Read Larry Connors' blog – Short Term Trading Strategies
Results of Operations
The Company's net revenues for the second quarter ending June 30, 2009, were approximately $267.2 million, a decrease of 21% compared to the prior year's second quarter. The Company reported Adjusted EBITDA for the quarter of $79.2 million, a decrease of 38% compared to the prior year's second quarter. For the second quarter, the Company reported a net loss of $65.3 million as compared to net earnings of $18.6 million in the prior year's second quarter.
During the second quarter, the Company incurred $0.6 million in write-downs and other charges, which included losses on asset disposals and severance expense. The Company also incurred $0.6 million in costs to develop new gaming opportunities, $2.7 million of expense related to equity-based awards, $1.4 million of preopening expenses, $4.5 million in legal fees related to the proposed debt restructuring and other non-recurring costs, and a gain of $1.5 million related to its deferred compensation plan.
The Company's second quarter earnings from its Green Valley Ranch joint venture were $5.6 million, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the second quarter, Green Valley Ranch generated Adjusted EBITDA before management fees of $15.2 million, a decrease of 31% compared to the same period in the prior year. Green Valley Ranch reported a net loss of $3.8 million for the second quarter as compared to a net loss of $1.2 million in the same period in the prior year.
Las Vegas Market Results
For the second quarter, net revenues from the Major Las Vegas Operations, excluding Green Valley Ranch and Aliante Station, were $245.9 million, a 20% decrease compared to the prior year's second quarter, while Adjusted EBITDA from those operations decreased 33% to $71.0 million from $106.1 million in the same period in the prior year. The Major Las Vegas Operations reported a net loss of $15.6 million for the second quarter as compared to net income of $1.6 million in the same period in the prior year.
Adjusted EBITDA 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 the valuation of gaming companies. EBITDA and Adjusted EBITDA are further defined in footnote 1.
Balance Sheet and Capital Expenditures
Long-term debt was $5.7 billion as of June 30, 2009. Total capital expenditures were $17.1 million for the second quarter which consisted primarily of maintenance capital purchases and other projects. Equity contributions to joint ventures during the second quarter were $14.0 million.
Voluntary Chapter 11 Petition
As described more fully in our 8-K and press release dated July 28, 2009, Station and certain of its non-casino subsidiaries filed voluntary petitions to reorganize under Chapter 11 of the United States Bankruptcy Code.
Company Information and Forward Looking Statements
Station Casinos, Inc. is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties 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, Santa Fe Station Hotel & Casino, Wildfire Rancho and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Wildfire Boulder, Gold Rush Casino and Lake Mead Casino in Henderson, Nevada. Station also owns a 50% interest in Green Valley Ranch Station Casino, Barley's Casino & Brewing Company, The Greens and Wildfire Lanes in Henderson, Nevada, a 50% interest in Aliante Station Casino + Hotel in North Las Vegas, Nevada and a 6.7% interest in the joint venture that owns the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages Thunder Valley Casino near Sacramento, California on behalf of the United Auburn Indian Community.
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, the ability to effect a successful restructuring; the impact of the bankruptcy filing on our operations; our ability to finance operations and expenses associated with the pending bankruptcy proceeding; the impact of the substantial indebtedness incurred to finance the consummation of the going private transaction in November 2007; the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming and hotel industries in particular; changes in laws, including increased tax rates, regulations or accounting standards, third-party relations and approvals, and decisions of courts, regulators and governmental bodies; litigation outcomes and judicial actions, including gaming legislative action, referenda and taxation; acts of war or terrorist incidents or natural disasters; the effects of competition, including locations of competitors and operating and market competition; and other risks described 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, as amended, for the year ended December 31, 2008, and its Registration Statement on Form S-3ASR File No. 333-134936. All forward-looking statements are based on the Company's current expectations and projections about future events. All forward-looking statements speak only as of the date hereof and the Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
Development of the proposed gaming and entertainment projects with the Gun Lake Tribe, the Federated Indians of Graton Rancheria, the Mechoopda Indian Tribe of Chico Rancheria and the North Fork Rancheria of Mono Indians and the operation of Class III gaming at each of the projects is subject to certain governmental and regulatory approvals, including, but not limited to, approval of state gaming compacts with the State of Michigan or the State of California, the Department of the Interior completing the process of taking land into trust for the benefit of the tribes and approval of the management agreements by the National Indian Gaming Commission. No assurances can be given as to when, or if, these governmental and regulatory approvals will be received.
