Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 0-24206 | |
Entity Registrant Name | PENN NATIONAL GAMING, INC. | |
Entity Central Index Key | 0000921738 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Incorporation, State or Country Code | PA | |
Entity Tax Identification Number | 23-2234473 | |
Entity Address, Address Line One | 825 Berkshire Blvd., Suite 200 | |
Entity Address, City or Town | Wyomissing, | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 19610 | |
City Area Code | 610 | |
Local Phone Number | 373-2400 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | PENN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Smaller Reporting Company | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 115,912,626 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 406.9 | $ 479.6 |
Receivables, net of allowance for doubtful accounts of $5.6 and $3.2 | 91.6 | 106.8 |
Prepaid expenses | 72.8 | 63 |
Other current assets | 56.9 | 28.2 |
Total current assets | 628.2 | 677.6 |
Property and equipment, net | 5,155.2 | 6,868.8 |
Investment in and advances to unconsolidated affiliates | 128.5 | 128.5 |
Goodwill | 1,350.4 | 1,228.4 |
Other intangible assets, net | 2,104.5 | 1,856.9 |
Deferred income taxes | 0 | 80.6 |
Operating lease right-of-use assets | 4,592 | 0 |
Finance lease right-of-use assets | 222.7 | 0 |
Other assets | 136.5 | 120.2 |
Total assets | 14,318 | 10,961 |
Current liabilities | ||
Accounts payable | 39.5 | 30.5 |
Current maturities of long-term debt | 62.9 | 62.1 |
Current portion of financing obligations | 45.3 | 67.8 |
Current portion of operating lease liabilities | 124.4 | 0 |
Current portion of finance lease liabilities | 6.3 | 0 |
Accrued expenses and other current liabilities | 598.9 | 578 |
Total current liabilities | 877.3 | 738.4 |
Long-term debt, net of current maturities and debt issuance costs | 2,392 | 2,350.1 |
Long-term portion of financing obligations | 4,110.8 | 7,080.6 |
Long-term portion of operating lease liabilities | 4,439.1 | 0 |
Long-term portion of finance lease liabilities | 217.8 | 0 |
Deferred income taxes | 252.8 | 0 |
Other noncurrent liabilities | 88.8 | 60.7 |
Total liabilities | 12,378.6 | 10,229.8 |
Commitments and contingencies (Note 12) | ||
Stockholders’ equity | ||
Common stock ($0.01 par value, 200,000,000 shares authorized, 118,044,658 and 118,855,201 shares issued, and 115,877,265 and 116,687,808 shares outstanding) | 1.2 | 1.2 |
Treasury stock, at cost, (2,167,393 shares held in both periods) | (28.4) | (28.4) |
Additional paid-in capital | 1,712.9 | 1,726.4 |
Retained earnings (accumulated deficit) | 254.1 | (968) |
Total Penn stockholders’ equity | 1,939.8 | 731.2 |
Non-controlling interest | (0.4) | 0 |
Total stockholders’ equity | 1,939.4 | 731.2 |
Total liabilities and stockholders’ equity | 14,318 | 10,961 |
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 Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Allowance for doubtful accounts | $ 5.6 | $ 3.2 |
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) | 118,044,658 | 118,855,201 |
Common stock, shares outstanding (in shares) | 115,877,265 | 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 Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues | ||||
Revenues | $ 1,354.5 | $ 789.7 | $ 3,960.2 | $ 2,432.6 |
Operating expenses | ||||
General and administrative | 309.7 | 125.1 | 883.6 | 378.9 |
Depreciation and amortization | 106.3 | 56.9 | 316.4 | 175.8 |
Recoveries on loan loss and unfunded loan commitments, net of impairment losses | 0 | 0 | 0 | (16.4) |
Total operating expenses | 1,174.7 | 633.9 | 3,399.6 | 1,922.9 |
Operating income | 179.8 | 155.8 | 560.6 | 509.7 |
Other income (expenses) | ||||
Interest expense, net | (133.5) | (114.6) | (400.5) | (345.7) |
Income from unconsolidated affiliates | 9.8 | 5.7 | 21.7 | 16.8 |
Loss on early extinguishment of debt | 0 | (0.3) | 0 | (3.8) |
Other | 7.2 | (1.4) | 7.2 | (1.5) |
Total other expenses | (116.5) | (110.6) | (371.6) | (334.2) |
Income before income taxes | 63.3 | 45.2 | 189 | 175.5 |
Income tax expense | (19.6) | (9.1) | (53) | (40) |
Net income | 43.7 | 36.1 | 136 | 135.5 |
Less: Net loss attributable to non-controlling interest | 0.2 | 0 | 0.4 | 0 |
Net income attributable to Penn | $ 43.9 | $ 36.1 | $ 136.4 | $ 135.5 |
Earnings per common share: | ||||
Basic earnings per common share (in dollars per share) | $ 0.38 | $ 0.39 | $ 1.18 | $ 1.48 |
Diluted earnings per common share (in dollars per share) | $ 0.38 | $ 0.38 | $ 1.16 | $ 1.43 |
Weighted average basic shares outstanding (in shares) | 115.2 | 91.9 | 115.8 | 91.5 |
Weighted average diluted shares outstanding (in shares) | 116.7 | 95.3 | 117.7 | 95 |
Gaming | ||||
Revenues | ||||
Revenues | $ 1,088.5 | $ 646.3 | $ 3,185.2 | $ 1,965.9 |
Operating expenses | ||||
Cost of revenue | 587.5 | 352 | 1,699.1 | 1,043.2 |
Food, beverage, hotel and other | ||||
Revenues | ||||
Revenues | 266 | 138.8 | 775 | 403.4 |
Operating expenses | ||||
Cost of revenue | 171.2 | 96 | 500.5 | 284.1 |
Management service and license fees | ||||
Revenues | ||||
Revenues | 0 | 0.7 | 0 | 6 |
Reimbursable management costs | ||||
Revenues | ||||
Revenues | 0 | 3.9 | 0 | 57.3 |
Operating expenses | ||||
Cost of revenue | $ 0 | $ 3.9 | $ 0 | $ 57.3 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 43.7 | $ 36.1 | $ 136 | $ 135.5 |
Total comprehensive income | 43.7 | 36.1 | 136 | 135.5 |
Less: Comprehensive loss attributable to non-controlling interest | 0.2 | 0 | 0.4 | 0 |
Comprehensive income attributable to Penn | $ 43.9 | $ 36.1 | $ 136.4 | $ 135.5 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Millions | 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 | $ (73.2) | $ 0 | $ 0.9 | $ (28.4) | $ 1,007.6 | $ (1,051.8) | $ (1.5) | $ (73.2) | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation arrangements (in shares) | 1,202,384 | ||||||||
Share-based compensation arrangements | 16.3 | 16.3 | 16.3 | ||||||
Reclassification of accumulated other comprehensive loss to earnings upon termination of management contract | 1.5 | 1.5 | 1.5 | ||||||
Net income | 135.5 | 135.5 | 135.5 | ||||||
Ending balance (in shares) at Sep. 30, 2018 | 0 | 92,427,626 | |||||||
Ending balance at Sep. 30, 2018 | 70.5 | $ 0 | $ 0.9 | (28.4) | 1,023.9 | (925.9) | 0 | 70.5 | 0 |
Beginning balance (in shares) at Jun. 30, 2018 | 0 | 92,196,285 | |||||||
Beginning balance at Jun. 30, 2018 | 27.7 | $ 0 | $ 0.9 | (28.4) | 1,018.7 | (962) | (1.5) | 27.7 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation arrangements | 5.2 | 5.2 | 5.2 | ||||||
Reclassification of accumulated other comprehensive loss to earnings upon termination of management contract | 1.5 | 1.5 | 1.5 | ||||||
Net income | 36.1 | 36.1 | 36.1 | ||||||
Ending balance (in shares) at Sep. 30, 2018 | 0 | 92,427,626 | |||||||
Ending balance at Sep. 30, 2018 | 70.5 | $ 0 | $ 0.9 | (28.4) | 1,023.9 | (925.9) | 0 | 70.5 | 0 |
Beginning balance (in shares) at Dec. 31, 2018 | 0 | 116,687,808 | |||||||
Beginning balance at Dec. 31, 2018 | 731.2 | $ 0 | $ 1.2 | (28.4) | 1,726.4 | (968) | 0 | 731.2 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation arrangements (in shares) | 461,280 | ||||||||
Share-based compensation arrangements | 11.4 | 11.4 | 11.4 | ||||||
Share repurchases (in shares) | (1,271,823) | ||||||||
Share repurchases | (24.9) | (24.9) | (24.9) | ||||||
Net income | 136 | 136.4 | 136.4 | (0.4) | |||||
Ending balance (in shares) at Sep. 30, 2019 | 0 | 115,877,265 | |||||||
Ending balance at Sep. 30, 2019 | 1,939.4 | $ 0 | $ 1.2 | (28.4) | 1,712.9 | 254.1 | 0 | 1,939.8 | (0.4) |
Beginning balance (in shares) at Jun. 30, 2019 | 0 | 115,869,769 | |||||||
Beginning balance at Jun. 30, 2019 | 1,891.7 | $ 0 | $ 1.2 | (28.4) | 1,708.9 | 210.2 | 0 | 1,891.9 | (0.2) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Share-based compensation arrangements (in shares) | 7,496 | ||||||||
Share-based compensation arrangements | 4 | 4 | 4 | ||||||
Net income | 43.7 | 43.9 | 43.9 | (0.2) | |||||
Ending balance (in shares) at Sep. 30, 2019 | 0 | 115,877,265 | |||||||
Ending balance at Sep. 30, 2019 | $ 1,939.4 | $ 0 | $ 1.2 | $ (28.4) | $ 1,712.9 | $ 254.1 | $ 0 | $ 1,939.8 | $ (0.4) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Operating activities | ||
Net income | $ 136 | $ 135.5 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 316.4 | 175.8 |
Amortization of items charged to interest expense | 5.7 | 4.6 |
Noncash operating lease expense | 79 | 0 |
Change in fair value of contingent purchase price | 7 | 1.7 |
Holding gain on equity securities | (7.1) | 0 |
Loss on sale or disposal of property and equipment | 8.3 | 3.2 |
Income from unconsolidated affiliates | (21.7) | (16.8) |
Return on investment from unconsolidated affiliates | 22 | 21.6 |
Deferred income taxes | 28.8 | 7.9 |
Stock-based compensation | 10.4 | 8.8 |
Recoveries on loan loss and unfunded loan commitments, net of impairment losses | 0 | (16.4) |
Reclassification of accumulated other comprehensive loss to earnings upon termination of management contract | 0 | 1.5 |
Loss on early extinguishment of debt | 0 | 3.8 |
Changes in operating assets and liabilities, net of businesses acquired | ||
Accounts receivable | 23.6 | 11.2 |
Prepaid expenses and other current assets | 12.5 | (2.2) |
Other assets | (1.5) | (8.7) |
Accounts payable | 8.1 | (5.1) |
Accrued expenses | (20.3) | (36.5) |
Income taxes | (4.5) | 5.6 |
Operating lease liabilities | (107.6) | 0 |
Other current and noncurrent liabilities | 24.1 | 4.7 |
Net cash provided by operating activities | 519.2 | 300.2 |
Investing activities | ||
Project capital expenditures | (18.2) | (2.2) |
Maintenance capital expenditures | (118.5) | (54.8) |
Proceeds from sale of loan | 0 | 15.2 |
Consideration paid for acquisitions of businesses, net of cash acquired | (1,359.4) | (2.9) |
Proceeds from sale-and-leaseback transactions in conjunction with acquisitions | 961.1 | 0 |
Acquisition of equity securities | (5.1) | 0 |
Additional contributions from joint venture | 0 | 18.9 |
Consideration paid for gaming licenses and other intangible assets | (1.5) | (58.7) |
Other | (0.5) | 0.4 |
Net cash used in investing activities | (542.1) | (84.1) |
Financing activities | ||
Proceeds from revolving credit facility | 395 | 89 |
Principal payments on long-term debt | (35) | (190.9) |
Repayments on revolving credit facility | (307) | (89) |
Payments of other long-term obligations | (15.4) | (14.8) |
Principal payments on financing obligations | (38.4) | (48.3) |
Principal payments on finance leases | (4.6) | 0 |
Proceeds from exercise of options | 1 | 7.4 |
Repurchase of common stock | (24.9) | 0 |
Payments of contingent purchase price | (3.8) | (4.2) |
Proceeds from insurance financing | 14.3 | 8.6 |
Payments on insurance financing | (14.8) | (8.1) |
Other | (0.3) | 0 |
Net cash used in financing activities | (33.9) | (250.3) |
Change in cash, cash equivalents, and restricted cash | (56.8) | (34.2) |
Cash, cash equivalents and restricted cash at the beginning of the year | 481.2 | 279.4 |
Cash, cash equivalents and restricted cash at the end of the period | 424.4 | 245.2 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Total cash, cash equivalents and restricted cash | 481.2 | 279.4 |
Supplemental disclosure: | ||
Cash paid for interest, net of amounts capitalized | 404.4 | 350.2 |
Cash payments related to income taxes, net | 20.9 | 23.8 |
Non-cash investing and financing activities: | ||
Commencement of operating leases | 713.3 | 0 |
Commencement of finance leases | 4.3 | 0 |
Accrued capital expenditures | 8.3 | 4.9 |
Acquisition of equity securities | $ 16.1 | $ 0 |
Organization and Basis of Prese
Organization and Basis of Presentation | 9 Months Ended |
Sep. 30, 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. We also offer live sports betting at our facilities in Indiana, Iowa, Mississippi, Pennsylvania and West Virginia. In addition, the Company operates an interactive gaming division through its subsidiary, Penn Interactive Ventures, LLC (“PIV”), which recently launched iGaming in Pennsylvania. Our MYCHOICE ® customer loyalty program (the “my choice program”) provides its members with various benefits, including earning reward points redeemable for complimentary goods and/or services and credit toward tier status, which entitles our guests to receive certain other benefits. 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 September 30, 2019 , we owned, managed, or had ownership interests in 41 facilities in 19 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. (NASDAQ: GLPI) (“GLPI”), a 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 U.S. 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 | 9 Months Ended |
Sep. 30, 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: 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 consider our combined VGT operations, by state, to be separate operating segments. See Note 16, “Segment Information,” for further information. For financial reporting purposes, 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 Greektown Casino-Hotel (1) Detroit, Michigan Greektown 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 Marquee by Penn (2) Pennsylvania N/A Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease South segment (3) 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 (4) Bossier City, Louisiana Margaritaville 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 (5) 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 (6) Kansas City, Kansas Owned - JV Hollywood Casino St. Louis Maryland Heights, Missouri Penn Master Lease Prairie State Gaming (2) Illinois N/A River City Casino St. Louis, Missouri Pinnacle Master Lease (1) Acquired on May 23, 2019 (2) VGT route operations (3) Resorts Casino Tunica closed on June 30, 2019, but remains subject to the Penn Master Lease. (4) Acquired on January 1, 2019 (5) The riverboat is owned by us and not subject to the Penn Master Lease. (6) 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 Hollywood Casino at Kansas Speedway. 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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Food and beverage $ 66.7 $ 30.5 $ 195.3 $ 77.3 Hotel 44.1 10.5 121.5 30.8 Other 4.2 1.7 13.0 3.7 Total complimentaries associated with gaming contracts $ 115.0 $ 42.7 $ 329.8 $ 111.8 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 September 30, 2019 (in millions) Northeast South West Midwest Other Intersegment Eliminations (1) Total Revenues: Gaming $ 555.2 $ 201.2 $ 93.3 $ 236.1 $ 3.3 $ (0.6 ) $ 1,088.5 Food and beverage 39.4 39.0 29.5 21.0 0.5 — 129.4 Hotel 13.7 27.5 32.4 11.7 — — 85.3 Racing 5.6 — 0.1 — 1.3 — 7.0 Other 15.0 8.9 6.2 7.0 7.3 (0.1 ) 44.3 Total revenues $ 628.9 $ 276.6 $ 161.5 $ 275.8 $ 12.4 $ (0.7 ) $ 1,354.5 (1) Represents the elimination of intersegment operations associated with our internally-branded retail sportsbooks, which are operated by PIV, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour (“HPT”). For the three months ended September 30, 2018 (in millions) Northeast South West Midwest Other Total Revenues: Gaming $ 391.1 $ 46.1 $ 47.5 $ 161.6 $ — $ 646.3 Food and beverage 25.7 9.7 20.8 13.1 0.2 69.5 Hotel 5.9 2.9 20.4 5.8 — 35.0 Racing 3.8 — 0.1 — 1.4 5.3 Reimbursable management costs 3.9 — — — — 3.9 Other 11.0 1.7 3.8 4.9 8.3 29.7 Total revenues $ 441.4 $ 60.4 $ 92.6 $ 185.4 $ 9.9 $ 789.7 For the nine months ended September 30, 2019 (in millions) Northeast South West Midwest Other Intersegment Eliminations (1) Total Revenues: Gaming $ 1,571.9 $ 628.1 $ 282.6 $ 699.8 $ 3.4 $ (0.6 ) $ 3,185.2 Food and beverage 112.8 118.7 86.9 61.7 1.2 — 381.3 Hotel 31.3 77.0 95.7 32.9 — — 236.9 Racing 19.1 — 0.2 — 4.4 — 23.7 Other 43.5 26.9 19.0 20.9 22.9 (0.1 ) 133.1 Total revenues $ 1,778.6 $ 850.7 $ 484.4 $ 815.3 $ 31.9 $ (0.7 ) $ 3,960.2 (1) Represents the elimination of intersegment operations associated with our internally-branded retail sportsbooks, which are operated by PIV, and our live and televised poker tournament series that operates under the trade name, HPT. For the nine months ended September 30, 2018 (in millions) Northeast South West Midwest Other Total Revenues: Gaming $ 1,182.1 $ 146.3 $ 144.6 $ 492.9 $ — $ 1,965.9 Food and beverage 72.3 26.8 61.6 36.3 0.8 197.8 Hotel 16.0 8.5 62.4 16.9 — 103.8 Racing 14.0 — 0.2 — 4.7 18.9 Reimbursable management costs 46.8 — 10.5 — — 57.3 Other 34.2 4.8 11.9 12.9 25.1 88.9 Total revenues $ 1,365.4 $ 186.4 $ 291.2 $ 559.0 $ 30.6 $ 2,432.6 Customer-related Liabilities The Company has three general types of liabilities related to contracts with customers: (i) the obligation associated with our my choice program (loyalty points and tier status benefits), (ii) advance payments on goods and services yet to be provided and for unpaid wagers, and (iii) deferred revenue associated with third-party sports betting operators for online sports betting and related iGaming market access. The Company’s my choice program allows members to utilize their reward membership cards to earn loyalty points 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. In addition, members of the my choice program earn credit toward tier status, which entitles them to receive certain other benefits, such as gifts. The Company accounts for the obligation associated with our my choice program utilizing a deferred revenue model, which defers revenue at the point in time when the loyalty points and tier status benefits are earned by our customers. Deferred revenue associated with the my choice program is recognized at the point in time when the loyalty points are redeemed by our customers or at the point in time when our customers receive the tier status benefits. The obligation associated with our my choice program is based on the estimated standalone selling price of the loyalty points and the tier status benefits earned after factoring in the likelihood of redemption. The obligation associated with our my choice program, which is included in “Accrued expenses and other current liabilities” within our unaudited Condensed Consolidated Balance Sheets, was $37.0 million and $39.9 million as of September 30, 2019 and December 31, 2018 , respectively, and consisted principally of the obligation associated with the loyalty points. Our loyalty point 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 points as well as the timing of when our customers receive their earned tier status benefits. 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 $33.8 million and $34.3 million as of September 30, 2019 and December 31, 2018 , respectively, of which $0.7 million were classified as long-term in both periods. 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. During the third quarter of 2019, we entered into multi-year agreements with sports betting operators for online sports betting and related iGaming market access across the Company’s portfolio, of which we received cash and equity securities, including ordinary shares and warrants, specific to three operator agreements. Since the operations contemplated by these agreements had not yet commenced, as of September 30, 2019 , the Company has yet to recognize revenue associated with these agreements. Deferred revenue associated with third-party sports betting operators for online sports betting and related iGaming market access as of September 30, 2019 , was $33.7 million , which is included in “Other noncurrent liabilities” within our unaudited Condensed Consolidated Balance Sheets. 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. For the three and nine months ended September 30, 2019 , these expenses, which were recorded primarily in gaming expense within the unaudited Condensed Consolidated Statements of Operations, were $403.1 million and $1,189.4 million , respectively, as compared to $250.1 million and $750.5 million , respectively, for the three and nine months ended September 30, 2018 . Equity Securities: The Company’s equity securities (including warrants) are measured at fair value each reporting period with unrealized holding gains and losses included in current period earnings. During the three and nine months ended September 30, 2019 , the Company recognized a holding gain of $7.1 million related to equity securities held as of September 30, 2019 , which is included in “Other,” as reported in “Other income (expenses)” within our unaudited Condensed Consolidated Statements of Operations. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 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 Accounting Standards Codification (“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 elected the following policies: (i) to account for lease and non-lease components as a single component for all classes of underlying assets and (ii) to not recognize short-term leases (i.e., a lease that is less than 12 months and does not contain a purchase option) within the unaudited Condensed Consolidated Balance Sheets, with the expense related to these short-term leases recorded in 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” (“ASC 840”), 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, net” 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. Lease 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. Lease 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 or (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 pursuant to ASC 840. 