UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934

Date of Report—July 27, 2006
(Date of earliest event reported)

PENN NATIONAL GAMING, INC.
 (Exact name of registrant as specified in its charter)

 

825 Berkshire Blvd., Suite 200, Wyomissing Professional Center, Wyomissing, PA		19610
(Address of principal executive offices)		(Zip Code)

 

Area Code (610) 373-2400
(Registrant’s telephone number)

Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 to Form 8-K):

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 24.14a-12)

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 40.13e-4(c))

 

 

Item 2.02               Results of Operations and Financial Condition.

On July 27, 2006, Penn National Gaming, Inc. (the “Company”) issued a press release announcing its financial results for the three and six months ended June 30, 2006 and conducted a conference call to discuss such financial results.  The full text of the press release is attached as Exhibit 99.1 and incorporated herein by reference.

The information in Item 2.02 of this Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 9.01               Financial Statements and Exhibits.

(d)           Exhibits.

Exhibit No.		Description
99.1		Press release, dated July 27, 2006, issued by Penn National Gaming, Inc. announcing its financial results for the three and six months ended June 30, 2006.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: July 28, 2006	PENN NATIONAL GAMING, INC.
	By:	/s/ Robert S. Ippolito
		Robert S. Ippolito
		Vice President, Secretary and Treasurer

 

 

EXHIBIT INDEX

Exhibit No.		Description
99.1		Press release, dated July 27, 2006, issued by Penn National Gaming, Inc. announcing its financial results for the three and six months ended June 30, 2006.

 

 

Exhibit 99.1

News Announcement

 

	Conference Call:	Today, July 27, 2006 at 10:00 a.m. EDT
	Dial-in numbers:	212/896-6110 or 415/247-8505
	Webcast:	www.pngaming.com

 

Replay information provided below

CONTACT:
William J. Clifford	Joseph N. Jaffoni, Richard Land
Chief Financial Officer	Jaffoni & Collins Incorporated
610/373-2400	212/835-8500 or penn@jcir.com

 

FOR IMMEDIATE RELEASE

PENN NATIONAL GAMING REPORTS SECOND QUARTER DILUTED EPS OF
$0.49, INCLUSIVE OF $.04 PER SHARE IN STOCK COMPENSATION CHARGES

- EBITDA Rises 97% to $155.1 Million -

- Net Income Rises 252% to $42.7 Million -

- Establishes 2006 Third Quarter Guidance and Raises Full Year Guidance -

Wyomissing, Penn., (July 27, 2006)--Penn National Gaming, Inc. (PENN: Nasdaq) 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 June 30,
(except per share data)		2006 Actual			2006 Guidance(3)			2005 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

 

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(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 Actual			2006 Guidance			2005 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.

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“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,

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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.”

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Development and Expansion Projects

The table below outlines Penn National Gaming’s current pipeline of new or expanded facilities:

							Amount
		New		Planned			Expended			Expected
		Gaming		Total			through			Opening
Project/Scope		Positions		Budget			June 30, 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 gaming machines, and the second phase will provide capacity for an additional 1,000 gaming machines.		800		$	80		$	2		First phase of gaming space 1Q ’07
Argosy Casino Riverside (MO)—Construction of 258-room hotel.		—		$	66		$	22		Hotel 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 and another 400 positions will be added to the second level, along with restaurants and other amenities on the gaming barge.		1,600		$	310		$	45		Parking facility 4Q ’07; gaming facility 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

 

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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;

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Financial Guidance (continued)

·                  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

		Three Months Ended						Full Year Ended
		September 30,			September 30,			2006 Revised			2006 Prior			2005
(in millions, except per share data)		2006 Guidance			2005 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.

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PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information - Continuing Operations
(in thousands) (unaudited)

		NET REVENUES (1)						EBITDA (2)
		Three Months Ended June 30,						Three Months Ended 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 June 30,						Six Months Ended 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.

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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

 

