10-K 1 stationcasinos10-kx12312014.htm 10-K Station Casinos 10-K - 12.31.2014
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
 
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2014
OR
o
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 89135
(Address of principal executive offices, Zip Code)
Registrant's telephone number, including area code: (702) 495-3000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Voting Units
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No þ 
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
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 definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No þ
The aggregate market value of the voting units held by non-affiliates (all other persons other than executive officers or directors) of the registrant as of June 30, 2014 was $0.
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes þ    No o 
As of February 28, 2015, 100 shares of the registrant's voting units were outstanding and 100 shares of the registrant's non-voting units were outstanding.
Documents Incorporated by Reference
None.



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Unless otherwise noted, references to the ''Company,'' "Station," ''we,'' ''us'' and ''our'' refer to Station Casinos LLC and its consolidated subsidiaries for periods following June 17, 2011, the Company’s bankruptcy emergence date. The terms ''STN" and "STN Predecessor" refer to Station Casinos, Inc. and its consolidated subsidiaries prior to June 17, 2011.

PART I

ITEM 1.
BUSINESS
Introduction
We are a gaming and entertainment company established in 1976 that develops and operates casino entertainment facilities. We currently own and operate nine major hotel/casino properties under the Red Rock, Green Valley Ranch, Station and Fiesta brands and ten smaller casino properties (three of which are 50% owned) in the Las Vegas metropolitan area. We also manage Graton Resort & Casino in Sonoma County, California, which opened in November 2013, and Gun Lake Casino in Allegan County in southwestern Michigan.
We offer convenience and choices to residents throughout the Las Vegas valley with our strategically located properties. Each of our properties caters primarily to Las Vegas area residents. We believe that our patrons are discerning customers who enjoy a high-quality, value oriented experience. We believe that our patrons view our hotel and casino product as a preferable alternative to attractions located on the Las Vegas Strip and/or in downtown Las Vegas.
Our principal source of revenue and operating income is gaming, primarily slot revenue, and we use our non-gaming offerings, such as restaurants, hotels and other entertainment amenities, to attract patrons to our casino properties. 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 at our properties.
We believe the high-quality entertainment experience we provide our customers also differentiates us from our competitors. Our casino properties are conveniently located throughout the Las Vegas valley and provide our customers a wide variety of entertainment and dining options. We believe we surpass our competitors in offering casino patrons the newest and most popular slot and video games featuring the latest technology.
Our principal executive offices are located at 1505 South Pavilion Center Drive, Las Vegas, Nevada 89135. The telephone number for our executive offices is (702) 495-3000. Our internet website is www.sclv.com.
Business Strategy
Our primary operating strategy emphasizes attracting and retaining customers, primarily Las Vegas residents and, to a lesser extent, out-of-town visitors. Our properties attract customers through:
convenient locations with best-in-class assets;
offering our customers the latest in slot and video poker technology;
a variety of non-gaming amenities such as restaurants, bars and entertainment options;
focused marketing efforts targeting our extensive customer database;
innovative, frequent and high-profile promotional programs; and
convention business.
The Las Vegas market is very competitive, and we compete with both large hotel casinos in Las Vegas and smaller gaming-only establishments throughout the Las Vegas valley.
Provide a High-Value Gaming and Entertainment Experience. Because we target repeat customers, we are committed to providing a high-value entertainment experience for our customers in our casinos, restaurants, hotels and other entertainment amenities. We have developed regional entertainment destinations for Las Vegas residents that include amenities such as movie theaters, bowling centers, spas, live entertainment venues, child care facilities and ice skating. We believe the value offered by the restaurants at each of our casino properties is a major factor in attracting gaming customers, as dining is a primary motivation for casino visits by many guests. Through their restaurants, each of which has a distinct style of cuisine, our casino

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properties offer generous portions of high-quality food at reasonable prices. Our operating strategy focuses on slot and video poker machine play. Our target market consists of frequent gaming patrons who seek a friendly atmosphere and convenience. Because repeat visitors demand variety and quality in their slot and video poker machine play, we offer the latest in slot and video poker technology at our casino properties. As part of our commitment to providing a quality entertainment experience for our patrons, we are dedicated to ensuring a high level of customer satisfaction and loyalty by providing attentive customer service in a friendly, casual atmosphere.
Innovative Marketing and Promotion Strategy. We employ an innovative marketing strategy that utilizes frequent high-profile promotional programs in order to attract and retain customers while also establishing a high level of name recognition. In addition to advertising through traditional media, such as television, radio and newspaper, we have increased our focus to reach and engage guests through digital and mobile solutions.
Voted "Best Players Club" for 15 years in a row by the local residents, our Boarding Pass player rewards program allows guests to earn and redeem points at any of our Las Vegas area properties for cash, free slot play, food and beverage at any of our restaurants and bars, hotel rooms, movie passes, entertainment tickets and merchandise. In late 2014, we introduced custom kiosk games to enhance the promotional engagement and experience for our Boarding Pass guests. We plan to continue developing custom interactive games in 2015 to retain and entertain guests of all ages.
We have developed progressive mobile solutions to engage our current customers and attract new customers. In early 2014, we introduced a mobile application which allows users to access information about our properties, make reservations, receive special offers, activate their current offers and access their Boarding Pass account information. In addition, we continue to enhance our Sports Connection mobile application including the introduction of a Station Casinos prepaid card that allows bettors to deposit and withdraw from their account anywhere in Nevada. We believe that these mobile products create sustainable competitive advantages and will continue to distinguish us from our competition.
Employee Relations. Station began as a family-run business in 1976 and has maintained close-knit relationships among our management, and we endeavor to instill this same sense of loyalty among our employees. Toward this end, we take a hands-on approach through active and direct involvement with employees at all levels. We believe we have very good employee relations. See "Risk Factors—Risks Related to our Business—Union organization activities could disrupt our business by discouraging patrons from visiting our properties, causing labor disputes or work stoppages, and, if successful, could significantly increase our labor costs."
Native American Projects. Because of our expertise in developing and operating regional entertainment destinations, we also provide management and development services to several Native American tribes.

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Properties
Set forth below is certain information as of December 31, 2014 concerning our properties.
 
Hotel
Rooms
 
Slots (1)
 
Gaming
Tables (2)
 
Acreage
Owned Properties
 
 
 
 
 
 
 
Red Rock
811

 
2,889

 
61

 
64

Green Valley Ranch
495

 
2,331

 
45

 
40

Palace Station
972

 
1,653

 
39

 
30

Boulder Station
299

 
2,607

 
33

 
54

Texas Station
199

 
1,709

 
20

 
47

Sunset Station
457

 
2,217

 
35

 
82

Santa Fe Station
200

 
2,409

 
39

 
39

Fiesta Rancho
100

 
1,237

 
13

 
25

Fiesta Henderson
224

 
1,534

 
16

 
46

Wild Wild West
258

 
176

 
4

 
20

Wildfire Rancho

 
187

 

 
5

Wildfire Boulder

 
169

 

 
2

Wildfire Sunset

 
141

 

 
1

Wildfire Lake Mead

 
57

 

 
3

Wildfire Valley View

 
35

 

 

Wildfire Anthem

 
15

 

 

50% Owned Properties
 
 
 
 
 
 
 
Barley's

 
197

 

 

The Greens

 
38

 

 

Wildfire Lanes

 
199

 

 

Managed Properties
 
 
 
 
 
 
 
Gun Lake Casino

 
1,625

 
33

 
147

Graton Resort & Casino

 
2,909

 
131

 
254

_______________________________________________________________________________
(1)
Includes slot and video poker machines.
(2)
Generally includes blackjack ("21"), craps, roulette, pai gow, baccarat, let it ride and three-card poker.
Red Rock
Red Rock opened in 2006 and is strategically located at the intersection of Interstate 215 and Charleston Boulevard in the Summerlin master-planned community in Las Vegas, Nevada. The AAA Four Diamond resort features an elegant desert oasis theme with a contemporary design featuring luxury amenities. In addition to its standard guest rooms, the hotel offers six styles of suites, including one-of-a-kind custom villas and penthouse suites. Additional non-gaming amenities include nine full-service restaurants, a 16-screen movie theater complex, approximately 94,000 square feet of meeting and convention space, a full-service spa, a 72-lane bowling center, a Kid's Quest child care facility and a gift shop. In 2014, we completed several major capital projects at Red Rock, including the mall connector and Restaurant Row. The mall connector is a new parking area and walkway which offers our guests convenient parking and access to and from Downtown Summerlin, a new1.6 million square foot outdoor shopping, dining and entertainment center located adjacent to Red Rock. Restaurant Row links, via a pedestrian walkway, five of our premier restaurants including Hearthstone Kitchen & Cellar and Mercadito Mexican Restaurant, both of which opened in 2014, Yard House, Lucille's Smokehouse Bar-B-Que and a new Italian restaurant which is expected to open in 2015. Other full-service restaurants at Red Rock include T-bones Chophouse, 8 Noodle Bar, which opened in December 2014, the Grand Café, Feast Buffet (which features live-action themed buffets offering options that include Mexican, Italian, barbecue, American and Chinese cuisines) and Sandbar. Red Rock also features numerous bars and lounges including Rocks Lounge, Onyx Bar, Sandbar and Lucky Bar. Red Rock also offers a variety of fast-food restaurants.

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Green Valley Ranch
Green Valley Ranch opened in 2001 and is strategically located at the intersection of Interstate 215 and Green Valley Parkway in Henderson, Nevada. Green Valley Ranch is approximately five minutes from McCarran International Airport and seven minutes from the Las Vegas Strip. Green Valley Ranch was designed to complement the Green Valley master-planned community. The AAA Four Diamond resort features a Mediterranean style villa theme with non-gaming amenities including four full-service restaurants, a 4,200-square-foot non-gaming arcade, a state-of-the-art spa with outdoor pools, a 10-screen movie theater complex, two gift shops, approximately 65,000 square feet of meeting and convention space and an entertainment lounge. Green Valley Ranch also offers an 8-acre outdoor complex featuring private poolside cabanas, a contemporary poolside bar and grill, and one and a half acres of vineyards. Green Valley Ranch's full-service restaurants include Hank's Fine Steaks and Martinis, Tides Seafood & Sushi Bar, the Grand Café and Feast Buffet. Green Valley Ranch also offers a variety of fast-food restaurants. Guests may also enjoy the Drop Bar, a centerpiece of the casino, the Lobby Bar, which is open to the hotel entrance and the pool area, and the Sip Bar.
Palace Station
Palace Station opened in 1976 and is strategically located at the intersection of Sahara Avenue and Interstate 15, one of Las Vegas' most heavily traveled areas. Palace Station is a short distance from McCarran International Airport and from major attractions on the Las Vegas Strip and downtown Las Vegas. Palace Station features a turn-of-the-20th-century railroad station theme with non-gaming amenities including six full-service restaurants, two additional bars, two swimming pools, an approximately 20,000-square-foot banquet and convention center and a gift shop. Palace Station's full-service restaurants offer a variety of high-quality food at reasonable prices, and include the Grand Café, Feast Buffet, Cabo Mexican Restaurant, The Oyster Bar, Food Express Chinese Restaurant, and The Charcoal Room (a steakhouse), which reopened in 2014. Palace Station also offers a variety of fast-food restaurants.
Boulder Station
Boulder Station opened in 1994 and is strategically located at the intersection of Boulder Highway and Interstate 515. We believe that Boulder Station's highly visible location at this well-traveled intersection offers a competitive advantage relative to the other hotels and casinos located on Boulder Highway. Boulder Station is located approximately four miles east of the Las Vegas Strip and approximately four miles southeast of downtown Las Vegas. Boulder Station features a turn-of-the-20th-century railroad station theme with non-gaming amenities including five full-service restaurants, a 750-seat entertainment lounge, three additional bars, an 11-screen movie theater complex, a Kid's Quest child care facility, a swimming pool, a non-gaming video arcade and a gift shop. These restaurants, which offer a variety of high-quality meals at reasonable prices, include the Grand Café, Feast Buffet, The Broiler Steakhouse, Pasta Cucina and Cabo Mexican Restaurant. Boulder Station also offers a variety of fast-food restaurants.
Texas Station
Texas Station opened in 1995 and is strategically located at the intersection of Lake Mead Boulevard and Rancho Drive in North Las Vegas. Texas Station features a friendly Texas atmosphere, highlighted by distinctive early Texas architecture with non-gaming amenities including four full-service restaurants, a Kid's Quest child care facility, a 300-seat entertainment lounge, a 2,000-seat event center, seven additional bars, an 18-screen movie theater complex, a swimming pool, a non-gaming video arcade, a gift shop, a 60-lane bowling center and approximately 42,000 square feet of meeting and banquet space. Texas Station's full-service restaurants offer a variety of high-quality food at reasonable prices, and include the Grand Café, Austins Steakhouse, Feast Buffet and Texas Star Oyster Bar. In addition, guests may also enjoy the unique features of several bars and lounges including Sports Bar, Martini Ranch, Whiskey Bar, Garage Bar, A-Bar, Splitz Bar and South Padre Lounge. Texas Station also offers a variety of fast-food restaurants.
Sunset Station
Sunset Station opened in 1997 and is strategically located at the intersection of Interstate 515 and Sunset Road. Situated in a highly concentrated commercial corridor along Interstate 515, Sunset Station has prominent visibility from the freeway and the Sunset commercial corridor. Sunset Station is located approximately nine miles east of McCarran International Airport and approximately seven miles southeast of Boulder Station. Sunset Station features a Spanish/Mediterranean style theme with non-gaming amenities including six full-service restaurants, approximately 13,000 square feet of meeting space, a 500-seat entertainment lounge, a 5,000-seat outdoor amphitheater, six additional bars, a gift shop, a non-gaming video arcade, a 13-screen movie theater complex, a 72-lane bowling center, a Kid's Quest child care facility and a swimming pool. Sunset Station's full-service restaurants, which include the Grand Café, Sonoma Cellar Steakhouse, Pasta Cucina, Cabo Mexican

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Restaurant, Feast Buffet, and Oyster Bar, offer a variety of high-quality food at reasonable prices. Guests may also enjoy the Gaudi Bar, a centerpiece of the casino featuring over 8,000 square feet of stained glass. Sunset Station also offers a variety of fast-food restaurants.
Santa Fe Station
We purchased Santa Fe Station in 2000. Santa Fe Station is strategically located at the intersection of Highway 95 and Rancho Drive, approximately five miles northwest of Texas Station. Santa Fe Station features non-gaming amenities including four full-service restaurants, a gift shop, a non-gaming video arcade, a swimming pool, a 500-seat entertainment lounge, four additional bars, a 60-lane bowling center, a 16-screen movie theater complex, a Kid's Quest child care facility and over 14,000 square feet of meeting and banquet facilities. Santa Fe Station's full-service restaurants include The Charcoal Room, Cabo Mexican Restaurant, the Grand Café and Feast Buffet. Guests may also enjoy Revolver Saloon and Dance Hall or 4949 Lounge, a centerpiece of the casino. Santa Fe Station also offers a variety of fast-food restaurants.
Fiesta Rancho
We purchased Fiesta Rancho in 2001. Fiesta Rancho is strategically located at the intersection of Lake Mead Boulevard and Rancho Drive in North Las Vegas across from Texas Station. Fiesta Rancho features a Southwestern theme with non-gaming amenities including three full-service restaurants, a gift shop, a non-gaming video arcade, a swimming pool, a 600-seat entertainment lounge, a regulation-size ice skating rink and four additional bars. Fiesta Rancho's full-service restaurants include Blue Agave, Garduno's, Festival Buffet and Denny's Restaurant. Fiesta Rancho also offers a variety of fast-food restaurants.
Fiesta Henderson
We purchased Fiesta Henderson in 2001. Fiesta Henderson is strategically located at the intersection of Interstate 215 and Interstate 515 in Henderson, Nevada, approximately three miles southeast of Sunset Station. Fiesta Henderson features four full-service restaurants, a 12-screen movie theater complex, a gift shop, a swimming pool, three bars and lounges and meeting space. Fiesta Henderson's full-service restaurants include Fuego Steakhouse, Amigo's Mexican Cantina, Fiesta Café and Festival Buffet. Fiesta Henderson also offers a variety of fast-food restaurants.
Wild Wild West
We purchased Wild Wild West in 1998. Wild Wild West is strategically located on Tropicana Avenue immediately adjacent to Interstate 15. Wild Wild West's non-gaming amenities include a full-service restaurant, a bar, a gift shop and a truck plaza. In 2009, the Wild Wild West hotel was rebranded as Days Inn—Las Vegas under a franchise agreement with Days Inn Worldwide.
Wildfire Rancho
We purchased Wildfire Rancho in 2003. Wildfire Rancho is located on Rancho Drive across from Texas Station. Wildfire Rancho's non-gaming amenities include a lounge, outdoor patio and a full-service restaurant.
Wildfire Boulder and Wildfire Sunset
We purchased Wildfire Boulder and Wildfire Sunset in 2004. Both properties are located in Henderson, Nevada, and offer non-gaming amenities which include a full-service restaurant and a bar. Wildfire Boulder is located approximately seven miles southeast of Fiesta Henderson. Wildfire Sunset is located next to Sunset Station.
Wildfire Lake Mead
We purchased Wildfire Lake Mead, located in Henderson, Nevada, in 2006. The property closed in 2012 for a complete renovation, and reopened in 2014. Wildfire Lake Mead features a sports lounge, a bar and quick service food offerings.
Wildfire Valley View and Wildfire Anthem
We purchased Wildfire Valley View, a tavern located in Las Vegas, Nevada, in August 2013 and Wildfire Anthem, a tavern located in Henderson, Nevada, in July 2013. Non-gaming amenities offered by Wildfire Valley View and Wildfire Anthem include a bar and quick service food offerings.

