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 March 31, 1998
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., Suite 200
Wyomissing, PA 19610
(Address of principal executive offices)
610-373-2400
(Registrant's telephone number including area code:)
Not applicable
(Former name, former address, and former fiscal year, if changed since
last report)
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 ____
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes ____ No ____
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
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 May 15, 1998
Common Stock par value .01 per share 15,155,830
This Report contains forward-looking statements that inherently involve
risks and uncertainties. The Company's actual result could differ
materially from those anticipated in these forward-looking statements as
a result of certain factors, including those discussed in this Quarterly
Report 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.
Penn National Gaming, Inc. And Subsidiaries
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1 - Financial Statements
Consolidated Balance Sheets -
March 31, 1998 (unaudited) and December 31, 1997 4-5
Consolidated Statements of Income -
Three Months Ended March 31, 1998
and 1997 (unaudited) 6-7
Consolidated Statement of Shareholders' Equity -
Three Months Ended March 31, 1998 (unaudited) 8
Consolidated Statements of Cash Flow -
Three Months Ended March 31, 1998
and 1997 (unaudited) 9-10
Notes to Consolidated Financial Statements 11-13
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-16
Item 3 - Changes in information about Market Risk 16
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 17
Item 6 - Exhibits and Reports on Form 8-K 18
Signature Page 19
Exhibit Index 20
Part I. Financial Information
Item 1. Financial Statements
PENN NATIONAL GAMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
March 31, December 31,
1998 1997
(Unaudited) ___________
Assets
Current assets
Cash and cash equivalents $ 23,555 $ 21,854
Accounts receivable 3,418 2,257
Prepaid expenses and other current assets 1,779 1,441
Deferred income taxes 513 469
Prepaid income taxes 2,138 3,003
Total current assets 31,403 29,024
Property, plant and equipment, at cost
Land and improvements 25,875 24,643
Building and improvements 66,035 56,298
Furniture, fixtures and equipment 15,497 13,847
Transportation equipment 494 490
Leasehold improvements 8,245 6,778
Leased equipment under capitalized lease 824 824
Construction in progress 964 11,288
117,934 114,168
Less accumulated depreciation and amortization 12,159 11,007
Net property, plant and equipment 105,775 103,161
Other assets
Excess of cost over fair market value of net
assets acquired (net of accumulated amortization
of $1,542 and $1,389, respectively) 22,902 23,055
Deferred financing costs 3,066 3,014
Miscellaneous 805 624
Total other assets 26,773 26,693
$ 163,951 $ 158,878
See accompanying notes to consolidated financial statement
PENN NATIONAL GAMING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
March December 31,
1998 1997
(Unaudited)
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt and capital $ 197 $ 204
lease obligations
Accounts payable 7,920 7,405
Purses due horsemen 1,281 -
Uncashed pari-mutuel tickets 1,724 1,504
Accrued interest 2,422 326
Accrued expenses 1,951 2,427
Accrued salaries and wages 692 813
Customer deposits 525 470
Taxes, other than income taxes 884 649
Total current liabilities 17,596 13,798
Long term liabilities
Long-term debt and capital lease obligations,
net of current maturities 80,123 80,132
Deferred income taxes 11,156 11,092
Total long-term liabilities 91,279 91,224
Commitments and contingencies
Shareholders' equity
Preferred stock,$.01 par value,
authorized 1,000,000 shares; none issued - -
Common stock,$.01 par value,
authorized 20,000,000 shares;
15,155,830 and 15,12,580 152 152
issued and outstanding, respectively 37,987 37,969
Additional paid in capital 16,937 15,735
Retained earnings 55,076 53,856
Total Shareholders' equity $ 163,951 $ 158,878
See accompanying notes to consolidated financial statements
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
1997 1998
Revenues
Pari-mutuel revenues
Live races $ 5,305 $ 4,369
Import simulcasting 16,351 14,797
Export simulcasting 1,326 1,123
Gaming revenue 7,156 -
Admissions, programs and other racing revenue 1,260 1,258
Concession revenues 1,955 1,273
Total revenues 33,353 22,820
Operating expenses
Purses, stakes, and trophies 6,307 4,202
Direct salaries, payroll taxes and employee benefits 4,365 3,246
Simulcast expenses 3,101 2,836
Pari-mutuel taxes 2,697 1,957
Lottery taxes and administration 2,347 -
Other direct meeting expenses 5,442 3,378
Off-track wagering concession expenses 1,505 966
