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 <TABLE> PENN NATIONAL GAMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) <CAPTION> March 31, December 31, 1998 1997 (Unaudited) ___________ <S> <C> <C> 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 </TABLE>
<TABLE> See accompanying notes to consolidated financial statement PENN NATIONAL GAMING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) <CAPTION> March December 31, 1998 1997 (Unaudited) <S> <C> <C> 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 </TABLE> See accompanying notes to consolidated financial statements
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) <CAPTION> Three Months Ended March 31, 1997 1998 <S> <C> <C> 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 </TABLE>
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) (Unaudited) <CAPTION> <S> <C> <C> 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 </TABLE> See accompanying notes to consolidated financial statements
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands, except share data) (Unaudited) <CAPTION> Additional Common Stock Paid-In Retained Shares Amounts Capital Earnings Total <S> <C> <C> <C> <C> <C> 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 </TABLE> See accompanying notes to consolidated financial statements
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) <CAPTION> Three Months Ended March 31, 1997 1998 <S> <C> <C> 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) </TABLE>
<TABLE> PENN NATIONAL GAMING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) <CAPTION> <S> <C> <C> 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 </TABLE> 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. <TABLE> 2. Wagering Information (in thousands) <CAPTION> Three months ended March 31, 1998 Penn Pocono Charles National Downs Town Total <S> <C> <C> <C> <C> 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 </TABLE>
<TABLE> Three months ended March 31, 1997 Penn Pocono Charles National Downs Town Total <CAPTION> <S> <C> <C> <C> <C> 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 </TABLE> 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: <TABLE> <CAPTION> March 31, 1998 --------------------------------------------------------- Parent Subsidiary Subsidiary Company Guarantors NonguarantorsEliminationsConsolidated <S> <C> <C> <C> <C> <C> 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 </TABLE> <TABLE> <CAPTION> Three months ended March 31, 1998 --------------------------------------------------------- <S> <C> <C> <C> <C> <C> 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 </TABLE> 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