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Barley's, The Greens and Wildfire Lanes
We own a 50% interest in three smaller properties in Henderson, Nevada including Barley's, a casino and brew pub, The Greens, a restaurant and lounge, and Wildfire Lanes, which features a full-service restaurant, a bar and an 18-lane bowling center.
Managed Properties
Gun Lake Casino
We manage Gun Lake Casino (“Gun Lake”) in Allegan County, Michigan, which opened in February 2011, on behalf of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians of Michigan, a federally recognized Native American tribe commonly referred to as the Gun Lake Tribe. Gun Lake is located on U.S. Highway 131 between Grand Rapids, Michigan and Kalamazoo, Michigan. We have a 50% ownership interest in the manager of Gun Lake, MPM Enterprises, LLC, a Michigan limited liability company (“MPM”), which receives a management fee of approximately 30% of the net income of Gun Lake under a seven year management contract that commenced in February 2011. Under the terms of the MPM operating agreement, our portion of the management fee is 50% of the first $24 million of management fees earned, 83% of the next $24 million of management fees earned, and 93% of any management fees in excess of $48 million, each calculated on an annual basis.
Graton Resort & Casino
We manage Graton Resort & Casino ("Graton Resort") in Sonoma County, California, which opened in November 2013, on behalf of the Federated Indians of Graton Rancheria (the "Graton Tribe"), a federally recognized Native American tribe. Graton Resort is located just west of U.S. Highway 101 in Rohnert Park, California, approximately 43 miles from downtown San Francisco. It is the largest gaming and entertainment facility in the Bay Area. Graton Resort offers various dining options including four full-service restaurants and seven fast-casual restaurants. The management agreement has a term of seven years from the opening date. For the first four years of the agreement, we will receive a management fee of 24% of Graton Resort's net income (as defined in the management agreement) and for the fifth through seventh years, we will receive a management fee of 27% of Graton Resort's net income. We own an additional 34-acre site adjacent to Graton Resort which is being held for future development.
Native American Development
North Fork Rancheria of Mono Indian Tribe
We have entered into development and management agreements with the North Fork Rancheria of Mono Indians (the "Mono"), a federally recognized Native American tribe located near Fresno, California, under which we will assist the Mono in developing and operating a gaming and entertainment facility (the "North Fork Project") to be located on a 305-acre site (the "North Fork Site") located on Highway 99 north of the city of Madera in Madera County, California. The North Fork Site was taken into trust for the benefit of the Mono by the United States Department of the Interior ("DOI") on February 5, 2013.
The management agreement has a term of seven years from the opening of the facility and provides for a management fee of 40% of the facility's net income. As currently contemplated, the North Fork Project is expected to include approximately 2,000 slot machines, approximately 40 table games and several restaurants. 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 National Indian Gaming Commission ("NIGC").
In 2010, the Bureau of Indian Affairs ("BIA") published notice in the Federal Register that the environmental impact statement for the North Fork Project had been finalized. In 2011, the Assistant Secretary of the Interior for Indian Affairs issued his determination that gaming on the North Fork Site would be in the best interest of the Mono and would not be detrimental to the surrounding community. On August 31, 2012, the Governor of California concurred with the Assistant Secretary's determination that placing the North Fork Site in trust was in the best interest of the Mono and was not detrimental to the surrounding community. On the same day, the Governor signed a tribal-state Class III gaming compact (the “2012 Compact”) between the State and the Mono. The California Assembly and Senate passed Assembly Bill 277 (“AB 277”) ratifying the 2012 Compact on May 2, 2013 and June 27, 2013, respectively. The 2012 Compact is intended to regulate gaming at the North Fork Project on the North Fork Site, and provides for the Mono to operate up to 2,000 slot machines in return for sharing up to 15% of the net revenues from Class III gaming devices with the State of California, Madera County, the City of Madera, and other Native American tribes, which includes payments due to local authorities under any memorandum of understanding.

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On July 3, 2013, opponents of the North Fork Project filed a referendum challenging AB 277. On October 22, 2013, the BIA published notice in the Federal Register that the 2012 Compact was deemed effective. On November 20, 2013, the referendum challenging AB 277 was qualified for the November 2014 state-wide ballot as "Proposition 48." The opponents contend that the qualification of the referendum suspended AB 277 and that the compact was void unless Proposition 48 was approved by a majority of voters in the November 4, 2014 general election. On November 4, 2014, Proposition 48 failed. No assurances can be provided as to whether the Mono will be successful in obtaining an effective tribal-state gaming compact. In addition, the development of the North Fork Project is subject to numerous ongoing legal challenges and receipt of required regulatory approvals and financing. There can be no assurance that the North Fork Project will be successfully completed nor that future events and circumstances will not change our estimates of the timing, scope, and potential for successful completion or that any such changes will not be material. There can be no assurance that we will recover all of our investment in the North Fork Project even if it is successfully completed and opened for business. See Note 8 to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K (the "Consolidated Financial Statements") for additional information about the North Fork Project.
Intellectual Property
We use a variety of trade names, service marks, trademarks, patents and copyrights in our operations and believe that we have all the licenses necessary to conduct our continuing operations. We have registered several service marks, trademarks, patents and copyrights with the United States Patent and Trademark Office or otherwise acquired the licenses to use those which are material to conduct our business. We own patents and patent applications with expiration dates ranging from 2018 to 2028 relating to technologies that allow us to track the wagering activities and geographic location of our players. We also own patents relating to unique casino games. We file copyright applications to protect our creative artworks, which are often featured in property branding, as well as our distinctive website content.
Seasonality
Our cash flows from operating activities are somewhat seasonal in nature. Our operating results are traditionally strongest in the fourth quarter and weakest during the third quarter.
Competition
Our casino properties face competition from all other casinos and hotels in the Las Vegas area, including to some degree, from each other. We compete with other nonrestricted casino/hotels, as well as restricted gaming locations, by focusing on repeat customers and attracting these customers through innovative marketing programs. Our value-oriented, high-quality approach is designed to generate repeat business. Additionally, our casino properties are strategically located and designed to permit convenient access and ample parking, which are critical factors in attracting local visitors and repeat patrons.
Currently, there are approximately 45 major gaming properties located on or near the Las Vegas Strip, 15 located in the downtown area and several located in other areas of Las Vegas. We also face competition from 149 nonrestricted gaming locations in the Clark County area primarily targeted to the local and repeat visitor markets. In addition, our casino properties face competition from restricted gaming locations (sites with 15 or fewer slot machines) in the greater Las Vegas area. As of December 31, 2014, there were approximately 1,414 restricted gaming locations in the Las Vegas area with approximately 14,028 slot machines. Major additions, expansions or enhancements of existing properties or the construction of new properties by competitors could have a material adverse effect on our business.
The Nevada legislature enacted Senate Bill 208 in 1997. This legislation identified certain gaming enterprise districts wherein casino gaming development would be permitted throughout the Las Vegas valley and established more restrictive criteria for the establishment of new gaming enterprise districts. We believe the growth in gaming supply in the Las Vegas locals market has been, and will continue to be, limited by the provisions of Senate Bill 208.
To a lesser extent, we compete with gaming operations in other parts of the state of Nevada, such as Reno, Laughlin and Lake Tahoe, and other gaming markets throughout the United States and in other parts of the world, and with state sponsored lotteries, on-and-off-track wagering on horse and other races, card rooms, online gaming and other forms of legalized gambling. The gaming industry also includes land-based casinos, dockside casinos, riverboat casinos, racetracks with slots and casinos located on Native American land. There is intense competition among companies in the gaming industry, some of which have significantly greater resources than we do. Several states are currently considering legalizing casino gaming in designated areas. Legalized casino gaming in such states and on Native American land could result in additional competition and could adversely affect our operations, particularly to the extent that such gaming is conducted in areas close to our operations. We also face competition from internet poker operators in Nevada. In addition, legislation approving internet gaming has been

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proposed by the federal government and other states. Expansion of internet gaming and legalized casino gaming in new or existing jurisdictions and on Native American land could result in additional competition for our Nevada operations and for the gaming facilities that we manage for Native American tribes.
Native American gaming in California, as it currently exists, has had little, if any, impact on our Nevada operations to date, although there are no assurances as to the future impact it may have. In total, the State of California has signed and ratified Tribal-State Compacts with 72 Native American tribes. Currently there are 60 Native American gaming facilities in operation in the State of California. These Native American tribes are allowed to operate slot machines, lottery games, and banked and percentage games (including "21") on Native American lands. A banked game is one in which players compete against the licensed gaming establishment rather than against one another. A percentage game is one in which the house does not directly participate in the game, but collects a percentage of the amount of bets made, winnings collected, or the amount of money changing hands. It is not certain whether any expansion of Native American gaming in California will affect our Nevada operations given that visitors from California make up Nevada's largest visitor market. Increased competition from Native American gaming in California may result in a decline in our revenues and may have a material adverse effect on our business.
Regulation and Licensing
In addition to gaming regulations, our business is subject to various federal, state and local laws and regulations of the United States and Nevada. These laws and regulations include, but are not limited to, restrictions concerning employment and immigration status, currency transactions, zoning and building codes, marketing and advertising, privacy and telemarketing. Since we deal with significant amounts of cash in our operations we are subject to various reporting and anti-money laundering regulations. Any violations of anti-money laundering laws or any of the other laws or regulations to which we are subject could result in regulatory actions, fines, or other penalties. Any material changes, new laws or regulations or material differences in interpretations by courts or governmental authorities or material regulatory actions, fines, penalties or other actions could adversely affect our business and operating results.
Nevada Gaming Regulations
The ownership and operation of casino gaming facilities and the manufacture and distribution of gaming devices in Nevada are subject to the Nevada Gaming Control Act and the rules and regulations promulgated thereunder (collectively, the "Nevada Act") and various local ordinances and regulations. Our gaming operations in Nevada are subject to the licensing and regulatory control of the Nevada Gaming Commission (the "Nevada Commission"), the Nevada State Gaming Control Board (the "Nevada Board"), the Las Vegas City Council, the Clark County Liquor and Gaming Licensing Board (the "Clark County Board"), the North Las Vegas City Council, the Henderson City Council and certain other local regulatory agencies. The Nevada Commission, Nevada Board, Las Vegas City Council, Clark County Board, North Las Vegas City Council, Henderson City Council, and certain other local regulatory agencies are collectively referred to as the "Nevada Gaming Authorities."
The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal controls and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on our gaming operations.
Our direct and indirect subsidiaries that conduct gaming operations in Nevada are required to be licensed by the Nevada Gaming Authorities. The gaming licenses require the periodic payment of fees and taxes and are not transferable. NP Red Rock LLC, NP Boulder LLC, NP Palace LLC, NP Sunset LLC, NP Tropicana LLC, NP Fiesta LLC, NP Gold Rush LLC, NP Lake Mead, LLC, NP Magic Star LLC, NP Rancho LLC, NP Santa Fe LLC, NP Texas LLC, Station GVR Acquisition, LLC, SC SP 2 LLC, NP LML LLC and NP River Central LLC hold licenses to conduct nonrestricted gaming operations. Our ownership in NP Tropicana LLC is held through NP Landco Holdco LLC, which has a registration as an intermediary company and a license as a member and manager of NP Tropicana LLC. Our ownership in SC SP 2 LLC is held through SC SP Holdco LLC which has a registration as an intermediary company and a license as a member and manager of SC SP 2 LLC. Town Center Amusements, Inc., a Limited Liability Company ("TCAI") is licensed to conduct nonrestricted gaming operations at Barley's. Greens Café, LLC ("GC") is licensed to conduct nonrestricted gaming operations at The Greens, and Sunset GV, LLC ("SGV") is licensed to conduct nonrestricted gaming operations at Wildfire Lanes. A license to conduct "nonrestricted" operations is a license to conduct an operation of (i) at least 16 slot machines, (ii) any number of slot machines together with any other game, gaming device, race book or sports pool at one establishment, (iii) a slot machine route, (iv) an inter‑casino

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linked system, or (v) a mobile gaming system. Our ownership in TCAI, GC and SGV is held through NP Green Valley LLC, which has a registration as an intermediary company and a license as a member and manager of TCAI, GC and SGV. SC SP 4 LLC holds a restricted gaming license. Our ownership in SC SP 4 LLC is held through SC SP Holdco LLC, which has a registration as an intermediary company and a license as a member and manager of SC SP 4 LLC.
We are required to periodically submit detailed financial and operating reports to the Nevada Commission and provide any other information that the Nevada Commission may require. Substantially all material loans, leases, sales of securities and similar financing transactions by us and our licensed or registered subsidiaries must be reported to or approved by the Nevada Commission and/or the Nevada Board.
We have been found suitable to own the equity interests in our licensed and registered subsidiaries (the "Gaming Subsidiaries") and we are registered by the Nevada Commission as a publicly traded corporation for purposes of the Nevada Act (a "Registered Corporation"). As a Registered Corporation, we are required to periodically submit detailed financial and operating reports to the Nevada Board and provide any other information the Nevada Board may require. No person may become a more than 5% stockholder or holder of more than a 5% interest in, or receive any percentage of gaming revenue from the Gaming Subsidiaries without first obtaining licenses, approvals and/or applicable waivers from the Nevada Gaming Authorities. Substantially all material loans, leases, sales of securities and similar financing transactions by us and our Gaming Subsidiaries must be reported to or approved by the Nevada Gaming Authorities.
The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, a Registered Corporation or its licensed subsidiaries, in order to determine whether such individual is suitable or should be licensed as a business associate of a Registered Corporation or a gaming licensee. Officers, directors and certain key employees of our licensed subsidiaries must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. Our officers, managers and key employees who are actively and directly involved in gaming activities of our licensed subsidiaries may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause that they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue to have a relationship with us or our licensed subsidiaries, the companies involved would have to sever all relationships with such person. In addition, the Nevada Commission may require our licensed subsidiaries to terminate the employment of any person who refuses to file the appropriate applications. Determinations of suitability or questions pertaining to licensing are not subject to judicial review in Nevada.
If it were determined that the Nevada Act was violated by a licensed subsidiary, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company, our licensed subsidiaries and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate our properties, and under certain circumstances, earnings generated during the supervisor's appointment (except for the reasonable rental value of the premises) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of the gaming licenses of the licensed subsidiaries or the appointment of a supervisor could (and revocation of any such gaming license would) have a material adverse effect on our gaming operations.
Any beneficial owner of our voting or non-voting securities, regardless of the number of shares owned, may be required to file an application, may be investigated, and may be required to obtain a finding of suitability as a beneficial owner of our securities if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the beneficial owner of our voting or non-voting securities who must be found suitable is a corporation, partnership, limited partnership, limited liability company or trust, it must submit detailed business and financial information, including a list of its beneficial owners, to the Nevada Board. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.
The Nevada Act provides that persons who acquire beneficial ownership of more than 5% of the voting or non-voting securities of a Registered Corporation must report the acquisition to the Nevada Commission. The Nevada Act also requires that beneficial owners of more than 10% of the voting securities of a Registered Corporation must apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman of the Nevada Board mails the written notice requiring such

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filing. An "institutional investor," as defined in the Nevada Commission's regulations, which acquires beneficial ownership of more than 10%, but not more than 25%, of our voting securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may, in certain circumstances, hold up to 29% of our voting securities and maintain its waiver for a limited period of time. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of our board of managers ("Board of Managers"), any change in our corporate charter, bylaws, management policies or our operations, or any of our gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding our voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in our management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent.
Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission, or the Chairman of the Nevada Board, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any equity holder who is found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common equity of a Registered Corporation beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be an equity holder or to have any other relationship with us or our licensed or registered subsidiaries, we (i) pay that person any dividend or interest upon our securities, (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pay remuneration in any form to that person for services rendered or otherwise, or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish his securities including, if necessary, the immediate purchase of said securities (a) in the case of Station Holdco LLC ("Station Holdco"), a Delaware limited liability company, for the price specified by the relevant gaming authority or, if no such price is specified, the fair market value as determined by Station Holdco's board of managers, or (b) in the case of Station Voteco LLC ("Station Voteco"), a Delaware limited liability company, for no consideration. In the case of Station Holdco, this price would be payable in cash or, at the election of Station Holdco's board of managers, with a promissory note, maturing in not more than 10 years after delivery of the note and no earlier than 71/2 years from June 17, 2011, bearing interest at the applicable rate set forth by the Internal Revenue Service for obligations of at least nine years. Additionally, the Clark County Board has the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming license.
The Nevada Commission may, in its discretion, require the holder of any debt security of a Registered Corporation to file applications, be investigated and be found suitable to own the debt security of a Registered Corporation if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Registered Corporation can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Commission, it: (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by such unsuitable person in connection with such securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.
We are required to maintain a current membership interest ledger in Nevada, which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. Failure to make such disclosure may be grounds for finding the record holder unsuitable. We are also required to render maximum assistance in determining the identity of the beneficial owner.
We may not make a public offering of our debt securities without the prior approval of the Nevada Commission if the securities or proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. On September 20, 2012, the Nevada Gaming Commission granted us prior approval, subject to certain conditions, to make public offerings of debt securities for a period of three years (the "Shelf Approval"). The Shelf Approval also applies to any affiliated company wholly owned by us which is a publicly traded corporation or would thereby become a publicly traded corporation pursuant to a public offering. The Shelf Approval may be rescinded for good cause without prior notice upon the issuance of an interlocutory stop order by the Chairman of the Nevada Board. The Shelf Approval does not constitute a finding, recommendation or approval by any of the Nevada Gaming

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Authorities as to the accuracy or adequacy of any offering memorandum or the investment merits of the securities offered thereby. Any representation to the contrary is unlawful.
Changes in control of the Company through merger, consolidation, stock or asset acquisitions (including stock issuances in connection with restructuring transactions), management or consulting agreements, or any act or conduct by a person whereby such person obtains control, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the Nevada Board and the Nevada Commission that they meet a variety of stringent standards prior to assuming control of such Registered Corporation. The Nevada Commission may also require controlling equity holders, officers, managers and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada corporate gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada's gaming industry and to further Nevada's policy to: (i) assure the financial stability of corporate gaming licensees and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before a Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of re-capitalization proposed by the Registered Corporation's Board of Directors or similar governing entity in response to a tender offer made directly to the Registered Corporation's equity holders for the purpose of acquiring control of the Registered Corporation.
License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada licensee's respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by casino operations where entertainment is furnished in connection with admission charges, the serving or selling of food or refreshments or the selling of any merchandise. Nevada licensees that hold a license as an operator of a slot route, or manufacturer's or distributor's license also pay certain fees and taxes to the State of Nevada.
Any person who is licensed, required to be licensed, registered, required to be registered, or is under common control with such persons (collectively, "Licensees"), and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada Board of their participation in such foreign gaming. The revolving fund is subject to increase or decrease at the discretion of the Nevada Commission. Thereafter, licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities or enter into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employ, contract with or associate with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the grounds of unsuitability or whom a court in the state of Nevada has found guilty of cheating. The loss or restriction of our gaming licenses in Nevada would have a material adverse effect on our business and could require us to cease gaming operations in Nevada.
Nevada Liquor Regulations
There are various local ordinances and regulations as well as state laws applicable to the sale of alcoholic beverages in Nevada. Palace Station, Wildfire Rancho, Wildfire Valley View and Santa Fe Station are subject to liquor licensing control and regulation by the Las Vegas City Council. Red Rock, Boulder Station and Wild Wild West are subject to liquor licensing control and regulation by the Clark County Board. Texas Station and Fiesta Rancho are subject to liquor licensing control and regulation by the North Las Vegas City Council. Sunset Station, Green Valley Ranch, Fiesta Henderson, Barley's, Wildfire Sunset, Wildfire Boulder, The Greens, Wildfire Anthem, Wildfire Lanes and Wildfire Lake Mead are subject to liquor licensing control and regulation by the Henderson City Council. All liquor licenses are revocable and are, in some jurisdictions, not transferable. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse effect on the operations of our licensed subsidiaries.

