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TABLE OF CONTENTS
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Commission file number 000-54193

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STATION CASINOS LLC
(Exact name of registrant as specified in its charter)

1505 South Pavilion Center Drive, Las Vegas, Nevada 89135
(Address of principal executive offices, Zip Code)

Registrant's telephone number, including area code: (702) 495-3000

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Voting Units

         Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o    No ý

         Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. ý

         Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

         Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o    No ý

         The aggregate market value of the voting common stock held by non-affiliates (all other persons other than executive officers or directors) of the registrant as of June 30, 2010 was $0.

         As of January 31, 2011, there were no shares outstanding of the registrant's voting units.

Documents Incorporated by Reference
None.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This Annual Report on Form 10-K contains forward-looking statements. Such statements contain words such as "believes," "estimates," "expects," "intends," "plans," "projects," "may," "will," "should" or "anticipates" or the negative or other variation of these or similar words, or by discussions of strategy or risks and uncertainties. Forward-looking statements in this Annual Report on Form 10-K include, among other things, statements concerning: projections of future results of operations or financial condition; expectations regarding casino properties and future development plans; expectations of the continued availability of capital resources; and expectations regarding the restructuring efforts of Station Casinos, Inc. ("STN") and its subsidiaries. STN and its subsidiaries are referred to collectively in this Annual Report on Form 10-K as "Station." Any forward-looking statement is based upon a number of estimates and assumptions that, while considered reasonable by us, is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our or Station's control, and are subject to change. Actual results of operations may vary materially from any forward-looking statement made herein. Forward-looking statements should not be regarded as a representation by us, Station or any other person that the forward-looking statements will be achieved. Undue reliance should not be placed on any forward-looking statements. Some of the contingencies and uncertainties to which any forward-looking statement contained herein is subject include, but are not limited to, the following:

•

although the Plan (as defined herein) has been confirmed, it will not be fully consummated until the Effective Date (as defined herein). The timing of consummation of the Plan is uncertain. The continuing bankruptcy proceedings and consummation of the Plan may adversely affect Station's, and consequently our, business, including their and our relationships with customers and suppliers;



•

the recession, and in particular the economic downturn in Nevada, has adversely affected Station's business. We expect that Station's, and consequently our, business will continue to be adversely affected by the economic downturn;



•

we will have substantial debt outstanding following the Effective Date. Our debt service requirements may adversely affect our operations and ability to compete;



•

we will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors that are beyond our control;



•

we may experience a loss of market share due to intense competition;



•

we face extensive regulation from gaming and other government authorities;



•

changes to applicable gaming and tax laws could have a material adverse effect on our financial condition;



•

our operating results may be adversely impacted by general business conditions including competitive practices, changes in customer demand and the cyclical nature of the gaming and hospitality business generally, and general economic conditions, including interest rates; and



•

we may be adversely impacted by adverse outcomes of legal proceedings and the development of, and changes in, claims or litigation reserves.

For additional contingencies and uncertainties, see "Item 1A. Risk Factors."

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PART I

ITEM 1.    BUSINESS.

Introduction

        We are a Nevada limited liability company that was formed to acquire substantially all of the assets of Station pursuant to the joint plan of reorganization of STN and certain affiliated debtors under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code"). In addition, we anticipate acquiring substantially all of the assets of Green Valley Ranch Gaming, LLC ("GVR") pursuant to the GVR Asset Purchase Agreement (as defined herein). The Company was formed on August 9, 2010 and has its principal executive offices at 1505 South Pavilion Center Drive, Las Vegas, Nevada 89135. The telephone number for its executive offices is (702) 495-3000. Station's internet website is www.stationcasinos.com and we expect to maintain the website after the Effective Date.

        To date, we have conducted no business and have no material assets or liabilities. We expect the reorganization of Station and acquisition of Green Valley Ranch (as defined herein) to be completed by June 30, 2011, at which time we will acquire substantially all of the assets of Station in consideration for the issuance of (i) our voting units ("Voting Units") to Station Voteco LLC, a Nevada limited liability company formed to hold the voting equity interests of the Company ("Station Voteco"), (ii) our non-voting units ("Non-Voting Units" together with our Voting Units, our "Units") to Station Holdco LLC, a Delaware limited liability company formed to hold the non-voting equity interests of the Company ("Station Holdco"), and (iii) secured credit facilities, as well as acquire substantially all of the assets of GVR for approximately $500.0 million. See "Item 1. Business—Chapter 11 Reorganization and Restructuring Transactions" for a further description of the reorganization of Station and acquisition of Green Valley Ranch.

Available Information

        We are required to file annual, quarterly and other current reports and information with the SEC. You will be able to read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Because we submit filings to the SEC electronically, access to this information is available at the SEC's internet website (www.sec.gov). This site contains reports and other information regarding issuers that file electronically with the SEC.

        Following the Effective Date, we will also make available, free of charge, at our principal internet address (www.stationcasinos.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Chapter 11 Reorganization

        Station is a gaming and entertainment company that currently owns and operates ten major hotel/casino properties (two of which are 50% owned) under the Station and Fiesta brand names and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area. Station owns and operates Palace Station Hotel & Casino ("Palace Station"), Boulder Station Hotel & Casino ("Boulder Station"), Texas Station Gambling Hall & Hotel ("Texas Station"), Sunset Station Hotel & Casino ("Sunset Station"), Santa Fe Station Hotel & Casino ("Santa Fe Station"), Red Rock Casino Resort Spa ("Red Rock"), Fiesta Rancho Casino Hotel ("Fiesta Rancho"), Fiesta Henderson Casino Hotel ("Fiesta Henderson"), Wild Wild West Gambling Hall & Hotel ("Wild Wild West"), Wildfire Casino—Rancho ("Wildfire Rancho"), Wildfire Casino—Boulder ("Wildfire Boulder"), Gold Rush Casino ("Gold Rush") and Lake Mead Casino. Station also owns a 50% interest in Green Valley Ranch

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Resort Spa Casino ("Green Valley Ranch"), Aliante Station Casino + Hotel ("Aliante Station"), Barley's Casino & Brewing Company ("Barley's"), The Greens Gaming and Dining ("The Greens") and Wildfire Lanes and Casino ("Wildfire Lanes"). Station also manages Gun Lake Casino.

        On November 7, 2007, STN completed a going private transaction that was sponsored by Frank J. Fertitta III and Lorenzo J. Fertitta and certain affiliates of Colony Capital, LLC ("Colony") (such going private transaction is referred to herein as, the "Merger"). In connection with the Merger, STN's subsidiary, FCP PropCo, LLC ("Propco"), and certain other subsidiaries of STN that directly or indirectly own interests in Propco (the "Propco Debtors") entered into a mortgage loan and related mezzanine financings in an aggregate principal amount of $2.475 billion (the "CMBS Loans"). The CMBS Loans were secured by substantially all fee and leasehold real property comprising Palace Station, Boulder Station, Sunset Station and Red Rock (collectively, the "Propco Properties"). In addition, STN, as borrower, entered into a $900 million senior secured credit agreement (the "Credit Agreement") which was secured by substantially all of the assets of STN and its subsidiaries, other than Propco and the Propco Debtors. STN's $450 million 6% senior notes due April 1, 2012, $400 million 7³/4% senior notes due August 15, 2016, $450 million 6¹/2% senior subordinated notes due February 1, 2014, $700 million 6⁷/8% senior subordinated notes due March 1, 2016 and $300 million 6⁵/8% senior subordinated notes due March 15, 2018 (collectively, "Senior and Senior Subordinated Notes") remained outstanding following consummation of the Merger. On February 7, 2008, a wholly owned, indirect subsidiary of STN ("Landco"), as borrower, entered into a $250 million delay-draw term loan collateralized by land located on the southern end of Las Vegas Boulevard at Cactus Avenue and land surrounding Wild Wild West in Las Vegas, Nevada (the "Land Loan").

        The Merger and related transactions left Station highly leveraged. Shortly thereafter, the economy in the United States sharply declined, consumer spending deteriorated and the credit markets severely contracted. Foreclosure and unemployment rates in Nevada sharply increased, becoming among the highest in the United States, and many planned construction projects for new casinos in Nevada were delayed or cancelled, causing further deterioration of the Las Vegas economy and reduced discretionary consumer spending by Las Vegas residents. Station was severely impacted by the economic downturn due to the fact all of its owned casinos are located in Las Vegas and its properties have historically attracted customers from the Las Vegas valley. In addition, the value of real estate in Nevada significantly eroded as a result of the deterioration of the economy.

        Due to the economic conditions following the Merger, including the credit crisis and a decrease in consumer confidence levels, Station experienced a significant reduction in revenues. Although Station engaged in cost reductions, reductions in workforce and other efforts to mitigate the impact of the decline in revenues, the results of operations of Station were materially and adversely impacted by the economic downturn and its ability to service its debt obligations was impaired. In addition, the decline in real estate values in Nevada adversely affected the value of Station's assets. The resulting deterioration of Station's results of operations and asset values, coupled with Station's high leverage and the general unavailability of credit, negatively impacted Station's ability to service its outstanding indebtedness or otherwise raise capital for restructuring.

        As a result, on July 28, 2009 (the "Petition Date"), STN, FCP MezzCo Parent, LLC, FCP MezzCo Parent Sub, LLC, FCP MezzCo Borrower VII, LLC, FCP MezzCo Borrower VI, LLC, FCP MezzCo Borrower V, LLC, FCP MezzCo Borrower IV, LLC, FCP MezzCo Borrower III, LLC, FCP MezzCo Borrower II, LLC, FCP MezzCo Borrower I, LLC, FCP PropCo, LLC, Northern NV Acquisitions, LLC, Tropicana Station, LLC, River Central, LLC and Reno Land Holdings, LLC and affiliates FCP Holding Inc., FCP VoteCo, LLC, Fertitta Partners, LLC (collectively, the "Debtors") filed voluntary petitions in the United States Bankruptcy Court for the District of Nevada in Reno, Nevada (the "Bankruptcy Court") under Chapter 11 of the Bankruptcy Code. These cases are being jointly administered under the caption In re Station Casinos, Inc., et al Debtors Case No. 09-52470 (the "Chapter 11 Case").

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Restructuring Transactions

        On August 27, 2010, the Bankruptcy Court entered an order confirming the Debtors joint plan of reorganization (the "Plan"). Under the Plan, the Company, as designee of German American Capital Corporation and JP Morgan Chase Bank, N.A., as holders of $1.8 billion in CMBS Loans (the "Mortgage Lenders"), is expected to acquire the Propco Properties and certain related assets in satisfaction of the Mortgage Lenders' existing secured claims against Propco. In conjunction with these transfers to the Company, under the Plan: (i) our Voting Units are expected to be issued to Station Voteco, which is expected to be owned by (a) Robert A. Cashell Jr. and Stephen J. Greathouse, who are expected to be designated by the Mortgage Lenders as members of our Board of Managers and owners of Station Voteco, and (b) an entity owned by Frank J. Fertitta III, our Chief Executive Officer, President and a member of our Board of Managers, and Lorenzo J. Fertitta, a member of our Board of Managers, (ii) our Non-Voting Units are expected to be issued to Station Holdco, which is expected to be owned by the Mortgage Lenders, FI Station Investor LLC, a newly formed limited liability company owned by affiliates of Frank J. Fertitta III and Lorenzo J. Fertitta ("FI Station Investor"), and the holders of the Senior and Senior Subordinated Notes; and (iii) the Company is expected to enter into a new credit agreement (the "Propco Credit Agreement") with the Mortgage Lenders consisting of a term loan facility in the principal amount of $1.6 billion and a revolving credit facility in the amount of $100 million, which revolving credit facility will increase to $150 million upon the prepayment of $50 million of outstanding principal amount under the term loan (the transactions described in clauses (i) through (iii) collectively referred to herein as, the "Propco Restructuring").

        In addition, Station Holdco will issue two classes of warrants to the Mortgage Lenders permitting the Mortgage Lenders to purchase a total of 5% of the non-voting equity of Station Holdco at exercise prices based upon a multiple of the share value of Station Holdco on the Effective Date (the "Mortgage Lender Warrants"). The Mortgage Lenders will sell to FI Station Investor one of the classes of warrants with the right to purchase up to 2.5% of the non-voting equity (the "Fertitta Warrants") and will transfer the remaining 2.5% of the Mortgage Lender Warrants to holders of the mezzanine portion of the CMBS Loans. On or about the Effective Date, FI Station Investor is expected to assign the Fertitta Warrants to an affiliate of Colony. The Mortgage Lender Warrants will have a per unit exercise price equal to two and one-half times the value of the Non-Voting Units on the Effective Date (as defined below) that will increase by 15% on each of the third through seventh anniversaries of the Effective Date. The Fertitta Warrants will have a per unit exercise price equal to three times the value of the Non-Voting Units on the Effective Date that will increase by 15% on each of the third through seventh anniversaries of the Effective Date. For purposes of determining the exercise price of the Mortgage Lender Warrants and the Fertitta Warrants, the per unit value of the Non-Voting Units will be determined based on a total equity value of Station Holdco equal to $200 million, plus the amount of any additional equity issued or capital contributions made as of the Effective Date, plus the amount of any reduction in the debt agreed to by the Mortgage Lenders in exchange for Station Holdco equity (the "Plan Value"). The Mortgage Lender Warrants and the Fertitta Warrants may only be exercised following the earlier of (i) the six and one-half year anniversary of the Effective Date and (ii) the occurrence of a capital raising transaction by Station Holdco that involves a determination of the equity value of Station Holdco (other than the transactions contemplated by the Plan) which expire on the seventh anniversary of the Effective Date.

        In addition, pursuant to the terms of the Plan, STN and certain of its subsidiaries have entered into an Asset Purchase Agreement dated as of June 7, 2010, as amended (the "Asset Purchase Agreement") with FG Opco Acquisitions LLC, an entity that is currently owned in whole or in part by Fertitta Entertainment LLC, which is owned by affiliates of Frank J. Fertitta III and Lorenzo J. Fertitta ("Fertitta Entertainment"), and the Mortgage Lenders and will be owned by the Company upon consummation of the transactions contemplated by the Asset Purchase Agreement (the "Opco Purchaser"). Pursuant to the terms of the Asset Purchase Agreement, the Opco Purchaser will acquire substantially all of the assets of STN and certain of its subsidiaries, including Santa Fe Station, Texas Station, Fiesta Henderson, Fiesta Rancho and interests in certain Native American gaming projects (the "Opco Assets"), for a purchase

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price of $772 million, consisting of the following: (i) an amount in cash equal to $317 million, subject to adjustment pursuant to the terms of the Asset Purchase Agreement; and (ii) $455 million in aggregate principal amount of term loans, subject to adjustment pursuant to the terms of the Asset Purchase Agreement (together with a $25 million revolving credit facility, the "Opco Credit Agreement") (the transactions described in this paragraph, collectively referred to herein as the "Opco Acquisition"). The lenders under the Opco Credit Agreement will be the same lenders as under STN's existing Credit Agreement.

        Pursuant to the terms of the Plan, the proceeds of the sale of the Opco Assets will be distributed to secured creditors of STN in full satisfaction of their claims against Station. The Plan also provides that certain general unsecured creditors of STN ("Opco Unsecured Creditors") will receive warrants (the "Unsecured Creditor Warrants") exercisable for 2.5% of the total equity of Station Holdco. The Unsecured Creditor Warrants will have a per unit exercise price equal to two and one-half times the value of the Non-Voting Units on the Effective Date that will increase by 15% on each of the third through seventh anniversaries of the Effective Date. For purposes of determining the exercise price of the Unsecured Creditor Warrants, the per unit value of the Non-Voting Units will be determined based on the Plan Value. The Unsecured Creditor Warrants may only be exercised following the earlier of (i) the six and one-half year anniversary of the Effective Date and (ii) the occurrence of a capital raising transaction by Station Holdco that involves a determination of the equity value of Station Holdco (other than the transactions contemplated by the Plan), which expire on the seventh anniversary of the Effective Date.

        In addition, Opco Unsecured Creditors that are "accredited investors" (as defined in the Securities Act of 1933, as amended) will have an opportunity to participate in a rights offering ("Rights Offering") under which they may subscribe for and purchase their pro rata share of 15% of the equity interests of Station Holdco for an aggregate amount of $35.3 million. The Rights Offering may be increased to fund (i) the payment of $50 million pay-down under the Propco Credit Agreement, (ii) a portion of the Opco Acquisition and (iii) the acquisition of Green Valley Ranch, Aliante Station, or any other material gaming operations located with a 100-mile radius of Las Vegas, provided that the aggregate purchase price payable for additional units so offered in the Rights Offering will not exceed $64.7 million. Certain affiliates of Fidelity Management & Research Company, Oaktree Capital Management, L.P. and Serengeti Asset Management, LP (the "Put Parties") will purchase at least one-half of the equity interests of Station Holdco offered pursuant to the Rights Offering and have committed to purchase the remainder of the equity interests of Station Holdco offered pursuant to the Rights Offering on or before June 30, 2011, to the extent that such equity interests are not purchased by other Opco Unsecured Creditors (the "Equity Put"). In consideration for their agreement to purchase equity interests that are not purchased by other Opco Unsecured Creditors, the Put Parties will receive a $3 million cash payment on the Effective Date and reimbursement of expenses in an amount of up to $1.7 million.

        Claimants with respect to the Land Loan are expected to enter into an amended and restated credit agreement related to the Land Loan (the "Restructured Land Loan"). Pursuant to the terms of the Restructured Land Loan, the principal outstanding is expected to be reduced to $105 million in exchange for warrants to purchase 60% of the outstanding equity interests in Landco exercisable for nominal consideration (the "Landco Warrants" and together with the Mortgage Lender Warrants, the Fertitta Warrants and the Unsecured Creditor Warrants, the "Warrants").

        On March 9, 2011, Station GVR Acquisition, LLC (the "GVR Purchaser"), an indirect subsidiary of the Company, and GVR, owner of Green Valley Ranch, entered into an Asset Purchase Agreement (the "GVR Asset Purchase Agreement") pursuant to which, the GVR Purchaser will purchase substantially all of the assets and assume certain specified liabilities of GVR for a purchase price of approximately $500 million (the "GVR Acquisition"), consisting of the following: (i) an amount in cash equal to $225 million and (ii) $275 million in aggregate principal amount of term loans (the "GVR Term Loan"). The GVR Asset Purchase Agreement contemplates that GVR will file voluntary petitions for relief under chapter 11 of the Bankruptcy Code and that such acquisition will be pursuant to, among other things,

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Sections 363 and 365 of the Bankruptcy Code and as part of a pre-packaged chapter 11 plan of reorganization of GVR. The GVR Asset Purchase Agreement is subject to, among other things, the bankruptcy court entering a confirmation order confirming the chapter 11 plan of reorganization of GVR.

        On March 22, 2011, the subsidiaries of STN that are sellers under the Asset Purchase Agreement and Station's 50%-owned joint ventures GVR and Aliante Gaming, LLC ("Aliante"), commenced a solicitation of approvals for a prepackaged plan of reorganization (the "Subsidiary Plan") to implement and facilitate the sale and related restructuring transactions described in the Asset Purchase Agreement, the GVR Asset Purchase Agreement and a reorganization of Aliante pursuant to which its lenders would receive the equity of Aliante in exchange for their claims. We expect that the Chapter 11 cases for such subsidiaries (the "Subsidiary Chapter 11 Cases") will be filed in the second quarter of 2011.

        The chart that follows below summarizes the Company's corporate structure and material debt facilities after giving effect to the Restructuring Transactions. In order to simplify the presentation, not all entities expected to make up the enterprise are depicted in the chart below.

(1)

Borrower under the Propco Credit Agreement.

(2)

Borrower under the Restructured Land Loan.

(3)

Borrower under the Opco Credit Agreement.

(4)

Borrower under the GVR Term Loan.

        Following consummation of the Plan and the GVR Acquisition it is expected that the Company and its subsidiaries will enter into long-term management contracts with affiliates of Fertitta Entertainment to manage the Propco Properties, the Opco Assets and Green Valley Ranch (the "Management Agreements"). The Propco Restructuring, the Opco Acquisition, the GVR Acquisition, the issuance of the Warrants, the Rights Offering, the Equity Put, entry into the Management Agreements and the Restructured Land Loan are referred to herein collectively as the "Restructuring Transactions."

        Although the Plan was confirmed by the Bankruptcy Court on August 27, 2010, consummation of the Plan is subject to the satisfaction of certain conditions precedent, including among other things, (i) the Bankruptcy Court shall have authorized the assumption and rejection of certain contracts of the Debtors,

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(ii) all documents necessary to implement the Restructuring Transactions contemplated by the Plan, including but not limited to the equityholders agreement to be entered into upon emergence from bankruptcy among the Company, its equityholders and its subsidiaries (the "Equityholders Agreement"), the Opco Credit Agreement, the Propco Credit Agreement, the Restructured Land Loan and the Warrants, shall be in form and substance reasonably acceptable to the Debtors, and (iii) all necessary regulatory approvals, including but not limited to necessary approvals of the Nevada Gaming Authorities (as defined herein), will have been obtained (the date upon which the actions described in clauses (i) through (iii) are completed is referred to herein as the "Effective Date"). The Company currently expects that the Effective Date will occur by June 30, 2011, although the Company cannot assure you that the required regulatory approvals will be obtained, that conditions to consummation of the Plan will be satisfied by that date, or at all, or that Station will be successful in implementing the Plan in the form contemplated, or at all. In addition, the Subsidiary Chapter 11 Cases will need to be filed in the Bankruptcy Court for the purposes of effectuating the sale or transfer of all or a portion of their assets pursuant to the Plan.

        This report is not intended to be, and should not in any way be construed as, a solicitation of votes on the Subsidiary Plan. There can be no assurance that a sufficient percentage or number of lenders will accept the Subsidiary Plan or that the Bankruptcy Court will confirm such plan. In addition, if the Subsidiary Plan is not accepted, confirmed or consummated, there can be no assurance that the Company will be able to successfully develop, prosecute, confirm and consummate a plan of reorganization that is acceptable to the Bankruptcy Court and to the creditors, equity holders and other parties in interest of GVR and Aliante.

        Following the consummation of the Plan, STN and certain of the other Debtors will be dissolved and, except to the extent set forth in the Plan, none of the Company, Fertitta Entertainment, FI Station Investor nor any of their respective affiliates will succeed to the assets or liabilities of STN or the other Debtors.

Narrative Description of Business

        Each of Station's properties caters primarily to local Las Vegas area residents. We intend to market the seven "Station" casinos (including Red Rock and Green Valley Ranch) together under the Station Casinos' brand and the two "Fiesta" casinos under the Fiesta brand, offering convenience and choices to residents throughout the Las Vegas valley with our strategically located properties.

Operating Strategy

        Station's operating strategy emphasizes attracting and retaining customers primarily from the local and repeat visitor markets and we intend to keep this operating strategy. Station's properties attract customers through:

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innovative, frequent and high-profile promotional programs directed towards the local market;



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focused marketing efforts and convenient locations;



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aggressive marketing to the repeat visitor market; and



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the development of strong relationships with specifically targeted travel wholesalers in addition to convention business at both Green Valley Ranch and Red Rock.

        Although perceived value will initially attract a customer to the Station properties, actual value generates customer satisfaction and loyalty. Station believes that actual value becomes apparent during the customer's visit through an enjoyable, affordable and high-quality entertainment experience. Las Vegas, which has been one of the fastest growing cities in the United States, is characterized by a historically strong economy and demographics, which include an increasing number of retirees and other active gaming customers; however, the city continues to be adversely affected by the national economic downturn. The current recession has had an adverse impact on the growth and economy of Las Vegas, resulting in significant declines in the local housing market and rising unemployment which has negatively affected consumer spending and customer visits to Station's properties.

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        Station believes that its out-of-town patrons are also discerning customers who enjoy a value oriented, high-quality approach. Station believes that its patrons view its hotel and casino product as a preferable alternative to attractions located on the Las Vegas Strip and downtown Las Vegas.

Provide a High-Value Experience

        Because Station targets the repeat customer, Station is committed to providing a high-value entertainment experience for its customers in the restaurants, hotels, casinos and other entertainment amenities. Station has developed regional entertainment destinations for locals that include other amenities such as spas, movie theaters, bowling centers, ice skating, live entertainment venues and child care facilities. In addition, Station believes the value offered by restaurants at each of its casino properties is a major factor in attracting local gaming customers, as dining is a primary motivation for casino visits by many locals. Through their restaurants, each of which has a distinct style of cuisine, the casino properties offer generous portions of high-quality food at reasonable prices. In addition, Station's operating strategy focuses on slot and video poker machine play. Station's target market consists of frequent gaming patrons who seek a friendly atmosphere and convenience. Because locals and repeat visitors demand variety and quality in their slot and video poker machine play, Station offers the latest in slot and video poker technology at its casino properties.

        As part of Station's commitment to providing a quality entertainment experience for its patrons, Station is dedicated to ensuring a high level of customer satisfaction and loyalty by providing attentive customer service in a friendly, casual atmosphere. Station recognizes that consistent quality and a comfortable atmosphere stem from the collective care and friendliness of each employee. Station began as a family-run business and has maintained close-knit relationships amongst its management and endeavors to instill among its employees this same sense of loyalty. Toward this end, Station takes a hands-on approach through active and direct involvement with employees at all levels.

Marketing and Promotion

        Station employs an innovative marketing strategy that utilizes frequent high-profile promotional programs in order to attract customers and establish a high level of name recognition. In addition to aggressive marketing through television, radio and newspaper advertising, Station has created and sponsored promotions that have become a tradition in the locals' market.

        In 1999, Station introduced a unified Boarding Pass player rewards program at its Station properties. The Boarding Pass program allows guests to earn points based on their level of gaming activity. The Fiesta properties offer a similar player rewards program called the Amigo Club. Members of the Boarding Pass and the Amigo Club can redeem points at any of the properties for free slot play, meals in any of the restaurants, hotel rooms, movie passes, entertainment tickets or merchandise from its gift shops.

        Station is heavily focused on using cutting-edge technology to drive customer traffic with products created by Station such as its Jumbo Brand products, which include "Jumbo Pennies," "Jumbo Bingo," "Jumbo Keno" and "Jumbo Hold'Em." Other products also include "Xtra Play Cash" and "Sports Connection," among others. Station believes that these products create sustainable competitive advantages and will continue to distinguish it from its competition.

Growth Strategy

        Due to the current state of the Las Vegas economy, Station has no short-term expansion plans but may pursue acquisitions. Station's long-term growth strategy includes the master-planned expansions of its existing gaming facilities in Nevada, the development of gaming facilities on certain real estate it owns or is under contract to acquire in the Las Vegas valley and Reno, Nevada, the evaluation and pursuit of additional acquisition or development opportunities in Nevada and other gaming markets and the pursuit of additional management agreements with Native American tribes.

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Properties

        Set forth below is certain information as of December 31, 2010 concerning the properties we will acquire (the "Acquired Casinos") through the Restructuring Transactions. The Acquired Casinos are more fully described following the table.

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(1)

For the year ended December 31, 2010, room occupancy for the hotel operations of the Acquired Casinos was 81%, the average daily room rate was $71, and revenue per available room was $58.

(2)

Includes slot and video poker machines and other coin-operated devices.

(3)

Generally includes blackjack ("21"), craps, roulette, pai gow poker, mini baccarat, let it ride, three-card poker, Texas hold'em and wild hold'em. The Casino Properties also offer a keno lounge with the exception of Green Valley Ranch, a bingo parlor with the exception of Green Valley Ranch and a race and sports book. The Other Properties offer a sports book with the exception of Lake Mead Casino and The Greens.

(4)

Includes covered parking spaces of 1,900 for Palace Station, 1,900 for Boulder Station, 3,500 for Texas Station, 2,900 for Sunset Station, 4,500 for Santa Fe Station, 5,100 for Red Rock, 2,700 for Green Valley Ranch, 1,000 for Fiesta Rancho and 1,100 for Fiesta Henderson.

Casino Properties

Palace Station

        Palace Station is strategically located at the intersection of Sahara Avenue and Interstate 15, one of Las Vegas' most heavily traveled areas. Palace Station is a short distance from McCarran International Airport and from major attractions on the Las Vegas Strip and downtown Las Vegas. Palace Station features a turn-of-the-20th-century railroad station theme with non-gaming amenities including newly remodeled hotel rooms, seven full-service restaurants, a 275-seat entertainment lounge, four additional bars, two swimming pools, an approximately 20,000-square-foot banquet and convention center, a gift shop and a non-gaming video arcade.

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        Palace Station's seven full-service restaurants have a total of approximately 1,300 seats. These restaurants offer a variety of high-quality food at reasonable prices, including the Grand Café, Feast Buffet, The Broiler Steaks and Seafood, Pasta Palace (an Italian restaurant), Cabo Mexican Restaurant, an 18-seat Oyster Bar and Food Express Chinese Restaurant. In addition to these restaurants, Palace Station offers various fast-food outlets and the Louie Anderson Theater featuring Bonkers Comedy Club.

Boulder Station

        Boulder Station, which opened in August 1994, is strategically located on Boulder Highway, immediately adjacent to the Interstate 515 interchange. Station believes that this highly visible location at this well-traveled intersection offers a competitive advantage relative to existing hotels and casinos located on Boulder Highway. Boulder Station is located approximately four miles east of the Las Vegas Strip and approximately four miles southeast of downtown Las Vegas. Boulder Station features a turn-of-the-20th-century railroad station theme with non-gaming amenities including five full-service restaurants, a 750-seat entertainment lounge, six additional bars, an 11-screen movie theater complex, a Kid's Quest child care facility, a swimming pool, a non-gaming video arcade and a gift shop.

        Boulder Station's five full-service restaurants have a total of over 1,400 seats. These restaurants offer a variety of high-quality meals at reasonable prices, including the Grand Café, Feast Buffet, The Broiler Steaks and Seafood, Pasta Palace (an Italian restaurant) and Guadalajara Bar & Grille (a Mexican restaurant). In addition to these restaurants, Boulder Station offers various fast-food outlets.

