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Pinnacle Entertainment, Inc. 10-Q 2012
PNK 3.31.12 10Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________ 
FORM 10-Q
(Mark One)
x
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
or
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-13641
____________________________
PINNACLE ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
95-3667491
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
8918 Spanish Ridge Avenue
Las Vegas, NV 89148
(Address of principal executive offices) (Zip Code)
(702) 541-7777
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO x
As of the close of business on May 7, 2012, the number of outstanding shares of the registrant’s common stock was 62,533,185.



PINNACLE ENTERTAINMENT, INC.
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 EX-101 INSTANCE DOCUMENT
 EX-101 SCHEMA DOCUMENT
 EX-101 CALCULATION LINKBASE DOCUMENT
 EX-101 LABELS LINKBASE DOCUMENT
 EX-101 PRESENTATION LINKBASE DOCUMENT
 EX-101 DEFINITION LINKBASE DOCUMENT




PART I
Item 1. Financial Statements
PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(amounts in thousands, except per share data)
 
For the three months ended March 31,
 
2012
 
2011
Revenues:
 
Gaming
$
259,662

 
$
250,028

Food and beverage
16,201

 
15,587

Lodging
8,522

 
7,861

Retail, entertainment and other
8,600

 
6,671

Total revenues
292,985

 
280,147

Expenses and other costs:
 
 
 
Gaming
140,122

 
140,540

Food and beverage
16,656

 
15,969

Lodging
4,839

 
5,003

Retail, entertainment and other
4,102

 
3,266

General and administrative
54,760

 
54,264

Depreciation and amortization
26,246

 
26,152

Pre-opening and development costs
2,758

 
2,173

Write-downs, reserves and recoveries, net
8

 
691

Total expenses and other costs
249,491

 
248,058

Operating income
43,494

 
32,089

Interest expense, net of capitalized interest
(21,918
)
 
(26,099
)
Loss on early extinguishment of debt
(20,718
)
 

Loss from equity method investments
(1,595
)
 

Income (loss) from continuing operations before income taxes
(737
)
 
5,990

Income tax (expense) benefit
411

 
(388
)
Income (loss) from continuing operations
(326
)
 
5,602

Loss from discontinued operations, net of income taxes
(683
)
 
(3,241
)
Net income (loss)
$
(1,009
)
 
$
2,361

Net income (loss) per common share—basic
 
 
 
Income (loss) from continuing operations
$
(0.01
)
 
$
0.09

Loss from discontinued operations, net of income taxes
(0.01
)
 
(0.05
)
Net income (loss) per common share—basic
$
(0.02
)
 
$
0.04

Net income (loss) per common share—diluted
 
 
 
Income (loss) from continuing operations
$
(0.01
)
 
$
0.09

Loss from discontinued operations, net of income taxes
(0.01
)
 
(0.05
)
Net income (loss) per common share—diluted
$
(0.02
)
 
$
0.04

Number of shares—basic
62,187

 
61,824

Number of shares—diluted
62,187

 
62,384

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3


PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(amounts in thousands)

 
For the three months ended March 31,
 
2012
 
2011
Net income (loss)
$
(1,009
)
 
$
2,361

Post-retirement plan benefit obligation, net of income taxes
5

 
5

Comprehensive income (loss)
$
(1,004
)
 
$
2,366


See accompanying notes to the unaudited Condensed Consolidated Financial Statements.


4


PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in thousands, except per share data)
 
March 31,
2012
 
December 31,
2011
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
255,664

 
$
78,597

Accounts receivable, net of allowance for doubtful accounts of $6,938 and $4,718
17,179

 
19,565

Inventories
6,904

 
7,083

Prepaid expenses and other assets
11,515

 
11,758

Assets of discontinued operations held for sale
63,220

 
73,871

Total current assets
354,482

 
190,874

Restricted cash
6,330

 
6,451

Land, buildings, riverboats and equipment:
 

 
 

Land and land improvements
233,117

 
234,574

Buildings, riverboats and improvements
1,266,801

 
1,263,054

Furniture, fixtures and equipment
455,175

 
453,701

Construction in progress
242,601

 
173,303

 Land, buildings, riverboats and equipment, gross
2,197,694

 
2,124,632

Less: accumulated depreciation
(632,872
)
 
(609,603
)
 Land, buildings, riverboats and equipment, net
1,564,822

 
1,515,029

Goodwill
52,562

 
52,562

Equity method investment
98,730

 
97,795

Intangible assets, net
18,516

 
18,516

Other assets, net
76,945

 
69,392

Total assets
$
2,172,387

 
$
1,950,619

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
53,166

 
$
46,135

Accrued interest
19,352

 
21,270

Accrued compensation
32,423

 
39,801

Accrued taxes
17,661

 
18,769

Other accrued liabilities
55,102

 
50,544

Deferred income taxes
2,426

 
2,426

Current portion of long-term debt
3,362

 
111

Liabilities of discontinued operations held for sale
2,668

 
2,923

Total current liabilities
186,160

 
181,979

Long-term debt less current portion
1,439,324

 
1,223,874

Other long-term liabilities
22,383

 
21,944

Deferred income taxes
3,430

 
3,430

Total liabilities
1,651,297

 
1,431,227

Commitments and contingencies (Note 8)

 

Stockholders’ equity
 
 
 
Preferred stock—$1.00 par value, 250,000 shares authorized, none issued or outstanding

 

Common stock—$0.10 par value, 100,000,000 authorized, 62,533,185 and 62,143,572 shares outstanding, net of treasury shares
6,455

 
6,416

Additional paid in capital
1,046,021

 
1,043,358

Retained deficit
(511,383
)
 