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Native American Gaming Regulations
The terms and conditions of management contracts and the operation of casinos and all gaming on land held in trust for Native American tribes in the United States are subject to the Indian Gaming Regulatory Act of 1988 (the "IGRA"), which is administered by the NIGC and the gaming regulatory agencies of state and tribal governments. The IGRA is subject to interpretation by the NIGC and may be subject to judicial and legislative clarification or amendment.
The IGRA established three separate classes of tribal gaming: Class I, Class II and Class III. Class I gaming includes all traditional or social games solely for prizes of minimal value played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as bingo, pull-tabs, punchboards, instant bingo (and electronic or computer-aided versions of such games) and non-banked card games (those that are not played against the house), such as poker. Class III gaming is casino-style gaming and includes banked table games such as blackjack, craps and roulette, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering, a system of betting under which wagers are placed in a pool, management receives a fee from the pool, and the remainder of the pool is split among the winning wagers.
The IGRA requires NIGC approval of management contracts for Class II and Class III gaming, as well as the review of all agreements collateral to the management contracts. The NIGC will not approve a management contract if a director or a 10% shareholder of the management company: (i) is an elected member of the governing body of the Native American tribe which is the party to the management contract; (ii) has been or subsequently is convicted of a felony or gaming offense; (iii) has knowingly and willfully provided materially important false information to the NIGC or the tribe; (iv) has refused to respond to questions from the NIGC; or (v) is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, or create or enhance the chance of unsuitable activities in gaming or the business and financial arrangements incidental thereto. In addition, the NIGC will not approve a management contract if the management company or any of its agents have attempted to unduly influence any decision or process of tribal government relating to gaming, or if the management company has materially breached the terms of the management contract or the tribe's gaming ordinance or resolution, or a trustee, exercising the skill and due diligence that a trustee is commonly held to, would not approve the management contract. A management contract can be approved only after the NIGC determines that the contract provides for, among other things: (i) adequate accounting procedures and verifiable financial reports, which must be furnished to the tribe; (ii) tribal access to the daily operations of the gaming enterprise, including the right to verify daily gross revenues and income; (iii) minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs; (iv) a ceiling on the repayment of such development and construction costs and (v) a contract term not exceeding five years and a management fee not exceeding 30% of net revenues (as determined by the NIGC); provided that the NIGC may approve up to a seven year term and a management fee not to exceed 40% of net revenues if the NIGC is satisfied that the capital investment required, and the income projections for the particular gaming activity require the larger fee and longer term. There is no periodic or ongoing review of approved contracts by the NIGC. The only post-approval action that could result in possible modification or cancellation of a contract would be as the result of an enforcement action taken by the NIGC based on a violation of the law or an issue affecting suitability.
The IGRA prohibits all forms of Class III gaming unless the tribe has entered into a written agreement with the state that specifically authorizes the types of Class III gaming the tribe may offer (a "tribal-state compact"). These tribal-state compacts provide, among other things, the manner and extent to which each state will conduct background investigations and certify the suitability of the manager, its officers, directors, and key employees to conduct gaming on Native American lands.
Title 25, Section 81 of the United States Code states that "no agreement shall be made by any person with any tribe of Indians, or individual Indians not citizens of the United States, for the payment or delivery of any money or other thing of value... in consideration of services for said Indians relative to their lands... unless such contract or agreement be executed and approved" by the Secretary or his or her designee. An agreement or contract for services relative to Native American lands which fails to conform with the requirements of Section 81 is void and unenforceable. All money or other things of value paid to any person by any Native American or tribe for or on his or their behalf, on account of such services, in excess of any amount approved by the Secretary or his or her authorized representative will be subject to forfeiture. We intend to comply with Section 81 with respect to any other contract with an Indian tribe in the United States.
Native American tribes are sovereign nations with their own governmental systems, which have primary regulatory authority over gaming on land within the tribes' jurisdiction. Therefore, persons engaged in activities on tribal lands, including the Company, are subject to the provisions of tribal ordinances and regulations. Tribal gaming ordinances are subject to review by the NIGC under certain standards established by the IGRA. The NIGC may determine that some or all of the ordinances require amendment, and those additional requirements, including additional licensing requirements, may be imposed on us.

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Several bills have been introduced in Congress that would amend the IGRA. Any amendment of the IGRA could change the governmental structure and requirements within which tribes could conduct gaming, and may have an adverse effect on our results of operations or impose additional regulatory or operational burdens. In addition, any amendment to or expiration of a tribal-state compact may have an adverse effect on our results of operations or impose additional regulatory or operational burdens.
General Gaming Regulations in Other Jurisdictions
If we become involved in gaming operations in any other jurisdictions, such gaming operations will subject us and certain of our officers, managers, key employees, equityholders and other affiliates ("Regulated Persons") to strict legal and regulatory requirements, including mandatory licensing and approval requirements, suitability requirements, and ongoing regulatory oversight with respect to such gaming operations. Such legal and regulatory requirements and oversight will be administered and exercised by the relevant regulatory agency or agencies in each jurisdiction (the "Regulatory Authorities"). We and the Regulated Persons will need to satisfy the licensing, approval and suitability requirements of each jurisdiction in which we seek to become involved in gaming operations. These requirements vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. In general, the procedures for gaming licensing, approvals and findings of suitability require the Company and each Regulated Person to submit detailed personal history information and financial information to demonstrate that the proposed gaming operation has adequate financial resources generated from suitable sources and adequate procedures to comply with the operating controls and requirements imposed by law and regulation in each jurisdiction, followed by a thorough investigation by such Regulatory Authorities. In general, the Company and each Regulated Person must pay the costs of such investigation. An application for any gaming license, approval or finding of suitability may be denied for any cause that the Regulatory Authorities deem reasonable. Once obtained, licenses and approvals may be subject to periodic renewal and generally are not transferable. The Regulatory Authorities may at any time revoke, suspend, condition, limit or restrict a license, approval or finding of suitability for any cause that they deem reasonable. Fines for violations may be levied against the holder of a license or approval and in certain jurisdictions, gaming operation revenues can be forfeited to the state under certain circumstances. There can be no assurance that we will obtain all of the necessary licenses, approvals and findings of suitability or that our officers, managers, key employees, other affiliates and certain other stockholders will satisfy the suitability requirements in one or more jurisdictions, or that such licenses, approvals and findings of suitability, if obtained, will not be revoked, limited, suspended or not renewed in the future. We may be required to submit detailed financial and operating reports to Regulatory Authorities.
Failure by us to obtain, or the loss or suspension of, any necessary licenses, approval or findings of suitability would prevent us from conducting gaming operations in such jurisdiction and possibly in other jurisdictions, which may have an adverse effect on our results of operations.
Environmental Matters
Compliance with federal, state and local laws enacted for the protection of the environment to date has had no material effect upon our capital expenditures, earnings or competitive position and we do not anticipate any material adverse effects in the future based on the nature of our future operations.
Employees
As of February 28, 2015, we had approximately 11,600 employees, including employees of our 50% owned properties. None of our casino properties are currently subject to any collective bargaining agreement or similar arrangement with any union. However, union activists have actively sought to organize employees at certain of our properties in the past, and we believe that such efforts are ongoing at this time.
Available Information
We are required to file annual, quarterly and other current reports and information with the SEC. You may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Because we submit filings to the SEC electronically, access to this information is available at the SEC's internet website (www.sec.gov). This site contains reports and other information regarding issuers that file electronically with the SEC.
We also make available, free of charge, at our principal internet address (www.sclv.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports

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filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
We have adopted a Code of Business Conduct and Ethics (the "Code of Ethics") that applies to all of our directors, managers, officers (including our principal executive officer and our principal financial officer) and employees. The Code of Ethics and any waivers or amendments to the Code of Ethics are available on the Investor Relations section of our website at www.sclv.com. Printed copies are also available to any person without charge, upon request directed to our Corporate Secretary, 1505 South Pavilion Center Drive, Las Vegas, Nevada 89135.
Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements. Such statements contain words such as "believe," "estimate," "expect," "intend," "plan," "project," "may," "will," "might," "should," "could," "would," "seek," "pursue," and "anticipate" or the negative or other variation of these or similar words, or may include discussions of strategy or risks and uncertainties. Forward-looking statements in this Annual Report on Form 10-K include, among other things, statements concerning:
projections of future results of operations or financial condition;
expectations regarding our business and results of operations of our existing casino properties and prospects for future development;
expenses and our ability to operate efficiently;
expectations regarding trends that will affect our market and the gaming industry generally and the impact of those trends on our business and results of operations;
our ability to comply with the covenants in the agreements governing our outstanding indebtedness;
our ability to meet our projected debt service obligations, operating expenses, and maintenance capital expenditures;
expectations regarding the availability of capital resources, including our ability to refinance our outstanding indebtedness;
our intention to pursue development opportunities and acquisitions and obtain financing for such development and acquisitions; and
the impact of regulation on our business and our ability to receive and maintain necessary approvals for our existing properties and future projects.
Any forward-looking statement is based upon a number of estimates and assumptions that, while considered reasonable by us, is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control, and are subject to change. Actual results of operations may vary materially from any forward-looking statement made herein. Forward-looking statements should not be regarded as a representation by us or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. Some of the contingencies and uncertainties to which any forward-looking statement contained herein is subject include, but are not limited to, the following:
the economic downturn, and in particular the economic downturn in Nevada, and its effect on consumer spending and our business;
the effects of intense competition that exists in the gaming industry;
the risk that new gaming licenses or gaming activities, such as internet gaming, are approved and result in additional competition;
our substantial outstanding indebtedness and the effect of our significant debt service requirements on our operations and ability to compete;
the risk that we will not be able to finance our development and investment projects or refinance our outstanding indebtedness;

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the impact of extensive regulation from gaming and other government authorities on our ability to operate our business and the risk that regulatory authorities may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines or take other actions that adversely affect us;
risks associated with changes to applicable gaming and tax laws that could have a material adverse effect on our financial condition;
general business conditions including competitive practices, changes in customer demand and the cyclical nature of the gaming and hospitality business generally, and general economic conditions, including interest rates, on our business and results of operations;
adverse outcomes of legal proceedings and the development of, and changes in, claims or litigation reserves; and
risks associated with development, construction and management of new projects or the expansion of existing facilities, including cost overruns, construction delays and legal or political challenges.
For additional contingencies and uncertainties, see Item 1A. Risk Factors.
Given these risks and uncertainties, we can give no assurances that results contemplated by any forward-looking statements will in fact occur and therefore caution investors not to place undue reliance on them. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report on Form 10-K might not occur.
Market and Industry Data
Some of the market and industry data contained in this Annual Report on Form 10-K are based on independent industry publications or other publicly available information. Although we believe that these independent sources are reliable, we have not independently verified and cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry data contained herein, and our beliefs and estimates based on such data, may not be reliable.

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ITEM 1A.
RISK FACTORS.
The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in the forward-looking statements. The following risk factors set forth the risks that we believe are material to our business, financial condition, assets, operations and equity interests. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected.
Risks Related to our Business
We depend on the Las Vegas locals and repeat visitor markets as our key markets, which subjects us to greater risks than a gaming company with more diverse operations.
Our operating strategies emphasize attracting and retaining customers from the Las Vegas local and repeat visitor market. All of our casino properties are dependent upon attracting Las Vegas residents as well as out of town visitors. As a result of our concentration in the Las Vegas market, we have a greater degree of exposure to a number of risks than we would have if we had operations outside of the Las Vegas valley. These risks include the following:
local economic and competitive conditions;
changes in local and state governmental laws and regulations, including gaming laws and regulations;
natural and other disasters; and
a decline in the local population.
In addition, our strategy of growth through master-planning of our casinos for future expansion was developed, in part, based on projected population growth in Las Vegas. There can be no assurance that population growth in Las Vegas will justify future development, additional casinos or expansion of our existing casino properties, which limits our ability to expand our business.
Our business is sensitive to reductions in discretionary consumer spending as a result of downturns in the economy.
Consumer demand for the offerings of casino hotel properties such as ours is sensitive to downturns in the economy and the corresponding impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions and customer confidence in the economy, unemployment, the uncertainty and distress in the housing and credit markets, the impact of high energy, food and healthcare costs, the potential for bank failures, perceived or actual changes in disposable consumer income and wealth, taxes, effects or fears of war and future acts of terrorism could further reduce customer demand for the amenities that we offer and materially and adversely affect our business and results of operations.
Our casinos draw a substantial number of customers from the Las Vegas valley, as well as nearby geographic areas, including Southern California, Arizona and Utah. While the economies of these areas have shown significant recovery, we are unable to determine the sustainability or strength of the recovery. In addition, the overall economic outlook and residential real estate market in the United States, and in particular Las Vegas, remain uncertain, and our target markets, and in particular Las Vegas, continue to experience significantly higher rates of unemployment than the national average. The economic downturn and adverse conditions experienced in our target markets and in the United States generally resulted in a significant decline in spending in Las Vegas, which negatively affected our results of operations. Any slowing of the recovery or a return to an economic downturn would further negatively affect our results of operations.
We face substantial competition in the gaming industry and we expect that such competition will intensify.
Our casino properties face competition for customers and employees from all other casinos and hotels in the Las Vegas area including, to some degree, each other. In addition, our casino properties face competition from all smaller nonrestricted gaming locations and restricted gaming locations (locations with 15 or fewer slot machines) in the greater Las Vegas area, including those that primarily target the local and repeat visitor markets. Major additions, expansions or enhancements of existing properties or the construction of new properties by competitors could also have a material adverse effect on the business of our casino properties. If our competitors operate more successfully than we do, or if they attract customers away from us as a result of aggressive pricing and promotion or enhanced or expanded properties, we may lose market share and our business could be adversely affected.

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To a lesser extent, our casino properties compete with gaming operations in other parts of the state of Nevada and other gaming markets in the United States and in other parts of the world, with state sponsored lotteries, on-and-off-track pari-mutuel wagering (a system of betting under which wagers are placed in a pool, management receives a fee from the pool, and the remainder of the pool is split among the winning wagers), card rooms, other forms of legalized gaming and online gaming. The gaming industry also includes dockside casinos, riverboat casinos, racetracks with slot machines and casinos located on Native American land. There is intense competition among companies in the gaming industry, some of which have significantly greater resources than we do. Our properties have encountered additional competition as large-scale Native American gaming on Indian lands, particularly in California, has increased and competition may intensify if more Native American gaming facilities are developed. Several states are currently considering the approving of legalized casino gaming in designated areas, expansion of existing gaming operations or additional gaming sites. In addition, internet gaming has commenced in Nevada, New Jersey and Delaware, and legislation approving internet gaming has been proposed by the federal government and other states. Internet gaming and expansion of legalized casino gaming in new or existing jurisdictions and on Native American land could result in additional competition that could adversely affect our operations, particularly to the extent that such gaming is conducted in areas close to our operations.
For further details on competition in the gaming industry, see Item 1. Business—Competition.
We are dependent upon Fertitta Entertainment, an entity controlled by Frank J. Fertitta III and Lorenzo J. Fertitta, to operate our casino properties under long-term management contracts. The success of our operations depends on the ability of Fertitta Entertainment to effectively manage our assets and operations.
We have entered into management agreements with subsidiaries of Fertitta Entertainment. The management agreements extend until 2036 and have limited rights of termination prior to such date. Under the management agreements, subsidiaries of Fertitta Entertainment have significant discretion in the management and operation of our casino properties. Fertitta Entertainment receives a base management fee equal to 2% of the gross revenues attributable to our properties and an incentive management fee equal to 5% of positive EBITDA of our properties.
Subject to the terms of a non-competition agreement, Fertitta Entertainment or any of its affiliates is permitted to manage certain casinos and properties other than our properties. Accordingly, management of such other casinos and properties by Fertitta Entertainment may create conflicts of interest between us and members of management affiliated with Fertitta Entertainment. Such other management opportunities could also limit the ability of such members of our management to devote time to our affairs and could have a negative impact on our business. There can be no assurance that those potential time conflicts and conflicts of interest will be resolved in our favor.
In addition, Fertitta Entertainment or its affiliates were granted a perpetual license to use certain of our information technology systems (but not our customer database). Although this license is subject to certain limitations, it enables the licensee thereunder to make use of such information technology systems in connection with assets, entities and projects other than our casino business enterprise that are managed, owned or operated by Fertitta Entertainment or its affiliates. As a consequence of the foregoing, Fertitta Entertainment has the technological resources necessary to rapidly develop additional business opportunities other than the management of our casino business, which may give Fertitta Entertainment an incentive to focus meaningful attention on such business activities in addition to the management of our casino business.
The success of our casino properties and, in turn, our business, is substantially dependent upon Fertitta Entertainment and its affiliates. Subject to limited restrictions, Fertitta Entertainment and its affiliates are permitted to manage the operations of other gaming companies and the officers and employees of Fertitta Entertainment and its affiliates are not required to devote their full time and attention to managing our casino properties. There can be no assurance that Fertitta Entertainment will be successful at managing and operating our casino properties or that the terms of the Fertitta Entertainment management agreements are in our best interests.
We rely on the skills and experience of our management and key personnel, including personnel of Fertitta Entertainment. The loss of the services of management or other key personnel could materially and adversely affect our results of operations and we may not be able to effectively replace management who have left the company.
Our ability to operate successfully and competitively is dependent, in part, upon the continued services of certain officers and key employees, including but not limited to, Frank J. Fertitta III. All of our executive officers are employees of Fertitta Entertainment. In the event that Fertitta Entertainment and its affiliates cease to manage our casino properties or these officers and/or employees leave Fertitta Entertainment, we might not be able to find suitable replacements. Through termination of the management agreements, or by other means, we believe that the loss of the services of these officers and/or employees could have a material adverse effect on our results of operations.