Texas Station

        Texas Station, which opened in July 1995, is strategically located at the corner of Lake Mead Boulevard and Rancho Drive in North Las Vegas. Texas Station features a friendly Texas atmosphere, highlighted by distinctive early Texas architecture with non-gaming amenities including five full-service restaurants, a Kid's Quest child care facility, a 300-seat entertainment lounge, a 1,700-seat event center, eight additional bars, an 18-screen movie theater complex, a swimming pool, a non-gaming video arcade, a gift shop, a 60-lane bowling center and approximately 40,000 square feet of meeting and banquet space.

        Texas Station's five full-service restaurants have a total of approximately 1,200 seats. These restaurants offer a variety of high-quality food at reasonable prices, including Coco's Bakery & Restaurant, Austins Steakhouse, San Lorenzo (an Italian restaurant), Feast Buffet (featuring seven different food stations) and Texas Star Oyster Bar, which has 110 seats. In addition to the Texas Station-themed restaurants, guests may also enjoy the unique features of several bars and lounges including Martini Ranch, Whiskey Bar, Garage Bar, A Bar and South Padre Honky Tonk. Texas Station also offers a variety of fast-food outlets to enhance the customers' dining selection.

Sunset Station

        Sunset Station, which opened in June 1997, is strategically located at the intersection of Interstate 515 and Sunset Road. Multiple access points provide customers convenient access to the gaming complex and parking areas. Situated in a highly concentrated commercial corridor along Interstate 515, Sunset Station has prominent visibility from the freeway and the Sunset commercial corridor. Sunset Station is located approximately nine miles east of McCarran International Airport and approximately seven miles southeast of Boulder Station. Sunset Station features a Spanish/Mediterranean-style theme with non-gaming amenities including seven full-service restaurants themed to capitalize on the familiarity of the restaurants at Station's other properties, a 520-seat entertainment lounge, a 4,000-seat outdoor amphitheater, eight additional bars, a gift shop, a non-gaming video arcade, a 13-screen movie theater complex, a 72-lane bowling center, a Kid's Quest child care facility and a swimming pool.

        Sunset Station's seven full-service restaurants have a total of approximately 2,100 seats featuring "live-action" cooking and simulated patio dining. These restaurant facilities offer a variety of high-quality

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food at reasonable prices, including the Grand Café, Sonoma Cellar Steakhouse, Capri Italian Ristorante, Guadalajara Bar & Grille (a Mexican restaurant), Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine, Hooter's and a 65-seat Oyster Bar. Guests may also enjoy the Gaudi Bar, a centerpiece of the casino featuring over 8,000 square feet of stained glass. Sunset Station also offers a variety of fast-food outlets to enhance the customers' dining selection.

Santa Fe Station

        In October 2000, Station purchased Santa Fe Station which is strategically located at the intersection of Highway 95 and Rancho Drive, approximately five miles northwest of Texas Station. Santa Fe Station features non-gaming amenities including four full-service restaurants, a gift shop, a non-gaming video arcade, a swimming pool, a 500-seat entertainment lounge, seven additional bars, a 60-lane bowling center, a 16-screen movie theater complex, a Kid's Quest child care facility and over 14,000 square feet of meeting and banquet facilities.

        Santa Fe Station's four full-service restaurants have a total of approximately 1,000 seats, which include The Charcoal Room (a steakhouse), Cabo Mexican Restaurant, a 24-hour cafe and the Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine. Guests may also enjoy Revolver Saloon and Dance Hall or 4949 Lounge, a centerpiece of the casino. Santa Fe Station also offers a variety of fast-food outlets to enhance the customers' dining selection.

Red Rock

        Red Rock, which opened in April 2006, is strategically located on Charleston Boulevard at the Interstate 215/Charleston interchange in the Summerlin master-planned community in Las Vegas, Nevada. Red Rock features an elegant desert oasis theme with a contemporary design, offering 815 hotel rooms featuring ultra-modern design filled with the most up-to-date luxury amenities. In addition to its standard guestrooms, the hotel offers six styles of suites, including one-of-a-kind custom villas and penthouse suites. Additional non-gaming amenities include nine full-service restaurants, a 16-screen movie theater complex, 94,000 square feet of meeting and convention space, a full-service spa, a 72-lane bowling center and a Kid's Quest child care facility.

        Red Rock's nine full-service restaurants have a total of approximately 1,600 seats and include Hachi (a contemporary Japanese restaurant), T-bones Chophouse, Terra Rossa (an Italian restaurant), Cabo Mexican Restaurant, the Grand Café, Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine, Sand Bar, Yard House and LBS: A Burger Joint (a gourmet burger restaurant). In addition, Red Rock features numerous bars and lounges including Rocks Lounge offering free live entertainment, Onyx Bar, Sand Bar and Lucky Bar. Red Rock also offers a variety of fast-food outlets to enhance the customers' dining selection.

Green Valley Ranch

        Green Valley Ranch, which opened in December 2001, is strategically located at the intersection of Interstate 215 and Green Valley Parkway in Henderson, Nevada. Green Valley Ranch is approximately five minutes from McCarran International Airport and seven minutes from the Las Vegas Strip. Green Valley Ranch was designed to complement the Green Valley master-planned community. The AAA Four Diamond resort features a Mediterranean-style villa theme with non-gaming amenities including eight full-service restaurants, a 4,200-square-foot non-gaming arcade, a state-of-the-art spa with outdoor pools, a 10-screen movie theater complex, two gift shops, approximately 65,000 square feet of meeting and convention space and an entertainment lounge. Green Valley Ranch also offers an 8-acre complex featuring private poolside cabanas, a contemporary poolside bar and grill, one and a half acres of vineyards and an outdoor performance venue.

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        Green Valley Ranch's eight full-service restaurants include the China Spice (a Chinese restaurant), Sushi+Sake, Terra Verde (an Italian restaurant), Hank's Fine Steaks and Martinis, The Original Pancake House, Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine, Tides Oyster Bar and Turf Grill. Green Valley Ranch also offers a variety of fast-food outlets to enhance the customers' dining selection. Guests may also enjoy the Drop Bar, a centerpiece of the casino, The Lobby Bar, which is open to the hotel entrance and the pool area, and Ovation, an entertainment lounge.

Fiesta Rancho

        Fiesta Rancho was purchased by Station in January 2001 and is strategically located at the intersection of Lake Mead Boulevard and Rancho Drive in North Las Vegas across from Texas Station. Fiesta Rancho features a Southwestern theme with non-gaming amenities including three full-service restaurants, a gift shop, a non-gaming video arcade, a swimming pool, a 600-seat entertainment lounge, a regulation-size ice skating rink and three additional bars.

        Fiesta Rancho's three full-service restaurants have a total of over 870 seats, and include a 24-hour Denny's Restaurant, Garduno's (a Mexican restaurant), and Festival Buffet. Fiesta Rancho also offers a variety of fast-food outlets to enhance the customers' dining selection.

Fiesta Henderson

        Fiesta Henderson was purchased by Station in January 2001 and is strategically located at the intersection of Interstate 215 and Interstate 515 in Henderson, Nevada. The property features four full-service restaurants, a 12-screen movie theater complex, a gift shop, a swimming pool, three bars and lounges and meeting space.

        Fiesta Henderson's four full-service restaurants have a total of approximately 1,100 seats, and include a 24-hour Denny's Restaurant, Fuego Steakhouse, Amigo's Mexican Cantina and Festival Buffet. Fiesta Henderson also offers a variety of fast-food outlets to enhance the customers' dining selection.

Other Properties

Wildfire Rancho

        In January 2003, Station purchased Wildfire Rancho located on Rancho Drive across from Texas Station. Wildfire Rancho's non-gaming amenities include a lounge, outdoor patio and a full-service restaurant.

Wildfire Boulder & Gold Rush

        In August 2004, Station purchased Wildfire Boulder (formerly known as Magic Star) and Gold Rush. Wildfire Boulder is located on Boulder Highway in Henderson, Nevada. Gold Rush is located at the intersection of Interstate 515 and Sunset Road, adjacent to Sunset Station in Henderson, Nevada. Both properties offer non-gaming amenities which include a full-service restaurant and a bar.

Lake Mead Casino

        In September 2006, Station purchased Lake Mead Casino located in Henderson, Nevada. Lake Mead Casino's non-gaming amenities include a full-service restaurant and bar.

Barley's, The Greens and Wildfire Lanes

        Barley's, which opened in January 1996, is a casino and brew pub located in Henderson, Nevada. Barley's non-gaming amenities include a full-service restaurant, a pizza kitchen and a bar. In November 2005, Station purchased a 50% interest in The Greens, a restaurant and lounge, located in Henderson,

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Nevada. The Greens' non-gaming amenities include a full-service restaurant and bar. In October 2007, Station purchased a 50% interest in Wildfire Lanes (formerly known as Renata's) located in Henderson, Nevada. Wildfire Lanes' non-gaming amenities include a full-service restaurant, a bar and an 18-lane bowling center. Station is the managing partner for Barley's, The Greens and Wildfire Lanes and receives a management fee equal to approximately 10% of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA").

Managed Properties

Gun Lake Casino

        Station manages the Gun Lake Casino in Allegan County, Michigan, which opened in February 2011, on behalf of the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians of Michigan, a federally recognized Native American tribe commonly referred to as the Gun Lake Tribe.

        On November 13, 2003, Station agreed to purchase a 50% interest in MPM Enterprises, LLC, a Michigan limited liability company ("MPM"). MPM has entered into development and management agreements with the Gun Lake Tribe, pursuant to which MPM agreed to assist the tribe in developing and operating a gaming and entertainment project to be located in Allegan County, Michigan. Gun Lake Casino, is located on approximately 147 acres on U.S. Highway 131 and 129th Avenue, approximately 25 miles south of Grand Rapids, Michigan and 27 miles north of Kalamazoo, Michigan, and includes approximately 1,400 slot machines, 28 table games and various dining options.

        The Sixth Amended and Restated Management Agreement (the "Gun Lake Management Agreement") has a term of seven years from the opening of the facility and provides for a management fee of 30% of the project's net income to be paid to MPM. Pursuant to the terms of the MPM operating agreement, Station's, or the Company's as successor to Station, portion of the management fee is 50% of the first $24 million of management fees earned, 83% of the next $24 million of management fees and 93% of any management fees in excess of $48 million.

Expansion Strategy

Selection Criteria

        Station believes that a highly visible location, convenient access and ample parking are critical factors in attracting local patronage and repeat visitors. Additionally, sites must be large enough to support multi-phased, master-planned growth to capitalize on growing demand in incremental stages. Station selects sites that are located within a dense population base which generally are adjacent to high-traffic surface streets and interstate highways. Station believes that each of its casino properties' locations has provided it with a significant competitive advantage to attract its targeted customer base. In the Las Vegas metropolitan area, as a result of Senate Bill 208, there are a limited number of sites available for development off of "The Strip" or downtown and Station controls a number of these sites.

Master-Planned Development

        No master-planned development is currently contemplated, but a long-term master-planned expansion strategy would include the master-planned expansion of Station's existing and future gaming locations. In designing project sites, Station plans and engineers for multi-phased facility expansions to accommodate future growth which allows Station to develop dominant properties. A project's master-planned design typically allows the option of adding hotel rooms, casino space, parking structures and non-gaming entertainment such as movie theaters, additional restaurants, retail shops and various other entertainment venues.

        Station continually evaluates the timing and scope of its master-planned developments at each of its properties and may determine from time to time to expand the scope of, improve on or suspend the

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implementation of its master plans. These decisions are dependent upon the availability of financing, competition and future economic and gaming regulatory environments, many of which are beyond Station's control.

Development and Acquisition Opportunities

        Station has acquired several parcels of land in the Las Vegas valley, northern California and Reno, Nevada, which could be used for new casino development or other associated development. Station also evaluates other development and acquisition opportunities in current and emerging gaming markets, including land-based, dockside, riverboat and Native American gaming. The decision by Station whether to proceed with any new gaming development or acquisition opportunity is dependent upon future economic and regulatory factors, the availability of financing and competitive and strategic considerations, many of which are beyond its control.

Land Held for Development

        As of December 31, 2010, Station had land held for development consisting primarily of eleven sites that are owned or leased, which includes 368 acres in the Las Vegas valley, 772 acres in northern California and 200 acres in Reno, Nevada. The primary gaming-entitled land that Station owns in the Las Vegas valley consists of 77 acres of land (96 acres including those leased or under contract) on which the Wild Wild West is located and the surrounding area, 71 acres located at the intersection of Durango Road and the Southern Beltway/Interstate 215 in the southwest area of Las Vegas, 58 acres also located in southwest Las Vegas at the intersection of Town Center and Interstate 215, 45 acres in the master-planned community of Inspirada located in Henderson, Nevada, 58 acres located on the southern end of Las Vegas Boulevard at Cactus Avenue and 30 acres on Boulder Highway at the site formerly known as the Castaways Hotel Casino and Bowling Center.

        In December 2008, Station amended the lease and purchase agreement for the 19-acre parcel of land on which Wild Wild West is located. Under the amended agreement, Station has an option to purchase the land for a purchase price of $36 million. The amended lease also includes options to purchase the land in July 2023, 2044 and 2065 for a purchase price equal to fair market value as of July 2022, 2043 and 2064, respectively. No amounts related to these purchase options have been recorded on Station's consolidated balance sheets at December 31, 2010. In March 2011, Station was notified by the lessor that the lease had been terminated. We are currently in negotiations regarding possible modifications to this lease, however we can provide no assurance that we will be able to reach an agreement with the lessor.

Native American Development

The Federated Indians of Graton Rancheria

        Station has entered into development and management agreements with the Federated Indians of Graton Rancheria (the "FIGR"), a federally recognized Native American tribe. Pursuant to those agreements, Station, or the Company as successor to Station, will assist the FIGR in developing, financing and operating a gaming and entertainment project to be located near the City of Rohnert Park in Sonoma County, California.

        The management agreement has a term of seven years from the date of opening of the project and Station will receive a management fee equal to 24% of the facility's net income in years 1 through 4 and 27% of the facility's net income in years 5 through 7. Station will also receive a development fee equal to 2% of the cost of the project upon the opening of the project. The National Indian Gaming Commission (the "NIGC") has approved the management agreement for Class II gaming at the planned facility. Class II gaming includes games of chance such as bingo, pull-tabs, tip jars and punch boards (and electronic or computer-aided versions of such games), and non-banked card games. The FIGR and Station may also pursue approval of Class III gaming, which would permit casino-style gaming, at the planned

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facility. Class III gaming would require an approved compact with the State of California and approval by the NIGC of a modification to the existing management agreement, or a new management agreement, permitting Class III gaming.

        During 2010, the Bureau of Indian Affairs of the U.S. Department of the Interior (the "BIA") accepted approximately 254 acres of land owned by Station into trust on behalf of the FIGR for the development of the project by Station and the FIGR.

        The timing and feasibility of the project are dependent upon the receipt of the necessary governmental and regulatory approvals. Prior to obtaining third-party financing, Station will contribute significant financial support to the project, even though there can be no assurances as to when or if the necessary approvals will be obtained.

North Fork Rancheria of Mono Indian Tribe

        Station has entered into development and management agreements with the North Fork Rancheria of Mono Indians (the "Mono"), a federally recognized Native American tribe located near Fresno, California, pursuant to which, Station, or, following the Effective Date, the Company, will assist the Mono in developing, financing and operating a gaming and entertainment facility to be located in Madera County, California. The management agreement has a term of seven years from the opening of the facility and provides for a management fee of 24% of the facility's net income.

        In 2008, the Mono and the State of California entered into a tribal-state Class III gaming compact. The compact is subject to approval by the California Legislature and, if approved, will regulate gaming the Mono's proposed gaming and entertainment project to be developed on the site. No assurances can be provided as to whether the California Legislature will approve the compact.

        As currently contemplated, the facility will include slot machines, table games, restaurants, a hotel and entertainment amenities. Development of the project is subject to certain governmental and regulatory approvals, including, but not limited to, approval by the California Legislature of the gaming compact with the State of California, the DOI accepting the land into trust on behalf of the Mono and approval of the management agreement by the NIGC.

        The timing of this type of project is difficult to predict, and is dependent upon the receipt of the necessary governmental and regulatory approvals. Prior to obtaining third-party financing, Station, or the Company or its subsidiaries as successor to Station, will contribute significant financial support to the project, even though there can be no assurances as to when, or if, the necessary approvals will be obtained.

Mechoopda Indian Tribe

        Station has entered into development and management agreements with the Mechoopda Indian Tribe of Chico Rancheria, California (the "MITCR"), a federally recognized Native American tribe, pursuant to which, Station, or, following the Effective Date, the Company, will assist the MITCR in developing, financing and operating a gaming and entertainment facility to be located in Butte County, California. Under the terms of the development agreement, Station has advanced approximately $11.9 million toward the development of this project through December 31, 2010, which was expected to be repaid from the proceeds of the project financing or from the MITRC's gaming revenues. As a result of the continued economic downturn and thus the revised expected potential of the project, Station does not expect to proceed with the development of this project, and has written off the associated long-term asset.

Intellectual Property

        Station uses a variety of trade names, service marks, trademarks, patents and copyrights in its operations and believes that they have all the licenses necessary to conduct their continuing operations. Station has registered several service marks, trademarks, patents and copyrights with the United States

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Patent and Trademark Office or otherwise acquired the licenses to use those which are material to conduct their business. Station owns patents and patent applications with expiration dates ranging from 2018 to 2028 relating to technologies that allow Station to track the wagering activities and geographic location of its players. Station also owns patents relating to unique casino games. Station also files copyright applications to protect its creative artworks, which are often featured in property branding, as well as its distinctive website content. We will acquire all rights to Station intellectual property in the Restructuring Transactions.

Seasonality

        Station's cash flows from operating activities are seasonal in nature. Their operating results are traditionally the strongest in the first quarter and the fourth quarter, and traditionally the weakest during the third quarter.

Competition

        The Acquired Casinos face competition from all other casinos and hotels in the Las Vegas area, including to some degree, from each other. In addition, the Acquired Casinos face competition from all smaller non-restricted gaming locations and restricted gaming locations (locations with 15 or fewer slot machines) in the greater Las Vegas area. As of December 31 2010, there were approximately 1,400 restricted gaming locations with approximately 14,000 slot machines. The Acquired Casinos compete with other hotel/casinos and restricted gaming locations by focusing on repeat customers and attracting these customers through innovative marketing programs. The Acquired Casinos' value-oriented, high-quality approach is designed to generate repeat business. Additionally, the Acquired Casinos are strategically located and designed to permit convenient access and ample parking, which are critical factors in attracting local visitors and repeat patrons. Currently, there are approximately 38 major gaming properties located on or near the Las Vegas Strip, 16 located in the downtown area and several located in other areas of Las Vegas. Major additions, expansions or enhancements of existing properties or the construction of new properties by competitors, could also have a material adverse effect on the business of the Acquired Casinos.

        The Acquired Casinos also face competition from 159 non-restricted gaming locations in the Clark County area primarily targeted to the local and the repeat visitor markets. Some of these competitors have completed construction or expansions and other existing competitors have projects under construction. Although the Acquired Casinos have competed strongly in these marketplaces, there can be no assurance that additional capacity will not have a negative impact on our business.

        In 1997, the Nevada legislature enacted Senate Bill 208. This legislation identified certain gaming enterprise districts wherein casino gaming development would be permitted throughout the Las Vegas valley and established more restrictive criteria for the establishment of new gaming enterprise districts. Station believes the growth in gaming supply in the Las Vegas locals' market has been, and will continue to be, limited by the provisions of Senate Bill 208.

        To a lesser extent, the Acquired Casinos compete with gaming operations in other parts of the state of Nevada, such as Reno, Laughlin and Lake Tahoe, and other gaming markets throughout the United States and in other parts of the world, with state sponsored lotteries, on-and-off-track wagering on horse and other races, card rooms, online gaming and other forms of legalized gambling. The gaming industry also includes land-based casinos, dockside casinos, riverboat casinos, racetracks with slots and casinos located on Native American land. There is intense competition among companies in the gaming industry, some of which have significantly greater resources than we will. Several states are currently considering legalizing casino gaming in designated areas. Legalized casino gaming in such states and on Native American land will result in strong competition and could adversely affect our operations, particularly to the extent that such gaming is conducted in areas close to our operations.

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        Native American gaming in California, as it currently exists, has had little, if any impact on Station's Nevada operations to date, although there are no assurances as to future impact. In total, the State of California has signed and ratified Tribal-State Compacts with 67 Native American tribes. Currently there are 58 Native American casinos in operation in the State of California. These Native American tribes are allowed to operate slot machines, lottery games, and banking and percentage games (including "21") on Native American lands. A banking game is one in which players compete against the licensed gaming establishment rather than against one another. A percentage game is one in which the house does not directly participate in the game, but collects a percentage from it which may be computed from the amount of bets made, winnings collected, or the amount of money changing hands. It is not certain if any expansion of Native American gaming in California will affect our Nevada operations given that visitors from California make up Nevada's largest visitor market. Increased competition from Native American gaming may result in a decline in our revenues and may have a material adverse effect on our business.

Regulation and Licensing

Nevada Gaming Regulations

        The ownership and operation of casino gaming facilities and the manufacture and distribution of gaming devices in Nevada are subject to: (i) the Nevada Gaming Control Act and the rules and regulations promulgated thereunder (collectively, the "Nevada Act"); and (ii) various local ordinances and regulations. Our gaming operations in Nevada will be subject to the licensing and regulatory control of the Nevada Gaming Commission (the "Nevada Commission"), the Nevada State Gaming Control Board (the "Nevada Board"), the City of Las Vegas, the Clark County Liquor and Gaming Licensing Board (the "Clark County Board"), the City of North Las Vegas, the City of Henderson and certain other local regulatory agencies. The Nevada Commission, Nevada Board, City of Las Vegas, Clark County Board, City of North Las Vegas, City of Henderson, and certain other local regulatory agencies are collectively referred to as the "Nevada Gaming Authorities".

        The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things: (i) the prevention of unsavory or unsuitable persons from having a direct or indirect involvement with gaming at any time or in any capacity; (ii) the establishment and maintenance of responsible accounting practices and procedures; (iii) the maintenance of effective controls over the financial practices of licensees, including the establishment of minimum procedures for internal controls and the safeguarding of assets and revenues, providing reliable record keeping and requiring the filing of periodic reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and fraudulent practices; and (v) providing a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on our gaming operations.

        Our direct and indirect subsidiaries that will conduct gaming operations in Nevada are required to be licensed by the Nevada Gaming Authorities. The gaming licenses require the periodic payment of fees and taxes and are not transferable. NP Boulder LLC ("New Boulder"), NP Palace LLC ("New Palace"), NP Red Rock LLC ("New Red Rock"), NP Sunset LLC ("New Sunset"), NP Tropicana LLC ("New Tropicana"), NP Fiesta LLC ("New Fiesta"), NP Gold Rush LLC ("New Gold Rush"), NP Lake Mead LLC ("New Lake Mead"), NP LML LLC ("New LML"), NP Magic Star LLC ("New Magic Star"), NP Rancho LLC "New Rancho"), NP Santa Fe LLC ("New Santa Fe"), NP Texas LLC ("New Texas") and NP River Central LLC ("New River Central") have applied for licenses to conduct non-restricted gaming operations. Our ownership in New Tropicana will be held through NP Landco Holdco LLC, which has applied for registration as an intermediary company and for licensing as a member and manager of New Tropicana. Town Center Amusements, Inc., a Limited Liability Company ("TCAI") has been licensed to conduct non-restricted gaming operations at Barley's Casino & Brewing Company ("Barley's"), a micro brewery and casino located in Henderson, Nevada. Greens Café, LLC ("GC") has been licensed to conduct non-restricted gaming operations at The Greens, a restaurant and bar located in Henderson,

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Nevada and Sunset GV, LLC ("SGV") has been licensed to conduct non-restricted gaming operations at Wildfire Lanes, formerly Renata's Supper Club, a casino located in Henderson, Nevada. A license to conduct "non-restricted" operations is a license to conduct an operation of (i) at least 16 slot machines, (ii) any number of slot machines together with any other game, gaming device, race book or sports pool at one establishment, (iii) a slot machine route, (iv) an inter-casino linked system, or (v) a mobile gaming system. Our ownership in TCAI, GC and SGV will be held through an intermediary company known as NP Green Valley LLC ("New Green Valley"), which has applied for registration as an intermediary company and for licensing as a member and manager of TCAI, GC and SGV. We will also own a minority interest in Fiesta Palms, LLC, d.b.a. Palms Casino through Palms Station, LLC, which is registered with the Nevada Commission as an intermediary company.

        We have applied to the Nevada Gaming Authorities to be found suitable to own the equity interests in our licensed and registered subsidiaries and to be registered by the Nevada Commission as a publicly traded corporation for purposes of the Nevada Act (a "Registered Corporation"). Once we become a Registered Corporation, we will be required to periodically submit detailed financial and operating reports to the Nevada Commission and provide any other information that the Nevada Commission may require. Substantially all material loans, leases, sales of securities and similar financing transactions by us and our licensed or registered subsidiaries must be reported to or approved by the Nevada Commission and/or the Nevada Board.

        The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, a Registered Corporation or its licensed subsidiaries, in order to determine whether such individual is suitable or should be licensed as a business associate of a Registered Corporation or a gaming licensee. Officers, directors and certain key employees of our licensed subsidiaries must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. Our officers, directors and key employees who are actively and directly involved in gaming activities of our licensed subsidiaries may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause that they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and, in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in corporate position.

        If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue to have a relationship with us or our licensed subsidiaries, the companies involved would have to sever all relationships with such person. In addition, the Nevada Commission may require our licensed subsidiaries to terminate the employment of any person who refuses to file the appropriate applications. Determinations of suitability or questions pertaining to licensing are not subject to judicial review in Nevada.

        If it were determined that the Nevada Act was violated by a licensed subsidiary, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company, the licensed subsidiaries and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the discretion of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock, Fiesta Rancho, Fiesta Henderson, Wild Wild West, Wildfire Rancho, Barley's, Gold Rush, Wildfire Boulder, The Greens, Lake Mead Casino and Wildfire Lanes and, under certain circumstances, earnings generated during the supervisor's appointment (except for the reasonable rental value of the premises) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of the gaming licenses of the licensed subsidiaries

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or the appointment of a supervisor could (and revocation of any such gaming license would) have a material adverse affect on our gaming operations.

        Any beneficial owner of our voting or non-voting securities, regardless of the number of shares owned, may be required to file an application, may be investigated, and may be required to obtain a finding of suitability as a beneficial owner of our securities if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the beneficial owner of our voting or nonvoting securities who must be found suitable is a corporation, partnership, limited partnership, limited liability company or trust, it must submit detailed business and financial information, including a list of its beneficial owners, to the Nevada Board. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.

        The Nevada Act provides that persons who acquire beneficial ownership of more than 5% of the voting or non-voting securities of a Registered Corporation must report the acquisition to the Nevada Commission. The Nevada Act also requires that beneficial owners of more than 10% of the voting securities of a Registered Corporation must apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman of the Nevada Board mails the written notice requiring such filing. An "institutional investor," as defined in the Nevada Commission's regulations, which acquires beneficial ownership of more than 10%, but not more than 25% of our voting securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor that has obtained a waiver may, in certain circumstances, hold up to 29% of our voting securities and maintain its waiver for a limited period of time. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of our Board of Managers, any change in our corporate charter, bylaws, management policies or our operations, or any of our gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding our voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include: (i) voting on all matters voted on by stockholders; (ii) making financial and other inquiries of management of the type normally made by securities analysts for informational purposes and not to cause a change in our management, policies or operations; and (iii) such other activities as the Nevada Commission may determine to be consistent with such investment intent.

        Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission, or the Chairman of the Nevada Board, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any equity holder who is found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common equity of a Registered Corporation beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. We will be subject to disciplinary action if, after we receive notice that a person is unsuitable to be an equity holder or to have any other relationship with us or our licensed or registered subsidiaries, we (i) pay that person any dividend or interest upon our securities, (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person, (iii) pay remuneration in any form to that person for services rendered or otherwise, or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish his securities including, if necessary, the immediate purchase of said securities (a) in the case of Station Holdco, for the price specified by the relevant gaming authority or, if no such price is specified, the fair market value as determined by Station Holdco's board of managers, or (b) in the case of Station Voteco, for no consideration. In the case of Station Holdco, this price would be payable in cash or, at the election of Station Holdco's board of managers, with a promissory note, maturing in not more than 10 years after delivery of the note and no earlier than 7¹/2 years from the Effective Date, bearing interest at the applicable rate set forth by the Internal Revenue Service for obligations of at least nine years.

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Additionally, the Clark County Board has the authority to approve all persons owning or controlling the stock of any corporation controlling a gaming license.

        The Nevada Commission may, in its discretion, require the holder of any debt security of a Registered Corporation to file applications, be investigated and be found suitable to own the debt security of a Registered Corporation if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Registered Corporation can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Commission, it: (i) pays to the unsuitable person any dividend, interest, or any distribution whatsoever; (ii) recognizes any voting right by such unsuitable person in connection with such securities; (iii) pays the unsuitable person remuneration in any form; or (iv) makes any payment to the unsuitable person by way of principal, redemption, conversion, exchange, liquidation or similar transaction.

        We will be required to maintain a current membership interest ledger in Nevada, which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. Failure to make such disclosure may be grounds for finding the record holder unsuitable. We are also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require any membership interest certificates we may issue to bear a legend indicating that the securities are subject to the Nevada Act. We do not know whether the Nevada Commission will impose such a requirement on us.

        We may not make a public offering of our securities without the prior approval of the Nevada Commission if the securities or proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes.

        Changes in control of the Company through merger, consolidation, stock or asset acquisitions (including stock issuances in connection with restructuring transactions), management or consulting agreements, or any act or conduct by a person whereby such person obtains control, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of a Registered Corporation must satisfy the Nevada Board and the Nevada Commission that they meet a variety of stringent standards prior to assuming control of such Registered Corporation. The Nevada Commission may also require controlling equity holders, officers, managers and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.

