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Pinnacle Entertainment reports results

LAS VEGAS, Nevada -- (PRESS RELEASE) -- Pinnacle Entertainment, Inc. (NYSE: PNK) today reported financial results for the third quarter and nine months ended September 30, 2007.

For the third quarter ended September 30, 2007, revenues were $238 million and Consolidated Adjusted EBITDA(1) was $47.0 million. The quarterly results reflect record quarterly Adjusted EBITDA at L'Auberge du Lac as well as the benefit of the December 2006 acquisition of the President Riverboat Casino. For the third quarter ended September 30, 2006, revenues were $237 million and Consolidated Adjusted EBITDA was $54.0 million. The Company benefited in the prior-year quarter from the temporary closure of numerous casinos along the Mississippi Gulf Coast following the major hurricanes of 2005.

On a GAAP ("Generally Accepted Accounting Principles") basis, the Company reported net income of $5.0 million, or $0.08 per share, for the third quarter of 2007. These results reflect increased pre-opening and development costs, increased corporate costs and certain write-offs and other charges, all related to the Company's development activities. These were offset by an increase in capitalized interest. The 2006 third quarter results included a gain on the sale of certain discontinued operations, which gain was $16.5 million on a pre-tax basis, and $9.9 million, or $0.20 per share, on an after-tax basis. Inclusive of such after-tax gain, GAAP net income for the 2006 third quarter was $22.4 million, or $0.45 per share.

Meanwhile, Pinnacle made significant progress on its development pipeline during the quarter. The Company expects to open the $507 million Lumiere Place casino hotel in downtown St. Louis on December 19, pending licensing by the Missouri Gaming Commission. The $507 million total cost includes the original project, which is on budget for $495 million, plus $12 million associated with the addition of certain surface parking lots and a large pylon sign, which was approved by Pinnacle's Board of Directors in June 2007. In Baton Rouge, Louisiana, the Company owns approximately 565 acres of land and made substantial progress towards approval of a major development on that site. Finally, Pinnacle imploded the former Sands Casino Hotel in Atlantic City as part of the site preparation for construction of a major resort at the center of The Boardwalk.

Nine-Month Results

For the nine months ended September 30, 2007, revenues were $704 million and Consolidated Adjusted EBITDA was $137 million compared to revenues of $700 million and Consolidated Adjusted EBITDA of $168 million for the prior-year period. The 2007 nine-month results reflect continued strong performances at L'Auberge du Lac and Belterra, as well as the benefit of the December 2006 acquisition of the President Riverboat Casino. Boomtown New Orleans also performed well on a nine-month basis, exceeding all comparable prior-year periods except for the first nine months of 2006, when it benefited from hurricane-related factors.

On a GAAP basis, net income for the nine months of 2007 was $17.8 million, or $0.29 per share. The 2007 results reflect increased pre-opening and development costs, increased corporate costs and certain write-offs and other charges that relate to development activities, as well as a loss on early extinguishment of debt. These results were offset by an increase in capitalized interest and an income tax benefit due to the favorable settlement of certain prior years' tax-related matters. GAAP net income for the first nine months of 2006 was $81.9 million, or $1.67 per share. The 2006 results included an exceptional performance at Boomtown New Orleans following the hurricanes, net proceeds of approximately $44.8 million related to the Company's terminated merger agreement with Aztar Corporation and pre-tax gains of $27.2 million from the sale of the Company's California card club operations.

Overview

"Our properties performed well in the third quarter of 2007, led by another record quarter at L'Auberge du Lac," said Daniel R. Lee, Pinnacle's Chairman and Chief Executive Officer. "We look forward to the December openings of both Lumiere Place and L'Auberge du Lac's 250-guestroom expansion. Following initial ramp-up periods in each case, we expect Lumiere Place to contribute significantly to our Adjusted EBITDA and the expansion tower at L'Auberge du Lac to bolster that property's already strong results.

