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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER 000-21640
                            ------------------------

                             STATION CASINOS, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                    <C>
            NEVADA                                88-0136443
  (State of incorporation of           (IRS Employer Identification No.)
incorporation or organization)

 2411 WEST SAHARA AVENUE, LAS                        89102
         VEGAS, NEVADA                            (Zip Code)
(Address of principal executive
           offices)
</TABLE>

(Registrant's telephone number, including area code): (702) 367-2411

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 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 /X/  No / /

    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. / /

    The aggregate market value of the voting stock held by non-affiliates (all
persons other than executive officers or directors) of the registrant as of
March 15, 2001, based on the closing price per share as reported on the New York
Stock Exchange was $439,045,476.

    As of March 15, 2001, the registrant has 57,144,121 shares of common stock
outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Proxy Statement for the Registrant's 2000 Annual Meeting of
Stockholders to be held May 22, 2001 (which has not been made publicly available
as of the date of this filing) are incorporated by reference into Part III.

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                                     PART I

ITEM 1. BUSINESS

FORWARD-LOOKING STATEMENTS

    When used in this report and elsewhere by management from time to time, the
words "believes," "anticipates," and "expects" and similar expressions are
intended to identify forward-looking statements with respect to the financial
condition, results of operations and the business of Station Casinos, Inc. (the
"Company") and its subsidiaries including the expansion, development and
acquisition projects, legal proceedings and employee matters of the Company and
its subsidiaries. Certain important factors, including but not limited to,
financial market risks, could cause the Company's actual results to differ
materially from those expressed in the Company's forward-looking statements.
Further information on potential factors which could affect the financial
condition, results of operations and business of the Company and its
subsidiaries including, without limitation, 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 the filings of the Company 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. The Company
undertakes no obligation to publicly release any revisions to such
forward-looking statements to reflect events or circumstances after the date
hereof.

GENERAL

    Station Casinos, Inc. is a gaming company that owns and operates seven
distinctly themed hotel/ casino properties and two smaller casino properties
throughout the Las Vegas metropolitan area. The Company also owns and provides
slot route management services in southern Nevada. Management's growth strategy
includes the master-planned expansion of the Company's existing gaming
facilities in Nevada, as well as the evaluation and pursuit of additional
acquisition or development opportunities in Nevada and other gaming markets.

    The Company owns and operates Palace Station Hotel & Casino ("Palace
Station"), Boulder Station Hotel & Casino ("Boulder Station"), Texas Station
Gambling Hall & Hotel ("Texas Station"), Sunset Station Hotel & Casino ("Sunset
Station"), Santa Fe Station Hotel & Casino ("Santa Fe Station"), Fiesta Casino
Hotel ("Fiesta"), The Reserve Hotel & Casino ("The Reserve") and Tropicana
Station, Inc., the operator of Wild Wild West Gambling Hall & Hotel ("Wild Wild
West"). The Company also owns a 50% interest in Town Center Amusements, Inc.
d.b.a. Barley's Casino & Brewing Company ("Barley's"). Palace Station is
situated on approximately 39 acres on Sahara Avenue adjacent to Interstate 15,
and is near major attractions on the Las Vegas Strip and downtown Las Vegas.
Boulder Station is situated on approximately 46 acres along Boulder Highway,
immediately adjacent to Interstate 515, and is located on the opposite side of
Las Vegas from Palace Station. Texas Station is located on approximately 47
acres at the corner of Lake Mead Boulevard and Rancho Road in North Las Vegas.
Sunset Station is located on approximately 105 acres on Sunset Road immediately
adjacent to Interstate 515 and features a Spanish/Mediterranean-themed
hotel/casino. Santa Fe Station is situated on approximately 38 acres at the
intersection of Interstate 95 and Rancho Road, approximately five miles
northwest of Texas Station. Fiesta is situated on approximately 25 acres at the
intersection of Lake Mead Boulevard and Rancho Road in North Las Vegas, across
from Texas Station. The Reserve is situated on approximately 46 acres at the
intersection of Interstate 215 and Interstate 515. Each of the Company's casinos
caters primarily to local Las Vegas residents. The Company markets the five
"Station" casinos together under the Station Casinos' brand, and the Fiesta and
The Reserve independently, offering convenience and choices to residents
throughout the Las Vegas Valley with its strategically located properties.

                                       2
<PAGE>
OPERATING STRATEGY

    Management believes that the following key principles have been integral to
its success as a gaming operator and intends to continue to employ these
strategies at each of its various operations.

    TARGETED CUSTOMER BASE

    The Company's operating strategy emphasizes attracting and retaining
customers primarily from the local and repeat visitor markets. The casino
properties attract customers from the Las Vegas locals market through
innovative, frequent and high-profile promotional programs, focused marketing
efforts and convenient locations, and from the repeat visitor market through
aggressive marketing and the development of strong relationships with
specifically targeted travel wholesalers. Although perceived value initially
attracts a customer to the casino properties, actual value generates customer
satisfaction and loyalty. Management believes that actual value becomes apparent
during the customer's visit through an enjoyable, affordable and high-quality
entertainment experience. Las Vegas, which is and has been one of the fastest
growing cities in the United States, is characterized by a strong economy and
demographics which include an increasing number of retirees and other active
gaming customers. The Company believes that its out-of-town patrons are also
discerning customers who enjoy the Company's value-oriented, high-quality
approach. Our patrons view the Company's hotel and casino product as a
preferable alternative to attractions located on the Las Vegas Strip and
downtown Las Vegas.

    PROVIDE A HIGH-VALUE EXPERIENCE

    Because the Company targets the repeat customer, management is committed to
providing a high-value entertainment experience for its customers in its
restaurants, hotels, casinos, and other entertainment amenities. Management
believes that the value offered by restaurants at each of the casino properties
is a major factor in attracting its local gaming customers, as dining is a
primary motivation for casino visits by many locals. Through their restaurants,
each of which has a distinct theme and style of cuisine, the casino properties
offer generous portions of high-quality food at reasonable prices. In addition,
the Company's operating strategy focuses on slot and video poker machine play.
The Company's target market consists of frequent gaming patrons who seek not
only a friendly atmosphere and convenience, but also higher than average payout
rates. Because locals and repeat visitors demand variety and quality in their
slot and video poker machine play, the casino properties offer the latest in
slot and video poker technology, including several games designed exclusively
for the Company.

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

    MARKETING AND PROMOTION

    The Company employs an innovative marketing strategy that utilizes frequent,
high-profile promotional programs in order to attract customers and establish a
high level of name recognition. In addition to aggressive marketing through
television, radio and newspaper advertising, the Company has created and
sponsored such promotions as "Paycheck Bonanza" and the "Great Giveaway," a
popular

                                       3
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football season contest. These promotions have become a tradition in the locals'
market and have had a positive impact upon the Company's patronage during their
respective promotion periods.

    In April 1999, the Company introduced its unified Boarding Pass player
rewards program at the casino properties. The Boarding Pass program allows
guests to earn points based on their level of gaming activity. These points can
then be redeemed for food, entertainment and merchandise at any of the Station
properties. This "single card", for which the technology was developed in-house,
sets the Company apart from its competition in the Las Vegas locals market.

CASINO PROPERTIES

    Set forth below is certain information concerning the properties that are
owned and operated by the Company. The properties are more fully described in
the following table.

                             CASINO PROPERTIES (1)

<TABLE>
<CAPTION>
                                                    CASINO                                        PARKING
                                                    SQUARE     HOTEL                   GAMING      SPACES
                    PROPERTY                       FOOTAGE     ROOMS     SLOTS (2)   TABLES (3)     (4)
                    --------                       --------   --------   ---------   ----------   --------
<S>                                                <C>        <C>        <C>         <C>          <C>
Casino Properties
    Palace Station...............................   84,000     1,014       2,084         51        3,700
    Boulder Station..............................   89,000       300       2,988         44        4,350
    Texas Station................................  102,300       200       2,999         40        5,300
    Sunset Station...............................  110,000       467       3,059         55        7,100
    Santa Fe Station.............................   85,000       200       1,840         27        1,100
    Fiesta.......................................   70,000       100       1,850         24        2,300
    The Reserve..................................   42,000       224       1,450         26        1,900

Other Properties
    Wild Wild West...............................   12,500       260         248          7          500
    Barley's.....................................   10,000        --         199          9           --
    Southwest Gaming.............................       --        --         790         --           --
</TABLE>

------------------------

(1) The information with respect to each property other than Fiesta and The
    Reserve is as of December 31, 2000. Information for Fiesta and The Reserve
    is as of February 28, 2001.

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

(3) Generally includes blackjack ("21"), craps, roulette, pai gow poker, mini
    baccarat, Caribbean stud poker, let it ride, big six, three card and double
    down stud. The Casino Properties also offer a keno lounge, poker room, bingo
    parlor and a race and sports book. Wild Wild West and Barley's also offer a
    sports book.

(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 and 1,000
    for Fiesta.

    PALACE STATION

    Palace Station is strategically located on approximately 39 acres 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's ample parking and convenient location assure customers
easy access to the hotel and casino, a factor that management believes is
particularly important in attracting and retaining its customers. The Palace
Station complex features a turn-of-the-20th-century railroad

                                       4
<PAGE>
station theme. The complex also includes two swimming pools, an approximately
20,000-square foot banquet and convention center, five full-service restaurants,
several fast-food outlets, a 24-hour gift shop and a non-gaming video arcade.

    Palace Station's five full-service restaurants have a total of over 1,225
seats. These restaurants offer a variety of high-quality food at reasonable
prices, including the 24-hour Palace Cafe (featuring American and Chinese fare),
an all-you-can-eat buffet known as "The Feast," the Broiler (a steak and seafood
restaurant), the Pasta Palace (an Italian restaurant) and the Guadalajara Bar &
Grille (a Mexican restaurant). Palace Station also offers a 17 seat Oyster Bar.
Palace Station guests also may take advantage of the Palace Saloon Piano Bar and
the Sound Trax Lounge, which provide music, dancing and entertainment.

    BOULDER STATION

    Boulder Station, which opened in August 1994, is strategically located on
approximately 46 acres on the opposite side of Las Vegas from Palace Station.
Patrons enjoy convenient access to this facility which is located on Boulder
Highway and immediately adjacent to the Interstate 515 interchange. Management
believes that its 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. The Boulder Station complex, like Palace Station, features a
turn-of-the-20th-century railroad station theme. The complex also includes five
full-service restaurants, several fast-food outlets, a 750-seat entertainment
lounge, eight additional bars, a high-quality 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 food at reasonable
prices. Restaurant themes and menus are similar to Palace Station's, allowing
Boulder Station to benefit from the market acceptance and awareness of this
product. Restaurants include the 24-hour Boulder Cafe (featuring American and
Chinese fare), an all-you-can-eat buffet known as "The Feast," the Broiler (a
steak and seafood restaurant), the Pasta Palace (an Italian restaurant), and the
Guadalajara Bar & Grille (a Mexican restaurant). In addition to these
restaurants, Boulder Station offers various fast-food outlets. Boulder Station's
restaurants and bars are located in open settings that are designed to
intermingle the dining and gaming experience.

    TEXAS STATION

    Texas Station, which opened in July 1995, is strategically located on
approximately 47 acres located at the corner of Lake Mead Boulevard and Rancho
Road in North Las Vegas. The facility features a friendly, "down-home" Texas
atmosphere, highlighted by its distinctive early Texas architecture. In
December 2000, the Company completed a master-planned expansion at Texas Station
with capital expenditures of approximately $78 million. The scope of the project
included renovation of various restaurants and additional upgrades to provide
consistency in the quality of finishes between all phases of Texas' expansion.
The expansion project also included the addition of 350 gaming devices, a
60-lane bowling center and approximately 40,000 square feet of meeting and
banquet space. The latest phase of the master plan was designed to further
position Texas Station as an all-inclusive entertainment destination for Las
Vegas residents. Texas Station includes four full-service restaurants, several
fast-food outlets, a 10,000-square foot Kid's Quest child-care facility, a
300-seat entertainment lounge, a 1,700-seat event center, seven additional bars,
a high-quality 18-screen movie theater complex, a swimming pool, a non-gaming
video arcade and a gift shop. Management believes that the theater complex
provides a competitive advantage for the property and is an additional
attraction that draws a significant number of patrons to the facility.

                                       5
<PAGE>
    Texas Station's four full-service restaurants have a total of over 1,300
seats. These restaurant facilities offer a variety of high-quality food at
reasonable prices, including the 24-hour Texas Cafe (featuring American and
Chinese fare), Austin's Steakhouse, the San Lorenzo (an Italian restaurant) and
the Market Street Buffet (featuring seven different food stations). Texas
Station also features the Texas Star Oyster Bar, which has 110 seats. In
addition to the Texas Station-themed restaurants, guests may also take advantage
of the unique features of several bars and lounges including the Martini Ranch,
the Whiskey Bar, the Garage Bar, or the Armadillo Honky Tonk. The facility also
offers a variety of fast-food outlets to enhance the customers' dining
selection. Management believes that the quality and variety of the restaurants
offered at the facility are a major draw in the rapidly growing North Las Vegas
and Summerlin markets.

    SUNSET STATION

    Sunset Station, which opened in June 1997, is located on an approximately
105-acre parcel at the intersection of Interstate 515 and Sunset Road. Multiple
access points provide customers convenient access to the gaming complex and
parking areas. Situated in a highly concentrated commercial corridor along
Interstate 515, Sunset Station has prominent visibility from the freeway and the
Sunset commercial corridor. Sunset Station is located approximately nine miles
east of McCarran International Airport and eight miles southeast of Boulder
Station.

    Sunset Station is distinguished from the Company's other properties by its
interior and exterior Spanish/Mediterranean-style architecture. The facility
seven full-service restaurants, themed to capitalize on the restaurants at the
Company's other properties, a 520-seat entertainment lounge and a 4,000-seat
outdoor amphitheater, additional bars, a gift shop, a non-gaming video arcade, a
high-quality 13-screen movie theater complex, a Kid's Quest child-care facility,
and a swimming pool, as well as several fast-food outlets and franchises.

    Sunset Station's seven full-service restaurants have a total of over 2,200
seats featuring "live-action" cooking and simulated patio dining. These
restaurant facilities offer a variety of high-quality food at reasonable prices,
including the 24-hour Sunset Cafe (featuring American and Chinese fare), the
Sonoma Cellar (a steakhouse), the Casa Del Sol (a seafood restaurant), the Capri
(an Italian restaurant), Guadalajara Bar & Grille (a Mexican restaurant), Sunset
Brewing Company (a microbrewery) and The Feast Around the World, a live action
buffet featuring Mexican, Italian, barbecue, American and Chinese cuisine.
Sunset Station also features a 65 seat Oyster Bar. Guests may also take
advantage of the Gaudi Bar, a centerpiece of the casino featuring over 8,000
square feet of stained-glass and a water light display. The facility also offers
fast-food outlets to enhance the customers' dining selection.

    Sunset Station is located on approximately 105 acres, approximately 70 acres
of which have been developed. The Company is currently evaluating potential
development plans for the undeveloped property. Uses for the land could include
a lifestyle entertainment retail center, as well as the development of several
pads for various build-to-suit retail, restaurant and entertainment concepts.
Timing and definitive plans have not yet been determined for such a development.

    SANTA FE STATION

    On October 2, 2000, the Company consummated the purchase of substantially
all of the assets of the Santa Fe Hotel & Casino for an aggregate purchase price
of $205 million and renamed the property "Santa Fe Station." Santa Fe Station is
strategically located on approximately 38 acres at the intersection of
Interstate 95 and Rancho Road, approximately five miles northwest of Texas
Station. Santa Fe Station has approximately 440,000 square feet of main facility
area and features a Southwestern theme which includes a swimming pool, three
full-service restaurants, several fast food outlets, a gift shop, a non-gaming
video arcade, a 250-seat entertainment lounge, four additional bars, a

                                       6
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60-lane bowling center, a regulation-sized ice skating arena and 10,000 square
feet of meeting and banquet facilities.

    Santa Fe Station's three full-service restaurants have a total of over 400
seats, and include the Taos Steakhouse, the Capri (an Italian restaurant) and
the 24-hour Santa Fe Cafe (featuring American and Chinese fare).

    In October, the Company began a renovation, retheming and expansion project
at the property. In late November, the number of slot machines on the casino
floor were increased to 1,932 and remodeled restaurants were opened. The Company
is currently constructing a 1,700-space parking garage, a food court area with
eight lease tenants, a 25,000-square foot casino expansion to allow for
approximately 700 additional gaming devices, the build-out of lease tenant space
for two new restaurants, a new hotel lobby and a new gift shop. The Company
expects that post-acquisition renovation, retheming and expansion capital
expenditures at Santa Fe Station will total approximately $71 million and the
expansion project will be completed in the third quarter of 2001.

    FIESTA

    On January 4, 2001, the Company consummated the purchase of substantially
all of the assets of the Fiesta Casino Hotel for a purchase price of
$170 million. The property will retain the Fiesta name and theme. Fiesta is
strategically located on approximately 25 acres at the intersection of Lake Mead
Boulevard and Rancho Road in North Las Vegas across from Texas Station. Fiesta
features a Southwestern theme which also includes a swimming pool, four
full-service restaurants, several fast-food outlets, a gift shop, a non-gaming
video arcade, a 970-seat entertainment lounge and five additional bars.

    Fiesta's four full-service restaurants have a total of over 1,100 seats, and
include Gardunos (a Mexican restaurant), the Old San Francisco Steakhouse, the
Festival Buffet and the 24-hour Cafe Fiesta (featuring American fare).

    The Company expects to spend approximately $5 million during the first half
of 2001 on minor renovations to the property.

    THE RESERVE

    On January 30, 2001, the Company consummated the purchase of substantially
all of the assets of The Reserve Hotel & Casino for an aggregate purchase price
of $71.8 million. The property will retain its name and theme pending further
evaluation. The Reserve is strategically located on approximately 46 acres at
the intersection of Interstate 215 and Interstate 515. The Reserve features an
African safari and big game reserve theme which also includes a swimming pool,
four full-service restaurants, several fast-food outlets, a gift shop, three
bars and lounges and meeting space.

    The Reserve's four full-service restaurants have a total of over 1,000
seats, and include the Tusk Steakhouse, Serengeti Spaghetti (an Italian
restaurant), the Grand Safari Buffet and the 24-hour Congo Jack's Cafe
(featuring American and Chinese fare).

    The Company expects to spend approximately $8 million during 2001 to make
minor revisions and additions to the casino floor and parking areas.

                                       7
<PAGE>
OTHER PROPERTIES

    WILD WILD WEST

    Wild Wild West, which the Company acquired in July 1998, is strategically
located on approximately 19 acres located on Tropicana Avenue and immediately
adjacent to Interstate 15. Wild Wild West has a full service restaurant and bar.

    BARLEY'S

    Barley's, which opened in January 1996, is a casino and brew pub located in
Henderson, Nevada which the Company owns a 50% interest. Barley's offers a full
service restaurant and bar.

    SOUTHWEST GAMING

    The Company provides slot route management services to numerous food and
beverage establishments and commercial businesses in Southern Nevada through its
subsidiary, Southwest Gaming Services, Inc. ("SGSI"). SGSI commenced its slot
route business in southern Nevada in December 1990. Management combined its
gaming experience with its route management abilities to capitalize on the
rapidly expanding slot route business.

EXPANSION STRATEGY

    SELECTION CRITERIA

    Management believes that a highly visible central 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. The Company selects sites that are centrally located within
a dense population base so that the facility cannot be cut-off from its primary
market. These sites generally have been adjacent to high-traffic surface streets
and interstate highways. Management believes that each of its casino properties'
locations has provided the Company with a significant competitive advantage to
attract its targeted customer base.

    MASTER-PLANNED DEVELOPMENT

    Management's expansion strategy includes the master-planned expansion of its
existing and future gaming locations. In designing project sites, the Company
plans and engineers for multi-phased facility expansion to accommodate future
growth and to allow the Company to develop dominant properties in each market
place. A project's master-planned design typically allows the option of adding
hotel rooms, casino space and non-gaming entertainment such as movie theaters,
additional restaurants, retail shops, and various other entertainment venues.

    EXPANSION, DEVELOPMENT AND ACQUISITION OPPORTUNITIES

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

    The Company also evaluates other development and acquisition opportunities
in current and emerging gaming markets, including land-based, dockside,
riverboat and Indian gaming opportunities. The Company's decision whether to
proceed with any new gaming development or acquisition

                                       8
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opportunity is dependent upon future economic and regulatory factors, the
availability of financing and competitive and strategic considerations, many of
which are beyond the Company's control.

    GREEN VALLEY RANCH

    A 50/50 joint venture between the Company and GCR Gaming, LLC (an affiliate
of American Nevada Corporation) has commenced construction of a new
casino/resort, Green Valley Ranch on the south side of Interstate 215 at Green
Valley Parkway in Henderson, Nevada. The 40-acre resort site is part of a
170-acre mixed-use commercial, retail and office project. The Company expects to
contribute approximately $50 million in cash equity for a 50 percent equity
ownership. As of December 31, 2000, the Company has made cash equity
contributions of $34 million. The Company will be the managing partner of Green
Valley Ranch and will receive a management fee for its services. Construction of
the resort is expected to be completed in the fourth quarter of 2001. The
estimated construction cost of this project is approximately $300 million. The
project is expected to be capitalized with total equity contributions from the
partners of approximately $100 million and third party financing for the
remainder. The joint venture has received commitments from a group of banks for
a $165 million reducing revolving credit facility, subject to customary
conditions. The Company anticipates that it will be required to enter into a
completion guarantee and a make-well agreement in connection with the Green
Valley Ranch financing. In addition, the joint venture anticipates obtaining
$35 million of equipment lease financing from a group of lenders. The Company
has co-owned Barley's with an affiliate of American Nevada Corporation since
January 1996.

    The new project is planned to complement the Green Valley Ranch
master-planned community. The plans for the project include over 330,000 square
feet of public space and 200 hotel rooms. Planned entertainment amenities
include a state-of-the-art spa with outdoor pools, a 10-screen movie theater,
six full-service restaurants, a fast-food court with six quick-serve outlets and
a non-gaming arcade. It is anticipated that the casino will have over 2,400 slot
machines and 40 table games. The planned facility also includes a race and
sports book, a poker room and parking for approximately 3,200 vehicles in a
low-rise garage and on surface parking.