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 the opening balance of retained earnings 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 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, but 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 millions) 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 $ 63.0 $ — $ — $ — $ — $ (1.0 ) $ 62.0 $ (1.0 ) Total current assets $ 677.6 $ — $ — $ — $ — $ (1.0 ) $ 676.6 $ (1.0 ) Property and equipment, net (4) $ 6,868.8 $ — $ (164.3 ) $ (1,407.4 ) $ — $ — $ 5,297.1 $ (1,571.7 ) Goodwill $ 1,228.4 $ 5.5 $ — $ — $ — $ — $ 1,233.9 $ 5.5 Operating lease right-of-use assets (5) $ — $ — $ — $ 3,541.2 $ 112.8 $ 152.5 $ 3,806.5 $ 3,806.5 Finance lease right-of-use assets (6) $ — $ — $ 224.5 $ — $ — $ — $ 224.5 $ 224.5 Total assets $ 10,961.0 $ 5.5 $ 60.2 $ 2,133.8 $ 112.8 $ 151.5 $ 13,424.8 $ 2,463.8 Liabilities Current liabilities Current portion of financing obligations (7) $ 67.8 $ — $ (1.5 ) $ (16.2 ) $ — $ — $ 50.1 $ (17.7 ) Current portion of operating lease liabilities (5) $ — $ — $ — $ 72.9 $ 20.5 $ 8.9 $ 102.3 $ 102.3 Current portion of finance lease liabilities (6) $ — $ — $ 5.8 $ — $ — $ — $ 5.8 $ 5.8 Accrued expenses and other current liabilities $ 578.0 $ — $ — $ — $ — $ (0.5 ) $ 577.5 $ (0.5 ) Total current liabilities $ 738.4 $ — $ 4.3 $ 56.7 $ 20.5 $ 8.4 $ 828.3 $ 89.9 Long-term portion of financing obligations (7) $ 7,080.6 $ 5.5 $ (181.3 ) $ (2,760.6 ) $ — $ — $ 4,144.2 $ (2,936.4 ) Long-term portion of operating lease liabilities (5) $ — $ — $ — $ 3,467.1 $ 92.3 $ 145.0 $ 3,704.4 $ 3,704.4 Long-term portion of finance lease liabilities (6) $ — $ — $ 218.3 $ — $ — $ — $ 218.3 $ 218.3 Deferred income taxes (8) $ — $ — $ 4.3 $ 299.5 $ — $ — $ 303.8 $ 303.8 Other noncurrent liabilities $ 60.7 $ — $ — $ — $ — $ (1.9 ) $ 58.8 $ (1.9 ) Total liabilities $ 10,229.8 $ 5.5 $ 45.6 $ 1,062.7 $ 112.8 $ 151.5 $ 11,607.9 $ 1,378.1 Stockholders’ equity Retained earnings (accumulated deficit) $ (968.0 ) $ — $ 14.6 $ 1,071.1 $ — $ — $ 117.7 $ 1,085.7 Total Penn stockholders’ equity $ 731.2 $ — $ 14.6 $ 1,071.1 $ — $ — $ 1,816.9 $ 1,085.7 Total stockholders’ equity $ 731.2 $ — $ 14.6 $ 1,071.1 $ — $ — $ 1,816.9 $ 1,085.7 Total liabilities and stockholders’ equity $ 10,961.0 $ 5.5 $ 60.2 $ 2,133.8 $ 112.8 $ 151.5 $ 13,424.8 $ 2,463.8 (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 land). (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 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 lease 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 ASC 840 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 buildings). 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. See Note 11, “Income Taxes.” Accounting Pronouncements to be Implemented in 2020 In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”), which sets forth a “current expected credit loss” (referred to as “CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and must be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently assessing the impact of the adoption of ASU 2016-13 on its unaudited Condensed Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Cost Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This will result in certain implementation costs being capitalized; the associated amortization charge will, however, be recorded as an operating expense. Under the previous guidance, costs incurred when implementing a cloud computing arrangement deemed to be a service contract are recorded as an operating expense when incurred. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities can choose to adopt the new guidance prospectively to eligible costs incurred on or after the date the guidance is first applied or retrospectively. The Company is currently assessing the impact of the adoption of ASU 2018-15 on its unaudited Condensed Consolidated Financial Statements. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company determines if a contract is or contains a leasing element at contract inception 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 the right to (i) obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) direct the use of the identified asset. The Company has leasing arrangements that contain both (i) lease and (ii) non-lease components. We account for both the lease and non-lease components as a single component for all classes of underlying assets. In determining the present value of lease payments at lease commencement date, the Company utilizes its incremental borrowing rate based on the information available, unless the rate implicit in the lease is readily determinable. Upon adoption of the new lease standard, which is discussed in Note 3, “New Accounting Pronouncements,” 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 Upon adoption of the new lease standard, components associated with the Master Leases were determined to be either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments under both our Penn Master Lease and Pinnacle Master Lease (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases and (ii) record the incremental variable payment associated with the financing obligation to interest expense. 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 19 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 (other than Hollywood Casino Columbus (“Columbus”) and Hollywood Casino Toledo (“Toledo”)) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo (see below). 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. On May 23, 2019, the Company acquired all of the membership interests of Greektown Holdings, L.L.C. (as discussed in Note 5, “Acquisitions” ), activating a competition clause within the Penn Master Lease, which introduced a rent floor specific to Toledo. As a result, an additional ROU asset and corresponding lease liability of $151.2 million was recognized associated with the operating lease component (the land). Lease payments resulting from the rent floor associated with components determined to continue to be the financing obligations (the building) are included in “Interest expense, net” within our unaudited Condensed Consolidated Statements of Operations. Monthly rent in excess of the rent floor for Toledo and monthly rent associated with Columbus are variable and considered contingent rent. Expense related to the operating lease components (the land) associated with Columbus and Toledo are included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations and the variable expense related to the financing obligation component (the buildings) is included in “Interest expense, net” within our unaudited Condensed Consolidated Statements of Operations. The entire variable expense related to prior year periods was included in “Interest expense, net” pursuant to the failed sale-leaseback accounting treatment under ASC 840. Total monthly variable expenses were as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Variable expenses included in “General and administrative” $ 2.3 $ — $ 15.4 $ — Variable expenses included in “Interest expense, net” 2.1 11.8 14.1 36.8 Total variable expenses $ 4.4 $ 11.8 $ 29.5 $ 36.8 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, 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 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 compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). The next annual escalator test date and the next Pinnacle Percentage Rent reset are scheduled to occur on May 1, 2020. 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. (NYSE: VICI) (“VICI”) for the real estate assets used in the operation of Margaritaville Resort Casino (“Margaritaville”) (the “Margaritaville Lease”), (iii) a triple net lease with VICI for the real estate assets used in the operation of Greektown Casino-Hotel (“Greektown”) (the “Greektown Lease” and collectively with the Master Leases, the Meadows Lease, and the Margaritaville Lease, the “Triple Net Leases”), (iv) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (v) 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 terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information related to lease term and discount rate was as follows: September 30, 2019 Weighted Average Remaining Lease Term Operating leases (1) 27.8 years Finance leases (2) 28.8 years Financing obligations (3) 30.6 years Weighted Average Discount Rate (4) Operating leases 6.7 % Finance leases 6.8 % Financing obligations 8.1 % (1) Amount consists principally of (i) land components associated with our Master Leases; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) our Greektown Lease; (v) ground and levee leases with landlords which were not assumed by our REIT landlords; and (vi) building and equipment not associated with our Master Leases. (2) Amount consists primarily of the Dayton and Mahoning Valley finance leases. (3) Amount consists of the components contained within each of the Master Leases determined to continue to be financing obligations (primarily buildings) at the adoption date of the new lease standard. (4) 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. The components of lease expense were as follows: Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the three months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 96.3 $ — $ — $ 96.3 Operating lease cost (2) — 0.1 4.1 — — 4.2 Short-term lease cost 13.7 0.4 0.3 — — 14.4 Variable lease cost (2) 0.8 — 0.2 — — 1.0 Total $ 14.5 $ 0.5 $ 100.9 $ — $ — $ 115.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 3.8 $ — $ 3.8 Amortization expense (3) — — — — 2.0 2.0 Total $ — $ — $ — $ 3.8 $ 2.0 $ 5.8 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 97.6 $ — $ 97.6 Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the nine months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 271.0 $ — $ — $ 271.0 Operating lease cost (2) 0.3 0.4 12.5 — — 13.2 Short-term lease cost 40.9 0.9 1.1 — — 42.9 Variable lease cost (2) 2.0 — 0.8 — — 2.8 Total $ 43.2 $ 1.3 $ 285.4 $ — $ — $ 329.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 11.5 $ — $ 11.5 Amortization expense (3) — — — — 5.9 5.9 Total $ — $ — $ — $ 11.5 $ 5.9 $ 17.4 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 293.6 $ — $ 293.6 (1) Pertains to the components contained within the Master Leases (primarily land) determined to be operating leases, the Meadows Lease, the Margaritaville Lease, and the Greektown Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land) (see table above). (2) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3) Primarily pertains to the Dayton and Mahoning Valley finance leases. (4) Pertains to the components contained within the Master Leases (primarily buildings) determined to continue to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings) (see table above). The following is a maturity analysis of our operating leases, finance leases and financing obligations as of September 30, 2019 : (in millions) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 106.7 $ 5.4 $ 97.4 2020 420.1 21.4 374.7 2021 399.9 21.4 367.3 2022 396.9 21.4 367.3 2023 393.7 20.5 367.3 Thereafter 8,457.0 403.8 9,638.0 Total lease payments 10,174.3 493.9 11,212.0 Less: Imputed interest (5,610.8 ) (269.8 ) (7,055.9 ) Present value of future lease payments 4,563.5 224.1 4,156.1 Less: Current portion of lease obligations (124.4 ) (6.3 ) (45.3 ) Long-term portion of lease obligations $ 4,439.1 $ 217.8 $ 4,110.8 During the three and nine months ended September 30, 2019 , total payments made under our Triple Net Leases were $222.6 million and $645.4 million , respectively. During the three and nine months ended September 30, 2018 , total payments made under our Penn Master Lease were $115.2 million and $347.0 million , respectively. Supplemental cash flow information related to leases was as follows: (in millions) For the nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 11.5 Operating cash flows from operating leases $ 296.0 Financing cash flows from finance leases $ 4.6 Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “Food, beverage, hotel and other revenues” within our unaudited Condensed Consolidated Statements of Operations. For the three and nine months ended September 30, 2019 , the Company recognized $85.3 million and $236.9 million of lessor revenues related to the rental of hotel rooms, respectively. Hotel leasing arrangements vary in duration, but are short-term in nature. The cost and accumulated depreciation of property and equipment associated with hotel rooms is included in “Property and equipment, net” within our unaudited Condensed Consolidated Balance Sheets. |
Leases | Leases The Company determines if a contract is or contains a leasing element at contract inception 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 the right to (i) obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) direct the use of the identified asset. The Company has leasing arrangements that contain both (i) lease and (ii) non-lease components. We account for both the lease and non-lease components as a single component for all classes of underlying assets. In determining the present value of lease payments at lease commencement date, the Company utilizes its incremental borrowing rate based on the information available, unless the rate implicit in the lease is readily determinable. Upon adoption of the new lease standard, which is discussed in Note 3, “New Accounting Pronouncements,” 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 Upon adoption of the new lease standard, components associated with the Master Leases were determined to be either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments under both our Penn Master Lease and Pinnacle Master Lease (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases and (ii) record the incremental variable payment associated with the financing obligation to interest expense. 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 19 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 (other than Hollywood Casino Columbus (“Columbus”) and Hollywood Casino Toledo (“Toledo”)) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo (see below). 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. On May 23, 2019, the Company acquired all of the membership interests of Greektown Holdings, L.L.C. (as discussed in Note 5, “Acquisitions” ), activating a competition clause within the Penn Master Lease, which introduced a rent floor specific to Toledo. As a result, an additional ROU asset and corresponding lease liability of $151.2 million was recognized associated with the operating lease component (the land). Lease payments resulting from the rent floor associated with components determined to continue to be the financing obligations (the building) are included in “Interest expense, net” within our unaudited Condensed Consolidated Statements of Operations. Monthly rent in excess of the rent floor for Toledo and monthly rent associated with Columbus are variable and considered contingent rent. Expense related to the operating lease components (the land) associated with Columbus and Toledo are included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations and the variable expense related to the financing obligation component (the buildings) is included in “Interest expense, net” within our unaudited Condensed Consolidated Statements of Operations. The entire variable expense related to prior year periods was included in “Interest expense, net” pursuant to the failed sale-leaseback accounting treatment under ASC 840. Total monthly variable expenses were as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Variable expenses included in “General and administrative” $ 2.3 $ — $ 15.4 $ — Variable expenses included in “Interest expense, net” 2.1 11.8 14.1 36.8 Total variable expenses $ 4.4 $ 11.8 $ 29.5 $ 36.8 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, 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 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 compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). The next annual escalator test date and the next Pinnacle Percentage Rent reset are scheduled to occur on May 1, 2020. 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. (NYSE: VICI) (“VICI”) for the real estate assets used in the operation of Margaritaville Resort Casino (“Margaritaville”) (the “Margaritaville Lease”), (iii) a triple net lease with VICI for the real estate assets used in the operation of Greektown Casino-Hotel (“Greektown”) (the “Greektown Lease” and collectively with the Master Leases, the Meadows Lease, and the Margaritaville Lease, the “Triple Net Leases”), (iv) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (v) 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 terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information related to lease term and discount rate was as follows: September 30, 2019 Weighted Average Remaining Lease Term Operating leases (1) 27.8 years Finance leases (2) 28.8 years Financing obligations (3) 30.6 years Weighted Average Discount Rate (4) Operating leases 6.7 % Finance leases 6.8 % Financing obligations 8.1 % (1) Amount consists principally of (i) land components associated with our Master Leases; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) our Greektown Lease; (v) ground and levee leases with landlords which were not assumed by our REIT landlords; and (vi) building and equipment not associated with our Master Leases. (2) Amount consists primarily of the Dayton and Mahoning Valley finance leases. (3) Amount consists of the components contained within each of the Master Leases determined to continue to be financing obligations (primarily buildings) at the adoption date of the new lease standard. (4) 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. The components of lease expense were as follows: Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the three months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 96.3 $ — $ — $ 96.3 Operating lease cost (2) — 0.1 4.1 — — 4.2 Short-term lease cost 13.7 0.4 0.3 — — 14.4 Variable lease cost (2) 0.8 — 0.2 — — 1.0 Total $ 14.5 $ 0.5 $ 100.9 $ — $ — $ 115.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 3.8 $ — $ 3.8 Amortization expense (3) — — — — 2.0 2.0 Total $ — $ — $ — $ 3.8 $ 2.0 $ 5.8 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 97.6 $ — $ 97.6 Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the nine months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 271.0 $ — $ — $ 271.0 Operating lease cost (2) 0.3 0.4 12.5 — — 13.2 Short-term lease cost 40.9 0.9 1.1 — — 42.9 Variable lease cost (2) 2.0 — 0.8 — — 2.8 Total $ 43.2 $ 1.3 $ 285.4 $ — $ — $ 329.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 11.5 $ — $ 11.5 Amortization expense (3) — — — — 5.9 5.9 Total $ — $ — $ — $ 11.5 $ 5.9 $ 17.4 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 293.6 $ — $ 293.6 (1) Pertains to the components contained within the Master Leases (primarily land) determined to be operating leases, the Meadows Lease, the Margaritaville Lease, and the Greektown Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land) (see table above). (2) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3) Primarily pertains to the Dayton and Mahoning Valley finance leases. (4) Pertains to the components contained within the Master Leases (primarily buildings) determined to continue to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings) (see table above). The following is a maturity analysis of our operating leases, finance leases and financing obligations as of September 30, 2019 : (in millions) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 106.7 $ 5.4 $ 97.4 2020 420.1 21.4 374.7 2021 399.9 21.4 367.3 2022 396.9 21.4 367.3 2023 393.7 20.5 367.3 Thereafter 8,457.0 403.8 9,638.0 Total lease payments 10,174.3 493.9 11,212.0 Less: Imputed interest (5,610.8 ) (269.8 ) (7,055.9 ) Present value of future lease payments 4,563.5 224.1 4,156.1 Less: Current portion of lease obligations (124.4 ) (6.3 ) (45.3 ) Long-term portion of lease obligations $ 4,439.1 $ 217.8 $ 4,110.8 During the three and nine months ended September 30, 2019 , total payments made under our Triple Net Leases were $222.6 million and $645.4 million , respectively. During the three and nine months ended September 30, 2018 , total payments made under our Penn Master Lease were $115.2 million and $347.0 million , respectively. Supplemental cash flow information related to leases was as follows: (in millions) For the nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 11.5 Operating cash flows from operating leases $ 296.0 Financing cash flows from finance leases $ 4.6 Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “Food, beverage, hotel and other revenues” within our unaudited Condensed Consolidated Statements of Operations. For the three and nine months ended September 30, 2019 , the Company recognized $85.3 million and $236.9 million of lessor revenues related to the rental of hotel rooms, respectively. Hotel leasing arrangements vary in duration, but are short-term in nature. The cost and accumulated depreciation of property and equipment associated with hotel rooms is included in “Property and equipment, net” within our unaudited Condensed Consolidated Balance Sheets. |
