SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-24206
Penn National Gaming, Inc.
(Exact Name of Registrant
as Specified in its Charter)
Pennsylvania 23-2234473
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Penn National Gaming, Inc.
825 Berkshire Blvd.
Wyomissing, PA 19610
(Address of Principal Executive Offices)
610-373-2400
(Registrant's Telephone Number, Including Area Code:)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
(1)
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Title Outstanding as of August 12, 1997
Common stock par value .01 per share 15,126,070
---------------------
This Report contains forward-looking statements that inherently involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those discussed in this Quarterly Report on Form 10-Q and
those discussed in the Company's Annual Report on Form 10-K. References to "Penn
National Gaming" or the "Company" include Penn National Gaming, Inc. and its
subsidiaries.
(2)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
INDEX
PART I-FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets - 4-5
June 30, 1997 (unaudited) and December 31, 1996
Consolidated Statements of Income - 6
Six Months Ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Income - 7
Three Months Ended June 30, 1997 and 1996 (unaudited)
Consolidated Statement of Shareholders' Equity - 8
Six Months Ended June 30, 1997 (unaudited)
Consolidated Statement of Cash Flow - 9-10
Six Months Ended June 30, 1997 and 1996 (unaudited)
Notes to Consolidated Financial Statements 11-14
Item 2. Management's Discussion and Analysis of Financial 15-18
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8 - K 19
- -------------------------------------------
(3)
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
PENN NATIONAL GAMING, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, 1997 December 31, 1996
(Unaudited)
Assets
Current Assets
Cash $ 4,827 $ 5,634
Accounts receivable 3,137 4,293
Prepaid expenses and other current assets 3,838 1,552
Deferred income taxes 58 90
--------- -------
Total current assets 11,860 11,569
-------- ------
Property, plant and equipment, at cost
Land and improvements 18,120 15,728
Buildings and improvements 46,941 30,484
Furniture, fixtures and equipment 12,430 8,937
Transportation equipment 477 366
Leasehold improvements 6,703 6,680
Leased equipment under capitalized lease 824 1,626
Construction in progress 12,702 2,926
-------- -------
98,197 66,747
Less accumulated depreciation and amortization 9,313 8,029
------- -------
Net property and equipment 88,884 58,718
--------- -------
Other assets
Excess of cost over fair market value of assets
acquired (Net of accumulated amortization of
$1,111 and $811, respectively) 23,525 21,885
Prepaid acquisition costs - 1,764
Deferred financing costs 1,860 2,416
Miscellaneous 874 371
-------- ------
Total other assets 26,259 26,436
--------- -------
$ 127,003 $ 96,723
======== =======
See accompanying notes to consolidated financial statements
(4)
PENN NATIONAL GAMING, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, 1997
(Unaudited) December 31, 1996
Liabilities and Shareholders'
Equity
Current Liabilities
Current maturities of long-
term debt and Capital lease
obligations $ 3,259 $ 1,563
Accounts payable 9,546 5,066
Purses due horseman 1,879 1,421
Uncashed pari-mutuel tickets 749 1,336
Accrued expenses 1,963 1,880
Customer deposits 681 420
Taxes, other than income taxes 349 392
Income Taxes 1,178 -
------- -------
Total current liabilities 19,604 12,078
------- -------
Long-term liabilities
Long-term debt and capital
lease obligations, Net of
current maturities 41,622 45,954
Deferred income taxes 10,926 10,810
------- -------
Total long-term liabilities 52,548 56,764
------- -------
Commitments and contingencies
Shareholders' equity
Preferred stock, $.01 par value,
1,000,000 shares authorized:
none issued - -
Common stock, $.01 par value,
20,000,000 shares authorized:
15,125.970 and 13,355,290
issued and outstanding 151 134
Additional paid in capital 38,009 14,299
Retained earnings 16,763 13,448
Treasury Stock, 4,320 shares at cost (72) -
