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Segment Information | 9 Months Ended
--- | ---
Sep. 30, 2015
Segment Reporting [Abstract] |
Segment Information | NOTE 10 — SEGMENT INFORMATION The Company operates in the following five segments: (1) Big Fish Games; (2) Casinos, which includes video poker and casino operations at Calder Casino, Fair Grounds Slots, Harlow’s Casino Resort & Spa ("Harlow's"), the Company's equity investment in MVG, Oxford Casino (“Oxford”), Riverwalk Casino Hotel ("Riverwalk"), Video Services, LLC (“VSI”) and management fee revenue from Saratoga Casino and Raceway in Saratoga Springs, New York ("Saratoga"); (3) TwinSpires, which includes TwinSpires, our Advance Deposit Wagering (“ADW”) business, Fair Grounds Account Wagering, Bloodstock Research Information Services and Velocity, a business focused on high wagering-volume international customers, as well as the Company's equity investment in HRTV, LLC ("HRTV"), prior to its sale during January 2015; (4) Racing, which includes Churchill Downs, Arlington International Race Course ("Arlington") and its ten off-track betting facilities ("OTBs"), Fair Grounds Race Course ("Fair Grounds") and the pari-mutuel activity generated at its twelve OTBs and Calder Race Course ("Calder"), which ceased pari-mutuel operations on July 1, 2014; and (5) Other Investments, which includes United Tote, Bluff, I-Gaming and the Company's other minor investments. Eliminations include the elimination of intersegment transactions. In order to evaluate the performance of these operating segments internally, the Company's chief operating decision maker uses Adjusted EBITDA (defined as earnings before interest, taxes, depreciation, amortization, and adjusted for insurance recoveries net of losses, share-based compensation expenses, pre-opening expenses, the impairment of assets, Big Fish Games transaction expenses, Big Fish Games acquisition-related charges, changes in Big Fish Games deferred revenue, Calder exit costs and other charges or recoveries). Big Fish Games transaction expenses include legal, accounting and other deal-related expenses. Big Fish Games acquisition-related charges reflect the change in fair value of the Big Fish Games earnout and deferred consideration liability recorded each reporting period. Changes in Big Fish Games deferred revenue reflect reductions in revenue from business combination accounting rules when deferred revenue balances assumed as part of an acquisition are adjusted to their fair values. Fair value approximates the cost of fulfilling the service obligation, plus a reasonable profit margin. Adjusted EBITDA also includes 50% of the operating income or loss of our joint venture, MVG. The Company utilizes the Adjusted EBITDA metric because it believes the inclusion or exclusion of certain recurring items is necessary to provide a more accurate measure of its core operating results and enables management and investors to evaluate and compare from period to period our operating performance in a meaningful and consistent manner. Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of performance, as an alternative to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure provided in accordance with GAAP. The Company's calculation of Adjusted EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. The table below presents information about the reported segments for the three and nine months ended September 30, 2015 and 2014 (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Net revenues from external customers: |  |  |  |  |  |  |
Big Fish Games | $ | 103,540 |  |  | $ | — |  |  | $ | 299,969 |  |  | $ | — |
Casinos: |  |  |  |  |  |  |
Calder Casino | 18,561 |  |  | 18,104 |  |  | 58,726 |  |  | 58,560 |
Fair Grounds Slots | 8,789 |  |  | 9,453 |  |  | 29,324 |  |  | 30,823 |
VSI | 9,011 |  |  | 8,008 |  |  | 27,584 |  |  | 25,241 |
Harlow's Casino | 11,741 |  |  | 12,197 |  |  | 37,471 |  |  | 38,425 |
Oxford Casino | 22,338 |  |  | 21,887 |  |  | 60,799 |  |  | 58,808 |
Riverwalk Casino | 12,003 |  |  | 11,974 |  |  | 37,724 |  |  | 37,931 |
Saratoga | 236 |  |  | — |  |  | 236 |  |  | — |
Total Casinos | 82,679 |  |  | 81,623 |  |  | 251,864 |  |  | 249,788 |
TwinSpires | 50,346 |  |  | 46,266 |  |  | 156,409 |  |  | 149,426 |
Racing: |  |  |  |  |  |  |
Churchill Downs | 7,863 |  |  | 8,021 |  |  | 136,663 |  |  | 128,511 |
