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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 21, 1999
STATION CASINOS, INC.
(Exact name of registrant as specified in its charter)
Nevada
----------------------------------------------
(State or other jurisdiction of incorporation)
000-21640 88-0136443
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
2411 West Sahara Avenue
Las Vegas, Nevada 89102
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 367-2411
N.A.
(Former name or former address, if changed since last report)
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STATION CASINOS, INC.
Item 5. The Registrant has filed this Form 8-K to file a press release
issued by the Registrant on January 21, 1999. This press release is
incorporated herein by this reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
<TABLE>
<CAPTION>
Exhibit
-------
<S> <C>
99.1 Press release, dated January 21, 1999.
</TABLE>
<PAGE>
STATION CASINOS, INC.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Station Casinos, Inc.
Date: January 22, 1999 /s/ Glenn C. Christenson
-----------------------------
Glenn C. Christenson
Executive Vice President
and Chief Financial Officer
<PAGE>
STATION CASINOS, INC
EXHIBIT INDEX
99.1 Press release, dated January 21, 1999.
<PAGE>
EXHIBIT 99.1
January 21, 1999
STATION CASINOS REPORTS SIXTH CONSECUTIVE QUARTER OF RECORD CASH FLOW; 22
PERCENT INCREASE FOR THIRD QUARTER
LAS VEGAS, -- Station Casinos, Inc. (NYSE: STN) today
announced the results of its operations for the third fiscal quarter ended
December 31, 1998.
Station Casinos, Inc. ("STN" or "the Company") reported net
revenues for the quarter ended December 31, 1998 of $222.5 million, a 13 percent
increase over the prior year's quarter. Earnings before interest, taxes,
depreciation and amortization (EBITDA), as adjusted for the Sunset equipment
lease, increased 22 percent to $53.8 million compared to $44.3 million in the
prior year. The increase in net revenues and EBITDA reflect same-store sales and
EBITDA growth from the Company's Nevada operations of 11 percent and 12 percent,
respectively, and improved operating results at Station Casino Kansas City
(SCKC). This is the sixth consecutive quarter of record cash flow for the
Company.
For the quarter, the Company reported earnings applicable to
common stock, before an extraordinary item for the quarter of $1.7 million, or
$0.05 per share, prior to the effect on net income of a $30.0 million asset
impairment loss, a $2.1 million gain related to insurance proceeds related to
the roof collapse and fire at Palace Station this summer, and $0.8 million of
interest expense related to the defeasance of the 9 5/8 percent Senior
Subordinated Notes. The $30.0 million asset impairment loss relates to the
write-down of assets, including a riverboat formerly used in operations at
Station Casino St. Charles (SCSC), and several parcels of land within close
proximity to the St. Charles site that were being held for future development.
The Company is actively attempting to dispose of non-strategic assets and
expects to close on some of these asset sales in the first half of calendar year
1999. "We are exploring many alternatives to achieve our goal of reducing the
Company's leverage. In addition to strengthening cash flow from operations and
carefully managing capital expenditures, the sale of non-strategic assets is a
prudent step in this direction," said Glenn C. Christenson, executive vice
president and chief financial officer. Including these non-recurring items, the
Company reported a loss applicable to common stock before the extraordinary item
of $16.9 million or $0.48 per share.
In November 1998, the Company completed a new $425 million
bank facility to replace its existing $285 million Reducing Revolving Credit
Facility and an $80 million Supplemental Term Loan Facility (together, the "Old
Bank Facility"). The refinancing resulted in an after-tax extraordinary charge
of $3.1 million, or $0.09 per share, to write-off previously unamortized loan
costs related to the Old Bank Facility. Including this extraordinary item, the
Company reported a net loss applicable to common stock of $0.57 per share.
Quarterly results were also impacted by expenditures of
$3.7 million related to costs for supporting the successful passage of the
"boat in the moat" referendum in Missouri on November 3, 1998. For the
nine-month period ended December 31, 1998, referendum costs in Missouri and
California totaled $6.0 million. Such referendum costs are not deductible for
tax purposes.
1
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For the nine-month period ending December 31, 1998, net
revenues increased 14 percent to $642.2 million, while EBITDA, adjusted for the
Sunset equipment lease, increased 26 percent to $154.2 million. Effective
December 31, 1998, the Company has changed its fiscal year from March 31 to
December 31, and will file a form 10-K for the nine-month abbreviated year.
