Penn National Gaming Reports Third Quarter Diluted EPS of $1.79, Inclusive of $1.32 Per Share Gain on Sale
biz.yahoo.com
Thursday October 26, 7:00 am ET
- EBITDA Rises 107% to $162.8 Million - - Net Income Rises to $155.1 Million, Inclusive of $114.7 Million Gain on Sale -
- Establishes 2006 Fourth Quarter EBITDA Guidance of $142.3 Million and Diluted EPS From Continuing Operations Guidance of $0.34 -
WYOMISSING, Pa.--(BUSINESS WIRE)--Penn National Gaming, Inc. (Nasdaq:PENN):
----------------------------------------------------------
Conference Call: Today, October 26, 2006 at 9:00 a.m. EDT
Dial-in numbers: 212/896-6011 or 415/537-1818
Webcast: www.pngaming.com
Replay information provided below
----------------------------------------------------------
Penn National Gaming, Inc. (Nasdaq:PENN - News) today reported record third quarter operating results for the period ended September 30, 2006, as summarized below:
Summary of Third Quarter Results
(in millions)
----------------------------------------------------------------------
Three Months Ended
(except per ------------------------------------------------------
share data) September 30,
----------------------------------------------------------------------
Revised Guidance
2006 Guidance from August 9,
2006 Actual Original (3) 2006 (4) 2005 Actual
----------------------------------------------------------------------
Net revenues
(1) $586.1 $578.2 $286.9
----------------------------------------------------------------------
EBITDA (2) 162.8 160.2 78.6
----------------------------------------------------------------------
Less
depreciation
and
amortization,
gain/loss on
disposal of
assets,
interest
expense - net,
income taxes,
charges for
stock
compensation
and other
expenses (122.4) (117.1) (58.8)
----------------------------------------------------------------------
Net income from
continuing
operations 40.4 43.1 19.8
----------------------------------------------------------------------
Loss from
discontinued
operations - - (2.3)
----------------------------------------------------------------------
Gain on sale of
discontinued
operations 114.7 - 37.9
----------------------------------------------------------------------
Net income $155.1 $43.1 $55.4
----------------------------------------------------------------------
Per share data
----------------------------------------------------------------------
Diluted
earnings per
share from
continuing
operations $0.47 $0.49 $0.47 $0.23
----------------------------------------------------------------------
Diluted
earnings per
share $1.79 $0.49 N/A $0.64
----------------------------------------------------------------------
(1) Revenue figures for all periods reflect a reclassification for
cash redemption coupons to contra-revenue from operating expense.
This reclassification had no effect on operating income, EBITDA,
net income or earnings per share for the three month period ended
September 30, 2005.
(2) EBITDA is income from continuing operations excluding charges for
stock compensation, depreciation and amortization, gain or loss on
disposal of assets, settlement costs and hurricane expenses, 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 July 27, 2006 for the third quarter ended
September 30, 2006.
(4) On August 9, 2006, Penn National reported that it had secured new
property insurance and that the incremental cost of securing the
insurance would impact the original third quarter 2006 guidance by
$0.02 per diluted share (the original guidance was diluted
earnings per share of $0.49). The Company did not update its other
third quarter financial guidance metrics on August 9, 2006.
In the three months ended September 30, 2006, Penn National Gaming executed an amended purchase agreement that, among other things, provided for the Mohegan Tribal Gaming Authority's irrevocable waiver of any post-closing termination rights related to its purchase of The Downs Racing, Inc. This agreement effectively completed the sale of The Downs Racing, Inc. and its subsidiaries to the Mohegan Tribal Gaming Authority, and Penn National recorded a net book gain on the sale of $114.7 million (net of $84.3 million of income taxes), or $1.32 per diluted share.
In the three months ended September 30, 2005, Penn National Gaming recorded $19.1 million of pre-tax expenses ($12.3 million, or $0.14 per diluted share, after-tax) related to the impact of Hurricane Katrina on two gulf coast properties.