Leases | Leases The Company determines if a contract is or contains a leasing element at contract inception 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 the right to (i) obtain substantially all of the economic benefits from the use of the identified asset throughout the period of use and (ii) direct the use of the identified asset. The Company has leasing arrangements that contain both (i) lease and (ii) non-lease components. We account for both the lease and non-lease components as a single component for all classes of underlying assets. In determining the present value of lease payments at lease commencement date, the Company utilizes its incremental borrowing rate based on the information available, unless the rate implicit in the lease is readily determinable. Upon adoption of the new lease standard, which is discussed in Note 3, “New Accounting Pronouncements,” 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 Upon adoption of the new lease standard, components associated with the Master Leases were determined to be either (i) operating leases, (ii) finance leases, or (iii) financing obligations. Changes to future lease payments under both our Penn Master Lease and Pinnacle Master Lease (i.e., when future escalators become known or future variable rent resets occur), which are discussed below, require the Company to (i) increase both the ROU assets and corresponding lease liabilities with respect to operating and finance leases and (ii) record the incremental variable payment associated with the financing obligation to interest expense. 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 19 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 (other than Hollywood Casino Columbus (“Columbus”) and Hollywood Casino Toledo (“Toledo”)) compared to a contractual baseline during the preceding five years (“Penn Percentage Rent”) and (ii) monthly by an amount equal to 20% of the net revenues of Columbus and Toledo in excess of a contractual baseline and subject to a rent floor specific to Toledo (see below). 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. On May 23, 2019, the Company acquired all of the membership interests of Greektown Holdings, L.L.C. (as discussed in Note 5, “Acquisitions” ), activating a competition clause within the Penn Master Lease, which introduced a rent floor specific to Toledo. As a result, an additional ROU asset and corresponding lease liability of $151.2 million was recognized associated with the operating lease component (the land). Lease payments resulting from the rent floor associated with components determined to continue to be the financing obligations (the building) are included in “Interest expense, net” within our unaudited Condensed Consolidated Statements of Operations. Monthly rent in excess of the rent floor for Toledo and monthly rent associated with Columbus are variable and considered contingent rent. Expense related to the operating lease components (the land) associated with Columbus and Toledo are included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations and the variable expense related to the financing obligation component (the buildings) is included in “Interest expense, net” within our unaudited Condensed Consolidated Statements of Operations. The entire variable expense related to prior year periods was included in “Interest expense, net” pursuant to the failed sale-leaseback accounting treatment under ASC 840. Total monthly variable expenses were as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Variable expenses included in “General and administrative” $ 2.3 $ — $ 15.4 $ — Variable expenses included in “Interest expense, net” 2.1 11.8 14.1 36.8 Total variable expenses $ 4.4 $ 11.8 $ 29.5 $ 36.8 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, 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 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 compared to a contractual baseline during the preceding two years (“Pinnacle Percentage Rent”). The next annual escalator test date and the next Pinnacle Percentage Rent reset are scheduled to occur on May 1, 2020. 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. (NYSE: VICI) (“VICI”) for the real estate assets used in the operation of Margaritaville Resort Casino (“Margaritaville”) (the “Margaritaville Lease”), (iii) a triple net lease with VICI for the real estate assets used in the operation of Greektown Casino-Hotel (“Greektown”) (the “Greektown Lease” and collectively with the Master Leases, the Meadows Lease, and the Margaritaville Lease, the “Triple Net Leases”), (iv) ground and levee leases to landlords which were not assumed by our REIT Landlords and remain an obligation of the Company, and (v) 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 terms. The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants. Information related to lease term and discount rate was as follows: September 30, 2019 Weighted Average Remaining Lease Term Operating leases (1) 27.8 years Finance leases (2) 28.8 years Financing obligations (3) 30.6 years Weighted Average Discount Rate (4) Operating leases 6.7 % Finance leases 6.8 % Financing obligations 8.1 % (1) Amount consists principally of (i) land components associated with our Master Leases; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) our Greektown Lease; (v) ground and levee leases with landlords which were not assumed by our REIT landlords; and (vi) building and equipment not associated with our Master Leases. (2) Amount consists primarily of the Dayton and Mahoning Valley finance leases. (3) Amount consists of the components contained within each of the Master Leases determined to continue to be financing obligations (primarily buildings) at the adoption date of the new lease standard. (4) 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. The components of lease expense were as follows: Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the three months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 96.3 $ — $ — $ 96.3 Operating lease cost (2) — 0.1 4.1 — — 4.2 Short-term lease cost 13.7 0.4 0.3 — — 14.4 Variable lease cost (2) 0.8 — 0.2 — — 1.0 Total $ 14.5 $ 0.5 $ 100.9 $ — $ — $ 115.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 3.8 $ — $ 3.8 Amortization expense (3) — — — — 2.0 2.0 Total $ — $ — $ — $ 3.8 $ 2.0 $ 5.8 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 97.6 $ — $ 97.6 Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the nine months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 271.0 $ — $ — $ 271.0 Operating lease cost (2) 0.3 0.4 12.5 — — 13.2 Short-term lease cost 40.9 0.9 1.1 — — 42.9 Variable lease cost (2) 2.0 — 0.8 — — 2.8 Total $ 43.2 $ 1.3 $ 285.4 $ — $ — $ 329.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 11.5 $ — $ 11.5 Amortization expense (3) — — — — 5.9 5.9 Total $ — $ — $ — $ 11.5 $ 5.9 $ 17.4 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 293.6 $ — $ 293.6 (1) Pertains to the components contained within the Master Leases (primarily land) determined to be operating leases, the Meadows Lease, the Margaritaville Lease, and the Greektown Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land) (see table above). (2) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3) Primarily pertains to the Dayton and Mahoning Valley finance leases. (4) Pertains to the components contained within the Master Leases (primarily buildings) determined to continue to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings) (see table above). The following is a maturity analysis of our operating leases, finance leases and financing obligations as of September 30, 2019 : (in millions) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 106.7 $ 5.4 $ 97.4 2020 420.1 21.4 374.7 2021 399.9 21.4 367.3 2022 396.9 21.4 367.3 2023 393.7 20.5 367.3 Thereafter 8,457.0 403.8 9,638.0 Total lease payments 10,174.3 493.9 11,212.0 Less: Imputed interest (5,610.8 ) (269.8 ) (7,055.9 ) Present value of future lease payments 4,563.5 224.1 4,156.1 Less: Current portion of lease obligations (124.4 ) (6.3 ) (45.3 ) Long-term portion of lease obligations $ 4,439.1 $ 217.8 $ 4,110.8 During the three and nine months ended September 30, 2019 , total payments made under our Triple Net Leases were $222.6 million and $645.4 million , respectively. During the three and nine months ended September 30, 2018 , total payments made under our Penn Master Lease were $115.2 million and $347.0 million , respectively. Supplemental cash flow information related to leases was as follows: (in millions) For the nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 11.5 Operating cash flows from operating leases $ 296.0 Financing cash flows from finance leases $ 4.6 Lessor The Company leases its hotel rooms to patrons and records the corresponding lessor revenue in “Food, beverage, hotel and other revenues” within our unaudited Condensed Consolidated Statements of Operations. For the three and nine months ended September 30, 2019 , the Company recognized $85.3 million and $236.9 million of lessor revenues related to the rental of hotel rooms, respectively. Hotel leasing arrangements vary in duration, but are short-term in nature. The cost and accumulated depreciation of property and equipment associated with hotel rooms is included in “Property and equipment, net” within our unaudited Condensed Consolidated Balance Sheets. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions Greektown Casino-Hotel On May 23, 2019, the Company acquired all of the membership interests of Greektown Holdings, L.L.C., for a net purchase price of $320.3 million , after working capital and other adjustments, pursuant to a transaction agreement among the Company, VICI Properties L.P., a wholly-owned subsidiary of VICI, and Greektown Mothership LLC. In connection with the acquisition, the real estate assets relating to Greektown were acquired by a subsidiary of VICI for an aggregate sales price of $700.0 million and the Company entered into the Greektown Lease, which has an initial annual rent of $55.6 million and an initial term of 15 years , with four five -year renewal options. The acquisition of the operations was financed through a combination of cash on hand and incremental borrowings under the Company’s Revolving Credit Facility (as defined in Note 9, “Long-term Debt” ). The Company is in the process of finalizing the assumptions that derive the fair value of certain assets acquired and liabilities assumed. Therefore, the allocation of the purchase price is preliminary and subject to change. During the three months ended September 30, 2019, we made the following adjustments to the preliminary purchase price: (in millions) Estimated fair value, as previously reported (1) Measurement period adjustments Estimated fair value, as adjusted Cash and cash equivalents $ 31.1 $ — $ 31.1 Receivables, prepaid expenses, and other current assets 15.6 (1.1 ) 14.5 Property and equipment 32.3 — 32.3 Goodwill (2) 61.7 1.1 62.8 Other intangible assets Gaming license 166.4 — 166.4 Trademark 24.4 — 24.4 Customer relationships 3.3 — 3.3 Operating lease right-of-use assets 516.1 — 516.1 Finance lease right-of-use assets 4.2 — 4.2 Other assets 0.2 — 0.2 Total assets $ 855.3 $ — $ 855.3 Accounts payable, accrued expenses and other current liabilities $ 14.8 $ — 14.8 Operating lease liabilities 516.0 — 516.0 Finance lease liabilities 4.2 — 4.2 Total liabilities 535.0 — 535.0 Net assets acquired $ 320.3 $ — $ 320.3 (1) Amounts were initially reported within the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2019, filed with the SEC on August 8, 2019. (2) The goodwill has been assigned to our Northeast segment. The entire $62.8 million goodwill amount is deductible for tax purposes. The Company utilizes the acquisition method of accounting in accordance with ASC Topic 805, “Business Combinations” (“ASC 805”), 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 ascribed to tangible and identifiable intangible assets is recorded as goodwill. 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. Property and equipment acquired consists of non-REIT assets (e.g., equipment for use in gaming operations and furniture and equipment). We determined that the land and buildings subject to the Greektown Lease, which was entered into at the time of the acquisition, represent operating lease ROU assets with a corresponding operating lease liability calculated based on the present value of the future lease payments at the acquisition date in accordance with GAAP. 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 and a trademark, which are both indefinite-lived intangible assets, and a customer relationship, which is an amortizing intangible asset with an assigned useful life of 2 years . Management valued (i) the gaming license 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; (ii) the trademark using the relief-from-royalty method under the income approach; and (iii) 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 Greektown since the acquisition date, which are included within our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019 : (in millions) For the three months ended September 30, 2019 Period from May 23, 2019 through September 30, 2019 Revenues $ 78.2 $ 112.4 Net income $ 3.9 $ 4.8 Margaritaville Resort Casino On January 1, 2019, the Company acquired the operations of Margaritaville Resort Casino (“Margaritaville”) for a net 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. 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 operating assets, to the Company. In connection with the acquisition, the real estate assets used in the operations of Margaritaville were acquired by VICI for $261.1 million and the Company entered into the Margaritaville Lease, which has 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. The Company is in the process of finalizing the assumptions that derive the fair value of certain assets acquired and liabilities assumed. Therefore, the allocation of the purchase price is preliminary and subject to change. During the three months ended September 30, 2019, we made the following adjustments to the preliminary purchase price: (in millions) Estimated fair value, as previously reported (1) Measurement period adjustments Estimated fair value, as adjusted Cash and cash equivalents $ 10.7 $ — $ 10.7 Receivables, prepaid expenses, and other current assets 7.1 — 7.1 Property and equipment 21.7 (1.0 ) 20.7 Goodwill (2) 39.5 1.0 40.5 Other intangible assets Gaming license 48.1 — 48.1 Customer relationships 2.3 — 2.3 Operating lease right-of-use assets 196.2 — 196.2 Total assets $ 325.6 $ — $ 325.6 Accounts payable, accrued expenses and other current liabilities $ 9.5 $ — $ 9.5 Operating lease liabilities 196.2 — 196.2 Total liabilities 205.7 — 205.7 Net assets acquired $ 119.9 $ — $ 119.9 (1) Amounts were initially reported within the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2019, filed with the SEC on May 8, 2019. (2) The goodwill has been assigned to our South segment. The entire $40.5 million goodwill amount is deductible for tax purposes. The Company utilizes the acquisition method of accounting in accordance with ASC 805, 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 ascribed to tangible and identifiable intangible assets is recorded as goodwill. 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. Property and equipment acquired consists of non-REIT assets (e.g., equipment for use in gaming operations and furniture and equipment). We determined that the land and buildings subject to the Margaritaville Lease, which was entered into at the time of the acquisition, represent operating lease ROU assets with a corresponding operating lease liability calculated based on the present value of the future lease payments at the acquisition date in accordance with GAAP. 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) the gaming license using the Greenfield Method under the income approach and (ii) the customer relationships 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 Margaritaville since the acquisition date, which are included within our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019 : (in millions) For the three months ended September 30, 2019 For the nine months ended September 30, 2019 Revenues $ 39.6 $ 120.7 Net income $ 2.6 $ 10.8 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 St. Charles, Ameristar Kansas City, Belterra Resort and Belterra Park, to Boyd Gaming Corporation (NYSE: BYD), and GLPI acquired the real estate assets associated with Plainridge Park Casino and concurrently leased back such assets to the Company. 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.” During the third quarter of 2019, the Company finalized the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill. During the nine months ended September 30, 2019 , prior to its finalization, we made the following adjustments to the preliminary purchase price allocation: (in millions) Estimated fair value, as previously reported (1) Measurement period adjustments Fair value, as finalized Cash and restricted cash $ 124.2 $ — $ 124.2 Assets held for sale 667.0 0.5 667.5 Other current assets 80.6 0.5 81.1 Property and equipment - non-Pinnacle Master Lease 318.9 (0.3 ) 318.6 Property and equipment - Pinnacle Master Lease (2) 3,984.1 (29.2 ) 3,954.9 Goodwill (3) 219.5 18.7 238.2 Other intangible assets Gaming licenses 1,046.0 21.6 1,067.6 Trademarks 298.0 — 298.0 Customer relationships 22.4 — 22.4 Other long-term assets 38.9 — 38.9 Total assets $ 6,799.6 $ 11.8 $ 6,811.4 Long-term financing obligation, including current portion (4) $ 3,427.0 $ 5.5 $ 3,432.5 Other current liabilities 200.6 5.5 206.1 Deferred tax liabilities 339.2 0.8 340.0 Other long-term liabilities 16.6 — 16.6 Total liabilities 3,983.4 11.8 3,995.2 Net assets acquired $ 2,816.2 $ — $ 2,816.2 (1) Amounts were initially reported within the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019. (2) 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. (3) See Note 7, “Goodwill and Other Intangible Assets,” for details on the impact to each reportable segment. (4) Long-term financing obligation, including current portion represents the financing obligation associated with Pinnacle Master Lease, as amended. Pro Forma Financial Information - Greektown, Margaritaville, and Pinnacle The following table includes unaudited pro forma consolidated financial information assuming our acquisitions of Greektown and Margaritaville had occurred as of January 1, 2018 and Pinnacle had occurred as of January 1, 2017. 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, Greektown, Margaritaville, 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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues $ 1,354.5 $ 1,391.7 $ 4,093.8 $ 4,240.7 Net income attributable to Penn $ 46.1 $ 36.1 $ 157.3 $ 153.2 |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net, consisted of the following: (in millions) September 30, December 31, Property and equipment - non-Master Leases Land and improvements $ 353.3 $ 344.0 Building, vessels and improvements 410.7 343.0 Furniture, fixtures and equipment 1,585.2 1,565.8 Leasehold improvements 178.4 152.9 Construction in progress 58.3 25.5 2,585.9 2,431.2 Less: Accumulated depreciation (1,524.8 ) (1,400.2 ) 1,061.1 1,031.0 Property and equipment - Master Leases Land and improvements (1) 1,525.9 2,971.0 Building, vessels and improvements (1) 3,659.1 3,845.0 5,185.0 6,816.0 Less: Accumulated depreciation (1,090.9 ) (978.2 ) 4,094.1 5,837.8 Property and equipment, net $ 5,155.2 $ 6,868.8 (1) Upon adoption of ASC 842, approximately $1.4 billion of land was derecognized and replaced with operating lease ROU assets based on the present value of future lease payments and $180.4 million of building and improvements, gross, was derecognized and replaced with finance lease ROU assets based on the present value of future lease payments. See Note 3, “New Accounting Pronouncements.” Depreciation expense was as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Depreciation expense (1) $ 97.9 $ 53.6 $ 291.8 $ 163.9 (1) Of such amounts, $26.5 million , $22.7 million , $119.4 million , and $68.9 million , respectively, pertain to real estate assets subject to either of our Master Leases. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 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 millions) Northeast South West Midwest Other Total Balance as of December 31, 2018 Goodwill, gross $ 848.4 $ 185.2 $ 210.4 $ 1,110.1 $ 156.1 $ 2,510.2 Accumulated goodwill impairment losses (707.6 ) (34.6 ) (16.6 ) (435.3 ) (87.7 ) (1,281.8 ) Goodwill, net 140.8 150.6 193.8 674.8 68.4 1,228.4 Goodwill acquired during year 62.8 40.5 — — — 103.3 Other (1) (1.5 ) 7.2 6.4 6.6 — 18.7 Balance as of September 30, 2019 Goodwill, gross 909.7 232.9 216.8 1,116.7 156.1 2,632.2 Accumulated goodwill impairment losses (707.6 ) (34.6 ) (16.6 ) (435.3 ) (87.7 ) (1,281.8 ) Goodwill, net $ 202.1 $ 198.3 $ 200.2 $ 681.4 $ 68.4 $ 1,350.4 (1) Amounts relate to adjustments made to the preliminary purchase price allocation of Pinnacle during the nine months ended September 30, 2019 , prior to it being finalized, as 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: September 30, 2019 December 31, 2018 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets Gaming licenses $ 1,734.6 $ — $ 1,734.6 $ 1,498.3 $ — $ 1,498.3 Trademarks 322.4 — 322.4 298.0 — 298.0 Other 0.7 — 0.7 0.7 — 0.7 Amortizing intangible assets Customer relationships 104.3 (64.6 ) 39.7 98.8 (51.5 ) 47.3 Other 62.0 (54.9 ) 7.1 61.9 (49.3 ) 12.6 Total other intangible assets $ 2,224.0 $ (119.5 ) $ 2,104.5 $ 1,957.7 $ (100.8 ) $ 1,856.9 There were no impairment charges recorded on other intangible assets during the three and nine months ended September 30, 2019 and 2018 . Amortization expense related to our amortizing intangible assets was $6.4 million and $18.7 million , for the three and nine months ended September 30, 2019 , respectively, as compared to $3.3 million and $11.9 million , for the three and nine months ended September 30, 2018 , respectively. The following table presents the estimated amortization expense based on our amortizing intangible assets as of September 30, 2019 (in millions): Remaining 2019 $ 5.9 2020 19.5 2021 5.6 2022 3.8 2023 3.6 Thereafter 8.4 Total $ 46.8 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 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 millions) September 30, December 31, Accrued salaries and wages $ 125.3 $ 139.2 Accrued gaming, pari-mutuel, property, and other taxes 117.6 105.8 Accrued interest 5.8 15.8 Other accrued expenses (1) 218.0 204.6 Other current liabilities (2) 132.2 112.6 $ 598.9 $ 578.0 (1) Amounts include the obligation associated with our my choice program and the current portion of advance payments on goods and services yet to be provided and for unpaid wagers, which are discussed in Note 2, “Significant Accounting Policies.” (2) Amounts include $74.1 million and $64.1 million , respectively, pertaining to the Company’s non-qualified deferred compensation plan that covers most management and other highly-compensated employees. |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Long-term debt, net of current maturities, was as follows: (in millions) September 30, December 31, Senior Secured Credit Facilities: Revolving Credit Facility due 2023 $ 200.0 $ 112.0 Term Loan A Facility due 2023 681.1 707.7 Term Loan B-1 Facility due 2025 1,120.3 1,128.7 5.625% Notes due 2027 400.0 400.0 Other long-term obligations 89.2 104.6 Capital leases (1) — 0.4 2,490.6 2,453.4 Less: Current maturities of long-term debt (62.9 ) (62.1 ) Less: Debt discount (2.5 ) (2.8 ) Less: Debt issuance costs (33.2 ) (38.4 ) $ 2,392.0 $ 2,350.1 (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”). As of September 30, 2019 , the Company had conditional obligations under letters of credit issued pursuant to the Senior Secured Credit Facilities with face amounts aggregating $30.0 million . 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. 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 voluntary principal repayments on the Term Loan B Facility, the Company recorded losses on early extinguishment of debt of $0.3 million and $3.8 million during the three and nine months ended September 30, 2018 . Interest expense, net Interest expense, net, was as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Interest expense $ (134.2 ) $ (114.8 ) $ (401.8 ) $ (346.4 ) Interest income 0.6 0.2 1.2 0.7 Capitalized interest 0.1 — 0.1 — $ (133.5 ) $ (114.6 ) $ (400.5 ) $ (345.7 ) 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 September 30, 2019 , the Company was in compliance with all required financial covenants. Other Long-Term Obligations Ohio Relocation Fees As of September 30, 2019 and December 31, 2018 , other long-term obligations included $76.4 million and $91.3 million , respectively, related to the relocation fees for Dayton and Mahoning Valley, which opened in August 2014 and September 2014, respectively. 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 $1.0 million and $3.2 million for the three and nine months ended September 30, 2019 , respectively, as compared to $1.2 million and $3.7 million for the three and nine months ended September 30, 2018 , respectively. |
