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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 27, 1996
Penn National Gaming, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 0-24206 23-2234473
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
825 Berkshire Blvd., Suite 203, Wyomissing, PA 19610
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 610-373-2400
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<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. The following
financial statements of The Plains Company are filed as a part of
this Current Report on Form 8-K:
Page No.
--------
Report of Independent Accountants *
Consolidated Balance Sheets at December 31, 1994 *
and 1995 and at September 30, 1996 (unaudited)
Consolidated Statements of Income and Retained *
Earnings for the years ended December 31, 1993,
1994 and 1995 and for the nine months ended
September 30, 1996 (unaudited)
Consolidated Statement of Cash Flows for the years *
ended December 31, 1993, 1994 and 1995 and for the
nine months ended September 30, 1996 (unaudited)
Notes to Consolidated Financial Statements *
(b) PRO FORMA FINANCIAL INFORMATION. The following unaudited
pro forma combined financial information is filed as part of this
Current Report on Form 8-K:
Page No.
--------
Unaudited Pro Forma Consolidated Financial 4
Information
Unaudited Pro Forma Consolidated Balance Sheet 5
Unaudited Pro Forma Consolidated Statement 6
of Income
Notes to Unaudited Pro Forma Consolidated 7
Financial Statements
* Incorporated by reference to the corresponding items included in
Amendment No. 1 to the Company's Registration Statement on Form S-3
(File No. 333-18861) filed with the Securities and Exchange Commission on
January 21, 1997.
2
<PAGE>
(c) EXHIBITS.
Exhibit No. Description
2.1 Amended and Restated Option Agreement dated
as of February 17, 1995 among Charles Town
Races, Inc., Charles Town Racing Limited
Partnership and PNGI Charles Town Gaming
Limited Liability Company. *
2.2 Transfer, Assignment and Assumption Agreement
and Bill of Sale dated January 15, 1997 among
Charles Town Races, Inc., Charles Town Racing
Limited Partnership and PNGI Charles Town
Gaming Limited Liability Company. *
2.3 Closing Agreement dated January 15, 1997
among Charles Town Races, Inc., Charles Town
Racing Limited Partnership and PNGI Charles
Town Gaming Limited Liability Company. *
2.4 Amended and Restated Operating Agreement
dated as of December 31, 1996 among Penn
National Gaming of West Virginia, Inc.,
Bryant Development Company and PNGI Charles
Town Gaming Limited Liability Company. *
2.5 Letter dated January 14, 1997 from Peter M.
Carlino to James A. Reeder. *
2.6 First Amendment and Consent dated as of
January 7, 1997 among the Company, Bankers
Trust Company as Agent, CoreStates Bank, N.A.
as Co-Agent and certain banks party to the
Credit Agreement dated as of November 27,
1996. *
23.1 Consent of Robert Rossi & Co.**
- ----------
* Previously filed.
** Filed herewith.
3
<PAGE>
Unaudited Pro Forma Consolidated Financial Information
The unaudited pro forma consolidated financial statements present pro forma
information for Penn National Gaming, Inc. (the "Company") giving effect to the
acquisition (the "Acquisition") of all of the capital stock of The Plains
Company and all of the limited partnership interests in The Plains Company's
affiliated entities (together, "The Plains Company") for an aggregate purchase
price of $47.0 million plus approximately $525,000 in acquisition-related fees
and expenses. These pro forma consolidated financial statements are based upon
the historical financial statements of the Company and The Plains Company as of
September 30, 1996 and for the year ended December 31, 1995 and for the nine
months ended September 30, 1996.
The accompanying pro forma consolidated balance sheet as of September 30,
1996 has been presented as if the Acquisition had occurred on September 30,
1996. The accompanying pro forma consolidated statements of income for the year
ended December 31, 1995 and for the nine months ended September 30, 1996 have
been presented as if the Acquisition had occurred on January 1, 1995.
The pro forma adjustments are based upon currently available information
and upon certain assumptions described in the accompanying Notes to Unaudited
Pro Forma Consolidated Financial Statements. These assumptions include
assumptions relating to the allocation of the purchase price paid in the
Acquisition to the assets and liabilities of The Plains Company based upon
preliminary estimates of fair values; the actual allocation of such purchase
price may differ from that reflected in the pro forma consolidated financial
statements. The Company's management believes the assumptions underlying the pro
forma consolidated financial statements to be reasonable under the
circumstances.
The pro forma consolidated financial statements are unaudited and are not
necessarily indicative of the results that would have been obtained if the
Acquisition had occurred on the dates indicated, or the results of operations
that may be obtained in the future. These statements are qualified in their
entirety by, and should be read in conjunction with, the historical financial
statements of the Company and The Plains Company.
