RED ROCK RESORTS, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-K)

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The following discussion and analysis should be read in conjunction with the consolidated financial statements and accompanying notes included in Item 8. Financial Statements and Supplementary Data in this Annual Report on Form 10-K.

Overview


Red Rock was formed as a Delaware corporation in 2015 to own an indirect equity
interest in, and manage, Station Casinos LLC, a Nevada limited liability company
("Station LLC"). Station LLC is a gaming, development and management company
established in 1976 that owns and operates nine major gaming and entertainment
facilities and ten smaller casinos (three of which are 50% owned) in the Las
Vegas regional market. Three of our major properties had not reopened as of
December 31, 2021 as discussed within Impact of COVID-19 below. Excluding the
three closed properties, we currently offer approximately 13,894 slot machines,
240 table games and 3,081 hotel rooms in the Las Vegas market. A subsidiary of
Station LLC also managed Graton Resort in northern California on behalf of a
Native American tribe through February 5, 2021. In addition, we are currently
developing a new casino resort to be called Durango, a Station Casinos Resort,
on our approximately 50-acre development site at the intersection of Durango
Drive and Interstate 215 in the southwest Las Vegas valley. We commenced
construction of Durango in the first quarter of 2022, and we anticipate
completion approximately 18 to 24 months after construction begins.

We own all of the outstanding voting interests in Station LLC and have an
indirect equity interest in Station LLC through our ownership of limited
liability company interests in Station Holdco ("LLC Units"), which owns all of
the economic interests in Station LLC. At December 31, 2021, we held 58% of the
economic interests and 100% of the voting power in Station Holdco, subject to
certain limited exceptions, and we are designated as the sole managing member of
both Station Holdco and Station LLC. We control and operate all of the business
and affairs of Station Holdco and Station LLC, and conduct all of our operations
through these entities. Other than assets and liabilities related to income
taxes and the tax receivable agreement, our only assets are our equity interest
in Station Holdco and our voting interest in Station LLC. We have no operations
outside of our management of Station Holdco and Station LLC.

Our Consolidated Financial Statements reflect the consolidation of Station LLC
and its consolidated subsidiaries, and Station Holdco. The financial position
and results of operations attributable to LLC Units we do not own are reported
separately as noncontrolling interest.

Our principal source of revenue and operating income is gaming, and our
non-gaming offerings include restaurants, hotels and other entertainment
amenities. Approximately 80% to 85% of our casino revenue is generated from slot
play. The majority of our revenue is cash-based and as a result, fluctuations in
our revenues have a direct impact on our cash flows from operations. Because our
business is capital intensive, we rely heavily on the ability of our properties
to generate operating cash flow to repay debt financing and fund capital
expenditures.

A significant portion of our business is dependent upon customers who live
and/or work in the Las Vegas metropolitan area. As of December 2021, the
unemployment rate in the Las Vegas metropolitan area was 6.0%, down from a high
of 34% in April 2020. Statewide, the unemployment rate for December 2021
declined to 5.2%, as compared to 30% in April 2020. The median price of an
existing single-family home in Las Vegas was at an all-time high of $425,000 at
December 31, 2021, up 23% as compared to the prior year according to the Las
Vegas Realtors®, continuing a trend of significant increases in home values in
Las Vegas since 2012. In addition, Las Vegas remains one of the fastest growing
metropolitan areas in the United States, posting a 2.4% growth rate in 2021. Due
to uncertainties surrounding the ongoing pandemic, we cannot predict whether the
recovery in unemployment and the positive trends in housing prices and
population growth in the Las Vegas area will continue.

Impact of COVID-19


During 2020, our business was negatively impacted by the global COVID-19
pandemic, including the temporary state-mandated closure of all of our
properties from March 17, 2020 through June 3, 2020. Although the pandemic is
ongoing, on June 1, 2021, many of the state-mandated occupancy and other
operational restrictions were lifted. Certain operational restrictions
continued, including a rule added in late July 2021 requiring all employees and
guests to wear face coverings while indoors in public spaces, which was lifted
on February 10, 2022.

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At December 31, 2021, our Texas Station, Fiesta Rancho and Fiesta Henderson
properties had not reopened. We will continue to assess the performance of the
reopened properties, as well as the recovery of the Las Vegas market and the
economy as a whole, before considering whether to reopen some or all of the
remaining properties, and we have no current plans to reopen any of these
properties in 2022.

Subsequent to the reopening of most of our properties in June 2020, we saw
favorable customer trends which continued throughout 2021, including strong
visitation from our guests, including a younger demographic, increased spend per
visit, more time spent on device, and increased return of our core customers.
These positive trends, in combination with business optimization and cost
reduction measures implemented in the second quarter of 2020, have continued to
drive strong operating results in 2021. However, we cannot predict whether these
trends will continue, nor can we predict the extent to which the impacts of
COVID-19 and its related variants on the United States and Las Vegas economies
may affect our business in the future.

The COVID-19 pandemic and its related variants have had, and may continue to
have, a detrimental impact on the United States and Las Vegas economies. We have
taken steps to mitigate these and potential future effects of COVID-19 and its
related variants on our results of operations through a combination of
streamlining our business, optimizing our marketing initiatives, and reducing
expenses. We have implemented comprehensive health and cleanliness standards
designed to provide the safest and most secure environment possible for our
guests and employees.

As a result of the COVID-19 pandemic, the mandatory closure of all of our
properties from March 17, 2020 through June 3, 2020, and the ongoing closure of
three of our properties, our operating results for the year ended December 31,
2021 and those of the prior year are not comparable.

Our key performance indicators

We use certain key indicators to measure our performance.

Gaming revenue metrics:


•Slot handle, table game drop and race and sports write are measures of volume.
Slot handle represents the dollar amount wagered in slot machines, and table
game drop represents the total amount of cash and net markers issued that are
deposited in table game drop boxes.

•Win represents the amount of bets retained by us.

•Hold represents the win as a percentage of slot machine handle or table game drop.