------- -------
Total Shareholders' equity 54,851 27,881
------- -------
$127,003 $96,723
======== =======
See accompanying notes to consolidated financial statements
(5)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Six Months Ended
June 30,
1997 1996
Revenues
Pari-mutuel revenues
Live races $11,397 $ 9,672
Import simulcasting 31,338 15,509
Export simulcasting 3,395 1,776
Admissions, programs and other racing revenues 2,824 2,048
Concession revenues 3,450 1,601
------- -------
Total revenues 52,404 30,606
------- -------
Operating expenses
Purses, stakes and trophies 10,318 6,448
Direct salaries, payroll taxes and
employee benefits 7,420 3,967
Simulcast expenses 5,881 4,680
Pari-mutuel taxes 4,419 2,630
Other direct meeting expenses 8,499 4,478
Off-track wagering concessions expenses 2,640 1,045
Other operating expenses 5,435 2,485
------- -------
Total operating expenses 44,612 25,733
------ -------
Income from operations 7,792 4,873
------- -------
Other income (expenses)
Interest (expense) (1,675) (38)
Interest income 158 153
Other (4) -
------- -------
Total other income (expenses) (1,521) 115
------- -------
Income before income taxes 6,271 4,988
Taxes on income 2,573 2,024
------- -------
Income before extraordinary item 3,698 2,964
------- -------
Extraordinary item
Loss on early extinguishment
of debt, net of income taxes of $264 383 -
------- -------
Net income $ 3,315 $ 2,964
======= =======
Earnings per share before extraordinary item $ 0.24 $ 0.22
------- -------
Earnings per share $ 0.22 $ 0.22
------- -------
Weighted average common shares outstanding 15,319 13,596
======= =======
See accompanying notes to consolidated financial statements
(6)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
June 30,
1997 1996
Revenues
Pari-mutuel revenues
Live races $ 7,028 $ 5,191
Import simulcasting 16,541 7,915
Export simulcasting 2,272 926
Admissions, programs and other racing revenues 1,566 1,171
Concession revenues 2,177 840
------- -------
Total revenues 29,584 16,043
------- -------
Operating expenses
Purses, stakes and trophies 6,116 3,522
Direct salaries, payroll taxes and
employee benefits 4,174 2,058
Simulcast expenses 3,045 2,391
Pari-mutuel expenses 2,462 1,363
Other direct meeting expenses 5,121 2,252
Off-track wagering concessions expenses 1,674 536
Other operating expenses 2,876 1,087
------- -------
Total operating expenses 25,468 13,209
------- -------
Income from operations 4,116 2,834
------- -------
Other income (expenses)
Interest (expenses) (775) (24)
Interest income 72 85
Other (4) -
------- ------
Total other income (expenses) (707) 61
------- -------
Income before income taxes 3,409 2,895
Taxes on income 1,395 1,170
------- -------
Net income $ 2,014 $ 1,725
======= =======
Earnings per share $ 0.13 $ 0.12
------- -------
Weighted average common shares outstanding 15,717 13,876
======= =======
See accompanying notes to consolidated financial statements
(7)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Common Stock Treasury Stock
Additional
Paid-In
Shares Amounts Shares Amounts Capital Earnings Total
Balance, at
January 1,1997 13,355,290 $ 134 - $ - $ 14,299 $ 13,448 $ 27,881
Issuance of common stock 1,770,680 17 23,137 23,154
Purchase of Treasury Stock
at cost 4,320 (72) (72)
Tax benefit related to stock
options exercised 573 573
Net income for the six
months ended
June 30, 1997 3,315 3,315
Balance, at
June 30, 1997 15,125,970 $ 151 4,320 $ (72) $ 38,009 $ 16,763 $ 54,851
========== ======= ===== ====== ======== ======== ========
See accompanying notes to consolidated financial statements
(8)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities
Net income $ 3,315 $ 2,964
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,660 592
Extraordinary item, loss on early extinguishment
of debt, before income tax benefit 647 -
Deferred income taxes 148 102
Decrease (Increase) in
Accounts receivable 1,156 (1,174)
Prepaid expenses and other current assets (2,286) (704)
Miscellaneous other assets (503) (252)
Increase (decrease) in
Accounts payable 4,480 1,126
Purses due horsemen 458 128
Uncashed pari-mutuel tickets (587) (286)
