Consolidating Condensed Financial Information

Our subsidiaries (excluding a subsidiary that owns 26.0% of the equity in ACDL; a subsidiary with approximately $10.5 million in cash and cash equivalents as of December 31, 2011; a subsidiary with approximately $4.5 million in cash and cash

equivalents as of December 31, 2011; a subsidiary that owns $10.0 million in principal amount of 7.50% Notes; and certain non-material subsidiaries) have fully, unconditionally, 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:



							100% Owned			Consolidating			Pinnacle
	Pinnacle			100% Owned			Non-			and			Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating			Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries			Consolidated
	(in millions)
Statements of Operations
For the year ended December 31, 2011
Revenues:
Gaming	$	—		$	997.6		$	—		$	—		$	997.6
Food and beverage	—			69.4			—			—			69.4
Other	0.1			74.1			—			—			74.2
	0.1			1,141.1			—			—			1,141.2
Expenses:
Gaming	—			563.9			—			—			563.9
Food and beverage	—			69.6			—			—			69.6
General and administrative and other	37.4			233.6			—			—			271.0
Depreciation and amortization	3.4			100.5			—			—			103.9
Write downs, reserves, recoveries, and impairments	0.7			3.5			—			—			4.2
	41.5			971.1			—			—			1,012.6
Operating income (loss)	(41.4		)	170.0			—			—			128.6
Equity earnings of subsidiaries	127.8			—			—			(127.8		)	—
Interest (expense) and non-operating income, net	(105.7		)	7.0			3.4			—			(95.3		)
Loss on early extinguishment of debt	(0.2		)	—			—			—			(0.2		)
Loss from equity method investment	—			—			(0.6		)	—			(0.6		)
Income (loss) from continuing operations before inter-company activity and income taxes	(19.5		)	177.0			2.8			(127.8		)	32.5
Management fee and inter-company interest	19.3			(15.9		)	(3.4		)	—			—
Income tax expense	(2.3		)	—			—			—			(2.3		)
Income (loss) from continuing operations	(2.5		)	161.1			(0.6		)	(127.8		)	30.2
Income (loss) from discontinued operations, net of taxes	—			(32.9		)	0.2			—			(32.7		)
Net income (loss)	$	(2.5	)	$	128.2		$	(0.4	)	$	(127.8	)	$	(2.5	)



							100% Owned			Consolidating			Pinnacle
	Pinnacle			100% Owned			Non-			and			Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating			Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries			Consolidated
	(in millions)
For the year ended December 31, 2010
Revenues:
Gaming	$	—		$	932.9		$	—		$	—		$	932.9
Food and beverage	—			64.4			—			—			64.4
Other	0.4			60.9			—			—			61.3
	0.4			1,058.2			—			—			1,058.6
Expenses:
Gaming	—			530.8			—			—			530.8
Food and beverage	—			65.3			—			—			65.3
General and administrative and other	42.8			226.6			(0.6		)	—			268.8
Depreciation and amortization	5.3			104.4			0.1			—			109.7
Write downs, reserves, recoveries and impairments	(5.9		)	38.1			(0.5		)	—			31.8
	42.2			965.2			(1.0		)	—			1,006.4
Operating income (loss)	(41.8		)	93.0			1.0			—			52.2
Equity earnings of subsidiaries	99.6			2.1			—			(101.7		)	—
Loss on early extinguishment of debt	(1.9		)	—			—			—			(1.9		)
Interest (expense) and non-operating income, net	(105.6		)	2.8			—			—			(102.8		)
Income (loss) from continuing operations before inter-company activity and income taxes	(49.7		)	97.9			1.0			(101.7		)	(52.5		)
Management fee and inter-company interest	14.6			(14.6		)	—			—			_—
Income tax benefit	11.7			—			—			—			11.7
Income (loss) from continuing operations	(23.4		)	83.3			1.0			(101.7		)	(40.8		)
Income from discontinued operations, net of taxes	—			15.8			1.6			—			17.4
Net income (loss)	$	(23.4	)	$	99.1		$	2.6		$	(101.7	)	$	(23.4	)



