WYOMISSING, Pennsylvania – (PRESS RELEASE) -- Penn National Gaming, Inc. (Nasdaq:PENN) today reported record
second quarter operating results for the period ended June 30, 2006,
as summarized below:
Summary of Second Quarter Results
----------------------------------------------------------------------
(in millions) Three Months Ended
(except per share data) June 30,
----------------------------------------------------------------------
2006
2006 Guidance 2005
Actual (3) Actual
------------------------------------------- -------- -------- --------
Net revenues (1) $ 537.8 $ 534.0 $ 296.2
------------------------------------------- -------- -------- --------
EBITDA (2) 155.1 151.4 78.6
------------------------------------------- -------- -------- --------
Less depreciation and amortization,
gain/loss on disposal of assets, interest
expense - net, income taxes, charges for
stock compensation and other expenses (112.4) (111.0) (63.7)
------------------------------------------- -------- -------- --------
Net income from continuing operations 42.7 40.4 14.9
------------------------------------------- -------- -------- --------
Loss from discontinued operations - - (2.8)
------------------------------------------- -------- -------- --------
Net income $ 42.7 $ 40.4 $ 12.1
------------------------------------------- -------- -------- --------
Per share data
----------------------------------------------------------------------
Diluted earnings per share from continuing
operations $ 0.49 $ 0.47 $ 0.17
------------------------------------------- -------- -------- --------
Diluted earnings per share $ 0.49 $ 0.47 $ 0.14
------------------------------------------- -------- -------- --------
(1) Revenue figures for all periods reflect a reclassification for
cash redemption coupons to contra-revenue from operating expense.
The Company has several cash back programs, including promotional
credits, cash back as an effective rebate based on player volumes
and discretionary cash redemption coupons which are mailed
directly to customers. The Company has historically treated such
promotional credits and "cash back" as reductions in revenue, and
treated discretionary cash redemption coupons as a marketing
expense. As a result of our review of trends in interpreting
accounting pronouncements and gaming industry practices for
accounting for customer cash incentives, we believe that the
reclassification of the discretionary cash redemption coupons from
a marketing expense to a reduction of revenue will enable readers
to more readily evaluate and compare the Company's financial
results with those of other companies in our industry. This
reclassification represents approximately 3% of the Company's
revenues for the three month period ended June 30, 2005, and has
no effect on operating income, EBITDA, net income or earnings per
share for the three month period ended June 30, 2005.
(2) EBITDA is income from continuing operations excluding charges for
stock compensation, depreciation and amortization, and gain or
loss on disposal of assets, and is inclusive of earnings from
joint venture. A reconciliation of net income per accounting
principles generally accepted in the United States of America
("GAAP") to EBITDA, as well as income from continuing operations
per GAAP to EBITDA is included in the accompanying financial
schedules.
(3) The figures in this column present the guidance Penn National
Gaming provided on April 25, 2006 for the second quarter ended
June 30, 2006. Net revenues have been adjusted to reflect the
reclassification for cash redemption coupons to contra-revenue
from operating expense.
In the three months ended June 30, 2006, Penn National Gaming
recorded a charge for stock compensation that had the net effect of
reducing both diluted earnings per share from continuing operations
and diluted earnings per share by $0.04. In the three months ended
June 30, 2005, Penn National Gaming recorded charges for early
extinguishment of debt and settlement charges related to the Company's
Casino Rouge property that, in aggregate, had the net effect of
reducing both diluted earnings per share from continuing operations
and diluted earnings per share by $0.21.
Three Months Ended
June 30,
--------------------------
2006 2006 2005
Actual Guidance Actual
------------------------------------------- -------- -------- --------
Diluted earnings per share from continuing
operations $ 0.49 $ 0.47 $ 0.17
------------------------------------------- -------- -------- --------
Charge for early extinguishment of debt - - 0.01
------------------------------------------- -------- -------- --------
Charge for stock compensation 0.04 0.04 -
------------------------------------------- -------- -------- --------
Settlement charges - - 0.20
------------------------------------------- -------- -------- --------
Diluted earnings per share before charges
for early extinguishment of debt, stock
compensation and settlement $ 0.53 $ 0.51 $ 0.38
------------------------------------------- -------- -------- --------
Commenting on the results, Peter M. Carlino, Chairman and Chief
Executive Officer of Penn National said, "Penn National's record 2006
second quarter operating results exceeded the Company's financial
guidance for the period as we benefited from the successful
integration of the five Argosy Gaming properties -- including
year-over-year EBITDA improvements at the four largest acquired
properties -- and 'same property' EBITDA gains at five of the six
other Penn National casinos. In addition, Hollywood Slots at Bangor's
EBITDA contribution improved 27% over the first quarter of 2006.