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We and Fertitta Entertainment have experienced, and expect to continue to experience, strong competition in hiring and retaining qualified property and corporate management personnel. From time to time, we have vacancies in key corporate and property management positions. If we are unable to successfully recruit and retain qualified management personnel at our properties, or Fertitta Entertainment is unable to successfully recruit and retain qualified corporate personnel, our results of operations could be materially adversely affected.

In addition, our officers, directors and key employees are required to file applications with the gaming authorities and be licensed or found suitable by such authorities. If the gaming authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with us, we would have to sever all relationships with that person. Furthermore, the gaming authorities could require us to terminate the employment of any person who refuses to file appropriate applications. We could be adversely affected under either circumstance.
Union organization activities could disrupt our business by discouraging patrons from visiting our properties, causing labor disputes or work stoppages, and, if successful, could significantly increase our labor costs.
None of our owned casino properties are currently subject to any collective bargaining agreement or similar arrangement with any union, and we believe we have excellent employee relations. However, union activists have actively sought to organize employees at certain of our casino properties in the past, and we believe that such efforts are ongoing at this time. Accordingly, there can be no assurance that our casino properties will not ultimately be unionized. Union organization efforts that may occur in the future could cause disruptions to our casino properties and discourage patrons from visiting our properties and may cause us to incur significant costs, any of which could have a material adverse effect on our results of operations and financial condition. In addition, union activities may result in labor disputes, including work stoppages, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, should employees at one or more of our properties organize, collective bargaining would introduce an element of uncertainty into planning our future labor costs, which could have a material adverse effect on the business of our casino properties and our financial condition and results of operations.
Work stoppages, labor problems and unexpected shutdowns may limit our operational flexibility and negatively impact our future profits.
Any work stoppage at one or more of our casino properties, including any construction projects which may be undertaken, could require us to expend significant funds to hire replacement workers, and qualified replacement labor may not be available at reasonable costs, if at all. Strikes and work stoppages could also result in adverse media attention or otherwise discourage customers from visiting our casino properties. Strikes and work stoppages involving laborers at any construction project which may be undertaken could result in construction delays and increases in construction costs. As a result, a strike or other work stoppage at one of our casino properties or any construction project could have an adverse effect on the business of our casino properties and our financial condition and results of operations. There can be no assurance that we will not experience a strike or work stoppage at one or more of our casino properties or any construction project in the future.
In addition, any unexpected shutdown of one of our casino properties or any construction project could have an adverse effect on the business of our casino properties and our results of operations. There can be no assurance that we will be adequately prepared for unexpected events, including political or regulatory actions, which may lead to a temporary or permanent shutdown of any of our casino properties.
Potential conflicts of interest may exist or may arise among our principal equity holders.
Our Board of Managers is controlled by persons designated by FI Station Investor LLC, an affiliate of Fertitta Entertainment ("FI Station Investor"), and German American Capital Corporation (an affiliate of Deutsche Bank Securities Inc.) ("GACC"). Certain major actions require the approval of a majority of the managers designated by FI Station Investor and a majority of the managers designated by GACC.
Affiliates of Fertitta Entertainment are indirect holders of our equity interests and the managers of our operations. In addition, all of our executive officers are employed by Fertitta Entertainment. The interests of FI Station Investor, in its capacity as an affiliate of the managers of our properties, may be different from, or in addition to, its interests as an equity holder. For example, since the affiliates of Fertitta Entertainment that manage our operations are compensated for their management services based on the revenue and EBITDA achieved by our properties, FI Station Investor may have an incentive to support the growth of such revenue and EBITDA even if doing so would require increased leverage and interest service obligations or increased capital expenditures for our properties. Under certain circumstances, the imposition of increased leverage and interest

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service obligations on our properties, or an increase in our capital expenditure levels, could adversely affect our liquidity and financial condition.
In addition, GACC, which is a holder of our indirect non-voting equity interests and is entitled to designate two members of our Board of Managers, is a lender under our credit facility, which includes a $1.625 billion term loan facility (the “Term Loan Facility”) and a $350.0 million revolving credit facility (the “Revolving Credit Facility”) (together the “Credit Facility”). GACC is also a lender under our amended and restated credit agreement (the ''Restructured Land Loan'') among CV PropCo, LLC, a subsidiary of the Company that owns certain land held for development, Deutsche Bank AG Cayman Islands Branch and JPMorgan Chase Bank, N.A. as initial lenders, entered into as of June 17, 2011, consisting of a term loan facility with an initial principal amount of $105 million. To the extent that GACC continues to hold interests at multiple levels of our capital structure, it may have a conflict of interest and make decisions or take actions that reflect its interests as our secured lender, unsecured lender or indirect equity holder that could have adverse consequences to our other stakeholders.     
The concentration and evolution of the slot machine manufacturing industry or other technological conditions could impose additional costs on us.
We rely on a variety of hardware and software products to maximize revenue and efficiency in our operations. Technology in the gaming industry is developing rapidly, and we may need to invest substantial amounts to acquire the most current gaming and hotel technology and equipment in order to remain competitive in the markets in which we operate. In addition, we may not be able to successfully implement and/or maintain any acquired technology.
We are subject to extensive federal, state and local regulation and governmental authorities have significant control over our operations which could have an adverse effect on our business.
Our ownership and operation of gaming facilities is subject to extensive regulation by the states, counties and cities in which we operate. These laws, regulations and ordinances vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators or, alternatively, cease operations in that jurisdiction. In addition, unsuitable activity on our part or on the part of our unconsolidated affiliates in any jurisdiction could have a negative effect on our ability to continue operating in other jurisdictions. For a summary of gaming and other regulations that affect our business, see Item 1. Business—Regulation and Licensing. The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. In addition, we are subject to various gaming taxes, which are subject to possible increase at any time. Increases in gaming taxation could also adversely affect our results of operations.
We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. We are subject to regulation under the Currency and Foreign Transactions Reporting Act of 1970, commonly known as the "Bank Secrecy Act," which, among other things, requires us to report to the Internal Revenue Service ("IRS") any currency transactions in excess of $10,000 that occur within a 24-hour gaming day, including identification of the individual transacting the currency. We are also required to report certain suspicious activity, including any transactions aggregating to $5,000 or more, where we know, suspect or have reason to suspect such transactions involve funds from illegal activity or are intended to evade federal regulations or avoid reporting requirements. In addition, under the Bank Secrecy Act we are subject to various other rules and regulations involving reporting, recordkeeping and retention. Our compliance with the Bank Secrecy Act is subject to periodic audits by the IRS, and we may be required to pay substantial penalties if we fail to comply with applicable regulations. Any violations of anti-money laundering laws or regulations by any of our properties could have an adverse effect on our financial condition, results of operations or cash flows. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted.
Rising operating and other costs at our gaming properties could have a negative impact on our business.

The operating expenses associated with our gaming properties could increase due to, among other reasons, the following factors:

changes in the federal, state or local regulations, including state and local gaming regulations or taxes, or the way such regulations are administered could impose additional restrictions or increase our operating costs;


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aggressive marketing and promotional campaigns by our competitors for an extended period of time could force us to increase our expenditures for marketing and promotional campaigns in order to maintain our existing customer base and attract new customers;

as our properties age, we may need to increase our expenditures for repairs, maintenance, and to replace equipment necessary to operate our business compared to amounts that we have spent historically;

our reliance on slot play revenues and any additional costs imposed on us from vendors;

availability and cost of the many products and service we provide our customers, including food, beverages, retail items, entertainment, hotel rooms, and spa services;

availability and costs associated with insurance;

increases in costs of labor and employee benefits, including due to potential unionization of our employees;

increases in the prices of electricity, natural gas and other forms of energy; and

water shortages or other increases in the cost of water.

If our operating expenses increase without any offsetting increase in our revenues, our results of operations would suffer.
We may incur losses that are not adequately covered by insurance, which may harm our results of operations. In addition, our insurance costs may increase and we may not be able to obtain similar insurance coverage in the future.
Although we maintain insurance that is customary and appropriate for our business, each of our insurance policies is subject to certain exclusions. Our property insurance coverage is in an amount that may be significantly less than the expected replacement cost of rebuilding our facilities in the event of a total loss. The lack of adequate insurance for certain types or levels of risk could expose us to significant losses in the event of a catastrophe. In addition to the damage caused to our properties by a casualty loss, we may suffer business disruption or be subject to claims by third parties that may be injured or harmed. While we carry general liability insurance and business interruption insurance, there can be no assurance that insurance will be available or adequate to cover all loss and damage to which our business or our assets might be subjected. In addition, certain casualty events, such as labor strikes, nuclear events, loss of income due to terrorism, deterioration or corrosion, insect or animal damage and pollution, may not be covered under our policies. Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to fund replacements or repairs for destroyed property and reduce the funds available for payments of our obligations.
We renew our insurance policies on an annual basis. To the extent that the cost of insurance coverage increases, we may be required to reduce our policy limits or agree to exclusions from our coverage.
We are subject to litigation in the ordinary course of our business. An adverse determination with respect to any such disputed matter could result in substantial losses.
We are, from time to time, during the ordinary course of operating our businesses, subject to various litigation claims and legal disputes, including contract, lease, employment and regulatory claims as well as claims made by visitors to our properties. There are also litigation risks inherent in any construction or development of any of our properties. Certain litigation claims may not be covered entirely or at all by our insurance policies or our insurance carriers may seek to deny coverage. In addition, litigation claims can be expensive to defend and may divert our attention from the operations of our businesses. Further, litigation involving visitors to our properties, even if without merit, can attract adverse media attention. As a result, litigation can have a material adverse effect on our businesses and, because we cannot predict the outcome of any action, it is possible that adverse judgments or settlements could significantly reduce our earnings or result in losses.
We may incur delays and budget overruns with respect to future construction projects. Any such delays or cost overruns may have a material adverse effect on our operating results.
We are currently providing funding for the North Fork Project and have an agreement to develop the facility. In addition, we will evaluate expansion opportunities as they become available, and in the future we may develop projects in addition to the proposed North Fork Project.

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Such construction projects entail significant risks, including the following:
shortages of material or skilled labor;
unforeseen engineering, environmental or geological problems;
work stoppages;
weather interference;
floods;
unanticipated cost increases; and
legal or political challenges;
any of which can give rise to delays or cost overruns.
The anticipated costs and construction periods are based upon budgets, conceptual design documents and construction schedule estimates prepared by us in consultation with our architects and contractors. Construction, equipment, staffing requirements, problems or difficulties in obtaining any of the requisite licenses, permits, allocations or authorizations from regulatory authorities can increase the cost or delay the construction or opening of each of the proposed facilities or otherwise affect the project's planned design and features. We cannot be sure that we will not exceed the budgeted costs of these projects or that the projects will commence operations within the contemplated time frame, if at all. Budget overruns and delays with respect to expansion and development projects could have a material adverse impact on our results of operations.
We may regularly pursue new gaming acquisition and development opportunities and may not be able to recover our investment or successfully expand to additional locations.
We will regularly evaluate and may pursue new gaming acquisition and development opportunities in existing and emerging jurisdictions. These opportunities may take the form of joint ventures. To the extent that we decide to pursue any new gaming acquisition or development opportunities, our ability to benefit from such investments will depend upon a number of factors including:
our ability to identify and acquire attractive acquisition opportunities and development sites;
our ability to secure required federal, state and local licenses, permits and approvals, which in some jurisdictions are limited in number;
certain political factors, such as local support or opposition to development of new gaming facilities or legalizing casino gaming in designated areas;
the availability of adequate financing on acceptable terms (including waivers of restrictions in existing credit arrangements); and
our ability to identify and develop satisfactory relationships with joint venture partners.
Most of these factors are beyond our control. Therefore, we cannot be sure that we will be able to recover our investment in any new gaming development opportunities or acquired facilities, or successfully expand to additional locations.
We have invested, and we will likely continue to invest, in real property in connection with the pursuit of expansion opportunities. These investments are subject to the risks generally incident to the ownership of real property, including:
changes in economic conditions;
environmental risks;
governmental rules and fiscal policies; and
other circumstances over which we may have little or no control.
The development of such properties will also be subject to restrictions under our credit agreements. We cannot be sure that we will be able to recover our investment in any such properties or be able to prevent incurring investment losses.

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We may experience difficulty integrating operations of any acquired companies and developed properties and managing our overall growth which could have a material adverse effect on our operating results.     
We may not be able to effectively manage our properties, proposed projects with Native American tribes and any future acquired companies or developed properties, or realize any of the anticipated benefits of the acquisitions, including streamlining operations or gaining efficiencies from the elimination of duplicative functions. The management of Native American gaming facilities requires continued dedication of management resources and may temporarily distract attention from our day-to-day business. In addition, to the extent we pursue expansion and acquisition opportunities, we would face significant challenges in managing our expansion projects and any other gaming operations we may acquire in the future. Failure to manage our growth effectively could have a material adverse effect on our operating results.
We require significant capital to fund capital expenditures, pursue proposed development, expansion or acquisition opportunities or refinance our significant indebtedness.
Our businesses are capital intensive. For our casino properties to remain attractive and competitive we must periodically invest significant capital to keep the properties well-maintained, modernized and refurbished. Similarly, future construction and development projects, including but not limited to, the proposed North Fork Project, and acquisitions of other gaming operations could require significant additional capital. We rely on earnings and cash flow from operations to finance our business, capital expenditures, development, expansion and acquisitions and, to the extent that we cannot fund such expenditures from cash generated by operations, funds must be borrowed or otherwise obtained. We will also be required in the future to refinance our outstanding debt. Our ability to effectively operate and grow our business may be constrained if we are unable to borrow additional capital or refinance existing borrowings on reasonable terms.
We may be unable to generate sufficient revenues and cash flows to service our debt obligations as they come due, finance capital expenditures and meet our operational needs.
If we are unable to access sufficient capital from operations or borrowings, we may be precluded from:
maintaining or enhancing our properties;
taking advantage of future opportunities;
growing our business; or
responding to competitive pressures.
Further, our failure to generate sufficient revenues and cash flows could lead to cash flow and working capital constraints, which may require us to seek additional working capital. We may not be able to obtain such working capital when it is required. Further, even if we were able to obtain additional working capital, it may only be available on unfavorable terms. For example, we may be required to incur additional debt, and servicing the payments on such debt could adversely affect our results of operations and financial condition. Limited liquidity and working capital may also restrict our ability to maintain and update our casino properties, which could put us at a competitive disadvantage to casinos offering more modern and better maintained facilities.
If we do not have access to credit or capital markets at desirable times or at rates that we would consider acceptable, the lack of such funding could have a material adverse effect on our business, results of operations and financial condition and our ability to service our indebtedness.
We may incur impairments to goodwill, indefinite-lived intangible assets, or long-lived assets which could negatively affect our results of operations.    
We test our goodwill and indefinite-lived intangible assets for impairment during the fourth quarter of each year or when a triggering event occurs, and we test other long-lived assets for impairment whenever changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If we do not achieve our projected cash flow estimates related to such assets, we may be required to record an impairment charge, which could have a material adverse impact on our consolidated financial statements. We have recognized significant impairment charges in the past as a result of a number of factors including negative industry and economic trends, reduced estimates of future cash flows, and slower than expected growth. We could be required to recognize additional impairment charges, which could have a material adverse effect on our results of operations if events that negatively impact our business should occur in the future.

