UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

PINNACLE ENTERTAINMENT, INC.

Delaware (State or other jurisdiction of incorporation or organization)		95-3667491 (I.R.S. Employer Identification No.)

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 the filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

As of the close of business on May 8, 2009, the number of outstanding shares of the registrant’s common stock was 60,064,681.

 

 

PINNACLE ENTERTAINMENT, INC.
TABLE OF CONTENTS

PART I
Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Income Statements for the Three Months ended March 31, 2009 and 2008			3
Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008			4
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2009 and 2008			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Executive Summary			19
Results of Operations			20
Liquidity and Capital Resources			25
Contractual Obligations and Other Commitments			27
Critical Accounting Estimates			27
Forward-Looking Statements			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			29
Item 4. Controls and Procedures			30
PART II
Item 1. Legal Proceedings			30
Item 1A. Risk Factors			31
Item 6. Exhibits			32
Signature Page			33
Exhibit 10.1
Exhibit 10.2
Exhibit 11
Exhibit 31.1
Exhibit 31.2
Exhibit 32

PART I

Item 1. Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

		For the three months ended
		March 31,
		2009				2008
		(in thousands, except per share data)
Revenues:
Gaming		$	237,495			$	228,202
Food and beverage			14,863				13,742
Lodging			8,397				6,129
Retail, entertainment and other			8,205				8,512
			268,960				256,585
Expenses and other costs (benefits):
Gaming			134,565				138,024
Food and beverage			15,264				15,021
Lodging			5,808				4,388
Retail, entertainment and other			4,310				5,813
General and administrative			57,936				59,691
Depreciation and amortization			26,201				28,461
Pre-opening and development costs			5,884				17,136
Write-downs, reserves and recoveries, net			412				(118	)
			250,380				268,416
Operating income (loss)			18,580				(11,831	)
Other non-operating income			133				1,139
Interest expense, net of capitalized interest			(16,678	)			(12,083	)
Income (loss) from continuing operations before income taxes			2,035				(22,775	)
Income tax (expense) benefit			(808	)			7,016
Income (loss) from continuing operations			1,227				(15,759	)
Income (loss) from discontinued operations, net of income taxes			(296	)			20,813
Net income		$	931			$	5,054
Net income per common share—basic
Income (loss) from continuing operations		$	0.02			$	(0.26	)
Income (loss) from discontinued operations, net of income taxes			—				0.34
Net income per common share—basic		$	0.02			$	0.08
Net income per common share—diluted
Income (loss) from continuing operations		$	0.02			$	(0.26	)
Income (loss) from discontinued operations, net of income taxes			—				0.34
Net income per common share—diluted		$	0.02			$	0.08
Number of shares—basic			60,008				59,949
Number of shares—diluted			61,876				60,085

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2009				December 31, 2008
		(Unaudited)
		(in thousands, except share data)
ASSETS
Current Assets:
Cash and cash equivalents		$	130,852			$	115,712
Accounts receivable, net of allowance for doubtful accounts of $12,612 and $11,848			20,994				26,348
Inventories			5,643				6,425
Prepaid expenses and other assets			16,687				18,845
Total current assets			174,176				167,330
Restricted cash			9,254				9,318
Land, buildings, riverboats and equipment: (Note 1)
Land and land improvements			407,118				407,169
Buildings, riverboats and improvements			1,100,027				1,099,204
Furniture, fixtures and equipment			437,078				436,887
Construction in progress			166,169				127,407
			2,110,392				2,070,667
Less: accumulated depreciation			(464,456	)			(440,630	)
			1,645,936				1,630,037
Assets held for sale			2,688				2,687
Goodwill			16,742				16,742
Intangible assets, net (Note 1)			32,540				32,607
Other assets, net			62,246				60,503
		$	1,943,582			$	1,919,224
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	50,645			$	45,755
Accrued interest			15,509				11,010
Accrued compensation			38,815				41,574
Accrued taxes			14,670				17,089
Other accrued liabilities			55,172				55,060
Deferred income taxes			2,277				4,029
Current portion of long-term debt (Note 2)			91				89
Total current liabilities			177,179				174,606
Long-term debt less current portion (Note 2)			956,541				943,243
Other long-term liabilities			58,938				59,831
Deferred income taxes (Note 3)			3,857				2,198
Commitments and contingencies (Note 6)
Stockholders’ Equity
Preferred stock—$1.00 par value, 250,000 shares authorized, none issued or outstanding			—				—
Common—$0.10 par value, 60,063,181 and 59,981,181 shares outstanding, net of treasury shares			6,207				6,199
Additional paid in capital			1,002,186				999,419
Retained deficit			(229,147	)			(230,077	)
Accumulated other comprehensive loss			(12,089	)			(16,105	)
Treasury stock, at cost, for both periods 2,008,986 of treasury shares			(20,090	)			(20,090	)
Total stockholders’ equity			747,067				739,346
		$	1,943,582			$	1,919,224

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		For the three months ended
		March 31,
		2009				2008
		(in thousands)
Cash flows from operating activities:
Net income		$	931			$	5,054
Depreciation and amortization			26,201				28,639
Loss on disposal of assets			252				413
Impairment of land, buildings, riverboats and equipment			138				—
Provision for bad debts			809				363
Amortization of debt issuance costs			1,155				1,068
Share-based compensation expense			2,312				1,771
Change in deferred income taxes			750				11,326
Tax benefit from stock option exercises			—				118
Excess tax benefit from stock equity plans			—				(180	)
Change in long-term accounts, net			—				1,488
Changes in operating assets and liabilities:
Receivables			2,827				866
Prepaid expenses and other			128				(410	)
Other long-term assets			1,285				—
Accounts payable			(2,845	)			(4,671	)
Accrued compensation			(1,779	)			(6,864	)
Accrued interest			4,499				4,496
Other accrued liabilities			(1,621	)			(9,077	)
Other long-term liabilities			388				—
All other, net			—				91
Net cash provided by operating activities			35,430				34,491
Cash flows from investing activities:
Capital expenditures			(33,625	)			(122,934	)
Change in restricted cash			(13	)			79
Proceeds from sale of property and equipment			21				—
Net cash used in investing activities			(33,617	)			(122,855	)
Cash flows from financing activities:
Borrowings under credit facility			27,689				100,000
Repayments under credit facility			(14,456	)			—
Payments on other secured and unsecured notes payable			(21	)			(30	)
Proceeds from common stock options exercised			446				464
Excess tax benefits from stock equity plans			—				180
Debt issuance and other financing costs			(70	)			(240	)
Net cash provided by financing activities			13,588				100,374
Effect of exchange rate changes on cash and cash equivalents			(261	)			(21	)
Increase in cash and cash equivalents			15,140				11,989
Cash and cash equivalents at the beginning of the period			115,712				191,124
Cash and cash equivalents at the end of the period		$	130,852			$	203,113
Supplemental Cash Flow Information:
Cash paid for interest, net of amounts capitalized		$	11,036			$	13,393
Cash payments (refunds) related to income taxes, net			(3,504	)			627
Construction related costs included in liabilities, net			34,862				24,458

