Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Jul. 27, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | PENN NATIONAL GAMING INC | |
Entity Central Index Key | 921,738 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 80,185,538 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash and cash equivalents | $ 233,118 | $ 208,673 |
Receivables, net of allowance for doubtful accounts of $2,071 and $2,004 at June 30, 2015 and December 31, 2014, respectively | 45,135 | 41,618 |
Prepaid expenses | 62,185 | 68,947 |
Deferred income taxes | 50,751 | 55,579 |
Other current assets | 15,452 | 11,189 |
Total current assets | 406,641 | 386,006 |
Property and equipment, net | 835,462 | 769,145 |
Other assets | ||
Investment in and advances to unconsolidated affiliates | 173,726 | 179,551 |
Goodwill | 274,764 | 277,582 |
Other intangible assets, net | 370,820 | 370,562 |
Deferred Income taxes | 76,135 | 79,067 |
Advances to the Jamul Tribe | 108,142 | 62,048 |
Other assets | 79,358 | 87,318 |
Total other assets | 1,082,945 | 1,056,128 |
Total assets | 2,325,048 | 2,211,279 |
Current liabilities | ||
Current maturities of long-term debt | 44,015 | 30,853 |
Accounts payable | 73,393 | 43,136 |
Accrued expenses | 136,681 | 130,818 |
Accrued interest | 8,781 | 5,163 |
Accrued salaries and wages | 86,069 | 84,034 |
Gaming, pari-mutuel, property, and other taxes | 62,965 | 52,132 |
Insurance financing | 6,092 | 13,680 |
Other current liabilities | 73,528 | 75,703 |
Total current liabilities | 491,524 | 435,519 |
Long-term liabilities | ||
Long-term debt, net of current maturities and debt issuance costs | 1,216,908 | 1,204,828 |
Noncurrent tax liabilities | 9,935 | 8,188 |
Other noncurrent liabilities | 7,460 | 8,258 |
Total long-term liabilities | $ 1,234,303 | $ 1,221,274 |
Shareholders' equity | ||
Series C Preferred stock ($.01 par value, 18,500 shares authorized, 8,624 shares issued at June 30, 2015 and December 31, 2014) | ||
Common stock ($.01 par value, 200,000,000 shares authorized, 80,115,538 and 79,161,817 shares issued at June 30, 2015 and December 31, 2014, respectively) | $ 795 | $ 786 |
Additional paid-in capital | 936,391 | 918,370 |
Retained deficit | (335,506) | (363,388) |
Accumulated other comprehensive loss | (2,459) | (1,282) |
Total shareholders' equity | 599,221 | 554,486 |
Total liabilities and shareholders' equity | $ 2,325,048 | $ 2,211,279 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Receivables, net of allowance for doubtful accounts (in dollars) | $ 2,071 | $ 2,004 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 80,115,538 | 79,161,817 |
Series C Preferred Stock | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 18,500 | 18,500 |
Preferred stock, shares issued | 8,624 | 8,624 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||||
Gaming | $ 618,919 | $ 576,158 | $ 1,210,255 | $ 1,146,841 |
Food, beverage and other | 117,421 | 110,574 | 226,184 | 215,444 |
Management service fee | 2,816 | 3,105 | 4,743 | 5,563 |
Revenues | 739,156 | 689,837 | 1,441,182 | 1,367,848 |
Less promotional allowances | (38,200) | (37,691) | (76,088) | (74,622) |
Net revenues | 700,956 | 652,146 | 1,365,094 | 1,293,226 |
Operating expenses | ||||
Gaming | 313,616 | 284,107 | 608,511 | 570,184 |
Food, beverage and other | 82,803 | 80,403 | 160,732 | 157,941 |
General and administrative | 118,572 | 107,898 | 234,641 | 215,637 |
Rental expense related to Master Lease | 109,519 | 104,613 | 218,364 | 208,922 |
Depreciation and amortization | 41,752 | 47,183 | 84,674 | 94,549 |
Impairment losses | 4,560 | 4,560 | ||
Total operating expenses | 666,262 | 628,764 | 1,306,922 | 1,251,793 |
Income from operations | 34,694 | 23,382 | 58,172 | 41,433 |
Other income (expenses) | ||||
Interest expense | (12,295) | (10,892) | (24,458) | (22,187) |
Interest income | 2,443 | 790 | 4,313 | 1,257 |
Income from unconsolidated affiliates | 4,154 | 1,473 | 8,136 | 3,956 |
Other | (956) | (1,823) | 2,133 | (192) |
Total other expenses | (6,654) | (10,452) | (9,876) | (17,166) |
Income from operations before income taxes | 28,040 | 12,930 | 48,296 | 24,267 |
Income tax provision | 11,154 | 8,754 | 20,414 | 15,554 |
Net income | $ 16,886 | $ 4,176 | $ 27,882 | $ 8,713 |
Earnings per common share: | ||||
Basic earnings per common share (in dollars per share) | $ 0.19 | $ 0.05 | $ 0.32 | $ 0.10 |
Diluted earnings per common share (in dollars per share) | $ 0.19 | $ 0.05 | $ 0.31 | $ 0.10 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 16,886 | $ 4,176 | $ 27,882 | $ 8,713 |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustment during the period | 539 | 619 | (1,177) | (81) |
Other comprehensive income (loss) | 539 | 619 | (1,177) | (81) |
Comprehensive income | $ 17,425 | $ 4,795 | $ 26,705 | $ 8,632 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands | Preferred Stock | Common Stock | Additional Paid-in Capital | Retained Deficit | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2013 | $ 775 | $ 887,556 | $ (130,314) | $ 383 | $ 758,400 | |
Balance (in shares) at Dec. 31, 2013 | 8,624 | 77,788,393 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Share-based compensation arrangements, net of tax benefits of $9,591 and $8,036 for the six months ended June 30, 2014 and 2015 respectively | $ 6 | 20,715 | 20,721 | |||
Share-based compensation arrangements (in shares) | 839,090 | |||||
Foreign currency translation adjustment | (81) | (81) | ||||
Net income | 8,713 | 8,713 | ||||
Balance at Jun. 30, 2014 | $ 781 | 908,271 | (121,601) | 302 | 787,753 | |
Balance (in shares) at Jun. 30, 2014 | 8,624 | 78,627,483 | ||||
Balance at Dec. 31, 2014 | $ 786 | 918,370 | (363,388) | (1,282) | 554,486 | |
Balance (in shares) at Dec. 31, 2014 | 8,624 | 79,161,817 | ||||
Increase (Decrease) in Shareholders' Equity | ||||||
Share-based compensation arrangements, net of tax benefits of $9,591 and $8,036 for the six months ended June 30, 2014 and 2015 respectively | $ 9 | 18,021 | 18,030 | |||
Share-based compensation arrangements (in shares) | 953,721 | |||||
Foreign currency translation adjustment | (1,177) | (1,177) | ||||
Net income | 27,882 | 27,882 | ||||
Balance at Jun. 30, 2015 | $ 795 | $ 936,391 | $ (335,506) | $ (2,459) | $ 599,221 | |
Balance (in shares) at Jun. 30, 2015 | 8,624 | 80,115,538 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Changes in Shareholders' Equity | ||
Share-based compensation arrangements, net of tax benefits | $ 8,036 | $ 9,591 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating activities | ||
Net income | $ 27,882 | $ 8,713 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 84,674 | 94,549 |
Amortization of items charged to interest expense | 3,008 | 3,022 |
Accretion of settlement values on long term obligations | 707 | |
Loss (gain) on sale of fixed assets | 388 | (47) |
Income from unconsolidated affiliates | (8,136) | (3,956) |
Distributions of earnings from unconsolidated affiliates | 14,000 | 11,000 |
Deferred income taxes | 8,805 | (7,401) |
Charge for stock-based compensation | 4,421 | 5,096 |
Impairment losses and writedowns | 7,860 | |
(Increase) decrease, net of businesses acquired | ||
Accounts receivable | (3,462) | (16,983) |
Prepaid expenses and other current assets | 2,537 | (5,749) |
Other assets | 5,750 | 4,303 |
Increase (decrease), net of businesses acquired | ||
Accounts payable | 6,633 | 24,115 |
Accrued expenses | 6,148 | (8,837) |
Accrued interest | 3,618 | (2,030) |
Accrued salaries and wages | 2,035 | (6,293) |
Gaming, pari-mutuel, property and other taxes | 10,833 | 4,009 |
Income taxes | 5,735 | 1,337 |
Other current and noncurrent liabilities | (2,973) | 3,467 |
Other noncurrent tax liabilities | 2,791 | 5,698 |
Net cash provided by operating activities | 175,394 | 121,873 |
Investing activities | ||
Capital project expenditures, net of reimbursements | (90,324) | (36,041) |
Capital maintenance expenditures | (30,165) | (44,273) |
Advances to the Jamul Tribe | (38,452) | (18,856) |
Proceeds from sale of property and equipment | 375 | 176 |
Investment in joint ventures | (328) | (1,000) |
(Increase) decrease in cash in escrow | (4,000) | 18,000 |
Acquisition of businesses and gaming and other licenses | (248) | (88,185) |
Net cash used in investing activities | (163,142) | (170,179) |
Financing activities | ||
Proceeds from exercise of options | 5,518 | 6,034 |
Proceeds from issuance of long-term debt, net of issuance costs | 60,000 | |
Principal payments on long-term debt | (53,773) | (13,866) |
Proceeds from insurance financing | 885 | 14,816 |
Payments on insurance financing | (8,473) | (9,965) |
Tax benefit from stock options exercised | 8,036 | 9,591 |
Net cash provided by financing activities | 12,193 | 6,610 |
Net increase (decrease) in cash and cash equivalents | 24,445 | (41,696) |
Cash and cash equivalents at beginning of year | 208,673 | 292,995 |
Cash and cash equivalents at end of period | 233,118 | 251,299 |
Supplemental disclosure | ||
Interest expense paid, net of amounts capitalized | 17,114 | 21,187 |
Income taxes paid | $ 432 | $ 3,030 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Parenthetical) $ in Millions | 1 Months Ended |
Jan. 31, 2015USD ($) | |
Condensed Consolidated Statements of Cash Flows | |
Increased property and equipment, net | $ 15.3 |
Increased total debt | $ 15.3 |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Organization and Basis of Presentation | |
Organization and Basis of Presentation | 1. Organization and Basis of Presentation Penn National Gaming, Inc. (“Penn”) and together with its subsidiaries (collectively, the “Company”) is a diversified, multi-jurisdictional owner and manager of gaming and pari-mutuel properties. As of June 30, 2015, the Company owned, managed, or had ownership interests in twenty-six facilities in the following seventeen jurisdictions: Florida, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Ohio, Pennsylvania, Texas, West Virginia and Ontario, Canada. The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. 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. The condensed consolidated financial statements include the accounts of Penn and its subsidiaries. Investment 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 (“VIE”), are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses for the reporting periods. Actual results could differ from those estimates. For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. The notes to the consolidated financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2014 should be read in conjunction with these condensed consolidated financial statements. The December 31, 2014 financial information has been derived from the Company’s audited consolidated financial statements. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Revenue Recognition and Promotional Allowances Gaming revenue consists mainly of slot and video lottery gaming machine revenue as well as to a lesser extent table game and poker revenue. Gaming revenue is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs, for “ticket-in, ticket-out” coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots. Progressive slot machines, which contain base jackpots that increase at a progressive rate based on the number of coins played, are charged to revenue as the amount of the jackpots increases. Table game revenue is the aggregate of table drop adjusted for the change in aggregate table chip inventory. Table drop is the total dollar amount of the currency, coins, chips, tokens and outstanding markers (credit instruments) that are removed from the live gaming tables. Food, beverage and other revenue, including racing revenue, is recognized as services are performed. Racing revenue includes the Company’s share of pari-mutuel wagering on live races after payment of amounts returned as winning wagers, its share of wagering from import and export simulcasting, and its share of wagering from its off-track wagering facilities. Revenue from the management service contract for Casino Rama is based upon contracted terms and is recognized when services are performed. Revenues are recognized net of certain sales incentives in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-50, “Revenue Recognition—Customer Payments and Incentives.” The Company records certain sales incentives and points earned in point-loyalty programs as a reduction of revenue. The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances. The estimated cost of providing such promotional allowances is primarily included in food, beverage and other expense. The amounts included in promotional allowances for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Rooms $ $ $ $ Food and beverage Other Total promotional allowances $ $ $ $ The estimated cost of providing such complimentary services for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Rooms $ $ $ $ Food and beverage Other Total cost of complimentary services $ $ $ $ Gaming and Racing Taxes The Company is subject to gaming and pari-mutuel taxes based on gross gaming revenue and pari-mutuel revenue in the jurisdictions in which it operates. The Company primarily recognizes gaming and pari-mutuel tax expense based on the statutorily required percentage of revenue that is required to be paid to state and local jurisdictions in the states where or in which wagering occurs. In certain states in which the Company operates, gaming taxes are based on graduated rates. The Company records gaming tax expense at the Company’s estimated effective gaming tax rate for the year, considering estimated taxable gaming revenue and the applicable rates. Such estimates are adjusted each interim period. If gaming tax rates change during the year, such changes are applied prospectively in the determination of gaming tax expense in future interim periods. Finally, the Company recognizes purse expense based on the statutorily required percentage of revenue that is required to be paid out in the form of purses to the winning owners of horse races run at the Company’s racetracks in the period in which wagering occurs. For the three and six months ended June 30, 2015, these expenses, which are recorded primarily within gaming expense in the condensed consolidated statements of income, were $244.5 million and $471.6 million, as compared to $223.2 million and $442.6 million for the three and six months ended June 30, 2014, respectively. Rental Expense related to the Master Lease As of June 30, 2015, the Company leases from Gaming and Leisure Properties, Inc. (“GLPI”) real property assets associated with eighteen of the Company’s gaming and related facilities used in the Company’s operations under a “triple net” master lease agreement (“Master Lease”). The rent structure under the Master Lease, which became effective November 1, 2013, includes a fixed component, a portion of which is subject to an annual escalator of up to 2% if certain rent coverage ratio thresholds are met, and a variable component that is based on the performance of the facilities, which is prospectively adjusted, subject to a floor of zero (i) every five years by an amount equal to 4% of the average change to net revenues of all facilities under the Master Lease (other than Hollywood Casino Columbus and Hollywood Casino Toledo) during the preceding five years, and (ii) monthly by an amount equal to 20% of the change in net revenues of Hollywood Casino Columbus and Hollywood Casino Toledo during the preceding month. In addition, with the openings of Hollywood Gaming at Mahoning Valley Race Course and Hollywood Gaming at Dayton Raceway in the third quarter of 2014, these properties began paying rent subject to the terms of the Master Lease, for which the annual rental obligation is calculated as 10% of the real estate construction costs paid for by GLPI related to these facilities. The Master Lease is commonly known as a triple-net lease. Accordingly, in addition to rent, the Company is required to pay the following, among other things: (1) all facility maintenance; (2) all insurance required in connection with the leased properties and the business conducted on the leased properties; (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. At the Company’s option, the Master Lease may be extended for up to four five-year renewal terms beyond the initial fifteen-year term, on the same terms and conditions. Total rental expense under the Master Lease for the three and six months ended June 30, 2015 was $109.5 million and $218.4 million, as compared to $104.6 million and $208.9 million for the three and six months ended June 30, 2014, respectively. Long-term asset related to the Jamul Tribe On April 5, 2013, the Company announced that, subject to final National Indian Gaming Commission approval, it and the Jamul Indian Village of California (the “Jamul Tribe”) had entered into definitive agreements to jointly develop a Hollywood Casino branded gaming facility on the Jamul Tribe’s trust land in San Diego County, California. The definitive agreements were entered into to: (i) secure the development, management, and branding services of the Company to assist the Jamul Tribe during the pre-development and entitlement phase of the project; (ii) set forth the terms and conditions under which the Company will provide a loan or loans to the Jamul Tribe to fund certain development costs; and (iii) create an exclusive arrangement between the parties. The Jamul Tribe is a federally recognized Indian Tribe holding a government-to-government relationship with the U.S. through the U.S. Department of the Interior’s Bureau of Indian Affairs and possesses certain inherent powers of self-government. The Jamul Tribe is the beneficial owner of approximately six acres of reservation land located within the exterior boundaries of the State of California held by the U.S. in trust for the Jamul Tribe (the “Property”). The Jamul Tribe exercises jurisdiction over the Property pursuant to its powers of self-government and consistent with the resolutions and ordinances of the Jamul Tribe. The arrangement between the Jamul Tribe and the Company provides the Jamul Tribe with the expertise, knowledge and capacity of a proven developer and operator of gaming facilities and provides the Company with the exclusive right to administer and oversee planning, designing, development, construction management, and coordination during the development and construction of the project as well as the management of a gaming facility on the Property. The proposed $390 million development project will include a three-story gaming and entertainment facility of approximately 200,000 square feet featuring over 1,700 slot machines, 43 live table games, including poker, multiple restaurants, bars and lounges and a partially enclosed parking structure with over 1,800 spaces. In mid-January 2014, the Company announced the commencement of construction activities at the site and it is anticipated that the facility will open in mid-2016. The Company may, under certain circumstances, provide backstop financing to the Jamul Tribe in connection with the project and, upon opening, will manage and provide branding for the casino. The Company has a conditional loan commitment to the Jamul Tribe (that can be terminated under certain circumstances) for up to $400 million and anticipates it will fund approximately $390 million related to this development. The Company is accounting for the development agreement and related loan commitment letter with the Jamul Tribe as a loan (note receivable) with accrued interest in accordance with ASC 310 “Receivables.” The loan represents advances made by the Company to the Jamul Tribe for the development and construction of a gaming facility for the Jamul Tribe on reservation land. As such, the Jamul Tribe will own the casino and its related assets and liabilities. San Diego Gaming Ventures, LLC (a wholly owned subsidiary of the Company) is a separate legal entity established to account for the loan and, upon completion of the project and subsequent commencement of gaming operations on the Property, will be the Penn entity which receives management and licensing fees from the Jamul Tribe. The Company has a note receivable with the Jamul Tribe for $108.1 million and $62.0 million, which includes accrued interest of $7.2 million and $3.3 million, at June 30, 2015 and December 31, 2014, respectively. Collectability of the note receivable will be derived from the revenues of the casino operations once the project is completed. Based on the Company’s current progress with this project, the Company believes collectability of the note is highly certain. However, in the event that the Company’s internal projections related to the profitability of this project and/or the timing of the opening are inaccurate, the Company may be required to record a reserve related to the collectability of this note receivable. The Company considered whether the arrangement with the Jamul Tribe represents a variable interest that should be accounted for pursuant to the VIE Subsections of ASC 810 “Consolidation” (“ASC 810”). The Company noted that the scope and scope exceptions of ASC 810-10-15-12(e) states that a reporting entity shall not consolidate a government organization or financing entity established by a government organization (other than certain financing entities established to circumvent the provisions of the VIE Subsections of ASC 810). Based on the status of the Jamul Tribe as a government organization, the Company believes its arrangement with the Jamul Tribe is not within the scope defined by ASC 810. Earnings Per Share The Company calculates earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share” (“ASC 260”). Basic EPS is computed by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the additional dilution for all potentially-dilutive securities such as stock options and unvested restricted shares. At June 30, 2015 and 2014, the Company had outstanding 8,624 shares of Series C Convertible Preferred Stock. The Company determined that both classes of preferred stock qualified as a participating security as defined in ASC 260 since these securities participate in dividends with the Company’s common stock. In accordance with ASC 260, a company is required to use the two-class method when computing EPS when a company has a security that qualifies as a “participating security.” The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. A participating security is included in the computation of basic EPS using the two-class method. Under the two-class method, basic EPS for the Company’s common stock is computed by dividing net income applicable to common stock by the weighted-average common shares outstanding during the period. Diluted EPS for the Company’s common stock is computed using the more dilutive of the two-class method or the if-converted method. The following table sets forth the allocation of net income for the three and six months ended June 30, 2015 and 2014 under the two-class method: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Net income $ $ $ $ Net income applicable to preferred stock Net income applicable to common stock $ $ $ $ The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three and six months ended June 30, 2015 and 2014: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Determination of shares: Weighted-average common shares outstanding Assumed conversion of dilutive employee stock-based awards Assumed conversion of restricted stock Diluted weighted-average common shares outstanding before participating security Assumed conversion of preferred stock Diluted weighted-average common shares outstanding Options to purchase 1,604,583 shares and 935,147 shares were outstanding during the six months ended June 30, 2015 and 2014, respectively, but were not included in the computation of diluted EPS because they were antidilutive. The following table presents the calculation of basic EPS for the Company’s common stock (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Calculation of basic EPS: Net income applicable to common stock $ $ $ $ Weighted-average common shares outstanding Basic EPS $ $ $ $ The following table presents the calculation of diluted