NEVADA OPERATIONS
The Company's Nevada operations reported solid increases in
net revenues and EBITDA. Combined net revenues increased 11 percent to $137.4
million from $124.2 million in the prior year's quarter. EBITDA, adjusted for
the Sunset equipment lease, increased 11 percent over the prior year's quarter
to a record $40.9 million, representing a combined margin of 30 percent. During
the quarter, Boulder Station, Texas Station, and Sunset Station all reported
record levels of casino revenue and net revenue. "We are very proud of the
continued improvement in our Las Vegas portfolio during the last quarter and
calendar year. Over the past 12 months, we have generated $159 million in cash
flow out of our Las Vegas operations representing a return on investment of 24
percent on our Las Vegas portfolio," said Christenson.
MISSOURI OPERATIONS
The Company's Missouri operations also reported record net
revenues and EBITDA for the quarter. Combined net revenues increased 11 percent
from the prior year's quarter to $74.9 million. Combined EBITDA increased 58
percent to $15.8 million from $10.0 million in the prior year. The increase in
net revenues and EBITDA is attributable to operational improvements at SCKC.
Gaming revenue at SCKC increased 29 percent over the prior year's quarter,
driven by increased market share and a 15 percent increase in win-per-admission.
As a result, net revenues at SCKC increased to $47.0 million for the quarter
while EBITDA more than doubled to $10.9 million. Net revenues at SCSC declined
by six percent from the prior year's quarter, while EBITDA declined 10 percent
to $4.9 million. "Momentum at Station Casino Kansas City continues to build with
casino revenue and net revenue increasing successively in each of the last four
quarters. Though St. Charles was down year over year, the property improved from
the seasonally stronger September quarter," said Christenson.
OTHER DEVELOPMENTS
SUNSET STATION EXPANSION
In the December quarter, the Company completed a
master-planned expansion project at Sunset Station, which included the addition
of a 2,000-space parking structure, approximately 14,000 square feet of casino
space with 250 slots, the Sonoma Cellar Steakhouse, two fast-food lease tenants,
and approximately 8,000 square feet of meeting space. The total cost of the
project was $34 million and all capital expenditures relating to the project
were completed during the December quarter. "We are pleased with the initial
customer response to the new expansion and believe that it has helped in
satisfying peak period demand. The overall budget on the project was reduced by
approximately $11 million, primarily as a result of delaying the movie theater
expansion until the initial results from the Texas Station theater expansion are
analyzed," said Christenson.
2
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TEXAS STATION EXPANSION
The Texas Station master-planned expansion project currently
underway is expected to open during the second week of February at a total cost
of approximately $51 million. The expansion includes a 2,000-space parking
structure, six additional "stadium-style" movie screens, approximately 21,000
square feet of casino space for 850 additional slots, a food court for several
fast-food lease tenants, and a Kid's Quest child-care facility. "This expansion
will further enhance Texas' competitive position in the Northwest Las Vegas
market and help to satisfy the tremendous demand for our product," said
Christenson.
FINANCING
During the quarter ended December 31, 1998, the Company
completed two financings. In November 1998, the Company secured a $425 million
bank credit facility. This facility provided for the necessary funding to
complete the master-planned expansions at Sunset Station and Texas Station. In
December 1998, the Company completed a $199.9 million 8 7/8 percent senior
subordinated notes offering. Proceeds from this offering were used to redeem the
9 5/8 percent senior subordinated notes due in 2003 ("9 5/8 percent Notes") on
January 4, 1999. During the first quarter of calendar 1999, the Company will
record an extraordinary charge of $10.2 million (net of applicable income tax
benefit) to reflect the write-off of the unamortized debt discount, unamortized
loan costs and the premium to redeem the notes. "We are extremely pleased to
have completed these two financings in a timely manner," said Christenson. "It
is important to note that the Company's long-term debt increased by $17 million
as a result of the refinancing of the 9 5/8 percent Notes. Despite the increase
in debt, this refinancing extends the term by five years and will result in
reduced interest expense of $2.0 million annually."
Station Casinos, Inc. is a multi-jurisdictional gaming company
that owns and operates the Palace Station Hotel & Casino, the Boulder Station
Hotel & Casino, the Texas Station Gambling Hall & Hotel, and the Wild Wild West
Gambling Hall & Hotel in Las Vegas, Nevada, Sunset Station Hotel & Casino in
Henderson, Nevada, as well as slot machine route management services in Clark
County, Nevada. Station Casinos, Inc. also owns and operates Station Casino St.
Charles, a gaming and entertainment facility in St. Charles, Missouri, and
Station Casino Kansas City, a gaming and entertainment facility in Kansas City,
Missouri.
This press release may be deemed to contain certain
forward-looking statements with respect to the financial condition, results of
operations and expansion projects of STN and its subsidiaries which involve
risks and uncertainties including, but not limited to, competition from other
gaming operations, the inherent uncertainty and cost of prolonged litigation,
construction risks, and licensing and other regulatory risks. Further
information on potential factors which could affect the financial condition,
results of operations, and expansion projects of STN and its subsidiaries, are
included in the filings of STN with the Securities and Exchange Commission,
including, but not limited to STN's Annual Report on Form 10-K for the fiscal
year ended March 31, 1998, and its Registration Statement on Form S-4 File No.