4
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
COMPANY POCONO DOWNS AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
------------- ------------- ------------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 5,602 $ 4,521 $(46,407)(1) $ 6,758
44,822 (2)
(1,780)(3)
Marketable securities.... -- 6,001 (6,001)(2) --
Other current assets..... 3,362 1,557 -- 4,919
------- ------- -------- ---------
Total current assets... 8,964 12,079 (9,366) 11,677
Property and equipment,
net.................... 19,629 12,712 22,541 (1) 54,882
Intangibles, including
goodwill............... 1,848 -- 11,563 (1) 13,411
Other assets, including
deferred charges....... 3,292 235 (1,118)(1) 4,189
1,780 (3)
------- ------- -------- ---------
Total assets........... $33,733 $25,026 $ 25,400 $ 84,159
======= ======= ======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current maturities of
long-term debt......... $ 222 $ 1,020 $ (1,020)(2) $ 222
Other current
liabilities............ 5,748 3,426 -- 9,174
------- ------- -------- --------
Total current
liabilities.......... 5,970 4,446 (1,020) 9,396
------- ------- -------- --------
Long-term debt........... 80 7,159 39,841 (2) 47,080
Other long-term
liabilities............ 989 -- -- 989
------- ------- -------- --------
Total long-term
liabilities.......... 1,069 7,159 39,841 48,069
------- ------- -------- --------
Minority interest........ -- 1,880 (1,880)(1) --
Total shareholders'
equity (deficit)..... 26,694 11,541 (11,541)(1) 26,694
------- ------- -------- --------
Total liabilities and
shareholders'
equity............... $33,733 $25,026 $ 25,400 $ 84,159
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
5
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------
PRO FORMA
ADJUSTMENTS
COMPANY POCONO DOWNS AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
------------- ------------- ------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Total revenues............ $57,676 $33,854 $ -- $ 91,530
Total operating expenses.. 49,421 27,261 (1,053)(6) 76,490
861 (7)
------- ------- ------- ---------
Income (loss) from
operations.............. 8,255 6,593 192 15,040
Total other income
(expenses).............. 208 (461) (3,995)(4) (3,687)
561 (5)
Minority interest......... -- (1,571) 1,571 (9) --
------- ------- ------- ---------
Income (loss) before
income taxes............ 8,463 4,561 (1,671) 11,353
Taxes on income........... 3,467 1,602 (1,362)(8) 4,367
660 (9)
------- -------- ------- ----------
Net income (loss)......... $ 4,996 $ 2,959 $ (969) $ 6,986
======= ======= ======= ==========
Net income per share...... $ .38 $ .53
======= ==========
Weighted average common
shares outstanding...... 13,104 13,104
======= ==========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------------------
PRO FORMA
ADJUSTMENTS
COMPANY POCONO DOWNS AND COMPANY
HISTORICAL HISTORICAL ELIMINATIONS PRO FORMA
------------- ------------- ------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Total revenues............ $46,474 $25,746 $ -- $ 72,220
Total operating expenses.. 39,237 21,306 (804)(6) 60,340
601 (7)
------- ------- --------- ---------
Income (loss) from
operations.............. 7,237 4,440 203 11,880
Total other income
(expenses).............. 185 (316) (2,996)(4) (2,821)
306 (5)
Minority interest......... -- (874) 874 (9) --
------- ------- --------- ---------
Income (loss) before
income taxes............ 7,422 3,250 (1,613) 9,059
Taxes on income........... 3,016 1,323 (1,045)(8) 3,661
367 (9)
------- ------- ------- ---------
Net income (loss)......... $ 4,406 $ 1,927 $ (935) $ 5,398
======= ======= ======= =========
Net income per share...... $ .32 $ .39
======= =========
Weighted average common
shares outstanding...... 13,754 13,754
======= =========
</TABLE>
The accompanying notes are an integral part of these pro forma consolidated
financial statements.
6
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
POCONO DOWNS ACQUISITION:
The pro forma adjustments are as follows:
(1) The Company purchased Pocono Downs for $47,000,000 and recorded a
charge of $525,000 for estimated acquisition-related costs.
The purchase price of the Pocono Downs Acquisition is reflected as
follows:
(IN THOUSANDS)
-------------
Cost of Pocono Downs Acquisition.......................... $ 47,525
Less: Historical minority interest........................ (1,880)
Pocono Downs historical equity....................... (11,541)
--------
Excess acquisition cost................................... $ 34,104
========
Allocations:
Increase to property and equipment........................ $ 22,541
Intangibles, including goodwill........................... 11,563
--------
$ 34,104
========
The following pro forma adjustment records the Pocono Downs Acquisition:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------
DEBIT CREDIT
------- --------
(IN THOUSANDS)
<S> <C> <C>
Cash............................................................ $46,407
Property and equipment, net..................................... $22,541
Intangibles, including goodwill................................. 11,563
Minority interest............................................... 1,880
Stockholders' equity............................................ 11,541
Other assets, including deferred charges........................ 1,118
</TABLE>
(2) In connection with the Pocono Downs Acquisition, the Company borrowed
$47,000,000. Approximately $8,179,000 of existing Pocono Downs cash and
marketable securities was used to retire its long-term indebtedness.
