EX-99.1 2 a5344283ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Station Casinos Announces Fourth Quarter Results LAS VEGAS--(BUSINESS WIRE)--Feb. 28, 2007--Station Casinos, Inc. (NYSE: STN; "Station" or the "Company") today announced the results of its operations for the fourth quarter ended December 31, 2006 and other Company-related news. Notable events include: -- Fourth quarter EBITDA (1) of $141.5 million, an increase of 14% over the prior year's fourth quarter. -- Net revenues from its Major Las Vegas Operations, excluding Green Valley Ranch, increased 29% from the prior year's fourth quarter. -- Adjusted for non-recurring items and development expenses, diluted earnings per share ("EPS") of $0.53 compared to $0.69 in the prior year's fourth quarter, a decrease of 23%. -- The opening of a portion of the Phase II expansion of Red Rock Casino Resort Spa and a portion of the Phase III expansion of Santa Fe Station in December 2006. -- On February 23, 2007, the United States District Court for the District of Columbia ruled in favor of the Gun Lake Tribe and the Department of Interior ("DOI") and dismissed the complaint that had been filed by local gaming opponents that had delayed the DOI's taking of land into trust for the Gun Lake Tribe's proposed casino and entertainment project. -- Declaring a quarterly cash dividend of $0.2875 per share payable on March 12, 2007 to shareholders of record on February 26, 2007. -- For the third year in a row, the Company was selected as one of Fortune magazine's "100 Best Companies to Work For". -- On February 23, 2007, the Company entered into a definitive merger agreement with Fertitta Colony Partners LLC ("FCP"), pursuant to which FCP agreed to acquire all of Station's outstanding common stock for $90 per share in cash. FCP is a new company formed by Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, Lorenzo J. Fertitta, Vice Chairman and President of Station and Colony Capital Acquisitions, LLC, an affiliate of Colony Capital, LLC. Results of Operations The Company's net revenues for the fourth quarter ended December 31, 2006 were approximately $358.8 million, an increase of 26% compared to the prior year's fourth quarter. The Company reported EBITDA for the quarter of $141.5 million, an increase of 14% compared to the prior year's fourth quarter. This marks the 20th consecutive quarter of year-over-year growth of Adjusted EBITDA. For the fourth quarter, Adjusted Earnings (2) applicable to common stock were $29.5 million, or $0.53 per diluted share, compared to last year's $0.69 per diluted share on a comparable basis. During the fourth quarter, the Company incurred a $2.5 million loss related to costs associated with the cancellation of the residential project at Red Rock, $2.3 million in costs to develop new gaming opportunities, primarily related to Native American gaming, $2.0 million in preopening costs related to various master planned expansions, $2.5 million related to costs associated with the FCP transaction noted above and $0.6 million of lease termination costs. Including these items, the Company reported net income of $23.1 million and diluted earnings applicable to common stock of $0.41 per share. The Company's earnings from its Green Valley Ranch joint venture for the fourth quarter were $13.1 million, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the quarter, Green Valley Ranch generated EBITDA before management fees of $30.1 million, a 7% increase compared to the prior year's fourth quarter. Las Vegas Market Results For the fourth quarter, net revenues from the Major Las Vegas Operations, excluding Green Valley Ranch, increased to $320.5 million, a 29% increase compared to the prior year's quarter, while EBITDA from those operations increased 15% to $117.5 million. "The fourth quarter revenue and EBITDA results came in as expected. Trends for the quarter in terms of same store revenues and the promotional environment were consistent with our guidance," said Lorenzo J. Fertitta, vice chairman and president of the Company. EBITDA and Adjusted Earnings are not generally accepted accounting principles ("GAAP") measurements and are presented solely as a supplemental disclosure because the Company believes that they are widely used measures of operating performance in the gaming industry and as a principal basis for valuation of gaming companies. EBITDA and Adjusted Earnings are further defined in footnotes 1 and 2, respectively. Balance Sheet Items and Capital Expenditures Long-term debt was $3.47 billion as of December 31, 2006. Total capital expenditures were $117.4 million for the fourth quarter. Expansion and project capital expenditures included $45.1 million for Phases II and III of Red Rock Resort, $32.2 million for the expansion of Santa Fe Station and $12.7 million for the purchase of land. As of December 31, 2006, the Company's debt to cash flow ratio, as defined in its bank credit facility, was 6.0 to 1. Aliante Station The groundbreaking for Aliante Station was on February 22, 2007. The Company is