Penn National Gaming Reports Fourth Quarter Diluted EPS from Continuin

    Business Editors/Gambling Writers

    WYOMISSING, Pa.--(BUSINESS WIRE)--Feb. 3, 2005--Penn National Gaming, Inc. (NASDAQ:PENN)

Conference Call: Today, February 3 at 10:00 a.m. EST Dial-in numbers: 212/896-6009 or 415/904-7342 Webcast: www.fulldisclosure.com

Replay information provided below

    Penn National Gaming, Inc. (NASDAQ:PENN) today reported record fourth quarter results for the period ended December 31, 2004.

Summary of Q4 and 2004 Results

(In millions, Three Months Ended Twelve Months Ended except per-share data) December 31, December 31, ------------------- -------------------- 2004# 2003# 2004# 2003# -------- -------- -------- -------- Net revenues $ 276.7 $ 257.4 $1,140.7 $1,013.0 EBITDA * $ 67.1 $ 57.8 $ 283.0 $ 237.8 Income from continuing operations $ 49.9 $ 41.6 $ 213.7 $ 176.5 Net income from continuing operations $ 18.8 $ 13.1 $ 87.3 $ 62.2 (Loss) from discontinued operations - HCS Shreveport+ $ (2.1) $ (4.2) $ (18.3) $ (13.1) Income from discontinued operations - Pocono Downs and its OTWs+ $ 0.2 $ 0.3 $ 2.4 $ 2.4 Net income $ 16.9 $ 9.2 $ 71.4 $ 51.5 Diluted earnings per share from continuing operations $ 0.44 $ 0.32 $ 2.09 $ 1.54 Diluted (Loss) per share from discontinued operations + $ (0.04) $ (0.09) $ (0.38) $ (0.27) Diluted earnings per share $ 0.40 $ 0.23 $ 1.71 $ 1.27

* EBITDA is income from continuing operations excluding charges for depreciation and amortization and gain/loss on disposal of assets, and is inclusive of earnings from joint venture. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release.

+ Hollywood Casino - Shreveport is accounted for as a discontinued operation effective in the second quarter 2004. As a result of Penn National's sale of Pocono Downs Racetrack and its affiliated off-track wagering facilities, the Company is accounting for these facilities as discontinued operations effective July 1, 2004. The income/loss and diluted loss per share figures from discontinued operations are net of taxes.

# In the three months ended December 31, 2004 Penn National Gaming recorded several items that had the net effect of reducing both diluted earnings per share from continuing operations and diluted earnings per share by $0.01. Without the effect of these items, Penn National would have reported 2004 fourth quarter diluted earnings per share from continuing operations of $0.45 and diluted earnings per share of $0.41. The table below summarizes these items:

(In millions, Three Months Ended Twelve Months Ended except per-share data) December 31, 2004 December 31, 2004 ------------------- -------------------- Pre-tax After tax Pre-tax After tax amount diluted amount diluted of item EPS of item EPS effect effect Charles Town Races & Slots insurance recovery $ 1.3 $ 0.02 $ 1.3 $ 0.02 West Virginia tax rebate for racing capital expenditures $ 1.5 $ 0.02 - - Reversal of accrual at Casino Rama $ 0.4 $ 0.01 $ 0.4 $ 0.01 Loss on early extinguishment of debt for the accelerated principal payments made on credit facility term loans $ (3.8) $ (0.06) $ (3.8) $ (0.06) Total effect on results from continuing operations $ (0.6) $ (0.01) $ (2.1) $ (0.03)

