Pinnacle Entertainment (PNKZV) 8-K Unaudited Pro Forma Condensed Consolidated Financial Statements

EXHIBIT 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma condensed consolidated financial statements are based upon and should be read in conjunction with historical consolidated financial statements and related notes of Pinnacle Entertainment, Inc. (“Pinnacle” or the “Company”).

The unaudited pro forma condensed consolidated balance sheet of Pinnacle as of March 31, 2006 and statements of operations for the three months ended March 31, 2006 and for the year ended December 31, 2005, give effect to the disposition of certain Pinnacle assets held for sale as a result of discontinued operations of the Hollywood Park-Casino card club as if the sale occurred, for balance sheet purposes, on March 31, 2006 and, for statements of operations purposes, on January 1, 2005.

In December 2005, the Company’s board of directors approved management’s plan to sell its Hollywood Park-Casino card club in Inglewood, California. In accordance with the Statement of Financial Accounting Standard No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets, Hollywood Park-Casino card club assets were classified as “held for sale” on Pinnacle’s consolidated balance sheet as of December 31, 2005 in Pinnacle’s Annual Report on Form 10-K and Pinnacle’s unaudited consolidated balance sheet as of March 31, 2006 in Pinnacle’s Quarterly Report on Form 10-Q.

The results of operations of Hollywood Park-Casino had been classified as a discontinued operation for all periods presented in the audited historical consolidated financial statements and notes thereto included in Pinnacle’s Annual Report on Form 10-K as of and for the year ended December 31, 2005 and in the unaudited consolidated financial statements and notes thereto included in Pinnacle’s Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2006, in accordance with Statement of Financial Accounting Standard No. 144,Accounting for the Impairment or Disposal of Long-Lived Assets. As such, there are no pro forma adjustments to continuing operations necessary to reflect the Company’s sale of its Hollywood Park-Casino card club assets.

The unaudited pro forma condensed consolidated financial statements have been prepared based upon currently available information, estimates and assumptions that are deemed appropriate by Pinnacle’s management. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the results that would have been reported had such transaction actually occurred on the dates specified, nor are they indicative of our future results of operations or financial condition. The unaudited pro forma condensed consolidated financial statements are based on and should be read in conjunction with, and are qualified in its entirety by, the historical consolidated financial statements and notes thereto of Pinnacle.

The unaudited pro forma condensed consolidated financial statements of Pinnacle are prepared in accordance with Article 11 of Regulation S-X.

PINNACLE ENTERTAINMENT, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

March 31, 2006

(in thousands, except share data)

	Pinnacle Historical (Note 1)		Pro Forma Adjustments (Note 2)			Pinnacle Pro Forma
ASSETS
Current Assets:
Cash and cash equivalents	$	319,019	$	24,231	(a)	$	343,250
Insurance receivable related to inventory and interim costs		20,544					20,544
Accounts receivable, net of doubtful accounts of $4,843		17,154					17,154
Inventories		5,957					5,957
Prepaid expenses and other assets		16,506					16,506
Income tax receivable		4,742					4,742
Deferred income taxes		5,318					5,318
Total current assets		389,240		24,231			413,471
Restricted cash		9,221					9,221
Insurance receivable related to property and equipment impairment charges		7,814					7,814
Property and equipment, net		900,376					900,376
Goodwill		26,656					26,656
Gaming licenses, net		21,130					21,130
Debt issuance costs, net		20,257					20,257
Other assets		11,491					11,491
Assets held for sale		22,469		(16,709	)(b)		5,760
	$	1,408,654	$	7,522		$	1,416,176

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	29,138		$			$	29,138
Accrued interest		7,475						7,475
Accrued compensation		22,461						22,461
Other accrued liabilities		65,206			7,105	(c)		72,311
Current portion of long-term debt		142						142
Total current liabilities		124,422			7,105			131,527
Long-term debt		637,438						637,438
Other long-term liabilities		9,507						9,507
Deferred income taxes		4,338						4,338
Liabilities associated with assets held for sale		9,914			(9,765	)(d)		149
Stockholders’ Equity:
Common stock—$0.10 par value, 47,942,292 shares outstanding, net of treasury shares		4,995						4,995
Additional paid in capital		616,427						616,427
Retained earnings		32,677			10,182	(e)		42,859
Accumulated other comprehensive loss		(10,974	)					(10,974	)
Treasury stock, at cost		(20,090	)					(20,090	)
Total stockholders’ equity		623,035			10,182			633,217
	$	1,408,654		$	7,522		$	1,416,176

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

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PINNACLE ENTERTAINMENT, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the three months ended March 31, 2006

(in thousands, except per share data)