jointly developing Aliante Station with the Greenspun Corporation which will be located on a 40-acre site on the northeast corner of Interstate 215 and Aliante Parkway in North Las Vegas. Construction is expected to be completed by the end of 2008 at a cost of approximately $650 million to $675 million. The first phase of Aliante Station is expected to include 200 hotel rooms, approximately 3,000 slot machines, multiple full-service restaurants and a multi-screen movie theater complex. Gun Lake Project Update On February 23, 2007, the United States District Court for the District of Columbia issued a decision in favor of the Gun Lake Tribe ("Gun Lake") and the United States Department of Interior ("DOI") and dismissed the lawsuit filed by Michigan Gambling Opposition ("MichGO") against the DOI and officials of the DOI. MichGO's complaint sought injunctive and declaratory relief against the DOI as a result of the DOI's determination to take certain land into trust for the benefit of Gun Lake. The District Court found that there were no facts which would entitle MichGO to any relief on the four issues raised in its complaint and, therefore, granted the DOI and Gun Lake's motions to dismiss or, in the alternative, for summary judgment. Unless the District Court's decision is appealed and a stay is granted pending such appeal, the DOI is now free to take the land into trust, which is necessary for the commencement of construction of Gun Lake's proposed gaming facility. It is anticipated that MichGO will appeal the District Court's decision and seek a stay pending appeal. Dividend On February 14, 2007 the Company's Board of Directors declared a quarterly cash dividend of $0.2875 per share. The dividend is payable on March 12, 2007 to shareholders of record on February 26, 2007. Proposed Merger On February 23, 2007, the Company entered into a definitive merger agreement with Fertitta Colony Partners LLC ("FCP"), pursuant to which FCP agreed to acquire all of Station's outstanding common stock for $90 per share in cash. FCP is a new company formed by Frank J. Fertitta III, Chairman and Chief Executive Officer of Station, Lorenzo J. Fertitta, Vice Chairman and President of Station and Colony Capital Acquisitions, LLC, an affiliate of Colony Capital, LLC. The transaction is expected to be completed in six to nine months, subject to regulatory approvals and customary closing conditions. IMPORTANT ADDITIONAL INFORMATION REGARDING THE MERGER WILL BE FILED WITH THE SEC. In connection with the proposed merger, the Company will file a proxy statement with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER AND THE PARTIES THERETO. Investors and security holders may obtain a free copy of the proxy statement (when available) and other documents filed by the Company at the Securities and Exchange Commission's website at http://www.sec.gov. The proxy statement and such other documents may also be obtained for free from the Company by directing such request to Station Casinos, Inc. Investor Relations, 2411 W. Sahara Avenue, Las Vegas, NV 89102, telephone: (800) 544-2411. Station and its directors, executive officers and certain other members of its management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in connection with the proposed merger. Information regarding the interests of Station's participants in the solicitation will be included in the proxy statement relating to the proposed merger when it becomes available. Conference Call Information The Company will host a conference call today, Wednesday, February 28 at 12:00 p.m. (Eastern Time) to discuss its fourth quarter 2006 financial results. Those interested in participating in the call should dial (866) 633-6299 or (706) 679-5908 for international callers, approximately 10 minutes before the call start time. A live audio webcast of the call, as well as supplemental tables and charts, will also be available at the Company's website, www.stationcasinos.com (3). A replay of the call will be available from 5:00 p.m. (Eastern Time) on February 28, 2007, until 12:00 p.m. (Eastern Time) on March 6, 2007 at (800) 642-1687. The reservation number is 8033905. Company Information and Forward Looking Statements Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Red Rock Casino Resort Spa, Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino, Gold Rush Casino and Lake Mead Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company and The Greens in Henderson, Nevada and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community. This press release contains certain forward-looking statements with respect to the Company and its subsidiaries which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to, the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement with FCP; the outcome of any legal proceedings that have been, or will be, instituted against the Company related to the merger agreement; the inability to complete the merger due to the failure to obtain stockholder approvals for the merger or the failure to satisfy other conditions