        The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada corporate gaming licensees, and Registered Corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada's gaming industry and to further Nevada's policy to: (i) assure the financial stability of corporate gaming licensees and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the orderly governance of corporate affairs. Approvals are, in certain circumstances, required from the Nevada Commission before a Registered Corporation can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of re-capitalization proposed by the Registered Corporation's Board of Directors or similar governing entity in response to a tender offer made directly to the Registered Corporation's equity holders for the purpose of acquiring control of the Registered Corporation.

        License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada licensee's

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respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either: (i) a percentage of the gross revenues received; (ii) the number of gaming devices operated; or (iii) the number of table games operated. A live entertainment tax is also paid by casino operations where entertainment is furnished in connection with admission charges, the serving or selling of food or refreshments or the selling of any merchandise. Nevada licensees that hold a license as an operator of a slot route, or manufacturer's or distributor's license also pay certain fees and taxes to the State of Nevada.

        Any person who is licensed, required to be licensed, registered, required to be registered, or is under common control with such persons (collectively, "Licensees"), and who proposes to become involved in a gaming venture outside of Nevada, is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation by the Nevada Board of their participation in such foreign gaming. The revolving fund is subject to increase or decrease at the discretion of the Nevada Commission. Thereafter, licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Commission if they knowingly violate any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fail to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engage in activities or enter into associations that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employ, contract with or associate with a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the grounds of unsuitability or whom a court in the state of Nevada has found guilty of cheating. The loss or restriction of our gaming licenses in Nevada would have a material adverse effect on our business and could require us to cease gaming operations in Nevada.

Nevada Liquor Regulations

        The sale of alcoholic beverages at Palace Station, Wildfire Rancho and Santa Fe Station is subject to licensing control and regulation by the City of Las Vegas. Red Rock, Boulder Station and Wild Wild West are subject to liquor licensing control and regulation by the Clark County Board. Texas Station and Fiesta Rancho are subject to liquor licensing control and regulation by the City of North Las Vegas. Sunset Station, Green Valley Ranch, Fiesta Henderson, Barley's, Gold Rush, Wildfire Boulder, The Greens, Lake Mead Casino and Wildfire Lanes are subject to liquor licensing control and regulation by the City of Henderson. All liquor licenses are revocable and are not transferable. The agencies involved have full power to limit, condition, suspend or revoke any such license, and any such disciplinary action could (and revocation would) have a material adverse effect on the operations of our licensed subsidiaries.

Native American Gaming Regulations

        The terms and conditions of management contracts and the operation of casinos and all gaming on land held in trust for Native American tribes in the United States are subject to the Indian Gaming Regulatory Act of 1988 (the "IGRA"), which is administered by the National Indian Gaming Commission (the "NIGC") and the gaming regulatory agencies of tribal governments. The IGRA is subject to interpretation by the NIGC and may be subject to judicial and legislative clarification or amendment.

        The IGRA established three separate classes of tribal gaming—Class I, Class II and Class III. Class I gaming includes all traditional or social games solely for prizes of minimal value played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as bingo, pull-tabs, punchboards, instant bingo (and electronic or computer-aided versions of such games) and non-banked card games (those that are not played against the house), such as poker. Class III gaming is casino-style gaming and includes banked table games such as blackjack, craps and roulette, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering, a system of betting under which wagers are placed in a pool, management receives a fee from the pool, and the remainder of the pool is split among the winning wagers.

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        The IGRA requires NIGC approval of management contracts for Class II and Class III gaming as well as the review of all agreements collateral to the management contracts. The NIGC will not approve a management contract if a director or a 10% shareholder of the management company: (i) is an elected member of the governing body of the Native American tribe which is the party to the management contract; (ii) has been or subsequently is convicted of a felony or gaming offense; (iii) has knowingly and willfully provided materially important false information to the NIGC or the tribe; (iv) has refused to respond to questions from the NIGC; or (v) is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, or create or enhance the chance of unsuitable activities in gaming or the business and financial arrangements incidental thereto. In addition, the NIGC will not approve a management contract if the management company or any of its agents have attempted to unduly influence any decision or process of tribal government relating to gaming, or if the management company has materially breached the terms of the management contract or the tribe's gaming ordinance or resolution, or a trustee, exercising the skill and due diligence that a trustee is commonly held to, would not approve the management contract. A management contract can be approved only after the NIGC determines that the contract provides, among other things, for: (i) adequate accounting procedures and verifiable financial reports, which must be furnished to the tribe; (ii) tribal access to the daily operations of the gaming enterprise, including the right to verify daily gross revenues and income; (iii) minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs; (iv) a ceiling on the repayment of such development and construction costs and (v) a contract term not exceeding five years and a management fee not exceeding 30% of net revenues (as determined by the NIGC); provided that the NIGC may approve up to a seven year term and a management fee not to exceed 40% of net revenues if the NIGC is satisfied that the capital investment required, and the income projections for the particular gaming activity require the larger fee and longer term. There is no periodic or ongoing review of approved contracts by the NIGC. The only post-approval action that could result in possible modification or cancellation of a contract would be as the result of an enforcement action taken by the NIGC based on a violation of the law or an issue affecting suitability.

        The IGRA prohibits all forms of Class III gaming unless the tribe has entered into a written agreement with the state that specifically authorizes the types of Class III gaming the tribe may offer (a "tribal-state compact"). These tribal-state compacts provide, among other things, the manner and extent to which each state will conduct background investigations and certify the suitability of the manager, its officers, directors, and key employees to conduct gaming on Native American lands.

        Title 25, Section 81 of the United States Code states that "no agreement shall be made by any person with any tribe of Indians, or individual Indians not citizens of the United States, for the payment or delivery of any money or other thing of value... in consideration of services for said Indians relative to their lands... unless such contract or agreement be executed and approved" by the Secretary or his or her designee. An agreement or contract for services relative to Native American lands which fails to conform with the requirements of Section 81 is void and unenforceable. All money or other things of value paid to any person by any Native American or tribe for or on his or their behalf, on account of such services, in excess of any amount approved by the Secretary or his or her authorized representative will be subject to forfeiture. We intend to comply with Section 81 with respect to any other contract to manage casinos located on Native American land in the United States.

        Native American tribes are sovereign nations with their own governmental systems, which have primary regulatory authority over gaming on land within the tribes' jurisdiction. Therefore, persons engaged in gaming activities, including Station, are subject to the provisions of tribal ordinances and regulations on gaming. These ordinances are subject to review by the NIGC under certain standards established by the IGRA. The NIGC may determine that some or all of the ordinances require amendment, and those additional requirements, including additional licensing requirements, may be imposed on us.

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        Several bills have been introduced in Congress that would amend the IGRA. While there have been a number of technical amendments to the IGRA, to date there have been no material changes. Any amendment of the IGRA could change the governmental structure and requirements within which tribes could conduct gaming, and may have an adverse effect on our results of operations or impose additional regulatory or operational burdens.

General Gaming Regulations in Other Jurisdictions

        If we become involved in gaming operations in any other jurisdictions, such gaming operations will subject us and certain of our officers, managers, key employees, equityholders and other affiliates ("Regulated Persons") to strict legal and regulatory requirements, including mandatory licensing and approval requirements, suitability requirements, and ongoing regulatory oversight with respect to such gaming operations. Such legal and regulatory requirements and oversight will be administered and exercised by the relevant regulatory agency or agencies in each jurisdiction (the "Regulatory Authorities"). We and the Regulated Persons will need to satisfy the licensing, approval and suitability requirements of each jurisdiction in which we seek to become involved in gaming operations. These requirements vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. In general, the procedures for gaming licensing, approval and finding of suitability require the Company and each Regulated Person to submit detailed personal history information and financial information to demonstrate that the proposed gaming operation has adequate financial resources generated from suitable sources and adequate procedures to comply with the operating controls and requirements imposed by law and regulation in each jurisdiction, followed by a thorough investigation by such Regulatory Authorities. In general, the Company and each Regulated Person must pay the costs of such investigation. An application for any gaming license, approval or finding of suitability may be denied for any cause that the Regulatory Authorities deem reasonable. Once obtained, licenses and approvals may be subject to periodic renewal and generally are not transferable. The Regulatory Authorities may at any time revoke, suspend, condition, limit or restrict a license, approval or finding of suitability for any cause that they deem reasonable. Fines for violations may be levied against the holder of a license or approval and in certain jurisdictions, gaming operation revenues can be forfeited to the state under certain circumstances. There can be no assurance that we will obtain all of the necessary licenses, approvals and findings of suitability or that our officers, managers, key employees, other affiliates and certain other stockholders will satisfy the suitability requirements in one or more jurisdictions, or that such licenses, approvals and findings of suitability, if obtained, will not be revoked, limited, suspended or not renewed in the future.

        Failure by us to obtain, or the loss or suspension of, any necessary licenses, approval or findings of suitability would prevent us from conducting gaming operations in such jurisdiction and possibly in other jurisdictions, which may have an adverse effect on our results of operations. We may be required to submit detailed financial and operating reports to Regulatory Authorities.

Environmental Matters

        Compliance with federal, state and local laws enacted for the protection of the environment to date had no material effect upon Station's capital expenditures, earnings or competitive position and we do not anticipate any material adverse effects in the future based on the nature of our future operations.

Employees

        We currently have no employees. Upon consummation of the Restructuring Transactions, the employees of STN and the Acquired Casinos will become our employees. As of December 31, 2010, Station had approximately 12,224 employees in Nevada, which includes Green Valley Ranch, Aliante Station, Barley's, The Greens and Wildfire Lanes. None of the Acquired Casinos are currently subject to

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any collective bargaining agreement or similar arrangement with any union. However, union activists have actively sought to organize employees at certain of the Acquired Casinos in the past, and we believe that such efforts are ongoing at this time.

Managers

        The Company will be managed by a Board of Managers. The members of the Board of Managers have been selected due to, among other things, their experience and expertise in the gaming industry and other business ventures. Membership on the Board of Managers is not expected to require the full professional time of the individuals serving on the board. As such, the members of the Company's Board of Managers may, from time to time, be engaged in other business endeavors, including but not limited to those business endeavors in which they are currently involved, aside from their commitments to the Company. None of the members of the Company's Board of Managers are currently involved in other businesses that are in direct competition with the Company. See "Item 10. Directors, Executive Officers and Corporate Governance" for details on the members of the Board of Managers and certain of their past and present business endeavors.

Financial Information

        Please refer to "Item 6. Selected Financial Data" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for information about revenues, operating results and total assets and liabilities, and to "Item 8. Financial Statements and Supplementary Data—Station Casinos, Inc. Consolidated Financial Statements" included in this Annual Report on Form 10-K.

ITEM 1A.    RISK FACTORS.

        The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in the forward-looking statements. The following risk factors set forth the risks that we believe are material to our business, financial condition, assets, operations and equity interests. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected.

Risks Related to our Business

        We will not acquire Station's assets and commence operations unless the Restructuring Transactions are consummated.

        Our ability to operate is dependent upon, among other things, consummation of the Restructuring Transactions and our acquisition of Station's assets. Although we believe that the Effective Date will occur, there can be no assurance as to timing, or as to whether the Effective Date will occur at all. If the Effective Date does not occur, it is unclear what would happen to the Acquired Casinos and whether we would be able to successfully develop, prosecute, confirm and consummate an alternative plan of reorganization with respect to the Chapter 11 Cases that would be acceptable to the Bankruptcy Court or the holders of claims and equity interests. Finally, if the Effective Date has not occurred by June 30, 2011, certain of Station's creditors could be entitled to foreclosure on their security interests.

        The bankruptcy filing has had a negative impact on Station's image and may negatively impact our business going forward.

        As a result of their Chapter 11 Cases, Station has been the subject of negative publicity which has had an impact on its image. This negative publicity may have an effect on the terms under which some customers and suppliers are willing to continue to do business with us and could materially adversely affect

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our business, financial condition, future business prospects and results of operations. The impact of this negative publicity cannot be accurately predicted or quantified.

        There is doubt about the ability of Station to continue as a going concern.

        The audited consolidated financial statements of Station contained elsewhere in this Annual Report on Form 10-K have been prepared assuming that Station will continue as a going concern. However, the report of the independent registered public accounting firm on the financial statements of Station as of and for the year ended December 31, 2010 includes an explanatory paragraph describing the existence of substantial doubt about the ability of Station to continue as a going concern. This report, as well as the uncertainty regarding the eventual outcome of the Plan may adversely impact Station's relationships with vendors, ability to attract customers to its casino properties, attract and retain key executive employees and maintain and promote its properties, which could materially adversely affect our results of operations.

        Station has incurred operating losses in recent fiscal periods. Unless we are able to improve the results of operations of the assets that we acquire in the Restructuring Transactions, we may be unable to generate sufficient cash flows to meet our debt obligations and finance all operating expenses, working capital needs and capital expenditures.

        Station incurred operating losses of $209.1 million, $1.2 billion and $3.2 billion for the years ended December 31, 2010, 2009 and 2008, respectively. We may incur operating losses in the future. Following the consummation of the Restructuring Transactions, we may be unable to generate sufficient revenues and cash flows to service our debt obligations as they come due, finance capital expenditures and meet our operational needs. Any one of these failures may preclude us from, among other things:

•

maintaining or enhancing the Acquired Casinos;



•

taking advantage of future opportunities;



•

growing our business; or



•

responding to competitive pressures.

        Further, our failure to generate sufficient revenues and cash flows could lead to cash flow and working capital constraints, which may require us to seek additional working capital. We may not be able to obtain such working capital when it is required. Further, even if we were able to obtain additional working capital, it may only be available on unfavorable terms. For example, we may be required to take on additional debt, the interest costs of which could adversely affect our results of operations and financial condition. If any such required capital is obtained in the form of equity, the percentage ownership of the Company of the holders of the then-outstanding Units could be diluted.

        Limited liquidity and working capital may also restrict our ability to maintain and update the Acquired Casinos, which could put us at a competitive disadvantage to casinos offering more modern and better maintained facilities.

        We may face potential successor liability for liabilities of Station not provided for in the Plan. If we are determined to be liable for obligations of Station our business, financial condition and results of operations may be materially and adversely affected.

        We may be subject to certain liabilities of Station not provided for in the Plan. Such liabilities may arise in a number of circumstances, including those where:

•

a creditor of Station did not receive proper notice of the pendency of the bankruptcy case relating to the Plan or the deadline for filing claims therein;

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the injury giving rise to, or source of, a creditor's claim did not manifest itself in time for the creditor to file the creditor's claim;



•

a creditor did not timely file the creditor's claim in such bankruptcy case due to excusable neglect;



•

we are liable for Station's tax liabilities under a federal and/or state theory of successor liability; or



•

the order of confirmation for the Plan was procured by fraud.

        If we are determined to be subject to such liabilities, it could materially adversely affect our business, financial condition and results of operations.

        Our future financial results will be affected by the adoption of fresh-start reporting and may not reflect historical trends.

        We were formed for the purpose of acquiring substantially all of the assets of Station pursuant to the Plan. We will operate our business with a different capital structure than Station's capital structure. The Propco Restructuring and Opco Acquisition will result in the Company becoming a new reporting entity and adopting fresh-start reporting in accordance with Accounting Standards Codification ("ASC") 852-10-15. As required by fresh-start reporting, the Company will cause Station's assets and liabilities to be adjusted to fair value, and certain assets and liabilities not previously recognized in Station's financial statements will be recognized under fresh-start reporting. Because the Propco Restructuring and Opco Acquisition have not been consummated, fresh-start reporting has not yet been adopted and the consolidated financial statements included in this Annual Report on Form 10-K do not give effect to any adjustments in the carrying values of assets or liabilities that will be recorded upon implementation of the Plan under fresh-start reporting rules. Accordingly, our financial condition and results of operations from and after the Effective Date will not be comparable to the financial condition and results of operations reflected in Station's historical consolidated financial statements.

        The GVR Acquisition may not be consummated, which could adversely affect our business.

        The GVR Acquisition is not a condition precedent to the effectiveness of the Plan, and is anticipated to occur on or subsequent to the Effective Date. It is possible, however, that the GVR Acquisition will not occur as planned, or at all, in which case we would not own Green Valley Ranch. If we do not own Green Valley Ranch, the scale of our overall operations will be smaller than we currently anticipate, which could adversely affect our business, financial condition and results of operations.

        Our business will be sensitive to reductions in discretionary consumer spending as a result of downturns in the economy.

        Consumer demand for casino hotel properties, such as the Acquired Casinos, is sensitive to downturns in the economy and the corresponding impact on discretionary spending on leisure activities. Changes in discretionary consumer spending or consumer preferences brought about by factors such as perceived or actual general economic conditions and customer confidence in the economy, unemployment, the current housing and credit crisis, the impact of high energy and food costs, the potential for continued bank failures, perceived or actual changes in disposable consumer income and wealth, effects or fears of war and future acts of terrorism could further reduce customer demand for the amenities that we offer and materially and adversely affect our business and results of operations. The current housing crisis and economic slowdown in the United States has resulted in significant unemployment in our key markets and a significant decline in the amount of tourism and spending in Las Vegas. This decline has adversely affected Station, and may continue to adversely affect our financial condition, results of operations and cash.

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        The economic downturn may be protracted in our key markets and may continue to negatively impact our revenues and other operating results.

        The Acquired Casinos draw a substantial number of customers from the Las Vegas valley, as well as certain geographic areas, including Southern California, Arizona and Utah. The economies of these areas have been, and may continue to be, negatively impacted due to a number of factors, including the credit crisis and a decrease in consumer confidence levels. The resulting severe economic downturn and adverse conditions in the local markets have negatively affected Station's operations, and may continue to negatively affect our operations in the future. Based on information from the Las Vegas Convention and Visitors Authority, gaming revenues in Clark County for the year ended December 31, 2010 increased 0.8% from the level in the comparable period of the prior year. Las Vegas gaming revenues and operators were severely negatively impacted by the economic downturn and there can be no assurance that gaming revenues will not decrease in future periods. In addition, the residential real estate market in the United States, and in particular Las Vegas, has experienced a significant downturn due to declining real estate values. Individual consumers are experiencing higher delinquency rates on various consumer loans and defaults on indebtedness of all kinds have increased. In addition, the Las Vegas and our other target markets continue to experience and high rates of unemployment. All of these factors have materially and adversely affected Station's results of operations. Further declines in real estate values in Las Vegas and the United States and continuing credit and liquidity concerns could continue to have an adverse affect on our results of operations. Although Station and other gaming companies have experienced a decrease in revenues, certain costs remain fixed or even increase resulting in decreased earnings or net losses. Gaming and other leisure activities that we will offer represent discretionary expenditures and participation in such activities have been particularly adversely impacted as a result of the economic downturn because consumers have less disposable income to spend on discretionary activities. The current economic condition has adversely affected consumer spending at Station's gaming operations and related facilities and may continue to adversely affect our business.

        Furthermore, other uncertainties, including national and global economic conditions, other global events, or terrorist attacks or disasters in or around Southern Nevada could have a significant adverse effect on our business, financial condition and results of operations. The Acquired Casinos use significant amounts of electricity, natural gas and other forms of energy. While no shortages of energy have been experienced, the substantial increase in the cost of electricity, natural gas and gasoline in the United States has negatively affected Station's operating results. As we will be a highly leveraged company, if adverse regional and national economic conditions persist or worsen, the decreased revenues from the Acquired Casinos attributable to decreases in consumer spending levels may result in a failure to satisfy additional financial and other restrictive covenants to which we are subject under our indebtedness that is outstanding following the Effective Date. Furthermore, due to the existing uncertainty in the capital and credit markets, we may not be able to refinance our then-existing debt or obtain additional credit facilities on terms acceptable to us or at all.

        We will depend on the Las Vegas locals and repeat visitor markets as our key markets. As a result, we may not be able to attract a sufficient number of guests and gaming customers to make our operations profitable.

        Station's operating strategies emphasize attracting and retaining customers from the Las Vegas local and repeat visitor market. All of the Acquired Casinos are dependent upon attracting Las Vegas residents. We cannot be sure that we will be able to attract a sufficient number of guests, gaming customers and other visitors in Nevada to make our operations profitable. In addition, Station's strategy of growth through master-planning of its casinos for future expansion, was developed, in part, based on projected population growth in Las Vegas. During the economic downturn, the Las Vegas valley has not experienced population growth at the expected rates or at the same rates as it experienced prior to the economic downturn. There can be no assurance that population growth in Las Vegas will return to levels that justify future development, additional casinos or expansion of the Acquired Casinos or that we will be able to

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successfully adapt our business strategy to the current economic downturn or any further economic slowdown.

        We will face substantial competition in the gaming industry and may experience a loss of market share.

        The Acquired Casinos face competition from all other casinos and hotels in the Las Vegas area including, to some degree, from each other. In addition, the Acquired Casinos face competition from all smaller non-restricted gaming locations and restricted gaming locations (locations with 15 or fewer slot machines) in the greater Las Vegas area, including those that primarily target the local and repeat visitor markets. Major additions, expansions or enhancements of existing properties or the construction of new properties by competitors, could also have a material adverse effect on the business of the Acquired Casinos. For further details on competition in the gaming industry that will affect our business, see "Item 1. Business—Competition."

        To a lesser extent, the Acquired Casinos compete with gaming operations in other parts of the state of Nevada, such as Reno, Laughlin and Lake Tahoe, and other gaming markets in the United States and in other parts of the world, with state sponsored lotteries, on-and-off-track pari-mutuel wagering, a system of betting under which wagers are placed in a pool, management receives a fee from the pool, and the remainder of the pool is split among the winning wagers, card rooms and other forms of legalized gambling. The gaming industry also includes land-based casinos, dockside casinos, riverboat casinos, racetracks with slots and casinos located on Native American land. There is intense competition among companies in the gaming industry, some of which have significantly greater resources than we will. Several states are currently considering legalizing casino gaming in designated areas. Legalized casino gaming in such states and on Native American land will result in strong competition that could adversely affect our operations, particularly to the extent that such gaming is conducted in areas close to our operations.

        We may incur losses that are not adequately covered by insurance which may harm our results of operations.

        Although we will maintain insurance customary and appropriate for our business, we cannot assure you that insurance will be available or adequate to cover all loss and damage to which our business or our assets might be subjected. The lack of adequate insurance for certain types or levels of risk could expose us to significant losses in the event that a catastrophe occurred for which we are underinsured. Any losses we incur that are not adequately covered by insurance may decrease our future operating income, require us to find replacements or repairs for destroyed property and reduce the funds available for payments of our obligations.

        We will be subject to litigation in the ordinary course of our business. An adverse determination with respect to any such disputed matter could result in substantial losses.

        We will be, from time to time, during the ordinary course of operating our businesses, subject to various litigation claims and legal disputes, including contract, lease, employment and regulatory claims as well as claims made by visitors to our properties. In addition, there are litigation risks inherent in any construction or development of any of the Acquired Casinos. Certain litigation claims may not be covered entirely or at all by our insurance policies or our insurance carriers may seek to deny coverage. In addition, litigation claims can be expensive to defend and may divert our attention from the operations of our businesses. Further, litigation involving visitors to our properties, even if without merit, can attract adverse media attention. As a result, litigation can have a material adverse effect on our businesses and, because we cannot predict the outcome of any action, it is possible that adverse judgments or settlements could significantly reduce our earnings or result in losses.

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        We may incur delays and budget overruns with respect to future construction projects. Any such delays or cost overruns may have a material adverse effect on our operating results.

        Station is currently providing funding for the proposed gaming facilities for the Federated Indians of Graton Rancheria and the North Fork Rancheria of Mono Indians (collectively, the "Native American Tribes"). We will evaluate expansion opportunities as they become available, and we may in the future develop projects in addition to the proposed facilities for the Native American Tribes.

        Construction projects, such as the proposed gaming facilities for the Native American Tribes, entail significant risks, including the following:

•

shortages of material or skilled labor;



•

unforeseen engineering, environmental or geological problems;



•

work stoppages;



•

weather interference;



•

floods; and



•

unanticipated cost increases,

        any of which can give rise to delays or cost overruns.

        The anticipated costs and construction periods are based upon budgets, conceptual design documents and construction schedule estimates prepared by Station in consultation with its architects and contractors. Construction, equipment, staffing requirements, problems or difficulties in obtaining any of the requisite licenses, permits, allocations or authorizations from regulatory authorities can increase the cost or delay the construction or opening of each of the proposed facilities or otherwise affect the project's planned design and features. We cannot be sure that we will not exceed the budgeted costs of these projects or that the projects will commence operations within the contemplated time frame, if at all. Budget overruns and delays with respect to expansion and development projects could have a material adverse impact on our results of operations.

        We may experience difficulty integrating operations of acquired companies and developed properties and managing our overall growth which could have a material adverse effect on our operating results.

        We may not be able to manage the operations of Station including, the recently opened Gun Lake Casino, the proposed projects with the Native American Tribes and future acquired companies or developed properties effectively, or realize any of the anticipated benefits of the acquisitions, including streamlining operations or gaining efficiencies from the elimination of duplicative functions. The integration of other companies as assets will require continued dedication of management resources and may temporarily distract attention from our day-to-day business.

        In addition, because we plan to continue to pursue expansion and acquisition opportunities, we face significant challenges not only in managing and integrating the recently opened Gun Lake facility and the proposed projects with the Native American Tribes, but also managing our expansion projects and any other gaming operations we may acquire in the future. Management of these new projects will require increased managerial resources, and we intend to continue our efforts to enhance our gaming management team. However, there can be no assurances that we will succeed in doing so. Failure to manage our growth effectively could have a material adverse effect on our operating results.

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        We will be dependent upon Fertitta Entertainment, a newly formed entity controlled by Frank J. Fertitta III and Lorenzo J. Fertitta, to operate the Acquired Casinos pursuant to long term management contracts. The success of our operations will depend on the ability of Fertitta Entertainment's ability to effectively manage our assets and operations.

        Under the Plan, we will enter into Management Agreements with subsidiaries of Fertitta Entertainment. The Management Agreements will have a scheduled term of 25 years following the Effective Date and will have limited rights of termination. Pursuant to the Management Agreements, subsidiaries of Fertitta Entertainment will have significant discretion in the management and operation of the Acquired Casinos. The manager under the Management Agreements will receive a base management fee equal to two percent of the gross revenues attributable to the managed properties and an incentive management fee equal to five percent of positive earnings before interest, taxes, depreciation and amortization ("EBITDA") of the managed properties.

        The success of the Acquired Casinos and, in turn, our business, will be substantially dependent upon Fertitta Entertainment and its affiliates. Subject to limited restrictions, Fertitta Entertainment and its affiliates will be permitted to manage the operations of other gaming companies and the officers and employees of Fertitta Entertainment and its affiliates will not be required to devote their full time and attention to managing the Acquired Casinos. There can be no assurance that Fertitta Entertainment will be successful at managing and operating the Acquired Casinos or that the terms of the Fertitta Entertainment management agreements will be in our best interests.

        We will rely on key personnel of Fertitta Entertainment, the loss of the services of whom could materially and adversely affect our results of operations.

        Our ability to operate successfully and competitively will be dependent, in part, upon the continued services of certain of Station's officers and key employees, including but not limited to Frank J. Fertitta III. All of our executive officers, other than Thomas M. Friel, our Executive Vice President, Chief Accounting Officer and Treasurer, will be employees of Fertitta Entertainment. In the event that Fertitta Entertainment and its affiliates cease to manage the Acquired Properties or these officers and/or employees leave Fertitta Entertainment, we might not be able to find suitable replacements. We believe that the loss of the services of these officers and/or employees, including through the termination of the Management Agreements, could have a material adverse effect on our results of operations.

        Unionization organization activities could disrupt our business by discouraging patrons from visiting our properties, causing labor disputes or work stoppages, and, if successful, could significantly increase our labor costs.

        None of the Acquired Casinos is currently subject to any collective bargaining agreement or similar arrangement with any union. However, union activists have actively sought to organize employees at certain of the Acquired Casinos in the past, and we believe that such efforts are ongoing at this time. Accordingly, there can be no assurance that the Acquired Casinos will not ultimately be unionized. Union organization efforts that may occur in the future could cause disruptions to the Acquired Casinos and discourage patrons from visiting our properties and may cause us to incur significant costs, any of which could have a material adverse effect on our results of operations and financial condition. In addition, union activities may result in labor disputes, including work stoppages, which could have a material adverse effect on our business, financial condition and results of operation. Furthermore, unfavorable union contract settlements or collective bargaining agreements, should they be entered into, could cause significant increases in our labor costs, which could have a material adverse effect on the business of the Acquired Casinos and our financial condition and results of operation.

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        Work stoppages, labor problems and unexpected shutdowns may limit our operational flexibility and negatively impact our future profits.

        Any work stoppage at one or more of the Acquired Casinos, including any construction projects which may be undertaken, could require us to expend significant funds to hire replacement workers, and qualified replacement labor may not be available at reasonable costs, if at all. Strikes and work stoppages could also result in adverse media attention or otherwise discourage customers from visiting the Acquired Casinos. Strikes and work stoppages involving laborers at any construction project which may be undertaken could result in construction delays and increases in construction costs. As a result, a strike or other work stoppage at one of the Acquired Casinos or any construction project could have an adverse effect on the business of the Acquired Casinos and our financial condition and results of operations. There can be no assurance that we will not experience a strike or work stoppage at one or more of the Acquired Casinos or any construction project in the future.

        In addition, any unexpected shutdown of one of the Acquired Casinos or any construction project could have an adverse effect on the business of the Acquired Casinos and our results of operations. There can be no assurance that we will be adequately prepared for unexpected events, including political or regulatory actions, which may lead to a temporary or permanent shutdown of any of the Acquired Properties.

        We will regularly pursue new gaming acquisition and development opportunities and may not be able to recover our investment or successfully expand to additional locations.

