Pinnacle Entertainment, Inc. announced selected operating results for the fourth quarter and full year ended December 31, 2008.
Las Vegas – Pinnacle also filed twith the Securities and Exchange Commission a Form 12b-25 for an extension for filing its Annual Report on Form 10-K ended December 31, 2008 (the „Form 10-K“) because of the complexity of determining the amount of certain impairments related to goodwill, equity securities, indefinite-lived intangible assets, real estate and other long-lived assets. Extra time is needed to account for and review these impairments, in part, due to the magnitude and the number of impairments.
Fourth Quarter 2008 Results
For the fourth quarter of 2008, revenues increased 18.1% to $259 million from $219 million in the 2007 fourth quarter. Consolidated Adjusted EBITDA(1) was $45.6 million in the current quarter, an increase of 38.5% from $32.9 million in the fourth quarter of 2007.
The Company expects that the total amount of non-cash impairment charges to be recorded will range between $275 million to $330 million for the fourth quarter of 2008. As a result of these impairment charges, on a GAAP („Generally Accepted Accounting Principles“) basis, the Company expects to record a net loss ranging between approximately $253 million to $308 million for the 2008 fourth quarter compared with a net loss of $19.2 million for the 2007 fourth quarter.
Full-Year 2008 Results
For the year ended December 31, 2008, revenues rose 13.3% to $1.0 billion from $922 million for the year ended December 31, 2007. Consolidated Adjusted EBITDA was $160 million in 2008 compared to $171 million for the prior-year period.
The Company expects that the total amount of non-cash impairment charges to be recorded will range between $302 million to $357 million for the fiscal year ended December 31, 2008. As a result of these impairment charges, on a GAAP basis, the Company expects to record a net loss ranging between approximately $277 million to $332 million for the 2008 fiscal year compared with a net loss of $1.4 million for the 2007 fiscal year. The foregoing results are estimated and are subject to change.
Non-GAAP Financial Measures
(1) Consolidated Adjusted EBITDA is a non-GAAP measurement. The Company defines Consolidated Adjusted EBITDA 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, corporate-level litigation settlement costs, gain (loss) on sale of certain assets, loss on early extinguishment of debt, gain (loss) on sale of equity security investments, minority interest and discontinued operations. Not all of the aforementioned benefits and costs occur in each reporting period, but have been included in the definition based on historic activity.
The Company uses Consolidated Adjusted EBITDA as a relevant and useful measure to compare operating results among its properties and between accounting periods. The presentation of Consolidated Adjusted EBITDA has economic substance because it is used by management as a performance measure to analyze the performance of its business segments. Consolidated Adjusted EBITDA is specifically relevant in evaluating large, long-lived casino-hotel projects because it provides a perspective on the current effects of operating decisions separated from the substantial, non-operational depreciation charges and financing costs of such projects. Management eliminates the results from discontinued operations as they are discontinued. Management also reviews pre-opening and development expenses separately, as such expenses are also included in total project costs when assessing budgets and project returns and because such costs relate to anticipated future revenues and income. Management believes some investors consider Consolidated Adjusted EBITDA to be a useful measure in determining a company’s ability to service or incur indebtedness and for estimating a company’s underlying cash flows from operations before capital costs, taxes and capital expenditures. Consolidated Adjusted EBITDA also approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDA does not include depreciation or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital. The Company compensates for these limitations by using other comparative measures to assist in the evaluation of operating performance.
EBITDA measures, such as Consolidated Adjusted EBITDA, are not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure of comparing performance among different companies. See the attached „supplemental information“ tables for a reconciliation of Consolidated Adjusted EBITDA to Net loss.
