8-K
Red Rock Resorts, Inc. (RRR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): December 17, 2021
RED ROCK RESORTS, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-37754 | 47-5081182 |
|---|---|---|
| (State or Other Jurisdiction<br> <br>of Incorporation) | (Commission<br> <br>File Number) | (I.R.S. Employer<br> <br>Identification Number) |
1505 South Pavilion Center Drive, Las Vegas, Nevada 89135
(Address of Principal Executive Offices) (Zip Code)
702-495-3000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Class A Common Stock, $0.01 par value | RRR | NASDAQ Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.01 | Completion of Acquisition or Disposition of Assets |
|---|
As previously disclosed, on May 3, 2021, Red Rock Resorts, Inc., a Delaware corporation (the “Company”), through its subsidiary Station Casinos LLC, a Nevada limited liability company (“Station”), and Station’s subsidiary, RRR Palms LLC, a Nevada limited liability company (“RRR Palms”), entered into an Interest Purchase Agreement (the “Interest Purchase Agreement”) with SMGHA Nevada, LLC, a Nevada limited liability company (“Buyer”), and Yuhaviatam, LLC, a California limited liability company, as the guarantor of Buyer’s obligations, pursuant to which Buyer agreed to purchase all of the outstanding membership interests of RRR Palms. RRR Palms is the owner of the entities that own the Palms Casino Resort and Palms Place, both located in Las Vegas, Nevada.
On December 17, 2021, Station completed the sale of RRR Palms pursuant to the Interest Purchase Agreement for aggregate cash consideration of $650,000,000, subject to adjustment for certain working capital items.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| (b) | Pro Forma Financial Information. |
| --- | --- |
Unaudited pro forma condensed consolidated financial information for the year ended December 31, 2020 and as of and for the nine months ended September 30, 2021 is filed as Exhibit 99.1 hereto and are incorporated herein by reference.
| (d) | Exhibits: |
|---|---|
| Exhibit No. | Description |
| --- | --- |
| 2.1 | Interest Purchase Agreement (incorporated by reference to Exhibit 10.1 filed with the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 filed on August 6, 2021) |
| 99.1 | Unaudited pro forma condensed consolidated financial information for the year ended December 31, 2020 and as of and for the nine months ended September 30, 2021. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| RED ROCK RESORTS, INC. | ||
|---|---|---|
| Date: December 17, 2021 | By: | /s/ Stephen L. Cootey |
| Stephen L. Cootey | ||
| Executive Vice President, Chief Financial Officer and Treasurer |
EX-99.1
Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Information
The following unaudited pro forma condensed consolidated financial information is based on the historical financial statements of Red Rock Resorts, Inc. (the “Company” or “Red Rock”) and adjusted to give effect to the disposition (the “Sale”) of RRR Palms LLC (“Palms”), pursuant to an interest purchase agreement by and among the Company’s subsidiary, Station Casinos LLC (“Station” or “Seller”), Palms, SMGHA Nevada, LLC (the “Buyer”) and Yuhaviatam, LLC as the guarantor of Buyer’s obligations (the “Interest Purchase Agreement”). The unaudited pro forma condensed consolidated balance sheet as of September 30, 2021 has been prepared as if the Sale occurred on September 30, 2021. The unaudited pro forma condensed consolidated statement of income for the nine months ended September 30, 2021 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2020 have been prepared as if the Sale occurred on January 1, 2020.
The Company’s historical financial statements were prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), and the unaudited pro forma condensed consolidated financial information herein has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Unaudited transaction accounting adjustments included for the Sale consist of those necessary for its accounting. Assumptions and estimates underlying the unaudited transaction accounting adjustments were made by management as of the date of this Current Report on Form 8-K and are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information. Management believes the adjustments reflected in the pro forma amounts herein are reasonable and necessary to present fairly the pro forma balance sheet and results of operations as of and for the periods indicated.
