Lumiere Place Posts Significantly Increased Cash Flows LAS VEGAS,
Feb. 5 /PRNewswire-FirstCall/ -- Pinnacle Entertainment, Inc.
(NYSE:PNK) today reported financial results for the fourth quarter
and full year ended December 31, 2009. Revenues in the fourth
quarter of 2009 were $245 million, a 5.4% decline from the
prior-year period's $259 million. We reviewed certain assets on our
balance sheet and recorded $207 million of non-cash write-downs in
the carrying value of various assets. We are evaluating some of
those assets for the possibility of future disposal. These
write-downs, as well as $5.0 million in severance costs related to
the departure of the Company's former chief executive officer and
other corporate staff, are reflected in the Company's net loss of
$242 million for the 2009 fourth quarter. For the 2008 fourth
quarter, the net loss was $298 million, including $313 million of
non-cash write-downs. For the year, revenue was virtually unchanged
from last year at $1.0 billion. Net loss for the year was $258
million, including $207 million in non-cash write-downs, as
compared to $323 million in 2008, including $318 million in
non-cash write-downs. Consolidated Adjusted EBITDA(1) for the 2009
fourth quarter declined 51% to $22.5 million compared to a very
strong 2008 fourth quarter of $45.6 million. The 2009 fourth
quarter included a weaker performance at two of the Company's
Louisiana properties and its Indiana property, as well as the
aforementioned severance costs, partially offset by a strong
showing by our newest property in St. Louis. For the year,
Consolidated Adjusted EBITDA increased 5.2% to $168 million in 2009
from the prior year's $160 million. Strong performances by Lumiere
Place and Boomtown Bossier City were offset by declines, mainly in
the fourth quarter, by L'Auberge du Lac and Boomtown New Orleans.
"The fourth quarter was a tough one for us, and we're
disappointed," said John Giovenco, Pinnacle Entertainment's interim
chief executive officer. "While the first half of the year was
solid, the continuing deterioration of the economy resulted in less
visitation and lower play per customer. We started to feel the
economic downturn in late summer and we increased our marketing
efforts. As a result, we maintained or increased market share in
many of our larger markets, but our margins declined. "In spite of
these difficult conditions, we were particularly pleased to see
Lumiere Place in St. Louis perform so well--a 19 percent increase
in revenue and a 66 percent increase in Adjusted EBITDA in the
fourth quarter. This heightens our confidence that the scheduled
opening of River City in south St. Louis County will be successful.
We plan to open River City on March 4, 2010, subject to approval by
the Missouri Gaming Commission. "As we enter 2010, we are focused
on our commitment to increasing shareholder value," Mr. Giovenco
continued. "We're concentrating on operating efficiency and, in
particular, effective marketing. We're evaluating our
underperforming and non-strategic assets; reducing corporate
overhead costs; taking a disciplined approach to capital spending;
and developing Sugarcane Bay and Baton Rouge in Louisiana. "To
achieve these goals, we redesigned both our Sugarcane Bay and Baton
Rouge projects, resulting in a reduction of more than $100 million
in Sugarcane Bay's cash construction costs; restructured corporate
and property marketing to result in a significant net reduction in
headcount; subsequent to year-end decided to put our Atlantic City
assets up for sale; listed the company airplane for sale; hired two
highly experienced general managers for Boomtown New Orleans and
Lumiere Place; moved to consolidate our three Las Vegas offices
into one; reduced corporate overhead; and plan to institute a new
compensation program that rewards executives for increasing
long-term cash flow and EBITDA. We believe these actions will
improve operating results. "Separately, the board has engaged the
international recruiting firm Heidrick & Struggles to help
conduct the search for a new executive to succeed Pinnacle's former
chief executive officer, who left the company in the fourth quarter
of 2009. The search is well underway, and we will announce a
resolution at the appropriate time," Mr. Giovenco said. Recent
Developments -- The Company recently moved up the opening of River
City, Pinnacle's casino project in south St. Louis County, to March
4, 2010 from spring 2010, subject to various regulatory approvals.
Construction of the casino facility and surrounding amenities is
substantially complete. The Company is currently in the process of
hiring and training River City's workforce, which is expected to
include more than 1,200 employees. River City is expected to be
completed for less than its $357 million budget, excluding
capitalized interest, non-cash rent and start-up cash. -- In
Atlantic City, the Company owns approximately 19 acres of land near
the center of The Boardwalk and related assets. Subsequent to the
end of the year, the Company made the strategic decision to sell
its assets in Atlantic City, New Jersey, as the Company does not
intend to develop its Atlantic City property. -- In December 2009,
the Louisiana Gaming Control Board approved the Company's updated
plans for its Sugarcane Bay at L'Auberge du Lac project in Lake
Charles, Louisiana. The Sugarcane Bay project will include a new
single-level riverboat casino; 400 high-quality guestrooms and
suites; exciting new food and beverage outlets; and a multipurpose
venue for entertainment and group meetings. The revised project's
budget is approximately $305 million, excluding operating cash and
capitalized interest, and represents a reduction of more than $100
million from the previous construction budget. The updated
Sugarcane Bay design retains the quality look and feel that
distinguish L'Auberge du Lac, and fully integrates Sugarcane Bay
with the existing L'Auberge du Lac footprint and infrastructure.