(510,374
)
Accumulated other comprehensive income
87

 
82

Treasury stock, at cost, 2,008,986 of treasury shares for both periods
(20,090
)
 
(20,090
)
Total stockholders’ equity
521,090

 
519,392

Total liabilities and stockholders' equity
$
2,172,387

 
$
1,950,619

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

5


PINNACLE ENTERTAINMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(amounts in thousands)
 
For the three months ended March 31,
 
2012
 
2011
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(1,009
)
 
$
2,361

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
26,252

 
26,699

Gain on disposal of assets
(1,993
)
 
(232
)
Loss from equity method investments
1,595

 

Loss on early extinguishment of debt
20,718

 

Reserve on uncollectible loan receivable
2,000

 

Impairment of land and development costs

 
301

Amortization of debt issuance costs
1,614

 
1,869

Share-based compensation expense
2,057

 
1,452

Change in income taxes
31

 
(2,444
)
Changes in operating assets and liabilities:
 
 
 
Receivables, net
10,776

 
2,927

Prepaid expenses and other
2,042

 
1,859

Accounts payable, accrued expenses and other
(10,040
)
 
(6,499
)
Net cash provided by operating activities
54,043

 
28,293

Cash flows from investing activities:
 
 
 
Capital expenditures
(65,989
)
 
(38,293
)
Purchase of River Downs racetrack

 
(45,193
)
Equity method investments, inclusive of capitalized interest
(2,530
)
 

Proceeds from sale of property and equipment
3,647

 
923

Loans receivable
(2,000
)
 

Net cash used in investing activities
(66,872
)
 
(82,563
)
Cash flows from financing activities:
 
 
 
Proceeds from Credit Facility
47,500

 
10,000

Repayments under Credit Facility
(103,500
)
 
(10,000
)
Proceeds from issuance of long-term debt
646,750

 

Repayment of long-term debt
(389,090
)
 
(24
)
Proceeds from common stock options exercised
612

 
2,361

Debt issuance and other financing costs
(12,737
)
 

Net cash provided by financing activities
189,535

 
2,337

Increase (decrease) in cash and cash equivalents
176,706

 
(51,933
)
Cash and cash equivalents at the beginning of the period
80,294

 
195,387

Cash and cash equivalents at the end of the period
$
257,000

 
$
143,454

Supplemental cash flow information:
 
 
 
Cash paid for interest, net of amounts capitalized
$
22,310

 
$
19,162

Cash payments (refunds) related to income taxes, net
12

 
(352
)
Increase in construction-related deposits and liabilities
11,746

 
5,577

See accompanying notes to the unaudited Condensed Consolidated Financial Statements

6


PINNACLE ENTERTAINMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1—Summary of Significant Accounting Policies
Basis of Presentation and Organization: Pinnacle Entertainment, Inc. (“Pinnacle”) is an owner, operator and developer of casinos and related hospitality and entertainment facilities. We operate casinos located in Lake Charles, New Orleans and Bossier City, Louisiana (L’Auberge Lake Charles, Boomtown New Orleans and Boomtown Bossier City), St. Louis, Missouri (River City Casino and Lumière Place Casino and Hotels), and southeastern Indiana (Belterra Casino Resort). In addition, we own and operate a racetrack facility in Cincinnati, Ohio (River Downs). We view each property as an operating segment, with the exception of our properties located in St. Louis, Missouri, which are aggregated into the “St. Louis” reporting segment. We also own 26% of the equity in Asian Coast Development (Canada), Ltd. ("ACDL"), a British Columbia corporation that is developing Vietnam's first integrated resort near Ho Chi Minh City, which is accounted for under the equity method of accounting. For further details, see Note 6, Equity Method Investments. References in these footnotes to “Pinnacle,” the “Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where stated or the context otherwise indicates.
We have classified certain of our assets and liabilities as held for sale in our unaudited Condensed Consolidated Balance Sheets and include the related results of operations in discontinued operations, including our Boomtown Reno property. For further information, see Note 7, Discontinued Operations. Our unaudited Condensed Consolidated Statements of Cash Flows have not been adjusted for discontinued operations.
        
We are also developing L'Auberge Baton Rouge in Baton Rouge, Louisiana, which we currently expect will open by Labor Day 2012. However, the ultimate opening date is dependent upon the construction progress and obtaining regulatory approvals, among other factors.

In April 2012, we entered into agreements to execute a series of transactions that would result in us acquiring 75.5% of the equity of Retama Partners, Ltd., the owner of the racing license for Retama Park Racetrack. Located approximately 20 miles northeast of downtown San Antonio, Texas, Retama Park is a class 1 pari-mutuel horse-racing track directly off of Interstate 35 in Selma, Texas.

Principles of Consolidation: The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions of the Securities and Exchange Commission (“SEC”) to the Quarterly Report on Form 10-Q and, therefore, do not include all information and notes necessary for complete financial statements in conformity with the instructions for generally accepted accounting principles in the United States (“GAAP”). The results for the periods indicated are unaudited, but reflect all adjustments that management considers necessary for a fair presentation of operating results. The unaudited Condensed Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries. Investments in unconsolidated affiliates which are 50% or less owned are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for interim periods are not indicative of a full year of operations. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2011.
Use of Estimates: The preparation of unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and our mychoice customer loyalty program, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and intangible assets, contingencies and litigation, and estimates of the forfeiture rate and expected life of share-based awards and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates.
Fair Value: Fair value measurements affect our accounting and impairment assessments of our long-lived assets, investments in unconsolidated affiliates, assets acquired in an acquisition, goodwill, and other intangible assets. Fair value measurements also affect our accounting for certain financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

7


measurement date and is measured according to a hierarchy that includes: "Level 1" inputs, such as quoted prices in an active market for identical assets or liabilities; "Level 2" inputs, which are observable inputs for similar assets; or "Level 3" inputs, which are unobservable inputs.
We measure our liability for deferred compensation on a recurring basis. As of March 31, 2012, our liability for deferred compensation had a balance and fair value of $1.3 million and was valued using Level 1 inputs.
Land, Buildings, Riverboats and Equipment: Land, buildings, riverboats and equipment are stated at cost. Land includes land not currently being used in our operations, which totaled $30.3 million at March 31, 2012 and December 31, 2011. We capitalize the costs of improvements that extend the life of the asset. Construction in progress at March 31, 2012 relates primarily to our L'Auberge Baton Rouge project. We expense maintenance and repair costs as incurred. Gains or losses on the dispositions of land, buildings, riverboats and equipment are included in the determination of income.

