Company Quick10K Filing
Red Rock Resorts
Price21.10 EPS0
Shares70 P/E90
MCap1,469 P/FCF7
Net Debt2,940 EBIT135
TEV4,409 TEV/EBIT33
TTM 2019-09-30, in MM, except price, ratios
10-Q 2021-03-31 Filed 2021-05-10
10-K 2020-12-31 Filed 2021-02-23
10-Q 2020-09-30 Filed 2020-11-06
10-Q 2020-06-30 Filed 2020-08-07
10-Q 2020-03-31 Filed 2020-05-20
10-K 2019-12-31 Filed 2020-02-21
10-Q 2019-09-30 Filed 2019-11-07
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-02-26
10-Q 2018-09-30 Filed 2018-11-09
10-Q 2018-06-30 Filed 2018-08-06
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-13
10-Q 2016-09-30 Filed 2016-11-10
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-06-10
8-K 2020-10-27
8-K 2020-08-04
8-K 2020-06-11
8-K 2020-05-19
8-K 2020-05-11
8-K 2020-05-01
8-K 2020-03-24
8-K 2020-03-17
8-K 2020-02-07
8-K 2020-02-04
8-K 2020-01-24
8-K 2020-01-23
8-K 2019-11-05
8-K 2019-08-06
8-K 2019-06-13
8-K 2019-04-30
8-K 2019-02-18
8-K 2019-02-08
8-K 2018-11-07
8-K 2018-07-31
8-K 2018-06-14
8-K 2018-05-01
8-K 2018-02-27

RRR 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities - None.
Item 4. Mine Safety Disclosures - None.
Item 5. Other Information - None.
Item 6. Exhibits
EX-10.1 rrr-033121xex101restricted.htm
EX-10.2 rrr-033121xex102nonxqualif.htm
EX-31.1 rrr-033121xex311certificat.htm
EX-31.2 rrr-033121xex312certificat.htm
EX-32.1 rrr-033121xex321certificat.htm
EX-32.2 rrr-033121xex322certificat.htm

Red Rock Resorts Earnings 2021-03-31

Balance SheetIncome StatementCash Flow
4.23.42.51.70.80.02015201620182020
Assets, Equity
0.50.40.30.10.0-0.12015201620182020
Rev, G Profit, Net Income
0.20.1-0.0-0.2-0.3-0.42015201620182020
Ops, Inv, Fin

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Table of Contents    

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
For the quarterly period ended March 31, 2021
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to     
Commission file number 001-37754
RED ROCK RESORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware47-5081182
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1505 South Pavilion Center Drive, Las Vegas, Nevada
(Address of principal executive offices)
89135
(Zip Code)
(702495-3000
Registrant’s telephone number, including area code
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, $.01 par valueRRRNASDAQ Stock Market
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     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company

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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at April 30, 2021
Class A Common Stock, $0.01 par value70,968,321
Class B Common Stock, $0.00001 par value45,985,804


Table of Contents    

RED ROCK RESORTS, INC.
INDEX



Table of Contents    

Part I.    Financial Information
Item 1.    Financial Statements
RED ROCK RESORTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except share data)
 March 31,
2021
December 31, 2020
(unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$117,908 $121,176 
Restricted cash 4,529 
Receivables, net35,398 35,130 
Inventories12,442 13,079 
Prepaid gaming tax26,246 24,316 
Prepaid expenses and other current assets18,997 13,827 
Assets held for sale679,073 36,902 
Total current assets890,064 248,959 
Property and equipment, net of accumulated depreciation of $1,092,133 and $1,224,081 at March 31, 2021 and December 31, 2020, respectively
2,033,239 2,857,973 
Goodwill195,676 195,676 
Intangible assets, net of accumulated amortization of $15,910 and $19,520 at March 31, 2021 and December 31, 2020, respectively
88,390 100,817 
Land held for development233,740 233,740 
Investments in joint ventures7,633 8,162 
Native American development costs24,200 22,149 
Other assets, net64,709 72,478 
Total assets$3,537,651 $3,739,954 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$10,422 $11,208 
Accrued interest payable12,838 20,128 
Other accrued liabilities 145,850 146,077 
Liabilities related to assets held for sale4,620  
Current portion of long-term debt 26,355 22,844 
Total current liabilities200,085 200,257 
Long-term debt, less current portion 2,801,220 2,879,163 
Other long-term liabilities30,545 28,499 
Payable pursuant to tax receivable agreement28,035 27,394 
Total liabilities3,059,885 3,135,313 
Commitments and contingencies (Note 13)
Stockholders’ equity:  
Preferred stock, par value $0.01 per share, 100,000,000 shares authorized; none issued and outstanding
  
Class A common stock, par value $0.01 per share, 500,000,000 shares authorized; 71,001,975 and 71,228,168 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
710 712 
Class B common stock, par value $0.00001 per share, 100,000,000 shares authorized; 45,985,804 and 46,085,804 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively
1 1 
Additional paid-in capital373,278 385,579 
Accumulated deficit
(97,849)(33,071)
Accumulated other comprehensive loss
(624)(623)
Total Red Rock Resorts, Inc. stockholders’ equity275,516 352,598 
Noncontrolling interest202,250 252,043 
Total stockholders’ equity477,766 604,641 
Total liabilities and stockholders’ equity$3,537,651 $3,739,954 
The accompanying notes are an integral part of these condensed consolidated financial statements.
3