As our customers are primarily Las Vegas residents, our hold percentages are
generally consistent from period to period. Notwithstanding the impact of the
COVID-19 pandemic, fluctuations in our casino revenue are primarily due to the
volume and spending levels of customers at our properties.

Food and Beverage Revenue Metrics:

• Average customer check is a measure of the volume of food sales and product offerings in our restaurants, and represents the average amount spent per customer visit.

• The number of guests served is an indicator of volume.

Room Revenue Metrics:

• Occupancy is calculated by dividing occupied rooms, including free rooms, by available rooms.

• Average Daily Rate (“ADR”) is calculated by dividing room revenue, which includes the retail value of free rooms, by occupied rooms, including free rooms.

• Revenue per available room is calculated by dividing room revenue by available rooms.


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Information about our results of operations is included herein and in the notes
to our Consolidated Financial Statements.

Operating results


The following table presents information about our results of operations for the
year ended December 31, 2021 compared to 2020 (dollars in thousands).
Information about our results of operations for the year ended December 31, 2020
as compared to 2019 can be found in Part II, Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations in our Annual Report
on Form 10-K for the year ended December 31, 2020, filed with the SEC on
February 23, 2021.

                                                                                          Year Ended December 31,
                                                                                                                       Percent
                                                                              2021                 2020                change
Net revenues                                                             $ 1,617,899          $ 1,182,445               36.8%
Operating income                                                             401,542               88,589              353.3%

Casino revenues                                                            1,142,606              764,255               49.5%
Casino expenses                                                              275,462              232,939               18.3%
Margin                                                                          75.9  %              69.5  %

Food and beverage revenues                                                   245,432              192,899               27.2%
Food and beverage expenses                                                   196,156              195,963               0.1%
Margin                                                                          20.1  %              (1.6) %

Room revenues                                                                143,916               87,035               65.4%
Room expenses                                                                 55,336               49,363               12.1%
Margin                                                                          61.5  %              43.3  %

Other revenues                                                                76,746               56,279               36.4%
Other expenses                                                                25,535               23,034               10.9%

Management fee revenue                                                         9,199               81,977              (88.8)%

Selling, general and administrative expenses                                 347,090              324,644               6.9%
Percent of net revenues                                                         21.5  %              27.5  %

Depreciation and amortization                                                157,791              231,391              (31.8)%
Write-downs and other, net                                                    18,677              (36,522)               n/m
Loss on sale of Palms                                                        177,664                    -                n/m
Interest expense, net                                                        103,206              128,465              (19.7)%
(Loss) gain on extinguishment/modification of debt, net                      (13,492)                 240                n/m
Change in fair value of derivative instruments                                  (215)             (21,590)               n/m
Benefit (provision) for income tax                                            69,287             (114,081)               n/m
Net income (loss) attributable to noncontrolling interests                   112,980              (24,146)               n/m
Net income (loss) attributable to Red Rock                                   241,850             (150,397)               n/m


________________________________________________

n/m = not significant

We look at each of our Vegas casino properties as an individual operating segment. We gather all our Vegas operating segments into a single segment to present because all of our Vegas properties offer similar products, meet


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the same customer base, have the same regulatory and tax structure, share the
same marketing programs, are directed by a centralized management structure and
have similar economic characteristics. We also aggregate our Native American
management activities into one reportable segment. The results of operations for
our Native American management segment are discussed in the section entitled
Management Fee Revenue below and the results of operations of our Las Vegas
operations are discussed in the remaining sections below.

Net Revenues. Net revenues for the year ended December 31, 2021 increased by
$435.5 million to $1.62 billion as compared to $1.18 billion for the year ended
December 31, 2020. Net revenues were higher across all revenue categories except
management fee revenue, which decreased as we ceased to manage Graton Resort in
February 2021. The improvement in net revenues was due to our continued recovery
from the negative effects of the COVID-19 pandemic, despite the ongoing closure
of three of our properties. As described above, all of our properties were
closed from March 17, 2020 through June 3, 2020.

Operating Income. Operating income increased by $313.0 million to $401.5 million
for 2021 as compared to $88.6 million for 2020. Our strong performance and the
overall customer trends for the current year were consistent with the trends we
have seen since our reopening in June 2020. For the year ended December 31,
2021, our operating income was negatively impacted by a $177.7 million loss on
the sale of Palms Casino Resort ("Palms"). For the year ended December 31, 2020,
our operating income was negatively impacted by the temporary closure of all of
our properties as described under Impact of COVID-19 above, as well as the
state-mandated occupancy, social distancing and other restrictions in place
subsequent to our reopening. Additional information about factors impacting our
operating income are discussed below.

Casino.  Casino revenues increased by 49.5% and casino expenses increased by
18.3% for the year ended December 31, 2021 as compared to 2020, as all of our
properties were closed for part of the first quarter of 2020 and most of the
second quarter of 2020. Subsequent to reopening on June 4, 2020 and throughout
2021, the higher volume and corresponding revenue we have experienced across all
categories of casino operations was a result of strong and consistent visitation
from our guests, including a younger demographic and the continued return of our
core customers. For 2021, slot handle increased by 42.4%, table games drop
increased by 33.1% and our hold percentages were consistent as compared to 2020.
Race and sports write also increased by 60.8%, as many sporting events were
postponed or cancelled in 2020. Casino expenses were higher for the year ended
December 31, 2021 as compared to 2020 commensurate with the higher revenues,
primarily due to gaming taxes.

Food and Beverage.  Food and beverage includes revenue and expenses from
restaurants, bars and catering. For the year ended December 31, 2021, food and
beverage revenue increased by 27.2% as compared to 2020. Since reopening in June
2020, all of our restaurants at our open properties are operating, with the
exception of the buffets, which we expect to remain closed. The number of
restaurant guests served increased by 38.8% and the average guest check
increased by 10.9% for 2021 as compared to 2020, excluding the buffets. Food and
beverage expenses for the year ended December 31, 2021 as compared to the prior
year effectively remained flat, as the absence of buffet expenses and related
employee costs was offset by increased costs of sales from a full year of
operating all of our other restaurants at our open properties.