333-30685.
3
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STATION CASINOS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
PROFORMA DECEMBER 31, MARCH 31,
FINANCIAL 1998 1998
INFORMATION (a) -------------------- ----------
ASSETS:<S> <C> <C> <C>
Cash and cash equivalents $ 59,908 $ 59,040 $ 50,158
Cash - restricted to defease long-term debt(a) -- 202,383 --
Accounts and notes receivable, net 18,372 18,372 12,288
Other current assets 26,141 26,141 25,045
---------------- ------------------ ---------------
TOTAL CURRENT ASSETS 104,421 305,936 87,491
Property and equipment, net 1,147,890 1,147,890 1,132,719
Other long-term assets 76,675 80,105 80,006
---------------- ------------------ ---------------
TOTAL ASSETS $ 1,328,986 $ 1,533,931 $ 1,300,216
---------------- ------------------ ---------------
---------------- ------------------ ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current portion of long-term debt $ 13,323 $ 13,323 $ 97,931
Construction contracts payable 10,399 10,399 10,534
Other current liabilities 94,069 101,133 89,044
---------------- ------------------ ---------------
TOTAL CURRENT LIABILITIES 117,791 124,855 197,509
Long-term debt, less current portion 946,308 946,308 615,244
9 5/8% Senior subordinated notes - defeased -- 187,635 187,051
January 4, 1999(a)
Other long-term liabilities 5,372 5,372 13,525
---------------- ------------------ ---------------
TOTAL LIABILITIES 1,069,471 1,264,170 1,013,329
Stockholders' equity 259,515 269,761 286,887
---------------- ------------------ ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,328,986 $ 1,533,931 $ 1,300,216
---------------- ------------------ ---------------
---------------- ------------------ ---------------
</TABLE>
(a) On January 4, 1999, the 9 5/8% senior subordinated notes ("9 5/8% Notes")
were redeemed with proceeds generated by the successful completion in
December 1998 of the offering of $199.9 million in 8 7/8% senior
subordinated notes. This proforma financial information reflects restricted
cash, other long-term assets, other current liabilities, long-term debt and
stockholders' equity as if the defeasance of the 9 5/8% Notes had occurred
on December 31, 1998. This proforma financial information is being supplied
for purposes of additional analysis and does not represent the financial
position of the Company at December 31,1998 as determined in accordance
with generally accepted accounting principles. The Company will record an
extraordinary loss of approximately $10.2 million (net of applicable income
tax benefit) in the first quarter of calendar year 1999 to reflect the
write-off of unamortized loan costs and premiums paid to redeem the 9 5/8%
Notes.
4
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STATION CASINOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------------------- -------------------------------
1998 1997 1998 1997
------------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Casino $176,584 $154,172 $509,149 $436,872
Food and beverage 36,231 34,282 104,538 97,859
Room 10,733 10,474 30,040 27,692
Other 16,402 12,557 47,663 41,233
------------------- ------------------ ---------------- --------------
Gross revenues 239,950 211,485 691,390 603,656
Less promotional allowances (17,434) (14,289) (49,176) (38,847)
------------------- ------------------ ---------------- --------------
Net revenues 222,516 197,196 642,214 564,809
------------------- ------------------ ---------------- --------------
OPERATING COSTS AND EXPENSES:
Casino 86,022 73,910 249,353 211,502
Food and beverage 23,237 22,764 66,121 67,626
Room 4,035 3,520 11,515 10,001
Other 6,963 5,744 19,463 19,225
Selling, general and administrative 45,968 45,523 135,769 127,419
Corporate expenses 4,595 3,524 12,311 11,272
Depreciation and amortization 17,790 17,227 52,975 50,396
Asset impairment 30,011 -- 30,011 --
Preopening expenses -- -- -- 10,866
------------------- ------------------ ---------------- --------------
218,621 172,212 577,518 508,307
------------------- ------------------ ---------------- --------------
OPERATING INCOME 3,895 24,984 64,696 56,502
------------------- ------------------ ---------------- --------------
OTHER INCOME (EXPENSE):
Interest expense, net (21,719) (19,884) (66,127) (55,597)
Interest expense - defeasance, net (835) -- (835) --
Merger and related legal costs -- -- (2,943) --
Other (1,823) 199 (4,655) (4,797)
------------------- ------------------ ---------------- --------------
(24,377) (19,685) (74,560) (60,394)
INCOME (LOSS) BEFORE INCOME TAXES AND (20,482) 5,299 (9,864) (3,892)
EXTRAORDINARY ITEM
Income tax (provision) benefit 5,346 (1,874) 871 1,384
------------------- ------------------ ---------------- --------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (15,136) 3,425 (8,993) (2,508)
EXTRAORDINARY ITEM - LOSS ON EARLY (3,104) -- (3,104) --
RETIREMENT OF DEBT, NET OF APPLICABLE INCOME
TAX BENEFIT
------------------- ------------------ ---------------- --------------
NET INCOME (LOSS) (18,240) 3,425 (12,097) (2,508)
PREFERRED STOCK DIVIDENDS (1,812) (1,812) (5,434) (5,434)
------------------- ------------------ ---------------- --------------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $(20,052) $1,613 $(17,531) $(7,942)
------------------- ------------------ ---------------- --------------
------------------- ------------------ ---------------- --------------
BASIC AND DILUTED EARNINGS (LOSS) PER COMMON
SHARE:
Earnings (loss) applicable to common $ (0.48) $0.05 $ (0.41) $(0.22)
stock, before extraordinary item
Extraordinary item $(0.09) $-- $ (0.09) $--
Earnings (loss) applicable to common stock $(0.57) $0.05 $(0.50) $(0.22)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 35,312 35,307 35,312 35,309
------------------- ------------------ ---------------- --------------
------------------- ------------------ ---------------- --------------
</TABLE>
5
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STATION CASINOS, INC.
