Gold Merger Sub, LLC - FORM 8-K/A - EX-99.3 - EXHIBIT - October 29, 2013

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Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined financial information presents the unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statements of continuing operations as of and for the six months ended June 30, 2013, and for the year ended December 31, 2012 based upon the consolidated historical financial statements of Pinnacle Entertainment, Inc. (“Pinnacle”) and Ameristar Casinos, Inc. (“Ameristar”).

The unaudited pro forma condensed combined balance sheet presents the financial position of Pinnacle at June 30, 2013 after giving effect to the acquisition of Ameristar (the “Acquisition”) and the reclassification adjustment to reflect Lumière Place Casino, Hotel Lumière, Four Seasons, and Ameristar Lake Charles as discontinued operations in connection with the planned divestiture of those assets as if they had occurred on such date. The unaudited pro forma condensed combined statements of continuing operations for the six months ended June 30, 2013 and for the year ended December 31, 2012 give effect to the Acquisition and the reclassification adjustment to reflect Lumière Place Casino, Hotel Lumière, Four Seasons, and Ameristar Lake Charles as discontinued operations in connection with the planned divestiture of those assets as if they had occurred on January 1, 2012. The unaudited pro forma adjustments reflecting the Acquisition have been prepared in accordance with business combination accounting guidance as provided in Accounting Standards Codification ("ASC") 805, and reflect the allocations of the preliminary purchase price to the acquired assets and liabilities based upon their estimated fair values, using the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information has been prepared based upon currently available information and assumptions deemed appropriate by Pinnacle’s management and is provided for informational purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been completed as of the dates set forth above, nor is it indicative of the future results or current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the transaction or any integration costs. Furthermore, the unaudited pro forma condensed combined statements of continuing operations do not include certain nonrecurring charges and the related tax effects which resulted directly from the Acquisition as described in the notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information should be read in conjunction with the separate historical financial statements and accompanying notes of Pinnacle and Ameristar.



Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.
Condensed Combined Balance Sheet and Pro Forma Adjustments
As of June 30, 2013
(Unaudited)
(amounts in thousands)
 
Historical
 
 
 
 
 
 
 
 
 
Pinnacle Entertainment, Inc.
 
Ameristar Casinos, Inc.
 
Acquisition
pro forma adjustments
 
Notes
 
Discontinued operations
pro forma adjustments (p)
 
Pro forma combined
ASSETS
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
86,233

 
$
91,560

 
$
(962,428
)
 
 a
 
$
(11,937
)
 
$
213,394

 
 
 
 
 
2,814,618

 
 b
 
 
 
 
 
 
 
 
 
(1,686,950
)
 
 c
 
 
 
 
 
 
 
 
 
(31,246
)
 
 d
 
 
 
 
 
 
 
 
 
(50,518
)
 
 e
 
 
 
 
 
 
 
 
 
(318
)
 
 f
 
 
 
 
 
 
 
 
 
(837
)
 
 r
 
 
 
 
 
 
 
 
 
(34,783
)
 
 s
 
 
 
 
Restricted cash
—

 
6,581

 
—

 
 
 
(656
)
 
5,925

Accounts receivable, net
20,895

 
5,179

 
—

 
 
 
(2,429
)
 
23,645

Income tax receivable
—

 
—

 
29,471

 
 q
 
—

 
29,471

Inventories
6,600

 
5,848

 
—

 
 
 
(1,216
)
 
11,232

Prepaid expenses and other assets
21,067

 
16,485

 
—

 
 
 
(1,432
)
 
36,120

Deferred income taxes
—

 
12,246

 
14,964

 
 h
 
(16,669
)
 
10,541

Assets of discontinued operations held for sale
38,609

 
—

 
—

 
 
 
458,588

 
497,197

Total current assets
173,404

 
137,899

 
91,973

 
 
 
424,249

 
827,525

Restricted cash
5,667

 
—

 
28,686

 
 g
 
(28,686
)
 
5,667

Property and equipment, net
1,735,256

 
1,826,557

 
(1,821,557
)
 
 i
 
(512,941
)
 
2,962,016

 
 
 
 