Goodwill and Other Intangible Assets: Goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter, or more frequently if there are indications of possible impairment, by applying a fair-value-based test. There were no impairments to goodwill or intangible assets during the three months ended March 31, 2012 and 2011, respectively.
The mychoice Customer Loyalty Program: Our customer loyalty program, mychoice, offers incentives to customers who gamble at certain of our casinos. Customers earn points based on their level of play that may be redeemed for benefits such as cash back, shopping, dining, hotel stays, or free credit that can be replayed in the slot machines or at table games. The reward credit balance will be forfeited if the customer does not earn any reward credits over the prior six-month period. In addition, based on their level of play, customers can earn additional benefits without redeeming points, such as a car lease, among other items. We accrue a liability for the estimated cost of providing these benefits as the benefits are earned. Estimates and assumptions are made regarding cost of providing the benefits, breakage rates, and the mix of goods and services customers will choose. We use historical data to assist in the determination of estimated accruals. Changes in estimates or customer redemption habits could produce significantly different results. At March 31, 2012 and December 31, 2011, we had accrued $12.3 million and $10.8 million, respectively, for the estimated cost of providing these benefits. Such amounts are included in "Other accrued liabilities" in our unaudited Condensed Consolidated Balance Sheets.
Gaming Taxes: We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on our gaming revenues and are recorded as a gaming expense in the unaudited Condensed Consolidated Statements of Operations.
 
For the three months ended March 31,
 
2012
 
2011
 
(in millions)
Gaming taxes
$
76.6

 
$
74.9

Pre-opening and Development Costs: Pre-opening and development costs are expensed as incurred. For the three months ended March 31, 2012 and 2011, respectively, they consist of the following:
 
For the three months ended March 31,
 
2012
 
2011
 
(in millions)
Baton Rouge
$
1.7

 
$
1.0

Other
1.1

 
1.2

Total pre-opening and development costs
$
2.8

 
$
2.2

Earnings per Share: For the three months ended March 31, 2012, we recorded a net loss from continuing operations. Accordingly, the potential dilution from the assumed exercise of stock options is anti-dilutive. As a result, basic earnings per share is equal to diluted earnings per share for such years and options and securities that could potentially dilute basic earnings per share in the future that were not included in the computation of diluted earnings per share were 0.4 million.
Diluted earnings per share reflects the addition of potentially dilutive securities, which include in-the money stock options and restricted stock units. We calculate the effect of dilutive securities using the treasury stock method. A total of 3.6 million out-of-money stock options were excluded from the calculation of diluted earnings per share for the three months ended March

8


31, 2011, because including them would have been anti-dilutive.

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board ("FASB") issued authoritative guidance regarding comprehensive income. An entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total of other comprehensive income, and a total amount for comprehensive income. This update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. The amendments in this new guidance do not change the items that must be reported in comprehensive income or when an item of other comprehensive income must be reclassified to net income. This guidance is effective for fiscal years and interim periods within those years, beginning after December 15, 2011, with retrospective application. We adopted this guidance for the quarterly period ended March 31, 2012.
A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited Condensed Consolidated Financial Statements.

Note 2—Long-Term Debt
Long-term debt at March 31, 2012 and December 31, 2011 consists of the following:
 
March 31,
2012
 
December 31,
2011
 
(in millions)
Senior Secured Credit Facility
$

 
$
56.0

Term Loan
321.8

 

7.75% Senior Subordinated Notes due 2022
325.0

 

8.75% Senior Subordinated Notes due 2020
350.0

 
350.0

8.625% Senior Notes due 2017
445.3

 
445.1

7.50% Senior Subordinated Notes due 2015

 
372.2

Other secured and unsecured notes payable
0.6

 
0.7

 
1,442.7

 
1,224.0

Less current maturities
(3.4
)
 
(0.1
)
 
$
1,439.3

 
$
1,223.9

Senior Secured Credit Facility: In August 2011, we entered into the Fourth Amended and Restated Credit Agreement for a $410 million credit facility ("Credit Facility"), which matures in August 2016. As of March 31, 2012, we had no borrowings outstanding under the Credit Facility, and had $11.1 million committed under letters of credit for various self-insurance programs.

Term Loan: On March 19, 2012, we entered into a $325 million Incremental Term Loan (the "Term Loan") under the Credit Facility. The Term Loan matures with all outstanding principal amounts due and payable March 19, 2019. The Term Loan requires payments of $3.25 million annually, payable in equal quarterly installments, with any remaining amount of the Term Loan required to be repaid in full on the maturity date. The Term Loan bears interest, at our option, at either a LIBOR rate plus a margin of 3.00% or at a base rate plus a margin of 1.50%. The LIBOR rate carries a floor of 1.0%. As discussed below, we used a portion of the Term Loan, to redeem a portion of our then existing 7.50% senior subordinated notes due 2015 ("7.50% Notes”).

