What changed in this filing

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Item 1A. Risk Factors

2020-11-04 compared with 2020-08-06 · 26 added, 31 removed, 55 unchanged (51% of the section changed)

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A.

“Risk Factors” in our Form 10-K for the year ended December 31, 2019, and our Form 10-Q for the quarterly period ended March 31, 2020, which could materially affect our business, financial condition, and future results.

The risks described in our Form 10-K for the year ended December 31, 2019 and our Form 10-Q for the quarterly period ended March 31, 2020 are not the only risks that we face.

“Risk Factors” in our Form 10-K for the year ended December 31, 2019, and our Form 10-Q for the quarterly period ended March 31, 2020 and June 30, 2020, which could materially affect our business, financial condition, and future results.

The risks described in our Form 10-K for the year ended December 31, 2019 and our subsequent Form 10-Q filings are not the only risks that we face.

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our financial condition, operating results and cash flows.

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“Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2019 and Part II, Item 1A.

“Risk Factors” in the Company’s Form 10-Q for the quarterly period ended March 31, 2020.

“Risk Factors” in the Company’s subsequent Form 10-Q filings.

Risks Related to the COVID-19 Pandemic

The COVID-19 pandemic has significantly impacted the global economy, including the gaming industry, and has had a material adverse effect on our business, financial condition, results of operations and cash flows, and may continue to do so.

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Many jurisdictions where our properties are located required mandatory closures or imposed capacity limitations and other restrictions affecting our operations.

The COVID-19 pandemic and these resulting developments have caused significant disruptions to our ability to generate revenues, profitability and cash flows and have had a material adverse impact on our financial condition, results of operations and cash flows as of and for the three and six months ended June 30, 2020 and which we expect to impact our results of operations and cash flows for the three months ended September 30, 2020.

The COVID-19 pandemic and these resulting developments caused significant disruptions to our ability to generate revenues, profitability and cash flows and had a material adverse impact on our financial condition, results of operations and cash flows.

Such impact could worsen and last for an unknown period of time.

In addition, these disruptions to us and the gaming industry in general as well as significant negative economic trends due to the COVID-19 pandemic have adversely affected and could continue to adversely affect our stock price.

In addition, these disruptions to us and the gaming industry in general as well as significant negative economic trends due to the COVID-19 pandemic may adversely affect our stock price.

During the first quarter of 2020, the Company took various actions to reduce its cost structure during the property closures to help mitigate the operating and financial impact of the COVID-19 pandemic, which included:

(i) furloughing approximately 26,000 employees and operating with a minimum staffing of less than 850 employees company-wide during the closures;

(ii) enacting meaningful compensation reductions to its remaining property and corporate leadership teams effective April 1, 2020 until such time as the Company determines that its properties have substantially returned to normal operations;

and (iii) executing substantial reductions in operating expenses, capital expenditures, including temporarily suspending construction of its two planned Category 4 development projects in Pennsylvania, and overall costs.

In addition, the Company’s Board of Directors elected to forgo their cash compensation effective April 1, 2020 until such time as the Company determines that its properties have substantially returned to normal operations.

Such steps, and further changes we make in the future to reduce costs, may negatively impact our growth prospects, guest loyalty or our ability to attract and retain employees, and our business and reputation may suffer as a result.

While we have engaged in cost reduction efforts in connection with the closures, we still have significant fixed and variable expenses.

(i) furloughing the vast majority of our employees and operating with a minimum staffing of less than 850 employees company-wide during the closures;

(ii) enacting meaningful compensation reductions to its remaining property and corporate leadership teams;

In addition, during the property closures, the Company’s Board of Directors elected to forgo their cash compensation.

Though virtually all of our properties have reopened, we cannot predict the period of time required for the ramp-up of operations.

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Our reopened properties face restrictions on our operations, including capacity limitations, cleaning requirements, restrictions on the number of seats per table game, slot machine spacing, temperature checks, mask protection and social distancing requirements which impact our future operations and ability to generate the same level of revenues and cash flows as before the COVID-19 pandemic.

The continued operation of our reopened properties, may be affected by our ability to retain our workforce still on furlough as well as management-level corporate employees due to reductions in compensation or other factors.

The continued operation of our reopened properties, may be affected by our ability to retain our workforce still on furlough or other factors.

For example, if our employees that remain on furlough do not return to work with us when the COVID-19 pandemic further subsides, including because they find new employment during the furlough, we may experience operational challenges that may impact our ability to resume operations in full.

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Our properties have large customer-facing footprints and high levels of customer traffic where customers can gather together for personal interaction.

