Penn National releases results
PENNSYLVANIA -- (PRESS RELEASE) -- Penn National Gaming, Inc. (PENN: Nasdaq) today reported fourth quarter operating results for the period ended December 31, 2006, as summarized below.
Summary of Fourth Quarter and Full Year Results
(in millions, except Three Months Ended Twelve Months Ended
per share data) December 31, December 31,
----------------------------------------------------------------------
2006
Guidance
2006 (3) 2005 (4) 2006 2005 (4)
----------------------------------------------------------------------
Net revenues (1) $572.9 $ 558.6 $ 504.5 $2,244.5 $1,369.1
----------------------------------------------------------------------
EBITDA (2) 146.4 142.3 143.9 629.2 373.3
----------------------------------------------------------------------
Less depreciation and
amortization,
gain/loss on disposal
of assets, interest
expense - net, income
taxes, hurricane,
goodwill impairment,
charge for stock
compensation, charge
for early
extinguishment of
debt and other
expenses (58.4) (112.8) (107.7) (416.1) (286.1)
----------------------------------------------------------------------
Net income from
continuing operations 88.0 29.5 36.2 213.1 87.2
----------------------------------------------------------------------
Income (loss) from
discontinued
operations - - 1.4 - (4.1)
----------------------------------------------------------------------
(Loss) gain on sale of
discontinued
operations (0.7) - - 114.0 37.9
----------------------------------------------------------------------
Net income $ 87.3 $ 29.5 $ 37.6 $ 327.1 $ 120.9
----------------------------------------------------------------------
Per share data
----------------------------------------------------------------------
Diluted earnings per
share from continuing
operations $ 1.01 $ 0.34 $ 0.42 $ 2.46 $ 1.02
----------------------------------------------------------------------
Diluted earnings per
share from
discontinued
operations (0.01) - 0.02 1.32 0.39
----------------------------------------------------------------------
Diluted earnings per
share $ 1.00 $ 0.34 $ 0.44 $ 3.78 $ 1.41
----------------------------------------------------------------------
(1) Revenue figures for all periods of 2005 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 and twelve
month periods ended December 31, 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, hurricane, and goodwill
impairment, 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 October 26, 2006 for the fourth quarter ended
December 31, 2006.
(4) 2005 results do not include charges for stock based compensation.
In the three and twelve months ended December 31, 2006, Penn
National Gaming incurred pre-tax non-cash charges for stock based
compensation of $5.3 million ($3.9 million, net of taxes, or $0.04
per diluted share) and $20.6 million ($14.9 million, net of taxes,
or $0.17 per diluted share), respectively.
Review of Fourth Quarter 2006 Results vs. Guidance and Fourth Quarter 2005 Results
Three Months Ended
December 31,
-------------------------------
2006 2006 Guidance 2005
Actual (1) Actual
----------------------------------------------------------------------
Diluted earnings per share from
continuing operations $ 1.01 $ 0.34 $ 0.42
----------------------------------------------------------------------
Hurricane (0.94) 0.02
----------------------------------------------------------------------
Goodwill impairment 0.25 -
----------------------------------------------------------------------
Charge for early extinguishment of
debt related to termination of senior
credit facility - 0.01
----------------------------------------------------------------------
Diluted earnings per share from
continuing operations before
hurricane, goodwill impairment and
charge for early extinguishment of
debt $ 0.32 $ 0.34 $ 0.45
----------------------------------------------------------------------
Review of Full Year 2006 Results vs. Guidance and Full Year 2005 Results
Twelve Months Ended
December 31,
---------------------------------
2006 2006 Guidance 2005
Actual (1) Actual
----------------------------------------------------------------------
Diluted earnings per share from
continuing operations $ 2.46 $ 1.79 $ 1.02
----------------------------------------------------------------------
Hurricane (0.94) 0.16
----------------------------------------------------------------------
Goodwill impairment 0.25 -
----------------------------------------------------------------------
Charge for early extinguishment of
debt related to termination of
senior credit facility 0.07 0.07 0.14
----------------------------------------------------------------------
Settlement charge - 0.20
----------------------------------------------------------------------
Impairment charge for Penn National
grandstand - 0.03
----------------------------------------------------------------------
Diluted earnings per share from
continuing operations before
hurricane, goodwill impairment,
charge for early extinguishment of
debt, settlement charge and
impairment charge for Penn National
grandstand $ 1.84 $ 1.86 $ 1.55
----------------------------------------------------------------------
(1) The figures in this column present the guidance Penn National
Gaming provided on October 26, 2006 for the period ended
December 31, 2006.
