Document Entity Information
Document Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 30, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PENN NATIONAL GAMING INC | |
Trading Symbol | PENN | |
Entity Central Index Key | 0000921738 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Smaller Reporting Company | false | |
Entity Emerging Growth Company | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 117,138,924 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 400,280 | $ 479,598 |
Receivables, net of allowance for doubtful accounts of $2,942 and $3,161 | 114,439 | 106,837 |
Prepaid expenses | 67,856 | 62,971 |
Other current assets | 56,629 | 28,252 |
Total current assets | 639,204 | 677,658 |
Property and equipment, net | 5,227,922 | 6,868,768 |
Other assets | ||
Investment in and advances to unconsolidated affiliates | 127,924 | 128,488 |
Goodwill | 1,279,496 | 1,228,422 |
Other intangible assets, net | 1,923,347 | 1,856,868 |
Deferred income taxes | 0 | 80,612 |
Operating lease right-of-use assets | 3,972,527 | 0 |
Finance lease right-of-use assets | 222,418 | 0 |
Other assets | 105,333 | 120,196 |
Total other assets | 7,631,045 | 3,414,586 |
Total assets | 13,498,171 | 10,961,012 |
Current liabilities | ||
Accounts payable | 31,388 | 30,551 |
Current maturities of long-term debt | 62,505 | 62,140 |
Current portion of financing obligations | 52,600 | 67,777 |
Current portion of operating lease liabilities | 95,894 | 0 |
Current portion of finance lease liabilities | 5,874 | 0 |
Accrued expenses and other current liabilities | 572,122 | 577,968 |
Total current liabilities | 820,383 | 738,436 |
Long-term debt, net of current maturities and debt issuance costs | 2,311,379 | 2,350,088 |
Long-term portion of financing obligations | 4,129,233 | 7,080,638 |
Long-term portion of operating lease liabilities | 3,868,392 | 0 |
Long-term portion of finance lease liabilities | 216,948 | 0 |
Deferred income taxes | 232,679 | 0 |
Noncurrent tax liabilities | 32,461 | 32,360 |
Other noncurrent liabilities | 24,885 | 28,269 |
Total liabilities | 11,636,360 | 10,229,791 |
Commitments and contingencies (Note 12) | ||
Stockholders’ equity | ||
Common stock ($0.01 par value, 200,000,000 shares authorized, 119,307,944 and 118,855,201 shares issued, and 117,140,551 and 116,687,808 shares outstanding) | 1,189 | 1,188 |
Treasury stock, at cost, (2,167,393 shares held in both periods) | (28,414) | (28,414) |
Additional paid-in capital | 1,730,351 | 1,726,401 |
Retained earnings (accumulated deficit) | 158,695 | (967,949) |
Total Penn National Gaming, Inc. stockholders’ equity | 1,861,821 | 731,226 |
Non-controlling interest | (10) | (5) |
Total stockholders’ equity | 1,861,811 | 731,221 |
Total liabilities and stockholders’ equity | 13,498,171 | 10,961,012 |
Series B Preferred stock ($0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding) | ||
Stockholders’ equity | ||
Preferred stock | 0 | 0 |
Series C Preferred stock ($0.01 par value, 18,500 shares authorized, no shares issued and outstanding) | ||
Stockholders’ equity | ||
Preferred stock | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 2,942 | $ 3,161 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 119,307,944 | 118,855,201 |
Common stock, shares outstanding (in shares) | 117,140,551 | 116,687,808 |
Treasury stock (in shares) | 2,167,393 | 2,167,393 |
Series B Preferred stock ($0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding) | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Series C Preferred stock ($0.01 par value, 18,500 shares authorized, no shares issued and outstanding) | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 18,500 | 18,500 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenues | ||
Revenues | $ 1,282,571 | $ 816,085 |
Operating expenses | ||
General and administrative | 286,928 | 121,263 |
Depreciation and amortization | 104,053 | 60,390 |
Impairment losses | 0 | 618 |
Total operating expenses | 1,100,185 | 643,951 |
Operating income | 182,386 | 172,134 |
Interest expense | (132,587) | (115,740) |
Interest income | 319 | 249 |
Income from unconsolidated affiliates | 5,687 | 5,361 |
Loss on early extinguishment of debt | 0 | (882) |
Other | 0 | 4 |
Total other expenses | (126,581) | (111,008) |
Income before income taxes | 55,805 | 61,126 |
Income tax expense | (14,818) | (15,689) |
Net income | 40,987 | 45,437 |
Less: Net loss attributable to non-controlling interest | 5 | 0 |
Net income attributable to Penn National Gaming, Inc. | $ 40,992 | $ 45,437 |
Earnings per common share | ||
Basic earnings per common share (in dollars per share) | $ 0.35 | $ 0.50 |
Diluted earnings per common share (in dollars per share) | $ 0.35 | $ 0.48 |
Weighted average basic shares outstanding (in shares) | 116,293 | 91,191 |
Weighted average diluted shares outstanding (in shares) | 118,595 | 94,650 |
Gaming | ||
Revenues | ||
Revenues | $ 1,034,511 | $ 654,494 |
Operating expenses | ||
Cost of revenue | 547,445 | 340,516 |
Food, beverage, hotel and other | ||
Revenues | ||
Revenues | 248,060 | 130,969 |
Operating expenses | ||
Cost of revenue | 161,759 | 92,980 |
Management service and license fees | ||
Revenues | ||
Revenues | 0 | 2,438 |
Reimbursable management costs | ||
Revenues | ||
Revenues | 0 | 28,184 |
Operating expenses | ||
Cost of revenue | $ 0 | $ 28,184 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 40,987 | $ 45,437 |
Total comprehensive income | 40,987 | 45,437 |
Less: Comprehensive loss attributable to non-controlling interest | 5 | 0 |
Comprehensive income attributable to Penn National Gaming, Inc. | $ 40,992 | $ 45,437 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Preferred Stock | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Loss | Total Penn National Gaming, Inc. Stockholders’ Equity (Deficit) | Non-Controlling Interest |
Beginning balance (in shares) at Dec. 31, 2017 | 0 | 91,225,242 | |||||||
Beginning balance at Dec. 31, 2017 | $ (73,146) | $ 0 | $ 933 | $ (28,414) | $ 1,007,606 | $ (1,051,818) | $ (1,453) | $ (73,146) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation arrangements (in shares) | 430,048 | ||||||||
Share-based compensation arrangements | 3,720 | $ 4 | 3,716 | 3,720 | |||||
Net income (loss) | 45,437 | 45,437 | 45,437 | ||||||
Ending balance (in shares) at Mar. 31, 2018 | 0 | 91,655,290 | |||||||
Ending balance at Mar. 31, 2018 | (33,639) | $ 0 | $ 937 | (28,414) | 1,011,322 | (1,016,031) | (1,453) | (33,639) | 0 |
Beginning balance (in shares) at Dec. 31, 2018 | 0 | 116,687,808 | |||||||
Beginning balance at Dec. 31, 2018 | 731,221 | $ 0 | $ 1,188 | (28,414) | 1,726,401 | (967,949) | 0 | 731,226 | (5) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation arrangements (in shares) | 452,743 | ||||||||
Share-based compensation arrangements | 3,951 | $ 1 | 3,950 | 3,951 | |||||
Net income (loss) | 40,987 | 40,992 | 40,992 | (5) | |||||
Ending balance (in shares) at Mar. 31, 2019 | 0 | 117,140,551 | |||||||
Ending balance at Mar. 31, 2019 | $ 1,861,811 | $ 0 | $ 1,189 | $ (28,414) | $ 1,730,351 | $ 158,695 | $ 0 | $ 1,861,821 | $ (10) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net income | $ 40,987 | $ 45,437 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 104,053 | 60,390 |
Amortization of items charged to interest expense | 1,917 | 1,603 |
Amortization of operating lease right-of-use assets | 30,434 | 0 |
Change in fair value of contingent purchase price | 4,717 | 1,134 |
Loss on sale of property and equipment | 522 | 55 |
Income from unconsolidated affiliates | (5,687) | (5,361) |
Return on investment from unconsolidated affiliates | 6,500 | 6,500 |
Deferred income taxes | 10,980 | 5,926 |
Stock-based compensation | 3,417 | 2,929 |
Impairment losses | 0 | 618 |
Loss on early extinguishment of debt | 0 | 882 |
Changes in operating assets and liabilities, net of businesses acquired | ||
Accounts receivable | (2,926) | 3,973 |
Prepaid expenses and other current assets | (8,132) | (7,248) |
Other assets | (648) | (567) |
Accounts payable | 927 | (4,142) |
Accrued expenses | (25,291) | (50,634) |
Income taxes | 5,295 | 6,072 |
Operating lease liabilities | (38,864) | 0 |
Other current and noncurrent liabilities | (2,522) | (642) |
Net cash provided by operating activities | 125,679 | 66,925 |
Investing activities | ||
Project capital expenditures | (1,446) | (1,211) |
Maintenance capital expenditures | (36,220) | (10,602) |
Proceeds from sale of property and equipment | 321 | 49 |
Consideration paid for acquisitions of businesses, net of cash acquired | (370,262) | 0 |
Consideration paid for gaming licenses and other intangible assets | (343) | (50,379) |
Other | (250) | (327) |
Net cash used in investing activities | (408,200) | (62,470) |
Financing activities | ||
Proceeds from revolving credit facility | 90,000 | 30,000 |
Principal payments on long-term debt | (11,668) | (45,441) |
Repayments on revolving credit facility | (110,000) | (30,000) |
Payments of other long-term obligations | (7,937) | (7,636) |
Proceeds from sale-and-leaseback transactions in conjunction with acquisitions | 261,127 | 0 |
Principal payments on financing obligations | (12,559) | (16,650) |
Principal payments on finance leases | (1,640) | 0 |
Proceeds from exercise of options | 534 | 791 |
Payments of contingent purchase price | (21) | (121) |
Proceeds from insurance financing | 13,666 | 8,541 |
Payments on insurance financing | (5,857) | (3,907) |
Other | (275) | 0 |
Net cash provided by (used in) financing activities | 215,370 | (64,423) |
Change in cash, cash equivalents, and restricted cash | (67,151) | (59,968) |
Cash, cash equivalents and restricted cash at the beginning of the year | 481,238 | 279,418 |
Cash, cash equivalents and restricted cash at the end of the period | 414,087 | 219,450 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Total cash, cash equivalents and restricted cash | 481,238 | 279,418 |
Supplemental disclosure: | ||
Cash paid for interest, net of amounts capitalized | 139,675 | 120,229 |
Cash payments (refunds) related to income taxes, net | (1,727) | 2,233 |
Non-cash investing and financing activities: | ||
Commencement of operating leases | 196,494 | 0 |
Commencement of finance leases | 0 | 0 |
Accrued capital expenditures | $ 6,596 | $ 786 |
Organization and Basis of Prese
Organization and Basis of Presentation | 3 Months Ended |
Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Organization: Penn National Gaming, Inc., together with its subsidiaries, is a leading, diversified, multi-jurisdictional owner and manager of gaming and racing facilities and video gaming terminal (“VGT”) operations with a focus on slot machine entertainment. In the second half of 2018, we launched live sports wagering at our facilities in Mississippi, Pennsylvania and West Virginia. In addition, the Company operates an interactive gaming division through its subsidiary, Penn Interactive Ventures, LLC (“PIV”). References in these footnotes to “Penn,” the “Company,” “we,” “our,” or “us” refer to Penn National Gaming, Inc. and its subsidiaries, except where stated or the context otherwise indicates. As of March 31, 2019 , we owned, managed, or had ownership interests in 41 facilities in 18 jurisdictions. The majority of the gaming facilities used in the Company’s operations are subject to triple net master leases; the most significant of which are the Penn Master Lease and the Pinnacle Master Lease (as such terms are defined in Note 4, “Leases,” and collectively referred to as the “ Master Leases ”), with Gaming and Leisure Properties, Inc. (“GLPI”), a publicly-traded real estate investment trust (“REIT”), as the landlord under the Master Leases . The Company has four reportable segments: Northeast, South, West and Midwest. See Note 2, “Significant Accounting Policies” and Note 16, “Segment Information” for further information. Basis of Presentation: The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of Penn National Gaming, Inc. and its subsidiaries. Investments in and advances to unconsolidated affiliates that do not meet the consolidation criteria of the authoritative guidance for voting interest, controlling interest or variable interest entities (“VIEs”), are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates: The preparation of unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Segment Information: The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), as that term is defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting,” measures and assesses the Company’s business performance based on regional operations of various properties grouped together based primarily on their geographic locations. We view each of our gaming and racing properties as an operating segment with the exception of our two properties in Jackpot, Nevada, which we view as one operating segment. We view our combined video gaming terminals (“VGT”) operations as an operating segment. See Note 16, “Segment Information,” for further information. For financial reporting purposes, as of March 31, 2019 , we aggregate our operating segments into the following reportable segments: Location Real Estate Assets Lease or Ownership Structure Northeast segment Ameristar East Chicago East Chicago, Indiana Pinnacle Master Lease Hollywood Casino Bangor Bangor, Maine Penn Master Lease Hollywood Casino at Charles Town Races Charles Town, West Virginia Penn Master Lease Hollywood Casino Columbus Columbus, Ohio Penn Master Lease Hollywood Casino Lawrenceburg Lawrenceburg, Indiana Penn Master Lease Hollywood Casino at Penn National Race Course Grantville, Pennsylvania Penn Master Lease Hollywood Casino Toledo Toledo, Ohio Penn Master Lease Hollywood Gaming at Dayton Raceway Dayton, Ohio Penn Master Lease Hollywood Gaming at Mahoning Valley Race Course Youngstown, Ohio Penn Master Lease Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease South segment 1 st Jackpot Casino Tunica, Mississippi Penn Master Lease Ameristar Vicksburg Vicksburg, Mississippi Pinnacle Master Lease Boomtown Biloxi Biloxi, Mississippi Penn Master Lease Boomtown Bossier City Bossier City, Louisiana Pinnacle Master Lease Boomtown New Orleans New Orleans, Louisiana Pinnacle Master Lease Hollywood Casino Gulf Coast Bay St. Louis, Mississippi Penn Master Lease Hollywood Casino Tunica Tunica, Mississippi Penn Master Lease L’Auberge Baton Rouge Baton Rouge, Louisiana Pinnacle Master Lease L’Auberge Lake Charles Lake Charles, Louisiana Pinnacle Master Lease Margaritaville Resort Casino (1) Bossier City, Louisiana Margaritaville Lease Resorts Casino Tunica (2) Tunica, Mississippi Penn Master Lease West segment Ameristar Black Hawk Black Hawk, Colorado Pinnacle Master Lease Cactus Petes and Horseshu Jackpot, Nevada Pinnacle Master Lease M Resort Henderson, Nevada Penn Master Lease Tropicana Las Vegas Las Vegas, Nevada Owned Zia Park Casino Hobbs, New Mexico Penn Master Lease Midwest segment Ameristar Council Bluffs Council Bluffs, Iowa Pinnacle Master Lease Argosy Casino Alton (3) Alton, Illinois Penn Master Lease Argosy Casino Riverside Riverside, Missouri Penn Master Lease Hollywood Casino Aurora Aurora, Illinois Penn Master Lease Hollywood Casino Joliet Joliet, Illinois Penn Master Lease Hollywood Casino at Kansas Speedway (4) Kansas City, Kansas Owned - JV Hollywood Casino St. Louis Maryland Heights, Missouri Penn Master Lease Prairie State Gaming (5) Illinois N/A River City Casino St. Louis, Missouri Pinnacle Master Lease (1) Acquired on January 1, 2019. (2) In April 2019, the Company announced that it expects to close Resorts Casino Tunica on June 30, 2019. (3) The riverboat is owned by us and not subject to the Penn Master Lease. (4) Pursuant to a joint venture with International Speedway Corporation (“International Speedway”) and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns the Hollywood Casino at Kansas Speedway. (5) VGT route operations Revenue Recognition: The Company’s revenue from contracts with customers consists of gaming wagers, food and beverage transactions, retail transactions, hotel room sales, racing wagers, sports betting wagers, and management services related to the management of external casinos and reimbursable costs associated with management contracts. During the second quarter of 2018, our management contract was terminated for Hollywood Casino-Jamul San Diego, which is located on the Jamul Tribe’s trust land in San Diego, California. In addition, our management contract was terminated for Casino Rama, which is located in Ontario, Canada, during the third quarter of 2018. Complimentaries associated with Gaming Contracts Food and beverage, hotel, and other services furnished to patrons for free as an inducement to gamble or through the redemption of our customers’ loyalty points are recorded as food and beverage, hotel, and other revenues, at their estimated standalone selling prices with an offset recorded as a reduction to gaming revenues. The cost of providing complimentary goods and services to patrons as an inducement to gamble as well as for the fulfillment of our loyalty point obligation is included in food, beverage, hotel, and other expenses. Revenues recorded to food and beverage, hotel, and other and offset to gaming revenues were as follows: For the three months ended March 31, (in thousands) 2019 2018 Food and beverage $ 64,478 $ 22,976 Hotel 36,596 9,687 Other 4,272 976 Total complimentaries associated with gaming contracts $ 105,346 $ 33,639 Revenue Disaggregation We generate revenues at our owned, managed, or operated properties principally by providing the following types of services: (i) gaming, (ii) food and beverage, (iii) hotel, (iv) racing, (v) reimbursable management costs and (vi) other. In addition, we assess our revenues based on geographic location of the related properties, which is consistent with our reportable segments (see Note 16, “Segment Information,” for further information). Our revenue disaggregation by type of revenue and geographic location was as follows: For the three months ended March 31, 2019 (in thousands) Northeast South West Midwest Other Total Revenues: Gaming $ 487,727 $ 220,091 $ 92,823 $ 233,755 $ 115 $ 1,034,511 Food and beverage 35,797 40,190 27,870 21,038 299 125,194 Hotel 7,154 22,980 31,641 9,634 — 71,409 Racing 6,525 — 17 — 1,534 8,076 Other 13,375 8,681 6,303 6,835 8,187 43,381 Total revenues $ 550,578 $ 291,942 $ 158,654 $ 271,262 $ 10,135 $ 1,282,571 For the three months ended March 31, 2018 (in thousands) Northeast South West Midwest Other Total Revenues: Gaming $ 392,278 $ 50,976 $ 46,571 $ 164,669 $ — $ 654,494 Food and beverage 23,303 8,430 19,849 11,798 263 63,643 Hotel 4,720 2,480 21,121 5,200 — 33,521 Racing 5,276 — 7 — 1,527 6,810 Reimbursable management costs 21,844 — 6,340 — — 28,184 Other 11,298 1,444 4,078 3,867 8,746 29,433 Total revenues $ 458,719 $ 63,330 $ 97,966 $ 185,534 $ 10,536 $ 816,085 Customer-related Liabilities The Company has two general types of liabilities related to contracts with customers: (i) our loyalty credit obligation and (ii) advance payments on goods and services yet to be provided and for unpaid wagers. The Company’s loyalty reward programs allow members to utilize their reward membership cards to earn loyalty credits that are redeemable for slot play and complimentaries, such as food and beverage at our restaurants, lodging at our hotels and products offered at our retail stores across the vast majority of the Company’s properties. The Company accounts for the loyalty credit obligation utilizing a deferred revenue model, which defers revenue at the point in time when the loyalty credits are earned by our customers. Deferred revenue associated with the loyalty credit obligation is recognized at the point when the loyalty points are redeemed by our customers. The liability associated with the loyalty credit obligation is based on the estimated standalone selling price of the loyalty credits earned after factoring in the likelihood of redemption. The Company’s loyalty credit obligation, which is included in “Accrued expenses and other current liabilities” within our unaudited Condensed Consolidated Balance Sheets, was $44.6 million and $39.9 million as of March 31, 2019 and December 31, 2018 , respectively. Our loyalty credit obligations are generally settled within six months of issuance. Changes between the opening and closing balances primarily relate to the timing of our customers’ election to redeem loyalty credits. The Company’s advance payments on goods and services yet to be provided and for unpaid wagers primarily consist of the following: (i) deposits on rooms and convention space, (ii) money deposited on behalf of a customer in advance of their property visit (referred to as “safekeeping” or “front money”), (iii) outstanding tickets generated by slot machine play or pari-mutuel wagering, (iv) outstanding chip liabilities, (v) unclaimed jackpots, and (vi) gift cards redeemable at our properties. Advance payments on goods and services are recognized as revenue when the good or service is transferred to the customer. Unpaid wagers primarily relate to the Company’s obligation to settle outstanding slot tickets, pari-mutuel racing tickets and gaming chips with customers and generally represent obligations stemming from prior wagering events, of which revenue was previously recognized. The Company’s advance payments on goods and services yet to be provided and for unpaid wagers were $31.5 million and $34.3 million as of March 31, 2019 and December 31, 2018 , respectively, of which, $0.5 million and $0.7 million are classified as long-term, respectively. The current portion and long-term portion of our advance payments on goods and services yet to be provided and for unpaid wagers are included in “Accrued expenses and other current liabilities” and “Other noncurrent liabilities” within our unaudited Condensed Consolidated Balance Sheets, respectively. Gaming and Racing Taxes: The Company is subject to gaming and pari-mutuel taxes based on gross gaming revenue and pari-mutuel revenue in the jurisdictions in which it operates. The Company primarily recognizes gaming and pari-mutuel tax expense based on the statutorily required percentage of revenue that is required to be paid to state and local jurisdictions in the states where or in which wagering occurs. In certain states in which the Company operates, gaming taxes are based on graduated rates. The Company records gaming tax expense at the Company’s estimated effective gaming tax rate for the year, considering estimated taxable gaming revenue and the applicable rates. Such estimates are adjusted each interim period. If gaming tax rates change during the year, such changes are applied prospectively in the determination of gaming tax expense in future interim periods. For the three months ended March 31, 2019 and 2018 , these expenses, which were recorded primarily within gaming expense within the unaudited Condensed Consolidated Statements of Operations, were $386.5 million and $247.4 million , respectively. Earnings Per Share: Basic earnings per share (“EPS”) is computed by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the additional dilution for all potentially-dilutive securities, such as stock options and unvested restricted shares. See Note 14, “Earnings per Share,” for further information. Stock-Based Compensation: The Company accounts for stock compensation under ASC Topic 718, “Compensation-Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratably over the requisite service period following the date of grant. The Company accounts for forfeitures in the period in which they occur based on actual amounts. See Note 13, “Stock-based Compensation,” for further information. Application of Business Combination Accounting: The Company utilizes the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations,” which requires us to allocate the purchase price to tangible and identifiable intangible assets based on their fair values. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the fair value ascribed to tangible and identifiable intangible assets changes during the measurement period (due to additional information being available and related Company analysis), the measurement period adjustment is recognized in the reporting period in which the adjustment amount is determined and offset against goodwill. The measurement period for our acquisitions are no more than one year in duration. See Note 5, “Acquisitions,” |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements Accounting Pronouncements Implemented in 2019 On January 1, 2019, the Company adopted the new lease standard ASC Topic 842, “Leases” (“ASC 842”), and all the related amendments (the “new lease standard”) using the modified retrospective method with an effective date of January 1, 2019 (the “adoption date”) and a cumulative effect adjustment to equity. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As part of the adoption, the Company elected to utilize the package of practical expedients included in this guidance, which permitted the Company to not reassess (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) the initial direct costs for existing leases. In conjunction with the adoption of the new lease standard, the Company adopted the following policies: (i) an election to account for lease and non-lease components as a single component for all classes of underlying assets; and (ii) an election not to recognize short-term leases (i.e., a lease that is less than 12 months and contains no purchase option) within the unaudited Condensed Consolidated Balance Sheets, with the expense related to these short-term leases recorded within total operating expenses within the unaudited Condensed Consolidated Statements of Operations. Penn Master Lease and Pinnacle Master Lease The most significant impact of the adoption of the new lease standard relates to the accounting for our Master Leases with GLPI. Under previous GAAP, as contained within ASC Topic 840, “Leases,” the Company concluded that (i) the Penn Master Lease and (ii) the Pinnacle Master Lease to each be a failed sale-leaseback transaction resulting in (a) the land and building assets associated with the Master Leases to be recognized in “Property and equipment, net” within the unaudited Condensed Consolidated Balance Sheets; (b) the recognition of a financing obligation, with the associated interest recorded to “Interest expense” within the unaudited Condensed Consolidated Statements of Operations; and (c) the contingent rentals to be recorded as additional interest expense. Under the provisions of the new lease standard, the Company was required to evaluate its existing sale-leaseback transactions with GLPI to determine whether a sale had occurred, and if a sale had occurred, to determine the classification (operating or finance) of each component contained within each of the Master Leases. Leasing components contained within each of the Master Leases that were determined to be operating leases (consisting primarily of the land components) at the adoption date resulted in (i) the derecognition of the existing financing obligation and the carrying amount of the property and equipment with an adjustment to the opening balance of retained earnings; and (ii) the recognition of an operating lease liability and an operating lease right-of-use (“ROU”) asset. Operating lease expenses are recorded as rent expense, as opposed to interest expense and depreciation and amortization expense, within the unaudited Condensed Consolidated Statements of Operations and recorded as operating cash outflows within the unaudited Condensed Consolidated Statements of Cash Flows. Leasing components contained within each of the Master Leases that were determined to continue to be financing obligations (consisting primarily of the building components) at the adoption date resulted in (i) the continued recognition of the leased assets in “Property and equipment, net” within our unaudited Condensed Consolidated Balance Sheets and (ii) the continued recognition of the financing obligation utilizing assumptions as determined (a) at the lease commencement date with respect to the Penn Master Lease and (b) at the acquisition date with respect to the Pinnacle Master Lease. Our Hollywood Casino at Dayton Raceway and Hollywood Casino at Mahoning Valley Race Course (“Dayton and Mahoning Valley”) properties included within the Penn Master Lease were previously accounted for under build-to-suit guidance under previous GAAP. The Company was required to evaluate the components contained within the build-to-suit arrangements and determine the classification (operating or finance) under the provisions of the new lease standard at the adoption date. The Dayton and Mahoning Valley lease components were determined to be finance leases, which resulted in (i) the recognition of a finance lease ROU asset (recorded to depreciation and amortization expense over the lease term); (ii) a corresponding finance lease liability (recorded to interest expense over the lease term); and (iii) a write-off of the previous (a) carrying amount of the property and equipment and (b) financing obligation recorded with an adjustment to equity at the adoption date. Principal payments associated with finance leases are recorded as financing cash outflows and interest payments associated with finance leases are recorded as operating cash outflows within our unaudited Condensed Consolidated Statements of Cash Flows. Operating Leases, inclusive of the Meadows Lease with GLPI The adoption of the new lease standard required us to recognize ROU assets and lease liabilities that had not previously been recorded within the unaudited Condensed Consolidated Balance Sheets. The lease liability for operating leases is based on the net present value of future lease payments. The ROU asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts, such as deferred rent. Deferred and prepaid rent are no longer presented separately. Leases that are short-term in nature are not recognized as ROU assets within the unaudited Condensed Consolidated Balance Sheets and are recognized as an expense (recorded within total operating expenses) within the unaudited Condensed Consolidated Statements of Operations. The impact of the adoption of the new lease standard on our unaudited Condensed Consolidated Balance Sheets at January 1, 2019 was as follows (only financial statement line items impacted are presented): Impacts of: (in thousands) As Reported as of December 31, 2018 Financing Obligations - Master Leases (1) Finance Leases - Dayton and Mahoning Valley Operating Leases - Master Leases (2) Operating Lease - Meadows (3) Other Operating Leases - Non-Master Leases As Adjusted for ASC 842 Increase/(Decrease) Assets Current assets Prepaid expenses $ 62,971 $ — $ — $ — $ — $ (977 ) $ 61,994 $ (977 ) Total current assets $ 677,658 $ — $ — $ — $ — $ (977 ) $ 676,681 $ (977 ) Property and equipment, net (4) $ 6,868,768 $ — $ (164,314 ) $ (1,407,357 ) $ — $ — $ 5,297,097 $ (1,571,671 ) Other assets Goodwill $ 1,228,422 $ 5,517 $ — $ — $ — $ — $ 1,233,939 $ 5,517 Operating lease right-of-use assets (5) $ — $ — $ — $ 3,541,144 $ 112,804 $ 152,519 $ 3,806,467 $ 3,806,467 Finance lease right-of-use assets (6) $ — $ — $ 224,482 $ — $ — $ — $ 224,482 $ 224,482 Total other assets $ 3,414,586 $ 5,517 $ 224,482 $ 3,541,144 $ 112,804 $ 152,519 $ 7,451,052 $ 4,036,466 Total assets $ 10,961,012 $ 5,517 $ 60,168 $ 2,133,787 $ 112,804 $ 151,542 $ 13,424,830 $ 2,463,818 Liabilities Current liabilities Current portion of financing obligations (7) $ 67,777 $ — $ (1,534 ) $ (16,157 ) $ — $ — $ 50,086 $ (17,691 ) Current portion of operating lease liabilities (5) $ — $ — $ — $ 72,894 $ 20,515 $ 8,913 $ 102,322 $ 102,322 Current portion of finance lease liabilities (6) $ — $ — $ 5,752 $ — $ — $ — $ 5,752 $ 5,752 Accrued expenses and other current liabilities $ 577,968 $ — $ — $ — $ — $ (434 ) $ 577,534 $ (434 ) Total current liabilities $ 738,436 $ — $ 4,218 $ 56,737 $ 20,515 $ 8,479 $ 828,385 $ 89,949 Long-term portion of financing obligations (7) $ 7,080,638 $ 5,517 $ (181,262 ) $ (2,760,587 ) $ — $ — $ 4,144,306 $ (2,936,332 ) Long-term portion of operating lease liabilities (5) $ — $ — $ — $ 3,467,057 $ 92,289 $ 144,988 $ 3,704,334 $ 3,704,334 Long-term portion of finance lease liabilities (6) $ — $ — $ 218,329 $ — $ — $ — $ 218,329 $ 218,329 Deferred income taxes (8) $ — $ — $ 4,288 $ 299,523 $ — $ — $ 303,811 $ 303,811 Other noncurrent liabilities $ 28,269 $ — $ — $ — $ — $ (1,925 ) $ 26,344 $ (1,925 ) Total liabilities $ 10,229,791 $ 5,517 $ 45,573 $ 1,062,730 $ 112,804 $ 151,542 $ 11,607,957 $ 1,378,166 Stockholders’ equity Retained earnings (accumulated deficit) $ (967,949 ) $ — $ 14,595 $ 1,071,057 $ — $ — $ 117,703 $ 1,085,652 Total Penn National Gaming, Inc. stockholders’ equity $ 731,226 $ — $ 14,595 $ 1,071,057 $ — $ — $ 1,816,878 $ 1,085,652 Total stockholders’ equity $ 731,221 $ — $ 14,595 $ 1,071,057 $ — $ — $ 1,816,873 $ 1,085,652 Total liabilities and stockholders’ equity $ 10,961,012 $ 5,517 $ 60,168 $ 2,133,787 $ 112,804 $ 151,542 $ 13,424,830 $ 2,463,818 (1) During the first quarter of 2019, the Company identified an adjustment to the purchase price allocation associated with its October 2018 acquisition of Pinnacle Entertainment, Inc. (“Pinnacle”). The purchase price adjustment increased the financing obligation upon the adoption of the new lease standard, resulting in an increase to goodwill (see Note 5, “Acquisitions” ). (2) Represents components contained within each of the Master Leases determined to be operating leases (primarily consists of land components). (3) Represents the triple net lease with GLPI for the real estate assets used in the operations of Meadows Racetrack and Casino (the “Meadows Lease”). (4) Represents the (i) derecognition of the carrying amount of the property and equipment, net, associated with land components contained within our Master Leases determined to be operating leases upon the adoption of the new lease standard; and (ii) derecognition of the carrying amount of the property and equipment, net, associated with land and building components associated with Dayton and Mahoning Valley determined to be finance leases upon the adoption of the new lease standard. (5) Operating lease ROU assets represent (i) the land components contained within the Master Leases determined to be operating leases upon the adoption of the new lease standard; and (ii) with respect to other Operating Leases, represent (a) the Meadows Lease, which was acquired by the Company in conjunction with in the acquisition of Pinnacle; (b) ground and levee leases with landlords, which were not assumed by GLPI and remain an obligation of the Company; and (c) buildings and equipment not associated with our Master Leases. For leases where the rate implicit in the lease was not readily determinable, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We utilized the incremental borrowing rate on the adoption date for operating leases that commenced prior to that date. The operating lease liability is based on the net present value of future lease payments. (6) Amounts primarily represent finance leases associated with Dayton and Mahoning Valley (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components under current guidance contained within the new lease standard, which resulted in all components being classified as finance leases. Finance leases result in (i) the recognition of a finance lease ROU asset amortized over the lease term and (ii) a corresponding finance lease liability (recorded to interest expense over the lease term). We utilized our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. The finance lease liability is based on the net present value of future lease payments. (7) Represents components associated with our Master Leases that remain financing obligations (primarily building components). The financing obligation at the adoption date was calculated utilizing previous assumptions as determined (a) at the lease commencement date with respect to the Penn Master Lease and (b) at the acquisition date with respect to the Pinnacle Master Lease. (8) Represents the tax impacts related to the adoption of the new lease standard. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company determines if a contract is or contains a leasing element at the inception of the contract or the date in which a modification of an existing contract occurs. In order for a contract to be considered a lease, the contract must transfer the right to control the use of an identified asset for a period of time in exchange for consideration. Control is determined to have occurred if the lessee has (i) the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) the right to direct the use of the identified asset. The Company has leasing arrangements that contain both (i) lease and (ii) non-lease components. The Company accounts for both the lease component and the non-lease component as a single component for all classes of underlying assets. For leases where the rate implicit in the lease is not readily determinable, the Company utilizes its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Upon adoption of the new lease standard, the Company utilized its incremental borrowing rate on January 1, 2019, for operating and finance leases that commenced prior to that date. Lessee Master Leases - General As described in Note 3, “New Accounting Pronouncements,” components associated with the Master Leases were determined to be operating leases or finance leases or continued to be financing obligations. Penn Master Lease Pursuant to a triple net master lease with GLPI, which became effective November 1, 2013 (the “Penn Master Lease”), the Company leases real estate assets associated with 20 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five -year renewal periods on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 35 years . The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2% , depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8 :1, and a component that is based on the performance of the facilities, which is prospectively adjusted (i) every five years by an amount equal to 4% of the average change in net revenues of all facilities under the Penn Master Lease compared to a contractual baseline (other than Hollywood Casino Columbus and Hollywood Casino Toledo (“Columbus and Toledo”)) during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the revenues of Hollywood Casino Columbus and Hollywood Casino Toledo in excess of a contractual baseline. The next annual escalator test date is scheduled to occur effective November 1, 2019 and the next Penn Percentage Rent reset is scheduled to occur on November 1, 2023. Monthly variable expenses associated with contingent payments for Columbus and Toledo totaled $13.1 million and $12.4 million for the three months ended March 31, 2019 and 2018 , respectively. For the three months ended March 31, 2019 , the Company recorded an expense of $6.8 million related to the operating lease components (land components), which is included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations; and recorded an expense of $6.3 million related to the finance lease components (building components), which is included in “Interest expense” within our unaudited Condensed Consolidated Statements of Operations. The $12.4 million expense related to the three months ended March 31, 2018 was included in “Interest expense” within our unaudited Condensed Consolidated Statements of Operations pursuant to previous GAAP under which all contingent rentals were recorded as interest expense due to the failed sale-leaseback accounting treatment. Changes to future lease payments (i.e., when future escalators become known or future variable rent resets occur) require the Company to (i) increase both the operating lease ROU assets and corresponding operating lease liabilities with respect to operating leases; and (ii) record the incremental variable payment associated with the financing obligation to interest expense. Pinnacle Master Lease In connection with the Pinnacle Acquisition (as defined in Note 5, “Acquisitions,” ), the Company assumed a triple net master lease with GLPI, originally effective April 28, 2016 (the “Pinnacle Master Lease”), pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial 10 -year term, with five subsequent, five -year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years . The payment structure under the Pinnacle Master Lease includes a fixed component, which is subject to an annual escalator of up to 2% , depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8 :1, and a component that is based on the performance of the facilities, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of all facilities under the Pinnacle Master Lease (with the exception of Plainridge Park Casino) compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). The next annual escalator test date is scheduled to occur effective May 1, 2019 and the next Pinnacle Percentage Rent reset is scheduled to occur on May 1, 2020. Changes to future lease payments (i.e., when future escalators become known or future variable rent resets occur) require the Company to (i) increase both the operating lease ROU assets and corresponding operating lease liabilities with respect to operating leases; and (ii) record the incremental variable payment associated with the financing obligation to interest expense. Operating Leases The Company’s operating leases consist mainly of (i) the Meadows Lease with GLPI; (ii) a triple net lease with VICI Properties Inc. (“VICI”) for the real estate assets used in the operation of Margaritaville Resort Casino (the “Margaritaville Lease”); (iii) ground and levee leases to landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (iv) building and equipment not associated with our Master Leases. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Other information related to lease term and discount rate was as follows: March 31, Weighted Average Remaining Lease Term Operating leases (1) 29.8 years Finance leases (2) 29.5 years Financing obligations (3) 31.1 years Weighted Average Discount Rate Operating leases (1) 6.9 % Finance leases (2) 6.8 % Financing obligations (3) 8.1 % (1) Amounts consist of (i) land components associated with our Master Leases that were concluded to be operating leases at the adoption date of the new lease standard; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) ground and levee leases with landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (v) building and equipment not contained within leases with our REIT landlords. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (2) Amounts primarily represent finance leases associated with our Dayton and Mahoning Valley properties (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components utilizing the guidance contained within the new lease standard, which resulted in all components being classified as finance leases. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (3) Amounts consist of components contained within each of the Master Leases determined to continue to be financing obligations (which consist primarily of building components) at the adoption date of the new lease standard. The components of lease expense were as follows: Classification (in thousands) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense Depreciation and Amortization Total for the three months ended March 31, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 84,730 $ — $ — $ 84,730 Operating lease cost 137 156 4,097 — — 4,390 Short-term lease cost 12,936 160 568 — — 13,664 Variable lease cost 1,259 2 315 — — 1,576 Total $ 14,332 $ 318 $ 89,710 $ — $ — $ 104,360 Finance Lease Costs Interest expense associated with finance leases (2) $ — $ — $ — $ 3,827 $ — $ 3,827 Amortization expense associated with finance leases (2) — — — — 1,959 1,959 Total $ — $ — $ — $ 3,827 $ 1,959 $ 5,786 Financing Obligation Costs Interest expense associated with financing obligations (3) $ — $ — $ — $ 97,672 $ — $ 97,672 (1) Pertains to the components contained within the Master Leases (primarily land components) determined to be operating leases, the Meadows Lease, and the Margaritaville Lease. (2) Primarily pertains to the Dayton and Mahoning Valley finance leases. (3) Pertains to the components contained within the Master Leases (primarily building components) determined to continue to be financing obligations, inclusive of contingent variable interest expense associated with Columbus and Toledo. The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2019 : (in thousands) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the three months ended March 31, 2019) $ 275,761 $ 15,701 $ 292,189 2020 352,916 21,028 374,715 2021 336,908 21,021 367,278 2022 336,660 20,909 367,278 2023 333,540 20,083 367,278 Thereafter 7,665,371 398,727 9,637,956 Total lease payments 9,301,156 497,469 11,406,694 Less: Amounts representing interest (5,336,870 ) (274,647 ) (7,224,861 ) Present value of future lease payments 3,964,286 222,822 4,181,833 Less: Current portion of lease obligations (95,894 ) (5,874 ) (52,600 ) Long-term portion of lease obligations $ 3,868,392 $ 216,948 $ 4,129,233 For the three months ended March 31, 2019 and 2018 , total payments made to GLPI under the Penn Master Lease were $114.4 million and $115.9 million , respectively. For the three months ended March 31, 2019 , total payments made to GLPI under the Pinnacle Master Lease were $81.3 million . Supplemental cash flow information related to leases was as follows: (in thousands) For the three months ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 3,827 Operating cash flows from operating leases $ 90,629 Financing cash flows from finance leases $ 1,640 Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue within “Food, beverage, hotel and other revenues” within our unaudited Condensed Consolidated Statements of Operations. For the three months ended March 31, 2019 , the Company recognized $71.4 million |
Leases | Leases The Company determines if a contract is or contains a leasing element at the inception of the contract or the date in which a modification of an existing contract occurs. In order for a contract to be considered a lease, the contract must transfer the right to control the use of an identified asset for a period of time in exchange for consideration. Control is determined to have occurred if the lessee has (i) the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) the right to direct the use of the identified asset. The Company has leasing arrangements that contain both (i) lease and (ii) non-lease components. The Company accounts for both the lease component and the non-lease component as a single component for all classes of underlying assets. For leases where the rate implicit in the lease is not readily determinable, the Company utilizes its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Upon adoption of the new lease standard, the Company utilized its incremental borrowing rate on January 1, 2019, for operating and finance leases that commenced prior to that date. Lessee Master Leases - General As described in Note 3, “New Accounting Pronouncements,” components associated with the Master Leases were determined to be operating leases or finance leases or continued to be financing obligations. Penn Master Lease Pursuant to a triple net master lease with GLPI, which became effective November 1, 2013 (the “Penn Master Lease”), the Company leases real estate assets associated with 20 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five -year renewal periods on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 35 years . The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2% , depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8 :1, and a component that is based on the performance of the facilities, which is prospectively adjusted (i) every five years by an amount equal to 4% of the average change in net revenues of all facilities under the Penn Master Lease compared to a contractual baseline (other than Hollywood Casino Columbus and Hollywood Casino Toledo (“Columbus and Toledo”)) during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the revenues of Hollywood Casino Columbus and Hollywood Casino Toledo in excess of a contractual baseline. The next annual escalator test date is scheduled to occur effective November 1, 2019 and the next Penn Percentage Rent reset is scheduled to occur on November 1, 2023. Monthly variable expenses associated with contingent payments for Columbus and Toledo totaled $13.1 million and $12.4 million for the three months ended March 31, 2019 and 2018 , respectively. For the three months ended March 31, 2019 , the Company recorded an expense of $6.8 million related to the operating lease components (land components), which is included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations; and recorded an expense of $6.3 million related to the finance lease components (building components), which is included in “Interest expense” within our unaudited Condensed Consolidated Statements of Operations. The $12.4 million expense related to the three months ended March 31, 2018 was included in “Interest expense” within our unaudited Condensed Consolidated Statements of Operations pursuant to previous GAAP under which all contingent rentals were recorded as interest expense due to the failed sale-leaseback accounting treatment. Changes to future lease payments (i.e., when future escalators become known or future variable rent resets occur) require the Company to (i) increase both the operating lease ROU assets and corresponding operating lease liabilities with respect to operating leases; and (ii) record the incremental variable payment associated with the financing obligation to interest expense. Pinnacle Master Lease In connection with the Pinnacle Acquisition (as defined in Note 5, “Acquisitions,” ), the Company assumed a triple net master lease with GLPI, originally effective April 28, 2016 (the “Pinnacle Master Lease”), pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial 10 -year term, with five subsequent, five -year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years . The payment structure under the Pinnacle Master Lease includes a fixed component, which is subject to an annual escalator of up to 2% , depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8 :1, and a component that is based on the performance of the facilities, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of all facilities under the Pinnacle Master Lease (with the exception of Plainridge Park Casino) compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). The next annual escalator test date is scheduled to occur effective May 1, 2019 and the next Pinnacle Percentage Rent reset is scheduled to occur on May 1, 2020. Changes to future lease payments (i.e., when future escalators become known or future variable rent resets occur) require the Company to (i) increase both the operating lease ROU assets and corresponding operating lease liabilities with respect to operating leases; and (ii) record the incremental variable payment associated with the financing obligation to interest expense. Operating Leases The Company’s operating leases consist mainly of (i) the Meadows Lease with GLPI; (ii) a triple net lease with VICI Properties Inc. (“VICI”) for the real estate assets used in the operation of Margaritaville Resort Casino (the “Margaritaville Lease”); (iii) ground and levee leases to landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (iv) building and equipment not associated with our Master Leases. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Other information related to lease term and discount rate was as follows: March 31, Weighted Average Remaining Lease Term Operating leases (1) 29.8 years Finance leases (2) 29.5 years Financing obligations (3) 31.1 years Weighted Average Discount Rate Operating leases (1) 6.9 % Finance leases (2) 6.8 % Financing obligations (3) 8.1 % (1) Amounts consist of (i) land components associated with our Master Leases that were concluded to be operating leases at the adoption date of the new lease standard; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) ground and levee leases with landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (v) building and equipment not contained within leases with our REIT landlords. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (2) Amounts primarily represent finance leases associated with our Dayton and Mahoning Valley properties (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components utilizing the guidance contained within the new lease standard, which resulted in all components being classified as finance leases. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (3) Amounts consist of components contained within each of the Master Leases determined to continue to be financing obligations (which consist primarily of building components) at the adoption date of the new lease standard. The components of lease expense were as follows: Classification (in thousands) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense Depreciation and Amortization Total for the three months ended March 31, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 84,730 $ — $ — $ 84,730 Operating lease cost 137 156 4,097 — — 4,390 Short-term lease cost 12,936 160 568 — — 13,664 Variable lease cost 1,259 2 315 — — 1,576 Total $ 14,332 $ 318 $ 89,710 $ — $ — $ 104,360 Finance Lease Costs Interest expense associated with finance leases (2) $ — $ — $ — $ 3,827 $ — $ 3,827 Amortization expense associated with finance leases (2) — — — — 1,959 1,959 Total $ — $ — $ — $ 3,827 $ 1,959 $ 5,786 Financing Obligation Costs Interest expense associated with financing obligations (3) $ — $ — $ — $ 97,672 $ — $ 97,672 (1) Pertains to the components contained within the Master Leases (primarily land components) determined to be operating leases, the Meadows Lease, and the Margaritaville Lease. (2) Primarily pertains to the Dayton and Mahoning Valley finance leases. (3) Pertains to the components contained within the Master Leases (primarily building components) determined to continue to be financing obligations, inclusive of contingent variable interest expense associated with Columbus and Toledo. The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2019 : (in thousands) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the three months ended March 31, 2019) $ 275,761 $ 15,701 $ 292,189 2020 352,916 21,028 374,715 2021 336,908 21,021 367,278 2022 336,660 20,909 367,278 2023 333,540 20,083 367,278 Thereafter 7,665,371 398,727 9,637,956 Total lease payments 9,301,156 497,469 11,406,694 Less: Amounts representing interest (5,336,870 ) (274,647 ) (7,224,861 ) Present value of future lease payments 3,964,286 222,822 4,181,833 Less: Current portion of lease obligations (95,894 ) (5,874 ) (52,600 ) Long-term portion of lease obligations $ 3,868,392 $ 216,948 $ 4,129,233 For the three months ended March 31, 2019 and 2018 , total payments made to GLPI under the Penn Master Lease were $114.4 million and $115.9 million , respectively. For the three months ended March 31, 2019 , total payments made to GLPI under the Pinnacle Master Lease were $81.3 million . Supplemental cash flow information related to leases was as follows: (in thousands) For the three months ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 3,827 Operating cash flows from operating leases $ 90,629 Financing cash flows from finance leases $ 1,640 Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue within “Food, beverage, hotel and other revenues” within our unaudited Condensed Consolidated Statements of Operations. For the three months ended March 31, 2019 , the Company recognized $71.4 million |
Leases | Leases The Company determines if a contract is or contains a leasing element at the inception of the contract or the date in which a modification of an existing contract occurs. In order for a contract to be considered a lease, the contract must transfer the right to control the use of an identified asset for a period of time in exchange for consideration. Control is determined to have occurred if the lessee has (i) the right to obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) the right to direct the use of the identified asset. The Company has leasing arrangements that contain both (i) lease and (ii) non-lease components. The Company accounts for both the lease component and the non-lease component as a single component for all classes of underlying assets. For leases where the rate implicit in the lease is not readily determinable, the Company utilizes its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Upon adoption of the new lease standard, the Company utilized its incremental borrowing rate on January 1, 2019, for operating and finance leases that commenced prior to that date. Lessee Master Leases - General As described in Note 3, “New Accounting Pronouncements,” components associated with the Master Leases were determined to be operating leases or finance leases or continued to be financing obligations. Penn Master Lease Pursuant to a triple net master lease with GLPI, which became effective November 1, 2013 (the “Penn Master Lease”), the Company leases real estate assets associated with 20 of the gaming facilities used in its operations. The Penn Master Lease has an initial term of 15 years with four subsequent, five -year renewal periods on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 35 years . The payment structure under the Penn Master Lease includes a fixed component, a portion of which is subject to an annual escalator of up to 2% , depending on the Adjusted Revenue to Rent Ratio (as defined in the Penn Master Lease) of 1.8 :1, and a component that is based on the performance of the facilities, which is prospectively adjusted (i) every five years by an amount equal to 4% of the average change in net revenues of all facilities under the Penn Master Lease compared to a contractual baseline (other than Hollywood Casino Columbus and Hollywood Casino Toledo (“Columbus and Toledo”)) during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the revenues of Hollywood Casino Columbus and Hollywood Casino Toledo in excess of a contractual baseline. The next annual escalator test date is scheduled to occur effective November 1, 2019 and the next Penn Percentage Rent reset is scheduled to occur on November 1, 2023. Monthly variable expenses associated with contingent payments for Columbus and Toledo totaled $13.1 million and $12.4 million for the three months ended March 31, 2019 and 2018 , respectively. For the three months ended March 31, 2019 , the Company recorded an expense of $6.8 million related to the operating lease components (land components), which is included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations; and recorded an expense of $6.3 million related to the finance lease components (building components), which is included in “Interest expense” within our unaudited Condensed Consolidated Statements of Operations. The $12.4 million expense related to the three months ended March 31, 2018 was included in “Interest expense” within our unaudited Condensed Consolidated Statements of Operations pursuant to previous GAAP under which all contingent rentals were recorded as interest expense due to the failed sale-leaseback accounting treatment. Changes to future lease payments (i.e., when future escalators become known or future variable rent resets occur) require the Company to (i) increase both the operating lease ROU assets and corresponding operating lease liabilities with respect to operating leases; and (ii) record the incremental variable payment associated with the financing obligation to interest expense. Pinnacle Master Lease In connection with the Pinnacle Acquisition (as defined in Note 5, “Acquisitions,” ), the Company assumed a triple net master lease with GLPI, originally effective April 28, 2016 (the “Pinnacle Master Lease”), pursuant to which the Company leases real estate assets associated with 12 of the gaming facilities used in its operations. Upon assumption of the Pinnacle Master Lease, as amended, there were 7.5 years remaining of the initial 10 -year term, with five subsequent, five -year renewal periods, on the same terms and conditions, exercisable at the Company’s option. The Company has determined that the lease term is 32.5 years . The payment structure under the Pinnacle Master Lease includes a fixed component, which is subject to an annual escalator of up to 2% , depending on the Adjusted Revenue to Rent Ratio (as defined in the Pinnacle Master Lease) of 1.8 :1, and a component that is based on the performance of the facilities, which is prospectively adjusted every two years by an amount equal to 4% of the average change in net revenues of all facilities under the Pinnacle Master Lease (with the exception of Plainridge Park Casino) compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). The next annual escalator test date is scheduled to occur effective May 1, 2019 and the next Pinnacle Percentage Rent reset is scheduled to occur on May 1, 2020. Changes to future lease payments (i.e., when future escalators become known or future variable rent resets occur) require the Company to (i) increase both the operating lease ROU assets and corresponding operating lease liabilities with respect to operating leases; and (ii) record the incremental variable payment associated with the financing obligation to interest expense. Operating Leases The Company’s operating leases consist mainly of (i) the Meadows Lease with GLPI; (ii) a triple net lease with VICI Properties Inc. (“VICI”) for the real estate assets used in the operation of Margaritaville Resort Casino (the “Margaritaville Lease”); (iii) ground and levee leases to landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (iv) building and equipment not associated with our Master Leases. Certain of our lease agreements include rental payments based on a percentage of sales over specified contractual amounts, rental payments adjusted periodically for inflation and rental payments based on usage. The Company’s leases include options to extend the lease term. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Other information related to lease term and discount rate was as follows: March 31, Weighted Average Remaining Lease Term Operating leases (1) 29.8 years Finance leases (2) 29.5 years Financing obligations (3) 31.1 years Weighted Average Discount Rate Operating leases (1) 6.9 % Finance leases (2) 6.8 % Financing obligations (3) 8.1 % (1) Amounts consist of (i) land components associated with our Master Leases that were concluded to be operating leases at the adoption date of the new lease standard; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) ground and levee leases with landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (v) building and equipment not contained within leases with our REIT landlords. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (2) Amounts primarily represent finance leases associated with our Dayton and Mahoning Valley properties (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components utilizing the guidance contained within the new lease standard, which resulted in all components being classified as finance leases. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (3) Amounts consist of components contained within each of the Master Leases determined to continue to be financing obligations (which consist primarily of building components) at the adoption date of the new lease standard. The components of lease expense were as follows: Classification (in thousands) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense Depreciation and Amortization Total for the three months ended March 31, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 84,730 $ — $ — $ 84,730 Operating lease cost 137 156 4,097 — — 4,390 Short-term lease cost 12,936 160 568 — — 13,664 Variable lease cost 1,259 2 315 — — 1,576 Total $ 14,332 $ 318 $ 89,710 $ — $ — $ 104,360 Finance Lease Costs Interest expense associated with finance leases (2) $ — $ — $ — $ 3,827 $ — $ 3,827 Amortization expense associated with finance leases (2) — — — — 1,959 1,959 Total $ — $ — $ — $ 3,827 $ 1,959 $ 5,786 Financing Obligation Costs Interest expense associated with financing obligations (3) $ — $ — $ — $ 97,672 $ — $ 97,672 (1) Pertains to the components contained within the Master Leases (primarily land components) determined to be operating leases, the Meadows Lease, and the Margaritaville Lease. (2) Primarily pertains to the Dayton and Mahoning Valley finance leases. (3) Pertains to the components contained within the Master Leases (primarily building components) determined to continue to be financing obligations, inclusive of contingent variable interest expense associated with Columbus and Toledo. The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2019 : (in thousands) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the three months ended March 31, 2019) $ 275,761 $ 15,701 $ 292,189 2020 352,916 21,028 374,715 2021 336,908 21,021 367,278 2022 336,660 20,909 367,278 2023 333,540 20,083 367,278 Thereafter 7,665,371 398,727 9,637,956 Total lease payments 9,301,156 497,469 11,406,694 Less: Amounts representing interest (5,336,870 ) (274,647 ) (7,224,861 ) Present value of future lease payments 3,964,286 222,822 4,181,833 Less: Current portion of lease obligations (95,894 ) (5,874 ) (52,600 ) Long-term portion of lease obligations $ 3,868,392 $ 216,948 $ 4,129,233 For the three months ended March 31, 2019 and 2018 , total payments made to GLPI under the Penn Master Lease were $114.4 million and $115.9 million , respectively. For the three months ended March 31, 2019 , total payments made to GLPI under the Pinnacle Master Lease were $81.3 million . Supplemental cash flow information related to leases was as follows: (in thousands) For the three months ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 3,827 Operating cash flows from operating leases $ 90,629 Financing cash flows from finance leases $ 1,640 Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue within “Food, beverage, hotel and other revenues” within our unaudited Condensed Consolidated Statements of Operations. For the three months ended March 31, 2019 , the Company recognized $71.4 million |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Margaritaville Resort Casino On January 1, 2019, the Company acquired the operations of Margaritaville Resort Casino for an aggregate purchase price of $119.9 million , after working capital and other adjustments, pursuant to (i) an agreement and plan of merger (the “Margaritaville Merger Agreement”) among the Company, VICI, Bossier Casino Venture (HoldCo), Inc. (“Holdco”), and Silver Slipper Gaming, LLC, and (ii) a membership interest purchase agreement (the “MIPA”) among VICI and the Company. Pursuant to the Margaritaville Merger Agreement, a subsidiary of VICI merged with and into Holdco with Holdco surviving the merger as a wholly-owned subsidiary of VICI (the “Merger”) and owner of the real estate assets relating to Margaritaville Resort Casino. Pursuant to the MIPA, immediately following the consummation of the Merger, HoldCo sold its interests in its sole direct subsidiary and owner of the Margaritaville Resort Casino operating assets, to the Company. On the closing date, we entered into the Margaritaville Lease with VICI having an initial annual rent of $23.2 million and an initial term of 15 years , with four five -year renewal options. The acquisition of the operations was financed through incremental borrowings under the Company’s Revolving Credit Facility (as defined in Note 9, “Long-term Debt” ) and the acquisition of the real estate assets of Margaritaville Resort Casino was financed through VICI in the amount of $261.1 million . Due to the recent acquisition date of Margaritaville Resort Casino, the Company has not yet finalized its valuation analysis and is in the process of evaluating key assumptions that derive the fair value of the assets acquired and liabilities assumed. The following table reflects the preliminary allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill: (in thousands) January 1, 2019 Cash and cash equivalents $ 10,756 Receivables, prepaid expenses, and other current assets 7,058 Property and equipment 21,731 Goodwill (1) 39,457 Other intangible assets Gaming licenses 48,100 Customer relationships 2,300 Operating lease right-of-use assets 196,212 Total assets $ 325,614 Accounts payable, accrued expenses, and other current liabilities $ 9,511 Operating lease liabilities 196,212 Total liabilities 205,723 Net assets acquired $ 119,891 (1) The goodwill has been assigned to our South segment. The entire $39.5 million goodwill amount is deductible for tax purposes. The Company used the income, market, or cost approach (or a combination thereof) for the valuation, as appropriate, and used valuation inputs in these models and analyses that were based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability. For certain items, the carrying amount was determined to be a reasonable approximation of fair value based on information available to the Company. Property and equipment acquired consists of non-REIT assets (e.g., equipment for use in gaming operations and furniture and equipment). Upon adoption of the new lease standard, we determined the land and buildings to be operating leases, which are accounted for as operating lease right-of-use assets with a corresponding operating lease liability calculated based on the net present value of the future lease payments at the acquisition date. Management determined the fair value of its office equipment, computer equipment and slot machine gaming devices based on the market approach and other property based on the cost approach, supported where available by observable market data, which includes consideration of obsolescence. Acquired identifiable intangible assets consist of a gaming license, which is an indefinite-lived intangible asset, and a customer relationship, which is an amortizing intangible asset with an assigned useful life of 2 years . Management valued (i) gaming licenses using the Greenfield Method under the income approach, which estimates the fair value of the gaming license using a discounted cash flow model assuming the Company built a casino with similar utility to that of the existing facility and assumes a theoretical start-up company going into business without any assets other than the intangible asset being valued; and (ii) customer relationships (rated player databases) using the with-and-without method of the income approach. All valuation methods are forms of the income approach supported by observable market data for peer casino operator companies. The following table includes the financial results of the Margaritaville Resort Casino since the acquisition date which is included within our unaudited Condensed Consolidated Statement of Operations for the three months ended March 31, 2019 : (in thousands) Period from January 1, 2019 through March 31, 2019 Revenues $ 41,499 Net income $ 4,961 Pinnacle Acquisition On October 15, 2018, the Company acquired all of the outstanding shares of Pinnacle, for a total purchase price of $2,816.2 million , which consisted of (i) a cash payment of $20.00 per share of Pinnacle common stock, totaling $1,252.2 million ; (ii) issuance of Penn common stock in the amount of $749.7 million ; and (iii) the retirement of $814.3 million of Pinnacle debt obligations (the “Pinnacle Acquisition”). In conjunction with the Pinnacle Acquisition, the Company divested the membership interests of certain Pinnacle subsidiaries which operated the casinos known as Ameristar Casino Resort St. Charles, Ameristar Casino Hotel Kansas City, Belterra Casino Resort and Belterra Park, to Boyd Gaming Corporation (“Boyd”); GLPI acquired the real estate assets associated with the Plainridge Park Casino, and concurrently leased back the real estate assets to the Company; and a subsidiary of Boyd acquired the real estate assets associated with Belterra Park from a subsidiary of GLPI. Additionally, as a part of the transaction, the Pinnacle Master Lease was assumed and amended by the Company. For more information on the Pinnacle Master Lease and related amendment, see Note 4, “Leases.” Due primarily to the scale and complexity of the Pinnacle Acquisition, the Company has not yet finalized its valuation analysis and is in the process of evaluating key assumptions that derive the fair value of the assets acquired and liabilities assumed, including the income tax balances. Therefore, the allocation of the purchase price is preliminary and subject to change. During the three months ended March 31, 2019, we made the following adjustments to the preliminary purchase price allocation: (in thousands) Increase/(Decrease) Property and equipment - Pinnacle Master Lease (1) $ (29,200 ) Goodwill (2) 11,617 Other intangible assets Gaming licenses 21,600 Total assets $ 4,017 Long-term financing obligation, including current portion (3) $ 5,517 Deferred tax liabilities (1,500 ) Total liabilities 4,017 Net assets acquired $ — (1) Includes buildings, boats, vessels, barges, and implied land and land use rights. Land use rights represent the intangible value of the Company’s ability to utilize and access land associated with long term ground lease agreements that give the Company the exclusive rights to operate the casino gaming facilities associated with such agreements. (2) See Note 7, “Goodwill and Other Intangible Assets,” for details on the impact to each reportable segment. (3) Long-term financing obligation, including current portion represents the financing obligation associated with Pinnacle Master Lease, as amended. Pro Forma Financial Information - Margaritaville Resort Casino and Pinnacle The following table includes unaudited pro forma consolidated financial information assuming our acquisitions of Margaritaville Resort Casino and Pinnacle had occurred as of January 1, 2018, and January 1, 2017, respectively. The pro forma financial information does not represent the anticipated future results of the combined company. The pro forma amounts include the historical operating results of Penn, Margaritaville Resort Casino, and Pinnacle, prior to the acquisition, with adjustments directly attributable to the acquisitions, inclusive of adjustments for acquisition costs. The below pro forma results do not include any adjustments related to synergies. For the three months ended March 31, (in thousands) 2019 2018 Revenues $ 1,282,571 $ 1,323,247 Net income attributable to Penn National Gaming, Inc. $ 43,426 $ 47,144 Greektown Casino-Hotel On November 14, 2018, the Company announced that it had entered into a definitive agreement to acquire the operations of Greektown Casino-Hotel in Detroit, Michigan for approximately $300 million in cash. Simultaneous with the closing of the transaction, the Company will enter into a triple net lease agreement with VICI for the real estate assets used in the operations of the property. The lease will have an initial annual rent of $55.6 million and an initial term of 15 years , with four five -year renewal options. The transaction will be financed with a combination of cash on hand and debt. The transaction, which is |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net, consisted of the following: (in thousands) March 31, December 31, Property and equipment - non-Master Leases Land and improvements $ 343,987 $ 343,987 Building, vessels and improvements 347,479 342,944 Furniture, fixtures and equipment 1,599,050 1,565,830 Leasehold improvements 153,872 152,943 Construction in progress 35,467 25,473 2,479,855 2,431,177 Less: Accumulated depreciation (1,442,955 ) (1,400,198 ) 1,036,900 1,030,979 Property and equipment - Master Leases Land and improvements (1) 1,525,934 2,970,969 Building, vessels and improvements (2) 3,664,611 3,845,062 5,190,545 6,816,031 Less: Accumulated depreciation (999,523 ) (978,242 ) 4,191,022 5,837,789 Property and equipment, net $ 5,227,922 $ 6,868,768 (1) Upon adoption of ASC 842, approximately $1.4 billion of land was derecognized and replaced with operating lease ROU assets based on the net present value of future lease payments. See Note 3, “New Accounting Pronouncements.” (2) Upon adoption of ASC 842, $180.4 million of building and improvements, gross, was derecognized and replaced with finance lease ROU assets based on the net present value of future lease payments. See Note 3, “New Accounting Pronouncements.” Depreciation expense for all of our property and equipment was $98.3 million and $55.9 million for the three months ended March 31, 2019 and 2018 , respectively, of which, $48.6 million and $23.3 million , pertained to real estate assets subject to either of our Master Leases, respectively. No interest was capitalized in connection with major construction projects for the three months ended March 31, 2019 and 2018 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets A reconciliation of goodwill and accumulated goodwill impairment losses, by reportable segment, is as follows: (in thousands) Northeast Segment South Segment West Segment Midwest Segment Other Total Balance as of December 31, 2018 Goodwill, gross $ 848,424 $ 185,158 $ 210,423 $ 1,110,052 $ 156,116 $ 2,510,173 Accumulated goodwill impairment losses (707,593 ) (34,522 ) (16,633 ) (435,283 ) (87,720 ) (1,281,751 ) Goodwill, net 140,831 150,636 193,790 674,769 68,396 1,228,422 Goodwill acquired during year — 39,457 — — — 39,457 Other (1) (2,000 ) 5,100 4,117 4,400 — 11,617 Balance as of March 31, 2019 Goodwill, gross 846,424 229,715 214,540 1,114,452 156,116 2,561,247 Accumulated goodwill impairment losses (707,593 ) (34,522 ) (16,633 ) (435,283 ) (87,720 ) (1,281,751 ) Goodwill, net $ 138,831 $ 195,193 $ 197,907 $ 679,169 $ 68,396 $ 1,279,496 (1) The amounts relate to adjustments made during the three months ended March 31, 2019 to the preliminary purchase price allocation pertaining to the Pinnacle Acquisition, described in Note 5, “Acquisitions.” The table below presents the gross carrying amount, accumulated amortization, and net carrying amount of each major class of other intangible assets: March 31, 2019 December 31, 2018 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets Gaming licenses $ 1,568,009 $ — $ 1,568,009 $ 1,498,309 $ — $ 1,498,309 Trademarks 298,000 — 298,000 298,000 — 298,000 Other 696 — 696 696 — 696 Amortizing intangible assets Customer relationships 101,052 (55,450 ) 45,602 98,752 (51,544 ) 47,208 Other 62,261 (51,221 ) 11,040 61,918 (49,263 ) 12,655 Total other intangible assets $ 2,030,018 $ (106,671 ) $ 1,923,347 $ 1,957,675 $ (100,807 ) $ 1,856,868 There were no impairment charges recorded on other intangible assets for the three months March 31, 2019 and 2018 . Our amortizing intangible assets have a weighted-average remaining amortization period of 3.7 years . Amortization expense relating to our amortizing intangible assets was $5.9 million and $4.5 million , for the three months ended March 31, 2019 and 2018 , respectively. The following table presents the estimated amortization expense based on our amortizing intangible assets as of March 31, 2019 (in thousands): Remaining 2019 $ 17,574 2020 18,023 2021 4,526 2022 4,067 2023 4,007 Thereafter 8,445 Total $ 56,642 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: (in thousands) March 31, December 31, Accrued salaries and wages $ 112,946 $ 139,159 Accrued gaming, pari-mutuel, property, and other taxes 102,498 105,767 Accrued interest 6,218 15,793 Other accrued expenses 225,956 204,656 Other current liabilities 124,504 112,593 $ 572,122 $ 577,968 |