Table of Contents    

RED ROCK RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(amounts in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
20212020
Operating revenues:
Casino$259,938 $208,267 
Food and beverage46,872 88,331 
Room21,944 40,076 
Other15,557 21,357 
Management fees8,308 19,357 
Net revenues352,619 377,388 
Operating costs and expenses:
Casino63,116 83,275 
Food and beverage41,057 92,486 
Room11,091 20,673 
Other5,350 9,634 
Selling, general and administrative78,910 101,273 
Depreciation and amortization54,255 58,534 
Write-downs and other charges, net260 8,807 
Asset impairment 169,733  
423,772 374,682 
Operating (loss) income
(71,153)2,706 
Earnings from joint ventures
390 202 
Operating (loss) income and earnings from joint ventures
(70,763)2,908 
Other expense:
Interest expense, net
(27,267)(36,058)
Loss on extinguishment/modification of debt, net
(8,140)(11,411)
Change in fair value of derivative instruments(128)(20,010)
Other
(48)(44)
(35,583)(67,523)
Loss before income tax
(106,346)(64,615)
Provision for income tax
(217)(113,185)
Net loss
(106,563)(177,800)
Less: net loss attributable to noncontrolling interests
(41,785)(25,601)
Net loss attributable to Red Rock Resorts, Inc.
$(64,778)$(152,199)
Loss per common share (Note 12):
Loss per share of Class A common stock, basic and diluted
$(0.92)$(2.18)
Weighted-average common shares outstanding:
Basic and diluted
70,728 69,962 
Comprehensive loss
$(106,563)$(178,462)
Less: comprehensive loss attributable to noncontrolling interests
(41,785)(25,862)
Comprehensive loss attributable to Red Rock Resorts, Inc.
$(64,778)$(152,600)
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RED ROCK RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(amounts in thousands)
(unaudited)
Red Rock Resorts, Inc. Stockholders’ Equity
Common stockAdditional paid-in capitalAccumulated deficitAccumulated other comprehensive lossNoncontrolling interestTotal stockholders’ equity
Class AClass B
SharesAmountSharesAmount
Balances,
December 31, 2020
71,228 $712 46,086 $1 $385,579 $(33,071)$(623)$252,043 $604,641 
Net loss— — — — — (64,778)— (41,785)(106,563)
Share-based compensation— — — — 2,741 — — — 2,741 
Distributions— — — — — — — (7,561)(7,561)
Stock option exercises and issuance of restricted stock, net171 2 — — (319)— — — (317)
Repurchases of Class A common stock(397)(4)— — (11,708)— — — (11,712)
Exchanges of noncontrolling interests for cash— — (100) (2,223)— (1)(598)(2,822)
Tax receivable agreement liability resulting from exchanges of noncontrolling interests for cash— — — — (641)— — — (641)
Rebalancing of ownership percentage between the Company and noncontrolling interests in Station Holdco— — — — (151)— — 151 — 
Balances,
March 31, 2021
71,002 $710 45,986 $1 $373,278 $(97,849)$(624)$202,250 $477,766 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RED ROCK RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Continued)
(amounts in thousands)
(unaudited)
Red Rock Resorts, Inc. Stockholders’ Equity
Common stockAdditional paid-in capitalRetained earnings (accumulated deficit)Accumulated other comprehensive lossNoncontrolling interestTotal stockholders’ equity
Class AClass B
SharesAmountSharesAmount
Balances,
December 31, 2019
70,465 $705 46,827 $1 $376,229 $124,423 $(641)$281,880 $782,597 
Net loss— — — — — (152,199)— (25,601)(177,800)
Other comprehensive loss, net of tax— — — — — — (401)(261)(662)
Share-based compensation— — — — 4,057 — — — 4,057 
Distributions— — — — — — — (4,620)(4,620)
Dividends— — — — — (7,113)— — (7,113)
Stock option exercises and issuance of restricted stock, net41  — — 485 — — — 485 
Repurchases of Class A common stock(6) — — (68)— — — (68)
Exchanges of noncontrolling interests for Class A common stock641 6 (641) 4,006 — 1 (4,013) 
Tax receivable agreement liability resulting from exchanges of noncontrolling interests for Class A common stock— — — — (1,997)— — — (1,997)
Rebalancing of ownership percentage between the Company and noncontrolling interests in Station Holdco— — — — (1,746)— 1 1,745 — 
Balances,
March 31, 2020
71,141 $711 46,186 $1 $380,966 $(34,889)$(1,040)$249,130 $594,879 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RED ROCK RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
(unaudited)
Three Months Ended March 31,
20212020
Cash flows from operating activities: 
Net loss
$(106,563)$(177,800)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization54,255 58,534 
Change in fair value of derivative instruments128 20,010 
Reclassification of unrealized gain on derivative instruments into income
 (662)
Write-downs and other charges, net (66)6,221 
Asset impairment169,733  
Amortization of debt discount and debt issuance costs2,411 3,003 
Share-based compensation2,741 4,053 
Loss on extinguishment/modification of debt, net
8,140 11,411 
Deferred income tax 113,185 
Changes in assets and liabilities:
Receivables, net(167)16,196 
Inventories and prepaid expenses(7,492)(562)
Accounts payable(178)(13,343)
Accrued interest payable(7,330)13,404 
Other accrued liabilities3,183 (7,236)
Other, net965 1,470 
Net cash provided by operating activities
119,760 47,884 
Cash flows from investing activities:
Capital expenditures, net of related payables(8,010)(30,790)
Native American development costs(2,744)(145)
Net settlement of derivative instruments(5,648)(97)
Other, net150 (256)
Net cash used in investing activities
(16,252)(31,288)
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RED ROCK RESORTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(amounts in thousands)
(unaudited)
Three Months Ended March 31,
20212020
Cash flows from financing activities: 
Borrowings under credit agreements with original maturity dates greater than three
   months
220,000 1,007,500 
Payments under credit agreements with original maturity dates greater than three
   months
(47,693)(780,824)
Proceeds from issuance of 4.50% Senior Notes 750,000 
Partial redemption of 5.00% Senior Notes(250,000) 
Cash paid for early extinguishment of debt(6,250)(7,109)
Distributions to noncontrolling interests(7,561)(4,620)
Repurchases of Class A common stock(11,712)(68)
Exchanges of noncontrolling interests for cash(2,822) 
Dividends paid (7,110)
Payment of debt issuance costs (12,265)
Other, net(591)225 
Net cash (used in) provided by financing activities
(106,629)945,729 
(Decrease) increase in cash, cash equivalents and restricted cash
(3,121)962,325 
Balance, beginning of period125,705 132,915 
Balance, end of period$122,584 $1,095,240 
Cash, cash equivalents and restricted cash:
Cash and cash equivalents$117,908 $1,091,149 
Restricted cash 4,091 
Cash, cash equivalents and restricted cash included in assets held for sale4,676  
Balance, end of period$122,584 $1,095,240 
Supplemental cash flow disclosures: 
Cash paid for interest$32,207 $21,062 
Non-cash investing and financing activities:
Capital expenditures incurred but not yet paid$7,719 $15,763 