Hall. Information on our hotel activities is presented below:

                                    Year Ended December 31,
                                   2021                  2020
Occupancy                            75.0   %             65.4  %
Average daily rate            $    152.20             $ 118.01
Revenue per available room    $    114.13             $  77.17


For the year ended December 31, 2021 as compared to 2020, room revenues
increased by 65.4% and room expenses increased by 12.1%, as domestic travel and
demand recovered from the effects of the COVID-19 pandemic. Our ADR improved by
29.0%, our revenue per available room improved by 47.9% and our occupancy rate
improved by 9.6 percentage points for 2021 as compared to 2020. Room revenues
for the prior year reflected the impact of decreased travel amid the pandemic
and the temporary closure of all of our properties for part of the first quarter
of 2020 and most of the second quarter of 2020. Room expenses were higher for
the year ended December 31, 2021 as compared to 2020 commensurate with the
higher revenues and increased occupancy.

Other. Other primarily represents revenues from tenant leases, retail outlets,
bowling, spas and entertainment and their corresponding expenses. For the year
ended December 31, 2021, other revenues and other expenses increased 36.4% and
10.9%, respectively, as compared to the prior year due to the easing of
state-mandated occupancy, social distancing and other restrictions, which
increased our ability to offer non-gaming amenities at our reopened properties.
In addition, other revenues

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for the prior year were negatively impacted by the closure of all of our
properties for part of the first quarter of 2020 and most of the second quarter
of 2020.

Management Fee Revenue. Management fee revenue primarily represents fees earned
from our agreement with a Native American tribe to manage Graton Resort. For
2021 as compared to 2020, management fee revenue decreased by 88.8% as we ceased
to manage Graton Resort on February 5, 2021.

Selling, General and Administrative ("SG&A"). SG&A expenses increased by 6.9% to
$347.1 million for the year ended December 31, 2021 as compared to $324.6
million for the prior year. The increase in SG&A expenses as compared to the
prior year was primarily due to higher employee costs. In addition, SG&A
expenses were lower for the year ended December 31, 2020 because all of our
properties were closed for part of the first quarter of 2020 and most of the
second quarter of 2020. As a percentage of net revenue, SG&A expenses decreased
by 6.0 percentage points for 2021 as compared to 2020.

Depreciation and Amortization. Depreciation and amortization expense for the
year ended December 31, 2021 decreased to $157.8 million as compared to $231.4
million for 2020. As a result of the sale of Palms, we ceased recognizing
depreciation and amortization expense for the property as of April 1, 2021.
Depreciation expense also decreased due to certain assets becoming fully
depreciated. Amortization expense decreased primarily due to the Graton Resort
management agreement becoming fully amortized in the fourth quarter of 2020.

Write-downs and other, net. Write-downs and other, net, include gains and losses
on asset disposals, severance, preopening and redevelopment, business innovation
and technology enhancements and non-routine expenses. For the year ended
December 31, 2021, write-downs and other, net was a gain of $18.7 million,
primarily representing gains on land sales. For the year ended December 31,
2020, write-downs and other, net was a loss of $36.5 million, which included net
losses on asset disposals, including the write-off of assets due to the closure
of the Company's buffets; severance, including insurance benefits through
September 2020 for employees who were terminated in connection with the
Company's workforce reduction in May 2020; and asset write-offs related to
various technology projects.

Loss on sale of palm trees. For the year ended December 31, 2021we recognized a
$177.7 million loss on the sale of Palms, which we sold for $650 million in
December 2021.

Interest expense, net. The following table provides summary information about our interest expense (amounts in thousands):

Year ended the 31st of December,

                                                                        2021                   2020
Interest cost, net of interest income                           $      93,919              $  117,993
Amortization of debt discount and debt issuance costs                   9,592                  10,472
Capitalized interest                                                     (305)                      -
Interest expense, net                                           $     103,206              $  128,465


Interest expense, net, for the year ended December 31, 2021 was $103.2 million
as compared to $128.5 million for 2020. The decrease in interest expense, net
was due to lower variable interest rates applicable to our credit facility as
well as lower average outstanding indebtedness. Beginning in February 2020, the
variable interest rates applicable to our credit facility declined and have
remained very low through December 31, 2021 in response to economic and growth
uncertainty in the financial markets due to the COVID-19 pandemic. Additional
information about our long-term debt is included in Note 7 to the Consolidated
Financial Statements.

(Loss) Gain on Extinguishment/Modification of Debt, net. For the year ended
December 31, 2021, we recognized a loss of $13.5 million on extinguishment of
debt as a result of the redemption of our 5.00% Senior Notes. For the year ended
December 31, 2020, we recognized a net gain of $0.2 million comprising a gain of
$12.7 million on repurchases of $96.6 million of our outstanding indebtedness,
partially offset by a loss of $12.5 million related to amendments to our credit
facility in February 2020.

Change in Fair Value of Derivative Instruments. Our interest rate swaps expired
in July 2021. For the year ended December 31, 2021, we recognized a net loss of
$0.2 million in the fair value of our interest rate swaps, as compared to a net
loss of $21.6 million for 2020. The losses in the prior year were primarily due
to downward movements in the forward interest rate curve.

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Benefit (Provision) for Income Tax. For the year ended December 31, 2021, we
recognized an income tax benefit of $69.3 million as compared to income tax
expense of $114.1 million for the prior year. For the year ended December 31,
2021, we reversed the valuation allowance on our deferred tax assets that had
been recognized in the prior year due to the uncertainty of realizing certain
tax benefits as a result of the COVID-19 pandemic. Station Holdco is treated as
a partnership for income tax reporting and Station Holdco's members are liable
for federal, state and local income taxes based on their share of Station
Holdco's taxable income. Our effective tax rate of (24.3)% for 2021 was less
than the statutory rate with differences primarily related to the reversal of
the valuation allowance, as well as net income attributable to noncontrolling
interest, tax credits and permanent items.

