Enhanced Investments - Financial Portal

Published: 2021-12-17 16:35:09 ET

EX-99.1 2 d231599dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Information

The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of Red Rock Resorts, Inc. (the “Company” or “Red Rock”) and adjusted to give effect to the disposition (the “Sale”) of RRR Palms LLC (“Palms”), pursuant to an interest purchase agreement by and among the Company’s subsidiary, Station Casinos LLC (“Station” or “Seller”), Palms, SMGHA Nevada, LLC (the “Buyer”) and Yuhaviatam, LLC as the guarantor of Buyer’s obligations (the “Interest Purchase Agreement”). The unaudited pro forma condensed consolidated balance sheet as of September 30, 2021 has been prepared as if the Sale occurred on September 30, 2021. The unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2021 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2020 have been prepared as if the Sale occurred on January 1, 2020.

The Company’s historical financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and the unaudited pro forma condensed consolidated financial information herein has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Unaudited transaction accounting adjustments included for the Sale consist of those necessary for its accounting. Assumptions and estimates underlying the unaudited transaction accounting adjustments were made by management as of the date of this Current Report on Form 8-K and are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information. Management believes the adjustments reflected in the pro forma amounts herein are reasonable and necessary to present fairly the pro forma balance sheet and results of operations as of and for the periods indicated.

The unaudited pro forma condensed consolidated financial information does not purport to reflect what the Company’s consolidated financial position or results of operations would have been had the Sale been completed as of the dates indicated, nor is it necessarily useful in projecting future consolidated financial position or results of operations. Actual results may differ significantly from the pro forma amounts shown herein for a variety of reasons, including, but not limited to, differences between estimates and actual amounts. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s historical financial statements and notes, including those in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

RED ROCK RESORTS, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2021

(amounts in thousands, except share data)

(unaudited)


	As Reported			Adjustments			Notes			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	89,925		$	641,175			(a	)	$	731,100
Receivables, net		32,467			(1,387	)		(b	)		31,080
Inventories		11,475			—						11,475
Prepaid gaming tax		30,437			—						30,437
Prepaid expenses and other current assets		28,761			—						28,761
Assets held for sale		656,628			(644,028	)		(c	)		12,600

Total current assets		849,693			(4,240	)					845,453
Property and equipment, net of accumulated depreciation of $1,147,196		1,995,977			—						1,995,977
Goodwill		195,676			—						195,676
Intangible assets, net of accumulated amortization of $16,722		87,578			—						87,578
Land held for development		262,693			—						262,693
Investments in joint ventures		6,147			—						6,147
Native American development costs		29,942			—						29,942
Other assets, net		74,303			—						74,303

Total assets	$	3,502,009		$	(4,240	)				$	3,497,769

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,474		$	—					$	20,474
Accrued interest payable		11,235			—						11,235
Other accrued liabilities		166,247			1,974			(b	)		168,221
Liabilities related to assets held for sale		3,091			(3,091	)		(c	)		—
Current portion of long-term debt		25,910			—						25,910

Total current liabilities		226,957			(1,117	)					225,840
Long-term debt, less current portion		2,617,009			—						2,617,009
Other long-term liabilities		39,153			—						39,153
Payable pursuant to tax receivable agreement		28,035			—						28,035

Total liabilities		2,911,154			(1,117	)					2,910,037

Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 100,000,000 shares authorized; none issued and outstanding		—			—						—
Class A common stock, par value $0.01 per share, 500,000,000 shares authorized; 68,696,282 shares issued and outstanding		687			—						687
Class B common stock, par value $0.00001 per share, 100,000,000 shares authorized; 45,985,804 shares issued and outstanding		1			—						1
Additional paid-in capital		286,360			—						286,360
Retained earnings		60,119			(3,217	)		(d	)		56,902
Accumulated other comprehensive loss		(568	)		—						(568	)

Total Red Rock Resorts, Inc. stockholders’ equity		346,599			(3,217	)					343,382
Noncontrolling interest		244,256			94			(e	)		244,350

Total stockholders’ equity		590,855			(3,123	)					587,732

Total liabilities and stockholders’ equity	$	3,502,009		$	(4,240	)				$	3,497,769

See accompanying notes to these unaudited pro forma condensed consolidated financial statements.

RED ROCK RESORTS, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

(amounts in thousands, except per share data)

(unaudited)


	As Reported			Adjustments			Notes			Pro Forma
Operating revenues:
Casino	$	853,133		$	(411	)		(f	)	$	852,722
Food and beverage		176,551			(444	)		(f	)		176,107
Room		100,613			(9,725	)		(f	)		90,888
Other		56,267			(4,180	)		(f	)		52,087
Management fees		8,981			—						8,981

Net revenues		1,195,545			(14,760	)					1,180,785

Operating costs and expenses:
Casino		204,501			782			(f	)		205,283
Food and beverage		141,844			(411	)		(f	)		141,433
Room		40,863			(7,406	)		(f	)		33,457
Other		18,102			(426	)		(f	)		17,676
Selling, general and administrative		255,602			(14,611	)		(f	)		240,991
Depreciation and amortization		124,440			(17,024	)		(f	)		107,416
Write-downs and other charges, net		2,158			38			(f	)		2,196
Asset impairment		167,777			—			(g	)		167,777

