PNK 1Q 2011 CONF CALL NOTES

PNK beat our Street high EBITDA estimate and it looks sustainable.

"We are pleased to report another quarter of year-over-year Adjusted EBITDA growth and continued improvements in operating margins. These improvements reflect the ongoing implementation of operating strategies focused on providing best-in-market experiences for our guests and improving our own internal processes.  We continue to progress with better methods to improve operations and elevate the guest experience."

-Anthony Sanfilippo, President and Chief Executive Officer.

HIGHLIGHTS FROM THE RELEASE 

• The new Stadium Sports Grill and Bar at Lumiere Place will open in early May
• Baton Rouge project: The three casino hulls were recently moved from the shipyard to the project site along the Mississippi River and construction of the casino is underway.
• As of March 31, 2011, approximately $290 million of the $357 million construction budget (excluding land and capitalized interest) remains to be invested in the planned Baton Rouge facility.
• Cash: $143MM, $70MM used in day-to-day operations
• At the end of 1Q, the Company's $375MM credit facility was undrawn and approximately $9.3 MM LoC were outstanding. The Company expects to begin drawing on its credit facility as construction on its Baton Rouge project further ramps up. 
• Gross interest expense: $27MM; net interest expense:$26MM
• Capitalized interest of $0.8MM was related to Baton Rouge project
• Discontinued operations: Atlantic City: - $2.2MM

CONF CALL

• Cautiously optimistic on consumers
• 90bps margin improvement ex severance costs
• Sees shared services at St. Louis (started 6 months ago) making progress
• L'Auberge and Boomtown New Orleans did very well
• Boomtown New Orleans efficiency improvements continue into 2Q
• Tough weather conditions in 1Q, particularly at Belterra
• Capex:  $38MM ($24MM due to Baton Rouge)
• Most rivers in Southeast have had abnormally high water levels
• Baton Rouge: barges are in place; river levels still above normal; now expect summer 2012 opening - pushed back from Q1 2012
• All Mid-western properties gained share
• 2011 Marketing expense as % of revs: on track with expectations
• L'Auberge brand campaign: summer 2011

Q&A

• Severance costs: predominantly corporate; corporate expense; 6.5-7MM run rate for corp expense
• April trends: continues 1Q trend
• 1Q Marketing spend: played to expectations; not inflated by myChoice
  
  • Haven't seen an increase in promotional spend by competitors in their markets
    • St. Louis: special program and brand campaigns drove marketing expense, unrelated to myChoice
  • 1Q myChoice expenses: launch related 
• Mostly higher consumer spend per visit driving results (even in St. Louis properties)
• VLTs in Ohio:  encouraged by early thoughts on tax structure
• Encouraged by early myChoice results
• myChoice performance metrics: play consolidation, play frequency, migration of tiers, # of new customers YoY
• myChoice will help retention rate of existing customers
• Weather impact:
  
  • Belterra: overall net-neutral; was affected in January
  • South: coastline Lousiana properties not much impact
  • St. Louis: tornado last week no impact
• St. Louis: early innings of ramp up
• Louisiana properties: still sees room for improvement
  • L'Auberge: can be better yielded; a lot of work being done
• Texas: very difficult to pass