    UNITED AUBURN INDIAN COMMUNITY

    On October 12, 1999, the Company announced that it has entered into a
Development Services Agreement and a Management Agreement with the United Auburn
Indian Community (the "UAIC"). Subject to the receipt of certain governmental
approvals, as well as voter approval of a proposed amendment to the California
constitution, the Company and the UAIC intend to develop a gaming and
entertainment facility on 49 acres, located approximately seven miles north of
Interstate 80, in Placer County, California, near Sacramento. Voter approval of
the proposed amendment to the California constitution was received in
March 2000, however, there can be no assurances when or if the necessary
government approvals will be received. The scope and the timing of this project
have yet to be determined.

COMPETITION

    The gaming industry includes land-based casinos, dockside casinos, riverboat
casinos, casinos located on Indian reservations and other forms of legalized
gaming. There is intense competition among companies in the gaming industry,
many of which have significantly greater resources than the Company. Certain
states have recently legalized, and several other states are currently
considering legalizing, casino gaming in designated areas. Legalized casino
gaming in such states and on Indian reservations will provide strong competition
to the Company and could adversely affect the Company's operations, particularly
to the extent that such gaming is conducted in areas close to the Company's
operations. Indian gaming in California, as it currently exists, has had little,
if any impact on the Company's operations to date, although there are no
assurances as to future impact. Proposition 1A is

                                       9
<PAGE>
an amendment to the California Constitution, passed by the voters of California
on March 7, 2000, designed to modify the Constitution to authorize the Governor
to negotiate compacts with federally recognized Indian tribes, subject to
Legislative ratification, for the operation of slot machines, lottery games, and
banking and percentage games (including "21") on Indian lands. In
September 1999 the Governor negotiated, and the Legislature ratified, compacts
with 57 Indian tribes that became effective with the passage of Proposition 1A.
It is not certain how Proposition 1A will affect the Company; however, because
visitors from California make up Nevada's largest visitors market, with
Proposition 1A, increased competition from Indian gaming may result in a decline
in the Company's revenues and may have a material adverse effect on the
Company's business.

    The casino properties face more direct competition from 35 nonrestricted
gaming locations primarily targeted to the local and the repeat visitor markets.
Some of these competitors have completed expansions and existing competitors and
new entrants into these markets are in the planning stages or under construction
on other projects. Although the Company has competed strongly in these
marketplaces, there can be no assurance that additional capacity will not have a
negative impact on the Company.

    The casino properties face competition from all other casinos and hotels in
the Las Vegas area, including to some degree, from each other. In addition, the
casino properties face competition from all smaller nonrestricted gaming
locations and restricted gaming locations (locations with 15 or fewer slot
machines) in the greater Las Vegas area. As of December 31, 2000, there were
1,324 restricted gaming locations with a total of 12,946 slot machines. The
Company competes with other locals oriented hotel/ casinos by focusing on repeat
customers and attracting these customers through innovative marketing programs.
The Company's value-oriented, high-quality approach is designed to generate
repeat business. Additionally, the casino 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 32 major gaming properties located on or near the Las Vegas Strip,
14 located in the downtown area and several located in other areas of Las Vegas.
Major additions, expansions or enhancements of existing properties or the
construction of new properties by competitors, could also have a material
adverse effect on the businesses of the casino properties. The additional
capacity has had little, if any, impact on the casino properties' hotel
occupancy or casino volume to date, although there can be no assurance that
hotel occupancy or casino volume will not be adversely affected in the future.

    To a lesser extent, the Company's operations compete with gaming operations
in other parts of the state of Nevada, such as Reno, Laughlin and Lake Tahoe,
with facilities in Atlantic City, New Jersey, casinos located on Indian
reservations and other parts of the world and with state-sponsored lotteries,
on-and-off-track pari-mutuel wagering, card parlors and other forms of legalized
gambling.

REGULATION AND LICENSING

    NEVADA GAMING REGULATIONS

    The ownership and operation of casino gaming facilities, the operation of
gaming device routes 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. The Company's gaming operations
are subject to the licensing and regulatory control of the Nevada Gaming
Commission ("Nevada Commission"), the Nevada State Gaming Control Board ("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,
the Nevada Board, the City of Las Vegas, the Clark County Board, the City of
North Las Vegas, the City of

                                       10
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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. Change in such laws, regulations and
procedures could have an adverse effect on the Company's gaming operations.

    The Company's 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. SGSI is licensed as a distributor and as an operator
of a slot machine route. Palace Station Hotel & Casino, Inc. ("PSHC"), Boulder
Station, Inc. ("BSI"), Texas Station, Inc. ("TSI"), Sunset Station, Inc.
("SSI"), Tropicana Station, Inc. ("TRSI"), Santa Fe Station, Inc. ("SFSI"),
Fiesta Station, Inc. ("FSI") and Lake Mead Station, Inc. ("LMSI") have received
licenses to conduct nonrestricted gaming operations. Town Center
Amusements, Inc. ("TCAI") has been licensed to conduct nonrestricted gaming
operations at Barley's Casino & Brewing Company ("Barley's Casino"), a micro
brewery and casino located in Southeast Las Vegas. The Company's ownership in
TCAI is held through an intermediary company known as Green Valley
Station, Inc. ("GVSI") which is licensed as a member and Manager of TCAI. The
Company 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, TSI, SSI, TRSI, GVSI, SGSI, SFSI, FSI and LMSI. The Company is also
licensed as a manufacturer and distributor. PSHC, BSI, TSI, SSI, TRSI, GVSI,
SGSI, SFSI, FSI, and LMSI are each a corporate gaming licensee and TCAI is 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, the Company 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. The
Company 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 the Company or the Gaming Subsidiaries, which hold a
license, 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.
Officers, directors and key employees of the Company 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
which 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

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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 the Company or the Gaming Subsidiaries, the companies involved
would have to sever all relationships with such person. In addition, the Nevada
Commission may require the Company 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.

    The Company 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 the Company and the 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, the Company, 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
Station, Boulder Station, Texas Station, Sunset Station, Santa Fe Station,
Fiesta, The Reserve, Wild Wild West and Barley's Casino 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 the Company's gaming
operations.

    Any beneficial owner of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be investigated,
and have their suitability as a beneficial owner of the Company's 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. 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 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 15% of the Company's 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 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 the board of directors of the Company, any change in the Company's
corporate charter, bylaws, management policies or operations of the Company, or
any of its gaming affiliates, or any other action which the Nevada Commission
finds to be inconsistent with holding the Company's 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

                                       12
<PAGE>
cause a change in its management, policies or operations; and (iii) such other
activities as the Nevada Commission may determine to be consistent with such
investment intent. 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 is required to pay all costs of investigation.

    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. The Company is
subject to disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationship with the
Company or the Gaming Subsidiaries, the Company (i) pays that person any
dividend or interest upon voting securities of the Company, (ii) allows 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) fails 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 license.

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

    The Company is 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. A failure to make such disclosure may be grounds for finding the
record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Company's 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 the Company.

                                       13
<PAGE>
    The Company may not make a public offering of its 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. On
May 27, 1999, the Nevada Commission granted the Company prior approval to make
public offerings for a period of two years, subject to certain conditions
("Shelf Approval"). The Shelf Approval has been amended several times to reflect
the addition of new subsidiaries, most recently on January 25, 2001. However,
the Shelf Approval may be rescinded for good cause without prior notice upon the
issuance of an interlocutory stop order by the Chairman of the Nevada Board and
must be renewed at the end of the two year approval period. The Shelf Approval
also applies to any affiliated company wholly-owned by the Company (an
"Affiliate") which is a publicly traded corporation or would thereby become a
publicly traded corporation pursuant to a public offering. The Shelf Approval
also includes approval for the Gaming Subsidiaries to guarantee any security
issued by, or to hypothecate their assets to secure the payment or performance
of any obligations evidenced by a security issued by, the Company or an
Affiliate in a public offering under the Shelf Approval. The Shelf Approval does
not constitute a finding, recommendation or approval by the Nevada Commission or
the Nevada Board as to the accuracy or adequacy of the prospectus or the
investment merits of the securities offered. Any representation to the contrary
is unlawful.

    Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, 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 recapitalization proposed
by the Registered Corporation's Board of Directors 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 gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with 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.

                                       14
<PAGE>
    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 in 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 the
Company's gaming licenses in Nevada would have a material adverse effect on its
business and could require the Company to cease gaming operations in Nevada.

    NEVADA LIQUOR REGULATIONS

    The sale of alcoholic beverages at Palace Station and Santa Fe Station is
subject to licensing, control and regulation by the City of Las Vegas. The sale
of alcoholic beverages at Boulder Station and Wild Wild West is subject to
licensing control and regulation by the Clark County Board. Texas Station and
Fiesta are subject to licensing control and regulation of the City of North Las
Vegas. Sunset Station, The Reserve and Barley's Casino are subject to the
licensing control and regulation of the City of Henderson and the Department of
Treasury, Bureau of Alcohol, Tobacco and Firearms, as applicable. All licenses
are revocable and are not transferable. The agencies involved have full power to
limit, condition, suspend or revoke any such license, and any such disciplinary
action could (and revocation would) have a material adverse effect on the
operations of the Gaming Subsidiaries.

    GENERAL GAMING REGULATIONS IN OTHER JURISDICTIONS

    If the Company becomes involved in gaming operations in any other
jurisdictions, such gaming operations will subject the Company and certain of
its 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"). The Company and the Regulated Persons will need to satisfy the
licensing, approval and suitability requirements of each jurisdiction in which
the Company seeks to become involved in gaming operations. These requirements
vary from jurisdiction to jurisdiction, but generally concern the
responsibility, financial stability and character of the owners and managers of
gaming operations as well as persons financially interested or involved in
gaming operations. In general, the procedures for gaming licensing, approval and
finding of suitability require the Company and each Regulated Person to submit
detailed personal history information and financial information to demonstrate
that the proposed gaming operation has adequate financial resources generated
from suitable sources and adequate procedures to comply with the operating
controls and requirements imposed by law and regulation in each jurisdiction,
followed by a thorough investigation by such Regulatory Authorities. In general,
the Company and each Regulated Person must pay the costs of such investigation.
An application for any gaming license, approval or finding of suitability may be
denied for any cause that the Regulatory Authorities deem reasonable. Once
obtained, licenses and approvals may be subject to periodic renewal and
generally are not transferable. The Regulatory Authorities may at any time
revoke, suspend, condition, limit or restrict a license, approval or finding of
suitability for

                                       15
<PAGE>
any cause 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 the Company will obtain all of the necessary licenses,
approvals and findings of suitability or that its 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 the Company to obtain, or the loss or suspension of, any
necessary licenses, approval or findings of suitability would prevent the
Company from conducting gaming operations in such jurisdiction and possibly in
other jurisdictions. The Company may be required to submit detailed financial
and operating reports to Regulatory Authorities.

    The laws, regulations and procedures pertaining to gaming are subject to the
interpretation of the Regulatory Authorities and may be amended. Any changes in
such laws, regulations, or their interpretations could have a material adverse
effect on the Company.

EMPLOYEES

    As of December 31, 2000, the Company and its subsidiaries had approximately
8,100 employees and as a result of the acquisitions of Fiesta and The Reserve,
the number of employees has increased to approximately 9,600. From time to time,
certain employees of the Company are contacted by unions and the Company engages
in discussions with such employees regarding establishment of collective
bargaining agreements. In 1998, approximately 12 of the Company's employees
voted to be represented by a union. While the Company is from time to time faced
with such movements by employees, the Company does not believe that such
movements will have any broad-based impact on its employees; however there can
be no assurances to that effect. Management believes that it has good
relationships with its employees.

ITEM 2. PROPERTIES

    Palace Station is situated on approximately 39 acres located on the west
side of Las Vegas, Nevada. The Company owns 26 acres and leases the remaining 13
acres pursuant to five long-term ground leases with unaffiliated third parties.
The property is subject to a lien to secure borrowings under the Amended Bank
Facility.

    Boulder Station is situated on approximately 46 acres located on the east
side of Las Vegas, Nevada. The Company owns 19 acres and leases the remaining 27
acres from a trust pursuant to a long-term ground lease. The trustee of such
trust is Bank of America National Trust and Savings Association ("Bank of
America NT&SA") and the beneficiary of which is KB Enterprises, an affiliated
company owned by Frank J. Fertitta, Jr. and Victoria K. Fertitta (the "Related
Lessor"), the parents of Frank J. Fertitta III, Chairman of the Board and Chief
Executive Officer of the Company. The lease has a maximum term of 65 years,
ending in June 2058. The lease provides for monthly payments of $135,525 through
June 2008. In July 2008, and every ten years thereafter, the rent will be
adjusted by a cost of living factor. In July 2003, 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. Pursuant to the ground
lease, the Company has an option, exercisable at five-year intervals beginning
in June 1998, to purchase the land at fair market value. The Company did not
exercise its June 1998 option. The Company believes that the terms of the ground
lease are as fair to the Company as could be obtained from an independent third
party. The Company's leasehold interest in the property and the acreage it owns
directly are subject to a lien to secure borrowings under the Amended Bank
Facility.

                                       16
<PAGE>
    Texas Station is situated on approximately 47 acres located in North Las
Vegas, Nevada. The Company leases this land from a trust pursuant to a long-term
ground lease. The trustee of this trust is Bank of America NT&SA, the
beneficiary of which is Texas Gambling Hall & Hotel, Inc., an affiliate company
of the Related Lessor. The lease has a maximum term of 65 years, ending in
July 2060. The lease provides for monthly rental payments of $287,500 through
June 2010. In July 2010, and every ten years thereafter, the rent will be
adjusted to the product of the fair market value of the land and the greater of
(i) the then prevailing annual rate of return being realized for owners of
comparable land in Clark County or (ii) 8% per year. The rent will be further
adjusted by a cost of living factor after the first ten years and every ten
years thereafter. In no event will the rent for any period be less than the
immediately preceding period. Pursuant to the ground lease, the Company has an
option, exercisable at five-year intervals beginning in May 2000, to purchase
the land at fair market value. The Company did not exercise its May 2000 option.
Pursuant to the ground lease, the lessor will have a right to put the land to
the Company, exercisable no later than one year after the first to occur of
(a) a change of control (as defined in the lease), or (b) delivery of written
notice that such a change of control is anticipated, at a purchase price equal
to fair market value as determined by negotiation. The Company believes that the
terms of the ground lease are as fair to the Company as could be obtained from
an independent third party. The Company's leasehold interest in the property is
subject to a lien to secure borrowings under the Amended Bank Facility.

    Sunset Station is situated on approximately 105 acres located in the Green
Valley/Henderson area of Las Vegas, Nevada. The Company leases approximately 48
acres pursuant to a long-term ground lease with an unaffiliated third party. The
lease was entered into in June 1994, and has a term of 65 years with monthly
rental payments of $120,000, adjusted on each subsequent five-year anniversary
by a cost of living factor. The Company has notified the landlord of its
intention to exercise its option to purchase this land for $23.8 million in June
2001. The Company's leasehold interest in the property is subject to a lien to
secure borrowings under the Amended Bank Facility.

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

    Fiesta, which was purchased on January 4, 2001, is situated on approximately
25 acres in North Las Vegas, Nevada across from Texas Station.

    The Reserve, which was purchased on January 30, 2001, is situated on
approximately 46 acres in Henderson, Nevada.

    The Company currently owns or leases six sites, which have been acquired for
potential gaming projects, consisting of 224 acres with options on an additional
66 acres adjacent to two of the sites.

                                       17
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ITEM 3. LEGAL PROCEEDINGS

    The Company 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.

    POULOS/AHEARN CASE

    On April 26, 1994, a suit seeking status as a class action lawsuit was filed
by plaintiff, William H. Poulos, et al., as class representative, in the United
States District Court, Middle District of Florida, naming 41 manufacturers,
distributors and casino operators of video poker and electronic slot machines,
including the Company. On May 10, 1994, a lawsuit alleging substantially
identical claims was filed by another plaintiff, William Ahearn, et al., as
class representative, in the United States District Court, Middle District of
Florida, against 48 manufacturers, distributors and casino operators of video
poker and electronic slot machines, including the Company and most of the other
major hotel/casino companies. The lawsuits allege that the defendants have
engaged in a course of fraudulent and misleading conduct intended to induce
persons to play such games based on a false belief concerning how the gaming
machines operate, as well as the extent to which there is an opportunity to win.
The two lawsuits have been consolidated into a single action, and have been
transferred to the United States District Court for the District of Nevada. On
September 26, 1995, a lawsuit alleging substantially identical claims was filed
by plaintiff, Larry Schreier, et al., as class representative, in the United
States District Court for the District of Nevada, naming 45 manufacturers,
distributors, and casino operators of video poker and electronic slot machines,
including the Company. Motions to dismiss the Poulos/ Ahearn and Schreier cases
were filed by defendants. On April 17, 1996, the Poulos/Ahearn lawsuits were
dismissed, but plaintiffs were given leave to file Amended Complaints on or
before May 31, 1996. On May 31, 1996, an Amended Complaint was filed, naming
William H. Poulos, et al., as plaintiff. Defendants filed a motion to dismiss.
On August 15, 1996, the Schreier lawsuit was dismissed with leave to amend. On
September 27, 1996, Schreier filed an Amended Complaint. Defendants filed
motions to dismiss the Amended Complaint. In December 1996, the Court
consolidated the Poulos/ Ahearn, the Schreier, and a third case not involving
the Company and ordered all pending motions be deemed withdrawn without
prejudice, including Defendants' Motions to Dismiss the Amended Complaints. The
plaintiffs filed a Consolidated Amended Complaint on February 13, 1997. On or
about December 19, 1997, the Court issued formal opinions granting in part and
denying in part the defendants' motion to dismiss. In so doing, the Court
ordered plaintiffs to file an amended complaint in accordance with the Court's
orders in January of 1998. Accordingly, plaintiffs amended their complaint and
filed it with the United States District Court for the District of Nevada in
February 1998. The Company and all other defendants continue to deny the
allegations contained in the amended complaint filed on behalf of plaintiffs.
The plaintiffs are seeking compensatory, special, consequential, incidental, and
punitive damages in unspecified amounts. The defendants have committed to
vigorously defend all claims and allegations contained in the consolidated
action. The parties have fully briefed the issues regarding class certification,
which are currently pending before the court. The Company does not expect that
the lawsuits will have a material adverse effect on the Company's financial
position or results of operations.

    STEPHEN B. SMALL CASE

    A class action lawsuit was filed by plaintiff Stephen B. Small, et al., as
class representative, on November 28, 1997, in the United States District Court
for the Western District of Missouri, naming four gaming operators in Kansas
City, Missouri, including Kansas City Station Corporation. The lawsuit alleged
that the defendants are conducting gaming operations that are not located on the
Missouri River in violation of certain state and federal statutes. The plaintiff
also sought compensatory, special, consequential, and incidental damages in
unspecified amounts. On September 1, 1998, the United

                                       18
<PAGE>
States District Court granted Kansas City Station Corporation's motion to
dismiss the lawsuit. On February 16, 1999, the plaintiff served the defendants
with a notice of appeal of the federal court dismissal. On October 30, 1998, the
plaintiff filed a similar lawsuit in the Circuit Court of Cole County, Missouri.
The lawsuit alleged that the operators were conducting illegal games of chance
prior to December 3, 1998, the effective date of a Constitutional amendment
passed by Missouri voters on November 3, 1998, legalizing gaming facilities
within 1,000 feet of the main channel of the Mississippi and Missouri Rivers. On
February 9, 1999, the Cole County Circuit Court granted Kansas City Station
Corporation's motion to dismiss the lawsuit. On February 19, 1999, the plaintiff
served the defendants with a notice of appeal of the state court dismissal.
Management believes that the plaintiff's claims are without merit and does not
expect that the lawsuit will have a material adverse effect on the Company's
financial position or results of operations.

    FITZGERALD'S SUGAR CREEK, INC. V. KANSAS CITY STATION CORP., ET AL.

    On December 20, 2000, SCI and Kansas City Station Corporation were named as
defendants in an action styled FITZGERALD SUGAR CREEK. INC. V. KANSAS CITY
STATION CORP., ET AL., No. 00CV230480 (Circuit Court of Jackson County,
Missouri). The Company and its subsidiary responded to this lawsuit on
January 19, 2001 and moved to remove the case to bankruptcy court in Nevada. The
plaintiff alleges that the defendants are liable for unspecified actual punitive
damages and other relief, based on alleged tortious interference with the
plaintiff's business expectancy of receiving a Missouri gaming license in the
Kansas City metropolitan area. The allegations of the petition appear to be
based on the same issues involved in the investigation by the Missouri Gaming
Commission related to activities of Michael Lazaroff, an attorney who formerly
represented the Company in Missouri. The plaintiff also alleges claims based on
fraudulent concealment and civil conspiracy. Although no assurance can be made
with respect to any litigation, the Company believes that the plaintiffs claims
are without merit and does not expect that the lawsuit will have a material
adverse effect on the Company's financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal year 2000.

                                       19
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Common Stock trades on the New York Stock Exchange under the symbol
"STN". Prior to September 5, 1996, the common stock traded on the Nasdaq Stock
Market under the symbol "STCI". On May 23, 2000, the Company announced a 3-for-2
stock split. The record date for the stock split was June 30, 2000 and the
distribution date was July 17, 2000. Cash was paid for all fractional shares.
All share data has been adjusted retroactively for the 3-for-2 stock split. The
following table sets forth, for the periods indicated, the high and low sale
price per share of the Common Stock as reported on the New York Stock Exchange,
adjusted for the stock split.

<TABLE>
<CAPTION>
                                                                HIGH       LOW
                                                              --------   --------
<S>                                                           <C>        <C>
FISCAL YEAR ENDING DECEMBER 31, 2000
    First Quarter...........................................   $16.17     $11.79
    Second Quarter..........................................    20.00      13.50
    Third Quarter...........................................    17.92      12.13
    Fourth Quarter..........................................    19.13      14.00
FISCAL PERIOD ENDING DECEMBER 31, 1999
    First Quarter...........................................   $ 9.92     $ 5.29
    Second Quarter..........................................    13.59       8.17
    Third Quarter...........................................    16.42      11.33
    Fourth Quarter..........................................    18.25      11.00
</TABLE>

    As of March 15, 2001, there were 617 holders of record of the Company's
common stock.

    The Company has never paid cash dividends on any shares of Common Stock. The
Company does not intend to pay cash dividends in the foreseeable future so that
it may reinvest its earnings in the development of its business. The payment of
dividends in the future will be at the discretion of the Board of Directors of
the Company. Restrictions imposed by the Company's debt instruments and other
agreements, limit the payment of dividends by the Company (see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Description of Certain Indebtedness and Capital Stock").

