Press Release
May 2, 2001
GLENDALE, CA -- Pinnacle Entertainment, Inc. (NYSE: PNK) yesterday reported financial results for the fiscal first
quarter ended March 31, 2001, consistent with the ranges provided in the previous release.
For the three months ended March 31, 2001, revenues from continuing operations increased 22% to $134.0 million
from $109.7 million in the first quarter of 2000, due primarily to the revenues generated by the Belterra Casino
Resort, which opened in Southern Indiana in the fourth quarter of last year. Earnings from continuing operations
before interest, taxes, depreciation, amortization and non-recurring items (``EBITDA'') were $19.4 million for
the first quarter, versus comparable EBITDA of $25.6 million in the year-ago period. The net loss for the first
quarter was ($2.1) million, or ($0.08) per diluted share, compared with net income of $1.9 million, or $0.07 per
diluted share, for the same period of 2000, when adjusted for operations sold and non-recurring items.
Belterra Casino Resort
``Belterra's results dramatically improved during the quarter, from January revenue of $7.3 million and an EBITDA
loss of $729,000 to March revenue of $10.7 million and EBITDA of $982,000,'' said Alanis. ``Our marketing programs
have begun to take hold and the warmer weather has started an improvement trend which we expect will continue''.
``During the quarter we recorded pre-opening costs of $198,000 related to the Tom Fazio-designed golf course that
is slated to open in July of this year.'' ``This championship course should contribute significantly to our ability
to generate increased revenues and profitability at Belterra.''
Effect of New Louisiana Dockside Gaming Legislation
``At Boomtown New Orleans, we are beginning to experience increased customer traffic as a result of the dockside
legislation, which became effective on April 1, 2001,'' Alanis said. ``However, we expect the gaming tax increase
to have an initial negative impact on EBIDTA at Bossier City that we anticipate will be offset beginning in late
2002 with our planned property expansion.''
Casino Magic Bossier City Casino Property
``The Bossier City gaming market is showing significant growth due to the new capacity in the marketplace,'' continued
Alanis. ``As a result, we are planning major renovations and additions, which will include a new larger riverboat,
new entertainment center, 300-room hotel addition and other land- based amenities. The project has a total expected
cost of $115 million and will begin in the third quarter of this year with a planned fall 2002 completion. During
the first quarter, new competition and flooding in the first level of the parking garage affected our visitor flow
and impacted our revenues. We expect the amenities we are adding at our Bossier City property to substantially
improve the property's contribution to results starting late in 2002.''
Boomtown Properties
``The company's New Orleans and Reno Boomtown properties continued to perform well during the quarter,'' said Alanis.
``At New Orleans we recaptured market share during the first quarter and expect to generate strong returns through
the remainder of the year. Our property in Reno is also generating satisfying returns on the $28 million in capital
investments made during 1998 and 1999.''
Casino Magic Biloxi
Alanis noted various factors that affected results at the company's Casino Magic Biloxi property. ``The settlement
of a 1998 hurricane business interruption insurance claim contributed $0.8 million to first quarter 2000 revenue
and EBITDA, affecting the quarter-to-quarter comparison. Additionally, continued strong competition impacted our
2001 first quarter results. However, we continue to be positive about Biloxi's potential and have positioned our
operations there to capitalize on this market's future growth.''
Stock Buyback
In August of 1998, Pinnacle announced its intention to repurchase and retire up to 20% or approximately 5.3 million
shares of its then issued and outstanding common stock. Through the end of the first quarter 2001, the Company
had repurchased approximately one million shares at a total cost of approximately $10.9 million in connection with
this program. No shares have been acquired since March 31, 2001. Under the company's most restrictive debt covenants,
$9.1 million remains available for share buyback.
2001 Financial Guidance
New accounting guidelines effective in the first quarter of 2001 require the cost of cash back slot and table game
promotional programs to be classified as a reduction in revenue, rather than a casino expense. Accordingly, the
company's guidance and the attached table showing first quarter 2000 revenue reflects reclassifications for the
new guidelines. The accounting change does not impact EBITDA, operating income or net income.
``Reflecting the recent accounting change rather than a change in operational outlook, Pinnacle is recasting its
2001 revenue forecast to between $560 and $585 million.''`` As previously announced, 2001 EBITDA is expected to
be between $110 and $120 million and net income to be in the $13 to $15 million range, or $0.50 to $0.55 per diluted
share.
The company now anticipates capital spending will be $95 to $100 million in 2001, including $20 million for maintenance
capital expenditures. The 2001 capital expenditures reflect 2001 expansion costs for its Bossier City property
of approximately $35 million, with the remaining $80 million to be incurred in 2002. Other 2001 major project capital
expenditures include $12 million for a parking structure at Casino Magic Biloxi; and $10 million for improvements
at Boomtown New Orleans. Capital expenditures in the range of $10 million were incurred in the first quarter of
2001.
First Quarter Conference Call
Pinnacle will be holding an investor conference call to discuss the company's financial and operating results today
at 11:00 am ET. Investors will have the opportunity to listen to the conference call by dialing (703) 871-3722
or over the Internet through StreetFusion at www.streetfusion.com . To listen to the live call, please go to the
web site at least fifteen minutes early to register, download, and install any necessary audio software. For those
who cannot listen to the live broadcast, a replay will be available for one week on StreetFusion.
About Pinnacle Entertainment
Pinnacle Entertainment is a diversified gaming Company that owns and operates seven casinos (four with hotels)
in Nevada, Mississippi, Louisiana, Indiana and Argentina, and receives lease income from two card club casinos,
both in the Los Angeles metropolitan area.
(The Private Securities Litigation Reform Act of 1995 provides a ``safe harbor'' for forward-looking statements.