"Following last year's hurricane damage, Penn National's Boomtown
Biloxi facility re-opened late in the second quarter with a re-modeled
interior, approximately 1,100 new slots, 22 table games and a 350-seat
buffet. We are delighted that, through the efforts of our
redevelopment teams, the property re-opened ahead of schedule and to a
strong response from local patrons. In early September, Boomtown will
open its pier-based expansion with 400 additional slot machines and a
full service restaurant. We are now focused on finishing renovations
at our Bay St. Louis, Mississippi casino, which will be re-named
Hollywood Casino Bay St. Louis upon re-opening in the fall. We'll
initially re-launch this property as a 30,000 square foot temporary
casino in the property's former hotel lobby, which we plan to replace
with a permanent land-based casino. In addition, the damaged areas of
the existing 290-room hotel tower are being completely refurbished.
Upon opening, Hollywood Casino Bay St. Louis will initially feature
approximately 20 table games and approximately 850 slot machines, with
room to expand to 1,270 slots.
"In addition to near-term growth to be realized from the
re-openings, there have been several recent developments related to
our pipeline of expansion and development opportunities, including
Argosy Casino Lawrenceburg's casino and parking project; the Hollywood
Casino at Penn National; the temporary and permanent facilities at
Hollywood Slots at Bangor; Charles Town's casino, parking and food and
beverage expansions; and, the hotel at Argosy Casino Riverside.
"While Argosy Casino Lawrenceburg recorded a year-over-year EBITDA
gain, the property remains capacity constrained and is adversely
impacted by its current three-tier layout. We have increased the
budget for the new two-level Lawrenceburg barge by approximately 17%
to $310 million, which reflects the current environment for
construction and materials costs and enables us to add 400 additional
gaming positions, including a 30-table poker room, which were not
contemplated in the original budget.
"Late in the second quarter, the Pennsylvania Gaming Control Board
("PGCB") licensed 12 slot distributors in the state, and the Chairman
of the PGCB has indicated that conditional Category 1 licenses should
be issued by the end of September. We will begin construction on the
integrated racing and slots facility at Penn National Race Course this
August. Given that nearly two years have elapsed since the facility's
initial plans were conceived, the construction budget has been
increased by 18% to $310 million. The increased budget reflects a rise
in construction and materials costs during this time and a refinement
of our development plans. We remain highly confident that Hollywood
Casino at Penn National will prove to be an exciting entertainment
destination for patrons, while delivering excellent returns for our
shareholders.
"With growing patronage and play, the Hollywood Slots at Bangor
temporary facility is generating strong annualized EBITDA returns and
we continue to advance plans to build a permanent facility in the
market. During the second quarter, the Bangor City Council approved a
series of agreements that pave the way for the development of a
permanent Bangor slot site including a parking garage, restaurants and
retail space. Construction on the facility, which will open with 1,000
slots and have capacity for 1,500 gaming machines, is planned to
commence in early 2007, subject to securing one remaining leaseholder
agreement. The construction budget has been increased by $19 million
to $90 million, which reflects increased construction costs and a
refinement of our development plans.
"On the legislative front the state of Illinois passed House Bill
1918 effective May 26 which singled out four casinos for a 3% tax
surcharge to subsidize local horse racing interests. As such, second
quarter 2006 results were impacted by this higher gaming tax, which
amounted to $1.5 million during the period, and we will continue to
pay this tax in upcoming periods. Prior to the passage of this law,
questions were raised regarding its constitutionality. After it was
enacted, Empress Casino Hotel and Hollywood Casino Aurora joined with
the two other riverboats affected by the law (Harrah's Joliet and the
Grand Victoria Casino in Elgin) and filed suit asking the Court to
declare the law unconstitutional. The State agreed to the entry of an
order that establishes a protest fund for all of the surcharge
payments and enjoins the Treasurer from making any payments out of
that fund pending the final outcome of the litigation. Should the
casinos prevail with their challenge, the incremental taxes paid under
protest would be refunded. We anticipate a long process before a
resolution to this matter can be reached.
"In Ohio, as the owner of Raceway Park in Toledo, Penn National
Gaming continues to provide support for a proposed constitutional
amendment that would establish a tuition grant program for Ohio
students to attend public or private colleges in the state. This
program would generate nearly $1 billion per year in college
scholarships while an additional $200 million per year would be
earmarked to local governments for attracting new business and jobs,
by allowing slot machines at the state's seven racetracks and two
locations in downtown Cleveland. The state's three major horsemen's
groups including the Ohio Harness Horsemen's Association, the Ohio
Horsemen's Benevolent and Protective Association, and the Ohio
Thoroughbred Breeders and Owners have all voted to support the
amendment. The Learn and Earn Committee has now collected over 600,000
signatures ahead of the August 9, 2006 deadline to qualify the
initiative for the ballot in November.