The accompanying notes are an integral part of these condensed consolidated financial statements.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.    Organization, Basis of Presentation and Significant Accounting Policies
Organization
Red Rock Resorts, Inc. (“Red Rock,” or the “Company”) was formed as a Delaware corporation in 2015 to own an indirect equity interest in and manage Station Casinos LLC (“Station LLC”), a Nevada limited liability company. Station LLC is a gaming, development and management company established in 1976 that owns and operates ten major gaming and entertainment facilities and ten smaller casino properties (three of which are 50% owned) in the Las Vegas regional market.
The Company owns all of the outstanding voting interests in Station LLC and has an indirect equity interest in Station LLC through its ownership of limited liability interests in Station Holdco LLC (“Station Holdco,” and such interests, “LLC Units”), which owns all of the economic interests in Station LLC. At March 31, 2021, the Company held 61% of the economic interests and 100% of the voting power in Station Holdco, subject to certain limited exceptions, and is designated as the sole managing member of both Station Holdco and Station LLC. The Company controls and operates all of the business and affairs of Station Holdco and Station LLC, and conducts all of its operations through these entities.
The Company continues to operate under state-mandated occupancy and other operational restrictions as a result of the ongoing COVID-19 pandemic. At March 31, 2021, the Texas Station, Fiesta Henderson, Fiesta Rancho and Palms Casino Resort (“Palms”) properties have not reopened. The Company will continue to assess the performance of its open 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. The Company has no plans to reopen any of these properties in 2021. As a result of the pandemic, the temporary closure of all of the Company’s properties from March 17, 2020 through June 3, 2020 and the ongoing closure of four of its properties, the Company’s operating results for the three months ended March 31, 2021 are not comparable with those of the prior period presented.
A subsidiary of Station LLC also managed Graton Resort, a casino in northern California, on behalf of a Native American tribe through February 5, 2021. The property was temporarily closed from March 17, 2020 through June 17, 2020 as a result of the COVID-19 pandemic. The management agreement was originally expected to expire in November 2020 but was extended as a result of the pandemic through February 5, 2021, when the tribe terminated the Company’s management role at the facility. Whether the management agreement provides for an additional extension beyond that date is in dispute.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments necessary for a fair presentation of the results for the interim periods have been made, and such adjustments were of a normal recurring nature. The interim results reflected in these condensed consolidated financial statements are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Certain amounts in the condensed consolidated financial statements for the prior year have been reclassified to be consistent with the current year presentation.
Principles of Consolidation
Station Holdco and Station LLC are variable interest entities, of which the Company is the primary beneficiary. Accordingly, the Company consolidates the financial position and results of operations of Station LLC and its consolidated subsidiaries and Station Holdco, and presents the interest in Station Holdco not owned by Red Rock within noncontrolling interest in the condensed consolidated financial statements. All intercompany accounts and transactions have been eliminated.
The Company has investments in three 50% owned smaller casino properties which are joint ventures accounted for using the equity method.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported and disclosed. Actual results could differ from those estimates.
Significant Accounting Policies
A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10-K for the year ended December 31, 2020.
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board issued amended accounting guidance to simplify the accounting for income taxes. The amendment eliminates certain exceptions related to the approach for intraperiod tax allocations, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendment also simplifies other aspects of the accounting for income taxes. The Company adopted this guidance on January 1, 2021. The adoption did not have a material impact on the Company’s financial position or results of operations.
2.    Assets Held for Sale
The Company classifies assets as held for sale when a sale is probable of completion within one year and the asset or asset group meets all of the accounting requirements to be classified as held for sale. Assets held for sale and any related liabilities are presented as single asset and liability amounts on the balance sheet with a valuation allowance, if necessary, to reduce the carrying amount of the net assets to the lower of carrying amount or estimated fair value less cost to sell. Estimates are required to determine the fair value and the related disposal costs. The estimated fair value is generally based on market comparables, solicited offers or a discounted cash flow model. In subsequent periods, the valuation allowance may be adjusted based on changes in management’s estimate of fair value less cost to sell. Depreciation and amortization of long-lived assets are not recorded during the period in which such assets are classified as held for sale.
On May 3, 2021, the Company entered into an agreement to sell the equity interests in the entities that hold Palms to a third-party buyer for aggregate consideration of $650.0 million. The sale is expected to close in the fourth quarter of 2021. Accordingly, the net assets of Palms that are expected to be disposed were reclassified to held for sale as of March 31, 2021, and the Company recorded an asset impairment charge of $169.7 million to reduce the carrying amount of the disposal group to its estimated fair value less cost to sell.
The carrying amounts of the assets and liabilities held for sale related to Palms as of March 31, 2021 are presented below (amounts in thousands):
Assets
Cash and cash equivalents$29 
Restricted cash4,647 
Other current assets746 
Property and equipment779,705 
Intangible assets, net11,784 
Other assets, net14,993 
Valuation allowance on assets held for sale(169,733)
Assets held for sale$642,171 
Liabilities
Current liabilities$2,404 
Other long-term liabilities2,216 
Liabilities related to assets held for sale$4,620 