 
1,734,701

 
 i
 
 
 
 
Goodwill
58,476

 
69,167

 
(69,167
)
 
 j
 
—

 
913,938

 
 
 
 
 
855,462

 
 j
 
 
 
 
Equity method investments
1,541

 
—

 
—

 
 
 
—

 
1,541

Other intangible assets, net
24,674

 
42,400

 
(42,400
)
 
 k
 
(29,800
)
 
556,574

 
 
 
 
 
561,700

 
 k
 
 
 
 
Deposits and other assets
—

 
81,397

 
(81,397
)
 
 g
 
—

 
—

Other assets
61,581

 
—

 
(40,566
)
 
 l
 
(759
)
 
87,760

 
 
 
 
 
(16,453
)
 
 u
 
 
 
 
 
 
 
 
 
52,711

 
 g
 
 
 
 
 
 
 
 
 
31,246

 
 d
 
 
 
 
Total assets
$
2,060,599

 
$
2,157,420

 
$
1,284,939

 
 
 
$
(147,937
)
 
$
5,355,021




Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.
Condensed Combined Balance Sheet and Pro Forma Adjustments
As of June 30, 2013
(Unaudited)
(Continued)
(amounts in thousands)

 
Historical
 
 
 
 
 
 
 
 
 
Pinnacle Entertainment, Inc.
 
Ameristar Casinos, Inc.
 
Acquisition
pro forma adjustments
 
Notes
 
Discontinued operations
pro forma adjustments (p)
 
Pro forma combined
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
36,731

 
$
18,071

 
$
—

 
 
 
$
(2,623
)
 
$
52,179

Construction contracts payable
—

 
40,479

 
(40,479
)
 
 g
 
—

 
—

Income taxes payable
—

 
3,933

 
(3,933
)
 
 g
 
—

 
—

Accrued liabilities
158,876

 
119,966

 
40,480

 
 g
 
(59,077
)
 
256,494

 
 
 
 
 
(318
)
 
 f
 
 
 
 
 
 
 
 
 
(3,433
)
 
 v
 
 
 
 
Deferred income taxes
3,012

 
—

 
—

 

 
—

 
3,012

Current portion of long-term debt
3,250

 
32,505

 
(35,755
)
 
 c
 
—

 
16,000

 
 
 
 
 
16,000

 
 t
 
 
 
 
Liabilities of discontinued operations held for sale
—

 
—

 
—

 
 
 
63,477

 
63,477

Total current liabilities
201,869

 
214,954

 
(27,438
)
 
 
 
1,777

 
391,162

Long-term debt less current portion
1,456,232

 
1,883,660

 
2,763,835

 
 b
 
—

 
4,527,928

 
 
 
 
 
(1,627,799
)
 
 c
 
 
 
 
 
 
 
 
 
52,000

 
 m
 
 
 
 
Deferred income taxes
3,751

 
38,952

 
224,331

 
 h
 
350

 
267,384

Other long-term liabilities
22,825

 
2,331

 
—

 
 
 
(1,777
)
 
23,379

Total liabilities
1,684,677

 
2,139,897

 
1,384,929

 
 
 
350

 
5,209,853

Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
 
Common stock
6,500

 
615

 
(615
)
 
 n
 
—

 
6,500

Additional paid-in capital
1,061,662

 
343,522

 
(343,522
)
 
 n
 
—

 
1,061,662

Accumulated other comprehensive income
9

 
—

 
—

 
 
 
—

 
9

Retained (deficit) earnings
(632,652
)
 
175,294

 
(175,294
)
 
 n
 
(148,287
)
 
(863,406
)
 
 
 
 
 
(82,467
)
 
 o
 
 
 
 
Treasury stock
(71,090
)
 
(501,908
)
 
501,908

 
 n
 
—

 
(71,090
)
Total Pinnacle/Ameristar stockholders' equity
364,429

 
17,523

 
(99,990
)
 
 
 
(148,287
)
 
133,675

Non-controlling interest
11,493

 
—

 
—

 
 
 
—

 
11,493

Total stockholders' equity
375,922

 
17,523

 
(99,990
)
 
 
 
(148,287
)
 
145,168

Total liabilities and stockholders' equity
$
2,060,599

 
$
2,157,420

 
$
1,284,939

 
 
 
$
(147,937
)
 
$
5,355,021





Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.
Condensed combined statement of continuing operations and pro forma adjustments
For the six months ended June 30, 2013 (Unaudited)
(amounts in thousands, except per share data)
 
Historical
 
 
 
 
 
 
 
 
 
Pinnacle Entertainment, Inc.
 
