Penn National Results Up

3 Feb 2005

WYOMISSING, Pennsylvania -- (PRESS RELEASE) -- Penn National Gaming, Inc. (NASDAQ:PENN) today reported record fourth quarter results for the period ended December 31, 2004.

                    Summary of Q4 and 2004 Results

(In millions,                 Three Months Ended  Twelve Months Ended
except per-share data)            December 31,        December 31,
                              ------------------- --------------------
                                  2004#     2003#     2004#     2003#
                                --------  --------  --------  --------
Net revenues                   $  276.7  $  257.4  $1,140.7  $1,013.0
EBITDA *                       $   67.1  $   57.8  $  283.0  $  237.8
Income from continuing
 operations                    $   49.9  $   41.6  $  213.7  $  176.5
Net income from continuing
 operations                    $   18.8  $   13.1  $   87.3  $   62.2
(Loss) from discontinued
 operations - HCS Shreveport+  $   (2.1) $   (4.2) $  (18.3) $  (13.1)
Income from discontinued
 operations - Pocono Downs and
 its OTWs+                     $    0.2  $    0.3  $    2.4  $    2.4
Net income                     $   16.9  $    9.2  $   71.4  $   51.5
Diluted earnings per share
 from continuing operations    $   0.44  $   0.32  $   2.09  $   1.54
Diluted (Loss) per share from
 discontinued operations +     $  (0.04) $  (0.09) $  (0.38) $  (0.27)
Diluted earnings per share     $   0.40  $   0.23  $   1.71  $   1.27

      * EBITDA is income from continuing operations excluding charges
        for depreciation and amortization and gain/loss on disposal of
        assets, and is inclusive of earnings from joint venture. A
        reconciliation of net income (GAAP) to EBITDA as well as
        income from operations (GAAP) to EBITDA, is included in the
        financial schedules accompanying this release.

      + Hollywood Casino - Shreveport is accounted for as a
        discontinued operation effective in the second quarter 2004.
        As a result of Penn National's sale of Pocono Downs Racetrack
        and its affiliated off-track wagering facilities, the Company
        is accounting for these facilities as discontinued operations
        effective July 1, 2004. The income/loss and diluted loss per
        share figures from discontinued operations are net of taxes.

      # In the three months ended December 31, 2004 Penn National
        Gaming recorded several items that had the net effect of
        reducing both diluted earnings per share from continuing
        operations and diluted earnings per share by $0.01. Without
        the effect of these items, Penn National would have reported
        2004 fourth quarter diluted earnings per share from continuing
        operations of $0.45 and diluted earnings per share of $0.41.
        The table below summarizes these items:

  (In millions,               Three Months Ended   Twelve Months Ended
 except per-share data)        December 31, 2004    December 31, 2004
                              ------------------- --------------------
                               Pre-tax   After tax  Pre-tax  After tax
                               amount    diluted    amount   diluted
                               of item     EPS      of item    EPS
                                          effect             effect
Charles Town Races & Slots
 insurance recovery           $    1.3  $   0.02  $    1.3  $   0.02
West Virginia tax rebate for
 racing capital expenditures  $    1.5  $   0.02         -         -
Reversal of accrual at Casino
 Rama                         $    0.4  $   0.01  $    0.4  $   0.01
Loss on early extinguishment
 of debt for the accelerated
 principal payments made on
 credit facility term loans   $   (3.8) $  (0.06) $   (3.8) $  (0.06)
Total effect on results from
 continuing operations        $   (0.6) $  (0.01) $   (2.1) $  (0.03)

Commenting on the results, Peter M. Carlino, Chief Executive Officer of Penn National said, "Penn National generated record fourth quarter operating results with our portfolio of regional gaming properties again generating revenues, diluted EPS from continuing operations and EBITDA that exceeded the Company's guidance. Results for the quarter were driven by higher year-over-year EBITDA contributions, excluding the items noted above, at six of our eight gaming properties, including the management contract.

"At Charles Town Races & Slots(TM), the benefit of continued capital investments in the facility resulted in fourth quarter year-over-year EBITDA growth of approximately 20% without the effect of the insurance settlement and tax rebate. Our second largest property, Hollywood Casino® Aurora, recorded a fourth quarter year-over-year revenue gain of 8% although, as expected, EBITDA declined approximately 7% as the fourth quarter of 2004 was impacted by the Illinois tax increase implemented in the third quarter of 2003. Our Bay St. Louis property recorded a 12.2% year-over-year decline in EBITDA attributable to the highly competitive regional destination guest segment of its business.

"Reflecting the Company's strong overall operating trends, Penn National paid down $129.7 million of principal on our credit facility throughout 2004, including $50.0 million in the fourth quarter.

