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

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

For the transition period from            to           

Commission file number: 001-13641

 

PINNACLE ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

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

3800 Howard Hughes Parkway, Las Vegas, NV 89169
(Former name, former address and former fiscal year, if changed since last report)

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 such 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 (Do not check if a smaller reporting company)		Smaller reporting company o

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 5, 2010, the number of outstanding shares of the registrant’s common stock was 60,537,986.

 

 

PINNACLE ENTERTAINMENT, INC.
TABLE OF CONTENTS

PART I
Item 1. Financial Statements (Unaudited)			3
Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2010 and 2009			3
Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009			4
Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2010 and 2009			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Executive Summary			24
Results of Operations			25
Liquidity and Capital Resources			30
Contractual Obligations and Other Commitments			34
Critical Accounting Estimates			34
Forward-Looking Statements			34
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			36
PART II
Item 1. Legal Proceedings			37
Item 1A. Risk Factors			37
Item 6. Exhibits			38
Signature Page			39
Exhibit 11
Exhibit 31.1
Exhibit 31.2
Exhibit 32

PART I

Item 1.		Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		For the three months ended
		March 31,
		2010				2009
		(in thousands, except per share data)
Revenues:
Gaming		$	235,485			$	228,938
Food and beverage			15,367				14,054
Lodging			8,398				8,271
Retail, entertainment and other			8,176				7,960
			267,426				259,223
Expenses and other costs (benefits):
Gaming			133,058				131,576
Food and beverage			15,909				14,171
Lodging			5,198				5,626
Retail, entertainment and other			4,568				4,310
General and administrative			56,812				55,463
Depreciation and amortization			26,080				25,484
Pre-opening and development costs			8,884				2,927
Write-downs, reserves and recoveries, net (Note 5)			(3,068	)			451
			247,441				240,008
Operating income			19,985				19,215
Other non-operating income			27				85
Interest expense, net of capitalized interest			(20,952	)			(16,575	)
Loss on early extinguishment of debt			(1,418	)			—
Income (loss) from continuing operations before income taxes			(2,358	)			2,725
Income tax (expense) benefit			207				(179	)
Income (loss) from continuing operations			(2,151	)			2,546
Income (loss) from discontinued operations, net of income taxes			38,894				(1,615	)
Net income		$	36,743			$	931
Net income per common share—basic
Income (loss) from continuing operations		$	(0.04	)		$	0.04
Income (loss) from discontinued operations, net of income taxes			0.65				(0.02	)
Net income per common share—basic		$	0.61			$	0.02
Net income per common share—diluted
Income (loss) from continuing operations		$	(0.04	)		$	0.04
Income (loss) from discontinued operations, net of income taxes			0.64				(0.02	)
Net income per common share—diluted		$	0.60			$	0.02
Number of shares—basic			60,107				60,008
Number of shares—diluted			60,936				61,876

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

PINNACLE ENTERTAINMENT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2010				December 31, 2009
		(Unaudited)
		(in thousands, except share data)
ASSETS
Current Assets:
Cash and cash equivalents		$	133,925			$	124,744
Accounts receivable, net of allowance for doubtful accounts of $10,320 and $12,556, respectively			12,259				13,803
Inventories			6,899				6,464
Prepaid expenses and other assets			12,018				15,683
Assets of discontinued operations held for sale			94,342				93,837
Total current assets			259,443				254,531
Restricted cash			6,612				7,149
Land, buildings, riverboats and equipment: (Note 1)
Land and land improvements			260,599				212,602
Buildings, riverboats and improvements			1,276,176				1,078,511
Furniture, fixtures and equipment			485,105				419,518
Construction in progress			27,143				304,643
			2,049,023				2,015,274
Less: accumulated depreciation			(542,209	)			(514,514	)
			1,506,814				1,500,760
Assets held for sale			79				1,660
Goodwill			16,742				16,742
Intangible assets, net (Note 1)			30,017				30,017
Other assets, net			32,262				29,620
Deferred taxes- non current			3,377				3,377
Total assets		$	1,855,346			$	1,843,856
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	32,132			$	72,319
Accrued interest			15,816				21,267
Accrued compensation			40,656				42,257
Accrued taxes			14,828				17,263
Other accrued liabilities			51,264				50,750
Deferred income taxes			1,274				1,274
Current portion of long-term debt (Note 2)			81				88
Liabilities of discontinued operations held for sale			16,019				34,368
Total current liabilities			172,070				239,586
Long-term debt less current portion (Note 2)			1,106,554				1,063,283
Other long-term liabilities			43,091				46,578
Total liabilities			1,321,715				1,349,447
Commitments and contingencies (Note 7)
Stockholders’ Equity
Preferred stock—$1.00 par value, 250,000 shares authorized, none issued or outstanding			—				—
Common—$0.10 par value, 60,211,186 and 60,079,686 shares outstanding, net of treasury shares			6,222				6,209
Additional paid in capital			1,016,859				1,014,233
Retained deficit			(451,636	)			(488,379	)
Accumulated other comprehensive loss			(17,724	)			(17,564	)
Treasury stock, at cost, for both periods 2,008,986 of treasury shares			(20,090	)			(20,090	)
Total stockholders’ equity			533,631				494,409
		$	1,855,346			$	1,843,856

