Wynn Resorts, Limited
Three Year Strategic Plan for 2009-2011
Kristin CookCurtis JacobsRyan MeltonHope Wofford
Francis Marion UniversityFlorence, South Carolina
Presentation OutlineI. Introduction II. Mission/VisionIII. Internal Assessment
a. Financial Ratiosb. Organizational Chartc. Market Positioning Mapd. Marketing Strategye. Value of the Firmf. Strengths/Weaknessesg. IFE
IV. External Assessmenta. Competitor Analysisb. CPMc. Opportunities/Threatsd. EFE
V. Strategy Formulationa. SWOTb. SPACEc. BCGd. IEe. GSMf. QSPMg. Recommendations
VI. Strategy Implementationa. EPS/EBIT Analysisb. Pro-forma Statements and
RatiosVII. Conclusion
Company Overview•Formed in 2002 by leading developer Stephen Wynn•Currently has 3 casino resort destinations
•Wynn Las Vegas: Opened April 28, 2005•2,716 Rooms•111,00 square foot casino•18-hole golf course on the Las Vegas “Strip”
•Wynn Macau: Opened September 6, 2006•600 Rooms•205,000 square foot casino
•Encore at Wynn Las Vegas•2,034 Suites•72,000 square foot casino
Vision Statement
Wynn Resorts, Limited strives to be the leading provider and choice of elite, luxurious casino and resort experiences worldwide.
Mission Statement Wynn Resorts, Limited targets high net worth individuals by providing a variety of socioeconomic activities in the casino and resort industry. 1,2 With our resorts in Las Vegas and Macau (People’s Republic of China), we aim to reach a global customer base. 3 We continually strive to provide and research new and innovative gaming and lodging amenities to our customers. 4 Wynn Resorts, Ltd. continuously seeks new ventures and opportunities for expansion in order to advance the Wynn brand and maximize shareholder wealth.5,6 We continue to provide the highest quality and unique gaming resort experience to our customers. 7 Investment in the social and environmental well -being of communities in which we operate, such as Las Vegas and Macau, is a top priority. 8 Wynn encourages employee growth, training, and development in order to provide the most luxurious and hospitable environment possible for our customers. 9
Mission Statement of MGM
The resorts and casinos of MGM MIRAGE are some of the most famous in the world, widely credited for establishing a new generation of excitement in Las Vegas! Our 24 destinations are renowned for their winning combination of quality entertainment, luxurious facilities and exceptional customer service.
Our dedicated staff of over 70,000 employees are committed to providing an unsurpassed experience for every one of our guests. We are actively expanding our presence globally, with potential developments in a number of domestic and international markets. At MGM MIRAGE, we are all striving together to deliver our enticing blend of entertainment to every corner of the world.
MGM Mission Statement Analysis
-Mission statement includes the majority of the 9 core components of a good mission statement
-Does not mention a concern for public image
-This statement gives a platform upon which MGM is able to make strategic decisions.
Ratio Wynn Industry SectorP/E (TTM) 7.89 0.64 28.81Quick Ratio (MRQ) 2.03 4.60 1.14Current Ratio (MRQ) 2.13 4.90 1.49LT Debt/Equity (MRQ) 350.76 8.76 37.25Total Debt/Equity (MRQ) 350.98 9.32 76.63Net Profit Margin (TTM) 14.11 0.56 1.20Return on Assets (TTM) 7.04 1.04 1.16Return on Investments (TTM) 8.02 1.60 1.69Return on Equity (TTM) 26.32 2.05 3.72Total Asset Turnover (TTM) 0.50 0.08 0.48
Financial Ratio Analysis
Current Organizational Chart CEO &
Chairman of the Board
CAO & Executive VP COO
Senior VP & General
Counsel & Secretary
COO Las Vegas
President Wynn Las
Vegas
Senior VP & CFO Las Vegas
President Wynn
International Marketing,
Ltd.
