UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549



FORM 10-K

(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the fiscal year ended December 31, 2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934for the transition period from
 to
.


Commission file number 000-21640



STATION CASINOS, INC.(Exact name of registrant as specified in its charter)

Nevada(State or other jurisdiction of incorporation or
organization)

88-0136443(I.R.S. Employer Identification No.)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:Common Stock, $0.01 par value

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):

Large accelerated filer o

Accelerated filer oNon-accelerated filer ý
(Do not check if a smaller reporting company)

Smaller reporting company o


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 41.7 shares outstanding of the registrant's voting common stock and 41,674,838 shares outstanding of the registrant's non-voting
common stock.

Documents Incorporated by Reference

The information required by Part III (Items 10, 11, 12, 13 and 14) will be filed with the Commission not later than 120 days after the
end of the fiscal year as an amendment to this Annual Report on Form 10-K.



---





PART I

ITEM 1.    BUSINESS

Unless the context indicates otherwise, all references to the "Company", "Station", "we", "our", "ours" and "us" refer to Station
Casinos, Inc. and its consolidated subsidiaries.

Forward-looking Statements

When used in this report and elsewhere by management from time to time, the words "may", "might", "could", "believes", "anticipates",
"expects" and similar expressions are intended to identify forward-looking statements with respect to our financial condition, results of
operations and our business including our reorganization plan, expansions, development and acquisition projects, legal proceedings and employee matters. Certain important factors, including but not
limited to, financial market risks, could cause our actual results to differ materially from those expressed in our forward-looking statements. Further information on potential factors which could
affect our financial condition, results of operations and business including, without limitation, failure to consummate the Joint Plan of Reorganization, our ability to effect a successful
restructuring, the ability to recognize the benefits of the Merger, the impact of the substantial outstanding indebtedness, 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, development and construction risks, regulatory matters and litigation are
included in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date thereof. We
undertake no obligation to publicly release any revisions to such forward-looking statements to reflect events or circumstances after the date hereof.

General

We are 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 operate 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. We also own a 50% interest in Green Valley Ranch 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.

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

1

---



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 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, the Company and certain of 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

2

---



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 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 Station in full satisfaction of their claims against Station.
The Plan also provides that certain general unsecured creditors of Station ("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

3

---



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 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 Green Valley Ranch
Gaming, LLC 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,

4

---



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, 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.

Operating Strategy

Our operating strategy emphasizes attracting and retaining customers primarily from the local and repeat visitor markets. Our casino
properties attract customers through:



Although
perceived value initially attracts a customer to our casino properties, actual value generates customer satisfaction and loyalty. We believe 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

5

---



significant
declines in the local housing market and rising unemployment which has negatively affected consumer spending and customer visits to our properties.

We
believe that our out-of-town patrons are also discerning customers who enjoy our value-oriented, high-quality approach. We believe that our patrons
view our hotel and casino product as a preferable alternative to attractions located on the Las Vegas Strip and downtown Las Vegas. In markets outside of Las Vegas we believe customers come from
farther distances, a radius in some cases of more than 150 miles; however, the business model for local customers remains the same.



Because we target the repeat customer, we are committed to providing a high-value entertainment experience for our
customers in our restaurants, hotels, casinos and other entertainment amenities. We develop 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, we believe the value offered by restaurants at each of our 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, our casino properties
offer generous portions of high-quality food at reasonable prices. In addition, our operating strategy focuses on slot and video poker machine play. Our 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, our casino properties offer the
latest in slot and video poker technology.

As
part of our commitment to providing a quality entertainment experience for our patrons, we are dedicated to ensuring a high level of customer satisfaction and loyalty by providing
attentive customer service in a friendly, casual atmosphere. We recognize that consistent quality and a comfortable atmosphere stem from the collective care and friendliness of each employee. We began
as a family-run business, and have maintained close-knit relationships among
our management and we endeavor to instill among our employees this same sense of loyalty. Toward this end, we take a hands-on approach through active and direct involvement with employees
at all levels.



We employ 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, we have created and sponsored promotions that have
become a tradition in the locals' market.

In
1999, we introduced a unified Boarding Pass player rewards program at our 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 our properties for free slot
play, meals in any of the restaurants, hotel rooms, movie passes, entertainment tickets or merchandise from our gift shops.

We
are heavily focused on using cutting-edge technology to drive customer traffic with products such as our Jumbo Brand products, which include "Jumbo Pennies," "Jumbo
Bingo," "Jumbo Keno" and "Jumbo Hold'Em." Other products include "Xtra Play Cash" and "Sports Connection," among others. We believe that these products create sustainable competitive advantages and
distinguish us from our competition.

Growth Strategy

Due to the current state of the Las Vegas economy, we have no short-term expansion plans but may pursue acquisitions. Our
long-term growth strategy includes the master-planned expansion of our existing

6

---



gaming
facilities in Nevada, the development of gaming facilities on certain real estate we own or are 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.

Properties

Set forth below is certain information as of December 31, 2010 concerning our properties, all of which we own and/or operate
except as otherwise indicated. The properties are more fully described following the table.

Hotel
Rooms (1)

Slots (2)

Gaming
Tables (3)

Parking
Spaces (4)

AcreageCasino PropertiesPalace Station


1,011


1,760


47


2,600


30Boulder Station


300


2,760


33


4,800


54Texas Station


200


2,006


27


5,900


47Sunset Station


457


2,463


41


5,500


82Santa Fe Station


200


2,825


40


5,200


39Red Rock


815


2,995


66


6,800


64Green Valley Ranch (50% owned)


495


2,407


48


3,900


40Aliante Station (50% owned)


202


2,013


44


4,800


40Fiesta Rancho


100


1,460


15


2,050


25Fiesta Henderson


224


1,618


16


3,000


46Other PropertiesWild Wild West


262


198


6


600


19Wildfire Rancho





196





265


5Wildfire Boulder





167





230


2Gold Rush





147





125


1Lake Mead Casino





87





64


3Barley's (50% owned)





199








The Greens (50% owned)





37








Wildfire Lanes (50% owned)





197











(1)For
the year ended December 31, 2010, room occupancy for hotel operations was 80%, the average daily room rate was $70, and revenue per available
room was $56.(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 and Aliante Station, and a bingo parlor, with the exception of Green Valley Ranch. The Casino
Properties also offer a race and sports book and the Other Properties offer a sports book with the exception of The Greens and Lake Mead Casino.(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, 3,300 for Aliante Station, 1,000 for Fiesta Rancho and 1,100 for Fiesta Henderson.


7

---






Casino Properties



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.

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, 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, 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, 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

8

---



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 food at reasonable prices, including the Grande 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.



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 café, 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, 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.

9

---







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. We jointly developed the project on 40
acres of a 170-acre multi-use commercial development with GCR Gaming. In addition to our 50% ownership, we are also the managing partner of Green Valley Ranch and receive a
management fee equal to 2% of the property's revenues and approximately 5% of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA").

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.

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.



Aliante Station, which opened on November 11, 2008, is strategically located at the intersection of Interstate 215 and Aliante
Parkway in North Las Vegas, Nevada. We jointly developed the project on 40 acres in the Aliante master-planned community with The Greenspun Corporation. Aliante Station features a contemporary desert
theme with non-gaming amenities including 202 hotel rooms, six full-service restaurants, a 16-screen movie theater complex, an entertainment lounge and
approximately 14,000 square feet of meeting and banquet space. We receive a management fee equal to 2% of the property's revenues and approximately 5% of EBITDA.

Aliante's
six full-service restaurants include MRKT Sea and Land, Il Vino Cucina & Wine Bar, Camacho's (a Mexican restaurant), The Original Pancake House, TGI Friday's
and Feast Buffet, a live action buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine. Aliante also offers a variety of fast-food outlets to enhance the customers'
dining selection.



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.

10

---





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



Wild Wild West, which we acquired in July 1998, is strategically located on Tropicana Avenue and immediately adjacent to Interstate 15.
Wild Wild West's non-gaming amenities include a full-service restaurant, a bar, a gift shop and a truck plaza. In December 2009, the Wild Wild West was rebranded as Days
InnLas Vegas under a franchise agreement with Days Inn Worldwide.



In January 2003, we 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.



In August 2004, we 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.



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



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, we purchased a 50% interest in The Greens, a restaurant and lounge, located in Henderson, Nevada.
The Greens' non-gaming amenities include a full-service restaurant and bar. In October 2007, we purchased a 50% interest in Wildfire Lanes (formerly known as Renata's) located
in Henderson, Nevada. Wildfire Lanes' non-gaming features include a full-service restaurant, a bar and an 18-lane bowling center. We are the managing partner for
Barley's, The Greens and Wildfire Lanes and receive a management fee equal to approximately 10% of EBITDA.

Managed Properties



We manage 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.

11

---



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 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



We believe 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. We select sites that are located within
a dense population base which generally are adjacent to high-traffic surface streets and interstate highways. We believe that each of our casino properties' locations has provided us with
a significant competitive advantage to attract our 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 we control a number of these sites.



No master-planned development is currently contemplated, but our long-term master-planned expansion strategy includes the
master-planned expansion of our existing and future gaming locations. In designing project sites, we plan and engineer for multi-phased facility expansions to accommodate future growth and to allow us
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.

We
continually evaluate the timing and scope of our master-planned developments at each of our properties and may determine from time to time to expand the scope of, improve on or
suspend the implementation of our master plans. These decisions are dependent upon the availability of financing, competition and future economic and gaming regulatory environments, many of which are
beyond our control.



We have 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. We also evaluate other development and acquisition opportunities in current and emerging gaming markets, including land-based, dockside,
riverboat and Native American gaming. Our decision 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 our control.

12

---



Land Held for Development

As of December 31, 2010, we had $240.8 million of 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 we own 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. During the year ended December 31, 2010, options to purchase approximately 10 acres of land near the Wild Wild West expired, and we
terminated the lease on 2.5 acres near the Cactus site.

In
December 2008, we 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, we have 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 our consolidated balance sheets at December 31, 2010. In March
2011, we were 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.

In
November 2010 we terminated the ground lease and option agreement on a 2.5 acre parcel adjacent to our 58 acre site at the southern end of Las Vegas Boulevard at Cactus Avenue.

Native American Development



We have 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, we 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 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

13

---



significant
financial support to the project, even though there can be no assurances as to when or if the necessary approvals will be obtained.



We have 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 we 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 at 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, we 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.



We have 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 we agreed to 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, we have 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 MITCR's gaming revenues. As a result of the continued economic downturn and thus the revised expected potential
of the project, we do not expect to proceed with the development of this project, and have written off the associated long-term asset.

Seasonality

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

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.

14

---



Employees

As of January 31, 2011, we had approximately 12,224 employees in Nevada, which includes Green Valley Ranch, Aliante Station,
Barley's, The Greens and Wildfire Lanes. None of our properties 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 our properties in the past, and we believe that such efforts are ongoing at this time.

Competition

Our properties face competition from all other casinos and hotels in the Las Vegas area, including to some degree, from each other. In
addition, we 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. We compete with other hotel/casinos and restricted gaming locations by
focusing on repeat customers and attracting these customers through innovative marketing programs. Our value-oriented, high-quality approach is designed to generate repeat business.
Additionally, our properties 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 our business.

We
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 we 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, we 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.

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

15

---



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

We are subject to extensive state and local regulation and licensing and gaming authorities have significant control over our
operations. Following is a detailed discussion of regulatory and licensing matters.



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 are 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 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. Palace Station Hotel & Casino, Inc. ("PSHC"), Boulder Station, Inc. ("BSI"), Texas Station, LLC ("TSL"),
Sunset Station, Inc. ("SSI"), Tropicana Station, Inc. ("TRSI"), Santa Fe Station, Inc. ("SFSI"), Charleston Station, LLC. ("CSL"), Fiesta
Station, Inc. ("FSI"), Rancho Station, LLC ("RSL"), Lake Mead Station, Inc. ("LMSI"), Gold Rush Station, LLC ("GRS"), Magic Star Station, LLC ("MSS")
and LML Station, LLC ("LML") have received licenses to conduct non-restricted gaming operations. In addition, the GVR Seller has received licenses to conduct
non-restricted gaming operations at Green Valley Ranch and Aliante has received licenses to conduct non-restricted gaming operations at Aliante Station
Casino + Hotel. Our ownership in the GVR Seller and Aliante are owned through intermediary companies known as GV Ranch Station, Inc. ("GVRS") and Aliante
Station, LLC/Aliante Holding, LLC (collectively "ASL-AHL") respectively. Both GVRS and ASL-AHL are licensed as members and managers of the GVR
Seller and Aliante respectively. 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, Nevada and Sunset GV, LLC ("SGV") has been

16

---



licensed
to conduct non-restricted gaming operations at Wildfire Casino & Lanes ("Wildfire Lanes"), formerly Renata's Supper Club, a casino located in Henderson, Nevada. Station's
ownership in TCAI, GC and SGV is held through an intermediary company known as Green Valley Station, Inc. ("GVSI"), which is licensed as a member and manager of TCAI, GC and SGV. We also own a
minority interest in Fiesta Palms, LLC, d.b.a. Palms Casino Resort, which we hold through our subsidiary, Palms Station, LLC ("PSL"). Station is registered by the Nevada
Commission as a publicly traded corporation (a "Registered Corporation") and has been found suitable to own the stock of PSHC, BSI, TSL, SSI, TRSI, GVSI, SFSI, CSL, GVRS, FSI, RSL, LMSI, GRS, MSS and
LML. We are also licensed as a manufacturer and distributor of gaming devices. PSHC, BSI, SSI, TRSI, GVSI, GVRG, FSI, SFSI and LMSI are each a corporate gaming licensee and TCAI, TSL, the GVR Seller,
RSL, GRS, MSS, GC, PSL, LML, SGV, CSL, SFSI and Aliante are each a limited liability company licensee (individually a "Gaming Subsidiary" and collectively the "Gaming Subsidiaries") under the terms of
the Nevada Act. As a Registered Corporation, Station is required periodically to submit detailed financial and operating reports to the Nevada Commission and the Nevada Board and furnish any other
information, which the Nevada Commission or the Nevada Board may require. No person may become a stockholder or holder of an interest of, or receive any percentage of profits from the Gaming
Subsidiaries without first obtaining licenses and approvals from the Nevada Gaming Authorities. Station and the Gaming Subsidiaries have obtained from the Nevada Gaming Authorities the various
registrations, findings of suitability, approvals, permits and licenses (individually, a "Gaming License" and collectively, the "Gaming Licenses") required in order to engage in gaming activities in
Nevada.

The
Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, a Registered Corporation, such as Station or the Gaming
Subsidiaries, which hold licenses, 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 the Gaming 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 the Gaming 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 Station or the Gaming
Subsidiaries, the companies involved would have to sever all relationships with such person. In addition, the Nevada Commission may require Station or the Gaming 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.

Station
and the Gaming Subsidiaries are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of
securities and similar financing transactions by us and our Gaming Subsidiaries must be reported to or approved by the Nevada Commission and/or the Nevada Board.

If
it were determined that the Nevada Act was violated by a Gaming Subsidiary, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance
with certain statutory and regulatory procedures. In addition, Station, the Gaming 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

17

---



Station,
Boulder Station, Texas Station, Sunset Station, Santa Fe Station, Red Rock, Green Valley Ranch, Aliante Station, 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 Gaming Subsidiaries or the appointment of a supervisor could (and
revocation of any 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, be investigated, and obtain a
finding of suitability as a beneficial owner of our voting securities determined 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 holder of voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and financial information including a list of beneficial owners. 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 Directors, 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 stockholder who is found unsuitable and who holds, directly or
indirectly, any beneficial ownership of the common stock 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
are subject to disciplinary action if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us or our Gaming Subsidiaries, we (i) pay
that person any dividend or interest upon our voting 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 voting
securities including, if necessary, the immediate purchase of said voting securities for cash at fair market value. Additionally, the Clark County Board has the authority to approve all persons owning
or controlling the stock of any corporation controlling a gaming licensee.

18

---





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
are required to maintain a current stock 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 our stock certificates to bear
a legend indicating that the securities are subject to the Nevada Act. However, to date, the Nevada Commission has not imposed 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 stockholders, officers, directors 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
stockholders 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 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

19

---



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.



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, Fiesta Rancho, and Aliante
Station 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 without first procuring
the requisite approvals. 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 the Gaming Subsidiaries.



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, which is 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.

20

---



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 believe that we have complied with the requirements of Section 81 with respect to our management contract for Thunder Valley, which
expired in June 2010, and 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

21

---



amendment,
and those additional requirements, including additional licensing requirements, may be imposed on us. On July 15, 2010, the NICG provided MPM and Gun Lake with notice of approval of
the Gun Lake management agreement. The possession of valid licenses from the Gun Lake Tribal Gaming Authority is an ongoing condition of our management agreement with that tribe. Lastly, on
October 1, 2010, the NIGC informed Station that the FIGR and the NIGC approved the management agreement by and between the FIGR and Station for Class II gaming at the planned gaming and
entertainment facility.

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.



If we become involved in gaming operations in any other jurisdictions, such gaming operations will subject us and certain of our
officers, directors, key employees, stockholders 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 Station 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, Station 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, directors, 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.

Financial Information

Please refer toItem 6Selected Financial Dataand Item 7Management's Discussion and Analysis
of Financial Condition and Results of Operationsfor information about our revenues,
operating results and total assets and liabilities, and toItem 8Financial Statements and Supplementary Datafor our consolidated
financial statements and accompanying footnotes.

22

---



Available Information

We are a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and file annual reports,
quarterly reports and other documents with the Securities and Exchange Commission (the "SEC"). You may also read and copy any of our filings at the SEC's public reference room at 100 F Street
N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. 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.

We
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.

Our
Code of Business Conduct and Ethics includes a code of ethics for our principal executive officer and our principal accounting officer and applies to all of our employees and
non-employee directors. Our Code of Business Conduct and Ethics is available on the Investor Relations section of our website at www.stationcasinos.com.

ITEM 1A.    RISK FACTORS.

We are subject to a number of risks including our ability to successfully reorganize the Company in the Chapter 11 Case and
general business and financial risk factors. Any or all of such factors below, could have a material adverse affect on our business, financial condition or results of operations.

Before
making an investment decision, the investor should carefully consider the risks and uncertainties described below together with all of the information included or incorporated by
reference in this Annual Report on Form 10-K and our other public filings made with the SEC before making an investment decision with respect to our securities. 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

The Chapter 11 Case may materially adversely affect our business, results of operations and prospects.

Risk factors involving the Chapter 11 Case include, but are not limited to, the following:



23

---





Prolonged continuation of the Chapter 11 Cases may harm our business.

If the Chapter 11 Cases continue for a prolonged amount of time, the proceedings could adversely affect our business and
operations. So long as the Chapter 11 Cases continue, our senior management will be required to spend a significant amount of time and effort dealing with our reorganization instead of focusing
exclusively on business operations. Prolonged continuation of the Chapter 11 Cases will also make it more difficult to attract and retain management and other key personnel necessary to the
success and growth of our business. In addition, the longer the Chapter 11 Cases continue, the more likely it is that our customers, suppliers and agents will lose confidence in our ability to
successfully reorganize our business and seek to establish alternative commercial relationships. Furthermore, so long as the Chapter 11 Cases continue, we will be required to incur substantial
costs for professional fees and other expenses associated with the Chapter 11 Cases. Prolonged continuation of the Chapter 11 Cases may also require us to seek additional financing. It
may not be possible for us to obtain additional financing during or after the Chapter 11 Cases on commercially favorable terms or at all. If we were to require additional financing during the
Chapter 11 Cases and were unable to obtain the financing on favorable terms or at all, our chances of successfully reorganizing our business may be seriously jeopardized.

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

As a result of the Chapter 11 Cases, we have been the subject of negative publicity which has had an impact on our 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 our business, financial
condition, future business prospects and results of operations. The impact of this negative publicity cannot be accurately predicted or quantified.

24

---



There is doubt about our ability to continue as a going concern.

The audited consolidated financial statements of the Company contained elsewhere in this Annual Report on Form 10-K
have been prepared assuming that we will continue as a going concern. However, the report of the independent registered public accounting firm on the financial statements of the Company as of and for
the year ended December 31, 2010 includes an explanatory paragraph describing the existence of substantial doubt about our ability to continue as a going concern. This report, as well as the
uncertainty regarding the eventual outcome of the Chapter 11 Cases may adversely impact our relationships with vendors, ability to attract customers to our casino properties, attract and retain
key executive employees and maintain and promote its properties, which could materially adversely affect our results of operations.

We have incurred operating losses in recent fiscal periods. Unless we are able to improve our results of operations, 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.

We 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. 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:



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.

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

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

Consumer demand for casino hotel properties, such as our casino properties, 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 us, and may continue to adversely affect our financial condition, results of
operations and cash.

25

---



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

Our casino properties 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 our 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 our 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 we 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 offer represent discretionary expenditures and participation in such activities
has 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 our 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. Our casino properties 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 our operating results. Because we
are a highly leveraged company, if adverse regional and national economic conditions persist or worsen, the decreased revenues from our casino properties 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 outstanding indebtedness. 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 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.

Our operating strategies emphasize attracting and retaining customers from the Las Vegas local and repeat visitor market. Our casino
properties 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, our strategy of growth through master-planning of our 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 our current casino properties or that we will be able to
successfully adapt our business strategy to the current economic downturn or any further economic slowdown.

26

---



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

Our casino properties face competition from all other casinos and hotels in the Las Vegas area including, to some degree, from each
other. In addition, our casino properties 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 our business. For further details on competition in the gaming industry that will affect our business, see "Item 1.
BusinessCompetition."

To
a lesser extent, our casino properties 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 do. 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 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 are 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 are, 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 our casino properties. 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.

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.

We are 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.

27

---





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



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 us in consultation with our 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 our operations, 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.

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 our casino properties 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 our casino properties in the past, and we believe that such efforts are ongoing at this time. Accordingly, there can
be no assurance that our casino properties will not ultimately be unionized. Union organization efforts that may occur in the future could cause disruptions to our casino properties 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

28

---



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 our casino properties and our financial condition and results of operation.

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 our casino properties, 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 our casino properties. 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 our casino properties or any construction project could have an adverse effect on the
business of our casino properties 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 our casino
properties or any construction project in the future.

In
addition, any unexpected shutdown of one of our casino properties or any construction project could have an adverse effect on the business of our casino properties 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 our casino properties.

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

Our ability to operate successfully and competitively is dependent, in part, upon the continued services of certain of our officers and
key employees. In the event that these officers and/or employees were to leave us, we might not be able to find suitable replacements. We believe that the loss of the services of these officers and/or
employees could have a material adverse effect on our results of operations.

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

We 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:



29

---



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.

We
have 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:



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 are 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 is subject to extensive regulation by the states, counties and cities in which we
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 our securities 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 such securities. 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.

30

---



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.

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 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 our securities 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 such securities.

Risks Related to our Substantial Indebtedness

Our high leverage and debt service obligations could adversely affect our ability to raise additional capital to fund our operations, increase our vulnerability to general
adverse economic and industry conditions, expose us to interest rate risk to the extent of our variable rate debt and prevent us from meeting our obligations.

As a result of the Merger, we are highly leveraged. Our ability to make scheduled payments on or to refinance our debt obligations has
been significantly impacted by general economic, financial, competitive and other factors that are beyond our control. We expect that we will remain highly leveraged following our restructuring and if
our economic performance were to deteriorate, we may be unable to maintain a level of cash flows from operating activities sufficient to
enable us to pay the principal, premium, if any, and interest on our indebtedness outstanding following a restructuring.

Our
high level of debt and the covenants contained in our senior secured credit facilities and any debt that may remain outstanding following the consummation of the Plan or other
restructuring could have important consequences, including:



31

---



Depending
on the terms of our restructuring, we and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in the
applicable credit
facilities and the indentures. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

A decline in our economic performance has adversely affected our ability to service all of our indebtedness.

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. Our performance has been significantly impacted by general economic and
financial conditions, which has affected our cash flows from operating activities and our ability to pay the principal, premium, if any, and interest on our indebtedness. As a result, we have elected
not to make certain interest payments on our senior and senior subordinated notes prior to the filing of the Chapter 11 Case and initiated discussions with our lenders regarding a
restructuring.

In
addition, a further deterioration in our economic performance may cause us to reduce or delay investments and capital expenditures, or to sell assets. In the absence of such 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. In addition, any
such transaction would require the approval of the Bankruptcy Court.

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 business is capital intensive. For our casino properties 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 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. Our 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.

32

---



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 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.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.    PROPERTIES

Substantially all of the property that we own and lease is subject to liens to secure borrowings under our senior secured credit
facilities. With the exception of Red Rock, Palace Station, Sunset Station, Boulder Station, land owned at the southern end of Las Vegas Boulevard at Cactus Avenue and land surrounding the Wild Wild
West, substantially all of the property that we own and lease is subject to liens to secure borrowings under our senior secured credit facilities. The CMBS Loans are collateralized by substantially
all fee and leasehold real property comprising Palace Station, Boulder Station, Sunset Station and Red Rock. The land located on the southern end of Las Vegas Boulevard at Cactus Avenue and the land
surrounding Wild Wild West in Las Vegas, Nevada collateralizes the $250 million land loan.

Palace
Station is situated on approximately 30 acres that we own located on the west side of Las Vegas, Nevada.

Boulder
Station is situated on approximately 54 acres located on the east side of Las Vegas, Nevada. We own 27 acres and lease 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 have an option, exercisable at five-year intervals with the next
option in June 2013, to purchase the land at fair market value. Our leasehold interest in the property is subject to a lien to secure borrowings under the CMBS Loan Documents. 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 is situated on approximately 47 acres located in North Las Vegas, Nevada. We lease 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 with scheduled adjustments in July
2010, and every ten years thereafter, 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 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 is situated on approximately 82 acres that we own located in Henderson, Nevada.

Santa
Fe Station is situated on approximately 38 acres that we own located on the northwest side of Las Vegas, Nevada.

33

---



Red
Rock is situated on approximately 64 acres that we own located on the northwest side of Las Vegas, Nevada.

Green
Valley Ranch, a 50% owned joint venture, is situated on approximately 40 acres in Henderson, Nevada that is owned by the joint venture.

Aliante
Station, a 50% owned joint venture, is situated on approximately 40 acres in North Las Vegas, Nevada that is owned by the joint venture.

Fiesta
Rancho is situated on approximately 25 acres that we own in North Las Vegas, Nevada.

Fiesta
Henderson is situated on approximately 46 acres that we own in Henderson, Nevada.

We
also have acquired or are 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. In December 2008, we 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, we have 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, we were 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.

We
also own 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.

ITEM 3.    LEGAL PROCEEDINGS

Station and our subsidiaries are defendants in various lawsuits relating to routine matters incidental to our business. As with all
litigation, no assurance can be provided as to the outcome of the following matters and litigation inherently involves significant costs. Following is a summary of key litigation impacting us and our
subsidiaries.



On February 4, 2008, Josh Luckevich, Cathy Scott and Julie St. Cyr filed a purported class action complaint against the
Company and certain of its subsidiaries in the United States District Court for the District of Nevada, Case No. CV-00141 (the "Federal Court Action"). The plaintiffs are all former
employees of the Company or its subsidiaries. The complaint alleged that the Company and its subsidiaries (i) failed to pay its employees for all hours worked, (ii) failed to pay
overtime, (iii) failed to timely pay wages and (iv) unlawfully converted certain earned wages. The complaint in the Federal Court Action sought, among other relief, class certification
of the lawsuit, compensatory damages in excess of $5,000,000, punitive damages and an award of attorneys' fees and expenses to plaintiffs' counsel.

On
October 31, 2008, the Company filed a motion for judgment on the pleadings. During a hearing on that motion, the United States District Court questioned whether it had
jurisdiction to adjudicate the matter. After briefing regarding the jurisdiction question, on May 16, 2009, the United States District Court dismissed the Federal Court Action for lack of
jurisdiction and entered a judgment in the Company's favor. Subsequently, on July 21, 2009, the plaintiffs filed a purported class action complaint against the Company and certain of its
subsidiaries in the District Court of Clark County, Nevada, Case No. A-09-595614-C (the "State Court Action"). The complaint in the State Court Action
alleged substantially the same claims that were alleged in the complaint in the Federal Court Action.

On
August 19, 2009, the corporate defendants, other than the Company, filed an answer responding to the complaint. Subsequently, on August 27, 2009, the corporate
defendants, other than the Company,

34

---



filed
a motion to stay the State Court Action pending the resolution of the Company's chapter 11 case. That motion was granted on September 30, 2009.

On
or about April 30, 2010, the Company and the plaintiffs reached an agreement to settle all claims asserted or that could have been asserted in the State Court Action. Under the
terms of the settlement:



On
June 17, 2010, the State Court Action was removed to the Bankruptcy Court by agreement of the parties.

On
July 16, 2010, the Bankruptcy Court granted preliminary approval of the settlement, and directed the parties to provide notice to the current and former employees covered by
the State Court Action of their right to object to the settlement and/or be excluded therefrom. No objections to the settlement were filed.

On
October 26, 2010, the Bankruptcy Court granted final approval of the settlement. The proceeds referenced in paragraph (b) above were distributed in full on
December 10, 2010.

The
expense related to this legal settlement was accrued during the year ended December 31, 2010 and the related liability is classified in liabilities subject to compromise in
the accompanying consolidated balance sheet.

Pursuant
to the Plan, among other things, general unsecured creditors, including the employees referenced in paragraph (a) above, were to receive warrants referred to in the Plan
as the NPH Warrants. On December 13, 2010, the Company filed a motion with the Bankruptcy Court asking that the Plan be modified so that the Company would not need to distribute an NPH Warrant
worth approximately 13¢ to each of the employees referenced in paragraph (a) above (the "Plan Modification Motion"). On January 21, 2011, the Bankruptcy Court entered an
order granting the relief sought in the Plan Modification Motion.



On July 28, 2009, the Debtors filed voluntary petitions in the Bankruptcy Court under Chapter 11 of title 11 of the
United States 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").
On February 10, 2010, GV Ranch Station, Inc., a wholly-owned subsidiary of Station Casinos, Inc. that manages and owns 50% of Green Valley filed a voluntary petition in the
Bankruptcy Court under chapter 11 of title 11 of the United States Code. The Chapter 11 Case and the GV Ranch Station, Inc. chapter 11 case are collectively referred to as
the "Chapter 11 Cases."

On
July 28, 2010, the Debtors filed the Plan and an accompanying 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 New Station, and the GVR Seller 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 the GVR Seller for $500 million

35

---



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 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 GVR Seller 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 and $45 million in secured loans 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 plan of reorganization for the Subsidiary Chapter 11
Cases. 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.

See
"Part I. Item I. BusinessChapter 11 Reorganization" and "Restructuring Transactions" for further discussions on the Chapter 11
Cases and the Restructuring Transactions.

ITEM 4.    (REMOVED AND RESERVED)

36

---





PART II

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

Market Information

All of the outstanding common stock of Station Casinos, Inc. is privately held and there is no established public trading market
for our common stock.

Holders

As of January 31, 2011, there were two holders of record of our non-voting common stock and one holder of record of
our voting common stock.

Dividends

There were no dividends paid during the years ended December 31, 2010 and 2009, respectively.

The
payment of dividends in the future will be at the discretion of our Board of Directors. Restrictions imposed by our debt instruments and other agreements limit the payment of
dividends (see "Management's Discussion and Analysis of Financial Condition and Results of OperationsDescription of Certain Indebtedness and Capital Stock").