Net Income (Loss) Attributable to Noncontrolling Interests. Net income (loss)
attributable to noncontrolling interests for the years ended December 31, 2021
and 2020 represented the portion of net income (loss) attributable to the
ownership interest in Station Holdco not held by us.

Adjusted EBITDA


Adjusted EBITDA for the years ended December 31, 2021 and 2020 for our two
reportable segments and a reconciliation of net income to Adjusted EBITDA are
presented below (amounts in thousands). The Las Vegas operations segment
includes all of our Las Vegas area casino properties and the Native American
management segment includes our Native American management activities.

                                                               Year Ended December 31,
                                                                2021             2020
Net revenues
Las Vegas operations                                       $  1,602,438      $ 1,094,442
Native American management                                        8,292           81,440
Reportable segment net revenues                               1,610,730        1,175,882
Corporate and other                                               7,169            6,563
Net revenues                                               $  1,617,899      $ 1,182,445

Net income (loss)                                          $    354,830      $  (174,543)
Adjustments
Depreciation and amortization                                   157,791          231,391
Share-based compensation                                         12,728           10,886
Write-downs and other, net                                      (18,677)          36,522
Loss on sale of Palms                                           177,664                -
Operating losses from Palms assets held for sale                  6,211                -
Interest expense, net                                           103,206     

128,465

Loss (gain) on extinguishment/modification of debt, net 13,492

(240)

Change in fair value of derivative instruments                      215     

21,590

(Benefit) provision for income tax                              (69,287)         114,081
Other                                                             2,818              333
Adjusted EBITDA                                            $    740,991      $   368,485

Adjusted EBITDA
Las Vegas operations                                       $    785,932      $   335,134
Native American management                                        7,809           77,440
Corporate and other                                             (52,750)         (44,089)
Adjusted EBITDA                                            $    740,991      $   368,485

Year-over-year variations in Adjusted EBITDA are attributable to the factors described in the Results of Operations section above.


Adjusted EBITDA is a non-GAAP measure that is presented solely as a supplemental
disclosure. We believe that Adjusted EBITDA is a widely used measure of
operating performance in our industry and is a principal basis for valuation of
gaming companies. We believe that in addition to net income (loss), Adjusted
EBITDA is a useful financial performance measurement for assessing our operating
performance because it provides information about the performance of our ongoing

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core operations. Adjusted EBITDA includes net income (loss) plus depreciation
and amortization, share-based compensation, write-downs and other, net, loss on
sale of Palms, operating losses from Palms assets held for sale, interest
expense, net, loss (gain) on extinguishment/modification of debt, net, change in
fair value of derivative instruments, (benefit) provision for income tax and
other.

To evaluate Adjusted EBITDA and the trends it depicts, the components should be
considered. Each of these components can significantly affect our results of
operations and should be considered in evaluating our operating performance, and
the impact of these components cannot be determined from Adjusted EBITDA.
Adjusted EBITDA does not represent net income or cash flows from operating,
investing or financing activities as defined by accounting principles generally
accepted in the United States of America ("GAAP") and should not be considered
as an alternative to net income as an indicator of our operating performance.
Additionally, Adjusted EBITDA does not consider capital expenditures and other
investing activities and should not be considered as a measure of our liquidity.
It should be noted that not all gaming companies that report EBITDA or
adjustments to this measure may calculate EBITDA or such adjustments in the same
manner as we do, and therefore, our measure of Adjusted EBITDA may not be
comparable to similarly titled measures used by other gaming companies.

Financial information about the holding company


The indentures governing the 4.50% Senior Notes and the 4.625% Senior Notes
contain certain covenants that require Station LLC to furnish to the holders of
the notes certain annual and quarterly financial information relating to Station
LLC and its subsidiaries. The obligation to furnish such information may be
satisfied by providing consolidated financial information of the Company along
with additional disclosure explaining the differences between such information
and the financial information of Station LLC and its subsidiaries on a
standalone basis. The following financial information about the Company and its
consolidated subsidiaries exclusive of Station LLC and its subsidiaries (the
"Holding Company"), is furnished to explain the differences between the
financial information of the Holding Company and the financial information of
Station LLC and its subsidiaries for the periods presented in this report. The
primary differences between the financial information of the Holding Company and
that of Station LLC relate to income taxes and the liability relating to the tax
receivable agreement ("TRA").

At December 31, 2021, the difference between the balance sheet for Station LLC
and its consolidated subsidiaries and the balance sheet for the Holding Company
is that the Holding Company had cash of $3.3 million, $98.6 million of deferred
tax assets, net, a $27.2 million noncurrent liability under the TRA and $2.1
million of other current liabilities that are solely liabilities of the Holding
Company. At December 31, 2020, the Holding Company had a $27.4 million
noncurrent liability under the TRA and $0.6 million of other current
liabilities.

For the year ended December 31, 2021, the difference between the statement of
operations for Station LLC and its consolidated subsidiaries and the statement
of operations for the Holding Company is that the Holding Company had net income
of $70.6 million primarily representing an income tax benefit related to the
reversal of a valuation allowance against its deferred tax assets. For the year
ended December 31, 2020, the difference between the statement of operations for
Station LLC and its consolidated subsidiaries and the statement of operations
for the Holding Company is that the Holding Company had a net loss of $114.2
million primarily representing a provision for income tax to establish a full
valuation allowance against its deferred tax assets.

Financial situation, capital resources and liquidity


The following financial condition, capital resources and liquidity discussion
contains certain forward-looking statements with respect to our business,
financial condition, results of operations, dispositions, acquisitions,
expansion projects and issuances of debt and equity, which involve risks and
uncertainties that cannot be predicted or quantified, and consequently, actual
results may differ materially from those expressed or implied herein. Such risks
and uncertainties include, but are not limited to, the risks described in Item
1A. Risk Factors.

At December 31, 2021, we had $275.3 million in cash and cash equivalents, and
Station LLC's borrowing availability under its revolving credit facility was
$1.0 billion, which was net of $29.4 million in outstanding letters of credit
and similar obligations. Station LLC maintains its borrowing availability under
its revolving credit facility, subject to continued compliance with the terms of
the credit facility. See Note 7 to the Consolidated Financial Statements for
more information about our long-term debt.

