EX-99.1 2 a4743907ex991.txt NEWS RELEASE Exhibit 99.1 Station Casinos Announces Record Third Quarter Results and Increases Dividend by 20% LAS VEGAS--(BUSINESS WIRE)--Oct. 19, 2004--Station Casinos, Inc. (NYSE: STN - News; "Station" or the "Company") today announced the results of its operations for the third quarter ended September 30, 2004. Highlights for the quarter include: -- Adjusted for non-recurring items, diluted earnings per share of $0.46 compared to $0.35 in the prior year's third quarter, an increase of 31%. -- Record third quarter EBITDA (1) of $90.7 million, an increase of 19% over the prior year's third quarter. -- Same-store (2) revenues from the Las Vegas operations increased 14% over the prior year's third quarter, marking the third consecutive quarter of double-digit same-store revenue growth. -- Same-store EBITDA from the Las Vegas operations increased 27% over the prior year's third quarter. -- Same-store EBITDA margins for the Las Vegas operations increased to 36.3% from 32.5% in the prior year's third quarter. -- Declaring a 20% increase in its quarterly cash dividend, with the next quarterly dividend of $0.21 per share payable on December 3, 2004. -- The United Auburn Indian Community added approximately 800 slot machines at Thunder Valley Casino located outside of Sacramento, California, which represents an increase of over 40% in the number of slot machines at the property. Results of Operations The Company's net revenues for the third quarter ended September 30, 2004 were approximately $242.9 million, an increase of 11% compared to the prior year's third quarter. The Company reported EBITDA for the quarter of $90.7 million, an increase of 19% compared to the prior year's quarter. For the third quarter, Adjusted Earnings (3) applicable to common stock were $31.1 million, or $0.46 per share, an increase of 31% over the prior year's $0.35 per share on a comparable basis. This marks the eleventh consecutive quarter of year over year growth of Adjusted EBITDA, EBITDA margin and EPS. Non-recurring items for the quarter included $0.8 million for the net settlement of certain litigation and the payment of a fine and investigative costs related to violations of Nevada Gaming Commission Regulation 6A. In addition, the Company incurred preopening costs related to Red Rock Station of $0.2 million and $2.1 million in costs to develop new gaming opportunities, primarily related to Native American gaming. Including these items, the Company reported net income of $29.1 million and earnings applicable to common stock of $0.43 per share. For the quarter ended September 30, 2004, the Company reported earnings from its Green Valley Ranch Station joint venture of $8.3 million, which represents a combination of Station's management fee plus 50% of Green Valley Ranch Station's operating income. Green Valley Ranch Station generated EBITDA before management fees of $18.9 million, a 29% increase compared to the prior year's quarter. Las Vegas Market Results Same-store (Major Las Vegas Operations and Green Valley Ranch Station) net revenues for the quarter increased to $257.7 million, a 14% increase compared to the prior year's quarter, while EBITDA from those operations increased 27% to $93.7 million. "Our third consecutive quarter of double-digit same-store revenue growth demonstrates the strength of the Las Vegas economy. We continue to benefit from significant population growth and substantial development in the community, including new housing. These factors, combined with no new supply in the locals' market, give us confidence in our guidance of 10% to 12% same-store revenue growth for the fourth quarter of 2004," said Glenn C. Christenson, executive vice president and chief financial officer. EBITDA and Adjusted Earnings are not generally accepted accounting principles ("GAAP") measurements and are presented solely as a supplemental disclosure because the Company believes that they are widely used measures of operating performance in the gaming industry and as a principal basis for valuation of gaming companies. EBITDA and Adjusted Earnings are further defined in footnotes 1 and 3, respectively. Balance Sheet Items and Capital Expenditures Long-term debt was $1.28 billion as of September 30, 2004, net of cash held in marketable securities of $5.5 million. Total capital expenditures totaled $91.8 million for the third quarter, which included