    Commenting on the results, Peter M. Carlino, Chief Executive Officer of Penn National said, "Penn National generated record fourth quarter operating results with our portfolio of regional gaming properties again generating revenues, diluted EPS from continuing operations and EBITDA that exceeded the Company's guidance. Results for the quarter were driven by higher year-over-year EBITDA contributions, excluding the items noted above, at six of our eight gaming properties, including the management contract.
    "At Charles Town Races & Slots(TM), the benefit of continued capital investments in the facility resulted in fourth quarter year-over-year EBITDA growth of approximately 20% without the effect of the insurance settlement and tax rebate. Our second largest property, Hollywood Casino(R) Aurora, recorded a fourth quarter year-over-year revenue gain of 8% although, as expected, EBITDA declined approximately 7% as the fourth quarter of 2004 was impacted by the Illinois tax increase implemented in the third quarter of 2003. Our Bay St. Louis property recorded a 12.2% year-over-year decline in EBITDA attributable to the highly competitive regional destination guest segment of its business.
    "Reflecting the Company's strong overall operating trends, Penn National paid down $129.7 million of principal on our credit facility throughout 2004, including $50.0 million in the fourth quarter.
    "Penn National was also active during the fourth quarter in charting and advancing its plans for future expansion and financial growth. The Company has developed the broadest range of growth opportunities in its history including those related to the expansion of existing properties including Charles Town Races & Slots, the proposed development of racinos in Pennsylvania and Maine and the pending acquisition of Argosy Gaming Company which brings with it several prospects for growth through both expansion and development. Importantly, each of these projects is complex and subject to regulatory approvals, yet all are moving forward on schedule. Barring unanticipated delays, we currently expect to begin recognizing the financial benefits of the Argosy acquisition and further enhancements at Charles Town later this year.
    "To briefly update the status of Penn National's primary growth catalysts, in Pennsylvania, we have continued to develop and refine our design proposal for a completely new gaming and racing facility at Penn National Race Course. We have determined that the location, with a population of nearly 900,000 adults within a one hour drive, warrants a larger facility with more amenities and features than originally contemplated. As such, we now expect the budget to approximate $240 million, inclusive of the $50 million gaming license fee and the purchase of 2,000 slot machines. We continue to expect the new Penn National Race Course slots facility to open in early 2006 and intend to deploy in Pennsylvania many of the same disciplined project development, management and expansion techniques that have resulted in Charles Town emerging as one of the nation's premier racinos.
    "At Charles Town, we started 2005 strongly as during New Year's week the facility recorded its first week of gaming revenue in excess of $10 million. Investment at Charles Town continues and construction will soon be complete allowing for the placement of an additional 200 slot machines in 2005 and 500 slot machines in 2006, bringing the machine count to 4,500 units. During 2005 we will be constructing a small detached hotel, a new buffet, and an additional parking structure to accommodate 2,700 vehicles.
    "In Maine, the state has named a technology provider for the slot monitoring system and last week the legislature conducted hearings on legislation that would enable the state Gambling Control Board to protect the confidentiality of personal and private information and non-public corporate information in the license application process, which will allow Penn National to submit the final pieces of information required to secure an unconditional license to develop Bangor Historic Track and operate approximately 1,500 slot machines. This will be the State's first and only gaming facility with an anticipated opening in mid-2006, subject to the required licensing of slot machine distributors and employees, and finalization of rules necessary for slots to become operational, all of which is expected in 2005.
    "Throughout 2004, we maintained a very disciplined approach to evaluating acquisition growth opportunities and their potential benefit to Penn National based on several criteria including return on investment, further revenue, geographic and earnings diversification and, most importantly, the potential to enhance shareholder value. As such, we were delighted to reach an agreement last November to acquire Argosy Gaming as it meets these criteria on each and every level. Last month, Argosy stockholders voted to approve the transaction and our legal, finance and operations teams are addressing the remaining conditions and regulatory approvals required to complete the acquisition. With committed financing, we continue to expect the transaction to close in the second half of this year.
    "We are initiating preliminary 2005 guidance today based solely on our existing continuing operations and we expect to update this guidance following the completion of the Argosy transaction."