As such, some customers may choose for a period of time not to travel or visit our properties for health concerns or due to overall changes in consumer behavior resulting from social distancing.

Upon reopening our properties, we saw weakened visitation, which may have been due to increased level of unemployment, continued travel restrictions or warnings, consumer fears, reduced consumer discretionary spending or general economic uncertainty.

As such, some customers may choose for a period of time not to travel or visit our properties for health and safety concerns or due to overall changes in consumer behavior resulting from social distancing.

Upon reopening our properties, we have seen weakened visitation, which may have been due to increased level of unemployment, continued travel restrictions or warnings, consumer fears, reduced consumer discretionary spending or general economic uncertainty.

Our vendors and other suppliers could also experience potential adverse effects of the pandemic that could impact our ability to operate to the same level as prior to the closures.

If COVID-19 continues to spread, governmental agencies or officials may order additional closures or impose further restrictions on the number of people allowed in our properties or in proximity to each other.

If COVID-19 continues to spread significantly, governmental agencies or officials may order additional closures or impose further restrictions on the number of people allowed in our properties or in proximity to each other.

Any of these events could result in significant further disruption to our operations and a drop in demand for our properties and could have a material adverse effect on us.

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our ability to again generate revenue and profits capable of supporting our ongoing operations;

new information which may emerge concerning the severity of COVID-19;

new information

which may emerge concerning the severity of COVID-19;

the negative impact it has on global and regional economies and economic activity;

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and how quickly economies, travel activity, and demand for gaming, entertainment and leisure activities recovers after the pandemic subsides.

The impact of the COVID-19 pandemic may also have the effect of exacerbating many of the other risks described in our Form 10-K for the year ended December 31, 2019 and our Form 10-Q for the quarterly period ended March 31, 2020.

The impact of the COVID-19 pandemic may also have the effect of exacerbating many of the other risks described in our Annual Report on Form 10-K for the year ended December 31, 2019 and our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2020 and June 30, 2020.

As a result of the foregoing, we cannot predict the ultimate scope, duration and impact the COVID-19 pandemic will have on our results of operations, but we expect that it will continue to have a material impact on our business, financial condition, liquidity, results of operations (including revenues and profitability) and stock price.

Number Description of Exhibit

2.1†† Purchase Agreement, dated as of April 16, 2020, by and among Tropicana Las Vegas, Inc., Penn National Gaming, Inc., GLP Capital, L.P., Gold Merger Sub, LLC, PA Meadows, LLC, Tropicana LV LLC and, solely for the purposes set forth therein, Gaming and Leisure Properties, Inc.

is hereby incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on April 20, 2020.

(SEC File No.

2.2†† Lease, dated as of April 16, 2020, by and among Tropicana Land LLC and Tropicana Las Vegas, Inc.

is hereby incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K filed on April 20, 2020.

(SEC File No.

4.1 Indenture, dated May 14, 2020, between the Company and Wells Fargo Bank, National Association, as trustee is hereby incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 14, 2020.

10.1† Second Amendment to Executive Agreement, dated October 1, 2020, by and between Penn National Gaming, Inc.

Snowden is hereby incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 2, 2020.

(SEC File No.

4.2 First Supplemental Indenture, dated May 14, 2020, between the Company and Wells Fargo Bank, National Association, as trustee is hereby incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on May 14, 2020.

Second Amendment to Executive Agreement, dated October 1, 2020, by and between Penn National Gaming, Inc.

and David Williams is hereby incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on October 2, 2020.

(SEC File No.

4.3 Form of Note representing the 2.75% Convertible Senior Notes due 2026 (included in Exhibit 4.2) is hereby incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on May 14, 2020.

Second Amendment to Executive Agreement, dated October 1, 2020, by and between Penn National Gaming, Inc.

and Carl Sottosanti is hereby incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on October 2, 2020.

(SEC File No.

10.1† Second Amendment, dated as of April 14, 2020, by and among Penn National Gaming, Inc., the guarantors party thereto, the lenders party thereto and Bank of America, N.A., as letter of credit lender, swingline lender, administrative agent and collateral agent is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 20, 2020.

Seventh Amendment to the Penn National Gaming, Inc.

Deferred Compensation Plan.

31.1* CEO Certification pursuant to rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

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† Management contract or compensatory plan or arrangement.

†† Annexes, schedules and/or exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.

Penn National Gaming, Inc.

agrees to furnish supplementally a copy of any omitted attachment to the SEC on a confidential basis upon request.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PENN NATIONAL GAMING, INC.

August 6, 2020 By:

November 4, 2020 By:

/s/ Christine LaBombard

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors