UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended June 30, 2017

OR

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

For the transition period from                    to     

Commission file number 000-54193

STATION CASINOS LLC

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 27-3312261 (I.R.S. Employer Identification No.)

1505 South Pavilion Center Drive, Las Vegas, Nevada

(Address of principal executive offices)

89135

(Zip Code)

(702) 495-3000

Registrant’s telephone number, including area code

N/A

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

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 þ    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes þ    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer o Accelerated filer o Non-accelerated filer þ  (Do not check if a
smaller reporting company) Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No þ

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

As of July 31, 2017, 100 shares of the registrant’s voting units were outstanding and 100 shares of the registrant’s non-voting units were outstanding.

STATION CASINOS LLC

INDEX

Part I.	Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets — June 30, 2017 (unaudited) and December 31, 2016	3
	Condensed Consolidated Statements of Operations — Three and six months ended June 30, 2017 and 2016 (unaudited)	4
	Condensed Consolidated Statements of Comprehensive (Loss) Income — Three and six months ended June 30, 2017 and 2016 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows — Six months ended June 30, 2017 and 2016 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements (unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
Part II.	Other Information
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	51
Signature		52

Part I.    Financial Information

Item 1.    Financial Statements

STATION CASINOS LLC CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands, except units data)
	June 30, 2017		December 31, 2016
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	112,633	$	129,959
Restricted cash	2,829		2,377
Receivables, net	41,238		43,547
Inventories	11,131		11,956
Prepaid gaming tax	24,764		20,066
Prepaid expenses and other current assets	10,889		11,194
Assets held for sale	19,602		19,020
Total current assets	223,086		238,119
Property and equipment, net of accumulated depreciation of $641,125 and $566,081 at      June 30, 2017 and December 31, 2016, respectively	2,480,759		2,438,129
Goodwill	195,676		195,676
Intangible assets, net of accumulated amortization of $95,406 and $87,471 at      June 30, 2017 and December 31, 2016, respectively	137,964		149,199
Land held for development	163,700		163,700
Investments in joint ventures	10,005		10,572
Native American development costs	16,393		14,844
Other assets, net	63,580		59,728
Total assets	$	3,291,163	$	3,269,967
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	33,022	$	30,504
Accrued interest payable	9,062		15,841
Other accrued liabilities	153,036		152,508
Current portion of long-term debt	71,341		46,063
Total current liabilities	266,461		244,916
Long-term debt, less current portion	2,427,682		2,376,238
Deficit investment in joint venture	2,270		2,307
Other long-term liabilities	10,164		10,041
Total liabilities	2,706,577		2,633,502
Commitments and contingencies (Note 10)
Members’ equity:
Voting units; 100 units authorized, issued and outstanding	—		—
Non-voting units; 100 units authorized, issued and outstanding	—		—
Members’ equity	570,384		612,820
Accumulated other comprehensive income	8,474		7,967
Total Station Casinos LLC members’ equity	578,858		620,787
Noncontrolling interest	5,728		15,678
Total members’ equity	584,586		636,465
Total liabilities and members’ equity	$	3,291,163	$	3,269,967

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

3

STATION CASINOS LLC CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands, unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Operating revenues:
Casino	$	258,396		$	233,796		$	521,368		$	473,567
Food and beverage	75,303			66,408			155,418			133,028
Room	44,641			32,979			94,405			67,363
Other	23,699			17,705			46,519			34,887
Management fees	30,676			27,455			60,903			54,104
Gross revenues	432,715			378,343			878,613			762,949
Promotional allowances	(29,222		)	(26,857		)	(57,388		)	(52,216		)
Net revenues	403,493			351,486			821,225			710,733
Operating costs and expenses:
Casino	103,170			88,986			204,824			176,407
Food and beverage	55,059			44,501			110,105			87,025
Room	18,239			11,893			38,306			24,278
Other	9,079			6,305			16,912			12,027
Selling, general and administrative	92,468			78,814			184,419			153,904
Preopening	368			373			398			721
Depreciation and amortization	46,807			38,436			92,060			77,863
Write-downs and other charges, net	9,270			10,966			10,298			13,334
Related party lease termination	98,393			—			98,393			—
	432,853			280,274			755,715			545,559
Operating (loss) income	(29,360		)	71,212			65,510			165,174
Earnings from joint ventures	420			428			835			1,040
Operating (loss) income and earnings from joint ventures	(28,940		)	71,640			66,345			166,214
Other (expense) income:
Interest expense, net	(33,853		)	(34,078		)	(68,797		)	(69,146		)
Loss on extinguishment/modification of debt, net	(975		)	(7,084		)	(2,994		)	(7,084		)
Change in fair value of derivative instruments	3,330			90			3,369			87
	(31,498		)	(41,072		)	(68,422		)	(76,143		)
Net (loss) income	(60,438		)	30,568			(2,077		)	90,071
Less: net income attributable to noncontrolling interests	4,055			2,740			6,316			4,604
Net (loss) income attributable to Station Casinos LLC	$	(64,493	)	$	27,828		$	(8,393	)	$	85,467

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

4

STATION CASINOS LLC CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (amounts in thousands, unaudited)
	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net (loss) income	$	(60,438	)	$	30,568		$	(2,077	)	$	90,071
Other comprehensive (loss) income:
(Loss) gain on interest rate swaps:
Unrealized loss arising during period	(3,268		)	(5,612		)	(1,875		)	(7,127		)
Reclassification into income	986			335			2,521			1,601
(Loss) gain on interest rate swaps recognized in other comprehensive (loss) income	(2,282		)	(5,277		)	646			(5,526		)
Gain (loss) on available-for-sale securities:
Unrealized gain arising during period	—			22			10			41
Reclassification into income	—			—			(149		)	—
Gain (loss) on available-for-sale securities recognized in other comprehensive (loss) income	—			22			(139		)	41
Other comprehensive (loss) income	(2,282		)	(5,255		)	507			(5,485		)
Comprehensive (loss) income	(62,720		)	25,313			(1,570		)	84,586
Less: comprehensive income attributable to noncontrolling interests	4,055			2,740			6,316			4,604
Comprehensive (loss) income attributable to Station Casinos LLC	$	(66,775	)	$	22,573		$	(7,886	)	$	79,982

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

5

STATION CASINOS LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands, unaudited)
	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net (loss) income	$	(2,077	)	$	90,071
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	92,060			77,863
Change in fair value of derivative instruments	(3,369		)	(87		)
Reclassification of unrealized loss on derivative instruments into income	2,521			1,601
Write-downs and other charges, net	3,431			1,108
Amortization of debt discount and debt issuance costs	8,918			9,115
Interest—paid in kind	—			2,130
Share-based compensation	3,433			4,222
Settlement of liability-classified equity awards	—			(18,739		)
Earnings from joint ventures	(835		)	(1,040		)
Distributions from joint ventures	705			589
Loss on extinguishment/modification of debt, net	2,994			7,084
Changes in assets and liabilities:
Restricted cash	(452		)	—
Receivables, net	3,723			898
Interest on related party notes receivable	—			(247		)
Inventories and prepaid expenses	(3,783		)	(5,254		)
Accounts payable	6,533			(680		)
Accrued interest payable	(6,698		)	4,338
Other accrued liabilities	(1,522		)	(6,775		)
Other, net	1,847			1,024
Net cash provided by operating activities	107,429			167,221
Cash flows from investing activities:
Capital expenditures, net of related payables	(101,855		)	(87,633		)
Proceeds from asset sales	627			8,318
Acquisition of land from related party	(23,440		)	—
Proceeds from repayment of related party notes receivable	—			18,330
Deposit for business acquisition	—			(20,002		)
Distributions in excess of earnings from joint ventures	660			476
Native American development costs	(2,134		)	(933		)
Other, net	(6,539		)	(1,312		)
Net cash used in investing activities	(132,681		)	(82,756		)

6

STATION CASINOS LLC CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (amounts in thousands, unaudited)
	Six Months Ended June 30,
	2017			2016
Cash flows from financing activities:
Borrowings under credit agreements with original maturity dates greater than three months	729,688			1,717,500
Payments under credit agreements with original maturity dates greater than three months	(627,453		)	(1,468,613		)
Payments under credit agreements with original maturity dates of three months or less, net	—			(53,900		)
Cash paid for early extinguishment of debt	(9,401		)	—
Capital contributions	1,574			419,475
Distributions to members and noncontrolling interests	(50,858		)	(107,413		)
Deemed distributions	—			(389,054		)
Payment of debt issuance costs	(21,098		)	(36,778		)
Payments on derivative instruments with other-than-insignificant financing elements	—			(10,831		)
Payments on other debt	(3,634		)	(21,216		)
Acquisition of subsidiary noncontrolling interests	(4,484		)	—
Other, net	(6,408		)	(4,486		)
Net cash provided by financing activities	7,926			44,684
Cash and cash equivalents:
(Decrease) increase in cash and cash equivalents	(17,326		)	129,149
Balance, beginning of period	129,959			116,623
Balance, end of period	$	112,633		$	245,772
Supplemental cash flow disclosures:
Cash paid for interest, net of $197 and $0 capitalized, respectively	$	63,456		$	55,545
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid	$	26,465		$	27,855

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

7

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.    Organization, Basis of Presentation and Significant Accounting Policies

Organization

Station Casinos LLC, a Nevada limited liability company (the “Company” or “Station”), is a gaming, development and management company that owns and operates ten major gaming and entertainment facilities and ten smaller casino properties (three of which are 50% owned) in the Las Vegas regional market. The Company also manages a casino in Sonoma County, California and a casino in Allegan County, Michigan, both on behalf of Native American tribes.

All of the Company’s voting interests are held by Red Rock Resorts, Inc. (“Red Rock”), and all of the Company’s economic interests are held by Station Holdco LLC (“Station Holdco”). Red Rock indirectly holds approximately 59% of the Company’s economic interests through its ownership interest in Station Holdco. Red Rock is designated as the Company’s sole managing member and controls and operates all of its business and affairs.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results for the interim periods have been made. The interim results reflected in these condensed consolidated financial statements are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10–K for the year ended December 31, 2016. Certain amounts in the condensed consolidated financial statements for the prior year have been reclassified to be consistent with the current year presentation. These reclassifications had no effect on the previously reported net income.

Principles of Consolidation

The amounts shown in the accompanying condensed consolidated financial statements include the accounts of the Company and its controlled subsidiaries, including MPM Enterprises, LLC (“MPM”), which is a 50% owned, consolidated variable interest entity (“VIE”) that manages Gun Lake Casino. The financial position and results of operations attributable to third party holdings of MPM are reported within noncontrolling interest in the condensed consolidated financial statements. All intercompany accounts and transactions have been eliminated.

Investments in Variable Interest Entities and Joint Ventures

The Company consolidates MPM because it directs the activities of MPM that most significantly impact MPM’s economic performance and has the right to receive benefits and the obligation to absorb losses that are significant to MPM, and as such, is MPM’s primary beneficiary. The assets of MPM reflected in the Condensed Consolidated Balance Sheets at June 30, 2017 and December 31, 2016 included a management contract intangible asset with a carrying amount of $6.4 million and $11.5 million, respectively, and management fees receivable of $6.5 million and $3.3 million, respectively. MPM’s assets may be used only to settle MPM’s obligations, and MPM’s beneficial interest holders have no recourse to the general credit of the Company.

The Company has investments in three50% owned smaller casino properties, which are accounted for using the equity method. The carrying amount of the Company’s investment in one of the smaller casino properties has been reduced below zero and is presented as a deficit investment balance on the Condensed Consolidated Balance Sheets because the Company has received distributions in excess of its investment in the casino. The Company also holds a 50% investment in a restaurant at one of its properties which is considered to be a VIE, of which the Company is not the primary beneficiary.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP 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.

8

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

Income Taxes

The Company is a limited liability company treated as a partnership for income tax purposes and as such, is a pass-through entity which is not liable for income tax in the jurisdictions in which it operates. Accordingly, no provision for income taxes has been made in the condensed consolidated financial statements and the Company has no liability associated with uncertain tax positions.

Significant Accounting Policies

A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10–K for the year ended December 31, 2016.

Recently Issued and Adopted Accounting Standards

In May 2017, the Financial Accounting Standards Board (“FASB”) issued accounting guidance that amends the scope of modification accounting for share-based payment arrangements. The amended guidance clarifies which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting. The amended guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017, and early application is permitted. The Company expects to adopt this guidance in the first quarter of 2018. The adoption is not expected to have a material impact on the Company’s financial position or results of operations.

In January 2017, the FASB issued amended accounting guidance to simplify the test for goodwill impairment. The amended guidance removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. Under the new guidance, a goodwill impairment is measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill allocated to the reporting unit. The guidance is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for annual or interim goodwill impairment tests performed after January 1, 2017. The Company is currently evaluating the impact this guidance will have on its financial position and results of operations and anticipates early adoption in 2017.

In February 2016, the FASB issued amended accounting guidance that changes the accounting for leases and requires expanded disclosures about leasing activities. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Lessor accounting will remain largely unchanged, other than certain targeted improvements intended to align lessor accounting with the lessee accounting model and with the updated revenue recognition guidance issued in 2014. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The amended guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2018, and early application is permitted. The Company is currently evaluating the impact this guidance will have on its financial position and results of operations.

In May 2014, the FASB issued a new accounting standard for revenue recognition which requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard supersedes the existing accounting guidance for revenue recognition, including industry-specific guidance, and amends certain accounting guidance for recognition of gains and losses on the transfer of non-financial assets. For public companies, the new guidance is effective for annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. Upon adoption, financial statement issuers may elect to apply the new standard either retrospectively to each prior reporting period presented, or using a modified retrospective approach by recognizing the cumulative effect of initial application and providing certain additional disclosures. The Company will adopt this guidance in the first quarter of 2018 and is currently assessing which adoption method it will elect. Under the new standard, the current presentation of gross revenues for complementary goods and services provided to guests with a corresponding offsetting amount included in promotional allowances will be eliminated. In addition, the Company will be required to recognize a liability for the retail value of its performance obligations for points earned by guests under the Company’s player rewards program (“Rewards Program”). Currently, the Company records a liability and a charge to casino expense for the estimated cost of outstanding points earned under the Rewards Program that management believes ultimately will be redeemed. Upon adoption, the Company’s liability for performance obligations under the Rewards Program is expected to be recognized primarily as a reduction to casino revenue. When points are redeemed, revenues and expenses will be recognized and classified based on the goods and services provided and the associated liability will be relieved. The Company is currently evaluating the quantitative effects of the new standard on its financial statements and related disclosures.