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,
		2010				2009
		(in thousands)
Cash flows from operating activities:
Net income		$	36,743			$	931
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			26,757				26,201
Loss on disposal of assets			514				252
Impairment of land, buildings, riverboats and equipment			2,971				138
Other write-downs, reserves and recoveries			(8	)			—
Provision for bad debts			644				809
Amortization of debt issuance costs			1,831				1,155
Share-based compensation expense			1,447				2,312
Change in deferred income taxes			(1,548	)			750
Changes in operating assets and liabilities:
Receivables			2,255				2,827
Prepaid expenses and other			2,711				128
Other long-term assets			(3,050	)			1,285
Accounts payable			(10,081	)			(2,845	)
Accrued compensation			(1,596	)			(1,779	)
Accrued interest			(5,451	)			4,499
Other accrued liabilities			(2,392	)			(1,621	)
Other long-term liabilities			(17,965	)			388
Net cash provided by operating activities			33,782				35,430
Cash flows from investing activities:
Capital expenditures			(65,908	)			(33,625	)
Change in restricted cash			667				(13	)
Proceeds from sale of property and equipment			1,463				21
Net cash used in investing activities			(63,778	)			(33,617	)
Cash flows from financing activities:
Borrowings under credit facility			165,379				27,689
Repayments under credit facility			(122,298	)			(14,456	)
Payments on other secured and unsecured notes payable			(9	)			(21	)
Proceeds from common stock options exercised			15				446
Proceeds from issuance of common stock			1,081				—
Debt issuance and other financing costs			(6,447	)			(70	)
Net cash provided by financing activities			37,721				13,588
Effect of exchange rate changes on cash and cash equivalents			(58	)			(261	)
Increase in cash and cash equivalents			7,667				15,140
Cash and cash equivalents at the beginning of the period			129,576				115,712
Cash and cash equivalents at the end of the period		$	137,243			$	130,852
Supplemental Cash Flow Information:
Cash paid for interest, net of amounts capitalized		$	24,584			$	11,036
Cash payments (refunds) related to income taxes, net			358				(3,504	)
Increase (decrease) in construction related deposits and liabilities			(30,493	)			34,862

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 an owner, operator and developer of casinos and related hospitality and entertainment facilities. We operate 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 (“River City Casino”, “Lumière Place Casino” and “President Casino”). We view each property as an operating segment, with the exception of our properties located in St. Louis, Missouri, which are aggregated into the “St. Louis” reporting segment. References in these footnotes to “Pinnacle,” the “Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where stated or the context otherwise indicates.

In January 2010, we made the decision to explore strategic alternatives for our Argentina operations. Also in January 2010, we made the decision to sell our Atlantic City entities. We have classified the related assets and liabilities as held for sale in our unaudited Condensed Consolidated Balance Sheets and have included the results in discontinued operations. For further information, see Note 6, Discontinued Operations. In April 2010, the Company determined it was no longer in the best interest of shareholders to continue development of its Sugarcane Bay project. For further information, see Note 10, Subsequent Events.

We are also developing a casino-hotel in Baton Rouge, Louisiana, which 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, 2009.

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, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities 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 and expected life of share-based awards 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 authoritative guidance for fair value measurements, which guidance provides companies the option to measure certain financial assets and liabilities at fair value with changes in fair value recognized in earnings each period. We have elected not to measure any financial assets and liabilities at fair value that were not previously required to be measured at fair value.

Fair value is defined in the authoritative guidance 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. The guidance 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.

We measure our liability for deferred compensation on a recurring basis. As of March 31, 2010, the liability has a balance of $2.0 million and was valued using Level 1 inputs.

Land, Buildings, Riverboats and Land Land, buildings, riverboats and equipment are stated at cost. Land includes land not currently being used in our operations, which totaled $45.8 million at both March 31, 2010 and December 31, 2009. We capitalize the costs of improvements that extend the life of the asset. Construction in progress at March 31, 2010 relates primarily to our Sugarcane Bay and Baton Rouge projects. Depreciation expense for the three months ended March 31, 2010 and 2009 was $26.0 million and $25.5 million, respectively. Interest expense is capitalized on internally constructed assets at our overall weighted average cost of borrowing. Capitalized interest for three months ended March 31, 2010 and 2009 amounted to $3.5 million and $2.2 million, respectively.

Goodwill and Other Intangible Assets Pursuant to authoritative guidance, 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, 2010 and 2009.

Gaming Taxes We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment of our gaming revenues and are recorded as a gaming expense in the unaudited Condensed Consolidated Statements of Operations. These taxes totaled approximately $71.3 million and $68.2 million for the three months ended March 31, 2010 and 2009, respectively.

