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Arnold M. Knightly

Station Casinos posts $65.3 million net loss

17 August 2009

LAS VEGAS, Nevada –- Station Casinos, which filed for Chapter 11 bankruptcy July 28, posted a net loss of $65.3 million in the second quarter ended June 30 and revealed that one its newest properties is losing money, according to a filing made Friday with the Securities and Exchange Commission.

The filing said Aliante Station, which opened in November, has been operating at a loss as a result of "lower-than-average operating margins, which have been magnified by the current economic slowdown."

The company's loss is a sharp swing from the $18.6 million profit posted the same time last year. The widening loss drove the company to a six-month loss of $99 million, an increase from the $52.3 million loss through June last year.

Revenues fell 21.2 percent in the quarter to $267.2 million from $339.1 million. Six-month revenues fell 20.5 percent to $549.9 million from $691.4 million.

"Net revenues continue to be affected by the weakening Las Vegas and U.S. economies as a result of declining real estate values, the credit crisis, increased unemployment and a decrease in consumer confidence levels which are expected to continue to affect our net revenue levels through the remainder of 2009," the filing said.

Second-quarter cash flow, defined as earnings before interest, taxes, depreciation and amortization, fell 37 percent, to $68.9 million from $109.4 million in 2008.

Casino revenues fell 20 percent in the quarter and 19.3 percent the first six months.

Room revenues fell 20.8 percent and 24.4 percent respectively. Room occupancy slipped to 87 percent from 91 percent in the quarter, and to 86 percent from 90 percent this year.

The company owns and operates 13 casinos, and is a 50 percent partner with the Greenspun Corp. in five more, including Green Valley Ranch Resort and Aliante Station.

Second-quarter earnings from Green Valley Ranch Resort were $5.6 million, which represents a combination of the company's management fee plus half of the property's operating income.

The property posted a net loss of $3.8 million in the quarter as compared with a net loss of $1.2 million last year.

Station Casinos filed for bankruptcy in the U.S. Bankruptcy Court of Nevada in Reno after failing to restructure $5.7 billion in debt with its creditors outside of court.

Los Angeles-based real estate firm Colony Capital owns 75.9 percent and members of the Fertitta family control the remaining 24.1 percent.