SUMMARY INFORMATION TABLES
(AMOUNTS IN THOUSANDS, EXCEPT OCCUPANCY PERCENTAGE AND ADR)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
TOTAL NEVADA OPERATIONS(a):
Net revenues $ 137,418 $ 124,167 $ 397,908 $ 341,447
Operating income $ 27,564 $ 25,924 $ 83,669 $ 60,028
EBITDA(b) $ 38,729 $ 34,729 $ 113,284 $ 96,029
EBITDA, adjusted for the Sunset Equipment lease $ 40,852 $ 36,796 $ 119,788 $ 100,207
Occupancy percentage 90% 90% 93% 93%
ADR $ 51 $ 55 $ 47 $ 48
TOTAL MISSOURI OPERATIONS(a):
Net revenues $ 74,947 $ 67,230 $ 219,734 $ 203,374
Operating (loss) income $ (16,798) $ 2,082 $ (5,056) $ 6,358
EBITDA(b) $ 15,785 $ 9,975 $ 43,163 $ 29,640
Occupancy percentage 82% 87% 82% 89%
ADR $ 110 $ 91 $ 108 $ 91
STATION CASINOS, INC. AND OTHER:
Net revenues $ 10,151 $ 5,799 $ 24,572 $ 19,988
Operating loss $ (6,871) $ (3,022) $ (13,917) $ (9,884)
EBITDA (b) $ (2,818) $ (2,493) $ (8,765) $ (7,905)
TOTAL STATION CASINOS, INC.:
Net revenues $ 222,516 $ 197,196 $ 642,214 $ 564,809
Operating income $ 3,895 $ 24,984 $ 64,696 $ 56,502
EBITDA (b) $ 51,696 $ 42,211 $ 147,682 $ 117,764
EBITDA, adjusted for the Sunset Equipment lease $ 53,819 $ 44,278 $ 154,186 $ 121,942
</TABLE>
(a) The Nevada Operations include the accounts of: Palace Station Hotel &
Casino, Inc., Boulder Station, Inc., Texas Station, Inc. and Sunset
Station, Inc. The Missouri Operations include the accounts of: St. Charles
Riverfront Station, Inc. and Kansas City Station Corporation.
(b) EBITDA consists of operating income plus depreciation, amortization,
preopening expenses and asset impairment. The Company believes that in
addition to cash flows and net income, EBITDA is a useful financial
performance measurement for assessing the operating performance of the
Company. Together with net income and cash flows, EBITDA provides 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 the
trends it depicts, the components should be considered. The impact of
interest, taxes, depreciation and amortization, preopening expenses and
asset impairment, 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.
Further, EBITDA does not represent net income or cash flows from operating,
financing and investing activities as defined by generally accepted
accounting principles ("GAAP") and
6
<PAGE>
does not necessarily indicate cash flows will be sufficient to fund cash
needs. They should not be considered as an alternative to net income, as
an indicator 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 or adjustments to such measures may
calculate EBITDA or such adjustments in the same manner as the Company,
and therefore, the Company's measure of EBITDA may not be comparable to
similarly titled measures used by other gaming companies.
CONTACT: Glenn C. Christenson, Executive Vice President/Chief Financial
Officer/Chief Administrative Officer, 800-544-2411, Rod S. Atamian, Vice
President of Financial Services, 800-544-2411, or Jack Taylor, Director of
Public Relations, 702-221-6900, all of Station Casinos, Inc.
7