In the three months ended December 31, 2006, Penn National Gaming's financial results benefited from a settlement agreement with its property and business interruption insurance providers for a total of $225 million for Hurricane Katrina-related losses at its Hollywood Casino Bay St. Louis (formerly known as Casino Magic-Bay St. Louis) and Boomtown Biloxi facilities, as well as minor proceeds related to its National Flood Insurance coverage and auto insurance claims. Both Mississippi facilities sustained significant damage as a result of Hurricane Katrina in August 2005. Reflecting the settlement agreement, Penn National Gaming recorded a pre-tax gain of $128.3 million ($81.8 million, net of taxes, or $0.94 per diluted share) in the three months ended December 31, 2006.
As a result of the increased asset values resulting from the reconstruction at Hollywood Casino Bay St. Louis, the Company determined that all of the goodwill associated with the original purchase of the property has been impaired. Accordingly, Penn National recorded a pre-tax charge of $34.5 million ($22.0 million, net of taxes, or $0.25 per diluted share) in the three months ended December 31, 2006.
The Company's performance versus guidance, after giving effect to the insurance recovery and goodwill impairment, is attributable to costs associated with merger and acquisition activity which were expensed in the three months ended December 31, 2006, and increased depreciation as a result of underestimating the depreciation associated with the Gulf Coast assets, as the asset segregation analysis was not completed when the Company provided guidance. The net impact of the costs associated with merger and acquisition activity and underestimation of the depreciation associated with the Gulf Coast assets was $0.04 per diluted share in the three months ended December 31, 2006.
In the three months ended December 31, 2005, Penn National Gaming recorded charges of $0.02 and $0.01 per diluted share related to the impact of Hurricane Katrina on two Gulf Coast properties and early extinguishment of debt, respectively.
Commenting on the results, Peter M. Carlino, Chairman and Chief Executive Officer of Penn National Gaming said, "During the fourth quarter, our portfolio of regionally diversified assets overcame several challenges including the normalization of results at our Baton Rouge property, as properties closed by Hurricane Katrina reopened, increased insurance costs and the incremental tax in Illinois of 3% of revenue at our Chicago-area facilities. Despite these challenges, our operating management team did an excellent job of driving record fourth quarter revenue and EBITDA that exceeded our guidance.
"During the quarter, we also continued to execute on our long-term strategy for growth through acquisition and the development and expansion of gaming facilities. Our focus is on prudently expanding our operating base and generating returns on invested capital that will continue to bring value to our shareholders. In this regard, during the quarter, we evaluated both modest and significant acquisition opportunities, applying a disciplined approach to structuring transactions that would result in the long-term enhancement of shareholder value. We succeeded in New Mexico, entering into a definitive agreement to purchase Zia Park Racetrack and its Black Gold Casino for $200 million, which will result in the operation being accretive to earnings while further diversifying Penn National's regional asset base. Management, in concert with financial and legal advisors, also pursued a significant M&A opportunity during the quarter. In applying our criteria for returns, we adhered to a valuation and structure that our analysis indicated would provide meaningful free cash flow growth and support our long-term goals for value creation. However, the cost of the opportunity reached a level where we felt the returns to our shareholders would not justify the higher level of risk associated with the transaction. While we incurred costs during the quarter related to this process, we are confident that our aggressive -- yet disciplined -- approach to maximizing shareholder returns will continue to serve our shareholders well in the near- and long-term.
"We continued to move forward the Company's broad slate of development and expansion projects that are expected to begin to drive new phases of growth for the next several years. As these projects come online, we will be well-positioned to reduce debt or allocate capital in areas that will create even more opportunities to build value at a time when our EBITDA run rate will significantly exceed the levels we are achieving now.
"The current expansion under way at Charles Town will add gaming floor capacity for 800 more slots. However, we are slightly revising the opening of this phase of expansion from the first quarter of 2007 to May of this year to reflect certain construction delays. We're also carefully monitoring legislative activity in West Virginia related to table games and, independent of the outcome, development will continue at the property with further gaming floor space for either tables or 1,000 slot machines, the addition of a hotel, parking and additional food and beverage offerings. Earlier this month, Jefferson County approved the Company's plans for a 153-room hotel at Charles Town. Charles Town's fourth quarter revenue and EBITDA were impressive, as they grew 12% and 18%, respectively, despite a lower number of available gaming positions compared to the prior year period. This revenue growth, which partially benefited from a favorable calendar and weather, leads us to be very excited about the continued growth prospects for the facility and its appeal to patrons in the region.
"Argosy Casino Riverside recorded a 11% year-over-year fourth quarter revenue growth and 16% EBITDA increase, while progress on the facility's 258-room hotel and 5,200 square feet of new meeting space continued on pace for an April 2007 opening. These amenities will complement an already strong property and its attraction as a regional destination.
