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 <TABLE> PENN NATIONAL GAMING, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) <CAPTION> June 30, 1997 December 31, 1996 (Unaudited) <S> <C> <C> 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 ======== ======= </TABLE> See accompanying notes to consolidated financial statements (4)
<TABLE> PENN NATIONAL GAMING, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) <CAPTION> June 30, 1997 (Unaudited) December 31, 1996 <S> <C> <C> 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 ======== ======= </TABLE> See accompanying notes to consolidated financial statements (5)
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) <CAPTION> Six Months Ended June 30, 1997 1996 <S> <C> <C> 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 ======= ======= </TABLE> See accompanying notes to consolidated financial statements (6)
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) <CAPTION> Three Months Ended June 30, 1997 1996 <S> <C> <C> 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 ======= ======= </TABLE> See accompanying notes to consolidated financial statements (7)
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (In thousands, except share data) (Unaudited) <CAPTION> Common Stock Treasury Stock Additional Paid-In Shares Amounts Shares Amounts Capital Earnings Total <S> <C> <C> <C> <C> <C> <C> <C> 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 ========== ======= ===== ====== ======== ======== ======== </TABLE> See accompanying notes to consolidated financial statements (8)
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) <CAPTION> Six Months Ended June 30, 1997 1996 <S> <C> <C> 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) --------- ------- </TABLE> (9)
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (In thousands) (Unaudited) (Continued) <CAPTION> Six Months Ended June 30, 1997 1996 <S> <C> <C> 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 ======== ======== </TABLE> 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. <TABLE> 2. Wagering Information (in thousands): <CAPTION> Three months ended June 30, 1997 1996 ---- ---- Penn National Pocono Downs Charles Town Total Penn National <S> <C> <C> <C> <C> <C> 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 ======== ======= ========= ======== ======== </TABLE> (11)
PENN NATIONAL GAMING, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) <TABLE> 2. Wagering Information (in thousands) <CAPTION> Three months ended June 30, 1997 1996 ---- ---- Penn National Pocono Downs Charles Town Total Penn National <S> <C> <C> <C> <C> <C> 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 ======== ======= ========= ======== ======== </TABLE> 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)