Net Revenue Up, Income Down for PNGI

Penn National Gaming Inc. reported an increase in net revenue for the first quarter of 2005 compared with the comparable period in 2004, but also showed a $2-million loss in net income.

In financial results released April 26, the Pennsylvania-based racing and gaming company said net revenue for the first three months of this year was $289.3 million, up from $285.1 million in 2004. The largest revenue-producer was Charles Town Races & Slots at $103.2 million for the first quarter, up from $94 million for the first quarter of 2004.

Other holdings, such as Hollywood Casino in Illinois, and Hollywood Casino and Boomtown Casino in Mississippi, registered declines in revenue during the period. Gaming generated $253 million in total revenue for the company.

Net income came in at $15.8 million, down from $17.8 million.

PNGI has racing operations at Charles Town; Penn National Race Course in Pennsylvania; and Freehold Raceway in New Jersey. Penn National and its network of off-track betting parlors produced $13.2 million in revenue for the first quarter of 2005, down from $13.3 million a year ago.

The company noted in the three months of this year, it recorded charges for the early extinguishing of debt of $15.8 million ($10.3 million net of taxes) that had the net effect of reducing diluted earnings per share from continuing operations and diluted earnings per share by $0.12. Otherwise, PNGI would have reported first-quarter diluted earnings per share from continuing operations and diluted earnings per share of $0.31.

PNGI chief executive officer Peter Carlino said the company has improved its capital structure in advance of several "new growth opportunities." They are acquisition of Argosy Gaming, which operates the largest revenue-producing riverboat casino in the nation in Lawrenceburg, Ind.; installing slot machines at Penn National; and installing slot machines at a racing facility in Bangor, Maine.

"In Pennsylvania, where we are developing a new gaming and racing facility at Penn National Race Course, we secured local approvals for the project's land-development plan," Carlino said in a release. "We anticipate securing a license from the Pennsylvania Gaming Control Board in late 2005, commencing construction immediately thereafter, and opening our new Harrisburg-area facility in early 2007."

Argosy recently announced plans to increase the number of slot machines at the Indiana riverboat casino from 2,800 to 4,000. The casino is located in the market of several racetracks, including Turfway Park in Northern Kentucky and River Downs in Ohio.

"We believe the Argosy development projects, which are complex and subject to regulatory approvals, adhere to our long-term desire to enhance long-term shareholder value by creating more exciting entertainment venues," Carlino said.