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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
For the three months ended March 31, 2021, Palms generated net revenues of $4.1 million and a pretax loss of $189.6 million, which included the $169.7 million asset impairment charge. For the three months ended March 31, 2020, Palms generated net revenues of $47.2 million and a pretax loss of $25.2 million.
In addition to the net assets of Palms presented above, assets held for sale also included certain undeveloped land parcels that were expected to be sold within one year, with an aggregate carrying amount of $36.9 million at March 31, 2021 and December 31, 2020. Subsequent to March 31, 2021, management determined that the held for sale criteria were no longer met for a parcel of land with a carrying amount of $19.6 million.
3.    Noncontrolling Interest in Station Holdco
As discussed in Note 1, Red Rock holds a controlling interest in and consolidates the financial position and results of operations of Station LLC and its subsidiaries and Station Holdco, and the interests in Station Holdco not owned by Red Rock are presented within noncontrolling interest in the condensed consolidated financial statements. During the three months ended March 31, 2021, a noncontrolling interest holder unaffiliated with Red Rock exchanged 100,000 LLC Units, together with an equal number of Class B common shares, for cash at the election of the Company, which increased Red Rock’s percentage ownership in Station Holdco. Approximately 641,000 Class B common shares and LLC Units were exchanged for Class A common shares during the three months ended March 31, 2020.
The ownership of the LLC Units is summarized as follows:
March 31, 2021December 31, 2020
UnitsOwnership %UnitsOwnership %
Red Rock71,384,772 60.8 %71,228,168 60.7 %
Noncontrolling interest holders45,985,804 39.2 %46,085,804 39.3 %
Total117,370,576 100.0 %117,313,972 100.0 %
The Company uses monthly weighted-average LLC Unit ownership to calculate the pretax income or loss and other comprehensive income or loss of Station Holdco attributable to Red Rock and the noncontrolling interest holders. Station Holdco equity attributable to Red Rock and the noncontrolling interest holders is rebalanced, as needed, to reflect LLC Unit ownership at period end.
4.    Native American Development
The Company has development and management agreements with the North Fork Rancheria of Mono Indians (the “Mono”), a federally recognized Native American tribe located near Fresno, California, which were originally entered into in 2003. In August 2014, the Mono and the Company entered into the Second Amended and Restated Development Agreement (the “Development Agreement”) and the Second Amended and Restated Management Agreement. Pursuant to those agreements, the Company will assist the Mono in developing and operating a gaming and entertainment facility (the “North Fork Project”) to be located in Madera County, California. The Company purchased a 305-acre parcel of land adjacent to Highway 99 north of the city of Madera (the “North Fork Site”), which was taken into trust for the benefit of the Mono by the Department of the Interior (“DOI”) in February 2013.
As currently contemplated, the North Fork Project is expected to include approximately 2,000 Class III slot machines, approximately 40 table games and several restaurants, and future development costs of the project are expected to be between $350 million and $400 million. Development of the North Fork Project is subject to certain governmental and regulatory approvals, including, without limitation, approval of the Management Agreement by the Chairman of the National Indian Gaming Commission (“NIGC”).
Under the terms of the Development Agreement, the Company has agreed to arrange the financing for the ongoing development costs and construction of the facility, and has contributed significant financial support to the North Fork Project. Through March 31, 2021, the Company has paid approximately $39.3 million of reimbursable advances to the Mono, primarily to complete the environmental impact study, purchase the North Fork Site and pay the costs of litigation. The advances are expected to be repaid from the proceeds of the project’s financing or from the Mono’s cash flows from the North Fork Project’s operations; however, there can be no assurance that the advances will be repaid. The carrying amount of the advances was reduced to fair value upon the Company’s adoption of fresh-start reporting in 2011. At March 31, 2021, the carrying amount of the advances was $24.2 million. In accordance with the Company’s accounting policy, accrued interest on the advances will not be recognized in income until the carrying amount of the advances has been recovered.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The Company will receive a development fee of 4% of the costs of construction (as defined in the Development Agreement) for its development services, which will be paid upon the commencement of gaming operations at the facility. In March 2018, the Mono submitted a proposed Third Amended and Restated Management Agreement (the “Management Agreement”) to the NIGC. The Management Agreement allows the Company to receive a management fee of 30% of the North Fork Project’s net income. The Management Agreement and the Development Agreement have a term of seven years from the opening of the North Fork Project. The Management Agreement includes termination provisions whereby either party may terminate the agreement for cause, and the Management Agreement may also be terminated at any time upon agreement of the parties. There is no provision in the Management Agreement allowing the tribe to buy-out the agreement prior to its expiration. The Management Agreement provides that the Company will train the Mono tribal members such that they may assume responsibility for managing the North Fork Project upon the expiration of the agreement.
Upon termination or expiration of the Management Agreement and Development Agreement, the Mono will continue to be obligated to repay any unpaid principal and interest on the advances from the Company, as well as certain other amounts that may be due, such as management fees. Amounts due to the Company under the Development Agreement and Management Agreement are secured by substantially all of the assets of the North Fork Project except the North Fork Site. In addition, the Development Agreement and Management Agreement contain waivers of the Mono’s sovereign immunity from suit for the purpose of enforcing the agreements or permitting or compelling arbitration and other remedies.
The timing of this type of project is difficult to predict and is dependent upon the receipt of the necessary governmental and regulatory approvals. There can be no assurance as to when, or if, these approvals will be obtained. The Company currently estimates that construction of the North Fork Project may begin in the next three months and estimates that the North Fork Project would be completed and opened for business approximately 15 to 18 months after construction begins. There can be no assurance, however, that the North Fork Project will be completed and opened within this time frame or at all. The Company expects to assist the Mono in obtaining financing for the North Fork Project once all necessary regulatory approvals have been received and prior to commencement of construction; however, there can be no assurance that the Company will be able to obtain such financing for the North Fork Project on acceptable terms or at all.
The Company has evaluated the likelihood that the North Fork Project will be successfully completed and opened, and has concluded that the likelihood of successful completion is in the range of 75% to 85% at March 31, 2021. The Company’s evaluation is based on its consideration of all available positive and negative evidence about the status of the North Fork Project, including, but not limited to, the status of required regulatory approvals, as well as the progress being made toward the achievement of all milestones and the successful resolution of all litigation and contingencies. There can be no assurance that the North Fork Project will be successfully completed or that future events and circumstances will not change the Company’s estimates of the timing, scope, and potential for successful completion or that any such changes will not be material. In addition, there can be no assurance that the Company will recover all of its investment in the North Fork Project even if it is successfully completed and opened for business.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The following table summarizes the Company’s evaluation at March 31, 2021 of each of the critical milestones necessary to complete the North Fork Project.
Federally recognized as an Indian tribe by the Bureau of Indian Affairs (“BIA”)Yes
Date of recognitionFederal recognition was terminated in 1966 and restored in 1983.
Tribe has possession of or access to usable land upon which the project is to be built
The DOI accepted approximately 305 acres of land for the project into trust for the benefit of the Mono in February 2013.