Accrued expenses 83 8
Customer deposits 261 210
Taxes other than income taxes (43) (54)
Income Taxes 1,178 (265)
-------- -------
Net cash provided by operating activities 9,967 2,395
-------- -------
Cash flows from investing activities
Expenditures for property and equipment (15,450) (2,044)
Acquisition of business,
(Primarily property and equipment) (16,000) -
Increase in prepaid acquisitions cost (176) -
--------- -------
Net cash (used in) investing activities (31,626) (2,044)
--------- -------
(9)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands)
(Unaudited)
(Continued)
Six Months Ended
June 30,
1997 1996
Cash flows from financing activities
Proceeds of sale common stock 23,082 1,486
Tax benefit related to stock options exercised 573 -
Proceeds of long term debt 16,500 -
Principal payments on long-term debt and (19,136) (41)
capital lease obligations
Increase in unamortized financing cost (167) -
-------- --------
Net cash provided by financing activities 20,852 1,445
-------- -------
Net increase (decrease) in cash (807) 1,796
Cash, at beginning of period 5,634 7,514
------- -------
Cash, at end of period $ 4,827 $ 9,310
======== ========
See accompanying notes to consolidated financial statements
(10)
PENN NATIONAL GAMING , INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Financial Statement Presentation
The accompanying consolidated financial statements are unaudited
and include the accounts of Penn National Gaming, Inc., ("Penn") and its wholly
and majority owned subsidiaries, (collectively, the "Company"). All significant
intercompany transactions and balances have been eliminated.
In the opinion of management, all adjustments (consisting of
normal recurring accruals) have been made which are necessary to present fairly
the financial position of the Company as of June 30, 1997 and the results of its
operations for the six month periods ended June 30, 1997 and 1996. The results
of operations experienced for the six month period ending June 30, 1997 are not
necessarily indicative of the results to be experienced for the fiscal year
ending December 31, 1997.
The financial statements and related notes have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. The
accompanying notes should therefore be read in conjunction with the Company's
December 31, 1996 annual financial statements.
2. Wagering Information (in thousands):
Three months ended June 30,
1997 1996
---- ----
Penn National Pocono Downs Charles Town Total Penn National
Pari-mutuel wagering in-state on
company live races $ 25,084 $ 9,243 $ 4,640 $ 38,967 $ 24,798
------- ------ --------- -------- --------
Pari-mutuel wagering on simulcasting:
Import simulcasting from
other racetracks 42,603 30,258 6,645 79,506 40,620
Export simulcasting to out of Pennsylvania
wagering facilities 38,930 8,827 - 47,757 31,450
------- ------- ---------- -------- --------
81,533 39,085 6,645 127,263 72,070
------- ------- --------- -------- --------
Total pari-mutuel wagering $106,617 $48,328 $ 11,285 $166,230 $ 96,868
======== ======= ========= ======== ========
(11)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2. Wagering Information (in thousands)
Three months ended June 30,
1997 1996
---- ----
Penn National Pocono Downs Charles Town Total Penn National
Pari-mutuel wagering in-state
on company live races $ 47,574 $ 9,243 $ 4,640 $ 61,457 $ 46,105
------- ------ --------- -------- --------
Pari-mutuel wagering on simulcasting:
Import simulcasting from
other racetracks 85,843 59,510 6,645 151,998 81,451
Export simulcasting to out of Pennsylvania
wagering facilities 76,361 8,827 - 85,188 59,788
-------- ------- ---------- -------- --------
162,204 68,337 6,645 237,186 141,239
-------- ------- --------- -------- --------
Total pari-mutuel wagering $209,778 $77,580 $ 11,285 $298,643 $187,344
======== ======= ========= ======== ========
3. Commitments
At June 30, 1997, the Company was contingently obligated under
letters of credit with face amounts aggregating $1,803,700. The $1,803,700
consisted of $1,703,700 relating to the horsemen's account balances and $100,000
for Pennsylvania pari-mutuel taxes.