maintenance capital expenditures of $8.1 million. Expansion and project capital expenditures were $83.7 million, including $25.6 million for Red Rock Station, $6.0 million for the master planned expansion at Santa Fe Station, $3.2 million for the bowling center at Sunset Station, $10.9 million for the accelerated replacement of ticket-in ticket-out slot machines and $18.6 million for the purchase and enhancements of the Gold Rush and Magic Star casinos. As of September 30, 2004, the Company's debt to cash flow ratio as defined in its bank credit facility was 3.6 to 1. Fourth Quarter 2004 Guidance The Company expects EBITDA of approximately $94 million to $98 million for the fourth quarter of 2004 (excluding development expense and other non-recurring items). This would result in earnings per share ("EPS") of $0.48 to $0.52 for the fourth quarter of 2004 assuming 68 million fully diluted shares. This guidance assumes revenue growth for the fourth quarter of 2004 of 10% to 12% in Las Vegas (including Green Valley Ranch Station) with an effective tax rate of 37%. For 2004, the Company expects EBITDA of approximately $372 million to $376 million (excluding development expense and non-recurring items) and Adjusted Earnings applicable to common stock of approximately $1.94 to $1.98 assuming 67 million fully diluted shares. Dividend On October 18, 2004, the Company's Board of Directors declared a 20% increase in its quarterly cash dividend to $0.21 per share. The dividend is payable on December 3, 2004 to shareholders of record on November 12, 2004. "Our strong operational performance and significant free cash flows allow us to provide significant cash returns to our shareholders while continuing to grow the business through new unit development and master-planned expansions. This is the second time since we instituted a dividend in 2003 that we have increased the amount returned to shareholders as a result of the strength of our operations," said Christenson. Conference Call Information The Company will host a conference call today, Tuesday, October 19, at 9:00 AM (PT) to discuss its third quarter financial results and provide guidance for the fourth quarter of 2004. Interested participants may access the call by dialing in to the conference operator at (888) 328-2936. A live audio webcast of the call, as well as supplemental tables and charts, will also be available at the Company's website, www.stationcasinos.com. (4) A replay of the call will be available from 11:00 AM (PT) on October 19, 2004, until 11:00 AM (PT) on October 26, 2004 at (800) 633-8284. The reservation number is 21209821. Company Information and Forward Looking Statements Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino in Henderson, Nevada and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages the Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community. This press release contains certain forward-looking statements with respect to the business, financial condition, results of operations, dispositions, acquisitions and expansion projects of the Company and its 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, financial market risks, the ability to maintain existing management, integration of acquisitions, competition within the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, regulatory matters and litigation and other risks described in the filings of the Company with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2003, and its Registration Statement on Form S-4 File No. 333-113986. All forward-looking statements are based on the Company's current expectations and projections about future events. All forward-looking statements speak only as of the date hereof and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Additional financial information, including presentations from recent investor conferences, is available in the "Investors" section of the Company's website at www.stationcasinos.com . (4) Construction projects such as Red Rock Station, the expansions of Green Valley Ranch Station, Santa Fe Station and Sunset Station entail significant risks, including shortages of materials or skilled labor, unforeseen regulatory problems, work stoppages, weather interference, floods and unanticipated cost increases. The anticipated costs and construction periods are based on budgets, conceptual design documents and construction schedule estimates. There can