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S&P Upgrades Pinnacle's Outlook

The action followed improved operating results for the six months ended June 30, 2002, for the Glendale, Calif.-headquartered casino owner and operator and reflected Standard & Poor's expectation that the positive momentum will continue in the near term, leading to improved credit measures. innacle had total debt outstanding at June 30, 2002, of slightly less than $500 million.

Pinnacle Entertainment owns and operates casino facilities in Reno, Nev.; New Orleans and Bossier City, La.; Biloxi, Miss.; and Switzerland County, Ind. It also operates casino facilities in Argentina.

"Ratings stability reflects the expectation that the company will maintain its market positions and that operating performance will gradually improve, somewhat offsetting the risks associated with Pinnacle's increased capital spending plans," said Standard & Poor's credit analyst Michael Scerbo.

In Louisiana, the substantial completion of the Bossier City facility's $25 million renovation and re-branding project should help to improve operations at this property.

The Boomtown Reno property, which has performed well, could be negatively affected over the next few years by the increase in Native American gaming in northern California.

The company's growth opportunities include the construction of a $325 million dockside gaming facility in Lake Charles, La. While the market has steadily grown, the Pinnacle project will increase capacity significantly. The company's estimated costs are expected to include significant contingencies to cover cost overruns. Groundbreaking is scheduled within the next few quarters, with opening planned for mid-2004.

In addition, Pinnacle expects to add a 300-room hotel tower within the next 18 months at its Belterra riverboat facility in southern Indiana, which is expected to enhance performance.

Financial flexibility is currently adequate, with about $100 million in excess cash on hand, full availability under the existing revolving credit facility, and no near-term maturities. However, the company's capital expenditure plans over the next few years will use excess cash and increase debt levels.

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