EX-99.1 2 a5542206ex991.txt EXHIBIT 99.1 Exhibit 99.1 Station Casinos Announces Third Quarter Results LAS VEGAS--(BUSINESS WIRE)--Nov. 9, 2007--Station Casinos, Inc. ("Station" or the "Company") today announced the results of its operations for the third quarter ended September 30, 2007 and other Company-related news. Results of Operations The Company's net revenues for the third quarter ended September 30, 2007 were approximately $354.1 million, an increase of 2% compared to the prior year's third quarter. The Company reported EBITDA for the quarter of $124.2 million, a decrease of 2% compared to the prior year's third quarter. For the third quarter, Adjusted Earnings (2) applicable to common stock were $9.1 million, or $0.16 per diluted share, compared to the prior year's $0.38 per diluted share on a comparable basis. During the third quarter, the Company incurred $2.3 million in costs to develop new gaming opportunities, primarily related to Native American gaming, $2.2 million related to costs associated with the Merger (as defined below), $0.9 million of preopening expenses and $2.5 million of other non-recurring costs. Including these items, the Company reported net income of $3.7 million and diluted earnings applicable to common stock of $0.07 per share. The Company's earnings from its Green Valley Ranch joint venture for the third quarter were $10.6 million, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the third quarter, Green Valley Ranch generated EBITDA before management fees of $25.4 million, which was virtually unchanged compared to the same period in the prior year. Las Vegas Market Results For the third quarter, net revenues from the Major Las Vegas Operations, excluding Green Valley Ranch, were $321.2 million, a 4% increase compared to the prior year's third quarter, while EBITDA from those operations increased 4% to $106.1 million. 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 2, respectively. Balance Sheet Items and Capital Expenditures Long-term debt was $3.72 billion as of September 30, 2007. Total capital expenditures were $202.9 million for the third quarter. Expansion and project capital expenditures included $9.0 million for Phase III of Red Rock, $10.0 million for the expansion of Fiesta Henderson, $26.2 million for the corporate office building and $114.6 million for the purchase of land. As of September 30, 2007, the Company's debt to cash flow ratio, as defined in its bank credit facility, was 6.3 to 1. Merger On November 7, 2007, the Company completed its merger (the "Merger") with FCP Acquisition Sub, a Nevada corporation ("Merger Sub"), pursuant to which Merger Sub merged with and into the Company with the Company continuing as the surviving corporation. The Merger was completed pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of February 23, 2007 and amended as of May 4, 2007, among the Company, Fertitta Colony Partners LLC, a Nevada limited liability company ("Parent"), and Merger Sub, as amended. As a result of the Merger, approximately 24.1% of the issued and outstanding shares of non-voting common stock of the Company is owned by Fertitta Partners LLC, a Nevada limited liability company ("Fertitta Partners"), which is owned by affiliates of Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, affiliates of Lorenzo J. Fertitta, Vice Chairman and President of Station, affiliates of Blake L. Sartini and Delise F. Sartini, and certain officers and other members of management of the Company. The remaining 75.9% of the issued and outstanding shares of non-voting common stock of the Company is owned by FCP Holding, Inc., a Nevada corporation and a wholly-owned subsidiary of Parent ("FCP HoldCo"). Parent is owned by an affiliate of Colony Capital, LLC ("Colony") and affiliates of Frank J. Fertitta III and Lorenzo J. Fertitta. Substantially simultaneously with the consummation of the merger, shares of voting common stock of Station were issued for nominal consideration to FCP VoteCo LLC, a Nevada limited liability company ("FCP VoteCo"), which is owned by Frank J. Fertitta III, Lorenzo J. Fertitta and Thomas J. Barrack, Jr., the Chairman and Chief Executive Officer of Colony. 