"We continue to make substantial progress on our other growth plans," Mr. Lee continued. "In Baton Rouge, our plans for a hotel and gaming entertainment complex have been approved by the Louisiana Gaming Control Board. The East Baton Rouge Metro Council has also approved a February 9, 2008 date for a local referendum vote to seek approval in East Baton Rouge for our proposed resort, as required under Louisiana law. Construction continues on our River City project in St. Louis County, which we plan to open in the first half of 2009. Working drawings are being prepared for the new Sugarcane Bay resort in Lake Charles, on which we expect to begin construction in the first quarter of 2008. We also expect to break ground on the new hotel at Boomtown New Orleans in the first half of 2008. As noted, we imploded the Sands as part of the site preparation for our larger new resort in Atlantic City. Finally, we recently submitted a proposal for a new destination casino complex in Kansas City, Kansas, and look forward to formally discussing our project with the local officials and the community."

    Recent Developments

    -- Pinnacle plans to open the Lumiere Place casino, located in downtown
       St. Louis, on December 19, subject to licensing by the Missouri Gaming
       Commission. The dramatic downtown complex will offer approximately
       2,000 slot machines and 48 table games, a 13-table poker room, a luxury
       spa, several restaurants, approximately 12,000 square feet of meeting
       and convention space, and a pedestrian tunnel linking the complex to
       the America's Center convention center, the Edward Jones Dome and the
       city's central business district. The casino and most of the complex's
       restaurants are planned to open on December 19. The two hotels that are
       part of the complex will open in phases in January and February. The
       pedestrian tunnel is not expected to open until March, due to delays
       caused by an adjoining business earlier in construction.

    -- At the River City project in St. Louis County, Pinnacle continues
       construction of the access road from a nearby interstate to the casino
       hotel, including a bridge over an active railroad yard, which is the
       critical path for this project. In December 2007, we plan to begin
       construction of the casino's foundation. As noted, the River City
       project is currently expected to open in the first half of 2009,
       subject to licensing by the Missouri Gaming Commission.

    -- At L'Auberge du Lac, Pinnacle is also anticipating a December 2007
       opening of its 250-guestroom addition. The addition will bring
       L'Auberge du Lac's total guestroom count to approximately 1,000
       guestrooms. The new guestrooms will come on line as they are completed,
       with all rooms expected to be completed by the end of January.

    -- In June 2007, the Louisiana Gaming Control Board approved Pinnacle's
       architectural plans for the Sugarcane Bay project in Lake Charles,
       Louisiana. Located adjacent to L'Auberge du Lac, Sugarcane Bay is
       expected to include approximately 400 guestrooms and suites, 1,500 slot
       machines and 50 table games, including a poker room. The Company
       expects to break ground in the first quarter of 2008 and open Sugarcane
       Bay in mid-2009, subject to various approvals by the Louisiana Gaming
       Control Board.

    -- On September 18, 2007, Pinnacle received approval from the Louisiana
       Gaming Control Board for its plans for a hotel and gaming entertainment
       project on a portion of the approximately 565 acres of land that
       Pinnacle owns in Baton Rouge. The Company acquired the land over the
       past several months at a cost of approximately $22.6 million. Both the
       design and the name of the new project, "Riviere" and "Casino Riviere,"
       evoke elegance and reflect the area's French heritage. The project,
       designed to be built in phases, features a world-class gaming resort.
       The first phase of the project includes a single-deck casino with
       approximately 1,500 slot machines and approximately 50 table games, a
       first-class hotel, a live entertainment venue and an exciting mix of
       restaurants, at an expected cost of approximately $250 million. Future
       phases may include a residential community with more than 640 family
       units, a golf course, an equestrian center and miles of walking and
       biking trails. The casino hotel requires various approvals, including a
       local-option referendum in East Baton Rouge Parish planned for February
       9, 2008, and adherence to certain conditions imposed by the Louisiana
       Gaming Control Board.

    -- Pinnacle continues the design process for its Atlantic City project,
       which for a resort of this size is expected to take at least two years
       from Pinnacle's acquisition of the site in November 2006. The implosion
       of the 21-story Sands Casino Hotel took place on October 18 and
       demolition will continue on six other large buildings and several
       smaller structures on the site over the next several months. The
       Company anticipates opening its Atlantic City project in late 2011 or
       early 2012.

    -- On September 24, 2007, Pinnacle submitted two alternative proposals for
       a new $650 million gaming entertainment complex to be located at either
       of two sites it controls in Kansas City, Kansas. The proposed
       entertainment resort features a 100,000-square-foot casino and a
       500-guestroom hotel. The gaming complex anchors a 100,000-square-foot
       convention center, including a 50,000-square-foot venue for concerts
       and live events. Pinnacle's proposals are two of the six submitted to
       the Unified Government of Wyandotte County/Kansas City, Kansas. There
       may be proposals in other jurisdictions within Wyandotte County, all
       vying for the one license recently authorized for that county by the
       Kansas legislature.