Issuer Purchases of Equity Securities

There were no purchases of our common stock made by or on behalf of us during the three months ended December 31, 2010.

37

---





ITEM 6.    SELECTED FINANCIAL DATA

The selected consolidated financial data presented below as of and for the years ended December 31, 2010, 2009 and 2008, the
successor period from November 8, 2007 through December 31, 2007 (the "Successor Period") and the period then ended, the predecessor period from January 1, 2007 through
November 7, 2007 (the "Predecessor Period"), and as of and for the fiscal years ended December 31, 2006 have been derived from our consolidated financial statements which, except for
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, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements, the notes thereto and other financial and
statistical information included elsewhere in this Annual Report on Form 10-K.

Successor

PredecessorPeriod from
November 8, 2007
Through
December 31,
2007

Period from
January 1, 2007
Through
November 7,
2007

For the
Year
Ended
December 31,
2006(a)For the Year Ended December 31,2010

2009

2008(in thousands)

(in thousands)Operating Results:Net revenues

$
944,955

$
1,062,149

$
1,298,151

$
209,711

$
1,237,284

$
1,339,024Operating costs and expenses, excluding the following items (b):


856,473


965,006


1,095,535


460,703


939,091


978,445Development (c)


12,642


6,261


3,398


375


3,089


9,036Preopening (d)


3,630


5,753


10,198


1,170


5,859


29,461Merger transaction costs (e)














156,500


2,526Asset impairments (f)


262,020


1,276,861


3,343,247





16,631


Write-downs and other charges, net (g)


18,347


16,677


57,800


958


(1,346
)

2,368Management agreement/lease terminations (h)


898


4,130


4,825





3,825


1,053Operating (loss) income


(209,055
)

(1,212,539
)

(3,216,852
)

(253,495
)

113,635


316,135Gain on dissolution of joint venture (i)


124,193














(Losses) earnings from joint ventures (j)


(248,495
)

(127,643
)

17,020


5,875


34,247


41,854Operating (loss) income and earnings (losses) from joint ventures


(333,357
)

(1,340,182
)

(3,199,832
)

(247,620
)

147,882


357,989Gain (loss) on early retirement of debt (k)





40,348





(20,311
)




Change in fair value of derivative instruments


(42
)

23,729


(23,057
)

(30,686
)




Interest expense, net


(171,291
)

(317,393
)

(426,956
)

(66,019
)

(220,873
)

(178,537
)(Loss) income before income taxes and reorganization items


(504,690
)

(1,593,498
)

(3,649,845
)

(364,636
)

(72,991
)

179,452Reorganization items, net (l)


(82,748
)

(375,888
)










(Loss) income before income taxes


(587,438
)

(1,969,386
)

(3,649,845
)

(364,636
)

(72,991
)

179,452Income tax benefit (provision)


21,996


289,872


381,345


26,736


15,335


(69,240
)Net (loss) income

$
(565,442
)
$
(1,679,514
)
$
(3,268,500
)
$
(337,900
)
$
(57,656
)
$
110,212Balance Sheet Data:Total assets

$
3,954,143

$
4,276,832

$
5,831,636

$
8,988,666




$
3,716,696Long-term debt (including current) (m)


5,921,755


5,922,058


5,782,153


5,171,149





3,468,828Stockholders' (deficit) equity


(2,886,248
)

(2,335,388
)

(677,324
)

2,571,062





(186,858
)


(a)On
April 18, 2006, we opened Red Rock.(b)Upon
consummation of the Merger, equity-based awards in FCP and Fertitta Partners were issued (see Note 16 to the 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 Consolidated Financial Statements in
this Annual Report on Form 10-K).


38

---



(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.(e)During
the Predecessor Period, the Company 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, we recorded approximately $262.0 million in non-cash impairment charges to
write-down certain portions of our 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, we recorded approximately $1.28 billion in non-cash impairment charges to write-down certain portions of our 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, we 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 our goodwill,
intangible assets, investments in joint ventures and land held for development to their fair values (see Note 15 to the Consolidated Financial Statements in this Annual Report on
Form 10-K). During the 2007 Predecessor Period, we 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, we 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, we 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, we
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 Consolidated Financial Statements in this Annual
Report on Form 10-K). During the 2007 Predecessor Period, we 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, we recorded lease termination expense of $0.9 million related primarily to the termination of certain
restaurant leases. During the year ended December 31, 2009, we 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 consolidated balance sheet in this Annual Report on Form 10-K. During the years ended December 31, 2008 and 2006, we 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 we leased would no longer be
utilized. As such, the remaining lease payments were accrued. During the Predecessor Period, we 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 we 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, our losses from joint ventures resulted primarily from recording our 50% share of asset impairment losses at
Aliante Station. During the year ended December 31, 2009, our losses from joint ventures resulted primarily from recording our 50% share of impairment losses on land held by the Rancho Road
joint venture and our share of asset impairment charges and operating losses from Aliante Station, which opened in November 2008. Our 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, we recorded a gain on early retirement of debt of $40.3 million as a result of our repurchase of $40.0 million of our outstanding
67/8% Senior Subordinated Notes and $8.0 million of our outstanding 61/2% Senior Subordinated Notes. During the Successor Period, in conjunction with the Merger,
we terminated our 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 our then existing cash flow hedge interest rate swaps.(l)Reorganization
items represent amounts 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 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.


39

---





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

General

We are 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.
We also own a 50% interest in Green Valley Ranch, Aliante Station, Barley's, The Greens and Wildfire Lanes. Station also manages Gun Lake Casino.

Our
operating results are greatly dependent on level of gaming revenue generated at our properties. A substantial portion of our operating income is generated from our gaming operations,
more specifically slot play. We use our non-gaming revenue departments to drive customer traffic to our properties. The majority of our revenue is cash based through customers wagering
with cash or paying for non-gaming amenities with cash or credit card. Because our business is capital intensive, we rely heavily on the ability of our 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 have been prepared assuming that the Company will continue as a going concern. As
discussed in Note 1 to the consolidated financial statements, the Company commenced the Chapter 11 Case on July 28, 2009. The pending Chapter 11 Case raises substantial
doubt about the Company's ability to continue as a going concern. The 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 New Station, and the GVR Seller 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 the GVR Seller 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
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 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

40

---



Aliante
and $45 million in secured loans in exchange for their claims. We expect that the Subsidiary Chapter 11 Cases will be filed by June 30, 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 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.

See
"Part I. Item I. BusinessChapter 11 Reorganization" and "Restructuring Transactions" for further discussions on the Chapter 11
Cases and the Restructuring Transactions.

The
following discussion and analysis should be read in conjunction with "Selected Financial Data" and the consolidated financial statements and notes thereto included elsewhere in this
Annual Report on Form 10-K.

Results of Operations

The following table highlights the results of our operations (dollars in thousands):

Year Ended
December 31,
2010

Percent
change

Year Ended
December 31,
2009

Percent
change

Year Ended
December 31,
2008Net revenuestotal

$
944,955


(11.0
)%
$
1,062,149


(18.2
)%
$
1,298,151Major Las Vegas Operations (a)


886,647


(8.6
)%

970,521


(17.5
)%

1,176,394Management fees (b)


22,394


(57.3
)%

52,447


(27.6
)%

72,405Other Operations and Corporate (c)


35,914


(8.3
)%

39,181


(20.6
)%

49,352Operating (loss) incometotal

$
(209,055
)

82.8
%
$
(1,212,539
)

62.3
%
$
(3,216,852
)Major Las Vegas Operations (a)


36,017


116.7
%

(216,002
)

88.0
%

(1,799,158
)Management fees (b)


22,394


(57.3
)%

52,447


(27.6
)%

72,405Other Operations and Corporate (c)


(267,466
)

74.5
%

(1,048,984
)

29.6
%

(1,490,099
)Cash flows (used in) provided by:Operating activities

$
(4,564
)

96.4
%
$
(126,677
)

(347.3
)%
$
51,222Investing activities


(14,969
)

88.5
%

(130,280
)

50.7
%

(264,249
)Financing activities


(303
)

98.1
%

(15,914
)

(102.8
)%

574,699


(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.


41

---








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 our 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 our 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, we have experienced an overall decrease in revenues across all of our 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.



Our consolidated operating loss of $209.1 million for the year ended December 31, 2010 improved significantly as compared
to our 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.

Our
consolidated operating loss of $1.21 billion for the year ended December 31, 2009 decreased significantly as compared to our 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 our various sources of revenues and expenses as compared to prior years (dollars in thousands):

Year Ended
December 31,
2010

Percent
change

Year Ended
December 31,
2009

Percent
change

Year Ended
December 31,
2008Casino revenues

$
699,401


(8.5
)%
$
764,639


(16.7
)%
$
918,120Casino expenses


289,168


(10.9
)%

324,373


(10.2
)%

361,255Margin


58.7
%




57.6
%




60.7
%Food and beverage revenues

$
163,215


(14.1
)%
$
189,917


(17.0
)%
$
228,858Food and beverage expenses


107,311


(8.2
)%

116,932


(23.6
)%

153,018Margin


34.3
%




38.4
%




33.1
%Room revenues

$
73,454


(10.7
)%
$
82,282


(22.2
)%
$
105,718Room expenses


32,321


(5.4
)%

34,182


(14.6
)%

40,029Margin


56.0
%




58.5
%




62.1
%Other revenues

$
59,086


(8.7
)%
$
64,732


(12.2
)%
$
73,745Other expenses


19,979


(0.7
)%

20,121


(27.6
)%

27,774Selling, general and administrative expenses

$
219,479


(4.2
)%
$
229,200


(8.5
)%
$
250,614Percent of net revenues


23.2
%




21.6
%




19.3
%Corporate expense

$
34,899


5.7
%
$
33,018


(8.4
)%
$
36,029Percent of net revenues


3.7
%




3.1
%




2.8
%(Losses) earnings from joint ventures

$
(248,495
)

(94.7
)%
$
(127,643
)

(850.0
)%
$
17,020


42

---



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, 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 our 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 our 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.

43

---



Room.The following table shows key information about our hotel operations:

Year Ended
December 31,
2010

Percent
change

Year Ended
December 31,
2009

Percent
change

Year Ended
December 31,
2008Room revenues

$
73,454


(10.7
)%
$
82,282


(22.2
)%
$
105,718Room expenses


32,321


(5.4
)%

34,182


(14.6
)%

40,029Margin


56.0
%




58.5
%




62.1
%Occupancy


80
%




83
%




88
%Average daily rate

$
62


(7.5
)%
$
67


(21.2
)%
$
85Revenue per available room

$
50


(10.7
)%
$
56


(25.3
)%
$
75


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 our room-related costs are fixed, decreases in room revenues typically
result in decreased margins.

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.We are the managing partner for Green Valley Ranch, Aliante Station, Barley's, The Greens and Wildfire Lanes and earn
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. We 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 we 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 our 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 our 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

44

---



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
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 our 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 our 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 our 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 the Company's net assets that are subject to the plan. We determined that this constituted an indicator of asset impairment
and therefore we reviewed substantially all of our assets for impairment during the third quarter of 2010. As a result of our impairment review, we recognized asset impairments totaling
$262.0 million, consisting of the following:



For
the year ended December 31, 2009, we 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

45

---



rates
resulting from turmoil in the credit markets. Asset impairments recognized during the year ended December 31, 2009 consisting of the following:



In
the year ended December 31, 2008, the Company 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 the Company'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:



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:



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



46

---





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



(Losses) Earnings From Joint Ventures.We own 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. Our share of the (losses) earnings from these joint ventures was $(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 our 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 our 50% owned joint ventures. During the year ended December 31, 2010, losses from
joint ventures included a charge of $233.3 million representing our 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 our 50% share of asset impairment losses recognized by the Rancho Road joint venture. The $144.6 million decrease in our 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 our investment in Rancho Road was a deficit of $124.2 million as a result of accumulated losses in excess of our
investment. Upon dissolution, we removed this deficit carrying value from our books and recognized a gain. Prior to Richfield Homes' disposal of its assets, our carrying value was
$19.8 million. During 2010 we recognized a $16.3 million impairment of our investment in Richfield Homes, which resulted in a carrying value equal to the $3.5 million cash
distribution we received from the disposal of Richfield Homes' assets. As a result, we 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

47

---



claim.
As a result of the filing of the Chapter 11 Case on July 28, 2009, we stopped accruing interest for the senior notes, the senior subordinated notes and the mezzanine financings.
Had we 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 our weighted average cost of capital during 2010 as a result of the cessation of interest accruals on a portion of our 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 our 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, we recorded
$66.7 million,
$40.8 million and $47.6 million, respectively, in interest and other expense related to our unconsolidated joint ventures. The $25.9 million increase in interest and other expense
from joint ventures for the year ended December 31, 2010 compared to the year ended December 31, 2009 relates primarily to recording our 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, we 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, we recorded gains of $23.7 million related primarily
to the change in fair value of our 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 our 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, we recorded losses of $23.1 million related primarily to the change in fair value of our 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 the Company purchased $40.0 million in aggregate
principal amount of our outstanding $700 million 67/8% Senior Subordinated Notes and $8.0 million in aggregate principal amount of our outstanding
$450 million 61/2% Senior Subordinated Notes for approximately $1.5 million plus approximately $1.4 million in accrued interest. As a result, we 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.

48

---



Liquidity and Capital Resources

The following liquidity and capital resources discussion contains certain forward-looking statements with respect to our
business, financial condition, results of operations, dispositions, acquisitions, expansion projects and our 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 our 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 our 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, 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 our current expectations and projections about future events.



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 our 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 our 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 our debt.

As
of December 31, 2010, we had $165.4 million in cash and cash equivalents, of which approximately $83.5 million is in our casino cages to be used for the
day-to-day operations of our 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, Station Casinos, Inc. entered into an unsecured, subordinated administrative priority DIP
Credit Agreement among the Company, as borrower, Vista Holdings, LLC, a non-debtor subsidiary of the Company ("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 the Company and were available for intercompany loans to our 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.

49

---



Station
Casinos, Inc.'s obligations under the DIP Credit Agreement will be an administrative expense claim in the Chapter 11 Case havingpari
passupriority with other administrative expense claims, provided that repayment of the loan by Station Casinos, Inc. shall be subordinate to the full repayment of the
lenders under the Company's prepetition Credit Agreement. In addition, Station Casinos, Inc.'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, Station Casinos, Inc. entered into an Unsecured Revolving Loan Promissory Note in favor
of Past Enterprises, Inc., a non-debtor subsidiary of the Company ("Past Enterprises"), pursuant to which Past Enterprises provides to Station Casinos, Inc. 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. 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. The Company 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 the Company assisted them in obtaining in
connection with the Gun Lake Development Agreement. A subsidiary of the Company, 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 the Company 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.

Station
Casinos, Inc.'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 Station Casinos, Inc. shall be subordinate to the full repayment of the lenders under the
Company'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. We classify 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 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.

In
addition to capital expenditures, during the year ended December 31, 2010, we paid approximately $16.0 million in reimbursable advances for our Native American
development projects (see "Native American Development").

50

---





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



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 our 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 our net revenues and operating margin. In addition, our
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 our
restricted cash requirements for the year ended December 31, 2009 is due primarily to additional collateral required for our treasury management function, restrictions placed on our cash by
lenders of the CMBS Loans, and restrictions placed on our 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 our
election not to make the scheduled interest payments on our senior and senior subordinated notes and a portion of our CMBS loans in 2009 as described above.

At
December 31, 2009, we had no borrowing availability under our Revolver but had $25.3 million of availability under our DIP Credit Agreement. In addition,
subsequent to December 31, 2009, the DIP Credit Agreement facility was increased to $185 million. At December 31, 2009 we had $185.2 million in cash and cash
equivalents, of which approximately $81.5 million was in our casino cages to be used for the day-to-day operations of our 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, we paid approximately $19.3 million in advances for our Native American development projects
and paid approximately $24.3 million in cash equity contributions to joint ventures.



Our 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 our existing and potential Native American projects and (iii) expenses related to the Chapter 11 Case. Our
liquidity and capital resources for 2011 are expected to be significantly affected by the Chapter 11 Case and completion of a restructuring of our indebtedness. At this time it is not possible
to predict with certainty the effect the Chapter 11 Case and a restructuring will have on our business or various creditors. Our future results depend upon our successfully implementing, on a
timely basis, a restructuring of our indebtedness. Our operations and relationship with our 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, we

51

---



expect
to continue to incur, among other things, increased costs for professional fees and similar expenses. In addition, the filing 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 our financial reorganization instead of focusing on the operations of our business.

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



As of December 31, 2010, we have certain off-balance sheet arrangements that affect our financial condition,
liquidity and results of operations, including interest rate swaps with a combined notional amount of $250 million (see "Description of Certain Indebtedness and Capital
StockDerivative Instruments").

The
following table summarizes our contractual obligations and commitments (amounts in thousands):

Contractual obligationsLong-term
debt (a)

Operating
leases (b)

Other long-term
obligations (c)

Total contractual
cash obligationsPayments due by year2011

$
6,218,333

$
6,854

$
15,870

$
6,241,0572012


250,434


6,831


50


257,3152013


152,174


6,742


50


158,9662014


115,107


6,724


50


121,8812015


111,740


6,724





118,464Thereafter


175,692


294,214





469,906Total

$
7,023,480

$
328,089

$
16,020

$
7,367,589


(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 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 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.


52

---






As
further discussed in Note 21 to the Consolidated Financial Statements in this Annual Report on Form 10-K, on January 1, 2007 we adopted the provisions
of the accounting guidance for uncertainty in income taxes. We 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.



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

Investments in Joint Ventures

During March 2011, the GVR Seller entered into the GVR Asset Purchase Agreement under which substantially all of its
assets would be sold to a subsidiary of New Station for aggregate consideration of $500 million plus the assumption of certain liabilities, as part of a pre-packaged
chapter 11 plan of reorganization under the Bankruptcy code. The consummation of the GVR Asset Purchase Agreement and the proposed plan of reorganization is subject to the acceptance of
the plan by the lenders under the GVR Seller's first lien credit agreement, and there can be no assurance as to when or if the necessary approvals will be obtained.

On
March 22, 2011, Aliante launched a solicitation of approvals by lenders under its credit facility for a plan of reorganization (the "Aliante Plan") in which each of the lenders
under the credit facility would receive its pro rata share of 100% of the equity interests in the reorganized Aliante and its pro rata share of a new $45 million senior secured
credit facility to be entered into upon consummation of the Aliante Plan. If Aliante obtains the requisite approvals of its lenders pursuant to the solicitation of acceptances of the Aliante Plan,
Aliante will seek confirmation of the Aliante Plan under chapter 11 of title 11 of the United States Bankruptcy Code by the United States Bankruptcy Court for the District of Nevada in Reno,
Nevada. In addition, in connection with the proposed restructuring of Aliante, Aliante and the steering committee of lenders under the Aliante credit facility are in discussions with third parties
regarding a management agreement relating to the operation of Aliante during the pendency of the proposed chapter 11 case and following the consummation of the Aliante Plan.

Native American Development



In April 2003, the Company 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 will assist the FIGR in developing and operating a gaming and entertainment project to be located in Sonoma
County, California. The FIGR selected Station to assist them in designing, developing and financing their project, and upon opening Station will manage the facility on behalf of the FIGR. The
management agreement has a term of seven years from the date of the opening of the project. Under the terms of the management agreement, Station will provide training to the FIGR such that they may
assume responsibility for managing the facility upon expiration of the seven-year term of the agreement. 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 facility.

Under
the agreements, Station has agreed to provide certain advances for the development of the project, including, but not limited to monthly payments to the FIGR, professional fees,
consulting services, mitigation costs and design and pre-construction services fees.

53

---



As
described in the record of decision for the environmental impact statement, the project would include approximately 175,000 square feet of casino space, 196,000 square feet of
non-casino space, including a 200-room hotel, banquet and meeting space, spa, fitness center, multiple bars, a food court and various dining options.

In
October 2003, the FIGR entered into a Memorandum of Understanding with the City of Rohnert Park under which the FIGR would provide certain funding to the city, schools and nonprofit
organizations over 20 years in exchange for the city's support of the casino project.

In
August 2005, Station purchased 270 acres of land just west of the Rohnert Park city limits in Sonoma County, California. In March 2006, Station purchased an additional
4.7 acres adjacent to the previously acquired property. The property purchased is approximately one-quarter mile from Highway 101 and approximately 43 miles from
downtown San Francisco. The site is easily accessible via Wilfred Avenue and Business Park Drive, and will have multiple points of ingress and egress. In March 2008, it was determined that
approximately 254 acres of the 270-acre site purchased in August 2005 would be taken into trust, with the remaining 23 acres retained by Station. Over the period of May 2007
through June 2008, Station purchased an additional 11 acres of land adjacent to the 23 acre site, bringing the total land retained for development by Station to 34 acres.

On
May 7, 2008, the Department of Interior ("DOI") published in the Federal Register a Notice of Final Agency Determination (the "Determination") to take certain land into trust
for the benefit of the FIGR. The publication commenced a thirty-day period in which interested parties could seek judicial review of the Determination. On June 6, 2008, the Stop The
Casino 101 Coalition and certain individuals filed a complaint (the "Complaint") in the United States District Court for the Northern District of California seeking declaratory and injunctive relief
against the DOI and officials of the DOI. The Complaint sought judicial review of the Determination. On November 17, 2008, the federal defendants and the FIGR filed their respective motions to
dismiss the compliant for lack of jurisdiction and failure to state a claim. In response, the plaintiffs filed a motion for leave to amend their complaint which was granted on January 26, 2009.
The DOI and the FIGR filed motions to dismiss the amended complaint on February 20, 2009, and on March 27, 2009, a hearing was held to argue such motions. On April 21, 2009, the
DOI and FIGR's motions to dismiss were granted. On June 8, 2009, the plaintiffs filed an appeal (the "Appeal") in the United States Court of Appeals for the Ninth Circuit (the "Court of
Appeals"), and the DOI agreed to voluntarily stay the taking of the site into trust pending resolution of the Appeal. The plaintiffs filed their opening briefs on October 26, 2009. On
November 4, 2009, the DOI filed an unopposed motion to expedite the oral argument. The DOI and FIGR then filed their answering briefs on November 25, 2009. The plaintiffs responded by
filing reply briefs on December 28, 2009. The court clerk initially rejected the motion to expedite oral arguments, but following FIGR's motion for reconsideration, the court scheduled oral
arguments for April 15, 2010. Oral arguments were heard on April 15, 2010, and on June 3, 2010, the Court of Appeals
affirmed the district court's dismissal of the Complaint. On July 19, 2010, the plaintiffs filed a petition for rehearing en banc. The Court of Appeals denied plaintiffs' petition on
August 11, 2010.

On
October 1, 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. In connection with the development of the project, it is expected that the FIGR will enter into memoranda of
understanding with, among others, Sonoma County, California and the California Department of Transportation relating to mitigation measures such as contributions toward the costs for infrastructure
improvements and public services required as a result of the development and operation of the planned project.

On
February 19, 2009, a Notice of Availability of a Final Environmental Impact Statement was filed in the Federal Register. On October 15, 2010, the NIGC published notice
in the Federal Register that it had

54

---



issued
the Record of Decision approving the Environmental Impact Statement for the project, thereby completing the environmental process for the project.

On
October 1, 2010, the NIGC informed Station and the FIGR that the NIGC approved the management agreement by and between the FIGR and Station for Class II gaming at the
planned gaming and entertainment 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. A banking game is one in which players compete against the licensed gaming establishment rather than against one another. The FIGR and
Station may also pursue approval of Class III gaming, which would permit casino-style gaming at the planned facility, including banked table games, such as blackjack, craps and
roulette, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering. Pari-mutuel wagering is 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. Class III gaming would require an approved compact (a "Class III Gaming
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, or
casino-style, gaming. There can be no assurances that the project will be able to obtain, in a timely fashion or at all, the approvals from the State of California and the NIGC that are
necessary to conduct Class III, or casino-style, gaming at the facility.

Under
the terms of the development agreement, Station will assist the FIGR in obtaining third-party financing for the project, however we do not expect such financing will be
obtained until shortly before the project is under construction, and as such, the timing of obtaining the financing is uncertain. Prior to obtaining third-party financing, Station will
contribute significant financial support to the project. The Company began capitalizing expenditures toward the project in 2003. Through December 31, 2010, Station has advanced approximately
$147.7 million toward
the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included in Native American development costs on the Company's
consolidated balance sheets. Funds advanced by Station are expected to be repaid from the proceeds of the project financing or from the FIGR's gaming revenues. Station's advances to the FIGR bear
interest at the rate of prime plus 1.5%. In addition, we have agreed to pay approximately $11.3 million upon achieving certain milestones, which will not be reimbursed. Through
December 31, 2010, approximately $2.0 million of these payments had been made and were expensed as incurred. The timing and feasibility of the project are dependent upon the receipt of
the necessary governmental and regulatory approvals. The Company plans to continue contributing significant financial support to the project, even though there can be no assurances as to when or if
the necessary approvals will be obtained.

55

---



The
following table outlines the status at December 31, 2010 of each of the following critical milestones necessary to complete the FIGR project.

As of December 31, 2010Federally recognized as a tribe by the US Government's Bureau of Indian Affairs (BIA)

YesDate of recognition

Recognition was terminated during the 1950's and was restored on December 27, 2000Tribe has possession of or access to usable land upon which the project is to be built

YesStatus of obtaining regulatory and governmental approvals:Tribal-State Compact

Not required for Class II gaming; compact will be pursued for Class III gaming.Approval of gaming compact by DOI

NoApproval of management agreement by NIGC

YesDate

October 1, 2010DOI accepting usable land into trust on behalf of the tribe

YesDate

October 1, 2010Gaming licenses:Type

Class IINumber of gaming devices allowed

N/ACounty agreement

NoOther agreements

Memorandum of Understanding with City of Rohnert ParkDate

October 2003




In March 2004 the Company 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 those agreements, we will assist the Mono in developing and operating a gaming and entertainment
facility to be located in Madera County, California. We have purchased, for the benefit of the Mono, a 305-acre parcel of land located on Highway 99 north of the city of Madera. The
management agreement has a term of seven years from the opening of the facility, and under the agreement, Station will provide training to the MITCR such that they may assume responsibility for
managing the facility upon the expiration of the agreement. Station will receive a management fee of 24% of the facility's net income.

As
currently contemplated, the project includes the development of an approximately 472,000 square foot hotel and casino resort and associated facilities, which would include a main
gaming hall, a 200-room hotel, various dining options, retail space and banquet/meeting space. Development of the gaming and entertainment 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.

56

---



On
April 28, 2008, the Mono and the State of California entered into a tribal-state Class III gaming compact permitting casino-style gaming. The
compact is subject to approval by the California Legislature and, if approved, will regulate gaming at 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.

On
August 6, 2010, the BIA published notice in the Federal Register that the environmental impact statement for the Mono's casino and resort project has been finalized and is
available for review. Prior to the land being taken into trust, the BIA must publish a record of decision concerning the environmental impact statement and the Secretary must make the decision that
the land should be taken into trust.

Under
the terms of the development agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Prior to obtaining
third-party financing, we will contribute significant financial support to the project. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from
the Mono's gaming revenues. We began capitalizing reimbursable advances related to this project in 2003. Through December 31, 2010, we have advanced approximately $16.4 million toward
the development of the project, primarily to complete the environmental impact study and secure real estate for the project, which is included in Native American development costs on the Company's
consolidated balance sheets. Reimbursable advances by Station to the Mono bear interest at the prime rate plus 1.5%. In addition, we have agreed to pay approximately $1.3 million of payments
upon achieving certain milestones, which will not be reimbursed and will be expensed as incurred. Through December 31, 2010, none of these payments had been made. The timing of this type of
project is difficult to predict, and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when, or if, these approvals will be obtained.

The
following table outlines the status at December 31, 2010 of each of the critical milestones necessary to complete the Mono project.

As of December 31, 2010Federally recognized as a tribe by the US Government's Bureau of Indian Affairs (BIA)

YesDate of recognition

Terminated in 1961; restored in 1983Tribe has possession of or access to usable land upon which the project is to be built

Yes, Station has acquired usable land for the development of this project on behalf of the Mono.Status of obtaining regulatory and governmental approvals:Tribal-State Compact

Pending ratification by California LegislatureApproval of gaming compact by DOI

NoApproval of management agreement by NIGC

NoDOI accepting usable land into trust on behalf of the tribe

NoGaming licenses:Type

Class III gaming being pursuedNumber of gaming devices allowed

N/A


57

---







In January 2004 Station 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 those agreements, Station agreed to assist the MITCR in developing and operating a gaming and entertainment facility
to be located on a portion of an approximately 650-acre site in Butte County, California, at the intersection of State Route 149 and Highway 99, approximately 10 miles
southeast of Chico, California and 80 miles north of Sacramento, California.

Under
the terms of the development agreement, Station agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by Station are
expected to be repaid from the proceeds of the project financing or from the MITCR's gaming revenues. Station's advances to the MITCR bear interest at prime plus 2%. Through December 31, 2010,
the Company has advanced approximately $11.9 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is
included in Native American development costs on the Company's consolidated balance sheets. In addition, Station agreed to pay approximately $2.2 million of payments upon achieving certain
milestones, which will not be reimbursed. Through December 31, 2010, $50,000 of these payments had been made and were expensed as incurred. As of December 31, 2010, we have discontinued
funding for the development of the facility and anticipate terminating the development agreement. Given the recent recession and thus the revised expected potential of the project, we have written off
the long-term asset associated with this project.

Land Acquisition

We have acquired certain parcels of land as part of future development activities. Our decision whether to proceed with any new gaming
or development opportunity is dependent upon future economic and regulatory factors, the availability of acceptable financing and competitive and strategic considerations. As many of these
considerations are beyond our control, no assurances can be made that we will be able to proceed with any particular project.

As
of December 31, 2010, we had $240.8 million of 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 we own 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, we 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, we have 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 our consolidated balance sheets at December 31, 2010 or
December 31, 2009. In March 2011, we were 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.

58

---



Regulation and Taxes

We are subject to extensive regulation by the Nevada gaming authorities and will be subject to regulation, which may or may not be
similar to that in Nevada, by any other jurisdiction in which we may conduct gaming activities in the future, including the NIGC and the Gun Lake Tribal Gaming Commission.

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 for 120 days and
when special sessions are called by the Governor, and the current legislative session began in February 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.

In
March 2008, in the matter captioned Sparks Nugget, Inc. vs. State ex rel. Department of Taxation, the Nevada Supreme Court ruled that food and non-alcoholic
beverages purchased for use in complimentary meals provided to employees and patrons are not subject to Nevada use tax. We have filed refunds for the periods from April 2000 through February 2008. The
amount subject to these refunds is approximately $15.3 million plus interest. Any amount refunded to us would be reduced by a contingent fee owed to a third party advisory firm. In April 2008,
the Department of Taxation filed a motion for rehearing of the Supreme Court's decision, and in July 2008, the Nevada Supreme Court denied the Department of Taxation's motion for rehearing. The
Department of Taxation subsequently took the position that these purchases are subject to Nevada sales tax. Accordingly, we have not recorded a receivable related to a refund for the previously paid
use tax on these purchases in the accompanying consolidated balance sheets as of December 31, 2010 and December 31, 2009, respectively. However, we began claiming this exemption on sales
and use tax returns for periods subsequent to February 2008 given the Nevada Supreme Court decision. In March 2010, the Department of Taxation issued a $12.7 million sales tax assessment, plus
interest of $8.2 million, related to these food costs. We have not accrued a liability related to this assessment because we do not believe the Department of Taxation's position has any merit,
and therefore we do not believe it is probable that we will owe this tax. The sales tax assessment and the refund cases have been appealed to the Administrative Law Judge of the Nevada Department of
Taxation and a hearing date has not yet been set.

