Exhibit 99.1
Station Casinos Announces First Quarter Results and Declares Dividend
LAS VEGAS--(BUSINESS WIRE)--May 9, 2007--Station Casinos, Inc.
(NYSE:STN; "Station" or the "Company") today announced the results of
its operations for the first quarter ended March 31, 2007 and other
Company-related news.
Notable events include:
-- Station's Board of Directors approved a $90 per share buy-out
offer.
-- First quarter EBITDA (1) of $152.3 million, an increase of 15%
over the prior year's first quarter.
-- Net revenues from its Major Las Vegas Operations, excluding
Green Valley Ranch, increased 32% from the prior year's first
quarter.
-- Adjusted for non-recurring items and development expenses,
diluted earnings per share ("EPS") of $0.51 compared to $0.78
in the prior year's first quarter, a decrease of 35%.
-- Declaring a quarterly cash dividend of $0.2875 per share
payable on June 4, 2007 to shareholders of record on May 21,
2007.
Results of Operations
The Company's net revenues for the first quarter ended March 31,
2007 were approximately $372.4 million, an increase of 27% compared to
the prior year's first quarter. The Company reported EBITDA for the
quarter of $152.3 million, an increase of 15% compared to the prior
year's first quarter. This marks the twenty-first consecutive quarter
of year-over-year growth of Adjusted EBITDA. For the first quarter,
Adjusted Earnings (2) applicable to common stock were $28.7 million,
or $0.51 per diluted share, compared to last year's $0.78 per diluted
share on a comparable basis.
During the first quarter, the Company incurred $2.3 million in
costs to develop new gaming opportunities, primarily related to Native
American gaming, $4.8 million related to costs associated with the FCP
transaction noted below and $0.8 million of other non-recurring costs.
Including these items, the Company reported net income of $23.1
million and diluted earnings applicable to common stock of $0.41 per
share.
The Company's earnings from its Green Valley Ranch joint venture
for the first quarter were $13.3 million, which represents a
combination of the Company's management fee plus 50% of Green Valley
Ranch's operating income. For the quarter, Green Valley Ranch
generated EBITDA before management fees of $29.2 million, a 3%
decrease compared to the prior year's first quarter.
Las Vegas Market Results
For the first quarter, net revenues from the Major Las Vegas
Operations, excluding Green Valley Ranch, increased to $335.0 million,
a 32% increase compared to the prior year's quarter, while EBITDA from
those operations increased 19% to $129.8 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 $3.30 billion as of March 31, 2007. Total
capital expenditures were $138.0 million for the first quarter.
Expansion and project capital expenditures included $35.2 million for
Phases II and III of Red Rock Resort, $11.5 million for the expansion
of Santa Fe Station and $32.7 million for the purchase of land. As of
March 31, 2007, the Company's debt to cash flow ratio, as defined in
its bank credit facility, was 5.7 to 1.
Dividend
On May 7, 2007 the Company's Board of Directors declared a
quarterly cash dividend of $0.2875 per share. The dividend is payable
on June 4, 2007 to shareholders of record on May 21, 2007.
Proposed Merger
On February 23, 2007, the Company entered into a definitive merger
agreement with Fertitta Colony Partners LLC ("FCP"), pursuant to which
FCP agreed to acquire all of Station's outstanding common stock for
$90 per share in cash. FCP is a new company formed by Frank J.
Fertitta III, Chairman and Chief Executive Officer of Station, Lorenzo
J. Fertitta, Vice Chairman and President of Station and Colony Capital
Acquisitions, LLC, an affiliate of Colony Capital, LLC. On May 7,
2007, Station filed a preliminary proxy statement and related
materials with the Securities and Exchange Commission that provides
details about the pending sale of the Company.
IMPORTANT ADDITIONAL INFORMATION REGARDING THE MERGER HAS BEEN
FILED WITH THE SEC.
