Penn National Gaming Profits Dip
Photo: Penn National
Casino and racetrack operator Penn National Gaming Inc., which is under contract to be purchased by two private entities, said April 24 its first-quarter profit dipped 5% on pre-opening expenses and economic challenges.

Net income for the period ended March 31 slipped to $40.7 million, or 46 cents per share, compared with $42.9 million, or 49 cents per share, a year earlier. Analysts surveyed by Thomson Financial predicted earnings of 49 cents per share. Total operating expenses rose to $494.9 million from $471.5 million.

Chairman and chief executive officer Peter M. Carlino said in a statement that economic conditions hurt regional and major-market gaming operators during the quarter. No conference call was held in connection to the earnings report.

Quarterly results also included pre-opening expenses of $4.9 million, or 4 cents per share, for the Hollywood Casino at Penn National Race Course in central Pennsylvania and the Hollywood Slots Hotel and Raceway in Bangor, Maine. Revenue rose to $613.5 million, up 3% from $596.3 million in the previous year. Analysts expected revenue of $627.5 million.

Gaming revenue climbed to $560.6 million from $549.1 million, while management service fee revenue grew to $4 million from $3.5 million. Food, beverage and other sales increased to $81.5 million from $73.8 million.

PNGI last June announced it had entered into an agreement to be purchased by Fortress Investment Group and Centerbridge Partners for $67 a share, or $6.1 billion. Shareholders approved the buyout last December, and seven state jurisdictions have given approval on the deal, with nine reviews pending, according to PNGI. If the transaction is not completed by June 15, the per-share consideration will increase by about 1.5 cents per day.

The company's stock price opened April 24 trading at $39.62, about 41% below the per-share buyout offer. Analysts have said the gaming sector, along with many other industries, has been squeezed as consumers tighten spending due to the continued housing downturn, escalating gas costs, eroding credit and recession worries.

In addition to Hollywood Casino at Penn National in Grantville, Pa.; PNGI includes among its holdings Thoroughbred racing operations Charles Town Races & Slots in Charles Town, W.Va.; and Zia Park in Hobbs, N. M.

(The Associated Press contributed to this article)

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