Pinnacle expects to complete the Sugarcane Bay project by June
2011, although the casino operations may open sooner, subject to
approval by the Louisiana Gaming Control Board. Approximately $235
million remains to be spent for the Sugarcane Bay project. --
Entitlement and design work for the Company's project in Baton
Rouge continues. In October 2009, the Louisiana Gaming Control
Board granted Pinnacle until March 31, 2010 to enter into a
construction contract for the project. The gaming entertainment
complex will be located on a portion of the 575 acres owned by
Pinnacle and is expected to include a casino, a 100-guestroom
hotel, and several dining and entertainment options. The
preliminary budget for Baton Rouge is approximately $250 million,
excluding capitalized interest, with approximately $240 million
remaining to be spent. -- Effective February 3, 2010, the Company
entered into a settlement agreement with RSUI Indemnity Company
("RSUI") in its pending lawsuit related to the loss caused by
Hurricane Katrina. The settlement provides that within 10 days,
RSUI will pay the Company the sum of $23.4 million in full
settlement of all remaining claims against RSUI. The parties will
also enter into a joint stipulation for dismissal of the lawsuit.
Artists' renderings for certain of the Company's projects and
corresponding pictures of the work in progress are available via
its corporate website at http://www.pnkinc.com/. Property
Highlights L'Auberge du Lac For the fourth quarter of 2009,
revenues and Adjusted EBITDA were $78.2 million and $15.1 million,
respectively. Results in the 2009 fourth quarter reflect a
challenging revenue market and a lower-than-normal table games hold
level. In addition, increased marketing costs adversely affected
fourth quarter 2009 results, though L'Auberge du Lac's market share
improved to 52.6% in the period from 50.2% in the prior-year
period. While the overall regional economy was softer in the 2009
fourth quarter compared to the 2008 period, unemployment statistics
remain more favorable in this region than the nation as a whole.
Revenues and Adjusted EBITDA for the 2008 fourth quarter were $89.3
million and $24.3 million, respectively. On an annual basis,
L'Auberge du Lac generated revenues of $339 million and Adjusted
EBITDA of $79.2 million in 2009 compared to revenues and Adjusted
EBITDA in 2008 of $343 million and $84.2 million. 2009 fourth
quarter results were the primary contributor to the year-over-year
variance. Lumiere Place Lumiere Place continued to perform strongly
throughout 2009. Revenues for the fourth quarter of 2009 improved
18.8% to $56.1 million. Adjusted EBITDA rose 65.9% to $10.5
million, reflecting the continued maturation of the property since
its opening in December 2007. In particular, marketing and payroll
costs declined during the 2009 period. Market share at Lumiere
Place climbed from 17.1% in the 2008 fourth quarter to 20.5% in the
2009 period. Annual revenues and Adjusted EBITDA for 2009 were $219
million and $42.0 million, respectively, compared to 2008 revenues
and Adjusted EBITDA of $174 million and $10.1 million,
respectively. As mentioned above, overall operational results
continued to improve in 2009 as Lumiere Place completed its second
year of operations. In addition, the passage of Proposition A in
November 2008, which eliminated certain betting restrictions in
Missouri's casinos, helped improve results. Boomtown New Orleans
Revenues and Adjusted EBITDA for the fourth quarter of 2009 were
$31.3 million and $5.7 million, respectively. For the fourth
quarter of 2008, revenues and Adjusted EBITDA were $39.5 million
and $13.9 million, respectively. Consistent with trends beginning
in 2007, results in 2009 trended below those in 2008. Boomtown New
Orleans was affected by market softness as reduced Katrina relief
efforts and related spending, reduced construction activity,
reduced discretionary income, and weaker economic conditions have
dampened operating results throughout the region. As such,
marketing efforts by the competition have increased dramatically.
The Property's increased marketing programs did not produce
intended results, and both the fourth quarter of 2009 and full-year
2009 results were below the prior-year periods. For the full year,
revenues and Adjusted EBITDA in 2009 were $138 million and $37.6
million, respectively, compared to 2008 revenues and Adjusted
EBITDA of $158 million and $54.2 million, respectively. Belterra
Casino Resort For the fourth quarter of 2009, Belterra's revenues
were $36.5 million compared to $38.3 million in the 2008 period.
Adjusted EBITDA was $3.3 million in the fourth quarter of 2009
versus $6.0 million in the prior-year period. These results reflect
the opening of expanded and enhanced casinos at two competing
facilities, as well as softer general economic conditions. One of
such expansions was the opening of a permanent casino at a
racetrack near Indianapolis, replacing a temporary facility that
had opened in 2008. The other was the replacement in June 2009 of a
13-year-old riverboat with a new $336 million facility at a casino
near Cincinnati. As a result of competitive pressures in the
market, 2009 fourth quarter results at Belterra reflect increased
marketing spend to compete against the augmented competition.