    Financial Guidance

    The following table sets forth current guidance targets for continuing operations (e.g. excluding Hollywood Casino - Shreveport and Pocono Downs Racetrack and its affiliated off-track wagering facilities) for the first quarter and full year 2005 based on the following:

(in millions, Q1'05E Q1'04A FY'05E FY'04A except per share data)

Net revenues $ 292.8 $ 285.4 $1,219.3 $1,140.9 EBITDA* $ 70.1 $ 69.8 $ 295.5 $ 283.0 Less depreciation and amortization, gain/loss on disposal of assets, interest expense - net, income taxes, and other expenses $ 56.2 $ 48.7 $ 201.7 $ 195.7 Net income from continuing operations $ 13.9 $ 21.1 $ 93.8 $ 87.3 Diluted earnings per share from continuing operations $ 0.33 $ 0.52 $ 2.17 $ 2.09 After tax diluted earnings per share effect of early extinguishment of debt, Charles Town insurance recovery and Casino Rama reversal $ 0.23 - $ 0.23 $ 0.03 Adjusted diluted earnings per share# $ 0.56 $ 0.52 $ 2.40 $ 2.12

* EBITDA is net income from continuing operations plus depreciation and amortization, gain/loss on disposal of assets, interest expense - net, income taxes, other expense, loss on change in fair value of interest rate swaps and loss on early extinguishment of debt and is inclusive of earnings from joint venture.

# Adjusted diluted earnings per share is diluted earnings per share from continuing operations excluding the loss on early extinguishment of debt (Q1 '05E, FY '05E and FY '04A) as well as Charles Town insurance recovery and Casino Rama reversal (FY '04A).

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information - Continuing Operations (In thousands) (unaudited)

REVENUES EBITDA (1) Three Months Ended December 31,

2004 2003 2004 2003

Charles Town Races $100,055 $ 83,802 $ 29,472 $ 21,957 -------- -------- -------- -------- Casino Rouge 26,429 25,622 7,808 7,077 -------- -------- -------- -------- Casino Magic - Bay St. Louis 24,071 26,050 4,022 4,584 -------- -------- -------- -------- Boomtown Biloxi - Biloxi 16,607 16,793 3,814 3,069 -------- -------- -------- -------- Bullwhackers 7,781 6,543 862 434 -------- -------- -------- -------- Casino Rama Management Contract 4,327 3,856 4,411 3,578 -------- -------- -------- -------- Penn National Race Course and OTWs 13,206 13,518 439 939 -------- -------- -------- -------- Bangor Historic Track 32 - (39) - -------- -------- -------- -------- Hollywood Casino - Aurora 57,731 53,520 17,041 18,338 -------- -------- -------- -------- Hollywood Casino - Tunica 26,449 27,685 5,117 4,875 -------- -------- -------- -------- Earnings from Pennwood Racing, Inc. (New Jersey) - - 337 192 -------- -------- -------- -------- Corporate overhead - - (6,176) (7,246) -------- -------- -------- -------- Total $276,688 $257,389 $ 67,108 $ 57,797 -------- -------- -------- --------

REVENUES EBITDA (1) Twelve Months Ended December 31,

2004 2003 2004 2003

Charles Town Races $ 400,129 $ 329,147 $ 114,363 $ 90,337 ---------- ---------- -------- -------- Casino Rouge 108,409 106,940 33,763 30,311 ---------- ---------- -------- -------- Casino Magic - Bay St. Louis 106,236 106,641 20,719 22,418 ---------- ---------- -------- -------- Boomtown Biloxi - Biloxi 70,391 72,644 15,901 15,285 ---------- ---------- -------- -------- Bullwhackers 32,035 26,467 4,776 2,674 ---------- ---------- -------- -------- Casino Rama Management Contract 16,277 13,726 15,485 12,343 ---------- ---------- -------- -------- Penn National Race Course and OTWs 56,141 58,847 5,055 6,045 ---------- ---------- -------- -------- Bangor Historic Track 978 - (219) - ---------- ---------- -------- -------- Hollywood Casino - Aurora(2) 232,584 201,938 69,009 62,926 ---------- ---------- -------- -------- Hollywood Casino - Tunica(2) 117,509 96,648 25,875 16,769 ---------- ---------- -------- -------- Earnings from Pennwood Racing, Inc. (New Jersey) - - 1,634 1,825 ---------- ---------- -------- -------- Corporate overhead - - (23,338) (23,096) ---------- ---------- -------- -------- Total $1,140,689 $1,012,998 $ 283,023 $ 237,837 ---------- ---------- -------- --------