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

PINNACLE ENTERTAINMENT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1—Summary of Significant Accounting Policies

Basis of Presentation and Organization Pinnacle Entertainment, Inc. (“Pinnacle”) is a developer, owner and operator of casinos and related hospitality and entertainment facilities. We operate seven domestic casinos located in southeastern Indiana (“Belterra Casino Resort”); Lake Charles, New Orleans and Bossier City, Louisiana (“L’Auberge du Lac,” “Boomtown New Orleans” and “Boomtown Bossier City”, respectively); Reno, Nevada (“Boomtown Reno”) and St. Louis, Missouri (“Lumière Place Casino” and “The Admiral Riverboat Casino”). Internationally, we operate one significant casino and several small casinos in Argentina (“Casino Magic Argentina”). We view each property as an operating segment and aggregate our Argentine casinos into the “Casino Magic Argentina” reporting segment. References in this Quarterly Report on Form 10-Q to “Pinnacle,” “the Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where the context otherwise indicates.

In July 2008, we announced plans to sell or otherwise discontinue operations of The Casino at Emerald Bay in the Bahamas and officially ceased operations on January 2, 2009. We have classified the related assets as held for sale in our unaudited Condensed Consolidated Balance Sheets and have included its results in discontinued operations.

Within our construction and development pipeline, we have a number of projects at various stages of development. In south St. Louis County, we are constructing a casino named River City. In Lake Charles, Louisiana, we are developing a second casino resort to be called Sugarcane Bay. We are also developing a casino-hotel in Baton Rouge, Louisiana. Each of these projects is subject to various regulatory approvals.

Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions of the Securities and Exchange Commission (“SEC”) to the Quarterly Report on Form 10-Q and, therefore, do not include all information and notes necessary for complete financial statements in conformity with the instructions for generally accepted accounting principles (“GAAP”) in the United States. The results for the periods indicated are unaudited, but reflect all adjustments that management considers necessary for a fair presentation of operating results. The unaudited Condensed Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for interim periods are not indicative of a full year of operations. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2008.

Use of Estimates The preparation of unaudited Condensed Consolidated Financial Statements in conformity with accounting principles used in the United States requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liability and mychoice customer rewards programs, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and intangible assets, contingencies and litigation and estimates of the forfeiture rate, expected life of options and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates.

Fair Value Effective January 1, 2008, we adopted the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” and SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities—including an amendment to FASB Statement No. 115.” SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value framework requires the categorization of assets and liabilities into three levels based upon assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

•

Level 1: Quoted market prices in active markets for identical assets or liabilities.

•

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

•

Level 3: Unobservable inputs that are not corroborated by market data.

SFAS No. 159 permits an entity to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. During the quarter ended March 31, 2009, we elected not to use the fair value option permitted under SFAS No. 159 for any of our financial assets and financial liabilities that are not already recorded at fair value.

As of March 31, 2009, our assets and liabilities that are measured at fair value on a recurring basis are as follows:

		Balance				Level 1				Level 2				Level 3
		(in millions)
Assets:
Available-for-sale securities		$	15.7			$	15.7			$	—			$	—
Total assets at fair value		$	15.7			$	15.7			$	—			$	—
Liabilities:
Phantom stock units		$	0.5			$	0.5			$	—			$	—
Total liabilities at fair value		$	0.5			$	0.5			$	—			$	—

As of December 31, 2008, our assets and liabilities that are measured at fair value on a recurring basis are as follows:

		Balance				Level 1				Level 2				Level 3
		(in millions)
Assets:
Available-for-sale securities		$	10.8			$	10.8			$	—			$	—
Total assets at fair value		$	10.8			$	10.8			$	—			$	—
Liabilities:
Phantom stock units		$	0.6			$	0.6			$	—			$	—
Total liabilities at fair value		$	0.6			$	0.6			$	—			$	—

Available-for-Sale Securities: We classify all equity securities that we hold as current available-for-sale securities. Pursuant to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, during the three months ended March 31, 2009 and 2008, we recorded an after-tax temporary unrealized holding gain of $4.9 million and a loss of $6.9 million, respectively, as a separate component of “Accumulated other comprehensive loss” on the unaudited Condensed Consolidated Balance Sheets. At March 31, 2009 and December 31, 2008, available-for-sale securities include 1.2 million shares of common stock in Ameristar Casinos, Inc., a competitor, at $15.7 million and $10.8 million, respectively, and are included in “Other assets, net” on the unaudited Condensed Consolidated Balance Sheets.

Land, Buildings, Riverboats and Equipment Land, buildings, riverboats and equipment are stated at cost. We capitalize the costs of improvements that extend the life of the asset. Construction in progress at March 31, 2009 and December 31, 2008 relates primarily to our River City project. Depreciation expense for the three months ended March 31, 2009 and 2008 was $26.2 million and $28.5 million, respectively. Interest expense is capitalized on internally constructed assets at our overall weighted average cost of borrowing. Capitalized interest for the three months ended March 31, 2009 and 2008 amounted to $2.2 million and $7.0 million, respectively.