EPS for the Company’s common stock (in thousands, except per share data): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Calculation of diluted EPS using two-class method: Net income applicable to common stock $ $ $ $ Diluted weighted-average common shares outstanding before participating security Diluted EPS $ $ $ $ Stock-Based Compensation The Company accounts for stock compensation under ASC 718, “Compensation-Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratably over the requisite service period following the date of grant. The fair value for stock options was estimated at the date of grant using the Black-Scholes option-pricing model, which requires management to make certain assumptions. The risk-free interest rate was based on the U.S. Treasury spot rate with a term equal to the expected life assumed at the date of grant. Expected volatility was estimated based on the historical volatility of the Company’s stock price over a period of 5.45 years, in order to match the expected life of the options at the grant date. Historically, at the grant date, there has been no expected dividend yield assumption since the Company has not paid any cash dividends on its common stock since its initial public offering in May 1994 and since the Company intends to retain all of its earnings to finance the development of its business for the foreseeable future. The weighted-average expected life was based on the contractual term of the stock option and expected employee exercise dates, which was based on the historical and expected exercise behavior of the Company’s employees. The Company granted 1,689,357 stock options during the six months ended June 30, 2015. Stock-based compensation expense for the three and six months ended June 30, 2015 was $2.3 million and $4.4 million, as compared to $2.5 million and $5.1 million for the three and six months ended June 30, 2014, respectively, and is included within the condensed consolidated statements of income under general and administrative expense. The Company’s cash-settled phantom stock unit awards (“PSUs”), which vest over a period of three to five 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 in accordance with ASC 718-30, “Compensation—Stock Compensation, Awards Classified as Liabilities.” The Company had a liability, which is included in accrued salaries and wages within the condensed consolidated balance sheets, associated with its PSUs of $11.9 million and $8.2 million at June 30, 2015 and December 31, 2014, respectively. For PSUs held by Penn employees, there was $25.2 million of total unrecognized compensation cost at June 30, 2015 that will be recognized over the grants remaining weighted average vesting period of 2.1 years. For the three and six months ended June 30, 2015, the Company recognized $5.0 million and $9.5 million of compensation expense associated with these awards, as compared to $1.2 million and $2.6 million for the three and six months ended June 30, 2014. The increase was primarily due to the stock price increase for both Penn and GLPI awards held by Penn employees in the current year compared with stock price declines in the prior year. Amounts paid by the Company for the three and six months ended June 30, 2015 on these cash-settled awards totaled $0.1 million and $5.3 million, as compared to $0.1 million and $6.0 million for the three and six months ended June 30, 2014, respectively. For the Company’s stock appreciation rights (“SARs”), the fair value of the SARs is calculated during each reporting period and estimated using the Black-Scholes option pricing model based on the various inputs discussed below. 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. The Company had a liability, which is included in accrued salaries and wages within the condensed consolidated balance sheets, associated with its SARs of $11.1 million and $6.3 million at June 30, 2015 and December 31, 2014, respectively. For SARs held by Penn employees, there was $10.2 million of total unrecognized compensation cost at June 30, 2015 that will be recognized over the awards remaining weighted average vesting period of 2.84 years. For the three and six months ended June 30, 2015, the Company recognized $2.5 million and $7.1 million of compensation expense associated with these awards, as compared to ($0.2) million and $0.1 million for the three and six months ended June 30, 2014, respectively. The increase was primarily due to the stock price increase for both Penn and GLPI awards held by Penn employees in the current year compared with stock price declines in the prior year. Amounts paid by the Company for the three and six months ended June 30, 2015 on these cash-settled awards totaled $0.5 million and $2.3 million, as compared to $0.7 million and $1.2 million for the three and six months ended June 30, 2014, respectively. The following are the weighted-average assumptions used in the Black-Scholes option-pricing model at June 30, 2015 and 2014: 2015 2014 Risk-free interest rate % % Expected volatility % % Dividend yield — — Weighted-average expected life (years) Segment Information The Company’s Chief Executive Officer and President, who is the Company’s Chief Operating Decision Maker, as that term is defined in ASC 280, “Segment Reporting” (“ASC 280”), measures and assesses the Company’s business performance based on regional operations of various properties grouped together based primarily on their geographic locations. The Company’s reportable segments are: (i) East/Midwest, (ii) West, and (iii) Southern Plains. The East/Midwest reportable segment consists of the following properties: Hollywood Casino at Charles Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn National Race Course, Hollywood Casino Lawrenceburg, Hollywood Casino Toledo, Hollywood Casino Columbus, Hollywood Gaming at Dayton Raceway, which opened on August 28, 2014, Hollywood Gaming at Mahoning Valley Race Course, which opened on September 17, 2014, and Plainridge Park Casino, which opened on June 24, 2015. It also includes the Company’s Casino Rama management service contract. The West reportable segment consists of the following properties: Zia Park Casino and the M Resort, as well as the Hollywood Casino Jamul — San Diego project with the Jamul Indian Village, which the Company anticipates completing in mid-2016. This segment will also include the results of Tropicana Las Vegas Hotel and Casino (“Tropicana Las Vegas” or “Tropicana”) once this acquisition is consummated. The Southern Plains reportable segment consists of the following properties: Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, and Hollywood Casino St. Louis, and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns the Hollywood Casino at Kansas Speedway. On July 30, 2014, the Company closed Argosy Casino Sioux City. The Other category consists of the Company’s standalone racing operations, namely Rosecroft Raceway, Sanford-Orlando Kennel Club, and the Company’s joint venture interests in Sam Houston Race Park, Valley Race Park, and Freehold Raceway, as well as the Company’s 50% joint venture with the Cordish Companies in New York (which is in the process of being dissolved). If the Company is successful in obtaining gaming operations at these locations, they would be assigned to one of the Company’s regional executives and reported in their respective reportable segment. The Other category also includes the Company’s corporate overhead operations which does not meet the definition of an operating segment under ASC 280. See Note 8 for further information with respect to the Company’s segments. Other Comprehensive Income The Company accounts for comprehensive income in accordance with ASC 220, “Comprehensive Income,” which establishes standards for the reporting and presentation of comprehensive income in the consolidated financial statements. The Company presents comprehensive income in two separate but consecutive statements. For the three and six months ended June 30, 2015 and 2014, the only component of accumulated other comprehensive income was foreign currency translation adjustments. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2015 | |
New Accounting Pronouncements | |
New Accounting Pronouncements | 3. New Accounting Pronouncements In April 2015, the FASB issued revised guidance to simplify the presentation of debt issuance costs in the balance sheet. The revised guidance requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with the existing presentation of debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this revised guidance, and therefore there is no impact to the statement of income. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of this revised guidance is permitted for financial statements that have not been previously issued. An entity should apply the revised guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the revised guidance. The Company has elected to early adopt the revised guidance and as such debt issuance costs are now presented as a direct reduction of long-term debt on the Company’s condensed consolidated balance sheets. See Note 6 for further information regarding debt issuance costs. In February 2015, the FASB issued new consolidation guidance to modify the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The main provisions of the new guidance include modifying the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, the evaluation of fees paid to a decision maker or a service provider as a variable interest, and the effect of fee arrangements and related parties on the primary beneficiary determination, as well as provides a scope exception for certain investment funds. The new guidance is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. A reporting entity may apply the new guidance using a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption. A reporting entity also may apply the new guidance retrospectively. Management is in the process of assessing the impact of the new guidance on existing consolidation conclusions and equity method investments, but does not anticipate any change. In May 2014, the FASB issued new revenue recognition guidance, which will supersede nearly all existing revenue recognition guidance. The core principle of the guidance is that an entity should recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, the new guidance implements a five-step process for customer contract revenue recognition. The guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows arising from contracts with customers. This new guidance was originally to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early adoption is prohibited. In April 2015, the FASB issued a one-year deferral of the effective date of this new guidance resulting in it now being effective for the Company beginning in fiscal year 2018. Entities can transition to the new guidance either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the new revenue recognition guidance will have on the consolidated financial statements. |
Pending Acquisitions
Pending Acquisitions | 6 Months Ended |
Jun. 30, 2015 | |
Pending Acquisitions | |