The unaudited pro forma condensed consolidated financial information does not purport to reflect what the Company’s consolidated financial position or results of operations would have been had the Sale been completed as of the dates indicated, nor is it necessarily useful in projecting future consolidated financial position or results of operations. Actual results may differ significantly from the pro forma amounts shown herein for a variety of reasons, including, but not limited to, differences between estimates and actual amounts. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s historical financial statements and notes, including those in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
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RED ROCK RESORTS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2021
(amounts in thousands, except share data)
(unaudited)
| Adjustments | Notes | Pro Forma | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | 89,925 | $ | 641,175 | (a | ) | $ | 731,100 | ||||
| Receivables, net | 32,467 | (1,387 | ) | (b | ) | 31,080 | |||||
| Inventories | 11,475 | — | 11,475 | ||||||||
| Prepaid gaming tax | 30,437 | — | 30,437 | ||||||||
| Prepaid expenses and other current assets | 28,761 | — | 28,761 | ||||||||
| Assets held for sale | 656,628 | (644,028 | ) | (c | ) | 12,600 | |||||
| Total current assets | 849,693 | (4,240 | ) | 845,453 | |||||||
| Property and equipment, net of accumulated depreciation of 1,147,196 | 1,995,977 | — | 1,995,977 | ||||||||
| Goodwill | 195,676 | — | 195,676 | ||||||||
| Intangible assets, net of accumulated amortization of 16,722 | 87,578 | — | 87,578 | ||||||||
| Land held for development | 262,693 | — | 262,693 | ||||||||
| Investments in joint ventures | 6,147 | — | 6,147 | ||||||||
| Native American development costs | 29,942 | — | 29,942 | ||||||||
| Other assets, net | 74,303 | — | 74,303 | ||||||||
| Total assets | 3,502,009 | $ | (4,240 | ) | $ | 3,497,769 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | 20,474 | $ | — | $ | 20,474 | ||||||
| Accrued interest payable | 11,235 | — | 11,235 | ||||||||
| Other accrued liabilities | 166,247 | 1,974 | (b | ) | 168,221 | ||||||
| Liabilities related to assets held for sale | 3,091 | (3,091 | ) | (c | ) | — | |||||
| Current portion of long-term debt | 25,910 | — | 25,910 | ||||||||
| Total current liabilities | 226,957 | (1,117 | ) | 225,840 | |||||||
| Long-term debt, less current portion | 2,617,009 | — | 2,617,009 | ||||||||
| Other long-term liabilities | 39,153 | — | 39,153 | ||||||||
| Payable pursuant to tax receivable agreement | 28,035 | — | 28,035 | ||||||||
| Total liabilities | 2,911,154 | (1,117 | ) | 2,910,037 | |||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity: | |||||||||||
| Preferred stock, par value 0.01 per share, 100,000,000 shares authorized; none issued and<br>outstanding | — | — | — | ||||||||
| Class A common stock, par value 0.01 per share, 500,000,000 shares authorized; 68,696,282<br>shares issued and outstanding | 687 | — | 687 | ||||||||
| Class B common stock, par value 0.00001 per share, 100,000,000 shares authorized; 45,985,804<br>shares issued and outstanding | 1 | — | 1 | ||||||||
| Additional paid-in capital | 286,360 | — | 286,360 | ||||||||
| Retained earnings | 60,119 | (3,217 | ) | (d | ) | 56,902 | |||||
| Accumulated other comprehensive loss | (568 | ) | — | (568 | ) | ||||||
| Total Red Rock Resorts, Inc. stockholders’ equity | 346,599 | (3,217 | ) | 343,382 | |||||||
| Noncontrolling interest | 244,256 | 94 | (e | ) | 244,350 | ||||||
| Total stockholders’ equity | 590,855 | (3,123 | ) | 587,732 | |||||||
| Total liabilities and stockholders’ equity | 3,502,009 | $ | (4,240 | ) | $ | 3,497,769 |
All values are in US Dollars.
See accompanying notes to these unaudited pro forma condensed consolidated financial statements.