(1) EBITDA is income from continuing operations excluding charges for depreciation and amortization and gain/loss on disposal of assets, and is inclusive of earnings from joint venture. EBITDA does not represent net income or cash flows from continuing operations as those terms are defined by generally accepted accounting principles. EBITDA does not necessarily indicate whether cash flows will be sufficient to fund cash needs. A reconciliation of net income (GAAP) to EBITDA as well as income from operations (GAAP) to EBITDA, is included in the financial schedules accompanying this release. (2) Hollywood Casino - Aurora, Hollywood Casino - Tunica and Hollywood Casino - Shreveport were acquired by Penn National Gaming on March 3, 2003 and accounted for as of March 1, 2003. As a result of Penn National's decision not to participate in the bidding process for the sale of Hollywood Casino - Shreveport, the Company is now accounting for this facility as a discontinued operation (effective April 1, 2004). In the twelve months ended December 31, 2003, Hollywood Casino - Aurora revenues were $248.1 million and EBITDA was $75.7 million and Hollywood Casino - Tunica revenues were $113.0 million and EBITDA was $19.3 million. For the purposes of comparison, the 2003 revenue and EBITDA figures for Hollywood Casino - Aurora and Hollywood Casino - Tunica for two months of the first quarter 2003 (under former ownership) have been restated to conform with Penn National's presentation.

Reconciliation of EBITDA to Net Income (GAAP)

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

(In thousands) (unaudited)

Three Months Ended Twelve Months Ended December 31 December 31, ------------------- ------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Total EBITDA $ 67,108 $ 57,797 $283,023 $237,837 Earnings from joint venture (337) (192) (1,634) (1,825) Depreciation and amortization (16,372) (15,920) (65,785) (57,471) Loss on disposals (499) (104) (1,824) (2,006) --------- --------- --------- --------- Income from continuing operations 49,900 41,581 213,780 176,535 Interest expense (18,130) (20,106) (75,720) (76,616) Interest income 794 381 2,093 1,649 Earnings from joint venture 337 192 1,634 1,825 Other 404 (1,250) (392) (1,899) (Loss) on change in fair value of interest rate swaps - - - (527) (Loss) on early extinguishment of debt (3,767) - (3,767) (1,310) Taxes on income (10,738) (7,728) (50,288) (37,463) --------- --------- --------- --------- Net income from continuing operations 18,800 13,070 87,340 62,194 --------- --------- --------- --------- (Loss) from discontinued operations, net of taxes (1,935) (3,878) (15,856) (10,723) --------- --------- --------- --------- Net income $ 16,865 $ 9,192 $ 71,484 $ 51,471 ========= ========= ========= =========

Reconciliation of Income From Operations (GAAP) To EBITDA

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information Including Corporate Overhead - Continuing Operations (In thousands) (unaudited) Three Months Ended December 31, 2004

Income from Depreciation (Gain)/loss Earnings EBITDA continuing and on from operations Amortization disposal joint of assets venture ----------- ------------ ----------- -------- -------- Charles Town Races $ 25,286 $ 4,181 $ 5 $ - $29,472 Casino Rouge 5,365 1,901 542 - 7,808 Casino Magic - Bay St. Louis 1,345 2,650 27 - 4,022 Boomtown Biloxi - Biloxi 2,045 1,731 38 - 3,814 Bullwhackers 436 431 (5) - 862 Casino Rama Management Contract 4,411 - - - 4,411 Penn National Race Course and OTWs 52 387 - - 439 Bangor Historic Track (81) 42 - - (39) Earnings from Pennwood Racing, Inc. - - - 337 337 Hollywood Casino - Aurora 14,780 2,372 (111) - 17,041 Hollywood Casino - Tunica 3,189 1,928 - - 5,117 Corporate overhead (6,928) 749 3 - (6,176) ---------- ----------- ---------- ------- ------- Total $ 49,900 $ 16,372 $ 499 $ 337 $67,108 ---------- ----------- ---------- ------- -------

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information Including Corporate Overhead - Continuing Operations (In thousands) (unaudited) Three Months Ended December 31, 2003