Pre-opening and Development Costs Pre-opening and development costs are expensed as incurred, consistent with authoritative guidance, and for the three months ended March 31, 2010 and 2009 consist of the following:

		For the three months ended
		March 31,
		2010				2009
		(in millions)
Pre-opening and development costs:
River City (a)		$	8.2			$	1.2
Sugarcane Bay			0.4				0.6
Baton Rouge			0.2				1.0
Other			0.1				0.1
Total pre-opening and development costs		$	8.9			$	2.9

Comprehensive Income Our comprehensive income is as follows:

		For the three months ended
		March 31,
		2010				2009
		(in millions)
Net income		$	36.7			$	0.9
Other comprehensive income
Foreign currency translation loss			(0.3	)			(1.7	)
Post-retirement plan benefit obligation, net of income taxes (a)			0.1				0.8
Unrealized gain on securities, net of income taxes (b)			—				4.9
Comprehensive income		$	36.5			$	4.9

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, 2010 and 2009, our share-based awards issued under our stock option plans consisted primarily of common stock option grants.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued new authoritative guidance regarding disclosures about fair value measurements. An entity is now required to disclose separately the amounts of significant transfers in and out of Level 1 and 2 fair value measurements, and describe the reasons for the transfers. Also, it requires additional disclosure regarding purchases, sales, issuances and settlements of Level 3 measurements. The guidance is effective for interim and annual periods beginning after December 15, 2009, except for the additional disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 15, 2010. The adoption did not have, and is not expected to have, a material effect on our unaudited Condensed Consolidated Financial Statements.

A variety of proposed or otherwise potential accounting standards are currently under review and 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 any such proposed or revised standards would have on our unaudited Condensed Consolidated Financial Statements.

Note 2—Long-Term Debt

Long-term debt at March 31, 2010 and December 31, 2009 consisted of the following:

		March 31, 2010				December 31, 2009
		(in millions)
Senior Secured Credit Facility		$	80.0			$	36.9
8.625% Senior Notes due 2017			444.1				443.9
7.50% Senior Subordinated Notes due 2015			381.0				380.8
8.25% Senior Subordinated Notes due 2012			200.8				200.9
Other secured and unsecured notes payable			0.8				0.9
			1,106.7				1,063.4
Less current maturities			(0.1	)			(0.1	)
		$	1,106.6			$	1,063.3

Senior Secured Credit Facility: On February 5, 2010, we entered into an amended and restated credit agreement for a $375 million revolving credit facility (the “Credit Facility”). The Credit Facility matures on March 31, 2014; however, if any portion of our 8.25% senior subordinated notes due 2012 (“8.25% Notes”) is outstanding on September 30, 2011, the maturity date will be accelerated to September 30, 2011. As detailed below, on May 6, 2010, we issued new 8.75% senior subordinated notes due 2020 and concurrently issued a notice of redemption for all of our outstanding 8.25% Notes.

As of March 31, 2010, we had $80.0 million in borrowings outstanding under the Credit Facility, and had letters of credit of $9.6 million for various self-insurance programs. A letter of credit of $3.0 million related to our River City project was cancelled during March 2010.

On April 28, 2010, we modified certain covenants of our Credit Facility. Previously, there was a provision in the Credit Facility that we could not spend more than $25 million in construction and development costs on the Baton Rouge project after January 1, 2010 unless we had received at least $100 million in the aggregate from permitted sales or other dispositions of assets (including receipt of insurance proceeds), cash tax refunds, litigation settlements, and/or gross proceeds received by us from the issuance and sale of non-debt capital, and/or dividends and distributions received from unrestricted subsidiaries net of investments made after January 1, 2010 in such unrestricted subsidiaries that have not been charged to an investment basket. In the modification to our Credit Facility, this amount was reduced from $100 million in the aggregate to $40 million in the aggregate, and we have the funds available to meet this requirement.

Loss on early extinguishment of debt: During the three months ended March 31, 2010, we incurred a loss on early extinguishment of debt of $1.4 million related to the write off of unamortized debt issuance costs related to the execution of our Credit Facility.

8.75% Senior Subordinated Notes due 2020: On May 6, 2010, we closed an offering of $350 million in aggregate principal amount of new 8.75% senior subordinated notes due 2020 (the “8.75% Notes”). The 8.75% Notes were issued in a private offering conducted pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, at par. Net of the initial purchasers’ fees and various costs and expenses, net proceeds from the offering were approximately $341.5 million. Using the proceeds, we intend to redeem all of our existing 8.25% Notes, of which $200 million in aggregate principal amount is outstanding, and to repay $80 million in revolving credit borrowings under the Credit Facility. On May 6, 2010, we deposited the funds necessary for the redemption of our 8.25% Notes into escrow with the trustee and received a discharge of the 8.25% Notes indenture. The remaining net proceeds from the offering are expected to be used for general corporate purposes, including the funding of our Baton Rouge project.