"Penn National was also active during the fourth quarter in charting and advancing its plans for future expansion and financial growth. The Company has developed the broadest range of growth opportunities in its history including those related to the expansion of existing properties including Charles Town Races & Slots, the proposed development of racinos in Pennsylvania and Maine and the pending acquisition of Argosy Gaming Company which brings with it several prospects for growth through both expansion and development. Importantly, each of these projects is complex and subject to regulatory approvals, yet all are moving forward on schedule. Barring unanticipated delays, we currently expect to begin recognizing the financial benefits of the Argosy acquisition and further enhancements at Charles Town later this year.

"To briefly update the status of Penn National's primary growth catalysts, in Pennsylvania, we have continued to develop and refine our design proposal for a completely new gaming and racing facility at Penn National Race Course. We have determined that the location, with a population of nearly 900,000 adults within a one hour drive, warrants a larger facility with more amenities and features than originally contemplated. As such, we now expect the budget to approximate $240 million, inclusive of the $50 million gaming license fee and the purchase of 2,000 slot machines. We continue to expect the new Penn National Race Course slots facility to open in early 2006 and intend to deploy in Pennsylvania many of the same disciplined project development, management and expansion techniques that have resulted in Charles Town emerging as one of the nation's premier racinos.

"At Charles Town, we started 2005 strongly as during New Year's week the facility recorded its first week of gaming revenue in excess of $10 million. Investment at Charles Town continues and construction will soon be complete allowing for the placement of an additional 200 slot machines in 2005 and 500 slot machines in 2006, bringing the machine count to 4,500 units. During 2005 we will be constructing a small detached hotel, a new buffet, and an additional parking structure to accommodate 2,700 vehicles.

"In Maine, the state has named a technology provider for the slot monitoring system and last week the legislature conducted hearings on legislation that would enable the state Gambling Control Board to protect the confidentiality of personal and private information and non-public corporate information in the license application process, which will allow Penn National to submit the final pieces of information required to secure an unconditional license to develop Bangor Historic Track and operate approximately 1,500 slot machines. This will be the State's first and only gaming facility with an anticipated opening in mid-2006, subject to the required licensing of slot machine distributors and employees, and finalization of rules necessary for slots to become operational, all of which is expected in 2005.

"Throughout 2004, we maintained a very disciplined approach to evaluating acquisition growth opportunities and their potential benefit to Penn National based on several criteria including return on investment, further revenue, geographic and earnings diversification and, most importantly, the potential to enhance shareholder value. As such, we were delighted to reach an agreement last November to acquire Argosy Gaming as it meets these criteria on each and every level. Last month, Argosy stockholders voted to approve the transaction and our legal, finance and operations teams are addressing the remaining conditions and regulatory approvals required to complete the acquisition. With committed financing, we continue to expect the transaction to close in the second half of this year.

"We are initiating preliminary 2005 guidance today based solely on our existing continuing operations and we expect to update this guidance following the completion of the Argosy transaction."

Financial Guidance

The following table sets forth current guidance targets for continuing operations (e.g. excluding Hollywood Casino - Shreveport and Pocono Downs Racetrack and its affiliated off-track wagering facilities) for the first quarter and full year 2005 based on the following:

Although the transaction is expected to be closed in the second half of 2005, there will be no financial contributions from the Argosy Gaming Company properties;
The Company will take a non-cash charge of $4.3 million relative to pre-construction activities at Penn National Race Course in the 2005 second quarter. The after tax effect of the charge is expected to approximate $2.7 million or $0.06 per diluted share;
The Company is successful in completing a new debt offering to allow for the tender/call of its existing $200 million principal amount 11 1/8% bonds.
The Company will incur approximately $15.6 million in pre-tax charges for the early extinguishment of debt in the 2005 first quarter related to anticipated debt pre-payments and the expected tender/call of the $200 million principal amount 11 1/8% bonds. The after tax effect of the charge for the early extinguishment of debt is expected to approximate $10.1 million or $0.23 per diluted share;
Anticipated results do not include any charges for future or prior stock option grants, although it is expected that the Company will incur such charges, expected to approximate $7.0 million pre-tax, assuming the Company adopts FASB 123R in the third quarter of 2005;
The Company will have approximately 43.2 million diluted shares outstanding for 2005;
The financial guidance does not reflect the effect of the 2-for-1 split of the Company's common stock (announced separately today);
Charles Town Races & Slots will install an additional 200 gaming devices in the third quarter of 2005;
The guidance does not reflect the scheduled sunset on July 1, 2005 of the current state of Illinois gaming tax;
The financial guidance does not include a gain on a sale of assets related to the recently completed sale of The Downs Racing and its subsidiaries;
The effective tax rate for federal, state and local income taxes for 2005 will be 37.5%; 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.