We
believe that our recorded tax balances are adequate. However, it is not possible to determine with certainty the likelihood of possible changes in tax law or in the administration of
such law, regulations or compact provisions. Such changes, if adopted, could have a material adverse effect on our operating results.

Description of Certain Indebtedness and Capital Stock



In connection with the Merger, on November 7, 2007, a number of wholly-owned unrestricted direct and indirect subsidiaries of
Station (collectively, the "CMBS Borrower") entered into a mortgage loan and related mezzanine financings in the aggregate principal amount of $2.475 billion (the "CMBS Loans"), for the purpose
of financing the Merger consideration payable to the Company's stockholders upon consummation of the Merger and paying fees and expenses incurred in connection with the Merger.

The
CMBS Loans are secured by substantially all fee and leasehold real property comprising Palace Station, Boulder Station, Sunset Station and Red Rock (collectively, the "CMBS
Property") and had an original maturity date of November 12, 2009. Prior to the 2009 maturity date, the CMBS Borrower exercised a one-year extension to extend the maturity date to
November 2010 subject to two additional one-year extensions. The lenders have disputed the effectiveness of the extension. Interest on the CMBS Loans is equal to one-month
LIBOR plus 5.3% per annum, which includes an additional 3.0% default rate.

59

---



As
a result of the Chapter 11 Case, interest due on the mezzanine financings is not being remitted to the mezzanine lenders. The CMBS Borrower is required to hedge the LIBOR interest rate such
that it will not exceed 5.5% on a blended basis. As a result, the CMBS Borrower purchased interest rate caps with a combined notional amount of $1.11 billion and a cap rate of 5.8% for an
initial premium of $3.6 million. The initial premium was recorded in other assets and was marked to market at each reporting period. The interest rate caps expired in November 2010. In
addition, the CMBS Borrower entered into an interest rate swap with a notional amount of $1.36 billion in which the borrower paid a fixed rate of approximately 5.3% and received
one-month LIBOR, terminating in November 2012. This interest rate swap was early terminated during 2009 (see Note 12Derivative Instruments).

The
loan documents for the CMBS Loans (the "CMBS Loan Documents") contain a number of covenants that, among other things, restrict, subject to certain exceptions, each wholly-owned
unrestricted direct and indirect subsidiary's ability to incur additional indebtedness; create liens on assets; engage in mergers or consolidations; sell assets; pay dividends or make distributions;
make investments, loans or advances; make certain acquisitions; engage in certain transactions with affiliates;
and fundamentally change its business. The CMBS Loan Documents also require the CMBS Borrower to fund specific reserves as defined. In addition, the CMBS Loan Documents contain a requirement that if
the CMBS Borrower fails to maintain a minimum lease coverage ratio of 1.15 to 1.00 during two consecutive fiscal quarters, 80% of the funds available following the payment of all amounts and reserves
required to be made pursuant to the CMBS Loan Documents be deposited into an account for the benefit of the lenders instead of permitting distribution of such funds to the Company. As of
December 31, 2010 and December 31, 2009, we were not in compliance with the lease coverage ratio. In a letter dated April 6, 2009 to the CMBS Borrower, certain lenders under the
CMBS Loans alleged that the CMBS Borrower had not calculated the lease coverage ratio in accordance with the CMBS Loan Documents for the quarters ended September 30, 2008 and
December 31, 2008 and further alleged that the CMBS Borrower would not have been in compliance with the minimum lease coverage ratio if the lease coverage ratio had been properly calculated. As
a result, those lenders instituted a block against the release of 80% of the funds available following the payment of all amounts and reserves due under the CMBS Loans and instructed our depository
bank to hold such funds in a collateral account for the benefit of the lenders. As a result of the Chapter 11 Case, the block against the release of funds increased to 100% of the funds
available following the payment of all amounts and reserves due under the CMBS Loans. The total amount deposited in the collateral account in relation to this block was $179.4 million and
$78.7 million at December 31, 2010 and 2009, respectively, which is reflected in restricted cash on our consolidated balance sheets.



On February 7, 2008, CV PropCo, LLC, a wholly-owned, indirect unrestricted subsidiary of Station, as borrower, entered
into a $250 million delay-draw term loan which is 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 Land Loan contains no principal amortization and matured on February 7, 2011. At closing, $200 million was drawn with the remaining
$50 million drawn in June 2008. The proceeds were used to fund a distribution to Station, establish an interest reserve and pay transaction expenses. Borrowings under the Land Loan bear
interest at LIBOR plus 5.5% per annum or at the Alternate Base Rate (as defined in the Land Loan) plus 3.5% per annum, which includes an additional 2% default rate, at the borrower's election. The
borrower is required to hedge the interest rate such that LIBOR will not exceed 6.5%. As a result, the borrower entered into two interest rate swap agreements with notional amounts of
$200 million and $50 million in which the borrower pays a fixed LIBOR rate of 3.0% and 3.7%, respectively, and receives one-month LIBOR. These interest rate swaps were early
terminated in November 2009 (see Note 12Derivative Instruments).

The
Land Loan contains a number of covenants that, among other things, restrict, subject to certain exceptions, the borrower's ability to incur additional indebtedness; create liens on
assets; engage in

60

---



mergers
or consolidations; sell assets; pay dividends or make distributions; make investments, loans or advances; make certain acquisitions; engage in certain transactions with affiliates; and
fundamentally
change its business. In addition, the Land Loan requires the borrower to maintain a loan-to-value ratio of no more than 40% and also contains customary affirmative covenants
and certain events of default.

During
the first quarter of 2009, the lenders under the Land Loan, based on appraisals, indicated their opinion that the value of the collateral had likely decreased to the point that
the loan-to-value ratio was no longer less than 40%, as required under the credit agreement, and thus an event of default had occurred under the credit agreement. As a result
of such event of default, the lenders have become entitled to exercise remedies, including, among other things, the ability to declare the Land Loan and related accrued interest due and payable and to
foreclose on the underlying collateral of the borrower which at December 31, 2010 and 2009 included land with a book value of $116.4 million and $133.2 million, respectively. In
December 2009, the balance of the interest reserve account of $8.2 million was liquidated, and $8.0 million was applied as a principal reduction to the loan with the remainder applied to
the swap termination settlement amount. In addition, the borrower did not make the November 2009 payments or any subsequent payments due on account of interest or the interest rate swap agreements.
There is no recourse to the Company for any portion of the Land Loan that is not satisfied by the Borrower or the collateral. As a result of the events of default under the Land Loan, the related
outstanding indebtedness has been classified as current in the accompanying consolidated balance sheets at December 31, 2010 and 2009.



In connection with the Merger, Station, as borrower, entered into a new $900 million senior secured credit agreement (the
"Credit Agreement") consisting of a $650 million revolving facility (the "Revolver") and a $250 million term loan (the "Term Loan"). The maturity date for both the Term Loan and the
Revolver is August 7, 2012 subject to a single 15-month extension (as further defined in the Credit Agreement). The Term Loan requires quarterly principal payments of $625,000. The
Revolver contains no principal amortization. Borrowings under the Credit Agreement bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate (each as defined in the Credit
Agreement), as selected by us. The margin above such rates, and the fee on the unfunded portions of the Revolver, will vary quarterly based on our total debt to Adjusted EBITDA (as defined in the
Credit Agreement). As of December 31, 2010, the borrower's margin above the Eurodollar Rate on borrowings under the Credit Agreement was 4.50%. As of December 31, 2010, the maximum
margin for Eurodollar Rate borrowings was 4.50% and the maximum margin for Alternate Base Rate borrowings was 3.50%. As of December 31, 2010, the fee for any unfunded portion of the Revolver
was 0.375%.

The
Credit Agreement contains certain financial and other covenants. These include a minimum interest coverage, a maximum total debt to Adjusted EBITDA (as defined in the Credit
Agreement) ratio and a total senior secured debt to Adjusted EBITDA (as defined in the Credit Agreement) ratio.

For
the quarters ended December 31, 2008, March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30,
2010, September 30, 2010, and December 31, 2010, we were not in compliance with the financial covenants in the Credit Agreement. In addition, the filing of the Chapter 11 Case
constitutes an event of default under the terms of the Credit Agreement resulting in an acceleration of the obligations thereunder, subject to the bankruptcy stay.



The indentures (the "Indentures") governing our $2.3 billion in aggregate principal amount of senior and senior subordinated
notes (the "Notes") contain certain customary financial and other covenants, which limit our and our subsidiaries' ability to incur additional debt.

61

---



We
have not made scheduled interest payments on the Company's $450 million 61/2% Senior Subordinated Notes due February 1, 2014 (the "2014 Subordinated
Notes"), $400 million 73/4% Senior Notes due August 15, 2016 (the "2016 Senior Notes"), $700 million 67/8% Senior Subordinated Notes due 2016 (the
"2016 Subordinated Notes"), $300 million 65/8% Senior Subordinated Notes due 2018 (the "2018 Subordinated Notes") or $450 million 6% Senior Notes due 2012 (the "2012
Senior Notes") since February 1, 2009. The grace periods with respect to the payment of interest on the 2014 Subordinated Notes, 2016 Senior Notes, 2016 Subordinated Notes, 2018 Subordinated
Notes and 2012 Senior Notes have expired, resulting in an event of default under the indentures governing such indebtedness. In addition as a result of the filing of the Chapter 11 Case, the
2014 Subordinated Notes, 2016 Senior Notes, 2016 Subordinated Notes, 2018 Subordinated Notes and 2012 Senior Notes have been accelerated and are due and payable, subject to the bankruptcy stay.



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



In November 2007, we entered into a sale-leaseback agreement related to our corporate office building with a third-party
real estate investment firm. We 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. The lease also contains two options for us 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 sale-leaseback transaction 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, we continue to include the corporate office building within property and
equipment, net on our consolidated balance sheets and depreciate it according to our policy. An event of default under the sale leaseback agreement 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. In September 2010, this lease was amended to reduce the annual lease payments by approximately 46%. The
annual lease payments for the first 24 months of the amended lease will total approximately $2.9 million and will increase thereafter by approximately 1.25% annually to approximately
$3.8 million in the final year of the original term. The amendment 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. Minimum lease payments related to this lease for the years ended December 31, 2011, 2012, 2013, 2014, and 2015, respectively, are approximately
$2.9 million, $3.0 million, $3.1 million, $3.2 million and $3.3 million. During the twelve months ended December 31, 2010, 2009 and 2008, we recorded interest
expense related to this lease of approximately $4.6 million, $5.3 million and $5.3 million, respectively.

62

---





We have entered into various interest rate swaps and a cap with members of our bank group to manage interest expense. At
December 31, 2010 we have a
floating-to-fixed interest rate swap with a notional amount of $250 million, maturing in January 2011, which effectively converts a portion of our
floating-rate debt to a fixed rate. This interest rate swap is not designated as a hedging instrument and as a result, gains or losses resulting from the change in fair value of this swap
are recognized in earnings in the period of the change. 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 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. As of December 31, 2010, we paid a weighted-average fixed rate of approximately 3.0% and received one-month LIBOR which approximated 0.3% on this interest rate
swap.

During
the three months ended March 31, 2010, an interest rate swap of one of our 50% owned joint ventures with a notional amount of $430.0 million was early terminated and
as a result, we reclassified the remaining $2.0 million of deferred losses, net of tax, from accumulated other comprehensive income (loss) into operations. As a result of the termination of
this interest rate swap, the carrying amount of the liability was adjusted to the termination settlement amount and a loss was recorded by the joint venture. Our 50% share of this loss is reflected in
interest and other expense from joint ventures in the accompanying consolidated statement of operations.

During
2009, we early terminated a floating-to-fixed interest rate swap with a notional amount of $1.36 billion. Prior to termination, this interest rate
swap effectively converted a portion of our floating-rate debt to a fixed rate. This interest rate swap was not designated as a hedging instrument and as a result, gains or losses
resulting from the change in fair value of this swap were recognized in earnings in the period of the change. The expected amount of the allowed claim related to this interest rate swap is classified
in liabilities subject to compromise at December 31, 2010.

Also
during 2009, we early terminated two floating-to-fixed interest rate swaps with a combined notional amount of $250 million. Prior to termination,
these interest rate swaps effectively converted a portion of our floating-rate debt to a fixed rate. These interest rate swaps previously qualified and were designated as cash flow hedges,
resulting in the effective portion of the gain or loss from the change in fair value being reported as a component of other comprehensive income (loss). The variable cash flow method was used to
measure the ineffectiveness of the hedging relationship. Accordingly, the calculation of ineffectiveness involved a comparison of the present value of the cumulative change in the expected future cash
flows of the variable portion of the interest rate swaps and the present value of the cumulative change in the expected future variable interest payments designated in the hedging relationship. These
interest rate swaps were de-designated as cash flow hedges for accounting purposes during 2009 and as a result of the termination of these swaps, we reclassified $1.7 million in
deferred losses, net of tax, from accumulated other comprehensive income into earnings. The total termination settlement amount of these swaps is recorded in accrued expenses and other current
liabilities at December 31, 2010.

During
2009, one of our 50% owned joint ventures terminated two interest rate swaps with notional amounts of $297.8 million. These interest rate swaps had been previously
designated as cash flow hedges and as a result of the termination, we reclassified $0.3 million in deferred losses, net of tax, from accumulated other comprehensive income into earnings.

In
accordance with ASC Topic 852, the Debtors' interest rate swap liabilities that are subject to compromise are classified as liabilities subject to compromise in our consolidated
balance sheets as of December 31, 2009, and as a result, these interest rate swap liabilities were adjusted to the expected amounts of the allowed claims, which are different than the
prepetition carrying amounts of these liabilities as a result of changes in the fair values of these instruments. Gains and losses resulting from adjustments to the carrying values of swap liabilities
subject to compromise are recorded in reorganization

63

---



items
in the accompanying consolidated statements of operations. At December 31, 2010, we determined that one of these interest rate swaps, which expired in January 2011, was no longer subject
to compromise and we reclassified the carrying value to current liabilities.

The
difference between amounts received and paid under our interest rate swap 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 interest rate swaps. The net effect of the interest rate swaps and interest rate cap resulted in an increase in interest expense of approximately $7.0 million,
$77.5 million, and $35.1 million for the years ended December 31, 2010, 2009, and 2008, respectively. In addition, our proportionate share of the net effect of interest rate swaps
of our 50% owned joint ventures is reflected as an increase (decrease) in interest and other expense from joint ventures in our consolidated statements of operations, and totaled approximately
$27.3 million, $10.6 million, and $17.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.



We are authorized to issue up to 10,000 shares of voting common stock, $0.01 par value per share. At December 31, 2010, there
were 41.7 shares of voting common stock issued and outstanding. Each holder of issued and outstanding shares of voting common stock is entitled to one vote for each share held of record on each matter
submitted to a vote of stockholders. Holders of our voting common stock have no cumulative voting, conversion or redemption rights. Under the Equityholders Agreement of Station, FCP and Fertitta
Partners, as amended, in certain circumstances, FCP VoteCo, as the holder of Station's voting common stock, shall have the preemptive right to purchase or subscribe to any voting stock to be sold or
issued by Station on the terms and conditions as such voting stock is being offered and sold or issued. Subject to any preferences that may be granted to the holders of our preferred stock, each
holder of voting common stock is entitled to receive ratably, such dividends as may be declared by our Board of Directors out of funds legally available therefore, as well as any distributions to the
stockholders and, in the event of our liquidation, dissolution or winding up is entitled to share ratably in all our assets remaining after payment of liabilities.



We are authorized to issue up to 100,000,000 shares of non-voting common stock, $0.01 par value per share. At
December 31, 2010, there were 41,674,838 shares of non-voting common stock issued and outstanding. Holders of issued and outstanding shares of non-voting common stock
are not entitled to vote on any matters to be voted on by the stockholders of the Company and are not to be included in determining the number of shares voting or entitled to vote. Holders of our
non-voting common stock have no cumulative voting, conversion or redemption rights. Under the Equityholders Agreement of Station, FCP and Fertitta Partners, as amended, in certain
circumstances, holders of non-voting common stock shall have the preemptive right to purchase or subscribe to any equity interests (other than voting stock) to be sold or issued by Station
on the same terms and conditions as such equity interests are being offered and sold or issued. Subject to any preferences that may be granted to the holders of our preferred stock, each holder of
non-voting common stock is entitled to receive ratably, such dividends as may be declared by our Board of Directors out of funds legally available therefor, as well as any distributions to
the stockholders and, in the event of our liquidation, dissolution or winding up is entitled to share ratably in all our assets remaining after payment of liabilities.



We are authorized to issue up to 10,000 shares of preferred stock, $0.01 par value per share, of which none are issued. The Board of
Directors, without further action by the holders of our common stock, may issue shares of preferred stock in one or more series and may fix or alter the rights, preferences, privileges and
restrictions, including the voting rights, redemption provisions (including sinking fund provisions),

64

---



dividend
rights, dividend rates, liquidation rates, liquidation preferences, conversion rights and the description and number of shares constituting any wholly unissued series of preferred stock.
Except as described above, our Board of Directors, without further stockholder approval, may issue shares of preferred stock with rights that could adversely affect the rights of the holders of our
common stock. The issuance of shares of preferred stock under certain circumstances could have the effect of delaying or preventing a change of control of Station or other corporate action.

Critical Accounting Policies



We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States.
Certain of our accounting policies, including the determination of slot club program liability, the estimated useful lives assigned to our assets, asset impairment, insurance reserves, bad debt
expense, derivative instruments, purchase price allocations made in connection with our acquisitions and the calculation of our income tax liabilities, require that we 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. Our judgments are based on our 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 our estimates. To provide an understanding of the methodology we apply, our 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 our consolidated financial statements.



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.

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 our 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 we believe,
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.



We are 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,
we had total self-insurance accruals reflected in our consolidated balance sheets of $4.1 million and $3.6 million, respectively. Effective July 1, 2008, we were no
longer self-insured for medical costs. In estimating these accruals, we evaluated historical loss experience and made judgments about the expected levels of costs per claim. We believe
changes in medical costs, trends in claims of our employee base, accident frequency and severity and other factors could materially affect the estimate for these liabilities. We continually monitor

65

---



changes
in employee demographics, incident and claim type and evaluate our insurance accruals and adjust our accruals based on our evaluation of these qualitative data points.



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 accounting guidance 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 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.

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.



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 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.

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

66

---



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.



We account for goodwill and other intangible assets in accordance with ASC Topic 350, IntangiblesGoodwill and Other.



We test our 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 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. 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 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.



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, utilizing 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.



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

67

---



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 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.

68

---





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.



We incur 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, 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. Due to the uncertainty surrounding the estimated cost to complete and the collectability of
the stated return, we account 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.

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 Topic 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.



We are subject to income taxes in the U.S. and file a consolidated federal income tax return. We account 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.

Effective
January 1, 2007, we 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

69

---



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.

Our
income tax returns are subject to examination by tax authorities. We regularly assess the potential outcome of these examinations in determining the adequacy of our provision for
income taxes and our income tax liabilities. To determine necessary reserves, we must make assumptions and judgments about potential actions by taxing authorities, partially based on past experiences.
Our estimate of the potential outcome for any uncertain tax issue is highly judgmental, and we believe we have adequately provided for any reasonable and foreseeable outcomes relating to uncertain tax
matters. When actual results of tax examinations differ from our estimates or when potential actions are settled differently than we expected, we adjust the income tax provision and our 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.



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. 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 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, 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 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 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.

70

---





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 is interest rate risk associated with our long-term debt. We attempt to limit our exposure to interest rate risk by
managing the mix of our long-term and short-term borrowings under the Credit Agreement. Borrowings under the Credit Agreement bear interest at a margin above the Alternate Base
Rate or the Eurodollar Rate (each as defined in the Credit Agreement) as selected by us. However, the amount of outstanding borrowings is expected to fluctuate and may be reduced from time to time.
The borrowings under the Credit Agreement mature in August 2012.

The
following table provides information about our long-term debt at December 31, 2010 (see also "Description of Certain Indebtedness and Capital Stock") (amounts in
thousands):

Maturity
date

Face
amount

Carrying
value

Estimated
fair value (b)CMBS Loans, weighted-average interest rate of approximately 5.8%

November 2012 (a)

$
2,475,000

$
2,475,000

$
1,807,736Land Loan, weighted-average interest rate of approximately 8.5%

February 2011


242,032


242,032


242,032Revolver, weighted-average interest rate of approximately 5.2%

August 2012


631,107


631,107


557,704Term Loan, weighted-average interest rate of approximately 4.9%

August 2012


242,500


242,500


214,2966% senior notes

April 2012


450,000


450,000


9073/4% senior notes

August 2016


400,000


400,000


4061/2% senior subordinated notes

February 2014


442,000


442,000


4467/8% senior subordinated notes

March 2016


660,000


660,000


6665/8% senior subordinated notes

March 2018


300,000


300,000


3Other debt, weighted-average interest rate of approximately 5.7%

2012-2020


79,116


79,116


79,116Total



$
5,921,755

$
5,921,775

$
2,901,127


(a)Prior
to the maturity date, the CMBS Borrower exercised a one-year extension to extend the maturity date to November 2010 subject to two
additional one-year extensions. The lenders have disputed the effectiveness of the extension.(b)The
estimated fair values of the senior notes and the senior subordinated notes are based on actual market prices for the most recent trades on or before
December 31, 2010. The estimated fair values of the Revolver and the Term Loan are based upon the value of the pending Opco asset purchase transaction. The estimated fair value of the CMBS
Loans is based on the estimated value to be received by the CMBS lenders in the pending restructuring transaction as if the transaction occurred at December 31, 2010. The estimated fair values
of all other long-term debt are assumed to be equal to the carrying values, and do not reflect any adjustment related to the Company's credit risk or the potential impact of the
Chapter 11 Case on the amounts that are recoverable by creditors.


We
are also exposed to market risk in the form of fluctuations in interest rates and their potential impact upon our debt. This market risk is managed by utilizing derivative financial
instruments in accordance with established policies and procedures. We evaluate our exposure to market risk by monitoring interest rates in the marketplace, and do not utilize derivative financial
instruments for trading purposes. Our derivative financial instruments consist exclusively of interest rate swap agreements and

71

---



interest
rate cap agreements. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense.

The
following table provides information about our financial instruments at December 31, 2010 that are sensitive to changes in interest rates (amounts in thousands):

Current Portion as of December 31,2010

2011

2012

2013

2014

Thereafter

TotalLong-term debt (including current portion):Fixed-rate

$
2,252,427

$
5,384

$
345

$
367

$
390

$
1,886

$
2,260,799Weighted-average interest rate


8.7
%

5.4
%

7.2
%

7.2
%

7.2
%

7.3
%

8.7
%Variable-rate

$
3,660,674

$
38

$
244

$


$


$


$
3,660,956Weighted-average interest rate


5.8
%

7.5
%

7.5
%

7.5
%







5.8
%Interest rate swaps*:Notional amount

$
250,000

$


$


$


$


$


$
250,000Average payable rate


3.0
%
















3.0
%Average receivable rate


0.2
%
















0.2
%


*Excludes
terminated interest rate swaps.


72

---





ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



PageReport of Independent Registered Public Accounting Firm

74Consolidated Balance Sheets

75Consolidated Statements of Operations

76Consolidated Statements of Stockholders' (Deficit) Equity

77Consolidated Statements of Cash Flows

78Notes to Consolidated Financial Statements

80


73

---





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

74

---





STATION CASINOS, INC.        (Debtor and Debtor-In Possession)        CONSOLIDATED BALANCE SHEETS        (amounts in thousands, except per share data)

December 31,2010

2009ASSETSCurrent assets:Cash and cash equivalents

$
165,357

$
185,193Restricted cash


278,329


174,361Receivables, net


24,104


49,878Inventories


7,093


9,794Prepaid gaming tax


15,901


16,293Prepaid expenses and other current assets


18,783


13,903Total current assets


509,567


449,422Property and equipment, net


2,505,763


2,723,683Restricted cash, noncurrent


15,006


Goodwill


124,313


184,699Intangible assets, net (includes Intangible assets of consolidated variable interest entity of $24,000 and $24,000)


272,524


293,235Land held for development


240,836


305,617Investments in joint ventures


5,516


10,489Native American development costs (includes Native American development costs of consolidated variable interest entity of $22,978 and $53,649)


184,975


213,774Other assets, net


95,643


95,913Total assets

$
3,954,143

$
4,276,832LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilities:Current portion of long-term debt (includes Current portion of long-term debt of consolidated variable interest entity of $35 and $39)

$
242,366

$
242,347Accounts payable


10,266


14,905Construction contracts payable


516


741Accrued interest payable (includes Accrued interest payable of consolidated variable interest entity of $120 and $0)


22,399


2,341Accrued expenses and other current liabilities


92,268


91,676Total current liabilities


367,815


352,010Long-term debt, less current portion (includes Long-term debt, less current portion, of consolidated variable interest entity of $5,343 and $5,714)


8,659


9,341Deferred income taxes, net


108,551


116,691Investments in joint ventures, deficit


344,767


143,048Other long-term liabilities, net


12,778


7,021Total liabilities not subject to compromise


842,570


628,111Liabilities subject to compromise


5,997,821


5,984,109Total liabilities


6,840,391


6,612,220Commitments and contingenciesStockholders' deficit:Common stock, par value $0.01; authorized 10,000 shares; 41.7 shares issued





Non-voting common stock, par value $0.01; authorized 100,000,000 shares; 41,674,838 shares issued


417


417Additional paid-in capital


2,964,648


2,951,031Accumulated other comprehensive income (loss)


43


(922
)Accumulated deficit


(5,849,683
)

(5,285,914
)Total Station Casinos, Inc. stockholders' deficit


(2,884,575
)

(2,335,388
)Noncontrolling interest


(1,673
)

Total stockholders' deficit


(2,886,248
)

(2,335,388
)Total liabilities and stockholders' deficit

$
3,954,143

$
4,276,832


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

75

---





STATION CASINOS, INC.        (Debtor and Debtor-In Possession)        CONSOLIDATED STATEMENTS OF OPERATIONS        (amounts in thousands)

Year Ended
December 31, 2010

Year Ended
December 31, 2009

Year Ended
December 31, 2008Operating revenues:Casino

$
699,401

$
764,639

$
918,120Food and beverage


163,215


189,917


228,858Room


73,454


82,282


105,718Other


59,086


64,732


73,745Management fees


22,394


52,447


72,405Gross revenues


1,017,550


1,154,017


1,398,846Promotional allowances


(72,595
)

(91,868
)

(100,695
)Net revenues


944,955


1,062,149


1,298,151Operating costs and expenses:Casino


289,168


324,373


361,255Food and beverage


107,311


116,932


153,018Room


32,321


34,182


40,029Other


19,979


20,121


27,774Selling, general and administrative


219,479


229,200


250,614Corporate


34,899


33,018


36,029Development and preopening


16,272


12,014


13,596Depreciation and amortization


153,316


207,180


226,816Impairment of goodwill


60,386


181,785


2,594,992Impairment of other intangible assets


4,704


255,263


327,326Impairment of other assets


196,930


839,813


420,929Write-downs and other charges, net


19,245


20,807


62,6251,154,010


2,274,688


4,515,003Operating loss


(209,055
)

(1,212,539
)

(3,216,852
)(Losses) earnings from joint ventures


(248,495
)

(127,643
)

17,020Gain on dissolution of joint venture


124,193





Operating loss and (losses) earnings from joint ventures


(333,357
)

(1,340,182
)

(3,199,832
)Other (expense) income:Interest expense, net (contractual interest for the years ended December 31, 2010 and December 31, 2009 was $419,853 and $403,673, respectively)


(104,582
)

(276,591
)

(379,313
)Interest and other expense from joint ventures


(66,709
)

(40,802
)

(47,643
)Change in fair value of derivative instruments


(42
)

23,729


(23,057
)Gain (loss) on early retirement of debt





40,348


(171,333
)

(253,316
)

(450,013
)Loss before income taxes and reorganization items


(504,690
)

(1,593,498
)

(3,649,845
)Reorganization items


(82,748
)

(375,888
)

Loss before income taxes


(587,438
)

(1,969,386
)

(3,649,845
)Income tax benefit


21,996


289,872


381,345Net loss


(565,442
)

(1,679,514
)

(3,268,500
)Less: net loss applicable to noncontrolling interest


(1,673
)




Net loss applicable to Station Casinos, Inc. stockholders

$
(563,769
)
$
(1,679,514
)
$
(3,268,500
)


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

76

---





STATION CASINOS, INC.        (Debtor and Debtor-In-Possession)        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY        (amounts in
thousands)

Non-voting
common
stock

Additional
paid-in
capital

Accumulated
other
comprehensive
income (loss)

Accumulated
deficit

Total
stockholders'
(deficit)
equity

Noncontrolling
interest

Total Station
Casinos, Inc.
stockholders'
(deficit)
equityBalances, December 31, 2007

$
417

$
2,920,526

$
(11,981
)
$
(337,900
)
$
2,571,062

$



2,571,062Share-based compensation expense





14,445








14,445





14,445Purchase price adjustment





1,978








1,978





1,978Interest rate swap market value adjustment, net of tax








(1,937
)




(1,937
)




(1,937
)Unrealized loss on available-for-sale securities, net of tax








(695
)




(695
)




(695
)Amortization of unrecognized pension and postretirement benefit plan liabilities, net of tax








6,323





6,323





6,323Net loss











(3,268,500
)

(3,268,500
)




(3,268,500
)Balances, December 31, 2008

$
417

$
2,936,949

$
(8,290
)
$
(3,606,400
)
$
(677,324
)
$


$
(677,324
)Share-based compensation expense





14,082








14,082





14,082Interest rate swap market value adjustment, net of tax








6,429





6,429





6,429Unrealized gain on available-for-sale securities, net of tax








123





123





123Amortization of unrecognized pension and postretirement benefit plan liabilities, net of tax








816





816





816Net loss











(1,679,514
)

(1,679,514
)




(1,679,514
)Balances, December 31, 2009

$
417

$
2,951,031

$
(922
)
$
(5,285,914
)
$
(2,335,388
)
$


$
(2,335,388
)Share-based compensation expense





13,617








13,617





13,617Interest rate swap market value adjustment, net of tax








1,985





1,985





1,985Unrealized loss on available-for-sale securities, net of tax








(80
)




(80
)




(80
)Amortization of unrecognized pension and postretirement benefit plan liabilities, net of tax








(940
)




(940
)




(940
)Net loss











(565,442
)

(565,442
)

(1,673
)

(563,769
)Balances, December 31, 2010

$
417

$
2,964,648

$
43

$
(5,851,356
)
$
(2,886,248
)
$
(1,673
)
$
(2,884,575
)


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

77

---





STATION CASINOS, INC.        (Debtor and Debtor-In-Possession)        CONSOLIDATED STATEMENTS OF CASH FLOWS        (amounts in thousands)

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Cash flows from operating activities:Net loss

$
(565,442
)
$
(1,679,514
)
$
(3,268,500
)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization


153,316


207,180


226,816Change in fair value of derivative instruments


42


(23,729
)

23,057Impairment of goodwill


60,386


181,785


2,594,992Impairment of other intangible assets


4,704


255,263


327,326Impairment of other assets


196,930


839,813


420,929Write-downs and other charges, net


19,245


20,807


62,625Share-based compensation


13,381


14,083


14,445Loss from joint ventures


315,203


168,445


30,623Gain on dissolution of joint ventures


(124,193
)




Amortization of debt discount and issuance costs


1,955


23,272


37,761Gain on early retirement of debt





(40,348
)

Reorganization items


82,748


375,888


Changes in assets and liabilities:Restricted cash


(118,974
)

(159,400
)

(13,995
)Receivables, net


25,774


(5,776
)

6,409Inventories and prepaid expenses


4,523


6,793


1,677Due from unconsolidated affiliate





(250
)

(5,011
)Deferred income taxes


(17,262
)

(285,376
)

(384,128
)Accounts payable


(4,645
)

1,395


(2,968
)Accrued interest


21,348


83,955


(8,074
)Accrued expenses and other current liabilities


698


(31,369
)

(11,368
)Other, net


8,507


(19,819
)

(1,394
)Total adjustments


643,686


1,612,612


3,319,722Net cash provided by (used in) operating activities before reorganization items


78,244


(66,902
)

51,222Net cash used for reorganization items


(82,808
)

(59,775
)

Net cash (used in) provided by operating activities


(4,564
)

(126,677
)

51,222Cash flows from investing activities:Capital expenditures


(34,530
)

(64,594
)

(172,051
)Proceeds from sale of land, property and equipment


871


636


2,368Investments in joint ventures, net


(3,509
)

(24,343
)

(57,752
)Distributions in excess of earnings from joint ventures


6,112


2,118


2,855Construction contracts payable


(225
)

(8,687
)

(13,723
)Native American development costs


(16,007
)

(19,337
)

(14,876
)Proceeds from repayment of Native American development costs


42,806





Other, net


(10,487
)

(16,073
)

(11,070
)Net cash used in investing activities


(14,969
)

(130,280
)

(264,249
)


78

---



STATION CASINOS, INC.