President Wynn Macau
CFO Macau
CFO & Treasurer
Problems with Current Organizational Chart
- Dual titles of top executives, such as Chairman and CEO
- Does not include some of the necessary functional business units, such as research and development
- Executive titles are confusing and do not effectively describe the functional area of business of the position
- Hard to distinguish a proper chain of command for the different geographic locations
CEO
CIO CMO CFO COO
President of US
Operations
VP Casinos LV VP Lodging LV VP Food LV
VP Entertainmen
t LV
President of Macau
Operations
VP Casinos Macau
VP Lodging Macau
VP Food Macau
VP Entertainmen
t Macau
HRM CLO R&D
Proposed Organizational Chart
Organizational Chart Titles
-CEO- Chief Executive Officer
-COO- Chief Operating Officer
-CIO- Chief Information Officer
-CFO- Chief Financial Officer
-CMO- Chief Marketing Officer
-HRM- Human Resource Manager
-CLO- Chief Legal Officer
-R&D- Research and Development
Organizational Chart Improvements
-Divisional Structure by geographic region
-Eliminates dual titles
-Clearly outlines the necessary functional business units
-Executive titles more clearly defined and Presidents report only to the COO
-Clearly defines reporting relationships
-Gives Wynn Resorts a defined unity of command
-Allows each geographic unit to adapt to regional trends independently of the other(s)
Succession PlanCreate a formal succession plan
because currently we do not have a clearly defined or published plan of action in the event of a separation of Stephen Wynn from the company.
We suggest the COO, or another top executive, should move up to the position of CEO. Then divisional presidents would move up to replace those individuals.
The top executives in the company should have a retreat once a quarter over the next three years for leadership training.
Market Positioning Map
Wynn
Las Vegas
Sands
MGM Mirage
Market Positioning Map
Wynn
Las Vegas
Sands
MGM Mirage
Current Marketing- Reward system that offers discounted and complimentary meals, lodging, and
entertainment
- Use integrated database to target specific customers for promotions
- Marketing executives located in Tokyo, Hong Kong, Macau, Singapore, Taiwan, Vancouver, and southern California
- Types of Advertisement:- Television- Radio- Magazines- Internet- Direct mail- Billboards
- Differentiated product from competitors by offering higher standards of luxury
-Current Target Market- Premium gaming customers internationally
New Marketing Strategies
-Discontinue advertising expenditures on direct mailings and radio
-Develop a resort “stimulus package” by offering $1000 gaming vouchers to our customers that live within driving distance of Wynn Las Vegas
-Increase online advertising on gaming websites such as PokerStars.net
-Increase marketing in India by 1.5% over the course of the next 3 years. India has the fastest growing number of high net worth individuals (those in our target market).
New Marketing Slogan
Luxury. Style. Elegance. The Wynn
Experience.
Map of Operations
Las Vegas
Macau
Map of Competitor Operations
Las Vegas
Macau
Singapore
IllinoisMississippi
Michigan
Louisiana
PA
Website: Wynn Las Vegas
Website Analysis
Eye appealingA lot of
PhotographsEasy to find
headingsClick-able Links
Can only reserve 3 rooms at a time or up to 8 people
Scrolling photo bar not user friendly
Website requires fast user connection speeds to perform optimally
Website: MGM Mirage
Website Analysis Wynn Las Vegas vs. MGM’s The Bellagio
Can be put in full screen for easier viewing
Easier to navigate to other Wynn property sites
More pictures of resorts
Can easily select another language
Have show ticket prices listed on website were it is easy to find
Includes air/hotel packages on the main page
Company Worth Analysis
Company Worth Analysis (Year-End 2008)Stockholders Equity $ 1,948,159,000
Net Income x 5 $ 1,051,030,000
(Share Price/EPS) x Net Income $ 4,579,023,485
Number of Shares Outstanding x Share Price $ 4,581,322,080
5 Method Average $ 3,039,883,641
Strengths