"With the benefit of acquisition integration and synergies,
organic growth and the resumption of operations at our Gulf Coast
properties, Penn National will continue to deliver outstanding
financial growth in 2006 and beyond. It should be noted that the
earnings growth anticipated in the third quarter and revised full year
guidance is inclusive of the Illinois tax increase, which alone
amounts to approximately $8 million in the second half of 2006, as
well as increased insurance costs related to windstorm and flood
coverage. In addition, with a strong base of existing operations, a
diversified, staggered development pipeline with an emphasis on strong
returns on invested capital, we have a visible growth trajectory for
several years. Finally, we continue to regularly evaluate acquisition
opportunities in the gaming industry, including destination markets,
where we can expand our operating base while generating attractive
returns that will bring value to our shareholders."
Development and Expansion Projects
The table below outlines Penn National Gaming's current pipeline
of new or expanded facilities:
----------------------------------------------------------------------
Amount
Expended
New Planned through Expected
Gaming Total June 30, Opening
Project/Scope Positions Budget 2006 Date
------------------------------ --------- --------- --------- ---------
(in millions)
------------------------------ --------- ------------------- ---------
Charles Town (WV) - Casino
expansion including a hotel
and a 65,000 square foot
expansion of the gaming
floor. Gaming space will be
finished in two phases: the
first phase will be completed
in the first quarter of 2007,
and will allow for 800 more First
gaming machines, and the phase of
second phase will provide gaming
capacity for an additional space
1,000 gaming machines. 800 $ 80 $ 2 1Q '07
------------------------------ --------- --------- --------- ---------
----------------------------------------------------------------------
Argosy Casino Riverside (MO) -
Construction of 258-room Hotel
hotel. - $ 66 $ 22 2Q '07
------------------------------ --------- --------- --------- ---------
----------------------------------------------------------------------
Argosy Casino Lawrenceburg
(IN) - New two-level 250,000
square foot gaming barge, an
additional 1,500 space
parking garage and road and
infrastructure improvements.
The gaming barge will allow
4,000 positions on one level Parking
and another 400 positions facility
will be added to the second 4Q '07;
level, along with restaurants gaming
and other amenities on the facility
gaming barge. 1,600 $ 310 $ 45 4Q '08
------------------------------ --------- --------- --------- ---------
----------------------------------------------------------------------
Hollywood Casino at Penn
National (PA) - Building an
integrated racing and gaming
facility. Budget includes a
$50 million license fee and
the purchase of an initial
2,000 slot machines (with
the ability to add 1,000
additional machines), a 2,500
space parking garage and
several restaurants. 2,000 $ 310 $ 22 1Q '08
------------------------------ --------- --------- --------- ---------
----------------------------------------------------------------------
Hollywood Slots at Bangor (ME)
- Building a permanent
facility, which will include
a 1,500 slot facility, 1,000
slot machines, a 1,500 space
parking garage, several
restaurants and an off-track
wagering facility. Inclusive
of the initial $51 million
purchase price, $68 million
was spent in 2005 for a 475-
slot temporary facility that
opened in November 2005. 525 $ 90 $ 3 2Q '08
------------------------------ --------- --------- --------- ---------
----------------------------------------------------------------------
Financial Guidance
The following table sets forth current guidance targets for
continuing operations for the 2006 third quarter and full year, based
on the following assumptions:
- Hollywood Casino Bay St. Louis (formerly Casino Magic - Bay
St. Louis) will re-open during the fall of 2006;
- The pier facility at Boomtown Biloxi will open in the fall
with 400 additional machines;
- The repair of Boomtown Biloxi and Hollywood Casino Bay St.
Louis are assumed to be completely funded through insurance
recoveries;
- Although Penn National Gaming expects to receive business
interruption insurance proceeds resulting from the hurricane
damage incurred at Boomtown Biloxi and Hollywood Casino Bay
St. Louis, the Company cannot presently determine the amount
or the timing of such payments and, as such, these proceeds
are excluded from guidance;
- While the Company has been granted an injunction blocking the
distribution of Illinois' 3% additional gaming tax at Empress
Casino Hotel and Hollywood Casino Aurora properties, we will
continue to accrue for and pay such taxes until the matter is
resolved. In aggregate, we will incur incremental taxes of
$8.0 million, which will impact earnings per diluted share by
$0.05 for the second half of 2006;
- The results of Empress Casino Hotel are included in continuing
operations as the accounting standards for treating properties
as "assets held for sale" will not be met in 2006; as such,
the results from the property are included in our 2006 third
quarter and full year guidance;
- Anticipated third quarter and full year 2006 results include
our estimate expenses for supporting the November 2006
referendum in Ohio, which are not deductible for tax purposes;
- Anticipated third quarter 2006 results include a $1.6 million
pre-tax non-recurring charge, or $0.01 per diluted share, for
converting a defined-benefit plan to a defined contribution
plan at Pennwood Racing, Inc., our New Jersey joint venture;
- Anticipated 2006 results include a pre-tax, non-cash charge
for stock compensation of $20.8 million ($13.5 million net of
taxes, or $0.16 per diluted share);
- The effective tax rate for federal, state and local income
taxes for 2006 will be 42.0%, which reflects the impact of
better operating results in jurisdictions with higher state
income tax and the non-deductibility of political lobbying
expenses;
- The Company will have approximately 87.0 million diluted
shares outstanding as of December 31, 2006; and,
- There will be no material changes in economic conditions,
applicable legislation or regulation, world events, or other
circumstances beyond our control that may adversely affect the
Company's results of operations.