(Debtor and Debtor-In-Possession)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(amounts in thousands)

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Cash flows from financing activities:Borrowings under Credit Agreement with maturity dates less than three months, net








335,137Proceeds from the issuance of Land Loan








250,000Borrowings under Term Loan with maturity dates greater than three months


2,870





Payments on land loan





(7,968
)

Payments under Term Loan with maturity dates greater than three months


(2,500
)

(2,500
)

(2,500
)Redemption of senior subordinated notes





(1,460
)

Debt issuance costs





(460
)

(7,638
)Other, net


(673
)

(3,526
)

(300
)Net cash (used in) provided by financing activities


(303
)

(15,914
)

574,699Cash and cash equivalents:(Decrease) increase in cash and cash equivalents


(19,836
)

(272,871
)

361,672Balance, beginning of year


185,193


458,064


96,392Balance, end of year

$
165,357

$
185,193

$
458,064Supplemental cash flow disclosures:Cash paid for interest, net of $10,078, $15,989 and $27,087 capitalized

$
77,016

$
166,211

$
345,920Supplemental disclosure of non-cash items:Capital expenditures financed by debt

$


$


$
4,514Debt settlement in land sale

$


$
4,000

$



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

79

---





STATION CASINOS, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies and Basis of Presentation



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.



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

80

---



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").



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

81

---



STATION CASINOS, INC.

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

82

---



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,

83

---



STATION CASINOS, INC.

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 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

84

---



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.



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.



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

85

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 havingpari
passupriority 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 passupriority 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.



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.

86

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.



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.

87

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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



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



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 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

88

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.



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.



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.



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.

89

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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



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.



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.



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

90

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

91

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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



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 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.



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.

92

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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



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.



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.



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

93

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

Year Ended December 31, 2010

Year Ended December 31, 2009

Year Ended December 31, 2008Food and beverage

$
62,764

$
77,194

$
84,843Room


6,735


8,142


7,548Other


1,957


2,873


3,596Total

$
71,456

$
88,209

$
95,987


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.



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.

94

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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



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.



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.



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").

95

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

96

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Receivables, net

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

December 31,2010

2009Casino

$
11,669

$
15,946Hotel


6,686


4,068Management fees


3,246


7,313Income tax





18,655Due from unconsolidated joint ventures


435


5,420Other


12,720


8,71434,756


60,116Allowance for doubtful accounts


(10,652
)

(10,238
)Receivables, net

$
24,104

$
49,878


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):

December 31,Estimated life
(years)2010

2009Land



$
413,933

$
426,918Buildings and improvements

10-45


2,161,028


2,200,182Furniture, fixtures and equipment

3-7


574,030


548,816Construction in progress




20,273


82,0623,169,264


3,257,978Accumulated depreciation and amortization




(663,501
)

(534,295
)Property and equipment, net



$
2,505,763

$
2,723,683


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.

97

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Property and Equipment (Continued)



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):

Year ended December 31, 2010Balance at
beginning of
the year

Changes during
the year

Balance at
end of the
yearGoodwill

$
2,986,993

$


$
2,986,993Accumulated impairment losses


(2,802,294
)

(60,386
)

(2,862,680
)Goodwill, net of accumulated impairment losses

$
184,699

$
(60,386
)
$
124,313




Year ended December 31, 2009Balance at
beginning of
the year

Changes during
the year

Balance at
end of the
yearGoodwill

$
2,986,993

$


$
2,986,993Accumulated impairment losses


(2,620,509
)

(181,785
)

(2,802,294
)Goodwill, net of accumulated impairment losses

$
366,484

$
(181,785
)
$
184,699


98

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Goodwill and Other Intangible Assets (Continued)

Intangible
assets, net as of December 31, 2010 and 2009 consist of the following:

December 31, 2010Estimated
life
(years)

Gross
Carrying
Amount

Accumulated
Amortization

Accumulated
Impairment
Losses

Net
Carrying
AmountBrands

Indefinite

$
214,791

$


$
(115,237
)
$
99,554License rights

Indefinite


4,531





(4,190
)

341Customer relationships

15


268,961


(18,942
)

(241,363
)

8,656Management contracts

3-20


521,464


(127,957
)

(229,534
)

163,973Other

1


8,654


(8,654
)




$
1,018,401

$
(155,553
)
$
(590,324
)
$
272,524




December 31, 2009Estimated
life
(years)

Gross
Carrying
Amount

Accumulated
Amortization

Accumulated
Impairment
Losses

Net
Carrying
AmountBrands

Indefinite

$
214,791

$


$
(115,237
)
$
99,554License rights

Indefinite


4,531








4,531Customer relationships

15


268,961


(18,297
)

(240,849
)

9,815Management contracts

3-20


521,464


(112,595
)

(229,534
)

179,335Other

1


8,654


(8,654
)




$
1,018,401

$
(139,546
)
$
(585,620
)
$
293,235


The
intangible asset for customer relationships refers to the value associated with our rated casino guests. The Company amortizes its finite-lived intangible assets ratably over their
estimated useful lives. The aggregate amortization expense for those assets that are amortized under the provisions of ASC Topic 350 was approximately $16.0 million,
$53.8 million, and $74.5 million for the years ended December 31, 2010, 2009, and 2008, respectively. Estimated annual amortization expense for intangible assets for the years
ended December 31, 2011, 2012, 2013, 2014, and 2015 is anticipated to be approximately $3.8 million, $4.2 million, $23.8 million, $23.8 million, and
$23.8 million, respectively.



During the three months ended September 30, 2010, we determined that a triggering event, as described in ASC Topics 350
and 360, had occurred due to developments in our bankruptcy proceedings, and we therefore tested our goodwill and intangible assets for impairment. We determined that certain of these assets were
impaired and we recognized impairment charges in our consolidated statements of operations as described in more detail below.

We
tested the goodwill of each of our reporting units for impairment by comparing the carrying value of each reporting unit, including goodwill, with its fair value. For reporting units
where carrying value exceeded fair value, we measured the implied fair value of the reporting unit's goodwill by allocating the fair value of the reporting unit to the assets and liabilities of the
unit, as if the reporting unit had been acquired in a business combination. Where the carrying value of a reporting unit's goodwill exceeded its implied fair value, we recognized an impairment loss in
an amount equal to that excess. During the three

99

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Goodwill and Other Intangible Assets (Continued)

months
ended September 30, 2010, goodwill of our Santa Fe Station and Boulder Station reporting units with a carrying amount of $184.7 million was written down to its implied fair value
of $124.3 million, resulting in an impairment charge of $60.4 million. As a result of these interim goodwill impairment charges recognized during the three months ended
September 30, 2010, our annual goodwill impairment testing as of October 1, 2010 resulted in no additional impairment charges. 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, which are generally classified as
Level 3 inputs under ASC Topic 820.

We
tested our finite-lived intangible assets for impairment by comparing their carrying values with their fair values, and for those with carrying values that exceeded their fair values,
impairment was recognized based on the excess of carrying value over fair value. Customer relationship intangible assets with carrying values totaling $8.6 million were written down to their
fair value of $8.1 million, resulting in an impairment charge of $0.5 million. We estimated the fair value of our customer relationship intangible assets using a discounted cash flow
model based on Level 3 inputs under ASC Topic 820.

During
the year ended December 31, 2010, we decided to discontinue the exclusivity arrangement associated with one of our indefinite-lived license right intangibles, which had a
carrying value of $1.0 million. As a result, we determined that this asset had become fully impaired and we recorded an impairment charge equal to the carrying value of this asset. In addition,
during our interim impairment testing we determined that a license asset with a carrying value of $3.5 million was impaired, primarily as a result of changes in its potential utilization,
therefore we wrote this asset down to its estimated fair value of $0.3 million and recognized a $3.2 million impairment charge. We estimated the fair value of the license asset based on
solicited offers and comparable asset sales estimates, which are Level 3 inputs under ASC Topic 820



During the year ended December 31, 2009, we determined that the Company's restructuring activities and the continuation of the
economic downturn constituted indicators of impairment, and we therefore tested our finite-lived intangible assets for impairment. As a result, we wrote down certain customer relationship intangible
assets with carrying values totaling
$22.5 million to their fair value of $9.9 million. Likewise, our brands with carrying amounts totaling $129.2 million were written down to their fair values of
$99.6 million. As a result, we recognized impairment losses totaling $12.6 million and $29.7 million, respectively, for our customer relationship and brand intangibles. The
impairment of our brands and customers relationships is the result of the ongoing recession which has 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. The concentration of our customer base in the Las Vegas valley, where the impact of
the recession has been particularly significant, has negatively impacted our projected cash flow estimates.

In
addition, during the year ended December 31, 2009, as a result of decreases in the projected revenue streams for certain of our managed properties, management contract
intangible assets with carrying values totaling $258.7 million were written down to their fair values totaling $45.8 million. The majority of the management contract impairment charge
related to our contracts to manage Green Valley Ranch, Aliante Station, and Gun Lake.

100

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

5. Goodwill and Other Intangible Assets (Continued)

As
a result of our annual goodwill impairment testing for the year ended December 31, 2009, goodwill of certain of our reporting units, primarily Boulder Station, Santa Fe Station
and Sunset Station, with a total carrying amount of $366.5 million was written down to its implied fair value of $184.7 million, resulting in an impairment charge of
$181.8 million.



In conjunction with our annual impairment testing for the year ended December 31, 2008, we determined that an impairment of the
goodwill recorded in conjunction with the Merger of approximately $2.6 billion existed company-wide, which was recorded in impairment of goodwill on our consolidated statements of
operations.

6. Land Held for Development

As of December 31, 2010, we had $240.8 million of 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 we own 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. During the year ended December 31, 2010, options to purchase approximately 10 acres of land near the Wild Wild West expired, and we wrote off the $9.0 million carrying value of
the related asset.

In
December 2008, we 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, we have 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 our consolidated balance sheets at December 31, 2010 or 2009. In
March 2011, we were 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.

Our
decision whether to proceed with any new gaming or development opportunity is dependent upon future economic and regulatory factors, the availability of acceptable financing and
competitive and strategic considerations. As many of these considerations are beyond our control, no assurances can be made that we will be able to proceed with any particular project.



During the year ended December 31, 2010, it was determined that a triggering event, as described under the accounting guidance
for impairment or disposal of long-lived assets, had occurred due to developments in our bankruptcy proceedings. As a result, we tested our land held for development by comparing the
estimated future cash flows for each land parcel, on an undiscounted basis, to its carrying value. For certain land parcels, primarily those located in the Las Vegas valley, the carrying value was

101

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Land Held for Development (Continued)

higher.
As a result, we recorded an impairment loss of $114.4 million to write down the carrying value of those parcels totaling $308.6 million to their fair values totaling
$194.1 million. Included in the impairment charge was a $49.6 million write-off of capitalized project costs related to the impaired parcels. The fair value of our land held
for development is estimated using traditional real estate valuation techniques, primarily the sales comparison approach, utilizing inputs classified as Level 3 under ASC Topic 820.

As
a result of the continuing recession and its significant impact on real estate values, we reviewed our land held for development for impairment during the year ended
December 31, 2009 and determined that impairments existed for a number of land parcels in the Las Vegas valley, Reno, Nevada, and northern California. As a result, we recorded impairments
totaling $617.4 million in impairment of other assets in our consolidated statements of operations to write down the carrying value of these parcels totaling $918.2 million to their fair
values totaling $300.9 million.



During the year ended December, 2010, we recognized a $0.1 million gain on disposal of a real estate parcel in the Las Vegas
valley. During the year ended December 31, 2009, we recorded a loss on land disposition of $5.1 million related to a parcel of land in Reno, Nevada that had previously been held for
development.

7. Investments in Joint Ventures

We have various investments in 50% owned joint ventures, and a 6.7% investment in a joint venture that owns the Palms Casino Resort in Las Vegas, Nevada, which are accounted for under
the equity method. Under the equity method, original investments are recorded at cost and adjusted by our share of earnings, losses and distributions of the joint ventures, and the carrying value of
investments may be reduced below zero, resulting in a deficit investment balance, when the investor is committed to provide further financial support for the investee. Our investment balances also
include any fair value adjustments recorded in conjunction with the Merger described in Note 1 and adjustments related to impairment

102

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Investments in Joint Ventures (Continued)

charges.
As of December 31, 2010 and 2009, we have received distributions in excess of our equity earnings. Investments in joint ventures consist of the following (amounts in thousands):

December 31,2010

2009Green Valley Ranch (50.0%) (a)

$


$
4,310Palms Casino Resort (6.7%)





Barley's (50.0%)


4,756


4,852Wildfire Lanes (50.0%)


760


1,257The Greens (50.0%) (b)





70Investments in joint ventures

$
5,516

$
10,489Green Valley Ranch (50.0%) (a)

$
(38,258
)
$
The Greens (50.0%) (b)


(163
)

Aliante Station (50.0%) (c)


(306,346
)
$
(38,389
)Rancho Road and Richfield Homes (50.0%) (d)





(104,659
)Deficit investments in joint ventures

$
(344,767
)
$
(143,048
)


(a)As
a result of the losses recognized by Green Valley Ranch during the years ended December 31, 2010, 2008, and 2009, and animpairment of our joint
venture investment recognized during the year ended December 31, 2009, our investment in Green Valley Ranch at December 31, 2010 reflects a deficit of approximately $38.3 million.(b)As
a result of the operating losses recognized by The Greens during the year ended December 31, 2010 and distributions in excess of equity earnings,
our investment in The Greens at December 31, 2010 reflects a deficit of approximately $0.2 million, which is recorded as a long-term liability on our consolidated balance
sheets.(c)As
a result of the ongoing losses of Aliante Station, including impairment losses of approximately $466.5 million recognized by Aliante Station
during 2010, and an impairment of our joint venture investment recognized during 2008, our investment in Aliante Station at December 31, 2010 and December 31, 2009 reflects a deficit of
approximately $306.3 million and $38.4 million, respectively.(d)As
a result of the significant decline in real estate values in the Las Vegas valley, Rancho Road recorded an impairment charge related to its land held for
development during the year ended December 31, 2009, and our investment in Rancho Road at December 31, 2009 reflects a deficit of approximately $104.7 million. Effective
January 1, 2010, Richfield Homes joint venture was formed by the members of Rancho Road, and certain assets of Rancho Road were contributed to Richfield Homes. During the three months ended
December 31, 2010, we recorded an impairment charge of $16.3 million related to our investment in Richfield Homes. In early November 2010, Rancho Road and Richfield Homes disposed of
substantially all of their assets. In connection with the asset disposal, the Company received a distribution of $3.5 million. These entities were dissolved during the three months ended
December 31, 2010, and as a result of the deficit carrying value of our investment in Rancho Road, we recognized a gain on disposal for the


103

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Investments in Joint Ventures (Continued)

year
ended December 31, 2010 of $124.2 million. We recognized no gain or loss upon the dissolution of Richfield Homes joint venture.


As
a result of the Merger, our investments in joint ventures balance as of December 31, 2007 differed from our ownership equity in these investments by $217.3 million due
to the allocation of the purchase price to these investment accounts. Differences between our investments in joint ventures balance and the Company's underlying equity in the joint ventures
attributable to land, goodwill and indefinite-lived intangible assets are not amortized. Differences attributable to depreciable assets and finite-lived intangible assets are amortized based on the
estimated useful lives of the related assets and recorded in earnings from joint ventures on our consolidated statement of operations. During the years ended December 31, 2009 and 2008, we
recorded approximately $0.1 million and $2.8 million, respectively, of depreciation and amortization related to these assets. As a result of the depreciation and amortization expense
recorded during the years ended December 31, 2009 and 2008, and impairment losses recorded during 2009 discussed below, these differences were fully written off as of December 31, 2009.

On
March 9, 2011, the GVR Purchaser, an indirect subsidiary of New Station, and the GVR Seller 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 the GVR Seller for $500 million through a prepackaged plan of reorganization. The consummation the GVR
Asset Purchase Agreement and the proposed plan of reorganization is subject to the acceptance of the plan by the lenders under GVR Seller's first lien credit agreement, and there can be no assurance
as to when or if the necessary approvals will be obtained.

On
March 22, 2011, Aliante Gaming, LLC ("Aliante") launched a solicitation of approvals by the lenders under its credit facility for a plan of reorganization (the "Aliante
Plan") in which each of the lenders under the credit facility would receive its pro rata share of 100% of the equity interests in the reorganized Aliante and its pro rata share of a new
$45 million senior secured credit facility to be entered into upon consummation of the Aliante Plan. If Aliante obtains the requisite approvals of its lenders pursuant to the solicitation of
acceptances of the Aliante Plan, Aliante will seek confirmation of the Aliante Plan chapter 11 of title 11 of the United States Code by the United States Bankruptcy Court for the District of
Nevada in Reno, Nevada. In addition, in connection with the proposed restructuring of Aliante, Aliante and the steering committee of lenders under the Aliante credit facility are in discussions with
third parties regarding a management agreement relating to the operation of Aliante during the pendency of the proposed chapter 11 case and following the consummation of the Aliante Plan.



In connection with our interim impairment testing during the three months ended September 30, 2010, we reviewed the carrying
value of our investments in joint ventures for impairment because we determined that indicators of impairment existed. We compared the estimated future cash flows of the assets, on an undiscounted
basis, to the carrying values of the assets as required by the accounting guidance for impairment or disposal of long-lived assets. As a result, we recorded impairment charges totaling
$16.3 million to reduce the $19.8 million carrying value of our investment in Richfield Homes to its fair value of $3.5 million. The fair values of our investments in joint
ventures were estimated using discounted cash flow techniques based on Level 3 inputs under ASC Topic 820.

During
the year ended December 31, 2009, it was determined that due to the ongoing recession and its impact on our estimated future cash flows from our investments in joint
ventures, a triggering event, as

104

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Investments in Joint Ventures (Continued)

described
under the accounting guidance for the impairment or disposal of long-lived assets, had occurred related to certain of our investments in joint ventures. As a result, we compared
the estimated future cash flows of each of our investments in joint ventures, on an undiscounted basis, to the carrying value. The carrying values for our investments in certain joint ventures,
primarily Green Valley Ranch, were higher and as such, we recorded impairment losses totaling approximately $30.0 million to reduce the carrying values of our investments in these joint
ventures totaling $37.2 million to their fair values totaling $7.2 million.

Summarized
balance sheet information for the joint ventures is as follows (amounts in thousands):

December 31,2010

2009Current assets

$
113,439

$
78,715Property and equipment and other assets, net


1,044,629


1,775,436Current liabilities


1,362,724


492,344Long-term debt and other liabilities


499,990


1,356,243Shareholders' equity


(704,646
)

5,564


Summarized
results of operations for the joint ventures are as follows (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Net revenues

$
411,861

$
459,688

$
520,203Operating costs and expenses


935,529


736,647


469,973Operating income


(523,668
)

(276,959
)

50,230Interest and other expense, net


(174,934
)

(114,141
)

(128,298
)Net (loss) income

$
(698,602
)
$
(391,100
)
$
(78,068
)


Our
share of the operating (losses) earnings from these joint ventures is shown as a separate line item after operating income on our consolidated statements of operations. For the year
ended December 31, 2010 and 2009, operating losses from joint ventures includes charges of $233.3 million and $124.9 million, respectively, related to recognizing our 50% share of
impairment charges recorded by Aliante Station in 2010 and Rancho Road, LLC and Aliante Station in 2009. Our share of interest and other expense from these joint ventures is shown as a separate
component under other expense on our consolidated statements of operations, which also includes our 50% share of the joint ventures'
mark-to-market valuation of their interest rate swaps that are not designated as hedging instruments. The following table identifies the total equity (losses) earnings from
joint ventures (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Operating (losses) earnings from joint ventures

$
(248,495
)
$
(127,643
)
$
17,020Interest and other expense from joint ventures


(66,709
)

(40,802
)

(47,643
)Net losses from joint ventures

$
(315,204
)
$
(168,445
)
$
(30,623
)


105

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Native American Development



In April 2003, the Company 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 will assist the FIGR in developing and operating a gaming and entertainment project to be located in Sonoma
County, California. The FIGR selected Station to assist them in designing, developing and financing their project, and upon opening Station will manage the facility on behalf of the FIGR. The
management agreement has a term of seven years from the date of the opening of the project. Under the terms of the management agreement, Station will provide training to the FIGR such that they may
assume responsibility for managing the facility upon expiration of the seven-year term of the agreement. 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 facility.

Under
the agreements, Station has agreed to provide certain advances for the development of the project, including, but not limited to monthly payments to the FIGR, professional fees,
consulting services, mitigation costs and design and pre-construction services fees.

As
described in the record of decision for the environmental impact statement, the project would include approximately 175,000 square feet of casino space, 196,000 square feet of
non-casino space, including a 200-room hotel, banquet and meeting space, spa, fitness center, multiple bars, a food court and various dining options.

In
October 2003, the FIGR entered into a Memorandum of Understanding with the City of Rohnert Park under which the FIGR would provide certain funding to the city, schools and nonprofit
organizations over 20 years in exchange for the city's support of the casino project.

In
August 2005, Station purchased 270 acres of land just west of the Rohnert Park city limits in Sonoma County, California. In March 2006, Station purchased an additional 4.7 acres
adjacent to the previously acquired property. The property purchased is approximately one-quarter mile from Highway 101 and approximately 43 miles from downtown San Francisco. The
site is easily accessible via Wilfred Avenue and Business Park Drive, and will have multiple points of ingress and egress. In March 2008, it was determined that approximately 254 acres of the
270-acre site purchased in August 2005 would be taken into trust, with the remaining 23 acres retained by Station. Over the period of May 2007 through June 2008, Station purchased an
additional 11 acres of land adjacent to the 23 acre site, bringing the total land retained for development by Station to 34 acres.

On
May 7, 2008, the Department of Interior ("DOI") published in the Federal Register a Notice of Final Agency Determination (the "Determination") to take certain land into trust
for the benefit of the FIGR. The publication commenced a thirty-day period in which interested parties could seek judicial review of the Determination. On June 6, 2008, the Stop The
Casino 101 Coalition and certain individuals filed a complaint (the "Complaint") in the United States District Court for the Northern District of California seeking declaratory and injunctive relief
against the DOI and officials of the DOI. The Complaint sought judicial review of the Determination. On November 17, 2008, the federal defendants and the FIGR filed their respective motions to
dismiss the compliant for lack of jurisdiction and failure to state a claim. In response, the plaintiffs filed a motion for leave to amend their complaint which was granted on January 26, 2009.
The DOI and the FIGR filed motions to dismiss the amended complaint on February 20, 2009, and on March 27, 2009, a hearing was held to argue such motions. On April 21, 2009, the
DOI and FIGR's motions to dismiss were granted. On June 8, 2009, the plaintiffs filed an appeal (the

106

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Native American Development (Continued)

"Appeal")
in the United States Court of Appeals for the Ninth Circuit (the "Court of Appeals"), and the DOI agreed to voluntarily stay the taking of the site into trust pending resolution of the
Appeal. The plaintiffs filed their opening briefs on October 26, 2009. On November 4, 2009, the DOI filed an unopposed motion to expedite the oral argument. The DOI and FIGR then filed
their answering briefs on November 25, 2009. The plaintiffs responded by filing reply briefs on December 28, 2009. The court clerk initially rejected the motion to expedite oral
arguments, but following FIGR's motion for reconsideration, the court scheduled oral arguments for April 15, 2010. Oral arguments were heard on April 15, 2010, and on June 3,
2010, the Court of Appeals affirmed the district court's dismissal of the Complaint. On July 19, 2010, the plaintiffs filed a petition for rehearing en banc. The Court of Appeals denied
plaintiffs' petition on August 11, 2010.

On
October 1, 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. In connection with the development of the project, it is expected that the FIGR will enter into memoranda of understanding with,
among others,
Sonoma County, California and the California Department of Transportation relating to mitigation measures such as contributions toward the costs for infrastructure improvements and public services
required as a result of the development and operation of the planned project.

On
February 19, 2009, a Notice of Availability of a Final Environmental Impact Statement was filed in the Federal Register. On October 15, 2010, the NIGC published notice
in the Federal Register that it had issued the Record of Decision approving the Environmental Impact Statement for the project, thereby completing the environmental process for the project.

On
October 1, 2010, the NIGC informed Station and the FIGR that the NIGC approved the management agreement by and between the FIGR and Station for Class II gaming at the
planned gaming and entertainment 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. A banking game is one in which players compete against the licensed gaming establishment rather than against one another. The FIGR and Station may
also pursue approval of Class III gaming, which would permit casino-style gaming at the planned facility, including banked table games, such as blackjack, craps and roulette, and gaming
machines such as slots, video poker, lotteries and pari-mutuel wagering. Pari-mutuel wagering is 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. Class III gaming would require an approved compact (a "Class III Gaming 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, or casino-style, gaming. There can be no
assurances that the project will be able to obtain, in a timely fashion or at all, the approvals from the State of California and the NIGC that are necessary to conduct Class III, or
casino-style, gaming at the facility.

Under
the terms of the development agreement, Station will assist the FIGR in obtaining third-party financing for the project, however we do not expect such financing will be obtained
until shortly before the project is under construction, and as such, the timing of obtaining the financing is uncertain. Prior to obtaining third-party financing, Station will contribute significant
financial support to the project. The Company began capitalizing expenditures toward the project in 2003. Through December 31, 2010, Station has advanced approximately $147.7 million
toward the development of this project, primarily to complete the environmental impact study and secure real estate for the project, which is included in Native American development costs on the
Company's consolidated balance sheets. Funds advanced by Station

107

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Native American Development (Continued)

are
expected to be repaid from the proceeds of the project financing or from the FIGR's gaming revenues. Station's advances to the FIGR bear interest at the rate of prime plus 1.5%. In addition, we
have agreed to pay approximately $11.3 million upon achieving certain milestones, which will not be reimbursed. Through December 31, 2010, approximately $2.0 million of these
payments had been made and were expensed as incurred. The timing and feasibility of the project are dependent upon the receipt of the necessary governmental and regulatory approvals. The Company plans
to continue contributing significant financial support to the project, even though there can be no assurances as to when or if the necessary approvals will be obtained.

The
following table outlines the status at December 31, 2010 of each of the following critical milestones necessary to complete the FIGR project.

As of December 31, 2010Federally recognized as a tribe by the US Government's Bureau of Indian Affairs (BIA)

YesDate of recognition

Recognition was terminated during the 1950's and was restored on December 27, 2000Tribe has possession of or access to usable land upon which the project is to be built

YesStatus of obtaining regulatory and governmental approvals:Tribal-State Compact

Not required for Class II gaming; compact will be pursued for Class III gaming.Approval of gaming compact by DOI

NoApproval of management agreement by NIGC

YesDate

October 1, 2010DOI accepting usable land into trust on behalf of the tribe

YesDate

October 1, 2010Gaming licenses:Type

Class IINumber of gaming devices allowed

N/ACounty agreement

NoOther agreements

Memorandum of Understanding with City of Rohnert ParkDate

October 2003


108

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Native American Development (Continued)



In March 2004 the Company 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 those agreements, we will assist the Mono in developing and operating a gaming and entertainment
facility to be located in Madera County, California. We have purchased, for the benefit of the Mono, a 305-acre parcel of land located on Highway 99 north of the city of Madera. The
management agreement has a term of seven years from the opening of the facility, and under the agreement, Station will provide training to the MITCR such that they may assume responsibility for
managing the facility upon the expiration of the agreement. Station will receive a management fee of 24% of the facility's net income.

As
currently contemplated, the project includes the development of an approximately 472,000 square foot hotel and casino resort and associated facilities, which would include a main
gaming hall, a
200-room hotel, various dining options, retail space and banquet/meeting space. Development of the gaming and entertainment 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.

On
April 28, 2008, the Mono and the State of California entered into a tribal-state Class III gaming compact permitting casino-style gaming. The compact is subject to
approval by the California Legislature and, if approved, will regulate gaming at 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.

On
August 6, 2010, the BIA published notice in the Federal Register that the environmental impact statement for the Mono's casino and resort project has been finalized and is
available for review. Prior to the land being taken into trust, the BIA must publish a record of decision concerning the environmental impact statement and the Secretary must make the decision that
the land should be taken into trust.

Under
the terms of the development agreement, we have agreed to arrange the financing for the ongoing development costs and construction of the facility. Prior to obtaining third-party
financing, we will contribute significant financial support to the project. Funds advanced by us are expected to be repaid from the proceeds of the project financing or from the Mono's gaming
revenues. We began capitalizing reimbursable advances related to this project in 2003. Through December 31, 2010, we have advanced approximately $16.4 million toward the development of
the project, primarily to complete the environmental impact study and secure real estate for the project, which is included in Native American development costs on the Company's consolidated balance
sheets. Reimbursable advances by Station to the Mono bear interest at the prime rate plus 1.5%. In addition, we have agreed to pay approximately $1.3 million of payments upon achieving certain
milestones, which will not be reimbursed and will be expensed as incurred. Through December 31, 2010, none of these payments had been made. The timing of this type of project is difficult to
predict, and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurances when, or if, these approvals will be obtained.

109

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Native American Development (Continued)

The
following table outlines the status at December 31, 2010 of each of the critical milestones necessary to complete the Mono project.