Ameristar Casinos, Inc.
 
Acquisition
pro forma adjustments
 
Notes
 
Discontinued operations
pro forma adjustments (i)
 
Pro forma combined
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Gaming
$
549,054

 
$
601,701

 
$
(68,006
)
 
a
 
$
(73,028
)
 
$
1,009,721

Food and beverage
37,835

 
66,400

 
(36,241
)
 
a
 
(10,299
)
 
57,695

Lodging
18,760

 
37,976

 
(27,834
)
 
a
 
(7,928
)
 
20,974

Retail, entertainment and other
22,330

 
13,985

 
(1,614
)
 
a
 
(2,850
)
 
31,851

Total revenues
627,979

 
720,062

 
(133,695
)
 
 
 
(94,105
)
 
1,120,241

Less: promotional allowances
—

 
(133,695
)
 
133,695

 
a
 
—

 
—

Net revenues
627,979

 
586,367

 
—

 
 
 
(94,105
)
 
1,120,241

Expenses and other costs:
 
 
 
 
 
 
 
 
 
 
 
Gaming
311,592

 
259,532

 
 
 
 
 
(40,759
)
 
530,365

Food and beverage
32,144

 
27,319

 
 
 
 
 
(8,195
)
 
51,268

Lodging
10,160

 
3,695

 
 
 
 
 
(4,011
)
 
9,844

Retail, entertainment and other
10,341

 
4,697

 
 
 
 
 
(1,013
)
 
14,025

General and administrative
122,524

 
121,539

 
(946
)
 
a
 
(21,285
)
 
221,832

Depreciation and amortization
55,137

 
50,430

 
10,921

 
b
 
(9,482
)
 
105,404

 
 
 
 
 
(1,602
)
 
c
 
 
 
 
Pre-opening and development costs
24,769

 
—

 
946

 
a
 
(950
)
 
24,765

Impairment of fixed assets
—

 
23

 
(23
)
 
a
 
—

 
—

Net gain on disposition of assets
—

 
(30
)
 
30

 
a
 
—

 
—

Write-downs, reserves and recoveries, net
2,241

 
—

 
(7
)
 
a
 
(112
)
 
2,122

Total expenses and other costs
568,908

 
467,205

 
9,319

 
 
 
(85,807
)
 
959,625

Operating income (loss)
59,071

 
119,162

 
(9,319
)
 
 
 
(8,298
)
 
160,616

Interest expense, net
(57,071
)
 
(56,776
)
 
35,214

 
d
 
151

 
(145,657
)
 
 
 
 
 
(64,562
)
 
e
 
 
 
 
 
 
 
 
 
(5,868
)
 
f
 
 
 
 
 
 
 
 
 
3,250

 
g
 
 
 
 
 
 
 
 
 
5

 
a
 
 
 
 
Interest income
—

 
5

 
(5
)
 
a
 
—

 
—

Loss from equity method investment
(92,181
)
 
—

 
—

 
 
 
—

 
(92,181
)
Income (loss) from continuing operations before taxes
(90,181
)
 
62,391

 
(41,285
)
 
 
 
(8,147
)
 
(77,222
)
Income tax expense
(360
)
 
(24,438
)
 
(4,589
)
 
h, j
 
(552
)
 
(29,939
)
Income (loss) from continuing operations
$
(90,541
)
 
$
37,953

 
$
(45,874
)
 
 
 
$
(8,699
)
 
$
(107,161
)
Net income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(1.55
)
 
$
1.15

 
n/a

 
 
 
n/a

 
$
(1.83
)
Diluted
$
(1.55
)
 
$
1.08

 
n/a

 
 
 
n/a

 
$
(1.83
)
Weighted average shares:
 
 
 
 
 
 
 
 
 
 
 
Basic
58,431

 
33,012

 
—

 
 
 
—

 
58,431

Diluted
58,431

 
35,004

 
—

 
 
 
—

 
58,431




Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.
Condensed combined statement of continuing operations and pro forma adjustments
For the year ended December 31, 2012 (Unaudited)
 
Historical
 
 
 
 
 
 
 
 
 
Pinnacle Entertainment, Inc.
 