to complete the merger, including the receipt of all regulatory approvals related to the merger; the failure to obtain the necessary financing arrangements set forth in the debt and equity commitment letters delivered pursuant to the merger agreement; risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; the ability to recognize the benefits of the merger; the amount of the costs, fees, expenses and charges related to the merger and the actual terms of certain financings that will be obtained for the merger; the impact of the substantial indebtedness to be incurred to finance the consummation of the merger; the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and hotel industries in particular; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation; acts of war or terrorist incidents or natural disasters; the effects of competition, including locations of competitors and operating and market competition; and other risks described in the filings of the Company with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended December 31, 2005, and its Registration Statement on Form S-3ASR File No. 333-134936. All forward-looking statements are based on the Company's current expectations and projections about future events. All forward-looking statements speak only as of the date hereof and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Additional financial information, including presentations from recent investor conferences, is available in the "Investors" section of the Company's website at www.stationcasinos.com (3). Construction projects such as the master-planned expansions of Red Rock, Santa Fe Station, Fiesta Henderson and Green Valley Ranch entail significant risks, including shortages of materials or skilled labor, unforeseen regulatory problems, work stoppages, weather interference, floods and unanticipated cost increases. The anticipated costs and construction periods are based on budgets, conceptual design documents and construction schedule estimates. There can be no assurance that the budgeted costs or construction period will be met. Development of the proposed gaming and entertainment projects with the Gun Lake Tribe, the Federated Indians of Graton Rancheria, the Mechoopda Indian Tribe of Chico Rancheria and the North Fork Rancheria of Mono Indians and the operation of Class III gaming at each of the projects is subject to certain governmental and regulatory approvals, including, but not limited to, approval of state gaming compacts with the State of Michigan or the State of California, the Department of the Interior completing the process of taking land into trust for the benefit of the tribes and approval of the management agreements by the National Indian Gaming Commission. No assurances can be given as to when, or if, these governmental and regulatory approvals will be received. (1) EBITDA consists of net income plus income tax provision, interest and other expense, net, loss on early retirement of debt, loss or gain on asset disposals, net, preopening expenses, lease terminations, other non-recurring costs, depreciation, amortization and development expense. EBITDA is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance in the gaming industry and as a principal basis for valuation of gaming companies. The Company believes that in addition to cash flows and net income, EBITDA is a useful financial performance measurement for assessing the operating performance of the Company. Together with net income and cash flows, EBITDA provides investors with an additional basis to evaluate the ability of the Company to incur and service debt and incur capital expenditures. To evaluate EBITDA and the trends it depicts, the components should be considered. The impact of income tax provision, interest and other expense, loss on early retirement of debt, loss or gain on asset disposals, preopening expenses, lease terminations, other non-recurring costs, depreciation, amortization and, each of which can significantly affect the Company's results of operations and liquidity and should be considered in evaluating the Company's operating performance, cannot be determined from EBITDA. Further, EBITDA does not represent net income or cash flows from operating, financing and investing activities as defined by generally accepted accounting principles ("GAAP") and does not necessarily indicate cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income, as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. In addition, it should be noted that not all gaming companies that report EBITDA or adjustments to such measures may calculate EBITDA or such adjustments in the same manner as the Company, and therefore, the Company's measure of EBITDA may not be comparable to similarly titled measures used by other gaming companies. A reconciliation of EBITDA to net income is included in the financial schedules accompanying this release. (2) Adjusted Earnings excludes development expense, preopening expenses, lease terminations, loss or gain on asset disposals, loss on early