Station Casinos Announces Third Quarter 2012 Results and Agreement to Acquire a Majority Interest in Fertitta Interactive

  Station Casinos Announces Third Quarter 2012 Results and Agreement to
  Acquire a Majority Interest in Fertitta Interactive

Business Wire

LAS VEGAS -- November 13, 2012

Station Casinos LLC ("Station" or the “Company") today announced the results
of its operations for the third quarter ended September 30, 2012. In addition,
the Company announced that it has entered into an agreement to acquire a 50.1%
ownership interest in Fertitta Interactive LLC, which operates Ultimate
Gaming. The Company believes that Fertitta Interactive is well positioned to
become a leader in online gaming by leveraging its existing capabilities and
platform as well as its exclusive relationship with the Ultimate Fighting
Championship (the “UFC”).

“Despite a challenging operating environment, we experienced continued
improvements in our operating results during the third quarter, and for the
third consecutive quarter we experienced gains in both revenues and operating
income in all of our major departments,” stated Marc Falcone, Executive Vice
President and Chief Financial Officer.

Consolidated Results of Operations

The Company's consolidated net revenues for the third quarter ended September
30, 2012 were approximately $295.7 million, an increase of 4.7% compared to
the prior year third quarter net revenues of $282.4 million. Consolidated
adjusted EBITDAM for the third quarter was $71.7 million, an increase of 3.2%
compared to the prior year third quarter adjusted EBITDAM of $69.5 million.
Adjusted EBITDAM is not a generally accepted accounting principle (“GAAP”)
measurement and 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 is a principal basis for valuation of gaming
companies. Adjusted EBITDAM is further defined in footnote 1.

Guarantor Group Results of Operations

The net revenues for Station Casinos LLC and the subsidiaries that own Red
Rock, Palace Station, Boulder Station and Sunset Station (the “Guarantor
Group”) for the third quarter ended September 30, 2012 were approximately
$158.8 million, an increase of 3.9% compared to the prior year. The Company
reported adjusted EBITDAM of $40.3 million for the Guarantor Group for the
quarter, an increase of 2.6% compared to the prior year.

Balance Sheet Items and Capital Expenditures

As of September 30, 2012, the outstanding principal balance of long-term debt
was $2.2 billion on a consolidated basis (excluding a nonrecourse land loan of
$108 million), including $1.6 billion for the Guarantor Group. Year to date,
the Company has repaid approximately $205 million of debt on a consolidated
basis. Since June 17, 2011, the date the Company acquired assets from Station
Casinos, Inc., on a consolidated basis, the Company has repaid over $270
million of debt. As of September 30, 2012, the Company’s consolidated debt to
EBITDAM ratio was approximately 6.2x. Year to date, total consolidated capital
expenditures were $46.4 million, of which $23.5 million were made by the
Guarantor Group.

Acquisition of Fertitta Interactive

The Company also announced that it has entered into an agreement to purchase a
50.1% ownership interest in Fertitta Interactive. The transaction is expected
to close by the end of November. Fertitta Interactive was formed in 2011 with
the purchase of Cyber-Arts, an Oakland, California based company, which has
developed a real money and social gaming platform under the Ultimate Gaming
brand. The Cyber-Arts technology provides a proprietary, highly scalable and
robust platform that has a proven track record in the global online
marketplace. “This technology represents one of the few established online
poker platforms in the world that has never taken wagers from a jurisdiction
in which such wagers were illegal,” Falcone said. “It is critically important
to us that we own the technology, which allows us to control the perpetual
innovation cycle. We are one of the only U.S. gaming companies to develop and
own its technology. We are excited about the possibilities that Ultimate
Gaming presents and believe this creates a long-term value driver for Station
Casinos,” continued Falcone.

Conference Call Information

The Company will host a conference call on, Tuesday, November 13, 2012 at 1:30
p.m. (PST) to discuss its third quarter financial results. The conference call
will consist of prepared remarks from the Company and will include a question
and answer session. Those interested in participating in the call should dial
(877) 331-7677 or (713) 936-6995 for international callers, approximately 15
minutes before the call start time. A replay of the call will be available
from 5:00 p.m. (PST) on November 14, 2012 at
www.sclv.com/en/investor-relations.aspx. The reservation number is 11132012. A
live audio webcast of the call will also be available at www.sclv.com.