Other operating expenses 2,396 1,698
Depreciation and amortization 1,419 861
Total operating expenses 29,579 19,144
Income from operations 3,774 3,676
Other income (expenses)
Interest (expense) (2,110) (900)
Interest income 201 86
Total other (expenses) (1,909) (814)
Income before income taxes and
extraordinary item 1,865 2,862
Taxes on income 663 1,178
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Net income before extraordinary item 1,202 1,684
Extraordinary Item
Loss of early extinguishment
of debt, net of income taxes of $264 - 383
Net income $ 1,202 $ 1,301
Per share data
Basic
Income per share before extraordinary item $ .08 $ .12
Extraordinary item - .03
Net income per share .08 .09
Diluted
Income per share before extraordinary item $ .08 $ .11
Extraordinary item - .02
Net income per share .08 .09
Shares outstanding
Basic 15,153 14,281
Diluted 15,586 14,835
See accompanying notes to consolidated financial statements
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Additional
Common Stock Paid-In Retained
Shares Amounts Capital Earnings Total
Balance, January 1, 1998 15,152,580 $ 152 $ 37,969 $15,735 $53,856
Issuance of common stock 3,250 - 18 - 18
Net income for the three
months ended March 31, 1998 - - - 1,202 1,202
Balance, March 31, 1998 15,155,830 $ 152 $ 37,987 $16,937 $55,076
See accompanying notes to consolidated financial statements
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
1997 1998
Cash flows from operating activities
Net income $ 1,202 $ 1,301
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 1,417 841
Deferred income taxes 20 58
Extraordinary item - 647
Decrease (increase) in:
Accounts receivable (1,161) 1,245
Prepaid expenses and other current assets (338) (556)
Prepaid income taxes 865 -
Miscellaneous other assets (181) (88)
Increase (decrease) in:
Accounts payable 515 840
Purses due horsemen 1,281 942
Uncashed pari-mutuel tickets 220 262
Accrued expenses (476) (267)
Accrued interest 2,096 97
Accrued salaries and wages (121) (70)
Customers deposits 55 139
Taxes other than income payable 235 293
Net cash provided by operating activities 5,629 5,684
Cash flows from investing activities
Expenditures for property, plant and equipment (3,766) (2,456)
Acquisition of business - (16,000)
Increase in prepaid acquisition costs
- (176)
Net cash (used in) investing activities (3,766) (18,632)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Cash flows from financing activities
Proceeds from sale of common stock 18 23,214
Tax benefit related to stock options exercised - 573
Proceeds of long-term debt - 16,500
Principal payments on long-term debt and capital
lease Obligations (16) (19,270)
Increase in unamortized finance costs (164) (167)
Net cash provided by (used in) financing activities (162) 20,850
Net increase in cash and cash equivalents 1,701 7,902
Cash and cash equivalents, at beginning of period 21,854 5,634
Cash and cash equivalents, at end of period $ 23,555 $13,536
See accompanying notes to consolidated financial statements
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. Certain prior year amounts have been reclassified to
conform to current year presentation.
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 March 31, 1998 and the
results of its operations for the three month periods ended March 31,
1998 and 1997. The results of operations experienced for the three
month period ended March 31, 1998 are not necessarily indicative of the
results to be experienced for the fiscal year ended December 31, 1998.
The 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, 1997 annual financial
statements.
2. Wagering Information (in thousands)
Three months ended March 31, 1998
Penn Pocono Charles
National Downs Town Total
Pari-mutuel wagering in-state on
Company live races $ 19,610 $ 915 $ 4,118 $ 24,643
Pari-mutuel wagering on 42,845 31,065 10,153 84,063
simulcasting:
Import simulcasting from other
racetracks 43,620 574 - 44,194
Export simulcasting to out of
Pennsylvania wagering
facilities 86,465 31,639 10,153 128,257
Total pari-mutuel wagering $106,075 $32,554 $ 14,271 $ 152,900
Three months ended March 31, 1997
Penn Pocono Charles
National Downs Town Total
Pari-mutuel wagering in-state on
Company live races $ 22,490 $ - $ - $ 22,490
Pari-mutuel wagering on
simulcasting 43,420 32,196 - 75,436
Import simulcasting from other
racetracks 37,431 - - 37,431
Export simulcasting to out of
Pennsylvania wagering
facilities 80,671 32,196 - 112,867
Total pari-mutuel wagering $103,161 $ 32,196 $ - $135,357
3. Commitments
At March 31, 1998, the Company was contingently obligated under
letters of credit with face amounts aggregating $2,041,000. The
$2,041,000 consisted of $1,786,000 relating to the horsemen's account
balances, $100,000 for Pennsylvania pari-mutuel taxes and $155,000 for
purses.