Belterra's 2009 revenues and Adjusted EBITDA were $162 million and
$26.5 million, respectively, compared to 2008 revenues and Adjusted
EBITDA of $169 million and $29.7 million, respectively. The decline
in results from the prior year is due principally to additional
competition. Boomtown Bossier City Revenues at Boomtown Bossier
City for the 2009 fourth quarter were $20.1 million compared to
$20.7 million in the same 2008 period. Adjusted EBITDA of $3.3
million in the 2009 fourth quarter compared to $3.9 million in the
same 2008 period. We were able to maintain market share; however,
revenues in the Bossier City/Shreveport market were down 13% for
the fourth quarter of 2009 compared to the prior-year period.
Revenues and Adjusted EBITDA in 2009 were $90.9 million and $19.2
million, respectively, compared to 2008 revenues and Adjusted
EBITDA of $89.0 million and $17.1 million, respectively. Boomtown
Bossier City achieved increased revenues and Adjusted EBITDA,
despite the competitive Bossier City/Shreveport gaming market,
through a refinement of the property's marketing efforts and
certain cost-cutting measures. The Bossier City/Shreveport market
saw a decline in revenues of 8% during 2009 as compared to 2008.
Boomtown Reno For the fourth quarter of 2009, revenues were $9.0
million and Adjusted EBITDA loss was $1.3 million at Boomtown Reno.
In the prior-year quarter, revenues were $8.9 million and Adjusted
EBITDA loss was $1.5 million. Boomtown Reno's 2009 revenues were
$38.7 million and Adjusted EBITDA loss was $2.6 million, compared
to 2008 revenues of $46.0 million and Adjusted EBITDA loss of $4.4
million. Boomtown Reno has been affected by significant competition
from northern California Native American casinos, as well as weak
economic conditions in both the region and northern California.
Improvements in Adjusted EBITDA loss for the period are due to
cost-cutting measures. Employee headcount as of December 31, 2009
has decreased 11% from December 31, 2008. The Company has targeted
additional areas at Boomtown Reno to further reduce costs in 2010.
Casino Magic Argentina Casino Magic Argentina consists of a sizable
casino-hotel facility in the city of Neuquen and several smaller
casinos in other parts of the Province of Neuquen. For the fourth
quarter of 2009, revenues and Adjusted EBITDA were $9.0 million and
$1.7 million, respectively. Such results for the 2008 fourth
quarter were $9.5 million and $2.2 million. Revenues and Adjusted
EBITDA for 2009 were $36.2 million and $9.1 million, respectively,
compared to 2008 revenues and Adjusted EBITDA of $40.0 million and
$11.8 million, respectively. Revenues have decreased due to a
recent decline in the value of the Argentine peso, as well as
weakness in the Argentine economy. The decrease in Adjusted EBITDA
reflects the currency decline and inflation of certain costs,
principally payroll costs. President Casino Due principally to
competition from an expanded competing property across the river
and the Company's neighboring Lumiere Place, revenues declined to
$4.6 million in the 2009 fourth quarter from $5.5 million in the
prior-year period. Adjusted EBITDA loss of $1.6 million was flat
during the fourth quarter. For the full year, revenues in 2009
decreased to $20.4 million from $25.8 million in 2008. Property
management has focused on cost-cutting measures that resulted in a
reduced Adjusted EBITDA loss of $2.9 million for the 2009 year from
an Adjusted EBITDA loss of $5.0 million for the prior-year period.
Operations at the President Casino were also adversely affected in
the year due to temporary flood-related closures. On January 27,
2010, the Missouri Gaming Commission issued a preliminary order for
disciplinary action against the President Riverboat
Casino-Missouri, Inc. ("PRC-MO"), a wholly-owned subsidiary of
Pinnacle Entertainment, Inc. and the operator of President Casino.
The preliminary order proposes that the Missouri Gaming Commission
revoke the license of the PRC-MO. The Missouri Gaming Commission
alleges in its preliminary order that there has been a purposeful
downgrading of the President Casino's offerings and revenues, which
it claims should subject PRC-MO to disciplinary action. The Company
is examining all available legal remedies in connection with this
matter. Other Items Corporate Expenses. Corporate overhead for the
three months ended December 31, 2009 was $14.1 million, which
includes $5.0 million of compensation expense related to the
resignation of a corporate officer and other staff reductions at
the Company's corporate headquarters. In the fourth quarter of
2008, corporate expenses were $8.0 million. For the full year,
corporate expenses were $40.2 million in 2009 (inclusive of the
$5.0 million of compensation expense mentioned above) compared to
$38.2 million in 2008. The Company is continuing its efforts to
reduce costs across the Company. Pinnacle recently listed its
corporate aircraft for sale. In addition, Pinnacle is in the
process of examining and revamping its marketing department.