Long-term Debt
Long-term Debt | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Long-term debt, net of current maturities, was as follows: (in thousands) March 31, December 31, Senior Secured Credit Facilities: Revolving Credit Facility due 2023 $ 92,000 $ 112,000 Term Loan A Facility due 2023 698,828 707,674 Term Loan B-1 Facility due 2025 1,125,928 1,128,750 5.625% Notes due 2027 400,000 400,000 Other long-term obligations 96,646 104,583 Capital leases (1) — 381 2,413,402 2,453,388 Less: Current maturities of long-term debt (62,505 ) (62,140 ) Less: Debt discount (2,658 ) (2,748 ) Less: Debt issuance costs (36,860 ) (38,412 ) $ 2,311,379 $ 2,350,088 (1) Reclassified to finance lease liabilities upon the adoption of ASC 842. Senior Secured Credit Facilities On January 19, 2017, the Company entered into an agreement to amend and restate its previous credit agreement, dated October 30, 2013, as amended, (the “Credit Agreement”), which provided for: (i) a five -year $700 million revolving credit facility (the “Revolving Credit Facility”), (ii) a five -year $300 million term loan A facility (the “Term Loan A Facility”), and (iii) a seven -year $500 million Term Loan B facility (the “Term Loan B Facility”). On October 15, 2018, in connection with the Pinnacle Acquisition, the Company entered into an incremental joinder agreement (the “Incremental Joinder”), which amended the Credit Agreement (the “Amended Credit Agreement”). The Incremental Joinder provided for an additional $430.2 million of incremental loans having the same terms as the existing Term Loan A Facility, with the exception of extending the maturity date, and an additional $1,128.8 million of loans as a new tranche having new terms (the “Term Loan B-1 Facility” and collectively with the Revolving Credit Facility and the Term Loan A Facility, the “Senior Secured Credit Facilities”). With the exception of extending the maturity date, the Incremental Joinder did not impact the Revolving Credit Facility. As of March 31, 2019 , the Company had conditional obligations under letters of credit issued pursuant to the Senior Secured Credit Facilities with face amounts aggregating $36.5 million , resulting in $571.5 million of available borrowing capacity under the Revolving Credit Facility. The payment and performance of obligations under the Senior Secured Credit Facilities are guaranteed by a lien on and security interest in substantially all of the assets (other than excluded property such as gaming licenses) of the Company and its subsidiaries. 5.625% Senior Unsecured Notes On January 19, 2017, the Company completed an offering of $400 million aggregate principal amount of 5.625% senior unsecured notes that mature on January 15, 2027 (the “ 5.625% Notes”) at a price of par. Interest on the 5.625% Notes is payable on January 15 th and July 15 th of each year. Loss on Early Extinguishment of Debt In connection with principal repayments on the Term Loan B Facility, the Company recorded a $0.9 million loss on early extinguishment of debt during the three months ended March 31, 2018 . Covenants Our Senior Secured Credit Facilities and 5.625% Notes require us, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests. In addition, the Company’s Senior Secured Credit Facilities and 5.625% Notes restrict, among other things, our ability to incur additional indebtedness, incur guarantee obligations, amend debt instruments, pay dividends, create liens on assets, make investments, engage in mergers or consolidations, and otherwise restrict corporate activities. As of March 31, 2019 , the Company was in compliance with all required financial covenants. Other Long-Term Obligations Ohio Relocation Fees As of March 31, 2019 and December 31, 2018 , other long-term obligations included $84.0 million and $91.3 million , respectively, related to the relocation fees for Dayton and Mahoning Valley. The relocation fee for each facility is payable as follows: $7.5 million upon the opening of the facility and eighteen semi-annual payments of $4.8 million beginning one year after the commencement of operations. This obligation is accreted to interest expense at an effective yield of 5.0% . The amount included in interest expense related to this obligation was $1.1 million and $1.3 million for the three months ended March 31, 2019 and 2018 , respectively. Event Center As of March 31, 2019 and December 31, 2018 , other long-term obligations included $12.6 million and $13.2 million , respectively, related to the repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg, which was constructed by The City of Lawrenceburg Department of Redevelopment. Effective in January 2015, by contractual agreement, in exchange for conveyance of the property, the Company is obligated to make annual payments of $1.0 million for 20 years , which began in January 2016. This obligation is accreted to interest expense at its effective yield of 3.0% . The amount included in interest expense related to this obligation was $0.1 million for each of the three months ended March 31, 2019 and 2018 |
Investments in and Advances to
Investments in and Advances to Unconsolidated Affiliates | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in and Advances to Unconsolidated Affiliates | Investments in and Advances to Unconsolidated Affiliates As of March 31, 2019 , investment in and advances to unconsolidated affiliates primarily included the Company’s 50% investment in Kansas Entertainment, which is a joint venture with International Speedway, its 50% interest in Freehold Raceway, and its 50% joint venture with MAXXAM, Inc. (“MAXXAM”) that owns and operates racetracks in Texas. Kansas Joint Venture The Company has a 50% investment in Kansas Entertainment, which owns the Hollywood Casino at Kansas Speedway. As of March 31, 2019 and December 31, 2018 , the Company’s investment balance was $88.9 million and $89.4 million , respectively. The Company has determined that Kansas Entertainment is a VIE that should not be consolidated since the Company does not qualify as the primary beneficiary. In making this determination, the Company concluded that it does not have the ability to direct the activities of Kansas Entertainment that most significantly impact Kansas Entertainment’s economic performance without the approval of International Speedway. Furthermore, International Speedway has substantive participating rights in Kansas Entertainment. The following table provides summary income statement information of Kansas Entertainment for the comparative periods that are included within the Company’s unaudited Condensed Consolidated Statements of Operations: For the three months ended March 31, (in thousands) 2019 2018 Revenues $ 39,511 $ 39,285 Operating expenses 27,414 27,658 Operating income 12,097 11,627 Net income $ 12,097 $ 11,627 Net income attributable to Penn National Gaming, Inc. $ 6,049 $ 5,814 Texas and New Jersey Joint Ventures The Company has a 50% interest in a joint venture with MAXXAM, which owns and operates the Sam Houston Race Park in Houston, Texas and the Valley Race Park in Harlingen, Texas, and holds a license for a racetrack in Austin, Texas. Sam Houston Race Park hosts thoroughbred and quarter-horse racing and offers daily simulcast operations, and Valley Race Park features dog racing and simulcasting. In addition, through a separate arrangement, the Company has a 50% interest in a joint venture with Greenwood Limited Jersey, Inc. (“Greenwood”), which owns and operates Freehold Raceway, in Freehold, New Jersey. The property features a half-mile standardbred racetrack and a grandstand. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company calculates the provision for income taxes during interim reporting periods, by applying an estimate of the annual effective tax rate to the full year projected pretax book income or loss excluding certain discrete items. The effective tax rate (income taxes as a percentage of income before income taxes) including discrete items was 26.6% for the three months ended March 31, 2019 , as compared to 25.7% for the three months ended March 31, 2018 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions, development agreements and other matters arising in the ordinary course of business. Although the Company maintains what it believes to be adequate insurance coverage to mitigate the risk of loss pertaining to covered matters, legal and administrative proceedings can be costly, time-consuming and unpredictable. The Company does not believe that the final outcome of these matters will have a material adverse effect on its financial position, cash flows or results of operations. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Long Term Incentive Compensation Plans The Company’s 2018 Long Term Incentive Compensation Plan (the “2018 Plan”) permits it to issue stock options (incentive and/or non-qualified), stock appreciation rights (“SARs”), restricted stock, phantom stock units (“PSUs”) and other equity and cash awards to employees. Non-employee directors are eligible to receive all such awards, other than incentive stock options. Prior to the 2018 Plan, the Company had the 2008 Long Term Incentive Compensation Plan (the “2008 Plan”), which expired in June 2018. Although awards can no longer be granted under the 2008 Plan, it remains in place until all of the awards previously granted thereunder have been paid, forfeited or expired. As of March 31, 2019 , there were 9,397,761 shares available for future grants under the 2018 Plan. Share Repurchase Program On January 9, 2019, the Company announced a new share repurchase program pursuant to which the Board of Directors authorized to repurchase up to $200 million of the Company’s common stock, which expires on December 31, 2020. The Company did not repurchase any shares of its common stock during the three months ended March 31, 2019 . Performance Share Program On February 14, 2019, the Company’s Compensation Committee of the Board of Directors adopted a performance share program (the “Performance Share Program II”) pursuant to the 2018 Plan, which provides for the issuance of restricted stock awards with performance-based vesting conditions. An aggregate of 278,780 performance shares, at target, was granted on February 14, 2019, with the grant having a three -year award period consisting of three one -year performance periods and a three -year service period. The performance threshold for vesting of these awards is 50% of target and, based on the level of achievement, up to 150% of target. Stock Options The Company granted 1,307,015 and 661,175 stock options during the three months ended March 31, 2019 and 2018 , respectively. Stock-based Compensation Expense Stock-based compensation expense, which pertains to our stock options, restricted stock, and other equity awards, for the three months ended March 31, 2019 and 2018 was $3.4 million and $2.9 million , respectively, and is included within the unaudited Condensed Consolidated Statements of Operations under “General and administrative.” Stock Appreciation Rights The fair value of SARs is calculated each reporting period and estimated using the Black-Scholes option pricing model. The Company’s SARs, which vest over a period of four years , are accounted for as liability awards since they will be settled in cash. Accordingly, the Company has a liability, which is included in “Accrued expenses and other current liabilities” within the unaudited Condensed Consolidated Balance Sheets, associated with its SARs of $8.6 million and $6.8 million as of March 31, 2019 and December 31, 2018 , respectively. For SARs held by employees of the Company, there was $9.6 million of total unrecognized compensation cost as of March 31, 2019 that will be recognized over the awards remaining weighted average vesting period of 2.98 years. For the three months ended March 31, 2019 and 2018 , the Company recognized compensation expense of $3.0 million and a reduction to compensation expense of $4.0 million associated with these awards, respectively. Compensation expense associated with our SARs is recorded in “General and administrative” within the unaudited Condensed Consolidated Statements of Operations. Amounts paid by the Company for the three months ended March 31, 2019 and 2018 on these cash-settled awards was $1.2 million and $3.0 million , respectively. Phantom Stock Units The Company’s PSUs, which vest over a period of three to four years , entitle employees and directors to receive cash based on the fair value of the Company’s common stock on the vesting date. The PSUs are accounted for as liability awards and are re-measured at fair value each reporting period until they become vested with compensation expense being recognized over the requisite service period. The Company has a liability, which is included in “Accrued expenses and other current liabilities” within the unaudited Condensed Consolidated Balance Sheets, associated with its PSUs of $0.4 million and $1.7 million as of March 31, 2019 and December 31, 2018 , respectively. For PSUs held by employees and directors of the Company, there was $4.5 million of total unrecognized compensation cost as of March 31, 2019 that will be recognized over the awards remaining weighted average vesting period of 2.24 years. For the three months ended March 31, 2019 and 2018 , the Company recognized $1.1 million and $0.1 million of compensation expense associated with these awards, respectively. Compensation expense associated with our PSUs is recorded in “General and administrative” within the unaudited Condensed Consolidated Statements of Operations. Amounts paid by the Company for the three months ended March 31, 2019 and 2018 on these cash-settled awards totaled $2.4 million and $4.1 million |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three months ended March 31, 2019 and 2018 : For the three months ended March 31, (in thousands) 2019 2018 Determination of shares: Weighted-average common shares outstanding 116,293 91,191 Assumed conversion of dilutive employee stock-based awards 2,049 3,260 Assumed conversion of restricted stock 253 199 Diluted weighted-average common shares outstanding 118,595 94,650 Options to purchase 1,940,633 shares and 646,307 shares were outstanding during the three months ended March 31, 2019 and 2018 , respectively, but were not included in the computation of diluted EPS because they were antidilutive. The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the three months ended March 31, 2019 and 2018 : For the three months ended March 31, (in thousands, except per share data) 2019 2018 Calculation of basic EPS: Net income applicable to common stock $ 40,992 $ 45,437 Weighted-average common shares outstanding 116,293 91,191 Basic EPS $ 0.35 $ 0.50 Calculation of diluted EPS: Net income applicable to common stock $ 40,992 $ 45,437 Diluted weighted-average common shares outstanding 118,595 94,650 Diluted EPS $ 0.35 $ 0.48 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, “Fair Value Measurements and Disclosures,” establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below: • Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities. • Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions, as there is little, if any, related market activity. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy. The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate. The fair value of the Company’s trade accounts receivable and payables approximates the carrying amounts. Cash and cash equivalents The fair value of the Company’s cash and cash equivalents approximates their carrying amount, due to the short maturity of the cash equivalents. Held-to-maturity Securities and Promissory Notes We have a management contract with Retama Development Corporation (“RDC”), a local government corporation of the City of Selma, Texas, to manage the day-to-day operations of Retama Park Racetrack, located outside of San Antonio, Texas. In addition, we own 1.0% of the equity of Retama Nominal Holder, LLC, which holds a nominal interest in the racing license used to operate Retama Park Racetrack, and a 75.5% interest in Pinnacle Retama Partners, LLC (“PRP”), which owns the contingent gaming rights that may arise if gaming under the existing racing license becomes legal in Texas in the future. As of March 31, 2019 and December 31, 2018 , PRP held $16.9 million in promissory notes issued by RDC and $7.5 million in local government corporation bonds issued by RDC, at amortized cost. The promissory notes and the local government corporation bonds are collateralized by the assets of Retama Park Racetrack. As of March 31, 2019 , the promissory notes are included in “Other current assets” within our unaudited Condensed Consolidated Balance Sheet and the local government corporation bonds, which have long-term contractual maturities, are included in “Other assets” within our unaudited Condensed Consolidated Balance Sheet. The contractual terms of these promissory notes include interest payments due at maturity; however, we have not recorded accrued interest on these promissory notes because uncertainty exists as to RDC’s ability to make interest payments. We have the positive intent and ability to hold the local government corporation bonds to maturity and until the amortized cost is recovered. The estimated fair values of such investments are principally based on appraised values of the land associated with Retama Park Racetrack, which are classified as Level 2 inputs. Long-term Debt The fair value of the Company’s Term Loan A Facility, Term Loan B-1 Facility and 5.625% Notes is estimated based on quoted prices in active markets and as such is a Level 1 measurement. The fair value of the Company’s Revolving Credit Facility approximates its carrying amount as it is revolving, variable rate debt, which we classify as a Level 2 measurement. Other long-term obligations as of March 31, 2019 and December 31, 2018 included the relocation fees for Dayton and Mahoning Valley and the repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg, which are discussed in Note 9, “Long-term Debt.” The fair values of these long-term obligations are estimated based on rates consistent with the Company’s credit rating for comparable terms and debt instruments and as such are Level 2 measurements. Other Liabilities Other liabilities as of March 31, 2019 and December 31, 2018 principally consist of contingent consideration relating to Plainridge Park Casino. The contingent consideration is calculated based on actual earnings of the gaming operations over the first 10 years of operations, which commenced on June 24, 2015. As of March 31, 2019 and December 31, 2018 , we were contractually obligated to make seven remaining annual payments. The fair value of this liability, which is included within our unaudited Condensed Consolidated Balance Sheets in “Accrued expenses and other current liabilities” or “Other noncurrent liabilities,” depending on the timing of the next payment, is estimated based on an income approach using a discounted cash flow model and has been classified as a Level 3 measurement. The carrying amounts and estimated fair values by input level of the Company’s financial instruments were as follows: March 31, 2019 (in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 400,280 $ 400,280 $ 400,280 $ — $ — Held-to-maturity securities $ 7,466 $ 7,931 $ — $ 7,931 $ — Promissory notes $ 16,853 $ 17,491 $ — $ 17,491 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,877,885 $ 1,893,268 $ 1,893,268 $ — $ — 5.625% Notes $ 399,353 $ 389,520 $ 389,520 $ — $ — Other long-term obligations $ 96,646 $ 89,408 $ — $ 89,408 $ — Other liabilities $ 26,556 $ 26,548 $ — $ 2,810 $ 23,738 December 31, 2018 (in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 479,598 $ 479,598 $ 479,598 $ — $ — Held-to-maturity securities $ 7,466 $ 7,879 $ — $ 7,879 $ — Promissory notes $ 16,853 $ 17,415 $ — $ 17,415 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,907,932 $ 1,886,333 $ 1,886,333 $ — $ — 5.625% Notes $ 399,332 $ 360,000 $ 360,000 $ — $ — Other long-term obligations $ 104,583 $ 96,338 $ — $ 96,338 $ — Other liabilities $ 21,863 $ 21,857 $ — $ 2,815 $ 19,042 The following table summarizes the changes in fair value of our Level 3 liabilities measured on a recurring basis: Other Liabilities (in thousands) Contingent Purchase Price Balance as of January 1, 2019 $ 19,042 Payments (21 ) Included in earnings (1) 4,717 Balance as of March 31, 2019 $ 23,738 (1) The expense is included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations. The following table summarizes the significant unobservable inputs used in calculating fair value for our Level 3 liabilities on a recurring basis as of March 31, 2019 : Valuation Technique Unobservable Input Discount Rate Contingent purchase price - Plainridge Park Casino Discounted cash flow Discount rate 7.48% |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information We have aggregated our operating segments into four reportable segments based on the similar characteristics of the operating segments within the regions in which they operate: Northeast, South, West and Midwest. The Other category is included in the following tables in order to reconcile the segment information to the consolidated information. Inter-segment revenues were not material in any of the years presented below. During the fourth quarter of 2018, the Company made revisions to its reportable segments upon the consummation of the Pinnacle Acquisition. Apart from the addition of the new properties, the most significant change was dividing the South/West segment into two separate reportable segments. The financial information presented below reflects such changes, including restating the prior period comparative financial information. The Company utilizes Adjusted EBITDAR (as defined below) as its measure of segment profit or loss. The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to Net income. For the three months ended March 31, (in thousands) 2019 2018 Revenues: Northeast segment $ 550,578 $ 458,719 South segment 291,942 63,330 West segment 158,654 97,966 Midwest segment 271,262 185,534 Other (1) 10,135 10,536 Revenues $ 1,282,571 $ 816,085 Adjusted EBITDAR (2) : Northeast segment $ 164,754 $ 144,977 South segment 97,844 21,118 West segment 49,923 23,931 Midwest segment 99,219 68,185 Other (1) (20,303 ) (15,665 ) Adjusted EBITDAR (2) 391,437 242,546 Other operating benefits (costs) and other income (expenses): Rent expense associated with triple net operating leases (3) (84,730 ) — Stock-based compensation (3,417 ) (2,929 ) Cash-settled stock award variance (472 ) 7,462 Loss on disposal of assets (522 ) (55 ) Contingent purchase price (4,717 ) (1,134 ) Pre-opening and acquisition costs (4,380 ) (6,093 ) Depreciation and amortization (104,053 ) (60,390 ) Impairment losses — (618 ) Non-operating items for Kansas JV (1,073 ) (1,294 ) Interest expense (132,587 ) (115,740 ) Interest income 319 249 Loss on early extinguishment of debt — (882 ) Other — 4 Income before income taxes 55,805 61,126 Income tax expense (14,818 ) (15,689 ) Net income $ 40,987 $ 45,437 (1) The Other category consists of the Company's standalone racing operations, namely Sanford-Orlando Kennel Club, located in Longwood, Florida, and the Company’s joint venture interests in Texas and New Jersey (see Note 10, “Investments in and Advances to Unconsolidated Affiliates” ). The Other category also includes PIV, our management contract for Retama Park Racetrack, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. The Other category also includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have otherwise been allocated to a property. (2) We define Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation and amortization, rent expense associated with triple net operating leases, stock-based compensation, debt extinguishment and financing charges, impairment charges, insurance recoveries and deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening and acquisition costs, and other income or expenses. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment. Adjusted EBITDAR excludes payments associated with our Master Leases, the Meadows Lease, and the Margaritaville Lease, as such amounts are included as either interest expense or rent expense. (3) As of and for the three months ended March 31, 2019, for purposes of this definition, the Company’s triple net operating leases include components of the Master Leases (principally pertaining to the land), the Meadows Lease, and the Margaritaville Lease. For the three months ended March 31, (in thousands) 2019 2018 Capital expenditures: Northeast segment $ 12,685 $ 4,212 South segment 8,872 682 West segment 7,027 2,730 Midwest segment 7,039 3,007 Other 2,043 1,182 Total capital expenditures $ 37,666 $ 11,813 (in thousands) Northeast South West Midwest Other Total As of March 31, 2019 Investment in and advances to unconsolidated affiliates $ 105 $ — $ — $ 88,899 $ 38,920 $ 127,924 Total assets (1) $ 1,470,512 $ 1,458,782 $ 752,189 $ 1,489,105 $ 8,327,583 $ 13,498,171 As of December 31, 2018 Investment in and advances to unconsolidated affiliates $ 105 $ — $ — $ 89,350 $ 39,033 $ 128,488 Total assets (2) $ 1,330,256 $ 1,082,304 $ 755,665 $ 1,411,468 $ 6,381,319 $ 10,961,012 (1) As of March 31, 2019, total assets of the Other category includes the real estate assets subject to the Master Leases, which are either classified as property and equipment, operating lease ROU assets, or finance lease ROU assets, depending on whether the underlying component of the Master Leases was determined to be an operating lease, a finance lease, or continue to be financing obligations, upon adoption of ASC 842. (2) |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of Penn National Gaming, Inc. and its subsidiaries. Investments in and advances to unconsolidated affiliates that do not meet the consolidation criteria of the authoritative guidance for voting interest, controlling interest or variable interest entities (“VIEs”), are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates: The preparation of unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. |