Goodwill and Other Intangible Assets Pursuant to SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter, or more frequently if there are indications of possible impairment, by applying a fair-value-based test. There were no impairments to goodwill or indefinite-lived intangible assets during the three months ended March 31, 2009 or 2008.

Amortizing Intangible Assets Amortizing intangible assets consist of our concession agreement in Argentina, which provides us with certain exclusive rights to operate casinos in major cities of the Province of Neuquén. In June 2008, all of the 32 guestrooms of the hotel that adjoins the principal casino in Neuquén were opened under the terms of our concession agreement. Our exclusivity rights are to be extended from 2016 to 2021 with the completion of such luxury hotel. We are awaiting formal government approval of such extension. The unamortized costs as of March 31, 2009 and 2008 were $686,000 and $871,000, respectively.

Pre-opening and Development Costs Pre-opening and development costs are expensed as incurred, consistent with SOP 98-5 “Reporting on the Costs of Start-up Activities”, and for the three months ended March 31, 2009 and 2008 consist of the following:

		For the three months ended
		March 31,
		2009				2008
		(in millions)
Pre-opening and development costs:
Atlantic City (a)		$	3.0			$	5.7
River City (b)			1.2				0.9
Baton Rouge			1.0				4.7
Sugarcane Bay			0.6				0.5
Kansas City (c)			—				0.8
Lumière Place			—				3.6
Missouri Proposition A Initiative			—				0.6
Other			0.1				0.3
Total pre-opening and development costs		$	5.9			$	17.1

Comprehensive Income Our comprehensive income (loss) is as follows:

		For the three months ended
		March 31,
		2009				2008
		(in millions)
Net income		$	0.9			$	5.1
Other comprehensive income (loss)
Foreign currency translation loss			(1.7	)			(0.2	)
Post-retirement plan benefit obligation, net of income taxes (a)			0.8				—
Unrealized gain (loss) on securities, net of income taxes (b)			4.9				(6.9	)
Comprehensive income (loss)		$	4.9			$	(2.0	)

Earnings per Share Diluted earnings per share assume exercise of in-the-money stock options (those options with exercise prices at or below the weighted average market price for the periods presented) outstanding at the beginning of the period or at the date of issuance. We calculate the effect of dilutive securities using the treasury stock method. As of March 31, 2009 and 2008, our share-based awards issued under our Stock Option Plans consisted primarily of common stock option grants.

Recently Issued Accounting Pronouncements

SFAS No. 141(R) In December 2007, the FASB issued SFAS No. 141 (revised), “Business Combinations”, which is intended to improve reporting by creating greater consistency in the accounting and financial reporting of business combinations. SFAS No. 141(R) requires that the acquiring entity in a business combination recognize all (and only) the assets and liabilities assumed in the transaction, establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to disclose to investors and other users all of the information that they need to evaluate and understand the nature and financial effect of the business combination. In addition, SFAS No. 141(R) modifies the accounting for transaction and restructuring costs. SFAS 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We currently do not have any pending business combinations, thus SFAS No. 141(R) is not expected to have an effect on our audited Consolidated Financial Statements upon adoption.

SFAS No. 160 In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements”. The statement is an amendment of Accounting Research Bulletin No. 51, “Consolidated Financial Statements.” SFAS No. 160 became effective for us on January 1, 2009. We do not have a non-controlling interest in any subsidiaries, as such, adoption did not have an effect on our unaudited Condensed Consolidated Financial Statements.

FSP No. FAS 157-2 In February 2008, the FASB issued FSP No. FAS 157-2, “Effective Date of FASB Statement No. 157”, which defers the effective date of SFAS No. 157, “Fair Value Measurements” to fiscal years beginning after November 15, 2008 for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Early adoption of SFAS No. 157 is permitted. We applied SFAS No. 157 in the fair value calculations for our testing of land and development costs, buildings, riverboats and equipment, goodwill, and indefinite-lived intangible assets as of December 31, 2008.

SFAS No. 161 In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an Amendment of FASB Statement No. 133”, which enhances required disclosures regarding derivatives and hedging activities. SFAS No. 161 became effective for us on January 1, 2009 and adoption did not have an effect on our unaudited Condensed Consolidated Financial Statements.

FSP No. FAS 142-3 In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets”. FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets”, and requires enhanced related disclosures. This FSP became effective for us on January 1, 2009, and adoption did not have a material effect on our unaudited Condensed Consolidated Financial Statements.

FSP No. EITF 03-6-1 In June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments Granted In Share-Based Payment Transactions Are Participating Securities”, which specifies that those unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and must be included in the computation of both basic and diluted earnings per share. This FSP became effective January 1, 2009 and adoption did not have an effect on our unaudited Condensed Consolidated Financial Statements, as our current share-based awards do not include dividend rights.

FSP FAS 157-4 In April 2009, the FASB issued FASB Staff Position (“FSP”) No. FAS 157-4 “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That are Not Orderly” which is intended to provide additional guidance for estimating fair value in accordance with SFAS No. 157 “Fair Value Measurements” when the volume and level of activity for the asset or liability has significantly decreased, as well as guidance on identifying circumstances that indicate a transaction is not orderly. This statement is effective for interim and annual periods ending after June 15, 2009. FSP FAS 157-4 is not expected to have an effect on our unaudited Condensed Consolidated Financial Statements upon adoption.

FSP FAS 107-1 and APB 28-1 In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1 “Interim Disclosures about Fair Value of Financial Instruments” which requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements, as well as disclosures in summarized financial information at interim reporting periods. This statement is effective for interim reporting periods ending after June 15, 2009, and is not expected to have an effect on our unaudited Condensed Consolidated Financial Statements upon adoption.

FSP FAS 115-2 and FAS 124-2 In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” which amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This statement is effective for interim and annual reporting periods ending after June 15, 2009, and is not expected to have an effect on our unaudited Condensed Consolidated Financial Statements upon adoption.