"Construction of the integrated Hollywood Casino racing and gaming facility at Penn National Race Course is moving forward at full force, with a significant portion of the steel building structure now in place. Our enthusiasm for this project and its prospective returns remains very high based on the demographics and encouraging results reported by the facilities featuring slots that recently opened in Pennsylvania. With our plans to open with 2,000 slots and expand as quickly as demand dictates to 3,000 positions, this project presents Penn National with solid near- and long-term growth opportunities.
"Penn National Gaming recently completed the purchase of the former Holiday Inn in Bangor, Maine, where we will build the permanent Hollywood Slots at Bangor facility. With the impressive results being generated by our temporary facility and a substantial number of patrons driving significant distances to Hollywood Slots at Bangor, we are adding a hotel to the plans for the permanent facility, which will feature a two-story, semi-circular, glass tower casino area, a four-story parking garage, restaurants, retail space and a new simulcast facility for off-track wagering. Construction will commence in the first half of 2007 following the demolition of the existing hotel and adjacent buildings. Reflecting higher construction costs and the addition of the hotel, the project budget has been revised to $131 million from $90 million. The permanent facility will initially include 1,000 slots, or roughly double what we operate in Maine today at the temporary facility. Like our facility at Penn National Race Course, we have designed the permanent Bangor site to accommodate future expansion, including up to 1,500 gaming machines. So again, we have considered our goals to achieve both near- and longer-term returns and growth.
"Finally, while Argosy Casino Lawrenceburg recorded a year-over-year fourth quarter EBITDA gain, the property remains capacity-constrained, and is impacted by its three-tier layout. Our plans for a new two-level barge, 1,600 more gaming positions and a significant parking expansion will address these impediments. Unfortunately, some aspects of the project's progress remain beyond our control as environmental and archeological studies continue to be conducted at the site. As a result, we are disappointed that the expected opening date for the parking facility will now be in the second quarter of 2008, while the expanded casino floor will open in the second quarter of 2009.
"Reflecting our continued disciplined approach to growth, Penn National Gaming delivered exceptional 2006 operating results and gains over 2005. As indicated in our guidance, 2007 will be somewhat of a transition year as we largely operate our existing base of properties and move forward our diversified, staggered development pipeline. We expect these projects to significantly benefit 2008 results and beyond."
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 December 31, Opening
Project/Scope Positions Budget 2006 Date
----------------------------------------------------------------------
(in millions)
----------------------------------------------------------------------
Charles Town (WV) -
Casino expansion, First phase
including a 153-room, of gaming
on-site, hotel and a space -
65,000 square foot May 2007
expansion of the gaming Hotel - 15
floor. Gaming space will months
be finished in two from
phases: the first phase receipt of
will be completed in the building
second quarter of 2007, permits
allowing for 800 more Second
gaming machines, and the phase of
second phase will gaming
provide capacity for an space - To
additional 1,000 gaming be
machines. 800 $ 56 $ 12 determined
----------------------------------------------------------------------
----------------------------------------------------------------------
Argosy Casino Riverside
(MO) - Construction of Hotel -
258-room hotel. - $ 66 $ 46 April 2007
----------------------------------------------------------------------
----------------------------------------------------------------------
Argosy Casino
Lawrenceburg (IN) - New
two-level 270,000 square
foot gaming barge, an
additional 1,500 space
parking garage and road
and infrastructure Parking
improvements. The gaming facility -
barge will allow 4,000 2nd
positions on one level, Quarter
and another 400 2008
positions will be added Gaming
to the second level, facility -
along with restaurants 2nd
and other amenities on Quarter
the gaming barge. 1,600 $ 310 $ 63 2009
----------------------------------------------------------------------
----------------------------------------------------------------------
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 1st Quarter
restaurants. 2,000 $ 310 $ 37 2008
----------------------------------------------------------------------
----------------------------------------------------------------------
Hollywood Slots at Bangor
(ME) - Building a
permanent facility,
which will include a
1,500 slot facility
(1,000 slot machines at 15 months
opening), a 152-room from
hotel, 1,500 space receipt of
parking garage and building
several restaurants. 525 $ 131 $ 12 permits
----------------------------------------------------------------------
Financial Guidance
The following table sets forth current guidance targets for continuing operations for the 2007 first quarter and full year, based on the following assumptions:
- The closing of the Zia Park acquisition by the beginning of the third quarter of 2007;