As of December 31, 2010Federally recognized as a tribe by the US Government's Bureau of Indian Affairs (BIA)

YesDate of recognition

Terminated in 1961; restored in 1983Tribe has possession of or access to usable land upon which the project is to be built

Yes, Station has acquired usable land for the development of this project on behalf of the Mono.Status of obtaining regulatory and governmental approvals:Tribal-State Compact

Pending ratification by California LegislatureApproval of gaming compact by DOI

NoApproval of management agreement by NIGC

NoDOI accepting usable land into trust on behalf of the tribe

NoGaming licenses:Type

Class III gaming being pursuedNumber of gaming devices allowed

N/A




In January 2004 Station 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 those agreements, Station agreed to assist the MITCR in developing and operating a gaming and entertainment facility
to be located on a portion of an approximately 650-acre site in Butte County, California, at the intersection of State Route 149 and Highway 99, approximately 10 miles
southeast of Chico, California and 80 miles north of Sacramento, California.

Under
the terms of the development agreement, Station agreed to arrange the financing for the ongoing development costs and construction of the facility. Funds advanced by Station are
expected to be repaid from the proceeds of the project financing or from the MITCR's gaming revenues. Station's advances to the MITCR bear interest at prime plus 2%. Through December 31, 2010,
the Company has advanced approximately $11.9 million toward the development of this project, primarily to complete the environmental assessment and secure real estate for the project, which is
included in Native American development costs on the Company's consolidated balance sheets. In addition, Station agreed to pay approximately $2.2 million of payments upon achieving certain
milestones, which will not be reimbursed. Through December 31, 2010, $50,000 of these payments had been made and were expensed as incurred. As of December 31, 2010, we have discontinued
funding for the development of the facility and anticipate

110

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Native American Development (Continued)

terminating
the development agreement. Given the recent recession and thus the revised expected potential of the project, we have written off the long-term asset associated with this
project.



We manage 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 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.

MPM
is considered a variable interest entity under the provisions of ASC Topic 810,Consolidation("ASC Topic 810"). Under the terms of
the MPM Operating Agreement, Station is required to provide the majority of MPM's financing. At December 31, 2010, Station's loans to MPM total approximately $13.6 million and financing
provided by MPM's other members, investors and banks totals approximately $5.4 million. The creditors of MPM have no recourse to the general credit of Station. Based on a qualitative analysis,
we believe Station directs the most significant activities that impact MPM's economic performance and has the right to receive benefits and the obligation to absorb losses that could potentially be
significant to MPM, therefore we believe Station is the primary beneficiary of MPM as defined in ASC Topic 810. As a result, we consolidate MPM in our consolidated financial statements.



During the year ended December 31, 2009, we determined that a total of $13.0 million in advances and capitalized interest
related to the MITCR Native American development agreement was not recoverable, and the carrying value of the project was written down to its fair value, which approximated the fair value of the land.
The fair value of the land is included in land held for development in our consolidated balance sheets at December 31, 2010 and 2009, respectively. The fair value of the land was estimated
using traditional real estate valuation techniques based on Level 3 inputs under ASC Topic 820.

111

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Management Fees

Station is the managing partner for Green Valley Ranch, Aliante Station, Barley's, The Greens and Wildfire Lanes and receive a management fee equal to 2% of net revenues and
approximately 5% of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") from Green Valley Ranch and Aliante Station and 10% of EBITDA from Barley's, The Greens and Wildfire
Lanes. During the year ended December 31, 2010, Station did not recognize management fee revenue for Green Valley Ranch and Aliante Station due to debt-related cash restrictions in
place at those properties.

Station
previously managed Thunder Valley under a seven-year management agreement with the United Auburn Indian Community which expired in June 2010 and was not renewed.
Under
this agreement, Station received a management fee equal to 24% of net income (as defined in the management agreement).

Management
fees are included in net revenues on Station's consolidated statements of operations. Management fees earned under Station's management agreements are recognized in revenue
when the services have been performed, the amount of the fee is determinable, and collectability is reasonably assured.

10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (amounts in thousands):

December 31,2010

2009Accrued payroll and related

$
26,416

$
20,973Accrued gaming and related


27,040


25,705Other accrued expenses and current liabilities


38,812


44,998Total accrued expenses and other current liabilities

$
92,268

$
91,676


112

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise

Long-term debt consists of the following (amounts in thousands):

December 31,2010

2009CMBS mortgage loan and related mezzanine financings, due November 12, 2010, interest at a margin above LIBOR (5.8% and 5.7% at December 31, 2010
and 2009, respectively) (a)(b)

$
2,475,000

$
2,475,000Land Loan, due February 7, 2011, interest at a margin above LIBOR or Alternate Base Rate (8.5% and 6.5% at December 31, 2010 and 2009,
respectively)


242,032


242,032Revolver, due August 7, 2012, interest at a margin above the Alternate Base Rate or the Eurodollar Rate (5.2% and 5.2% at December 31, 2010 and
2009, respectively) (b)


631,107


628,237Term Loan, due August 7, 2012, interest at a margin above the Alternate Base Rate or the Eurodollar Rate (4.9% and 4.7% at December 31, 2010 and
2009, respectively) (b)


242,500


245,0006% senior notes, interest payable semi-annually, principal due April 1, 2012, callable April 1, 2009 (b)


450,000


450,00073/4% senior notes, interest payable semi-annually, principal due August 15, 2016, callable August 15, 2011 (b)


400,000


400,00061/2% senior subordinated notes, interest payable semi-annually, principal due February 1, 2014, callable February 1,
2009 (b)


442,000


442,00067/8% senior subordinated notes, interest payable semi-annually, principal due March 1, 2016, callable March 1,
2009 (b)


660,000


660,00065/8% senior subordinated notes, interest payable semi-annually, principal due March 15, 2018, callable March 15,
2011 (b)


300,000


300,000Other long-term debt, weighted-average interest of 5.7% and 7.9% at December 31, 2010 and 2009, respectively, maturity dates ranging from 2010 to
2020


79,116


79,789Total long-term debt


5,921,755


5,922,058Current portion of long-term debt


(242,366
)

(242,347
)Long-term debt subject to compromise (b)


(5,670,730
)

(5,670,370
)Total long-term debt, net

$
8,659

$
9,341


(a)Prior
to the maturity date, the CMBS Borrower exercised a one-year extension to extend the maturity date to November 2010 subject to two
additional one-year extensions. The lenders have disputed the effectiveness of the extension.(b)Certain
long-term debts are subject to compromise as a result of the Chapter 11 Case and are classified as liabilities subject to
compromise in our consolidated balance sheet at December 31, 2010 as described below.


113

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise (Continued)






Under bankruptcy law, actions by creditors to collect upon liabilities of the Debtors incurred prior to the Petition Date are stayed
and certain other pre-petition contractual obligations may not be enforced against the Debtors without approval of the Court. In accordance with ASC Topic 852, these liabilities are
classified as liabilities subject to compromise in our consolidated balance sheets as of December 31, 2010 and December 31, 2009, and are adjusted to the expected amount of the allowed
claims, even if they may be settled for lesser amounts. The expected amount of the allowed claims for certain liabilities subject to compromise differ from their prepetition carrying amounts mainly as
a result of the write-off of approximately $185.7 million in debt discounts during the year ended December 31, 2009 and the reversal of approximately $88.6 million in
nonperformance risk adjustments that had previously been included in the pre-petition fair values of the interest rate swap liabilities in accordance with ASC Topic 820. Adjustments to the
claims may result from negotiations, payments authorized by the Court, interest accruals, or other events. It is anticipated that such adjustments, if any, could be material. As of December 31,
2010 and December 31, 2009, respectively, certain pre-petition liabilities included in liabilities subject to compromise have been reduced or increased as a result of the payment of
certain accounts payable and notes payable as allowed by the court, the determination that certain liabilities are no longer subject to compromise, and as a result of non-cash adjustments
of the expected amount of the allowed claims related to interest rate swap liabilities. In addition, during the year ended December 31, 2010, a $6.2 million settlement liability related
to a pre-petition litigation matter was recorded. Liabilities subject to compromise are subject to the treatment set forth in the Joint Plan of Reorganization. Liabilities subject to
compromise are classified separately from long-term obligations and current liabilities on the accompanying consolidated balance sheets.

The
following table summarizes the components of liabilities subject to compromise (in thousands):

December 31,2010

2009CMBS mortgage loan and related mezzanine financings

$
2,475,000

$
2,475,000Revolver and term loan


873,607


873,2376% senior notes


450,000


450,00073/4% senior notes


400,000


400,00061/2% senior subordinated notes


442,000


442,00067/8% senior subordinated notes


660,000


660,00065/8% senior subordinated notes


300,000


300,000Other long-term debt


70,123


70,133Interest rate swaps


144,003


141,793Accrued interest


143,854


142,562Payroll, benefits and related liabilities


30,258


25,330Accounts payable and other liabilities


8,976


4,054Total liabilities subject to compromise

$
5,997,821

$
5,984,109




In accordance with ASC Topic 852, 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. Currently the

114

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise (Continued)

Company
is not accruing interest for the senior notes, the senior subordinated notes or the mezzanine financings. As a result, post-petition interest expense is lower than
pre-petition interest expense. The write-off of debt discounts and deferred debt issue costs related to liabilities subject to compromise also reduces post-petition
interest expense as there are no longer any non-cash amortization charges related to these items.



In connection with the Merger, on November 7, 2007, a number of wholly-owned unrestricted direct and indirect
subsidiaries of Station (collectively, the "CMBS Borrower") entered into a mortgage loan and related mezzanine financings in the aggregate principal amount of $2.475 billion (the
"CMBS Loans"), for the purpose of financing the Merger consideration payable to the Company's stockholders upon consummation of the Merger and paying fees and expenses incurred in connection
with the Merger.

The
CMBS Loans are secured by substantially all fee and leasehold real property comprising Palace Station, Boulder Station, Sunset Station and Red Rock (collectively, the
"CMBS Property") and matured in November 2010. Prior to the 2009 maturity date, the CMBS Borrower exercised a one-year extension to extend the maturity date to November 2010
subject to two additional one-year extensions. The lenders have disputed the effectiveness of the extension. Interest on the CMBS Loans is equal to one-month LIBOR plus
5.3% per annum, which includes an additional 3.0% default rate. As a result of the Chapter 11 Case, interest due on the mezzanine financings is not being remitted to the mezzanine lenders. The
CMBS Borrower is required to hedge the LIBOR interest rate such that it will not exceed 5.5% on a blended basis. As a result, the CMBS Borrower purchased interest rate caps with a
combined notional amount of $1.11 billion and a cap rate of 5.8% for an initial premium of $3.6 million. The initial premium was recorded in other assets and, in accordance with the
authoritative guidance for accounting for derivative instruments and hedging activities, was marked to market at each reporting period. The interest rate caps expired in November 2010. In addition,
the CMBS Borrower entered into an interest rate swap with a notional amount of $1.36 billion in which the borrower paid a fixed rate of approximately 5.3% and received
one-month LIBOR, terminating in November 2012. This interest rate swap was early terminated during the three months ended December 31, 2009 (see
Note 12Derivative Instruments).

The
loan documents for the CMBS Loans (the "CMBS Loan Documents") contain a number of covenants that, among other things, restrict, subject to certain exceptions, each
wholly-owned unrestricted direct and indirect subsidiary's ability to incur additional indebtedness; create liens on assets; engage in mergers or consolidations; sell assets; pay dividends
or make distributions; make investments, loans or advances; make certain acquisitions; engage in certain transactions with affiliates; and fundamentally change its business. The CMBS Loan
Documents also require the CMBS Borrower to fund specific reserves as defined. In addition, the CMBS Loan Documents contain a requirement that if the CMBS Borrower fails to
maintain a minimum lease coverage ratio of 1.15 to 1.00 during two consecutive fiscal quarters, 80% of the funds available following the payment of all amounts and reserves required to be made
pursuant to the CMBS Loan Documents be deposited into an account for the benefit of the lenders instead of permitting distribution of such funds to the Company. As of December 31, 2010,
we were not in compliance with the lease coverage ratio. In a letter dated April 6, 2009 to the CMBS Borrower, certain lenders under the CMBS Loans alleged that the
CMBS Borrower had not calculated the lease coverage ratio in accordance with the CMBS Loan Documents for the quarters ended September 30, 2008 and December 31, 2008 and
further alleged that the CMBS Borrower would not have been in compliance with the minimum lease coverage ratio if the lease coverage ratio had been properly

115

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise (Continued)

calculated.
As a result, those lenders instituted a block against the release of 80% of the funds available following the payment of all amounts and reserves due under the CMBS Loans and
instructed our depository bank to hold such funds in a collateral account for the benefit of the lenders. As a result of the Chapter 11 Case, the block against the release of funds increased to
100% of the funds available following the payment of all amounts and reserves due under the CMBS Loans. The total amount deposited in the collateral account in relation to this block was
$179.4 million and $78.7 million at December 31, 2010 and 2009, respectively, which is reflected in restricted cash on our consolidated balance sheets.



On February 7, 2008, CV Propco, LLC, a wholly-owned, indirect unrestricted subsidiary of Station, as
borrower, entered into a $250 million delay-draw term loan which is 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 Land Loan contains no principal amortization and matured on February 7, 2011. At closing, $200 million was
drawn with the remaining $50 million drawn in June 2008. The proceeds were used to fund a distribution to Station, establish an interest reserve and pay transaction expenses. Borrowings under
the Land Loan bear interest at LIBOR plus 5.5% per annum or at the Alternate Base Rate (as defined in the Land Loan) plus 3.5% per annum, which includes an additional 2% default rate, at the
borrower's election. The borrower is required to hedge the interest rate such that LIBOR will not exceed 6.5%. As a result, the borrower entered into two interest rate swap agreements with notional
amounts of $200 million and $50 million in which the borrower pays a fixed LIBOR rate of 3.0% and 3.7%, respectively, and receives one-month LIBOR. These interest rate swaps
were early terminated in November 2009 (see Note 12Derivative Instruments).

The
Land Loan contains a number of covenants that, among other things, restrict, subject to certain exceptions, the borrower's ability to incur additional indebtedness; create liens on
assets; engage in mergers or consolidations; sell assets; pay dividends or make distributions; make investments, loans or advances; make certain acquisitions; engage in certain transactions with
affiliates; and fundamentally change its business. In addition, the Land Loan requires the borrower to maintain a loan-to-value ratio of no more than 40% and also contains
customary affirmative covenants and certain events of default.

During
the first quarter of 2009, the lenders under the land loan, based on appraisals, indicated their opinion that the value of the collateral had likely decreased to the point that
the loan-to-value ratio was no longer less than 40%, as required under the credit agreement, and thus an event of default had occurred under the credit agreement. As a result
of such event of default, lenders have become entitled to exercise remedies, including, among other things, the ability to declare the land loan and related accrued interest due and payable and to
foreclose on the underlying collateral of the borrower which at December 31, 2010 and 2009 included land with a book value of $116.4 million and $133.2 million, respectively. In
December 2009, the balance of the interest reserve account of $8.2 million was liquidated, and $8.0 million was applied as a principal reduction to the loan with the remainder applied to
the swap termination settlement amount. In addition, the borrower did not make the November 2009 payments or any subsequent payments due on account of interest or the interest rate swap agreements.
There is no recourse to the Company for any portion of the land loan that is not satisfied by the Borrower or the collateral. As a result of the events of default under the Land Loan, the related
outstanding indebtedness has been classified as current in the accompanying consolidated balance sheets at December 31, 2010 and 2009.

116

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise (Continued)

Subsequent
to December 31, 2010, we did not make scheduled interest payments totaling $3.4 million on the Land Loan.



In connection with the Merger, Station, as borrower, entered into a new $900 million senior secured credit agreement (the
"Credit Agreement") consisting of a $650 million revolving facility (the "Revolver") and a $250 million term loan (the "Term Loan"). The maturity date for both the Term Loan and the
Revolver is August 7, 2012 subject to a single 15-month extension (as further defined in the Credit Agreement). The Term Loan requires quarterly principal payments of $625,000. The
Revolver contains no principal amortization. Borrowings under the Credit
Agreement bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate (each as defined in the Credit Agreement), as selected by us. The margin above such rates, and the fee on the
unfunded portions of the Revolver, will vary quarterly based on our total debt to Adjusted EBITDA (as defined in the Credit Agreement). As of December 31, 2010, the borrower's margin above the
Eurodollar Rate on borrowings under the Credit Agreement was 4.50%. As of December 31, 2010, the maximum margin for Eurodollar Rate borrowings was 4.50% and the maximum margin for Alternate
Base Rate borrowings was 3.50%. As of December 31, 2010, the fee for any unfunded portion of the Revolver was 0.375%.

The
Credit Agreement contains certain financial and other covenants. These include a minimum interest coverage, a maximum total debt to Adjusted EBITDA (as defined in the Credit
Agreement) ratio and a total senior secured debt to Adjusted EBITDA (as defined in the Credit Agreement) ratio.

For
the quarters ended December 31, 2008, March 31, 2009, June 30, 2009, September 30, 2009, December 31, 2009, March 31, 2010, June 30,
2010, September 30, 2010, and December 31, 2010, we were not in compliance with the financial covenants in the Credit Agreement. In addition, the filing of the Chapter 11 Case
constitutes an event of default under the terms of the Credit Agreement. Notwithstanding such events of default, in connection with the filing of the Chapter 11 Case, on July 28, 2009,
the Company entered into a Second Forbearance Agreement and Second Amendment to the Credit Agreement (the "Forbearance Agreement") with the lenders holding a majority of the commitments under its
Credit Agreement pursuant to which the lenders agreed, among other things, to forbear from exercising their default-related rights, remedies and powers or privileges against certain
subsidiaries that guarantee the Company's obligations under the Credit Agreement. The Forbearance Agreement terminated on January 31, 2010.



The indentures (the "Indentures") governing our $2.3 billion in aggregate principal amount of senior and senior subordinated
notes (the "Notes") contain certain customary financial and other covenants, which limit our and our subsidiaries' ability to incur additional debt. As a result of the filing of the Chapter 11
Case, all amounts outstanding under the Notes have been accelerated and are due and payable.

We
did not make scheduled interest payments on the Company's $450 million 61/2% Senior Subordinated Notes due February 1, 2014 (the
"2014 Subordinated Notes"), $400 million 73/4% Senior Notes due August 15, 2016 (the "2016 Senior Notes"), $700 million
67/8% Senior Subordinated Notes due 2016 (the "2016 Subordinated Notes"), $300 million 65/8% Senior Subordinated Notes due 2018
(the "2018 Subordinated Notes") or $450 million 6% Senior Notes due 2012 (the "2012 Senior Notes") since February 1, 2009. The grace periods with respect to the
payment of interest on the 2014 Subordinated Notes, 2016 Senior Notes,

117

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise (Continued)

2016 Subordinated
Notes, 2018 Subordinated Notes and 2012 Senior Notes have expired, resulting in an event of default under the indentures governing such indebtedness. In addition
as a result of the filing of the Chapter 11 Case, the 2014 Subordinated Notes, 2016 Senior Notes, 2016 Subordinated Notes, 2018 Subordinated Notes and
2012 Senior Notes have been accelerated and are due and payable, subject to the bankruptcy stay.



In January 2009, a wholly-owned subsidiary of the Company purchased $40.0 million in aggregate principal amount of
our outstanding $700 million 67/8% Senior Subordinated Notes and $8.0 million in aggregate principal amount of our outstanding $450 million
61/2% Senior Subordinated Notes for approximately $1.5 million plus approximately $1.4 million in accrued interest. As a result, during the three months ended
March 31, 2009, we recorded a gain on early retirement of debt of approximately $40.3 million, which is the difference between the reacquisition price and the net carrying amount of the
extinguished debt including the face amount of the associated debt adjusted for the related unamortized discount and debt issuance costs.



In November 2007, we entered into a sale-leaseback agreement related to our corporate office building with a
third-party real estate investment firm. We 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. An event of default under the sale leaseback agreement 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. Annual lease payments increase approximately 1.2% annually to approximately
$6.7 million in the final year of the original term. The lease also contains two options for us 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 sale-leaseback
transaction 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, we continue to include
the corporate office building within property and equipment, net on our consolidated balance sheets and depreciate it according to our policy. In September 2010, this lease was amended to reduce the
annual lease payments by approximately 46%. The annual lease payments for the first 24 months of the amended lease will total approximately $2.9 million and will increase thereafter by
approximately 1.25% annually to approximately $3.8 million in the final year of the original term. The amendment 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. Minimum lease payments related to this lease for the years ended December 31, 2011, 2012, 2013, 2014,
and 2015, respectively, are approximately $2.9 million, $3.0 million, $3.1 million, $3.2 million, and $3.3 million. During the years ended December 31, 2010,
2009 and 2008, we recorded interest expense related to this lease of approximately $4.6 million, $5.3 million and $5.3 million, respectively.

118

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Long-term Debt and Liabilities Subject to Compromise (Continued)



At December 31, 2010, the estimated aggregate fair value of the Company's long-term debt was approximately
$2.90 billion, compared to its carrying value of $5.92 billion. The estimated fair value of our publicly traded debt securities at December 31, 2010 was based on quoted market
prices on or about December 31, 2010, which is considered a Level 1 input under the fair value measurement hierarchy. The estimated fair values of the Revolver and the Term Loan at
December 31, 2010, were based upon the value of the pending Opco asset purchase transaction, which is considered a Level 3 input under the fair value measurement hierarchy. The fair
value of the CMBS loans at December 31, 2010 was estimated based on the estimated value to be received by the CMBS lenders in the pending restructuring transaction as if the
transaction occurred at December 31, 2010, and utilizes Level 3 inputs under the fair value measurement hierarchy. The estimated fair values of all other long-term debt at
December 31, 2010 were assumed to be equal to the carrying values, and do not reflect any adjustment related to the Company's credit risk or the potential impact of the Chapter 11 Case
on the amounts that are recoverable by creditors.

At
December 31, 2009, the estimated aggregate fair value of the Company's long-term debt was approximately $3.81 billion, compared to its carrying value of
$5.92 billion. The estimated fair value of our publicly traded debt securities at December 31, 2009 was based on quoted market prices on or about December 31, 2009. The estimated
fair values of all other long-term debt at December 31, 2009 were assumed to be equal to the carrying values, and do not reflect any adjustment related to the Company's credit risk
or the potential impact of the Chapter 11 Case on the amounts that are recoverable by creditors.

Scheduled
maturities of long-term debt, excluding liabilities subject to compromise, are as follows (amounts in thousands):

Years ending December 31,2011

$
242,3662012


5,4222013


5892014


3672015


390Thereafter


1,891Total

$
251,025


Long-term
debt included in liabilities subject to compromise is not included in the above table since the scheduled maturities are uncertain as a result of the
Chapter 11 Case.

12. Derivative Instruments

Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements or other identified risks. To accomplish this objective,
we primarily use interest rate swaps and interest rate caps as part of our cash flow hedging strategy. Interest rate swaps utilized as cash flow hedges involve the receipt of variable-rate
payments in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. We do not use derivative financial instruments for trading
or speculative purposes.

119

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Derivative Instruments (Continued)

At
December 31, 2010 we have a floating-to-fixed interest rate swap with a notional amount of $250 million, which terminated in January 2011, which
effectively converts a portion of our floating-rate debt to a fixed rate. This interest rate swap is not designated as a hedging instrument and as a result, gains or losses resulting from
the change in fair value of this swap are recognized in earnings in the period of the change. 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 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. As of December 31, 2010, we paid a weighted-average fixed rate of approximately 3.0% and received one-month
LIBOR which approximated 0.3% on this interest rate swap.

During
the three months ended March 31, 2010, an interest rate swap of one of our 50% owned joint ventures with a notional amount of $430.0 million was early
terminated and as a result, we reclassified the remaining $2.0 million of deferred losses, net of tax, from accumulated other comprehensive income (loss) into operations. As a result of the
termination of this interest rate swap, the carrying amount of the liability was adjusted to the termination settlement amount and a loss was recorded by the joint
venture. Our 50% share of this loss is reflected in interest and other expense from joint ventures in the accompanying consolidated statement of operations.

During
the three months ended December 31, 2009, we early terminated a floating-to-fixed interest rate swap with a notional amount of $1.36 billion.
Prior to termination, this cash flow hedges effectively converted a portion of our floating-rate debt to a fixed rate. This interest rate swap was not designated as a hedging instrument
and as a result, gains or losses resulting from the change in fair value of this swap were recognized in earnings in the period of the change. The estimated expected amount of the allowed claim
related to this interest rate swap is classified in liabilities subject to compromise at December 31, 2009.

Also
during the three months ended December 31, 2009, we early terminated two floating-to-fixed interest rate swaps with a combined notional amount of
$250 million and it became probable that the original forecasted transactions would not occur. Prior to termination, these cash flow hedges effectively converted a portion of our
floating-rate debt to a fixed rate. These interest rate swaps previously qualified and were designated as cash flow hedges, resulting in the effective portion of the gain or loss from the
change in fair value being reported as a component of other comprehensive income (loss). The variable cash flow method was used to measure the ineffectiveness of the hedging relationship. Accordingly,
the calculation of ineffectiveness involved a comparison of the present value of the cumulative change in the expected future cash flows of the variable portion of the interest rate swaps and the
present value of the cumulative change in the expected future variable interest payments designated in the hedging relationship. During the first quarter of 2009, these interest rate swaps were
de-designated as cash flow hedges for accounting purposes. As a result of the termination of these swaps, we reclassified $1.7 million in deferred losses, net of tax, from
accumulated other comprehensive income into earnings. The total termination settlement amount of these swaps is recorded in accrued expenses and other current liabilities at December 31, 2009.

During
the second quarter of 2009, two interest rate swaps of one of our 50% owned joint ventures with notional amounts of $297.8 million were terminated and it became probable
that the original forecasted transactions would not occur. As a result, we reclassified $0.3 million in deferred losses, net of tax, from accumulated other comprehensive income into earnings.

120

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Derivative Instruments (Continued)

Accumulated
other comprehensive loss on our consolidated balance sheets includes deferred gains and losses related to our interest rate swaps that were previously designated as hedging
instruments under the authoritative guidance for accounting for derivative instruments and hedging activities, as well as our proportionate share of our 50% owned joint ventures' deferred gains and
losses on interest rate swaps that were previously designated as hedging instruments.

The
activity in deferred gains (losses) on derivatives included in accumulated other comprehensive loss is as follows (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Deferred losses on derivatives included in accumulated other comprehensive loss, beginning balance

$
(1,985
)
$
(8,414
)
$
(6,477
)Gains (losses) recognized in other comprehensive loss on derivatives (effective portion), net of tax





1,286


(1,937
)Losses reclassified from other comprehensive income into income (effective portion) in change of fair value of derivative instruments





3,152


Losses reclassified from other comprehensive income into income as a result of the discontinuance of cash flow hedges because it is probable that the
original forecasted transactions will not occur


1,985


1,991


Deferred losses on derivatives included in accumulated other comprehensive loss, ending balance

$


$
(1,985
)
$
(8,414
)


In
accordance with ASC Topic 852, the Debtors' interest rate swap liabilities that are subject to compromise are classified as liabilities subject to compromise in our consolidated
balance sheets as of December 31, 2010 and December 31, 2009. These interest rate swap liabilities are adjusted to the expected amounts of the allowed claims, which are different than
the prepetition carrying amounts of these liabilities as a result of changes in the fair values of these instruments. Gains and losses resulting from adjustments to the carrying values of swap
liabilities subject to compromise are recorded in reorganization items in the accompanying consolidated statements of operations.

121

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Derivative Instruments (Continued)

Presented below are the effects of derivative instruments on our consolidated statements of operations (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Amounts included in change in fair value of derivative instruments:Gains (losses) from interest rate swaps

$


$
28,019

$
(19,762
)Losses from interest rate cap


(42
)

(121
)

(3,295
)Net gains (losses) for derivatives not designated as hedging instruments


(42
)

27,898


(23,057
)Losses reclassified from other comprehensive income into income (effective portion)





(1,501
)

Losses reclassified from accumulated other comprehensive income into income as a result of the discontinuance of cash flow hedges because it is probable
that the original forecasted transactions will not occur





(2,668
)

Total derivative gains (losses) included in change in fair value of derivative instruments


(42
)

23,729


(23,057
)Amounts included in reorganization items:Losses from interest rate swaps


(2,607
)

(80,790
)

Amounts included in interest and other expense from joint ventures:Gains (losses) for derivatives not designated as hedging instruments


(22,221
)

7,936


(12,328
)Losses reclassified from other comprehensive income into income (effective portion)


(386
)

(3,348
)

Losses reclassified from accumulated other comprehensive income into income as a result of the discontinuance of cash flow hedges because it is probable
that the original forecasted transactions will not occur


(2,667
)

(394
)

Total derivative gains (losses) included in interest and other expense from joint ventures


(25,274
)

4,194


(12,328
)Total derivative losses included in consolidated statements of operations

$
(27,923
)
$
(52,867
)
$
(35,385
)


The
difference between amounts received and paid under our interest rate swap 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 interest rate swaps. The net effect of the interest rate swaps and interest rate cap resulted in an increase in interest expense of approximately $7.0 million,
$77.5 million, and $35.1 million for the years ended December 31, 2010, 2009 and 2008, respectively. In addition, our proportionate share of the net effect of interest rate swaps
of our 50% owned joint ventures is reflected as an increase (decrease) in interest and other expense from joint ventures in our consolidated statements of operations, and totaled

122

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Derivative Instruments (Continued)

approximately
$27.3 million, $10.6 million, and $17.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

The
fair values of our outstanding derivative instruments are recorded in our consolidated balance sheet as follows (amounts in thousands):

Fair Value atBalance Sheet Classification

December 31,
2010

December 31,
2009Derivatives not designated as hedging instruments:Interest rate swaps:Liabilities subject to compromise(a)


144,003


141,793Accrued expenses and other current liabilities


9,334


8,937Total interest rate swaps not designated as hedging instruments


153,337


150,730Total liability derivatives

$
153,337

$
150,730Interest rate cap:Other assets, net

$


$
42Total asset derivatives

$


$
42


(a)Includes
termination values of interest rate swaps that were terminated during 2009.


13. Commitments and Contingencies



We entered into a ground lease for 27 acres of land on which Boulder Station is located. We lease this land 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 have an option, exercisable at five-year intervals with the next option in June 2013, to purchase the land at fair
market value. Our leasehold interest in the property is subject to a lien to secure borrowings under the CMBS Loan Documents.



We entered into a ground lease for 47 acres of land on which Texas Station is located. We lease this land from Texas Gambling
Hall & Hotel, Inc., a company owned by the Related Lessor. The lease has a

123

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Commitments and Contingencies (Continued)

maximum
term of 65 years, ending in July 2060. The lease provides for monthly rental payments of $337,417 through June 2010 with scheduled adjustments in July 2010, and every ten years
thereafter, 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 have an option, exercisable at five-year intervals with the next option in May 2015, to purchase the
land at fair market value. Our leasehold interest in the property is subject to a lien to secure borrowings under the Credit Agreement.



We amended the lease and purchase agreement for the 19-acre parcel of land on which the Wild Wild West is located in
December 2008. Under the amended agreement, we have 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. No amounts related to these purchase options have
been recorded on our consolidated balance sheets at December 31, 2010 and 2009. Additionally, the annual lease expense was increased from $1.6 million for the year ended
December 31, 2008 to $2.1 million and $2.4 million for the years ended December 31, 2009 and 2010, respectively. In July 2013, and every three years thereafter, the rent
will be adjusted by changes in the consumer price index, not to exceed 12% and shall at no time be decreased. In March 2011, we were 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.