4. Supplemental Disclosures of Cash Flow Information
Cash paid during the three months ended March 31, 1998 and 1997
for interest was $14,000 and $1,034,000 respectively.
Cash paid during the three months ended March 31, 1998 and 1997
for income taxes was $218,000 and $398,000 respectively.
5. Potential Tennessee Development Project
In June 1997, the Company acquired twelve one-month options to
purchase approximately 100 acres of land in Memphis, Tennessee. Since
such time, the Company, through its subsidiary, Tennessee Downs, Inc.
("Tennessee Downs"), has pursued the development of a harness track and
simulcast facility on this option site, which is located in the
northeastern section of Memphis. The Company submitted an application
to the Tennessee State Racing Commission (the "Tennessee Commission") in
October 1997 for an initial license for the development and operation of
a harness track and OTW facility at this site. A land use plan for the
construction of a 5/8-mile harness track, clubhouse and grandstand area
were approved in October 1997 by the Land Use Hearing Board for the City
of Memphis and County of Shelby. Tennessee Downs was determined to be
financially suitable by the Tennessee Commission and a public comment
hearing before the Tennessee Commission was held in November 1997. In
December 1997, the Company received the necessary zoning and land
development approvals from the Memphis City Council.
In April 1998, the Tennessee Commission granted a contingent
license to the Company which expires the earlier of (i) December 31,
2000 or (ii) the Tennessee Commission's term on June 30, 1998, if such
term is not extended by the Tennessee legislature. On May 1, 1998, the
Tennessee State Legislature voted against extending the life of the
Tennessee Commission, allowing the Tennessee Commission's term to expire
on June 30, 1998. The Company intends to continue its efforts to obtain
an unconditional racing license prior to the June 30, 1998 expiration
from the Tennessee Commission. The Company is also considering legal
action to secure an unconditional racing license that would expire
December 31, 2000. There can be no assurance that the Company's efforts
to obtain an unconditional racing license will be successful. As of May
15, 1998, the Company has invested approximately $500,000 in the
Tennessee Development Project.
6. Subsidiary Guarantors
Summarized financial information as of March 31, 1998 and for the
three months ended March 31, 1998, for Penn National Gaming, Inc.
("Parent"), the Subsidiary Guarantors and Subsidiary Nonguarantors is as
follows:
March 31, 1998
---------------------------------------------------------
Parent Subsidiary Subsidiary
Company Guarantors NonguarantorsEliminationsConsolidated
Current assets $ 16,667 $ 9,936 $ 3,162 $ (1,638) $ 31,403
Net property, plant
and equipment 439 61,714 43,622 - 105,775
Other assets 103,284 146,333 1,370 224,213 26,774
Total 120,390 217,983 48,154 222,575 163,952
Current liabilities 912 11,188 3,857 (1.639) 17,596
Long-term liabilities 80,023 81,116 50,081 119,941 91,279
Shareholders' equity 39,455 125,679 (5,784) 104,273 55,077
Total $120,390 $217,983 $ 48,154 $ 222,575 $ 163,952
Three months ended March 31, 1998
---------------------------------------------------------
Total revenues $ 2,313 $ 20,521 $ 10,969 $ 450 $ 33,353
Total operating
expenses 834 18,477 10,718 450 29,579
Income from operations 1,479 2,044 251 - 3,774
Other income
(expenses) (1,387) 644 (1,166) - (1,909)
Income before income
taxes 92 2,688 (915) - 1,865
Taxes on income (67) 730 - - 663
Net income $ 159 $ 1,958 $ (915) $ - $ 1,202
Summarized financial information as of March 31, 1997, and for the
three months ended March 31, 1997, has not been presented. Separate
financial statements of the Subsidiary Guarantors and Subsidiary
Nonguarantors are not presented because management does not believe such
statements are material to investors.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Result of Operations
Three months ended March 31, 1998 compared to three months ended March
31, 1997
Total revenue increased by approximately $10.5 million or 46.2% from
$22.8 million for the three months ended March 31, 1997 to 33.4 million
for the three months ended March 31, 1998. Charles Town Races, which was
purchased in January of 1997 and began racing operations on April 30,
1997 and video lottery machines operations on September 10, 1997,
accounted for an $11.0 million increase. Revenues at Penn National Race
Course and its OTW facilities decreased by $.6 million due primarily to
a decrease in revenues at its Chambersburg OTW facility resulting from
the opening of the Charles Town Facility. Revenue increased at the
Williamsport OTW facility due to a full period of operations in 1998
compared to 1997 but were offset by a decrease in revenues at the other
facilities. Revenues at Pocono Downs increased by $163,000 due to
increased revenue at the race track facility, the Allentown OTW and the
opening of two new facilities in Hazleton and Carbondale in March 1998.