- The Company believes that the operating results from its Hollywood Casino Baton Rouge property (formerly known as Casino Rouge) stabilized in the fourth quarter of 2006. As such, the Company anticipates the contributions from this property to normalize near levels achieved in the fourth quarter of 2006;
- The Company assumes increased competition from new facility openings in the St. Louis market in the fourth quarter of 2007;
- The Company expects the hotel project at Argosy Casino Riverside to take several months to have meaningful results;
- 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 remain included in continuing operations as the Company assumes that the accounting standards for treating properties as "assets held for sale" will not be met in 2007; as such, the results from the property are included in our 2007 first quarter and full year guidance;
- Anticipated depreciation and amortization to increase in the first quarter by $5.8 million and the full year 2007 by $21.4 million;
- Anticipated 2007 results include a pre-tax non-cash charge for stock compensation of $24.4 million ($17.7 million, net of taxes, or $0.20 per diluted share);
- The effective tax rate for federal, state and local income taxes for the first quarter and full year 2007 will be 43.0%, reflecting the impact of better operating results in jurisdictions with higher state income tax;
- The Company will have approximately 87.5 million diluted shares outstanding as of December 31, 2007; 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 (continued)
(in millions, except
per share data) Three Months Ended Full Year Ended
----------------------------------------------------------------------
March 31, March 31, 2007 2006
2007 Guidance 2006 Actual Guidance Actual
----------------------------------------------------------------------
Net revenues (1) $ 599.5 $ 547.8 $ 2,453.0 $ 2,244.5
----------------------------------------------------------------------
EBITDA (2) 159.0 164.8 648.1 629.2
----------------------------------------------------------------------
Less depreciation and
amortization,
gain/loss on disposal
of assets, interest
expense - net, income
taxes, charge for
stock compensation
and other expenses (118.9) (116.3) (485.5) (469.4)
----------------------------------------------------------------------
Net income from
continuing operations
before charge for
early extinguishment
of debt, hurricane
and goodwill
impairment 40.1 48.5 162.6 159.8
----------------------------------------------------------------------
Charge for early
extinguishment of
debt, net of tax - (6.5) - (6.5)
----------------------------------------------------------------------
Hurricane, net of tax - - - 81.8
----------------------------------------------------------------------
Goodwill impairment,
net of tax - - - (22.0)
----------------------------------------------------------------------
Net income from
continuing operations
GAAP $ 40.1 $ 42.0 $ 162.6 $ 213.1
----------------------------------------------------------------------
Diluted earnings per
share before charge
for early
extinguishment of
debt, hurricane and
goodwill impairment $ 0.46 $ 0.56 $ 1.86 $ 1.84
----------------------------------------------------------------------
EPS impact of charge
for early
extinguishment of
debt, hurricane and
goodwill impairment - (0.07) - 0.62
----------------------------------------------------------------------
Diluted earnings per
share from continuing
operations $ 0.46 $ 0.49 $ 1.86 $ 2.46
----------------------------------------------------------------------
(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, hurricane and goodwill
impairment, and is inclusive of earnings from joint venture.
2006 EBITDA to 2007 EBITDA Guidance Reconciliation
Three Months Full Year
Ended Ended
(in millions) March 31, December 31,
----------------------------------------------------------------------
----------------------------------------------------------------------
2006 EBITDA Actual (1) $ 164.8 $ 629.2
----------------------------------------------------------------------
----------------------------------------------------------------------
Existing Operations/Corporate 5.7 36.9
----------------------------------------------------------------------
Zia Park - 13.2
----------------------------------------------------------------------
Incremental Insurance Costs (6.1) (14.2)
----------------------------------------------------------------------
Pre-Opening Expenses (1.6) (10.5)
----------------------------------------------------------------------
Incremental Illinois 3% Tax (3.8) (6.5)
----------------------------------------------------------------------
----------------------------------------------------------------------
2007 EBITDA Guidance (1) $ 159.0 $ 648.1
----------------------------------------------------------------------
(1) EBITDA is income from continuing operations excluding charges for
stock compensation, depreciation and amortization, gain or loss on
disposal of assets, settlement costs, hurricane and goodwill
impairment, 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
December 31, December 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Charles Town Entertainment
Complex $118,854 $106,251 $ 36,453 $ 30,957
Argosy Casino Lawrenceburg 118,683 107,259 38,033 35,536
Hollywood Casino Aurora 61,241 57,477 18,573 19,837
Empress Casino Hotel 58,939 58,228 12,176 15,917
Argosy Casino Riverside 38,840 34,844 12,412 10,712
Hollywood Casino Baton Rouge 32,101 43,247 11,351 20,621
Argosy Casino Alton 28,380 26,046 6,952 5,205
Hollywood Casino Tunica 24,206 26,943 5,395 7,423
Hollywood Casino Bay St.