A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our unaudited Condensed Consolidated Financial Statements.

Note 2—Long-Term Debt

Long-term debt at March 31, 2009 and December 31, 2008 consisted of the following:

		March 31,				December 31,
		2009				2008
		(in millions)
Senior Secured Credit Facility		$	165.0			$	151.8
Unsecured 8.25% Notes due 2012			276.6				276.7
Unsecured 8.75% Notes due 2013			133.8				133.7
Unsecured 7.50% Notes due 2015			380.3				380.2
Other secured and unsecured notes payable			0.9				0.9
		$	956.6			$	943.3
Less current maturities			(0.1	)			(0.1	)
		$	956.5			$	943.2

Senior Secured Credit Facility: As of March 31, 2009, we had borrowed $165 million and had letters of credit of $12.6 million under our $625 million revolving credit facility that matures in December 2010 (the “Credit Facility”). Utilization of the Credit Facility is currently limited to $350 million by the indenture governing our 8.75% senior subordinated notes due 2013, which notes became callable in October 2008. As of March 31, 2009, the interest rate of the Credit Facility is computed as either LIBOR plus a margin of 2.0% or prime plus a margin of 0.5% based on our “Consolidated Leverage Ratio” as defined in the Credit Facility. The letters of credit bore facility fees of 2.0% per annum during the three months ended March 31, 2009.

Interest expense: Interest expense was as follows:

		For the three months ended
		March 31,
		2009				2008
		(in millions)
Interest expense before capitalization of interest		$	18.9			$	19.1
Less: capitalized interest			(2.2	)			(7.0	)
Total interest expense, net of capitalized interest		$	16.7			$	12.1

The decrease in capitalized interest was principally due to the suspension of development activities in Atlantic City, partially offset by an increase attributed to our River City project.

Note 3—Income Taxes

Our effective income tax rate for continuing operations for the quarter ended March 31, 2009 was an expense of $0.8 million, or 39.7%, as compared to a benefit of $7.0 million, or (30.9)% for the same period last year. Our income tax benefit for the same period last year was negatively affected by non-deductible items such as lobbying expenses and state income tax expense, including the impact of non-deductible gaming taxes for Indiana. In addition, it is reasonably possible that our unrecognized tax benefits will decrease between $4 million and $6 million during the next 12 months.

Note 4—Employee Benefit and Other Plans

Share-based Compensation: As of March 31, 2009, we had approximately 6.9 million share-based awards issued, 19,000 of which are restricted stock awards and the rest of which are common stock options, with approximately 1.1 million share-based awards available for grant.

Pursuant to SFAS No. 123R, “Share-Based Payment,” we recorded pre-tax compensation expense of approximately $2.3 million and $1.8 million for the three months ended March 31, 2009 and 2008, respectively. Theoretical compensation costs not yet amortized related to stock options granted totaled approximately $21.4 million and $20.0 million at March 31, 2009 and 2008, respectively, and the weighted average period over which the costs are expected to be recognized is approximately three years.

The aggregate amount of cash we received from the exercise of stock options was $446,000 and $464,000 for the three months ended March 31, 2009 and 2008, respectively. The associated shares were newly issued common stock. Excess tax benefit resulting from the exercise of stock options was $180,000 for the three months ended March 31, 2008 and is reported as additional cash flows from financing activities. There was no such benefit for the three months ended March 31, 2009.

The following table summarizes information related to our common stock options under our stock option plans:

		Number of				Weighted Average
		Stock Options				Exercise Price
Options outstanding at January 1, 2009			7,398,988			$	14.68
Granted			92,500			$	7.39
Exercised			(82,000	)		$	5.44
Cancelled, Forfeited			(470,700	)		$	11.66
Options outstanding at March 31, 2009			6,938,788			$	14.89
Vested or expected to vest at a point in the future as of March 31, 2009			6,656,342
Options exercisable at March 31, 2009			3,615,888			$	12.67
Weighted-average value per granted option calculated using the Black-Scholes option-pricing model for options granted during the three months ended March 31, 2009		$	3.25

Note 5—Write-downs, reserves and recoveries, net

Write-downs, reserves and recoveries, net consist of the following:

		For the three months ended
		March 31,
		2009				2008
		(in millions)
Impairment of assets		$	0.1			$	—
Loss (gain) on disposal of assets			0.3				(0.1	)
Write-downs, reserves and recoveries, net		$	0.4			$	(0.1	)

Note 6—Commitments and Contingencies

Guaranteed Maximum Price Agreement for Lumière Place: In the second quarter of 2007, we signed a Guaranteed Maximum Price Agreement (the “GMP Agreement”) with a general contractor for our Lumière Place project. Pursuant to the GMP Agreement, the contractor agreed to complete the construction of the casino-hotel for a maximum price of approximately $345 million. The guaranteed maximum price set by the GMP Agreement was a portion of the total budget of $507 million for the Lumière Place project. The budget includes items separate from those covered in the GMP Agreement, such as pre-opening and development costs; furniture, fixtures and other equipment; gaming equipment; consulting fees and information technology. As of March 31, 2009, we had paid approximately $335 million of the approximate $345 million maximum price and we expect to pay a portion of the remaining $10 million, which has been accrued.

Redevelopment Agreement: In connection with our Lumière Place project, we have a redevelopment agreement which, among other things, commits us to oversee the investment of $50.0 million in residential housing, retail or mixed-use developments in the City of St. Louis within five years of the opening of the casino and hotel. Such investment can be made with partners and partner contributions and project debt financing, all of which count toward the $50.0 million investment commitment. We are also obligated to pay an annual fee of $1.0 million to the City of St. Louis beginning after our River City project opens. The redevelopment agreement also contains certain contingent payments in the event of certain defaults. If we and our development partners collectively fail to invest $50.0 million in residential housing, retail, or mixed-use developments within five years of the opening of the casino and hotel, we would be obligated to pay an additional annual service fee of $1.0 million in Year Six, $2.0 million in Years Seven and Eight, and $2.0 million annually thereafter, adjusted by the change in the consumer price index.