9

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

2.    Native American Development

Following is information about the Company’s Native American development activities.

North Fork Rancheria of Mono Indian Tribe

The Company has development and management agreements with the North Fork Rancheria of Mono Indians (the “Mono”), a federally recognized Native American tribe located near Fresno, California, which were originally entered into in 2003. In August 2014, the Mono and the Company entered into the Second Amended and Restated Development Agreement (the “Development Agreement”) and the Second Amended and Restated Management Agreement (the “Management Agreement”). Pursuant to those agreements, the Company will assist the Mono in developing and operating a gaming and entertainment facility (the “North Fork Project”) to be located in Madera County, California. The Company purchased a 305-acre parcel of land adjacent to Highway 99 north of the city of Madera (the “North Fork Site”), which was taken into trust for the benefit of the Mono by the Department of the Interior (“DOI”) in February 2013.

As currently contemplated, the North Fork Project is expected to include approximately 2,000 slot machines, approximately 40 table games and several restaurants, and the cost of the project is expected to be between $250 million and $300 million. Development of the North Fork Project is subject to certain governmental and regulatory approvals, including, but not limited to, approval of the Management Agreement by the Chairman of the National Indian Gaming Commission (“NIGC”).

Under the terms of the Development Agreement, the Company has agreed to arrange the financing for the ongoing development costs and construction of the facility. The Company will contribute significant financial support to the North Fork Project. Through June 30, 2017, the Company has paid approximately $31.5 million of reimbursable advances to the Mono, primarily to complete the environmental impact study, purchase the North Fork Site and pay the costs of litigation. The advances are expected to be repaid from the proceeds of third-party financing or from the Mono’s gaming revenues; however, there can be no assurance that the advances will be repaid. The carrying amount of the advances was reduced to fair value upon the Company’s adoption of fresh-start reporting in 2011. At June 30, 2017, the carrying amount of the advances was $16.4 million. In accordance with the Company’s accounting policy, accrued interest on the advances will not be recognized in income until the carrying amount of the advances has been recovered.

The Company will receive a development fee of 4% of the costs of construction (as defined in the Development Agreement) for its development services, which will be paid upon the commencement of gaming operations at the facility. The Management Agreement allows the Company to receive a management fee of 40% of the North Fork Project’s net income. The Management Agreement and the Development Agreement have a term of seven years from the opening of the North Fork Project. The Management Agreement includes termination provisions whereby either party may terminate the agreement for cause, and the Management Agreement may also be terminated at any time upon agreement of the parties. There is no provision in the Management Agreement allowing the tribe to buy-out the agreement prior to its expiration. The Management Agreement provides that the Company will train the Mono tribal members such that they may assume responsibility for managing the North Fork Project upon the expiration of the agreement.

Upon termination or expiration of the Management Agreement and Development Agreement, the Mono will continue to be obligated to repay any unpaid principal and interest on the advances from the Company, as well as certain other amounts that may be due, such as management fees. Amounts due to the Company under the Development Agreement and Management Agreement are secured by substantially all of the assets of the North Fork Project except the North Fork Site. In addition, the Development Agreement and Management Agreement contain waivers of the Mono’s sovereign immunity from suit for the purpose of enforcing the agreements or permitting or compelling arbitration and other remedies.

The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurance as to when, or if, these approvals will be obtained. The Company currently estimates that construction of the North Fork Project may begin in the next 36 to 48 months and estimates that the North Fork Project would be completed and opened for business approximately 18 months after construction begins. There can be no assurance, however, that the North Fork Project will be completed and opened within this time frame or at all. The Company expects to assist the Mono in obtaining third-party financing for the North Fork Project once all necessary regulatory approvals have been received and prior to commencement of construction; however, there can be no assurance that the Company will be able to obtain such financing for the North Fork Project on acceptable terms or at all.

The Company has evaluated the likelihood that the North Fork Project will be successfully completed and opened, and has concluded that the likelihood of successful completion is in the range of 65% to 75% at June 30, 2017. The Company’s evaluation is based on its consideration of all available positive and negative evidence about the status of the North Fork Project, including, but not limited to, the status of required regulatory approvals, as well as the progress being made toward the

10

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

achievement of all milestones and the successful resolution of all litigation and contingencies. There can be no assurance that the North Fork Project will be successfully completed or that future events and circumstances will not change the Company’s estimates of the timing, scope, and potential for successful completion or that any such changes will not be material. In addition, there can be no assurance that the Company will recover all of its investment in the North Fork Project even if it is successfully completed and opened for business.

11

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The following table summarizes the Company’s evaluation at June 30, 2017 of each of the critical milestones necessary to complete the North Fork Project.

	As of June 30, 2017
Federally recognized as an Indian tribe by the Bureau of Indian Affairs (“BIA”)	Yes
Date of recognition	Federal recognition was terminated in 1966 and restored in 1983.
Tribe has possession of or access to usable land upon which the project is to be built	The DOI accepted approximately 305 acres of land for the project into trust for the benefit of the Mono in February 2013.
Status of obtaining regulatory and governmental approvals:
Tribal–state compact	A compact was negotiated and signed by the Governor of California and the Mono in August 2012. The California State Assembly and Senate passed Assembly Bill 277 (“AB 277”) which ratified the Compact in May 2013 and June 2013, respectively. Opponents of the North Fork Project qualified a referendum, “Proposition 48,” for a state-wide ballot challenging the legislature’s ratification of the Compact. In November 2014, Proposition 48 failed. The State took the position that the failure of Proposition 48 nullified the ratification of the Compact and, therefore, the Compact did not take effect under California law. In March 2015, the Mono filed suit against the State (see North Fork Rancheria of Mono Indians v. State of California) to obtain a compact with the State or procedures from the Secretary of the Interior under which Class III gaming may be conducted on the North Fork Site. In July 2016, the DOI issued Secretarial procedures (the “Secretarial Procedures”) pursuant to which the Mono may conduct Class III gaming on the North Fork Site.
Approval of gaming compact by DOI	The Compact was submitted to the DOI in July 2013. In October 2013, notice of the Compact taking effect was published in the Federal Register. The Secretarial Procedures supersede and replace the Compact.
Record of decision regarding environmental impact published by BIA	In November 2012, the record of decision for the Environmental Impact Statement for the North Fork Project was issued by the BIA. In December 2012, the Notice of Intent to take land into trust was published in the Federal Register.
BIA accepting usable land into trust on behalf of the tribe	The North Fork Site was accepted into trust in February 2013.
Approval of management agreement by NIGC	In December 2015, the Mono submitted the Management Agreement, and certain related documents, to the NIGC. In July 2016, the Mono received a deficiency letter from the NIGC seeking additional information concerning the Management Agreement. Approval of the Management Agreement by the NIGC is expected to occur following the Mono’s response to the deficiency letter. The Company believes the Management Agreement will be approved because the terms and conditions thereof are consistent with the provisions of the Indian Gaming Regulatory Act (“IGRA”).
Gaming licenses:
Type	The North Fork Project will include the operation of Class II and Class III gaming, which are allowed pursuant to the terms of the Secretarial Procedures and IGRA, following approval of the Management Agreement by the NIGC.
Number of gaming devices allowed	The Secretarial Procedures allow for the operation of a maximum of 2,000 Class III slot machines at the facility during the first two years of operation and thereafter up to 2,500 Class III slot machines. There is no limit on the number of Class II gaming devices that the Mono can offer.
Agreements with local authorities	The Mono has entered into memoranda of understanding with the City of Madera, the County of Madera and the Madera Irrigation District under which the Mono agreed to pay one-time and recurring mitigation contributions, subject to certain contingencies. The memoranda of understanding with the City and County were amended in December 2016 to restructure the timing of certain payments due to delays in the development of the North Fork Project.

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(UNAUDITED)

Following is a discussion of legal matters related to the North Fork Project.

Stand Up For California! v. Dept. of the Interior. In December 2012, Stand Up for California!, several individuals and the Ministerial Association of Madera (collectively, the “Stand Up” plaintiffs) filed a complaint against the DOI, the BIA and the Secretary of Interior and Assistant Secretary of the Interior, in their official capacities, seeking to overturn the Secretary’s determination to take the North Fork Site into trust for the purposes of gaming (the “North Fork Determination”) and seeking declaratory and injunctive relief to prevent the United States from taking the North Fork Site into trust. The Mono filed a motion to intervene as a party to the lawsuit, which was granted. In January 2013, the Court denied the Stand Up plaintiffs’ Motion for Preliminary Injunction and the United States accepted the North Fork Site into trust for the benefit of the Mono in February 2013. The parties subsequently filed motions for summary judgment. In September 2016, the Court denied the Stand Up plaintiffs’ motions for summary judgment and granted the defendants’ and the Mono’s motions for summary judgment in part and dismissed the remainder of the Stand Up plaintiffs’ claims. The Stand Up plaintiffs appealed the district court’s decision and proceedings on the appeal are pending. All briefs have been filed and oral arguments have been scheduled for October 13, 2017.

Stand Up For California! v. Brown. In March 2013, Stand Up for California! and Barbara Leach, a local resident, filed a complaint for declaratory relief and petition for writ of mandate in California Superior Court for the County of Madera against California Governor Edmund G. Brown, Jr., alleging that Governor Brown violated the California constitutional separation-of-powers doctrine when he concurred in the North Fork Determination. The complaint sought to vacate and set aside the Governor’s concurrence. Plaintiffs’ complaint was subsequently amended to include a challenge to the constitutionality of AB 277. The Mono intervened as a defendant in the lawsuit. In March 2014, the court dismissed plaintiffs’ amended complaint, which dismissal was appealed by plaintiffs. In December 2016, the appellate court ruled in favor of the Stand Up plaintiffs concluding that Governor Brown exceeded his authority in concurring in the Secretary’s determination that gaming on the North Fork Site would be in the best interest of the Tribe and not detrimental to the surrounding community. The appellate court’s decision reversed the trial court’s previous ruling in favor of the Mono. The Mono and the State filed petitions in the Supreme Court of California seeking review of the appellate court’s decision. In March 2017, the Supreme Court of California granted the Mono and State’s petitions for review and deferred additional briefing or other action in this matter pending consideration and disposition of a similar issue in United Auburn Indian Community of Auburn Rancheria v. Brown.

Picayune Rancheria of Chukchansi Indians v. Brown. In March 2016, Picayune Rancheria of Chukchansi Indians (“Picayune”) filed a complaint for declaratory relief and petition for writ of mandate in California Superior Court for the County of Madera against Governor Edmund G. Brown, Jr., alleging that the referendum that invalidated the Compact also invalidated Governor Brown’s concurrence with the North Fork Determination. The complaint seeks to vacate and set aside the Governor’s concurrence. In July 2016, the court granted the Mono’s application to intervene and the Mono filed a demurrer seeking to dismiss the case. In November 2016, the district court dismissed Picayune’s complaint, but the court subsequently vacated its ruling based on the December 2016, decision by the Fifth District Court of Appeal in Stand Up for California! v. Brown. In May 2017, the court stayed the case for six months by agreement of the parties and scheduled a status conference on November 13, 2017 to address how the case should proceed in light of the California Supreme Court’s granting of the Mono and State’s petitions for review in Stand Up for California! v. Brown.

Picayune Rancheria of Chukchansi Indians v. United States Department of the Interior. In July 2016, Picayune filed a complaint in the United States District Court for the Eastern District of California for declaratory and injunctive relief against the DOI. The complaint seeks a declaration that the North Fork Site does not come under one of the exceptions to the general prohibition against gaming on lands taken into trust after October 1988 set forth in IGRA and therefore is not eligible for gaming. It also seeks a declaration that the North Fork Determination has expired because the legislature never ratified Governor Brown’s concurrence, and seeks injunctive relief prohibiting the DOI from taking any action under IGRA concerning the North Fork Site. The Mono filed a motion to intervene in September 2016, which was subsequently granted. The Mono and federal defendants filed motions for summary judgment in March 2017. On August 8, 2017, Picayune filed a brief arguing that the court should stay the proceedings in light of the Fifth District Court's decision in Stand Up for California! v. Brown and the appeal pending in the California Supreme Court.

Stand Up for California! et. al. v. United States Department of the Interior. In November 2016, Stand Up for California! and other plaintiffs filed a complaint in the United States District Court for the Eastern District of California alleging that the DOI’s issuance of Secretarial Procedures for the Mono was subject to the National Environmental Policies Act and the Clean Air Act, and violate the Johnson Act. The complaint further alleges violations of the Freedom of Information Act and the Administrative Procedures Act. The DOI filed its answer to the complaint in February 2017 denying plaintiffs’ claims and asserting certain affirmative defenses. A motion to intervene filed by the Mono was granted in March 2017. Plaintiffs’

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(UNAUDITED)

subsequently filed a motion to stay the proceedings in May 2017. Briefing on the contested stay request concluded in July 2017 and briefing on cross-motions for summary judgment is scheduled to conclude in September 2017.

3.    Long-term Debt

Long-term debt consisted of the following (amounts in thousands):

	June 30, 2017			December 31, 2016
$1.875 billion Term Loan B Facility, due June 8, 2023, interest at a margin above LIBOR or base rate (3.71% and 3.75% at June 30, 2017 and December 31, 2016, respectively), net of unamortized discount and deferred issuance costs of $57.8 million and $42.9 million at June 30, 2017 and December 31, 2016, respectively	$	1,775,642		$	1,449,591
$275 million Term Loan A Facility, due June 8, 2021, interest at a margin above LIBOR or base rate (3.17% and 3.20% at June 30, 2017 and December 31, 2016, respectively), net of unamortized discount and deferred issuance costs of $5.7 million and $7.4 million at June 30, 2017 and December 31, 2016, respectively	255,877			211,978
$685 million Revolving Credit Facility, due June 8, 2021, interest at a margin above LIBOR or base rate (3.31% and 3.44% weighted average at June 30, 2017 and December 31, 2016, respectively)	190,000			120,000
7.50% Senior Notes, due March 1, 2021, net of unamortized discount and deferred issuance costs of $4.2 million and $9.4 million at June 30, 2017 and December 31, 2016, respectively	245,770			490,568
Restructured Land Loan, due June 17, 2017, interest at a margin above LIBOR or base rate (5.27% at December 31, 2016), net of unamortized discount of $0.6 million	—			115,378
Other long-term debt, weighted-average interest of 3.68% and 3.92% at June 30, 2017 and December 31, 2016, respectively, maturity dates ranging from 2018 to 2037	31,734			34,786
Total long-term debt	2,499,023			2,422,301
Current portion of long-term debt	(71,341		)	(46,063		)
Total long-term debt, net	$	2,427,682		$	2,376,238

Credit Facility

In January 2017, the Company amended its credit facility to increase the existing Term Loan B Facility by $125.0 million and reduce the applicable margins for LIBOR and base rate loans by 50 basis points. The Company used the proceeds of the incremental Term Loan B Facility borrowings to repay outstanding borrowings under its Revolving Credit Facility and pay fees and costs incurred in connection with the transaction, including a repricing fee of $14.9 million, which represented 1.00% of the aggregate principal amount of the Term Loan B Facility outstanding prior to the $125.0 million increase in borrowings. The Company evaluated the transaction on a lender by lender basis in accordance with the accounting guidance for debt modifications and extinguishments. The majority of the transaction was accounted for as a debt modification and as a result, the Company capitalized $14.9 million in related fees and costs and recognized a $2.0 million loss on debt extinguishment and modification, which was primarily related to third-party fees it incurred in connection with the repricing.