Further, the Company is currently in the process of consolidating
its office space in Las Vegas from three separate locations into
one. Pre-opening and Development Costs. For details regarding the
pre-opening and development costs, see the attached supplemental
information table. Interest Expense. Gross interest expense before
capitalized interest was $24.1 million in the 2009 fourth quarter
versus $20.1 million in the prior-year period. Gross interest
expense increased principally due to the replacement of
less-expensive revolver borrowings with the issuance in July 2009
of long-term 8.625% senior notes due in 2017. Capitalized interest
was $5.0 million and $1.8 million for the three months ended
December 31, 2009 and 2008, respectively. For the year ended
December 31, 2009, gross interest expense before capitalized
interest was $84.3 million compared to $78.1 million for the 2008
period. Capitalized interest was $13.7 million and $25.1 million
for 2009 and 2008, respectively, reflecting the suspension of
development activities in Atlantic City and partially offset by an
increase in activities at our River City project. Impairment of
Real Estate and Development Costs. During the fourth quarter of
2009, the Company determined that, in accordance with applicable
guidance, a triggering event had occurred for its land held in
Atlantic City, New Jersey due to the continuing economic downturn
of the gaming market in Atlantic City as the result of other
competing markets, primarily Pennsylvania, as well as the continued
deterioration in commercial real estate values in the area. The
Company tested the book value of its land holdings for
recoverability, and as a result of tests performed, it recorded
impairment charges of $160 million during the fourth quarter. The
Company recently decided to put its Atlantic City land up for sale.
During the fourth quarter of 2009, the Company re-evaluated the
scope and design of its Sugarcane Bay and Baton Rouge projects. The
Sugarcane Bay project was relocated from land adjacent to L'Auberge
du Lac to the existing L'Auberge du Lac footprint. In addition, the
size of the project, the anticipated amenities, and other items
were reduced in scope. As a result of these changes, all of the
previously capitalized development costs associated with the prior
Sugarcane Bay design were fully impaired. Accordingly, Pinnacle
recorded an impairment charge of $20.9 million in relation to
Sugarcane Bay as of December 31, 2009. The Company's Baton Rouge
project will be similar to the original design. However, the
orientation of the hotel and structure has changed, resulting in
the impairment of some of the design components. Pinnacle recorded
an impairment charge of $0.7 million in relation to Baton Rouge as
of December 31, 2009. As a result of the events occurring in the
fourth quarter of 2009 (and prior to the Missouri Gaming
Commission's preliminary order), the Company determined there was a
triggering event to review the President Casino assets as of
December 31, 2009. As a result of these tests, Pinnacle determined
that certain assets were impaired and, as of December 31, 2009,
recorded impairment charges of $3.4 million. Due to the poor
economic climate and prospective financial performance outlook in
Reno, the Company determined a triggering event occurred for
Boomtown Reno during the fourth quarter of 2009. As a result,
Pinnacle tested all long-lived assets at Boomtown Reno for
recoverability. As a result of these tests, Pinnacle recorded
impairment charges of $2.9 million related to real estate during
the fourth quarter of 2009, and an additional $7.4 million related
to buildings and equipment, discussed below. In addition, the scope
of certain property improvement projects were reduced or cancelled.
As a result of these updated plans, Pinnacle reviewed all
previously capitalized development costs and recorded impairments
as appropriate. Impairment of Buildings, Riverboats and Equipment.
As mentioned above, the Company determined a triggering event
occurred for Boomtown Reno during the fourth quarter of 2009. As a
result of these tests, Pinnacle recorded impairment charges of $7.4
million during the fourth quarter of 2009 related to certain
buildings and equipment. In late 2009, Pinnacle listed a corporate
aircraft for sale and incurred an impairment charge of $8.7
million, which is the difference between the carrying value and the
estimated fair value. The corporate aircraft is classified as an
asset held for sale on our balance sheet. Impairment of
Indefinite-Lived Intangible Assets. As a result of the events
preceding the January 27, 2010 preliminary order issued by the
Missouri Gaming Commission, the Company performed an impairment
analysis of the intangible assets of the President Casino as of
December 31, 2009. As a result of analysis performed, Pinnacle
recorded an impairment charge of $1.9 million in relation to the
President Casino's gaming license. Discontinued Operations. In July
2008, the Company decided to discontinue operations of The Casino
at Emerald Bay, the Company's former boutique casino located in the
Bahamas. This casino officially ceased operations on January 2,
2009. Results of operations for The Casino at Emerald Bay,
including impairment charges, are reflected in discontinued
operations. The Company also classifies its former Biloxi casino as
discontinued operations pending final resolution of its outstanding
insurance claim, including the related insurance proceeds received.
Liquidity At December 31, 2009, the Company had approximately $130
million in cash and cash equivalents, approximately $70 million of
which is used in day-to-day operations. As of December 31, 2009,
$36.9 million was drawn under the Company's $531 million bank
credit facility and approximately $12.6 million of letters of
credit were outstanding. As of that same date, the Company had
invested approximately $283 million in River City and had also
capitalized interest on the project of approximately $19.7 million.
The cash budget for River City is $357 million, plus capitalized
interest, non-cash rent and operating cash, which is consistent
with earlier cash budget estimates. As of February 4, 2010, the
Company had drawn $92.3 million under its credit facility, and
anticipates additional borrowings to fund its development projects
and other general corporate needs. The Company has been working
toward a refinancing of its current credit facility, which matures
in December 2010. Banc of America Securities LLC and J.P. Morgan
Securities, Inc. have been selected as Joint Lead Arrangers for
this new credit facility, which has a maturity date of March 31,
2014. Commitments from banking institutions toward the new credit
facility have been received in the amount of $375 million. The
Company expects that the new credit facility will close in the next
few business days. However, there can be no assurance that this
closing will actually occur. Community Contribution The Company
pays significant taxes in the communities in which it operates.
