Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

The following table highlights our revenues and Adjusted EBITDAR for each reportable segment and reconciles Adjusted EBITDAR on a consolidated basis to Net income.



	For the three months ended March 31,
(in thousands)	2019			2018
Revenues:
Northeast segment	$	550,578		$	458,719
South segment	291,942			63,330
West segment	158,654			97,966
Midwest segment	271,262			185,534
Other ⁽¹⁾	10,135			10,536
Revenues	$	1,282,571		$	816,085

Adjusted EBITDAR ⁽²⁾:
Northeast segment	$	164,754		$	144,977
South segment	97,844			21,118
West segment	49,923			23,931
Midwest segment	99,219			68,185
Other ⁽¹⁾	(20,303		)	(15,665		)
Adjusted EBITDAR ⁽²⁾	391,437			242,546

Other operating benefits (costs) and other income (expenses):
Rent expense associated with triple net operating leases⁽³⁾	(84,730		)	—
Stock-based compensation	(3,417		)	(2,929		)
Cash-settled stock award variance	(472		)	7,462
Loss on disposal of assets	(522		)	(55		)
Contingent purchase price	(4,717		)	(1,134		)
Pre-opening and acquisition costs	(4,380		)	(6,093		)
Depreciation and amortization	(104,053		)	(60,390		)
Impairment losses	—			(618		)
Non-operating items for Kansas JV	(1,073		)	(1,294		)
Interest expense	(132,587		)	(115,740		)
Interest income	319			249
Loss on early extinguishment of debt	—			(882		)
Other	—			4
Income before income taxes	55,805			61,126
Income tax expense	(14,818		)	(15,689		)
Net income	$	40,987		$	45,437

(1)

The Other category consists of the Company's standalone racing operations, namely Sanford-Orlando Kennel Club, located in Longwood, Florida, and the Company’s joint venture interests in Texas and New Jersey (see Note 10, “Investments in and Advances to Unconsolidated Affiliates”). The Other category also includes PIV, our management contract for Retama Park Racetrack, and our live and televised poker tournament series that operates under the trade name, Heartland Poker Tour. Expenses incurred for corporate and shared services activities that are directly attributable to a property or are otherwise incurred to support a property are allocated to each property. The Other category also includes corporate overhead costs,

which consist of certain expenses, such as: payroll, professional fees, travel expenses and other general and administrative expenses that do not directly relate to or have otherwise been allocated to a property.

(2)

We define Adjusted EBITDAR as earnings before interest income and expense, income taxes, depreciation and amortization, rent expense associated with triple net operating leases, stock-based compensation, debt extinguishment and financing charges, impairment charges, insurance recoveries and deductible charges, changes in the estimated fair value of our contingent purchase price obligations, gain or loss on disposal of assets, the difference between budget and actual expense for cash-settled stock-based awards, pre-opening and acquisition costs, and other income or expenses. Adjusted EBITDAR is also inclusive of income or loss from unconsolidated affiliates, with our share of non-operating items (such as depreciation and amortization) added back for our joint venture in Kansas Entertainment. Adjusted EBITDAR excludes payments associated with our Master Leases, the Meadows Lease, and the Margaritaville Lease, as such amounts are included as either interest expense or rent expense.


(3)	As of and for the three months ended March 31, 2019, for purposes of this definition, the Company’s triple net operating leases include components of the Master Leases (principally pertaining to the land), the Meadows Lease, and the Margaritaville Lease.



	For the three months ended March 31,
(in thousands)	2019		2018
Capital expenditures:
Northeast segment	$	12,685	$	4,212
South segment	8,872		682
West segment	7,027		2,730
Midwest segment	7,039		3,007
Other	2,043		1,182
Total capital expenditures	$	37,666	$	11,813



(in thousands)	Northeast		South		West		Midwest		Other		Total
As of March 31, 2019
Investment in and advances to unconsolidated affiliates	$	105	$	—	$	—	$	88,899	$	38,920	$	127,924
Total assets ⁽¹⁾	$	1,470,512	$	1,458,782	$	752,189	$	1,489,105	$	8,327,583	$	13,498,171

As of December 31, 2018
Investment in and advances to unconsolidated affiliates	$	105	$	—	$	—	$	89,350	$	39,033	$	128,488
Total assets ⁽²⁾	$	1,330,256	$	1,082,304	$	755,665	$	1,411,468	$	6,381,319	$	10,961,012

(1)

As of March 31, 2019, total assets of the Other category includes the real estate assets subject to the Master Leases, which are either classified as property and equipment, operating lease ROU assets, or finance lease ROU assets, depending on whether the underlying component of the Master Leases was determined to be an operating lease, a finance lease, or continue to be financing obligations, upon adoption of ASC 842.

(2)

As of December 31, 2018, total assets of the Other category includes the real estate assets subject to the Master Leases, which are classified as property and equipment.