In May 2017, the Company amended its credit facility to increase the Term Loan B Facility by an additional $250.0 million. The Company applied the proceeds of the incremental borrowings under the Term Loan B Facility, together with cash on hand, to pay for the redemption of $250.0 million of its 7.50% Senior Notes and to pay fees and costs incurred in connection with the transactions. The Company capitalized $3.8 million in fees and costs related to the $250.0 million in incremental borrowings. As a result of the January 2017 and May 2017 increases to the Term Loan B Facility, the required quarterly principal payments increased to $4.7 million. Depending on its consolidated total leverage ratio, the Company is required to apply a portion of its excess cash flow to repay amounts outstanding under the Term Loan B Facility, which reduces future quarterly principal payments.

Also in May 2017, the Company completed a series of amendments to its credit facility to increase the existing Term Loan A Facility by $50.0 million and reduce the applicable margins for LIBOR and base rate loans under the Revolving Credit Facility and Term Loan A Facility. As amended, the Revolving Credit Facility and the Term Loan A Facility bear interest at a rate per annum, at the Company’s option, equal to either LIBOR plus an amount ranging from 1.75% to 2.00% or base rate plus an amount ranging from 0.75% to 1.00%, depending on the Company’s consolidated leverage ratio. Prior to the amendments, the Revolving Credit Facility and the Term Loan A Facility bore interest at a rate per annum, at the Company’s option and subject to a leverage-based grid, of either LIBOR plus an amount ranging from 1.75% to 2.75% or base rate plus an amount ranging from 0.75% to 1.75%. Station LLC evaluated the transaction on a lender by lender basis in accordance with the

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(UNAUDITED)

accounting guidance for debt modifications and extinguishments and as a result, the Company capitalized $1.3 million in related fees and costs and recognized a $2.1 million loss on debt extinguishment and modification, which was primarily related to the write-off of unamortized debt discount related to the extinguished debt.

The credit facility governing the Company’s term loans and revolver contains a number of customary covenants including the requirements that the Company maintain throughout the term of the credit facility and measured as of the end of each quarter a minimum interest coverage ratio of 2.50 to 1.00 and a maximum consolidated total leverage ratio ranging from 6.50 to 1.00 at June 30, 2017 to 5.25 to 1.00 at March 31, 2020 and thereafter. A breach of the financial ratio covenants shall only become an event of default under the Term B Loan Facility if the lenders providing the Term Loan A Facility and the Revolving Credit Facility take certain affirmative actions after the occurrence of a default of such financial ratio covenants. At June 30, 2017, the Company’s interest coverage ratio was 4.58 to 1.00 and its consolidated total leverage ratio was 4.96 to 1.00, both as defined in the credit facility. The Company believes it was in compliance with all applicable covenants at June 30, 2017.

Revolving Credit Facility Availability

At June 30, 2017, the Company’s borrowing availability under its Revolving Credit Facility, subject to continued compliance with the terms of its credit facility, was $461.0 million, which was net of $190.0 million in outstanding borrowings and $34.0 million in outstanding letters of credit and similar obligations.

Restructured Land Loan

In March 2017, the Company’s wholly owned subsidiary, CV Propco, LLC (“CV Propco”), as borrower, and Deutsche Bank AG Cayman Islands Branch (“Deutsche Bank”) and JPMorgan Chase Bank, N.A. (“JPMorgan”), as initial lenders, amended the $105 million Restructured Land Loan. Pursuant to the amendment, CV Propco paid $61.8 million in full settlement of the $72.6 million outstanding principal amount owed to Deutsche Bank under the Restructured Land Loan. In addition, the outstanding warrants held by Deutsche Bank and JPMorgan to purchase 60% of the interests of both CV Propco and NP Tropicana LLC were canceled. Prior to the cancellation, the warrants were accounted for as noncontrolling interests.

The Company accounted for the $61.8 million settlement as consideration paid to Deutsche Bank to (i) extinguish the debt and (ii) acquire the warrants held by Deutsche Bank. Accordingly, the Company attributed $57.3 million of the $61.8 million to extinguishment of the debt and $4.5 million to the acquisition of the warrants. The settlement resulted in a $14.9 million gain on debt extinguishment in June 2017, the date when all contingencies related to the settlement were satisfied. In June 2017, CV Propco repaid the remaining $43.3 million in outstanding principal under the Restructured Land Loan in full.

7.50% Senior Notes

As noted above, in May 2017, the Company redeemed $250.0 million in aggregate principal amount of its 7.50% Senior Notes at a redemption price equal to 103.75% of the principal amount of such notes. Following the redemption, $250.0 million in aggregate principal amount of 7.50% Senior Notes remain outstanding. The Company recognized a $13.8 million loss on debt extinguishment related to the 7.50% Senior Notes redemption, primarily comprising the write-off of $4.4 million in unamortized debt discount and issuance costs related to the extinguished debt and the redemption premium of $9.4 million.

4.    Derivative Instruments

The Company’s objective in using derivative instruments is to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps, including forward-starting swaps, as a primary part of its cash flow hedging strategy, which involves the receipt of variable–rate interest payments in exchange for fixed–rate payments without exchange of the underlying notional amount. The Company may elect not to apply hedge accounting to its derivative instruments; however, it does not use derivative financial instruments for trading or speculative purposes.

On June 30, 2017, the Company dedesignated the hedge accounting relationships of the Company’s 16 interest rate swaps that were previously designated as cash flow hedges of forecasted interest payments. The 16 interest rate swaps are with four different counterparties and have maturity dates that run concurrently. The interest rate swaps each have one-year terms that run consecutively which began in July 2016 and will end in July 2020 with predetermined fixed pay rates that increase with each new term to more closely align with the one–month LIBOR forward curve as of the trade date of the interest rate swaps. The Company paid a weighted–average fixed rate of 0.85% during the first one-year term that ended in July 2017, which will increase to a weighted–average rate of approximately 1.11%, 1.39%, and 1.69% in the second, third and fourth one-year terms, respectively. As a result of the June 2017 dedesignation, cumulative deferred gains of $8.6 million that had previously been recognized in accumulated other comprehensive income will be amortized as a reduction of interest expense as the hedged interest payments continue to occur through July 2020.

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(UNAUDITED)

In June 2017, the Company entered into eight additional interest rate swaps for which hedge accounting was not elected. These swaps are also intended to meet the Company’s objectives noted above and are not speculative. The eight interest rate swaps are with two different counterparties and have maturity dates that run concurrently. The interest rate swaps each have one-year terms that run consecutively beginning July 2017 and will end in July 2021 with predetermined fixed pay rates that increase with each new term to more closely align with the one-month LIBOR forward curve as of the trade date of the interest rate swaps. Station LLC will pay a weighted-average fixed rate of 1.32% during the first one-year term ending in July 2018, which will increase to a weighted-average rate of approximately 1.59%, 1.78% and 1.94% during the second, third and fourth one-year terms, respectively.

At June 30, 2017, the Company’s interest rate swaps effectively converted $1.0 billion of the Company’s variable interest rate debt (based on one-month LIBOR that is subject to a minimum of 0.75%) to a fixed rate of 3.47%.

The fair values of the Company’s interest rate swaps, exclusive of accrued interest, as well as their classification on the Condensed Consolidated Balance Sheets, are presented below (amounts in thousands):

	June 30, 2017		December 31, 2016
Interest Rate Swaps Designated in Cash Flow Hedging Relationships
Prepaid expenses and other current assets	$	—	$	19
Other assets, net	—		10,661
Other accrued liabilities	—		8
Interest Rate Swaps Not Designated in Cash Flow Hedging Relationships
Prepaid expenses and other current assets	61		—
Other assets, net	11,868		—

For derivative instruments that are designated and qualify as cash flow hedges of forecasted interest payments, the Company defers the gain or loss on the effective portion of the derivative’s change in fair value as a component of other comprehensive income (loss) until the interest payments being hedged are recorded as interest expense, at which time the amounts in accumulated other comprehensive income are reclassified as an adjustment to interest expense. The Company recognizes the gain or loss on any ineffective portion of the derivative’s change in fair value in the period in which the change occurs as a component of Change in fair value of derivative instruments in the Condensed Consolidated Statements of Operations. For derivative instruments that are not designated in cash flow hedge accounting relationships, the Company records the derivative’s change in the fair value in the period in which the change occurs as a component of Change in fair value of derivative instruments in the Condensed Consolidated Statements of Operations.

As a result of (i) the June 2017 dedesignation of the Company’s 16 interest rate swaps previously designated in cash flow hedging relationships and (ii) the Company’s election not to apply hedge accounting to its eight new interest rate swaps, beginning July 2017, the changes in fair value of all of the Company’s derivative instruments will be reflected in Change in fair value of derivative instruments in the Condensed Consolidated Statements of Operations in the period in which the change occurs. As such, interest expense will not reflect a fixed rate as it previously did under hedge accounting for that portion of the debt hedged. However, the economics will be unchanged and the Company will continue to meet its risk management objective and achieve fixed cash flows attributable to interest payments on the debt principal being hedged by its interest rate swaps.

At June 30, 2017, approximately $2.6 million of deferred net gains from the Company’s previously designated interest rate swaps is expected to be reclassified from accumulated other comprehensive income into earnings during the next twelve months due to the amortization of deferred gains from the interest rate swaps that were dedesignated on June 30, 2017 and the amortization of deferred losses on a previously terminated interest rate swap.     

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(UNAUDITED)

Information about gains and losses on derivative financial instruments that were designated in cash flow hedging relationships and their location within the condensed consolidated financial statements is presented below (amounts in thousands):

Derivatives Designated in Cash Flow Hedging Relationships	Amount of Loss on Derivatives Recognized in Other Comprehensive (Loss) Income (Effective Portion)						Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)						Location of (Loss) Gain on Derivatives Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of (Loss) Gain on Derivatives Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Three Months Ended June 30,							Three Months Ended June 30,							Three Months Ended June 30,
	2017			2016				2017			2016				2017			2016
Interest rate swaps	$	(3,268	)	$	(5,612	)	Interest expense, net	$	(986	)	$	(335	)	Change in fair value of derivative instruments	$	(37	)	$	90

Derivatives Designated in Cash Flow Hedging Relationships	Amount of Loss on Derivatives Recognized in Other Comprehensive (Loss) Income (Effective Portion)						Location of Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)	Amount of Loss Reclassified from Accumulated Other Comprehensive Income into Income (Effective Portion)						Location of Gain on Derivatives Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain on Derivatives Recognized in Income (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	Six Months Ended June 30,							Six Months Ended June 30,							Six Months Ended June 30,
	2017			2016				2017			2016				2017		2016
Interest rate swaps	$	(1,875	)	$	(7,127	)	Interest expense, net	$	(2,521	)	$	(1,601	)	Change in fair value of derivative instruments	$	2	$	87

Information about gains on derivative financial instruments that were not designated in hedge accounting relationships and their location within the Condensed Consolidated Statements of Operations is presented below (amounts in thousands):

Derivatives Not Designated in Cash Flow Hedging Relationships	Location of Gain on Derivatives Recognized in Income	Amount of Gain on Derivatives Recognized in Income
		Three Months Ended June 30,				Six Months Ended June 30,
		2017		2016		2017		2016
Interest rate swaps	Change in fair value of derivative instruments	$	3,367	$	—	$	3,367	$	—

The Company has not posted any collateral related to the interest rate swap agreements; however, the Company’s obligations under the interest rate swap agreements are subject to the security and guarantee arrangements applicable to the Company’s credit facility. The interest rate swap agreements contain a cross-default provision under which the Company could be declared in default on its obligation under such agreements if certain conditions of default exist on the Company’s credit facility. At June 30, 2017, the termination value of the Company’s interest rate swaps, including accrued interest, was a net asset of $12.0 million.

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(UNAUDITED)

5.    Fair Value Measurements

Assets Measured at Fair Value on a Recurring Basis

Information about the Company’s financial assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, is presented below (amounts in thousands):

			Fair Value Measurement at Reporting Date Using
	Balance at June 30, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Interest rate swaps	$	11,929	$	—	$	11,929	$	—

			Fair Value Measurement at Reporting Date Using
	Balance at December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available-for-sale securities	$	248	$	248	$	—	$	—
Interest rate swaps	10,680		—		10,680		—
Liabilities
Interest rate swaps	8		—		8		—

The fair values of the Company’s interest rate swaps were determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the interest rate swaps. This analysis reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement.

Fair Value of Long-term Debt

The estimated fair value of the Company’s long-term debt compared with its carrying amount is presented below (amounts in millions):

	June 30, 2017		December 31, 2016
Aggregate fair value	$	2,574	$	2,521
Aggregate carrying amount	2,499		2,422

The estimated fair value of the Company’s long-term debt is based on quoted market prices from various banks for similar instruments, which is considered a Level 2 input under the fair value measurement hierarchy.