Investments in and Advances to
Investments in and Advances to Unconsolidated Affiliates | 9 Months Ended |
Sep. 30, 2019 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investments in and Advances to Unconsolidated Affiliates | Investments in and Advances to Unconsolidated Affiliates As of September 30, 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 Hollywood Casino at Kansas Speedway. As of September 30, 2019 and December 31, 2018 , the Company’s investment balance was $90.6 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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues $ 40.6 $ 39.8 $ 120.2 $ 119.3 Operating expenses 19.6 27.4 73.8 83.0 Operating income 21.0 12.4 46.4 36.3 Net income $ 21.0 $ 12.4 $ 46.4 $ 36.3 Net income attributable to Penn $ 10.5 $ 6.2 $ 23.2 $ 18.1 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 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 its year-to-date pretax book income or loss. The tax effects of discrete items, including but not limited to, excess tax benefits associated with stock-based compensation, changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur. The effective tax rate (income taxes as a percentage of income before income taxes) including discrete items was 31.0% and 28.0% for the three and nine months ended September 30, 2019 , respectively, as compared to 20.1% and 22.8% for the three and nine months ended September 30, 2018 , respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, the geographic and business mix of our earnings, changes to our state valuation allowance and the level of our tax credits. Certain of these and other factors, including our history and projections of pretax earnings, are considered in assessing our ability to realize our net deferred tax assets. As discussed in Note 5, “Acquisitions,” the Company finalized its allocation of the purchase price pertaining to the Pinnacle Acquisition during the third quarter of 2019. During the nine months ended September 30, 2019 , the effect of measurement period adjustments were an increase of $0.8 million to deferred tax liabilities. The adoption of ASC 842, which is described fully in Note 3, “New Accounting Pronouncements,” required us to adjust the deferred income taxes associated with our Master Leases through retained earnings as of January 1, 2019. Upon adoption, the Company recorded a reduction to our net deferred tax asset of $80.6 million , an increase to our net deferred tax liability of $223.2 million , and a decrease to retained earnings of $303.8 million . |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 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 | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Payment Arrangement [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 September 30, 2019 , there were 8,442,068 shares available for future grants under the 2018 Plan. Share Repurchase Program On January 9, 2019, the Company announced a 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. During the nine months ended September 30, 2019 , the Company repurchased 1,271,823 shares of its common stock in open market transactions for $24.9 million at an average price of $19.55 per share. All repurchased shares were retired. 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 and phantom stock units 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 2,353,599 and 663,343 stock options during the nine months ended September 30, 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 and nine months ended September 30, 2019 was $3.7 million and $10.4 million , respectively, as compared to $2.9 million and $8.8 million for the three and nine months ended September 30, 2018 , 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 $6.6 million and $6.8 million as of September 30, 2019 and December 31, 2018 , respectively. For SARs held by employees of the Company, there was $5.5 million of total unrecognized compensation cost as of September 30, 2019 that will be recognized over the awards remaining weighted average vesting period of 2.62 years. For the three and nine months ended September 30, 2019 , the Company recognized a reduction to compensation expense of $0.5 million and compensation expense of $2.0 million , respectively, as compared to compensation expense of $1.1 million and $6.9 million for the three and nine months ended September 30, 2018 , respectively, associated with these awards. Compensation expense associated with our SARs is recorded in “General and administrative” within the unaudited Condensed Consolidated Statements of Operations. We paid $2.2 million and $9.8 million during the nine months ended September 30, 2019 and 2018 , respectively, pertaining to the Company’s cash-settled SARs. 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 $1.3 million and $1.7 million as of September 30, 2019 and December 31, 2018 , respectively. For PSUs held by employees and directors of the Company, there was $3.1 million of total unrecognized compensation cost as of September 30, 2019 that will be recognized over the awards remaining weighted average vesting period of 1.85 years. For the three and nine months ended September 30, 2019 , the Company recognized $0.5 million and $2.1 million , respectively, of compensation expense associated with these awards, as compared to $0.7 million and $2.2 million , for the three and nine months ended September 30, 2018 , respectively. Compensation expense associated with our PSUs is recorded in “General and administrative” within the unaudited Condensed Consolidated Statements of Operations. We paid $2.5 million and $4.2 million during the nine months ended September 30, 2019 and 2018 , respectively, pertaining to the Company’s cash-settled PSUs. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 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 earnings per share (“EPS”) to the weighted average common shares outstanding used in the calculation of diluted EPS for the three and nine months ended September 30, 2019 and 2018 : For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Determination of shares: Weighted average common shares outstanding 115.2 91.9 115.8 91.5 Assumed conversion of dilutive employee stock-based awards 1.4 3.2 1.7 3.3 Assumed conversion of restricted stock 0.1 0.2 0.2 0.2 Diluted weighted average common shares outstanding 116.7 95.3 117.7 95.0 Options to purchase 2,519,816 and 2,139,874 shares and 660,436 and 655,952 shares were outstanding during the three and nine months ended September 30, 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 and nine months ended September 30, 2019 and 2018 : For the three months ended September 30, For the nine months ended September 30, (in millions, except per share data) 2019 2018 2019 2018 Calculation of basic EPS: Net income applicable to common stock $ 43.9 $ 36.1 $ 136.4 $ 135.5 Weighted average common shares outstanding 115.2 91.9 115.8 91.5 Basic EPS $ 0.38 $ 0.39 $ 1.18 $ 1.48 Calculation of diluted EPS: Net income applicable to common stock $ 43.9 $ 36.1 $ 136.4 $ 135.5 Diluted weighted average common shares outstanding 116.7 95.3 117.7 95.0 Diluted EPS $ 0.38 $ 0.38 $ 1.16 $ 1.43 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 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. Equity Securities As of September 30, 2019 , we held $28.3 million in equity securities, including ordinary shares and warrants, which are reported as “Other assets” in our unaudited Condensed Consolidated Balance Sheet. As discussed in Note 2, “Significant Accounting Policies,” these equity securities are the result of entering into multi-year agreements with third-party sports betting operators for online sports betting and related iGaming market access across our portfolio during the third quarter of 2019. The fair value of the equity securities was determined using Level 2 inputs, which use market approach valuation techniques. The primary inputs to those techniques include the quoted market price of the equity securities, foreign currency exchange rates, a discount for lack of marketability (“DLOM”) with respect to the ordinary shares, and a Black-Scholes option pricing model with respect to the warrants. The DLOM is based on the remaining term of the relevant lock-up periods and the volatility associated with the underlying equity securities. The Black-Scholes option pricing model utilizes the exercise price of the warrants, a risk-free rate, volatility associated with the underlying equity securities and the expected life of the warrants. 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 September 30, 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 September 30, 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 is classified as 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 September 30, 2019 and December 31, 2018 included the relocation fees for Dayton and Mahoning Valley, which are discussed in Note 9, “Long-term Debt,” and a repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg. 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 are classified as Level 2 measurements. Other Liabilities Other liabilities as of September 30, 2019 and December 31, 2018 principally consists of contingent consideration related to Plainridge Park Casino and Absolute Bingo, which was acquired by PIV during the second quarter of 2018. The Plainridge Park Casino contingent consideration is calculated based on earnings of the gaming operations over the first 10 years of operations, which commenced on June 24, 2015. As of September 30, 2019 and December 31, 2018 , we were contractually obligated to make six and seven additional annual payments, respectively. The Absolute Bingo contingent consideration is calculated based on earnings over the first two years of operations after the acquisition. As of September 30, 2019 , we are contractually obligated to make one additional payment, which corresponds to the second year of operations after the acquisition, which will become payable in the third quarter of 2020. The fair value of these liabilities, which are both estimated based on an income approach using a discounted cash flow model and have been classified as Level 3 measurements, are 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. The carrying amounts and estimated fair values by input level of the Company’s financial instruments were as follows: September 30, 2019 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 406.9 $ 406.9 $ 406.9 $ — $ — Equity securities $ 28.3 $ 28.3 $ — $ 28.3 $ — Held-to-maturity securities $ 7.5 $ 7.8 $ — $ 7.8 $ — Promissory notes $ 16.9 $ 17.3 $ — $ 17.3 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,966.3 $ 2,000.5 $ 2,000.5 $ — $ — 5.625% Notes $ 399.4 $ 411.0 $ 411.0 $ — $ — Other long-term obligations $ 89.2 $ 82.5 $ — $ 82.5 $ — Other liabilities $ 20.3 $ 20.3 $ — $ 2.8 $ 17.5 December 31, 2018 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 479.6 $ 479.6 $ 479.6 $ — $ — Held-to-maturity securities $ 7.5 $ 7.9 $ — $ 7.9 $ — Promissory notes $ 16.9 $ 17.4 $ — $ 17.4 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,907.9 $ 1,886.3 $ 1,886.3 $ — $ — 5.625% Notes $ 399.3 $ 360.0 $ 360.0 $ — $ — Other long-term obligations $ 104.6 $ 96.3 $ — $ 96.3 $ — Other liabilities $ 21.9 $ 21.8 $ — $ 2.8 $ 19.0 The following table summarizes the changes in fair value of our Level 3 liabilities measured on a recurring basis: Other Liabilities (in millions) Contingent Consideration Balance as of January 1, 2019 $ 19.0 Payments (8.5 ) Included in earnings (1) 7.0 Balance as of September 30, 2019 $ 17.5 (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 September 30, 2019 : Valuation Technique Unobservable Input Discount Rate Contingent consideration - Plainridge Park Casino Discounted cash flow Discount rate 6.33% |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 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. 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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues: Northeast segment $ 628.9 $ 441.4 $ 1,778.6 $ 1,365.4 South segment 276.6 60.4 850.7 186.4 West segment 161.5 92.6 484.4 291.2 Midwest segment 275.8 185.4 815.3 559.0 Other (1) 12.4 9.9 31.9 30.6 Intersegment eliminations (2) (0.7 ) — (0.7 ) — Total $ 1,354.5 $ 789.7 $ 3,960.2 $ 2,432.6 Adjusted EBITDAR (3) : Northeast segment $ 189.1 $ 141.3 $ 540.1 $ 434.6 South segment 89.0 17.1 279.6 58.8 West segment 50.6 21.8 151.0 71.8 Midwest segment 104.3 65.4 301.3 201.1 Other (1) (25.0 ) (15.9 ) (66.1 ) (47.0 ) Intersegment eliminations (2) (0.1 ) — (0.1 ) — Total (3) 407.9 229.7 1,205.8 719.3 Other operating benefits (costs) and other income (expenses): Rent expense associated with triple net operating leases (4) (96.3 ) — (271.0 ) — Stock-based compensation (3.7 ) (2.9 ) (10.4 ) (8.8 ) Cash-settled stock-based awards variance 3.4 1.7 6.4 1.3 Loss on disposal of assets (7.4 ) (3.2 ) (8.3 ) (3.2 ) Contingent purchase price (1.2 ) (0.4 ) (7.0 ) (1.7 ) Pre-opening and acquisition costs (7.4 ) (5.2 ) (15.5 ) (17.2 ) Depreciation and amortization (106.3 ) (56.9 ) (316.4 ) (175.8 ) Recoveries on loan loss and unfunded loan commitments, net of impairment losses — — — 16.4 Insurance recoveries, net of deductible charges 1.5 — 1.5 0.1 Non-operating items for Kansas JV (0.9 ) (1.3 ) (2.8 ) (3.9 ) Interest expense, net (133.5 ) (114.6 ) (400.5 ) (345.7 ) Loss on early extinguishment of debt — (0.3 ) — (3.8 ) Other 7.2 (1.4 ) 7.2 (1.5 ) Income before income taxes 63.3 45.2 189.0 175.5 Income tax expense (19.6 ) (9.1 ) (53.0 ) (40.0 ) Net income $ 43.7 $ 36.1 $ 136.0 $ 135.5 (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. The Other category also includes PIV; which operates social gaming, our internally-branded retail sportsbooks, and iGaming; our management contract for Retama Park Racetrack; and HPT. 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) Represents the elimination of intersegment operations associated with PIV and HPT. (3) We define Adjusted EBITDAR as earnings before interest expense, net; income taxes; depreciation and amortization; rent expense associated with triple net operating leases (see footnote (4) below); 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. (4) The Company’s triple net operating leases include certain components of the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, and the Greektown Lease. For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Capital expenditures: Northeast segment $ 22.8 $ 11.0 $ 67.3 $ 23.7 South segment 5.0 2.3 21.5 5.8 West segment 3.7 2.4 17.8 7.6 Midwest segment 6.2 7.4 22.6 15.6 Other 4.0 0.9 7.5 4.3 Total capital expenditures $ 41.7 $ 24.0 $ 136.7 $ 57.0 (in millions) Northeast South West Midwest Other Total As of September 30, 2019 Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 90.6 $ 37.8 $ 128.5 Total assets (1) $ 2,298.9 $ 1,423.8 $ 750.5 $ 1,475.9 $ 8,368.9 $ 14,318.0 As of December 31, 2018 Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 89.4 $ 39.0 $ 128.5 Total assets (2) $ 1,330.2 $ 1,082.3 $ 755.7 $ 1,411.5 $ 6,381.3 $ 10,961.0 (1) As of September 30, 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) As of December 31, 2018, total assets of the Other category includes the real estate assets subject to the Master Leases, which are classified as property and equipment. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 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: 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 consider our combined VGT operations, by state, to be separate operating segments. See Note 16, “Segment Information,” for further information. For financial reporting purposes, 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 Greektown Casino-Hotel (1) Detroit, Michigan Greektown 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 Marquee by Penn (2) Pennsylvania N/A Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease South segment (3) 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 (4) Bossier City, Louisiana Margaritaville 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 (5) 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 (6) Kansas City, Kansas Owned - JV Hollywood Casino St. Louis Maryland Heights, Missouri Penn Master Lease Prairie State Gaming (2) Illinois N/A River City Casino St. Louis, Missouri Pinnacle Master Lease (1) Acquired on May 23, 2019 (2) VGT route operations (3) Resorts Casino Tunica closed on June 30, 2019, but remains subject to the Penn Master Lease. (4) Acquired on January 1, 2019 (5) The riverboat is owned by us and not subject to the Penn Master Lease. (6) 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 Hollywood Casino at Kansas Speedway. |
Revenue Recognition | Revenue Disaggregation 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 Customer-related Liabilities The Company has three general types of liabilities related to contracts with customers: (i) the obligation associated with our my choice program (loyalty points and tier status benefits), (ii) advance payments on goods and services yet to be provided and for unpaid wagers, and (iii) deferred revenue associated with third-party sports betting operators for online sports betting and related iGaming market access. The Company’s my choice program allows members to utilize their reward membership cards to earn loyalty points 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. In addition, members of the my choice program earn credit toward tier status, which entitles them to receive certain other benefits, such as gifts. The Company accounts for the obligation associated with our my choice program utilizing a deferred revenue model, which defers revenue at the point in time when the loyalty points and tier status benefits are earned by our customers. Deferred revenue associated with the my choice program is recognized at the point in time when the loyalty points are redeemed by our customers or at the point in time when our customers receive the tier status benefits. The obligation associated with our my choice program is based on the estimated standalone selling price of the loyalty points and the tier status benefits earned after factoring in the likelihood of redemption. The obligation associated with our my choice program, which is included in “Accrued expenses and other current liabilities” within our unaudited Condensed Consolidated Balance Sheets, was $37.0 million and $39.9 million as of September 30, 2019 and December 31, 2018 , respectively, and consisted principally of the obligation associated with the loyalty points. Our loyalty point 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 points as well as the timing of when our customers receive their earned tier status benefits. 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 $33.8 million and $34.3 million as of September 30, 2019 and December 31, 2018 , respectively, of which $0.7 million were classified as long-term in both periods. 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. During the third quarter of 2019, we entered into multi-year agreements with sports betting operators for online sports betting and related iGaming market access across the Company’s portfolio, of which we received cash and equity securities, including ordinary shares and warrants, specific to three operator agreements. Since the operations contemplated by these agreements had not yet commenced, as of September 30, 2019 , the Company has yet to recognize revenue associated with these agreements. Deferred revenue associated with third-party sports betting operators for online sports betting and related iGaming market access as of September 30, 2019 , was $33.7 million , which is included in “Other noncurrent liabilities” within our unaudited Condensed Consolidated Balance Sheets. |
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. For the three and nine months ended September 30, 2019 , these expenses, which were recorded primarily in gaming expense within the unaudited Condensed Consolidated Statements of Operations, were $403.1 million and $1,189.4 million , respectively, as compared to $250.1 million and $750.5 million , respectively, for the three and nine months ended September 30, 2018 . |
Equity Securities including Warrants | Equity Securities: The Company’s equity securities (including warrants) are measured at fair value each reporting period with unrealized holding gains and losses included in current period earnings. During the three and nine months ended September 30, 2019 , the Company recognized a holding gain of $7.1 million related to equity securities held as of September 30, 2019 , which is included in “Other,” as reported in “Other income (expenses)” within our unaudited Condensed Consolidated Statements of Operations. |