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RED ROCK RESORTS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(amounts in thousands, except per share data)
(unaudited)
| As Reported | Adjustments | Notes | Pro Forma | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating revenues: | ||||||||||||
| Casino | $ | 853,133 | $ | (411 | ) | (f | ) | $ | 852,722 | |||
| Food and beverage | 176,551 | (444 | ) | (f | ) | 176,107 | ||||||
| Room | 100,613 | (9,725 | ) | (f | ) | 90,888 | ||||||
| Other | 56,267 | (4,180 | ) | (f | ) | 52,087 | ||||||
| Management fees | 8,981 | — | 8,981 | |||||||||
| Net revenues | 1,195,545 | (14,760 | ) | 1,180,785 | ||||||||
| Operating costs and expenses: | ||||||||||||
| Casino | 204,501 | 782 | (f | ) | 205,283 | |||||||
| Food and beverage | 141,844 | (411 | ) | (f | ) | 141,433 | ||||||
| Room | 40,863 | (7,406 | ) | (f | ) | 33,457 | ||||||
| Other | 18,102 | (426 | ) | (f | ) | 17,676 | ||||||
| Selling, general and administrative | 255,602 | (14,611 | ) | (f | ) | 240,991 | ||||||
| Depreciation and amortization | 124,440 | (17,024 | ) | (f | ) | 107,416 | ||||||
| Write-downs and other charges, net | 2,158 | 38 | (f | ) | 2,196 | |||||||
| Asset impairment | 167,777 | — | (g | ) | 167,777 | |||||||
| 955,287 | (39,058 | ) | 916,229 | |||||||||
| Operating income | 240,258 | 24,298 | 264,556 | |||||||||
| Earnings from joint ventures | 2,397 | — | 2,397 | |||||||||
| Operating income and earnings from joint ventures | 242,655 | 24,298 | 266,953 | |||||||||
| Other expense: | ||||||||||||
| Interest expense, net | (78,192 | ) | — | (78,192 | ) | |||||||
| Loss on extinguishment of debt | (8,140 | ) | — | (8,140 | ) | |||||||
| Change in fair value of derivative instruments | (215 | ) | — | (215 | ) | |||||||
| Other | (233 | ) | — | (233 | ) | |||||||
| (86,780 | ) | — | (86,780 | ) | ||||||||
| Income before income tax | 155,875 | 24,298 | 180,173 | |||||||||
| Provision for income tax | (1,152 | ) | (3,361 | ) | (h | ) | (4,513 | ) | ||||
| Net income | 154,723 | 20,937 | 175,660 | |||||||||
| Less: net income attributable to noncontrolling interests | 61,539 | 9,593 | (j | ) | 71,132 | |||||||
| Net income attributable to Red Rock Resorts, Inc. | $ | 93,184 | $ | 11,344 | $ | 104,528 | ||||||
| Earnings per common share: | ||||||||||||
| Earnings per share of Class A common stock, basic | $ | 1.33 | $ | 1.49 | ||||||||
| Earnings per share of Class A common stock, diluted | $ | 1.21 | $ | 1.37 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||
| Basic | 69,988 | 69,988 | ||||||||||
| Diluted | 117,232 | 117,232 |
See accompanying notes to these unaudited pro forma condensed consolidated financial statements.
3
RED ROCK RESORTS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2020
(amounts in thousands, except per share data)
(unaudited)
| As Reported | Adjustments | Notes | Pro Forma | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating revenues: | ||||||||||||
| Casino | $ | 764,255 | $ | (14,649 | ) | (f | ) | $ | 749,606 | |||
| Food and beverage | 192,899 | (17,263 | ) | (f | ) | 175,636 | ||||||
| Room | 87,035 | (16,992 | ) | (f | ) | 70,043 | ||||||
| Other | 56,279 | (7,663 | ) | (f | ) | 48,616 | ||||||
| Management fees | 81,977 | — | 81,977 | |||||||||
| Net revenues | 1,182,445 | (56,567 | ) | 1,125,878 | ||||||||
| Operating costs and expenses: | ||||||||||||
| Casino | 232,939 | (12,713 | ) | (f | ) | 220,226 | ||||||
| Food and beverage | 195,963 | (20,688 | ) | (f | ) | 175,275 | ||||||
| Room | 49,363 | (11,496 | ) | (f | ) | 37,867 | ||||||
| Other | 23,034 | (3,143 | ) | (f | ) | 19,891 | ||||||
| Selling, general and administrative | 324,644 | (28,764 | ) | (f | ) | 295,880 | ||||||
| Depreciation and amortization | 231,391 | (70,600 | ) | (f | ) | 160,791 | ||||||
| Write-downs and other charges, net | 36,537 | (7,102 | ) | (f | ) | 29,435 | ||||||
| Tax receivable agreement liability adjustment | (15 | ) | — | (15 | ) | |||||||
| 1,093,856 | (154,506 | ) | 939,350 | |||||||||
| Operating income | 88,589 | 97,939 | 186,528 | |||||||||
