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October 22, 2014

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Station Casinos reports revenue drop in fourth quarter

Station Casinos properties

The clock tower of the Boulder Station hotel-casino obscures the resort's 15-story tower. Boulder Station has won three Launch slideshow »

Station Casinos Inc. of Las Vegas today disclosed that its revenue fell on a year-over-year basis in the fourth quarter as the recession reduced spending at its hotels and casinos.

The company, which is operating in bankruptcy, reported fourth quarter revenue of $256.5 million, up slightly from the third quarter but down from $289.8 million in 2008’s fourth quarter.

Adjusted EBITDA – a profitability measure meaning earnings before interest, taxes, depreciation and amortization – was $71 million, down 27.3 percent from the fourth quarter of 2008.

Both fourth quarters included huge quarterly losses – on paper – because of accounting charges.

In 2009’s fourth quarter, the company lost $1.125 billion mainly because of impairment losses totaling $1.28 billion. There were also $5.2 million in net costs related to the bankruptcy reorganization that has been under way since July.

The impairment losses – accounting charges to reflect the declining value of assets – include $181.8 million for goodwill, $255.3 million for other intangible assets, $617.4 million for land held for development, $179.4 for property and equipment and $43 million for other assets.

In 2008’s fourth quarter, Station lost $3.2 billion. That included asset impairments, write-downs and other charges of $3.4 billion.

Station said its Green Valley Ranch joint venture with an affiliate of the Greenspun family, owner of the Las Vegas Sun, generated fourth quarter earnings for Station of $2.1 million, which included Station's management fee and 50 percent of the property's operating income.

For the fourth quarter, Green Valley Ranch's adjusted EBITDA before management fees was $8.8 million, down 44.2 percent compared to the 2008 fourth quarter.

Green Valley Ranch had a net loss of $2.6 million for the fourth quarter vs. a net loss of $23.2 million in the same period in 2008, Station said.

Station's subsidiary that manages Green Valley Ranch filed for bankruptcy in the first quarter and has warned the property itself may need to restructure because it's near a default on its debt. The Greenspun affiliate is seeking dismissal of that bankruptcy case, claiming Green Valley Ranch has been mismanaged by Station – charges Station denies and attributes to a fired former manager.

For all of 2009, Station reported net revenue of $1.062 billion, down from $1.298 billion in 2008.

The company, with interests in 18 Las Vegas-area gaming properties, posted an annual loss of $1.679 billion vs. $3.268 billion lost in 2008.

"The decrease in net revenue was due primarily to a continuing overall decrease in gaming revenue across all properties as a result of weakening Las Vegas and U.S. economies. Declining real estate values, the credit crisis, increased unemployment and a decrease in consumer confidence levels have all precipitated an economic slowdown, which has negatively impacted our operations during 2009 and 2008," Station said today in its annual report.

Casino revenue for 2009 fell nearly 17 percent to $764.6 million while food and beverage revenue fell 17 percent to $190 million and room revenue fell 22.2 percent to $82.3 million.

The hotel occupancy rate of 83 percent in 2009 was down 5 percentage points from 2008 while the average daily room rate fell from $85 to $67.

Station has about 4,250 hotel rooms. Its largest hotels are at Palace Station at Sahara Avenue and Interstate 15 (1,000 rooms) and at Red Rock Resort in Summerlin (815 rooms).

Station reported the value of its assets as $4.276 billion at the end of 2009, down from $5.831 billion at the end of 2008.

Debt and other liabilities at year end totaled $6.6 billion, up from $6.5 billion at the end of 2008

Station's bankruptcy judge has yet to rule on the company's reorganization plan in which Station owners the Fertitta family and Colony Capital and certain lenders would take over five of Station's 18 properties and the others would be sold – with the Fertittas potentially bidding for the 13 on the for-sale list along with several land parcels.

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