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Any failure to protect our trademarks could have a negative impact on the value of our brand names and adversely affect our business.
The development of intellectual property is part of our overall business strategy, and we regard our intellectual property to be an important element of our success. While our business as a whole is not substantially dependent on any one trademark or combination of several of our trademarks or other intellectual property, we seek to establish and maintain our proprietary rights in our business operations through the use of trademarks. Despite our efforts to protect our proprietary rights, parties may infringe our trademarks and our rights may be invalidated or unenforceable. Monitoring the unauthorized use of our intellectual property is difficult. Litigation may be necessary to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources. We cannot assure you that all of the steps we have taken to protect our trademarks will be adequate to prevent imitation of our trademarks by others. The unauthorized use or reproduction of our trademarks could diminish the value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.
Shortages or increases in prices of energy or water may adversely affect our business and our results of operations.
Our casinos and hotels use significant amounts of electricity, natural gas, other forms of energy and water. The southwest United States is currently experiencing a severe drought, which may result in governmentally-imposed restrictions on water use or increases in the cost of water. Any such restrictions on use of water or increases in cost could adversely impact our business and our results of operations. In addition, while no shortages of energy have been experienced recently and gasoline prices are currently lower than historical periods, energy shortages or substantial increases in the cost of electricity and gasoline in the United States have negatively affected our operating results in the past. Increased gasoline prices may cause reduced visitation to our properties because of travel costs or reductions in disposable income of our guests and increased energy prices directly impact our operating costs. Any such increases in prices could negatively affect our business in the future.
Failure to maintain the integrity of our internal or customer data, including defending our information systems against hacking, security breaches, computer malware, cyber attacks and similar technology exploitation risks, could have an adverse effect on our results of operations and cash flows, and/or subject us to costs, fines or lawsuits.
Our business requires the collection and retention of large volumes of data about our customers, employees, suppliers and business partners, including customer credit card numbers and other personally identifiable information of our customers and employees, in various information systems that we maintain and in those maintained by third party service providers. The integrity and protection of that data is important to our business and is subject to privacy laws enacted by various jurisdictions. The regulatory environment and the requirements imposed on us by the payment card industry surrounding information, security and privacy are evolving and may be inconsistent. Our systems may be unable to meet changing regulatory and payment card industry requirements and employee and customer expectations, or may require significant additional investments or time in order to do so. Our information systems and records, including those maintained by service providers, may be subject to security breaches, system failures, viruses, operator error or inadvertent releases of data. The steps we have taken to mitigate these risks may not be sufficient and a significant theft, loss or fraudulent use of customer, employee or company data maintained by us or by a service provider could have an adverse effect on our reputation and employee relationships and could result in remedial and other expenses, fines or litigation. A breach in the security of our information systems or those of our service providers could lead to an interruption in the operation of our systems or loss, disclosure or misappropriation of our business information and could have an adverse effect on our business, results of operations and cash flows.
We may face potential successor liability for liabilities of STN not provided for in our plan of reorganization. If we are determined to be liable for obligations of STN, our business, financial condition and results of operations may be materially and adversely affected.
We may be subject to certain liabilities of STN not provided for in our plan of reorganization. Such liabilities may arise in a number of circumstances, including those where:
a creditor of STN did not receive proper notice of the pendency of the bankruptcy case relating to our plan of reorganization or the deadline for filing claims therein;
the injury giving rise to, or source of, a creditor's claim did not manifest itself in time for the creditor to file the creditor's claim;
a creditor did not timely file the creditor's claim in such bankruptcy case due to excusable neglect;
we are liable for STN's tax liabilities under a federal and/or state theory of successor liability; or

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the order of confirmation for our plan of reorganization was procured by fraud.
To date, we have been successful in both state court and bankruptcy court defending against such alleged liabilities. If, however, we are determined to be subject to such liabilities, it could materially adversely affect our business, financial condition and results of operations.
Risks Related to our Substantial Indebtedness
We have a substantial amount of indebtedness, which could have a material adverse effect on our financial condition and our ability to obtain financing in the future and to react to changes in our business.
We have a substantial amount of debt, which requires significant principal and interest payments. As of December 31, 2014, the principal amount of our outstanding indebtedness, including original issue discount and our $113.5 million non-recourse Restructured Land Loan, totaled approximately $2.2 billion, and we have $315.7 million of undrawn availability under our Credit Facility. Our ability to make interest payments on our debt will be significantly impacted by general economic, financial, competitive and other factors beyond our control.
Our substantial indebtedness could:
make it more difficult for us to satisfy our obligations under our 7.50% Senior Notes and senior secured credit facilities and other indebtedness;
increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings, including those under our senior secured credit facilities, are and will continue to be at variable rates of interest;
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes;
limit our flexibility in planning for, or reacting to, changes in our business and industry;
place us at a disadvantage compared to competitors that may have proportionately less debt;
limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and
cause us to incur higher interest expense in the event of increases in interest rates on our borrowings that have variable interest rates or if we refinance existing debt at higher interest rates.
Our indebtedness imposes restrictive financial and operating covenants that limit our flexibility in operating our business and may adversely affect our ability to compete or engage in favorable business or financing activities.
Our credit agreements and the indenture governing our 7.50% Senior Notes contain a number of covenants that impose significant operating and financial restrictions on us, including certain limitations on our and our subsidiaries' ability to, among other things:
incur additional debt or issue certain preferred units;
pay dividends on or make certain redemptions, repurchases or distributions in respect of our units or make other restricted payments;
make certain investments;
sell certain assets;
create liens on certain assets;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and
enter into certain transactions with our affiliates.
In addition, our credit agreements contain certain financial covenants, including maintenance of a minimum interest coverage ratio and adherence to a maximum total leverage ratio.

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As a result of these covenants and restrictions, we are limited in how we conduct our business and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The restrictions caused by such covenants could also place us at a competitive disadvantage to less leveraged competitors. In addition, our ability to comply with covenants and restrictions contained in the agreements governing our indebtedness may be affected by general economic conditions, industry conditions and other events beyond our control. As a result, we cannot assure you that we will be able to comply with these covenants and restrictions.
A failure to comply with the covenants contained in the credit agreements, the indenture governing our 7.50% Senior Notes, or other indebtedness that we may incur in the future could result in an event of default, which, if not cured or waived, could result in the acceleration of the indebtedness and have a material adverse effect on our business, financial condition and results of operations. In the event of any default under any of our credit agreements, the lenders thereunder:
will not be required to lend any additional amount to us;
could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable and terminate all commitments to extend future credit; and
could require us to apply all of our available cash to repay these borrowings.
If we are unable to comply with the covenants in the agreements governing our indebtedness or to pay our debts, the lenders under our credit agreements could proceed against the collateral granted to them to secure that indebtedness, which includes substantially all of our assets, and the holders of our 7.50% Senior Notes would be entitled to exercise remedies under our indenture. If our indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. Moreover, in the event that such indebtedness is accelerated, there can be no assurance that we will be able to refinance it on acceptable terms, or at all.
Despite our current indebtedness levels, we and our subsidiaries may still incur significant additional indebtedness, which could increase the risks associated with our substantial indebtedness.
We and our subsidiaries may be able to incur substantial additional indebtedness, including additional secured indebtedness, in the future. The terms of the documents governing our indebtedness restrict, but do not completely prohibit, us from doing so. As of December 31, 2014, we have $315.7 million of undrawn availability under our Credit Facility (after giving effect to the issuance of approximately $34.3 million of letters of credit and similar obligations). In addition, the indenture governing our 7.50% Senior Notes allows us to issue additional notes under certain circumstances. The indenture also allows us to incur certain other additional secured and unsecured debt. Further, the indenture does not prevent us from incurring other liabilities that do not constitute indebtedness. If new debt or other liabilities are added to our current debt levels, the related risks that we and our subsidiaries now face could intensify.
We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond our control. We will also be required to obtain the consent of the lenders under our Credit Facility to refinance material portions of our indebtedness. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures, or to sell assets, seek additional capital or restructure or refinance our indebtedness. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations. If our operating results and available cash are insufficient to meet our debt service obligations, we could face substantial liquidity problems and might be required to dispose of significant assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or to obtain the proceeds that we could realize from them, and these proceeds may not be adequate to meet any debt service obligations then due. Additionally, the documents governing our indebtedness limit the use of the proceeds from any disposition; as a result, we may not be allowed, under these documents, to use proceeds from such dispositions to satisfy all current debt service obligations.

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Our ability to service all of our indebtedness depends on our ability to generate cash flow, which is subject to factors that are beyond our control.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to general economic, financial, competitive and other factors that are beyond our control. In addition, a further deterioration in the economic performance of our casino properties may cause us to reduce or delay investments and capital expenditures, or to sell assets. In the absence of such operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
PROPERTIES.
Substantially all of the property that we own and lease is subject to liens to secure borrowings under our credit agreements and the indenture governing our 7.50% Senior Notes.
Red Rock, which opened in 2006, is situated on approximately 64 acres that we own located on the northwest side of Las Vegas, Nevada.
Green Valley Ranch, which opened in 2001, is situated on approximately 40 acres that we own in Henderson, Nevada.
Palace Station, which opened in 1976, is situated on approximately 30 acres that we own located on the west side of Las Vegas, Nevada.
Boulder Station, which opened in 1994, is situated on approximately 54 acres located on the east side of Las Vegas, Nevada. We own 27 acres and lease the remaining 27 acres from KB Enterprises, a company owned by the Frank J. Fertitta and Victoria K. Fertitta Revocable Family Trust (the "Related Lessor"). Frank J. Fertitta, Jr. and Victoria K. Fertitta are the parents of Frank J. Fertitta III, a member of our Board of Managers and Chief Executive Officer, and Lorenzo J. Fertitta, a member of our Board of Managers. The lease has a maximum term of 65 years, ending in June 2058. The lease provides for monthly payments of $222,933 through June 2018. In July 2018 and every ten years thereafter, the rent will be adjusted by a cost of living factor. In July 2023 and every ten years thereafter, the rent is subject to adjustment based on the product of the fair market value of the land and the greater of the then prevailing annual rate of return for comparably situated property or 8% per year. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we have an option to purchase the land at fair market value, exercisable at five-year intervals with the next option in July 2018. We believe that the terms of the ground lease are as fair to us as could be obtained from an independent third party.
Texas Station, which opened in 1995, is situated on approximately 47 acres located in North Las Vegas, Nevada. We lease this land from Texas Gambling Hall & Hotel, Inc., a company owned by the Related Lessor. The lease has a maximum term of 65 years, ending in July 2060. The lease provides for monthly rental payments of $337,417 through July 2015. In August 2015 and every ten years thereafter, the rent will be adjusted by a cost of living factor. In August 2020, and every ten years thereafter, the rent is subject to adjustment based on the product of the fair market value of the land and the greater of the then prevailing annual rate of return for comparably situated property or 8% per year. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we have an option to purchase the land at fair market value, exercisable in April 2030 and at five-year intervals thereafter. We believe that the terms of the ground lease are as fair to us as could be obtained from an independent third party.
Sunset Station, which opened in 1997, is situated on approximately 82 acres that we own located in Henderson, Nevada.
Santa Fe Station, which we purchased in 2000, is situated on approximately 39 acres that we own located on the northwest side of Las Vegas, Nevada.
Fiesta Rancho, which we purchased in 2001, is situated on approximately 25 acres that we own in North Las Vegas, Nevada.
Fiesta Henderson, which we purchased in 2001, is situated on approximately 46 acres that we own in Henderson, Nevada.

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Wild Wild West, which we purchased in 1998, is situated on a portion of approximately 97 acres of land, of which approximately 77 acres is owned and approximately 20 acres is leased from a third party lessor as of December 31, 2014. The significant terms of the lease agreement include (i) annual rent adjustments through January 2020 and every three years thereafter, (ii) options under which we may purchase the land at any time through 2019 at established fixed prices, (iii) a one-time termination option at our election in 2019, and (iv) options under which we may purchase the land in July 2023, 2044 and 2065 for a purchase price equal to fair market value as of July 2022, 2043 and 2064, respectively.
Wildfire Rancho, which we purchased in 2003, is situated on approximately five acres that we own in Las Vegas, Nevada.
Wildfire Boulder, which we purchased in 2004, is situated on approximately two acres that we own in Henderson, Nevada.
Wildfire Sunset, which we purchased in 2004, is situated on approximately one acre that we own in Henderson, Nevada.
Wildfire Lake Mead, which we purchased in 2006, is situated on approximately three acres that we own in Henderson, Nevada.
Barley's and The Greens, which are 50% owned, lease land and buildings in Henderson, Nevada used in their operations from third-party lessors. Wildfire Lanes, which is 50% owned, owns the land and building in Henderson, Nevada used in its operations. We opened Barley's in 1996 and purchased The Greens in 2005 and Wildfire Lanes in 2007.
Wildfire Valley View and Wildfire Anthem, which we purchased in 2013, lease land and buildings used in their operations in Las Vegas and Henderson, Nevada, respectively, from third party lessors.
We lease our corporate office building in Las Vegas, Nevada from a third-party real estate investment firm, to whom STN sold the building in 2007. The initial 20-year term of the lease expires in November 2027, and we have four remaining five-year options to extend the lease. The lease also contains an option under which we may repurchase the building in November 2017.
We own land held for development consisting primarily of 12 sites comprising approximately 355 acres in the Las Vegas valley, approximately 34 acres in Northern California and approximately 100 acres in Reno, Nevada.
Subsequent to the opening or purchase of our larger properties, we have completed a variety of expansion and renovation projects. In addition, from time to time we also renovate portions of our properties, such as hotel rooms and restaurants.
ITEM 3.
LEGAL PROCEEDINGS.
We and our subsidiaries are from time to time subject to litigation relating to routine matters incidental to our business. As with all litigation, no assurance can be provided as to the outcome of the following matters and litigation inherently involves significant costs.
ITEM 4.
MINE SAFETY DISCLOSURES
Not applicable.

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PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
All of our outstanding voting equity interests (the ''Voting Units'') and our non-voting equity interests (the ''Non-Voting Units'' and together with the Voting Units, collectively the "Units") are privately held and there is no established public trading market for our Units.
Holders
As of February 28, 2015, there was one holder of record of our Voting Units and one holder of record of our Non-Voting Units.
Dividends
From time to time we evaluate whether we will make dividends or distributions in respect of our Units, subject to compliance with restrictive covenants of our debt instruments and other agreements (see Management's Discussion and Analysis of Financial Condition and Results of Operations—Description of Certain Indebtedness and Capital Stock). In addition, we are party to a tax distribution agreement that requires us to distribute to Station Holdco an amount that is generally sufficient to permit the members of Station Holdco to pay federal and state income taxes in respect of their allocable shares of our income. In 2014 and 2013, we paid distributions to equityholders of Station Holdco totaling $130.3 million and $46.5 million, respectively.
Issuer Purchases of Equity Securities
There were no purchases of our equity securities made by or on behalf of us during the three months ended December 31, 2014.
Securities authorized for issuance under equity compensation plans
None of our equity securities are authorized for issuance under equity compensation plans.
ITEM 6.
SELECTED FINANCIAL DATA
The selected consolidated financial data presented below have been derived from Station and its predecessor entities' consolidated financial statements which, except for periods ended on or before December 31, 2011, are contained elsewhere in this Annual Report on Form 10-K. On June 17, 2011, Station emerged from Chapter 11 bankruptcy and acquired substantially all of the assets of Station Casinos, Inc. and Green Valley Ranch Gaming, LLC (the “Predecessors”) pursuant to Chapter 11 plans of reorganization.
The selected consolidated financial data set forth below are qualified in their entirety by, and should be read in conjunction with, Management's Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and the notes thereto and other financial and statistical information included elsewhere in this Annual Report on Form 10-K.
Amounts previously reported for the years ended December 31, 2013 and 2012 have been revised to reflect the results of Fertitta Interactive LLC ("Fertitta Interactive") as discontinued operations.

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Station Casinos LLC
 
 
Predecessors (e)
 
Year Ended December 31, 2014 (a)
 
Year Ended December 31, 2013 (c)
 
Year Ended December 31, 2012 (d)
 
Period From
 June 17, 2011 Through
December 31, 2011
 
 
Station Casinos, Inc.
 
Green Valley Ranch Gaming, LLC
 
Station Casinos, Inc.
 
Green Valley Ranch Gaming, LLC
 
 
 
 
 
 
Period From January 1, 2011 Through June 16, 2011 (f)
 
Year Ended December 31, 2010 (g)
 
(amounts in thousands)
 
 
(amounts in thousands)
Operating Results:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues
$
1,291,616

 
$
1,256,137

 
$
1,229,302

 
$
629,399

 
 
$
464,697

 
$
84,052

 
$
944,955

 
$
169,772

Operating income (loss)
219,842

 
205,283

 
162,828

 
72,511

 
 
48,599

 
11,947

 
(209,055
)
 
7,554

Net income (loss) from continuing operations
114,736

 
(87,840
)
 
25,219

 
(20,138
)
 
 
3,357,474

 
626,364

 
(565,442
)
 
(91,640
)
Discontinued operations (b)
(43,410
)
 
(25,653
)
 
(13,507
)
 

 
 

 

 

 

Net income (loss)
71,326

 
(113,493
)
 
11,712

 
(20,138
)
 
 
3,357,474

 
626,364

 
(565,442
)
 
(91,640
)
Net (loss) income attributable to noncontrolling interests
(11,955
)
 
(9,067
)
 
(1,606
)
 
4,955

 
 
24,321

 

 
(1,673
)
 

Net income (loss) attributable to Station Casinos LLC
83,281

 
(104,426
)
 
13,318

 
(25,093
)
 
 
3,333,153

 
626,364

 
(563,769
)
 
(91,640
)
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
Total assets
$
2,974,341

 
$
3,078,398

 
$
3,098,943

 
$
3,178,349

 
 
 
 
 
 
$
3,954,143

 
$
485,620

Long-term debt, including current portion
2,146,599

 
2,198,148

 
2,073,601

 
2,195,227

 
 
 
 
 
 
5,921,755

 
766,742

Members'/stockholders' equity (deficit)
645,168

 
695,943

 
838,861

 
842,476

 
 
 
 
 
 
(2,886,248
)
 
(419,300
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(a)
During the year ended December 31, 2014, we recognized a $49.1 million gain on repayment of our advances for development of Graton Resort.
(b)
Discontinued operations represents the results of Fertitta Interactive, which ceased operations in the fourth quarter of 2014. See Note 3 to the Consolidated Financial Statements for additional information.
(c)
During the year ended December 31, 2013, we recognized a loss on debt extinguishment of $146.8 million related to the refinancing of $2.1 billion of our then outstanding debt. See Note 11 to the Consolidated Financial Statements for additional information.
(d)
During the year ended December 31, 2012, we recognized a loss on debt extinguishment of $51.8 million related to the refinancing of approximately $517 million of our then outstanding debt, mainly the write-off of unamortized debt discount and debt issuance costs related to the previous credit facilities. See Note 11 to the Consolidated Financial Statements for additional information. In addition, we recognized a $102.8 million gain on repayment of our advances for development of Graton Resort.
(e)
Upon our emergence from Chapter 11 bankruptcy we adopted fresh-start reporting. As a result, the Company’s selected financial data for periods beginning on or after June 17, 2011 is not comparable to the selected financial data of the Predecessors.
(f)
For the period from January 1, 2011 through June 16, 2011, our Predecessors recognized net gains of approximately $3.9 billion as a direct result of the Chapter 11 bankruptcy cases.
(g)
During the year ended December 31, 2010, STN recognized a loss of $234.5 million as a result of recording its 50% share of asset impairment losses of Aliante Station, a 50% owned joint venture of STN. In addition, a joint venture was dissolved and STN recognized a $124.2 million gain on dissolution as a result of writing off the deficit carrying amount of the investment.