    -- Pinnacle also continues its construction of the 31-guestroom hotel
       adjoining its principal Casino Magic Argentina property in the Province
       of Neuquen. Approximately half of these guestrooms are expected to open
       late in the fourth quarter of 2007, with the balance to be opened in
       early 2008. The new hotel is expected to cost approximately $13 million
       and is being funded through the property's existing cash balances and
       operating cash flows.

Artists' renderings for certain of the Company's projects and corresponding pictures of the work in progress are available via its corporate website at http://www.pnkinc.com.

Property Highlights

L'Auberge du Lac

L'Auberge du Lac generated revenues of $84.5 million for the third quarter of 2007, a 6.7% increase over the $79.2 million in the same 2006 period. The increase in revenues contributed to a 10.0% increase in Adjusted EBITDA to a quarterly record of $21.8 million, compared to $19.8 million in the same 2006 period. Occupancy at L'Auberge du Lac's 743-guestroom hotel was 95% in the third quarter and 92% for the 12 months ended September 30, 2007.

Boomtown New Orleans

For several quarters following Hurricanes Katrina and Rita in the third quarter of 2005, Boomtown New Orleans was one of only a few casinos open in the region. One major competitor reopened in February 2006 and two others reopened in August 2006. Boomtown New Orleans' revenues declined 12.7% from the comparable 2006 period. Adjusted EBITDA was $13.5 million in the third quarter of 2007 compared to $17.2 million in the third quarter of 2006. Adjusted EBITDA was $14.6 million and $14.3 million for the 2007 first and second quarters, respectively. All of these results compare favorably to results from the comparable periods prior to the hurricanes due to shifts in population and economic growth in the West Bank area, which did not flood during the 2005 hurricanes.

Belterra Casino Resort

Belterra generated revenues of $46.9 million for the third quarter of 2007, versus $47.4 million in the same 2006 period. Adjusted EBITDA was $10.5 million in the third quarter of 2007 compared to $11.7 million in the same 2006 period.

On August 31, 2007, Belterra opened five new retail shops. Late in the third quarter of 2007, the Company began to refurbish 11 of the property's high-end suites. Five suites were completed in October and the rest are expected to be completed in December.

Boomtown Bossier City

Boomtown Bossier City had revenues of $22.6 million for the third quarter of 2007, an 8.3% decrease from the $24.6 million in the same 2006 period. Adjusted EBITDA was $4.4 million compared to $5.6 million in the same 2006 period. The Company is outfitting a barge with escalators to adjoin the Boomtown casino, improving access to the casino in this highly competitive market. The escalator boat is expected to be completed and installed in mid-2008.

President Riverboat Casino

In December 2006, the Company acquired the President Riverboat Casino, which is near the Lumiere Place project in downtown St. Louis. The President generated revenues and Adjusted EBITDA of $14.9 million and $1.6 million, respectively, for the three months ended September 30, 2007.

Boomtown Reno

Boomtown Reno closed its truck stop late in the second quarter of 2007, in order to facilitate the completion and opening of the neighboring Cabela's retail store. The parking for Cabela's utilizes the former truck stop location. In the fourth quarter of 2007, the Company expects to begin construction of a new satellite casino and travel plaza at a different location on the property's 470 acres of developable land and to open the facility in late 2008. The Cabela's store is scheduled to open on November 16, 2007.

Primarily due to the closure of the truck stop, which sold fuel at low margins, Boomtown Reno generated revenues of $17.3 million for the third quarter of 2007, a decrease from the $27.7 million in the same 2006 period. Adjusted EBITDA decreased to $2.1 million in the third quarter of 2007 compared to $3.7 million in the same 2006 period. Boomtown Reno also had $691,000 of write-downs related to the demolition of the truck stop, which amount has been excluded from the calculation of Adjusted EBITDA.

International

The International segment generated revenues of $11.6 million for the third quarter of 2007, a substantial increase over the $8.0 million in the same 2006 period. The increase in revenues contributed to an increase in Adjusted EBITDA to $4.4 million in the third quarter of 2007 compared to $2.5 million in the same 2006 period.