Guaranteed Maximum Price Agreement for River City: On August 8, 2008, we entered into a Guaranteed Maximum Price Agreement (the “Agreement”) with a general contractor for the construction of our River City project. Among other things, the Agreement establishes that the contractor will complete the construction of the casino for a maximum price of approximately $149 million and that the project will be substantially complete by January 31, 2010. The guaranteed maximum price set by the Agreement is a portion of the total budget of $380 million for the River City project. The budget includes items separate from those covered in the Agreement, such as construction work prior to entering into the Agreement, pre-opening and development costs; furniture, fixtures and other equipment; gaming equipment; consulting fees and information technology; and capitalized interest, and excludes start-up cage cash and the non-cash accrual for rent during the construction period.

Lease and Development Agreement: In connection with our River City project, we have a lease and development agreement with the St. Louis County Port Authority which, among other things, commits us to lease 56 acres for 99 years (not including certain termination provisions) for annual rent of the greater of $4.0 million or 2.5% of adjusted gross receipts (as defined in the lease and development agreement) commencing on the earlier of August 11, 2009 or the date the project opens. We are required to invest a minimum of $375 million to: (a) construct a gaming and multi-use facility; (b) perform environmental remediation on the site of the project, which remediation has been completed; (c) contribute $5.1 million for the construction of community and recreational facilities, which amount has been paid; (d) develop and construct a hatch shell on the park property; and (e) construct a roadway into the project, which construction is underway. We are also required to pay certain fees, potentially aggregating $20 million unless we invest at least an additional $75 million to construct a hotel with a minimum of 100 guestrooms and other amenities, such amenities to be mutually agreed upon by us and St. Louis County. The lease and development agreement provides that we must proceed with reasonable diligence to complete the gaming facilities by May 1, 2009, subject to delays beyond our control, including governmental approvals. We currently anticipate that the property will be completed in the first quarter of 2010 due to several factors which were beyond our control, including delays in receiving governmental approvals and delays caused by unfavorable weather conditions. The second phase must be opened within three years from August 11, 2009, or we are required to pay fees over five years beginning on the January 2 immediately following the expiration of three years. In each of the five subsequent years that the second phase is not opened, the amount of fees begins at $2.0 million for the first year and increases by $1.0 million each subsequent year: hence, $3.0 million in Year Two, $4.0 million in Year Three, $5.0 million in Year Four and $6.0 million in Year Five. As a result, the maximum amount of such fees that we would have to pay if the second phase is not completed is $20.0 million.

Employment and Severance Agreements: We have entered into employment agreements with certain employees, including our executive officers. The employment agreements require severance payments in the case of certain triggering events, including a change in control. As of March 31, 2009, the maximum aggregate amount that would be paid to this group of 35 employees if a triggering event occurs in every case following a change in control, where applicable, is approximately $41.8 million.

In connection with Wade Hundley’s resignation as President of the Company, we entered into a separation agreement with him, dated as of June 5, 2008. Mr. Hundley is entitled to cash severance payments equal to approximately $1.4 million, payable in various installments over an 18-month period, of which approximately $418,000 remains to be paid as of March 31, 2009. Mr. Hundley is also entitled to approximately $373,000 representing amounts he had previously elected to defer plus earnings thereon, of which approximately $43,300 has been paid as of March 31, 2009. As provided in the separation agreement, Mr. Hundley is entitled to exercise certain stock options, which survive the separation. For those stock options granted on or after the date of his employment agreement, Mr. Hundley has until June 5, 2009 to exercise those stock options.

Deferred Bonus Plan: We have a deferred bonus plan in which a portion of an employee’s bonus is deferred and paid in three equal annual installments contingent on the individual remaining employed by us, except employees who retire at age 65 or later who will received their scheduled annual installments even if they are no longer employed by us. Payments are accelerated upon death, disability and a change in control, regardless of the age of the employee. We are expensing the deferred portion over the period of time leading up to the vesting date. As of March 31, 2009, the deferred bonus commitment, which, for example, would have to be paid commensurate with a change in control, was approximately $3.6 million, of which $3.0 million is included in the $41.8 million change-in-control amount mentioned above.

Self-Insurance: We self-insure various levels of general liability, property, workers’ compensation and medical coverage. Insurance reserves include accruals for estimated settlements for known claims, as well as accruals for estimates of claims not yet made, which are included in “Accrued compensation” and “Other accrued liabilities” on the unaudited Condensed Consolidated Balance Sheets.

Collective Bargaining Agreements: As of March 31, 2009, we continue to negotiate a collective bargaining agreement with approximately 62 of our employees at The Admiral Riverboat Casino. The prior agreement expired on September 30, 2007.

On May 17, 2006, the Company entered into a Memorandum of Agreement (the “Agreement”) commensurate with its obligations under its development agreement with St. Louis that, among other things, provided a hotel workers’ union in St. Louis, Missouri (the “Union”) access to certain employees employed at the Company’s Lumière Place facility, as well as access to the premises, should the Union manifest its intent to organize those certain employees. Additionally, the Agreement provided that in the event the Union requested recognition as the exclusive bargaining agent for those certain employees, the Company agreed to an arbitrator-led card check.

On November 20, 2008, an arbitrator conducted a review of the authorization cards submitted by the Union. A majority of the employees in the applicable bargaining unit authorized the Union to act as their exclusive bargaining agent. Consistent with the Agreement, the Company recognized the Union as the exclusive bargaining agent for the applicable bargaining unit. The Union and the Company have met three times to negotiate a collective bargaining agreement, the last of which was February 18, 2009.