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(UNAUDITED)

6.    Members’ Equity

Changes in Members’ Equity and Noncontrolling Interest

The changes in members’ equity and noncontrolling interest for the six months ended June 30, 2017 were as follows (amounts in thousands):

	Voting Units		Non-voting Units		Members’ Equity			Accumulated Other Comprehensive Income		Total Station Casinos LLC Members’ Equity			Noncontrolling Interest			Total Members’ Equity
Balance at December 31, 2016	$	—	$	—	$	612,820		$	7,967	$	620,787		$	15,678		$	636,465
Net (loss) income	—		—		(8,393		)	—		(8,393		)	6,316			(2,077		)
Capital contributions	—		—		1,574			—		1,574			—			1,574
Other comprehensive income	—		—		—			507		507			—			507
Share-based compensation	—		—		3,459			—		3,459			—			3,459
Distributions	—		—		(44,092		)	—		(44,092		)	(6,766		)	(50,858		)
Acquisition of subsidiary noncontrolling interests	—		—		5,016			—		5,016			(9,500		)	(4,484		)
Balance at June 30, 2017	$	—	$	—	$	570,384		$	8,474	$	578,858		$	5,728		$	584,586

At June 30, 2017, noncontrolling interest represented a 50% ownership interest in MPM.

On August 4, 2017, the Company announced that it would pay a cash distribution of $11.6 million to Station Holdco on August 30, 2017.

Changes in Accumulated Other Comprehensive Income

The following table presents changes in accumulated other comprehensive income by component for the six months ended June 30, 2017 (amounts in thousands):

	Accumulated Other Comprehensive Income
	Unrealized Gain on Interest Rate Swaps			Unrealized Gain on Available-for-sale Securities			Unrecognized Pension Liability		Total
Balances, December 31, 2016	$	7,822		$	139		$	6	$	7,967
Unrealized (loss) gain arising during the period	(1,875		)	10			—		(1,865		)
Amounts reclassified from accumulated other comprehensive income into income	2,521			(149		)	—		2,372
Net current-period other comprehensive income (loss)	646			(139		)	—		507
Balances, June 30, 2017	$	8,468		$	—		$	6	$	8,474

7.    Share-Based Compensation

Red Rock maintains an equity incentive plan which is designed to attract, retain and motivate employees and to align the interests of those individuals with the interests of the Company. A total of 11.6 million shares of Red Rock’s Class A common stock are reserved for issuance under the plan, of which 5.0 million shares were available for issuance at June 30, 2017.

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(UNAUDITED)

The following table presents information about share-based compensation awards under the equity incentive plan:

	Restricted Class A  Common Stock				Stock Options
	Shares		Weighted-average grant date fair value		Shares		Weighted-average exercise price
Outstanding at January 1, 2017	199,411		$	15.26	1,637,029		$	19.71
Activity during the period:
Granted	236,888		21.74		3,276,164		21.76
Vested/exercised	(62,735	)	9.09		(80,727	)	19.50
Forfeited	(90,824	)	20.23		(463,400	)	21.07
Outstanding at June 30, 2017	282,740		$	20.63	4,369,066		$	21.11

The Company recognized share-based compensation expense of $2.2 million and $3.4 million, respectively, for the three and six months ended June 30, 2017 and $3.6 million and $4.2 million, respectively, for the three and six months ended June 30, 2016. At June 30, 2017, unrecognized share-based compensation cost was $28.3 million, which is expected to be recognized over a weighted-average period of 3.4 years.

8.    Write-downs and Other Charges, Net

Write-downs and other charges, net include various charges to record net losses on asset disposals and non-routine transactions. For the three and six months ended June 30, 2017, write-downs and other charges, net were $9.3 million and $10.3 million, respectively. These amounts included $3.5 million in tenant lease termination expenses, as well as losses on fixed asset disposals of $5.5 million and $5.6 million, respectively, for the three and six months ended June 30, 2017.

For the three and six months ended June 30, 2016, write-downs and other charges, net were $11.0 million and $13.3 million, respectively. Included in this amount was $7.8 million and $9.0 million, respectively, in IPO-related advisory, legal and other transaction-related costs that were not deferred as direct and incremental costs of the IPO, as well as costs related to the acquisition of Fertitta Entertainment. The Company also incurred $1.3 million in costs associated with various development and acquisition activities, including the acquisition of Palms Casino Resort completed during the fourth quarter of 2016.

9.    Related Party Transactions

Prior to April 27, 2017, the Company leased the land on which each of Boulder Station and Texas Station is located pursuant to long-term ground leases which provided for monthly payments of $222,933 and $366,435, respectively, subject to future increases. The Company leased this land from entities owned by the Frank J. Fertitta and Victoria K. Fertitta Revocable Family Trust. Frank J. Fertitta, Jr. and Victoria K. Fertitta are the parents of Frank J. Fertitta III, the Company’s Chairman and Chief Executive Officer, and Lorenzo J. Fertitta, the Company’s Vice Chairman. On April 27, 2017, the Company acquired the land subject to the ground leases, including the residual interest in the gaming and hotel facilities and other real property improvements thereon, for aggregate consideration of $120.0 million. As a result of such acquisition and the termination of the ground leases, the Company recognized a charge of $98.4 million in related party lease termination costs, which was an amount equal to the difference between the aggregate consideration paid by the Company and the acquisition date fair value of the land and residual interests.

10.    Commitments and Contingencies

The Company and its subsidiaries are defendants in various lawsuits relating to routine matters incidental to their business. As with all litigation, no assurance can be provided as to the outcome of any legal matters and litigation inherently involves significant costs.

11.    Segments

The Company views each of its Las Vegas casino properties and each of its Native American management arrangements as individual operating segments. The Company aggregates all of its Las Vegas operating segments into one reportable segment because all of its Las Vegas properties offer similar products, cater to the same customer base, have the same regulatory and tax structure, share the same marketing techniques, are directed by a centralized management structure and have similar economic characteristics. The Company also aggregates its Native American management arrangements into one reportable segment.

20

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

The Company utilizes Adjusted EBITDA as its primary performance measure. The Company’s segment information and a reconciliation of net (loss) income to Adjusted EBITDA are presented below (amounts in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net revenues
Las Vegas operations	$	371,492		$	322,876		$	757,730		$	654,334
Native American management	30,543			27,320			60,648			53,807
Reportable segment net revenues	402,035			350,196			818,378			708,141
Corporate and other	1,458			1,290			2,847			2,592
Net revenues	$	403,493		$	351,486		$	821,225		$	710,733
Net (loss) income	$	(60,438	)	$	30,568		$	(2,077	)	$	90,071
Adjustments
Preopening	368			373			398			721
Depreciation and amortization	46,807			38,436			92,060			77,863
Share-based compensation	2,157			3,602			3,433			4,222
Write-downs and other charges, net	9,270			10,966			10,298			13,334
Related party lease termination	98,393			—			98,393			—
Interest expense, net	33,853			34,078			68,797			69,146
Loss on extinguishment/modification of debt, net	975			7,084			2,994			7,084
Change in fair value of derivative instruments	(3,330		)	(90		)	(3,369		)	(87		)
Adjusted EBITDA attributable to MPM noncontrolling interest	(6,418		)	(5,211		)	(11,056		)	(9,332		)
Other	—			(1,133		)	—			(1,133		)
Adjusted EBITDA (a)	$	121,637		$	118,673		$	259,871		$	251,889
Adjusted EBITDA
Las Vegas operations	$	104,711		$	104,627		$	225,277		$	223,637
Native American management	22,695			20,096			46,012			40,528
Reportable segment Adjusted EBITDA	127,406			124,723			271,289			264,165
Corporate and other	(5,769		)	(6,050		)	(11,418		)	(12,276		)
Adjusted EBITDA	$	121,637		$	118,673		$	259,871		$	251,889

__________________________________________________________

(a) Adjusted EBITDA includes net (loss) income plus preopening, depreciation and amortization, share-based compensation, write-downs and other charges, net, related party lease termination, interest expense, net, loss on extinguishment/modification of debt, net and change in fair value of derivative instruments, and excludes Adjusted EBITDA attributable to the noncontrolling interests of MPM.

21

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

12.Condensed Consolidating Financial Information

The Company’s 7.50% Senior Notes are guaranteed by all subsidiaries of the Company other than NP Landco Holdco LLC and its subsidiaries, MPM and SC Restaurant Holdco LLC. The following condensed consolidating financial statements present information about the Company, the Guarantor Subsidiaries and the non-guarantor subsidiaries. These condensed consolidating financial statements are presented in the provided form because (i) the Guarantor Subsidiaries are 100% owned subsidiaries of the Company (the issuer of the 7.50% Senior Notes), (ii) the guarantees are joint and several, and (iii) the guarantees are “full and unconditional,” as those terms are used in Regulation S-X Rule 3-10.  The guarantee of a Guarantor Subsidiary will be automatically released in certain customary circumstances, such as when such Guarantor Subsidiary is sold or all of the assets of such Guarantor Subsidiary are sold, the capital stock is sold, when such Guarantor Subsidiary is designated as an “unrestricted subsidiary” for purposes of the indenture, or upon legal defeasance or satisfaction and discharge of the indenture.

22

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS JUNE 30, 2017 (amounts in thousands)
	Parent		Guarantor Subsidiaries		Eliminations			Parent and Guarantor Subsidiaries		Non–Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	90	$	110,049	$	—		$	110,139	$	2,494	$	—		$	112,633
Restricted cash	—		2,829		—			2,829		—		—			2,829
Receivables, net	1,448		32,621		—			34,069		7,169		—			41,238
Intercompany receivables	2,097		—		—			2,097		—		(2,097		)	—
Loans to parent	—		922,509		(922,509		)	—		—		—			—
Inventories	—		11,010		—			11,010		121		—			11,131
Prepaid gaming tax	—		24,601		—			24,601		163		—			24,764
Prepaid expenses and other current assets	7,405		3,311		—			10,716		173		—			10,889
Assets held for sale	—		—		—			—		19,602		—			19,602
Total current assets	11,040		1,106,930		(922,509		)	195,461		29,722		(2,097		)	223,086
Property and equipment, net	61,625		2,410,062		—			2,471,687		9,072		—			2,480,759
Goodwill	1,234		194,442		—			195,676		—		—			195,676
Intangible assets, net	1,000		130,561		—			131,561		6,403		—			137,964
Land held for development	—		83,700		—			83,700		80,000		—			163,700
Investments in joint ventures	—		10,005		—			10,005		—		—			10,005
Native American development costs	—		16,393		—			16,393		—		—			16,393
Investments in subsidiaries	3,916,486		5,690		(3,807,449		)	114,727		—		(114,727		)	—
Other assets, net	44,034		18,482		—			62,516		1,064		—			63,580
Total assets	$	4,035,419	$	3,976,265	$	(4,729,958	)	$	3,281,726	$	126,261	$	(116,824	)	$	3,291,163

23

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS (Continued) JUNE 30, 2017 (amounts in thousands)
	Parent		Guarantor Subsidiaries		Eliminations			Parent and Guarantor Subsidiaries		Non–Guarantor Subsidiaries		Eliminations			Consolidated
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	9,642	$	22,924	$	—		$	32,566	$	456	$	—		$	33,022
Accrued interest payable	9,055		7		—			9,062		—		—			9,062
Other accrued liabilities	16,093		134,276		—			150,369		2,667		—			153,036
Intercompany payables	—		—		—			—		2,097		(2,097		)	—
Loans from subsidiaries	922,509		—		(922,509		)	—		—		—			—
Current portion of long-term debt	70,880		454		—			71,334		7		—			71,341
Total current liabilities	1,028,179		157,661		(922,509		)	263,331		5,227		(2,097		)	266,461
Long-term debt, less current portion	2,427,107		—		—			2,427,107		575		—			2,427,682
Deficit investment in joint venture	—		2,270		—			2,270		—		—			2,270
Other long-term liabilities	1,275		8,885		—			10,160		4		—			10,164
Total liabilities	3,456,561		168,816		(922,509		)	2,702,868		5,806		(2,097		)	2,706,577
Members’ equity:
Total Station Casinos LLC members’ equity	578,858		3,807,449		(3,807,449		)	578,858		114,727		(114,727		)	578,858
Noncontrolling interest	—		—		—			—		5,728		—			5,728
Total members’ equity	578,858		3,807,449		(3,807,449		)	578,858		120,455		(114,727		)	584,586
Total liabilities and members’ equity	$	4,035,419	$	3,976,265	$	(4,729,958	)	$	3,281,726	$	126,261	$	(116,824	)	$	3,291,163

24

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS DECEMBER 31, 2016 (amounts in thousands)
	Parent		Guarantor Subsidiaries		Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	6,455	$	120,307	$	—		$	126,762		$	3,197	$	—		$	129,959
Restricted cash	—		2,377		—			2,377			—		—			2,377
Receivables, net	3,719		36,041		—			39,760			3,787		—			43,547
Intercompany receivables	4,775		—		—			4,775			—		(4,775		)	—
Loans to parent	—		846,947		(846,947		)	—			—		—			—
Inventories	—		11,835		—			11,835			121		—			11,956
Prepaid gaming tax	—		19,933		—			19,933			133		—			20,066
Prepaid expenses and other current assets	7,577		3,457		—			11,034			160		—			11,194
Assets held for sale	—		—		—			—			19,020		—			19,020
Total current assets	22,526		1,040,897		(846,947		)	216,476			26,418		(4,775		)	238,119
Property and equipment, net	67,860		2,360,613		—			2,428,473			9,656		—			2,438,129
Goodwill	1,234		194,442		—			195,676			—		—			195,676
Intangible assets, net	1,000		136,696		—			137,696			11,503		—			149,199
Land held for development	—		83,700		—			83,700			80,000		—			163,700
Investments in joint ventures	—		10,572		—			10,572			—		—			10,572
Native American development costs	—		14,844		—			14,844			—		—			14,844
Investments in subsidiaries	3,676,365		6,142		(3,691,790		)	(9,283		)	—		9,283			—
Other assets, net	40,552		18,030		—			58,582			1,146		—			59,728
Total assets	$	3,809,537	$	3,865,936	$	(4,538,737	)	$	3,136,736		$	128,723	$	4,508		$	3,269,967

