Penn National Gaming Reports First Quarter Gains

Penn National Gaming officials reported substantial gains for the first quarter ending March 31, 2006. The Pennsylvania-based racetrack and casino company showed a 128% rise in post-EBITDA earnings, reporting $164.8 million for the period.

Commenting to investors and media in an April 25 teleconference, chairman and chief executive officer Peter M. Carlino said, "This was a great quarter; one we were all very pleased with. I think this speaks for itself."

In all, the owner of Charles Town Races and Slots in Charles Town, W.V., and Penn National Race Course in Grantville, Penn., showed first-quarter revenues of $569.2 million before interest, taxes, depreciation, and amortization, surpassing the "financial guidance" forecast issued during the fourth quarter last year calling for $551.1 billion.

Also for the period, Penn National Gaming reported stock compensation and extinguishment of debt as having the net effect of reducing both diluted earnings per share from continuing operations and diluted earnings per share by $0.11.

Carlino cited the "strong impact" of the company's October 2005 acquisition of the mid-western casino company Argosy Gaming as a contributing factor for the positive performance.

With that reported $2.2-billion buy-out, Penn National Gaming's estimated annual revenues of $2.18 billion ranks them as gambling's third-largest casino operator, trailing only the merged Harrah's Entertainment-Caesars Entertainment and the combined MGM Mirage-Mandalay Resort Group.

Chief financial officer William Clifford said an unusually mild winter and a large spike in attendance at the company's Casino Rouge in Baton Rouge, La., with the influx of displaced New Orleans residents were also positive but "unsustainable" trends that would level off in the coming quarters.

Officials said the two casinos damaged by Hurricane Katrina last summer--Boomtown Biloxi and Casino Magic-Bay St. Louis--would return to operation as soon as possible.

Charles Town Races and Slots, the company's largest operation, accounted for $116.9 million in earnings, compared to the $103.2 posted for the same first quarter of 2005. Racing operations in Pennsylvania and Ohio accounted for $13.1 million and $2 million respectively.

Carlino said the company had a "high desire" to seek entrance into the competitive markets of Atlantic City and Las Vegas in the near future and, with ownership of Raceway Park in Ohio as of this year, would spend "significant" funds to provide support for a voter referendum on the November ballot that would authorize up to 5,000 slot machines at each of Ohio's seven racetracks.

"Penn National started 2006 with exceptional operating results and based on the continued positive trends at our properties and diversified, staggered development pipeline, we are confident in our growth prospects not only for the remainder of 2006 but for several years to come," the CEO said.

The company reported cash balances on hand of $138.1 million and debts totaling $2.75 billion.

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