	Pinnacle Historical (Note 1)			Pro Forma Adjustments (Note 3)	Pinnacle Pro Forma
Gaming	$	205,364			$	205,364
Food and beverage		10,640				10,640
Truck stop and service station		5,828				5,828
Hotel and recreational vehicle park		6,661				6,661
Other operating income		5,649				5,649
		234,142				234,142
Expenses and Other Costs:
Gaming		113,917				113,917
Food and beverage		10,326				10,326
Truck stop and service station		5,445				5,445
Hotel and recreational vehicle park		3,311				3,311
General and administrative		40,723				40,723
Depreciation and amortization		16,406				16,406
Other operating expenses		2,190				2,190
Pre-opening and development costs		4,056				4,056
Asset impairment		4,939				4,939
		201,313				201,313
Operating income		32,829				32,829
Interest income		2,505				2,505
Interest expense, net of capitalized interest		(14,135	)			(14,135	)
Income from continuing operations before income taxes		21,199				21,199
Income tax expense		(8,645	)			(8,645	)
Income from continuing operations	$	12,554			$	12,554
Income per share from continuing operations — basic	$	0.27			$	0.27
Income per share from continuing operations — diluted	$	0.26			$	0.26
Number of shares—basic		46,385				46,385
Number of shares—diluted		47,962				47,962

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

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PINNACLE ENTERTAINMENT, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the year ended December 31, 2005

(in thousands, except per share data)

	Pinnacle Historical (Note 1)			Pro Forma Adjustments (Note 3)	Pinnacle Pro Forma
Gaming	$	616,561			$	616,561
Food and beverage		40,116				40,116
Truck stop and service station		28,397				28,397
Hotel and recreational vehicle park		24,521				24,521
Other operating income		16,305				16,305
		725,900				725,900
Expenses and Other Costs:
Gaming		368,475				368,475
Food and beverage		39,629				39,629
Truck stop and service station		26,800				26,800
Hotel and recreational vehicle park		12,267				12,267
General and administrative		139,430				139,430
Depreciation and amortization		61,171				61,171
Other operating expenses		11,287				11,287
Pre-opening and development costs		29,608				29,608
		688,667				688,667
Operating income		37,233				37,233
Interest income		3,668				3,668
Interest expense, net of capitalized interest		(49,535	)			(49,535	)
Loss on early extinguishment of debt		(3,752	)			(3,752	)
Loss from continuing operations before income taxes		(12,386	)			(12,386	)
Income tax benefit		15,975				15,975
Income from continuing operations	$	3,589			$	3,589
Income per share from continuing operations — basic	$	0.09			$	0.09
Income per share from continuing operations — diluted	$	0.08			$	0.08
Number of shares—basic		40,703				40,703
Number of shares—diluted		42,951				42,951

See accompanying notes to the unaudited pro forma condensed consolidated financial statements.

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Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements

Note 1 - Pinnacle Basis of Presentation

Historical financial information for Pinnacle as of and for the three months ended March 31, 2006 has been derived from unaudited historical consolidated financial statements included in Pinnacle’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006. Historical financial information for the year ended December 31, 2005 has been derived from audited historical consolidated financial statements included in Pinnacle’s 2005 Annual Report on Form 10-K.

Note 2 - Pro Forma Adjustments

Pro Forma adjustments related to the disposition of certain Pinnacle assets held for sale as a result of discontinued operations of the Hollywood Park-Casino card club:

(a) Represents gross cash proceeds of $24.2 million from the sale of Hollywood Park-Casino assets. If it can find suitable replacement property, Pinnacle intends to effect a deferred like-kind exchange of property under Section 1031 of the Internal Revenue Code, and, accordingly, a portion of the gross cash proceeds, in the amount of approximately $21.8 million, is being held by a qualified intermediary in an exchange account for up to 180 days, the time allotted for such an exchange under Section 1031. The pro forma adjustments assume that no such replacement property is found during the permitted time frame and that the cash sale proceeds are released from the exchange account and subject to taxation.

(b) Adjustment to reflect decrease in assets held for sale with a book value of approximately $16.7 million, comprised of the leasehold interest of approximately $14.2 million and a related receivable of approximately $2.5 million.

(c) Adjustment to reflect increase in other accrued liabilities for income taxes payable of $6.9 million related to the estimated gain on the sale of Hollywood Park-Casino card club assets and estimated professional fees of $175,000 related to the sale.

(d) Adjustment to reflect a decrease in liabilities associated with assets held for sale, comprised of the capital lease obligation of approximately $9.5 million and certain payables of approximately $239,000 assumed by the buyer.

(e) Adjustment to increase retained earnings to reflect the estimated gain, net of tax, on sale of the Hollywood Park-Casino card club.

	(in thousands)
Cash proceeds	$	24,231
Assets held for sale		16,709
Less liabilities associated with assets held for sale		(9,765	)
Basis in sold assets		6,944
Estimated professional fees		(175	)
Estimated gain on sale of assets before income taxes		17,112
Income taxes		6,930
Estimated net gain	$	10,182

Note 3 - Statements of Operations Pro Forma Adjustments

There were no adjustments to any items on the Consolidated Statement of Operations in calculating the Income from Continuing Operations as the Hollywood Park-Casino card club was reflected as discontinued operations in the Company’s Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2006 and the Annual Report on Form 10-K as of and for the year ended December 31, 2005. Income recorded as discontinued operations related to the Hollywood Park-Casino card club of $960,000, or $0.02 per diluted share, and $2,728,000, or $0.06 per diluted share, during the three months ended March 31, 2006 and the year ended December 31, 2005, respectively, would have decreased income from discontinued operations by such amounts. The pro forma results exclude the impact of the gain on sale of the Hollywood Park-Casino card club assets and the costs related to the dispositions.

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