Company Press Release: Station Casinos, Inc.
July 21, 2000
LAS VEGAS, NV -- Station Casinos, Inc. (NYSE: STN) yesterday announced the results of its operations for the second
quarter ended June 30, 2000.
Highlights for the second quarter included the following:
Record second quarter cash flow of $71.3 million, up 16 percent
year-over-year;
Record second quarter earnings per share of $0.33 (adjusted for a
3-for-2 stock split, effective July 17, 2000);
Eight percent increase in Nevada cash flow to $53.2 million on a
same-store basis;
32 percent increase in Missouri cash flow to $22.6 million on a
same-store basis;
Agreement to acquire the Santa Fe Hotel & Casino in northwest Las Vegas.
Station Casinos, Inc. (``Station'' or ``the Company'') reported net revenues for the second quarter ended June 30, 2000, of $244.3 million, a four percent increase over the prior year's quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for the Sunset equipment lease, increased 16 percent to $71.3 million compared to $61.6 million in the prior year. Earnings applicable to common stock increased to $20.7 million, or $0.33 per share, from $12.8 million, or $0.20 per share. The prior year's earnings per share exclude the effect on net income of $8.8 million related to a litigation settlement with Crescent Real Estate Equities, Inc. (NYSE: CEI). Including the litigation settlement, the Company reported earnings of $21.6 million, or $0.33 per share in the prior year's quarter.
Balance Sheet Items
The Company's balance sheet reflected a decrease in total long-term debt (including construction payables) to $937.3 million, a $14.6 million decline from the period ended March 31, 2000. In addition to reducing borrowings under its bank revolver, the Company utilized its free cash flow from operations to fund $21.7 million in capital expenditures. The Company's trailing 12-month debt to EBITDA ratio (per the Company's Amended Bank Facility) continued its decline to 3.5. The Company recently completed a $375 million 9 7/8 percent senior subordinated notes offering. Proceeds from this offering reduced all amounts outstanding under the Company's Term Loan Agreement and the balance was used to reduce the Company's revolving credit facility.
Nevada Operations
Combined net revenues for the Company's Nevada operations increased three percent to $152.2 million, while EBITDA, adjusted for the Sunset equipment lease, increased eight percent to $53.2 million. Cash flow margins for the quarter increased to 35 percent from 33 percent in the prior year's quarter. The strong results for the quarter were largely due to a four percent increase in gaming revenue, and continued reduction in operating costs. ``We continue to see the benefits of our brand strategy in appealing to Las Vegas residents. We expect our recent acquisitions to further strengthen our brand and afford our customers even greater convenience and choice,'' said Glenn C. Christenson, executive vice president and chief financial officer.
Missouri Operations
The Company's Missouri operations reported an increase in combined net revenues of four percent from the prior year's quarter to $80.1 million, while EBITDA increased 32 percent to $22.6 million. The increase in EBITDA is primarily attributable to continued improvement in operating margins at both Station Casino Kansas City (SCKC) and Station Casino St. Charles (SCSC). The margin improvement at SCSC is primarily related to the consolidation and streamlining of operations onto a single gaming barge. Net revenues at SCKC increased four percent to $50.1 million for the quarter while EBITDA increased 22 percent to $14.9 million. At SCSC, net revenues increased three percent from the prior year's quarter to $30.0 million, while EBITDA increased 57 percent to $7.7 million.
Recent Developments
The Company announced a repositioning strategy that will focus on the Las Vegas locals' market. (See accompanying release.) Highlights of the repositioning include:
A definitive agreement to acquire the Fiesta Casino Hotel in North Las Vegas, Nevada, from the Fiesta Hotel Corporation, a subsidiary of Joe G. Maloof & Company, Inc. (``Maloof''). The purchase price of $185 million includes a non-compete agreement with Maloof, Fiesta and certain members of the Maloof family. The transaction is expected to close by January 31, 2001.