The following pro forma adjustment reflects the repayment of certain
Pocono Downs indebtedness, as well as the transaction-related
borrowings:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------
DEBIT CREDIT
------- --------
(IN THOUSANDS)
<S> <C> <C>
Current maturities of long-term debt............................ $ 1,020
Long-term debt.................................................. $39,841
Cash............................................................ 44,822
Marketable securities........................................... 6,001
</TABLE>
(3) Fees incurred or to be incurred in connection with the above-mentioned
bank borrowing are estimated to be $1,780,000. The following pro forma
adjustment represents the payment of these fees:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------
DEBIT CREDIT
----- ------
(IN THOUSANDS)
<S> <C> <C>
Other assets, including deferred charges........................ $1,780
Cash............................................................ $1,780
</TABLE>
7
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(4) The purchase price was financed with the above-mentioned bank
borrowing. The following pro forma adjustment records the interest
expense in connection with this borrowing at an assumed interest rate
of 8.5% per annum:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------ ------------------
(IN THOUSANDS)
<S> <C> <C>
Interest expense -- senior debt...................... $3,995 $2,996
</TABLE>
(5) The following pro forma adjustment reflects the elimination of Pocono
Downs, net interest expense relating to the repayment of its
indebtedness:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Eliminate historical net interest expense............ $(561) $(306)
</TABLE>
(6) The following pro forma adjustment reflects the elimination of certain
historical Pocono Downs corporate and administrative expenses,
principally certain duplicative senior management compensation:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Operating expenses other than depreciation and
amortization....................................... $(1,053) $(804)
</TABLE>
(7) The following pro forma adjustment reflects the incurrence of
additional depreciation and amortization:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Operating expenses -- depreciation and
amortization....................................... $861 $601
</TABLE>
(8) Pro forma adjustment to record income tax effect of pro forma income
statement adjustments at estimated effective tax rate of 42%:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Income tax effect.................................... $(1,362) $(1,045)
</TABLE>
(9) Pro forma adjustment to eliminate allocation of income to Pocono Downs'
minority interest and the related tax effect:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1995 SEPTEMBER 30, 1996
------------------- -------------------
(IN THOUSANDS)
<S> <C> <C>
Minority interest.................................... $1,571 $874
Income tax provision................................. 660 367
</TABLE>
8
<PAGE>
SIGNATURE
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 hereunto duly authorized.
Penn National Gaming, Inc.
Date: February 6, 1997 By: /s/ Robert S. Ippolito
------------------------
Robert S. Ippolito
Chief Financial Officer
9
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
2.1 Amended and Restated Option Agreement dated
as of February 17, 1995 among Charles Town
Races, Inc., Charles Town Racing Limited
Partnership and PNGI Charles Town Gaming
Limited Liability Company. *
2.2 Transfer, Assignment and Assumption Agreement
and Bill of Sale dated January 15, 1997 among
Charles Town Races, Inc., Charles Town Racing
Limited Partnership and PNGI Charles Town
Gaming Limited Liability Company. *
2.3 Closing Agreement dated January 15, 1997
among Charles Town Races, Inc., Charles Town
Racing Limited Partnership and PNGI Charles
Town Gaming Limited Liability Company. *
2.4 Amended and Restated Operating Agreement
dated as of December 31, 1996 among Penn
National Gaming of West Virginia, Inc.,
Bryant Development Company and PNGI Charles
Town Gaming Limited Liability Company. *
2.5 Letter dated January 14, 1997 from Peter M.
Carlino to James A. Reeder. *
2.6 First Amendment and Consent dated as of
January 7, 1997 among the Company, Bankers
Trust Company as Agent, CoreStates Bank, N.A.
as Co-Agent and certain banks party to the
Credit Agreement dated as of November 27,
1996. *
23.1 Consent of Robert Rossi & Co.**
- ----------
* Previously filed.
** Filed herewith.
10
<PAGE>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Penn National Gaming, Inc.
825 Berkshire Boulevard
Wyomissing, Pennsylvania
We hereby consent to the inclusion in the current report on Form 8-K/A
of Penn National Gaming, Inc. dated February 6, 1997 to be filed with the
Securities and Exchange Commission of our report dated December 6, 1996,
relating to the consolidated financial statements of The Plains Company as of
December 31, 1994 and 1995, and for each of the years in the three-year period
ended December 31, 1995.
/s/ ROBERT ROSSI & CO.
------------------------
ROBERT ROSSI & CO.
Olyphant, Pennsylvania
February 6, 1997