Ameristar Casinos, Inc.
 
Acquisition
pro forma adjustments
 
Notes
 
Discontinued operations
pro forma adjustments (i)
 
Pro forma combined
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Gaming
$
1,042,515

 
$
1,228,958

 
$
(140,592
)
 
 a
 
$
(150,231
)
 
$
1,980,650

Food and beverage
74,551

 
139,565

 
(77,819
)
 
 a
 
(21,077
)
 
115,220

Lodging
39,426

 
77,698

 
(57,569
)
 
 a
 
(17,489
)
 
42,066

Retail, entertainment and other
40,611

 
27,957

 
(2,977
)
 
 a
 
(5,470
)
 
60,121

Total revenues
1,197,103

 
1,474,178

 
(278,957
)
 
 
 
(194,267
)
 
2,198,057

Less: promotional allowances
—

 
(278,957
)
 
278,957

 
 a
 
—

 
—

Net revenues
1,197,103

 
1,195,221

 
—

 
 
 
(194,267
)
 
2,198,057

Expenses and other costs:
 
 
 
 
 
 
 
 
 
 
 
Gaming
588,646

 
537,862

 
 
 
 
 
(87,292
)
 
1,039,216

Food and beverage
64,537

 
53,634

 
 
 
 
 
(17,427
)
 
100,744

Lodging
20,626

 
8,121

 
 
 
 
 
(9,002
)
 
19,745

Retail, entertainment and other
22,010

 
9,761

 
 
 
 
 
(2,158
)
 
29,613

General and administrative
224,918

 
251,395

 
(140
)
 
 a
 
(43,723
)
 
432,450

Depreciation and amortization
115,694

 
106,317

 
21,843

 
 b
 
(33,005
)
 
202,202

 
 
 
 
 
(8,647
)
 
 c
 
 
 
 
Pre-opening and development costs
21,633

 
—

 
140

 
 a
 
(1,246
)
 
20,527

Impairment of fixed assets
—

 
9,563

 
(9,563
)
 
 a
 
—

 
—

Net loss on disposition of assets
—

 
408

 
(408
)
 
 a
 
—

 
—

Write-downs, reserves and recoveries, net
11,818

 
—

 
9,971

 
 a
 
(10,989
)
 
10,800

Total expenses and other costs
1,069,882

 
977,061

 
13,196

 
 
 
(204,842
)
 
1,855,297

Operating income
127,221

 
218,160

 
(13,196
)
 
 
 
10,575

 
342,760

Interest expense, net
(93,687
)
 
(114,740
)
 
93,943

 
 d
 
17

 
(248,784
)
 
 
 
 
 
(129,125
)
 
 e
 
 
 
 
 
 
 
 
 
(11,736
)
 
 f
 
 
 
 
 
 
 
 
 
6,500

 
 g
 
 
 
 
 
 
 
 
 
44

 
 a
 
 
 
 
Interest income
—

 
44

 
(44
)
 
 a
 
—

 
—

Loss on early extinguishment of debt
(20,718
)
 
—

 
—

 
 
 
—

 
(20,718
)
Loss from equity method investment
(30,780
)
 
—

 
—

 
 
 
—

 
(30,780
)
Other
—

 
835

 
—

 
 
 
—

 
835

Income (loss) from continuing operations before taxes
(17,964
)
 
104,299

 
(53,614
)
 
 
 
10,592

 
43,313

Income tax expense
(4,675
)
 
(27,964
)
 
(15,037
)
 
 h, j
 
(429
)
 
(48,105
)
Income (loss) from continuing operations
$
(22,639
)
 
$
76,335

 
$
(68,651
)
 