retirement of debt and other non-recurring costs. Adjusted Earnings is presented solely as a supplemental disclosure because the Company believes that it is a widely used measure of operating performance in the gaming industry and as a principal basis for valuation of gaming companies, as this measure is considered by the Company to be a better measure on which to base expectations of future results than GAAP net income. A reconciliation of Adjusted Earnings and EPS to GAAP net income and EPS is included in the financial schedules accompanying this release. (3) The hyperlink to the Company's URL is included herein solely for the convenience of investors in accessing the audio webcast of the fourth quarter conference call. All other references herein to the Company's URL are inactive textual references. None of the information contained on the Company's website shall be deemed incorporated by reference or otherwise included herein. Station Casinos, Inc. Condensed Consolidated Balance Sheets (amounts in thousands) (unaudited) December 31, ----------------------- 2006 2005 ----------- ----------- Assets: Cash and cash equivalents $116,898 $85,552 Receivables, net 40,762 19,604 Other current assets 43,891 34,055 ----------- ----------- Total current assets 201,551 139,211 Property and equipment, net 2,586,473 1,990,584 Other long-term assets 928,672 799,248 ----------- ----------- Total assets $3,716,696 $2,929,043 =========== =========== Liabilities and stockholders' (deficit) equity: Current portion of long-term debt $341 $108 Other current liabilities 251,565 228,657 ----------- ----------- Total current liabilities 251,906 228,765 Revolving credit facility 1,155,800 330,000 Senior and senior subordinated notes 2,304,737 1,606,545 Other debt 8,855 9,136 Interest rate swaps, mark-to-market (905) (1,461) Other long-term liabilities 183,161 125,244 ----------- ----------- Total liabilities 3,903,554 2,298,229 Stockholders' (deficit) equity (186,858) 630,814 ----------- ----------- Total liabilities and stockholders' (deficit) equity $3,716,696 $2,929,043 =========== =========== Station Casinos, Inc. Condensed Consolidated Statements of Operations (amounts in thousands, except per share data) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- --------------------- 2006 2005 2006 2005 --------- --------- ---------- ---------- Operating revenues: Casino $258,951 $212,674 $969,147 $825,995 Food and beverage 58,795 37,433 211,579 146,774 Room 22,924 15,167 82,431 61,238 Other 18,517 14,341 70,245 52,550 Management fees 25,302 24,214 99,485 95,144 --------- --------- ---------- ---------- Gross revenues 384,489 303,829 1,432,887 1,181,701 Promotional allowances (25,694) (18,761) (93,863) (72,868) --------- --------- ---------- ---------- Net revenues 358,795 285,068 1,339,024 1,108,833 --------- --------- ---------- ---------- Operating costs and expenses: Casino 93,754 73,340 348,659 286,503 Food and beverage 42,591 26,436 152,300 102,970 Room 7,995 5,368 29,962 21,094 Other 7,040 4,577 26,244 17,799 Selling, general and administrative 62,626 47,221 230,278 181,670 Corporate 18,275 14,763 63,066 57,619 Development 2,251 1,998 9,036 8,747 Depreciation and amortization 37,208 25,833 131,094 101,356 Preopening 1,984 3,106 29,461 6,560 Loss on asset disposals, net 1,056 318 1,736 3,916 Lease terminations 553 3,000 1,053 14,654 --------- --------- ---------- ---------- 275,333 205,960 1,022,889 802,888 --------- --------- ---------- ---------- Operating income 83,462 79,108 316,135 305,945 Earnings from joint ventures 10,977 10,529 41,861 38,885 --------- --------- ---------- ---------- Operating income and earnings from joint ventures 94,439 89,637 357,996 344,830 --------- --------- ---------- ---------- Other expense: Interest expense, net (54,419) (22,062) (171,729) (80,378) Interest and other expense from joint ventures (1,925) (1,648) (6,815) (6,947) Loss on early retirement of debt - - - (1,278) --------- --------- ---------- ---------- (56,344) (23,710) (178,544) (88,603) --------- --------- ---------- ---------- Income before income taxes 38,095 65,927 179,452 256,227 Income tax provision (15,027) (24,250) (69,240) (94,341) --------- --------- ---------- ---------- Net income $23,068 $41,677 $110,212 $161,886 ========= ========= ========== ========== Earnings per common share: Basic $0.43 $0.63 $1.90 $2.46 Diluted $0.41 $0.61 $1.85 $2.40 Weighted average common shares outstanding Basic 54,063 66,189 57,969 65,707 Diluted 55,917 68,102 59,671 67,588 Dividends paid per common share $0.29 $0.25 $1.08 $0.92 Station Casinos, Inc. Summary Information and Reconciliation of Net Income to EBITDA (amounts in thousands, except occupancy percentage and ADR) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------- ----------------------- 2006 2005 2006 2005 --------- --------- ----------- ----------- Major Las Vegas Operations (a): --------------------- Net revenues $320,506 $248,872 $1,189,099 $968,017 Net income $30,983 $38,825 $120,107 $154,907 Income tax provision 19,015 22,802 73,614 