Station Casinos sees revenues slip in year, quarter

Net revenues fell to $1.3 billion from $1.45 billion in 2007, the lowest total since 2005, the year before the financially struggling company opened its $975 million Red Rock Resort, a Tuesday filing with the Securities and Exchange Commission shows.

Station Casinos also reported that its fourth-quarter revenues plummeted 19 percent to $289.8 million from $357.5 million

The company blamed the economic downturn that has hit the gaming industry hard for the drop in revenues.

“The decrease in net revenues was due primarily to an overall decrease in gaming revenues across all properties as a result of weakening Las Vegas and U.S. economies,” the company said. “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 2008.”

Station Casinos did not hold a conference call to discuss its earnings and declined to comment beyond the filing.

Jacob Oberman, director of gaming research and analysis at CB Richard Ellis, said beyond the economy, Station Casinos’ properties lost customers to the Boulder Strip’s Eastside Cannery, which opened in August, and Aliante Station, the Station Casinos’ joint venture with Greenspun Corp. that opened in November.

“They leveraged their database when they opened Aliante and got players who might be Red Rock or Sante Fe or Texas players,” Oberman said. “Obviously, they would have cannibalized some trips. The Eastside Cannery opening probably had a pretty substantial impact on Boulder (Station) and Sunset (Station).”

Oberman said the locals market is expected to continue to be “down significantly” from last year as consumers continue to cut back on spending.

Station Casinos, which is privately held by members of the Fertitta family and Los Angeles-based real estate firm Colony Capital, said in a federal court filing in March that it could file for bankruptcy by April 15. The company said it could also seek another extension from the company’s debtors so it can continue to negotiate details of its bankruptcy proposal.

April 15 is the day a forbearance agreement with holders of the company’s $5.4 billion debt load expires. It also is five days after Station’s new deadline for bondholders to approve the company’s debt exchange offer.

The debt exchange proposal asks investors holding $2.3 billion in bonds to accept between 10 cents and 50 cents on the dollar in cash and new notes as part of a prepackaged Chapter 11 bankruptcy.

Station Casinos reached agreements in early March with its lenders to give the company more time to negotiate a restructuring plan after Boyd Gaming Corp. made an offer to buy much of the gaming company’s assets for $950 million.

The revenue numbers were in line with the unaudited results the company released in February when it unveiled its prepackaged bankruptcy proposal.

The fourth-quarter revenue drop continued a steep decline that started last year; revenue decreased 10.5 percent in the third quarter and 7.4 percent in the first nine months of the year.

The company posted a $3.3 billion loss last year, driven by a $3.34 billion noncash impairment write-down in the fourth quarter, according to the earnings report. Fourth-quarter cash flow, defined as earnings before interest, taxes, depreciation and amortization, was $97.6 million, a 26 percent decrease from the $118 million reported in 2007.

Cash flow for the year fell 14.4 percent to $475.5 million from $555.3 million in 2007.

Casino revenues dropped 19.2 percent in the fourth quarter and 10.9 percent for 2008.

Room revenues decreased 6 percent last year while occupancy slipped two points to 88 percent.

The company’s staffing level decreased 7.6 percent to 13,400 from 14,500 in 2007. That number was cushioned by the opening of Aliante Station in November, which added 1,000 employees to the company’s payroll.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.