New Accounting Pronouncements | Accounting Pronouncements Implemented in 2019 On January 1, 2019, the Company adopted Accounting Standards Codification (“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 elected the following policies: (i) to account for lease and non-lease components as a single component for all classes of underlying assets and (ii) to not recognize short-term leases (i.e., a lease that is less than 12 months and does not contain a purchase option) within the unaudited Condensed Consolidated Balance Sheets, with the expense related to these short-term leases recorded in 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” (“ASC 840”), 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, net” 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. Lease 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. Lease 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 or (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 pursuant to ASC 840. 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 the opening balance of retained earnings 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 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, but 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 millions) 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 $ 63.0 $ — $ — $ — $ — $ (1.0 ) $ 62.0 $ (1.0 ) Total current assets $ 677.6 $ — $ — $ — $ — $ (1.0 ) $ 676.6 $ (1.0 ) Property and equipment, net (4) $ 6,868.8 $ — $ (164.3 ) $ (1,407.4 ) $ — $ — $ 5,297.1 $ (1,571.7 ) Goodwill $ 1,228.4 $ 5.5 $ — $ — $ — $ — $ 1,233.9 $ 5.5 Operating lease right-of-use assets (5) $ — $ — $ — $ 3,541.2 $ 112.8 $ 152.5 $ 3,806.5 $ 3,806.5 Finance lease right-of-use assets (6) $ — $ — $ 224.5 $ — $ — $ — $ 224.5 $ 224.5 Total assets $ 10,961.0 $ 5.5 $ 60.2 $ 2,133.8 $ 112.8 $ 151.5 $ 13,424.8 $ 2,463.8 Liabilities Current liabilities Current portion of financing obligations (7) $ 67.8 $ — $ (1.5 ) $ (16.2 ) $ — $ — $ 50.1 $ (17.7 ) Current portion of operating lease liabilities (5) $ — $ — $ — $ 72.9 $ 20.5 $ 8.9 $ 102.3 $ 102.3 Current portion of finance lease liabilities (6) $ — $ — $ 5.8 $ — $ — $ — $ 5.8 $ 5.8 Accrued expenses and other current liabilities $ 578.0 $ — $ — $ — $ — $ (0.5 ) $ 577.5 $ (0.5 ) Total current liabilities $ 738.4 $ — $ 4.3 $ 56.7 $ 20.5 $ 8.4 $ 828.3 $ 89.9 Long-term portion of financing obligations (7) $ 7,080.6 $ 5.5 $ (181.3 ) $ (2,760.6 ) $ — $ — $ 4,144.2 $ (2,936.4 ) Long-term portion of operating lease liabilities (5) $ — $ — $ — $ 3,467.1 $ 92.3 $ 145.0 $ 3,704.4 $ 3,704.4 Long-term portion of finance lease liabilities (6) $ — $ — $ 218.3 $ — $ — $ — $ 218.3 $ 218.3 Deferred income taxes (8) $ — $ — $ 4.3 $ 299.5 $ — $ — $ 303.8 $ 303.8 Other noncurrent liabilities $ 60.7 $ — $ — $ — $ — $ (1.9 ) $ 58.8 $ (1.9 ) Total liabilities $ 10,229.8 $ 5.5 $ 45.6 $ 1,062.7 $ 112.8 $ 151.5 $ 11,607.9 $ 1,378.1 Stockholders’ equity Retained earnings (accumulated deficit) $ (968.0 ) $ — $ 14.6 $ 1,071.1 $ — $ — $ 117.7 $ 1,085.7 Total Penn stockholders’ equity $ 731.2 $ — $ 14.6 $ 1,071.1 $ — $ — $ 1,816.9 $ 1,085.7 Total stockholders’ equity $ 731.2 $ — $ 14.6 $ 1,071.1 $ — $ — $ 1,816.9 $ 1,085.7 Total liabilities and stockholders’ equity $ 10,961.0 $ 5.5 $ 60.2 $ 2,133.8 $ 112.8 $ 151.5 $ 13,424.8 $ 2,463.8 (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 land). (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 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 lease 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 ASC 840 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 buildings). 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. See Note 11, “Income Taxes.” Accounting Pronouncements to be Implemented in 2020 In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurements of Credit Losses on Financial Instruments” (“ASU 2016-13”), which sets forth a “current expected credit loss” (referred to as “CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and must be applied through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently assessing the impact of the adoption of ASU 2016-13 on its unaudited Condensed Consolidated Financial Statements. In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Cost Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”). Under the new guidance, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. This will result in certain implementation costs being capitalized; the associated amortization charge will, however, be recorded as an operating expense. Under the previous guidance, costs incurred when implementing a cloud computing arrangement deemed to be a service contract are recorded as an operating expense when incurred. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities can choose to adopt the new guidance prospectively to eligible costs incurred on or after the date the guidance is first applied or retrospectively. The Company is currently assessing the impact of the adoption of ASU 2018-15 on its unaudited Condensed Consolidated Financial Statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of operating and reportable segments | For financial reporting purposes, 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 Greektown Casino-Hotel (1) Detroit, Michigan Greektown 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 Marquee by Penn (2) Pennsylvania N/A Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease South segment (3) 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 (4) Bossier City, Louisiana Margaritaville 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 (5) 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 (6) Kansas City, Kansas Owned - JV Hollywood Casino St. Louis Maryland Heights, Missouri Penn Master Lease Prairie State Gaming (2) Illinois N/A River City Casino St. Louis, Missouri Pinnacle Master Lease (1) Acquired on May 23, 2019 (2) VGT route operations (3) Resorts Casino Tunica closed on June 30, 2019, but remains subject to the Penn Master Lease. (4) Acquired on January 1, 2019 (5) The riverboat is owned by us and not subject to the Penn Master Lease. (6) 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 Hollywood Casino at Kansas Speedway. Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to Net income. For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues: Northeast segment $ 628.9 $ 441.4 $ 1,778.6 $ 1,365.4 South segment 276.6 60.4 850.7 186.4 West segment 161.5 92.6 484.4 291.2 Midwest segment 275.8 185.4 815.3 559.0 Other (1) 12.4 9.9 31.9 30.6 Intersegment eliminations (2) (0.7 ) — (0.7 ) — Total $ 1,354.5 $ 789.7 $ 3,960.2 $ 2,432.6 Adjusted EBITDAR (3) : Northeast segment $ 189.1 $ 141.3 $ 540.1 $ 434.6 South segment 89.0 17.1 279.6 58.8 West segment 50.6 21.8 151.0 71.8 Midwest segment 104.3 65.4 301.3 201.1 Other (1) (25.0 ) (15.9 ) (66.1 ) (47.0 ) Intersegment eliminations (2) (0.1 ) — (0.1 ) — Total (3) 407.9 229.7 1,205.8 719.3 Other operating benefits (costs) and other income (expenses): Rent expense associated with triple net operating leases (4) (96.3 ) — (271.0 ) — Stock-based compensation (3.7 ) (2.9 ) (10.4 ) (8.8 ) Cash-settled stock-based awards variance 3.4 1.7 6.4 1.3 Loss on disposal of assets (7.4 ) (3.2 ) (8.3 ) (3.2 ) Contingent purchase price (1.2 ) (0.4 ) (7.0 ) (1.7 ) Pre-opening and acquisition costs (7.4 ) (5.2 ) (15.5 ) (17.2 ) Depreciation and amortization (106.3 ) (56.9 ) (316.4 ) (175.8 ) Recoveries on loan loss and unfunded loan commitments, net of impairment losses — — — 16.4 Insurance recoveries, net of deductible charges 1.5 — 1.5 0.1 Non-operating items for Kansas JV (0.9 ) (1.3 ) (2.8 ) (3.9 ) Interest expense, net (133.5 ) (114.6 ) (400.5 ) (345.7 ) Loss on early extinguishment of debt — (0.3 ) — (3.8 ) Other 7.2 (1.4 ) 7.2 (1.5 ) Income before income taxes 63.3 45.2 189.0 175.5 Income tax expense (19.6 ) (9.1 ) (53.0 ) (40.0 ) Net income $ 43.7 $ 36.1 $ 136.0 $ 135.5 (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. The Other category also includes PIV; which operates social gaming, our internally-branded retail sportsbooks, and iGaming; our management contract for Retama Park Racetrack; and HPT. 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) Represents the elimination of intersegment operations associated with PIV and HPT. (3) We define Adjusted EBITDAR as earnings before interest expense, net; income taxes; depreciation and amortization; rent expense associated with triple net operating leases (see footnote (4) below); 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. (4) The Company’s triple net operating leases include certain components of the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, and the Greektown Lease. For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Capital expenditures: Northeast segment $ 22.8 $ 11.0 $ 67.3 $ 23.7 South segment 5.0 2.3 21.5 5.8 West segment 3.7 2.4 17.8 7.6 Midwest segment 6.2 7.4 22.6 15.6 Other 4.0 0.9 7.5 4.3 Total capital expenditures $ 41.7 $ 24.0 $ 136.7 $ 57.0 (in millions) Northeast South West Midwest Other Total As of September 30, 2019 Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 90.6 $ 37.8 $ 128.5 Total assets (1) $ 2,298.9 $ 1,423.8 $ 750.5 $ 1,475.9 $ 8,368.9 $ 14,318.0 As of December 31, 2018 Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 89.4 $ 39.0 $ 128.5 Total assets (2) $ 1,330.2 $ 1,082.3 $ 755.7 $ 1,411.5 $ 6,381.3 $ 10,961.0 (1) As of September 30, 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) |
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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Food and beverage $ 66.7 $ 30.5 $ 195.3 $ 77.3 Hotel 44.1 10.5 121.5 30.8 Other 4.2 1.7 13.0 3.7 Total complimentaries associated with gaming contracts $ 115.0 $ 42.7 $ 329.8 $ 111.8 |
Schedule of disaggregation of revenue | Our revenue disaggregation by type of revenue and geographic location was as follows: For the three months ended September 30, 2019 (in millions) Northeast South West Midwest Other Intersegment Eliminations (1) Total Revenues: Gaming $ 555.2 $ 201.2 $ 93.3 $ 236.1 $ 3.3 $ (0.6 ) $ 1,088.5 Food and beverage 39.4 39.0 29.5 21.0 0.5 — 129.4 Hotel 13.7 27.5 32.4 11.7 — — 85.3 Racing 5.6 — 0.1 — 1.3 — 7.0 Other 15.0 8.9 6.2 7.0 7.3 (0.1 ) 44.3 Total revenues $ 628.9 $ 276.6 $ 161.5 $ 275.8 $ 12.4 $ (0.7 ) $ 1,354.5 (1) Represents the elimination of intersegment operations associated with our internally-branded retail sportsbooks, which are operated by PIV, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour (“HPT”). For the three months ended September 30, 2018 (in millions) Northeast South West Midwest Other Total Revenues: Gaming $ 391.1 $ 46.1 $ 47.5 $ 161.6 $ — $ 646.3 Food and beverage 25.7 9.7 20.8 13.1 0.2 69.5 Hotel 5.9 2.9 20.4 5.8 — 35.0 Racing 3.8 — 0.1 — 1.4 5.3 Reimbursable management costs 3.9 — — — — 3.9 Other 11.0 1.7 3.8 4.9 8.3 29.7 Total revenues $ 441.4 $ 60.4 $ 92.6 $ 185.4 $ 9.9 $ 789.7 For the nine months ended September 30, 2019 (in millions) Northeast South West Midwest Other Intersegment Eliminations (1) Total Revenues: Gaming $ 1,571.9 $ 628.1 $ 282.6 $ 699.8 $ 3.4 $ (0.6 ) $ 3,185.2 Food and beverage 112.8 118.7 86.9 61.7 1.2 — 381.3 Hotel 31.3 77.0 95.7 32.9 — — 236.9 Racing 19.1 — 0.2 — 4.4 — 23.7 Other 43.5 26.9 19.0 20.9 22.9 (0.1 ) 133.1 Total revenues $ 1,778.6 $ 850.7 $ 484.4 $ 815.3 $ 31.9 $ (0.7 ) $ 3,960.2 (1) Represents the elimination of intersegment operations associated with our internally-branded retail sportsbooks, which are operated by PIV, and our live and televised poker tournament series that operates under the trade name, HPT. For the nine months ended September 30, 2018 (in millions) Northeast South West Midwest Other Total Revenues: Gaming $ 1,182.1 $ 146.3 $ 144.6 $ 492.9 $ — $ 1,965.9 Food and beverage 72.3 26.8 61.6 36.3 0.8 197.8 Hotel 16.0 8.5 62.4 16.9 — 103.8 Racing 14.0 — 0.2 — 4.7 18.9 Reimbursable management costs 46.8 — 10.5 — — 57.3 Other 34.2 4.8 11.9 12.9 25.1 88.9 Total revenues $ 1,365.4 $ 186.4 $ 291.2 $ 559.0 $ 30.6 $ 2,432.6 |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 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 millions) 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 $ 63.0 $ — $ — $ — $ — $ (1.0 ) $ 62.0 $ (1.0 ) Total current assets $ 677.6 $ — $ — $ — $ — $ (1.0 ) $ 676.6 $ (1.0 ) Property and equipment, net (4) $ 6,868.8 $ — $ (164.3 ) $ (1,407.4 ) $ — $ — $ 5,297.1 $ (1,571.7 ) Goodwill $ 1,228.4 $ 5.5 $ — $ — $ — $ — $ 1,233.9 $ 5.5 Operating lease right-of-use assets (5) $ — $ — $ — $ 3,541.2 $ 112.8 $ 152.5 $ 3,806.5 $ 3,806.5 Finance lease right-of-use assets (6) $ — $ — $ 224.5 $ — $ — $ — $ 224.5 $ 224.5 Total assets $ 10,961.0 $ 5.5 $ 60.2 $ 2,133.8 $ 112.8 $ 151.5 $ 13,424.8 $ 2,463.8 Liabilities Current liabilities Current portion of financing obligations (7) $ 67.8 $ — $ (1.5 ) $ (16.2 ) $ — $ — $ 50.1 $ (17.7 ) Current portion of operating lease liabilities (5) $ — $ — $ — $ 72.9 $ 20.5 $ 8.9 $ 102.3 $ 102.3 Current portion of finance lease liabilities (6) $ — $ — $ 5.8 $ — $ — $ — $ 5.8 $ 5.8 Accrued expenses and other current liabilities $ 578.0 $ — $ — $ — $ — $ (0.5 ) $ 577.5 $ (0.5 ) Total current liabilities $ 738.4 $ — $ 4.3 $ 56.7 $ 20.5 $ 8.4 $ 828.3 $ 89.9 Long-term portion of financing obligations (7) $ 7,080.6 $ 5.5 $ (181.3 ) $ (2,760.6 ) $ — $ — $ 4,144.2 $ (2,936.4 ) Long-term portion of operating lease liabilities (5) $ — $ — $ — $ 3,467.1 $ 92.3 $ 145.0 $ 3,704.4 $ 3,704.4 Long-term portion of finance lease liabilities (6) $ — $ — $ 218.3 $ — $ — $ — $ 218.3 $ 218.3 Deferred income taxes (8) $ — $ — $ 4.3 $ 299.5 $ — $ — $ 303.8 $ 303.8 Other noncurrent liabilities $ 60.7 $ — $ — $ — $ — $ (1.9 ) $ 58.8 $ (1.9 ) Total liabilities $ 10,229.8 $ 5.5 $ 45.6 $ 1,062.7 $ 112.8 $ 151.5 $ 11,607.9 $ 1,378.1 Stockholders’ equity Retained earnings (accumulated deficit) $ (968.0 ) $ — $ 14.6 $ 1,071.1 $ — $ — $ 117.7 $ 1,085.7 Total Penn stockholders’ equity $ 731.2 $ — $ 14.6 $ 1,071.1 $ — $ — $ 1,816.9 $ 1,085.7 Total stockholders’ equity $ 731.2 $ — $ 14.6 $ 1,071.1 $ — $ — $ 1,816.9 $ 1,085.7 Total liabilities and stockholders’ equity $ 10,961.0 $ 5.5 $ 60.2 $ 2,133.8 $ 112.8 $ 151.5 $ 13,424.8 $ 2,463.8 (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 land). (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 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 lease 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 ASC 840 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 buildings). 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. See Note 11, “Income Taxes.” |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Expense, other information and supplemental cash flow information related to leases | Information related to lease term and discount rate was as follows: September 30, 2019 Weighted Average Remaining Lease Term Operating leases (1) 27.8 years Finance leases (2) 28.8 years Financing obligations (3) 30.6 years Weighted Average Discount Rate (4) Operating leases 6.7 % Finance leases 6.8 % Financing obligations 8.1 % (1) Amount consists principally of (i) land components associated with our Master Leases; (ii) our Meadows Lease; (iii) our Margaritaville Lease; (iv) our Greektown Lease; (v) ground and levee leases with landlords which were not assumed by our REIT landlords; and (vi) building and equipment not associated with our Master Leases. (2) Amount consists primarily of the Dayton and Mahoning Valley finance leases. (3) Amount consists of the components contained within each of the Master Leases determined to continue to be financing obligations (primarily buildings) at the adoption date of the new lease standard. (4) 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. The components of lease expense were as follows: Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the three months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 96.3 $ — $ — $ 96.3 Operating lease cost (2) — 0.1 4.1 — — 4.2 Short-term lease cost 13.7 0.4 0.3 — — 14.4 Variable lease cost (2) 0.8 — 0.2 — — 1.0 Total $ 14.5 $ 0.5 $ 100.9 $ — $ — $ 115.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 3.8 $ — $ 3.8 Amortization expense (3) — — — — 2.0 2.0 Total $ — $ — $ — $ 3.8 $ 2.0 $ 5.8 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 97.6 $ — $ 97.6 Classification (in millions) Gaming Expense Food, Beverage, Hotel and Other Expense General and Administrative Interest Expense, net Depreciation and Amortization Total for the nine months ended September 30, 2019 Operating Lease Costs Rent expense associated with triple net leases classified as operating leases (1) $ — $ — $ 271.0 $ — $ — $ 271.0 Operating lease cost (2) 0.3 0.4 12.5 — — 13.2 Short-term lease cost 40.9 0.9 1.1 — — 42.9 Variable lease cost (2) 2.0 — 0.8 — — 2.8 Total $ 43.2 $ 1.3 $ 285.4 $ — $ — $ 329.9 Finance Lease Costs Interest expense (3) $ — $ — $ — $ 11.5 $ — $ 11.5 Amortization expense (3) — — — — 5.9 5.9 Total $ — $ — $ — $ 11.5 $ 5.9 $ 17.4 Financing Obligation Costs Interest expense (4) $ — $ — $ — $ 293.6 $ — $ 293.6 (1) Pertains to the components contained within the Master Leases (primarily land) determined to be operating leases, the Meadows Lease, the Margaritaville Lease, and the Greektown Lease, inclusive of the variable expense associated with Columbus and Toledo for the operating lease components (the land) (see table above). (2) Excludes the operating lease costs and variable lease costs pertaining to our triple net leases with our REIT landlords classified as operating leases, discussed in footnote (1) above. (3) Primarily pertains to the Dayton and Mahoning Valley finance leases. (4) Pertains to the components contained within the Master Leases (primarily buildings) determined to continue to be financing obligations, inclusive of the variable expense associated with Columbus and Toledo for the finance lease components (the buildings) (see table above). For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Variable expenses included in “General and administrative” $ 2.3 $ — $ 15.4 $ — Variable expenses included in “Interest expense, net” 2.1 11.8 14.1 36.8 Total variable expenses $ 4.4 $ 11.8 $ 29.5 $ 36.8 Supplemental cash flow information related to leases was as follows: (in millions) For the nine months ended September 30, 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from finance leases $ 11.5 Operating cash flows from operating leases $ 296.0 Financing cash flows from finance leases $ 4.6 |
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 September 30, 2019 : (in millions) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 106.7 $ 5.4 $ 97.4 2020 420.1 21.4 374.7 2021 399.9 21.4 367.3 2022 396.9 21.4 367.3 2023 393.7 20.5 367.3 Thereafter 8,457.0 403.8 9,638.0 Total lease payments 10,174.3 493.9 11,212.0 Less: Imputed interest (5,610.8 ) (269.8 ) (7,055.9 ) Present value of future lease payments 4,563.5 224.1 4,156.1 Less: Current portion of lease obligations (124.4 ) (6.3 ) (45.3 ) Long-term portion of lease obligations $ 4,439.1 $ 217.8 $ 4,110.8 |
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 September 30, 2019 : (in millions) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 106.7 $ 5.4 $ 97.4 2020 420.1 21.4 374.7 2021 399.9 21.4 367.3 2022 396.9 21.4 367.3 2023 393.7 20.5 367.3 Thereafter 8,457.0 403.8 9,638.0 Total lease payments 10,174.3 493.9 11,212.0 Less: Imputed interest (5,610.8 ) (269.8 ) (7,055.9 ) Present value of future lease payments 4,563.5 224.1 4,156.1 Less: Current portion of lease obligations (124.4 ) (6.3 ) (45.3 ) Long-term portion of lease obligations $ 4,439.1 $ 217.8 $ 4,110.8 |
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 September 30, 2019 : (in millions) Operating Leases Finance Leases Financing Obligations Years ending December 31, 2019 (excluding the nine months ended September 30, 2019) $ 106.7 $ 5.4 $ 97.4 2020 420.1 21.4 374.7 2021 399.9 21.4 367.3 2022 396.9 21.4 367.3 2023 393.7 20.5 367.3 Thereafter 8,457.0 403.8 9,638.0 Total lease payments 10,174.3 493.9 11,212.0 Less: Imputed interest (5,610.8 ) (269.8 ) (7,055.9 ) Present value of future lease payments 4,563.5 224.1 4,156.1 Less: Current portion of lease obligations (124.4 ) (6.3 ) (45.3 ) Long-term portion of lease obligations $ 4,439.1 $ 217.8 $ 4,110.8 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Allocation of purchase price and adjustments | During the nine months ended September 30, 2019 , prior to its finalization, we made the following adjustments to the preliminary purchase price allocation: (in millions) Estimated fair value, as previously reported (1) Measurement period adjustments Fair value, as finalized Cash and restricted cash $ 124.2 $ — $ 124.2 Assets held for sale 667.0 0.5 667.5 Other current assets 80.6 0.5 81.1 Property and equipment - non-Pinnacle Master Lease 318.9 (0.3 ) 318.6 Property and equipment - Pinnacle Master Lease (2) 3,984.1 (29.2 ) 3,954.9 Goodwill (3) 219.5 18.7 238.2 Other intangible assets Gaming licenses 1,046.0 21.6 1,067.6 Trademarks 298.0 — 298.0 Customer relationships 22.4 — 22.4 Other long-term assets 38.9 — 38.9 Total assets $ 6,799.6 $ 11.8 $ 6,811.4 Long-term financing obligation, including current portion (4) $ 3,427.0 $ 5.5 $ 3,432.5 Other current liabilities 200.6 5.5 206.1 Deferred tax liabilities 339.2 0.8 340.0 Other long-term liabilities 16.6 — 16.6 Total liabilities 3,983.4 11.8 3,995.2 Net assets acquired $ 2,816.2 $ — $ 2,816.2 (1) Amounts were initially reported within the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 28, 2019. (2) 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. (3) See Note 7, “Goodwill and Other Intangible Assets,” for details on the impact to each reportable segment. (4) Long-term financing obligation, including current portion represents the financing obligation associated with Pinnacle Master Lease, as amended. (in millions) Estimated fair value, as previously reported (1) Measurement period adjustments Estimated fair value, as adjusted Cash and cash equivalents $ 31.1 $ — $ 31.1 Receivables, prepaid expenses, and other current assets 15.6 (1.1 ) 14.5 Property and equipment 32.3 — 32.3 Goodwill (2) 61.7 1.1 62.8 Other intangible assets Gaming license 166.4 — 166.4 Trademark 24.4 — 24.4 Customer relationships 3.3 — 3.3 Operating lease right-of-use assets 516.1 — 516.1 Finance lease right-of-use assets 4.2 — 4.2 Other assets 0.2 — 0.2 Total assets $ 855.3 $ — $ 855.3 Accounts payable, accrued expenses and other current liabilities $ 14.8 $ — 14.8 Operating lease liabilities 516.0 — 516.0 Finance lease liabilities 4.2 — 4.2 Total liabilities 535.0 — 535.0 Net assets acquired $ 320.3 $ — $ 320.3 (1) Amounts were initially reported within the Company’s Quarterly Report on Form 10-Q for the three months ended June 30, 2019, filed with the SEC on August 8, 2019. (2) The goodwill has been assigned to our Northeast segment. The entire $62.8 million goodwill amount is deductible for tax purposes. (in millions) Estimated fair value, as previously reported (1) Measurement period adjustments Estimated fair value, as adjusted Cash and cash equivalents $ 10.7 $ — $ 10.7 Receivables, prepaid expenses, and other current assets 7.1 — 7.1 Property and equipment 21.7 (1.0 ) 20.7 Goodwill (2) 39.5 1.0 40.5 Other intangible assets Gaming license 48.1 — 48.1 Customer relationships 2.3 — 2.3 Operating lease right-of-use assets 196.2 — 196.2 Total assets $ 325.6 $ — $ 325.6 Accounts payable, accrued expenses and other current liabilities $ 9.5 $ — $ 9.5 Operating lease liabilities 196.2 — 196.2 Total liabilities 205.7 — 205.7 Net assets acquired $ 119.9 $ — $ 119.9 (1) Amounts were initially reported within the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2019, filed with the SEC on May 8, 2019. (2) The goodwill has been assigned to our South segment. The entire $40.5 million goodwill amount is deductible for tax purposes. |
