Station Casinos Reports Strong Q1 Results

20 Apr 2004

LAS VEGAS -- (PRESS RELEASE) -- Station Casinos, Inc. (NYSE: STN) today announced the results of its operations for the first quarter ended March 31, 2004.

Highlights for the quarter include:

-Adjusted for non-recurring items, diluted earnings of $0.51 per share compared to $0.23 in the prior year's quarter, a 122% increase.

-EBITDA (1) of $94.1 million, an increase of 42% over the prior year's quarter.

-Same-store revenues from the Las Vegas operations increased 11% over the prior year's quarter, while same-store EBITDA margins for those operations increased to 37.9% from 35.8% in the prior year's quarter. Excluding Green Valley Ranch Station, revenues from the Major Las Vegas Operations increased 9%, while EBITDA margins increased to 36.7% from 34.7% in the prior year's quarter.

-Same-store EBITDA from the Las Vegas operations increased 17% over the prior year's quarter. Excluding Green Valley Ranch Station, EBITDA from the Major Las Vegas Operations increased 16% over the prior year's quarter.

-Refinancing of substantially all outstanding debt and thereby reducing its weighted average pre-tax cost of debt to 6.0%. In addition, the Company expanded the amount available under its credit facility to $500 million from $365 million.

-Declaring a 40% increase in its quarterly cash dividend, with the next quarterly dividend of $0.175 per share payable on June 4, 2004.

Announcing development and management agreements with the North Fork Rancheria of Mono Indians, pursuant to which the Company will assist that Tribe in developing and operating a gaming and entertainment complex to be located in Madera County, California.

Construction began on Red Rock Station in Las Vegas, Nevada.

Results of Operations

The Company's net revenues for the first quarter ended March 31, 2004 were approximately $239.0 million, an increase of 20% compared to the prior year's quarter. The Company reported EBITDA for the quarter of $94.1 million, an increase of 42% compared to the prior year's quarter. During the quarter, Adjusted Earnings (2) applicable to common stock were $33.5 million, or $0.51 per share, an increase of 122% over the prior year's $0.23 per share on a comparable basis.

For the quarter ended March 31, 2004, the Company reported earnings from its Green Valley Ranch Station joint venture of $7.7 million, which represents a combination of Station's management fee plus 50% of Green Valley Ranch Station's operating income. Green Valley Ranch Station generated EBITDA before management fees of $17.7 million, an increase of 25% compared to the prior year's quarter.

The non-recurring item for this quarter was a loss on the early retirement of debt of $93.3 million. In addition, the Company incurred $2.0 million in costs to develop new gaming opportunities, primarily in Native American gaming. The Company also made $2.0 million of non-reimbursable milestone payments related to the Gun Lake project in Michigan. Including these items, the Company reported net loss of $29.8 million and loss applicable to common stock of $0.48 per share.

Las Vegas Market Results

Same-store (Major Las Vegas Operations and Green Valley Ranch Station) net revenues for the quarter increased to $250.5 million, an 11% increase compared to the prior year's quarter, while EBITDA from those operations increased 17% to $95.0 million. "A combination of a strong local economy, our Jumbo suite of products and continued population growth helped drive revenues and contributed to margin expansion for the quarter," stated Glenn C. Christenson, executive vice president and chief financial officer. Same-store EBITDA margins increased to 37.9% compared to 35.8% during the first quarter of last year.

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.

Red Rock Station

The Company recently started construction of Red Rock Station Resort and Casino in the Summerlin master-planned community in Las Vegas, Nevada. The initial phase of the resort is expected to include 60 table games and 2,700 slot machines. The resort is also expected to include 400 hotel rooms, 45,000 square feet of meeting space, 16 movie theaters, a 20,000 square foot spa, several restaurants and a nightclub. The cost of the resort is expected to be approximately $450 million to $475 million. Red Rock Station is expected to be completed in late 2005 or early 2006. "As a result of the recent refinancings, our incremental borrowing rate for the construction of Red Rock Station will be approximately 3%. Based on our projections and on current interest rates, Red Rock Station is expected to be accretive to our earnings per share by $0.20 to $0.25 in its first full year of operations, growing to $0.39 to $0.44 in the third year," stated Christenson.