be no assurance that the budgeted costs or construction period will be met. (1) EBITDA consists of net income plus income tax provision, interest and other expense, loss on early retirement of debt, our 50% portion of the leased tenant buyout at Green Valley Ranch Station, impairment loss, preopening expenses, depreciation, amortization, development expense, employer taxes on stock exercises, certain litigation, Regulation 6A fine and related investigative costs less Thunder Valley development fee. EBITDA is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance in the gaming industry and as a principal basis for valuation of gaming companies. The Company believes that in addition to cash flows and net income, EBITDA is a useful financial performance measurement for assessing the operating performance of the Company. Together with net income and cash flows, EBITDA provides investors with an additional basis to evaluate the ability of the Company to incur and service debt and incur capital expenditures. To evaluate EBITDA and the trends it depicts, the components should be considered. The impact of income tax provision, interest and other expense, loss on early retirement of debt, our 50% portion of the leased tenant buyout at Green Valley Ranch Station, impairment loss, preopening expenses, depreciation, amortization, development expense, employer taxes on stock exercises, certain litigation, Regulation 6A fine and related investigative costs and Thunder Valley development fee, each of which can significantly affect the Company's results of operations and liquidity and should be considered in evaluating the Company's operating performance, cannot be determined from EBITDA. Further, EBITDA does not represent net income or cash flows from operating, financing and investing activities as defined by generally accepted accounting principles ("GAAP") and does not necessarily indicate cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income, as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. In addition, it should be noted that not all gaming companies that report EBITDA or adjustments to such measures may calculate EBITDA or such adjustments in the same manner as the Company, and therefore, the Company's measure of EBITDA may not be comparable to similarly titled measures used by other gaming companies. A reconciliation of EBITDA to net income is included in the financial schedules accompanying this release. (2) Same-store includes the Major Las Vegas Operations (Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Fiesta Rancho and Fiesta Henderson) plus the total operations of Green Valley Ranch Station. (3) Adjusted Earnings excludes development fee and interest income related to Thunder Valley, development expense, employer taxes on stock exercises, certain litigation, Regulation 6A fine and related investigative costs, loss on sale of land, impairment loss, preopening expenses, loss on early retirement of debt and our 50% portion of the leased tenant buyout at Green Valley Ranch Station. Adjusted Earnings is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance in the gaming industry and as a principal basis for valuation of gaming companies, as this measure is considered by the Company to be a better measure on which to base expectations of future results than GAAP net income. A reconciliation of Adjusted Earnings and EPS to GAAP net income and EPS is included in the financial schedules accompanying this release. (4) The hyperlink to the Company's URL is included herein solely for the convenience of investors in accessing the audio webcast of the third quarter conference call. All other references herein to the Company's URL are inactive textual references. None of the information contained on the Company's website shall be deemed incorporated by reference or otherwise included herein. Station Casinos, Inc. Condensed Consolidated Balance Sheets (amounts in thousands) (unaudited) September 30, December 31, 2004 2003 ----------- ----------- Assets: Cash and cash equivalents $53,831 $62,272 Receivables, net 18,234 28,224 Other current assets 30,014 43,968 ----------- ----------- Total current assets 102,079 134,464 Property and equipment, net 1,284,651 1,158,299 Other long-term assets 506,615 453,209 ----------- ----------- Total assets $1,893,345 $1,745,972 =========== =========== Liabilities and stockholders' equity: Current portion of