                                       20
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

    On November 6, 1998 the Company filed a Form 8-K announcing its change in
fiscal year end from March 31 of each year to December 31 of each year. This
change is effective for the nine month period ended December 31, 1998 (the
"Transition Period 1998").

    The selected consolidated financial data presented below as of and for the
Company's fiscal years ended March 31, 1997 and 1998, for the Transition Period
1998, and for the fiscal years ended December 31, 1999 and 2000 have been
derived from consolidated financial statements which, except for 1997 and 1998,
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.

<TABLE>
<CAPTION>
                                       FOR THE YEARS ENDED                    FOR THE YEARS ENDED
                                          DECEMBER 31,         TRANSITION          MARCH 31,
                                     -----------------------     PERIOD     -----------------------
                                        2000         1999         1998         1998         1997
                                     ----------   ----------   ----------   ----------   ----------
                                            (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                  <C>          <C>          <C>          <C>          <C>
OPERATING RESULTS:
Net revenues.......................  $  991,678   $  942,469   $  642,214   $  769,610   $  583,515
Operating income...................     242,812       28,871       64,696       84,186       58,123
Income (loss) before income taxes
  and extraordinary item...........     148,149      (47,223)      (9,864)      (4,120)      21,378
Extraordinary item-loss on early
  retirement of debt, net of
  applicable income tax benefit....        (546)     (10,653)      (3,104)      (2,042)          --
Net income (loss) applicable to
  common stock.....................      93,505      (44,758)     (17,531)     (12,441)       6,518
Basic earnings (loss) per common
  share............................  $     1.55   $    (0.76)  $    (0.33)  $    (0.23)  $     0.12
Diluted earnings (loss) per common
  share............................  $     1.48   $    (0.76)  $    (0.33)  $    (0.23)  $     0.12
BALANCE SHEET DATA:
Total assets.......................  $1,440,428   $1,276,273   $1,531,925   $1,300,216   $1,234,118
Long-term debt.....................     989,625      942,480    1,147,266      900,226      760,963
Stockholders' equity...............     288,887      216,801      269,406      286,887      298,848
</TABLE>

                                       21
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the 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 operations for the Company
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                             TWELVE
                                                    FISCAL YEARS ENDED       MONTHS
                                                       DECEMBER 31,          ENDED       TRANSITION
                                                    -------------------   DECEMBER 31,     PERIOD
                                                      2000       1999         1998          1998
                                                    --------   --------   ------------   ----------
                                                                          (UNAUDITED)
<S>                                                 <C>        <C>        <C>            <C>
NET REVENUES -- TOTAL.............................  $991,678   $942,469     $847,015      $642,214
    Nevada Operations (a).........................   627,968    584,852      526,854       397,908
    Missouri Operations (a).......................   315,422    313,439      290,160       219,734
    Other (a).....................................    48,288     44,178       30,001        24,572

OPERATING INCOME (LOSS) -- TOTAL..................  $242,812   $ 28,871     $ 92,380      $ 64,696
    Nevada Operations (a).........................   165,138    147,217      111,902        83,669
    Missouri Operations (a).......................   102,882    (85,269)      (1,528)       (5,056)
    Other (a).....................................   (25,208)   (33,077)     (17,994)      (13,917)

CASH FLOWS FROM:
    Operating activities..........................  $163,696   $173,058     $108,321      $ 76,692

EBITDA, AS ADJUSTED (B) -- TOTAL..................  $273,847   $236,970     $192,384      $147,682
    Nevada Operations (a).........................   211,252    186,677      150,413       113,284
    Missouri Operations (a).......................    82,636     69,223       54,314        43,163
    Other (a).....................................   (20,041)   (18,930)     (12,343)       (8,765)

EBITDA, AS ADJUSTED (B), ADJUSTED FOR THE SUNSET
  EQUIPMENT LEASE -- TOTAL........................  $273,847   $242,890     $200,952      $154,186
    Nevada Operations (a).........................   211,252    192,597      158,981       119,788
</TABLE>

------------------------

(a) The Nevada Operations include the accounts of: Palace Station, Boulder
    Station, Texas Station, Sunset Station, Santa Fe Station (from October 2,
    2000) and preopening expenses related to Fiesta and The Reserve. The
    Missouri Operations include the accounts of: Station Casino St. Charles and
    Station Casino Kansas City. On December 20, 2000, the Company completed the
    sale of substantially all of the assets of the Missouri Operations. Other
    includes the operations of Wild Wild West, the Company's investment in
    Barley's, Southwest Gaming and Corporate expense.

(b) "EBITDA, As Adjusted" consists of operating income plus depreciation,
    amortization, preopening expenses, restructuring charge, Missouri/Nevada
    investigations and fines, gain on sale of Missouri assets and impairment
    loss. The Company believes that in addition to cash flows and net income,
    EBITDA, As Adjusted is a useful financial performance measurement for
    assessing the operating performance of the Company. Together with net income
    and cash flows, EBITDA, As Adjusted provides investors with an additional
    basis to evaluate the ability of the Company to incur and service debt and
    incur capital expenditures. To evaluate EBITDA, As Adjusted and the trends
    it depicts, the components should be considered. The impact of interest,
    taxes, depreciation and amortization, preopening expenses, restructuring
    charge, Missouri/Nevada investigations and fines, gain on the sale of
    Missouri assets and impairment loss, each of which can significantly affect
    the

                                       22
<PAGE>
    Company's results of operations and liquidity and should be considered in
    evaluating the Company's operating performance, cannot be determined from
    EBITDA, As Adjusted. Further, EBITDA, As Adjusted does not represent net
    income or cash flows from operating, financing and investing activities as
    defined by generally accepted accounting principles ("GAAP") and does not
    necessarily indicate cash flows will be sufficient to fund cash needs. It
    should not be considered as an alternative to net income, as an indicator of
    the Company's operating performance or to cash flows as a measure of
    liquidity. In addition, it should be noted that not all gaming companies
    that report EBITDA or adjustments to such measures may calculate EBITDA, or
    such adjustments in the same manner as the Company, and therefore, the
    Company's measure of EBITDA, As Adjusted may not be comparable to similarly
    titled measures used by other gaming companies.

    Consolidated net revenues, cash flows from operating activities, and EBITDA,
As Adjusted for the fiscal year ended December 31, 1999 increased as compared to
the Transition Period 1998. These increases are due to the Transition Period
1998 consisting of nine months as compared to the fiscal year ended
December 31, 1999, which is twelve months. The above table presents certain
results of operations from the unaudited twelve month period ended December 31,
1998 for comparison purposes.

    CONSOLIDATED NET REVENUES

    The increase in consolidated net revenues for the fiscal year ended
December 31, 2000 as compared to the fiscal year ended December 31, 1999 is due
to increased revenues at all of the Company's properties with the exception of
Station Casino St. Charles, which decreased slightly. Increased revenues at the
Nevada Operations are partially a result of the acquisition of Santa Fe Station
on October 2, 2000 and the subsequent completion in late November of the
renovation and retheming of the casino and restaurants. In addition, revenues at
the Nevada Operations increased in the early part of the year due to the
introduction of the Boarding Pass player rewards program in April 1999, which
makes it more convenient for customers to take advantage of products, services
and amenities offered under the Station brand. Net revenues at the Missouri
Operations increased slightly. However, the results were negatively impacted
during the fourth quarter due to inclement weather throughout the Midwest, the
anticipated sale of the Missouri Operations and the timing of the sale of the
Missouri Operations on December 20, 2000.

    The increase in consolidated net revenues for the fiscal year ended
December 31, 1999 as compared to the twelve months ended December 31, 1998 is
due to increased revenues at all of the Company's properties. Increased revenues
at the Nevada Operations are partially a result of the completed master-planned
expansions at Texas Station and Sunset Station, which were completed in
February 1999 and November 1998, respectively. In addition, revenues at the
Nevada Operations increased due to the introduction of the Boarding Pass player
rewards program in April 1999, which makes it more convenient for customers to
take advantage of the Station brand. Net revenues at the Missouri Operations
increased 8% primarily due to Station Casino Kansas City which generated a 13%
increase.

                                       23
<PAGE>
    OPERATING INCOME/OPERATING MARGIN

    The Company's operating income was impacted by certain charges/credits in
each of the above periods that affect the ability to analyze year to year
comparisons. The following table identifies these charges/credits (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                              TWELVE
                                                     FISCAL YEARS ENDED       MONTHS
                                                        DECEMBER 31,          ENDED       TRANSITION
                                                     -------------------   DECEMBER 31,     PERIOD
                                                       2000       1999         1998          1998
                                                     --------   --------   ------------   ----------
                                                                           (UNAUDITED)
<S>                                                  <C>        <C>        <C>            <C>
Operating income...................................  $242,812   $ 28,871     $ 92,380       $64,696
    OPERATING MARGIN...............................      24.5%       3.1%        10.9%         10.1%

Certain charges/credits:
    Gain on sale of Missouri assets................  $(41,731)  $     --     $     --       $    --
    Missouri/Nevada investigations and fines.......     4,388         --           --            --
    Preopening expenses............................     3,858         --           --            --
    Restructuring charge...........................     1,174         --           --            --
    Impairment loss................................        --    137,435       30,011        30,011

Operating income, excluding certain
  charges/credits..................................  $210,501   $166,306     $122,391       $94,707
    OPERATING MARGIN, EXCLUDING CERTAIN
      CHARGES/CREDITS..............................      21.2%      17.6%        14.4%         14.7%
</TABLE>

    Consolidated operating income, excluding certain charges/credits, improved
by $44.2 million in the fiscal year ended December 31, 2000 as compared to the
fiscal year ended December 31, 1999 with operating income at all of the
Company's properties increasing with the exception of Texas Station. The
increases at the Nevada Operations are attributed to the same factors affecting
consolidated net revenues discussed above, to the elimination of the equipment
lease at Sunset Station in October 1999 and the continued focus on cost controls
at each of the properties. The increases at the Missouri Operations are
primarily due to significant improvement in operations at both Station Casino
St. Charles and Station Casino Kansas City. Operating income at Station Casino
St. Charles increased significantly due to a reconfiguration of the gaming
operations which transferred all gaming activities from the riverboat to the
barge. The new configuration is much more efficient from a cost perspective than
the two facility layout. Station Casino Kansas City continued to benefit from
increases in the overall gaming market in the Kansas City area.

    The consolidated operating margin, excluding certain charges/credits,
improved in the fiscal year ended December 31, 2000 as compared to the fiscal
year ended December 31, 1999, due to the operating margin at the Missouri
Operations improving 7.6 percentage points as a result of the elimination of
costs associated with the riverboat in St. Charles, as discussed above, and the
Nevada Operations improving 1.7 percentage points due primarily to the revenue
growth discussed above.

    Consolidated operating income, excluding certain charges/credits, improved
by $43.9 million in the fiscal year ended December 31, 1999 as compared to the
twelve months ended December 31, 1998 with operating income at all of the
Company's properties increasing. The increases at the Nevada properties are
attributed to the same factors affecting consolidated net revenues discussed
above and the increases at the Missouri properties are primarily attributed to a
95.2% increase in operating income, excluding certain charges/credits, at
Station Casino Kansas City due to a significant improvement in operations at
this property. In addition, the decline in the prior year at Station Casino St.
Charles was reversed as the property posted a $1.6 million increase in operating
income, excluding certain charges/credits.

    The consolidated operating margin, excluding certain charges/credits,
improved in the fiscal year ended December 31, 1999 as compared to the twelve
months ended December 31, 1998, due to the

                                       24
<PAGE>
operating margins at Sunset Station and Station Casino Kansas City improving
over 600 basis points and smaller increases at all of the other properties.

    The following table highlights the various sources of revenues and expenses
for the Company as compared to prior periods (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                TWELVE
                                                   FISCAL YEARS ENDED           MONTHS
                                                      DECEMBER 31,              ENDED          TRANSITION
                                                 ----------------------      DECEMBER 31,        PERIOD
                                                   2000          1999            1998             1998
                                                 --------      --------      ------------      ----------
                                                                             (UNAUDITED)
<S>                                              <C>           <C>           <C>               <C>
Casino revenues................................  $807,880      $764,089        $673,124         $509,149
Casino expenses................................   372,826       356,365         328,953          249,353
    MARGIN.....................................      53.9%         53.4%           51.1%            51.0%

Food and beverage revenues.....................  $137,198      $141,116        $138,044         $104,538
Food and beverage expenses.....................    83,879        88,898          88,423           66,121
    MARGIN.....................................      38.9%         37.0%           35.9%            36.7%

Room revenues..................................  $ 46,260      $ 42,870        $ 39,678         $ 30,040
Room expenses..................................    16,416        15,860          14,975           11,515
    MARGIN.....................................      64.5%         63.0%           62.3%            61.7%

Other revenues.................................  $ 67,999      $ 62,286        $ 59,924         $ 47,663

Selling, general and administrative expenses...  $180,659      $190,753        $181,723         $136,649
    PERCENT OF NET REVENUES....................      18.2%         20.2%           21.5%            21.3%

Corporate expense..............................  $ 26,974      $ 23,007        $ 15,661         $ 11,431
    PERCENT OF NET REVENUES....................       2.7%          2.4%            1.8%             1.8%
</TABLE>

    CASINO.  Casino revenues increased 5.7% for the fiscal year ended
December 31, 2000 as compared to the fiscal year ended December 31, 1999 with
increases at all of the Company's properties. The increase in casino revenues at
the Nevada Operations is a result of the same factors affecting consolidated net
revenues discussed above. The growth in casino revenues in the second half of
the year was tempered somewhat due to the competitive impact of the opening of
the Suncoast on Texas Station, continued road construction near Palace Station
and competitive supply increases on the Boulder Strip and surrounding areas. The
increase in casino revenues at the Missouri Operations was impacted by the same
factors affecting consolidated net revenues discussed above. The casino profit
margin remained relatively consistent for the fiscal year ended December 31,
2000 as compared to the fiscal year ended December 31, 1999.

    Casino revenues increased for the fiscal year ended December 31, 1999 as
compared to the twelve months ended December 31, 1998 as a result of the same
factors affecting consolidated net revenues discussed above. The casino profit
margin increased to 53.4% for the fiscal year ended December 31, 1999 from 51.1%
for the twelve months ended December 31, 1998 with all properties improving
their margin with the exception of Boulder Station which decreased slightly.

    FOOD AND BEVERAGE.  Food and beverage revenues decreased 2.8% for the fiscal
year ended December 31, 2000 as compared to the fiscal year ended December 31,
1999 despite the acquisition of Santa Fe Station. At the Nevada Operations, food
and beverage revenues remained flat with the acquisition of Santa Fe Station
offsetting the reduction in food covers at the other Nevada properties. The
reduction in food covers is due to a combination of selected menu price
increases and additional competition in the market from restaurants in both
gaming and non-gaming facilities. At the Missouri Operations, food and beverage
revenues experienced a 12.4% decrease primarily due to a decrease in food covers
as a result of selected menu price increases at Station Casino Kansas City and
to an overall

                                       25
<PAGE>
reduction of complimentaries at Station Casino St. Charles. Food and beverage
net profit margin increased for the fiscal year ended December 31, 2000 as
compared to the fiscal year ended December 31, 1999 due to an improvement at the
Nevada Operations, primarily as a result of continued focus on cost control and
purchasing efficiencies, as well as selected menu price increases. The increase
in margin at the Nevada Operations was offset by a decrease at Station Casino
St. Charles.

    Food and beverage revenues for the fiscal year ended December 31, 1999
increased 2.2% over food and beverage revenues for the twelve months ended
December 31, 1998. This increase is primarily due to the completion of the
expansion projects at Sunset Station and Texas Station. These increases in food
and beverage revenues in Nevada were offset by decreases at the Missouri
properties. Also, food and beverage revenues increased due to selected menu
price increases, which were offset by a decrease in food covers at all of the
properties. Food and beverage net profit margins increased to 37.0% for the
fiscal year ended December 31, 1999 from 35.9% for the twelve months ended
December 31, 1998.

    ROOM.  Room revenues for the fiscal year ended December 31, 2000 increased
7.9% as compared to the fiscal year ended December 31, 1999. The increase in
room revenues is primarily due to the acquisition of Santa Fe Station and to
average daily room rates at Palace Station and Wild Wild West increasing 14.9%
and 12.7%, respectively, over the prior year and smaller increases at the other
Nevada properties. At Palace Station the room rates for all market segments were
increased as a result of room renovations completed during the summer. The
increase in average daily room rate at the Nevada properties was offset by a
decrease in the average daily room rate at Station Casino Kansas City to $106 in
the fiscal year ended December 31, 2000 from $109 in the fiscal year ended
December 31, 1999 due to new lower rate competitors that entered the market
during 1999.

    The company-wide room occupancy decreased to 88% in the fiscal year ended
December 31, 2000 as compared to 89% in the fiscal year ended December 31, 1999
due to the Company increasing room rates at the Nevada properties. The
company-wide average daily room rate increased to $58 in the fiscal year ended
December 31, 2000 as compared to $54 in the fiscal year ended December 31, 1999.

    Room revenues for the fiscal year ended December 31, 1999 increased 8.0%
over room revenues for the twelve months ended December 31, 1998. The primary
reason for this increase was due to the acquisition of Wild Wild West in
July 1998, which contributed $2.3 million of room revenues in the fiscal year
ended December 31, 1999 as compared to $1.1 million of room revenues in the
twelve months ended December 31, 1998.

    The company-wide room occupancy decreased to 89% in the fiscal year ended
December 31, 1999 as compared to 90% in the twelve months ended December 31,
1998 due to the Company increasing room rates at the properties. The average
daily room rate increased to $54 in the fiscal year ended December 31, 1999 as
compared to $51 in the twelve months ended December 31, 1998.

    SELLING, GENERAL AND ADMINISTRATIVE ("SG&A").  As a percent of net revenues,
SG&A decreased to 18.2% in the fiscal year ended December 31, 2000, as compared
to 20.2% in the fiscal year ended December 31, 1999. This decrease is due
primarily to the continuing operating efficiencies in addition to the
elimination of the equipment lease at Sunset Station in October 1999. Also, due
to the fixed cost nature of some of these expenses, they decrease on a
percentage basis as the Company continues to increase revenue.

    As a percent of net revenues, SG&A decreased to 20.2% in the fiscal year
ended December 31, 1999 as compared to 21.5% in the twelve months ended
December 31, 1998. These decreases are due primarily to the fine tuning of
operations at Sunset Station and Station Casino Kansas City.

                                       26
<PAGE>
    CORPORATE EXPENSE.  Corporate expense as a percent of net revenues increased
to 2.7% in the fiscal year ended December 31, 2000 as compared to 2.4% in the
fiscal year ended December 31, 1999. Corporate expense as a percent of net
revenues increased to 2.4% in the fiscal year ended December 31, 1999 as
compared to 1.8% in the twelve months ended December 31, 1998. The Company has
increased its corporate infrastrucure and spending on Information Technology and
Human Resources as it continues to lay the foundation for future growth.

    DEPRECIATION AND AMORTIZATION.  Depreciation and amortization decreased
10.4% in the fiscal year ended December 31, 2000 to $63.3 million as compared to
$70.7 million in the fiscal year ended December 31, 1999. This decrease is
primarily due to the write down of assets at Station Casino St. Charles in the
fourth quarter of 1999 and also due to the assets at Station Casino St. Charles
and Station Casino Kansas City not being depreciated during the last two months
of the year. Upon entering into the agreement to sell the Missouri properties,
these assets were classified as "assets held for sale" and, consequently,
depreciation ceased. This decrease was offset by an increase at Sunset Station
due to the purchase of various leased equipment in October 1999 and due to the
acquisition of Santa Fe Station.

    Depreciation and amortization increased $0.7 million in the fiscal year
ended December 31, 1999 to $70.7 million as compared to $70.0 million in the
twelve months ended December 31, 1998. This increase is due to the completion of
the expansion projects at Sunset Station and Texas Station which were completed
in November 1998 and February 1999, respectively.   This increase was offset by
decreases at Boulder Station and Station Casino St. Charles as a portion of the
original equipment became fully depreciated during the fiscal year ended
December 31, 1999, as both properties have been open for five years. In
addition, Palace Station had a large purchase of slot machines in 1994 that
became fully depreciated during the fiscal year ended December 31, 1999.

    IMPAIRMENT LOSS.  In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
the Company recorded an impairment loss of $137.4 million in the fiscal year
ended December 31, 1999 and $30.0 million in the Transition Period 1998 to
adjust the carrying value of its fixed assets and land held for development to
their estimated fair value. In the fiscal year ended December 31, 1999,
approximately $125.2 million of the impairment loss was related to Station
Casino St. Charles. In the fourth quarter of 1999, the Company made a decision
to reconfigure the existing Station Casino St. Charles facility to a more
efficient layout in response to the new open boarding rules promulgated by the
Missouri Gaming Commission that began in September 1999 in the St. Louis market.
In March 2000, all gaming operations were moved to the existing barge and the
existing riverboat has been sold. In accordance with SFAS No. 121, the riverboat
and miscellaneous other fixed assets were written down by approximately
$15 million to their net realizable value.

    In addition, the Company performed an evaluation of the carrying values of
the remaining assets in St. Charles and determined a $110 million write-down of
the asset values was necessary. The write-down was deemed appropriate after a
review of the property's asset valuations relative to the Company's near-term
investment objectives. The balance of the impairment loss in the fiscal year
ended December 31, 1999, resulted primarily from the Company's determination
that it would sell a 40-acre parcel of land in Henderson, Nevada, that it had
acquired. Future development of the property will be limited to non-gaming
purposes. The resulting write-down of the parcel was necessary to reflect the
value of the land as a non-gaming site. This land was sold in the fiscal year
ended December 31, 2000.

    In the Transition Period 1998, the impairment loss principally involves
assets at the Station Casino St. Charles facility, including a riverboat
formerly used in the Missouri operations, capitalized project costs associated
with various parcels of land determined to have no value, and several parcels of
land within close proximity to the St. Charles, Missouri site that were being
held for future development.

