x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 47-4668380 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o | Emerging growth company o |
(Do not check if a smaller reporting company) |
EX-101 INSTANCE DOCUMENT | |
EX-101 SCHEMA DOCUMENT | |
EX-101 CALCULATION LINKBASE DOCUMENT | |
EX-101 LABELS LINKBASE DOCUMENT | |
EX-101 PRESENTATION LINKBASE DOCUMENT | |
EX-101 DEFINITION LINKBASE DOCUMENT |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Gaming | $ | 575,290 | $ | 530,097 | $ | 1,731,433 | $ | 1,556,636 | |||||||
Food and beverage | 33,608 | 32,160 | 100,837 | 93,901 | |||||||||||
Lodging | 14,562 | 14,490 | 40,024 | 38,871 | |||||||||||
Retail, entertainment and other | 23,943 | 18,427 | 68,725 | 52,023 | |||||||||||
Total revenues | 647,403 | 595,174 | 1,941,019 | 1,741,431 | |||||||||||
Expenses and other costs: | |||||||||||||||
Gaming | 309,976 | 288,389 | 939,449 | 822,181 | |||||||||||
Food and beverage | 31,895 | 31,175 | 95,586 | 89,267 | |||||||||||
Lodging | 6,817 | 6,893 | 19,380 | 18,676 | |||||||||||
Retail, entertainment and other | 11,198 | 7,899 | 31,128 | 19,299 | |||||||||||
General and administrative | 117,067 | 108,999 | 344,341 | 340,867 | |||||||||||
Depreciation and amortization | 54,125 | 54,354 | 166,300 | 162,423 | |||||||||||
Pre-opening, development and other costs | 403 | 5,594 | 2,997 | 54,951 | |||||||||||
Impairment of goodwill | — | (11,600 | ) | — | 321,300 | ||||||||||
Impairment of other intangible assets | — | — | — | 129,500 | |||||||||||
Write-downs, reserves and recoveries, net | 4,192 | 6,190 | 12,644 | 13,830 | |||||||||||
Total expenses and other costs | 535,673 | 497,893 | 1,611,825 | 1,972,294 | |||||||||||
Operating income (loss) | 111,730 | 97,281 | 329,194 | (230,863 | ) | ||||||||||
Interest expense, net | (95,851 | ) | (94,276 | ) | (286,589 | ) | (239,116 | ) | |||||||
Loss on early extinguishment of debt | (516 | ) | — | (516 | ) | (5,207 | ) | ||||||||
Loss from equity method investment | — | — | (90 | ) | (90 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 15,363 | 3,005 | 41,999 | (475,276 | ) | ||||||||||
Income tax benefit (expense) | (1,423 | ) | (3,537 | ) | (2,425 | ) | 26,435 | ||||||||
Income (loss) from continuing operations | 13,940 | (532 | ) | 39,574 | (448,841 | ) | |||||||||
Income from discontinued operations, net of income taxes | — | 37 | — | 433 | |||||||||||
Net income (loss) | 13,940 | (495 | ) | 39,574 | (448,408 | ) | |||||||||
Less: Net loss attributable to non-controlling interest | 193 | 9 | 1,153 | 24 | |||||||||||
Net income (loss) attributable to Pinnacle Entertainment, Inc. | $ | 14,133 | $ | (486 | ) | $ | 40,727 | $ | (448,384 | ) | |||||
Net income (loss) per common share—basic | |||||||||||||||
Income (loss) from continuing operations | $ | 0.25 | $ | (0.01 | ) | $ | 0.72 | $ | (7.52 | ) | |||||
Income from discontinued operations, net of income taxes | — | 0.00 | — | 0.01 | |||||||||||
Net income (loss) per common share—basic | $ | 0.25 | $ | (0.01 | ) | $ | 0.72 | $ | (7.51 | ) | |||||
Net income (loss) per common share—diluted | |||||||||||||||
Income (loss) from continuing operations | $ | 0.23 | $ | (0.01 | ) | $ | 0.66 | $ | (7.52 | ) | |||||
Income from discontinued operations, net of income taxes | — | 0.00 | — | 0.01 | |||||||||||
Net income (loss) per common share—diluted | $ | 0.23 | $ | (0.01 | ) | $ | 0.66 | $ | (7.51 | ) | |||||
Number of shares—basic | 56,799 | 57,004 | 56,478 | 59,722 | |||||||||||
Number of shares—diluted | 61,880 | 57,004 | 61,738 | 59,722 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income (loss) | $ | 13,940 | $ | (495 | ) | $ | 39,574 | $ | (448,408 | ) | |||||
Comprehensive income (loss) | 13,940 | (495 | ) | 39,574 | (448,408 | ) | |||||||||
Less: Comprehensive loss attributable to non-controlling interest | 193 | 9 | 1,153 | 24 | |||||||||||
Comprehensive income (loss) attributable to Pinnacle Entertainment, Inc. | $ | 14,133 | $ | (486 | ) | $ | 40,727 | $ | (448,384 | ) |
September 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 144,374 | $ | 185,093 | |||
Accounts receivable, net of allowance for doubtful accounts of $5,898 and $5,282 | 40,104 | 42,997 | |||||
Inventories | 10,538 | 9,967 | |||||
Prepaid expenses and other assets | 25,654 | 17,760 | |||||
Total current assets | 220,670 | 255,817 | |||||
Land, buildings, vessels and equipment, net | 2,657,292 | 2,768,491 | |||||
Goodwill | 610,889 | 610,889 | |||||
Other intangible assets, net | 385,798 | 392,398 | |||||
Other assets, net | 51,649 | 49,472 | |||||
Total assets | $ | 3,926,298 | $ | 4,077,067 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 37,021 | $ | 69,069 | |||
Accrued interest | 12,382 | 5,286 | |||||
Accrued compensation | 65,609 | 72,939 | |||||
Accrued taxes | 71,779 | 58,207 | |||||
Current portion of long-term debt | 10,414 | 12,258 | |||||
Current portion of long-term financing obligation | 34,956 | 49,770 | |||||
Other accrued liabilities | 78,738 | 91,062 | |||||
Total current liabilities | 310,899 | 358,591 | |||||
Long-term debt less current portion | 814,101 | 924,442 | |||||
Long-term financing obligation less current portion | 3,091,608 | 3,113,529 | |||||
Deferred income taxes | 15,145 | 13,242 | |||||
Other long-term liabilities | 38,308 | 40,143 | |||||
Total liabilities | 4,270,061 | 4,449,947 | |||||
Commitments and contingencies (Note 8) | |||||||
Stockholders’ Deficit: | |||||||
Preferred stock—$0.01 par value, 250,000 shares authorized, none issued or outstanding | — | — | |||||
Common stock—$0.01 par value, 150,000,000 authorized, 57,025,771 and 55,812,425 shares issued and outstanding, net of treasury shares | 644 | 620 | |||||
Additional paid-in capital | 931,336 | 919,974 | |||||
Accumulated deficit | (1,193,092 | ) | (1,233,819 | ) | |||
Accumulated other comprehensive income | 326 | 326 | |||||
Treasury stock, at cost, 7,347,844 and 6,209,541 of treasury shares | (92,009 | ) | (70,166 | ) | |||
Total Pinnacle stockholders’ deficit | (352,795 | ) | (383,065 | ) | |||
Non-controlling interest | 9,032 | 10,185 | |||||
Total stockholders’ deficit | (343,763 | ) | (372,880 | ) | |||
Total liabilities and stockholders’ deficit | $ | 3,926,298 | $ | 4,077,067 |
Capital Stock | ||||||||||||||||||||||||||||||||||
Number of Shares | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock | Total Pinnacle Stockholders’ Deficit | Non-Controlling Interest | Total Stockholders’ Deficit | ||||||||||||||||||||||||||
Balance as of January 1, 2017 | 55,812 | $ | 620 | $ | 919,974 | $ | (1,233,819 | ) | $ | 326 | $ | (70,166 | ) | $ | (383,065 | ) | $ | 10,185 | $ | (372,880 | ) | |||||||||||||
Net income (loss) | — | — | — | 40,727 | — | — | 40,727 | (1,153 | ) | 39,574 | ||||||||||||||||||||||||
Share-based compensation | — | — | 10,399 | — | — | — | 10,399 | — | 10,399 | |||||||||||||||||||||||||
Common stock issuance and option exercises | 2,352 | 24 | 3,593 | — | — | — | 3,617 | — | 3,617 | |||||||||||||||||||||||||
Forfeiture of restricted stock awards | (16 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Treasury stock purchases | (1,122 | ) | — | — | — | — | (21,843 | ) | (21,843 | ) | — | (21,843 | ) | |||||||||||||||||||||
Tax withholding related to vesting of share-based awards | — | — | (2,630 | ) | — | — | — | (2,630 | ) | — | (2,630 | ) | ||||||||||||||||||||||
Balance as of September 30, 2017 | 57,026 | $ | 644 | $ | 931,336 | $ | (1,193,092 | ) | $ | 326 | $ | (92,009 | ) | $ | (352,795 | ) | $ | 9,032 | $ | (343,763 | ) |
For the nine months ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | 39,574 | $ | (448,408 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 166,300 | 162,423 | |||||
Loss on sales or disposals of long-lived assets, net | 7,753 | 13,092 | |||||
Loss from equity method investment | 90 | 90 | |||||
Loss on early extinguishment of debt | 516 | 5,207 | |||||
Impairment of goodwill | — | 321,300 | |||||
Impairment of other intangible assets | — | 129,500 | |||||
Impairment of held-to-maturity securities | 3,844 | — | |||||
Impairment of long-lived assets | — | 238 | |||||
Amortization of debt issuance costs and debt discounts/premiums | 6,877 | 5,964 | |||||
Share-based compensation expense | 10,399 | 32,654 | |||||
Change in income taxes | (675 | ) | (37,285 | ) | |||
Changes in operating assets and liabilities: | |||||||
Receivables, net | 2,673 | 2,109 | |||||
Prepaid expenses and other | (13,422 | ) | (5,303 | ) | |||
Accounts payable, accrued expenses and other | (31,274 | ) | (15,942 | ) | |||
Net cash provided by operating activities | 192,655 | 165,639 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (56,392 | ) | (73,103 | ) | |||
Payment for business combination, net of cash acquired | — | (103,365 | ) | ||||
Net proceeds from disposition of asset held for sale | — | 10,325 | |||||
Proceeds from sales of furniture, fixtures and equipment | 86 | 143 | |||||
Loans receivable | (2,000 | ) | (1,500 | ) | |||
Restricted cash | 603 | — | |||||
Net cash used in investing activities | (57,703 | ) | (167,500 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from Senior Secured Credit Facilities | 471,100 | 902,900 | |||||
Repayments under Senior Secured Credit Facilities | (589,507 | ) | (313,963 | ) | |||
Proceeds from Former Senior Secured Credit Facilities | — | 134,500 | |||||
Repayments under Former Senior Secured Credit Facilities | — | (1,011,285 | ) | ||||
Proceeds from issuance of long-term debt | — | 375,000 | |||||
Repayments under financing obligation | (36,735 | ) | (19,238 | ) | |||
Proceeds from common stock options exercised | 3,617 | 579 | |||||
Purchase of treasury stock | (21,342 | ) | (60,402 | ) | |||
Debt issuance costs and debt discount | — | (14,276 | ) | ||||
Other | (2,804 | ) | (1,192 | ) | |||
Net cash used in financing activities | (175,671 | ) | (7,377 | ) | |||
Change in cash and cash equivalents | (40,719 | ) | (9,238 | ) | |||
Cash and cash equivalents at the beginning of the period | 185,093 | 164,034 | |||||
Cash and cash equivalents at the end of the period | $ | 144,374 | $ | 154,796 | |||
Supplemental Cash Flow Information: | |||||||
Cash paid for interest, net of amounts capitalized | $ | 272,888 | $ | 240,156 | |||
Cash payments related to income taxes, net | $ | 3,001 | $ | 9,811 | |||
Increase (decrease) in construction-related deposits and liabilities | $ | (313 | ) | $ | 656 | ||
Non-cash issuance of common stock | $ | — | $ | 686 | |||
Non-cash retirement of debt in connection with Spin-Off and Merger | $ | — | $ | (2,761,287 | ) | ||
Non-cash settlement of accrued interest in connection with Spin-Off and Merger | $ | — | $ | (34,133 | ) | ||
Non-cash recognition of financing obligation | $ | — | $ | 3,194,287 | |||
Non-cash consideration for business combination | $ | — | $ | 4,563 |
Midwest segment, which includes: | Location |
Ameristar Council Bluffs (1) | Council Bluffs, Iowa |
Ameristar East Chicago (1) | East Chicago, Indiana |
Ameristar Kansas City (1) | Kansas City, Missouri |
Ameristar St. Charles (1) | St. Charles, Missouri |
Belterra Resort (1) | Florence, Indiana |
Belterra Park | Cincinnati, Ohio |
Meadows (2) | Washington, Pennsylvania |
River City (1) | St. Louis, Missouri |
South segment, which includes: | Location |
Ameristar Vicksburg (1) | Vicksburg, Mississippi |
Boomtown Bossier City (1) | Bossier City, Louisiana |
Boomtown New Orleans (1) | New Orleans, Louisiana |
L’Auberge Baton Rouge (1) | Baton Rouge, Louisiana |
L’Auberge Lake Charles (1) | Lake Charles, Louisiana |
West segment, which includes: | Location |
Ameristar Black Hawk (1) | Black Hawk, Colorado |
Cactus Petes and Horseshu (1) | Jackpot, Nevada |
(1) | We lease the real estate associated with these gaming facilities under the terms of the Master Lease. |
(2) | The Meadows Racetrack and Casino (the “Meadows”) was acquired on September 9, 2016, as discussed below. We lease the real estate associated with this gaming facility under the terms of the Meadows Lease. |
Fair Value Measurements Using: | |||||||||||||||||||
Total Carrying Amount | Total Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
(in millions) | |||||||||||||||||||
As of September 30, 2017 | |||||||||||||||||||
Assets: | |||||||||||||||||||
Held-to-maturity securities | $ | 10.4 | $ | 10.4 | $ | — | $ | 7.5 | $ | 2.9 | |||||||||
Promissory notes | $ | 16.9 | $ | 17.2 | $ | — | $ | 17.2 | $ | — | |||||||||
Liabilities: | |||||||||||||||||||
Long-term debt | $ | 824.5 | $ | 843.1 | $ | — | $ | 843.1 | $ | — | |||||||||
Other long-term liabilities | $ | 5.1 | $ | 5.2 | $ | — | $ | 5.2 | $ | — | |||||||||
As of December 31, 2016 | |||||||||||||||||||
Assets: | |||||||||||||||||||
Held-to-maturity securities | $ | 14.3 | $ | 16.4 | $ | — | $ | 13.4 | $ | 3.0 | |||||||||
Promissory notes | $ | 15.6 | $ | 19.8 | $ | — | $ | 19.8 | $ | — | |||||||||
Liabilities: | |||||||||||||||||||
Long-term debt | $ | 936.7 | $ | 953.2 | $ | — | $ | 953.2 | $ | — | |||||||||
Other long-term liabilities | $ | 5.5 | $ | 5.6 | $ | — | $ | 5.6 | $ | — |
September 30, 2017 | December 31, 2016 | ||||||
(in millions) | |||||||
Land, buildings, vessels and equipment: | |||||||
Land and land improvements | $ | 429.1 | $ | 426.7 | |||
Buildings, vessels and improvements | 2,696.7 | 2,689.0 | |||||
Furniture, fixtures and equipment | 805.0 | 805.9 | |||||
Construction in progress | 26.8 | 32.7 | |||||
Land, buildings, vessels and equipment, gross | 3,957.6 | 3,954.3 | |||||
Less: accumulated depreciation | (1,300.3 | ) | (1,185.8 | ) | |||
Land, buildings, vessels and equipment, net | $ | 2,657.3 | $ | 2,768.5 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Food and beverage | $ | 35.6 | $ | 35.6 | $ | 106.7 | $ | 103.1 | |||||||
Lodging | 16.5 | 16.7 | 47.8 | 48.8 | |||||||||||
Other | 4.4 | 4.2 | 12.6 | 11.9 | |||||||||||
Total promotional allowances | $ | 56.5 | $ | 56.5 | $ | 167.1 | $ | 163.8 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Promotional allowance costs included in gaming expense | $ | 40.6 | $ | 41.4 | $ | 122.8 | $ | 117.9 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Gaming taxes | $ | 175.2 | $ | 153.8 | $ | 529.0 | $ | 442.3 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Restructuring costs (1) | $ | 0.2 | $ | 1.3 | $ | 0.9 | $ | 48.1 | |||||||
Meadows acquisition costs (2) | — | 4.1 | 0.2 | 6.2 | |||||||||||
Other | 0.2 | 0.2 | 1.9 | 0.7 | |||||||||||
Total pre-opening, development and other costs | $ | 0.4 | $ | 5.6 | $ | 3.0 | $ | 55.0 |
(1) | Amounts comprised principally of costs associated with the Spin-Off and Merger. See Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease.” |
(2) | Amounts comprised principally of legal, advisory and other costs associated with the acquisition and integration of the Meadows. See Note 7, “Investment and Acquisition Activities.” |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Reduction of financing obligation | $ | 12.7 | $ | 11.4 | $ | 36.7 | $ | 19.2 | |||||||
Interest expense attributable to financing obligation | 83.8 | 83.6 | 247.7 | 141.9 | |||||||||||
Total lease payments under the Master Lease | $ | 96.5 | $ | 95.0 | $ | 284.4 | $ | 161.1 |
September 30, 2017 | |||||||||||
Outstanding Principal | Unamortized Discount and Debt Issuance Costs | Long-Term Debt, Net | |||||||||
(in millions) | |||||||||||
Senior Secured Credit Facilities: | |||||||||||
Revolving Credit Facility due 2021 | $ | 161.0 | $ | — | $ | 161.0 | |||||
Term Loan A Facility due 2021 | 173.4 | (2.6 | ) | 170.8 | |||||||
5.625% Notes due 2024 | 500.0 | (7.4 | ) | 492.6 | |||||||
Other | 0.1 | — | 0.1 | ||||||||
Total debt including current maturities | 834.5 | (10.0 | ) | 824.5 | |||||||
Less: current maturities | (10.4 | ) | — | (10.4 | ) | ||||||
Total long-term debt | $ | 824.1 | $ | (10.0 | ) | $ | 814.1 |
December 31, 2016 | |||||||||||
Outstanding Principal | Unamortized Discount and Debt Issuance Costs | Long-Term Debt, Net | |||||||||
(in millions) | |||||||||||
Senior Secured Credit Facilities: | |||||||||||
Revolving Credit Facility due 2021 | $ | 107.2 | $ | — | $ | 107.2 | |||||
Term Loan A Facility due 2021 | 180.4 | (3.2 | ) | 177.2 | |||||||
Term Loan B Facility due 2023 | 165.2 | (4.9 | ) | 160.3 | |||||||
5.625% Notes due 2024 | 500.0 | (8.1 | ) | 491.9 | |||||||
Other | 0.1 | — | 0.1 | ||||||||
Total debt including current maturities | 952.9 | (16.2 | ) | 936.7 | |||||||
Less: current maturities | (12.3 | ) | — | (12.3 | ) | ||||||
Total long-term debt | $ | 940.6 | $ | (16.2 | ) | $ | 924.4 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Interest expense from financing obligation (1) | $ | 83.8 | $ | 83.6 | $ | 247.7 | $ | 141.9 | |||||||
Interest expense from debt (2) | 12.2 | 11.0 | 39.2 | 95.3 | |||||||||||
Interest income | (0.1 | ) | (0.3 | ) | (0.3 | ) | (0.5 | ) | |||||||
Capitalized interest | — | — | — | (0.1 | ) | ||||||||||
