Penn National Gaming (PNG) recently released its operating results for 2012. PNG describes itself as “a leading, diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties…” with over 20,000 full- and part-time employees.

At the close of 2012, PNG owned, managed, or had investments in 29 facilities in 18 states and Ontario. These included eleven racetracks (five Thoroughbred, four harness, and two greyhound) and five off-track wagering facilities. The Thoroughbred racetracks are Beulah Park in OH, Hollywood Casino at Charles Town, WV, Hollywood Casino at Penn National, Sam Houston Race Park in TX, and Zia Park Casino in NM. Beulah Park is to be relocated from near Columbus, OH to a start-up facility close to Youngstown, OH.

In a major strategic development announced in November 2012, PNG said it plans to separate most of its gaming assets and real property assets into two publicly traded companies. The operating entity will remain Penn National Gaming and the tax-free spin-off of real estate assets into a REIT will be known as PropCo. The REIT will lease back its assets to PNG for use by PNG subsidiaries.

PNG had net revenues of $2.9 billion in 2012, a 5.4% gain over 2011. The company stated: “The vast majority of our revenue is gaming revenue, derived primarily from… slot machines (which represented approximately 84% and 88% of our gaming revenue in 2012 and 2011, respectively) and to a lesser extent, table games…” The balance of revenues derived from multiple sources, such as concessions and racing operations.

Net income was nearly $212 million in 2012, a decrease of 12.5% from the previous year. Diluted earnings per share (i.e., adjusted for stock options) were $2.04 in 2012, compared with $2.26 in 2011. Management attributed the decline in earnings to sundry factors like persistently sluggish economic conditions, new competition in the Midwest, and capital expenditures.

PNG typically has paid no cash dividend but has been active (though not in 2012) in repurchasing its common stock. If the proposed spin-off of the real estate assets is achieved, the REIT must, by law, “distribute at least 90% of its annual taxable income as dividends.”

PNG’s stock is listed under the symbol PENN on the NASDAQ Global Select Market. In 2012, PENN traded in the range of $37-$51.98, and has surpassed its previous peak in 2013. The stock has been trading at about an average price-to-earnings ratio for NASDAQ.

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