7.75% Senior Subordinated Notes due 2022: On March 19, 2012, we issued $325 million in aggregate principal amount of 7.75% senior subordinated notes due 2022 (“7.75% Notes”). The 7.75% Notes were issued in a public offering pursuant to a Registration Statement on Form S-3 at par, with interest payable on April 1 and October 1 of each year, beginning, October 1, 2012. Net of initial purchasers’ fees and various costs and expenses, net proceeds from the offering were approximately $318.3 million. We used all of the net proceeds of the 7.75% Notes offering and a portion of the net proceeds from the Term Loan to

9


redeem all $385 million in aggregate principal amount of our 7.50% Notes and to repay all $70 million in then outstanding revolving credit borrowings under the Credit Facility.

The 7.75% Notes are senior subordinated, unsecured obligations, and are subordinated in right of payment to all of our existing and future senior debt, including debt under the Credit Facility and the 8.625% senior notes due 2017, and rank equally with our existing and future senior subordinated debt, including our 8.75% senior subordinated notes due 2020. The 7.75% Notes are guaranteed on a senior subordinated basis by certain of our current and future domestic restricted subsidiaries. The 7.75% Notes are effectively subordinated to the Credit Facility, as well as any other secured debt which may be issued in the future.

7.50% Senior Subordinated Notes due 2015: In March 2012, we redeemed all $385 million in aggregate principal amount of our 7.50% Notes, of which we held $10 million. Holders were paid an aggregate of approximately $407 million, representing 103.75% of par, plus accrued and unpaid interest.

Loss on early extinguishment of debt: During the three months ended March 31, 2012, we incurred a $20.7 million loss related to the early redemption of our 7.50% Notes. The loss included redemption premiums, write off of previously unamortized debt issuance costs and original discount costs. During the three months ended March 31, 2011 we had no such loss.
Interest expense, net of capitalized interest was as follows:
 
For the three months ended March 31,
 
2012
 
2011
 
(in millions)
Interest expense before capitalization of interest
$
27.3

 
$
26.9

Less: capitalized interest
(5.4
)
 
(0.8
)
Total interest expense, net of capitalized interest
$
21.9

 
$
26.1

       
Interest expense is capitalized on internally constructed assets at our overall weighted average cost of borrowing. Capitalized interest increased in 2012 as compared to 2011 due to our Baton Rouge project and our investment in Asian Coast Development (Canada), Ltd. ("ACDL"). We have capitalized interest on our investment in ACDL, as ACDL has not begun its principal operations, which consists of the Ho Tram Strip beachfront complex of integrated resorts and residential developments in southern Vietnam. ACDL currently has activities in progress to commence these planned operations, and is using all funds to acquire assets for the future operations. Once ACDL opens the first phase of this development, which is expected to occur in 2013, the investment will no longer qualify for capitalization of interest.
Fair Value of Financial Instruments: The estimated fair value of our senior notes and senior subordinated notes was based on Level 2 inputs on or about March 31, 2012 and December 31, 2011, and the fair value of our credit facility was based on Level 2 inputs using estimated fair values of comparable debt instruments on or about March 31, 2012 and December 31, 2011. The estimated fair value of our long-term debt is as follows:
 
March 31,
2012
 
December 31,
2011
 
(in millions)
Fair value of long term debt
$
1,538.2

 
$
1,243.5


Note 3—Income Taxes

Our effective income tax rate for continuing operations for the three months ended March 31, 2012 was a benefit of 55.8%, or $0.4 million, as compared to an expense of 6.5% or $0.4 million for the prior-year period. Our tax rate differs from the statutory rate of 35.0% due to the effects of permanent non-deductible expenses, the recording of a valuation allowance against a portion of our deferred tax assets generated in the current year, and a reserve for unrecognized tax benefits. In March 2012, the Internal Revenue Service commenced an examination of our corporate income tax returns for the years 2009 and 2010. Our Indiana income tax filings for the years 2005, 2006, and 2007 are also currently under appeal. For further discussion, see Note 8, Commitments and Contingencies.

10


Note 4—Employee Benefit and Other Plans
Share-based Compensation: As of March 31, 2012, we had approximately 5.0 million share-based awards outstanding, approximately 0.3 million of which are restricted stock units and other share based awards, and the rest of which are common stock options. In addition, we had approximately 2.0 million share-based awards available for grant. We recorded share-based compensation expense as follows:
 
For the three months ended March 31,
 
2012
 
2011
 
(in millions)
Share-based compensation expense
$
2.0

 
$
1.5

         
The unamortized compensation costs not yet expensed related to stock options totaled approximately $13.2 million at March 31, 2012 and the weighted average period over which the costs are expected to be recognized is approximately three years. The aggregate amount of cash we received from the exercise of stock options is described below. The associated shares were newly issued common stock.

Stock options: The following table summarizes information related to our common stock options:
 
Number of
Stock Options
 
Weighted Average
Exercise Price
Options outstanding at January 1, 2012
5,336,929

 
$
12.84

Granted
85,400

 
$
11.02

Exercised
(69,250
)
 
$
8.19

Canceled, Forfeited
(329,950
)
 
$
17.65

Options outstanding at March 31, 2012
5,023,129

 
$
12.56

Vested or expected to vest at a point in the future as of March 31, 2012
2,014,844

 
$
11.65

Options exercisable at March 31, 2012
2,453,147

 
$
13.56


The following information is provided for our stock options:
 
For the three months ended March 31,
 
2012
 
2011
Weighted-average grant date fair value
$
5.67

 
$
7.05

Non-vested Shares: The following table summarizes information related to our non-vested shares, which includes restricted stock units:
 
Number of
Shares
 
Weighted Average
Grant Date Fair Value
Unvested shares at January 1, 2012
224,970

 
$
11.51

Granted
141,650

 
$
11.10

Vested
(79,510
)
 
$
9.97

Canceled, Forfeited

 
$

Unvested shares at March 31, 2012
287,110

 
$
11.73


Unamortized compensation costs not yet expensed attributable to non-vested shares totaled approximately $3.1 million at March 31, 2012 and the weighted average period over which the costs are expected to be recognized is approximately three years.