Interest expense, net of capitalized interest was as follows:

		For the three months ended
		March 31,
		2010				2009
		(in millions)
Interest expense before capitalization of interest		$	24.4			$	18.8
Less: capitalized interest			(3.5	)			(2.2	)
Total interest expense, net of capitalized interest		$	20.9			$	16.6

We issued $450 million in aggregate principal amount of 8.625% senior notes due 2017 (“8.625% Notes”) on August 10, 2009, and used a portion of the proceeds to repay the balance outstanding under our Credit Facility. The increase in interest expense before capitalized interest for the three months ended March 31, 2010 from the same 2009 period was due to the replacement of less expensive revolver borrowings with new, long-term 8.625% Notes. We believe the longer maturity, fixed interest rate and less-restrictive covenants of the 8.625% Notes warranted the higher interest rate. The increase in capitalized interest was due to an increase in capitalized costs attributable to our River City project. We stopped capitalizing interest on our River City project upon opening.

Note 3—Income Taxes

Our effective income tax rate for continuing operations for the quarter ended March 31, 2010 resulted in a benefit of $0.2 million, or an 8.8% effective rate, as compared to an expense of $0.2 million, or a 6.6% effective rate for the same period last year. Our tax rate differs from the statutory rate due to the effects of permanent items, and the recording of a valuation allowance against a portion of our deferred tax assets generated in the current year as well as a reserve for unrecognized tax benefits. It is possible that the total amount of unrecognized tax benefits may decrease by approximately $1.0 million to $3.0 million during the next twelve months.

Note 4—Employee Benefit and Other Plans

Share-based Compensation: As of March 31, 2010, we had approximately 7.1 million share-based awards issued, 172,772 of which are restricted stock awards and the rest of which are common stock options, with approximately 1.3 million share-based awards available for grant.

Pursuant to authoritative guidance, we recorded share-based compensation expense of approximately $1.4 million and $2.2 million for the three months ended March 31, 2010 and 2009, respectively. Theoretical compensation costs not yet amortized related to stock options granted totaled approximately $18.7 million and $21.4 million at March 31, 2010 and 2009, 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 $15,000 and $446,000 for the three months ended March 31, 2010 and 2009, respectively. The associated shares were newly issued common stock.

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, 2010			6,342,007			$	14.56
Granted			1,109,000			$	8.19
Exercised			(2,500	)		$	5.95
Cancelled, Forfeited			(309,983	)		$	16.58
Options outstanding at March 31, 2010			7,138,524			$	13.49
Vested or expected to vest at a point in the future as of March 31, 2010			6,928,801
Options exercisable at March 31, 2010			4,671,199			$	13.71
Weighted-average value per granted option calculated using the Black-Scholes option-pricing model for options granted during the three months ended March 31, 2010		$	5.09

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,
		2010				2009
		(in millions)
Impairment of assets		$	3.0			$	0.1
Loss on disposal of assets			0.4				0.3
Legal settlement recoveries			(6.5	)			—
Write-downs, reserves and recoveries, net		$	(3.1	)		$	0.4

Impairment of assets: The President Casino operates on a vessel known as the Admiral. The certification of the hull by ABS Consulting expires on July 1, 2010, and the Admiral may not be used to carry passengers beyond that date without significant repairs and/or specific approval. As such, during 2009, we began repairs to the hull to ensure recertification would be achieved prior to the expiration date. However, on March 10, 2010, we reached a settlement agreement with the Missouri Gaming Commission (“MGC”) in which we agreed to surrender our gaming license related to the President Casino and cease operations on or before July 1, 2010. In return, the MGC would withdraw and dismiss the preliminary order for disciplinary action issued on January 27, 2010. As a result, the hull repair project was terminated and all previously capitalized costs associated with the project were impaired for a total charge of $3.0 million for the three months ended March 31, 2010.

Loss on disposal of assets: During the three months ended March 31, 2010, we sold a warehouse and slot equipment at our properties for a loss of $0.4 million. During the three months ended March 31, 2009, we sold slot equipment for a loss of $0.3 million.

Legal settlement recoveries: During March 2010, we received a $6.5 million legal settlement related to the recovery of legal fees.

Note 6—Discontinued Operations

Discontinued operations as of March 31, 2010 consist of our Casino Magic Argentina operations, our Atlantic City entities, our former Casino Magic Biloxi operations and our operations at The Casino at Emerald Bay in The Bahamas.

Casino Magic Argentina: In January 2010, we made the decision to explore strategic alternatives for our Argentina operations. We have reflected the business as a discontinued operation and the related assets and liabilities as held for sale. During the three months ended March 31, 2010 and 2009, our Argentina operations generated net income of $0.6 million and $1.4 million, respectively.

On April 29, 2010, we entered into an agreement to sell our Argentina operations for approximately $40 million, subject to working capital and other adjustments, the approval of the Government of the Province of Neuquén and customary closing conditions. Pursuant to the agreement, we will transfer all of the shares of Casino Magic Neuquén, a wholly-owned indirect subsidiary of Pinnacle, to the buyers.

