swimming pools, a spa and salon and retail outlets. The Encore Budget, Plans and Specs include approximately $70.0 million to be incurred for an additional employee parking garage located on the Company's Koval property across Sands Avenue from Wynn Las Vegas, a related pedestrian bridge, and costs to be incurred in connection with preparing the Broadway Theater to host "Monty Python's Spamalot." The Company commenced construction of Encore on April 28, 2006 and expects to open Encore to the public by early 2009.

Through September 30, 2006, the Company incurred approximately $200.7 million of the Encore project costs. These costs, net of approximately $6.4 million of retention, have been funded from the Wynn Las Vegas Credit Facilities, the First Mortgage Notes and cash flow from the operations of Wynn Las Vegas. Prior to signing a guaranteed maximum price construction contract, the Company is permitted to spend up to $300.0 million of the proceeds of the First Mortgage Notes and the Wynn Las Vegas Credit Facilities on Encore project costs. As of September 30, 2006, the Company has spent approximately $155.9 million using the debt proceeds. The remaining $38.4 million has been funded from cash flows from operations. The Company expects that the remaining proceeds from the First Mortgage Notes, together with availability under the Wynn Las Vegas Credit Facilities, cash flow from operations and the equity commitment from Wynn Resorts will be sufficient to fund Encore's $1.74 billion budget.

Other Factors Affecting Earnings

Wynn Macau completed the sale of a subconcession right to Publishing & Broadcasting, Limited for $900 million in cash, received on September 11, 2006. The one time gain on the sale substantially increased net income for the quarter ended September 30, 2006.

Depreciation and amortization expenses were $42.5 million during the third quarter of 2006. Interest expense, net of $8.7 million in capitalized interest, was $37.0 million for the quarter. Pre-opening expenses, primarily related to Wynn Macau, totaled $36.8 million during the quarter. Corporate expenses and other were $13.3 million, including $4.8 million of stock based compensation expense.

Balance Sheet and Capital Expenditures

Our total cash balances at the end of the quarter were $1.7 billion, including unrestricted cash balances of $1.4 billion and cash balances restricted for our construction and development projects of $324 million. Total debt outstanding at the end of the quarter was $2.4 billion, including $224 million of Convertible Debentures and $478 million of Wynn Macau-related debt. Capital expenditures during the third quarter of 2006, net of changes in construction payables and retention, totaled approximately $231 million, of which approximately $134 million was related to Wynn Macau and the remainder was mostly attributable to Encore.