Income from Depreciation (Gain)/loss Earnings EBITDA continuing and on from operations Amortization disposal joint of assets venture ----------- ------------------------ -------- -------- Charles Town Races $ 17,318 $ 4,639 $ - $ - $21,957 Casino Rouge 5,362 1,712 3 - 7,077 Casino Magic - Bay St. Louis 2,173 2,393 18 - 4,584 Boomtown Biloxi - Biloxi 1,616 1,369 84 - 3,069 Bullwhackers 131 303 - - 434 Casino Rama Management Contract 3,578 - - - 3,578 Penn National Race Course and OTWs 561 378 - - 939 Earnings from Pennwood Racing, Inc. - - - 192 192 Hollywood Casino - Aurora 15,693 2,657 (12) - 18,338 Hollywood Casino - Tunica 3,135 1,740 - - 4,875 Corporate overhead (7,986) 729 11 - (7,246) ---------- ----------- ---------- ------- ------- Total $ 41,581 $ 15,920 $ 104 $ 192 $57,797 ---------- ----------- ---------- ------- -------

Reconciliation of Income From Operations (GAAP) To EBITDA

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information Including Corporate Overhead - Continuing Operations (In thousands) (unaudited) Twelve Months Ended December 31, 2004

Income from Depreciation (Gain)/loss Earnings EBITDA continuing and on from operations Amortization disposal joint of assets venture ----------- ------------ ----------- -------- --------- Charles Town Races $ 96,031 $ 18,061 $ 271 $ - $114,363 Casino Rouge 25,543 7,358 862 - 33,763 Casino Magic - Bay St. Louis 9,996 10,422 301 - 20,719 Boomtown Biloxi - Biloxi 8,739 6,717 445 - 15,901 Bullwhackers 3,206 1,567 3 - 4,776 Casino Rama Management Contract 15,485 - - - 15,485 Penn National Race Course and OTWs 3,552 1,503 - - 5,055 Bangor Historic Track (351) 132 - (219) Earnings from Pennwood Racing, Inc. - - - 1,634 1,634 Hollywood Casino - Aurora 59,372 9,773 (136) - 69,009 Hollywood Casino - Tunica 18,525 7,282 68 - 25,875 Corporate overhead (26,318) 2,970 10 - (23,338) ---------- ----------- ---------- ------- -------- Total $ 213,780 $ 65,785 $ 1,824 $ 1,634 $283,023 ---------- ----------- ---------- ------- --------

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES Property Information Including Corporate Overhead - Continuing Operations (In thousands) (unaudited) Twelve Months Ended December 31, 2003

Income from Depreciation (Gain)/loss Earnings EBITDA continuing and on from operations Amortization disposal joint of assets venture ----------- ------------ ----------- -------- --------- Charles Town Races $ 72,929 $ 16,570 $ 838 $ - $ 90,337 Casino Rouge 23,650 6,444 217 - 30,311 Casino Magic - Bay St. Louis 12,333 9,586 499 - 22,418 Boomtown Biloxi - Biloxi 9,766 5,319 200 - 15,285 Bullwhackers 1,626 1,006 42 - 2,674 Casino Rama Management Contract 12,343 - - - 12,343 Penn National Race Course and OTWs 4,510 1,535 - - 6,045 Earnings from Pennwood Racing, Inc. - - - 1,825 1,825 Hollywood Casino - Aurora (1) 54,547 8,393 (14) - 62,926 Hollywood Casino - Tunica (1) 11,041 5,684 44 - 16,769 Corporate overhead (26,210) 2,934 180 - (23,096) ---------- ----------- ---------- ------- -------- Total $ 176,535 $ 57,471 $ 2,006 $ 1,825 $237,837 ---------- ----------- ---------- ------- --------

(1) Hollywood Casino - Aurora, Hollywood Casino - Tunica and Hollywood Casino - Shreveport were acquired by Penn National Gaming on March 3, 2003 and accounted for as of March 1, 2003. Hollywood Casino - Shreveport is accounted for as a discontinued operation effective April 1, 2004.