11


Note 5—Write-downs, reserves and recoveries, net

Write-downs, reserves and recoveries, net consist of the following:
 
For the three months ended March 31,
 
2012
 
2011
 
(in millions)
Loss (gain) on disposal of assets
$
(2.0
)
 
$
0.7

Reserve on uncollectable loan receivable
$
2.0

 
$

Write-downs, reserves and recoveries, net
$

 
$
0.7

Loss (gain) on disposal of assets: During the three months ended March 31, 2012, we recorded a net gain of $2.5 million related to settlement proceeds received from the U.S. Army Corps of Engineers related to the compensation for land commandeered and severance damages associated with construction of a floodwall and easement designation on our property in New Orleans, Louisiana. This gain was offset by losses on disposals of slot and other equipment and write-off of design fees in the normal course of business. Our loss during the three months ended March 31, 2011 relates to the disposal of slot and other equipment at our properties.
Reserve on uncollectable loan receivable: In January 2012, we made a $2.0 million loan to a company, and in February 2012, the borrower filed for protection under Chapter 11 of the U.S. Bankruptcy Code. As the result of the filing, we determined it was appropriate to fully reserve for the loan receivable.

Note 6— Equity Method Investments

We apply equity method accounting for investments when we do not control the investee, but have the ability to exercise significant influence over its operating and finance policies. Equity method investments are recorded at cost, with the allocable portion of the investee's income or loss reported in earnings, and adjusted for capital contributions to and distributions from the investee. Distributions in excess of equity method earnings, if any, are recognized as a return of investment and recorded as investing cash flows in the unaudited Condensed Consolidated Statement of Cash Flows. We review our equity investments for impairment whenever events or changes in circumstances indicate that the carrying value of our investment may have experienced an "other-than-temporary" decline in value. If such conditions exist, we would compare the estimated fair value of the investment to its carrying value to determine if an impairment is indicated. In addition, we would determine if the impairment is "other-than-temporary" based on our assessment of all relevant factors, including consideration of our intent and ability to retain the investment. To estimate fair value, we would use a discounted cash flow analysis based on estimated future results of the investee and market indicators of terminal year capitalization rates.

During the first quarter of 2012, we committed to invest $2.0 million in Farmworks, a land re-utilization project in Downtown St. Louis. We will receive credit for approximately $10.0 million towards our obligation to invest $50.0 million in St. Louis as a result of this transaction. This investment will be accounted for under the equity method.

In August 2011, we invested $95 million in ACDL in exchange for a 26% ownership interest, which is accounted for under the equity method, and a management agreement related to the second phase of the Ho Tram Strip project. ACDL is the owner and developer of the Ho Tram Strip beachfront complex of destination integrated resorts and residential developments in southern Vietnam. The first phase of the Ho Tram Strip, MGM Grand Ho Tram, is currently under construction with a planned opening in 2013. The second integrated resort of the Ho Tram Strip, for which we secured a management agreement in conjunction with our investment, will be jointly developed by Pinnacle and ACDL, and owned by ACDL.

Because the financial statements of ACDL are not available to incorporate with our financial statements in the applicable time period, we record our allocable share of income or loss on a one quarter lag. As ACDL is a development stage entity, their results included no revenues and a net loss of $5.9 million for the three months ended December 31, 2011. During the three months ended March 31, 2012, our proportional share of ACDL's losses totaled $1.6 million.

Our purchase price of $95.0 million exceeds the underlying equity in the net book assets of ACDL, as the fair value of the gaming license and the potential future growth of ACDL exceeds their current book value. The portion of this difference attributable to the fair value of the gaming license will be amortized over the term of the gaming license, or 50 years, which amortization will be included in our determination of income or loss from equity method investments. The portion of this difference attributable to equity method goodwill will not be amortized.

12



We have capitalized interest on our investment in ACDL, as ACDL has not begun its principal operations. ACDL currently has activities in progress to commence these planned operations, and is using all funds to acquire assets for the future operations. Once ACDL opens the first phase of this operation, the investment will no longer qualify for capitalization of interest. Capitalized interest on this investment was $2.1 million for the three months ended March 31, 2012.

Although ACDL has obtained a portion of the funding for the first phase of the first integrated resort, there is a funding gap that will require additional capital to complete such first phase. It is uncertain whether ACDL will be able to obtain this funding or funds in a timely manner, or on acceptable terms, or at all. It is also uncertain whether the first phase of the first integrated resort will be completed or that any subsequent phases or the second integrated resort of the Ho Tram Strip will be developed. If ACDL is unable to build the resort complex as planned, it will have a negative impact on our investment in ACDL. ACDL's operations will be subject to the significant business, economic, regulatory and competitive uncertainties and contingencies frequently encountered by new businesses in new gaming jurisdictions and other risks associated with this investment, many of which are beyond ACDL's or our control. The gaming elements of the businesses will be subject to regulation by the government of Vietnam and uncertainty exists as to how such regulation will affect ACDL's gaming operations. For a further discussion related to the risks associated with our investment in ACDL, please see Part II, Item 1A. Risk Factors.

