Penn National Profit Declines
by Blood-Horse Staff
Date Posted: 2/7/2008 10:15:09 AM
Last Updated: 2/9/2008 12:12:37 PM

Photo: File Photo

Penn National Gaming Inc. said Feb. 7 fourth-quarter profit fell 63%, and the company blamed the losses in part on inclement weather at some of its largest properties.

Earnings for the three months ended Dec. 31 dropped to $32.2 million, or 36 cents per share, from $87.3 million, or $1 per share, a year earlier.

The company includes in its holdings Thoroughbred racing operations Hollywood Casino at Penn National in Grantville, Pa.; Charles Town Races & Slots in Charles Town, W.Va.; and Zia Park in Hobbs, N. M. The new Hollywood Casino at Penn National is scheduled to open Feb. 12 at the Pennsylvania location.

PNGI during the quarter also recorded a $2.5-million pre-opening charge at Penn National for Pennsylvania Gaming Control Board start-up fees in the fourth quarter. The amount wasn't anticipated in its guidance. The company said its total investment in the new racino is more than $300 million, including a $50-million license fee.

The company, which operates 19 casinos and/or racetracks in the United States and Canada, had 29 "property days" impacted by snow in December, compared with just three in 2006, said Peter Carlino, PNGI chairman and chief executive officer.

PNGI is in the midst of a proposed $6.1-billion buyout. Fortress Investment Group LLC and Centerbridge Partners LP made their $67-per-share acquisition offer to PNGI in June 2007, which shareholders approved at a special meeting Dec. 12. PNGI said it would like to complete the deal late in the second quarter.

Investors appear to have some concerns about whether the deal will go through; PNGI shares are trading at $50.13, well below the offer price.

Excluding a loss related to fluctuations in the Canadian dollar in the latest quarter and a goodwill impairment charge and hurricane settlement gains in the 2006 quarter, net income rose to 37 cents per share from 32 cents per share. Analysts surveyed by Thomson Financial expected a profit of 41 cents per share.

Quarterly revenue grew 2% to $585.8 million from $572.9 million, but trailed the company's estimate of $595.4 million. Analysts had estimated sales at $593.3 million. For the year, net income declined 51% to $160.1 million, or $1.81 per share, from $327.1 million, or $3.78 per share. Annual sales rose 9% to $2.44 billion from $2.24 billion.

In other company news, Tim Willmot, the former chief operating officer for Harrah's Entertainment, has been named president and COO of PNGI.

The Associated Press contributed to this article



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