Louis (3) 21,417 19 2,614 19
Argosy Casino Sioux City 13,343 13,218 4,385 4,158
Boomtown Biloxi (3) 22,484 (123) 5,691 (122)
Hollywood Slots at Bangor 10,870 4,742 3,089 (127)
Bullwhackers 6,287 7,443 697 845
Casino Rama management
service contract 4,019 4,627 3,667 4,275
Pennsylvania Racing
Operations 11,452 12,027 (307) (449)
Raceway Park 1,745 2,286 (166) 134
Earnings from Pennwood
Racing, Inc. - - (110) 240
Corporate overhead - - (14,464) (11,237)
--------- --------- --------- ---------
Total $572,861 $504,534 $146,441 $143,944
========= ========= ========= =========
NET REVENUES (1) EBITDA (2)
Twelve Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
----------- ----------- --------- ---------
Charles Town Entertainment
Complex $ 485,197 $ 440,641 $143,634 $129,520
Argosy Casino Lawrenceburg 474,046 107,259 156,626 35,536
Hollywood Casino Aurora 245,475 227,339 79,056 75,105
Empress Casino Hotel 238,843 58,228 60,744 15,917
Argosy Casino Riverside 153,441 34,844 49,512 10,712
Hollywood Casino Baton
Rouge 144,001 129,675 61,843 52,699
Argosy Casino Alton 115,194 26,046 30,465 5,205
Hollywood Casino Tunica 106,352 106,496 26,892 27,906
Hollywood Casino Bay St.
Louis (3) 32,184 69,595 5,770 14,123
Argosy Casino Sioux City 53,909 13,218 17,569 4,158
Boomtown Biloxi (3) 51,421 45,714 18,409 10,847
Hollywood Slots at Bangor 40,871 5,957 11,258 (987)
Bullwhackers 26,812 29,435 3,161 4,029
Casino Rama management
service contract 18,146 18,595 16,765 17,234
Pennsylvania Racing
Operations 50,303 53,777 1,958 2,699
Raceway Park 8,352 2,286 (395) 134
Earnings from Pennwood
Racing, Inc. - - (788) 1,455
Corporate overhead - - (53,254) (32,988)
----------- ----------- --------- ---------
Total $2,244,547 $1,369,105 $629,225 $373,304
=========== =========== ========= =========
(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, hurricane and goodwill
impairment, 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
(in thousands) (unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
--------- --------- ---------- ---------
EBITDA $146,441 $143,944 $ 629,225 $373,304
Loss (earnings) from joint
venture 110 (240) 788 (1,455)
Depreciation and amortization (35,309) (26,125) (123,951) (72,531)
Charge for stock compensation (5,331) - (20,566) -
Settlement costs and
hurricane 128,253 (2,003) 128,253 (49,320)
Goodwill impairment (34,522) - (34,522) -
Loss on disposals (594) (4,264) (1,386) (6,450)
--------- --------- ---------- ---------
Income from continuing
operations $199,048 $111,312 $ 577,841 $243,548
Interest expense (50,401) (47,693) (196,328) (89,344)
Interest income 873 930 3,525 4,111
(Loss) earnings from joint
venture (110) 240 (788) 1,455
Other (3,777) (398) (4,296) 39
Charge for early
extinguishment of debt - (1,365) (10,022) (18,039)
Taxes on income (57,630) (26,800) (156,852) (54,593)
--------- --------- ---------- ---------
Net income from continuing
operations $ 88,003 $ 36,226 $ 213,080 $ 87,177
Income (loss) from
discontinued operations, net
of tax - 1,382 - (4,135)
(Loss) gain on sale of
discontinued operations (653) - 114,008 37,888
--------- --------- ---------- ---------
Net income $ 87,350 $ 37,608 $ 327,088 $120,930
========= ========= ========== =========
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 December 31, 2006
Income
from Charge for
continuing stock Goodwill
operations compensation Hurricane impairment
-----------------------------------------------
Charles Town
Entertainment Complex $ 30,637 $ - $ - $ -
Argosy Casino
Lawrenceburg 33,798 - - -
Hollywood Casino
Aurora 16,216 - - -
Empress Casino Hotel 9,177 - - -
Argosy Casino
Riverside 9,373 - - -
Hollywood Casino Baton
Rouge 8,961 - - -
Argosy Casino Alton 4,895 - - -
Hollywood Casino
Tunica 3,579 - - -
Hollywood Casino Bay
St. Louis (1) 34,021 - (69,071) 34,522
Argosy Casino Sioux
City 3,242 - - -
Boomtown Biloxi (1) 61,591 - (59,182) -
Hollywood Slots at
Bangor 2,072 - - -
Bullwhackers 105 - - -
Casino Rama management
service contract 3,667 - - -
Pennsylvania Racing
Operations (659) - - -
Raceway Park (282) - - -
Earnings from Pennwood
Racing, Inc. - - - -
Corporate overhead (21,345) 5,331 - -
-----------------------------------------------
Total $ 199,048 $ 5,331 $(128,253) $ 34,522
===============================================
(Gain)/loss Loss
Depreciation on disposal from
and of joint
amortization assets venture EBITDA
-------------------------------------------
Charles Town Entertainment
Complex $ 5,681 $ 135 $ - $ 36,453
Argosy Casino Lawrenceburg 4,310 (75) - 38,033
Hollywood Casino Aurora 2,357 - - 18,573
Empress Casino Hotel 3,027 (28) - 12,176
Argosy Casino Riverside 2,904 135 - 12,412
Hollywood Casino Baton
Rouge 2,024 366 - 11,351
Argosy Casino Alton 2,040 17 - 6,952
Hollywood Casino Tunica 1,816 - - 5,395
Hollywood Casino Bay St.