In connection with the financing of the CMBS Loans, certain Station subsidiaries (the "Operating Subsidiaries") entered into an amended
and restated purchase and sale agreement with a wholly-owned subsidiary of Station, which immediately prior to the closing of the CMBS Loans, assigned its rights and obligations under the amended and
restated purchase and sale agreement to a newly created subsidiary of the Company, the CMBS Borrower. Pursuant to this purchase and sale agreement, the CMBS Property was sold to the CMBS Borrower.
Immediately following the sale, such CMBS Property was leased back to the Company pursuant to a master lease with an initial term of fifteen years and extension terms for an aggregate of ten
additional years. The Company in turn subleased each parcel of the CMBS Property back to the Operating Subsidiaries, with each such sublease having the same term as the master lease. All transactions
related to this lease are intercompany in nature and as such eliminate upon consolidation.



In addition to the leases described above, we also lease certain other buildings and equipment used in our operations, which have
operating lease terms expiring through 2013.

124

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Commitments and Contingencies (Continued)

Future
minimum lease payments required under all non-cancelable operating leases are as follows (amounts in thousands):

Years ending December 31,2011

$
6,8542012


6,8312013


6,7422014


6,7242015


6,724Thereafter


294,214Total

$
328,089


Rent
expense totaled approximately $9.6 million, $9.7 million, and $9.9 million for the years ended December 31, 2010, 2009 and 2008, respectively.

During
the year ended December 31, 2009, the Debtors rejected two operating leases related to unoccupied office space. Under Section 365 of the Bankruptcy Code, the Debtors
may assume, assume and assign, or reject executory contracts and unexpired leases, including real property and equipment leases with the approval of the Bankruptcy Court and under certain other
conditions. Rejection constitutes a court-authorized termination of the lease or contract in question and, subject to certain exceptions, relieves the Debtors of future obligations under such lease or
contract, but creates a pre-petition claim for damages caused by such termination, subject to the Debtors' right to review and contest such claim. Parties whose contracts or leases are
rejected may file claims against the Debtors for damages. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure all prior defaults under such executory
contract or unexpired lease, including all pre-petition arrearages, and to provide adequate assurance of future performance. In this regard, the Debtors' financial statements include
amounts classified as "liabilities subject to compromise" that the Bankruptcy Court allowed as claim amounts as a result of the Debtors' rejection of various executory contracts and unexpired leases.
Additional amounts may be included in "liabilities subject to compromise" in future periods if additional executory contracts and unexpired leases are rejected. Conversely, the Debtors would expect
that the assumption of certain executory
contracts and unexpired leases may convert certain liabilities shown in future financial statements as subject to compromise to post-petition liabilities.



In March 2008, in the matter captioned Sparks Nugget, Inc. vs. State ex rel. Department of Taxation, the Nevada Supreme Court
ruled that food and non-alcoholic beverages purchased for use in complimentary meals provided to employees and patrons are not subject to Nevada use tax. We have filed refunds for the
periods from April 2000 through February 2008. The amount subject to these refunds is approximately $15.3 million plus interest. Any amount refunded to us would be reduced by a contingent fee
owed to a third party advisory firm. In April 2008, the Department of Taxation filed a motion for rehearing of the Supreme Court's decision, and in July 2008, the Nevada Supreme Court denied the
Department of Taxation's motion for rehearing. The Department of Taxation subsequently took the position that these purchases are subject to Nevada sales tax. Accordingly, we have not recorded a
receivable related to a refund for the previously paid use tax on these purchases in the accompanying consolidated balance sheets as of December 31, 2010 and December 31, 2009,
respectively. However, we

125

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Commitments and Contingencies (Continued)

began
claiming this exemption on sales and use tax returns for periods subsequent to February 2008 given the Nevada Supreme Court decision. In March 2010, the Department of Taxation issued a
$12.7 million sales tax assessment, plus interest of $8.2 million, related to these food costs. We have not accrued a liability related to this assessment because we do not believe the
Department of Taxation's position has any merit, and therefore we do not believe it is probable that we will owe this tax. The sales tax assessment and the refund cases have been appealed to the
Administrative Law Judge of the Nevada Department of Taxation and a hearing date has not yet been set.



In December 2006, we entered into an amended and restated operating agreement with FBLV Holding Company LLC ("FBLV"). Pursuant
to the amended and restated operating agreement, the parties contributed approximately 52 acres (with approximately 20 acres contributed by us for our 50% ownership and approximately 32 acres
contributed by FBLV for their 50% ownership) of improved and unimproved real property located along Rancho Road south of Palace Station in Las Vegas, Nevada into a joint venture. Through
December 31, 2010, we contributed an additional $47.2 million to fund the acquisition of additional property as well as design and development costs.

Effective
January 1, 2010, Richfield Homes joint venture was formed by the members of Rancho Road and a portion of the assets of Rancho Road were contributed to Richfield Homes.

In
early November 2010, Rancho Road and Richfield Homes disposed of substantially all of their assets. In connection with the asset disposal, the Company received a distribution of
$3.5 million. These entities were dissolved during late 2010, and as a result of the deficit carrying value of the Company's investment in Rancho Road, a gain of $124.2 million gain was
recognized upon dissolution.



See Note 8 for information regarding commitments and contingencies related to the Company's Native American Development
activities.

14. Stockholders' Equity



We are authorized to issue up to 10,000 shares of voting common stock, $0.01 par value per share. At December 31, 2010, there
were 41.7 shares of voting common stock issued and outstanding. Each holder of issued and outstanding shares of voting common stock is entitled to one vote for each share held of record on each matter
submitted to a vote of stockholders. Holders of our voting common stock have no cumulative voting, conversion or redemption rights. Under the Equityholders Agreement of Station, FCP and Fertitta
Partners, as amended, in certain circumstances, FCP VoteCo, as the holder of Station's voting common stock, shall have the preemptive right to purchase or subscribe to any voting stock to be sold or
issued by Station on the terms and conditions as such voting stock is being offered and sold or issued. Certain actions defined as Major Actions in the Equityholders Agreement of Station, FCP and
Fertitta Partners, as amended, require the approval of Thomas J. Barrack, Jr. and at least one of Frank J. Fertitta III or Lorenzo J. Fertitta. Subject to any preferences that may
be granted to the holders of our preferred stock, each holder of voting common stock is entitled to receive ratably, such dividends as may

126

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Stockholders' Equity (Continued)

be
declared by our Board of Directors out of funds legally available therefore, as well as any distributions to the stockholders and, in the event of our liquidation, dissolution or winding up is
entitled to share ratably in all our assets remaining after payment of liabilities.



We are authorized to issue up to 100,000,000 shares of non-voting common stock, $0.01 par value per share. At
December 31, 2010, there were 41,674,838 shares of non-voting common stock issued and outstanding. Holders of issued and outstanding shares of non-voting common stock
are not entitled to vote on any matters to be voted on by the stockholders of the Company and are not to be included in determining the number of shares voting or entitled to vote. Holders of our
non-voting common stock have no cumulative voting, conversion or redemption rights. Under the Equityholders Agreement of Station, FCP and Fertitta Partners, as amended, in certain
circumstances, holders of non-voting common stock shall have the preemptive right to purchase or subscribe to any equity interests (other than voting stock) to be sold or issued by Station
on the same terms and conditions as such equity interests are being offered and sold or issued. Subject to any preferences that may be granted to the holders of our preferred stock, each holder of
non-voting common stock is entitled to receive ratably, such dividends as may be declared by our Board of Directors out of funds legally available therefore, as well as any distributions
to the stockholders and, in the event of our liquidation, dissolution or winding up is entitled to share ratably in all our assets remaining after payment of liabilities.



We are authorized to issue up to 10,000 shares of preferred stock, $0.01 par value per share of which none are issued. The Board of
Directors, without further action by the holders of our common stock, may issue shares of preferred stock in one or more series and may fix or alter the rights, preferences, privileges and
restrictions, including the voting rights, redemption provisions (including sinking fund provisions), dividend rights, dividend rates, liquidation rates, liquidation preferences, conversion rights and
the description and number of shares constituting any wholly unissued series of preferred stock. Except as described above, our Board of Directors, without further stockholder approval, may issue
shares of preferred stock with rights that could adversely affect the rights of the holders of our common stock. The issuance of shares of preferred stock under certain circumstances could have the
effect of delaying or preventing a change of control of Station or other corporate action.



ASC Topic 220,Comprehensive Incomerequires companies to disclose other comprehensive
income (loss) and the components of such income (loss). Comprehensive income (loss) is the total of net income (loss) and all other non-stockholder changes in equity, and includes
unrealized gains (losses) on available-for-sale securities and the amortization of unrecognized pension and postretirement benefit plan liabilities. In addition, comprehensive
income (loss) includes recognition of deferred mark-to-market adjustments on interest rate swaps that were previously designated as hedging instruments, as well as our 50%
share of deferred mark-to-market adjustments on interest rate swaps previously designated as

127

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Stockholders' Equity (Continued)

hedging
instruments at Green Valley Ranch and Aliante Station. Comprehensive loss was computed as follows (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Net loss

$
(565,442
)
$
(1,679,514
)
$
(3,268,500
)Mark-to-market valuation of interest rate swaps, net of tax


1,985


6,429


(1,937
)Unrealized gain (loss) on available-for-sale securities, net of tax


(80
)

123


(695
)Amortization of unrecognized pension and postretirement benefit plan liabilities, net of tax


(940
)

816


6,323Comprehensive loss

$
(564,477
)
$
(1,672,146
)
$
(3,264,809
)


The
components of accumulated other comprehensive income (loss) are as follows (amounts in thousands):

December 31,2010

2009Mark-to-market valuation of interest rate swaps, net of tax

$


$
(1,985
)Unrealized loss on available-for-sale securities, net of tax


(165
)

(85
)Amortization of unrecognized pension and postretirement benefit plan liabilities, net of tax


208


1,148Accumulated other comprehensive income (loss)

$
43

$
(922
)


The
mark-to-market valuation of interest rate swaps, net of tax, included in accumulated other comprehensive loss at December 31, 2009 relates to our 50%
interest in the mark-to-market valuation of the interest rate swap at Green Valley Ranch that was de-designated as a cash flow hedge during the year ended
December 31, 2009. During the three months ended March 31, 2010, the Green Valley Ranch interest rate swap was terminated and as a result, the remaining balance of deferred losses, net
of tax, in accumulated other comprehensive loss was reclassified to operations.

15. Asset Impairments and Write-downs and Other Charges, Net

Included in our statements of operations for the years ended December 31, 2010, 2009, and 2008 are various pretax charges related to impairments of goodwill, intangible assets and
other assets, as well as write-downs and other charges, net. Write-downs and other charges, net includes gains or losses on asset

128

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Asset Impairments and Write-downs and Other Charges, Net (Continued)

disposals,
severance expense and other non-routine transactions. Components of asset impairments and write-downs and other charges, net were as follows:

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Impairment of goodwill (Note 5)

$
60,386

$
181,785

$
2,594,992Impairment of other intangible assets (Note 5)

$
4,704

$
255,263

$
327,326Impairments of other assets:Impairment of land held for development (Note 6)

$
114,378

$
617,383

$
147,968Impairment of investments in joint ventures (Note 7)


16,267


30,003


272,961Impairment of property and equipment (Note 4)


66,647


179,430


Impairment of Native American project costs and related capitalized interest (Note 8)





12,997


Other, net(a)


(362
)




$
196,930

$
839,813

$
420,929Write-downs and other charges, net:Write-off of abandoned projects

$


$
2,362

$
44,576Loss (gain) on disposal of assets, net


534


478


4,546Gain (loss) on land disposition (Note 6)


(74
)

5,091


Severance expense


2,687


2,966


4,972Legal settlement (Note 22)


6,200





Management agreement/lease termination


898


4,130


4,825Reserve for note receivable from unconsolidated affiliate





5,261


Other asset write-offs


9,000





Write-off of debt offering and restructuring fees





519


3,706Write-downs and other charges, net

$
19,245

$
20,807

$
62,625


(a)During
2010, we recorded an impairment loss of $1.0 million related to a license right intangible, and in connection with this impairment, we also
wrote off an associated net liability of approximately $0.4 million.




During the years ended December 31, 2009 and 2008, due to the current economic conditions, we decided to abandon several
projects at our properties that were in the developmental stage. In conjunction with these decisions, the costs incurred to date on such projects were expensed during the years ended
December 31, 2009 and 2008.



During the year ended December 31, 2010, we recognized $0.9 million in lease termination expense, primarily related to
certain restaurant facilities that we leased to third party operators. During the year ended December 31, 2009, we recognized lease termination expense of $3.1 million related to the

129

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Asset Impairments and Write-downs and Other Charges, Net (Continued)

termination
of an equipment lease and $1.0 million related to leased office space no longer being utilized. During the year ended December 31, 2008, we recognized expense of
$1.7 million related to termination of various leases related to land adjacent to the current Wild Wild West property and $3.1 million related to leased office space no longer being
utilized.



During the year ended December 31, 2009, we recognized a $5.3 million expense related to a note receivable from an
unconsolidated affiliate that may not be recoverable. See Note 3 for additional information.



Included in write-off of debt offering and restructuring fees is the write-off of fees and costs incurred in
connection the termination of a debt restructuring project for one of our non-Debtor subsidiaries during 2009, and the write-off of cancelled debt offering fees and costs
incurred to launch a private exchange offer in November 2008 that was subsequently terminated in December 2008.



During the year ended December 31, 2010, we wrote off $9 million in other assets as a result of the expiration of certain
land purchase options.

16. Share-Based Compensation

Long-term incentive compensation is provided in the form of non-voting limited liability company membership interests in FCP and Fertitta Partners pursuant to the
Second Amended and Restated Operating Agreement of Fertitta Colony Partners and the Amended and Restated Operating Agreement of Fertitta Partners, respectively (collectively "the Operating
Agreements"). The Operating Agreements allow certain officers and members of management of the Company to participate in the long-term growth and financial success of the Company through
indirect ownership of Class B Units and direct ownership of Class C Units in FCP and Fertitta Partners. The purpose is to promote the Company's long-term growth and
profitability by aligning the interests of the Company's management with the interests of the owners of the Company and by encouraging retention.

Upon
the consummation of the Merger, certain members of management were awarded indirect ownership of Class B Units and direct ownership of Class C Units in each of FCP and
Fertitta Partners. During the Successor Period, 6.9 million Class B Units were granted with a weighted-average grant-date fair value of $44.92, of which 6.4 million
units vested immediately and the remaining units vest equally over five years. In addition, 0.3 million and 1.4 million Class C Units were granted during the year ended
December 31, 2008 and the Successor Period with a weighted average grant-date fair value of $12.43 and $28.54, respectively. The Class C Units vest equally over five years.
The Class C Units include certain call and put provisions as defined in the Operating Agreements, such that under certain circumstances, within ninety days after termination, in certain cases,
of the Class C Unit holder's employment with Station, FCP and Fertitta Partners can call the Class C Units and the employee that holds the Class C Units can put the Class C
Units back to FCP and
Fertitta Partners. The conditions that could result in the employee putting the Class C Units back to FCP and Fertitta Partners are either contingent or within the control of the issuer.

130

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Share-Based Compensation (Continued)

During the year ended December 31, 2008, 0.7 million of the Class B Units that were previously issued upon consummation of the Merger were transferred to certain
officers and management of the Company. These Class B Units grants had a weighted average grant date fair value of $17.65, and vest equally over five years. During the year ended
December 31, 2008, additional Class C Units were issued to certain management of the Company. During the years ended December 31, 2009 and 2010, no Class B Units or
Class C Units were granted.

The
Company determined the fair value associated with these units taking into account the estimated enterprise value of the Company, expected term of the units (5.5 years and
6.0 years for the years ended December 31, 2008 and 2007, respectively), expected volatility based on expected volatility of equity
instruments of comparable companies (22% and 30% for the years ended December 31, 2008 and 2007 respectively) and a risk free rate of 3.33% and 4.01% for the years ended December 31,
2008 and 2007, respectively. The estimated fair value of the units is being recognized in expense on a straight-line basis over the requisite service periods of the awards.

At
December 31, 2010, we had unearned share-based compensation of approximately $29.2 million associated with Class B Units and Class C Units which is
expected to be recognized over a period of approximately 2.8 years. The Class B Units and the Class C Units are expected to be cancelled as a result of the Chapter 11
proceedings, and the remaining unearned share-based compensation will be recognized upon cancellation.

The
following table represents where recorded share-based compensation expense was classified in the accompanying consolidated statements of operations (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Total share-based compensation

$
13,617

$
14,083

$
14,445Less compensation costs capitalized


(236
)

(237
)

(234
)Less reimbursed compensation costs








(62
)Share-based compensation recognized as expense

$
13,381

$
13,846

$
14,149Casino expense

$
138

$
89

$
312Selling, general &administrative


1,938


2,264


2,299Corporate


8,173


8,296


8,025Development and preopening


3,132


3,197


3,451Earnings (losses) from joint ventures








62Share-based compensation recognized as expense


13,381


13,846


14,149Tax benefit


(4,683
)

(4,846
)

(4,952
)Share-based compensation expense, net of tax

$
8,698

$
9,000

$
9,197


17. Executive Compensation Plans

We have employment agreements with certain of our executive officers. These contracts provide for, among other things, an annual base salary, supplemental long-term
disability and supplemental life insurance benefits in excess of our normal coverage for employees. In addition, we have adopted a Supplemental Executive Retirement Plan for our Chief Executive
Officer and a Supplemental

131

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Executive Compensation Plans (Continued)

Management
Retirement Plan for certain key executives as selected by our Board of Directors. Other executive plans include a Deferred Compensation Plan and a Long-Term Stay-On
Performance Incentive Plan. See Note 20 for additional information regarding the Supplemental Executive Retirement Plan and the Supplemental Management Retirement Plan.

18. Reorganization Items, Net

Reorganization items, net represent amounts incurred as a direct result of the Chapter 11 Case and are
presented separately in the consolidated statements of operations. The components of reorganization items are as follows (amounts in thousands):

Year Ended
December 31, 2010

Year Ended
December 31, 2009Professional fees and retainers

$
79,346

$
66,522Write-off of debt discount and debt issuance costs





225,011Adjustment of swap carrying values to expected amounts of allowed claims


2,607


80,790Other


795


3,565Reorganization items, net

$
82,748

$
375,888


Professional
fees include financial, legal and other services directly associated with the reorganization process. Cash payments for the year ended December 31, 2010 and 2009 for
professional fees and retainers and other reorganization items totaled $82.8 million and $59.8 million, respectively. In accordance with ASC 852 on the Petition Date the Company ceased
amortization of debt discounts and deferred debt issuance costs related to the liabilities subject to compromise. Reorganization items, net for the year ended December 31, 2009 includes losses
of $185.7 million and $39.3 million, respectively, representing the write-off of unamortized debt discounts and debt issuance costs related to certain liabilities subject to
compromise. The write-off of these amounts resulted in an adjustment of the net carrying value of the related liabilities to the expected amount of the allowed claims.

132

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Fair Value Measurements

The following table presents information about our financial assets and liabilities measured at fair value on a recurring basis at December 31, 2010, and indicates the fair value
hierarchy of the valuation techniques utilized to determine such fair value (amounts in thousands):

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Balance at
December 31,
2010AssetsInterest rate caps

$


$


$


$
Available-for-sale securities


271








271Total assets measured at fair value on a recurring basis

$
271

$


$


$
271LiabilitiesLiabilities not subject to compromise:Interest rate swap

$


$
397

$


$
397Liabilities subject to compromise:Deferred compensation liabilities


1,194








1,194Total liabilities measured at fair value on a recurring basis

$
1,194

$
397

$


$
1,591


The
fair values of available-for-sale securities and deferred compensation liabilities are based on quoted prices in active markets. The fair values of interest
rate swaps and interest rate caps are based on quoted market prices from various banks for similar instruments. These quoted market prices are based on relevant factors such as the contractual terms
of our interest rate swap agreements and interest rate curves and are adjusted for the non-performance risk of either us or our counterparties, as applicable. Certain interest rate swaps
previously accounted for at fair value have been terminated early, and as a result, are no longer accounted for at fair value on a recurring basis.

20. Retirement Plans

Effective as of November 30, 1994, we adopted the Supplemental Executive Retirement Plan (the "SERP"), which is an unfunded defined benefit plan for the Chief Executive Officer
and President as sole participants. On January 21, 2005, Station amended the SERP (the "First SERP Amendment"). The purpose of the First SERP Amendment was to (i) increase the Early
Retirement Date (as defined in the SERP) for participants from age 45 to age 50, (ii) increase the Normal Retirement Date (as defined in the SERP) for the participants from
age 55 to age 60, (iii) add the President of the Company as a participant, and (iv) include the average annual bonus (in addition to base salary) earned by participants for
the three most recent fiscal years in determining Final Annual Compensation (as defined in the SERP). On November 7, 2007, Station further amended the SERP for the purpose of updating the
"Change of Control" definition and confirming that the Merger would not constitute a "Change of Control" for purposes of the plan. On April 17, 2008, the Company executed the third amendment of
the SERP to

133

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. Retirement Plans (Continued)

increase
the Early Retirement Date (as defined in the SERP) for participants from age 50 to age 60 and increase the Normal Retirement Date (as defined in the SERP) for participants from
age 60 to age 65.

Effective
as of November 30, 1994, we adopted the Supplemental Management Retirement Plan (the "SMRP"), which is an unfunded defined benefit plan. Certain key executives (other
than the Chief Executive Officer and President) as selected by the Board of Directors are able to participate in the SMRP. On November 7, 2007, Station amended the SMRP for the purpose of
updating the "Change of Control" definition under the plan and confirming that the Merger would not constitute a "Change of Control" for purposes of the plan. On April 17, 2008, the Company
executed the second amendment of the SMRP to increase the Early Retirement Date (as defined in the SMRP) for participants from age 55 to age 60 and increase the Normal Retirement Date
(as defined in the SMRP) for participants from age 60 to age 65.

134

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. Retirement Plans (Continued)

A
reconciliation of the beginning and ending balances of the pension benefit obligation and fair value of the plan assets and the funded status is as follows (in thousands):

December 31,2010

2009Change in pension benefit obligation:Benefit obligation at beginning of year

$
22,002

$
20,159Service cost


1,707


2,115Interest cost


1,296


1,217Plan amendments





Net actuarial loss (gain)


1,382


(1,318
)Benefits paid





(171
)Benefit obligation at end of year

$
26,387

$
22,002Change in plan assets:Contribution by Station

$


$
171Benefits paid





(171
)Fair value of plan assets at end of year

$


$
Funded status of the plan (underfunded)

$
(26,387
)
$
(22,002
)Unrecognized net actuarial loss





Unrecognized actuarial loss





Net amount recognized

$
(26,387
)
$
(22,002
)Amounts recognized in the consolidated balance sheet consist of:Current liabilities (a)

$
(416
)
$
(293
)Accrued pension costs (a)


(25,651
)

(23,474
)Accumulated other comprehensive income


(320
)

1,765Net amount recognized

$
(26,387
)
$
(22,002
)Weighted average assumptions:Discount rate


5.25
%

5.50
%Salary rate increase


5.00
%

5.00
%


(a)As
a result of the Chapter 11 Case, the current liabilities and the accrued pension costs at December 31, 2010 and 2009 are classified as
liabilities subject to compromise in the accompanying consolidated balance sheets.


135

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

20. Retirement Plans (Continued)




The
components of the net periodic pension benefit cost consist of the following (in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Service cost

$
1,707

$
2,115

$
1,850Interest cost


1,296


1,217


1,253Amortization of prior service credit


(63
)

(63
)

(70
)Amortization actuarial losses








92Net periodic pension cost


2,940


3,269


3,125Curtailment charge








(1,525
)Total pension cost

$
2,940

$
3,269

$
1,600


As
a result of the Chapter 11 Case, SERP and SMRP benefit payments were suspended as of July 28, 2009, and we expect the SERP and SMRP to be terminated in connection with
the consummation of the plan of reorganization. As a result, we do not expect to pay any benefits under the SERP or SMRP in the future, however since this expectation is based on assumptions about
future events, actual results may vary significantly from this estimate.



We have a defined contribution 401(k) plan, which covers all employees who meet certain age and length of service requirements and
allows an employer contribution up to 50% of the first 4% of each participating employee's compensation. Plan participants can elect to defer before tax compensation through payroll deductions. These
deferrals are regulated under Section 401(k) of the Internal Revenue Code. In December 2008, we announced that we had elected to suspend the employer contribution effective
January 1, 2009 therefore there were no matching contributions during the years ended December 31, 2010 and 2009, respectively. Our matching contribution was approximately
$3.7 million for the year ended December 31, 2008.

21. Income Taxes

We file a consolidated federal income tax return. For financial reporting purposes, we recorded income tax benefit of $22.0 million, $289.9 million, and
$381.3 million for the years ended December 31, 2010, 2009 and 2008, respectively.

The
benefit for income taxes attributable to net loss consists of the following (amounts in thousands):

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Current

$
(5,469
)
$
(1,217
)
$
(585
)Deferred


(16,527
)

(288,655
)

(380,760
)Total income tax benefit

$
(21,996
)
$
(289,872
)
$
(381,345
)


136

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

21. Income Taxes (Continued)

The
income tax provision differs from that computed at the federal statutory corporate tax rate as follows:

Year Ended
December 31,
2010

Year Ended
December 31,
2009

Year Ended
December 31,
2008Federal statutory rate


35.0
%

35.0
%

35.0
%Change in valuation allowance


(21.3
)

(15.8
)

(0.9
)Goodwill impairment


(3.6
)

(3.0
)

(23.5
)Vesting of Class B and Class C Units


(0.8
)

(0.2
)

(0.2
)Restructuring costs


(5.3
)

(1.2
)

Other, net


(0.3
)

(0.1
)

Effective tax rate


3.7
%

14.7
%

10.4
%


We
recorded $0, $0, and $2.0 million as increases to contributed capital for certain tax benefits from employee share-based compensation for the years ended December 31,
2010, 2009, and 2008, respectively.

The
tax effects of significant temporary differences representing net deferred tax assets and liabilities are as follows (amounts in thousands):

December 31,2010

2009Deferred tax assets:Accrued vacation, bonuses and group insurance

$
7,429

$
5,656Preopening and other costs, net of amortization


9,756


7,417Accrued benefits


9,653


8,069Capital loss carryover


64,917


Net operating loss carryover


380,286


290,840Financing arrangements


38,688


102,054FICA credits


10,194


7,816Minimum tax credit carryover


20,850


26,087Other deferred tax assets


96,988


41,183Valuation allowance


(468,904
)

(343,714
)Total deferred tax assets


169,857


145,408Deferred tax liabilities:Prepaid expenses and other


(16,287
)

(16,805
)Temporary differences related to property and equipment


(184,247
)

(173,539
)Intangibles


(70,713
)

(74,044
)Other deferred tax liabilities


(1,046
)

Total deferred tax liabilities


(272,293
)

(264,388
)Net

$
(102,436
)
$
(118,980
)


At
December 31, 2010, the Company had an Alternative Minimum Tax ("AMT") credit carryover of approximately $20.9 million. AMT credits are available to be carried forward
indefinitely and may be

137

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

21. Income Taxes (Continued)

utilized
against regular U.S. corporate tax to the extent that they do not exceed computed AMT calculations. The Company expects to utilize all of its AMT credits.

At
December 31, 2010, the Company had a general business credit ("GBC") carryover for U.S. federal income tax purposes of approximately $10.2 million. The GBC carryover
will begin expiring in 2022. The accounting guidance for income taxes requires recognition of a future tax benefit to the extent that realization of such benefit is more likely than not. Otherwise a
valuation allowance is applied. Based on the future reversal of existing temporary differences, the Company believes it will be unable to utilize the GBC carryover on a more likely than not basis and
has recorded a full valuation allowance for this credit in the current year.

As
of December 31, 2010, the Company has a tax net operating loss carryover of approximately $1.11 billion that expires between 2027 and 2030. Management believes that the
realization of a portion of this deferred tax asset is more likely than not based on the future reversal of existing temporary differences. At December 31, 2010 and 2009 a valuation allowance
was established against the portion of net operating loss that is more likely than not unrealizable.

Station
or our subsidiaries file income tax returns for federal purposes only. We are no longer subject to U.S. federal tax examination for years before 2007 except for earlier years
that can be examined as a result of the net operating losses that were carried back.

As
of December 31, 2010 and 2009, unrecognized tax benefits of $3.5 million and $4.1 million, respectively, were recorded as reductions to the U.S. net operating
loss deferred tax asset. As of December 31, 2010 and 2009, unrecognized tax benefits of $5.3 million and $6.2 million, respectively, were recorded in other long term liabilities.
Included in the balance as of December 31, 2010 and 2009 are $4.1 million and $4.2 million, respectively, of uncertain tax benefits that would affect the effective income tax rate
if recognized.

We
recognize accrued interest and penalties related to our unrecognized tax benefits in income tax expense. Our liability for the payment of interest on our unrecognized tax benefits was
reduced to zero as of December 31, 2009 and 2010 because the net operating losses exceed taxable income including the unrecognized tax benefits. We do not anticipate any penalty assessments
associated with our liability for unrecognized tax benefits. In the next twelve months, the Company does not expect the liability for the unrecognized benefits to change significantly.

A
summary of the changes in the gross amount of unrecognized tax benefit is shown below (in millions):

December 31,2010

2009Balance at the beginning of the year

$
10.3

$
8.9Additions based on tax positions related to prior years


0.4


1.4Reductions based on tax positions related to prior years


(1.9
)

Statute expirations





Balance at the end of the year

$
8.8

$
10.3


138

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22. Legal Matters

Station and its subsidiaries are defendants in various lawsuits relating to routine matters incidental to their business. As with all litigation, no assurance can be provided as to the
outcome of the following matters and litigation inherently involves significant costs. Following is a summary of key litigation impacting Station.



On February 4, 2008, Josh Luckevich, Cathy Scott and Julie St. Cyr filed a purported class action complaint against the
Company and certain of its subsidiaries in the United States District Court for the District of Nevada, Case No. CV-00141 (the "Federal Court Action"). The plaintiffs are all former
employees of the Company or its subsidiaries. The complaint alleged that the Company and its subsidiaries (i) failed to pay its employees for all hours worked, (ii) failed to pay
overtime, (iii) failed to timely pay wages and (iv) unlawfully converted certain earned wages. The complaint in the Federal Court Action sought, among other relief, class certification
of the lawsuit, compensatory damages in excess of $5,000,000, punitive damages and an award of attorneys' fees and expenses to plaintiffs' counsel.

On
October 31, 2008, the Company filed a motion for judgment on the pleadings. During a hearing on that motion, the United States District Court questioned whether it had
jurisdiction to adjudicate the matter. After briefing regarding the jurisdiction question, on May 16, 2009, the United States District Court dismissed the Federal Court Action for lack of
jurisdiction and entered a judgment in the Company's favor. Subsequently, on July 21, 2009, the plaintiffs filed a purported class action complaint against the Company and certain of its
subsidiaries in the District Court of Clark County, Nevada, Case No. A-09-595614-C (the "State Court Action"). The complaint in the State Court Action
alleged substantially the same claims that were alleged in the complaint in the Federal Court Action.

