PINNACLE ENTERTAINMENT INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002

Commission file number 001-13641

PINNACLE ENTERTAINMENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

(State or Other Jurisdiction of Incorporation or Organization)

(IRS Employer Identification No.)

330 North Brand Boulevard, Suite 1100, Glendale, California		91203
(Address of Principal Executive Offices)		(Zip Code)

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether 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, and (2) has been subject to such filing requirements for the past 90 days. YES x NO ¨

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES x NO ¨

The number of outstanding shares of the registrant’s common stock, as of the close of business on November 8, 2002: 25,934,261.

PINNACLE ENTERTAINMENT, INC.

TABLE OF CONTENTS

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	For the three months ended September 30,						For the nine months ended September 30,
	2002			2001			2002			2001
	(in thousands, except per share data—unaudited)
Revenues:
Gaming	$	120,645		$	114,763		$	339,447		$	337,008
Food and beverage		8,409			8,746			23,045			23,839
Truck stop and service station		6,244			6,109			15,046			16,043
Hotel and recreational vehicle park		4,592			4,513			11,533			11,641
Other income		4,736			5,133			13,104			16,343

		144,626			139,264			402,175			404,874

Expenses:
Gaming		69,391			65,908			198,809			195,444
Food and beverage		9,244			10,370			25,921			29,685
Truck stop and service station		5,738			5,599			13,831			14,910
Hotel and recreational vehicle park		2,439			2,761			6,954			7,633
Selling, general and administrative		27,669			29,898			80,360			92,451
Depreciation and amortization		11,232			13,093			33,695			37,316
Other		2,499			4,245			6,912			10,279
Indiana regulatory settlement and related costs		83			0			6,576			0
Re-branding costs, Bossier City		786			0			2,129			0

		129,081			131,874			375,187			387,718

Operating income		15,545			7,390			26,988			17,156
Interest income		(536	)		(984	)		(1,702	)		(4,260	)
Interest expense, net of capitalized interest		12,204			12,596			37,156			37,214

Income (loss) before income taxes and change in accounting principle		3,877			(4,222	)		(8,466	)		(15,798	)
Income tax expense (benefit)		1,396			(5,225	)		(2,234	)		(9,393	)

Income (loss) before change in accounting principle		2,481			1,003			(6,232	)		(6,405	)
Cumulative effect of change in accounting principle, net of income tax benefit		0			0			56,704			0

Net income (loss)	$	2,481		$	1,003		$	(62,936	)	$	(6,405	)

Income (loss) per common share—basic
Income (loss) before change in accounting principle	$	0.10		$	0.04		$	(0.24	)	$	(0.25	)
Cumulative effect of change in accounting principle		0.00			0.00			(2.21	)		0.00

Net income (loss) per common share—basic	$	0.10		$	0.04		$	(2.45	)	$	(0.25	)

Income (loss) per common share—diluted
Income (loss) before change in accounting principle	$	0.09		$	0.04		$	(0.24	)	$	(0.25	)
Cumulative effect of change in accounting principle		0.00			0.00			(2.21	)		0.00

Net income (loss) per common share—diluted	$	0.09		$	0.04		$	(2.45	)	$	(0.25	)

Number of shares—basic		25,911			25,542			25,721			25,939
Number of shares—diluted		26,120			25,623			25,721			25,939

See accompanying notes to the condensed consolidated financial statements.

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2002		December 31, 2001
	(in thousands, except share data, unaudited)
ASSETS
Current Assets:
Unrestricted cash and cash equivalents	$	116,917	$	153,187
Restricted cash—Argentina		1,053		3,452
Receivables, net		10,013		9,194
Income tax receivable		1,437		10,587
Inventories		5,438		4,264
Prepaid expenses and other assets		20,472		14,143
Deferred income taxes		4,989		4,712
Assets held for sale		18,160		18,285
Current portion of notes receivable		0		1,000

Total current assets		178,479		218,824
Restricted cash		30,100		0
Property, plant and equipment, net		577,164		576,299
Goodwill		19,558		68,727
Gaming licenses, net of amortization		21,814		36,588
Debt issuance costs, net of amortization		9,437		12,334
Other assets		6,530		6,577

	$	843,082	$	919,349

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	16,385	$	16,953
Accrued interest		6,099		17,423
Accrued compensation		15,994		13,737
Accrued liabilities		37,762		31,887


Item 1.	Financial information

	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2002 and 2001	1

	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001	2

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001	3

	Notes to Unaudited Condensed Consolidated Financial Statements	4

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

	Forward-Looking Statements	22

	Critical Accounting Policies	23

	Results of Operations	24

	Liquidity and Capital Resources	27

	Factors Affecting Future Operating Results	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	33

Part II

Item 1.	Legal Proceedings	34

Item 5.	Other Information	34

Item 6.	Exhibits and Reports on Form 8-K	34

Signatures		35

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