                                       27
<PAGE>
The fair value of the impaired assets was primarily determined through the
market's interest in riverboats and barges, and on the comparable sales prices
on parcels of land in the St. Charles area. The total amount of the impairment
loss in the Transition Period 1998 related to this category of assets was
approximately $23.4 million. In addition to the assets described above, the most
significant portion of the remaining impairment loss in the Transition Period
1998 relates to several parcels of land in Nevada and Texas that the Company had
acquired in the past for either defensive or expansion purposes. The value of
these parcels was determined based on sales prices for comparable parcels of
land on the market. The following two circumstances led to the Company's
decision to write-down these assets to their fair market value: (1) the passage,
in Nevada, of legislation which places significantly higher requirements on land
to be zoned for gaming purposes, and (2) the termination of the Plan of Merger
with Crescent Real Estate Equities.

    RESTRUCTURING CHARGE.  During the fiscal year ended December 31, 2000, the
Company recorded a restructuring charge of $1.2 million related to
organizational changes to reduce costs and improve efficiency which resulted
primarily in employee severance payments. The Nevada Operations were
restructured to divide management responsibility between the east side and west
side of the Las Vegas valley. As a result, certain functions that were operated
on an individual property basis have been consolidated.

    MISSOURI/NEVADA INVESTIGATIONS AND FINES.  During the fiscal year ended
December 31, 2000, the Company recorded $4.4 million in costs related to
litigation and fines stemming from investigatory proceedings in Missouri and
Nevada (see Lazaroff Investigation below for additional information on the
Missouri investigation).

    PREOPENING EXPENSES.  Prior to December 31, 1998, the Company capitalized
preopening expenses associated with its construction projects. Such amounts were
expensed upon the opening of the related project. Preopening expenses incurred
after January 1, 1999 have been expensed as incurred. Preopening expenses during
the fiscal year ended December 31, 2000 included $1.1 million related to costs
incurred for the acquisition of Santa Fe Station, $1.8 million related to the
expansion project at Texas Station, $0.7 million related to costs incurred prior
to the acquisition of the Fiesta, $0.1 million related to costs incurred prior
to the acquisition of The Reserve and $0.2 million related to Green Valley
Ranch.

    INTEREST EXPENSE, NET.  Interest costs incurred (expensed and capitalized)
increased 16.2% to $99.2 million for the fiscal year ended December 31, 2000 as
compared to $85.4 million in the fiscal year ended December 31, 1999. This
increase is due in part to an increase of $47.1 million in total long-term debt
from the prior year. In addition, the Company issued $375 million of 9 7/8%
Senior Subordinated Notes in July 2000. The proceeds of the notes were used to
repay amounts outstanding on the revolving credit facility and term loan which
carried lower interest rates.

    Interest costs incurred (expensed and capitalized) decreased 6.2% to
$85.4 million for the fiscal year ended December 31, 1999 as compared to
$91.0 million in the twelve months ended December 31, 1998. This decrease is due
to a decline of $17.2 million in total long-term debt from the prior year and to
a reduction in average interest rates on long-term debt to 9.0% from 9.6% in the
prior year.

    OTHER INCOME/EXPENSE.  During the fourth quarter of the fiscal year ended
December 31, 1999, the Company wrote off $2.4 million of costs incurred related
to the termination of the Flamingo Hilton Kansas City acquisition.

    In April 1999, the Company received a $15.0 million settlement payment from
Crescent Real Estate Equities, Inc., which is included in the "Merger
settlement, net of related legal costs" line on the accompanying Consolidated
Statements of Operations.

                                       28
<PAGE>
    EXTRAORDINARY ITEM.  During the fiscal year ended December 31, 2000, the
Company recorded an extraordinary charge of $0.4 million (net of applicable tax
benefit) related to the termination of the Company's Term Loan and $0.1 million
(net of applicable tax benefit) related to the termination of the Company's
bridge loan.

    In 1999, the Company recorded an extraordinary charge of $10.4 million (net
of applicable tax benefit) to reflect the write-off of the unamortized debt
discount, unamortized loan costs and the premium to redeem the 9 5/8% senior
subordinated notes, which were repaid on January 4, 1999. In addition, the
Company also recorded an extraordinary charge of $0.3 million (net of applicable
tax benefit) related to the write-off of unamortized loan costs on the Company's
$75.0 million secured term loan facility.

LIQUIDITY AND CAPITAL RESOURCES

    During the fiscal year ended December 31, 2000, the Company generated cash
flows from operating activities of $163.7 million. At December 31, 2000, the
Company had total available borrowings of $380.8 million under the Amended Bank
Facility, of which $64.0 million was directly outstanding. Total available
borrowings will reduce each quarter in accordance with the terms of the Amended
Bank Facility (see "Description of Certain Indebtedness and Capital
Stock-Amended Bank Facility"). The Company also had $256.0 million in cash and
cash equivalents. Included in the cash balance was $194.2 million received from
the sale of the Missouri properties that was held to fund portions of the Fiesta
and The Reserve acquisitions, which were completed in January 2001, as well as
the purchase of land in North Las Vegas in January 2001. On December 20, 2000,
the Company sold the Missouri Operations to Ameristar Casinos, Inc. for
$488 million.

    During the year ended December 31, 2000, total capital expenditures were
approximately $358.8 million, of which approximately (i) $205 million was
associated with the acquisition of Santa Fe Station, (ii) $65.5 million was
associated with the expansion project at Texas Station, (iii) $3.3 million was
associated with the reconfiguration of the Station Casino St. Charles facility
to a more efficient layout, (iv) $8.8 million was associated with the hotel room
remodels at Palace Station and Boulder Station, (v) $27.3 million was associated
with the renovation and retheming of Santa Fe Station, (vi) $7.7 million was
associated with the expansion of the Sunset Station parking garage,
(vii) $29.3 million was for maintenance capital expenditures, and
(viii) $9.5 million was associated with various other projects. In addition to
the capital expenditures noted above, the Company also made $32.0 million of
equity contributions to Green Valley Ranch.

    The Company's primary capital requirements during fiscal year 2001 are
expected to include (i) purchase of the Fiesta Casino Hotel and costs of capital
improvements, expected to total approximately $175 million, (ii) purchase of The
Reserve Hotel & Casino, and costs of capital improvements, expected to total
approximately $80 million, (iii) the remaining costs of the expansion project at
Santa Fe Station, estimated to be approximately $43.7 million, (iv) the
remaining equity contributions to Green Valley Ranch expected to be
approximately $16 million, (v) investments in new slot machines and a new slot
system of approximately $40 million, (vi) the purchases of land for
approximately $33 million, which includes the buyout of the land that is
currently leased by Sunset Station, (vii) strategic land purchases throughout
the Las Vegas area, (viii) opportunistic repurchases of the Company's Common
Stock, (ix) maintenance capital expenditures, and (x) principal and interest
payments on indebtedness.

    In February 2001, the Company issued $300 million of senior notes, the
proceeds of which were used to pay down the Revolving Facility and to repay
$100 million of principal amount of the 10 1/8% senior subordinated notes. The
Company believes that cash flows from operations, borrowings under the Amended
Bank Facility, vendor and lease financing of equipment, and existing cash
balances will be adequate to satisfy the Company's anticipated uses of capital
during fiscal year 2001. The Company,

                                       29
<PAGE>
however, continually is evaluating its financing needs. If more attractive
financing alternatives or expansion, development or acquisition opportunities
become available to the Company, the Company may amend its financing plans
assuming such financing would be permitted under its existing debt agreements
(See "Description of Certain Indebtedness and Capital Stock") and other
applicable agreements.

FUTURE DEVELOPMENT

    GREEN VALLEY RANCH

    A 50/50 joint venture between the Company and GCR Gaming, LLC (an affiliate
of American Nevada Corporation) has commenced construction of a new
resort/casino, Green Valley Ranch, on the south side of Interstate 215 at Green
Valley Parkway in Henderson, Nevada. The 40-acre resort site is part of a
170-acre mixed-use commercial, retail and office project. The Company expects to
contribute approximately $50 million in cash equity for a 50 percent equity
ownership. As of December 31, 2000, the Company has made cash equity
contributions of $34 million. The Company will be the managing partner of Green
Valley Ranch and will receive a management fee for its services. Construction of
the resort is expected to be completed in the fourth quarter of 2001. The
estimated construction cost of this project is approximately $300 million. The
project is expected to be capitalized with total equity contributions from the
partners of approximately $100 million and third party financing for the
remainder. The joint venture has received commitments from a group of banks for
a $165 million reducing revolving credit facility, subject to customary
conditions. The Company anticipates that it will be required to enter into a
completion guarantee and a make-well agreement in connection with the Green
Valley Ranch financing. In addition, the joint venture anticipates obtaining
$35 million of equipment lease financing from a group of lenders. If the third
party financing cannot be obtained or is insufficient to fund the construction
costs, the Company and GCR Gaming, LLC would be obligated to contribute amounts
necessary to finance the construction and opening of the project. The Company
has co-owned Barley's with an affiliate of American Nevada Corporation since
January 1996.

    UNITED AUBURN INDIAN COMMUNITY

    On October 12, 1999, the Company announced that it has entered into a
Development Services Agreement and a Management Agreement with the United Auburn
Indian Community (the "UAIC"). Subject to the receipt of certain governmental
approvals, as well as voter approval of a proposed amendment to the California
constitution, the Company and the UAIC intend to develop a gaming and
entertainment facility on 49 acres, located approximately seven miles north of
Interstate 80, in Placer County, California, near Sacramento. Voter approval of
the proposed amendment to the California constitution was received in
March 2000, however there can be no assurances when or if the necessary
government approvals will be received. The scope and timing of this project have
yet to be determined.

    LAND ACQUISITION

    In addition to Green Valley Ranch, the Company has purchased or has options
to purchase an additional 290 acres of land for six additional gaming sites in
the Las Vegas Valley which will be used for future development. The Rhodes Ranch
site consists of two parcels totaling 83 acres (the Company owns 51 acres and
has an option to purchase 32 acres), located at the intersection of Durango Road
and the Southern Beltway/I-215 located in the southwest quadrant of Las Vegas.
The Boulder/Tropicana site is a 68-acre site consisting of two parcels at the
intersection of Boulder Highway and Tropicana Avenue in eastern Las Vegas. The
Company is leasing (with an option to purchase) 34 acres of the site and has
entered into an option to purchase the adjacent 34-acre parcel. The Company paid
$30.2 million for the land mentioned above. The Company has no immediate plans
to develop these sites.

                                       30
<PAGE>
    On April 19, 2000, the Company announced that it had secured a gaming site
in North Las Vegas. The site is a 34-acre parcel near the intersection of Martin
Luther King Jr. Drive and Craig Road in North Las Vegas, Nevada. The Company has
entered into a long-term ground lease with an option to purchase the property.
The parcel is already entitled for gaming. As part of the transaction, the
Company also placed a deed restriction prohibiting casino gaming on an 18-acre
parcel, approximately 1.5 miles east of this site, that was previously entitled
for gaming. The Company is currently evaluating the size, scope and timing of
this project. In order to maintain its gaming entitlements, the Company would be
required to complete the facility prior to the end of 2002.

    In December 2000, the Company purchased for $42.0 million a 49-acre
gaming-entitled parcel in southwest Las Vegas at the intersection of Flamingo
Road and the soon-to-be-completed Interstate 215 Western Beltway. In
January 2001, the Company purchased for $9.0 million a 29-acre gaming-entitled
parcel at the intersection of Smoke Ranch Road and Rancho Road in North Las
Vegas, adjacent to the North Las Vegas airport. In addition, the Company owns a
27-acre gaming entitled parcel at the intersection of Boulder Highway and Nellis
Boulevard.

    The Company's capital requirements in 2001 could also include amounts
necessary to fund the proposed development of the project with the United Auburn
Indian Community to the extent development of such project is commenced in 2001.
In addition, the Company has in the past, and may in the future, make
acquisitions and enter into joint ventures on an opportunistic basis. While the
Company has not entered into any agreement with respect to any such future
acquisition or joint venture other than as disclosed in this report, the
Company's capital requirements in 2001 may include amounts necessary to permit
the Company to pursue such expansion activities.

LAZAROFF INVESTIGATION

    In November the Company entered into a Settlement and Final Order with the
Missouri Gaming Commission (the "MGC"). The settlement addressed all outstanding
issues between the MGC and the Company and its affiliates, including
(1) allegations relating to the activities of Michael Lazaroff, an attorney who
formerly represented the Company in Missouri, and (2) other unrelated, pending
disciplinary actions which sought administrative penalties totaling $400,000.
Although denying any wrongdoing, the Company paid an administrative penalty of
$1 million to the MGC as part of the settlement after the closing of the sale of
the Company's Missouri properties to Ameristar Casinos, Inc.

REGULATION AND TAXES

    The Company is 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 it may conduct gaming
activities in the future. Changes in applicable laws or regulations could have a
significant impact on the Company's operations. Pursuant to legislation enacted
in 1996, a federal commission conducted a two-year study of the gaming industry
in the United States and reported its findings and recommendations to Congress.
To date there have been no changes to existing laws or regulations as a result
of this report.

    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. Proposals in recent years that have not been enacted included a
federal gaming tax and increases in state or local taxes, however, we have no
assurances that future proposals will not be enacted.

    Management believes that the Company's 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

                                       31
<PAGE>
administration of such law. Such changes, if adopted, could have a material
adverse effect on the Company's operating results.

DESCRIPTION OF CERTAIN INDEBTEDNESS AND CAPITAL STOCK

    AMENDED BANK FACILITY

    In August 1999, the Company amended its existing bank credit facility (the
"Revolving Facility") and entered into a new secured term loan facility (the
"Term Loan") (collectively, "the Amended Bank Facility"). The Amended Bank
Facility is secured by substantially all of the assets of Palace Station,
Boulder Station, Texas Station, Sunset Station, Station Casino St. Charles and
Station Casino Kansas City (the "Borrowers"). The proceeds from the Term Loan
were used to repay the Company's existing $75.0 million secured term loan
facility and to reduce outstanding borrowings under the Company's Revolving
Facility. The Company recorded an extraordinary charge of $0.3 million (net of
applicable tax benefit) to reflect the write-off of the unamortized loan costs
on the refinanced $75.0 million secured term loan facility. See discussion below
regarding the termination of the term loan.

    In March, 2000, the Company exercised its right to increase the Revolving
Facility by $50.0 million. The Revolving Facility provides for borrowings up to
an aggregate principal amount of $380.8 million at December 31, 2000. The
Revolving Facility matures on September 30, 2003. The availability under the
Revolving Facility was to reduce by $14.0 million on each March 31, 2001 and
June 30, 2001; by $17.5 million on each fiscal quarter end until and including
September 30, 2002; by $30.6 million on each fiscal quarter end until and
including June 30, 2003; and by $173.4 million on September 30, 2003. However,
in February 2001, the Company reduced the Revolving Facility to $300.8 million.
This reduction in the facility will eliminate substantially all the scheduled
amortization through March 31, 2002. Borrowings under the Revolving Facility
bear interest at a margin above the Alternate Base Rate or the Eurodollar Rate
(each, as defined in the Revolving Facility), as selected by the Company. The
margin above such rates, and the fee on the unfunded portions of the Revolving
Facility, will vary quarterly based on the Company's combined consolidated ratio
of debt to EBITDA (each, as defined in the Revolving Facility). As of
December 31, 2000, the Borrower's margin above the Eurodollar Rate on borrowings
under the Revolving Facility was 1.50%. The maximum margin for Eurodollar Rate
borrowings is 2.75%. The maximum margin for Alternate Base Rate borrowings is
1.50%. As of December 31, 2000, the fee for the unfunded portion of the
Revolving Facility was 35 basis points.

    The Revolving Facility contains certain financial and other covenants. These
include a maximum funded debt to Adjusted EBITDA ratio for the Borrowers
combined of 2.50 to 1.00 for each fiscal quarter (reduced to 2.25 to 1.00 in
February 2001), a minimum fixed charge coverage ratio for the preceding four
quarters for the Borrowers combined of 1.50 to 1.00 for each fiscal quarter,
limitations on indebtedness, limitations on asset dispositions, limitations on
investments, limitations on prepayments of indebtedness and rent and limitations
on capital expenditures. As of December 31, 2000, the Borrowers combined funded
debt to Adjusted EBITDA ratio was 0.72 to 1.00 and their combined fixed charge
coverage ratio for the preceding four quarters ended December 31, 2000 was 2.34
to 1.00. A tranche of the Revolving Facility contains a minimum tangible net
worth requirement for Palace Station and certain restrictions on distributions
of cash from Palace Station to the Company. As of December 31, 2000, Palace
Station's tangible net worth exceeded the requirement by approximately
$10.2 million. These covenants limit Palace Station's ability to make payments
to the Company, a significant source of anticipated cash for the Company.

    In addition, the Revolving Facility has financial and other covenants
relating to the Company. These include a tangible net worth covenant and a
covenant limiting the consolidated funded debt to Adjusted EBITDA ratio to no
more than 4.50 to 1.00 on December 31, 2000. In February 2001, this ratio was
increased to 5.25 to 1.00 and reducing in various steps to 4.50 to 1.00 on
September 30, 2003. Other covenants limit prepayments of indebtedness or rent
(including, subordinated debt other than

                                       32
<PAGE>
refinancings meeting certain criteria), limitations on asset dispositions,
limitations on dividends, limitations on indebtedness, limitations on
investments and limitations on capital expenditures. The Revolving Facility also
prohibits the Company from holding excess cash and cash equivalents. As of
December 31, 2000, the Company's consolidated funded debt to Adjusted EBITDA
ratio was 3.99 to 1.00. As of December 31, 2000, the Company has pledged the
stock of all of its material subsidiaries except Kansas City Station Corporation
and St. Charles Riverfront Station, Inc. and has agreed to pledge the stock of
these subsidiaries.

    SENIOR SUBORDINATED NOTES

    The Company has $916.5 million, net of unamortized discount of
$6.4 million, of senior subordinated notes outstanding as of December 31, 2000,
$198 million of these notes bear interest, payable semi-annually, at a rate of
10 1/8% per year, $150 million of these notes bear interest, payable
semi-annually, at a rate of 9 3/4% per year, $199.9 million of these notes bear
interest, payable semi-annually, at a rate of 8 7/8% per year and $375 million
of these notes bear interest, payable semi-annually, at a rate of 9 7/8% per
year (collectively the "Notes"). The indentures governing the Notes (the
"Indentures") contain certain customary financial and other covenants, which
limit the Company and its subsidiaries' ability to incur additional debt and to
pay dividends. At December 31, 2000, the Company's Consolidated Coverage Ratio
(as defined) was 2.34 to 1.00. The Indentures provide that the Company may not
incur additional indebtedness, other than specified types of indebtedness,
unless the Consolidated Coverage Ratio is at least 2.00 to 1.00. In the event
the Consolidated Coverage Ratio is not at least 2.00 to 1.00, the covenant
limits the Company's ability to incur additional indebtedness for borrowings
under the Amended Bank Facility not to exceed the greater of $200 million or 1.5
times Operating Cash Flow (as defined) for the four most recent quarters, plus
$15 million. On August 10, 2000, the Company completed a consent solicitation
with the holders of the Notes to exclude the write-down of assets at Station
Casino St. Charles in December 1999 from the definition of consolidated net
income for the Consolidated Coverage Ratio. The limitation on the incurrence of
additional indebtedness and dividend restrictions in the Indentures
significantly restrict the Company's ability to pay dividends on its capital
stock. The Indentures also give the holders of the Notes the right to require
the Company to purchase the Notes at 101% of the principal amount of the Notes
plus accrued interest thereon upon a Change of Control and Rating Decline (each
as defined in the Indentures) of the Company.

    SENIOR NOTES

    In February 2001, the Company issued $300 million of 8 3/8% Senior Notes
(the "Senior Notes"). The proceeds from the Senior Notes were used to repay
amounts outstanding on the Revolving Facility and to redeem $100 million
principal amount (and the associated call premium) of the 10 1/8% senior
subordinated notes. The Senior Note indenture contains substantially the same
covenants as the Indentures, as well as a limitation on the amount of liens the
Company can incur.

    SUNSET OPERATING LEASE

    The Company entered into an operating lease for furniture, fixtures and
equipment (the "Equipment") with a cost of up to $40.0 million, dated as of
September 25, 1996 (the "Sunset Operating Lease") with First Security Trust
Company of Nevada. A total of $35.7 million of this facility had been drawn. The
Company incurred approximately $2.0 million of rent expense per quarter related
to the Sunset Operating Lease. In October 1999, the Company exercised its option
to purchase the equipment for approximately $27 million. The purchase price was
funded with borrowings from the Company's Revolving Facility.

                                       33
<PAGE>
    COMMON STOCK

    On May 23, 2000, the Company announced a 3-for-2 stock split. The record
date for the stock split was June 30, 2000 and the distribution date was
July 17, 2000. Cash was paid for all fractional shares. All share data has been
adjusted retroactively in the accompanying consolidated financial statements for
the 3-for-2 stock split.

    Adjusted for the stock split, the Company is authorized to issue up to
135,000,000 shares of its common stock, $0.01 par value per share (the "Common
Stock"), 63,919,530 shares of which were issued and 3,552,401 shares were held
in treasury as of December 31, 2000. Each holder of the Common Stock is entitled
to one vote for each share held of record on each matter submitted to a vote of
stockholders. Holders of the Common Stock have no cumulative voting, conversion,
redemption or preemptive rights or other rights to subscribe for additional
shares other than pursuant to the Rights Plan described below. Subject to any
preferences that may be granted to the holders of the Company's preferred stock,
each holder of Common Stock is entitled to receive ratably such dividends as may
be declared by the Board of Directors out of funds legally available therefor as
well as any distributions to the stockholders and, in the event of liquidation,
dissolution or winding up of the Company, is entitled to share ratably in all
assets of the Company remaining after payment of liabilities.

    RIGHTS PLAN

    On October 6, 1997, the Company declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock. The
dividend was paid on October 21, 1997. Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series A Preferred
Stock, par value $0.01 per share ("Preferred Shares") of the Company at a price
of $40.00 per one one-hundredth of a Preferred Share, subject to adjustment. The
Rights are not exercisable until the earlier of 10 days following a public
announcement that a person or group of affiliated or associated persons have
acquired beneficial ownership of 15% or more of the outstanding Common Stock
("Acquiring Person") or 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer, the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Stock.

    The Rights will expire on October 21, 2007. Acquiring Persons do not have
the same rights to receive Common Stock as other holders upon exercise of the
Rights. Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share. In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the proper provisions will be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter become void), will thereafter have the right to
receive upon exercise that number of shares of Common Stock having a market
value of two times the exercise price of the Right. In the event that the
Company is acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon exercise
thereof, that number of shares of Common Stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right. Because of the characteristics of the Rights in connection
with a person or group of affiliated or associated persons becoming an Acquiring
Person, the Rights may have the effect of making an acquisition of the Company
more difficult and may discourage such an acquisition.

                                       34
<PAGE>
    PREFERRED STOCK

    The Company is authorized to issue up to 5,000,000 shares of its preferred
stock, $0.01 par value per share (the "Preferred Stock"). As of June 14, 1999,
the Company redeemed all 2,070,000 shares of its $3.50 Convertible Preferred
Stock in exchange for 10,112,448 shares of the Company's Common Stock. The Board
of Directors, without further action by the holders of 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, the 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 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 the Company or other
corporate action.

    TREASURY STOCK

    Adjusted for the stock split, the Company is authorized to repurchase up to
approximately 9.5 million shares of its Common Stock. As of December 31, 2000,
the Company had purchased 3.6 million shares at a cost of $41.9 million. In
July 2000, the Company entered into an equity forward contract that allows for
shares of the Company's Common Stock to be purchased by a financial institution
and held on the Company's behalf. This contract expired in January 2001 and the
terms of the contract permitted settlement in cash, shares, net cash or net
shares. In January 2001, the Company closed out the contract and purchased
3.2 million shares for approximately $46 million.

    PUT OPTIONS

    During the quarter ended March 31, 2000, the Company sold put options,
adjusted for the stock split, on 2.2 million shares of its Common Stock. The
Company had the option to settle in cash or shares of Common Stock. On
April 27, 2000, options on 1.1 million shares expired unexercised. On July 27,
2000, the remaining options on 1.1 million shares were rolled into another put
option for 1.1 million shares, which was terminated on August 4, 2000.

                                       35
<PAGE>
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. The Company's primary exposure to market risk is interest rate
risk associated with its long-term debt. The Company attempts to limit its
exposure to interest rate risk by managing the mix of its long-term fixed-rate
borrowings and short-term borrowings under the Amended Bank Facility. Borrowings
under the Amended Bank Facility bear interest, at the Company's option, at a
specified premium over the prime rate or at a specified premium over the one-,
two-, three-, or six-month London Interbank Offered Rate ("LIBOR"). However, the
amount of outstanding borrowings is expected to fluctuate and may be reduced
from time to time. The Revolving Facility matures in September 2003.

    The following table provides information about the Company's long-term debt
at December 31, 2000 (see also "Description of Certain Indebtedness and Capital
Stock") (amounts in thousands):

<TABLE>
<CAPTION>
                                                MATURITY           FACE     CARRYING   ESTIMATED
                                                  DATE            AMOUNT     VALUE     FAIR VALUE
                                          --------------------   --------   --------   ----------
<S>                                       <C>                    <C>        <C>        <C>
Revolving Facility at a weighted average
  interest rate of approximately
  9.41%.................................  September 2003         $ 64,000   $ 64,000   $   64,000
9 7/8% senior subordinated notes........  July 2010               375,000    373,566      386,438
8 7/8% senior subordinated notes........  December 2008           199,900    199,900      196,622
9 3/4% senior subordinated notes........  April 2007              150,000    145,782      153,720
10 1/8% senior subordinated notes         March 2006              198,000    197,205      204,098
Other notes, interest ranging from 8.50%
  to 9.00%..............................  Various to June 2007      9,172      9,172        9,172
                                                                 --------   --------   ----------
    Total.....................................................   $996,072   $989,625   $1,014,050
                                                                 ========   ========   ==========
</TABLE>

                                       36
<PAGE>
ITEM 8. FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Report of Independent Public Accountants....................     38

Consolidated Balance Sheets.................................     39

Consolidated Statements of Operations.......................     40

Consolidated Statements of Stockholders' Equity.............     41

Consolidated Statements of Cash Flows.......................     42

Notes to Consolidated Financial Statements..................     43
</TABLE>

                                       37
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

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

    We have audited the accompanying consolidated balance sheets of Station
Casinos, Inc. (a Nevada corporation) and subsidiaries as of December 31, 2000
and 1999, and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended December 31, 2000 and 1999 and for the
nine months ended December 31, 1998. 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. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as 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 Station Casinos, Inc. and
subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for the years ended December 31, 2000 and 1999
and for the nine months ended December 31, 1998, in conformity with accounting
principles generally accepted in the United States.

Arthur Andersen LLP

Las Vegas, Nevada
January 23, 2001 (except for Note 12, as to which the date is March 15, 2001)

                                       38
<PAGE>
                             STATION CASINOS, INC.

                          CONSOLIDATED BALANCE SHEETS

                   (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                 2000         1999
                                                              ----------   ----------
<S>                                                           <C>          <C>
                           ASSETS
Current assets:
    Cash and cash equivalents...............................  $  255,984   $   73,072
    Receivables, net........................................      11,128       12,346
    Income tax receivable...................................      18,351           --
    Inventories.............................................       3,975        6,013
    Prepaid gaming tax......................................      11,072       10,035
    Prepaid expenses........................................       5,276        8,219
    Deferred income tax.....................................       7,248        8,023
                                                              ----------   ----------
        Total current assets................................     313,034      117,708

Property and equipment, net.................................     811,449    1,025,753
Goodwill, net...............................................     114,854        2,407
Land held for development...................................      97,949       18,839
Investment in joint ventures................................      45,210        3,699
Deferred income tax, net....................................          --       24,319
Other assets, net...........................................      57,932       83,548
                                                              ----------   ----------
        Total assets........................................  $1,440,428   $1,276,273
                                                              ==========   ==========
            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt.......................  $    5,684   $    8,647
    Accounts payable........................................      21,871       11,998
    Accrued payroll and related.............................      20,335       25,065
    Construction contracts payable..........................       5,476          750
    Accrued interest payable................................      10,998       12,341
    Accrued progressives....................................       6,837        8,877
    Accrued expenses and other current liabilities..........      53,541       50,011
                                                              ----------   ----------
        Total current liabilities...........................     124,742      117,689

Long-term debt, less current portion........................     983,941      933,833
Deferred income tax, net....................................      31,336           --
Other long-term liabilities, net............................      11,522        7,950
                                                              ----------   ----------
        Total liabilities...................................   1,151,541    1,059,472
                                                              ----------   ----------
Commitments and contingencies (Note 6)

Stockholders' equity:
    Common stock, par value $.01; authorized 135,000,000
      shares; 63,919,530 and 63,683,999 shares issued.......         427          424
    Treasury stock, 3,552,401 and 1,167,494 shares, at
      cost..................................................     (41,882)     (11,862)
    Additional paid-in capital..............................     288,794      282,294
    Deferred compensation--restricted stock.................      (6,050)      (7,432)
    Retained earnings (accumulated deficit).................      47,598      (45,907)
    Accumulated other comprehensive income..................          --         (716)
                                                              ----------   ----------
        Total stockholders' equity..........................     288,887      216,801
                                                              ----------   ----------
        Total liabilities and stockholders' equity..........  $1,440,428   $1,276,273
                                                              ==========   ==========
</TABLE>

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

                                       39
<PAGE>
                             STATION CASINOS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                   (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                FOR THE YEARS ENDED
                                                                   DECEMBER 31,
                                                              -----------------------    TRANSITION
                                                                 2000         1999      PERIOD 1998
                                                              ----------   ----------   ------------
                                                                                        (SEE NOTE 1)
<S>                                                           <C>          <C>          <C>
Operating revenues:
    Casino..................................................  $  807,880   $  764,089    $  509,149
    Food and beverage.......................................     137,198      141,116       104,538
    Room....................................................      46,260       42,870        30,040
    Other...................................................      67,999       62,286        47,663
                                                              ----------   ----------    ----------
        Gross revenues......................................   1,059,337    1,010,361       691,390
    Promotional allowances..................................     (67,659)     (67,892)      (49,176)
                                                              ----------   ----------    ----------
        Net revenues........................................     991,678      942,469       642,214
                                                              ----------   ----------    ----------
Operating costs and expenses:
    Casino..................................................     372,826      356,365       249,353
    Food and beverage.......................................      83,879       88,898        66,121
    Room....................................................      16,416       15,860        11,515
    Other...................................................      37,077       30,616        19,463
    Selling, general and administrative.....................     180,659      190,753       136,649
    Corporate expense.......................................      26,974       23,007        11,431
    Depreciation and amortization...........................      63,346       70,664        52,975
    Gain on sale of Missouri assets.........................     (41,731)          --            --
    Missouri/Nevada investigations and fines................       4,388           --            --
    Preopening expenses.....................................       3,858           --            --
    Restructuring charge....................................       1,174           --            --
    Impairment loss.........................................          --      137,435        30,011
                                                              ----------   ----------    ----------
                                                                 748,866      913,598       577,518
                                                              ----------   ----------    ----------
Operating income............................................     242,812       28,871        64,696
                                                              ----------   ----------    ----------
Other income (expense):
    Interest expense, net...................................     (94,098)     (84,618)      (66,127)
    Merger settlement, net of related legal costs...........          --       12,824        (2,943)
    Other...................................................        (565)      (4,300)       (5,490)
                                                              ----------   ----------    ----------
                                                                 (94,663)     (76,094)      (74,560)
                                                              ----------   ----------    ----------
Income (loss) before income taxes and extraordinary item....     148,149      (47,223)       (9,864)
Income tax (provision) benefit..............................     (54,098)      14,929           871
                                                              ----------   ----------    ----------
Income (loss) before extraordinary item.....................      94,051      (32,294)       (8,993)

Extraordinary item--loss on early retirement of debt, net of
  applicable income tax benefit.............................        (546)     (10,653)       (3,104)
                                                              ----------   ----------    ----------
Net income (loss)...........................................      93,505      (42,947)      (12,097)
Preferred stock dividends...................................          --       (1,811)       (5,434)
                                                              ----------   ----------    ----------
Net income (loss) applicable to common stock................  $   93,505   $  (44,758)   $  (17,531)
                                                              ==========   ==========    ==========
Basic and diluted earnings (loss) per common share:
  Earnings (loss) applicable to common stock, before
    extraordinary item:
    Basic...................................................  $     1.55   $    (0.58)   $    (0.27)
    Diluted.................................................  $     1.49   $    (0.58)   $    (0.27)
  Earnings (loss) applicable to common stock:
    Basic...................................................  $     1.55   $    (0.76)   $    (0.33)
    Diluted.................................................  $     1.48   $    (0.76)   $    (0.33)
  Weighted average common shares outstanding:
    Basic...................................................  60,519,046   58,692,141    52,967,573
    Diluted.................................................  63,116,113   58,692,141    52,967,573
</TABLE>

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

                                       40
<PAGE>
                             STATION CASINOS, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                             (AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                    DEFERRED        RETAINED      ACCUMULATED
                                                                     ADDITIONAL   COMPENSATION-     EARNINGS         OTHER
                                   PREFERRED    COMMON    TREASURY    PAID-IN      RESTRICTED     (ACCUMULATED   COMPREHENSIVE
                                     STOCK      STOCK      STOCK      CAPITAL         STOCK         DEFICIT)        INCOME
                                   ---------   --------   --------   ----------   -------------   ------------   -------------
<S>                                <C>         <C>        <C>        <C>          <C>             <C>            <C>
Balances, March 31, 1998.........  $103,500      $353     $    --     $167,180       $  (528)       $ 16,382         $  --
Exercise of stock options........        --        --          --           36            --              --            --
Amortization of deferred
  compensation...................        --        --          --           --           369              --            --
Preferred stock dividends........        --        --          --           --            --          (5,434)           --
Purchase of treasury stock, at
  cost (320 shares)..............        --        --      (2,006)          --            --              --            --
Other............................        --        --          --        1,651            --              --            --
Net loss.........................        --        --          --           --            --         (12,097)           --
                                   ---------     ----     --------    --------       -------        --------         -----
Balances, December 31, 1998,
  (see Note 1)...................   103,500       353      (2,006)     168,867          (159)         (1,149)           --
Exercise of stock options........        --         1          --          827            --              --            --
Issuance of restricted stock.....        --         3          --        7,510        (7,513)             --            --
Amortization of deferred
  compensation...................        --        --          --           --           240              --            --
Preferred stock dividends........        --        --          --           --            --          (1,811)           --
Preferred stock conversion.......  (103,500)       67          --      103,746            --              --            --
Purchase of treasury stock, at
  cost (848 shares)..............        --        --      (9,856)          --            --              --            --
Other............................        --        --          --        1,344            --              --            --
Asset held for sale market
  valuation adjustment...........        --        --          --           --            --              --          (716)
Net loss.........................        --        --          --           --            --         (42,947)           --
                                   ---------     ----     --------    --------       -------        --------         -----
Balances, December 31, 1999......        --       424     (11,862)     282,294        (7,432)        (45,907)         (716)
Exercise of stock options........        --         3          --        3,146            --              --            --
Cancellation of restricted
  stock..........................        --        --          --         (631)          631              --            --
Amortization of deferred
  compensation...................        --        --          --           --           751              --            --
Purchase of treasury stock, at
  cost (2,384 shares)............        --        --     (30,020)          --            --              --            --
Sale of put options..............        --        --          --        2,085            --              --            --
Other............................        --        --          --        1,900            --              --            --
Asset held for sale market
  valuation adjustment...........        --        --          --           --            --              --           716
Net income.......................        --        --          --           --            --          93,505            --
                                   ---------     ----     --------    --------       -------        --------         -----
Balances, December 31, 2000......  $     --      $427     $(41,882)   $288,794       $(6,050)       $ 47,598         $  --
                                   =========     ====     ========    ========       =======        ========         =====

<CAPTION>

                                       TOTAL
                                   STOCKHOLDERS'
                                      EQUITY
                                   -------------
<S>                                <C>
Balances, March 31, 1998.........    $286,887
Exercise of stock options........          36
Amortization of deferred
  compensation...................         369
Preferred stock dividends........      (5,434)
Purchase of treasury stock, at
  cost (320 shares)..............      (2,006)
Other............................       1,651
Net loss.........................     (12,097)
                                     --------
Balances, December 31, 1998,
  (see Note 1)...................     269,406
Exercise of stock options........         828
Issuance of restricted stock.....          --
Amortization of deferred
  compensation...................         240
Preferred stock dividends........      (1,811)
Preferred stock conversion.......         313
Purchase of treasury stock, at
  cost (848 shares)..............      (9,856)
Other............................       1,344
Asset held for sale market
  valuation adjustment...........        (716)
Net loss.........................     (42,947)
                                     --------
Balances, December 31, 1999......     216,801
Exercise of stock options........       3,149
Cancellation of restricted
  stock..........................          --
Amortization of deferred
  compensation...................         751
Purchase of treasury stock, at
  cost (2,384 shares)............     (30,020)
Sale of put options..............       2,085
Other............................       1,900
Asset held for sale market
  valuation adjustment...........         716
Net income.......................      93,505
                                     --------
Balances, December 31, 2000......    $288,887
                                     ========
</TABLE>

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

                                       41
<PAGE>
                             STATION CASINOS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED
                                                                  DECEMBER 31,
                                                              ---------------------    TRANSITION
                                                                2000        1999      PERIOD 1998
                                                              ---------   ---------   ------------
                                                                                      (SEE NOTE 1)
<S>                                                           <C>         <C>         <C>
Cash flows from operating activities:
Net income (loss)...........................................  $  93,505   $ (42,947)    $(12,097)
                                                              ---------   ---------     --------
Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation and amortization.............................     63,346      70,664       52,975
  Amortization of debt discount and issuance costs..........      2,979       2,659        4,254
  Loss on early retirement of debt..........................        840      16,389        4,775
  Impairment loss...........................................         --     137,435       30,011
  Gain on sale of Missouri assets...........................    (41,731)         --           --
  Changes in assets and liabilities:
    (Increase) decrease in receivables, net.................    (19,613)      6,026       (5,598)
    Decrease (increase) in inventories and prepaid expenses
      and other.............................................        432      (3,113)      (2,839)
    Increase (decrease) in deferred income tax..............     56,430     (32,733)      (6,410)
    Increase (decrease) in accounts payable.................      9,873      (6,893)       2,138
    (Decrease) increase in accrued expenses and other
      current liabilities...................................       (321)     25,170        9,531
    Other, net..............................................     (2,044)        401          (48)
                                                              ---------   ---------     --------
      Total adjustments.....................................     70,191     216,005       88,789
                                                              ---------   ---------     --------
      Net cash provided by operating activities.............    163,696     173,058       76,692
                                                              ---------   ---------     --------
Cash flows from investing activities:
  Capital expenditures......................................   (358,763)    (76,344)     (96,482)
  Proceeds from sale of property and equipment, and Missouri
    assets..................................................    511,576       5,025        5,998
  Purchase of land held for development.....................    (79,596)     (1,947)        (580)
  Investment in joint ventures..............................    (58,837)     (2,643)          --
  Assets held for sale......................................         --     (37,468)          --
  Increase (decrease) in construction contracts payable.....      4,726      (9,649)        (135)
  Other, net................................................    (11,810)     (8,627)      (2,572)
                                                              ---------   ---------     --------
      Net cash provided by (used in) investing activities...      7,296    (131,653)     (93,771)
                                                              ---------   ---------     --------
Cash flows from financing activities:
  (Payments) borrowings under bank facility, net............   (313,300)     (1,700)      55,000
  Principal payments on notes payable.......................    (13,695)    (16,004)     (11,780)
  Proceeds from the issuance of senior subordinated notes...    373,522          --      199,900
  Defeasance of 9 5/8% senior subordinated notes............         --    (201,670)          --
  Purchase of treasury stock................................    (30,020)     (9,856)      (2,006)
  Sale of put options.......................................      2,085          --           --
  Dividends paid on preferred stock.........................         --      (1,811)      (5,434)
  Exercise of stock options.................................      3,149         828           36
  Debt issuance costs and other, net........................     (9,821)        457       (7,372)
                                                              ---------   ---------     --------
      Net cash provided by (used in) financing activities...     11,920    (229,756)     228,344
                                                              ---------   ---------     --------
Cash and cash equivalents:
  Increase (decrease) in cash and cash equivalents..........    182,912    (188,351)     211,265
  Balance, beginning of year................................     73,072     261,423       50,158
                                                              ---------   ---------     --------
  Balance, end of year......................................  $ 255,984   $  73,072     $261,423
                                                              =========   =========     ========
Supplemental cash flow disclosures:
  Cash paid for interest, net of amounts capitalized........  $  93,582   $  85,176     $ 65,275
  Cash paid for income taxes, net...........................  $  16,550   $  15,202     $    519
  Property and equipment purchases financed by debt.........  $      --   $      35     $  2,978
  Preferred stock converted to common stock and additional
    paid-in capital.........................................  $      --   $ 100,131     $     --
  Market valuation adjustment for asset held for sale.......  $      --   $     716     $     --
</TABLE>

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

                                       42
<PAGE>
                             STATION CASINOS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

    BASIS OF PRESENTATION AND ORGANIZATION

    Station Casinos, Inc. (the "Company"), a Nevada Corporation, is a gaming
company that owns and operates seven distinctly themed hotel/casino properties
and two smaller casino properties throughout the Las Vegas metropolitan area.
The Company also owns and provides slot route management services in southern
Nevada. On October 2, 2000, the Company consummated the purchase of
substantially all of the assets of the Santa Fe Hotel & Casino for an aggregate
purchase price of $205 million and renamed the property Santa Fe Station. Until
December 20, 2000, the Company owned and operated St. Charles Riverfront
Station, Inc. ("Station Casino St. Charles") located in St. Charles, Missouri
and Kansas City Station Corporation ("Station Casino Kansas City") located in
Kansas City, Missouri. On December 20, 2000, the Company consummated the sale of
substantially all of the assets of Station Casino St. Charles and Station Casino
Kansas City (collectively the "Missouri Properties") to Ameristar Casinos, Inc.
for an aggregate purchase price of approximately $488 million.

    On January 4, 2001, the Company consummated the purchase of substantially
all of the assets of the Fiesta Casino Hotel for a purchase price of
$170 million. On January 30, 2001, the Company consummated the purchase of
substantially all of the assets of The Reserve Hotel & Casino for an aggregate
purchase price of $71.8 million.

    The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Palace Station Hotel &
Casino, Inc. ("Palace Station"), Boulder Station, Inc. ("Boulder Station"),
Texas Station, Inc. ("Texas Station"), Sunset Station, Inc. ("Sunset Station"),
Santa Fe Station, Inc. ("Santa Fe Station"), St. Charles Riverfront
Station, Inc. ("Station Casino St. Charles"), Kansas City Station Corporation
("Station Casino Kansas City"), Southwest Gaming Services, Inc. ("SGSI") and
Tropicana Station, Inc., the operator of the Wild Wild West Gambling Hall &
Hotel ("Wild Wild West"). The Company also owns a 50% interest in Town Center
Amusements, Inc. d.b.a. Barley's Casino & Brewing Company ("Barley's"). All
significant intercompany accounts and transactions have been eliminated.

    CHANGE IN FISCAL YEAR

    On November 6, 1998, the Company filed a Form 8-K announcing its change in
fiscal year end from March 31 of each year to December 31 of each year. This
change is effective for the nine month period ended December 31, 1998 (the
"Transition Period 1998"). Selected consolidated financial data for the twelve
months ended December 31, 1998 is presented below, for comparison purposes only
(amounts in thousands, unaudited).

<TABLE>
<S>                                                         <C>
Net revenues..............................................  $847,015
Operating income..........................................    92,380
Loss before income taxes and extraordinary item...........   (10,092)
Income tax benefit........................................       453
Extraordinary item, net of applicable income tax
  benefit.................................................    (5,146)
Net loss..................................................   (14,785)
Net loss applicable to common stock.......................   (22,030)
Loss per common share applicable to common stock..........     (0.42)
</TABLE>

                                       43
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions 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

    Cash and cash equivalents include investments purchased with an original
maturity of 90 days or less.

    INVENTORIES

    Inventories are stated at the lower of cost or market; cost being determined
on a first-in, first-out basis.

    PROPERTY AND EQUIPMENT

    Property and equipment are 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. Costs of major
improvements are capitalized, while costs of normal repairs and maintenance are
charged to expense as incurred.

    GOODWILL

    In connection with the acquisition of Santa Fe Station, the excess of the
purchase price over the fair market value of the net assets acquired was
$113.3 million and is being amortized over a period of 40 years.

    CAPITALIZATION OF INTEREST

    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. Interest capitalized was approximately
$3.8 million for the fiscal year ended December 31, 2000, was approximately
$0.4 million for the fiscal year ended December 31, 1999 and was approximately
$1.2 million for the Transition Period 1998.