Note 7—Discontinued Operations
Discontinued operations as of March 31, 2012 consist primarily of our Boomtown Reno operations and our Atlantic City operations.
Boomtown Reno: In November 2011, we entered into a definitive agreement to sell our Boomtown Reno operations, which sale is expected to close in 2012. The proceeds from the transaction are expected to be approximately $12.9 million, with the potential for an additional $3.8 million if an option granted to the buyer is exercised to purchase our membership interest in PNK (Reno), LLC and additional land adjacent to Boomtown Reno. We will operate Boomtown Reno until the transaction closes. We expect no significant on-going costs with this operation after the transaction closes. In addition, we are currently marketing the additional excess land adjacent to our property as for sale. We have reflected the business as discontinued operations and the related assets and liabilities as held for sale.
Atlantic City: In the first quarter of 2010, we made the decision to sell our Atlantic City operation. Since that time, we have actively marketed the land and related operations, however, events and circumstances beyond our control have extended the period to complete the sale of this operation beyond one year. We have continued to reflect the business as discontinued operations and the related assets and liabilities as held for sale.
During 2011, the assessed value of our land in Atlantic City was reduced and we were awarded a property tax refund of $8.2 million, for which we recorded a gain and an associated receivable as of December 31, 2011. We collected the refund in February 2012.
Revenue, expense and net loss for discontinued operations are summarized as follows:
 
For the three months ended March 31,
 
2012
 
2011
 
(in millions)
Revenues
$
8.5

 
$
7.8

Operating loss
$
(0.8
)
 
$
(3.5
)
Income tax benefit
0.1

 
0.3

Loss from discontinued operations, net of income taxes
$
(0.7
)
 
$
(3.2
)

13


Net assets for entities and operations included in discontinued operations are summarized as follows:
 
March 31,
2012
 
December 31,
2011
 
(in millions)
Assets:
 
 
 
Property and equipment, net
$
54.5

 
$
54.4

Other assets, net
8.7

 
19.5

Total assets
$
63.2

 
$
73.9

Liabilities:
 
 
 
Total liabilities
$
2.7

 
$
2.9

Net assets
$
60.5

 
$
71.0


Note 8—Commitments and Contingencies

Guaranteed Maximum Price Agreement for L'Auberge Casino & Hotel Baton Rouge: In April 2010, we entered into an Agreement for Guaranteed Maximum Price Construction Services with a general contractor for the construction of L'Auberge Baton Rouge. In May 2011, we entered into an amendment to the agreement, which, among other things, provides that the contractor will complete the construction of the casino for the total guaranteed maximum price of approximately $229 million and currently provides for a guaranteed date of substantial completion of May 31, 2012. We expect L'Auberge Baton Rouge to open by Labor Day 2012. The guaranteed maximum price set by the amendment to the agreement is a portion of the total budget for the project of $368 million.
Redevelopment Agreement: In connection with our Lumière Place Casino and Hotel ("Lumière Place"), we have a redevelopment agreement which, among other things, commits us to oversee the investment of $50.0 million in residential housing, retail or mixed-use developments in the City of St. Louis within five years of the opening of Lumière Place. Such investment can be made with partners and partner contributions and project debt financing, all of which count toward the $50.0 million investment commitment. To date, we have invested or committed in partnership with other parties certain projects the provide us with approximately $13 million in credits toward investments under the redevelopment agreement. The redevelopment agreement also contains certain contingent payments in the event of certain defaults. If we and any development partners collectively fail to invest $50.0 million in residential housing, retail, or mixed-use developments within five years of the opening of the casino and hotels, we would be obligated to pay an additional annual service fee of $1.0 million, less applicable credits, in year six, $2.0 million in years seven and eight, and $2.0 million annually thereafter, adjusted pro-rata for investments made, and by changes in the consumer price index. We are also obligated to pay an annual fee of $1.0 million to the City of St. Louis, which obligation began after our River City Casino opened in March 2010.

Lease and Development Agreement for River City Casino: In connection with our River City Casino, we have a lease and development agreement with the St. Louis County Port Authority which, among other things, commits us to lease 56 acres for 99 years (subject to certain termination provisions). We have invested the minimum requirement of $375.0 million, pursuant to the agreement. From April 1, 2010 through the expiration of the term of the lease and development agreement, we are required to pay to St. Louis County as annual rent the greater of (a) $4.0 million, or (b) 2.5% of annual adjusted gross receipts, as that term is defined in the lease and development agreement. We are also required to invest an additional $75 million in the second phase of the project to construct: (a) a hotel with a minimum of 200 guestrooms, (b) a meeting room/event space with at least 10,000 square feet, and (c) a parking garage with a minimum of 1,600 parking spaces. We are required to achieve substantial completion of the second phase by October 31, 2013. In the event that the second phase is not substantially completed by October 31, 2013, we are required to pay liquidated damages of $2.0 million beginning on November 1, 2013. In each subsequent year that the second phase is not opened, the amount of liquidated damages increases by $1.0 million hence, $3.0 million in 2014, $4.0 million in 2015, $5.0 million in 2016 and $6.0 million in 2017. As a result, the maximum amount of liquidated damages that we would have to pay if the second phase is not completed is $20.0 million. Our previously announced $82.0 million expansion project at River City that is currently underway is expected to fulfill this commitment.

Self-Insurance: We self-insure various levels of general liability and workers' compensation at all of our properties and medical coverage at most of our properties. Insurance reserves include accruals for estimated settlements for known claims, as well as accruals for estimates of claims not yet made. At March 31, 2012 and December 31, 2011, we had total self-insurance accruals of $14.5 million and $14.8 million, respectively, which are included in “Other accrued liabilities” in our unaudited Condensed Consolidated Balance Sheets.