							100% Owned			Consolidating		Pinnacle
	Pinnacle			100% Owned			Non-			and		Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating		Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries		Consolidated
	(in millions)
For the year ended December 31, 2009
Revenues:
Gaming	$	—		$	834.9		$	—		$	—	$	834.9
Food and beverage	—			55.2			—			—		55.2
Other	0.1			58.5			—			—		58.6
	0.1			948.6			—			—		948.7
Expenses:
Gaming	—			497.5			—			—		497.5
Food and beverage	—			53.8			—			—		53.8
General and administrative and other	56.5			210.2			(2.4		)	—		264.3
Depreciation and amortization	5.4			88.8			1.2			—		95.4
Write downs, reserves, recoveries and impairments	—			25.6			8.7			—		34.3
	61.9			875.9			7.5			—		945.3
Operating income (loss)	(61.8		)	72.7			(7.5		)	—		3.4
Equity earnings of subsidiaries	(126.4		)	(2.7		)	—			129.1		—
Loss on early extinguishment of debt	(9.5		)	—			—			—		(9.5		)
Gain on sale of equity securities	6.0			—			6.9			—		12.9
Interest (expense) and non-operating income, net	(83.9		)	13.7			—			—		(70.2		)
Income (loss) from continuing operations before inter-company activity and income taxes	(275.6		)	83.7			(0.6		)	129.1		(63.4		)
Management fee and inter-company interest	17.0			(17.0		)	—			—		—
Income tax benefit	0.3			—			—			—		0.3
Income (loss) from continuing operations	(258.3		)	66.7			(0.6		)	129.1		(63.1		)
Income (loss) from discontinued operations, net of taxes	—			(197.9		)	2.7			—		(195.2		)
Net income (loss)	$	(258.3	)	$	(131.2	)	$	2.1		$	129.1	$	(258.3	)



					100% Owned		Consolidating			Pinnacle
	Pinnacle		100% Owned		Non-		and			Entertainment,
	Entertainment,		Guarantor		Guarantor		Eliminating			Inc.
	Inc.		Subsidiaries(a)		Subsidiaries(b)		Entries			Consolidated
	(in millions)
Balance Sheets
As of December 31, 2011
Current assets, excluding discontinued operations	$	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, excluding discontinued operations	$	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

As of December 31, 2010
Current assets, excluding discontinued operations	$	84.0	$	75.2	$	77.2	$	—		$	236.4
Property and equipment, net	13.0		1,426.0		0.5		—			1,439.5
Other non-current assets	59.3		51.5		—		—			110.8
Investment in subsidiaries	1,585.3		—		—		(1,585.3		)	—
Assets of discontinued operations held for sale	—		97.4		0.3		(0.6		)	97.1
Inter-company	1.2		—		—		(1.2		)	—
	$	1,742.8	$	1,650.1	$	78.0	$	(1,587.1	)	$	1,883.8
Current liabilities, excluding discontinued operations	$	45.1	$	121.9	$	0.1	$	—		$	167.1
Notes payable, long term	1,176.0		0.7		—		—			1,176.7
Other non-current liabilities	14.3		11.4		—		—			25.7
Liabilities of discontinued operations held for sale	—		6.9		—		—			6.9
Inter-company	—		—		1.2		(1.2		)	—
Equity	507.4		1,509.2		76.7		(1,585.9		)	507.4
	$	1,742.8	$	1,650.1	$	78.0	$	(1,587.1	)	$	1,883.8