Forward-looking information involves important risks and uncertainties that could significantly affect future results
and accordingly, such results may differ from those expressed in forward-looking statements made by or on behalf
of Pinnacle Entertainment. Such statements include, but are not limited to, (a) the successful operation of Pinnacle
Entertainment's Belterra Casino Resort and Casino Magic Bossier City; (b) the company's expected operating performance
in fiscal year 2001; (c) market growth in Louisiana and Mississippi; and (d) improving operating efficiency in
fiscal year 2001. Pinnacle Entertainment cautions that these statements are qualified by important factors that
could cause actual results to differ materially from those reflected by the forward-looking statements contained
herein. Such factors include, but are not limited to (a) the effect of current and future weather conditions and
other natural events; (b) the performance of Belterra Casino Resort, which has a limited operating history; (c)
overall economic conditions; (d) maintaining adequate financing to meet strategic goals; (e) continuing regulatory
approvals, (f) increased competition from casino operators with greater resources, (g) changes in the gaming markets
in which Pinnacle Entertainment operates, and (h) other risks as detailed from time to time in Pinnacle Entertainment's
filings with the Securities and Exchange Commission (``SEC''). For more information on the potential factors that
could affect the Company's financial results, review the Company's filings with the SEC, including the Company's
Annual Report on Form 10-K and Pinnacle Entertainment's other filings with the SEC.)
PINNACLE ENTERTAINMENT, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended
March 31,
2001 2000
(unaudited)
Revenues:
Belterra Casino Resort $26,195 $0
Boomtown Reno 19,112 18,521
Boomtown New Orleans 25,742 24,464
Casino Magic Biloxi 22,715 22,825
Casino Magic Bossier City 32,528 36,089
Casino Magic Argentina 5,193 5,686
Card Clubs and Other 2,522 2,118
134,007 109,703
Operations sold
Boomtown Biloxi 0 16,861
Casino Magic Bay St. Louis 0 23,148
Turf Paradise Race Track 0 6,943
Total Revenues (a) $134,007 $156,655
Earnings (loss) before interest, income taxes,
depreciation, amortization, and
non-recurring items (EBITDA):
Belterra Casino Resort $383 $0
Boomtown Reno 2,367 2,576
Boomtown New Orleans 7,406 6,799
Casino Magic Biloxi 4,431 6,083
Casino Magic Bossier City 5,071 10,572
Casino Magic Argentina 2,009 2,356
Card Clubs and Other 2,364 2,022
Pinnacle Entertainment Corporate (4,600) (4,788)
19,431 25,620
Operations sold
Boomtown Biloxi 0 3,116
Casino Magic Bay St. Louis 0 6,820
Turf Paradise Race Track 0 2,580
EBITDA 19,431 38,136
Non-recurring income (expenses):
Gain on sale of assets 0 23,854
Pre-opening costs, Belterra Casino Resort (198) (1,743)
Terminated merger costs 0 (625)
Non-recurring (expenses) income (198) 21,486
Subtotal $19,233 $59,622
a) New accounting guidance issued in and effective for the first quarter
of 2001 requires that the cost of the cash back component of the Company's
promotional casino games programs be classified as a reduction in
revenues.These costs had previously been treated as a casino expense.The
new guidance does not impact EBITDA, operating profit or net income. The
prior year's results have been reclassified to reflect the impact of
implementing this new guidance to be consistent with the 2001
presentation.
PINNACLE ENTERTAINMENT, INC
CONSOLIDATED STATEMENTS OF OPERATIONS, CONTINUED
(in thousands, except per share data)
Three months ended
March 31,
2001 2000
(unaudited)
Subtotal from prior table $19,233 $59,622
Depreciation and amortization
Belterra Casino Resort 2,990 0
Boomtown Reno 1,997 1,900
Boomtown New Orleans 1,413 1,501
Casino Magic Biloxi 1,665 1,852
Casino Magic Bossier City 2,122 2,094
Casino Magic Argentina 359 406
Card Clubs and Other 968 1,030
Pinnacle Entertainment Corporate 574 1,008
12,088 9,791
Operations sold
Boomtown Biloxi 0 899
Casino Magic Bay St. Louis 0 1,614
Turf Paradise Race Track 0 287
Depreciation and amortization 12,088 12,591
Operating income 7,145 47,031
Interest income 1,848 3,189
Interest expense, net of capitalized interest (12,307) (16,069)
(Loss) Income before income taxes (3,314) 34,151
Income tax benefit (expense) 1,193 (12,239)
Net (loss) income ($2,121) $21,912
Per common share
Before non-recurring items-basic ($0.08) $0.31
Pre-opening and terminated merger costs-basic 0.00 (0.06)
Gain on sale of assets-basic 0.00 0.58
Net (loss) income-basic ($0.08) $0.83
Before non-recurring items-diluted ($0.08) $0.30
Pre-opening and terminated merger costs-diluted 0.00 (0.06)
Gain on sale of assets-diluted 0.00 0.56
Net (loss) income-diluted ($0.08) $0.80
Number of shares basic 26,288 26,260
Number of shares diluted 26,288 27,307
PINNACLE ENTERTAINMENT, INC,
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2001 2000
(unaudited)
Assets
Cash and cash equivalents $145,025 $172,868
Assets held for sale (a) 12,160 12,164
Other assets 178,629 182,725
Fixed assets 593,309 593,718
Total assets $929,123 $961,475
Liabilities and Stockholders' Equity
Liabilities $74,895 $99,705
Notes payable 499,933 500,594
Total liabilities 574,828 600,299
Stockholders' equity 354,295 361,176
Total liabilities and stockholders' equity $929,123 $961,475
(a) Assets held for sale at March 31, 2001 and December 31, 2000 is
surplus land in California.
SOURCE: Pinnacle Entertainment, Inc.