        We will regularly evaluate and pursue new gaming acquisition and development opportunities in existing and emerging jurisdictions. These opportunities may take the form of joint ventures. To the extent that we decide to pursue any new gaming acquisition or development opportunities, our ability to benefit from such investments will depend upon a number of factors including:

•

our ability to identify and acquire attractive acquisition opportunities and development sites;



•

our ability to secure required federal, state and local licenses, permits and approvals, which in some jurisdictions are limited in number;



•

certain political factors, such as local support or opposition to development of new gaming facilities or legalizing casino gaming in designated areas;



•

the availability of adequate financing on acceptable terms (including waivers of restrictions in existing credit arrangements); and



•

our ability to identify and develop satisfactory relationships with joint venture partners.

        Most of these factors are beyond our control. Therefore, we cannot be sure that we will be able to recover our investment in any new gaming development opportunities or acquired facilities, or successfully expand to additional locations.

        Station has invested, and we will likely continue to invest, in real property in connection with the pursuit of expansion opportunities. These investments are subject to the risks generally incident to the ownership of real property, including:

•

changes in economic conditions;



•

environmental risks;



•

governmental rules and fiscal policies; and



•

other circumstances over which we may have little or no control.

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        The development of such properties will also be subject to restrictions under our secured credit facilities. We cannot be sure that we will be able to recover our investment in any such properties or be able to prevent incurring investment losses.

        We will be subject to extensive state and local regulation and licensing and gaming authorities will have significant control over our operations which could have an adverse effect on our business.

        Our ownership and operation of gaming facilities will be subject to extensive regulation by the states, counties and cities in which we will operate. These laws, regulations and ordinances vary from jurisdiction to jurisdiction, but generally concern the responsibility, financial stability and character of the owners and managers of gaming operations as well as persons financially interested or involved in gaming operations. As such, our gaming regulators can require us to disassociate ourselves from suppliers or business partners found unsuitable by the regulators or, alternatively, cease operations in that jurisdiction. In addition, unsuitable activity on our part or on the part of our domestic or foreign unconsolidated affiliates in any jurisdiction could have a negative effect on our ability to continue operating in other jurisdictions. Holders of Units who fail to obtain any licenses, authorizations, qualifications or findings of suitability, as may be required by Nevada Gaming authorities, will not be entitled to exercise any rights of ownership with respect to or receive any income from the Units. For a summary of gaming and other regulations that will affect our business, see "Item 1. Business—Regulation and Licensing." The regulatory environment in any particular jurisdiction may change in the future and any such change could have a material adverse effect on our results of operations. In addition, we are subject to various gaming taxes, which are subject to possible increase at any time. Increases in gaming taxation could also adversely affect our results.

        Changes to the gaming tax laws could have an adverse effect on results of operations by increasing the cost of operating our business.

        The gaming industry represents a significant source of tax revenue, particularly to the State of Nevada and its counties and municipalities. From time to time, various state and federal legislators and officials have proposed changes in tax law, or in the administration of such law, affecting the gaming industry. The Nevada Legislature meets every two years and when special sessions are called by the Governor. The Nevada legislative session began on February 7, 2011. There have been no specific proposals during the legislative session to increase gaming taxes, however there are no assurances an increase in gaming taxes will not be proposed and passed by the Nevada Legislature. An increase in the gaming tax could have a material adverse effect on our results of operations.

Risks Related to our Substantial Indebtedness

        We expect to have significant indebtedness upon the Effective Date. Such substantial indebtedness could make it difficult or impossible for us to meet our debt service obligations and finance our operating expenses, working capital needs and capital expenditures.

        We will be a highly leveraged company. Immediately after the Effective Date, we expect our indebtedness to include approximately $2.4 billion under various term loans and $175.0 million available under revolving credit facilities, some of which may be drawn on the Effective Date. The ability to make these payments will be significantly impacted by general economic, financial, competitive and other factors beyond our control.

        Our substantial indebtedness could:

•

limit our ability to borrow money or otherwise obtain financing for our working capital, capital expenditures, development projects, debt service requirements, strategic initiatives or other purposes;

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•

make it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under the agreements governing our indebtedness;



•

require us to dedicate a substantial portion of our cash flow from operations to the repayment of our indebtedness thereby reducing funds available to us for other purposes;



•

limit our flexibility in planning for, or reacting to, changes in our operations, industry or business;



•

make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;



•

make us more vulnerable to downturns in our business or the economy;



•

make us more vulnerable to increases in interest rates with respect to our indebtedness that accrues interest at variable rates;



•

restrict us from making strategic acquisitions, developing new gaming facilities, introducing new technologies or exploiting business opportunities; and



•

limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets.

        Our indebtedness will impose restrictive financial and operating covenants that will limit our flexibility in operating our business and may adversely affect our ability to compete or engage in favorable business or financing activities.

        The Propco Credit Agreement, Opco Credit Agreement, GVR Term Loan and Restructured Land Loan will contain a number of covenants that will impose significant operating and financial restrictions on us, including restrictions on our and our subsidiaries' ability to, among other things:

•

incur additional debt or issue certain preferred units;



•

pay dividends on or make certain redemptions, repurchases or distributions in respect of our Units or make other restricted payments;



•

make certain investments;



•

sell certain assets;



•

create liens on certain assets;



•

consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and



•

enter into certain transactions with our affiliates.

        In addition, our credit agreements will contain certain financial covenants, including minimum interest coverage ratio, total leverage ratio and maximum capital expenditures.

        As a result of these covenants, we are limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. The restrictions caused by such covenants could also place us at a competitive disadvantage to less leveraged competitors.

        A failure to comply with the covenants contained in the secured credit facilities or other indebtedness that we may incur in the future could result in an event of default, which, if not cured or waived, could result in the acceleration of the indebtedness and have a material adverse affect on our business, financial condition and results of operations. In the event of any default under the Propco Credit Agreement, Opco

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Credit Agreement, GVR Term Loan or Restructured Land Loan or other indebtedness, the lenders thereunder:

•

will not be required to lend any additional amount to us;



•

could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable and terminate all commitments to extend future credit; or



•

could require us to apply all of our available cash to repay these borrowings.

        If we are unable to repay these amounts, the lenders under the Propco Credit Agreement, Opco Credit Agreement, GVR Term Loan or Restructured Land Loan or other indebtedness could proceed against the collateral granted to them to secure that indebtedness, which will include substantially all of our assets. If the indebtedness under the Propco Credit Agreement, Opco Credit Agreement, GVR Term Loan or Restructured Land Loan or other indebtedness were to be accelerated, there can be no assurance that our assets would be sufficient to repay such indebtedness in full. Moreover, in the event that such indebtedness is accelerated, there can be no assurance that we will be able to refinance it on acceptable terms, or at all.

        Conditions in the financial system and the capital and credit markets may negatively affect our ability to raise capital to fund capital expenditures, pursue proposed development, expansion or acquisition opportunities or refinance our significant indebtedness.

        Our businesses will be capital intensive. For the Acquired Casinos to remain attractive and competitive we must periodically invest significant capital to keep the properties well-maintained, modernized and refurbished. Similarly, future construction and development projects, including but not limited to proposed gaming facilities for the Native American Tribes, and acquisitions of other gaming operations could require significant additional capital. We will rely on earnings and cash flow from operations to finance our business, capital expenditures, development, expansion and acquisitions and, to the extent that we cannot fund such expenditures from cash generated by operations, funds must be borrowed or otherwise obtained. We will also be required in the future to refinance our outstanding debt. Our ability to effectively operate and grow our business may be constrained if we are unable to borrow additional capital or refinance existing borrowings on reasonable terms.

        The credit, financial and equity markets have experienced disruption that has had a dramatic impact on the availability and cost of capital and credit. While the United States and other governments have enacted legislation and taken other actions to help alleviate these conditions, there is no assurance that such steps will have the effect of easing the conditions in credit and capital markets. We are unable to predict the likely duration or severity of the current disruption in the capital and credit markets and we have no assurance that we will have further access to credit or capital markets at desirable times or at rates that we would consider acceptable, and the lack of such funding could have a material adverse effect on our business, results of operations and financial condition and our ability to service our indebtedness.

        Our ability to service all of our indebtedness depends on our ability to generate cash flow, which is subject to factors that are beyond our control.

        Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and operating performance, which is subject to general economic, financial, competitive and other factors that are beyond our control. Station's performance has been significantly impacted by general economic and financial conditions, which has affected its cash flows from operating activities and its ability to pay the principal, premium, if any, and interest on its indebtedness.

        In addition, a further deterioration in the economic performance of the casino properties may cause us to reduce or delay investments and capital expenditures, or to sell assets. In the absence of such

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operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.

Risks Related to our Units

        Unless we are considered a "publicly traded corporation" under the Nevada Gaming Control Act, each of our equityholders must be found suitable by the Nevada Gaming Authorities or we may be required to sever all relationships with such equityholder.

        After we become a "publicly traded corporation" under the Nevada Gaming Control Act, persons who acquire beneficial ownership of more than 5% of our voting securities will be required to report their acquisition to the Nevada Gaming Authorities and persons who acquire beneficial ownership of more than 10% of our voting securities will be required to apply to the Nevada Gaming Authorities for a finding of suitability. Notwithstanding these provisions, under the Nevada Gaming Control Act, the Nevada Gaming Authorities may at any time, in their discretion, require the holder of any of our securities to file applications, be investigated and be found suitable to own our securities if they have reason to believe that the security ownership would be inconsistent with the declared policies of Nevada. We anticipate that, so long as we are a "publicly traded corporation" under the Nevada Gaming Control Act, the Nevada Gaming Authorities will require only our equityholders having beneficial ownership of more than 10% of our voting securities to be found suitable.

        If we do not become, or cease to be, a "publicly traded corporation" under the Nevada Gaming Control Act, or if required by the Nevada Gaming Authorities, each of our equityholders would be required to be found suitable by the Nevada Gaming Authorities. If any equityholder fails to be found suitable, we may be required to sever all relationships, including through redemption of shares, with such equityholder, which may have a material adverse effect on our business and our equityholders. In addition, such holders of Units who fail to obtain any necessary licenses, authorizations, qualifications or findings of suitability will not be entitled to exercise any rights of ownership with respect to or receive any income from the Units.

        A public market for our Units may not develop which would affect the liquidity and pricing of our Units.

        We have not issued any Units. Therefore, there is currently no established public trading market for our Units, and there are no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market in our Units. The liquidity of any market for our Units will depend, among other things, upon the number of holders of our Units, our financial performance, and the market for similar securities, none of which can be determined or predicted. Our Units are not and will not be listed for trading on any national securities exchange. Therefore, we cannot provide assurances that an active trading market will develop, or if a market develops, what the liquidity or pricing characteristics of that market will be.

        We may, but are not required to, make distributions to enable our members to pay tax on income that is attributable to their ownership interest in us and do not plan to make other distributions.

        Our operational documents provide that we will, where possible, but do not require us to, make distributions to our members in respect of our taxable income that they recognize as a result of their ownership in the Company. However, the making of such distributions will be subject to the availability of funds and compliance with the restrictions contained in our debt agreements. There can be no assurance that we will make such distributions. In addition, even if we do make tax distributions, we do not plan to pay any other dividends or make any other distributions on our Units in the foreseeable future. In addition, restrictive covenants of the Propco Credit Agreement, the Opco Credit Agreement and GVR Term Loan will restrict the ability of the respective obligors to pay dividends. Therefore, you should not expect to receive any distributions in the foreseeable future from your Units.

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        Members of our Board of Managers are likely to devote some of their time to other businesses, which could have a negative impact on the Company's management.

        Members of our Board of Managers will not be required to commit their full time to the Company's affairs, which could create a conflict when allocating their time between Company matters and their other commitments. It is expected that all of the members of the Company's Board of Managers will be engaged in several other business endeavors aside from their commitments to the Company. In addition, members of our Board of Managers will not be obligated to devote any specific number of hours to the Company's affairs. If the other business affairs of members of our Board of Managers require them to devote more time to such affairs, it could limit their ability to devote time to the Company's affairs and could have a negative impact on the quality of the Company's governance. We cannot assure the holders of Units that these time conflicts will be resolved in the Company's favor.

        Potential conflicts of interest may exist, or may arise, based on debt and management interests of the principal equityholders of Station Holdco.

        Pursuant to the governance structure of Station Holdco, its directors will primarily be persons designated by FI Station Investor or the Mortgage Lenders. In addition, many major actions require approval of a majority of the directors designated by FI Station Investor and a majority of the directors designated by the Mortgage Lenders. FI Station Investor and the Mortgage Lenders may have interests that are different than, or in addition to, equity holders of Station Holdco, which could adversely affect such equity holders.

        In addition to being an equity holder of Station Holdco, affiliates of Fertitta Entertainment will be the managers of the Propco Properties, Opco Assets and Green Valley Ranch. The interests of Fertitta Entertainment, in its capacity as an affiliate of the managers of the Propco Properties, the Opco Assets and Green Valley Ranch, may be different from, or in addition to, the interests of other equity holders of Station Holdco. For example, since the affiliates of Fertitta Entertainment that manages the Propco Properties, Opco Assets and Green Valley Ranch will be compensated for its management services based on the revenue and EBITDA achieved by the Propco Properties, Opco Assets and Green Valley Ranch, Fertitta Entertainment may have an incentive to support the growth of the revenue and EBITDA of the Propco Properties, Opco Assets and Green Valley Ranch even if doing so would require increased leverage and interest service obligations for the Propco Properties, Opco Assets or Green Valley Ranch. Under certain circumstances, the imposition of increased leverage and interest service obligations on the Propco Properties, Opco Assets or Green Valley Ranch could adversely affect the equity value of the Company.

        The Mortgage Lenders or affiliates thereof are lenders under the Company's credit facilities. Therefore, they may have an incentive for the Company to act or omit to act, in each case, in a manner that enhances the ability of the Company to service its indebtedness or the Mortgage Lenders to recover on the Company's credit facilities, rather than seeking to maximize the value of the equity of the Company.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

        Not applicable.

ITEM 2.    PROPERTIES.

        The Company does not currently own any property; however, upon the Effective Date, we expect to acquire from Station all of the casino properties and the land that it owns or leases, other than the Wild Wild West unless the property lease is renegotiated, as well as Green Valley Ranch. We are currently in negotiations regarding the terms of the Wild Wild West property lease, however, the Company can provide no assurance that it will be able to reach an agreement with the lessor.

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        Following the Effective Date, substantially all of the property that we will own or lease will be subject to liens to secure borrowings under the Propco Credit Agreement, Opco Credit Agreement, Restructured Land Loan and GVR Term Loan.

        Palace Station, which Station opened in 1976 and completed a series of expansions through 1991, is situated on approximately 30 acres that Station owns located on the west side of Las Vegas, Nevada.

        Boulder Station, which Station opened in 1994 and was expanded in 1995, is situated on approximately 54 acres located on the east side of Las Vegas, Nevada. Station owns 27 acres and leases the remaining 27 acres from KB Enterprises, a company owned by the Frank J. Fertitta and Victoria K. Fertitta Revocable Family Trust (the "Related Lessor"). Frank J. Fertitta, Jr. and Victoria K. Fertitta are the parents of Frank J. Fertitta III, Chairman, Chief Executive Officer and President of Station and Lorenzo J. Fertitta, Vice Chairman of Station. The lease has a maximum term of 65 years, ending in June 2058. The lease provides for monthly payments of $222,933 through May 2018. In June 2013, and every ten years thereafter, the rent will be adjusted to the product of the fair market value of the land and the greater of (i) the then prevailing annual rate of return for comparably situated property or (ii) 8% per year. In no event will the rent for any period be less than the immediately preceding period. In June 2018, and every ten years thereafter, the rent will be adjusted by a cost of living factor. Pursuant to the ground lease, we will have an option, exercisable at five-year intervals with the next option in June 2013, to purchase the land at fair market value. We believe that the terms of the ground lease are as fair to us as could be obtained from an independent third party.

        Texas Station, which Station opened in 1995 and completed two master planned expansions through 2000, is situated on approximately 47 acres located in North Las Vegas, Nevada. Station leases this land from Texas Gambling Hall & Hotel, Inc., a company owned by the Related Lessor. The lease has a maximum term of 65 years, ending in July 2060. The lease provides for monthly rental payments of $337,417 through June 2010. In July 2010, and every ten years thereafter, the rent will be adjusted to the product of the fair market value of the land and the greater of (i) the then prevailing annual rate of return being realized for owners of comparable land in Clark County or (ii) 8% per year. The July 2010 adjustment was deferred. In July 2015, and every ten years thereafter, the rent will be adjusted by a cost of living factor. In no event will the rent for any period be less than the immediately preceding period. Pursuant to the ground lease, we will have an option, exercisable at five-year intervals with the next option in May 2015, to purchase the land at fair market value. We believe that the terms of the ground lease are as fair to us as could be obtained from an independent third party.

        Sunset Station, which Station opened in 1997 and completed two expansions through 2005, is situated on approximately 82 acres that Station owns located in Henderson, Nevada.

        Santa Fe Station, which Station purchased in 2000 and completed three master-planned expansions though 2007, is situated on approximately 39 acres that Station owns located on the northwest side of Las Vegas, Nevada.

        Red Rock, which Station opened in 2006 and completed two master-planned expansions through 2007, is situated on approximately 64 acres that Station owns located on the northwest side of Las Vegas, Nevada.

        Green Valley Ranch, which opened in 2001 and completed a master-planned expansion in 2006, is situated on approximately 40 acres in Henderson, Nevada.

        Fiesta Rancho, which Station purchased in 2001 and was expanded in 2004, is situated on approximately 25 acres that Station owns in North Las Vegas, Nevada.

        Fiesta Henderson, which Station purchased in 2001 and completed two master-planned expansions through 2007, is situated on approximately 46 acres that Station owns in Henderson, Nevada.

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        Station also has acquired or is under contract to acquire approximately 106 acres of land on which Wild Wild West is located and the surrounding area, of which approximately 77 acres have been acquired as of December 31, 2010. Station purchased the Wild Wild West in 1998. In December 2008, Station amended the lease and purchase agreement for the 19-acre parcel of land on which the Wild Wild West is located. Under the amended agreement, Station has an option to purchase the land on or before December 28, 2011 for a purchase price of $36 million. The amended lease also includes options to purchase the land in July 2023, 2044 and 2065 for a purchase price equal to fair market value as of July 2022, 2043 and 2064, respectively. In March 2011, Station was notified by the lessor that the lease had been terminated. We are currently in negotiations regarding possible modification to this lease, however, we can provide no assurance that it will be able to reach an agreement with the lessor.

        Wildfire Rancho, which Station purchased in 2003, is situated on approximately five acres that Station owns in Las Vegas, Nevada.

        Wildfire Boulder, which Station purchased in 2004, is situated on approximately two acres that Station owns in Henderson, Nevada.

        Gold Rush, which Station purchased in 2004, is situated on approximately one acre that Station owns in Henderson, Nevada.

        Lake Mead Casino, which Station purchased in 2006, is situated on approximately three acres in Henderson, Nevada.

        Barley's, The Greens and Wildfire Lanes, each located in Henderson, Nevada, lease the land and buildings used in their operations. Station opened Barley's in 1996 and purchased The Greens in 2005 and Wildfire Lanes in 2007.

        In November 2007, Station entered into a financing transaction with respect to its corporate office building with a third-party real estate investment firm pursuant to which Station sold the corporate office building for approximately $70 million and subsequently entered into a lease with the purchaser for an initial period of 20 years with four options to extend the lease, each option for an extension of five years. Such arrangements are generally referred to as "sale-leaseback" transactions. An event of default under the lease for the corporate office building occurred on October 26, 2009 as a result of the Chapter 11 Case not being dismissed within 90 days following the filing thereof, entitling the landlord to exercise its remedies thereunder, including, among other things, termination of the lease and acceleration of contractual rents. Station and the landlord subsequently amended the lease to reduce the basic annual rent during the initial term of the lease commencing with the rent period that began on September 1, 2010, and the amended lease was approved by the Bankruptcy Court. In the first four years of the remaining initial term of the lease, following the effective date of the lease amendment, the basic annual rent will be reduced as follows: (a) in lease year 4 (the 12 month period commencing on September 1, 2010) the basic annual rent will be reduced from $5.4 million to $2.9 million; (b) in lease year 5 the basic annual rent will be reduced from $5.5 million to $2.9 million; (c) in lease year 6 the basic annual rent will be reduced from $5.6 million to $3.1 million; and (d) in lease year 7 the basic annual rent will be reduced from $5.6 million to $3.2 million. In lease years 8 through year 20, the basic annual rent will be increased by an amount equal to the greater of 1.25% of the prior lease year basic annual rent or (ii) the percentage increase in the CPI over the lease year immediately preceding the applicable lease year in question, provided, however, that in no event shall such percentage be greater than 2% of the prior lease year basic annual rent. The lease also contains two options for Station to repurchase the corporate office building, one option at the end of the fifth year of the lease term and a second option at the end of the tenth year of the lease term, which is considered continuing involvement under the authoritative guidance for accounting for sale-leaseback transactions involving real estate. Because of this continuing involvement, the corporate office lease is being accounted for as a financing transaction, with the sales proceeds recorded as a liability and the lease payments recorded as interest expense. In addition, the corporate office building is included within property and equipment, net of depreciation, on Station's consolidated balance sheets. The amendment

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did not change the terms of the two options to repurchase the building. The amended lease was assumed by the Company with the authorization of the Bankruptcy Court.

        Station currently owns eight additional sites which have been acquired for potential gaming projects, consisting of 253 acres in the Las Vegas valley, 772 acres in Northern California and 200 acres in Reno, Nevada. We expect to acquire these sites on the Effective Date.

ITEM 3.    LEGAL PROCEEDINGS.

        The Company is not a party to any litigation. However, Station and Green Valley Ranch were from time to time subject to litigation relating to routine matters incidental to its business. Litigation claims against STN will be satisfied pursuant to the Plan and will not be assumed by us. Litigation claims against subsidiaries of STN that are not currently Debtors are expected to be addressed in the Plan following such time as such subsidiaries file voluntary chapter 11 cases with the Bankruptcy Court. We expect to be subject to other claims from time to time following the Effective Date in connection with our business and operations.

ITEM 4.    (REMOVED AND RESERVED)

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PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

        We have not yet issued any Units. Therefore, there is currently no established public trading market for our Units, and there are no plans, proposals, arrangements or understandings with any person with regard to the development of a trading market for our Units. On the Effective Date, there will be outstanding membership Units. We have not agreed with any security holder to register any of our Units for sale by any security holder. Our Units are being issued pursuant to the Plan, and none of our Units are being publicly offered by us.

Holders

        We have not yet issued any Units. On the Effective Date, we anticipate that there will be one holder of record of our Voting Units and one holder of record of our Non-Voting Units.

Dividends

        Our operational documents permit, but do not require, us to make distributions to our members in respect of our taxable income that they recognize as a result of their ownership in the company. There can be no assurance that we will make such distributions. In addition, even if we do make tax distributions, we do not plan to pay any other dividends or make any other distributions on our Units in the foreseeable future. In addition, restrictive covenants of our debt instruments and other agreements will restrict the ability of the respective obligors to pay dividends. Therefore, you should not expect to receive any distributions in the foreseeable future from your Units.

Securities authorized for issuance under equity compensation plans

        We currently do not have any compensation plans.

ITEM 6.    SELECTED FINANCIAL DATA

Station Casinos LLC

        The Company was formed for the purpose of acquiring substantially all of the assets of Station pursuant to the Plan. In addition, the Company anticipates acquiring substantially all of the assets of GVR pursuant to the GVR Asset Purchase Agreement. We expect the Restructuring Transactions to be completed by June 30, 2011, at which time we will acquire the Acquired Casinos. The Company has conducted no business other than in connection with the Chapter 11 Cases and has no material assets or liabilities. See "Item 1. Business—Introduction." As the Company has no operations, the following selected financial data relates to Station.

        The historical financial results of Station are not indicative of our current financial condition or our future results of operations. Our future results of operations will be subject to significant business, economic, regulatory and competitive uncertainties and contingencies, some of which are beyond our control.

Station

        On November 7, 2007, STN completed its Merger as described further under "Item 1. Business—Chapter 11 Reorganization". The Merger resulted in a greater than 50% change in control of Station and was a "business combination" for accounting purposes, requiring Fertitta Colony Partners LLC ("FCP"), Fertitta Partners, LLC ("Fertitta Partners"), FCP VoteCo LLC ("FCP Voteco") and their respective

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owners (the "Investors"), pursuant to the accounting guidance for business combinations, to record the acquired assets and assumed liabilities at their fair market values as of the acquisition date, resulting in a new basis of accounting. As a result, the selected consolidated financial data presented for 2007 is presented for two periods: January 1, 2007 through November 7, 2007 (the "Predecessor Period") and November 8, 2007 through December 31, 2007 (the "Successor Period"). The Predecessor Period and the year ended December 31, 2006 reflect the historical accounting basis in Station's assets and liabilities, while the years ended December 31, 2010, 2009 and 2008 and the Successor Period reflect the push down of the Investors' new basis to its consolidated financial statements.

        In the table below, we provide Station's selected consolidated historical financial data as of and for the periods indicated. The selected consolidated financial data presented below as of and for the fiscal years ended December 31, 2010, 2009 and 2008, the Successor Period and the Predecessor Period, and as of and for the fiscal year ended December 31, 2006 have been derived from Station's consolidated financial statements which, except for 2007 and 2006, are contained elsewhere in this Annual Report on Form 10-K.

        The selected consolidated financial data set forth below are qualified in their entirety by, and should be read in conjunction with, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Station" and "Item 8. Financial Statements and Supplementary Data—Station Casinos, Inc. Consolidated Financial Statements" included in this Annual Report on Form 10-K. This

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selected consolidated financial data may not be indicative of our future performance, including changes that will occur as a result of the Restructuring Transactions such as changes in capitalization.

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(a)

On April 18, 2006, Station opened Red Rock.

(b)

Upon consummation of the Merger, equity-based awards in FCP and Fertitta Partners were issued (see Note 16 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K), which vest immediately or over five years, and as such, expense of approximately $287.7 million related to this issuance was recorded during the Successor Period from November 8, 2007 through December 31, 2007.

(c)

Development expenses include costs to identify potential gaming opportunities and other development opportunities, which include payroll, travel and legal expenses. Development expense for the year ended December 31, 2010 includes a $7.2 million accrual for non-reimbursable milestone payments that are expected to be paid in 2016 and 2017. A $4.0 million milestone payment is included in development expense for the year ended December 31, 2009 (see Note 8 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K).

(d)

Preopening expenses for the years ended December 31, 2010, 2009, 2008, the Successor Period and the Predecessor Period related to various projects under development. Preopening expenses for the year ended December 31, 2006 include costs primarily related to the opening of Red Rock.

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(e)

During the Predecessor Period, Station recorded approximately $156.5 million in costs related to the Merger. These costs include approximately $31.6 million of accounting, investment banking, legal and other costs associated with the Merger and $124.9 million of expense related to the accelerated vesting and buyout of employee stock options and restricted stock awards upon consummation of the Merger.

(f)

During the year ended December 31, 2010, Station recorded approximately $262.0 million in non-cash impairment charges to write-down certain portions of its goodwill, intangible assets, property and equipment, investments in joint ventures and land held for development to their fair values. During the year ended December 31, 2009, Station recorded approximately $1.28 billion in non-cash impairment charges to write-down certain portions of its goodwill, intangible assets, investments in joint ventures, land held for development and Native American project costs to their fair values. During the year ended December 31, 2008, Station recorded approximately $3.40 billion in asset impairment charges, of which $3.34 billion related to non-cash impairment charges to write-down certain portions of its goodwill, intangible assets, investments in joint ventures and land held for development to their fair values (see Note 15 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K). During the 2007 Predecessor Period, Station recorded impairment charges of $16.6 million, including an $8.0 million write-down of goodwill at Wildfire Boulder and Gold Rush, and $8.6 million related to the write-down of the corporate office building in conjunction with its sale.

(g)

During the year ended December 31, 2010, Station recorded approximately $18.3 million in write-downs and other charges, net, including a legal settlement of $6.2 million, net losses on asset disposals of $0.4 million, severance expense of $2.7 million, and a loss of $9.0 million related to expired land purchase options. During the year ended December 31, 2009, Station recorded approximately $16.7 million in write-downs and other charges, net, consisting of $2.4 million related to write-off of cancelled projects, $5.5 million related to losses on asset disposals, $3.0 million of severance expense, $5.3 million related to fully reserving a note receivable from an unconsolidated affiliate and $0.5 million related to the write-off of debt offering and restructuring fees. During the year ended December 31, 2008, Station recorded $57.8 million in write-downs and other charges, net of which $44.6 million related to the write-off of cancelled projects, $4.5 million related to loss on asset disposals, $5.0 million related to severance expense and $3.7 million for cancelled debt offering fees (see Note 15 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K). During the 2007 Predecessor Period, Station recorded write-downs and other charges, net of $(1.3) million including a $1.6 million gain on asset disposal, partially offset by a $0.2 million severance charge. During the Successor Period and the year ended December 31, 2006, write-downs and other charges, net related to losses on asset disposals and severance expense.

(h)

During the year ended December 31, 2010, Station recorded lease termination expense of $0.9 million related primarily to the termination of certain restaurant leases. During the year ended December 31, 2009, Station recorded lease termination expense of $4.1 million related to the termination of an equipment lease and a lease for certain office space that was no longer being utilized. The remaining lease payments on the office space totaling approximately $1.0 million were accrued in accordance with the guidance for accounting for costs associated with exit or disposal activities. The accrual for the office space lease termination is included in liabilities subject to compromise at December 31, 2009 in the accompanying Station Casinos, Inc. consolidated balance sheet in this Annual Report on Form 10-K. During the years ended December 31, 2008 and 2006, Station recorded lease termination expense to terminate various leases primarily related to land adjacent to the current Wild Wild West property. In addition, in 2008 it was determined that certain office space that Station leased would no longer be utilized. As such, the remaining lease payments were accrued. During the Predecessor Period, Station recorded management agreement/lease termination expense primarily due to the termination of the management agreement related to Cherry nightclub at Red Rock.