Actual and pro forma financial results | The following table includes the financial results of Margaritaville since the acquisition date, which are included within our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019 : (in millions) For the three months ended September 30, 2019 For the nine months ended September 30, 2019 Revenues $ 39.6 $ 120.7 Net income $ 2.6 $ 10.8 The following table includes the financial results of Greektown since the acquisition date, which are included within our unaudited Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2019 : (in millions) For the three months ended September 30, 2019 Period from May 23, 2019 through September 30, 2019 Revenues $ 78.2 $ 112.4 Net income $ 3.9 $ 4.8 The following table includes unaudited pro forma consolidated financial information assuming our acquisitions of Greektown and Margaritaville had occurred as of January 1, 2018 and Pinnacle had occurred as of January 1, 2017. 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, Greektown, Margaritaville, 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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues $ 1,354.5 $ 1,391.7 $ 4,093.8 $ 4,240.7 Net income attributable to Penn $ 46.1 $ 36.1 $ 157.3 $ 153.2 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment, net and depreciation expense | Property and equipment, net, consisted of the following: (in millions) September 30, December 31, Property and equipment - non-Master Leases Land and improvements $ 353.3 $ 344.0 Building, vessels and improvements 410.7 343.0 Furniture, fixtures and equipment 1,585.2 1,565.8 Leasehold improvements 178.4 152.9 Construction in progress 58.3 25.5 2,585.9 2,431.2 Less: Accumulated depreciation (1,524.8 ) (1,400.2 ) 1,061.1 1,031.0 Property and equipment - Master Leases Land and improvements (1) 1,525.9 2,971.0 Building, vessels and improvements (1) 3,659.1 3,845.0 5,185.0 6,816.0 Less: Accumulated depreciation (1,090.9 ) (978.2 ) 4,094.1 5,837.8 Property and equipment, net $ 5,155.2 $ 6,868.8 (1) Upon adoption of ASC 842, approximately $1.4 billion of land was derecognized and replaced with operating lease ROU assets based on the present value of future lease payments and $180.4 million of building and improvements, gross, was derecognized and replaced with finance lease ROU assets based on the present value of future lease payments. See Note 3, “New Accounting Pronouncements.” Depreciation expense was as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Depreciation expense (1) $ 97.9 $ 53.6 $ 291.8 $ 163.9 (1) Of such amounts, $26.5 million , $22.7 million , $119.4 million , and $68.9 million , respectively, pertain to real estate assets subject to either of our Master Leases. |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 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 millions) Northeast South West Midwest Other Total Balance as of December 31, 2018 Goodwill, gross $ 848.4 $ 185.2 $ 210.4 $ 1,110.1 $ 156.1 $ 2,510.2 Accumulated goodwill impairment losses (707.6 ) (34.6 ) (16.6 ) (435.3 ) (87.7 ) (1,281.8 ) Goodwill, net 140.8 150.6 193.8 674.8 68.4 1,228.4 Goodwill acquired during year 62.8 40.5 — — — 103.3 Other (1) (1.5 ) 7.2 6.4 6.6 — 18.7 Balance as of September 30, 2019 Goodwill, gross 909.7 232.9 216.8 1,116.7 156.1 2,632.2 Accumulated goodwill impairment losses (707.6 ) (34.6 ) (16.6 ) (435.3 ) (87.7 ) (1,281.8 ) Goodwill, net $ 202.1 $ 198.3 $ 200.2 $ 681.4 $ 68.4 $ 1,350.4 (1) Amounts relate to adjustments made to the preliminary purchase price allocation of Pinnacle during the nine months ended September 30, 2019 , prior to it being finalized, as described in Note 5, “Acquisitions.” |
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: September 30, 2019 December 31, 2018 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets Gaming licenses $ 1,734.6 $ — $ 1,734.6 $ 1,498.3 $ — $ 1,498.3 Trademarks 322.4 — 322.4 298.0 — 298.0 Other 0.7 — 0.7 0.7 — 0.7 Amortizing intangible assets Customer relationships 104.3 (64.6 ) 39.7 98.8 (51.5 ) 47.3 Other 62.0 (54.9 ) 7.1 61.9 (49.3 ) 12.6 Total other intangible assets $ 2,224.0 $ (119.5 ) $ 2,104.5 $ 1,957.7 $ (100.8 ) $ 1,856.9 |
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: September 30, 2019 December 31, 2018 (in millions) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets Gaming licenses $ 1,734.6 $ — $ 1,734.6 $ 1,498.3 $ — $ 1,498.3 Trademarks 322.4 — 322.4 298.0 — 298.0 Other 0.7 — 0.7 0.7 — 0.7 Amortizing intangible assets Customer relationships 104.3 (64.6 ) 39.7 98.8 (51.5 ) 47.3 Other 62.0 (54.9 ) 7.1 61.9 (49.3 ) 12.6 Total other intangible assets $ 2,224.0 $ (119.5 ) $ 2,104.5 $ 1,957.7 $ (100.8 ) $ 1,856.9 |
Expected intangible asset amortization expense | The following table presents the estimated amortization expense based on our amortizing intangible assets as of September 30, 2019 (in millions): Remaining 2019 $ 5.9 2020 19.5 2021 5.6 2022 3.8 2023 3.6 Thereafter 8.4 Total $ 46.8 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: (in millions) September 30, December 31, Accrued salaries and wages $ 125.3 $ 139.2 Accrued gaming, pari-mutuel, property, and other taxes 117.6 105.8 Accrued interest 5.8 15.8 Other accrued expenses (1) 218.0 204.6 Other current liabilities (2) 132.2 112.6 $ 598.9 $ 578.0 (1) Amounts include the obligation associated with our my choice program and the current portion of advance payments on goods and services yet to be provided and for unpaid wagers, which are discussed in Note 2, “Significant Accounting Policies.” (2) Amounts include $74.1 million and $64.1 million , respectively, pertaining to the Company’s non-qualified deferred compensation plan that covers most management and other highly-compensated employees. |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt, net of current maturities | Long-term debt, net of current maturities, was as follows: (in millions) September 30, December 31, Senior Secured Credit Facilities: Revolving Credit Facility due 2023 $ 200.0 $ 112.0 Term Loan A Facility due 2023 681.1 707.7 Term Loan B-1 Facility due 2025 1,120.3 1,128.7 5.625% Notes due 2027 400.0 400.0 Other long-term obligations 89.2 104.6 Capital leases (1) — 0.4 2,490.6 2,453.4 Less: Current maturities of long-term debt (62.9 ) (62.1 ) Less: Debt discount (2.5 ) (2.8 ) Less: Debt issuance costs (33.2 ) (38.4 ) $ 2,392.0 $ 2,350.1 (1) Reclassified to finance lease liabilities upon the adoption of ASC 842. |
Schedule of interest expense, net | Interest expense, net, was as follows: For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Interest expense $ (134.2 ) $ (114.8 ) $ (401.8 ) $ (346.4 ) Interest income 0.6 0.2 1.2 0.7 Capitalized interest 0.1 — 0.1 — $ (133.5 ) $ (114.6 ) $ (400.5 ) $ (345.7 ) |
Investments in and Advances t_2
Investments in and Advances to Unconsolidated Affiliates (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues $ 40.6 $ 39.8 $ 120.2 $ 119.3 Operating expenses 19.6 27.4 73.8 83.0 Operating income 21.0 12.4 46.4 36.3 Net income $ 21.0 $ 12.4 $ 46.4 $ 36.3 Net income attributable to Penn $ 10.5 $ 6.2 $ 23.2 $ 18.1 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 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 earnings per share (“EPS”) to the weighted average common shares outstanding used in the calculation of diluted EPS for the three and nine months ended September 30, 2019 and 2018 : For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Determination of shares: Weighted average common shares outstanding 115.2 91.9 115.8 91.5 Assumed conversion of dilutive employee stock-based awards 1.4 3.2 1.7 3.3 Assumed conversion of restricted stock 0.1 0.2 0.2 0.2 Diluted weighted average common shares outstanding 116.7 95.3 117.7 95.0 |
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 and nine months ended September 30, 2019 and 2018 : For the three months ended September 30, For the nine months ended September 30, (in millions, except per share data) 2019 2018 2019 2018 Calculation of basic EPS: Net income applicable to common stock $ 43.9 $ 36.1 $ 136.4 $ 135.5 Weighted average common shares outstanding 115.2 91.9 115.8 91.5 Basic EPS $ 0.38 $ 0.39 $ 1.18 $ 1.48 Calculation of diluted EPS: Net income applicable to common stock $ 43.9 $ 36.1 $ 136.4 $ 135.5 Diluted weighted average common shares outstanding 116.7 95.3 117.7 95.0 Diluted EPS $ 0.38 $ 0.38 $ 1.16 $ 1.43 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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: September 30, 2019 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 406.9 $ 406.9 $ 406.9 $ — $ — Equity securities $ 28.3 $ 28.3 $ — $ 28.3 $ — Held-to-maturity securities $ 7.5 $ 7.8 $ — $ 7.8 $ — Promissory notes $ 16.9 $ 17.3 $ — $ 17.3 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,966.3 $ 2,000.5 $ 2,000.5 $ — $ — 5.625% Notes $ 399.4 $ 411.0 $ 411.0 $ — $ — Other long-term obligations $ 89.2 $ 82.5 $ — $ 82.5 $ — Other liabilities $ 20.3 $ 20.3 $ — $ 2.8 $ 17.5 December 31, 2018 (in millions) Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 479.6 $ 479.6 $ 479.6 $ — $ — Held-to-maturity securities $ 7.5 $ 7.9 $ — $ 7.9 $ — Promissory notes $ 16.9 $ 17.4 $ — $ 17.4 $ — Financial liabilities: Long-term debt Senior Secured Credit Facilities $ 1,907.9 $ 1,886.3 $ 1,886.3 $ — $ — 5.625% Notes $ 399.3 $ 360.0 $ 360.0 $ — $ — Other long-term obligations $ 104.6 $ 96.3 $ — $ 96.3 $ — Other liabilities $ 21.9 $ 21.8 $ — $ 2.8 $ 19.0 |
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 millions) Contingent Consideration Balance as of January 1, 2019 $ 19.0 Payments (8.5 ) Included in earnings (1) 7.0 Balance as of September 30, 2019 $ 17.5 (1) The expense is included in “General and administrative” within our unaudited Condensed Consolidated Statements of Operations. |
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 September 30, 2019 : Valuation Technique Unobservable Input Discount Rate Contingent consideration - Plainridge Park Casino Discounted cash flow Discount rate 6.33% |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of segment information | For financial reporting purposes, 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 Greektown Casino-Hotel (1) Detroit, Michigan Greektown 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 Marquee by Penn (2) Pennsylvania N/A Meadows Racetrack and Casino Washington, Pennsylvania Meadows Lease Plainridge Park Casino Plainville, Massachusetts Pinnacle Master Lease South segment (3) 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 (4) Bossier City, Louisiana Margaritaville 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 (5) 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 (6) Kansas City, Kansas Owned - JV Hollywood Casino St. Louis Maryland Heights, Missouri Penn Master Lease Prairie State Gaming (2) Illinois N/A River City Casino St. Louis, Missouri Pinnacle Master Lease (1) Acquired on May 23, 2019 (2) VGT route operations (3) Resorts Casino Tunica closed on June 30, 2019, but remains subject to the Penn Master Lease. (4) Acquired on January 1, 2019 (5) The riverboat is owned by us and not subject to the Penn Master Lease. (6) 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 Hollywood Casino at Kansas Speedway. Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to Net income. For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Revenues: Northeast segment $ 628.9 $ 441.4 $ 1,778.6 $ 1,365.4 South segment 276.6 60.4 850.7 186.4 West segment 161.5 92.6 484.4 291.2 Midwest segment 275.8 185.4 815.3 559.0 Other (1) 12.4 9.9 31.9 30.6 Intersegment eliminations (2) (0.7 ) — (0.7 ) — Total $ 1,354.5 $ 789.7 $ 3,960.2 $ 2,432.6 Adjusted EBITDAR (3) : Northeast segment $ 189.1 $ 141.3 $ 540.1 $ 434.6 South segment 89.0 17.1 279.6 58.8 West segment 50.6 21.8 151.0 71.8 Midwest segment 104.3 65.4 301.3 201.1 Other (1) (25.0 ) (15.9 ) (66.1 ) (47.0 ) Intersegment eliminations (2) (0.1 ) — (0.1 ) — Total (3) 407.9 229.7 1,205.8 719.3 Other operating benefits (costs) and other income (expenses): Rent expense associated with triple net operating leases (4) (96.3 ) — (271.0 ) — Stock-based compensation (3.7 ) (2.9 ) (10.4 ) (8.8 ) Cash-settled stock-based awards variance 3.4 1.7 6.4 1.3 Loss on disposal of assets (7.4 ) (3.2 ) (8.3 ) (3.2 ) Contingent purchase price (1.2 ) (0.4 ) (7.0 ) (1.7 ) Pre-opening and acquisition costs (7.4 ) (5.2 ) (15.5 ) (17.2 ) Depreciation and amortization (106.3 ) (56.9 ) (316.4 ) (175.8 ) Recoveries on loan loss and unfunded loan commitments, net of impairment losses — — — 16.4 Insurance recoveries, net of deductible charges 1.5 — 1.5 0.1 Non-operating items for Kansas JV (0.9 ) (1.3 ) (2.8 ) (3.9 ) Interest expense, net (133.5 ) (114.6 ) (400.5 ) (345.7 ) Loss on early extinguishment of debt — (0.3 ) — (3.8 ) Other 7.2 (1.4 ) 7.2 (1.5 ) Income before income taxes 63.3 45.2 189.0 175.5 Income tax expense (19.6 ) (9.1 ) (53.0 ) (40.0 ) Net income $ 43.7 $ 36.1 $ 136.0 $ 135.5 (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. The Other category also includes PIV; which operates social gaming, our internally-branded retail sportsbooks, and iGaming; our management contract for Retama Park Racetrack; and HPT. 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) Represents the elimination of intersegment operations associated with PIV and HPT. (3) We define Adjusted EBITDAR as earnings before interest expense, net; income taxes; depreciation and amortization; rent expense associated with triple net operating leases (see footnote (4) below); 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. (4) The Company’s triple net operating leases include certain components of the Master Leases (primarily land), the Meadows Lease, the Margaritaville Lease, and the Greektown Lease. For the three months ended September 30, For the nine months ended September 30, (in millions) 2019 2018 2019 2018 Capital expenditures: Northeast segment $ 22.8 $ 11.0 $ 67.3 $ 23.7 South segment 5.0 2.3 21.5 5.8 West segment 3.7 2.4 17.8 7.6 Midwest segment 6.2 7.4 22.6 15.6 Other 4.0 0.9 7.5 4.3 Total capital expenditures $ 41.7 $ 24.0 $ 136.7 $ 57.0 (in millions) Northeast South West Midwest Other Total As of September 30, 2019 Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 90.6 $ 37.8 $ 128.5 Total assets (1) $ 2,298.9 $ 1,423.8 $ 750.5 $ 1,475.9 $ 8,368.9 $ 14,318.0 As of December 31, 2018 Investment in and advances to unconsolidated affiliates $ 0.1 $ — $ — $ 89.4 $ 39.0 $ 128.5 Total assets (2) $ 1,330.2 $ 1,082.3 $ 755.7 $ 1,411.5 $ 6,381.3 $ 10,961.0 (1) As of September 30, 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) | 9 Months Ended |
Sep. 30, 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 | 19 |
Number of reportable segments | segment | 4 |
Significant Accounting Polici_4
Significant Accounting Policies - Segment Information (Details) | 9 Months Ended |
Sep. 30, 2019facilitysegment | |
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 Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenue from External Customer [Line Items] | ||||
Total complimentaries associated with gaming contracts | $ 115 | $ 42.7 | $ 329.8 | $ 111.8 |
Food and beverage | ||||
Revenue from External Customer [Line Items] | ||||
Total complimentaries associated with gaming contracts | 66.7 | 30.5 | 195.3 | 77.3 |
Hotel | ||||
Revenue from External Customer [Line Items] | ||||
Total complimentaries associated with gaming contracts | 44.1 | 10.5 | 121.5 | 30.8 |
Other | ||||
Revenue from External Customer [Line Items] | ||||
Total complimentaries associated with gaming contracts | $ 4.2 | $ 1.7 | $ 13 | $ 3.7 |
Significant Accounting Polici_6
Significant Accounting Policies - Revenue Disaggregation and Customer-Related Liabilities (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019USD ($)agreement | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)agreement | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 1,354.5 | $ 789.7 | $ 3,960.2 | $ 2,432.6 | |
Loyalty credit obligation | |||||
Disaggregation of Revenue [Line Items] | |||||
Customer-related liabilities | 37 | $ 37 | $ 39.9 | ||
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 | 33.8 | $ 33.8 | 34.3 | ||
Customer-related liabilities, long-term | 0.7 | 0.7 | $ 0.7 | ||
Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 1,088.5 | 646.3 | 3,185.2 | 1,965.9 | |
Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 129.4 | 69.5 | 381.3 | 197.8 | |
Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 85.3 | 35 | 236.9 | 103.8 | |
Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 7 | 5.3 | 23.7 | 18.9 | |
Reimbursable management costs | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 3.9 | 57.3 | |||
Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 44.3 | 29.7 | 133.1 | 88.9 | |
Online sports betting and iGaming market access | |||||
Disaggregation of Revenue [Line Items] | |||||
Customer-related liabilities | $ 33.7 | $ 33.7 | |||
Number of operator agreements containing ordinary shares and warrants | agreement | 3 | 3 | |||
Operating segments | Northeast segment | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 628.9 | 441.4 | $ 1,778.6 | 1,365.4 | |
Operating segments | Northeast segment | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 555.2 | 391.1 | 1,571.9 | 1,182.1 | |
Operating segments | Northeast segment | Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 39.4 | 25.7 | 112.8 | 72.3 | |
Operating segments | Northeast segment | Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 13.7 | 5.9 | 31.3 | 16 | |
Operating segments | Northeast segment | Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 5.6 | 3.8 | 19.1 | 14 | |
Operating segments | Northeast segment | Reimbursable management costs | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 3.9 | 46.8 | |||
Operating segments | Northeast segment | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 15 | 11 | 43.5 | 34.2 | |
Operating segments | South segment | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 276.6 | 60.4 | 850.7 | 186.4 | |
Operating segments | South segment | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 201.2 | 46.1 | 628.1 | 146.3 | |
Operating segments | South segment | Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 39 | 9.7 | 118.7 | 26.8 | |
Operating segments | South segment | Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 27.5 | 2.9 | 77 | 8.5 | |
Operating segments | South segment | Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Operating segments | South segment | Reimbursable management costs | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | |||
Operating segments | South segment | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 8.9 | 1.7 | 26.9 | 4.8 | |
Operating segments | West segment | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 161.5 | 92.6 | 484.4 | 291.2 | |
Operating segments | West segment | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 93.3 | 47.5 | 282.6 | 144.6 | |
Operating segments | West segment | Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 29.5 | 20.8 | 86.9 | 61.6 | |
Operating segments | West segment | Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 32.4 | 20.4 | 95.7 | 62.4 | |
Operating segments | West segment | Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0.1 | 0.1 | 0.2 | 0.2 | |
Operating segments | West segment | Reimbursable management costs | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 10.5 | |||
Operating segments | West segment | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 6.2 | 3.8 | 19 | 11.9 | |
Operating segments | Midwest segment | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 275.8 | 185.4 | 815.3 | 559 | |
Operating segments | Midwest segment | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 236.1 | 161.6 | 699.8 | 492.9 | |
Operating segments | Midwest segment | Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 21 | 13.1 | 61.7 | 36.3 | |
Operating segments | Midwest segment | Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 11.7 | 5.8 | 32.9 | 16.9 | |
Operating segments | Midwest segment | Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Operating segments | Midwest segment | Reimbursable management costs | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | |||
Operating segments | Midwest segment | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 7 | 4.9 | 20.9 | 12.9 | |
Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 12.4 | 9.9 | 31.9 | 30.6 | |
Other | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 3.3 | 0 | 3.4 | 0 | |
Other | Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0.5 | 0.2 | 1.2 | 0.8 | |
Other | Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | 0 | 0 | |
Other | Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 1.3 | 1.4 | 4.4 | 4.7 | |
Other | Reimbursable management costs | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | |||
Other | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 7.3 | $ 8.3 | 22.9 | $ 25.1 | |
Intersegment Eliminations | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | (0.7) | (0.7) | |||
Intersegment Eliminations | Gaming | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | (0.6) | (0.6) | |||
Intersegment Eliminations | Food and beverage | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | |||
Intersegment Eliminations | Hotel | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | |||
Intersegment Eliminations | Racing | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 0 | 0 | |||
