Tuesday, July 23, 2002 | 11:03 a.m.
LAS VEGAS AP) - Station Casinos Inc. cut its operating costs in the second quarter and nearly doubled profits to $8 million, or 13 cents per share, officials reported Tuesday.
That compares with $3.8 million, or 6 cents per share, earned in the same period a year ago.
The company also announced plans to build an upscale hotel-casino in a master-planned community west of Las Vegas.
The Las Vegas local casinos gambling giant reported that same-store cash flow increased 4 percent over the prior year to $65.7 million for the quarter ending June 30.
Executives attributed cost-cutting measures - expenses fell from $176 million to $162 million - for the majority of the profit increase.
"The results of the quarter show our (cost (cutting)- efforts are paying off," said Glenn Christenson, Stations' chief financial officer.
Revenues fell 6.6 percent for the quarter, from $212.8 million to $199.6 million. Excluding nonrecurring items such as the write-down of Station's Internet investments, the company said it earned $10.9 million, or 18 cents per share in the second quarter.
Wall Street analysts had expected the company to earn 16 cents per share, according to the research firm Thomson First Call.
While Las Vegas is recovering from the mass layoffs of last fall, business is not yet back to normal, executives said.
"We had a strong second quarter," Christenson said. "We are pleased with our results given the steady ramp up in the local economy post 9-11. But there are still challenges. The unemployment rate is still high, energy costs are up and visitor volume is down."
Station and The Howard Hughes Corp., local affiliate of Maryland-based The Rouse Co., reached a deal earlier this month, giving the valley's largest casino operator the option to build a hotel-casino in upscale Summerlin.
If Station exercises its option by October, the company would pay Hughes Corp. $6.4 million toward a final purchase price of $65 million for the 73-acre, gambling-zoned site.
The hotel-casino will be located in a 1,300-acre development.
"This is the premier casino site in the Las Vegas Valley," Christenson said.
The new casino, which has yet to be named, would cost more than the $300 million Green Valley Ranch Station hotel-casino, executives said. The size of the casino will be similar to Sunset Station hotel-casino and the company plans to use the same architects and designers that created the Green Valley property. It would be built by 2005.
"We believe Station will wait until late 2003 to break ground on the project, given the company's near-term focus on reducing debt and the need for more residential and commercial development in the area to maximize return on investment," Bear, Stearns & Co. of New York's gambling analyst Jason Ader wrote to investors in a research note.
Station's stock dropped $2 per share, or 14 percent.
Station Casinos operates nine hotel-casinos in the Las Vegas area. The company, the nation's fifth-largest gambling corporation, employs about 11,000 workers.
On the Net:
Station Casinos Inc.: http://www.stationcasinos.com