Other (3) | — | — | — | 2.5 | |||||||||||
Interest expense, net | $ | 95.9 | $ | 94.3 | $ | 286.6 | $ | 239.1 |
(1) | See Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease,” for information on total lease payments under the Master Lease. |
(2) | Interest expense associated with the Former Senior Secured Credit Facilities, the 6.375% Notes, the 7.50% Notes, the 7.75% Notes, and the 8.75% Notes, which were no longer obligations of the Company as of April 28, 2016, included in the nine months ended September 30, 2016 was $76.5 million. |
(3) | Represents a nonrecurring expense associated with the GLPI transaction. |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Share-based compensation expense | $ | 3.7 | $ | 2.6 | $ | 10.4 | $ | 32.7 |
Number of Stock Options | Weighted Average Exercise Price | |||||
Options outstanding as of January 1, 2017 | 6,387,115 | $ | 6.16 | |||
Granted | 20,000 | $ | 19.30 | |||
Exercised | (1,065,813 | ) | $ | 4.22 | ||
Canceled or forfeited | (119,647 | ) | $ | 9.11 | ||
Options outstanding as of September 30, 2017 | 5,221,655 | $ | 6.54 | |||
Options exercisable as of September 30, 2017 | 3,735,994 | $ | 4.97 | |||
Expected to vest as of September 30, 2017 | 1,222,278 | $ | 10.52 |
For the nine months ended September 30, | |||||||
2017 | 2016 | ||||||
Weighted-average grant date fair value | $ | 6.37 | $ | 4.05 |
Number of Units | Weighted Average Grant Date Fair Value | |||||
Non-vested as of January 1, 2017 | 2,183,056 | $ | 9.65 | |||
Granted | 573,085 | $ | 19.01 | |||
Vested | (547,636 | ) | $ | 9.36 | ||
Canceled or forfeited | (159,091 | ) | $ | 12.39 | ||
Non-vested as of September 30, 2017 | 2,049,414 | $ | 12.14 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Non-vested as of January 1, 2017 | 340,620 | $ | 14.24 | |||
Granted | 713,470 | $ | 20.92 | |||
Canceled or forfeited | (11,428 | ) | $ | 18.70 | ||
Non-vested as of September 30, 2017 | 1,042,662 | $ | 18.77 |
Number of Units | Weighted Average Grant Date Fair Value | |||||
Non-vested as of January 1, 2017 | 108,855 | $ | 7.84 | |||
Vested | (108,855 | ) | $ | 7.84 | ||
Non-vested as of September 30, 2017 | — | $ | — |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Loss on sales or disposals of long-lived assets, net | $ | 3.0 | $ | 6.2 | $ | 7.8 | $ | 13.1 | |||||||
Impairment of held-to-maturity securities | — | — | 3.8 | — | |||||||||||
Impairment of long-lived assets | — | — | — | 0.2 | |||||||||||
Other | 1.2 | — | 1.1 | 0.5 | |||||||||||
Write-downs, reserves and recoveries, net | $ | 4.2 | $ | 6.2 | $ | 12.7 | $ | 13.8 |
Current and other assets | $ | 35,953 | |
Property and equipment | 39,265 | ||
Goodwill | 18,822 | ||
Other intangible assets | 71,300 | ||
Other non-current assets | 3,001 | ||
Total assets | 168,341 | ||
Current liabilities | 18,524 | ||
Deferred tax liabilities | 10,624 | ||
Other long-term liabilities | 5,145 | ||
Total liabilities | 34,293 | ||
Net assets acquired | $ | 134,048 |
As Recorded at Fair Value | |||
(in thousands) | |||
Furniture, fixtures and equipment | $ | 39,240 | |
Construction in progress | 25 | ||
Total property and equipment acquired | $ | 39,265 |
As Recorded at Fair Value | |||
(in thousands) | |||
Gaming licenses | $ | 56,300 | |
Trade name | 15,000 | ||
Total other intangible assets acquired | $ | 71,300 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Revenues: | |||||||||||||||
Midwest segment (a) | $ | 391.7 | $ | 333.5 | $ | 1,171.7 | $ | 980.8 | |||||||
South segment (a) | 188.7 | 197.0 | 583.0 | 579.0 | |||||||||||
West segment (a) | 65.3 | 62.9 | 182.1 | 177.2 | |||||||||||
645.7 | 593.4 | 1,936.8 | 1,737.0 | ||||||||||||
Corporate and other (c) | 1.7 | 1.8 | 4.2 | 4.4 | |||||||||||
Total revenues | $ | 647.4 | $ | 595.2 | $ | 1,941.0 | $ | 1,741.4 | |||||||
Adjusted EBITDAR (b): | |||||||||||||||
Midwest segment (a) | $ | 112.2 | $ | 92.8 | $ | 334.2 | $ | 299.0 | |||||||
South segment (a) | 60.2 | 58.1 | 189.7 | 180.5 | |||||||||||
West segment (a) | 26.7 | 24.2 | 70.8 | 66.8 | |||||||||||
199.1 | 175.1 | 594.7 | 546.3 | ||||||||||||
Corporate expenses and other (c) | (21.0 | ) | (19.7 | ) | (61.0 | ) | (61.5 | ) | |||||||
Consolidated Adjusted EBITDAR (b) | 178.1 | 155.4 | 533.7 | 484.8 | |||||||||||
Other benefits (costs): | |||||||||||||||
Rent expense under the Meadows Lease | (4.0 | ) | (1.0 | ) | (12.1 | ) | (1.0 | ) | |||||||
Depreciation and amortization | (54.1 | ) | (54.3 | ) | (166.3 | ) | (162.4 | ) | |||||||
Pre-opening, development and other costs | (0.4 | ) | (5.6 | ) | (3.0 | ) | (55.0 | ) | |||||||
Non-cash share-based compensation expense | (3.7 | ) | (2.6 | ) | (10.4 | ) | (32.7 | ) | |||||||
Impairment of goodwill | — | 11.6 | — | (321.3 | ) | ||||||||||
Impairment of other intangible assets | — | — | — | (129.5 | ) | ||||||||||
Write-downs, reserves and recoveries, net | (4.2 | ) | (6.2 | ) | (12.7 | ) | (13.8 | ) | |||||||
Interest expense, net | (95.9 | ) | (94.3 | ) | (286.6 | ) | (239.1 | ) | |||||||
Loss on early extinguishment of debt | (0.5 | ) | — | (0.5 | ) | (5.2 | ) | ||||||||
Loss from equity method investment | — | — | (0.1 | ) | (0.1 | ) | |||||||||
Income tax benefit (expense) | (1.4 | ) | (3.5 | ) | (2.4 | ) | 26.5 | ||||||||
Income (loss) from continuing operations | $ | 13.9 | $ | (0.5 | ) | $ | 39.6 | $ | (448.8 | ) |
For the nine months ended September 30, | |||||||
2017 | 2016 | ||||||
(in millions) | |||||||
Capital expenditures: | |||||||
Midwest segment (a) | $ | 30.5 | $ | 42.1 | |||
South segment (a) | 15.0 | 21.6 | |||||
West segment (a) | 3.4 | 6.7 | |||||
Corporate and other, including development projects | 7.5 | 2.7 | |||||
$ | 56.4 | $ | 73.1 |
(a) | See Note 1, “Organization and Summary of Significant Accounting Policies,” for listing of properties included in each segment. |
(b) | We define Consolidated Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. We define Adjusted EBITDAR for each segment as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, inter-company management fees, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of discontinued operations and discontinued operations. We use Consolidated Adjusted EBITDAR and Adjusted EBITDAR for each reportable segment to compare operating results among our properties and between accounting periods. Consolidated Adjusted EBITDAR and Adjusted EBITDAR have economic substance because they are used by management as measures to analyze the performance of our business and are especially relevant in evaluating large, long-lived casino-hotel projects because they provide a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We eliminate the results from discontinued operations at the time they are deemed discontinued. We also review pre-opening, development and other costs separately, as such expenses are also included in total project costs when assessing budgets and project returns, and because such costs relate to anticipated future revenues and income. We believe that Consolidated Adjusted EBITDAR and Adjusted EBITDAR are useful measures for investors because they are indicators of the performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value of companies within our industry. In addition, Consolidated Adjusted EBITDAR approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR and Adjusted EBITDAR do not include depreciation or interest expense and, therefore, do not reflect current or future capital expenditures or the cost of capital. Consolidated Adjusted EBITDAR should not be considered as an alternative to operating income (loss) as an indicator of performance, or as an alternative to any other measure provided in accordance with GAAP. Our calculations of Consolidated Adjusted EBITDAR and Adjusted EBITDAR may be different from the calculation methods used by other companies and, therefore, comparability may be limited. |
(c) | Corporate and other includes revenues from a live and televised poker tournament series that operates under the trade name Heartland Poker Tour (“HPT”) and management of Retama Park Racetrack. Corporate expenses represent payroll, professional fees, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations. Corporate expenses that are directly attributable to a property are allocated to each applicable property. Other includes expenses relating to the operation of HPT and management of Retama Park Racetrack. |
Midwest segment, which includes: | Location |
Ameristar Council Bluffs (1) | Council Bluffs, Iowa |
Ameristar East Chicago (1) | East Chicago, Indiana |
Ameristar Kansas City (1) | Kansas City, Missouri |
Ameristar St. Charles (1) | St. Charles, Missouri |
Belterra Resort (1) | Florence, Indiana |
Belterra Park | Cincinnati, Ohio |
Meadows (2) | Washington, Pennsylvania |
River City (1) | St. Louis, Missouri |
South segment, which includes: | Location |
Ameristar Vicksburg (1) | Vicksburg, Mississippi |
Boomtown Bossier City (1) | Bossier City, Louisiana |
Boomtown New Orleans (1) | New Orleans, Louisiana |
L’Auberge Baton Rouge (1) | Baton Rouge, Louisiana |
L’Auberge Lake Charles (1) | Lake Charles, Louisiana |
West segment, which includes: | Location |
Ameristar Black Hawk (1) | Black Hawk, Colorado |
Cactus Petes and Horseshu (1) | Jackpot, Nevada |
(1) | We lease the real estate associated with these gaming facilities under the terms of the Master Lease. |
(2) | The Meadows Racetrack and Casino (the “Meadows”) was acquired on September 9, 2016, as discussed below. We lease the real estate associated with this gaming facility under the terms of the Meadows Lease. |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Revenues: | |||||||||||||||
Midwest segment (a) | $ | 391.7 | $ | 333.5 | $ | 1,171.7 | $ | 980.8 | |||||||
South segment (a) | 188.7 | 197.0 | 583.0 | 579.0 | |||||||||||
West segment (a) | 65.3 | 62.9 | 182.1 | 177.2 | |||||||||||
645.7 | 593.4 | 1,936.8 | 1,737.0 | ||||||||||||
Corporate and other (c) | 1.7 | 1.8 | 4.2 | 4.4 | |||||||||||
Total revenues | $ | 647.4 | $ | 595.2 | $ | 1,941.0 | $ | 1,741.4 | |||||||
Adjusted EBITDAR (b): | |||||||||||||||
Midwest segment (a) | $ | 112.2 | $ | 92.8 | $ | 334.2 | $ | 299.0 | |||||||
South segment (a) | 60.2 | 58.1 | 189.7 | 180.5 | |||||||||||
West segment (a) | 26.7 | 24.2 | 70.8 | 66.8 | |||||||||||
199.1 | 175.1 | 594.7 | 546.3 | ||||||||||||
Corporate expenses and other (c) | (21.0 | ) | (19.7 | ) | (61.0 | ) | (61.5 | ) | |||||||
Consolidated Adjusted EBITDAR (b) | 178.1 | 155.4 | 533.7 | 484.8 | |||||||||||
Lease Payments (d) | (102.7 | ) | (96.5 | ) | (303.4 | ) | (162.7 | ) | |||||||
Consolidated Adjusted EBITDA, net of Lease Payments (d) | 75.4 | 58.9 | 230.3 | 322.1 | |||||||||||
Other benefits (costs) and adjustments: | |||||||||||||||
Lease Payments (d) | 102.7 | 96.5 | 303.4 | 162.7 | |||||||||||
Rent expense under the Meadows Lease | (4.0 | ) | (1.0 | ) | (12.1 | ) | (1.0 | ) | |||||||
Depreciation and amortization | (54.1 | ) | (54.3 | ) | (166.3 | ) | (162.4 | ) | |||||||
Pre-opening, development and other costs | (0.4 | ) | (5.6 | ) | (3.0 | ) | (55.0 | ) | |||||||
Non-cash share-based compensation expense | (3.7 | ) | (2.6 | ) | (10.4 | ) | (32.7 | ) | |||||||
Impairment of goodwill | — | 11.6 | — | (321.3 | ) | ||||||||||
Impairment of other intangible assets | — | — | — | (129.5 | ) | ||||||||||
Write-downs, reserves and recoveries, net | (4.2 | ) | (6.2 | ) | (12.7 | ) | (13.8 | ) | |||||||
Interest expense, net | (95.9 | ) | (94.3 | ) | (286.6 | ) | (239.1 | ) | |||||||
Loss on early extinguishment of debt | (0.5 | ) | — | (0.5 | ) | (5.2 | ) | ||||||||
Loss from equity method investment | — | — | (0.1 | ) | (0.1 | ) | |||||||||
Income tax benefit (expense) | (1.4 | ) | (3.5 | ) | (2.4 | ) | 26.5 | ||||||||
Income (loss) from continuing operations | $ | 13.9 | $ | (0.5 | ) | $ | 39.6 | $ | (448.8 | ) | |||||
Consolidated Adjusted EBITDAR margin | 27.5 | % | 26.1 | % | 27.5 | % | 27.8 | % | |||||||
Income (loss) from continuing operations margin | 2.2 | % | (0.1 | )% | 2.0 | % | (25.8 | )% |
(a) | See “Executive Summary” section for listing of properties included in each segment. |
(b) | We define Consolidated Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of equity security investments, income (loss) from equity method investments, non-controlling interest and discontinued operations. We define Adjusted EBITDAR for each reportable segment as earnings before interest income and expense, income taxes, depreciation, amortization, rent expense associated with the Meadows Lease, pre-opening, development and other costs, non-cash share-based compensation, asset impairment costs, write-downs, reserves, recoveries, inter-company management fees, gain (loss) on sale of certain assets, gain (loss) on early extinguishment of debt, gain (loss) on sale of discontinued operations and discontinued operations. We define Consolidated Adjusted EBITDAR margin as Consolidated Adjusted EBITDAR divided by revenues on a consolidated basis. We define Adjusted EBITDAR margin as Adjusted EBITDAR for the segment divided by segment revenues. We use Consolidated Adjusted EBITDAR and Adjusted EBITDAR for each reportable segment to compare operating results among our properties and between accounting periods. Consolidated Adjusted EBITDAR and Adjusted EBITDAR have economic substance because they are used by management as measures to analyze the performance of our business and are especially relevant in evaluating large, long-lived casino-hotel projects because they provide a perspective on the current effects of operating decisions separated from the substantial non-operational depreciation charges and financing costs of such projects. We eliminate the results from discontinued operations at the time they are deemed discontinued. We also review pre-opening, development and other costs separately, as such expenses are also included in total project costs when assessing budgets and project returns, and because such costs relate to anticipated future revenues and income. We believe that Consolidated Adjusted EBITDAR, Consolidated Adjusted EBITDAR margin and Adjusted EBITDAR are useful measures for investors because they are indicators of the performance of ongoing business operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare operating performance and value of companies within our industry. In addition, Consolidated Adjusted EBITDAR approximates the measures used in the debt covenants within the Company’s debt agreements. Consolidated Adjusted EBITDAR and Adjusted EBITDAR do not include depreciation or interest expense and, therefore, do not reflect current or future capital expenditures or the cost of capital. Consolidated Adjusted EBITDAR should not be considered as an alternative to operating income (loss) as an indicator of performance, or as an alternative to any other measure provided in accordance with GAAP. Our calculations of Consolidated Adjusted EBITDAR and Adjusted EBITDAR may be different from the calculation methods used by other companies and, therefore, comparability may be limited. |
(c) | Corporate and other includes revenues from a live and televised poker tournament series that operates under the trade name Heartland Poker Tour (“HPT”) and management of Retama Park Racetrack located outside of San Antonio, Texas. Corporate expenses represent payroll, professional fees, travel expenses and other general and administrative expenses not directly related to our casino and hotel operations. Corporate expenses that are directly attributable to a property are allocated to each applicable property. Other includes expenses relating to the operation of HPT and management of Retama Park Racetrack. |
(d) | Consolidated Adjusted EBITDA, net of Lease Payments is defined as Consolidated Adjusted EBITDAR (as defined in footnote b above), net of Lease Payments. The Company defines Lease Payments as lease payments made to GLPI for the Master Lease and the Meadows Lease. We believe that Consolidated Adjusted EBITDA, net of Lease Payments is a useful measure to compare operating results between accounting periods. In addition, Consolidated Adjusted EBITDA, net of Lease Payments is a useful measure for investors because it is an indicator of the performance of ongoing business operations after incorporating the cash flow obligations associated with the Master Lease and the Meadows Lease. Consolidated Adjusted EBITDA, net of Lease Payments should not be considered as an alternative to operating income (loss) as an indicator of performance, or as an alternative to any other measure provided in accordance with GAAP. Our calculations of Consolidated Adjusted EBITDA, net of Lease Payments may be different from the calculation methods used by other companies and, therefore, comparability may be limited. |
For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||