(i)

During the year ended December 31, 2010, the Rancho Road joint venture was dissolved and Station recognized a $124.2 million gain on dissolution as a result of writing off the deficit carrying value of this investment.

(j)

During the year ended December 31, 2010, Station's losses from joint ventures resulted primarily from recording its 50% share of asset impairment losses at Aliante Station. During the year ended December 31, 2009, Station's losses from joint ventures resulted primarily from recording its 50% share of impairment losses on land held by the Rancho Road joint venture and its share of asset impairment charges and operating losses from Aliante Station, which opened in November 2008. Station's earnings from joint ventures were impacted during the year ended December 31, 2008 by increased preopening expenses incurred prior to the opening of Aliante Station.

(k)

During 2009, Station recorded a gain on early retirement of debt of $40.3 million as a result of its repurchase of $40.0 million of its outstanding 6⁷/8% Senior Subordinated Notes and $8.0 million of its outstanding 6¹/2% Senior Subordinated Notes. During the Successor Period, in conjunction with the Merger, Station terminated its previous revolving credit facility resulting in a loss on early retirement of debt of $20.3 million, which included the write-off of unamortized loan costs as well as costs to terminate its then existing cash flow hedge interest rate swaps.

(l)

Reorganization items represent amounts Station incurred as a direct result of the Chapter 11 Case. Reorganization items for the year ended December 31, 2010 include $80.1 million related to professional fees and other expenses and $2.6 million related to post-petition adjustments of a swap liability to its fair value. Reorganization items for the year ended December 31, 2009 include $225.0 million related to the write-off of debt discount and prepaid debt issue costs, $80.8 million related to

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post-petition adjustments of swap liabilities to their fair values, and $70.1 million related to professional fees and other expenses.

(m)

Includes long term debt of $5.7 billion and $5.7 billion classified as liabilities subject to compromise at December 31, 2010 and 2009, respectively.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Station Casinos LLC

Overview

        Since our formation in August 2010, we have had no operations. We were formed for the purpose of acquiring substantially all of the assets of Station pursuant to the Plan. In addition, we anticipate acquiring substantially all of the assets of Green Valley Ranch pursuant to the GVR Asset Purchase Agreement. We expect the Restructuring Transactions to be completed by June 30, 2011, at which time we will acquire the Acquired Casinos. Accordingly, the management's discussion and analysis of financial condition and results of operations that follows is for the Company and Station on an individual basis.

        Upon the Effective Date, we will:

•

issue 100 Voting Units to Station Voteco;



•

issue 100 Non-Voting Units to Station Holdco;



•

enter into the Propco Credit Agreement, Opco Credit Agreement, Restructured Land Loan and GVR Term Loan; and



•

consummate the other Restructuring Transactions.

        Upon emergence, we intend to have approximately 100 Voting Units and 100 Non-Voting Units issued and outstanding. Station Voteco will be the only member of the Company entitled to vote on any matters to be voted on by the members of the Company. Station Holdco, as the holder of our issued and outstanding Non-Voting Units, will not be entitled to vote on any matters to be voted on by the members of the Company, but will be the only member of the Company entitled to receive distributions as determined by our Board of Managers out of funds legally available therefor and, in the event of our liquidation, dissolution or winding up is entitled to all of the Company's assets remaining after payment of liabilities. Under the Equityholders Agreement, in certain circumstances, holders of interests in Station Holdco will have the preemptive right to purchase or subscribe to any equity interests to be sold or issued by Station Holdco on the same terms and conditions as such equity interests are being offered and sold or issued to third parties.

        Upon the Effective Date, we will adopt fresh-start reporting in accordance with ASC 852-10-15 as it relates to the Plan. As a result, the value of Stations' assets, including intangible assets, and liabilities will be adjusted to their fair values on our consolidated balance sheet. In addition, upon the Effective Date, we will account for the GVR Acquisition in accordance with ASC 805—Business Combinations resulting in the value of the Green Valley Ranch assets acquired, including intangible assets, and liabilities assumed being recorded at the acquisition date fair values on our consolidated balance sheet. The historical consolidated financial results of Station are not indicative of our current financial condition or our future results of operations following the Effective Date. Our future results of operations will be subject to these events and other significant business, economic, regulatory and competitive uncertainties and contingencies, some of which are beyond our control.

Liquidity and Capital Resources

        Our cash flows will be affected by a variety of factors, many of which are outside of our control, including regulatory issues, competition, financial markets and other general business conditions. We

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believe that we will have sufficient liquidity through available cash, availability under our credit agreements and cash flow from the Acquired Casinos to fund our cash requirements and capital expenditures for at least twelve months after the Effective Date. We will endeavor to fund capital expenditures for maintenance of our properties through our operating results. However, we cannot assure you that we will generate sufficient income and liquidity to meet all of our liquidity requirements and other obligations as our results for future periods are subject to numerous uncertainties which may result in liquidity problems, which could affect our ability to meet our obligations while attempting to meet competitive pressures or adverse economic conditions.

        The following is a description of the expected debt arrangements following the Effective Date, including the estimated principal amounts outstanding. These estimates are based on the terms of the Plan and the current understanding with respect to the reorganization of Station. The terms of the debt may be subject to change as the reorganization of Station and acquisition of Green Valley Ranch are finalized and implemented, and the changes may be substantial. For example, the amount of the debt financing that will be required will depend on a number of factors, including the amount of cash Station holds as of the Effective Date after payment of reorganization expenses and the estimated cash needs going forward.

Propco Credit Agreement

        On the Effective Date, the Company, as borrower, is expected to enter into the Propco Credit Agreement consisting of a term loan facility in the principal amount of $1.6 billion (the "Propco Term Loan") and a revolving credit facility in the amount of $100 million, which revolving credit facility will increase to $150 million upon prepayment of $50 million of outstanding principal amount under the Propco Term Loan on the closing date thereof (the "Propco Revolver"). The initial maturity date of the Propco Credit Agreement will be on the fifth anniversary of the Effective Date but may be extended for two additional one-year periods, subject to the absence of defaults, accuracy of representations and warranties, payment of a 1.00% extension fee for each extension, and pro forma compliance with the total leverage and interest coverage ratios, and, in the case of the second extension of maturity, a total leverage ratio of less than 6.20 to 1.00. Interest shall accrue on the principal balance at the rate per annum, as selected by the Company, of not more than LIBOR plus 3.00% or base rate plus 2.00% for the first three years of the term; LIBOR plus 3.50% or base rate plus 2.50% for the fourth and fifth year; LIBOR plus 4.50% or base rate plus 3.50% in the sixth year if the Company elects to exercise the first optional extension of the maturity of the loans; and LIBOR plus 5.50% or base rate plus 4.50% for the seventh year if the Company elects to exercise the second optional extension of the maturity of the loans. Base rate will be subject to a floor equal to one-month LIBOR plus 1.00%. Additionally, the Company will be subject to a fee of 0.50% for the unfunded portion of the Propco Revolver.

        The Propco Credit Agreement is expected to contain certain financial and other covenants. These will include a minimum interest coverage ratio and total leverage ratio beginning eighteen months following the Effective Date. The Propco Credit Agreement also will provide for maximum capital expenditures not to exceed $50 million in 2011 and $70 million in each of 2012, 2013, 2014, 2015, 2016 and 2017. The Company will not be required to make principal payments prior to maturity of the Propco Credit Agreement other than (a) quarterly prepayments of 75% of excess cash flow if the total leverage ratio is equal to or greater than 6.00:1.00, 50% of excess cash flow if the total leverage ratio is less than 6.00:1.00 but greater than or equal to 4.00:1.00, or 25% if the total leverage ratio is less than 4.00:1.00 subject, in each case, to maintenance of minimum liquidity of $10.0 million; (b) prepayments with proceeds of certain asset sales, events of loss, incurrence of debt and equity issuances, and (c) prepayments of the Propco Revolver of unrestricted cash in excess of $15.0 million (which will not permanently reduce the revolving loan commitment).

        The Propco Credit Agreement will be guaranteed by all subsidiaries of the Company except NP Opco Holdings LLC ("Opco Holdings") and its subsidiaries (including NP Opco LLC ("Opco")), NP Landco Holdco LLC and its subsidiaries (including Landco), NP IP Holdings LLC ("IP Holdco") until such time

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as IP Holdco becomes a wholly owned subsidiary of the Company and each other subsidiary of the Company that is designated as an unrestricted subsidiary pursuant to the terms of the Propco Credit Agreement (each such entity and its subsidiaries, a "Propco Credit Agreement Unrestricted Subsidiary"). The Propco Credit Agreement will be secured by a pledge of the Company's equity (including equity held by Station Holdco and Station Voteco in the Company), together with all tangible and intangible assets of the Company and its subsidiaries (other than (i) any assets of IP Holdco, (ii) liens prohibited by applicable gaming laws, (iii) equity issued by, and any assets of, Opco or its subsidiaries, (iv) equity issued by, or any property of, Landco and its subsidiaries and (v) any assets of any other Propco Credit Agreement Unrestricted Subsidiary). The loan documents for the Propco Credit Agreement (the "Propco Loan Documents") contain a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of the Company, Station Voteco, Station Holdco and each direct and indirect subsidiary of the Company (other than Propco Credit Agreement Unrestricted Subsidiaries) to incur additional indebtedness; create liens on assets; dispose of assets; make investments and acquisitions; engage in certain transactions with affiliates, pay dividends, engage in mergers and fundamentally change its business. The Propco Credit Agreement is expected to contain certain events of default including, among other things, nonpayment of principal when due; nonpayment of interest, fees or other amounts after a five business day grace period; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain covenants, to certain grace periods); cross-default; bankruptcy events; certain Employee Retirement Income Security Act ("ERISA") events; material judgments; and a change of control. The Propco Loan Documents will provide that, following termination of the management agreements which may be effected upon a default by affiliates of Fertitta Entertainment (including certain specified defaults under the Propco Credit Agreement) or foreclosure by the Propco Lenders, the Company and Fertitta Entertainment will provide full transition services to the Propco Lenders and their designees.

Opco Credit Agreement

        On the Effective Date, a subsidiary of the Company, Opco, as borrower, will enter into the Opco Credit Agreement consisting of (a) a term loan facility in the principal amount of $430 million (the "Opco Term Loan"), (b) a term loan facility in the principal amount of $25 million with respect to which interest may be paid in kind (i.e. capitalized as principal) for the first five years of the term of the Opco Credit Agreement (the "PIK Term Loan") and (c) a new "super priority" revolving credit facility in the maximum amount of $25 million, the availability of which will be subject to standard closing and continuing conditions (the "Opco Revolver"). In addition, Opco shall have the option, after the first anniversary of the Effective Date, to solicit lending commitments to increase the amount of the Opco Revolver by up to an additional $25 million. The initial maturity date will be on the fifth anniversary of the Effective Date but may be extended for two additional one-year periods, subject to the absence of defaults, accuracy of representations and warranties, and payment of 1.00% extension fee for each extension, and pro forma compliance with the total leverage and interest coverage ratios. Interest shall accrue on the principal balance other than the PIK Term Loan at the rate per annum, as selected by Opco, of not more than LIBOR plus 3.00% or base rate plus 2.00% for the first three years of the term; LIBOR plus 3.50% or base rate plus 2.50% for the fourth and fifth year; LIBOR plus 4.50% or base rate plus 3.50% for the sixth year if the Company elects to exercise the first optional extension of the maturity of the loans; and LIBOR plus 5.50% or base rate plus 4.50% for the seventh year if Opco elects to exercise the second optional extension of the maturity of the loans. Interest shall accrue on the principal balance of the PIK Term Loan at the rate per annum, as selected by Opco, of not more than LIBOR plus 3.50% or base rate plus 2.50% for the first five years of the term; LIBOR plus 4.50% or base rate plus 3.50% for the sixth year if the Company elects to exercise the first optional extension of the maturity of the loans; and LIBOR plus 5.50% or base rate plus 4.50% for the seventh year if Opco elects to exercise the second optional extension of the maturity of the loans. Base rate will be subject to a floor equal to one-month LIBOR plus 1.00%. Additionally, Opco will be subject to a fee of 0.50% for the unfunded portion of the Opco Revolver.

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        The Opco Credit Agreement is expected to contain certain financial and other covenants. These will include a maximum total leverage ratio and a minimum interest coverage ratio that will commence on the earlier of eighteen months after the Effective Date or the date on which aggregate investments by Opco deemed to have been made due to the designation of restricted subsidiaries as unrestricted subsidiaries exceed $10 million. The Opco Credit Agreement also will provide for maximum capital expenditures not to exceed $35 million in 2011, $40 million in each of 2012 and 2013, $45 million in each of 2014 and 2015 and $50 million in each of 2016 and 2017. Opco will not be required to make principal payments prior to the maturity of the Opco Credit Agreement other than (a) commencing with the fiscal year ended December 31, 2011, annual prepayments of 75% of excess cash flow if the total leverage ratio is equal to or greater than 3.50:1.00, 50% of excess cash flow if the total leverage ratio is less than 3.50:1.00 but greater than or equal to 2.50:1.00, or 25% of excess cash flow if the total leverage ratio is less than 2.50:1.00, subject, in each case, to maintenance of certain reserves not to exceed of $3.0 million; (b) prepayments with proceeds of certain asset sales, events of loss, incurrence of debt and equity issuances and (c) prepayments of the Opco Revolver of unrestricted cash in excess of $7.5 million (which will not permanently reduce the revolving loan commitment).

        The Opco Credit Agreement will be guaranteed by Opco Holdings and all subsidiaries of Opco except unrestricted subsidiaries. The Opco Credit Agreement will be secured by a pledge of Opco equity, together with all tangible and intangible assets of Opco Holdings, Opco and its subsidiaries (other than property of unrestricted subsidiaries and subject to limitations required by applicable gaming laws). The loan documents for the Opco Credit Agreement contain a number of covenants that, among other things, restrict, subject to certain exceptions, the ability of Opco and each restricted direct and indirect subsidiary thereof to incur additional indebtedness; create liens on assets; make investments and acquisitions; engage in certain transaction with affiliates, pay dividends, engage in mergers and fundamentally change its business. The Opco Credit Agreement is expected to contain certain events of default including, among other things, nonpayment of principal when due; nonpayment of interest, fees or other amounts after a five business day grace period; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain covenants, to certain grace periods); cross-default; bankruptcy events; certain ERISA events; material judgments; and a change of control (as defined therein). The loan documents will provide that, following termination of the management agreements which may be effected upon a default by affiliates of Fertitta Entertainment (including certain specified defaults under the Opco Credit Agreement) or foreclosure by the Opco Lenders, the Company and Fertitta Entertainment will provide full transition services to the Opco Lenders and their designees.

Restructured Land Loan

        On the Effective Date, a subsidiary of Propco Landco, CV PropCo, LLC ("CV Propco"), as borrower, is expected to enter into the Restructured Land Loan. The initial maturity date is expected to be the fifth anniversary of the Effective Date. Interest will accrue on the principal balance at the rate per annum of LIBOR plus 3.50% for the first five years. All interest on the Restructured Land Loan would be paid in kind (i.e., capitalized as principal under the Restructured Land Loan) for the first five years. CV Propco would have two options to extend the maturity date for an additional year to be available subject to absence of default, payment of up to 1.00% extension fee for each year, a step-up in interest rate to not more than LIBOR plus 4.50% (in year 6) and not more than LIBOR plus 5.50% (in year 7). Interest accruing in years 6 and 7 shall be paid in cash. There is no schedule minimum amortization prior to final stated maturity, but the Restructured Land Loan will be subject to mandatory prepayments with excess cash. The Restructured Land Loan would be guaranteed by all subsidiaries of CV Propco and secured by a pledge of CV Propco equity and all tangible and intangible assets of CV Propco and its subsidiaries, principally consisting of land located on the southern end of Las Vegas Boulevard at Cactus Avenue and land surrounding Wild Wild West. Documentation is expected to include customary representations, warranties, covenants, and events of default. The land carry costs of CV Propco are expected to be supported by the Company under a Support Agreement that provides for advances from the Company to

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CV Propco to fund taxes, insurance premiums and other land carry costs (excluding debt service) payable by CV Propco. The Restructured Land Loan is expected to provide that, following the termination of management agreements which may be effected upon a default by affiliates of Fertitta Entertainment (including certain specified defaults under the Propco Credit Agreement) or foreclosure by the Propco Lenders, the Company and Fertitta Entertainment would provide full transition services to the CV Propco lenders and their designees.

GVR Term Loan

        GVR Purchaser, as borrower, has entered into a commitment letter for the GVR Term Loan, of which $205 million is expected to be a first lien term loan and $70 million of which is expected to be a second lien term loan. The maturity date of the first lien term loan is expected to be the fifth anniversary of the loan closing date and the maturity date of the second lien term loan is expected to be the sixth anniversary of the loan closing date. The first lien term loan is expected to have scheduled quarterly minimum amortization payments in the amount of one percent per annum. We do not expect that there will be scheduled minimum amortization of the second lien term loan prior to final stated maturity. The GVR Term Loan is expected to be subject to customary mandatory prepayments, including sale of equity or debt and excess cash flow. The lenders and GVR are expected to enter into a customary Intercreditor agreement. Interest is expected to accrue on the first lien term loan at the rate per annum of LIBOR plus 5.25% and interest is expected to accrue on the second lien term loan at the rate per annum of LIBOR plus 9.25%, in each case subject to a minimum LIBOR rate of 1.75%. The GVR Term Loan is expected to be guaranteed by all subsidiaries of GVR and its immediate parent company, GVR Holdco 1 LLC and secured by first lien and second lien pledges of GVR equity, together with first and second priority liens on all tangible and intangible assets of GVR and its subsidiaries.

Results of Operations

        Since our formation on August 9, 2010, we have had no operations.

Off-Balance Sheet Arrangements

        We currently do not have any off-balance sheet obligations.

Contractual Obligations

        We currently do not have any contractual obligations.

Station

Overview

        Station is a gaming and entertainment company that currently owns and operates ten major hotel/casino properties (two of which are 50% owned) under the Station and Fiesta brand names and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area. Station owns and operates Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock, Fiesta Rancho, Fiesta Henderson, Wild Wild West, Wildfire Rancho, Wildfire Boulder, Gold Rush and Lake Mead Casino. Station also owns a 50% interest in Green Valley Ranch, Aliante Station, Barley's, The Greens and Wildfire Lanes. Station also manages Gun Lake Casino.

        Station's operating results are greatly dependent on the level of gaming revenue generated at its properties. A substantial portion of Station's operating income is generated from the gaming operations, more specifically slot play. Station uses the non-gaming revenue departments to drive customer traffic to its properties. The majority of Station's revenue is cash based through customers wagering with cash or paying for non-gaming amenities with cash or credit card. Because Station's business is capital intensive,

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Station relies heavily on the ability of its properties to generate operating cash flow to repay debt financing, fund maintenance capital expenditures and provide excess cash for future development.

Recent Events

        The accompanying consolidated financial statements for Station have been prepared assuming that Station will continue as a going concern. As discussed in Note 1 to Station's consolidated financial statements, Station commenced the Chapter 11 Case on July 28, 2009. The pending Chapter 11 Case raises substantial doubt about Station's ability to continue as a going concern. Station's consolidated financial statements do not include any adjustments (except as described below) to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Chapter 11 Case

        On July 28, 2009, the Debtors filed voluntary petitions in the Bankruptcy Court under chapter 11 of title 11 of the United States Code. On February 10, 2010, GV Ranch Station, Inc., a wholly-owned subsidiary of Station Casinos, Inc. that manages and owns 50% of Green Valley Ranch, filed a voluntary petition in the Bankruptcy Court under chapter 11 of title 11 of the United States Code.

        On July 28, 2010, the Debtors filed the Plan and Disclosure Statement (the "Disclosure Statement"). The Bankruptcy Court entered an order approving the Disclosure Statement on July 29, 2010. The Bankruptcy Court entered an order confirming the Plan on August 27, 2010.

        On March 9, 2011, the GVR Purchaser, an indirect subsidiary of the Company, and GVR entered into the GVR Asset Purchase Agreement pursuant to which, the GVR Purchaser will purchase substantially all of the assets and assume certain specified liabilities of GVR for $500 million through a prepackaged plan of reorganization. The GVR Asset Purchase Agreement is subject to, among other things, the bankruptcy court entering a confirmation order confirming the chapter 11 plan of reorganization of GVR.

        On March 22, 2011, the subsidiaries of STN that are sellers under the Asset Purchase Agreement and Station's 50%-owned joint ventures GVR and Aliante commenced a solicitation of approvals for the Subsidiary Plan to implement and facilitate the sale and related restructuring transactions described in the Asset Purchase Agreement, the GVR Asset Purchase Agreement and a reorganization of Aliante pursuant to which its lenders would receive the equity of Aliante in exchange for their claims. We expect that the Subsidiary Chapter 11 Cases will be filed in the second quarter of 2011.

        This report is not intended to be, and should not in any way be construed as, a solicitation of votes on the Plan or the Subsidiary Plan. The Plan and the Disclosure Statement have been filed with the Bankruptcy Court and were filed with the Securities and Exchange Commission by Station on its Current Report on Form 8-K dated July 28, 2010, which is publicly available at http://www.sec.gov. Station concluded its solicitation of acceptance of the Plan and received its confirmation from the Bankruptcy Court on August 27, 2010. Although the Plan was confirmed by the Bankruptcy Court on August 27, 2010, there can be no assurance that the transactions contemplated by the Asset Purchase Agreement or the Plan will be consummated.

        The Debtors continue to conduct their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

        Please refer to our discussion under "Item 1. Business—Chapter 11 Reorganization" and "—Restructuring Transactions" for a more detailed discussion of the Chapter 11 Case and Restructuring Transactions.

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        The following discussion and analysis should be read in conjunction with "Item 6. Financial Information—Selected Financial Data—Station" and "Item 8. Financial Statements and Supplementary Data—Station Casinos, Inc. Consolidated Financial Statements" included in this Annual Report on Form 10-K.

Results of Operations

        The following table highlights the results of operations for Station as compared to prior years (dollars in thousands):

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(a)

Includes the wholly-owned properties of Palace Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock, Fiesta Rancho and Fiesta Henderson.

(b)

For 2010, includes management fees from Thunder Valley (through June 2010), Barley's, The Greens and Wildfire Lanes. For 2009 and 2008, includes management fees from Thunder Valley, Green Valley Ranch, Aliante Station (since November 11, 2008), Barley's, The Greens and Wildfire Lanes. No management fee revenue was recognized for Green Valley Ranch and Aliante Station during 2010 due to debt-related cash restrictions at those properties.

(c)

Includes the wholly-owned properties of Wild Wild West, Wildfire Rancho, Wildfire Boulder, Gold Rush, Lake Mead Casino and corporate and development expense.

Net Revenues

        Consolidated net revenues for the year ended December 31, 2010 decreased 11.0% to $945.0 million as compared to $1.06 billion in 2009. Similarly, combined net revenues from Station's Major Las Vegas Operations decreased 8.6% to $886.6 million for the year ended December 31, 2010 as compared to $970.5 million for the year ended December 31, 2009. Consolidated net revenues for the year ended December 31, 2009 decreased 18.2% to $1.06 billion as compared to $1.30 billion in 2008. Similarly, combined net revenues from Station's Major Las Vegas Operations decreased 17.5% to $970.5 million for the year ended December 31, 2009 as compared to $1.18 billion for the year ended December 31, 2008.

        During the years ended December 31, 2010, 2009 and 2008, Station experienced an overall decrease in revenues across all of its properties as a result of the ongoing economic weakness in Las Vegas and across the United States. High unemployment, weak consumer confidence levels and depressed real estate values have continued to negatively impact the economic climate in the Las Vegas area and are expected to continue in 2011.

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Operating Income/Operating Margin

        Station's consolidated operating loss of $209.1 million for the year ended December 31, 2010 improved significantly as compared to its consolidated operating loss of $1.21 billion for the year ended December 31, 2009. The improvement of $1.00 billion is primarily due to a $1.01 billion decrease in asset impairment charges recognized during 2010 compared to 2009. Asset impairment charges are discussed in more detail below.

        Station's consolidated operating loss of $1.21 billion for the year ended December 31, 2009 decreased significantly as compared to its consolidated operating loss of $3.22 billion for the year ended December 31, 2008. The decrease is primarily the result of a decrease in operating costs and expenses in 2009 compared to 2008, most notably a $2.11 billion decrease in asset impairment charges and other write-downs, partially offset by the decline in net revenues during 2009.

        The following table highlights Station's various sources of revenues and expenses as compared to prior years (dollars in thousands):

        Casino.    Casino revenues decreased 8.5% to $699.4 million for the year ended December 31, 2010 as compared to $764.6 million for the year ended December 31, 2009. The $65.2 million decrease in casino revenues during 2010 is due primarily to a 7.0% decrease in slot revenue and a 20.3% decrease in table game revenues. Casino revenues decreased 16.7% to $764.6 million for the year ended December 31, 2009 as compared to $918.1 million for 2008. The $153.5 million decrease in casino revenues during 2009 was due primarily to a 17.1% decrease in slot revenue and a 16.3% decrease in table game revenues. These decreases in casino revenues are primarily due to the continuation of the general economic slowdown discussed above.

        Casino expenses decreased 10.9% to $289.2 million for the year ended December 31, 2010 as compared to $324.4 million for the year ended December 31, 2009. The $35.2 million decrease in expenses is due primarily to a decrease of $6.6 million in costs related to complimentary slot play, food, beverage,

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rooms, entertainment and merchandise, decreased payroll expense of $5.5 million, decreased promotional expense of $15.2 million, decreased gaming taxes and licenses of $1.7 million primarily resulting from lower gaming revenues, and a net decrease in other casino expenses of $6.2 million. Casino expenses decreased 10.2% to $324.4 million for the year ended December 31, 2009 as compared to $361.3 million for 2008. The $36.9 million decrease in casino expenses during 2009 is due primarily to a decrease of $21.6 million in costs related to complimentary slot play, food, beverage, rooms, entertainment and merchandise, decreased payroll expense of $12.6 million, decreased gaming taxes and licenses of $13.6 million primarily resulting from lower gaming revenues, and a net decrease in other casino expenses of $5.0 million, partially offset by an increase in promotional expenses of $15.9 million.

        The casino operating margin for the year ended December 31, 2010 increased to 58.7% as compared to 57.6% for 2009. The casino operating margin for the year ended December 31, 2009 decreased to 57.6% as compared to 60.7% for the year ended December 31, 2008.

        Food and Beverage.    Food and beverage revenues decreased 14.1% to $163.2 million for the year ended December 31, 2010 as compared to 2009 primarily due to the conversion of several owned outlets to leased outlets. The number of restaurant guests served decreased 22.1% for the year ended December 31, 2010 compared to 2009 primarily for the same reason. Food and beverage expenses decreased 8.2% for the year ended December 31, 2010 as compared to 2009 primarily due to the decreased number of restaurant guests served. The food and beverage margin for the year ended December 31, 2010 decreased 4.1% as compared to 2009, primarily as a result of increases in the cost of food and beverage commodities. The average guest check for the year ended December 31, 2010 increased by approximately 1.4% as compared to 2009 primarily due to the closure of lower priced restaurants.

        Food and beverage revenues decreased 17.0% for the year ended December 31, 2009 as compared to 2008 due to the conversion of owned outlets to leased outlets as well as reduced hours of operation at various owned food outlets due to the general economic slowdown discussed above. The number of restaurant guests served decreased 20.3% for the year ended December 31, 2009 compared to 2008 as a result of these same factors. Food and beverage expenses decreased 23.6% for the year ended December 31, 2009 as compared to 2008 due to the decrease in the number of restaurant guests served, an overall decrease in Station's food and beverage costs as a result of efficiency efforts and reduced payroll expenses due to reduced staffing and reduced hours of operation. The food and beverage margin for the year ended December 31, 2009 increased 5.3% as compared to 2008, primarily due to the efficiency efforts that have decreased food and beverage costs. The average guest check for the year ended December 31, 2009 increased by approximately 3.2% as compared to 2008 due primarily to the closure of lower priced restaurants and an increase in selected menu prices.

        Room.    The following table shows key information about Station's hotel operations:

        The year over year decreases in room revenues for the years ended December 31, 2010 and 2009, respectively, are primarily due to the continued economic slowdown discussed above, and the decreases in room expenses for the same periods are due mainly to lower occupancy levels. Since many of Station's room-related costs are fixed, decreases in room revenues typically result in decreased margins.

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        Other.    Other revenues primarily include income from gift shops, bowling, entertainment, leased outlets and the spa. Other revenues decreased 8.7% for the year ended December 31, 2010 as compared to 2009, and other revenues decreased 12.2% for the year ended December 31, 2009 as compared to 2008. The decreases in other revenues are primarily the result of reduced customer spending in these areas as a result of the general economic slowdown discussed above.

        Management Fees.    Station is the managing partner for Green Valley Ranch, Aliante Station, Barley's, The Greens and Wildfire Lanes and earns a management fee equal to 2% of revenues and approximately 5% of EBITDA from Green Valley Ranch and Aliante Station and 10% of EBITDA from Barley's, The Greens and Wildfire Lanes. Station also managed Thunder Valley on behalf of the United Auburn Indian Community and received a management fee equal to 24% of net income (as defined in the management agreement) until the management agreement expired in June 2010. During 2010 Station did not recognize management fee revenue from Green Valley Ranch and Aliante Station due to debt-related cash restrictions in place at those properties. As a result, management fees for the year ended December 31, 2010 decreased to $22.4 million compared to $52.4 million for 2009. For the year ended December 31, 2009, management fees decreased to $52.4 million from $72.4 million for 2008 as a result of an overall decrease in revenues at Station's managed properties due to the general economic slowdown discussed above.