Company Information and Forward Looking Statements

Station Casinos LLC is the leading provider of gaming and entertainment to the
residents of Las Vegas, Nevada. Station's properties, which are located
throughout the Las Vegas valley, 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, Sunset Station Hotel & Casino, Green Valley Ranch Resort Casino Spa,
Santa Fe Station Hotel & Casino, Texas Station Gambling Hall & Hotel, Fiesta
Rancho Casino Hotel, Fiesta Henderson Casino Hotel, Wildfire Rancho, Wildfire
Boulder, Wild Wild West Gambling Hall & Hotel, Wildfire Sunset and Lake Mead
Casino. Station also owns a 50% interest in Barley's Casino & Brewing Company,
Wildfire Lanes and Casino and The Greens. In addition, Station owns a 50%
interest in MPM Enterprises, LLC, which is the manager of the Gun Lake Casino
in southwestern Michigan.

Fertitta Interactive was established by Frank Fertitta III, Lorenzo Fertitta,
Tom Breitling and Tim Poster. Fertitta Interactive works to build strong
global brands and businesses online. The group has worked together since the
early 1990's, when the Fertittas were investors in Travelscape, an online
travel company that was founded by Breitling and Poster and purchased by
Microsoft's Expedia, Inc. in 2000.

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 risks relating to the
acquisition of Fertitta Interactive; the economic downturn, and in particular
the economic downturn in Nevada, and its effect on consumer spending and our
business; the effects of intense competition that exists in the gaming
industry; the risk that new gaming licenses or gaming activities, such as
internet gaming, are approved and result in additional competition; our
substantial outstanding indebtedness and the effect of our significant debt
service requirements on our operations and ability to compete; the risk that
we will not be able to finance our development and investment projects or
refinance our outstanding indebtedness; the impact of extensive regulation
from gaming and other government authorities on our ability to operate our
business and the risk that regulatory authorities may revoke, suspend,
condition or limit our gaming or other licenses, impose substantial fines or
take other actions that adversely affect us; risks associated with changes to
applicable gaming and tax laws that could have a material adverse effect on
our financial condition; general business conditions including competitive
practices, changes in customer demand and the cyclical nature of the gaming
and hospitality business in general, and general economic conditions,
including interest rates, on our business and results of operations; adverse
outcomes of legal proceedings and the development of, and changes in, claims
or litigation reserves; risks, such as cost overruns and construction delays,
associated with development, construction and management of new projects or
the expansion of existing facilities, including the Graton Resort and Casino;
and other risks described in the filings of the Company with the Securities
and Exchange Commission.

(1) Adjusted EBITDAM consists of net income plus interest, net, loss on early
retirement of debt, preopening expenses, charges relating to share based
compensation, gains on Native American development, certain items attributable
to non-controlling affiliates or joint ventures, other non-recurring costs,
changes in fair value of derivative instruments, depreciation, amortization
and management fee expense. EBITDA and Adjusted EBITDAM are presented solely
as 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. The Company believes that
in addition to cash flows and net income, EBITDA and adjusted EBITDAM are a
useful financial performance measurement for assessing the operating
performance of the Company. Together with net income and cash flows, EBITDA
and adjusted EBITDAM provide 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 adjusted EBITDAM and the trends they
depict, the components should be considered. The impact of interest and other
expense, net, loss on early retirement of debt, loss or gain on asset
disposals, net, preopening expenses, charges relating to share based
compensation, gains on Native American development, certain items attributable
to non-controlling affiliates or joint ventures, other non-recurring costs,
changes in fair value of derivative instruments, depreciation, amortization
and management fee expense, 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 or adjusted EBITDAM. Further, EBITDA and adjusted EBITDAM do not
represent net income or cash flows from operating, financing and investing
activities as defined by generally accepted accounting principles (“GAAP”) and
do not necessarily indicate cash flows will be sufficient to fund cash needs.
Such measures should not be considered as alternatives to net income, as
indicators 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, EBITDAM or adjustments to such measures may
calculate EBITDA, EBITDAM or such adjustments in the same manner as the
Company, and therefore, the Company’s measure of EBITDA and adjusted EBITDAM
may not be comparable to similarly titled measures used by other gaming
companies. A reconciliation of EBITDA and adjusted EBITDAM to net income is
included in the financial schedules accompanying this release.

