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Investments in Joint Ventures

9 Months Ended

Sep. 30, 2011

7. Investments in Joint Ventures

The Company has various investments in 50% owned joint ventures in Las Vegas, Nevada, which are accounted for under the equity method. Under the equity method, original investments are initially recorded at cost and adjusted by the investor's share of earnings, losses and distributions of the joint ventures. The carrying value of investments may be reduced below zero, resulting in a deficit investment balance, when the investor is committed to provide further financial support for the investee. The investment balance also includes the effect of any previously recognized impairment charges.

Successor

The Company holds 50% equity investments in Barley's, The Greens and Wildfire Lanes, which are managed by the Company on behalf of the joint ventures. The Company also owns a 50% investment in Losee Elkhorn Properties, LLC which owns undeveloped land in North Las Vegas. As a result of fresh-start reporting, on the Effective Date the carrying values of these investments were adjusted to their fair values, which totaled approximately $10.3 million. These investments are not, in the aggregate, material in relation to the Company's financial position or results of operations. Operating earnings from joint ventures is shown as a separate line item after operating income, and interest and other expense from joint ventures is shown as a separate component under other expense on the Company's condensed consolidated statements of operations.

Predecessor

STN's investments in joint ventures consist of the following (amounts in thousands):

		Predecessor

		Station Casinos, Inc.
		December 31, 2010
Barley's Casino & Brewing Company ("Barley's") (50.0%)		$	4,756
Wildfire Lanes and Casino ("Wildfire Lanes") (50.0%)			760

	Investments in joint ventures	$	5,516

Green Valley Ranch (50.0%) (a)		$	(38,258	)
The Greens Gaming and Dining ("The Greens") (50.0%) (b)			(163	)
Aliante Station (50.0%) (c)			(306,346	)

	Deficit investments in joint ventures	$	(344,767	)

(a): STN's investment in Green Valley Ranch at December 31, 2010 reflects a deficit as a result of asset impairment charges and ongoing losses recognized during the Predecessor period, which is recorded as a long-term liability on STN's condensed consolidated balance sheet.
(b): STN's investment in The Greens at December 31, 2010 reflects a deficit as a result of ongoing losses recognized during the Predecessor period, which is recorded as a long-term liability on STN's condensed consolidated balance sheet.
(c): STN's investment in Aliante Station at December 31, 2010 reflects a deficit as a result of asset impairment charges and ongoing losses recognized during the Predecessor period, which is recorded as a long-term liability on STN's condensed consolidated balance sheet.

On June 7, 2011, Predecessor disposed of its 6.7% investment in Palms Casino Resort and recognized a gain on disposal of $250,000. As a result of previously recognized losses, the carrying value of this investment had been reduced to zero prior to disposal.

For the Predecessor Periods, interest and other expense from joint ventures includes Predecessor's 50% interest in the mark-to-market valuation of certain joint ventures' interest rate swaps that were not designated as hedging instruments for accounting purposes. The following table identifies Predecessor's total equity earnings (loss) from joint ventures (amounts in thousands, unaudited):

		Predecessor

		Station Casinos, Inc.
		Three Months Ended September 30, 2010			Period From January 1, 2011 Through June 16, 2011			Nine Months Ended September 30, 2010
Operating loss from joint ventures		$	(4,975	)	$	(945	)	$	(2,762	)
Interest and other expense from joint ventures			(11,126	)		(15,452	)		(55,750	)

	Net loss from joint ventures	$	(16,101	)	$	(16,397	)	$	(58,512	)

Summarized balance sheet information for STN's joint ventures is as follows (amounts in thousands):

	Predecessor

	Station Casinos, Inc.
	December 31, 2010
Current assets	$	113,439
Property and equipment and other assets, net		1,044,629
Current liabilities		1,362,724
Long-term debt and other liabilities		499,990
Members' deficit		(704,646	)

Summarized results of operations for STN's joint ventures are as follows (amounts in thousands, unaudited):

		Predecessor

		Station Casinos Inc.
		Three Months Ended September 30, 2010			Period From January 1, 2011 Through June 16, 2011			Nine Months Ended September 30, 2010
Net revenues		$	99,423		$	194,554		$	311,416
Operating costs and expenses			115,676			177,685			333,755

	Operating (loss) income		(16,253	)		16,869			(22,339	)
Interest and other expense, net			(31,486	)		(70,858	)		(141,270	)

	Net loss	$	(47,739	)	$	(53,989	)	$	(163,609	)

As of December 31, 2010, STN had received distributions from joint ventures in excess of equity earnings.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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