Segment Information | Segment Information: The Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), as that term is defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, “Segment Reporting,” measures and assesses the Company’s business performance based on regional operations of various properties grouped together based primarily on their geographic locations. We view each of our gaming and racing properties as an operating segment with the exception of our two properties in Jackpot, Nevada, which we view as one operating segment. We view our combined video gaming terminals (“VGT”) operations as an operating segment. See Note 16, “Segment Information,” for further information. For financial reporting purposes, as of March 31, 2019 , we aggregate our operating segments into the following reportable segments: Location Real Estate Assets Lease or Ownership Structure Northeast segment Ameristar East Chicago East Chicago, Indiana Pinnacle Master Lease Hollywood Casino Bangor Bangor, Maine Penn Master Lease Hollywood Casino at Charles Town Races Charles Town, West Virginia Penn Master Lease Hollywood Casino Columbus Columbus, Ohio Penn Master Lease Hollywood Casino Lawrenceburg Lawrenceburg, Indiana Penn Master Lease Hollywood Casino at Penn National Race Course Grantville, Pennsylvania Penn Master Lease Hollywood Casino Toledo Toledo, Ohio Penn Master Lease Hollywood Gaming at Dayton Raceway Dayton, Ohio Penn Master Lease Hollywood Gaming at Mahoning Valley Race Course Youngstown, Ohio Penn Master Lease Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease South segment 1 st Jackpot Casino Tunica, Mississippi Penn Master Lease Ameristar Vicksburg Vicksburg, Mississippi Pinnacle Master Lease Boomtown Biloxi Biloxi, Mississippi Penn Master Lease Boomtown Bossier City Bossier City, Louisiana Pinnacle Master Lease Boomtown New Orleans New Orleans, Louisiana Pinnacle Master Lease Hollywood Casino Gulf Coast Bay St. Louis, Mississippi Penn Master Lease Hollywood Casino Tunica Tunica, Mississippi Penn Master Lease L’Auberge Baton Rouge Baton Rouge, Louisiana Pinnacle Master Lease L’Auberge Lake Charles Lake Charles, Louisiana Pinnacle Master Lease Margaritaville Resort Casino (1) Bossier City, Louisiana Margaritaville Lease Resorts Casino Tunica (2) Tunica, Mississippi Penn Master Lease West segment Ameristar Black Hawk Black Hawk, Colorado Pinnacle Master Lease Cactus Petes and Horseshu Jackpot, Nevada Pinnacle Master Lease M Resort Henderson, Nevada Penn Master Lease Tropicana Las Vegas Las Vegas, Nevada Owned Zia Park Casino Hobbs, New Mexico Penn Master Lease Midwest segment Ameristar Council Bluffs Council Bluffs, Iowa Pinnacle Master Lease Argosy Casino Alton (3) Alton, Illinois Penn Master Lease Argosy Casino Riverside Riverside, Missouri Penn Master Lease Hollywood Casino Aurora Aurora, Illinois Penn Master Lease Hollywood Casino Joliet Joliet, Illinois Penn Master Lease Hollywood Casino at Kansas Speedway (4) Kansas City, Kansas Owned - JV Hollywood Casino St. Louis Maryland Heights, Missouri Penn Master Lease Prairie State Gaming (5) Illinois N/A River City Casino St. Louis, Missouri Pinnacle Master Lease (1) Acquired on January 1, 2019. (2) In April 2019, the Company announced that it expects to close Resorts Casino Tunica on June 30, 2019. (3) The riverboat is owned by us and not subject to the Penn Master Lease. (4) Pursuant to a joint venture with International Speedway Corporation (“International Speedway”) and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns the Hollywood Casino at Kansas Speedway. (5) |
Revenue Recognition | Revenue Disaggregation The Company’s revenue from contracts with customers consists of gaming wagers, food and beverage transactions, retail transactions, hotel room sales, racing wagers, sports betting wagers, and management services related to the management of external casinos and reimbursable costs associated with management contracts. During the second quarter of 2018, our management contract was terminated for Hollywood Casino-Jamul San Diego, which is located on the Jamul Tribe’s trust land in San Diego, California. In addition, our management contract was terminated for Casino Rama, which is located in Ontario, Canada, during the third quarter of 2018. Complimentaries associated with Gaming Contracts The Company has two general types of liabilities related to contracts with customers: (i) our loyalty credit obligation and (ii) advance payments on goods and services yet to be provided and for unpaid wagers. The Company’s loyalty reward programs allow members to utilize their reward membership cards to earn loyalty credits that are redeemable for slot play and complimentaries, such as food and beverage at our restaurants, lodging at our hotels and products offered at our retail stores across the vast majority of the Company’s properties. The Company accounts for the loyalty credit obligation utilizing a deferred revenue model, which defers revenue at the point in time when the loyalty credits are earned by our customers. Deferred revenue associated with the loyalty credit obligation is recognized at the point when the loyalty points are redeemed by our customers. The liability associated with the loyalty credit obligation is based on the estimated standalone selling price of the loyalty credits earned after factoring in the likelihood of redemption. The Company’s loyalty credit obligation, which is included in “Accrued expenses and other current liabilities” within our unaudited Condensed Consolidated Balance Sheets, was $44.6 million and $39.9 million as of March 31, 2019 and December 31, 2018 , respectively. Our loyalty credit obligations are generally settled within six months of issuance. Changes between the opening and closing balances primarily relate to the timing of our customers’ election to redeem loyalty credits. The Company’s advance payments on goods and services yet to be provided and for unpaid wagers primarily consist of the following: (i) deposits on rooms and convention space, (ii) money deposited on behalf of a customer in advance of their property visit (referred to as “safekeeping” or “front money”), (iii) outstanding tickets generated by slot machine play or pari-mutuel wagering, (iv) outstanding chip liabilities, (v) unclaimed jackpots, and (vi) gift cards redeemable at our properties. Advance payments on goods and services are recognized as revenue when the good or service is transferred to the customer. Unpaid wagers primarily relate to the Company’s obligation to settle outstanding slot tickets, pari-mutuel racing tickets and gaming chips with customers and generally represent obligations stemming from prior wagering events, of which revenue was previously recognized. The Company’s advance payments on goods and services yet to be provided and for unpaid wagers were $31.5 million and $34.3 million as of March 31, 2019 and December 31, 2018 , respectively, of which, $0.5 million and $0.7 million |
Gaming and Racing Taxes | Gaming and Racing Taxes: The Company is subject to gaming and pari-mutuel taxes based on gross gaming revenue and pari-mutuel revenue in the jurisdictions in which it operates. The Company primarily recognizes gaming and pari-mutuel tax expense based on the statutorily required percentage of revenue that is required to be paid to state and local jurisdictions in the states where or in which wagering occurs. In certain states in which the Company operates, gaming taxes are based on graduated rates. The Company records gaming tax expense at the Company’s estimated effective gaming tax rate for the year, considering estimated taxable gaming revenue and the applicable rates. Such estimates are adjusted each interim period. If gaming tax rates change during the year, such changes are applied prospectively in the determination of gaming tax expense in future interim periods. For the three months ended March 31, 2019 and 2018 , these expenses, which were recorded primarily within gaming expense within the unaudited Condensed Consolidated Statements of Operations, were $386.5 million and $247.4 million |
Earnings Per Share | Earnings Per Share: Basic earnings per share (“EPS”) is computed by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the additional dilution for all potentially-dilutive securities, such as stock options and unvested restricted shares. See Note 14, “Earnings per Share,” for further information. |
Stock-Based Compensation | Stock-Based Compensation: The Company accounts for stock compensation under ASC Topic 718, “Compensation-Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratably over the requisite service period following the date of grant. The Company accounts for forfeitures in the period in which they occur based on actual amounts. See Note 13, “Stock-based Compensation,” |
Application of Business Combination Accounting | Application of Business Combination Accounting: The Company utilizes the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations,” which requires us to allocate the purchase price to tangible and identifiable intangible assets based on their fair values. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the fair value ascribed to tangible and identifiable intangible assets changes during the measurement period (due to additional information being available and related Company analysis), the measurement period adjustment is recognized in the reporting period in which the adjustment amount is determined and offset against goodwill. The measurement period for our acquisitions are no more than one year in duration. |
New Accounting Pronouncements | Accounting Pronouncements Implemented in 2019 On January 1, 2019, the Company adopted the new lease standard ASC Topic 842, “Leases” (“ASC 842”), and all the related amendments (the “new lease standard”) using the modified retrospective method with an effective date of January 1, 2019 (the “adoption date”) and a cumulative effect adjustment to equity. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. As part of the adoption, the Company elected to utilize the package of practical expedients included in this guidance, which permitted the Company to not reassess (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) the initial direct costs for existing leases. In conjunction with the adoption of the new lease standard, the Company adopted the following policies: (i) an election to account for lease and non-lease components as a single component for all classes of underlying assets; and (ii) an election not to recognize short-term leases (i.e., a lease that is less than 12 months and contains no purchase option) within the unaudited Condensed Consolidated Balance Sheets, with the expense related to these short-term leases recorded within total operating expenses within the unaudited Condensed Consolidated Statements of Operations. Penn Master Lease and Pinnacle Master Lease The most significant impact of the adoption of the new lease standard relates to the accounting for our Master Leases with GLPI. Under previous GAAP, as contained within ASC Topic 840, “Leases,” the Company concluded that (i) the Penn Master Lease and (ii) the Pinnacle Master Lease to each be a failed sale-leaseback transaction resulting in (a) the land and building assets associated with the Master Leases to be recognized in “Property and equipment, net” within the unaudited Condensed Consolidated Balance Sheets; (b) the recognition of a financing obligation, with the associated interest recorded to “Interest expense” within the unaudited Condensed Consolidated Statements of Operations; and (c) the contingent rentals to be recorded as additional interest expense. Under the provisions of the new lease standard, the Company was required to evaluate its existing sale-leaseback transactions with GLPI to determine whether a sale had occurred, and if a sale had occurred, to determine the classification (operating or finance) of each component contained within each of the Master Leases. Leasing components contained within each of the Master Leases that were determined to be operating leases (consisting primarily of the land components) at the adoption date resulted in (i) the derecognition of the existing financing obligation and the carrying amount of the property and equipment with an adjustment to the opening balance of retained earnings; and (ii) the recognition of an operating lease liability and an operating lease right-of-use (“ROU”) asset. Operating lease expenses are recorded as rent expense, as opposed to interest expense and depreciation and amortization expense, within the unaudited Condensed Consolidated Statements of Operations and recorded as operating cash outflows within the unaudited Condensed Consolidated Statements of Cash Flows. Leasing components contained within each of the Master Leases that were determined to continue to be financing obligations (consisting primarily of the building components) at the adoption date resulted in (i) the continued recognition of the leased assets in “Property and equipment, net” within our unaudited Condensed Consolidated Balance Sheets and (ii) the continued recognition of the financing obligation utilizing assumptions as determined (a) at the lease commencement date with respect to the Penn Master Lease and (b) at the acquisition date with respect to the Pinnacle Master Lease. Our Hollywood Casino at Dayton Raceway and Hollywood Casino at Mahoning Valley Race Course (“Dayton and Mahoning Valley”) properties included within the Penn Master Lease were previously accounted for under build-to-suit guidance under previous GAAP. The Company was required to evaluate the components contained within the build-to-suit arrangements and determine the classification (operating or finance) under the provisions of the new lease standard at the adoption date. The Dayton and Mahoning Valley lease components were determined to be finance leases, which resulted in (i) the recognition of a finance lease ROU asset (recorded to depreciation and amortization expense over the lease term); (ii) a corresponding finance lease liability (recorded to interest expense over the lease term); and (iii) a write-off of the previous (a) carrying amount of the property and equipment and (b) financing obligation recorded with an adjustment to equity at the adoption date. Principal payments associated with finance leases are recorded as financing cash outflows and interest payments associated with finance leases are recorded as operating cash outflows within our unaudited Condensed Consolidated Statements of Cash Flows. Operating Leases, inclusive of the Meadows Lease with GLPI The adoption of the new lease standard required us to recognize ROU assets and lease liabilities that had not previously been recorded within the unaudited Condensed Consolidated Balance Sheets. The lease liability for operating leases is based on the net present value of future lease payments. The ROU asset for operating leases is based on the lease liability adjusted for the reclassification of certain balance sheet amounts, such as deferred rent. Deferred and prepaid rent are no longer presented separately. Leases that are short-term in nature are not recognized as ROU assets within the unaudited Condensed Consolidated Balance Sheets and are recognized as an expense (recorded within total operating expenses) within the unaudited Condensed Consolidated Statements of Operations. The impact of the adoption of the new lease standard on our unaudited Condensed Consolidated Balance Sheets at January 1, 2019 was as follows (only financial statement line items impacted are presented): Impacts of: (in thousands) As Reported as of December 31, 2018 Financing Obligations - Master Leases (1) Finance Leases - Dayton and Mahoning Valley Operating Leases - Master Leases (2) Operating Lease - Meadows (3) Other Operating Leases - Non-Master Leases As Adjusted for ASC 842 Increase/(Decrease) Assets Current assets Prepaid expenses $ 62,971 $ — $ — $ — $ — $ (977 ) $ 61,994 $ (977 ) Total current assets $ 677,658 $ — $ — $ — $ — $ (977 ) $ 676,681 $ (977 ) Property and equipment, net (4) $ 6,868,768 $ — $ (164,314 ) $ (1,407,357 ) $ — $ — $ 5,297,097 $ (1,571,671 ) Other assets Goodwill $ 1,228,422 $ 5,517 $ — $ — $ — $ — $ 1,233,939 $ 5,517 Operating lease right-of-use assets (5) $ — $ — $ — $ 3,541,144 $ 112,804 $ 152,519 $ 3,806,467 $ 3,806,467 Finance lease right-of-use assets (6) $ — $ — $ 224,482 $ — $ — $ — $ 224,482 $ 224,482 Total other assets $ 3,414,586 $ 5,517 $ 224,482 $ 3,541,144 $ 112,804 $ 152,519 $ 7,451,052 $ 4,036,466 Total assets $ 10,961,012 $ 5,517 $ 60,168 $ 2,133,787 $ 112,804 $ 151,542 $ 13,424,830 $ 2,463,818 Liabilities Current liabilities Current portion of financing obligations (7) $ 67,777 $ — $ (1,534 ) $ (16,157 ) $ — $ — $ 50,086 $ (17,691 ) Current portion of operating lease liabilities (5) $ — $ — $ — $ 72,894 $ 20,515 $ 8,913 $ 102,322 $ 102,322 Current portion of finance lease liabilities (6) $ — $ — $ 5,752 $ — $ — $ — $ 5,752 $ 5,752 Accrued expenses and other current liabilities $ 577,968 $ — $ — $ — $ — $ (434 ) $ 577,534 $ (434 ) Total current liabilities $ 738,436 $ — $ 4,218 $ 56,737 $ 20,515 $ 8,479 $ 828,385 $ 89,949 Long-term portion of financing obligations (7) $ 7,080,638 $ 5,517 $ (181,262 ) $ (2,760,587 ) $ — $ — $ 4,144,306 $ (2,936,332 ) Long-term portion of operating lease liabilities (5) $ — $ — $ — $ 3,467,057 $ 92,289 $ 144,988 $ 3,704,334 $ 3,704,334 Long-term portion of finance lease liabilities (6) $ — $ — $ 218,329 $ — $ — $ — $ 218,329 $ 218,329 Deferred income taxes (8) $ — $ — $ 4,288 $ 299,523 $ — $ — $ 303,811 $ 303,811 Other noncurrent liabilities $ 28,269 $ — $ — $ — $ — $ (1,925 ) $ 26,344 $ (1,925 ) Total liabilities $ 10,229,791 $ 5,517 $ 45,573 $ 1,062,730 $ 112,804 $ 151,542 $ 11,607,957 $ 1,378,166 Stockholders’ equity Retained earnings (accumulated deficit) $ (967,949 ) $ — $ 14,595 $ 1,071,057 $ — $ — $ 117,703 $ 1,085,652 Total Penn National Gaming, Inc. stockholders’ equity $ 731,226 $ — $ 14,595 $ 1,071,057 $ — $ — $ 1,816,878 $ 1,085,652 Total stockholders’ equity $ 731,221 $ — $ 14,595 $ 1,071,057 $ — $ — $ 1,816,873 $ 1,085,652 Total liabilities and stockholders’ equity $ 10,961,012 $ 5,517 $ 60,168 $ 2,133,787 $ 112,804 $ 151,542 $ 13,424,830 $ 2,463,818 (1) During the first quarter of 2019, the Company identified an adjustment to the purchase price allocation associated with its October 2018 acquisition of Pinnacle Entertainment, Inc. (“Pinnacle”). The purchase price adjustment increased the financing obligation upon the adoption of the new lease standard, resulting in an increase to goodwill (see Note 5, “Acquisitions” ). (2) Represents components contained within each of the Master Leases determined to be operating leases (primarily consists of land components). (3) Represents the triple net lease with GLPI for the real estate assets used in the operations of Meadows Racetrack and Casino (the “Meadows Lease”). (4) Represents the (i) derecognition of the carrying amount of the property and equipment, net, associated with land components contained within our Master Leases determined to be operating leases upon the adoption of the new lease standard; and (ii) derecognition of the carrying amount of the property and equipment, net, associated with land and building components associated with Dayton and Mahoning Valley determined to be finance leases upon the adoption of the new lease standard. (5) Operating lease ROU assets represent (i) the land components contained within the Master Leases determined to be operating leases upon the adoption of the new lease standard; and (ii) with respect to other Operating Leases, represent (a) the Meadows Lease, which was acquired by the Company in conjunction with in the acquisition of Pinnacle; (b) ground and levee leases with landlords, which were not assumed by GLPI and remain an obligation of the Company; and (c) buildings and equipment not associated with our Master Leases. For leases where the rate implicit in the lease was not readily determinable, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We utilized the incremental borrowing rate on the adoption date for operating leases that commenced prior to that date. The operating lease liability is based on the net present value of future lease payments. (6) Amounts primarily represent finance leases associated with Dayton and Mahoning Valley (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components under current guidance contained within the new lease standard, which resulted in all components being classified as finance leases. Finance leases result in (i) the recognition of a finance lease ROU asset amortized over the lease term and (ii) a corresponding finance lease liability (recorded to interest expense over the lease term). We utilized our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. The finance lease liability is based on the net present value of future lease payments. (7) Represents components associated with our Master Leases that remain financing obligations (primarily building components). The financing obligation at the adoption date was calculated utilizing previous assumptions as determined (a) at the lease commencement date with respect to the Penn Master Lease and (b) at the acquisition date with respect to the Pinnacle Master Lease. (8) Represents the tax impacts related to the adoption of the new lease standard. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of complimentaries | Revenues recorded to food and beverage, hotel, and other and offset to gaming revenues were as follows: For the three months ended March 31, (in thousands) 2019 2018 Food and beverage $ 64,478 $ 22,976 Hotel 36,596 9,687 Other 4,272 976 Total complimentaries associated with gaming contracts $ 105,346 $ 33,639 |