2017 | 2016 | 2017 vs. 2016 | 2017 | 2016 | 2017 vs. 2016 | ||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||
Gaming revenues | $ | 352.1 | $ | 301.2 | 16.9 | % | $ | 1,054.6 | $ | 887.6 | 18.8 | % | |||||||||
Total revenues | 391.7 | 333.5 | 17.5 | % | 1,171.7 | 980.8 | 19.5 | % | |||||||||||||
Operating income (loss) | 75.5 | 73.4 | 2.9 | % | 222.2 | (22.5 | ) | NM | |||||||||||||
Adjusted EBITDAR | 112.2 | 92.8 | 20.9 | % | 334.2 | 299.0 | 11.8 | % | |||||||||||||
Adjusted EBITDAR margin | 28.6 | % | 27.8 | % | 80 bps | 28.5 | % | 30.5 | % | (200) bps |
For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||
2017 | 2016 | 2017 vs. 2016 | 2017 | 2016 | 2017 vs. 2016 | ||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||
Gaming revenues | $ | 169.0 | $ | 177.3 | (4.7 | )% | $ | 525.0 | $ | 521.2 | 0.7 | % | |||||||||
Total revenues | 188.7 | 197.0 | (4.2 | )% | 583.0 | 579.0 | 0.7 | % | |||||||||||||
Operating income (loss) | 42.3 | 34.5 | 22.6 | % | 134.8 | (64.0 | ) | NM | |||||||||||||
Adjusted EBITDAR | 60.2 | 58.1 | 3.6 | % | 189.7 | 180.5 | 5.1 | % | |||||||||||||
Adjusted EBITDAR margin | 31.9 | % | 29.5 | % | 240 bps | 32.5 | % | 31.2 | % | 130 bps |
For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||
2017 | 2016 | 2017 vs. 2016 | 2017 | 2016 | 2017 vs. 2016 | ||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||
Gaming revenues | $ | 54.2 | $ | 51.6 | 5.0 | % | $ | 151.8 | $ | 147.9 | 2.6 | % | |||||||||
Total revenues | 65.3 | 62.9 | 3.8 | % | 182.1 | 177.2 | 2.8 | % | |||||||||||||
Operating income | 21.8 | 19.2 | 13.5 | % | 54.7 | 8.6 | NM | ||||||||||||||
Adjusted EBITDAR | 26.7 | 24.2 | 10.3 | % | 70.8 | 66.8 | 6.0 | % | |||||||||||||
Adjusted EBITDAR margin | 40.9 | % | 38.5 | % | 240 bps | 38.9 | % | 37.7 | % | 120 bps |
For the three months ended September 30, | Change | For the nine months ended September 30, | Change | ||||||||||||||||||
2017 | 2016 | 2017 vs. 2016 | 2017 | 2016 | 2017 vs. 2016 | ||||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||||
Other benefits (costs): | |||||||||||||||||||||
Corporate expenses and other | $ | (21.0 | ) | $ | (19.7 | ) | 6.6 | % | $ | (61.0 | ) | $ | (61.5 | ) | (0.8 | )% | |||||
Rent expense under the Meadows Lease | $ | (4.0 | ) | $ | (1.0 | ) | NM | $ | (12.1 | ) | $ | (1.0 | ) | NM | |||||||
Depreciation and amortization | $ | (54.1 | ) | $ | (54.3 | ) | (0.4 | )% | $ | (166.3 | ) | $ | (162.4 | ) | 2.4 | % | |||||
Pre-opening, development and other costs | $ | (0.4 | ) | $ | (5.6 | ) | (92.9 | )% | $ | (3.0 | ) | $ | (55.0 | ) | (94.5 | )% | |||||
Share-based compensation expense | $ | (3.7 | ) | $ | (2.6 | ) | 42.3 | % | $ | (10.4 | ) | $ | (32.7 | ) | (68.2 | )% | |||||
Impairment of goodwill | $ | — | $ | 11.6 | NM | $ | — | $ | (321.3 | ) | NM | ||||||||||
Impairment of other intangible assets | $ | — | $ | — | NM | $ | — | $ | (129.5 | ) | NM | ||||||||||
Write-downs, reserves and recoveries, net | $ | (4.2 | ) | $ | (6.2 | ) | (32.3 | )% | $ | (12.7 | ) | $ | (13.8 | ) | (8.0 | )% | |||||
Interest expense, net | $ | (95.9 | ) | $ | (94.3 | ) | 1.7 | % | $ | (286.6 | ) | $ | (239.1 | ) | 19.9 | % | |||||
Loss on early extinguishment of debt | $ | (0.5 | ) | $ | — | NM | $ | (0.5 | ) | $ | (5.2 | ) | (90.4 | )% | |||||||
Loss from equity method investment | $ | — | $ | — | NM | $ | (0.1 | ) | $ | (0.1 | ) | — | % | ||||||||
Income tax benefit (expense) | $ | (1.4 | ) | $ | (3.5 | ) | (60.0 | )% | $ | (2.4 | ) | $ | 26.5 | NM |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Restructuring costs (1) | $ | 0.2 | $ | 1.3 | $ | 0.9 | $ | 48.1 | |||||||
Meadows acquisition costs (2) | — | 4.1 | 0.2 | 6.2 | |||||||||||
Other | 0.2 | 0.2 | 1.9 | 0.7 | |||||||||||
Total pre-opening, development and other costs | $ | 0.4 | $ | 5.6 | $ | 3.0 | $ | 55.0 |
(1) | Amounts comprised principally of costs associated with the Spin-Off and Merger. |
(2) | Amounts comprised principally of legal, advisory and other costs associated with the acquisition and integration of the Meadows. |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Loss on sales or disposals of long-lived assets, net | $ | 3.0 | $ | 6.2 | $ | 7.8 | $ | 13.1 | |||||||
Impairment of held-to-maturity securities | — | — | 3.8 | — | |||||||||||
Impairment of long-lived assets | — | — | — | 0.2 | |||||||||||
Other | 1.2 | — | 1.1 | 0.5 | |||||||||||
Write-downs, reserves and recoveries, net | $ | 4.2 | $ | 6.2 | $ | 12.7 | $ | 13.8 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(in millions) | |||||||||||||||
Interest expense from financing obligation (1) | $ | 83.8 | $ | 83.6 | $ | 247.7 | $ | 141.9 | |||||||
Interest expense from debt (2) | 12.2 | 11.0 | 39.2 | 95.3 | |||||||||||
Interest income | (0.1 | ) | (0.3 | ) | (0.3 | ) | (0.5 | ) | |||||||
Capitalized interest | — | — | — | (0.1 | ) | ||||||||||
Other (3) | — | — | — | 2.5 | |||||||||||
Interest expense, net | $ | 95.9 | $ | 94.3 | $ | 286.6 | $ | 239.1 |
(1) | Total lease payments under the Master Lease for the three and nine months ended September 30, 2017 and 2016 were $96.5 million, $284.4 million, $95.0 million, and $161.1 million, respectively. |
(2) | Interest expense associated with the Former Senior Secured Credit Facilities, the 6.375% Notes, the 7.50% Notes, the 7.75% Notes, and the 8.75% Notes (as such terms are defined in the “Liquidity and Capital Resources” section below), which were no longer obligations of the Company as of April 28, 2016, included in the nine months ended September 30, 2016 was $76.5 million. |
(3) | Represents a nonrecurring expense associated with the GLPI transaction. |
For the nine months ended September 30, | Change | |||||||||
2017 | 2016 | 2017 vs. 2016 | ||||||||
(in millions) | ||||||||||
Net cash provided by operating activities | $ | 192.7 | $ | 165.6 | 16.4 | % | ||||
Net cash used in investing activities | $ | (57.7 | ) | $ | (167.5 | ) | (65.6 | )% | ||
Net cash used in financing activities | $ | (175.7 | ) | $ | (7.4 | ) | NM |
For the nine months ended September 30, | |||||||
2017 | 2016 | ||||||
(in millions) | |||||||
Midwest segment | $ | 30.5 | $ | 42.1 | |||
South segment | 15.0 | 21.6 | |||||
West segment | 3.4 | 6.7 | |||||
Corporate and other, including development projects | 7.5 | 2.7 | |||||
Total capital expenditures | $ | 56.4 | $ | 73.1 |
• | Our business is particularly sensitive to reductions in consumers’ discretionary spending as a result of downturns in the economy or other changes we cannot accurately predict; |
• | The gaming industry is very competitive and increased competition, including through legislative legalization or expansion of gaming by states in or near where we operate facilities or through Native American gaming facilities and internet gaming, could adversely affect our financial results; |
• | Our gaming operations rely heavily on technology services provided by third parties. In the event that there is an interruption of these services to us, it may have an adverse effect on our operations and financial condition; |
• | Our business may be harmed from cyber security risk and we may be subject to legal claims if there is loss, disclosure or misappropriation of or access to our guests’ or our business partners’ or our own information or other breaches of our information security; |
• | We are required to pay a significant portion of our cash flows pursuant to and subject to the terms and conditions of the Master Lease and the Meadows Lease, which could adversely affect our ability to fund our operations and growth and limit our ability to react to competitive and economic changes; |
• | Substantially all of our gaming facilities are leased and could experience risks associated with leased property, including risks relating to lease termination, lease extensions, charges and our relationship with GLPI, which could have a material adverse effect on our business, financial position or results of operations; |
• | We face risks associated with growth and acquisitions; |
• | We derived 28.5% and 28.7% of our revenues in 2016 from our casinos located in Louisiana and Missouri, respectively, and are especially subject to certain risks, including economic and competitive risks, associated with the conditions in those areas and in the states from which we draw patrons; |
• | Our present indebtedness and projected future borrowings could adversely affect our financial health; future cash flows may not be sufficient to meet our obligations, and we may have difficulty obtaining additional financing; and we may experience adverse effects of interest rate fluctuations; |
• | Our indebtedness imposes restrictive covenants on us; |
• | To service our indebtedness and make payments under the Master Lease and the Meadows Lease, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control; |
• | Our ability to obtain additional financing on commercially reasonable terms may be limited; |
• | We may experience an impairment of our goodwill, other intangible assets, or long-lived assets, which could adversely affect our financial condition and results of operations; |
• | Insufficient or lower-than-expected results generated from our new developments and acquisitions may negatively affect our operating results and financial condition; |
• | Rising operating costs at our operations could have a negative impact on our business; |
• | Our slots and table games hold percentages may fluctuate; |
• | Recessions have affected our business and financial condition, and economic conditions may continue to affect us in ways that we currently cannot accurately predict; |
• | We expect to be engaged from time to time in one or more construction and development projects, and many factors could prevent us from completing them as planned, including the escalation of construction costs beyond increments anticipated in our construction budgets; |
• | Our industry is highly regulated, which makes us dependent on obtaining and maintaining gaming licenses and subjects us to potentially significant fines and penalties; |
• | Potential changes in the regulatory environment could harm our business; |
• | Our business may be adversely affected by legislation prohibiting tobacco smoking; |
• | Our operations are largely dependent on the skill and experience of our management and key personnel. The loss of management and other key personnel could significantly harm our business, and we may not be able to effectively replace members of management who have left our company; |
• | Adverse weather conditions, road construction, gasoline shortages and other factors affecting our facilities and the areas in which we operate could make it more difficult for potential customers to travel to the facilities on which we operate and deter customers from visiting our facilities; |
• | Our results of operations and financial condition could be materially adversely affected by the occurrence of natural disasters, such as hurricanes, or other catastrophic events, including war and terrorism; |
• | We are exposed to a variety of natural disasters such as named windstorms, floods and earthquakes and this can make it challenging for us to obtain adequate levels of weather catastrophe occurrence insurance coverage for our facilities at reasonable rates, if at all; |
• | We may incur property and other losses that are not adequately covered by insurance, which may harm our results of operations; |
• | The concentration and evolution of the slot machine manufacturing industry or other technological conditions could impose additional costs on us; |
• | We operate in a highly taxed industry and it may be subject to higher taxes in the future. If the jurisdictions in which we operate increase gaming taxes and fees, our operating results could be adversely affected; |
• | Work stoppages, organizing drives and other labor problems could negatively impact our future profits; |
• | We face environmental and archaeological regulation of the real estate on which we operate; |
• | We are subject to litigation, which, if adversely determined, could cause us to incur substantial losses; |
• | We are subject to certain federal, state and other regulations; |
• | Climate change, climate change regulations and greenhouse effects may adversely impact our operations and markets; |
• | We face business and regulatory risks associated with our investment in Asian Coast Development (Canada), Ltd.; |
• | We are subject to extensive governmental regulations that impose restrictions on the ownership and transfer of our securities; and |
• | The market price for our common stock may be volatile, and you may not be able to sell our stock at a favorable price or at all. |
2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||
Revolving Credit Facility | $ | — | $ | — | $ | — | $ | — | $ | 161,000 | $ | — | $ | 161,000 | $ | 157,780 | |||||||||||||||
Interest Rate | 2.98 | % | 2.98 | % | 2.98 | % | 2.98 | % | 2.98 | % | — | 2.98 | % | ||||||||||||||||||
Term Loan A Facility | $ | 2,313 | $ | 11,562 | $ | 16,188 | $ | 18,500 | $ | 124,875 | $ | — | $ | 173,438 | $ | 173,437 | |||||||||||||||
Interest Rate | 2.98 | % | 2.98 | % | 2.98 | % | 2.98 | % | 2.98 | % | — | 2.98 | % | ||||||||||||||||||
5.625% Notes | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 500,000 | $ | 500,000 | $ | 511,850 | |||||||||||||||
Interest Rate | 5.625 | % | 5.625 | % | 5.625 | % | 5.625 | % | 5.625 | % | 5.625 | % | 5.625 | % | |||||||||||||||||
Other | $ | 2 | $ | 9 | $ | 9 | $ | 10 | $ | 11 | $ | 30 | $ | 71 | $ | 71 | |||||||||||||||
Interest Rate | 10.00 | % | 10.00 | % | 10.00 | % | 10.00 | % | 10.00 | % | 10.00 | % | 10.00 | % |
Period | Total Number of Shares (or Units) Purchased | Average Price Paid per Share (or Unit) (1) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that may be Purchased Under the Plans or Programs (2) | ||||||||||
July 1 - July 31, 2017 | — | $ | — | — | $ | 29,922,918 | ||||||||
August 1 - August 31, 2017 | 423,398 | $ | 19.40 | 423,398 | $ | 21,707,796 | ||||||||
September 1 - September 30, 2017 | 698,477 | $ | 19.51 | 698,477 | $ | 8,080,345 | ||||||||
Total | 1,121,875 | $ | 19.47 | 1,121,875 | $ | 8,080,345 |
(1) | Average price paid per share for shares purchased as part of our share repurchase program (includes brokerage commissions). |
(2) | In August 2016, the Company’s Board of Directors authorized a share repurchase program of up to $50.0 million of our common stock. As of November 6, 2017, under this program, we have repurchased 2.8 million shares of our common stock for $42.4 million. |
Exhibit Number | Description of Exhibit | |
3.1 | ||
3.2 | ||
3.3 | ||
11* | ||
31.1* | ||
31.2* | ||
32** | ||
101* | Financial statements from Pinnacle Entertainment, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) unaudited Condensed Consolidated Statements of Operations, (ii) unaudited Condensed Consolidated Statements of Comprehensive Income (Loss),(iii) unaudited Condensed Consolidated Balance Sheets, (iv) unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit, (v) unaudited Condensed Consolidated Statements of Cash Flows; and (vi) Notes to unaudited Condensed Consolidated Financial Statements. |
* | Filed herewith. | |
** | Furnished herewith. |
PINNACLE ENTERTAINMENT, INC. (Registrant) | |||
Date: | November 9, 2017 | By: | /s/ Carlos A. Ruisanchez |
Carlos A. Ruisanchez | |||
President and Chief Financial Officer (Authorized Officer, Principal Financial Officer and Principal Accounting Officer) |
Exhibit Number | Description of Exhibit | |
3.1 | ||
3.2 | ||
3.3 | ||
11* | ||
31.1* | ||
31.2* | ||
32** | ||
101* | Financial statements from Pinnacle Entertainment, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) unaudited Condensed Consolidated Statements of Operations, (ii) unaudited Condensed Consolidated Statements of Comprehensive Income (Loss),(iii) unaudited Condensed Consolidated Balance Sheets, (iv) unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficit, (v) unaudited Condensed Consolidated Statements of Cash Flows; and (vi) Notes to unaudited Condensed Consolidated Financial Statements. |
* | Filed herewith. | |
** | Furnished herewith. |
For the three months ended September 30, | |||||||||||||||
Basic | Diluted (a) | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Weighted average number of common shares outstanding | 56,799 | 57,004 | 56,799 | 57,004 | |||||||||||
Potential dilution from share-based awards | — | — | 5,081 | — | |||||||||||
Total shares | 56,799 | 57,004 | 61,880 | 57,004 | |||||||||||
Income (loss) from continuing operations | $ | 13,940 | $ | (532 | ) | $ | 13,940 | $ | (532 | ) | |||||
Income from discontinued operations, net of income taxes | — | 37 | — | 37 | |||||||||||
Net income (loss) | 13,940 | (495 | ) | 13,940 | (495 | ) | |||||||||
Less: Net loss attributable to non-controlling interest | 193 | 9 | 193 | 9 | |||||||||||