Pending Acquisitions | 4. Pending Acquisition On April 29, 2015, the Company announced that it entered into a definitive agreement to acquire the Tropicana Las Vegas Hotel and Casino for approximately $360 million. We believe t he planned acquisition will fulfill an important long-term strategic objective of establishing a presence on the Las Vegas Strip. The Tropicana is a quality facility situated on 35 acres of land located on the Las Vegas Strip with 1,467 remodeled guest rooms and suites, a 50,000 square foot casino gaming floor featuring 844 slot and video poker machines and 38 table games including blackjack, mini-baccarat, craps and roulette, three full-service restaurants, a 1,200 seat performance theater, a 300 seat comedy club, a nightclub, beach club and 2,950 parking spaces. The transaction is subject to customary closing conditions and regulatory approvals. The purchase price will be funded by revolving commitments under the Company’s existing senior secured credit facility and approximately $280 million of incremental commitments under an amended senior secured credit facility. The acquisition is expected to close later this year, subject to the timing of regulatory approvals and other closing conditions. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2015 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment, net, consists of the following: June 30, December 31, 2015 2014 (in thousands) Land and improvements $ $ Building and improvements Furniture, fixtures, and equipment Leasehold improvements Construction in progress Total property and equipment Less accumulated depreciation ) ) Property and equipment, net $ $ Property and equipment, net increased by $66.3 million for the six months ended June 30, 2015 primarily due to the City of Lawrenceburg’s conveyance of a hotel and event center near Hollywood Casino Lawrenceburg (see Note 6 for further detail) and construction costs for the development of Plainridge Park Casino as well as normal capital maintenance expenditures, all of which were partially offset by depreciation expense for the six months ended June 30, 2015. Depreciation expense totaled $41.8 million and $84.7 million for the three and six months ended June 30, 2015, as compared to $42.0 million and $84.0 million for the three and six months ended June 30, 2014, respectively. Interest capitalized in connection with major construction projects was $1.2 million and $1.8 million for the three and six months ended June 30, 2015, as compared to $0.1 million and $0.2 million for the three and six months ended June 30, 2014, respectively. |
Long-term Debt
Long-term Debt | 6 Months Ended |
Jun. 30, 2015 | |
Long-term Debt | |
Long-term Debt | 6. Long-term Debt Long-term debt, net of current maturities, is as follows: June 30, December 31, 2015 2014 (in thousands) Senior secured credit facility $ $ $300 million 5.875% senior unsecured notes due November 1, 2021 Other long term obligations Capital leases Less current maturities of long-term debt ) ) Less discount on senior secured credit facility Term Loan B ) ) Less debt issuance costs, net of accumulated amortization of $9.7 million and $6.8 million, respectively ) ) $ $ The following is a schedule of future minimum repayments of long-term debt as of June 30, 2015 (in thousands, excluding other long-term obligations attributable to the contingent purchase price consideration related to the purchase of Plainridge Racecourse further discussed below): Within one year $ 1-3 years 3-5 years Over 5 years Total minimum payments $ Senior Secured Credit Facility The senior secured credit facility consists of a five year $500 million revolver, a five year $500 million Term Loan A facility, and a seven year $250 million Term Loan B facility. At June 30, 2015, the Company’s senior secured credit facility had a gross outstanding balance of $813.8 million, consisting of a $462.5 million Term Loan A facility, a $246.3 million Term Loan B facility, and $105.0 million outstanding on the revolving credit facility. Additionally, at June 30, 2015, the Company had conditional obligations under letters of credit issued pursuant to the senior secured credit facility with face amounts aggregating $22.9 million, resulting in $372.1 million of available borrowing capacity as of June 30, 2015 under the revolving credit facility. Other Long Term Obligations Other long term obligations at June 30, 2015 of $170.2 million included $19.9 million for the contingent purchase price consideration related to the purchase of Plainridge Racecourse, $135.0 million related to the relocation fees for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course, and $15.3 million related to the repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg; all of which are more fully described below. Plainridge Racecourse On April 11, 2014, the Company purchased Plainridge Racecourse in Massachusetts, at which the Company began to operate a slots-only gaming facility on June 24, 2015. The associated option and purchase agreement contained contingent purchase price consideration that is calculated based on the actual earnings over the first ten years of operations following the commencement of gaming. The first payment is due 60 days after the completion of the first four full fiscal quarters of operation following the commencement of gaming, and additional payments are due every year for nine years after the first payment. The fair value of this liability was based on an income approach from the Company’s internal earning projections and was discounted at a rate consistent with the risk a third party market participant would require holding the identical instrument as an asset. At each reporting period, the Company assesses the fair value of this obligation and changes in its value are recorded in earnings. The amount included in interest expense related to the change in fair value of this obligation was $0.3 million and $0.7 million for the three and six months ended June 30, 2015, respectively. Ohio Relocation Fees In June 2013, the Company finalized the terms of its memorandum of understanding with the State of Ohio, which included an agreement by the Company to pay a relocation fee in return for being able to relocate its existing racetracks in Toledo and Grove City to Dayton and Mahoning Valley, respectively. Upon opening of these two racinos in Ohio in the third quarter of 2014, the relocation fee for each new racino was recorded at the present value of the contractual obligation, which was calculated to be $75 million based on the 5% discount rate included in the agreement. 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 from 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 $1.7 million and $3.4 million for the three and six months ended June 30, 2015, respectively . Event Center The City of Lawrenceburg Department of Redevelopment recently completed construction of a hotel and event center located less than a mile away from Hollywood Casino Lawrenceburg. Effective in mid-January 2015, by contractual agreement, a repayment obligation for the hotel and event center was assumed by a wholly-owned subsidiary of the Company in the amount of $15.3 million, which was financed through a loan with the City of Lawrenceburg Department of Redevelopment. The Company is obligated to make annual payments on the loan of approximately $1 million for twenty years beginning January 2016. This obligation is accreted to interest expense at its effective yield of 3.0%. The amount included in interest expense related to this obligation was $0.1 million and $0.2 million for the three and six months ended June 30, 2015, respectively . Debt Issuance Costs As discussed in Note 3, the Company elected to early adopt accounting guidance issued in April 2015 to simplify the presentation of debt issuance costs. This change in accounting principle was implemented retrospectively as of March 31, 2015 . Debt issuance costs that are incurred by the Company in connection with the issuance of debt are deferred and amortized to interest expense using the effective interest method over the contractual term of the underlying indebtedness. The Company has reclassified debt issuance costs as a direct reduction to the related debt obligation on the balance sheet as of December 31, 2014. Covenants The Company’s senior secured credit facility and $300 million 5.875% senior unsecured notes require it, among other obligations, to maintain specified financial ratios and to satisfy certain financial tests, including fixed charge coverage, interest coverage, senior leverage and total leverage ratios. In addition, the Company’s senior secured credit facility and $300 million 5.875% senior unsecured notes restrict, among other things, its 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. At June 30, 2015, the Company was in compliance with all required financial covenants. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 7. Commitments and Contingencies Litigation The Company is subject to various legal and administrative proceedings relating to personal injuries, employment matters, commercial transactions and other matters arising in the ordinary course of business. The Company does not believe that the final outcome of these matters will have a material adverse effect on the Company’s consolidated financial position or results of operations. In addition, the Company maintains what it believes is adequate insurance coverage to further mitigate the risks of such proceedings. However, such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings may not materially impact the Company’s consolidated financial condition or results of operations. Further, no assurance can be given that the amount or scope of existing insurance coverage will be sufficient to cover losses arising from such matters. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Information | |
Segment Information | 8. Segment Information The following tables present certain information with respect to the Company’s segments. Intersegment revenues between the Company’s segments were not material in any of the periods presented below. East/Midwest West Southern Plains Other Total (in thousands) Three months ended June 30, 2015 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Capital expenditures Three months ended June 30, 2014 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Impairment losses — — — Capital expenditures Six months ended June 30, 2015 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Capital expenditures Six months ended June 30, 2014 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Impairment losses — — — Capital expenditures Balance sheet at June 30, 2015 Total assets Investment in and advances to unconsolidated affiliates — Goodwill and other intangible assets, net Balance sheet at December 31, 2014 Total assets Investment in and advances to unconsolidated affiliates — Goodwill and other intangible assets, net |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Taxes | |
Income Taxes | 9. Income Taxes At June 30, 2015 and December 31, 2014, the Company had a net deferred tax asset balance of $126.9 million and $134.6 million, respectively, within its condensed consolidated balance sheets. The Company accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and are measured at the prevailing enacted tax rates that will be in effect when these differences are settled or realized. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | 10. Fair Value Measurements ASC 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: Cash and cash equivalents The fair value of the Company’s cash and cash equivalents approximates the carrying value of the Company’s cash and cash equivalents, due to the short maturity of the cash equivalents. Long-term debt The fair value of the Company’s Term Loan A and B components of its senior secured credit facility and senior unsecured notes is estimated based on quoted prices in active markets and as such is a Level 1 measurement. The fair value of the remainder of the Company’s senior secured credit facility approximates its carrying value as it is revolving, variable rate debt and as such is a Level 2 measurement. Other long term obligations at June 30, 2015 include the contingent purchase price consideration related to the purchase of Plainridge Racecourse, the relocation fees for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course, and the repayment obligation of a hotel and event center located near Hollywood Casino Lawrenceburg. The fair value of the Company’s contingent purchase price consideration related to its Plainridge Racecourse acquisition is estimated based on an income approach using a discounted cash flow model and as such is a Level 3 measurement. At each reporting period, the Company assesses the fair value of this obligation and changes in its value are recorded in earnings. The amount included in interest expense related to the change in fair value of this obligation was $0.3 million and $0.7 million for the three and six months ended June 30, 2015, respectively. The fair value of the relocation fees for Hollywood Gaming at Dayton Raceway and Hollywood Gaming at Mahoning Valley Race Course approximates its carrying value as the discount rate of 5.0% approximates the market rate of similar debt instruments and as such is a Level 2 measurement. Finally, the fair value of the repayment obligation for the hotel and event center is estimated based on a rate consistent with comparable municipal bonds and as such is a Level 2 measurement. See Note 6 for further details regarding the Company’s other long term obligations. The carrying amounts and estimated fair values by input level of the Company’s financial instruments at June 30, 2015 and December 31, 2014 are as follows (in thousands): June 30, 2015 Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ $ $ $ — $ — Financial liabilities: Long-term debt Senior secured credit facility — Senior unsecured notes — — Other long-term obligations — December 31, 2014 Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ $ $ $ — $ — Financial liabilities: Long-term debt Senior secured credit facility — Senior unsecured notes — — Other long-term obligations — |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Revenue Recognition and Promotional Allowances | Revenue Recognition and Promotional Allowances Gaming revenue consists mainly of slot and video lottery gaming machine revenue as well as to a lesser extent table game and poker revenue. Gaming revenue is the aggregate net difference between gaming wins and losses, with liabilities recognized for funds deposited by customers before gaming play occurs, for “ticket-in, ticket-out” coupons in the customers’ possession, and for accruals related to the anticipated payout of progressive jackpots. Progressive slot machines, which contain base jackpots that increase at a progressive rate based on the number of coins played, are charged to revenue as the amount of the jackpots increases. Table game revenue is the aggregate of table drop adjusted for the change in aggregate table chip inventory. Table drop is the total dollar amount of the currency, coins, chips, tokens and outstanding markers (credit instruments) that are removed from the live gaming tables. Food, beverage and other revenue, including racing revenue, is recognized as services are performed. Racing revenue includes the Company’s share of pari-mutuel wagering on live races after payment of amounts returned as winning wagers, its share of wagering from import and export simulcasting, and its share of wagering from its off-track wagering facilities. Revenue from the management service contract for Casino Rama is based upon contracted terms and is recognized when services are performed. Revenues are recognized net of certain sales incentives in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 605-50, “Revenue Recognition—Customer Payments and Incentives.” The Company records certain sales incentives and points earned in point-loyalty programs as a reduction of revenue. The retail value of accommodations, food and beverage, and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances. The estimated cost of providing such promotional allowances is primarily included in food, beverage and other expense. The amounts included in promotional allowances for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Rooms $ $ $ $ Food and beverage Other Total promotional allowances $ $ $ $ The estimated cost of providing such complimentary services for the three and six months ended June 30, 2015 and 2014 are as follows: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Rooms $ $ $ $ Food and beverage Other Total cost of complimentary services $ $ $ $ |
Gaming and Racing Taxes | Gaming and Racing Taxes The Company is subject to gaming and pari-mutuel taxes based on gross gaming revenue and pari-mutuel revenue in the jurisdictions in which it operates. The Company primarily recognizes gaming and pari-mutuel tax expense based on the statutorily required percentage of revenue that is required to be paid to state and local jurisdictions in the states where or in which wagering occurs. In certain states in which the Company operates, gaming taxes are based on graduated rates. The Company records gaming tax expense at the Company’s estimated effective gaming tax rate for the year, considering estimated taxable gaming revenue and the applicable rates. Such estimates are adjusted each interim period. If gaming tax rates change during the year, such changes are applied prospectively in the determination of gaming tax expense in future interim periods. Finally, the Company recognizes purse expense based on the statutorily required percentage of revenue that is required to be paid out in the form of purses to the winning owners of horse races run at the Company’s racetracks in the period in which wagering occurs. For the three and six months ended June 30, 2015, these expenses, which are recorded primarily within gaming expense in the condensed consolidated statements of income, were $244.5 million and $471.6 million, as compared to $223.2 million and $442.6 million for the three and six months ended June 30, 2014, respectively. |
Rental Expense related to the Master Lease | Rental Expense related to the Master Lease As of June 30, 2015, the Company leases from Gaming and Leisure Properties, Inc. (“GLPI”) real property assets associated with eighteen of the Company’s gaming and related facilities used in the Company’s operations under a “triple net” master lease agreement (“Master Lease”). The rent structure under the Master Lease, which became effective November 1, 2013, includes a fixed component, a portion of which is subject to an annual escalator of up to 2% if certain rent coverage ratio thresholds are met, and a variable component that is based on the performance of the facilities, which is prospectively adjusted, subject to a floor of zero (i) every five years by an amount equal to 4% of the average change to net revenues of all facilities under the Master Lease (other than Hollywood Casino Columbus and Hollywood Casino Toledo) during the preceding five years, and (ii) monthly by an amount equal to 20% of the change in net revenues of Hollywood Casino Columbus and Hollywood Casino Toledo during the preceding month. In addition, with the openings of Hollywood Gaming at Mahoning Valley Race Course and Hollywood Gaming at Dayton Raceway in the third quarter of 2014, these properties began paying rent subject to the terms of the Master Lease, for which the annual rental obligation is calculated as 10% of the real estate construction costs paid for by GLPI related to these facilities. The Master Lease is commonly known as a triple-net lease. Accordingly, in addition to rent, the Company is required to pay the following, among other things: (1) all facility maintenance; (2) all insurance required in connection with the leased properties and the business conducted on the leased properties; (3) taxes levied on or with respect to the leased properties (other than taxes on the income of the lessor); and (4) all utilities and other services necessary or appropriate for the leased properties and the business conducted on the leased properties. At the Company’s option, the Master Lease may be extended for up to four five-year renewal terms beyond the initial fifteen-year term, on the same terms and conditions. Total rental expense under the Master Lease for the three and six months ended June 30, 2015 was $109.5 million and $218.4 million, as compared to $104.6 million and $208.9 million for the three and six months ended June 30, 2014, respectively. |
Long-term asset related to the Jamul Tribe | Long-term asset related to the Jamul Tribe On April 5, 2013, the Company announced that, subject to final National Indian Gaming Commission approval, it and the Jamul Indian Village of California (the “Jamul Tribe”) had entered into definitive agreements to jointly develop a Hollywood Casino branded gaming facility on the Jamul Tribe’s trust land in San Diego County, California. The definitive agreements were entered into to: (i) secure the development, management, and branding services of the Company to assist the Jamul Tribe during the pre-development and entitlement phase of the project; (ii) set forth the terms and conditions under which the Company will provide a loan or loans to the Jamul Tribe to fund certain development costs; and (iii) create an exclusive arrangement between the parties. The Jamul Tribe is a federally recognized Indian Tribe holding a government-to-government relationship with the U.S. through the U.S. Department of the Interior’s Bureau of Indian Affairs and possesses certain inherent powers of self-government. The Jamul Tribe is the beneficial owner of approximately six acres of reservation land located within the exterior boundaries of the State of California held by the U.S. in trust for the Jamul Tribe (the “Property”). The Jamul Tribe exercises jurisdiction over the Property pursuant to its powers of self-government and consistent with the resolutions and ordinances of the Jamul Tribe. The arrangement between the Jamul Tribe and the Company provides the Jamul Tribe with the expertise, knowledge and capacity of a proven developer and operator of gaming facilities and provides the Company with the exclusive right to administer and oversee planning, designing, development, construction management, and coordination during the development and construction of the project as well as the management of a gaming facility on the Property. The proposed $390 million development project will include a three-story gaming and entertainment facility of approximately 200,000 square feet featuring over 1,700 slot machines, 43 live table games, including poker, multiple restaurants, bars and lounges and a partially enclosed parking structure with over 1,800 spaces. In mid-January 2014, the Company announced the commencement of construction activities at the site and it is anticipated that the facility will open in mid-2016. The Company may, under certain circumstances, provide backstop financing to the Jamul Tribe in connection with the project and, upon opening, will manage and provide branding for the casino. The Company has a conditional loan commitment to the Jamul Tribe (that can be terminated under certain circumstances) for up to $400 million and anticipates it will fund approximately $390 million related to this development. The Company is accounting for the development agreement and related loan commitment letter with the Jamul Tribe as a loan (note receivable) with accrued interest in accordance with ASC 310 “Receivables.” The loan represents advances made by the Company to the Jamul Tribe for the development and construction of a gaming facility for the Jamul Tribe on reservation land. As such, the Jamul Tribe will own the casino and its related assets and liabilities. San Diego Gaming Ventures, LLC (a wholly owned subsidiary of the Company) is a separate legal entity established to account for the loan and, upon completion of the project and subsequent commencement of gaming operations on the Property, will be the Penn entity which receives management and licensing fees from the Jamul Tribe. The Company has a note receivable with the Jamul Tribe for $108.1 million and $62.0 million, which includes accrued interest of $7.2 million and $3.3 million, at June 30, 2015 and December 31, 2014, respectively. Collectability of the note receivable will be derived from the revenues of the casino operations once the project is completed. Based on the Company’s current progress with this project, the Company believes collectability of the note is highly certain. However, in the event that the Company’s internal projections related to the profitability of this project and/or the timing of the opening are inaccurate, the Company may be required to record a reserve related to the collectability of this note receivable. The Company considered whether the arrangement with the Jamul Tribe represents a variable interest that should be accounted for pursuant to the VIE Subsections of ASC 810 “Consolidation” (“ASC 810”). The Company noted that the scope and scope exceptions of ASC 810-10-15-12(e) states that a reporting entity shall not consolidate a government organization or financing entity established by a government organization (other than certain financing entities established to circumvent the provisions of the VIE Subsections of ASC 810). Based on the status of the Jamul Tribe as a government organization, the Company believes its arrangement with the Jamul Tribe is not within the scope defined by ASC 810. |