Status of obtaining regulatory and governmental approvals:
Tribal-state compactA compact was negotiated and signed by the Governor of California and the Mono in August 2012. The California State Assembly and Senate passed Assembly Bill 277 (“AB 277”) which ratified the Compact in May 2013 and June 2013, respectively. Opponents of the North Fork Project qualified a referendum, “Proposition 48,” for a state-wide ballot challenging the legislature’s ratification of the Compact. In November 2014, Proposition 48 failed. The State took the position that the failure of Proposition 48 nullified the ratification of the Compact and, therefore, the Compact did not take effect under California law. In March 2015, the Mono filed suit against the State to obtain a compact with the State or procedures from the Secretary of the Interior under which Class III gaming may be conducted on the North Fork Site. In July 2016, the DOI issued Secretarial procedures (the “Secretarial Procedures”) pursuant to which the Mono may conduct Class III gaming on the North Fork Site.
Approval of gaming compact by DOIThe Compact was submitted to the DOI in July 2013. In October 2013, notice of the Compact taking effect was published in the Federal Register. The Secretarial Procedures supersede and replace the Compact.
Record of decision regarding environmental impact published by BIAIn November 2012, the record of decision for the Environmental Impact Statement for the North Fork Project was issued by the BIA. In December 2012, the Notice of Intent to take land into trust was published in the Federal Register.
BIA accepting usable land into trust on behalf of the tribeThe North Fork Site was accepted into trust in February 2013.
Approval of management agreement by NIGCIn December 2015, the Mono submitted a Second Amended and Restated Management Agreement, and certain related documents, to the NIGC. In July 2016, the Mono received a deficiency letter from the NIGC seeking additional information concerning the Second Amended and Restated Management Agreement. In March 2018, the Mono submitted the Management Agreement and certain related documents to the NIGC. In June 2018, the Mono received a deficiency letter from the NIGC seeking additional information concerning the Management Agreement. Approval of the Management Agreement by the NIGC is expected to occur following the Mono’s response to the deficiency letter. The Company believes the Management Agreement will be approved because the terms and conditions thereof are consistent with the provisions of the Indian Gaming Regulatory Act (“IGRA”).
Gaming licenses:
TypeThe North Fork Project will include the operation of Class II and Class III gaming, which are allowed pursuant to the terms of the Secretarial Procedures and IGRA, following approval of the Management Agreement by the NIGC.
Number of gaming devices allowed
The Secretarial Procedures allow for the operation of a maximum of 2,000 Class III slot machines at the facility during the first two years of operation and thereafter up to 2,500 Class III slot machines. There is no limit on the number of Class II gaming devices that the Mono can offer.
Agreements with local authoritiesThe Mono has entered into memoranda of understanding with the City of Madera, the County of Madera and the Madera Irrigation District under which the Mono agreed to pay one-time and recurring mitigation contributions, subject to certain contingencies. The memoranda of understanding have all been amended to restructure the timing of certain payments due to delays in the development of the North Fork Project.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Following is a discussion of certain unresolved legal matters related to the North Fork Project.
Stand Up For California! v. Brown. In March 2013, Stand Up for California! and Barbara Leach, a local resident (collectively, the “Stand Up” plaintiffs), filed a complaint for declaratory relief and petition for writ of mandate in California Superior Court for the County of Madera against California Governor Edmund G. Brown, Jr., alleging that Governor Brown violated the California constitutional separation-of-powers doctrine when he concurred in the Secretary of the Interior’s determination that gaming on the North Fork Site would be in the best interest of the Mono and not detrimental to the surrounding community (the “North Fork Determination”). The complaint sought to vacate and set aside the Governor’s concurrence. Plaintiffs’ complaint was subsequently amended to include a challenge to the constitutionality of AB 277. The Mono intervened as a defendant in the lawsuit. In March 2014, the court dismissed plaintiffs’ amended complaint, which dismissal was appealed by plaintiffs. In December 2016, the California Court of Appeal, Fifth Appellate District (the “Fifth District Court of Appeal”) ruled in favor of the Stand Up plaintiffs concluding that Governor Brown exceeded his authority in concurring in the North Fork Determination. The Mono and the State filed petitions in the Supreme Court of California seeking review of the Fifth District Court of Appeal’s decision, which petitions for review were granted in March 2017. The Supreme Court of California deferred additional briefing or other action in this matter pending consideration and disposition of a similar issue in United Auburn Indian Community of Auburn Rancheria v. Brown. On August 31, 2020 the Supreme Court of California announced its decision in the United Auburn case, concluding that Governor Brown’s concurrence in that case did not exceed his authority. On October 14, 2020, the Supreme Court of California transferred the Stand Up case back to the Fifth District Court of Appeal with directions to vacate its December 2016 decision against the Mono and the State and to reconsider the matter in light of the United Auburn decision. The Fifth District Court of Appeal permitted supplemental briefing in connection with its reconsideration of the matter, which briefing was completed on February 10, 2021.
Picayune Rancheria of Chukchansi Indians v. Brown. In March 2016, Picayune Rancheria of Chukchansi Indians (“Picayune”) filed a complaint for declaratory relief and petition for writ of mandate in California Superior Court for the County of Madera against Governor Edmund G. Brown, Jr., alleging that the referendum that invalidated the Compact also invalidated Governor Brown’s concurrence with the North Fork Determination. The complaint seeks to vacate and set aside the Governor’s concurrence. In July 2016, the court granted the Mono’s application to intervene and the Mono filed a demurrer seeking to dismiss the case. In November 2016, the district court dismissed Picayune’s complaint, but the court subsequently vacated its ruling based on the December 2016 decision by the Fifth District Court of Appeal in Stand Up for California! v. Brown. The case has been stayed since 2017 pending a decision by the California Supreme Court in Stand Up for California! v. Brown.