Three Months Ended
------------------------
September 30,
------------------------
2006 Actual 2005 Actual
------------------------
Diluted earnings per share from continuing
operations $ 0.47 $ 0.23
----------------------------------------------------------------------
Hurricane Katrina expenses - 0.14
----------------------------------------------------------------------
Diluted earnings per share from continuing
operations before Hurricane Katrina expenses $ 0.47 $ 0.37
----------------------------------------------------------------------
There were numerous factors that affected the Company's results for the three and nine month periods ended September 30, 2006, including the following:
The successful integration of the Argosy Gaming Company properties, which were acquired in October 2005;
The contribution of Hollywood Slots at Bangor, which opened in November 2005;
A full-quarter's contribution from Boomtown Biloxi, which re-opened in June 2006;
A partial quarter's contribution from Hollywood Casino® - Bay St. Louis, which re-opened in late August 2006;
Continued better than historical operating results at Casino Rouge since Hurricane Katrina;
The impact of the 3% Illinois tax surcharge on the Company's two Chicagoland boats, which amounted to $4.0 million pre-tax, or $0.02 per diluted share in the quarter ended September 30, 2006;
The impact of increased windstorm and flood insurance costs compared to the prior year which amounted to approximately $4.0 million pre-tax, or $0.02 per diluted share, for the period between August 8, 2006 and September 30, 2006;
Funding Penn National Gaming's share of the Ohio Learn and Earn referendum;
Absorbing a $1.5 million pre-tax charge, or $0.01 per diluted share, related to the Company's share of converting the Pension Plan at Freehold Raceway from a defined-benefit plan to a defined-contribution plan; and,
A $3.8 million charge to income taxes, or $0.04 per diluted share, for items identified in preparation of our tax returns.
Commenting on the results, Peter M. Carlino, Chairman and Chief Executive Officer of Penn National said, "Reflecting the strength and resilience of the regional markets in which we operate, Penn National achieved record third quarter operating results. With the opening in late August of Hollywood Casino-Bay St. Louis, Penn National has rebounded from the devastation of last year's hurricane and is completely focused on expanding our operating base and generating returns on invested capital that will continue to bring value to our shareholders.
"As described in greater detail below, in Pennsylvania, we are presently in the process of developing a state-of-the-art integrated racing and gaming facility at our racetrack outside of Harrisburg. In Maine, we've received the requisite host community approvals for construction of our permanent gaming facility. In Ohio, we're continuing to provide support for a proposed constitutional amendment that would establish a tuition grant program for Ohio students and permit slot machines at our Raceway Park facility, and eight other locations in the state. In West Virginia, we're continuing to advance our long-term plan for Charles Town Races. Finally, the Company is moving forward on Argosy Casino Lawrenceburg's new two-level barge, which will significantly expand the number of available gaming positions.
"In August, the Company commenced construction of its planned, permanent Hollywood Casino racing and gaming facility at Penn National Race Course. In late September, the Pennsylvania Gaming Control Board granted the Company a conditional Category 1 slot machine license. Over the next year, we plan to create an exciting entertainment destination featuring a five-story, 365,000 square foot facility with initial capacity for 3,000 slot machines. The project is expected to create approximately 800 new jobs, to open with 2,000 slots, and to feature a food court and track side dining, a sports bar, various racing area concessions, bar and lounge areas on the gaming level, and a five-story parking garage with valet service. The long-term plan for Penn National Race Course, which includes the potential addition of a hotel and conference center, retail outlets, entertainment center, and additional parking deck, would allow the facility to accommodate up to 5,000 gaming devices. We view Hollywood Casino at Penn National as both a near- and long-term growth driver, similar to Charles Town Races, in that we expect it to be among the largest in the nation in terms of gaming positions, have unique customer feeder markets, and, based on our analysis, deliver very attractive returns on invested capital.
"Charles Town has recorded growth in annual EBITDA in each year since its 1997 opening, which reflects our continued investment in the facility and the track according to our long-term plan. The first phase of Charles Town's current expansion adds gaming floor capacity for an additional 800 gaming devices and is on schedule for opening in the first quarter of 2007. Subsequently, development will continue at the property with additional gaming floor space to accommodate another 1,000 slots, parking and food and beverage expansions and a hotel. Ultimately, we envision Charles Town Races will feature approximately 6,000 slot machines.
"While smaller in scale than our Hollywood Casino at Penn National and Charles Town projects, we are also very excited about the prospective value to be derived from our Hollywood Slots at Bangor permanent facility given the strong EBITDA returns generated by the temporary facility in its first year of operation. Last month, we presented to local leaders our plans for the proposed permanent facility, to be located across the street from Bangor Raceway at Bass Park, in close proximity to Interstate 395. This followed our resolution during the quarter of the final property ownership issue related to the proposed site. Construction of Hollywood Slots, which will feature a two-story semi-circular glass tower, is expected to begin in early 2007. We anticipate the 116,000-square-foot Bangor facility will open mid-2008 with 500 employees, 1,000 slots, and capacity for 1,500 gaming machines, and will also include a four-story parking garage, restaurants and retail space as well as a new simulcast facility for off-track wagering. We are pleased to report that for the first time, harness racing at Bangor Raceway has resumed in October and November as our operation of Hollywood Slots has doubled race purses this year, creating more interest among patrons and horsemen in the state.