During 2009, Pinnacle paid or accrued $266 million in gaming taxes,
$23.0 million in payroll taxes, $18.8 million in property taxes,
and $8.3 million in sales taxes. Investor Conference Call Pinnacle
will hold a conference call for investors today, February 5, 2010,
at 11:00 a.m. ET (8:00 a.m. PT) to discuss its 2009 fourth quarter
and full-year financial and operating results. Investors may listen
to the call by dialing (888) 792-8395 or, for international
callers, (706) 679-7241. Investors may also listen to the
conference call live over the Internet at http://www.pnkinc.com/. A
replay of the conference call will be available shortly after the
conclusion of the call through February 19, 2010 by dialing (800)
642-1687 or, for international callers, (706) 645-9291. The code to
access the replay is 54755025. The conference call will also be
available for replay at http://www.pnkinc.com/. Non-GAAP Financial
Measures (1) Consolidated Adjusted EBITDA, Adjusted net income
(loss), and Adjusted EBITDA are non-GAAP measurements. The Company
defines Consolidated Adjusted EBITDA as earnings before interest
income and expense, income taxes, depreciation, amortization,
pre-opening and development expenses, non-cash share-based
compensation, asset impairment costs, write-downs, reserves,
recoveries, corporate-level litigation settlement costs, gain
(loss) on sale of certain assets, loss on early extinguishment of
debt, gain (loss) on sale of equity security investments, minority
interest and discontinued operations. The Company defines Adjusted
net income (loss) as net income (loss) before pre-opening and
development expenses, non-cash share-based compensation, asset
impairment costs, write-downs, reserves, recoveries,
corporate-level litigation settlement costs, gain (loss) on sale of
certain assets, gain (loss) on early extinguishment of debt, income
tax benefits, minority interest and discontinued operations. The
Company defines Adjusted EBITDA as earnings before interest income
and expense, income taxes, depreciation, amortization, pre-opening
and development expenses, non-cash share-based compensation and
write-downs. Not all of the aforementioned benefits and costs occur
in each reporting period, but have been included in the definition
based on historic activity. The Company uses Consolidated Adjusted
EBITDA as a relevant and useful measure to compare operating
results among its properties and between accounting periods. The
presentation of Consolidated Adjusted EBITDA has economic substance
because it is used by management as a performance measure to
analyze the performance of its business segments. Consolidated
Adjusted EBITDA is specifically relevant in evaluating large,
long-lived casino-hotel projects because it provides a perspective
on the current effects of operating decisions separated from the
substantial, non-operational depreciation charges and financing
costs of such projects. Management eliminates the results from
discontinued operations as they are discontinued. Management also
reviews pre-opening and development expenses separately, as such
expenses are also included in total project costs when assessing
budgets and project returns and because such costs relate to
anticipated future revenues and income. Management believes some
investors consider Consolidated Adjusted EBITDA to be a useful
measure in determining a company's ability to service or incur
indebtedness and for estimating a company's underlying cash flows
from operations before capital costs, taxes and capital
expenditures. Consolidated Adjusted EBITDA also approximates the
measures used in the debt covenants within the Company's debt
agreements. Consolidated Adjusted EBITDA does not include
depreciation or interest expense and therefore does not reflect
current or future capital expenditures or the cost of capital. The
Company compensates for these limitations by using other
comparative measures to assist in the evaluation of operating
performance. Adjusted net income (loss) is presented solely as
supplemental disclosure, as this is one method that management
reviews and uses to analyze the performance of its core operating
business. For many of the same reasons mentioned above relating to
Consolidated Adjusted EBITDA, management believes Adjusted net
income (loss) is a useful analytic tool as it enables management to
track the performance of its core casino operating business
separate and apart from factors that do not impact decisions
affecting its operating casino properties, such as impairments of
intangible assets or costs associated with the Company's
development activities. Management believes Adjusted net income
(loss) is useful to investors since the adjustments provide a
measure of performance that more closely resembles widely used
measures of performance and valuation in the gaming industry.