A definitive agreement to acquire the Santa Fe Hotel & Casino in Las Vegas, Nevada, from Santa Fe Hotel, Inc. (SFHI), a subsidiary of Santa Fe Gaming Corporation (SFGC). The purchase price of $205 million includes substantially all of the assets of the Santa Fe Hotel & Casino, an option to acquire an adjacent 21-acre parcel of real property, and a non-compete agreement with SFGC and SFHI. The transaction is expected to close in the fourth quarter of 2000.
A definitive agreement to sell Station Casino St. Charles and Station Casino Kansas City to a group led by John Finamore, president of Station's Midwest operations, and William W. Warner, the company's vice president of finance.
The appointment of Lorenzo J. Fertitta as president of Station Casinos, Inc. Lorenzo Fertitta has been a member of the board of directors since 1991.
The appointment of Don Marrandino as president of East Las Vegas operations and Kevin Kelley as president of West Las Vegas operations.
Completion of all acquisitions and dispositions is subject to regulatory approvals in Nevada and Missouri.
On July 7, 2000, the Board of Directors of the Company established a special committee of independent members of the Board to monitor the ongoing Missouri investigations of matters relating to Michael Lazaroff. Lazaroff recently pled guilty to three felonies, including defrauding his law firm by withholding bonus payments from his partners, defrauding clients -- including Station Casinos -- through improper billing, and federal election law violations. In connection with the ongoing investigations related to certain bonus payments made between 1994 and 1996 to Lazaroff, Frank J. Fertitta III, chairman and chief executive officer, and Glenn C. Christenson, executive vice president and chief financial officer, recently received subpoenas to testify before a federal grand jury in the western district of Missouri. No date for the testimony is presently scheduled.
Stock Split
On July 17, 2000 the Company's previously announced three-for-two stock split became effective. Adjusted for the stock split, the Company has been authorized to purchase 9,482,484 shares of common stock (of which 3,268,110 have already been purchased) under its stock buy-back program.
Station Casinos, Inc. is a multi-jurisdictional gaming company that owns and operates the Palace Station Hotel & Casino, the Boulder Station Hotel & Casino, the Texas Station Gambling Hall & Hotel, and the Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Sunset Station Hotel & Casino in Henderson, Nevada, as well as slot machine route management services in Clark County, Nevada. Station Casinos, Inc. also owns and operates Station Casino St. Charles, a gaming and entertainment facility in St. Charles, Missouri, and Station Casino Kansas City, a gaming and entertainment facility in Kansas City, Missouri.
This press release may be deemed to contain certain forward-looking statements with respect to the business,
financial condition, and results of operations of the Company and its subsidiaries which involve risks and uncertainties
including, but not limited to, changes in the financial markets, licensing and other regulatory risks, competition
from other gaming operations, and construction risks. Further information on potential factors which could affect
the business, financial condition, and results of operations of the Company and its subsidiaries, are included
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, 1999, and its Registration Statement on Form S-4 File
No. 333-71227. The Company's 1999 Annual Report is available to view on its website at http://www.stationcasinos.com.
Station Casinos, Inc.