• Occupancy rates at Wynn Las Vegas at 96% in 2007• Occupancy rates at Wynn Macau at 88.8% in 2007• Net income rose 92% in the first 3 quarters of 2008• The senior executive teams has on average approximately 25 years of
experience.• Wynn Resorts, Limited has over $1 billion in its cash account• Wynn Resorts, Limited owns one of only six gaming concessions in
Macau• The only resort to receive the Mobil 5 Star Award• Wynn Macau and Wynn Las Vegas table winnings per unit per day are
118% and 27% greater than the market average, respectively• Wynn Macau and Wynn Las Vegas slot winnings per unit per day are
132% and 45% greater than the market average, respectively• Wynn Resorts had 17% of the Market Share in Macau in the 3rd quarter
of 2008 (8% greater than the fair share)
Weaknesses
• Has outstanding debts of $3.5 billion• Only have 3 locations providing cash flow• Stephen Wynn has the power to select the board of directors• Wynn Resorts relies heavily on the long-term tenure of Stephen -
Wynn as CEO for company survival• 42% of currently outstanding stock is owned by 2 owners: Mr. Wynn
and Azure USA• The company has no published vision or mission statement• Wynn Resorts, Limited has no resorts in Atlantic City, one of the
highest revenue gaming areas in the world• Shares of Wynn Resorts have fallen 66% since February 2008• The company has a Beta of 2.36• Occupancy rates dropped 4.2% in 2008 from 2007
Internal Factor Evaluation MatrixStrengths Weight Rating Raw Score
Occupancy rates at Wynn Las Vegas at 96% in 2007 0.05 4 0.2
Occupancy rates at Wynn Macau at 88.8% in 2007 0.05 3 0.15
Net income rose 92% in the first 3 quarters of 2008 0.06 4 0.24
The senior executive teams has on average approximately 25 years of experience. 0.07 4 0.28
Wynn Resorts, Limited has over $1 billion in its cash account 0.05 4 0.2
Wynn Resorts, Limited owns one of only six gaming concessions in Macau 0.08 4 0.32
The only resort to receive the Mobil 5 Star Award 0.04 3 0.12
Wynn Macau and Wynn Las Vegas table winings per unit per day are 118% and 27% greater than the market average, respectively 0.05 4 0.2
Wynn Macau and Wynn Las Vegas slot winnings per unit per day are 132% and 45% greater than the market average, respectively 0.05 4 0.2Wynn Resorts had 17% of the Market Share in Macau in the 3rd quarter of 2008 (8% greater than the fair share) 0.07 3 0.21
Internal Factor Evaluation Matrix (cont)
Weaknesses Weight Rating Raw Score
Has outstanding debts of $3.5 billion 0.04 2 0.08
Only have 3 locations providing cash flow 0.05 1 0.05
Stephen Wynn has the power to select the board of directors 0.04 2 0.08
Wynn Resorts relies heavily on the long-term tenure of Stephen Wynn as CEO for company survival 0.06 1 0.06
42% of currently oustanding stock is owned by 2 owners: Mr. Wynn and Azure USA 0.03 2 0.06
The company has no published vision or mission statement 0.05 1 0.05
Wynn Resorts, Limited has no resorts in Atlantic City, one of the highest revenue gaming areas in the world 0.04 2 0.08
Shares of Wynn Resorts have fallen 66% since February 2008 0.05 2 0.1
The company has a Beta of 2.36 0.04 2 0.08
Occupancy rates dropped 4.2% in 2008 from 2007 0.03 2 0.06
Total 1 2.82
Competitive Profile Matrix--Wynn Resorts Limited
Wynn Las Vegas Sands MGM Mirage
Critical Success Factors Weight RatingWeighted
Score RatingWeighted
Score RatingWeighted
Score
Advertising 0.085 2 0.17 1 0.085 3 0.255
Management Experience 0.1 4 0.4 3 0.3 2 0.2
Customer Service 0.15 4 0.6 3 0.45 2 0.3
Geographic Diversity 0.085 1 0.085 4 0.34 3 0.255
Product Quality 0.15 4 0.6 3 0.45 2 0.3
Market Share 0.08 2 0.16 3 0.24 4 0.32
Price Competitiveness 0.075 1 0.075 2 0.15 3 0.225
Property Ownership 0.09 3 0.27 2 0.18 4 0.36
Breadth of Product Line 0.085 3 0.255 1 0.085 2 0.17
Customer Mix 0.05 2 0.1 3 0.15 4 0.2
Financial Position 0.05 4 0.2 1 0.05 3 0.15
Total 1 2.915 2.48 2.735
Opportunities• 60.4% of target market resides in areas where Wynn currently operates• Atlantic City casino winnings are 390% greater than those in the state of
Nevada• Macau casino winnings up 46%, becoming the largest casino market in
the world• MGM Mirage facing possible bankruptcy due to possible default on debts• Target market in China expected to increase to 180-200 million people