PENN NATIONAL GAMING, INC. AND SUBSIDIARIES

Summary Consolidated Statement Of Income (In thousands, except per share data) (unaudited)

Three Months Ended Twelve Months Ended December 31 December 31, ------------------- ----------------------- 2004 2003 2004 2003 --------- --------- ----------- ----------- Revenues: Gaming $240,923 $222,970 $ 992,088 $ 871,218 Racing 11,589 11,982 49,948 52,075 Management service fee 4,327 3,856 16,277 13,726 Food, beverage, and other revenue 36,056 33,771 147,991 131,915 --------- --------- ----------- ----------- Gross revenues 292,895 272,579 1,206,304 1,068,934 --------- --------- ----------- ----------- Less: Promotional allowances (16,207) (15,190) (65,615) (55,936) --------- --------- ----------- -----------

Net revenues 276,688 257,389 1,140,689 1,012,998 --------- --------- ----------- -----------

Operating Expenses: Gaming 132,931 121,654 544,746 475,407 Racing 8,950 9,660 38,997 41,752 Food, beverage, and other expenses 24,557 23,187 97,712 92,663 General and administrative 43,978 45,387 179,669 169,170 Depreciation and amortization 16,372 15,920 65,785 57,471 --------- --------- ----------- ----------- Total operating expenses 226,788 215,808 926,909 836,463 --------- --------- ----------- -----------

Income from continuing operations 49,900 41,581 213,780 176,535 --------- --------- ----------- -----------

Other income (expense): Interest expense (18,130) (20,106) (75,720) (76,616) Interest income 794 381 2,093 1,649 Earnings from joint venture 337 192 1,634 1,825 Other 404 (1,250) (392) (1,899) Loss on change in fair value of interest rate swaps - - - (527) Loss on early extinguishment of debt (3,767) - (3,767) (1,310) --------- --------- ----------- ----------- Total other expenses (20,362) (20,783) (76,152) (76,878) --------- --------- ----------- -----------

Income from continuing operations before income taxes 29,538 20,798 137,628 99,657

Taxes on income 10,738 7,728 50,288 37,463 --------- --------- ----------- -----------

Net income from continuing operations 18,800 13,070 87,340 62,194 --------- --------- ----------- -----------

(Loss) from discontinued operations, net of taxes (1,935) (3,878) (15,856) (10,723) --------- --------- ----------- -----------

Net income $ 16,865 $ 9,192 $ 71,484 $ 51,471 ========= ========= =========== ===========

Earnings per share - basic: Income from continuing operations $ 0.46 $ 0.33 $ 2.17 $ 1.57 Discontinued operations, net of taxes (0.05) (0.10) (0.39) (0.27) --------- --------- ----------- ----------- Basic net income per share $ 0.41 $ 0.23 $ 1.78 $ 1.30 ========= ========= =========== ===========

Earnings per share - diluted: Income from continuing operations $ 0.44 $ 0.32 $ 2.09 $ 1.54 Discontinued operations, net of taxes (0.04) (0.09) (0.38) (0.27) --------- --------- ----------- ----------- Diluted net income per share $ 0.40 $ 0.23 $ 1.71 $ 1.27 ========= ========= =========== ===========

Weighted shares outstanding: Basic 40,669 39,250 40,255 39,473 ========= ========= =========== =========== Diluted 42,284 40,457 41,754 40,612 ========= ========= =========== ===========

