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| PNK > SEC Filings for PNK > Form 10-Q on 6-Nov-2009 | All Recent SEC Filings |
6-Nov-2009
Quarterly Report
RESULTS OF OPERATIONS
The following table highlights our results of operations for the three and nine
months ended September 30, 2009 and 2008. As discussed in Note 8 to our
unaudited Condensed Consolidated Financial Statements, we report segment
operating results based on revenues and Adjusted EBITDA. Such segment reporting
is on a consistent basis with how we measure our business and allocate resources
internally. See Note 8 to our unaudited Condensed Consolidated Financial
Statements for more information regarding our segment information.
For the three months ended For the nine months ended
September 30, September 30,
2009 2008 2009 2008
(in millions)
Revenues:
L'Auberge du Lac $ 85.8 $ 81.8 $ 260.8 $ 253.3
Boomtown New Orleans 32.6 37.4 106.4 118.9
Lumière Place 55.6 45.7 162.9 127.0
Belterra Casino Resort 41.7 43.9 125.4 130.3
Boomtown Bossier City 23.3 22.5 70.8 68.2
Casino Magic Argentina 9.1 11.4 27.2 30.5
Boomtown Reno 11.5 14.9 29.7 37.1
President Casino 5.0 5.2 15.8 20.3
Other 0.8 - 1.6 0.2
Total Revenue $ 265.4 $ 262.8 $ 800.6 $ 785.8
Operating income (loss) $ 6.4 $ (7.4 ) $ 35.4 $ (36.1 )
Loss from continuing operations $ (21.7 ) $ (8.3 ) $ (15.5 ) $ (72.4 )
Adjusted EBITDA: (a)
L'Auberge du Lac $ 19.2 $ 18.6 $ 64.2 $ 59.9
Boomtown New Orleans 7.8 11.3 32.0 40.3
Lumière Place 11.0 3.2 31.5 3.9
Belterra Casino Resort 7.2 8.5 23.2 23.7
Boomtown Bossier City 5.0 4.5 15.9 13.2
Casino Magic Argentina 2.4 3.8 7.4 9.6
Boomtown Reno (0.1 ) 0.5 (1.4 ) (2.9 )
President Casino (0.7 ) (1.7 ) (1.3 ) (3.4 )
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(a) We define
Adjusted
EBITDA for
each segment
as earnings
before
interest
income and
expense,
income taxes,
depreciation,
amortization,
pre-opening
and
development
expenses,
non-cash
share-based
compensation,
asset
impairment
costs,
write-downs,
reserves,
recoveries,
gain (loss) on
sale of
certain
assets, gain
(loss) on sale
of equity
securities,
loss on early
extinguishment
of debt and
discontinued
operations.
Segment comparison of the three and nine months ended September 30, 2009 and
2008
L'Auberge du Lac
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 75.1 $ 71.4 5.2 % $ 228.8 $ 222.8 2.7 %
Total revenues 85.8 81.8 4.9 % 260.8 253.3 3.0 %
Operating income 11.9 10.4 14.4 % 42.5 33.2 28.0 %
Adjusted EBITDA 19.2 18.6 3.2 % 64.2 59.9 7.2 %
|
L'Auberge du Lac, our largest property, increased revenues and Adjusted EBITDA during the three and nine months ended September 30, 2009 compared to the prior-year periods, reflecting improved utilization of the guestroom and amenity expansion which opened in early 2008. In addition, L'Auberge du Lac was closed for nine days during the quarter ended September 30, 2008 due to Hurricanes Gustav and Ike. There have been no such closures in the current year. Boomtown New Orleans
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 31.2 $ 35.8 (12.8 )% $ 101.7 $ 114.0 (10.8 )%
Total revenues 32.6 37.4 (12.8 )% 106.4 118.9 (10.5 )%
Operating income 6.1 9.3 (34.4 )% 26.4 33.9 (22.1 )%
Adjusted EBITDA 7.8 11.3 (31.0 )% 32.0 40.3 (20.6 )%
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Results during the three and nine months ended September 30, 2009 at Boomtown
New Orleans reflect the heightened competition in the area, principally from the
Mississippi Gulf Coast; levee construction along the primary access road to our
property; as well as general economic conditions. To address the increased
competition, Boomtown New Orleans is revisiting certain aspects of its marketing
program, including increased marketing efforts to draw in local customers with
events and promotions, which in the current period has resulted in increased
costs and reduced Adjusted EBITDA.