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	Penn National Results Up 3 Feb 2005 WYOMISSING, Pennsylvania -- (PRESS RELEASE) -- Penn National Gaming, Inc. (NASDAQ:PENN) today reported record fourth quarter results for the period ended December 31, 2004. Summary of Q4 and 2004 Results (In millions, Three Months Ended Twelve Months Ended except per-share data) December 31, December 31, ------------------- -------------------- 2004# 2003# 2004# 2003# -------- -------- -------- -------- Net revenues $ 276.7 $ 257.4 $1,140.7 $1,013.0 EBITDA * $ 67.1 $ 57.8 $ 283.0 $ 237.8 Income from continuing operations $ 49.9 $ 41.6 $ 213.7 $ 176.5 Net income from continuing operations $ 18.8 $ 13.1 $ 87.3 $ 62.2 (Loss) from discontinued operations - HCS Shreveport+ $ (2.1) $ (4.2) $ (18.3) $ (13.1) Income from discontinued operations - Pocono Downs and its OTWs+ $ 0.2 $ 0.3 $ 2.4 $ 2.4 Net income $ 16.9 $ 9.2 $ 71.4 $ 51.5 Diluted earnings per share from continuing operations $ 0.44 $ 0.32 $ 2.09 $ 1.54 Diluted (Loss) per share from discontinued operations + $ (0.04) $ (0.09) $ (0.38) $ (0.27) Diluted earnings per share $ 0.40 $ 0.23 $ 1.71 $ 1.27 * EBITDA is income from continuing operations excluding charges for depreciation and amortization and gain/loss on disposal of assets, and is inclusive of earnings from joint venture. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release. + Hollywood Casino - Shreveport is accounted for as a discontinued operation effective in the second quarter 2004. As a result of Penn National's sale of Pocono Downs Racetrack and its affiliated off-track wagering facilities, the Company is accounting for these facilities as discontinued operations effective July 1, 2004. The income/loss and diluted loss per share figures from discontinued operations are net of taxes. # In the three months ended December 31, 2004 Penn National Gaming recorded several items that had the net effect of reducing both diluted earnings per share from continuing operations and diluted earnings per share by $0.01. Without the effect of these items, Penn National would have reported 2004 fourth quarter diluted earnings per share from continuing operations of $0.45 and diluted earnings per share of $0.41. The table below summarizes these items: (In millions, Three Months Ended Twelve Months Ended except per-share data) December 31, 2004 December 31, 2004 ------------------- -------------------- Pre-tax After tax Pre-tax After tax amount diluted amount diluted of item EPS of item EPS effect effect Charles Town Races & Slots insurance recovery $ 1.3 $ 0.02 $ 1.3 $ 0.02 West Virginia tax rebate for racing capital expenditures $ 1.5 $ 0.02 - - Reversal of accrual at Casino Rama $ 0.4 $ 0.01 $ 0.4 $ 0.01 Loss on early extinguishment of debt for the accelerated principal payments made on credit facility term loans $ (3.8) $ (0.06) $ (3.8) $ (0.06) Total effect on results from continuing operations $ (0.6) $ (0.01) $ (2.1) $ (0.03) Commenting on the results, Peter M. Carlino, Chief Executive Officer of Penn National said, "Penn National generated record fourth quarter operating results with our portfolio of regional gaming properties again generating revenues, diluted EPS from continuing operations and EBITDA that exceeded the Company's guidance. Results for the quarter were driven by higher year-over-year EBITDA contributions, excluding the items noted above, at six of our eight gaming properties, including the management contract. "At Charles Town Races & Slots(TM), the benefit of continued capital investments in the facility resulted in fourth quarter year-over-year EBITDA growth of approximately 20% without the effect of the insurance settlement and tax rebate. Our second largest property, Hollywood Casino® Aurora, recorded a fourth quarter year-over-year revenue gain of 8% although, as expected, EBITDA declined approximately 7% as the fourth quarter of 2004 was impacted by the Illinois tax increase implemented in the third quarter of 2003. Our Bay St. Louis property recorded a 12.2% year-over-year decline in EBITDA attributable to the highly competitive regional destination guest segment of its business. "Reflecting the Company's strong overall operating trends, Penn National paid down $129.7 million of principal on our credit facility throughout 2004, including $50.0 million in the fourth quarter. "Penn National was also active during the fourth quarter in charting and advancing its plans for future expansion and financial growth. The Company has developed the broadest range of growth opportunities in its history including those related to the expansion of existing properties including Charles Town Races & Slots, the proposed development of racinos in Pennsylvania and Maine and the pending acquisition of Argosy Gaming Company which brings with it several prospects for growth through both expansion and development. Importantly, each of these projects is complex and subject to regulatory approvals, yet all are moving forward on schedule. Barring unanticipated delays, we currently expect to begin recognizing the financial benefits of the Argosy acquisition and further enhancements at Charles Town later this year. "To briefly update the status of Penn National's primary growth catalysts, in Pennsylvania, we have continued to