Stand Up for California! et. al. v. United States Department of the Interior. In November 2016, Stand Up for California! and other plaintiffs filed a complaint in the United States District Court for the Eastern District of California (the “District Court”) alleging that the DOI’s issuance of Secretarial Procedures for the Mono was subject to the National Environmental Policies Act (“NEPA”) and the Clean Air Act (the “CAA”), and violate the Johnson Act. The complaint further alleges violations of the Freedom of Information Act and the Administrative Procedures Act. The DOI filed its answer to the complaint in February 2017 denying plaintiffs’ claims and asserting certain affirmative defenses. A motion to intervene filed by the Mono was granted in March 2017. Plaintiffs subsequently filed a motion to stay the proceedings in May 2017. Briefing on the contested stay request concluded in July 2017 and briefing on cross-motions for summary judgment was concluded in September 2017. On July 18, 2018, the court denied plaintiffs’ motion to stay the proceedings and granted the summary judgment motions of the Mono and the federal defendants. On September 11, 2018, plaintiffs filed a notice of appeal of the District Court decision with the United States Court of Appeals for the Ninth Circuit. The briefing of the issues on appeal was completed on June 13, 2019. The Ninth Circuit heard oral argument on February 11, 2020 and in May 2020 rendered a decision affirming the grant of summary judgment on the Johnson Act issues and reversing and remanding for further proceedings the portion of the summary judgment decision relating to NEPA and the CAA. The briefing on the portion of the case that was reversed and remanded was completed in January 2021 and a decision of the District Court is pending.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
5.    Other Accrued Liabilities
Other accrued liabilities consisted of the following (amounts in thousands):
 March 31,
2021
December 31, 2020
Contract and customer-related liabilities:
Rewards Program liability$14,934 $17,465 
Advance deposits and future wagers11,959 11,854 
Unpaid wagers, outstanding chips and other customer-related liabilities18,869 18,248 
Other accrued liabilities:
Accrued payroll and related35,865 41,026 
Accrued gaming and related26,879 20,316 
Construction payables and equipment purchase accruals7,747 3,710 
Operating lease liabilities, current portion3,176 2,936 
Interest rate swaps6,198 11,758 
Other20,223 18,764 
$145,850 $146,077 
6.    Long-term Debt
Long-term debt consisted of the following indebtedness of Station LLC (amounts in thousands):
March 31,
2021
December 31, 2020
Term Loan B Facility due February 7, 2027, interest at a margin above LIBOR or base rate (2.50% at March 31, 2021 and December 31, 2020), net of unamortized discount and deferred issuance costs of $28.4 million and $29.5 million at March 31, 2021 and December 31, 2020, respectively
$1,471,741 $1,470,944 
Term Loan A Facility due February 7, 2025, interest at a margin above LIBOR or base rate (1.86% and 1.90% at March 31, 2021 and December 31, 2020, respectively), net of unamortized discount and deferred issuance costs of $2.0 million and $2.2 million at March 31, 2021 and December 31, 2020, respectively
177,488 179,712 
Revolving Credit Facility due February 7, 2025, interest at a margin above LIBOR or base rate (1.86% at March 31, 2021)
175,000  
4.50% Senior Notes due February 15, 2028, net of unamortized discount and deferred issuance costs of $7.3 million and $7.6 million at March 31, 2021 and December 31, 2020, respectively
683,481 683,257 
5.00% Senior Notes due October 1, 2025, net of unamortized deferred issuance costs of $2.1 million and $4.1 million at March 31, 2021 and December 31, 2020, respectively
278,281 526,260 
Other long-term debt, weighted-average interest of 3.83% at March 31, 2021 and December 31, 2020, net of unamortized discount and deferred issuance costs of $0.3 million and $0.4 million at March 31, 2021 and December 31, 2020, respectively
41,584 41,834 
Total long-term debt
2,827,575 2,902,007 
Current portion of long-term debt
(26,355)(22,844)
Total long-term debt, net
$2,801,220 $2,879,163 
Credit Facility
Station LLC’s credit facility consists of the Term Loan B Facility, the Term Loan A Facility and the Revolving Credit Facility (collectively, the “Credit Facility”). As last amended in February 2020, the Term Loan B Facility bears interest at a rate per annum, at Station LLC’s option, equal to either LIBOR plus 2.25% or base rate plus 1.25%, and the Term Loan A Facility and Revolving Credit Facility bear interest at a rate per annum, at Station LLC’s option, equal to either LIBOR plus an amount ranging from 1.50% to 1.75% or base rate plus an amount ranging from 0.50% to 0.75%, depending on Station LLC’s consolidated total leverage ratio. The Credit Facility contains a number of customary covenants, including requirements that Station LLC maintain throughout the term of the Credit Facility and measured as of the end of each quarter, an interest
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
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 March 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 within 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. Management believes the Company was in compliance with all applicable covenants at March 31, 2021.
Revolving Credit Facility
At March 31, 2021, Station LLC’s borrowing availability under its Revolving Credit Facility, subject to continued compliance with the terms of the Credit Facility, was $826.7 million, which was net of $175.0 million in outstanding borrowings and $29.4 million in outstanding letters of credit and similar obligations.
Senior Notes
On February 22, 2021, Station LLC redeemed $250.0 million in aggregate principal amount of its 5.00% Senior Notes at a redemption price equal to 102.50% of the principal amount of such notes. Following the redemption, $280.3 million in aggregate principal amount of 5.00% Senior Notes remained outstanding. The partial redemption was funded using borrowings under the Revolving Credit Facility and cash on hand. Station LLC recognized an $8.1 million loss on debt extinguishment related to the 5.00% Senior Notes redemption, comprising a write-off of $1.8 million in unamortized deferred issuance costs related to the extinguished debt and a redemption premium of $6.3 million.
7.    Derivative Instruments
The Company’s objective in using derivative instruments is to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as a part of its cash flow hedging strategy. The Company does not use derivative financial instruments for trading or speculative purposes.
The Company’s hedging strategy includes the use of interest rate swaps that are not designated in cash flow hedging relationships. The interest rate swap agreements allow Station LLC to receive variable-rate payments in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. At March 31, 2021, Station LLC’s interest rate swaps had a weighted-average fixed pay rate of 1.94%, a combined notional amount of $1.3 billion and effectively converted $1.3 billion of Station LLC’s variable interest rate debt to a fixed rate of 3.95%. The interest rate swaps will expire July 8, 2021.
Derivative instruments are presented at fair value, exclusive of accrued interest, in Other accrued liabilities on the Condensed Consolidated Balance Sheets, and the Company does not offset derivative asset and liability positions when interest rate swap agreements are held with the same counterparty. Changes in the fair values of derivative instruments not designated in hedge accounting relationships and the related pretax gains and losses are presented in Change in fair value of derivative instruments in the Condensed Consolidated Statements of Operations and Comprehensive Loss in the period in which the change occurs.