Our primary capital requirements for the near term are expected to be related to
the operation and maintenance of our properties, debt service payments and
construction costs for Durango. Our anticipated uses of cash for 2022 include
(i) approximately $300.0 million to $400.0 million for investment capital
expenditures, including the development of Durango, (ii)

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approximately $75.0 million to 0.0 million for maintenance capital
expenditures at our existing properties, (iii) required principal and interest
payments on Station LLC's indebtedness totaling $25.9 million and $99.2 million,
respectively, (iv) dividends to our Class A common stockholders, and (v)
distributions to noncontrolling interest holders of Station Holdco, including
"tax distributions", which may be made quarterly when required and in amounts
that may vary from quarter to quarter. Other payment obligations include
salaries, wages and employee benefits, service contracts, property taxes,
insurance and other obligations.

In February 2022, Station Holdco paid a distribution of $24.9 million to all LLC
Unit holders, of which approximately $14.6 million was distributed to Red Rock
and approximately $10.3 million was distributed to the other unit holders of
Station Holdco. In addition, on February 18, 2022, our board of directors
declared a quarterly cash dividend of $0.25 per share of Class A common stock,
to be paid on March 31, 2022 to shareholders of record as of March 15, 2022.
Prior to the payment of the dividend on March 31, 2022, Station Holdco will make
a cash distribution to all LLC Unit holders, including Red Rock, of $0.25 per
LLC Unit, a portion of which will be paid to the other unit holders of Station
Holdco.

We are obligated to make payments under the TRA, which is described in Note 2 to
the Consolidated Financial Statements. At December 31, 2021, such obligations
with respect to previously consummated transactions totaled $27.2 million.
Future payments in respect of any subsequent exchanges of LLC Units for Class A
common stock would be in addition to these amounts and are expected to be
substantial. The timing of payments under the TRA may vary. The payments that we
are required to make will generally reduce the amount of overall cash that might
have otherwise been available to us, but we expect the cash tax savings we will
realize from the utilization of the related deferred tax assets to fund the
required payments.

In February 2019, our board of directors approved an equity repurchase program
authorizing the repurchase of up to an aggregate of $150 million of our Class A
common stock. In February 2021, our board of directors approved an extension of
the equity repurchase program through December 31, 2022. In September 2021, our
board of directors approved an increase in the aggregate amount authorized under
the equity repurchase program to $300 million. We are not obligated to
repurchase any shares under the program. Subject to applicable laws and the
provisions of any agreements restricting our ability to do so, repurchases may
be made at our discretion from time to time through open market purchases,
negotiated transactions or tender offers, depending on market conditions and
other factors. For the year ended December 31, 2021, we repurchased 3,517,043
shares of our Class A common stock at a weighted-average price of $40.59 per
share in open market transactions, and we have $154.4 million of remaining
repurchases authorized under the program. In December 2021, we purchased
6,884,858 shares of our issued and outstanding Class A common stock for an
aggregate purchase price of $354.6 million and a price per share of $51.50 (the
"2021 Equity Tender") pursuant to a "modified Dutch Auction" tender offer, and
the shares were retired upon repurchase. The Class A share repurchases made
under the tender offer were not a part of the Company's publicly-announced
equity repurchase program. From time to time, we may also seek to repurchase our
outstanding indebtedness. Any such purchases may be funded by existing cash
balances or the incurrence of debt, including borrowings under our credit
facility. The amount and timing of any repurchase will be based on business and
market conditions, capital availability, compliance with debt covenants and
other considerations.

We expect that cash on hand, cash generated from operations and, to the extent
necessary, borrowings available under the credit facility, will be sufficient to
fund our operations and capital requirements and service our outstanding
indebtedness for the next twelve months. We regularly assess our projected cash
requirements for capital expenditures, repayment of debt obligations, and
payment of other general corporate and operational needs. In the long term, we
expect that we will fund our capital requirements with a combination of cash
generated from operations, borrowings under the credit facility and the issuance
of debt or equity as market conditions may permit. However, our cash flow and
ability to obtain debt or equity financing on terms that are satisfactory to us,
or at all, may be affected by a variety of factors, including competition,
general economic and business conditions and financial markets, all of which may
be adversely impacted by the ongoing COVID-19 pandemic. As a result, we cannot
provide any assurance that we will generate sufficient income and liquidity to
meet all of our liquidity requirements or other obligations.

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Following is a summary of our cash flow information (amounts in thousands):

                                        Year Ended December 31,
                                          2021               2020
Net cash provided by (used in):
Operating activities              $     609,963           $ 212,790
Investing activities                    586,259             (69,557)
Financing activities                 (1,014,672)           (150,443)


Cash Flows from Operations

Our operating cash flows primarily consist of operating income generated by our
properties (excluding depreciation and other non-cash charges), interest paid
and changes in working capital accounts such as inventories, prepaid expenses,
receivables and payables. The majority of our revenue is generated from our slot
machine and table game play, which is conducted primarily on a cash basis. Our
food and beverage, room and other revenues are also primarily cash-based. As a
result, fluctuations in our revenues have a direct impact on our cash flow from
operations.

Net cash provided by operating activities for the year ended December 31, 2021
totaled $610.0 million, compared to $212.8 million for 2020. An increase in
gaming revenues, favorable customer trends and cost reduction measures
implemented in the second quarter of 2020 drove strong operating results in
2021. For 2020, operating cash flows were negatively impacted by the onset of
the COVID-19 pandemic, including the mandatory closure of all of our properties
for part of the first quarter of 2020 and most of the second quarter of 2020,
the effects of state-mandated occupancy and social distancing restrictions
subsequent to reopening, reduced consumer confidence, discretionary spending and
travel, and the continued closure of three of our properties.

Cash flow from investing activities


For the year ended December 31, 2021, cash inflows from investing activities
included cash proceeds from the sale of Palms of $650.0 million, less
transaction costs and other adjustments, and $35.4 million from the sale of
certain land parcels in Reno and Las Vegas. In addition, during 2021 and 2020,
cash paid for capital expenditures totaled $61.3 million and $58.5 million,
respectively.

Cash flow from financing activities


For the year ended December 31, 2021, we redeemed $530.3 million in outstanding
principal amount of 5.00% Senior Notes and paid redemption premiums of $9.8
million. In November 2021, we issued $500.0 million in principal amount of
4.625% Senior Notes due 2031. For the year ended December 31, 2021, we also paid
$500.9 million to repurchase approximately 10.4 million shares of our Class A
common stock, which included $354.6 million for the 2021 Equity Tender described
above. For the year ended December 31, 2021, we paid cash distributions totaling
$237.2 million to the noncontrolling interest holders of Station Holdco, and in
December 2021, we paid a special cash dividend of $3.00 per share to holders of
our Class A common stock.

For the year ended December 31, 2020, we reduced our outstanding indebtedness by
$129.9 million. In February 2020, we issued $750.0 million in principal amount
of 4.50% Senior Notes, the proceeds of which were used to repay a portion of the
amounts outstanding under the credit facility, to pay fees and costs associated
with the offering and for general corporate purposes. In March 2020, we drew
$997.5 million under our revolving credit facility to secure our liquidity
position and preserve financial flexibility amid the COVID-19 pandemic, all of
which was repaid during 2020. In addition, for the year ended December 31, 2020,
we paid $82.6 million to repurchase $96.6 million in principal amount of our
outstanding indebtedness, primarily our senior notes. We also paid $7.3 million
in dividends to Class A common stockholders and $4.6 million in cash
distributions to noncontrolling interest holders of Station Holdco, as well as
$22.9 million in fees and costs related to the amendment of the credit facility
and the new senior notes.

Restrictive Covenants

Certain customary covenants are included in both the credit agreement governing
the credit facility and the indentures governing Station LLC's senior notes
that, among other things and subject to certain exceptions, restrict Station
LLC's ability and the ability of its restricted subsidiaries to incur or
guarantee additional debt; create liens on collateral; engage in mergers,
consolidations or asset dispositions; pay distributions; make investments, loans
or advances; engage in certain transactions with

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Affiliates or subsidiaries; engage in business areas other than its core business and related businesses; or issue certain preferred shares.


The credit facility also includes certain financial ratio covenants that Station
LLC is required to maintain throughout the term of the credit facility, measured
as of the end of each quarter. As most recently amended in February 2020, these
financial ratio covenants include an interest coverage ratio of not less than
2.50 to 1.00 and a maximum consolidated total leverage ratio, with step-downs
over the term of the credit facility, ranging from 6.50 to 1.00 at December 31,
2021 to 5.25 to 1.00 at December 31, 2023 and thereafter. A breach of the
financial ratio covenants shall only become an event of default under the term
loan B facility if the lenders providing the term loan A facility and the
revolving credit facility take certain affirmative actions after the occurrence
of a default of such financial ratio covenants. We believe Station LLC was in
compliance with all applicable covenants at December 31, 2021

Off-balance sheet arrangements


At December 31, 2021, we had no variable interests in unconsolidated entities
that provide off-balance sheet financing, liquidity, market risk or credit risk
support, or that engage in leasing, hedging or research and development
arrangements with us, nor did we have retained or contingent interests in assets
transferred to an unconsolidated entity. Our derivative instruments expired in
July 2021 as described in Note 8 to the Consolidated Financial Statements. At
December 31, 2021, we had outstanding letters of credit and similar obligations
totaling $29.4 million.

Inflation

We do not believe inflation has had a significant effect on our results of
operations during 2021 or 2020. However, commodity prices have recently
increased and become more volatile, and we are experiencing price inflation in
food costs, supplies, energy costs and construction costs. In addition, we have
been impacted by a shortage of qualified workers which places additional upward
pressure on wages and benefit costs as we seek to attract and retain qualified
workers. We attempt to minimize the impact of inflation on our business by
implementing cost controls and adjusting prices.

Native American development


We have development and management agreements with the Mono, a federally
recognized Native American tribe located near Fresno, California, pursuant to
which we will assist the Mono in developing, financing and operating a gaming
and entertainment facility to be located on Highway 99 north of the city of
Madera, California. See Note 5 to the Consolidated Financial Statements for
additional information.

Regulations and Taxes


We are subject to extensive regulation by Nevada gaming authorities, as well as
regulation by gaming authorities in the other jurisdictions in which we operate,
including the NIGC and the California Gambling Control Commission. We will also
be subject to regulation, which may or may not be similar to that in Nevada, by
any other jurisdiction in which we may conduct gaming activities in the future.
For a more complete description of our regulatory requirements, see Item 1.
Business-Regulation and Licensing.

The gaming industry represents a significant source of tax revenue, particularly
to the State of Nevada and its counties and municipalities. From time to time,
various state and federal legislators and officials have proposed changes in tax
law, or in the administration of such law, affecting the gaming industry. The
Nevada legislature meets every two years for 120 days and when special sessions
are called by the Governor. The legislature is not currently in session, and the
most recent special legislative session ended on November 16, 2021. There are
currently no specific legislative proposals to increase taxes on gaming revenue,
but there are no assurances that an increase in taxes on gaming or other revenue
will not be proposed and passed by the Nevada legislature in the future.

In January 2020, the Clark County Education Association ("CCEA") filed a ballot
initiative to increase the Nevada gaming tax by three percentage points, from
6.75 percent to 9.75 percent. Although CCEA subsequently withdrew the petition
and no longer supports it, it is not clear that the petition can be withdrawn
from the ballot following signature qualification. CCEA has commenced a legal
challenge against the Secretary of State to withdraw the initiative. If the
initiative is not withdrawn, it will be voted on during the November 8, 2022,
general election. If the voters approve the ballot initiative, the gaming tax
increase would become effective on January 1, 2023.

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Description of Certain Indebtedness

long-term debt

A description of our debt is included in Note 7 to the consolidated financial statements.