Consolidated Statements of Operations
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Operating revenues:
Casino $199,016 $190,724 $407,926 $376,848
Food and beverage 34,804 35,305 70,052 71,426
Room 11,474 10,399 23,139 21,143
Other 16,187 15,687 32,302 30,087
Gross revenues 261,481 252,115 533,419 499,504
Promotional
allowances (17,153) (16,744) (34,248) (34,202)
Net revenues 244,328 235,371 499,171 465,302
Operating costs
and expenses:
Casino 92,399 87,715 185,517 176,803
Food and beverage 20,777 22,655 41,802 45,074
Room 4,076 4,012 7,990 7,867
Other 9,003 7,818 17,688 14,806
Selling, general and
administrative 40,512 47,896 86,342 96,939
Corporate expense 6,275 5,644 14,186 10,469
Depreciation and
amortization 16,212 18,079 32,266 36,016
189,254 193,819 385,791 387,974
Operating income 55,074 41,552 113,380 77,328
Other income (expense):
Interest expense, net (22,319) (21,058) (44,726) (42,385)
Merger settlement, net
of related legal costs -- 14,074 -- 12,824
Other (117) (43) (563) (245)
(22,436) (7,027) (45,289) (29,806)
Income before income
taxes and extraordinary
item 32,638 34,525 68,091 47,522
Income tax provision (11,913) (12,933) (25,030) (17,814)
Income before
extraordinary item 20,725 21,592 43,061 29,708
Extraordinary item - loss
on early retirement of
debt, net of applicable
income tax benefit -- -- -- (10,350)
Net income 20,725 21,592 43,061 19,358
Preferred stock
dividends -- -- -- (1,811)
Net income applicable
to common stock $20,725 $21,592 $43,061 $17,547
Basic and diluted earnings
per common share:
Earnings applicable to
common stock, before
extraordinary item
Basic $0.34 $0.39 $0.71 $0.51
Diluted $0.33 $0.33 $0.68 $0.46
Earnings applicable
to common stock
Basic $0.34 $0.39 $0.71 $0.32
Diluted $0.33 $0.33 $0.68 $0.30
Weighted average common
shares outstanding
Basic 60,482 55,682 60,765 54,332
Diluted 63,742 64,822 63,552 64,227
Station Casinos, Inc.
Condensed Consolidated Balance Sheets
(amounts in thousands)
(unaudited)
June 30, December 31,
2000 1999
Assets:
Cash and cash equivalents $57,103 $73,072
Accounts and notes receivable, net 10,385 12,346
Other current assets 34,456 34,786
Total current assets 101,944 120,204
Property and equipment, net 1,023,827 1,025,753
Other long-term assets 161,106 130,316
Total assets $1,286,877 $1,276,273
Liabilities and stockholders' equity:
Current portion of long-term debt $11,013 $8,647
Construction contracts payable 692 750
Other current liabilities 99,639 108,292
Total current liabilities 111,344 117,689
Long-term debt, less current portion 925,576 933,833
Other long-term liabilities 10,840 7,950
Total liabilities 1,047,760 1,059,472
Temporary equity 13,537 --
Stockholders' equity 225,580 216,801
Total liabilities and stockholders'
equity $1,286,877 $1,276,273
Station Casinos, Inc.
Summary Information Tables
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Total Nevada
Operations (a):
Net revenues $152,245 $147,278 $312,516 $288,467
Operating income $43,084 $37,162 $90,987 $69,640
EBITDA (b) $53,222 $47,171 $111,175 $89,184
EBITDA, adjusted for
the Sunset
Equipment lease $53,222 $49,130 $111,175 $93,128
Occupancy percentage 93% 94% 92% 94%
ADR $55 $50 $57 $51
Total Missouri
Operations (a):
Net revenues $80,087 $77,017 $162,564 $155,373
Operating income $17,341 $9,780 $34,407 $17,736
EBITDA (b) $22,628 $17,189 $44,864 $32,872
Occupancy percentage 81% 79% 81% 79%
ADR $108 $110 $105 $110
Station Casinos, Inc.
and other (a):
Net revenues $11,996 $11,076 $24,091 $21,462
Operating loss $(5,351) $(5,390) $(12,014) $(10,048)
EBITDA (b) $(4,564) $(4,729) $(10,393) $(8,712)
Total Station Casinos, Inc.:
Net revenues $244,328 $235,371 $499,171 $465,302
Operating income $55,074 $41,552 $113,380 $77,328
EBITDA (b) $71,286 $59,631 $145,646 $113,344
EBITDA, adjusted for
the Sunset
Equipment lease $71,286 $61,590 $145,646 $117,288
(a) The Nevada Operations include the accounts of: Palace Station, Boulder
Station, Texas Station and Sunset Station. The Missouri Operations
include the accounts of:Station Casino St. Charles and Station Casino
Kansas City.Station Casinos, Inc. and other includes the operations
of Wild Wild West, the Company's investment in Barley's, Southwest
Gaming and Corporate expense.
(b) EBITDA consists of operating income plus depreciation and
amortization. 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 interest,
taxes, depreciation and amortization, 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.
SOURCE: Station Casinos, Inc.