Station LLC has not posted any collateral related to its interest rate swap agreements; however, Station LLC’s obligations under the interest rate swap agreements are subject to the security and guarantee arrangements applicable to the Credit Facility. The interest rate swap agreements contain a cross-default provision under which Station LLC could be declared in default on its obligation under such agreements if certain conditions of default exist on the Credit Facility. At March 31, 2021, the termination value of Station LLC’s interest rate swaps, including accrued interest, was a net liability of $7.8 million. Had Station LLC been in breach of the provisions of its swap agreements, it could have been required to pay the termination value to settle the obligations.
Certain of Station LLC’s interest rate swaps were previously designated in cash flow hedging relationships until their dedesignation in June 2017. Accordingly, associated cumulative deferred net gains, which were previously recognized in accumulated other comprehensive loss, were amortized as a reduction of interest expense through July 2020 as the hedged interest payments occurred. During the three months ended March 31, 2020, $0.7 million in deferred net gains were reclassified from accumulated other comprehensive loss to Interest expense, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
8.    Fair Value Measurements
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Information about the Company’s assets and liabilities measured at fair value on a recurring basis, aggregated by the level in the fair value hierarchy within which those measurements fall, is presented below (amounts in thousands):
March 31,
2021
December 31, 2020Level of Fair Value Hierarchy
Liabilities   
Interest rate swaps$6,198 $11,758 Level 2 - Significant unobservable inputs
The fair values of Station LLC’s interest rate swaps were determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of the interest rate swaps. This analysis reflects the contractual terms of the interest rate swaps, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. Station LLC incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the counterparty’s nonperformance risk in the fair value measurement. The Company had no financial assets measured at fair value on a recurring basis at March 31, 2021 or December 31, 2020.
Fair Value of Long-term Debt
The estimated fair value of Station LLC’s long-term debt compared with its carrying amount is presented below (amounts in millions):
March 31,
2021
December 31, 2020
Aggregate fair value$2,868 $2,936 
Aggregate carrying amount2,828 2,902 
The estimated fair value of Station LLC’s long-term debt is based on quoted market prices from various banks for similar instruments, which is considered a Level 2 input under the fair value measurement hierarchy.
9.    Stockholders’ Equity    
Net Loss Attributable to Red Rock Resorts, Inc. and Transfers from (to) Noncontrolling Interests
The table below presents the effect on Red Rock Resorts, Inc. stockholders’ equity from net loss and transfers from (to) noncontrolling interests (amounts in thousands):
Three Months Ended
March 31,
20212020
Net loss attributable to Red Rock Resorts, Inc.
$(64,778)$(152,199)
Transfers from (to) noncontrolling interests:
Exchanges of noncontrolling interests598 4,013 
Rebalancing of ownership percentage between the Company and noncontrolling interests in Station Holdco (151)(1,745)
Net transfers from noncontrolling interests
447 2,268 
Change from net loss attributable to Red Rock Resorts, Inc. and net transfers from noncontrolling interests
$(64,331)$(149,931)
Dividends
During the three months ended March 31, 2021, the Company paid no dividends. In May 2020, the Company announced that its Board of Directors had suspended the payment of dividends for the remainder of 2020, and the suspension of dividend payments will continue until further notice. During the three months ended March 31, 2020, the Company declared and paid a cash dividend of $0.10 per share of Class A common stock.
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Equity Repurchase Program
In February 2019, the Company’s board of directors approved an equity repurchase program authorizing the repurchase of up to an aggregate of $150 million of its Class A common stock. In February 2021, the Company’s board of directors extended its approval of the equity repurchase program through December 31, 2022. Through December 31, 2020, no shares had been repurchased under the program. Pursuant to the program, during the three months ended March 31, 2021, the Company repurchased 382,602 shares of its Class A common stock for an aggregate of $11.2 million and a weighted average price per share of $29.39 in open market transactions. At March 31, 2021, the remaining amount authorized for repurchases under the program was $135.9 million.
10.    Share-based Compensation
The Company maintains an equity incentive plan designed to attract, retain and motivate employees and align the interests of those individuals with the interests of the Company. A total of 23.2 million shares of Class A common stock are reserved for issuance under the plan, of which approximately 12.1 million shares were available for issuance at March 31, 2021.
The following table presents information about the Company’s share-based compensation awards:
Restricted Class A
 Common Stock
Stock Options
SharesWeighted-average grant date fair valueSharesWeighted-average exercise price
Outstanding at January 1, 2021368,811 $27.19 6,310,657 $25.80 
Activity during the period:
Granted147,930 28.66 1,295,986 28.66 
Vested/exercised (a)(74,386)27.74 (120,754)20.78 
Forfeited/expired(5,467)28.24 (78,149)28.87 
Outstanding at March 31, 2021436,888 $27.58 7,407,740 $26.35 
_______________________________________________________________
(a)Stock options exercised included 92,838 options that were not converted into shares due to net share settlements to cover the aggregate exercise price and employee withholding taxes.
The Company recognized share-based compensation expense of $2.7 million and $4.1 million for the three months ended March 31, 2021 and 2020, respectively. At March 31, 2021, unrecognized share-based compensation cost was $35.9 million, which is expected to be recognized over a weighted-average period of 3.1 years.
11.    Income Taxes
Red Rock is a corporation and pays corporate federal, state and local taxes on its income, primarily pass-through income from Station Holdco based upon Red Rock’s economic interest held in Station Holdco. Station Holdco is a partnership for income tax reporting purposes. Station Holdco’s members, including the Company, are liable for federal, state and local income taxes based on their respective share of Station Holdco’s pass-through taxable income.     
The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter the Company updates the estimate of the annual effective tax rate and makes necessary cumulative adjustments to the total tax provision or benefit. The current taxes are estimated for the period and the balance sheet is adjusted to reflect such taxes currently payable or receivable. The remaining tax provision or benefit is recorded as deferred taxes.
