Penn National Gaming Reports Second Quarter Revenue of $652.1 Million and Adjusted EBITDA of $82.1 Million, Inclusive of $104.6

  Penn National Gaming Reports Second Quarter Revenue of $652.1 Million and   Adjusted EBITDA of $82.1 Million, Inclusive of $104.6 Million of Rent   Expense  - Establishes 2014 Third Quarter Guidance and Updates 2014 Full Year Guidance                                       -  Business Wire  WYOMISSING, Pa. -- July 24, 2014  Penn National Gaming, Inc. (PENN: Nasdaq):                       Conference Call:  Today, July 24, 2014 at 10:00 a.m. ET   Dial-in number:    212/231-2907   Webcast:           www.pngaming.com   Replay information provided below                                                              Penn National Gaming, Inc. (PENN: Nasdaq) (“Penn National Gaming”, “Penn” or the “Company”) today reported second quarter operating results for the three months ended June 30, 2014, as summarized below.  Summary of Second Quarter Results  (in millions, except        Three Months Ended per share data)                                       June 30,                          2014 Actual   2014 Guidance (3)   2013 Actual Net revenues (1)          $  652.1     $    640.5         $  761.4   Adjusted EBITDAR (1)        186.7         183.2           214.3   Rental expense related      (104.6 )       (104.3   )       -       to Master Lease Adjusted EBITDA (2)         82.1          78.9            214.3   Less: Impact of stock compensation, impairment losses, insurance recoveries and deductible charges, depreciation and            (79.3  )       (73.4    )       (226.5 ) amortization, gain/loss on disposal of assets, interest expense - net, income taxes and other expenses Net income (loss)         $  2.8       $    5.5           $  (12.2  )                                                           Diluted earnings (loss)   $  0.03      $    0.06          $  (0.16  ) per common share (4)             Adjusted EBITDAR is adjusted EBITDA excluding rent expense associated       with our Master Lease with Gaming and Leisure Properties, Inc. (“GLPI”). (1)   Results for the three months ended June 30, 2013 included net revenues       of $46.1 million and adjusted EBITDAR of $12.7 million related to       Hollywood Casino Perryville and Hollywood Casino Baton Rouge that were       contributed to GLPI on November 1, 2013 as part of the spin-off.       Adjusted EBITDA is income (loss) from operations, excluding the impact       of stock compensation, impairment losses, insurance recoveries and       deductible charges, depreciation and amortization and gain or loss on       disposal of assets. Adjusted EBITDA is also inclusive of income or loss       from unconsolidated affiliates, with our share of the non-operating (2)   items added back for our joint venture in Kansas Entertainment, LLC       (“Kansas Entertainment”). A reconciliation of net income (loss) per       accounting principles generally accepted in the United States of America       (“GAAP”) to adjusted EBITDA and adjusted EBITDAR, as well as income       (loss) from operations per GAAP to adjusted EBITDA and adjusted EBITDAR,       is included in the accompanying financial schedules.       The guidance figures in the table above present the guidance Penn (3)   National Gaming provided on April 24, 2014 for the three months ended       June 30, 2014, adjusted to add back our share of the impact of       non-operating items for our joint venture in Kansas Entertainment.       Since the Company reported a loss from operations for the three months       ended June 30, 2013, it was required by GAAP to use basic (4)   weighted-average common shares outstanding, rather than diluted       weighted-average common shares outstanding, when calculating diluted       loss per common share.                                                                                Review of Second Quarter 2014 Results vs. Guidance                                             Three Months                                               Ended                                               June 30, 2014                                               Pre-tax     After-tax                                               (in thousands) Income, per guidance (1)                      $ 14,854    $    5,494                                                                               EBITDA variances: Positive operating segment variance             2,184           1,028 excluding Argosy Casino Sioux City Argosy Casino Sioux City negative               (1,438 )        (891     ) variance Positive corporate overhead due to lower       2,507        1,512     liability based stock compensation Total EBITDA variances from guidance            3,253           1,649                                                                               Impairment charge for Lawrenceburg vessel       (4,560 )        (2,830   ) Other                                           (617   )        (373     ) Tax variance                                   -            (1,160   ) Income, as reported                           $ 12,930   $    2,780                                                                                                                                 Three Months Ended                                               June 30,                                               2014        2014 Guidance (1) Diluted earnings per common share             $ 0.03       $    0.06 Argosy Casino Sioux City shortfall              0.01            - Liability based stock compensation              (0.02  )        - Impairment charge for Lawrenceburg vessel       0.03            - Tax variance                                   -            (0.02    ) Total                                         $ 0.05     $    0.04                  The guidance figures in the tables above present the guidance Penn (1)   National Gaming provided on April 24, 2014 for the three months ended       June 30, 2014.         Timothy J. Wilmott, President and Chief Executive Officer of Penn National Gaming, commented, “Second quarter consolidated revenue, adjusted EBITDAR and adjusted EBITDA exceeded guidance as our property-level operating results benefited from a somewhat more stable operating environment and continued strong margins.  “Our Southern Plains and West segments generated slight year-over-year improvements in adjusted EBITDAR margins despite weaker than expected results at Argosy Casino Sioux City. Adjusted EBITDAR margin for our East/Midwest segment declined by approximately 100 basis points year-over-year as Hollywood Casino at Charles Town Races and Hollywood Casino Lawrenceburg continued to experience competitive pressures. We remain highly focused on growing property-level adjusted EBITDAR as we actively manage property level expenses, fine tune our gaming mix, continue to build up customer databases at recently opened facilities, refine marketing efforts and adjust food, beverage and entertainment offerings. Reflecting these strategies to improve operating efficiencies, consolidated second quarter 2014 adjusted EBITDAR margin rose to 28.62%, representing a 47 basis point year-over-year improvement.  “Excluding the operations of Argosy Casino Sioux City, Penn National Gaming’s second quarter adjusted EBITDA from its operating segments exceeded guidance by approximately $2.2 million. Net income and diluted earnings per common share were impacted by a higher tax rate and a one-time pre-tax charge of approximately $4.6 million which was not contemplated in guidance, related to our decision to divest the former Hollywood Casino Lawrenceburg riverboat. Once the vessel is sold, our annual carrying costs of approximately $350,000 will be eliminated. In addition, with the implementation of several new cost management measures, we are on track to realize full year corporate overhead expense reductions of approximately 21% after excluding $25 million of spin-off costs incurred last year.  “Throughout the quarter we aggressively pursued our rights through the Iowa courts to prevent the loss of jobs associated with the near-term closure of Argosy Casino Sioux City. While we are very disappointed by the decisions in Iowa to date, Argosy Casino Sioux City was one of the Company’s smallest facilities in terms of its annual adjusted EBITDA contribution. In addition, our previous guidance did not include any earnings contribution from this facility for the second half of 2014 and the closure will result in a $6.2 million reduction in our annual rent pursuant to the Master Lease with GLPI.  “Penn National Gaming is making continued progress on its expansion and development pipeline, which we anticipate will generate solid returns on invested capital while further diversifying our broad-based property portfolio. Construction is nearing completion on our Dayton and Austintown video lottery terminal facilities in Ohio, which will feature 1,000 and 850 gaming devices, respectively. Pending final regulatory approval, we have scheduled the grand opening of Hollywood Gaming at Dayton Raceway for August 28 and expect to begin harness racing on the new all-weather racetrack on October 3. Located in North Dayton and convenient to both I-75 and I-70, Hollywood Gaming at Dayton Raceway will offer guests a range of entertainment, dining and pari-mutuel experiences in an exciting, high energy setting, as well as a grandstand that includes more than 1,000 enclosed seats and a simulcast theater.  “We are proud of the significant economic opportunities that we are creating in Dayton and Austintown. With nearly 500 permanent team members, Hollywood Gaming at Dayton Raceway will be a significant regional employer and we believe the facility can serve as a catalyst for additional economic development in the area. In Austintown, we recently held a highly successful job fair and continue to anticipate completing staffing and announcing a September 2014 grand opening date shortly.  “In addition to the Dayton opening, on August 28, we also plan to open our new, $26 million, 154 room hotel at Zia Park Casino. We believe the addition of lodging at this facility will deliver attractive returns on invested capital as it will offer an amenity that will allow us to further build relationships with key customers from eastern New Mexico and western Texas and extended stays.  “In Massachusetts, construction is proceeding on our $225 million Plainridge Park Casino. During the quarter, the Massachusetts Supreme Judicial Court issued a decision permitting a referendum on the November statewide ballot that would repeal the 2011 gaming legislation. Current public opinion polls indicate that Massachusetts voters recognize the importance of the gaming act and that residents understand and appreciate the substantial economic and employment benefits that gaming will bring to the state. We intend to actively engage in a broad-based coalition effort to support the gaming act and are continuing as planned with the construction of our facility, which will generate 1,000 construction related jobs and employ over 500 people, of which 90% are planned to be hired from the local area. We estimate that, by the time of the referendum, Penn National will have invested approximately $104 million in the project, inclusive of the $42 million purchase price and $25 million license fee. Overall, the project represents a significant opportunity for Massachusetts, its residents and our shareholders and we look forward to an anticipated June 2015 opening of this facility.  “Construction is also underway on the $360 million Hollywood Casino-branded facility on the Jamul Indian Village’s land in trust, which is located approximately twenty miles east of downtown San Diego, directly off of State Route 94. Hollywood Casino Jamul-San Diego is expected to open in mid-2016 and would be the closest casino to downtown San Diego. When complete, the property will include a three-story gaming and entertainment facility of approximately 200,000 square feet, over 1,700 slot machines, 50 live table games, multiple restaurants, bars and lounges and 1,900 parking spaces. As with all of our developments, the project is expected to create significant new construction and permanent jobs in the region and will enable the Jamul Indian Village of California to become economically self-sufficient. Penn National Gaming expects to participate in the success of the project through management and branding fees, as well as interest payments on funds advanced to develop the project.  “As previously announced, during the second quarter we formed a strategic alliance with The Cordish Companies, developer and operator of the highly successful Maryland Live!, to pursue the development of ‘Live! Hotel & Casino New York,’ a world-class gaming facility and resort proposed for Orange County, New York with a budget in excess of $750 million. Our plans are expected to include an upscale boutique hotel with over 300 rooms and luxury suites; a destination spa and fitness center; over 3,000 slot machines and more than 250 live table games; several marquee restaurants including Bobby Flay Steak, Smorgasburg, The Cheesecake Factory, Fornino, and Bobby’s Burger Palace; as well as a live entertainment venue and a spacious conference center. The proposed facility will be owned and managed by a 50/50 joint venture which brings together two of the industry’s most financially sound companies with proven gaming facility development and operations skills as well as unrivalled records of developing and operating highly successful regional gaming facilities in competitive environments. Our proposal is one of 17 applications for up to four casino licenses in three separate regions of New York State and licenses are expected to be awarded later this year.  “Overall, second quarter results reflect our continued success in efficiently operating our broadly diversified portfolio of new and well-maintained regional gaming facilities. We believe our proven management team, development pipeline and recently completed new facility developments and property upgrades provide Penn National Gaming with growth opportunities differentiated from our peer group and we look forward to the near-term expansion of our property portfolio with the opening of our newest facilities in Dayton and Austintown this quarter.”                                                                                Development and Expansion Projects The table below summarizes Penn National Gaming’s current facility development projects:                                                                                                                 Amount                               New           Planned     Expended   Expected  Project/Scope              Gaming      Total      through   Opening                               Positions     Budget      June 30,   Date                                                         2014                                      (Unaudited, in                                                    millions)                                                          Zia Park Casino (NM) - Addition of 154 room, five story hotel which will include six suites,                                          Opening a breakfast room, a        -           $26        $15.3     August 28, business center, meeting                                          2014 and exercise rooms, as well as additional surface parking.                                                          Dayton Raceway (OH) - Construction began in May 2013 at the site of an abandoned Delphi Automotive plant, with our new Hollywood themed facility featuring a new                                          Opening 5/8 mile harness           1,000       $165 (1)   $15.9     August 28, racetrack and                              (2)                    2014 simulcasting and the ability to hold up to 1,500 video lottery terminals, as well as various restaurants, bars and other amenities.                                                          Mahoning Valley Race Track (OH) - Construction began in May 2013 at Austintown’s Centrepointe Business Park, with our new Hollywood themed facility featuring a new                   $161 (1)               September one-mile thoroughbred      850         (2)        $15.9     2014 racetrack and simulcasting and the ability to hold up to 1,000 video lottery terminals, as well as various restaurants, bars and other amenities.                                                          Plainridge Park Casino (MA) - Construction is underway at the site of the Plainridge Racecourse for our new gaming operation, which will be integrated with    1,250       $225 (3)   $69.3     June 2015 the existing live harness racing and simulcasting, featuring 1,250 slot machines, as well as various dining and entertainment options.                                                          Jamul Indian Village project (CA) - Construction is underway at the site for this new Hollywood Casino branded gaming operation which Penn will manage. The      2,100       $360 (4)   $24.1     Mid-2016 facility is anticipated to feature over 1,700 slot machines, 50 live table games including poker, multiple restaurants, bars and lounges.  (1) Includes a relocation fee of $75 million based on the present value of the contractual obligation, which is $7.5 million upon opening, and 18 additional semi-annual payments of $4.8 million beginning one year after opening. For the license fee, we paid $10 million in the second quarter of 2014, which is included in the amount expended to date, and anticipate paying the remaining license fee as follows: 1) $15 million upon opening and 2) $25 million on the one year anniversary of the commencement of gaming. (2) GLPI is responsible for certain construction related real estate costs associated with these projects that are not included in the budgeted figures above. (3) Includes a $25 million license fee, which was paid in March 2014 and $42 million purchase price, both of which are included in the amount expended to date. (4) As disclosed previously, this project will be accounted for as a loan.                                                                                Financial Guidance  Reflecting current operating trends, the table below sets forth 2014 third quarter and full year guidance targets for financial results, based on the following assumptions:    *Horseshoe Baltimore opens in early September 2014, impacting Hollywood     Casino at Charles Town Races;   *Miami Valley Gaming in Lebanon, Ohio, opened in December 2013 and     continues to impact Hollywood Casino Lawrenceburg and Hollywood Casino     Columbus;   *Belterra Park in Cincinnati, opened in May 2014, impacts Hollywood Casino     Lawrenceburg;   *Hollywood Gaming at Dayton Raceway opens on August 28, 2014, impacting     Hollywood Casino Columbus;   *Hollywood Gaming at Mahoning Valley Race Track opens in September 2014;   *Operations at Argosy Casino Sioux City cease in the near term;   *A full year contribution from the Company’s management contract for Casino     Rama;   *Full year 2014 rent expense of $419.3 million, with $104.0 million in the     third quarter of 2014 which contemplates additional rent related to the     planned openings of Hollywood