over next 10 years• Top competitor's merging create a wide pool of experienced executives• India experienced 22.1% growth in individuals with $1 million or more in
personal assets• East coast U.S. casino and resort venues account for 40% of the top 5
casino market revenues• Macau Chief Executive announced freeze on new gaming license to
stabilize industry• 63% of Americans believe gambling is morally acceptable• Tourism to Macau increased by 23% between 2006-2007• States considering using the gaming industry to fund budget gaps
Threats
• Macaun government has ability to nationalize all operations in the year 2017
• Increase in legalization of casino gaming in or near metropolitan areas
• Average daily room rate dropped 7.7% in Las Vegas• Vacancies are at a 20 year high in the U.S. hotel industry• Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008• Chinese governments reducing the amount of travel visas granted to
Macau from 1/month to 1/3 months• Las Vegas strip gaming revenue down 6.7%• Airlines expected to decrease passenger capacities 10-15% in 2009• Profit margins expected to decrease 17-18% in 2009• Visitors to Las Vegas down 1.1% in 2008• Political legislation restricting gaming • Construction costs for hotels are up 29% from August of 2007
External Factor Evaluation MatrixOpportunities Weight Rating Raw Score
60.4% of target market resides in areas where Wynn currently operates 0.08 4 0.32Atlantic City casino winnings are 390% greater than those in the state of Nevada 0.045 1 0.045Macau casino winnings up 46%, becoming the largest casino market in the world 0.08 4 0.32
MGM Mirage facing possible bankruptcy due to possible default on debts 0.03 3 0.09Target market in China expected to increase to 180-200 million people over next 10 years 0.07 3 0.21
Top competitor's merging create a wide pool of experienced executives 0.03 1 0.03India experienced 22.1% growth in individuals with $1 million or more in personal assets 0.03 1 0.03East coast U.S. casino and resort venues account for 40% of the top 5 casino market revenues 0.035 1 0.035Macau Chief Executive announced freeze on new gaming licencse to stabilize industry 0.055 4 0.22
63% of Americans believe gambling is morally acceptable 0.025 2 0.05
Tourism to Macau increased by 23% between 2006-2007 0.045 4 0.18
States considering using the gaming industry to fund budget gaps 0.025 1 0.025
External Factor Evaluation Matrix (cont)
Threats Weight Rating Raw Score
Macaun government has ability to nationalize all operations in the year 2017 0.08 2 0.16
Increase in legalization of casino gaming in or near metropolitan areas 0.03 1 0.03
Average daily room rate dropped 7.7% in Las Vegas 0.025 4 0.1
Vacancies are at a 20 year high in the U.S. hotel industry 0.03 2 0.06
Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008 0.025 2 0.05
Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months 0.045 2 0.09
Las Vegas strip gaming revenue down 6.7% 0.035 4 0.14
Airlines expected to decrease passenger capacities 10-15% in 2009 0.025 3 0.075
Profit margins expected to decrease 17-18% in 2009 0.04 2 0.08
Visitors to Las Vegas down 1.1% in 2008 0.025 3 0.075
Political legislation restricting gaming 0.025 3 0.075
Construction costs for hotels are up 29% from August of 2007 0.065 1 0.065
Total 1 2.555
SWOT Matrix
SO Strategies ST Strategies
1) Decrease room rates in Macau by 10%. (S2, O11)
1) Increase philanthropic giving in Macau by 2%. (S3, T1)
2) Open 500 room VIP facility in Atlantic City. (S5, O2)
2) Lower room mates in Las Vegas by 10%. (S1, T3)
3) Develop a succession plan that capitalizes on available and experienced executives. (S4, O6)
3) Host a celebrity poker tournament at Wynn Encore. (S7, O11)
4) Increase number of slot machines at Wynn Las Vegas and Macau by 10%. (S9, O10)
4) Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area (S7, T5)
SWOT Matrix continued
WO Strategies WT Strategies
1) Develop a formalized succession plan in the event of a separation of Stephen Wynn and the company. (W4, O6)
1) Drop the room rates in the US by 10%. (W10,T3)