develop and refine our design proposal for a completely new gaming and racing facility at Penn National Race Course. We have determined that the location, with a population of nearly 900,000 adults within a one hour drive, warrants a larger facility with more amenities and features than originally contemplated. As such, we now expect the budget to approximate $240 million, inclusive of the $50 million gaming license fee and the purchase of 2,000 slot machines. We continue to expect the new Penn National Race Course slots facility to open in early 2006 and intend to deploy in Pennsylvania many of the same disciplined project development, management and expansion techniques that have resulted in Charles Town emerging as one of the nation's premier racinos. "At Charles Town, we started 2005 strongly as during New Year's week the facility recorded its first week of gaming revenue in excess of $10 million. Investment at Charles Town continues and construction will soon be complete allowing for the placement of an additional 200 slot machines in 2005 and 500 slot machines in 2006, bringing the machine count to 4,500 units. During 2005 we will be constructing a small detached hotel, a new buffet, and an additional parking structure to accommodate 2,700 vehicles. "In Maine, the state has named a technology provider for the slot monitoring system and last week the legislature conducted hearings on legislation that would enable the state Gambling Control Board to protect the confidentiality of personal and private information and non-public corporate information in the license application process, which will allow Penn National to submit the final pieces of information required to secure an unconditional license to develop Bangor Historic Track and operate approximately 1,500 slot machines. This will be the State's first and only gaming facility with an anticipated opening in mid-2006, subject to the required licensing of slot machine distributors and employees, and finalization of rules necessary for slots to become operational, all of which is expected in 2005. "Throughout 2004, we maintained a very disciplined approach to evaluating acquisition growth opportunities and their potential benefit to Penn National based on several criteria including return on investment, further revenue, geographic and earnings diversification and, most importantly, the potential to enhance shareholder value. As such, we were delighted to reach an agreement last November to acquire Argosy Gaming as it meets these criteria on each and every level. Last month, Argosy stockholders voted to approve the transaction and our legal, finance and operations teams are addressing the remaining conditions and regulatory approvals required to complete the acquisition. With committed financing, we continue to expect the transaction to close in the second half of this year. "We are initiating preliminary 2005 guidance today based solely on our existing continuing operations and we expect to update this guidance following the completion of the Argosy transaction." Financial Guidance The following table sets forth current guidance targets for continuing operations (e.g. excluding Hollywood Casino - Shreveport and Pocono Downs Racetrack and its affiliated off-track wagering facilities) for the first quarter and full year 2005 based on the following: Although the transaction is expected to be closed in the second half of 2005, there will be no financial contributions from the Argosy Gaming Company properties; The Company will take a non-cash charge of $4.3 million relative to pre-construction activities at Penn National Race Course in the 2005 second quarter. The after tax effect of the charge is expected to approximate $2.7 million or $0.06 per diluted share; The Company is successful in completing a new debt offering to allow for the tender/call of its existing $200 million principal amount 11 1/8% bonds. The Company will incur approximately $15.6 million in pre-tax charges for the early extinguishment of debt in the 2005 first quarter related to anticipated debt pre-payments and the expected tender/call of the $200 million principal amount 11 1/8% bonds. The after tax effect of the charge for the early extinguishment of debt is expected to approximate $10.1 million or $0.23 per diluted share; Anticipated results do not include any charges for future or prior stock option grants, although it is expected that the Company will incur such charges, expected to approximate $7.0 million pre-tax, assuming the Company adopts FASB 123R in the third quarter of 2005; The Company will have approximately 43.2 million diluted shares outstanding for 2005; The financial guidance does not reflect the effect of the 2-for-1 split of the Company's common stock (announced separately today); Charles Town Races & Slots will install an additional 200 gaming devices in the third quarter of 2005; The guidance does not reflect the scheduled sunset on July 1, 2005 of the current state of Illinois gaming tax; The financial guidance does not include a gain on a sale of assets related to the recently completed sale of The Downs Racing and its subsidiaries; The effective tax rate for federal, state and local income taxes for 2005 will be 37.5%; 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.