    INVESTMENTS IN JOINT VENTURES

    The Company has investments in two joint ventures that are accounted for
under the equity method. Under the equity method, original investments are
recorded at cost and adjusted by the Company's share of earnings, losses and
distributions of the joint ventures. The investment balance also includes
interest capitalized during the construction period which will be amortized
against the earnings of the joint venture when operations begin. In addition,
the Company has an investment in a joint venture in which it owns a 6.7%
interest, and therefore, is accounted for on the cost method. Under

                                       44
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the cost method, earnings will be recognized only to the extent that cash is
distributed from the joint venture.

    DEBT ISSUANCE COSTS

    Debt issuance costs incurred in connection with the issuance of long-term
debt are capitalized and amortized to interest expense over the terms of the
related debt agreements.

    PREOPENING EXPENSES

    Effective January 1, 1999, Statement of Position 98-5, "Reporting on the
Costs of Start-up Activities", changed the manner in which the Company accounts
for preopening expenses. Preopening expenses incurred after January 1, 1999 have
been expensed as incurred. The construction phase typically covers a period of
12 to 24 months. The majority of preopening costs are incurred in the three
months prior to opening. During the fiscal year ended December 31, 2000, the
Company incurred preopening expenses of $3.9 million related to the expansion of
Texas Station, the remodeling of Santa Fe Station and ongoing construction of
Green Valley Ranch. During the fiscal year ended December 31, 1999 and the
Transition Period 1998, the Company had no preopening expenses.

    REVENUES AND PROMOTIONAL ALLOWANCES

    In accordance with industry practice, 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. Revenues include the retail value of accommodations and food and
beverage provided on a complimentary basis to customers. The estimated
departmental costs of providing such promotional allowances are included in
casino costs and expenses and consist of the following (amounts in thousands):

<TABLE>
<CAPTION>
                                                  FOR THE YEARS ENDED
                                                     DECEMBER 31,       TRANSITION
                                                  -------------------     PERIOD
                                                    2000       1999        1998
                                                  --------   --------   ----------
<S>                                               <C>        <C>        <C>
Food and beverage...............................  $51,545    $51,916      $38,816
Room............................................    3,126      2,527        1,877
Other...........................................    3,242      3,106        1,932
                                                  -------    -------      -------
    Total.......................................  $57,913    $57,549      $42,625
                                                  =======    =======      =======
</TABLE>

    EARNINGS (LOSS) APPLICABLE TO COMMON STOCK

    In accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 128, "Earnings Per Share" basic EPS is computed by
dividing net income (loss) applicable to common stock by the weighted average
common shares outstanding during the period. Diluted EPS reflects the additional
dilution for all potentially dilutive securities such as stock options and
convertible preferred stock.

                                       45
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    The weighted average number of common shares used in the calculation of
basic and diluted earnings per share consisted of the following:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                              DECEMBER 31, 2000
                                                              -----------------
<S>                                                           <C>
Weighted average common shares outstanding (used in
  calculation of basic earnings per share)..................     60,519,046

Potential dilution from the assumed exercise of Stock
  options...................................................      2,597,067
                                                                 ----------

Weighted average common and common equivalent shares
  outstanding (used in calculation of diluted earnings per
  share)....................................................     63,116,113
                                                                 ==========
</TABLE>

    The assumed exercise of stock options for the year ended December 31, 1999
and the Transition Period 1998 was anti-dilutive and, therefore, not included in
the calculation above.

    RECENTLY ISSUED ACCOUNTING STANDARDS

    The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This statement establishes accounting and reporting
standards for derivative instruments for fiscal years beginning after June 15,
2000. Management estimates that SFAS No. 133 will not have a significant impact
on the Company's results of operations or financial position.

    RECLASSIFICATIONS

    Certain amounts in the December 31, 1999 and the Transition Period 1998
consolidated financial statements have been reclassified to conform to the
December 31, 2000 presentation. These reclassifications had no effect on the
previously reported net loss.

2.  RECEIVABLES

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

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Casino....................................................  $ 7,376    $ 7,496
Hotel.....................................................    2,546      2,546
Other.....................................................    4,144      5,263
                                                            -------    -------
                                                             14,066     15,305
Allowance for doubtful accounts...........................   (2,938)    (2,959)
                                                            -------    -------
    Receivables, net......................................  $11,128    $12,346
                                                            =======    =======
</TABLE>

                                       46
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3.  PROPERTY AND EQUIPMENT

    Property and equipment consists of the following as of December 31, 2000 and
1999 (amounts in thousands):

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                  ESTIMATED LIFE   -----------------------
                                                     (YEARS)          2000         1999
                                                  --------------   ----------   ----------
<S>                                               <C>              <C>          <C>
Land............................................       --          $   57,956   $   36,737
Land leases acquired............................     48-52              4,995        4,995
Buildings and leasehold improvements............     31-45            675,696      765,042
Boats and barges................................     20-45                 --       67,009
Furniture, fixtures and equipment...............      3-7             258,058      284,167
Construction in progress........................       --              19,022      119,353
                                                                   ----------   ----------
                                                                    1,015,727    1,277,303
Accumulated depreciation and amortization.......                     (204,278)    (251,550)
                                                                   ----------   ----------
    Property and equipment, net.................                   $  811,449   $1,025,753
                                                                   ==========   ==========
</TABLE>

    At December 31, 2000 and 1999, substantially all property and equipment of
the Company is pledged as collateral for long-term debt.

    CONSTRUCTION IN PROGRESS

    Since December 31, 1997, construction on the Station Casino St. Charles
expansion project has been halted. Included in construction in progress at
December 31, 1999 is approximately $101.0 million related to the Station Casino
St. Charles expansion project (see Asset Impairment discussion below).

    ASSET IMPAIRMENT

    In accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the Company
recorded an impairment loss of $137.4 million in the fiscal year ended
December 31, 1999 and $30.0 million in the Transition Period 1998 to adjust the
carrying value of its fixed assets and land held for development to their
estimated fair value. In the fiscal year ended December 31, 1999, approximately
$125.2 million of the impairment loss was related to Station Casino St. Charles.
In the fourth quarter of 1999, the Company made a decision to reconfigure the
existing Station Casino St. Charles facility to a more efficient layout in
response to the new open boarding rules promulgated by the Missouri Gaming
Commission that began in September 1999 in the St. Louis market. In March 2000,
all gaming operations were moved to the existing barge and the existing
riverboat has been sold. In accordance with SFAS No. 121, the riverboat and
miscellaneous other fixed assets were written down by approximately $15 million
to their net realizable value. In December 2000, the Company sold its Missouri
assets (see Note 6).

    In addition, the Company performed an evaluation of the carrying values of
the remaining assets in St. Charles and determined a $110 million write-down of
the asset values was necessary. The write-down was deemed appropriate after a
review of the property's asset valuations relative to the Company's near-term
investment objectives. The balance of the impairment loss in the fiscal year
ended December 31, 1999, resulted primarily from the Company's determination
that it would sell a 40-acre parcel of land in Henderson, Nevada, that it had
acquired. Future development of the property will be limited to non-gaming
purposes. The resulting write-down of the parcel was necessary to reflect

                                       47
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the value of the land as a non-gaming site. This land was sold in the fiscal
year ended December 31, 2000.

    In the Transition Period 1998, the impairment loss principally involves
assets at the Station Casino St. Charles facility, including a riverboat
formerly used in the Missouri operations, capitalized project costs associated
with various parcels of land determined to have no value, and several parcels of
land within close proximity to the St. Charles, Missouri site that were being
held for future development. The fair value of the impaired assets was primarily
determined through the market's interest in riverboats and barges, and on the
comparable sales prices on parcels of land in the St. Charles area. The total
amount of the impairment loss in the Transition Period 1998 related to this
category of assets was approximately $23.4 million. In addition to the assets
described above, the most significant portion of the remaining impairment loss
in the Transition Period 1998 relates to several parcels of land in Nevada and
Texas that the Company had acquired in the past for either defensive or
expansion purposes. The value of these parcels was determined based on sales
prices for comparable parcels of land on the market. The following two
circumstances led to the Company's decision to write-down these assets to their
fair market value: (1) the passage, in Nevada, of legislation which places
significantly higher requirements on land to be zoned for gaming purposes, and
(2) the termination of the Plan of Merger with Crescent Real Estate Equities
Company.

    PALACE STATION FIRE AND FLOOD

    On July 20, 1998, Palace Station suffered damage to its casino and hotel
tower as a result of a thunderstorm in the Las Vegas valley. In November 1998,
repairs were completed to the casino and all of the rooms in the 21-story hotel
tower became fully functional. Losses associated with the property damage and
business interruption were covered under the Company's insurance policies. As of
December 31, 1998, the Company had recorded $6.8 million in other revenues in
the Consolidated Statements of Operations for the Transition Period 1998 related
to the business interruption claim. During the quarter ended March 31, 1999, the
Company received its final payment from its insurance company on these claims.

4.  LAND HELD FOR DEVELOPMENT

    The Company has acquired several parcels of land in the Las Vegas valley as
part of the Company's development activities. The Company's decision on whether
to proceed with any new gaming opportunity is dependent upon future economic and
regulatory factors, the availability of financing and competitive and strategic
considerations. As many of these considerations are beyond the Company's
control, no assurances can be made that the Company will be able to obtain
appropriate licensing or be able to secure additional, acceptable financing in
order to proceed with any particular project. As of December 31, 2000, the
Company has $97.9 million of land held for development. Land held for
development consists primarily of five sites that are owned or leased which
comprise 195 acres. In addition, the Company has options to purchase a total of
66 acres adjacent to two of the sites.

                                       48
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Amended and restated reducing revolving credit facility,
  $380.8 million limit at December 31, 2000, due September
  30, 2003, interest at a margin above the bank's prime rate
  or the Eurodollar Rate (9.41% at December 31, 2000).......  $ 64,000   $177,300
Secured term loan facility..................................        --    200,000
9 7/8% senior subordinated notes, interest payable
  semi-annually, principal due July 1, 2010, net of
  unamortized discount of $1.4 million at December 31,
  2000......................................................   373,566         --
8 7/8% senior subordinated notes, interest payable
  semi-annually, principal due December 1, 2008.............   199,900    199,900
9 3/4% senior subordinated notes, interest payable
  semi-annually, principal due April 15, 2007, net of
  unamortized discount of $4.2 million at December 31,
  2000......................................................   145,782    145,326
10 1/8% senior subordinated notes, interest payable
  semi-annually, principal due March 15, 2006, net of
  unamortized discount of $0.8 million at December 31,
  2000......................................................   197,205    197,087
Other long-term debt, collateralized by various assets,
  including slot machines, furniture and equipment, and
  land, monthly installments including interest ranging from
  8.50% to 9.00% at December 31, 2000.......................     9,172     22,867
                                                              --------   --------
    Total long-term debt....................................   989,625    942,480
Current portion of long-term debt...........................    (5,684)    (8,647)
                                                              --------   --------
    Total long-term debt, less current portion..............  $983,941   $933,833
                                                              ========   ========
</TABLE>

    In August 1999, the Company amended its existing bank credit facility (the
"Revolving Facility") and entered into a new secured term loan facility (the
"Term Loan") (collectively, "the Amended Bank Facility"). The Amended Bank
Facility is secured by substantially all of the assets of Palace Station,
Boulder Station, Texas Station, Sunset Station, Station Casino St. Charles and
Station Casino Kansas City (the "Borrowers"). The proceeds from the Term Loan
were used to repay the Company's existing $75.0 million secured term loan
facility and to reduce outstanding borrowings under the Company's Revolving
Facility. The Company recorded an extraordinary charge of $0.3 million (net of
applicable tax benefit) to reflect the write-off of the unamortized loan costs
on the refinanced $75.0 million secured term loan facility. See discussion below
regarding the termination of the Term Loan.

    Subsequent to December 31, 2000, the Company amended the Revolving Facility
to amend certain covenants discussed below including the scheduled amortization
and the consolidated funded debt to adjusted EBITDA ratio. See discussion of
amendment in note 12.

    In March 2000, the Company exercised its right to increase the Revolving
Facility by $50.0 million. The Revolving Facility provides for borrowings up to
an aggregate principal amount of $380.8 million at December 31, 2000. The
Revolving Facility matures on September 30, 2003. The availability under the
Revolving Facility will reduce by $14.0 million on each of March 31, 2001 and
June 30, 2001; by $17.5 million each fiscal quarter end until and including
September 30, 2002; by $30.6 million on each fiscal quarter end until and
including June 30, 2003; and by $173.4 million on September 30, 2003.

                                       49
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Borrowings under the Revolving Facility bear interest at a margin above the
Alternate Base Rate or the Eurodollar Rate (each, as defined in the Revolving
Facility), as selected by the Company. The margin above such rates, and the fee
on the unfunded portions of the Revolving Facility, will vary quarterly based on
the Company's combined consolidated ratio of debt to EBITDA (each, as defined in
the Revolving Facility). As of December 31, 2000, the Borrower's margin above
the Eurodollar Rate on borrowings under the Revolving Facility was 1.50%. The
maximum margin for Eurodollar Rate borrowings is 2.75%. The maximum margin for
Alternate Base Rate borrowings is 1.50%. As of December 31, 2000, the fee for
the unfunded portion of the Revolving Facility was 35 basis points.

    The Revolving Facility contains certain financial and other covenants. These
include a maximum funded debt to Adjusted EBITDA ratio for the Borrowers
combined of 2.50 to 1.00 for each fiscal quarter, a minimum fixed charge
coverage ratio for the preceding four quarters for the Borrowers combined of
1.50 to 1.00 for each fiscal quarter, limitations on indebtedness, limitations
on asset dispositions, limitations on investments, limitations on prepayments of
indebtedness and rent and limitations on capital expenditures. As of
December 31, 2000, the Borrowers combined funded debt to Adjusted EBITDA ratio
was 0.72 to 1.00 and their combined fixed charge coverage ratio for the
preceding four quarters ended December 31, 2000 was 2.34 to 1.00. A tranche of
the Revolving Facility contains a minimum tangible net worth requirement for
Palace Station and certain restrictions on distributions of cash from Palace
Station to the Company. As of December 31, 2000, Palace Station's tangible net
worth exceeded the requirement by approximately $10.2 million. These covenants
limit Palace Station's ability to make payments to the Company, a significant
source of anticipated cash for the Company.

    In addition, the Revolving Facility has financial and other covenants
relating to the Company. These include a tangible net worth covenant and a
covenant limiting the consolidated funded debt to Adjusted EBITDA ratio to no
more than 4.50 to 1.00 on December 31, 2000 and reducing quarterly to 4.00 to
1.00 on September 30, 2001. Other covenants limit prepayments of indebtedness or
rent (including, subordinated debt other than refinancings meeting certain
criteria), limitations on asset dispositions, limitations on dividends,
limitations on indebtedness, limitations on investments and limitations on
capital expenditures. The Revolving Facility also prohibits the Company from
holding excess cash and cash equivalents. As of December 31, 2000, the Company's
consolidated funded debt to Adjusted EBITDA ratio was 3.99 to 1.00. As of
December 31, 2000, the Company has pledged the stock of all of its material
subsidiaries except Kansas City Station Corporation and St. Charles Riverfront
Station, Inc. and has agreed to pledge the stock of these subsidiaries.

    In July 2000, the Company completed an offering of $375.0 million of senior
subordinated notes due in July 2010, that have equal priority with the other
senior subordinated notes. The $375.0 million senior subordinated notes bear
interest payable semi-annually at a rate of 9 7/8%. The discount on the
$375.0 million senior subordinated notes was recorded as a reduction to
long-term debt. Proceeds from the sale of the $375.0 million senior subordinated
notes were used to repay all amounts outstanding under the Term Loan and the
Term Loan was terminated. The remaining proceeds were used to reduce amounts
outstanding under our Revolving Facility. The Company recorded an extraordinary
charge of $0.4 million (net of applicable tax benefit) to reflect the write-off
of the unamortized loan costs related to the termination of the Term Loan.

    In December 1998, the Company completed an offering of $199.9 million of
senior subordinated notes due in December 2008 that have equal priority with the
Company's other senior subordinated notes. The $199.9 million senior
subordinated notes bear interest payable semi-annually, at a rate of 8 7/8% per
year (the "8 7/8% Notes"). At December 31, 1998, the Company had deposited the
net proceeds from the sale of the 8 7/8% Notes and a portion of the funds
borrowed under the Amended

                                       50
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Bank Facility in a separate trust account with the trustee under the indenture
relating to the 9 5/8% senior subordinated notes (the "9 5/8% Notes") to redeem
and to pay accrued interest and redemption premiums related to the 9 5/8% Notes
on the redemption date. The redemption occurred on January 4, 1999. The Company
recorded an extraordinary charge of $10.4 million (net of applicable tax
benefit) to reflect the write-off of the unamortized debt discount, unamortized
loan costs and the premium to redeem the 9 5/8% Notes.

    In April 1997, the Company completed an offering of $150 million of senior
subordinated notes due in April 2007, that have equal priority with the other
senior subordinated notes. The $150 million senior subordinated notes have a
coupon rate of 9 3/4% and were priced to yield 10.37% to maturity. The discount
on the $150 million senior subordinated notes has been recorded as a reduction
to long-term debt in the accompanying consolidated balance sheets.

    In March 1996, the Company completed an offering of $198 million of senior
subordinated notes due in March 2006, that have equal priority with the other
senior subordinated notes. The $198 million senior subordinated notes have a
coupon rate of 10 1/8% and were priced to yield 10.24% to maturity. The discount
on the $198 million senior subordinated notes has been recorded as a reduction
to long-term debt in the accompanying consolidated balance sheets.

    The indentures governing the Company's senior subordinated notes (the
"Indentures") contain certain customary financial and other covenants which
limit the Company and its subsidiaries' ability to incur additional debt and to
pay dividends. At December 31, 2000, the Company's Consolidated Coverage Ratio
(as defined in the Indentures) was 2.34 to 1.00. The Indentures provide that the
Company may not incur additional indebtedness, other than specified types of
indebtedness, unless the Consolidated Coverage Ratio is at least 2.00 to 1.00.
As a result, the covenant limits the Company's ability to incur additional
indebtedness for borrowings under the Amended Bank Facility not to exceed the
greater of $200 million or 1.5 times Operating Cash Flow (as defined) for the
four most recent quarters, plus $15 million. The limitation on the incurrence of
additional indebtedness and dividend restrictions in the Indentures
significantly restrict the Company's ability to pay dividends on its capital
stock. On August 10, 2000, the Company completed a consent solicitation with the
holders of the Notes to exclude the write down of assets at Station Casino St.
Charles in December 1999 from the definition of consolidated net income for the
Consolidated Coverage Ratio. The Indentures also give the holders of the Notes
the right to require the Company to purchase the Notes at 101% of the principal
amount of the Notes plus accrued interest thereon upon a Change of Control and
Rating Decline (each as defined in the Indentures) of the Company.

    The estimated fair value of the Company's long-term debt at December 31,
2000, was approximately $1,014.0 million, compared to its book value of
approximately $989.6 million. The estimated fair value amounts were based on
quoted market prices on or about December 31, 2000, for the Company's debt
securities that are publicly traded. For the Amended Bank Facility, the fair
value approximates the carrying amount of the debt due to the short-term
maturities of the individual components of the debt.

                                       51
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S>                                                         <C>
    2001..................................................  $  5,684
    2002..................................................       257
    2003..................................................    66,901
    2004..................................................       121
    2005..................................................       126
    Thereafter............................................   916,536
                                                            --------
        Total.............................................  $989,625
                                                            ========
</TABLE>

6.  COMMITMENTS AND CONTINGENCIES

    BOULDER STATION LEASE

    The Company entered into a ground lease for 27 acres of land on which
Boulder Station is located. The Company leases this land from a trust pursuant
to a long-term ground lease. The trustee of this trust is Bank of America NT&SA,
the beneficiary of which is KB Enterprises, an affiliated company owned by Frank
J. Fertitta, Jr. and Victoria K. Fertitta (the "Related Lessor"), the parents of
Frank J. Fertitta III, Chairman of the Board and Chief Executive Officer of the
Company. The lease has a maximum term of 65 years, ending in June 2058. The
lease provides for monthly payments of $135,525 through June 2008. In
July 2008, and every ten years thereafter, the rent will be adjusted by a cost
of living factor. In July 2003, 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. Pursuant to the ground lease, the Company has an
option, exercisable at five-year intervals beginning in June 1998, to purchase
the land at fair market value. The Company's leasehold interest in the property
is subject to a lien to secure borrowings under the Amended Bank Facility.

    TEXAS STATION LEASE

    The Company entered into a ground lease for 47 acres of land on which Texas
Station is located. The Company leases this land from a trust pursuant to a
long-term ground lease. The trustee of this trust is Bank of America NT&SA, the
beneficiary of which is Texas Gambling Hall & Hotel, Inc. an affiliate company
of the Related Lessor. The lease has a maximum term of 65 years, ending in
July 2060. The lease provides for monthly rental payments of $287,500 through
June 2010. In July 2010, and every ten years thereafter, the rent will be
adjusted to the product of the fair market value of the land and the greater of
(i) the then prevailing annual rate of return being realized for owners of
comparable land in Clark County or (ii) 8% per year. The rent will be further
adjusted by a cost of living factor after the first ten years and every ten
years thereafter. In no event will the rent for any period be less than the
immediately preceding period. Pursuant to the ground lease, the Company has an
option, exercisable at five-year intervals beginning in May 2000, to purchase
the land at fair market value. The Company did not exercise its May 2000 option.
The Company's leasehold interest in the property is subject to a lien to secure
borrowings under the Amended Bank Facility.

                                       52
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S>                                                         <C>
</TABLE>

    SUNSET STATION LEASE

    In June 1994, the Company entered into a lease agreement for approximately
48 acres of land on which Sunset Station is located. The lease has a term of
65 years with monthly rental payments of $120,000, adjusted on each subsequent
five-year anniversary by a cost of living factor. In June 2001, the Company has
an option to purchase this land for $23.8 million.

    EQUIPMENT LEASE

    In connection with the loan agreement to fund the construction of Sunset
Station, the Company entered into an operating lease for furniture, fixtures and
equipment (the "Equipment") with a cost of up to $40 million, dated as of
September 25, 1996, (the "Sunset Operating Lease") with First Security Trust
Company of Nevada. A total of $35.7 million of this facility had been drawn. The
Company incurred approximately $2.0 million of rent expense per quarter related
to the Sunset Operating Lease. In October 1999, the Company exercised its option
to purchase the equipment for approximately $27.0 million. The purchase price
was funded with borrowings from the Company's Revolving Facility.