 
 
$
10,163

 
$
(4,792
)
Net income (loss) per common share
 
 
 
 
 
 
 
 
 
 
 
Basic
$
(0.37
)
 
$
2.32

 
n/a

 
 
 
n/a

 
$
(0.08
)
Diluted
$
(0.37
)
 
$
2.26

 
n/a

 
 
 
n/a

 
$
(0.08
)
Weighted average shares
 
 
 
 
 
 
 
 
 
 
 
Basic
61,258

 
32,906

 
—

 
 
 
—

 
61,258

Diluted
61,258

 
33,743

 
—

 
 
 
—

 
61,258




Pinnacle Entertainment, Inc. and Ameristar Casinos, Inc.
Notes to unaudited pro forma condensed combined financial information
Note 1. Basis of Presentation

The historical financial information has been adjusted to give pro forma effect to events that are (i) directly attributable to the Acquisition and related transactions, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed combined statements of continuing operations, expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the Acquisition and certain other adjustments. The final determination of the purchase price allocation will be based on the fair values of assets acquired and liabilities assumed as of the date the Acquisition closes, and could result in significant changes to the unaudited pro forma condensed combined financial information, including goodwill.

This information should be read in conjunction with Pinnacle’s historical financial statements and accompanying notes in its Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 1, 2013, its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, as filed with the SEC on August 7, 2013, its Annual Report on Form 10-K Amendment No. 1 for the year ended December 31, 2012, as filed with the SEC on May 31, 2013, its Annual Report on Form 10-K Amendment No. 2 for the year ended December 31, 2012, as filed with the SEC on July 26, 2013, its definitive Proxy Statement as filed with the SEC on April 9, 2013 (with respect to information contained in such proxy statement that is incorporated into Part III of our Annual Report on Form 10-K only), and Ameristar’s historical financial statements and the accompanying notes that are included in its Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on February 28, 2013, and Ameristar's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, as filed with the SEC on August 7, 2013. All pro forma adjustments and their underlying assumptions are described more fully in the notes to the unaudited pro forma condensed combined financial information.

Note 2. Description of Transaction

On December 20, 2012, Pinnacle Entertainment, Inc. (“Pinnacle”), PNK Holdings, Inc., a direct wholly-owned subsidiary of Pinnacle (“HoldCo”), PNK Development 32, Inc., an indirect wholly-owned subsidiary of Pinnacle (“Merger Sub”), and Ameristar Casinos, Inc. (“Ameristar”), entered into an Agreement and Plan of Merger (as amended by that certain First Amendment, entered into on February 1, 2013 (the “First Amendment”) and that certain Second Amendment, entered into on March 14, 2013 (the “Second Amendment”, and as amended by the First Amendment and the Second Amendment, the “Merger Agreement”)), pursuant to which (i) Merger Sub would be merged with and into Ameristar, with Ameristar surviving as a wholly-owned, indirect subsidiary of Pinnacle, or (ii) alternately, at Pinnacle’s election, under certain circumstances and under an alternative merger structure, (x) HoldCo would be merged with and into Ameristar with Ameristar as the surviving corporation (the “Alternative Merger”), and (y) immediately thereafter, Ameristar would merge with and into Pinnacle with Pinnacle as the surviving corporation (the “Post-Effective Merger” and together with the Alternative Merger, the “Merger”).

On April 2, 2013, at the request and expense of Pinnacle, Ameristar successfully completed the solicitation of consents from holders of the $1.040 billion outstanding principal amount of Ameristar’s 7.50% Senior Notes due 2021 (the “Ameristar Notes”) for waivers of and amendments to certain provisions of the indenture governing the Ameristar Notes in order to proceed with the Alternative Merger. The holders of the Ameristar Notes received an aggregate consent fee of $19.6 million, or $19.00 for each $1,000 in principal amount of the Ameristar Notes for which consents were validly delivered and unrevoked (the “Consent Fee”).

On August 13, 2013, Pinnacle, HoldCo, and Ameristar completed the Alternative Merger, and immediately thereafter completed the Post-Effective Merger. As a result, Ameristar was merged with and into Pinnacle and ceased to exist as a separate entity.

