x

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

For the quarterly period ended March 31, 2003

Commission file number 001-13641

PINNACLE ENTERTAINMENT, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation or Organization)

95-3667491

(IRS Employer Identification No.)

3800 Howard Hughes Parkway, Suite 1800, Las Vegas, Nevada

89109

(Address of Principal Executive Offices)

(Zip Code)

(702) 784-7777

(Registrant’s Telephone Number, Including Area Code)

YES   x

NO   o

YES   x

NO   o

Part I

Item 1.

Financial information

Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002

1

Unaudited Condensed Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002

2

Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002

3

Notes to Unaudited Condensed Consolidated Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Results of Operations

19

Liquidity and Capital Resources

21

Other Supplemental Data

23

Contractual Obligations and Other Commitments

24

Factors Affecting Future Operating Results

24

Critical Accounting Policies

25

Recently Issued Accounting Standards

25

Forward-Looking Statements and Risk Factors

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Control Procedures

27

Part II

Item 1.

Legal Proceedings

28

Item 6.

Exhibits and Reports on Form 8-K

29

Signatures

30

For the three months
ended March 31,

2003

2002

(in thousands, unaudited)

Revenues:

Gaming

$

113,508

$

105,771

Food and beverage

6,753

7,011

Truck stop and service station

4,647

3,611

Hotel and recreational vehicle park

3,121

3,150

Other income

4,063

3,962

132,092

123,505

Expenses:

Gaming

65,168

61,537

Food and beverage

8,035

8,096

Truck stop and service station

4,325

3,322

Hotel and recreational vehicle park

2,064

2,201

Selling, general and administrative

27,866

26,598

Depreciation and amortization

11,479

11,162

Other

2,433

2,181

121,370

115,097

Operating income

10,722

8,408

Interest income

(481

)

(634

)

Interest expense, net of capitalized interest

12,357

12,633

Loss before income taxes and cumulative effect of a change in accounting principle

(1,154

)

(3,591

)

Income tax benefit

(307

)

(1,293

)

Loss before cumulative effect of a change in accounting principle

(847

)

(2,298

)

Cumulative effect of a change in accounting principle, net of income tax benefit

0

56,704

Net loss

$

(847

)

$

(59,002

)

Loss per common share—basic and diluted

Loss before cumulative effect of a change in accounting principle

$

(0.03

)

$

(0.09

)

Cumulative effect of a change in accounting principle

0.00

(2.23

)

Net loss per common share—basic and diluted

$

(0.03

)

$

(2.32

)

Number of shares—basic and diluted

25,934

25,444

March 31,
2003

December 31,
2002

(in thousands, except share data,
unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

103,344

$

114,286

Restricted cash—Argentina

3,301

3,155

Receivables, net

9,247

9,857

Income tax receivable

6,064

6,364

Inventories

5,182

5,320

Prepaid expenses and other assets

13,820

16,314

Deferred income taxes

6,110

5,549

Assets held for sale

12,160

12,160

Total current assets

159,228

173,005

Restricted cash

30,100

30,100

Property, plant and equipment, net

582,895

586,083

Goodwill

19,558

19,558

Gaming licenses, net of amortization

22,113

21,944

Debt issuance costs, net of amortization

8,025

8,679

Other assets

854

1,069

$

822,773

$

840,438

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$

14,311

$

15,615

Accrued interest

6,248

17,129

Accrued compensation

15,275

17,208

Other accrued liabilities

31,339

35,515

Current portion of notes payable

2,295

2,419

Total current liabilities

69,468

87,886

Notes payable, less current maturities

490,518

491,079

Deferred income taxes

14,539

12,987

Stockholders’ Equity:

Capital stock—

Preferred—$1.00 par value, authorized 250,000 shares; none issued and outstanding in 2003 and 2002

0

0

Common—$0.10 par value, authorized 40,000,000 shares; 25,934,261 shares issued and outstanding as of March 31, 2003 and December 31, 2002

2,615

2,615

Capital in excess of par value

224,232

224,195

Accumulated other comprehensive loss

(9,911

)

(10,483

)

Retained earnings

31,312

32,159

Total stockholders’ equity

248,248

248,486

$

822,773

$

840,438

For the three months
ended March 31,

2003

2002

(in thousands, unaudited)

Cash flows from operating activities:

Net loss

$

(847

)

$

(59,002

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization

11,479

11,162

Cumulative effect of a change in accounting principle

0

56,704

Other changes that provided (used) cash:

Receivables, net

610

519

Income tax receivable

300

4,200

Prepaid expenses and other assets

2,632

327

Accounts payable

(1,304

)

(5,582

)

Accrued interest

(10,881

)

(11,101

)

Accrued liabilities

(6,109

)

2,801

All other, net

2,385

281

Net cash (used in) provided by operating activities

(1,735

)

309

Cash flows from investing activities:

Restricted cash

(146

)

2,466

Additions to property, plant and equipment

(8,501

)

(10,300

)

All other, net

79

43

Net cash used in investing activities

(8,568

)

(7,791

)

Cash flows from financing activities:

Payment of notes payable

(685

)

(695

)

Net cash used in financing activities

(685

)

(695