UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2004
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
Las Vegas, Nevada 89109
(Address of Principal Executive Offices) (Zip Code)
(702) 784-7777
(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 the 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 May 7, 2004: 35,526,734.
PINNACLE ENTERTAINMENT, INC.
| ITEM 1. | FINANCIAL INFORMATION |
PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (in thousands, except per share data, unaudited) |
||||||||
| Revenues: |
||||||||
| Gaming |
$ | 114,991 | $ | 113,508 | ||||
| Food and beverage |
7,495 | 6,753 | ||||||
| Truck stop and service station |
4,581 | 4,647 | ||||||
| Hotel and recreational vehicle park |
3,299 | 3,121 | ||||||
| Other operating income |
3,991 | 4,063 | ||||||
| 134,357 | 132,092 | |||||||
| Expenses: |
||||||||
| Gaming |
66,677 | 65,168 | ||||||
| Food and beverage |
7,098 | 8,035 | ||||||
| Truck stop and service station |
4,283 | 4,325 | ||||||
| Hotel and recreational vehicle park |
1,760 | 2,064 | ||||||
| General and administrative |
28,972 | 27,866 | ||||||
| Depreciation and amortization |
11,705 | 11,479 | ||||||
| Other operating expenses |
1,725 | 2,433 | ||||||
| Pre-opening and development costs |
2,197 | 0 | ||||||
| Gain on sale of assets |
(13,181 | ) | 0 | |||||
| 111,236 | 121,370 | |||||||
| Operating income |
23,121 | 10,722 | ||||||
| Interest income |
(867 | ) | (481 | ) | ||||
| Interest expense, net of capitalized interest |
13,571 | 12,357 | ||||||
| Loss on early extinguishment of debt |
8,254 | 0 | ||||||
| Income (loss) before income taxes |
2,163 | (1,154 | ) | |||||
| Income tax expense (benefit) |
730 | (307 | ) | |||||
| Net income (loss) |
$ | 1,433 | $ | (847 | ) | |||
| Net income (loss) per common share—basic |
$ | 0.05 | $ | (0.03 | ) | |||
| Net income (loss) per common share—diluted |
$ | 0.04 | $ | (0.03 | ) | |||
| Number of shares—basic |
31,417 | 25,934 | ||||||
| Number of shares—diluted |
32,762 | 25,934 | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
1
PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2004 |
December 31, 2003 |
|||||||
| (in thousands, except share data, unaudited) |
||||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents (exclusive of restricted cash items below) |
$ | 154,287 | $ | 100,107 | ||||
| Restricted cash |
4,400 | 4,400 | ||||||
| Accounts receivable, net |
7,356 | 7,359 | ||||||
| Inventories |
5,252 | 5,518 | ||||||
| Prepaid expenses and other assets |
10,420 | 10,699 | ||||||
| Deferred income taxes |
5,378 | 5,378 | ||||||
| Assets held for sale |
4,408 | 12,160 | ||||||
| Total current assets |
191,501 | 145,621 | ||||||
| Restricted cash—construction reserve accounts |
175,835 | 124,529 | ||||||
| Property and equipment, net |
657,906 | 621,709 | ||||||
| Goodwill, net |
26,656 | 26,656 | ||||||
| Gaming licenses, net |
21,826 | 21,848 | ||||||
| Debt issuance costs, net |
17,676 | 15,864 | ||||||
| Other assets |
887 | 875 | ||||||
| $ | 1,092,287 | $ | 957,102 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Accounts payable |
$ | 24,536 | $ | 15,958 | ||||
| Accrued interest |
8,647 | 15,459 | ||||||
| Accrued compensation |
21,138 | 21,847 | ||||||
| Other accrued liabilities |
41,813 | 40,016 | ||||||
| Current portion of notes payable |
2,373 | 2,341 | ||||||
| Total current liabilities |
98,507 | 95,621 | ||||||
| Notes payable, less current maturities |
653,620 | 643,594 | ||||||
| Deferred income taxes |
17,028 | 17,028 | ||||||
| Commitments and contingencies (Note 7) |
||||||||
| Stockholders’ Equity: |
||||||||
| Common—$0.10 par value, 35,508,233 and 23,926,942 shares outstanding, net of treasury shares |
3,752 | 2,594 | ||||||
| Capital in excess of par value |
343,792 | 224,377 | ||||||
| Retained earnings |
5,350 | 3,917 | ||||||
| Accumulated other comprehensive loss |
(9,672 | ) | (9,939 | ) | ||||
| Treasury stock, at cost |
(20,090 | ) | (20,090 | ) | ||||
| Total stockholders’ equity |
323,132 | 200,859 | ||||||
| $ | 1,092,287 | $ | 957,102 | |||||
See accompanying notes to the unaudited condensed consolidated financial statements.
2
PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
| Common Stock |
Capital in Excess of Par Value |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Total Stockholders’ Equity | |||||||||||||||
| (in thousands, unaudited) | ||||||||||||||||||||
| Balance as of January 1, 2004 |
$ | 2,594 | $ | 224,377 | $ | 3,917 | $ | (9,939 | ) | $ | (20,090 | ) | $ | 200,859 | ||||||
| Net income |
0 | 0 | 1,433 | 0 | 0 | 1,433 | ||||||||||||||
| Foreign currency translation income |
0 | 0 | 0 | 267 | 0 | 267 | ||||||||||||||
| Total comprehensive income |
1,700 | |||||||||||||||||||
| Common stock offering |
1,150 | 118,628 | 0 | 0 | 0 | 119,778 | ||||||||||||||
| Common stock options, net |
8 | 787 | 0 | 0 | 0 | 795 | ||||||||||||||
| Balance as of March 31, 2004 |
$ | 3,752 | $ | 343,792 | $ | 5,350 | $ | (9,672 | ) | $ | (20,090 | ) | $ | 323,132 | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
3
PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the three months ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (in thousands, unaudited) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income (loss) |
$ | 1,433 | $ | (847 | ) | |||
| Depreciation and amortization |
11,705 | 11,479 | ||||||
| Amortization of debt issuance costs |
795 | 654 | ||||||
| Loss on early extinguishment of debt |
8,254 | 0 | ||||||
| Gain on sale of assets |
(13,181 | ) | 0 | |||||
| Changes in working capital: |
||||||||
| Accounts receivable, net |
3 | 610 | ||||||
| Income tax receivable |
0 | 300 | ||||||
| Prepaid expenses and other assets |
(98 | ) | 2,632 | |||||
| Accounts payable |
(1,204 | ) | (1,304 | ) | ||||
| Accrued liabilities |
(372 | ) | (6,109 | ) | ||||
| Accrued interest |
(6,812 | ) | (10,881 | ) | ||||
| Income taxes |
0 | 991 | ||||||
| All other, net |
58 | 740 | ||||||
| Net cash provided by (used in) operating activities |
581 | (1,735 | ) | |||||
| Cash flows from investing activities: |
||||||||
| Restricted cash |
(51,306 | ) | (146 | ) | ||||
| Additions to property and equipment |
(37,863 | ) | (8,501 | ) | ||||
| Receipts from dispositions of assets and property and equipment |
21,476 | 79 | ||||||
| Net cash used by investing activities |
(67,693 | ) | (8,568 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Proceeds from senior subordinated notes |
198,564 | 0 | ||||||
| Payment of senior subordinated notes |
(188,000 | ) | 0 | |||||
| Payment of other secured and unsecured notes payable |
(561 | ) | (685 | ) | ||||
| Debt issuance costs |
(9,864 | ) | 0 | |||||
| Common stock offering |
120,400 | 0 | ||||||