Financial Guidance as of July 27, 2006
---------------------------------------------------------------------
(in millions,
except per share
data) Three Months Ended Full Year Ended
------------------ ------------------- ------------------------------
September September 2006 2006
30, 2006 30, 2005 Revised Prior 2005
Guidance Actual Guidance Guidance Actual
------------------ --------- --------- --------- --------- ----------
Net revenues (1) $ 578.2 $ 286.9 $ 2,220.2 $ 2,193.9 $ 1,369.1
------------------ --------- --------- --------- --------- ----------
EBITDA (2) 160.2 78.6 627.1 617.3 373.3
------------------ --------- --------- --------- --------- ----------
Less depreciation
and amortization,
gain/loss on
disposal of
assets, interest
expense - net,
income taxes,
charge for stock
compensation and
other expenses (117.1) (46.5) (460.4) (453.5) (241.1)
------------------ --------- --------- --------- --------- ----------
Net income from
continuing
operations before
charge for early
extinguishment of
debt, hurricane
expense,
settlement
charges and
impairment charge
for Penn National
grandstand 43.1 32.1 166.7 163.8 132.2
------------------ --------- --------- --------- --------- ----------
Charge for early
extinguishment of
debt, net of tax - - (6.5) (6.5) (11.7)
------------------ --------- --------- --------- --------- ----------
Hurricane expense,
net of tax - (12.3) - - (13.7)
------------------ --------- --------- --------- --------- ----------
Settlement
charges, net of
tax - - - - (16.8)
------------------ --------- --------- --------- --------- ----------
Impairment charge
for Penn National
grandstand, net
of tax - - - - (2.8)
------------------ --------- --------- --------- --------- ----------
Net income from
continuing
operations GAAP $ 43.1 $ 19.8 $ 160.2 $ 157.3 $ 87.2
------------------ --------- --------- --------- --------- ----------
Diluted earnings
per share before
charge for early
extinguishment of
debt, hurricane
expense,
settlement
charges, and
impairment charge
for Penn National
grandstand $ 0.49 $ 0.37 $ 1.91 $ 1.89 $ 1.55
------------------ --------- --------- --------- --------- ----------
EPS impact of
charge for early
extinguishment of
debt, hurricane
expense,
settlement
charges, and
impairment charge
for Penn National
grandstand - (0.14) (0.07) (0.07) (0.53)
------------------ --------- --------- --------- --------- ----------
Diluted earnings
per share from
continuing
operations $ 0.49 $ 0.23 $ 1.84 $ 1.82 $ 1.02
------------------ --------- --------- --------- --------- ----------
(1) Reflects reclassification for cash redemption coupons to
contra-revenue from operating expense.
(2) EBITDA is income from continuing operations excluding charges for
stock compensation, hurricane expenses, settlement charges,
depreciation and amortization, and gain or loss on disposal of
assets, and is inclusive of earnings from joint venture.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information - Continuing Operations
(in thousands) (unaudited)
NET REVENUES (1) EBITDA (2)
Three Months Ended Three Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- --------- --------- ---------
Charles Town Entertainment
Complex $122,452 $112,779 $ 35,405 $ 33,179
Argosy Casino Lawrenceburg 114,994 - 37,982 -
Hollywood Casino Aurora 60,703 57,782 20,120 18,972
Empress Casino Hotel 59,736 - 17,263 -
Argosy Casino Riverside 37,607 - 12,443 -
Casino Rouge 35,447 28,430 15,533 10,074
Argosy Casino Alton 28,205 - 7,692 -
Hollywood Casino Tunica 26,899 26,505 6,974 6,950
Casino Magic-Bay St. Louis (3) (22) 26,576 - 5,375
Argosy Casino Sioux City 13,196 - 4,251 -
Boomtown Biloxi (3) 1,010 16,791 262 3,795
Hollywood Slots at Bangor 10,104 482 2,784 (60)
Bullwhackers 7,036 6,897 916 958
Casino Rama management service
contract 4,921 4,700 4,564 4,362
Pennsylvania Racing Operations 13,073 15,262 553 1,553
Raceway Park 2,412 - (87) -
Earnings from Pennwood Racing,
Inc. - - 574 642
Corporate overhead - - (12,095) (7,185)
---------- --------- --------- ---------
Total $537,773 $296,204 $155,134 $ 78,615
========== ========= ========= =========
NET REVENUES (1) EBITDA (2)
Six Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- --------- --------- ---------
Charles Town Entertainment
Complex $ 239,370 $215,990 $ 69,554 $ 62,608
Argosy Casino Lawrenceburg 235,157 - 78,741 -
Hollywood Casino Aurora 122,453 111,244 41,519 35,210
Empress Casino Hotel 120,052 - 34,784 -
Argosy Casino Riverside 76,602 - 25,601 -
Casino Rouge 78,567 57,550 36,602 21,219
Argosy Casino Alton 57,724 - 15,875 -
Hollywood Casino Tunica 55,057 52,698 14,900 13,137
Casino Magic-Bay St. Louis
(3) - 53,209 - 11,092
Argosy Casino Sioux City 27,247 - 8,969 -
Boomtown Biloxi (3) 1,010 35,054 262 8,614
Hollywood Slots at Bangor 18,814 482 4,978 (122)
Bullwhackers 13,622 14,104 1,542 1,801
Casino Rama management
service contract 9,308 8,767 8,632 8,130
Pennsylvania Racing
Operations 26,160 28,536 1,470 2,879
Raceway Park 4,432 - (66) -
Earnings from Pennwood
Racing, Inc. - - 987 985
Corporate overhead - - (24,401) (14,766)
---------- --------- --------- ---------
Total $1,085,575 $577,634 $319,949 $150,787
========== ========= ========= =========
(1) Reflects reclassification for cash redemption coupons to
contra-revenue from operating expense.
