Station Casinos reports Q4 results

28 Feb 2007

LAS VEGAS, Nevada -- (PRESS RELEASE) -- 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.

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	Station Casinos reports Q4 results 28 Feb 2007 LAS VEGAS, Nevada -- (PRESS RELEASE) -- 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.