Other

"Other" includes the former Embassy Suites Hotel, which was purchased by the Company in 2005 and adjoins Lumiere Place in downtown St. Louis. The hotel portion of the former Embassy Suites Hotel was closed on March 31, 2007 to accommodate a renovation costing approximately $16 million, not including pre-opening costs. The former Embassy Suites Hotel will reopen as "HoteLumiere," which will be an integral part of the Lumiere Place complex.

The restaurant at the former Embassy Suites Hotel remains open and generated revenues of $256,000 for the third quarter of 2007, compared to $3.5 million from the entire hotel and restaurant in the same 2006 period. Adjusted EBITDA loss was $97,000 in the third quarter of 2007, compared to Adjusted EBITDA of $775,000 in the same 2006 period. The former Embassy Suites Hotel also had a loss on asset disposition of $2.6 million related to furniture, fixtures and equipment that are being replaced as part of the refurbishment, which has been excluded from the calculation of Adjusted EBITDA.

Other Items

Corporate Expenses. The Company continues to broaden its base of operations in order to manage the numerous projects now in development. As a result, corporate costs for the third quarter of 2007 increased to $11.1 million from $7.3 million in the prior-year period, excluding non-cash stock-based compensation charges in both periods. This did not include a $488,000 gain on the sale of a corporate airplane in the third quarter of 2007, which has been excluded from the calculation of Adjusted EBITDA.

Pre-opening and Development Costs. For the third quarter of 2007, pre-opening and development costs were $12.2 million, including $5.2 million related to the St. Louis projects, $3.4 million for the Atlantic City project and $2.1 million related to the Sugarcane Bay and proposed Baton Rouge projects. For the 2006 third quarter, pre-opening and development costs were $7.0 million, including $2.8 million related to the St. Louis projects, $2.1 million for the Atlantic City project and $1.2 million related to the Sugarcane Bay project.

Other Non-Operating Income. Other non-operating income primarily includes interest income of $4.3 million and $3.9 million for the three months ended September 30, 2007 and 2006, respectively. The increase reflects higher interest rates and higher cash levels in the recent period attributable to the Company's January equity offering and June issuance of our 7.50% senior subordinated notes. Other non-operating income also includes a $1.8 million gain on the sale on Aztar Corporation stock in the three months ended September 30, 2006.

Interest Expense. Interest expense, net of capitalized interest, was $5.9 million for the three months ended September 30, 2007 versus $13.1 million for the three months ended September 30, 2006. The decrease was principally due to significantly greater investment in projects under development or construction. Interest expense before the capitalization of interest was $17.8 million and $14.5 million for the three months ended September 30, 2007 and 2006, respectively, resulting principally from a higher debt level in the 2007 period.

Discontinued Operations. For the three months ended September 30, 2007, the Company reported a loss from discontinued operations of $670,000, net of income tax. This is principally due to legal and administrative expenses related to Casino Magic Biloxi and the insurance claims resulting from Hurricanes Katrina and Rita in 2005 against Allianz Global Risks US Insurance Company, Arch Specialty Insurance Company and RSUI Indemnity Company. The Company filed a lawsuit in August 2006 in the United States District Court for the District of Nevada against these insurance companies and intends to vigorously pursue its claims under its insurance contracts.

Quarterly results for discontinued operations in 2006 included a pre-tax book gain of approximately $16.5 million from the sale of the Company's leasehold interest and related receivables in the Hollywood Park card club.

Liquidity

The Company had approximately $352 million in cash, cash equivalents and restricted cash at September 30, 2007. Of the Company's $625 million revolving credit facility, none is currently drawn and $20.7 million was utilized for outstanding letters of credit at September 30, 2007. As of September 30, the Company had expended approximately $350 million of the $507 million budget for the Lumiere Place facility. That leaves most of the Company's significant liquidity and borrowing capacity to be used for construction of other projects. Utilization of the credit facility is currently restricted to $350 million by the Company's indenture governing its 8.75% senior subordinated notes, which become callable in 2008.

Community Contribution

The Company pays significant taxes in the communities in which it operates. During the first nine months of 2007, Pinnacle paid or accrued $173 million in gaming taxes, $14.7 million in payroll taxes, $9.1 million in property taxes, and $3.2 million in sales taxes. Setting aside income taxes, the Company paid or accrued $200 million for taxes to state and local authorities in the first nine months of 2007.

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