The Company’s effective tax rate for the three months ended March 31, 2021 was (0.2)%, including discrete items, as compared to (175.2)% for the three months ended March 31, 2020. The Company’s effective tax rate for the three months ended March 31, 2021 as compared to the 21% statutory rate was primarily impacted by a full valuation allowance established against the deferred tax assets (“DTAs”). Other items impacting the effective tax rate include a rate detriment attributable to the fact that Station Holdco operates as a limited liability company which is not subject to federal income tax. Accordingly, the Company does not benefit from the portion of Station Holdco’s losses attributable to noncontrolling interests. In addition, state income taxes do not have a significant impact on the Company's effective rate. Station Holdco operates in Nevada and
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RED ROCK RESORTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
California. Nevada does not impose a state income tax and the Company's activities in California result in minimal state income tax.
As a result of the Company’s 2016 initial public offering (“IPO”) and certain reorganization transactions, the Company recorded a net deferred tax asset resulting from the outside basis difference of its interest in Station Holdco. The Company also recorded a DTA for its liability related to payments to be made pursuant to the tax receivable agreement (“TRA”) representing 85% of the tax savings the Company expects to realize from the amortization deductions associated with the step up in the basis of depreciable assets under Section 754 of the Internal Revenue Code. In addition, the Company has recorded DTAs related to tax attributes including net operating losses, interest limitations and tax credits.
The Company considers both positive and negative evidence when measuring the need for a valuation allowance. A valuation allowance is not required to the extent that, in management’s judgment, positive evidence exists with a magnitude and duration sufficient to result in a conclusion that it is more likely than not that the Company’s deferred tax assets will be realized. As a result of the economic downturn and uncertainty caused by the COVID-19 pandemic on its current operating results and the considerable uncertainty that remains in the future, the Company determined it was more likely than not that the deferred tax assets will not be realized.
Historically, the Company recorded a full valuation allowance on the DTA related only to the LLC Units issued in the IPO and reorganization transactions as the deferred tax asset relating to those units is not expected to be realized unless the Company disposes of its investment in Station Holdco. The Company recognizes changes to the valuation allowance through the provision for income tax or other comprehensive income, as applicable, and at March 31, 2021 and December 31, 2020, the valuation allowance was $174.9 million and $160.5 million, respectively.
The Company recorded $1.2 million of unrecognized tax benefits as of March 31, 2021. The Company does not currently record interest and penalties for unrecognized tax benefits as any recognition would result in a reduction of its net operating loss or other tax attributes and would not result in an underpayment of tax. Further, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.
The Company files annual income tax returns for Red Rock and Station Holdco in the U.S. federal jurisdiction and California. Red Rock is currently under examination by the Internal Revenue Service for the 2016 tax year and Station Holdco is under examination for the 2016 and 2017 tax years. The Company regularly assesses the likelihood of adverse outcomes resulting from any examinations to determine the adequacy of the Company’s provision for income taxes.
Tax Receivable Agreement
In connection with the IPO, the Company entered into the TRA with certain owners who held LLC Units prior to the IPO. In the event that such parties exchange any or all of their LLC Units for Class A common stock, the TRA requires the Company to make payments to such holders for 85% of the tax benefits realized by the Company as a result of such exchange. The Company expects to realize these tax benefits based on current projections of taxable income. The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits.
At March 31, 2021 and December 31, 2020, the Company’s liability under the TRA was $28.0 million and $27.4 million, respectively, of which $9.0 million was payable to entities related to Frank J. Fertitta III, the Company’s Chairman of the Board and Chief Executive Officer, and Lorenzo J. Fertitta, Vice Chairman of the Board and a vice president of the Company. For the three months ended March 31, 2021 and 2020, exchanges of LLC Units resulted in an increase in the amount payable under the TRA liability of $0.6 million and $2.0 million, respectively, which was recorded through stockholders’ equity.
The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Company generates each year and the tax rate then applicable. The payment obligations under the TRA are Red Rock’s obligations and are not obligations of Station Holdco or Station LLC. Payments are generally due within a specified period of time following the filing of the Company’s annual tax return and interest on such payments will accrue from the original due date (without extensions) of the income tax return until the date paid. Payments not made within the required period after the filing of the income tax return generally accrue interest at a rate of LIBOR plus 5.00%.
The TRA will remain in effect until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the TRA. The TRA will also terminate if the Company breaches its obligations under the TRA or upon certain mergers, asset sales or other forms of business combinations, or other changes of control. If the Company exercises its
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
right to terminate the TRA, or if the TRA is terminated early in accordance with its terms, the Company’s payment obligations would be accelerated based upon certain assumptions, including the assumption that the Company would have sufficient future taxable income to utilize such tax benefits, and may substantially exceed the actual benefits, if any, the Company realizes in respect of the tax attributes subject to the TRA.
12.    Loss Per Share
Basic loss per share is calculated by dividing net loss attributable to Red Rock by the weighted-average number of shares of Class A common stock outstanding during the period. The calculation of diluted earnings or loss per share gives effect to all potentially dilutive shares, including shares issuable pursuant to outstanding stock options and nonvested restricted shares of Class A common stock, based on the application of the treasury stock method, and outstanding Class B common stock that is exchangeable, along with an equal number of LLC Units, for Class A common stock, based on the application of the if-converted method. For the three months ended March 31, 2021 and 2020, the Company incurred a net loss. As a result, all potentially dilutive securities have been excluded from the calculation of diluted loss per share because their inclusion would have been antidilutive.
A reconciliation of the numerator and denominator used in the calculation of basic and diluted loss per share is presented below (amounts in thousands):
Three Months Ended
March 31,
20212020
Net loss$(106,563)$(177,800)
Less: net loss attrib