In connection with the proposed merger, the Company has filed a
preliminary proxy statement and related materials with the Securities
and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO
READ THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE
IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES
THERETO. Investors and security holders may obtain a free copy of the
proxy statement (when available) and other documents filed by the
Company at the Securities and Exchange Commission's website at
http://www.sec.gov. The proxy statement and such other documents may
also be obtained for free from the Company by directing such request
to Station Casinos, Inc. Investor Relations, 2411 W. Sahara Avenue,
Las Vegas, NV 89102, telephone: (800) 544-2411.
Station and its directors, executive officers and certain other
members of its management and employees may be deemed to be
participants in the solicitation of proxies from its stockholders in
connection with the proposed merger. Information regarding the
interests of Station's participants in the solicitation will be
included in the definitive proxy statement relating to the proposed
merger when it becomes available.
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
and The Greens 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 occurrence of any event, change or other
circumstances that could give rise to the termination of the merger
agreement with FCP; the outcome of any legal proceedings that have
been, or will be, instituted against the Company related to the merger
agreement; the inability to complete the merger due to the failure to
obtain stockholder approvals for the merger or the failure to satisfy
other conditions to complete the merger, including the receipt of all
regulatory approvals related to the merger; the failure to obtain the
necessary financing arrangements set forth in the debt and equity
commitment letters delivered pursuant to the merger agreement; risks
that the proposed 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; the
amount of the costs, fees, expenses and charges related to the merger
and the actual terms of certain financings that will be obtained for
the merger; the impact of the substantial indebtedness to be incurred
to finance the consummation of the merger; 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. Additional financial information,
including presentations from recent investor conferences, is available
in the "Investor Relations" section of the Company's website at
www.stationcasinos.com.
Construction projects such as the master-planned expansions of Red
Rock and Fiesta Henderson 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, lease
terminations, 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, lease
terminations, 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, lease terminations, 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)
March 31, December 31,
2007 2006
------------- -------------
Assets:
Cash and cash equivalents $115,904 $116,898
Receivables, net 41,389 40,762
Other current assets 46,091 43,891
------------- -------------
Total current assets 203,384 201,551
Property and equipment, net 2,672,219 2,586,473
Other long-term assets 818,458 928,672
------------- -------------
Total assets $3,694,061 $3,716,696
============= =============
Liabilities and stockholders' deficit:
Current portion of long-term debt $580 $341
Other current liabilities 248,986 251,565
------------- -------------
Total current liabilities 249,566 251,906
Revolving credit facility 984,400 1,155,800
Senior and senior subordinated notes 2,304,661 2,304,737
Other debt 8,593 8,855
Interest rate swaps, mark-to-market 840 (905)
Due to unconsolidated affiliate 100,000 -
Other long-term liabilities 224,379 183,161
------------- -------------
Total liabilities 3,872,439 3,903,554
Stockholders' deficit (178,378) (186,858)
------------- -------------
Total liabilities and stockholders'
deficit $3,694,061 $3,716,696
============= =============
Station Casinos, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
-------------------
2007 2006
--------- ---------
Operating revenues:
Casino $264,695 $216,223
Food and beverage 61,563 38,871
Room 30,748 17,021
Other 17,428 13,972
Management fees 24,828 25,900
--------- ---------
Gross revenues 399,262 311,987
Promotional allowances (26,824) (19,517)
--------- ---------
Net revenues 372,438 292,470
--------- ---------
Operating costs and expenses:
Casino 95,300 74,180
Food and beverage 43,062 26,576
Room 9,416 5,544
Other 6,227 4,583
Selling, general and administrative 61,928 44,623
Corporate 21,310 16,287
Development 2,259 2,132
Depreciation and amortization 40,222 25,664
Preopening 4 14,122
Gain on asset disposals, net (46) (843)
Lease terminations - 500
--------- ---------
279,682 213,368
--------- ---------
Operating income 92,756 79,102
Earnings from joint ventures 11,516 11,923
--------- ---------
Operating income and earnings from joint ventures 104,272 91,025
--------- ---------
Other expense:
Interest expense, net (56,530) (23,816)
Interest and other expense from joint ventures (5,898) (1,568)
--------- ---------
(62,428) (25,384)
--------- ---------
Income before income taxes 41,844 65,641
Income tax provision (18,794) (24,519)
--------- ---------
Net income $23,050 $41,122
========= =========
Earnings per common share:
Basic $0.42 $0.64
Diluted $0.41 $0.62
Weighted average common shares outstanding
Basic 54,385 64,104
Diluted 56,320 66,054
Dividends paid per common share $0.29 $0.25
Station Casinos, Inc.