| Earnings from joint ventures | 1,097 | — | 1,097 | |||||||||
| Operating income and earnings from joint ventures | 89,686 | 97,939 | 187,625 | |||||||||
| Other (expense) income: | ||||||||||||
| Interest expense, net | (128,465 | ) | — | (128,465 | ) | |||||||
| Gain on extinguishment/modification of debt, net | 240 | — | 240 | |||||||||
| Change in fair value of derivative instruments | (21,590 | ) | — | (21,590 | ) | |||||||
| Other | (333 | ) | — | (333 | ) | |||||||
| (150,148 | ) | — | (150,148 | ) | ||||||||
| (Loss) income before income tax | (60,462 | ) | 97,939 | 37,477 | ||||||||
| Provision for income tax | (114,081 | ) | — | (i | ) | (114,081 | ) | |||||
| Net loss | (174,543 | ) | 97,939 | (76,604 | ) | |||||||
| Less: net (loss) income attributable to noncontrolling interests | (24,146 | ) | 39,113 | (j | ) | 14,967 | ||||||
| Net loss attributable to Red Rock Resorts, Inc. | $ | (150,397 | ) | $ | 58,826 | $ | (91,571 | ) | ||||
| Loss per common share: | ||||||||||||
| Loss per share of Class A common stock, basic and diluted | $ | (2.13 | ) | $ | (1.30 | ) | ||||||
| Weighted-average common shares outstanding: | ||||||||||||
| Basic and diluted | 70,542 | 70,542 |
See accompanying notes to these unaudited pro forma condensed consolidated financial statements.
4
RED ROCK RESORTS, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| 1. | Basis of Pro Forma Presentation |
|---|
The accompanying unaudited pro forma condensed consolidated financial statements have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission, and they include the historical condensed consolidated financial statements of the Company, adjusted via pro forma adjustments to give effect to the Sale of Palms. They do not necessarily indicate what the Company’s consolidated financial position or results of operations would have been had the Sale been completed as of the date or beginning of the periods presented. Actual results may differ significantly from the pro forma amounts shown herein due to various reasons.
In the opinion of management, all pro forma adjustments are reasonable and necessary for a fair presentation of the pro forma results for the indicated periods. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Company’s historical financial statements and notes, including those in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
| 2. | Pro Forma Adjustments |
|---|---|
| (a) | Represents the cash proceeds from the Sale of $650.0 million, less $8.8 million for transaction costs<br>and working capital adjustments. |
| --- | --- |
| (b) | Represents a reduction of income tax receivable and an increase to income tax payable arising from the Sale of<br>Palms, which resulted in a taxable gain. |
| --- | --- |
| (c) | Represents the elimination of assets and liabilities held for sale related to Palms as of September 30,<br>2021. |
| --- | --- |
| (d) | Represents the effect on Red Rock Resorts, Inc. stockholders’ equity of the adjustments described in notes<br>(a) through (c) above. |
| --- | --- |
| (e) | Represents the effect on noncontrolling interest of the adjustments described in notes (a) and (c) above.<br> |
| --- | --- |
| (f) | Represents the elimination of revenue and related operating costs and expenses related to Palms.<br> |
| --- | --- |
| (g) | No adjustment has been made to the asset impairment charge arising from the Sale of Palms as of<br>December 17, 2021. |
| --- | --- |
| (h) | Represents income tax expense for the nine months ended September 30, 2021 arising from the Sale of Palms,<br>which resulted in a taxable gain. |
| --- | --- |
| (i) | Represents the recognition of no income tax expense for the year ended December 31, 2020 as a result of<br>the Sale of Palms. The Company had sufficient federal net operating loss carryforwards to offset tax on the gain from the Sale. |
| --- | --- |
| (j) | Represents the effect of the adjustments described in note (f) above on net income or loss attributable to<br>noncontrolling interests. |
| --- | --- |
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