2) Pay off debts 5% annually for the next 3 years. (W1, O3)
2) Open 500 room VIP facility in Atlantic City. (W2, T7)
3) Increase the gaming space at Macau by 5%. (W10, O11)
3) Write a vision and mission statement that guides our company towards higher profitability. (W6, T 9)
4) Acquire the Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage. (W7, O4)
4) Distribute $1000 “resort stimulus package” gaming voucher to our middle tier customers that live within driving distance of Wynn Las Vegas. (W10, T8)
Financial Strength (FS) Environmental Stability (ES)
Return on Assets (ROA) 4 Rate of Inflation -4
Leverage 3 Technological Changes -2
Net Income 4 Price Elasticity of Demand -5
Brand Name 6 Competitive Pressure -5Inventory Turnover 2
Barriers to Entry into Market -4
Financial Strength (FS) Average 3.8 Environmental Stability (ES) Average -4.0
Competitive Advantage (CA) Industry Strength (IS)
Market Share -2 Growth Potential 5
Product Quality -1 Financial Stability 3
Customer Loyalty -2 Ease of Entry into Market 3
Technological know-how -2 Resource Utilization 5Control over Suppliers and Distributors -3 Profit Potential 6
Competitive Advantage (CA) Average -2.0 Industry Strength (IS) Average 4.4
SPACE Matrix Data
SPACE Matrix
BCG Matrix Data
Division Division Name Revenues % of Revenue Profits % of
Profits RMSP IGR
1 Casinos $2,261,932 77% $771,005 93% 0.6 0.33
2 Rooms $326,655 10% $248,417 8% 0.16 0.11
3 Food and Beverage $358,715 11% $151,434 16% 0.2 0.13
4Entertainment, retail and
other$270,065 9% $108,203 7% 0.17 0.18
5Less:
Promotional Allowances
-$230,043 -7% -$230,043 -25% 0.28 0.19
Totals: $2,987,324 100% $1,049,016 100%
RMSP
High Medium Low
1.0 .50 0.0High +20
Medium 0
Low - 20
Indu
stry
Gro
wth
Rat
e(p
erc
en
tag
e)
12
3
45
IFE Matrix DataDivision Division Name Revenues % of Revenue Profits % of
ProfitsEFE
ScoresIFE
Scores
1 Casinos $2,261,932 77% $771,005 93% 3 3.2
2 Rooms $326,655 10% $248,417 8% 2.5 3
3 Food and Beverage $358,715 11% $151,434 16% 2.5 2.7
4 Entertainment, retail and other $270,065 9% $108,203 7% 3 2
5 Less: Promotional Allowances -$230,043 -7% -$230,043 -25% 2.8 2.3
Totals: $2,987,324 100% $1,049,016 100%
IFE Total Weighted Scores
EFE
Tota
l Wei
ghte
d S
core
s
Internal Factor Evaluation Matrix
Grand Strategy Matrix
Strategy
OneStrategy
Two
Purchase
Atlantic CityBuild new
casino
Casino from
MGMin Atlantic
City
Strengths Weight AS TAS AS TAS1Occupancy rates at Wynn Las Vegas at 96% in 2007 0.05 0 02Occupancy rates at Wynn Macau at 88.8% in 2007 0.05 0 03Net income rose 92% in the first 3 quarters of 2008 0.06 0 04The senior executive teams has on average approximately 25 years
of experience. 0.07 3 0.21 4 0.285Wynn Resorts, Limited has over $1 billion in its cash account 0.05 2 0.1 3 0.156Wynn Resorts, Limited owns one of only six gaming concessions in
Macau 0.08 0 07The only resort to receive the Mobil 5 Star Award 0.04 2 0.08 4 0.168Wynn Macau and Wynn Las Vegas table winings per unit per day
are 118% and 27% greater than the market average, respectively 0.05 0 09Wynn Macau and Wynn Las Vegas slot winnings per unit per day
are 132% and 45% greater than the market average, respectively 0.05 0 010Wynn Resorts had 17% of the Market Share in Macau in the 3rd
quarter of 2008 (8% greater than the fair share) 0.07 0 0
QSPM
Weaknesses Weight AS TAS AS TAS1Has outstanding debts of $3.5 billion 0.04 3 0.12 2 0.082Only have 3 locations providing cash flow 0.05 4 0.2 3 0.153Stephen Wynn has the power to select the board of directors 0.04 0 04Wynn Resorts relies heavily on the long-term tenure of Stephen
Wynn as CEO for company survival 0.06 0 0542% of currently oustanding stock is owned by 2 owners: Mr.
Wynn and Azure USA 0.03 0 06The company has no published vision or mission statement 0.05 0 07Wynn Resorts, Limited has no resorts in Atlantic City, one of the
highest revenue gaming areas in the world 0.04 4 0.16 3 0.128Shares of Wynn Resorts have fallen 66% since February 2008 0.05 0 09The company has a Beta of 2.36 0.04 0 0
10Occupancy rates dropped 4.2% in 2008 from 2007 0.03 3 0.09 2 0.06 1
QSPM Cont.