Balance Sheet Items and Capital Expenditures

During the first quarter, the Company refinanced substantially all of its senior and senior subordinated notes. The Company issued $1.25 billion in new senior and senior subordinated notes that will mature at various dates between 2012 and 2016. "The refinancing accomplished a number of things - we lowered our pre-tax cost of debt by approximately 200 basis points, we reduced our annual interest costs by approximately $15 million, we significantly extended the maturities of our debt portfolio and positioned ourselves so that our incremental borrowing rate on our revolving credit facility is less than 3% today," stated Christenson. In addition, the Company expanded the amount available under its revolving credit facility to $500 million from $365 million. "The refinancings and expanded credit facility give us increased flexibility to continue to grow the Company in the future."

In connection with the refinancing, the Company completed tender offers for $940.6 million of its senior and senior subordinated notes outstanding. As a result, the Company recorded a loss on the early retirement of this debt of $93.3 million during the quarter.

Long-term debt was $1.29 billion as of March 31, 2004, while cash held in marketable securities was $25 million as of March 31, 2004. This excess cash was generated as a result of the above-described refinancing. Capital expenditures totaled $33.1 million for the quarter ended March 31, 2004 and consisted of $12.7 million of maintenance capital expenditures, $13.5 million of expansion and project capital expenditures and $6.9 million for the accelerated replacement of slot machines to take advantage of ticket-in ticket-out technology. As of March 31, 2004, the Company's debt to cash flow ratio as defined in its bank credit facility was 3.8 to 1, which reflects an annualization of the management fees from Thunder Valley Casino.

Second Quarter 2004 and Year 2004 Guidance

The Company expects EBITDA of approximately $86 million to $90 million for the second quarter of 2004 (excluding development expense and other non-recurring items). This would result in earnings per share ("EPS") of $0.45 to $0.49 for the second quarter of 2004.

For 2004, the Company expects EBITDA of approximately $350 million to $365 million (excluding development expense and non-recurring items) and Adjusted Earnings applicable to common stock of approximately $1.81 to $1.96 assuming 67 million fully diluted shares. Development costs are expected to be approximately $7 million to $8 million, which does not include non-reimbursable project costs in the form of milestone payments that may be required under certain development and management agreements. This guidance assumes revenue growth for the balance of the year of 6% to 8% in Las Vegas with an approximate 50% flow through and an effective tax rate of 36%.

Dividend

On March 29, 2004, the Company's Board of Directors declared a 40% increase in its quarterly cash dividend to $0.175 per share. The dividend is payable on June 4, 2004 to shareholders of record on May 14, 2004.