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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												Earnings
		from			Charge for			Depreciation			(Gain)/loss			from
		continuing			stock			and			on disposal of			joint
		operations			compensation			amortization			assets			venture			EBITDA
Charles Town Entertainment Complex		$	30,894		$	—		$	4,871		$	(360	)	$	—		$	35,405
Argosy Casino Lawrenceburg		33,724			—			4,256			2			—			37,982
Hollywood Casino Aurora		18,029			—			2,259			(168		)	—			20,120
Empress Casino Hotel		14,478			—			2,794			(9		)	—			17,263
Argosy Casino Riverside		9,686			—			2,759			(2		)	—			12,443
Casino Rouge		13,455			—			2,067			11			—			15,533
Argosy Casino Alton		5,464			—			2,228			—			—			7,692
Hollywood Casino Tunica		5,198			—			1,775			1			—			6,974
Casino Magic-Bay St. Louis (1)		(218		)	—			197			21			—			—
Argosy Casino Sioux City		3,161			—			1,090			—			—			4,251
Boomtown Biloxi (1)		262			—			—			—			—			262
Hollywood Slots at Bangor		1,797			—			987			—			—			2,784
Bullwhackers		386			—			524			6			—			916
Casino Rama management service contract		4,564			—			—			—			—			4,564
Pennsylvania Racing Operations		204			—			349			—			—			553
Raceway Park		(200		)	—			113			—			—			(87		)
Earnings from Pennwood Racing, Inc.		—			—			—			—			574			574
Corporate overhead		(19,047		)	5,493			1,459			—			—			(12,095		)
Total		$	121,837		$	5,493		$	27,728		$	(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												Earnings
		from						Depreciation			(Gain)/loss			from
		continuing			Settlement			and			on disposal of			joint
		operations			costs			amortization			assets			venture			EBITDA
Charles Town Entertainment Complex		$	28,611		$	—		$	4,567		$	1		$	—		$	33,179
Hollywood Casino Aurora		16,709			—			2,263			—			—			18,972
Casino Rouge		(20,095		)	28,175			1,979			15			—			10,074
Hollywood Casino Tunica		4,810			—			2,140			—			—			6,950
Casino Magic-Bay St. Louis (1)		2,991			—			2,343			41			—			5,375
Boomtown Biloxi (1)		2,662			—			1,026			107			—			3,795
Hollywood Slots at Bangor		(103		)	—			43			—			—			(60		)
Bullwhackers		453			—			481			24			—			958
Casino Rama management service contract		4,362			—			—			—			—			4,362
Pennsylvania Racing Operations		1,196			—			357			—			—			1,553
Earnings from Pennwood Racing, Inc.		—			—			—			—			642			642
Corporate overhead		(7,953		)	—			770			(2		)	—			(7,185		)
Total		$	33,643		$	28,175		$	15,969		$	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.

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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												Earnings
		from			Charge for			Depreciation			(Gain)/loss			from
		continuing			stock			and			on disposal			joint
		operations			compensation			amortization			of assets			venture			EBITDA
Charles Town Entertainment Complex		$	60,384		$	—		$	9,528		$	(358	)	$	—		$	69,554
Argosy Casino Lawrenceburg		69,870			—			8,891			(20		)	—			78,741
Hollywood Casino Aurora		37,244			—			4,443			(168		)	—			41,519
Empress Casino Hotel		27,877			—			6,907			—			—			34,784
Argosy Casino Riverside		19,920			—			5,646			35			—			25,601
Casino Rouge		31,572			—			4,177			853			—			36,602
Argosy Casino Alton		10,905			—			4,970			—			—			15,875
Hollywood Casino Tunica		11,029			—			3,869			2			—			14,900
Casino Magic-Bay St. Louis (1)		(374		)	—			353			21			—			—
Argosy Casino Sioux City		6,988			—			1,978			3			—			8,969
Boomtown Biloxi (1)		262			—			—			—			—			262
Hollywood Slots at Bangor		3,130			—			1,848			—			—			4,978
Bullwhackers		492			—			1,044			6			—			1,542
Casino Rama management service contract		8,632			—			—			—			—			8,632
Pennsylvania Racing Operations		849			—			621			—			—			1,470
Raceway Park		(179		)	—			113			—			—			(66		)
Earnings from Pennwood Racing, Inc.		—			—			—			—			987			987
Corporate overhead		(37,863		)	10,404			3,058			—			—			(24,401		)
Total		$	250,738		$	10,404		$	57,446		$	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												Earnings
		from						Depreciation			(Gain)/loss			from
		continuing			Settlement			and			on disposal of			joint
		operations			costs			amortization			assets			venture			EBITDA
Charles Town Entertainment Complex		$	53,892		$	—		$	8,696		$	20		$	—		$	62,608
Hollywood Casino Aurora		30,531			—			4,679			—			—			35,210
Casino Rouge		(10,762		)	28,175			3,895			(89		)	—			21,219
Hollywood Casino Tunica		8,934			—			4,203			—			—			13,137
Casino Magic-Bay St. Louis (1)		6,372			—			4,656			64			—			11,092
Boomtown Biloxi (1)		6,358			—			2,063			193			—			8,614
Hollywood Slots at Bangor		(208		)	—			86			—			—			(122		)
Bullwhackers		829			—			936			36			—			1,801
Casino Rama management service contract		8,130			—			—			—			—			8,130
Pennsylvania Racing Operations		2,161			—			718			—			—			2,879
Earnings from Pennwood Racing, Inc.		—			—			—			—			985			985
Corporate overhead		(16,296		)	—			1,532			(2		)	—			(14,766		)
Total		$	89,941		$	28,175		$	31,464		$	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.

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