"Ohio represents another market in which we are seeking to leverage our property development and management capabilities to deliver value for stockholders while creating a unique and very significant pool of tuition funds for in-state college students. During the November 7 election, Ohioans will vote on Issue 3, an amendment to allow slots at seven existing racetracks -- including Penn National's Raceway Park in Toledo -- and two non-racing casinos in Cleveland with up to 3,500 slots per location. With support from the state's three major horsemen's groups and the potential to deliver more than $853 million per year in college tuition and an additional $200 million per year to local governments for attracting new businesses and jobs, we are hopeful that the amendment will pass.
"Penn National's other development projects, including the hotel at Argosy Casino Riverside and the Argosy Casino Lawrenceburg barge and parking project, remain on track with our previously announced budgets.
"While our current properties consistently deliver excellent quarterly results, Penn National Gaming continues to execute on a disciplined, yet aggressive approach to achieving growth both organically and through acquisitions."
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 September 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 gaming machines, First
and the second phase phase of
will provide capacity gaming
for an additional 1,000 space
gaming machines. 800 $ 80 $ 7 1Q '07
----------------------------------------------------------------------
----------------------------------------------------------------------
Argosy Casino Riverside
(MO) - Construction of Hotel 2Q
258-room hotel. - $ 66 $ 37 '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 Parking
positions will be added facility
to the second level, 4Q '07;
along with restaurants gaming
and other amenities on facility
the gaming barge. 1,600 $ 310 $ 57 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 building size
sufficient to add 1,000
additional machines), a
2,500 space parking
garage and several
restaurants. 2,000 $ 310 $ 26 1Q '08
----------------------------------------------------------------------
----------------------------------------------------------------------
Hollywood Slots at Bangor
(ME) - Building a
permanent facility,
which will include a
1,500 slot facility
(1,000 slot machines at
opening), a 1,500 space
parking garage, several
restaurants and an off-
track wagering facility. 525 $ 90 $ 3 2Q '08
----------------------------------------------------------------------
Financial Guidance
The following table sets forth current guidance targets for continuing operations for the 2006 fourth quarter and full year, based on the following assumptions:
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;
Fourth quarter operating results from the Company's Casino Rouge property are expected to be moderately better than what the facility produced in the periods prior to the impact of Hurricane Katrina;
The impact of increased windstorm and flood insurance costs compared to the fourth quarter of 2005 is expected to be approximately $6.0 million pre-tax, or $0.04 per diluted share;
While the Company has been granted an injunction blocking the distribution of Illinois' 3% additional gaming tax at its 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 gaming taxes in the 2006 fourth quarter of approximately $3.8 million, which will impact earnings per diluted share by $0.02;
Penn National Gaming is currently required by the Illinois Gaming Board to reach a definitive sales agreement for the Empress Casino Hotel by June 30, 2008. However, 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 fourth quarter and full year guidance;
Anticipated fourth quarter and full year 2006 results include our expected expenses for supporting the November 2006 referendum in Ohio, which are not deductible for tax purposes;
Anticipated 2006 results include a pre-tax non-cash charge for stock compensation of $20.6 million ($13.3 million net of taxes, or $0.15 per share);
The effective tax rate for federal, state and local income taxes for the fourth quarter and full year 2006 will be 43.2% and 43.5% respectively, reflecting 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 86.6 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, weather, or other circumstances beyond our control that may adversely affect the Company's results of operations.
Financial Guidance
(in millions, except per share data) Three Months Ended
----------------------------------------------------------------------
December 31, December 31,
2006 Guidance 2005 Actual (5)
----------------------------------------------------------------------
Net revenues (1) $ 558.6 $ 504.5
----------------------------------------------------------------------
EBITDA (2) 142.3 143.9
----------------------------------------------------------------------
Less depreciation and amortization,
gain/loss on disposal of assets,
interest expense - net, income taxes,
hurricane costs, charge for stock
compensation and other expenses (112.8) (103.2)
----------------------------------------------------------------------
Net income from continuing operations
before charge for early
extinguishment of debt, hurricane
expense, settlement charges and
impairment charge for Penn National
grandstand 29.5 40.7
----------------------------------------------------------------------
Charge for early extinguishment of