This increase was offset by a decrease in revenue at the Erie OTW
facility.
Total operating expenses increased by approximately $10.5 million or
a 54.5% from $19.1 million for the three months ended March 31, 1998 to
$29.6 million for the three months ended March 31, 1998. Charles Town
Races accounted for $10.2 million of this increase. Penn National Race
Course and its OTW facility operations accounted for a $508,000 decrease
in total operating expenses primarily due to a decrease in revenue at
its facilities. Pocono Downs had a $58,000 increase in operating
expenses at its facilities due to the opening of the Hazleton and
Carbondale facilities. Corporate expenses increased by $124,000 due to
the hiring of additional staff and the leasing of additional office
space. Depreciation and amortization increased by $556,000 or 64.6% from
$861,000 for the three months ended March 31, 1997 to $1,417,000 for the
three months ended March 31, 1998. The increase was primarily due to
depreciation associated with new facilities in Williamsport (February
1997), Charles Town Races (April 1997) and Charles Town Gaming
(September 1997).
Income from operations increased by approximately $98,000 or 2.7%
from $3.7 million for the three months ended March 31, 1997 to $3.8
million for the three months ended March 31, 1998 due to the factors
described above. Other expenses for the three months ended March 31,
1998 consisted of $1.9 million in net interest expense (primarily due to
the 10 5/8% Senior Notes issued December 1997) compared to $.8 million
in net interest expense for the three months ended March 31, 1997.
Income tax expense decreased approximately $537,000 or 44.7% from
$1.2 million for the three months ended March 31, 1997 to $663,000 for
the three months ended March 31, 1998 due to the decrease in income for
the period.
The extraordinary item in 1997 consisted of a loss on the early
extinquishment of debt in the amount of $383,000 net of income taxes.
The Company used approximately $19 million of the $23 million in
proceeds from the February 1997 equity offering to reduce long-term
debt, resulting in a write-off of $647,000 for fees associated with the
early extinguishment of debt.
Liquidity and Capital Resources
Historically, the Company's primary sources of liquidity and
capital resources have been cash flow from operations, borrowings from
banks and proceeds from issuance of equity securities.
Net cash provided from operating activities for the three months
ended March 31, 1998 ($5.6 million) consisted of net income and non-cash
expenses ($2.6 million), an increase of purses due horsemen ($1.3
million), and other changes in working capital ($1.7 million).
Cash flows used in investing activities ($3.8 million) consisted
of renovation and refurbishment of the Charles Town facility ($.9
million) and $2.9 million in capital expenditures, including
approximately $2.5 million for the completion of the Hazleton and
Carbondale OTW facilities.
Cash flows from financing activities ($162,000) consisted
principally of additional financing fees associated with the sale of
Senior Notes in December 1997.
The Company is subject to possible liabilities arising from the
environmental condition at the landfill adjacent to Pocono Downs.
Specifically, the Company may incur expenses in connection with the
landfill in the future. Such expenses may not be reimbursed by the four
municipalities that are parties to the settlement agreement. The Company
is unable to estimate the amount, if any, that it may be required to
expend.
During the balance of 1998, the Company anticipates capital
expenditures of approximately $4.7 million to complete construction of
two additional OTW facilities. For the existing racetracks and OTW
facilities at Penn National Race Course and Pocono Downs, the Company
plans to spend an additional $500,000 and $350,000, respectively, on
building improvements and equipment. The Company anticipates expending
approximately $.5 million on the refurbishment of the Charles Town
Entertainment Complex (excluding the cost of Gaming Machines). If
approval of the Tennessee license beyond June 30, 1998 is ultimately
received, the Company anticipates expending $9.0 million to complete the
first phase of the project.
The Company entered into a credit facility in December 1997 (the
"Credit Facility") with Bankers Trust Company, as agent. The Credit
Facility provides for, subject to certain terms and conditions, a $12.0
million revolving credit facility and has a five-year term from its
closing. The Credit Facility, under certain circumstances, requires the
Company to make mandatory prepayments and commitment reductions and to
comply with certain covenants, including financial ratios and
maintenance tests. In addition, the Company may make optional
prepayments and commitment reductions pursuant to the terms of the
Credit Facility. Borrowings under the Credit Facility will accrue
interest, at the option of the Company, at either a base rate plus an
applicable margin of up to 2.0% or a eurodollar rate plus an applicable
margin of up to 3.0%. The Credit Facility contains certain covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, incur
guarantee obligations, repay indebtedness or amend debt instruments, pay
dividends, create liens on assets, make investments, make acquisitions,
engage in mergers or consolidations, make capital expenditures, or
engage in certain transactions with subsidiaries and affiliates and
otherwise restrict corporate activities. The Credit Facility is secured
by the assets of the Company and certain of its subsidiaries and
guaranteed by all subsidiaries, except the Charles Town Joint Venture.