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ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in Item 8. Financial Statements and Supplementary Data included in this Annual Report on Form 10-K.
Overview
We are a gaming and entertainment company established in 1976 that develops and operates casino entertainment facilities. We currently own and operate nine major hotel/casino properties and ten smaller casino properties (three of which are 50% owned) in the Las Vegas metropolitan area. In addition, we manage Graton Resort & Casino ("Graton Resort") in Sonoma County, California, which opened on November 5, 2013, and Gun Lake Casino ("Gun Lake") in Allegan County, Michigan.
Our operating results are greatly dependent on the level of casino revenue generated at our properties. A substantial portion of our operating income is generated from our gaming operations, primarily from slot play, which represents approximately 80% to 85% of our casino revenue. We use our non-gaming offerings, such as restaurants, hotels and other entertainment amenities, to attract customer traffic to our casino properties. 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.
We use certain key indicators to measure the performance of our gaming operations. Slot handle and table games drop are key indicators of casino volume. Slot handle represents the total amount wagered in a slot machine. Table games drop represents the total amount of cash and net markers issued that are deposited in gaming table drop boxes. Win represents the amount of wagers retained by us and recorded as casino revenue, and hold represents win as a percentage of slot handle or table games drop. As our customers are primarily Las Vegas locals, 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.
The climate of the Las Vegas economy continued to slowly improve during 2014. The Las Vegas Strip continued to see improvements in visitation, hotel rates, food and beverage sales and retail sales; however gaming revenues on the Las Vegas Strip remained relatively flat in 2014. In the local economy, employment has grown at a steady pace of approximately 3% per year and employment was up to 887,000 jobs at the end of 2014, the highest since November 2008.  The median existing home price increased by approximately 6% from December 31, 2013 to December 31, 2014. Taxable sales are also steadily improving, and increased by approximately 8% for the same period.  We believe all of these indicators reflect stabilization of the Las Vegas economy and a foundation for future growth.  Although we experienced improved operating results in the fourth quarter of 2014 due, in part, to more favorable local economic conditions and reduced gas prices, 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. 
Highlights for 2014 include the following:
Our net revenues grew by 2.8% and our operating income grew by 7.1% during 2014.
Through the fourth quarter of 2014, our Adjusted EBITDAM has grown for 15 consecutive quarters.
We completed a repricing of our $1.6 billion Term Loan Facility in March, resulting in a 75 basis point interest rate reduction which contributes approximately $12 million in annual cash interest savings.
We repaid $71.3 million in principal amount of debt.
We continued our focus on achieving operating efficiencies.
We completed Restaurant Row at Red Rock Resort, which links five of our premier restaurants via a pedestrian walkway. We also added a new parking area and walkway offering guests convenient access to and from Downtown Summerlin, a 1.6 million square foot outdoor shopping, dining and entertainment center which opened in October 2014.
In September 2014, Fertitta Interactive withdrew from the New Jersey online gaming market after terminating its online gaming operations agreement with its partner due to multiple breaches by the partner. In November 2014, Fertitta Interactive ceased its Nevada online poker operations as a result of revenues not meeting expectations. The operations of

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Fertitta Interactive are presented in discontinued operations for all periods presented, and are excluded from the results of operations presented and discussed below.
Additional information about our results of operations is included herein and in the notes to our Consolidated Financial Statements.
Results of Operations
The following tables present information about our results of continuing operations (dollars in thousands):
Year Ended December 31, 2014 Compared to Year Ended December 31, 2013


 
Year Ended December 31,
 
 
 
2014
 
2013
 
Percent
change
Net revenues
$
1,291,616

 
$
1,256,137

 
2.8%
Operating income
219,842

 
205,283

 
7.1%
 
 
 
 
 
 
Casino revenues
897,361

 
882,241

 
1.7%
Casino expenses
341,490

 
339,651

 
0.5%
Margin
61.9
%
 
61.5
%
 
 
 
 
 
 
 
 
Food and beverage revenues
239,212

 
235,722

 
1.5%
Food and beverage expenses
157,191

 
161,790

 
(2.8)%
Margin
34.3
%
 
31.4
%
 
 
 
 
 
 
 
 
Room revenues
112,664

 
105,630

 
6.7%
Room expenses
45,479

 
43,062

 
5.6%
Margin
59.6
%
 
59.2
%
 
 
 
 
 
 
 
 
Other revenues
70,522

 
67,431

 
4.6%
Other expenses
28,979

 
26,580

 
9.0%
 
 
 
 
 
 
Management fee revenue
68,782

 
59,758

 
15.1%
 
 
 
 
 
 
Selling, general and administrative expenses
288,667

 
291,586

 
(1.0)%
Percent of net revenues
22.3
%
 
23.2
%
 
 
 
 
 
 
 
 
Depreciation and amortization
127,766

 
128,754

 
(0.8)%
Management fee expense
48,872

 
46,145

 
5.9%
Impairment of goodwill

 
1,183

 
n/m
Impairment of other assets
11,739

 

 
n/m
Write-downs and other charges, net
20,951

 
11,881

 
76.3%
Interest expense, net
150,995

 
164,622

 
(8.3)%
Loss on extinguishment of debt
4,132

 
146,787

 
n/m
Gain on Native American development
49,074

 
16,974

 
n/m
________________________________________________
n/m = not meaningful


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Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

 
Year Ended December 31,
 
 
2013
 
2012
 
Percent
change
Net revenues
$
1,256,137

 
$
1,229,302

 
2.2%
Operating income
205,283

 
162,828

 
26.1%
 
 
 
 
 
 
Casino revenues
882,241

 
885,629

 
(0.4)%
Casino expenses
339,651

 
355,199

 
(4.4)%
Margin
61.5
%
 
59.9
%
 
 
 
 
 
 
 
 
Food and beverage revenues
235,722

 
237,770

 
(0.9)%
Food and beverage expenses
161,790

 
161,167

 
0.4%
Margin
31.4
%
 
32.2
%
 
 
 
 
 
 
 
 
Room revenues
105,630

 
106,348

 
(0.7)%
Room expenses
43,062

 
43,106

 
(0.1)%
Margin
59.2
%
 
59.5
%
 
 
 
 
 
 
 
 
Other revenues
67,431

 
69,704

 
(3.3)%
Other expenses
26,580

 
26,987

 
(1.5)%
 
 
 
 
 
 
Management fee revenue
59,758

 
29,874

 
100.0%
 
 
 
 
 
 
Selling, general and administrative expenses
291,586

 
286,537

 
1.8%
Percent of net revenues
23.2
%
 
23.3
%
 
 
 
 
 
 
 
 
Depreciation and amortization
128,754

 
129,139

 
(0.3)%
Management fee expense
46,145

 
44,087

 
4.7%
Impairment of goodwill
1,183

 

 
n/m
Impairment of other assets

 
10,066

 
n/m
Write-downs and other charges, net
11,881

 
9,875

 
20.3%
Interest expense, net
164,622

 
189,481

 
(13.1)%
Loss on extinguishment of debt
146,787

 
51,796

 
n/m
Gain on Native American development
16,974

 
102,816

 
n/m
________________________________________________
n/m = not meaningful
Net Revenues. Net revenues for the year ended December 31, 2014 increased by 2.8% to $1.29 billion as compared to $1.26 billion for the year ended December 31, 2013. The increase in net revenues during 2014 was due to management fee revenue from Graton Resort, which opened in November 2013, as well as improvements in casino and room revenue.
Net revenues for the year ended December 31, 2013 increased by 2.2% as compared to net revenues of $1.23 billion for the year ended December 31, 2012. The increase in net revenues during 2013 was primarily a result of management fees from Graton Resort, including a development fee of $8.2 million. The components of net revenues are discussed below.

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Operating Income. Operating income increased by 7.1% to $219.8 million for the year ended December 31, 2014 as compared to $205.3 million for the prior year due to management fee revenue from Graton Resort, as well as improvements in operating income from casino and rooms.
Operating income increased by 26.1% to $205.3 million for the year ended December 31, 2013 as compared to $162.8 million for the prior year, primarily due to improved operating results at our properties, as well as the impact of management fees from Graton Resort. The components of operating income are discussed below.
Casino.  Casino revenues increased by $15.2 million to $897.4 million for the year ended December 31, 2014 as compared to $882.2 million for the prior year. The improvement was primarily due to increased slot revenues and sports win. Casino expenses decreased slightly for the year ended December 31, 2014 as compared to the prior year due to our continued focus on operating efficiencies.
Casino revenues decreased slightly for the year ended December 31, 2013 as compared to the prior year. The decrease was primarily due to lower casino volume at our properties, which we believe was attributable to the general weakness of the economy. In addition, we believe the expiration of the federal payroll tax cut in January 2013 had likely negatively affected the discretionary spending of our patrons during 2013. Casino expenses decreased by 4.4% for the year ended December 31, 2013 compared to the prior year, primarily due to our ongoing cost savings efforts.
Food and Beverage.  Food and beverage revenues for the year ended December 31, 2014 increased to $239.2 million as compared to $235.7 million for 2013. The improvement was primarily due to a $3.9 million increase in catering revenue, partially offset by the impact of the closure of several restaurants during the year for renovation. For the year ended December 31, 2014, the average guest check increased by 2.5% as compared to the prior year, and the number of restaurant guests served decreased by 1.8% due to the restaurant closures. Food and beverage expense for the year ended December 31, 2014 decreased as compared to the prior year, mainly due to lower payroll and related costs as a result of the restaurant closures.
Food and beverage revenues for the year ended December 31, 2013 decreased slightly to $235.7 million as compared to $237.8 million for the prior year. Beverage revenue decreased by 10.1% during the year ended December 31, 2013 as compared to 2012, which was partially offset by a 3.7% increase in food revenue. For the year ended December 31, 2013, the average guest check and the number of restaurant guests served increased slightly as compared to 2012. The decrease in beverage revenue for the year ended December 31, 2013 was primarily due to closure of several bars and lounges for conversion or remodeling, as well as a reduction in entertainment offerings, such as outdoor concerts. Food and beverage expense for the year ended December 31, 2013 increased slightly as compared to 2012.
Room. The following table shows key information about our hotel operations:
 
Year Ended December 31,
 
2014
 
2013
 
2012
Occupancy
90.6
%
 
88.9
%
 
87.3
%
Average daily rate
$75
 
$71
 
$72
Revenue per available room
$67
 
$63
 
$63
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.
Room revenues for the year ended December 31, 2014 increased by 6.7% as compared to the prior year due to a 170 basis point improvement in the occupancy rate and a 5.5% improvement in ADR. Room expenses for the year ended December 31, 2014 increased by 5.6% as compared to the prior year, mainly due to higher payroll and related costs associated with the increased occupancy.
Room revenues for the year ended December 31, 2013 decreased slightly as compared to 2012 due to a slight decrease in ADR, partially offset by a 160 basis point improvement in the occupancy rate. Room expenses for the year ended December 31, 2013 remained flat as compared to 2012.

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Other. Other revenues primarily include revenues from entertainment, gift shops, bowling, leased outlets and spas. Other revenues for the year ended December 31, 2014 increased by 4.6% to $70.5 million as compared to $67.4 million for the prior year, primarily due to increased revenue from our retail shops. Other expenses for the year ended December 31, 2014 increased by 9.0% as compared to the prior year, largely due to the increased sales at our retail shops. Other revenues for the year ended December 31, 2013 decreased by 3.3% as compared to the prior year, primarily due to a reduction in our entertainment offerings. Other expenses for the year ended December 31, 2013 decreased slightly as compared to the prior year.
Management Fee Revenue. Management fee revenue mainly represents fees earned from our management agreements with Graton Resort and Gun Lake. For the year ended December 31, 2014, management fee revenue increased to $68.8 million as compared to $59.8 million for the prior year primarily due to management fees from Graton Resort, which opened in November 2013. Under our management agreement with the Graton Tribe, we receive a management fee of 24% of Graton Resort's net income (as defined in the management agreement) through November 2017 and 27% of Graton Resort's net income for the period from December 2017 through November 2020.
Management fee revenue also includes reimbursable costs, which represent amounts received or due pursuant to our management agreements with Native American tribes for the reimbursement of expenses, primarily payroll costs, that we incur on their behalf. We recognize reimbursable cost revenues on a gross basis, with an offsetting amount charged to operating expenses. Management fee revenue for the year ended December 31, 2014 included $7.5 million of reimbursable costs, primarily related to our management agreement with the Graton Tribe, as compared to $12.6 million for the prior year. Reimbursable costs for Graton Resort were higher for the year ended December 31, 2013 due to costs incurred in preparation for its opening. Excluding reimbursable costs, management fee revenue increased by $14.1 million or 29.9% for the year ended December 31, 2014 as compared to 2013.
Management fee revenue for the year ended December 31, 2013 increased by 100.0% as compared to 2012. The increase was primarily due to the opening of Graton Resort, which contributed $14.7 million in management fees for 2013, including a one-time development fee of $8.2 million which we earned upon opening. In addition, we recognized reimbursable costs of $12.6 million for the year ended December 31, 2013, primarily from Graton Resort. Excluding reimbursable costs, management fee revenue increased by $17.3 million or 57.8% for the year ended December 31, 2013 as compared to 2012.
Selling, General and Administrative ("SG&A").  SG&A expenses decreased by 1.0% to $288.7 million for the year ended December 31, 2014 as compared to $291.6 million for the prior year, mainly due to a $5.1 million reduction in reimbursable expenses under our management agreements, partially offset by increases in various other SG&A expenses. Excluding reimbursable expenses, SG&A expenses for the year ended December 31, 2014 increased less than 1.0% as compared to the prior year.
SG&A expenses increased by 1.8% to $291.6 million for the year ended December 31, 2013 as compared to $286.5 million for 2012. SG&A expenses for the year ended December 31, 2013 included $12.6 million in reimbursable expenses related to our Native American management agreements, primarily Graton Resort, as noted above. Excluding reimbursable expenses, SG&A expenses for the year ended December 31, 2013 decreased by 2.7% as compared to 2012.
Depreciation and Amortization.  Depreciation and amortization expense for the year ended December 31, 2014 decreased slightly to $127.8 million as compared to $128.8 million for the prior year. Depreciation and amortization expense for the year ended December 31, 2013 decreased slightly to $128.8 million as compared to $129.1 million for 2012. The year over year decreases in depreciation and amortization were primarily due to shorter-lived assets becoming fully depreciated, partially offset by amortization of the Graton management contract intangible asset, which began in November 2013.
Management Fee Expense. We have long-term management agreements with affiliates of Fertitta Entertainment to manage our properties. Under the management agreements, we pay a base management fee equal to 2% of gross revenues and an incentive management fee equal to 5% of positive EBITDA (as defined in the agreements) for each of our managed properties. Management fee expense for the year ended December 31, 2014 increased by 5.9% to $48.9 million as compared to $46.1 million for the prior year. Management fee expense for the year ended December 31, 2013 increased by 4.7% as compared to the prior year. The increases in management fee expense were due to increases in gross revenues and EBITDA.
Asset Impairment Charges. During the year ended December 31, 2014 we sold approximately 101 acres of land held for development in Reno, Nevada for approximately $2.0 million and recognized an impairment loss of $11.7 million to write down the carrying amount of the land to its estimated fair value less cost to sell. During the year ended December 31, 2013, we recognized a goodwill impairment charge of $1.2 million related to two taverns. During the year ended December 31, 2012, we

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recorded impairment losses of $10.1 million to write down the carrying amounts of certain parcels of land to their estimated fair values.
Write-downs and Other Charges, net. Write-downs and other charges, net includes charges such as losses on asset disposals, severance expense and non-routine transactions. Write-downs and other charges, net, for the year ended December 31, 2014 totaled $21.0 million, primarily due to the abandonment of certain assets, including an amphitheater and an outdoor water feature, as well as several restaurant renovation projects. For the year ended December 31, 2013, write-downs and other charges, net totaled $11.9 million, primarily representing net losses on asset disposals. For the year ended December 31, 2012, write-downs and other charges, net totaled $9.9 million, which included a $5.0 million settlement paid in satisfaction of an option granted to a former owner of Green Valley Ranch to reacquire an ownership interest in the property as provided in a settlement agreement.
Interest Expense, net.  The following table presents summarized information about our interest expense (in thousands):
 
Year Ended December 31,
 
2014
 
2013
 
2012
Interest cost, net of interest income
$
133,072

 
$
141,256

 
$
122,942

Amortization of debt discount and debt issuance costs
17,923

 
23,366

 
70,260

Less capitalized interest

 

 
(3,721
)
Interest expense, net
$
150,995

 
$
164,622

 
$
189,481

Interest expense, net, for the year ended December 31, 2014 was $151.0 million as compared to $164.6 million for the prior year. In March 2014, we completed a repricing of our $1.6 billion term loan facility, which resulted in an interest rate reduction of 75 basis points. The term loan repricing reduced our cash interest expense by approximately $8.8 million for the year ended December 31, 2014.
Interest expense, net, for the year ended December 31, 2013 was $164.6 million as compared to $189.5 million for 2012. In March 2013, we refinanced approximately $2.1 billion of our outstanding long-term debt, which resulted in an increase in the contractual interest rates on the refinanced debt. The majority of the refinancing was accounted for as a debt extinguishment. As a result of the refinancing transaction, a significant portion of our debt discount was written off. The decrease in interest expense during 2013 as compared to 2012 was primarily due to lower debt discount amortization during the current year, partially offset by the impact of the higher interest rates on the refinanced debt.
Interest expense, net, includes the impact of our interest rate swaps that are designated in cash flow hedging relationships, which effectively convert $1.0 billion of our variable-rate debt to a fixed rate. For the years ended December 31, 2014, 2013 and 2012, interest rate swaps increased our interest expense by $12.9 million, $13.1 million and $12.4 million, respectively. These amounts include deferred losses on discontinued cash flow hedging relationships that are being reclassified from accumulated other comprehensive loss into interest expense as the previously hedged cash flows continue to occur. Approximately $8.4 million of deferred losses on discontinued cash flow hedging relationships is expected to be reclassified from accumulated other comprehensive loss into interest expense, net, during 2015.
Loss on Extinguishment of Debt. During the year ended December 31, 2014, we recognized a $4.1 million loss on extinguishment of debt, primarily related to the March 2014 repricing of our Term Loan Facility. During the year ended December 31, 2013, we recognized a $146.8 million loss on extinguishment of debt, primarily related to the refinancing of approximately $2.1 billion of our then outstanding long-term debt. During the year ended December 31, 2012, we recognized a $51.8 million loss on extinguishment of debt, primarily related to the refinancing of approximately $517.0 million of our then outstanding long-term debt. These losses primarily resulted from the write-off of unamortized debt discounts and debt issuance costs related to previous credit facilities. See Note 11Long-term Debt, in the Consolidated Financial Statements for additional information about these transactions.
Gain on Native American Development. For the years ended December 31, 2014, 2013 and 2012, we recognized gains as a result of repayments on our advances to Graton Resort. The gains were due to the adjustment of the carrying amount of the project to fair value upon our adoption of fresh-start reporting in 2011, and our deferral of the return on the advances until the carrying amount had been recovered and the return was collected or realizable. In 2012, we received a payment of $194.2 million from the Graton Tribe as a partial repayment of development costs we had advanced. We recognized a gain of $102.8 million representing the difference between the carrying amount of the advances and the payment received. During December 2013, we recognized an additional gain of $17.0 million on the advances, and in 2014 we recognized a gain of $49.1 million

