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September 25, 2020

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Pinnacle Entertainment reports third quarter 2009 results

(US).- Pinnacle Entertainment reported financial results for the third quarter and nine months ended September 30, 2009. For the third quarter ended September 30, revenues were us$ 265 million, a 1 % increase from us$ 263 million generated in the prior-year period.

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onsolidated Adjusted EBITDA rose 8.2 % to us$ 43.1 million in the 2009 third quarter from us$ 39.9 million in the prior-year period. Three of the company's five most significant casinos had increases to Adjusted EBITDA, despite the difficult economy. The quarterly results reflect the continued improvement of operations at Lumiere Place and overall cost controls, partially offset by heightened competition in some markets and general economic conditions. In the 2008 third quarter, weather-related closures of L'Auberge du Lac, Boomtown New Orleans and the President Casino adversely affected results.

On a U.S. GAAP basis, the firm reported a net loss of us$ 21.9 million for the third quarter of 2009. U.S. GAAP net loss for the 2008 third quarter was us$ 11.8 million. Such results reflect significant pre-opening and development costs and non-cash charges related to share-based compensation in both periods. The 2009 third quarter also includes an us$ 8.8 million charge related to the early extinguishment of some of the company's debt.

For the nine months ended September 30, revenues increased to us$ 801 million from us$ 786 million in the prior-year period. Consolidated Adjusted EBITDA rose 27.5 % to us$ 145 million in the nine months ended September 30, 2009 from us$ 114 million in the prior-year period.

The 2009 results reflect improved operating efficiencies at Lumiere Place relative to its start-up period; full utilization in 2009 of the hotel expansion that opened in late 2007 and early 2008 at L'Auberge du Lac; the hurricane effects noted above; and efforts to control overall costs, partially offset by general economic conditions.

On a U.S. GAAP basis, net loss for the first nine months of 2009 was us$ 16.3 million versus a net loss of us$ 24.9 million for the first nine months of 2008. The 2009 period reflects a us$ 12.9 million gain on sale of equity securities and the us$ 8.8 million loss on early extinguishment of debt. The 2008 period reflects a us$ 22.6 million impairment of investment in those same equity securities.

"We are pleased that consolidated revenues and Adjusted EBITDA grew from last year's third quarter, despite continued softness in the overall economy and consumer confidence," said Daniel R. Lee, Pinnacle's Chairman and CEO. "In particular, Lumiere Place achieved record quarterly results. As we transition into 2010, we remain focused on our near- and long-term growth plans, including the opening of River City in the spring, ongoing construction at Sugarcane Bay in Lake Charles, Louisiana, and preparations for our planned casino in Baton Rouge."

As recent developments, in July 2009, Pinnacle issued us$ 450 million in aggregate principal amount of new 8.625 % senior notes due 2017, which were priced at 98.597 % of par to yield 8.875 % to maturity. The firm used the net proceeds from the offering to repay approximately us$ 206 million in revolving credit borrowings under its credit facility; to retire all us$ 135 million in aggregate principal amount of its 8.75 % senior subordinated notes due 2013; to repurchase us$ 75 million in aggregate principal amount of its 8.25 % senior subordinated notes due 2012; and the balance for general corporate purposes.

Besides, construction continues at the River City casino project in south St. Louis County, Missouri. The installation of slot machines is expected to begin in early November. The company anticipates opening River City in the spring of 2010, subject to various regulatory
approvals.

In October 2009, Pinnacle began the foundation work for Sugarcane Bay, a casino-resort project in Lake Charles, Louisiana. It is expected to include a casino with approximately 1,500 slot machines, 50 table games, and a poker room; a 400-guestroom hotel; a significant entertainment and convention facility; and several dining options. Sugarcane Bay is expected to cost approximately us$ 391 million, excluding capitalized interest and start up cash.

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 is expected to include a casino, a 100-guestroom hotel and several dining and entertainment options.

In August 2009, the Missouri Gaming Commission rejected Pinnacle's plan to replace The Admiral Riverboat, on which we operate the President Casino, with one of the two much newer riverboat casinos acquired from a competitor in Lake Charles in 2006.  Pinnacle is appealing such decision in the Missouri Court of Appeals, Western District.  Meanwhile, the current certification by the American Bureau of Shipping of the hull of The Admiral expires in July 2010.  Pinnacle is now planning to repair the hull of The Admiral.  With such repairs, Pinnacle expects to qualify for an extension of the ABS operating certificate.

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