Earnings Per Share | Earnings Per Share The Company calculates earnings per share (“EPS”) in accordance with ASC 260, “Earnings Per Share” (“ASC 260”). Basic EPS is computed by dividing net income applicable to common stock by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the additional dilution for all potentially-dilutive securities such as stock options and unvested restricted shares. At June 30, 2015 and 2014, the Company had outstanding 8,624 shares of Series C Convertible Preferred Stock. The Company determined that both classes of preferred stock qualified as a participating security as defined in ASC 260 since these securities participate in dividends with the Company’s common stock. In accordance with ASC 260, a company is required to use the two-class method when computing EPS when a company has a security that qualifies as a “participating security.” The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. A participating security is included in the computation of basic EPS using the two-class method. Under the two-class method, basic EPS for the Company’s common stock is computed by dividing net income applicable to common stock by the weighted-average common shares outstanding during the period. Diluted EPS for the Company’s common stock is computed using the more dilutive of the two-class method or the if-converted method. The following table sets forth the allocation of net income for the three and six months ended June 30, 2015 and 2014 under the two-class method: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Net income $ $ $ $ Net income applicable to preferred stock Net income applicable to common stock $ $ $ $ The following table reconciles the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS for the three and six months ended June 30, 2015 and 2014: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Determination of shares: Weighted-average common shares outstanding Assumed conversion of dilutive employee stock-based awards Assumed conversion of restricted stock Diluted weighted-average common shares outstanding before participating security Assumed conversion of preferred stock Diluted weighted-average common shares outstanding Options to purchase 1,604,583 shares and 935,147 shares were outstanding during the six months ended June 30, 2015 and 2014, respectively, but were not included in the computation of diluted EPS because they were antidilutive. The following table presents the calculation of basic EPS for the Company’s common stock (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Calculation of basic EPS: Net income applicable to common stock $ $ $ $ Weighted-average common shares outstanding Basic EPS $ $ $ $ The following table presents the calculation of diluted EPS for the Company’s common stock (in thousands, except per share data): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Calculation of diluted EPS using two-class method: Net income applicable to common stock $ $ $ $ Diluted weighted-average common shares outstanding before participating security Diluted EPS $ $ $ $ |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock compensation under ASC 718, “Compensation-Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. This expense is recognized ratably over the requisite service period following the date of grant. The fair value for stock options was estimated at the date of grant using the Black-Scholes option-pricing model, which requires management to make certain assumptions. The risk-free interest rate was based on the U.S. Treasury spot rate with a term equal to the expected life assumed at the date of grant. Expected volatility was estimated based on the historical volatility of the Company’s stock price over a period of 5.45 years, in order to match the expected life of the options at the grant date. Historically, at the grant date, there has been no expected dividend yield assumption since the Company has not paid any cash dividends on its common stock since its initial public offering in May 1994 and since the Company intends to retain all of its earnings to finance the development of its business for the foreseeable future. The weighted-average expected life was based on the contractual term of the stock option and expected employee exercise dates, which was based on the historical and expected exercise behavior of the Company’s employees. The Company granted 1,689,357 stock options during the six months ended June 30, 2015. Stock-based compensation expense for the three and six months ended June 30, 2015 was $2.3 million and $4.4 million, as compared to $2.5 million and $5.1 million for the three and six months ended June 30, 2014, respectively, and is included within the condensed consolidated statements of income under general and administrative expense. The Company’s cash-settled phantom stock unit awards (“PSUs”), which vest over a period of three to five 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 in accordance with ASC 718-30, “Compensation—Stock Compensation, Awards Classified as Liabilities.” The Company had a liability, which is included in accrued salaries and wages within the condensed consolidated balance sheets, associated with its PSUs of $11.9 million and $8.2 million at June 30, 2015 and December 31, 2014, respectively. For PSUs held by Penn employees, there was $25.2 million of total unrecognized compensation cost at June 30, 2015 that will be recognized over the grants remaining weighted average vesting period of 2.1 years. For the three and six months ended June 30, 2015, the Company recognized $5.0 million and $9.5 million of compensation expense associated with these awards, as compared to $1.2 million and $2.6 million for the three and six months ended June 30, 2014. The increase was primarily due to the stock price increase for both Penn and GLPI awards held by Penn employees in the current year compared with stock price declines in the prior year. Amounts paid by the Company for the three and six months ended June 30, 2015 on these cash-settled awards totaled $0.1 million and $5.3 million, as compared to $0.1 million and $6.0 million for the three and six months ended June 30, 2014, respectively. For the Company’s stock appreciation rights (“SARs”), the fair value of the SARs is calculated during each reporting period and estimated using the Black-Scholes option pricing model based on the various inputs discussed below. 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. The Company had a liability, which is included in accrued salaries and wages within the condensed consolidated balance sheets, associated with its SARs of $11.1 million and $6.3 million at June 30, 2015 and December 31, 2014, respectively. For SARs held by Penn employees, there was $10.2 million of total unrecognized compensation cost at June 30, 2015 that will be recognized over the awards remaining weighted average vesting period of 2.84 years. For the three and six months ended June 30, 2015, the Company recognized $2.5 million and $7.1 million of compensation expense associated with these awards, as compared to ($0.2) million and $0.1 million for the three and six months ended June 30, 2014, respectively. The increase was primarily due to the stock price increase for both Penn and GLPI awards held by Penn employees in the current year compared with stock price declines in the prior year. Amounts paid by the Company for the three and six months ended June 30, 2015 on these cash-settled awards totaled $0.5 million and $2.3 million, as compared to $0.7 million and $1.2 million for the three and six months ended June 30, 2014, respectively. The following are the weighted-average assumptions used in the Black-Scholes option-pricing model at June 30, 2015 and 2014: 2015 2014 Risk-free interest rate % % Expected volatility % % Dividend yield — — Weighted-average expected life (years) |
Segment Information | Segment Information The Company’s Chief Executive Officer and President, who is the Company’s Chief Operating Decision Maker, as that term is defined in ASC 280, “Segment Reporting” (“ASC 280”), measures and assesses the Company’s business performance based on regional operations of various properties grouped together based primarily on their geographic locations. The Company’s reportable segments are: (i) East/Midwest, (ii) West, and (iii) Southern Plains. The East/Midwest reportable segment consists of the following properties: Hollywood Casino at Charles Town Races, Hollywood Casino Bangor, Hollywood Casino at Penn National Race Course, Hollywood Casino Lawrenceburg, Hollywood Casino Toledo, Hollywood Casino Columbus, Hollywood Gaming at Dayton Raceway, which opened on August 28, 2014, Hollywood Gaming at Mahoning Valley Race Course, which opened on September 17, 2014, and Plainridge Park Casino, which opened on June 24, 2015. It also includes the Company’s Casino Rama management service contract. The West reportable segment consists of the following properties: Zia Park Casino and the M Resort, as well as the Hollywood Casino Jamul — San Diego project with the Jamul Indian Village, which the Company anticipates completing in mid-2016. This segment will also include the results of Tropicana Las Vegas Hotel and Casino (“Tropicana Las Vegas” or “Tropicana”) once this acquisition is consummated. The Southern Plains reportable segment consists of the following properties: Hollywood Casino Aurora, Hollywood Casino Joliet, Argosy Casino Alton, Argosy Casino Riverside, Hollywood Casino Tunica, Hollywood Casino Gulf Coast, Boomtown Biloxi, and Hollywood Casino St. Louis, and includes the Company’s 50% investment in Kansas Entertainment, LLC (“Kansas Entertainment”), which owns the Hollywood Casino at Kansas Speedway. On July 30, 2014, the Company closed Argosy Casino Sioux City. The Other category consists of the Company’s standalone racing operations, namely Rosecroft Raceway, Sanford-Orlando Kennel Club, and the Company’s joint venture interests in Sam Houston Race Park, Valley Race Park, and Freehold Raceway, as well as the Company’s 50% joint venture with the Cordish Companies in New York (which is in the process of being dissolved). If the Company is successful in obtaining gaming operations at these locations, they would be assigned to one of the Company’s regional executives and reported in their respective reportable segment. The Other category also includes the Company’s corporate overhead operations which does not meet the definition of an operating segment under ASC 280. See Note 8 for further information with respect to the Company’s segments. |
Other Comprehensive Income | Other Comprehensive Income The Company accounts for comprehensive income in accordance with ASC 220, “Comprehensive Income,” which establishes standards for the reporting and presentation of comprehensive income in the consolidated financial statements. The Company presents comprehensive income in two separate but consecutive statements. For the three and six months ended June 30, 2015 and 2014, the only component of accumulated other comprehensive income was foreign currency translation adjustments. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of promotional allowances | Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Rooms $ $ $ $ Food and beverage Other Total promotional allowances $ $ $ $ |
Schedule of estimated cost of providing complimentary services | Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Rooms $ $ $ $ Food and beverage Other Total cost of complimentary services $ $ $ $ |