Schedule of disaggregation of revenue | Our revenue disaggregation by type of revenue and geographic location was as follows: For the three months ended March 31, 2019 (in thousands) Northeast South West Midwest Other Total Revenues: Gaming $ 487,727 $ 220,091 $ 92,823 $ 233,755 $ 115 $ 1,034,511 Food and beverage 35,797 40,190 27,870 21,038 299 125,194 Hotel 7,154 22,980 31,641 9,634 — 71,409 Racing 6,525 — 17 — 1,534 8,076 Other 13,375 8,681 6,303 6,835 8,187 43,381 Total revenues $ 550,578 $ 291,942 $ 158,654 $ 271,262 $ 10,135 $ 1,282,571 For the three months ended March 31, 2018 (in thousands) Northeast South West Midwest Other Total Revenues: Gaming $ 392,278 $ 50,976 $ 46,571 $ 164,669 $ — $ 654,494 Food and beverage 23,303 8,430 19,849 11,798 263 63,643 Hotel 4,720 2,480 21,121 5,200 — 33,521 Racing 5,276 — 7 — 1,527 6,810 Reimbursable management costs 21,844 — 6,340 — — 28,184 Other 11,298 1,444 4,078 3,867 8,746 29,433 Total revenues $ 458,719 $ 63,330 $ 97,966 $ 185,534 $ 10,536 $ 816,085 |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of impact of adoption of ASU-2014-09 | The impact of the adoption of the new lease standard on our unaudited Condensed Consolidated Balance Sheets at January 1, 2019 was as follows (only financial statement line items impacted are presented): Impacts of: (in thousands) As Reported as of December 31, 2018 Financing Obligations - Master Leases (1) Finance Leases - Dayton and Mahoning Valley Operating Leases - Master Leases (2) Operating Lease - Meadows (3) Other Operating Leases - Non-Master Leases As Adjusted for ASC 842 Increase/(Decrease) Assets Current assets Prepaid expenses $ 62,971 $ — $ — $ — $ — $ (977 ) $ 61,994 $ (977 ) Total current assets $ 677,658 $ — $ — $ — $ — $ (977 ) $ 676,681 $ (977 ) Property and equipment, net (4) $ 6,868,768 $ — $ (164,314 ) $ (1,407,357 ) $ — $ — $ 5,297,097 $ (1,571,671 ) Other assets Goodwill $ 1,228,422 $ 5,517 $ — $ — $ — $ — $ 1,233,939 $ 5,517 Operating lease right-of-use assets (5) $ — $ — $ — $ 3,541,144 $ 112,804 $ 152,519 $ 3,806,467 $ 3,806,467 Finance lease right-of-use assets (6) $ — $ — $ 224,482 $ — $ — $ — $ 224,482 $ 224,482 Total other assets $ 3,414,586 $ 5,517 $ 224,482 $ 3,541,144 $ 112,804 $ 152,519 $ 7,451,052 $ 4,036,466 Total assets $ 10,961,012 $ 5,517 $ 60,168 $ 2,133,787 $ 112,804 $ 151,542 $ 13,424,830 $ 2,463,818 Liabilities Current liabilities Current portion of financing obligations (7) $ 67,777 $ — $ (1,534 ) $ (16,157 ) $ — $ — $ 50,086 $ (17,691 ) Current portion of operating lease liabilities (5) $ — $ — $ — $ 72,894 $ 20,515 $ 8,913 $ 102,322 $ 102,322 Current portion of finance lease liabilities (6) $ — $ — $ 5,752 $ — $ — $ — $ 5,752 $ 5,752 Accrued expenses and other current liabilities $ 577,968 $ — $ — $ — $ — $ (434 ) $ 577,534 $ (434 ) Total current liabilities $ 738,436 $ — $ 4,218 $ 56,737 $ 20,515 $ 8,479 $ 828,385 $ 89,949 Long-term portion of financing obligations (7) $ 7,080,638 $ 5,517 $ (181,262 ) $ (2,760,587 ) $ — $ — $ 4,144,306 $ (2,936,332 ) Long-term portion of operating lease liabilities (5) $ — $ — $ — $ 3,467,057 $ 92,289 $ 144,988 $ 3,704,334 $ 3,704,334 Long-term portion of finance lease liabilities (6) $ — $ — $ 218,329 $ — $ — $ — $ 218,329 $ 218,329 Deferred income taxes (8) $ — $ — $ 4,288 $ 299,523 $ — $ — $ 303,811 $ 303,811 Other noncurrent liabilities $ 28,269 $ — $ — $ — $ — $ (1,925 ) $ 26,344 $ (1,925 ) Total liabilities $ 10,229,791 $ 5,517 $ 45,573 $ 1,062,730 $ 112,804 $ 151,542 $ 11,607,957 $ 1,378,166 Stockholders’ equity Retained earnings (accumulated deficit) $ (967,949 ) $ — $ 14,595 $ 1,071,057 $ — $ — $ 117,703 $ 1,085,652 Total Penn National Gaming, Inc. stockholders’ equity $ 731,226 $ — $ 14,595 $ 1,071,057 $ — $ — $ 1,816,878 $ 1,085,652 Total stockholders’ equity $ 731,221 $ — $ 14,595 $ 1,071,057 $ — $ — $ 1,816,873 $ 1,085,652 Total liabilities and stockholders’ equity $ 10,961,012 $ 5,517 $ 60,168 $ 2,133,787 $ 112,804 $ 151,542 $ 13,424,830 $ 2,463,818 (1) During the first quarter of 2019, the Company identified an adjustment to the purchase price allocation associated with its October 2018 acquisition of Pinnacle Entertainment, Inc. (“Pinnacle”). The purchase price adjustment increased the financing obligation upon the adoption of the new lease standard, resulting in an increase to goodwill (see Note 5, “Acquisitions” ). (2) Represents components contained within each of the Master Leases determined to be operating leases (primarily consists of land components). (3) Represents the triple net lease with GLPI for the real estate assets used in the operations of Meadows Racetrack and Casino (the “Meadows Lease”). (4) Represents the (i) derecognition of the carrying amount of the property and equipment, net, associated with land components contained within our Master Leases determined to be operating leases upon the adoption of the new lease standard; and (ii) derecognition of the carrying amount of the property and equipment, net, associated with land and building components associated with Dayton and Mahoning Valley determined to be finance leases upon the adoption of the new lease standard. (5) Operating lease ROU assets represent (i) the land components contained within the Master Leases determined to be operating leases upon the adoption of the new lease standard; and (ii) with respect to other Operating Leases, represent (a) the Meadows Lease, which was acquired by the Company in conjunction with in the acquisition of Pinnacle; (b) ground and levee leases with landlords, which were not assumed by GLPI and remain an obligation of the Company; and (c) buildings and equipment not associated with our Master Leases. For leases where the rate implicit in the lease was not readily determinable, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We utilized the incremental borrowing rate on the adoption date for operating leases that commenced prior to that date. The operating lease liability is based on the net present value of future lease payments. (6) Amounts primarily represent finance leases associated with Dayton and Mahoning Valley (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components under current guidance contained within the new lease standard, which resulted in all components being classified as finance leases. Finance leases result in (i) the recognition of a finance lease ROU asset amortized over the lease term and (ii) a corresponding finance lease liability (recorded to interest expense over the lease term). We utilized our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. The finance lease liability is based on the net present value of future lease payments. (7) Represents components associated with our Master Leases that remain financing obligations (primarily building components). The financing obligation at the adoption date was calculated utilizing previous assumptions as determined (a) at the lease commencement date with respect to the Penn Master Lease and (b) at the acquisition date with respect to the Pinnacle Master Lease. (8) |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Other information related to leases, components of lease expense and supplemental cash flow information | Other information related to lease term and discount rate was as follows: March 31, Weighted Average Remaining Lease Term Operating leases (1) 29.8 years Finance leases (2) 29.5 years Financing obligations (3) 31.1 years Weighted Average Discount Rate Operating leases (1) 6.9 % Finance leases (2) 6.8 % Financing obligations (3) 8.1 % (1) Amounts consist of (i) land components associated with our Master Leases that were concluded to be operating leases at the adoption date of the new lease standard; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) ground and levee leases with landlords which were not assumed by our REIT landlords and remain an obligation of the Company; and (v) building and equipment not contained within leases with our REIT landlords. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (2) Amounts primarily represent finance leases associated with our Dayton and Mahoning Valley properties (which are included in the Penn Master Lease) that under previous GAAP utilized specific build-to-suit guidance. The adoption of the new lease standard required the Company to evaluate the components utilizing the guidance contained within the new lease standard, which resulted in all components being classified as finance leases. For leases where the rate implicit in the lease is not readily determinable, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of lease payments. (3) Amounts consist of components contained within each of the Master Leases determined to continue to be financing obligations (which consist primarily of building components) at the adoption date of the new lease standard. The components of lease expense were as follows: Classification (in thousands) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense Depreciation and Amortization Total for the three months ended March 31, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 84,730 $ — $ — $ 84,730 Operating lease cost 137 156 4,097 — — 4,390 Short-term lease cost 12,936 160 568 — — 13,664 Variable lease cost 1,259 2 315 — — 1,576 Total $ 14,332 $ 318 $ 89,710 $ — $ — $ 104,360 Finance Lease Costs Interest expense associated with finance leases (2) $ — $ — $ — $ 3,827 $ — $ 3,827 Amortization expense associated with finance leases (2) — — — — 1,959 1,959 Total $ — $ — $ — $ 3,827 $ 1,959 $ 5,786 Financing Obligation Costs Interest expense associated with financing obligations (3) $ — $ — $ — $ 97,672 $ — $ 97,672 (1) Pertains to the components contained within the Master Leases (primarily land components) determined to be operating leases, the Meadows Lease, and the Margaritaville Lease. (2) Primarily pertains to the Dayton and Mahoning Valley finance leases. (3) (in thousands) For the three months ended March 31, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 3,827 Operating cash flows from operating leases $ 90,629 Financing cash flows from finance leases $ 1,640 |
Schedule of future minimum lease commitments, operating leases | The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2019 : (in thousands) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the three months ended March 31, 2019) $ 275,761 $ 15,701 $ 292,189 2020 352,916 21,028 374,715 2021 336,908 21,021 367,278 2022 336,660 20,909 367,278 2023 333,540 20,083 367,278 Thereafter 7,665,371 398,727 9,637,956 Total lease payments 9,301,156 497,469 11,406,694 Less: Amounts representing interest (5,336,870 ) (274,647 ) (7,224,861 ) Present value of future lease payments 3,964,286 222,822 4,181,833 Less: Current portion of lease obligations (95,894 ) (5,874 ) (52,600 ) Long-term portion of lease obligations $ 3,868,392 $ 216,948 $ 4,129,233 |
Schedule of future minimum lease commitments, finance leases | The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2019 : (in thousands) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the three months ended March 31, 2019) $ 275,761 $ 15,701 $ 292,189 2020 352,916 21,028 374,715 2021 336,908 21,021 367,278 2022 336,660 20,909 367,278 2023 333,540 20,083 367,278 Thereafter 7,665,371 398,727 9,637,956 Total lease payments 9,301,156 497,469 11,406,694 Less: Amounts representing interest (5,336,870 ) (274,647 ) (7,224,861 ) Present value of future lease payments 3,964,286 222,822 4,181,833 Less: Current portion of lease obligations (95,894 ) (5,874 ) (52,600 ) Long-term portion of lease obligations $ 3,868,392 $ 216,948 $ 4,129,233 |
Schedule of future minimum lease commitments, financing obligations | The following is a maturity analysis of our operating leases, finance leases, and financing obligations as of March 31, 2019 : (in thousands) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the three months ended March 31, 2019) $ 275,761 $ 15,701 $ 292,189 2020 352,916 21,028 374,715 2021 336,908 21,021 367,278 2022 336,660 20,909 367,278 2023 333,540 20,083 367,278 Thereafter 7,665,371 398,727 9,637,956 Total lease payments 9,301,156 497,469 11,406,694 Less: Amounts representing interest (5,336,870 ) (274,647 ) (7,224,861 ) Present value of future lease payments 3,964,286 222,822 4,181,833 Less: Current portion of lease obligations (95,894 ) (5,874 ) (52,600 ) Long-term portion of lease obligations $ 3,868,392 $ 216,948 $ 4,129,233 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Business Combinations [Abstract] | |
Allocation of purchase price | The following table reflects the preliminary allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill: (in thousands) January 1, 2019 Cash and cash equivalents $ 10,756 Receivables, prepaid expenses, and other current assets 7,058 Property and equipment 21,731 Goodwill (1) 39,457 Other intangible assets Gaming licenses 48,100 Customer relationships 2,300 Operating lease right-of-use assets 196,212 Total assets $ 325,614 Accounts payable, accrued expenses, and other current liabilities $ 9,511 Operating lease liabilities 196,212 Total liabilities 205,723 Net assets acquired $ 119,891 (1) The goodwill has been assigned to our South segment. The entire $39.5 million |
Actual and pro forma financial results | For the three months ended March 31, (in thousands) 2019 2018 Revenues $ 1,282,571 $ 1,323,247 Net income attributable to Penn National Gaming, Inc. $ 43,426 $ 47,144 March 31, 2019 : (in thousands) Period from January 1, 2019 through March 31, 2019 Revenues $ 41,499 Net income $ 4,961 |
Adjustments to purchase price allocation | During the three months ended March 31, 2019, we made the following adjustments to the preliminary purchase price allocation: (in thousands) Increase/(Decrease) Property and equipment - Pinnacle Master Lease (1) $ (29,200 ) Goodwill (2) 11,617 Other intangible assets Gaming licenses 21,600 Total assets $ 4,017 Long-term financing obligation, including current portion (3) $ 5,517 Deferred tax liabilities (1,500 ) Total liabilities 4,017 Net assets acquired $ — (1) Includes buildings, boats, vessels, barges, and implied land and land use rights. Land use rights represent the intangible value of the Company’s ability to utilize and access land associated with long term ground lease agreements that give the Company the exclusive rights to operate the casino gaming facilities associated with such agreements. (2) See Note 7, “Goodwill and Other Intangible Assets,” for details on the impact to each reportable segment. (3) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net | Property and equipment, net, consisted of the following: (in thousands) March 31, December 31, Property and equipment - non-Master Leases Land and improvements $ 343,987 $ 343,987 Building, vessels and improvements 347,479 342,944 Furniture, fixtures and equipment 1,599,050 1,565,830 Leasehold improvements 153,872 152,943 Construction in progress 35,467 25,473 2,479,855 2,431,177 Less: Accumulated depreciation (1,442,955 ) (1,400,198 ) 1,036,900 1,030,979 Property and equipment - Master Leases Land and improvements (1) 1,525,934 2,970,969 Building, vessels and improvements (2) 3,664,611 3,845,062 5,190,545 6,816,031 Less: Accumulated depreciation (999,523 ) (978,242 ) 4,191,022 5,837,789 Property and equipment, net $ 5,227,922 $ 6,868,768 (1) Upon adoption of ASC 842, approximately $1.4 billion of land was derecognized and replaced with operating lease ROU assets based on the net present value of future lease payments. See Note 3, “New Accounting Pronouncements.” (2) Upon adoption of ASC 842, $180.4 million of building and improvements, gross, was derecognized and replaced with finance lease ROU assets based on the net present value of future lease payments. See |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Details of goodwill | A reconciliation of goodwill and accumulated goodwill impairment losses, by reportable segment, is as follows: (in thousands) Northeast Segment South Segment West Segment Midwest Segment Other Total Balance as of December 31, 2018 Goodwill, gross $ 848,424 $ 185,158 $ 210,423 $ 1,110,052 $ 156,116 $ 2,510,173 Accumulated goodwill impairment losses (707,593 ) (34,522 ) (16,633 ) (435,283 ) (87,720 ) (1,281,751 ) Goodwill, net 140,831 150,636 193,790 674,769 68,396 1,228,422 Goodwill acquired during year — 39,457 — — — 39,457 Other (1) (2,000 ) 5,100 4,117 4,400 — 11,617 Balance as of March 31, 2019 Goodwill, gross 846,424 229,715 214,540 1,114,452 156,116 2,561,247 Accumulated goodwill impairment losses (707,593 ) (34,522 ) (16,633 ) (435,283 ) (87,720 ) (1,281,751 ) Goodwill, net $ 138,831 $ 195,193 $ 197,907 $ 679,169 $ 68,396 $ 1,279,496 (1) The amounts relate to adjustments made during the three months ended March 31, 2019 to the preliminary purchase price allocation pertaining to the Pinnacle Acquisition, described in |
Schedule of indefinite-lived intangible assets | The table below presents the gross carrying amount, accumulated amortization, and net carrying amount of each major class of other intangible assets: March 31, 2019 December 31, 2018 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets Gaming licenses $ 1,568,009 $ — $ 1,568,009 $ 1,498,309 $ — $ 1,498,309 Trademarks 298,000 — 298,000 298,000 — 298,000 Other 696 — 696 696 — 696 Amortizing intangible assets Customer relationships 101,052 (55,450 ) 45,602 98,752 (51,544 ) 47,208 Other 62,261 (51,221 ) 11,040 61,918 (49,263 ) 12,655 Total other intangible assets $ 2,030,018 $ (106,671 ) $ 1,923,347 $ 1,957,675 $ (100,807 ) $ 1,856,868 |
Schedule of finite-lived intangible assets | The table below presents the gross carrying amount, accumulated amortization, and net carrying amount of each major class of other intangible assets: March 31, 2019 December 31, 2018 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets Gaming licenses $ 1,568,009 $ — $ 1,568,009 $ 1,498,309 $ — $ 1,498,309 Trademarks 298,000 — 298,000 298,000 — 298,000 Other 696 — 696 696 — 696 Amortizing intangible assets Customer relationships 101,052 (55,450 ) 45,602 98,752 (51,544 ) 47,208 Other 62,261 (51,221 ) 11,040 61,918 (49,263 ) 12,655 Total other intangible assets $ 2,030,018 $ (106,671 ) $ 1,923,347 $ 1,957,675 $ (100,807 ) $ 1,856,868 |
Expected intangible asset amortization expense | The following table presents the estimated amortization expense based on our amortizing intangible assets as of March 31, 2019 (in thousands): Remaining 2019 $ 17,574 2020 18,023 2021 4,526 2022 4,067 2023 4,007 Thereafter 8,445 Total $ 56,642 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Payables and Accruals [Abstract] | |
Accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: (in thousands) March 31, December 31, Accrued salaries and wages $ 112,946 $ 139,159 Accrued gaming, pari-mutuel, property, and other taxes 102,498 105,767 Accrued interest 6,218 15,793 Other accrued expenses 225,956 204,656 Other current liabilities 124,504 112,593 $ 572,122 $ 577,968 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt, net of current maturities | Long-term debt, net of current maturities, was as follows: (in thousands) March 31, December 31, Senior Secured Credit Facilities: Revolving Credit Facility due 2023 $ 92,000 $ 112,000 Term Loan A Facility due 2023 698,828 707,674 Term Loan B-1 Facility due 2025 1,125,928 1,128,750 5.625% Notes due 2027 400,000 400,000 Other long-term obligations 96,646 104,583 Capital leases (1) — 381 2,413,402 2,453,388 Less: Current maturities of long-term debt (62,505 ) (62,140 ) Less: Debt discount (2,658 ) (2,748 ) Less: Debt issuance costs (36,860 ) (38,412 ) $ 2,311,379 $ 2,350,088 (1) |
Investments in and Advances t_2
Investments in and Advances to Unconsolidated Affiliates (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of summary financial information for Kansas Entertainment | The following table provides summary income statement information of Kansas Entertainment for the comparative periods that are included within the Company’s unaudited Condensed Consolidated Statements of Operations: For the three months ended March 31, (in thousands) 2019 2018 Revenues $ 39,511 $ 39,285 Operating expenses 27,414 27,658 Operating income 12,097 11,627 Net income $ 12,097 $ 11,627 Net income attributable to Penn National Gaming, Inc. $ 6,049 $ 5,814 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of reconciliation of the weighted-average common shares outstanding | The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three months ended March 31, 2019 and 2018 : For the three months ended March 31, (in thousands) 2019 2018 Determination of shares: Weighted-average common shares outstanding 116,293 91,191 Assumed conversion of dilutive employee stock-based awards 2,049 3,260 Assumed conversion of restricted stock 253 199 Diluted weighted-average common shares outstanding 118,595 94,650 |
Schedule of calculation of basic and diluted EPS | The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the three months ended March 31, 2019 and 2018 : For the three months ended March 31, (in thousands, except per share data) 2019 2018 Calculation of basic EPS: Net income applicable to common stock $ 40,992 $ 45,437 Weighted-average common shares outstanding 116,293 91,191 Basic EPS $ 0.35 $ 0.50 Calculation of diluted EPS: Net income applicable to common stock $ 40,992 $ 45,437 Diluted weighted-average common shares outstanding 118,595 94,650 Diluted EPS $ 0.35 $ 0.48 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying amounts and estimated fair values by input level | The carrying amounts and estimated fair values by input level of the Company’s financial instruments were as follows: March 31, 2019 (in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 400,280 $ 400,280 $ 400,280 $ — $ — Held-to-maturity securities $ 7,466 $ 7,931 $ — $ 7,931 $ — Promissory notes $ 16,853 $ 17,491 $ — $ 17,491 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,877,885 $ 1,893,268 $ 1,893,268 $ — $ — 5.625% Notes $ 399,353 $ 389,520 $ 389,520 $ — $ — Other long-term obligations $ 96,646 $ 89,408 $ — $ 89,408 $ — Other liabilities $ 26,556 $ 26,548 $ — $ 2,810 $ 23,738 December 31, 2018 (in thousands) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 479,598 $ 479,598 $ 479,598 $ — $ — Held-to-maturity securities $ 7,466 $ 7,879 $ — $ 7,879 $ — Promissory notes $ 16,853 $ 17,415 $ — $ 17,415 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,907,932 $ 1,886,333 $ 1,886,333 $ — $ — 5.625% Notes $ 399,332 $ 360,000 $ 360,000 $ — $ — Other long-term obligations $ 104,583 $ 96,338 $ — $ 96,338 $ — Other liabilities $ 21,863 $ 21,857 $ — $ 2,815 $ 19,042 |
Summary of the changes in fair value of Level 3 liabilities | The following table summarizes the changes in fair value of our Level 3 liabilities measured on a recurring basis: Other Liabilities (in thousands) Contingent Purchase Price Balance as of January 1, 2019 $ 19,042 Payments (21 ) Included in earnings (1) 4,717 Balance as of March 31, 2019 $ 23,738 (1) |
Summary of significant unobservable inputs used in calculating Level 3 assets and liabilities | The following table summarizes the significant unobservable inputs used in calculating fair value for our Level 3 liabilities on a recurring basis as of March 31, 2019 : Valuation Technique Unobservable Input Discount Rate Contingent purchase price - Plainridge Park Casino Discounted cash flow Discount rate 7.48% |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment information | The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to Net income. For the three months ended March 31, (in thousands) 2019 2018 Revenues: Northeast segment $ 550,578 $ 458,719 South segment 291,942 63,330 West segment 158,654 97,966 Midwest segment 271,262 185,534 Other (1) 10,135 10,536 Revenues $ 1,282,571 $ 816,085 Adjusted EBITDAR (2) : Northeast segment $ 164,754 $ 144,977 South segment 97,844 21,118 West segment 49,923 23,931 Midwest segment 99,219 68,185 Other (1) (20,303 ) (15,665 ) Adjusted EBITDAR (2) 391,437 242,546 Other operating benefits (costs) and other income (expenses): Rent expense associated with triple net operating leases (3) (84,730 ) — Stock-based compensation (3,417 ) (2,929 ) Cash-settled stock award variance (472 ) 7,462 Loss on disposal of assets (522 ) (55 ) Contingent purchase price (4,717 ) (1,134 ) Pre-opening and acquisition costs (4,380 ) (6,093 ) Depreciation and amortization (104,053 ) (60,390 ) Impairment losses — (618 ) Non-operating items for Kansas JV (1,073 ) (1,294 ) Interest expense (132,587 ) (115,740 ) Interest income 319 249 Loss on early extinguishment of debt — (882 ) Other — 4 Income before income taxes 55,805 61,126 Income tax expense (14,818 ) (15,689 ) Net income $ 40,987 $ 45,437 (1) The Other category consists of the Company's standalone racing operations, namely Sanford-Orlando Kennel Club, located in Longwood, Florida, and the Company’s joint venture interests in Texas and New Jersey (see Note 10, “Investments in and Advances to Unconsolidated Affiliates” ). The Other category also includes PIV, our management contract for Retama Park Racetrack, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. The Other category also includes corporate overhead costs, which consist of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have otherwise been allocated to a property. (2) We define Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation and amortization, rent expense associated with triple net operating leases, stock-based compensation, debt extinguishment and financing charges, impairment charges, insurance recoveries and deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening and acquisition costs, and other income or expenses. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment. Adjusted EBITDAR excludes payments associated with our Master Leases, the Meadows Lease, and the Margaritaville Lease, as such amounts are included as either interest expense or rent expense. (3) As of and for the three months ended March 31, 2019, for purposes of this definition, the Company’s triple net operating leases include components of the Master Leases (principally pertaining to the land), the Meadows Lease, and the Margaritaville Lease. For the three months ended March 31, (in thousands) 2019 2018 Capital expenditures: Northeast segment $ 12,685 $ 4,212 South segment 8,872 682 West segment 7,027 2,730 Midwest segment 7,039 3,007 Other 2,043 1,182 Total capital expenditures $ 37,666 $ 11,813 (in thousands) Northeast South West Midwest Other Total As of March 31, 2019 Investment in and advances to unconsolidated affiliates $ 105 $ — $ — $ 88,899 $ 38,920 $ 127,924 Total assets (1) $ 1,470,512 $ 1,458,782 $ 752,189 $ 1,489,105 $ 8,327,583 $ 13,498,171 As of December 31, 2018 Investment in and advances to unconsolidated affiliates $ 105 $ — $ — $ 89,350 $ 39,033 $ 128,488 Total assets (2) $ 1,330,256 $ 1,082,304 $ 755,665 $ 1,411,468 $ 6,381,319 $ 10,961,012 (1) As of March 31, 2019, total assets of the Other category includes the real estate assets subject to the Master Leases, which are either classified as property and equipment, operating lease ROU assets, or finance lease ROU assets, depending on whether the underlying component of the Master Leases was determined to be an operating lease, a finance lease, or continue to be financing obligations, upon adoption of ASC 842. (2) |