25

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING BALANCE SHEETS (Continued) DECEMBER 31, 2016 (amounts in thousands)
	Parent		Guarantor Subsidiaries		Eliminations			Parent and Guarantor Subsidiaries		Non–Guarantor Subsidiaries			Eliminations			Consolidated
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Accounts payable	$	7,417	$	22,761	$	—		$	30,178	$	326		$	—		$	30,504
Accrued interest payable	15,799		8		—			15,807		34			—			15,841
Other accrued liabilities	13,298		137,395		—			150,693		1,815			—			152,508
Intercompany payables	—		—		—			—		4,775			(4,775		)	—
Loans from subsidiaries	846,947		—		(846,947		)	—		—			—			—
Current portion of long-term debt	44,730		1,333		—			46,063		—			—			46,063
Total current liabilities	928,191		161,497		(846,947		)	242,741		6,950			(4,775		)	244,916
Long-term debt, less current portion	2,259,212		1,648		—			2,260,860		115,378			—			2,376,238
Deficit investment in joint venture	—		2,307		—			2,307		—			—			2,307
Other long-term liabilities	1,347		8,694		—			10,041		—			—			10,041
Total liabilities	3,188,750		174,146		(846,947		)	2,515,949		122,328			(4,775		)	2,633,502
Members’ equity:
Total Station Casinos LLC members’ equity (deficit)	620,787		3,691,790		(3,691,790		)	620,787		(9,283		)	9,283			620,787
Noncontrolling interest	—		—		—			—		15,678			—			15,678
Total members’ equity	620,787		3,691,790		(3,691,790		)	620,787		6,395			9,283			636,465
Total liabilities and members’ equity	$	3,809,537	$	3,865,936	$	(4,538,737	)	$	3,136,736	$	128,723		$	4,508		$	3,269,967

26

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2017 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations		Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Casino	$	—		$	256,600		$	—	$	256,600		$	1,796		$	—		$	258,396
Food and beverage	—			75,142			—		75,142			161			—			75,303
Room	—			43,365			—		43,365			1,276			—			44,641
Other	—			22,455			—		22,455			2,832			(1,588		)	23,699
Management fees	991			16,500			—		17,491			13,270			(85		)	30,676
Gross revenues	991			414,062			—		415,053			19,335			(1,673		)	432,715
Promotional allowances	—			(29,090		)	—		(29,090		)	(132		)	—			(29,222		)
Net revenues	991			384,972			—		385,963			19,203			(1,673		)	403,493
Operating costs and expenses:
Casino	—			102,540			—		102,540			630			—			103,170
Food and beverage	—			55,027			—		55,027			32			—			55,059
Room	—			17,585			—		17,585			654			—			18,239
Other	—			7,861			—		7,861			1,218			—			9,079
Selling, general and administrative	8,004			81,782			—		89,786			4,270			(1,588		)	92,468
Preopening	—			368			—		368			—			—			368
Depreciation and amortization	3,763			39,935			—		43,698			3,109			—			46,807
Management fee expense	—			—			—		—			85			(85		)	—
Write-downs and other charges, net	6,024			4,234			—		10,258			(988		)	—			9,270
Related party lease termination	591			97,802			—		98,393			—			—			98,393
	18,382			407,134			—		425,516			9,010			(1,673		)	432,853
Operating (loss) income	(17,391		)	(22,162		)	—		(39,553		)	10,193			—			(29,360		)
(Loss) earnings from subsidiaries	(2,523		)	4,055			17,414		18,946			—			(18,946		)	—
Earnings from joint ventures	—			420			—		420			—			—			420
Operating (loss) income and earnings from subsidiaries and joint ventures	(19,914		)	(17,687		)	17,414		(20,187		)	10,193			(18,946		)	(28,940		)

27

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Continued) FOR THE THREE MONTHS ENDED JUNE 30, 2017 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations		Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Other (expense) income:
Interest expense, net	(31,986		)	273			—		(31,713		)	(2,140		)	—			(33,853		)
(Loss) gain on extinguishment/modification of debt, net	(15,923		)	—			—		(15,923		)	14,948			—			(975		)
Change in fair value of derivative instruments	3,330			—			—		3,330			—			—			3,330
	(44,579		)	273			—		(44,306		)	12,808			—			(31,498		)
Net (loss) income	(64,493		)	(17,414		)	17,414		(64,493		)	23,001			(18,946		)	(60,438		)
Less: net income attributable to noncontrolling interests	—			—			—		—			4,055			—			4,055
Net (loss) income attributable to Station Casinos LLC	$	(64,493	)	$	(17,414	)	$	17,414	$	(64,493	)	$	18,946		$	(18,946	)	$	(64,493	)
Comprehensive (loss) income attributable to Station Casinos LLC	$	(66,775	)	$	(17,414	)	$	17,414	$	(66,775	)	$	18,946		$	(18,946	)	$	(66,775	)

28

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2016 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Casino	$	—		$	232,079		$	—		$	232,079		$	1,717		$	—		$	233,796
Food and beverage	—			66,247			—			66,247			161			—			66,408
Room	—			31,798			—			31,798			1,181			—			32,979
Other	—			16,350			—			16,350			2,550			(1,195		)	17,705
Management fees	1,623			15,138			—			16,761			10,812			(118		)	27,455
Gross revenues	1,623			361,612			—			363,235			16,421			(1,313		)	378,343
Promotional allowances	—			(26,733		)	—			(26,733		)	(124		)	—			(26,857		)
Net revenues	1,623			334,879			—			336,502			16,297			(1,313		)	351,486
Operating costs and expenses:
Casino	—			88,406			—			88,406			580			—			88,986
Food and beverage	—			44,462			—			44,462			39			—			44,501
Room	—			11,278			—			11,278			615			—			11,893
Other	—			5,166			—			5,166			1,139			—			6,305
Selling, general and administrative	5,421			70,912			—			76,333			3,676			(1,195		)	78,814
Preopening	—			373			—			373			—			—			373
Depreciation and amortization	3,647			31,696			—			35,343			3,093			—			38,436
Management fee expense	—			—			—			—			118			(118		)	—
Write-downs and other charges, net	8,925			2,038			—			10,963			3			—			10,966
	17,993			254,331			—			272,324			9,263			(1,313		)	280,274
Operating (loss) income	(16,370		)	80,548			—			64,178			7,034			—			71,212
Earnings from subsidiaries	80,989			2,740			(82,842		)	887			—			(887		)	—
Earnings from joint ventures	—			428			—			428			—			—			428
Operating income and earnings from subsidiaries and joint ventures	64,619			83,716			(82,842		)	65,493			7,034			(887		)	71,640

29

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Continued) FOR THE THREE MONTHS ENDED JUNE 30, 2016 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Other (expense) income:
Interest expense, net	(30,286		)	(385		)	—			(30,671		)	(3,407		)	—			(34,078		)
Loss on extinguishment/modification of debt	(6,595		)	(489		)	—			(7,084		)	—			—			(7,084		)
Change in fair value of derivative instruments	90			—			—			90			—			—			90
	(36,791		)	(874		)	—			(37,665		)	(3,407		)	—			(41,072		)
Net income	27,828			82,842			(82,842		)	27,828			3,627			(887		)	30,568
Less: net income attributable to noncontrolling interests	—			—			—			—			2,740			—			2,740
Net income attributable to Station Casinos LLC	$	27,828		$	82,842		$	(82,842	)	$	27,828		$	887		$	(887	)	$	27,828
Comprehensive income attributable to Station Casinos LLC	$	22,573		$	82,842		$	(82,842	)	$	22,573		$	887		$	(887	)	$	22,573

30

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2017 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Casino	$	—		$	517,791		$	—		$	517,791		$	3,577		$	—		$	521,368
Food and beverage	—			155,107			—			155,107			311			—			155,418
Room	—			91,784			—			91,784			2,621			—			94,405
Other	—			45,918			—			45,918			5,290			(4,689		)	46,519
Management fees	2,702			33,431			—			36,133			24,980			(210		)	60,903
Gross revenues	2,702			844,031			—			846,733			36,779			(4,899		)	878,613
Promotional allowances	—			(57,131		)	—			(57,131		)	(257		)	—			(57,388		)
Net revenues	2,702			786,900			—			789,602			36,522			(4,899		)	821,225
Operating costs and expenses:
Casino	—			203,596			—			203,596			1,228			—			204,824
Food and beverage	—			110,043			—			110,043			62			—			110,105
Room	—			37,005			—			37,005			1,301			—			38,306
Other	—			14,709			—			14,709			2,203			—			16,912
Selling, general and administrative	16,272			163,109			—			179,381			9,727			(4,689		)	184,419
Preopening	—			398			—			398			—			—			398
Depreciation and amortization	7,735			78,123			—			85,858			6,202			—			92,060
Management fee expense	—			—			—			—			210			(210		)	—
Write-downs and other charges, net	6,774			4,503			—			11,277			(979		)	—			10,298
Related party lease termination	591			97,802			—			98,393			—			—			98,393
	31,372			709,288			—			740,660			19,954			(4,899		)	755,715
Operating (loss) income	(28,670		)	77,612			—			48,942			16,568			—			65,510
Earnings from subsidiaries	99,052			6,316			(84,855		)	20,513			—			(20,513		)	—
Earnings from joint ventures	—			835			—			835			—			—			835
Operating income and earnings from subsidiaries and joint ventures	70,382			84,763			(84,855		)	70,290			16,568			(20,513		)	66,345

31

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Continued) FOR THE SIX MONTHS ENDED JUNE 30, 2017 (amounts in thousands)
	Parent			Guarantor Subsidiaries		Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Other (expense) income:
Interest expense, net	(64,202		)	92		—			(64,110		)	(4,687		)	—			(68,797		)
(Loss) gain on extinguishment/modification of debt, net	(17,942		)	—		—			(17,942		)	14,948			—			(2,994		)
Change in fair value of derivative instruments	3,369			—		—			3,369			—			—			3,369
	(78,775		)	92		—			(78,683		)	10,261			—			(68,422		)
Net (loss) income	(8,393		)	84,855		(84,855		)	(8,393		)	26,829			(20,513		)	(2,077		)
Less: net income attributable to noncontrolling interests	—			—		—			—			6,316			—			6,316
Net (loss) income attributable to Station Casinos LLC	$	(8,393	)	$	84,855	$	(84,855	)	$	(8,393	)	$	20,513		$	(20,513	)	$	(8,393	)
Comprehensive (loss) income attributable to Station Casinos LLC	$	(7,886	)	$	84,855	$	(84,855	)	$	(7,886	)	$	20,513		$	(20,513	)	$	(7,886	)

32

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2016 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Operating revenues:
Casino	$	—		$	470,055		$	—		$	470,055		$	3,512		$	—		$	473,567
Food and beverage	—			132,714			—			132,714			314			—			133,028
Room	—			65,142			—			65,142			2,221			—			67,363
Other	—			34,304			—			34,304			4,653			(4,070		)	34,887
Management fees	3,154			29,824			—			32,978			21,350			(224		)	54,104
Gross revenues	3,154			732,039			—			735,193			32,050			(4,294		)	762,949
Promotional allowances	—			(51,975		)	—			(51,975		)	(241		)	—			(52,216		)
Net revenues	3,154			680,064			—			683,218			31,809			(4,294		)	710,733
Operating costs and expenses:
Casino	—			175,233			—			175,233			1,174			—			176,407
Food and beverage	—			86,948			—			86,948			77			—			87,025
Room	—			23,063			—			23,063			1,215			—			24,278
Other	—			10,169			—			10,169			1,858			—			12,027
Selling, general and administrative	8,483			140,698			—			149,181			8,793			(4,070		)	153,904
Preopening	—			721			—			721			—			—			721
Depreciation and amortization	7,197			64,481			—			71,678			6,185			—			77,863
Management fee expense	—			—			—			—			224			(224		)	—
Write-downs and other charges, net	10,215			3,152			—			13,367			(33		)	—			13,334
	25,895			504,465			—			530,360			19,493			(4,294		)	545,559
Operating (loss) income	(22,741		)	175,599			—			152,858			12,316			—			165,174
Earnings from subsidiaries	175,790			4,604			(179,318		)	1,076			—			(1,076		)	—
Earnings from joint ventures	—			1,040			—			1,040			—			—			1,040
Operating income and earnings from subsidiaries and joint ventures	153,049			181,243			(179,318		)	154,974			12,316			(1,076		)	166,214

33

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Continued) FOR THE SIX MONTHS ENDED JUNE 30, 2016 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Other (expense) income:
Interest expense, net	(61,074		)	(1,436		)	—			(62,510		)	(6,636		)	—			(69,146		)
Loss on extinguishment/modification of debt	(6,595		)	(489		)	—			(7,084		)	—			—			(7,084		)
Change in fair value of derivative instruments	87			—			—			87			—			—			87
	(67,582		)	(1,925		)	—			(69,507		)	(6,636		)	—			(76,143		)
Net income	85,467			179,318			(179,318		)	85,467			5,680			(1,076		)	90,071
Less: net income attributable to noncontrolling interests	—			—			—			—			4,604			—			4,604
Net income attributable to Station Casinos LLC	$	85,467		$	179,318		$	(179,318	)	$	85,467		$	1,076		$	(1,076	)	$	85,467
Comprehensive income attributable to Station Casinos LLC	$	79,982		$	179,318		$	(179,318	)	$	79,982		$	1,076		$	(1,076	)	$	79,982

34

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2017 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Net cash (used in) provided by operating activities	$	(66,149	)	$	160,268		$	—		$	94,119		$	13,310		$	—		$	107,429
Cash flows from investing activities:
Capital expenditures, net of related payables	(12,401		)	(88,958		)	—			(101,359		)	(496		)	—			(101,855		)
Proceeds from asset sales	—			626			—			626			1			—			627
Acquisition of land from related party	—			(23,440		)	—			(23,440		)	—			—			(23,440		)
Distributions in excess of earnings from joint ventures	—			660			—			660			—			—			660
Distributions from subsidiaries	14,310			6,766			(14,310		)	6,766			—			(6,766		)	—
Loans to parent, net	—			(39,242		)	39,242			—			—			—			—
Native American development costs	—			(2,134		)	—			(2,134		)	—			—			(2,134		)
Investment in subsidiaries	(105,247		)	—			—			(105,247		)	—			105,247			—
Other, net	(4,980		)	(1,559		)	—			(6,539		)	—			—			(6,539		)
Net cash used in investing activities	(108,318		)	(147,281		)	24,932			(230,667		)	(495		)	98,481			(132,681		)
Cash flows from financing activities:
Borrowings under credit agreements with original maturity dates greater than three months	729,688			—			—			729,688			—			—			729,688
Payments under credit agreements with original maturity dates greater than three months	(526,898		)	—			—			(526,898		)	(100,555		)	—			(627,453		)
Cash paid for early extinguishment of debt	(9,401		)	—			—			(9,401		)	—			—			(9,401		)
Capital contributions	1,574			—			—			1,574			105,247			(105,247		)	1,574
Distributions to members and noncontrolling interests	(44,092		)	(14,310		)	14,310			(44,092		)	(13,532		)	6,766			(50,858		)
Payment of debt issuance costs	(20,904		)	—			—			(20,904		)	(194		)	—			(21,098		)
Loans from subsidiaries, net	39,242			—			(39,242		)	—			—			—			—
Payments on other debt	(1,107		)	(2,527		)	—			(3,634		)	—			—			(3,634		)
Acquisition of subsidiary noncontrolling interests	—			—			—			—			(4,484		)	—			(4,484		)
Other, net	—			(6,408		)	—			(6,408		)	—			—			(6,408		)
Net cash provided by (used in) financing activities	168,102			(23,245		)	(24,932		)	119,925			(13,518		)	(98,481		)	7,926