90,977 Interest and other expense, net 30,442 16,086 97,202 57,500 Depreciation and amortization 35,276 24,157 123,752 94,784 Gain on asset disposals, net (111) (22) (518) (201) Preopening expenses 1,899 - 29,034 147 --------- --------- ----------- ----------- EBITDA $117,504 $101,848 $443,191 $398,114 ========= ========= =========== =========== Green Valley Ranch (50% owned): --------------------- Net revenues $70,531 $64,702 $262,354 $238,355 Net income $16,470 $16,072 $62,385 $55,532 Interest and other expense, net 6,615 6,008 23,875 23,293 Depreciation and amortization 6,962 5,873 25,374 22,262 Preopening expenses 8 - 294 - Loss on asset disposals, net - 51 25 1,210 Lease terminations - - - 1,632 --------- --------- ----------- ----------- EBITDA $30,055 $28,004 $111,953 $103,929 ========= ========= =========== =========== Major Las Vegas Operations including Green Valley Ranch: --------------------- Net revenues $391,037 $313,574 $1,451,453 $1,206,372 Net income $47,453 $54,897 $182,492 $210,439 Income tax provision 19,015 22,802 73,614 90,977 Interest and other expense, net 37,057 22,094 121,077 80,793 Depreciation and amortization 42,238 30,030 149,126 117,046 Preopening expenses 1,907 - 29,328 147 (Gain) loss on asset disposals, net (111) 29 (493) 1,009 Lease terminations - - - 1,632 --------- --------- ----------- ----------- EBITDA $147,559 $129,852 $555,144 $502,043 ========= ========= =========== =========== Total Station Casinos, Inc. (b): --------------------- Net income $23,068 $41,677 $110,212 $161,886 Income tax provision 15,027 24,250 69,240 94,341 Interest and other expense, net 56,344 23,710 178,544 87,325 Depreciation and amortization 37,208 25,833 131,094 101,356 Development expense 2,251 1,998 9,036 8,747 Preopening expenses 1,984 3,106 29,461 6,560 Preopening expenses at Green Valley Ranch (50%) 4 - 147 - Loss on asset disposals, net 1,056 318 1,736 3,916 Other non-recurring costs 4,026 - 4,389 - Lease terminations 553 3,000 1,053 15,470 Loss on early retirement of debt - - - 1,278 --------- --------- ----------- ----------- EBITDA $141,521 $123,892 $534,912 $480,879 ========= ========= =========== =========== Occupancy percentage 92% 94% 95% 96% ADR $79 $60 $73 $61 (a) Includes the wholly owned properties of Red Rock (since April 18, 2006), Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Fiesta Rancho and Fiesta Henderson. (b) Includes the Major Las Vegas Operations, Wild Wild West, Wildfire, Magic Star, Gold Rush, Lake Mead Casino (since October 2006), the Company's earnings from joint ventures, management fees and corporate expense. Station Casinos, Inc. Reconciliation of GAAP Net Income and EPS to Adjusted Earnings and EPS (amounts in thousands, except per share data) (unaudited) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ------------------- 2006 2005 2006 2005 --------- -------- --------- --------- Adjusted Earnings (a): Net income $23,068 $41,677 $110,212 $161,886 Development expense 1,463 1,299 5,874 5,686 Preopening expenses 1,290 2,019 19,150 4,264 Loss on asset disposals 686 206 1,128 2,545 Lease terminations 359 1,950 684 10,055 Loss on early retirement of debt - - - 831 Preopening expenses at Green Valley Ranch (50%) 3 - 96 - Other non-recurring costs 2,617 - 2,853 - --------- -------- --------- --------- Adjusted Earnings $29,486 $47,151 $139,997 $185,267 ========= ======== ========= ========= Adjusted basic earnings per common share (a): Net income $0.43 $0.63 $1.90 $2.46 Development expense 0.03 0.02 0.10 0.09 Preopening expenses 0.02 0.03 0.33 0.07 Loss on asset disposals 0.01 - 0.03 0.04 Lease terminations 0.01 0.03 0.01 0.15 Cancellation of certain insurance policies, net - - - - Loss on early retirement of debt - - - 0.01 Preopening expenses at Green Valley Ranch (50%) - - - - Other non-recurring costs 0.05 - 0.05 - --------- -------- --------- --------- Adjusted basic earnings per common share $0.55 $0.71 $2.42 $2.82 ========= ======== ========= ========= Weighted average common shares outstanding - basic 54,063 66,189 57,969 65,707 Adjusted diluted earnings per common share (a): Net income $0.41 $0.61 $1.85 $2.40 Development expense 0.03 0.02 0.10 0.08 Preopening expenses 0.02 0.03 0.32 0.06 Loss on asset disposals 0.01 - 0.02 0.04 Lease terminations 0.01 0.03 0.01 0.15 Loss on early retirement of debt - - - 0.01 Preopening expenses at Green Valley Ranch (50%) - - - - Other non-recurring costs 0.05 - 0.05 - --------- -------- --------- --------- Adjusted diluted earnings per common share $0.53 $0.69 $2.35 $2.74 ========= ======== ========= ========= Weighted average common shares outstanding - diluted 55,917 68,102 59,671 67,588 (a) All dollar and per share amounts are shown net of tax. CONTACT: Station Casinos, Inc., Las Vegas Glenn C. Christenson, 800-544-2411 or 702-495-4242 Executive Vice President/Chief Financial Officer/ Chief Administrative Officer or Thomas M. Friel, 800-544-2411 or 702-495-4210 Vice President of Finance/Controller or Lori B. Nelson, 800-544-2411 or 702-495-4248 Director of Corporate Communications