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 Red Rock Casino Resort Spa, 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, Gold Rush Casino and Lake Mead Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company, The Greens and Renata's Casino in Henderson, Nevada and a 6.7% interest in the joint venture that owns the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages 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 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, the outcome of any legal proceedings that have been, or will be, instituted against the Company related to the merger transaction; risks that the merger transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; the ability to recognize the benefits of the merger transaction; the impact of the substantial indebtedness to be incurred to finance the consummation of the merger transaction; the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and hotel industries in particular; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation; acts of war or terrorist incidents or natural disasters; the effects of competition, including locations of competitors and operating and market competition; 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, as amended, for the year ended December 31, 2006, and its Registration Statement on Form S-3ASR File No. 333-134936. 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. Construction projects such as the master-planned expansion of Red Rock and the development of Aliante 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. Development of the proposed gaming and entertainment projects with the Gun Lake Tribe, the Federated Indians of Graton Rancheria, the Mechoopda Indian Tribe of Chico Rancheria and the North Fork Rancheria of Mono Indians and the operation of Class III gaming at each of the projects is subject to certain governmental and regulatory approvals, including, but not limited to, approval of state gaming compacts with the State of Michigan or the State of California, the Department of the Interior completing the process of taking land into trust for the benefit of the tribes and approval of the management agreements by the National Indian Gaming Commission. No assurances can be given as to when, or if, these governmental and regulatory approvals will be received. (1) EBITDA consists of net income plus income tax provision, interest and other expense, net, loss on early retirement of debt, loss or gain on asset disposals, net, preopening expenses, management agreement/lease termination costs, other non-recurring costs, depreciation, amortization and development expense. 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, net, loss on early retirement of debt, loss or gain on asset disposals, net, preopening expenses, management agreement/lease termination costs, other non-recurring costs, depreciation, amortization and development expense, 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) Adjusted Earnings excludes development expense, preopening expenses, management agreement/lease termination costs, loss or gain on asset disposals, net, loss on early retirement of debt and other non-recurring costs. 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. Station Casinos, Inc. Condensed Consolidated Balance Sheets (amounts in thousands) (unaudited) September 30, December 31, 2007 2006 ------------- ------------ Assets: Cash and cash equivalents $ 98,958 $ 116,898 Receivables, net 47,049 40,762 Other current assets 51,833 43,891 ------------- ------------ Total current assets 197,840 201,551 Property and equipment, net 2,793,778 2,586,473 Other long-term assets 940,116 928,672 ------------- ------------ Total assets $3,931,734 $3,716,696 ============= ============ Liabilities and stockholders' deficit: Current portion of long-term debt $ 114 $ 341 Other current liabilities 247,737 251,565 ------------- ------------ Total current liabilities 247,851 251,906 Revolving credit facility 1,306,000 1,155,800 Senior and senior subordinated notes 2,304,507 2,304,737 Other debt 12,588 8,855 Interest rate swaps, mark-to-market 3,044 (905) Due to unconsolidated affiliate 100,000 - Other long-term liabilities 248,646 183,161 ------------- ------------ Total liabilities 4,222,636 3,903,554 Stockholders' deficit (290,902) (186,858) ------------- ------------ Total liabilities and stockholders' deficit $3,931,734 $3,716,696 ============= ============ 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, ------------------- ----------------------- 2007 2006 2007 2006 --------- --------- ----------- ----------- Operating revenues: Casino $254,169 $248,836 $ 775,323 $ 710,196 Food and beverage 60,372 57,637 184,800 152,784 Room 25,223 20,867 84,527 59,507 Other 20,097 19,894 57,040 51,728 Management fees 20,999 24,299 69,441 74,183 --------- --------- ----------- ----------- Gross revenues 380,860 371,533 1,171,131 1,048,398 Promotional allowances (26,732) (25,565) (81,669) (68,169) --------- --------- ----------- ----------- Net revenues 354,128 345,968 1,089,462 980,229 --------- --------- ----------- ----------- Operating costs and expenses: Casino 98,218 93,776 290,500 254,905 Food and beverage 45,087 41,710 132,141 109,709 Room 9,464 8,584 28,010 21,967 Other 7,813 7,801 21,533 19,204 Selling, general and administrative 67,841 64,872 190,665 167,652 Corporate 15,717 12,032 54,430 44,791 Development 2,305 2,104 6,457 6,785 Depreciation and amortization 44,259 36,859 124,456 93,886 Preopening 636 (211) 1,649 27,477 Loss (gain) on asset disposals, net 140 1,458 (1,599) 680 Management agreement/lease termination 25 - 3,825 500 --------- --------- ----------- ----------- 291,505 268,985 852,067 747,556 --------- --------- ----------- ----------- Operating income 62,623 76,983 237,395 232,673 Earnings from joint ventures 8,943 9,044 29,831 30,884 --------- --------- ----------- ----------- Operating income and earnings from joint ventures 71,566 86,027 267,226 263,557 --------- --------- ----------- ----------- Other expense: Interest expense, net (58,320) (52,149) (172,113) (117,310) Interest and other expense from joint ventures (7,547) (1,842) (20,419) (4,890) --------- --------- ----------- ----------- (65,867) (53,991) (192,532) (122,200) --------- --------- ----------- ----------- Income before income taxes 5,699 32,036 74,694 141,357 Income tax provision (1,990) (12,807) (32,862) (54,213) --------- --------- ----------- ----------- Net income $ 3,709 $ 19,229 $ 41,832 $ 87,144 ========= ========= =========== =========== Earnings per common share: Basic $ 0.07 $ 0.35 $ 0.77 $ 1.47 Diluted $ 0.07 $ 0.34 $ 0.74 $ 1.43 Weighted average common shares outstanding Basic 54,165 55,003 54,357 59,286 Diluted 56,129 56,712 56,247 61,099 Dividends declared per common share $ 0.29 $ 0.29 $ 0.86 $ 0.79 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, ------------------- ----------------------- 2007 2006 2007 2006 --------- --------- ----------- ----------- Major Las Vegas Operations (a): ---------------------- Net revenues $321,232 $308,617 $ 983,377 $ 868,593 Net income $ 17,754 $ 22,791 $ 80,555 $ 89,124 Income tax provision 13,284 15,312 60,275 54,599 Interest and other expense, net 30,262 29,554 88,143 66,760 Depreciation and amortization 42,286 34,769 118,604 88,476 Loss (gain) on asset disposals, net 52 (2) 20 (407) Preopening expenses 151 (293) 715 27,135 Other non-recurring costs 2,329 - 2,329 - Management agreement/lease termination - - 3,800 - --------- --------- ----------- ----------- EBITDA (b) $106,118 $102,131 $ 354,441 $ 325,687 ========= ========= =========== =========== Green Valley Ranch (50% owned): ---------------------- Net revenues $ 67,667 $ 61,728 $ 206,685 $ 191,823 Net income $ 3,462 $ 13,492 $ 18,427 $ 45,915 Interest and other expense, net 14,964 5,350 40,833 17,260 Depreciation and amortization 6,113 6,309 17,707 18,412 (Gain) loss on asset disposals, net - - (17) 25 Preopening expenses 274 286 376 286 Management agreement/lease termination 580 - 3,880 - Loss on early retirement of debt - - 1,655 - --------- --------- ----------- ----------- EBITDA $ 25,393 $ 25,437 $ 82,861 $ 81,898 ========= ========= =========== =========== Major Las Vegas Operations including Green Valley Ranch: ---------------------- Net revenues $388,899 $370,345 $1,190,062 $1,060,416 Net income $ 21,216 $ 36,283 $ 98,982 $ 135,039 Income tax provision 13,284 15,312 60,275 54,599 Interest and other expense, net 45,226 34,904 128,976 84,020 Depreciation and amortization 48,399 41,078 136,311 106,888 Loss (gain) on asset disposals, net 52 (2) 3 (382) Preopening expenses 425 (7) 1,091 27,421 Management agreement/lease termination 580 - 7,680 - Other non-recurring costs 2,329 - 2,329 - Loss on early retirement of debt - - 1,655 - --------- --------- ----------- ----------- EBITDA $131,511 $127,568 $ 437,302 $ 407,585 ========= ========= =========== =========== Total Station Casinos, Inc. (b): ---------------------- Net income $ 3,709 $ 19,229 $ 41,832 $ 87,144 Income tax provision 1,990 12,807 32,862 54,213 Interest and other expense, net 65,867 53,991 192,532 122,200 Depreciation and amortization 44,259 36,859 124,456 93,886 Development expense 2,305 2,104 6,457 6,785 Loss (gain) on asset disposals, net 140 1,458 (1,599) 680 (Gain) loss on asset disposals, net at joint ventures (50%) - - (19) - Preopening expenses 636 (211) 1,649 27,477 Preopening expenses at joint ventures (50%) 227 143 464 143 Management agreement/lease termination 25 - 3,825 500 Management agreement/lease termination at Green Valley Ranch (50%) 290 - 1,940 - Other non-recurring costs 4,744 363 16,364 363 --------- --------- ----------- ----------- EBITDA $124,192 $126,743 $ 420,763 $ 393,391 ========= ========= =========== =========== Occupancy percentage 88% 94% 92% 96% ADR $ 86 $ 71 $ 92 $ 71 (a)Includes the wholly owned properties of Red Rock (since April 18, 2006), Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Fiesta Rancho and Fiesta Henderson. (b)For the three and nine months ended September 30, 2007, the CMBS Properties (Red Rock, Palace Station, Boulder Station and Sunset Station) reported EBITDA of $70.6 million and $239.6 million, respectively. (c)Includes the Major Las Vegas Operations, Wild Wild West, Wildfire, Magic Star, Gold Rush, Lake Mead Casino (since October 2006), 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, ------------------ ----------------- 2007 2006 2007 2006 ---------- ------- -------- -------- Adjusted Earnings (a): Net income $3,709 $19,229 $41,832 $87,144 Development expense 1,498 1,368 4,197 4,411 Loss (gain) on asset disposals 91 948 (1,039) 442 (Gain) loss on asset disposals at joint ventures (50%) - - (12) - Preopening expenses 413 (137) 1,071 17,860 Preopening expenses at joint ventures (50%) 148 93 302 93 Management agreement/lease termination 16 - 2,486 325 Management agreement/lease termination at Green Valley Ranch (50%) 188 - 1,261 - Other non-recurring costs 3,084 236 10,636 236 Loss on early retirement of debt at Green Valley Ranch (50%) - - 538 - ---------- ------- -------- -------- Adjusted Earnings $9,147 $21,737 $61,272 $110,511 ========== ======= ======== ======== Adjusted basic earnings per common share(a): Net income $0.07 $0.35 $0.77 $1.47 Development expense 0.03 0.03 0.08 0.07 Loss (gain) on asset disposals - 0.02 (0.02) 0.01 Preopening expenses 0.01 - 0.02 0.30 Management agreement/lease termination - - 0.05 0.01 Management agreement/lease termination at Green Valley Ranch (50%) - - 0.02 - Other non-recurring costs 0.06 - 0.20 - Loss on early retirement of debt at Green Valley Ranch (50%) - - 0.01 - ---------- ------- -------- -------- Adjusted basic earnings per common share $0.17 $0.40 $1.13 $1.86 ========== ======= ======== ======== Weighted average common shares outstanding - basic 54,165 55,003 54,357 59,286 Adjusted diluted earnings per common share (a): Net income $0.07 $0.34 $0.74 $1.43 Development expense 0.03 0.02 0.08 0.07 Loss (gain) on asset disposals - 0.02 (0.02) 0.01 Preopening expenses 0.01 - 0.02 0.29 Preopening expenses at joint ventures (50%) - - 0.01 - Management agreement/lease termination - - 0.04 0.01 Management agreement/lease termination at Green Valley Ranch (50%) - - 0.02 - Other non-recurring costs 0.05 - 0.19 - Loss on early retirement of debt at Green Valley Ranch (50%) - - 0.01 - ---------- ------- -------- -------- Adjusted diluted earnings per common share $0.16 $0.38 $1.09 $1.81 ========== ======= ======== ======== Weighted average common shares outstanding - diluted 56,129 56,712 56,247 61,099 (a) All dollar and per share amounts are shown net of tax. CONTACT: Station Casinos, Inc., Las Vegas Thomas M. Friel, 800-544-2411 or 702-495-4210 Executive Vice President, Chief Accounting Officer and Treasurer Lori B. Nelson, 800-544-2411 or 702-495-4248 Director of Corporate Communications