35

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Continued) FOR THE SIX MONTHS ENDED JUNE 30, 2017 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations		Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations		Consolidated
Cash and cash equivalents:
Decrease in cash and cash equivalents	(6,365		)	(10,258		)	—		(16,623		)	(703		)	—		(17,326		)
Balance, beginning of period	6,455			120,307			—		126,762			3,197			—		129,959
Balance, end of period	$	90		$	110,049		$	—	$	110,139		$	2,494		$	—	$	112,633
Supplemental cash flow disclosures:
Cash paid for interest	$	59,767		$	1,731		$	—	$	61,498		$	1,958		$	—	$	63,456
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid	$	1,140		$	25,149		$	—	$	26,289		$	176		$	—	$	26,465

36

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2016 (amounts in thousands)
	Parent			Guarantor Subsidiaries			Eliminations			Parent and Guarantor Subsidiaries			Non–Guarantor Subsidiaries			Eliminations			Consolidated
Net cash (used in) provided by operating activities	$	(65,864	)	$	218,563		$	—		$	152,699		$	14,522		$	—		$	167,221
Cash flows from investing activities:
Capital expenditures, net of related payables	(10,654		)	(76,679		)	—			(87,333		)	(300		)	—			(87,633		)
Proceeds from asset sales	—			8,316			—			8,316			2			—			8,318
Proceeds from repayment of related party notes receivable	—			18,330			—			18,330			—			—			18,330
Deposit for business acquisition	(20,002		)	—			—			(20,002		)	—			—			(20,002		)
Distributions in excess of earnings from joint ventures	—			476			—			476			—			—			476
Distributions from subsidiaries	53,462			6,422			(53,462		)	6,422			—			(6,422		)	—
Proceeds from repayment of advances to subsidiaries, net	54,408			—			(54,408		)	—			—			—			—
Loans to parent, net	—			(84,993		)	84,993			—			—			—			—
Native American development costs	—			(933		)	—			(933		)	—			—			(933		)
Investments in subsidiaries	(70,174		)	—			69,696			(478		)	—			478			—
Other, net	22			(847		)	—			(825		)	(487		)	—			(1,312		)
Net cash provided by (used in) investing activities	7,062			(129,908		)	46,819			(76,027		)	(785		)	(5,944		)	(82,756		)
Cash flows from financing activities:
Borrowings under credit agreements with original maturity dates greater than three months	1,717,500			—			—			1,717,500			—			—			1,717,500
Payments under credit agreements with original maturity dates greater than three months	(1,468,613		)	—			—			(1,468,613		)	—			—			(1,468,613		)
Payments under credit agreements with original maturity dates of three months or less, net	(20,000		)	(33,900		)	—			(53,900		)	—			—			(53,900		)
Capital contributions	419,475			69,696			(69,696		)	419,475			478			(478		)	419,475
Distributions to members and noncontrolling interests	(100,991		)	(53,462		)	53,462			(100,991		)	(12,844		)	6,422			(107,413		)
Deemed distributions	(389,054		)	—			—			(389,054		)	—			—			(389,054		)
Payment of debt issuance costs	(35,621		)	—			—			(35,621		)	(1,157		)	—			(36,778		)
Payments on derivative instruments with other-than-insignificant financing elements	(10,831		)	—			—			(10,831		)	—			—			(10,831		)
Loans from subsidiaries, net	84,993			—			(84,993		)	—			—			—			—
Payments on advances from parent, net	—			(54,408		)	54,408			—			—			—			—
Payments on other debt	(1,080		)	(19,327		)	—			(20,407		)	(809		)	—			(21,216		)
Other, net	1,514			(6,000		)	—			(4,486		)	—			—			(4,486		)
Net cash provided by (used in) financing activities	197,292			(97,401		)	(46,819		)	53,072			(14,332		)	5,944			44,684

37

STATION CASINOS LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(UNAUDITED)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Continued) FOR THE SIX MONTHS ENDED JUNE 30, 2016 (amounts in thousands)
	Parent		Guarantor Subsidiaries			Eliminations		Parent and Guarantor Subsidiaries		Non–Guarantor Subsidiaries			Eliminations		Consolidated
Cash and cash equivalents:
Increase (decrease) in cash and cash equivalents	138,490		(8,746		)	—		129,744		(595		)	—		129,149
Balance, beginning of period	5,897		107,114			—		113,011		3,612			—		116,623
Balance, end of period	$	144,387	$	98,368		$	—	$	242,755	$	3,017		$	—	$	245,772
Supplemental cash flow disclosures:
Cash paid for interest	$	52,038	$	1,330		$	—	$	53,368	$	2,177		$	—	$	55,545
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid	$	4,336	$	23,263		$	—	$	27,599	$	256		$	—	$	27,855

38

Item 2.    

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes (the “Condensed Consolidated Financial Statements”) included in Part I, Item 1 of this Quarterly Report on Form 10-Q, and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2016.

Overview

Station Casinos LLC (“us,” “we,” “our,” or the “Company”) is a gaming, development and management company established in 1976 that develops and operates casino entertainment properties. We own and operate ten major gaming and entertainment facilities and ten smaller casinos (three of which are 50% owned) in the Las Vegas regional market, including our recent acquisition of Palms Casino Resort (“Palms”) in October 2016. In addition, we manage Graton Resort & Casino (‘‘Graton Resort’’) in Sonoma County, California and Gun Lake Casino (‘‘Gun Lake’’) in Allegan County, Michigan, both on behalf of Native American tribes.

Our principal source of revenue and operating income is gaming, and our non-gaming offerings include restaurants, hotels and other entertainment amenities. Approximately 80% to 85% of our casino revenue is generated from slot play. The majority of our revenue is cash-based and as a result, fluctuations in our revenues have a direct impact on our cash flows from operations. Because our business is capital intensive, we rely heavily on the ability of our properties to generate operating cash flow to repay debt financing and fund capital expenditures.

A significant portion of our business is dependent upon customers who live and/or work in the Las Vegas metropolitan area. The Las Vegas economy, although severely impacted by the recession and housing crisis that spanned from 2008 to 2011, began to stabilize in 2012 and, based on population and employment growth, is once again one of the fastest growing economies in the United States. Based on a recent U.S. Census Bureau release, Nevada was second among all states in percentage growth of population from July 2015 to July 2016. In addition, based on preliminary data for June 2017 from the U.S. Bureau of Labor Statistics, Las Vegas experienced a 3.7% year-over-year increase in employment to 981,000 jobs which is an all-time high. This resulted in an unemployment rate of 5.1% which has declined from 14.1% in July 2011. Businesses and consumers in Las Vegas continue to increase their spending as evidenced by 47 consecutive months of year-over-year increases in taxable retail sales from July 2013 to May 2017. Home values have also improved significantly over the past several years with the median price of an existing single family home in Las Vegas up approximately 130% at June 2017 compared to January 2012, as reported by the Greater Las Vegas Association of Realtors.

The Las Vegas economy has shown improvements in employment, taxable sales and home prices, and we believe the stabilization of the local economy, positive trends in many of the key economic indicators and future projects and infrastructure investments provide a foundation for future growth in our business. Although we experienced improved operating results over the past few years due, in part, to more favorable local economic conditions, we cannot be sure if, or how long, these favorable market conditions will persist or that they will continue to positively impact our results of operations.

Our Key Performance Indicators

We use certain key indicators to measure our performance.

Gaming revenue measures:

• Slot handle and table game drop are measures of volume. Slot handle represents the dollar amount wagered in slot machines, and table game drop represents the total amount of cash and net markers issued that are deposited in table game drop boxes.

• Win represents the amount of wagers retained by us and recorded as casino revenue.

• Hold represents win as a percentage of slot handle or table game drop.

As our customers are primarily Las Vegas residents, our hold percentages are generally consistent from period to period. Fluctuations in our casino revenue are primarily due to the volume and spending levels of customers at our properties.

Food and beverage revenue measures:

• Average guest check is a measure of sales and represents the average amount spent per customer visit.

39

• Number of guests served is an indicator of volume.

Room revenue measures:

• Occupancy is calculated by dividing total occupied rooms, including complimentary rooms, by total rooms available.

• Average daily rate (“ADR”) is calculated by dividing total room revenue, which includes the retail value of complimentary rooms, by total rooms occupied, including complimentary rooms.

• Revenue per available room is calculated by dividing total room revenue by total rooms available.

40

Results of Operations

Information about our results of operations is presented below (dollars in thousands):

	Three Months Ended June 30,						Percent change		Six Months Ended June 30,						Percent change
	2017			2016					2017			2016
Net revenues	$	403,493		$	351,486		14.8	%	$	821,225		$	710,733		15.5	%
Operating (loss) income	(29,360		)	71,212			n/m		65,510			165,174			(60.3	)%
Casino revenues	258,396			233,796			10.5	%	521,368			473,567			10.1	%
Casino expenses	103,170			88,986			15.9	%	204,824			176,407			16.1	%
Margin	60.1		%	61.9		%			60.7		%	62.7		%
Food and beverage revenues	75,303			66,408			13.4	%	155,418			133,028			16.8	%
Food and beverage expenses	55,059			44,501			23.7	%	110,105			87,025			26.5	%
Margin	26.9		%	33.0		%			29.2		%	34.6		%
Room revenues	44,641			32,979			35.4	%	94,405			67,363			40.1	%
Room expenses	18,239			11,893			53.4	%	38,306			24,278			57.8	%
Margin	59.1		%	63.9		%			59.4		%	64.0		%
Other revenues	23,699			17,705			33.9	%	46,519			34,887			33.3	%
Other expenses	9,079			6,305			44.0	%	16,912			12,027			40.6	%
Management fee revenue	30,676			27,455			11.7	%	60,903			54,104			12.6	%
Selling, general and administrative expenses	92,468			78,814			17.3	%	184,419			153,904			19.8	%
Percent of net revenues	22.9		%	22.4		%			22.5		%	21.7		%
Depreciation and amortization	46,807			38,436			21.8	%	92,060			77,863			18.2	%
Write-downs and other charges, net	9,270			10,966			(15.5	)%	10,298			13,334			(22.8	)%
Related party lease termination	98,393			—			n/m		98,393			—			n/m
Interest expense, net	33,853			34,078			(0.7	)%	68,797			69,146			(0.5	)%
Loss on extinguishment/modification of debt, net	975			7,084			n/m		2,994			7,084			n/m
Net income attributable to noncontrolling interests	4,055			2,740			48.0	%	6,316			4,604			37.2	%

____________________________________

n/m = Not meaningful

We view each of our Las Vegas casino properties as individual operating segments. We aggregate all of our Las Vegas operating segments into one reportable segment because all of our Las Vegas properties offer similar products, cater to the same customer base, have the same regulatory and tax structure, share the same marketing techniques, are directed by a centralized management structure and have similar economic characteristics. We also aggregate our Native American management arrangements into one reportable segment. The results of operations for our Native American management segment are discussed in the section entitled “Management Fee Revenue” below and the results of operations of our Las Vegas operations are discussed in the remaining sections. For the three and six months ended June 30, 2017, references to same-store basis represents results of operations excluding the impact of operations of Palms, which was acquired in the fourth quarter of 2016.

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Net Revenues. Net revenues for the three and six months ended June 30, 2017 increased by 14.8% and 15.5%, respectively, as compared to the prior year periods primarily due to the acquisition of Palms. Same-store net revenues for the three and six months ended June 30, 2017, which are further discussed below, increased 3.5% and 3.6% as compared to the prior year periods, despite the negative impact related to construction disruption at Palace Station associated with the upgrade and expansion project that commenced during the fourth quarter of 2016.

Operating (Loss) Income. Operating loss was $29.4 million for the three months ended June 30, 2017 and operating income was $65.5 million for the six months ended June 30, 2017, and was negatively impacted by a $98.4 million loss on a related party lease termination during the second quarter, which is discussed further below. Operating income for the three and six months ended June 30, 2016 was $71.2 million and $165.2 million, respectively. Same-store operating income excluding the loss from the related party lease termination was $73.4 million and $163.6 million for the three and six months ended June 30, 2017, respectively. Components of operating income for the three and six month comparative periods are discussed below.

Casino.  Casino revenues increased by 10.5% and 10.1% for the three and six months ended June 30, 2017, respectively, as compared to the prior year periods primarily due to the acquisition of Palms. Casino revenues on a same-store basis increased by 2.8% and 2.5% for the three and six months ended June 30, 2017, respectively, as compared to the prior year periods due to higher slot, table games and race and sports revenue. The increase in slot revenue on a same-store basis for the three and six month periods was primarily attributable to a 2.6% and 2.0% increase in slot handle, respectively, as compared to the prior year periods. The increase in table games revenue on a same-store basis for the three and six months ended June 30, 2017 was primarily due to an increase in drop of 5.7% and 2.5%, respectively, as compared to the prior year periods. Race and sports revenue was higher on a same-store basis for the three and six months ended June 30, 2017 due to increases in volume.

For the three and six months ended June 30, 2017, casino expenses increased by 15.9% and 16.1%, respectively, as compared to the prior year periods as a result of the increase in revenues, as well as increases in gaming promotions and employee expenses.

Food and Beverage.  For the three and six months ended June 30, 2017, food and beverage revenue increased by 13.4% and 16.8%, respectively, as compared to the prior year periods largely due to the acquisition of Palms. Food and beverage revenue on a same-store basis remained relatively flat for the three months ended June 30, 2017 and increased 1.1% for the six months ended June 30, 2017, as compared to the prior year periods, primarily due to the opening of several new restaurants during the first half of 2016, partially offset by lower catering revenues in the current year periods. The average guest check increased 4.7% and 2.7% on a same-store basis for the three and six months ended June 30, 2017, respectively, as compared to the prior year periods and same-store covers decreased by 3.5% and 1.4%, respectively, as compared to the prior year periods. Food and beverage expenses increased by 23.7% and 26.5% for the three and six months ended June 30, 2017, respectively, as compared to the prior year periods due to the acquisition of Palms, the addition of the new restaurants and increases in employee expenses, as well as enhancements to our food and beverage product offerings and service levels.