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	Station Casinos Reports Strong Q1 Results 20 Apr 2004 LAS VEGAS -- (PRESS RELEASE) -- Station Casinos, Inc. (NYSE: STN) today announced the results of its operations for the first quarter ended March 31, 2004. Highlights for the quarter include: -Adjusted for non-recurring items, diluted earnings of $0.51 per share compared to $0.23 in the prior year's quarter, a 122% increase. -EBITDA (1) of $94.1 million, an increase of 42% over the prior year's quarter. -Same-store revenues from the Las Vegas operations increased 11% over the prior year's quarter, while same-store EBITDA margins for those operations increased to 37.9% from 35.8% in the prior year's quarter. Excluding Green Valley Ranch Station, revenues from the Major Las Vegas Operations increased 9%, while EBITDA margins increased to 36.7% from 34.7% in the prior year's quarter. -Same-store EBITDA from the Las Vegas operations increased 17% over the prior year's quarter. Excluding Green Valley Ranch Station, EBITDA from the Major Las Vegas Operations increased 16% over the prior year's quarter. -Refinancing of substantially all outstanding debt and thereby reducing its weighted average pre-tax cost of debt to 6.0%. In addition, the Company expanded the amount available under its credit facility to $500 million from $365 million. -Declaring a 40% increase in its quarterly cash dividend, with the next quarterly dividend of $0.175 per share payable on June 4, 2004. Announcing development and management agreements with the North Fork Rancheria of Mono Indians, pursuant to which the Company will assist that Tribe in developing and operating a gaming and entertainment complex to be located in Madera County, California. Construction began on Red Rock Station in Las Vegas, Nevada. Results of Operations The Company's net revenues for the first quarter ended March 31, 2004 were approximately $239.0 million, an increase of 20% compared to the prior year's quarter. The Company reported EBITDA for the quarter of $94.1 million, an increase of 42% compared to the prior year's quarter. During the quarter, Adjusted Earnings (2) applicable to common stock were $33.5 million, or $0.51 per share, an increase of 122% over the prior year's $0.23 per share on a comparable basis. For the quarter ended March 31, 2004, the Company reported earnings from its Green Valley Ranch Station joint venture of $7.7 million, which represents a combination of Station's management fee plus 50% of Green Valley Ranch Station's operating income. Green Valley Ranch Station generated EBITDA before management fees of $17.7 million, an increase of 25% compared to the prior year's quarter. The non-recurring item for this quarter was a loss on the early retirement of debt of $93.3 million. In addition, the Company incurred $2.0 million in costs to develop new gaming opportunities, primarily in Native American gaming. The Company also made $2.0 million of non-reimbursable milestone payments related to the Gun Lake project in Michigan. Including these items, the Company reported net loss of $29.8 million and loss applicable to common stock of $0.48 per share. Las Vegas Market Results Same-store (Major Las Vegas Operations and Green Valley Ranch Station) net revenues for the quarter increased to $250.5 million, an 11% increase compared to the prior year's quarter, while EBITDA from those operations increased 17% to $95.0 million. "A combination of a strong local economy, our Jumbo suite of products and continued population growth helped drive revenues and contributed to margin expansion for the quarter," stated Glenn C. Christenson, executive vice president and chief financial officer. Same-store EBITDA margins increased to 37.9% compared to 35.8% during the first quarter of last year. 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. Red Rock Station The Company recently started construction of Red Rock Station Resort and Casino in the Summerlin master-planned community in Las Vegas, Nevada. The initial phase of the resort is expected to include 60 table games and 2,700 slot machines. The resort is also expected to include 400 hotel rooms, 45,000 square feet of meeting space, 16 movie theaters, a 20,000 square foot spa, several restaurants and a nightclub. The cost of the resort is expected to be approximately $450 million to $475 million. Red Rock Station is expected to be completed in late 2005 or early 2006. "As a result of the recent refinancings, our incremental borrowing rate for the construction of Red Rock Station will be approximately 3%. Based on our projections and on current interest rates, Red Rock Station is expected to be accretive to our earnings per share by $0.20 to $0.25 in its first full year of operations, growing to $0.39 to $0.44 in the third year," stated Christenson. Balance Sheet Items and Capital Expenditures During the first quarter, the Company refinanced substantially all of its senior and senior subordinated notes. The Company issued $1.25 billion in new senior and senior subordinated notes that will mature at various dates between 2012 and 2016. "The refinancing accomplished a number of things - we lowered our pre-tax cost of debt by approximately 200 basis points, we reduced our annual interest costs by approximately $15 million, we significantly extended the maturities of our debt portfolio and positioned ourselves so that our incremental borrowing rate on our revolving credit facility is less than 3% today," stated Christenson. In addition, the Company expanded the amount available under its revolving credit facility to $500 million from $365 million. "The refinancings and expanded credit facility give us increased flexibility to continue to grow the Company in the future." In connection with the refinancing, the Company completed tender offers for $940.6 million of its senior and senior subordinated notes outstanding. As a result, the Company recorded a loss on the early retirement of this debt of $93.3 million during the quarter. Long-term debt was $1.29 billion as of March 31, 2004, while cash held in marketable securities was $25 million as of March 31, 2004. This excess cash was generated as a result of the above-described refinancing. Capital expenditures totaled $33.1 million for the quarter ended March 31, 2004 and consisted of $12.7 million of maintenance capital expenditures, $13.5 million of expansion and project capital expenditures and $6.9 million for the accelerated replacement of slot machines to take advantage of ticket-in ticket-out technology. As of March 31, 2004, the Company's debt to cash flow ratio as defined in its bank credit facility was 3.8 to 1, which reflects an annualization of the management fees from Thunder Valley Casino. Second Quarter 2004 and Year 2004 Guidance The Company expects EBITDA of approximately $86 million to $90 million for the second quarter of 2004 (excluding development expense and other non-recurring items). This would result in earnings per share ("EPS") of $0.45 to $0.49 for the second quarter of 2004. For 2004, the Company expects EBITDA of approximately $350 million to $365 million (excluding development expense and non-recurring items) and Adjusted Earnings applicable to common stock of approximately $1.81 to $1.96 assuming 67 million fully diluted shares. Development costs are expected to be approximately $7 million to $8 million, which does not include non-reimbursable project costs in the form of milestone payments that may be required under certain development and management agreements. This guidance assumes revenue growth for the balance of the year of 6% to 8% in Las Vegas with an approximate 50% flow through and an effective tax rate of 36%. Dividend On March 29, 2004, the Company's Board of Directors declared a 40% increase in its quarterly cash dividend to $0.175 per share. The dividend is payable on June 4, 2004 to shareholders of record on May 14, 2004.