    Reconciliation of Non-GAAP Measures to GAAP

    EBITDA or earnings before interest, taxes, depreciation and amortization, loss on change in fair value of interest rate swaps and gain/loss on disposal of assets and inclusive of earnings from joint venture, is not a measure of performance or liquidity calculated in accordance with generally accepted accounting principles. EBITDA information is presented as a supplemental disclosure because management believes that it is a widely used measure of such performance in the gaming industry. In addition, management uses EBITDA as the primary measure of the operating performance of its properties, including the evaluation of operating personnel. EBITDA should not be construed as an alternative to operating income, as an indicator of the Company's operating performance, or as an alternative to cash flows from operating activities, as a measure of liquidity, or as any other measure of performance determined in accordance with generally accepted accounting principles. The Company has significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayments, which are not reflected in EBITDA. It should also be noted that other gaming companies that report EBITDA information may calculate EBITDA in a different manner than the Company. Adjusted diluted earnings per share is presented solely as a supplemental disclosure because management believes that it is a widely used measure of performance and a principal basis for the valuation of gaming companies, as this measure is considered by many to be a better measure of the Company's operating results than diluted net income per share (GAAP). A reconciliation of the Company's EBITDA to net income (GAAP), as well as the Company's EBITDA to income from continuing operations (GAAP), is included in the financial schedules accompanying this release.
    A reconciliation of each property's EBITDA to income from continuing operations is included in the financial schedules accompanying this release. On a property level, EBITDA is reconciled to income from continuing operations (GAAP), rather than net income (GAAP), because of, among other things, the impracticability of allocating interest expense, interest income, income taxes and certain other items to the Company's various properties on a property-by-property basis. Management believes that this presentation is more meaningful to investors in evaluating the performance of the Company's individual properties and is consistent with the reporting of other gaming companies.

    Penn National is hosting a conference call and simultaneous webcast at 10:00 am EST today, both of which are open to the general public. The conference call number is 212/896-6009 or 415/904-7342; please call five minutes in advance to ensure that you are connected prior to the presentation. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at www.fulldisclosure.com; allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed until February 17, by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the replay is 21228148. A replay of the call can also be accessed for thirty days on the Internet via www.fulldisclosure.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 "Recent News" section.

    About Penn National Gaming

    Penn National Gaming owns and operates casino and horse racing facilities with a focus on slot machine entertainment. The Company presently operates eleven facilities in nine jurisdictions including West Virginia, Illinois, Louisiana, Mississippi, Pennsylvania, New Jersey, Colorado, Maine and Ontario. In aggregate, Penn National's facilities feature over 13,000 slot machines, 260 table games, 1,286 hotel rooms and 417,000 square feet of gaming floor space.
    The company is currently in the process of completing the disposition of the Shreveport, Louisiana Hollywood Casino. In November 2004, Penn National Gaming agreed to acquire all of the outstanding shares of Argosy Gaming Company, which it expects to complete in the second half of 2005.

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from expectations. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from the Company's expectations. Meaningful factors which could cause actual results to differ from expectations include, but are not limited to, risks related to the following: the passage of state, federal or local legislation that would expand, restrict, further tax or prevent gaming operations in the jurisdictions in which we do business; our ability to successfully complete the proposed acquisition of Argosy Gaming Company and to successfully integrate its operations; the activities of our competitors; increases in our effective rate of taxation at any of our properties or at the corporate level; successful completion of capital projects at our gaming and pari-mutuel facilities; the existence of attractive acquisition candidates and the costs and risks involved in the pursuit of those acquisitions; our ability to maintain regulatory approvals for our existing businesses and to receive regulatory approvals for our new businesses (including without limitation the issuance of final operators' licenses in Maine and Pennsylvania); delays in the process of finalizing gaming regulations and the establishment of related governmental infrastructure in Pennsylvania and Maine; the maintenance of agreements with our horsemen and pari-mutuel clerks; our dependence on key personnel; the impact of terrorism and other international hostilities; the availability and cost of financing; the outcome and financial impact from the event of default under the indentures governing the Hollywood Casino Shreveport notes and other factors as discussed in the Company's filings with the United States Securities and Exchange Commission. In addition, consummation of Penn National's acquisition of Argosy Gaming is subject to several conditions including the approval of various governmental entities, including certain gaming regulatory authorities to which the Companies are subject. Furthermore, the Company does not intend to update publicly any forward-looking statements except as required by law. The cautionary advice in this paragraph is permitted by the Private Securities Litigation Reform Act of 1995.

--30--TM/ny*

CONTACT: Penn National Gaming, Inc. William J. Clifford, 610-373-2400 or Jaffoni & Collins Incorporated Joseph N. Jaffoni / Richard Land, 212-835-8500 penn@jcir.com

KEYWORD: NEW JERSEY INDUSTRY KEYWORD: SPORTS ENTERTAINMENT GAMING EARNINGS CONFERENCE CALLS SOURCE: Penn National Gaming, Inc.

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