Net income (loss) attributable to Pinnacle Entertainment, Inc. | $ | 14,133 | $ | (486 | ) | $ | 14,133 | $ | (486 | ) | |||||
Per share data: | |||||||||||||||
Income (loss) from continuing operations | $ | 0.25 | $ | (0.01 | ) | $ | 0.23 | $ | (0.01 | ) | |||||
Income from discontinued operations, net of income taxes | — | 0.00 | — | 0.00 | |||||||||||
Net income (loss) per common share | $ | 0.25 | $ | (0.01 | ) | $ | 0.23 | $ | (0.01 | ) | |||||
For the nine months ended September 30, | |||||||||||||||
Basic | Diluted (a) | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Weighted average number of common shares outstanding | 56,478 | 59,722 | 56,478 | 59,722 | |||||||||||
Potential dilution from share-based awards | — | — | 5,260 | — | |||||||||||
Total shares | 56,478 | 59,722 | 61,738 | 59,722 | |||||||||||
Income (loss) from continuing operations | $ | 39,574 | $ | (448,841 | ) | $ | 39,574 | $ | (448,841 | ) | |||||
Income from discontinued operations, net of income taxes | — | 433 | — | 433 | |||||||||||
Net income (loss) | 39,574 | (448,408 | ) | 39,574 | (448,408 | ) | |||||||||
Less: Net loss attributable to non-controlling interest | 1,153 | 24 | 1,153 | 24 | |||||||||||
Net income (loss) attributable to Pinnacle Entertainment, Inc. | $ | 40,727 | $ | (448,384 | ) | $ | 40,727 | $ | (448,384 | ) | |||||
Per share data: | |||||||||||||||
Income (loss) from continuing operations | $ | 0.72 | $ | (7.52 | ) | $ | 0.66 | $ | (7.52 | ) | |||||
Income from discontinued operations, net of income taxes | — | 0.01 | — | 0.01 | |||||||||||
Net income (loss) per common share | $ | 0.72 | $ | (7.51 | ) | $ | 0.66 | $ | (7.51 | ) |
(a) | When the impact of share-based awards is anti-dilutive, the weighted average number of common shares outstanding is used in the determination of basic and diluted earnings per share. |
1. | I have reviewed this quarterly report on Form 10-Q of Pinnacle Entertainment, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ Anthony M. Sanfilippo |
Anthony M. Sanfilippo Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Pinnacle Entertainment, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ Carlos A. Ruisanchez |
Carlos A. Ruisanchez President and Chief Financial Officer |
1. | The Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Anthony M. Sanfilippo | |
Name: | Anthony M. Sanfilippo |
Title: | Chief Executive Officer |
/s/ Carlos A. Ruisanchez | |
Name: | Carlos A. Ruisanchez |
Title: | President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Nov. 06, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PINNACLE ENTERTAINMENT, INC. | |
Entity Central Index Key | 0001656239 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 57,452,535 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 13,940 | $ (495) | $ 39,574 | $ (448,408) |
Comprehensive income (loss) | 13,940 | (495) | 39,574 | (448,408) |
Less: Comprehensive loss attributable to non-controlling interest | 193 | 9 | 1,153 | 24 |
Comprehensive income (loss) attributable to Pinnacle Entertainment, Inc. | $ 14,133 | $ (486) | $ 40,727 | $ (448,384) |
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5,898 | $ 5,282 |
Preferred stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 250,000 | 250,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 57,025,771 | 55,812,425 |
Common stock, shares outstanding (in shares) | 57,025,771 | 55,812,425 |
Treasury stock, shares (in shares) | 7,347,844 | 6,209,541 |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT - 9 months ended Sep. 30, 2017 - USD ($) shares in Thousands, $ in Thousands |
Total |
Capital Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Treasury Stock |
Total Pinnacle Stockholders’ Deficit |
Non-Controlling Interest |
---|---|---|---|---|---|---|---|---|
Beginning balance, shares at Dec. 31, 2016 | 55,812 | |||||||
Beginning balance at Dec. 31, 2016 | $ (372,880) | $ 620 | $ 919,974 | $ (1,233,819) | $ 326 | $ (70,166) | $ (383,065) | $ 10,185 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income (loss) | 39,574 | 40,727 | 40,727 | (1,153) | ||||
Share-based compensation | 10,399 | 10,399 | 10,399 | |||||
Common stock issuance and option exercises, shares | 2,352 | |||||||
Common stock issuance and option exercises | 3,617 | $ 24 | 3,593 | 3,617 | ||||
Forfeiture of restricted stock awards, shares | (16) | |||||||
Forfeiture of restricted stock awards | $ 0 | 0 | ||||||
Treasury stock purchases, shares | (1,100) | (1,122) | ||||||
Treasury stock purchases | $ (21,843) | (21,843) | (21,843) | |||||
Tax withholding related to vesting of share-based awards | (2,630) | (2,630) | (2,630) | |||||
Ending balance, shares at Sep. 30, 2017 | 57,026 | |||||||
Ending balance at Sep. 30, 2017 | $ (343,763) | $ 644 | $ 931,336 | $ (1,193,092) | $ 326 | $ (92,009) | $ (352,795) | $ 9,032 |
Organization and Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Organization: Pinnacle Entertainment, Inc. is an owner, operator and developer of casinos and related hospitality and entertainment businesses. References in these footnotes to “Pinnacle,” the “Company,” “we,” “our” or “us” refer to Pinnacle Entertainment, Inc. and its subsidiaries, except where stated or the context otherwise indicates. References to “Former Pinnacle” refer to Pinnacle Entertainment, Inc. prior to the Spin-Off and Merger (as such terms are defined below). We own and operate 16 gaming, hospitality and entertainment businesses, of which 15 operate in leased facilities. Our owned facility is located in Ohio and our leased facilities are located in Colorado, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada and Pennsylvania, subject to either the Master Lease or the Meadows Lease (as such terms are defined below). We view each of our operating businesses as an operating segment with the exception of our two businesses in Jackpot, Nevada, which we view as one operating segment. For financial reporting purposes, we aggregate our operating segments into the following reportable segments:
On April 28, 2016, Former Pinnacle completed the transactions under the terms of a definitive agreement (the “Merger Agreement”) with Gaming and Leisure Properties, Inc. (“GLPI”), a real estate investment trust. Pursuant to the terms of the Merger Agreement, Former Pinnacle separated its operating assets and liabilities (and its Belterra Park property and excess land at certain locations) into the Company, a newly formed subsidiary, and distributed to its stockholders, on a pro rata basis, all of the issued and outstanding shares of common stock of the Company (such distribution referred to as the “Spin-Off”). As a result, Former Pinnacle stockholders received one share of the Company’s common stock, with a par value of $0.01 per share, for each share of Former Pinnacle common stock that they owned. Gold Merger Sub, LLC, a wholly owned subsidiary of GLPI (“Merger Sub”), then merged with and into Former Pinnacle (the “Merger”), with Merger Sub surviving the Merger as a wholly owned subsidiary of GLPI. Immediately following the Merger, the Company was renamed Pinnacle Entertainment, Inc., and operates its gaming businesses in the facilities acquired by GLPI under a triple-net master lease agreement (the “Master Lease”). For more information regarding the Spin-Off and Merger, see Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease.” Former Pinnacle’s historical consolidated financial statements and accompanying notes thereto were determined to represent the Company’s historical consolidated financial statements based on the conclusion that, for accounting purposes, the Spin-Off was to be evaluated as the reverse of its legal form under the requirements of Accounting Standards Codification (“ASC”) Subtopic 505-60, Spinoffs and Reverse Spinoffs, resulting in the Company being considered the accounting spinnor. In addition, the Master Lease of the gaming facilities acquired by GLPI did not qualify for sale-leaseback accounting pursuant to ASC Topic 840, Leases. Therefore, the Master Lease is accounted for as a financing obligation and the gaming facilities remain on the Company’s unaudited Condensed Consolidated Financial Statements. On September 9, 2016, we closed on a purchase agreement (the “Purchase Agreement”) with GLP Capital, L.P. (“GLPC”), a subsidiary of GLPI, pursuant to which we acquired all of the equity interests of the Meadows located in Washington, Pennsylvania for base consideration of $138.0 million, subject to certain adjustments. The purchase price, after giving effect to such adjustments was $134.0 million and the cash paid for the Meadows business, net of cash acquired was $107.5 million. As a result of the transaction, we own and operate the Meadows’ gaming entertainment and harness racing business subject to a triple-net lease of its underlying real property with GLPI (the “Meadows Lease”). See Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease,” and Note 7, “Investment and Acquisition Activities.” Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions of the Securities and Exchange Commission (the “SEC”) to the Quarterly Report on Form 10-Q and, therefore, do not include all information and notes necessary for complete financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”). The results for the periods indicated are unaudited, but reflect all adjustments, which are of a normal recurring nature, that management considers necessary for a fair presentation of operating results. The results of operations for interim periods are not indicative of a full year of operations. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2016. Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries. Investments in the common stock of unconsolidated affiliates in which we have the ability to exercise significant influence are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates: The preparation of unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and our guest loyalty programs, the initial measurement of the financing obligation associated with the Master Lease, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and other intangible assets, contingencies and litigation, and estimates of the forfeiture rate and expected term of share-based awards and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates. Fair Value: Fair value measurements affect our accounting and impairment assessments of our long-lived assets, investments in unconsolidated affiliates, assets acquired in an acquisition, goodwill, and other intangible assets. Fair value measurements also affect our accounting for certain financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: “Level 1” inputs, such as quoted prices in an active market for identical assets or liabilities; “Level 2” inputs, which are observable inputs for similar assets; or “Level 3” inputs, which are unobservable inputs. The following table presents a summary of fair value measurements by level for certain financial instruments not measured at fair value on a recurring basis in the unaudited Condensed Consolidated Balance Sheets for which it is practicable to estimate fair value:
The estimated fair values for certain of our long-term held-to-maturity securities and our long-term promissory notes were based primarily on Level 2 inputs using observable market data. The estimated fair values of certain of our other long-term liabilities were based on Level 2 inputs using a present value of future cash flow valuation technique, which is based on contractually obligated payments and terms. The estimated fair values for certain of our long-term held-to-maturity securities were based on Level 3 inputs using a present value of future cash flow valuation technique that relies on management assumptions and qualitative observations. Key significant unobservable inputs in this technique include discount rate risk premiums and probability-weighted cash flow scenarios. The estimated fair values of our long-term debt, which include our 5.625% Notes and Senior Secured Credit Facilities (as such terms are defined in Note 3, “Long-Term Debt”), were based on Level 2 inputs of observable market data on comparable debt instruments on or about September 30, 2017 and December 31, 2016, as applicable. The fair values of our short-term financial instruments approximate the carrying amounts due to their short-term nature. Land, Buildings, Vessels and Equipment: Land, buildings, vessels and equipment are stated at cost. We capitalize the costs of improvements that extend the life of the asset. We expense repair and maintenance costs as incurred. Gains or losses on the disposition of land, buildings, vessels and equipment are included in the determination of income. We review the carrying amounts of our land, buildings, vessels and equipment used in our operations whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from estimated future undiscounted cash flows expected to result from its use and eventual disposition. If the undiscounted cash flows exceed the carrying amount, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying amount, then an impairment charge is recorded based on the fair value of the asset. Development costs directly associated with the acquisition, development, and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to get the property ready for its intended use are in progress. The costs incurred for development projects are carried at cost. Interest costs associated with development projects are capitalized as part of the cost of the constructed asset. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using our weighted-average cost of borrowing. Capitalization of interest ceases when the project, or discernible portion of the project, is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed. As a result of the Spin-Off and Merger transactions, substantially all of the real estate assets used in the Company’s operations are subject to the Master Lease and owned by GLPI. See Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease.” The following table presents a summary of our land, buildings, vessels and equipment, including those subject to the Master Lease:
Goodwill and Other Intangible Assets: Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations and has been allocated to our reporting units. We consider each of our operating segments to represent a reporting unit. Other indefinite-lived intangible assets include gaming licenses and trade names for which it is reasonably assured that we will continue to renew indefinitely. Goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter (October 1st test date), or more frequently if there are indications of possible impairment. Amortizing intangible assets include player relationships and favorable leasehold interests. We review amortizing intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Spin-Off and Merger transactions, which closed on April 28, 2016, represented a significant financial restructuring event that increased our cash flow obligations in connection with the Master Lease, which we concluded represented an indicator that impairment may exist on our goodwill and other intangible assets. Consequently, during the second quarter 2016, we performed a preliminary impairment assessment on goodwill and completed impairment assessments on gaming licenses and trade names. As a result of those impairment assessments, during the second quarter 2016, we recognized non-cash impairments to goodwill, gaming licenses and trade names totaling $332.9 million, $68.5 million and $61.0 million, respectively. During the three months ended September 30, 2016, we completed our impairment assessment on goodwill, which resulted in the reversal of $11.6 million of non-cash impairment to goodwill. Consequently, the non-cash impairment to goodwill recorded during the nine months ended September 30, 2016 as result of the Spin-Off and Merger transactions totaled $321.3 million. Guest Loyalty Programs: We offer incentives to our guests through our mychoice guest loyalty program (“mychoice program”). Under the mychoice program, guests earn points based on their level of play that may be redeemed for various benefits, such as cash back, dining, or hotel stays, among others. The reward credit balance under the mychoice program will be forfeited if the guest does not earn or use any reward credits over the prior six-month period. In addition, based on their level of play, guests can earn additional benefits without redeeming points, such as a car lease, among other items. During the third quarter 2017, the Company announced its intention to implement the mychoice program at the Meadows during the first quarter 2018, which currently operates its own guest loyalty program. We accrue a liability for the estimated cost of providing these benefits as the benefits are earned. Estimates and assumptions are made regarding cost of providing the benefits, breakage rates, and the combination of goods and services guests will choose. We use historical data to assist in the determination of estimated accruals. Changes in estimates or guest redemption patterns could produce different results. As of September 30, 2017 and December 31, 2016, we had accrued $18.6 million and $25.1 million, respectively, for the estimated cost of providing these benefits, which are included in “Other accrued liabilities” in our unaudited Condensed Consolidated Balance Sheets. Revenue Recognition: Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts paid to winning patrons. Cash discounts and other cash incentives to guests related to gaming play are recorded as a reduction to gaming revenue. Food and beverage, lodging, retail, entertainment, and other operating revenues are recognized as products are delivered or services are performed. Advance deposits on lodging are recorded as accrued liabilities until services are provided to the guest. The retail value of food and beverage, lodging and other services furnished to guests on a complimentary basis is included in revenues and then deducted as promotional allowances in calculating total revenues. The estimated cost of providing such promotional allowances is primarily included in gaming expenses. Complimentary revenues that have been excluded from the accompanying unaudited Condensed Consolidated Statements of Operations were as follows:
The costs to provide such complimentary benefits were as follows:
Gaming Taxes: We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on our gaming revenues and are recorded as a gaming expense in our unaudited Condensed Consolidated Statements of Operations. These taxes were as follows:
Leases: The Company has certain long-term lease obligations, including the Meadows Lease, ground leases at certain properties and agreements relating to slot machines. Rent associated with operating leases, excluding contingent rent, is expensed on a straight-line basis over the life of the lease beginning on the date of possession of the leased property. To the extent it is considered probable, contingent rent associated with operating leases is expensed as incurred. At lease inception, the lease term is determined by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is capital or operating and is used to calculate the straight-line rent expense. Additionally, the depreciable life of capital lease assets and leasehold improvements is limited by the expected lease term if less than the useful life of the asset. Rent expenses are included in “General and administrative” in our unaudited Condensed Consolidated Statements of Operations. Pre-opening, Development and Other Costs: Pre-opening, development and other costs consist of payroll costs to hire, employ and train the workforce prior to opening an operating facility; marketing campaigns prior to and in connection with the opening; legal and professional fees related to the project but not otherwise attributable to depreciable assets; and lease payments, real estate taxes, and other general and administrative costs prior to the opening of an operating facility. In addition, pre-opening, development and other costs include acquisition and restructuring costs. Pre-opening, development and other costs are expensed as incurred. Pre-opening, development and other costs consist of the following:
Earnings Per Share: The computation of basic and diluted earnings per share (“EPS”) is based on net income (loss) attributable to Pinnacle Entertainment, Inc. divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively. Diluted EPS reflects the addition of potentially dilutive securities, such as stock options, restricted stock units, restricted stock and performance stock units (“share-based awards”). We calculate the dilutive effect of share-based awards using the treasury stock method. A total of 0.0 million, 0.2 million, 2.2 million and 1.7 million share-based awards were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2017, and 2016, respectively, because including them would have been anti-dilutive. For the three and nine months ended September 30, 2016, we recorded a net loss from continuing operations. Accordingly, the potential dilution from share-based awards is anti-dilutive. As a result, basic EPS is equal to diluted EPS for such periods. Share-based awards that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS were 3.0 million and 2.8 million for the three and nine months ended September 30, 2016, respectively. See Note 5, “Employee Benefit Plans.” Treasury Stock: In May 2016, the Company’s Board of Directors authorized a share repurchase program of up to $50.0 million of our common stock, which we completed in July 2016. In August 2016, our Board of Directors authorized an additional share repurchase program of up to $50.0 million of our common stock. The cost of the shares acquired is treated as a reduction to stockholders’ equity. During the nine months ended September 30, 2017, and 2016, we repurchased 1.1 million shares of common stock for $21.8 million and 5.5 million shares of common stock for $61.3 million, respectively. As of November 6, 2017, under the current program, we have repurchased 2.8 million shares of our common stock for $42.4 million. Recently Issued Accounting Pronouncements: In May 2014, as part of its ongoing efforts to assist in the convergence of GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which is a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In July 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, which defers the implementation of this new standard to be effective for fiscal years beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard pursuant to ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which amend certain aspects of the new revenue recognition standard pursuant to ASU No. 2014-09. In December 2016, the FASB issued ASU No. 2016-19 and ASU No. 2016-20, Technical Corrections and Improvements, which further clarified and corrected certain elements of this new standard. The Company currently anticipates adopting these accounting standards relating to revenue recognition during the first quarter 2018 using the full retrospective approach. Although we are still evaluating the full impact of this standard on our unaudited Condensed Consolidated Financial Statements, the Company has concluded that the adoption of this standard will affect how we account for our mychoice program as well as the classification of revenues between gaming, food and beverage, lodging, and retail, entertainment and other. Under our mychoice program, guests earn points based on their level of play, which may be redeemed for various benefits, such as cash back, dining, or hotel stays, among others. We currently determine our liability for unredeemed points based on the estimated costs of services or merchandise to be provided and estimated redemption rates. Under the new standard, points awarded under our mychoice program are considered a material right given to the guests based on their gaming play and the promise to provide points to guests will need to be accounted for as a separate performance obligation. The new standard will require us to allocate the revenues associated with the guests’ activity between gaming revenue and the value of the points and to measure the liability based on the estimated standalone selling price of the points earned after factoring in the likelihood of redemption. As a result, we expect that gaming revenues will be reduced with a corresponding increase, in total, to food and beverage, lodging, and retail, entertainment and other revenues. The revenue associated with the points earned will be recognized in the period in which they are redeemed. The quantitative effects of these changes have not yet been determined and are still being analyzed. In February 2016, the FASB issued ASU No. 2016-02, Recognition and Measurement of Leases. Under the new guidance, for all leases (with the exception of short-term leases), at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Further, the new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and liabilities, which no longer provides a source for off balance sheet financing. The effective date for this update is for the annual and interim periods beginning after December 15, 2018 with early adoption permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company currently anticipates adopting this accounting standard during the first quarter 2019. Operating leases, including the Meadows Lease, ground leases at certain properties, and agreements relating to slot machines, will be recorded in our unaudited Condensed Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability, which will be amortized using the effective interest rate method as payments are made. The right-of-use asset will be depreciated on a straight-line basis and recognized as lease expense. Additionally, as a result of this ASU, the Company will be required to reassess whether the Spin-Off and Merger transactions qualified for sale-leaseback accounting treatment. The full qualitative and quantitative effects of these changes have not yet been determined and are still being analyzed. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplified several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this guidance during the first quarter 2017 and it did not have a material impact on our unaudited Condensed Consolidated Financial Statements. In adopting this guidance, the Company made an accounting policy election to continue to estimate the number of awards that are expected to vest as opposed to accounting for forfeitures as they occur. Prior periods were not required to be adjusted as a result of the adoption of this guidance. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which provides clarity and intends to reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation. More specifically, ASU No. 2017-09 provides guidance on which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. The effective date for this update is for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update are to be applied on a prospective basis. Although the Company is still evaluating the impact of adopting this accounting standard, we do not currently believe it will have a material impact on our unaudited Condensed Consolidated Financial Statements. In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which makes amendments to the SEC paragraphs pursuant to the staff announcement at the July 20, 2017 Emerging Issues Task Force meeting and rescinds prior SEC staff announcements and observer comments. To the extent this guidance is applicable, it is effective immediately. As discussed above, the Company has not yet adopted ASC Topics 606, Revenue from Contracts with Customers, and 842, Leases. The guidance currently applicable to the Company in this ASU did not have a material impact on our unaudited Condensed Consolidated Financial Statements. A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies. Given the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited Condensed Consolidated Financial Statements. |
Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease |
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Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease | Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease Overview of the Spin-Off and Merger: On April 28, 2016, Former Pinnacle completed the transactions under the terms of the Merger Agreement with GLPI. Pursuant to the terms of the Merger Agreement, Former Pinnacle separated its operating assets and liabilities (and its Belterra Park property and excess land at certain locations) into the Company, a newly formed subsidiary, and distributed to its stockholders, on a pro rata basis, all of the issued and outstanding shares of common stock of the Company. As a result, Former Pinnacle stockholders received one share of the Company’s common stock, with a par value of $0.01 per share, for each share of Former Pinnacle common stock that they owned. Merger Sub then merged with and into Former Pinnacle, with Merger Sub surviving the Merger as a wholly owned subsidiary of GLPI. Immediately following the Merger, the Company was renamed Pinnacle Entertainment, Inc., and operates its gaming businesses under the Master Lease for the facilities acquired by GLPI. In completing the Merger, each share of common stock, par value $0.10 per share, of Former Pinnacle (the “Former Pinnacle Common Stock”) issued and outstanding immediately prior to the effective time (other than shares of Former Pinnacle Common Stock (i) owned or held in treasury by Former Pinnacle or (ii) owned by GLPI, its subsidiaries or Merger Sub) were canceled and converted into the right to receive 0.85 shares of common stock, par value $0.01 per share, of GLPI. In connection with the Spin-Off and Merger, on April 28, 2016, we made a dividend to Former Pinnacle of $808.4 million (the “Cash Payment”), which was equal to the amount of debt outstanding of Former Pinnacle as of April 28, 2016, less $2.7 billion that GLPI assumed pursuant to the Merger Agreement. Immediately prior to the consummation of the Spin-Off and Merger, the August 2013 amended and restated credit agreement (“Former Senior Secured Credit Facilities”) was repaid in full and terminated and the 6.375% senior notes due 2021 (“6.375% Notes”), the 7.50% senior notes due 2021 (“7.50% Notes”) and the 7.75% senior subordinated notes due 2022 (“7.75% Notes”) were redeemed. Former Pinnacle’s indenture governing its 8.75% senior subordinated notes due 2020 (“8.75% Notes”) was redeemed on May 15, 2016. Following the consummation of the Spin-Off and Merger, the Company had no outstanding obligations under the Former Senior Secured Credit Facilities, the 6.375% Notes, the 7.50% Notes, the 7.75% Notes and the 8.75% Notes. For a description of the Company’s existing long-term debt, see Note 3, “Long-Term Debt.” Failed Spin-Off-Leaseback: The Spin-Off and the subsequent leaseback of the gaming facilities under the terms of the Master Lease did not meet all of the requirements for sale-leaseback accounting treatment under ASC Topic 840, Leases, and therefore is accounted for as a financing obligation. Specifically, the Master Lease contains provisions that indicate prohibited forms of continuing involvement in the leased assets. Master Lease Financing Obligation: The Master Lease is accounted for as a financing obligation. The obligation was calculated at lease inception based on the future minimum lease payments due to GLPI under the Master Lease discounted at 10.5%. The discount rate represents the estimated incremental borrowing rate over the lease term of 35 years, which included renewal options that were reasonably assured of being exercised. As of April 28, 2016, the commencement date of the Master Lease, the financing obligation was determined to be $3.2 billion. Fourteen of our sixteen gaming facilities are subject to the Master Lease with GLPI. The Master Lease has an initial term of 10 years with five subsequent, five-year renewal periods at our option. The rent, which is payable in monthly installments, is comprised of base rent, which includes a land and a building component, and percentage rent. The land base rent is fixed for the entire lease term. The building base rent is subject to an annual escalation of up to 2%, depending on the Adjusted Revenue to Rent Ratio (as defined in the Master Lease) of 1.8:1. In May 2017, the building base rent was adjusted by the annual escalation. The percentage rent, which is fixed for the first two years, will be adjusted every two years to establish a new fixed amount for the next two-year period. Each new fixed amount will be calculated by multiplying 4% by the difference between (i) the average net revenues for the trailing two-year period and (ii) $1.1 billion. As of September 30, 2017, annual rent under the Master Lease was $382.8 million, which was comprised of the land base rent, the building base rent and the percentage rent, which were $44.1 million, $294.6 million and $44.1 million, respectively. Total lease payments under the Master Lease were as follows:
Meadows Lease: The Meadows Lease, which is accounted for as an operating lease, provides for a 10-year initial term, including renewal terms at our option, up to a total of 29 years. As of September 30, 2017, annual rent under the Meadows Lease was $25.1 million, payable in monthly installments, and comprised of a base rent of $13.7 million, which is subject to certain adjustments, and a percentage rent of $11.4 million. The base rent is subject to an annual escalation of up to 5% for the initial 10-year term or until the lease year in which base rent plus percentage rent is a total of $31.0 million, subject to certain adjustments, and up to 2% thereafter, subject to an Adjusted Revenue to Rent Ratio (as defined in the Meadows Lease) of 1.8:1 during the second year of the lease, 1.9:1 during the third year of the lease and 2.0:1 during the fourth year of the lease and thereafter. As a result of the annual escalation of the base rent, beginning in October 2017, we pay annual rent of $25.8 million. The percentage rent is fixed for the first two years and will be adjusted every two years to establish a new fixed amount for the next two-year period equal to 4% of the average annual net revenues during the trailing two-year period. |
Long-Term Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following:
Senior Secured Credit Facilities: On April 28, 2016, in connection with the Spin-Off and Merger, we entered into a credit agreement with certain lenders (the “Credit Agreement”). The Credit Agreement is comprised of (i) a $185.0 million term loan A facility with a maturity of five years (the “Term Loan A Facility”), (ii) a $300.0 million term loan B facility with a maturity of seven years (the “Term Loan B Facility”) and (iii) a $400.0 million revolving credit facility with a maturity of five years (the “Revolving Credit Facility” and together with the Term Loan A Facility and the Term Loan B Facility, the “Senior Secured Credit Facilities”). As of September 30, 2017, we had $161.0 million drawn under the Revolving Credit Facility and $9.2 million committed under various letters of credit. During the three months ended September 30, 2017, the Company fully repaid the outstanding principal amount of the Term Loan B Facility. Loans under the Term Loan A Facility and Revolving Credit Facility bear interest at a rate per annum equal to, at our option, LIBOR plus an applicable margin from 1.50% to 2.50% or the base rate plus an applicable margin from 0.50% to 1.50%, in each case, depending on the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) as of the most recent fiscal quarter. Loans under the Term Loan B Facility bore interest at a rate per annum equal to, at our option, LIBOR plus 3.00% or the base rate plus 2.00% and in no event was LIBOR to be less than 0.75%. In addition, we pay a commitment fee on the unused portion of the commitments under the Revolving Credit Facility at a rate that ranges from 0.30% to 0.50% per annum, depending on the Consolidated Total Net Leverage Ratio as of the most recent fiscal quarter. The Term Loan A Facility amortizes in equal quarterly amounts equal to a percentage of the original outstanding principal amount at closing as follows: (i) 5% per annum in the first two years, (ii) 7.5% per annum in the third year and (iii) 10% per annum in the fourth and fifth year. The remaining principal amount is payable on April 28, 2021. The Term Loan B Facility amortized in equal quarterly amounts equal to 1% per annum of the original outstanding principal amount at closing. The Revolving Credit Facility is not subject to amortization and is due and payable on April 28, 2021. 5.625% Notes due 2024: On April 28, 2016, we issued $375.0 million in aggregate principal amount of 5.625% senior notes due 2024 (the “Existing 5.625% Notes”). The Existing 5.625% Notes were issued at par, mature on May 1, 2024, and bear interest at the rate of 5.625% per annum. Interest on the Existing 5.625% Notes is payable semi-annually on May 1st and November 1st of each year. On April 28, 2016, the proceeds of the Senior Secured Credit Facilities, together with the proceeds from the Existing 5.625% Notes were used (i) to make the Cash Payment and (ii) to pay fees and expenses related to the issuance of the Senior Secured Credit Facilities and the Existing 5.625% Notes. On October 12, 2016, we issued an additional $125.0 million in aggregate principal amount of 5.625% senior notes due 2024 (the “Additional 5.625% Notes” and together with the Existing 5.625% Notes, the “5.625% Notes”), under the bond indenture governing the Existing 5.625% Notes issued on April 28, 2016, as amended and supplemented by that certain first supplemental indenture, dated as of October 12, 2016. The Additional 5.625% Notes were issued at par plus a premium of 50 basis points. Loss on early extinguishment of debt: During the three and nine months ended September 30, 2017, we recorded a $0.5 million loss related to the repayment, in full, of the Term Loan B Facility. During the nine months ended September 30, 2016, we recorded a $5.2 million loss related to the repayment, in full, of the Former Senior Secured Credit Facilities. The losses included the write-off of unamortized debt issuance costs and original issuance discount. Interest expense, net, was as follows:
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Income Taxes |
9 Months Ended |
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Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Our effective tax rate for continuing operations for the three and nine months ended September 30, 2017, was 9.3%, or an expense of $1.4 million, and 5.8%, or an expense of $2.4 million, respectively, as compared to an effective tax rate of 117.7%, or an expense of $3.5 million, and 5.6%, or a benefit of $26.5 million, respectively, for the corresponding prior year periods. The rates include the tax impact of certain discrete items, including changes in the tax status of certain of our legal entities. In general, our effective tax rate differs from the statutory rate of 35.0% due to the effects of permanent items, deferred tax expense on tax amortization of indefinite-lived intangible assets, changes in unrecognized tax benefits, changes in valuation allowance and state taxes. The Spin-Off described in Note 1, “Organization and Summary of Significant Accounting Policies,” was a taxable transaction. A gain was recognized for tax purposes and the tax bases of the operating assets were stepped up to fair market value at the time of the transaction. Pursuant to ASC Topic 740, Income Taxes, the tax impact directly related to the transaction amongst shareholders was recorded to equity, consistent with the overall accounting treatment of the transaction. All changes in tax bases of assets and liabilities caused by the transactions were recorded to additional paid-in capital. As previously noted, the failed sale-leaseback is accounted for as a financing obligation. As a result, the real estate gaming facility assets acquired by GLPI are presented on the Company’s unaudited Condensed Consolidated Balance Sheets at historical cost, net of accumulated depreciation, and the financing obligation is recognized and amortized over the lease term. For federal and state income tax purposes, the Spin-Off and the subsequent leaseback of the gaming facilities is an operating lease. As such, the Company recognizes no tax bases in the leased gaming facilities, which creates basis differences that give rise to deferred taxes under ASC Topic 740, Income Taxes. |
Employee Benefit Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans Share-based Compensation: As of September 30, 2017, we had 8.6 million share-based awards outstanding, including stock options, restricted stock units, performance stock units, and restricted stock, which are detailed below. Our 2016 Equity and Performance Incentive Plan had 5.0 million share-based awards available for grant as of September 30, 2017. As a result of the Spin-Off and Merger on April 28, 2016, each outstanding vested and non-vested share-based award granted by Former Pinnacle on or prior to July 16, 2015 (“Pre-July 2015 Former Pinnacle Awards”) were converted into a combination of (1) corresponding share-based awards of the Company, which continue to vest on the same schedule as Pre-July 2015 Former Pinnacle Awards based on service with the Company and (2) adjusted Pre-July 2015 Former Pinnacle Awards, which immediately became fully-vested and settled in shares of GLPI common stock as a result of the Merger. Share-based compensation expense for the nine months ended September 30, 2016 includes $22.6 million of incremental expense attributable to the accelerated vesting of adjusted Pre-July 2015 Former Pinnacle Awards, which were settled in shares of GLPI common stock. We recorded share-based compensation expense as follows:
Stock options: The following table summarizes information related to our common stock options:
The unamortized compensation costs not yet expensed related to stock options totaled $4.4 million as of September 30, 2017. The weighted average period over which the costs are expected to be recognized is 1.3 years. The aggregate amount of cash we received from the exercise of stock options was $3.6 million and $0.6 million for the nine months ended September 30, 2017, and 2016, respectively. The associated shares were newly issued common stock. The following information is provided for our stock options:
Restricted Stock Units: The following table summarizes information related to our restricted stock units:
The unamortized compensation costs not yet expensed related to non-vested restricted stock units totaled $18.6 million as of September 30, 2017. The weighted average period over which the costs are expected to be recognized is 1.2 years. Restricted Stock: The Company grants restricted stock awards, which are subject to either market or performance conditions. The grant-date fair value of the awards subject to market conditions was determined using the Monte Carlo simulation. The grant-date fair value of the awards subject to performance conditions was determined as the closing price of the Company’s common stock on the grant date. To the extent that restricted stock awards are forfeited, the forfeited shares will be included in treasury stock. The following table summarizes information related to our restricted stock:
The unamortized compensation costs not yet expensed related to restricted stock totaled $11.0 million as of September 30, 2017. The weighted average period over which the costs are expected to be recognized is 1.7 years. Performance Stock Units: The following table summarizes information related to our performance stock units:
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Write-downs, Reserves and Recoveries, Net |
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Write Downs Reserves And Recoveries Net Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Write Downs, Reserves and Recoveries Net | Write-downs, Reserves and Recoveries, Net Write-downs, reserves and recoveries, net consist of the following:
Loss on sales or disposals of long-lived assets, net: During the three and nine months ended September 30, 2017 and 2016, we recorded net losses related primarily to sales or disposals of building improvements and furniture, fixtures and equipment in the normal course of business. Impairment of held-to-maturity securities: During the nine months ended September 30, 2017, as a result of the lack of legislative progress and on-going negative operating results at Retama Park Racetrack, we recorded an other-than-temporary impairment on our local government corporation bonds issued by RDC (as defined in Note 7, “Investment and Acquisition Activities”). For further information, see Note 7, “Investment and Acquisition Activities.” |
Investment and Acquisition Activities |
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Investment and Acquisition Activities | Investment and Acquisition Activities Acquisition of the Meadows Business: On September 9, 2016, we closed on the purchase agreement with GLPC pursuant to which we acquired all of the equity interests of the Meadows located in Washington, Pennsylvania for base consideration of $138.0 million, subject to certain adjustments. The purchase price, after giving effect to such adjustments was $134.0 million and the cash paid for the Meadows business, net of cash acquired, was $107.5 million. As a result of the transaction, we own and operate the Meadows’ gaming, entertainment and harness racing business subject to the Meadows Lease, which is discussed in Note 2, “Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease.” The Company believes that this acquisition provides additional economies of scale and further geographical diversification and will provide long-term growth for our stockholders. We are required to allocate the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values. The excess of the purchase price over those fair values is recorded as goodwill, of which $8.2 million is deductible for income tax purposes. The goodwill recognized is primarily the result of expected cash flows of the Meadows business, including anticipated synergies. The determination of the fair values of the acquired assets and assumed liabilities requires significant judgment. During the second quarter 2017, management finalized the purchase price allocation, which did not result in any adjustments to the recorded goodwill balance. The following table reflects the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill (in thousands). The goodwill has been assigned to our Midwest segment.
The following table summarizes the acquired property and equipment.
The following table summarizes the acquired identifiable intangible assets.
Retama Park Racetrack: We hold 75.5% of the equity of Pinnacle Retama Partners, LLC (“PRP”), which owns the racing license of Retama Park Racetrack located outside of San Antonio, Texas. We consolidate the accounts of PRP in our unaudited Condensed Consolidated Financial Statements. We also manage Retama Park Racetrack under a management contract with Retama Development Corporation (“RDC”), a local government corporation of the City of Selma, Texas. As of September 30, 2017, PRP held $16.9 million in promissory notes issued by RDC and $7.5 million in local government corporation bonds issued by RDC, at amortized cost. The promissory notes and local government corporation bonds, which are included in “Other assets, net” in our unaudited Condensed Consolidated Balance Sheets, have long-term contractual maturities and are collateralized by the assets of the Retama Park Racetrack. As noted in Note 6, “Write-downs, reserves and recoveries, net,” during the nine months ended September 30, 2017, we recorded an other-than-temporary impairment on the local government corporation bonds in the amount of $3.8 million. The contractual terms of the promissory notes include interest payments due at maturity; however, we have not recorded accrued interest because uncertainty exists as to RDC’s ability to make the interest payments. We have the positive intent and ability to hold the local government corporation bonds to maturity and until the amortized cost basis is recovered. |
Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Self-Insurance: We self-insure various levels of general liability, workers’ compensation, and medical coverage at most of our properties. Insurance reserves include accruals for estimated settlements for known claims, as well as accruals for estimates of claims not yet made. As of September 30, 2017 and December 31, 2016, we had total self-insurance accruals of $25.8 million and $26.1 million, respectively, which are included in “Total current liabilities” in our unaudited Condensed Consolidated Balance Sheets. Other: We are a party to a number of other pending legal proceedings. Management does not expect that the outcome of such proceedings, either individually or in the aggregate, will have a material effect on our financial position, cash flows or results of operations. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information We view each of our operating businesses as an operating segment with the exception of our two businesses in Jackpot, Nevada, which we view as one operating segment. Operating segments are aggregated based on their similar economic characteristics, types of customers, types of services provided, the regulatory environments in which they operate, and their management and reporting structure. We have aggregated our operating segments into three reportable segments based on the similar characteristics of the operating segments within the regions in which they operate: Midwest, South and West. Corporate and other is included in the following segment disclosures to reconcile to consolidated results. We use Consolidated Adjusted EBITDAR and Adjusted EBITDAR (as such terms are defined below) for each segment to compare operating results among our segments and allocate resources. The following table highlights our Adjusted EBITDAR for each segment and reconciles Consolidated Adjusted EBITDAR to Income (loss) from continuing operations for the three and nine months ended September 30, 2017 and 2016.