    OPERATING LEASES

    The Company leases several parcels of land and equipment used in its
operations at Palace Station, Boulder Station, Texas Station, Sunset Station and
Wild Wild West. Leases on various parcels ranging from 13 acres to 47 acres have
terms expiring between March 2006 and July 2063. Future minimum lease payments
required under these operating leases and other noncancelable operating leases
are as follows (amounts in thousands):

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S>                                                         <C>
    2001..................................................  $ 11,943
    2002..................................................    12,781
    2003..................................................    12,656
    2004..................................................    12,537
    2005..................................................    11,879
    Thereafter............................................   584,636
                                                            --------
        Total.............................................  $646,432
                                                            ========
</TABLE>

    Rent expense totaled approximately $10.9 million, $14.6 million and
$12.1 million for the fiscal years ended December 31, 2000 and 1999 and the
Transition Period 1998, respectively.

    GREEN VALLEY RANCH

    A 50/50 joint venture between the Company and GCR Gaming, LLC (an affiliate
of American Nevada Corporation) has commenced construction of a new
resort/casino, Green Valley Ranch, on the south side of Interstate 215 at Green
Valley Parkway in Henderson, Nevada. The 40-acre resort site is part of a
170-acre mixed-use commercial, retail and office project. The Company expects to
contribute approximately $50 million in cash equity for a 50 percent equity
ownership. As of December 31, 2000, the Company has made cash equity
contributions of $34 million. The Company will be the managing partner of Green
Valley Ranch and will receive a management fee for its services. Construction of
the resort is expected to be completed in the fourth quarter of 2001. The
estimated construction cost of this project is approximately $300 million. The
project is expected to be capitalized with total equity

                                       53
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

contributions from the partners of approximately $100 million and third party
financing for the remainder. The joint venture has received commitments from a
group of banks for a $165 million reducing revolving credit facility, subject to
customary conditions. The Company anticipates that it will be required to enter
into a completion guarantee and a make-well agreement in connection with the
Green Valley Ranch financing. In addition, the joint venture anticipates
obtaining $35 million of equipment lease financing from a group of lenders. If
the third party financing cannot be obtained or is insufficient to fund the
construction costs, the Company and GCR Gaming, LLC would be obligated to
contribute amounts necessary to finance the construction and opening of the
project. The Company has co-owned Barley's with an affiliate of American Nevada
Corporation since January 1996.

    UNITED AUBURN INDIAN COMMUNITY

    On October 12, 1999, the Company announced that it has entered into a
Development Services Agreement and a Management Agreement with the United Auburn
Indian Community (the "UAIC"). Subject to the receipt of certain governmental
approvals, as well as voter approval of a proposed amendment to the California
constitution, the Company and the UAIC intend to develop a gaming and
entertainment facility on 49 acres, approximately seven miles north of
Interstate 80, in Placer County, California, near Sacramento. Voter approval of
the proposed amendment to the California constitution was received in
March 2000, however, there can be no assurances when or if the necessary
government approvals will be received. The scope and the timing of this project
have yet to be determined.

    MISSOURI PROPERTIES SALE

    On December 20, 2000, the Company sold the Missouri Properties for an
aggregate purchase price of $488 million. The sale of the Missouri Properties is
subject to a post-closing purchase price adjustment related to the current
assets purchased and the current liabilities assumed by Ameristar. The amount of
any payments required related to the post-closing purchase price adjustment has
yet to be determined. In addition, the Company has agreed to indemnify Ameristar
for any losses resulting from breaches by the Company of representations or
warranties contained in the purchase agreements, subject to applicable caps and
thresholds with respect to such losses.

7.  STOCKHOLDERS' EQUITY

    COMMON STOCK

    On May 23, 2000, the Company announced a 3-for-2 stock split. The record
date for the stock split was June 30, 2000 and the distribution date was
July 17, 2000. Cash was paid for all fractional shares. All share data has been
adjusted retroactively in the accompanying consolidated financial statements for
the 3-for-2 stock split.

    Adjusted for the stock split, the Company is authorized to issue up to
135,000,000 shares of its common stock, $0.01 par value per share (the "Common
Stock"), 63,919,530 shares of which were issued and 3,552,401 shares were held
in treasury as of December 31, 2000. Each holder of the Common Stock is entitled
to one vote for each share held of record on each matter submitted to a vote of
stockholders. Holders of the Common Stock have no cumulative voting, conversion,
redemption or preemptive rights or other rights to subscribe for additional
shares other than pursuant to the Rights Plan described below. Subject to any
preferences that may be granted to the holders of the Company's preferred stock,
each holder of Common Stock is entitled to receive ratably such dividends as may
be declared by the Board of Directors out of funds legally available therefore
as well as any distributions

                                       54
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

to the stockholders and, in the event of liquidation, dissolution or winding up
of the Company, is entitled to share ratably in all assets of the Company
remaining after payment of liabilities.

    PREFERRED STOCK

    The Company is authorized to issue up to 5,000,000 shares of its preferred
stock, $0.01 par value per share (the "Preferred Stock"). As of June 14, 1999,
adjusted for the stock split, the Company redeemed all 2,070,000 shares of its
$3.50 Convertible Preferred Stock in exchange for 10,112,448 shares of the
Company's Common Stock. The Board of Directors, without further action by the
holders of 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, the 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 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 the Company or other corporate action.

    TREASURY STOCK

    Adjusted for the stock split, the Company is authorized to repurchase up to
approximately 9.5 million shares of its Common Stock. As of December 31, 2000,
the Company had purchased 3.6 million shares at a cost of $41.9 million. In
July 2000, the Company entered into an equity forward contract that allows for
shares of the Company's Common Stock to be purchased by a financial institution
and held on the Company's behalf. This contract expired in January 2001 and the
terms of the contract permitted settlement in either net shares or cash. In
January 2001, the Company closed out the contract and purchased 3.2 million
shares for approximately $46 million.

    PUT OPTIONS

    During the quarter ended March 31, 2000, the Company sold put options,
adjusted for the stock split, on 2.2 million shares of its Common Stock. The
Company had the option to settle in cash or shares of Common Stock. On
April 27, 2000, options on 1.1 million shares expired unexercised. On July 27,
2000, the remaining options on 1.1 million shares were rolled into another put
option for 1.1 million shares, which was terminated on August 4, 2000.

    RIGHTS PLAN

    On October 6, 1997, the Company declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock. The
dividend was paid on October 21, 1997. Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series A Preferred
Stock, par value $0.01 per share ("Preferred Shares") of the Company at a price
of $40.00 per one one-hundredth of a Preferred Share, subject to adjustment. The
Rights are not exercisable until the earlier of 10 days following a public
announcement that a person or group of affiliated or associated persons have
acquired beneficial ownership of 15% or more of the outstanding Common Stock
("Acquiring Person") or 10 business days (or such later date as may be
determined by action of the Board of Directors prior to such time as any person
or group of affiliated persons becomes an Acquiring Person) following the
commencement of, or announcement of an intention to

                                       55
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

make, a tender offer or exchange offer, the consummation of which would result
in the beneficial ownership by a person or group of 15% or more of the
outstanding Common Stock.

    The Rights will expire on October 21, 2007. Acquiring Persons do not have
the same rights to receive Common Stock as other holders upon exercise of the
Rights. Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share. In the event that any person or group of affiliated or associated
persons becomes an Acquiring Person, the proper provisions will be made so that
each holder of a Right, other than Rights beneficially owned by the Acquiring
Person (which will thereafter become void), will thereafter have the right to
receive upon exercise that number of shares of Common Stock having a market
value of two times the exercise price of the Right. In the event that the
Company is acquired in a merger or other business combination transaction or 50%
or more of its consolidated assets or earning power are sold after a person or
group has become an Acquiring Person, proper provision will be made so that each
holder of a Right will thereafter have the right to receive, upon exercise
thereof, that number of shares of Common Stock of the acquiring company which at
the time of such transaction will have a market value of two times the exercise
price of the Right. Because of the characteristics of the Rights in connection
with a person or group of affiliated or associated persons becoming an Acquiring
Person, the Rights may have the effect of making an acquisition of the Company
more difficult and may discourage such an acquisition.

8.  BENEFIT PLANS

    STOCK COMPENSATION PROGRAMS

    The Company has adopted a Stock Compensation Program which includes (i) an
Incentive Stock Option Plan for the grant of incentive stock options, (ii) a
Compensatory Stock Option Plan providing for the grant of nonqualified stock
options, (iii) a Restricted Shares Plan providing for the grant of restricted
shares of common stock and (iv) a Nonemployee Director Stock Option Plan,
providing for the grant of nonqualified stock options. The Company has also
adopted the 1999 Stock Compensation Program (combined with the Stock
Compensation Program "the Programs"), which includes (i) the 1999 Compensatory
Stock Option Plan providing for the grant of nonqualified stock options to
employees who are not officers or directors of the Company and (ii) the 1999
Share Plan which grants shares of common stock to employees based on their
length of service with the Company. Officers, key employees, directors (whether
employee directors or nonemployee directors) and independent contractors or
agents of the Company and its subsidiaries are eligible to participate in the
programs. However, only employees of the Company and its subsidiaries are
eligible to receive incentive stock options.

    A maximum of 17,710,500 shares of common stock have been reserved for
issuance under the Program. Options are granted at the current market price at
the date of grant. The plan provides for a variety of vesting schedules,
including immediate, twenty percent per year for five years, and a cliff vest at
the vesting date, to be determined at the time of grant. All options have an
exercise period of ten years from the date of grant.

                                       56
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    The Programs will terminate ten years from the date of adoption, unless
terminated earlier by the Board of Directors, and no options or restricted
shares may be granted under the Programs after such date. Summarized information
for the Programs is as follows:

<TABLE>
<CAPTION>
                                       FOR THE YEAR            FOR THE YEAR
                                    ENDED DECEMBER 31,      ENDED DECEMBER 31,     TRANSITION PERIOD
                                           2000                    1999                   1998
                                   ---------------------   --------------------   --------------------
                                                WEIGHTED               WEIGHTED               WEIGHTED
                                                AVERAGE                AVERAGE                AVERAGE
                                                EXERCISE               EXERCISE               EXERCISE
                                    OPTIONS      PRICE      OPTIONS     PRICE      OPTIONS     PRICE
                                   ----------   --------   ---------   --------   ---------   --------
<S>                                <C>          <C>        <C>         <C>        <C>         <C>
Outstanding at beginning of the
  year...........................   9,908,493    $ 9.01    9,004,995    $ 8.29    7,601,178    $ 8.87
    Granted......................   1,820,250    $13.93    1,126,149    $14.37    1,557,459    $ 5.13
    Exercised....................    (277,884)   $ 6.18     (107,224)   $ 7.72       (1,684)   $ 8.00
    Canceled.....................    (685,267)   $ 8.93     (115,427)   $ 5.75     (151,958)   $ 5.27
                                   ----------              ---------              ---------
Outstanding at end of the year...  10,765,592    $ 9.91    9,908,493    $ 9.01    9,004,995    $ 8.29
                                   ==========              =========              =========
Exercisable at end of year.......   6,479,932    $ 9.82    5,652,665    $10.09    2,927,391    $11.07
                                   ==========              =========              =========
Options available for grant......   5,808,296              6,914,195                169,917
                                   ==========              =========              =========
</TABLE>

    The following table summarizes information about the options outstanding at
December 31, 2000:

<TABLE>
<CAPTION>
                                  OPTIONS OUTSTANDING              OPTIONS EXERCISABLE
                         -------------------------------------   ------------------------
                            NUMBER       WEIGHTED                   NUMBER
                         OUTSTANDING      AVERAGE     WEIGHTED    EXERCISABLE    WEIGHTED
       RANGE OF               AT         REMAINING    AVERAGE         AT         AVERAGE
       EXERCISE          DECEMBER 31,   CONTRACTUAL   EXERCISE   DECEMBER 31,    EXERCISE
        PRICES               2000          LIFE        PRICE         2000         PRICE
----------------------   ------------   -----------   --------   -------------   --------
<S>                      <C>            <C>           <C>        <C>             <C>
   $ 3.29 -- $ 3.58           98,250        7.7        $ 3.57         21,750      $ 3.53
   $ 5.00 -- $ 6.58        3,041,728        7.2        $ 5.12      1,186,318      $ 5.12
   $ 7.75 -- $11.54        3,368,517        5.0        $ 9.42      3,328,617      $ 9.41
   $12.00 -- $16.92        4,257,097        6.5        $13.89      1,943,247      $13.46
                          ----------                               ---------
                          10,765,592        6.2        $ 9.91      6,479,932      $ 9.82
                          ==========                               =========
</TABLE>

    Restricted stock grants of 6,000 and 495,000 shares were issued during the
fiscal years ended December 31, 2000 and 1999, respectively. The effect of these
grants is to increase the issued and outstanding shares of the Company's common
stock and decrease the number of shares available for grant in the plan.
Deferred compensation is recorded for the restricted stock grants equal to the
market value of the Company's common stock on the date of grant. The deferred
compensation is amortized over the period the restricted stock vests and is
recorded as compensation expense in the accompanying consolidated statements of
operations.

    The Company applies APB Opinion No. 25 and related interpretations in
accounting for the Programs. Accordingly, compensation expense recognized was
different than what would have been otherwise recognized under the fair value
based method defined in SFAS No. 123, "Accounting for Stock-Based Compensation".
Had compensation expense for the plans been determined in accordance with SFAS
No. 123, the effect on the Company's net income (loss) applicable to common
stock and

                                       57
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

basic and diluted earnings (loss) per common share would have been as follows
(amounts in thousands, except per share data):

<TABLE>
<CAPTION>
                                                         FOR THE YEARS ENDED
                                                            DECEMBER 31,       TRANSITION
                                                         -------------------     PERIOD
                                                           2000       1999        1998
                                                         --------   --------   ----------
<S>                                                      <C>        <C>        <C>
Net income (loss) applicable to common stock:
    As reported........................................  $93,505    $(44,758)   $(17,531)
    Proforma...........................................  $89,949    $(48,526)   $(19,201)

Basic earnings (loss) per common share:
    As reported........................................  $  1.55    $  (0.76)   $  (0.33)
    Proforma...........................................  $  1.49    $  (0.83)   $  (0.36)

Diluted earnings (loss) per common share:
    As reported........................................  $  1.48    $  (0.76)   $  (0.33)
    Proforma...........................................  $  1.43    $  (0.83)   $  (0.36)
</TABLE>

    The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing method with the following assumptions:

<TABLE>
<CAPTION>
                                                                FOR THE YEARS
                                                                    ENDED
                                                                 DECEMBER 31,           TRANSITION
                                                            ----------------------        PERIOD
                                                              2000          1999           1998
                                                            --------      --------      ----------
<S>                                                         <C>           <C>           <C>
Expected dividend yield...................................      --            --              --
Expected stock price volatility...........................   52.00%        50.00%          51.90%
Risk-free interest rate...................................    6.12%         5.90%           4.51%
Expected average life of options (years)..................    4.36          3.91            3.87
Expected fair value of options granted....................   $6.68         $6.31           $2.23
</TABLE>

    Because the SFAS No. 123 method of accounting has not been applied to
options granted prior to April 1, 1995, the resulting pro forma net income may
not be representative of that to be expected in future years.

    401(K) PLAN

    The Company has 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 percent of the first four percent of each
participating employee's compensation. Effective October 1, 1998, the employer
contribution was increased from 25 percent of the first four percent 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. The Company's
matching contribution was approximately $2,187,000, $2,103,000 and $678,000 for
the fiscal years ended December 31, 2000 and 1999 and the Transition Period
1998, respectively.

9.  EXECUTIVE COMPENSATION PLANS

    The Company has employment agreements with certain of its 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 the Company's normal coverage for employees. In

                                       58
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

addition, the Company has adopted a Supplemental Executive Retirement Plan for
its Chief Executive Officer and a Supplemental Management Retirement Plan for
certain key executives as selected by the Human Resources Committee of the
Company's Board of Directors. Other executive plans include a Deferred
Compensation Plan and a Long-Term Stay-On Performance Incentive Plan.

10. INCOME TAXES

    The Company files a consolidated federal income tax return. The benefit
(provision) for income taxes for financial reporting purposes consists of the
following (amounts in thousands):

<TABLE>
<CAPTION>
                                                          FOR THE YEARS ENDED
                                                             DECEMBER 31,       TRANSITION
                                                          -------------------     PERIOD
                                                            2000       1999        1998
                                                          --------   --------   ----------
<S>                                                       <C>        <C>        <C>
Income tax benefit (provision) from continuing
  operations............................................  $(54,098)  $14,929      $  871
Tax benefit from extraordinary loss on early retirement
  of debt...............................................       294     5,736       1,671
                                                          --------   -------      ------
    Total income taxes..................................  $(53,804)  $20,665      $2,542
                                                          ========   =======      ======
</TABLE>

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

<TABLE>
<CAPTION>
                                                         FOR THE YEARS ENDED
                                                            DECEMBER 31,       TRANSITION
                                                         -------------------     PERIOD
                                                           2000       1999        1998
                                                         --------   --------   ----------
<S>                                                      <C>        <C>        <C>
Current................................................  $(22,266)  $(14,960)    $ 3,953
Deferred...............................................   (31,538)    35,625      (1,411)
                                                         --------   --------     -------
    Total income taxes.................................  $(53,804)  $ 20,665     $ 2,542
                                                         ========   ========     =======
</TABLE>

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

<TABLE>
<CAPTION>
                                                                  FOR THE YEARS
                                                                      ENDED
                                                                   DECEMBER 31,        TRANSITION
                                                              ----------------------     PERIOD
                                                                2000          1999        1998
                                                              --------      --------   ----------
<S>                                                           <C>           <C>        <C>
Federal statutory rate......................................    35.0%         35.0%        35.0%
Lobbying and political......................................     0.3          (1.2)       (16.8)
Meals and entertainment.....................................     0.6          (0.9)        (1.2)
Credits earned, net.........................................    (0.3)          0.8          2.5
Other, net..................................................     0.9          (1.2)        (2.1)
                                                                ----          ----        -----
Effective tax rate..........................................    36.5%         32.5%        17.4%
                                                                ====          ====        =====
</TABLE>

                                       59
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Deferred tax assets:
    Current:
        Accrued vacation, bonuses and group insurance.......  $  6,088   $  7,358
        Prepaid gaming taxes................................    (2,911)    (2,880)
        Other...............................................     4,071      3,545
                                                              --------   --------
    Total current...........................................     7,248      8,023
                                                              --------   --------
    Long-term:
        Preopening and other costs, net of amortization.....     1,857      7,135
        Accrued benefits....................................     5,640      2,496
        FICA credits........................................        --      2,947
        State deferred taxes................................        --      2,023
        Net operating loss..................................        --      2,690
        Alternative minimum tax credits.....................    16,086     27,725
                                                              --------   --------
    Total long-term.........................................    23,583     45,016
                                                              --------   --------
    Total deferred tax assets...............................    30,831     53,039
                                                              --------   --------
Deferred tax liabilities:
    Long-term:
        Temporary differences related to property and
          equipment.........................................   (45,920)   (19,963)
        Other...............................................    (8,999)      (734)
                                                              --------   --------
    Total deferred tax liabilities..........................   (54,919)   (20,697)
                                                              --------   --------
    Net.....................................................  $(24,088)  $ 32,342
                                                              ========   ========
</TABLE>

    The excess of the alternative minimum tax over the regular federal income
tax is a tax credit which can be carried forward indefinitely to reduce future
regular federal income tax liabilities. The Company did not record a valuation
allowance at December 31, 2000 or 1999 relating to recorded tax benefits because
all benefits are more likely than not to be realized.

11. LEGAL MATTERS

    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.

    On December 20, 2000, the Company and Kansas City Station Corporation were
named as defendants in an action styled FITZGERALD SUGAR CREEK, INC. V. KANSAS
CITY STATION CORP. ET AL., No. 00CV230480 (Circuit Court of Jackson County,
Missouri). The Company and its subsidiary responded to this lawsuit on
January 19, 2001 and moved to remove the case to bankruptcy court in Nevada. The
plaintiff alleges that the defendants are liable for unspecified actual punitive
damages and other relief, based on alleged tortious interference with the
plaintiff's business expectancy of receiving a Missouri gaming license in the
Kansas City metropolitan area. The allegations of the petition appear to

                                       60
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

be based on the same issues involved in the investigation by the Missouri Gaming
Commission related to activities of Michael Lazaroff, an attorney who formerly
represented the Company in Missouri. The plaintiff also alleges claims based on
fraudulent concealment and civil conspiracy. Although no assurance can be made
with respect to any litigation, the Company believes that the plaintiffs claims
are without merit and does not expect that the lawsuit will have a material
adverse effect on the Company's financial position or results of operations.

12. SUBSEQUENT EVENTS

    On January 4, 2001, the Company consummated the purchase of substantially
all of the assets of the Fiesta Casino Hotel for $170 million. Fiesta is
strategically located on approximately 25 acres at the intersection of Lake Mead
Boulevard and Rancho Road in North Las Vegas, Nevada, across from Texas Station.
The property will retain the Fiesta name and theme.

    On January 30, 2001, the Company consummated the purchase of substantially
all of the assets of The Reserve Hotel & Casino for $71.8 million. The Reserve
is strategically located on approximately 46 acres at the intersection of
Interstate 215 and Interstate 515 in Henderson, Nevada. The property will retain
its name and theme pending further evaluation.

    In February 2001, the Company completed an offering of $300 million of
senior notes due in February 2008 (the "Senior Notes"). The Senior Notes have a
coupon rate of 8 3/8% and were priced at par. The indentures governing the
Senior Notes contain substantially the same covenants as the Company's senior
subordinated notes along with a limitation on the amount of liens the Company
can incur. The proceeds from the Senior Notes were used to repay amounts
outstanding on the Revolving Facility and to redeem $100 million in principal
amount of the 10 1/8% senior subordinated notes due 2006. The redemption of the
senior subordinated notes was completed on March 15, 2001. The Company will
record an extraordinary charge of approximately $4.2 million, net of the
applicable tax benefit, related to the redemption of the senior subordinated
note.