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when we received the final payment of the remaining amounts due from the Graton Tribe. We have no ongoing contractual obligation related to amounts collected from the Graton Tribe, and the amounts are nonrefundable.
Change in Fair Value of Derivative Instruments.  Fluctuations in interest rates can cause the fair value of our interest rate swaps to change each reporting period. For interest rate swaps not designated as hedging instruments and the ineffective portion of designated interest rate swaps, changes in fair value are recognized as gains or losses in our Consolidated Statements of Operations. For the years ended December 31, 2014, 2013 and 2012, we recognized losses of $0.1 million, $0.3 million and $0.9 million, respectively, representing changes in the fair value of our interest rate swaps. See Note 12Derivative Instruments, in the Consolidated Financial Statements for additional information.
Discontinued Operations. Discontinued operations represents the operating results of Fertitta Interactive, which ceased operating in November 2014. The net loss from discontinued operations for the years ended December 31, 2014, 2013 and 2012 was $43.4 million, $25.7 million and $13.5 million, respectively. See Note 3 Fertitta Interactive, in the Consolidated Financial Statements for additional information.
Adjusted EBITDAM
Adjusted EBITDAM for the years ended December 31, 2014, 2013 and 2012 was as follows (in thousands):
 
Year Ended December 31,
 
2014
 
2013
 
2012
Adjusted EBITDAM
$
420,689

 
$
385,449

 
$
347,225

The increases in Adjusted EBITDAM are is primarily due to improved operating results at our properties, as well as the impact of management and development fees from Graton Resort, as noted in the discussion above.
Adjusted EBITDAM is a non-GAAP measure that is presented solely as a supplemental disclosure. We believe that Adjusted EBITDAM 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 operating income, Adjusted EBITDAM is a useful financial performance measurement for assessing our operating performance because it provides information about the performance of our ongoing core operations excluding management fees, non-cash expenses, financing costs, and other non-operational or non-recurring items. Adjusted EBITDAM includes net income from continuing operations plus interest expense, net, depreciation and amortization, management fee expense, development and preopening expense, joint venture preopening expense, charges relating to share-based compensation, impairment of goodwill and other assets, write-downs and other charges, net, loss on extinguishment of debt, gain on Native American development, changes in fair value of derivative instruments, and excludes Adjusted EBITDAM attributable to MPM noncontrolling interests. To evaluate Adjusted EBITDAM 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 EBITDAM. Further, Adjusted EBITDAM does not represent net income or cash flows from operating, financing or investing 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 EBITDAM 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 EBITDAM or adjustments to this measure may calculate EBITDAM or such adjustments in the same manner as us, and therefore our measure of Adjusted EBITDAM may not be comparable to similarly titled measures used by other gaming companies.

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Following is a reconciliation of net income (loss) from continuing operations to Adjusted EBITDAM (in thousands):
 
Year Ended December 31,
 
2014
 
2013
 
2012
Net income (loss) from continuing operations
$
114,736

 
$
(87,840
)
 
$
25,219

Interest expense, net
150,995

 
164,622

 
189,481

Depreciation and amortization
127,766

 
128,754

 
129,139

Management fee expense
48,872

 
46,145

 
44,087

Development and preopening
640

 
222

 
311

Joint venture preopening expense
435

 
195

 

Share-based compensation
2,790

 
3,416

 
2,628

Impairment of goodwill

 
1,183

 

Impairment of other assets
11,739

 

 
10,066

Write-downs and other charges, net
20,951

 
11,881

 
9,875

Loss on extinguishment of debt
4,132

 
146,787

 
51,796

Gain on Native American development
(49,074
)
 
(16,974
)
 
(102,816
)
Change in fair value of derivative instruments
90

 
291

 
921

Other
41

 
41

 
66

Adjusted EBITDAM attributable to MPM noncontrolling interests
(13,424
)
 
(13,274
)
 
(13,548
)
Adjusted EBITDAM
$
420,689

 
$
385,449

 
$
347,225

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, expansion projects and our 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.
At December 31, 2014, we had $122.0 million in cash and cash equivalents, which is primarily used for the day-to-day operations of our properties. At December 31, 2014, our borrowing availability under our Revolving Credit Facility was $315.7 million, subject to continued compliance with the terms of our Credit Facility, which is net of outstanding letters of credit and similar obligations totaling $34.3 million. Subject to obtaining additional commitments under the Credit Facility, we have the ability to increase our borrowing capacity thereunder in an aggregate principal amount not to exceed the greater of (a) $350 million and (b) an unlimited amount, if certain conditions are met and pro forma first lien leverage is less than or equal to 4.5x.  Our ability to incur additional debt pursuant to such increased borrowing capacity is subject to compliance with the covenants in the Credit Facility and the indenture governing our 7.50% Senior Notes, including pro forma compliance with the financial covenants contained in the Credit Facility and compliance with covenants contained in the Credit Facility and the indenture limiting our ability to incur additional indebtedness.
Our primary cash requirements for 2015 are expected to include (i) required principal and interest payments on our indebtedness, totaling approximately $80.9 million and $114.4 million, respectively, including a $61.0 million excess cash flow payment due in April 2015 under the terms of our Credit Facility, (ii) approximately $110 million to $125 million for capital expenditures, and (iii) distributions to our members and noncontrolling interests.
Our cash flow may be affected by a variety of factors, many of which are outside our control, including regulatory issues, competition, financial markets and other general business conditions. We believe that cash flows from operations, available borrowings under our credit agreements and existing cash balances will be adequate to satisfy our anticipated uses of capital for the foreseeable future, and we are continually evaluating our liquidity position and our financing needs. We cannot provide assurance, however, that we will generate sufficient income and liquidity to meet all of our liquidity requirements or other obligations.

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Following is a summary of our cash flow information, which includes cash flows of discontinued operations (amounts in thousands):
 
Year Ended December 31,
 
2014
 
2013
 
2012
Cash flows provided by (used in):
 
 
 
 
 
Operating activities
$
242,299

 
$
229,123

 
$
206,624

Investing activities
(41,282
)
 
(93,030
)
 
101,472

Financing activities
(215,936
)
 
(127,352
)
 
(272,878
)
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 changes 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 primarily 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. During the year ended December 31, 2014, net cash provided by operating activities totaled $242.3 million, compared to $229.1 million for the prior year. The increase in net cash provided by operating activities for the year ended December 31, 2014 as compared to the prior year is primarily due to a $12.6 million increase in management fees from Graton Resort, partially offset by an increase of $8.7 million in cash paid for interest on our debt. Cash flows from operating activities also reflect normal fluctuations in our working capital accounts. Operating cash flows for the years ended December 31, 2014 and 2013 include $24.9 million and $20.5 million, respectively, of net cash outflows for discontinued operations.
Cash Flows from Investing Activities
During the year ended December 31, 2014, we paid $102.6 million for capital expenditures, consisting primarily of various renovation projects at our properties, information technology equipment purchases and slot machine purchases, and we paid $2.6 million in reimbursable advances for the North Fork Project. In addition, during the year ended December 31, 2014, we received repayments totaling $66.1 million on our advances for Graton Resort, which have now been repaid in full.
During the year ended December 31, 2013, we paid $86.3 million for capital expenditures, primarily for slot machine purchases, information technology equipment, additional casino offerings and various remodeling projects, and we paid $3.6 million in reimbursable advances for the North Fork Project.
Cash Flows from Financing Activities
During the year ended December 31, 2014, we paid $71.3 million million in principal payments on our indebtedness and $130.3 million in distributions to our members. For the same period, MPM paid $10.1 million in distributions to noncontrolling interest holders and Fertitta Interactive received capital contributions of $10.0 million from noncontrolling interest holders to fund its operations. In addition, we paid $2.5 million in fees and costs related to our March 2014 debt repricing.
During the year ended December 31, 2013, we paid $46.5 million in distributions to our members, and MPM paid $10.2 million in distributions to noncontrolling interest holders. During 2013, Fertitta Interactive received capital contributions from noncontrolling interest holders totaling $15.3 million. In addition, in March 2013 we refinanced approximately $2.1 billion of our outstanding indebtedness and paid $35.9 million in related fees and costs.
Restrictive Covenants
Certain customary covenants are included in either the credit agreement governing the Credit Facility or the indenture governing our 7.50% Senior Notes (the "Indenture") that, among other things and subject to certain exceptions, restrict our ability and the ability of our restricted subsidiaries to incur or guarantee additional debt; create liens on collateral; engage in mergers, consolidations or asset dispositions; pay dividends or distributions; make investments, loans or advances; engage in certain transactions with affiliates or subsidiaries; engage in lines of business other than our core business and related businesses; or issue certain preferred units.
The credit agreement governing the Revolving Credit Facility also includes requirements that we maintain a maximum total leverage ratio ranging from 7.00 to 1.00 at December 31, 2014 to 5.00 to 1.00 in 2017 and a minimum interest coverage

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ratio ranging from 2.50 to 1.00 in 2014 to 3.00 to 1.00 in 2017, provided that a default of the financial ratio covenants shall only become an event of default under the Term Loan Facility if the lenders providing the Revolving Credit Facility take certain affirmative actions after the occurrence of a default of such financial ratio covenants. The testing of these financial ratio covenants began with the fiscal quarter ended March 31, 2013. At December 31, 2014, our total leverage ratio was 5.02 to 1.00 and our interest coverage ratio was 3.40 to 1.00. We believe we were in compliance with all applicable covenants at December 31, 2014.
In addition to quarterly principal payments of 0.25% of the original principal amount of the Term Loan Facility, which began on June 30, 2013, we are also required to make prepayments on the Term Loan Facility with a portion of our excess cash flow as follows: (i) 50% of excess cash flow so long as no default has occurred and our total leverage ratio is above 4.50 to 1.00 or a default has occurred and is continuing, (ii) 25% of excess cash flow so long as no default has occurred and our total leverage ratio is less than or equal to 4.50 to 1.00, or (iii) 0% of excess cash flow so long as no default has occurred and our total leverage ratio is less than or equal to 3.50 to 1.00. In addition, subject to certain customary carve-outs and reinvestment provisions, we are required to use all net cash proceeds of asset sales or other dispositions, all proceeds from the issuance or incurrence of additional debt, and all proceeds from the receipt of insurance and condemnation awards to make prepayments on the Term Loan Facility.
The Indenture governing our 7.50% Senior Notes requires that we offer to repurchase the 7.50% Senior Notes at a purchase price in cash equal to 101% of the aggregate principal amount outstanding plus accrued and unpaid interest thereon if we experience certain change of control events (as defined in the Indenture) and that we make an offer to repurchase the 7.50% Senior Notes at a purchase price equal to 100% of the principal amount of the purchased notes if we have excess net proceeds (as defined in the Indenture) from certain asset sales.
Off-Balance Sheet Arrangements
We have not entered into any transactions with special purpose entities nor do we have any derivative arrangements other than the previously discussed interest rate swaps. We do not have any retained or contingent interest in assets transferred to an unconsolidated entity. At December 31, 2014, we had outstanding letters of credit and similar obligations totaling $34.3 million.
Contractual Obligations
The following table summarizes our contractual obligations at December 31, 2014 (amounts in thousands):
 
Payments Due by Period
 
Less than 1 year
 
1-3 years
 
3-5 years
 
Thereafter
 
Total
Long-term debt (a)
$
80,892

 
$
243,495

 
$
73,717

 
$
1,802,584

 
$
2,200,688

Interest on long-term debt and interest rate swaps (b)
114,363

 
218,916

 
189,542

 
56,541

 
579,362

Operating leases
8,773

 
17,531

 
17,360

 
388,155

 
431,819

Other (c)
35,761

 
9,224

 
6,233

 
15

 
51,233

Total contractual cash obligations
$
239,789

 
$
489,166

 
$
286,852

 
$
2,247,295

 
$
3,263,102

___________________________________
(a)
Includes scheduled principal payments and estimated excess cash flow payments on long-term debt outstanding at December 31, 2014. Additional information about our long-term debt is included in Note 11 to the Consolidated Financial Statements. The amount due in less than one year includes a $61.0 million excess cash flow payment on our Term Loan which we expect to pay by April 2015.
(b)
Includes contractual interest payments on fixed and variable rate long-term debt outstanding at December 31, 2014 based on outstanding amounts and interest rates in effect at that date, and projected cash payments on interest rate swaps. Additional information about our derivative instruments is included in Note 12 to the Consolidated Financial Statements.
(c)
Includes employment contracts, long-term stay-on agreements, open purchase orders, natural gas purchase contracts, equipment purchase obligations and other long term obligations.

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Inflation
We do not believe that inflation has had a significant impact on our revenues, results of operations or cash flows in the last three fiscal years.
Native American Development
We have development and management agreements with the Mono, a federally recognized Native American tribe located near Fresno, California, pursuant to which we will assist the Mono in developing, financing and operating a gaming and entertainment facility to be located on Highway 99 north of the city of Madera, California. See Note 8 to the Consolidated Financial Statements for additional information.    
Regulation and Taxes
We are subject to extensive regulation by Nevada gaming authorities, as well as regulation by gaming authorities in the other jurisdictions in which we operate, including the NIGC, 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 legislature is currently in session, but there are no specific proposals to increase gaming taxes. There are no assurances that an increase in gaming taxes will not be proposed and passed by the Nevada Legislature in the future.
Description of Certain Indebtedness
Long-term Debt
A description of our indebtedness is included in Note 11 to the Consolidated Financial Statements.
Derivative Instruments
We have entered into various interest rate swaps to manage our exposure to interest rate risk. At December 31, 2014, we had two variable-to-fixed interest rate swaps with notional amounts totaling $1.0 billion which mature in 2015 and 2017. These interest rate swaps effectively fix the interest rates on $1.0 billion of our variable-rate debt to a fixed rate of 5.29%. As of December 31, 2014, we paid a weighted-average fixed interest rate of 2.04% and received a weighted-average variable interest rate of 1.00% on our interest rate swaps, which is the LIBOR floor stipulated in the agreements. For the year ended December 31, 2014, our interest rate swaps increased our interest expense by $12.9 million. The changes in fair value of the effective portion of our designated interest rate swaps are recognized in other comprehensive income, and the changes in fair value of any ineffective portion of the designated interest rate swaps, as well as any interest rate swaps not designated as hedging instruments, are recognized in change in fair value of derivative instruments as they occur. See Note 12 to the Consolidated Financial Statements for further information about our derivative and hedging activities and the related accounting.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that are subject to an inherent degree of uncertainty. Certain accounting estimates and assumptions may have a material impact on our financial statements due to the significant levels of subjectivity and judgment involved and the susceptibility of such estimates and assumptions to change. We base our estimates on historical experience, information that is currently available to us and various other assumptions that we believe are reasonable under the circumstances, and we evaluate our estimates on an ongoing basis. Actual results may differ from these estimates, and such differences could have a material effect on our consolidated financial statements. Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements. Following is a discussion of our accounting policies that involve critical estimates and assumptions.

