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Arnold M. Knightly


One-time expenses hurt Station profits

13 Nov 2007

By Arnold M. Knightly

LAS VEGAS, Nevada -- The financial risks of growth reflected in Station Casinos' third-quarter bottom line, earnings released Friday show.

Station Casinos' third-quarter net income decreased 80.7 percent to $3.7 million, or 7 cents per share, for the quarter ended Sept. 30, from $19.2 million, or 34 cents per share, a year earlier.

In a statement, the company said $2.3 million in development costs related to American Indian gaming, $2.2 million related to the company's just-completed buyout and $2.5 million in other nonrecurring costs fueled the decrease.

The announcement came the same day that the gaming company held a topping-off ceremony for its $675 million Aliante Station project in North Las Vegas.

The company also spent $202.9 million on capital expenses in the quarter including expansion work at Red Rock Resort and Fiesta Henderson and to build a new corporate office building.

The company, which completed its $5.4 management-led private equity buyout on Wednesday, released the results but held on no conference call for investors. Station Casinos is no longer listed on the New York Stock Exchange.

Quarterly net revenues rose 2.3 percent to $354.1 million from $346 million.

Revenues for the first nine months rose 11 percent to $1.1 billion from $980.2 million last year.

Cash flow, defined as earnings before interest, taxes, depreciation and amortization, decreased 2 percent to $124.2 million from $126.7 million for the quarter.

Cash flow for 2007 increased 7 percent to $420.8 million from $393.4 million last year.

Casino revenues for the quarter increased 2.2 percent to $254.2 million from $248.8 million last year, and have increased 9.2 percent to $775.3 million from $710.2 million in 2006.

Room revenues for the quarter increased 20.9 percent to $25.2 million from $20.9 million last year, and have increased 42 percent to $84.5 million from $59.5 million in 2006.

The increases were driven by a 21.1 percent increase in average daily room rates to $86 for the quarter and increased 29.6 percent to $92 for 2007

However, room occupancy for the quarter and year was down 4 percent at 88 percent for the quarter and 92 percent for the year.

Station Casinos is now owned by Fertitta Colony Partners, a joint venture between the founding Fertitta family and Los Angeles-based investment firm Colony Capital.

The company will continue to file quarterly and year-end earnings reports with the Securities and Exchange Commission because some public debt financing is being used to finance the buyout.

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