Atlantic City: In January 2010, we made the decision to sell our Atlantic City entities. During the first quarter of 2010, we explored strategic alternatives for the assets and liabilities. We have reflected the business as a discontinued operation and the related assets and liabilities as held for sale. Our Atlantic City entities generated a net loss of $2.7 million for both the three months ended March 31, 2010 and 2009.

Casino Magic Biloxi: Casino Magic Biloxi closed in 2005 after Hurricane Katrina. In February 2010, we settled all remaining claims with our final insurance carrier in exchange for a payment of approximately $23.4 million, which amount was received on February 12, 2010. We have received payments totaling approximately $215 million from our insurers related to our claims. Prior insurance advances that exceeded the book value of destroyed assets and certain insured expenses were recorded as a deferred gain of $18.3 million. As a result of this final settlement, we recognized this deferred gain for the three months ended March 31, 2010. We have no further outstanding insurance claims related to Hurricane Katrina. During the three months ended March 31, 2010 and 2009, Casino Magic Biloxi generated a net income of $40.9 million and a net loss of $0.1 million, respectively.

The Casino at Emerald Bay: The Casino at Emerald Bay in The Bahamas was closed during the first quarter of 2009. We are actively marketing the assets associated with our Bahamas operation; however, events and circumstances beyond our control have extended the period to complete the sale of the assets beyond a year. The business continues to be classified as a discontinued operation and the related assets as held for sale. During the three months ended March 31, 2010 and 2009, The Casino at Emerald Bay generated a net income of $0.1 million from the sale of assets and a net loss of $0.2 million, respectively.

Revenue, expense and net income for entities and operations included in discontinued operations are summarized as follows:

		For the three months ended
		March 31,
		2010				2009
		(in millions)
Revenues		$	10.1			$	9.8
Operating loss		$	(1.9	)		$	(0.8	)
Non-operating income (loss)			41.7				(0.1	)
Income (loss) before income taxes			39.8				(0.9	)
Income tax expense			(0.9	)			(0.7	)
Income (loss) from discontinued operations		$	38.9			$	(1.6	)

Net assets for entities and operations included in discontinued operations are summarized as follows:

		March 31,				December 31,
		2010				2009
		(in millions)
Assets:
Land, buildings, riverboats and equipment, net		$	55.6			$	56.6
Other assets, net			38.7				37.2
		$	94.3			$	93.8
Liabilities:
Accounts payable and other accrued liabilities		$	13.8			$	15.0
Long term liabilities			2.2				19.3
			16.0				34.3
Net Assets		$	78.3			$	59.5

President Casino: On March 10, 2010, we reached a settlement agreement with the Missouri Gaming Commission (“MGC”) in connection with the preliminary order for disciplinary action in regards to the President Casino. We agreed to surrender our gaming license related to the President Casino to the MGC and agreed to cease operations on or before July 1, 2010. In exchange, the MGC agreed to withdraw and dismiss the preliminary order for disciplinary action. The President Casino is currently scheduled to close on June 28, 2010, at which time it will be considered discontinued operations.

Note 7—Commitments and Contingencies

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 an Agreement for Guaranteed Maximum Price Construction Services 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. River City opened on March 4, 2010, and we expect to pay the contractor $153 million, of which approximately $12.2 million remains to be paid. The guaranteed maximum price set by the agreement is a portion of the total budget 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. The River City project represents a $351 million investment, excluding operating cash of approximately $10 million and capitalized interest of approximately $23 million, versus its original projected budget of $357 million.

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). We are required to invest a minimum of $375 million to: (a) construct a gaming and multi-use facility, which opened on March 4, 2010; (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 adjoining property within eighteen months of March 4, 2010; and

(e) construct a roadway into the project, which construction is complete. We are required to pay rent in the amount of $2.5 million from May 1, 2009 to March 31, 2010, which amount has been paid. From April 1, 2010 through the expiration of the term of the lease and development agreement, we are required to pay to St. Louis County as annual rent the greater of (a) $4.0 million, or (b) 2.5% of annual adjusted gross receipts. We are also required to invest at least an additional $75 million into a second phase that would include a hotel with a minimum of 100 guestrooms and other amenities, to be mutually agreed upon by us and St. Louis County. The second phase must be opened within three years from March 4, 2010. In each of the five subsequent years that the second phase is not opened, the amount of liquidated damages 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 liquidated damages that we would have to pay if the second phase is not completed is $20.0 million.

Self-Insurance: We self-insure various levels of general liability, 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.

Legal

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 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. In May 2009, the Louisiana district civil court extended the stay of the state case indefinitely pending the decision of the Fifth Circuit on Jebaco’s appeal. On October 30, 2009, the Fifth Circuit affirmed the district court’s dismissal of the federal antitrust claims. Jebaco has not yet indicated if it intends to appeal the Fifth Circuit decision. We moved for dismissal of the state-court claims. On January 29, 2010, the state court judge dismissed Jebaco’s complaint in its entirety. On April 16, 2010, Jebaco moved the district civil court for leave to appeal the dismissal of its claims. While the Company cannot predict the outcome of this litigation, it intends to vigorously defend against Jebaco’s claims.