Pursuant to the terms of the Merger Agreement, (i) each share of Ameristar common stock, par value $0.01 per share (the “Ameristar Common Stock”), outstanding immediately prior to the effective time of the Alternative Merger was canceled and (with the exception of shares of Ameristar Common Stock held in the treasury of Ameristar or owned, directly or indirectly, by Pinnacle or HoldCo) automatically converted into the right to receive $26.50 in cash; (ii) each outstanding option to purchase Ameristar Common Stock was accelerated and automatically converted into the right to receive a cash payment equal to the product of (x) the difference between $26.50 and the exercise price and (y) the number of shares of Ameristar Common Stock subject to such stock option; and (iii) each outstanding restricted stock unit was accelerated and automatically converted into the right to receive a cash payment equal to the product of (x) $26.50 and (y) the number of shares of Ameristar Common Stock subject to such restricted stock unit, in each case without interest and subject to deduction for any required withholding tax.




Pinnacle acquired Ameristar for approximately $2.8 billion, including assumed debt, largely with debt financing consisting of proceeds from the sale of $850 million in aggregate principal amount of its 6.375% Senior Notes due 2021 and initial borrowings under an Amended and Restated Credit Facility under which Pinnacle is the borrower, entered into upon consummation of the Merger. The Amended and Restated Credit Facility consists of a $1.0 billion revolving credit facility, of which approximately $365 million was drawn down at the closing of the Merger, and $1.6 billion in term loans.

On August 2, 2013, pursuant to the direction of Pinnacle to the Trustee, the Trustee delivered a conditional notice of redemption in full providing for the redemption of all outstanding Pinnacle 8.625% senior notes due 2017, totaling $450 million in aggregate principal amount, which were redeemed on August 17, 2013 at a redemption price equal to 104.313% of the principal amount of the notes, plus accrued and unpaid interest to August 17, 2013.


Note 3. Calculation of Purchase Consideration

The fair value of the consideration transferred at the closing date includes the purchase price of the assets acquired, offset by the fair value of certain liabilities assumed and expenses incurred on behalf of Ameristar.

The purchase price, excluding assumed debt, is as follows (amounts in thousands):
Consideration for Ameristar issued and outstanding common stock (i)
$
877,214

Consideration for Ameristar stock options and restricted stock units
85,214

Consideration for repayment of Ameristar debt (ii)
876,483

Total consideration transferred
$
1,838,911

(i)Consideration for Ameristar's issued and outstanding common stock based on 33,102,407 shares issued and outstanding as of August 12, 2013.
(ii)Consideration for repayment of Ameristar debt is based on Ameristar's June 30, 2013 debt balances, and the related accrued interest, that were retired as of the acquisition date.


Note 4. Preliminary Purchase Price Allocation

Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Ameristar will be recorded at the acquisition date fair values and added to those of Pinnacle. The pro forma adjustments are preliminary and based on estimates of the fair value and useful lives of the assets acquired and liabilities assumed as of June 30, 2013 and have been prepared to illustrate the estimated effect of the transaction. The pro forma purchase price allocation is subject to further adjustments as additional information becomes available and additional analysis and final valuations are conducted. There can be no assurance that these additional analyses and final valuations will not result in significant changes to the estimate of fair value set forth below.

The following table reflects the preliminary allocation of the purchase consideration to the identifiable tangible and intangible assets acquired and liabilities assumed, with the excess recorded as goodwill.



 
(in thousands)
Current and other assets
$
182,333

Property and equipment
1,734,701

Goodwill
855,462

Intangible assets (i)
561,700

Other non-current assets
37,093

Total assets
3,371,289

 
 
Current liabilities
174,764

Deferred tax liabilities (ii)
263,283

Other long-term liabilities
2,331

Debt (iii)
1,092,000

Total liabilities
1,532,378

Net assets acquired
$
1,838,911


(i)
Intangible assets consisted of trade names, customer relationships, and gaming licenses for certain properties.
(ii)
Ameristar's deferred tax liabilities were derived based on fair value adjustments for property and equipment, identified intangibles, debt and deferred financing costs. Deferred tax adjustments also considered the effect of the cash settlement of Ameristar's stock options and restricted stock units, and Ameristar's valuation allowance against its deferred tax assets.
(iii)
Debt is comprised of the fair value of Ameristar Notes.