    In February 2001, the Company reduced the commitments under its Revolving
Facility to $300.8 million. The $80 million reduction will eliminate
substantially all the scheduled amortization described in Note 5 through
March 31, 2002. In addition, on March 12, 2001, the Company amended the
Revolving Facility. The amendment affects various covenants in the Revolving
Facility, including raising the maximum consolidated funded debt to Adjusted
EBITDA ratio to 5.25 to 1.00 through September 30, 2001 and reducing in steps to
4.50 to 1.00 on September 30, 2003.

                                       61
<PAGE>
                             STATION CASINOS, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      NET
                                                                      INCOME         INCOME     DILUTED
                                                                   (LOSS) BEFORE     (LOSS)     EARNINGS
                                                                   INCOME TAXES    APPLICABLE    (LOSS)
                                                       OPERATING        AND            TO         PER
                                              NET       INCOME     EXTRAORDINARY     COMMON      COMMON
                                            REVENUES    (LOSS)         ITEM          STOCK       SHARE
                                            --------   ---------   -------------   ----------   --------
                                                  (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                         <C>        <C>         <C>             <C>          <C>
YEAR ENDED DECEMBER 31, 2000
First quarter.............................  $254,843   $ 58,306      $  35,453      $ 22,336     $ 0.35
Second quarter............................   244,328     55,074         32,638        20,725       0.33
Third quarter.............................   249,062     47,301         24,844        15,569       0.25
Fourth quarter............................   243,445     82,131         55,214        34,875       0.55

YEAR ENDED DECEMBER 31, 1999
First quarter.............................  $229,931   $ 35,776      $  12,997      $ (4,045)    $(0.08)
Second quarter............................   235,371     41,552         34,525        21,592       0.39
Third quarter.............................   237,531     42,235         20,976        13,143       0.21
Fourth quarter............................   239,636    (90,692)      (115,721)      (75,448)     (1.20)

TRANSITION PERIOD 1998
First quarter.............................  $206,250   $ 29,179      $   5,528      $  1,488     $ 0.03
Second quarter............................   213,448     31,622          5,090         1,033       0.02
Third quarter.............................   222,516      3,895        (20,482)      (20,052)     (0.38)
</TABLE>

                                       62
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

    None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    There is incorporated by reference the information appearing in the section
entitled "Directors and Executive Officers" in the Registrant's definitive Proxy
Statement to be made publicly available with the Securities and Exchange
Commission.

ITEM 11. EXECUTIVE COMPENSATION

    There is incorporated by reference the information appearing in the section
entitled "Executive Compensation" in the Registrant's definitive Proxy Statement
to be made publicly available with the Securities and Exchange Commission.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    There is incorporated by reference the information appearing in the section
entitled "Security Ownership of Certain Beneficial Owners and Management" in the
Registrant's definitive Proxy Statement to be made publicly available with the
Securities and Exchange Commission.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    There is incorporated by reference the information appearing in the sections
entitled "Certain Relationships and Related Transactions" in the Registrant's
definitive Proxy Statement to be made publicly available with the Securities and
Exchange Commission.

                                       63
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

        Report of Independent Public Accountants

        Consolidated Balance Sheets as of December 31, 2000 and 1999

        Years Ended December 31, 2000 and 1999 and the Transition Period Ended
        December 31, 1998

           Consolidated Statements of Operations

           Consolidated Statements of Stockholders' Equity

           Consolidated Statements of Cash Flows

        Notes to Consolidated Financial Statements

   2. None

   3. Exhibits

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
       -------                                  -----------
<S>                     <C>
 3.1                    Amended and Restated Articles of Incorporation of the
                        Registrant. (Incorporated herein by reference to
                        Registration Statement No. 33-76156)
 3.2                    Restated Bylaws of the Registrant. (Incorporated herein by
                        reference to Registration Statement No. 33-76156)
 4.1                    Form of Senior Notes of the Registrant (2001 Issue)
                        (included in Exhibit 4.6)
 4.2                    Form of Subordinated Note of the Registrant (2000 issue).
                        (Incorporated herein by reference to Registration Statement
                        on Form S-4 dated October 30, 2000)
 4.3                    Form of Subordinated Note of the Registrant (1998 Issue).
                        (Incorporated herein by reference to the Company's annual
                        report on Form 10-K for the period ended December 31, 1999)
 4.4                    Form of Subordinated Note of the Registrant (1997 Issue).
                        (Incorporated herein by reference to the Company's Form 8-K
                        dated April 3, 1997)
 4.5                    Form of Subordinated Note of the Registrant (1996 Issue).
                        (Incorporated herein by reference to the Company's Form 8-K
                        dated March 25, 1996)
 4.6                    Indenture dated as of February 13, 2001 between Registrant
                        and United States Trust Company as Trustee
 4.7                    Indenture dated as of July 7, 2000 between the Registrant
                        and First Union National Bank as Trustee. (Incorporated
                        herein by reference to Registration Statement on Form S-4
                        dated October 30, 2000)
 4.8                    Indenture dated as of December 3, 1998 between the
                        Registrant and First Union National Bank as Trustee.
                        (Incorporated herein by reference to the Company's
                        Registration Statement on Form S-4 dated January 27, 1999)
 4.9                    First Supplemental Indenture dated as of August 10, 2000
                        between the Registrant and First Union National Bank as
                        Trustee, with respect to the Indenture dated as of
                        December 3, 1998
 4.10                   Indenture dated as of April 3, 1997 between Registrant and
                        First Union National Bank as Trustee. (Incorporated by
                        reference to the Company's Form 8-K dated April 3, 1997)
 4.11                   First Supplemental Indenture dated as of August 10, 2000
                        between the Registrant and First Union National Bank as
                        Trustee, with respect to the Indenture dated as of April 3,
                        1997
</TABLE>

                                       64
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
       -------                                  -----------
<S>                     <C>
 4.12                   Indenture dated as of March 29, 1996 between the Registrant
                        and First Union National Bank, as Trustee. (Incorporated
                        herein by reference to the Company's Form 8-K dated
                        March 25, 1996)
 4.13                   First Indenture dated as of August 10, 2000 between the
                        Registrant and First Union National Bank as Trustee, with
                        respect to the Indenture dated as of March 29, 1996
 4.14                   Third Amended and Restated Reducing Revolving Loan Agreement
                        dated as of August 25, 1999. (Incorporated herein by
                        reference to the Company's Quarterly Report on Form 10-Q for
                        the period ended September 30, 1999)
 4.15                   Amendment No. 1 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of September 24, 1999.
                        (Incorporated herein by reference to the Company's Quarterly
                        Report on Form 10-Q for the period ended September 30, 1999)
 4.16                   Amendment No. 2 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of January 25, 2000.
                        (Incorporated herein by reference to the Company's Annual
                        Report on Form 10-K for the period ended December 31, 1999)
 4.17                   Facility Increase Global Document to Third Amended and
                        Restated Reducing Revolving Loan Agreement dated as of
                        March 24, 2000. (Incorporated herein by reference to the
                        Company's Quarterly Report on Form 10-Q for the period ended
                        March 31, 2000)
 4.18                   Amendment No. 3 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of June 2, 2000.
                        (Incorporated herein by reference to the Company's Quarterly
                        Report on Form 10-Q for the period ended June 30, 2000)
 4.19                   Amendment No. 4 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of June 28, 2000.
                        (Incorporated herein by reference to the Company's Quarterly
                        Report on Form 10-Q for the period ended June 30, 2000)
 4.20                   Amendment No. 5 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of August 24, 2000.
                        (Incorporated herein by reference to Registration Statement
                        on Form S-4 dated October 30, 2000)
 4.21                   Amendment No. 6 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of August 31, 2000.
                        (Incorporated herein by reference to Registration Statement
                        on Form S-4 dated October 30, 2000)
 4.22                   Amendment No. 7 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of November 6, 2000.
                        (Incorporated herein by reference to the Company's Quarterly
                        Report on Form 10-Q for the period ended September 30, 2001)
 4.23                   Amendment No. 8 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of January 30, 2001.
 4.24                   Amendment No. 9 to Third Amended and Restated Reducing
                        Revolving Loan Agreement dated as of March 12, 2001.
 4.25                   Certificate of Resolutions of Convertible Preferred Stock of
                        the Registrant. (Incorporated herein by reference to the
                        Company's Form 8-K dated March 25, 1996)
 4.26                   Form of Convertible Preferred Stock of the Registrant.
                        (Incorporated herein by reference to the Company's Form 8-K
                        dated March 25, 1996)
 4.27                   Rights Agreement dated October 6, 1997 between the Company
                        and Continental Stock Transfer and Trust Company, as Rights
                        Agent. (Incorporated herein by reference to the Company's
                        Form 8-K dated October 9, 1997)
 4.28                   Amendment to Rights Agreement, dated as of January 16, 1998,
                        between Station Casinos, Inc. and Continental Stock
                        Transfer & Trust Company, as Rights Agent. (Incorporated
                        herein by reference to the Company's Form 8-K dated
                        January 27, 1998)
</TABLE>

                                       65
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
       -------                                  -----------
<S>                     <C>
 4.29                   Amendment No. 2 to Rights Agreement, dated as of
                        December 1, 1998, between Station Casinos, Inc. and
                        Continental Stock Transfer & Trust Company, as Rights Agent.
                        (Incorporated herein by reference to the Company's Form 8-K
                        dated November 6, 1998)
 4.30                   Certificate of Resolutions of $100 Redeemable Preferred
                        Stock. (Incorporated herein by reference to the Company's
                        Form 10-K for the fiscal year ended March 31, 1998)
 10.1                   Lease dated as of December 17, 1974 between Teddy Rich
                        Enterprises and Townefood, Inc. (Incorporated herein by
                        reference to Registration Statement No. 33-59302)
 10.2                   Lease dated as of May 8, 1973 between Teddy Rich Enterprises
                        and Mini-Price Motor Inn., including Addendum dated May 8,
                        1973; Lease Addendum dated June 10, 1974 amending lease
                        dated May 8, 1973 between Teddy Rich Enterprises and
                        Mini-Price Motor Inn, Inc. (Incorporated herein by
                        reference to Registration Statement No. 33-59302)
 10.3                   First Amendment to Lease (With Option) dated as of April 1,
                        1999 between Palace Station Hotel & Casino, Inc. and
                        Flamingo Associates, Inc. (Incorporated herein by reference
                        to the Company's Quarterly Report on Form 10-Q for the
                        period ended September 30, 1999)
 10.4                   Second Amendment to Lease (With Option) dated as of
                        April 1, 1999 between Palace Station Hotel Casino, Inc. and
                        Flamingo Associates, Inc. (Incorporated herein by reference
                        to the Company's Quarterly Report on Form 10-Q for the
                        period ended September 30, 1999)
 10.5                   Lease dated as of February 16, 1976 between Richfield
                        Development Co. and Mini-Price Motor Inn. (Incorporated
                        herein by reference to Registration Statement No. 33-59302)
 10.6                   First Amendment to Lease (With Option) dated as of April 1,
                        1999 between Palace Station Hotel & Casino, Inc. and
                        Richfield Development Co. (Incorporated herein by reference
                        to the Company's Quarterly Report on Form 10-Q for the
                        period ended September 30, 1999)
 10.7                   Second Amendment to Lease (With Option) dated as of
                        April 1, 1999 between Palace Station Hotel & Casino, Inc.
                        and Richfield Development Co. (Incorporated herein by
                        reference to the Company's Quarterly Report on Form 10-Q for
                        the period ended September 30, 1999)
 10.8                   Lease dated as of September 6, 1977 between Richard Tam and
                        Mini-Price Motor Inn Joint Venture (Parcel B1).
                        (Incorporated herein by reference to Registration Statement
                        No. 33-59302)
 10.9                   Lease dated as of September 6, 1977 between Richard Tam and
                        Mini-Price Motor Inn Joint Venture (Parcel B2).
                        (Incorporated herein by reference to Registration Statement
                        No. 33-59302)
 10.10                  First Amendment to Lease (With Option) dated as of April 1,
                        1999 between Palace Station Hotel & Casino, Inc. and Richard
                        Tam. (Incorporated herein by reference to the Company's
                        Quarterly Report on Form 10-Q for the period ended
                        September 30, 1999)
 10.11                  Second Amendment to Lease (With Option) dated as of
                        April 1, 1999 between Palace Station Hotel & Casino, Inc.
                        and Richard Tam. (Incorporated herein by reference to the
                        Company's Quarterly Report on Form 10-Q for the period ended
                        September 30, 1999)
 10.12                  Executive Employment Agreement between Frank J. Fertitta III
                        and the Registrant dated as of December 1, 1999.
                        (Incorporated herein by reference to the Company's Annual
                        Report on Form 10-K for the period ended December 31, 1999)
 10.13                  Executive Employment Agreement between Glenn C. Christenson
                        and the Registrant dated as of December 1, 1999.
                        (Incorporated herein by reference to the Company's Annual
                        Report on Form 10-K for the period ended December 31, 1999)
 10.14                  Executive Employment Agreement between Scott M Nielson and
                        the Registrant dated as of December 1, 1999. (Incorporated
                        herein by reference to the Company's Annual Report on
                        Form 10-K for the period ended December 31, 1999)
</TABLE>

                                       66
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
       -------                                  -----------
<S>                     <C>
 10.15                  Executive Employment Agreement between Blake L. Sartini and
                        the Registrant dated as of December 1, 1999. (Incorporated
                        herein by reference to the Company's Annual Report on
                        Form 10-K for the period ended December 31, 1999)
 10.16                  Executive Employment Agreement between Lorenzo J. Fertitta
                        and the Registrant dated as of July 31, 2000. (Incorporated
                        herein by reference to Registration Statement on Form S-4
                        dated October 30, 2000)
 10.17                  Stock Compensation Program of the Registrant. (Incorporated
                        herein by reference to the Company's Quarterly Report on
                        Form 10-Q for the period ended June 30, 1993)
 10.18                  Amendment dated as of August 22, 1995 to the Stock
                        Compensation Program. (Incorporated herein by reference to
                        the Company's Quarterly Report on Form 10-Q for the period
                        ended September 30, 1995)
 10.19                  Supplemental Executive Retirement Plan of the Registrant
                        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)
 10.20                  Supplemental Management Retirement Plan of the Registrant
                        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)
 10.21                  Long-Term Stay-On Performance Incentive Plan between the
                        Registrant and Glenn C. Christenson, Scott M Nielson and
                        Blake L. Sartini. (Incorporated herein by reference to the
                        Company's Quarterly Report on Form 10-Q for the period ended
                        December 31, 1994)
 10.22                  Amended and Restated Deferred Compensation Plan of the
                        Registrant effective as of September 30, 1999. (Incorporated
                        herein by reference to the Company's annual report on
                        Form 10-K for the period ended December 31, 1999)
 10.23                  Special Long-Term Disability Plan of the Registrant 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)
 10.24                  Ground Lease between Boulder Station, Inc. and KB
                        Enterprises dated as of June 1, 1993. (Incorporated herein
                        by reference to the Company's Quarterly Report on Form 10-Q
                        for the period ended June 30, 1993)
 10.25                  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)
 10.26                  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)
 10.27                  First Amendment to Ground Lease and Sublease, dated as of
                        June 30, 1995, by and between KB Enterprises, as landlord
                        and Boulder Station, Inc. (Incorporated herein by reference
                        to the Company's Form 8-K dated July 5, 1995)
 10.28                  Ground Lease between Registrant and Texas Gambling Hall &
                        Hotel, Inc. dated as of June 1, 1995. (Incorporated herein
                        by reference to the Company's Form 8-K dated July 5, 1995)
 10.29                  First Amendment to Ground Lease dated as of June 30, 1995
                        between Registrant and Texas Gambling Hall & Hotel, Inc.
                        (Incorporated herein by reference to the Company's Form 8-K
                        dated July 5, 1995)
 10.30                  Assignment, Assumption and Consent Agreement (Ground Lease)
                        dated as of July 6, 1995 between Registrant and Texas
                        Station, Inc. (Incorporated herein by reference to the
                        Company's Form 8-K dated July 5, 1995)
</TABLE>

                                       67
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
       -------                                  -----------
<S>                     <C>
 10.31                  Lease between Navillus Investment Co.; Jerome D. Mack as
                        trustee of the Center Trust; Peter Trust Limited
                        Partnership; and Third Generation Limited Partnership and
                        Registrant. (Incorporated herein by reference to the
                        Company" Annual Report on Form 10-K for the period ended
                        March 31, 1994)
 10.32                  Form of Indemnification Agreement for Directors and
                        Executive Officers. (Incorporated herein by reference to
                        Registration Statement No. 33-59302)
 10.33                  Form of Indemnification Agreement between the Registrant and
                        Frank Fertitta, Jr. (Incorporated herein by reference to
                        Registration Statement No. 33-59302)
 10.34                  Operating Agreement dated March 10, 2000, among Green Valley
                        Ranch Gaming, LLC, GCR Gaming, LLC and GV Ranch
                        Station, Inc., a wholly owned subsidiary of the Registrant.
                        (Incorporated herein by reference to the Company's Annual
                        Report on Form 10-K for the period ended December 31, 1999)
 10.35                  Purchase Agreement with Santa Fe Gaming Corp. and Santa Fe
                        Hotel, Inc. dated June 12, 2000. (Incorporated herein by
                        reference to the Company's Quarterly Report on Form 10-Q for
                        the period ended June 30, 2000)
 10.36                  Amendment No. 1 dated as of July 28, 2000, to Purchase
                        Agreement with Santa Fe Gaming Corp. and Santa Fe
                        Hotel, Inc. (Incorporated herein by reference to the
                        Company's Form 8-K dated October 2, 2000)
 10.37                  Amendment No. 2 dated as of August 3, 2000, to Purchase
                        Agreement with Santa Fe Gaming Corp. and Santa Fe
                        Hotel, Inc. (Incorporated herein by reference to the
                        Company's Form 8-K dated October 2, 2000)
 10.38                  Asset Purchase Agreement with Fiesta Hotel Corporation, Los
                        Pueblos, Inc. and Joe G. Maloof & Co., Inc. dated July 19,
                        2000. (Incorporated herein by reference to Registration
                        Statement on Form S-4 dated October 30, 2000)
 10.39                  Amendment dated as of January 2, 2001 to Asset Purchase
                        Agreement dated as of July 19, 2000 with Fiesta Hotel
                        Corporation, Los Pueblos, Inc. and Joe G. Maloof &
                        Company, Inc. (Incorporated herein by reference to the
                        Company's Form 8-K dated January 3, 2001)
 10.40                  Asset Purchase Agreement with Ameristar Casino Kansas
                        City, Inc., Ameristar Casinos, Inc. and Kansas City Station
                        Corporation dated October 17, 2000. (Incorporated herein by
                        reference to Registration Statement on Form S-4 dated
                        October 30, 2000)
 10.41                  Asset Purchase Agreement with Ameristar Casino St.
                        Charles, Inc., Ameristar Casinos, Inc. and St. Charles
                        Riverfront Station, Inc. dated October 17, 2000.
                        (Incorporated herein by reference to Registration Statement
                        on Form S-4 dated October 30, 2000)
 10.42                  Asset Purchase Agreement with Ameristar Casino Las
                        Vegas, Inc., Ameristar Casinos, Inc. and Lake Mead
                        Station, Inc. dated October 17, 2000. (Incorporated herein
                        by reference to Registration Statement on Form S-4 dated
                        October 30, 2000)
 21.1                   Subsidiaries of the Registrant
 23.1                   Consent of Arthur Andersen LLP
</TABLE>

------------------------

(b) Reports on Form 8K

    On January 4, 2001, the Company filed a current report on Form 8-K dated
December 20, 2000. The Company reported under Item 2 the disposition of
substantially all of the assets of Station Casino Kansas City and Station Casino
St. Charles for an aggregate purchase price of $488 million to Ameristar
Casinos, Inc.

                                       68
<PAGE>
    On January 9, 2001, the Company filed a current report on Form 8-K dated
January 3, 2001. The Company reported under Item 2 the acquisition of
substantially all of the assets of the Fiesta Casino Hotel for an aggregate
purchase price of $170 million.

    On January 25, 2001, the Company filed a current report on Form 8-K dated
January 23, 2001. The Company reported under Item 5 the financial results for
the quarter and year ended December 31, 2000 and commented on its outlook for
2001, that the Company had entered into a Settlement and Final Order with the
Missouri Gaming Commission in November and that on December 20, 2000, the
Company and Kansas City Station Corporation were named as defendants in an
action styled FITZGERALD'S SUGAR CREEK, INC. V KANSAS CITY STATION CORPORATION,
ET AL. No. 00CV230480 (Circuit Court of Jackson County, Missouri).

(c) None

(d) None

                                       69
<PAGE>
                                   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.

<TABLE>
<S>                                                    <C>  <C>
                                                       STATION CASINOS, INC.

Dated: March 28, 2001                                  By:            /s/ FRANK J. FERTITTA
                                                            -----------------------------------------
                                                                        Frank J. Fertitta
                                                            CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
                                                              OFFICER (PRINCIPAL EXECUTIVE OFFICER)
</TABLE>

    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.

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                    DATE
                      ---------                                    -----                    ----
<C>                                                    <S>                             <C>
                                                       Chairman of the Board and
                /s/ FRANK J. FERTITTA                    Chief Executive Officer
     -------------------------------------------         (Principal Executive          March 28, 2001
                  Frank J. Fertitta                      Officer)

               /s/ LORENZO J. FERTITTA
     -------------------------------------------       President and Director          March 28, 2001
                 Lorenzo J. Fertitta

                                                       Executive Vice President,
                                                         Chief Financial Officer,
              /s/ GLENN C. CHRISTENSON                   Chief Administrative
     -------------------------------------------         Officer, Treasurer and        March 28, 2001
                Glenn C. Christenson                     Director (Principal
                                                         Financial and Accounting
                                                         Officer)

                /s/ BLAKE L. SARTINI                   Executive Vice President,
     -------------------------------------------         Chief Operating Officer and   March 28, 2001
                  Blake L. Sartini                       Director
</TABLE>

                                       70
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                    TITLE                    DATE
                      ---------                                    -----                    ----
<C>                                                    <S>                             <C>
                   /s/ R. HAL DEAN
     -------------------------------------------       Director                        March 28, 2001
                     R. Hal Dean

            /s/ LOWELL H. LEBERMANN, JR.
     -------------------------------------------       Director                        March 28, 2001
              Lowell H. Lebermann, Jr.

                /s/ DELISE F. SARTINI
     -------------------------------------------       Director                        March 28, 2001
                  Delise F. Sartini

                  /s/ JAMES E. NAVE
     -------------------------------------------       Director                        March 28, 2001
                    James E. Nave
</TABLE>

                                       71