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 against the Company, ACE Gaming, LLC (“ACE”, a wholly owned subsidiary of the Company), and one other defendant. We acquired ACE as part of our acquisition of the entities owning the former Sands Hotel & Casino (the “Sands”) 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 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 the Company, 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 the Company 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 attorneys’ fees, against the Company and ACE. ACE continues to make its payment obligations under the lease, which expires in December 2012.

On March 17, 2010, Madison House moved to dismiss its Complaint and ACE’s Counterclaim without prejudice, which motion was heard on April 28, 2010. The Court ruled that it was granting the motion to dismiss Madison House’s Complaint, without prejudice, but that it was denying the motion to dismiss ACE’s Counterclaim. The Court also ruled that the case would be moved from the Chancery Division to the Law Division. While the Company cannot predict the outcome of this litigation, it intends to pursue its Counterclaim vigorously.

Collective Bargaining Agreements: On May 17, 2006, we entered into a Memorandum of Agreement (the “MOA”) with Unite HERE Local 74 (“Union”) commensurate with our obligations under a development agreement with the city of St. Louis that, among other things, provided union access to certain employees (“bargaining unit employees”) employed at our Lumière Place facility should the Union manifest its intent to organize those employees. Additionally, the MOA provided that we would recognize the Union as the exclusive bargaining representative of the bargaining unit employees if a majority of the employees (verified by a neutral arbitrator) indicated their desire to be represented by the Union by signing an authorization card.

On November 20, 2008, an arbitrator conducted a review of the authorization cards submitted by the Union and determined that a majority of the bargaining unit employees had indicated their desire to be represented by the Union. Consistent with the MOA, we recognized the Union as the exclusive bargaining representative for the bargaining unit employees. We met with the Union three times to negotiate a collective bargaining agreement; the last meeting was on February 18, 2009.

During March and April 2009, we received competing claims from three unions, each claiming to be the exclusive collective bargaining representative of our St. Louis employees, including a claim from one union that they were the successor to the Union. In response to the competing claims for recognition, we withdrew recognition from the Union because of a lack of continuity of representation. In May 2009, we notified the Union that the collective bargaining agreement for HoteLumière was no longer in effect and that the collective bargaining agreement for the President Casino was being terminated. In May 2009, one of the unions claiming to be the successor to the Union filed unfair labor practice charges with the National Labor Relations Board (“NLRB”) alleging, among other things, that we refused to bargain in good faith by refusing to engage in collective bargaining negotiations, by refusing to negotiate over the discharge of employees, and by withdrawing recognition and abrogating the terms and conditions of employment. The NLRB dismissed the charge filed against HoteLumière.

In October 2009, the Union again changed its affiliation, and again requested recognition, which was denied. In December 2009, the Union filed charges with the NLRB alleging that Lumière Place and President Casino acted unlawfully when they refused to recognize and deal with the Union. In January 2010, the NLRB issued a Complaint and Notice of Hearing against Lumière Place and President Casino.

On April 13, 2010, following the resolution of the competing claims for recognition, Lumière Place and President Casino agreed to settle the NLRB matters, by among other things, agreeing to recognize the Union as the bargaining representative of bargaining units of Lumière Place and President Casino employees, bargaining with the Union upon request, and recognizing the validity of the collective bargaining agreement between President Casino and the Union. The settlement agreements with the NLRB specifically provide that neither Lumière Place nor President Casino admit to having violated the National Labor Relations Act.

President Casino: The President Casino operates on a vessel known as the Admiral. The hull of the Admiral was built in 1904. The current certification of the hull by the American Bureau of Shipping (“ABS”) expires on July 19, 2010, and the Admiral may not be used to carry passengers beyond that date without significant repairs and/or specific approval. On August 26, 2009, the Missouri Gaming Commission (the “MGC”) approved a resolution that it is not practicable for us to repair the President Casino and prohibits us from relocating the President, or any other vessel, from the current location of the President Casino. The MGC’s resolution also provided that a new license would be needed to replace the President Casino with another vessel at its present site. On September 24, 2009, we filed a petition for judicial review with the Missouri Court of Appeals, Western District (“CAWD”) regarding the MGC’s resolution.

On January 27, 2010, the MGC issued a preliminary order for disciplinary action (the “Order”) against the President Riverboat Casino-Missouri, Inc. (“PRC-MO”), a wholly-owned subsidiary of Pinnacle Entertainment, Inc. and the operator of President Casino. On March 10, 2010, the MGC approved of the settlement agreement, dated March 8, 2010, between the Company and PRC-MO and the MGC (the “Settlement Agreement”) in connection with the Order. Pursuant to the Settlement Agreement, the parties agreed that PRC-MO will surrender its gaming licenses to the MGC and cease operations on or before July 1, 2010 and that the MGC would withdraw and dismiss the Order against PRC-MO.