(2) EBITDA is income from continuing operations excluding charges for
stock compensation, depreciation and amortization, and gain or
loss on disposal of assets, and is inclusive of earnings from
joint venture. A reconciliation of net income per accounting
principles generally accepted in the United States of America
("GAAP") to EBITDA, as well as income from continuing operations
per GAAP to EBITDA is included in the accompanying financial
schedules.
(3) Casino Magic - Bay St. Louis and Boomtown Biloxi were closed
effective August 28, 2005 due to hurricane damage. Boomtown Biloxi
reopened on June 29, 2006.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information - Continuing Operations
(in thousands) (unaudited)
Reconciliation of EBITDA to Net Income (GAAP)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
--------- --------- --------- ---------
EBITDA $155,134 $ 78,615 $319,949 $150,787
Earnings from joint venture (574) (642) (987) (985)
Depreciation and amortization (27,728) (15,969) (57,446) (31,464)
Charge for stock compensation (5,493) - (10,404) -
Settlement costs - (28,175) - (28,175)
Gain (loss) on disposals 498 (186) (374) (222)
--------- --------- --------- ---------
Income from continuing
operations $121,837 $ 33,643 $250,738 $ 89,941
Interest expense (47,766) (12,324) (96,195) (28,828)
Interest income 867 930 1,770 2,222
Earnings from joint venture 574 642 987 985
Other 184 (74) 74 (94)
Charge for early
extinguishment of debt - (869) (10,022) (16,673)
Taxes on income (33,001) (7,055) (62,674) (16,407)
--------- --------- --------- ---------
Net income from continuing
operations $ 42,695 $ 14,893 $ 84,678 $ 31,146
Loss from discontinued
operations, net of taxes - (2,774) - (3,221)
--------- --------- --------- ---------
Net income $ 42,695 $ 12,119 $ 84,678 $ 27,925
========= ========= ========= =========
Reconciliation of Income from Continuing Operations (GAAP) to EBITDA
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Three Months Ended June 30, 2006
Income
from Charge for Depreciation
continuing stock and
operations compensation amortization
-------------------------------------------
Charles Town
Entertainment Complex $ 30,894 $ - $ 4,871
Argosy Casino
Lawrenceburg 33,724 - 4,256
Hollywood Casino Aurora 18,029 - 2,259
Empress Casino Hotel 14,478 - 2,794
Argosy Casino Riverside 9,686 - 2,759
Casino Rouge 13,455 - 2,067
Argosy Casino Alton 5,464 - 2,228
Hollywood Casino Tunica 5,198 - 1,775
Casino Magic-Bay St.