Lumière Place
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 44.4 $ 35.1 26.5 % $ 133.0 $ 103.1 29.0 %
Total revenues 55.6 45.7 21.7 % 162.9 127.0 28.3 %
Operating income (loss) 2.2 (6.4 ) 134.4 % 5.5 (28.6 ) 119.2 %
Adjusted EBITDA 11.0 3.2 243.8 % 31.5 3.9 707.7 %
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Lumière Place includes the Lumière Place Casino, which opened in late 2007, the Pinnacle-owned Four Seasons Hotel St. Louis and HoteLumière, each of which opened in early 2008, and other amenities, comprising the Lumière Place complex. Overall operational results at Lumière Place continued to improve in the three and nine months ended September 30, 2009 as it entered its second year of operations, consistent with most new casino openings. In addition, Missouri's gambling loss limit, wherein players were required to have player cards and losses were limited to $500 in a two-hour period, was repealed in November 2008, commensurate with an increase in the gaming tax rate. Marketing and payroll costs declined during the three and nine months ended September 30, 2009 compared to the prior-year period due to the maturation of the property. Belterra Casino Resort
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 35.2 $ 36.3 (3.0 )% $ 107.8 $ 111.0 (2.9 )%
Total revenues 41.7 43.9 (5.0 )% 125.4 130.3 (3.8 )%
Operating income 3.9 5.0 (22.0 )% 13.1 12.8 2.3 %
Adjusted EBITDA 7.2 8.5 (15.3 )% 23.2 23.7 (2.1 )%
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Results during the three and nine months ended September 30, 2009 at Belterra
reflect the effects of increased competition in the area, as well as general
economic conditions. During mid-2008, two racetrack casinos in the Indianapolis
metropolitan area opened, each of which operate approximately 2,000 slot
machines. One of these facilities replaced its temporary casino with a
significantly nicer permanent facility in March 2009. Another competitor opened
a new, larger casino in Lawrenceburg, Indiana in June 2009, replacing a smaller
facility. On November 3, 2009, Ohio voters passed a constitutional amendment
which allows only one casino to be developed in each of Cincinnati, Columbus,
Cleveland and Toledo. In the event a new casino is developed in Cincinnati,
which is likely to take several years to develop, it will provide additional
competition to Belterra.
Boomtown Bossier City
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 22.0 $ 21.1 4.3 % $ 66.7 $ 64.1 4.1 %
Total revenues 23.3 22.5 3.6 % 70.8 68.2 3.8 %
Operating income 3.4 2.6 30.8 % 11.0 7.5 46.7 %
Adjusted EBITDA 5.0 4.5 11.1 % 15.9 13.2 20.5 %
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Boomtown Bossier City achieved increased revenues and Adjusted EBITDA despite
the competitive Bossier City/Shreveport gaming market through a refinement of
the property's marketing efforts and certain cost-cutting measures. Boomtown
Bossier competes with four casino-hotels and a racetrack offering slot machines.
In addition, the Bossier City/Shreveport gaming market, which is approximately
188 miles east of Dallas/Fort Worth, competes with significant and growing
Native American gaming in southern Oklahoma, located approximately 60 miles
north of Dallas/Fort Worth.
Casino Magic Argentina
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 8.2 $ 10.1 (18.8 )% $ 24.5 $ 27.6 (11.2 )%
Total revenues 9.1 11.4 (20.2 )% 27.2 30.5 (10.8 )%
Operating income 1.7 2.7 (37.0 )% 5.2 6.8 (23.5 )%
Adjusted EBITDA 2.4 3.8 (36.8 )% 7.4 9.6 (22.9 )%
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Casino Magic Argentina includes a sizable casino-hotel facility in Neuquén,
which includes 1,076 gaming positions, and several smaller casinos in other
parts of the Province of Neuquén, with an aggregate 361 gaming positions.
Revenues have decreased due to a recent decline in the value of the Argentine
peso, as well as weakness in the Argentine economy. The decrease in Adjusted
EBITDA reflects the currency decline and inflation of certain costs, principally
payroll costs.
Under terms of our concession agreement with the Province of Neuquén (the
"province"), our license in Neuquén and San Martin de los Andes is to be
extended from 2016 to 2021 with the completion of a luxury hotel. We opened such
hotel in June 2008 and are awaiting the formal government approval of such
extension. The provincial government has passed a resolution calling for an
increase in the gaming tax rate. Our concession agreement with the province caps
the gaming tax rate at current levels. We have had discussions with the province
suggesting that the concession agreement could be renegotiated to incorporate a
longer term than 2021 and a somewhat higher tax rate. There is no certainty that
such a revision will be consummated.