On June 20, 1997, the Company acquired options to purchase
approximately 100 acres of land in Memphis, Tennessee for an aggregate purchase
price of $2.7 million. The Company paid $11,000 to acquire the options and has
the right to extend the options from month to month until June 20, 1998 upon the
payment of $11,000 per month. The Company is preparing an application to the
Tennessee State Racing Commission for the proposed development of a harness race
track and off-track wagering facility at the site.
On June 25, 1997, the Company entered into a five-year technology
agreement with GTECH Corporation for the installation and operation of the VLT
system at the Charles Town facility. The agreement provides for annual payments
equal to the facility's net win multiplied by a percentage which decreases as
the net win per day per machine at the facility increases.
(12)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. Supplemental Disclosures of Cash Flow Information
Cash paid during the six months ended June 30, 1997 and 1996 for
interest was $2,051,000 and $30,000, respectively.
Cash paid during the six months ended June 30, 1997 and 1996 for
income taxes was $629,000 and $1,616,000, respectively.
For the six months ended June 30, 1997, the Company reclassified
approximately $1.9 million of prepaid acquisition costs to excess of cost over
fair market value of net assets acquired.
5. Common Stock
In February 1997, the Company completed a secondary public
offering of 1,725,000 shares of its common stock. The net proceeds of $23
million were used to repay $19 million of term loans outstanding under the $75
million credit facility and to finance a portion of the cost of the
refurbishment of the Charles Town Races facility. In connection with such debt
repayment, the Company incurred an extraordinary loss of $383,000 after taxes,
consisting primarily of the write-off of deferred finance costs.
6. Acquisitions
On January 15, 1997, an 89% - owned Company subsidiary acquired
substantially all of the assets of Charles Town Races for approximately $16
million plus acquisition-related fees and expenses of approximately $1.9
million.
On March 26, 1997, the Company entered into an agreement to
purchase property for its proposed Carbondale, Pennsylvania OTW facility. The
agreement provides for a purchase price of $200,000 and is subject to numerous
contingencies, including approval by the Pennsylvania State Harness Racing
Commission. On June 5, 1997, the Company's application was approved by the
Racing Commission, the Company expects to have the facility constructed and
operational in the fourth quarter of 1997.
(13)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
7. Subsequent Items
On July 8, 1997, the Company entered into a lease agreement for
the Hazleton OTW facility. The lease is for 13,000 square feet at the Laurel
Mall in Hazleton, Pennsylvania. The initial term of the lease is for ten years
with two additional five-year renewal options available. The agreement is
subject to numerous contingencies, including approval by the Pennsylvania State
Harness Racing Commission. On July 10, 1997, the Company submitted its
application for such approval. If approved by the Racing Commission, the Company
expects to have the facility constructed and operational in the fourth quarter
of 1997.
(14)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three months ended June 30, 1997 compared to three months ended June 30, 1996
Total revenue increased by approximately $13.5 million or 84.4%
from $16.1 million to $29.6 million for the three months ended June 30, 1997 as
compared to the three months ended June 30, 1996. Pocono Downs, which was
acquired in the fourth quarter of 1996, accounted for $10.1 million of the
increase. Charles Town Races, which was purchased in January of 1997 and began
racing operations on April 30, 1997, accounted for $2.9 million of the increase.
In addition, revenues at Penn National Race Course and its OTW facilities
increased by $547,000. This increase was primarily due to the receipt of $2.5
million in revenues at the Company's new OTW facilities in Lancaster and
Williamsport, offset by a decrease of $2.0 million at the thoroughbred track in
Grantville and the other OTW facilities. Management believes that the decrease
in revenues at the Penn National OTW facilities was primarily due to the opening
of a competitor's OTW facility and the opening of the Company's Lancaster OTW
facility.