Louis (1) (218) - 197
Argosy Casino Sioux City 3,161 - 1,090
Boomtown Biloxi (1) 262 - -
Hollywood Slots at Bangor 1,797 - 987
Bullwhackers 386 - 524
Casino Rama management
service contract 4,564 - -
Pennsylvania Racing
Operations 204 - 349
Raceway Park (200) - 113
Earnings from Pennwood
Racing, Inc. - - -
Corporate overhead (19,047) 5,493 1,459
------------------------------------------
Total $121,837 $ 5,493 $ 27,728
==========================================
Earnings
(Gain)/loss from
on disposal joint
of assets venture EBITDA
---------------------------------------
Charles Town Entertainment
Complex $ (360) $ - $ 35,405
Argosy Casino Lawrenceburg 2 - 37,982
Hollywood Casino Aurora (168) - 20,120
Empress Casino Hotel (9) - 17,263
Argosy Casino Riverside (2) - 12,443
Casino Rouge 11 - 15,533
Argosy Casino Alton - - 7,692
Hollywood Casino Tunica 1 - 6,974
Casino Magic-Bay St. Louis (1) 21 - -
Argosy Casino Sioux City - - 4,251
Boomtown Biloxi (1) - - 262
Hollywood Slots at Bangor - - 2,784
Bullwhackers 6 - 916
Casino Rama management
service contract - - 4,564
Pennsylvania Racing Operations - - 553
Raceway Park - - (87)
Earnings from Pennwood
Racing, Inc. - 574 574
Corporate overhead - - (12,095)
---------------------------------------
Total $ (498) $ 574 $155,134
=======================================
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Three Months Ended June 30, 2005
Income
from Depreciation
continuing Settlement and
operations costs amortization
--------------------------------------
Charles Town Entertainment
Complex $ 28,611 $ - $ 4,567
Hollywood Casino Aurora 16,709 - 2,263
Casino Rouge (20,095) 28,175 1,979
Hollywood Casino Tunica 4,810 - 2,140
Casino Magic-Bay St. Louis (1) 2,991 - 2,343
Boomtown Biloxi (1) 2,662 - 1,026
Hollywood Slots at Bangor (103) - 43
Bullwhackers 453 - 481
Casino Rama management service
contract 4,362 - -
Pennsylvania Racing Operations 1,196 - 357
Earnings from Pennwood Racing,
Inc. - - -
Corporate overhead (7,953) - 770
--------------------------------------
Total $ 33,643 $ 28,175 $ 15,969
======================================
Earnings
(Gain)/loss from
on disposal joint
of assets venture EBITDA
--------------------------------------
Charles Town Entertainment
Complex $ 1 $ - $ 33,179
Hollywood Casino Aurora - - 18,972
Casino Rouge 15 - 10,074
Hollywood Casino Tunica - - 6,950
Casino Magic-Bay St. Louis (1) 41 - 5,375
Boomtown Biloxi (1) 107 - 3,795
Hollywood Slots at Bangor - - (60)
Bullwhackers 24 - 958
Casino Rama management service
contract - - 4,362
Pennsylvania Racing Operations - - 1,553
Earnings from Pennwood Racing,
Inc. - 642 642
Corporate overhead (2) - (7,185)
--------------------------------------
Total $ 186 $ 642 $ 78,615
======================================
(1) Income from continuing operations and EBITDA for the three months
ended June 30, 2006 reflects the closure of Casino Magic - Bay St.
Louis and Boomtown Biloxi, which incurred extensive hurricane
damage in August 2005. Boomtown Biloxi reopened on June 29, 2006.
Reconciliation of Income from Continuing Operations (GAAP) to EBITDA
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Six Months Ended June 30, 2006
Income
from Charge for Depreciation
continuing stock and
operations compensation amortization
--------------------------------------
Charles Town Entertainment
Complex $ 60,384 $ - $ 9,528
Argosy Casino Lawrenceburg 69,870 - 8,891
Hollywood Casino Aurora 37,244 - 4,443
Empress Casino Hotel 27,877 - 6,907
Argosy Casino Riverside 19,920 - 5,646
Casino Rouge 31,572 - 4,177
Argosy Casino Alton 10,905 - 4,970
Hollywood Casino Tunica 11,029 - 3,869
Casino Magic-Bay St. Louis (1) (374) - 353
Argosy Casino Sioux City 6,988 - 1,978
Boomtown Biloxi (1) 262 - -
Hollywood Slots at Bangor 3,130 - 1,848
Bullwhackers 492 - 1,044
Casino Rama management service
contract 8,632 - -
Pennsylvania Racing Operations 849 - 621
Raceway Park (179) - 113
Earnings from Pennwood Racing,
Inc. - - -
Corporate overhead (37,863) 10,404 3,058
--------------------------------------
Total $ 250,738 $ 10,404 $ 57,446
======================================
Earnings
(Gain)/loss from
on disposal joint
of assets venture EBITDA
--------------------------------------
Charles Town Entertainment
Complex $ (358) $ - $ 69,554
Argosy Casino Lawrenceburg (20) - 78,741
Hollywood Casino Aurora (168) - 41,519
Empress Casino Hotel - - 34,784
Argosy Casino Riverside 35 - 25,601
Casino Rouge 853 - 36,602
Argosy Casino Alton - - 15,875
Hollywood Casino Tunica 2 - 14,900
Casino Magic-Bay St. Louis (1) 21 - -
Argosy Casino Sioux City 3 - 8,969
Boomtown Biloxi (1) - - 262
Hollywood Slots at Bangor - - 4,978
Bullwhackers 6 - 1,542
Casino Rama management service
contract - - 8,632
Pennsylvania Racing Operations - - 1,470