Intersegment Eliminations | Other | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ (0.1) | $ (0.1) |
Significant Accounting Polici_7
Significant Accounting Policies - Gaming and Racing Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Gaming taxes | $ 403.1 | $ 250.1 | $ 1,189.4 | $ 750.5 |
Significant Accounting Polici_8
Significant Accounting Policies - Equity Securities including Warrants (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Accounting Policies [Abstract] | ||
Unrealized gains | $ 7.1 | $ 7.1 |
New Accounting Pronouncements_2
New Accounting Pronouncements (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jun. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets | |||||||
Prepaid expenses | $ 72.8 | $ 62 | $ 63 | ||||
Total current assets | 628.2 | 676.6 | 677.6 | ||||
Property and equipment, net | 5,155.2 | 5,297.1 | 6,868.8 | ||||
Other assets | |||||||
Goodwill | 1,350.4 | 1,233.9 | 1,228.4 | ||||
Operating lease right-of-use assets | 4,592 | 3,806.5 | 0 | ||||
Finance lease right-of-use assets | 222.7 | 224.5 | 0 | ||||
Total assets | 14,318 | 13,424.8 | 10,961 | ||||
Current liabilities | |||||||
Current portion of financing obligations | 45.3 | 50.1 | 67.8 | ||||
Current portion of operating lease liabilities | 124.4 | 102.3 | 0 | ||||
Current portion of finance lease liabilities | 6.3 | 5.8 | 0 | ||||
Accrued expenses and other current liabilities | 598.9 | 577.5 | 578 | ||||
Total current liabilities | 877.3 | 828.3 | 738.4 | ||||
Long-term portion of financing obligations | 4,110.8 | 4,144.2 | 7,080.6 | ||||
Long-term portion of operating lease liabilities | 4,439.1 | 3,704.4 | 0 | ||||
Long-term portion of finance lease liabilities | 217.8 | 218.3 | 0 | ||||
Deferred income taxes | 252.8 | 303.8 | 0 | ||||
Other noncurrent liabilities | 88.8 | 58.8 | 60.7 | ||||
Total liabilities | 12,378.6 | 11,607.9 | 10,229.8 | ||||
Retained earnings (accumulated deficit) | 254.1 | 117.7 | (968) | ||||
Total Penn stockholders’ equity | 1,939.8 | 1,816.9 | 731.2 | ||||
Total stockholders’ equity | 1,939.4 | $ 1,891.7 | 1,816.9 | 731.2 | $ 70.5 | $ 27.7 | $ (73.2) |
Total liabilities and stockholders’ equity | $ 14,318 | 13,424.8 | $ 10,961 | ||||
ASC 842 | |||||||
Current assets | |||||||
Prepaid expenses | (1) | ||||||
Total current assets | (1) | ||||||
Property and equipment, net | (1,571.7) | ||||||
Other assets | |||||||
Goodwill | 5.5 | ||||||
Operating lease right-of-use assets | 3,806.5 | ||||||
Finance lease right-of-use assets | 224.5 | ||||||
Total assets | 2,463.8 | ||||||
Current liabilities | |||||||
Current portion of financing obligations | (17.7) | ||||||
Current portion of operating lease liabilities | 102.3 | ||||||
Current portion of finance lease liabilities | 5.8 | ||||||
Accrued expenses and other current liabilities | (0.5) | ||||||
Total current liabilities | 89.9 | ||||||
Long-term portion of financing obligations | (2,936.4) | ||||||
Long-term portion of operating lease liabilities | 3,704.4 | ||||||
Long-term portion of finance lease liabilities | 218.3 | ||||||
Deferred income taxes | 303.8 | ||||||
Other noncurrent liabilities | (1.9) | ||||||
Total liabilities | 1,378.1 | ||||||
Retained earnings (accumulated deficit) | 1,085.7 | ||||||
Total Penn stockholders’ equity | 1,085.7 | ||||||
Total stockholders’ equity | 1,085.7 | ||||||
Total liabilities and stockholders’ equity | 2,463.8 | ||||||
Financing Obligations - Master Leases | |||||||
Current assets | |||||||
Prepaid expenses | 0 | ||||||
Total current assets | 0 | ||||||
Property and equipment, net | 0 | ||||||
Other assets | |||||||
Goodwill | 5.5 | ||||||
Operating lease right-of-use assets | 0 | ||||||
Finance lease right-of-use assets | 0 | ||||||
Total assets | 5.5 | ||||||
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 | 5.5 | ||||||
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 | 5.5 | ||||||
Retained earnings (accumulated deficit) | 0 | ||||||
Total Penn stockholders’ equity | 0 | ||||||
Total stockholders’ equity | 0 | ||||||
Total liabilities and stockholders’ equity | 5.5 | ||||||
Finance Leases - Dayton and Mahoning Valley | |||||||
Current assets | |||||||
Prepaid expenses | 0 | ||||||
Total current assets | 0 | ||||||
Property and equipment, net | (164.3) | ||||||
Other assets | |||||||
Goodwill | 0 | ||||||
Operating lease right-of-use assets | 0 | ||||||
Finance lease right-of-use assets | 224.5 | ||||||
Total assets | 60.2 | ||||||
Current liabilities | |||||||
Current portion of financing obligations | (1.5) | ||||||
Current portion of operating lease liabilities | 0 | ||||||
Current portion of finance lease liabilities | 5.8 | ||||||
Accrued expenses and other current liabilities | 0 | ||||||
Total current liabilities | 4.3 | ||||||
Long-term portion of financing obligations | (181.3) | ||||||
Long-term portion of operating lease liabilities | 0 | ||||||
Long-term portion of finance lease liabilities | 218.3 | ||||||
Deferred income taxes | 4.3 | ||||||
Other noncurrent liabilities | 0 | ||||||
Total liabilities | 45.6 | ||||||
Retained earnings (accumulated deficit) | 14.6 | ||||||
Total Penn stockholders’ equity | 14.6 | ||||||
Total stockholders’ equity | 14.6 | ||||||
Total liabilities and stockholders’ equity | 60.2 | ||||||
Operating Leases - Master Leases | |||||||
Current assets | |||||||
Prepaid expenses | 0 | ||||||
Total current assets | 0 | ||||||
Property and equipment, net | (1,407.4) | ||||||
Other assets | |||||||
Goodwill | 0 | ||||||
Operating lease right-of-use assets | 3,541.2 | ||||||
Finance lease right-of-use assets | 0 | ||||||
Total assets | 2,133.8 | ||||||
Current liabilities | |||||||
Current portion of financing obligations | (16.2) | ||||||
Current portion of operating lease liabilities | 72.9 | ||||||
Current portion of finance lease liabilities | 0 | ||||||
Accrued expenses and other current liabilities | 0 | ||||||
Total current liabilities | 56.7 | ||||||
Long-term portion of financing obligations | (2,760.6) | ||||||
Long-term portion of operating lease liabilities | 3,467.1 | ||||||
Long-term portion of finance lease liabilities | 0 | ||||||
Deferred income taxes | 299.5 | ||||||
Other noncurrent liabilities | 0 | ||||||
Total liabilities | 1,062.7 | ||||||
Retained earnings (accumulated deficit) | 1,071.1 | ||||||
Total Penn stockholders’ equity | 1,071.1 | ||||||
Total stockholders’ equity | 1,071.1 | ||||||
Total liabilities and stockholders’ equity | 2,133.8 | ||||||
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 | 112.8 | ||||||
Finance lease right-of-use assets | 0 | ||||||
Total assets | 112.8 | ||||||
Current liabilities | |||||||
Current portion of financing obligations | 0 | ||||||
Current portion of operating lease liabilities | 20.5 | ||||||
Current portion of finance lease liabilities | 0 | ||||||
Accrued expenses and other current liabilities | 0 | ||||||
Total current liabilities | 20.5 | ||||||
Long-term portion of financing obligations | 0 | ||||||
Long-term portion of operating lease liabilities | 92.3 | ||||||
Long-term portion of finance lease liabilities | 0 | ||||||
Deferred income taxes | 0 | ||||||
Other noncurrent liabilities | 0 | ||||||
Total liabilities | 112.8 | ||||||
Retained earnings (accumulated deficit) | 0 | ||||||
Total Penn stockholders’ equity | 0 | ||||||
Total stockholders’ equity | 0 | ||||||
Total liabilities and stockholders’ equity | 112.8 | ||||||
Other Operating Leases - Non-Master Leases | |||||||
Current assets | |||||||
Prepaid expenses | (1) | ||||||
Total current assets | (1) | ||||||
Property and equipment, net | 0 | ||||||
Other assets | |||||||
Goodwill | 0 | ||||||
Operating lease right-of-use assets | 152.5 | ||||||
Finance lease right-of-use assets | 0 | ||||||
Total assets | 151.5 | ||||||
Current liabilities | |||||||
Current portion of financing obligations | 0 | ||||||
Current portion of operating lease liabilities | 8.9 | ||||||
Current portion of finance lease liabilities | 0 | ||||||
Accrued expenses and other current liabilities | (0.5) | ||||||
Total current liabilities | 8.4 | ||||||
Long-term portion of financing obligations | 0 | ||||||
Long-term portion of operating lease liabilities | 145 | ||||||
Long-term portion of finance lease liabilities | 0 | ||||||
Deferred income taxes | 0 | ||||||
Other noncurrent liabilities | (1.9) | ||||||
Total liabilities | 151.5 | ||||||
Retained earnings (accumulated deficit) | 0 | ||||||
Total Penn stockholders’ equity | 0 | ||||||
Total stockholders’ equity | 0 | ||||||
Total liabilities and stockholders’ equity | $ 151.5 |
Leases - Variable Lease Expense
Leases - Variable Lease Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Lessee, Lease, Cost [Line Items] | ||||
Total variable expenses | $ 1 | $ 2.8 | ||
General and administrative | ||||
Lessee, Lease, Cost [Line Items] | ||||
Total variable expenses | 0.2 | 0.8 | ||
Interest expense, net | ||||
Lessee, Lease, Cost [Line Items] | ||||
Total variable expenses | 0 | 0 | ||
Penn Master Lease | ||||
Lessee, Lease, Cost [Line Items] | ||||
Total variable expenses | 4.4 | $ 11.8 | 29.5 | $ 36.8 |
Penn Master Lease | General and administrative | ||||
Lessee, Lease, Cost [Line Items] | ||||
Total variable expenses | 2.3 | 0 | 15.4 | 0 |
Penn Master Lease | Interest expense, net | ||||
Lessee, Lease, Cost [Line Items] | ||||
Total variable expenses | $ 2.1 | $ 11.8 | $ 14.1 | $ 36.8 |
Leases - Other Information Rela
Leases - Other Information Related to Lease Term and Discount Rate (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Weighted Average Remaining Lease Term | |
Operating leases | 27 years 9 months 18 days |
Finance leases | 28 years 9 months 18 days |
Financing obligations | 30 years 7 months 6 days |
Weighted Average Discount Rate | |
Operating leases | 6.70% |
Finance leases | 6.80% |
Financing obligations | 8.10% |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019 | Sep. 30, 2019 | |
Operating Lease Costs | ||
Rent expense associated with triple net leases classified as operating leases | $ 96.3 | $ 271 |
Operating lease cost | 4.2 | 13.2 |
Short-term lease cost | 14.4 | 42.9 |
Variable lease cost | 1 | 2.8 |
Total | 115.9 | 329.9 |
Finance Lease Costs | ||
Interest expense | 3.8 | 11.5 |
Amortization expense | 2 | 5.9 |
Total | 5.8 | 17.4 |
Financing Obligation Costs | ||
Interest expense | 97.6 | 293.6 |
Cost of revenue | Gaming | ||
Operating Lease Costs | ||
Rent expense associated with triple net leases classified as operating leases | 0 | 0 |
Operating lease cost | 0 | 0.3 |
Short-term lease cost | 13.7 | 40.9 |
Variable lease cost | 0.8 | 2 |
Total | 14.5 | 43.2 |
Finance Lease Costs | ||
Interest expense | 0 | 0 |
Amortization expense | 0 | 0 |
Total | 0 | 0 |
Financing Obligation Costs | ||
Interest expense | 0 | 0 |
Cost of revenue | Food, beverage, hotel and other | ||
Operating Lease Costs | ||
Rent expense associated with triple net leases classified as operating leases | 0 | 0 |
Operating lease cost | 0.1 | 0.4 |
Short-term lease cost | 0.4 | 0.9 |
Variable lease cost | 0 | 0 |
Total | 0.5 | 1.3 |
Finance Lease Costs | ||
Interest expense | 0 | 0 |
Amortization expense | 0 | 0 |
Total | 0 | 0 |
Financing Obligation Costs | ||
Interest expense | 0 | 0 |
General and administrative | ||
Operating Lease Costs | ||
Rent expense associated with triple net leases classified as operating leases | 96.3 | 271 |
Operating lease cost | 4.1 | 12.5 |
Short-term lease cost | 0.3 | 1.1 |
Variable lease cost | 0.2 | 0.8 |
Total | 100.9 | 285.4 |
Finance Lease Costs | ||
Interest expense | 0 | 0 |
Amortization expense | 0 | 0 |
Total | 0 | 0 |
Financing Obligation Costs | ||
Interest expense | 0 | 0 |
Interest expense, net | ||
Operating Lease Costs | ||
Rent expense associated with triple net leases classified as operating leases | 0 | 0 |
Operating lease cost | 0 | 0 |
Short-term lease cost | 0 | 0 |
Variable lease cost | 0 | 0 |
Total | 0 | 0 |
Finance Lease Costs | ||
Interest expense | 3.8 | 11.5 |
Amortization expense | 0 | 0 |
Total | 3.8 | 11.5 |
Financing Obligation Costs | ||
Interest expense | 97.6 | 293.6 |
Depreciation and amortization | ||
Operating Lease Costs | ||
Rent expense associated with triple net leases classified as operating leases | 0 | 0 |
Operating lease cost | 0 | 0 |
Short-term lease cost | 0 | 0 |
Variable lease cost | 0 | 0 |
Total | 0 | 0 |
Finance Lease Costs | ||
Interest expense | 0 | 0 |
Amortization expense | 2 | 5.9 |
Total | 2 | 5.9 |
Financing Obligation Costs | ||
Interest expense | $ 0 | $ 0 |
Leases - Future Minimum Lease C
Leases - Future Minimum Lease Commitments (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Operating Leases | |||
2019 (excluding the nine months ended September 30, 2019) | $ 106.7 | ||
2020 | 420.1 | ||
2021 | 399.9 | ||
2022 | 396.9 | ||
2023 | 393.7 | ||
Thereafter | 8,457 | ||
Total lease payments | 10,174.3 | ||
Less: Imputed interest | (5,610.8) | ||
Present value of future lease payments | 4,563.5 | ||
Less: Current portion of lease obligations | (124.4) | $ (102.3) | $ 0 |
Long-term portion of lease obligations | 4,439.1 | 3,704.4 | 0 |
Finance Leases | |||
2019 (excluding the nine months ended September 30, 2019) | 5.4 | ||
2020 | 21.4 | ||
2021 | 21.4 | ||
2022 | 21.4 | ||
2023 | 20.5 | ||
Thereafter | 403.8 | ||
Total lease payments | 493.9 | ||
Less: Imputed interest | (269.8) | ||
Present value of future lease payments | 224.1 | ||
Less: Current portion of lease obligations | (6.3) | (5.8) | 0 |
Long-term portion of lease obligations | 217.8 | 218.3 | 0 |
Financing Obligations | |||
2019 (excluding the nine months ended September 30, 2019) | 97.4 | ||
2020 | 374.7 | ||
2021 | 367.3 | ||
2022 | 367.3 | ||
2023 | 367.3 | ||
Thereafter | 9,638 | ||
Total lease payments | 11,212 | ||
Less: Imputed interest | (7,055.9) | ||
Present value of future lease payments | 4,156.1 | ||
Less: Current portion of lease obligations | (45.3) | (50.1) | (67.8) |
Long-term portion of lease obligations | $ 4,110.8 | $ 4,144.2 | $ 7,080.6 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from finance leases | $ 11.5 | |
Operating cash flows from operating leases | 296 | |
Financing cash flows from finance leases | $ 4.6 | $ 0 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | Apr. 28, 2016facilityextension_period | Nov. 01, 2013facilityextension_period | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) |
Schedule of Leased Assets [Line Items] | ||||||
Additional ROU asset and corresponding lease liability recognized | $ 713.3 | $ 0 | ||||
Variable expenses | $ 1 | 2.8 | ||||
Lease payments | 222.6 | $ 115.2 | 645.4 | 347 | ||
Lease income | 85.3 | 236.9 | ||||
General and administrative expense | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Variable expenses | 0.2 | 0.8 | ||||
Interest expense | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Variable expenses | 0 | 0 | ||||
Penn Master Lease | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Number of facilities with leased real estate | facility | 19 | |||||
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% | |||||
Percentage rent baseline period | 5 years | |||||
Variable expenses | 4.4 | 11.8 | 29.5 | 36.8 | ||
Penn Master Lease | Greektown Casino-Hotel | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Additional ROU asset and corresponding lease liability recognized | 151.2 | |||||
Penn Master Lease | General and administrative expense | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Variable expenses | 2.3 | 0 | 15.4 | 0 | ||
Penn Master Lease | Interest expense | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Variable expenses | $ 2.1 | $ 11.8 | $ 14.1 | $ 36.8 | ||
Pinnacle Master Lease | ||||||
Schedule of Leased Assets [Line Items] | ||||||
Number of facilities with leased real estate | facility | 12 | |||||
Number of options to extend lease | 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 | |||||
Initial lease term | 10 years | |||||
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% | |||||
Percentage rent baseline period | 2 years |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ / shares in Units, $ in Millions | May 23, 2019USD ($)renewal_option | Jan. 01, 2019USD ($)renewal_option | Oct. 15, 2018USD ($)$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) |
Business Acquisition [Line Items] | |||||
Proceeds from sale-and-leaseback transactions in conjunction with acquisitions | $ 961.1 | $ 0 | |||
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 | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 320.3 | ||||
Proceeds from sale-and-leaseback transactions in conjunction with acquisitions | 700 | ||||
Annual rent | $ 55.6 | ||||
Lease term | 15 years | ||||
Number of lease renewal options | renewal_option | 4 | ||||
Lease renewal term | 5 years | ||||
Assigned useful life of amortizing intangible asset acquired | 2 years |
Acquisitions - Allocation of Pu
Acquisitions - Allocation of Purchase Price and Adjustments (Details) - USD ($) $ in Millions | 4 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2019 | May 23, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | Oct. 15, 2018 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 1,350.4 | $ 1,350.4 | $ 1,233.9 | $ 1,228.4 | ||
Greektown Casino-Hotel | ||||||
Business Acquisition [Line Items] | ||||||
Cash and cash equivalents | 31.1 | 31.1 | $ 31.1 | |||
Receivables, prepaid expenses, and other current assets | 14.5 | 14.5 | 15.6 | |||
Property and equipment | 32.3 | 32.3 | 32.3 | |||
Goodwill | 62.8 | 62.8 | 61.7 | |||
Customer relationships | 3.3 | 3.3 | 3.3 | |||
Operating lease right-of-use assets | 516.1 | 516.1 | 516.1 | |||
Finance lease right-of-use assets | 4.2 | 4.2 | 4.2 | |||
Other assets | 0.2 | 0.2 | 0.2 | |||
Total assets | 855.3 | 855.3 | 855.3 | |||
Accounts payable, accrued expenses and other current liabilities | 14.8 | 14.8 | 14.8 | |||
Operating lease liabilities | 516 | 516 | 516 | |||
Finance lease liabilities | 4.2 | 4.2 | 4.2 | |||
Total liabilities | 535 | 535 | 535 | |||
Net assets acquired | 320.3 | 320.3 | 320.3 | |||
Goodwill deductible for tax purposes | 62.8 | |||||
Measurement period adjustments | ||||||
Receivables, prepaid expenses, and other current assets | (1.1) | |||||
Goodwill | 1.1 | |||||
Greektown Casino-Hotel | Gaming licenses | ||||||
Business Acquisition [Line Items] | ||||||
Indefinite-lived intangible assets | 166.4 | 166.4 | 166.4 | |||
Greektown Casino-Hotel | Trade name | ||||||
Business Acquisition [Line Items] | ||||||
Indefinite-lived intangible assets | 24.4 | 24.4 | $ 24.4 | |||
Margaritaville Resort Casino | ||||||
Business Acquisition [Line Items] | ||||||
Cash and cash equivalents | 10.7 | 10.7 | 10.7 | |||
Receivables, prepaid expenses, and other current assets | 7.1 | 7.1 | 7.1 | |||
Property and equipment | 20.7 | 20.7 | 21.7 | |||
Goodwill | 40.5 | 40.5 | 39.5 | |||
Operating lease right-of-use assets | 196.2 | 196.2 | 196.2 | |||
Total assets | 325.6 | 325.6 | 325.6 | |||
Accounts payable, accrued expenses and other current liabilities | 9.5 | 9.5 | 9.5 | |||
Operating lease liabilities | 196.2 | 196.2 | 196.2 | |||
Total liabilities | 205.7 | 205.7 | 205.7 | |||
Net assets acquired | 119.9 | 119.9 | 119.9 | |||
Goodwill deductible for tax purposes | 40.5 | |||||
Measurement period adjustments | ||||||
Property and equipment | (1) | |||||
Goodwill | 1 | |||||
Margaritaville Resort Casino | Customer relationships | ||||||
Business Acquisition [Line Items] | ||||||
Customer relationships | 2.3 | 2.3 | 2.3 | |||
Margaritaville Resort Casino | Gaming licenses | ||||||
Business Acquisition [Line Items] | ||||||
Indefinite-lived intangible assets | 48.1 | 48.1 | $ 48.1 | |||
Pinnacle | ||||||
Business Acquisition [Line Items] | ||||||
Cash and restricted cash | 124.2 | 124.2 | $ 124.2 | |||
Assets held for sale | 667.5 | 667.5 | 667 | |||
Other current assets | 81.1 | 81.1 | 80.6 | |||
Goodwill | 238.2 | 238.2 | 219.5 | |||
Customer relationships | 22.4 | 22.4 | 22.4 | |||
Other assets | 38.9 | 38.9 | 38.9 | |||
Total assets | 6,811.4 | 6,811.4 | 6,799.6 | |||
Long-term financing obligation, including current portion | 3,432.5 | 3,432.5 | 3,427 | |||
Other current liabilities | 206.1 | 206.1 | 200.6 | |||
Deferred tax liabilities | 340 | 340 | 339.2 | |||
Other long-term liabilities | 16.6 | 16.6 | 16.6 | |||
Total liabilities | 3,995.2 | 3,995.2 | 3,983.4 | |||
Net assets acquired | 2,816.2 | 2,816.2 | 2,816.2 | |||
Measurement period adjustments | ||||||
Receivables, prepaid expenses, and other current assets | 0.5 | |||||
Assets held for sale | 0.5 | |||||
Goodwill | 18.7 | |||||
Total assets | 11.8 | |||||
Long-term financing obligation, including current portion | 5.5 | |||||
Other current liabilities | 5.5 | |||||
Deferred tax liabilities | 0.8 | |||||
Total liabilities | 11.8 | |||||
Pinnacle | Gaming licenses | ||||||
Business Acquisition [Line Items] | ||||||
Indefinite-lived intangible assets | 1,067.6 | 1,067.6 | 1,046 | |||
Measurement period adjustments | ||||||
Indefinite-lived intangible assets | 21.6 | |||||
Pinnacle | Trademarks | ||||||
Business Acquisition [Line Items] | ||||||
Indefinite-lived intangible assets | 298 | 298 | 298 | |||
Property and equipment - non-Master Leases | Pinnacle | ||||||
Business Acquisition [Line Items] | ||||||
Property and equipment | 318.6 | 318.6 | 318.9 | |||
Measurement period adjustments | ||||||
Property and equipment | (0.3) | |||||
Property and equipment - Master Leases | Pinnacle | ||||||
Business Acquisition [Line Items] | ||||||
Property and equipment | $ 3,954.9 | 3,954.9 | $ 3,984.1 | |||
Measurement period adjustments | ||||||
Property and equipment | $ (29.2) |
Acquisitions - Actual and Pro F
Acquisitions - Actual and Pro Forma Financial Results (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Pro forma financial results | ||||
Revenues | $ 1,354.5 | $ 1,391.7 | $ 4,093.8 | $ 4,240.7 |
Net income attributable to Penn | 46.1 | $ 36.1 | 157.3 | $ 153.2 |
Greektown Casino-Hotel | ||||
Actual financial results of acquiree since acquisition date | ||||
Revenues | 78.2 | 112.4 | ||
Net income | 3.9 | 4.8 | ||
Margaritaville Resort Casino | ||||
Actual financial results of acquiree since acquisition date | ||||
Revenues | 39.6 | 120.7 | ||
Net income | $ 2.6 | $ 10.8 |
Property and Equipment - Proper
Property and Equipment - Property and Equipment, Net (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, net | $ 5,155.2 | $ 5,297.1 | $ 6,868.8 |