Total operating expenses increased by approximately $12.3 million
or 93.2% from $13.2 million to $25.5 million for the three months ended June 30,
1997 as compared to the three months ended June 30, 1996. Pocono Downs and
Charles Town Races accounted for $8.3 million and $3.0 million of this increase,
respectively. Penn National Race Course and its OTW facility operations
accounted for $1.0 million of the total operating expense increase. This
increase was primarily due to $1.9 million in operating expenses for the
Company's new OTW facilities in Lancaster and Williamsport offset by a decrease
in purses, pari-mutuel taxes, simulcast expenses, and direct salaries, payroll
taxes, and employees benefits at the thoroughbred track in Grantville and the
other OTW facilities due to decreased revenues.
Income from operations increased by approximately $1.3 million or
45.2% from $2.8 million to $4.1 million due to the factors described above.
Other expenses for the three months ended June 30, 1997 consisted of
approximately $775,000 in interest expense (primarily due to the financing of
the Pocono Downs acquisition) compared to $24,000 in interest expense for the
three months ended June 30, 1996.
Income tax expense increased from $1.2 million to $1.4 million due
to the increase in income for the period.
Net income increased by approximately $300,000 or 16.7% from $1.7
million to $2.0 million for the three months ended June 30, 1997 compared to the
three months ended June 30, 1996 based on the factors described above.
(15)
Six months ended June 30, 1997 compared to six months ended June 30, 1996
Total revenue increased by approximately $21.8 million or 71.2%
from $30.6 million to $52.4 million for the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996. Pocono Downs, which was acquired
in the fourth quarter of 1996, accounted for $17.3 million of the increase.
Charles Town Races, which was purchased in January of 1997 and began racing
operations on April 30, 1997, accounted for $2.9 million of the increase. In
addition, revenues at Penn National Race Course and its OTW facilties increased
by $1.6 million. This increase was primarily due to the receipt of $4.7 million
in revenues at the Company's new OTW facilities in Lancaster and Williamsport,
offset by a decrease of $3.1 million at the thoroughbred track in Grantville and
the other OTW facilities. Management believes that the decrease at the Penn
National OTW facilities was primarily due to the opening of a competitor's OTW
facility and the opening of the Company's Lancaster OTW facility.
Total operating expenses increased by approximately $18.9 million
or 73.4% from $25.7 million to $44.6 million for the six months ended June 30,
1997 as compared to the six months ended June 30, 1996. Pocono Downs and Charles
Town Races accounted for $13.8 million and $3.0 million of this increase
respectively. Penn National Race Course and its OTW facility operations
accounted for $2.1 million of the total operating expense increase. This
increase was primarily due to $3.4 million in operating expenses for the
Company's new OTW facilities in Lancaster and Williamsport offset by a decrease
in purses, pari-mutuel taxes, simulcast expenses, and direct salaries, payroll
taxes, and employees benefits at the thoroughbred track in Grantville and the
other OTW facilities due to decreased revenues.
Income from operations increased by approximately $2.9 million or
59.9% from $4.9 million to $7.8 million due to the factors described above.
Other expenses for the six months ended June 30, 1997 consisted of approximately
$1.7 million in interest expense (primarily due to the financing of the Pocono
Downs acquisition) compared to $38,000 in interest expense for the six months
ended June 30, 1996.
Income tax expense increased from $2.0 million to $2.6 million due
to the increase in income for the period.
The extraordinary item consisted of a loss on the early
extinguishment of debt in the amount of $383,000 net of income taxes. This
resulted from the Company's receiving approximately $23 million as proceeds from
the February 1997 equity offering and using approximately $19 million to reduce
long-term debt.
(16)
Net income increased by approximately $351,000 or 11.8% from $3.0
million to $3.3 million for the six months ended June 30, 1997 compared to the
six months ended June 30, 1996 based on the factors described above.
Liquidity and Capital Resources
Historically, the Company's primary sources of liquidity and
capital resources have been cash flow from operations and borrowings from banks.