debt, net of tax - (0.8)
----------------------------------------------------------------------
Hurricane expense, net of tax - (1.2)
----------------------------------------------------------------------
Settlement charges, net of tax - -
----------------------------------------------------------------------
Impairment charge for Penn National
grandstand, net of tax - (2.5)
----------------------------------------------------------------------
Net income from continuing operations
GAAP $ 29.5 $ 36.2
----------------------------------------------------------------------
Diluted earnings per share before
charge for early extinguishment of
debt, hurricane expense, settlement
charges, and impairment charge for
Penn National grandstand $ 0.34 $ 0.47
----------------------------------------------------------------------
EPS impact of charge for early
extinguishment of debt, hurricane
expense, settlement charges, and
impairment charge for Penn National
grandstand - (0.05)
----------------------------------------------------------------------
Diluted earnings per share from
continuing operations $ 0.34 $ 0.42
----------------------------------------------------------------------
(in millions, Full Year Ended
except per
share data)
----------------------------------------------------------------------
2006
Guidance Revised
2006 Revised Original Guidance from 2005
Guidance (3) August 9, 2006 (4) Actual (5)
----------------------------------------------------------------------
Net revenues
(1) $2,230.3 $2,220.2 $ 1,369.1
----------------------------------------------------------------------
EBITDA (2) 625.1 627.1 373.3
----------------------------------------------------------------------
Less
depreciation
and
amortization,
gain/loss on
disposal of
assets,
interest
expense - net,
income taxes,
hurricane
costs, charge
for stock
compensation
and other
expenses (463.9) (460.4) (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 161.2 166.7 132.2
----------------------------------------------------------------------
Charge for
early
extinguishment
of debt, net
of tax (6.5) (6.5) (11.7)
----------------------------------------------------------------------
Hurricane
expense, net
of tax - - (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 $ 154.7 $ 160.2 $ 87.2
----------------------------------------------------------------------
Diluted
earnings per
share before
charge for
early
extinguishment
of debt,
hurricane
expense,
settlement
charges, and
impairment
charge for
Penn National
grandstand $ 1.86 $ 1.91 $ 1.55
----------------------------------------------------------------------
EPS impact of
charge for
early
extinguishment
of debt,
hurricane
expense,
settlement
charges, and
impairment
charge for
Penn National
grandstand (0.07) (0.07) (0.53)
----------------------------------------------------------------------
Diluted
earnings per
share from
continuing
operations $ 1.79 $ 1.84 $1.79 $ 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, depreciation and amortization, gain or loss on
disposal of assets, settlement costs and hurricane expenses, and
is inclusive of earnings from joint venture.
(3) The figures in this column present the guidance Penn National
Gaming provided on July 27, 2006 for the full year ended December
31, 2006.
(4) On August 9, 2006, Penn National reported that it had secured new
property insurance and that the incremental cost of securing the
insurance would impact the full year 2006 guidance by $0.05 per
diluted share (the original guidance for diluted earnings per
share from continuing operations was $1.84). The Company did not
update its other financial guidance metrics on August 9, 2006.
(5) 2005 Actual results do not include charges for stock compensation.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information - Continuing Operations
(in thousands) (unaudited)
NET REVENUES (1) EBITDA (2)
Three Months Ended Three Months Ended
September 30, September 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Charles Town Entertainment
Complex $126,973 $118,403 $ 37,627 $ 35,954
Argosy Casino Lawrenceburg 120,206 - 39,852 -
Hollywood Casino Aurora 61,781 58,619 18,964 20,059
Empress Casino Hotel 59,852 - 13,784 -
Argosy Casino Riverside 37,999 - 11,499 -
Casino Rouge 33,333 28,877 13,890 10,859
Argosy Casino Alton 29,090 - 7,638 -
Hollywood Casino Tunica 27,089 26,855 6,597 7,346
Hollywood Casino Bay St.
Louis (3) 10,767 16,366 3,156 3,011
Argosy Casino Sioux City 13,319 - 4,215 -
Boomtown Biloxi (3) 27,927 10,782 12,456 2,355
Hollywood Slots at Bangor 11,187 733 3,191 (737)
Bullwhackers 6,903 7,888 922 1,383
Casino Rama management
service contract 4,819 5,201 4,466 4,829
Pennsylvania Racing
Operations 12,691 13,213 795 268
Raceway Park 2,175 - (163) -
Earnings from Pennwood
Racing, Inc. - - (1,665) 230
Corporate overhead - - (14,389) (6,984)
--------- --------- --------- ---------
Total $586,111 $286,937 $162,835 $ 78,573
========= ========= ========= =========
NET REVENUES (1) EBITDA (2)
Nine Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
----------- --------- --------- ---------
Charles Town Entertainment
Complex $ 366,343 $334,390 $107,181 $ 98,562
Argosy Casino Lawrenceburg 355,363 - 118,593 -
Hollywood Casino Aurora 184,234 169,862 60,483 55,268
Empress Casino Hotel 179,904 - 48,568 -
Argosy Casino Riverside 114,601 - 37,100 -
Casino Rouge 111,900 86,428 50,492 32,078
Argosy Casino Alton 86,814 - 23,513 -
Hollywood Casino Tunica 82,146 79,553 21,497 20,483
Hollywood Casino Bay St.