Significant Accounting Policies and Estimates


The preparation of consolidated financial statements in conformity with GAAP
requires us to make estimates and judgments that are subject to an inherent
degree of uncertainty. Certain accounting estimates and assumptions may have a
material impact on our financial statements due to the significant levels of
subjectivity and judgment involved and the susceptibility of such estimates and
assumptions to change. We base our estimates on historical experience,
information that is currently available to us and various other assumptions that
we believe are reasonable under the circumstances, and we evaluate our estimates
on an ongoing basis. Actual results may differ from our estimates, and such
differences could have a material effect on our consolidated financial
statements. Our significant accounting policies are described in Note 2 to the
Consolidated Financial Statements. Following is a discussion of our accounting
policies that involve critical estimates and assumptions.

Long-lived assets


Our business is capital intensive and a significant portion of our capital is
invested in property and equipment, finite-lived intangible assets and other
long-lived assets. We review long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may not be
recoverable. We evaluate the recoverability of our long-lived assets by
estimating the future cash flows the asset is expected to generate, and
comparing these estimated cash flows, on an undiscounted basis, to the carrying
amount of the asset. If the carrying amount is greater, the asset is considered
to be impaired, and we recognize an impairment charge equal to the amount by
which the carrying amount of the asset exceeds its fair value. We test our
long-lived assets for impairment at the reporting unit level, and each of our
operating properties is considered a separate reporting unit.

Inherent in the calculation of fair values are various estimates and
assumptions, including estimates of future cash flows expected to be generated
by an asset or asset group. We base our cash flow estimates on the current
regulatory, political and economic climates in the areas where we operate,
recent operating information and projections for our properties. These estimates
could be negatively impacted by changes in federal, state or local regulations,
economic downturns, changes in consumer preferences, or events affecting various
forms of travel and access to our properties. Future cash flow estimates are, by
their nature, subjective and actual results may differ materially from our
estimates. The most significant assumptions used in determining cash flow
estimates include forecasts of future operating results, Adjusted EBITDA
margins, tax rates, capital expenditures, working capital requirements,
long-term growth rates and terminal year free cash flows. Cash flow estimates
and their impact on fair value are highly sensitive to changes in many of these
assumptions. If our estimates of future cash flows are not met, we may be
required to record impairment charges in the future.

In December 2021, Station LLC sold all of its equity interests in Palms Casino
Resort, ("Palms") to a third-party buyer for aggregate consideration of $650.0
million. The transaction resulted in a loss on sale of $177.7 million, which
included an asset impairment charge to reduce the carrying amount of Palms' net
assets to their estimated fair value less costs to sell.

As of December 31, 2021, our Texas Station, Fiesta Henderson and Fiesta Rancho
properties had not reopened, and we have no current plans to reopen any of these
properties in 2022. We determined these ongoing closures to be an indicator of
potential impairment at those reporting units. Accordingly, we tested the
long-lived assets of those reporting units for impairment by comparing the
estimated future undiscounted cash flows of those properties to the carrying
amounts of the reporting units. Our cash flow projections were based on a number
of assumptions that are highly judgmental due to the uncertainties surrounding
the ongoing pandemic, including economic conditions, the projected timing of
reopening of the properties, potential changes in regulations, such as
operational and travel restrictions, and consumer preferences. Based on our
undiscounted cash flow analysis, no impairment charges were recognized. However,
we cannot predict the future impact or duration of the ongoing negative effects
of the COVID-19 pandemic and as a result, cannot reasonably predict the
probability or amount of impairment losses that may be incurred in future
periods.

Property and Equipment. At December 31, 2021, the carrying amount of our
property and equipment was approximately $2.0 billion, which represents 64.0% of
our total assets. We make estimates and assumptions when accounting for property
and equipment. We compute depreciation using the straight-line method over the
estimated useful lives of the assets, and our depreciation expense is highly
dependent on the assumptions we make about the estimated useful lives of our
assets. We estimate the useful lives of our property and equipment based on our
experience with similar assets and our estimate of the usage of the asset.
Whenever events or circumstances occur that change the estimated useful life of
an asset, we account

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for the change prospectively. We must also make judgments about the
capitalization of costs. Costs of major improvements are capitalized, while
costs of normal repairs and maintenance are charged to expense as incurred. If
an asset or asset group is disposed or retired before the end of its previously
estimated useful life, we may be required to accelerate our depreciation expense
or recognize a loss on disposal.

Finite-Lived Intangible Assets. Our finite-lived intangibles assets primarily
include assets related to our customer relationships and management contracts.
We amortize our finite-lived intangible assets over their estimated useful lives
using the straight-line method. We periodically evaluate the remaining useful
lives of our finite-lived intangible assets to determine whether events and
circumstances warrant a revision to the remaining period of amortization.
Whenever events or circumstances occur that change the estimated remaining
useful life of an asset, we account for the change prospectively.

Goodwill. We test our goodwill for impairment annually as of October 1, and
whenever events or circumstances indicate that it is more likely than not that
impairment may have occurred. Impairment testing for goodwill is performed at
the reporting unit level, and we consider each of our operating properties to be
a separate reporting unit.

When performing goodwill impairment testing, we either conduct a qualitative
assessment to determine whether it is more likely than not that the asset is
impaired, or elect to bypass this qualitative assessment and perform a
quantitative test for impairment. Under the qualitative assessment, we consider
both positive and negative factors, including macroeconomic conditions, industry
events, financial performance and other changes in facts and circumstances, and
make a determination of whether it is more likely than not that the fair value
of goodwill is less than its carrying amount. If, after assessing the
qualitative factors, we determine it is more likely than not the asset is
impaired, we then perform a quantitative test in which the estimated fair value
of the reporting unit is compared with its carrying amount, including goodwill.
If the carrying amount of the reporting unit exceeds its estimated fair value,
an impairment loss is recognized in an amount equal to the excess, limited to
the amount of goodwill allocated to the reporting unit.