                                                                  
Station Casinos LLC
Condensed Consolidated Statements of Operations
(amounts in thousands)
(unaudited)
 
                       Consolidated
                       Three Months Ended                  Nine Months Ended
                       September 30,                       September 30,
                       2012              2011              2012                2011
                       Actual            Actual            Actual              Pro Forma
                                                                               (a)
Operating
revenues:
  Casino               $ 212,406         $ 203,176         $ 664,856           $ 631,227
  Food and               56,603            53,395            180,063             167,482
  beverage
  Room                   25,829            25,121            81,897              75,377
  Other                  18,130            18,068            53,271              54,039
  Management            6,829           5,731           22,007            17,458   
  fees
      Gross              319,797           305,491           1,002,094           945,583
      revenues
  Promotional           (24,069 )        (23,093 )        (75,873   )        (70,887  )
  allowances
      Net               295,728         282,398         926,221           874,696  
      revenues
                                                                               
Operating costs
and expenses:
  Casino                 87,243            80,592            265,054             252,212
  Food and               39,911            39,463            120,649             119,147
  beverage
  Room                   10,874            10,252            32,592              30,529
  Other                  7,909             7,749             20,578              22,222
  Selling,
  general,               76,571            72,505            217,774             213,555
  administrative
  and corporate
  Development            41                356               171                 1,696
  and preopening
  Depreciation
  and                    31,999            34,522            94,301              90,483
  amortization
  Management             10,121            9,638             33,338              30,648
  fees
  Impairment of          10,066            -                 10,066              -
  other assets
  Write-downs
  and other             6,626           881             7,825             4,954    
  charges, net
                        281,361         255,958         802,348           765,446  
                                                                               
Operating income         14,367            26,440            123,873             109,250
  Earnings from          352               290               1,302               1,227
  joint ventures
  Gain on
  dissolution of        -               -               -                 250      
  joint venture
Operating income
and earnings            14,719          26,730          125,175           110,727  
from joint
ventures
                                                                               
Other (expense)
income:
  Interest               (52,439 )         (45,100 )         (144,763  )         (142,595 )
  expense, net
  Loss on debt           (51,794 )         -                 (51,794   )         -
  extinguishment
  Gain on Native
  American               102,816           -                 102,816             -
  development
  Change in fair
  value of              (800    )        -               (800      )        -        
  derivative
  instruments
                        (2,217  )        (45,100 )        (94,541   )        (142,595 )
Net income               12,502            (18,370 )         30,634              (31,868  )
(loss)
  Less: Net
  income
  attributable          1,349           794             5,106             4,766    
  to
  noncontrolling
  interests
Net income
(loss)
attributable to        $ 11,153         $ (19,164 )       $ 25,528           $ (36,634  )
Station Casinos
LLC members
                                                                               

        Pro forma information is based on the sum of the consolidated results
        for Station Casinos, Inc. and Green Valley Ranch Gaming, LLC before
        the Effective Date and the consolidated results of Station Casinos LLC
        after the Effective Date. Pro forma information is presented solely
        for purposes of analysis and comparison with current operating results
        and does not, and is not intended to, comply with the requirements set
        forth in Regulation S-X. Pro forma adjustments include elimination of
        intercompany management fee revenue, costs eliminated as a result of
        the restructuring, elimination of share-based compensation expense,
(a)   adjustments to depreciation and amortization expense as a result of
        resetting the carrying values of assets and liabilities to their
        estimated fair values in fresh-start reporting, adjustments to
        interest expense as a result of the Restructuring Transactions, the
        conversion of a portion of the Company’s new debt from a variable rate
        to a fixed rate and the entry into new floating-to-fixed interest rate
        swaps, elimination of intercompany interest expense, recognition of
        management fees payable to subsidiaries of Fertitta Entertainment,
        elimination of historical gains and losses on derivative instruments,
        and elimination of income taxes reflecting the status of the Company
        as a pass-through entity.
        