Schedule of allocation of net income attributable to shareholders under the two-class method | Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Net income $ $ $ $ Net income applicable to preferred stock Net income applicable to common stock $ $ $ $ |
Schedule of reconciliation of the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS | Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 (in thousands) Determination of shares: Weighted-average common shares outstanding Assumed conversion of dilutive employee stock-based awards Assumed conversion of restricted stock Diluted weighted-average common shares outstanding before participating security Assumed conversion of preferred stock Diluted weighted-average common shares outstanding |
Schedule of calculation of basic EPS for the entity's common stock | The following table presents the calculation of basic EPS for the Company’s common stock (in thousands, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Calculation of basic EPS: Net income applicable to common stock $ $ $ $ Weighted-average common shares outstanding Basic EPS $ $ $ $ |
Schedule of calculation of diluted EPS for the entity's common stock | The following table presents the calculation of diluted EPS for the Company’s common stock (in thousands, except per share data): Three months ended June 30, Six months ended June 30, 2015 2014 2015 2014 Calculation of diluted EPS using two-class method: Net income applicable to common stock $ $ $ $ Diluted weighted-average common shares outstanding before participating security Diluted EPS $ $ $ $ |
Weighted-average assumptions used in Black-Scholes option pricing model | 2015 2014 Risk-free interest rate % % Expected volatility % % Dividend yield — — Weighted-average expected life (years) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property and Equipment | |
Schedule of property and equipment, net | June 30, December 31, 2015 2014 (in thousands) Land and improvements $ $ Building and improvements Furniture, fixtures, and equipment Leasehold improvements Construction in progress Total property and equipment Less accumulated depreciation ) ) Property and equipment, net $ $ |
Long-term Debt (Tables)
Long-term Debt (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Long-term Debt | |
Schedule of long-term debt, net of current maturities | June 30, December 31, 2015 2014 (in thousands) Senior secured credit facility $ $ $300 million 5.875% senior unsecured notes due November 1, 2021 Other long term obligations Capital leases Less current maturities of long-term debt ) ) Less discount on senior secured credit facility Term Loan B ) ) Less debt issuance costs, net of accumulated amortization of $9.7 million and $6.8 million, respectively ) ) $ $ |
Schedule of future minimum repayments of long-term debt | The following is a schedule of future minimum repayments of long-term debt as of June 30, 2015 (in thousands, excluding other long-term obligations attributable to the contingent purchase price consideration related to the purchase of Plainridge Racecourse further discussed below): Within one year $ 1-3 years 3-5 years Over 5 years Total minimum payments $ |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Information | |
Schedule of information with respect to the Company's segments | East/Midwest West Southern Plains Other Total (in thousands) Three months ended June 30, 2015 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Capital expenditures Three months ended June 30, 2014 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Impairment losses — — — Capital expenditures Six months ended June 30, 2015 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Capital expenditures Six months ended June 30, 2014 Net revenues $ $ $ $ $ Income (loss) from operations ) Depreciation and amortization Income (loss) from unconsolidated affiliates — — ) Impairment losses — — — Capital expenditures Balance sheet at June 30, 2015 Total assets Investment in and advances to unconsolidated affiliates — Goodwill and other intangible assets, net Balance sheet at December 31, 2014 Total assets Investment in and advances to unconsolidated affiliates — Goodwill and other intangible assets, net |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Fair Value Measurements | |
Schedule of estimated fair values of financial instruments | The carrying amounts and estimated fair values by input level of the Company’s financial instruments at June 30, 2015 and December 31, 2014 are as follows (in thousands): June 30, 2015 Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ $ $ $ — $ — Financial liabilities: Long-term debt Senior secured credit facility — Senior unsecured notes — — Other long-term obligations — December 31, 2014 Carrying Amount Fair Value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ $ $ $ — $ — Financial liabilities: Long-term debt Senior secured credit facility — Senior unsecured notes — — Other long-term obligations — |
Organization and Basis of Pre26
Organization and Basis of Presentation (Details) - Jun. 30, 2015 | jurisdictionfacility |
Organization and Basis of Presentation | |
Number of facilities the entity owned, managed, or had ownership interests in | 26 |
Number of jurisdictions in which the entity operates | jurisdiction | 17 |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenue recognition | ||||
Promotional allowances | $ 38,200 | $ 37,691 | $ 76,088 | $ 74,622 |
Cost of complimentary services | 12,504 | 13,051 | 25,106 | 25,728 |
Gaming and Racing Taxes | ||||
Gaming expense | 244,500 | 223,200 | 471,600 | 442,600 |
Rooms | ||||
Revenue recognition | ||||
Promotional allowances | 8,903 | 8,426 | 17,239 | 16,497 |
Cost of complimentary services | 974 | 891 | 1,909 | 1,758 |
Food and Beverage | ||||
Revenue recognition | ||||
Promotional allowances | 27,215 | 26,790 | 54,651 | 53,389 |
Cost of complimentary services | 10,657 | 11,247 | 21,486 | 22,215 |
Other | ||||
Revenue recognition | ||||
Promotional allowances | 2,082 | 2,475 | 4,198 | 4,736 |
Cost of complimentary services | $ 873 | $ 913 | $ 1,711 | $ 1,755 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 2) $ in Thousands | Nov. 01, 2013 | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)facilityitem | Jun. 30, 2014USD ($) |
Rental expense related to the master lease | |||||
Total rental expense | $ 109,519 | $ 104,613 | $ 218,364 | $ 208,922 | |
Master Lease | |||||
Rental expense related to the master lease | |||||
Number of lease renewal options | item | 4 | ||||
Term of lease renewal options | 5 years | ||||
Initial term of Master Lease | 15 years | ||||
Total rental expense | $ 109,500 | $ 104,600 | $ 218,400 | $ 208,900 | |
Master Lease | Facilities Held Under Leases | |||||
Rental expense related to the master lease | |||||
Number of real property assets associated with Company's gaming and related facilities | facility | 18 | ||||
Percentage of escalation to fixed components of rent if certain rent coverage ratio thresholds are met | 2.00% | ||||
Period over which operating lease component is adjusted | 5 years | ||||
Adjustment to operating lease component as percentage of the average change to net revenues during preceding five years | 4.00% | ||||
Adjustment to operating lease component as percentage of the average change to net revenues during preceding month | 20.00% | ||||
Real estate construction costs paid for by GLPI to facilities (in percentage) | 10.00% |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details 3) - Jamul Tribe $ in Millions | Apr. 05, 2013USD ($)ft²aitem | Jun. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Long-term asset related to the Jamul Tribe | |||
Land owned | a | 6 | ||
Proposed facility development cost | $ 390 | ||
Number of stories | item | 3 | ||
Size of gaming and entertainment facility | ft² | 200,000 | ||
Number of slot machines | item | 1,700 | ||
Number of table games | item | 43 | ||
Number of parking spaces | item | 1,800 | ||
Loan commitment | $ 400 | ||
Anticipated loan funding | 390 | ||
Note receivable | 108.1 | $ 62 | |
Interest Receivable | $ 7.2 | $ 3.3 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 4) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Net income loss available to common stockholders | ||||
Net income | $ 16,886 | $ 4,176 | $ 27,882 | $ 8,713 |
Net income applicable to preferred stock | 1,648 | 414 | 2,726 | 866 |
Net income applicable to common stock | $ 15,238 | $ 3,762 | $ 25,156 | $ 7,847 |
Determination of shares: | ||||
Weighted-average common shares outstanding (in shares) | 79,758,000 | 78,458,000 | 79,580,000 | 78,189,000 |
Assumed conversion of dilutive employee stock-based awards (in shares) | 2,298,000 | 1,800,000 | 2,301,000 | 1,903,000 |
Assumed conversion of restricted stock (in shares) | 49,000 | 54,000 | 60,000 | 97,000 |
Diluted weighted-average common shares outstanding before participating security | 82,105,000 | 80,312,000 | 81,941,000 | 80,189,000 |
Assumed conversion of preferred stock (in shares) | 8,624,000 | 8,624,000 | 8,624,000 | 8,624,000 |
Diluted weighted-average common shares outstanding (in shares) | 90,729,000 | 88,936,000 | 90,565,000 | 88,813,000 |
Anti-dilutive securities, options to purchase shares outstanding | 1,604,583 | 935,147 | ||
Calculation of basic EPS: | ||||
Net income applicable to common stock | $ 15,238 | $ 3,762 | $ 25,156 | $ 7,847 |
Weighted-average common shares outstanding (in shares) | 79,758,000 | 78,458,000 | 79,580,000 | 78,189,000 |
Basic earnings per common share (in dollars per share) | $ 0.19 | $ 0.05 | $ 0.32 | $ 0.10 |
Calculation of diluted EPS using two-class method: | ||||
Net income applicable to common stock | $ 15,238 | $ 3,762 | $ 25,156 | $ 7,847 |
Diluted weighted-average common shares outstanding before participating security | 82,105,000 | 80,312,000 | 81,941,000 | 80,189,000 |
Diluted earnings per common share (in dollars per share) | $ 0.19 | $ 0.05 | $ 0.31 | $ 0.10 |
Series C Preferred Stock | ||||
Earnings Per Share | ||||
Preferred stock , shares outstanding | 8,624 | 8,624 | 8,624 | 8,624 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details 5) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Stock-based compensation costs | |||||
Time period of historical volatility of stock used to estimate expected volatility | 5 years 5 months 12 days | ||||
Expected dividend yield assumption (as a percent) | 0.00% | ||||
Granted (in shares) | 1,689,357 | ||||
Accrued salaries and wages | $ 86,069 | $ 86,069 | $ 84,034 | ||
Stock based compensation expense | 2,300 | $ 2,500 | $ 4,400 | $ 5,100 | |
Weighted-average assumptions used in the Black-Scholes option-pricing model | |||||
Risk-free interest rate (as a percent) | 1.75% | 1.68% | |||
Expected volatility (as a percent) | 32.52% | 44.80% | |||
Weighted-average expected life (years) | 5 years 5 months 12 days | 5 years 5 months 12 days | |||
Phantom Share Units (PSUs) | |||||
Stock-based compensation costs | |||||
Accrued salaries and wages | 11,900 | $ 11,900 | 8,200 | ||
Total compensation cost related to nonvested awards not yet recognized | 25,200 | $ 25,200 | |||
Period for recognition of unrecognized compensation cost | 2 years 1 month 6 days | ||||
Stock based compensation expense | 5,000 | 1,200 | $ 9,500 | $ 2,600 | |
Amounts paid on cash settled awards | 100 | 100 | $ 5,300 | 6,000 | |
Phantom Share Units (PSUs) | Minimum | |||||
Stock-based compensation costs | |||||
Vesting period | 3 years | ||||
Phantom Share Units (PSUs) | Maximum | |||||
Stock-based compensation costs | |||||
Vesting period | 5 years | ||||
Stock Appreciation Rights (SARs) | |||||
Stock-based compensation costs | |||||
Vesting period | 4 years | ||||
Accrued salaries and wages | 11,100 | $ 11,100 | $ 6,300 | ||
Total compensation cost related to nonvested awards not yet recognized | 10,200 | $ 10,200 | |||
Period for recognition of unrecognized compensation cost | 2 years 10 months 2 days | ||||
Stock based compensation expense | 2,500 | $ 7,100 | 100 | ||
Stock based compensation, net | (200) | ||||
Amounts paid on cash settled awards | $ 500 | $ 700 | $ 2,300 | $ 1,200 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details 6) | Jun. 30, 2015 |