In addition, the Credit Facility requires the Company to comply with
certain financial ratios and maintenance tests. As of December 31,
1997, the Company would not have been in compliance with certain
covenants under the Credit Facility had the bank group not granted a
waiver, through March 30, 1998, of certain defaults regarding minimum
consolidated net worth, consolidated cash interest coverage ratio and
minimum leverage ratio. As of May 15, 1998, the bank group granted a
waiver of a default regarding the minimum consolidated net worth and, to
the extent any such other default exists as of March 31, 1998 (which is
to be calculated on or before May 15, 1998) and has amended the above
ratios for the periods going forward. As of May 15, 1998, the Company
had not drawn any portion of the Credit Facility (although a $2.0
million letter of credit was issued against such Credit Facility) and
had adequate capital resources even without consideration of the Credit
Facility.
A portion of the net proceeds of the offering of the 10 5/8% Senior
Notes was used to repay amounts outstanding immediately prior to the
offering under a pre-existing credit facility. The Company currently
estimates that excess proceeds from the offering, cash generated from
operations and available borrowings under the Credit Facility will be
sufficient to finance its current operations, planned capital
expenditure requirements and the costs associated with the Tennessee
development project. There can be no assurance, however, that the
Company will not be required to seek additional capital through public
or private financing, including equity financing, in addition to that
available from the foregoing sources. There can be no assurance that
adequate funding will be available as needed or, if available, on terms
acceptable to the Company.
Item 3. Changes in Information About Market Risk
All of the Company's debt obligations at March 31, 1998, were
fixed rate obligations and Management, therefore, does not believe that
the Company has any material market risk from its debt obligations.
Part II. Other Information
Item 1. Legal Proceedings
In December 1997, Amtote International, Inc.("Amtote"), filed an
action against the Company and the Charles Town Joint Venture in the
United States District Court for the Northern District of West
Virginia. In its complaint, Amtote (i) states that the Company and the
Charles Town Joint Venture allegedly breached certain contracts with
Amtote and its affiliates when it entered into, a wagering services
contract with a third party (the "Third Party Wagering Services
Contract"), and not with Amtote, effective January 1, 1998, (ii) sought
preliminary and injunctive relief through a temporary restraining order
seeking to prevent the Charles Town Joint Venture from (a) entering into
a wagering services contract with a party other than Amtote and (b)
having a third party provide such wagering services, (iii) seeks
declaratory relief that certain contracts allegedly bind the Charles
Town Joint Venture to retain Amtote for wagering services through
September 2004 and (iv) seeks unspecified compensatory damages, legal
fees and costs associated with the action and other legal and equitable
relief as the Court deems just and appropriate. On December 24, 1997, a
temporary restraining order was issued, which prescribes performance
under the Third Party Wagering Contract. On January 14, 1998, a hearing
was held to rule on whether a preliminary injunction should be issued or
whether the temporary restraining order should be lifted, On February
20, 1998, the temporary restraining order was lifted by the court. The
Company intends to pursue legal remedies in order to terminate Amtote
and proceed under the Third Party Wagering Services Contract. The
Company believes that this action, and any resolution thereof, will not
have any material adverse impact upon its financial condition, results,
or the operations of either the Charles Town Joint Venture or the
Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.75 General Contractor Agreement dated April 24, 1998, between
Pennsylvania National Turf Club, Inc. and Warfel
Construction Company.
10.76 First Amendment and Waiver dated May 15, 1998, among
Penn National Gaming, Inc., CoreStates Bank, N.A. and
Bankers Trust Company.
(b) Reports on Form 8-K
None
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.
May 15, 1998 By: /s/ Robert S. Ippolito
Date Robert S. Ippolito, Chief Financial
Officer, Secretary/Treasurer
EXHIBIT INDEX
Exhibit Nos. Description of Exhibits Page No.
10.75 General Contractor Agreement dated April 24,
1998, between Penn National Turf Club and Warfel
Construction Company 21-27
10.76 First Amendment and Waiver dated May 15, 1998,
among Penn National Gaming, Inc., CoreStates
Bank, N.A. and Bankers Trust Company. 28-31