Louis (3) 10,767 69,576 3,156 14,103
Argosy Casino Sioux City 40,566 - 13,184 -
Boomtown Biloxi (3) 28,937 45,837 12,718 10,969
Hollywood Slots at Bangor 30,001 1,215 8,169 (860)
Bullwhackers 20,525 21,992 2,464 3,184
Casino Rama management
service contract 14,127 13,968 13,098 12,959
Pennsylvania Racing
Operations 38,851 41,750 2,265 3,147
Raceway Park 6,607 - (229) -
Earnings from Pennwood
Racing, Inc. - - (678) 1,216
Corporate overhead - - (38,790) (21,750)
----------- --------- --------- ---------
Total $1,671,686 $864,571 $482,784 $229,359
=========== ========= ========= =========
(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, gain or loss on
disposal of assets, settlement costs and hurricane expenses, 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) Hollywood Casino Bay St. Louis and Boomtown Biloxi were closed
effective August 28, 2005 due to hurricane damage. Boomtown Biloxi
reopened on June 29, 2006 and Hollywood Casino Bay St. Louis
reopened on August 31, 2006.
Reconciliation of EBITDA to Net Income (GAAP)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information - Continuing Operations
(in thousands) (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
--------- --------- ---------- ---------
EBITDA $162,835 $ 78,573 $ 482,784 $229,359
Loss (earnings) from joint
venture 1,665 (230) 678 (1,216)
Depreciation and amortization (31,196) (14,942) (88,642) (46,406)
Charge for stock compensation (4,831) - (15,235) -
Settlement costs and
hurricane expense - (19,142) - (47,317)
Loss on disposals (418) (1,965) (792) (2,186)
--------- --------- ---------- ---------
Income from continuing
operations $128,055 $ 42,294 $ 378,793 $132,234
Interest expense (49,732) (12,824) (145,927) (41,652)
Interest income 882 958 2,652 3,180
(Loss) earnings from joint
venture (1,665) 230 (678) 1,216
Other (593) 532 (519) 438
Charge for early
extinguishment of debt - - (10,022) (16,673)
Taxes on income (36,548) (11,386) (99,222) (27,793)
--------- --------- ---------- ---------
Net income from continuing
operations $ 40,399 $ 19,804 $ 125,077 $ 50,950
Loss from discontinued
operations, net of tax - (2,291) - (5,512)
Gain on sale of discontinued
operations 114,661 37,888 114,661 37,888
--------- --------- ---------- ---------
Net income $155,060 $ 55,401 $ 239,738 $ 83,326
========= ========= ========== =========
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 September 30, 2006
Income
from Charge for Depreciation
continuing stock and
operations compensation amortization
-------------------------------------
Charles Town Entertainment
Complex $ 31,917 $ - $ 5,712
Argosy Casino Lawrenceburg 35,599 - 4,273
Hollywood Casino Aurora 16,680 - 2,284
Empress Casino Hotel 10,768 - 3,016
Argosy Casino Riverside 8,451 - 2,892
Casino Rouge 11,564 - 2,061
Argosy Casino Alton 5,573 - 2,065
Hollywood Casino Tunica 4,785 - 1,812
Hollywood Casino Bay St. Louis
(1) 2,163 - 992
Argosy Casino Sioux City 3,133 - 1,082
Boomtown Biloxi (1) 10,959 - 1,497
Hollywood Slots at Bangor 2,130 - 1,061
Bullwhackers 350 - 564
Casino Rama management service
contract 4,466 - -
Pennsylvania Racing Operations 439 - 346
Raceway Park (190) - 27
Earnings from Pennwood Racing,
Inc. - - -
Corporate overhead (20,732) 4,831 1,512
-------------------------------------
Total $ 128,055 $ 4,831 $ 31,196
=====================================
(Gain)/loss Loss
on disposal from
of joint
assets venture EBITDA
------------------------------
Charles Town Entertainment Complex $ (2) $ - $ 37,627
Argosy Casino Lawrenceburg (20) - 39,852
Hollywood Casino Aurora - - 18,964
Empress Casino Hotel - - 13,784
Argosy Casino Riverside 156 - 11,499
Casino Rouge 265 - 13,890
Argosy Casino Alton - - 7,638
Hollywood Casino Tunica - - 6,597
Hollywood Casino Bay St. Louis (1) 1 - 3,156
Argosy Casino Sioux City - - 4,215
Boomtown Biloxi (1) - - 12,456
Hollywood Slots at Bangor - - 3,191
Bullwhackers 8 - 922
Casino Rama management service
contract - - 4,466
Pennsylvania Racing Operations 10 - 795
Raceway Park - - (163)
Earnings from Pennwood Racing, Inc. - (1,665) (1,665)
Corporate overhead - - (14,389)
-------------------------------
Total $418 $(1,665) $162,835
===============================
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Three Months Ended September 30, 2005