Summary Information and
Reconciliation of Net Income to EBITDA
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended
March 31,
-------------------
2007 2006
--------- ---------
Major Las Vegas Operations (a):
- ---------------------------------------------------
Net revenues $335,004 $254,720
Net income $38,474 $44,468
Income tax provision 23,581 26,341
Interest and other expense, net 29,652 14,632
Depreciation and amortization 38,306 23,901
Gain on asset disposals, net (32) (254)
Preopening expenses (184) -
--------- ---------
EBITDA $129,797 $109,088
========= =========
Green Valley Ranch Station (50% owned):
- ---------------------------------------------------
Net revenues $69,441 $67,094
Net income $10,976 $17,835
Interest and other expense, net 10,841 6,194
Depreciation and amortization 5,682 5,998
Loss on asset disposals, net - 23
Loss on early retirement of debt 1,655 -
Preopening expenses 3 -
--------- ---------
EBITDA $29,157 $30,050
========= =========
Major Las Vegas Operations including Green Valley
Ranch:
- ---------------------------------------------------
Net revenues $404,445 $321,814
Net income $49,450 $62,303
Income tax provision 23,581 26,341
Interest and other expense, net 40,493 20,826
Depreciation and amortization 43,988 29,899
Gain on asset disposals, net (32) (231)
Loss on early retirement of debt 1,655 -
Preopening expenses (181) -
--------- ---------
EBITDA $158,954 $139,138
========= =========
Total Station Casinos, Inc. (b):
- ---------------------------------------------------
Net income $23,050 $41,122
Income tax provision 18,794 24,519
Interest and other expense, net 62,428 25,384
Depreciation and amortization 40,222 25,664
Development expense 2,259 2,132
Gain on asset disposals, net (46) (843)
Preopening expenses 4 14,122
Lease terminations - 500
Other non-recurring costs 5,601 -
--------- ---------
EBITDA $152,312 $132,600
========= =========
Occupancy percentage 94% 98%
ADR $97 $66
*T
(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) 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
March 31,
---------------------
2007 2006
---------- ----------
Adjusted Earnings (a):
Net income $23,050 $41,122
Development expense 1,468 1,386
Preopening expenses 3 9,179
Lease terminations - 325
Gain on asset disposals (30) (548)
Other non-recurring costs 3,641 -
Loss on early retirement of debt at Green
Valley Ranch Station (50%) 538 -
---------- ----------
Adjusted Earnings $28,670 $51,464
========== ==========
Adjusted basic earnings per common share(a):
Net income $0.42 $0.64
Development expense 0.03 0.02
Preopening expenses - 0.14
Lease terminations - 0.01
Gain on asset disposals - (0.01)
Other non-recurring costs 0.07 -
Loss on early retirement of debt at Green
Valley Ranch Station (50%) 0.01 -
---------- ----------
Adjusted basic earnings per common share $0.53 $0.80
========== ==========
Weighted average common shares outstanding -
basic 54,385 64,104
Adjusted diluted earnings per common share (a):
Net income $0.41 $0.62
Development expense 0.03 0.02
Preopening expenses - 0.14
Lease terminations - 0.01
Gain on asset disposals - (0.01)
Other non-recurring costs 0.06 -
Loss on early retirement of debt at Green
Valley Ranch Station (50%) 0.01 -
---------- ----------
Adjusted diluted earnings per common share $0.51 $0.78
========== ==========
Weighted average common shares outstanding -
diluted 56,320 66,054
(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
or
Lori B. Nelson, 800-544-2411 or 702-495-4248
Director of Corporate Communications