		955,287			(39,058	)					916,229

Operating income		240,258			24,298						264,556
Earnings from joint ventures		2,397			—						2,397

Operating income and earnings from joint ventures		242,655			24,298						266,953

Other expense:
Interest expense, net		(78,192	)		—						(78,192	)
Loss on extinguishment of debt		(8,140	)		—						(8,140	)
Change in fair value of derivative instruments		(215	)		—						(215	)
Other		(233	)		—						(233	)

		(86,780	)		—						(86,780	)

Income before income tax		155,875			24,298						180,173
Provision for income tax		(1,152	)		(3,361	)		(h	)		(4,513	)

Net income		154,723			20,937						175,660
Less: net income attributable to noncontrolling interests		61,539			9,593			(j	)		71,132

Net income attributable to Red Rock Resorts, Inc.	$	93,184		$	11,344					$	104,528

Earnings per common share:
Earnings per share of Class A common stock, basic	$	1.33								$	1.49
Earnings per share of Class A common stock, diluted	$	1.21								$	1.37
Weighted-average common shares outstanding:
Basic		69,988									69,988
Diluted		117,232									117,232

See accompanying notes to these unaudited pro forma condensed consolidated financial statements.

RED ROCK RESORTS, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020

(amounts in thousands, except per share data)

(unaudited)


	As Reported			Adjustments			Notes			Pro Forma
Operating revenues:
Casino	$	764,255		$	(14,649	)		(f	)	$	749,606
Food and beverage		192,899			(17,263	)		(f	)		175,636
Room		87,035			(16,992	)		(f	)		70,043
Other		56,279			(7,663	)		(f	)		48,616
Management fees		81,977			—						81,977

Net revenues		1,182,445			(56,567	)					1,125,878

Operating costs and expenses:
Casino		232,939			(12,713	)		(f	)		220,226
Food and beverage		195,963			(20,688	)		(f	)		175,275
Room		49,363			(11,496	)		(f	)		37,867
Other		23,034			(3,143	)		(f	)		19,891
Selling, general and administrative		324,644			(28,764	)		(f	)		295,880
Depreciation and amortization		231,391			(70,600	)		(f	)		160,791
Write-downs and other charges, net		36,537			(7,102	)		(f	)		29,435
Tax receivable agreement liability adjustment		(15	)		—						(15	)

		1,093,856			(154,506	)					939,350

Operating income		88,589			97,939						186,528
Earnings from joint ventures		1,097			—						1,097

Operating income and earnings from joint ventures		89,686			97,939						187,625

Other (expense) income:
Interest expense, net		(128,465	)		—						(128,465	)
Gain on extinguishment/modification of debt, net		240			—						240
Change in fair value of derivative instruments		(21,590	)		—						(21,590	)
Other		(333	)		—						(333	)

		(150,148	)		—						(150,148	)

(Loss) income before income tax		(60,462	)		97,939						37,477
Provision for income tax		(114,081	)		—			(i	)		(114,081	)

Net loss		(174,543	)		97,939						(76,604	)
Less: net (loss) income attributable to noncontrolling interests		(24,146	)		39,113			(j	)		14,967

Net loss attributable to Red Rock Resorts, Inc.	$	(150,397	)	$	58,826					$	(91,571	)

Loss per common share:
Loss per share of Class A common stock, basic and diluted	$	(2.13	)							$	(1.30	)
Weighted-average common shares outstanding:
Basic and diluted		70,542									70,542

See accompanying notes to these unaudited pro forma condensed consolidated financial statements.

RED ROCK RESORTS, INC.

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1.	Basis of Pro Forma Presentation

The accompanying unaudited pro forma condensed consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission, and they include the historical condensed consolidated financial statements of the Company, adjusted via pro forma adjustments to give effect to the Sale of Palms. They do not necessarily indicate what the Company’s consolidated financial position or results of operations would have been had the Sale been completed as of the date or beginning of the periods presented. Actual results may differ significantly from the pro forma amounts shown herein due to various reasons.

In the opinion of management, all pro forma adjustments are reasonable and necessary for a fair presentation of the pro forma results for the indicated periods. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s historical financial statements and notes, including those in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

2.	Pro Forma Adjustments

(a)

Represents the cash proceeds from the Sale of $650.0 million, less $8.8 million for transaction costs and working capital adjustments.

(b)

Represents a reduction of income tax receivable and an increase to income tax payable arising from the Sale of Palms, which resulted in a taxable gain.

(c)

Represents the elimination of assets and liabilities held for sale related to Palms as of September 30, 2021.

(d)

Represents the effect on Red Rock Resorts, Inc. stockholders’ equity of the adjustments described in notes (a) through (c) above.

(e)

Represents the effect on noncontrolling interest of the adjustments described in notes (a) and (c) above.

(f)

Represents the elimination of revenue and related operating costs and expenses related to Palms.

(g)

No adjustment has been made to the asset impairment charge arising from the Sale of Palms as of December 17, 2021.

(h)

Represents income tax expense for the nine months ended September 30, 2021 arising from the Sale of Palms, which resulted in a taxable gain.

(i)

Represents the recognition of no income tax expense for the year ended December 31, 2020 as a result of the Sale of Palms. The Company had sufficient federal net operating loss carryforwards to offset tax on the gain from the Sale.

(j)

Represents the effect of the adjustments described in note (f) above on net income or loss attributable to noncontrolling interests.