Gaming at Dayton Raceway and Hollywood     Gaming at Mahoning Valley Race Track and the closure of Argosy Casino     Sioux City;   *Full year 2014 pre-opening expenses of $8.2 million, with $5.4 million in     the third quarter of 2014;   *Excludes costs that will be incurred related to the November Massachusetts     referendum;   *Depreciation and amortization charges in 2014 of $178.7 million, with     $39.0 million in the third quarter of 2014;   *Estimated non-cash stock compensation expenses of $10.4 million for 2014,     with $2.7 million in the third quarter of 2014;   *LIBOR is based on the forward yield curve;   *A diluted share count of approximately 89.1 million shares for the full     year 2014; and   *There will be no material changes in applicable legislation, regulatory     environment, world events, weather, recent consumer trends, economic     conditions, competitive landscape (other than listed above) or other     circumstances beyond our control that may adversely affect the Company’s     results of operations.  (in millions,    Three Months Ending except per      September 30,            Full Year Ending December 31, share data)                                            2014          2014 Prior                2014        2013        Updated                   2013 Actual                  Guidance     Actual                     Guidance                                            Guidance      (1) Net revenues    $ 633.5    $ 714.4    $ 2,547.8   $ 2,513.8   $ 2,918.8   Adjusted         164.4     185.0     690.9      686.2      776.1     EBITDAR Rental expense related to       (104.0 )   -         (419.3  )   (418.1  )   (69.5    ) Master Lease Adjusted         60.4      185.0     271.6      268.1      706.6     EBITDA Less: Impact of stock compensation, impairment losses, insurance recoveries and deductible charges, depreciation and              (55.1  )   (143.7 )   (269.6  )   (257.7  )   (1,500.9 ) amortization, gain/loss on disposal of assets, interest expense - net, income taxes, loss on early extinguishment of debt and other expenses Net income      $ 5.3      $ 41.3     $ 2.0       $ 10.4      $ (794.3   ) (loss)                                                               Diluted earnings        $ 0.06     $ 0.40     $ 0.02      $ 0.12      $ (10.17   ) (loss) per common share  (1) The guidance figures in the table above present the guidance Penn National Gaming provided on April 24, 2014 for the full year ended December 31, 2014, adjusted to add back our share of the impact of non-operating items for our joint venture in Kansas Entertainment.     PENN NATIONAL GAMING, INC. AND SUBSIDIARIES  Segment Information – Operations  (in thousands) (unaudited)                                                                     NET REVENUES                  ADJUSTED EBITDAR                      Three Months Ended June 30,   Three Months Ended June 30,                      2014           2013          2014           2013 East/Midwest         $  361,357      $ 430,943     $  112,309      $ 138,394 (1) West (2)                59,033         61,442         17,000         17,591 Southern                224,726        258,761        73,008         83,606 Plains (3) Other (4)              7,030         10,225        (15,647  )    (25,271 ) Total                $  652,146      $ 761,371     $  186,670     $ 214,320                                                                                                                                                               NET REVENUES                  ADJUSTED EBITDAR                      Six Months Ended June 30,     Six Months Ended June 30,                      2014            2013          2014            2013 East/Midwest         $  710,805      $ 889,492     $  213,959      $ 285,939 (1) West (2)                119,953        123,594        35,556         35,514 Southern                448,483        527,105        146,949        168,312 Plains (3) Other (4)              13,985        19,426        (32,135  )    (51,838 ) Total                $  1,293,226    $ 1,559,617   $  364,329     $ 437,927                                                                                       The East/Midwest reportable segment consists of the following       properties: Hollywood Casino at Charles Town Races, Hollywood Casino       Bangor, Hollywood Casino at Penn National Race Course, Hollywood Casino       Lawrenceburg, Hollywood Casino Toledo and Hollywood Casino Columbus. It       also includes the Company’s Casino Rama management service contract and       the Mahoning Valley and Dayton Raceway projects in Ohio, which the       Company anticipates completing in the third quarter of 2014, as well as       the Plainville project in Massachusetts, which the Company expects to (1)  open in the second quarter of 2015. Current year results do not include       results for Hollywood Casino Perryville as it was contributed to GLPI on       November 1, 2013. This property had net revenues of $25.9 million and       $47.6 million and adjusted EBITDAR of $5.9 million and $9.3 million for       the three and six months ended June 30, 2013, respectively. Our       East/Midwest segment results for the three and six months ended June 30,       2014 included development costs of $1.6 million and $2.8 million,       respectively, whereas results for the six months ended June 30, 2013       included preopening charges of $0.2 million.              The West reportable segment consists of the following properties: Zia (2)   Park Casino and the M Resort, as well as the Jamul development project,       which the Company anticipates completing in mid-2016.              The Southern Plains reportable segment consists of the following       properties: Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy       Casino Alton, Argosy Casino Riverside, Argosy Casino Sioux City,       Hollywood Casino Tunica, Hollywood Casino Bay St. Louis, Boomtown       Biloxi, and Hollywood Casino St. Louis, and includes the Company’s 50%       investment in Kansas Entertainment, which owns the Hollywood Casino at       Kansas Speedway. Starting with the second quarter of 2014, adjusted (3)   EBITDA and adjusted EBITDAR from our joint venture in Kansas       Entertainment exclude our share of the impact of non-operating items       (such as depreciation and amortization expense). The prior year amounts       were restated to conform to this new presentation. Additionally, current       year results do not include results for Hollywood Casino Baton Rouge as       it was contributed to GLPI on November 1, 2013. This property had net       revenues of $20.2 million and $41.1 million and adjusted EBITDAR of $6.8       million and $13.7 million for the three and six months ended June 30,       2013, respectively.              