QSPM Cont. Opportunities Weight AS TAS AS TAS
160.4% of target market resides in areas where Wynn currently operates 0.08 4 0.32 3 0.24
2Atlantic City casino winnings are 390% greater than those in the state of Nevada 0.045 4 0.18 3
0.135
3Macau casino winnings up 46%, becoming the largest casino market in the world 0.08 0 0
4MGM Mirage facing possible bankruptcy due to possible default on debts 0.03 4 0.12 1 0.03
5Target market in China expected to increase to 180-200 million people over next 10 years 0.07 0 0
6Top competitor's merging create a wide pool of experienced executives 0.03 0 0
7India experienced 22.1% growth in individuals with $1 million or more in personal assets 0.03 0 0
8East coast U.S. casino and resort veneus account for 40% of the top 5 casino market revenues 0.035 3 0.105 2 0.07
9Macau Chief Executive announced freeze on new gaming licencse to stabilize industry 0.055 0 0
1063% of Americans believe gambling is morally acceptable 0.025 0 011Tourism to Macau increased by 23% between 2006-2007 0.045 0 012States considering using the gaming industry to fund budget gaps 0.025 0 0
QSPM Cont. Threats Weight AS TAS AS TAS
1Macaun government has ability to nationalize all operations in the year 2017 0.08 0 0
2Increase in legalization of casino gaming in or near metropolitan areas 0.03 0 0
3Average daily room rate dropped 7.7% in Las Vegas 0.025 0 0
4Vacancies are at a 20 year high in the U.S. hotel industry 0.03 2 0.06 1 0.03
5Occupancy rates in U.S. hotel industry dropped by 3.2% in 2008 0.025 2 0.05 1 0.025
6Chinese governments reducing the amount of travel visas granted to Macau from 1/month to 1/3 months 0.045 0 0
7Las Vegas strip gaming revenue down 6.7% 0.035 0 0
8Airlines expected to decrease passenger capacites 10-15% in 2009 0.025 3 0.075 2 0.05
9Profit margins expected to decrease 17-18% in 2009 0.04 2 0.08 1 0.04
10Visitors to Las Vegas down 1.1% in 2008 0.025 2 0.05 1 0.025
11Political legislation restricting gaming 0.025 0 0
12Construction costs for hotels are up 29% from August of 2007 0.065 4 0.26 1 0.065 1 TOTALS 2.26 1.71
RecommendationsPlace AED Defibrillators at all locations. 1 per floor and 3 in each gaming area. $400,000
Develop a formalized succession plan in the event of separation of Stephen Wynn from the company. $700,000
Drop room rates in the US and Macau by 10%. $32,600,000
Increase philanthropic giving in Macau by 2%. $36,919,500
Purchase 4 ferry boats to run from the Chinese shore to Macau. $4,000,000
Distribute $1000 "resort stimulus package" casino gaming vouchers to middle tier customers within driving distance of Wynn Las Vegas. $2,500,000
Acquire Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage $425,000,000
Increase gaming space at Wynn Macau by 5% $5,000,000
Host a celebrity poker tournament at Wynn Encore. $750,000
Pay off debts 5% annually for the next 3 years. $175,000,000
Total Cost $682,869,500
Timeline for Strategy Implementation
Place AED Defibrillators at all locations. 1 per floor and 3 in each gaming area. 2009
Develop a formalized succession plan in the event of separation of Stephen Wynn from the company. 2009
Drop room rates in the US and Macau by 10%. 2009
Increase philanthropic giving in Macau by 2%. 2009-2011
Purchase 4 ferry boats to run from the Chinese shore to Macau. 2010
Distribute $1000 "resort stimulus package" casino gaming vouchers to middle tier customers within driving distance of Wynn Las Vegas. 2009
Acquire Borgata Resort and Casino in Atlantic City, NJ from MGM Mirage 2010
Increase gaming space at Wynn Macau by 5% 2011