Raceway Park - - (66)
Earnings from Pennwood Racing,
Inc. - 987 987
Corporate overhead - - (24,401)
--------------------------------------
Total $ 374 $ 987 $ 319,949
======================================
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Six Months Ended June 30, 2005
Income
from Depreciation
continuing Settlement and
operations costs amortization
--------------------------------------
Charles Town Entertainment
Complex $ 53,892 $ - $ 8,696
Hollywood Casino Aurora 30,531 - 4,679
Casino Rouge (10,762) 28,175 3,895
Hollywood Casino Tunica 8,934 - 4,203
Casino Magic-Bay St. Louis (1) 6,372 - 4,656
Boomtown Biloxi (1) 6,358 - 2,063
Hollywood Slots at Bangor (208) - 86
Bullwhackers 829 - 936
Casino Rama management service
contract 8,130 - -
Pennsylvania Racing Operations 2,161 - 718
Earnings from Pennwood Racing,
Inc. - - -
Corporate overhead (16,296) - 1,532
--------------------------------------
Total $ 89,941 $ 28,175 $ 31,464
======================================
Earnings
(Gain)/loss from
on disposal joint
of assets venture EBITDA
--------------------------------------
Charles Town Entertainment
Complex $ 20 $ - $ 62,608
Hollywood Casino Aurora - - 35,210
Casino Rouge (89) - 21,219
Hollywood Casino Tunica - - 13,137
Casino Magic-Bay St. Louis (1) 64 - 11,092
Boomtown Biloxi (1) 193 - 8,614
Hollywood Slots at Bangor - - (122)
Bullwhackers 36 - 1,801
Casino Rama management service
contract - - 8,130
Pennsylvania Racing Operations - - 2,879
Earnings from Pennwood Racing,
Inc. - 985 985
Corporate overhead (2) - (14,766)
--------------------------------------
Total $ 222 $ 985 $ 150,787
======================================
(1) Income from continuing operations and EBITDA for the three months
ended June 30, 2006 reflects the closure of Casino Magic - Bay St.
Louis and Boomtown Biloxi, which incurred extensive hurricane
damage in August 2005. Boomtown Biloxi reopened on June 29, 2006.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data) (unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
------------------- --------------------
2006 2005 2006 2005
--------- --------- ---------- ---------
Revenues
Gaming (1) $490,804 $254,961 $ 994,254 $500,137
Racing 13,635 13,306 27,202 25,105
Management service fee 4,921 4,700 9,308 8,767
Food, beverage and other 52,417 39,877 104,985 77,150
--------- --------- ---------- ---------
Gross revenues 561,777 312,844 1,135,749 611,159
Less promotional
allowances (24,004) (16,640) (50,174) (33,525)
--------- --------- ---------- ---------
Net revenues 537,773 296,204 1,085,575 577,634
--------- --------- ---------- ---------
Operating expenses
Gaming (1) 254,882 136,288 510,626 267,021
Racing 10,855 10,259 20,926 19,069
Food, beverage and other 48,871 25,869 97,228 49,725
General and
administrative 73,600 46,001 148,611 92,239
Depreciation and
amortization 27,728 15,969 57,446 31,464
Settlement costs - 28,175 - 28,175
--------- --------- ---------- ---------
Total operating expenses 415,936 262,561 834,837 487,693
--------- --------- ---------- ---------
Income from continuing
operations 121,837 33,643 250,738 89,941
--------- --------- ---------- ---------
Other income (expenses)
Interest expense (47,766) (12,324) (96,195) (28,828)
Interest income 867 930 1,770 2,222
Earnings from joint
venture 574 642 987 985
Other 184 (74) 74 (94)
Loss on early
extinguishment of debt - (869) (10,022) (16,673)
--------- --------- ---------- ---------
Total other expenses (46,141) (11,695) (103,386) (42,388)
--------- --------- ---------- ---------
Income from continuing
operations before income
taxes 75,696 21,948 147,352 47,553
Taxes on income 33,001 7,055 62,674 16,407
--------- --------- ---------- ---------
Net income from continuing
operations 42,695 14,893 84,678 31,146
--------- --------- ---------- ---------
Loss from discontinued
operations, net of tax - (2,774) - (3,221)
--------- --------- ---------- ---------
Net income $ 42,695 $ 12,119 $ 84,678 $ 27,925
========= ========= ========== =========
Earnings (loss) per share
- Basic
Income from continuing
operations $ 0.51 $ 0.18 $ 1.01 $ 0.38
Discontinued operations, net
of tax - (0.03) - (0.04)
--------- --------- ---------- ---------
Basic earnings per share $ 0.51 $ 0.15 $ 1.01 $ 0.34
========= ========= ========== =========
Earnings (loss) per share
- Diluted
Income from continuing
operations $ 0.49 $ 0.17 $ 0.98 $ 0.36
Discontinued operations, net
of tax - (0.03) - (0.03)
--------- --------- ---------- ---------
Diluted earnings per share $ 0.49 $ 0.14 $ 0.98 $ 0.33
========= ========= ========== =========
Weighted average shares
outstanding
Basic 84,333 83,227 83,991 82,497
Diluted 86,729 85,732 86,435 85,563
(1) Reflects reclassification for cash redemption coupons to
contra-revenue from operating expense.