        Selling, General and Administrative ("SG&A").    SG&A expenses decreased $9.7 million, or 4.2%, for the year ended December 31, 2010 as compared to 2009, and SG&A as a percentage of net revenues increased to 23.2% for the year ended December 31, 2010 compared to 21.6% in 2009. The decrease in SG&A expenses during 2010 is primarily due to a decrease of $2.2 million in utilities, a decrease of $2.0 million in consulting and outside services expense, a decrease of $1.7 million in taxes and licenses, a decrease of $1.7 million in payroll and benefits and a net decrease of $3.1 million in other SG&A expenses, partially offset by a decrease of $1.0 million in the gain on net deferred compensation assets. SG&A expenses decreased $21.4 million, or 8.5%, for the year ended December 31, 2009 as compared to 2008 due to Station's cost savings initiatives which reduced payroll expense and health benefit costs company-wide. In addition, SG&A expenses were lower in 2009 as compared to 2008 as a result of efficiency efforts which resulted in reductions in advertising, security expense, and maintenance expense of $7.8 million, $1.1 million and $3.4 million, respectively, compared to 2008 levels. SG&A as a percentage of net revenues increased to 21.6% for the year ended December 31, 2009 compared to 19.3% in 2008 due to lower net revenues.

        Corporate Expense.    Corporate expense increased 5.7% to $34.9 million for the year ended December 31, 2010 as compared to $33.0 for the year ended December 31, 2009. The $1.9 million increase is primarily related to an increase of $1.3 million in insurance expense, an increase of $1.0 million in payroll and benefits and a net increase of $1.1 million in various other corporate expenses, partially offset by a decrease of $1.5 million in legal expense. Corporate expense decreased to $33.0 million for the year ended December 31, 2009 as compared to $36.0 for the year ended December 31, 2008. The decrease was primarily related to reduced payroll expense and health benefit costs resulting from cost savings initiatives.

        Development and Preopening Expense.    Development and preopening expense includes costs to identify potential gaming opportunities and other development opportunities, and expenses incurred prior to the opening of projects under development. The primary components of such costs are payroll, travel, legal expenses and milestone payments. Development and preopening expense for the years ended December 31, 2010, 2009, and 2008 were $16.3 million, $12.0 million and $13.6 million, respectively. The increase in development and preopening expenses during the year ended December 31, 2010 compared to 2009 was primarily due to a $3.2 million increase in milestone expenses related to the Gun Lake project and the forgiveness of $2.0 million in Gun Lake project advances, partially offset by a $0.9 million decrease in other development and preopening expenses. The decrease in development and preopening expenses during the year ended December 31, 2009 compared to 2008 was due primarily to higher expenses incurred

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during 2008 related to the Aliante project, partially offset by a $4.0 million milestone payment during 2009 related to the Gun Lake project.

        Depreciation and Amortization.    Depreciation and amortization decreased 26.0% to $153.3 million for the year ended December 31, 2010 compared to $207.2 million for the year ended December 31, 2009. Depreciation expense decreased by approximately $16.2 million during 2010 compared to 2009, primarily as a result of a decrease in the total carrying value of Station's depreciable assets due to asset impairment charges recognized during 2009. Amortization expense decreased by approximately $37.7 million during 2010 as compared to 2009 primarily as a result of the intangible asset related to Station's management agreement with Thunder Valley becoming fully amortized in June 2010. Depreciation and amortization decreased 8.7% to $207.2 million for the year ended December 31, 2009 compared to $226.8 million for the year ended December 31, 2008. This decrease was due primarily to reductions in amortization expense of approximately $20.8 million related to lower finite-lived intangible asset balances resulting from the impairment of customer relationship intangibles in the fourth quarter of 2008, as well as finite-lived assets that became fully amortized during late 2008, partially offset by a slight increase in depreciation expense as a result of additions to property and equipment.

        Asset Impairments.    The Plan as confirmed by the Bankruptcy Court on August 27, 2010 reflects a reorganization value of approximately $2.6 billion, which is significantly less than the carrying value of Station's net assets that are subject to the plan. Station determined that this constituted an indicator of asset impairment and therefore Station reviewed substantially all of its assets for impairment during the third quarter of 2010. As a result of Station's impairment review, Station recognized asset impairments totaling $262.0 million, consisting of the following:

•

$60.4 million to write down the goodwill of certain of its reporting units to fair value;



•

$114.4 million related to land held for development due to decreased real estate values in the markets in which Station operate;



•

$66.6 million related to the property and equipment of certain reporting units;



•

$16.3 million related to an investment in its Richfield Homes joint venture; and



•

$4.3 million related to other intangible assets.

        For the year ended December 31, 2009, Station recorded asset impairments totaling $1.28 billion, primarily as a result of the ongoing recession which resulted in decreased projected cash flow estimates, decreased valuation multiples for gaming assets due to the current market conditions and higher discount rates resulting from turmoil in the credit markets. Asset impairments recognized during the year ended December 31, 2009 consisting of the following:

•

$181.8 million to write down to fair value the goodwill of certain of its reporting units;



•

$255.3 million to write down certain intangible assets that were recognized in the Merger to fair value;



•

$30.0 million to write down investments in joint ventures to their fair values due to decreases in estimated future cash flows from these investments;



•

$617.4 million related to land held for development due to decreased real estate values in the markets in which Station operates, changes in the anticipated use of certain land parcels, and the current economic condition of Station and its ability to secure adequate financing for capital projects going forward;



•

$179.4 million related to the property and equipment of certain reporting units; and



•

$13.0 million related to capitalized Native American project costs which may not be recoverable.

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        In the year ended December 31, 2008, Station recognized asset impairments totaling $3.34 billion. These impairments were primarily a result of the ongoing recession which resulted in decreased projected cash flow estimates, decreased valuation multiples for gaming assets due to weak market conditions and higher discount rates resulting from turmoil in the credit markets, as well as the impact of Station's economic condition on its ability to secure adequate financing for future capital projects and changes in the anticipated use of certain land parcels. Impairments recognized during the year ended December 31, 2008 consisted of the following:

•

$2.59 billion and $327.3 million, respectively, to write down certain portions of its goodwill and intangible assets that were recognized in the Merger to their fair values;



•

$273.0 million to write down its investments in joint ventures to their fair values; and



•

$148.0 million related to its land held for development.

        Write-downs and Other Charges, net.    For the year ended December 31, 2010, write-downs and other charges, net were $19.2 million and consisted of the following:

•

the write-off of $9.0 million in capitalized costs related to expired land purchase options;



•

a legal settlement of $6.2 million;



•

$2.7 million in severance expense;



•

charges totaling $0.9 million related to the termination of certain restaurant leases; and



•

$0.4 million net loss on disposal of assets.

        For the year ended December 31, 2009, write-downs and other charges, net were $20.8 million and consisted of the following:

•

$2.4 million to write-off projects that were abandoned due to the general economic slowdown;



•

$5.5 million loss on disposal of assets, net, primarily related to the disposal of certain land held for development in Reno, Nevada;



•

$3.0 million in severance expense;



•

charges totaling $4.1 million related to the early termination of an equipment lease and a lease for office space no longer being utilized;



•

$5.3 million to fully reserve a note receivable from an unconsolidated affiliate; and



•

$0.5 million related to abandoned debt offering and restructuring efforts.

        In the year ended December 31, 2008, write-downs and other charges, net were $62.6 million and consisted of the following:

•

$44.6 million to write-off projects that were abandoned due to the general economic slowdown and options to purchase land that Station allowed to lapse;



•

$4.5 million loss on disposal of assets, net, primarily related to the closure of several food venues;



•

$3.7 million to write-off costs incurred to launch a private exchange offer in November 2008 that was subsequently terminated in December 2008;



•

$1.7 million to terminate various leases related to land adjacent to the current Wild Wild West property and $3.1 million related to an office space that was currently leased but no longer utilized. As such, the remaining lease payments were accrued in accordance with the guidance for accounting for costs associated with exit or disposal activities; and



•

$5.0 million in severance expense.

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        (Losses) Earnings From Joint Ventures.    Station owns a 50% interest in various joint ventures including Green Valley Ranch and Aliante Station, and a 6.7% interest in a joint venture that owns the Palms Casino Resort. Station's share of the (losses) earnings from these joint ventures were $(248.5) million, $(127.6) million and $17.0 million for the years ended December 31, 2010, 2009, and 2008, respectively. The $120.9 million increase in losses from joint ventures for the year ended December 31, 2010 as compared to the year ended December 31, 2009 is due primarily to increased impairment charges recognized by certain of Station's 50% owned joint ventures. During the year ended December 31, 2010, losses from joint ventures included a charge of $233.3 million representing Station's 50% share of asset impairment losses at Aliante Station. During the year ended December 31, 2009, losses from joint ventures included a charge of $124.9 representing Station's 50% share of asset impairment losses recognized by the Rancho Road joint venture. The $144.6 million decrease in Station's earnings from joint ventures for the year ended December 31, 2009 as compared to the year ended December 31, 2008 is due primarily to the 2009 impairment charges, as well as operating losses at Aliante Station, which opened in November 2008, and a decrease in operating results at Green Valley Ranch due to the general economic slowdown discussed above.

        Gain on Dissolution of Joint Venture.    During 2010, the Rancho Road and Richfield Homes joint ventures disposed of substantially all of their assets and were dissolved. At the date of dissolution, the carrying value of the investment in Rancho Road was a deficit of $124.2 million as a result of accumulated losses in excess of the investment. Upon dissolution, Station removed this deficit carrying value from its books and recognized a gain. Prior to Richfield Homes' disposal of its assets, Station's carrying value was $19.8 million. During 2010 Station recognized a $16.3 million impairment of its investment in Richfield Homes, which resulted in a carrying value equal to the $3.5 million cash distribution Station received from the disposal of Richfield Homes' assets. As a result, Station recognized no gain or loss upon the dissolution of the Richfield Homes joint venture.

        Interest Expense.    Interest expense, net of capitalized interest, decreased 62.2% to $104.6 million for the year ended December 31, 2010 as compared to $276.6 million for the year ended December 31, 2009. Gross interest expense decreased 60.9% to $115.8 million for the year ended December 31, 2010 as compared to $295.8 million for the year ended December 31, 2009. Interest expense, net of capitalized interest, decreased 27.1% to $276.6 million for the year ended December 31, 2009 as compared to $379.3 million for the year ended December 31, 2008. Gross interest expense decreased 27.4% to $295.8 million for the year ended December 31, 2009 as compared to $407.5 million for the year ended December 31, 2008.

        The year over year decreases in interest expense are due primarily to the accounting treatment under ASC Topic 852, Reorganizations ("ASC Topic 852"), whereby interest expense is recognized only to the extent that it will be paid during the bankruptcy proceeding or that it is probable that it will be an allowed claim. As a result of the filing of the Chapter 11 Case on July 28, 2009, Station stopped accruing interest for the senior notes, the senior subordinated notes and the mezzanine financings. Had Station recognized the additional contractual interest expense, interest expense for 2010 and 2009, respectively, would have been $315.3 million and $127.1 million higher than what was recorded. Capitalized interest for the year ended December 31, 2010 was $10.1 million compared to $16.0 million for the year ended December 31, 2009. The decrease was due primarily to the decrease in the weighted average cost of capital during 2010 as a result of the cessation of interest accruals on a portion of the debt as discussed above. Capitalized interest for the year ended December 31, 2009 was $16.0 million compared to $27.1 million for the year ended December 31, 2008. The higher capitalized interest during 2008 was primarily due to interest being capitalized on equity contributions to Aliante Station during the construction of the project.

        Interest and Other Expense from Joint Ventures.    For the years ended December 31, 2010, 2009, and 2008, Station recorded $66.7 million, $40.8 million and $47.6 million, respectively, in interest and other expense related to its unconsolidated joint ventures. The $25.9 million increase in interest and other

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expense from joint ventures for the year ended December 31, 2010 compared to the year ended December 31, 2009 relates primarily to recording Station's 50% share of the loss that resulted from the early termination of Green Valley Ranch's interest rate swap in March 2010. Prior to the termination of this interest rate swap, the liability was carried at fair value, which incorporated nonperformance risk adjustments related to credit risks of both counterparties in accordance with ASC Topic 815, Derivatives and Hedging. Upon early termination of the swap, fair value accounting for the swap was discontinued and the carrying value of the liability was increased to a fixed termination settlement amount which does not incorporate nonperformance risk adjustments. The $6.8 million decrease in interest and other expense from joint ventures for the year ended December 31, 2009 compared to the year ended December 31, 2008 relates primarily to decreased expense related to changes in the fair values of the interest rate swaps of the joint ventures, partially offset by increased interest at Aliante Station as a result of interest being capitalized during 2008 related the development of the property.

        Change in Fair Value of Derivative Instruments.    During the year ended December 31, 2010, Station recorded losses of $42,000 related to an interest rate swap not designated as a hedge for accounting purposes, which expired in November 2010. During the year ended December 31, 2009, Station recorded gains of $23.7 million related primarily to the change in fair value of its derivative instruments not designated as hedges for accounting purposes during the period prior to the Chapter 11 petition date. As a result of the Chapter 11 Case, certain interest rate swaps were reclassified to liabilities subject to compromise in accordance with ASC Topic 852, and therefore post-petition changes in the expected amount of the allowed claims for these interest rate swaps was recognized in the reorganization items line on Station's consolidated statement of operations. The post-petition change in fair value of derivative instruments included in reorganization items for the years ended December 31, 2010 and 2009 were expenses of $2.6 million and $80.8 million, respectively, and the amount in 2009 was primarily due to the reversal of pre-petition nonperformance adjustments that were previously included in the carrying values of these swaps. During the year ended December 31, 2008, Station recorded losses of $23.1 million related primarily to the change in fair value of its derivative instruments not designated as hedges for accounting purposes. Fluctuations in interest rates can cause the fair value of our derivative instruments to change each reporting period.

        Gain on Early Retirement of Debt.    In January 2009, a wholly-owned subsidiary of Station purchased $40.0 million in aggregate principal amount of its outstanding $700 million 6⁷/8% Senior Subordinated Notes and $8.0 million in aggregate principal amount of its outstanding $450 million 6¹/2% Senior Subordinated Notes for approximately $1.5 million plus approximately $1.4 million in accrued interest. As a result, Station recorded a gain on early retirement of debt of approximately $40.3 million during the year ended December 31, 2009, representing the difference between the reacquisition price and the net carrying amount of the extinguished debt based on the face amount of the associated debt adjusted for the related unamortized discount and debt issuance costs.

Liquidity and Capital Resources

        The following liquidity and capital resources discussion contains certain forward-looking statements with respect to Station's business, financial condition, results of operations, dispositions, acquisitions, expansion projects and its subsidiaries, which involve risks and uncertainties that cannot be predicted or quantified, and consequently, actual results may differ materially from those expressed or implied herein. Such risks and uncertainties include, but are not limited to, completion of Station's reorganization plan, financial market risks, the ability to maintain existing management, integration of acquisitions, competition within the gaming industry, the cyclical nature of the hotel business and gaming business, economic conditions, regulatory matters and litigation and other risks described in its filings with the Securities and Exchange Commission. In addition, construction projects entail significant risks, including shortages of materials or skilled labor, unforeseen regulatory problems, work stoppages, weather interference, floods and unanticipated cost increases. The anticipated costs and construction periods are based on budgets,

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conceptual design documents and construction schedule estimates. There can be no assurance that the budgeted costs or construction period will be met. All forward-looking statements are based on Station's current expectations and projections about future events.

Year Ended December 31, 2010

        The persistence of weak economic conditions in the United States and particularly in Las Vegas, including depressed real estate values, significant unemployment and low consumer confidence levels adversely affected Station's net revenues and gross margin during 2010, and these trends are expected to continue into 2011.

        During the year ended December 31, 2010, cash used in operating activities was approximately $4.6 million, as compared to cash used in operating activities of $126.7 million for the year ended December 31, 2009, reflecting a year over year decrease in cash used in operating activities of $122.1 million. The improvement in cash flows from operations resulted primarily from a decrease of $40.4 million in additions to restricted cash, a decrease of $95.1 million in cash paid for interest and a $10.1 million increase in other operating cash inflows, partially offset by an increase of $23.5 million in cash used for reorganization items.

        During the year ended December 31, 2010, restricted cash increased by $119.0 million due primarily to restrictions placed on cash by the lenders of the CMBS Loans and the Bankruptcy Court, partially offset by restricted cash released in connection with the DIP financing. The decrease in cash paid for interest during 2010 was primarily due to the previously discussed cessation of interest payments on certain portions of debt.

        As of December 31, 2010, Station had $165.4 million in cash and cash equivalents, of which approximately $83.5 million is in its casino cages to be used for the day-to-day operations of its properties and the remaining $81.9 million is to be used for general corporate purposes.

        In connection with the filing of the Chapter 11 Case, on July 31, 2009, STN entered into an unsecured, subordinated administrative priority DIP Credit Agreement among the Company, as borrower, Vista Holdings, LLC, a non-debtor subsidiary of Station ("Vista Holdings"), as administrative agent and lender, and the lenders party thereto. The DIP Credit Agreement, as amended, provided for a $185 million revolving credit facility that was funded on a committed basis for so long as Vista Holdings had cash and cash equivalents on hand in an amount in excess of $100 million and on a discretionary basis thereafter. The proceeds of the loans incurred under the DIP Credit Agreement were used for working capital and other general corporate purposes of Station and were available for intercompany loans to its subsidiaries during the pendency of the Chapter 11 Case. Advances under the DIP Credit Agreement bear interest at a rate equal to 2.5% plus LIBOR. The DIP Credit Agreement matured on August 10, 2010, and at December 31, 2010, $172.0 million in advances remained outstanding under the DIP Credit Agreement.

        STN's obligations under the DIP Credit Agreement will be an administrative expense claim in the Chapter 11 Case having pari passu priority with other administrative expense claims, provided that repayment of the loan by STN shall be subordinate to the full repayment of the lenders under Station's prepetition Credit Agreement. In addition, STN's obligations under the DIP Credit Agreement may be accelerated following certain events of default, including (without limitation) the conversion of any of the Chapter 11 Cases to a case under chapter 7 of the Bankruptcy Code or the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code.

        Also, in connection with the filing of the Chapter 11 Case, on July 31, 2009, STN entered into an Unsecured Revolving Loan Promissory Note in favor of Past Enterprises, Inc., a non-debtor subsidiary of Station ("Past Enterprises"), pursuant to which Past Enterprises provides to STN an unlimited revolving credit facility (the "Past Revolving Loan") at an interest rate of 2.78% per annum, the proceeds of which will be used for working capital and other general corporate purposes of Station and will be available for

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intercompany loans to its subsidiaries. The Past Revolving Loan matures on the earlier of (i) demand, or (ii) July 31, 2011, and provides for a default rate of interest of 4.78% if principal or interest due thereunder is not paid when due. At December 31, 2010, the outstanding balance due under the Past Revolving Loan totaled $289.3 million. Station still has the ability to borrow under the Past Revolving Loan, and there is no limit on its borrowings under the Past Revolving Loan.

        In July 2010, Gun Lake completed a $165 million third-party construction financing facility ("Gun Lake Financing"), which Station assisted them in obtaining in connection with the Gun Lake Development Agreement. A subsidiary of Station, SC Michigan, LLC ("SC Michigan"), provided $15 million of cash collateral to secure a limited completion guaranty and keep well obligation in connection with the Gun Lake Financing. The $15 million remains property of SC Michigan unless it is used to satisfy the completion guaranty requirements in the Gun Lake Financing, at which time it will be converted to a loan payable by Gun Lake to SC Michigan. SC Michigan deposited the $15 million into a restricted cash account under the control of the lenders to the Gun Lake Financing. As a result, in July 2010 MPM received approximately $42.8 million representing a partial repayment of project advances. Of the $42.8 million, SC Michigan received $39.3 million and used all of these funds to purchase funded debtor-in-possession loans made to Station by Past Enterprises (the "SC Michigan Revolving Loan"). At December 31, 2010, the outstanding balance due under the SC Michigan Revolving Loan totaled $39.3 million. The remainder of advances on the Gun Lake project is expected to be repaid from the operations of the project, which opened on February 10, 2011.

        STN's obligations under the Past Revolving Loan and SC Michigan Revolving Loan will be an administrative expense claim in the Chapter 11 Case having pari passu priority with other administrative expense claims, provided that repayment of the loan by STN shall be subordinate to the full repayment of the lenders under Station's prepetition Credit Agreement.

        During the year ended December 31, 2010, total capital expenditures were approximately $34.5 million for maintenance capital expenditures and various other projects. Capital expenditures for 2010 were $30.1 million lower than the prior year period, primarily due to reduced capital spending in response to current market conditions. Station classifies items as maintenance capital to differentiate replacement type capital expenditures such as new slot machines from investment type capital expenditures to drive future growth such as an expansion of an existing property. In contrast to normal repair and maintenance costs that are expensed when incurred, items Station classifies as maintenance capital are expenditures necessary to keep its existing properties at their current levels and are typically replacement items due to the normal wear and tear of its properties and equipment as a result of use and age.

        In addition to capital expenditures, during the year ended December 31, 2010, Station paid approximately $16.0 million in reimbursable advances for its Native American development projects.

        During 2010 Station also paid approximately $3.5 million in equity contributions to joint ventures and $3.2 million in principal payments on its debt, including $2.5 million in quarterly payments on the Term Loan (as defined below) and $0.7 million on other debt.

Year Ended December 31, 2009

        During the year ended December 31, 2009, cash flows used in operating activities were approximately $126.7 million, as compared to cash flows provided by operating activities of $51.2 million for the year ended December 31, 2008, reflecting a year over year decrease in cash flows from operations of $177.9 million. This decrease resulted primarily from a $152.5 million increase in operating loss, net of noncash items and reorganization costs, an increase in restricted cash of $145.4 million, and cash used for reorganization items of $59.8, partially offset by a decrease of $190.8 million in cash paid for interest. The weakening Las Vegas and U.S. economies, the decline in real estate values, the credit crisis, increased unemployment and a decrease in consumer confidence levels adversely affected Station's net revenues and

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operating margin. In addition, Station's estimated future cash flows have been impacted by these same factors, resulting in the significant asset impairment charges recorded in the year ended December 31, 2009. The increase in restricted cash requirements for the year ended December 31, 2009 is due primarily to additional collateral required for Station's treasury management function, restrictions placed on cash by lenders of the CMBS Loans, and restrictions placed on cash by the Bankruptcy Court. Cash used in investing activities during the year ended December 31, 2009 decreased by $134.0 million compared to 2008 primarily as a result of a $107.5 decrease in capital expenditures due to the economic slowdown, and a decrease in cash contributions to joint ventures of $33.4 million. Cash paid for interest during the year ended December 31, 2009 decreased by $190.8 million compared to the year ended December 31, 2008 primarily as a result of Station's election not to make the scheduled interest payments on its senior and senior subordinated notes and a portion of its CMBS loans in 2009 as described above.

        At December 31, 2009, Station had no borrowing availability under it Revolver but had $25.3 million of availability under its DIP Credit Agreement. In addition, subsequent to December 31, 2009, the DIP Credit Agreement facility was increased to $185 million. At December 31, 2009 Station had $185.2 million in cash and cash equivalents, of which approximately $81.5 million was in its casino cages to be used for the day-to-day operations of its properties with the remaining $103.7 million to be used for general corporate purposes.

        During the year ended December 31, 2009, total capital expenditures were approximately $64.6 million for maintenance capital expenditures and various other projects. Capital expenditures for the year ended December 31, 2009 were $107.5 million lower than the prior year capital expenditures of $172.1 million due to reduced capital spending in 2009 in response to current market conditions.

        In addition to capital expenditures, during the year ended December 31, 2009, Station paid approximately $19.3 million in advances for its Native American development projects and paid approximately $24.3 million in cash equity contributions to joint ventures.

Year Ending December 31, 2011

        Station's primary cash requirements for 2011 are expected to include (i) approximately $55 million to $75 million for maintenance and other capital expenditures, (ii) payments related to its existing and potential Native American projects and (iii) expenses related to the Chapter 11 Case. Station's liquidity and capital resources for 2011 are expected to be significantly affected by the Chapter 11 Case and completion of the restructuring of its indebtedness. At this time it is not possible to predict with certainty the effect the Chapter 11 Case and the restructuring will have on its business or various creditors. Station's future results depend upon successfully implementing, on a timely basis, a restructuring of its indebtedness. Station's operations and relationship with its customers, employees, regulators, vendors and agents may be adversely affected by the filing of the Chapter 11 Case. As a result of the filing of the Chapter 11 Case, Station expects to continue to incur, among other things, increased costs for professional fees and similar expenses. In addition, the filing of Station may make it more difficult to retain and attract management and other key personnel and requires senior management to spend a significant amount of time and effort dealing with the financial reorganization instead of focusing on the operations of its business.

        Stations' cash flow may be affected by a variety of factors, many of which are outside its control, including regulatory issues, competition, financial markets and other general business conditions. Station cannot assure you that it will possess sufficient income and liquidity to meet all of its liquidity requirements and other obligations. Although Station believes that cash flows from operations and borrowings under the Past Revolving Loan will be adequate to meet its financial and operating obligations in 2011, the results for future periods are subject to numerous uncertainties. Station may encounter liquidity problems, which could affect its ability to meet its obligations while attempting to meet competitive pressures or adverse economic conditions.

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Off Balance Sheet Arrangements

        As of December 31, 2010, Station has certain off-balance sheet arrangements that affect its financial condition, liquidity and results of operations, including interest rate swaps with a combined notional amount of $250 million.

        The following table summarizes Station's contractual obligations and commitments (amounts in thousands):

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(a)

Includes principal and contractual interest on long term debt, and termination settlement amounts due under terminated interest rate swaps. Also includes interest related to interest rate swaps that have not been terminated which has been estimated based on the notional amount and net interest spread as of December 31, 2010. Interest related to the CMBS Loans, Senior Notes and Senior Subordinated Notes is estimated based on the outstanding balance and interest rate as of July 27, 2009 immediately preceding the petition date of the Chapter 11 Case. Interest related to the Term Loan, Revolver and Land Loan is estimated based on the outstanding balance and interest rate as of December 31, 2010. See Notes 11 and 12 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K for additional information related to long-term debt and derivative instruments, respectively.

(b)

See Note 13 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K.

(c)

Other long-term obligations include employment contracts, long-term stay-on agreements and slot conversion purchase obligations.

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        As further discussed in Note 21 to the Station Casinos, Inc. Consolidated Financial Statements in this Annual Report on Form 10-K, on January 1, 2007 Station adopted the provisions of the accounting guidance for uncertainty in income taxes. Station had $8.8 million of unrecognized tax benefits as of December 31, 2010. Due to the inherent uncertainty of the underlying tax positions, it is not possible to assign the liability as of December 31, 2010 to any particular years in the table.

Inflation

        Station does not believe that inflation has had a significant impact on its revenues, results of operations or cash flows in the last three fiscal years.

Critical Accounting Policies

Significant Accounting Policies and Estimates

        Station prepares its consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of its accounting policies, including the determination of slot club program liability, the estimated useful lives assigned to assets, asset impairment, insurance reserves, bad debt expense, derivative instruments, purchase price allocations made in connection with acquisitions and the calculation of income tax liabilities, require that Station apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on Station's historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from Station's estimates. To provide an understanding of the methodology Station applies, its significant accounting policies and basis of presentation are discussed below, as well as where appropriate in this discussion and analysis and in the notes to Station's consolidated financial statements.

Slot Club Programs

        Station's Boarding Pass and Amigo Club player rewards programs (the "Programs") allow customers to redeem points earned from their gaming activity at all Station and Fiesta properties for complimentary slot play, food, beverage, rooms, entertainment and merchandise. At the time redeemed, the retail value of complimentaries under the Programs is recorded as revenue with a corresponding offsetting amount included in promotional allowances. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed under the Programs is recorded in casino costs and expenses on Station's consolidated statements of operations.

        Under the Programs, customers are able to accumulate points over time that they may redeem at their discretion under the terms of the Programs. The estimated cost to provide points is expensed as the points are earned and is included in casino costs and expenses in Station's consolidated statements of operations. To arrive at the estimated cost associated with outstanding points under the Programs, various estimates and assumptions are made regarding incremental costs of the benefits, historical breakage/forfeiture rates and an estimate of the mix of goods and services Station believes, based on past customer redemption patterns, will be redeemed. At December 31, 2010 and 2009, $8.4 million and $6.1 million, respectively, were accrued for the cost of anticipated Program redemptions.

Self-Insurance Reserves

        Station is currently self-insured up to certain stop loss amounts for workers' compensation and general liability costs. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accruals of estimates for claims incurred but not reported. At December 31, 2010 and 2009, Station had total self-insurance accruals reflected in its consolidated balance sheets of $4.1 million and $3.6 million, respectively. Effective July 1, 2008, Station is no longer self-insured for medical costs. In

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estimating these accruals, Station evaluated historical loss experience and made judgments about the expected levels of costs per claim. Station believe changes in medical costs, trends in claims of its employee base, accident frequency and severity and other factors could materially affect the estimate for these liabilities. Station continually monitors changes in employee demographics, incident and claim type and evaluates its insurance accruals and adjusts its accruals based on its evaluation of these qualitative data points.

Derivative Instruments

        From time to time Station enters into derivative instruments, typically in the form of interest rate swaps, in order to manage interest rate risks associated with its current and future borrowings. Station has adopted the accounting guidance for derivative instruments and hedging activities, as amended, to account for its interest rate swaps. The accounting guidance requires Station to recognize its derivative instruments as either assets or liabilities in its consolidated balance sheet at fair value. The accounting for changes in fair value (i.e. gains or losses) of a derivative instrument agreement depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Additionally, the difference between amounts received and paid under such agreements, as well as any costs or fees, is recorded as a reduction of, or an addition to, interest expense as incurred over the life of the agreement.