The Other category consists of the Company’s standalone racing       operations, namely Beulah Park, Raceway Park, Rosecroft Raceway,       Sanford-Orlando Kennel Club, and the Company’s joint venture interests       in Sam Houston Race Park, Valley Race Park, and Freehold Raceway, as       well as the Company’s 50% joint venture with the Cordish Companies in       New York. Results in the prior year also included the Company’s       Bullwhackers property which was sold in July 2013. If the Company is       successful in obtaining gaming operations at these locations, they would       be assigned to one of the Company’s regional executives and reported in       their respective reportable segment. The Other category also includes       the Company’s corporate overhead costs, which was $14.4 million and       $30.1 million for the three and six months ended June 30, 2014,       respectively, as compared to corporate overhead costs of $25.7 million       and $52.9 million for the three and six months ended June 30, 2013, (4)   respectively. Corporate overhead costs decreased by $11.3 million and       $22.8 million for the three and six months ended June 30, 2014,       respectively, as compared to the corresponding period in the prior year,       primarily due to lower payroll costs of $4.0 million and $8.9 million       primarily attributed to lower liability based stock compensation charges       of $1.9 million and $5.9 million, as well as decreased compensation       costs due to the fact that certain members of Penn’s executive       management team transferred their employment to GLPI as part of the       spin-off, lower spin-off transaction costs and development costs of $4.3       million and $7.8 million, lower lobbying costs of $1.3 million and $1.8       million, transition service fees received from GLPI of $0.4 million and       $1.2 million, and a reduction in various other items due to cost       containment measures. Additionally, the Other category includes $0.9       million for the three and six months ended June 30, 2014 in costs from       our New York joint venture.    Reconciliation of Net income (loss) (GAAP) to Adjusted EBITDA and Adjusted EBITDAR  PENN NATIONAL GAMING, INC. AND SUBSIDIARIES  (in thousands) (unaudited)                                                                            Three Months Ended          Six Months Ended                          June 30,                    June 30,                          2014         2013          2014         2013 Net income (loss)        $ 2,780       $ (12,180 )   $ 7,317       $ 53,091 Income tax provision       10,150        38,567        16,950        81,334 Other                      1,823         (2,402  )     192           (3,066  ) Income from unconsolidated             (1,473  )     (3,821  )     (3,956  )     (5,542  ) affiliates Interest income            (790    )     (343    )     (1,257  )     (605    ) Interest expense          10,892      27,060      22,187      54,984   Income from              $ 23,382      $ 46,881      $ 41,433      $ 180,196 operations Loss (gain) on             3             285           (47     )     2,675 disposal of assets Insurance deductible       -             2,500         -             2,500 charges Impairment losses          4,560         71,846        4,560         71,846 Charge for stock           2,517         5,450         5,096         11,701 compensation Depreciation and           47,183        80,615        94,549        157,686 amortization Income from unconsolidated             1,473         3,821         3,956         5,542 affiliates Non-operating items       2,939       2,922       5,860       5,781    for Kansas JV Adjusted EBITDA          $ 82,057      $ 214,320     $ 155,407     $ 437,927 Rental expense related to Master         104,613     -           208,922     -        Lease Adjusted EBITDAR         $ 186,670    $ 214,320    $ 364,329    $ 437,927     Reconciliation of Income (loss) from operations (GAAP) to Adjusted EBITDA and Adjusted EBITDAR  PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Segment Information (in thousands) (unaudited)                                                                                   Three Months Ended June 30, 2014                  East/Midwest  West      Southern  Other        Total                                                   Plains Income (loss) from              $  17,003     $ 7,426   $ 17,970  $ (19,017 )  $ 23,382 operations Charge for stock                 -             -          -          2,517         2,517 compensation Impairment            4,560         -          -          -             4,560 losses Depreciation and                   25,911        1,692      17,573     2,007         47,183 amortization (Gain) loss on disposal of           (30     )     -          39         (6      )     3 assets Income (loss) from                  -             -          2,621      (1,148  )     1,473 unconsolidated affiliates Non-operating items for           -          -        2,939    -          2,939    Kansas JV (1) Adjusted           $  47,444      $ 9,118    $ 41,142   $ (15,647 )   $ 82,057 EBITDA Rental expense related to          64,865     7,882    31,866   -          104,613  Master Lease Adjusted          $  112,309   $ 17,000  $ 73,008  $ (15,647 )  $ 186,670  EBITDAR                                                                                      Three Months Ended June 30, 2013                  East/Midwest  West      Southern     Other        Total                                                   Plains Income (loss) from              $   97,819    $ 14,260  $ (30,619 )  $ (34,579 )  $ 46,881 operations Charge for stock                  -            -          -             5,450         5,450 compensation Impairment             -            -          71,846        -             71,846 losses Insurance deductible             -            -          2,500         -             2,500 charges Depreciation and                    40,469       3,321      32,730        