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Organization and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Segment Reporting | We view each of our operating businesses as an operating segment with the exception of our two businesses in Jackpot, Nevada, which we view as one operating segment. |
Basis of Presentation | Basis of Presentation: The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the instructions of the Securities and Exchange Commission (the “SEC”) to the Quarterly Report on Form 10-Q and, therefore, do not include all information and notes necessary for complete financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”). The results for the periods indicated are unaudited, but reflect all adjustments, which are of a normal recurring nature, that management considers necessary for a fair presentation of operating results. The results of operations for interim periods are not indicative of a full year of operations. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended December 31, 2016. |
Principles of Consolidation | Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of Pinnacle Entertainment, Inc. and its subsidiaries. Investments in the common stock of unconsolidated affiliates in which we have the ability to exercise significant influence are accounted for under the equity method. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates: The preparation of unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Estimates used by us include, among other things, the estimated useful lives for depreciable and amortizable assets, the estimated allowance for doubtful accounts receivable, estimated income tax provisions, the evaluation of the future realization of deferred tax assets, determining the adequacy of reserves for self-insured liabilities and our guest loyalty programs, the initial measurement of the financing obligation associated with the Master Lease, estimated cash flows in assessing the recoverability of long-lived assets, asset impairments, goodwill and other intangible assets, contingencies and litigation, and estimates of the forfeiture rate and expected term of share-based awards and stock price volatility when computing share-based compensation expense. Actual results may differ from those estimates. |
Fair Value | The estimated fair values for certain of our long-term held-to-maturity securities and our long-term promissory notes were based primarily on Level 2 inputs using observable market data. The estimated fair values of certain of our other long-term liabilities were based on Level 2 inputs using a present value of future cash flow valuation technique, which is based on contractually obligated payments and terms. The estimated fair values for certain of our long-term held-to-maturity securities were based on Level 3 inputs using a present value of future cash flow valuation technique that relies on management assumptions and qualitative observations. Key significant unobservable inputs in this technique include discount rate risk premiums and probability-weighted cash flow scenarios. Fair Value: Fair value measurements affect our accounting and impairment assessments of our long-lived assets, investments in unconsolidated affiliates, assets acquired in an acquisition, goodwill, and other intangible assets. Fair value measurements also affect our accounting for certain financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured according to a hierarchy that includes: “Level 1” inputs, such as quoted prices in an active market for identical assets or liabilities; “Level 2” inputs, which are observable inputs for similar assets; or “Level 3” inputs, which are unobservable inputs. |
Land, Buildings, Vessels and Equipment | Land, Buildings, Vessels and Equipment: Land, buildings, vessels and equipment are stated at cost. We capitalize the costs of improvements that extend the life of the asset. We expense repair and maintenance costs as incurred. Gains or losses on the disposition of land, buildings, vessels and equipment are included in the determination of income. We review the carrying amounts of our land, buildings, vessels and equipment used in our operations whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from estimated future undiscounted cash flows expected to result from its use and eventual disposition. If the undiscounted cash flows exceed the carrying amount, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying amount, then an impairment charge is recorded based on the fair value of the asset. Development costs directly associated with the acquisition, development, and construction of a project are capitalized as a cost of the project during the periods in which activities necessary to get the property ready for its intended use are in progress. The costs incurred for development projects are carried at cost. Interest costs associated with development projects are capitalized as part of the cost of the constructed asset. When no debt is incurred specifically for a project, interest is capitalized on amounts expended for the project using our weighted-average cost of borrowing. Capitalization of interest ceases when the project, or discernible portion of the project, is substantially complete. If substantially all of the construction activities of a project are suspended, capitalization of interest will cease until such activities are resumed. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets: Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations and has been allocated to our reporting units. We consider each of our operating segments to represent a reporting unit. Other indefinite-lived intangible assets include gaming licenses and trade names for which it is reasonably assured that we will continue to renew indefinitely. Goodwill and other indefinite-lived intangible assets are subject to an annual assessment for impairment during the fourth quarter (October 1st test date), or more frequently if there are indications of possible impairment. Amortizing intangible assets include player relationships and favorable leasehold interests. We review amortizing intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. |
Guest Loyalty Programs | Guest Loyalty Programs: We offer incentives to our guests through our mychoice guest loyalty program (“mychoice program”). Under the mychoice program, guests earn points based on their level of play that may be redeemed for various benefits, such as cash back, dining, or hotel stays, among others. The reward credit balance under the mychoice program will be forfeited if the guest does not earn or use any reward credits over the prior six-month period. In addition, based on their level of play, guests can earn additional benefits without redeeming points, such as a car lease, among other items. During the third quarter 2017, the Company announced its intention to implement the mychoice program at the Meadows during the first quarter 2018, which currently operates its own guest loyalty program. We accrue a liability for the estimated cost of providing these benefits as the benefits are earned. Estimates and assumptions are made regarding cost of providing the benefits, breakage rates, and the combination of goods and services guests will choose. We use historical data to assist in the determination of estimated accruals. Changes in estimates or guest redemption patterns could produce different results. |
Revenue Recognition | Revenue Recognition: Gaming revenues consist of the net win from gaming activities, which is the difference between amounts wagered and amounts paid to winning patrons. Cash discounts and other cash incentives to guests related to gaming play are recorded as a reduction to gaming revenue. Food and beverage, lodging, retail, entertainment, and other operating revenues are recognized as products are delivered or services are performed. Advance deposits on lodging are recorded as accrued liabilities until services are provided to the guest. The retail value of food and beverage, lodging and other services furnished to guests on a complimentary basis is included in revenues and then deducted as promotional allowances in calculating total revenues. The estimated cost of providing such promotional allowances is primarily included in gaming expenses. |
Gaming Taxes | Gaming Taxes: We are subject to taxes based on gross gaming revenues in the jurisdictions in which we operate, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on our gaming revenues and are recorded as a gaming expense in our unaudited Condensed Consolidated Statements of Operations. |
Leases | Leases: The Company has certain long-term lease obligations, including the Meadows Lease, ground leases at certain properties and agreements relating to slot machines. Rent associated with operating leases, excluding contingent rent, is expensed on a straight-line basis over the life of the lease beginning on the date of possession of the leased property. To the extent it is considered probable, contingent rent associated with operating leases is expensed as incurred. At lease inception, the lease term is determined by assuming the exercise of those renewal options that are reasonably assured. The lease term is used to determine whether a lease is capital or operating and is used to calculate the straight-line rent expense. Additionally, the depreciable life of capital lease assets and leasehold improvements is limited by the expected lease term if less than the useful life of the asset. Rent expenses are included in “General and administrative” in our unaudited Condensed Consolidated Statements of Operations. |
Pre-opening, Development and Other Costs | Pre-opening, Development and Other Costs: Pre-opening, development and other costs consist of payroll costs to hire, employ and train the workforce prior to opening an operating facility; marketing campaigns prior to and in connection with the opening; legal and professional fees related to the project but not otherwise attributable to depreciable assets; and lease payments, real estate taxes, and other general and administrative costs prior to the opening of an operating facility. In addition, pre-opening, development and other costs include acquisition and restructuring costs. Pre-opening, development and other costs are expensed as incurred. |
Earnings Per Share | Earnings Per Share: The computation of basic and diluted earnings per share (“EPS”) is based on net income (loss) attributable to Pinnacle Entertainment, Inc. divided by the basic weighted average number of common shares and diluted weighted average number of common shares, respectively. Diluted EPS reflects the addition of potentially dilutive securities, such as stock options, restricted stock units, restricted stock and performance stock units (“share-based awards”). We calculate the dilutive effect of share-based awards using the treasury stock method. |
Treasury Stock | Treasury Stock: In May 2016, the Company’s Board of Directors authorized a share repurchase program of up to $50.0 million of our common stock, which we completed in July 2016. In August 2016, our Board of Directors authorized an additional share repurchase program of up to $50.0 million of our common stock. The cost of the shares acquired is treated as a reduction to stockholders’ equity. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements: In May 2014, as part of its ongoing efforts to assist in the convergence of GAAP and International Financial Reporting Standards, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which is a new standard related to revenue recognition. Under the new standard, recognition of revenue occurs when a customer obtains control of promised services or goods in an amount that reflects the consideration to which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts. The standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In July 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, which defers the implementation of this new standard to be effective for fiscal years beginning after December 15, 2017. In March 2016, the FASB issued ASU No. 2016-08, Principal versus Agent Considerations, which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard pursuant to ASU No. 2014-09. In April 2016, the FASB issued ASU No. 2016-10, Identifying Performance Obligations and Licensing, and in May 2016, the FASB issued ASU No. 2016-12, Narrow-Scope Improvements and Practical Expedients, which amend certain aspects of the new revenue recognition standard pursuant to ASU No. 2014-09. In December 2016, the FASB issued ASU No. 2016-19 and ASU No. 2016-20, Technical Corrections and Improvements, which further clarified and corrected certain elements of this new standard. The Company currently anticipates adopting these accounting standards relating to revenue recognition during the first quarter 2018 using the full retrospective approach. Although we are still evaluating the full impact of this standard on our unaudited Condensed Consolidated Financial Statements, the Company has concluded that the adoption of this standard will affect how we account for our mychoice program as well as the classification of revenues between gaming, food and beverage, lodging, and retail, entertainment and other. Under our mychoice program, guests earn points based on their level of play, which may be redeemed for various benefits, such as cash back, dining, or hotel stays, among others. We currently determine our liability for unredeemed points based on the estimated costs of services or merchandise to be provided and estimated redemption rates. Under the new standard, points awarded under our mychoice program are considered a material right given to the guests based on their gaming play and the promise to provide points to guests will need to be accounted for as a separate performance obligation. The new standard will require us to allocate the revenues associated with the guests’ activity between gaming revenue and the value of the points and to measure the liability based on the estimated standalone selling price of the points earned after factoring in the likelihood of redemption. As a result, we expect that gaming revenues will be reduced with a corresponding increase, in total, to food and beverage, lodging, and retail, entertainment and other revenues. The revenue associated with the points earned will be recognized in the period in which they are redeemed. The quantitative effects of these changes have not yet been determined and are still being analyzed. In February 2016, the FASB issued ASU No. 2016-02, Recognition and Measurement of Leases. Under the new guidance, for all leases (with the exception of short-term leases), at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Further, the new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and liabilities, which no longer provides a source for off balance sheet financing. The effective date for this update is for the annual and interim periods beginning after December 15, 2018 with early adoption permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company currently anticipates adopting this accounting standard during the first quarter 2019. Operating leases, including the Meadows Lease, ground leases at certain properties, and agreements relating to slot machines, will be recorded in our unaudited Condensed Consolidated Balance Sheets as a right-of-use asset with a corresponding lease liability, which will be amortized using the effective interest rate method as payments are made. The right-of-use asset will be depreciated on a straight-line basis and recognized as lease expense. Additionally, as a result of this ASU, the Company will be required to reassess whether the Spin-Off and Merger transactions qualified for sale-leaseback accounting treatment. The full qualitative and quantitative effects of these changes have not yet been determined and are still being analyzed. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplified several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this guidance during the first quarter 2017 and it did not have a material impact on our unaudited Condensed Consolidated Financial Statements. In adopting this guidance, the Company made an accounting policy election to continue to estimate the number of awards that are expected to vest as opposed to accounting for forfeitures as they occur. Prior periods were not required to be adjusted as a result of the adoption of this guidance. In May 2017, the FASB issued ASU No. 2017-09, Scope of Modification Accounting, which provides clarity and intends to reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation—Stock Compensation. More specifically, ASU No. 2017-09 provides guidance on which changes to the terms and conditions of a share-based payment award require an entity to apply modification accounting. The effective date for this update is for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The amendments in this update are to be applied on a prospective basis. Although the Company is still evaluating the impact of adopting this accounting standard, we do not currently believe it will have a material impact on our unaudited Condensed Consolidated Financial Statements. In September 2017, the FASB issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842), which makes amendments to the SEC paragraphs pursuant to the staff announcement at the July 20, 2017 Emerging Issues Task Force meeting and rescinds prior SEC staff announcements and observer comments. To the extent this guidance is applicable, it is effective immediately. As discussed above, the Company has not yet adopted ASC Topics 606, Revenue from Contracts with Customers, and 842, Leases. The guidance currently applicable to the Company in this ASU did not have a material impact on our unaudited Condensed Consolidated Financial Statements. A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies. Given the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of any such proposed or revised standards would have on our unaudited Condensed Consolidated Financial Statements. |
Organization and Summary of Significant Accounting Policies (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Properties within Reportable Segments | For financial reporting purposes, we aggregate our operating segments into the following reportable segments:
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Fair Value Measurements Not Measured on a Recurring Basis | The following table presents a summary of fair value measurements by level for certain financial instruments not measured at fair value on a recurring basis in the unaudited Condensed Consolidated Balance Sheets for which it is practicable to estimate fair value:
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Summary of Land, Buildings, Vessels and Equipment | The following table presents a summary of our land, buildings, vessels and equipment, including those subject to the Master Lease:
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Schedule of Complimentary Revenue | Complimentary revenues that have been excluded from the accompanying unaudited Condensed Consolidated Statements of Operations were as follows:
The costs to provide such complimentary benefits were as follows:
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Schedule of Gaming Taxes | These taxes were as follows:
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Schedule of Pre-opening, Development and Other Costs | Pre-opening, development and other costs consist of the following:
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Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease (Tables) |
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Spin-Off, Merger and Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Total Lease Payments Under the Master Lease | Total lease payments under the Master Lease were as follows:
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Long-Term Debt (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consisted of the following:
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Schedule of Interest Expense, Net | Interest expense, net, was as follows:
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Employee Benefit Plans (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-Based Compensation Expense | We recorded share-based compensation expense as follows:
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Schedule of Stock Option Activity | The following table summarizes information related to our common stock options:
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Schedule of Weighted Average Grant Date Fair Value | The following information is provided for our stock options:
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Schedule of Restricted Stock Units Activity | The following table summarizes information related to our restricted stock units:
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Schedule of Restricted Stock Activity | The following table summarizes information related to our restricted stock:
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Schedule of Performance Stock Units Activity | The following table summarizes information related to our performance stock units:
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Write-downs, Reserves and Recoveries, Net (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Write Downs Reserves And Recoveries Net Abstract | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Write Downs, Reserves and Recoveries, Net | Write-downs, reserves and recoveries, net consist of the following:
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Investment and Acquisition Activities (Tables) |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment and Acquisitions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table reflects the allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed, with the excess recorded as goodwill (in thousands). The goodwill has been assigned to our Midwest segment.
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Schedule of Property and Equipment Acquired | The following table summarizes the acquired property and equipment.
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Schedule of Acquired Intangible Assets Other Than Goodwill | The following table summarizes the acquired identifiable intangible assets.
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The following table highlights our Adjusted EBITDAR for each segment and reconciles Consolidated Adjusted EBITDAR to Income (loss) from continuing operations for the three and nine months ended September 30, 2017 and 2016.