Adjusted net income (loss) does not include the costs of the
Company's development activities, certain asset sale gains, income
tax benefits or the costs of its refinancing activities, but the
Company compensates for these limitations by using other
comparative measures to assist in evaluating the performance of its
business. Management believes that Adjusted EBITDA is a useful
analytical tool as it enables management to evaluate the
profitability of the gaming operations without taking into account
the effect of certain non-operating expenses. EBITDA measures, such
as Consolidated Adjusted EBITDA, and Adjusted net income (loss) are
not calculated in the same manner by all companies and,
accordingly, may not be an appropriate measure of comparing
performance among different companies. See the attached
"supplemental information" tables for a reconciliation of
Consolidated Adjusted EBITDA to Net loss from continuing operations
and a reconciliation of GAAP net income (loss) to Adjusted net
income (loss). About Pinnacle Entertainment Pinnacle Entertainment,
Inc. owns and operates casinos in Nevada, Louisiana, Indiana,
Missouri and Argentina. The Company has a second casino development
project under construction in the St. Louis area, to be called
River City, which opening is dependent upon final approval by the
Missouri Gaming Commission. Pinnacle is also developing a second
casino in Lake Charles, Louisiana, to be called Sugarcane Bay at
L'Auberge du Lac, and a casino in Baton Rouge, Louisiana. All
statements included in this press release, other than historical
information or statements of historical fact, are "forward-looking
statements" within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements, including statements regarding
the Company's future operating performance, future growth,
anticipated milestones, completion and opening schedules of various
projects, construction schedules and budgets of the various
projects, amenities and features of the various projects, ability
to reduce corporate costs and overhead, ability of the Company to
sell the Company airplane and the Atlantic City assets, continued
improvement of operations at Lumiere Place, the continued benefits
of Proposition A in Missouri, the successful opening of the River
City Casino, the economic outlook of New Orleans area, the ability
of the Company to borrow as it constructs its various projects
under its Credit Facility may be constrained if the Company is
unable to extend the maturity date and the Company's ability to
retain the gaming license for the President Casino are based on
management's current expectations and are subject to risks,
uncertainties and changes in circumstances that could significantly
affect future results. Accordingly, Pinnacle cautions that the
forward-looking statements contained herein are qualified by
important factors that could cause actual results to differ
materially from those reflected by such statements. Such factors
include, but are not limited to: (a) the Company's business may be
sensitive to reductions in consumers' discretionary spending as a
result of downtowns in the economy, as may be indicated by our
fourth quarter 2009 results; (b) the Company's substantial funding
needs in connection with its development projects and other
capital-intensive projects will require it to raise substantial
amounts of money from outside sources and/or sell assets in market
conditions that may not be favorable; (c) the global financial
crisis may have an impact on the Company's business and financial
condition in ways that the Company currently cannot accurately
predict; (d) insufficient or lower-than-expected results generated
from the Company's new developments and acquired properties, may
negatively affect the market for the Company's securities and our
new properties may compete with our existing properties; (e) many
factors, including the escalation of construction costs beyond
increments anticipated in its construction budgets, could prevent
the Company from completing its construction and development
projects within budget and on time; (f) the loss of management and
other key personnel could significantly harm our business and we
may not be able to effectively replace members of management who
have left the Company; (g) significant competition in the gaming
industry in all of the Company's markets could adversely affect the
Company's profitability; (h) the gaming license of the President
Casino may be revoked by the Missouri Gaming Commission; (i) the
Company may not meet the conditions for receipt or maintenance of
gaming licensing approvals, including for its River City, Sugarcane
Bay and Baton Rouge projects, some of which are beyond its control;
(j) the terms of the Company's credit facility and the indentures
governing its senior and subordinated indebtedness impose operating
and financial restrictions on the Company; (k) the Company's
insurance policy limits for Weather Catastrophe/Named Windstorm
Occurrence, Flood and Earthquake are significantly less than its
coverage for the 2005 hurricane season; and (l) other risks,
including those as may be detailed from time to time in the
Company's filings with the Securities and Exchange Commission
("SEC"). For more information on the potential factors that could
affect the Company's financial results and business, review the
Company's filings with the SEC, including, but not limited to, its
Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and
its Current Reports on Form 8-K. Belterra, Boomtown, Casino Magic,
L'Auberge du Lac, Lumiere Place, River City and Sugarcane Bay are
registered trademarks of Pinnacle Entertainment, Inc. All rights
reserved (-financial tables follow-) Pinnacle Entertainment, Inc.