Boomtown Reno
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 6.6 $ 7.5 (12.0 )% $ 17.2 $ 18.9 (9.0 )%
Total revenues 11.5 14.9 (22.8 )% 29.7 37.1 (19.9 )%
Operating loss (0.8 ) (0.7 ) 14.3 % (4.5 ) (7.6 ) (40.8 )%
Adjusted EBITDA loss (0.1 ) 0.5 (120.0 )% (1.4 ) (2.9 ) (51.7 )%
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Boomtown Reno has been affected by significant competition from the northern
California Native American gaming market, as well as poor economic conditions in
both the region and northern California. Improvements in operating income and
Adjusted EBITDA for the nine-month period are due to cost-cutting measures.
Employee headcount as of September 30, 2009 has decreased 21% from September 30,
2008.
President Casino
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Gaming revenues $ 4.6 $ 4.8 (4.2 )% $ 14.8 $ 18.6 (20.4 )%
Total revenues 5.0 5.2 (3.8 )% 15.8 20.3 (22.2 )%
Operating loss (1.4 ) (4.0 ) (65.0 )% (3.3 ) (9.7 ) (66.0 )%
Adjusted EBITDA loss (0.7 ) (1.7 ) (58.8 )% (1.3 ) (3.4 ) (61.8 )%
|
Due principally to competition from the neighboring Lumière Place and an
expanded competing property across the river, revenues for the three and nine
months ended September 30, 2009 have decreased from the same period in the prior
year. As a result, beginning in late 2008, we eliminated mid-week table game
operations at the President Casino and reduced operating hours for the entire
casino mid-week. These cost-cutting measures have resulted in a decreased
Adjusted EBITDA loss for the three and nine months ended September 30, 2009.
During 2008, operations at the President Casino were also adversely affected due
to temporary flood related closures.
The President Casino operates on a vessel known as the Admiral. The hull of the
Admiral was built in 1904. The certification of the hull by ABS Consulting
("ABS") expires in July 2010, and the Admiral may not be used to carry
passengers beyond that date without significant repairs and/or specific
approval. We currently intend to repair the hull of the Admiral prior to the
expiration of the ABS certification in July 2010. For further detail regarding
the ABS certification, see Note 6, Commitments and Contingencies, to the
unaudited Condensed Consolidated Financial Statements.
Other factors affecting loss from continuing operations The following are a description of the other costs and benefits for the three months ended September 30, 2009 and 2008, respectively:
Percentage Percentage
For the three months Increase/ For the nine months Increase/
ended September 30, (Decrease) ended September 30, (Decrease)
2009 2008 2009 vs. 2008 2009 2008 2009 vs. 2008
(in millions) (in millions)
Other benefits (costs):
Corporate expenses $ (8.7 ) $ (8.9 ) (2.2 )% $ (26.1 ) $ (30.3 ) (13.9 )%
Depreciation and
amortization (25.8 ) (29.7 ) (13.1 )% (78.1 ) (89.2 ) (12.4 )%
Pre-opening and
development costs (8.6 ) (14.6 ) (41.1 )% (21.1 ) (45.9 ) (54.0 )%
Non-cash share-based
compensation (2.1 ) (2.0 ) 5.0 % (9.8 ) (6.9 ) 42.0 %
Write-downs, reserves and
recoveries, net (0.3 ) (0.9 ) (66.7 )% (1.0 ) (8.2 ) (87.8 )%
Other non-operating
income 0.1 0.8 (87.5 )% 0.3 2.5 (88.0 )%
Gain on sale of equity
securities - - - 12.9 - 100 %
Impairment of investment
in equity securities - - - - (22.6 ) 100 %
Interest expense, net of
capitalized interest (18.7 ) (11.0 ) 70.0 % (51.5 ) (34.7 ) 48.4 %
Loss on early
extinguishment of debt (8.8 ) - (100 )% (8.8 ) - (100 )%
Income tax benefit
(expense) (0.6 ) 9.3 (106.5 )% (3.8 ) 18.6 (120.4 )%
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Corporate expenses represent unallocated payroll, professional fees, rent,
travel expenses and other general and administrative expenses not directly
incurred by our casino and hotel operations. Such expenses decreased in the
three and nine months ended September 30, 2009 due to the relocation of some
offices to lower-rent spaces, the decision to reduce the scope of an employee
401(k) matching program for 2008 and the first half of 2009 and other smaller
items. Additionally, the prior-year nine-month period included approximately
$1.5 million of compensation expense related to the resignation of a corporate
officer.
Depreciation and amortization expense decreased in the three and nine months
ended September 30, 2009 due to the decreased asset basis resulting from our
2008 fourth quarter impairment of certain long-lived assets.
Pre-opening and Development Costs Pre-opening and development costs are expensed
as incurred, consistent with authoritative guidance, and for the three and nine
months ended September 30, 2009 and 2008 consist of the following:
For the three months ended For the nine months ended
September 30, September 30,
2009 2008 2009 2008
(in millions)
Pre-opening and development costs:
. . .
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