When performing the quantitative test, we estimate the fair value of each
reporting unit using the expected present value of future cash flows along with
value indications based on our current valuation multiple and multiples of
comparable publicly traded companies. The estimation of fair value requires
management to make critical estimates, judgments and assumptions, including
estimating expected future cash flows and selecting appropriate discount rates,
valuation multiples and market comparables. Application of alternative estimates
and assumptions could produce significantly different results.

At December 31, 2021, our goodwill totaled $195.7 million. Approximately 86.8%
of our goodwill is associated with one of our properties. As of our most recent
annual goodwill testing date, the estimated fair value of each of our properties
with goodwill exceeded its respective carrying value by a significant amount. If
the fair value of any of these properties should decline in the future, we may
be required to recognize a goodwill impairment charge, which could be material.
A property's fair value may decline as a result of a decrease in the property's
actual or projected operating results or changes in other significant
assumptions and judgments used in the estimation process, including the discount
rate and market multiple.

Indefinite-Lived Intangible Assets. Our indefinite-lived intangible assets
primarily represent the value of our brands. At December 31, 2021, the carrying
amount of our indefinite-lived intangible assets totaled $77.5 million.
Indefinite-lived intangible assets are not amortized unless management
determines that their useful life is no longer indefinite. We test our
indefinite-lived intangible assets for impairment annually as of October 1, and
whenever events or changes in circumstances indicate that an asset may be
impaired, by comparing the carrying amount of the asset to its estimated fair
value. If the carrying amount of the asset exceeds its estimated fair value, we
recognize an impairment charge equal to the excess. We estimate the fair value
of our brands using a derivation of the income approach to valuation based on
the present value of estimated royalties avoided through ownership of the
assets. The fair values of our indefinite-lived intangible assets are highly
sensitive to changes in projected operating results. Accordingly, any decrease
in the projected operating results of a property could require us to recognize
an impairment charge, which could be material.

Native American Development Costs. We incur certain costs associated with our
development and management agreements with Native American tribes which are
reimbursable by the tribes, and we capitalize these costs as long-term assets.
The assets are typically transferred to the tribe at such time as the tribe
secures financing, or the gaming facility is completed. We earn a return on the
costs incurred for the acquisition and development of Native American projects.
Due to the uncertainty surrounding the timing and amount of the stated return,
we recognize the return when it is received. Development costs and the related
return are typically repaid by the tribe from a project's financing or from
operating cash flows of the casino after opening. Accordingly, the
recoverability of our development costs is highly dependent upon the tribe's
success in obtaining financing and our ability to operate the project
successfully upon its completion. Our evaluation of the recoverability of our
Native American development costs requires us to apply a significant amount of
judgment.

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We evaluate our Native American development costs for impairment whenever events
or changes in circumstances indicate that the carrying amount of the project
might not be recoverable, taking into consideration all available information.
Among other things, we consider the status of the project, any contingencies,
the achievement of milestones, any existing or potential litigation and
regulatory matters when evaluating our Native American projects for impairment.
If an indicator of impairment exists, we compare the estimated future cash flows
of the asset, on an undiscounted basis, to the carrying amount of the asset. If
the undiscounted expected future cash flows for a project do not exceed its
carrying amount, the asset is written down to its estimated fair value. We
estimate a project's fair value using a discounted cash flow model and market
comparables, when available. Our estimate of the undiscounted future cash flows
of a Native American development project is based on consideration of all
positive and negative evidence about the future cash flow potential of the
project including, but not limited to, the likelihood that the project will be
successfully completed, the status of required approvals, and the status and
timing of the construction of the project, as well as current and projected
economic, political, regulatory and competitive conditions that may adversely
impact the project's operating results. In certain circumstances, we may
discontinue funding of a project due to a revision of its expected potential, or
otherwise determine that our advances are not recoverable and as a result, we
may be required to write off the entire carrying amount of a project.

Disputes, claims and assessments


We are defendants in various lawsuits relating to routine matters incidental to
our business and we assess the potential for any lawsuits or claims brought
against us on an ongoing basis. For ongoing litigation and potential claims, we
use judgment in determining the probability of loss and whether a reasonable
estimate of loss, if any, can be made. We accrue a liability when we believe a
loss is probable and the amount of the loss can be reasonably estimated. As the
outcome of litigation is inherently uncertain, it is possible that certain
matters may be resolved for materially different amounts than previously accrued
or disclosed.

Income Taxes

We are taxed as a corporation and pay corporate federal, state and local taxes
on income allocated to us by Station Holdco. Station Holdco operates as a
partnership for federal, state and local tax reporting and holds 100% of the
economic interests in Station LLC. The members of Station Holdco are liable for
any income taxes resulting from income allocated to them by Station Holdco as a
pass-through entity.

We recognize deferred tax assets and liabilities based on the differences
between the book value of assets and liabilities for financial reporting
purposes and those amounts applicable for income tax purposes using enacted tax
rates in effect for the year in which the differences are expected to reverse.
Deferred tax assets represent future tax deductions or credits. Realization of
the deferred tax assets ultimately depends on the existence of sufficient
taxable income of the appropriate character in either the carryback or
carryforward period.

Each reporting period, we analyze the likelihood that our deferred tax assets
will be realized. A valuation allowance is recorded if, based on the weight of
all available positive and negative evidence, it is more likely than not that
some portion, or all, of a deferred tax asset will not be realized. If we
subsequently determine that there is sufficient evidence to indicate a deferred
tax asset will be realized, the associated valuation allowance is reversed. On
an annual basis, we perform a comprehensive analysis of all forms of positive
and negative evidence based on year end results. During each interim period, we
update our annual analysis for significant changes in the positive and negative
evidence.

We record uncertain tax positions on the basis of a two-step process in which
(1) we determine whether it is more likely than not the tax positions will be
sustained on the basis of the technical merits of the position, and (2) for
those tax positions meeting the more likely than not recognition threshold, we
recognize the largest amount of tax benefit that is more than 50% likely to be
realized upon ultimate settlement with the related tax authority. We do not
believe that we have any tax positions for which it is reasonably possible that
we will be required to record a significant liability for unrecognized tax
benefits within the next twelve months.

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