Kansas Entertainment | |
Segment Information | |
Ownership interest in joint venture (as a percent) | 50.00% |
Cordish | |
Segment Information | |
Ownership interest in joint venture (as a percent) | 50.00% |
Pending Acquisition (Details)
Pending Acquisition (Details) - Tropicana Las Vegas Hotel And Casino $ in Millions | Apr. 29, 2015USD ($)ft²aitemrestaurantroom | Dec. 31, 2015USD ($) |
Acquisitions | ||
Approximate purchase price | $ | $ 360 | |
Area of land ( in acres) | a | 35 | |
Number of remodeled guest rooms and suites at facility | room | 1,467 | |
Size of gaming floor at facility (in square feet) | ft² | 50,000 | |
Number of slot and video poker machines | 844 | |
Number of table games at facility | 38 | |
Number of restaurants | restaurant | 3 | |
Number of seats in performance theater | 1,200 | |
Number of seats in comedy club, a night club and beach club | 300 | |
Number of parking spaces | 2,950 | |
Senior Secured Credit Facility | Forecast | ||
Acquisitions | ||
Purchase price funding from senior secured credit facility | $ | $ 280 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Plant and equipment | |||||
Property and equipment | $ 1,867,795 | $ 1,867,795 | $ 1,743,950 | ||
Less accumulated depreciation | (1,032,333) | (1,032,333) | (974,805) | ||
Property and equipment, net | 835,462 | 835,462 | 769,145 | ||
Increase in property and equipment | 66,300 | ||||
Depreciation expense | 41,800 | $ 42,000 | 84,700 | $ 84,000 | |
Interest capitalized in connection with major construction projects | 1,200 | $ 100 | 1,800 | $ 200 | |
Land and Improvements | |||||
Plant and equipment | |||||
Property and equipment | 56,702 | 56,702 | 42,350 | ||
Building and Improvements | |||||
Plant and equipment | |||||
Property and equipment | 294,187 | 294,187 | 173,043 | ||
Furniture, Fixtures and Equipment | |||||
Plant and equipment | |||||
Property and equipment | 1,259,639 | 1,259,639 | 1,213,143 | ||
Leasehold Improvements | |||||
Plant and equipment | |||||
Property and equipment | 248,447 | 248,447 | 246,047 | ||
Construction in Progress | |||||
Plant and equipment | |||||
Property and equipment | $ 8,820 | $ 8,820 | $ 69,367 |
Long-term Debt (Details)
Long-term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Long-term Debt | ||
Debt and Capital Lease Obligations, Total | $ 1,284,123 | $ 1,261,888 |
Less current maturities of long-term debt | (44,015) | (30,853) |
Less discount on senior secured credit facility Term Loan B | (972) | (1,056) |
Less debt issuance costs, net of accumulated amortization of $9.7 million and $6.8 million, respectively | (22,228) | (25,151) |
Long-term debt, net of current maturities and debt issuance costs | 1,216,908 | 1,204,828 |
Debt issuance costs, accumulated amortization (in dollars) | 9,700 | 6,800 |
Senior Secured Credit Facility | ||
Long-term Debt | ||
Debt and Capital Lease Obligations, Total | 813,750 | 807,500 |
Senior Unsecured 5.875% Percent Notes | ||
Long-term Debt | ||
Debt and Capital Lease Obligations, Total | $ 300,000 | 300,000 |
Debt instrument interest rate stated percentage | 5.875% | |
Principal amount | $ 300,000 | |
Other long-term obligations | ||
Long-term Debt | ||
Debt and Capital Lease Obligations, Total | 170,196 | 154,189 |
Capital leases | ||
Long-term Debt | ||
Debt and Capital Lease Obligations, Total | $ 177 | $ 199 |
Long-term Debt (Details 2)
Long-term Debt (Details 2) $ in Thousands | Apr. 11, 2014item | Jan. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2014USD ($)item | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) |
Future minimum repayments of long-term debt | |||||||
Within one year | $ 44,015 | $ 44,015 | |||||
1-3 years | 126,953 | 126,953 | |||||
3-5 years | 478,477 | 478,477 | |||||
Over 5 years | 614,781 | 614,781 | |||||
Total minimum payments | 1,264,226 | 1,264,226 | |||||
Long-term Debt | |||||||
Interest expense | 12,295 | $ 10,892 | 24,458 | $ 22,187 | |||
Senior Secured Credit Facility | |||||||
Long-term Debt | |||||||
Gross outstanding balance | 813,800 | 813,800 | |||||
Letters of credit outstanding | 22,900 | 22,900 | |||||
Available borrowing capacity | 372,100 | $ 372,100 | |||||
Revolving credit facility | |||||||
Long-term Debt | |||||||
Term of debt | 5 years | ||||||
Maximum borrowing capacity | 500,000 | $ 500,000 | |||||
Gross outstanding balance | 105,000 | $ 105,000 | |||||
Term Loan A Facility | |||||||
Long-term Debt | |||||||
Term of debt | 5 years | ||||||
Maximum borrowing capacity | 500,000 | $ 500,000 | |||||
Gross outstanding balance | 462,500 | $ 462,500 | |||||
Term Loan B Facility | |||||||
Long-term Debt | |||||||
Term of debt | 7 years | ||||||
Maximum borrowing capacity | 250,000 | $ 250,000 | |||||
Gross outstanding balance | $ 246,300 | $ 246,300 | |||||
Senior Unsecured 5.875% Percent Notes | |||||||
Long-term Debt | |||||||
Debt instrument interest rate stated percentage | 5.875% | 5.875% | |||||
Principal amount | $ 300,000 | $ 300,000 | |||||
Other long-term obligations | |||||||
Long-term Debt | |||||||
Other long term obligations | 170,200 | 170,200 | |||||
Other long-term obligations | Plainridge Racecourse | |||||||
Long-term Debt | |||||||
Other long term obligations | 19,900 | 19,900 | |||||
Period considered to calculate contingent purchase consideration | 10 years | ||||||
Number of days for first payment due after completion of first four full fiscal quarters of operations | 60 days | ||||||
Number of quarters considered to make first payment | item | 4 | ||||||
Number of years payment after first payment | 9 years | ||||||
Accretion on instrument | 300 | 700 | |||||
Interest expense | 300 | 700 | |||||
Other long-term obligations | Hollywood Gaming at Dayton Raceway And Mahoning Valley Race Course | |||||||
Long-term Debt | |||||||
Other long term obligations | 135,000 | $ 135,000 | |||||
Discount Rate | 5.00% | ||||||
Other long-term obligations | Hollywood Casino Lawrenceburg | |||||||
Long-term Debt | |||||||
Other long term obligations | $ 15,300 | $ 15,300 | |||||
Other long-term obligations | Racetracks in Toledo and Grove City to Dayton and Austintown | |||||||
Long-term Debt | |||||||
Number of New Facilities | two | ||||||
Contractual Obligation Relocation Fee | $ 75 | ||||||
Discount Rate | 5.00% | ||||||
Relocation fee payable upon opening of the facility | $ 7,500 | ||||||
Number of semi-annual payments | item | 18 | ||||||
Semi-annual payment amount beginning one year from the commencement of operation | $ 4,800 | ||||||
Effective yield | 5.00% | 5.00% | |||||
Interest expense | $ 1,700 | $ 3,400 | |||||
Other long-term obligations | City of Lawrenceburg Department of Redevelopment | |||||||
Long-term Debt | |||||||
Term of debt | 20 years | ||||||
Purchase price of hotel and event center | $ 15,300 | ||||||
Annual payment amount | $ 1,000 | ||||||
Effective yield | 3.00% | 3.00% | |||||
Interest expense | $ 100 | $ 200 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Segment information | |||||
Net revenues | $ 700,956 | $ 652,146 | $ 1,365,094 | $ 1,293,226 | |
Income (loss) from operations | 34,694 | 23,382 | 58,172 | 41,433 | |
Depreciation and amortization | 41,752 | 47,183 | 84,674 | 94,549 | |
Income (loss) from unconsolidated affiliates | 4,154 | 1,473 | 8,136 | 3,956 | |
Impairment losses | 4,560 | 4,560 | |||
Capital expenditures | 71,700 | 43,273 | 120,489 | 80,314 | |
Total assets | 2,325,048 | 2,325,048 | $ 2,211,279 | ||
Investment in and advances to unconsolidated affiliates | 173,726 | 173,726 | 179,551 | ||
Goodwill and other intangible assets, net | 645,584 | 645,584 | 648,144 | ||
East/Midwest | |||||
Segment information | |||||
Net revenues | 417,756 | 361,357 | 804,300 | 710,805 | |
Income (loss) from operations | 27,853 | 17,003 | 46,947 | 26,605 | |
Depreciation and amortization | 27,342 | 25,911 | 55,614 | 52,734 | |
Impairment losses | 4,560 | 4,560 | |||
Capital expenditures | 60,150 | 16,988 | 98,724 | 27,098 | |
Total assets | 1,090,333 | 1,090,333 | 990,031 | ||
Investment in and advances to unconsolidated affiliates | 91 | 91 | 94 | ||
Goodwill and other intangible assets, net | 264,261 | 264,261 | 264,147 | ||
West | |||||
Segment information | |||||
Net revenues | 63,664 | 59,033 | 126,250 | 119,953 | |
Income (loss) from operations | 7,410 | 7,426 | 13,919 | 15,482 | |
Depreciation and amortization | 2,297 | 1,692 | 4,685 | 3,241 | |
Capital expenditures | 2,363 | 9,617 | 5,214 | 16,047 | |
Total assets | 332,962 | 332,962 | 289,026 | ||
Goodwill and other intangible assets, net | 145,198 | 145,198 | 145,054 | ||
Southern Plains | |||||
Segment information | |||||
Net revenues | 213,689 | 224,726 | 423,958 | 448,483 | |
Income (loss) from operations | 26,333 | 17,970 | 50,907 | 39,197 | |
Depreciation and amortization | 10,697 | 17,573 | 21,480 | 34,824 | |
Income (loss) from unconsolidated affiliates | 4,401 | 2,621 | 8,189 | 5,074 | |
Capital expenditures | 8,003 | 13,990 | 14,451 | 33,333 | |
Total assets | 565,278 | 565,278 | 592,405 | ||
Investment in and advances to unconsolidated affiliates | 109,658 | 109,658 | 115,469 | ||
Goodwill and other intangible assets, net | 232,047 | 232,047 | 234,865 | ||
Other | |||||
Segment information | |||||
Net revenues | 5,847 | 7,030 | 10,586 | 13,985 | |
Income (loss) from operations | (26,902) | (19,017) | (53,601) | (39,851) | |
Depreciation and amortization | 1,416 | 2,007 | 2,895 | 3,750 | |
Income (loss) from unconsolidated affiliates | (247) | (1,148) | (53) | (1,118) | |
Capital expenditures | 1,184 | $ 2,678 | 2,100 | $ 3,836 | |
Total assets | 336,475 | 336,475 | 339,817 | ||
Investment in and advances to unconsolidated affiliates | 63,977 | 63,977 | 63,988 | ||
Goodwill and other intangible assets, net | $ 4,078 | $ 4,078 | $ 4,078 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Jun. 30, 2015 | Dec. 31, 2014 |
Income Taxes | ||
Net deferred tax assets | $ 126.9 | $ 134.6 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Financial assets: | |||||
Interest expense | $ 12,295 | $ 10,892 | $ 24,458 | $ 22,187 | |
Carrying Amount | |||||
Financial assets: | |||||
Cash and Cash Equivalents | 233,118 | 233,118 | $ 208,673 | ||
Fair Value | |||||
Financial assets: | |||||
Cash and Cash Equivalents | 233,118 | 233,118 | 208,673 | ||
Level 1 | |||||
Financial assets: | |||||
Cash and Cash Equivalents | 233,118 | 233,118 | 208,673 | ||
Senior Secured Credit Facility | Carrying Amount | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 794,619 | 794,619 | 785,683 | ||
Senior Secured Credit Facility | Fair Value | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 805,901 | 805,901 | 799,556 | ||
Senior Secured Credit Facility | Level 1 | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 700,901 | 700,901 | 714,556 | ||
Senior Secured Credit Facility | Level 2 | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 105,000 | 105,000 | 85,000 | ||
Senior Unsecured Notes | Carrying Amount | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 295,931 | 295,931 | 295,610 | ||
Senior Unsecured Notes | Fair Value | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 300,000 | 300,000 | 276,000 | ||
Senior Unsecured Notes | Level 1 | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 300,000 | $ 300,000 | 276,000 | ||
Other long-term obligations | Hollywood Gaming at Dayton Raceway And Mahoning Valley Race Course | |||||
Financial assets: | |||||
Discount Rate | 5.00% | ||||
Other long-term obligations | Carrying Amount | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 170,196 | $ 170,196 | 154,189 | ||
Other long-term obligations | Fair Value | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 167,575 | 167,575 | 154,189 | ||
Other long-term obligations | Level 2 | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 147,679 | 147,679 | 135,000 | ||
Other long-term obligations | Level 3 | |||||
Financial assets: | |||||
Debt Instrument, Fair Value Disclosure | 19,896 | 19,896 | $ 19,189 | ||
Other long-term obligations | Plainridge Racecourse | |||||
Financial assets: | |||||
Interest expense | $ 300 | $ 700 |