Operating Leases - Master Leases | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, net | (1,407.4) | ||
Finance Leases - Dayton and Mahoning Valley | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, net | (164.3) | ||
Property and equipment - non-Master Leases | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 2,585.9 | 2,431.2 | |
Less: Accumulated depreciation | (1,524.8) | (1,400.2) | |
Property and equipment, net | 1,061.1 | 1,031 | |
Land and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 353.3 | 344 | |
Building, vessels and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 410.7 | 343 | |
Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,585.2 | 1,565.8 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 178.4 | 152.9 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 58.3 | 25.5 | |
Property and equipment - Master Leases | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 5,185 | 6,816 | |
Less: Accumulated depreciation | (1,090.9) | (978.2) | |
Property and equipment, net | 4,094.1 | 5,837.8 | |
Land and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,525.9 | 2,971 | |
Land and improvements | Operating Leases - Master Leases | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | (1,400) | ||
Building, vessels and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 3,659.1 | $ 3,845 | |
Building, vessels and improvements | Finance Leases - Dayton and Mahoning Valley | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ (180.4) |
Property and Equipment - Deprec
Property and Equipment - Depreciation Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 97.9 | $ 53.6 | $ 291.8 | $ 163.9 |
Property and equipment - Master Leases | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation expense | $ 26.5 | $ 22.7 | $ 119.4 | $ 68.9 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Goodwill and Accumulated Goodwill Impairment Losses (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | $ 2,510.2 |
Accumulated goodwill impairment losses, beginning balance | (1,281.8) |
Goodwill, net, beginning balance | 1,228.4 |
Goodwill acquired during year | 103.3 |
Other | 18.7 |
Goodwill, gross, ending balance | 2,632.2 |
Accumulated goodwill impairment losses, ending balance | (1,281.8) |
Goodwill, net, ending balance | 1,350.4 |
Operating segments | Northeast segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 848.4 |
Accumulated goodwill impairment losses, beginning balance | (707.6) |
Goodwill, net, beginning balance | 140.8 |
Goodwill acquired during year | 62.8 |
Other | (1.5) |
Goodwill, gross, ending balance | 909.7 |
Accumulated goodwill impairment losses, ending balance | (707.6) |
Goodwill, net, ending balance | 202.1 |
Operating segments | South segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 185.2 |
Accumulated goodwill impairment losses, beginning balance | (34.6) |
Goodwill, net, beginning balance | 150.6 |
Goodwill acquired during year | 40.5 |
Other | 7.2 |
Goodwill, gross, ending balance | 232.9 |
Accumulated goodwill impairment losses, ending balance | (34.6) |
Goodwill, net, ending balance | 198.3 |
Operating segments | West segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 210.4 |
Accumulated goodwill impairment losses, beginning balance | (16.6) |
Goodwill, net, beginning balance | 193.8 |
Goodwill acquired during year | 0 |
Other | 6.4 |
Goodwill, gross, ending balance | 216.8 |
Accumulated goodwill impairment losses, ending balance | (16.6) |
Goodwill, net, ending balance | 200.2 |
Operating segments | Midwest segment | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 1,110.1 |
Accumulated goodwill impairment losses, beginning balance | (435.3) |
Goodwill, net, beginning balance | 674.8 |
Goodwill acquired during year | 0 |
Other | 6.6 |
Goodwill, gross, ending balance | 1,116.7 |
Accumulated goodwill impairment losses, ending balance | (435.3) |
Goodwill, net, ending balance | 681.4 |
Other | |
Goodwill [Roll Forward] | |
Goodwill, gross, beginning balance | 156.1 |
Accumulated goodwill impairment losses, beginning balance | (87.7) |
Goodwill, net, beginning balance | 68.4 |
Goodwill acquired during year | 0 |
Other | 0 |
Goodwill, gross, ending balance | 156.1 |
Accumulated goodwill impairment losses, ending balance | (87.7) |
Goodwill, net, ending balance | $ 68.4 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, accumulated amortization | $ (119.5) | $ (100.8) |
Amortizing intangible assets, net carrying amount | 46.8 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Total other intangible assets, gross carrying amount | 2,224 | 1,957.7 |
Total other intangible assets, net carrying amount | 2,104.5 | 1,856.9 |
Gaming licenses | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 1,734.6 | 1,498.3 |
Trademarks | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 322.4 | 298 |
Other | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 0.7 | 0.7 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, gross carrying amount | 104.3 | 98.8 |
Amortizing intangible assets, accumulated amortization | (64.6) | (51.5) |
Amortizing intangible assets, net carrying amount | 39.7 | 47.3 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortizing intangible assets, gross carrying amount | 62 | 61.9 |
Amortizing intangible assets, accumulated amortization | (54.9) | (49.3) |
Amortizing intangible assets, net carrying amount | $ 7.1 | $ 12.6 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Expected Intangible Asset Amortization Expense (Details) $ in Millions | Sep. 30, 2019USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2019 | $ 5.9 |
2020 | 19.5 |
2021 | 5.6 |
2022 | 3.8 |
2023 | 3.6 |
Thereafter | 8.4 |
Amortizing intangible assets, net carrying amount | $ 46.8 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Impairment charges on other intangible assets | $ 0 | $ 0 | $ 0 | $ 0 |
Intangible asset amortization expense | $ 6,400,000 | $ 3,300,000 | $ 18,700,000 | $ 11,900,000 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Payables and Accruals [Abstract] | |||
Accrued salaries and wages | $ 125.3 | $ 139.2 | |
Accrued gaming, pari-mutuel, property, and other taxes | 117.6 | 105.8 | |
Accrued interest | 5.8 | 15.8 | |
Other accrued expenses (1) | 218 | 204.6 | |
Other current liabilities (2) | 132.2 | 112.6 | |
Accrued expenses and other current liabilities | 598.9 | $ 577.5 | 578 |
Deferred compensation liability, current | $ 74.1 | $ 64.1 |
Long-term Debt - Debt Summary (
Long-term Debt - Debt Summary (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Jan. 19, 2017 |
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,490.6 | $ 2,453.4 | |
Less: Current maturities of long-term debt | (62.9) | (62.1) | |
Less: Debt discount | (2.5) | (2.8) | |
Less: Debt issuance costs | (33.2) | (38.4) | |
Long-term debt, net of current maturities and debt issuance costs | $ 2,392 | 2,350.1 | |
Interest rate | 5.625% | ||
Secured credit facility | Revolving Credit Facility due 2023 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 200 | 112 | |
Secured credit facility | Term Loan A Facility due 2023 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 681.1 | 707.7 | |
Secured credit facility | Term Loan B-1 Facility due 2025 | |||
Debt Instrument [Line Items] | |||
Long-term debt | 1,120.3 | 1,128.7 | |
Senior notes | 5.625% Notes due 2027 | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 400 | 400 | |
Interest rate | 5.625% | 5.625% | |
Other long-term obligations | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 89.2 | 104.6 | |
Capital leases | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 0.4 |
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 | Sep. 30, 2018 | Sep. 30, 2018 | Sep. 30, 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 | $ 30,000,000 | ||||
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 | $ 300,000 | $ 3,800,000 | |||
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 - Interest Expen
Long-term Debt - Interest Expense, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Debt Disclosure [Abstract] | ||||
Interest expense | $ (134.2) | $ (114.8) | $ (401.8) | $ (346.4) |
Interest income | 0.6 | 0.2 | 1.2 | 0.7 |
Capitalized interest | 0.1 | 0 | 0.1 | 0 |
Interest expense, net | $ (133.5) | $ (114.6) | $ (400.5) | $ (345.7) |
Long-term Debt - Other Long-ter
Long-term Debt - Other Long-term Obligations (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2014USD ($)payment | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Dec. 31, 2018USD ($) | |
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 2,490.6 | $ 2,490.6 | $ 2,453.4 | |||
Other long-term obligations | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 89.2 | 89.2 | 104.6 | |||
Other long-term obligations | Ohio relocation fees debt | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | 76.4 | 76.4 | $ 91.3 | |||
Amount payable upon opening of the facility | $ 7.5 | |||||
Number of semi-annual payments | payment | 18 | |||||
Amount of semi-annual payments due beginning one year from commencement of operations | $ 4.8 | |||||
Effective yield | 5.00% | |||||
Interest expense | $ 1 | $ 1.2 | $ 3.2 | $ 3.7 |
Investments in and Advances t_3
Investments in and Advances to Unconsolidated Affiliates (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Summary financial information | |||||
Net income attributable to Penn | $ 9.8 | $ 5.7 | $ 21.7 | $ 16.8 | |
Kansas Entertainment | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership interest | 50.00% | 50.00% | |||
Investment balance | $ 90.6 | $ 90.6 | $ 89.4 | ||
Summary financial information | |||||
Revenues | 40.6 | 39.8 | 120.2 | 119.3 | |
Operating expenses | 19.6 | 27.4 | 73.8 | 83 | |
Operating income | 21 | 12.4 | 46.4 | 36.3 | |
Net income | 21 | 12.4 | 46.4 | 36.3 | |
Net income attributable to Penn | $ 10.5 | $ 6.2 | $ 23.2 | $ 18.1 | |
Freehold Raceway | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership interest | 50.00% | 50.00% | |||
MAXXAM | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership interest | 50.00% | 50.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jan. 01, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | ||||||
Effective tax rate | 31.00% | 20.10% | 28.00% | 22.80% | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Retained earnings (accumulated deficit) | $ 254.1 | $ 254.1 | $ 117.7 | $ (968) | ||
Pinnacle | ||||||
Business Acquisition [Line Items] | ||||||
Increase in deferred tax liabilities, acquisition | $ 0.8 | |||||
ASC 842 - Master Lease deferred tax adjustment | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Deferred tax assets, net | (80.6) | |||||
Deferred tax liabilities, net | 223.2 | |||||
Retained earnings (accumulated deficit) | $ (303.8) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | Feb. 14, 2019shares | Sep. 30, 2019USD ($)shares | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)performance_period$ / sharesshares | Sep. 30, 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 | ||||||
Repurchases of common stock (in shares) | shares | 1,271,823 | ||||||
Repurchases of common stock | $ 24,900,000 | ||||||
Repurchases of common stock, average price (in dollars per share) | $ / shares | $ 19.55 | ||||||
Stock options granted (in shares) | shares | 2,353,599 | 663,343 | |||||
Stock-based compensation expense (reduction to expense) | $ 3,700,000 | $ 2,900,000 | $ 10,400,000 | $ 8,800,000 | |||
Phantom share units (PSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Stock-based compensation expense (reduction to expense) | 500,000 | 700,000 | 2,100,000 | 2,200,000 | |||
Liability for cash-settled awards | 1,300,000 | 1,300,000 | $ 1,700,000 | ||||
Unrecognized compensation cost, other awards | 3,100,000 | $ 3,100,000 | |||||
Unamortized compensation costs, weighted average period of recognition | 1 year 10 months 6 days | ||||||
Amounts paid on cash-settled awards | $ 2,500,000 | 4,200,000 | |||||
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) | (500,000) | $ 1,100,000 | $ 2,000,000 | 6,900,000 | |||
Vesting period | 4 years | ||||||
Liability for cash-settled awards | 6,600,000 | $ 6,600,000 | $ 6,800,000 | ||||
Unrecognized compensation cost, other awards | $ 5,500,000 | $ 5,500,000 | |||||
Unamortized compensation costs, weighted average period of recognition | 2 years 7 months 13 days | ||||||
Amounts paid on cash-settled awards | $ 2,200,000 | $ 9,800,000 | |||||
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 | 8,442,068 | 8,442,068 | |||||
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 | 1 year | ||||||
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 Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Determination of shares: | ||||
Weighted average common shares outstanding (in shares) | 115,200,000 | 91,900,000 | 115,800,000 | 91,500,000 |
Diluted weighted average common shares outstanding (in shares) | 116,700,000 | 95,300,000 | 117,700,000 | 95,000,000 |
Anti-dilutive securities, stock options (in shares) | 2,519,816 | 660,436 | 2,139,874 | 655,952 |
Calculation of basic EPS: | ||||
Net income applicable to common stock | $ 43.9 | $ 36.1 | $ 136.4 | $ 135.5 |
Weighted average common shares outstanding (in shares) | 115,200,000 | 91,900,000 | 115,800,000 | 91,500,000 |
Basic EPS (in dollars per share) | $ 0.38 | $ 0.39 | $ 1.18 | $ 1.48 |
Calculation of diluted EPS using two class method: | ||||
Net income applicable to common stock | $ 43.9 | $ 36.1 | $ 136.4 | $ 135.5 |
Diluted weighted average common shares outstanding (in shares) | 116,700,000 | 95,300,000 | 117,700,000 | 95,000,000 |
Diluted EPS (in dollars per share) | $ 0.38 | $ 0.38 | $ 1.16 | $ 1.43 |
Stock options | ||||
Determination of shares: | ||||
Assumed conversion of dilutive employee stock-based awards and restricted stock (in shares) | 1,400,000 | 3,200,000 | 1,700,000 | 3,300,000 |
Restricted stock | ||||
Determination of shares: | ||||
Assumed conversion of dilutive employee stock-based awards and restricted stock (in shares) | 100,000 | 200,000 | 200,000 | 200,000 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amounts and Estimated Fair Values by Input Level (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 | Jan. 19, 2017 |
Financial assets: | |||
Equity securities | $ 28.3 | ||
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 | $ 406.9 | $ 479.6 | |
Equity securities | 28.3 | ||
Held-to-maturity securities | 7.5 | 7.5 | |
Promissory notes | 16.9 | 16.9 | |
Financial liabilities: | |||
Other liabilities | 20.3 | 21.9 | |
Carrying Amount | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 1,966.3 | 1,907.9 | |
Carrying Amount | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 399.4 | 399.3 | |
Carrying Amount | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | 89.2 | 104.6 | |
Fair Value | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 406.9 | 479.6 | |
Equity securities | 28.3 | ||
Held-to-maturity securities | 7.8 | 7.9 | |
Promissory notes | 17.3 | 17.4 | |
Financial liabilities: | |||
Other liabilities | 20.3 | 21.8 | |
Fair Value | Recurring | Secured credit facility | |||
Financial liabilities: | |||
Long-term debt | 2,000.5 | 1,886.3 | |
Fair Value | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 411 | 360 | |
Fair Value | Recurring | Other long-term obligations | |||
Financial liabilities: | |||
Long-term debt | 82.5 | 96.3 | |
Level 1 | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 406.9 | 479.6 | |
Equity securities | 0 | ||
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 | 2,000.5 | 1,886.3 | |
Level 1 | Recurring | Senior notes | 5.625% Notes | |||
Financial liabilities: | |||
Long-term debt | 411 | 360 | |
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 | |
Equity securities | 28.3 | ||
Held-to-maturity securities | 7.8 | 7.9 | |
Promissory notes | 17.3 | 17.4 | |
Financial liabilities: | |||
Other liabilities | 2.8 | 2.8 | |
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 | 82.5 | 96.3 | |
Level 3 | Recurring | |||
Financial assets: | |||
Cash and cash equivalents | 0 | 0 | |
Equity securities | 0 | ||
Held-to-maturity securities | 0 | 0 | |
Promissory notes | 0 | 0 | |
Financial liabilities: | |||
Other liabilities | 17.5 | 19 | |
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 Millions | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Contingent Consideration | |
Balance | $ 19 |
Payments | (8.5) |
Included in earnings | 7 |
Balance | $ 17.5 |
Fair Value Measurements - Signi
Fair Value Measurements - Significant Unobservable Inputs For Level 3 Assets and Liabilities (Details) | Sep. 30, 2019 |
Plainridge Park Casino | Discounted cash flow | Level 3 | Discount rate | |
Recurring basis: | |
Contingent consideration, measurement input | 0.0633 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Millions | 9 Months Ended | ||
Sep. 30, 2019USD ($)payment | Dec. 31, 2018USD ($)payment | Jan. 19, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Equity securities | $ 28.3 | ||
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 | 6 | 7 | |
Absolute Bingo | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Period of actual earnings used to calculate contingent consideration | 2 years | ||
Number of remaining annual payments | payment | 1 | ||
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 | $ 7.5 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($)segment | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | Jan. 01, 2019USD ($) | |
Segment Reporting Information [Line Items] | ||||||
Number of reportable segments | segment | 4 | |||||
Revenues: | ||||||
Total | $ 1,354.5 | $ 789.7 | $ 3,960.2 | $ 2,432.6 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | 407.9 | 229.7 | 1,205.8 | 719.3 | ||
Rent expense associated with triple net operating lease | (96.3) | 0 | (271) | 0 | ||
Stock-based compensation | (3.7) | (2.9) | (10.4) | (8.8) | ||
Cash-settled stock-based awards variance | 3.4 | 1.7 | 6.4 | 1.3 | ||
Loss on disposal of assets | (7.4) | (3.2) | (8.3) | (3.2) | ||
Contingent purchase price | (1.2) | (0.4) | (7) | (1.7) | ||
Pre-opening and acquisition costs | (7.4) | (5.2) | (15.5) | (17.2) | ||
Depreciation and amortization | (106.3) | (56.9) | (316.4) | (175.8) | ||
Recoveries on loan loss and unfunded loan commitments, net of impairment losses | 0 | 0 | 0 | 16.4 | ||
Insurance recoveries, net of deductible charges | 1.5 | 0 | 1.5 | 0.1 | ||
Non-operating items for Kansas JV | (0.9) | (1.3) | (2.8) | (3.9) | ||
Interest expense, net | (133.5) | (114.6) | (400.5) | (345.7) | ||
Loss on early extinguishment of debt | 0 | (0.3) | 0 | (3.8) | ||
Other | 7.2 | (1.4) | 7.2 | (1.5) | ||
Income before income taxes | 63.3 | 45.2 | 189 | 175.5 | ||
Income tax expense | (19.6) | (9.1) | (53) | (40) | ||
Net income | 43.7 | 36.1 | 136 | 135.5 | ||
Capital expenditures: | ||||||
Capital expenditures | 41.7 | 24 | 136.7 | 57 | ||
Assets: | ||||||
Investment in and advances to unconsolidated affiliates | 128.5 | $ 128.5 | 128.5 | |||
Total assets | 14,318 | $ 10,961 | 14,318 | $ 13,424.8 | ||
South/West segment | ||||||
Segment Reporting Information [Line Items] | ||||||
Number of new reportable segments from division of segment | segment | 2 | |||||
Operating segments | Northeast segment | ||||||
Revenues: | ||||||
Total | 628.9 | 441.4 | 1,778.6 | 1,365.4 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | 189.1 | 141.3 | 540.1 | 434.6 | ||
Capital expenditures: | ||||||
Capital expenditures | 22.8 | 11 | 67.3 | 23.7 | ||
Assets: | ||||||
Investment in and advances to unconsolidated affiliates | 0.1 | $ 0.1 | 0.1 | |||
Total assets | 2,298.9 | 1,330.2 | 2,298.9 | |||
Operating segments | South segment | ||||||
Revenues: | ||||||
Total | 276.6 | 60.4 | 850.7 | 186.4 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | 89 | 17.1 | 279.6 | 58.8 | ||
Capital expenditures: | ||||||
Capital expenditures | 5 | 2.3 | 21.5 | 5.8 | ||
Assets: | ||||||
Investment in and advances to unconsolidated affiliates | 0 | 0 | 0 | |||
Total assets | 1,423.8 | 1,082.3 | 1,423.8 | |||
Operating segments | West segment | ||||||
Revenues: | ||||||
Total | 161.5 | 92.6 | 484.4 | 291.2 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | 50.6 | 21.8 | 151 | 71.8 | ||
Capital expenditures: | ||||||
Capital expenditures | 3.7 | 2.4 | 17.8 | 7.6 | ||
Assets: | ||||||
Investment in and advances to unconsolidated affiliates | 0 | 0 | 0 | |||
Total assets | 750.5 | 755.7 | 750.5 | |||
Operating segments | Midwest segment | ||||||
Revenues: | ||||||
Total | 275.8 | 185.4 | 815.3 | 559 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | 104.3 | 65.4 | 301.3 | 201.1 | ||
Capital expenditures: | ||||||
Capital expenditures | 6.2 | 7.4 | 22.6 | 15.6 | ||
Assets: | ||||||
Investment in and advances to unconsolidated affiliates | 90.6 | 89.4 | 90.6 | |||
Total assets | 1,475.9 | 1,411.5 | 1,475.9 | |||
Other | ||||||
Revenues: | ||||||
Total | 12.4 | 9.9 | 31.9 | 30.6 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | (25) | (15.9) | (66.1) | (47) | ||
Capital expenditures: | ||||||
Capital expenditures | 4 | 0.9 | 7.5 | 4.3 | ||
Assets: | ||||||
Investment in and advances to unconsolidated affiliates | 37.8 | 39 | 37.8 | |||
Total assets | 8,368.9 | $ 6,381.3 | 8,368.9 | |||
Intersegment eliminations | ||||||
Revenues: | ||||||
Total | (0.7) | 0 | (0.7) | 0 | ||
Adjusted EBITDAR: | ||||||
Adjusted EBITDAR | $ (0.1) | $ 0 | $ (0.1) | $ 0 |
Uncategorized Items - penn09302
Label | Element | Value |
Restricted Cash and Cash Equivalents, Current | us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue | $ 0 |
Restricted Cash and Cash Equivalents, Current | us-gaap_RestrictedCashAndCashEquivalentsAtCarryingValue | 15,600,000 |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | 700,000 |
Restricted Cash and Cash Equivalents, Noncurrent | us-gaap_RestrictedCashAndCashEquivalentsNoncurrent | 1,900,000 |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,600,000) |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,600,000) |
Accounting Standards Update 2014-09 [Member] | Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (9,600,000) |
Accounting Standards Update 2016-02 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 1,085,700,000 |
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 1,085,700,000 |
Accounting Standards Update 2016-02 [Member] | Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 1,085,700,000 |