        

                                                                   
Station Casinos LLC
Summary Information and
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDAM
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)

                       Consolidated
                       Three Months Ended                    Nine Months Ended
                       September 30,                         September 30,
                       2012                2011              2012               2011
                       Actual              Actual            Actual             Pro Forma
                                                                                (a)
                                                                                
Net revenues           $ 295,728           $ 282,398         $ 926,221          $ 874,696
Net revenues
attributable to         (3,347    )        (2,808  )        (10,781  )        (8,511  )
noncontrolling
interests
Net revenues
attributable to        $ 292,381          $ 279,590        $ 915,440         $ 866,185 
Station Casinos
LLC members
                                                                                
Net income             $ 12,502            $ (18,370 )       $ 30,634           $ (31,868 )
(loss)
  Interest and
  other expense,         52,439              45,100            144,763            142,595
  net
  Depreciation
  and                   31,999            34,522          94,301           90,483  
  amortization
EBITDA                   96,940              61,252            269,698            201,210
  EBITDA
  attributable
  to                     (3,283    )         (2,643  )         (10,439  )         (8,020  )
  noncontrolling
  interests
  Management fee         10,121              9,638             33,338             30,648
  expense
  Development            41                  356               171                1,696
  and preopening
  Share-based            1,380               -                 1,380              -
  compensation
  Impairment of          10,066              -                 10,066             -
  other assets
  Write-downs
  and other              6,626               881               7,825              4,954
  charges, net
  Write-downs
  and other
  charges at             16                  -                 45                 -
  joint ventures
  (50%)
  Loss on debt           51,794              -                 51,794             -
  extinguishment
  Gain on Native
  American               (102,816  )         -                 (102,816 )         -
  development
  Change in fair
  value of              800               -               800              -       
  derivative
  instruments
Adjusted EBITDAM       $ 71,685           $ 69,484         $ 261,862         $ 230,488 
                                                                                
Occupancy                90        %         86      %         89       %         86      %
percentage
ADR                    $ 67                $ 69              $ 73               $ 70
                                                                                
                                                                                
Principal amount
of long-term
debt at
September 30,
2012:
  Guarantor            $ 1,598,523
  Group
  Opco and Green         577,451
  Valley Ranch
  Land loan             108,267   
  Total                $ 2,284,241 
                                                                                
                                                                                

                                                                
Station Casinos LLC and Guarantor Subsidiaries
Condensed Combined Statements of Operations
(amounts in thousands)
(unaudited)
 
                       Station Casinos Guarantor Group
                       Three Months Ended                  Nine Months Ended
                       September 30,                       September 30,
                       2012              2011              2012              2011
                       Actual            Actual            Actual            Pro Forma
                                                                             (b)
Operating
revenues:
  Casino               $ 113,086         $ 109,831         $ 356,421         $ 340,449
  Food and               33,421            31,236            105,932           98,467
  beverage
  Room                   16,840            16,245            53,945            48,708
  Other                 9,237           8,756           26,305          25,807  
      Gross              172,584           166,068           542,603           513,431
      revenues
  Promotional           (13,812 )        (13,183 )        (42,659 )        (40,335 )
  allowances
      Net               158,772         152,885         499,944         473,096 
      revenues
                                                                             
Operating costs
and expenses:
  Casino                 46,012            43,425            141,331           136,212
  Food and               23,529            22,920            70,453            70,039
  beverage
  Room                   6,875             6,585             20,754            19,336
  Other                  3,987             3,684             9,676             10,000
  Selling,
  general,               38,719            37,026            108,767           108,705
  administrative
  and corporate
  Development            -                 116               8                 677
  and preopening
  Depreciation
  and                    17,579            18,308            51,929            48,838
  amortization
  Management             5,525             5,302             18,434            16,893
  fees
  Write-downs
  and other             5,961           478             6,409           3,791   
  charges, net
                        148,187         137,844         427,761         414,491 
                                                                             