(1) EBITDA, earnings before interest, taxes, depreciation and amortization, is a widely used measure of operating performance in the gaming industry and is a principal basis for the valuation of gaming companies. The Company has traditionally adjusted EBITDA when evaluating its own operating performance because it believes that the inclusion or exclusion of certain non-cash recurring and non-recurring items is necessary to present the most accurate measure of its principal operating results and as a means to assess results period over period. The Company refers to the financial measure that adjusts for these items as Adjusted EBITDA. The Company believes, when considered with measures calculated in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Adjusted EBITDA is a useful financial performance measurement for assessing the operating performance of the Company and is used by management in making financial and operational decisions. In this regard, Adjusted EBITDA is a key metric used by the Company in its individual property budgeting process, when calculating returns on investment on existing and proposed projects and in the evaluation of incentive compensation related to property management. Adjusted EBITDA consists of net income (loss) plus income tax (provision) benefit, interest and other expense, net, write-downs and other charges, net, preopening expenses, equity-based compensation expense, management agreement/lease termination costs, other non-recurring and non-cash costs, depreciation, amortization and development expense. The Company has historically reported this measure and management believes that the continued inclusion of Adjusted EBITDA provides the consistency in our financial reporting required by our stakeholders. In addition, management believes that our debt stakeholders use Adjusted EBITDA as an appropriate financial measure in determining the value of their investment. To evaluate Adjusted EBITDA and the trends it depicts, the components should be considered. The impact of income tax (provision) benefit, interest and other expense, net, write-downs and other charges, net, preopening expenses, equity-based compensation expense, management agreement/lease termination costs, other non-recurring and non-cash costs, depreciation, amortization and development 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. Adjusted EBITDA is used in addition to and in conjunction with GAAP measures and should not be considered as an alternative to net income (loss), or any other GAAP operating performance measure.
To compensate for the inherent limitations of the disclosure of Adjusted EBITDA, the Company provides relevant disclosure of its depreciation and amortization, interest and income taxes, capital expenditures and other items in its reconciliations to GAAP financial measures and consolidated financial statements, all of which should be considered when evaluating the Company's performance. In addition, it should be noted that not all gaming companies that report Adjusted EBITDA or adjustments to such measures may calculate Adjusted EBITDA or such adjustments in the same manner as the Company, and therefore, the Company's measure of Adjusted EBITDA may not be comparable to similarly titled measures used by other gaming companies. A reconciliation of Adjusted EBITDA to EBITDA to net income (loss) is included in the financial schedules accompanying this release.
Station Casinos, Inc.
Condensed Consolidated Statements of Operations
(amounts in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Operating revenues:
Casino $ 190,488 $ 238,222 $ 393,610 $ 487,664
Food and beverage 50,625 58,765 104,000 119,730
Room 22,147 27,981 44,078 58,281
Other 16,060 19,755 31,215 39,082
Management fees 12,279 19,326 26,298 38,072
Gross revenues 291,599 364,049 599,201 742,829
Promotional allowances (24,438 ) (24,947 ) (49,292 ) (51,410 )
Net revenues 267,161 339,102 549,909 691,419
Operating costs and expenses:
Casino 82,065 91,440 165,067 187,211
Food and beverage 31,156 40,276 62,385 81,962
Room 8,847 10,202 17,431 20,565
Other 5,203 8,661 9,589 15,977
Selling, general and administrative 55,309 63,400 110,383 126,587
Corporate 13,107 8,622 24,693 20,390
Development 556 612 1,204 1,339
Depreciation and amortization 53,020 58,416 106,537 115,655
Preopening 1,420 2,720 3,162 4,850
Write-downs and other charges, net 590 3,803 5,840 6,012
251,273 288,152 506,291 580,548
Operating income 15,888 50,950 43,618 110,871
Earnings from joint ventures 1,044 6,641 2,707 15,167
Operating income and earnings from joint ventures 16,932 57,591 46,325 126,038
Other income (expense):
Interest expense, net (92,344 ) (94,003 ) (184,394 ) (191,349 )
Interest and other expense from joint ventures (14,642 ) (7,787 ) (22,275 ) (17,041 )
Change in fair value of derivative instruments 14,563 65,140 33,581 6,708
Gain on early retirement of debt - - 40,348 -
(92,423 ) (36,650 ) (132,740 ) (201,682 )
(Loss) income before income taxes (75,491 ) 20,941 (86,415 ) (75,644 )
Income tax benefit (provision) 10,160 (2,352 ) (12,625 ) 23,369
Net (loss) income $ (65,331 ) $ 18,589 $ (99,040 ) $ (52,275 )
Station Casinos, Inc.