4,095         80,615 amortization Loss (gain) on disposal of            106          10         180           (11     )     285 assets Income (loss) from                   -            -          4,047         (226    )     3,821 unconsolidated affiliates Non-operating items for            -          -        2,922      -          2,922    Kansas JV (1) Adjusted          $   138,394   $ 17,591  $ 83,606    $ (25,271 )  $ 214,320  EBITDA                                                                                      Six Months Ended June 30, 2014                  East/Midwest  West      Southern   Other        Total                                                     Plains Income (loss) from              $  26,605     $ 15,482  $ 39,197   $ (39,851 )  $ 41,433 operations Charge for stock                 -             -          -           5,096         5,096 compensation Impairment            4,560         -          -           -             4,560 losses Depreciation and                   52,734        3,241      34,824      3,750         94,549 amortization (Gain) loss on disposal of           (117    )     65         17          (12     )     (47     ) assets Income (loss) from                  -             -          5,074       (1,118  )     3,956 unconsolidated affiliates Non-operating items for           -          -        5,860     -          5,860     Kansas JV (1) Adjusted              83,782        18,788     84,972      (32,135 )     155,407 EBITDA Rental expense related to          130,177    16,768   61,977    -          208,922   Master Lease Adjusted          $  213,959   $ 35,556  $ 146,949  $ (32,135 )  $ 364,329   EBITDA                                                                                    Six Months Ended June 30, 2013                  East/Midwest  West      Southern   Other        Total                                                   Plains Income (loss) from              $   203,646   $ 26,307  $ 21,419   $ (71,176 )  $ 180,196 operations Charge for stock                  -            -          -           11,701        11,701 compensation Impairment             -            -          71,846      -             71,846 losses Insurance deductible             -            -          2,500       -             2,500 charges Depreciation and                    82,157       6,627      60,714      8,188         157,686 amortization Loss (gain) on disposal of            136          2,580      268         (309    )     2,675 assets Income (loss) from                   -            -          5,784       (242    )     5,542 unconsolidated affiliates Non-operating items for            -          -        5,781     -          5,781    Kansas JV (1) Adjusted          $   285,939   $ 35,514  $ 168,312  $ (51,838 )  $ 437,927  EBITDA           Starting with the second quarter of 2014, adjusted EBITDA and adjusted      EBITDAR from our joint venture in Kansas Entertainment exclude our share 1)   of the impact of non-operating items (such as depreciation and      amortization expense). Prior periods were restated to conform to this new      presentation.                                                                                                                                                                  PENN NATIONAL GAMING, INC. AND SUBSIDIARIES  Consolidated Statements of Operations  (in thousands, except per share data) (unaudited)                                                                    Three Months Ended June     Six Months Ended June 30,                      30,                      2014         2013          2014           2013                                                                                 Revenues Gaming               $ 576,158     $ 679,829     $ 1,146,841     $ 1,397,754 Food, beverage         110,574       121,044       215,444         242,904 and other Management            3,105       3,667       5,563         6,714      service fee Revenues               689,837       804,540       1,367,848       1,647,372 Less promotional      (37,691 )    (43,169 )    (74,622   )    (87,755   ) allowances Net revenues          652,146     761,371     1,293,226     1,559,617                                                                                  Operating expenses Gaming                 284,107       341,889       570,184         703,907 Food, beverage         80,403        88,910        157,941         179,175 and other General and            107,898       128,730       215,637         264,307 administrative Rental expense related to             104,613       -             208,922         - Master Lease Depreciation and       47,183        80,615        94,549          157,686 amortization Impairment             4,560         71,846        4,560           71,846 losses Insurance deductible            -           2,500       -             2,500      charges Total operating       628,764     714,490     1,251,793     1,379,421  expenses Income from           23,382      46,881      41,433        180,196    operations                                                                                 Other income (expenses) Interest expense       (10,892 )     (27,060 )     (22,187   )     (54,984   ) Interest income        790           343           1,257           605 Income from unconsolidated         1,473         3,821         3,956           5,542 affiliates Other                 (1,823  )    2,402       (192      )    3,066      Total other           (10,452 )    (20,494 )    (17,166   )    (45,771   ) expenses                                                                                 Income from operations             12,930        26,387        24,267          134,425 before income taxes Income tax            10,150      38,567      16,950        81,334     provision Net income           $ 2,780      $ (12,180 )   $ 7,317        $ 53,091     (loss)                                                                                 Earnings (loss) per common share: Basic earnings (loss) per           $ 0.03        $ (0.16   )   $ 0.08          $ 0.55 common share Diluted earnings (loss) per           $ 0.03        $ (0.16   )   $ 0.08          $ 0.51 common share                                                                                 Weighted-average common shares outstanding: Basic                  78,458        78,306        78,189          77,932 Diluted                