Condensed Consolidated Statements of Operations (In thousands,
except per share data, unaudited) For the three months For the year
ended December 31, ended December 31, ------------------
------------------ 2009 2008 2009 2008 ---- ---- ---- ----
Revenues: Gaming $214,146 $223,750 $908,692 $903,780 Food and
beverage 14,398 15,994 62,461 63,248 Lodging 8,024 10,033 37,376
37,101 Retail, entertainment and other 8,453 9,150 37,080 40,555
----- ----- ------ ------ 245,021 258,927 1,045,609 1,044,684
------- ------- --------- --------- Expenses and other costs:
Gaming 134,957 132,274 543,047 542,309 Food and beverage 14,908
16,555 62,528 65,469 Lodging 5,677 8,503 23,966 24,613 Retail,
entertainment and other 5,233 5,492 21,250 26,231 General and
administrative 65,870 52,834 240,786 235,658 Depreciation and
amortization 27,015 28,674 105,157 117,846 Pre-opening and
development costs 7,612 9,457 28,732 55,371 Impairment of goodwill
- 28,543 - 28,543 Impairment of indefinite-lived intangible assets
1,850 41,387 1,850 41,387 Impairment of land and development costs
188,409 227,954 188,409 227,954 Impairment of buildings, riverboats
and equipment 16,492 15,158 16,492 20,330 Write-downs, reserves and
recoveries, net 689 1,267 1,708 4,292 --- ----- ----- ----- 468,712
568,098 1,233,925 1,390,003 ------- ------- --------- ---------
Operating loss (223,691) (309,171) (188,316) (345,319) Other
non-operating income 47 249 339 2,715 Interest expense, net of
capitalized interest (19,108) (18,334) (70,556) (53,049) Gain on
sale of equity securities - - 12,914 - Impairment of investment in
equity securities - (6,452) - (29,088) Loss on early extinguishment
of debt (636) - (9,467) - ---- --- ------ --- Loss from continuing
operations before income taxes (243,388) (333,708) (255,086)
(424,741) Income tax (expense) benefit 1,062 35,925 (2,744) 54,545
----- ------ ------ ------ Loss from continuing operations
(242,326) (297,783) (257,830) (370,196) Income (loss) from
discontinued operations, net of income taxes 306 85 (472) 47,599
--- --- ---- ------ Net loss $(242,020) $(297,698) $(258,302)
$(322,597) ========= ========= ========= ========= Net loss per
common share-basic Loss from continuing operations $(4.03) $(4.97)
$(4.29) $(6.17) Income (loss) from discontinued operations, net of
income taxes 0.00 0.00 (0.01) 0.79 ---- ---- ----- ---- Net loss
per common share-basic $(4.03) $(4.97) $(4.30) $(5.38) ======
====== ====== ====== Net loss per common share-diluted Loss from
continuing operations $(4.03) $(4.97) $(4.29) $(6.17) Income (loss)
from discontinued operations, net of income taxes 0.00 0.00 (0.01)
0.79 ---- ---- ----- ---- Net loss per common share-diluted $(4.03)
$(4.97) $(4.30) $(5.38) ====== ====== ====== ====== Number of
shares-basic 60,080 59,981 60,056 59,966 Number of shares-diluted
60,080 59,981 60,056 59,966 Pinnacle Entertainment, Inc. Condensed
Consolidated Balance Sheets (In thousands, unaudited) December 31,
December 31, 2009 2008 ---- ---- Assets Cash and cash equivalents
$129,576 $115,712 Other assets 166,910 173,475 Land, buildings,
riverboats and equipment, net 1,547,370 1,630,037 ---------
--------- Total assets $1,843,856 $1,919,224 ========== ==========
Liabilities and Stockholders' Equity Liabilities, other than
long-term debt $286,076 $236,546 Long-term debt, including current
portion 1,063,371 943,332 --------- ------- Total liabilities
1,349,447 1,179,878 Stockholders' equity 494,409 739,346 -------
------- Total liabilities and stockholders' equity $1,843,856
$1,919,224 ========== ========== Pinnacle Entertainment, Inc.
Supplemental Information Property Revenues and Adjusted EBITDA (In
thousands, unaudited) For the three months For the year ended
December 31, ended December 31, ------------------
------------------ 2009 2008 2009 2008 ---- ---- ---- ---- Revenues
L'Auberge du Lac $78,236 $89,261 $339,034 $342,594 Lumiere Place
(a) 56,089 47,217 219,006 174,185 Boomtown New Orleans 31,268
39,495 137,662 158,351 Belterra Casino Resort 36,471 38,325 161,915
168,576 Boomtown Bossier City 20,107 20,714 90,902 88,956 Boomtown
Reno 8,998 8,923 38,664 46,007 Casino Magic Argentina 9,001 9,481
36,195 40,006 President Casino 4,561 5,466 20,388 25,784 Other 290
45 1,843 225 --- --- ----- --- Total Revenues $245,021 $258,927
$1,045,609 $1,044,684 ======== ======== ========== ==========
Adjusted EBITDA (b) L'Auberge du Lac $15,055 $24,313 $79,210
$84,227 Lumiere Place (a) 10,511 6,337 41,960 10,145 Boomtown New
Orleans 5,683 13,887 37,642 54,151 Belterra Casino Resort 3,283
6,039 26,488 29,724 Boomtown Bossier City 3,266 3,921 19,212 17,117
Boomtown Reno (1,254) (1,522) (2,638) (4,409) Casino Magic
Argentina 1,733 2,215 9,139 11,843 President Casino (1,636) (1,633)
(2,889) (5,034) ------ ------ ------ ------ 36,641 53,557 208,124
197,764 Corporate expenses (14,104) (7,960) (40,169) (38,156)
------- ------ ------- ------- Consolidated Adjusted EBITDA (b)
$22,537 $45,597 $167,955 $159,608 Depreciation and amortization
(27,015) (28,674) (105,157) (117,846) Pre-opening and development
costs (7,612) (9,457) (28,732) (55,371) Non-cash share-based
compensation (4,161) (2,328) (13,923) (9,204) Impairment of
goodwill - (28,543) - (28,543) Impairment of indefinite-lived
intangible assets (1,850) (41,387) (1,850) (41,387) Impairment of
land and development costs (188,409) (227,954) (188,409) (227,954)
Impairment of buildings, riverboats and equipment (16,492) (15,158)
(16,492) (20,330) Write-downs, reserves and recoveries, net (689)
(1,267) (1,708) (4,292) Other non-operating income 47 249 339 2,715
Interest expense, net of capitalized interest (19,108) (18,334)
(70,556) (53,049) Gain on sale of equity securities - - 12,914 -
Impairment of investment in equity securities - (6,452) - (29,088)
Loss on early extinguishment of debt (636) - (9,467) - Income tax
(expense) benefit 1,062 35,925 (2,744) 54,545 ----- ------ ------
------ Loss from continuing operations $(242,326) $(297,783)
$(257,830) $(370,196) ========= ========= ========= ========= (a)
Lumiere Place includes the Lumiere Place Casino and two hotels. The
Lumiere Place Casino opened on December 19, 2007. The
Pinnacle-owned Four Seasons Hotel St. Louis opened in February
2008. The former Embassy Suites was closed on March 31, 2007 and
reopened as HoteLumiere in February 2008 following an extensive
refurbishment. (b) See discussion of Non-GAAP Financial Measures
above for a detailed description of Adjusted EBITDA and
Consolidated Adjusted EBITDA. Pinnacle Entertainment, Inc.