Organization and Basis of Pre_2
Organization and Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2019jurisdictionfacilitysegment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of facilities the entity owned, managed, or had ownership interests in | facility | 41 |
Number of jurisdictions in which the entity operates | jurisdiction | 18 |
Number of reportable segments | segment | 4 |
Significant Accounting Polici_4
Significant Accounting Policies - Segment Information (Details) | 12 Months Ended | |
Dec. 31, 2018segment | Mar. 31, 2019facility | |
Segment Information | ||
Number of facilities the entity owned, managed, or had ownership interests in | 41 | |
Kansas Entertainment | ||
Segment Information | ||
Ownership interest | 50.00% | |
Jackpot, Nevada | ||
Segment Information | ||
Number of facilities the entity owned, managed, or had ownership interests in | 2 | |
Number of operating segments | segment | 1 |
Significant Accounting Polici_5
Significant Accounting Policies - Revenue Recognition and Complimentaries (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Revenue from External Customer [Line Items] | ||
Total complimentaries associated with gaming contracts | $ 105,346 | $ 33,639 |
Food and beverage | ||
Revenue from External Customer [Line Items] | ||
Total complimentaries associated with gaming contracts | 64,478 | 22,976 |
Hotel | ||
Revenue from External Customer [Line Items] | ||
Total complimentaries associated with gaming contracts | 36,596 | 9,687 |
Other | ||
Revenue from External Customer [Line Items] | ||
Total complimentaries associated with gaming contracts | $ 4,272 | $ 976 |
Significant Accounting Polici_6
Significant Accounting Policies - Revenue Disaggregation and Customer-Related Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 1,282,571 | $ 816,085 | |
Loyalty credit obligation | |||
Disaggregation of Revenue [Line Items] | |||
Customer-related liabilities | $ 44,600 | $ 39,900 | |
Customer-related liabilities, term | 6 months | ||
Advance payments on goods and services yet to be provided and unpaid wagers | |||
Disaggregation of Revenue [Line Items] | |||
Customer-related liabilities | $ 31,500 | 34,300 | |
Customer-related liabilities, long-term | 500 | $ 700 | |
Gaming | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 1,034,511 | 654,494 | |
Food and beverage | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 125,194 | 63,643 | |
Hotel | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 71,409 | 33,521 | |
Racing | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 8,076 | 6,810 | |
Reimbursable management costs | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 28,184 | ||
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 43,381 | 29,433 | |
Operating segments | Northeast segment | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 550,578 | 458,719 | |
Operating segments | Northeast segment | Gaming | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 487,727 | 392,278 | |
Operating segments | Northeast segment | Food and beverage | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 35,797 | 23,303 | |
Operating segments | Northeast segment | Hotel | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 7,154 | 4,720 | |
Operating segments | Northeast segment | Racing | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 6,525 | 5,276 | |
Operating segments | Northeast segment | Reimbursable management costs | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 21,844 | ||
Operating segments | Northeast segment | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 13,375 | 11,298 | |
Operating segments | South segment | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 291,942 | 63,330 | |
Operating segments | South segment | Gaming | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 220,091 | 50,976 | |
Operating segments | South segment | Food and beverage | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 40,190 | 8,430 | |
Operating segments | South segment | Hotel | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 22,980 | 2,480 | |
Operating segments | South segment | Racing | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
Operating segments | South segment | Reimbursable management costs | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | ||
Operating segments | South segment | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 8,681 | 1,444 | |
Operating segments | West segment | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 158,654 | 97,966 | |
Operating segments | West segment | Gaming | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 92,823 | 46,571 | |
Operating segments | West segment | Food and beverage | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 27,870 | 19,849 | |
Operating segments | West segment | Hotel | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 31,641 | 21,121 | |
Operating segments | West segment | Racing | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 17 | 7 | |
Operating segments | West segment | Reimbursable management costs | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 6,340 | ||
Operating segments | West segment | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 6,303 | 4,078 | |
Operating segments | Midwest segment | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 271,262 | 185,534 | |
Operating segments | Midwest segment | Gaming | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 233,755 | 164,669 | |
Operating segments | Midwest segment | Food and beverage | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 21,038 | 11,798 | |
Operating segments | Midwest segment | Hotel | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 9,634 | 5,200 | |
Operating segments | Midwest segment | Racing | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
Operating segments | Midwest segment | Reimbursable management costs | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | ||
Operating segments | Midwest segment | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 6,835 | 3,867 | |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 10,135 | 10,536 | |
Other | Gaming | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 115 | 0 | |
Other | Food and beverage | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 299 | 263 | |
Other | Hotel | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | 0 | |
Other | Racing | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 1,534 | 1,527 | |
Other | Reimbursable management costs | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | 0 | ||
Other | Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenues | $ 8,187 | $ 8,746 |
Significant Accounting Polici_7
Significant Accounting Policies - Gaming and Racing Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Accounting Policies [Abstract] | ||
Gaming taxes | $ 386.5 | $ 247.4 |
New Accounting Pronouncements -
New Accounting Pronouncements - Cumulative Effect on Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets | |||||
Prepaid expenses | $ 67,856 | $ 61,994 | $ 62,971 | ||
Total current assets | 639,204 | 676,681 | 677,658 | ||
Property and equipment, net | 5,227,922 | 5,297,097 | 6,868,768 | ||
Other assets | |||||
Goodwill | 1,279,496 | 1,233,939 | 1,228,422 | ||
Operating lease right-of-use assets | 3,972,527 | 3,806,467 | 0 | ||
Finance lease right-of-use assets | 222,418 | 224,482 | 0 | ||
Total other assets | 7,631,045 | 7,451,052 | 3,414,586 | ||
Total assets | 13,498,171 | 13,424,830 | 10,961,012 | ||
Current liabilities | |||||
Current portion of financing obligations | 52,600 | 50,086 | 67,777 | ||
Current portion of operating lease liabilities | 95,894 | 102,322 | 0 | ||
Current portion of finance lease liabilities | 5,874 | 5,752 | 0 | ||
Accrued expenses and other current liabilities | 572,122 | 577,534 | 577,968 | ||
Total current liabilities | 820,383 | 828,385 | 738,436 | ||
Long-term portion of financing obligations | 4,129,233 | 4,144,306 | 7,080,638 | ||
Long-term portion of operating lease liabilities | 3,868,392 | 3,704,334 | 0 | ||
Long-term portion of finance lease liabilities | 216,948 | 218,329 | 0 | ||
Deferred income taxes | 232,679 | 303,811 | 0 | ||
Other noncurrent liabilities | 24,885 | 26,344 | 28,269 | ||
Total liabilities | 11,636,360 | 11,607,957 | 10,229,791 | ||
Retained earnings (accumulated deficit) | 158,695 | 117,703 | (967,949) | ||
Total Penn National Gaming, Inc. stockholders’ equity | 1,861,821 | 1,816,878 | 731,226 | ||
Total stockholders’ equity | 1,861,811 | 1,816,873 | 731,221 | $ (33,639) | $ (73,146) |
Total liabilities and stockholders’ equity | $ 13,498,171 | 13,424,830 | $ 10,961,012 | ||
ASC 842 | |||||
Current assets | |||||
Prepaid expenses | (977) | ||||
Total current assets | (977) | ||||
Property and equipment, net | (1,571,671) | ||||
Other assets | |||||
Goodwill | 5,517 | ||||
Operating lease right-of-use assets | 3,806,467 | ||||
Finance lease right-of-use assets | 224,482 | ||||
Total other assets | 4,036,466 | ||||
Total assets | 2,463,818 | ||||
Current liabilities | |||||
Current portion of financing obligations | (17,691) | ||||
Current portion of operating lease liabilities | 102,322 | ||||
Current portion of finance lease liabilities | 5,752 | ||||
Accrued expenses and other current liabilities | (434) | ||||
Total current liabilities | 89,949 | ||||
Long-term portion of financing obligations | (2,936,332) | ||||
Long-term portion of operating lease liabilities | 3,704,334 | ||||
Long-term portion of finance lease liabilities | 218,329 | ||||
Deferred income taxes | 303,811 | ||||
Other noncurrent liabilities | (1,925) | ||||
Total liabilities | 1,378,166 | ||||
Retained earnings (accumulated deficit) | 1,085,652 | ||||
Total Penn National Gaming, Inc. stockholders’ equity | 1,085,652 | ||||
Total stockholders’ equity | 1,085,652 | ||||
Total liabilities and stockholders’ equity | 2,463,818 | ||||
Financing Obligations - Master Leases | |||||
Current assets | |||||
Prepaid expenses | 0 | ||||
Total current assets | 0 | ||||
Property and equipment, net | 0 | ||||
Other assets | |||||
Goodwill | 5,517 | ||||
Operating lease right-of-use assets | 0 | ||||
Finance lease right-of-use assets | 0 | ||||
Total other assets | 5,517 | ||||
Total assets | 5,517 | ||||
Current liabilities | |||||
Current portion of financing obligations | 0 | ||||
Current portion of operating lease liabilities | 0 | ||||
Current portion of finance lease liabilities | 0 | ||||
Accrued expenses and other current liabilities | 0 | ||||
Total current liabilities | 0 | ||||
Long-term portion of financing obligations | 5,517 | ||||
Long-term portion of operating lease liabilities | 0 | ||||
Long-term portion of finance lease liabilities | 0 | ||||
Deferred income taxes | 0 | ||||
Other noncurrent liabilities | 0 | ||||
Total liabilities | 5,517 | ||||
Retained earnings (accumulated deficit) | 0 | ||||
Total Penn National Gaming, Inc. stockholders’ equity | 0 | ||||
Total stockholders’ equity | 0 | ||||
Total liabilities and stockholders’ equity | 5,517 | ||||
Finance Leases - Dayton and Mahoning Valley | |||||
Current assets | |||||
Prepaid expenses | 0 | ||||
Total current assets | 0 | ||||
Property and equipment, net | (164,314) | ||||
Other assets | |||||
Goodwill | 0 | ||||
Operating lease right-of-use assets | 0 | ||||
Finance lease right-of-use assets | 224,482 | ||||
Total other assets | 224,482 | ||||
Total assets | 60,168 | ||||
Current liabilities | |||||
Current portion of financing obligations | (1,534) | ||||
Current portion of operating lease liabilities | 0 | ||||
Current portion of finance lease liabilities | 5,752 | ||||
Accrued expenses and other current liabilities | 0 | ||||
Total current liabilities | 4,218 | ||||
Long-term portion of financing obligations | (181,262) | ||||
Long-term portion of operating lease liabilities | 0 | ||||
Long-term portion of finance lease liabilities | 218,329 | ||||
Deferred income taxes | 4,288 | ||||
Other noncurrent liabilities | 0 | ||||
Total liabilities | 45,573 | ||||
Retained earnings (accumulated deficit) | 14,595 | ||||
Total Penn National Gaming, Inc. stockholders’ equity | 14,595 | ||||
Total stockholders’ equity | 14,595 | ||||
Total liabilities and stockholders’ equity | 60,168 | ||||
Operating Leases - Master Leases | |||||
Current assets | |||||
Prepaid expenses | 0 | ||||
Total current assets | 0 | ||||
Property and equipment, net | (1,407,357) | ||||
Other assets | |||||
Goodwill | 0 | ||||
Operating lease right-of-use assets | 3,541,144 | ||||
Finance lease right-of-use assets | 0 | ||||
Total other assets | 3,541,144 | ||||
Total assets | 2,133,787 | ||||
Current liabilities | |||||
Current portion of financing obligations | (16,157) | ||||
Current portion of operating lease liabilities | 72,894 | ||||
Current portion of finance lease liabilities | 0 | ||||
Accrued expenses and other current liabilities | 0 | ||||
Total current liabilities | 56,737 | ||||
Long-term portion of financing obligations | (2,760,587) | ||||
Long-term portion of operating lease liabilities | 3,467,057 | ||||
Long-term portion of finance lease liabilities | 0 | ||||
Deferred income taxes | 299,523 | ||||
Other noncurrent liabilities | 0 | ||||
Total liabilities | 1,062,730 | ||||
Retained earnings (accumulated deficit) | 1,071,057 | ||||
Total Penn National Gaming, Inc. stockholders’ equity | 1,071,057 | ||||
Total stockholders’ equity | 1,071,057 | ||||
Total liabilities and stockholders’ equity | 2,133,787 | ||||
Operating Lease - Meadows | |||||
Current assets | |||||
Prepaid expenses | 0 | ||||
Total current assets | 0 | ||||
Property and equipment, net | 0 | ||||
Other assets | |||||
Goodwill | 0 | ||||
Operating lease right-of-use assets | 112,804 | ||||
Finance lease right-of-use assets | 0 | ||||
Total other assets | 112,804 | ||||
Total assets | 112,804 | ||||
Current liabilities | |||||
Current portion of financing obligations | 0 | ||||
Current portion of operating lease liabilities | 20,515 | ||||
Current portion of finance lease liabilities | 0 | ||||
Accrued expenses and other current liabilities | 0 | ||||
Total current liabilities | 20,515 | ||||
Long-term portion of financing obligations | 0 | ||||
Long-term portion of operating lease liabilities | 92,289 | ||||
Long-term portion of finance lease liabilities | 0 | ||||
Deferred income taxes | 0 | ||||
Other noncurrent liabilities | 0 | ||||
Total liabilities | 112,804 | ||||
Retained earnings (accumulated deficit) | 0 | ||||
Total Penn National Gaming, Inc. stockholders’ equity | 0 | ||||
Total stockholders’ equity | 0 | ||||
Total liabilities and stockholders’ equity | 112,804 | ||||
Other Operating Leases - Non-Master Leases | |||||
Current assets | |||||
Prepaid expenses | (977) | ||||
Total current assets | (977) | ||||
Property and equipment, net | 0 | ||||
Other assets | |||||
Goodwill | 0 | ||||
Operating lease right-of-use assets | 152,519 | ||||
Finance lease right-of-use assets | 0 | ||||
Total other assets | 152,519 | ||||
Total assets | 151,542 | ||||
Current liabilities | |||||
Current portion of financing obligations | 0 | ||||
Current portion of operating lease liabilities | 8,913 | ||||
Current portion of finance lease liabilities | 0 | ||||
Accrued expenses and other current liabilities | (434) | ||||
Total current liabilities | 8,479 | ||||
Long-term portion of financing obligations | 0 | ||||
Long-term portion of operating lease liabilities | 144,988 | ||||
Long-term portion of finance lease liabilities | 0 | ||||
Deferred income taxes | 0 | ||||
Other noncurrent liabilities | (1,925) | ||||
Total liabilities | 151,542 | ||||
Retained earnings (accumulated deficit) | 0 | ||||
Total Penn National Gaming, Inc. stockholders’ equity | 0 | ||||
Total stockholders’ equity | 0 | ||||
Total liabilities and stockholders’ equity | $ 151,542 |
Leases - Other Information Rela
Leases - Other Information Related to Lease Term and Discount Rate (Details) | 3 Months Ended |
Mar. 31, 2019 | |
Weighted Average Remaining Lease Term | |
Operating leases | 29 years 9 months 18 days |
Finance leases | 29 years 6 months |
Financing obligations | 31 years 1 month 6 days |
Weighted Average Discount Rate | |
Operating leases | 6.90% |
Finance leases | 6.80% |
Financing obligations | 8.10% |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Operating Lease Costs | |
Rent expense associated with triple net leases classified as operating leases | $ 84,730 |
Operating lease cost | 4,390 |
Short-term lease cost | 13,664 |
Variable lease cost | 1,576 |
Total | 104,360 |
Finance Lease Costs | |
Interest expense associated with finance leases | 3,827 |
Amortization expense associated with finance leases | 1,959 |
Total | 5,786 |
Financing Obligation Costs | |
Interest expense associated with financing obligations | 97,672 |
Cost of revenue | Gaming | |
Operating Lease Costs | |
Rent expense associated with triple net leases classified as operating leases | 0 |
Operating lease cost | 137 |
Short-term lease cost | 12,936 |
Variable lease cost | 1,259 |
Total | 14,332 |
Finance Lease Costs | |
Interest expense associated with finance leases | 0 |
Amortization expense associated with finance leases | 0 |
Total | 0 |
Financing Obligation Costs | |
Interest expense associated with financing obligations | 0 |
Cost of revenue | Food, beverage, hotel and other | |
Operating Lease Costs | |
Rent expense associated with triple net leases classified as operating leases | 0 |
Operating lease cost | 156 |
Short-term lease cost | 160 |
Variable lease cost | 2 |
Total | 318 |
Finance Lease Costs | |
Interest expense associated with finance leases | 0 |
Amortization expense associated with finance leases | 0 |
Total | 0 |
Financing Obligation Costs | |
Interest expense associated with financing obligations | 0 |
General and administrative | |
Operating Lease Costs | |
Rent expense associated with triple net leases classified as operating leases | 84,730 |
Operating lease cost | 4,097 |
Short-term lease cost | 568 |
Variable lease cost | 315 |
Total | 89,710 |
Finance Lease Costs | |
Interest expense associated with finance leases | 0 |
Amortization expense associated with finance leases | 0 |
Total | 0 |
Financing Obligation Costs | |
Interest expense associated with financing obligations | 0 |
Interest expense | |
Operating Lease Costs | |
Rent expense associated with triple net leases classified as operating leases | 0 |
Operating lease cost | 0 |
Short-term lease cost | 0 |
Variable lease cost | 0 |
Total | 0 |
Finance Lease Costs | |
Interest expense associated with finance leases | 3,827 |
Amortization expense associated with finance leases | 0 |
Total | 3,827 |
Financing Obligation Costs | |
Interest expense associated with financing obligations | 97,672 |
Depreciation and amortization | |
Operating Lease Costs | |
Rent expense associated with triple net leases classified as operating leases | 0 |
Operating lease cost | 0 |
Short-term lease cost | 0 |
Variable lease cost | 0 |
Total | 0 |
Finance Lease Costs | |
Interest expense associated with finance leases | 0 |
Amortization expense associated with finance leases | 1,959 |
Total | 1,959 |
Financing Obligation Costs | |
Interest expense associated with financing obligations | $ 0 |
Leases - Future Minimum Lease C
Leases - Future Minimum Lease Commitments (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating Leases | |||
2019 (excluding the three months ended March 31, 2019) | $ 275,761 | ||
2020 | 352,916 | ||
2021 | 336,908 | ||
2022 | 336,660 | ||
2023 | 333,540 | ||
Thereafter | 7,665,371 | ||
Total lease payments | 9,301,156 | ||
Less: Amounts representing interest | (5,336,870) | ||
Present value of future lease payments | 3,964,286 | ||
Less: Current portion of lease obligations | (95,894) | $ (102,322) | $ 0 |
Long-term portion of lease obligations | 3,868,392 | 3,704,334 | 0 |
Finance Leases | |||
2019 (excluding the three months ended March 31, 2019) | 15,701 | ||
2020 | 21,028 | ||
2021 | 21,021 | ||
2022 | 20,909 | ||
2023 | 20,083 | ||
Thereafter | 398,727 | ||
Total lease payments | 497,469 | ||
Less: Amounts representing interest | (274,647) | ||
Present value of future lease payments | 222,822 | ||
Less: Current portion of lease obligations | (5,874) | (5,752) | 0 |
Long-term portion of lease obligations | 216,948 | 218,329 | 0 |
Financing Obligations | |||
2019 (excluding the three months ended March 31, 2019) | 292,189 | ||
2020 | 374,715 | ||
2021 | 367,278 | ||
2022 | 367,278 | ||
2023 | 367,278 | ||
Thereafter | 9,637,956 | ||
Total lease payments | 11,406,694 | ||
Less: Amounts representing interest | (7,224,861) | ||
Present value of future lease payments | 4,181,833 | ||
Less: Current portion of lease obligations | (52,600) | (50,086) | (67,777) |
Long-term portion of lease obligations | $ 4,129,233 | $ 4,144,306 | $ 7,080,638 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from finance leases | $ 3,827 | |
Operating cash flows from operating leases | 90,629 | |
Financing cash flows from finance leases | $ 1,640 | $ 0 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | Apr. 28, 2016extension_periodfacility | Nov. 01, 2013extension_periodfacility | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) |
Schedule of Leased Assets [Line Items] | ||||
Variable expenses | $ 1,576 | |||
Lease income | 71,400 | |||
Hollywood Casinos - Columbus and Toledo | ||||
Schedule of Leased Assets [Line Items] | ||||
Variable expenses | 13,100 | $ 12,400 | ||
General and administrative expense | ||||
Schedule of Leased Assets [Line Items] | ||||
Variable expenses | 315 | |||
General and administrative expense | Hollywood Casinos - Columbus and Toledo | ||||
Schedule of Leased Assets [Line Items] | ||||
Variable expenses | 6,800 | |||
Interest expense | ||||
Schedule of Leased Assets [Line Items] | ||||
Variable expenses | 0 | |||
Interest expense | Hollywood Casinos - Columbus and Toledo | ||||
Schedule of Leased Assets [Line Items] | ||||
Variable expenses | 6,300 | 12,400 | ||
Penn Master Lease | ||||
Schedule of Leased Assets [Line Items] | ||||
Number of facilities with leased real estate | facility | 20 | |||
Lease term | 15 years | |||
Number of options to extend lease | extension_period | 4 | |||
Lease renewal term | 5 years | |||
Lease - expected term with renewal options | 35 years | |||
Adjusted annual escalator percentage | 2.00% | |||
Adjusted revenue to rent ratio | 1.8 | |||
Period over which fixed component is adjusted | 5 years | |||
Adjustment to fixed component as percentage of the average change to net revenues during the preceding five years | 4.00% | |||
Adjustment to fixed component as percentage of the average change to net revenues during preceding month | 20.00% | |||
Lease payments | 114,400 | $ 115,900 | ||
Pinnacle Master Lease | ||||
Schedule of Leased Assets [Line Items] | ||||
Number of facilities with leased real estate | facility | 12 | |||
Lease term | 10 years | |||
Number of lease renewal options | extension_period | 5 | |||
Lease renewal term | 5 years | |||
Lease - expected term with renewal options | 32 years 6 months | |||
Remaining lease term | 7 years 6 months | |||
Annual escalator percentage - up to | 2.00% | |||
Adjusted Revenue to Rent Ratio, as defined | 1.8 | |||
Percentage rent escalation interval | 2 years | |||
Percentage of average net revenues during preceding two years | 4.00% | |||
Fixed period of percentage rent component | 2 years | |||
Lease payments | $ 81,300 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ / shares in Units, $ in Millions | May 31, 2019USD ($)renewal_option | Jan. 01, 2019USD ($)renewal_option | Oct. 15, 2018USD ($)$ / shares |
Margaritaville Resort Casino | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 119.9 | ||
Annual rent | $ 23.2 | ||
Lease term | 15 years | ||
Number of lease renewal options | renewal_option | 4 | ||
Lease renewal term | 5 years | ||
Liabilities incurred on acquisition | $ 261.1 | ||
Margaritaville Resort Casino | Customer relationships | |||
Business Acquisition [Line Items] | |||
Assigned useful life of amortizing intangible asset acquired | 2 years | ||
Pinnacle | |||
Business Acquisition [Line Items] | |||
Purchase price | $ 2,816.2 | ||
Liabilities incurred on acquisition | $ 814.3 | ||
Cash paid per share (in dollars per share) | $ / shares | $ 20 | ||
Cash paid | $ 1,252.2 | ||
Fair value of Penn common stock issued to former Pinnacle shareholders | $ 749.7 | ||
Greektown Casino-Hotel | Scenario, Forecast | |||
Business Acquisition [Line Items] | |||
Annual rent | $ 55.6 | ||
Lease term | 15 years | ||