88,936        78,306        88,813          103,932                       PENN NATIONAL GAMING, INC. AND SUBSIDIARIES          Supplemental information          (in thousands) (unaudited)                                                                                                June 30, 2014         December 31, 2013                                                                       Cash and cash                  $  251,299            $    292,995         equivalents                                                                       Bank Debt                      $  735,110            $    748,777         Notes                             300,000                 300,000         Other long term                  20,689       (1)       2,015         obligations         Total Debt (2)                 $  1,055,799          $    1,050,792           Other long term obligations include contingent purchase price 1)   consideration measured at its estimated fair value of $18.5 million that      is payable over ten years to the previous owners of Plainridge      Racecourse.      Although our joint venture in Kansas Entertainment is accounted for as an 2)   equity method investment and is not consolidated, this joint venture had      no debt outstanding at June 30, 2014 or December 31, 2013.        During the second quarter of 2014, Penn refined its definition of adjusted EBITDA and adjusted EBITDAR to add back our share of the impact of non-operating items (such as depreciation and amortization) at our joint ventures which have gaming operations. At this time, Kansas Entertainment, the operator of Hollywood Casino at Kansas Speedway, is Penn’s only joint venture that meets this definition. Kansas Entertainment does not currently have, nor has it ever had, any indebtedness. Attached below is a quarterly summary of the Company’s historical and revised adjusted EBITDA that Penn reported over the past five quarters.                   Three months ended                    March 31,   December  September  June 30,   March 31,                    2014         31, 2013   30, 2013    2013        2013                                                                               Adjusted EBITDA as          $  70,429    $ 80,779   $ 182,070   $ 211,398   $ 220,748 historically reported                                                                               Non-operating items for             2,921       2,913      2,902       2,922       2,859 Kansas JV                                                                 Adjusted EBTIDA as          $  73,350    $ 83,692   $ 184,972   $ 214,320   $ 223,607 revised                                                                                Diluted Share Count Methodology  In connection with the spin-off, Penn National Gaming completed its exchange and repurchase transaction with an affiliate of Fortress Investment Group, LLC (“Fortress”) on October 11, 2013, which resulted in the repurchase of $627 million of its Series B Preferred Stock and the issuance of 8,624 shares of Series C Preferred Stock, which is equivalent to 8,624,000 common shares upon sale by Fortress to a third party.  Reconciliation of GAAP to Non-GAAP Measures  Adjusted EBITDA and adjusted EBITDAR are used by management as the primary measure of the Company’s operating performance. We define adjusted EBITDA as earnings before interest, taxes, stock compensation, debt extinguishment charges, impairment charges, insurance recoveries and deductible charges, depreciation and amortization, gain or loss on disposal of assets, and other income or expenses. Adjusted EBITDA is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment. Adjusted EBITDAR is adjusted EBITDA excluding rent expense associated with our Master Lease agreement with GLPI. Adjusted EBITDA and adjusted EBITDAR have economic substance because they are used by management as a performance measure to analyze the performance of our business, and are especially relevant in evaluating large, long-lived casino projects because they provide a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We also present adjusted EBITDA and adjusted EBITDAR because they are used by some investors and creditors as an indicator of the strength and performance of ongoing business operations, including our ability to service debt, fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value companies within our industry. In addition, gaming companies have historically reported adjusted EBITDA as a supplement to financial measures in accordance with GAAP. In order to view the operations of their casinos on a more stand-alone basis, gaming companies, including us, have historically excluded from their adjusted EBITDA calculations certain corporate expenses that do not relate to the management of specific casino properties. However, adjusted EBITDA and adjusted EBITDAR are not a measure of performance or liquidity calculated in accordance with GAAP. Adjusted EBITDA and adjusted EBITDAR information is presented as a supplemental disclosure, as management believes that it is a widely used measure of performance in the gaming industry, is the principal basis for the valuation of gaming companies, and that it is considered by many to be a better indicator of the Company’s operating results than net income (loss) per GAAP. Management uses adjusted EBITDA and adjusted EBITDAR as the primary measures of the operating performance of its segments, including the evaluation of operating personnel. Adjusted EBITDA and adjusted EBITDAR should not be construed as alternatives to operating income, as indicators of the Company’s operating performance, as alternatives to cash flows from operating activities, as measures of liquidity, or as any other measures of performance determined in accordance with GAAP. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in adjusted EBITDA and adjusted EBITDAR. It should also be noted that other gaming companies that report adjusted EBITDA information may calculate adjusted EBITDA in a different manner than the Company and therefore, comparability may be limited.  