Arlington | 24,978 |  |  | 26,974 |  |  | 48,909 |  |  | 54,289 |
Calder | 638 |  |  | 786 |  |  | 2,029 |  |  | 18,524 |
Fair Grounds | 5,388 |  |  | 5,274 |  |  | 31,140 |  |  | 29,745 |
Total Racing | 38,867 |  |  | 41,055 |  |  | 218,741 |  |  | 231,069 |
Other Investments | 4,093 |  |  | 4,249 |  |  | 12,200 |  |  | 12,864 |
Corporate | 240 |  |  | 290 |  |  | 731 |  |  | 949 |
Net revenues from external customers | $ | 279,765 |  |  | $ | 173,483 |  |  | $ | 939,914 |  |  | $ | 644,096 |
Intercompany net revenues: |  |  |  |  |  |  |
TwinSpires | $ | 234 |  |  | $ | 240 |  |  | $ | 781 |  |  | $ | 714 |
Racing: |  |  |  |  |  |  |
Churchill Downs | 685 |  |  | 678 |  |  | 6,302 |  |  | 5,851 |
Arlington | 1,665 |  |  | 2,001 |  |  | 4,109 |  |  | 4,795 |
Calder | — |  |  | — |  |  | — |  |  | 707 |
Fair Grounds | 11 |  |  | 15 |  |  | 869 |  |  | 744 |
Total Racing | 2,361 |  |  | 2,694 |  |  | 11,280 |  |  | 12,097 |
Other Investments | 792 |  |  | 829 |  |  | 2,680 |  |  | 2,937 |
Eliminations | (3,387 | ) |  | (3,763 | ) |  | (14,741 | ) |  | (15,748 | )
Net revenues | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Reconciliation of segment Adjusted EBITDA to net earnings: |  |  |  |  |  |  |
Big Fish Games | $ | 33,295 |  |  | $ | — |  |  | $ | 81,559 |  |  | $ | — |
Casinos | 25,037 |  |  | 24,937 |  |  | 81,779 |  |  | 78,362 |
TwinSpires | 13,759 |  |  | 11,098 |  |  | 41,666 |  |  | 35,135 |
Racing | 283 |  |  | (1,229 | ) |  | 76,281 |  |  | 66,600 |
Other Investments | (78 | ) |  | (899 | ) |  | 35 |  |  | (2,475 | )
Total segment Adjusted EBITDA | 72,296 |  |  | 33,907 |  |  | 281,320 |  |  | 177,622 |
Corporate Adjusted EBITDA | (1,685 | ) |  | (1,398 | ) |  | (5,239 | ) |  | (3,645 | )
Insurance recoveries, net of losses | — |  |  | — |  |  | — |  |  | 431 |
Big Fish Games acquisition charges | (2,810 | ) |  | — |  |  | (17,410 | ) |  | — |
Big Fish Games changes in deferred revenue | (10,907 | ) |  | — |  |  | (32,003 | ) |  | — |
Share-based compensation | (4,485 | ) |  | (2,213 | ) |  | (10,580 | ) |  | (10,567 | )
Calder exit costs | (12,737 | ) |  | (2,298 | ) |  | (13,490 | ) |  | (2,298 | )
MVG interest expense, net | (535 | ) |  | (819 | ) |  | (1,625 | ) |  | (1,956 | )
Other charges and recoveries, net | — |  |  | (355 | ) |  | 6,114 |  |  | (832 | )
Depreciation and amortization | (27,452 | ) |  | (17,280 | ) |  | (82,129 | ) |  | (48,324 | )
Interest (expense) income, net | (6,732 | ) |  | (5,167 | ) |  | (21,104 | ) |  | (15,092 | )
Income tax provision | (750 | ) |  | (846 | ) |  | (46,165 | ) |  | (35,175 | )
Net earnings | 4,203 |  |  | 3,531 |  |  | 57,689 |  |  | 60,164 |
Foreign currency translation, net of tax effect | 58 |  |  | — |  |  | (357 | ) |  | — |
Comprehensive earnings | $ | 4,261 |  |  | $ | 3,531 |  |  | $ | 57,332 |  |  | $ | 60,164 |
The table below presents equity in earnings of unconsolidated investments included in the Company’s reported segments for the three months and nine ended September 30, 2015 and 2014 (in thousands):
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2015 |  | 2014 |  | 2015 |  | 2014
Casinos | $ | 2,337 |  |  | $ | 1,839 |  |  | $ | 7,754 |  |  | $ | 6,676 |
TwinSpires | — |  |  | (289 | ) |  | — |  |  | (41 | )
Other Investments | 52 |  |  | (493 | ) |  | 490 |  |  | (782 | )
| $ | 2,389 |  |  | $ | 1,057 |  |  | $ | 8,244 |  |  | $ | 5,853 |
The table below presents total assets for the reported segments (in thousands):
| September 30, 2015 |  | December 31, 2014
Total assets: |  |  |
Big Fish Games | $ | 1,052,842 |  |  | $ | 1,009,668 |
Casinos | 608,396 |  |  | 621,240 |
TwinSpires | 184,830 |  |  | 182,322 |
Racing | 377,594 |  |  | 518,517 |
Other Investments | 36,653 |  |  | 30,757 |
| $ | 2,260,315 |  |  | $ | 2,362,504 |
The table below presents total capital expenditures for the reported segments for the nine months ended September 30, 2015 and 2014 (in thousands):
| Nine Months Ended September 30,
| 2015 |  | 2014
Capital expenditures: |  |  |
Big Fish Games | $ | 2,987 |  |  | $ | — |
Casinos | 15,383 |  |  | 6,629 |
TwinSpires | 3,098 |  |  | 4,716 |
Racing | 8,359 |  |  | 33,491 |
Other Investments | 1,011 |  |  | 4,018 |
| $ | 30,838 |  |  | $ | 48,854 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8906-108599 + Details
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