Income Settlement
from costs and Depreciation
continuing hurricane and
operations expense amortization
----------------------------------
Charles Town Entertainment Complex $ 29,408 $ - $ 4,828
Hollywood Casino Aurora 17,842 - 2,217
Casino Rouge 8,897 - 1,884
Hollywood Casino Tunica 5,096 - 2,216
Hollywood Casino Bay St. Louis (1) (10,809) 12,351 1,442
Boomtown Biloxi (1) (5,236) 6,791 704
Hollywood Slots at Bangor (780) - 43
Bullwhackers 876 - 495
Casino Rama management service
contract 4,829 - -
Pennsylvania Racing Operations (75) - 343
Earnings from Pennwood Racing, Inc. - - -
Corporate overhead (7,754) - 770
----------------------------------
Total $ 42,294 $ 19,142 $ 14,942
==================================
(Gain)/loss Earnings
on disposal from
of joint
assets venture EBITDA
-----------------------------
Charles Town Entertainment Complex $ 1,718 $ - $35,954
Hollywood Casino Aurora - - 20,059
Casino Rouge 78 - 10,859
Hollywood Casino Tunica 34 - 7,346
Hollywood Casino Bay St. Louis (1) 27 - 3,011
Boomtown Biloxi (1) 96 - 2,355
Hollywood Slots at Bangor - - (737)
Bullwhackers 12 - 1,383
Casino Rama management service contract - - 4,829
Pennsylvania Racing Operations - - 268
Earnings from Pennwood Racing, Inc. - 230 230
Corporate overhead - - (6,984)
-----------------------------
Total $ 1,965 $ 230 $78,573
=============================
(1) Income from continuing operations and EBITDA for the three months
ended September 30, 2006 and 2005 reflects the closure of
Hollywood Casino Bay St. Louis and Boomtown Biloxi, which incurred
extensive hurricane damage in August 2005. Boomtown Biloxi
reopened on June 29, 2006, and Hollywood Casino Bay St. Louis
reopened on August 31, 2006.
Reconciliation of Income from Continuing Operations (GAAP) to EBITDA
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Nine Months Ended September 30, 2006
Income
from Charge for Depreciation
continuing stock and
operations compensation amortization
-------------------------------------
Charles Town Entertainment
Complex $ 92,301 $ - $ 15,240
Argosy Casino Lawrenceburg 105,469 - 13,164
Hollywood Casino Aurora 53,924 - 6,727
Empress Casino Hotel 38,645 - 9,923
Argosy Casino Riverside 28,371 - 8,538
Casino Rouge 43,136 - 6,238
Argosy Casino Alton 16,478 - 7,035
Hollywood Casino Tunica 15,814 - 5,681
Hollywood Casino Bay St. Louis
(1) 1,789 - 1,345
Argosy Casino Sioux City 10,121 - 3,060
Boomtown Biloxi (1) 11,221 - 1,497
Hollywood Slots at Bangor 5,260 - 2,909
Bullwhackers 842 - 1,608
Casino Rama management service
contract 13,098 - -
Pennsylvania Racing Operations 1,288 - 967
Raceway Park (369) - 140
Earnings from Pennwood Racing,
Inc. - - -
Corporate overhead (58,595) 15,235 4,570
-------------------------------------
Total $ 378,793 $ 15,235 $ 88,642
=====================================
(Gain)/loss Loss
on disposal from
of joint
assets venture EBITDA
-----------------------------
Charles Town Entertainment Complex $ (360) $ - $107,181
Argosy Casino Lawrenceburg (40) - 118,593
Hollywood Casino Aurora (168) - 60,483
Empress Casino Hotel - - 48,568
Argosy Casino Riverside 191 - 37,100
Casino Rouge 1,118 - 50,492
Argosy Casino Alton - - 23,513
Hollywood Casino Tunica 2 - 21,497
Hollywood Casino Bay St. Louis (1) 22 - 3,156
Argosy Casino Sioux City 3 - 13,184
Boomtown Biloxi (1) - - 12,718
Hollywood Slots at Bangor - - 8,169
Bullwhackers 14 - 2,464
Casino Rama management service contract - - 13,098
Pennsylvania Racing Operations 10 - 2,265
Raceway Park - - (229)
Earnings from Pennwood Racing, Inc. - (678) (678)
Corporate overhead - - (38,790)
-----------------------------
Total $ 792 $ (678) $482,784
=============================
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Nine Months Ended September 30, 2005
Income Settlement
from costs and Depreciation
continuing hurricane and
operations expense amortization
----------------------------------
Charles Town Entertainment Complex $ 83,300 $ - $ 13,524
Hollywood Casino Aurora 48,371 - 6,897
Casino Rouge (1,865) 28,175 5,779
Hollywood Casino Tunica 14,029 - 6,420
Hollywood Casino Bay St. Louis (1) (4,436) 12,351 6,098
Boomtown Biloxi (1) 1,123 6,791 2,766
Hollywood Slots at Bangor (990) - 130
Bullwhackers 1,705 - 1,431
Casino Rama management service