Louis (1) 3,140 2 - 2,614
Argosy Casino Sioux City 1,106 37 - 4,385
Boomtown Biloxi (1) 3,282 - - 5,691
Hollywood Slots at Bangor 1,017 - - 3,089
Bullwhackers 587 5 - 697
Casino Rama management
service contract - - - 3,667
Pennsylvania Racing
Operations 352 - - (307)
Raceway Park 116 - - (166)
Earnings from Pennwood
Racing, Inc. - - (110) (110)
Corporate overhead 1,550 - - (14,464)
-------------------------------------------
Total $ 35,309 $ 594 $ (110) $146,441
===========================================
Three Months Ended December 31, 2005
Income
from Settlement Depreciation
continuing costs and and
operations hurricane amortization
----------------------------------
Charles Town Entertainment Complex $ 26,193 $ - $ 4,761
Argosy Casino Lawrenceburg 31,792 - 3,818
Hollywood Casino Aurora 17,600 - 2,239
Empress Casino Hotel 14,019 - 1,950
Argosy Casino Riverside 7,680 - 3,026
Hollywood Casino Baton Rouge 18,511 - 1,988
Argosy Casino Alton 3,615 - 1,590
Hollywood Casino Tunica 5,156 - 2,251
Hollywood Casino Bay St. Louis (1) (1,420) 1,358 81
Argosy Casino Sioux City 2,929 - 1,226
Boomtown Biloxi (1) (776) 645 -
Hollywood Slots at Bangor (856) - 729
Bullwhackers 323 - 522
Casino Rama management service
contract 4,275 - -
Pennsylvania Racing Operations (5,043) - 361
Raceway Park 124 - 10
Earnings from Pennwood Racing, Inc. - - -
Corporate overhead (12,810) - 1,573
----------------------------------
Total $ 111,312 $ 2,003 $ 26,125
==================================
(Gain)/loss Earnings
on disposal from
of joint
assets venture EBITDA
-------------------------------
Charles Town Entertainment Complex $ 3 $ - $ 30,957
Argosy Casino Lawrenceburg (74) - 35,536
Hollywood Casino Aurora (2) - 19,837
Empress Casino Hotel (52) - 15,917
Argosy Casino Riverside 6 - 10,712
Hollywood Casino Baton Rouge 122 - 20,621
Argosy Casino Alton - - 5,205
Hollywood Casino Tunica 16 - 7,423
Hollywood Casino Bay St. Louis (1) - - 19
Argosy Casino Sioux City 3 - 4,158
Boomtown Biloxi (1) 9 - (122)
Hollywood Slots at Bangor - - (127)
Bullwhackers - - 845
Casino Rama management service contract - - 4,275
Pennsylvania Racing Operations 4,233 - (449)
Raceway Park - - 134
Earnings from Pennwood Racing, Inc. - 240 240
Corporate overhead - - (11,237)
-------------------------------
Total $ 4,264 $ 240 $143,944
===============================
(1) Income from continuing operations and EBITDA for the three months
ended December 31, 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)
Twelve Months Ended December 31, 2006
Income
from Charge for
continuing stock Goodwill
operations compensation Hurricane impairment
------------------------------------------------
Charles Town
Entertainment
Complex $ 122,938 $ - $ - $ -
Argosy Casino
Lawrenceburg 139,267 - - -
Hollywood Casino
Aurora 70,140 - - -
Empress Casino Hotel 47,822 - - -
Argosy Casino
Riverside 37,744 - - -
Hollywood Casino
Baton Rouge 52,097 - - -
Argosy Casino Alton 21,373 - - -
Hollywood Casino
Tunica 19,393 - - -
Hollywood Casino Bay
St. Louis (1) 35,810 - (69,071) 34,522
Argosy Casino Sioux
City 13,363 - - -
Boomtown Biloxi (1) 72,812 - (59,182) -
Hollywood Slots at
Bangor 7,332 - - -
Bullwhackers 947 - - -
Casino Rama
management service
contract 16,765 - - -
Pennsylvania Racing
Operations 629 - - -
Raceway Park (651) - - -
Earnings from
Pennwood Racing,
Inc. - - - -
Corporate overhead (79,940) 20,566 - -
------------------------------------------------
Total $ 577,841 $ 20,566 $(128,253) $ 34,522
================================================
(Gain)/loss Loss
Depreciation on disposal from
and of joint
amortization assets venture EBITDA
-------------------------------------------
Charles Town Entertainment
Complex $ 20,921 $ (225) $ - $143,634
Argosy Casino Lawrenceburg 17,474 (115) - 156,626
Hollywood Casino Aurora 9,084 (168) - 79,056
Empress Casino Hotel 12,950 (28) - 60,744
Argosy Casino Riverside 11,442 326 - 49,512
Hollywood Casino Baton
Rouge 8,262 1,484 - 61,843
Argosy Casino Alton 9,075 17 - 30,465
Hollywood Casino Tunica 7,497 2 - 26,892
Hollywood Casino Bay St.
