Subsidiary Guarantors

6 Months Ended

Jun. 30, 2011

Subsidiary Guarantors.

Subsidiary Guarantors

11.  Subsidiary Guarantors

Under the terms of the senior secured credit facility, many of Penn’s subsidiaries are guarantors under the agreement. Each of the subsidiary guarantors is directly or indirectly 100% owned by Penn. In addition, the guarantees provided by such subsidiaries under the terms of the senior secured credit facility are full and unconditional, joint and several. There are no significant restrictions within the senior secured credit facility on the Company’s ability to obtain funds from its subsidiaries by dividend or loan. However, in certain jurisdictions, the gaming authorities may impose restrictions pursuant to the authority granted to them with regard to Penn’s ability to obtain funds from its subsidiaries.

Condensed consolidating balance sheets at June 30, 2011 and December 31, 2010 and condensed consolidating statements of income for the three and six months ended June 30, 2011 and 2010, and condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010 for Penn, the subsidiary guarantors of the senior secured credit facility and the subsidiary non-guarantors are presented below.

The Company’s $250 million 63/4% senior subordinated notes and $325 million 83/4% senior subordinated notes are not guaranteed by the Company’s subsidiaries.

	Penn			Subsidiary Guarantors			Subsidiary Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Senior Secured Credit Facility
At June 30, 2011
Condensed Consolidating Balance Sheet
Total current assets	$	151,664		$	293,513		$	41,027		$	(719	)	$	485,485
Property and equipment, net	15,226			1,937,696			226,815			—			2,179,737
Total other assets	3,851,307			4,956,449			240,403			(7,165,913		)	1,882,246
Total assets	$	4,018,197		$	7,187,658		$	508,245		$	(7,166,632	)	$	4,547,468
Total current liabilities	$	13,365		$	270,230		$	26,139		$	(717	)	$	309,017
Total long-term liabilities	2,066,724			3,149,356			32,248			(2,947,986		)	2,300,342
Total shareholders’ equity	1,938,108			3,768,072			449,858			(4,217,929		)	1,938,109
Total liabilities and shareholders’ equity	$	4,018,197		$	7,187,658		$	508,245		$	(7,166,632	)	$	4,547,468
Three Months Ended June 30, 2011
Condensed Consolidating Statement of Income
Net revenues	$	—		$	648,907		$	38,972		$	—		$	687,879
Total operating expenses	25,294			486,304			35,689			—			547,287
(Loss) income from operations	(25,294		)	162,603			3,283			—			140,592
Other income (expenses)	18,275			(44,243		)	(315		)	—			(26,283		)
(Loss) income from operations before income taxes	(7,019		)	118,360			2,968			—			114,309
Taxes on income	(13,421		)	50,463			1,278			—			38,320
Net income	$	6,402		$	67,897		$	1,690		$	—		$	75,989
Six Months Ended June 30, 2011
Condensed Consolidating Statement of Income
Net revenues	$	—		$	1,277,896		$	77,006		$	—		$	1,354,902
Total operating expenses	51,307			968,545			71,723			—			1,091,575
(Loss) income from operations	(51,307		)	309,351			5,283			—			263,327
Other income (expenses)	27,181			(83,344		)	(3,090		)	—			(59,253		)
(Loss) income from operations before income taxes	(24,126		)	226,007			2,193			—			204,074
Taxes on income	(22,798		)	97,803			1,552			—			76,557
Net (loss) income	(1,328		)	128,204			641			0			127,517
Six Months Ended June 30, 2011
Condensed Consolidating Statement of Cash Flows
Net cash provided by operating activities	$	199,268		$	9,620		$	82,089		$	—		$	290,977
Net cash used in investing activities	(1,322		)	(2,373		)	(141,085		)	—			(144,780		)
Net cash (used in) provided by financing activities	(69,335		)	(2,048		)	786			—			(70,597		)
Net increase (decrease) in cash and cash equivalents	128,611			5,199			(58,210		)	—			75,600
Cash and cash equivalents at beginning of year	6,276			157,992			82,117			—			246,385
Cash and cash equivalents at end of period	$	134,887		$	163,191		$	23,907		$	—		$	321,985

	Penn			Subsidiary Guarantors			Subsidiary Non- Guarantors			Eliminations			Consolidated
	(in thousands)
Senior Secured Credit Facility
At December 31, 2010
Condensed Consolidating Balance Sheet
Total current assets	$	31,422		$	261,768		$	131,204		$	41,559		$	465,953
Property and equipment, net	15,328			1,775,913			174,533			—			1,965,774
Total other assets	3,848,412			5,042,516			167,466			(7,027,242		)	2,031,152
Total assets	$	3,895,162		$	7,080,197		$	473,203		$	(6,985,683	)	$	4,462,879
Total current liabilities	$	355,018		$	293,588		$	1,370		$	41,553		$	691,529
Total long-term liabilities	1,762,379			3,159,736			45,024			(2,973,555		)	1,993,584
Total shareholders’ equity	1,777,765			3,626,873			426,809			(4,053,681		)	1,777,766
Total liabilities and shareholders’ equity	$	3,895,162		$	7,080,197		$	473,203		$	(6,985,683	)	$	4,462,879
Three Months Ended June 30, 2010
Condensed Consolidating Statement of Income
Net revenues	$	—		$	590,706		$	7,605		$	—		$	598,311
Total operating expenses	21,466			484,084			41,050			—			546,600
(Loss) income from operations	(21,466		)	106,622			(33,445		)	—			51,711
Other income (expenses)	34,917			(66,695		)	(159		)	—			(31,937		)
Income (loss) from operations before income taxes	13,451			39,927			(33,604		)	—			19,774
Taxes on income	(8,046		)	32,154			(11,306		)	—			12,802
Net income (loss) including noncontrolling interests	21,497			7,773			(22,298		)	—			6,972
Less: Net loss attributable to noncontrolling interests	—			—			(2,184		)	—			(2,184		)
Net income (loss) attributable to the shareholders of Penn National Gaming, Inc. and subsidiaries	$	21,497		$	7,773		$	(20,114	)	$	—		$	9,156
Six Months Ended June 30, 2010
Condensed Consolidating Statement of Income
Net revenues	$	—		$	1,176,084		$	14,550		$	—		$	1,190,634
Total operating expenses	44,344			954,786			47,442			—			1,046,572
(Loss) income from operations	(44,344		)	221,298			(32,892		)	—			144,062
Other income (expenses)	46,323			(113,567		)	(988		)	—			(68,232		)
Income (loss) from operations before income taxes	1,979			107,731			(33,880		)	—			75,830
Taxes on income	(17,948		)	65,827			(15,176		)	—			32,703
Net income (loss) including noncontrolling interests	19,927			41,904			(18,704		)	—			43,127
Less: Net loss attributable to noncontrolling interests	—			—			(2,193		)	—			(2,193		)
Net income (loss) attributable to the shareholders of Penn National Gaming, Inc. and subsidiaries	$	19,927		$	41,904		$	(16,511	)	$	—		$	45,320
Six Months Ended June 30, 2010
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	$	272,657		$	192,059		$	(241,367	)	$	—		$	223,349
Net cash used in investing activities	(1,316		)	(199,610		)	(74,244		)	—			(275,170		)
Net cash used in financing activities	(261,554		)	(1,539		)	—			—			(263,093		)
Net increase (decrease) in cash and cash equivalents	9,787			(9,090		)	(315,611		)	—			(314,914		)
Cash and cash equivalents at beginning of year	6,385			145,519			561,214			—			713,118
Cash and cash equivalents at end of period	$	16,172		$	136,429		$	245,603		$	—		$	398,204