contract 12,959 - -
Pennsylvania Racing Operations 2,086 - 1,061
Earnings from Pennwood Racing, Inc. - - -
Corporate overhead (24,048) - 2,300
----------------------------------
Total $132,234 $ 47,317 $ 46,406
==================================
(Gain)/loss Earnings
on disposal from
of joint
assets venture EBITDA
------------------------------
Charles Town Entertainment Complex $ 1,738 $ - $ 98,562
Hollywood Casino Aurora - - 55,268
Casino Rouge (11) - 32,078
Hollywood Casino Tunica 34 - 20,483
Hollywood Casino Bay St. Louis (1) 90 - 14,103
Boomtown Biloxi (1) 289 - 10,969
Hollywood Slots at Bangor - - (860)
Bullwhackers 48 - 3,184
Casino Rama management service contract - - 12,959
Pennsylvania Racing Operations - - 3,147
Earnings from Pennwood Racing, Inc. - 1,216 1,216
Corporate overhead (2) - (21,750)
------------------------------
Total $ 2,186 $ 1,216 $229,359
==============================
(1) Income from continuing operations and EBITDA for the three months
ended September 30, 2006 and 2005 reflects the closure of
Hollywood Casino Bay St. Louis and Boomtown Biloxi, which incurred
extensive hurricane damage in August 2005. Boomtown Biloxi
reopened on June 29, 2006 and Hollywood Casino Bay St. Louis
reopened on August 31, 2006.
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except per share data) (unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- ---------------------
2006 2005 2006 2005
---------- --------- ----------- ---------
Revenues
Gaming (1) $ 536,901 $249,824 $1,531,155 $749,962
Racing 13,075 11,627 40,277 36,731
Management service fee 4,819 5,201 14,127 13,968
Food, beverage and other 59,198 34,113 164,183 111,263
---------- --------- ----------- ---------
Gross revenues 613,993 300,765 1,749,742 911,924
Less promotional
allowances (27,882) (13,828) (78,056) (47,353)
---------- --------- ----------- ---------
Net revenues 586,111 286,937 1,671,686 864,571
---------- --------- ----------- ---------
Operating expenses
Gaming (1) 278,079 136,535 788,705 403,557
Racing 10,094 9,173 31,020 28,241
Food, beverage and other 52,703 25,603 149,931 75,328
General and administrative 85,984 39,248 234,595 131,488
Hurricane expense - 19,142 - 19,142
Settlement costs - - - 28,175
Depreciation and
amortization 31,196 14,942 88,642 46,406
---------- --------- ----------- ---------
Total operating expenses 458,056 244,643 1,292,893 732,337
---------- --------- ----------- ---------
Income from continuing
operations 128,055 42,294 378,793 132,234
---------- --------- ----------- ---------
Other income (expenses)
Interest expense (49,732) (12,824) (145,927) (41,652)
Interest income 882 958 2,652 3,180
(Loss) earnings from joint
venture (1,665) 230 (678) 1,216
Other (593) 532 (519) 438
Loss on early
extinguishment of debt - - (10,022) (16,673)
---------- --------- ----------- ---------
Total other expenses (51,108) (11,104) (154,494) (53,491)
---------- --------- ----------- ---------
Income from continuing
operations before income
taxes 76,947 31,190 224,299 78,743
Taxes on income 36,548 11,386 99,222 27,793
---------- --------- ----------- ---------
Net income from continuing
operations 40,399 19,804 125,077 50,950
---------- --------- ----------- ---------
Loss from discontinued
operations, net of tax - (2,291) - (5,512)
Gain on sale of
discontinued operations,
net of tax 114,661 37,888 114,661 37,888
---------- --------- ----------- ---------
Net income $ 155,060 $ 55,401 $ 239,738 $ 83,326
========== ========= =========== =========
Earnings per share-Basic
Income from continuing
operations $ 0.48 $ 0.24 $ 1.49 $ 0.62
Discontinued operations,
net of tax 1.36 0.43 1.36 0.39
---------- --------- ----------- ---------
Basic earnings per share $ 1.84 $ 0.67 $ 2.85 $ 1.01
========== ========= =========== =========
Earnings per share-Diluted
Income from continuing
operations $ 0.47 $ 0.23 $ 1.45 $ 0.59
Discontinued operations,
net of tax 1.32 0.41 1.32 0.38
---------- --------- ----------- ---------
Diluted earnings per share $ 1.79 $ 0.64 $ 2.77 $ 0.97
========== ========= =========== =========
Weighted average shares
outstanding
Basic 84,385 83,259 84,124 82,754
Diluted 86,580 86,186 86,505 85,777
(1) Reflects reclassification for cash redemption coupons to
contra-revenue from operating expense.
Argosy Gaming Company - Results for the Three and Nine Months Ended September 30, 2006 and 2005
On October 3, 2005, Penn National Gaming completed the acquisition of Argosy Gaming Company with the transaction treated for accounting purposes as effective October 1, 2005. The table below summarizes the operating performance of the Argosy Gaming Company properties during the three and nine month periods ended September 30, 2006 and 2005. Although Penn National Gaming did not own Argosy Gaming Company during the three and nine month periods ended September 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
September 30, September 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Argosy Casino Lawrenceburg $120,206 $114,441 $ 39,852 $ 37,776
Empress Casino Hotel 59,852 60,770 13,784 17,391
Argosy Casino Riverside 37,999 33,599 11,499 9,363
Argosy Casino Alton 29,090 27,516 7,638 5,941
Argosy Casino Sioux City 13,319 13,242 4,215 3,926
Raceway Park 2,175 - (163) -
NET REVENUES (1) EBITDA (2)
(in thousands) (in thousands)
Nine Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Argosy Casino Lawrenceburg $355,363 $339,068 $118,593 $111,552
Empress Casino Hotel 179,904 172,098 48,568 44,403
Argosy Casino Riverside 114,601 106,351 37,100 31,235
Argosy Casino Alton 86,814 81,346 23,513 17,279
Argosy Casino Sioux City 40,566 40,180 13,184 12,462
Raceway Park 6,607 - (229) -
(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 September 30, 2005
Reconciliation of Income from Operations (GAAP) to Adjusted EBITDA
Income Depreciation EBITDA (Gain)/loss Adjusted
from and (1) on disposal EBITDA
operations amortization of assets (2)
----------------------------------------------------------------------
Argosy Casino
Lawrenceburg $ 33,914 $ 3,862 37,776 $ - $37,776
----------------------------------------------------------------------
Empress Casino
Hotel 15,035 2,352 17,387 4 17,391
----------------------------------------------------------------------
Argosy Casino
Riverside 6,268 3,095 9,363 - 9,363
----------------------------------------------------------------------
Argosy Casino
Alton 4,418 1,523 5,941 - 5,941
----------------------------------------------------------------------
Argosy Casino
Sioux City 2,902 1,025 3,927 (1) 3,926
----------------------------------------------------------------------
ARGOSY GAMING COMPANY
Property Information Including Corporate Overhead
(in thousands) (unaudited)
Nine Months Ended September 30, 2005
Reconciliation of Income from Operations (GAAP) to Adjusted EBITDA
Income Depreciation EBITDA (Gain)/loss Adjusted
from and (1) on disposal EBITDA
operations amortization of assets (2)
----------------------------------------------------------------------
Argosy Casino
Lawrenceburg $100,308 $11,243 111,551 $1 $111,552
----------------------------------------------------------------------
Empress Casino
Hotel 37,395 7,101 44,496 (93) 44,403
----------------------------------------------------------------------
Argosy Casino
Riverside 21,292 9,898 31,190 45 31,235
----------------------------------------------------------------------
Argosy Casino
Alton 12,461 4,818 17,279 - 17,279
----------------------------------------------------------------------
Argosy Casino
Sioux City 9,489 2,971 12,460 2 12,462
----------------------------------------------------------------------
(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.
Reconciliation of Non-GAAP Measures to GAAP
EBITDA, or earnings before interest, taxes, charges for stock compensation, depreciation and amortization, gain or loss on disposal of assets, settlement costs and hurricane expenses, and inclusive of earnings from joint venture, is not a measure of performance or liquidity calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). EBITDA information is presented as a supplemental disclosure, as management believes that it is a widely used measure of performance in the gaming industry. In addition, management uses EBITDA as the primary measure of the operating performance of its properties, including the evaluation of operating personnel. EBITDA should not be construed as an alternative to operating income, as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities, as a measure of liquidity, or as any other measure of performance determined in accordance with GAAP. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. It should also be noted that other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company. Diluted earnings per share before charges for early extinguishment of debt and stock compensation is presented solely as a supplemental disclosure, as management believes that it is a principal basis for the valuation of gaming companies, as this measure is considered by many to be a better indicator of the Company's operating results than diluted net income per share per GAAP. A reconciliation of the Company's EBITDA to net income per GAAP, as well as the Company's EBITDA to income from continuing operations per GAAP, is included in the accompanying financial schedules.
A reconciliation of each property's EBITDA to income from operations is included in the financial schedules herein. On a property level, EBITDA is reconciled to income from continuing operations per GAAP, rather than net income per GAAP due to, among other things, the impracticability of allocating interest expense, interest income, income taxes and certain other items to the Company's various properties on a property-by-property basis. Management believes that this presentation is more meaningful to investors in evaluating the performance of the Company's individual properties and is consistent with the reporting of other gaming companies. |