        For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and the ineffective portion is recorded in the consolidated statement of operations. Derivative instruments that are designated as fair value hedges and qualify for the "shortcut" method under accounting for derivative instruments and hedging activities, as amended, are allowed an assumption of no ineffectiveness. As such, there is no impact on the consolidated statement of operations from the changes in the fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on Station's consolidated balance sheet with an offsetting adjustment to the carrying value of the related debt. For those derivative instruments that are not designated as hedges for accounting purposes, the change in fair value is recorded in the consolidated statement of operations in the period of change.

        Fluctuations in interest rates can cause the fair value of Station's derivative instruments to change each reporting period. While Station attempts to predict such movements in interest rates and the impact on derivative instruments, such estimates are subject to a large degree of variability which could have a significant impact on its consolidated financial statements.

Property and Equipment and Other Long-Lived Assets

        Property and equipment are initially recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the term of the capitalized lease, whichever is less. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.

        Station must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense or a capital asset is a matter of judgment. Station classifies items as maintenance capital to differentiate replacement type capital expenditures such as a new slot machine from investment type capital expenditures to drive future growth such as an expansion of an existing property. In contrast to normal repair and maintenance costs that are expensed when incurred, items Station classifies as maintenance capital are expenditures necessary to keep its existing properties at their current levels and are typically replacement items due to the normal wear and tear of its properties and equipment as a result of use and age. Station's depreciation expense is highly dependent on the assumptions Station makes about its assets' estimated useful lives. Station determines the estimated useful

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lives based on its experience with similar assets, engineering studies and its estimate of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, Station accounts for the change prospectively.

        Station evaluates its property and equipment and other long-lived assets for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360-10. For assets to be held and used, Station reviews fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, Station compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparables, when available. For assets to be disposed of, Station recognizes the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model.

Goodwill and Other Intangible Assets

        Station accounts for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles-Goodwill and Other.

Goodwill

        Station tests its goodwill for impairment annually during the fourth quarter of each year, and between annual test dates whenever events or circumstances make it more likely than not that an impairment may have occurred. Impairment testing for goodwill is performed at the reporting unit level, and each of its 100% owned casino properties is considered to be a reporting unit. Station's annual goodwill impairment testing utilizes a two step process. In the first step, Station compares the fair value of each reporting unit with its carrying amount, including goodwill. The fair value of each reporting unit is estimated using the expected present value of future cash flows along with value indications provided by the current valuation multiples of comparable publicly traded companies. If the fair value of the reporting unit exceeds its carrying amount, then goodwill of the reporting unit is not considered impaired. If the carrying value of the reporting unit exceeds its fair value, then the goodwill of the reporting unit is considered to be impaired, and Station proceeds to the second step of the goodwill impairment test. In the second step, Station determines the implied fair value of the reporting unit's goodwill by allocating the fair value of the reporting unit determined in step one to the assets and liabilities of the reporting unit, as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Indefinite-lived Intangible Assets

        Station's indefinite-lived intangible assets include brands and certain license rights. The fair value of brands is estimated using a derivation of the income approach to valuation, based on estimated royalties saved through ownership of the assets, utilizing market indications of fair value. Station tests its indefinite-lived intangible assets for impairment annually during the fourth quarter of each year, and whenever events or circumstances make it more likely than not that an impairment may have occurred. Station's annual impairment test of indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that excess. Indefinite-lived intangible assets are not amortized unless it is determined that their useful life is no longer indefinite. Station periodically reviews its indefinite-lived assets to determine whether events and circumstances continue to support an indefinite useful life. If it is determined that an indefinite-lived intangible asset has

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a finite useful life, then the asset is tested for impairment and is subsequently accounted for as a finite-lived intangible asset.

Finite-Lived Intangible Assets

        Station's finite-lived intangible assets include customer relationship and management contract intangibles. Finite-lived intangible assets are amortized over their estimated useful lives, and Station periodically evaluates the remaining useful lives of these intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. Station reviews its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

        The customer relationship intangible asset refers to the value associated with Station's rated casino guests. The initial fair value of the customer relationship intangible asset was based on the projected net cash flows associated with these casino guests. Prior to the annual impairment test for the year ended December 31, 2008, Station had utilized the income forecast approach as its basis for amortization of the customer relationships intangible assets. The percentage of annual amortization applied each year utilizing the income forecast approach was based on expected future net cash flows associated with Station's rated casino guests and an expected attrition rate. Station believed this approach better reflected the pattern in which the economic benefits of the intangible asset were consumed. The attrition rate was determined in part quantitatively using historical customer data and qualitatively based on the consistency of its rated casino guests which is predominantly Las Vegas local residents as opposed to out of town customers. Subsequent to Station's annual impairment testing for the year ended December 31, 2008, these intangible assets are being amortized ratably over their estimated useful lives as the expected pattern of consumption no longer accommodates the income forecast approach.

        The customer relationship intangible asset is reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Increased competition within the gaming industry or a downturn in the economy could have an impact on Station's customer relationship intangible asset. Declines in customer spending which would impact the expected future cash flows associated with Station's rated casino guests, declines in the number of visitations which could impact the expected attrition rate of its rated casino guests or an erosion of operating margins associated with rated casino guest could cause the carrying value of the customer relationship asset to exceed the fair value. In this event an impairment based on the difference between the estimated fair value and the carrying value would be recognized.

        Management contract intangible assets refer to the value associated with management agreements under which Station provides management services to various casino properties, including casinos operated by joint ventures in which Station holds a 50% equity interest, and certain Native American casinos that Station has developed or are currently under development. The fair values of these management contract intangibles are established using discounted cash flow techniques based on estimated future cash flows expected to be received in exchange for providing management services. Management contract intangible assets are amortized ratably over their expected useful lives. Station begins amortizing management contract intangible assets when the property begins operations and management fees are being earned.

        Station evaluates its finite-lived intangible assets and other long-lived assets for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360-10. For assets to be held and used, Station reviews long-lived assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, Station compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, impairment is measured based on fair value compared to carrying value, with

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fair value typically based on a discounted cash flow model or market comparables, when available. For assets to be disposed of, Station recognizes the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model.

        Inherent in the calculation of fair values are various estimates. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from Station's estimates. If Station's ongoing estimates of future cash flows are not met, Station may have to record additional impairment charges in future accounting periods. Estimates of cash flows are based on the current regulatory, political and economic climates, recent operating information and budgets of the various properties where Station conducts operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to Station's properties.

Native American Development Costs

        Station incurs certain costs associated with development and management agreements entered into with Native American Tribes (the "Tribes"). In accordance with the accounting guidance in ASC Topic 970, Real Estate—General, costs for the acquisition and related development of the land and the casino facilities are capitalized as long-term assets until such time as the assets are transferred to the Tribe, at which time a long term receivable is recognized.

        In accordance with the accounting guidance for capitalization of interest costs, Station capitalizes interest to the project once a "Notice of Intent" (or the equivalent) to transfer the land into trust, signifying that activities are in progress to prepare the asset for its intended use, has been issued by the United States Department of the Interior ("DOI").

        Station earns a return on the costs incurred for the acquisition and development of the projects. Due to the uncertainty surrounding the estimated cost to complete and the collectability of the stated return, Station accounts for the return earned on Native American Development Costs using the cost recovery method described in ASC Subtopic 360-20, Real Estate Sales. Under the cost recovery method, recognition of the return is deferred until the gaming facility is complete and transferred to the Tribe and the resulting receivable has been repaid. Repayment of the advances and the return typically is funded from a refinancing by the Tribe, from the cash flows of the gaming facility or both.

        Station evaluates its Native American Development Costs for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-Lived Assets Subsections of ASC Topic 360-10. Station evaluates each project for impairment whenever events or changes in circumstances indicate that the carrying amount of the project might not be recoverable, taking into consideration all available information. Among other things, Station considers the status of the project, any contingencies, the achievement of milestones, any existing or potential litigation, and regulatory matters when evaluating its Native American projects for impairment. If an indicator of impairment exists, Station compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted expected future cash flows exceed the carrying value, no impairment is indicated. If the undiscounted expected future cash flows do not exceed the carrying value, then impairment is measured based on the difference between fair value and the carrying value.

Income Taxes

        Station is subject to income taxes in the U.S. and files a consolidated federal income tax return. Station accounts for income taxes in accordance with the guidance for accounting for income taxes. That guidance requires the recognition of deferred tax assets, net of applicable reserves, related to net operating loss carry-forwards and certain temporary differences.

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        Effective January 1, 2007, Station adopted the authoritative accounting guidance for accounting for uncertainty in income taxes. The accounting guidance contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with the authoritative guidance for accounting for income taxes. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement.

        Station's income tax returns are subject to examination by tax authorities. Station regularly assessses the potential outcome of these examinations in determining the adequacy of its provision for income taxes and its income tax liabilities. To determine necessary reserves, Station must make assumptions and judgments about potential actions by taxing authorities, partially based on past experiences. The estimate of the potential outcome for any uncertain tax issue is highly judgmental, and Station believes it has adequately provided for any reasonable and foreseeable outcomes relating to uncertain tax matters. When actual results of tax examinations differ from its estimates or when potential actions are settled differently than Station expected, Station adjusts the income tax provision and its tax reserves in the current period. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest.

Recently Issued Accounting Standards

        In December 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-28, Intangibles—Goodwill and Other (Topic 350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts ("ASU 2010-28"). Under the amended guidance, for reporting units with zero or negative carrying amounts, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. ASU 2010-28 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. Station does not expect adoption of the new guidance to have a material effect on its consolidated financial statements.

        In April 2010, the FASB issued ASU No. 2010-16, Entertainment—Casinos (Topic 924): Accruals for Casino Jackpot Liabilities, a consensus of the FASB Emerging Issues Task Force. This guidance clarifies that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots. The guidance is effective for reporting periods beginning after December 15, 2010. Since Station's existing accounting policy for accrual of jackpot liabilities is consistent with the new guidance, the adoption of this guidance will have no impact on Station's consolidated financial statements.

        In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This guidance clarifies and extends the disclosure requirements about recurring and nonrecurring fair value measurements. The guidance is effective for reporting periods beginning after December 15, 2009. Accordingly, Station adopted the new guidance in the first fiscal quarter of 2010. The adoption of this new guidance did not have a material impact on Station's consolidated financial statements.

        A variety of proposed or otherwise potential accounting guidance is currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary

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nature of such proposed accounting guidance, Station have not yet determined the effect, if any, that the implementation of such proposed accounting guidance would have on Station's consolidated financial statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our primary exposure to market risk will be interest rate risk associated with our long-term debt that is expected to bear interest based on floating rates. The interest on the Propco Credit Agreement, Opco Credit Agreement, GVR Term Loan and Restructured Land Loan, each to be entered into on the Effective Date, is expected to be based on a the LIBOR rate or base rate (both of which are floating) plus a stated amount. (See Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation—Station Casinos LLC—Liquidity and Capital Resources).

        Based upon assumed borrowings of $1.7 billion outstanding under our Propco Credit Agreement, a hypothetical 100 basis point (1%) change in interest rates would result in an annual interest expense change of up to approximately $17.0 million. Based upon assumed borrowings of $460.7 million outstanding under our Opco Credit Agreement, a hypothetical 100 basis point (1%) change in interest rates would result in an annual interest expense change of up to approximately $4.6 million. Based upon assumed borrowings of $105.0 million outstanding under the Restructured Land Loan, a hypothetical 100 basis point (1%) change in interest rates would result in an annual interest expense change of up to approximately $1.0 million. Based upon assumed borrowings of $275.0 outstanding under the GVR Term Loan, a hypothetical 100 basis point (1%) change in interest rates would result in an annual interest expense change of up to approximately $27.5 million.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

EXPLANATORY NOTE

        Since our formation in August 2010, we have had no operations. We were formed for the purpose of acquiring substantially all of the assets of Station pursuant to the Plan. In addition, we anticipate acquiring substantially all of the assets of Green Valley Ranch pursuant to the GVR Asset Purchase Agreement. We expect the Restructuring Transactions to be completed by June 30, 2011, at which time we will acquire the Acquired Casinos. Accordingly, the consolidated financial statements that follow are for Station.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Station Casinos, Inc.:

        We have audited the accompanying consolidated balance sheets of Station Casinos, Inc. and subsidiaries (the "Company") as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' deficit, and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

        The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, on July 28, 2009, the Company and certain of its affiliates filed voluntary petitions in the United States Bankruptcy Court for the District of Nevada in Reno, Nevada under chapter 11 of title 11 of the United States Code. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters also are described in Note 1. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ Ernst & Young, LLP

Las Vegas, Nevada
March 31, 2011

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STATION CASINOS, INC.

(Debtor and Debtor-In Possession)

CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except per share data)

The accompanying notes are an integral part of these consolidated financial statements.

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STATION CASINOS, INC.

(Debtor and Debtor-In Possession)

CONSOLIDATED STATEMENTS OF OPERATIONS

(amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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STATION CASINOS, INC.

(Debtor and Debtor-In-Possession)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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STATION CASINOS, INC.

(Debtor and Debtor-In-Possession)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(amounts in thousands)

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STATION CASINOS, INC.

(Debtor and Debtor-In-Possession)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(amounts in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Basis of Presentation

Basis of Presentation and Organization

        Station Casinos, Inc. (the "Company", "Station", "we", "our", "ours" or "us"), a Nevada corporation, is a gaming and entertainment company that currently owns and operates ten major hotel/casino properties (two of which are 50% owned) under the Station and Fiesta brand names and eight smaller casino properties (three of which are 50% owned), in the Las Vegas metropolitan area, as well as manages a casino for a Native American tribe. The accompanying consolidated financial statements include the accounts of Station and its wholly owned subsidiaries and MPM Enterprises, LLC (which is 50% owned by Station and required to be consolidated). Investments in all other 50% or less owned affiliated companies are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated.

Chapter 11 Reorganization

        On November 7, 2007, the Company completed a going private transaction that was sponsored by Frank J. Fertitta III and Lorenzo J. Fertitta and certain affiliates of Colony Capital, LLC ("Colony") (such going private transaction is referred to herein as, the "Merger"). In connection with the Merger, the Company's subsidiary, FCP PropCo, LLC ("Propco"), and certain other subsidiaries of the Company that directly or indirectly own interests in Propco (the "Propco Debtors") entered into a mortgage loan and related mezzanine financings in an aggregate principal amount of $2.475 billion (the "CMBS Loans"). The CMBS Loans were secured by substantially all fee and leasehold real property comprising Palace Station, Boulder Station, Sunset Station and Red Rock (collectively, the "Propco Properties"). In addition, the Company, as borrower, entered into a $900 million senior secured credit agreement (the "Credit Agreement") which was secured by substantially all of the assets of the Company and its subsidiaries, other than Propco and the Propco Debtors. The Company's $450 million 6% senior notes due April 1, 2012, $400 million 7³/4% senior notes due August 15, 2016, $450 million 6¹/2% senior subordinated notes due February 1, 2014, $700 million 6⁷/8% senior subordinated notes due March 1, 2016 and $300 million 6⁵/8% senior subordinated notes due March 15, 2018 (collectively, "Senior and Senior Subordinated Notes") remained outstanding following consummation of the Merger. On February 7, 2008, a wholly owned, indirect subsidiary of the Company ("Landco"), as borrower, entered into a $250 million delay-draw term loan collateralized by land located on the southern end of Las Vegas Boulevard at Cactus Avenue and land surrounding Wild Wild West in Las Vegas, Nevada (the "Land Loan").

        The Merger and related transactions left the Company highly leveraged. Shortly thereafter, the economy in the United States sharply declined, consumer spending deteriorated and the credit markets severely contracted. Foreclosure and unemployment rates in Nevada sharply increased, becoming among the highest in the United States, and many planned construction projects for new casinos in Nevada were delayed or cancelled, causing further deterioration of the Las Vegas economy and reduced discretionary consumer spending by Las Vegas residents. The Company was severely impacted by the economic downturn due to the fact all of its owned casinos are located in Las Vegas and its properties have historically attracted customers from the Las Vegas valley. In addition, the value of real estate in Nevada significantly eroded as a result of the deterioration of the economy.

        Due to the economic conditions following the Merger, including the credit crisis and a decrease in consumer confidence levels, the Company experienced a significant reduction in revenues. Although the Company engaged in cost reductions, reductions in workforce and other efforts to mitigate the impact of the decline in revenues, the results of operations of the Company were materially and adversely impacted

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STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

by the economic downturn and its ability to service its debt obligations was impaired. In addition, the decline in real estate values in Nevada adversely affected the value of the Company's assets. The resulting deterioration of the Company's results of operations and asset values, coupled with the Company's high leverage and the general unavailability of credit, negatively impacted the Company's ability to service its outstanding indebtedness or otherwise raise capital for restructuring.

        As a result, on July 28, 2009, STN and its affiliates FCP Holding Inc., FCP VoteCo, LLC, Fertitta Partners, LLC, FCP MezzCo Parent, LLC, FCP MezzCo Parent Sub, LLC, FCP MezzCo Borrower VII, LLC, FCP MezzCo Borrower VI, LLC, FCP MezzCo Borrower V, LLC, FCP MezzCo Borrower IV, LLC, FCP MezzCo Borrower III, LLC, FCP MezzCo Borrower II, LLC, FCP MezzCo Borrower I, LLC, FCP PropCo, LLC, Northern NV Acquisitions, LLC, Tropicana Station, LLC, River Central, LLC and Reno Land Holdings, LLC (collectively, the "Debtors") filed voluntary petitions in the United States Bankruptcy Court for the District of Nevada in Reno, Nevada (the "Bankruptcy Court") under Chapter 11 of the Bankruptcy Code. These cases are being jointly administered under the caption In re Station Casinos, Inc., et al Debtors Case No. 09-52470 (the "Chapter 11 Case").

Restructuring Transactions

        On August 27, 2010, the Bankruptcy Court entered an order confirming the Debtors' joint plan of reorganization (the "Plan"). Under the Plan, Station Casinos LLC ("New Station"), a designee of German American Capital Corporation and JP Morgan Chase Bank, N.A., as holders of $1.8 billion in CMBS Loans (the "Mortgage Lenders"), is expected to acquire the Propco Properties and certain related assets in satisfaction of the Mortgage Lenders' existing secured claims against Propco. In conjunction with these transfers to the Company, under the Plan: (i) New Station's voting units are expected to be issued to Station Voteco LLC, which is expected to be owned by designees of the Mortgage Lenders and an entity owned by Frank J. Fertitta III, our Chief Executive Officer, President and a member of our Board of Directors, and Lorenzo J. Fertitta, a member of our Board of Directors, (ii) New Station's non-voting units are expected to be issued to Station Holdco LLC ("Station Holdco"), which is expected to be owned by the Mortgage Lenders, FI Station Investor LLC, a newly formed limited liability company owned by affiliates of Frank J. Fertitta III and Lorenzo J. Fertitta ("FI Station Investor"), and the holders of the Senior and Senior Subordinated Notes; and (iii) New Station is expected to enter into a new credit agreement (the "Propco Credit Agreement") with the Mortgage Lenders consisting of a term loan facility in the principal amount of $1.6 billion and a revolving credit facility in the amount of $100 million, which revolving credit facility will increase to $150 million upon the prepayment of $50 million of outstanding principal amount under the term loan (the transactions described in clauses (i) through (iii) collectively referred to herein as, the "Propco Restructuring").

        In addition, Station Holdco will issue two classes of warrants to the Mortgage Lenders permitting the Mortgage Lenders to purchase a total of 5% of the non-voting equity of Station Holdco at exercise prices based upon a multiple of the share value of Station Holdco on the Effective Date (as defined herein) of the Plan (the "Mortgage Lender Warrants"). The Mortgage Lenders will sell to FI Station Investor one of the classes of warrants with the right to purchase up to 2.5% of the non-voting equity (the "Fertitta Warrants") and will transfer the remaining 2.5% of the Mortgage Lender Warrants to holders of the mezzanine portion of the CMBS Loans. On or about the Effective Date, FI Station Investor is expected to assign the Fertitta Warrants to an affiliate of Colony. The Mortgage Lender Warrants will have a per unit exercise price equal to two and one-half times the value of the non-voting units on the Effective Date that will increase by 15% on each of the third through seventh anniversaries of the Effective Date. The Fertitta

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

Warrants will have a per unit exercise price equal to three times the value of the non-voting units on the Effective Date that will increase by 15% on each of the third through seventh anniversaries of the Effective Date. For purposes of determining the exercise price of the Mortgage Lender Warrants and the Fertitta Warrants, the per unit value of the non-voting units will be determined based on a total equity value of Station Holdco equal to $200 million, plus the amount of any additional equity issued or capital contributions made as of the Effective Date, plus the amount of any reduction in the debt agreed to by the Mortgage Lenders in exchange for Station Holdco equity (the "Plan Value"). The Mortgage Lender Warrants and the Fertitta Warrants may only be exercised following the earlier of (i) the six and one-half year anniversary of the Effective Date and (ii) the occurrence of a capital raising transaction by Station Holdco that involves a determination of the equity value of Station Holdco (other than the transactions contemplated by the Plan) and expire on the seventh anniversary of the Effective Date.

        In addition, pursuant to the terms of the Plan, the Company and certain of its subsidiaries have entered into an Asset Purchase Agreement dated as of June 7, 2010, as amended (the "Asset Purchase Agreement") with FG Opco Acquisitions LLC, an entity that is currently owned in whole or in part by Fertitta Entertainment LLC, which is owned by affiliates of Frank J. Fertitta III and Lorenzo J. Fertitta ("Fertitta Entertainment"), and the Mortgage Lenders and will be owned by the New Station upon consummation of the transactions contemplated by the Asset Purchase Agreement (the "Opco Purchaser"). Pursuant to the terms of the Asset Purchase Agreement, the Opco Purchaser will acquire substantially all of the assets of the Company and certain of its subsidiaries, including Santa Fe Station, Texas Station, Fiesta Henderson, Fiesta Rancho and interests in certain Native American gaming projects (the "Opco Assets"), for a purchase price of $772 million, consisting of the following: (i) an amount in cash equal to $317 million, subject to adjustment pursuant to the terms of the Asset Purchase Agreement; and (ii) $455 million in aggregate principal amount of term loans, subject to adjustment pursuant to the terms of the Asset Purchase Agreement (together with a $25 million revolving credit facility, the "Opco Credit Agreement") (the transactions described in this paragraph, collectively referred to herein as the "Opco Acquisition"). The lenders under the Opco Credit Agreement will be the same lenders as under Station's existing Credit Agreement.

        Pursuant to the terms of the Plan, the proceeds of the sale of the Opco Assets will be distributed to secured creditors of STN in full satisfaction of their claims against Station. The Plan also provides that certain general unsecured creditors of STN ("Opco Unsecured Creditors") will receive warrants (the "Unsecured Creditor Warrants") exercisable for 2.5% of the total equity of Station Holdco. The Unsecured Creditor Warrants will have a per unit exercise price equal to two and one-half times the value of the non-voting units on the Effective Date that will increase by 15% on each of the third through seventh anniversaries of the Effective Date. For purposes of determining the exercise price of the Unsecured Creditor Warrants, the per unit value of the non-voting units will be determined based on the Plan Value. The Unsecured Creditor Warrants may only be exercised following the earlier of (i) the six and one-half year anniversary of the Effective Date and (ii) the occurrence of a capital raising transaction by Station Holdco that involves a determination of the equity value of Station Holdco (other than the transactions contemplated by the Plan), and expire on the seventh anniversary of the Effective Date.

        In addition, Opco Unsecured Creditors that are "accredited investors" (as defined in the Securities Act of 1933, as amended) will have an opportunity to participate in a rights offering ("Rights Offering") under which they may subscribe for and purchase their pro rata share of 15% of the equity interests of Station Holdco for an aggregate amount of $35.3 million. The Rights Offering may be increased to fund (i) the payment of $50 million pay-down under the Propco Credit Agreement, (ii) a portion of the Opco

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STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

Acquisition and (iii) the acquisition of Green Valley Ranch, Aliante Station, or any other material gaming operations located with a 100-mile radius of Las Vegas, provided that the aggregate purchase price payable for additional units so offered in the Rights Offering will not exceed $64.7 million. Certain affiliates of Fidelity Management & Research Company, Oaktree Capital Management, L.P. and Serengeti Asset Management, LP (the "Put Parties") will purchase at least one-half of the equity interests of Station Holdco offered pursuant to the Rights Offering and have committed to purchase the remainder of the equity interests of Station Holdco offered pursuant to the Rights Offering on or before June 30, 2011, to the extent that such equity interests are not purchased by other Opco Unsecured Creditors (the "Equity Put"). In consideration for their agreement to purchase equity interests that are not purchased by other Opco Unsecured Creditors, the Put Parties will receive a $3 million cash payment on the Effective Date and reimbursement of expenses in an amount of up to $1.7 million.

        Claimants with respect to the Land Loan are expected to enter into an amended and restated credit agreement related to the Land Loan (the "Restructured Land Loan"). Pursuant to the terms of the Restructured Land Loan, the principal outstanding is expected to be reduced to $105 million in exchange for warrants to purchase 60% of the outstanding equity interests of Landco exercisable for nominal consideration (the "Landco Warrants" and together with the Mortgage Lender Warrants, the Fertitta Warrants and the Unsecured Creditor Warrants, the "Warrants").

        On March 9, 2011, Station GVR Acquisition, LLC (the "GVR Purchaser"), an indirect subsidiary of New Station, and Green Valley Ranch Gaming, LLC (the "GVR Seller") entered into an Asset Purchase Agreement (the "GVR Asset Purchase Agreement"), pursuant to which the GVR Purchaser will purchase substantially all of the assets and assume certain specified liabilities of the GVR Seller for $500 million through a prepackaged plan of reorganization (the "GVR Acquisition"). The consummation of the transactions contemplated by the GVR Asset Purchase Agreement is subject to, among other things, the bankruptcy court entering a confirmation order confirming the chapter 11 plan of reorganization of the GVR Seller.

        On March 22, 2011, the subsidiaries of the Company that are sellers under the Asset Purchase Agreement and the Company's 50%-owned joint ventures the GVR Seller and Aliante Gaming, LLC ("Aliante") commenced a solicitation of approvals for a prepackaged plan of reorganization (the "Subsidiary Plan") to implement and facilitate the sale and related restructuring transactions described in the Asset Purchase Agreement, the GVR Asset Purchase Agreement and a reorganization of Aliante, pursuant to which its lenders would receive the equity of Aliante and $45 million in secured loans in exchange for their claims. We expect that the Chapter 11 cases for such subsidiaries (the "Subsidiary Chapter 11 Cases") will be filed in the second quarter of 2011.

        Following consummation of the Plan it is expected that New Station and its subsidiaries will enter into long-term management contracts with affiliates of Fertitta Entertainment to manage the Propco Properties and the Opco Assets (the "Management Agreements"). The Propco Restructuring, the Opco Acquisition, the GVR Acquisition, the issuance of the Warrants, the Rights Offering, the Equity Put, entry into the Management Agreements and the Restructured Land Loan are referred to herein collectively as the "Restructuring Transactions."

        Although the Plan was confirmed by the Bankruptcy Court on August 27, 2010, consummation of the Plan is subject to the satisfaction of certain conditions precedent, including among other things, (i) the Bankruptcy Court shall have authorized the assumption and rejection of certain contracts of the Debtors, (ii) all documents necessary to implement the Restructuring Transactions contemplated by the Plan,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

including but not limited to the equityholders agreement to be entered into upon emergence from bankruptcy among the Company, its equityholders and its subsidiaries (the "Equityholders Agreement"), the Opco Credit Agreement, the Propco Credit Agreement, the Restructured Land Loan and the Warrants, shall be in form and substance reasonably acceptable to the Debtors, and (iii) all necessary regulatory approvals, including but not limited to necessary approvals of the Nevada Gaming Authorities (as defined herein), will have been obtained (the date upon which the actions described in clauses (i) through (iii) are completed is referred to herein as the "Effective Date"). The Company currently expects that the Effective Date will occur by June 30, 2011, although the Company cannot assure you that the required regulatory approvals will be obtained, that conditions to consummation of the Plan will be satisfied by that date, or at all, or that the Company will be successful in implementing the Plan in the form contemplated, or at all.

        This report is not intended to be, and should not in any way be construed as, a solicitation of votes on the Subsidiary Plan. There can be no assurance that a sufficient percentage or number of lenders will accept the Subsidiary Plan or that the Bankruptcy Court will confirm such plan. In addition, if the Subsidiary Plan is not accepted, confirmed or consummated, there can be no assurance that the Company will be able to successfully develop, prosecute, confirm and consummate a plan of reorganization that is acceptable to the Bankruptcy Court and to the creditors, equity holders and other parties in interest of the GVR Seller and Aliante.

        Following the consummation of the Plan, the Company and certain of the other Debtors will be dissolved and, except to the extent set forth in the Plan, none of New Station, Fertitta Entertainment, FI Station Investor nor any of their respective affiliates will succeed to the assets or liabilities of the Company or the other Debtors.

        This report is not intended to be, and should not in any way be construed as, a solicitation of votes on the Plan. The Plan and the Disclosure Statement have been filed with the Bankruptcy Court and were filed with the Securities and Exchange Commission by the Company on its Current Report on Form 8-K dated July 28, 2010, which is publicly available at http://www.sec.gov. The Company concluded its solicitation of acceptance of the Plan and received its confirmation from the Bankruptcy Court on August 27, 2010. Although the Plan was confirmed by the Bankruptcy Court on August 27, 2010, there can be no assurance that the transactions contemplated by the Asset Purchase Agreement or the Plan will be consummated.

        The Debtors continue to conduct their businesses as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court.

Accounting for Reorganization

        Accounting Standards Codification ("ASC") Topic 852, Reorganizations ("ASC Topic 852") provides accounting guidance for financial reporting by entities in reorganization under the Bankruptcy Code including companies in chapter 11, and generally does not change the manner in which financial statements are prepared. The consolidated financial statements have been prepared on a going-concern basis, which assumes continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. The Chapter 11 Cases create substantial doubt about Station's ability to continue as a going concern. The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability of assets and the classification of liabilities that might result from the outcome of these uncertainties. In addition, the plan of reorganization could materially change the

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STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

amounts and classifications reported in the consolidated financial statements, and the accompanying consolidated financial statements do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that might be necessary as a consequence of confirmation of the plan of reorganization.