14



Indiana Tax Dispute: In 2008, the Indiana Department of Revenue (“IDR”) commenced an income tax examination of our Indiana income tax filings for the years 2005, 2006, and 2007. In 2010, we received a proposed assessment in the amount of $7.3 million, excluding interest and penalties. We filed a protest requesting abatement of all taxes, interest and penalties and had two hearings with the IDR where we provided additional facts and support. At issue is whether income and gain from certain asset sales, including the sale of Hollywood Park Racetrack in 1999, and other transactions outside of Indiana, such as the Aztar merger termination fee in 2006, which we reported on our Indiana state tax returns for the years 2000 through 2007, resulted in business income subject to apportionment. In April 2012, the IDR issued a supplemental letter of findings that denied our protest on most counts. We believe our tax return position should be sustained on technical merits and intend to contest this matter in tax court. In the supplemental letter of findings, the IDR did not raise any new technical arguments or advance any new theory that would alter our judgment regarding the recognition or measurement of the unrecognized tax benefit related to this audit. Accordingly, we continue to believe we have adequately reserved for the potential outcome.

Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations.

15


Note 9—Consolidating Condensed Financial Information

Our subsidiaries (excluding a subsidiary that owns 26% of the equity in ACDL; a subsidiary with approximately $8.0 million in cash and cash equivalents as of March 31, 2012; a subsidiary with approximately $15.1 million in cash and cash equivalents as of March 31, 2012; and certain non-material subsidiaries) have fully and unconditionally and jointly and severally guaranteed the payment of all obligations under our senior and senior subordinated notes, as well as our Credit Facility. Our Atlantic City subsidiaries do not guarantee our Credit Facility. Separate financial statements and other disclosures regarding the subsidiary guarantors are not included herein because management has determined that such information is not material to investors. In lieu thereof, we include the following:

 
Pinnacle
Entertainment,
Inc.
 
100% Owned
Guarantor
Subsidiaries(a)
 
100% Owned
Non-
Guarantor
Subsidiaries(b)
 
Consolidating
and
Eliminating
Entries
 
Pinnacle
Entertainment,
Inc.
Consolidated
 
(in millions)
For the three months ended March 31, 2012
 
 
 
 
 
 
 
 
Statement of Operations
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$

 
$
259.7

 
$

 
$

 
$
259.7

Food and beverage

 
16.2

 

 

 
16.2

Other

 
17.1

 

 

 
17.1

 

 
293.0

 

 

 
293.0

Expenses:
 
 
 
 
 
 
 
 
 
Gaming

 
140.1

 

 

 
140.1

Food and beverage

 
16.7

 

 

 
16.7

General and administrative and other
7.6

 
58.9

 

 

 
66.5

Depreciation and amortization
0.7

 
25.5

 

 

 
26.2

Write-downs, reserves and recoveries

 
(2.0
)
 
2.0

 

 

 
8.3

 
239.2

 
2.0

 

 
249.5

Operating income (loss)
(8.3
)
 
53.8

 
(2.0
)
 

 
43.5

Equity earnings of subsidiaries
47.1

 

 

 
(47.1
)
 

Interest expense and non-operating income, net
(27.3
)
 
3.3

 
2.1

 

 
(21.9
)
Loss on early extinguishment of debt
(20.7
)
 

 

 

 
(20.7
)
Loss from equity method investment

 

 
(1.6
)
 

 
(1.6
)
Income (loss) from continuing operations before inter-company activity and income taxes
(9.2
)
 
57.1

 
(1.5
)
 
(47.1
)
 
(0.7
)
Management fee & inter-company interest
7.8

 
(5.7
)
 
(2.1
)
 

 

Income tax benefit
0.4

 

 

 

 
0.4

Income (loss) from continuing operations
(1.0
)
 
51.4

 
(3.6
)
 
(47.1
)
 
(0.3
)
Loss from discontinued operations, net of taxes

 
(0.7
)
 

 

 
(0.7
)
Net income (loss)
$
(1.0
)
 
$
50.7

 
$
(3.6
)
 
$
(47.1
)
 
$
(1.0
)



16


 
Pinnacle
Entertainment,
Inc.
 
100% Owned
Guarantor
Subsidiaries(a)
 
100% Owned
Non-
Guarantor
Subsidiaries(b)
 
Consolidating
and
Eliminating
Entries
 
Pinnacle
Entertainment,
Inc.
Consolidated
 
(in millions)
For the three months ended March 31, 2011
 
 
 
 
 
 
 
 
Statement of Operations
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
Gaming
$

 
$
250.0

 
$

 
$

 
$
250.0

Food and beverage

 
15.6

 

 

 
15.6

Other

 
14.5

 

 

 
14.5

 

 
280.1

 

 

 
280.1

Expenses:
 
 
 
 
 
 
 
 
 
Gaming

 
140.5

 

 

 
140.5

Food and beverage

 
16.0

 

 

 
16.0

General and administrative and other
10.2

 
54.4

 

 

 
64.6

Depreciation and amortization
0.9

 
25.3

 

 

 
26.2

Write-downs, reserves and recoveries
0.5

 
0.2

 

 

 
0.7

 
11.6

 
236.4

 

 

 
248.0

Operating income (loss)
(11.6
)
 
43.7

 

 

 
32.1

Equity earnings of subsidiaries
38.2

 
0.4

 

 
(38.6
)
 

Interest expense and non-operating income, net
(26.9
)
 
0.8

 

 

 
(26.1
)
Loss on early extinguishment of debt

 

 

 

 

Income (loss) from continuing operations before inter-company activity and income taxes
(0.3
)
 
44.9

 

 
(38.6
)
 
6.0

Management fee & inter-company interest
3.1

 
(3.1
)
 

 

 

Income tax expense
(0.4
)
 

 

 

 
(0.4
)
Income (loss) from continuing operations
2.4

 
41.8

 

 
(38.6
)
 
5.6

Income (loss) from discontinued operations, net of taxes

 
(3.7
)
 
0.5

 

 
(3.2
)
Net income (loss)
$
2.4

 
$
38.1

 
$
0.5

 
$
(38.6
)
 
$
2.4




17


 
Pinnacle
Entertainment,
Inc.
 