Host a celebrity poker tournament at Wynn Encore. 2009-2011
Pay off debts 5% annually for the next 3 years. 2009-2011
EPS/EBIT Analysis
Common Stock Financing Debt Financing
Recession Normal Boom Recession Normal Boom
EBIT 300,000,000 450,000,000 600,000,000 300,000,000 450,000,000 600,000,000
Interest 0 0 0 34,143,475 34,143,475 34,143,475
EBT 300,000,000 450,000,000 600,000,000 265,856,525 415,856,525 565,856,525
Taxes 120,000,000 180,000,000 240,000,000 106,342,610 166,342,610 226,342,610
EAT 180,000,000 270,000,000 360,000,000 159,513,915 249,513,915 339,513,915
# Shares 150,812,443 150,812,443 150,812,443 112,013,040 112,013,040 112,013,040
EPS 1.19 1.79 2.39 1.42 2.23 3.03
70 Percent Stock - 30 Percent Debt
70 Percent Debt - 30 Percent Stock
Recession Normal Boom Recession Normal Boom
EBIT 300,000,000 450,000,000 600,000,000 300,000,000 450,000,000 600,000,000
Interest 10,243,043 10,243,043 10,243,043 23,900,433 23,900,433 23,900,433
EBT 289,756,958 439,756,958 589,756,958 276,099,568 426,099,568 576,099,568
Taxes 115,902,783 175,902,783 235,902,783 110,439,827 170,439,827 230,439,827
EAT 173,854,175 263,854,175 353,854,175 165,659,741 255,659,741 345,659,741
# Shares 139,172,622 139,172,622 139,172,622 123,652,861 123,652,861 123,652,861
EPS 1.25 1.90 2.54 1.34 2.07 2.80
Wynn Resorts Projected Income Statement (FY 2008-2011) in Thousands
2008 2009 2010 2011Operating Revenues: Casino 2,261,932 2,533,364 3,420,041 4,104,049 Rooms 326,655 349,521 454,377 536,165 Food and Beverage 358,715 369,476 461,846 508,030 Entertainment, retail and other 270,065 282,893 339,472 383,603 Gross revenues 3,217,367 3,535,254 4,675,736 5,531,848 Less: Promotional Allowances (230,043) (257,648) (309,178) (352,463)
Net Revenues 2,987,324 3,277,606 4,366,558 5,179,385 Increase due to opening of two new locations and recommendations.
Operating Costs and Expenses: Casino 1,490,927 1,669,838 2,254,282 2,705,138 Rooms 78,238 83,714 108,828 128,417 Food and Beverage 207,281 213,498 266,873 293,560 Entertainment, retail and other 161,862 169,549 203,459 229,909 General & Administrative 319,303 350,330 466,724 553,604 Provision for Doubtful Accounts 49,405 54,081 72,048 85,460 Pre-opening costs 72,375 36,188 72,375 - Depreciation and Amortization 262,848 288,390 384,205 455,724 Contract Termination Fee - Property Charges and Other 32,584 35,726 47,595 56,455 Total Operating Costs and Expenses 2,674,823 2,901,313 3,876,388 4,508,266 Calculated as a % of Net Revenues. Equity in income from unconsilidated affiliates 1,353 1,484 1,978 2,346 Operating Income 313,854 377,777 492,147 673,465 Other Income (Expense) Interest Income 21,517 22,593 23,722 24,909
Interest Expense (172,693) (180,493) (252,387) (299,368)70% of the total recommendation cost @ 5% IR over 3 years. Distribution to convertible debenture holders - - - - Increase (decrease) in swap fair value (31,485) - - - Gain on sale of subconcession right, net - - - - Gain (loss) from extinguishment of debt 22,347 58,333 58,333 58,333 Other (4,257) - - - Other Income (expense) net (164,571) (99,567) (170,332) (216,127)Income before income taxes 149,283 278,210 321,815 457,338
Benefit (provision) for income taxes 60,923 (967) (1,287) (1,829)Small tax amount due to interest expenses from debts.Net Income 210,206 277,243 320,528 455,509
Projected Financial Statements
Wynn Resorts, Limited Balance Sheet (FY 2008-2011) in Thousands (except per share amounts)
ASSETS 2008 2009 2010 2011Current assets:Cash and cash equivalents 1,133,904$ 1,159,202$ 1,330,394$ 1,670,241$ Increase in cash attributed to new facilities and operation expansionReceivables, net 125,196$ 140,220$ 157,046$ 175,891$ Inventories 120,944$ 124,572$ 128,309$ 132,159$ Deferred income taxes - - - -Prepaid expenses and other 31,047$ 34,152$ 37,567$ 41,324$