Louis (1) 4,485 24 - 5,770
Argosy Casino Sioux City 4,166 40 - 17,569
Boomtown Biloxi (1) 4,779 - - 18,409
Hollywood Slots at Bangor 3,926 - - 11,258
Bullwhackers 2,195 19 - 3,161
Casino Rama management
service contract - - - 16,765
Pennsylvania Racing
Operations 1,319 10 - 1,958
Raceway Park 256 - - (395)
Earnings from Pennwood
Racing, Inc. - - (788) (788)
Corporate overhead 6,120 - - (53,254)
-------------------------------------------
Total $ 123,951 $ 1,386 $ (788) $629,225
===========================================
Twelve Months Ended December 31, 2005
Income
from Settlement Depreciation
continuing costs and and
operations hurricane amortization
----------------------------------
Charles Town Entertainment Complex $ 109,495 $ - $ 18,285
Argosy Casino Lawrenceburg 31,792 - 3,818
Hollywood Casino Aurora 65,972 - 9,135
Empress Casino Hotel 14,019 - 1,950
Argosy Casino Riverside 7,680 - 3,026
Hollywood Casino Baton Rouge 16,645 28,175 7,768
Argosy Casino Alton 3,615 - 1,590
Hollywood Casino Tunica 19,187 - 8,670
Hollywood Casino Bay St. Louis (1) (5,855) 13,709 6,179
Argosy Casino Sioux City 2,929 - 1,226
Boomtown Biloxi (1) 346 7,436 2,766
Hollywood Slots at Bangor (1,845) - 858
Bullwhackers 2,028 - 1,953
Casino Rama management service
contract 17,234 - -
Pennsylvania Racing Operations (2,956) - 1,422
Raceway Park 124 - 10
Earnings from Pennwood Racing, Inc. - - -
Corporate overhead (36,862) - 3,875
----------------------------------
Total $ 243,548 $ 49,320 $ 72,531
==================================
(Gain)/loss Earnings
on disposal from
of joint
assets venture EBITDA
-------------------------------
Charles Town Entertainment Complex $ 1,740 $ - $129,520
Argosy Casino Lawrenceburg (74) - 35,536
Hollywood Casino Aurora (2) - 75,105
Empress Casino Hotel (52) - 15,917
Argosy Casino Riverside 6 - 10,712
Hollywood Casino Baton Rouge 111 - 52,699
Argosy Casino Alton - - 5,205
Hollywood Casino Tunica 49 - 27,906
Hollywood Casino Bay St. Louis (1) 90 - 14,123
Argosy Casino Sioux City 3 - 4,158
Boomtown Biloxi (1) 299 - 10,847
Hollywood Slots at Bangor - - (987)
Bullwhackers 48 - 4,029
Casino Rama management service contract - - 17,234
Pennsylvania Racing Operations 4,233 - 2,699
Raceway Park - - 134
Earnings from Pennwood Racing, Inc. - 1,455 1,455
Corporate overhead (1) - (32,988)
-------------------------------
Total $ 6,450 $ 1,455 $373,304
===============================
(1) Income from continuing operations and EBITDA for the twelve months
ended December 31, 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 Twelve Months
Ended December 31, Ended December 31,
-------------------- -----------------------
2006 2005 2006 2005
---------- --------- ----------- -----------
Revenues
Gaming (1) $ 526,462 $461,400 $2,057,617 $1,211,360
Management service
fee 4,019 4,627 18,146 18,596
Food, beverage and
other 71,240 65,094 275,700 213,089
---------- --------- ----------- -----------
Gross revenues 601,721 531,121 2,351,463 1,443,045
Less promotional
allowances (28,860) (26,587) (106,916) (73,940)
---------- --------- ----------- -----------
Net revenues 572,861 504,534 2,244,547 1,369,105
---------- --------- ----------- -----------
Operating expenses
Gaming (1) 274,358 242,751 1,063,063 646,305
Food, beverage and
other 62,756 61,897 243,707 165,468
General and
administrative 95,121 60,446 329,716 191,933
Hurricane (128,253) 2,003 (128,253) 21,145
Goodwill impairment 34,522 - 34,522 -
Settlement costs - - - 28,175
Depreciation and
amortization 35,309 26,125 123,951 72,531
---------- --------- ----------- -----------
Total operating expenses 373,813 393,222 1,666,706 1,125,557
---------- --------- ----------- -----------
Income from continuing
operations 199,048 111,312 577,841 243,548