100% Owned
Guarantor
Subsidiaries(a)
 
100% Owned
Non-
Guarantor
Subsidiaries(b)
 
Consolidating
and
Eliminating
Entries
 
Pinnacle
Entertainment,
Inc.
Consolidated
 
(in millions)
As of March 31, 2012
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
 
 
 
 
Current assets
$
179.6

 
$
88.5

 
$
23.1

 
$

 
$
291.2

Property and equipment, net
21.9

 
1,542.4

 
0.5

 

 
1,564.8

Other non-current assets
66.0

 
88.4

 

 

 
154.4

Investment in subsidiaries
1,746.1

 

 

 
(1,746.1
)
 

Equity method investment

 

 
98.7

 

 
98.7

Assets of discontinued operations held for sale

 
63.9

 

 
(0.6
)
 
63.3

Inter-company
1.2

 

 

 
(1.2
)
 

 
$
2,014.8

 
$
1,783.2

 
$
122.3

 
$
(1,747.9
)
 
$
2,172.4

Current liabilities
$
40.1

 
$
143.3

 
$
0.1

 
$

 
$
183.5

Notes payable, long term
1,438.8

 
0.5

 

 

 
1,439.3

Other non-current liabilities
14.8

 
11.0

 

 

 
25.8

Liabilities of discontinued operations held for sale

 
2.7

 

 

 
2.7

Inter-company

 

 
1.2

 
(1.2
)
 

Equity
521.1

 
1,625.7

 
121.0

 
(1,746.7
)
 
521.1

 
$
2,014.8

 
$
1,783.2

 
$
122.3

 
$
(1,747.9
)
 
$
2,172.4

As of December 31, 2011
 
 
 
 
 
 
 
 
 
Balance Sheet
 
 
 
 
 
 
 
 
 
Current assets
$
23.2

 
$
78.6

 
$
15.2

 
$

 
$
117.0

Property and equipment, net
20.3

 
1,494.2

 
0.5

 

 
1,515.0

Other non-current assets
58.5

 
88.4

 

 

 
146.9

Investment in subsidiaries
1,692.9

 

 

 
(1,692.9
)
 

Equity method investment

 

 
97.8

 

 
97.8

Assets of discontinued operations held for sale

 
74.5

 

 
(0.6
)
 
73.9

Inter-company
1.2

 

 

 
(1.2
)
 

 
$
1,796.1

 
$
1,735.7

 
$
113.5

 
$
(1,694.7
)
 
$
1,950.6

Current liabilities
$
38.8

 
$
140.0

 
$
0.3

 
$

 
$
179.1

Notes payable, long term
1,223.3

 
0.5

 

 

 
1,223.8

Other non-current liabilities
14.6

 
10.8

 

 

 
25.4

Liabilities of discontinued operations held for sale

 
2.9

 

 

 
2.9

Inter-company

 

 
1.2

 
(1.2
)
 

Equity
519.4

 
1,581.5

 
112.0

 
(1,693.5
)
 
519.4

 
$
1,796.1

 
$
1,735.7

 
$
113.5

 
$
(1,694.7
)
 
$
1,950.6


18


 
Pinnacle
Entertainment,
Inc.
 
100% Owned
Guarantor
Subsidiaries(a)
 
100% Owned
Non-
Guarantor
Subsidiaries(b)
 
Consolidating
and
Eliminating
Entries
 
Pinnacle
Entertainment,
Inc.
Consolidated
 
(in millions)
For the three months ended March 31, 2012
 
 
 
 
 
 
 
 
Statement of Cash Flows
 
 
 
 
 
 
 
 
 
Cash provided by (used in) operating activities
$
(29.0
)
 
$
70.4

 
$
12.6

 
$

 
$
54.0

Capital expenditures and other
(2.3
)
 
(60.1
)
 
(4.5
)
 

 
(66.9
)
Cash provided by (used in) investing activities
(2.3
)
 
(60.1
)
 
(4.5
)
 

 
(66.9
)
Change in notes payable and other
189.6

 

 

 

 
189.6

Cash provided by financing activities
189.6

 

 

 

 
189.6

Increase (decrease) in cash and cash equivalents
158.3

 
10.3

 
8.1

 

 
176.7

Cash and cash equivalents, beginning of period
17.3

 
48.0

 
15.0

 

 
80.3

Cash and cash equivalents, end of period
$
175.6

 
$
58.3

 
$
23.1

 
$

 
$
257.0

 
 
 
 
 
 
 
 
 
 
For the three months ended March 31, 2011
 
 
 
 
 
 
 
 
Statement of Cash Flows
 
 
 
 
 
 
 
 
 
Cash provided by (used in) operating activities
$
(55.7
)
 
$
84.4

 
$
(0.4
)
 
$

 
$
28.3

Capital expenditure and other
(4.9
)
 
(78.1
)
 
0.4

 

 
(82.6
)
Cash provided by (used in) investing activities
(4.9
)
 
(78.1
)
 
0.4

 

 
(82.6
)
Change in notes payable
2.3

 

 

 

 
2.3

Cash provided by financing activities
2.3

 

 

 

 
2.3

Effect of exchange rate changes on cash

 

 

 

 

Increase in cash and cash equivalents
(58.3
)
 
6.3

 

 

 
(52.0
)
Cash and cash equivalents, beginning of period
76.9

 
41.6

 
76.9

 

 
195.4

Cash and cash equivalents, end of period
$
18.6

 
$
47.9

 
$
76.9