During the six months ended June 30, 1997, the Company's cash position decreased
by approximately $800,000 due primarily to the renovation project at Charles
Town Races.
Net cash provided from operating activities totaled approximately
$10.0 million for the six months ended June 30, 1997. Net income and non-cash
expenses provided $5.6 million and $1.3 million came from the repayment of the
Charles Town Races loan receivable in January 1997. The balance of $3.1 million
was generated by other changes in working capital.
Cash flows used in investing activities totaled approximately
$31.6 million. Acquisition costs for the purchase of Charles Town Races totaled
$16.0 million and construction in progress and equipment for the Charles Town
facility totaled approximately $13.0 million. Capital expenditures for the
completion of the Williamsport OTW facility was $700,000. The balance of $1.9
million represents other necessary ongoing capital expenditures.
Cash flows from financing activities totaled approximately $20.9
million of which was generated from the secondary equity offering in February
1997 and the exercise of options that resulted in the issuance of 1,756 shares
of common stock. The Company also received $16.5 million in proceeds from
long-term debt to use as payment for the Charles Town acquisition on January 15,
1997. The Company used $19.0 million of the proceeds from the offering to repay
a portion of its bank debt. The remaining amount of the proceeds of
approximately $4.0 million was used for the refurbishment of the Charles Town
facility.
During the balance of 1997, the Company anticipates capital
expenditures of approximately $4.0 million, exclusive of the cost of
refurbishing the Charles Town Facility (described below), to construct two
additional OTW facilities and approximately $500,000 for other capital
expenditures and improvements to existing facilities for Penn National Race
Course and Pocono Downs. Under the Company Credit Facility, the Company is
permitted to make capital expenditures (not including the refurbishment of the
Charles Town Facility or the cost of gaming machines to be installed there) of
$12.0 million in 1997, $4.0 million in 1998 and $2.0 million in 1999 and in each
year thereafter. The Company anticipates expending approximately $18.5 million
on the refurbishment of the Charles Town Facility (excluding the cost of gaming
machines), of
(17)
which $13.0 million had already been expended through June 30, 1997. On July 15,
1997, the Company borrowed an additional $3.5 million under the Company Credit
Facility for Charles Town refurbishment costs.
The Company currently estimates that the net proceeds of the
equity offering, together with the cash generated from operations and borrowings
under its Credit Facility, will be sufficient to finance its current operations
and planned capital expenditure requirements. There can be no assurance,
however, that the Company will not be required to seek capital, in addition to
that available from the foregoing sources. The Company may, from time to time,
seek additional funding through public or private financing, including equity
financing. There can be no assurance that adequate funding will be available as
needed or, if available, on terms acceptable to the Company. If additional funds
are raised by issuing equity securities, existing shareholders may experience
dilution.
(18)
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.62. Agreement dated June 25, 1997, between PNGI Charles Town
Gaming Limited Liability Company and GTECH Corporation.
10.63. Purchase Option dated June 20, 1997 between the Company and
Alan J. Aste.
10.64. Purchase Option dated June 20, 1997 between the Company and
Joyce M. Peck.
10.65. Purchase Option dated June 20 1997 between the Company and
Roosevelt Boyland Devisees.
(b) Reports on Form 8-K
None
(19)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
PENN NATIONAL GAMING, INC.
By:/s/ Robert S. Ippolito
Date August 12, 1997 Robert S. Ippolito
Chief Financial Officer
Secretary/Treasurer
(20)
EXHIBIT INDEX
Exhibit Nos. Description of Exhibits Page No.
10.62 Agreement dated June 25, 1997, betweenPNGI 22
Charles Town Gaming Limited Liability Company
and GTECH Corporation.
10.63 Purchase Option dated June 20 1997 between the 42
Company and Roosevelt Boyland Devisees.
10.64 Purchase Option dated June 20, 1997 between the 46
Company and Joyce M. Peck.
10.65 Purchase Option dated June 20, 1997 between the 51
Company and Alan J. Aste.
(21)