A reconciliation of the Company’s net income (loss) per GAAP to adjusted EBITDA and adjusted EBITDAR, as well as the Company’s income (loss) from operations per GAAP to adjusted EBITDA and adjusted EBITDAR, is included above. Additionally, a reconciliation of each segment’s income (loss) from operations to adjusted EBITDA and adjusted EBITDAR is also included above. On a segment level, income (loss) from operations per GAAP, rather than net income (loss) per GAAP is reconciled to adjusted EBITDA and adjusted EBITDAR due to, among other things, the impracticability of allocating interest expense, interest income, income taxes and certain other items to the Company’s segments on a segment by segment basis. Management believes that this presentation is more meaningful to investors in evaluating the performance of the Company’s segments and is consistent with the reporting of other gaming companies.  Conference Call, Webcast and Replay Details  Penn National Gaming is hosting a conference call and simultaneous webcast at 10:00 am ET today, both of which are open to the general public. The conference call number is 212/231-2907. Please call five minutes in advance to ensure that you are connected prior to the presentation. Questions will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.pngaming.com. Please allow 15 minutes to register and download and install any necessary software. A replay of the call can be accessed for thirty days on the Internet at www.pngaming.com.  This press release, which includes financial information to be discussed by management during the conference call and disclosure and reconciliation of non-GAAP financial measures, is available on the Company’s web site, www.pngaming.com in the “Investors” section (select link for “Press Releases”).  About Penn National Gaming  Penn National Gaming owns, operates or has ownership interests in gaming and racing facilities with a focus on slot machine entertainment. At June 30, 2014, the Company operated twenty-seven facilities in eighteen jurisdictions, including Florida, Illinois, Indiana, Iowa, Kansas, Maine, Massachusetts, Maryland, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia, and Ontario. At June 30, 2014, in aggregate, Penn National Gaming’s operated facilities featured approximately 30,900 gaming machines, 790 table games and 2,900 hotel rooms.  Forward-looking Statements  This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward looking terminology such as “expects,” “believes,” “estimates,” “projects,” “intends,” “plans,” “seeks,” “may,” “will,” “should” or “anticipates” or the negative or other variations of these or similar words, or by discussions of future events, strategies or risks and uncertainties, including future plans, strategies, performance, developments, acquisitions, capital expenditures, and operating results. Actual results may vary materially from expectations. Although the Company believes that our expectations are based on reasonable assumptions within the bounds of our knowledge of our business, there can be no assurance that actual results will not differ materially from our expectations. Meaningful factors that could cause actual results to differ from expectations include, but are not limited to, risks related to the following: our ability to obtain timely regulatory approvals required to own, develop and/or operate our facilities, or other delays or impediments to completing our planned acquisitions or projects, including favorable resolution of any related litigation, including the ongoing appeal by the Ohio Roundtable addressing the legality of video lottery terminals in Ohio and litigation against the Ohio Racing Commission concerning opposition to relocating the Company’s Toledo racetrack to the Dayton area; our ability to secure federal, state and local permits and approvals necessary for our construction projects; construction factors, including delays, unexpected remediation costs, local opposition, organized labor, and increased cost of labor and materials; our ability to maintain agreements with our horsemen, pari-mutuel clerks and other organized labor groups; with respect to the proposed Jamul project near San Diego, California, particular risks associated with financing a project of this type, sovereign immunity, local opposition (including several pending lawsuits), and building a complex project on a relatively small parcel; the passage of state, federal or local legislation (including referenda) that would expand, restrict, further tax, prevent or negatively impact operations in or adjacent to the jurisdictions in which we do or seek to do business (such as a smoking ban at any of our facilities); with respect to our Massachusetts project, the ultimate location of the other gaming facilities in the state and, more significantly, the outcome of the referendum to repeal the gaming legislation in Massachusetts which could result in substantial litigation as well as a significant loss to our investment in the state; with respect to our joint venture project in New York, risks related to our ability to secure local support for our site, licensing from the state and the extent and location of other applications and competition; the effects of local and national economic, credit, capital market, housing, and energy conditions on the economy in general and on the gaming and lodging industries in particular; the activities of our competitors and the rapid emergence of new competitors (traditional, internet and sweepstakes based and taverns); increases in the effective rate of taxation at any of our properties or at the corporate level; our ability to identify attractive acquisition and development opportunities and to agree to terms with partners/municipalities for such transactions; the costs and risks involved in the pursuit of such opportunities and our ability to complete the acquisition or development of, and achieve the expected returns from, such opportunities; our expectations for the continued availability and cost of capital; the outcome of pending legal proceedings; changes in accounting standards; our dependence on key personnel; the impact of terrorism and other international hostilities; the impact of weather; and other factors as discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, each as filed with the United States Securities and Exchange Commission. The Company does not intend to update publicly any forward-looking statements except as required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this press release may not occur.  Contact:  Penn National Gaming, Inc. Saul V. Reibstein, 610-401-2049 Chief Financial Officer or JCIR Joseph N. Jaffoni / Richard Land, 212-835-8500 penn@jcir.com  
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