Summary Information and
Reconciliation of Net (Loss) Income to EBITDA to Adjusted EBITDA
(amounts in thousands, except occupancy percentage and ADR)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Major Las Vegas Operations
(a):
Net revenues $ 245,942 $ 307,029 $ 504,707 $ 627,419
Net (loss) income $ (15,614 ) $ 1,642 $ (21,267 ) $ 8,374
Income tax (benefit) provision (8,407 ) (1,207 ) (11,451 ) 3,097
Interest and other expense, net 6,433 7,513 13,135 15,366
Depreciation and amortization 25,508 33,362 51,446 65,224
EBITDA 7,920 41,310 31,863 92,061
Rent expense (b) 62,362 62,362 124,725 124,725
Write-downs and other charges, net 109 1,762 290 2,186
Equity-based compensation expense 565 628 1,153 1,332
Adjusted EBITDA $ 70,956 $ 106,062 $ 158,031 $ 220,304
Green Valley Ranch (50%
owned):
Net revenues $ 49,254 $ 61,225 $ 99,753 $ 125,608
Net (loss) income $ (3,821 ) $ (1,171 ) $ (2,481 ) $ 268
Interest and other expense, net 13,143 16,753 23,112 34,251
Depreciation and amortization 5,788 6,324 11,507 12,629
EBITDA 15,110 21,906 32,138 47,148
Write-downs and other charges, net 55 162 456 162
Loss on early retirement of debt - - - 122
Equity-based compensation expense 3 9 6 31
Adjusted EBITDA $ 15,168 $ 22,077 $ 32,600 $ 47,463
Major Las Vegas Operations
including Green Valley Ranch:
Net revenues $ 295,196 $ 368,254 $ 604,460 $ 753,027
Net (loss) income $ (19,435 ) $ 471 $ (23,748 ) $ 8,642
Income tax (benefit) provision (8,407 ) (1,207 ) (11,451 ) 3,097
Interest and other expense, net 19,576 24,266 36,247 49,617
Depreciation and amortization 31,296 39,686 62,953 77,853
EBITDA 23,030 63,216 64,001 139,209
Rent expense (b) 62,362 62,362 124,725 124,725
Write-downs and other charges, net 164 1,924 746 2,348
Loss on early retirement of debt - - - 122
Equity-based compensation expense 568 637 1,159 1,363
Adjusted EBITDA $ 86,124 $ 128,139 $ 190,631 $ 267,767
Total Station Casinos, Inc.
(c):
Net (loss) income $ (65,331 ) $ 18,589 $ (99,040 ) $ (52,275 )
Income tax (benefit) provision (10,160 ) 2,352 12,625 (23,369 )
Interest and other expense, net 92,423 36,650 173,088 201,682
Gain on early retirement of debt - - (40,348 ) -
Depreciation and amortization 53,020 58,416 106,537 115,655
EBITDA 69,952 116,007 152,862 241,693
Write-downs and other charges, net 590 3,803 5,840 6,012
Write-downs and other charges, net at joint ventures (50%) 53 22 702 25
Development expense 556 612 1,204 1,339
Preopening expenses 1,420 2,720 3,162 4,850
Preopening expenses at joint ventures (50%) (64 ) 1,082 (130 ) 1,947
Equity-based compensation expense 2,666 2,285 5,460 4,787
Depreciation and amortization of investments in joint ventures 29 - 58 -
Other non-recurring costs 3,113 1,834 7,128 2,329
Executive buyout at Thunder Valley (24%) 930 - 930 -
Referendum expense at Thunder Valley (24%) - - - 1,560
Adjusted EBITDA $ 79,245 $ 128,365 $ 177,216 $ 264,542
Occupancy percentage 87 % 91 % 86 % 90 %
ADR $ 69 $ 88 $ 71 $ 93
(a) Includes the wholly-owned properties of Red Rock, Palace Station,
Boulder Station, Texas Station, Sunset Station, Santa Fe Station,
Fiesta Rancho and Fiesta Henderson.
(b) Rent expense refers to intercompany rent expense paid by the CMBS
properties to another consolidated entity. Because this expense is
eliminated upon consolidation, it has been excluded from Adjusted
EBITDA in the Major Las Vegas Operations table.
(c) Includes the Major Las Vegas Operations, Wild Wild West, Wildfire
Rancho, Wildfire Boulder, Gold Rush, Lake Mead Casino, the
Company's earnings from joint ventures, management fees and
corporate expense.
SOURCE: Station Casinos, Inc.
Station Casinos, Inc., Las Vegas Thomas M. Friel, 800-544-2411 or 702-495-4210 Executive Vice President, Chief Accounting Officer and Treasurer Lori B. Nelson, 800-544-2411 or 702-495-4248 Director of Corporate Communications
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.