Legal

Insurance Litigation: In April 2006, we filed a $347 million insurance claim for our losses related to our former Casino Magic Biloxi property caused by Hurricane Katrina. In August 2006, we filed suit in the United States District Court for the District of Nevada against three of our insurance carriers, Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company, related to such losses. Prior to the filing of that lawsuit, the various insurers comprising Pinnacle’s first $100 million of coverage paid their respective policy limits to Pinnacle for its Hurricane Katrina losses. On February 22, 2008, we settled with Arch Specialty Insurance Company, which provided $50 million of coverage, in exchange for its agreement to pay us approximately $36.8 million, which we received in March 2008. On May 9, 2008, we settled with Allianz Global Risks US Insurance Company, in exchange for its agreement to pay us approximately $48 million, which we received in June 2008. Allianz Global Risks US Insurance Company had previously paid Pinnacle $5 million, which brought Allianz Global Risks US Insurance Company’s total payment on the claim to $53 million. RSUI Indemnity Company provides $50 million of coverage at the same layer and pari passu with the coverage provided by Arch Specialty Insurance Company and an additional $150 million of coverage between $250 million and $400 million of total coverage. To date, RSUI Indemnity Company has paid us approximately $2.0 million as a prepayment on the undisputed amount of the claim. We continue to pursue our claims against RSUI Indemnity Company for its respective share of our total hurricane-related damage and consequential loss in Biloxi. On October 20, 2008, we filed a motion for partial summary judgment on certain outstanding legal issues relating to the calculation of our business interruption loss for the claim. A hearing date has not yet been set on that motion.

As of March 31, 2009, the insurers have not designated the $192 million of advances toward our insurance claim as being specific to any particular part of the claim. Therefore, the advances have offset the book value of the destroyed assets and certain insured expenses. To the extent that the advances under the policy, excluding settlements previously discussed, exceed such expenses and book value, the difference (currently $18.5 million) is recorded as a deferred gain in “Other long-term liabilities” on our unaudited Condensed Consolidated Balance Sheets.

Our ultimate insurance claim and recovery amounts are based on replacement costs rather than book value and are unrelated to, computed differently from, and are substantially larger than the asset write-offs. Management believes that the replacement cost of the assets that were destroyed is substantially in excess of their book value. We are also insured for lost profits as a result of the damage, but will not book such profits until the claim is resolved. The deferred gain reflected on the unaudited Condensed Consolidated Balance Sheets primarily reflects the ongoing dispute with remaining insurance carrier.

Jebaco Litigation: On August 9, 2006, Jebaco, Inc. (“Jebaco”) filed suit in the U.S. District Court for the Eastern District of Louisiana against Harrah’s Operating Co., Inc., Harrah’s Lake Charles, LLC, Harrah’s Star Partnership, Players LC, LLC, Players Riverboat Management, LLC, Players Riverboat II, LLC, and Pinnacle Entertainment, Inc. The lawsuit arises out of an agreement between Jebaco and Harrah’s (as successor in interest to the various Players defendants) whereby Harrah’s was obligated to pay Jebaco a fee based on the number of patrons entering Harrah’s two Lake Charles, Louisiana riverboat casinos. In November 2006, we acquired the Harrah’s Lake Charles subsidiaries, including the two riverboats. The lawsuit filed by Jebaco asserts that Harrah’s, in ceasing gaming operations in Lake Charles and ceasing payments to Jebaco, breached its contractual obligations to Jebaco and asserts damages of approximately $34.0 million. Jebaco also asserts that our agreement with Harrah’s violates state and federal antitrust laws. The lawsuit seeks antitrust damages jointly and severally against both us and Harrah’s and seeks a trebling of the $34.0 million in damages Jebaco alleges it has suffered. The defendants answered the complaint, denying all claims and asserting that the lawsuit is barred, among other reasons, because of the approval of our transaction with Harrah’s by the Louisiana Gaming Control Board and the lack of antitrust injury to Jebaco. In January 2007, all of the defendants moved to dismiss all of the claims of the complaint, which motions were heard on July 18, 2007. The motions to dismiss were granted with prejudice as to the federal antitrust claims and the state-law claims were dismissed without prejudice. Judgment of dismissal was entered on March 5, 2008. Jebaco has appealed the dismissal of the federal antitrust claims to the U.S. Court of Appeals for the Fifth Circuit. Further, on March 13, 2008, Jebaco filed a new lawsuit against the same parties in the Louisiana district civil court for Orleans Parish. This lawsuit seeks unspecified damages arising out of the same circumstances as the federal lawsuit based on claims for breach of the duty of good faith, negligent breach of contract, breach of contract, unfair trade practices, unjust enrichment, and subrogation to Harrah’s insurance proceeds. On January 6, 2009, the Louisiana district civil court extended the time for the defendants to respond to the state-court lawsuit until after the Fifth Circuit rules on Jebaco’s appeal. The Louisiana district civil court provided that Jebaco could request a deadline for a response from defendants if the Fifth Circuit had not ruled by February 12, 2009. On March 2, 2009, the Fifth Circuit heard oral arguments on the appeal. In light of this development, the defendants intend to seek an additional extension of time to respond to the state-court complaint. While we cannot predict the outcome of this litigation, management intends to vigorously defend this litigation.

Madison House Litigation: On December 23, 2008, Madison House Group, L.P. (“Madison House”) filed suit in Superior Court of New Jersey, Chancery Division, Atlantic County (Docket No.: ATL-C-145-08) against Pinnacle, ACE Gaming, LLC (“ACE”, a wholly owned subsidiary of Pinnacle), and one other defendant. Pinnacle acquired ACE as part of its acquisition of the entities owning the Sands Hotel & Casino in Atlantic City, New Jersey in November 2006. The lawsuit arises out of a Lease dated December 18, 2000 between Madison House as Landlord and ACE as Tenant for the Madison House hotel in Atlantic City, New Jersey (the “Hotel”). The lawsuit alleges in part that ACE breached certain obligations under the Lease, including, among others, failure to operate and maintain the Hotel as required by the Lease which was alleged to have resulted in substantial damages to the Hotel. The lawsuit further alleges that Pinnacle, as the ultimate parent entity of ACE, should be jointly and severally liable with ACE for the damages sought, and separately alleges independent actions against Pinnacle as described more fully in the lawsuit. The lawsuit seeks specific performance of ACE’s obligations under the Lease, including restoration of the Hotel, as well as unspecified compensatory and exemplary damages, and attorney’s fees, against Pinnacle and ACE.