Indiana Tax Dispute: In 2008, the Indiana Department of Revenue (“IDR”) commenced an income tax examination of the Company’s Indiana income tax filings for the 2005 to 2007 period. During June of 2009, the Company received an informal notification from the field agent for the IDR challenging whether income and gain from certain asset sales, including the sale of the Hollywood Park Racetrack in 1999, and other transactions outside of Indiana, such as the Aztar merger termination fee in 2006, which we reported on our Indiana state tax returns for the years 2000 through 2007, resulted in business income subject to apportionment, and proposed a potential assessment of approximately $11 million, excluding interest and penalties, of additional Indiana income taxes. During the fourth quarter of 2009, the Company submitted additional information to the IDR for consideration. On February 9, 2010, the Company received a revised proposed assessment in the amount of $9.5 million, including interest and penalties of $2.3 million. On March 17, 2010, the Company timely filed a protest with the IDR requesting abatement of all tax, interest and penalties.

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 8—Consolidating Condensed Financial Information

Our subsidiaries (excluding our Argentine subsidiary; a subsidiary that owned and subsequently sold our corporate jet on April 21, 2010; a subsidiary with approximately $66.3 million in cash, cash equivalents as of March 31, 2010; 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 8.625% Notes, as well as our Credit Facility. Our Atlantic City entities do not guarantee our Credit Facility. On May 6, 2010, the same entities fully and unconditionally and jointly and severally guaranteed the payment of obligations under our new 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, 2010
Statement of Operations
Revenues:
Gaming		$	—			$	235.5			$	—			$	—			$	235.5
Food and beverage			—				15.4				—				—				15.4
Other			—				16.5				—				—				16.5
			—				267.4				—				—				267.4
Expenses:
Gaming			—				133.1				—				—				133.1
Food and beverage			—				15.9				—				—				15.9
General and administrative and other			9.9				66.2				(0.7	)			—				75.4
Depreciation and amortization			1.4				24.6				0.1				—				26.1
Write-downs, reserves and recoveries			(6.5	)			3.4				—				—				(3.1	)
			4.8				243.2				(0.6	)			—				247.4
Operating income (loss)			(4.8	)			24.2				0.6				—				20.0
Equity earnings of subsidiaries			62.8				0.6				—				(63.4	)			—
Interest (expense) and non-operating income, net			(24.4	)			3.4				—				—				(21.0	)
Loss on early extinguishment of debt			(1.4	)			—				—				—				(1.4	)
Income (loss) from continuing operations before inter-company activity and income taxes			32.2				28.2				0.6				(63.4	)			(2.4	)
Management fee & inter-company interest			4.3				(4.3	)			—				—				—
Income tax benefit			0.2				—				—				—				0.2
Income (loss) from continuing operations			36.7				23.9				0.6				(63.4	)			(2.2	)
Income from discontinued operations, net of taxes			—				38.3				0.6				—				38.9
Net income (loss)		$	36.7			$	62.2			$	1.2			$	(63.4	)		$	36.7

										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 Operations
Revenues:
Gaming		$	—			$	223.3			$	5.6			$	—			$	228.9
Food and beverage			—				13.9				0.2				—				14.1
Other			—				16.0				0.2				—				16.2
			—				253.2				6.0				—				259.2
Expenses:
Gaming			—				127.0				4.5				—				131.5
Food and beverage			—				13.9				0.3				—				14.2
General and administrative and other			12.3				55.8				0.8				—				68.9
Depreciation and amortization			1.2				23.2				1.0				—				25.4
			13.5				219.9				6.6				—				240.0
Operating income (loss)			(13.5	)			33.3				(0.6	)			—				19.2
Equity earnings of subsidiaries			30.3				—				—				(30.3	)			—
Interest (expense) and non-operating income, net			(18.8	)			2.3				—				—				(16.5	)
Income (loss) from continuing operations before inter-company activity and income taxes			(2.0	)			35.6				(0.6	)			(30.3	)			2.7
Management fee & inter-company interest			3.1				(3.1	)			—				—				—
Income tax expense			(0.2	)			—				—				—				(0.2	)
Income (loss) from continuing operations			0.9				32.5				(0.6	)			(30.3	)			2.5
Income (loss) from discontinued operations, net of taxes			—				(2.8	)			1.2				—				(1.6	)
Net income (loss)		$	0.9			$	29.7			$	0.6			$	(30.3	)		$	0.9