							100% Owned			Consolidating			Pinnacle
	Pinnacle			100% Owned			Non-			and			Entertainment,
	Entertainment,			Guarantor			Guarantor			Eliminating			Inc.
	Inc.			Subsidiaries(a)			Subsidiaries(b)			Entries			Consolidated
	(in millions)
Statements of Cash Flows
For the year ended December 31, 2011
Cash provided by (used in) operating activities	$	(95.0	)	$	190.4		$	(0.1	)	$	36.5		$	131.8
Capital expenditures and other	(11.1		)	(184.0		)	(98.2		)	—			(293.3		)
Cash provided by (used in) investing activities	(11.1		)	(184.0		)	(98.2		)	—			(293.3		)
Change in notes payable and other	46.4			—			36.5			(36.5		)	46.4
Cash provided by financing activities	46.4			—			36.5			(36.5		)	46.4
Increase (decrease) in cash and cash equivalents	(59.7		)	6.4			(61.8		)	—			(115.1		)
Cash and cash equivalents, beginning of period	77.0			41.6			76.8			—			195.4
Cash and cash equivalents, end of period	$	17.3		$	48.0		$	15.0		$	—		$	80.3

For the year ended December 31, 2010
Cash provided by (used in) operating activities	$	(32.0	)	$	160.7		$	(40.1	)	$	—		$	88.6
Capital expenditures and other	(0.7		)	(175.8		)	45.9			—			(130.6		)
Cash provided by (used) in investing activities	(0.7		)	(175.8		)	45.9			—			(130.6		)
Change in notes payable and other	108.2			—			—			—			108.2
Cash provided by (used in) financing activities	108.2			—			—			—			108.2
Effect of exchange rate changes on cash	—			—			(0.4		)	—			(0.4		)
Increase (decrease) in cash and cash equivalents	75.5			(15.1		)	5.4			—			65.8
Cash and cash equivalents, beginning of period	1.5			56.7			71.4			—			129.6
Cash and cash equivalents, end of period	$	77.0		$	41.6		$	76.8		$	—		$	195.4

For the year ended December 31, 2009
Cash provided by (used in) operating activities	$	(108.1	)	$	226.8		$	1.5		$	—		$	120.2
Capital expenditures and other	(3.8		)	(221.4		)	(1.2		)	—			(226.4		)
Proceeds from sale of equity securities and other	10.1			0.3			13.6			—			24.0
Cash used in investing activities	6.3			(221.1		)	12.4			—			(202.4		)
Change in notes payable and other	96.6			—			—			—			96.6
Cash provided by (used in) financing activities	96.6			—			—			—			96.6
Effect of exchange rate changes on cash	—			—			(0.6		)	—			(0.6		)
Increase (decrease) in cash and cash equivalents	(5.2		)	5.7			13.3			—			13.8
Cash and cash equivalents, beginning of period	6.7			51.0			58.1			—			115.8
Cash and cash equivalents, end of period	$	1.5		$	56.7		$	71.4		$	—		$	129.6

(a)

The following material subsidiaries are identified as guarantors of our senior and senior subordinated notes: ACE Gaming, LLC; AREP Boardwalk Properties LLC; Belterra Resort Indiana, LLC; Biloxi Casino Corp.; Boomtown, LLC; Casino Magic Corp.; Casino One Corporation; Louisiana-I Gaming; PNK (Baton Rouge) Partnership; PNK (BOSSIER CITY), Inc.; PNK Development 7, LLC; PNK Development 8, LLC; PNK Development 9, LLC; PNK Development 13, LLC; PNK (ES), LLC; PNK (LAKE CHARLES), L.L.C.; PNK (Ohio), LLC; PNK (Ohio) II, LLC; PNK (Ohio) III, LLC; PNK (RENO), LLC; PNK (River City), LLC; PNK (STLH), LLC; and PNK (ST. LOUIS RE), LLC. In addition, certain other immaterial subsidiaries are also guarantors of our senior and senior subordinated notes.

(b)

PNK Development 11, LLC, which, as of December 31, 2011, held approximately $4.5 million in cash and cash equivalents, is our only material non-guarantor of our senior and senior subordinated notes. Other non-guarantor subsidiaries include, but are not limited to, a subsidiary with $10.5 million in cash and cash equivalents as of December 31, 2011, a subsidiary that owns 26% of the equity interest of ACDL, and a subsidiary that owns $10.0 million in aggregate principal amount of our 7.50% Notes.