The fair value of property and equipment was estimated using a combination of the income, market and cost approaches, depending on the characteristics of the asset classification. Certain personal property components of these assets (slot machines, furniture, fixtures and equipment, resort signage, vehicles and computer equipment) were valued using the cost approach, which is based on replacement or reproduction costs of the assets. The fair value of the land was determined using the market approach, which considers sales of comparable assets and applies compensating factors for any differences specific to the particular assets. Building and site improvements were valued using the cost approach using a direct cost model built on estimates of replacement cost.

The fair value of the assumed long-term debt was estimated based on bid prices for the Ameristar Notes as of June 30, 2013.

Note 5. Notes to Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2013

The unaudited pro forma condensed combined balance sheet presented above reflects the following specific adjustments:

(a)
Reflects the estimated cash payment to Ameristar’s stockholders and holders of options and restricted stock units.
(b)
Reflects the gross proceeds from debt expected to be incurred under the proposed Acquisition structure as follows:
 
Total Borrowing Capacity
 
Proceeds
 
(in thousands)
Revolving credit facility
$
1,000,000


$
364,618

Term loans
1,600,000


1,565,217

Unsecured notes
850,000


850,000

Total
$
3,450,000

 
$
2,779,835


(c)
Reflects the repayment of Ameristar’s secured and other debt as well as Pinnacle’s secured and other debt including original issue discount on Pinnacle’s secured debt and the redemption of Pinnacle’s existing 8.625% senior notes due 2017.
(d)
Reflects debt financing costs.
(e)
Reflects transaction fees, including the Consent Fee.
(f)
Reflects the repayment of interest accrued on the retired debt.



(g)
Represents a reclassification adjustment to conform the presentation of Ameristar to the presentation of Pinnacle.
(h)
Reflects the adjustment to deferred taxes as a result of recording the acquired assets and assumed liabilities of Ameristar at their fair values. For pro forma purposes, Pinnacle did not evaluate the impact of the Acquisition to its valuation allowance. Accordingly, no change to Pinnacle’s valuation allowance was made.
(i)
Reflects the removal of Ameristar’s historical property and equipment, and the addition of the estimated fair value of the property and equipment acquired in the Acquisition.
(j)
Represents the removal of Ameristar’s historical goodwill, and the addition of the estimated fair value of the goodwill acquired in the Acquisition.
(k)
Reflects the removal of Ameristar’s historical intangible assets, and the addition of the estimated fair value of the intangible assets comprised of trade name, customer relationships, and gaming licenses acquired in the Acquisition.
(l)
Reflects the removal of the deferred financing costs associated with the historical debt that was refinanced.
(m)
Reflects the fair value adjustment on the Ameristar Notes.
(n)
Reflects the reversal of Ameristar’s historical equity.
(o)
Reflects the impact to equity of the write-off of deferred financing costs and original issue discount associated with historical debt that was refinanced.
(p)
Represents a reclassification adjustment to reflect Lumière Place Casino, Hotel Lumière, Four Seasons, and Ameristar Lake Charles as discontinued operations in connection with the planned divestiture of those assets. The impairment charged to retained earnings is for the presentation of the assets at fair value less cost to sell in connection with the assumption of a planned divestiture and discontinued operations presentation, and does not represent an impairment charge using an undiscounted cash flow analysis performed under ASC 360-10.
(q)
Reflects the estimated benefit of current income tax deduction attributable to the cash settlement of Ameristar’s stock options and restricted stock units.
(r)
Represents financing payments, which did not qualify as debt financing costs, expensed as transaction costs.
(s)
Reflects cash outflows classified as discount on debt.
(t)
Reflects the current portion of debt issued as a result of the Acquisition.
(u)
Reflects the fair value adjustment on Ameristar long-term assets.
(v)
Reflects the fair value adjustment on Ameristar accrued liabilities.