On
August 19, 2009, the corporate defendants, other than the Company, filed an answer responding to the complaint. Subsequently, on August 27, 2009, the corporate
defendants, other than the Company, filed a motion to stay the State Court Action pending the resolution of the Company's chapter 11 case. That motion was granted on September 30, 2009.

On
or about April 30, 2010, the Company and the plaintiffs reached an agreement to settle all claims asserted or that could have been asserted in the State Court Action. Under the
terms of the settlement:



On
June 17, 2010, the State Court Action was removed to the Bankruptcy Court by agreement of the parties.

On
July 16, 2010, the Bankruptcy Court granted preliminary approval of the settlement, and directed the parties to provide notice to the current and former employees covered by
the State Court Action of

139

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22. Legal Matters (Continued)

their
right to object to the settlement and/or be excluded therefrom. No objections to the settlement were filed.

On
October 26, 2010, the Bankruptcy Court granted final approval of the settlement. The proceeds referenced in paragraph (b) above were distributed in full on
December 10, 2010.

The
expense related to this legal settlement was accrued during the year ended December 31, 2010 and the related liability is classified in liabilities subject to compromise in
the accompanying consolidated balance sheet.

Pursuant
to the Joint Plan of Reorganization, among other things, general unsecured creditors, including the employees referenced in paragraph (a) above, were to receive warrants
referred to in the Plan as the NPH Warrants. On December 13, 2010, the Company filed a motion with the Bankruptcy Court asking that the Plan be modified so that the Company would not need to
distribute an NPH Warrant worth approximately 13¢ to each of the employees referenced in paragraph (a) above (the "Plan Modification Motion"). On January 21, 2011, the
Bankruptcy Court entered an order granting the relief sought in the Plan Modification Motion.



On July 28, 2009, the Debtors filed voluntary petitions in the Bankruptcy Court under chapter 11 of the Bankruptcy 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 Resort Spa Casino ("Green Valley
Ranch"), filed a voluntary petition in the Bankruptcy Court under chapter 11 of title 11 of the United States Code. The Chapter 11 Case and the GV Ranch Station, Inc.
chapter 11 case are collectively referred to as the "Chapter 11 Cases."

On
July 28, 2010, the Debtors filed the Plan and 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 New Station, and the GVR Seller 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 the GVR Seller 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 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
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 and $45 million in secured loans 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 Joint Plan of Reorganization or the plan of reorganization for the Subsidiary
Chapter 11 Cases. The Joint Plan of Reorganization and the Disclosure Statement have been filed with the Bankruptcy Court and

140

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

22. Legal Matters (Continued)

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 Joint Plan of Reorganization and received its confirmation from the Bankruptcy Court on August 27, 2010. Although
the Joint Plan of Reorganization 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
Joint Plan of Reorganization 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.

See
"1. Summary of Significant Accounting Policies and Basis of PresentationChapter 11 Reorganization" and "Restructuring Transactions" for a
further discussion of the Chapter 11 Cases and the Restructuring Transactions.

23. Debtor Condensed Combined Financial Statements

As discussed in Note 1, on July 28, 2009, the Debtors filed voluntary petitions in the Bankruptcy Court under chapter 11 of the Bankruptcy Code, and 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 the Bankruptcy Code.

The
following condensed combined balance sheets as December 31, 2010 and December 31, 2009, condensed combined statements of operations for the year ended
December 31, 2010 and for the period July 28, 2009 through December 31, 2009, and condensed combined statements of cash flows for year ended December 31, 2010 and for the
period July 28, 2009 through December 31, 2009 present the post-petition financial condition, results of operations, and cash flows on a combined basis for Station
Casinos, Inc. and its wholly owned subsidiaries that are debtors in the Chapter 11 Cases. The debtor entities included in the following condensed combined financial statements are
Station Casinos, Inc., 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, Reno Land Holdings, LLC, and GV
Ranch Station, Inc.

141

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23. Debtor Condensed Combined Financial Statements (Continued)

STATION CASINOS, INC. AND CONSOLIDATED DEBTOR ENTITIES        (Debtor-In-Possession)        CONDENSED COMBINED BALANCE SHEETS        (amounts in thousands, except share data)

December 31,2010

2009ASSETSCurrent assets:Cash and cash equivalents

$
2,105

$
2,283Restricted cash


199,620


95,783Receivables, net


2,662


24,373Inventories


9


12Prepaid expenses and other current assets


10,969


5,567Total current assets


215,365


128,018Property and equipment, net


1,785,439


1,832,068Intangible assets, net


1,785


5,975Land held for development


24,192


24,192Investments in subsidiaries


2,451,828


2,923,274Other assets, net


30,120


69,137Total assets

$
4,508,729

$
4,982,664LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilities:Debtor-in-possession financing

$
500,533

$
193,151Accounts payable


540


544Due to affiliates, net


635


Accrued interest payable


542


3,818Accrued expenses and other current liabilities


18,807


22,856Total current liabilities


521,057


220,369Intercompany payables to non-debtors, net


672,030


934,789Investment in joint venture, deficit


38,257


Deferred income tax, net


108,552


123,828Other long-term liabilities, net


5,265


6,957Total liabilities not subject to compromise


1,345,161


1,285,943Liabilities subject to compromise


6,049,816


6,032,109Total liabilities


7,394,977


7,318,052Commitments and contingenciesStockholders' deficit:Common stock, par value $0.01; authorized 10,000 shares; 41.7 shares issued





Non-voting common stock, par value $0.01; authorized 100,000,000 shares; 41,674,838 shares issued


417


417Additional paid-in capital


2,964,648


2,951,031Accumulated other comprehensive income (loss)


43


(922
)Accumulated deficit


(5,849,683
)

(5,285,914
)Total Station Casinos, Inc. stockholders' deficit


(2,884,575
)

(2,335,388
)Noncontrolling interest


(1,673
)

Total stockholders' deficit


(2,886,248
)

(2,335,388
)Total liabilities and stockholders' deficit

$
4,508,729

$
4,982,664


142

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23. Debtor Condensed Combined Financial Statements (Continued)

STATION CASINOS, INC. AND CONSOLIDATED DEBTOR ENTITIES

(Debtor-In-Possession)

CONDENSED COMBINED STATEMENTS OF OPERATIONS

(amounts in thousands)

For the year
ended
December 31, 2010

For the period
from July 28, 2009
through
December 31, 2009Operating revenues:Other

$
249,938

$
107,344Management fees


22,869


10,537Total revenues


272,807


117,881Operating costs and expenses:Corporate, selling, general and administrative expenses


35,730


4,065Development


5,119


902Depreciation and amortization


49,545


17,972Preopening





92Impairment of intangibles and other assets


6,880


71,023Write-downs and other charges, net


16,589


3,128113,863


97,182Operating income


158,944


20,699Equity in pretax losses of non-debtor subsidiaries


(531,485
)

(1,427,156
)Earnings from joint ventures


2,618


Operating income, equity in pretax losses of non-debtor subsidiaries and earnings from joint ventures


(369,923
)

(1,406,457
)Other (expense) income:Interest expense, net


(89,649
)

(56,073
)Interest and other expenses from joint ventures


(45,076
)

Change in fair value of derivative instruments


(42
)

6,762(134,767
)

(49,311
)Loss before reorganization items and income taxes


(504,690
)

(1,455,768
)Reorganization items, net


(82,748
)

(381,620
)Loss before income taxes


(587,437
)

(1,837,388
)Income tax benefit


21,996


287,822Net loss


(565,442
)

(1,549,566
)Less: net loss applicable to noncontrolling interest


1,673


Net loss

$
(563,769
)
$
(1,549,566
)


143

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

23. Debtor Condensed Combined Financial Statements (Continued)

STATION CASINOS, INC. AND CONSOLIDATED DEBTOR ENTITIES

(Debtor-In-Possession)

CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(amounts in thousands)

For the year ended
December 31, 2010

For the period
from July 28, 2009
through
December 31, 2009Cash flows from operating activities:Net loss

$
(565,442
)
$
(1,549,566
)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization


49,545


17,972Change in fair value of derivative instruments


42


(6,762
)Share-based compensation


13,381


6,178Impairment of intangible and other assets


6,880


71,023Write-downs and other charges, net


16,589


3,128Equity in pretax losses of non-debtor subsidiaries


531,484


1,427,156Losses from joint ventures, net


42,458


Reorganization items


82,748


381,620Changes in assets and liabilities:Restricted cash


(103,837
)

(47,588
)Receivables, net


21,732


(11,804
)Intercompany payables, net


(303,612
)

Inventories, prepaid expenses and other assets


716


(2,328
)Deferred income taxes


(9,976
)

(296,432
)Accounts payable


(11
)

322Accrued interest


1,044


(3,094
)Accrued expenses and other current liabilities


(3,965
)

15,583Other, net


740


33,816Total adjustments


345,958


1,588,790Net cash provided by operating activities before reorganization items


(219,484
)

39,224Net cash used for reorganization items


(82,808
)

(25,449
)Net cash (used in) provided by operating activities


(302,292
)

13,775Cash flows from investing activities:Capital expenditures


(7,172
)

(3,698
)Proceeds from sale of land, property and equipment





615Investments in subsidiaries





(200,282
)Distributions from subsidiaries


3,157


Other, net


(1,613
)

(2,180
)Net cash used in investing activities


(5,628
)

(205,545
)Cash flows from financing activities:Borrowings under DIP Facility


86,609


124,651Borrowings under Unsecured Revolving Loan Promissory Note


220,773


68,500Borrowings under Term Loan with maturity dates less than three months, net


2,870


Payments under Term Loan with maturity dates less than three months


(2,500
)

Other, net


(10
)

(1,255
)Net cash provided by financing activities


307,742


191,896Cash and cash equivalents:(Decrease) increase in cash and cash equivalents


(178
)

126Balance, beginning of period


2,283


2,157Balance, end of period

$
2,105

$
2,283


144

---





STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

24. Subsequent Events

Subsequent to December 31, 2010, we did not make scheduled interest payments totaling $3.4 million on the Land Loan.

In
March 2011, we were notified by the lessor of the Wild Wild West property 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.

We
evaluated all activity of the Company and concluded that no other subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure
in the notes to the consolidated financial statements.

25. Quarterly Financial Information (Unaudited)

Year ended December 31, 2010(amounts in thousands)

First
Quarter (a)

Second
Quarter (b)

Third
Quarter (c)

Fourth
Quarter (d)Net revenues

$
249,371

$
233,575

$
227,048

$
234,961Operating income (loss)


23,492


15,483


(234,243
)

(13,787
)Loss before income taxes


(55,915
)

(57,401
)

(298,316
)

(175,806
)Net loss


(53,533
)

(69,615
)

(265,824
)

(176,470
)




Year ended December 31, 2009(amounts in thousands)

First
Quarter (e)

Second
Quarter (f)

Third
Quarter (g)

Fourth
Quarter (h)Net revenues

$
282,748

$
267,161

$
255,725

$
256,515Operating income (loss)


27,730


15,888


8,543


(1,264,700
)Loss before income taxes


(10,924
)

(75,491
)

(432,597
)

(1,450,374
)Net loss


(33,709
)

(65,331
)

(455,400
)

(1,125,074
)


---

145

---



STATION CASINOS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

25. Quarterly Financial Information (Unaudited) (Continued)

146

---





ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

As of the end of the period covered by this Annual Report on Form 10-K, an evaluation was carried out by the
Company's management, with the participation of its Chief Executive Officer and Chief Accounting Officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based upon this evaluation, the Chief Executive Officer and Chief Accounting Officer concluded that
the Company's disclosure controls and procedures are effective and designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms
and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Accounting Officer to allow timely decisions regarding required disclosure. No
changes were made to the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the last fiscal quarter
that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.



The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The
Company's internal control system was designed to provide reasonable assurance to the Company's management and board of directors regarding the preparation and fair presentation of published financial
statements.

All
internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention or overriding of controls.
Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further because of changes in conditions, the effectiveness of
internal controls may vary over time.

Management
assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2010. In making this assessment, it used the criteria set forth
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal ControlIntegrated Framework. Based on our
assessment we believe that, as of December 31, 2010, the Company's internal control over financial reporting is effective based on those criteria.

This
annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was
not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's
report in this annual report.

ITEM 9B.    OTHER INFORMATION

None

147

---





PART III

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

There is incorporated by reference the information appearing in an amendment to this Annual Report on Form 10-K to
be filed with the Commission not later than 120 days after the end of the fiscal year.

ITEM 11.    EXECUTIVE COMPENSATION

There is incorporated by reference the information appearing in an amendment to this Annual Report on Form 10-K to
be filed with the Commission not later than 120 days after the end of the fiscal year.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

There is incorporated by reference the information appearing in an amendment to this Annual Report on Form 10-K to
be filed with the Commission not later than 120 days after the end of the fiscal year.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

There is incorporated by reference the information appearing in an amendment to this Annual Report on Form 10-K to
be filed with the Commission not later than 120 days after the end of the fiscal year.

ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

There is incorporated by reference the information appearing in an amendment to this Annual Report on Form 10-K to
be filed with the Commission not later than 120 days after the end of the fiscal year.

CERTIFICATIONS

The Chief Executive Officer and the Chief Accounting Officer certifications required by Section 302 of the Sarbanes-Oxley Act of
2002 are filed as exhibits to this Annual Report on Form 10-K for the year ended December 31, 2010.

148

---





PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)    1.    Consolidated
Financial Statements (including related notes to Consolidated Financial Statements) filed in Part II of this report are listed below:



149

---







REPORT OF INDEPENDENT AUDITORS

To
the Member of Aliante Gaming, LLC:

We
have audited the accompanying balance sheets of Aliante Gaming, LLC, a Nevada limited liability company (the "Company"), as of December 31, 2010 and 2009, and the
related statements of operations, member's (deficit) capital, 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 auditing standards generally accepted in the 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 financial position of the Company at December 31, 2010 and 2009, and the
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, the Company has incurred
recurring operating losses and has a working capital deficiency. In addition, the Company has failed to remain in compliance with certain financial maintenance covenants set forth in its
$430 million Credit Facility and has failed to make scheduled principal or interest payments since April 2009. 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 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 30, 2011

150

---





ALIANTE GAMING, LLC        BALANCE SHEETS        (amounts in thousands)

December 31,2010

2009ASSETSCurrent assets:Cash and cash equivalents

$
9,919

$
7,171Restricted cash


509


485Receivables, net


1,099


1,121Inventories


648


586Prepaid expenses


2,633


2,808Debt issuance costs, net





5,947Total current assets


14,808


18,118Property and equipment, net


90,140


585,401Other assets, net


6,920


3,954Total assets

$
111,868

$
607,473LIABILITIES AND MEMBER'S (DEFICIT) CAPITALCurrent liabilities:Current portion of long-term debt

$
360,440

$
357,437Accounts payable


2,443


1,375Accrued payroll and related


1,307


1,081Accrued interest payable


48,929


20,279Accrued expenses and other current liabilities


2,367


1,881Interest rate swaps termination liability


15,665


15,665Due to affiliates, net


1,063


1,157Due to Station Casinos, Inc., net


2,946


2,763Total current liabilities


435,160


401,638Long-term debt, less current portion


4,453


5,089Total liabilities


439,613


406,727Commitments and contingencies (Note 10)Member's (deficit) capital:Aliante Holding, LLC


(327,745
)

200,746Total member's (deficit) capital


(327,745
)

200,746Total liabilities and member's (deficit) capital

$
111,868

$
607,473


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

151

---





ALIANTE GAMING, LLC        STATEMENTS OF OPERATIONS        (amounts in thousands)

For the year ended December 31,2010

2009

2008Operating revenues:Casino

$
49,378

$
52,709

$
11,237Food and beverage


12,609


13,388


2,752Room


5,575


5,597


650Other


3,241


3,684


886Gross revenues


70,803


75,378


15,525Promotional allowances


(5,517
)

(5,924
)

(1,075
)Net revenues


65,286


69,454


14,450Operating costs and expenses:Casino


23,669


26,992


4,829Food and beverage


8,850


8,018


1,815Room


1,944


2,140


379Other


560


760


442Selling, general and administrative


21,987


24,317


4,098Depreciation


27,873


27,608


2,422Management fees


1,853


1,893


451Preopening expenses


116


150


13,936Impairment loss


466,500





Lease termination


98


560


Loss on disposal


8


476


Restructuring and other charges


9,987





563,445


92,914


28,372Operating loss


(498,159
)

(23,460
)

(13,922
)Other expense:Interest expense, net


(30,332
)

(27,749
)

(3,098
)Change in fair value of interest rate swaps





(6,503
)

(9,163
)Net loss

$
(528,491
)
$
(57,712
)
$
(26,183
)


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

152

---





ALIANTE GAMING, LLC        STATEMENTS OF MEMBER'S (DEFICIT) CAPITAL        (amounts in thousands)

Member
contributions

Accumulated
deficit

Accumulated
other
comprehensive
loss

Total
member's
capital (deficit)Balances, December 31, 2007

$
209,000

$
(1,212
)
$
(503
)
$
207,285Interest rate swap fair value adjustment.








(462
)

(462
)Net loss





(26,183
)




(26,183
)Contributions from member


51,903








51,903Balances, December 31, 2008

$
260,903

$
(27,395
)
$
(965
)
$
232,543Interest rate swap fair value adjustment.








965


965Net loss





(57,712
)




(57,712
)Contributions from member


24,950








24,950Balances, December 31, 2009


285,853


(85,107
)




200,746Net loss





(528,491
)




(528,491
)Balances, December 31, 2010

$
285,853

$
(613,598
)
$


$
(327,745
)


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

153

---





ALIANTE GAMING, LLC        STATEMENTS OF CASH FLOWS        (amounts in thousands)

For the year ended December 31,2010

2009

2008Cash flows from operating activities:Net loss

$
(528,491
)
$
(57,712
)
$
(26,183
)Adjustments to reconcile net loss to net cash used in operating activities:Depreciation


27,873


27,608


2,422Change in fair value of interest rate swap





6,503


9,163Impairment loss


466,500





Amortization of debt issuance costs


1,288


1,686


1,525Loss on lease termination


98


560


Loss on disposal of equipment


8


476


Changes in assets and liabilities:Restricted cash


(24
)

(485
)

Receivables, net


22


(289
)

(832
)Inventories and prepaid expenses


113


(1,041
)

(2,353
)Accounts payable


970


(12,083
)

12,898Accrued payroll and other current liabilities


712


(2,168
)

4,996Accrued interest


28,650


19,223


12Due to affiliates, net


(94
)

(204
)

(631
)Due to Station Casinos, Inc., net


183


452


1,959Other, net


1,625


(355
)

(3,293
)Total adjustments


527,924


39,883


25,866Net cash used in operating activities


(567
)

(17,829
)

(317
)Cash flows from investing activities:Capital expenditures


(408
)

(2,679
)

(379,441
)Construction contracts payable





(16,097
)

(9,811
)Proceeds from disposals of fixed assets


4


619


Other, net


1,352





Net cash provided by (used in) investing activities


948


(18,157
)

(389,252
)Cash flows from financing activities:Borrowings under Credit Facility, net








356,628Borrowings under Letter of Credit


3,000





Contributions from member





24,950


51,903Debt issuance costs





(2,255
)

(129
)Debt payments


(633
)

(905
)

(63
)Net cash provided by financing activities


2,367


21,790


408,339Cash and cash equivalents:Change in cash and cash equivalents


2,748


(14,196
)

18,770Balance, beginning of year


7,171


21,367


2,597Balance, end of year

$
9,919

$
7,171

$
21,367Supplemental cash flow disclosures:Cash paid for interest, net of amounts capitalized

$
445

$
23,736

$
1,588Capital expenditures financed by debt

$


$
1,288

$
5,638


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

154

---





ALIANTE GAMING, LLC        NOTES TO FINANCIAL STATEMENTS        DECEMBER 31, 2010

1. Summary of Significant Accounting Policies



Aliante Gaming, LLC, a Nevada limited liability company, is a hotel/casino resort located in North Las Vegas, Nevada, doing
business as Aliante Station Casino and Hotel (the "Company") a wholly owned subsidiary of Aliante Holding, LLC (the "Parent"). The Company commenced operations on November 11, 2008,
prior to which it was a development stage enterprise. Aliante Station, LLC, a wholly owned subsidiary of Station Casinos, Inc. ("Station") jointly developed the project on 40 acres on
the northeast corner of Interstate 215 and Aliante Parkway in the Aliante master-planned community with G.C. Aliante, LLC, a wholly owned subsidiary of Greenspun Gaming, LLC which is
principally owned by members of the Greenspun family. Aliante Station, LLC and G.C. Aliante, LLC (collectively, the "Members") each hold a 50 percent ownership in the Parent.



As a result of recent macroeconomic conditions, including the ongoing economic downturn in the Las Vegas area and a continuation of low
consumer confidence levels, the Company has experienced lower than expected operating results. Consequently, the Company has failed to (i) remain in compliance with certain financial
maintenance covenants set forth in its $430.0 million credit facility (the "Facility") (which failure began in June, 2009 and has continued since such date) and (ii) make any scheduled
principal or interest payments under the Facility since April 2009. As a result of the foregoing and the occurrence of certain other events of default under the Facility, the Company is currently in
default under the Facility and, consequently, the Facility is accruing interest at
the default rate specified in the credit documentation governing it and the Company is not permitted to draw on the revolving line of credit under the Facility (the "Revolver").

Although
the lenders under the Facility have not agreed to waive the aforementioned events of default or forbear from exercising remedies with respect to the same, such lenders have, to
date, voluntarily abstained from taking any enforcement action under the credit documentation governing the Facility. However, there can be no assurance that the lenders under the Facility will
continue to forgo the exercise of remedies with respect to such events of default. Upon due notice to the Company under the terms of the credit documentation governing the Facility, the administrative
agent thereunder may, and upon instruction from lenders holding over 50% of the obligations under the Facility will, among other things (i) declare the unpaid principal amount of and accrued
interest on the loans and all other obligations under the Facility immediately due and payable and (ii) cause the collateral agent under the Facility to enforce any and all liens and security
interests created pursuant to the collateral documents entered into in connection with the Facility.

Certain
of the lenders under the Facility have organized into a steering committee (the "Steering Committee") and the Company has been in discussions with the Steering Committee and its
representatives concerning a restructuring of the Company's obligations under its Facility (a "Restructuring"). On March 22, 2011, the Company launched a solicitation of approvals by the
lenders under the Facility for a plan of reorganization (the "Plan of Reorganization") in which each of the lenders under the Facility will receive its pro rata share of 100% of the equity interests
in the reorganized Company and its pro rata share of a new $45 million senior secured credit facility to be entered into upon consummation of the Plan of Reorganization. If the Company obtains
the requisite approvals of its lenders pursuant to the solicitation of acceptances of the Plan of Reorganization, the Company will seek

155

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

1. Summary of Significant Accounting Policies (Continued)

confirmation
of the Plan of Reorganization under chapter 11 of title 11 of the United States Code (the "Chapter 11 Case") by the United States Bankruptcy Court for the District of Nevada
in Reno, Nevada (the "Bankruptcy Court"). In addition, in connection with the proposed Restructuring the Company and the Steering Committee are in discussions with third parties regarding a management
agreement relating to the operation of the Company during the pendency of the proposed Chapter 11 Case and following the consummation of the Plan of Reorganization.

There
can be no assurance that a sufficient percentage or number of lenders under the Facility will accept the Plan of Reorganization or that the Bankruptcy Court will confirm such plan.
In addition, if the Plan of Reorganization 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 Restructuring or plan of reorganization that is acceptable to the Company's creditors, equity holders and other parties in interest and to the Bankruptcy Court.

The
conditions and events described above raise substantial doubt about the Company's ability to continue as a going concern. The 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 classifications of liabilities that may result from the outcome of this
uncertainty. The accompanying financial statements have classified the outstanding indebtedness related to the Facility, as well as the termination settlement amount of the interest rate swaps entered
into to hedge the Facility interest rate, as current due to this uncertainty.

In
addition, on July 28, 2009, Station and certain of its subsidiaries filed voluntary petitions in the Bankruptcy Court under chapter 11 of title 11 of the United States
Code. The Bankruptcy Court entered an order confirming Station's Joint Plan of Reorganization on August 27, 2010.



The preparation of 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 fixed assets and
asset impairment 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.



Cash and cash equivalents includes cash on hand, as well as investments purchased with an original maturity of 90 days or less.
The Company maintains cash and cash equivalents at financial institutions that are insured by the Federal Deposit Insurance Corporation (the "FDIC") up to $250,000. At times the balances in the
accounts exceed the FDIC insured amount. The Company has not experienced any losses in such amounts and believes it is not exposed to any significant credit risk.



Restricted cash includes cash reserves required by regulation for race and sports book operations.

156

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

1. Summary of Significant Accounting Policies (Continued)



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, which consist primarily of food and beverage items, certain supplies and retail items, are stated at the lower of cost or
market, with cost being determined on a weighted-average basis.



The carrying value of the Company's cash and cash equivalents, receivables and accounts payable approximates fair value primarily
because of the short maturities of these instruments. Due to the balance under the Facility currently being in default, the Company believes it is impracticable to determine the fair value of its
debt.



Property and equipment are initially stated at cost. Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the assets or the terms of the capitalized lease, whichever is less, beginning the month after the respective assets are placed in service. Costs of major
improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred.

The
Company makes 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. The Company's depreciation expense is highly dependent on the assumptions made about its assets estimated useful lives. The Company determines the estimated useful lives based on experience
with similar assets, engineering studies and the Company's estimate of the usage of the asset. Whenever events or circumstances occur which change the estimated useful life of an asset, the Company
accounts for the change prospectively.

The
Company 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 Accounting Standards Codification ("ASC") Topic 360,Property, Plant and Equipment.For assets to be held
and used, the Company reviews fixed assets for impairment whenever indicators of impairment exist. If an indicator of impairment exists, the Company 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, then an impairment is measured based on the excess of carrying value over fair value. For property and equipment, fair value is generally based on discounted cash flow models, real
estate valuation techniques,

157

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

1. Summary of Significant Accounting Policies (Continued)

or
estimated prices for similar assets, all of which utilize Level 3 inputs under ASC Topic 820,Fair Value Measurements and Disclosures. For
assets to be disposed of, the Company recognizes the asset to be sold at the lower of carrying value or fair market value less costs of disposal. Fair market value for assets to be disposed of is
generally estimated based on comparable asset sales, solicited offers, or a discounted cash flow model utilizing Level 3 inputs under ASC Topic 820. During the year ended December 31,
2010, the Company determined that indicators of impairment existed as a result of its ongoing losses and the default on the credit facility. As a result, the Company performed an impairment review of
its long-lived assets and recorded asset impairment charges totaling $466.5 million related to its property and equipment. No impairment losses were recognized by the Company for
the year ended December 31, 2009.



The Company capitalizes 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, the Company capitalizes interest on amounts expended on the project at the Company's weighted-average cost of borrowed money. No interest was
capitalized during the years ended December 31, 2010 and 2009. Interest capitalized for the year ended December 31, 2008 was approximately $10.9 million.



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 on a straight-line basis, which approximates the effective-interest method. As a result of the current classification of the
associated debt, debt issuance costs are included in current assets on the Company's balance sheets as of December 31, 2009. Amortization of debt issuance costs was approximately
$1.3 million, $1.7 million and $1.5 million for the years ended December 31, 2010, 2009 and 2008, respectively. As a result of the Company's default on the Facility and
developments in restructuring negotiations with its lenders, the Company's remaining unamortized debt issuance costs totaling $2.5 million were written off at December 31, 2010.



The initial purchase of china, glassware, silverware, uniforms and certain other operating supplies is capitalized and recorded in base
stock and is included in other assets, net on the Company's balance sheets. With the exception of uniforms, which are amortized over a 36-month period, the purchase price of all other base
stock items remains in base stock until those items are replaced. Major replacement costs are capitalized and recorded in base stock and the initial purchase price is expensed.



Salaries and wages, advertising costs, promotional costs, supplies, utilities and similar expenses incurred during the construction
phase of new facilities are expensed as incurred. For major projects, the construction phase typically covers a period of 12 to 24 months, with the majority of preopening costs incurred in the
three months prior to opening. The Company incurred preopening expenses of

158

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

1. Summary of Significant Accounting Policies (Continued)

approximately
$0.1 million, $0.2 million and $13.9 million for the years ended December 31, 2010, 2009 and 2008, respectively.



The cost of advertising is expensed as incurred. For the years ended December 31, 2010 and 2009, these costs totaled
approximately $1.8 million and $2.4 million, respectively. For the year ended December 31, 2008, advertising costs totaled approximately $1.6 million of which approximately
$0.8 million is included in preopening expense on the Company's statements of operations.



From time to time the Company enters into derivative instruments, typically in the form of interest rate swaps, in order to manage
interest rate risk associated with its current and future borrowings. The Company accounts for its derivative instruments in accordance with ASC Topic 815,Derivatives and
Hedging, which requires the Company to recognize its interest rate swaps as either assets or liabilities in the balance sheets at fair value. The accounting for changes in the
fair value (i.e., gains or losses) of the derivative instrument agreements 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
a derivative instrument that is designated and qualifies as a cash flow hedge, 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, if any, is recorded in the statements of operations.

For
a derivative instrument that is designated as a fair value hedge and qualifies for the "shortcut" method, the accounting guidance allows for an assumption of no ineffectiveness. As
such, there is no impact on the statements of operations from the change in fair value of the hedging instrument. Instead, the fair value of the instrument is recorded as an asset or liability on the
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 statements of operations in the period of the
change (see Note 8).



The Company recognizes 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. The Company's Boarding Pass player rewards program (the "Program") allows customers to redeem points earned from their gaming activity at
the Company or any Station property for complimentary food, beverage, rooms, entertainment and merchandise. Upon redemption, the retail value of complimentaries under the Program 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
Program is recorded in casino costs and expenses. The estimated

159

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

1. Summary of Significant Accounting Policies (Continued)

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

For the year ended December 31,2010

2009

2008Food and beverage

$
5,053

$
5,472

$
1,001Room


342


172


19Other


830


140


11Total

$
5,478

$
5,784

$
1,031


The
Company also records a liability for the estimated cost of the outstanding points under the Program which the Company believes will ultimately be redeemed. At December 31,
2010 and 2009, $0.6 million and $0.3 million, respectively, was accrued for the cost of anticipated Program redemptions. The estimated cost of the outstanding points under the Program 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 the Company uses historical point redemption patterns to determine the redemption distribution between gaming, food, beverage, rooms, entertainment and merchandise as well as potential
breakage.



The accounting guidance for reporting comprehensive income (loss) requires companies to disclose other comprehensive income (loss) and
the components of such income (loss). Comprehensive loss is the total of net loss and all other nonmember changes in equity. During 2008, the Company recorded the effective portion of the changes in
fair value of its interest rate swaps as other comprehensive loss in member's capital on the Company's balance sheets. Comprehensive loss was computed as follows (amounts in thousands):

For the year ended December 31,2010

2009

2008Net loss

$
(528,491
)
$
(57,712
)
$
(26,183
)Changes in fair value of interest rate swap





965


(462
)Comprehensive loss

$
(528,491
)
$
(56,747
)
$
(26,645
)


The
deferred gains and losses on interest rate swaps included in accumulated other comprehensive loss at December 31, 2008 related to the Company's interest rate swap which had
been de-designated as a cash flow hedge for accounting purposes during the year ended December 31, 2008. The swaps were early terminated effective July 2, 2009, and as a
result, the unamortized deferred net loss related to the interest rate swaps was transferred to earnings during the year ended December 31, 2009.