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Organization and Summary of Significant Accounting Policies - Summary of Land, Buildings, Vessels and Equipment (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Land, buildings, vessels and equipment: | ||
Land and land improvements | $ 429,100 | $ 426,700 |
Buildings, vessels and improvements | 2,696,700 | 2,689,000 |
Furniture, fixtures and equipment | 805,000 | 805,900 |
Construction in progress | 26,800 | 32,700 |
Land, buildings, vessels and equipment, gross | 3,957,600 | 3,954,300 |
Less: accumulated depreciation | (1,300,300) | (1,185,800) |
Land, buildings, vessels and equipment, net | $ 2,657,292 | $ 2,768,491 |
Organization and Summary of Significant Accounting Policies - Summary of Complimentary Revenue and Associated Costs (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Food and beverage | $ 35.6 | $ 35.6 | $ 106.7 | $ 103.1 |
Lodging | 16.5 | 16.7 | 47.8 | 48.8 |
Other | 4.4 | 4.2 | 12.6 | 11.9 |
Total promotional allowances | 56.5 | 56.5 | 167.1 | 163.8 |
Promotional allowance costs included in gaming expense | $ 40.6 | $ 41.4 | $ 122.8 | $ 117.9 |
Organization and Summary of Significant Accounting Policies - Summary of Gaming Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Gaming taxes | $ 175.2 | $ 153.8 | $ 529.0 | $ 442.3 |
Organization and Summary of Significant Accounting Policies - Schedule of Pre-opening, Development and Other Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
||||||
Pre-opening and Development Costs [Line Items] | |||||||||
Restructuring costs | [1] | $ 200 | $ 1,300 | $ 900 | $ 48,100 | ||||
Pre-opening, development and other costs | 403 | 5,594 | 2,997 | 54,951 | |||||
Other | |||||||||
Pre-opening and Development Costs [Line Items] | |||||||||
Pre-opening, development and other costs | 200 | 200 | 1,900 | 700 | |||||
The Meadows | |||||||||
Pre-opening and Development Costs [Line Items] | |||||||||
Meadows acquisition costs | [2] | $ 0 | $ 4,100 | $ 200 | $ 6,200 | ||||
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Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease - Total Lease Payments (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Master Lease Financing Obligation [Line Items] | ||||||
Reduction of financing obligation | $ 36,735 | $ 19,238 | ||||
Interest expense attributable to financing obligation | [1] | $ 83,800 | $ 83,600 | 247,700 | 141,900 | |
Master Lease | ||||||
Master Lease Financing Obligation [Line Items] | ||||||
Reduction of financing obligation | 12,700 | 11,400 | 36,700 | 19,200 | ||
Interest expense attributable to financing obligation | 83,800 | 83,600 | 247,700 | 141,900 | ||
Total lease payments under the Master Lease | $ 96,500 | $ 95,000 | $ 284,400 | $ 161,100 | ||
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Spin-Off, Merger, Master Lease Financing Obligation and Meadows Lease - Meadows Lease (Details) - Meadows Lease $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
| |
Meadows Lease [Line Items] | |
Initial lease term | 10 years |
Lease term | 29 years |
Annual rent | $ 25.1 |
Annual rent - base rent | 13.7 |
Annual rent - percentage rent | $ 11.4 |
Percent escalation during initial term | 5.00% |
Sum of base rent and percentage rent threshold | $ 31.0 |
Annual escalator if certain rent coverage ratio thresholds are met | 2.00% |
Adjusted revenue to rent ratio - year 2 | 1.8 |
Adjusted revenue to rent ratio - year 3 | 1.9 |
Adjusted revenue to rent ratio - year 4 and thereafter | 2.0 |
Annual rent - future rent | $ 25.8 |
Fixed period of percentage rent component | 2 years |
Percentage rent escalation interval | 2 years |
Percentage of average net revenues during preceding two years | 4.00% |
Period used to calculate average actual net revenues | 2 years |
Long-Term Debt - Summary of Interest Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
||||||||
Debt Disclosure [Abstract] | |||||||||||
Interest expense from financing obligation | [1] | $ 83,800 | $ 83,600 | $ 247,700 | $ 141,900 | ||||||
Interest expense from debt | [2] | 12,200 | 11,000 | 39,200 | 95,300 | ||||||
Interest income | (100) | (300) | (300) | (500) | |||||||
Capitalized interest | 0 | 0 | 0 | (100) | |||||||
Other | [3] | 0 | 0 | 0 | 2,500 | ||||||
Interest expense, net | $ 95,851 | $ 94,276 | $ 286,589 | $ 239,116 | |||||||
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Long-Term Debt - Summary of Interest Expense Footnotes (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Apr. 28, 2016 |
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Debt Instrument [Line Items] | |||||||
Interest expense from debt | [1] | $ 12.2 | $ 11.0 | $ 39.2 | $ 95.3 | ||
6.375% Senior Notes due 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 6.375% | ||||||
7.50% Senior Notes due 2021 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 7.50% | ||||||
7.75% Senior Subordinated Notes due 2022 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 7.75% | ||||||
8.75% Senior Subordinated Notes due 2022 | |||||||
Debt Instrument [Line Items] | |||||||
Interest rate, stated percentage | 8.75% | ||||||
Former Senior Secured Credit Facilities and Former Notes | |||||||
Debt Instrument [Line Items] | |||||||
Interest expense from debt | $ 76.5 | ||||||
|
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate for continuing operations | 9.30% | 117.70% | 5.80% | 5.60% |
Income tax expense (benefit) | $ 1,423 | $ 3,537 | $ 2,425 | $ (26,435) |
Federal statutory income tax rate | 35.00% |
Employee Benefit Plans - Additional Information (Details) - USD ($) shares in Millions, $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2017 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based awards outstanding (in shares) | 8.6 | |
Share-based awards available for grant (in shares) | 5.0 | |
Incremental expense attributable to accelerated vesting | $ 22.6 |
Employee Benefit Plans - Share-based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Share-based compensation expense | $ 3.7 | $ 2.6 | $ 10.4 | $ 32.7 |
Employee Benefit Plans - Restricted Stock Units (Details) - Restricted Stock Units $ / shares in Units, $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
$ / shares
shares
| |
Number of Units | |
Non-vested as of January 1, 2017 (in shares) | shares | 2,183,056 |
Granted (in shares) | shares | 573,085 |
Vested (in shares) | shares | (547,636) |
Canceled or forfeited (in shares) | shares | (159,091) |
Non-vested as of September 30, 2017 (in shares) | shares | 2,049,414 |
Weighted Average Grant Date Fair Value | |
Non-vested at January 1, 2017 (in dollars per share) | $ / shares | $ 9.65 |
Granted (in dollars per share) | $ / shares | 19.01 |
Vested (in dollars per share) | $ / shares | 9.36 |
Canceled or forfeited (in dollars per share) | $ / shares | 12.39 |
Non-vested at September 30, 2017 (in dollars per share) | $ / shares | $ 12.14 |
Unamortized compensation costs not yet expensed, restricted stock units | $ | $ 18.6 |
Unamortized compensation costs, weighted average period of recognition | 1 year 2 months 6 days |
Employee Benefit Plans - Restricted Stock (Details) - Restricted Stock $ / shares in Units, $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2017
USD ($)
$ / shares
shares
| |
Number of Shares | |
Non-vested as of January 1, 2017 (in shares) | shares | 340,620 |
Granted (in shares) | shares | 713,470 |
Canceled or forfeited (in shares) | shares | (11,428) |
Non-vested as of September 30, 2017 (in shares) | shares | 1,042,662 |
Weighted Average Grant Date Fair Value | |
Non-vested at January 1, 2017 (in dollars per share) | $ / shares | $ 14.24 |
Granted (in dollars per share) | $ / shares | 20.92 |
Canceled or forfeited (in dollars per share) | $ / shares | 18.70 |
Non-vested at September 30, 2017 (in dollars per share) | $ / shares | $ 18.77 |
Unamortized compensation costs not yet expensed, restricted stock | $ | $ 11.0 |
Unamortized compensation costs, weighted average period of recognition | 1 year 8 months 20 days |
Employee Benefit Plans - Performance Stock (Details) - Performance Stock Units |
9 Months Ended |
---|---|
Sep. 30, 2017
$ / shares
shares
| |
Number of Units | |
Non-vested as of January 1, 2017 (in shares) | shares | 108,855 |
Vested (in shares) | shares | (108,855) |
Non-vested as of September 30, 2017 (in shares) | shares | 0 |
Weighted Average Grant Date Fair Value | |
Non-vested at January 1, 2017 (in dollars per share) | $ / shares | $ 7.84 |
Vested (in dollars per share) | $ / shares | 7.84 |
Non-vested at September 30, 2017 (in dollars per share) | $ / shares | $ 0.00 |
Write-downs, Reserves and Recoveries, Net - Summary of Write-downs, Reserves and Recoveries, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Write Downs Reserves And Recoveries Net Abstract | ||||
Loss on sales or disposals of long-lived assets, net | $ 3,000 | $ 6,200 | $ 7,753 | $ 13,092 |
Impairment of held-to-maturity securities | 0 | 0 | 3,844 | 0 |
Impairment of long-lived assets | 0 | 0 | 0 | 238 |
Other | 1,200 | 0 | 1,100 | 500 |
Write-downs, reserves and recoveries, net | $ 4,192 | $ 6,190 | $ 12,644 | $ 13,830 |
Investment and Acquisition Activities - Acquisition of the Meadows Business (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 09, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Business Acquisition [Line Items] | |||
Payment for business combination, net of cash acquired | $ 0 | $ 103,365 | |
The Meadows | |||
Business Acquisition [Line Items] | |||
Purchase price, before certain adjustments | $ 138,000 | ||
Purchase price, after certain adjustments | 134,000 | ||
Payment for business combination, net of cash acquired | 107,500 | ||
Goodwill deductible for income tax purposes | $ 8,200 |
Investment and Acquisition Activities - Allocation of Purchase Price (Details) - USD ($) $ in Thousands |
Sep. 30, 2017 |
Dec. 31, 2016 |
Sep. 09, 2016 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 610,889 | $ 610,889 | |
The Meadows | |||
Business Acquisition [Line Items] | |||
Current and other assets | $ 35,953 | ||
Property and equipment | 39,265 | ||
Goodwill | 18,822 | ||
Other intangible assets | 71,300 | ||
Other non-current assets | 3,001 | ||
Total assets | 168,341 | ||
Current liabilities | 18,524 | ||
Deferred tax liabilities | 10,624 | ||
Other long-term liabilities | 5,145 | ||
Total liabilities | 34,293 | ||
Net assets acquired | $ 134,048 |
Investment and Acquisition Activities - Acquired Property and Equipment (Details) - The Meadows $ in Thousands |
Sep. 09, 2016
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Property and equipment acquired | $ 39,265 |
Furniture, fixtures and equipment | |
Business Acquisition [Line Items] | |
Property and equipment acquired | 39,240 |
Construction in progress | |
Business Acquisition [Line Items] | |
Property and equipment acquired | $ 25 |
Investment and Acquisition Activities - Acquired Intangible Assets Other Than Goodwill (Details) - The Meadows $ in Thousands |
Sep. 09, 2016
USD ($)
|
---|---|
Business Acquisition [Line Items] | |
Intangible assets acquired | $ 71,300 |
Gaming licenses | |
Business Acquisition [Line Items] | |
Intangible assets acquired | 56,300 |
Trade name | |
Business Acquisition [Line Items] | |
Intangible assets acquired | $ 15,000 |
Investment and Acquisition Activities - Retama Park Racetrack (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Dec. 31, 2016 |
|
Schedule of Equity Method Investments | |||||
Promissory notes | $ 16,900 | $ 16,900 | $ 15,600 | ||
Corporate bonds | 10,400 | 10,400 | $ 14,300 | ||
Other-than-temporary impairment on corporate bonds | 0 | $ 0 | 3,844 | $ 0 | |
Local government corporation bonds | |||||
Schedule of Equity Method Investments | |||||
Corporate bonds | $ 7,500 | 7,500 | |||
Other-than-temporary impairment on corporate bonds | $ 3,800 | ||||
Retama Partners | |||||
Schedule of Equity Method Investments | |||||
Percentage of voting interests acquired | 75.50% | 75.50% |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Self-insurance accruals | $ 25.8 | $ 26.1 |
Segment Information - Additional Details (Details) |
9 Months Ended |
---|---|
Sep. 30, 2017
property
segment
| |
Segment Reporting Information [Line Items] | |
Number of gaming businesses owned and operated | property | 16 |
Number of reportable segments | segment | 3 |
Jackpot, Nevada | |
Segment Reporting Information [Line Items] | |
Number of gaming businesses owned and operated | property | 2 |
Number of operating segments | segment | 1 |
Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
||||||||
Revenues: | ||||||||||||
Revenues | $ 647,403 | $ 595,174 | $ 1,941,019 | $ 1,741,431 | ||||||||
Consolidated Adjusted EBITDAR | [1] | 178,100 | 155,400 | 533,700 | 484,800 | |||||||
Other benefits (costs): | ||||||||||||
Rent expense under the Meadows Lease | (4,000) | (1,000) | (12,100) | (1,000) | ||||||||
Depreciation and amortization | (54,125) | (54,354) | (166,300) | (162,423) | ||||||||
Pre-opening, development and other costs | (403) | (5,594) | (2,997) | (54,951) | ||||||||
Non-cash share-based compensation expense | (3,700) | (2,600) | (10,400) | (32,700) | ||||||||
Impairment of goodwill | 0 | 11,600 | $ (332,900) | 0 | (321,300) | |||||||
Impairment of other intangible assets | 0 | 0 | 0 | (129,500) | ||||||||
Write-downs, reserves and recoveries, net | (4,192) | (6,190) | (12,644) | (13,830) | ||||||||
Interest expense, net | (95,851) | (94,276) | (286,589) | (239,116) | ||||||||
Loss on early extinguishment of debt | (516) | 0 | (516) | (5,207) | ||||||||
Loss from equity method investment | 0 | 0 | (90) | (90) | ||||||||
Income tax benefit (expense) | (1,423) | (3,537) | (2,425) | 26,435 | ||||||||
Income (loss) from continuing operations | 13,940 | (532) | 39,574 | (448,841) | ||||||||
Capital expenditures | 56,392 | 73,103 | ||||||||||
Operating segments | ||||||||||||
Revenues: | ||||||||||||
Revenues | 645,700 | 593,400 | 1,936,800 | 1,737,000 | ||||||||
Consolidated Adjusted EBITDAR | [1] | 199,100 | 175,100 | 594,700 | 546,300 | |||||||
Operating segments | Midwest segment | ||||||||||||
Revenues: | ||||||||||||
Revenues | [2] | 391,700 | 333,500 | 1,171,700 | 980,800 | |||||||
Consolidated Adjusted EBITDAR | [1],[2] | 112,200 | 92,800 | 334,200 | 299,000 | |||||||
Other benefits (costs): | ||||||||||||
Capital expenditures | [2] | 30,500 | 42,100 | |||||||||
Operating segments | South segment | ||||||||||||
Revenues: | ||||||||||||
Revenues | [2] | 188,700 | 197,000 | 583,000 | 579,000 | |||||||
Consolidated Adjusted EBITDAR | [1],[2] | 60,200 | 58,100 | 189,700 | 180,500 | |||||||
Other benefits (costs): | ||||||||||||
Capital expenditures | [2] | 15,000 | 21,600 | |||||||||
Operating segments | West segment | ||||||||||||
Revenues: | ||||||||||||
Revenues | [2] | 65,300 | 62,900 | 182,100 | 177,200 | |||||||
Consolidated Adjusted EBITDAR | [1],[2] | 26,700 | 24,200 | 70,800 | 66,800 | |||||||
Other benefits (costs): | ||||||||||||
Capital expenditures | [2] | 3,400 | 6,700 | |||||||||
Corporate and other | ||||||||||||
Revenues: | ||||||||||||
Revenues | [3] | 1,700 | 1,800 | 4,200 | 4,400 | |||||||
Consolidated Adjusted EBITDAR | [1],[3] | $ (21,000) | $ (19,700) | (61,000) | (61,500) | |||||||
Other benefits (costs): | ||||||||||||
Capital expenditures | $ 7,500 | $ 2,700 | ||||||||||
|
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