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In preparation for PENN's Q4 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.

BANK OF AMERICA MERRILL LYNCH LEVERAGED FINANCE CONFERENCE (12/2/2011)

  • We've got Wyandotte, which is the project first expected to open. Our share of the spend is $155 million of a $410 million project. We've spent roughly $80 million. There's 600,000 people. Tax rate is 27%. And we'll be opening in the first quarter, probably sometime in February, but we're still working on the exact date for that opening. In Toledo, we're looking at second quarter of '12. It's a $320 million project and we've spent roughly $98 million. It's a population of roughly a million. Tax rate is 33% and will be open in the second quarter…. Columbus; $400 million, we've spent roughly $86 million. There's 1.8 million people and we'll be opening in the fourth quarter next year as well.”
  • “I will tell you that in the history of gaming, the move of having VLTs extended as an extension of lottery has gone challenged in probably every state that's authorized it and so far, it has been a perfect record where the Supreme Court has upheld the legislature's ability to expand lottery.”
  • “Under most foreseeable circumstances, we would never take leverage above 5 times. And candidly, if we did take it above 5 times, we would have to see that it's deleveraged quickly. You're not going to see Penn's management team putting themselves in a position and certainly with our existing creditholders where we take leverage that high.”
  • “The Gulf Coast right now and certainly Mississippi is really hurting now. I got to tell you if there is one area of the country that seems to be consistently having tough times and not too many upticks to give you any kind of encouragement, for us anyway, it's been Mississippi. We've been in major cost control, cost cutting modes in Mississippi. We've been able to hold together the EBITDA there. And there is more to come and there is more cost that we can cut and there is more marketing stuff that we can cut, but that's one area of the country that seems to be really struggling. The Biloxi, Tunica markets are just having a really tough time. So other than that, it's pretty much – I mean table game in Charlestown is wonderful, right, for that matter all things Charlestown is doing fine. Bangor is fine, the Midwest is fine. I mean yes, when I say fine, I mean it's just kind of blah fine.”

DEUTSCHE BANK HOSPITALITY & GAMING CONFERENCE (11/10/2011)

  • “October was a little bit soft and the numbers that are out there with the exception of West Virginia, which has continued to drive the growth of the company with the addition of table games. Some of the weakness we expected obviously in Illinois, where there is some of the bigger negative numbers because we had the cannibalization from the Rivers. The cannibalization has been a little bit less than what we anticipated, but not far off from what our internal estimates are. The other markets have been just a little bit soft, but nothing dramatic.”
  • “So, the thing about Illinois is that you've got to remember that Rivers is limited on how many positions they can have. So, that even in the peak, in the days of Elgin, I think they were doing roughly $425 million of revenue. It's hard to get above those numbers because your win per units, starts to make it difficult, and it deteriorates the customer experience as you get up into those $500, $600, $700 win per unit per day on the game. So, we don't anticipate the cannibalization to increase from the levels they are at now, but we think it's kind of stabilizing in a more normal range.”
  • “If you look across our portfolio, I think when we do the count, we have roughly eight properties that are going to get cannibalized, next year, which is nearly half of our portfolio, and we have some really large ones. The biggest thing to quantify next year is what the impact on Charles Town is. We've never seen cannibalization of a property of this size and scope and in a market that deep at the same time. There is a vast difference in terms of the amenities that are mainly offered at Charles Town versus the competitor.”
  • [CharlesTown & Arundel Mills impact]  “So, we believe conversely when the slot revenue rolls off that we're unlikely to lose table revenue. We'll lose some, but we think it will be de minimis in terms of the impact on table games, that's how the company is viewing it. When you look at the new revenue levels in terms of where they're coming from, the difficult part to understand is will people drive into Anne Arundel Mills.  I'm sure the vast majority of people here are not familiar with the site, but it's a very, very, very busy mall site and today without a casino before there was construction there was lines of traffic waiting to get in and out of the mall.  So, it's very congested area…. It's going to be a significant amount of cannibalization on the slot revenue. There is no doubt in our mind on that, but we still think that post-cannibalization Charles Town is still going to be one of our largest properties from an EBITDA and the revenue perspective.”
  • “I don't think you're going to see our CapEx grow, based on the existing casinos today, the CapEx is at a pretty sustainable level…. What we did is we went back and looked at what the growth in the slot machine pricing has been, because Penn's always been a company that's that we've got to go out and refresh our floors and roughly 50% of our maintenance CapEx has been on slot machines over the last decade. So, what we realized is that the slot machine pricing has far outpaced inflation…. Obviously, there will be an increase in the maintenance capital for the Ohio properties because they're new casinos, and they weren't in the formula before. But we are at a sustainable level, our floors are fresh, our restaurants and our hotels are being run through those maintenance capital, so all the new restaurants that you've seen redone over the last couple of years are all fresh.”

YOUTUBE FROM Q3 CONFERENCE CALL

  • “We’re seen a very, very rational promotional spending environment in the regional markets that have allowed us to continue to be smarter marketers and continue to shave off expenses to have better overall margins in our properties.”
  • “In Baton Rouge, we expect sometime in the third quarter Pinnacle to open that $350 million investment. And obviously, we think the market is not big enough to absorb that and there's going to be a loss of business at our Baton Rouge operation…. we do expect that there will be a hit in the third quarter next year. We're going to be fully prepared for that and react very quickly as a new level of business volumes are realized there.”
  • “Spring of 2013 is what we're expecting to be the opening of Horseshoe Cincinnati. It will be interesting to see what that effect will have on Lawrenceburg. It certainly will have a noticeable effect. We still have the advantage that our customers will be able to smoke in our casino environment, where in Ohio, it is a smoke-free casino.”
  • “As I look at '13 and there aren't many numbers published on '13, but I can tell you that I feel very comfortable that we're going to be significantly higher than the highest number on the Street in '12. Now, obviously that may not come as a huge surprise, but I can tell you that we're very comfortable that we're going to be growing EBITDA through '13. '12 is probably going to be closer to flat than what we're seeing in some of the estimates coming out for '12.”
  • “Between 37.5%, 38%, would be the normalized tax run rate. Relative to the authorization on the stock buyback, I believe we've got $240 million remaining.”
  • [when PENN pays $50MM license fee in Ohio] “Probably maybe a little bit before [opening], but not much time before then.”
  • “I think we're losing the low-end retail rated play, because they're finding it from a reward standpoint less appealing to them. And I think as you look at the overall rated player based on a per trip basis, we are seeing the quality of the rated customer up, but the amount of trips especially at the low-end, down.”