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Arnold M. Knightly

Station reports income jump

3 March 2007

LAS VEGAS, Nevada -- The opening of Red Rock Resort in April helped boost Station Casinos' fourth-quarter cash flow, although higher interest expenses and operating costs pushed net income down sharply.

The locals casino giant on Tuesday said its net income was $23.1 million, or 41 cents per share, in the three months ended Dec. 31, down from net income of $41.7 million, or 61 cents per share, a year earlier.

Fourth-quarter interest expense rose to $54.4 million from $22.1 million a year ago. The company said it lost $2.5 million from a canceled residential project at Red Rock Resort.

Adjusted profit, which excludes one-time items and development costs, was 53 cents per share, down from 69 cents per share last year.

Quarterly revenue rose 25.9 percent to $358.8 million from $285.1 million.

Both the profit and revenue numbers beat forecasts. Industry analysts polled by Thompson First Call had expected a profit of 45 cents per share on $355 million in revenue.

Fourth-quarter property cash flow, defined as earnings before interest, taxes, depreciation and amortization, increased 14.3 percent to $141.5 million from $123.9 million a year earlier. Full-year company cash flow rose 11.2 percent to $534.9 million from $480.9 million.

"The fourth-quarter revenue and (cash flow) results came in as expected," company President Lorenzo Fertitta said in a statement.

Station Casinos did not take questions from analysts following the less-than-10 minute conference call, citing its pending private equity takeover bid.

The company on Friday agreed to a $5.4 billion, or $90 per share, buyout by a private equity partnership involving members of the company's founding family and Los Angeles-based Colony Capital.

A note from analyst firm Bear Stearns pointed out that Station Casinos continues to advance its development pipeline, with the company spending $45.1 million to expand Red Rock Resorts, $32.2 million on Santa Fe Station and $12.7 million for land acquisition.

Although expenses related to Red Rock Resort affected the company's fourth-quarter earnings, they also helped power large increases in the company's gaming and nongaming revenue the last eight months of the year.

Casino revenues increased 22 percent to $258.9 million for the quarter and 17 percent to $969.1 million for the year. Food and beverage revenues increased 57.2 percent for the quarter and 48 percent for the year. Room revenue increased 52 percent for the quarter and 35 percent for the year.

Station Casinos owns or operates 16 properties in Southern Nevada and manages one American Indian casino in California.

Shares of Station Casino fell 19 cents, or 0.2 percent, Wednesday to close at $86.29 on the New York Stock Exchange.

Station reports income jump is republished from