Results for the Three and Six Months Ended June 30, 2006 and 2005
of the Properties Acquired in the Argosy Gaming Company Transaction
On October 3, 2005, Penn National Gaming acquired Argosy Gaming
Company with the transaction treated for accounting purposes as
effective October 1, 2005. The table below summarizes the operating
performance of the properties acquired in the Argosy Gaming Company
transaction during the three and six month periods ended June 30, 2006
and 2005. Although Penn National Gaming did not own Argosy Gaming
Company during the three and six month periods ended June 30, 2005,
the Company believes this data is useful to investors in considering
the value this transaction brings to Penn National. As previously
disclosed, Penn National Gaming completed the sale of Argosy
Casino-Baton Rouge on October 25, 2005 and is currently required by
the Illinois Gaming Board to reach a definitive sales agreement for
the Empress Casino Hotel by June 30, 2008.
Investors should also be aware that Argosy previously included
(gain)/loss on disposal of assets in EBITDA while Penn National does
not; the results below are furnished based on Penn National's
methodology.
NET REVENUES (1) EBITDA (2)
(in thousands) (in thousands)
Three Months Ended Three Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- ---------- --------- ---------
Argosy Casino Lawrenceburg $ 114,994 $ 111,932 $ 37,982 $ 36,863
Empress Casino Hotel 59,736 56,908 17,263 14,142
Argosy Casino Riverside 37,607 35,661 12,443 10,032
Argosy Casino Alton 28,205 26,621 7,692 5,130
Argosy Casino Sioux City 13,196 13,700 4,251 4,303
Raceway Park 2,412 - (87) -
NET REVENUES (1) EBITDA (2)
(in thousands) (in thousands)
Six Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---------- ---------- --------- ---------
Argosy Casino Lawrenceburg $ 235,157 $ 224,627 $ 78,741 $ 73,776
Empress Casino Hotel 120,052 111,328 34,784 27,012
Argosy Casino Riverside 76,602 72,752 25,601 21,872
Argosy Casino Alton 57,724 53,830 15,875 11,338
Argosy Casino Sioux City 27,247 26,938 8,969 8,536
Raceway Park 4,432 - (66) -
(1) Reflects reclassification for cash redemption coupons to
contra-revenue from operating expense.
(2) EBITDA is income from continuing operations excluding charges for
stock compensation, depreciation and amortization, and gain or
loss on disposal of assets, and is inclusive of earnings from
joint venture. A reconciliation of income from operations per
accounting principles generally accepted in the United States of
America ("GAAP") to EBITDA is included in the accompanying
financial schedules.
ARGOSY GAMING COMPANY
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Three Months Ended June 30, 2005
Reconciliation of Income from Operations (GAAP) to Adjusted EBITDA
Income Depreciation (Gain)/loss
from and EBITDA on disposal Adjusted
operations amortization (1) of assets EBITDA(2)
----------------------------------------------------------------------
Argosy Casino
Lawrenceburg $ 33,182 $ 3,680 36,862 $ 1 $ 36,863
----------------------------------------------------------------------
Empress Casino
Hotel 11,823 2,403 14,226 (84) 14,142
----------------------------------------------------------------------
Argosy Casino
Riverside 7,099 2,888 9,987 45 10,032
----------------------------------------------------------------------
Argosy Casino
Alton 3,469 1,661 5,130 - 5,130
----------------------------------------------------------------------
Argosy Casino
Sioux City 3,323 974 4,297 6 4,303
----------------------------------------------------------------------
ARGOSY GAMING COMPANY
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Six Months Ended June 30, 2005
Reconciliation of Income from Operations (GAAP) to Adjusted EBITDA
Income Depreciation (Gain)/loss
from and EBITDA on disposal Adjusted
operations amortization (1) of assets EBITDA(2)
----------------------------------------------------------------------
Argosy Casino
Lawrenceburg $ 66,394 $ 7,381 73,775 $ 1 $ 73,776
----------------------------------------------------------------------
Empress Casino
Hotel 22,360 4,749 27,109 (97) 27,012
----------------------------------------------------------------------
Argosy Casino
Riverside 15,024 6,803 21,827 45 21,872
----------------------------------------------------------------------
Argosy Casino
Alton 8,043 3,295 11,338 - 11,338
----------------------------------------------------------------------
Argosy Casino
Sioux City 6,587 1,946 8,533 3 8,536
----------------------------------------------------------------------
(1) EBITDA is income from continuing operations excluding charges for
stock compensation, depreciation and amortization, and gain or
loss on disposal of assets, and is inclusive of earnings from
joint venture.
(2) Adjusted EBITDA excludes gain/loss on disposal of assets.