Room.  Information about our hotel operations is presented below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Occupancy	91.5		%	95.0		%	91.8		%	94.2		%
Average daily rate	$	91.28		$	84.00		$	96.74		$	87.00
Revenue per available room	$	83.48		$	79.76		$	88.82		$	81.99

     For the three and six months ended June 30, 2017, room revenues increased by 35.4% and 40.1%, respectively, primarily due to the acquisition of Palms. ADR increased by 8.7% and 11.2%, respectively, as compared to the prior year periods, partially offset by a 3.5 and 2.4 percentage point decrease, respectively, in occupancy rate. Room revenues on a same-store basis increased 1.6% and 4.2% and same-store ADR increased 3.8% and 6.4%, respectively, as compared to the prior year periods. Room expenses also increased for the three and six months ended June 30, 2017 as compared to the prior year periods, primarily due to the acquisition of Palms, as well as increases in employee expenses.

Other.  Other primarily represents revenues and their corresponding expenses from tenant leases, retail outlets, bowling, spas and entertainment. Other revenues increased by $6.0 million and $11.6 million for the three and six months ended June 30, 2017, respectively, as compared to the prior year periods, and other expenses increased $2.8 million and $4.9 million for the three and six months ended June 30, 2017, respectively, as compared to the prior year periods, primarily due to the acquisition of Palms.

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Management Fee Revenue.  Management fee revenue primarily represents management and development fees earned from our management agreements with Graton Resort and Gun Lake. Management fee revenue increased 11.7% and 12.6% to $30.7 million and $60.9 million for the three and six months ended June 30, 2017, respectively, as compared to $27.5 million and $54.1 million, respectively, for the prior year periods. The increase was due to higher slot and table games revenue as well as the opening of an expansion at Graton Resort, which included a 200-room hotel, convention space and other resort amenities, in the fourth quarter of 2016. In addition, a portion of the casino expansion at Gun Lake opened in May 2017, and the remaining expansion is expected to open in September 2017. The Gun Lake management agreement expires in February 2018.

Selling, General and Administrative (“SG&A”). For the three and six months ended June 30, 2017, SG&A expenses increased by $13.7 million and $30.5 million or 17.3% and 19.8%, respectively, as compared to the prior year periods, primarily due to SG&A expense of Palms, as well as higher employee expenses. These increases were partially offset by decreased rent expense due to the related party lease termination discussed further below and decreased advertising and promotions expense as compared to the prior year periods.

Depreciation and Amortization.  For the three and six months ended June 30, 2017, depreciation and amortization expense increased to $46.8 million and $92.1 million as compared to $38.4 million and $77.9 million for the prior year periods, respectively, primarily due to the acquisition of Palms, as well as accelerated depreciation related to the upgrade and expansion at Palace Station.

Write-downs and Other Charges, net. Write-downs and other charges, net include various charges to record net losses on asset disposals and non-routine transactions. For the three and six months ended June 30, 2017, write-downs and other charges, net were $9.3 million and $10.3 million, respectively. These amounts included $3.5 million in tenant lease termination expenses, as well as losses on fixed asset disposals of $5.5 million and $5.6 million, respectively, for the three and six months ended June 30, 2017.

For the three and six months ended June 30, 2016, write-downs and other charges, net were $11.0 million and $13.3 million, respectively. Included in this amount was $7.8 million and $9.0 million, respectively, in IPO-related advisory, legal and other transaction-related costs that were not deferred as direct and incremental costs of the IPO, as well as costs related to the Fertitta Entertainment Acquisition. We also incurred $1.3 million in costs associated with various development and acquisition activities, including the acquisition of Palms completed during the fourth quarter of 2016.

Related Party Lease Termination.  In April 2017, we purchased entities that own certain land on which Texas Station and Boulder Station are located for aggregate consideration of $120.0 million. The land was previously leased under long-term operating leases with a related party lessor. As a result of the land acquisition and the termination of the ground leases, we recognized a $98.4 million charge representing the difference between the aggregate consideration paid to the related party lessor and the acquisition date fair value of the land and residual interests acquired. Annual rent expense will decrease by approximately $7.1 million as a result of the land acquisition.

Interest Expense, net.  Interest expense, net decreased slightly to $33.9 million and $68.8 million, respectively, for the three and six months ended June 30, 2017 as compared to $34.1 million and $69.1 million, respectively, for the prior year periods. As a result of the credit facility repricings in January and May 2017, the redemption of $250.0 million in aggregate principal amount of our 7.50% Senior Notes in May 2017, and the repayment of the Restructured Land Loan, the weighted average interest rate on our outstanding debt decreased, which was offset by the impact of an increase in our outstanding indebtedness. Additional information about our debt activity is included in Note 3 to the Condensed Consolidated Financial Statements.

Loss on Extinguishment/Modification of Debt, net. For the three and six months ended June 30, 2017, we recorded $1.0 million and $3.0 million, respectively, net loss on extinguishment/modification of debt. During the three and six months ended June 30, 2017, we recognized a loss of $2.1 million and $4.1 million, respectively, related to the repricing and upsizing of our credit facility. During the three months ended June 30, 2017, we also recognized a loss on extinguishment/modification of debt of $13.8 million related to the redemption of our 7.50% Senior Notes, which was partially offset by a $14.9 million gain on debt extinguishment related to the Restructured Land Loan recognized in June 2017.

For the three and six months ended June 30, 2016, we recorded $7.1 million loss on extinguishment/modification of debt, primarily related to the refinancing of the prior credit facility in June 2016.

Net Income Attributable to Noncontrolling Interests. Net income attributable to noncontrolling interests represents the portion of net income of MPM Enterprises, LLC (“MPM”) that is attributable to third party interests.

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Adjusted EBITDA

Adjusted EBITDA for the three and six months ended June 30, 2017 and 2016 for our two reportable segments and a reconciliation of net (loss) income to Adjusted EBITDA are presented below (amounts in thousands). The Las Vegas operations segment includes all of our Las Vegas area casino properties and the Native American management segment includes our Native American management arrangements.

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Net revenues
Las Vegas operations	$	371,492		$	322,876		$	757,730		$	654,334
Native American management	30,543			27,320			60,648			53,807
Reportable segment net revenues	402,035			350,196			818,378			708,141
Corporate and other	1,458			1,290			2,847			2,592
Consolidated net revenues	$	403,493		$	351,486		$	821,225		$	710,733
Net (loss) income	$	(60,438	)	$	30,568		$	(2,077	)	$	90,071
Adjustments
Preopening	368			373			398			721
Depreciation and amortization	46,807			38,436			92,060			77,863
Share-based compensation	2,157			3,602			3,433			4,222
Write-downs and other charges, net	9,270			10,966			10,298			13,334
Related party lease termination	98,393			—			98,393			—
Interest expense, net	33,853			34,078			68,797			69,146
Loss on extinguishment/modification of debt, net	975			7,084			2,994			7,084
Change in fair value of derivative instruments	(3,330		)	(90		)	(3,369		)	(87		)
Adjusted EBITDA attributable to MPM noncontrolling interest	(6,418		)	(5,211		)	(11,056		)	(9,332		)
Other	—			(1,133		)	—			(1,133		)
Adjusted EBITDA	$	121,637		$	118,673		$	259,871		$	251,889
Adjusted EBITDA
Las Vegas operations	$	104,711		$	104,627		$	225,277		$	223,637
Native American management	22,695			20,096			46,012			40,528
Reportable segment Adjusted EBITDA	127,406			124,723			271,289			264,165
Corporate and other	(5,769		)	(6,050		)	(11,418		)	(12,276		)
Adjusted EBITDA	$	121,637		$	118,673		$	259,871		$	251,889

The increase in Adjusted EBITDA for the three and six months ended June 30, 2017 as compared to the prior year periods is due to the factors described above.

Adjusted EBITDA is a non-GAAP measure that is presented solely as a supplemental disclosure. We believe that Adjusted EBITDA is a widely used measure of operating performance in our industry and is a principal basis for valuation of gaming companies. We believe that in addition to net (loss) income, Adjusted EBITDA is a useful financial performance measurement for assessing our operating performance because it provides information about the performance of our ongoing core operations excluding non-cash expenses, financing costs, and other non-operational items. Adjusted EBITDA includes net (loss) income plus preopening, depreciation and amortization, share-based compensation, write-downs and other charges, net, related party lease termination, interest expense, net, loss on extinguishment/modification of debt, net and change in fair value of derivative instruments, and excludes Adjusted EBITDA attributable to the noncontrolling interests of MPM.

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To evaluate Adjusted EBITDA and the trends it depicts, the components should be considered. Each of these components can significantly affect our results of operations and should be considered in evaluating our operating performance, and the impact of these components cannot be determined from Adjusted EBITDA. Further, Adjusted EBITDA does not represent net (loss) income or cash flows from operating, investing or financing activities as defined by GAAP and should not be considered as an alternative to net income as an indicator of our operating performance. Additionally, Adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. In addition, it should be noted that not all gaming companies that report EBITDA or adjustments to this measure may calculate EBITDA or such adjustments in the same manner as we do, and therefore, our measure of Adjusted EBITDA may not be comparable to similarly titled measures used by other gaming companies.

Liquidity and Capital Resources

The following liquidity and capital resources discussion contains certain forward-looking statements with respect to our business, financial condition, results of operations, dispositions, acquisitions, investments and subsidiaries, which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to, the risks described in Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016.

At June 30, 2017, we had $112.6 million in cash and cash equivalents used for the day-to-day operations of our properties. At June 30, 2017, our borrowing availability under our Revolving Credit Facility, subject to continued compliance with the terms of our credit facility, was $461.0 million, which was net of $190.0 million in outstanding borrowings and $34.0 million in outstanding letters of credit and similar obligations.

Our anticipated uses of cash for the remainder of 2017 include (i) principal and interest payments on our indebtedness totaling approximately $9.8 million and $49.9 million, respectively, (ii) approximately $125.0 million to $150.0 million for capital expenditures, which includes amounts related to the upgrade and expansion project at Palace Station and reinvestment in Palms, and (iii) distributions to our members and noncontrolling interests, including a distribution of $11.6 million that we expect to pay to Station Holdco on August 30, 2017.

We believe that cash flows from operations, available borrowings under our credit facility and existing cash balances will be adequate to satisfy our other anticipated uses of capital for the next twelve months. We regularly assess our projected capital requirements for capital expenditures, repayment of debt obligations, and payment of other general corporate and operational needs. In the long term, we expect that we will fund our capital requirements with a combination of cash generated from operations, borrowings under our Revolving Credit Facility and the issuance of new debt as market conditions may permit. However, our cash flow and ability to obtain financing on terms that are satisfactory to us, or at all, may be affected by a variety of factors, many of which are outside of our control, including competition, general economic and business conditions and financial markets. As a result, we cannot provide any assurance that we will generate sufficient income and liquidity to meet all of our liquidity requirements or other obligations.

A summary of our cash flow information is presented below (amounts in thousands):

	Six Months Ended June 30,
	2017			2016
Net cash provided by (used in):
Operating activities	$	107,429		$	167,221
Investing activities	(132,681		)	(82,756		)
Financing activities	7,926			44,684

Cash Flows from Operations

Our operating cash flows primarily consist of operating income generated by our properties (excluding depreciation and other non-cash charges), interest paid and normal fluctuations in working capital accounts such as inventories, prepaid expenses, receivables and payables. The majority of our revenue is generated from our slot machine and table game play, which is conducted mainly on a cash basis. Our food and beverage, room and other revenues are also primarily cash-based. As a result, fluctuations in our revenues have a direct impact on our cash flow from operations. For the six months ended June 30, 2017, cash provided by operating activities was $107.4 million as compared to $167.2 million for the prior year period. Operating cash flows were negatively impacted by the $98.4 million loss on related party lease termination. These negative impacts were partially offset by operating results from Palms, which we acquired in October 2016, as well as improved operating results at our properties and our Native American managed properties as described under Results of Operations above.

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Cash Flows from Investing Activities

For the six months ended June 30, 2017, capital expenditures were $101.9 million, which were primarily related to various renovation projects, including the upgrade and expansion project at Palace Station which commenced in October 2016, as well as the purchase of slot machines and related gaming equipment. During the same period, we paid $23.4 million to a related party to purchase the land subject to the ground leases on which each of Boulder Station and Texas Station is located. During the six months ended June 30, 2016, capital expenditures were $87.6 million and were primarily related to various renovation projects at our properties. In addition, during the same period, we collected $18.3 million of related party notes and we deposited $20.0 million into an escrow account in connection with the acquisition of Palms.

Cash Flows from Financing Activities

During the six months ended June 30, 2017, we completed an aggregate $425.0 million upsizing and repricing of our credit facility and paid $20.9 million in related fees and costs. During the same period, we paid $105.1 million in full settlement of the outstanding principal owed under the Restructured Land Loan and to acquire outstanding warrants of CV Propco and NP Tropicana. During the six months ended June 30, 2017, we redeemed $250.0 million of the 7.50% Senior Notes and paid a redemption premium of $9.4 million. In addition, cash distributions totaled $50.9 million, consisting of $44.1 million paid to members of Station Holdco and $6.8 million paid by MPM to its noncontrolling interest holders.

During the six months ended June 30, 2016, we received a capital contribution of $419.5 million from Station Holdco representing proceeds from Red Rock Resorts’ IPO, which we used to complete the purchase of Fertitta Entertainment, which included a deemed distribution of $389.1 million to Fertitta Entertainment’s equity holders. During the same period, we entered into a new credit facility with an initial principal balance of $1.725 billion, the proceeds of which were used to repay the principal balance outstanding under the prior credit facility. For the six months ended June 30, 2016, cash distributions totaled $107.4 million, consisting of $101.0 million paid to members of Station Holdco and $6.4 million paid by MPM to its noncontrolling interest holders.

Credit Facility Amendments

In January 2017, we amended our credit facility to increase our existing Term Loan B Facility by $125.0 million and reduce the applicable margins for LIBOR and base rate loans by 50 basis points. We used the proceeds of the incremental Term Loan B Facility borrowings to repay outstanding borrowings under our Revolving Credit Facility and pay fees and costs incurred in connection with the transaction, including a repricing fee of $14.9 million, which represented 1.00% of the aggregate principal amount of the Term Loan B Facility outstanding prior to the $125.0 million increase in borrowings.

