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LAS VEGAS, Nevada -- Regional casino operator Pinnacle Entertainment reported a fourth-quarter net loss Friday, but the figure had nothing to do with the company's casino operations.
Despite the challenging economy, Pinnacle's casinos in the South and Midwest increased revenues 18.1 percent in the fourth quarter ended Dec. 31 and 13.3 percent for all of 2008.
"Pinnacle's Louisiana properties posted year-over-year increases and were above our revenue and (cash flow) estimates," Oppenheimer gaming analyst David Katz told investors. "Lumiere Place (in St. Louis) also performed better than expected. We believe the increases in Louisiana were driven by relative strength in the Houston economy."
Las Vegas-based Pinnacle reported a $320 million noncash impairment charge for real estate, goodwill and other assets in recognition of decreased values in the current economy for the company's casinos and casino development sites.
The charge led to a fourth-quarter net loss of $297.7 million, or $4.97 per share, compared with a net loss of $19.2 million, or 30 cents a share, per year earlier.
The company said both quarters had significant preopening and development costs and noncash charges related to share-based compensation.
From an operations standpoint, Pinnacle reported revenues of $259 million in the fourth quarter, an 18.2 percent jump from $219 million a year ago.
For all of 2008, revenues were $1.04 billion, compared with $921.8 million in 2007.
Cash flow in the quarter rose 38.5 percent companywide.
"Our properties performed well in the fourth quarter, despite a difficult national economy," Pinnacle Chairman and Chief Executive Officer Dan Lee said.
Revenues increased at all three of the company's Louisiana casinos, but especially at L'Auberge du Lac in Lake Charles. In the fourth quarter revenues at L'Auberge were $89.3 million, a 15.6 percent increase from a year ago. Cash flow increased 53.7 percent at the casino.
In St. Louis, Pinnacle's year-old Lumiere Place had revenues of $47.2 in the fourth quarter. Both Lee and gaming analysts said Lumiere Place will benefit from a recent change in Missouri gaming laws which removed several wagering restrictions.
"Good revenue and margin performance at L'Auberge, good cost control in Boomtown New Orleans, a nicely increasing ramp at Lumiere Place and lower-than-expected corporate expense provided for the operational beat," JP Morgan gaming analyst Joe Greff said in a note to investors.
Lee also suggested during the conference call that the company's plans to build a $2 billion hotel-casino on the Atlantic City Boardwalk is looking more like a "dream" at this point.
The company put the project on indefinite hold last fall. Pinnacle says it will either wait until the economy improves to proceed, or it will sell the land if someone makes a decent offer.
"To build what we had hoped to build in Atlantic City takes an era of dreaming," he said on a conference call to discuss fourth-quarter earnings. "It takes an era where greed is good, we should all have a good time.
"We seem to be transported to Scandinavia: We have to hide our wealth, drive modest cars, conspicuous consumption is out," he said. "We live in an era where it's just not possible to build what we had anticipated in Atlantic City. Someday, hopefully it's a better world, or somebody shows up and offers us a better deal."
And even that looks iffy. Lee said the economic crisis has made it difficult if not impossible to accurately determine the value of land Pinnacle owns on and near the Boardwalk.
"If we had an auction on that land, I'm not sure anybody would show up," he said. "The city held an auction for Bader Field, and nobody bid."
Pinnacle Entertainment shares fell 96 cents, or 15.09 percent, Friday to close at $5.40 on the New York Stock Exchange.
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