---------- --------- ----------- -----------
Other income (expenses)
Interest expense (50,401) (47,693) (196,328) (89,344)
Interest income 873 930 3,525 4,111
(Loss) earnings from
joint venture (110) 240 (788) 1,455
Other (3,777) (398) (4,296) 39
Loss on early
extinguishment of
debt - (1,365) (10,022) (18,039)
---------- --------- ----------- -----------
Total other expenses (53,415) (48,286) (207,909) (101,778)
---------- --------- ----------- -----------
Income from continuing
operations before income
taxes 145,633 63,026 369,932 141,770
Taxes on income 57,630 26,800 156,852 54,593
---------- --------- ----------- -----------
Net income from
continuing operations 88,003 36,226 213,080 87,177
---------- --------- ----------- -----------
Income (loss) from
discontinued operations,
net of tax - 1,382 - (4,135)
(Loss) gain on sale of
discontinued operations,
net of tax (653) - 114,008 37,888
---------- --------- ----------- -----------
Net income $ 87,350 $ 37,608 $ 327,088 $ 120,930
========== ========= =========== ===========
Earnings (loss) per
share-Basic
Income from continuing
operations $ 1.04 $ 0.43 $ 2.53 $ 1.05
Discontinued operations,
net of tax (0.01) 0.02 1.35 0.41
---------- --------- ----------- -----------
Basic earnings per share $ 1.03 $ 0.45 $ 3.88 $ 1.46
========== ========= =========== ===========
Earnings (loss) per
share-Diluted
Income from continuing
operations $ 1.01 $ 0.42 $ 2.46 $ 1.02
Discontinued operations,
net of tax (0.01) 0.02 1.32 0.39
---------- --------- ----------- -----------
Diluted earnings per
share $ 1.00 $ 0.44 $ 3.78 $ 1.41
========== ========= =========== ===========
Weighted average shares
outstanding
Basic 84,541 83,307 84,229 82,893
Diluted 86,986 85,899 86,634 85,857
(1) Reflects reclassification for cash redemption coupons to
contra-revenue from operating expense.
Argosy Gaming Company - Results for the Twelve Months Ended December 31, 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 twelve-month periods ended December 31, 2006 and 2005. Although Penn National Gaming did not own Argosy Gaming Company during the entire twelve-month period ended December 31, 2005, the Company believes that this data is useful to investors in considering the value of this transaction 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)
Twelve Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Argosy Casino Lawrenceburg $474,046 $446,327 $156,626 $147,088
Empress Casino Hotel 238,843 230,326 60,744 60,320
Argosy Casino Riverside 153,441 141,195 49,512 41,947
Argosy Casino Alton 115,194 107,392 30,465 22,484
Argosy Casino Sioux City 53,909 53,398 17,569 16,620
(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, hurricane and goodwill
impairment, 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)
Twelve Months Ended December 31, 2005
Reconciliation of Income from Operations (GAAP) to Adjusted EBITDA
Income
from Depreciation (Gain)/loss Adjusted
continuing and EBITDA on disposal EBITDA
operations amortization (1) of assets (2)
----------------------------------------------------------------------
Argosy Casino
Lawrenceburg $ 132,100 $ 15,061 147,161 $ (73) $147,088
----------------------------------------------------------------------
Empress Casino
Hotel 51,414 9,051 60,465 (145) 60,320
----------------------------------------------------------------------
Argosy Casino
Riverside 28,972 12,924 41,896 51 41,947
----------------------------------------------------------------------
Argosy Casino
Alton 16,076 6,408 22,484 - 22,484
----------------------------------------------------------------------
Argosy Casino
Sioux City 12,418 4,197 16,615 5 16,620
----------------------------------------------------------------------