On January 7, 2009, ACE petitioned the United States District Court for the District of New Jersey for an order compelling arbitration. On February 18, 2009, the trial judge in the state court action issued an order staying the arbitration, which ACE and Pinnacle have appealed. No hearing date has yet been set for ACE’s motion to compel in the federal court case or for oral argument in the appeal of the state court order. Discovery in the lawsuit has commenced. While the Company cannot predict the outcome of this litigation, it intends to defend the matter vigorously. ACE continues to make its payment obligations under the Lease, which expires in December 2012.

Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

Note 7—Consolidating Condensed Financial Information

Our subsidiaries (excluding our Argentine subsidiary; a subsidiary that owns an aircraft; a subsidiary with approximately $62.2 million in cash, cash equivalents and marketable securities as of March 31, 2009; and certain non-material subsidiaries) have fully and unconditionally and jointly and severally guaranteed the payment of all obligations under the 7.50% Notes, 8.25% Notes and 8.75% Notes. Separate financial statements and other disclosures regarding the subsidiary guarantors are not included herein because management has determined that such information is not material to investors. In lieu thereof, we include the following:

										100% Owned				Consolidating				Pinnacle
		Pinnacle				100% Owned				Non-				and				Entertainment,
		Entertainment,				Guarantor				Guarantor				Eliminating				Inc.
		Inc.				Subsidiaries(a)				Subsidiaries(b)				Entries				Consolidated
		(in millions)
For the three months ended March 31, 2009
Income Statement
Revenues:
Gaming		$	—			$	223.3			$	14.2			$	—			$	237.5
Food and beverage			—				13.9				1.0				—				14.9
Other			—				16.3				0.3				—				16.6
			—				253.5				15.5				—				269.0
Expenses:
Gaming			—				127.0				7.5				—				134.5
Food and beverage			—				13.9				1.4				—				15.3
General and administrative and other			12.3				58.7				3.4				—				74.4
Depreciation and amortization			1.2				23.2				1.8				—				26.2
			13.5				222.8				14.1				—				250.4
Operating income (loss)			(13.5	)			30.7				1.4				—				18.6
Equity earnings of subsidiaries			30.3				1.3				—				(31.6	)			—
Interest (expense) and non-operating income, net			(18.8	)			2.2				—				—				(16.6	)
Income (loss) from continuing operations before inter-company activity and income taxes			(2.0	)			34.2				1.4				(31.6	)			2.0
Management fee & inter-company interest			3.1				(3.1	)			—				—				—
Income tax (expense) benefit			(0.2	)			—				(0.6	)			—				(0.8	)
Income (loss) from continuing operations			0.9				31.1				0.8				(31.6	)			1.2
Income (loss) from discontinued operations, net of taxes			—				(0.1	)			(0.2	)			—				(0.3	)
Net income (loss)		$	0.9			$	31.0			$	0.6			$	(31.6	)		$	0.9
For the three months ended March 31, 2008
Income Statement
Revenues:
Gaming		$	—			$	211.3			$	16.9			$	—			$	228.2
Food and beverage			—				12.4				1.4				—				13.8
Other			0.1				14.3				0.2				—				14.6
			0.1				238.0				18.5				—				256.6
Expenses:
Gaming			—				128.6				9.4				—				138.0
Food and beverage			—				13.4				1.6				—				15.0
General and administrative and other			13.1				69.8				4.0				—				86.9
Depreciation and amortization			0.8				24.7				3.0				—				28.5
			13.9				236.5				18.0				—				268.4
Operating income (loss)			(13.8	)			1.5				0.5				—				(11.8	)
Equity in subsidiaries			21.7				1.7				—				(23.4	)			—
Interest (expense) and non-operating income, net			(18.6	)			7.1				0.6				—				(10.9	)
Income (loss) from continuing operations before inter-company activity and income taxes			(10.7	)			10.3				1.1				(23.4	)			(22.7	)
Management fee & inter-company interest			7.9				(7.8	)			(0.1	)			—				—
Income tax (expense) benefit			7.9				—				(0.9	)			—				7.0
Income (loss) from continuing operations			5.1				2.5				0.1				(23.4	)			(15.7	)
Income (loss) from discontinued operations, net of taxes			—				21.2				(0.4	)			—				20.8
Net income (loss)		$	5.1			$	23.7			$	(0.3	)		$	(23.4	)		$	5.1

										100% Owned				Consolidating				Pinnacle
		Pinnacle				100% Owned				Non-				and				Entertainment,
		Entertainment,				Guarantor				Guarantor				Eliminating				Inc.
		Inc.				Subsidiaries(a)				Subsidiaries(b)				Entries				Consolidated
		(in millions)
As of March 31, 2009
Balance Sheet
Current assets		$	27.4			$	81.6			$	65.2			$	—			$	174.2
Property and equipment, net			17.8				1,584.7				43.4				—				1,645.9
Other non-current assets			48.1				66.4				13.3				(4.3	)			123.5
Investment in subsidiaries			1,673.7				22.7				—				(1,696.4	)			—
Inter-company			1.2				0.3				—				(1.5	)			—
		$	1,768.2			$	1,755.7			$	121.9			$	(1,702.2	)		$	1,943.6
Current liabilities			39.4				132.3				5.5				—				177.2
Notes payable, long term			955.7				0.8				4.3				(4.3	)			956.5
Other non-current liabilities			26.0				36.7				0.1				—				62.8
Inter-company			—				—				1.5				(1.5	)			—
Equity			747.1				1,585.9				110.5				(1,696.4	)			747.1
		$	1,768.2			$	1,755.7			$	121.9			$	(1,702.2	)		$	1,943.6
As of December 31, 2008
Balance Sheet
Current assets		$	17.9			$	85.3			$	64.1			$	—			$	167.3
Property and equipment, net			18.3				1,565.0				46.7				—				1,630.0
Other non-current assets			47.4				68.4				10.3				(4.2	)			121.9
Investment in subsidiaries			1,661.4				23.0				—				(1,684.4	)			—
Inter-company			1.2				0.2				—				(1.4	)			—
		$	1,746.2			$	1,741.9			$	121.1			$	(1,690.0	)		$	1,919.2
Current liabilities			38.6				129.4				6.5				0.1				174.6
Notes payable, long term			942.4				0.8				4.3				(4.3	)			943.2
Other non-current liabilities			25.9				36.0				0.2				—				62.1
Inter-company			—				—				1.4				(1.4	)			—
Equity			739.3				1,575.7				108.7				(1,684.4	)			739.3
		$	1,746.2			$	1,741.9			$	121.1			$	(1,690.0	)		$	1,919.2