Note 6. Notes to Unaudited Pro Forma Condensed Combined Statement of Continuing Operations for the six months ended June 30, 2013

The unaudited pro forma condensed combined statement of continuing operations presented above reflects the following specific adjustments:

(a)
Represents reclassification adjustments to conform presentation of Ameristar to presentation of Pinnacle.
(b)
Reflects the adjustment to amortization expense due to the amortization of the customer relationship and favorable lease intangible assets recognized in purchase accounting.
(c)
Reflects the adjustment to depreciation expense due to the fair value adjustment of property and equipment.
(d)
Represents the removal of the interest expense associated with the historical debt that was refinanced.
(e)
Reflects the interest expense associated with the debt financing incurred to finance the Acquisition. The pro forma interest expense arising from the additional borrowings has been computed using the rate on the $850.0 million of 6.375% senior notes issued in contemplation of the transaction, and the current rates on the existing Pinnacle term loan and the revolving credit facility of 3.750% and 3.443%, respectively. Each 1/8th % change in the variable rate on the approximate $1,600.0 million and $364.6 million borrowed under the new term loan and revolving credit facility at closing would result in a change in interest expense of $1.0 million and $0.2 million for the six months ended June 30, 2013, respectively.
(f)
Reflects the amortization of deferred financing charges and debt discount associated with the Amended and Restated Credit Facility.
(g)
Reflects the amortization of the fair value premium associated with the Ameristar Notes.
(h)
Reflects the adjustment to income tax expense by applying Ameristar’s effective tax rate of approximately 39.2% to the pro forma adjustments.
(i)
Represents an adjustment to remove the operations of Lumière Place Casino, Hotel Lumière, Four Seasons, and Ameristar Lake Charles in connection with the assumption of a planned divestiture of those assets.
(j)
An effective tax rate of 0% was applied to Pinnacle’s pro forma adjustments as Pinnacle is subject to a full valuation allowance. For pro forma purposes, Pinnacle did not evaluate the impact of the Acquisition to its valuation allowance. Accordingly, no change to Pinnacle’s valuation allowance was made.

Note 7. Notes to Unaudited Pro Forma Condensed Combined Statement of Continuing Operations for the year ended December 31, 2012

The unaudited pro forma condensed combined statement of continuing operations presented above reflects the following specific adjustments:

(a)
Represents reclassification adjustments to conform presentation of Ameristar to presentation of Pinnacle.
(b)
Reflects the adjustment to amortization expense due to the amortization of the customer relationship and favorable lease intangible assets recognized in purchase accounting.
(c)
Reflects the adjustment to depreciation expense due to the fair value adjustment of property and equipment.
(d)
Represents the removal of the interest expense associated with the historical debt that was refinanced.
(e)
Reflects the interest expense associated with the debt financing expected to be incurred to finance the Acquisition. The pro forma interest expense arising from the additional borrowings has been computed using the assumed rate on the $850.0 million of 6.375% senior notes issued in contemplation of the transaction, and the current rates on the existing Pinnacle term loan and the revolving credit facility of 3.750% and 3.443%, respectively. Each 1/8th % change in the variable rate on the approximate $1,600.0 million and $364.6 million borrowed under the new term loan and revolving credit facility at closing would result in a change in interest expense of $2.0 million and $0.5 million for the year ended December 31, 2012, respectively.
(f)
Reflects the amortization of deferred financing charges and debt discount associated with the Amended and Restated Credit Facility.
(g)
Reflects the amortization of the fair value premium associated with the Ameristar Notes.
(h)
Reflects the adjustment to income tax expense by applying Ameristar’s effective tax rate of approximately 41.9% to the pro forma adjustments.
(i)
Represents an adjustment to remove the operations of Lumière Place Casino, Hotel Lumière, Four Seasons, and Ameristar Lake Charles in connection with the assumption of a planned divestiture of those assets.
(j)
An effective tax rate of 0% was applied to Pinnacle’s pro forma adjustments as Pinnacle is subject to a full valuation allowance. For pro forma purposes, Pinnacle did not evaluate the impact of the Acquisition to its valuation allowance. Accordingly, no change to Pinnacle’s valuation allowance was made.


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