Number of lease renewal options | renewal_option | 4 | ||
Lease renewal term | 5 years | ||
Cash paid | $ 300 |
Acquisitions - Allocation of Pu
Acquisitions - Allocation of Purchase Price (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,279,496 | $ 1,233,939 | $ 1,228,422 |
Margaritaville Resort Casino | |||
Business Acquisition [Line Items] | |||
Cash and cash equivalents | 10,756 | ||
Receivables, prepaid expenses, and other current assets | 7,058 | ||
Property and equipment | 21,731 | ||
Goodwill | 39,457 | ||
Operating lease right-of-use assets | 196,212 | ||
Total assets | 325,614 | ||
Accounts payable, accrued expenses, and other current liabilities | 9,511 | ||
Operating lease liabilities | 196,212 | ||
Total liabilities | 205,723 | ||
Net assets acquired | 119,891 | ||
Goodwill deductible for tax purposes | 39,500 | ||
Margaritaville Resort Casino | Customer relationships | |||
Business Acquisition [Line Items] | |||
Customer relationships | 2,300 | ||
Margaritaville Resort Casino | Gaming licenses | |||
Business Acquisition [Line Items] | |||
Gaming licenses | $ 48,100 |
Acquisitions - Actual and Pro F
Acquisitions - Actual and Pro Forma Financial Results (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Margaritaville Resort Casino | ||
Actual financial results of acquiree since acquisition date | ||
Revenues | $ 41,499 | |
Net income | 4,961 | |
Margaritaville Resort Casino and Pinnacle | ||
Pro forma financial results | ||
Revenues | 1,282,571 | $ 1,323,247 |
Net income attributable to Penn National Gaming, Inc. | $ 43,426 | $ 47,144 |
Acquisitions - Purchase Price A
Acquisitions - Purchase Price Adjustments (Details) - Pinnacle $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Business Acquisition [Line Items] | |
Property and equipment - Pinnacle Master Lease | $ (29,200) |
Goodwill | 11,617 |
Gaming licenses | 21,600 |
Total assets | 4,017 |
Long-term financing obligation, including current portion | 5,517 |
Deferred tax liabilities | (1,500) |
Total liabilities | 4,017 |
Net assets acquired | $ 0 |
Property and Equipment - Proper
Property and Equipment - Property and Equipment, Net (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Plant and equipment | |||
Property and equipment, net | $ 5,227,922 | $ 5,297,097 | $ 6,868,768 |
Operating Leases - Master Leases | |||
Plant and equipment | |||
Property and equipment, net | (1,407,357) | ||
Finance Leases - Dayton and Mahoning Valley | |||
Plant and equipment | |||
Property and equipment, net | (164,314) | ||
Property and equipment - non-Master Leases | |||
Plant and equipment | |||
Property and equipment, gross | 2,479,855 | 2,431,177 | |
Less: Accumulated depreciation | (1,442,955) | (1,400,198) | |
Property and equipment, net | 1,036,900 | 1,030,979 | |
Land and improvements | |||
Plant and equipment | |||
Property and equipment, gross | 343,987 | 343,987 | |
Building, vessels and improvements | |||
Plant and equipment | |||
Property and equipment, gross | 347,479 | 342,944 | |
Furniture, fixtures and equipment | |||
Plant and equipment | |||
Property and equipment, gross | 1,599,050 | 1,565,830 | |
Leasehold improvements | |||
Plant and equipment | |||
Property and equipment, gross | 153,872 | 152,943 | |
Construction in progress | |||
Plant and equipment | |||
Property and equipment, gross | 35,467 | 25,473 | |
Property and equipment - Master Leases | |||
Plant and equipment | |||
Property and equipment, gross | 5,190,545 | 6,816,031 | |
Less: Accumulated depreciation | (999,523) | (978,242) | |
Property and equipment, net | 4,191,022 | 5,837,789 | |
Land and improvements | |||
Plant and equipment | |||
Property and equipment, gross | 1,525,934 | 2,970,969 | |
Land and improvements | Operating Leases - Master Leases | |||
Plant and equipment | |||
Property and equipment, gross | (1,400,000) | ||
Building, vessels and improvements | |||
Plant and equipment | |||
Property and equipment, gross | $ 3,664,611 | $ 3,845,062 | |
Building, vessels and improvements | Finance Leases - Dayton and Mahoning Valley | |||
Plant and equipment | |||
Property and equipment, gross | $ (180,400) |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 98.3 | $ 55.9 |
Interest capitalized | 0 | 0 |
Property and equipment - Master Leases | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation expense | $ 48.6 | $ 23.3 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill and Accumulated Goodwill Impairment Losses (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | $ 2,510,173 |
Accumulated goodwill impairment losses, beginning balance | (1,281,751) |
Goodwill, net, beginning balance | 1,228,422 |
Goodwill acquired during year | 39,457 |
Other | 11,617 |
Goodwill, gross, ending balance | 2,561,247 |
Accumulated goodwill impairment losses, ending balance | (1,281,751) |
Goodwill, net, ending balance | 1,279,496 |
Operating segments | Northeast segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 848,424 |
Accumulated goodwill impairment losses, beginning balance | (707,593) |
Goodwill, net, beginning balance | 140,831 |
Goodwill acquired during year | 0 |
Other | (2,000) |
Goodwill, gross, ending balance | 846,424 |
Accumulated goodwill impairment losses, ending balance | (707,593) |
Goodwill, net, ending balance | 138,831 |
Operating segments | South segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 185,158 |
Accumulated goodwill impairment losses, beginning balance | (34,522) |
Goodwill, net, beginning balance | 150,636 |
Goodwill acquired during year | 39,457 |
Other | 5,100 |
Goodwill, gross, ending balance | 229,715 |
Accumulated goodwill impairment losses, ending balance | (34,522) |
Goodwill, net, ending balance | 195,193 |
Operating segments | West segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 210,423 |
Accumulated goodwill impairment losses, beginning balance | (16,633) |
Goodwill, net, beginning balance | 193,790 |
Goodwill acquired during year | 0 |
Other | 4,117 |
Goodwill, gross, ending balance | 214,540 |
Accumulated goodwill impairment losses, ending balance | (16,633) |
Goodwill, net, ending balance | 197,907 |
Operating segments | Midwest segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 1,110,052 |
Accumulated goodwill impairment losses, beginning balance | (435,283) |
Goodwill, net, beginning balance | 674,769 |
Goodwill acquired during year | 0 |
Other | 4,400 |
Goodwill, gross, ending balance | 1,114,452 |
Accumulated goodwill impairment losses, ending balance | (435,283) |
Goodwill, net, ending balance | 679,169 |
Other | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 156,116 |
Accumulated goodwill impairment losses, beginning balance | (87,720) |
Goodwill, net, beginning balance | 68,396 |
Goodwill acquired during year | 0 |
Other | 0 |
Goodwill, gross, ending balance | 156,116 |
Accumulated goodwill impairment losses, ending balance | (87,720) |
Goodwill, net, ending balance | $ 68,396 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, accumulated amortization | $ (106,671) | $ (100,807) |
Amortizing intangible assets, net carrying amount | 56,642 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Total other intangible assets, gross carrying amount | 2,030,018 | 1,957,675 |
Total other intangible assets, net carrying amount | 1,923,347 | 1,856,868 |
Gaming licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 1,568,009 | 1,498,309 |
Trademarks | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 298,000 | 298,000 |
Other | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 696 | 696 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, gross carrying amount | 101,052 | 98,752 |
Amortizing intangible assets, accumulated amortization | (55,450) | (51,544) |
Amortizing intangible assets, net carrying amount | 45,602 | 47,208 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, gross carrying amount | 62,261 | 61,918 |
Amortizing intangible assets, accumulated amortization | (51,221) | (49,263) |
Amortizing intangible assets, net carrying amount | $ 11,040 | $ 12,655 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Expected Intangible Asset Amortization Expense (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 17,574 |
2020 | 18,023 |
2021 | 4,526 |
2022 | 4,067 |
2023 | 4,007 |
Thereafter | 8,445 |
Amortizing intangible assets, net carrying amount | $ 56,642 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Impairment charges on other intangible assets | $ 0 | $ 0 |
Weighted-average remaining amortization period | 3 years 8 months 12 days | |
Intangible asset amortization expense | $ 5,900,000 | $ 4,500,000 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | |||
Accrued salaries and wages | $ 112,946 | $ 139,159 | |
Accrued gaming, pari-mutuel, property, and other taxes | 102,498 | 105,767 | |
Accrued interest | 6,218 | 15,793 | |
Other accrued expenses | 225,956 | 204,656 | |
Other current liabilities | 124,504 | 112,593 | |
Accrued expenses and other current liabilities | $ 572,122 | $ 577,534 | $ 577,968 |
Long-term Debt - Debt Summary (
Long-term Debt - Debt Summary (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Jan. 19, 2017 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,413,402 | $ 2,453,388 | |
Less: Current maturities of long-term debt | (62,505) | (62,140) | |
Less: Debt discount | (2,658) | (2,748) | |
Less: Debt issuance costs | (36,860) | (38,412) | |
Long-term debt, net of current maturities and debt issuance costs | $ 2,311,379 | 2,350,088 | |
Interest rate | 5.625% | ||
Secured credit facility | Revolving Credit Facility due 2023 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 92,000 | 112,000 | |
Secured credit facility | Term Loan A Facility due 2023 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 698,828 | 707,674 | |
Secured credit facility | Term Loan B-1 Facility due 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,125,928 | 1,128,750 | |
Senior notes | 5.625% Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 400,000 | 400,000 | |
Interest rate | 5.625% | 5.625% | |
Other long-term obligations | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 96,646 | 104,583 | |
Capital leases | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 381 |
Long-term Debt - Senior Secured
Long-term Debt - Senior Secured Credit Facilities, Senior Unsecured Notes, Loss on Early Extinguishment of Debt, and Covenants (Details) - USD ($) | Jan. 19, 2017 | Mar. 31, 2018 | Mar. 31, 2019 | Oct. 15, 2018 |
Debt Instrument [Line Items] | ||||
Interest rate | 5.625% | |||
Secured credit facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt term | 5 years | |||
Maximum borrowing capacity | $ 700,000,000 | |||
Letters of credit outstanding | $ 36,500,000 | |||
Available borrowing capacity | $ 571,500,000 | |||
Secured credit facility | Term Loan A Facility | ||||
Debt Instrument [Line Items] | ||||
Debt term | 5 years | |||
Maximum borrowing capacity | $ 300,000,000 | |||
Secured credit facility | Term Loan B Facility | ||||
Debt Instrument [Line Items] | ||||
Debt term | 7 years | |||
Maximum borrowing capacity | $ 500,000,000 | |||
Secured credit facility | Term Loan A Facility due 2023, incremental loans | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 430,200,000 | |||
Secured credit facility | Term Loan B-1 Facility due 2025 | ||||
Debt Instrument [Line Items] | ||||
Maximum borrowing capacity | $ 1,128,800,000 | |||
Secured credit facility | 2013 Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Loss on early extinguishment of debt | $ 900,000 | |||
Senior notes | 5.625% Notes due 2027 | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 5.625% | 5.625% | ||
Debt principal amount | $ 400,000,000 |
Long-term Debt - Other Long-ter
Long-term Debt - Other Long-term Obligations (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |||
Jan. 31, 2015USD ($) | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) | Sep. 30, 2014USD ($)payment | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |||||
Long-term debt | $ 2,413,402 | $ 2,453,388 | |||
Other long-term obligations | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 96,646 | 104,583 | |||
Other long-term obligations | Ohio relocation fees debt | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 84,000 | 91,300 | |||
Amount payable upon opening of the facility | $ 7,500 | ||||
Number of semi-annual payments | payment | 18 | ||||
Amount of semi-annual payments due beginning one year from commencement of operations | $ 4,800 | ||||
Effective yield | 5.00% | ||||
Interest expense | 1,100 | $ 1,300 | |||
Other long-term obligations | Event center debt | |||||
Debt Instrument [Line Items] | |||||
Long-term debt | 12,600 | $ 13,200 | |||
Effective yield | 3.00% | ||||
Interest expense | $ 100 | $ 100 | |||
Periodic payment amount | $ 1,000 | ||||
Debt term | 20 years |
Investments in and Advances t_3
Investments in and Advances to Unconsolidated Affiliates (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Summary financial information | |||
Net income attributable to Penn National Gaming, Inc. | $ 5,687 | $ 5,361 | |
Kansas Entertainment | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest | 50.00% | ||
Investment balance | $ 88,900 | $ 89,400 | |
Summary financial information | |||
Revenues | 39,511 | 39,285 | |
Operating expenses | 27,414 | 27,658 | |
Operating income | 12,097 | 11,627 | |
Net income | 12,097 | 11,627 | |
Net income attributable to Penn National Gaming, Inc. | $ 6,049 | $ 5,814 | |
Freehold Raceway | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest | 50.00% | ||
MAXXAM | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest | 50.00% |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | 26.60% | 25.70% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Feb. 14, 2019shares | Mar. 31, 2019USD ($)performance_periodshares | Mar. 31, 2018USD ($)shares | Jan. 09, 2019USD ($) | Dec. 31, 2018USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Authorized amount under share repurchase program | $ 200,000,000 | ||||
Stock options granted (in shares) | shares | 1,307,015 | 661,175 | |||
Stock-based compensation expense (reduction to expense) | $ 3,400,000 | $ 2,900,000 | |||
Phantom share units (PSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense (reduction to expense) | 1,100,000 | 100,000 | |||
Liability for cash-settled awards | 400,000 | $ 1,700,000 | |||
Unrecognized compensation cost, other awards | $ 4,500,000 | ||||
Unamortized compensation costs, weighted average period of recognition | 2 years 2 months 26 days | ||||
Amounts paid on cash-settled awards | $ 2,400,000 | 4,100,000 | |||
Phantom share units (PSUs) | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Phantom share units (PSUs) | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
Stock appreciation rights (SARs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock-based compensation expense (reduction to expense) | $ 3,000,000 | (4,000,000) | |||
Vesting period | 4 years | ||||
Liability for cash-settled awards | $ 8,600,000 | $ 6,800,000 | |||
Unrecognized compensation cost, other awards | $ 9,600,000 | ||||
Unamortized compensation costs, weighted average period of recognition | 2 years 11 months 23 days | ||||
Amounts paid on cash-settled awards | $ 1,200,000 | $ 3,000,000 | |||
2018 Long Term Incentive Compensation Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares available for future grants (in shares) | shares | 9,397,761 | ||||
Performance Share Program | Performance shares | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Awards granted (in shares) | shares | 278,780 | ||||
Award period | 3 years | ||||
Number of annual award performance periods | performance_period | 3 | ||||
Service period | 3 years | ||||
Vesting period | 3 years | ||||
Performance Share Program | Performance shares | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of award which can potentially be earned | 50.00% | ||||
Performance Share Program | Performance shares | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of award which can potentially be earned | 150.00% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Determination of shares: | ||
Weighted average basic shares outstanding (in shares) | 116,293,000 | 91,191,000 |
Diluted weighted-average common shares outstanding (in shares) | 118,595,000 | 94,650,000 |
Anti-dilutive securities, stock options (in shares) | 1,940,633 | 646,307 |
Calculation of basic EPS: | ||
Net income applicable to common stock | $ 40,992 | $ 45,437 |
Weighted average basic shares outstanding (in shares) | 116,293,000 | 91,191,000 |
Basic EPS (in dollars per share) | $ 0.35 | $ 0.50 |
Calculation of diluted EPS using two class method: | ||
Net income applicable to common stock | $ 40,992 | $ 45,437 |
Diluted weighted-average common shares outstanding (in shares) | 118,595,000 | 94,650,000 |
Diluted EPS (in dollars per share) | $ 0.35 | $ 0.48 |
Stock options | ||
Determination of shares: | ||
Assumed conversion of dilutive employee stock-based awards and restricted stock (in shares) | 2,049,000 | 3,260,000 |
Restricted stock | ||
Determination of shares: | ||
Assumed conversion of dilutive employee stock-based awards and restricted stock (in shares) | 253,000 | 199,000 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amounts and Estimated Fair Values by Input Level (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Dec. 31, 2018 | Jan. 19, 2017 |
Financial liabilities: | |||
Interest rate | 5.625% | ||
Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Interest rate | 5.625% | 5.625% | |
Carrying Amount | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | $ 400,280 | $ 479,598 | |
Held-to-maturity securities | 7,466 | 7,466 | |
Promissory notes | 16,853 | 16,853 | |
Financial liabilities: | |||
Other liabilities | 26,556 | 21,863 | |
Carrying Amount | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 1,877,885 | 1,907,932 | |
Carrying Amount | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 399,353 | 399,332 | |
Carrying Amount | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | 96,646 | 104,583 | |
Fair Value | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 400,280 | 479,598 | |
Held-to-maturity securities | 7,931 | 7,879 | |
Promissory notes | 17,491 | 17,415 | |
Financial liabilities: | |||
Other liabilities | 26,548 | 21,857 | |
Fair Value | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 1,893,268 | 1,886,333 | |
Fair Value | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 389,520 | 360,000 | |
Fair Value | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | 89,408 | 96,338 | |
Level 1 | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 400,280 | 479,598 | |
Held-to-maturity securities | 0 | 0 | |
Promissory notes | 0 | 0 | |
Financial liabilities: | |||
Other liabilities | 0 | 0 | |
Level 1 | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 1,893,268 | 1,886,333 | |
Level 1 | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 389,520 | 360,000 | |
Level 1 | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | 0 | 0 | |
Level 2 | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 0 | 0 | |
Held-to-maturity securities | 7,931 | 7,879 | |
Promissory notes | 17,491 | 17,415 | |
Financial liabilities: | |||
Other liabilities | 2,810 | 2,815 | |
Level 2 | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 0 | 0 | |
Level 2 | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 0 | 0 | |
Level 2 | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | 89,408 | 96,338 | |
Level 3 | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 0 | 0 | |
Held-to-maturity securities | 0 | 0 | |
Promissory notes | 0 | 0 | |
Financial liabilities: | |||
Other liabilities | 23,738 | 19,042 | |
Level 3 | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 0 | 0 | |
Level 3 | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 0 | 0 | |
Level 3 | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | $ 0 | $ 0 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Fair Value of Level 3 Liabilities (Details) - Recurring $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Contingent Purchase Price | |
Balance | $ 19,042 |
Payments | (21) |
Included in earnings | 4,717 |
Balance | $ 23,738 |
Fair Value Measurements - Signi
Fair Value Measurements - Significant Unobservable Inputs For Level 3 Assets and Liabilities (Details) | Mar. 31, 2019 |
Plainridge Park Casino | Discounted cash flow | Level 3 | Discount rate | |
Recurring basis: | |
Contingent purchase price, measurement input | 0.0748 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2019USD ($)payment | Dec. 31, 2018USD ($)payment | Jan. 19, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate | 5.625% | ||
Plainridge Park Casino | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Period of actual earnings used to calculate contingent consideration | 10 years | ||
Number of remaining annual payments | payment | 7 | 7 | |
Senior notes | 5.625% Notes due 2027 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate | 5.625% | 5.625% | |
Retama Nominal Holder, LLC | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Ownership interest | 1.00% | ||
Pinnacle Retama Partners, LLC | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Ownership interest by parent | 75.50% | ||
Other assets | Pinnacle Retama Partners, LLC | Retama Development Corporation | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Promissory notes | $ 16.9 | $ 16.9 | |
Other assets | Local government bonds | Pinnacle Retama Partners, LLC | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Investment, at amortized cost | $ 7.5 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2019USD ($)segment | Dec. 31, 2018USD ($)segment | Mar. 31, 2018USD ($) | Jan. 01, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of reportable segments | segment | 4 | |||
Revenues: | ||||
Revenues | $ 1,282,571 | $ 816,085 | ||
Adjusted EBITDAR: | ||||
Adjusted EBITDAR | 391,437 | 242,546 | ||
Rent expense associated with triple net operating lease | (84,730) | 0 | ||
Stock-based compensation | (3,417) | (2,929) | ||
Cash-settled stock award variance | (472) | 7,462 | ||
Loss on disposal of assets | (522) | (55) | ||
Contingent purchase price | (4,717) | (1,134) | ||
Pre-opening and acquisition costs | (4,380) | (6,093) | ||
Depreciation and amortization | (104,053) | (60,390) | ||
Impairment losses | 0 | (618) | ||
Non-operating items for Kansas JV | (1,073) | (1,294) | ||
Interest expense | (132,587) | (115,740) | ||
Interest income | 319 | 249 | ||
Loss on early extinguishment of debt | 0 | (882) | ||
Other | 0 | 4 | ||
Income before income taxes | 55,805 | 61,126 | ||
Income tax expense | (14,818) | (15,689) | ||
Net income | 40,987 | 45,437 | ||
Capital expenditures: | ||||
Capital expenditures | 37,666 | 11,813 | ||
Assets: | ||||
Investment in and advances to unconsolidated affiliates | 127,924 | $ 128,488 | ||
Total assets | 13,498,171 | $ 10,961,012 | $ 13,424,830 | |
South/West segment | ||||
Segment Reporting Information [Line Items] | ||||
Number of new reportable segments from division of segment | segment | 2 | |||
Operating segments | Northeast segment | ||||
Revenues: | ||||
Revenues | 550,578 | 458,719 | ||
Adjusted EBITDAR: | ||||
Adjusted EBITDAR | 164,754 | 144,977 | ||
Capital expenditures: | ||||
Capital expenditures | 12,685 | 4,212 | ||
Assets: | ||||
Investment in and advances to unconsolidated affiliates | 105 | $ 105 | ||
Total assets | 1,470,512 | 1,330,256 | ||
Operating segments | South segment | ||||
Revenues: | ||||
Revenues | 291,942 | 63,330 | ||
Adjusted EBITDAR: | ||||
Adjusted EBITDAR | 97,844 | 21,118 | ||
Capital expenditures: | ||||
Capital expenditures | 8,872 | 682 | ||
Assets: | ||||
Investment in and advances to unconsolidated affiliates | 0 | 0 | ||
Total assets | 1,458,782 | 1,082,304 | ||
Operating segments | West segment | ||||
Revenues: | ||||
Revenues | 158,654 | 97,966 | ||
Adjusted EBITDAR: | ||||
Adjusted EBITDAR | 49,923 | 23,931 | ||
Capital expenditures: | ||||
Capital expenditures | 7,027 | 2,730 | ||
Assets: | ||||
Investment in and advances to unconsolidated affiliates | 0 | 0 | ||
Total assets | 752,189 | 755,665 | ||
Operating segments | Midwest segment | ||||
Revenues: | ||||
Revenues | 271,262 | 185,534 | ||
Adjusted EBITDAR: | ||||
Adjusted EBITDAR | 99,219 | 68,185 | ||
Capital expenditures: | ||||
Capital expenditures | 7,039 | 3,007 | ||
Assets: | ||||
Investment in and advances to unconsolidated affiliates | 88,899 | 89,350 | ||
Total assets | 1,489,105 | 1,411,468 | ||
Other | ||||
Revenues: | ||||
Revenues | 10,135 | 10,536 | ||
Adjusted EBITDAR: | ||||
Adjusted EBITDAR | (20,303) | (15,665) | ||
Capital expenditures: | ||||
Capital expenditures | 2,043 | $ 1,182 | ||
Assets: | ||||
Investment in and advances to unconsolidated affiliates | 38,920 | 39,033 | ||
Total assets | $ 8,327,583 | $ 6,381,319 |
Uncategorized Items - penn03312
Label | Element | Value |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | $ 1,640,000 |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | 1,453,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 12,167,000 |
Restricted Cash, Current | us-gaap_RestrictedCashCurrent | 0 |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,650,000) |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,650,000) |
Accounting Standards Update 2014-09 [Member] | Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,650,000) |
Accounting Standards Update 2016-02 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 1,085,652,000 |
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 1,085,652,000 |
Accounting Standards Update 2016-02 [Member] | Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,085,652,000 |