										100% Owned				Consolidating				Pinnacle
		Pinnacle				100% Owned				Non-				and				Entertainment,
		Entertainment,				Guarantor				Guarantor				Eliminating				Inc.
		Inc.				Subsidiaries(a)				Subsidiaries(b)				Entries				Consolidated
		(in millions)
For the three months ended March 31, 2009
Statement of Cash Flows
Cash provided by operating activities		$	1.0			$	32.7			$	1.7			$	—			$	35.4
Cash used in investing activities
Capital expenditures and other			(0.8	)			(32.8	)			—				—				(33.6	)
Cash used in investing activities			(0.8	)			(32.8	)			—				—				(33.6	)
Cash provided by financing activities
Change in notes payable and other			13.6				—				—				—				13.6
Cash provided by financing activities			13.6				—				—				—				13.6
Effect of exchange rate changes on cash			—				—				(0.3	)			—				(0.3	)
Increase (decrease) in cash and cash equivalents			13.8				(0.1	)			1.4				—				15.1
Cash and cash equivalents, beginning of period			6.7				49.5				59.5				—				115.7
Cash and cash equivalents, end of period		$	20.5			$	49.4			$	60.9			$	—			$	130.8

										100% Owned				Consolidating				Pinnacle
		Pinnacle				100% Owned				Non-				and				Entertainment,
		Entertainment,				Guarantor				Guarantor				Eliminating				Inc.
		Inc.				Subsidiaries(a)				Subsidiaries(b)				Entries				Consolidated
		(in millions)
For the three months ended March 31, 2008
Statement of Cash Flows
Cash provided by (used in) operating activities		$	(51.0	)		$	81.8			$	3.7			$	—			$	34.5
Cash used in investing activities
Capital expenditure and other			(3.5	)			(117.6	)			(1.8	)			—				(122.9	)
Cash used in investing activities			(3.5	)			(117.6	)			(1.8	)			—				(122.9	)
Cash provided by financing activities
Change in notes payable			100.4				—				—				—				100.4
Cash provided by financing activities			100.4				—				—				—				100.4
Effect of exchange rate changes on cash			—				—				—				—				—
Increase (decrease) in cash and cash equivalents			45.9				(35.8	)			1.9				—				12.0
Cash and cash equivalents, beginning of period			15.3				106.0				69.8				—				191.1
Cash and cash equivalents, end of period		$	61.2			$	70.2			$	71.7			$	—			$	203.1

Note 8—Segment Information

We use Adjusted EBITDA (as defined below) to compare operating results among our segments and allocate resources. The following table highlights our Adjusted EBITDA and reconciles Adjusted EBITDA to income (loss) from continuing operations for the three months ended March 31, 2009 and 2008.

		For the three months ended
		March 31,
		2009				2008
		(in millions)
Revenues:
L’Auberge du Lac		$	88.4			$	81.3
Boomtown New Orleans			38.3				42.4
Lumière Place			53.1				37.9
Belterra Casino Resort			41.0				42.0
Boomtown Bossier City			24.8				23.7
Casino Magic Argentina			9.5				9.2
The Admiral Riverboat Casino			6.0				9.3
Boomtown Reno			7.6				10.7
Other			0.3				0.1
Total Revenue		$	269.0			$	256.6
Adjusted EBITDA: (a)
L’Auberge du Lac		$	23.5			$	17.7
Boomtown New Orleans			13.5				15.3
Lumière Place			10.6				(0.5	)
Belterra Casino Resort			7.8				7.3
Boomtown Bossier City			6.2				4.8
Casino Magic Argentina			2.8				3.2
The Admiral Riverboat Casino			(0.2	)			(0.3	)
Boomtown Reno			(1.3	)			(2.2	)
			62.9				45.3

		For the three months ended
		March 31,
		2009				2008
		(in millions)
Corporate expenses (b)			(9.5	)			(9.8	)
			53.4				35.5
Other benefits (costs):
Depreciation and amortization			(26.2	)			(28.5	)
Pre-opening and development costs			(5.9	)			(17.1	)
Non-cash share-based compensation			(2.3	)			(1.8	)
Write-downs, reserves and recoveries, net			(0.4	)			0.1
Other non-operating income			0.1				1.1
Interest expense, net of capitalized interest			(16.7	)			(12.1	)
Income tax (expense) benefit			(0.8	)			7.0
Income (loss) from continuing operations		$	1.2			$	(15.8	)
Capital expenditures
L’Auberge du Lac		$	1.1			$	16.9
Boomtown New Orleans			1.2				0.9
Lumière Place			1.1				56.5
Belterra Casino Resort			3.2				0.2
Boomtown Bossier City			0.7				1.5
Casino Magic Argentina			—				1.8
The Admiral Riverboat Casino			—				0.2
Boomtown Reno			0.8				1.8
Corporate and other, including new properties (c)			25.5				43.1
		$	33.6			$	122.9

		March 31,				December 31,
		2009				2008
		(in millions)
Assets:
L’Auberge du Lac		$	343.3			$	356.2
Boomtown New Orleans			71.8				75.3
Lumière Place			532.8				542.8
Belterra Casino Resort			199.9				200.7
Boomtown Bossier City			93.5				91.8
Casino Magic Argentina			30.0				31.3
The Admiral Riverboat Casino			7.5				8.2
Boomtown Reno			53.4				54.6
Corporate and other, including new properties			611.4				558.3
		$	1,943.6			$	1,919.2