Total current assets 1,411,091$ 1,458,146$ 1,653,316$ 2,019,615$ Restricted cash - - - -Property and equipment, net 5,105,473$ 5,537,373$ 5,814,242$ 6,104,954$ Increase due to Atlantic City acquisition and Encore Macau Opening
Intangibles, net 49,049$ 49,282$ 49,515$ 49,748$ Deferred financing costs 65,877$ 62,583$ 59,454$ 56,481$ Deposits and other assets 106,429$ 138,358$ 179,865$ 233,825$ Investment in unconsolidated affiliates 4,696$ 4,931$ 5,177$ 5,436$
Total assets 6,742,615$ 7,250,672$ 7,761,569$ 8,470,058$
LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts and construction payable 232,136$ 266,956$ 307,000$ 353,050$ Increase due to construction and renovation in Atlantic City and MacauCurrent portion of long-term debt 2,685$ 2,670$ 2,765$ 2,860$ Current portion of land concession obligation 6,068$ 6,068$ 6,068$ 6,068$ Income taxes payable 1,283$ 967 1,287 1,829 Carried over from income statementAccrued interest 21,485$ 22,559 23,687 24,872 Accrued compensation and benefits 85,803$ 83,229$ 80,732$ 78,310$ Gaming taxes payable 66,954$ 76,001 102,601 123,121 Other accrued expenses 15,820$ 17,402$ 19,142$ 21,056$ Customer deposits and other liabilities 209,906$ 230,897$ 253,986$ 279,385$ Construction retention 78,599$ 82,529$ 16,755$ 10,500$ Deferred income taxes 3,036$ -$ -$ -$
Total current liabilities 723,775$ 789,278$ 814,024$ 901,052$ Long-term debt 4,290,424$ 4,449,424$ 4,608,424$ 4,767,424$ Increase in long term debt b/c of 70% debt financing,Other long-term liabilities 124,511$ 130,737$ 137,273$ 144,137$ however, 5% being paid off annually, as noted in recommendationsLong-term land concession obligation - -$ -$ -$ Deferred income taxes 4,433$ 4,433$ 4,433$ 4,433$ Construction retention 6,950$ 6,950$ 6,950$ 6,950$
Total liabilities 5,150,093$ 5,380,821$ 5,571,104$ 5,823,996$ Liability increase due to an increase in long term debt
Stockholders equity:Preferred stock, par value $0.01; 40,000,000 -shares authorized; zero shares issuedand outstandingCommon stock, par value $0.01; 400,000,000 1,248$ 1,334$ 1,420$ 1,508$ Increase by 30% over 3 years b/c of stock financingshares authorized; 124,817,994 and 116,259,411shares issued; 112,013,040 and 114,370,090shares outstandingTreasury stock, at cost; 12,804,954 and (1,119,407)$ (1,119,407)$ (1,119,407)$ (1,119,407)$ Continue purchases of Treasury Stock at same rates1,889,321 sharesAdditional paid-in capital 2,640,667$ 2,640,667$ 2,640,667$ 2,640,667$ Accumulated other comprehensive income 2,614$ 2,614$ 2,614$ 2,614$ (loss)Retained earnings (deficit) 67,400$ 344,643$ 665,171$ 1,120,680$
Total stockholders equity 1,592,522$ 1,869,851$ 2,190,465$ 2,646,062$
Total liabilities and stockholders equity 6,742,615$ 7,250,672$ 7,761,569$ 8,470,058$
Projected Financial Ratios
Ratio 2009 2010 2011
Quick Ratio 1.69 1.87 2.09
Current Ratio 1.85 2.03 2.24
Long Term Debt to Equity 2.38 2.10 1.80
Total Debt to Equity 2.88 2.54 2.20
Net Profit Margin 0.08 0.07 0.09
Return on Assets 0.04 0.04 0.05
Return on Equity 0.15 0.15 0.17
Total Asset Turnover 0.45 0.56 0.61
Earnings Per Share 2.08 2.26 3.02
Ratio 2009 2010 2011
Quick Ratio 1.69 1.87 2.09
Current Ratio 1.85 2.03 2.24
Long Term Debt to Equity 2.38 2.10 1.80
Total Debt to Equity 2.88 2.54 2.20
Net Profit Margin 0.08 0.07 0.09
Return on Assets 0.04 0.04 0.05
Return on Equity 0.15 0.15 0.17
Total Asset Turnover 0.45 0.56 0.61
Earnings Per Share 2.08 2.26 3.02