long-term debt $23 $22 Other current liabilities 131,794 142,294 ----------- ----------- Total current liabilities 131,817 142,316 Revolving credit facility - 177,000 Senior and senior subordinated notes 1,282,534 973,786 Other debt 6,042 6,060 Interest rate swaps, mark-to-market (817) 12,089 Other long-term liabilities 57,049 94,782 ----------- ----------- Total liabilities 1,476,625 1,406,033 Stockholders' equity 416,720 339,939 ----------- ----------- Total liabilities and stockholders' equity $1,893,345 $1,745,972 =========== =========== Station Casinos, Inc. Condensed Consolidated Statements of Operations (amounts in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Operating revenues: Casino $181,048 $157,637 $533,016 $479,890 Food and beverage 34,418 32,692 103,451 98,542 Room 13,426 12,803 42,545 37,500 Other 10,644 11,618 30,973 35,035 Management fees 19,995 19,914 62,174 27,769 --------- --------- --------- --------- Gross revenues 259,531 234,664 772,159 678,736 Promotional allowances (16,669) (15,994) (50,155) (50,500) --------- --------- --------- --------- Net revenues 242,862 218,670 722,004 628,236 --------- --------- --------- --------- Operating costs and expenses: Casino 69,391 66,297 203,239 196,612 Food and beverage 25,355 22,089 74,212 62,901 Room 5,418 4,883 15,601 14,628 Other 4,369 4,061 12,582 11,650 Selling, general and administrative 44,129 42,236 126,906 120,532 Corporate expense 11,311 7,968 33,874 24,653 Development expense 2,113 2,859 8,309 2,859 Depreciation and amortization 21,935 18,397 62,117 54,575 Preopening expenses 233 - 577 - Impairment loss - - - 1,394 --------- --------- --------- --------- 184,254 168,790 537,417 489,804 --------- --------- --------- --------- Operating income 58,608 49,880 184,587 138,432 Earnings from joint ventures 7,038 4,875 18,249 14,788 --------- --------- --------- --------- Operating income and earnings from joint ventures 65,646 54,755 202,836 153,220 --------- --------- --------- --------- Other income (expense): Interest expense (18,624) (22,681) (58,615) (70,758) Interest and other expense from joint ventures (894) (1,570) (3,271) (4,416) Interest income 29 8 115 4,867 Loss on early retirement of debt - - (93,265) - Other (487) 919 (3,299) 1,199 --------- --------- --------- --------- (19,976) (23,324) (158,335) (69,108) --------- --------- --------- --------- Income before income taxes 45,670 31,431 44,501 84,112 Income tax provision (16,584) (11,629) (16,163) (31,121) --------- --------- --------- --------- Net income $29,086 $19,802 $28,338 $52,991 ========= ========= ========= ========= Basic and diluted earnings per common share: Net income Basic $0.45 $0.34 $0.45 $0.92 Diluted $0.43 $0.32 $0.43 $0.86 Weighted average common shares outstanding Basic 65,052 58,634 63,647 57,762 Diluted 67,769 62,840 66,300 61,354 Dividends paid per common share $0.175 $0.125 $0.475 $0.125 Station Casinos, Inc. Summary Information and Reconciliation of Net Income to EBITDA (amounts in thousands, except occupancy percentage and ADR) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------ 2004 2003 2004 2003 ------------------------------------ Major Las Vegas Operations (a): ------------------------------- Net revenues $213,981 $191,236 $636,113 $577,793 Net income $22,628 $16,914 $78,615 $58,744 Income tax provision 14,678 9,933 46,171 34,499 Interest and other expense, net 13,581 14,020 40,767 45,427 Depreciation and amortization 20,566 17,488 58,537 51,974 Litigation, Regulation 6A fine and related investigative costs 3,303 520 3,303 520 ------------------------------------ EBITDA $74,756 $58,875 $227,393 $191,164 ==================================== Green Valley Ranch Station (50% owned): ---------------------------------------- Net revenues $43,743 $34,745 $127,626 $101,438 Net income $10,640 $5,263 $24,491 $16,826 Interest and other expense, net 3,873 4,981 12,026 13,355 Depreciation and amortization 4,309 4,377 12,647 12,289 Litigation 75 - 75 - Leased tenant buyout - - 7,284 - ------------------------------------ EBITDA $18,897 $14,621 $56,523 $42,470 ==================================== Same-Store Operations (b): ------------------------------- Net revenues $257,724 $225,981 $763,739 $679,231 Net income $33,268 $22,177 $103,106 $75,570 Income tax provision 14,678 9,933 46,171 34,499 Interest and other expense, net 17,454 19,001 52,793 58,782 Depreciation and amortization 24,875 