Operating income         10,585            15,041            72,183            58,605
  Equity in
  earnings
  (losses) of           33,090          (4,956  )        49,258          (648    )
  unconsolidated
  subsidiaries
  (c)
Operating income
and earnings
(losses) from           43,675          10,085          121,441         57,957  
unconsolidated
subsidiaries
                                                                             
Other (expense)
income:
  Interest               (32,527 )         (29,249 )         (95,918 )         (94,591 )
  expense, net
  Change in fair
  value of              5               -               5               -       
  derivative
  instruments
                                                                             
Net income
(loss)
attributable to        $ 11,153         $ (19,164 )       $ 25,528         $ (36,634 )
Station Casinos
LLC members
                                                                             

        Pro forma information is based on the results of the Guarantor Group
        after the Effective Date and the results of the entities that were
        predecessors to the Guarantor Group prior to the Effective Date. Pro
        Forma information is presented solely for purposes of analysis and
        comparison with current operating results and does not, and is not
        intended to, comply with the requirements set forth in Regulation S-X.
        Pro forma adjustments include elimination of intercompany management
        fee revenue, costs eliminated as a result of the restructuring,
        elimination of share-based compensation expense, adjustments to
(b)   depreciation and amortization expense as a result of resetting the
        carrying values of assets and liabilities to their estimated fair
        values in fresh-start reporting, adjustments to interest expense as a
        result of the Restructuring Transactions, the conversion of a portion
        of the Company’s new debt from a variable rate to a fixed rate and the
        entry into a new floating-to-fixed interest rate swap, elimination of
        intercompany interest expense, recognition of management fees payable
        to subsidiaries of Fertitta Entertainment, elimination of historical
        gains and losses on derivative instruments, and elimination of income
        taxes reflecting the status of the Company as a pass-through entity.
        
        Excludes $1.3 million, $0.8 million, $5.1 million and $4.8 million,
(c)     respectively, of net income attributable to noncontrolling interests
        in Station's 50% owned variable interest entity.
        
        

                                                                  
Station Casinos LLC and Guarantor Subsidiaries
Summary Information and
Reconciliation of Net Income (Loss) to EBITDA to Adjusted EBITDAM
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
 
                         Station Casinos Guarantor Group
                         Three Months Ended                  Nine Months Ended
                         September 30,                       September 30,
                         2012              2011              2012              2011
                         Actual            Pro Forma        Actual            Pro Forma
                                           (b)                                 (b)
                                                                               
Net revenues             $ 158,772        $ 152,885        $ 499,944        $ 473,096 
                                                                               
Net income (loss)        $ 11,153          $ (19,164 )       $ 25,528          $ (36,634 )
    Interest and
    other expense,         32,527            29,249            95,918            94,591
    net
    Depreciation
    and                   17,579          18,308          51,929          48,838  
    amortization
EBITDA                     61,259            28,393            173,375           106,795
    Management fee         5,525             5,302             18,434            16,893
    expense
    Share-based            625               -                 625               -
    compensation
    Write-downs
    and other              5,961             478               6,409             3,791
    charges, net
    Development            -                 116               8                 677
    and preopening
    Equity in
    (earnings)
    losses of              (33,090 )         4,956             (49,258 )         648
    unconsolidated
    subsidiaries
    Change in fair
    value of              (5      )        -               (5      )        -       
    derivative
    instruments
Adjusted EBITDAM         $ 40,275         $ 39,245         $ 149,588        $ 128,804 
                                                                               
Occupancy                  90      %         86      %         90      %         87      %
percentage
ADR                      $ 68              $ 70              $ 75              $ 71

Contact:

Station Casinos LLC
Marc J. Falcone
Executive Vice President and Chief Financial Officer
(702) 495-3600
or
Thomas M. Friel
Executive Vice President and Treasurer
(702) 495-4210
or
Lori B. Nelson
Vice President of Corporate Communications
(702) 495-4248
 
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