Supplemental Information Pre-opening and Development Costs (In
thousands, unaudited) For the three months For the year ended
December 31, ended December 31, ------------------
------------------ 2009 2008 2009 2008 ---- ---- ---- ----
Pre-opening and Development Costs Atlantic City (a) $3,856 $2,251
$12,124 $17,342 River City 3,058 2,309 7,965 6,065 Baton Rouge 322
996 5,769 7,452 Sugarcane Bay 282 1,022 2,021 3,188 Missouri
Proposition A Initiative - 874 - 7,861 Lumiere Place - 1,641 -
7,849 Kansas City (b) - 227 - 4,595 Other 94 137 853 1,019 --- ---
--- ----- Total Pre-opening and Development Costs $7,612 $9,457
$28,732 $55,371 ====== ====== ======= ======= (a) In late 2008,
management decided to complete certain demolition projects, but to
otherwise suspend substantially all development activities in
Atlantic City indefinitely. Such demolition activities were
completed in December 2008. The continuing pre-opening and
development costs include property taxes and other costs associated
with ownership of the land. (b) The Company withdrew its
application as an applicant for the Northeast Kansas Gaming Zone in
September 2008. Pinnacle Entertainment, Inc. Supplemental
Information Reconciliation of GAAP Net Loss to Adjusted Net Loss
(In thousands, except per share data, unaudited) Three Months Ended
Years Ended December 31, December 31, ----------- ------------ 2009
2008 2009 2008 ---- ---- ---- ---- GAAP Net loss $(242,020)
$(297,698) $(258,302) $(322,597) Pre-opening and development costs
7,612 9,457 28,732 55,371 Non-cash share-based compensation 4,161
2,328 13,923 9,204 Impairment of assets 206,751 313,042 206,751
318,214 Write down, reserves, and recoveries, net 689 1,267 1,708
4,292 Gain on sale of equity securities - - (12,914) - Impairment
of investment in equity securities - 6,452 - 29,088 Loss on early
extinguishment of debt 636 - 9,467 - Adjustment for taxes on above
(b) (959) (133,850) 2,664 (167,508) (Income) loss from discontinued
operations (306) (85) 472 (47,599) ---- --- --- ------- Adjusted
net loss (a) $(23,436) $(99,087) $(7,499) $(121,535) ========
======== ======= ========= Adjusted per common share - diluted GAAP
Net loss $(4.03) $(4.97) $(4.30) $(5.38) Pre-opening and
development costs 0.13 0.16 0.48 0.92 Non-cash share-based
compensation 0.07 0.04 0.23 0.15 Impairment of assets 3.44 5.21
3.44 5.31 Write down, reserves, and recoveries, net 0.01 0.02 0.03
0.07 Gain on sale of equity securities - - (0.22) - Impairment of
investment in equity securities - 0.11 - 0.50 Loss on early
extinguishment of debt 0.01 - 0.16 - Adjustment for taxes on above
(b) (0.02) (2.23) 0.04 (2.81) (Income) loss from discontinued
operations (0.00) - 0.01 (0.79) ----- --- ---- ----- Adjusted net
loss per common share - diluted $(0.39) $(1.66) $(0.13) $(2.03)
====== ====== ====== ====== Number of shares - diluted 60,080
59,981 60,056 59,966 (a) See discussion of Non-GAAP Financial
Measures above for a detailed description of Adjusted net income
(loss). (b) Our effective income tax rate for continuing operations
for the three and twelve months ended December 31, 2009 was 0.44%
and (1.08)%. FOR FURTHER INFORMATION At the Company - (702)
784-7777: -------------------------------- Lewis Fanger - Investor
Relations Pauline Yoshihashi - Media DATASOURCE: Pinnacle
Entertainment, Inc. CONTACT: Investor Relations, Lewis Fanger, or
Media, Pauline Yoshihashi, both of Pinnacle Entertainment, Inc.,
+1-702-784-7777 Web Site: http://www.pnkinc.com/
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