21,865 71,184 64,263 Litigation, Regulation 6A fine and related investigative costs 3,378 520 3,378 520 Leased tenant buyout - - 7,284 - ------------------------------------ EBITDA $93,653 $73,496 $283,916 $233,634 ==================================== Total Station Casinos, Inc. (c): ------------------------------- Net income $29,086 $19,802 $28,338 $52,991 Income tax provision 16,584 11,629 16,163 31,121 Interest and other expense, net 19,976 23,324 65,070 69,108 Depreciation and amortization 21,935 18,397 62,117 54,575 Development expense 2,113 2,859 8,309 2,859 Litigation, Regulation 6A fine and related investigative costs 813 520 813 2,313 Preopening expenses 233 - 577 - Loss on early retirement of debt - - 93,265 - Leased tenant buyout at Green Valley Ranch Station (50%) - - 3,642 - Employer taxes on stock exercises - 681 - 681 Thunder Valley development fee - (810) - (4,407) Impairment loss - - - 1,394 ------------------------------------ EBITDA $90,740 $76,402 $278,294 $210,635 ==================================== Occupancy percentage 96% 93% 96% 94% ADR $52 $50 $56 $49 (a)The Major Las Vegas Operations include the wholly owned properties of Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Fiesta Rancho and Fiesta Henderson. (b)Same-Store Operations include the Major Las Vegas Operations plus the total operations of Green Valley Ranch Station. (c)Total Station Casinos, Inc. includes the Major Las Vegas Operations, Wild Wild West, Wildfire (since January 27, 2003), Magic Star (since August 2, 2004), Gold Rush (since August 2, 2004), the Company's earnings from joint ventures, management fees and Corporate expense. Station Casinos, Inc. Reconciliation of GAAP Net Income and EPS to Adjusted Earnings and EPS (amounts in thousands, except per share data) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------------------------ 2004 2003 2004 2003 ------------------------------------ Adjusted Earnings Net income $29,086 $19,802 $28,338 $52,991 Development expense, net 1,374 1,858 5,401 1,858 Litigation, Regulation 6A fine and related investigative costs, net 528 338 528 1,503 Preopening expenses, net 151 - 375 - Loss on early retirement of debt, net - - 60,622 - Leased tenant buyout at Green Valley Ranch Station (50%), net - - 2,367 - Employer taxes on stock exercises, net - 443 - 443 Thunder Valley development fee, net - (527) - (2,865) Thunder Valley interest income, net - - - (3,149) Loss on sale of land, net - - 1,782 - Impairment loss, net - - - 906 -------- -------- -------- -------- Adjusted Earnings $31,139 $21,914 $99,413 $51,687 ======== ======== ======== ======== Adjusted basic earnings per common share: Net income $0.45 $0.34 $0.45 $0.92 Development expense, net 0.02 0.03 0.08 0.03 Litigation, Regulation 6A fine and related investigative costs, net 0.01 - 0.01 0.03 Preopening expenses, net - - 0.01 - Loss on early retirement of debt, net - - 0.95 - Leased tenant buyout at Green Valley Ranch Station (50%), net - - 0.03 - Employer taxes on stock exercises, net - 0.01 - 0.01 Thunder Valley development fee, net - (0.01) - (0.05) Thunder Valley interest income, net - - - (0.06) Loss on sale of land, net - - 0.03 - Impairment loss, net - - - 0.01 -------- -------- -------- -------- Adjusted basic earnings per common share $0.48 $0.37 $1.56 $0.89 ======== ======== ======== ======== Weighted average common shares outstanding - basic 65,052 58,634 63,647 57,762 Adjusted diluted earnings per common share: Net income $0.43 $0.32 $0.43 $0.86 Development expense, net 0.02 0.03 0.08 0.03 Litigation, Regulation 6A fine and related investigative costs, net 0.01 - 0.01 0.03 Preopening expenses, net - - 0.01 - Loss on early retirement of debt, net - - 0.91 - Leased tenant buyout at Green Valley Ranch Station (50%), net - - 0.03 - Employer taxes on stock exercises, net - 0.01 - 0.01 Thunder Valley development fee, net - (0.01) - (0.05) Thunder Valley interest income, net - - - (0.05) Loss on sale of land, net - - 0.03 - Impairment loss, net - - - 0.01 -------- -------- -------- -------- Adjusted diluted earnings per common share $0.46 $0.35 $1.50 $0.84 ======== ======== ======== ======== Weighted average common shares outstanding - diluted 67,769 62,840 66,300 61,354 CONTACT: Station Casinos, Inc., Las Vegas Glenn C. Christenson, 800-544-2411 or 702-367-2484 Thomas M. Friel, 800-544-2411 or 702-221-6793 Lesley A. Pittman, 800-544-2411 or 702-367-2437