Station's operating results rise

Station Casinos Inc. stock jumped 10.2 percent today after the company reported strong revenue and cash-flow growth at its Las Vegas properties.

Station reported that a $10.4 million extraordinary charge for debt reduction led to a $4 million net loss for the first quarter.

But the company said revenue rose 12 percent to $229.9 million in the latest quarter from $204.8 million from the year-earlier period, while cash flow increased 19 percent, to $55.7 million from $46.8 million.

Before the extraordinary charge related to early debt retirement, Station said net income for the 1999 first quarter was $13 million, or 18 cents a share, compared with a $228,000 loss in the year-ago quarter.

"I was really impressed with the revenue levels given that no new properties were opened, which means Station showed impressive same-casino sales growth," said analyst David Anders of CS First Boston Inc.

"The gain in cash-flow margins was also impressive," he said. "The net-net is that their per-share earnings before the extraordinary charge well exceeded our expectations of 14 cents. It was an impressive performance and should help the stock move toward our $20 price target."

Station stock was quoted at $16.25 a share, up $1.6875, in early afternoon trading today.

The extraordinary charge reflects the write-off of unamortized debt discounts and loan costs and a premium for redemption of $187.6 million of 9.625 percent senior subordinated notes repaid on Jan. 4, 1999.

Station said it trimmed $20.7 million from its long-term debt during the 1999 first quarter, despite $23.9 million of capital spending, much of it on an expansion at Texas Station.

The debt reduction is part of Station's strategy to reduce its debt-to-cash flow ratio to 4.0 from 4.92 this year. As of March 31, the ratio had dropped to 4.74.

Revenue at the company's four Las Vegas-area casinos -- Palace, Boulder, Texas and Sunset Stations -- rose 9 percent to $141.2 million while cash flow was up 12 percent to a record $44 million, Station said.

The cash flow margin for the Nevada operations rose to a record 31 percent due to revenue gains at each hotel-casino, Station said. Chief Financial Officer Glenn Christenson said the Nevada operations "continue to benefit from same-store growth and recently completed expansion projects at Texas and Sunset Stations."

In Missouri, the company's St. Charles and Kansas City Stations reported combined revenue gains of 11 percent, to a record $78.4 million, while cash flow jumped 41 percent to $15.7 million. The gains came from the Kansas City property, as the St. Charles casino reported lower revenue and cash flow due to dredging operations.

During the latest quarter, Station completed its $55 million expansion at Texas Station.

And last week, Station said it settled its lawsuits with Crescent Real Estate Equities Inc. over the aborted merger of the two companies. Crescent has agreed to pay $15 million to Station to settle all claims.

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