        Station's ability to continue as a going concern is contingent upon, among other things, its ability to (i) generate sufficient cash flow from operations; and (ii) obtain confirmation of a plan of reorganization under the Bankruptcy Code. In the event Station's restructuring activities are not successful and it is required to liquidate, the Company will be required to adopt the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts.

        ASC Topic 852 requires that the financial statements for periods subsequent to the filing of the Chapter 11 Case distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. As a result, revenues, expenses, realized gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business were reported separately as reorganization items in the statements of operations beginning in the quarter ended September 30, 2009. ASC Topic 852 also requires that the balance sheet distinguish pre-petition liabilities subject to compromise from both those pre-petition liabilities that are not subject to compromise and from post-petition liabilities, and requires that cash used for reorganization items be disclosed separately in the statement of cash flows. Station adopted ASC Topic 852 on July 28, 2009 and has segregated those items as outlined above for all reporting periods subsequent to such date.

Factors Affecting Comparability

        As a result of the filing of the Chapter 11 Cases, Station is now periodically required to file various documents with (and provide certain information to) the Bankruptcy Court, including statements of financial affairs, schedules of assets and liabilities, and monthly operating reports in forms prescribed by federal bankruptcy law, as well as certain financial information on an unconsolidated basis. Such materials will be prepared according to requirements of federal bankruptcy law. While they accurately provide then-current information required under federal bankruptcy law, they are nonetheless unconsolidated, unaudited, and prepared in a format different from that used in Station's financial statements filed under the securities laws. Accordingly, we believe that the substance and format do not allow meaningful comparison with our regular publicly disclosed financial statements. Moreover, the materials filed with the Bankruptcy Court are not prepared for the purpose of providing a basis for an investment decision relating to Station's securities, or for comparison with other financial information filed with the Securities and Exchange Commission.

DIP Financing

        In connection with the filing of the Chapter 11 Case, on July 31, 2009, the Company entered into a $150 million unsecured, subordinated administrative priority debtor in possession credit agreement (the "DIP Credit Agreement") among the Company, as borrower, Vista Holdings, LLC (a non-debtor subsidiary of the Company) as administrative agent (the "Administrative Agent") and lender, and the lenders party thereto. The DIP Credit Agreement provided for a $150 million revolving credit facility to be funded on a committed basis for so long as Vista Holdings, LLC had cash and cash equivalents on hand in an amount in excess of $100 million. During the three months ended March 31, 2010, the DIP Credit

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1. Summary of Significant Accounting Policies and Basis of Presentation (Continued)

Agreement was amended to increase the facility to $185 million. The proceeds of the loans incurred under the DIP Credit Agreement were used for working capital and other general corporate purposes of the Company and were be available for intercompany loans to its subsidiaries during the pendency of the Chapter 11 Case. The DIP Credit Agreement matured on August 10, 2010, and at December 31, 2010 $172 million in advances remained outstanding under the DIP Credit Agreement.

        The Company's obligations under the DIP Credit Agreement are an administrative expense claim in the Chapter 11 Case having pari passu priority with other administrative expense claims, provided that repayment of the loan by the Company shall be subordinate to the full repayment of the lenders under the Company's prepetition Credit Agreement.

        The Company's obligations under the DIP Credit Agreement may be accelerated following certain events of default, including (without limitation) the conversion of any of the Chapter 11 Case to a case under chapter 7 of the Bankruptcy Code or the appointment of a trustee pursuant to chapter 11 of the Bankruptcy Code.

        Also, in connection with the filing of the Chapter 11 Case, on July 31, 2009, the Company entered into an Unsecured Revolving Loan Promissory Note in favor of Past Enterprises, Inc. (a non-debtor subsidiary of the Company), pursuant to which Past Enterprises provides to the Company an unlimited revolving credit facility (the "Past Revolving Loan") at an interest rate of 2.78% per annum, the proceeds of which will be used for working capital and other general corporate purposes of the Company and will be available for intercompany loans to its subsidiaries. We still have the ability to borrow under the Past Revolving Loan, and there is no limit on the Company's borrowings under the Past Revolving Loan.

        The Past Revolving Loan matures on the earlier of (i) demand, or (ii) July 31, 2011, and provides for a default rate of interest of 4.78% if principal or interest due thereunder is not paid when due. At December 31, 2010, the outstanding balance due under the Past Revolving Loan totaled $289.3 million. In July 2010, SC Michigan, LLC and MPM Enterprises, LLC received approximately $42.8 million representing a partial repayment of advances on the Gun Lake project. SC Michigan, LLC, a wholly owned subsidiary of Station, received $39.3 million of the $42.8 million and used all of these funds to purchase funded debtor-in-possession loans made to the Company by Past Enterprises (the "SC Michigan Revolving Loan"). At December 31, 2010, the outstanding principal balance due under the SC Michigan Revolving Loan totaled $39.3 million.

        The Company's obligations under the Past Revolving Loan and the SC Michigan Revolving Loan will be administrative expense claims in the Chapter 11 Case having pari passu priority with other administrative expense claims, provided that repayment of the loan by the Company shall be subordinate to the full repayment of the lenders under the Company's prepetition Credit Agreement.

Merger

        On November 7, 2007, the Company completed the Merger with FCP Acquisition Sub, a Nevada corporation ("Merger Sub"), pursuant to which Merger Sub merged with and into the Company with the Company continuing as the surviving corporation. The Merger was completed pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of February 23, 2007 and amended as of May 4, 2007, among the Company, Fertitta Colony Partners LLC, a Nevada limited liability company ("FCP"), and Merger Sub.

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        As a result of the Merger, 24.1% of the issued and outstanding shares of non-voting common stock of the Company are owned by Fertitta Partners LLC, a Nevada limited liability company ("Fertitta Partners"), which is owned by affiliates of Frank J. Fertitta III, Chairman, Chief Executive Officer and President of Station, affiliates of Lorenzo J. Fertitta, Vice Chairman of Station, affiliates of Blake L. Sartini and Delise F. Sartini, and certain officers and other members of management of the Company. The remaining 75.9% of the issued and outstanding shares of non-voting common stock of the Company are owned by FCP Holding, Inc., a Nevada corporation ("FCP HoldCo") and a wholly-owned subsidiary of FCP. FCP is owned by an affiliate of Colony Capital, LLC ("Colony"), affiliates of Frank J. Fertitta III and Lorenzo J. Fertitta and certain officers and other members of management. Substantially simultaneously with the consummation of the Merger, shares of voting common stock of Station were issued for nominal consideration to FCP VoteCo LLC, a Nevada limited liability company ("FCP VoteCo"), which is owned equally by Frank J. Fertitta III, Lorenzo J. Fertitta and Thomas J. Barrack, Jr., the Chairman and Chief Executive Officer of Colony.

        At the effective time of the Merger, each outstanding share of our common stock, including any rights associated therewith (other than shares of our common stock owned by FCP, Merger Sub, FCP HoldCo, Fertitta Partners or any wholly-owned subsidiary of the Company or shares of our common stock held in treasury by us) was cancelled and converted into the right to receive $90 in cash, without interest. Following the consummation of the Merger, the Company is privately owned through FCP HoldCo, Fertitta Partners and FCP VoteCo. Station common stock ceased trading on the New York Stock Exchange at market close on November 7, 2007, and is no longer listed on any exchange or quotation system. The Company's voting common stock is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended.

        The Merger resulted in a greater than 50% control of the Company and was a "business combination" for accounting purposes, requiring FCP, Fertitta Partners, FCP VoteCo and their respective owners (the "Investors"), pursuant to the accounting guidance for business combinations, to record the acquired assets and assumed liabilities at their fair market values as of the acquisition date, resulting in a new basis of accounting. As a result of the Securities and Exchange Commission's rules and guidance regarding "push-down" accounting, the Investors' new accounting basis in our assets and liabilities is reflected in our consolidated financial statements to the extent that the Investors paid cash for the non-voting common stock of the Company as of the consummation of the Merger. Management has deemed it impracticable to determine the individual investors' carryover basis in the shares and has accordingly computed the carryover basis based on the pro rata portion of book value of Station prior to the Merger. For accounting periods subsequent to the Merger, the consolidated financial statements reflect the push down of the Investors' new basis of accounting.

Use of Estimates

        The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions for items such as slot club program liability, self-insurance reserves, bad debt reserves, estimated useful lives assigned to our assets, asset impairment, derivative instruments, purchase price allocations made in connection with acquisitions and the calculation of the income tax liabilities, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

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Cash and Cash Equivalents

        Cash and cash equivalents include cash on hand at our properties, as well as investments purchased with an original maturity of 90 days or less. As a result of the Chapter 11 Case, the Bankruptcy Court has imposed certain limitations on the use of the Debtors' cash and cash equivalents.

Restricted Cash

        Restricted cash includes cash reserves required in connection with the Company's financing transactions, treasury management activities, the CMBS Loans, letter of credit collateralization and regulatory reserves for race and sports book operations, and restrictions placed on our cash by the Bankruptcy Court.

Receivables, Net and Credit Risk

        Receivables, net consist primarily of casino, hotel and other receivables, which are typically non-interest bearing. Receivables are initially recorded at cost, and an allowance for doubtful accounts is maintained to reduce receivables to their carrying amount, which approximates fair value. The allowance is estimated based on a specific review of customer accounts, historical collection experience, the age of the receivable and other relevant factors. Accounts are written off when management deems the account to be uncollectible, and recoveries of accounts previously written off are recorded when received. Management does not believe that any significant concentrations of credit risk existed as of December 31, 2010.

Inventories

        Inventories are stated at the lower of cost or market. Cost is determined on a weighted-average basis.

Fair Value of Financial Instruments

        The carrying value of our cash and cash equivalents, restricted cash, receivables and accounts payable approximates fair value primarily because of the short maturities of these instruments. For debt with short-term maturities, the fair value approximates the carrying amount. The fair value of our publicly traded debt securities is based on quoted market prices on or about December 31, 2010, however since all of these debt securities are classified as liabilities subject to compromise as a result of the Chapter 11 Case, they are carried at the expected amount of the allowed claims, which approximates the face value of the securities.

Property and Equipment and Other Long-Lived Assets

Property and Equipment

        Property and equipment are initially recorded at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or the term of the capitalized lease, whichever is less. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.

        We must make estimates and assumptions when accounting for capital expenditures. Whether an expenditure is considered a maintenance expense or a capital asset is a matter of judgment. We classify items as maintenance capital to differentiate replacement type capital expenditures such as a new slot

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machine from investment type capital expenditures to drive future growth such as an expansion of an existing property. In contrast to normal repair and maintenance costs that are expensed when incurred, items we classify as maintenance capital are expenditures necessary to keep our existing properties at their current levels and are typically replacement items due to the normal wear and tear of our properties and equipment as a result of use and age. Our depreciation expense is highly dependent on the assumptions we make about our assets' estimated useful lives. We determine the estimated useful lives based on our experience with similar assets, engineering studies and our estimate of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, we account for the change prospectively.

Impairment of Property and Equipment and Other Long-Lived Assets

        We evaluate our property and equipment and other long-lived assets for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360-10. For assets to be held and used, we review fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparables, when available. For assets to be disposed of, we recognize the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model. As of December 31, 2010 and 2009, our consolidated financial statements reflect all adjustments required under the guidance for accounting for the impairment or disposal of long-lived assets.

        See Notes 4, 6, 7 and 15 for discussions of impairment charges recorded during the years ended December 31, 2010, 2009 and 2008 related to property and equipment and other long-lived assets.

Capitalization of Interest

        We capitalize interest costs associated with debt incurred in connection with major construction projects. Interest capitalization ceases once the project is substantially complete or no longer undergoing construction activities to prepare it for its intended use. When no debt is specifically identified as being incurred in connection with such construction projects, we capitalize interest on amounts expended on the project at our weighted average cost of borrowings. Interest capitalized was approximately $10.1 million, $16.0 million, and $27.1 million, for the years ended December 31, 2010, 2009, and 2008, respectively.

Goodwill and Other Intangible Assets

        We account for goodwill and other intangible assets in accordance with ASC Topic 350, Intangibles—Goodwill and Other ("ASC Topic 350"). See Note 5 for a discussion of impairment charges recorded for the years ended December 31, 2010, 2009 and 2008 related to goodwill and intangible assets.

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Goodwill

        We test our goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year, and whenever events or circumstances make it more likely than not that an impairment may have occurred. Impairment testing for goodwill is performed at the reporting unit level, and each of our 100% owned casino properties is considered to be a reporting unit. Our annual goodwill impairment testing utilizes a two step process. In the first step, we compare the fair value of each reporting unit with its carrying amount, including goodwill.. If the fair value of the reporting unit exceeds its carrying amount, then goodwill of the reporting unit is not considered impaired. If the carrying value of the reporting unit exceeds its fair value, then the goodwill of the reporting unit is considered to be impaired, and we proceed to the second step of the goodwill impairment test. In the second step, we determine the implied fair value of the reporting unit's goodwill by allocating the fair value of the reporting unit determined in step one to the assets and liabilities of the reporting unit, as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.

Indefinite-lived Intangible Assets

        Our indefinite-lived intangible assets include brands and certain license rights. The fair value of brands is estimated using a derivation of the income approach to valuation, based on estimated royalties saved through ownership of the assets. The fair value of license rights is estimated using market indications of fair value. We test our indefinite-lived intangible assets for impairment annually during the fourth quarter of each year, and whenever events or circumstances make it more likely than not that an impairment may have occurred. Our annual impairment test of indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying amount. If the carrying amount of the intangible asset exceeds its estimated fair value, an impairment loss is recognized in an amount equal to that excess. Indefinite-lived intangible assets are not amortized unless it is determined that their useful life is no longer indefinite. We periodically review our indefinite-lived assets to determine whether events and circumstances continue to support an indefinite useful life. If it is determined that an indefinite-lived intangible asset has a finite useful life, then the asset is tested for impairment and is subsequently accounted for as a finite-lived intangible asset. For the years ended December 31, 2010, 2009, and 2008, none of our indefinite-lived intangible assets were deemed to have a finite useful life.

Finite-Lived Intangible Assets

        Our finite-lived intangible assets include customer relationship and management contract intangibles. Finite-lived intangible assets are amortized over their estimated useful lives, and we periodically evaluate the remaining useful lives of these intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. We review our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.

        The customer relationship intangible asset refers to the value associated with our rated casino guests. The initial fair value of the customer relationship intangible asset was based on the projected net cash flows associated with these casino guests. Prior to the annual impairment test for the year ended December 31, 2008, we had utilized the income forecast approach as our basis for amortization of the customer relationships intangible assets. The percentage of annual amortization applied each year utilizing

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the income forecast approach was based on expected future net cash flows associated with our rated casino guests and an expected attrition rate. We believed this approach better reflected the pattern in which the economic benefits of the intangible asset were consumed. The attrition rate was determined in part quantitatively using historical customer data and qualitatively based on the consistency of our rated casino guests which is predominantly Las Vegas local residents as opposed to out of town customers. Subsequent to our annual impairment testing for the year ended December 31, 2008, these intangible assets are being amortized ratably over their estimated useful lives as the expected pattern of consumption no longer accommodates the income forecast approach.

        The customer relationship intangible asset is reviewed for impairment whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Increased competition within the gaming industry or a downturn in the economy could have an impact on our customer relationship intangible asset. Declines in customer spending which would impact the expected future cash flows associated with our rated casino guests, declines in the number of visitations which could impact the expected attrition rate of our rated casino guests or an erosion of our operating margins associated with our rated casino guest could cause the carrying value of the customer relationship asset to exceed the fair value. In this event an impairment based on the difference between the estimated fair value and the carrying value would be recognized.

        Management contract intangible assets refer to the value associated with management agreements under which we provide management services to various casino properties, including casinos operated by joint ventures in which we hold a 50% equity interest, and certain Native American casinos that we have developed or are currently under development. The fair values of these management contract intangibles are established using discounted cash flow techniques based on estimated future cash flows expected to be received in exchange for providing management services. Management contract intangible assets are amortized ratably over their expected useful lives. We begin amortizing management contract intangible assets when the property begins operations and management fees are being earned.

        We evaluate our finite-lived intangible assets and other long-lived assets for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360-10. For assets to be held and used, we review long-lived assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparables, when available. For assets to be disposed of, we recognize the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model.

        Inherent in the calculation of fair values are various estimates. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from our estimates. If our ongoing estimates of future cash flows are not met, we may have to record additional impairment charges in future accounting periods. Our estimates of cash flows are based on the current regulatory, political and economic climates, recent operating information and budgets of the various properties where we conduct operations. These estimates could be negatively impacted by changes in federal, state or local regulations, economic downturns, or other events affecting various forms of travel and access to our properties.

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Native American Development Costs

        We incur certain costs associated with development and management agreements entered into with Native American Tribes (the "Tribes"). In accordance with the guidance for accounting for costs and initial rental operations of real estate projects, costs for the acquisition and related development of the land and the casino facilities are capitalized as long-term assets until such time as the assets are transferred to the Tribe at which time a long term receivable is recognized.

        In accordance with the accounting guidance for capitalization of interest costs, we capitalize interest to the project once a "Notice of Intent" (or the equivalent) to transfer the land into trust, signifying that activities are in progress to prepare the asset for its intended use, has been issued by the United States Department of the Interior ("DOI").

        We earn a return on the costs incurred for the acquisition and development of the projects based upon the costs incurred over the development period of the project. In accordance with the guidance for accounting for sales of real estate, we recognize the return when the facility is complete and collectability of the receivable is assured. Due to the uncertainty surrounding the estimated cost to complete and the collectability of the stated return, we defer the return until the gaming facility is complete and transferred to the Tribe and the resulting receivable has been repaid. Repayment of the resulting advances would be from a refinancing by the Tribe, from the cash flow from the gaming facility or both.

        We evaluate our Native American Development Costs for impairment in accordance with the accounting guidance in the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360-10. We evaluate each project for impairment whenever events or changes in circumstances indicate that the carrying amount of the project might not be recoverable, taking into consideration all available information. Among other things, we consider the status of the project, any contingencies, the achievement of milestones, any existing or potential litigation, and regulatory matters when evaluating our Native American projects for impairment. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted expected future cash flows exceed the carrying value, no impairment is indicated. If the undiscounted expected future cash flows do not exceed the carrying value, then impairment is measured based on the difference between fair value and the carrying value. See Note 8 for a discussion of impairment charges recorded during the year ended December 31, 2009 related to Native American projects.

Debt Issuance Costs

        Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the expected terms of the related debt agreements and are included in other assets, net on our consolidated balance sheets. In connection with the Chapter 11 Case, in 2009 we wrote off certain debt issuance costs related to debt that is subject to compromise.

Advertising

        We expense advertising costs the first time the advertising takes place. Advertising expense, which is generally included in selling, general and administrative expenses on the accompanying consolidated statement of operations, was approximately $13.7 million, $13.7 million, and $18.3 million for the years ended December 31, 2010, 2009, and 2008, respectively.

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Preopening

        Preopening expenses are expensed as incurred. The construction phase of a major project typically covers a period of 12 to 24 months. The majority of preopening costs are incurred in the three months prior to opening. We incurred preopening expenses of approximately $3.6 million, $5.8 million, and $10.2 million during the years ended December 31, 2010, 2009, and 2008, respectively.

Derivative Instruments

        From time to time we enter into derivative instruments, typically in the form of interest rate swaps, in order to manage interest rate risks associated with our current and future borrowings. We have adopted the authoritative guidance for accounting for derivative instruments and hedging activities, as amended, to account for our interest rate swaps. The accounting guidance requires us to recognize our derivative instruments as either assets or liabilities in our consolidated balance sheet at fair value. The accounting for changes in fair value (i.e. gains or losses) of a derivative instrument agreement depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. Additionally, the difference between amounts received and paid under such agreements, as well as any costs or fees, is recorded as a reduction of, or an addition to, interest expense as incurred over the life of the agreement.

        For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and the ineffective portion is recorded in the consolidated statement of operations. Derivative instruments that are designated as fair value hedges and qualify for the "shortcut" method under the accounting for derivative instruments and hedging activities, as amended, are allowed an assumption of no ineffectiveness. As such, there is no impact on the consolidated statement of operations from the changes in the fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on our consolidated balance sheet with an offsetting adjustment to the carrying value of the related debt. For those derivative instruments that are not designated as hedges for accounting purposes, the change in fair value is recorded in the consolidated statement of operations in the period of change (See Note 12).

        Fluctuations in interest rates can cause the fair value of our derivative instruments to change each reporting period. While we attempt to predict such movements in interest rates and the impact on derivative instruments, such estimates are subject to a large degree of variability which could have a significant impact on our consolidated financial statements.

Revenues and Promotional Allowances

        We recognize as casino revenues the net win from gaming activities, which is the difference between gaming wins and losses. All other revenues are recognized as the service is provided. Additionally, our Boarding Pass and Amigo Club player rewards programs (the "Programs") allow customers to redeem points earned from their gaming activity at all Station and Fiesta properties for complimentary slot play, food, beverage, rooms, entertainment and merchandise. At the time redeemed, the retail value of complimentaries under the Programs is recorded as revenue with a corresponding offsetting amount included in promotional allowances. The cost associated with complimentary food, beverage, rooms, entertainment and merchandise redeemed under the Programs is recorded in casino costs and expenses on our consolidated statements of operations. The estimated departmental costs of providing such

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promotional allowances are included in casino costs and expenses and consist of the following (amounts in thousands):

        We also record a liability for the estimated cost of the outstanding points under the Programs that we believe will ultimately be redeemed. At December 31, 2010 and 2009, $8.4 million and $6.1 million, respectively, were accrued for the cost of anticipated Program redemptions. The estimated cost of the outstanding points under the Programs is calculated based on the total number of points earned but not yet achieving necessary redemption levels, converted to a redemption value times the average cost. The redemption value is estimated based on the average number of points needed to convert to rewards. The average cost is the incremental direct departmental cost for which the points are anticipated to be redeemed. When calculating the average cost we use historical point redemption patterns to determine the redemption distribution between gaming, food, beverage, rooms, entertainment and merchandise as well as potential breakage.

        Management fee revenues earned under our management agreements are recognized when the services have been performed, the amount of the fee is determinable, and collectability is reasonably assured.

Related Party Transactions

        We have entered into various related party transactions, which consist primarily of lease payments related to ground leases at Boulder Station and Texas Station. We paid approximately $6.7 million, $6.7 million, and $6.5 million for the years ended December 31, 2010, 2009, and 2008, respectively, in connection with these related party ground lease transactions.

        Additionally, we have purchased tickets to events held by Zuffa, LLC ("Zuffa") which is the parent company of the Ultimate Fighting Championship and is owned by Frank J. Fertitta III and Lorenzo J. Fertitta. For the years ended December 31, 2010, 2009 and 2008, we made payments to Zuffa for approximately $0.5 million, $0.7 million, and $0.7 million, respectively, for ticket purchases to, and closed circuit viewing fees of, Ultimate Fighting Championship events. In addition, in September 2008 Zuffa and a wholly-owned subsidiary of the Company entered into a month-to-month license agreement whereby Zuffa has the rights to a previously unused portion at Palace Station for general office and administrative use. Payments received by the Company related to this license agreement totaled approximately $22,000 and $21,000 for the years ended December 31, 2009, and 2008, respectively. There were no payments received from Zuffa under this license agreement during the year ended December 31, 2010. In January 2009, Station subleased its leased aircraft to Zuffa for a period of six months. Payments received by Station in connection with this sublease approximated the amount Station paid for leasing the aircraft, and totaled approximately $0.8 million.

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Share-Based Compensation

        Effective January 1, 2006, we adopted the accounting guidance for share-based payments, utilizing the modified prospective application. Under the modified prospective application, the accounting guidance applies to new awards and awards that were outstanding on December 31, 2005 that are subsequently modified, repurchased or cancelled. Under the modified prospective application, compensation cost recognized in the year ended December 31, 2006 and subsequent periods includes compensation cost of all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of the accounting guidance, and compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of the accounting guidance for share-based payments, as revised.

        Equity Awards.    Upon consummation of the Merger, FCP and Fertitta Partners issued Class B Units to an affiliate of Frank J. Fertitta III, Lorenzo J. Fertitta and certain officers of the Company. During the year ended December 31, 2008, Class B units that were previously issued upon consummation of the Merger were transferred to certain officers and management of the Company. Pursuant to the accounting guidance for share-based payments, the unearned share-based compensation related to the Class B Units is amortized to compensation expense over the requisite service period (immediate to five years). The share-based expense for these awards was based on the estimated fair market value of the Class B Units at the date of grant applied to the total number of Class B Units that were anticipated to fully vest and then amortized over the vesting period.

        Also upon consummation of the Merger, FCP and Fertitta Partners issued Class C Units to certain officers and management of the Company. During the year ended December 31, 2008, additional Class C units were issued to certain management of the Company. Pursuant to the accounting guidance for share-based payments, the unearned share-based compensation related to the Class C Units is amortized to compensation expense over the requisite service period (five years). The share-based expense for these awards was based on the estimated fair market value of the Class C Units at the date of grant, applied to the total number of Class C Units that were anticipated to fully vest and then amortized over the vesting period.

Operating Segments

        The accounting guidance for disclosures about segments of an enterprise and related information requires separate financial information be disclosed for all operating segments of a business. We believe we meet the "economic similarity" criteria established by the accounting guidance and as a result, we aggregate all of our properties into one operating segment. All of our properties offer the same products, cater to the same customer base, are all located in the greater Las Vegas, Nevada area, have the same regulatory and tax structure, share the same marketing techniques and are all directed by a centralized management structure.

Recently Issued Accounting Standards

        In December 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2010-28, Intangibles—Goodwill and Other (Topic 350), When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts ("ASU 2010-28").

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Under the amended guidance, for reporting units with zero or negative carrying amounts, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance which requires that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. ASU 2010-28 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not expect adoption of the new guidance to have a material effect on its consolidated financial statements.

        In April 2010, the FASB issued ASU No. 2010-16, Entertainment—Casinos (Topic 924): Accruals for Casino Jackpot Liabilities, a consensus of the FASB Emerging Issues Task Force. This guidance clarifies that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots. The guidance is effective for reporting periods beginning after December 15, 2010. Since the Company's existing accounting policy for accrual of jackpot liabilities is consistent with the new guidance, the adoption of this guidance will have no impact on the Company's financial statements.

        In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This guidance clarifies and extends the disclosure requirements about recurring and nonrecurring fair value measurements. The guidance is effective for reporting periods beginning after December 15, 2009. Accordingly, the Company adopted the new guidance in the first fiscal quarter of 2010. The adoption of this new guidance did not have a material impact on the Company's financial statements.

        A variety of proposed or otherwise potential accounting guidance is currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed accounting guidance, we have not yet determined the effect, if any, that the implementation of such proposed accounting guidance would have on our consolidated financial statements.

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2. Receivables, net

        Components of receivables are as follows (amounts in thousands):

3. Due from/to Unconsolidated Affiliate

        Effective January 1, 2009, a promissory note in the amount of $5.0 million (the "2009 GVR Promissory Note") was executed between GV Ranch Station, Inc. (the consolidated entity that owns our 50% portion of the GVR Seller and the GVR Seller. The 2009 GVR Promissory Note accrued interest at an annual rate of 5.0% and matured on January 1, 2011. The 2009 GVR Promissory Note is subordinate to the GVR Seller's senior secured debt and interest rate swaps. During the three months ended March 31, 2010, events of default occurred related to the GVR Seller's senior secured debt and interest rate swaps. As a result, the Company determined the GVR Promissory Note and the related accrued interest may not be recoverable and accordingly, the note and accrued interest receivable were fully reserved during the three months ended December 31, 2009 and accordingly, the Company recognized a $5.3 million expense in write-downs and other charges, net in our consolidated statements of operations during the year ended December 31, 2009 to fully reserve this receivable.

4. Property and Equipment

        Property and equipment consists of the following (amounts in thousands):

        Depreciation expense was $137.1 million, $153.3 million, and $152.1 million, respectively, for the years ended December 31, 2010, 2009, and 2008. At December 31, 2010 and 2009, substantially all of our property and equipment is pledged as collateral for our long-term debt.

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4. Property and Equipment (Continued)

Impairment Losses

        During the three months ended September 30, 2010, it was determined that a triggering event, as described in the Impairment or Disposal of Long-Lived Assets Subsections of ASC 360-10, had occurred due to developments in our bankruptcy proceedings. We therefore tested the carrying values of our property and equipment for recoverability by comparing the sum of the undiscounted estimated future cash flows of each asset group to its carrying value. For those asset groups where the sum of the undiscounted estimated cash flows did not exceed the carrying value, we measured an impairment based on the excess of carrying value over fair value. Buildings, land, furniture, fixtures and equipment with carrying amounts totaling $88.1 million were written down to their fair values totaling $21.4 million, resulting in an impairment charge of $66.6 million, which was included in our condensed consolidated statements of operations. This impairment charge included $65.9 million for property and equipment of Fiesta Rancho and $0.7 million for property and equipment of other operating properties.

        During the year ended December 31, 2009, we reviewed the carrying values of our property and equipment for impairment because we determined that the Company's restructuring activities and the continuation of the economic downturn constituted indicators of impairment. As a result, we recorded impairment charges totaling $179.4 million for the year ended December 31, 2009, related to property and equipment at certain operating subsidiaries, primarily Texas Station.

        We estimate the fair value of property and equipment using a combination of valuation methods including discounted cash flows and estimated prices for similar assets. These methods typically utilize inputs that are classified as Level 3 under ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820").

5. Goodwill and Other Intangible Assets

        Goodwill primarily represents the excess of total acquisition costs over the fair market value of net assets acquired in the Merger. The changes in the carrying amount of goodwill for the years ended December 31, 2010 and 2009 are as follows (amounts in thousands):

 

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5. Goodwill and Other Intangible Assets (Continued)