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Arnold M. Knightly

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Wynn Resorts increases payroll despite layoffs

16 Jun 2010

By Arnold M. Knightly
LAS VEGAS, Nevada -- Wynn Resorts Ltd. is restoring nearly 3,700 workers to full-time work schedules and pay, but announced that it will lay off 261 workers at its two Strip resorts, casino executive Steve Wynn said.

Wynn said full 40-hour workweeks will be restored at Wynn Las Vegas and Encore and all salaried employees making less than $200,000 will return to full wages. He described the decision as an attempt to boost employee morale at the resorts.

The gaming company, however, is laying off 261 Las Vegas workers, including 240 hourly workers, in areas that it has determined are overstaffed for the current economy.

The move will increase payroll by $7.7 million, Wynn said.

"It's going to be a big morale boost, and it cost the company a fortune when we're losing money," Wynn said. "We did it to give good news to 3,700 people."

Wynn said he planned to make the announcement to employees today.

The restoration of full-time hours is a reversal of Wynn Resorts' decision 18 months ago to cut back on everyone's hours and cut salaries to keep more employees working during the recession. However, the continued decline in casino business makes that no longer appropriate, Wynn said.

"Instead of the employees thinking we're protecting them, they're struggling with the reduction in their work hours," he said.

Other cutbacks the company took at the time included suspending company 401(k) contributions and bonus payments, reducing salaried employees' pay by 15 percent and going to 32-hour workweeks.

Wynn said the change was inspired by a long-time employee who said the company's policies were creating hardships for employees.

The job cuts, which Wynn said were the first layoffs in his 42 years in the casino industry, represent less than 3 percent of the two properties' work force.

Wynn Las Vegas and Encore reported having 12,200 employees on Dec. 31, a filing with the Securities and Exchange Commission shows, down 1,000 workers from Dec. 31, 2008.

Wynn Resorts has had a freeze on hiring for the past year, and the staff has been reduced by nearly 900 through attrition.

High-end resorts such as Wynn's continue to face operating losses because of a drop in visitation and spending by visitors.

The two Wynn properties reported operating losses of $144.3 million in 2009, up from the $58.6 million operating loss reported in 2008.

The operating loss helped widen the properties' net loss to $309.9 million in 2009, an increase from a net loss of $129.8 million in 2008.

The losses continued in the first quarter with the properties reporting an operating loss of $34.5 million and a net loss of $81.7 million for the quarter ended March 31.

The losses came despite a first-quarter revenue increase of 9.3 percent to $318.6 million.

Also, Wynn opened Encore on Dec. 22, 2008, which increased the company's operational costs.

Strip resorts with casino revenues greater than $72 million have reported flat revenues for the 12 months from May 2009 through April 2010, the latest numbers from the Nevada Gaming Control Board show.

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