160

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

1. Summary of Significant Accounting Policies (Continued)



On January 1, 2009, the Company adopted accounting standards related to accounting for uncertain income tax positions and did
not record any cumulative effect adjustment to retained earnings as a result of this adoption. Under the accounting standards, the Company may recognize the tax benefit from an uncertain tax position
only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the
financial statements from such a position should be measured based on the largest benefit that has a greater than 50.0% likelihood of being realized upon ultimate settlement. The accounting standards
also provide guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions.

The
Company is a limited liability company treated as a partnership for income tax purposes and as such, is a pass-through entity and is not liable for income tax in the
jurisdiction in which the Company operates. As a result, no provision for income taxes has been made in the accompanying financial statements. The Members include their respective share of the
Company's taxable income in their income tax returns. Due to its status as a pass-through entity, the Company recorded no liability associated with uncertain tax positions.



Restructuring and other charges includes various costs incurred in connection with a possible restructuring of the Company's
indebtedness, primarily legal, consulting and other professional services, and the charge to write off the Company's remaining unamortized debt issue costs.



In April 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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.

161

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

2. Receivables

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

December 31,2010

2009Casino

$
29

$
90Hotel


249


170Other


866


8991,144


1,159Allowance for doubtful accounts


(45
)

(38
)Receivables, net

$
1,099

$
1,121


3. Property and Equipment

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

December 31,Estimated Life
(years)2010

2009Land




$
8,296

$
51,233Buildings and improvements


2 - 45


93,822


456,131Furniture, fixtures and equipment


3 - 7


45,912


106,797Construction in progress








1,269148,030


615,430Accumulated depreciation and amortization





(57,890
)

(30,029
)Property and equipment, net




$
90,140

$
585,401


During
the year ended December 31, 2010, the Company determined that indicators of impairment existed as a result of its ongoing losses and the default on the Facility. The
Company therefore tested substantially all of its assets for impairment, by comparing the estimated future cash flows, on an undiscounted basis, to the carrying value of its assets. The undiscounted
cash flows did not exceed the carrying value, and impairment was measured based on the excess of the assets' carrying value over fair value. As a result, the Company's property and equipment was
written down by $466.5 million. Fair value was estimated based primarily on a discounted cash flow model utilizing Level 3 inputs under the fair value measurement hierarchy.

162

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

4. Other Assets, Net

Other assets, net consist of the following (amounts in thousands):

December 31,2010

2009Deposits

$
4,341

$
1,306Base stock


2,579


2,648Other assets, net

$
6,920

$
3,954


5. Due to Affiliate

Prior to obtaining financing related to the development of the project, the Parent paid various costs on behalf of the Company. Such costs included items such as legal fees and design
costs. At December 31, 2010 and 2009, amounts payable to Parent totaled approximately $1.1 million and $1.2 million, respectively.

6. Due to Station Casinos, Inc., net

Aliante Station, LLC, a wholly owned subsidiary of Station, is the managing member of the Company and is, subject to certain limitations set forth in the credit documentation
governing the Facility, generally entitled to receive a management fee for its services of 2% of the Company's gross revenues (as defined in the Aliante Gaming, LLC Amended and Restated
operating agreement) and approximately 5% of the earnings before interest, taxes, depreciation and amortization ("EBITDA"). Management fees incurred by the Company totaled approximately
$1.9 million, $1.9 million and $0.5 million for the years ended December 31, 2010, 2009 and 2008, respectively. As a result of the occurrence of certain events of default
under the Facility and certain other developments, the credit documentation governing the Facility does not currently permit the Company to pay any management fees to Aliante Station, LLC,
however the Company continues to accrue the management fee expense. In addition, Station provides various other shared services to the Company such as purchasing, human resources, advertising and
information technology and allocates the costs of the shared services to the Company. Expenses related to these shared services totaled approximately $3.7 million, $4.2 million and
$1.2 million for the years ended December 31, 2010, 2009 and 2008, respectively. The Company also occasionally buys and sells slot machines and other equipment at net book value from
Station. At December 31, 2010 and 2009, amounts payable to Station totaled approximately $2.9 million and $2.8 million, respectively.

163

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

7. Long-term Debt

Long-term debt consists of the following (amounts in thousands):

December 31,2010

2009Construction Loan, due October 5, 2012, interest at a margin above the Alternate Base Rate or LIBOR plus the interest rate margin (7.25% and 7.25% at
December 31, 2010 and 2009, respectively)(a)

$
359,628

$
356,628Equipment financing, payable in 72 monthly installments including interest at a fixed rate of 5.9%


4,248


4,824Special Improvement District assessment, payable in 32 semi-annual installments including interest at a fixed rate of 5.8%


1,017


1,074Total long-term debt


364,893


362,526Current portion of long-term debt


(360,440
)

(357,437
)Total long-term debt

$
4,453

$
5,089


(a)Percentage
includes a default rate of 200 basis points


In
October 2007, the Company completed a $430.0 million credit facility with a group of banks which is secured by substantially all of the assets of the Company, and which
provides for borrowings at a margin above the LIBOR rate of up to 325 basis points. The Facility is comprised of a $20.0 million revolving credit facility and a $410.0 million
construction loan facility (the "Construction Loan"). On July 25, 2008, a member of the bank group was closed by the Office of the Comptroller of the Currency and the FDIC was named receiver.
As a result, the available borrowings under the Revolver and Construction loan were reduced to $18.4 million and $391.1 million, respectively, which reflected the failed banks unfunded
portion. The Facility required initial equity contributions from each partner of $105.0 million prior to utilization of the Facility and equity contributions for a completion guaranty, if
necessary, for project costs that exceed $618.0 million exclusive of land acquisition costs and financing costs. The completion guaranty was a joint and several obligation of Station and G.C.
Investments, LLC, an affiliate of G.C. Aliante, LLC and was completed in June of 2009. Proceeds from the Construction Loan were used to finance the construction and development costs
associated with the development of the project. Borrowings under the Facility bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate (each as defined in the Facility), as
selected by the Company. The Facility contains certain financial and other covenants, including maintenance of certain Fixed Charge Ratios and Leverage Ratios, as defined in the credit agreement. The
construction loan was terminated during 2009, and the revolver was terminated in August 2010 as a result of the existence of several events of default, including but not limited to, noncompliance with
the covenants. In addition, the Company has not made any interest payments due on the Facility since April 14, 2009 and continues to accrue the unpaid interest including the default rate. In
addition, in accordance with the terms of the Facility, the Company accrues interest on the unpaid interest at the default rate. As of December 31, 2010, the Company has failed to make interest
payments on the Facility totaling $45.3 million.

164

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

7. Long-term Debt (Continued)

In
February 2010, in anticipation of the expiration of a $3.0 million letter of credit the Company had in place to secure claims related to the construction of the property, the
carrier of the Company's insurance program drew the full amount of the letter of credit to hold as collateral. The letter of credit was issued under the Facility. This drawdown increased the principal
balance outstanding under the Facility and the Company recorded an equal increase in noncurrent assets representing the collateral held by the insurance carrier.

In
addition to the initial equity contributions and the Facility, the Company entered into an equipment financing arrangement in the fourth quarter of 2008 in the amount of
$5.6 million at an interest rate of 5.9%, terminating in November 2014. The agreement calls for monthly payments beginning December 1, 2008, of approximately $80,000 with a residual
payment of $1.1 million to be paid in the final month.

Scheduled
maturities of long-term debt are as follows (amounts in thousands):

Years ending December 31,2011

$
360,4402012


8382013


8892014


1,9742015


76Thereafter


676Total

$
364,893


As
a result of the Company's defaults on its Facility and interest rate swaps, and in connection with the Company's ability to continue as a going concern as discussed in Note 1,
the outstanding indebtedness related to the Facility and the termination settlement liability related to the interest rate swaps entered into to hedge the Facility have been classified as current in
the Company's balance sheets at December 31, 2010 and 2009, respectively.

8. Derivative Instruments

The Company's objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this
objective, the Company primarily uses interest rate swaps as part of its cash flow hedging strategy. Interest rate swaps utilized as cash flow hedges involve the receipt of variable-rate
payments in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. The Company does not use derivative financial instruments
for trading or speculative purposes.

As
of December 31, 2008, the Company had two floating-to-fixed interest rate swaps with a notional amount of $274.0 million. These interest rate
swaps were previously designated as hedging instruments, and were de-designated during the year ended December 31, 2008. Effective July 2, 2009, these swaps were terminated
early and a $15.7 million liability was recorded representing the termination settlement amount. As a result of the termination, the remaining balance of deferred losses totaling
$0.8 million was transferred from accumulated other comprehensive loss into earnings during 2009. The termination

165

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

8. Derivative Instruments (Continued)

settlement
amount of the swaps is classified as a current liability in the accompanying balance sheets as of December 31, 2010 and 2009. In accordance with the terms of the arrangement, the
Company accrues interest on the unpaid termination settlement amount and the accrued unpaid interest as of the termination date at the rate of 1-month LIBOR plus 1%.

Accumulated
other comprehensive loss on the Company's balance sheets includes deferred gains and losses related to its interest rate swaps that were previously designated as hedging
instruments. At December 31, 2010 and 2009, there is no deferred loss on derivative instruments remaining in accumulated other comprehensive loss.

The
activity in deferred losses on derivatives included in accumulated other comprehensive loss is as follows (amounts in thousands):

For the year ended December 31,2010

2009

2008Deferred losses on derivatives included in accumulated other comprehensive loss, beginning balance

$


$
(965
)
$
(503
)Losses reclassified from other comprehensive loss into operations (effective portion) in change of fair value of derivative instruments








(608
)Losses reclassified from other comprehensive loss into operations (effective portion) in change of fair value of derivative instruments





176


146Losses reclassified from other comprehensive loss into operations as a result of the discontinuance of cash flow hedges because it became probable that
the original forecasted transactions would not occur





789


Deferred losses on derivatives included in accumulated other comprehensive loss, ending balance

$


$


$
(965
)


166

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

8. Derivative Instruments (Continued)

Presented
below are the effects of derivative instruments on the Company's statement of operations (amounts in thousands):

For the year ended December 31,2010

2009

2008Amounts included in change in fair value of derivative instruments:Net losses for derivatives not designated as hedging instruments

$


$
(5,538
)
$
(9,017
)Losses reclassified from other comprehensive loss into operations (effective portion) in change in fair value of derivative instruments





(176
)

(146
)Losses reclassified from other comprehensive loss into operations as a result of the discontinuance of cash flow hedges because it became probable that
the original forecasted transactions would not occur





(789
)

Total derivative (losses) gains included in statements of operations

$


$
(6,503
)
$
(9,163
)


The
difference between amounts received and paid under the Company's interest rate swap 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 interest rate swaps. The net effect of the interest rate swaps resulted in an increase in interest expense of approximately $0.3 million,
$4.9 million and $1.0 million for the years ended December 31, 2010, 2009 and 2008, respectively.

9. 401(k) Plan

All employees of the Company who meet certain age and length of service requirements are eligible to participate in Station's defined contribution 401(k) plan (the "Plan"). Plan
participants can elect to defer before tax compensation through payroll deductions. These deferrals are regulated under Section 401(k) of the Internal Revenue Code. During 2010 and 2009, the
Plan allowed employer contributions of up to 50% of the first 4% of each participating employee's compensation, however the Company suspended employer contributions effective January 1, 2009
and therefore made no employer contributions during 2010 and 2009. The Company's matching contribution was approximately $55,000 for the year ended December 31, 2008.

10. Commitments and Contingencies



The Company is a litigant in legal matters arising in the normal course of business. In the opinion of management, all pending legal
matters are either adequately covered by insurance or, if not insured, will not have a material adverse effect on the financial position or the results of operations of the Company.

167

---



ALIANTE GAMING, LLC

NOTES TO FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010

11. Leases

The Company, as lessor, leases the majority of its restaurants and some of its entertainment outlets under leases with terms ranging from 5 to 10 years. The leases provide for
annual guaranteed minimum rent and/or percentage rent that ranges from 0% to 12% of gross revenues. The majority of Company's leases provide only for percentage rent and as a result, future minimum
lease payments are insignificant. Revenue generated from these leases totaled approximately $1.6 million, $1.7 million and $0.4 million for the years ended December 31,
2010, 2009 and 2008, respectively, which is reflected in other revenues on the Company's statements of operations. The Company recognizes percentage rent when earned. During the years ended
December 31, 2010 and 2009, the Company terminated certain leases and as a result, incurred lease termination expense of $0.1 million and $0.6 million, respectively, for those
years.

12. Subsequent Events

Subsequent to December 31, 2010, the Company elected not to make an additional $7.3 million of interest payments on its Facility.

Management
has evaluated all activity of the Company through March 30, 2011, the date the financial statements were available to be issued, and concluded that no other subsequent
events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

168

---







Exhibit Number

Description2.1

First Amended Joint Chapter 11 Plan of Reorganization for the Company and its Affiliated Debtors dated July 28, 2010. (Incorporated herein by reference to the Company's Form 8-K dated August 27,
2010)3.1

Second Amended and Restated Articles of Incorporation of the Company. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)3.2

Amended and Restated Bylaws of the Company. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)4.1

Form of 6% Senior Notes of the Company (March 2004 Issue). (Included in Exhibit 4.2 which is incorporated herein by reference to Registration Statement No. 333-113986)4.2

Indenture dated as of March 17, 2004 between the Company and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to Registration Statement No. 333-113986)4.3

Form of 61/2% Subordinated Notes of the Company (January 2004 Issue). (Included in Exhibit 4.4 which is incorporated herein by reference to the Company's Annual Report on Form 10-K
for the period ended December 31, 2003)4.4

Indenture dated as of January 29, 2004 between the Company and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to the Company's Annual Report on Form 10-K for the period
ended December 31, 2003)4.5

Form of 67/8% Subordinated Notes of the Company (February 2004 Issue). (Included in Exhibit 4.6 which is incorporated herein by reference to the Company's Annual Report on Form 10-K
for the period ended December 31, 2003)4.6

Indenture dated as of February 27, 2004 between the Company and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to the Company's Annual Report on Form 10-K for the
period ended December 31, 2003)4.7

Form of 65/8% Subordinated Notes of the Company (March 2006 Issue). (Included in Exhibit 4.8 which is incorporated herein by reference to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 2006)4.8

Indenture dated as of March 13, 2006 between the Company and Law Debenture Trust Company of New York as Trustee. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 2006)4.9

Form of 73/4% Senior Notes of the Company (August 2006 Issue). (Included in Exhibit 4.10 which is incorporated herein by reference to the Company's Form 8-K dated August 2,
2006)4.10

Indenture dated as of August 1, 2006 between the Company and Law Debenture Trust Company of New York as Trustee. (Included in Exhibit 4.10 which is incorporated herein by reference to the Company's
Form 8-K dated August 2, 2006)10.2

Credit Agreement dated as of November 7, 2007 among the Company, Deutsche Bank Trust Company Americas, the lenders party thereto, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and JPMorgan
Chase Bank, N.A. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)


169

---



Exhibit Number

Description10.3

Forbearance Agreement; Waiver and First Amendment to the Credit Agreement, dated as of March 2, 2009 by and among the Company, certain subsidiaries of the Company, FCP Holdings, Inc., Fertitta Partners LLC,
FCP Voteco, LLC, Deutsche Bank Trust Company Americas, as administrative agent and the lenders party thereto. (Incorporated herein by reference to the Company's Form 8-K dated March 2, 2009)10.4

Amended and Restated Loan and Security Agreement dated as of March 19, 2008 by and among German American Capital Corporation and JPMorgan Chase Bank, N.A. and FCP PropCo, LLC. (Incorporated herein by
reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.5

Amended and Restated Note A-1 dated as of March 19, 2008 by FCP PropCo, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 2008)10.6

Amended and Restated Note A-2 dated as of March 19, 2008 by FCP PropCo, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 2008)10.7

Note B-1 dated as of March 19, 2008 by FCP PropCo, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the
period ended June 30, 2008)10.8

Note B-2 dated as of March 19, 2008 by FCP PropCo, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 2008)10.9

Amended and Restated Mezzanine Loan and Security Agreement (First Mezzanine), dated as of March 19, 2008 by and among FCP Mezzco Borrower I, LLC, German American Capital Corporation and JPMorgan Chase Bank,
N.A. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.10

Amended and Restated First Mezzanine Note A-1 dated as of March 19, 2008 by FCP Mezzco Borrower I, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2008)10.11

Amended and Restated First Mezzanine Note A-2 dated as of March 19, 2008 by FCP Mezzco Borrower I, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the period ended June 30, 2008)10.12

Amended and Restated Mezzanine Loan and Security Agreement (Second Mezzanine), dated as of March 19, 2008, by and among FCP Mezzco Borrower II, LLC, German American Capital Corporation and JPMorgan Chase
Bank, N.A. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.13

Amended and Restated Second Mezzanine Note A-1 dated as of March 19, 2008 by FCP Mezzco Borrower II, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30, 2008)10.14

Amended and Restated Second Mezzanine Note A-2 dated as of March 19, 2008 by FCP Mezzco Borrower II, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2008)


170

---



Exhibit Number

Description10.15

Amended and Restated Mezzanine Loan and Security Agreement (Third Mezzanine), dated as of March 19, 2008, by and among FCP Mezzco Borrower III, LLC, German American Capital Corporation and JPMorgan Chase Bank,
N.A. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.16

Amended and Restated Third Mezzanine Note A-1-a dated as of March 19, 2008 by FCP Mezzco Borrower III, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30, 2008)10.17

Amended and Restated Third Mezzanine Note A-1-b dated as of March 19, 2008 by FCP Mezzco Borrower III, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q for the period ended June 30, 2008)10.18

Amended and Restated Third Mezzanine Note A-2-a dated as of March 19, 2008 by FCP Mezzco Borrower III, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2008)10.19

Amended and Restated Third Mezzanine Note A-2-b dated as of March 19, 2008 by FCP Mezzco Borrower III, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2008)10.20

Mezzanine Loan and Security Agreement (Fourth Mezzanine), dated as of March 19, 2008, by and among FCP Mezzco Borrower IV, LLC, German American Capital Corporation and JPMorgan Chase Bank, N.A. (Incorporated
herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.21

Fourth Mezzanine Note A-1-a dated as of March 19, 2008 by FCP Mezzco Borrower IV, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 2008)10.22

Fourth Mezzanine Note A-1-b dated as of March 19, 2008 by FCP Mezzco Borrower IV, LLC in favor of German American Capital Corporation. (Incorporated herein by reference to the Company's Quarterly Report
on Form 10-Q for the period ended June 30, 2008)10.23

Fourth Mezzanine Note A-2-a dated as of March 19, 2008 by FCP Mezzco Borrower IV, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 2008)10.24

Fourth Mezzanine Note A-2-b dated as of March 19, 2008 by FCP Mezzco Borrower IV, LLC in favor of JPMorgan Chase Bank, N.A. (Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 2008)10.25

Credit Agreement dated as of October 5, 2007 among Aliante Gaming, LLC, the lenders party thereto, Wachovia Bank, National Association, Bank of Scotland PLC, Wells Fargo Bank, National Association and
Bank of America, N.A. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2007)10.26

Credit Agreement dated as of February 7, 2008 among CV PropCo, LLC, the lenders party thereto, Deutsche Bank Trust Company Americas, JPMorgan Chase Bank, N.A., Deutsche Bank Securities Inc. and J.P.
Morgan Securities Inc. (Incorporated herein by reference to the Company's Form 8-K dated February 7, 2008)


171

---



Exhibit Number

Description10.27

Amended and Restated Purchase and Sale Agreement dated as of October 31, 2007 among FCP NewCo, LLC, Boulder Station, Inc., Charleston Station, LLC, Palace Station Hotel & Casino, Inc.,
Sunset Station, Inc. and the other parties thereto. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.28

Master Lease Agreement dated as of November 7, 2007 between FCP PropCo, LLC and the Company. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.29

First Amendment to Master Lease Agreement dated as of March 19, 2008, by and between FCP PropCo, LLC and the Company amending the Master Lease Agreement dated as of November 7, 2007 by and between FCP
PropCo, LLC and the Company. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.30

Sublease (Boulder Station) dated as of November 7, 2007, by and between the Company and Boulder Station, Inc. (Incorporated herein by reference to the Company's Form 8-K dated November 7,
2007)10.31

First Amendment to Sublease Agreement (Boulder Station) dated as of March 19, 2008, by and between the Company and Boulder Station, Inc. amending the Sublease (Boulder Station) dated as of November 7,
2007 by and between the Company and Boulder Station, Inc. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.32

Sublease (Red Rock) dated as of March 19, 2008, by and between the Company and Charleston Station, Inc. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.33

First Amendment to Sublease Agreement (Red Rock) dated as March 19, 2008, by and between the Company and Charleston Station, Inc. amending the Sublease (Red Rock) dated as of November 7, 2007, by and
between the Company and Charleston Station, Inc. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.34

Sublease (Sunset Station) dated as of November 7, 2007 between the Company and Sunset Station, Inc. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.35

First Amendment to Sublease Agreement (Sunset Station) dated as of March 19, 2008, by and between the Company and Sunset Station, Inc. amending the Sublease (Sunset Station) dated as of November 7, 2007
between the Company and Sunset Station, Inc. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)10.36

Sublease (Palace Station) dated as of November 7, 2007 between the Company and Palace Station Hotel & Casino, Inc. (Incorporated herein by reference to the Company's Form 8-K dated
November 7, 2007)10.37

First Amendment to Sublease Agreement (Palace Station) dated as of March 19, 2008, by and between the Company and Palace Station Hotel & Casino, Inc. amending the Sublease (Palace Station) dated as
of November 7, 2007 between the Company and Palace Station Hotel & Casino, Inc. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2008)


172

---



Exhibit Number

Description10.38

Ground Lease dated as of June 1, 1993 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30,
1993)10.39

Option to Lease or Purchase dated as of June 1, 1993 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1993)10.40

Option to Acquire Interest Under Purchase Contract dated as of June 1, 1993 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1993)10.41

First Amendment to Ground Lease and Sublease dated as of June 30, 1995 between KB Enterprises and Boulder Station, Inc. (Incorporated herein by reference to the Company's Form 8-K dated July 5,
1995)10.42

Lease Amendment No. 1, dated December 23, 1996 between Boulder Station, Inc. and KB Enterprises. (Incorporated herein by reference to the Company's Annual Report on Form 10-K for the period ended
December 31, 2005)10.43

Second Amendment to Ground Lease and Sublease dated as of January 7, 1997 between KB Enterprises and Boulder Station, Inc. (Incorporated herein by reference to the Company's Annual Report on Form 10-K
for the period ended December 31, 2005)10.44

Rent Agreement to the First Amendment to Ground Lease and Sublease dated as of March 30, 2003 between KB Enterprises and Boulder Station, Inc. (Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q dated March 31, 2003)10.45

Ground Lease dated as of June 1, 1995 between Registrant and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company's Form 8-K dated July 5, 1995)10.46

First Amendment to Ground Lease dated as of June 30, 1995 between the Company and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company's Form 8-K dated July 5,
 1995)10.47

Lease Amendment No. 1 dated as of December 23, 1996 between the Company and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company's Annual Report on Form 10-K
for the period ended December 31, 2005)10.48

Second Amendment to Ground Lease dated as of January 7, 1997 between Texas Gambling Hall & Hotel, Inc. and the Company. (Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the period ended December 31, 2005)10.49

Rent Agreement to the First Amendment to Ground Lease dated as of May 12, 2000 between the Company and Texas Gambling Hall & Hotel, Inc. (Incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 2003)10.50

Assignment, Assumption and Consent Agreement (Ground Lease) dated as of July 6, 1995 between the Company and Texas Station, Inc. (Incorporated herein by reference to the Company's Form 8-K dated
July 5, 1995)10.51

Executive Employment Agreement between Frank J. Fertitta III and the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)


173

---



Exhibit Number

Description10.52

Executive Employment Agreement between Thomas M. Friel and the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.53

Executive Employment Agreement between Scott M Nielson and the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.54

Executive Employment Agreement between Richard J. Haskins and the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.55

Executive Employment Agreement between Kevin L. Kelley and the Company dated as of December 14, 2007. (Incorporated herein by reference to the Company's Form 8-K dated December 13, 2007)10.56

Equityholders Agreement of the Company, Fertitta Colony Partners LLC and Fertitta Partners LLC dated as of November 7, 2007 (Incorporated herein by reference to the Company's Form 8-K dated
November 7, 2007)10.57

Amendment to Equityholders Agreement of the Company, Fertitta Colony Partners LLC and Fertitta Partners LLC dated as of February 27, 2008. (Incorporated herein by reference to the Company's Annual
Report on Form 10-K for the period ended December 31, 2007)10.58

Transfer Restriction Agreement dated as of November 7, 2007 among Frank J. Fertitta, III, Lorenzo J. Fertitta, Thomas J. Barrack, Jr., FCP Holding, Inc. and Fertitta Partners LLC. (Incorporated herein
by reference to Exhibit 7.29 of Amendment No. 34 and 35 to Schedule 13D filed by Frank J. Fertitta III, Lorenzo J. Fertitta, Thomas J. Barrack, Jr. and FCP VoteCo, LLC with respect to the Company with the SEC on November 13,
2007)10.59

Supplemental Executive Retirement Plan of the Company dated as of November 30, 1994. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended December 31,
1994)10.60

First Amendment to the Supplemental Executive Retirement Plan of the Company dated as of February 4, 2005. (Incorporated herein by reference to the Company's Form 8-K dated February 7, 2005)10.61

Second Amendment to Supplemental Executive Retirement Program of the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.62

Supplemental Management Retirement Plan of the Company dated as of November 30, 1994. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended December 31,
1994)10.63

First Amendment to Supplemental Management Retirement Program of the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.64

Long-Term Stay-On Performance Incentive Payment Agreement between the Company and Thomas M. Friel dated June 1, 2004. (Incorporated herein by reference to the Company's Form 8-K dated March 30,
2007)10.65

Long-Term Stay-On Performance Incentive Payment Agreement between the Company and Richard J. Haskins dated as of April 1, 2002. (Incorporated herein by reference to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 2004)


174

---



Exhibit Number

Description10.66

Amended and Restated Deferred Compensation Plan for Executives of the Company dated as of September 12, 2001. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 2001)10.67

First Amendment to the Amended and Restated Deferred Compensation Plan for Executives of the Company dated as of December 4, 2002. (Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the period ended December 31, 2002)10.68

Second Amendment to Deferred Compensation Plan for Executives of the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7, 2007)10.69

Amended and Restated Deferred Compensation Plan of the Company dated as of January 1, 2001. (Incorporated herein by reference to the Company's Annual Report on Form 10-K for the period ended December 31,
 2007)10.70

First Amendment to Amended and Restated Deferred Compensation Plan of the Company dated as of August 13, 2007. (Incorporated herein by reference to the Company's Annual Report on Form 10-K for the period
ended December 31, 2007)10.71

Second Amendment to Amended and Restated Deferred Compensation Plan of the Company dated as of November 7, 2007. (Incorporated herein by reference to the Company's Form 8-K dated November 7,
2007)10.72

Special Long-Term Disability Plan of the Company dated as of November 30, 1994. (Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended December 31,
1994)10.73

Form of Indemnification Agreement for Directors and Executive Officers. (Incorporated herein by reference to the Company's Registration Statement No. 33-59302)10.74

Form of Indemnification Agreement between the Company and Frank Fertitta, Jr. (Incorporated herein by reference to the Company's Registration Statement No. 33-59302)10.75

Operating Agreement dated as of March 10, 2000 among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Company. (Incorporated herein by
reference to the Company's Annual Report on Form 10-K for the period ended December 31, 1999)10.76

First Amendment to Operating Agreement dated as of September 17, 2001 among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Company.
(Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2001)10.77

Second Amendment to Operating Agreement dated as of December 19, 2003 among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Company.
(Incorporated herein by reference to the Company's Annual Report on Form 10-K for the period ended December 31, 2003)10.78

Third Amendment to Operating Agreement dated as of December 17, 2004 among Green Valley Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch Station, Inc., a wholly owned subsidiary of the Company.
(Incorporated herein by reference to the Company's Annual Report on Form 10-K for the period ended December 31, 2004)


175

---



Exhibit Number

Description10.79

Second Amended and Restated Management Agreement dated as of November 1, 2002 between the Company and the United Auburn Indian Community. (Incorporated herein by reference to the Company's Annual Report on
Form 10-K for the period ended December 31, 2002)10.80

Operating Agreement of Aliante Holding, LLC dated as of December 16, 2005 among Aliante Holding, LLC, G.C. Aliante, LLC and Aliante Station, LLC, a wholly-owned subsidiary of the Company.
(Incorporated herein by reference to the Company's Annual Report on Form 10-K, as amended, for the period ended December 31, 2006)10.81

Amended and Restated Operating Agreement of Aliante Gaming, LLC dated as of January 6, 2006 among Aliante Gaming, LLC, a wholly-owned subsidiary of the Company, Aliante Holding, LLC and Aliante
Station, LLC. (Incorporated herein by reference to the Company's Annual Report on Form 10-K, as amended, for the period ended December 31, 2006)10.82

Asset Purchase Agreement dated as of June 7, 2010 among the Company, the subsidiaries of the Company listed therein and FG Opco Acquisitions, LLC. (Incorporated herein by reference to the Company's
Form 8-K dated August 6, 2010)10.83

Stipulation and Order dated as of July 28, 2010 by and between the Company and the Official Committee of Unsecured Creditors of the Company. (Incorporated herein by reference to the Company's Form 8-K dated
July 28, 2010)10.84

First Amendment to Asset Purchase Agreement dated as of August 26, 2010 among the Company, the subsidiaries of the Company listed therein and FG Opco Acquisitions, LLC. (Incorporated herein by reference to
the Company's Form 8-K dated August 6, 2010)10.85

Second Amendment to Asset Purchase Agreement dated as of March 29, 2011 among the Company, the subsidiaries of the Company listed therein and FG Opco Acquisitions, LLC.21.1

Subsidiaries of the Registrant23.1

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm23.2

Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm31.1

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


(b)    None

(c)    None

176

---





SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

STATION CASINOS, INC.Dated: March 31, 2011

By:

/s/ FRANK J. FERTITTA III Frank J. Fertitta III Chairman of the Board, Chief Executive
Officer and President (Principal Executive Officer)


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

Signature

Title

Date/s/ FRANK J. FERTITTA III Frank J. Fertitta III

Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)

March 31, 2011/s/ LORENZO J. FERTITTA Lorenzo J. Fertitta

Vice Chairman and Director

March 31, 2011/s/ THOMAS M. FRIEL Thomas M. Friel

Executive Vice President, Chief Accounting Officer and Treasurer (Principal Financial and Accounting Officer)

March 31, 2011/s/ THOMAS J. BARRACK, JR. Thomas J. Barrack, Jr.

Director

March 31, 2011/s/ JAMES E. NAVE James E. Nave

Director

March 31, 2011/s/ JONATHAN H. GRUNZWEIG Jonathan H. Grunzweig

Director

March 31, 2011


177

---