In May 2017, we amended our credit facility to increase the Term Loan B Facility by an additional $250.0 million. We applied the proceeds of the incremental borrowings under the Term Loan B Facility, together with cash on hand, to pay for the redemption of $250.0 million of its 7.50% Senior Notes and to pay fees and costs incurred in connection with the transactions. As a result of the January 2017 and May 2017 increases to the Term Loan B Facility, the required quarterly principal payments increased to $4.7 million. Depending on our consolidated leverage ratio, we are required to apply a portion of our excess cash flow to repay amounts outstanding under the Term Loan B Facility, which reduces future quarterly principal payments.

Also in May 2017, we completed a series of amendments to our credit facility to increase the existing Term Loan A Facility by $50.0 million and reduce the applicable margins for LIBOR and base rate loans under the Revolving Credit Facility and Term Loan A Facility. As amended, the Revolving Credit Facility and the Term Loan A Facility bear interest at a rate per annum, at our option, equal to either LIBOR plus an amount ranging from 1.75% to 2.00% or base rate plus an amount ranging from 0.75% to 1.00%, depending on our consolidated leverage ratio. Prior to the amendments, the Revolving Credit Facility and the Term Loan A Facility bore interest at a rate per annum, at our option and subject to a leverage-based grid, of either LIBOR plus an amount ranging from 1.75% to 2.75% or base rate plus an amount ranging from 0.75% to 1.75%.

Restructured Land Loan

In March 2017, we paid $61.8 million in full settlement of the $72.6 million outstanding principal amount owed to Deutsche Bank AG Cayman Islands Branch under the Restructured Land Loan. In June 2017, we repaid the remaining $43.3 million in outstanding principal amount owed to JPMorgan Chase Bank, N.A. under the Restructured Land Loan. Annual interest payments will decrease by approximately $3.6 million as a result of the repayment of the Restructured Land Loan.

7.50% Senior Notes

As noted above, in May 2017 we redeemed $250.0 million in aggregate principal amount of our 7.50% Senior Notes (the “Partial Notes Redemption”) at a redemption price equal to 103.75% of the principal amount of such notes. Following the

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Partial Notes Redemption, $250.0 million in aggregate principal amount of 7.50% Senior Notes remain outstanding. Annual interest payments will decrease by approximately $10.0 million as a result of the Partial Notes Redemption.

Restrictive Covenants

During the six months ended June 30, 2017, there were no changes in the covenants included in our credit facility or the indenture governing our 7.50% Senior Notes. A description of these covenants is included in Liquidity and Capital Resources in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2016. We believe that as of June 30, 2017, we were in compliance with the covenants contained in our credit facility and the indenture governing our 7.50% Senior Notes.

Off-Balance Sheet Arrangements

We have not entered into any transactions with special purpose entities and our derivative arrangements are described in Note 4 to the Condensed Consolidated Financial Statements. We do not have any retained or contingent interest in assets transferred to an unconsolidated entity. At June 30, 2017, we had outstanding letters of credit and similar obligations totaling $34.0 million.

Contractual Obligations

During the six months ended June 30, 2017, changes in our indebtedness, hedging activity and lease obligations caused a material change to the contractual obligations previously reported in our Annual Report on Form 10-K for the year ended December 31, 2016. The impact of the changes is summarized in the table below (amounts in millions):

	Payments Due by Period
	Less than 1 year		1-3 years		3-5 years		Thereafter		Total
Long-term debt (a)	$	71.3	$	118.3	$	689.4	$	1,687.7	$	2,566.7
Interest on long-term debt and interest rate swaps (b)	98.8		203.2		155.0		56.9		513.9
Operating leases	3.0		6.1		9.0		213.1		231.2

____________________________________________________________

(a) Includes scheduled principal payments and estimated excess cash flow payments on long-term debt outstanding at June 30, 2017.

(b) Includes contractual interest payments based on outstanding amounts and interest rates in effect at June 30, 2017 and projected net cash payments on our interest rate swaps.

Native American Development

We have development and management agreements with the North Fork Rancheria of Mono Indians, a federally recognized Native American tribe located near Fresno, California, pursuant to which we will assist the tribe in developing and operating a gaming and entertainment facility to be located on Highway 99 north of the city of Madera, California. See Note 2 to the Condensed Consolidated Financial Statements for information about this project.

Regulation and Taxes

We are subject to extensive regulation by Nevada gaming authorities as well as the National Indian Gaming Commission, the California Gambling Control Commission, the Federated Indians of Graton Rancheria Gaming Commission and the Gun Lake Tribal Gaming Commission. In addition, we will be subject to regulation, which may or may not be similar to that in Nevada, by any other jurisdiction in which we may conduct gaming activities in the future.

The gaming industry represents a significant source of tax revenue, particularly to the State of Nevada and its counties and municipalities. From time to time, various state and federal legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. The Nevada legislature meets every two years for 120 days and when special sessions are called by the Governor. The most recent regular legislative session ended in June 2017. There are currently no specific proposals to increase taxes on gaming revenue, but there are no assurances that an increase in taxes on gaming or other revenue will not be proposed and passed by the Nevada legislature in the future.

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Description of Certain Indebtedness

A description of our indebtedness is included in Note 11 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016 and in Note 3 to the Condensed Consolidated Financial Statements.

Derivative and Hedging Activities

A description of our derivative and hedging activities is included in Note 4 to the Condensed Consolidated Financial Statements.

Critical Accounting Policies and Estimates

A description of our critical accounting policies and estimates is included in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes to our critical accounting policies and estimates during the six months ended June 30, 2017.

Forward-looking Statements

When used in this report and elsewhere by management from time to time, the words “may”, “might”, “could”, “believes”, “anticipates”, “expects” and similar expressions are intended to identify forward-looking statements with respect to our financial condition, results of operations and our business including our expansions, development and acquisition projects, legal proceedings and employee matters. Certain important factors, including but not limited to, financial market risks, could cause our actual results to differ materially from those expressed in our forward-looking statements. Further information on potential factors which could affect our financial condition, results of operations and business including, without limitation, our ability to integrate the operations of Palms and realize cost savings and other synergies related to the acquisition; the impact of our substantial indebtedness; the effects of local and national economic, credit and capital market conditions on consumer spending and the economy in general, and on the gaming and hotel industries in particular; the effects of competition, including locations of competitors and operating and market competition; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; risks associated with construction projects, including disruption of our operations, shortages of materials or labor, unexpected costs, unforeseen permitting or regulatory issues and weather; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation; acts of war or terrorist incidents or natural disasters; risks associated with the collection and retention of data about our customers, employees, suppliers and business partners; and other risks described in our filings with the Securities and Exchange Commission. All forward-looking statements are based on our current expectations and projections about future events. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof.

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Item 3.        Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.

Our primary exposure to market risk is interest rate risk associated with our long-term debt. We evaluate our exposure to market risk by monitoring interest rates in the marketplace. We attempt to limit our exposure to interest rate risk by managing the mix of our long-term and short-term borrowings and by using interest rate swaps to hedge against the earnings effects of interest rate fluctuations. At June 30, 2017, $2.3 billion of the outstanding borrowings under our credit facility was based on variable rates, primarily LIBOR, plus applicable margins. See Note 3 to the Condensed Consolidated Financial Statements for additional information about our long-term debt.

Following is information about future principal maturities, excluding original issue discounts, of our long-term debt and the related weighted-average contractual interest rates in effect at June 30, 2017 (dollars in millions):

	Expected maturities during the twelve months ending June 30,
	2018			2019			2020			2021			2022			Thereafter			Total		Fair value
Long-term debt:
Fixed rate	$	2.7		$	2.4		$	2.6		$	252.7		$	2.9		$	18.4		$	281.7	$	291.4
Weighted-average interest rate	3.96		%	3.60		%	3.60		%	7.46		%	3.60		%	3.69		%
Variable rate (a)	$	68.6		$	37.7		$	75.6		$	419.7		$	14.1		$	1,669.3		$	2,285.0	$	2,282.7
Weighted-average interest rate	3.39		%	3.35		%	3.40		%	3.19		%	3.45		%	3.45		%

____________________________________________________________

(a) Based on variable interest rates and margins in effect at June 30, 2017.

The weighted-average interest rates for variable-rate debt shown in the long-term debt table above were calculated using the rates in effect at June 30, 2017. We cannot predict the LIBOR or base rate interest rates that will be in effect in the future, and actual rates will vary. Based on our outstanding borrowings at June 30, 2017, an assumed 1% increase in variable interest rates would cause our annual interest cost to increase by approximately $12.5 million, after giving effect to our interest rate swaps.

We are also exposed to interest rate risk related to our interest rate swap agreements which we use to hedge a portion of our variable-rate debt. Our interest rate swaps are matched with specific debt obligations and are not used for trading or speculative purposes. At June 30, 2017, our variable-to-fixed interest rate swaps effectively hedged the interest rate risk on $1.0 billion of the borrowings under our credit agreements.

On June 30, 2017, we dedesignated the hedge accounting relationships of our interest rate swaps that were previously designated as cash flow hedges of forecasted interest payments. Although we will no longer apply hedge accounting to these interest rate swaps, they continue to meet our risk management objectives by achieving fixed cash flows attributable to interest payments on the debt principal being hedged. See Note 4 to the Condensed Consolidated Financial Statements for detailed information about our interest rate swaps.

Interest rate movements affect the fair value of our interest rate swaps. We determine the fair values of our interest rate swaps using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the instrument. This analysis reflects the contractual terms of the agreements, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurement. Fair value is subject to significant estimation and a high degree of variability between periods. As a result of our election to discontinue hedge accounting, changes in the fair values of the previously designated interest rate swaps will be recognized in our Consolidated Statements of Operations in the period of change, which could result in earnings volatility in future periods.

We are exposed to credit risk should the counterparties fail to perform under the terms of the interest rate swap agreements; however, we seek to minimize our exposure to this risk by entering into interest rate swap agreements with highly rated counterparties, and we do not believe we were exposed to significant credit risk at June 30, 2017.

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Following is information about the combined notional amount and weighted average interest rate by contractual maturity date for our interest rate swap agreements, as well as the fair value of the combined net asset at June 30, 2017 (dollars in millions):

	Contractual maturities during the twelve months ending June 30,
	2018			2019			2020			2021			2022			Thereafter			Total		Fair value
Interest rate swaps:
Notional amount	$	44.1		$	52.3		$	54.9		$	885.9		$	—		$	—		$	1,037.2	$	11.9
Fixed interest rate payable (a)	1.18		%	1.46		%	1.73		%	1.94		%	—		%	—		%
Variable interest rate receivable (b)	1.09		%	1.09		%	1.09		%	1.09		%	—		%	—		%

____________________________________________________________

(a) Represents the weighted average fixed interest rate payable on our interest rate swaps.

(b) Represents the variable receive rate in effect at June 30, 2017.

There have been no other material changes in our market risk from those disclosed in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 4.    Controls and Procedures

The Company’s management conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of June 30, 2017. In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, the principal executive officer and principal financial officer concluded that, as of June 30, 2017, the Company’s disclosure controls and procedures were effective, at the reasonable assurance level, and are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

There was no change in the Company’s internal control over financial reporting during the Company’s most recently completed fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II.    Other Information

Item 1.       Legal Proceedings

The Company and its subsidiaries are defendants in various lawsuits relating to routine matters incidental to their business. As with all litigation, no assurance can be provided as to the outcome of such matters, and litigation inherently involves significant costs.

Item 1A.    Risk Factors

There have been no material changes in the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds—None.

Item 3.    Defaults Upon Senior Securities—None.

Item 4.    Mine Safety Disclosures—None.

Item 5.    Other Information—None.

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Item 6.    Exhibits

(a) Exhibits

No. 10.1—Second Amendment to Credit Agreement dated as of April 5, 2017, by and among Station Casinos LLC, the guarantors party thereto, Red Rock Resorts, Inc., Station Holdco LLC, the lenders party thereto and Deutsche Bank AG Cayman Islands Branch, as administrative agent. (Incorporated herein by reference to the Company’s Current Report on Form 8-K filed April 6, 2017.)

No. 10.2—Incremental Joinder Agreement No. 2 and Third Amendment to Credit Agreement dated as of May 2, 2017, by and among Station Casinos LLC, the guarantors party thereto, Red Rock Resorts, Inc., Station Holdco LLC, each of the Incremental Term A-3 Facility Lenders party thereto and Deutsche Bank AG Cayman Islands Branch, as administrative agent. (Incorporated herein by reference to the Company’s Current Report on Form 8-K filed May 3, 2017.)

No. 10.3—Incremental Joinder Agreement No. 3 dated as of May 10, 2017, by and among Station Casinos LLC, the guarantors party thereto, Red Rock Resorts, Inc., Station Holdco LLC, each of the Incremental Term B Lenders party thereto and Deutsche Bank AG Cayman Islands Branch, as administrative agent. (Incorporated herein by reference to the Company’s Current Report on Form 8-K filed May 10, 2017.)

No. 10.4—Supplemental Indenture dated as of July 25, 2017 by and among Palms Leaseco LLC, NP Landco Holdco LLC, NP Tropicana LLC, CV Propco LLC, Station Casinos LLC and Wells Fargo Bank, National Association as trustee.

No. 10.5—Employment Agreement, dated as of March 1, 2017 among Red Rock Resorts, Inc., Station Casinos LLC and Joseph J. Hasson.

No. 10.6—Employment Agreement, dated as of May 25, 2017 among Red Rock Resorts, Inc., Station Casinos LLC and Jeffrey T. Welch.

No. 10.7—Consulting Agreement dated as of May 24, 2017 by and between Station Casinos LLC and Marc J. Falcone.

No. 10.8—Consulting Agreement dated as of May 15, 2017 by and between Station Casinos LLC and Daniel Roy.

No. 10.9—Credit Agreement Joinder Agreement dated as of July 25, 2017 by and among Palms Leaseco LLC, NP Landco Holdco LLC, NP Tropicana LLC, CV Propco LLC and Deutsche Bank AG Cayman Islands Branch, as administrative agent.

No. 31.1—Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

No. 31.2—Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

No. 32.1—Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

No. 32.2—Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

No. 101—The following information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 formatted in eXtensible Business Reporting Language: (i) the Condensed Consolidated Balance Sheets at June 30, 2017 (unaudited) and December 31, 2016, (ii) the Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2017 and 2016, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 and (v) the Notes to Unaudited Condensed Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		STATION CASINOS LLC, Registrant
Date:	August 9, 2017	/s/ STEPHEN L. COOTEY
		Stephen L. Cootey Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

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