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Long-Lived Assets
Our business is capital intensive and a significant portion of our capital is invested in property and equipment and other long-lived assets. We review long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. We evaluate the recoverability of our long-lived assets by estimating the future cash flows the asset is expected to generate, and comparing these estimated cash flows, on an undiscounted basis, to the carrying amount of the asset. If the carrying amount is greater, the asset is considered to be impaired, and we recognize an impairment charge equal to the amount by which the carrying amount of the asset exceeds its fair value. We test our long-lived assets for impairment at the reporting unit level.
Inherent in the calculation of fair values are various estimates and assumptions, including estimates of future cash flows expected to be generated by an asset or asset group. We base our cash flow estimates on the current regulatory, political and economic climates in the areas where we operate, recent operating information and projections for our properties. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, changes in consumer preferences, or events affecting various forms of travel and access to our properties. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. The most significant assumptions used in determining cash flow estimates include forecasts of future operating results, EBITDA margins, tax rates, capital expenditures, depreciation expense, working capital requirements, long-term growth rates and terminal year free cash flows. Cash flow estimates and their impact on fair value are highly sensitive to changes in many of these assumptions. If our ongoing estimates of future cash flows are not met, we may be required to record impairment charges in future accounting periods.
Property and Equipment. At December 31, 2014, the carrying amount of our property and equipment was approximately $2.14 billion, which represents approximately 71.8% of our total assets. We make estimates and assumptions when accounting for property and equipment. We compute depreciation using the straight-line method over the estimated useful lives of the assets, and our depreciation expense is highly dependent on the assumptions we make about the estimated useful lives of our assets. We estimate the useful lives of our property and equipment based on our experience with similar assets and our estimate of the usage of the asset. Whenever events or circumstances occur that change the estimated useful life of an asset, we account for the change prospectively. We must also make judgments about the capitalization of costs. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. If an asset or asset group is disposed or retired before the end of its previously estimated useful life, we may be required to accelerate our depreciation expense or recognize a loss on disposal.
Goodwill. We test our goodwill for impairment as of October 1 of each year, and we perform interim goodwill impairment tests whenever events or changes in circumstances indicate that our goodwill may be impaired. We perform our goodwill impairment testing at the reporting unit level, and we consider each of our operating properties to be a reporting unit. We test goodwill for impairment by comparing the estimated fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its estimated fair value, then the goodwill of the reporting unit may be impaired. To measure goodwill impairment, if any, we estimate the implied fair value of the reporting unit's goodwill by allocating the estimated fair value of the reporting unit to the assets and liabilities of the reporting unit, as if the reporting unit had been acquired in a business combination. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to the excess. We estimate the fair value of a reporting unit using the present value of expected future cash flows along with value indications provided by the current valuation multiples of comparable publicly traded companies. The estimation of the fair value of a reporting unit requires management to make critical estimates, assumptions and judgments, including estimating the expected future cash flows and selecting appropriate discount rates, valuation multiples and market comparables. Application of alternative estimates and assumptions could produce significantly different results.
At December 31, 2014, our goodwill totaled $195.7 million. Approximately 86.8% of our goodwill is associated with one of our properties. As of our 2014 annual goodwill testing date, the estimated fair value of this property exceeded its carrying amount by approximately 18%. If the fair value of this property should decline in the future, we may be required to recognize a goodwill impairment charge, which could be material. Several of our other properties also have goodwill. The excess of those properties' fair values over their carrying amounts ranged from 14% to 32%, and declines in the fair values of any of those properties could also result in goodwill impairment charges. A property’s fair value may decline as a result of a decrease in the property’s actual or projected operating results or changes in significant assumptions and judgments used by management in the estimation process, including the discount rate and market multiple.
In the third quarter of 2014 we performed an interim goodwill impairment test for Fertitta Interactive when we ceased operations in New Jersey, and we recorded an impairment charge of $5.6 million to write off all of Fertitta Interactive's

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goodwill, which is included in discontinued operations. See Note 3 to the Consolidated Financial Statements for additional information.
Indefinite-Lived Intangible Assets. Our indefinite-lived intangible assets primarily represent the value of our brands. At December 31, 2014, the carrying amount of our indefinite-lived intangible assets totaled approximately $77.5 million. Indefinite-lived intangible assets are not amortized unless management determines that their useful life is no longer indefinite. We test our indefinite-lived intangible assets for impairment annually as of October 1 of each year, and whenever events or changes in circumstances indicate that an asset may be impaired, by comparing the carrying amount of the asset to its estimated fair value. If the carrying amount of the asset exceeds its estimated fair value, we recognize an impairment charge equal to the excess. We estimate the fair value of our brands using a derivation of the income approach to valuation based on estimated royalties avoided through ownership of the assets. The fair values of certain of our properties' indefinite lived intangible assets are equal to the carrying amounts, and the recoverability is highly sensitive to changes in projected operating results. Accordingly, any decrease in the projected operating results of a property could require us to recognize an impairment charge, which could be material.
Finite-Lived Intangible Assets. Our finite-lived intangible assets primarily represent the value of our management contracts and customer relationships. We amortize our finite-lived intangible assets over their estimated useful lives using the straight-line method, and we periodically evaluate the remaining useful lives of our finite-lived intangible assets to determine whether events or circumstances warrant a revision to the remaining period of amortization.
Our management contract intangible assets represent the value associated with management agreements under which we provide management services to various casino properties, primarily Native American casinos which we have developed or are currently developing. We estimate the fair values of management contract intangible assets using discounted cash flow techniques based on future cash flows expected to be received in exchange for providing management services. We amortize our management contract intangible assets using the straight-line method over their expected useful lives, which is generally equal to the initial term of the management agreement. We begin recognizing amortization expense when the managed property commences operations and management fees are being earned. The recoverability of our management contract intangible assets is dependent upon the operating results of the managed casinos and the likelihood that the casino project we are currently developing is successfully completed.
Our customer relationship intangible assets represent the value associated with our rated casino guests. We estimate the fair values of our customer relationship intangible assets using a variation of the cost approach. The recoverability of our customer relationship intangible assets could be affected by, among other things, increased competition within the gaming industry, a downturn in the economy, declines in customer spending which would impact the expected future cash flows associated with the rated casino guests, declines in the number of customer visits which could impact the expected attrition rate of the rated casino guests, and erosion of operating margins associated with rated casino guests.
Native American Development Costs. We incur certain costs associated with our development and management agreements with Native American tribes (the "Tribes") which are reimbursable by the Tribes, and we capitalize these costs as long-term assets. The assets are typically transferred to the Tribe at such time as the Tribe secures third-party financing, or the gaming facility is completed. We earn a return on the costs incurred for the acquisition and development of Native American projects. Due to the uncertainty surrounding the estimated cost to complete and the collectability of the stated return, we account for the return using the cost recovery method. Recognition of the return is deferred until the assets are transferred to the Tribe, the carrying amount of the assets has been fully recovered, and the return has been collected or is realizable. Development costs and the related return are typically repaid by the Tribes from a project's third-party financing or from operating cash flows of the casino after opening. Accordingly, the recoverability of our development costs is highly dependent upon the Tribe’s success in obtaining third-party financing and our ability to operate the project successfully upon its completion. Our evaluation of the recoverability of our Native American development costs requires us to apply a significant amount of judgment.
We evaluate our Native American development costs for impairment whenever events or changes in circumstances indicate that the carrying amount of the project might not be recoverable, taking into consideration all available information. Among other things, we consider the status of the project, any contingencies, the achievement of milestones, any existing or potential litigation and regulatory matters when evaluating our Native American projects for impairment. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying amount of the asset. If the undiscounted expected future cash flows for a project do not exceed its carrying amount, then the asset is written down to its estimated fair value. We estimate a project’s fair value using a discounted cash flow model and market comparables, when available. Our estimate of the undiscounted future cash flows of a Native American development project is

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based on consideration of all positive and negative evidence about the future cash flow potential of the project including, but not limited to, the likelihood that the project will be successfully completed, the status of required approvals, and the status and timing of the construction of the project, as well as current and projected economic, political, regulatory and competitive conditions that may adversely impact the project's operating results. In certain circumstances, we may discontinue funding of a project due to a revision of its expected potential, or otherwise determine that our advances are not recoverable and as a result, we may be required to write off the entire carrying amount of a project. See Note 8 to the Consolidated Financial Statements for additional information about the status of our Native American development activities.
Player Rewards Program
We have a player rewards program (the "Rewards Program") which allows customers to earn points based on their gaming activity. Points may be redeemed at all of our Las Vegas area properties for cash, free slot play, food and beverage at any of our restaurants and bars, rooms, entertainment and merchandise. We record a liability for the estimated cost of outstanding points earned under the Rewards Program that we believe will ultimately be redeemed. We record the estimated cost of points expected to be redeemed for cash and free slot play under the Rewards Program as a reduction of casino revenue. The estimated cost of points expected to be redeemed for food, beverage, rooms, entertainment and merchandise is charged to casino expense. Cost is estimated based on assumptions about the mix of goods and services for which points will be redeemed and the incremental departmental cost of providing the goods and services.
Self-Insurance Reserves
We are currently self-insured up to certain stop loss amounts for workers' compensation and general liability costs. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates for claims incurred but not reported. In estimating these accruals, we evaluate historical loss experience and make judgments about the expected levels of costs per claim. We believe changes in medical costs, trends in claims of our employee base, accident frequency and severity and other factors could materially affect our estimates for these liabilities. We continually monitor changes in employee demographics, incident and claim type, evaluate our self-insurance accruals, and adjust our accruals based on our evaluation of these qualitative data points.
Derivative Instruments
We enter into interest rate swaps in order to manage interest rate risks associated with our debt. We recognize our derivative instruments at fair value in our Consolidated Balance Sheets as either assets or liabilities. The fair value of our interest rate swaps is subject to significant estimation and a high degree of variability between periods. A description of the assumptions used in estimating the fair value of our interest rate swaps is included in Item 7A. Quantitative And Qualitative Disclosures About Market Risk. The accounting for changes in the fair value of derivative instruments (i.e. gains or losses) depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to qualify for hedge accounting. Our interest rate swaps are intended to hedge our exposure to variability in expected future cash flows related to interest payments on our debt, and at December 31, 2014, both of our interest rate swaps qualified for and were designated in cash flow hedging relationships. Fluctuations in interest rates can cause the fair value of our derivative instruments to change each reporting period. See Note 12 to the Consolidated Financial Statements for additional information about our derivative and hedging activities.
Litigation, Claims and Assessments
We are defendants in various lawsuits relating to routine matters incidental to our business and we assess the potential for any lawsuits or claims brought against us on an ongoing basis. For ongoing litigation and potential claims, we use judgment in determining the probability of loss and whether a reasonable estimate of loss, if any, can be made. We accrue a liability when we believe a loss is probable and the amount of the loss can be reasonably estimated. As the outcome of litigation is inherently uncertain, it is possible that certain matters may be resolved for materially different amounts than previously accrued or disclosed.
ITEM 7A.
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.

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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. Borrowings under our credit agreements bear interest at a margin above LIBOR or base rate (each as defined in the credit agreements) as selected by us. The total amount of outstanding borrowings is expected to fluctuate and may be reduced from time to time.
At December 31, 2014, $1.66 billion of the borrowings under our credit agreements are based on LIBOR plus applicable margins of 3.25% to 3.50%. The LIBOR rate underlying our LIBOR-based borrowings outstanding under our Credit Facility was 1.00%, which is the LIBOR floor stipulated in the agreement. The LIBOR rate underlying the borrowings under our Restructured Land Loan was 0.169% at December 31, 2014. The weighted-average interest rates for variable-rate debt shown in the long-term debt table below are calculated using the rates in effect as of December 31, 2014. 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 as of December 31, 2014, an assumed 1% increase in variable interest rates would cause our annual interest cost to increase by approximately $2.1 million, after giving effect to our interest rate swaps and the 1% LIBOR floor described above.
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. As of December 31, 2014, we had two variable-to-fixed interest rate swaps with notional amounts totaling $1.0 billion which effectively hedged a portion of the interest rate risk on borrowings under our credit agreements. Our interest rate swaps, both of which are designed as cash flow hedges, are matched with specific debt obligations and qualify for hedge accounting. We do not use derivative financial instruments for trading or speculative purposes. Interest differentials resulting from designated interest rate swap agreements are recorded on an accrual basis as an adjustment to interest expense. Interest rate movements also affect the fair values of our interest rate swaps, which are reflected within current and non-current liabilities in our Consolidated Balance Sheets.
The fair values of interest rate swaps are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each 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 measurements. Fair value is subject to significant estimation and a high degree of variability between periods; however, to the extent that the interest rate swaps are effective in hedging the designated risk, the changes in the fair value of these interest rate swaps are deferred in other comprehensive income on our Consolidated Balance Sheets. Certain future events, including prepayment, refinancing or acceleration of the hedged debt, could cause all or a portion of these hedges to become ineffective. The changes in the fair value of ineffective portions of our interest rate swaps are recognized in our Consolidated Statements of Operations in the period of change. In addition, we are exposed to credit risk should our 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 as of December 31, 2014.
The following table provides 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 December 31, 2014 (dollars in millions):
 
Expected maturity date
 
 
 
2015
 
2016
 
2017
 
2018
 
2019
 
Thereafter
 
Total
 
Fair Value
Long-term debt:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed rate
$
3.6

 
$
3.6

 
$
3.1

 
$
3.0

 
$
2.9

 
$
525.1

 
$
541.3

 
$
556.3

Weighted-average interest rate
4.97
%
 
4.82
%
 
4.42
%
 
4.18
%
 
4.00
%
 
7.32
%
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Variable rate (a)
$
77.3

 
$
188.4

 
$
48.4

 
$
51.6

 
$
16.2

 
$
1,277.5

 
$
1,659.4

 
$
1,609.5

Weighted-average interest rate
4.25
%
 
3.90
%
 
4.25
%
 
4.25
%
 
4.25
%
 
4.25
%
 


 
 
____________________________________
(a) Based on variable interest rates and margins in effect at December 31, 2014.

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The following table provides information about notional amounts and weighted-average interest rates by contractual maturity dates for our interest rate swap agreements, as well as the fair value of the liabilities, at December 31, 2014 (dollars in millions):
 
Expected maturity date
 
 
 
2015 (a)
 
2016
 
2017
 
2018
 
2019
 
Thereafter
 
Total
 
Fair value
Interest rate swaps:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notional amount
$
42.2

 
$
47.1

 
$
872.8

 
$

 
$

 
$

 
$
962.1

 
$
10.3

Weighted-average fixed interest rate payable (b)
1.97
%
 
1.77
%
 
1.77
%
 
%
 
%
 
%
 
1.84
%
 
 
Weighted-average variable interest rate receivable (c)
1.00
%
 
1.00
%
 
1.00
%
 
%
 
%
 
%
 
1.00
%
 
 
________________________________________________
(a)
In June 2015, one of our interest rate swaps with a notional amount of approximately $0.7 billion will mature. The notional amount of the remaining interest rate swap is scheduled to increase by approximately $0.7 billion in July 2015.
(b)
Based on actual fixed interest rates payable.
(c)
At December 31, 2014, the receive rate on our interest rate swaps is equal to 1.00% which is the LIBOR floor stipulated in the agreements.
Additional information about our long-term debt and interest rate swap agreements is included in Notes 11 and 12 to the Consolidated Financial Statements.

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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


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Report of Independent Registered Public Accounting Firm



The Board of Managers and Members of Station Casinos LLC:

We have audited the accompanying consolidated balance sheets of Station Casinos LLC (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income (loss), members' equity, and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Station Casinos LLC at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP
Las Vegas, Nevada
March 10, 2015





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STATION CASINOS LLC
CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except units data)
 
December 31,
 
2014
 
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
121,965

 
$
133,139

Restricted cash
1,067

 
1,067

Receivables, net
34,852

 
45,193

Inventories
9,960

 
8,937

Prepaid gaming tax
19,426

 
18,966

Prepaid expenses and other current assets
7,538

 
8,654

Current assets of discontinued operations
1,746

 
5,300

Total current assets
196,554

 
221,256

Property and equipment, net
2,135,908

 
2,155,373

Goodwill
195,676

 
195,676

Intangible assets, net
168,332

 
186,667

Land held for development
202,222

 
216,021

Investments in joint ventures
18,180

 
14,032

Native American development costs
9,619

 
6,806

Other assets, net
47,850

 
58,898

Noncurrent assets of discontinued operations

 
23,669

Total assets
$
2,974,341

 
$
3,078,398

LIABILITIES AND MEMBERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
25,938

 
$
17,608

Accrued interest payable
15,049

 
16,920

Other accrued liabilities
123,297

 
118,200

Current portion of long-term debt
80,892

 
69,813

Current liabilities of discontinued operations
366

 
8,089

Total current liabilities
245,542

 
230,630

Long-term debt, less current portion
2,065,707

 
2,128,335

Deficit investments in joint ventures
2,339

 
2,308

Interest rate swaps and other long-term liabilities, net
15,585

 
21,182

Total liabilities
2,329,173

 
2,382,455

Commitments and contingencies (Note 19)

 

Members' equity:
 
 
 
Voting units; 100 units authorized, issued and outstanding

 

Non-voting units; 100 units authorized, issued and outstanding

 

Additional paid-in capital
653,843

 
781,372

Accumulated other comprehensive loss
(7,099
)
 
(11,933
)
Accumulated deficit
(27,750
)
 
(111,031
)
Total Station Casinos LLC members' equity
618,994

 
658,408

Noncontrolling interest
26,174

 
37,535

Total members' equity
645,168

 
695,943

Total liabilities and members' equity
$
2,974,341

 
$
3,078,398


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

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STATION CASINOS LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in thousands)
 
Year Ended December 31,
 
2014
 
2013
 
2012
Operating revenues:
 
 
 
 
 
Casino
$
897,361

 
$
882,241

 
$
885,629

Food and beverage
239,212

 
235,722

 
237,770

Room
112,664

 
105,630

 
106,348

Other
70,522

 
67,431

 
69,704

Management fees
68,782

 
59,758

 
29,874

Gross revenues
1,388,541

 
1,350,782

 
1,329,325

Promotional allowances
(96,925
)
 
(94,645
)
 
(100,023
)
Net revenues
1,291,616

 
1,256,137

 
1,229,302

Operating costs and expenses:
 
 
 
 
 
Casino
341,490

 
339,651

 
355,199

Food and beverage
157,191

 
161,790

 
161,167

Room
45,479

 
43,062

 
43,106

Other
28,979

 
26,580

 
26,987

Selling, general and administrative
288,667

 
291,586

 
286,537

Development and preopening
640

 
222

 
311

Depreciation and amortization
127,766

 
128,754

 
129,139

Management fee expense
48,872

 
46,145

 
44,087

Impairment of goodwill

 
1,183

 

Impairment of other assets
11,739

 

 
10,066

Write-downs and other charges, net
20,951

 
11,881

 
9,875

 
1,071,774

 
1,050,854

 
1,066,474

Operating income
219,842

 
205,283

 
162,828

Earnings from joint ventures
1,037

 
1,603

 
1,773

Operating income and earnings from joint ventures
220,879

 
206,886

 
164,601

Other (expense) income:
 
 
 
 
 
Interest expense, net
(150,995
)
 
(164,622
)
 
(189,481
)
Loss on extinguishment of debt
(4,132
)
 
(146,787
)
 
(51,796
)
Gain on Native American development
49,074

 
16,974

 
102,816

Change in fair value of derivative instruments
(90
)
 
(291
)
 
(921
)
 
(106,143
)
 
(294,726
)
 
(139,382
)
Net income (loss) from continuing operations
114,736

 
(87,840
)
 
25,219

Discontinued operations
(43,410
)
 
(25,653
)
 
(13,507
)
Net income (loss)
71,326

 
(113,493
)
 
11,712

Less: net loss attributable to noncontrolling interests
(11,955
)
 
(9,067
)
 
(1,606
)
Net income (loss) attributable to Station Casinos LLC
$
83,281

 
$
(104,426
)
 
$
13,318

 
 
 
 
 
 

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

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STATION CASINOS LLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands)
 
Year Ended December 31,