										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, 2010
Balance Sheet
Current assets		$	10.5			$	87.9			$	66.7			$	—			$	165.1
Property and equipment, net			16.9				1,479.4				10.5				—				1,506.8
Other non-current assets			54.2				34.9				—				—				89.1
Investment in subsidiaries			1,619.7				24.2				—				(1,643.9	)			—
Assets of discontinued operations held for sale			—				64.9				29.4				—				94.3
Inter-company			1.2				—				—				(1.2	)			—
		$	1,702.5			$	1,691.3			$	106.6			$	(1,645.1	)		$	1,855.3
Current liabilities			33.9				122.1				—				—				156.0
Notes payable, long term			1,105.8				0.8				—				—				1,106.6
Other non-current liabilities			29.2				13.9				—				—				43.1
Liabilities of discontinued operations held for sale			—				11.8				4.2				—				16.0
Inter-company			—				—				1.2				(1.2	)			—
Equity			533.6				1,542.7				101.2				(1,643.9	)			533.6
		$	1,702.5			$	1,691.3			$	106.6			$	(1,645.1	)		$	1,855.3
As of December 31, 2009
Balance Sheet
Current assets		$	5.3			$	88.7			$	66.7			$	—			$	160.7
Property and equipment, net			16.9				1,473.3				10.6				—				1,500.8
Other non-current assets			49.3				39.2				—				—				88.5
Investment in subsidiaries			1,576.5				23.3				—				(1,599.8	)			—
Assets of discontinued operations held for sale			—				64.3				29.5				—				93.8
Inter-company			1.2				—				—				(1.2	)			—
		$	1,649.2			$	1,688.8			$	106.8			$	(1,601.0	)		$	1,843.8
Current liabilities			63.4				141.8				—				—				205.2
Notes payable, long term			1,062.5				0.7				—				—				1,063.2
Other non-current liabilities			28.9				17.7				—				—				46.6
Liabilities of discontinued operations held for sale			—				29.1				5.3				—				34.4
Inter-company			—				—				1.2				(1.2	)			—
Equity			494.4				1,499.5				100.3				(1,599.8	)			494.4
		$	1,649.2			$	1,688.8			$	106.8			$	(1,601.0	)		$	1,843.8

										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, 2010
Statement of Cash Flows
Cash provided by (used in) operating activities		$	(30.9	)		$	66.3			$	(1.6	)		$	—			$	33.8
Cash used in investing activities
Capital expenditures and other			(1.0	)			(62.8	)			—				—				(63.8	)
Cash used in investing activities			(1.0	)			(62.8	)			—				—				(63.8	)
Cash provided by financing activities
Change in notes payable and other			37.7				—				—				—				37.7
Cash provided by financing activities			37.7				—				—				—				37.7
Effect of exchange rate changes on cash			—				—				(0.1	)			—				(0.1	)
Increase (decrease) in cash and cash equivalents			5.8				3.5				(1.7	)			—				7.6
Cash and cash equivalents, beginning of period			1.5				56.7				71.4				—				129.6
Cash and cash equivalents, end of period		$	7.3			$	60.2			$	69.7			$	—			$	137.2
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 expenditure 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			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

Note 9—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, 2010 and 2009.

		For the three months
		ended March 31,
		2010				2009
		(in millions)
Revenues:
L’Auberge du Lac		$	86.4			$	88.4
St. Louis (a)			76.7				59.1
Boomtown New Orleans			34.8				38.3
Belterra Casino Resort			36.3				41.0
Boomtown Bossier City			24.4				24.8
Boomtown Reno			8.8				7.6
Total Revenue		$	267.4			$	259.2
Adjusted EBITDA: (b)
L’Auberge du Lac		$	24.0			$	23.5
St. Louis (a)			14.7				10.4
Boomtown New Orleans			10.6				13.5
Belterra Casino Resort			6.5				7.8
Boomtown Bossier City			6.5				6.2
Boomtown Reno			(1.0	)			(1.3	)
Adjusted EBITDA from continuing operations			61.3				60.1
Corporate expenses (c)			(8.0	)			(9.8	)
		$	53.3			$	50.3
Other benefits (costs) from continuing operations:
Depreciation and amortization			(26.1	)			(25.5	)
Pre-opening and development costs			(8.9	)			(2.9	)
Non-cash share-based compensation			(1.4	)			(2.2	)
Write-downs, reserves and recoveries, net			3.1				(0.4	)
Other non-operating income			—				0.1
Interest expense, net of capitalized interest			(20.9	)			(16.6	)
Loss on early extinguishment of debt			(1.4	)			—
Income tax benefit (expense)			0.2				(0.2	)
Income (loss) from continuing operations			(2.1	)		$	2.6
Capital expenditures
L’Auberge du Lac		$	1.3			$	1.1
St. Louis (a)			48.8				24.1
Boomtown New Orleans			0.7				1.2
Belterra Casino Resort			1.5				3.2
Boomtown Bossier City			2.6				0.7
Boomtown Reno			0.1				0.8
Corporate and other, including properties under development (d)			10.9				2.5
		$	65.9			$	33.6

		March 31,				December 31,
		2010				2009
		(in millions)
Assets
L’Auberge du Lac		$	315.3			$	331.0
St. Louis (a)			831.3				809.3
Boomtown New Orleans			68.3				74.3
Belterra Casino Resort			191.8				193.6
Boomtown Bossier City			92.3				92.1
Boomtown Reno			40.9				41.9
Corporate and other, including new properties and discontinued operations			315.4				301.7
		$	1,855.3			$	1,843.9